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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
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Date of Report (Date of Earliest Event Reported): April 3, 1998
UNITED STATIONERS INC.
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(Exact Name of Registrant as Specified in its Charter)
DELAWARE
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(State or Other Jurisdiction of Incorporation)
0-10653 36-3141189
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(Commission File Number) (I.R.S. Employer Identification No.)
UNITED STATIONERS SUPPLY CO.
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(Exact Name of Registrant as Specified in its Charter)
ILLINOIS
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(State or Other Jurisdiction of Incorporation)
33-59811 36-2431718
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(Commission File Number) (I.R.S. Employer Identification No.)
2200 EAST GOLF ROAD
DES PLAINES, ILLINOIS 60016-1267
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(Address of Principal Executive Offices) (Zip Code)
(847) 699-5000
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(Registrant's Telephone Number, Including Area Code)
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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 April 3, 1998, United Stationers Supply Co. (the "Company"), the
operating subsidiary of United Stationers Inc. ("United"), completed the
acquisition (the "Azerty Acquisition") of all of the capital stock of Azerty
Incorporated ("Azerty"), Azerty de Mexico, S.A. de C.V. ("Azerty Mexico"),
Positive ID Wholesale Inc. ("Positive ID"), and AP Support Services
Incorporated ("AP Support Services"), which conducted substantially all of
the United States and Mexican operations of the Office Products Division of
Abitibi-Consolidated Inc. (collectively, the "Azerty Business"). The
aggregate purchase price paid by the Company for the Azerty Acquisition was
approximately $110.0 million (including fees and expenses), subject to
adjustment based upon the net tangible assets of the Azerty Business as of
the closing of the acquisition. For the fiscal year ended December 31, 1997,
the Azerty Business had combined net sales and earnings before interest,
income taxes, depreciation and amortization ("EBITDA") of $355.4 million and
$12.6 million, respectively.
The aggregate purchase price for the Azerty Acquisition was determined
as a result of an arm's length negotiation between the Company and
Abitibi-Consolidated Inc.
The Azerty Business acquired by the Company owns assets that constitute
plant, equipment and other physical property used in the operation of its
wholesale distribution business, and such assets will continue to be utilized
for such purposes.
AZERTY
Azerty was founded in 1983 and is a leading wholesale distributor of
computer consumables, peripherals and accessories in the United States.
Azerty serves over 12,000 major customers in the United States which consist
primarily of information product dealers and value-added resellers. Azerty
distributes a broad range of products consisting of printers, printer
supplies, magnetic and optical data storage media, workstation accessories,
fax machines and basic office products essentials. Azerty provides a high
level of customer service, including high order fill rates, late order
cut-off times and guaranteed next-day delivery via UPS for products under 100
pounds.
Azerty sells through marketing employees who utilize advanced data
management and telesales capabilities that enable highly customized and
segmented marketing, whereby customers' calls are automatically routed to
sales representatives familiar with their accounts. In addition, Azerty runs
catalog marketing programs, collecting co-op allowances from vendors to
produce product catalogs for their customers. Azerty also has established a
new world wide web site on the Internet which allows on-line inventory
availability, pricing and UPS order tracking, as well as vendor and product
information, applications for new accounts and general company information.
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Headquartered in Orchard Park, New York, Azerty currently operates
through three distribution facilities (with an additional facility in Miami,
Florida expected to open in Spring 1998) that stock over 7,200 stockkeeping
units ("SKUs"). Azerty's primary competitors are Daisytek International,
Ingram Micro, Tech Data and Merisel. For the fiscal year ended December 31,
1997, Azerty accounted for approximately 88% and 98% of the net sales and
EBITDA, respectively, of the combined Azerty Business.
AZERTY MEXICO
Azerty Mexico was founded in 1995 to distribute computer consumables,
peripherals and accessories under the Azerty name in Mexico. Azerty Mexico
operates through a single distribution facility located in Mexico City,
Mexico.
POSITIVE ID
Positive ID is a wholesale distributor of bar code scanning products.
Founded in 1996, Positive ID has attempted to capitalize on an emerging
opportunity for wholesale distribution of products using the bar code
scanning technology that has been created by the increasing use of such
technology by small and medium-sized companies, as well as new applications
in the medical and insurance industries. Positive ID offers approximately
2,000 SKUs primarily to information products dealers and value-added
resellers and distributes products consisting of scanners, printers,
consumables, data collection terminals and software through its distribution
facility located in Tonawanda, New York.
AP SUPPORT SERVICES
Formed in 1996, AP Support Services is a third-party provider that
offers telemarketing, direct response marketing, logistics and data
management services to companies that are outsourcing such non-core
activities. AP Support Services offers a unique combination of sophisticated
telemarketing support and the ability to physically handle product. The
strategy of AP Support Services is to differentiate itself as a third-party
provider by offering vendors a broad range of services from marketing through
product delivery and invoicing. AP Support Services is located in Buffalo,
New York.
NEW CREDIT FACILITIES
On April 3, 1998, the Company entered into an amended and restated
credit agreement (the "New Credit Agreement"), governing its senior secured
credit facilities (the "New Credit Facilities") concurrently with the closing
of the Azerty Acquisition in order to fund the purchase price of the Azerty
Acquisition, refinance borrowings under the Company's existing senior secured
credit facilities (the "Existing Credit Facilities"), and pay related fees
and expenses in connection therewith. The following is a summary of the
principal terms of the New Credit Agreement which summary does not purport to
be
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complete and is subject, and is qualified in its entirety by reference to,
all the provisions of the New Credit Agreement, as it may be further amended
from time to time.
The New Credit Facilities under the New Credit Agreement consist of
$150.0 million of borrowings pursuant to a tranche A term loan (the "Tranche
A Term Loan Facility") and commitments of up to $250.0 million of revolving
loan borrowings pursuant to a revolving credit facility (the "Revolving
Credit Facility") (including a sublimit of $90.0 million under the Revolving
Credit Facility for letters of credit). A portion of the Revolving Credit
Facility is allocated for swingline loans. The New Credit Facilities also
included initial borrowings of $100.0 million under a tranche B term loan
facility (the "Tranche B Term Loan Facility"). All outstanding borrowings
under the Tranche B Loan Facility were repaid by the Company on April 15,
1998 with the net proceeds from the offering of the Company's 8-3/8% Senior
Subordinated Notes due 2008 (described below), and proceeds from the sale of
certain accounts receivable.
The loans under the Tranche A Term Loan Facility and the Revolving
Credit Facility generally bear interest as determined within a set range with
the rate based on the ratio of total debt (which excludes the face amount of
any undrawn letters of credit) of United and its subsidiaries to EBITDA (as
defined in the New Credit Agreement). The Tranche A Term Loan Facility and
the Revolving Credit Facility bear interest, at the option of the Company and
based upon financial performance, at the base rate (i.e., the higher of the
prime rate or federal funds plus 0.50%) plus 0% to 0.75% or LIBOR plus 1.00%
to 2.00%. The Tranche B Term Loan Facility bore interest, at the option of
the Company, at the base rate plus 0.75% or LIBOR plus 2.00%.
As of April 17, 1998, the outstanding principal balance of the Tranche A
Term Loan Facility consisted of $150.0 million and matures on or about March
31, 2004, and no amount of the Tranche B Term Loan Facility remained
outstanding, which had been scheduled to mature on or about December 31,
2004. The term loans under the Tranche A Term Loan Facility are repayable in
consecutive quarterly installments commencing on or about June 30, 1998, the
first four of which are each in the amount of $2.5 million, the next four of
which are each in the amount of $3.75 million, the next four of which are
each in the amount of $6.25 million, the next four of which are each in the
amount of $7.5 million and the last eight of which are each in the amount of
$8.75 million. The term loans under the Tranche B Term Loan Facility were
scheduled to be repaid in consecutive quarterly installments commencing on or
about June 30, 1998, the first twenty of which were to be each in the amount
of $0.25 million and the last seven of which were to be each in the amount of
approximately $13.6 million. On April 15, 1998, the Company used the
net proceeds of the Notes Offering (hereinafter defined) to repay a
substantial portion of the indebtedness outstanding under the Tranche B Term
Loan Facility, with the remainder of the Tranche B Term Loan Facility repaid
with proceeds from the sale of certain accounts receivables.
Loans under the Tranche A Term Loan Facility and the Revolving Credit
Facility may be prepaid at any time, and are subject to certain mandatory
prepayments out of (i) net
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proceeds received from the issuance of equity by United or any of its
subsidiaries subject to certain exceptions provided in the New Credit
Agreement, (ii) net proceeds from certain asset sales in excess of $15.0
million, (iii) 50% of the Company's Excess Cash Flow (as defined in the New
Credit Agreement) for any fiscal year (commencing with the fiscal year ending
December 31, 1998), but only if the Debt to Cash Flow Ratio (as defined in
the New Credit Agreement) as of the last day of the fiscal year is greater
than 3.75 to 1, (iv) net proceeds received from casualty events subject to
certain exceptions provided within the New Credit Agreement and (v) net
proceeds received from certain debt issuances. Optional prepayment under the
Tranche A Term Loan Facility will be applied to loans outstanding under the
Tranche A Term Loan Facility. Mandatory prepayments will be applied, first,
to loans outstanding under the Tranche A Term Loan Facility and, next, to the
permanent reduction of commitments (and the payment of loans outstanding)
under the Revolving Credit Facility.
The Tranche A Term Loan Facility and the Revolving Credit Facility are
guaranteed, on a joint and several basis, by United and all of the direct and
indirect domestic subsidiaries of the Company.
The Tranche A Term Loan Facility and the Revolving Credit Facility are
secured by perfected first priority pledges of the stock of the Company, all
of the stock of the domestic direct and indirect subsidiaries of the Company
and certain of the stock of all of the foreign direct and indirect
subsidiaries (other than the Receivables Company (as hereinafter defined)) of
the Company and security interests in, and liens upon, certain accounts
receivable, inventory, contract rights and other personal and certain real
property of the Company and its domestic subsidiaries. The New Credit
Agreement provides for the complete release, upon request by the Company, of
the liens upon achievement of an investment grade rating from Standard &
Poor's or Moody's for the unsecured long-term debt of United or the Company
for any quarter, and a partial release in the event the Leverage Ratio (as
defined in the New Credit Agreement) is less than or equal to 3 to 1. The
Majority Lenders (as defined in the New Credit Agreement) may request that
the security interests be regranted if the Leverage Ratio for any subsequent
quarter exceeds 3 to 1. In addition, the New Credit Agreement permits the
release of the Senior Lenders' lien in connection with the sale of specified
receivables under the Receivables Securitization Program (as hereinafter
defined).
The New Credit Agreement contains certain restrictive covenants that,
among other things, limit the ability of United, the Company and its
subsidiaries to dispose of assets, incur indebtedness or liens, pay dividends
or make other payments in respect of capital stock or subordinated
indebtedness, make investments or other acquisitions, engage in mergers or
consolidations, engage in transactions with affiliates, and engage in any
business other than specified businesses. In addition, the New Credit
Agreement requires the Company to comply with certain financial ratios and
tests, including ratios of total debt to EBITDA, cash flow to fixed charges,
and EBITDA to interest expense, and a minimum net worth test.
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Defaults under the New Credit Agreement include, among other things, (i)
failure to pay principal when due; (ii) failure to pay interest within three
business days after the due date; (iii) default in the performance of certain
covenants and other obligations which, in some cases, continues for ten days;
(iv) default by United, the Company or any of its subsidiaries in respect of
any of its indebtedness above specified levels; (v) certain bankruptcy
events; (vi) certain judgments against United, the Company or any of its
subsidiaries; (vii) the occurrence of a change of control (as defined in the
New Credit Agreement); and (viii) the existence of certain environmental
claims or liabilities.
RECEIVABLES SECURITIZATION PROGRAM
On April 3, 1998, in connection with the refinancing of its Existing
Credit Facilities, the Company entered into the $163.0 million 364-day
receivables securitization program (the "Receivables Securitization
Program"), pursuant to which the Company sells its U.S. dollar receivables
(the "Eligible Receivables") (except for certain excluded receivables, which
initially include all receivables from the Azerty Business and Lagasse Bros.,
Inc.) to a wholly-owned offshore, bankruptcy remote special purpose limited
liability company (the "Receivables Company"), which in turn ultimately
transfers the Eligible Receivables to a third-party, multi-seller
asset-backed commercial paper program existing solely for the purpose of
issuing commercial paper rated A-1/P-1 or higher. The sale of trade
receivables includes not only those Eligible Receivables that were existing
on the closing date of the Receivables Securitization Program, but also
Eligible Receivables created thereafter. The Chase Manhattan Bank acts as
funding agent and, together with other commercial banks rated at least
A-1/P-1, provides standby liquidity funding to support the purchase of the
receivables by the Receivables Company. The proceeds from the Receivables
Securitization Program were used to reduce borrowings under the Company's
Revolving Credit Facility. The Receivables Company retains an interest in
the Eligible Receivables transferred to the third party. The Receivables
Securitization Program carries an effective interest rate of LIBOR plus
0.37%. As a result of the Receivables Securitization Program, balance sheet
assets of the Company as of December 31, 1997 of approximately $120.0
million, consisting of accounts receivable, have been sold to the Receivables
Company and do not secure the Company's obligations under the New Credit
Facilities.
THE NOTES OFFERING
On April 15, 1998, the Company consummated the sale (the "Notes
Offering") of $100,000,000 of its 8-3/8% Senior Subordinated Notes due 2008
(the "Notes") in a transaction not subject to the registration requirements
of the Securities Act of 1933, as amended (the "Securities Act"). The Notes
were immediately resold by the initial purchasers thereof in reliance on Rule
144A under the Securities Act.
The Notes are unsecured and are subordinated in right of payment to all
existing and future Senior Indebtedness (as defined in the indenture (the
"Indenture") governing the
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Notes) of the Company, which includes indebtedness under the New Credit
Facilities. The Notes rank PARI PASSU in right of payment with the Company's
12-3/4% Senior Subordinated Notes due 2005 (the "12 3/4% Notes") and all
other existing and future senior subordinated Indebtedness (as defined in the
Indenture) of the Company, and rank senior in right of payment to all
Subordinated Indebtedness (as defined in the Indenture) of the Company.
The Notes bear interest at the rate of 8.375% per annum and mature on
April 15, 2008. The Notes are generally not callable by the Company prior to
five years following the issue date, subject to certain exceptions. The
Notes are fully and unconditionally guaranteed on a senior subordinated basis
by United and all of the Company's existing and future domestic Restricted
Subsidiaries (as defined in the Indenture) that incur Indebtedness (the
"Guarantors"). In connection with the Notes Offering, the Company and the
Guarantors entered into an exchange and registration rights agreement with
the initial purchasers thereof, providing for certain rights with respect to
exchange or registration of the Notes under the Securities Act.
The proceeds from the sale of the Notes were used to (i) repay a
substantial portion of indebtedness outstanding under the Tranche B Term Loan
Facility, and (ii) pay fees and expenses related to the Notes Offering.
ITEM 5. OTHER EVENTS
In connection with the Notes Offering, the Company prepared a final
offering memorandum that contained certain unaudited pro forma and "adjusted"
pro forma financial information for United and its consolidated subsidiaries
as of and for the fiscal year ended December 31, 1997. These unaudited pro
forma and "adjusted" pro forma financial statements are set forth below.
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UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
The following Unaudited Consolidated Pro Forma Financial Statements are
based on the historical financial statements of United. The pro forma balance
sheet is presented giving effect to (i) the refinancing of the Company's
Existing Credit Facility pursuant to the New Credit Facilities and the
Receivables Securitization Program (the "Senior Credit Facilities
Refinancing"), (ii) the Azerty Acquisition, and (iii) the Notes Offering, all
as more fully described in the notes to Unaudited Consolidated Pro Forma
Financial Statements below, as if all such transactions were effected on
December 31, 1997. The pro forma income statement gives effect to (i) the
Senior Credit Facilities Refinancing, (ii) the Azerty Acquisition, and (iii)
the Notes Offering, all as more fully described in the notes to Unaudited
Consolidated Pro Forma Financial Statements below, as if all such
transactions were effected as of the beginning of the period presented. The
adjusted pro forma income statement reflecting the 1997 Financing
Transactions is presented giving effect to (i) United's offering of 2.0
million primary shares of its common stock, $0.10 par value ("Common Stock"),
and a 2.4 million share secondary offering of Common Stock by certain selling
stockholders (collectively, the "October Equity Offering"), (ii) the
redemption of all of United's outstanding shares of Series A Preferred Stock,
$0.01 par value ("Series A Preferred Stock"), and Series C Preferred Stock,
$0.01 par value ("Series C Preferred Stock" and, collectively with the Series
A Preferred Stock, the "Preferred Stock"), for approximately $21.3 million,
which was effected in September 1997, (the "Preferred Stock Redemption"),
(iii) the termination of certain management advisory service agreeements
effected in October 1997 (the "Management Agreements Termination" and,
collectively with the October Equity Offering and the Preferred Stock
Redemption, the "1997 Financing Transactions"), (iv) the Senior Credit
Facilities Refinancing, (v) the Azerty Acquisition, and (vi) the Notes
Offering, as if all such transactions occurred at the beginning of the period
presented.
The pro forma income statement excludes the extraordinary non-recurring
charge of approximately $10.1 million ($6.1 million net of tax benefit of
$4.0 million) related to the write-off of unamortized financing fees in
conjunction with the Senior Credit Facilities Refinancing. For pro forma
balance sheet purposes, this extraordinary non-recurring charge has been
reflected as a reduction of retained earnings.
In addition to the above described extraordinary non-recurring charge of
$10.1 million, the Unaudited Consolidated Adjusted Pro Forma Income Statement
also excludes the following: (i) an extraordinary non-recurring charge of
$9.8 million ($5.9 million net of tax benefit of $3.9 million) on early
retirement of debt, (ii) a non-recurring non-cash charge of $59.4 million
($35.5 million net of tax benefit of $23.9 million) related to the vesting of
the Merger Incentive Options, and (iii) a non-recurring cash charge of $5.3
million ($3.2 million net of tax benefit of $2.1 million) related to the
Management Agreements Termination, all of which are related to the 1997
Financing Transactions. These additional non-recurring charges are reflected
in the historical balance sheet as of December 31, 1997.
The Unaudited Consolidated Pro Forma Financial Statements are intended
for informational purposes only and are not necessarily indicative of the
future financial position or future results of operations of United after the
Senior Credit Facilities Refinancing, the Azerty Acquisition and the Notes
Offering, or of the financial position or results of operations of United
that would have actually occurred had the 1997 Financing Transactions, the
Senior Credit Facilities Refinancing, the Azerty Acquisition, or the Notes
Offering occurred at the beginning of the period presented. The Unaudited
Consolidated Pro Forma Financial Statements and the accompanying notes should
be read in conjunction with, and are qualified in their entirety by, the
Consolidated Financial Statements of United, together with the related notes
thereto, included elsewhere herein. The financial information contained in
this Form 8-K relating to the Azerty Business has been derived from financial
statements prepared in accordance with Canadian generally accepted accounting
principles.
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UNITED STATIONERS INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED PRO FORMA BALANCE SHEET
AS OF DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SENIOR CREDIT
FACILITIES AZERTY
REFINANCING ACQUISITION OFFERING
HISTORICAL ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS PRO FORMA
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<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........... $ 12,367 $ -- $ -- $ -- $ 12,367
Accounts receivable................. 311,920 (120,300)(a) 42,806(e) -- 234,426
Inventories......................... 511,555 -- 33,639(e) -- 545,194
Other............................... 14,845 -- 550(e) -- 15,395
------------- ------------- ------------ ------------- -------------
Total current assets.............. 850,687 (120,300) 76,995 -- 807,382
Net property, plant and equipment..... 164,543 -- 5,392(e) -- 169,935
Goodwill.............................. 111,852 -- 69,342(e) -- 181,194
Other................................. 20,939 (7,661)(b) 43(e) 2,550 (f) 15,871
------------- ------------- ------------ ------------- -------------
Total assets...................... $ 1,148,021 $ (127,961) $ 151,772 $ 2,550 $ 1,174,382
------------- ------------- ------------ ------------- -------------
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt... $ 44,267 $ (33,600)(c) $ 99(e) $ -- $ 10,766
Accounts payable.................... 236,475 -- 37,844(e) -- 274,319
Accrued expenses.................... 107,935 -- 3,542(e) -- 111,477
Accrued income taxes................ 10,561 (4,166)(d) -- (80)(f) 6,315
------------- ------------- ------------ ------------- -------------
Total current liabilities......... 399,238 (37,766) 41,485 (80) 402,877
Deferred income taxes................. 19,383 -- -- -- 19,383
Long-term obligations:
Long-term debt...................... 492,868 (84,000)(c) 110,287(e) 2,750 (f) 521,905
Other long-term liabilities......... 13,224 -- -- -- 13,224
Stockholders' equity:
Common stock (voting)............... 1,591 -- -- -- 1,591
Capital in excess of par value...... 213,042 -- -- -- 213,042
Retained earnings................... 8,675 (6,195)(d) -- (120)(f) 2,360
------------- ------------- ------------ ------------- -------------
Total stockholders' equity........ 223,308 (6,195) -- (120) 216,993
------------- ------------- ------------ ------------- -------------
------------- ------------- ------------ ------------- -------------
Total liabilities and
stockholders' equity............ $ 1,148,021 $ (127,961) $ 151,772 $ 2,550 $ 1,174,382
------------- ------------- ------------ ------------- -------------
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</TABLE>
See accompanying Notes to Unaudited Consolidated Pro Forma Financial Statements.
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UNITED STATIONERS INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED PRO FORMA INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SENIOR CREDIT
FACILITIES AZERTY
REFINANCING ACQUISITION OFFERING
HISTORICAL ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS PRO FORMA
---------- ------------- ------------ ------------- -----------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales................................ $2,558,135 $ -- $ 355,423(j) $ -- $2,913,558
Cost of goods sold....................... 2,112,204 -- 323,160(j) -- 2,435,364
---------- ------------- ------------ ------------- -----------
Gross profit............................. 445,931 -- 32,263 -- 478,194
Operating expenses:
Warehousing, marketing and
administrative expenses.............. 311,002 -- 22,599(k) 333,601
Non-recurring charges.................. 64,698 -- -- -- 64,698
---------- ------------- ------------ ------------- -----------
Total operating expenses................. 375,700 -- 22,599 -- 398,299
---------- ------------- ------------ ------------- -----------
Income from operations................... 70,231 -- 9,664 -- 79,895
Interest expense......................... 53,511 (13,637)(g) 8,424(l) 1,205 (m) 49,503
Other expense............................ -- 7,401 (h) -- -- 7,401
---------- ------------- ------------ ------------- -----------
Income before income taxes and
extraordinary item..................... 16,720 6,236 1,240 (1,205) 22,991
Income taxes............................. 8,532 2,507 (i) 1,196(i) (484)(i) 11,751
---------- ------------- ------------ ------------- -----------
Income before extraordinary item......... 8,188 3,729 44 (721) 11,240
Extraordinary item--loss on early
retirement of debt, net of tax benefit
of $3,958.............................. (5,884) -- -- -- (5,884)
---------- ------------- ------------ ------------- -----------
Net income............................... 2,304 3,729 44 (721) 5,356
Preferred stock dividends issued and
accrued................................ 1,528 -- -- -- 1,528
---------- ------------- ------------ ------------- -----------
Net income attributable to common
stockholders........................... $ 776 $ 3,729 $ 44 $ (721) $ 3,828
---------- ------------- ------------ ------------- -----------
---------- ------------- ------------ ------------- -----------
Net income per common share--basic:
Income before extraordinary item....... $ 0.51 $ 0.74
Extraordinary item..................... (0.45) (0.45)
---------- -----------
Net income............................. $ 0.06 $ 0.29
---------- -----------
---------- -----------
Weighted average shares (in
thousands)........................... 13,064 13,064
---------- -----------
---------- -----------
Net income per common share--assuming
dilution:
Income before extraordinary item....... $ 0.43 $ 0.63
Extraordinary item..................... (0.38) (0.38)
---------- -----------
Net income............................. $ 0.05 $ 0.25
---------- -----------
---------- -----------
Weighted average shares and assumed
conversions (in thousands)........... 15,380 15,380
---------- -----------
---------- -----------
</TABLE>
See accompanying Notes to Unaudited Consolidated Pro Forma Financial Statements.
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UNITED STATIONERS INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED ADJUSTED PRO FORMA INCOME STATEMENT
(ADJUSTED FOR 1997 FINANCING TRANSACTIONS)
FOR THE YEAR ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
ADJUSTED
1997 SENIOR CREDIT PRO FORMA
FINANCING FACILITIES AZERTY FOR 1997
TRANSACTIONS REFINANCING ACQUISITION OFFERING FINANCING
HISTORICAL ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS TRANSACTIONS
---------- -------------- -------------- ------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales........................ $2,558,135 $ -- $ -- $ 355,423(j) $ -- $ 2,913,558
Cost of goods sold............... 2,112,204 -- -- 323,160(j) -- 2,435,364
---------- -------------- -------------- ------------- ------ -------------
Gross profit..................... 445,931 -- -- 32,263 -- 478,194
Operating expense:
Warehousing, marketing and
administrative expenses........ 311,002 (708)(n) -- 22,599(k) -- 332,893
Non-recurring charges............ 64,698 (64,698)(n) -- -- -- --
---------- -------------- -------------- ------------- ------ -------------
Total operating expenses......... 375,700 (65,406) -- 22,599 -- 332,893
---------- -------------- -------------- ------------- ------ -------------
Income from operations........... 70,231 65,406 -- 9,664 -- 145,301
Interest expenses................ 53,511 (5,096)(o) (13,637)(g) 8,424(l) 1,205 (m) 44,407
Other expense.................... -- -- 7,401 (h) -- -- 7,401
---------- -------------- -------------- ------------- ------ -------------
Income before income taxes and
extraordinary item............. 16,720 70,502 6,236 1,240 (1,205) 93,493
Income taxes..................... 8,532 28,342 (i) 2,507 (i) 1,196(i) (484)(i) 40,093
---------- -------------- -------------- ------------- ------ -------------
Income before extraordinary
item........................... 8,188 42,160 3,729 44 (721) 53,400
Extraordinary item--loss on early
retirement of debt, net of tax
benefit of $3,956.............. (5,884) 5,884 (p) -- -- -- --
---------- -------------- -------------- ------------- ------ -------------
Net income....................... 2,304 48,044 3,729 44 (721) 53,400
Preferred stock dividends issued
and accrued.................... 1,528 (1,528)(q) -- -- -- --
---------- -------------- -------------- ------------- ------ -------------
Net income attributable to common
stockholders................... $ 776 $ 49,572 $ 3,729 $ 44 $ (721) $ 53,400
---------- -------------- -------------- ------------- ------ -------------
---------- -------------- -------------- ------------- ------ -------------
Net income per common share--
basic:
Income before extraordinary
item......................... $ 0.51 $ 3.55
Extraordinary item............. (0.45) --
---------- ------------
Net income..................... $ 0.06 $ 3.55
---------- ------------
---------- ------------
Weighted average shares (in
thousands)................... 13,064 15,046
---------- ------------
---------- ------------
Net income per common share--
assuming dilution:
Income before extraordinary
item......................... $ 0.43 $ 3.14
Extraordinary item............. (0.38) --
---------- ------------
Net income..................... $ 0.05 $ 3.14
---------- ------------
---------- ------------
Weighted average shares and
assumed conversions (in
thousands)................... 15,380 17,019
---------- ------------
---------- ------------
</TABLE>
See accompanying Notes to Unaudited Consolidated Pro Forma Financial Statements.
11
<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED
PRO FORMA FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
The pro forma financial statements have been prepared giving effect to the
following:
(1) The New Credit Facilities and Receivables Securitization Program
replaced all preexisting debt under the Existing Credit Agreement
(which, as of December 31, 1997, consisted of $148.8 million of term
loan facilities and $256.0 million in a revolving credit facility).
Accordingly, $10.1 million of unamortized financing fees as of December
31, 1997 related to the credit agreement governing the Existing Credit
Facilities ($6.1 million net of tax benefit of $4.0 million) were
expensed as an extraordinary charge due to the early retirement of such
debt. As this extraordinary charge will be non-recurring it is not
considered for pro forma income statement purposes. Receivables sold
under the Receivables Securitization Program will total approximately
$120 million and will be used to reduce borrowings under the New Credit
Facilities. The anticipated annual costs related to the sale of certain
accounts receivable is estimated to be $7.4 million and is shown in
other expense.
(2) The Tranche B Term Loan Facility ($100.0 million) and a portion of the
Revolving Credit Facility under the New Credit Facilities
($10.0 million) were used to purchase the Azerty Business and pay
approximately $1.0 million in acquisition fees and expenses.
(3) The total purchase price for the Azerty Business (including fees and
expenses) was approximately $110.0 million and has been preliminarily
allocated as follows:
<TABLE>
<S> <C>
Current assets.......................................... $ 76,995
Property, plant and equipment........................... 5,392
Goodwill................................................ 69,342
Other assets............................................ 43
Liabilities assumed..................................... (41,772)
---------
Total purchase price................................ $ 110,000
---------
---------
</TABLE>
(4) The operating results for the year ended December 31, 1997 for the
Azerty Business have been included as follows:
<TABLE>
<S> <C>
Net sales............................................... $ 355,423
Cost of goods sold...................................... 323,160
---------
Gross Profit........................................ 32,263
Warehousing, marketing and administrative expenses(a)... 22,599
---------
Earnings before interest and taxes...................... $ 9,664
---------
---------
</TABLE>
--------------
(a) Includes $1.7 million of goodwill amortization based on $69.3
million of goodwill as computed above amortized over 40 years.
(5) Pro forma interest expense has been calculated based upon pro forma debt
levels and the applicable interest rates. The Existing Credit
Facilities' term loan facilities and revolving credit facility were
assumed to bear interest at their respective historical weighted
average annual rates of 7.91% and 7.97%, respectively. The Revolving
Credit Facility, the Tranche A Term Loan Facility and the Tranche B
Term Loan Facility under the New Credit Facilities were assumed to
12
<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED
PRO FORMA FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
bear interest at rates of 7.45%, 7.15% and 7.65%, respectively, based
on historical LIBOR/prime rates and current spread terms. The Notes
were assumed to bear interest at 8.375%. A 0.125% variation in effective
interest rates used for pro forma purposes has a $0.5 million impact on
pro forma interest expense.
(6) Income taxes have been provided for all adjustments at an assumed rate
of 40.2%. Goodwill resulting from the Azerty Acquisition will not be tax
deductible and as such is not tax affected.
The adjusted pro forma income statement reflecting the 1997 Financing
Transactions has been prepared giving effect to all the assumptions made in the
pro forma income statement and the following:
(1) The October Equity Offering and the resulting proceeds thereof were
contributed to the Company and used to redeem $50.0 million of the
Company's 12 3/4% Notes, pay the redemption premium of $6.4 million
thereon, and pay down $15.5 million of indebtedness under the Existing
Credit Facilities. The resulting extraordinary loss of $9.8 million
($5.9 million net of tax benefit of $3.9 million) on early retirement
of debt was eliminated for pro forma purposes.
(2) The October Equity Offering also resulted in the recognition of a
pre-tax non-recurring non-cash charge of $59.4 million ($35.5 million
net of tax benefit of $23.9 million) and a non-recurring cash charge
of $5.3 million ($3.2 million net of tax benefit of $2.1 million)
related to the vesting of the Merger Incentive Options and the
Management Agreements Termination, respectively. These non-recurring
charges have been eliminated for pro forma purposes. Approximately
$0.7 million in management advisory service agreement fees were paid
prior to the Management Agreements Termination. Accordingly, these
fees which were charged to 1997 operating expenses have been eliminated
for pro forma purposes.
(3) On September 2, 1997, United completed the redemption of all outstanding
shares of its Series A and Series C Preferred Stock for an aggregate
redemption price of approximately $21.3 million. Accordingly, the $1.5
million of Preferred Stock dividends issued and accrued for the year
ended December 31, 1997 has been eliminated for pro forma purposes.
Pro forma adjustments have been made to the pro forma balance sheet and
income statement to reflect the following effects of the Senior Credit
Facilities Refinancing, the Azerty Acquisition, and the Notes Offering:
<TABLE>
<C> <S> <C>
(a) Reflects the sale of accounts receivable related to the Receivables
Securitization Program.
(b) Write-off of capitalized financing costs associated with the
retirement of the Existing Credit Facilities' revolving credit
facility, tranche A and tranche B term loans......................... $ (10,061)
Capitalized financing costs related to the New Credit Facilities..... 2,400
---------
$ 7,661
---------
---------
</TABLE>
13
<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED
PRO FORMA FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(c) Reflects retirement of debt under the Existing Credit Facilities and the
issuance of new debt under the New Credit Facilities:
<TABLE>
<S> <C>
Retirement of existing tranche A term loan......................... $ (34,200)
Retirement of existing tranche B term loan......................... (9,400)
Tranche A Term Loan Facility....................................... 10,000
---------
Adjustment to current maturities of long-term debt(1).......... $ (33,600)
---------
---------
Retirement of existing tranche A term loan......................... $ (63,346)
Retirement of existing tranche B term loan......................... (41,842)
Retirement of existing revolving credit facility................... (256,000)
Tranche A Term Loan Facility....................................... 140,000
Revolving Credit Facility.......................................... 137,188
---------
Adjustment to long-term debt(1)................................ $ (84,000)
---------
---------
--------------
(1) Totals $117.6 million and combined with the $2.4 million of financing costs
related to the New Credit Facilities (see Note b) reflects the use of proceeds
from the Receivables Securitization Program.
</TABLE>
(d) Adjustment to current income tax liability for the tax effect and to
retained earnings for the net effect of the write-off of the
capitalized financing costs and the initial costs related to the sale
of certain accounts receivable.
(e) Reflects the use of $100.0 million of the Tranche B Term Loan Facility
and $10.0 million of the Revolving Credit Facility under the New Credit
Facilities to purchase the Azerty Business. The Company has also
assumed $0.3 million of debt from the Azerty Business. The assets and
liabilities of the Azerty Business (including fees and expenses) are
preliminarily allocated as follows:
<TABLE>
<S> <C>
Current assets.................................................. $ 76,995
Property, plant and equipment................................... 5,392
Goodwill........................................................ 69,342
Other assets.................................................... 43
Liabilities assumed............................................. (41,772)
---------
Purchase price.............................................. $ 110,000
---------
---------
</TABLE>
(f) Assumes net proceeds of $97.25 million from the issuance of the Notes
($100.0 million net of approximately $2.75 million in financing costs)
plus an additional $2.75 million in borrowings under the Revolving
Credit Facility, will be used to pay down the indebtedness outstanding
under the Tranche B Term Loan Facility, and as a result $0.2 million
($0.12 million net of tax benefit of $0.08 million) in financing fees
associated with the Tranche B Term Loan Facility will be expensed as
an extraordinary loss due to the early retirement of debt (which loss
is excluded for pro forma income statement purposes as it is
non-recurring).
14
<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED
PRO FORMA FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(g) The pro forma adjustments to interest expense related to the Senior
Credit Facilities Refinancing consist of the following:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1997
----------------------
<S> <C>
Elimination of interest related to Existing Credit Facilities:
Revolving credit facility...................................................... $ (12,540)
Tranche A term loan............................................................ (9,412)
Tranche B term loan............................................................ (4,794)
Elimination of amortization of deferred financing costs on retired debt........ (3,027)
--------
Decrease in interest expense..................................................... (29,773)
--------
Interest on new indebtedness (New Credit Facilities):
Revolving Credit Facility...................................................... 5,368
Tranche A Term Loan Facility................................................... 10,368
Amortization of deferred financing costs on the New Credit Facilities(1)....... 400
--------
Increase in interest expense................................................... 16,136
--------
Net decrease in interest expense................................................. $ (13,637)
--------
--------
------------------
</TABLE>
(1) Debt issuance costs are amortized over the life of the related new
debt, 6 years.
(h) Reflects the costs related to the sale of certain accounts receivable
under the Receivables Securitization Program.
(i) Income taxes provided at a 40.2% effective rate.
(j) Reflects the historical net sales and gross profit for the year ended
December 31, 1997 for the Azerty Business.
(k) Reflects the historical operating expenses for the year ended December
31, 1997 for the Azerty Business and $1.7 million of goodwill
amortization related to the Azerty Acquisition.
(l) The pro forma adjustments to interest expense related to the Azerty
Acquisition consist of the following:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1997
----------------------
<S> <C>
Interest on new indebtedness (New Credit Facilities):
Tranche B Term Loan Facility......................................... $ 7,650
Revolving Credit Facility............................................ 774
-------
Increase in interest expense....................................... $ 8,424
-------
-------
</TABLE>
15
<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED
PRO FORMA FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(m) The pro forma adjustments to interest expense related to the Offering
consist of the following:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1997
----------------------
<S> <C>
Elimination of interest related to New Credit Facilities:
Tranche B Term Loan Facility........................................ $ (7,650)
-------
Interest on new indebtedness (New Credit Facilities and the Notes):
Revolving Credit Facility........................................... 205
Notes .............................................................. 8,375
Amortization of deferred financing costs on Notes(1)................ 275
-------
Increase in interest expense........................................ 8,855
-------
Net increase in interest expense.................................. $ 1,205
-------
-------
- --------------
</TABLE>
(1) Debt issuance costs are amortized over the life of the related
new debt, 10 years.
Additional pro forma adjustments have been made to the adjusted pro forma
income statement reflecting the 1997 Financing Transactions to give effect to
the following:
(n) In the fourth quarter of 1997, United recognized a non-recurring
non-cash charge of $59.4 million ($35.5 million net of tax benefit of
$23.9 million) and a non-recurring cash charge of $5.3 million ($3.2
million net of tax benefit of $2.1 million) related to the vesting of
the Merger Incentive Options and the Management Agreements Termination,
respectively. In addition, approximately $0.7 million in management
advisory service fees were paid in 1997 prior to the Management
Agreements Termination. These charges and expenses are excluded for pro
forma purposes.
(o) The pro forma adjustments to interest expense related to the 1997
Financing Transactions consist of the following:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1997
----------------------
<S> <C>
Addition (Elimination) of interest related to:
Existing Credit Facilities..................................... $ 701
12 3/4% Notes.................................................. (5,467)
Elimination of amortization of deferred financing costs on
retired debt................................................. (330)
-------
Decrease in interest expense..................................... $ (5,096)
-------
-------
</TABLE>
(p) In the fourth quarter of 1997, United recorded an extraordinary loss of
$9.8 million ($5.9 million net of tax benefit of $3.9 million) related
to early retirement of debt. This non-recurring charge is excluded for
pro forma purposes.
(q) On September 2, 1997, United completed the redemption of all outstanding
shares of its Series A and Series C Preferred Stock for an aggregate
redemption price of approximately $21.3 million. Accordingly, no
Preferred Stock dividends would be paid or accrued on a pro forma basis.
16
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits.
2.1 Stock Purchase Agreement, dated as of February 10, 1998, among the
United Stationers Supply Co., United Stationers Inc.,
Abitibi-Consolidated Inc., Abitibi-Consolidated Sales Corporation,
Azerty Incorporated, Azerty de Mexico, S.A. de C.V., AP Support Services
Incorporated, and Positive ID Wholesale Inc.*
4.1 Indenture, dated as of April 15, 1998, among United Stationers Supply Co.,
as issuer, United Stationers Inc., Lagasse Bros., Inc., Azerty
Incorporated, Positive ID Wholesale Inc., and AP Support Services
Incorporated, as guarantors, and The Bank of New York, as trustee.*
4.2 Purchase Agreement, dated as of April 9, 1998, among United Stationers
Supply Co., as issuer, United Stationers Inc., Lagasse Bros., Inc., Azerty
Incorporated, Positive ID Wholesale Inc., and AP Support Services
Incorporated, as guarantors, and Chase Securities Inc. and Bear, Stearns &
Co. Inc., as initial purchasers.*
4.3 Exchange and Registration Rights Agreement, dated as of April 15, 1998,
among United Stationers Supply Co., United Stationers Inc., Lagasse Bros.,
Inc., Azerty Incorporated, Positive ID Wholesale Inc., AP Support Services
Incorporated, Chase Securities Inc. and Bear, Stearns & Co. Inc.*
4.4 Second Supplemental Indenture, dated as of April 3, 1998, among United
Stationers Supply Co., Lagasse Bros., Inc., Azerty Incorporated, Positive
ID Wholesale Inc., AP Support Services Incorporated, and The Bank of
New York, as trustee.*
10.1 Second Amended and Restated Credit Agreement, dated as of April 3, 1998,
among United Stationers Inc., United Stationers Supply Co., the lenders
parties thereto, Chase Securities Inc., as arranger, and The Chase
Manhattan Bank, as agent.*
10.2 Second Amended and Restated Security Agreement, dated as of April 3, 1998,
between United Stationers Supply Co. and The Chase Manhattan Bank, as
administrative agent.*
10.3 Subsidiary Guarantee and Security Agreement, dated as of April 3, 1998,
among Lagasse Bros., Inc., Azerty Incorporated, Positive ID Wholesale
Inc., AP Support Services Incorporated, and The Chase Manhattan Bank, as
administrative agent.*
10.4 Pooling Agreement, dated as of April 3, 1998, among USS Receivables
Company, Ltd., United Stationers Supply Co., as servicer, and The Chase
Manhattan Bank, as trustee.*
17
<PAGE>
10.5 Series 1998-1 Supplement, dated as of April 3, 1998, to Pooling Agreement
dated as of April 3, 1998, among USS Receivables Company, Ltd., United
Stationers Supply Co., as servicer, The Chase Manhattan Bank, as funding
agent, APA bank and trustee, and Park Avenue Receivables Corporation, as
initial purchaser.*
10.6 Receivables Sale Agreement, dated as of April 3, 1998, among United
Stationers Supply Co., as seller, USS Receivables Company, Ltd., and
United Stationers Supply Co., as servicer.*
10.7 Servicing Agreement, dated as of April 3, 1998, among USS Receivables
Company, Ltd., United Stationers Supply Co., as servicer, and The Chase
Manhattan Bank, as trustee.*
_____________________
* Filed herewith.
18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
UNITED STATIONERS INC.
Date: April 20, 1998 By: /s/ DANIEL H. BUSHELL
-----------------------------------------
Daniel H. Bushell
Executive Vice President and Chief
Financial Officer
UNITED STATIONERS SUPPLY CO.
Date: April 20, 1998 By: /s/ Daniel H. Bushell
-----------------------------------------
Daniel H. Bushell
Executive Vice President and Chief
Financial Officer
19
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- -------- ------------
2.1 Stock Purchase Agreement, dated as of February 10,
1998, among the United Stationers Supply Co., United
Stationers Inc., Abitibi-Consolidated Inc., Abitibi-Consolidated
Sales Corporation, Azerty Incorporated, Azerty de Mexico,
S.A. de C.V., AP Support Services Incorporated, and Positive
ID Wholesale Inc.
4.1 Indenture, dated as of April 15, 1998, among United
Stationers Supply Co., as issuer, United Stationers Inc.,
Lagasse Bros., Inc., Azerty Incorporated, Positive ID Wholesale
Inc., and AP Support Services Incorporated, as guarantors, and
The Bank of New York, as trustee.
4.2 Purchase Agreement, dated as of April 9, 1998, among
United Stationers Supply Co., as issuer, United Stationers Inc.,
Lagasse Bros., Inc., Azerty Incorporated, Positive ID Wholesale
Inc., and AP Support Services Incorporated, as guarantors, and
Chase Securities Inc. and Bear, Stearns & Co. Inc., as initial
purchasers.
4.3 Exchange and Registration Rights Agreement, dated as
of April 15, 1998, among United Stationers Supply Co., United
Stationers Inc., Lagasse Bros., Inc., Azerty Incorporated,
Positive ID Wholesale Inc., AP Support Services Incorporated,
Chase Securities Inc. and Bear, Stearns & Co. Inc.
4.4 Second Supplemental Indenture, dated as of April 3,
1998, among United Stationers Supply Co., Lagasse Bros., Inc.,
Azerty Incorporated, Positive ID Wholesale Inc., AP Support
Services Incorporated, and The Bank of New York, as trustee.
10.1 Second Amended and Restated Credit Agreement, dated as
of April 3, 1998, among United Stationers Inc., United
Stationers Supply Co., the lenders parties thereto, Chase
Securities Inc., as arranger, and The Chase Manhattan Bank, as
agent.
10.2 Second Amended and Restated Security Agreement, dated
as of April 3, 1998, between United Stationers Supply Co. and
The Chase Manhattan Bank, as administrative agent.
20
<PAGE>
10.3 Subsidiary Guarantee and Security Agreement, dated as
of April 3, 1998, among Lagasse Bros., Inc., Azerty
Incorporated, Positive ID Wholesale Inc., AP Support Services
Incorporated, and The Chase Manhattan Bank, as administrative
agent.
10.4 Pooling Agreement, dated as of April 3, 1998, among
USS Receivables Company, Ltd., United Stationers Supply Co., as
servicer, and The Chase Manhattan Bank, as trustee.
10.5 Series 1998-1 Supplement, dated as of April 3, 1998,
to Pooling Agreement dated as of April 3, 1998, among USS
Receivables Company, Ltd., United Stationers Supply Co., as
servicer, The Chase Manhattan Bank, as funding agent, APA bank
and trustee, and Park Avenue Receivables Corporation, as initial
purchaser.
10.6 Receivables Sale Agreement, dated as of April 3, 1998,
among United Stationers Supply Co., as seller, USS Receivables
Company, Ltd., and United Stationers Supply Co., as servicer.
10.7 Servicing Agreement, dated as of April 3, 1998, among
USS Receivables Company, Ltd., United Stationers Supply Co., as
servicer, and The Chase Manhattan Bank, as trustee.
21
<PAGE>
STOCK PURCHASE AGREEMENT
Made the 10th day of February, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
ARTICLE 1 - INTERPRETATION .............................................. 2
1.1 Definitions .................................................... 2
1.2 Construction ................................................... 8
1.3 Schedules and Exhibits ......................................... 9
ARTICLE 2 - PURCHASE AND SALE OF PURCHASED SHARES ....................... 10
2.1 Purchase and Sale of Purchased Shares .......................... 10
2.2 Purchase Price and Allocation .................................. 10
ARTICLE 3 - CLOSING ARRANGEMENTS ........................................ 10
3.1 Place of Closing ............................................... 10
3.2 Delivery of Certificates ....................................... 10
3.3 Payment of the Purchase Price .................................. 11
3.4 Other Closing Deliveries of Sellers ............................ 11
3.5 Other Closing Deliveries of Purchaser .......................... 11
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES .............................. 11
4.1 Representations and Warranties of the Sellers .................. 11
4.2 Representations and Warranties of the Purchaser ................ 28
4.3 Survival of Sellers' Representations and Warranties ............ 30
4.4 Survival of Purchaser's and United's Representations and
Warranties ..................................................... 30
ARTICLE 5 - COVENANTS OF THE PARTIES PRIOR TO CLOSING ................... 31
5.1 Operations before Closing ...................................... 31
5.2 Approvals and Consents ......................................... 33
5.3 Competitive Information ........................................ 33
5.4 Confidential Information ....................................... 34
5.5 Consultant Opinions ............................................ 34
5.6 New Competitive Information .................................... 35
5.7 Transitional Services .......................................... 35
ARTICLE 6 - CONDITIONS PRECEDENT TO THE PERFORMANCE
BY THE PARTIES OF THEIR OBLIGATIONS UNDER THIS AGREEMENT ....... 35
6.1 Conditions for the Benefit of the Purchaser .................... 35
6.2 Conditions for the Benefit of the Sellers ...................... 38
6.3 Termination by Purchaser ....................................... 39
6.4 Termination by Sellers ......................................... 39
ARTICLE 7 - COVENANTS OF THE PARTIES FOLLOWING CLOSING .................. 40
7.1 Closing Date Balance Sheet ..................................... 40
7.2 Adjustments .................................................... 41
7.3 Income Statement for Stub Period ............................... 41
7.4 Confidentiality ................................................ 42
<PAGE>
- 2 -
7.5 Employees ...................................................... 42
7.6 Non-Competition ................................................ 42
7.7 Non-Solicitation ............................................... 43
7.8 Access to Records .............................................. 43
7.9 Mexican Foreign Investment Notice .............................. 44
7.10 Recording Transfer of Azerty Mexico Shares ..................... 44
7.11 Change of Name ................................................. 44
ARTICLE 8 - INDEMNIFICATION ............................................. 45
8.1 Indemnification by Sellers ..................................... 45
8.2 Indemnification by the Purchaser ............................... 45
8.3 Procedure for Indemnification .................................. 46
8.4 Additional Rules and Procedures ................................ 47
8.5 Limits to Claims ............................................... 48
8.6 Amounts Recovered .............................................. 49
8.7 Non-Monetary Rights ............................................ 49
8.8 Purchase Price Adjustment ...................................... 49
8.9 Certain Tax Matters ............................................ 49
8.10 Transfer Taxes ................................................. 51
ARTICLE 9 - GENERAL ..................................................... 51
9.1 Public Notice .................................................. 51
9.2 Expenses ....................................................... 51
9.3 Further Assurances ............................................. 51
9.4 Time of the Essence ............................................ 52
9.5 Benefit of the Agreement ....................................... 52
9.6 Entire Agreement ............................................... 52
9.7 Waiver ......................................................... 52
9.8 Notices ........................................................ 52
9.9 Assignment ..................................................... 54
9.10 Severability ................................................... 54
9.11 Counterparts ................................................... 54
9.12 Governing Law .................................................. 54
9.13 Dispute Resolution ............................................. 54
9.14 United Guarantee ............................................... 54
9.15 Service ........................................................ 55
9.16 Waiver of Jury Trial and Punitive Damages ...................... 55
</TABLE>
<PAGE>
STOCK PURCHASE AGREEMENT
THIS AGREEMENT made the 10th day of February, 1998.
A M O N G:
ABITIBI-CONSOLIDATED INC., a corporation
incorporated under the federal laws of
Canada ("ACI")
- and -
ABITIBI-CONSOLIDATED SALES
CORPORATION, a corporation incorporated
under the laws of the State of Delaware ("ACSC")
(ACI and ACSC being collectively referred to
herein as the "Sellers")
- and -
AZERTY INCORPORATED, a corporation
incorporated under the laws of the State of
Delaware ("Azerty")
- and -
POSITIVE ID WHOLESALE INC., a corporation
incorporated under the laws of the State of
Delaware ("ID")
- and -
AP SUPPORT SERVICES INCORPORATED, a
corporation incorporated under the laws of the
State of Delaware ("APSS")
- and -
AZERTY DE MEXICO, S.A. DE C.V., a
corporation incorporated under the laws of the
federal district of Mexico ("Azerty Mexico")
- and -
UNITED STATIONERS SUPPLY CO., a
corporation incorporated under the laws of
the State
<PAGE>
- 2 -
of Illinois (the "Purchaser")
- and -
UNITED STATIONERS INC., a corporation
incorporated under the laws of the State of
Delaware ("United")
WHEREAS on the date hereof ACSC is, and on the Closing Date
(as hereinafter defined) ACSC will be, the registered and beneficial owner of
all of the issued and outstanding shares in the capital of Azerty, ID and
APSS;
AND WHEREAS on the date hereof ACI and Azerty are, and on
the Closing Date ACI and Azerty will be, the registered and beneficial owners
of 99% and 1% of all of the issued and outstanding shares in the capital of
Azerty Mexico, respectively;
AND WHEREAS the Sellers wish to sell to the Purchaser and
the Purchaser wishes to purchase from the Sellers all of the issued and
outstanding shares in the capital of the Corporations (as hereinafter
defined);
NOW THEREFORE in consideration of the premises and the
mutual covenants and agreements herein contained, the parties hereto hereby
covenant and agree as follows:
ARTICLE 1 - INTERPRETATION
1.1 DEFINITIONS. In this Agreement, or in any amendments hereto,
unless there is something in the subject matter or context inconsistent
therewith, the following terms shall have the following meanings,
respectively:
(a) "ADJUSTED CLOSING DATE BALANCE SHEET" has the meaning
attributed thereto in Schedule 7.1;
(a.1) "ADJUSTMENT DATE" means the date which is five Business Days
after the date on which the Closing Date Balance Sheet is
final and binding on the parties, as contemplated by Article 7
or, should there be an Adjusted Closing Date Balance Sheet in
the circumstances contemplated by Section 7.1 and Schedule
7.1, such date which is five Business Days after the date on
which such Adjusted Closing Date Balance Sheet is final and
binding on the parties, as contemplated by Article 7;
(b) "AFFILIATE" of a Person shall mean a Person that directly, or
indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, such Person;
<PAGE>
- 3 -
(c) "AGREEMENT" means this Agreement and includes all Exhibits and
Schedules attached thereto;
(d) "AUTHORITY" means any governmental authority, body, agency,
division or department, whether federal, state or local,
including without limitation such Persons in Canada, the
United States and Mexico;
(e) "AXIDATA" means Axidata Inc., a corporation incorporated under
the federal laws of Canada;
(f) "BUSINESS" means the distribution of computer consumables,
peripherals, data storage products, accessories and automated
identification equipment, and the provision of logistics and
marketing services, including telemarketing, currently carried
on by the Corporations, as reflected in the December 31
Financial Statements;
(g) "BUSINESS DAY" means every day except a Saturday, Sunday or a
day on which principal commercial banks are not open for
business in the City of New York, New York;
(h) "CLAIMS" means any and all losses (excluding loss of profits),
damages, Taxes, expenses, liabilities (whether accrued,
actual, contingent or otherwise), claims, demands, actions, of
whatever nature or kind, including legal fees and expenses on
a solicitor/attorney and client basis and other professional
fees and disbursements.
(i) "CLOSING" means the completion of the transactions described
in this Agreement;
(j) "CLOSING DATE" or "DATE OF CLOSING" means March 27, 1998 or
such other date as the Purchaser and the Sellers may agree
upon and on which the Closing occurs;
(k) "CLOSING DATE BALANCE SHEET" means, collectively, the audited
combined (including the elimination of all significant
inter-company transactions and balances) balance sheet
including each of the Corporations as at the Closing Date,
prepared in accordance with GAAP and the procedures set forth
in Schedule 7.1;
(l) "COMPETITIVE INFORMATION" means competitively sensitive
information of the Sellers or Corporations, or any of them,
including customer lists, pricing, volumes and specific
product mix by customer or region, and supplier information
relating to specific contract terms such as rebates and co-op
advertising terms and pricing;
(m) "CONFIDENTIAL INFORMATION" means any information, the
disclosure of which would result in the violation of any
confidentiality covenant to which any of the Sellers or the
Corporations is a party;
(n) "CONSENT" means the consent or approval of the landlord of a
Location, any other
<PAGE>
- 4 -
party to a Material Contract with any of the Sellers or the
Corporations or any Authority to the completion of the
transactions contemplated by this Agreement, the execution
of this Agreement and the Closing or the performance of any
terms hereof;
(o) "CORPORATIONS" means, collectively, Azerty, ID, APSS and
Azerty Mexico, and "CORPORATION" means any one of them;
(p) "DEBT" means all current liabilities and long term debt of any
of the Corporations as disclosed or required to be disclosed
(or with respect to current liabilities and long-term debt
incurred subsequent to December 31, 1997, which would be
required to be so disclosed if such Debt had been outstanding
on such date) in accordance with GAAP in the December 31
Balance Sheet;
(q) "DECEMBER 31 BALANCE SHEET" means, collectively, the audited
combined (including the elimination of all significant
inter-company transactions and balances) balance sheet
including each of the Corporations as at December 31, 1997;
(r) "DECEMBER 31 FINANCIAL STATEMENTS" means the audited combined
financial statements (including the elimination of all
significant inter-company transactions and balances) including
each of the Corporations for the fiscal year ended December
31, 1997 consisting of the December 31 Balance Sheet, a
statement of income (loss) and a statement of cash flows and
all notes and schedules thereto, which have been prepared in
accordance with GAAP and as described in Section 4.1(f),
copies of which are annexed as Schedule 1.1(r) hereto;
(s) "EMPLOYEES" has the meaning attributed thereto in section
4.1(s);
(t) "ENVIRONMENTAL LAWS" means all foreign, federal, municipal or
local laws, statutes, rules, regulations, ordinances, orders,
directives (to the extent legally binding) and other
requirements of any Authority (having the force of law) and in
force as of the date hereof without regard to any changes
thereto following the date hereof relating to environmental or
occupational health matters, including legislation governing
the labelling, use and storage of Hazardous Substances;
(u) "ENVIRONMENTAL ORDERS" means applicable orders or decisions
rendered by any Authority under or pursuant to any
Environmental Laws;
(v) "ENVIRONMENTAL PERMITS" means all permits, certificates,
registrations, licenses and other approvals issued by any
Authority and or required for the operation by the
Corporations or any of them of their Locations in compliance
with all Environmental Laws or Environmental Orders;
(w) "ERISA" shall mean the United States Employee Retirement
Income Security Act of 1974, as amended (including any
successor act), and the rules and regulations
<PAGE>
- 5 -
promulgated thereunder;
(x) "ERISA AFFILIATE" shall mean any Person under common control
with the Corporations or who is treated as a single employer
with any of the Corporations under Section 414(b), (c), (m),
or (o) of the U.S. Tax Code;
(y) "ESTIMATED PURCHASE PRICE" has the meaning attributed thereto
in section 2.2;
(z) "FINANCIAL STATEMENTS" has the meaning attributed thereto in
section 4.1(f);
(aa) "GAAP" means generally accepted accounting principles as set
forth in the handbook published by the Canadian Institute of
Chartered Accountants or interpretations and general practice
thereof;
(bb) "HAZARDOUS SUBSTANCES" means any material substance or waste
that is prohibited, controlled, regulated or which forms the
basis of liability under any Environmental Laws, including
PCBs, asbestos, urea formaldehyde foam insulation, petroleum
or petroleum by-products;
(cc) "HSR ACT" has the meaning attributed thereto in section
4.1(b)(iii)(A);
(dd) "INTELLECTUAL PROPERTY AGREEMENT" means an agreement
substantially in the form of the agreement annexed hereto
as Schedule 1.1(ad);
(ee) "KNOWLEDGE" means the actual knowledge, after due inquiry
within ACI and the Corporations, of the Person charged with
knowledge; and in the case of the Sellers or the Corporations
includes the actual knowledge of any officer or director of
the Sellers or the Corporations;
(ff) "LAW" means any statute, law, ordinance, regulation, rule or
other legally binding promulgation of an Authority;
(gg) "LIEN" means any lien, mortgage, pledge, assessment, easement,
right of way, encroachment, security interest, restriction,
lease, sublease, tenancy, adverse claim, levy or charge or
other encumbrance of any kind or any contract or agreement to
enter into any of the foregoing;
(hh) "LOCATION" means any premises utilized in the Business which
is owned or subject to a lease, sublease or license entered
into by a Corporation;
(ii) "LUCAS" means The Lucas Group, consultants retained by the
Purchaser;
(jj) "MATERIAL ADVERSE EFFECT" means, where used in relation to the
Corporations, a material adverse effect on the business,
operations, assets, condition (financial or otherwise) or
prospects of the Corporations considered as a whole;
<PAGE>
- 6 -
(kk) "MATERIAL CONTRACT" means any agreement, written or oral, to
which any Corporation is a party or otherwise relating to the
Business having a term in excess of one year and involving an
amount, in the aggregate, in excess of $50,000 or having a
term which does not exceed one year and involving payments or
loans by any party thereunder in excess of $100,000 in the
aggregate;
(ll) "NET TANGIBLE ASSETS" has the meaning attributed thereto in
Section 7.1(e);
(mm) "OPD" means the office products division of ACI which includes
the Corporations, which corporations are being sold hereunder,
and Axidata, Eurozerty B.V., ISFO B.V. and AP Support Services
B.V., which corporations are not being sold hereunder;
(am.1) "OFFICE PRODUCTS LONG TERM INCENTIVE PLAN" means the existing
Amended and Restated Office Products Long Term Incentive Plan
of ACI;
(nn) "PENSION AUTHORITIES" means the applicable foreign, federal
and state pension regulatory authorities, including, without
limitation, the United States Internal Revenue Service;
(oo) "PENSION LEGISLATION" means the applicable foreign, federal or
state pension benefits legislation and, where applicable, the
U.S. Tax Code;
(pp) "PERMITTED LIENS" has the meaning attributed thereto in
section 4.1(k);
(qq) "PERSON" means an individual, partnership, unincorporated
association, organization, syndicate, corporation, trust and a
trustee, executor, administrator or other legal or personal
representative;
(rr) "PLAN TERMS" means the terms and conditions of all Plan texts
and amendments thereto;
(ss) "PLANS" means, with respect to the Corporations and their
ERISA Affiliates, "employee benefit plans" as defined in
Section 3(3) of ERISA, stock bonus, stock ownership, stock
option, stock purchase, stock appreciation rights, phantom
stock, and other stock plans (whether qualified or
non-qualified), and all other pension, welfare, severance,
retirement, bonus, deferred compensation, incentive
compensation, insurance (whether life, accident and health,
or other and whether key man, group, workers compensation,
or other), profit sharing, disability, thrift, day care, legal
services, leave of absence, layoff, and supplemental or excess
benefit plans, in each case existing on or before the Closing
Date which any of the Corporations maintains or sponsors and
which cover some or all of the present or former officers,
directors, employees, agents, consultants, or other similar
representatives providing services to or for any of the
Corporations or their ERISA
<PAGE>
- 7 -
Affiliates but for greater certainty does not include the
Office Products Long Term Incentive Plan;
(tt) "PRIME RATE" means the rate of interest from time to time
announced by The Chase Manhattan Bank at its principal office
in New York, New York at its prime commercial lending rate;
(uu) "PURCHASED SHARES" means the issued and outstanding common
shares and, in the case of Azerty Mexico, Class 1 and Class 2
shares in the capital of the Corporations described in
Schedule 1.1(au) together with any additional shares issued to
the Sellers after the date hereof in connection with
capitalization of inter-company debt;
(vv) "PURCHASE PRICE" has the meaning attributed thereto in
section 2.2;
(ww) "REAL PROPERTY" means any real property, whether owned or
leased, and used for the conduct of the Business or previously
used for such purpose;
(xx) "REGULATORY APPROVALS" means all necessary approvals, permits,
sanctions, rulings, orders or consents from any Authority or
self-regulatory organization within or outside of the U.S.A.
and/or Mexico with respect to the transactions contemplated by
this Agreement;
(yy) "REMEDIAL REQUIREMENT" means any demand, directive or order of
any Authority having jurisdiction (if legally binding) or any
requirement or obligation under Environmental Laws to
investigate, remediate, clean-up or otherwise address
Hazardous Substances in order for the Business to be in
compliance with Environmental Laws, having regard to the
operations of the Business and the use of the Real Property as
at the Closing Date and without regard to any changes thereto
after the Closing Date;
(zz) "SELLERS" means, collectively, ACI and ACSC and "SELLER" means
either of them.
(aaa) "SEPTEMBER 30 BALANCE SHEET" means, collectively, the
unaudited balance sheets of each of the Corporations as at
September 30, 1997, copies of which are attached hereto as
Schedule 1.1(ba);
(ba.1) "SIDE AGREEMENT" means the agreement dated of even date
herewith between the Sellers and the Purchaser;
(bbb) "TAXES" shall mean all taxes, charges, fees, levies, duties
or other similar assessments, reassessments or liabilities,
including without limitation (a) income, gross receipts, ad
valorem, premium, excise, real property, personal property,
asset, sales, use, transfer, withholding, employment, payroll,
profit sharing, medicare, and franchise taxes imposed by the
United States of America, Mexico, or by any state, local, or
foreign government, or any subdivision, agency, or other
similar
<PAGE>
- 8 -
Person of the United States, Mexico or any such government;
and (b) any interest, fines, penalties, assessments, or
additions to taxes resulting from, attributable to, or
incurred in connection with any Tax or any contest, dispute,
or refund thereof;
(ccc) "TAX RETURNS" shall mean any report, return, or statement
required to be supplied to a taxing authority in connection
with Taxes;
(ddd) "TIME OF CLOSING" means 10:00 a.m. (New York time) on the
Closing Date or such other time as the Purchaser and the
Sellers may agree upon;
(eee) "U.S. GAAP" means United States generally accepted accounting
principles; and
(fff) "U.S. TAX CODE" means the United States Internal Revenue Code
of 1986, as amended.
1.2 CONSTRUCTION. In this Agreement, unless the context
requires otherwise or is otherwise expressly provided:
(a) words denoting the singular include the plural and vice versa
and words denoting any gender include all genders;
(b) the words "including", "include", and "includes" shall mean
"including without limitation", "include, without limitation"
and "includes, without limitation", respectively;
(c) all references to Articles or sections are references to
Articles of sections of this Agreement;
(d) any reference to a statute shall mean the statute in force as
at the date hereof and any regulation in force thereunder,
unless otherwise expressly provided;
(e) the use of headings is for convenience of reference only and
shall not affect the construction of this Agreement;
(f) when calculating the period of time within which or following
which any act is to be done or step taken, the date which is
the reference day in calculating such period shall be
excluded. If the last day of such period is not a Business
Day, the period shall end on the next Business Day;
(g) all dollar amounts are expressed in U.S. funds; and
(h) any tender of documents or money under this Agreement may be
made upon the parties or their respective counsel and money
may be tendered by bank draft or wire transfer drawn upon a
U.S. or Canadian chartered bank or by negotiable cheque
payable in U.S. funds and certified by a U.S. or Canadian
chartered bank.
<PAGE>
- 9 -
1.3 SCHEDULES AND EXHIBITS. The following are the schedules and
exhibits annexed hereto and incorporated by reference herein and deemed to be
part of this Agreement:
<TABLE>
<S> <C>
Schedule 1.1(r) - December 31 Financial Statements
Schedule 1.1(ad) - Intellectual Property Agreement
Schedule 1.1(au) - Purchased Shares
Schedule 1.1(ba) - September 30 Balance Sheet
Schedule 2.1 - Sellers and Purchased Shares
Schedule 3.4(c) - Form of Opinion of Counsel to the Sellers
Schedule 3.5(c) - Form of Opinion of Counsel to the Purchaser
Schedule 3.5(d) - Form of Opinion of General Counsel to the Purchaser
Schedule 4.1(b)(i)A - Regulatory Approvals
Schedule 4.1(b)(iii) - Sellers' or Corporations' Required Filings
Schedule 4.1(f) - Exceptions to GAAP in Preparation of Financial
Statements
Schedule 4.1(h) - Liabilities
Schedule 4.1(i) - Tax Matters
Schedule 4.1(j) - Material Changes
Schedule 4.1(k) - Encumbrances on Title to Assets
Schedule 4.1(n) - Leased Real Property
Schedule 4.1(m) - Location of Records
Schedule 4.1(o) - Owned Real Property
Schedule 4.1(q) - Litigation
Schedule 4.1(r) - Material Contracts
Schedule 4.1(s) - Employment Matters
Schedule 4.1(t) - Benefit plans
Schedule 4.1(u) - Insurance
Schedule 4.1(v) - Intellectual property
Schedule 4.1(x) - Non arm's-length contracts
Schedule 4.1(z) - Environmental Matters
Schedule 4.1(ac) - Year 2000 Compliance
Schedule 4.2(b)(iii) - Purchaser's Required Filings
Schedule 6.1(c) - Consents
Schedule 7.1 - Basis of Presentation of Closing Date Balance Sheet
Schedule 9.13 - Mediation Procedures
</TABLE>
ARTICLE 2 - PURCHASE AND SALE OF PURCHASED SHARES
2.1 PURCHASE AND SALE OF PURCHASED SHARES. Subject to the terms and
conditions of this Agreement, at the Time of Closing, each of the Sellers
shall sell to the Purchaser and the Purchaser shall purchase from such
Seller, free and clear of all Liens, the Purchased Shares set out opposite
such Seller's name on Schedule 2.1.
<PAGE>
- 10 -
2.2 PURCHASE PRICE AND ALLOCATION. The purchase price payable by the
Purchaser for the Purchased Shares shall be U.S.$109,000,000.00 (the
"Estimated Purchase Price"), subject to adjustment, if any, in accordance
with Article 7 (the Estimated Purchase Price as adjusted is the "Purchase
Price") and shall be allocated initially among the Purchased Shares as
follows, subject to final adjustment:
<TABLE>
<CAPTION>
PURCHASED ESTIMATED PERCENTAGE OF
SHARES PURCHASE PRICE PURCHASE PRICE
------------- ---------------- ----------------
<S> <C> <C>
Azerty $93,800,000 86.1%
ID $6,000,000 5.5%
APSS $1,200,000 1.1%
Azerty Mexico $8,000,000 7.3%
---------------- ----------------
Total $109,000,000 100%
</TABLE>
ARTICLE 3 - CLOSING ARRANGEMENTS
3.1 PLACE OF CLOSING. The closing shall take place at the Time of
Closing at the offices of Goodman Phillips & Vineberg, 430 Park Avenue, 10th
Floor, New York, New York, 10022, or at such other place and time as may be
agreed upon by the Purchaser and the Sellers.
3.2 DELIVERY OF CERTIFICATES. The Sellers shall transfer and deliver
to the Purchaser at the Time of Closing share certificates of each
Corporation representing, in the aggregate, the Purchased Shares duly
endorsed in blank for transfer, or accompanied by irrevocable stock transfer
powers of attorney duly executed in blank (provided that in the case of
Azerty Mexico, certificates shall be duly endorsed not in blank but in the
name of the Purchaser), and shall take such steps as shall be necessary to
cause the Corporations to issue to the Purchaser share certificates
representing the Purchased Shares.
3.3 PAYMENT OF THE PURCHASE PRICE. The Estimated Purchase Price shall
be paid and satisfied by the Purchaser at the Time of Closing in full by
certified cheque, bank draft or wire transfer in such amount made payable to
the Sellers, or as they may otherwise direct in writing. Any additional
amount on account of the Purchase Price shall be paid by the Purchaser in
accordance with Article 7 and any reduced amount shall be paid by the Sellers
in accordance with Article 7. All of such amount shall be payable to ACSC
except for that portion of the Estimated Purchase Price that is allocated to
Azerty Mexico pursuant to Section 2.2, which such portion shall be payable to
ACI.
3.4 OTHER CLOSING DELIVERIES OF SELLERS. On the Closing Date, the
Sellers shall deliver to the Purchaser the following:
(a) the officer's certificates described in section 6.1(a);
<PAGE>
- 11 -
(b) Certificates of Good Standing or their equivalents, issued by the
respective jurisdictions of organization of each of the
Corporations, dated as close to the Closing Date as is reasonably
possible; and
(c) an opinion of Goodman Phillips & Vineberg, counsel to the Sellers,
and of Rubio Villegas y Associados, S.C., Mexican counsel to the
Sellers, substantially in the form attached hereto as Schedule
3.4(c)
3.5 OTHER CLOSING DELIVERIES OF PURCHASER. On the Closing Date, the
Purchaser shall deliver to the Sellers the following:
(a) the officer's certificates described in section 6.2(a);
(b) Certificates of Good Standing of the Purchaser and United issued by
the Secretaries of State of the States of Illinois and Delaware
respectively and dated as close to the Closing Date as is
reasonably possible;
(c) an opinion of Weil, Gotshal & Manges LLP, counsel to the Purchaser
and United, substantially in the form attached hereto as Schedule
3.5(c); and
(d) an opinion of Otis H. Halleen, General Counsel to the Purchaser and
United, substantially in the form attached hereto as Schedule
3.5(d).
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS AND WARRANTIES OF THE SELLERS. The Sellers jointly
and severally represent and warrant to the Purchaser (and acknowledge that the
Purchaser is relying on such representations and warranties in completing the
transactions contemplated herein) that:
(a) CORPORATE - Each of the Corporations is a corporation duly
organized and validly existing under the laws of its jurisdiction
of incorporation and has the requisite corporate power and
authority to own its properties and assets and to carry on that
portion of the Business as currently conducted by it. Each of the
Corporations is duly qualified or admitted to do business and is in
good standing as a foreign corporation in all jurisdictions in
which the ownership, use or leasing of its assets or the conduct of
its business makes such qualification or admission necessary,
except where the failure to be so qualified or admitted and in good
standing, individually or in the aggregate, would not have a
Material Adverse Effect. Schedule 4.1(a) sets forth each
jurisdiction in which the Corporations are qualified or admitted to
do business as a foreign corporation. Each of the Sellers is a
corporation duly organized and validly existing under the laws of
its jurisdiction and has the requisite corporate power and
authority to enter into this Agreement, the Side Agreement and the
Intellectual Property Agreement and perform its obligations
hereunder and thereunder. Except as set forth in Schedule 4.1(a),
none of the Corporations owns,
<PAGE>
- 12 -
of record or beneficially, directly or indirectly, any equity or
other proprietary interest, or right to acquire any such interests,
contingent or otherwise, in any Person.
(b) ENFORCEABILITY - The execution and delivery of this Agreement, the
Side Agreement and the Intellectual Property Agreement by each of
the Sellers and the performance by such Seller of its obligations
hereunder and thereunder have been (or, in the case of ACSC, on the
Closing Date will be) duly and validly authorized by all necessary
corporate and stockholder action on its part, (such stockholder
approval being required only in respect of Azerty Mexico). Each of
this Agreement, the Side Agreement and the Intellectual Property
Agreement constitutes a legal, valid, and binding obligation of the
Sellers, enforceable against each of them in accordance with its
terms (subject to bankruptcy, reorganization, insolvency,
moratorium, and other laws relating to or affecting creditors'
rights generally and subject to the availability of equitable
remedies). The execution and delivery of this Agreement, the Side
Agreement and the Intellectual Property Agreement by the Sellers,
the consummation of the transactions contemplated hereby and
thereby and the fulfilment by the Sellers of the terms, conditions
and provisions hereof and thereof will not:
(i) contravene or violate or result in the breach in any
material respect (with or without the giving of notice or
lapse of time, or both) or acceleration of any obligations of
the Sellers or the Corporations under:
(A) any Laws applicable to the Sellers or the Corporations
except for the Regulatory Approvals set forth on
Schedule 4.1(b)(i)(A);
(B) any judgment, order, writ, injunction or decree of any
court which is applicable to the Sellers or the
Corporations;
(C) the articles, by-laws or any resolutions of the Sellers
or the Corporations or any amendments thereto or
restatements thereof; or
(D) the provisions of any Material Contract to which any
Seller or Corporation is a party or by which any of them
are bound;
(ii) result in the creation or imposition of any Lien upon any of
the assets of the Corporations or any of them which,
individually or in the aggregate, would have a Material
Adverse Effect; or
(iii) require any of the Sellers or the Corporations to obtain any
consent, approval or action of, or make any filings with or
give any notice to, any Person, except:
(A) the filing of a premerger notification report under the
HART-SCOTT-
<PAGE>
- 13 -
RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, as amended
(the "HSR Act"),
(B) as disclosed in Schedule 4.1(b)(iii), and
(C) those the failure of which to obtain, make or give,
individually or in the aggregate, would not have a
Material Adverse Effect or a material adverse effect on
the validity or enforceability of this Agreement, the
Side Agreement or the Intellectual Property Agreement or
on the ability of the Sellers to perform their
respective obligations under this Agreement, the Side
Agreement or the Intellectual Property Agreement.
(c) LICENCES, PERMITS AND AUTHORIZATIONS - The Corporations have
conducted the Business in compliance with, and the Corporations
hold all licenses, permits and authorizations (except for
Environmental Permits which are dealt with in Section 4.1(z))
necessary for the lawful operation of the Business, pursuant to all
applicable statutes and regulations of all Authorities having
jurisdiction over the Corporations or over any part of the
Business, except where the absence of such license, permit or
authorization would not have a Material Adverse Effect.
(d) CAPITALIZATION - The authorized, issued and outstanding capital
stock of each of the Corporations are as follows:
<TABLE>
<CAPTION>
Corporation Authorized Share Capital Number of Issued and Shareholder
Outstanding Shares
---------------- ---------------------------- ---------------------------- --------------
<S> <C> <C> <C>
Azerty 1,000 common shares 542.857 common shares ACSC
125 preferred shares
ID 1,000 common shares 100 common shares ACSC
125 preferred shares
APSS 1,000 common shares 100 common shares ACSC
125 preferred shares
Azerty Mexico 100 Class 1 shares 99 Class 1 shares ACI
unlimited Class 2 shares 990 Class 2 shares
1 Class 1 share Azerty
10 Class 2 shares
</TABLE>
All of the issued and outstanding shares of capital stock of each
of the Corporations are owned, beneficially and of record, by the
Persons and in the amounts shown above and have been validly
issued, are fully paid and non-assessable and have not been issued
in violation of any pre-emptive or similar rights. Save and except
for inter-company indebtedness to be capitalized prior to or at
Closing, there are no outstanding securities convertible into or
exchangeable or exercisable for any shares of the capital stock of
any Corporation, nor does any Corporation have outstanding any
rights to subscribe for or to purchase, or any options or warrants
for the purchase of, or any agreements providing for the issuance
of, any shares of its
<PAGE>
- 14 -
capital stock or any securities convertible into or exchangeable or
exercisable for any shares of its capital stock. The Sellers shall
cause any and all shares of capital stock in the Corporations that
result from the capitalization of inter-company indebtedness and
that are issued to the Sellers after the date hereof to be included
in the Purchased Shares. There are no bonds, debentures, notes or
other indebtedness of any of the Corporations having the right to
vote on any matters on which holders of the capital stock of any of
the Corporations may vote. On the Closing Date, the Purchased
Shares shall constitute all the issued and outstanding shares in
the capital stock of each Corporation, save and except for Azerty
Mexico, of which all of the issued and outstanding shares not
included in the Purchased Shares are owned by Azerty, free and
clear of all Liens. On the Closing Date, there will be no
outstanding stock appreciation, phantom stock or similar rights
based on the equity appreciation of any of the Corporations. On the
Closing Date, there will be no voting trusts, proxies or other
agreements with respect to voting any capital stock of any
corporation.
(e) OWNERSHIP OF SHARES - Each of the Sellers is (and will at the Time
of Closing be) the sole legal and beneficial owners of the
Purchased Shares, as set forth in Section 4.1(d), free and clear of
any liens, charges, encumbrances or rights of others (other than
the rights of the Purchaser hereunder). There is no contract,
option or other right of another binding upon or which at any time
in the future may become binding upon the Sellers or the
Corporations or any of them, to sell, transfer, assign, pledge,
charge, mortgage or in any other way dispose of or encumber any of
the Purchased Shares, other than pursuant to this Agreement.
(f) FINANCIAL STATEMENTS - The Sellers (i) have delivered to the
Purchaser copies of the December 31 Financial Statements, and (ii)
will, prior to the Closing Date, deliver to the Purchaser (x)
copies of the audited combined (including the elimination of all
significant inter-company transactions and balances) balance sheets
of the Corporations as of December 31, 1995 and 1996, together with
the related audited combined (including the elimination of all
significant inter-company transactions and balances) statements of
income and cash flows for the fiscal years ended December 31, 1995
and 1996, and the notes and schedules thereto, accompanied by the
report thereon of the applicable firm of independent public
accountants (the "1995-1996 Financial Statements" and, collectively
with the December 31 Financial Statements, the "Financial
Statements") and (y) whatever is necessary for the December 31
Financial Statements to comply with clause (D) below of this
Section 4.1(f). The Financial Statements, including the notes and
schedules thereto, (A) were or will be prepared in accordance with
GAAP throughout the periods covered thereby, except as otherwise
disclosed on Schedule 4.1(f), (B) present or will present fairly in
all material respects the combined financial position, results of
operations and changes in cash flows of the Corporations as of such
dates and for the periods then ended, (C) have or will have been
audited in accordance with generally accepted auditing standards in
Canada, and (D) include or will include all schedules necessary to
conform such Financial Statements with U.S. GAAP and the
information required
<PAGE>
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by Regulation S-X promulgated under the UNITED STATES SECURITIES
ACT of 1933 and the SECURITIES EXCHANGE ACT of 1934, each as
amended to the date hereof. The Purchaser acknowledges and accepts
the changes in respect of policies respecting reserves in
connection with the December 31, 1997 Balance Sheet and the
December 31, 1997 Financial Statements, as such specified reserves
are described in Schedule 7.1.
(g) INVENTORY - The inventory of the Corporations consists only of
items of an age, quality and quantity useful or saleable, as of the
Closing Date, in the ordinary course of business of the
Corporations, and net of reserves as described in Schedule 7.1.
For greater certainty, the Sellers are not responsible for any
diminution of saleable inventory after the Closing Date in excess
of such reserves. The inventories reflected on the December 31
Balance Sheet are, and the inventories on the Closing Date Balance
Sheet will be, valued at the lower of cost or net realizable value
(determined on a first-in, first-out (FIFO) basis).
(h) ABSENCE OF UNDISCLOSED LIABILITIES - Except to the extent reflected
or reserved against in the December 31 Financial Statements
(including disclosure in the notes thereto) or incurred subsequent
to December 31, 1997 and disclosed in Schedule 4.1(h) and except
for normal trade debt payable and other operating liabilities
(including, without limitation, overshipments from suppliers) in
the ordinary and normal course of business consistent with past
practices, which shall be dealt with in accordance with Section 7.1
and Schedule 7.1, none of the Corporations has any outstanding
indebtedness or any liabilities or obligations (whether accrued,
absolute, contingent or otherwise) nor any outstanding commitments
or obligations of any kind whether or not such obligations or
commitments are presently considered liabilities of any of the
Corporations under GAAP that would render the December 31 Financial
Statements materially and adversely incomplete or inaccurate.
(i) TAX MATTERS -
(i) Each of the Corporations has duly filed all Tax Returns it
was required to file, and has paid (or there has been paid on
its behalf) all Taxes that are due or adequate provision has
been made by the Corporations in the December 31 Balance
Sheet in accordance with GAAP for any Taxes due and unpaid at
the date of the December 31 Balance Sheet, or for the payment
of any Tax instalments due in respect of the current taxation
year of the Corporations. Each of the Corporations has made
(or there has been made on its behalf) all required estimated
or advance Tax payments sufficient to avoid any underpayment
penalties. Except to the extent reflected or reserved
against in the December 31 Balance Sheet or as will be
reflected or reserved against on the Closing Date Balance
Sheet (with respect to Taxes that became due after December
31, 1997 and relate to a taxable period ending at or on the
Closing Date or are allocable to such date by Section
8.9(f)), none of the Corporations is liable for any Taxes.
Except as disclosed in Schedule 4.1(i)
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the Tax Returns of each of the Corporations and of each
affiliated, combined or consolidated group which includes or
has included any of the Corporations have not been audited or
examined by a taxing authority and the statute of limitations
for all periods through the respective periods specified in
Schedule 4.1(i) has not expired. None of the Corporations has
effected any unauthorized accounting method changes. Except
as disclosed in Schedule 4.1(i), there are no actions, suits,
assessments, audits, investigations, claims or other
proceedings pending or, to the knowledge of the Sellers,
threatened against any of the Corporations with respect to
any Taxes;
(ii) Each of the Corporations has on a timely basis filed (or
there has been filed on its behalf) all Tax returns required
to be filed by it, or with respect to, it. To the knowledge
of the Sellers, no such Tax Return contains any material
misstatement or omitted any statement of any material fact
that should have been included therein or is otherwise not
correct in all material respects;
(iii) Each of the Corporations has withheld and remitted to the
proper taxing authority, or where permitted by law provided
security for, on a timely basis and in a form required under
the appropriate Tax legislation, all Taxes required to be
withheld or remitted in connection with any amounts paid or
owing to any employee, creditor, independent contractor or
other third party;
(iv) Except as provided in Schedule 4.1(i), there is no contract,
agreement, plan or arrangement covering any person that,
individually or collectively, could give rise to the payment
of any amount that would not be deductible by any of the
Corporations by reason of Section 28OG of the U.S. Tax Code;
(v) Except as provided in Schedule 4.1(i), there are no
outstanding agreements, waivers, or arrangements extending
the statutory period of limitation applicable to any claim
for, or the period for the collection or assessment of, Taxes
due from or with respect to any of the Corporations for any
taxable period, and no power of attorney granted by or with
respect to any of the Corporations with respect to Taxes is
currently in force. No closing agreement pursuant to Section
7121 of the U.S. Tax Code (or any predecessor provision) or
any similar provision of any state, local, or non-U.S. law
has been entered into by or with respect to any of the
Corporations. There are no advance pricing agreements
pursuant to Section 482 of the U.S. Tax Code (or any similar
or analogous law) relating to the Corporations and policies
regarding the transfer or sale of goods between the
Corporations are set forth in Schedule 4.1(i);
(vi) None of the Corporations has agreed (and no agreement has
been made on any of the Corporations' behalf) to make any
adjustment pursuant to Section
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481(a) of the U.S. Tax Code (or any predecessor provision) by
reason of any change in any accounting method, and there is
no application pending with any taxing authority requesting
permission for any changes in any accounting method of any of
the Corporations. No election under Section 338 of the U.S.
Tax Code has been made or filed by or with respect to any of
the Corporations. No consent to the application of Section
341(f)(2) of the U.S. Tax Code (or any predecessor provision)
has been made or filed by or with respect to any of the
Corporations or any of their assets;
(vii) ACSC is not a "foreign person" within the meaning of Section
1445(b)(2) of the U.S. Tax Code. None of the Corporations is
or has been during the preceding five years a United States
real property holding corporation for purposes of Section
1445(b)(3) of the U.S. Tax Code. No withholding Taxes are
applicable to the payment of the Purchase Price hereunder;
(viii) There are no deferred gains with respect to intercompany
transactions for purposes of United-States Treasury
Regulation Section 1.1502-13 (and any predecessor regulation)
with respect to Azerty, ID or APSS;
(ix) Each of Azerty, ID and APSS is a member (and will be a member
through the Closing Date) of an affiliated group for purposes
of Section 1504(a) of the U.S. Tax Code which properly files
consolidated United States federal income Tax Returns; and
(x) Schedule 4.1(i) accurately sets forth any net operating loss,
capital loss or credit carryforwards with respect to each of
the Corporations from the most recently filed Tax Returns of
the Corporations.
(j) ABSENCE OF CHANGES - Except as contemplated by this Agreement or
as set forth on Schedule 4.1(j), since December 31, 1997 or as
otherwise disclosed to the Purchaser in writing (except that no
such disclosure shall be required to the extent such disclosure
would breach any Law including, without limitation, the HSR Act),
the Business has been carried on in the ordinary course and there
has not been:
(i) any damage, destruction, loss, labour trouble or any other
event, (whether or not covered by insurance), which has
occurred and which would have a Material Adverse Effect;
(ii) any issuance, sale or disposition by the Corporations of any
of their respective shares of capital stock (other than as
contemplated by this Agreement) or any grant of options,
warrants or preemptive or other rights to acquire (including
upon conversion or exercise) any shares of its capital stock,
but subject to the issuance of shares on the capitalization
of inter-company indebtedness;
<PAGE>
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(iii) any material Lien created on any of the assets of the
Corporations, other than those created in the ordinary course
of business consistent with past practices;
(iv) any sale, transfer or conveyance of any material assets used
or useful in the Business other than in the ordinary course
of business consistent with past practices;
(v) any transaction or arrangement under which any of the
Corporations paid, loaned or advanced any amount to or in
respect of, or sold, transferred or leased any of its assets
or any services to (1) the Sellers, (2) any officer, director
or employee of any of the Corporations, (3) any affiliate of
the Corporations, or any officer, director of employee of any
such affiliate, or (4) any business or other Person in which
any of the Sellers, the Corporations or any such officer,
director, employee or affiliate has a material interest (or
agreed or committed to do any of the foregoing), except (A)
payments of salaries, wages and benefits to officers,
directors and employees of the Corporations in the ordinary
course of business consistent with past practices, (B)
advances made to, or reimbursements of, officers, directors
and employees of the Corporations in reasonable amounts in
the ordinary course of business consistent with company
policies and past practices, and (C) transactions made
pursuant to agreements with affiliates on terms no more
favourable than would be afforded to third parties;
(vi) any commitments or agreements for capital expenditures
involving an amount, in the aggregate, in excess of $50,000;
(vii) any material amendment, modification or termination of any
Material Contract, except for terminations in accordance with
the terms thereof;
(viii) any capital investment in, loan to or acquisition of the
securities or assets of any Person involving more than
$100,000;
(ix) any change made or authorized in any of their respective
certificates of incorporation or other organizational
instruments or by laws;
(x) the execution of any agreement with any director, officer or
employee of any of the Corporations, providing for his or her
employment or other services, or any increase in compensation
or in severance or termination benefits payable or to become
payable by any Corporation to its directors, officers or
employees, or any increase in benefits under any collective
bargaining agreements or in benefits under any Plans, except
in any case in the ordinary course of business consistent
with past practices and except as contemplated by the Side
Agreement;
<PAGE>
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(xi) any change by any of the Corporations in its financial or tax
accounting principles, practices or methods, except insofar
as required by GAAP or applicable Law or as is contemplated
in Section 7.1 or Schedule 7.1;
(xii) any declaration, setting aside or payment of any dividend
(whether in cash, stock or property) in respect of any of the
Corporations' capital stock or equity interests but subject
to the ability to repay or capitalize inter-company
indebtedness;
(xiii) any redemption, repurchase or retirement by any Corporation
of any of such Corporation's capital stock or equity
interests;
(xiv) any payment, prepayment, discharge or satisfaction by the
Corporations of any Debt or material Lien other than Debts or
Liens that were paid, discharged or satisfied in the ordinary
course of business consistent with past practices but subject
to the ability to repay or capitalize inter-company
indebtedness;
(xv) any cancellation of any liability or indebtedness owed to the
Corporations by any other Person except substantially in
accordance with past practices; or
(xvi) any commitment to do any of the foregoing except as
contemplated by this Agreement.
(k) TITLE TO PROPERTIES - Except as disclosed in the December 31, 1997
Balance Sheet or in Schedule 4.1(k), the Corporations have good and
marketable title to all property and assets, including rights under
leases, owned by the Corporations (except as since transferred,
sold or otherwise disposed of in the ordinary course of business
consistent with past practices), free and clear of all Liens except:
(i) statutory Liens securing payments not yet delinquent or
other statutory Liens, the validity of which are being
contested in good faith by appropriate actions;
(ii) purchase money Liens arising in the ordinary course;
(iii) Liens for taxes not yet delinquent;
(iv) Liens reflected in the Financial Statements (which have not
been discharged); or
(v) Liens which in the aggregate do not materially detract from
the value or materially impair the present and continued use
of the properties or assets subject thereto in the usual and
normal conduct of the Business,
<PAGE>
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(the Liens referred to in clauses (i) through (v) being
"Permitted Liens").
(l) ACCOUNTS RECEIVABLE - The accounts receivable reflected on the
December 31 Balance Sheet are, and the accounts and notes
receivable of the Corporations created from and after December 31,
1997 will be, free and clear of any Liens (except for Permitted
Liens). Subject to the treatment of reserves for accounts
receivable as described in Schedule 7.1, all accounts receivable of
the Corporations which will be outstanding on the Closing Date:
(i) will have arisen from bona fide sales of goods or services in
the ordinary course of business and consistent with past
practices;
(ii) are accurately and fairly reflected on the December 31
Balance Sheet or, with respect to accounts receivable created
after December 31, 1997 and through the date of this
Agreement, will have been accurately and fairly reflected in
the books and records of the Corporation and will be
accurately reflected on the Closing Date Balance Sheet; and
(iii) are fully collectible, net of reserves, as at the Closing
Date to the knowledge of the Sellers. For greater certainty,
absent such knowledge the Sellers are not responsible for bad
debts or uncollectible accounts following the Closing Date to
the extent that they exceed such reserves.
(m) BOOKS AND RECORDS - Except for the financial records in respect of
Azerty Mexico maintained by Zarate, Vega y Assoc., S.C. (a Mexican
accounting firm), which records shall, if so requested by the
Purchaser prior to Closing, be delivered to Azerty Mexico at the
Time of Closing, and except as set forth in Schedule 4.1(m), all of
the records, data, information, information services, systems and
controls maintained, operated or used by the Corporations or in
connection with the conduct, accounting or administration of the
Business (including all means of access thereto and therefrom) are
located at the Locations and are under the exclusive ownership or
direct control of the Corporations.
(n) LEASES OF REAL PROPERTY -
(i) Other than the leases and subleases referred to in Schedule
4.1(n) which expire on the dates set out in Schedule 4.1(n),
none of the Corporations is a party to or bound by any lease
or sublease relating to Real Property.
(ii) Neither any of the Corporations nor, to the knowledge of the
Sellers, any other party thereto, is in default or breach in
any material respect of any lease or sublease referred to in
Schedule 4.1(n).
(o) REAL PROPERTY - Except as set out in Schedule 4.1(o), none of the
Corporations owns any Real Property or, except for the leases
referred to in Schedule 4.1(n), any
<PAGE>
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interest in Real Property. Schedule 4.1(o) sets out the registered
owner and the municipal address and full legal description of each
such property. Except as set out in Schedule 4.1(o), on the
Closing Date the Corporations will have good and marketable title
in fee simple to all of such Real Property free and clear of all
Liens (other than Permitted Liens). Except as set out in Schedule
4.1(o), none of the Corporations has granted to any Person any
right of first refusal, right of first opportunity, option or
similar rights to purchase such Real Property or any interest
therein or part thereof. To the knowledge of the Sellers, except
as set out in Schedule 4.1(o), there is no material violation of
any health, safety, zoning, subdivision or building statute or
ordinance affecting such Real Property.
(p) CONDITION OF ASSETS - Subject to the usual maintenance and
replacement practices of the Corporations, all material fixed
assets of the Corporations used in or in connection with the
Business or any part thereof are in good condition, repair and
(where applicable) proper working order, having regard to the use
and age thereof, subject to ordinary wear and tear. All of the
assets that are used in the Business as conducted in the ordinary
course consistent with past practice are owned or leased by the
Corporations, free and clear of all Liens except for Permitted
Liens. The costs of such assets are adequately reflected in the
Financial Statements in accordance with GAAP.
(q) LITIGATION - Except as disclosed in Schedule 4.1(q), there is no
suit, action, dispute, civil or criminal litigation, claim,
arbitration or legal, administrative or other proceeding or
governmental investigation, including appeals and applications for
review (collectively, "Proceedings"), pending or, to the knowledge
of the Sellers, threatened against the Corporations or any of them
or affecting any of their respective assets or properties or the
Business, which if determined adversely to the Corporations, or any
of them, would have a Material Adverse Effect or would affect the
validity or enforceability of this Agreement with respect to the
Sellers or the Corporations, or any of them, or the consummation of
the transactions contemplated hereby. There are no facts or
circumstances known to the Sellers which are likely to give rise to
any such Proceedings. Except as disclosed in Schedule 4.1(q), there
is not presently outstanding against any Corporation any judgment,
execution, decree, injunction, rule or order of any court,
Authority, administrative agency or arbitrator that would have a
Material Adverse Effect.
(r) MATERIAL CONTRACTS - Schedule 4.1(r) sets forth a true and complete
list of each Material Contract to which any of the Corporations is
a party. Each of the Material Contracts set forth or required to
be set forth on such schedule to which any of the Corporations is a
party is a valid and binding obligation of the Corporation which is
a party thereto, and is in full force and effect without amendment
or modification. Each of the Corporations and, to the knowledge of
the Sellers, each other party to such Material Contracts, has
performed in all material respects the obligations required to be
performed by it under such Material Contracts and is not (with or
without the lapse of time or the giving of notice or both) in
breach or default in any
<PAGE>
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material respect thereunder. Schedule 4.1(r) identifies whether
the consent of the other party or parties to any such Material
Contract is required in order for such Material Contract to
continue in full force and effect upon the consummation of the
transactions contemplated by this Agreement.
(s) EMPLOYMENT MATTERS -
(i) The Purchaser has been provided with a complete and accurate
list in all material respects of all employees of each
Corporation as at December 31, 1997 (collectively, the
"Employees"), their respective positions, dates of hire with
such Corporation, or any predecessors of such Corporation,
current salaries, benefits and other remunerations, and dates
of last salary increases, and indicates which employees are
parties to a written agreement of employment (including
confidentiality and non-competition agreements). No other
employees, other than senior executive employees of the
Sellers having general oversight obligations over the
Corporations, are utilized in the operations of the
Corporations.
(ii) Save and except as disclosed in Schedule 4.1(s) or in the
Side Agreement, none of the Corporations or the Sellers is a
party to any agreements with past or present employees,
agents or independent contractors of the Corporations
providing for annual salary and bonuses or other payments in
excess of $100,000. There are no oral contracts of
employment entered into with any employees employed by the
Corporations which are not terminable in accordance with
applicable Law and except as set forth in Schedule 4.1(s) or
in such Side Agreement, none of the Corporations has entered
into any agreements with such employees with respect to the
termination of employment.
(iii) Save and except in respect of the Office Products Long Term
Incentive Plan (but subject to the Sellers' indemnification
responsibility in respect thereof set forth in Section
8.1(e)) and subject to the severance obligations that are in
place as described in Schedule 4.1(s) or in the Side
Agreement, all liabilities in respect of employees have or
shall have been accrued for to the Closing Date, including
income tax and any other employment related legislation,
accrued wages, Taxes, salaries, commissions, vacation pay and
employee benefit and post-retirement and post-employment
benefit plan payments.
(iv) None of the Corporations has made any agreements, whether
directly or indirectly, with any labour union, employee
association or other similar entity or made commitments to or
conducted negotiations with any labour union or employee
association or similar entity with respect to any future
agreements. No trade union, employee association or other
similar entity has any bargaining rights acquired by either
certification or voluntary
<PAGE>
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recognition with respect to the employees of the
Corporations. None of the Corporations is aware of any
current attempts to organize or establish any other labour
union, employee association or other similar entity.
(v) All vacation pay, bonuses (other than bonuses under the
Office Products Long Term Incentive Plan, but subject to the
Sellers' indemnification responsibility in respect thereof
set forth in Section 8.1(e)), commissions and other
emoluments relating to the Employees are accurately reflected
in all material respects and have been accrued in the
financial records of each Corporation in each case in
accordance with U.S. GAAP. There are no post-retirement
benefits offered by the Corporations.
(vi) Save and except in respect of the Office Products Long Term
Incentive Plan (but subject to the Sellers' indemnification
responsibility in respect thereof set forth in Section
8.1(e)) and subject to the Side Agreement, there are no
agreements with any Employee wherein compensation payable to
such Employee is triggered by the transactions contemplated
by this Agreement and payable by any Corporation.
(t) PENSION AND BENEFIT MATTERS - To the knowledge of the Sellers:
(i) Schedule 4.1(t) contains a complete and accurate list of all
Plans. Except as disclosed in Schedule 4.1(t), no Plan has
been terminated or partially terminated and all Plans are
still in force and effect.
(ii) A correct and complete copy of each of the following
documents have been provided to the Purchaser with respect to
each Plan, as applicable: the Plan document; the most recent
actuarial valuation; the most recent summary Plan
description; and the most recent determination letter from
the Internal Revenue Service or other Pension Authority.
(iii) Each Plan intended to qualify under Section 401 of the U.S.
Tax Code, and each related trust intended to qualify under
Section 501 of the U.S. Tax Code, are designed to be in
compliance with the applicable requirements of the U.S. Tax
Code.
(iv) Each Plan intended to qualify under Section 401 of the U.S.
Tax Code and each related trust intended to qualify under
Section 501 of the U.S. Tax Code has received a determination
letter from the Internal Revenue Service that the Plan and
related trust are designed in accordance with applicable
sections of the U.S. Tax Code, or has pending with the
Internal Revenue Service an application for such a
determination.
(v) The Corporations have made all material filings in connection
with the Plans required by the Pension Authorities and
Pension Legislation. The Plans and
<PAGE>
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all investments held by such Plans comply in all material
respects with all applicable Pension Legislation and have
been maintained and administered in compliance with the Plan
Terms.
(vi) All required contributions or premiums to be paid under the
Plans have been fully paid to the date hereof in a timely
fashion in accordance with the applicable Pension Legislation
and Plan Terms. No unfunded liability, solvency deficiency,
unpaid special payment or experience deficiency, whether due
or not exists with respect to the Plans.
(vii) There are no outstanding liabilities under the U.S. Tax Code
or other Tax liabilities with respect to the Plans.
(viii) There are no outstanding actions or claims with respect to
the Plans, other than claims for benefits submitted by
members or beneficiaries in the normal course; there are no
requests for documents; and there is no litigation, legal
action, suit, investigation, claim, counterclaim or
proceeding pending or, to the knowledge of the Sellers,
threatened against or affecting any Plan which could have a
Material Adverse Effect on the Sellers, any Corporation or on
any Plan maintained as of the Closing Date.
(ix) Except as disclosed in Schedule 4.1(t), there is not now and
on the Closing Date there will not be any benefit plans
established by or for the Corporations for any of their
respective employees.
(u) INSURANCE - The Corporations have all of their assets, property and
undertaking and the Business insured against loss or damage by all
insurable hazards or risks on a replacement cost basis and such
insurance coverage will be continued in full force and effect (with
all premiums paid) up to and including the Closing Date. Schedule
4.1(u) sets forth a true and complete list of all insurance
policies maintained by or on behalf of the Corporations, together
with a description of the annual premiums thereon paid by the
Corporations in respect of any policies that are not blanket
policies issued to ACI. To the knowledge of the Sellers, no event
has occurred which limits or impairs the rights of any of the
Corporations under any such insurance policies. Excluding
insurance policies that have expired and been replaced in the
ordinary course of business, no insurance policy has been cancelled
by any of the Corporations within the two years prior to the date
of this Agreement.
(v) INTELLECTUAL PROPERTY - Schedule 4.1(v) lists all material
inventions, patents, trade-marks, copyrights, service marks,
industrial designs, business names and other intellectual property,
whether or not registered, that are owned by or licensed to each
Corporation (collectively, the "Intellectual Property") and, with
respect to licensed Intellectual Property, lists the owner thereof.
The Intellectual Property is free and clear of any claims,
encumbrances or charges. Except as disclosed in Schedule 4.1(v),
there has been no material infringement or violation of any
<PAGE>
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Corporation's rights in and to the Intellectual Property, nor any
claim of adverse ownership, invalidity or other opposition to or
conflict with any of the Intellectual Property which in any case
would have a Material Adverse Effect. To the knowledge of the
Sellers, none of the Corporations has infringed or violated or is
currently infringing or violating any rights under any material
inventions, patents, trademarks, copyrights, service marks,
industrial designs, business names or any other intellectual
property. The Sellers in operating the Business have used the
"Four Square logo" in the Business in the United States for a
period of time in excess of 10 years and none of the Corporations
has received any notice of infringement from the registered owner
thereof; other than providing such representation and warranty as
to no such notice having been received, the Sellers make no
representation and warranty in respect of such logo.
(w) COMPLIANCE WITH LAWS - Each of the Corporations is in compliance in
all material respects with, and will at the Closing Date have filed
all reports or returns required under, all Laws applicable to it
(except for Environmental Laws, which are covered in Section
4.1(z)), except where non-compliance would not have a Material
Adverse Effect.
(x) CONTRACTS WITH AFFILIATES - Except as set forth in Schedule 4.1(x),
there are no existing Material Contracts to which any Corporation
is a party in which any of the Sellers, any director or officer of
such Corporation or any other Person not dealing at arm's length
with the Sellers, the Corporations or any of their respective
directors or officers has an interest, whether directly or
indirectly, including arrangements for the payment of management or
consulting fees. Schedule 4.1(x) sets forth a description of all
management, consulting, services and other similar arrangements of
any kind between any of the Corporations, on the one hand, and the
Sellers or any of their respective affiliates, on the other hand,
(but excluding the purchase and sale of inventory between the
Corporations, the Seller and their respective affiliates) including
a description of the services provided and the amount of payments
or other consideration provided by either party in respect of such
arrangements for the 1997 year.
(y) CORPORATE RECORDS - The minute books of each Corporation contain,
and will contain at the Closing Date, accurate and complete minutes
of all meetings and resolutions of its directors and shareholders.
(z) ENVIRONMENTAL MATTERS - Except as disclosed in Schedule 4.1(z):
(i) The Business has been and is being carried on in compliance
with all applicable Environmental Laws, Environmental Orders
and Environmental Permits, except where non-compliance would
not have a Material Adverse Effect. The Sellers do not know
of any fact which would give rise to a notice of
non-compliance with any Environmental Laws or Environmental
Orders except where non-compliance would not have a Material
Adverse Effect.
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(ii) The Corporations possess all Environmental Permits necessary
for their continued operations, except for those
Environmental Permits, the absence of which would not result
in the inability of the Corporations to operate the Business
as it is presently conducted. Schedule 4.1(z) contains a list
of all of the material Environmental Permits held by the
Corporations. All such Environmental Permits are valid in all
material respects.
(iii) None of the Corporations has ever been cited, found liable,
convicted or otherwise held responsible for any material
non-compliance with any Environmental Law in connection with
the Business or received any written notice of any Remedial
Requirement in connection with the Real Property and, to the
knowledge of the Sellers, no facts, circumstances or
conditions exist that would reasonably be expected to give
rise to a Remedial Requirement.
(iv) The Corporations have maintained and continue to maintain in
all material respects environmental records relating to the
Business in the manner and for the time periods required by
Environmental Laws.
(v) No judicial or administrative proceedings are pending or, to
the knowledge of the Sellers, threatened against the
Corporations or the Sellers relating to the Business or the
Real Property that allege the violation of or seek to impose
liability pursuant to any Environmental Law and, there are no
investigations pending or, to the knowledge of the Sellers,
threatened against the Real Property or the Sellers or the
Corporations with respect to the Business, which in any case
could give rise to Remedial Requirements.
(vi) Other than in compliance with Environmental Laws, there is
not now, nor, to the knowledge of the Sellers, has there been
in the past, on, in or under any of the Real Property owned,
leased or used by any of the Corporations (A) any
asbestos-containing materials, (B) any polychlorinated
biphenyls; or (C) any radioactive substances.
(vii) To the knowledge of Sellers, there exists no facts,
circumstances or conditions relating to the Business or the
Real Property that could reasonably be expected to give rise
to material liabilities under Environmental Laws or an
obligation to perform Remedial Requirements.
(viii) The Sellers have provided the Purchaser with copies of all
environmentally related audits, assessments, studies,
reports, analyses, and results of investigations of the Real
Property or the Business that are in the Sellers' possession,
custody or control.
The Purchaser and United acknowledge that they have reviewed the
executive
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summaries of the Phase I environmental reports relating
to work performed on their behalf in respect of the Real Property
and that there is nothing contained therein which has led either
the Purchaser or United at this time to conclude either (i) that
any work needs to be performed in connection with the Real Property
in order for the Sellers' representation and warranty contained in
Section 4.1(z) to be true and correct or (ii) that there is
presently a Remedial Requirement entitling the Purchaser to
indemnification pursuant to Section 8.1(d); provided, however, that
notwithstanding the foregoing, the Sellers acknowledge and agree
that (i) the executive summaries of the Phase I assessments by
their terms do not purport to be complete in all material respects,
(ii) as of the date of this Agreement, neither United nor the
Purchaser has received the final completed Phase I assessments
relating to the Real Property, and (iii) certain potential
asbestos-containing building materials and adjacent property
underground storage tank removals are referenced in such executive
summaries, and nothing contained in this paragraph shall otherwise
limit the Purchaser's right to indemnification relating to the
matters described in such summaries or for Remedial Requirements
that may be outside the knowledge of the Purchaser or United as of
the date of this Agreement or that may hereinafter become necessary.
(aa) BUSINESS - Save and except for the systems storage division and
paper operations of Axidata and its subsidiaries, ACI does not
carry on any business that competes with or is similar to the
Business in the United States or Mexico other than through the
Corporations.
(bb) FINDER'S OR BROKER'S FEES - Other than Nesbitt Burns Inc. (whose
fees and expenses shall be paid by and be the sole obligation of
the Sellers), no broker or finder has acted directly or indirectly
for or on behalf of the Sellers or the Corporations, nor have the
Sellers or the Corporations incurred any other obligation to pay
any brokerage, finder's fee or other commission in connection with
the transactions contemplated by this Agreement.
(cc) YEAR 2000 COMPLIANCE - Except as set forth on Schedule 4.1(ac), to
the knowledge of Sellers (after due inquiry of the IT Director of
Azerty), all of the computer software programs used in the Business
in the United States and Mexico operate accurately in the manner in
which they were intended with regard to date-related operations
when given a valid date containing century, year, month and day.
For the purposes of this Section 4.1(ac), the accurate operation of
the software shall require (i) that calculations using dates must
execute using a four digit year; (ii) that all functions, including
but not limited to entry, inquiry, maintenance, storage, update and
transmission of information, must support four digit year
processing; (iii) that interfaces and reports must support four
digit year processing; (iv) successful translation into year 2000
with the correct system date (e.g. 1/1/2000) without human
intervention; (v) processing with a four digit year after
transition to and beyond the year 2000 without human intervention;
and (vi) providing correct results in forward and backward date
calculations spanning century boundaries. The
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Sellers make no representation and warranty in respect of the
hardware used in the Business in the United States or Mexico.
(dd) BUSINESS PURCHASE PRACTICES - To the knowledge of Sellers, the
Corporations have not in the last three years sold any inventory of
the Business that was stolen or counterfeit. To the extent that the
Corporations acquire inventory for resale from sources other than
the manufacturer, such alternate sourcing arrangements do not cause
the Corporations to be in breach of their agreements with vendors.
4.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser and
United hereby jointly and severally represent and warrant to the Sellers (and
acknowledges that the Sellers are relying on the representations and
warranties in completing the transactions contemplated hereby) that:
(a) CORPORATE - Each of the Purchaser and United is a corporation duly
organized and validly existing under the laws of its jurisdiction
of incorporation and has the requisite corporate power and
authority to enter into this Agreement, the Side Agreement and the
Intellectual Property Agreement and to perform its respective
obligations hereunder and thereunder.
(b) ENFORCEABILITY - The execution and delivery of this Agreement, the
Side Agreement and the Intellectual Property Agreement by the
Purchaser and by United and the performance by the Purchaser and by
United of its respective obligations hereunder and thereunder have
been duly and validly authorized by all necessary corporate and
stockholder action on the part of the Purchaser and United. Each
of this Agreement, the Side Agreement and the Intellectual Property
Agreement constitutes a legal, valid and binding obligation of the
Purchaser and United, enforceable against the Purchaser and United
in accordance with its terms (subject to bankruptcy,
reorganization, insolvency, moratorium, and other laws relating to
or affecting creditors' rights generally and subject to the
availability of equitable remedies). The execution and delivery of
this Agreement, the Side Agreement and the Intellectual Property
Agreement by the Purchaser and United, the consummation of the
transactions contemplated hereby and thereby and the fulfilment by
the Purchaser and United of the terms, conditions and provisions
hereof and thereof will not:
(i) contravene or violate or result in the breach in any material
respect (with or without the giving of notice or lapse of
time, or both) or acceleration of any obligations of the
Purchaser or United under:
(A) any Laws applicable to the Purchaser or United, subject
to receipt of any required Regulatory Approvals;
(B) any judgment, order, writ, injunction or decree of any
court which is presently applicable to the Purchaser or
United;
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(C) the articles, by-laws or any resolutions of the
Purchaser or United or any amendments thereto or
restatements thereof; or
(D) the provisions of any material agreement to which the
Purchaser or United is a party or by which either the
Purchaser or United is bound that would have a material
adverse effect on the Purchaser's or United's ability to
consummate its respective obligations hereunder (except
for those under which consent shall be obtained at or
prior to Closing).
(ii) result in the creation or imposition of any Lien upon any of
the assets of the Purchaser or United, which, individually or
in the aggregate, would have a material adverse effect on the
Purchaser's or United's ability to consummate its respective
obligations hereunder; or
(iii) require the Purchaser or United to obtain any consent,
approval, or action of, or make any filings with or give any
notice to, any Person, except:
(A) the filing of a premerger notification report under the
HSR Act,
(B) as disclosed in Schedule 4.2(b)(iii), and
(C) those which the failure to obtain, make, or give,
individually or in the aggregate, would not have a
material adverse effect on the validity or
enforceability of this Agreement or on the ability of
the Purchaser or United to perform its respective
obligations under this Agreement.
4.3 SURVIVAL OF SELLERS' REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Sellers contained in this Agreement
(and, if applicable, in the Side Agreement and the Intellectual Property
Agreement) shall survive the Closing for the benefit of the Purchaser as
follows:
(a) as to the representations and warranties contained in section
4.1(i) and section 4.1(t)(iii) and (vii), until the date following
expiration of the applicable Tax statute of limitations with
respect to the relevant taxable period (including all periods of
extension, whether automatic or permissive);
(b) as to the representations and warranties contained in sections
4.1(d) and 4.1(e), indefinitely;
(c) as to the representations and warranties contained in section
4.1(z), for a period of five years, unless a BONA FIDE notice of a
claim shall have been made in writing before the expiry of that
period, in which case the representation and warranty to
<PAGE>
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which such notice applies shall survive in respect of that claim
until the final determination or settlement of the claim;
(d) as to all other matters, for a period of two years unless a BONA
FIDE notice of a specific claim shall have been given in writing
before the expiry of that period, in which case the representation
and warranty to which such notice applies shall survive in respect
of that claim until the final determination or settlement of that
claim.
4.4 SURVIVAL OF PURCHASER'S AND UNITED'S REPRESENTATIONS AND
WARRANTIES. The representations and warranties of the Purchaser and United
contained in this Agreement (and if applicable, in the Side Agreement and
the Intellectual Property Agreement) shall survive the Closing for the
benefit of the Sellers for a period of two years, unless a BONA FIDE notice
of specific claim shall have been made in writing before the expiry of that
period, in which case the representation and warranty to which such notice
applies shall survive in respect of that claim until the final determination
or settlement of that claim.
ARTICLE 5 - COVENANTS OF THE PARTIES PRIOR TO CLOSING
5.1 OPERATIONS BEFORE CLOSING. Except as otherwise contemplated or
permitted by this Agreement (and except to the extent that Sellers reasonably
believe upon advice of counsel that compliance with the following would
breach applicable Law including, without limitation, the HSR Act), during the
period from the date of this Agreement to the Time of Closing, the Sellers
shall, and shall cause the Corporations to:
(a) promote the interest and maintain the goodwill of the Corporations,
and of all persons having business relations with the Corporations
and shall continue to operate the Business in the ordinary course
consistent with past practice, including paying and satisfying all
Debts and obligations of the Corporations as such Debts and
obligations mature;
(b) not, without the prior written consent of the Purchaser, perform or
make any material act or decision to enter into any contract,
commitment or transaction not in the ordinary course of business
and which would have a Material Adverse Effect, or which would
constitute a breach of the covenants, representations or warranties
of the Sellers contained in this Agreement or which would cause
such covenants, representations and warranties to be untrue in any
material respect at the Time of Closing, including without
limitation:
(i) entering into commitments, acquiring or initiating new
businesses or undertakings or assuming any material
commitment or obligation (by written agreement or otherwise)
or selling, encumbering or otherwise disposing or
distributing any material assets except in the ordinary
course of business consistent with past practice. For
purposes hereof, a commitment, obligation or asset will be
deemed to be material if, among other things, it
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alone has a value in excess of $50,000 or all such
commitments, obligations and assets have a value of more than
$500,000 in the aggregate;
(ii) entering into or amending any employment, labour, consulting
or service contracts or Plan except in the ordinary course of
business consistent with past practice;
(iii) terminating any employment agreements or giving notice of
termination except in the ordinary course of business
consistent with past practice;
(iv) initiating any litigation to which the Corporations may be or
may become a party;
(v) entering into any transaction with any Person or Persons with
whom they are not acting at arm's length;
(vi) incurring any additional Debt (other than current liabilities
incurred in the normal course of operations consistent with
past practise) or guarantees of such Debt which, in the
aggregate, exceeds $500,000;
(vii) amending, revising, renewing or terminating any material
lease, licence or any other Material Contract to which the
Corporations or any of them may be a party or which may
affect the Business; or
(viii) authorizing, agreeing or otherwise becoming committed to do
any of the foregoing,
(c) continue to maintain in full force and effect all policies of
insurance (or replacement policies) currently in effect in respect
of the Business and give all notices and present all claims under
all policies of insurance in a due and timely fashion;
(d) use their commercially reasonable efforts to ensure that there will
not be any material adverse change in the condition (financial or
otherwise) or operations of the business or assets of the
Corporations other than changes in the ordinary and normal course
of business;
(e) ensure that, save and except for capitalizing inter-company loans,
none of the Corporations will:
(i) issue, sell or declare a dividend or make a distribution
(whether in cash, stock or other property) with respect to
any shares in its capital stock, or issue or sell any
warrants, bonds, debentures or other securities of the
Corporations or issue, grant or deliver any right, option or
other commitment for the issuance of any such other
securities;
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(ii) suffer a loss, or waive any rights of substantial value, or
enter into any commitment or transaction, in all cases not in
the ordinary and normal course of business consistent with
past practice;
(iii) amend or change or take any action to amend or change its
constituent documents or by-laws;
(iv) merge or consolidate with any other Person;
(v) make any settlement or compromise any Tax liability, change
any Tax election or make any new Tax election or Tax method
of accounting;
(vi) except as required by GAAP or applicable Law, or except as
contemplated by this Agreement, change any of the material
accounting principles or practices used by it; or
(vii) authorize or agree or otherwise become committed to do any of
the foregoing; and
(f) shall cause the Corporations to pay all accounts payable and
collect all accounts receivable in a timely manner in the ordinary
course of business consistent with past practice.
5.2 APPROVALS AND CONSENTS.
(a) The Sellers shall forthwith use commercially reasonable efforts to
obtain as of the Time of Closing all Consents and Regulatory Approvals.
(b) The Purchaser shall forthwith file the notices, take all steps
reasonably necessary and in the Purchaser's control and use commercially
reasonable efforts to obtain as of the Time of Closing all Regulatory
Approvals and all consents disclosed in Schedule 4.2(b)(iii).
(c) The fees and expenses incurred by each party in connection with
obtaining any Consents and Regulatory Approvals necessary for the
consummation of the transactions contemplated by this Agreement shall be the
sole responsibility of the party incurring such fees and expenses, except
that the filing fees and expenses (excluding legal fees but including the
fees and expenses of any other consultants or experts mutually engaged to
assist in the preparation, negotiation or defense of the filing under the HSR
Act) incurred in connection with the filing of a premerger notification under
the HSR Act shall be borne equally between the Sellers, on the one hand, and
the Purchaser, on the other hand.
5.3 COMPETITIVE INFORMATION. The Sellers represent and warrant that
save and except for the Not Yet Delivered Competitive Information (within the
meaning of Section 5.6), the Sellers have made available all documents which
the Sellers view as containing Competitive Information to Lucas and Ernst &
Young LLP ("E&Y"). The Purchaser acknowledges that Lucas and E&Y have
<PAGE>
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reviewed such Competitive Information and that such Competitive Information
is subject, in the case of Lucas, to the terms of the confidentiality
agreement dated as of August 5, 1997 between ACI and Lucas and, in the case
of E&Y, to a confidentiality agreement dated May 5, 1997 between the
Purchaser and ACI and which requires the Purchaser's representatives
including E&Y to maintain confidentiality (collectively the "Confidentiality
Agreements"). Notwithstanding the provisions of the Confidentiality
Agreements, each of Lucas and E&Y shall be permitted to discuss and provide
the substance of its analysis of the Competitive Information (including the
Not Yet Delivered Competitive Information) to the Purchaser, on a "no names"
basis and in compliance with all applicable Law (including, without
limitation, the HSR ACT) as advised by counsel, subject to the prior review
of the Sellers of any specific Competitive Information (including the Not Yet
Delivered Competitive Information) to be shared by Lucas or E&Y and further
subject to the consent of the Sellers, acting reasonably, as to whether to
allow such information to be shared prior to the receipt of all required
Regulatory Approvals. Once all required Regulatory Approvals have been
obtained, the Sellers shall grant access to and a reasonable opportunity to
review the Competitive Information (including the Not Yet Delivered
Competitive Information) only to (i) Randall W. Larrimore, Daniel H. Bushell,
Steven R. Schwarz and Mike Rowsey (together with those of their reports who
have specialized expertise in the area under consideration and whose input is
reasonably required by such named individuals in respect of such area under
consideration), (ii) Frederick B. Hegi, Jr., Daniel J. Good and Gary G.
Miller, being members of the Executive Committee of United and (iii) Otis H.
Halleen, General Counsel of United and the Purchaser (all of such named
individuals and such reports are collectively the "Specified Individuals") on
behalf of the Purchaser for a period of five Business Days prior to the
Closing Date. The Purchaser shall cause such the Specified Individuals not to
share such Competitive Information with any other employee, officer, director
or shareholder of the Purchaser or any other Person prior to Closing.
5.4 CONFIDENTIAL INFORMATION. The Purchaser acknowledges that the
Sellers and the Corporations have delivered to the Purchaser and to Lucas and
E&Y a list of material documents of the Corporations which have not been
disclosed to the Purchaser or its representatives on the grounds that the
Sellers view them as containing Confidential Information (save and except for
Confidential Information included in the Not Yet Delivered Competitive
Information). In the event that the Not Yet Delivered Competitive Information
contains Confidential Information, the Sellers shall deliver to the Purchaser
a revised list of Confidential Information, on or before February 13, 1998,
at the same time as it delivers the Not Yet Delivered Competitive
Information. The Sellers in preparing such list jointly and severally
represent and warrant that they have disclosed such information regarding the
subject matter and substance of such agreements as in their opinion could
reasonably be disclosed without violating any applicable confidentiality
covenant. Upon the request of the Purchaser for a document set out in such
list, the Sellers shall use commercially reasonable efforts to obtain the
consent of the third party in favour of whom the Confidential Information
covenant operates to disclose such Confidential Information to the Purchaser,
and the Specified Individuals on behalf of the Purchaser shall have a period
of five Business Days prior to the Closing Date to review all such
Confidential Information. The Purchaser shall cause such Specified
Individuals not to share such Confidential Information with any other
employee, officer, director or shareholder of the Purchaser or any other
Person prior to Closing.
5.5 CONSULTANT OPINIONS. The Purchaser and United jointly and severally
represent
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and warrant to the Sellers that Lucas and E&Y have advised the Purchaser that
they have reviewed and analyzed the Competitive Information (other than the
Not Yet Delivered Competitive Information) and that, based on such review and
analysis by Lucas and E&Y, the Purchaser and United are of the view (subject
to Section 6.1(f)) that nothing contained therein would constitute or result
in a Material Adverse Effect or would constitute or result in a material
impediment to the integration of the Business into the business of the
Purchaser or the prospects of such combined business.
5.6 NEW COMPETITIVE INFORMATION. Notwithstanding anything to the
contrary contained in this Agreement, Sellers advise that they have not to
date provided to E&Y or to Lucas certain agreements included in the
Competitive Information (the "Not Yet Delivered Competitive Information").
Sellers covenant to deliver to Lucas all agreements included in the Not Yet
Delivered Competitive Information not later than February 13, 1998 as well as
copies thereof with the Competitive Information removed therefrom to Weil,
Gotshal & Manges LLP. Not later than February 20, 1998, the Purchaser and
United shall determine whether they can confirm in writing to the Sellers
that Lucas has reviewed and analyzed the Not Yet Delivered Competitive
Information and that, based on such review and analysis by Lucas, the
Purchaser and United are of the view (subject to Section 6.1(f)) that nothing
contained therein would constitute or result in a Material Adverse Effect or
would constitute or result in a material impediment to the integration of the
Business into the business of the Purchaser or the prospects of such combined
business. The Purchaser and United shall act reasonably in reaching such
determination. Should the Purchaser and United not provide such confirmation
by such date, their only remedy shall be to terminate the Agreement and the
Side Letter with no party being liable to any other party in respect thereof.
5.7 TRANSITIONAL SERVICES. The Sellers have proposed a form of
transitional services agreement in respect of the services of Bruce
McGroarty. The Purchaser and United shall have until February 20, 1998 to
settle the form of such transitional services agreement with the Sellers and
agree that they shall negotiate in good faith the terms thereof. If the
parties are unable to settle such transitional services agreement by such
date, the services of Bruce McGroarty shall not be provided to the Purchaser
or the Corporations following the Closing Date. The parties acknowledge that
neither the execution and delivery of such a transitional services agreement
nor the provision by the Sellers to the Purchaser or the Corporations of the
services of Bruce McGroarty are a condition precedent to Closing.
ARTICLE 6 - CONDITIONS PRECEDENT TO THE PERFORMANCE
BY THE PARTIES OF THEIR OBLIGATIONS UNDER THIS AGREEMENT
6.1 CONDITIONS FOR THE BENEFIT OF THE PURCHASER. The obligation of the
Purchaser to complete the purchase of the Purchased Shares hereunder shall be
subject to the satisfaction of, or compliance with, at or before the Time of
Closing, each of the following conditions (each of which is hereby
acknowledged to be inserted for the exclusive benefit of the Purchaser):
(a) REPRESENTATIONS AND WARRANTIES - All representations and warranties
of the Sellers made in or pursuant to this Agreement (and, if
applicable, the Side Agreement) shall be true and correct in all
material respects with the same force and effect as if made
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at and as of the Time of Closing, and the Sellers shall have
delivered to the Purchaser at the Time of Closing a certificate
dated the Closing Date, duly executed by a senior officer of each
of the Sellers confirming to his or her knowledge, information and
belief, the truth and accuracy of such representations and
warranties at the Time of Closing.
(b) PERFORMANCE OF OBLIGATIONS - The Sellers shall have performed or
complied with, in all material respects, all of their obligations,
covenants and agreements in this Agreement and the Side Agreement
which are to be performed or complied with by the Sellers at or
prior to the Time of Closing.
(c) APPROVALS AND CONSENTS -
(i) All Regulatory Approvals required in connection with the
completion of any of the transactions contemplated by this
Agreement, the Side Agreement or the Intellectual Property
Agreement shall have been obtained and complied with on or
before the Time of Closing.
(ii) All Consents, being those described in Schedule 6.1(c), shall
have been obtained.
(iii) The Purchaser and the Sellers and any other Person in such
party's group required in connection with the transactions
contemplated by this Agreement to file a Notification and
Report Form with the United States Department of Justice and
the Federal Trade Commission pursuant to the HSR Act shall
have made such filing. All applicable waiting periods with
respect to such filing shall have expired or been terminated,
and no actions shall have been instituted challenging or
seeking to enjoin the consummation of the transactions
contemplated by this Agreement.
(d) NO ACTION TO RESTRAIN - No action or proceeding shall be pending or
threatened by any Authority or any other Person to restrain or
prohibit the completion of the transactions contemplated by this
Agreement.
(e) NO MATERIAL ADVERSE CHANGE - Except as has been specified in this
Agreement, since the date of this Agreement there shall not have
been any change in the business of the Corporations or any other
event or circumstance that would have a Material Adverse Effect.
(f) DUE DILIGENCE - All Confidential Information and Competitive
Information shall have been provided to the Purchaser and its
representatives for review in accordance with the terms of this
Agreement. In addition, the Purchaser shall have confirmed, acting
reasonably, that nothing contained in the Competitive Information
or Confidential Information would constitute or result in a
Material Adverse Effect or would constitute or result in a material
impediment to the integration of the Business
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into the business of the Purchaser or the prospects of such
combined businesses, having regard to the following provisions of
this Section 6.1(f). For purposes of the foregoing, the Purchaser
acknowledges that, as described in Section 5.3 and Section 5.5,
certain of its representatives already have had access to the
Competitive Information and have analyzed it and given the
Purchaser their views as to the condition in this Section 6.1(f)
having been satisfied and that the Purchaser's review of that
Competitive Information shall be confirmatory only of the
completeness of such review and analysis. Should the Purchaser wish
not to close the transactions in reliance on this Section 6.1(f),
it shall provide the Sellers with a written statement explaining
(i) with respect to the Competitive Information; why it does not
agree with the analysis of Lucas and E&Y, and/or (ii) with respect
to Confidential Information, the reasons that the Purchaser,
following its and its representatives' review and analysis of such
Confidential Information, acting reasonably has concluded that
information contained in such Confidential Information would
constitute or result in a Material Adverse Effect or would
constitute or result in a material impediment to the integration of
the Business with the business of the Purchaser or the prospects of
such combined businesses, and each such statement shall contain
sufficient detail in order that the Sellers shall have the
opportunity to challenge the Purchaser's conclusion. The Purchaser
shall also promptly provide to the Sellers (or, to the extent
required by applicable Law, to a representative designated by the
Sellers and to be bound by a confidentiality agreement in form and
substance similar to the Confidentiality Agreement executed and
delivered by Lucas) full access to the information used, analysis
conducted and all reports prepared by Lucas and E&Y and all
information and analysis completed by the Purchaser that form the
basis of the Purchaser's conclusion that it is entitled not to
close in reliance on the conditions contained in this Section
6.1(f).
(g) INTELLECTUAL PROPERTY AGREEMENT - The Intellectual Property
Agreement shall have been executed and delivered by ACI and
Eurozerty B.V. (and , if necessary, ACSC).
(h) CLOSING DELIVERIES - The Purchaser shall have received all stock
certificates, instruments and other documents required to be
delivered by the Sellers pursuant to Article 3.
(i) FINANCING - The Purchaser shall have received the proceeds of the
financing from such Person who agrees to finance the acquisition by
the Purchaser of the Purchased Shares (the "Purchaser's Lender"),
provided that, notwithstanding the foregoing, if the Purchaser has
not received such proceeds, this provision shall apply so as to
entitle the Purchaser not to close only if the Purchaser fails to
secure financing for the transaction as a result of any of the
following: (i) the Purchaser's Lender becomes aware after the date
hereof of any information or other matter that is not known to the
Purchaser as at the date hereof and in the reasonable judgment of
Purchaser's Lender has resulted or could result in any change in
the business of the Corporations that would have a Material Adverse
Effect; (ii) there shall have been
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any litigation commenced or threatened which challenges the
financing or which, if successful, would in the reasonable judgment
of the Purchaser's Lender have a Material Adverse Effect; (iii)
other than in the ordinary course of business, there shall have
been a material increase in the liabilities of the Corporations,
liquidated or contingent, whether or not reflected on the Closing
Date Balance Sheet, or a material decrease in their assets; (iv)
there shall have been a suspension in the trading in any equity
securities of United Stationers Inc. by the Securities and Exchange
Commission or the Nasdaq National Market (other than any such
suspension initiated at the request of or otherwise caused by
actions of United Stationers Inc.) or trading in securities
generally shall have been suspended on any principal United States
stock exchange; (v) there shall have declared a banking moratorium
by the United States or any state banking authority; or (vi) there
shall have occurred a material disruption of or material adverse
change in financial, banking or capital market conditions that
materially impairs the ability of the Purchaser's Lender to
syndicate the applicable credit facilities.
(j) INTERCOMPANY INDEBTEDNESS - All intercompany indebtedness
(including deferred tax accounts as shown on internal management
reporting statements) between either of the Sellers or any of their
affiliates, on the one hand, and any of the Corporations, on the
other hand, shall have been paid in full to affiliates or
capitalized as additional shares issued only to one or both of the
Sellers and included in the Purchased Shares and the Sellers and
their respective affiliates, as applicable, shall have executed and
delivered to Purchaser a release in respect thereof in form and
substance reasonably satisfactory to Purchaser.
(k) TAX MATTERS - On the Closing Date, Sellers shall cause the
termination and cancellation of any duties and obligations of each
of the Corporations under any tax sharing, tax allocation, tax
indemnity or other similar agreement and shall cause the release of
each of the Corporations from any liabilities with respect to any
such agreement. Purchaser shall have received reasonably
satisfactory substantiation that no withholding Taxes are
applicable to any payments under this Agreement (including
affidavits pursuant to Section 1445(b)(2) or Section 1445(b)(3) of
the U.S. Tax Code).
6.2 CONDITIONS FOR THE BENEFIT OF THE SELLERS. The obligation of the
Sellers to complete the sale of the Purchased Shares hereunder shall be
subject to the satisfaction of, or compliance with, at or before the Time of
Closing, each of the following conditions (each of which is hereby
acknowledged to be inserted for the exclusive benefit of the Sellers):
(a) REPRESENTATIONS AND WARRANTIES - All representations and warranties
that the Purchaser and United made in or pursuant to this Agreement
(and, if applicable, the Side Agreement) shall be true and correct
in all material respects with the same force and effect as if made
at and as of the Time of Closing, and each of the Purchaser and
United shall have delivered to the Sellers at the Time of Closing
its certificate dated the Closing Date, duly executed by a senior
officer of the Purchaser
<PAGE>
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or United, as applicable, confirming to his or her knowledge,
information and belief, the truth and accuracy of such
representations and warranties at the Time of Closing.
(b) PERFORMANCE OF OBLIGATIONS - The Purchaser and United shall have
performed or complied with, in all material respects all of its
obligations, covenants and agreements in this Agreement and the
Side Agreement which are to be performed or complied with by the
Purchaser or United at or prior to the Time of Closing.
(c) NO ACTION TO RESTRAIN - No action or proceeding shall be pending or
threatened by any Authority or any other Person to restrain or
prohibit the completion of the transactions contemplated by this
Agreement.
(d) INTELLECTUAL PROPERTY AGREEMENT - The Intellectual Property
Agreement shall have been executed and delivered by the Purchaser.
(e) CLOSING DELIVERIES - The Sellers shall have received the Purchase
Price and other documents required to be delivered by the Purchaser
pursuant to Article 3.
6.3 TERMINATION BY PURCHASER. If any of the conditions set forth in
section 6.1 have not been fulfilled, performed or satisfied at or prior to
the Closing Date, the Purchaser may, by written notice to the Sellers
terminate all of its obligations hereunder and the Purchaser and United shall
be released from all their obligations under this Agreement. Any of such
conditions may be waived in whole or in part by the Purchaser by instrument
in writing given to the Sellers without prejudice to any of the Purchaser's
rights of termination in the event of non-performance of any other condition,
obligation or covenant in whole or in part. Notwithstanding anything in this
section 6.3 to the contrary, the Purchaser shall not have the right to
terminate this Agreement in accordance with this section 6.3 in the event
that the Purchaser's or United's material breach of any provision hereof
causes or results in the failure of any of the conditions set forth in
section 6.1.
6.4 TERMINATION BY SELLERS. If any of the conditions set forth in
section 6.2 have not been fulfilled, performed or satisfied at or prior to
the Closing, the Sellers may, by written notice to the Purchaser, terminate
all of their obligations hereunder and the Sellers shall be released from all
their obligations under this Agreement. Any of such conditions may be waived
in whole or in part by the Sellers by instrument in writing to the Purchaser,
without prejudice to any of the Sellers' rights of termination in the event
of non-performance of any other condition, obligation or covenant in whole or
in part. Notwithstanding anything in this section 6.4 to the contrary, the
Sellers shall not have the right to terminate this Agreement in accordance
with this section 6.4 in the event that the Sellers' material breach of any
provision hereof causes or results in the failure of any of the conditions
set forth in section 6.2.
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ARTICLE 7 - COVENANTS OF THE PARTIES FOLLOWING CLOSING
7.1 CLOSING DATE BALANCE SHEET.
(a) The parties acknowledge that the Estimated Purchase Price was
established based on the Net Tangible Assets reflected on the September 30
Balance Sheet. Within 60 days following the Closing, the Purchaser on behalf
of the Corporations shall prepare and deliver to each of the Sellers the
combined balance sheet including each of the Corporations audited by Price
Waterhouse ("PW") as of the Closing Date (as so audited, the "Closing Date
Balance Sheet"). The Closing Date Balance Sheet shall be prepared and audited
in accordance with GAAP consistent with the accounting policies, practices
and procedures for the Corporations used in connection with preparation of
the September 30 Balance Sheet and the December 31 Balance Sheet, except as
may otherwise be required pursuant to this Article 7 or Schedule 7.1 and
shall be audited in accordance with Canadian generally accepted auditing
standards and accompanied by a written opinion thereon. Each of the Purchaser
and the Sellers shall have the right to consult, at reasonable times and with
reasonable notice, with PW and appropriate representatives of the
Corporations during the preparation and audit of the Closing Date Balance
Sheet. The Closing Date Balance Sheet (x) shall be prepared without regard to
(A) any effect from the Closing of the transactions contemplated hereby or
any financing relating thereto, (B) the Purchaser's existing or future plans
to modify or adjust the business, operations or accounting practices of the
Corporations after Closing or (C) adjustments relating to the recording of
the acquisition by the Purchaser and (y) shall reflect all proposed audit
adjustments determined by PW to be necessary in order that the Closing Date
Balance Sheet will comply with GAAP on a basis consistent with such prior
accounting policies, practices and procedures but subject to this Article 7
and Schedule 7.1.
(b) The Closing Date Balance Sheet shall reflect the basis of
presentation of the Closing Date Balance Sheet that is described in Schedule
7.1, together with the report of PW setting forth a calculation of Net
Tangible Assets of the Corporations on a combined basis, as determined from
the Closing Date Balance Sheet. If PW cannot deliver the opinion required by
Section 7.1(a) solely because of the adjustments required by Schedule 7.1,
then PW also shall prepare and deliver with its report the Adjusted Closing
Date Balance Sheet and, in such case, the calculation of Net Tangible Assets
shall be based on the Adjusted Closing Date Balance Sheet.
(c) Following the delivery of the Closing Date Balance Sheet (and, if
applicable, the Adjusted Closing Date Balance Sheet) to the Sellers and the
Purchaser, the Purchaser shall cause the Corporations to provide E&Y on
behalf of the Purchaser with access to the working papers of PW relating
thereto.
(d) In the event that the Purchaser, as a result of E&Y's review,
objects in writing (stating with reasonable specificity the reasons for its
objections) within 10 Business Days following receipt of the Closing Date
Balance Sheet and PW's report as to the amount of the Net Tangible Assets,
(and, if applicable, the Adjusted Closing Date Balance Sheet) then E&Y and
the Purchaser, on the one hand, and PW and the Sellers, on the other hand,
shall in good faith attempt to agree upon the amount of Net Tangible Assets
(and, if applicable, the Adjusted Closing Date Balance Sheet); PROVIDED, that
if the Purchaser and E&Y, on the one hand, and PW and the Sellers, on the
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other hand, are unable to so agree within 25 Business Days after delivery to
the Sellers of the Closing Date Balance Sheet and the PW report as to the Net
Tangible Assets (and, if applicable, the Adjusted Closing Date Balance
Sheet), then the Sellers and the Purchaser shall retain the independent
chartered accounting firm of Deloitte & Touche LLP (the "Neutral Auditors")
to resolve the differences on specific points of disagreement and to provide
an opinion on a revised Closing Date Balance Sheet (and, if applicable, the
Adjusted Closing Date Balance Sheet), together with a report of the Neutral
Auditors setting forth a revised calculation of Net Tangible Assets, in each
case prepared in accordance with the principles set forth in this Section 7.1
and Schedule 7.1. The fees of the Neutral Auditors shall be shared equally
between the Sellers, on the one hand, and the Purchaser, on the other hand,
and the decision of the Neutral Auditors shall be conclusive, final and
binding upon the Sellers and the Purchaser. The fees and expenses of PW shall
be the sole responsibility of the Sellers and the fees and expenses of E&Y
shall be the sole responsibility of the Purchaser.
(e) As used in this Agreement, "Net Tangible Assets" means, as of the
Closing Date and immediately prior to the consummation of the transactions
contemplated hereby, as derived from the Closing Date Balance Sheet (or, if
applicable, the Adjusted Closing Date Balance Sheet), an amount equal to
total assets minus goodwill, minus total current liabilities, minus long-term
debt and other long-term liabilities.
7.2 ADJUSTMENTS. If the Net Tangible Assets of the Corporations as
shown on the Closing Date Balance Sheet (or, as applicable, the Adjusted
Closing Date Balance Sheet) is more or less than $39,121,360, being the Net
Tangible Assets of the Corporations set out in the September 30 Balance
Sheet, the Purchase Price shall be decreased by an amount equal to the
difference if the Net Tangible Assets reflected on the Closing Date Balance
Sheet (or, as applicable, the Adjusted Closing Date Balance Sheet) are less
than $39,121,360, (the difference being referred to herein as the "Net Asset
Difference") or shall be increased by an amount equal to the Net Asset
Difference if the Net Tangible Assets reflected on the Closing Date Balance
Sheet (or, as applicable, the Adjusted Closing Date Balance Sheet) are
greater than $39,121,360. If the Purchase Price is to be so decreased, the
Sellers shall pay to the Purchaser on the Adjustment Date an amount in cash
equal to the Net Asset Difference. If the Purchase Price is to be so
increased, the Purchaser shall pay to the Sellers on the Adjustment Date an
amount in cash equal to the Net Asset Difference. In either case, payment of
the Net Asset Difference shall be made with interest thereon at the Prime
Rate, compounded monthly, from and including the Closing Date to and
excluding the Adjustment Date. The amount, if any, of an adjustment to the
Purchase Price in accordance with this section 7.2, shall be allocated to
each Corporation on the basis of the difference between the Net Tangible
Assets of each Corporation reflected in the September 30 Balance Sheet and
the Closing Date Balance Sheet (or, as applicable, the Adjusted Closing Date
Balance Sheet) for such Corporation.
7.3 INCOME STATEMENT FOR STUB PERIOD. The Purchaser shall also cause
the Corporations to prepare an income statement for the period from January
1, 1998 to the Closing Date (and PW shall audit such income statement in
connection with its audit of the Closing Date Balance Sheet) to be used in
the preparation by the parties of Tax Returns in respect of the period that
includes the stub period.
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7.4 CONFIDENTIALITY. From and after the Closing, the Sellers shall, and
shall cause each of its affiliates and its directors, officers, employees,
agents and representatives to, (i) use all non-public information and
documents relating to the Business in the United States and Mexico in their
possession solely and exclusively in connections with the transactions
contemplated by this Agreement and to file all Tax Returns required to be
filed by them, and (ii) keep all such information and documents confidential,
unless any such information or documents is or becomes generally available to
the public other than as a result of a disclosure by the Sellers or any other
such Person in violation of this section 7.4, or unless compelled to be
disclosed by Law or the rules and regulations of any national stock exchange
pursuant to which the Sellers or such Person is bound.
7.5 EMPLOYEES.
(a) Except for Claims that result from a breach of any of its
obligations in this Agreement by either the Sellers or the Purchaser, as the
case may be, the Purchaser agrees to indemnify and save harmless the Sellers,
in accordance with section 8.2, with respect to any Claims (including claims
for severance, notice of termination, breach of contract, constructive
dismissal or damages in connection therewith) relating to the employment of
any of the Employees by the Purchaser or the termination of the employment of
any of the Employees by the Purchaser, which Claims arise from facts after
12:00 (noon), Eastern Standard Time on the Closing Date, including the
continuation, discontinuation or provision to any Employee of any of the
employment policies, benefit plans or other benefits previously provided by
any of the Sellers other than benefits pursuant to the Office Products Long
Term Incentive Plan as it may be amended from time to time.
(b) The Sellers, jointly and severally, agree to indemnify and hold
harmless the Purchaser, in accordance with section 8.1, with respect to any
Claims (including claims for severance, notice of termination, breach of
contract, constructive dismissal or damages in connection therewith) relating
to the employment of any Employees of the Corporation, which Claims arise
from facts occurring prior to the Closing Date including any benefits payable
under the Office Products Long Term Incentive Plan.
(c) The Purchaser shall cause the Corporations, following the Closing
Date, to honour all obligations due to employees of the Corporations, or any
of them, of whatsoever nature, including normal compensation and severance
arrangements and the IPO/Sale severance arrangements described in the Side
Agreement.
7.6 NON-COMPETITION. For a period of five years after the Closing Date,
neither the Sellers nor any of their respective affiliates shall, directly or
indirectly, own, manage, operate, control, invest or acquire any equity
interest in any business (a "Competitive Operation") which directly competes
with the Business of the Corporations in the United States or Mexico as
currently conducted; provided, however, that ownership of not more than 3% of
the securities of any class of a Competitive Operation that are
publicly-traded shall not be deemed a violation of this section 5.6; provided
further, that should an arm's length third party acquire the business
conducted by Axidata and/or Eurozerty B.V. ("Eurozerty") prior to the
expiration of such five year period, the provisions of this section 5.6 shall
not thereafter apply to Axidata and/or Eurozerty (and such third party
<PAGE>
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acquirors), as the case may be. Notwithstanding the foregoing, if, following
the Closing, there is a change of control of ACI (i.e. any Person or group of
Persons (the "New Owner") not dealing at arm's length with each other
acquires at least 50.01% of the issued and outstanding voting shares in the
capital of ACI), the New Owner as an affiliate of the Sellers shall, to the
extent that it already carries on a Competitive Operation, not be required to
divest itself of or cease to carry on such Competitive Operation. In
addition, the Sellers shall not thereby be deemed to be in breach of this
Section 7.6 as long as the New Owner does not (i) integrate such Competitive
Operation with that portion of the OPD retained, directly or indirectly, by
ACI or (ii) use or disclose the knowledge, know-how, assets, marketing
strategies and information or other trade secrets of the Business in the
conduct of such Competitive Operation or in such other business that would
directly or indirectly compete with the Business. In addition,
notwithstanding anything to the contrary contained herein, Axidata shall be
entitled to continue to carry on in the United States the business of paper
and systems storage.
7.7 NON-SOLICITATION.
(a) From the date of this Agreement until the earlier of (i) nine
months after any sale of all of the shares in the capital of or substantially
all of the assets of Axidata, and (ii) eighteen months after the Closing Date
(the earlier of such dates being herein referred to as the "Trigger Date"),
neither the Sellers, or either of them, nor the Purchaser (or any of their
respective affiliates) shall hire any employee of the other party (or their
respective subsidiaries or affiliates) without the prior written consent of
the other party; and
(b) From the Closing Date until twelve additional months following the
Trigger Date, neither the Sellers nor the Purchaser (or any of their
respective affiliates) shall, directly or indirectly, solicit the employment
of any employee of the other party (or their respective subsidiaries or
affiliates) for employment; provided, however, that this Agreement shall not
prohibit (i) any advertisement or general solicitation that is not
specifically targeted at any such employees, (ii) from and after the Trigger
Date, the employment of any such employee who first contacts the Sellers or
the Purchaser or any of their respective affiliates on his or her own
initiative, or (iii) the employment of any hourly employee who initiates an
application for employment in the United States.
7.8 ACCESS TO RECORDS. Following the Closing Date and on reasonable
prior notice during regular business hours, Sellers shall be entitled to
access to the books and records and other information referred to in Section
4.1(m) to the extent that such access is restricted to information that
relates to periods prior to the Closing Date only and such access is
reasonably required by the Sellers.
7.9 MEXICAN FOREIGN INVESTMENT NOTICE. After the Closing Date, the
Purchaser shall give notice of the transaction to the applicable Mexican
Authority in the manner required by Mexican Law.
7.10 RECORDING TRANSFER OF AZERTY MEXICO SHARES. The Purchaser shall
take all steps necessary after the Closing Date to record on the stock
register of Azerty Mexico the transfer of the
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applicable Purchased Shares.
7.11 CHANGE OF NAME. Within three months following the Closing, ACI
shall cause AP Support Services B.V., a corporation organized under the laws
of the Netherlands and an indirect wholly-owned subsidiary of ACI ("APSS
Europe"), to file an amendment to its articles of association and to take all
other actions necessary to change APSS Europe's name (for any and all uses,
whether internal or external, wherever used and for any and all purposes
whatsoever) to a name that is not similar to, nor includes any words or
expressions that may be deemed to be similar to or cause confusion with, "AP
Support Services," and ACI shall deliver to Purchaser a copy of the amendment
to APSS Europe's articles of association effecting such name change.
7.12 UNIZERTY NAME. Neither the Purchaser nor United nor any of their
affiliates of either such party shall use the name "Unizerty" in Canada prior
to July 31, 1999. Except for the agreement in the immediately prior sentence,
ACI agrees that neither it nor any of its affiliates has any right, title or
interest to or in the name "Unizerty," and ACI agrees that except and only to
the extent of a breach by United, the Purchaser or any of their affiliates of
such agreement in this section 7.12, neither ACI nor any of its affiliates
shall make any claim of right, title or interest with respect to the name
"Unizerty" or bring any infringement or other action against United,
Purchaser or any of their affiliates as a result of United, Purchaser or any
such affiliates using the name "Unizerty" anywhere in the world or in any
manner whatsoever.
7.13 EUROZERTY NAME. Nothing contained in this Agreement or in any
document delivered in connection herewith (including, without limitation, the
Intellectual Property Agreement), shall prohibit the Sellers or any of their
affiliates from using the name "Eurozerty" in Europe on an exclusive basis
after the date hereof or from transferring such rights to any successor owner
of the European portion of the OPD. The Purchaser and United agree that
neither they nor any of their affiliates has any right, title or interest to
or in the name "Eurozerty" and that none of the Purchaser, United or any of
their affiliates shall make any claim of right, title or interest with
respect to the name "Eurozerty" or bring any infringement or other action
against Sellers or any of their affiliates or any successor owner of the
European portion of the OPD as a result of any of them using the name
"Eurozerty" in Europe in any manner whatsoever.
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ARTICLE 8 - INDEMNIFICATION
8.1 INDEMNIFICATION BY SELLERS. The Sellers jointly and severally
covenant and agree with the Purchaser to indemnify and save harmless the
Purchaser and its affiliates from and against any Claim which may be made or
brought against the Purchaser or its affiliates, or which the Purchaser or
its affiliates may suffer or incur in respect of, as a result of, or arising
out of:
(a) any nonfulfillment of any covenant or agreement on the part of the
Sellers, or any one or more of them, contained in this Agreement,
the Side Agreement and the Intellectual Property Agreement;
(b) any inaccuracy in or breach of any representation or warranty of
the Sellers, or any one or more of them, contained in this
Agreement, the Side Agreement and the Intellectual Property
Agreement;
(c) any debts and liabilities of the Corporations for Taxes (i) with
respect to any taxable period (or portion thereof) of any of the
Corporations (or any predecessor) ending on or before the Closing
Date; (ii) of any member of an affiliated, consolidated, combined,
or unitary group (other than the Corporations) of which any of the
Corporations (or any predecessor) is or was a member on or prior to
the Closing Date by reason of the liability of any of the
Corporations pursuant to United States Treasury Regulation Section
1.1502-6(a) or any analogous or similar state, local, Mexican or
other foreign law; and (iii) allocable to the Sellers pursuant to
Section 8.9(f), but only to the extent that such Taxes are in
excess of amounts reserved therefor in the Closing Date Balance
Sheet;
(d) any Remedial Requirement associated with the presence or migration
of any Hazardous Substance resulting from the Seller's use or
occupation of the Real Property prior to the Closing Date; or
(e) any Claims resulting from or relating to the Office Products Long
Term Incentive Plan.
8.2 INDEMNIFICATION BY THE PURCHASER. The Purchaser and United jointly
and severally covenant and agree with the Sellers to indemnify and save
harmless the Sellers and their affiliates, from and against any Claim which
may be made or brought against the Sellers or their affiliates, or one or
more of them, or which they or one or more of them may suffer or incur,
directly or indirectly, in respect of, as a result of, or arising out of:
(a) any nonfulfillment of any covenant or agreement on the part of the
Purchaser or United under this Agreement, the Side Agreement and
the Intellectual Property Agreement; and
(b) any inaccuracy in or breach of any of the Purchaser's or United's
representations or warranties contained in this Agreement, the Side
Agreement and the Intellectual
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Property Agreement.
8.3 PROCEDURE FOR INDEMNIFICATION.
(a) CLAIMS OTHER THAN THIRD PARTY CLAIMS. Following receipt from the
Sellers or the Purchaser and their respective affiliates, as the case may be
(the "Indemnified Party"), of a written notice of a claim for indemnification
which has not arisen in respect of a Third Party Claim (as defined in section
8.3(b)), the party who is in receipt of such notice (the "Indemnifying
Party") shall have 30 days to make such investigation of the claim as the
Indemnifying Party considers necessary or desirable. For the purpose of such
investigation, the Indemnified Party shall make available to the Indemnifying
Party the information relied upon by the Indemnified Party to substantiate
the claim. If the Indemnified Party and the Indemnifying Party agree at or
prior to the expiration of such 30 day period (or any mutually agreed upon
extension thereof) to the validity and amount of the claim, the Indemnifying
Party shall immediately pay to the Indemnified Party the full agreed upon
amount of the claim. If the Indemnified Party and the Indemnifying Party do
not agree within such period (or any mutually agreed upon extension thereof),
such dispute shall be resolved as set out in section 9.13.
(b) THIRD PARTY CLAIMS. The Indemnified Party shall notify the
Indemnifying Party in writing as soon as is reasonably practicable after
being informed in writing that facts exist which may result in a claim
originating from a Person other than the Indemnified Party (a "Third Party
Claim") and in respect of which a right of indemnification given pursuant to
section 8.1 or 8.2 may apply. The Indemnifying Party shall have the right to
elect, by written notice delivered to the Indemnified Party within 10 days of
receipt by the Indemnifying Party of the notice from the Indemnified Party in
respect of the Third Party Claim, at the sole expense of the Indemnifying
Party, to participate in or assume control of the negotiation, settlement or
defence of the Third Party Claim, provided that:
(i) such will be done at all times in a diligent and BONA FIDE
manner;
(ii) the Indemnifying Party acknowledges in writing its obligation
to indemnify the Indemnified Party in accordance with the
terms contained in this Agreement in respect of that Third
Party Claim; and
(iii) the Indemnifying Party shall pay all reasonable out-of-pocket
expenses incurred by the Indemnified Party as a result of
such participation or assumption.
If the Indemnifying Party elects to assume such control, the
Indemnified Party shall cooperate with the Indemnifying Party and its counsel
and shall have the right to participate in the negotiation, settlement or
defence of such Third Party Claim at its own expense. If the Indemnifying
Party does not so elect or, having elected to assume such control, thereafter
fails to proceed with the settlement or defence of any such Third Party
Claim, the Indemnified Party shall be entitled to assume such control at the
expense of the Indemnifying Party. In such case, the Indemnifying Party shall
cooperate where necessary with the Indemnified Party and its counsel in
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connection with such Third Party Claim and the Indemnifying Party shall be
bound by the results obtained by the Indemnified Party with respect to such
Third Party Claim.
8.4 ADDITIONAL RULES AND PROCEDURES. The obligation of the parties to
indemnify each other pursuant to this Article 8 shall also be construed in
accordance with and subject to the following:
(a) should the Closing actually occur, for purposes of the
indemnification provisions of sections 8.1 and 8.2, a breach of a
representation or warranty contained in this Agreement (other than
Sections 4.1(g), 4.1(h), 4.1(l) and 4.1(ac) (collectively, the
"Excluded Representations")) shall be deemed to exist either if
such representation or warranty is actually inaccurate or breached
or would have been breached or inaccurate if such representation or
warranty had not contained any limitation or qualification as to
materiality, Material Adverse Effect or knowledge, it being the
intention of the parties hereto that an Indemnified Party shall be
indemnified and held harmless from and against any and all Claims
arising out of, based upon or with respect to the failure of any
such representations or warranties to be true, correct and complete
in any respect, determined in each case without regard to any
qualification as to materiality, Material Adverse Effect or
knowledge set forth with respect thereto. For greater certainty,
this provision shall not apply in respect of the Excluded
Representations and shall not apply so as to remove materiality as
it otherwise would apply in determining GAAP. In addition, for
greater certainty, the definition of Material Contract shall not be
deemed to be amended by this Section 8.4(a);
(b) an Indemnified Party shall only be entitled to make a claim for
indemnification pursuant to section 8.1 or 8.2, as the case be, if
written notice containing reasonable particulars of such claim is
delivered to the Indemnifying Party within the time periods
provided for in section 4.3 or 4.4, as the case may be;
(c) if any Third Party Claim is of a nature such that the Indemnified
Party is required by applicable Law to make a payment to any Person
(a "Third Party") with respect to such Third Party Claim before the
completion of settlement negotiations or related legal proceedings,
the Indemnified Party may make such payment and the Indemnifying
Party shall, forthwith after demand by the Indemnified Party,
reimburse the Indemnified Party for any such payment. If the
amount of any liability under the Third Party Claim in respect of
which such a payment was made, as finally determined, is less than
the amount which was paid by the Indemnifying Party to the
Indemnified Party, the Indemnified Party shall, forthwith after
receipt of the difference from the Third Party, pay such difference
to the Indemnifying Party together with interest thereon at the
Prime Rate from the date of payment to the date of reimbursement;
(d) except in the circumstances contemplated by section 8.4(c), and
whether or not the Indemnifying Party assumes control of the
negotiation, settlement or defence of any
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Third Party Claim, the Indemnified Party shall not settle or
compromise any Third Party Claim except with the prior written
consent of the Indemnifying Party (which consent shall not be
unreasonably withheld). A failure by the Indemnifying Party to
respond in writing to a written request by the Indemnified Party
for consent for a period of five Business Days or more, shall be
deemed a consent by the Indemnifying Party to such request;
(e) the Indemnifying Party and the Indemnified Party shall provide each
other on an ongoing and timely basis with all information which may
be relevant to the other's liability hereunder and shall supply
copies of all relevant documentation promptly as they become
available;
(f) notwithstanding section 8.4(d), the Indemnifying Party shall not
settle any Third Party Claim or conduct any related legal or
administrative proceeding in a manner which would, in the opinion
of the Indemnified Party, acting reasonably, have a material
adverse impact on the Indemnified Party; and
8.5 LIMITS TO CLAIMS. Notwithstanding any of the provisions of
sections 8.1 and 8.2:
(a) MINIMUM THRESHOLD FOR CLAIMS. The indemnity obligations of the
Sellers pursuant to section 8.1(b) and of the Purchaser pursuant to
section 8.2(b) shall not apply: (i) unless such Claim is made
within the time period referred to in section 4.3 or 4.4, as the
case may be; and (ii) until the aggregate of all indemnifiable
Claims pursuant to section 8.1(b) or Section 8.2(b), as applicable,
exceed $750,000; provided that thereafter the Sellers and the
Purchaser, as applicable, shall be liable pursuant to sections
8.1(b) or 8.2(b), as applicable, for the full amount of such
indemnifiable Claims including the initial $750,000. For greater
certainty, the $750,000 amount with respect to Claims against the
Sellers or the Purchaser is a threshold not a deductible.
(b) APPLICATION OF THRESHOLDS. The $750,000 threshold described in
section 8.5 (a) shall not apply to nor in any way limit (i) the
ability of the Purchaser to receive 100% of all amounts to which it
is entitled in connection with any claim for indemnification in
respect of the Office Products Long Term Incentive Plan pursuant
to Section 8.1(e) or (ii) the ability of Purchaser to receive 100%
of all amounts to which it is entitled in connection with any claim
for indemnification in respect of Taxes pursuant to Section 8.1(c)
or (iii) with respect to any claim with respect to environmental
matters pursuant to Section 8.1(d). In addition, for greater
certainty, to the extent that the Purchaser is responsible under
this Agreement for amounts that exceed their applicable
corresponding reserves on the Closing Date Balance Sheet (or, as
applicable, the Adjusted Closing Date Balance Sheet) because no
representation or warranty of the Sellers shall have been breached,
as described in Sections 4.1(g), 4.1(h) and 4.1(l), the amount of
any such actual excess shall not constitute a Claim that is
included for the purposes of determining whether such threshold has
been reached.
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(c) MAXIMUM LIMITS. Notwithstanding anything else contained in this
Article 8, in no case shall either the Sellers or Purchaser be
required to indemnify the other party for an amount exceeding
$50,000,000 in the aggregate, other than (i) with respect to Claims
arising from a breach of any of the representations and warranties
contained in sections 4.1(d) or 4.1(e), in which case the maximum
amount shall be the amount of the Purchase Price or (ii) with
respect to Claims under Section 8.1 relating to Taxes or the Office
Products Long Term Incentive Plan, in which case this Section
8.5(c) shall not apply.
8.6 AMOUNTS RECOVERED. The amount of any Claim shall be determined
after giving effect to any amount actually recovered from an insurer or any
other third party, and the parties hereto agree to act in a commercially
reasonable manner in connection with making a claim against their respective
insurers or any third party or accepting a settlement.
8.7 NON-MONETARY RIGHTS. The rights of indemnification contained in
this Article are the exclusive monetary remedies with respect to the matters
covered therein but do not preclude any other non-monetary right or remedy of
the parties available to enforce this Agreement such as injunctive relief and
specific performance.
8.8 PURCHASE PRICE ADJUSTMENT. Any indemnification payment hereunder
shall be treated by the parties hereto for all Tax reporting purposes as an
adjustment to the Purchase Price.
8.9 CERTAIN TAX MATTERS.
(a) Sellers shall control the defense and settlement of any Tax audit
or administrative or court proceeding relating to taxable periods of the
Corporations ending on or prior to the Closing Date, provided, however, that
if the results of any such Tax audit or administrative or court proceeding
could result in a material tax liability for which the Purchaser is not
entitled to indemnification under this Agreement, then the Purchaser shall
review, consent and approve, which approval shall not be unreasonably
withheld, the defense and settlement of any such Tax audit or proceeding.
Sellers will promptly notify the Purchaser of the commencement of any claim,
audit, examination, or other proposed change or adjustment by any taxing
authority which is directly related to the liability of any of the
Corporations for Taxes and Sellers shall keep the Purchaser duly informed of
the progress thereof. The Purchaser will promptly notify the Sellers of the
commencement of any claim, audit, examination or other proposed charge or
adjustment by any taxing authority concerning an item directly related to a
Tax Return filed by the Sellers for a tax year ending prior to or on the
Closing Date.
(b) After the Closing Date, Sellers shall properly prepare and timely
file all consolidated, combined, affiliated or unitary Tax Returns of either
of the Sellers (or any affiliate) and which include any of the Corporations
through the Closing Date (the "Seller Returns"), and Purchaser shall properly
prepare and timely file all other Tax Returns with respect to the
Corporations (the "Purchaser Returns"). Following the Closing Date, Sellers
shall provide Purchaser with drafts of the portions of all Seller Returns
only as they relate to the Corporations not
<PAGE>
- 49 -
later than thirty days prior to the due date for the filing thereof for
Purchaser's review, comment and approval, which approval shall not be
unreasonably withheld, and Purchaser shall provide Sellers with drafts of the
Purchaser Returns (to the extent such Tax Returns give rise to an
indemnification obligation on the part of Sellers at the time of filing) not
later than thirty days prior to the due date for the filing thereof for
Sellers' review, comment and approval, which approvals will not be
unreasonably withheld. Sellers shall not file (and shall not permit any
affiliate to file) any amended Tax Return or claim for refund which will give
rise to an obligation that is not indemnifiable under this Agreement.
(c) Sellers and the Purchaser will provide to each other full access,
at any reasonable time and from time to time, at the business location at
which the books and records are maintained, after the Closing Date, to such
Tax data relating to the Corporations as the Sellers or the Purchaser, as the
case may be, may from time to time reasonably request (including the relevant
portions of consolidated, combined, affiliated and unitary Tax Returns which
include the Corporations).
(d) In the event that any of the Corporations has a carryback of a
loss, credit or other tax attribute from a taxable period ending after the
Closing Date which may be carried back to a consolidated, combined, unitary
or affiliate Tax Return of any of the Sellers (or any affiliate), Sellers
shall within fifteen days of the receipt of a refund or confirmation by the
applicable taxing authority of a reduction in Taxes pay such amount to the
applicable Corporation. In the event that such carryback is subsequently
disallowed by the applicable taxing authority, such Corporation will repay
such refund, along with interest calculated at the statutory underpayment
rate set forth in the U.S. Tax Code, to the Sellers in the event there is a
final determination that such refund is not allowable.
(e) Any Tax refunds of the Corporations that are received by the
Purchaser or the Corporations (or their affiliates) and any amounts credited
against Tax to which the Purchaser or the Corporations (or their affiliates)
become entitled, that relate to Tax periods of the Corporations or portions
thereof ending on or before the Closing Date and that are not (i) shown as an
asset on the December 31 Balance Sheet or the Closing Date Balance Sheet or
(ii) attributable to a carryback of the Corporations from a Tax period (or
portion thereof) ending after the Closing Date shall be for the account of
the Sellers, and the Purchaser shall pay over to the Sellers any such refund
or the amount of any such credit within fifteen (15) days after the receipt
or entitlement thereto. In addition, to the extent that any amount accrued as
a liability for current Taxes on the December 31 Balance Sheet or the Closing
Date Balance Sheet is refunded or credited to the Corporations (or their
affiliates), the Purchaser shall pay such amount to the Sellers within
fifteen (15) days after receipt or entitlement thereto. The Purchaser and the
Corporations shall be entitled to retain (and the Sellers upon receipt or
credit thereof shall pay to the Purchaser within 15 days) any Tax refund or
credit which is shown as an asset on the December 31 Balance Sheet or the
Closing Date Balance Sheet or is attributable to the carryback of losses or
credits or other tax benefits from a taxable period or portion thereof ending
after the Closing Date to a taxable period or portion thereof ending before
the Closing Date. The amount of any Tax refund or credit which is payable
hereunder shall be reduced by any increase in Taxes attributable to the
receipt thereof. In the event that such refund or credit is subsequently
disallowed by the applicable taxing authority, such Sellers will repay such
refund, along with interest calculated at the statutory underpayment rate set
forth in the
<PAGE>
- 50 -
U.S. Tax Code, to the Purchaser or the applicable Corporation in the event
there is a final determination that such refund is not allowable.
(f) For purposes of Section 8.1(c)(ii), Taxes with respect to any
separate Tax Return of the Corporations attributable to any taxable period of
the Corporations beginning before the Closing Date and ending after the
Closing Date shall be allocated (i) to the Sellers for the period up to the
Closing Date, and (ii) to the Purchaser for the period beginning after the
Closing Date to the end of the taxable period. Such allocation of Taxes
between the pre-Closing Date and post-Closing Date periods shall be
accomplished by closing the books of the Company as of the close of business
on the Closing Date or, where not susceptible to such method of allocation,
pro rata on the basis of the number of elapsed days.
(g) Sellers shall not make any election to attribute losses of any of
the Corporations to any of the Sellers (or any affiliate) pursuant to United
States Treasury Regulation Section 1.1502-20(g).
8.10 TRANSFER TAXES. The Purchaser shall be responsible for the payment
of and shall indemnify and hold the Sellers harmless from and against any and
all sales, use, transfer, recording, stamp, documentary, real estate or other
similar Taxes attributable to the transactions contemplated by this Agreement.
ARTICLE 9 - GENERAL
9.1 PUBLIC NOTICE. No public disclosure of any kind shall be made or
permitted in respect of the subject matter of this Agreement, the Side
Agreement or the Intellectual Property Agreement by any party without
consultation with and the consent of the other parties (such consent not to
be unreasonably withheld) except for such disclosure as may be required by
Law or the rules and regulations of any stock exchange of which such party is
subject. The parties acknowledge that there will be a public announcement or
announcements as soon as is reasonably practicable following the execution
and delivery hereof and in such form as is approved by the Sellers and the
Purchaser.
9.2 EXPENSES. Except as otherwise provided in this Agreement, each
party shall be responsible for its own fees, expenses, and other costs
incurred in connection with the transactions contemplated by this Agreement.
9.3 FURTHER ASSURANCES. The parties shall do all such things and
provide all such reasonable assurances as may be required to consummate the
transactions contemplated this Agreement, and each party shall provide such
further documents or instruments required by any other party as may be
reasonably necessary or desirable to effect the purpose of this Agreement and
carry out its provisions, whether before or after the Closing.
9.4 TIME OF THE ESSENCE. Time is of the essence to every provision of
this Agreement. Extension, waiver or variation of any provision of this
Agreement shall not be deemed to affect this provision and there shall be no
implied waiver of this provision.
<PAGE>
- 51 -
9.5 BENEFIT OF THE AGREEMENT. This Agreement shall enure to the
benefit of and be binding upon the parties hereto and their respective heirs,
executors, administrators, personal representatives, successors and permitted
assigns.
9.6 ENTIRE AGREEMENT. With respect to the subject matter of this
Agreement, this Agreement supersedes all prior understandings and
communications between the parties or any of them, oral or written, and
constitutes the entire agreement between the parties other than (i) the Side
Agreement, (ii) the Intellectual Property Agreement (when executed and
delivered) and (iii) the Confidentiality Agreement dated May 5, 1997 between
ACI and the Purchaser, which shall terminate as of Closing in respect of the
Corporations but not in respect of ACI, Axidata or ACI's European affiliates
and in respect of the Business carried on by ACI through the OPD in Canada
and Europe. Each party acknowledges that it shall have no right to rely upon
any amendment, promise, modification, statement or representation made or
occurring subsequent to the execution of this Agreement unless the same is in
writing and executed by the Purchaser and the Sellers.
9.7 WAIVER. The failure of any party to enforce at any time any of the
provisions of this Agreement or any of its rights in respect thereto or to
insist upon strict adherence to any term of this Agreement shall not be
considered to be a waiver of such provision, right or term or in any way to
affect the validity of this Agreement or deprive the applicable party of the
right thereafter to insist upon strict adherence to that term or any other
term of this Agreement. The exercise by any party of any of its rights
provided by this Agreement shall not preclude or prejudice such party from
exercising any other right it may have under this Agreement, notwithstanding
any previous action or proceeding taken by it hereunder. Any waiver by any
party of the performance of any of the provisions of this Agreement shall be
effective only if in writing and signed by a duly authorized representative
of such party.
9.8 NOTICES. All payments and communications which may be or are
required by this Agreement to be given by any party to any other party, shall
be in writing and (i) delivered personally, (ii) sent by prepaid courier
service or certified mail, or (iii) sent by telecopier or other similar means
of electronic communication to the parties at their following respective
addresses:
<PAGE>
- 52 -
(a) For the Purchaser or United:
United Stationers Inc.
2200 East Golf Road
Des Plaines, Illinois 60016
U.S.A.
ATTENTION: OTIS H. HALLEEN/RANDALL W. LARRIMORE
Telecopier: (847) 699-3193
with a copy to:
Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201
U.S.A.
ATTENTION: MARY R. KORBY
Telecopier: (214) 746-7777
(b) For the Sellers:
Abitibi-Consolidated Inc.
800 Rene-Levesque Blvd. West
P.O. Box 69
Montreal, Quebec
H3B 1Y9
ATTENTION: ROBERT P. KANEE/PAT CROWLEY
Telecopier: (514) 394-2334
with a copy to:
Goodman Phillips & Vineberg
250 Yonge Street, Suite 2400
Toronto, Ontario
M5B 2M6
ATTENTION: STEPHEN H. HALPERIN
Telecopier: (416) 979-1234
Azerty Incorporated
13 Centre Drive
Orchard Park, New York 14127
U.S.A.
ATTENTION: PRESIDENT
Telecopier: (716) 662-0750
Any such notice so given shall be deemed conclusively to have been given and
received when so
<PAGE>
- 53 -
personally delivered or delivered by courier or on the day on which delivery
is confirmed if sent by telecopier or other electronic communication or on
the fifth day following the sending thereof by certified mail. Any party may
from time to time change its address hereinbefore set forth by notice to the
other parties in accordance with this section.
9.9 ASSIGNMENT. Neither this Agreement nor any rights or obligations
hereunder shall be assignable by any party without the prior written consent
of each of the other parties. Any assignment without such consent shall be
null and void.
9.10 SEVERABILITY. If any provision of this Agreement is invalid or
unenforceable, such provision shall be severed and the remainder of this
Agreement shall be unaffected thereby but shall continue to be valid and
enforceable to the fullest extent permitted by law.
9.11 COUNTERPARTS. This Agreement may be executed by the parties in
separate counterparts (by original or facsimile signature) each of which when
so executed and delivered shall be an original, but all of which, when taken
together, shall together constitute one and the same instrument. This
Agreement shall not be binding upon any party until it has been executed by
each of the parties and delivered to all other parties.
9.12 GOVERNING LAW. This Agreement and the rights and obligations of the
parties hereunder shall be governed by and construed in accordance with the
laws of the State of New York, without regard to conflicts of laws principles
thereof. The parties agree that the Courts of the State of New York shall
have exclusive jurisdiction to entertain any action or other legal
proceedings based on any provisions of this Agreement. Each party does hereby
irrevocably attorn to the exclusive jurisdiction of the Courts of the State
of New York.
9.13 DISPUTE RESOLUTION. The parties shall attempt in good faith to
promptly resolve any dispute (a "Dispute") arising out of or relating to this
Agreement, the Side Agreement or the Intellectual Property Agreement (other
than a Dispute relating to the Closing Date Balance Sheet or calculation of
Net Tangible Assets, which shall be resolved exclusively in accordance with
section 7.1) by negotiations between executives or other representatives of
each party with authority to settle the Dispute. Any party may give the other
party written notice of any Dispute not resolved in the ordinary course of
business. Within 20 days of said notice, executives or other representatives
of each party to the Dispute shall meet at a mutually acceptable time and
place, and thereafter as they deem necessary, to exchange relevant
information and to attempt to resolve the Dispute. If the matter has not been
resolved within 60 days of the date of the disputing party's initial written
notice, or if the parties fail to meet within 20 days of such written notice,
either party may initiate mediation of the Dispute in accordance with the
procedures set forth on Schedule 9.13. If the Dispute cannot be resolved
after each party has adhered to the procedures for mediation set forth in
Schedule 9.13, any party may initiate litigation or other appropriate
remedial proceedings in law or equity.
9.14 UNITED GUARANTEE. United hereby irrevocably and unconditionally
guarantees and covenants to the Sellers that the Purchaser will perform,
observe and keep each and every obligation, covenant, condition and
agreement in or arising out of this Agreement and any and all
<PAGE>
- 54 -
other agreements and other documents and instruments delivered pursuant
hereto to be performed, observed and kept by the Purchaser including, without
limitation, pursuant to the Side Agreement and the Intellectual Property
Agreement (collectively, the "Obligations"). United agrees with the Sellers
that United shall be jointly and severally bound with the Purchaser for the
fulfilment of all obligations of the Purchaser under the Obligations and in
the enforcement of its rights under the Obligations, the Sellers may proceed
against United as if it were named the obligor under the Obligations. United
hereby waives any right to require the Sellers to proceed against the
Purchaser to pursue any remedy whatsoever which may be available to the
Sellers before proceeding against United. The Sellers shall be entitled to
grant extensions or otherwise to release or discharge the Purchaser from any
liability and to accept security or other guarantees without effecting, in
any way, the Sellers's rights against United. If the Purchaser makes any
assignment for the benefit of its creditors or the Purchaser takes advantage
of any act or statute that may be in force for bankrupt or insolvent debtors,
or if the Purchaser is liquidated or wound-up, United shall nevertheless
remain liable to the Sellers for the Obligations.
9.15 SERVICE. If any party to this Agreement becomes a party (the
"ExJuris Party") to any legal action or proceeding in connection with this
Agreement commenced in the United States and upon which legal process must be
served outside of the United States, such Ex-Juris Party shall designate, in
writing, within thirty (30) days, an agent within the United States to
receive for and accept service on behalf of such Ex-Juris Party in connection
with the legal action or proceeding. Failure of the Ex-Juris Party to receive
a copy of the legal process shall not in any way affect the service of the
legal process on such Ex-juris Party, and service of legal process upon the
agent of the Ex-Juris Party shall be service on such Ex-juris Party for all
purposes. If the ExJuris Party fails to appoint an agent for service of legal
process in accordance with this section 9.14, such Ex-Juris Party will be
deemed to have irrevocably consented to service of process via registered or
certified mail, postage prepaid, to the last address designated for such
Ex-Juris Party, and service is deemed effective thirty (30) days after the
date of the mailing. Such service by mail shall be deemed personal service
and acceptance of service by the Ex-Juris Party with respect to any action or
proceeding related to this Agreement. Service in accordance with this
provision shall not preclude any other manner of service permitted by the
laws of the United States, Canada or Mexico.
9.16 WAIVER OF JURY TRIAL AND PUNITIVE DAMAGES. EACH OF THE PARTIES
HERETO KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE
TO A TRIAL BY JURY AND THE AWARD OF PUNITIVE DAMAGES IN RESPECT OF ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
THIS AGREEMENT, OR ANY EXHIBIT OR SCHEDULE HERETO, OR ANY DOCUMENT DELIVERED
PURSUANT TO THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING OR
STATEMENTS (WHETHER VERBAL OR WRITTEN) RELATING TO THE FOREGOING. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES HERETO TO ENTER INTO THIS
AGREEMENT.
IN WITNESS WHEREOF the parties have duly executed this Agreement.
ABITIBI-CONSOLIDATED INC.
<PAGE>
- 55 -
Per:
----------------------------------
Authorized Signing Officer
Per:
----------------------------------
Authorized Signing Officer
ABITIBI-CONSOLIDATED SALES
CORPORATION
Per:
----------------------------------
Authorized Signing Officer
Per:
----------------------------------
Authorized Signing Officer
AZERTY INCORPORATED
Per:
----------------------------------
Authorized Signing Officer
Per:
----------------------------------
Authorized Signing Officer
POSITIVE ID WHOLESALE INC.
Per:
----------------------------------
Authorized Signing Officer
Per:
----------------------------------
Authorized Signing Officer
<PAGE>
AP SUPPORT SERVICES INCORPORATED
Per:
----------------------------------
Authorized Signing Officer
Per:
----------------------------------
Authorized Signing Officer
AZERTY DE MEXICO, S.A. DE C.V.
Per:
----------------------------------
Authorized Signing Officer
Per:
----------------------------------
Authorized Signing Officer
UNITED STATIONERS SUPPLY CO.
Per:
----------------------------------
Authorized Signing Officer
UNITED STATIONERS INC.
Per:
----------------------------------
Authorized Signing Officer
<PAGE>
SCHEDULE 1.1(ba)
SEPTEMBER 30 BALANCE SHEET
Attached
<PAGE>
SCHEDULE 2.1
SELLERS
<TABLE>
<CAPTION>
Name of Seller Corporation Number of Purchased Shares
- -------------- ----------- --------------------------
<S> <C> <C>
ACSC Azerty 542.857 common shares
ACSC ID 100 common shares
ACSC APSS 100 common shares
ACI Azerty Mexico 99 Class 1 shares
990 Class 2 shares
</TABLE>
<PAGE>
SCHEDULE 7.1
BASIS OF PRESENTATION OF CLOSING DATE BALANCE SHEET
The following shall be the basis of presentation of the Closing Date Balance
Sheet:
1. TREATMENT OF RESERVES. The parties agree that the following amounts
shall constitute the applicable reserves on the December 31 Balance
Sheet:
<TABLE>
<CAPTION>
Type of Reserve Amount of Reserve
--------------- -----------------
<S> <C>
(a) Accounts Receivable $750,000
(b) Inventory $800,000
(c) Accrued Payables $982,000
(d) Legals NIL
</TABLE>
Each such reserve amount shall be the actual reserve amount for purposes
of the Closing Date Balance Sheet except to the extent that in the
period between December 31, 1997 and the date of the Closing Date
Balance Sheet there has been a material change in the corresponding area
of the Business causing the Financial Statements not to be fairly stated
in accordance with GAAP, in the judgment of PW (or, if applicable, the
Neutral Auditor), after taking into account materiality based on all of
the reserves above. In such circumstances, the Closing Date Balance
Sheet reserves will be adjusted so that the Closing Date Balance Sheet
is fairly stated in accordance with GAAP and, if the reserves on the
Closing Date Balance Sheet are less than the aggregate of the above
reserves, an adjusted Closing Date Balance Sheet (the "Adjusted Closing
Date Balance Sheet") will be prepared by PW (or, if applicable, the
Neutral Auditor) reflecting the reserves above and the Net Tangible
Assets shall be derived from such Adjusted Closing Date Balance Sheet.
2. SEVERANCE ACCRUALS. Only unpaid severance in respect of severed
employees as at the Closing Date shall be accrued in the Closing Date
Balance Sheet.
3. BOOKING OF ERRORS. All known assets and liabilities shall be booked in
preparing the Closing Date Balance Sheet including all known errors.
Items that are subjective in nature shall not be viewed as known errors
for such purposes.
4. YEAR END ACCOUNTING AND AUDIT TREATMENT AND PROCEDURES:
Co-op advertising will be recorded at Closing in accordance with the
past practices of the Corporations. For greater certainty, one quarter
of the forecast profit of the Corporations for the 1998 year shall be
recognized. Should this result in a material amount, the Closing Date
Balance Sheet will be adjusted accordingly on the Adjusted Closing Date
Balance Sheet and the Net Tangible Assets shall be derived from such
Adjusted Closing Date Balance Sheet.
<PAGE>
- 2 -
<PAGE>
SCHEDULE 9.13
DISPUTE RESOLUTION
The following is the exclusive means of the parties to resolve all Disputes
(other than those arising out of section 7.1, which shall be resolved
exclusively by the means set forth therein) arising out of, relating to or
resulting from this Agreement (including the Side Agreement and the Intellectual
Property Agreement) and the transactions contemplated hereby. All negotiations
pursuant to section 9.13 and this Schedule 9.13 are confidential and shall be
treated as compromise and settlement negotiations for purposes of the United
States Federal Rules of Evidence and any other applicable foreign, federal or
state rules of evidence.
1. If the dispute has not been resolved by negotiation as provided in
section 9.13, the parties shall endeavour to settle the dispute by
mediation under the then current Center For Public Resources ("CPR,)
Model Procedure for Mediation of Business Disputes. The neutral third
party will be selected from the CPR Panels of Neutrals. If the parties
encounter difficulty in agreeing on a neutral, they will seek the
assistance of CPR in the selection process.
2. The parties shall attempt in good faith to resolve by mediation any
dispute arising out of or relating to this Agreement. Any party may
initiate a mediation proceeding by a request in writing to the other
party following the negotiation procedures set forth in section 9.13.
Thereupon, both parties will be obligated to engage in a mediation. The
proceeding will be conducted in accordance with the then current CPR
Model Procedure for Mediation of Business Disputes, with the following
exceptions:
(a) if the parties have not agreed within 30 days of the request for
mediation on the selection of a mediator willing to serve, the
Center For Public Resources, upon request of any party, shall
appoint a member of the CPR Panels of Neutrals as the mediator; and
(b) efforts to reach a settlement will continue until the conclusion of
the proceeding, which is deemed to occur when: (a) a written
settlement is reached, or (b) the mediator concludes and informs
the parties in writing that further efforts would not be useful, or
(c) the parties agree in writing that an impasse has been reached.
No party may withdraw before the conclusion of the proceeding.
The parties regard this obligation to mediate an essential provision of
this Agreement and one that is legally binding on them. In case of a
violation of such obligation by any party, the other party or parties
may bring an action to seek enforcement of such obligation in any court
having jurisdiction thereof.
3. If the dispute has not been resolved by mediation as provided herein
within 60 days of the initiation of such procedure, any party may
initiate litigation upon 10 days' written notice to the other party or
parties; provided, however, that if one party has requested another
party or parties to participate in mediation and such other party or
parties has failed to participate, the requesting party may initiate
litigation before expiration of the above period.
<PAGE>
- 2 -
4. The procedures specified in section 9.13 and this Schedule 9.13 shall be
the sole and exclusive procedures for the resolution of Disputes among
the parties arising out of or relating to this Agreement; provided,
however, that a party may seek a preliminary injunction or other
provisional judicial relief if in its judgment such action is necessary
to avoid irreparable damage or to preserve the status quo. Despite such
action the parties will continue to participate in good faith in the
procedures specified in section 9.13 and this Schedule 9.13.
5. All applicable statutes of limitation and defenses based upon the
passage of time shall be tolled while the procedures specified in
section 9.13 and this Schedule 9.13 are pending. The parties will take
such action, if any, required to effectuate such tolling.
<PAGE>
EXHIBIT 4.1
UNITED STATIONERS SUPPLY CO.,
as Issuer
UNITED STATIONERS INC.,
LAGASSE BROS., INC.,
AZERTY INCORPORATED,
POSITIVE ID WHOLESALE INC.,
AP SUPPORT SERVICES INCORPORATED,
as Guarantors
AND
THE BANK OF NEW YORK
as Trustee
--------------------------
Indenture
Dated as of April 15, 1998
--------------------------
$100,000,000
8 3/8% Senior Subordinated Notes
due 2008
<PAGE>
UNITED STATIONERS SUPPLY CO.
Reconciliation and tie between Trust Indenture Act
of 1939 and Indenture, dated as of April 15, 1998
<TABLE>
<S> <C>
Trust Indenture
Act Section............................................Indenture Section
SECTION 310(a)(1) ..................................... 607
(a)(2) ..................................... 607
(b) ........................................ 608
SECTION 312(c) ........................................ 701
SECTION 314(a)(4) ..................................... 1008(a)
(c)(1) ..................................... 102
(c)(2) ..................................... 102
(e) ........................................ 102
SECTION 315(b) ........................................ 601
SECTION 316(a)(last sentence) ......................... 101 ("Outstanding")
(a)(l)(A) .................................. 502, 512
(a)(1)(B) .................................. 513
(b) ........................................ 508
(c) ........................................ 104(d)
SECTION 317(a)(1) ..................................... 503
(a)(2) ..................................... 504
(b) ........................................ 1003
SECTION 318(a) ........................................ 111
</TABLE>
This reconciliation and tie shall not, for any purpose, be
deemed to be a part of this Indenture.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION 2
SECTION 101. Definitions.........................................................................2
SECTION 102. Compliance Certificates and Opinions...............................................19
SECTION 103. Form of Documents Delivered to Trustee.............................................20
SECTION 104. Acts of Holders....................................................................20
SECTION 105. Notices, etc., to Trustee and Company..............................................22
SECTION 106. Notice to Holders; Waiver..........................................................22
SECTION 107. Effect of Headings and Table of Contents...........................................22
SECTION 108. Successors and Assigns.............................................................22
SECTION 109. Separability Clause................................................................22
SECTION 110. Benefits of Indenture..............................................................23
SECTION 111. Governing Law......................................................................23
SECTION 112. Legal Holidays.....................................................................23
SECTION 113. No Recourse Against Others.........................................................23
SECTION 114. Miscellaneous......................................................................23
ARTICLE TWO SECURITY FORMS 23
SECTION 201. Forms Generally....................................................................23
SECTION 202. Restrictive Legends................................................................25
ARTICLE THREE THE SECURITIES 28
SECTION 301. Title and Terms....................................................................28
SECTION 302. Denominations......................................................................28
SECTION 303. Execution, Authentication, Delivery and Dating.....................................28
SECTION 304. Temporary Securities...............................................................29
SECTION 305. Registration, Registration of Transfer and Exchange................................30
SECTION 306. Book-Entry Provisions for Global Securities........................................31
SECTION 307. Special Transfer Provisions........................................................32
SECTION 308. Mutilated, Destroyed, Lost and Stolen Securities...................................35
SECTION 309. Payment of Interest; Interest Rights Preserved.....................................35
SECTION 310. Persons Deemed Owners..............................................................36
SECTION 311. Cancellation.......................................................................37
SECTION 312. Computation of Interest............................................................37
SECTION 313. CUSIP Numbers......................................................................37
ARTICLE FOUR SATISFACTION AND DISCHARGE 37
SECTION 401. Satisfaction and Discharge of Indenture............................................37
SECTION 402. Application of Trust Money.........................................................38
ARTICLE FIVE REMEDIES 39
SECTION 501. Events of Default..................................................................39
i
<PAGE>
SECTION 502. Acceleration of Maturity; Rescission and Annulment.................................40
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee....................41
SECTION 504. Trustee May File Proofs of Claim...................................................42
SECTION 505. Trustee May Enforce Claims Without Possession of Securities........................43
SECTION 506. Application of Money Collected.....................................................43
SECTION 507. Limitation on Suits................................................................43
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium,
Interest and Additional Amounts...................................................44
SECTION 509. Restoration of Rights and Remedies.................................................44
SECTION 510. Rights and Remedies Cumulative.....................................................44
SECTION 511. Delay or Omission Not Waiver.......................................................44
SECTION 512. Control by Holders.................................................................44
SECTION 513. Waiver of Past Defaults............................................................45
SECTION 514. Waiver of Stay or Extension Laws...................................................45
SECTION 515. Undertaking for Costs..............................................................45
ARTICLE SIX THE TRUSTEE 46
SECTION 601. Notice of Defaults.................................................................46
SECTION 602. Certain Rights of Trustee..........................................................46
SECTION 603. Trustee Not Responsible for Recitals or Issuance of Securities.....................47
SECTION 604. Trustee May Hold Securities........................................................47
SECTION 605. Money Held in Trust................................................................48
SECTION 606. Compensation and Reimbursement.....................................................48
SECTION 607. Corporate Trustee Required; Eligibility............................................48
SECTION 608. Resignation and Removal; Appointment of Successor..................................49
SECTION 609. Acceptance of Appointment by Successor.............................................50
SECTION 610. Merger, Conversion, Consolidation or Succession to Business........................50
ARTICLE SEVEN HOLDERS LISTS AND REPORTS BY TRUSTEE 51
SECTION 701. Disclosure of Names and Addresses of Holders.......................................51
SECTION 702. Reports by Trustee.................................................................51
ARTICLE EIGHT CONSOLIDATION, MERGER, SALE OF ASSETS 51
SECTION 801. Company and Each Guarantor May Consolidate, etc., Only on Certain Terms............51
SECTION 802. Successor Substituted..............................................................53
ARTICLE NINE SUPPLEMENTAL INDENTURES............................................................53
SECTION 901. Supplemental Indentures Without Consent of Holders.................................53
SECTION 902. Supplemental Indentures with Consent of Holders....................................54
SECTION 903. Execution of Supplemental Indentures...............................................55
SECTION 904. Effect of Supplemental Indentures..................................................55
SECTION 905. Conformity with Trust Indenture Act................................................55
SECTION 906. Reference in Securities to Supplemental Indentures.................................55
SECTION 907. Notice of Supplemental Indentures..................................................55
ARTICLE TEN COVENANTS 56
SECTION 1001. Payment of Principal, Premium, if any, Interest and Additional Amounts, if
ii
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any..............................................................................56
SECTION 1002. Maintenance of Office or Agency...................................................56
SECTION 1003. Money for Security Payments to Be Held in Trust...................................56
SECTION 1004. Corporate Existence...............................................................57
SECTION 1005. Payment of Taxes and Other Claims.................................................58
SECTION 1006. Maintenance of Properties.........................................................58
SECTION 1007. Insurance.........................................................................58
SECTION 1008. Statement by Officers As to Default...............................................58
SECTION 1009. Provision of Financial Statements.................................................59
SECTION 1010. Purchase of Notes upon Change in Control..........................................60
SECTION 1011. Limitation on Indebtedness........................................................61
SECTION 1012. Limitation on Restricted Payments.................................................63
SECTION 1013. Limitation on Transactions with Affiliates........................................67
SECTION 1014. Limitation on Senior Subordinated Indebtedness....................................68
SECTION 1015. Limitation on Liens...............................................................68
SECTION 1016. Limitation on Sale of Assets......................................................69
SECTION 1017. Limitation on Issuances of Guarantees of Indebtedness.............................71
SECTION 1018. Limitation on Subsidiary Capital Stock............................................72
SECTION 1019. Limitation on Dividends and Other Payment Restrictions Affecting
Restricted Subsidiaries..........................................................72
SECTION 1020. Waiver of Certain Covenants.......................................................73
SECTION 1021. Trustee's Application for Instructions from the Company...........................73
ARTICLE ELEVEN REDEMPTION OF SECURITIES 74
SECTION 1101. Right of Redemption...............................................................74
SECTION 1102. Applicability of Article..........................................................74
SECTION 1103. Election to Redeem; Notice to Trustee.............................................74
SECTION 1104. Selection by Trustee of Securities to Be Redeemed.................................75
SECTION 1105. Notice of Redemption..............................................................75
SECTION 1106. Deposit of Redemption Price.......................................................75
SECTION 1107. Securities Payable on Redemption Date.............................................76
SECTION 1108. Securities Redeemed in Part.......................................................76
ARTICLE TWELVE DEFEASANCE AND COVENANT DEFEASANCE 76
SECTION 1201. Company's Option to Effect Defeasance or Covenant Defeasance......................76
SECTION 1202. Defeasance and Discharge..........................................................76
SECTION 1203. Covenant Defeasance...............................................................77
SECTION 1204. Conditions to Defeasance or Covenant Defeasance...................................77
ARTICLE THIRTEEN GUARANTEE OF SECURITIES 79
SECTION 1301. Guarantee.........................................................................79
SECTION 1302. Obligations Unconditional.........................................................81
SECTION 1303. Notice to Trustee.................................................................81
SECTION 1304. This Article Not to Prevent Events of Default.....................................81
ARTICLE FOURTEEN SUBORDINATION OF SECURITIES 81
iii
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SECTION 1401. Securities Subordinated to Senior Indebtedness....................................81
SECTION 1402. No Payment on Securities in Certain Circumstances.................................82
SECTION 1403. Payment Over of Proceeds Upon Dissolution. Etc...................................83
SECTION 1404. Subrogation.......................................................................85
SECTION 1405. Obligations of Company Unconditional..............................................85
SECTION 1406. Notice to Trustee.................................................................86
SECTION 1407. Reliance on Judicial Order or Certificate of Liquidating Agent....................86
SECTION 1408. Trustee's Relation to Senior Indebtedness.........................................87
SECTION 1409. Subordination Rights Not Impaired by Acts or Omissions of the Company
or Holders of Senior Indebtedness................................................87
SECTION 1410. Holders Authorize Trustee to Effectuate Subordination of Securities...............87
SECTION 1411. Not to Prevent Events of Default..................................................87
SECTION 1412. Trustee's Compensation Not Prejudiced.............................................88
SECTION 1413. No Waiver of Subordination Provisions.............................................88
SECTION 1414. Payments May Be Paid Prior to Dissolution.........................................88
ARTICLE FIFTEEN SUBORDINATION OF GUARANTEES 88
SECTION 1501. Guarantees Subordinated to Senior Guarantor Indebtedness..........................88
SECTION 1502. No Payment on Guarantees of Securities in Certain Circumstances...................89
SECTION 1503. Payment Over of Proceeds Upon Dissolution, Etc....................................90
SECTION 1504. Subrogation.......................................................................92
SECTION 1505. Obligations of Company Unconditional..............................................92
SECTION 1506. Notice to Trustee.................................................................93
SECTION 1507. Reliance on Judicial Order or Certificate of Liquidating Agent....................93
SECTION 1508. Trustee's Relation to Senior Guarantor Indebtedness...............................94
SECTION 1509. Subordination Rights Not Impaired by Acts or Omissions of the
Guarantors or Holders of Senior Guarantor Indebtedness...........................94
SECTION 1510. Holders Authorize Trustee to Effectuate Subordination of Guarantee of
Securities.......................................................................94
SECTION 1511. Not to Prevent Events of Default..................................................95
SECTION 1512. Trustee's Compensation Not Prejudiced.............................................95
SECTION 1513. No Waiver of Subordination Provisions.............................................95
SECTION 1514. Payments May Be Paid Prior to Dissolution.........................................95
EXHIBIT A....................................Form of Security
EXHIBIT B....................................Form of Certificate to be Delivered in Connection with
Transfers to Institutional Accredited Investors
EXHIBIT C....................................Form of Certificate to be Delivered in Connection with
Transfers Pursuant to Regulation S
EXHIBIT D....................................Form of Company Subordinated Note
iv
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EXHIBIT E....................................Form of Restricted Subsidiary Intercompany Note
</TABLE>
v
<PAGE>
INDENTURE, dated as of April 15, 1998 among UNITED STATIONERS
SUPPLY CO., a corporation duly organized and existing under the laws of the
State of Illinois (herein called the "COMPANY"), having its principal office
at 2200 East Golf Road, Des Plaines, Illinois 60016-1267, UNITED STATIONERS
INC., a corporation duly organized and existing under the laws of the State
of Delaware ("UNITED"), LAGASSE BROS., INC., a corporation duly organized and
existing under the laws of the State of Louisiana, AZERTY INCORPORATED, a
corporation duly organized and existing under the laws of the State of
Delaware, POSITIVE ID WHOLESALE INC., a corporation duly organized and
existing under the laws of the State of Delaware, AP SUPPORT SERVICES
INCORPORATED, a corporation duly organized and existing under the laws of the
State of Delaware (each, together with United, a "GUARANTOR" and collectively
with United and other guarantors added from time to time, the "GUARANTORS")
and, The Bank of New York, a New York banking corporation, as Trustee (herein
called the "TRUSTEE").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of (i) an issue
of 8 3/8% Senior Subordinated Notes due 2008 to be issued on the date hereof
(together with the guarantees of the Guarantors thereof, herein called the
"INITIAL SECURITIES"), (ii) 8 3/8% Senior Subordinated Notes due 2008 to be
issued in exchange for the Initial Securities (together with the guarantees
of the Guarantors thereof, the "EXCHANGE SECURITIES" and/or "PRIVATE EXCHANGE
SECURITIES") and (iii) additional Senior Subordinated Notes having
substantially identical terms and conditions to the Initial Securities
(together with the guarantees of the Guarantors thereof, the "ADDITIONAL
SECURITIES" and, together with the Initial Securities, the "SECURITIES"), of
substantially the tenor and amount hereinafter set forth, and to provide
therefor the Company has duly authorized the execution and delivery of this
Indenture. Exchange Securities and Private Exchange Securities shall include
securities issued in exchange for Additional Securities having substantially
the same tenor and amount as the Additional Securities.
Each of the Guarantors has authorized the making of its
guarantees pursuant to this Indenture (the "GUARANTEES"). Upon the issuance
of the Exchange Securities, if any, or the effectiveness of the Shelf
Registration Statement (as defined), this Indenture will become subject to
the provisions of the Trust Indenture Act of 1939, as amended, that are
required to be part of this Indenture and shall, to the extent applicable, be
governed by such provisions.
All things necessary have been done (i) to make the
Securities, when executed by the Company and authenticated and delivered
hereunder and duly issued by the Company, the valid obligations of the
Company in accordance with their terms, (ii) to make the Guarantees, when
executed and delivered by the Guarantors, the valid obligations of each of
the Guarantors severally in accordance with their terms and (iii) to make
this Indenture, when executed and delivered by the Company and the Guarantors
and duly authorized, executed and delivered by the Trustee, a valid agreement
of the Company and the Guarantors, in accordance with its terms.
<PAGE>
2
NOW, THEREFORE, THIS INDENTURE WITNESSETH
For and in consideration of the premises and the purchase of
the Securities by the Holders (as defined) thereof, it is mutually covenanted
and agreed, for the equal and proportionate benefit of all Holders of the
Securities, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. DEFINITIONS. For all purposes of this
Indenture, except as otherwise expressly provided or unless the context
otherwise requires:
(a) the terms defined in this Article have the meanings
assigned to them in this Article, and include the plural as well as the
singular;
(b) all other terms used herein which are defined in the
Trust Indenture Act, either directly or by reference therein, have the
meanings assigned to them in the Trust Indenture Act, and the terms "cash
transaction" and "self-liquidating paper," as used in Trust Indenture Act
Section 311, shall have the meanings assigned to them in the rules of the
Commission adopted under the Trust Indenture Act;
(c) all accounting terms not otherwise deemed herein have the
meanings assigned to them in accordance with generally accepted accounting
principles, and except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall have the meaning ascribed to "GAAP" in
this Article; and
(d) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
"12 3/4 NOTES" means the Company's existing 12 3/4% Senior
Subordinated Notes due 2005.
"ACQUIRED INDEBTEDNESS" means Indebtedness of a Person (i)
existing at the time such Person becomes a Restricted Subsidiary or (ii)
assumed in connection with the acquisition of assets from such Person.
Acquired Indebtedness shall be deemed to be incurred on the date of the
related acquisition of assets from any Person or the date the acquired Person
becomes a Restricted Subsidiary.
"ADDITIONAL AMOUNTS" has the meaning specified in the
Registration Rights Agreement or in such other registration rights agreement
to be executed in connection with the issuance of Additional Securities.
"ADDITIONAL SECURITIES" has the meaning stated in the first
recital of this Indenture.
<PAGE>
3
"AFFILIATE" means, with respect to any specified Person, (i)
any other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person or (ii) any
other Person that owns, directly or indirectly, 10% or more of such specified
Person's Capital Stock or any executive officer or director of any such
specified Person or other Person or, with respect to any natural Person, any
person having a relationship with such Person by blood, marriage or adoption
not more remote than first cousin. For the purposes of this definition,
"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 ownership of voting securities, by contract or otherwise; and
the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"ASSET SALE" means any sale, issuance, conveyance, transfer,
lease or other disposition (including, without limitation, by way of merger,
consolidation or Sale and Leaseback Transaction) (collectively, a
"TRANSFER"), directly or indirectly, in one or a series of related
transactions, of (i) any Capital Stock of any Restricted Subsidiary; (ii) all
or substantially all of the properties and assets of any division or line of
business of the Company or any Restricted Subsidiary; or (iii) any other
properties or assets of the Company or any Restricted Subsidiary, other than
in the ordinary course of business. For the purposes of this definition, the
term "Asset Sale" shall not include (w) any transfer of properties or assets
(A) that is governed by Section 810(a), (B) that is by the Company to any
Restricted Wholly Owned Subsidiary, or by any Restricted Wholly Owned
Subsidiary to the Company or any Restricted Wholly Owned Subsidiary in
accordance with the terms of this Indenture, (x) dispositions with a Fair
Market Value of less than $2.5 million in the aggregate in any fiscal year,
(y) any Sale of Receivables and Related Assets pursuant to a Permitted
Receivables Securitization Program, or (z) the sale of real or personal
property or equipment that has become worn out, obsolete or damaged or
otherwise unsuitable or not required for use in connection with the business
of the Company or any Restricted Subsidiary, as the case may be.
"AVERAGE LIFE TO STATED MATURITY" means, as of the date of
determination with respect to any Indebtedness, the quotient obtained by
dividing (i) the sum of the products of (a) the number of years from the date
of determination to the date or dates of each successive scheduled principal
payment of such Indebtedness multiplied by (b) the amount of each such
principal payment by (ii) the sum of all such principal payments.
"BANKRUPTCY LAW" means Title 11, United States Bankruptcy Code
of 1978, as amended, or any similar United States federal or state law
relating to bankruptcy, insolvency, receivership, winding-up, liquidation,
reorganization or relief of debtors or any amendment to, succession to or
change in any such law.
"BOARD OF DIRECTORS" means the Board of Directors of the
Company or any committee thereof duly authorized to act on behalf of such
Board.
"BOARD RESOLUTION" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Company to have been duly
adopted by the Board of Directors and to be in full force and effect on the
date of such certification, and delivered to the Trustee.
<PAGE>
4
"BORROWING BASE" means, as of any date of determination, an
amount equal to the sum of (a) 85% of the face amount of all accounts
receivable of the Company and its Restricted Subsidiaries as of such date and
(b) 65% of the book value (calculated on a FIFO basis) of all inventory owned
by the Company and its Restricted Subsidiaries as of such date, all
calculated on a Consolidated basis and in accordance with GAAP. To the extent
that information is not available as to the amount of accounts receivable or
inventory as of a specific date, the Company may utilize the most recent
available quarterly or annual financial report for purposes of calculating
the Borrowing Base; provided, that any subsequent sale of Receivables and
Related Assets on or prior to the date of determination pursuant to a
Permitted Receivables Securitization Program shall be deducted from
"Borrowing Base" for purposes of the calculation thereof.
"BUSINESS DAY" means a day other than a Saturday, Sunday or
other day on which banking institutions in New York State are authorized or
required by law to close.
"CAPITAL LEASE OBLIGATION" means any obligations of the
Company and its Restricted Subsidiaries on a Consolidated basis under any
capital lease of real or personal property which, in accordance with GAAP,
has been recorded as a capitalized lease obligation.
"CAPITAL STOCK" of any Person means any and all shares,
interests, participations, partnership interests or other equivalents
(however designated) of such Person's capital stock.
"CHANGE OF CONTROL" means the occurrence of any of the
following events: (i) any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act) becomes the ultimate
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act), directly or indirectly, of more than 50% of the voting power of the
total outstanding Voting Stock of United (or any successor) or the Company
(or any successor) voting as one class; (ii) during any period of two
consecutive years, individuals who at the beginning of such period
constituted the Board of Directors of United or the Company (together with
any new directors whose election to such Board of Directors or whose
nomination for election by the shareholders of such Person, was approved by a
vote of 66-2/3% of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of such Board of Directors then in office; (iii) United or the
Company conveys, transfers, or leases or otherwise disposes of all or
substantially all of its assets to any Person; (iv) United (or any successor)
or the Company (or any successor) is liquidated or dissolved or adopts a plan
of liquidation or dissolution other than in a transaction which complies with
the provisions of Article Eight; and (v) the failure of United (or any
successor) to beneficially own 100% of the voting power of the total
outstanding Voting Stock of the Company (or any successor).
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMISSION" means the Securities and Exchange Commission, as
from time to time constituted, created under the Exchange Act, or if at any
time after the execution of this Indenture such Commission is not existing
and performing the duties now assigned to it under the Trust Indenture Act,
then the body performing such duties at such time.
<PAGE>
5
"COMPANY" means United Stationers Supply Co., a corporation
incorporated under the laws of the State of Illinois, until a successor
Person shall have become such pursuant to the applicable provisions hereof,
and thereafter "COMPANY" shall mean such successor Person.
"COMPANY REQUEST" or "COMPANY ORDER" means a written request
or order signed in the name of the Company by any one of the following: its
Chairman, its President, any Vice President, its Treasurer or an Assistant
Treasurer, and delivered to the Trustee.
"CONSOLIDATED FIXED CHARGE COVERAGE RATIO" of the Company
means, for any period, the ratio, determined on a pro forma basis, of (a) the
sum of Consolidated Net Income (Loss), Consolidated Interest Expense,
Consolidated Income Tax Expense and Consolidated Non-cash Charges deducted in
computing Consolidated Net Income (Loss) in each case, for such period, of
the Company and its Restricted Subsidiaries on a Consolidated basis, all
determined in accordance with GAAP to (b) the sum of Consolidated Interest
Expense for such period and cash and non-cash dividends required to be paid
or accrued on any Preferred Stock of the Company and its Restricted
Subsidiaries during such period; provided that (i) in making such
computation, the Consolidated Interest Expense attributable to interest on
any Indebtedness computed on a pro forma basis and (A) bearing a floating
interest rate, shall be computed as if the rate in effect on the date of
computation had been the applicable rate for the entire period and (B) which
was not outstanding during the period for which the computation is being made
but which bears at the option of the Company, a fixed or floating rate of
interest, shall be computed by applying at the option of the Company, either
the fixed or floating rate and (ii) in making such computation, the
Consolidated Interest Expense of the Company and its Restricted Subsidiaries
attributable to interest on any Indebtedness under a revolving credit
facility computed on a pro forma basis shall be computed based upon the
average daily balance of such Indebtedness during the applicable period. "Pro
forma basis" means, for purposes of calculating the Consolidated Fixed Charge
Coverage Ratio, giving pro forma effect to (i) the incurrence of the
Indebtedness giving rise to the need for such calculation and the application
of the net proceeds therefrom, including to refinance other Indebtedness, as
if such Indebtedness was incurred, and the application of such proceeds
occurred, at the beginning of the relevant four-quarter period; (ii) the
incurrence, repayment or retirement of any other Indebtedness by the Company
and its Restricted Subsidiaries since the first day of the relevant
four-quarter period as if such Indebtedness was incurred, repaid or retired
at the beginning of such four-quarter period (except that, in making such
computation, the amount of Indebtedness outstanding under any revolving
credit facility shall be computed based upon the average daily balance of
such Indebtedness during such four-quarter period); (iii) in the case of
Acquired Indebtedness, the related acquisition as if such acquisition
occurred at the beginning of the relevant four-quarter period; and (iv) any
acquisition or disposition by the Company or its Restricted Subsidiaries of
any company or any business or any assets out of the ordinary course of
business, whether by merger, stock purchase or sale or asset purchase or
sale, as if such acquisition or disposition, as the case may be, occurred at
the beginning of the relevant four-quarter period, and any related incurrence
or repayment of Indebtedness, in each case since the first day of the
relevant four-quarter period, assuming such acquisition or disposition had
been consummated on the first day of such four-quarter period. For purposes
of clause (iv) of this definition of "pro forma basis", in connection with an
acquisition of any company, business or assets, any such pro forma
calculation may include (1) any pro forma adjustments relating to the
relevant four-quarter period that would satisfy the requirements of Rule
11-02(a) of Regulation S-X, and (2) any other reduction of operating or
<PAGE>
6
other expenses in respect of restructuring or consolidating any business,
operations or facilities, any compensation or headcount reduction, or any
other cost savings, of any Persons either alone or together with the Company
or any Restricted Subsidiary, that would otherwise have resulted in the
payment of cash within the next four full fiscal quarters after the date of
consummation of such acquisition (collectively, the "COST SAVINGS"); provided
that (a) the Company reasonably believes in good faith that such Cost Savings
would have been achieved during the next four full fiscal quarters after the
date of consummation of such acquisition (regardless of whether such Cost
Savings could be reflected in pro forma financial statements under generally
accepted accounting principles, Regulation S-X or any other regulation or
policy of the SEC), (b) such Cost Savings are set forth in reasonable detail
in an operating plan which has been approved pursuant to a resolution of the
Board of Directors and are (X) limited to the lowest amount of a range if any
such Cost Savings are set forth as a range and (Y) net of any operating
expenses reasonably expected to be incurred during the next four full fiscal
quarters after the date of consummation of such acquisition to implement such
Cost Savings, and (c) such Cost Savings are identified and quantified in an
officers' certificate signed by the chief financial officer and another
officer of the Company and delivered to the Trustee at the time of
consummation of such acquisition.
"CONSOLIDATED INCOME TAX EXPENSE" means, for any period the
provision for federal, state, local and foreign income taxes of the Company
and its Restricted Subsidiaries for such period as determined in accordance
with GAAP on a Consolidated basis.
"CONSOLIDATED INTEREST EXPENSE" of the Company means, without
duplication for any period, the sum of (a) the interest expense of the
Company and its Restricted Subsidiaries for such period, on a Consolidated
basis, including, without limitation, (i) amortization of debt discount
(other than debt discount attributable solely to a discount in the purchase
price of Indebtedness sold with an equity security, to the extent of the
amount of the value reasonably attributed in good faith to such equity
security at the time of such sale and reflected in an Officers' Certificate
delivered promptly thereafter to the Trustees), (ii) the net cost under
Interest Rate Agreements (including amortization of discounts), (iii) the
interest portion of any deferred payment obligation, (iv) accrued interest
and (v) the amortization of deferred financing costs, plus (b) (i) the
interest component of the Capital Lease Obligations paid, accrued and/or
scheduled to be paid or accrued by the Company during such period and (ii)
all capitalized interest of the Company and its Restricted Subsidiaries, less
(c) the amortization of any deferred financing costs to the extent paid prior
to or on the Issue Date, in each case as determined in accordance with GAAP
on a Consolidated basis.
"CONSOLIDATED NET INCOME (LOSS)" of the Company means, for any
period, the Consolidated net income (or loss) of the Company and its
Restricted Subsidiaries for such period as determined in accordance with
GAAP, adjusted, to the extent included in calculating such net income (loss),
by excluding, without duplication, (i) all extraordinary, unusual or
nonrecurring gains or losses (less all fees and expenses relating thereto),
(ii) the portion of net income (or loss) of the Company and its Restricted
Subsidiaries allocable to minority interests in unconsolidated Persons to the
extent that cash dividends or distributions have not actually been received
by the Company or one of its Restricted Subsidiaries, (iii) net income (or
loss) of any Person combined with the Company or any of its Restricted
Subsidiaries on a "pooling of interests" basis attributable to any period
prior to the date of combination, (iv) any gain or loss, net of taxes,
<PAGE>
7
realized upon the termination of any employee pension benefit plan, (v) net
gains (or losses), less all fees and expenses relating thereto, in respect of
dispositions of assets other than in the ordinary course of business and the
net income of any Unrestricted Subsidiary, except to the extent paid to thc
Company or any Restricted Subsidiary in cash as a dividend or distribution or
(vi) the net income of any Restricted Subsidiary to the extent that the
declaration of dividends or similar distributions by that Restricted
Subsidiary of that income is not at the time permitted, directly or
indirectly, by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental
regulations applicable to such Restricted Subsidiary or its stockholders.
"CONSOLIDATED NET WORTH" of any Person means the Consolidated
stockholders' equity (excluding Redeemable Capital Stock) of such Person and
its subsidiaries (or, in the case of United or the Company, the Restricted
Subsidiaries), as determined in accordance with GAAP on a Consolidated basis.
"CONSOLIDATED NON-CASH CHARGES" of the Company means, for any
period, the aggregate depreciation, amortization and other non-cash charges
of the Company and its Restricted Subsidiaries on a Consolidated basis
reducing the Consolidated Net Income of the Company and its Restricted
Subsidiaries for such period, as determined in accordance with GAAP
(excluding any non-cash charge which requires an accrual or reserve for cash
charges for any future period).
"CONSOLIDATION" means, with respect to any Person, the
consolidation of the accounts of such Person and each of its subsidiaries
(or, in the case of United or the Company, the Restricted Subsidiaries) if
and to the extent the accounts of such Person and each of its subsidiaries
(or, in the case of United or the Company, the Restricted Subsidiaries) would
normally be consolidated with those of such Person, all in accordance with
GAAP. The term "CONSOLIDATED" shall have a similar meaning.
"CORPORATE TRUST OFFICE" means the principal corporate trust
office of the Trustee, at which at any particular time its corporate trust
business shall be administered, which office at the date of execution of this
Indenture is located at 101 Barclay Street, Floor 21 West, New York, New York
10286, Attn: Corporate Trust Administration.
"CREDIT FACILITIES" means the Amended and Restated Credit
Agreement dated as of April 3, 1998 among the Company, United, the
subsidiaries of the Company, if any, identified on the signature pages
thereof under the caption "Subsidiary Guarantors," the lenders named therein
and The Chase Manhattan Bank, as Administrative Agent for said lenders,
including a term loan made pursuant to the term loan agreement, a revolving
credit loan made pursuant to the revolving credit loan agreement, and any
ancillary documents executed in connection therewith, as such agreements may
be amended, renewed, extended, substituted, refinanced, restructured,
replaced, supplemented or otherwise modified from time to time (including,
without limitation, any successive renewals, extensions, substitutions,
refinancings, restructuring, replacements, supplements or other modifications
of the foregoing, including the addition of new lenders or agents). For
purposes of this Indenture, "Credit Facilities" shall include any amendments,
renewals, extensions, substitutions, refinancings, restructuring,
replacements, supplements or any other modifications that increase the
principal amount of the Indebtedness or
<PAGE>
8
the commitments to lend thereunder, whether under one or more credit
facilities or agreements; provided that, for purposes of the definition of
"Permitted Indebtedness," no such increase may result in the principal amount
of Indebtedness under the Credit Facilities exceeding the amount permitted by
Section 1011(6)(i).
"DEFAULT" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
"DEFAULTED INTEREST" has the meaning specified in Section 309.
"DEPOSITARY" means The Depository Trust Company, its nominees
and their respective successors.
"DESIGNATED SENIOR GUARANTOR INDEBTEDNESS" means (i) all
Senior Guarantor Indebtedness under the Credit Facilities; and (ii) any other
Senior Guarantor Indebtedness which, at the date of determination, has an
aggregate principal amount outstanding of, or under which, at the date of
determination, the holders thereof are committed to lend, at least $75.0
million, and which is specifically designated by the Guarantor in the
agreement governing or the instrument evidencing such Senior Guarantor
Indebtedness as "Designated Senior Guarantor Indebtedness."
"DESIGNATED SENIOR INDEBTEDNESS" means (i) all Senior
Indebtedness under the Credit Facilities; and (ii) any other Senior
Indebtedness which, at the date of determination, has an aggregate principal
amount outstanding of, or under which, at the date of determination, the
holders thereof are committed to lend, at least $75.0 million, and which is
specifically designated by the Company in the agreement governing or the
instrument evidencing such Senior indebtedness as "Designated Senior
Indebtedness."
"EVENT OF DEFAULT" has the meaning specified in Section 501.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXCHANGE OFFER" means the exchange offer that may be effected
pursuant to the Registration Rights Agreement and the offer by the Company to
exchange all of the Additional Securities for a like aggregate principal
amount of Exchange Securities, in each case as provided in this Indenture.
"EXCHANGE OFFER REGISTRATION STATEMENT" means the Exchange
Offer Registration Statement as defined in the Registration Rights Agreement.
"EXCHANGE SECURITIES" has the meaning stated in the first
recital of this Indenture and refers to any Exchange Securities containing
terms substantially identical to the Initial Securities (except that such
Exchange Securities shall not contain terms with respect to transfer
restrictions) that are issued and exchanged for the Initial Securities
pursuant to the Registration Rights Agreement and this Indenture.
"FAIR MARKET VALUE" means, with respect to any asset or
property, the sale value that would be obtained in an arm's-length
transaction between an informed and willing seller
<PAGE>
9
under no compulsion to sell and an informed and willing buyer under no
compulsion to buy as determined by the Board of Directors in good faith and
evidenced by a Board Resolution.
"GAAP" or "GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" means
generally accepted accounting principles in the United States, consistently
applied, which are in effect at the time any given calculation is made.
"GUARANTEE" means the guarantee by any Guarantor of the
Company's Indenture Obligations pursuant to a guarantee given in accordance
with this Indenture.
"GUARANTEED DEBT" of any Person means, without duplication,
all Indebtedness of any other Person guaranteed directly or indirectly in any
manner by such Person through an agreement (i) to pay or purchase such
Indebtedness or to advance or supply funds for the payment or purchase of
such indebtedness, (ii) to purchase, sell or lease (as lessee or lessor)
property, or to purchase or sell services, primarily for the purpose of
enabling the debtor to make payment of such Indebtedness or to assure the
holder of such Indebtedness against loss, (iii) to supply funds to, or in any
other manner invest in, the debtor (including any agreement: to pay for
property or services without requiring that such property be received or such
services be rendered), (iv) to maintain working capital or equity capital of
the debtor, or otherwise to maintain the net worth, solvency or other
financial condition of the debtor or (v) otherwise to assure a creditor
against loss; PROVIDED that the term "guarantee" shall not include
endorsements for collection or deposit, in either case in the ordinary course
of business.
"GUARANTOR" means United, the other Guarantors named in the
first paragraph of this Indenture, and each Restricted Subsidiary that is
organized under the laws of the United States or any state or territory
thereof, including the District of Columbia, which incurs any Indebtedness,
other than the Joint Venture and any Securitization Subsidiary that has
entered into or established a Permitted Receivables Securitization Program.
"HOLDER" means a Person in whose name a Security is registered
in the Security Register.
"INCUR" has the meaning specified in Section 1011; PROVIDED
that with respect to any Indebtedness of any Subsidiary that is owing to the
Company or another Subsidiary, (a) any disposition, pledge or transfer of
such Indebtedness to any Person (other than the Company or a Wholly Owned
Subsidiary or a pledge to lenders under the Credit Facilities) shall be
deemed to be an incurrence of such Indebtedness and (b) any transaction
pursuant to which a Wholly Owned Subsidiary (which is an obligor on
Indebtedness permitted by Section 1011(b)(vi)) ceases to be a Wholly Owned
Subsidiary shall be deemed to be an incurrence of such Indebtedness not
permitted by Section 1011(b)(vi).
"INDEBTEDNESS" means, with respect to any Person, without
duplication, (i) all indebtedness of such Person for borrowed money or for
the deferred purchase price of property or services, excluding any trade
payables, but including, without limitation, all obligations, contingent or
otherwise, of such Person in connection with any letters of credit issued
under letter of credit facilities, acceptance facilities or other similar
facilities now or hereafter outstanding, if, and to the extent, any of the
foregoing would appear as a liability upon a balance
<PAGE>
10
sheet of such Person prepared in accordance with GAAP, (ii) all obligations
of such Person evidenced by bonds, notes, debentures or other similar
instruments, (iii) all indebtedness created or arising under any conditional
sale or other title retention agreement with respect to property acquired by
such Person (even if the rights and remedies of the seller or lender under
such agreement in the event of default are limited to repossession or sale of
such property), but excluding trade payables arising in the ordinary course
of business, (iv) all obligations under Interest Rate Agreements of such
Person, (v) all Capital Lease Obligations of such Person, (vi) all
Indebtedness referred to in clauses (i) through (v) above of other Persons
and all dividends of other Persons, the payment of which is secured by (or
for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien, upon or with respect to property
(including, without limitation, accounts and contract rights) owned by such
Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness, (vii) all Guaranteed Debt of such Person and
(viii) all Redeemable Capital Stock valued at the greater of its voluntary or
involuntary maximum fixed repurchase price. For purposes hereof, the "maximum
fixed repurchase price" of any Redeemable Capital Stock which does not have a
fixed repurchase price shall be calculated in accordance with the terms of
such Redeemable Capital Stock as if such Redeemable Capital Stock were
purchased on any date on which Indebtedness shall be required to be
determined pursuant to this Indenture, and if such price is based upon, or
measured by, the Fair Market Value of such Redeemable Capital Stock, such
Fair Market Value shall be determined in good faith by the board of directors
of the issuer of such Redeemable Capital Stock.
"INDENTURE OBLIGATIONS" means the obligations of the Company
and any other obligor, including any Guarantor, under this Indenture or under
the Securities to pay principal of, premium, if any, and interest when due
and payable, and all other amounts due or to become due under or in
connection with this Indenture, the Securities and the performance of all
other obligations to the Trustee and the Holders under this Indenture and the
Securities, according to the terms thereof.
"INITIAL PURCHASERS" means Chase Securities Inc. and Bear,
Stearns & Co. Inc.
"INITIAL SECURITIES" has the meaning stated in the first
recital of this Indenture.
"INSTITUTIONAL ACCREDITED INVESTOR" means an institutional
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) and
(7) under the Securities Act.
"INTEREST PAYMENT DATE" means the Stated Maturity of an
installment of interest on the Securities.
"INTEREST RATE AGREEMENTS" means one or more of the following
agreements which shall be entered into by one or more financial institutions:
interest rate protection agreements (including, without limitation, interest
rate swaps, caps, floors, collars and similar arrangements) and/or other
types of interest rate hedging agreements from time to time.
"INVESTMENTS" means, with respect to any Person, directly or
indirectly, any advance, loan (including guarantees), or other extension of
credit or capital contribution to (by means of any transfer of cash or other
property to others or any payment for property or services
<PAGE>
11
for the account or use of others), or any purchase, acquisition or ownership
by such Person of any Capital Stock, bonds, notes, debentures or other
securities issued by, any other Person and all other items that would be
classified as investments on a balance sheet prepared in accordance with
GAAP. In addition, the Fair Market Value of the net assets of any Restricted
Subsidiary at the time that such Restricted Subsidiary is designated an
Unrestricted Subsidiary shall be deemed to be an "Investment" made by the
Company in such Unrestricted Subsidiary. The amount of any non-cash
Investment shall be equal to the Fair Market Value of the assets invested, as
determined in good faith by (i) in the case of any Investment in excess of
$5.0 million the Board of Directors of the Company (provided that such
determination is evidenced by a Board Resolution) or (ii) in any other case,
an executive officer of the Company.
"ISSUE DATE" means the date on which the Initial Securities
are first issued.
"ISSUERS" means, collectively, the Company and the Guarantors.
"JOINT VENTURE" means United Business Computers, Inc., a
Delaware corporation.
"LIEN" means any mortgage, charge, pledge, lien (statutory or
otherwise), privilege, security interest, hypothecation or other encumbrance
upon or with respect to any property of any kind, real or personal, movable
or immovable, now owned or hereafter acquired.
"MATURITY" when used with respect to any Security means the
date on which the principal of such Security becomes due and payable as
therein provided or as provided in this Indenture, whether at Stated
Maturity, the Repurchase Date or the redemption date and whether by
declaration of acceleration, offer in respect of Excess Proceeds, Change of
Control, call for redemption or otherwise.
"NET CASH PROCEEDS" means (a) with respect to any Asset Sale
by any Person, the proceeds thereof in the form of cash or Temporary Cash
Investments including payments in respect of deferred payment obligations
when received in the form of, or stock or other assets when disposed for,
cash or Temporary Cash Investments (except to the extent that such
obligations are financed or sold with recourse to the Company or any
Restricted Subsidiary) net of (i) brokerage commissions and other actual fees
and expenses (including fees and expenses of counsel and investment bankers)
related to such Asset Sale, (ii) provisions for all taxes payable as a result
of such Asset Sale, (iii) payments made to retire Indebtedness where payment
of such Indebtedness is secured by the assets or properties the subject of
such Asset Sale, (iv) amounts required to be paid to any Person (other than
the Company or any Restricted Subsidiary) owning a beneficial interest in the
assets subject to the Asset Sale and (v) appropriate amounts to be provided
by the Company or any Restricted Subsidiary, as the case may be, as a
reserve, in accordance with GAAP or, until no longer required by contract
with the buyer, as required by contract with the buyer, against any
liabilities associated with such Asset Sale and retained by the Company or
any Restricted Subsidiary, as the case may be, after such Asset Sale,
including, without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities
under any indemnification obligations associated with such Asset Sale, all as
reflected in an Officers' Certificate delivered to the Trustee and (b) with
respect to any issuance or sale of Capital Stock or options, warrants or
rights to purchase Capital Stock or Indebtedness or Capital Stock that have
been converted into or exchanged for Capital
<PAGE>
12
Stock, the proceeds of such issuance or sale in the form of cash or Temporary
Cash Investments, including payments in respect of deferred payment
obligations when received in the form of, or stock or other assets when
disposed for, cash or Temporary Cash Investments (except to the extent that
such obligations are financed or sold with recourse to the Company or any
Restricted Subsidiary), net of attorneys' fees, accountants' fees and
brokerage, consultation, underwriting and other fees and expenses actually
incurred in connection with such issuance or sale and net of taxes paid or
payable as a result thereof.
"NON-U.S. PERSONS" means persons other than "U.S. Persons" as
defined in Regulation S.
"NOTES" means, collectively, the Company's 8/ /% Senior
Subordinated Notes due 2008 issued hereunder on the Issue Date and pursuant
to the Registration Rights Agreement, and additional notes of the Company
authorized to be issued hereunder pursuant to Section 301.
"OFFICERS' CERTIFICATE" means a certificate signed by the
Chairman, the President or a Vice President, and by the Treasurer, an
Assistant Treasurer, the Secretary or an Assistant Secretary of the Company,
and delivered to the Trustee.
"OPINION OF COUNSEL" means a written opinion of counsel, who
may be counsel for the Company, including an employee of the Company, and who
shall be reasonably acceptable to the Trustee.
"OUTSTANDING," when used with respect to Securities, means, as
of the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(i) Securities theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Securities, or portions thereof, for whose payment
or redemption money in the necessary amount has been theretofore
deposited with the Trustee or any Paying Agent (other than the
Company) in trust or set aside and segregated in trust by the
Company (if the Company shall act as its own Paying Agent) for the
Holders of such Securities; PROVIDED that, if such Securities are to
be redeemed, notice of such redemption has been duly given pursuant
to this Indenture or provision therefor satisfactory to the Trustee
has been made;
(iii) Securities, except and only to the extent provided
in Sections 1202 and 1203, with respect to which the Company has
effected defeasance and/or covenant defeasance as provided in
Article Twelve; and
(iv) Securities which have been paid pursuant to Section
308 or in exchange for or in lieu of which other Securities have
been authenticated and delivered pursuant to this Indenture;
PROVIDED, HOWEVER, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities have given any request, demand,
authorization, direction, consent, notice or waiver hereunder, and for the
purpose of making the calculations required by TIA Section
<PAGE>
13
313, Securities owned by the Company or any other obligor upon the Securities
or any Affiliate of the Company or such other obligor shall be disregarded
and deemed not to be Outstanding, except that, in determining whether the
Trustee shall be protected in making such calculation or in relying upon any
such request, demand, authorization, direction, notice, consent or waiver,
only Securities which a Responsible Officer of the Trustee actually knows to
be so owned shall be so disregarded. Securities so owned which have been
pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Securities and that the pledgee is not the Company or
any other obligor upon the Securities or any Affiliate of the Company or such
other obligor.
"PARI PASSU INDEBTEDNESS" means any Indebtedness of the
Company or a Guarantor that is PARI PASSU in right of payment to the Notes or
a Guarantee of the Notes, as the case may be.
"PAYING AGENT" means any Person (including the Company acting
as Paying Agent) authorized by the Company to pay the principal of (and
premium, if any,), interest or Additional Amounts, if any, on any Securities
on behalf of the Company.
"PERMITTED INDEBTEDNESS" has the meaning specified in Section
1011(b).
"PERMITTED INVESTMENT" means (i) Investments in the Company or
any Restricted Subsidiary or any Person which, as a result of such
Investment, becomes a Restricted Subsidiary; (ii) Indebtedness of the Company
or a Restricted Subsidiary described under clauses (vi) and (vii) of the
definition of "Permitted Indebtedness"; (iii) Temporary Cash Investments;
(iv) receivables owing to the Company or any Restricted Subsidiary, if
created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms, PROVIDED, HOWEVER,
that such trade terms may include such concessionary trade terms as the
Company or any such Restricted Subsidiary deems reasonable under the
circumstances; (v) Investments acquired by the Company or any Restricted
Subsidiary in connection with an Asset Sale permitted under Section 1016 to
the extent such Investments are non-cash proceeds as permitted under such
Section; (vi) guarantees of Indebtedness otherwise permitted by this
Indenture; (vii) Investments in existence on the Issue Date; (viii) customer
advances not to exceed $2.5 million at any one time outstanding; (ix) travel
and relocation loans and advances made to employees in the ordinary course of
business; (x) Investments received in settlement of defaulted receivables or
in connection with the bankruptcy or reorganization of suppliers and
customers and in connection with the settlement of other disputes with
customers and suppliers arising in the ordinary course of business; and (xi)
additional Investments not to exceed $25.0 million at any one time
outstanding.
"PERMITTED RECEIVABLES SECURITIZATION PROGRAM" means a
transaction or series of transactions (including amendments, supplements,
extensions, renewals, replacements, refinancings or modifications thereof)
pursuant to which a Securitization Subsidiary purchases Receivables and
Related Assets from the Company or any Restricted Subsidiary and finances
such Receivables and Related Assets through the issuance of Indebtedness or
equity interests or through the sale of the Receivables and Related Assets or
a fractional undivided interest in the Receivables and Related Assets;
PROVIDED that (i) the Board of Directors shall have determined in good faith
that such Permitted Receivables Securitization Program is economically fair
and
<PAGE>
14
reasonable to the Company and the Securitization Subsidiary, (ii) all sales
of Receivables and Related Assets to or by the Securitization Subsidiary are
made at Fair Market Value, (iii) the financing terms, covenants, termination
events and other provisions thereof shall be market terms (as determined in
good faith by the Board of Directors), (iv) no portion of the Indebtedness of
a Securitization Subsidiary is Guaranteed by or is recourse to the Company or
any Restricted Subsidiary (other than recourse for customary representations,
warranties, covenants and indemnities, none of which shall relate to the
collectability of the Receivables and Related Assets) and (v) neither the
Company nor any Subsidiary has any obligation to maintain or preserve the
Securitization Subsidiary's financial condition.
"PERSON" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivisions thereof.
"PREDECESSOR SECURITY" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that
evidenced by such particular Security; and, for the purposes of this
definition, any Security authenticated and delivered under Section 308 in
exchange for a mutilated security or in lieu of a lost, destroyed or stolen
Security shall be deemed to evidence the same debt as the mutilated, lost,
destroyed or stolen Security.
"PREFERRED STOCK" means with respect to any Person, any and
all shares, interests, participations or other equivalents (however
designated) of such Person's preferred stock whether now outstanding, or
issued after the Issue Date, and including, without limitation, all classes
and series of preferred or preference stock.
"PROGRAM FUNDED AMOUNT" means, at any time, the amount of the
unrecovered aggregate "invested amount" of the purchaser or purchasers (other
than the Company or any Subsidiary) of Receivables and Related Assets or
interests therein sold by the Company and the Subsidiaries pursuant to the
Company's 1998 Receivables Securitization Program excluding amounts
representative of yield or interest earned on such aggregate "invested
amount."
"PUBLIC EQUITY OFFERING" means a bona-fide underwritten sale
to the public of Common Stock of the Company or of United, provided that, in
the case of such a sale of Common Stock of United, the net cash proceeds
thereof are paid to the Company as a capital contribution, pursuant to a
registration statement (other than Form S-8 or a registration statement
relating to securities issuable by any benefit plan of United, the Company or
any Subsidiary) that is declared effective by the Commission.
"QUALIFIED CAPITAL STOCK" of any Person means any and all
Capital Stock of such Person other than Redeemable Capital Stock.
"QUALIFIED INSTITUTIONAL BUYER" or "QIB" means a "qualified
institutional buyer" as that term is defined in Rule 144A under the
Securities Act.
"RECEIVABLES AND RELATED ASSETS" means accounts receivable in
respect of merchandise, goods or services, and instruments, documents,
chattel paper, obligations, general intangibles and other similar assets, in
each case, relating to such receivables, including interests in merchandise
or goods, the sale or lease of which gave rise to such receivable, related
<PAGE>
15
contractual rights, guarantees, insurance proceeds, collections, other
related assets, and proceeds of all of the foregoing.
"REDEEMABLE CAPITAL STOCK" means any Capital Stock that,
either by its terms or by the terms of any security into which it is
convertible or exchangeable or otherwise, is or upon the happening of an
event or passage of time would be, required to be redeemed prior to any
Stated Maturity of the principal of the Securities or is redeemable at the
option of the holder thereof at any time prior to any such Stated Maturity.
"REDEMPTION DATE," when used with respect to any Security to
be redeemed, in whole or in part, means the date fixed for such redemption by
or pursuant to this Indenture.
"REDEMPTION PRICE," when used with respect to any Security to
be redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"REGISTRATION RIGHTS AGREEMENT" means the Exchange and
Registration Rights Agreement among the Company, the Guarantors and the
Initial Purchasers, dated April 15, 1998, relating to the Securities.
"REGISTRATION STATEMENT" means a Registration Statement as
defined in the Registration Rights Agreement.
"REGULAR RECORD DATE" for the interest payable on any Interest
Payment Date means the April 1 or October 1 (whether or not a Business Day),
as the case may be, next preceding such Interest Payment Date.
"REGULATION S" means Regulation S under the Securities Act.
"REGULATION S-X" means Regulation S-X under the Securities Act.
"REPRESENTATIVE" means, with respect to any Designated Senior
Indebtedness or Designated Senior Guarantor Indebtedness, the indenture
trustee or other trustee, agent or representative in respect of such
Indebtedness; provided that if, and so long as, any such Indebtedness lacks
such a representative, then the "Representative" with respect to such
Indebtedness shall be the holders of a majority in outstanding principal
amount (or, if no amounts thereunder are outstanding, the committed amounts)
of such Indebtedness.
"RESALE RESTRICTION TERMINATION DATE" has the meaning
specified in Section 202.
"RESPONSIBLE OFFICER," when used with respect to the Trustee,
means any vice president, any assistant vice president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, the cashier, any
assistant cashier, any trust officer or assistant trust officer, the
controller or any assistant controller or any other officer of the Trustee
customarily performing functions similar to those performed by any of the
above-designated officers, and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of his knowledge of and familiarity with the particular subject.
"RESTRICTED PERIOD" has the meaning specified in Section 202.
<PAGE>
16
"RESTRICTED SUBSIDIARY" means any Subsidiary other than an
Unrestricted Subsidiary.
"SALE AND LEASEBACK TRANSACTION" means any transaction or
series of related transactions pursuant to which the Company or a Restricted
Subsidiary sells or transfers any property or asset in connection with the
leasing, or the resale against installment payments, of such property or
asset to the seller or transferor.
"SECURITIES" has the meaning stated in the first recital of
this Indenture and more particularly means any Securities authenticated and
delivered under this Indenture. For all purposes of this Indenture, the term
"Securities" shall include any Exchange Securities and any Private Exchange
Securities that are issued and exchanged for any Securities pursuant to the
Registration Rights Agreement and this Indenture and any Additional
Securities issued in accordance with the provisions of this Indenture, and,
for purposes of this Indenture, all Securities, Exchange Securities, Private
Exchange Securities and Additional Securities shall vote together as one
series of Securities under this Indenture.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIZATION SUBSIDIARY" means a Consolidated Restricted
Subsidiary or an Unrestricted Subsidiary of the Company which is established
for the limited purpose of acquiring and financing Receivables and Related
Assets and engaging in activities ancillary thereto.
"SECURITY REGISTER" and "SECURITY REGISTRAR" or "REGISTRAR"
have the respective meanings specified in Section 305.
"SENIOR GUARANTOR INDEBTEDNESS" means, with respect to any
Guarantor, the principal of, premium, if any, interest (including interest
accruing after the filing of a petition initiating any proceeding under any
state, federal or foreign bankruptcy laws whether or not allowable as a claim
in such proceeding), Additional Amounts, if any, and all obligations of every
nature of such Guarantor from time to time owed under any Indebtedness of
such Guarantor (except as otherwise provided in this definition), whether
outstanding on the Issue Date or thereafter created, incurred or assumed,
unless, in the case of any particular Indebtedness, the instrument creating
or evidencing the same or pursuant to which the same is outstanding expressly
provides that such Indebtedness shall not be senior in right of payment to
such Guarantor's Guarantee of the Notes. Without limiting the generality of
the foregoing, "Senior Guarantor Indebtedness" shall include the principal of
(and premium, if any) interest (including interest accruing after the filing
of a petition initiating any proceeding under any state, federal or foreign
bankruptcy laws whether or not allowable as a claim in such proceeding),
Additional Amounts, if any, and all other obligations of every nature of any
Guarantor from time to time owed under the Credit Facilities; provided,
however, that any Indebtedness under any refinancing, refunding or
replacement of the Credit Facilities shall not constitute Senior Guarantor
Indebtedness to the extent that the Indebtedness thereunder is by its express
terms subordinate to any other Indebtedness of any Guarantor. Notwithstanding
the foregoing, "Senior Guarantor Indebtedness" shall not include any of the
following (whether or not constituting Indebtedness under this Indenture):
(i) Indebtedness evidenced by the Guarantees of the Notes or guarantees of
the 12 3/4% Notes, (ii) Indebtedness that, by its express terms, is
subordinate or
<PAGE>
17
junior in right of payment to any Indebtedness of any Guarantor, (iii)
Indebtedness which when incurred and without respect to any election under
Section 1111(b) of Title 11, United States Bankruptcy Code of 1978, as
amended, is without recourse to any Guarantor, (iv) Indebtedness which is
represented by Redeemable Capital Stock, (v) any liability for foreign,
federal, state, local or other taxes owed or owing by any Guarantor, (vi)
indebtedness of any Guarantor to a Subsidiary and (vii) any trade payables.
"SENIOR INDEBTEDNESS" means the principal of, premium, if any,
interest (including interest accruing after the filing of a petition
initiating any proceeding under any state, federal or foreign bankruptcy law
whether or not allowable as a claim in such proceeding), Additional Amounts,
if any, and all obligations of every nature of the Company from time to time
owed under any Indebtedness of the Company (except as otherwise provided in
this definition), whether outstanding on the Issue Date or thereafter
created, incurred or assumed, unless, in the case of any particular
Indebtedness, the instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly provides that such Indebtedness shall
not be senior in right of payment to the Notes. Without limiting the
generality of the foregoing, "Senior Indebtedness" shall include the
principal of (and premium, if any), interest (including interest accruing
after the filing of a petition initiating any proceeding under any state,
federal or foreign bankruptcy laws whether or not allowable as a claim in
such proceeding), Additional Amounts, if any, and all other obligations of
every nature of the Company from time to time owed under the Credit
Facilities (including, without limitation, agency fees, commitment fees and
letter of credit fees); PROVIDED, HOWEVER, that any indebtedness under any
refinancing, refunding or replacement of the Credit Facilities shall not
constitute Senior Indebtedness to the extent that the Indebtedness thereunder
is by its express terms subordinate to any other Indebtedness of the Company.
Notwithstanding the foregoing, "Senior Indebtedness" shall not include any of
the following (whether or not constituting Indebtedness under this
Indenture): (i) Indebtedness evidenced by thc Securities or the 12 3/4 %
Notes, (ii) Indebtedness that, by its express terms, is subordinate or junior
in right of payment to any Indebtedness of the Company, (iii) Indebtedness
which, when incurred and without respect to any election under Section
1111(b) of Title 11, United States Bankruptcy Code of 1978, as amended, is
without recourse to the Company, (iv) Indebtedness which is represented by
Redeemable Capital Stock, (v) any liability for foreign, federal, state,
local or other taxes owed or owing by the Company, (vi) Indebtedness of the
Company to a Subsidiary, and (vii) any trade payables.
"SENIOR SUBORDINATED GUARANTOR OBLIGATIONS" means any
principal of, premium, if any, or interest on the Securities payable pursuant
to the terms of a Guarantee of the Securities or upon acceleration, including
any amounts received upon the exercise of rights of rescission or other
rights of action (including claims for damages) or otherwise, to the extent
relating to the purchase price of the Securities or other amounts
corresponding to such principal of, premium, if any, interest or Additional
Amounts, if any, on the Securities.
"SENIOR SUBORDINATED OBLIGATIONS" means any principal of,
premium, if any, interest or Additional Amounts, if any, on the Securities
payable pursuant to the terms of the Securities or upon acceleration,
including any amounts received upon the exercise of rights of rescission or
other rights of action (including claims for damages) or otherwise, to the
extent relating to the purchase price of the Securities or amounts
corresponding to such principal, premium, if any, interest or Additional
Amounts, if any, on the Securities.
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18
"SHELF REGISTRATION STATEMENT" means the Shelf Registration
Statement as defined in the Registration Rights Agreement.
"SIGNIFICANT SUBSIDIARY" means, at any date of determination,
any Restricted Subsidiary that, together with its Subsidiaries, (i) for the
most recent fiscal year of the Company, accounted for more than 10% of the
Consolidated revenues of the Company or (ii) as of the end of such fiscal
year, was the owner of more than 10% of the Consolidated assets of the
Company, all as set forth on the most recently available Consolidated
financial statements of the Company for such fiscal year.
"SPECIAL RECORD DATE" for the payment of any Defaulted
Interest means a date fixed by the Trustee pursuant to Section 309.
"STATED MATURITY" when used with respect to any Indebtedness
or any installment of interest thereon, means the dates specified in such
Indebtedness as the fixed date on which the principal of such Indebtedness or
such installment of interest is due and payable.
"SUBORDINATED INDEBTEDNESS" means Indebtedness of the Company
or a Guarantor subordinated in right of payment to the Notes or a Guarantee
of the Notes, as the case may be.
"SUBSIDIARY" means any Person a majority of the equity
ownership or the Voting Stock of which is at the time owned, directly or
indirectly, by the Company or by one or more other Subsidiaries.
"TEMPORARY CASH INVESTMENTS" means (i) any evidence of
Indebtedness with a maturity of one year or less and issued by the United
States of America, or an instrumentality or agency thereof and guaranteed
fully as to principal, premium, if any, and interest by the United States of
America, (ii) any certificate of deposit with a maturity of one year or less
and issued by, or a time deposit of, a commercial banking institution that is
a member of the Federal Reserve System and that has combined capital and
surplus and undivided profits of not less than $500.0 million whose debt has
a rating, at the time as of which any investment therein is made, of "P-1"
(or higher) according to Moody's Investors Service, Inc. ("Moody's") or any
successor rating agency or "A-1" (or higher) according to Standard & Poor's
Ratings Group ("S&P") or any successor rating agency, (iii) commercial paper
with a maturity of one year or less or industrial revenue bonds issued by a
corporation (other than an Affiliate or Subsidiary of United) organized and
existing under the laws of any state of the United States of America or the
District of Columbia with a rating, at the time as of which any investment
therein is made. of "P-1" (or higher) according to Moody's or "A-l" (or
higher) according to S&P and (iv) any money market deposit accounts issued or
offered by a domestic commercial bank having capital and surplus in excess of
$500.0 million.
"TRUST INDENTURE ACT" or "TIA" means the Trust Indenture Act
of 1939, as amended.
"UNRESTRICTED SUBSIDIARY" means (1) any Subsidiary which at
the time of determination shall be designated an Unrestricted Subsidiary (as
designated by the Board of Directors of the Company, as provided below), (2)
any Subsidiary of an Unrestricted Subsidiary, and (3) United Stationers Hong
Kong Limited and United Worldwide Limited, each of which is a
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19
corporation organized under the laws of Hong Kong. The Board of Directors may
designate any Subsidiary (including any newly acquired or newly formed
Subsidiary) to be an Unrestricted Subsidiary so long as (a) neither the
Company nor any Restricted Subsidiary is directly or indirectly liable for
any Indebtedness of such Subsidiary (except pursuant to a guarantee that, if
it had been made after such designation, would have been permitted to be made
under Section 1012, including Permitted Investments), (b) no default with
respect to any Indebtedness of such Subsidiary would permit (upon notice,
lapse of time or otherwise) any holder of any other Indebtedness of the
Company or any Restricted Subsidiary having a principal amount of $25.0
million or more to declare a default on such other Indebtedness or cause the
payment thereof to be accelerated or payable prior to its stated maturity,
(c) neither the Company nor any Restricted Subsidiary has, prior to the date
of such designation, made an Investment in such Subsidiary unless the amount
of such Investment, if it had been made after the date of such designation,
would have been permitted under Section 1012 (including Permitted
Investments), (d) neither the Company nor any Restricted Subsidiary has a
contract, agreement, arrangement, understanding or obligation of any kind,
whether written or oral, with such Subsidiary other than those that might be
obtained at the time from Persons who are not Affiliates of the Company. Any
such designation by the Board of Directors shall be evidenced to the Trustee
by filing a Board Resolution with the Trustee giving effect to such
designation and, for purposes of Section 1012, shall constitute the making of
an Investment in such Unrestricted Subsidiary as provided under the
definition of Investment. The Board of Directors may designate any
Unrestricted Subsidiary as a Restricted Subsidiary if immediately after
giving effect to such designation there would be no Default under this
Indenture and the Company could incur $1.00 of additional Indebtedness (other
than Permitted Indebtedness) pursuant to Section 1011.
"VOTING STOCK" means stock of the class or classes pursuant to
which the holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the board of directors,
managers or trustees of a corporation (irrespective of whether or not at the
time stock of any other class or classes shall have or might have voting
power by reason of the happening of any contingency).
"WHOLLY OWNED SUBSIDIARY" means a Subsidiary all the Capital
Stock of which (other than directors' qualifying shares or a DE MINIMIS
number of shares required, under applicable law, to be owned by foreign
nationals) is owned by the Company or another Wholly Owned Subsidiary; and
"RESTRICTED WHOLLY OWNED SUBSIDIARY" means a Wholly Owned Subsidiary that is
a Restricted Subsidiary.
"1998 RECEIVABLES SECURITIZATION PROGRAM" means the Company's
receivables securitization program contemplated by the certain United
Stationers Receivables Master Trust Pooling Agreement, dated as of April 3,
1998, among USS Receivables Company, Ltd., the Company and The Chase
Manhattan Bank, and that certain Series 1998-1 supplement thereto.
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any
application or request by the Company to the Trustee to take any action under
any provision of this Indenture, the Company shall furnish to the Trustee an
Officers' Certificate stating that all conditions precedent, if any, provided
for in this Indenture (including any covenant, if compliance therewith
constitutes a condition precedent) relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent,
<PAGE>
20
if any, have been complied with, except that in the case of any such
application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need
be furnished.
Every certificate with respect to compliance with a condition
or covenant provided for in this Indenture (other than pursuant to Section
1008(a)) shall include:
(1) a statement that each individual signing such
certificate or opinion has read such covenant or condition and the
definitions herein relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such
individual, he or she has made such examination or investigation as
is necessary to enable him to express an informed opinion as to
whether or not such covenant or condition has been complied with;
and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters
be certified by, or covered by the opinion of, only one such Person, or that
they be so certified or covered by only one document, but one such Person may
certify or give an opinion with respect to some matters and one or more other
such Persons as to other matters, and any such Person may certify or give an
opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company or the
Guarantors may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless such
officer knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to the matters upon
which his certificate or opinion is based are erroneous. Any such certificate
or Opinion of Counsel may be based, insofar as it relates to factual matters,
upon a certificate or opinion of, or representations by, an officer or
officers of the Company or the Guarantors stating that the information with
respect to such factual matters is in the possession of the Company or the
Guarantors, unless such counsel has actual knowledge that the certificate or
opinion or representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be
consolidated and form one instrument.
SECTION 104. ACTS OF HOLDERS. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Holders may be embodied in and
evidenced by one or more instruments of substantially
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21
similar tenor signed by such Holders in person or by agents duly appointed in
writing; and, except as herein otherwise expressly provided, such action
shall become effective when such instrument or instruments are delivered to
the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or
of a writing appointing any such agent shall be sufficient for any purpose of
this Indenture and conclusive in favor of the Trustee and the Company, if
made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness of
such execution, by an attestation of another authorized officer or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such
instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient
proof of authority. The fact and date of the execution of any such instrument
or writing, or the authority of the Person executing the same, may also be
proved in any other manner which the Trustee deems sufficient.
(c) The principal amount and serial numbers of Securities held
by any Person, and the date of holding the same, shall be proved by the
Security Register.
(d) If the Company shall solicit from the Holders of
Securities any request, demand, authorization, direction, notice, consent,
waiver or other Act, the Company may, at its option, by or pursuant to Board
Resolution, fix in advance a record date for the determination of Holders
entitled to give such request, demand, authorization, direction, notice,
consent, waiver or other Act, but the Company shall have no obligation to do
so. Notwithstanding TIA Section 316(c), such record date shall be the record
date specified in or pursuant to such Board Resolution, which shall be a date
not earlier than the date 10 days prior to the first solicitation of Holders
generally in connection therewith and not later than the date such
solicitation is completed. If such a record date is fixed, such request,
demand, authorization, direction, notice, consent, waiver or other Act may be
given before or after such record date, but only the Holders of record at the
close of business on such record date shall be deemed to be Holders for the
purposes of determining whether Holders of the requisite proportion of
Outstanding Securities have authorized or agreed or consented to such
request, demand, authorization, direction, notice, consent, waiver or other
Act, and for that purpose the Outstanding Securities shall be computed as of
such record date; PROVIDED that no such authorization, agreement or consent
by the Holders on such record date shall be deemed effective unless it shall
become effective pursuant to the provisions of this Indenture not later than
six months after the record date.
(e) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Security shall bind every
future Holder of the same Security and the Holder of every Security issued
upon the registration of transfer thereof or in exchange therefor or in lieu
thereof in respect of anything done, omitted or suffered to be done by the
Trustee or the Company in reliance thereon, whether or not notation of such
action is made upon such Security.
<PAGE>
22
SECTION 105. NOTICES, ETC., TO TRUSTEE AND COMPANY. Any
request, demand, authorization, direction, notice, consent, waiver or Act of
Holders or other document provided or permitted by this Indenture to be made
upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall
be sufficient for every purpose hereunder if made, given, furnished or filed
in writing to or with the Trustee at its Corporate Trust Office, Attention:
Corporate Trust Trustee Administration, or
(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to the
Company addressed to it at the address of its principal office specified in
the first paragraph of this Indenture, or at any other address previously
furnished in writing to the Trustee by the Company.
SECTION 106. NOTICE TO HOLDERS; WAIVER. Where this Indenture
provides for notice of any event to Holders by the Company, the Guarantors or
the Trustee, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid, to
each Holder affected by such event, at his address as it appears in the
Security Register, not later than the latest date, and not earlier than the
earliest date, prescribed for the giving of such notice. In any case where
notice to Holders is given by mail, neither the failure to mail such notice,
nor any defect in any notice so mailed, to any particular Holder shall affect
the sufficiency of such notice with respect to other Holders. Any notice
mailed to a Holder in the manner herein prescribed shall be conclusively
deemed to have been received by such Holder, whether or not such Holder
actually receives such notice. Where this Indenture provides for notice in
any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall
be the equivalent of such notice. Waivers of notice by Holders shall be filed
with the Trustee, but such filing shall not be a condition precedent to the
validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of or irregularities in
regular mail service or by reason of any other cause, it shall be
impracticable to mail notice of any event to Holders when such notice is
required to be given pursuant to any provision of this Indenture, then any
manner of giving such notice as shall be satisfactory to the Trustee shall be
deemed to be a sufficient giving of such notice for every purpose hereunder.
SECTION 107. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 108. SUCCESSORS AND ASSIGNS. All covenants and
agreements in this Indenture by each of the Company and the Guarantors shall
bind their respective successors and assigns, whether so expressed or not.
SECTION 109. SEPARABILITY CLAUSE. In case any provision in
this Indenture or in the Securities shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
<PAGE>
23
SECTION 110. BENEFITS OF INDENTURE. Nothing in this
Indenture or in the Securities, express or implied, shall give to any Person,
other than the parties hereto, any Paying Agent, any Securities Registrar and
their successors hereunder, and the Holders any benefit or any legal or
equitable right, remedy or claim under this Indenture.
SECTION 111. GOVERNING LAW. This Indenture and the
Securities shall be governed by and construed in accordance with the laws of
the State of New York applicable to contracts to be performed entirely in
that state.
SECTION 112. LEGAL HOLIDAYS. In any case where any Interest
Payment Date, Redemption Date, or Stated Maturity or Maturity of any Security
shall not be a Business Day, then (notwithstanding any other provision of
this Indenture or of the Securities) payment of interest or Additional
Amounts, if any, or principal (and premium, if any) need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on the Interest Payment Date, Redemption Date, or at
the Stated Maturity or Maturity; PROVIDED that no additional interest shall
accrue for the period from and after such Interest Payment Date, Redemption
Date, Stated Maturity or Maturity, as the case may be, through such next
succeeding Business Day.
SECTION 113. NO RECOURSE AGAINST OTHERS. No director,
officer, employee or stockholder, as such, of the Company or of a Guarantor
shall have any liability for any obligations of thc Company or a Guarantor
under the Securities or this Indenture or for any claim based on, in respect
of or by reason of such obligations or their creation. By accepting a
Security, each Holder shall waive and release all such liability. The waiver
and release shall be part of the consideration for the issue of the
Securities.
SECTION 114. MISCELLANEOUS. The parties hereto may sign any
number of copies of this Indenture. Each signed copy shall be an original,
but all of them together represent the same agreement. Notwithstanding any
provision of this Indenture, Securities may only be redeemed or repurchased
by the Company or any Guarantor in integral multiples of $1,000.
ARTICLE TWO
SECURITY FORMS
SECTION 201. FORMS GENERALLY. The Initial Securities shall
be known as the "8/ /% Senior Subordinated Notes due 2008" and the Exchange
Securities and the Private Exchange Securities shall be known as the "8/ /%
Senior Subordinated Notes due 2008," in each case, of the Company. The
Securities and the Trustee's certificate of authentication shall be in
substantially the forms annexed hereto as Exhibit A, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other
marks of identification and such legends or endorsements placed thereon as
may be required to comply with the rules of any securities exchange or the
Depositary or as may, consistently herewith, be determined by the officers
executing such Securities, as evidenced by their execution of the Securities.
Any portion of the text of any Security may be set forth on the reverse
thereof, with an appropriate reference thereto on the face of the Security.
Each Security shall be dated the date of its authentication.
<PAGE>
24
The terms and provisions contained in the form of the
Securities annexed hereto as Exhibit A shall constitute, and are hereby
expressly made, a part of this Indenture. To the extent applicable, the
Company, the Guarantors and the Trustee, by their execution and delivery of
this Indenture, expressly agree to such terms and provisions and to be bound
thereby.
Initial Securities offered and sold to Qualified Institutional
Buyers in the United States of America ("RULE 144A SECURITIES") shall be
issued on the Issue Date, and Additional Securities offered and sold to
Qualified Institutional Buyers in the United States of America shall be
issued, in the form of a permanent global security, without interest coupons,
substantially in the form set forth in Exhibit A, with such legends as may be
required by Section 202 (the "RULE 144A GLOBAL SECURITY") deposited with the
Trustee, as custodian for the Depositary, duly executed by the Company, with
the Guarantees of the Guarantors endorsed thereon and authenticated by the
Trustee as hereinafter provided. The Rule 144A Global Security may be
represented by more than one certificate, if so required by the Depositary's
rules regarding the maximum principal amount to be represented by a single
certificate. The aggregate principal amount of the Rule 144A Global Security
may from time to time be increased or decreased by adjustments made on the
records of the Trustee, as custodian for the Depositary or its nominee, as
hereinafter provided.
Initial Securities offered and sold in offshore transactions
to Non-U.S. Persons ("REGULATION S SECURITIES") in reliance on Regulation S
shall be issued on the Issue Date, and Additional Securities offered and sold
in offshore transactions to Non-U.S. Persons in reliance on Regulation S
shall be issued, in the form of a permanent global Security, without interest
coupons, substantially in the form set forth in Exhibit A, with such legends
as may be required by Section 202 (the "REGULATION S GLOBAL SECURITY"). The
Regulation S Global Security will be deposited with the Trustee, as custodian
for the Depositary, duly executed by the Company, with the Guarantees of the
Guarantors endorsed thereon and authenticated by the Trustee as hereinafter
provided. The Regulation S Global Security may be represented by more than
one certificate, if so required by the Depositary's rules regarding the
maximum principal amount to be represented by a single certificate. The
aggregate principal amount of the Regulation S Global Security may from time
to time be increased or decreased by adjustments made on the records of the
Trustee, as custodian for the Depositary or its nominee, as hereinafter
provided.
Initial Securities offered and sold to Institutional
Accredited Investors in the United States of America ("INSTITUTIONAL
ACCREDITED INVESTOR SECURITIES") shall be issued, and Additional Securities
offered and sold to Institutional Accredited Investors in the United States
of America shall be issued, in the form of a permanent global Security
substantially in the form set forth in Exhibit A, with such legends as may be
required by Section 202 (an "INSTITUTIONAL ACCREDITED INVESTOR GLOBAL
SECURITY") deposited with the Trustee, as custodian for the Depositary, duly
executed by the Company, with the Guarantees of the Guarantors endorsed
thereon and authenticated by the Trustee as hereinafter provided. The
Institutional Accredited Investor Global Security may be represented by more
than one certificate, if so required by the Depositary's rules regarding the
maximum principal amount to be represented by a single certificate. The
aggregate principal amount of the Institutional Accredited Investor Global
Security may from time to time be increased or decreased by adjustments made
on the records of the Trustee, as custodian for the Depositary or its
nominee, as hereinafter provided.
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25
The Rule 144A Global Security, the Regulation S Global
Security and the Institutional Accredited Investor Global Security are
sometimes collectively herein referred to as the "GLOBAL SECURITIES."
The definitive Securities shall be printed, lithographed or
engraved on steel-engraved borders or may be produced in any other manner,
all as determined by the officers of the Company and the Guarantors executing
such Securities, as evidenced by their execution of such Securities.
SECTION 202. RESTRICTIVE LEGENDS. Unless and until (i) a
Private Exchange Security is sold under an effective Registration Statement
or (ii) an Initial Security (or an Additional Security, to the extent not
sold by the Company pursuant to an effective registration statement under the
Securities Act) is exchanged for an Exchange Security in connection with an
effective Registration Statement, in each case pursuant to the Registration
Rights Agreement (or another registration rights agreement with respect to
the Additional Securities), the Rule 144A Global Security and the
Institutional Accredited Investor Global Security representing such
Securities shall bear the following legend (the "PRIVATE PLACEMENT LEGEND")
on the face thereof:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE
"RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF
THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUER OR ANY
AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
SUCH SECURITY), ONLY (A) TO THE ISSUER, (B) PURSUANT TO A REGISTRATION
STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR
SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER
THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM
NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D)
PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7)
UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT,
OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE
IN A MINIMUM PRINCIPAL AMOUNT OF $250,000, FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO OR FOR OFFER OR SALE IN
<PAGE>
26
CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F)
PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT, SUBJECT TO THE ISSUER'S AND THE TRUSTEE'S RIGHT PRIOR TO
ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D), (E) OR (F) TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM, AND IN THE CASE OF THE FOREGOING
CLAUSE (E), A CERTIFICATE OF TRANSFER (A FORM OF WHICH MAY BE OBTAINED FROM
THE ISSUER OR THE TRUSTEE) COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE
ISSUER AND THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE
HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
Until the expiration of the restricted period (as defined in
Regulation S), which commences on (and including) the later of (a) the day
upon which the Initial Securities or Additional Securities, as the case may
be, were offered to Persons other than distributors (as defined in Regulation
S) in reliance on Regulation S or (b) the Issue Date or the date of the
closing of the offering of Additional Securities, as the case may be, and
expires 40 consecutive days thereafter (the "RESTRICTED PERIOD"), the
Regulation S Global Security shall bear the following legend on the face
thereof:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO OR FOR THE ACCOUNT
OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY
ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT IT IS NOT A U.S.
PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION, (2) BY ITS
ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY,
PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO
YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON
WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS
SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE ISSUER, (B)
PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER
THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE
144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE
IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE
THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES
ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE
501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS ACQUIRING THE
SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
"ACCREDITED INVESTOR", IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF
$250,000, FOR
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27
INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION
WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, SUBJECT TO THE ISSUER'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY
SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D), (E) OR (F) TO REQUIRE
THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM, AND IN THE CASE OF THE FOREGOING
CLAUSE (E), A CERTIFICATE OF TRANSFER (A FORM OF WHICH MAY BE OBTAINED FROM
THE ISSUER OR THE TRUSTEE) COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE
ISSUER AND THE TRUSTEE. THIS LEGEND WILL BE REMOVED AFTER 40 CONSECUTIVE DAYS
BEGINNING ON AND INCLUDING THE LATER OF (A) THE DAY ON WHICH THE SECURITIES
ARE OFFERED TO PERSONS OTHER THAN DISTRIBUTORS (AS DEFINED IN REGULATION S)
AND (B) THE DATE OF THE CLOSING OF THE ORIGINAL OFFERING. AS USED HEREIN, THE
TERMS "OFFSHORE TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
The Global Securities shall also bear the following legend on
the face thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY ("DTC") TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER REPRESENTATIVE
OF DTC AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A
SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF
THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH
THE RESTRICTIONS SET FORTH IN SECTIONS 306 AND 307 OF THE INDENTURE.
<PAGE>
28
ARTICLE THREE
THE SECURITIES
SECTION 301. TITLE AND TERMS. The aggregate principal amount
of Initial Securities which may be authenticated and delivered under this
Indenture is limited to $100.0 million, and, subject to compliance with the
covenants contained in this Indenture, including Section 1011 as a new
incurrence of Indebtedness by the Issuers, the aggregate principal amount of
Additional Securities which may be authenticated and delivered under this
Indenture is limited to $100.0 million, except in each case for Securities
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Securities pursuant to Section 303, 304, 305, 306,
906, 1010, 1016 or 1108 (including Exchange Securities and Private Exchange
Securities).
The Initial Securities and the Additional Securities shall be
known and designated as the "8/ /% Senior Subordinated Notes due 2008," and the
Exchange Securities and the Private Exchange Securities shall be known and
designated as the "8/ /% Senior Subordinated Notes due 2008," in each case, of
the Company. The Stated Maturity of the Securities shall be April 15, 2008,
and they shall bear interest at the rate of 8.375% per annum from April 15,
1998, or from the most recent Interest Payment Date to which interest has
been paid or duly provided for, payable on October 15, 1998 and semiannually
thereafter on April 15 and October 15 in each year and at said Stated
Maturity, until the principal thereof is paid or duly provided for.
The principal of (and premium, if any, on), interest and
Additional Amounts, if any, on the Securities shall be payable at the office
or agency of the Company maintained for such purpose as provided in Section
1002; PROVIDED, HOWEVER, that, at the option of the Company, interest may be
paid by (i) check mailed to addresses of the Persons entitled thereto as such
addresses shall appear on the Security Register or (ii) wire transfer to an
account located in the United States maintained by the payee.
The Securities shall be redeemable as provided in Article
Eleven.
SECTION 302. DENOMINATIONS. The Securities shall be issuable
only in registered form without coupons and only in denominations of $1,000
and any integral multiple thereof.
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Securities shall be executed on behalf of the Company by its Chairman,
its President or a Vice President, and attested by its Secretary, an
Assistant Secretary or any Vice President. The signature of any of these
officers on the Securities may be manual or facsimile signatures of the
present or any future such authorized officer and may be imprinted or
otherwise reproduced on the Securities.
Securities bearing the manual or facsimile Signatures of
individuals who were, at the time such Securities were executed by such
individuals, the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did
not hold such offices at the date of such Securities.
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29
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities executed by
the Company to the Trustee for authentication, together with a Company Order
for the authentication and delivery of such Securities, and the Trustee in
accordance with such Company Order shall authenticate and deliver such
Securities.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there appears on
such Security a certificate of authentication substantially in the form
provided for herein duly executed by the Trustee by manual signature of an
authorized signatory, and such certificate upon any Security shall be
conclusive evidence, and the only evidence, that such Security has been duly
authenticated and delivered hereunder and is entitled to the benefits of this
Indenture.
In case the Company shall be consolidated or merged with or
into any other Person or shall convey, transfer, lease or otherwise dispose
of its properties and assets substantially as an entirety to any Person, and
the successor Person resulting from such consolidation, or surviving such
merger, or into which the Company shall have been merged, or the Person which
shall have received a conveyance, transfer, lease or other disposition as
aforesaid, shall have executed an indenture supplemental hereto with the
Trustee pursuant to Article Eight, any of the Securities authenticated or
delivered prior to such consolidation, merger, conveyance, transfer, lease or
other disposition may, from time to time, at the request of the successor
Person, be exchanged for other Securities executed in the name of the
successor Person with such changes in phraseology and form as may be
appropriate, but otherwise in substance of like tenor as the Securities
surrendered for such exchange and of like principal amount; and the Trustee,
upon Company Request of the successor Person, shall authenticate and deliver
Securities as specified in such request for the purpose of such exchange. If
Securities shall at any time be authenticated and delivered in any new name
of a successor Person pursuant to this Section in exchange or substitution
for or upon registration of transfer of any Securities, such successor
Person, at the option of the Holders but without expense to them, shall
provide for the exchange of all Securities at the time Outstanding for
Securities authenticated and delivered in such new name.
SECTION 304. TEMPORARY SECURITIES. Pending the preparation
of definitive Securities, the Company may execute, and upon Company Order the
Trustee shall authenticate and deliver, temporary Securities which are
printed, lithographed, typewritten, mimeographed or otherwise produced, in
any authorized denomination, substantially of the tenor of the definitive
Securities in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Securities may determine, as conclusively evidenced by their
execution of such Securities.
If temporary Securities are issued, the Company will cause
definitive Securities to be prepared without unreasonable delay. After the
preparation of definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities upon surrender of the temporary
Securities at the office or agency of the Company designated for such purpose
pursuant to Section 1002, without charge to the Holder. Upon surrender for
cancellation of any
<PAGE>
30
one or more temporary Securities, the Company shall execute and the Trustee
shall authenticate and deliver in exchange therefor a like principal amount
of definitive Securities of authorized denominations. Until so exchanged, the
temporary Securities shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities.
SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND
EXCHANGE. The Company shall cause to be kept at the Corporate Trust Office
of the Trustee a register (the register maintained in such office and in any
other office or agency designated pursuant to Section 1002 being herein
sometimes referred to as the "SECURITY REGISTER") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of transfers of Securities. The Security
Register shall be in written form or any other form capable of being
converted into written form within a reasonable time. At all reasonable
times, the Security Register shall be open to inspection by the Trustee. The
Trustee is hereby initially appointed as security registrar (the "REGISTRAR"
or "SECURITY REGISTRAR") for the purpose of registering Securities and
transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security at
the office or agency of the Company designated pursuant to Section 1002, the
Company shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Securities
of any authorized denomination or denominations of a like aggregate principal
amount.
Furthermore, any Holder of a Global Security shall, by
acceptance of such Global Security, agree that transfers of beneficial
interest in such Global Security may be effected only through a book-entry
system maintained by the Holder of such Global Security (or its agent), and
that ownership of a beneficial interest in the Security shall be required to
be reflected in book entry.
At the option of the Holder, Securities may be exchanged for
other Securities of any authorized denomination and of a like aggregate
principal amount, upon surrender of the Securities to be exchanged at such
office or agency. Whenever any Securities are so surrendered for exchange
(including an exchange of Initial Securities or Additional Securities for
Exchange Securities or Private Exchange Securities), the Company shall
execute, the Guarantors shall endorse and the Trustee shall authenticate and
deliver, the Securities which the Holder making the exchange is entitled to
receive; PROVIDED that no exchange of Initial Securities or Additional
Securities for Exchange Securities shall occur until the Exchange Offer
Registration Statement or another applicable registration statement shall
have been declared effective by the Commission and the Initial Securities or
Additional Securities to be exchanged for Exchange Securities or Private
Exchange Securities shall be cancelled by the Trustee.
All Securities issued upon any registration of transfer or
exchange of Securities shall be the valid obligations of the Company and the
Guarantors, evidencing the same debt, and entitled to the same benefits under
this Indenture, as the Securities surrendered upon such registration of
transfer or exchange.
Every Security presented or surrendered for registration of
transfer or for exchange shall (unless not required by the Company or the
Security Registrar) be duly endorsed,
<PAGE>
31
or be accompanied by a written instrument of transfer, in form satisfactory
to the Company and the Security Registrar, duly executed by the Holder
thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of
transfer or exchange or redemption of Securities, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any registration of transfer or
exchange of Securities, other than exchanges pursuant to Section 304, 906,
1010, 1016 or 1108 not involving any transfer.
The Company shall not be required (i) to issue, register the
transfer of or exchange any Security during a period beginning at the opening
of business 15 days before the selection of Securities to be redeemed under
Section 1104 and ending at the close of business on the day of mailing of the
relevant notice of redemption, or (ii) to register the transfer of or
exchange any Security so selected for redemption in whole or in part, except
the unredeemed portion of any Security being redeemed in part.
SECTION 306. BOOK-ENTRY PROVISIONS FOR GLOBAL SECURITIES.
(a) Each Global Security initially shall (i) be registered in the name of
the Depositary for such global Security or the nominee of such Depositary,
(ii) be delivered to the Trustee as custodian for such Depositary and (iii)
bear legends as set forth in Section 202.
Subject to Section 306(f), members of, or participants in, the
Depositary ("AGENT MEMBERS") shall have no rights under this Indenture with
respect to any Global Security held on their behalf by the Depositary, or the
Trustee as its custodian, or under such Global Security, and the Depositary
may be treated by the Company, the Guarantors, the Trustee and any agent of
the Company, the Guarantors or the Trustee as the absolute owner of such
Global Security for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Company, the Guarantors the Trustee or any
agent of the Company, the Guarantors or the Trustee, from giving effect to
any written certification, proxy or other authorization furnished by the
Depositary or shall impair, as between the Depositary and its Agent Members,
the operation of customary practices governing the exercise of the rights of
a holder of any Security.
(b) Transfers of a Global Security shall be limited to
transfers of such Global Security in whole, but not in part, to the
Depositary, its successors or their respective nominees. Interests of
beneficial owners in a Global Security may be transferred in accordance with
the rules and procedures of the Depositary and the provisions of Section 307.
Beneficial owners may obtain Certificated Securities in exchange for their
beneficial interests in a Global Security upon request in accordance with the
Depositary's and the Security Registrar's procedures. In addition,
Certificated Securities shall be transferred to all beneficial owners in
exchange for their beneficial interests in a Global Security if (i) the
Depositary notifies the Company that it is unwilling or unable to continue as
Depositary for such Global Security and a successor depositary is not
appointed by the Company within 90 days of such notice, (ii) the Company
executes and delivers to the Trustee and Registrar an Officers' Certificate
stating that such Global Security shall be so exchangeable or (iii) an Event
of Default has occurred and is continuing and the Registrar has received a
request from the Depositary.
<PAGE>
32
(c) In connection with any transfer of a portion of the
beneficial interest in a Global Security to beneficial owners who are
required to hold Certificated Securities pursuant to subsection (b) of this
Section, the Registrar shall reflect on its books and records the date and a
decrease in the principal amount of such Global Security in an amount equal
to the principal amount of the beneficial interest in such Global Security to
be transferred, and the Company shall execute, and the Trustee shall
authenticate and deliver, one or more Certificated Securities of like tenor
and amount.
(d) In connection with the transfer of an entire Global
Security to beneficial owners who are required to hold Certificated
Securities pursuant to the fourth sentence of paragraph (b) of this Section,
such Global Security shall be surrendered to the Trustee for cancellation,
and the Company shall execute, and the Trustee shall authenticate and
deliver, to each beneficial owner identified by the Depositary in exchange
for its beneficial interest in such Global Security, an equal aggregate
principal amount of Certificated Securities of authorized denominations.
(e) Any Certificated Security delivered in exchange for an
interest in a Global Security pursuant to paragraph (c) or paragraph (d) of
this Section shall, except as otherwise provided by paragraph (c) of Section
307, bear the applicable legends regarding transfer restrictions applicable
to the Certificated Security set forth in Section 202.
(f) The registered holder of a Global Security may grant
proxies and otherwise authorize any person, including Agent Members and
persons that may hold interests through Agent Members, to take any action
which a Holder is entitled to take under this Indenture or the Securities,
which proxies or authorizations shall be effective notwithstanding the second
paragraph of Section 306(a).
SECTION 307. SPECIAL TRANSFER PROVISIONS. (a) The following
provisions shall apply with respect to any proposed transfer of a Rule 144A
Security or an Institutional Accredited Investor Security prior to the
expiration of the Resale Restriction Termination Date (as defined in Section
202 hereof):
(i) a transfer of a Rule 144A Security or an
Institutional Accredited Investor Security or a beneficial interest therein
to a QIB shall be made upon the representation of the transferee that it is
purchasing the Security for its own account or an account with respect to
which it exercises sole investment discretion and that it and any such
account is a "qualified institutional buyer" within the meaning of Rule 144A
under the Securities Act and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such information
regarding the Company and the Guarantors as the undersigned has requested
pursuant to Rule 144A or has determined not to request such information and
that it is aware that the transferor is relying upon its foregoing
representations in order to claim the exemption from registration provided by
Rule 144A;
(ii) a transfer of a Rule 144A Security or an Institutional
Accredited Investor Security or a beneficial interest therein to an
Institutional Accredited Investor shall be made upon receipt by the Trustee
or its agent of a certificate substantially in the form set forth in Exhibit
B annexed hereto from the proposed transferee and, if requested by the
Company or the Trustee,
<PAGE>
33
the delivery of an opinion of counsel, certifications and/or other
information satisfactory to each of them; and
(iii) a transfer of a Rule 144A Security or an Institutional
Accredited Investor Security or a beneficial interest therein to a Non-U.S.
Person shall be made upon receipt by the Trustee or its agent of a
certificate substantially in the form set forth in Exhibit C annexed hereto
from the proposed transferee and, if requested by the Company or the Trustee,
the delivery of an opinion of counsel, certifications and/or other
information satisfactory to each of them.
(b) The following provisions shall apply with respect to any
proposed transfer of a Regulation S Security prior to the expiration of the
Restricted Period:
(i) a transfer of a Regulation S Security or a
beneficial interest therein to a QIB shall be made upon the representation of
the transferee that it is purchasing the Security for its own account or an
account with respect to which it exercises sole investment discretion and
that it and any such account is a "qualified institutional buyer" within the
meaning of Rule 144A under the Securities Act and is aware that the sale to
it is being made in reliance on Rule 144A and acknowledges that it has
received such information regarding the Company and the Guarantors as the
undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon its foregoing representations in order to claim the exemption from
registration provided by Rule 144A;
(ii) a transfer of a Regulation S Security or a
beneficial interest therein to an Institutional Accredited Investor shall be
made upon receipt by the Trustee or its agent of a certificate substantially
in the form set forth in Exhibit B annexed hereto from the proposed
transferee and, if requested by the Company or the Trustee, the delivery of
an opinion of counsel, certifications and/or other information satisfactory
to each of them; and
(iii) a transfer of a Regulation S Security or a
beneficial interest therein to a Non-U.S. Person shall be made upon, if
requested by the Company or the Trustee, the delivery of an opinion of
counsel, certifications and/or other information satisfactory to each of them.
Prior to or on the expiration of the Restricted Period,
beneficial interests in a Regulation S Global Security may only be held
through Morgan Guaranty Trust Company of New York, Brussels Office, as
operator of the Euroclear System ("Euroclear") or Cedel Bank, societe anonyme
("Cedel") (as indirect participants in DTC) or another agent member of
Euroclear and Cedel acting for and on behalf of them, unless exchanged for
interests in the Rule 144A Global Security or the Institutional Accredited
Investor Global Security in accordance with the certification requirements
hereof. During the Restricted Period, interests in the Regulation S Global
Security, if any, may be exchanged for interests in the Rule 144A Global
Security, the Institutional Accredited Investor Global Security or for
Certificated Securities only in accordance with the certification
requirements described in this Section 307.
After the expiration of the Restricted Period, interests in
the Regulation S Security may be transferred without requiring the
certification set forth in Exhibit C annexed hereto or any additional
certification.
<PAGE>
34
(c) PRIVATE PLACEMENT LEGEND. Upon the transfer, exchange or
replacement of Securities not bearing the Private Placement Legend, the
Registrar shall deliver Securities that do not bear the Private Placement
Legend. Upon the transfer, exchange or replacement of Securities bearing the
Private Placement Legend, the Registrar shall deliver only Securities that
bear the Private Placement Legend unless there is delivered to the Registrar
an Opinion of Counsel reasonably satisfactory to the Company and the Trustee
to the effect that neither such legend nor the related restrictions on
transfer are required in order to maintain compliance with the provisions of
the Securities Act.
(d) GENERAL. By its acceptance of any Security bearing the
Private Placement Legend, each Holder of such a Security acknowledges the
restrictions on transfer of such Security set forth in this Indenture and in
the Private Placement Legend and agrees that it will transfer such Security
only as provided in this Indenture.
(e) If requested, the Company shall deliver to the Trustee an
Officer's Certificate setting forth the dates on which the Restricted Period
terminates.
The Registrar shall retain copies of all letters, notices and
other written communications received pursuant to Section 306 or this Section
307. The Company shall have the right to inspect and make copies of all such
letters, notices or other written communications at any reasonable time upon
the giving of reasonable written notice to the Registrar.
(f) NO OBLIGATION OF THE TRUSTEE. (i) The Trustee shall have
no responsibility or obligation to any beneficial owner of a Global Security,
a member of, or a participant in the Depositary or other Person with respect
to any ownership interest in the Securities, with respect to the accuracy of
the records of the Depositary or its nominee or of any participant or member
thereof or with respect to the delivery to any participant, member,
beneficial owner or other Person (other than the Depositary) of any notice
(including any notice of redemption) or the payment of any amount, under or
with respect to such Securities. All notices and communications to be given
to the Holders and all payments to be made to Holders under the Securities
shall be given or made only to the registered Holders (which shall be the
Depositary or its nominee in the case of a Global Security). The rights of
beneficial owners in any Global Security in global form shall be exercised
only through the Depositary subject to the applicable rules and procedures of
the Depositary. The Trustee may conclusively rely and shall be fully
protected and indemnified pursuant to Section 606 in relying upon information
furnished by the Depositary with respect to any beneficial owners, its
members and participants.
(ii) The Trustee shall have no obligation or duty to
monitor, determine or inquire as to compliance with any restrictions on
transfer imposed under this Indenture or under applicable law with respect to
any transfer of any interest in any Security (including without limitation
any transfers between or among Depositary participants, members or beneficial
owners in any Global Security) other than to require delivery of such
certificates and other documentation of evidence as are expressly required
by, and to do so if and when expressly required by, the terms of this
Indenture, and to examine the same to determine substantial compliance as to
form with the express requirements hereof.
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35
(iii) Each Holder of a Security agrees to indemnify the
Company and the Trustee against any liability that may result from the
transfer, exchange or assignment of such Holder's Security in violation of
any provision of this Indenture and/or applicable United States federal or
state securities law.
SECTION 308. MUTILATED, DESTROYED, LOST AND STOLEN
SECURITIES. If (i) any mutilated Security is surrendered to the Trustee, or
(ii) the Company and the Trustee receive evidence to their satisfaction of
the destruction, loss or theft of any Security, and there is delivered to the
Company and the Trustee (at the expense of the Holder) such security or
indemnity as may be required by them to save each of them harmless, then, in
the absence of notice to the Company or the Trustee that such Security has
been acquired by a bona fide purchaser, the Company shall execute and upon
Company Order the Trustee shall authenticate and deliver, in exchange for any
such mutilated Security or in lieu of any such destroyed, lost or stolen
Security, a new Security of like tenor and principal amount, bearing a number
not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security
has become or is about to become due and payable, the Company in its
discretion may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the
Company may require the payment by the Holder of such mutilated, destroyed,
lost or stolen Security of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of
any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company and any Guarantor, whether
or not the destroyed, lost or stolen Security shall be at any time
enforceable by anyone, and shall be entitled to all benefits of this
Indenture equally and proportionately with any and all other Securities duly
issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 309. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Interest on any Security which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in
whose name such Security is registered at the close of business on the
Regular Record Date immediately prior to such Interest Payment Date at the
office or agency of the Company maintained for such purpose pursuant to
Section 1002; PROVIDED, HOWEVER, that each installment of interest may at the
Company's option be paid by (i) mailing a check for such interest, payable to
or upon the written order of the Person entitled thereto pursuant to Section
310, to the address of such Person as it appears in the Security Register or
(ii) wire transfer to an account located in the United States maintained by
the payee.
Any interest on any Security which is payable, but is not
punctually paid or duly provided for, on any interest Payment Date shall
forthwith cease to be payable to the Holder on
<PAGE>
36
the Regular Record Date by virtue of having been such Holder, and such
defaulted interest and (to the extent lawful) interest on such defaulted
interest at the rate borne by the Securities (such defaulted interest and
interest thereon herein collectively called "DEFAULTED INTEREST") may be paid
by the Company, at its election in each case, as provided in clause (1) or
(2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities are registered at the
close of business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Company shall
notify the Trustee in writing of the amount of Defaulted Interest proposed to
be paid on each Security and the date of the proposed payment, and at the
same time the Company shall deposit with the Trustee an amount of money equal
to the aggregate amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for such
deposit prior to the date of the proposed payment, such money when deposited
to be held in trust for the benefit of the Persons entitled to such Defaulted
Interest as in this clause provided. Thereupon the Trustee shall fix a
Special Record Date for the payment of such Defaulted Interest which shall be
not more than 30 days and not less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by the Trustee
of the notice of the proposed payment. The Trustee shall promptly notify the
Company of such Special Record Date, and in the name and at the expense of
the Company, shall cause notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor to be given in the manner
provided for in Section 106, not less than 10 days prior to such Special
Record Date. Notice of the proposed payment of such Defaulted Interest and
the Special Record Date therefor having been so given, such Defaulted
Interest shall be paid to the Persons in whose names the Securities (or their
respective Predecessor Securities) are registered at the close of business on
such Special Record Date and shall no longer be payable pursuant to the
following clause (2).
(2) The Company may make payment of any Defaulted Interest
in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this clause, such
manner of payment shall not be deemed impracticable by the Trustee.
Subject to the foregoing provisions of this Section, each
Security delivered under this Indenture upon registration of transfer of or
in exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.
SECTION 310. PERSONS DEEMED OWNERS. Prior to the due
presentment of a Security for registration of transfer, the Company, the
Trustee and any agent of the Company or the Trustee may treat the Person in
whose name such Security is registered as the owner of such Security for the
purpose of receiving payment of principal of (and premium, if any, on),
interest and Additional Amounts, if any, on such Security (subject to
Sections 305 and 309) and for all other purposes whatsoever, whether or nor
such Security be overdue, and none of the Company, the Trustee or any agent
of the Company or the Trustee shall be affected by notice to the contrary.
<PAGE>
37
SECTION 311. CANCELLATION. All Securities surrendered for
payment, redemption, registration of transfer or exchange shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly cancelled by it. The Company may at any time deliver to
the Trustee for cancellation any Securities previously authenticated and
delivered hereunder which the Company may have acquired in any manner
whatsoever, and may deliver to the Trustee (or to any other Person for
delivery to the Trustee) for cancellation any Securities previously
authenticated hereunder which the Company has not issued and sold, and all
Securities so delivered shall be promptly cancelled by the Trustee. If the
Company shall so acquire any of the Securities, however, such acquisition
shall not operate as a redemption or satisfaction of the Indebtedness
represented by such Securities unless and until the same are surrendered to
the Trustee for cancellation. No Securities shall be authenticated in lieu of
or in exchange for any Securities cancelled as provided in this Section,
except as expressly permitted by this Indenture. All cancelled Securities
held by the Trustee shall be returned to the Company.
SECTION 312. COMPUTATION OF INTEREST. Interest on the
Securities shall be computed on the basis of a 360 day year of twelve 30-day
months.
SECTION 313. CUSIP NUMBERS. The Company in issuing the
Securities may use "CUSIP" or "CINS" numbers (if then generally in use) and,
if so, the Trustee shall use "CUSIP" or "CINS" numbers, as the case may be,
in notices of redemption as a convenience to Holders; PROVIDED that any such
notice may state that no representation is made as to the correctness of such
numbers either as printed on the Securities or as contained in any notice of
a redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be
affected by any defect in or omission of such numbers. The Company will
promptly notify the Trustee of any change in the "CUSIP" or "CINS" numbers.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE. This
Indenture will be discharged and shall cease to be of further effect (except
as to surviving rights of registration of transfer or exchange of the
Securities, as expressly provided for herein) as to all Outstanding
Securities and the Trustee, at the expense of the Company, shall execute
proper instruments acknowledging satisfaction and discharge of this Indenture
when
(1) either
(a) all the Securities theretofore authenticated and
delivered (other than lost, stolen or destroyed Securities which have been
replaced or paid as provided in Section 308 have been cancelled or have been
delivered to the Trustee for cancellation; or
(b) all Securities not theretofore delivered to the Trustee
for cancellation
(i) have become due and payable,
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38
(ii) will become due and payable at their Stated
Maturity within one year, or
(iii) are to be called for redemption within one
year under arrangements satisfactory to the Trustee for the giving of notice
of redemption by the Trustee in the name, and at the expense, of the Company,
and the Company or any Guarantor has irrevocably deposited or caused to be
deposited with the Trustee funds in an amount sufficient to pay and discharge
the entire Indebtedness on the Securities not theretofore delivered to the
Trustee for cancellation, including principal of, premium, if any, accrued
interest and any Additional Amounts at such Stated Maturity or redemption
date;
(2) the Company or any Guarantor has paid or caused to be
paid all other sums payable under this Indenture by the Company and each
Guarantor, including all fees and expenses of the Trustee; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that (a) all conditions
precedent hereunder relating to the satisfaction and discharge of this
Indenture have been complied with and (b) such satisfaction and discharge
will not result in a breach or violation of, or constitute a default under,
this Indenture.
Notwithstanding satisfaction and discharge of this Indenture,
the obligations of the Company to the Trustee under Section 606 and, if money
shall have been deposited with the Trustee pursuant to subclause (b) of
clause (1) of this Section, the obligations of the Trustee under Section 402
and the last paragraph of Section 1003 shall survive any such satisfaction
and discharge.
SECTION 402. APPLICATION OF TRUST MONEY. Subject to the
provisions of the last paragraph of Section 1003, all money deposited with
the Trustee pursuant to Section 401 shall be held in trust and applied by it,
in accordance with the provisions of the Securities and this Indenture, to
the payment, either directly or through any Paying Agent (including the
Company acting as its own Paying Agent) as the Trustee may determine, to the
Persons entitled thereto, of the principal (and premium, if any), interest
and Additional Amounts, if any, for whose payment such money has been
deposited with the Trustee; but such money need not be segregated from other
funds except to the extent required by law.
If the Trustee or Paying Agent is unable to apply any money or
U.S. Government Obligations in accordance with Section 401 by reason of any
legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company's and the Guarantors' obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to Section 401; PROVIDED that if the Company
and the Guarantors have made any payment of principal of, premium, if any,
interest or Additional Amounts, if any, on any Securities because of the
reinstatement of such obligations, the Company and the Guarantors shall be
subrogated to the rights of the Holders of such Securities to receive such
payment from the money or Government Obligations held by the Trustee or
Paying Agent.
<PAGE>
39
ARTICLE FIVE
REMEDIES
SECTION 501. EVENTS OF DEFAULT. "EVENT OF DEFAULT," wherever
used herein, means any one of the following events (whatever the reason for
such Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body):
(1) there shall be a default in the payment of any interest
on any Security when it becomes due and payable, and such default shall
continue for a period of 30 days, whether or not such payment is prohibited
under the provisions of Article Fourteen or Article Fifteen;
(2) there shall be a default in the payment of the principal
of (or premium, if any, on) any Security at its Maturity (upon acceleration,
optional or mandatory redemption, required repurchase or otherwise), whether
or not such payment is prohibited under the provisions of Article Fourteen or
Article Fifteen;
(3) (a) there shall bc a default in the performance, or
breach, of any covenant or agreement of the Company, United or any Guarantor
under this Indenture (other than a default in the performance of, or breach
of, a covenant or agreement which is specifically dealt with in clause (1) or
(2) or in clauses (b), (c) and (d) of this clause (3)) and such default or
breach shall continue for a period of 30 days after written notice has been
given, by certified mail, (x) to the Company by the Trustee or (y) to the
Company and the Trustee by the Holders of at least 25% in aggregate principal
amount of the Outstanding Securities, specifying such default or breach and
requiring it to be remedied and stating that such notice is a "Notice of
Default" under this Indenture; (b) there shall be a default in the
performance of, or breach of, the provisions described in Article Eight; (c)
the Company shall have failed to make or consummate an Offer in accordance
with the provisions of Section 1016; or (d) the Company shall have failed to
make or consummate a Change of Control Offer in accordance with the
provisions of Section 1010;
(4) one or more defaults shall have occurred under any
agreements, indentures or instruments under which the Company or any
Restricted Subsidiary then has outstanding indebtedness in excess of $25.0
million principal amount in the aggregate and, if not already matured at its
final maturity in accordance with its terms, such Indebtedness shall have
been accelerated;
(5) any Guarantee shall for any reason cease to be, or shall
be asserted in writing by such Guarantor, United or the Company not to be, in
full force and effect and enforceable in accordance with its terms (other
than a Guarantee of a Subsidiary that is not a Significant Subsidiary and has
Consolidated Net Worth of less than $1.0 million at such time) or any
Restricted Subsidiary shall fail to Guarantee the Securities as required by
Section 1017;
(6) one or more judgments, orders or decrees for the payment
of money in excess of $25.0 million, either individually or in the aggregate
(net of amounts covered by
<PAGE>
40
insurance, bond, surety or similar instrument), shall be entered against the
Company, United or any Restricted Subsidiary, or any of their respective
properties, and shall not be discharged and either (a) any creditor shall
have commenced an enforcement proceeding upon such judgment, order or decree
or (b) there shall have been a period of 60 consecutive days during which a
stay of enforcement of such judgment or order, by reason of an appeal or
otherwise, shall not be in effect;
(7) there shall have been the entry by a court of competent
jurisdiction of (a) a decree or order for relief in respect of the Company,
United or any Significant Subsidiary in an involuntary case or proceeding
under any applicable Bankruptcy Law or (b) a decree or order adjudging the
Company, United or any Significant Subsidiary bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment or composition of or in
respect of the Company, United or any Significant Subsidiary under any
applicable federal or state law, or appointing a custodian, receiver,
liquidator, assignee, trustee, sequestrator (or other similar official) of
the Company, United or any Significant Subsidiary or of any substantial part
of their respective properties, or ordering the winding up or liquidation of
their affairs, and any such decree or order for relief shall continue to be
in effect, or any such other decree or order shall be unstayed and in effect,
for a period of 60 consecutive days; or
(8) (a) the Company, United or any Significant Subsidiary
commences a voluntary case or proceeding under any applicable Bankruptcy Law
or any other case or proceeding to be adjudicated bankrupt or insolvent, (b)
the Company, United or any Significant Subsidiary consents to the entry of a
decree or order for relief in respect of the Company, United or any
Significant Subsidiary in an involuntary case or proceeding under any
applicable Bankruptcy Law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, (c) the Company, United or any
Significant Subsidiary files a petition or answer or consent seeking
reorganization or relief under any applicable federal or state law, (d) the
Company, United or any Significant Subsidiary (x) consents to the filing of
such petition or the appointment of, or taking possession by, a custodian,
receiver, liquidator, assignee, trustee, sequestrator or similar official of
the Company, United or any Significant Subsidiary or of any substantial part
of their respective properties or (y) makes an assignment for the benefit of
creditors or (e) the Company, United or any Significant Subsidiary takes any
corporate action in furtherance of any such actions in this clause (8).
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND
ANNULMENT. If an Event of Default (other than as specified in Section 501(7)
or 501(8)) shall occur and be continuing, the Trustee or the Holders of not
less than 25% in aggregate principal amount of the Securities then
Outstanding may, and the Trustee at the request of such Holders shall,
declare all unpaid principal of (and premium, if any, on), accrued interest
and Additional Amounts, if any, on all the Securities to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if
given by the Holders of the Securities); PROVIDED that so long as the Credit
Facilities are in effect, such declaration shall not become effective until
the earlier of (a) five Business Days after receipt of such notice of
acceleration from the Holders or the Trustee by the agent under the Credit
Facilities or (b) acceleration of the Indebtedness under the Credit
Facilities. Thereupon such principal shall become immediately due and
payable, and the Trustee may, at its discretion, proceed to protect and
enforce the rights of the Holders of Securities by appropriate judicial
proceeding. If an Event of Default specified in Section 501(7) or 501(8)
<PAGE>
41
occurs, then all the Securities shall IPSO FACTO become and be immediately
due and payable, in an amount equal to the principal amount of the
Securities, together with accrued and unpaid interest, if any, to the date
the Securities become due and payable, without any declaration or other act
on the part of the Trustee or any Holder. The Trustee or, if notice of
acceleration is given by the Holders, the Holders shall give notice to the
agent under the Credit Facilities of any such acceleration; PROVIDED that
failure to give such notice shall not affect the validity thereof.
At any time after a declaration of acceleration has been made,
but before a judgment or decree for payment of the money due has been
obtained by the Trustee, the Holders of a majority in aggregate principal
amount of Securities Outstanding, by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences if:
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay:
(a) all sums paid or advanced by the Trustee hereunder and
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel,
(b) all overdue interest on all Securities, and
(c) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate borne by the Securities;
(2) all Events of Default, other than the non-payment of
principal of the Securities which have become due solely by such declaration
of acceleration, have been cured or waived as provided in Section 513; and
(3) the rescission will not conflict with any judgment or
decree of a court of competent jurisdiction.
No such rescission shall affect any subsequent default or
impair any right consequent thereon.
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR
ENFORCEMENT BY TRUSTEE. The Company covenants that if:
(a) default is made in the payment of any installment of
interest on any Security when such interest becomes due and payable and such
default continues for a period of 30 days, or
(b) default is made in the payment of the principal of (or
premium, if any, on) any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to the
Trustee for the benefit of the Holders of such Securities, the whole amount
then due and payable on such Securities for principal (and premium, if any),
interest and Additional Amounts, if any, and interest on any overdue
principal (and premium, if any) and, to the extent that payment of such
interest shall be legally enforceable, upon any overdue installment of
interest and Additional Amounts, if any, at
<PAGE>
42
the rate borne by the Securities, and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel, except costs and expenses incurred as
a result of the Trustee's negligence or bad faith.
If the Company fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name as trustee of an express trust, may
institute a judicial proceeding for the collection of the sums so due and
unpaid, may prosecute such proceeding to judgment or final decree and may
enforce the same against the Company, any Guarantor, or any other obligor
upon the Securities and collect the moneys adjudged or decreed to be payable
in the manner provided by law out of the property of the Company, any
Guarantor, or any other obligor upon the Securities, wherever situated.
If an Event of Default occurs and is continuing, the Trustee
may in its discretion proceed to protect and enforce its rights and the
rights of the Holders by such appropriate judicial proceedings as the Trustee
shall deem most effectual to protect and enforce any such rights, whether for
the specific enforcement of any covenant or agreement in this Indenture or in
aid of the exercise of any power granted herein, or to enforce any other
proper remedy.
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM. In case of
the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Company or any other obligor upon the Securities
or the property of the Company or of such other obligor or their creditors,
the Trustee (irrespective of whether the principal of the Securities shall
then be due and payable as therein expressed or by declaration or otherwise
and irrespective of whether the Trustee shall have made any demand on the
Company for the payment of overdue principal, premium, if any, interest or
Additional Amounts, if any) shall be entitled and empowered, by intervention
in such proceeding or otherwise,
(i) to file and prove a claim for the whole amount of
principal (and premium, if any) and interest owing and unpaid in respect of
the Securities and to file such other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee (including any claim
for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, unless incurred as a result of the Trustee's
negligence or bad faith) and of the Holders allowed in such judicial
proceeding, and
(ii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator,
sequestrator or similar official in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Trustee and, in the
event that the Trustee shall consent to the making of such payments directly
to the Holders, to pay the Trustee any amount due it for the reasonable
- -compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel, unless incurred as a result of the Trustee's negligence
or bad faith, and any other amounts due the Trustee under Section 606.
<PAGE>
43
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting
the Securities or the rights of any Holder, or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
SECURITIES. All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the
possession of any of the Securities or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the
Trustee shall be brought in its own name and as trustee of an express trust,
and any recovery of judgment shall, after provision for the payment of the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, be for the ratable benefit of the Holders in respect
of which such judgment has been recovered.
SECTION 506. APPLICATION OF MONEY COLLECTED. Any money
collected by the Trustee pursuant to this Article shall be applied in the
following order, at the date or dates filed by the Trustee and, in case of
the distribution of such money on account of principal (or premium, if any)
or interest, upon presentation of the Securities and the notation thereon of
the payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under
Section 606;
SECOND: To the payment of the amounts then due and unpaid for
principal of (and premium, if any, on,), interest and Additional Amounts, if
any, on the Securities in respect of which or for the benefit of which such
money has been collected, ratably, without preference or priority of any
kind, according to the amounts due and payable on such Securities for
principal (and premium, if any), interest and Additional Amounts, if any,
respectively; and
THIRD: The balance, if any, to the Company.
SECTION 507. LIMITATION ON SUITS. No Holder shall have any
right to institute any proceeding, judicial or otherwise, with respect to
this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless
(1) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(2) the Holders of not less than 25% in principal amount of
the Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(4) the Trustee for 30 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such proceeding;
and
<PAGE>
44
(5) no direction inconsistent with such written request has
been given to the Trustee during such 30-day period by the Holders of a
majority or more in principal amount of the Outstanding Securities;
it being understood and intended that no one or more Holders
shall have any right in any manner whatever by virtue of, or by availing of,
any provision of this Indenture to affect, disturb or prejudice the rights of
any other Holders, or to obtain or to seek to obtain priority or preference
over any other Holders or to enforce any right under this Indenture, except
in the manner herein provided and for the equal and ratable benefit of all
the Holders.
SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE
PRINCIPAL, PREMIUM , INTEREST AND ADDITIONAL AMOUNTS. Notwithstanding any
other provision in this Indenture, the Holder of any Security shall have the
right, which is absolute and unconditional, to receive payment, as provided
herein (including, if applicable, Article Twelve) and in such Security of the
principal of (and premium, if any, on), interest (subject to Section 309) and
Additional Amounts, if any, on such Security on the respective Stated
Maturities expressed in such Security (or, in the case of redemption, on the
Redemption Date) and to institute suit for the enforcement of any such
payment, and such rights shall not be impaired without the consent of such
Holder.
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES. If the
Trustee or any Holder has instituted any proceeding to enforce any right or
remedy under this Indenture and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then and in every such case, subject to any determination in
such proceeding, the Company, the Trustee and the Holders shall be restored
severally and respectively to their former positions hereunder and thereafter
all rights and remedies of the Trustee and the Holders shall continue as
though no such proceeding had been instituted.
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE. Except as
otherwise provided with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Securities in the last paragraph of Section 308, no
right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 511. DELAY OR OMISSION NOT WAIVER. No delay or
omission of the Trustee or of any Holder of any Security to exercise any
right or remedy accruing upon any Event of Default shall impair any such
right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law
to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the
case may be.
SECTION 512. CONTROL BY HOLDERS. The Holders of not less
than a majority in principal amount of the Outstanding Securities shall have
the right to direct the time, method and
<PAGE>
45
place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred on the Trustee, PROVIDED that
(1) such direction shall not be in conflict with any rule of
law or with this Indenture,
(2) subject to the provision of Section 315 of the Trust
Indenture Act, the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction, and
(3) the Trustee need not take any action which might involve
it in personal liability or be unjustly prejudicial to the Holders not
consenting.
SECTION 513. WAIVER OF PAST DEFAULTS. The Holders of not
less than a majority in principal amount of the Outstanding Securities may on
behalf of the Holders of all the Securities waive any past default hereunder
and its consequences, except a default
(1) in respect of the payment of the principal of (or premium,
if any, on), interest and Additional Amounts, if any, on any Security, or
(2) in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of the Holder
of each Outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured,
for every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right
consequent thereon.
SECTION 514. WAIVER OF STAY OR EXTENSION LAWS. The Company
and each Guarantor covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of this Indenture; and the Company and each
Guarantor (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
SECTION 515. UNDERTAKING FOR COSTS. In any suit for the
enforcement of any right or remedy under this Indenture or the Securities or
in any suit against the Trustee for any action taken or omitted by it as
Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in the suit, having
due regard to the merits and good faith of the claims or defenses made by the
party litigant. This Section does not apply to a suit by the Trustee or a
suit by Holders of more than 10% in principal amount of the Securities.
<PAGE>
46
ARTICLE SIX
THE TRUSTEE
SECTION 601. NOTICE OF DEFAULTS. Within 90 days after the
occurrence of any Default hereunder, the Trustee shall transmit in the manner
and to the extent provided in TIA Section 313(c), notice of such Default
hereunder known to the Trustee, unless such Default shall have been cured or
waived; PROVIDED, HOWEVER, that, except in the case of a Default in the
payment of the principal of (or premium, if any, on), interest or Additional
Amounts, if any, on any Security or in the payment of any sinking fund
installment, the Trustee shall be protected in withholding such notice if and
so long as the board of directors, the executive committee or a trust
committee of directors and/or Responsible Officers of the Trustee in good
faith determines that the withholding of such notice is in the interest of
the Holders.
SECTION 602. CERTAIN RIGHTS OF TRUSTEE. Subject to the
provisions of TIA Sections 315(a) through 315(d):
(1) the Trustee may conclusively rely and shall be
protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document whether in its original or facsimile
form believed by it to be genuine and to have been signed or presented by the
proper party or parties;
(2) any request or direction of the Company mentioned
herein shall be sufficiently evidenced by a Company Request or Company Order
and any resolution of the Board of Directors may be sufficiently evidenced by
a Board Resolution;
(3) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a manner be proved or established prior
to taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
gross negligence or bad faith on its part, rely conclusively upon an
Officers' Certificate;
(4) the Trustee may consult with counsel selected by it and
the advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon;
(5) the Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless such
Holders shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which might be incurred by it in
compliance with such request or direction;
(6) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry
or
<PAGE>
47
investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the Company,
personally or by agent or attorney at the sole expense of the Company and
shall incur no liability or additional liability of any kind by reason of
such inquiry or investigation;
(7) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys and the Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or attorney appointed with
due care by it hereunder;
(8) the Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith and believed by it to be authorized
or within the discretion or rights or powers conferred upon it by this
Indenture;
(9) the Trustee shall not be required to take notice or be
deemed to have notice of any Default under this Indenture except failure by
the Company to cause to be made any of the payments to the Trustee required
to be made by Article Three hereof unless the Trustee shall be specifically
notified in writing of such default by the Company, or by Holders of at least
10% in principal amount of the Outstanding Securities. All notices or the
instruments required by this Indenture to be delivered to the Trustee must,
in order to be effective, be delivered to a Responsible Officer of the
Trustee at the Corporate Trust Office, and in the absence of such notice so
delivered the Trustee may conclusively assume there is no default except as
aforesaid; and
(10) if an Event of Default has occurred and is continuing,
the Trustee shall exercise the rights and powers vested in it by this
Indenture, and shall use the same degree of care and skill in their exercise
as a prudent Person would exercise or use under the circumstances in the
conduct of such Person's own affairs.
The Trustee shall not be required to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of
its duties hereunder, or in the exercise of any of its rights or powers.
SECTION 603. TRUSTEE NOT RESPONSIBLE FOR RECITALS OR ISSUANCE
OF SECURITIES. The recitals contained herein and in the Securities, except
for the Trustee's certificates of authentication, shall be taken as the
statements of the Company, and the Trustee assumes no responsibility for
their correctness. The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Securities, except that the Trustee
represents that it is duly authorized to execute and deliver this Indenture,
authenticate the Securities and perform its obligations hereunder and that
any statements made by it in a Statement of Eligibility on Form T-1 supplied
to the Company are (or when delivered, will be) true and accurate, subject to
the qualifications set forth therein. The Trustee shall not be accountable
for the use or application by the Company of Securities or the proceeds
thereof.
SECTION 604. TRUSTEE MAY HOLD SECURITIES. The Trustee, any
Paying Agent, any Security Registrar or any other agent of the Company or of
the Trustee, in its individual or
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48
any other capacity, may become the owner or pledgee of Securities and,
subject to TIA Sections 310(b) and 311, may otherwise deal with the Company
with the same rights it would have if it were not Trustee, Paying Agent,
Security Registrar or such other agent.
SECTION 605. MONEY HELD IN TRUST. Money held by the Trustee
in trust hereunder need not be segregated from other funds except to the
extent required by law. The Trustee shall be under no liability for interest
on any money received by it hereunder except as otherwise agreed in writing
with the Company.
SECTION 606. COMPENSATION AND REIMBURSEMENT. The Company
agrees:
(1) to pay to the Trustee from time to time such
compensation as the Company and the Trustee shall agree for all services
rendered by it hereunder (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust);
(2) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any provision of this Indenture (including the reasonable compensation and
the expenses and disbursements of its agents and counsel), except any such
expense, disbursement or advance as may be attributable to its negligence or
bad faith; and
(3) to indemnify the Trustee (and any predecessor Trustee)
for, and to hold it harmless against, any and all loss, damage, claim,
liability or expense including, without limitation, taxes (other than taxes
based on the income of the Trustee) incurred without negligence or bad faith
on its part, arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.
The obligations of the Company under this Section to
compensate the Trustee, to pay or reimburse the Trustee for expenses,
disbursements and advances and to indemnify and hold harmless the Trustee
shall constitute additional indebtedness hereunder and shall survive the
satisfaction and discharge of this Indenture. As security for the performance
of such obligations of the Company, the Trustee shall have a lien prior to
the Securities upon all property and funds held or collected by the Trustee
as such, except funds held in trust for the payment of principal of (and
premium, if any, on), interest or Additional Amounts, if any, on particular
Securities.
If the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 501(7) or Section
501(8), the expenses (including the reasonable charges and expenses of its
counsel) and the compensation for the services are intended to constitute
expenses of administration under any applicable federal or state bankruptcy,
insolvency or other similar law.
SECTION 607. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY. There
shall at all times be a Trustee hereunder which shall be eligible to act as
Trustee under TIA Section 310(a)(1) and shall have a combined capital and
surplus of at least $50.0 million. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of
federal, state,
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49
territorial or District of Columbia supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. If at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section, it shall resign promptly in the manner and with the effect
hereinafter specified in this Article.
SECTION 608. RESIGNATION AND REMOVAL; APPOINTMENT OF
SUCCESSOR. (a) No resignation or removal of the Trustee and no appointment
of a successor Trustee pursuant to this Article shall become effective until
the acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 609.
(b) The Trustee may resign at any time by giving written
notice thereof to the Company. If the instrument of acceptance by a
successor Trustee required by Section 609 shall not have been delivered to
the Trustee within 30 days after the giving of such notice of resignation,
the resigning Trustee may petition any court of competent jurisdiction for
the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the
Holders of not less than a majority in principal amount of the Outstanding
Securities, delivered to the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with the provisions of
TIA Section 310(b) after written request therefor by the Company or by any
Holder who has been a bona fide Holder of a Security for at least six months,
or
(2) the Trustee shall cease to be eligible under Section
607(a) and shall fail to resign after written request therefor by the Company
or by any Holder who has been a bona fide Holder of a Security for at least
six months, or
(3) the Trustee shall become incapable of acting or shall
be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company, by a Board
Resolution, may remove the Trustee, or (ii) subject to TIA Section 315(e),
any Holder who has been a bona fide Holder of a Security for at least six
months may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Trustee for
any cause, the Company, by a Board Resolution, shall promptly appoint a
successor trustee. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor trustee shall be
appointed by Act of the Holders of a majority in principal amount of the
Outstanding Securities delivered to the Company and the retiring Trustee, the
successor trustee so appointed shall, forthwith upon
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50
its acceptance of such appointment, become the successor trustee and
supersede the successor trustee appointed by the Company. If no successor
trustee shall have been so appointed by the Company or the Holders and
accepted appointment in the manner hereinafter provided, any Holder who has
been a bona fide Holder of a Security for at least six months may, on behalf
of himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor trustee.
(f) The Company shall give notice of each resignation and
each removal of the Trustee and each appointment of a successor trustee to
the Holders of Securities in the manner provided for in Section 106. Each
notice shall include the name of the successor trustee and the address of its
Corporate Trust Office.
SECTION 609. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. Every
successor trustee appointed hereunder shall execute, acknowledge and deliver
to the Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor trustee, without any further act,
deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Trustee; but, on request of the Company or the
successor trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor trustee all
the rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor trustee all property and money held by
such retiring Trustee hereunder. Upon request of any such successor trustee,
the Company shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor trustee all such
rights, powers and trusts.
No successor trustee shall accept its appointment unless at
the time of such acceptance such successor trustee shall be qualified and
eligible under this Article.
SECTION 610. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION
TO BUSINESS. Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially all of the
corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder, provided such corporation shall be otherwise qualified and
eligible under this Article, without the execution or filing of any paper or
any further act on the part of any of the parties hereto. In case any
Securities shall have been authenticated, but not delivered, by the Trustee
then in office, any successor by merger, conversion or consolidation to such
authenticating Trustee may adopt such authentication and deliver the
Securities so authenticated with the same effect as if such successor trustee
had itself authenticated such Securities; and in case at that time any of the
Securities shall not have been authenticated, any successor trustee may, upon
receipt of a Company Order, authenticate such Securities either in the name
of any predecessor hereunder or in the name of the successor trustee; and in
all such cases such certificates shall have the full force which it is
anywhere in the Securities or in this Indenture provided that the certificate
of the Trustee shall have; PROVIDED, HOWEVER, that the right to adopt the
certificate of authentication of any predecessor Trustee or to authenticate
Securities in the name of any predecessor Trustee shall apply only to its
successor or successors by merger, conversion or consolidation.
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51
ARTICLE SEVEN
HOLDERS LISTS AND REPORTS BY TRUSTEE
SECTION 701. DISCLOSURE OF NAMES AND ADDRESSES OF HOLDERS.
Every Holder of Securities, by receiving and holding the same, agrees with
the Company and the Trustee that none of the Company or the Trustee or any
agent of either of them shall be held accountable by reason of the disclosure
of any such information as to the names and addresses of the Holders in
accordance with TIA Section 312, regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable
by reason of mailing any material pursuant to a request made under TIA
Section 312(b).
SECTION 702. REPORTS BY TRUSTEE. Within 60 days after
February 15 of each year commencing with the first February 15 after the
first issuance of Securities, the Trustee shall transmit to the Holders, in
the manner and to the extent provided in TIA Section 313(c), a brief report
dated as of such February 15 if required by TIA Section 313(a).
ARTICLE EIGHT
CONSOLIDATION, MERGER, SALE OF ASSETS
SECTION 801. COMPANY AND EACH GUARANTOR MAY CONSOLIDATE,
ETC., ONLY ON CERTAIN TERMS. (a) The Company shall not, in a single
transaction or through a series of related transactions, consolidate with or
merge with or into any other Person or sell, assign, convey, transfer, lease
or otherwise dispose of all or substantially all of its properties and assets
as an entirety to any Person or group of affiliated Persons, or permit any of
its Restricted Subsidiaries into any such transaction or transactions if such
transaction or transactions, in the aggregate, would result in a sale,
assignment, conveyance, transfer, lease or disposal of all or substantially
all of the properties and assets of the Company and its Restricted
Subsidiaries on a Consolidated basis to any other Person or group of
affiliated Persons, unless at the time and after giving effect thereto:
(1) either
(i) the Company shall be the Continuing corporation;
or
(ii) the Person (if other than the Company)
formed by such consolidation or into which the Company or such
Subsidiary is merged or the Person which acquires by sale,
assignment, conveyance, transfer, lease or disposition of all or
substantially all of the properties and assets of the Company or
such Subsidiary, as the case may be, substantially as an entirety
(the "SURVIVING ENTITY") shall be a corporation, limited liability
company, limited partnership or business trust duly organized and
validly existing under the laws of the United States of America, any
state thereof or the District of Columbia and such Person shall
assume, by a supplemental indenture executed and delivered to the
Trustee, all the obligations of the Company, under the Securities
and this Indenture, and this Indenture shall remain in full force
and effect;
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52
(2) immediately before and immediately after giving effect
to such transaction or transactions, no Default shall have occurred and be
continuing;
(3) immediately after giving effect to such transaction on
a PRO FORMA basis, the Consolidated Net Worth of the Company (for the
Surviving Entity if other than the Company) is equal to or greater than the
Consolidated Net Worth of the Company immediately prior to such transaction
or transactions;
(4) immediately before and immediately after giving effect
to such transaction on a PRO FORMA basis (on the assumption that the
transaction occurred on the first day of the four-quarter period immediately
prior to the consummation of such transaction with the appropriate
adjustments with respect to the transaction being included in such PRO FORMA
calculation), the Company (or the Surviving Entity if other than the Company)
could incur at least $1.00 of additional Indebtedness under Section 1011
(other than Permitted Indebtedness); and
(5) the Company or the Surviving Entity shall have
delivered, or caused to be delivered, to the Trustee, in form and substance
reasonably satisfactory to the Trustee, an Officers' Certificate and an
Opinion of Counsel, each to the effect that such consolidation, merger,
transfer, sale, assignment, conveyance, lease or other transaction and the
supplemental indenture in respect thereto comply with this Indenture and that
all conditions precedent herein provided for relating to such transaction
have been complied with.
(b) Each Guarantor shall not, and (except in the case of
United) the Company will not permit a Guarantor to, in a single transaction
or through a series of related transactions, merge or consolidate with or
into any other corporation (other than the Company or any Restricted Wholly
Owned Subsidiary) or other entity, sell, assign, convey, transfer, lease or
otherwise dispose of all or substantially all of thc Guarantor's properties
and assets on a Consolidated basis to any entity (other than the Company or
any Restricted Wholly Owned Subsidiary) unless at the time and after giving
effect thereto:
(1) either
(i) such Guarantor shall be the continuing
corporation, partnership or other legal entity; or
(ii) the entity (if other than such Guarantor) formed
by such consolidation or into which such Guarantor is merged or the
entity which acquires by sale, assignment, conveyance, transfer,
lease or disposition the properties and assets of such Guarantor
shall be a corporation, partnership or other legal entity duly
organized and validly existing under the laws of the United States,
any state thereof or the District of Columbia and shall expressly
assume by a supplemental indenture, executed and delivered to the
Trustee, in a form reasonably satisfactory to the Trustee, all the
obligations of such Guarantor under its Guarantee and this
Indenture;
(2) immediately before and immediately after giving effect
to such transaction or transactions, no Default shall have occurred and be
continuing; and
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53
(3) such Guarantor shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel in form and substance
reasonably satisfactory to the Trustee, each stating that such consolidation,
merger, sale, assignment, conveyance, transfer, lease or disposition and such
supplemental indenture comply with this Indenture, and thereafter all
obligations of the predecessor shall terminate; PROVIDED that the foregoing
shall not apply to any Guarantor (other than United) if (A) immediately after
such merger, consolidation, sale, assignment, conveyance, transfer, lease or
other disposition, the Person surviving such merger or consolidation or the
assignee, conveyee, transferee, lessee or recipient of such other disposition
are not Subsidiaries and (B) Section 1016 of this Indenture is complied with
in connection with such transaction.
SECTION 802. SUCCESSOR SUBSTITUTED. Upon any consolidation
of the Company, United or any other Guarantor with, or merger of the Company,
United or any other Guarantor with or into, any other corporation or any
sale, assignment, conveyance, transfer, lease or other disposition of the
properties and assets of the Company (or any Guarantor), substantially as an
entirety to any Person in accordance with Section 801(a) or Section 801(b),
the successor Person formed by such consolidation or into which the Company,
United or any other Guarantor is merged or to which such conveyance, transfer
or lease is made shall succeed to, and be substituted for, and may exercise
every right and power of, the Company, United or other Guarantor, as the case
may be, under this Indenture with the same effect as if such successor Person
had been named as the Company, United or other Guarantor, as the case may be
herein, and in the event of any such conveyance or transfer, the Company
(which term shall for this purpose mean the Person named as the "Company" in
the first paragraph of this Indenture or any successor Person which shall
theretofore become such in the manner described in Section 801(a)), United or
other Guarantor, as the case may be, except in the case of a lease, shall be
discharged of all obligations and covenants under this Indenture and the
Securities and may be dissolved and liquidated.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF
HOLDERS. Without the consent of any Holders, the Company, when authorized by
a Board Resolution, the Guarantors and the Trustee, at any time and from time
to time, may enter into one or more indentures supplemental hereto, in form
reasonably satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the
obligations under this Indenture and the Securities of the Company or any
Guarantor and the assumption by any such successor of the covenants of the
Company and any Guarantor contained herein and in the Securities; or
(2) to add to the covenants of the Company and the
Guarantors for the benefit of the Holders or to surrender any right or power
herein conferred upon the Company or the Guarantors; or
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54
(3) to add additional Events of Default; or
(4) to evidence and provide for the acceptance of
appointment hereunder by a successor trustee pursuant to the requirements of
Section 609; or
(5) to secure the Securities; or
(6) to cure any ambiguity, to correct or supplement any
provision herein which may be defective or inconsistent with any other
provision herein, or to make any other provisions with respect to matters or
questions arising under this Indenture; PROVIDED that such actions pursuant
to this clause (6) shall not adversely affect the interests of the Holders in
any material respect; or
(7) to comply with any requirement of the Commission in
connection with qualifying and maintaining the qualification of this
Indenture under the TIA.
SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the consent of the Holders of not less than a majority in principal
amount of the Outstanding Securities, by Act of said Holders delivered to the
Company and the Trustee, the Company, when authorized by a Board Resolution,
the Guarantors and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders under this Indenture;
PROVIDED, HOWEVER, that no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Security affected thereby:
(1) change the Stated Maturity of the principal of, or any
installment of interest on, any Security or reduce the principal amount
thereof or the rate of interest thereon or any premium payable upon the
redemption thereof, or change the coin or currency in which the principal of
any Security or any premium or the interest or any Additional Amounts thereon
is payable, or impair the right to institute suit for the enforcement of any
such payment on or after the Stated Maturity thereof;
(2) amend, change or modify the obligation of the Company
to make and consummate an Offer with respect to any Asset Sale or Asset Sales
in accordance with Section 1016 or the obligation of the Company to make and
consummate a Change of Control Offer in the event of a Change of Control in
accordance with Section 1010, including amending, changing or modifying any
definitions with respect thereto;
(3) reduce the percentage in principal amount of
Outstanding Securities, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver;
(4) modify any of the provisions of this Section or Section
513, except to increase the percentage of Outstanding Securities required for
such actions or to provide that certain other provisions of this Indenture
cannot be modified or waived without the consent of the Holder of each
Security affected thereby;
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55
(5) except as otherwise permitted under Article Eight
consent to the assignment or transfer by the Company or any Guarantor of any
of its rights and obligations under this Indenture; or
(6) amend or modify any of the provisions of Article
Fourteen or Article Fifteen in any manner adverse to the Holders of the
Securities.
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES. In
executing, or accepting the additional trusts created by, any supplemental
indenture permitted by this Article or the modifications thereby of the
trusts created by this Indenture, the Trustee shall be entitled to receive,
and shall be fully protected in relying upon, an Opinion of Counsel stating
that the execution of such supplemental indenture is authorized or permitted
by this Indenture. The Trustee may, but shall not be obligated to, enter into
any such supplemental indenture which affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise.
SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES. Upon the
execution of any supplemental Indenture under this Article, this Indenture
shall be modified in accordance therewith, and such supplemental Indenture
shall form a part of this Indenture for all purposes; and every Holder of
Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT. Every
supplemental indenture executed pursuant to this Article shall conform to the
requirements of the Trust Indenture Act as then in effect.
SECTION 906. REFERENCE IN SECURITIES TO SUPPLEMENTAL
INDENTURES. Securities authenticated and delivered after the execution of
any supplemental indenture pursuant to this Article may, and shall if
required by the Trustee, bear a notation in form approved by the Trustee as
to any matter provided for in such supplemental indenture. If the Company
shall so determine, new Securities so modified as to conform, in the opinion
of the Trustee and the Company, to any such supplemental indenture may be
prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Securities.
SECTION 907. NOTICE OF SUPPLEMENTAL INDENTURES. Promptly
after the execution by the Company and the Trustee of any supplemental
indenture pursuant to the provisions of Section 902, the Company shall give
notice thereof to the Holders of each Outstanding Security affected, in the
manner provided for in Section 106, setting forth in general terms the
substance of such supplemental indenture.
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56
ARTICLE TEN
COVENANTS
SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM, IF ANY,
INTEREST AND ADDITIONAL AMOUNTS, IF ANY. The Company covenants and agrees
for the benefit of the Holders that it will duly and punctually pay the
principal of (and premium, if any, on), interest and Additional Amounts, if
any, on the Securities in accordance with the terms of the Securities and
this Indenture.
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY. The Company
will maintain an office or agency where Securities may be presented or
surrendered for payment, where Securities may be surrendered for registration
of transfer or exchange and where notices and demands to or upon the Company
in respect of the Securities and this Indenture may be served. The Corporate
Trust Office of the Trustee shall be such office or agency of the Company,
unless the Company shall designate and maintain some other office or agency
for one or more of such purposes. The Company will give prompt written notice
to the Trustee of any change in the location of any such office or agency. If
at any time the Company shall fail to maintain any such required office or
agency or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee, and the Company hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices
and demands.
The Company may also from time to time rescind the above
designation and designate one or more other offices or agencies where the
Securities may be presented or surrendered for any or all such purposes and
may from time to time rescind any such subsequent designation; PROVIDED,
HOWEVER, that no such designation or rescission shall in any manner relieve
the Company of its obligation to maintain an office or agency for such
purposes. The Company will give prompt written notice to the Trustee of any
such designation or rescission and any change in the location of any such
other office or agency.
SECTION 1003. MONEY FOR SECURITY PAYMENTS TO BE HELD IN
TRUST. If the Company shall at any time act as its own Paying Agent, it
will, on or before each due day of the principal of (and premium, if any,
on), interest or Additional Amounts, if any, on any of the Securities,
segregate and hold in trust for the benefit of the Persons entitled thereto a
sum sufficient to pay the principal (and premium, if any), interest or
Additional Amounts so becoming due until such sums shall be paid to such
Persons or otherwise disposed of as herein provided and will promptly notify
the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for
the Securities, it will, on or before each due date of the principal of (and
premium, if any, on), interest or Additional Amounts, if any, on any
Securities, deposit with a Paying Agent a sum sufficient to pay the principal
(and premium, if any), interest or Additional Amounts, if any, so becoming
due, such sum to be held in trust for the benefit of the Persons entitled to
such principal, premium, interest or Additional Amounts and (unless such
Paying Agent is the Trustee) the Company will promptly notify the Trustee of
such action or any failure so to act.
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57
The Company will cause each Paying Agent (other than the
Trustee) to execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee, subject to the provisions of this
Section, that such Paying Agent will:
(1) hold all sums held by it for the payment of the
principal of (and premium, if any, on), interest or Additional Amounts, if
any, on Securities in trust for the benefit of the Persons entitled thereto
until such sums shall be paid to such Persons or otherwise disposed of as
herein provided;
(2) give the Trustee notice of any default by the Company
(or any other obligor upon the Securities) in the making of any payment of
principal (and premium, if any), interest or Additional Amounts, if any; and
(3) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the Trustee all
sums so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay,
or by Company Order direct any Paying Agent to pay, to the Trustee all sums
held in trust by the Company or such Paying Agent, such sums to be held by
the Trustee upon the same trusts as those upon which such sums were held by
the Company or such Paying Agent; and, upon such payment by any Paying Agent
to the Trustee, such Paying Agent shall be released from all further
liability with respect to such sums.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of thc principal of (and
premium, if any, on), interest or Additional Amounts, if any, on any Security
and remaining unclaimed for two years after such principal (and premium, if
any), interest or Additional Amounts, if any, has become due and payable
shall be paid to the Company on Company Request, or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Security
shall thereafter, as an unsecured general creditor, look only to the Company
for payment thereof, and all liability of the Trustee or such Paying Agent
with respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; PROVIDED, HOWEVER, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper published
in the English language, customarily published on each Business Day and of
general circulation in the Borough of Manhattan, The City of New York,
reasonable notice under the circumstances that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30
days from the date of such publication, any unclaimed balance of such money
then remaining will be repaid to the Company.
SECTION 1004. CORPORATE EXISTENCE. Subject to Article Eight,
and as long as any Securities remain Outstanding, each of United and the
Company will do or cause to be done all things necessary to preserve and keep
in full force and effect the corporate existence, rights (charter and
statutory) and franchises of the Company and each Subsidiary; PROVIDED,
HOWEVER, that the Company shall not be required to preserve any such right or
franchise if the Board of Directors shall determine that the preservation
thereof is no longer desirable in the conduct of the
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58
business of the Company and its Subsidiaries as a whole and that the loss
thereof is not disadvantageous in any material respect to the Holders.
SECTION 1005. PAYMENT OF TAXES AND OTHER CLAIMS. Each of
United and the Company will pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (a) all taxes,
assessments and governmental charges levied or imposed upon United, the
Company or any Subsidiary or upon the income, profits or property of United,
the Company or any Subsidiary and (b) all lawful claims for labor, materials
and supplies, which, if unpaid, might by law become a lien upon the property
of United, the Company or any Subsidiary; PROVIDED, HOWEVER, that United or
the Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim (1) the amount,
applicability or validity of which is being contested in good faith by
appropriate proceedings or (2) the nonpayment or delayed payment of which
would not have a material adverse effect on Holders.
SECTION 1006. MAINTENANCE OF PROPERTIES. Each of United and
the Company will cause all material properties owned by United, the Company
or any Subsidiary or used or held for use in the conduct of its business or
the business of any Subsidiary to be maintained and kept in good condition,
repair and working order and supplied with all necessary equipment and will
cause to be made all necessary repairs, renewals, replacements, betterments
and improvements thereof, all as in the judgment of United or the Company 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 United or the Company (i) from
discontinuing the maintenance of any of such properties if such
discontinuance is, in the judgment of United or the Company, desirable in the
conduct of its business or the business of any Subsidiary and not
disadvantageous in any material respect to the Holders or (ii) selling any
properties or taking any action in accordance with Article Eight or Section
1016.
SECTION 1007. INSURANCE. Each of United and the Company will
at all times keep all of its and its Subsidiaries' properties which are of an
insurable nature insured with insurers, believed by United and the Company to
be responsible, against loss or damage to the extent that property of similar
character is usually so insured by corporations similarly situated and owning
like properties.
SECTION 1008. STATEMENT BY OFFICERS AS TO DEFAULT. (a) The
Company will deliver to the Trustee, within 45 days after the end of each
fiscal quarter (or 90 days, in the case of the last fiscal quarter of each
fiscal year), a brief certificate from the principal executive officer,
principal financial officer or principal accounting officer as to his or her
knowledge of the Company's compliance with all conditions and covenants under
this Indenture. Such certificate shall state that such officer has reviewed
this Indenture and believes that either (a) the Company and Guarantors are in
compliance with terms thereof or (b) the Company and Guarantors are not in
compliance with terms thereof. For purposes of this Section 1008(a), such
compliance shall be determined without regard to any period of grace or
requirement of notice under this Indenture.
(b) When any Default has occurred and is continuing under
this Indenture, or if the trustee for or the holder of any other evidence of
Indebtedness of the Company, any
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59
Guarantor or any Subsidiary gives any notice or takes any other action with
respect to a claimed default (other than with respect to Indebtedness in the
principal amount of less than $1,000,000), the Company shall deliver to the
Trustee by registered or certified mail or by telegram, telex or facsimile
transmission an Officers' Certificate specifying such event, notice or other
action within five Business Days of its occurrence.
(c) The Company shall deliver to the Trustee, within 90
days after the end of each of the Company's fiscal years, a certificate
signed by the Company's independent certified public accountants stating (i)
that their audit examination has included a review of the terms of this
Indenture and the Securities as they relate to accounting matters, (ii) that
they have read the most recent Officers' Certificate delivered to the Trustee
pursuant to paragraph (a) of this Section 1008 and (iii) whether, in
connection with their audit examination, anything came to their attention
that caused them to believe that the Company was not in compliance with any
of the terms, covenants, provisions or conditions of Article Ten and Section
8.01 of this Indenture as they pertain to accounting matters and, if any
Default or Event of Default has come to their attention, specifying the
nature and period of existence thereof; PROVIDED that such independent
certified public accountants shall not be liable in respect of such statement
by reason of any failure to obtain knowledge of any such Default or Event of
Default that would not be disclosed in the course of an audit examination
conducted in accordance with generally accepted auditing standards in effect
at the date of such examination.
SECTION 1009. PROVISION OF FINANCIAL STATEMENTS. Whether or
not United or the Company is subject to Section 13(a) or 15(d) of the
Exchange Act, United and the Company will, to the extent permitted under the
Exchange Act, deliver to the Commission for filing the annual reports,
quarterly reports and other documents which United and the Company would have
been required to file with the Commission pursuant to such Section 13(a) or
15(d) if United and the Company were so subject, such documents to be filed
with the Commission on or prior to the respective dates (the "REQUIRED FILING
DATES") by which United and the Company would have been required to so file
such documents if United and the Company, were so subject (subject to a five
day grace period). United and the Company will also in any event (x) within
15 days of each Required Filing Date (subject to a five day grace period) (i)
transmit by mail to all Holders, as their names and addresses appear in the
security register, without cost to such Holders and (ii) file with the
Trustee copies of the annual reports, quarterly reports and other documents
which United and the Company would have been required to file with the
Commission pursuant to Section 13(a) or 15(d) of the Exchange Act if United
and the Company were subject to such Sections and (y) if filing such
documents by United and the Company with the Commission is not permitted
under the Exchange Act, promptly upon written request, supply copies of such
documents to any prospective Holder at United's and the Company's cost. The
Company and United will also provide the information required by Rule 144A to
any Holder or prospective Holder of Securities.
Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein
or determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
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60
SECTION 1010. PURCHASE OF NOTES UPON CHANGE IN CONTROL. (a)
If a Change of Control shall occur at any time, then the Company shall be
obligated to make an offer to purchase all of the Outstanding Notes (a
"CHANGE OF CONTROL OFFER") and the Company shall purchase all of the then
Outstanding Notes validly tendered pursuant to such Change of Control Offer,
in whole or in part in integral multiples of $1,000, at a purchase price (the
"CHANGE OF CONTROL PURCHASE PRICE") in cash in an amount equal to 101% of the
principal amount of such Notes, plus accrued and unpaid interest and
Additional Amounts, if any, to the date of purchase (the "CHANGE OF CONTROL
PURCHASE DATE"), pursuant to the procedures set forth in paragraphs (b), (c)
and (d) of this Section.
(b) Within 30 days following the date upon which the
Company becomes aware that any Change of Control has occurred, the Company
shall notify the Trustee thereof and shall give to each Holder of the
Securities in the manner provided in Section 106, a notice stating:
(l) that a Change of Control has occurred and that such
Holder has the right to require the Company to repurchase such Holder's Notes
at the Change of Control Purchase Price;
(2) the Change of Control Purchase Price and the Change of
Control Purchase Date, which shall be a Business Day no earlier than 30 days
nor later than 60 days from the date such notice is mailed, or such later
date as is necessary to comply with requirements under the Exchange Act;
(3) that any Note not tendered will continue to accrue
interest;
(4) that, unless the Company defaults in the payment of the
Change of Control Purchase Price, any Notes accepted for payment pursuant to
the Change of Control Offer shall cease to accrue interest after the Change
of Control Purchase Date; and
(5) the procedures that a Holder must follow to accept a
Change of Control Offer or to withdraw such acceptance.
(c) Holders electing to have Notes purchased will be
required to surrender such Securities with the execution form provided for in
Exhibit A duly executed to the Company at the address specified in the notice
at least 10 Business Days prior to the Change of Control Purchase Date.
Holders will be entitled to withdraw their election if the Company receives,
not later than three Business Days prior to the Change of Control Purchase
Date, a facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Securities delivered for purchase by the
Holder as to which his election is to be withdrawn and a statement that such
Holder is withdrawing his election to have such Notes purchased. Holders
whose Notes are purchased only in part will be issued new Notes equal in
principal amount to the unpurchased portion of the Notes surrendered.
(d) The Company will comply with any applicable tender offer
rules, including Rule 14e-1 under the Exchange Act, and any other applicable
securities laws or regulations in connection with a Change of Control Offer.
To the extent that the provisions of any securities laws or regulations
conflict with provisions of this Section, the Company shall
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61
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Section by virtue thereof.
(e) United will not, and will not permit any Subsidiary to,
create or permit to exist or become effective any restriction (other than
restrictions in effect on the Issue Date with respect to Indebtedness
outstanding on the Issue Date and refinancings thereof and customary default
provisions) that would materially impair the ability of the Company to make a
Change of Control Offer to purchase the Notes or, if such Change of Control
Offer is made, to pay for the Notes tendered for purchase.
SECTION 1011. LIMITATION ON INDEBTEDNESS. (a) The Company
will not, and will not permit any of its Restricted Subsidiaries to, create,
issue, assume, incur, guarantee, or otherwise in any manner become directly
or indirectly liable for (collectively, "INCUR") any Indebtedness (including
any Acquired Indebtedness); PROVIDED that the Company may incur Indebtedness
(including any Acquired Indebtedness) (A) if the Consolidated Fixed Charge
Coverage Ratio of the Company for the four full fiscal quarters immediately
preceding the incurrence of such Indebtedness (and for which such financial
information is available) taken as one period is at least equal to 2.00:1.00
and (B) if such Indebtedness is Subordinated Indebtedness, such Indebtedness
shall have an Average Life to Stated Maturity longer than the Average Life to
Stated Maturity of the Notes and a final Stated Maturity of principal later
than the final Stated Maturity of principal of the Notes.
(b) The foregoing limitation will not apply to the
incurrence of any of the following (collectively, "PERMITTED INDEBTEDNESS"):
(i) Indebtedness of the Company incurred pursuant to
the Credit Facilities and any other agreements or indentures
governing Senior Indebtedness outstanding at any time in an
aggregate principal amount not to exceed the greater of (x) the
sum of (I) $500.00 million and (II) if and when the 1998
Receivables Securitization Program is terminated and the Company
and its Subsidiaries have no obligation to sell Receivables and
Related Assets to any unaffiliated third party, $175.0 million
less the Program Funded Amount at such time, and (y) $150.0
million plus the Borrowing Base;
(ii) subject to Section 1017, Guarantees by
Restricted Subsidiaries of Senior Indebtedness of the Company;
PROVIDED, that such Indebtedness of the Company is incurred in
compliance with the provisions of this Indenture;
(iii) Indebtedness of the Company pursuant to the
Initial Securities issued on the Issue Date and the Exchange
Securities and Private Exchange Securities and Indebtedness of
any Guarantor pursuant to its Guarantee of the Initial Securities
and the Exchange Securities and Private Exchange Securities;
(iv) Indebtedness of the Company and its Restricted
Subsidiaries outstanding on the Issue Date;
(v) Indebtedness of the Company owing to a
Restricted Wholly Owned Subsidiary, PROVIDED, that any such
Indebtedness (x) is made pursuant to an intercompany note in the
form attached to this Indenture as Exhibit D and (y) is
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62
subordinated in right of payment to the prior payment and
performance of the Company's obligations under the Notes, if
applicable; PROVIDED FURTHER that (A) any disposition, pledge or
transfer of any such Indebtedness to a Person (other than a
disposition, pledge or transfer to a Restricted Wholly Owned
Subsidiary or a pledge to or for the benefit of any holder of
Senior Indebtedness) or (B) any transaction pursuant to which
such Restricted Wholly Owned Subsidiary ceases to be a Restricted
Wholly Owned Subsidiary shall be deemed to be an incurrence of
such Indebtedness by the Company not permitted by this clause (v);
(vi) Indebtedness of a Restricted Wholly Owned
Subsidiary owing to the Company or to a Restricted Wholly Owned
Subsidiary; PROVIDED, that, with respect to Indebtedness owing to
any Restricted Wholly Owned Subsidiary, (x) any such Indebtedness
is made pursuant to an intercompany note in the form attached to
this Indenture as Exhibit E and (y) any such Indebtedness shall
be subordinated in right of payment to the payment and
performance of such Subsidiary's obligations under its Guarantee
of the Notes, if applicable; PROVIDED FURTHER that (A) any
disposition, pledge or transfer of any such Indebtedness to a
Person (other than a disposition, pledge or transfer to the
Company or a Restricted Wholly Owned Subsidiary or a pledge to or
for the benefit of any holder of Senior Indebtedness) and (B) any
transaction pursuant to which any Restricted Wholly Owned
Subsidiary, which has Indebtedness owing to the Company or any
other Restricted Wholly Owned Subsidiary, ceases to be a
Restricted Wholly Owned Subsidiary shall be deemed to be an
incurrence of Indebtedness by the obligor that is not permitted
by this clause (vi);
(vii) any renewals, extensions, substitutions,
refundings, refinancings or replacements (collectively, a
"REFINANCING") of any Indebtedness described in clause (iv) of this
paragraph (b) (including any successive refinancings), so long as
the aggregate principal amount of Indebtedness represented thereby
is not increased by such refinancing, except by an amount equal to
the lesser of (x) the stated amount of any premium, interest or
other payment required to be paid in connection with such a
refinancing pursuant to the terms of the Indebtedness being
refinanced or (y) the amount of premium, interest or other payment
actually paid at such time to refinance the Indebtedness, plus, in
either case, the amount of expenses incurred in connection with such
refinancing; PROVIDED, that in the case of Pari Passu Indebtedness
or Subordinated Indebtedness, (A) such new Indebtedness does not
have a shorter Average Life to Stated Maturity or a final Stated
Maturity of principal earlier than the Indebtedness being
refinanced, (B) in the case of Pari Passu Indebtedness, such new
Indebtedness is PARI PASSU with, or subordinated to, the Notes and
(C) in thc case of Subordinated Indebtedness, such new Indebtedness
is subordinated to the Notes at least to the same extent as the
Indebtedness being refinanced; and PROVIDED FURTHER that in no event
may Indebtedness of the Company be refinanced with Indebtedness of
any Restricted Subsidiary pursuant to this clause (vii);
(viii) Indebtedness of the Company or any Restricted
Subsidiary consisting of Capitalized Lease Obligations, mortgage
financings or purchase money obligations in an aggregate
principal amount at any time outstanding not in excess of $50.0
million;
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63
(ix) Indebtedness of the Company or any Restricted
Subsidiary (A) in respect of judgment, appeal, surety,
performance and other like bonds, bankers' acceptances and
letters of credit provided by the Company or any Restricted
Subsidiary in the ordinary course of its business and which do
not secure other Indebtedness and (B) consisting of bona fide
Interest Rate Agreements or currency swap agreements designed to
protect the Company and/or its Restricted Subsidiaries from, or
control the exposure of the Company and/or its Restricted
Subsidiaries to, fluctuations in interest rates or foreign
currency fluctuations in respect of Indebtedness;
(x) Indebtedness of the Company or any Restricted
Subsidiary consisting of guarantees, indemnities or obligations
in respect of customary closing purchase price or similar
adjustments, in connection with the acquisition or disposition of
any business, assets or Subsidiary of the Company permitted under
this Indenture;
(xi) Indebtedness of the Company and its Restricted
Subsidiaries, to the extent the proceeds thereof are immediately
used after the incurrence thereof to purchase Notes tendered in
an offer to purchase made as a result of a Change of Control;
(xii) Indebtedness of a Securitization Subsidiary
incurred in connection with a Permitted Receivables Securitization
Subsidiary Program; and
(xiii) Indebtedness of the Company or any Restricted
Subsidiary in an aggregate principal amount at any time outstanding
not in excess of $25.0 million.
(c) Notwithstanding any other provision of this Section 1011,
the maximum amount of Indebtedness that the Company or any Restricted
Subsidiary may incur pursuant to this Section 1011 shall be deemed not to be
exceeded due solely to the result of fluctuations in the exchange rates of
currencies.
(d) For purposes of determining any particular amount of
Indebtedness under this Section 1011, (1) Indebtedness incurred pursuant to
the Credit Facilities prior to or on the Issue Date shall be treated as
incurred pursuant to clause (i) of Section 101l(b), (2) guarantees of, or
obligations with respect to letters of credit supporting, Indebtedness
otherwise included in the determination of such particular amount shall not
be included and (3) any Liens granted pursuant to the equal and ratable
provisions referred to in the first paragraph of Section 1015 of this
Indenture shall not be treated as Indebtedness. For purposes of determining
compliance with this Section 1011, (x) in the event that an item of
Indebtedness meets the criteria of more than one of the types of Indebtedness
described in the above clauses, the Company, in its sole discretion, shall
classify such item of Indebtedness and only be required to include the amount
and type of such Indebtedness in one of such clauses, and (y) the amount of
Indebtedness issued at a price that is less than the principal amount thereof
shall be equal to the amount of the liability in respect thereof determined
in conformity with GAAP.
SECTION 1012. LIMITATION ON RESTRICTED PAYMENTS. (a) The
Company will not, and will not permit any Restricted Subsidiary to, directly
or indirectly:
(i) declare or pay any dividend on, or make any
distribution to holders of, any shares of its Capital Stock (other than
dividends or distributions payable solely in shares of its
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64
Qualified Capital Stock or in options, warrants or other rights to acquire
such Qualified Capital Stock and other than dividends and distributions paid
to the Company or another Restricted Subsidiary (and, if such Restricted
Subsidiary has shareholders other than the Company or other Restricted
Subsidiaries, to its other shareholders on a pro rata basis or on a basis
that results in the receipt by the Company or a Restricted Subsidiary of
dividends or distributions of equal or greater value));
(ii) purchase, redeem or otherwise acquire or retire for
value, directly or indirectly, any shares of the Capital Stock of
United, the Company or any Restricted Subsidiary (other than any Restricted
Wholly Owned Subsidiary) or options, warrants or other rights to acquire such
Capital Stock;
(iii) make any principal payment on, or repurchase, redeem,
defease, retire or otherwise acquire for value, prior to the relevant
scheduled principal payment, sinking fund or maturity, any Subordinated
Indebtedness; or
(iv) make any Investment in any Person, including,
without limitation, any Unrestricted Subsidiary (other than any Permitted
Investments)
(the foregoing actions described in clauses (i) through (iv), collectively,
"RESTRICTED PAYMENTS") unless at the time the Company or such Restricted
Subsidiary makes such Restricted Payment (the amount of any such Restricted
Payment, if other than cash, as determined in good faith by the Board of
Directors of the Company, such determination to be conclusive and evidenced by a
Board Resolution), (A) no Default shall have occurred and be continuing (or
would result therefrom); (B) the Company could incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) under Section 1011; and (C) the
aggregate amount of all such Restricted Payments declared or made after the
Issue Date (including such Restricted Payment) does not exceed the sum of:
(I) 50% of the aggregate cumulative Consolidated Net
Income (or, if such aggregate cumulative Consolidated Net
Income shall be a loss, minus 100% of such loss) of the Company
accrued on a cumulative basis during the period (taken as one
accounting period) beginning on January 1, 1998 and ending on the
last day of the Company's last fiscal quarter ending prior to the
date of the Restricted Payment for which such financial information
is available;
(II) the aggregate Net Cash Proceeds
received after the Issue Date by the Company from the issuance or
sale (other than to any of its Subsidiaries) of its shares of
Qualified Capital Stock or any options, warrants or rights to
purchase such shares of Qualified Capital Stock (less the value of
any equity security referred to (and determined in accordance with)
the parenthetical in clause (a)(i) of the definition of Consolidated
Interest Expense);
(III) the aggregate Net Cash Proceeds
received after the Issue Date by the Company (other than from any of
its Subsidiaries) upon the exercise of any options, warrants or
rights to purchase shares of Qualified Capital Stock of the Company;
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65
(IV) the aggregate Net Cash Proceeds received after
the Issue Date by the Company from Indebtedness of the
Company or Redeemable Capital Stock of the Company that has been
converted into or exchanged for Qualified Capital Stock of the
Company (or options, warrants or rights to purchase such Qualified
Capital Stock), to the extent such Indebtedness of the Company or
Redeemable Capital Stock of the Company was originally incurred or
issued for cash, plus the aggregate Net Cash Proceeds received by
the Company at the time of such conversion or exchange;
(V) without duplication of any of the
foregoing, 100% of the aggregate Net Cash Proceeds received by the
Company as a capital contribution from United; and
(VI) to the extent not included in
Consolidated Net Income, the net reduction (received by the Company
or any Restricted Subsidiary in cash) in Investments (other than
Permitted Investments) (A) made by the Company and the Restricted
Subsidiaries since the Issue Date, and (B) as a result of the
redesignation of an Unrestricted Subsidiary as a Restricted
Subsidiary, not to exceed the amount of Investments (other than
Permitted Investments) made by the Company and the Restricted
Subsidiaries in such Person or in such Unrestricted Subsidiary
since the Issue Date.
(b) Notwithstanding the foregoing, and in the case of clauses
(ii), (iii), (iv), (v), (vi), (vii), (viii) and (ix) below, so long as there
is no Default continuing, the foregoing provisions shall not prohibit the
following actions:
(i) the payment of any dividend within 60 days
after the date of declaration thereof, if at such date of declaration such
payment would be permitted by the provisions of paragraph (a) of this Section
1012 (such payment shall be deemed to have been paid on such date of
declaration for purposes of the calculation required by paragraph (a) of this
Section 1012);
(ii) the repurchase, redemption, or other
acquisition or retirement of any shares of any class of Capital Stock of the
Company or United or warrants, options or other rights to acquire such stock
(x) in exchange for, or out of the Net Cash Proceeds of a substantially
concurrent issue and sale (other than to United or a Subsidiary) for cash of,
any Qualified Capital Stock of the Company or warrants, options or other
rights to acquire such stock or (y) in the case of Redeemable Capital Stock,
solely in exchange for, or through the application of the net proceeds of a
substantially concurrent sale for cash (other than to United or a Subsidiary)
of, Redeemable Capital Stock that has a redemption date no earlier than, and
requires the payment of current dividends or distributions in cash no earlier
than, in each case, the Redeemable Capital Stock being purchased, redeemed or
otherwise acquired or retired;
(iii) any repurchase, redemption, defeasance,
retirement, refinancing or acquisition for value or payment of principal of
any Subordinated Indebtedness in exchange for, or out of the net proceeds of
a substantially concurrent issuance and sale (other than to United or a
Subsidiary) for cash of, any Qualified Capital Stock of the Company or United
or warrants, options or other rights to acquire such stock or for shares of
Redeemable Capital Stock that have a redemption date no earlier than, and
require the payment of current dividends or distributions
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66
in cash no earlier than, in each case, the maturity date and interest payment
dates, respectively, of the Indebtedness being repurchased, redeemed,
defeased, retired, refinanced or acquired;
(iv) the repurchase, redemption, defeasance,
retirement or other acquisition for value or payment of principal of any
Subordinated Indebtedness through the issuance of Indebtedness meeting the
requirements of clause (vii) of paragraph (b) of Section 1011;
(v) the repurchase, redemption, acquisition or
retirement of shares of Capital Stock of United or options, warrants or other
rights to purchase such shares held by officers or employees or former
officers or employees of United and the Subsidiaries (or their estates or
beneficiaries), upon death, disability, retirement or termination of
employment, pursuant to the terms of any employee stock option or stock
purchase plan or agreement under which such shares were acquired; PROVIDED
that the aggregate consideration paid for all such shares following the Issue
Date does not exceed $2.5 million in any fiscal year of the Company; and
PROVIDED FURTHER that the amount by which $2.5 million exceeds the amount so
used in any fiscal year of the Company shall be available to be so used in
subsequent fiscal years of the Company, notwithstanding the immediately
preceding proviso;
(vi) payments to United, to the extent used by
United to (x) pay its operating and administrative expenses including,
without limitation, directors' fees, legal and audit expenses, Commission
compliance expenses and corporate franchise and other taxes, not to exceed
$2.5 million any fiscal year of the Company, (y) make payments in respect to
its indemnification obligations owing to directors, officers or other Persons
under United's Charter or by-laws or pursuant to written agreements with any
such Person or (z) make payments in respect of indemnification obligations
and costs and expenses incurred by United in connection with any offering of
common stock of United;
(vii) payments to United, not to exceed $5.0
million in the aggregate after the Issue Date, to the extent used by United
to make cash payments to holders of its Capital Stock in lieu of the issuance
of fractional shares of Capital Stock and to redeem or repurchase stock
purchase or similar rights issued as a shareholder rights device and
repurchases of shares from holders of Common Stock who hold less than 100
shares in each instance;
(viii) upon the occurrence of a Change of Control
or an Asset Sale and within 60 days after the completion of the offer to
repurchase the Notes pursuant to Section 1010 or Section 1016 (including the
purchase of all Notes tendered), any purchase, defeasance, retirement,
redemption or other acquisition of Subordinated Indebtedness required
pursuant to the terms thereof as a result of such Change of Control or Asset
Sale;
(ix) advances to employees, agents and consultants
for expenses incurred or to be incurred in the ordinary course of business
consistent with past practice; and
(x) other Restricted Payments in an aggregate
amount since the Issue Date not to exceed $25.0 million.
The actions described in clauses (i) through (iii) and clauses
(v), (viii) and (x) of this paragraph (b) shall be Restricted Payments that
shall be permitted to be taken in accordance
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67
with this paragraph (b) but shall reduce the amount that would otherwise be
available for Restricted Payments under clause (C) of paragraph (a) of this
Section 1012 (provided that any dividend paid pursuant to clause (i) of this
paragraph (b) shall reduce the amount that would otherwise be available under
clause (C) of paragraph (a) of this Section 1012 when declared, but not also
when paid pursuant to such clause (i)) and the actions described in clauses
(iv), (vi), (vii) and (ix) of this paragraph (b) shall be permitted to be
taken in accordance with this paragraph and shall not reduce the amount that
would otherwise be available for Restricted Payments under clause (C) of
paragraph (a).
SECTION 1013. LIMITATION ON TRANSACTIONS WITH AFFILIATES.
(a) The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, enter into or suffer to exist any
transaction or series of related transactions (including, without limitation,
the sale, purchase, exchange or lease of assets or property or the rendering
of any services) with any Affiliate of the Company (other than a Restricted
Wholly Owned Subsidiary of the Company) unless (i) such transaction or series
of transactions is in writing on terms that are no less favorable to the
Company or such Restricted Subsidiary, as the case may be, than would be
available in a comparable transaction in arm's-length dealings with an
unrelated third party, (ii) with respect to any such transaction or series of
transactions involving aggregate payments in excess of $10.0 million, the
Company delivers an Officers' Certificate to the Trustee certifying that such
transaction or series of related transactions complies with clause (i) above
and such transaction or series of related transactions has been approved by
the Board of Directors of the Company, and (iii) with respect to a
transaction or series of related transactions involving aggregate value in
excess of $25.0 million, the Company delivers to the Trustee an opinion of an
independent investment banking firm of national standing stating that the
transaction or series of transactions is fair to the Company or such
Restricted Subsidiary from a financial point of view.
(b) The provisions of the foregoing paragraph (a) shall not
prohibit (i) any Restricted Payment or Permitted Investment permitted to be
made pursuant to Section 1012, (ii) fees, compensation or employee benefit
arrangements paid to, and any indemnity provided for the benefit of,
directors, officers, employees, consultants or agents in the ordinary course
of business or any Indebtedness permitted to be incurred pursuant to clause
(xiii) of paragraph (b) of Section 1011 or any payments in respect thereof,
(iii) any issuance of securities, or other payments, awards or grants in
cash, securities or otherwise pursuant to, or the funding of, employment
arrangements, stock options and stock ownership plans approved by the Board
of Directors, (iv) transactions pursuant to agreements entered into or in
effect on the Issue Date, including amendments thereto entered into after the
Issue Date, PROVIDED that the terms of any such amendment are not, in the
aggregate, less favorable to the Company or such Restricted Subsidiary than
the terms of such agreement prior to such amendment, (v) advances to
employees, agents and consultants for moving, entertainment and travel
expenses, drawing accounts and similar expenditures in the ordinary course of
business and consistent with past practices, (vi) any transaction between or
among United, the Company and/or one or more Restricted Subsidiaries (so long
as the other stockholder of any participating Restricted Subsidiaries which
are not Wholly Owned Subsidiaries are not themselves Affiliates of the
Company), or (vii) the entering into by the Company, United and one or more
of its Restricted Subsidiaries of a tax sharing agreement or similar
arrangement.
<PAGE>
68
SECTION 1014. LIMITATION ON SENIOR SUBORDINATED INDEBTEDNESS.
The Company and each Guarantor will not, directly or indirectly, incur or
otherwise permit to exist any Indebtedness that is subordinate in right of
payment to any indebtedness of the Company or such Guarantor, as the case may
be, unless such Indebtedness is also PARI PASSU with the Notes or the
Guarantee of the Notes by such Guarantor, as the case may be, or subordinate
in right of payment to the Notes or such Guarantee of the Notes, as the case
may be, to at least the same extent as the Notes or such Guarantee are
subordinate in right of payment to Senior Indebtedness or Senior Guarantor
Indebtedness, as the case may be, as set forth in Article Fourteen or Article
Fifteen, as the case may be.
SECTION 1015. LIMITATION ON LIENS. The Company will not, and
will not permit any Restricted Subsidiary to, directly or indirectly, incur,
assume or suffer to exist any Lien of any kind upon any of its property or
assets (including any shares of Capital Stock or Indebtedness of any
Restricted Subsidiary), owned on the Issue Date or acquired after the Issue
Date, or any income or profits therefrom, except if the Notes (or the
Guarantee of the Notes, in the case of Liens on properties or assets of a
Restricted Subsidiary that is a Guarantor) and all other amounts due under
this Indenture are directly secured equally and ratably with (or prior to in
the case of Liens with respect to Subordinated Indebtedness) the obligation
or liability secured by such Lien, excluding, however, from the operation of
the foregoing any of the following:
(a) any Lien existing or provided for under written
arrangements existing as of the Issue Date;
(b) any Lien arising by reason of (i) any judgment, decree or
order of any court, so long as such Lien is adequately bonded and any
appropriate legal proceedings which may have been duly initiated for the
review of such judgment, decree or order shall not have been finally
terminated or the period within which such proceedings may be initiated shall
not have expired; (ii) taxes, assessments or other governmental charges not
yet delinquent or which are being contested in good faith; (iii) security for
payment of workers' compensation or other insurance; (iv) good faith deposits
in connection with tenders, leases or contracts (other than contracts for the
payment of money); (v) zoning restrictions, easements, licenses,
reservations, provisions, covenants, conditions, waivers, restrictions on the
use of property or minor irregularities of title (and with respect to
leasehold interests, mortgages, obligations, liens and other encumbrances
incurred, created, assumed or permitted to exist and arising by, through or
under a landlord or owner of the leased property, with or without consent of
the lessee), none of which materially impairs the use of any property or
assets material to the operation of the business of the Company or any
Restricted Subsidiary or the value of such property or assets for the purpose
of such business; (vi) deposits to secure public or statutory obligations, or
in lieu of surety or appeal bonds with respect to matters not yet finally
determined and being contested in good faith by negotiations or by
appropriate proceedings which suspend thc collection thereof; or (vii)
operation of law in favor of mechanics, materialmen, laborers, employees or
suppliers, incurred in the ordinary course of business for sums which are not
yet delinquent or are being contested in good faith by negotiations or by
appropriate proceedings which suspend the collection thereof;
<PAGE>
69
(c) any Lien now or hereafter existing on property of the
Company or any Guarantor securing Senior Indebtedness or Senior Guarantor
Indebtedness, as the case may be, of such Person;
(d) any Lien securing Acquired indebtedness created prior to
(and not created in connection with, or in contemplation of) the incurrence
of such Indebtedness by the Company, which Indebtedness is permitted under
Section 1011; PROVIDED that any such Lien only extends to the assets that
were subject to such Lien securing such Acquired indebtedness prior to the
related acquisition;
(e) any Lien now or hereafter existing on Receivables and
Related Assets in connection with a Permitted Receivables Securitization
Program;
(f) any Lien on property, assets or shares of Capital Stock of
a Person at the time such Person becomes a Subsidiary; PROVIDED, HOWEVER,
such Lien is not created, incurred or assumed by such Person in connection
with, or in contemplation of, such other Person becoming such a Subsidiary;
provided further, however, that such Lien may not extend to any other
property owned by the Company or any Restricted Subsidiary;
(g) any Lien on property or assets at the time the Company or
a Restricted Subsidiary acquired the property or assets, including any
acquisition by means of a merger or consolidation with or into the Company or
a Restricted Subsidiary; PROVIDED, HOWEVER, that such Lien is not created in
connection with, or in contemplation of, such acquisition; PROVIDED FURTHER,
HOWEVER, that the Lien may not extend to any other property owned by the
Company or any Restricted Subsidiary;
(h) Liens related to Capitalized Lease Obligations, mortgage
financings or purchase money obligations (including refinancings thereof), in
each case incurred in accordance with Section 1011 and for the purpose of
financing all or any part of the purchase price or costs of construction or
improvement of property, plant or equipment used in the business of the
Company or any Restricted Subsidiary, provided that any such Lien encumbers
only the asset or assets so financed, purchased, constructed or improved;
(i) any Lien on Capital Stock or other securities of an
Unrestricted Subsidiary; and
(j) any extension renewal, refinancing or replacement, in
whole or in part, of any Lien described in the foregoing clauses (a) through
(i) so long as the amount of property or assets subject to such Lien is not
increased to any amount greater than the sum of (i) the outstanding principal
amount or, if greater, committed amount of the Indebtedness described under
such clauses (a) through (i) at the time the original Lien became a Lien
permitted hereunder and (ii) an amount necessary to pay any fees and
expenses, including premiums, related to such extension, renewal, refinancing
or replacement.
SECTION 1016. LIMITATION ON SALE OF ASSETS. (a) The Company
will not, and will not permit any of its Restricted Subsidiaries to, directly
or indirectly, consummate an Asset Sale unless (i) at least 75% of the
proceeds from such Asset Sale are received in cash and (ii) the
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70
Company or such Restricted Subsidiary receives consideration at the time of
such Asset Sale at least equal to the Fair Market Value of the shares or
assets sold.
(b) If all or a portion of the Net Cash Proceeds of any Asset
Sale is not applied to repay permanently any Senior Indebtedness or Senior
Guarantor Indebtedness then outstanding as required by the terms thereof, and
the Company determines not to apply such Net Cash Proceeds to the prepayment
of such Senior Indebtedness or Senior Guarantor Indebtedness or if no such
Senior Indebtedness or Senior Guarantor Indebtedness is then outstanding,
then the Company may, within 12 months of the Asset Sale, invest (or enter
into a written, legally binding commitment to invest, PROVIDED that the
investment provided for in such commitment is actually made within 24 months
of the Asset Sale) the Net Cash Proceeds in other properties and assets that
will be used in the businesses of the Company and its Restricted Subsidiaries
or in any company having such properties and assets. The amount of such Net
Cash Proceeds neither used to permanently repay or prepay Senior Indebtedness
or Senior Guarantor Indebtedness nor used or invested as set forth in this
paragraph (b) constitutes "EXCESS PROCEEDS."
(c) When the aggregate amount of Excess Proceeds equals $10.0
million or more, the Company shall, within 15 Business Days in accordance
with the procedures set forth in this Indenture: (i) make an offer (an
"OFFER") to purchase, for cash, at 100% of the principal amount thereof, plus
accrued and unpaid interest to the repurchase date (the "REPURCHASE DATE"),
the maximum principal amount (expressed as a multiple of $1,000) of Notes
that may be purchased out of an amount (the "NOTE AMOUNT") equal to the
product of such Excess Proceeds multiplied by a fraction, the numerator of
which is the outstanding principal amount of the Notes, and the denominator
of which is the sum of the outstanding principal amount of the Notes and any
Pari Passu Indebtedness that is required to be repurchased under the
instrument governing such Pari Passu Indebtedness and (ii) to the extent
required by such Pari Passu Indebtedness, the Company shall make an offer to
purchase or, if required by the terms of such Pari Passu Indebtedness,
otherwise repurchase or redeem Pari Passu Indebtedness (a "PARI PASSU
REPAYMENT") in an amount (the "PARI PASSU DEBT AMOUNT") equal to the excess
of the Excess Proceeds over the Note Amount; PROVIDED that in no event shall
the Pari Passu Debt Amount exceed the principal amount of such Pari Passu
Indebtedness plus the amount of any premium, if any, and accrued and unpaid
interest required to be paid to repurchase such Pari Passu Indebtedness. To
the extent that the aggregate principal amount of and accrued but unpaid
interest with respect to the Notes tendered pursuant to the Offer is less
than the Note Amount relating thereto or the aggregate amount of Pari Passu
indebtedness that is purchased is less than the Pari Passu Debt Amount, the
Company may use such amounts not necessary to purchase the tendered Notes and
the Pari Passu Indebtedness required to be purchased for any purpose not
prohibited by this Indenture. Upon completion of the purchase of all the
Notes tendered pursuant to an Offer and the purchase of the Pari Passu
Indebtedness pursuant to a Pari Passu Repayment, the amount of Excess
Proceeds, if any, shall be reset at zero.
(d) Within the period required by the first sentence of
paragraph (c) above, the Company shall notify the Trustee thereof and shall
give to each Holder of the Securities in the manner provided in Section 106,
a notice stating:
(1) that an Offer is being made and that such Holder has
the right to require the Company to repurchase such Holder's
Securities on a pro rata basis;
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71
(2) the purchase price and the Repurchase Date, which
shall be a Business Day no earlier than 30 days nor later than 60
days from the date such notice is mailed, or such later date as may
be necessary to comply with requirements under the Exchange Act;
(3) that any Note not tendered will continue to accrue interest;
(4) that, unless the Company defaults in the payment of
the purchase price, any Notes accepted for payment pursuant to the
Offer shall cease to accrue interest after the Repurchase Date; and
(5) the procedures that a Holder must follow to accept an Offer
or to withdraw such acceptance.
(e) Holders electing to have Notes purchased will be required
to surrender such Notes with the execution form provided for in Exhibit A
duly executed to the Company at the address specified in the notice at least
10 Business Days prior to the Change of Control Repurchase Date. Holders will
be entitled to withdraw their election if the Company receives, not later
than three Business Days prior to the Change of Control Purchase Date, a
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of the Notes delivered for purchase by the Holder as to
which his election is to be withdrawn and a statement that such Holder is
withdrawing his election to have such Notes purchased. Holders whose Notes
are purchased only in part will be issued new Notes equal in principal amount
to the unpurchased portion of the Notes surrendered.
On the Repurchase Date, the Company shall repurchase Notes on
the pro rata basis set forth in paragraph (c) above.
(f) The Company will comply with the applicable tender offer
rules, including Rule 14e-1 under the Exchange Act, and any other applicable
securities laws and regulations in connection with an Offer.
SECTION 1017. LIMITATION ON ISSUANCES OF GUARANTEES OF
INDEBTEDNESS. (a) The Company will not permit any Restricted Subsidiary to
incur any Guaranteed Debt, other than Guaranteed Debt in respect of Senior
Indebtedness of the Company; PROVIDED that, concurrently with the incurrence
of such Guaranteed Debt by any Restricted Subsidiary, the Restricted
Subsidiary incurring such Guaranteed Debt (if it is not a Guarantor) shall
execute a supplemental indenture setting forth such Restricted Subsidiary's
senior subordinated guarantee of the Notes, such guarantee to be on the same
terms as each Guarantor's Guarantee of the Notes. Neither the Company nor any
Guarantor shall be required to make a notation on the Notes or the Guarantees
to reflect such Guarantee. In connection with such Guarantee of the Notes,
such Restricted Subsidiary shall waive, and agree that it will not in any
manner whatsoever claim or take the benefit or advantage of, any rights of
reimbursement, indemnity or subrogation or any other rights against the
Company or any Guarantor as a result of any payment by such Restricted
Subsidiary with respect to such Guaranteed Debt.
(b) United will not incur any Guaranteed Debt with respect to
any Pari Passu indebtedness or Subordinated Indebtedness unless such
Guaranteed Debt is subordinated (at least
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72
to the extent that Notes are subordinated in right of payment to Senior
Indebtedness) in right of payment to (or, in the case of Guaranteed Debt with
respect to Pari Passu Indebtedness, is PARI PASSU in right of payment with)
United's Guarantee of the Notes.
(c) The Company will cause each of its domestic
Restricted Subsidiaries which incurs any Indebtedness, other than the Joint
Venture and any Securitization Subsidiary that has entered into or established a
Permitted Receivables Securitization Program, simultaneously with the first
incurrence of any Indebtedness, to execute a supplemental indenture providing
for a Guarantee of the Notes on the same terms as each Guarantor's Guarantee of
the Notes, including, without limitation, the waiver and agreement referred to
in the last sentence of paragraph (a) above. Neither the Company nor any
Guarantor shall be required to make a notation on the Notes or the Guarantees to
reflect such Guarantee.
SECTION 1018. LIMITATION ON SUBSIDIARY CAPITAL STOCK. The
Company will not transfer, and will not permit the transfer or issuance of,
any Capital Stock of any Restricted Subsidiary (including options, warrants
or other rights to purchase shares of such Capital Stock) except for (i)
Capital Stock issued to and held by the Company or a Restricted Wholly Owned
Subsidiary, (ii) Capital Stock issued by a Person prior to the time (A) such
Person becomes a Restricted Subsidiary, (B) such Person merges with or into a
Restricted Subsidiary or (C) a Restricted Subsidiary merges with or into such
Person; PROVIDED that such Capital Stock was not issued or incurred by such
Person in anticipation of the type of transaction contemplated by subclause
(A), (B) or (C), (iii) the transfer of all of the Capital Stock of a
Restricted Subsidiary or (iv) the issuance or transfer of directors'
qualifying shares or a DE MINIMS number of shares required to be held by
foreign nationals, in each case to the extent required by applicable law. The
foregoing shall not prohibit the pledge of any shares of Capital Stock
permitted under Section 1015.
SECTION 1019. LIMITATION ON DIVIDENDS AND OTHER PAYMENT
RESTRICTIONS AFFECTING RESTRICTED SUBSIDIARIES. The Company will not, and
will not permit any Restricted Subsidiary to, directly or indirectly, create
or otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any Restricted Subsidiary to (i) pay dividends,
in cash or otherwise, or make any other distribution on or in respect of its
Capital Stock, (ii) pay any Indebtedness owed to the Company or any other
Restricted Subsidiary, (iii) make any loans or advances to, or Investments
in, the Company or any other Restricted Subsidiary or (iv) transfer any of
its properties or assets to the Company or any other Restricted Subsidiary,
except in any such case (1) any encumbrance or restriction pursuant to an
agreement in effect at or entered into on the Issue Date; (2) any encumbrance
or restriction, with respect to a Person that becomes a Restricted Subsidiary
after the Issue Date, in existence at the time such Person becomes a
Restricted Subsidiary and not incurred in connection with, or in
contemplation of, such Person becoming a Restricted Subsidiary (other than as
consideration in, in contemplation of, or to provide all or any portion of
the funds or credit support utilized to consummate, the transaction or series
of related transactions pursuant to which such Restricted Subsidiary became a
Restricted Subsidiary or was otherwise acquired by the Company or another
Restricted Subsidiary); (3) any encumbrance or restriction existing under any
agreement that extends, renews, refinances or replaces the agreements
containing the encumbrances or restrictions in the foregoing clauses (1) and
(2), or in this clause (3), PROVIDED that the terms and conditions of any
such encumbrances or restrictions are (A) not materially less favorable to the
<PAGE>
73
Holders of the Securities than those under or pursuant to the agreement so
extended, renewed, refinanced or replaced (as determined in good faith by the
Company) and (B) with respect to any instrument relating to any Indebtedness,
no more restrictive in any material respect than the encumbrances and
restrictions contained in the Credit Facilities as in effect on the Issue
Date (as determined in good faith by the Company); (4) any encumbrance or
restriction created pursuant to an asset sale agreement, stock sale agreement
or similar instrument pursuant to which a bona-fide Asset Sale, the proceeds
of which are applied as provided in this Indenture, is to be consummated, so
long as such restriction or encumbrance shall apply only to the assets
subject to such Asset Sale and shall be effective only for a period from the
execution and delivery of such agreement or instrument through the earlier of
the consummation of such Asset Sale or the termination of such agreement or
instrument; (5) customary nonassignment provisions of any lease governing any
leasehold interest of the Company or any Restricted Subsidiaries; (6) to the
extent required by this Indenture; (7) any encumbrance or restriction
existing under or by reason of applicable law; (8) with respect to a
Restricted Subsidiary, any encumbrance or restriction imposed pursuant to an
agreement that has been entered into for the sale of all or substantially all
of the Capital Stock of such Restricted Subsidiary; and (9) purchase money
obligations for property acquired in the ordinary course of business that
impose restrictions of the type referred to in clause (iv) above.
SECTION 1020. WAIVER OF CERTAIN COVENANTS. The Company may
omit in any particular instance to comply with any term, provision or
condition set forth in Sections 1008 through 1019, inclusive, if before or
after the time for such compliance the Holders of at least a majority in
principal amount of the Outstanding Securities, by Act of such Holders, waive
such compliance in such instance with such term, provision or condition, but
no such waiver shall extend to or affect such term, provision or condition
except to the extent so expressly waived, and, until such waiver shall become
effective, the obligations of the Company and the duties of the Trustee in
respect of any such term, provision or condition shall remain in full force
and effect.
SECTION 1021. TRUSTEE'S APPLICATION FOR INSTRUCTIONS FROM THE
COMPANY.
Any application by the Trustee for written instructions from
the Company may, at the option of the Trustee, set forth in writing any
action proposed to be taken or omitted by the Trustee under this Indenture
and the date on and/or after which such action shall be taken or such
omission shall be effective. The Trustee shall not be liable for any action
taken by or omission of, the Trustee in accordance with a proposal included
in such application on or after the date specified in such application (which
date shall not be less than three Business Days after the date any officer of
the Company actually receives such application, unless any such officer shall
have consented in writing to any earlier date) unless prior to taking any
such action (or the effective date in the case of an omission), the Trustee
shall have received written instructions in response to such application
specifying the action to be taken or omitted.
<PAGE>
74
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. RIGHT OF REDEMPTION. (a) The Securities will
be subject to redemption at any time on or after April 15, 2003, at the
option of the Company, in whole or in part, on not less than 30 nor more than
60 days' prior notice in amounts of $1,000 or an integral multiple thereof at
the following redemption prices (expressed as percentages of the principal
amount), if redeemed during the 12-month period beginning April 15 of the
years indicated below:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---- -----
<S> <C>
2003........................................104.188%
2004........................................102.792%
2005........................................101.396%
2006........................................100.000%
</TABLE>
and thereafter at 100% of the principal amount, in each case together with
accrued and unpaid interest and Additional Amounts, if any, to the redemption
date (subject to the right of holders of record on Regular Record Dates to
receive interest due on relevant Interest Payment Dates).
(b) In addition, at any time and from time to time prior to
April 15 , 2001, the Company may redeem up to 35% of the aggregate principal
amount of the Notes (calculated giving effect to any issuance of Additional
Securities) within 180 days following one or more Public Equity Offerings
with the net proceeds of such offerings at redemption price equal to 108.375%
of the principal amount thereof, together with accrued and unpaid interest
and Additional Amounts, if any, to the date of redemption (subject to the
right of holders of record on Regular Record Dates to receive interest due on
relevant Interest Payment Dates); PROVIDED that immediately after giving
effect to each such redemption, at least 65% of the aggregate principal
amount of the Notes (as so calculated) remain outstanding after giving effect
to each such redemption.
SECTION 1102. APPLICABILITY OF ARTICLE. Redemption of
Securities at the election of the Company or otherwise, as permitted or
required by any provision of this Indenture, shall be made in accordance with
such provision and this Article.
SECTION 1103. ELECTION TO REDEEM; NOTICE TO TRUSTEE. The
election of the Company to redeem any Securities pursuant to Section 1101
shall be evidenced by a Board Resolution. In case of any redemption at the
election of the Company, the Company shall, at least 60 days prior to the
Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date and
of the principal amount of Securities to be redeemed and shall deliver to the
Trustee such documentation and records as shall enable the Trustee to select
the Securities to be redeemed pursuant to Section 1104.
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75
SECTION 1104. SELECTION BY TRUSTEE OF SECURITIES TO BE
REDEEMED. If less than all of the Securities are to be redeemed at any time,
selection of Securities for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities
exchange, if any, on which the Securities are listed or, in the absence of
such requirements or if the Securities are not so listed, the Trustee shall
select the Securities or portions thereof to be redeemed pro rata, lot or by
any other method the Trustee shall deem fair and reasonable, PROVIDED that no
such Securities of $1,000 or less in principal amount shall be redeemed in
part.
The Trustee shall promptly notify the Company in writing of
the Securities selected for redemption and, in the case of any Securities
selected for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to redemption of Securities shall
relate, in the case of any Security redeemed or to be redeemed only in part,
to the portion of the principal amount of such Security which has been or is
to be redeemed.
SECTION 1105. NOTICE OF REDEMPTION. Notice of redemption
shall be given in the manner provided for in Section 106 not less than 30 nor
more than 60 days, prior to the Redemption Date, to each Holder of Securities
to be redeemed.
All notices of redemption shall identify the Securities
to be redeemed (including CUSIP or CINS number) and shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all Outstanding Securities are to be
redeemed, the identification (and, in the case of a partial redemption, the
principal amounts) of the particular Securities to be redeemed,
(4) that on the Redemption Date the Redemption Price
(together with accrued interest, if any, to the Redemption Date payable as
provided in Section 1107) will become due and payable upon each such
Security, or the portion thereof, to be redeemed, and that interest thereon
will cease to accrue on and after said date, and
(5) the place or places where such Securities are to be
surrendered for payment of the Redemption Price.
Notice of redemption of Securities to be redeemed at the
election of the Company shall be given by the Company or, at the Company's
request, by the Trustee in the name and at the expense of the Company.
SECTION 1106. DEPOSIT OF REDEMPTION PRICE. Prior to any
Redemption Date, the Company shall deposit with the Trustee or with a Paying
Agent (or, if the Company is acting as its own Paying Agent, segregate and
hold in trust as provided in Section 1003) an amount of
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76
money sufficient to pay the Redemption Price of, and accrued interest on, all
the Securities which are to be redeemed on that date.
SECTION 1107. SECURITIES PAYABLE ON REDEMPTION DATE. Notice
of redemption having been given as aforesaid, the Securities so to be
redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified (together with accrued interest, if any,
to the Redemption Date), and from and after such date (unless the Company
shall default in the payment of the Redemption Price and accrued interest)
such Securities shall cease to bear interest. Upon surrender of any such
Security for redemption in accordance with said notice, such Security shall
be paid by the Company at the Redemption Price, together with accrued
interest, if any, to the Redemption Date; PROVIDED, HOWEVER, that
installments of interest whose Stated Maturity is on or prior to the
Redemption Date shall be payable to the Holders of such Securities,
registered as such at the close of business on the relevant Record Dates
according to their terms and the provisions of Section 309.
If any Security called for redemption shall not be so paid
upon surrender thereof for redemption, the principal (and premium, if any)
shall, until paid, bear interest from the Redemption Date at the rate borne
by the Securities.
SECTION 1108. SECURITIES REDEEMED IN PART. Any Security
which is to be redeemed only in part shall be surrendered at the office or
agency of the Company maintained for such purpose pursuant to Section 1002
(with, if the Company or the Trustee so requires, due endorsement by, or a
written instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or such Holder's attorney duly
authorized in writing), and the Company shall execute, and the Trustee shall
authenticate and deliver to the Holder of such Security without service
charge, a new Security or Securities, of any authorized denomination as
requested by such Holder, in aggregate principal amount equal to and in
exchange for the unredeemed portion of the principal of the Security so
surrendered.
ARTICLE TWELVE
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1201. COMPANY'S OPTION TO EFFECT DEFEASANCE OR
COVENANT DEFEASANCE. The Company may, at its option and at any time, elect
to have either Section 1202 or Section 1203 be applied to all Outstanding
Securities upon compliance with the conditions set forth below in this
Article Twelve.
SECTION 1202. DEFEASANCE AND DISCHARGE. Upon the passage of
123 days after the Company's exercise under Section 1201 of the option
applicable to this Section 1202, the Company and the Guarantors shall be
deemed to have been discharged from their respective obligations with respect
to all thc Outstanding Securities on the date the conditions set forth in
Section 1204 are satisfied (hereinafter, "DEFEASANCE"). For this purpose,
such defeasance means that the Company shall be deemed to have paid and
discharged the entire indebtedness represented by Outstanding Securities
except for (i) the rights of Holders of Outstanding Securities to receive
payments in respect of the principal of, premium, if any, interest and
Additional Amounts, if any, on such Securities when such payments are due,
(ii) the Company's
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77
obligations with respect to the Securities concerning issuing temporary
Securities, registration of Securities, mutilated, destroyed, lost or stolen
Securities, and the maintenance of an office or agency for payment and money
for security payments held in trust, (iii) the rights, powers, trusts, duties
and immunities of the Trustee, and (iv) this Article Twelve.
SECTION 1203. COVENANT DEFEASANCE. Upon the passage of 123
days after the Company's exercise under Section 1201 of the option applicable
to this Section 1203, the Company and the Guarantors shall be released from
their respective obligations under any covenant in Section 801 and in
Sections 1003 and 1008 through 1019 with respect to the Outstanding
Securities on and after the date the conditions set forth below are satisfied
(hereinafter, "COVENANT DEFEASANCE"), and the Securities shall thereafter be
deemed not to be "Outstanding" for the purposes of any direction, waiver,
consent or declaration or Act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"Outstanding" for all other purposes hereunder. For this purpose, such
covenant defeasance means that, with respect to the Outstanding Securities,
the Company and the Guarantors may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any
covenant referred to in the first sentence of this Section 1203, whether
directly or indirectly, by reason of any reference elsewhere herein to any
such covenant or by reason of any reference in any such covenant to any other
provision herein or in any other document and such omission to comply shall
not constitute a Default or an Event of Default under Section 501(3) or
Section 501(5), but, except as specified above, the remainder of this
Indenture and such Securities shall be unaffected thereby.
SECTION 1204. CONDITIONS TO DEFEASANCE OR COVENANT
DEFEASANCE. The following shall be the conditions to application of either
Section 1202 or Section 1203 to the Outstanding Securities:
(1) The Company shall irrevocably have deposited or caused to
be deposited with the Trustee (or another trustee satisfying the requirements
of Section 607 who shall agree to comply with the provisions of this Article
Twelve applicable to it) as trust funds in trust for the purpose of making
the following payments, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of such Securities, (A) cash in United
States dollars in an amount, or (B) U.S. Government Obligations which through
the scheduled payment of principal and interest in respect thereof in
accordance with their terms will provide, not later than one day before the
due date of any payment, money in an amount, or (C) a combination thereof,
sufficient, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered to
the Trustee, to pay and discharge, and which shall be applied by the Trustee
(or other qualifying trustee) to pay and discharge, the principal of (and
premium, if any, on), interest and Additional Amounts, if any, on the
Outstanding Securities on the Stated Maturity (or Redemption Date, if
applicable) of such principal (and premium, if any), interest or Additional
Amounts, if any (or if specified by the Company in an Officers' Certificate
delivered to the Trustee at the time of such deposit, any date upon which the
Company would be entitled to redeem all Securities Outstanding (such date
being referred to as the "DEFEASANCE REDEMPTION DATE")); PROVIDED that the
Trustee shall have been irrevocably instructed to apply such money or the
proceeds of such U.S. Governmental Obligations to said payments with respect
to the Securities. Before such a deposit, the Company may give to the
Trustee, in accordance with Section 1103 hereof, a notice of its election to
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redeem all of the Outstanding Securities at a future date in accordance with
Article Eleven hereof, which notice shall be irrevocable. Such irrevocable
redemption notice, if given, shall be given effect in applying the foregoing.
For this purpose, "U.S. GOVERNMENT OBLIGATIONS" means securities that are (x)
direct obligations of the United States of America for the timely payment of
which its full faith and credit is pledged or (y) obligations of a Person
controlled or supervised by and acting as an agency or instrumentality of the
United States of America the timely payment of which is unconditionally
guaranteed as a full faith and credit obligation by e United States of
America, which, in either case, are not callable or redeemable at the option
of the issuer thereof, and shall also include a depository receipt issued by
a bank (as defined in Section 3(a)(2) of the Securities Act of 1933, as
amended), as custodian with respect to any such U.S. Government Obligation or
a specific payment of principal of or interest on any such U.S. Government
Obligation held by such custodian for the account of the holder of such
depository receipt, PROVIDED that (except as required by law) such custodian
is not authorized to make any deduction from the amount payable to the holder
of such depository receipt from any amount received by the custodian in
respect of the U.S. Government Obligation or the specific payment of
principal of or interest on the U.S. Government Obligation evidenced by such
depository receipt.
(2) No Default with respect to the Securities shall have
occurred and be continuing on the date of such deposit or, with respect to
Section 501(7) or Section 501(8), at any time during the period ending on the
123rd day after the date of deposit.
(3) Such defeasance or covenant defeasance shall not cause
the Trustee to have a conflicting interest with respect to any securities of
the Company or any Guarantor.
(4) Such defeasance or covenant defeasance shall not result
in a breach or violation of, or constitute a default under, this Indenture or
any other material agreement or instrument to which the Company or any
Guarantor is a party or by which it is bound.
(5) In the case of an election under Section 1202, the
Company shall have delivered to the Trustee an Opinion of Counsel in the
United States to the effect that since the date of this Indenture (A) the
Company has received from, or there has been published by, the Internal
Revenue Service a ruling or (B) there has been a change in the applicable
federal income tax law, in either case, to the effect that, and based thereon
such Opinion of Counsel in the United States shall confirm that, the Holders
of the Outstanding Securities will not recognize income, gain or loss for
federal income tax purposes as a result of such defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such covenant defeasance had
not occurred.
(6) In the case of an election under Section 1203, thc
Company shall have delivered to the Trustee an Opinion of Counsel in the
United States to the effect that the Holders of the Outstanding Securities
will not recognize income, gain or loss for federal income tax purposes as a
result of such covenant defeasance and will be subject to federal income tax
on the same amounts, in the same manner and at the same times as would have
been the case if such covenant defeasance had not occurred.
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(7) The Company shall have delivered to the Trustee an
Opinion of Counsel (which may be delivered on such 123rd day) to the effect
that (A) the trust funds will not be subject to any rights of holders of
Senior Indebtedness or Senior Guarantor Indebtedness, including, without
limitation, those arising under this Indenture and (B) after the 123rd day
following the deposit, the trust funds will not be subject to avoidance under
any applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally.
(8) The Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the Company
with the intent of preferring the Holders of the Securities or any Guarantee
over the other creditors of the Company or any Guarantor with the intent of
defeating, hindering, delaying or defrauding creditors of the Company, any
Guarantor or others.
(9) No event or condition shall exist that would prevent the
Company from making payments of principal of, premium, if any, interest and
Additional Amounts, if any, on the Securities on the date of such deposit or
at any time ending on the 123rd day after the date of such deposit.
(10) The Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to either the defeasance under
Section 1202 or the covenant defeasance under Section 1203 (as the case may
be) have been complied with.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to section 1202 or Section 1203 or the
principal and interest received in respect thereof other than any such tax,
fee or other charge which by law is for the account of the Holders of
Outstanding Securities.
ARTICLE THIRTEEN
GUARANTEE OF SECURITIES
SECTION 1301. GUARANTEE. Subject to the provisions of this
Article Thirteen, the Guarantors hereby, fully, unconditionally and
irrevocably guarantee to each Holder and to the Trustee on behalf of the
Holders: (i) the due and punctual payment of the principal of, premium, if
any, interest and Additional Amounts, if any, on each Security, when and as
the same shall become due and payable, whether at maturity, by acceleration
or otherwise, the due and punctual payment of interest on the overdue
principal of and interest, if any, on the Securities, to the extent lawful,
and the due and punctual performance of all other obligations of the Company
to the Holders or the Trustee, all in accordance with the terms of such
Security and this Indenture and (ii) in the case of any extension of time of
payment or renewal of any Securities or any of such other obligations, that
the same will be promptly paid in full when due or performed in accordance
with the terms of the extension or renewal, at Stated Maturity, by
acceleration or otherwise, PROVIDED that this Guarantee shall not be
enforceable against the Guarantors in an amount in excess of the respective
net worth of each Guarantor at the time that determination of such net worth
is, under applicable law, relevant to the enforceability of such
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Guarantee. Such net worth shall include any claim of any Guarantor against
the Company for reimbursement and any claim against any other Guarantor for
contribution. The Guarantors hereby waive diligence, presentment, demand of
payment, filing of claims with a court in the event of merger or bankruptcy
of the Company, any right to require a proceeding first against the Company,
the benefit of discussion, protest or notice with respect to any such
Security or the debt evidenced thereby and all demands whatsoever (except as
specified above), and covenants that this Guarantee will not be discharged as
to any such Security except by payment in full of the principal thereof and
interest thereon and as provided in Section 401 and Section 1202 or in the
event of a transaction in compliance with Section 801(b). The maturity of the
obligations guaranteed hereby may be accelerated as provided in Article Five
for the purposes of this Article Thirteen. In the event of any declaration of
acceleration of such obligations as provided in Article Five, such
obligations (whether or not due and payable) shall forthwith become due and
payable by the Guarantors for the purpose of this Article Thirteen. In
addition, without limiting the foregoing provisions, upon the effectiveness
of an acceleration under Article Five, the Trustee shall promptly make a
demand for payment on the Securities under the Guarantee provided for in this
Article Thirteen.
If the Trustee or the Holder of any Security is required by
any court or otherwise to return to the Company or any Guarantor, or any
custodian, receiver, liquidator, trustee, sequestrator or other similar
official acting in relation to the Company or such Guarantor, any amount paid
to the Trustee or such Holder in respect of a Security, this Guarantee, to
the extent theretofore discharged, shall be reinstated in full force and
effect. Each of the Guarantors further agrees, to the fullest extent that it
may lawfully do so, that, as between it, on the one hand, and the Holders and
the Trustee, on the other hand, the maturity of the obligations guaranteed
hereby may be accelerated as provided in Article Five hereof for the purposes
of this Guarantee, notwithstanding any stay, injunction or other prohibition
extant under any applicable bankruptcy law preventing such acceleration in
respect of the obligations guaranteed hereby.
Each of the Guarantors hereby irrevocably waives any claim or
other rights which it may now or hereafter acquire against the Company or any
other Guarantor that arise from the existence, payment, performance or
enforcement of its obligations under this Guarantee and this Indenture,
including, without limitation, any right of subrogation, reimbursement,
exoneration, contribution, indemnification, any right to participate in any
claim or remedy of the Holders against the Company or any Guarantor or any
collateral which any such Holder or the Trustee on behalf of such Holder
hereafter acquires, whether or not such claim, remedy or right arises in
equity, or under contract, statute or common law, including. without
limitation, the right to take or receive from the Company or a Guarantor,
directly or indirectly, in cash or other property or by set-off or in any
other manner, payment or security on account of such claim or other rights.
If any amount shall be paid to a Guarantor in violation of the preceding
sentence and the principal of, premium, if any, and accrued interest on the
Securities shall not have been paid in full, such amount shall be deemed to
have been paid to such Guarantor for the benefit of, and held in trust for
the benefit of, the Holders, and shall forthwith be paid to the Trustee for
the benefit of the Holders to be credited and applied upon the principal of,
premium, if any, and accrued interest on the Securities. Each of the
Guarantors acknowledges that it will receive direct and indirect benefits
from the issuance of the Securities pursuant to this Indenture and that the
waivers set forth in this Section 1301 are knowingly made in contemplation of
such benefits.
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The Guarantees set forth in this Section 1301 shall not be
valid or become obligatory for any purpose with respect to a Security until
the certificate of authentication on such Security shall have been signed by
or on behalf of the Trustee.
SECTION 1302. OBLIGATIONS UNCONDITIONAL. Except as provided
in Section 1301, nothing contained in this Article Thirteen or elsewhere in
this Indenture or in the Securities is intended to or shall impair, as among
each of the Guarantors and the holders of the Securities, the obligations of
each of the Guarantors, which are absolute and unconditional, upon failure by
the Company, to pay to the holders of the Securities the principal of,
premium, if any, interest and Additional Amounts, if any, on the Securities
as and when the same shall become due and payable in accordance with their
terms, or is intended to or shall affect the relative rights of the holders
of the Securities and creditors of each of the Guarantors, nor shall anything
herein or therein prevent the holder of any Security or the Trustee on their
behalf from exercising all remedies otherwise permitted by applicable law
upon default under this Indenture.
Without limiting the foregoing, nothing contained in this
Article Thirteen will restrict the right of the Trustee or the holders of the
Securities to take any action to declare the Guarantee provided for herein to
be due and payable prior to thc Stated Maturity of the Securities pursuant to
Section 502 or to pursue any rights or remedies hereunder.
SECTION 1303. NOTICE TO TRUSTEE. Each of the Guarantors
shall give prompt written notice to the Trustee of any fact known to any one
of the Guarantors which prohibits the making of any payment to or by the
Trustee in respect of the Guarantees pursuant to the provisions of this
Article Thirteen other than any agreement in effect on the date hereof.
SECTION 1304. THIS ARTICLE NOT TO PREVENT EVENTS OF DEFAULT.
The failure to make a payment on account of principal of, premium, if any,
interest or Additional Amounts, if any, on the Securities by reason of any
provision of this Article will not be construed as preventing the occurrence
of an Event of Default.
ARTICLE FOURTEEN
SUBORDINATION OF SECURITIES
SECTION 1401. SECURITIES SUBORDINATED TO SENIOR INDEBTEDNESS.
The Company, the Guarantors and the Trustee each covenants and agrees and
each Holder, by its acceptance of a Security, likewise covenants and agrees
that all Securities shall be issued subject to the provisions of this Article
Fourteen; and each Person holding any Security, whether upon original issue
or upon transfer, assignment or exchange thereof, accepts and agrees that
Senior Subordinated Obligations shall, to the extent and in the manner set
forth in this Article Fourteen, be subordinated in right of payment to the
prior payment in full, in cash or cash equivalents, of all amounts payable
under Senior Indebtedness, including, without limitation, the Company's
obligations under the Credit Facilities (including any interest accruing
subsequent to an event specified in Sections 501(7) and 501(8) of this
Indenture, whether or not such interest is an allowed claim enforceable
against the debtor under the United States Bankruptcy Code).
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SECTION 1402. NO PAYMENT ON SECURITIES IN CERTAIN
CIRCUMSTANCES. (a) During the continuance of any default in the payment of
any Senior Indebtedness beyond any applicable grace period, no payment (other
than payments previously made pursuant to Article Twelve) or distribution of
any assets of the Company of any kind or character shall be made by the
Company on account of Senior Subordinated Obligations (other than such
payments or distributions as may be agreed to by the lenders under the
Designated Senior Indebtedness in accordance with the terms of the Designated
Senior Indebtedness) unless and until such default shall have been cured or
waived or shall have ceased to exist or the Senior Indebtedness with respect
to which such payment default shall have occurred shall have been discharged
or paid in full in cash or in any other form acceptable to the holders of
such Senior Indebtedness (or such payment shall be duly provided for to the
satisfaction of the holders of such Senior Indebtedness), after which the
Company shall resume making any and all required payments in respect of
Senior Subordinated Obligations, including any missed payments.
(b) During the continuance of any non-payment event of
default with respect to any Designated Senior Indebtedness (as such event of
default is defined in the instrument creating or evidencing such Designated
Senior Indebtedness) pursuant to which the maturity thereof may be
accelerated (a "NON-PAYMENT DEFAULT") and after receipt by the Trustee and
the Company from a representative of the holders of such Designated Senior
Indebtedness of written notice of such event of default, no payment (other
than payments previously made pursuant to Article Twelve) or distribution of
any assets of the Company of any kind or character (other than such payments
or distributions as may be agreed to by the holders of such Designated Senior
Indebtedness in accordance with the terms of the agreement governing such
Designated Senior Indebtedness and, only to the extent acceptable to holders
of the Securities, payment (i) in Qualified Capital Stock issued by the
Company to pay interest on the Securities or issued in exchange for the
Securities, (ii) in securities substantially identical to the Securities
issued by the Company in payment of interest accrued thereon or (iii) in
securities issued by the Company which are subordinated to the Senior
Indebtedness at least to the same extent as the Securities and do not provide
for the payment of principal or mandatory redemption or repurchase prior to
the final maturity of such Designated Senior Indebtedness) shall be made by
the Company on account of Senior Subordinated Obligations for the period
specified below (the "PAYMENT BLOCKAGE PERIOD").
The Payment Blockage Period shall commence upon the receipt of
notice of the Non-payment Default by the Trustee from a Representative of the
holders of any Designated Senior Indebtedness and shall end on the earliest
of (i) the first date on which 179 days shall have elapsed since the receipt
of such written notice, (ii) the date on which such Non-payment Default is
cured, waived or ceases to exist or on which such Designated Senior
Indebtedness is discharged or paid in full in cash or in any other manner
acceptable to the holders of Designated Senior Indebtedness (as determined in
accordance with the terms of the agreement governing such Designated Senior
Indebtedness) (or the date on which payment shall be duly provided for to the
satisfaction of the holders of such Designated Senior Indebtedness) or (iii)
the date on which such Payment Blockage Period shall have been terminated by
written notice to the Company or the Trustee from the Representative of, or
the holders of at least a majority in principal amount of, the Designated
Senior Indebtedness initiating such Payment Blockage Period, after which, in
the case of clause (i), (ii) and (iii), the Company shall resume making any
and all required payments in respect of Senior Subordinated Obligations,
including any missed
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payments. In no event will a Payment Blockage Period extend beyond 179 days
from the date of the receipt by the Company or the Trustee of the notice
initiating such Payment Blockage Period (such 179-day period referred to as
the "INITIAL PERIOD"). Any number of notices of Non-payment Defaults may be
given during the Initial Period; PROVIDED that during any 365 consecutive day
period, only one such period during which payment of principal of, or
interest or Additional Amounts, if any, on, the Securities may not be made
may be commenced, and the duration of such period may not exceed 179 days. No
Non-payment Default with respect to Designated Senior Indebtedness which
existed or was continuing on the date of the commencement of any Payment
Blockage Period will be, or can be, made the basis for the commencement of a
second Payment Blockage Period, whether or not within a period of 365
consecutive days, unless such event of default has been cured or waived for a
period of not less than 90 consecutive days.
(c) In the event that, notwithstanding the foregoing, any
payment shall be received by the Trustee or any Holder when such payment is
prohibited by Section 1402(a) or 1402(b) of this Indenture, the Trustee shall
promptly notify the holders of Senior Indebtedness of such prohibited payment
and such payment shall be held in trust for the benefit of, and shall be paid
over or delivered to, the holders of Senior Indebtedness or their respective
Representatives, or to the trustee or trustees under any indenture pursuant
to which any of such Senior Indebtedness may have been issued, as their
respective interests may appear, but only to the extent that, upon notice
from the Trustee to the holders of Senior Indebtedness that such prohibited
payment has been made, the holders of the Senior Indebtedness (or their
Representative or Representatives or a trustee) within 30 days of receipt of
such notice from the Trustee notify the Trustee of the amounts then due and
owing on the Senior Indebtedness, if any, and only the amounts specified in
such notice to the Trustee shall be paid to the holders of Senior
Indebtedness and any excess above such amounts due and owing on Senior
Indebtedness shall be paid to the Company.
SECTION 1403. PAYMENT OVER OF PROCEEDS UPON DISSOLUTION.
ETC. (a) Upon any payment or distribution of assets or securities of the
Company, of any kind or character, whether in cash, property or securities,
upon any dissolution or winding up or total or partial liquidation or
reorganization of the Company, whether voluntary or involuntary or in
bankruptcy, insolvency, receivership or other proceedings, all amounts due or
to become due upon all Senior Indebtedness (including any interest accruing
subsequent to an event specified in Sections 501(7) and 501(8) of this
Indenture, whether or not such interest is an allowed claim enforceable
against the debtor under the United States Bankruptcy Code) shall first be
paid in full, in cash or cash equivalents, before the Holders or the Trustee
on behalf of the Holders shall be entitled to receive any payment by the
Company on account of Senior Subordinated Obligations, or any payment to
acquire any of the Securities for cash, property or securities, or any
distribution with respect to the Securities of any cash, property or
securities. Before any payment may be made by the Company of any Senior
Subordinated Obligations upon any such dissolution, winding up, liquidation
or reorganization, any payment or distribution of assets or securities of the
Company of any kind or character, whether in cash, property or securities, to
which the Holders or the Trustee on behalf of the Holders would be entitled,
but for the provisions of this Article Fourteen, shall be made by the Company
or by any receiver, trustee in bankruptcy, liquidating trustee, agent or
other similar Person making such payment or distribution, or by the Holders
or the Trustee if received by them or it, directly to the holders of Senior
Indebtedness (PRO RATA to such holders on the basis of the respective amounts
of Senior Indebtedness held by such holders)
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or their Representatives, or to any trustee or trustees under any other
indenture pursuant to which any such Senior Indebtedness may have been
issued, as their respective interests appear, to the extent necessary to pay
all such Senior Indebtedness in full, in cash or cash equivalents after
giving effect to any concurrent payment, distribution or provision therefor
to or for the holders of such Senior Indebtedness.
(b) To the extent any payment of Senior Indebtedness (whether
by the Company, as proceeds of security or enforcement of any right of setoff
or otherwise) is declared to be fraudulent or preferential, set aside, or
required to be paid to any receiver, trustee in bankruptcy, liquidating
trustee, agent or other similar Person under any bankruptcy, insolvency,
receivership, fraudulent conveyance or similar law, then if such payment is
recovered by, or paid over to, such receiver, taste in bankruptcy,
liquidating trustee, agent or other similar Person, the Senior Indebtedness
or part thereof originally intended to be satisfied shall be deemed to be
reinstated and outstanding as if such payment had not occurred. To the extent
the obligation to repay any Senior Indebtedness is declared to be fraudulent,
invalid or otherwise set aside under any bankruptcy, insolvency,
receivership, fraudulent conveyance or similar law, then the obligation so
declared fraudulent, invalid or otherwise set aside (and all other amounts
that would come due with respect thereto had such obligation not been so
affected) shall be deemed to be reinstated and outstanding as Senior
Indebtedness for all purposes hereof as if such declaration, invalidity or
setting aside had not occurred.
(c) In the event that, notwithstanding the foregoing provision
prohibiting such payment or distribution, any payment or distribution of
assets or securities of the Company of any kind or character, whether in
cash, property or securities, shall be received by the Trustee or any Holder
at a time when such payment or distribution is prohibited by Section 1403(a)
of this Indenture and before all obligations in respect of Senior
Indebtedness are paid in full, in cash or cash equivalents, such payment or
distribution shall be received and held in trust for the benefit of, and
shall be paid over or delivered to, the holders of Senior Indebtedness (pro
rata to such holders on the basis of the respective amount of Senior
Indebtedness held by such holders) or their Representatives or to the trustee
or trustees under any other indenture pursuant to which any such Senior
Indebtedness may have been issued, as their respective interests appear, for
application to the payment of Senior Indebtedness remaining unpaid until all
such Senior Indebtedness has been paid in full, in cash or cash equivalents,
after giving effect to any concurrent payment, distribution or provision
therefor to or for the holders of such Senior Indebtedness.
(d) For purposes of this Section 1403, the words "cash,
property or securities" shall not be deemed to include (so long as the effect
of this clause is not to cause the Securities to be treated in any case or
proceeding or similar event described in this Section 1403 as part of the
same class of claims as the Senior Indebtedness or any class of claims pari
passu with, or senior to, the Senior Indebtedness for any payment or
distribution), securities of the Company or any other corporation provided
for by a plan of reorganization or readjustment that are subordinated, at
least to the extent that the Securities are subordinated, to the payment of
all Senior Indebtedness then outstanding; provided that (1) if a new
corporation results from such reorganization or readjustment, such
corporation assumes the Senior Indebtedness and (2) the rights of the holders
of the Senior Indebtedness are not, without the consent of such holders,
altered by such reorganization or readjustment. The consolidation of the
Company with, or the
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merger of the Company with or into, another corporation or the liquidation or
dissolution of the Company following the sale, conveyance, transfer, lease or
other disposition of all or substantially all of its property and assets to
another corporation upon the terms and conditions provided in Article Eight
of this Indenture shall not be deemed a dissolution, winding up, liquidation
or reorganization for the purposes of this Section 1403 if such other
corporation shall, as a part of such consolidation, merger, sale, conveyance,
transfer, lease or other disposition, comply with the conditions stated in
Article Eight of this Indenture.
SECTION 1404. SUBROGATION. (a) Upon the payment in full of
all Senior Indebtedness in cash or cash equivalents, the Holders shall be
subrogated to the rights of the holders of Senior Indebtedness to receive
payments or distributions of cash, property or securities of the Company made
on such Senior Indebtedness until the principal of, premium, if any, interest
and Additional Amounts, if any, on the Securities shall be paid in full; and,
for the purposes of such subrogation, no payments or distributions to the
holders of the Senior Indebtedness of any cash, property or securities to
which the Holders or the Trustee on their behalf would be entitled except for
the provisions of this Article Fourteen, and no payment pursuant to the
provisions of this Article Fourteen to the holders of Senior Indebtedness by
Holders or the Trust on their behalf shall, as between the Company, their
creditors other than holders of Senior Indebtedness, and the Holders, be
deemed to be a payment by the Company to or on account of the Senior
Indebtedness. It is understood that the provisions of this Article Fourteen
are intended solely for the purpose of defining the relative rights of the
Holders, on the one hand, and the holders of the Senior Indebtedness, on the
other hand.
(b) If any payment or distribution to which the Holders would
otherwise have been entitled but for the provisions of this Article Fourteen
shall have been applied, pursuant to the provisions of this Article Fourteen,
to the payment of all amounts payable under Senior Indebtedness, then, and in
such case, the Holders shall be entitled to receive from the holders of such
Senior Indebtedness any payments or distributions received by such holders of
Senior Indebtedness in excess of the amount required to make payment in full,
in cash or cash equivalents, of such Senior Indebtedness of such holders.
SECTION 1405. OBLIGATIONS OF COMPANY UNCONDITIONAL. (a)
Nothing contained in this Article Fourteen or elsewhere in this Indenture or
in the Securities is intended to or shall impair, as among the Company and
the Holders, the obligation of the Company, which is absolute and
unconditional, to pay to the Holders the principal of, premium, if any,
interest and Additional Amounts, if any, on the Securities as and when the
same shall become due and payable in accordance with their terms, or is
intended to or shall affect the relative rights of the Holders and creditors
of the Company other than the holders of the Senior Indebtedness, nor shall
anything herein or therein prevent the Holders or the Trustee on their behalf
from exercising all remedies otherwise permitted by applicable law upon
default under this Indenture, subject to the rights, if any, under this
Article Fourteen of the holders of the Senior Indebtedness.
(b) Without limiting the generality of the foregoing, nothing
contained in this Article Fourteen will restrict the right of the Trustee or
the Holders to take any action to declare the Securities to be due and
payable prior to their Stated Maturity pursuant to Section 502 of this
Indenture or to pursue any rights or remedies hereunder; PROVIDED, HOWEVER,
that all Senior Indebtedness then due and payable or thereafter declared to
be due and payable shall first be paid
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in full, in cash or cash equivalents, before the Holders or the Trustee are
entitled to receive any direct or indirect payment from the Company of Senior
Subordinated Obligations.
SECTION 1406. NOTICE TO TRUSTEE. (a) The Company shall give
prompt written notice to the Trustee of any fact known to the Company that
would prohibit the making of any payment to or by the Trustee in respect of
the Securities pursuant to the provisions of this Article Fourteen. The
Trustee shall not be charged with knowledge of the existence of any default
or event of default with respect to any Senior Indebtedness or of any other
facts that would prohibit the making of any payment to or by the Trustee
unless and until the Trustee shall have received notice in writing at its
Corporate Trust Office to that effect signed by an Officer of the Company, or
by a holder of Senior Indebtedness, or trustee or agent therefor; and prior
to the receipt of any such written notice, the Trustee shall, subject to
Article Six, be entitled to assume that no such facts exist; PROVIDED that,
if the Trustee shall not have received the notice provided for in this
Section 1406 at least two Business Days prior to the date upon which, by the
terms of this Indenture, any monies shall become payable for any purpose
(including, without limitation, the payment of the principal of, premium, if
any, interest or Additional Amounts, if any, on any Security), then,
notwithstanding anything herein to the contrary, the Trustee shall have full
power and authority to receive any monies from the Company and to apply the
same to the purpose for which they were received, and shall not be affected
by any notice to the contrary that may be received by it on or after such
prior date except for an acceleration of the Securities prior to such
application. Nothing contained in this Section 1406 shall limit the right of
the holders of Senior Indebtedness to recover payments as contemplated by
this Article Fourteen. The foregoing shall not apply if the Paying Agent is
the Company. The Trustee shall be entitled to rely on the delivery to it of a
written notice by a Person representing himself or itself to be a holder of
any Senior Indebtedness (or a Trustee on behalf of, or other Representative
of, such holder) to establish that such notice has been given by a holder of
such Senior Indebtedness or a trustee or Representative on behalf of any such
holder.
(b) In the event that the Trustee determines in good faith
that any evidence is required with respect to the right of any Person as a
holder of Senior Indebtedness to participate in any payment or distribution
pursuant to this Article Fourteen, the Trustee may request such Person to
furnish evidence to the reasonable satisfaction of the Trustee as to the
amount of Senior Indebtedness held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and any
other facts pertinent to the rights of such Person under this Article
Fourteen and, if such evidence is not furnished to the Trustee, the Trustee
may defer any payment to such Person pending judicial determination as to the
right of such Person to receive such payment.
SECTION 1407. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF
LIQUIDATING AGENT. Upon any payment or distribution of assets or securities
referred to in this Article Fourteen, the Trustee and the Holders shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction in which bankruptcy, dissolution, winding up, liquidation or
reorganization proceedings are pending, or upon a certificate of the
receiver, trustee in bankruptcy, liquidating trustee, agent or other similar
Person making such payment or distribution, delivered to the Trustee or to
the Holders for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of the Senior Indebtedness and
other
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Indebtedness of the Company, the amount hereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto
or to this Article Fourteen.
SECTION 1408. TRUSTEE'S RELATION TO SENIOR INDEBTEDNESS. (a)
The Trustee and any Paying Agent shall be entitled to all the rights set
forth in this Article Fourteen with respect to any Senior Indebtedness that
may at any time be held by it in its individual or any other capacity to the
sane extent as any other holder of Senior Indebtedness and nothing in this
Indenture shall deprive the Trustee or any Paying Agent of any of its rights
as such holder.
(b) With respect to the holders of Senior Indebtedness, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article Fourteen, and no
implied covenants or obligations with respect to the holders of Senior
Indebtedness shall be read into this Indenture against the Trustee. The
Trustee shall not be deemed to owe any fiduciary duty to the holders of
Senior indebtedness (except as provided in Sections 1402(c) and 1403(c) of
this Indenture) and shall not be liable to any such holders if the Trustee
shall in good faith mistakenly pay over or distribute to Holders of
Securities or to the Company or to any other person cash, property, or
securities to which any holders of Senior Indebtedness shall be entitled by
virtue of this Article Fourteen or otherwise.
SECTION 1409. SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR
OMISSIONS OF THE COMPANY OR HOLDERS OF SENIOR INDEBTEDNESS. No right of any
present or future holders of any Senior Indebtedness to enforce subordination
as provided in this Article Fourteen will at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the
Company or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by the Company with the terms of this Indenture,
regardless of any knowledge thereof that any such holder may have or
otherwise be charged with. The provisions of this Article Fourteen are
intended to be for the benefit of, and shall be enforceable directly by, the
holders of Senior Indebtedness.
SECTION 1410. HOLDERS AUTHORIZE TRUSTEE TO EFFECTUATE
SUBORDINATION OF SECURITIES. Each Holder by his acceptance of any Securities
authorizes and expressly directs the Trustee on his behalf to take such
action as may be necessary or appropriate to effectuate the subordination
provided in this Article Fourteen, and appoints the Trustee his
attorney-in-fact for such purposes, including, in the event of any
dissolution, winding up, liquidation or reorganization of the Company
(whether in bankruptcy, insolvency, receivership. reorganization or similar
proceedings or upon an assignment for the benefit of creditors or otherwise)
tending towards liquidation of the property and assets of the Company, the
filing of a claim for the unpaid balance of its Securities in the form
required in those proceedings. If the Trustee does not file a proper claim or
proof of indebtedness in the form required in such proceeding at least 5 days
before the expiration of the time to file such claim or claims, each holder
of Senior Indebtedness is hereby authorized to file an appropriate claim for
and on behalf of the Holders.
SECTION 1411. NOT TO PREVENT EVENTS OF DEFAULT. The failure
to make a payment on account of principal of, premium, if any, or interest on
the Securities by reason of any provision of this Article Fourteen will not
be construed as preventing the occurrence of an Event of Default.
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SECTION 1412. TRUSTEE'S COMPENSATION NOT PREJUDICED. Nothing
in this Article Fourteen will apply to amounts due to the Trustee pursuant to
other sections of this Indenture.
SECTION 1413. NO WAIVER OF SUBORDINATION PROVISIONS. Without
in any way limiting the generality of Section 1409 of this Indenture, the
holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders, without
incurring responsibility to the Holders and without impairing or releasing
the subordination provided in this Article Fourteen or the obligations
hereunder of the Holders to the holders of Senior Indebtedness, do any one or
more of the following: (a) change the manner, place or terms of payment or
extend the time of payment of, or renew or alter, Senior Indebtedness or any
instrument evidencing the same or any agreement under which Senior
Indebtedness is outstanding or secured; (b) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing
Senior Indebtedness; (c) release any Person liable in any manner for the
collection of Senior Indebtedness; and (d) exercise or refrain from
exercising any rights against the Company and any other Person.
SECTION 1414. PAYMENTS MAY BE PAID PRIOR TO DISSOLUTION.
Nothing contained in this Article Fourteen or elsewhere in this Indenture
shall prevent (i) the Company, except under the conditions described in
Section 1402 or 1403 of this Indenture, from making payments of principal of,
premium, if any, interest and Additional Amounts, if any, on the Securities,
or from depositing with the Trustee any money for such payments, or (ii) the
application by the Trustee of any money deposited with it for the purpose of
making such payments of principal of, premium, if any, interest and
Additional Amounts, if any, on the Securities to the holders entitled thereto
unless, at least two Business Days prior to the date upon which such payment
becomes due and payable, the Trustee shall have received the written notice
provided for in Section 1402(b) of this Indenture (or there shall have been
an acceleration of the Securities prior to such application) or in Section
1406 of this Indenture. The Company shall give prompt written notice to the
Trustee of any dissolution, winding up, liquidation or reorganization of the
Company.
ARTICLE FIFTEEN
SUBORDINATION OF GUARANTEES
SECTION 1501. GUARANTEES SUBORDINATED TO SENIOR GUARANTOR
INDEBTEDNESS. The Company, the Guarantors and the Trustee each covenants and
agrees and each Holder, by its acceptance of a Security, likewise covenants
and agrees that the Guarantees shall be issued subject to the provisions of
this Article Fifteen; and each Person holding any Security, whether upon
original issue or upon transfer, assignment or exchange thereof, accepts and
agrees that Senior Subordinated Guarantor Obligations shall, to the extent
and in the manner set forth in this Article Fifteen, be subordinated in right
of payment to the prior payment in full, in cash or cash equivalents, of all
amounts payable under Senior Guarantor Indebtedness, including, without
limitation, the obligations of the Guarantors under the Credit Facilities
(including any interest accruing subsequent to an event specified in Sections
501(7) and 501(8) of this Indenture, whether or not such interest is an
allowed claim enforceable against the debtor under the United States
Bankruptcy Code).
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SECTION 1502. NO PAYMENT ON GUARANTEES OF SECURITIES IN
CERTAIN CIRCUMSTANCES. (a) During the continuance of any default in the
payment of any Senior Guarantor Indebtedness beyond any applicable grace
period, no payment (other than payments previously made pursuant to Article
Twelve) or distribution of any assets of any Guarantor of any kind or
character shall be made by the Guarantors on account of Senior Subordinated
Guarantor Obligations (other than such payments or distributions as may be
agreed to by the lenders under the Credit Facilities in accordance with the
terms of the Credit Facilities) unless and until such default shall have been
cured or waived or shall have ceased to exist or the Senior Guarantor
Indebtedness with respect to which such payment default shall have occurred
shall have been discharged or paid in full in cash or in any other form
acceptable to the holders of such Senior Guarantor Indebtedness (or such
payment shall be duly provided for to the satisfaction of the holders of the
Senior Guarantor indebtedness), after which the Guarantors shall resume
making any and all required payments in respect of Senior Subordinated
Guarantor Obligations, including any missed payments.
(b) During the continuance of any non-payment event of default
with respect to any Designated Senior Guarantor Indebtedness (as such event
of default is defined in the instrument creating or evidencing such
Designated Senior Guarantor Indebtedness) pursuant to which the maturity
thereof may be accelerated (a "NON-PAYMENT DEFAULT") and after receipt by the
Trustee and the Guarantors from a representative of the holders of such
Designated Senior Guarantor indebtedness of written notice of such event of
default, no payment (other than payments previously made pursuant to Article
Twelve) or distribution of any assets of any Guarantor of any kind or
character (other than such payments or distributions as may be agreed to by
the holders of such Designated Senior Guarantor Indebtedness in accordance
with the terms of the agreement governing such Designated Senior Guarantor
indebtedness) shall be made by the Guarantors on account of Senior
Subordinated Guarantor Obligations for the period specified below (the
"PAYMENT BLOCKAGE PERIOD.").
The Payment Blockage Period shall commence upon the receipt of
notice of the Non-payment Default by the Trustee from a Representative of the
holder of any Designated Senior Guarantor Indebtedness and shall end on the
earliest of (i) the first date on which 179 days shall have elapsed since the
receipt of such written notice, (ii) the date on which such Non-payment
Default is cured, waived or ceases to exist or on which such Designated
Senior Guarantor Indebtedness is discharged or paid in full in cash or in any
other manner acceptable to the holders of Designated Senior Guarantor
Indebtedness (as determined in accordance with the terms of the agreement
governing such Designated Senior Guarantor indebtedness) (or the date on
which payment shall be duly provided for to the satisfaction of the holders
of such Designated Senior Guarantor Indebtedness) or (iii) the date on which
such Payment Blockage Period shall have been terminated by written notice to
the Guarantors or the Trustee from the Representative of, or the holders of
at least a majority in principal amount of, the Designated Senior Guarantor
Indebtedness initiating such Payment Blockage Period, after which, in the
case of clause (i), (ii) and (iii), the Guarantors shall resume making any
and all required payments in respect of Senior Subordinated Guarantor
Obligations, including any missed payments. In no event will a Payment
Blockage Period extend beyond 179 days from the date of the receipt by the
Guarantors or the Trustee of the notice initiating such Payment Blockage
Period (such 179-day period referred to as the "INITIAL PERIOD"). Any number
of notices of Non-payment Defaults may be given during the Initial Period;
PROVIDED that during any 365 consecutive day period, only one
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such period during which payment of principal of, or interest on, the Notes
may not be made may be commenced, and the duration of such period may not
exceed 179 days. No Non-payment Default with respect to Designated Senior
Guarantor Indebtedness which existed or was continuing on the date of the
commencement of any Payment Blockage Period will be, or can be, made the
basis for the commencement of a second Payment Blockage Period, whether or
not within a period of 365 consecutive days, unless such event of default has
been cured or waived for a period of not less than 90 consecutive days.
In the event that, notwithstanding the foregoing, any payment
shall be received by the Trustee or any Holder when such payment is
prohibited by Section 1502(a) or 1502(b) of this Indenture, the Trustee shall
promptly notify the holders of Senior Guarantor Indebtedness of such
prohibited payment and such payment shall be held in trust for the benefit
of, and shall be paid over or delivered to, the holders of Senior Guarantor
Indebtedness or their respective Representatives, or to the trustee or
trustees under any indenture pursuant to which any of such Senior Guarantor
Indebtedness may have been issued, as their respective interest may appear,
but only to the extent that, upon notice from the Trustee to the holders of
Senior Guarantor Indebtedness that such prohibited payment has been made, the
holders of the Senior Guarantor Indebtedness (or their Representative or
Representatives or a trustee) within 30 days of receipt of such notice from
the Trustee notify the Trustee of the amounts then due and owing on the
Senior Guarantor Indebtedness, if any, and only the amounts specified in such
notice to the Trustee shall be paid to the holders of Senior Guarantor
Indebtedness and any excess above such amounts due and owing on Senior
Guarantor Indebtedness shall be paid to United.
SECTION 1503. PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC.
(a) Upon any payment or distribution of assets or securities of any of the
Guarantors, of any kind or character, whether in cash, property or
securities, upon any dissolution or winding up or total or partial
liquidation or reorganization of any of the Guarantors, whether voluntary or
involuntary or in bankruptcy, insolvency, receivership or other proceedings,
all amounts due or to become due upon all Senior Guarantor Indebtedness
(including any interest accruing subsequent to an event specified in Sections
501(7) and 501(8) of this Indenture, whether or not such interest is an
allowed claim enforceable against the debtor under the United States
Bankruptcy Code) shall first be paid in full, in cash or cash equivalents,
before the Holders or the Trustee on behalf of the Holders shall be entitled
to receive any payment by such Guarantor on account of Senior Subordinated
Guarantor Obligations, or any payment to acquire any of the Securities for
cash, property or securities, or any distribution with respect to the
Securities of any cash, property or securities. Before any payment may be
made by the Guarantors of any Senior Subordinated Guarantor Obligations upon
any such dissolution, winding up, liquidation or reorganization, any payment
or distribution of assets or securities of any of the Guarantors of any kind
or character, whether in cash, property or securities, to which the Holders
or the Trustee on behalf of the Holders would be entitled, but for the
provisions of this Article Fifteen, shall be made by any Guarantor or by any
receiver, trustee in bankruptcy, liquidating trustee, agent or other similar
Person making such payment or distribution, or by the Holders or the Trustee
if received by them or it, directly to the holders of Senior Guarantor
Indebtedness (PRO RATA to such holders on the basis of the respective amounts
of Senior Guarantor Indebtedness held by such holders) or their
Representatives, or to any trustee or trustees under any other indenture
pursuant to which any such Senior Guarantor Indebtedness may have been
issued, as their respective interests appear, to the extent necessary to pay
all such Senior Guarantor Indebtedness in full, in cash or cash
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equivalents after giving effect to any concurrent payment, distribution or
provision therefor to or for the holders of such Senior Guarantor
Indebtedness.
(b) To the extent any payment of Senior Guarantor Indebtedness
(whether by a Guarantor, as proceeds of security or enforcement of any right
of setoff or otherwise) is declared to be fraudulent or preferential, set
aside, or required to be paid to any receiver, trustee in bankruptcy,
liquidating trustee, agent or other similar Person under any bankruptcy,
insolvency, receivership, fraudulent conveyance or similar law, then if such
payment is recovered by, or paid over to, such receiver, trustee in
bankruptcy, liquidating trustee, agent or other similar Person, the Senior
Guarantor Indebtedness or part thereof originally intended to be satisfied
shall be deemed to be reinstated and outstanding as if such payment had not
occurred. To the extent the obligation to repay any Senior Guarantor
Indebtedness is declared to be fraudulent, invalid, or otherwise set aside
under any bankruptcy, insolvency, receivership, fraudulent conveyance or
similar law, then the obligation so declared fraudulent, invalid or otherwise
set aside (and all other amounts that would come due with respect thereto had
such obligation not been so affected) shall be deemed to be reinstated and
outstanding as Senior Guarantor Indebtedness for all purposes hereof as if
such declaration, invalidity or setting aside had not occurred.
(c) In the event that, notwithstanding the foregoing provision
prohibiting such payment or distribution, any payment or distribution of
assets or securities of any of the Guarantors of any kind or character,
whether in cash, property or securities, shall be received by the Trustee or
any Holder at a time when such payment or distribution is prohibited by
Section 1503(a) of this Indenture and before all obligations in respect of
Senior Guarantor Indebtedness are paid in full, in cash or cash equivalents,
such payment or distribution shall he received and held in trust for the
benefit of, and shall be paid over or delivered to the holders of Senior
Guarantor Indebtedness (PRO RATA to such holders on the basis of the
respective amount of Senior Guarantor Indebtedness held by such holders) or
their Representatives or to the trustee or trustees under any other indenture
pursuant to which any such Senior Guarantor Indebtedness may have been
issued, as their respective interests appear, for application to the payment
of Senior Guarantor Indebtedness remaining unpaid until all such Senior
Guarantor Indebtedness has been paid in full, in cash or cash equivalents,
after giving effect to any concurrent payment, distribution or provision
therefor to or for the holders of such Senior Guarantor Indebtedness.
For purposes of this Section 1503, the words "cash, property
or securities" shall not be deemed to include (so long as the effect of this
clause is not to cause the Securities to be treated in any case or proceeding
or similar event described in this Section 1503 as part of thc same class of
claims as the Senior Guarantor Indebtedness or any class of claims PARI PASSU
with, or senior to, the Senior Guarantor Indebtedness for any payment or
distribution), securities of any of the Guarantors or any other corporation
provided for by a plan of reorganization or readjustment that are
subordinated, at least to the extent that the Securities are subordinated, to
the payment of all Senior Guarantor Indebtedness then outstanding; PROVIDED
that (1) if a new corporation results from such reorganization or
readjustment, such corporation assumes the Senior Guarantor Indebtedness and
(2) the rights of the holders of the Senior Guarantor Indebtedness are not,
without the consent of such holders, altered by such reorganization or
readjustment. The consolidation of any of the Guarantors with, or the merger
of any of the Guarantors with or into, another corporation or the liquidation
or dissolution of any of the
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Guarantors following the sale, conveyance, transfer, lease or other
disposition of all or substantially all of its property and assets to another
corporation upon the terms and conditions provided in Article Eight of this
Indenture shall not be deemed a dissolution, winding up, liquidation or
reorganization for the purposes of this Section 1503 if such other
corporation shall, as a part of such consolidation, merger, sale, conveyance,
transfer, lease or other disposition, comply with the conditions stated in
Article Eight of this Indenture.
SECTION 1504. SUBROGATION. (a) Upon the payment in full of
all Senior Guarantor Indebtedness in cash or cash equivalents, the Holders
shall be subrogated to the rights of the holders of Senior Guarantor
Indebtedness to receive payments or distributions of cash, property or
securities of United made on such Senior Guarantor Indebtedness until the
principal of, premium, if any, and interest on the Securities shall be paid
in full; and, for the purposes of such subrogation, no payments or
distributions to the holders of the Senior Guarantor Indebtedness of any
cash, property or securities to which the Holders or the Trustee on their
behalf would be entitled except for the provisions of this Article Fifteen,
and no payment pursuant to the provisions of this Article Fifteen to the
holders of Senior Guarantor Indebtedness by Holders or the Trust on their
behalf shall, as between any of the Guarantors, their creditors other than
holders of Senior Guarantor Indebtedness, and the Holders, be deemed to be a
payment by any of the Guarantors to or on account of the Senior Guarantor
Indebtedness. It is understood that the provisions of this Article Fifteen
are intended solely for the purpose of defining the relative rights of the
Holders, on-the one hand, and the holders of the Senior Guarantor
Indebtedness, on the other hand.
(b) If any payment or distribution to which the Holders would
otherwise have been entitled but for the provisions of this Article Fifteen
shall have been applied, pursuant to the provisions of this Article Fifteen,
to the payment of all amounts payable under Senior Guarantor Indebtedness,
then, and in such case, the Holders shall be entitled to receive from the
holders of such Senior Guarantor Indebtedness any payments or distributions
received by such holders of Senior Guarantor Indebtedness in excess of the
amount required to make payment in full, in cash or cash equivalents, of such
Senior Guarantor Indebtedness of such holders.
SECTION 1505. OBLIGATIONS OF COMPANY UNCONDITIONAL. (a)
Nothing contained in this Article Fifteen or elsewhere in this Indenture or
in the Securities is intended to or shall impair, as among the Guarantors and
the Holders, the obligation of any of the Guarantors, which is absolute and
unconditional, to pay to the Holders the principal of, premium, if any, and
interest on the Securities as and when the same shall become due and payable
in accordance with their terms, or is intended to or shall affect the
relative rights of the Holders and creditors of any of the Guarantors other
than the holders of the Senior Guarantor Indebtedness, nor shall anything
herein or therein prevent the Holders or the Trustee on their behalf from
exercising all remedies otherwise permitted by applicable law upon default
under this Indenture, subject to the rights, if any, under this Article
Fifteen of the holders of the Senior Guarantor Indebtedness.
(b) Without limiting the generality of the foregoing, nothing
contained in this Article Fifteen will restrict the right of the Trustee or
the Holders to take any action to declare the Securities to be due and
payable prior to their Stated Maturity pursuant to Section 502 of this
Indenture or to pursue any rights or remedies hereunder; PROVIDED, HOWEVER,
that all Senior Guarantor Indebtedness then due and payable or thereafter
declared to be due and payable shall
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first be paid in full, in cash or cash equivalents, before the Holders or the
Trustee are entitled to receive any direct or indirect payment from the
Guarantors of Senior Subordinated Guarantor Obligations.
SECTION 1506. NOTICE TO TRUSTEE. (a) Each Guarantor shall
give prompt written notice to the Trustee of any fact known to such Guarantor
that would prohibit the making of any payment to or by the Trustee in respect
of the Securities pursuant to the provisions of this Article Fifteen. The
Trustee shall not be charged with knowledge of the existence of any default
or event of default with respect to any Senior Guarantor Indebtedness or of
any other facts that would prohibit the making of any payment to or by the
Trustee unless and until the Trustee shall have received notice in writing at
its Corporate Trust Office to that effect signed by an Officer of such
Guarantor, or by a holder of Senior Guarantor Indebtedness, or trustee or
agent therefor; and prior to the receipt of any such written notice, the
Trustee shall, subject to Article Six, be entitled to assume that no such
facts exist; PROVIDED that, if the Trustee shall not have received the notice
provided for in this Section 1506 at least two Business Days prior to the
date upon which, by the terms of this Indenture, any monies shall become
payable for any purpose (including, without limitation, the payment of the
principal of, premium, if any, or interest on any Security), then,
notwithstanding anything herein to the contrary, the Trustee shall have full
power and authority to receive any monies from such Guarantor and to apply
the same to the purpose for which they were received, and shall not be
affected by any notice to the contrary that may be received by it on or after
such prior date except for an acceleration of the Securities prior to such
application. Nothing contained in this Section 1506 shall limit the right of
the holders of Senior Guarantor Indebtedness to recover payments as
contemplated by this Article Fifteen. The foregoing shall not apply if the
Paying Agent is such Guarantor. The Trustee shall be entitled to rely on the
delivery to it of a written notice by a Person representing himself or itself
to be a holder of any Senior Guarantor Indebtedness (or a trustee on behalf
of, or other Representative of, such holder) to establish that such notice
has been given by a holder of such Senior Guarantor Indebtedness or a trustee
or Representative on behalf of any such holder.
(b) In the event that the Trustee determines in good faith
that any evidence is required with respect to the right of any Person as a
holder of Senior Guarantor Indebtedness to participate in any payment or
distribution pursuant to this Article Fifteen, the Trustee may request such
Person to furnish evidence to the reasonable satisfaction of the Trustee as
to the amount of Senior Guarantor Indebtedness held by such Person, the
extent to which such Person is entitled to participate in such payment or
distribution and any other facts pertinent to the rights of such Person under
this Article Fifteen and, if such evidence is not furnished to the Trustee,
the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.
SECTION 1507. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF
LIQUIDATING AGENT. Upon any payment or distribution of assets or securities
referred to in this Article Fifteen, the Trustee and the Holders shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction in which bankruptcy, dissolution, winding up, liquidation or
reorganization proceedings are pending, or upon a certificate of the
receiver, trustee in bankruptcy, liquidating trustee, agent or other similar
Person making such payment or distribution, delivered to the Trustee or to
the Holders for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of the Senior Guarantor
Indebtedness and
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other Indebtedness of any of the Guarantors, the amount hereof or payable
thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article Fifteen.
SECTION 1508. TRUSTEE'S RELATION TO SENIOR GUARANTOR
INDEBTEDNESS. (a) The Trustee and any Paying Agent shall be entitled to all
the rights set forth in this Article Fifteen with respect to any Senior
Guarantor Indebtedness that may at any time be held by it in its individual
or any other capacity to the same extent as any other holder of Senior
Guarantor Indebtedness and nothing in this Indenture shall deprive the
Trustee or any Paying Agent of any of its rights as such holder.
(b) With respect to the holders of Senior Guarantor
Indebtedness, thc Trustee undertakes to perform or to observe only such of
its covenants and obligations as are specifically set forth in this Article
Fifteen, and no implied covenants or obligations with respect to thc holders
of Senior Guarantor Indebtedness shall be read into this Indenture against
the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Guarantor Indebtedness (except as provided in Sections
1502(c) and 1503(c) of this Indenture) and shall not be liable to any such
holders if the Trustee shall in good faith mistakenly pay over or distribute
to Holders of Securities or to the Guarantors or to any other person cash,
property or securities to which any holders of Senior Guarantor Indebtedness
shall be entitled by virtue of this Article Fifteen or otherwise.
SECTION 1509. SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR
OMISSIONS OF THE GUARANTORS OR HOLDERS OF SENIOR GUARANTOR Indebtedness. No
right of any present or future holders of any Senior Guarantor Indebtedness
to enforce subordination as provided in this Article Fifteen will at any time
in any way be prejudiced or impaired by any act or failure to act on the part
of any of the Guarantors or by any act or failure to act, in good faith, by
any such holder, or by any noncompliance by any of the Guarantors with the
terms of this Indenture, regardless of any knowledge thereof that any such
holder may have or otherwise be charged with. The provisions of this Article
Fifteen are intended to be for the benefit of, and shall be enforceable
directly by, the holders of Senior Guarantor Indebtedness.
SECTION 1510. HOLDERS AUTHORIZE TRUSTEE TO EFFECTUATE
SUBORDINATION OF GUARANTEE OF SECURITIES. Each Holder by his acceptance of
any Securities authorizes and expressly directs the Trustee on his behalf to
take such action as may be necessary or appropriate to effectuate the
subordination provided in this Article Fifteen, and appoints the Trustee his
attorney-in-fact for such purposes, including, in the event of any
dissolution, winding up, liquidation or reorganization of any of the
Guarantors (whether in bankruptcy, insolvency, receivership, reorganization
or similar proceedings or upon an assignment for the benefit of creditors or
otherwise) tending towards liquidation of the property and assets of any of
the Guarantors, the filing of a claim for the unpaid balance of its
Securities in the form required in those proceedings. If the Trustee does not
file a proper claim or proof of indebtedness in the form required in such
proceeding at least 5 days before the expiration of the time to file such
claim or claims, each holder of Senior Guarantor Indebtedness is hereby
authorized to file an appropriate claim for and on behalf of the Holders.
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SECTION 1511. NOT TO PREVENT EVENTS OF DEFAULT. The failure
to make a payment on account of principal of, premium, if any, or interest on
the Securities by reason of any provision of this Article Fifteen will not be
construed as preventing the occurrence of an Event of Default.
SECTION 1512. TRUSTEE'S COMPENSATION NOT PREJUDICED. Nothing
in this Article Fifteen will apply to amounts due to the Trustee pursuant to
other sections of this Indenture.
SECTION 1513. NO WAIVER OF SUBORDINATION PROVISIONS. Without
in any way limiting the generality of Section 1509 of this Indenture, the
holders of Senior Guarantor Indebtedness may, at any time and from time to
time, without the consent of or notice to the Trustee or the Holders, without
incurring responsibility to the Holders and without impairing or releasing
the subordination provided in this Article Fifteen or the obligations
hereunder of the Holders to the holders of Senior Guarantor Indebtedness, do
any one or more of the following: (a) change the manner, place or terms of
payment or extend the time of payment of, or renew or alter, Senior Guarantor
Indebtedness or any instrument evidencing the same or any agreement under
which Senior Guarantor Indebtedness is outstanding or secured; (b) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing Senior Guarantor Indebtedness; (c) release any Person
liable in any manner for the collection of Senior Guarantor Indebtedness; and
(d) exercise or refrain from exercising any rights against the Guarantors and
any other Person.
SECTION 1514. PAYMENTS MAY BE PAID PRIOR TO DISSOLUTION.
Nothing contained in this Article Fifteen or elsewhere in this Indenture
shall prevent (i) the Guarantors, except under the conditions described in
Section 1502 or 1503 of this Indenture, from making payments of principal of,
premium, if any, and interest on the Securities, or from depositing with the
Trustee any money for such payments, or (ii) the application by the Trustee
of any money deposited with it for the purpose of making such payments of
principal of, premium, if any, and interest on the Securities pursuant to the
Guarantees thereof to the holders entitled thereto unless, at least two
Business Days prior to the date upon which such payment becomes due and
payable, the Trustee shall have received the written notice provided for in
Section 1502(b) of this Indenture (or there shall have been an acceleration
of the Securities prior to such application) or in Section 1506 of this
Indenture. Each Guarantor shall give prompt written notice to the Trustee of
any dissolution, winding up, liquidation or reorganization of such Guarantor.
<PAGE>
96
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
UNITED STATIONERS SUPPLY CO.,
as issuer of the Notes
By:
--------------------------
Title:
Attest:
--------------------------
Title:
UNITED STATIONERS INC.,
as a Guarantor
By:
--------------------------
Title:
Attest:
--------------------------
Title:
LAGASSE BROS., INC.,
as a Guarantor
By:
--------------------------
Title:
Attest:
--------------------------
Title:
<PAGE>
97
AZERTY INCORPORATED,
as a Guarantor
By:
--------------------------
Title:
Attest:
--------------------------
Title:
POSITIVE ID WHOLESALE INC.,
as a Guarantor
By:
--------------------------
Title:
Attest:
--------------------------
Title:
AP SUPPORT SERVICES INCORPORATED,
as a Guarantor
By:
--------------------------
Title:
Attest:
--------------------------
Title:
THE BANK OF NEW YORK,
as the Trustee
By:
--------------------------
Title:
<PAGE>
EXHIBIT A
[FACE OF SECURITY]
UNITED STATIONERS SUPPLY CO.
____% Senior Subordinated Note due 2008
CUSIP
No. ___________ $______________________
UNITED STATIONERS SUPPLY CO., an Illinois corporation (the
"Company," which term includes any successor under the Indenture hereinafter
referred to), for value received, promises to pay to _______, or its
registered assigns, the principal sum of ______________, on _____________, 2008.
Interest Rate: ____% per annum.
Interest Payment Dates: __________ and __________ of each
year commencing __________, 1998.
Regular Record Dates: _________ and _________ of each year.
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
<PAGE>
2
IN WITNESS WHEREOF, the Company has caused this Security to be
signed manually or by facsimile by its duly authorized officers.
Date: UNITED STATIONERS SUPPLY CO.
---------------------------
By:
---------------------------
Title:
Attest:
---------------------------
Title:
<PAGE>
3
(Form of Trustee's Certificate of Authentication)
Dated:
-----------------
This is one of the ____% Senior Subordinated Notes due 2008
described in the within-mentioned Indenture.
THE BANK OF NEW YORK,
as Trustee
By:
------------------------------
Authorized Signatory
<PAGE>
4
[REVERSE SIDE OF SECURITY]
UNITED STATIONERS SUPPLY CO.
____% Senior Subordinated Note due 2008
1. PRINCIPAL AND INTEREST.
The Company will pay the principal of this Security on
________, 2008.
The Company promises to pay interest on the principal amount
of this Security on each Interest Payment Date, as set forth below, at the
rate of ____% per annum.
Interest will be payable semiannually (to the holders of
record of the Securities at the close of business on the __________ or
__________ immediately preceding the Interest Payment Date) on each Interest
Payment Date, commencing __________, 1998.
[The Holder of this Security is entitled to the benefits of the
Exchange and Registration Rights Agreement, dated as of __________, 1998,
among the Company, the Guarantors named therein and the Initial Purchasers
named therein (the "Registration Rights Agreement"). In the event that
certain events have not occurred by certain dates the Holder will be entitled
to receive Additional Amounts (as defined in the Registration Rights
Agreement) with respect to this Security.]*
Interest on this Security will accrue from the most recent
date to which interest has been paid [on this Security or the Security
surrendered in exchange herefor]** or, if no interest has been paid, from
__________, 1998; PROVIDED that, if there is no existing default in the
payment of interest and if this Security is authenticated between a Regular
Record Date referred to on the face hereof and the next succeeding Interest
Payment Date, interest shall accrue from such Interest Payment Date. Interest
will be computed on the basis of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal and
premium, if any, and interest on overdue installments of interest, to the
extent lawful, at a rate per annum equal to the rate of interest applicable
to the Securities.
- --------------------
* Include only for Initial Securities and Private Exchange
Securities.
** Include only for Exchange Securities and Private Exchange
Securities.
<PAGE>
5
2. METHOD OF PAYMENT.
The Company will pay interest (except defaulted interest) on
the outstanding principal amount of the Securities on each __________ and
__________ to the persons who are holders thereof (as reflected in the
Security Register at the close of business on the __________ and __________
immediately preceding the Interest Payment Date), in each case, even if the
Security is cancelled on registration of transfer or registration of exchange
after such record date; PROVIDED that, with respect to the payment of
principal, the Company will make payment to the Holder that surrenders this
Security to any Paying Agent on or after __________, 2008.
The Company will pay principal, premium, if any, interest and
Additional Amounts, if any, in money of the United States that at the time of
payment is legal tender for payment of public and private debts. However, the
Company may pay principal, premium, if any, interest and Additional Amounts,
if any, by its check payable in such money. The Company may (i) mail an
interest check to a Holder's registered address (as reflected in the Security
Register) or (ii) wire transfer the interest payment to an account located in
the United States maintained by the payee. If a payment date is a date other
than a Business Day at a place of payment, payment may be made at that place
on the next succeeding day that is a Business Day and no interest shall
accrue for the intervening period.
3. PAYING AGENT AND REGISTRAR.
Initially, the Trustee will act as Paying Agent and Registrar.
The Company may change any Paying Agent or Registrar upon written notice
thereto. The Company, United, any Subsidiary or any Affiliate of any of them
may act as Paying Agent, Registrar and/or co-registrar.
4. INDENTURE; LIMITATIONS.
The Company issued the Securities under an Indenture dated as
of April __, 1998 (the "Indenture"), among the Company, the Guarantors named
therein and The Bank of New York, as trustee (the "Trustee"). Capitalized
terms herein are used as defined in the Indenture unless otherwise indicated.
The terms of the Securities include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act. The
Securities are subject to all such terms, and Holders are referred to the
Indenture and the Trust Indenture Act for a statement of all such terms. To
the extent permitted by applicable law, in the event of any inconsistency
between the terms of this Security and the terms of the Indenture, the terms
of the Indenture shall control.
The Securities are general unsecured obligations of the
Company limited to $100,000,000 aggregate principal amount at maturity,
except for Securities authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Securities pursuant to
Section 303, 304, 305, 306, 906, 1010, 1016 or 1108, and, subject to
compliance with the covenants contained in the Indenture, up to $100,000,000
aggregate principal amount of Additional Securities having substantially
identical terms and conditions as the Initial Securities.
<PAGE>
6
This Security is one of the [Initial]* [Additional]**Securities referred to
in the Indenture. The Securities include the Initial Securities, the
Additional Securities and any Exchange Securities or Private Exchange
Securities issued in exchange for the Initial Securities or Additional
Securities pursuant to the Indenture. The Initial Securities, the Additional
Securities, the Exchange Securities and the Private Exchange Securities are
treated as a single class of securities under the Indenture.
5. GUARANTEE.
The payment of principal and interest on the Notes is
guaranteed on a senior subordinated basis by the Guarantors pursuant to
Article Thirteen of the Indenture.
6. REDEMPTION.
OPTIONAL REDEMPTION.
The Securities will be subject to redemption at any time on or
after ________, 2003, at the option of the Company, in whole or in part, on
not less than 30 nor more than 60 days' prior notice in amounts of $1,000 or
an integral multiple thereof at the following redemption prices (expressed as
percentages of the principal amount), if redeemed during the 12-month period
beginning ________ of the years indicated below:
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2003...........................................______%
2004...........................................______%
2005...........................................______%
2006...........................................______%
</TABLE>
and thereafter at 100% of the principal amount, in each case, together with
accrued and unpaid interest and Additional Amounts, if any, to the redemption
date (subject to the right of holders of record on Regular Record Dates to
receive interest due on relevant Interest Payment Dates).
OPTIONAL REDEMPTION UPON A PUBLIC OFFERING.
In addition, at any time and from time to time on or prior to
___________, 2001, the Company may redeem up to 35% of the original principal
amount of the Securities (calculated giving effect to any issuance of
Additional Securities) within 180 days following one or more Public Equity
Offerings with the net proceeds of such offerings, at a redemption price
- -----------------------
* Include only for the Initial Securities.
** Include only for the Additional Securities.
<PAGE>
7
equal to ___% of the principal amount thereof, together with accrued and
unpaid interest and Additional Amounts, if any, to the date of redemption
(subject to the right of Holders of record on Regular Record Dates to receive
interest due on relevant Interest Payment Dates); PROVIDED, that immediately
after giving effect to each such redemption at least 65% of the aggregate
principal amount of the Securities (as so calculated) remain outstanding
after giving effect to each such redemption. On and after the redemption
date, interest ceases to accrue on Securities or portions of Securities
called for redemption, unless the Company defaults in the payment of the
Redemption Price.
7. REPURCHASE UPON A CHANGE IN CONTROL AND ASSET SALES.
Upon the occurrence of a Change of Control, the Company is
obligated to make an offer to purchase all Outstanding Securities at a
redemption price of 101% of the principal amount thereof, plus accrued and
unpaid interest and Additional Amounts, if any, to the date of purchase. Upon
the consummation of an Asset Sale, the Company may, under certain
circumstances, be obligated to make an offer to purchase Securities with a
portion of the Net Cash Proceeds of such Asset Sale at a redemption price of
100% of the principal amount thereof plus accrued and unpaid interest, if
any, to the date of purchase.
8. DENOMINATIONS; TRANSFER; EXCHANGE.
The Securities are in registered form without coupons, in
denominations of $1,000 and integral multiples of $1,000 in excess thereof. A
Holder may register the transfer or exchange of Securities in accordance with
the Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay any taxes
and fees required by law or permitted by the Indenture. The Registrar need
not register the transfer or exchange of any Securities selected for
redemption (except the unredeemed portion of any Security being redeemed in
part). Also, the Registrar need not register the transfer or exchange of any
Securities for a period of 15 days before a selection of Securities to be
redeemed is made.
9. PERSONS DEEMED OWNERS.
A Holder may be treated as the owner of a Security for all
purposes.
10. UNCLAIMED MONEY.
If money for the payment of principal, premium, if any, or
interest remains unclaimed for two years, the Trustee and the Paying Agent
will pay the money back to the Company at its request. After that, Holders
entitled to the money must look to the Company for payment, unless an
abandoned property law designates another Person, and all liability of the
Trustee and such Paying Agent with respect to such money shall cease.
11. DISCHARGE PRIOR TO REDEMPTION OR MATURITY.
If the Company irrevocably deposits, or causes to be
deposited, with the Trustee money or U.S. Government Obligations sufficient
to pay the then outstanding principal of,
<PAGE>
8
premium, if any, and accrued interest on the Securities (a) to redemption or
maturity, the Company and any Guarantor will be discharged from the Indenture
and the Securities, except in certain circumstances for certain sections
thereof, and (b) to the Stated Maturity, the Company and any Guarantor will
be discharged from certain covenants set forth in the Indenture.
12. AMENDMENT; SUPPLEMENT; WAIVER.
Subject to certain exceptions, the Indenture or the Securities
may be amended or supplemented with the consent of the Holders of at least a
majority in aggregate principal amount of the Securities then outstanding,
and any existing default or compliance with any provision may be waived with
the consent of the Holders of a majority in aggregate principal amount of the
Securities then outstanding. Without notice to or the consent of any Holder,
the parties thereto may amend or supplement the Indenture or the Securities
to, among other things, cure any ambiguity, defect or inconsistency.
13. RESTRICTIVE COVENANTS.
The Indenture contains certain covenants, including, without
limitation, covenants with respect to the following matters: (i)
Indebtedness; (ii) Restricted Payments; (iii) issuances and sales of
Subsidiary stock; (iv) transactions with Affiliates; (v) Liens; (vi)
guarantees of Indebtedness by Restricted Subsidiaries; (vii) disposition of
proceeds of Asset Sales; (viii) dividends and other payment restrictions
affecting Restricted Subsidiaries; (ix) mergers and certain transfers of
assets; and (x) Senior Subordinated Indebtedness. Within 90 days after the
end of each fiscal year and within 90 days after each fiscal quarter, the
Company must report to the Trustee on compliance with such limitations.
14. SUCCESSOR PERSONS.
When a successor person or other entity assumes all the
obligations of its predecessor under the Securities and the Indenture, the
predecessor person will be released from those obligations.
15. REMEDIES FOR EVENTS OF DEFAULT.
If an Event of Default, as defined in the indenture, occurs
and is continuing, the Trustee or the Holders of not less than 25% in
principal amount of the Securities then outstanding may declare all the
Securities to be immediately due and payable. If a bankruptcy or insolvency
default with respect to United, the Company or any Significant Subsidiary
occurs and is continuing, the Securities automatically become immediately due
and payable. Holders may not enforce the Indenture or the Securities except
as provided in the Indenture. The Trustee may require indemnity satisfactory
to it before it enforces the Indenture or the Securities. Subject to certain
limitations, Holders of at least a majority in principal amount of the
Securities then outstanding may direct the Trustee in its exercise of any
trust or power.
<PAGE>
9
16. SUBORDINATION.
The payment of the Securities will, to the extent set forth in
the Indenture, be subordinated in right of payment to the prior payment in
full, in cash, of all Senior Indebtedness.
17. TRUSTEE DEALINGS WITH COMPANY.
The Trustee under the Indenture, in its individual or any
other capacity, may become the owner or pledgee of Securities and may make
loans to, accept deposits from, perform services for, and otherwise deal
with, the Company, the Guarantors and their Affiliates as if it were not the
Trustee.
18. AUTHENTICATION.
This Security shall not be valid until the Trustee signs the
certificate of authentication on the other side of this Security.
19. CUSIP NUMBERS.
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company has caused CUSIP
numbers to be printed on the Securities and have directed the Trustee to use
CUSIP numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed
on the Securities or as contained in any notice of redemption and reliance
may be placed only on the other identification numbers placed thereon.
20. GOVERNING LAW.
This Security shall be governed by the laws of the State of
New York applicable to contracts to be performed entirely within that state.
21. ABBREVIATIONS.
Customary abbreviations may be used in the name of a Holder or
an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by
the entireties), JT TEN ( = joint tenants with right of survivorship and not
as tenants in common), CUST ( = Custodian) and U/G/M/A (= Uniform Gifts to
Minors Act).
The Company will furnish to any Holder upon written request
and without charge a copy of the Indenture. Requests may be made to United
Stationers Supply Co., 2200 East Golf Road, Des Plaines, Illinois 60016,
Attention: Secretary.
<PAGE>
10
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint such as agent to transfer this Security on the books
of the Company. The agent may substitute another to act for him.
- ------------------------------------------------------------------------------
Date: Your Signature:
----------------------- --------------------------------
Signature Guarantee:
---------------------------------------------------------
(Signature must be guaranteed)
- ------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in the Securities Transfer Agents Medallion Program ("STAMP") or
such other signature guarantee medallion program as may be approved by the
Registrar in addition to or substitution for, STAMP), pursuant to S.E.C. Rule
17Ad-15.
[In connection with any transfer or exchange of any of the Securities evidenced
by this certificate occurring prior to the date that is two years after the
later of the date of original issuance of such Securities and the last date, if
any, on which such Securities were owned by the Issuers or any Affiliate of the
Issuers, the undersigned confirms that such Securities are being:
CHECK ONE BOX BELOW:
1/ / acquired for the undersigned's own account, without transfer; or
2/ / transferred to the Company; or
3/ / transferred pursuant to and in compliance with Rule 144A under the
Securities Act of 1933; or
4/ / transferred pursuant to an effective registration statement under
the Securities Act; or
5/ / transferred pursuant to and in compliance with Regulation S under
the Securities Act of 1933; or
<PAGE>
11
6/ / transferred to an institutional "accredited investor" (as defined in
Rule 501 (a)(1), (2), (3) or (7) under the Securities Act of 1933),
that has furnished to the Trustee a signed letter containing certain
representations and agreements (the form of which letter appears as
Exhibit B of the Indenture); or
7/ / transferred pursuant to another available exemption from the
registration requirements of the Securities Act of 1933.
Unless one of the boxes is checked, the Trustee may refuse to register any of
the Securities evidenced by this certificate in the name of any person other
than the registered holder thereof; PROVIDED, HOWEVER, that if box (5), (6)
or (7) is checked, the Trustee or the Company may require, prior to
registering any such transfer of the Securities, in their sole discretion,
such legal opinions, certifications and other information as the Trustee or
the Company may reasonably request to confirm that such transfer is being
made pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act of 1933, such as the
exemption provided by Rule 144 under such Act.
-----------------------------
Signature
Signature Guarantee:
- -------------------------------
(Signature must be guaranteed)
- -------------------------------
Signature
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions) with
membership in the Securities Transfer Agents Medallion Program ("STAMP") or
such other signature guarantee medallion program as may be approved by the
Registrar in addition to or substitution for STAMP, pursuant to S.E.C. Rule
17Ad-15.]
<PAGE>
12
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security have been made:
<TABLE>
<S> <C> <C> <C> <C>
Date of Amount of Decrease Amount of Increase Principal Amount Signature of Authorized
Exchange in Principal Amount in Principal Amount of this Global Signatory of Trustee or
of this Global of this Global Security Following Custodian
Security Security Such Decrease
or Increase
</TABLE>
<PAGE>
13
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 1010 or 1016 of the Indenture, check the box:
/ /
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 1010 or 1016 of the Indenture,
state the amount in principal amount (must be integral multiple of $1,000):
$_______________.
Date: Your Signature
------------ ------------------------------------------
(Sign exactly as your name appears on the
other side of the Security)
Signature Guarantee:
-----------------------------------------------
(Signature must be guaranteed)
The signature(s) should be guaranteed by an eligible guarantor
institution (banks, stockbrokers, savings and loan associations and credit
unions) with membership in the Securities Transfer Agents Medallion Program
("STAMP") or such other signature guarantee medallion program as may be
approved by the Registrar in addition to or substitution for STAMP, pursuant
to S.E.C. Rule 17Ad-15.
<PAGE>
14
[THE FOLLOWING PROVISION TO BE INCLUDED ON ALL 144A CERTIFICATES]
In connection with any transfer of this Security occurring
prior to the date that is the earlier of the date of an effective
Registration Statement or _________________, the undersigned confirms that
without utilizing any general solicitation or general advertising that:
[CHECK ONE]
[ ] (a) this Security is being transferred in compliance with the
exemption from registration under the Securities Act of 1933, as
amended, provided by Rule 144A thereunder.
OR
[ ] (b) this Security is being transferred other than in accordance
with (a) above and documents are being furnished that comply with
the conditions of transfer set forth in this Security and the
Indenture.
If neither of the foregoing boxes is checked, the Trustee or other Registrar
shall not be obligated to register this Security in the name of any Person
other than the Holder hereof unless and until the conditions to any such
transfer of registration set forth herein and in the Indenture shall have
been satisfied.
Date:
----------------------- -----------------------------------------------
NOTICE: The signature must correspond with the name as written upon the face
of the within-mentioned instrument in every particular, without alteration or
any change whatsoever.
Signature Guarantee:
------------------------------------
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing
this Security for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act of 1933, as amended, and is aware that the sale to it is being
made in reliance on Rule 144A and acknowledges that it has received such
information regarding the Company and the Guarantors as the undersigned has
requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Date:
---------------------------- ---------------------------------------
NOTICE: To be executed by an executive
officer.
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION
WITH TRANSFERS TO INSTITUTIONAL ACCREDITED INVESTORS
[date]
UNITED STATIONERS SUPPLY CO.
c/o The Bank of New York, as Trustee
101 Barclay Street, 21st Floor
New York, New York 10286
Attention: Corporate Trust Administration
Ladies and Gentlemen:
This certificate is delivered to request a transfer of
$_______ principal amount of the [ ]% Senior Subordinated Notes due 2008
(together with the guarantees thereon, the "SECURITIES") of United Stationers
Supply Co. (the "COMPANY").
Upon transfer, the Securities would be registered in the name
of the new beneficial owner as follows:
Name:
Address:
Taxpayer ID Number:
The undersigned represents and warrants to you that:
(1) We are an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as
amended (the "SECURITIES ACT")), purchasing for our own account or for the
account of an institutional "accredited investor" at least $250,000 principal
amount of the Securities, and we are acquiring the Securities not with a view
to, or for offer or sale in connection with, any distribution in violation of
the Securities Act. We have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of our
investment in the Securities and invest in or purchase securities similar to
the Securities in the normal course of our business. We and any accounts for
which we are acting are each able to bear the economic risk of our or its
investment.
(2) We understand that the Securities have not been registered
under the Securities Act and, unless so registered, may not be sold except as
permitted in the following sentence. We agree on our own behalf and on behalf
of any investor account for which we are purchasing Securities to offer, sell
or otherwise transfer such Securities prior to the date which is two years
after the later of the date of original issue and the last date on which the
Company or any affiliate of the Company was the owner of such Notes (or any
predecessor thereto) (the "RESALE RESTRICTION TERMINATION DATE") only (a) to
the Company, (b) pursuant to a registration statement that has been declared
effective under the Securities Act, (c) in a transaction complying with the
requirements of Rule 144A under the Securities Act ("RULE 144A"), to a person
we reasonably believe is a "qualified institutional buyer" under Rule 144A (a
"QIB") that purchases for its own account or for the account of a QIB and to
whom notice is given that the transfer is being made in reliance on Rule
144A, (d) pursuant to offers and sales that occur outside the United States
within the meaning of Regulation S under the Securities Act, (e) to an
institutional
<PAGE>
2
"accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7)
under the Securities Act that is purchasing for its own account or for the
account of such an institutional "accredited investor", in each case in a
minimum principal amount of Securities of $250,000 or (f) pursuant to any
other available exemption from the registration requirements of the
Securities Act, subject in each of the foregoing cases to any requirement of
law that the disposition of our property or the property of such investor
account or accounts be at all times within our or their control and in
compliance with any applicable state securities laws. The foregoing
restrictions on resale will not apply subsequent to the Resale Restriction
Termination Date. If any resale or other transfer of the Securities is
proposed to be made pursuant to clause (e) above prior to the Resale
Restriction Termination Date, the transferor shall deliver a letter from the
transferee substantially in the form of this letter to the Company and the
Trustee, which shall provide, among other things, that the transferee is an
institutional "accredited investor" within the meaning of Rule 501 (a)(1),
(2), (3) or (7) under the Securities Act and that it is acquiring such
Securities for investment purposes and not for distribution in violation of
the Securities Act. Each purchaser acknowledges that the Company and the
Trustee reserve the right prior to any offer, sale or other transfer prior to
the Resale Restriction Termination Date of the Securities pursuant to clause
(d), (e) or (f) above to require the delivery of an opinion of counsel,
certifications and/or other information satisfactory to the Company and the
Trustee.
TRANSFEREE:
-----------------------
BY:
-------------------------------
------------------------------------
Signature Medallion Guaranteed
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION
WITH TRANSFERS PURSUANT TO REGULATION S
[date]
The Bank of New York, as Trustee
101 Barclay Street, 21st Floor
New York, New York 10286
Attention: Corporate Trust Administration
Re: United Stationers Supply Co. (the "Company")
[ ]% Senior Subordinated Notes due 2008
(TOGETHER WITH THE GUARANTEES THEREON, THE
"SECURITIES")
Ladies and Gentlemen:
In connection with our proposed sale of $__________ aggregate
principal amount of the Securities, we confirm that such sale has been
effected pursuant to and in accordance with Regulation S under the United
States Securities Act of 1933, as amended (the "SECURITIES ACT"), and,
accordingly, we represent that:
(a) the offer of the Securities was not made to a person in
the United States;
(b) either (i) at the time the buy order was originated, the
transferee was outside the United States or we and any person acting on our
behalf reasonably believed that the transferee was outside the United States
or (ii) the transaction was executed in, on or through the facilities of a
designated off-shore securities market and neither we nor any person acting
on our behalf knows that the transaction has been pre-arranged with a buyer
in the United States;
(c) no directed selling efforts have been made in the United
States in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable; and
(d) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act.
In addition, if the sale is made during a restricted period
and the provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are
applicable thereto, we confirm that such sale has been made in accordance
with the applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the
case may be.
You, the Company and the Guarantors are entitled to rely upon
this letter and are irrevocably authorized to produce this letter or a copy
hereof to any interested party in any administrative or legal proceedings or
official inquiry with respect to the matters covered hereby. Terms used in
this certificate have the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:
--------------------------- ------------------------------
Authorized Signature Signature Medallion Guaranteed
<PAGE>
EXHIBIT D
UNITED STATIONERS SUPPLY CO.
___% Senior Subordinated Note
UNITED STATIONERS SUPPLY CO., an Illinois corporation (the
"Company"), for value received, promises to pay to [Restricted Subsidiary],
or its registered assigns, the principal sum of ___________ ($____________)
on ______________________.
Interest Rate:___% per annum.
Interest Payment Dates:_____________ and ___________,
commencing _______________.
Reference is hereby made to the further provisions of this
Note set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Note to be
signed manually by its duly authorized officers.
Date: UNITED STATIONERS SUPPLY CO.
-------------------------
By:
-------------------------
Title:
By:
-------------------------
Title:
<PAGE>
D-2
UNITED STATIONERS SUPPLY CO.
____ % Subordinated Note due ___________
1. PRINCIPAL AND INTEREST.
The Company promises to pay interest on the principal amount
of this Note on each Interest Payment Date, as set forth below, at the rate
of __% per annum.
Interest will be payable [semiannually] on each Interest
Payment Date, commencing _____ .
Interest on the Note will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from the date
of issuance. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
2. SUBORDINATION.
The Note will be subordinated indebtedness of the Company.
Payment of the Subordinated Obligations (as defined below) will be
subordinated in right of payment to the prior payment in full, in cash or
cash equivalents, of all Senior Indebtedness, including, without limitation,
the Company's obligations under the ______% Senior Subordinated Notes due
2008.
"Subordinated Obligations" means any principal of, premium, if
any, or interest on the Note payable pursuant to the terms of the Note or
upon acceleration, including any amounts received upon the exercise of rights
of rescission or other rights of action (including claims for damages) or
otherwise, to the extent relating to the purchase price of the Note or
amounts corresponding to such principal, premium, if any, or interest on the
Note.
Upon any payment or distribution of assets or securities of
the Company, of any kind or character, whether in cash, property or
securities, in connection with any dissolution or winding up or total or
partial liquidation or reorganization of the Company, whether voluntary or
involuntary, or in bankruptcy, insolvency, receivership or other proceedings,
all amounts due or to become due upon all Senior Indebtedness (including any
interest accruing subsequent to an event of bankruptcy, whether or not such
interest is an allowed claim enforceable against the debtor under the United
States Bankruptcy Code) shall first be paid in full, in cash or cash
equivalents, before the holders shall be entitled to receive any payment by
the Company on account of Subordinated Obligations, or any payment to acquire
the Note for cash, property or securities, or any distribution with respect
to the Note of any cash, property or securities. Before any payment may be
made by, or on behalf of, the Company on any Subordinated Obligations in
connection with any such dissolution, winding up, liquidation or
reorganization, any payment or distribution of assets or securities of the
Company of any kind or character, whether in cash, property or securities, to
which the holders would be entitled, but for the subordination provisions of
the Note, shall be made by the Company or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other similar person making such
payment or distribution or by the holders if received by them, directly to
the holders of the Senior indebtedness (PRO RATA to such holders on the basis
of the respective amounts of Senior Indebtedness held by such holders) or
their representatives or to any trustee or trustees under any indenture
pursuant to which any such
<PAGE>
D-3
Senior indebtedness may have been issued, as their respective interests
appear, to the extent necessary to pay all such Senior Indebtedness in full,
in cash or cash equivalents after giving effect to any concurrent payment,
distribution or provision therefor to or for the holders of such Senior
Indebtedness.
No direct or indirect payment by or on behalf of the Company
of Subordinated Obligations, whether pursuant to the terms of the Note or
upon acceleration or otherwise, shall be made if, at the time of such
payment, there exists an event of default, or a default (it being understood
that as used in that sentence a "default" with respect to any Senior
Indebtedness shall mean the happening of any event or the existence of any
condition which, after the giving of notice or the passage of time or both,
would constitute an event of default under such Senior Indebtedness) with
respect to any portion of the obligations on any Senior Indebtedness, and
such default shall not have been cured or waived or the benefits of this
sentence waived by or on behalf of the holders of such Senior indebtedness.
"Senior Indebtedness" means the following obligations of the
Company: (i) any obligation with respect to the _____% Senior Subordinated
Notes due 2008 of the Company; and (ii) all other indebtedness of the
Company, including principal, premium and interest on such indebtedness,
unless such indebtedness, by its terms or by the terms of any agreement or
instrument pursuant to which such indebtedness is outstanding, is expressly
subordinated in right of payment to any other indebtedness of the Company.
To the extent any payment of Senior Indebtedness (whether by
or on behalf of the Company, as proceeds of security or enforcement of any
right of setoff or otherwise) is declared to be fraudulent or preferential,
set aside or required to be paid to any receiver, trustee in bankruptcy,
liquidating trustee, agent or other similar person under any bankruptcy,
insolvency, receivership, fraudulent conveyance or similar law, then if such
payment is recovered by, or paid over to, such receiver, trustee in
bankruptcy, liquidating trustee, agent or other similar person, the Senior
Indebtedness or part thereof originally intended to be satisfied shall be
deemed to bc reinstated and outstanding as if such payment had not occurred.
To the extent the obligation to repay any Senior Indebtedness is declared to
be fraudulent, invalid, or otherwise set aside under any bankruptcy,
insolvency, receivership, fraudulent conveyance or similar law, then the
obligation so declared fraudulent, invalid or otherwise set aside (and all
other amounts that would come due with respect thereto had such obligation
not been affected) shall be deemed to be reinstated and outstanding as Senior
Indebtedness for all purposes hereof as if such declaration invalidity or
setting aside had not occurred.
<PAGE>
EXHIBIT E
[RESTRICTED SUBSIDIARY]
____ % Senior Note due ________
$
--------------------
[RESTRICTED SUBSIDIARY], a ______________ corporation, for
value received, promises to pay to United Stationers Supply Co., the
principal sum of __________________ ($______________) on____________________.
Interest Rate: % per annum, in cash.
Interest Payment Dates: _______________ and _________________,
commencing _______________.
This Note is an unsubordinated, senior obligation of
[Restricted Subsidiary].
IN WITNESS WHEREOF, [Restricted Subsidiary] has caused
this Note to be signed manually by its duly authorized officers.
Date: [RESTRICTED SUBSIDIARY]
By:
-----------------------------
Title:
By:
-----------------------------
Title:
<PAGE>
EXHIBIT 4.2
UNITED STATIONERS SUPPLY CO.
$100,000,000
8 3/8% Senior Subordinated Notes due 2008
PURCHASE AGREEMENT
April 9, 1998
CHASE SECURITIES INC.
BEAR, STEARNS & CO. INC.
c/o Chase Securities Inc.
270 Park Avenue, 4th floor
New York, New York 10017
Ladies and Gentlemen:
United Stationers Supply Co., an Illinois corporation (the
"COMPANY"), a wholly-owned subsidiary of United Stationers Inc., a Delaware
corporation ("UNITED"), proposes to issue and sell $100,000,000 aggregate
principal amount of its 8 3/8% Senior Subordinated Notes due 2008 (the
"NOTES"). The Securities will be issued pursuant to an Indenture to be dated
as of April 15, 1998 (the "INDENTURE") among the Company, the Guarantors (as
defined below) and The Bank of New York, as trustee (the "TRUSTEE"). The
Notes will be unconditionally guaranteed on a senior subordinated basis (the
"GUARANTEES") initially by each of United, Lagasse Bros., Inc., a Louisiana
corporation, Azerty Incorporated, a Delaware corporation, Positive ID
Wholesale Inc., a Delaware corporation and AP Support Services Incorporated,
a Delaware corporation (collectively, the "GUARANTORS" and, together with the
Company, the "ISSUERS"), pursuant to the terms of the Indenture. The Notes
and the Guarantees are sometimes referred to herein together as the
"SECURITIES." The Issuers hereby confirm their agreement with Chase
Securities Inc. ("CSI") and Bear, Stearns & Co. Inc. (together with CSI, the
"INITIAL PURCHASERS") concerning the purchase of the Securities from the
Company by the several Initial Purchasers.
The Securities will be offered and sold to the Initial
Purchasers without being registered under the Securities Act of 1933, as
amended (the "SECURITIES ACT"), in reliance upon an exemption therefrom. The
Company has prepared a preliminary offering memorandum dated March 24, 1998
(the "PRELIMINARY OFFERING MEMORANDUM") and will prepare an offering
memorandum dated the date hereof (the "OFFERING MEMORANDUM") setting forth
information concerning the Issuers and the Securities. Copies of the
Preliminary Offering Memorandum have been, and copies of the Offering
Memorandum will be, delivered by the Company to the Initial Purchasers
pursuant to the terms of this Agreement. Any references herein to the
Preliminary Offering Memorandum and the Offering Memorandum shall be deemed
to include all amendments and supplements thereto, unless otherwise noted.
Each of the Issuers hereby confirms that it has authorized the use of the
Preliminary Offering Memorandum and the
<PAGE>
Offering Memorandum in connection with the offering and resale of the
Securities by the Initial Purchasers in accordance with Section 2.
Holders of the Securities (including the Initial Purchasers
and their direct and indirect transferees) will be entitled to the benefits
of an Exchange and Registration Rights Agreement, substantially in the form
attached hereto as Exhibit A (the "REGISTRATION RIGHTS AGREEMENT"), pursuant
to which the Company will agree to file with the Securities and Exchange
Commission (the "COMMISSION") (i) a registration statement under the
Securities Act (the "EXCHANGE OFFER REGISTRATION STATEMENT") registering an
issue of senior subordinated notes of the Company (the "EXCHANGE NOTES")
which are identical in all material respects to the Notes and which are
unconditionally guaranteed by each of the guarantors (such guarantees,
together with the Exchange Notes, the "EXCHANGE SECURITIES") (except that the
Exchange Securities will not contain terms with respect to transfer
restrictions) and (ii) under certain circumstances, a shelf registration
statement with respect to the resale of the Securities pursuant to Rule 415
under the Securities Act (the "SHELF REGISTRATION STATEMENT").
The net proceeds of the offering of the Securities will be
used by the Company to repay a portion of indebtedness of the Company
outstanding under a $100.0 million tranche B term loan facility (the "TRANCHE
B TERM LOAN FACILITY") under the Company's new senior secured credit
facilities (the "NEW CREDIT FACILITIES"). The Company used the Tranche B Term
Loan Facility and other drawings under the New Credit Facilities to pay the
purchase price for the acquisition of the capital stock of Azerty
Incorporated, Azerty de Mexico, S.A. de C.V., Positive ID Wholesale Inc. and
AP Support Services Incorporated (the "AZERTY ACQUISITION").
Capitalized terms used but not defined herein shall have the
meanings given to such terms in the Offering Memorandum.
1. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE ISSUERS.
Each of the Issuers, jointly and severally, represents and warrants to, and
agrees with, the several Initial Purchasers on and as of the date hereof and
the Closing Date (as defined in Section 3) that:
(a) Each of the Preliminary Offering Memorandum and the
Offering Memorandum, as of its respective date, did not, and on the
Closing Date the Offering Memorandum will not, contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; PROVIDED that the Issuers make no representation or
warranty as to information contained in or omitted from the Preliminary
Offering Memorandum or the Offering Memorandum in reliance upon and in
conformity with written information relating to the Initial Purchasers
furnished to the Company by or on behalf of any Initial Purchaser
specifically for use therein (the "INITIAL PURCHASERS' INFORMATION").
(b) Assuming the accuracy of the representations and
warranties of the Initial Purchasers contained in Section 2 and their
compliance with the agreements set forth therein, it is not necessary,
in connection with the issuance and sale of the Securities to the
Initial Purchasers and the offer, resale and delivery of the Securities
by the Initial Purchasers in the manner contemplated by this Agreement
and the Offering Memorandum, to register the Securities under the
Securities Act or to qualify the Indenture under the Trust Indenture
Act of 1939, as amended (the "TRUST INDENTURE ACT").
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<PAGE>
(c) Each of United, the Company and its subsidiaries has been
duly organized and is validly existing as a corporation or limited
liability company in good standing under the laws of its jurisdiction
of incorporation or organization, is duly qualified to do business and
is in good standing as a foreign corporation or limited liability
company in each jurisdiction in which the character or location of its
properties (owned, leased or licensed) or the nature or conduct of its
business makes such qualification necessary, and has all requisite
power and authority necessary to own or lease and operate its
properties and to conduct its business as now being conducted and as
described in the Offering Memorandum, except where the failure to be so
qualified or in good standing or have such power or authority would
not, singularly or in the aggregate, have a material adverse effect on
the condition (financial or otherwise), results of operations, business
or prospects of United, the Company and its subsidiaries taken as a
whole (a "MATERIAL ADVERSE EFFECT").
(d) United has an authorized capitalization as set forth in
the Offering Memorandum under the heading "Capitalization"; all of the
outstanding shares of capital stock of United have been duly and
validly authorized and issued, are fully paid and non-assessable and
were not issued in violation of any preemptive, maintenance or similar
rights; all of the outstanding shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and
non-assessable and were not issued in violation of any preemptive,
maintenance or similar rights, and are owned directly by United, free
and clear of any lien, pledge, encumbrance, claim, security interest,
restriction on transfer, stockholders' agreement, voting trust or other
defect of title except for those created pursuant to the New Credit
Facilities. All of the outstanding shares of capital stock of each
subsidiary of the Company have been duly and validly authorized and
issued, are fully paid and non-assessable and were not issued in
violation of any preemptive, maintenance or similar rights, and are
owned directly or indirectly by the Company, free and clear of any
lien, pledge, encumbrance, claim, security interest, restriction on
transfer, stockholders' agreement, voting trust or other defect of
title except for those created pursuant to the New Credit Facilities.
(e) Each of the Issuers has the corporate power and authority
to execute and deliver this Agreement, the Indenture, the Registration
Rights Agreement and (in the case of the Company) the Notes, the
Exchange Notes and the Private Exchange Notes (as defined in the
Registration Rights Agreement) and (in the case of the Guarantors) the
Guarantees endorsed on the Notes, the Exchange Notes and the Private
Exchange Notes (collectively, the "TRANSACTION DOCUMENTS") and to
perform its obligations hereunder and thereunder; and all corporate
action required to be taken by each of the Issuers for the due and
proper authorization, execution and delivery of each of the Transaction
Documents to which it is a party and the consummation of the
transactions contemplated thereby have been duly and validly taken.
(f) This Agreement has been duly authorized, executed and
delivered by each of the Issuers and (assuming the due authorization,
execution and delivery of this Agreement by the Initial Purchasers)
constitutes a valid and legally binding agreement of each of the
Issuers enforceable against each of the Issuers in accordance with the
terms hereof, except to the extent that (i) such enforceability may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other
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<PAGE>
similar laws affecting creditors' rights generally and by general
equitable principles (whether considered in a proceeding in equity
or at law) and (ii) the enforceability of rights to indemnification
and contribution hereunder may be limited by federal or state
securities laws or regulations or the public policy underlying such
laws or regulations.
(g) The Registration Rights Agreement has been duly authorized
by each of the Issuers and, when duly executed and delivered in
accordance with its terms by each of the parties thereto, will
constitute a valid and legally binding agreement of each of the
Issuers, enforceable against each of the Issuers in accordance with its
terms, except to the extent that (i) such enforceability may be limited
by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and by general equitable principles (whether
considered in a proceeding in equity or at law) and (ii) the
enforceability of rights to indemnification and contribution thereunder
may be limited by federal or state securities laws or regulations or
the public policy underlying such laws or regulations.
(h) The Indenture has been duly authorized by each of the
Issuers and, when duly executed and delivered in accordance with its
terms by each of the parties thereto, will constitute a valid and
legally binding agreement of each of the Issuers, enforceable against
each of the Issuers in accordance with its terms, except to the extent
that such enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws affecting creditors' rights generally and by general
equitable principles (whether considered in a proceeding in equity or
at law) and except to the extent of the effect on the Notes of the laws
of any jurisdiction other than federal law and the law of the States of
New York or Illinois wherein any purchaser of the Notes may be located
or wherein enforcement may be sought which limits the rate of interest
legally chargeable or collectible. On the Closing Date, the Indenture
will conform in all material respects to the requirements of the Trust
Indenture Act and the rules and regulations of the Commission
applicable to an indenture which is qualified thereunder.
(i) The Notes have been duly authorized by the Company and,
when duly executed, authenticated, issued and delivered as provided in
the Indenture and paid for as provided herein, will be duly and validly
issued and outstanding and will constitute valid and legally binding
obligations of the Company entitled to the benefits of the Indenture,
enforceable against the Company in accordance with their terms, except
to the extent that such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting creditors' rights generally
and by general equitable principles (whether considered in a proceeding
in equity or at law) and except to the extent of the effect on the
Notes of the laws of any jurisdiction other than federal law and the
law of the States of New York or Illinois wherein any purchaser of the
Notes may be located or wherein enforcement may be sought which limits
the rate of interest legally chargeable or collectible.
(j) The Guarantees to be endorsed on the Notes have been duly
authorized by each of the Guarantors and, when duly executed by each of
the Guarantors and when the Notes are duly executed, authenticated,
issued and delivered as provided in the Indenture and paid for as
provided herein, will constitute valid and legally binding obligations
of each of the Guarantors entitled to the benefits of the Indenture,
enforceable against each
-4-
<PAGE>
of the Guarantors in accordance with their terms, except to the
extent that such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting creditors' rights
generally and by general equitable principles (whether considered in
a proceeding in equity or at law).
(k) The Exchange Notes have been and, as of the Closing Date,
the Private Exchange Notes will be, duly authorized by the Company and,
when duly executed, authenticated, issued and delivered as provided in
the Indenture and the Registration Rights Agreement in exchange for the
Notes, will be duly and validly issued and outstanding and will
constitute valid and legally binding obligations of the Company
entitled to the benefits of the Indenture, enforceable against the
Company in accordance with their terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar
laws affecting creditors' rights generally and by general equitable
principles (whether considered in a proceeding in equity or at law).
(l) The Guarantees to be endorsed on the Exchange Notes have
been and, as of the Closing Date, the Guarantees to be endorsed on the
Private Exchange Notes will be, duly authorized by each of the
Guarantors and, when duly executed by each of the Guarantors and when
the Exchange Notes and/or the Private Exchange Notes, as the case may
be, are duly executed, authenticated, issued and delivered as provided
in the Indenture and the Registration Rights Agreement in exchange for
the Notes, will constitute valid and legally binding obligations of
each of the Guarantors entitled to the benefits of the Indenture,
enforceable against each of the Guarantors in accordance with their
terms, except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and by general equitable principles (whether
considered in a proceeding in equity or at law).
(m) Each of the Transaction Documents, the second amended and
restated credit agreement (the "New Credit Agreement") governing the
New Credit Facilities and the Receivables Securitization Program
conforms in all material respects to the description thereof contained
in the Offering Memorandum.
(n) The execution, delivery and performance by each of the
Issuers of each of the Transaction Documents to which it is a party,
the issuance, authentication, sale and delivery of the Securities, the
Exchange Securities and the Private Exchange Securities (as defined in
the Registration Rights Agreement) and compliance by each of the
Issuers with the terms thereof and the consummation of the transactions
contemplated by the Transaction Documents will not conflict with or
result in a breach or violation of any of the terms or provisions of,
or constitute a default (or an event which, with notice or lapse of
time or both, would constitute a default) under, or result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of United, the Company or any of its subsidiaries
pursuant to, any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which United, the Company or any of
its subsidiaries is a party or by which United, the Company or any of
its subsidiaries or their respective properties or assets may be bound,
except for any such conflict, breach, violation, default, lien, charge
or encumbrance that could not, singularly or in the
-5-
<PAGE>
aggregate, reasonably be expected to have a Material Adverse Effect
or a material adverse effect on the ability of the Issuers to
perform their respective obligations under the Transaction
Documents, nor will such actions result in any violation of the
provisions of the charter or bylaws of United, the Company or any of
its subsidiaries or any statute or any judgment, order, decree, rule
or regulation of any court or arbitrator or governmental agency or
body having jurisdiction over United, the Company or any of its
subsidiaries or any of their properties or assets; and no consent,
approval, authorization or order of, or filing, registration or
qualification with, any such court or arbitrator or governmental
agency or body under any such statute, judgment, order, decree, rule
or regulation is required for the execution, delivery and
performance by each of the Issuers of each of the Transaction
Documents to which it is a party, the issuance, authentication, sale
and delivery of the Securities, the Exchange Securities and the
Private Exchange Securities and compliance by each of the Issuers
with the terms thereof and the consummation of the transactions
contemplated by the Transaction Documents, except for such consents,
approvals, authorizations, orders, filings, registrations or
qualifications (i) which shall have been obtained or made prior to
the Closing Date and are in full force and effect on the Closing
Date, (ii) which may be required under the Trust Indenture Act in
connection with the Exchange Securities, and (iii) as may be
required to be obtained or made under the Securities Act and
applicable state securities laws as provided in the Registration
Rights Agreement.
(o) Ernst & Young LLP are independent certified public
accountants with respect to United and its consolidated subsidiaries
within the meaning of Rule 101 of the Code of Professional Conduct of
the American Institute of Certified Public Accountants ("AICPA") and
its interpretations and rulings thereunder. The historical financial
statements (including the related notes) contained in the Offering
Memorandum comply in all material respects with the requirements
applicable to a registration statement on Form S-1 under the Securities
Act (except that certain supporting schedules are omitted); such
financial statements have been prepared in accordance with United
States generally accepted accounting principles consistently applied
throughout the periods covered thereby and present fairly in all
material respects the financial position of the entities purported to
be covered thereby at the respective dates indicated and the results of
their operations and their cash flows for the respective periods
indicated; and the historical financial information contained in the
Offering Memorandum under the headings "Summary--Summary Consolidated
Financial and Pro Forma Data", "Capitalization", "Selected Consolidated
Financial Data" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" are derived from the accounting
records of the entities purported to be covered thereby and fairly
present the information purported to be shown thereby. Each of the
unaudited consolidated pro forma balance sheet as of December 31, 1997
and the unaudited consolidated pro forma income statement for the year
ended December 31, 1997 contained in the Offering Memorandum has been
prepared on a basis consistent with the historical financial statements
of the entities purported to be covered thereby (except for the PRO
FORMA adjustments specified therein), complies in all material respects
with the applicable accounting requirements of the Commission, gives
effect to assumptions made on a reasonable basis and fairly presents
the historical and proposed transactions contemplated by the Offering
Memorandum, the Transaction Documents, the New Credit Facilities, the
Receivables Securitization Program and the documents relating to the
Azerty Acquisition and the 1997 Financing Transactions, as applicable.
The other historical financial and statistical
-6-
<PAGE>
information and data included in the Offering Memorandum are, in all
material respects, presented fairly in accordance with their
descriptions therein.
(p) Except as described in the Offering Memorandum, there are
no legal or governmental proceedings pending to which United, the
Company or any of its subsidiaries is a party or, to the best knowledge
of the Company, of which any property or assets of United, the Company
or any of its subsidiaries is the subject which, singularly or in the
aggregate, if determined adversely to United, the Company or any of its
subsidiaries, could reasonably be expected to have a Material Adverse
Effect; and to the best knowledge of the Company, no such proceedings
are threatened by governmental authorities or by others.
(q) To the best knowledge of the Company, no action has been
taken and no statute, rule, regulation or order has been enacted,
adopted or issued by any governmental agency or body which prevents the
issuance of the Securities, the Exchange Securities or the Private
Exchange Securities or suspends the sale of the Securities in any
jurisdiction; no injunction, restraining order or order of any nature
by any federal or state court of competent jurisdiction has been issued
with respect to United, the Company or any of its subsidiaries which
would prevent or suspend the issuance or sale of the Securities, the
Exchange Securities or the Private Exchange Securities or the use of
the Preliminary Offering Memorandum or the Offering Memorandum in any
jurisdiction; no action, suit or proceeding is pending against or, to
the best knowledge of the Company, threatened against or affecting
United, the Company or any of its subsidiaries before any court or
arbitrator or any governmental agency, body or official, domestic or
foreign, which could reasonably be expected to interfere with or
adversely affect the issuance of the Securities, the Exchange
Securities or the Private Exchange Securities or in any manner draw
into question the validity or enforceability of any of the Transaction
Documents or any action taken or to be taken pursuant thereto.
(r) None of United, the Company or any of its subsidiaries is,
(i) in violation of its charter or bylaws, (ii) in default in any
material respect, and no event has occurred which, with notice or lapse
of time or both, would constitute such a default, in the due
performance or observance of any term, covenant or condition contained
in any material indenture, mortgage, deed of trust, loan agreement or
other material agreement or instrument to which it is a party or by
which it is bound or to which any of its property or assets is subject
or (iii) in violation in any material respect of any law, ordinance,
governmental rule, regulation, order, judgment or court decree to which
it or its property or assets may be subject, except for, in the cases
of clauses (ii) and (iii) above, such default or violation which could
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect or a material adverse effect on the ability of
the Issuers to perform their respective obligations under the
Transaction Documents.
(s) Each of United, the Company and its subsidiaries possesses
all material licenses, certificates, authorizations and permits issued
by, and has made all declarations and filings with, the appropriate
federal, state, local or foreign regulatory agencies or bodies which
are necessary to own or lease and operate its properties or conduct its
business as now being conducted and as described in the Offering
Memorandum, except where the failure to possess or make the same would
not, singularly or in the aggregate, have a Material Adverse Effect,
and none of the Company or any of its subsidiaries has
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received notification of any revocation or modification of any such
license, certificate, authorization or permit or has any reason to
believe that any such license, certificate, authorization or permit
will not be renewed in the ordinary course.
(t) Each of United, the Company and its subsidiaries has (i)
filed all federal, state, local and foreign income and franchise tax
returns required to be filed through the date hereof and all such tax
returns are true, complete and accurate in all material respects, or
(ii) properly filed for extensions thereof, and has paid all taxes due
thereon and all assessments received by it, except where, in the case
of state, local and foreign tax returns, the failure to file, extend
the due date or pay the same, in the aggregate, could not reasonably be
expected to have a Material Adverse Effect; and no tax deficiency has
been determined adversely to United, the Company or any of its
subsidiaries which has had (nor does United, the Company or any of its
subsidiaries have any knowledge of any tax deficiency which, if
determined adversely to United, the Company or any of its subsidiaries,
could reasonably be expected to have) a Material Adverse Effect.
(u) None of United, the Company or any of its subsidiaries is,
and upon consummation of the transactions contemplated hereby will be,
an "investment company" or a company "controlled by" an investment
company within the meaning of the Investment Company Act of 1940, as
amended (the "INVESTMENT COMPANY ACT"), and the rules and regulations
of the Commission thereunder.
(v) Each of United, the Company and its subsidiaries maintains
a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations; (ii) transactions
are recorded as necessary to permit preparation of financial statements
in conformity with United States generally accepted accounting
principles and to maintain asset accountability; (iii) access to assets
is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(w) Each of United, the Company and its subsidiaries has in
effect, with insurers the Company reasonably believes to be financially
sound, insurance covering its properties, operations, personnel and
business, which insurance is of the type and in amounts and insures
against such losses and risks as are adequate to protect it and its
business as now conducted or proposed to be conducted as described in
the Offering Memorandum. None of United, the Company or any of its
subsidiaries has received notice from any insurer or agent of such
insurer that capital improvements or other expenditures are required or
necessary to be made in order to continue such insurance.
(x) Each of United, the Company and its subsidiaries owns or
possesses adequate rights to use all material patents, patent
applications, trademarks, service marks, trade names, trademark
registrations, service mark registrations, copyrights, licenses,
technology and know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures) necessary for the conduct of its business as now conducted
or proposed to be conducted as described in the Offering Memorandum;
and the conduct of its business will not conflict in any material
respect with, and none of United, the Company or any of its
subsidiaries
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<PAGE>
has received any written notice of any infringement of or claim of
conflict with (or knows of such infringement or conflict with), any
such rights of others.
(y) Each of United, the Company and its subsidiaries has good
and marketable title in fee simple to, or has valid rights to lease or
otherwise use, all items of real and personal property which are
material to the business of United, the Company and its subsidiaries,
taken as a whole, in each case free and clear of all liens,
encumbrances, claims and defects and imperfections of title except such
liens, encumbrances, claims, defects and imperfections as (i) are not
in the aggregate material and do not materially interfere with the use
made and proposed to be made of such property by United, the Company
and its subsidiaries or (ii) are reflected in the financial statements
or otherwise described in the Offering Memorandum (including, without
limitation, to secure the New Credit Facilities).
(z) Except as described in the Offering Memorandum, no labor
disturbance by or dispute with the employees of United, the Company or
any of its subsidiaries exists or, to the best knowledge of the
Company, is threatened that could reasonably be expected to have a
Material Adverse Effect.
(aa) No "prohibited transaction" (as defined in Section 406 of
the Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations thereunder
("ERISA"), or Section 4975 of the Internal Revenue Code of 1986, as
amended from time to time (the "Code")) or "accumulated funding
deficiency" (as defined in Section 302 of ERISA) or any of the events
set forth in Section 4043(b) of ERISA (other than events with respect
to which the 30-day notice requirement under Section 4043 of ERISA has
been waived) has occurred with respect to any employee benefit plan of
United, the Company or any of its subsidiaries which could reasonably
be expected to have a Material Adverse Effect; each such employee
benefit plan is in compliance in all material respects with applicable
law, including ERISA and the Code; each of United, the Company and its
subsidiaries has not incurred and does not expect to incur liability
under Title IV of ERISA with respect to the termination of, or
withdrawal from, any pension plan for which United, the Company or any
of its subsidiaries would have any liability; and each such pension
plan that is intended to be qualified under Section 401(a) of the Code
is so qualified in all material respects and nothing has occurred,
whether by action or by failure to act, which could reasonably be
expected to cause a Material Adverse Effect.
(bb) To the knowledge of the Company, except as disclosed in
the Offering Memorandum, none of United, the Company or any of its
subsidiaries is in violation of any federal or state law or regulation
relating to occupational safety and health or to the storage, handling
or transportation of hazardous or toxic materials, except any such
violation which could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect, and each of United, the
Company and its subsidiaries has received all material permits,
licenses or other approvals required under applicable federal and state
occupational safety and health and environmental laws and regulations
to conduct its business. Each of United, the Company and its
subsidiaries is in compliance with all terms and conditions of any such
permits, licenses or approvals, except any such violation of law or
regulation, failure to receive required permits, licenses or other
approvals or failure to comply with the terms and conditions of such
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<PAGE>
permits, licenses or approvals which could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(cc) On and immediately after the Closing Date, each of
United, the Company and the other Guarantors (after giving effect to
the issuance of the Securities and to the other transactions related
thereto as described in the Offering Memorandum) will be Solvent. As
used in this paragraph, the term "SOLVENT" means, with respect to any
entity on a particular date, that on such date (i) the present fair
market value (or present fair saleable value) of the assets of such
entity is not less than the total amount required to pay the probable
liabilities of such entity on its total existing debts and liabilities
(including contingent liabilities) as they become absolute and matured,
(ii) assuming the sale of the Securities as contemplated by this
Agreement and the Offering Memorandum, such entity has not incurred
debts or liabilities beyond its ability to pay as such debts and
liabilities mature and (iii) such entity is not engaged in any business
or transaction, and is not about to engage in any business or
transaction, for which its property would constitute unreasonably small
capital. In computing the amount of such contingent liabilities at any
time, it is intended that such liabilities will be computed at the
amount that, in the light of all the facts and circumstances existing
at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.
(dd) Except as described in the Offering Memorandum, there are
no outstanding subscriptions, rights, warrants, calls or options to
acquire, or instruments convertible into or exchangeable for, or
agreements or understandings with third parties with respect to the
sale or issuance of, any shares of capital stock of or other equity or
other ownership interest in United, the Company or any of its
subsidiaries.
(ee) None of United, the Company or any of its subsidiaries
owns any "margin securities" as that term is defined in Regulations G
and U of the Board of Governors of the Federal Reserve System (the
"FEDERAL RESERVE BOARD"), and none of the proceeds of the sale of the
Securities will be used, directly or indirectly, for the purpose of
purchasing or carrying any margin security, for the purpose of reducing
or retiring any indebtedness which was originally incurred to purchase
or carry any margin security or for any other purpose which might cause
any of the Securities to be considered a "purpose credit" within the
meanings of Regulation G, T, U or X of the Federal Reserve Board.
(ff) None of United, the Company or any of its subsidiaries is
a party to any contract, agreement or understanding with any person
that would give rise to a valid claim against the Issuers or the
Initial Purchasers for a brokerage commission, finder's fee or like
payment in connection with the offering and sale of the Securities, the
Exchange Securities or the Private Exchange Securities (it being
understood that this Agreement is not such a contract, agreement or
understanding).
(gg) The Securities satisfy the eligibility requirements of
Rule 144A(d)(3) under the Securities Act.
(hh) None of United, the Company, the other Guarantors, any of
their affiliates or any person acting on their behalf has engaged or
will engage in any directed selling efforts (as such term is defined in
Regulation S under the Securities Act ("REGULATION S")) with respect to
the Securities, the Exchange Securities or the Private Exchange
Securities,
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<PAGE>
and all such persons have complied and will comply with the
offering restrictions requirement of Regulation S to the extent
applicable.
(ii) None of United, the Company, the other Guarantors, nor
any of their affiliates has, directly or through any agent (provided
that no representation is made as to the Initial Purchasers or any
person acting on their behalf), sold, offered for sale, solicited
offers to buy or otherwise negotiated in respect of, any security (as
such term is defined in the Securities Act), which is or will be
integrated with the sale of the Securities in a manner that would
require registration of the Securities under the Securities Act.
(jj) None of United, the Company, the other Guarantors or any
of their affiliates or any other person acting on their behalf
(provided that no representation is made as to the Initial Purchasers
or any person acting on their behalf) has engaged, in connection with
the offering of the Securities, in any form of general solicitation or
general advertising within the meaning of Rule 502(c) of Regulation D
under the Securities Act ("REGULATION D") or has solicited offers for,
or has offered and sold, the Securities in any manner involving a
public offering within the meaning of Section 4(2) of the Securities
Act.
(kk) Other than the common stock of United, there are no
securities of United, the Company or the other Guarantors registered
under the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT"), listed on a national securities exchange or quoted in a U.S.
automated inter-dealer quotation system.
(ll) None of United, the Company or any of the other
Guarantors has taken, and none of them will take, directly or
indirectly, any action prohibited by Regulation M under the Exchange
Act in connection with the offering of the Securities, the Exchange
Securities or the Private Exchange Securities.
(mm) No forward-looking statement (within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act)
contained in the Preliminary Offering Memorandum or the Offering
Memorandum has been made or reaffirmed without a reasonable basis or
has been disclosed other than in good faith.
(nn) The statistical and market-related data included in the
Offering Memorandum are based on or derived from sources which the
Company believes to be reliable.
(oo) None of United, the Company or any of its subsidiaries
does business with the government of Cuba or with any person or
affiliate located in Cuba within the meaning of Florida Statutes
Section 517.075.
(pp) Since the date as of which information is given in the
Offering Memorandum, except as otherwise stated therein, (i) there has
been no material adverse change, or any development involving a
prospective material adverse change, in or affecting the condition
(financial or otherwise), results of operations, business or prospects
of United, the Company and its subsidiaries, taken as a whole, whether
or not arising from transactions in the ordinary course of business,
(ii) the Company has not incurred any material liability or obligation,
direct or contingent, other than in the ordinary course of business,
(iii) the Company has not entered into any material transaction other
than in the
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<PAGE>
ordinary course of business and (iv) there has not been any
change in the capital stock or long-term debt of the Company, or any
dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock.
2. PURCHASE AND RESALE OF THE SECURITIES. (a) On the basis of
the representations, warranties and agreements contained herein, and subject to
the terms and conditions set forth herein, the Issuers agree to issue and sell
to each of the Initial Purchasers, severally and not jointly, and each of the
Initial Purchasers, severally and not jointly, agrees to purchase from the
Issuers, the principal amount of Notes (including the Guarantees thereof) set
forth opposite the name of such Initial Purchaser on Schedule 1 hereto at a
purchase price equal to 97.25% of the principal amount thereof. The Issuers
shall not be obligated to deliver any of the Securities except upon payment for
all of the Securities to be purchased as provided herein.
(b) The Initial Purchasers have advised the Company that they
propose to offer the Securities for resale upon the terms and subject to the
conditions set forth herein and in the Offering Memorandum. Each Initial
Purchaser, severally and not jointly, represents and warrants to, and agrees
with, the Issuers that (i) it is purchasing the Securities pursuant to a private
sale exempt from registration under the Securities Act and that the Securities
may not be offered or sold within the United States or to, or for the account or
benefit of, U.S. persons except pursuant to an exemption from, or in
transactions not subject to, the registration requirements of the Securities
Act, (ii) it has not solicited offers for, or offered or sold, and will not
solicit offers for, or offer or sell, the Securities by means of any form of
general solicitation or general advertising within the meaning of Rule 502(c) of
Regulation D or in any manner involving a public offering within the meaning of
Section 4(2) of the Securities Act and it has not engaged, and will not engage,
in any directed selling efforts within the meaning of Rule 902 under the
Securities Act in connection with the Securities, and it will comply with the
offering restrictions and other requirements of Regulation S, (iii) it has
solicited and will solicit offers for the Securities only from, and has offered
or sold and will offer, sell or deliver the Securities, as part of its initial
offering and otherwise until 40 days after the later of the commencement of the
offering of the Securities and Closing Date, only (A) within the United States
to persons whom it reasonably believes to be qualified institutional buyers
("QUALIFIED INSTITUTIONAL BUYERS") as defined in Rule 144A under the Securities
Act ("RULE 144A"), or if any such person is buying for one or more institutional
accounts for which such person is acting as fiduciary or agent, only when such
person has represented to it that each such account is a Qualified Institutional
Buyer to whom notice has been given that such sale or delivery is being made in
reliance on Rule 144A and in each case, in transactions in accordance with Rule
144A and (B) outside the United States to persons other than U.S. persons (as
defined in Rule 902 under the Securities Act) and to whom such Initial Purchaser
reasonably believes offers and sales of the Securities may be made in reliance
on Rule 903 under the Securities Act in transactions meeting the requirements of
Regulation S, and (iv) it is a Qualified Institutional Buyer. Each Initial
Purchaser, severally and not jointly, agrees that, prior to or simultaneously
with the confirmation of sale by such Initial Purchaser to any purchaser of any
of the Securities purchased by such Initial Purchaser from the Issuers pursuant
hereto, such Initial Purchaser shall furnish to that purchaser a copy of the
Offering Memorandum (and any amendment or supplement thereto that the Issuers
shall have furnished to such Initial Purchaser prior to the date of such
confirmation of sale). In addition to the foregoing, each Initial Purchaser
acknowledges and agrees that the Issuers and, for purposes of the opinions to be
delivered to the Initial Purchasers pursuant to Sections 5(d) and (e), counsel
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for the Issuers and for the Initial Purchasers, respectively, may rely upon the
accuracy of the representations and warranties of the Initial Purchasers and
their compliance with their agreements contained in this Section 2, and each
Initial Purchaser hereby consents to such reliance. The Initial Purchasers will
advise the Issuers of the completion of the distribution of Securities pursuant
to Regulation S. Each Initial Purchaser agrees that, at or prior to confirmation
of sale of Securities (other than a sale pursuant to Rule 144A), it will have
sent to each distributor, dealer or person receiving a selling concession, fee
or other remuneration that purchases Securities from it during the restricted
period a confirmation of notice to substantially the following effect:
"The Securities covered hereby have not been registered under
the U.S. Securities Act of 1933, as amended (the "Securities Act"), and
may not be offered or sold within the United States or to, or for the
account or benefit of, U.S. persons (i) as part of their distribution
at any time or (ii) otherwise until 40 days after the later of the
commencement of the offering of the Securities and the date of original
issuance of the Securities, except in accordance with Regulation S or
Rule 144A or any other available exemption from registration under the
Securities Act. Terms used above have the meanings given to them by
Regulation S."
Each Initial Purchaser represents that it has not entered into
and agrees that it will not enter into any contractual arrangement with respect
to the distribution or delivery of the Securities, except with the prior written
consent of the Company.
(c) Each Initial Purchaser represents, warrants and agrees
that (i) it has not offered or sold and will not offer or sell, in the United
Kingdom, any Securities offered hereby, other than to persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their businesses or
otherwise in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995 (the "REGULATIONS"), (ii) it has complied
and will comply with all applicable provisions of the Financial Services Act
1986 and the Regulations with respect to anything done by it in relation to the
Securities in, from or otherwise involving the United Kingdom, and (iii) it has
only issued or passed on and will only issue or pass on in the United Kingdom
any document received by it in connection with the issue of the Securities to a
person who is of a kind described in Article 11(3) of the Financial Services Act
1986 (Investment Advertisements) (Exemptions) Order 1996 or is a person to whom
such document may otherwise lawfully be issued or passed on.
(d) The Issuers acknowledge and agree that the Initial
Purchasers may sell Securities to any affiliate of an Initial Purchaser and that
any such affiliate may sell Securities purchased by it to an Initial Purchaser.
3. DELIVERY OF AND PAYMENT FOR THE SECURITIES. (a) Delivery of
and payment for the Securities shall be made at the offices of Milbank, Tweed,
Hadley & McCloy, New York, New York, or at such other place as shall be agreed
upon by the Initial Purchasers and the Company, at 10:00 A.M., New York City
time, on April 15, 1998, or at such other time or date, not later than seven
full business days thereafter, as shall be agreed upon by the Initial Purchasers
and the Company (such date and time of payment and delivery being referred to
herein as the "CLOSING DATE").
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<PAGE>
(b) On the Closing Date, payment of the purchase price for the
Securities shall be made to the Company by wire or book-entry transfer of
same-day funds to such account or accounts as the Company shall specify prior to
the Closing Date or by such other means as the parties hereto shall agree prior
to the Closing Date against delivery to the Initial Purchasers of the
certificates evidencing the Securities. Time shall be of the essence, and
delivery at the time and place specified pursuant to this Agreement is a further
condition of the obligations of the Initial Purchasers hereunder. Upon delivery,
the Securities shall be in global form, registered in such names and in such
denominations as CSI on behalf of the Initial Purchasers shall have requested in
writing not less than two full business days prior to the Closing Date. The
Company agrees to make one or more global certificates evidencing the Securities
available for inspection by CSI on behalf of the Initial Purchasers in New York,
New York at least 24 hours prior to the Closing Date.
4. FURTHER AGREEMENTS OF THE ISSUERS. Each of the Issuers,
jointly and severally, agrees with each of the several Initial Purchasers:
(a) to advise the Initial Purchasers promptly and, if
requested, confirm such advice in writing, of the happening of any
event which makes any statement of a material fact made in the Offering
Memorandum untrue or which requires the making of any additions to or
changes in the Offering Memorandum (as amended or supplemented from
time to time) in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; to advise
the Initial Purchasers promptly upon receipt of any order preventing or
suspending the use of the Preliminary Offering Memorandum or the
Offering Memorandum, of any suspension of the qualification of the
Securities for offering or sale in any jurisdiction and of the
initiation or, to the best knowledge of the Company, the threatening of
any proceeding for any such purpose; and to use its reasonable best
efforts to prevent the issuance of any such order preventing or
suspending the use of the Preliminary Offering Memorandum or the
Offering Memorandum or suspending any such qualification and, if any
such suspension is issued, to obtain the lifting thereof at the
earliest possible time;
(b) to furnish promptly to each of the Initial Purchasers and
counsel for the Initial Purchasers, without charge, as many copies of
the Preliminary Offering Memorandum and the Offering Memorandum (and
any amendments or supplements thereto) as may be reasonably requested;
(c) prior to making any amendment or supplement to the
Offering Memorandum, to furnish a copy thereof to each of the Initial
Purchasers and counsel for the Initial Purchasers and not to effect any
such amendment or supplement to which the Initial Purchasers shall
reasonably object by notice to the Company after a reasonable period to
review, which shall not in any case be longer than 10 business days
after receipt of such copy;
(d) if, at any time prior to completion of the resale of the
Securities by the Initial Purchasers, any event shall occur or
condition exist as a result of which it is necessary, in the opinion of
counsel for the Initial Purchasers or counsel for the Company, to amend
or supplement the Offering Memorandum in order that the Offering
Memorandum will not include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances existing at the time
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<PAGE>
it is delivered to a purchaser, not misleading, or if it is necessary
to amend or supplement the Offering Memorandum to comply with
applicable law, to promptly prepare such amendment or supplement as may
be necessary to correct such untrue statement or omission or so that
the Offering Memorandum, as so amended or supplemented, will comply
with applicable law;
(e) for so long as the Securities are outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act, to furnish to holders of the Securities and prospective
purchasers of the Securities designated by such holders, upon request
of such holders or such prospective purchasers, the information
required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act, unless the Company is then subject to and in compliance
with Section 13 or 15(d) of the Exchange Act (the foregoing agreement
being for the benefit of the holders from time to time of the
Securities and prospective purchasers of the Securities designated by
such holders);
(f) for a period of three years following the Closing Date, to
furnish to the Initial Purchasers copies of any annual reports,
quarterly reports and current reports filed by the Company with the
Commission on Forms 10-K, 10-Q and 8-K, or such other similar forms as
may be designated by the Commission, and such other documents, reports
and information as shall be furnished by the Company to the Trustee or
to the holders of the Securities pursuant to the Indenture or the
Exchange Act or any rule or regulation of the Commission thereunder;
(g) to promptly take from time to time such actions as the
Initial Purchasers may reasonably request to qualify the Securities for
offering and sale under the state securities or Blue Sky laws of such
jurisdictions as the Initial Purchasers may designate and to continue
such qualifications in effect for so long as required for the resale of
the Securities; and to arrange for the determination of the eligibility
for investment of the Securities under the laws of such jurisdictions
as the Initial Purchasers may reasonably request; PROVIDED that in no
event shall any of the Issuers be obligated to qualify as a foreign
corporation in any jurisdiction in which it is not then so qualified or
to take any action which would subject it to general consent to service
of process in any action other than one arising out of the offering of
the Securities in any such jurisdiction where it is not then so
subject, or to subject itself to the payment of taxes in excess of a
nominal amount in any jurisdiction where it is not then so subject;
(h) to assist the Initial Purchasers in arranging for the
Securities to be designated Private Offerings, Resales and Trading
through Automated Linkages ("PORTAL") Market securities in accordance
with the rules and regulations adopted by the National Association of
Securities Dealers, Inc. ("NASD") relating to trading in the PORTAL
Market and for the Securities to be eligible for clearance and
settlement through The Depository Trust Company ("DTC");
(i) not to, and to cause its affiliates not to, sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect of
any security (as such term is defined in the Securities Act) which
could be integrated with the sale of the Securities in a manner which
would require registration of the Securities under the Securities Act;
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<PAGE>
(j) except following the effectiveness of the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case
may be, not to, and to cause its affiliates not to, and not to
authorize or knowingly permit any person acting on their behalf to,
solicit any offer to buy or offer to sell the Securities, the Exchange
Securities or the Private Exchange Securities by means of any form of
general solicitation or general advertising within the meaning of
Regulation D, by means of any directed selling efforts (as defined in
Regulation S) in connection with the Securities or in any manner
involving a public offering within the meaning of Section 4(2) of the
Securities Act; and not to offer, sell, contract to sell or otherwise
dispose of, directly or indirectly, any securities under circumstances
where such offer, sale, contract or disposition would cause the
exemption afforded by Section 4(2) of the Securities Act to cease to be
applicable to the offering and sale of the Securities to the Initial
Purchasers as contemplated by this Agreement and the Offering
Memorandum;
(k) for a period of 90 days from the date of the Offering
Memorandum, not to offer for sale, sell, contract to sell or otherwise
dispose of, directly or indirectly, or file a registration statement
for, or announce any offer, sale, contract for sale of or other
disposition of any debt securities issued or guaranteed by the Issuers
(other than the Securities, the Exchange Securities, the Private
Exchange Securities and debt incurred in the ordinary course of
business) without the prior written consent of the Initial Purchasers;
(l) until consummation of the Exchange Offer, without the
prior written consent of the Initial Purchasers, not to, and not permit
any of its affiliates (as defined in Rule 144 under the Securities Act)
to, resell any of the Securities, the Exchange Securities or the
Private Exchange Securities that have been reacquired by them, except
for any such securities purchased by the Issuers or any of their
affiliates and resold in a transaction registered under the Securities
Act;
(m) in connection with the offering of the Securities, until
CSI on behalf of the Initial Purchasers shall have notified the Company
of the completion of the resale of the Securities, not to, and to cause
its affiliated purchasers (as defined in Regulation M under the
Exchange Act) not to, either alone or with one or more other persons,
bid for or purchase, for any account in which it or any of its
affiliated purchasers has a beneficial interest, any Securities, or
attempt to induce any person to purchase any Securities; and not to,
and to cause its affiliated purchasers not to, make bids or purchase
for the purpose of creating actual, or apparent, active trading in or
of raising the price of the Securities;
(n) in connection with the offering of the Securities, to make
its officers, independent accountants and legal counsel reasonably
available upon request by the Initial Purchasers;
(o) to furnish to each of the Initial Purchasers on the date
hereof a copy of the independent accountants' report included in the
Offering Memorandum signed by the accountants rendering such report;
(p) to do and perform all things required to be done and
performed by it under this Agreement that are within its control prior
to or after the Closing Date, and to use its
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reasonable best efforts to satisfy all conditions precedent on its
part to the delivery of the Securities;
(q) not to take any action prior to the execution and delivery
of the Indenture which, if taken after such execution and delivery,
would have violated any of the covenants contained in the Indenture;
(r) not to take any action prior to the Closing Date which
would require the Offering Memorandum to be amended or supplemented
pursuant to Section 4(d);
(s) prior to the Closing Date, not to issue any press release
or other communication directly or indirectly or hold any press
conference with respect to any of the Issuers, its condition (financial
or otherwise) or earnings, business affairs or business prospects
(except for routine oral marketing communications in the ordinary
course of business and consistent with the past practices of the
Issuers and of which the Initial Purchasers are notified), without the
prior written consent of the Initial Purchasers, unless in the judgment
of the Issuers and their counsel, and after notification to the Initial
Purchasers, such press release or communication is required by law or
the rules of any national securities exchange or inter-dealer quotation
system; and
(t) to apply the net proceeds from the sale of the Securities
as set forth in the Offering Memorandum under the heading "Use of
Proceeds."
5. CONDITIONS OF INITIAL PURCHASERS' OBLIGATIONS. The
respective obligations of the several Initial Purchasers hereunder are subject
to the accuracy, on and as of the date hereof and the Closing Date, of the
representations and warranties of each of the Issuers contained herein, to the
accuracy of the statements of each of the Issuers and their respective officers
made in any certificates delivered pursuant hereto, to the performance by the
Issuers of their obligations hereunder, and to each of the following additional
terms and conditions:
(a) The Offering Memorandum (and any amendments or supplements
thereto) shall have been printed and copies distributed to the Initial
Purchasers as promptly as practicable on or following the date of this
Agreement or at such other date and time as to which the Initial
Purchasers may agree; and no stop order suspending the sale of the
Securities in any jurisdiction shall have been issued and no proceeding
for that purpose shall have been commenced or shall be pending or, to
the best knowledge of the Company, threatened.
(b) None of the Initial Purchasers shall have discovered and
disclosed to the Company on or prior to the Closing Date that the
Offering Memorandum or any amendment or supplement thereto contains an
untrue statement of a fact which, in the opinion of counsel for the
Initial Purchasers, is material or omits to state any fact which, in
the opinion of such counsel, is material and is required to be stated
therein or is necessary to make the statements therein not misleading.
(c) All corporate proceedings and other legal matters incident
to the authorization, form and validity of each of the Transaction
Documents and the Offering Memorandum, and all other legal matters
relating to the Transaction Documents and the transactions contemplated
thereby, shall be reasonably satisfactory in all material respects
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to the Initial Purchasers, and the Issuers shall have furnished to
the Initial Purchasers all documents and information that they or
their counsel may reasonably request to enable them to pass upon such
matters.
(d) (i) Weil, Gotshal & Manges LLP, (ii) Otis H. Halleen,
Esq., and (iii) Phelps Dunbar LLP shall have furnished to the Initial
Purchasers their respective written opinions, as counsel to the
Issuers, addressed to the Initial Purchasers and dated the Closing
Date, in form and substance reasonably satisfactory to the Initial
Purchasers, substantially to the effect set forth in Exhibit B hereto.
(e) The Initial Purchasers shall have received from Milbank,
Tweed, Hadley & McCloy, counsel for the Initial Purchasers, such
opinion or opinions, dated the Closing Date, with respect to such
matters as the Initial Purchasers may reasonably require, and the
Issuers shall have furnished to such counsel such documents and
information as they request for the purpose of enabling them to pass
upon such matters.
(f) The Company shall have furnished to the Initial Purchasers
a letter (the "INITIAL LETTER") of Ernst & Young LLP, addressed to the
Initial Purchasers and dated the date hereof, in form and substance
satisfactory to the Initial Purchasers and counsel to the Initial
Purchasers and counsel to the Initial Purchasers, substantially to the
effect set forth in Exhibit C hereto.
(g) The Company shall have furnished to the Initial Purchasers
a letter (the "BRING-DOWN LETTER") of Ernst & Young LLP, addressed to
the Initial Purchasers and dated the Closing Date (i) confirming that
they are independent public accountants with respect to the Issuers
within the meaning of Rule 101 of the Code of Professional Conduct of
the AICPA and its interpretations and rulings thereunder, (ii) stating,
as of the date of the Bring-Down Letter (or, with respect to matters
involving changes or developments since the respective dates as of
which specified financial information is given in the Offering
Memorandum, as of a date not more than three business days prior to the
date of the Bring-Down Letter), that the conclusions and findings of
such accountants with respect to the financial information and other
matters covered by the Initial Letter are accurate and (iii) confirming
in all material respects the conclusions and findings set forth in the
Initial Letter.
(h) Each Issuer shall have furnished to the Initial Purchasers
a certificate, dated the Closing Date, of its chief executive officer
and its chief financial officer stating that (A) such officers have
carefully examined the Offering Memorandum, (B) in their opinion, the
Offering Memorandum, as of its date, did not include any untrue
statement of a material fact and did not omit to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, and since the date of the Offering
Memorandum, no event has occurred which should have been set forth in a
supplement or amendment to the Offering Memorandum so that the Offering
Memorandum (as so amended or supplemented) would not include any untrue
statement of a material fact and would not omit to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading and (C) as of the Closing Date, the
representations and warranties of such Issuer in this Agreement are
true and correct in all material respects, such Issuer has
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complied in all material respects with all agreements and satisfied
all conditions on its part to be performed or satisfied hereunder
on or prior to the Closing Date, and subsequent to the date of the
ent financial statements contained in the Offering Memorandum, there
has been no material adverse change, or any development including a
prospective material adverse change, in or affecting the condition
(financial or otherwise), results of operations, business or prospects
of such Issuer and its subsidiaries taken as a whole, except as set
forth in the Offering Memorandum.
(i) The Initial Purchasers shall have received a counterpart
of the Registration Rights Agreement which shall have been executed and
delivered by a duly authorized officer of each of the Issuers.
(j) The Indenture shall have been duly executed and delivered
by each of the Issuers and the Trustee, and the Notes shall have been
duly executed and delivered by the Company and duly authenticated by
the Trustee and the Guarantee of each Guarantor shall have been duly
endorsed thereon.
(k) The Notes shall have been approved by the NASD for trading
in the PORTAL Market.
(l) If any event shall have occurred that requires the Issuers
under Section 4(d) to prepare an amendment or supplement to the
Offering Memorandum, such amendment or supplement shall have been
prepared, the Initial Purchasers shall have been given a reasonable
opportunity to comment thereon, and copies thereof shall have been
delivered to the Initial Purchasers reasonably in advance of the
Closing Date.
(m) There shall not have occurred any invalidation of Rule
144A or Regulation S under the Securities Act by any court or any
withdrawal or proposed withdrawal of any rule or regulation under the
Securities Act or the Exchange Act by the Commission or any amendment
or proposed amendment thereof by the Commission which in the reasonable
judgment of the Initial Purchasers would materially impair the ability
of the Initial Purchasers to purchase, hold or effect resales of the
Securities as contemplated hereby.
(n) Subsequent to the execution and delivery of this Agreement
or, if earlier, the dates as of which relevant information is given in
the Offering Memorandum (exclusive of any amendment or supplement
thereto) other than as expressly described in the Offering Memorandum,
there shall not have been any change in the capital stock or long-term
debt or any change, or any development involving a prospective change,
in or affecting the management, condition (financial or otherwise),
results of operations, business or prospects of the Company and its
subsidiaries taken as a whole, the effect of which, in any such case
described above, is, in the reasonable judgment of the Initial
Purchasers, so material and adverse as to make it impracticable or
inadvisable to proceed with the sale or delivery of the Securities on
the terms and in the manner contemplated by this Agreement and the
Offering Memorandum (exclusive of any amendment or supplement thereto).
(o) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
governmental agency or body which would,
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as of the Closing Date, prevent the issuance or sale of the Securities,
the Exchange Securities or the Private Exchange Securities, and no
injunction, restraining order or order of any other nature by any
federal or state court of competent jurisdiction shall have been issued
as of the Closing Date which would prevent the issuance or sale of
the Securities, the Exchange Securities or the Private Exchange
Securities, in each case in the manner contemplated by this Agreement,
the Registration Rights Agreement and the Offering Memorandum.
(p) Subsequent to the execution and delivery of this Agreement
(i) no downgrading shall have occurred in the rating accorded the Notes
or any of United's or the Company's other debt securities by any
"nationally recognized statistical rating organization", as such term
is defined by the Commission for purposes of Rule 436(g)(2) under the
Securities Act and (ii) no such organization shall have publicly
announced that it has under surveillance or review (other than an
announcement with positive implications of a possible upgrading), its
rating of the Notes or any of United's or the Company's other debt
securities.
(q) Subsequent to the execution and delivery of this Agreement
there shall not have occurred any of the following: (i) trading in
securities generally on the New York Stock Exchange, the American Stock
Exchange or the over-the-counter market shall have been suspended or
limited, or minimum prices shall have been established on any such
exchange or market by the Commission, by any such exchange or by any
other regulatory body or governmental authority having jurisdiction, or
trading in any securities of the Company on any exchange or in the
over-the-counter market shall have been suspended or (ii) any
moratorium on commercial banking activities shall have been declared by
federal or New York state authorities or (iii) an outbreak or
escalation of hostilities or a declaration by the United States of a
national emergency or war or (iv) a material adverse change in general
economic, political or financial conditions (or the effect of
international conditions on the financial markets in the United States
shall be such) the effect of which, in the case of this clause (iv),
is, in the reasonable judgment of the Initial Purchasers, so material
and adverse as to make it impracticable or inadvisable to proceed with
the sale or the delivery of the Securities on the terms and in the
manner contemplated by this Agreement and in the Offering Memorandum
(exclusive of any amendment or supplement thereto).
(r) The Company shall have entered into the New Credit
Agreement and the Initial Purchasers or their counsel shall have
received a conformed copy thereof.
(s) The Company shall have entered into the Receivables
Securitization Program and the Initial Purchasers or their counsel
shall have received a conformed copy of the principal operative
documents related thereto.
(t) The Initial Purchasers or their counsel shall have
received a conformed copy of the purchase agreement and related closing
documents for the Azerty Acquisition.
All opinions, letters, evidence and certificates mentioned
above or elsewhere in this Agreement shall be deemed to be in compliance with
the provisions hereof only if they are in form and substance reasonably
satisfactory to counsel for the Initial Purchasers.
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6. TERMINATION. The obligations of the Initial Purchasers
hereunder may be terminated by the Initial Purchasers, in their absolute
discretion, by notice given to and received by the Company prior to delivery of
and payment for the Securities if, prior to that time, any of the events
described in Section 5(m), (n), (o), (p) or (q) shall have occurred and be
continuing.
7. DEFAULTING INITIAL PURCHASERS. (a) If, on the Closing Date,
any Initial Purchaser defaults in the performance of its obligations under this
Agreement, the non-defaulting Initial Purchasers may make arrangements for the
purchase of the Securities which such defaulting Initial Purchaser agreed but
failed to purchase by other persons satisfactory to the Company and the
non-defaulting Initial Purchasers, but if no such arrangements are made within
36 hours after such default, this Agreement shall terminate without liability on
the part of the non-defaulting Initial Purchasers or the Issuers, except that
the Issuers will continue to be liable for the payment of expenses to the extent
set forth in Sections 8 and 12 and except that the provisions of Sections 9 and
10 shall not terminate and shall remain in effect. As used in this Agreement,
the term "Initial Purchasers" includes, for all purposes of this Agreement
unless the context otherwise requires, any party not listed in Schedule 1 hereto
that, pursuant to this Section 7, purchases Securities which a defaulting
Initial Purchaser agreed but failed to purchase.
(b) Nothing contained herein shall relieve a defaulting
Initial Purchaser of any liability it may have to the Issuers or any
non-defaulting Initial Purchaser for damages caused by its default. If other
persons are obligated or agree to purchase the Securities of a defaulting
Initial Purchaser, either the non-defaulting Initial Purchasers or the Company
may postpone the Closing Date for up to seven full business days in order to
effect any changes that in the opinion of counsel for the Company or counsel for
the Initial Purchasers may be necessary in the Offering Memorandum or in any
other document or arrangement, and the Company agrees to promptly prepare any
amendment or supplement to the Offering Memorandum that effects any such
changes.
8. REIMBURSEMENT OF INITIAL PURCHASERS' EXPENSES. If (a) this
Agreement shall have been terminated pursuant to Section 6 or 7, (b) the Issuers
shall fail to tender the Securities for delivery to the Initial Purchasers for
any reason permitted under this Agreement or (c) the Initial Purchasers shall
decline to purchase the Securities for any reason permitted under this
Agreement, the Issuers shall reimburse the Initial Purchasers for such
out-of-pocket expenses (including reasonable fees and disbursements of counsel)
as shall have been reasonably incurred by the Initial Purchasers in connection
with this Agreement and the proposed purchase and resale of the Securities. If
this Agreement is terminated pursuant to Section 7 by reason of the default of
one or more of the Initial Purchasers, the Issuers shall not be obligated to
reimburse any defaulting Initial Purchaser on account of such expenses.
9. INDEMNIFICATION. (a) Each of the Issuers, jointly and
severally, shall indemnify and hold harmless each Initial Purchaser, its
affiliates, their respective officers, directors, employees, representatives and
agents, and each person, if any, who controls any Initial Purchaser within the
meaning of the Securities Act or the Exchange Act (collectively referred to for
purposes of this Section 9(a) and Section 10 as an Initial Purchaser), from and
against any loss, claim, damage or liability, joint or several, or any action in
respect thereof (including, without limitation, any loss, claim, damage,
liability or action relating to purchases and sales of the Securities), to which
that Initial Purchaser may become subject, whether commenced or threatened,
under the Securities Act, the Exchange Act, any other federal or state statutory
law or regulation, at common law or otherwise, insofar as such loss, claim,
damage, liability or action
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<PAGE>
arises out of, or is based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained in the Preliminary Offering Memorandum
or the Offering Memorandum or in any amendment or supplement thereto or in
any information provided by the Issuers to the holders of the Securities
pursuant to Section 4(e) or (ii) the omission or alleged omission to state
therein a material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, and shall reimburse each Initial Purchaser
promptly upon demand for any legal or other expenses reasonably incurred by
that Initial Purchaser in connection with investigating or defending or
preparing to defend against or appearing as a third party witness in
connection with any such loss, claim, damage, liability or action as such
expenses are incurred; PROVIDED, HOWEVER, that the Issuers shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability or action arises out of, or is based upon, an untrue statement or
alleged untrue statement in or omission or alleged omission from any of such
documents in reliance upon and in conformity with any Initial Purchasers'
Information; and PROVIDED, FURTHER, that with respect to any such untrue
statement in or omission from the Preliminary Offering Memorandum, the
indemnity agreement contained in this Section 9(a) shall not inure to the
benefit of any such Initial Purchaser to the extent that the sale to the
person asserting any such loss, claim, damage, liability or action was an
initial resale by such Initial Purchaser and any such loss, claim, damage,
liability or action of or with respect to such Initial Purchaser results from
the fact that both (A) a copy of the Offering Memorandum was not sent or
given to such person at or prior to the written confirmation of the sale of
such Securities to such person and (B) the untrue statement in or omission
from the Preliminary Offering Memorandum was corrected in the Offering
Memorandum unless, in either case, such failure to deliver the Offering
Memorandum was a result of non-compliance by the Issuers with Section 4(b).
(b) Each Initial Purchaser, severally and not jointly, shall
indemnify and hold harmless each of the Issuers, their respective affiliates,
their respective officers, directors, employees, representatives and agents,
and each person, if any, who controls each Issuer within the meaning of the
Securities Act or the Exchange Act (collectively referred to for purposes of
this Section 9(b) and Section 10 as the Issuers), from and against any loss,
claim, damage or liability, joint or several, or any action in respect
thereof, to which the Issuers may become subject, whether commenced or
threatened, under the Securities Act, the Exchange Act, any other federal or
state statutory law or regulation, at common law or otherwise, insofar as
such loss, claim, damage, liability or action arises out of, or is based
upon, (i) any untrue statement or alleged untrue statement of a material fact
contained in the Preliminary Offering Memorandum or the Offering Memorandum
or in any amendment or supplement thereto or (ii) the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, but in each case
only to the extent that the untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
any Initial Purchasers' Information, and shall reimburse the Issuers promptly
upon demand for any legal or other expenses reasonably incurred by the
Issuers in connection with investigating or defending or preparing to defend
against or appearing as a third party witness in connection with any such
loss, claim, damage, liability or action as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party pursuant to Section 9(a) or 9(b), notify the
indemnifying party in writing of the claim or the commencement of that action;
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<PAGE>
PROVIDED, HOWEVER, that the failure to notify the indemnifying party shall
not relieve it from any liability which it may have under this Section 9
except to the extent that it has been materially prejudiced (through the
forfeiture of substantive rights or defenses) by such failure; and, PROVIDED,
FURTHER, that the failure to notify the indemnifying party shall not relieve
it from any liability which it may have to an indemnified party otherwise
than under this Section 9. If any such claim or action shall be brought
against an indemnified party, and it shall notify the indemnifying party
thereof, the indemnifying party shall be entitled to participate therein and,
to the extent that it wishes, jointly with any other similarly notified
indemnifying party, to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party. After notice from the indemnifying
party to the indemnified party of its election to assume the defense of such
claim or action, the indemnifying party shall not be liable to the
indemnified party under this Section 9 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; PROVIDED, HOWEVER, that
an indemnified party shall have the right to employ its own counsel in any
such action, but the fees, expenses and other charges of such counsel for the
indemnified party will be at the expense of such indemnified party unless (1)
the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based upon advice of counsel to the indemnified party) that there
may be legal defenses available to it or other indemnified parties that are
different from or in addition to those available to the indemnifying party,
(3) a conflict or potential conflict exists (based upon advice of counsel to
the indemnified party) between the indemnified party and the indemnifying
party (in which case the indemnifying party will not have the right to direct
the defense of such action on behalf of the indemnified party) or (4) the
indemnifying party has not in fact employed counsel reasonably satisfactory
to the indemnified party to assume the defense of such action within a
reasonable time after receiving notice of the commencement of the action, in
each of which cases the reasonable fees, disbursements and other charges of
counsel will be at the expense of the indemnifying party or parties. It is
understood that the indemnifying party or parties shall not, in connection
with any proceeding or related proceedings in the same jurisdiction, be
liable for the reasonable fees, disbursements and other charges of more than
one separate firm of attorneys (in addition to any local counsel) at any one
time for all such indemnified party or parties. Each indemnified party, as a
condition of the indemnity agreements contained in Sections 9(a) and 9(b),
shall use all reasonable efforts to cooperate with the indemnifying party in
the defense of any such action or claim. No indemnifying party shall be
liable for any settlement of any such action effected without its written
consent (which consent shall not be unreasonably withheld), but if settled
with its written consent or if there be a final judgment for the plaintiff in
any such action, the indemnifying party agrees to indemnify and hold harmless
any indemnified party from and against any loss or liability by reason of
such settlement or judgment. No indemnifying party shall, without the prior
written consent of the indemnified party (which consent shall not be
unreasonably withheld), effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified
party unless such settlement includes an unconditional release in form and
substance reasonably satisfactory to such indemnified party of such
indemnified party from all liability on claims that are the subject matter of
such proceeding.
The obligations of the Issuers and the Initial Purchasers in
this Section 9 and in Section 10 are in addition to any other liability that
the Issuers or the Initial Purchasers, as the case may be, may otherwise
have, including in respect of any breaches of representations, warranties and
agreements made herein by any such party.
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10. CONTRIBUTION. If the indemnification provided for in
Section 9 is unavailable or insufficient to hold harmless an indemnified
party under Section 9(a) or 9(b), then each indemnifying party shall, in lieu
of indemnifying such indemnified party, contribute to the amount paid or
payable by such indemnified party as a result of such loss, claim, damage or
liability, or action in respect thereof, (i) in such proportion as shall be
appropriate to reflect the relative benefits received by the Issuers on the
one hand and the Initial Purchasers on the other from the offering of the
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Issuers on the one hand and the Initial Purchasers on
the other with respect to the statements or omissions that resulted in such
loss, claim, damage or liability, or action in respect thereof, as well as
any other relevant equitable considerations. The relative benefits received
by the Issuers on the one hand and the Initial Purchasers on the other with
respect to such offering shall be deemed to be in the same proportion as the
total net proceeds from the offering of the Securities purchased under this
Agreement (before deducting expenses) received by or on behalf of the
Issuers, on the one hand, and the total discounts and commissions received by
the Initial Purchasers with respect to the Securities purchased under this
Agreement, on the other, bear to the total gross proceeds from the sale of
the Securities under this Agreement, in each case as set forth in the table
on the cover page of the Offering Memorandum. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to the Issuers or information supplied by the
Issuers on the one hand or to any Initial Purchasers' Information on the
other, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The Issuers and the Initial Purchasers agree that it would not be
just and equitable if contributions pursuant to this Section 10 were to be
determined by PRO RATA allocation (even if the Initial Purchasers were
treated as one entity for such purpose) or by any other method of allocation
that does not take into account the equitable considerations referred to
herein. The amount paid or payable by an indemnified party as a result of the
loss, claim, damage or liability, or action in respect thereof, referred to
above in this Section 10 shall be deemed to include, for purposes of this
Section 10, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending or preparing
to defend any such action or claim. Notwithstanding the provisions of this
Section 10, no Initial Purchaser shall be required to contribute any amount
in excess of the amount by which the total discounts and commissions received
by such Initial Purchaser with respect to the Securities purchased by it
under this Agreement exceeds the amount of any damages which such Initial
Purchaser has otherwise paid or become liable to pay by reason of any untrue
or alleged untrue statement or omission or alleged omission. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Initial Purchasers'
obligations to contribute as provided in this Section 10 are several in
proportion to their respective purchase obligations and not joint.
11. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement
shall inure to the benefit of and be binding upon the Initial Purchasers, the
Issuers and their respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons, except as
provided in Sections 9 and 10 with respect to affiliates, officers,
directors, employees, representatives, agents and controlling persons of the
Issuers and the Initial Purchasers and in Section 4(e) with respect to
holders and prospective purchasers of the
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Securities. Nothing in this Agreement is intended or shall be construed to
give any person, other than the persons referred to in this Section 11, any
legal or equitable right, remedy or claim under or in respect of this
Agreement or any provision contained herein.
12. EXPENSES. The Issuers agree with the Initial Purchasers to
pay (a) the costs incident to the authorization, issuance, sale, preparation
and delivery of the Securities and any taxes payable in that connection; (b)
the costs incident to the preparation, printing and distribution of the
Preliminary Offering Memorandum, the Offering Memorandum and any amendments
or supplements thereto; (c) the costs of reproducing and distributing each of
the Transaction Documents; (d) the costs incident to the preparation,
printing and delivery of the certificates evidencing the Securities,
including stamp duties and transfer taxes, if any, payable upon issuance of
the Securities; (e) the fees and expenses of the Issuers' counsel and
independent accountants; (f) the fees and expenses of qualifying the
Securities under the securities laws of the several jurisdictions as provided
in Section 4(g) and of preparing, printing and distributing Blue Sky
Memoranda (including related reasonable fees and expenses of counsel for the
Initial Purchasers); (g) any fees charged by rating agencies for rating the
Securities; (h) the fees and expenses of the Trustee and any paying agent
(including related reasonable fees and expenses of any counsel to such
parties); (i) all expenses and application fees incurred in connection with
the application for the inclusion of the Securities on the PORTAL Market and
the approval of the Securities for book-entry transfer by DTC; and (j) all
other costs and expenses incident to the performance of the obligations of
the Issuers under this Agreement which are not otherwise specifically
provided for in this Section 12; PROVIDED, HOWEVER, that except as provided
in this Section 12 and Section 8, the Initial Purchasers shall pay their own
costs and expenses (including the costs and expenses of their legal counsel
other than as provided in clause (f) above).
13. SURVIVAL. The respective indemnities, rights of
contribution, representations, warranties and agreements of the Issuers and
the Initial Purchasers contained in this Agreement or made by or on behalf of
the Issuers or the Initial Purchasers pursuant to this Agreement or any
certificate delivered pursuant hereto shall survive the delivery of and
payment for the Securities and shall remain in full force and effect,
regardless of any termination or cancellation of this Agreement or any
investigation made by or on behalf of any of them or any of their respective
affiliates, officers, directors, employees, representatives, agents or
controlling persons.
14. NOTICES, ETC. All statements, requests, notices and
agreements hereunder shall be in writing, and:
(a) if to the Initial Purchasers, shall be delivered or sent
by mail or telecopy transmission to Chase Securities Inc., 270 Park
Avenue, New York, New York 10017, Attention: David Fass (telecopier
no.: (212) 270-0994); or
(b) if to the Company, shall be delivered or sent by mail or
telecopy transmission to the address of the Company set forth in the
Offering Memorandum, Attention: General Counsel (telecopier no.:
(847) 699-3193);
PROVIDED that any notice to an Initial Purchaser pursuant to Section 9(c) shall
also be delivered or sent by mail to such Initial Purchaser at its address set
forth on the signature page hereof. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Issuers shall
be entitled to act and rely upon any request, consent, notice or agreement given
or made on behalf of the Initial Purchasers by CSI.
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15. DEFINITION OF TERMS. For purposes of this Agreement, (a)
the term "business day" means any day on which The New York Stock Exchange, Inc.
is open for trading, (b) the term "subsidiary" has the meaning set forth in Rule
405 under the Securities Act and (c) except where otherwise expressly provided,
the term "affiliate" has the meaning set forth in Rule 405 under the Securities
Act.
16. INITIAL PURCHASERS' INFORMATION. The parties hereto
acknowledge and agree that, for all purposes of this Agreement, the Initial
Purchasers' Information consists solely of the following information in the
Preliminary Offering Memorandum and the Offering Memorandum: (i) the last
paragraph on the front cover page concerning the terms of the offering by the
Initial Purchasers; (ii) the legend on page i concerning over-allotment and
trading activities by the Initial Purchasers; and (iii) the statements
concerning the Initial Purchasers contained in the first sentence of the third
paragraph, the second sentence of the ninth paragraph, the eleventh paragraph
and the twelfth paragraph under the heading "Plan of Distribution."
17. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
18. COUNTERPARTS. This Agreement may be executed in one or
more counterparts (which may include counterparts delivered by telecopier) and,
if executed in more than one counterpart, the executed counterparts shall each
be deemed to be an original, but all such counterparts shall together constitute
one and the same instrument.
19. AMENDMENTS. No amendment or waiver of any provision of
this Agreement, nor any consent or approval to any departure therefrom, shall in
any event be effective unless the same shall be in writing and signed by the
parties hereto.
20. HEADINGS. The headings herein are inserted for convenience
of reference only and are not intended to be part of, or to affect the meaning
or interpretation of, this Agreement.
-26-
<PAGE>
If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement between each of the Issuers and the
several Initial Purchasers in accordance with its terms.
Very truly yours,
UNITED STATIONERS SUPPLY CO.
By
--------------------------------------
Name:
Title:
UNITED STATIONERS INC.
By
--------------------------------------
Name:
Title:
LAGASSE BROS., INC.
By
--------------------------------------
Name:
Title:
AZERTY INCORPORATED
By
--------------------------------------
Name:
Title:
POSITIVE ID WHOLESALE INC.
By
--------------------------------------
Name:
Title
-27-
<PAGE>
AP SUPPORT SERVICES INCORPORATED
By
--------------------------------------
Name:
Title:
Accepted:
CHASE SECURITIES INC.
By
-----------------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
1 Chase Plaza, 25th floor
New York, New York 10081
Attention: Legal Department
BEAR, STEARNS & CO. INC.
By
-----------------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
300 Crescent Court, Suite 200
Dallas, Texas 75201
Attention: Rich Lacher
-28-
<PAGE>
SCHEDULE 1
<TABLE>
<CAPTION>
Principal
Amount
Initial Purchasers Of Securities
- -------------------------------------------------------------------------------
<S> <C>
Chase Securities Inc. $ 90,000,000
10,000,000
------------
Bear, Stearns & Co. Inc. $100,000,000
</TABLE>
S-1
<PAGE>
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
among
UNITED STATIONERS SUPPLY CO.,
THE GUARANTORS NAMED HEREIN
and
CHASE SECURITIES INC.
BEAR, STEARNS & CO. INC.
DATED APRIL 15, 1998
<PAGE>
UNITED STATIONERS SUPPLY CO.
$100,000,000
8 3/8% Senior Subordinated Notes due 2008
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
April 15, 1998
CHASE SECURITIES INC.
BEAR, STEARNS & CO. INC.
c/o Chase Securities Inc.
270 Park Avenue, 4th floor
New York, New York 10017
Ladies and Gentlemen:
United Stationers Supply Co., an Illinois corporation (the "COMPANY"),
a wholly-owned subsidiary of United Stationers, Inc., a Delaware corporation
("United"), proposes to issue and sell to Chase Securities Inc. ("CSI") and
Bear, Stearns & Co. Inc. (together with CSI, the "INITIAL PURCHASERS"), upon the
terms and subject to the conditions set forth in a purchase agreement dated
April 9, 1998 (the "PURCHASE AGREEMENT"), $100,000,000 aggregate principal
amount of its 8 3/8% Senior Subordinated Notes due 2008 (the "NOTES"). The
Notes will be unconditionally guaranteed on a senior subordinated basis (the
"GUARANTEES") initially by United, Lagasse Bros., Inc., a Louisiana corporation,
Azerty Incorporated, a Delaware corporation, Positive ID Wholesale Inc., a
Delaware corporation and AP Support Services Incorporated, a Delaware
corporation (collectively, the "GUARANTORS" and, together with the Company, the
"ISSUERS"), in accordance with the terms of and subject to the conditions of an
indenture dated as of April 15, 1998 (the "INDENTURE") between the Company, the
Guarantors and The Bank of New York, as trustee (the "TRUSTEE"). The Notes and
the Guarantees are sometimes referred to herein together as the "SECURITIES."
Capitalized terms used but not defined herein shall have the meanings given to
such terms in the Purchase Agreement.
As an inducement to the Initial Purchasers to enter into the Purchase
Agreement and in satisfaction of a condition to the obligations of the Initial
Purchasers thereunder, the Issuers agree with the Initial Purchasers, for the
benefit of the holders (including the Initial Purchasers) of the Securities, the
Exchange Securities (as defined herein) and the Private Exchange Securities (as
defined herein) (collectively, the "HOLDERS"), as follows:
-2-
<PAGE>
1. REGISTERED EXCHANGE OFFER. The Issuers shall (i) prepare and, not
later than 60 days following the date of original issuance of the Securities
(the "ISSUE DATE"), file with the Commission a registration statement on
Form S-1 or Form S-4, if the use of such forms is then available (the "EXCHANGE
OFFER REGISTRATION STATEMENT"), with respect to a proposed offer to the Holders
of the Securities (the "REGISTERED EXCHANGE OFFER") to issue and deliver to such
Holders, in exchange for the Securities, a like aggregate principal amount of
debt securities of the Company (the "EXCHANGE NOTES") and like guarantees of the
Guarantors on such Exchange Notes (such guarantees, together with the Exchange
Notes, the "EXCHANGE SECURITIES") that are identical in all material respects to
the Securities, except for the transfer restrictions relating to the Securities,
(ii) use their reasonable best efforts to cause the Exchange Offer Registration
Statement to become effective under the Securities Act as promptly as
practicable after the filing thereof and within 150 days after the Issue Date,
and the Registered Exchange Offer to be consummated as promptly as practicable,
but in any event on or prior to 200 days after the Issue Date and (iii) keep the
Exchange Offer Registration Statement effective for not less than 30 days (or
longer, if required by applicable law) after the date on which notice of the
Registered Exchange Offer is mailed to the Holders (such period being called the
"EXCHANGE OFFER REGISTRATION PERIOD"). The Exchange Securities will be issued
under the Indenture or an indenture (the "EXCHANGE SECURITIES INDENTURE")
between the Company, the Guarantors and the Trustee or such other bank or trust
company that is reasonably satisfactory to the Initial Purchasers, as trustee
(the "EXCHANGE SECURITIES TRUSTEE"), such indenture to be identical in all
material respects to the Indenture, except for the transfer restrictions
relating to the Securities (as described above).
Upon the effectiveness of the Exchange Offer Registration Statement,
the Issuers shall promptly commence the Registered Exchange Offer, it being the
objective of such Registered Exchange Offer to enable each Holder electing to
exchange Securities for Exchange Securities (assuming that such Holder (a) is
not an affiliate of the Company, the Guarantors or an Exchanging Dealer (as
defined herein) not complying with the requirements of the next sentence, (b) is
not an Initial Purchaser holding Securities that have, or that are reasonably
likely to have, the status of an unsold allotment in an initial distribution,
(c) acquires the Exchange Securities in the ordinary course of such Holder's
business and (d) has no arrangements or understandings with any person to
participate in the distribution of the Exchange Securities) and to trade such
Exchange Securities from and after their receipt without any limitations or
restrictions under the Securities Act and without material restrictions under
the securities laws of the several states of the United States. The Issuers,
the Initial Purchasers and each Exchanging Dealer acknowledge that, (i) pursuant
to current interpretations by the Commission's staff of Section 5 of the
Securities Act, each Holder that is a broker-dealer electing to exchange
Securities acquired for its own account as a result of market-making activities
or other trading activities for Exchange Securities (an "EXCHANGING DEALER") is
required to deliver a prospectus containing substantially the information set
forth in Annex A hereto on the cover, in Annex B hereto in the "Exchange Offer
Procedures" section and the "Purpose of the Exchange Offer" section and in
Annex C hereto in the "Plan of Distribution" section of such prospectus in
connection with a sale of any such Exchange Securities received by such
Exchanging Dealer pursuant to the Registered Exchange Offer and (ii) if any
Initial Purchaser elects to sell Private Exchange Securities acquired in
exchange for Securities constituting any portion of an unsold allotment, it is
required to deliver a prospectus in connection with such a sale.
Upon consummation of the Registered Exchange Offer in accordance with
this Section 1, the provisions of this Agreement shall continue to apply,
MUTATIS MUTANDIS, solely with respect to Transfer Restricted Securities as to
which clauses (i) through (v) of the first paragraph of
-3-
<PAGE>
Section 2 is applicable and Exchange Securities held by Participating
Broker-Dealers (as defined), and the Issuers shall have no further obligation to
register Transfer Restricted Securities (other than in respect of Securities as
to which clauses (i) through (v) of the first paragraph of Section 2 applies)
pursuant to Section 2.
If, prior to the consummation of the Registered Exchange Offer, any
Holder holds any Securities acquired by it that have, or that are reasonably
likely to be determined to have, the status of an unsold allotment in an initial
distribution, or any Holder is not entitled to participate in the Registered
Exchange Offer, the Issuers shall, upon the request of any such Holder,
simultaneously with the delivery of the Exchange Securities in the Registered
Exchange Offer, issue and deliver to any such Holder, in exchange for the
Securities held by such Holder (the "PRIVATE EXCHANGE"), a like aggregate
principal amount of debt securities of the Company (the "PRIVATE EXCHANGE
NOTES") and like guarantees of the Guarantors on such Private Exchange Notes
(such guarantees, together with the Exchange Notes, the "PRIVATE EXCHANGE
SECURITIES") that are identical in all material respects to the Exchange
Securities, except for the transfer restrictions relating to such Private
Exchange Securities. The Private Exchange Securities will be issued under the
same indenture as the Exchange Securities, and the Issuers shall use their
reasonable best efforts to cause the Private Exchange Securities to bear the
same CUSIP number as the Exchange Securities.
In connection with the Registered Exchange Offer, the Issuers shall:
(a) mail to each Holder a copy of the prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
(b) keep the Registered Exchange Offer open for not less than 30 days
(or longer, if required by applicable law) after the date on which notice
of the Registered Exchange Offer is mailed to the Holders;
(c) utilize the services of a depositary for the Registered Exchange
Offer with an address in the Borough of Manhattan, The City of New York;
(d) permit Holders to withdraw tendered Securities at any time prior
to the close of business, New York City time, on the last business day on
which the Registered Exchange Offer shall remain open; and
(e) otherwise comply in all respects with all laws that are
applicable to the Registered Exchange Offer.
As soon as practicable after the close of the Registered Exchange
Offer and any Private Exchange, as the case may be, the Issuers shall:
(a) accept for exchange all Securities tendered and not validly
withdrawn pursuant to the Registered Exchange Offer and the Private
Exchange;
(b) deliver to the Trustee for cancellation all Securities so
accepted for exchange; and
-4-
<PAGE>
(c) cause the Trustee or the Exchange Securities Trustee, as the case
may be, promptly to authenticate and deliver to each Holder, Exchange
Securities or Private Exchange Securities, as the case may be, equal in
principal amount to the Securities of such Holder so accepted for exchange.
The Issuers shall use their reasonable best efforts to keep the
Exchange Offer Registration Statement effective and to amend and supplement the
prospectus contained therein in order to permit such prospectus to be used by
all persons subject to the prospectus delivery requirements of the Securities
Act for such period of time as such persons must comply with such requirements
in order to resell the Exchange Securities; PROVIDED that (i) in the case where
such prospectus and any amendment or supplement thereto must be delivered by an
Exchanging Dealer, such period shall be the lesser of 90 days and the date on
which all Exchanging Dealers have sold all Exchange Securities held by them and
(ii) the Issuers shall make such prospectus and any amendment or supplement
thereto available to any broker-dealer for use in connection with any resale of
any Exchange Securities for a period of not less than 90 days after the
consummation of the Registered Exchange Offer.
The Indenture or the Exchange Securities Indenture, as the case may
be, shall provide that the Securities, the Exchange Securities and the Private
Exchange Securities shall vote and consent together on all matters as one class
and that none of the Securities, the Exchange Securities or the Private Exchange
Securities will have the right to vote or consent as a separate class on any
matter.
Interest on each Exchange Security and Private Exchange Security
issued pursuant to the Registered Exchange Offer and in the Private Exchange
will accrue from the last interest payment date on which interest was paid on
the Securities surrendered in exchange therefor or, if no interest has been paid
on the Securities, from the Issue Date.
Each Holder participating in the Registered Exchange Offer shall be
required to represent to the Issuers that at the time of the consummation of the
Registered Exchange Offer (i) any Exchange Securities received by such Holder
will be acquired in the ordinary course of business, (ii) such Holder will have
no arrangements or understanding with any person to participate in the
distribution of the Securities or the Exchange Securities within the meaning of
the Securities Act, (iii) such Holder is not an affiliate of the Company or any
Guarantor or, if it is such an affiliate, such Holder will comply with the
registration and prospectus delivery requirements of the Securities Act to the
extent applicable and (iv) if such Holder is an Exchanging Dealer, such person
shall comply with the prospectus delivery requirements of the Securities Act to
the extent applicable.
Notwithstanding any other provisions hereof, the Issuers will ensure
that (i) any Exchange Offer Registration Statement and any amendment thereto and
any prospectus forming part thereof and any supplement thereto complies in all
material respects with the Securities Act and the rules and regulations of the
Commission thereunder, (ii) any Exchange Offer Registration Statement and any
amendment thereto does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading and
(iii) any prospectus forming part of any Exchange Offer Registration Statement,
and any supplement to such prospectus, does not, as of the consummation of the
Registered Exchange Offer, include an untrue statement of a material fact or
-5-
<PAGE>
omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
2. SHELF REGISTRATION. If (i) because of any change in law or
applicable interpretations thereof by the Commission's staff the Issuers are not
permitted to effect the Registered Exchange Offer as contemplated by Section 1,
(ii) any Securities validly tendered pursuant to the Registered Exchange Offer
are not exchanged for Exchange Securities within 200 days after the Issue Date,
(iii) any Initial Purchaser so requests in writing within 90 days after
consummation of the Registered Exchange Offer with respect to Securities or
Private Exchange Securities not eligible to be exchanged for Exchange Securities
in the Registered Exchange Offer and held by it following the consummation of
the Registered Exchange Offer, (iv) any applicable law or interpretations do not
permit any Holder to participate in the Registered Exchange Offer, (v) any
Holder that participates in the Registered Exchange Offer does not receive
freely transferable Exchange Securities in exchange for tendered Securities (the
obligation to comply with a prospectus delivery requirement being understood not
to constitute a restriction on transferability), or (vi) the Company so elects,
then the following provisions shall apply:
(a) The Issuers shall use their reasonable best efforts to file as
promptly as practicable (but in no event more than 60 days after so required or
requested pursuant to this Section 2) with the Commission, and thereafter shall
use their reasonable best efforts to cause to be declared effective as promptly
as practicable after the filing thereof, a shelf registration statement on an
appropriate form under the Securities Act relating to the offer and sale of the
Transfer Restricted Securities (as defined below) by the Holders thereof from
time to time in accordance with the methods of distribution set forth in such
registration statement (hereafter, a "SHELF REGISTRATION STATEMENT" and,
together with any Exchange Offer Registration Statement, each a "REGISTRATION
STATEMENT").
(b) The Issuers shall use their reasonable best efforts to keep the
Shelf Registration Statement continuously effective in order to permit the
prospectus forming part thereof to be used by Holders of Transfer Restricted
Securities for a period ending on the earlier of (i) two years from the Issue
Date or such shorter period that will terminate when all the Transfer Restricted
Securities covered by the Shelf Registration Statement have been sold pursuant
thereto and (ii) the date on which the Securities become eligible for resale
without volume restrictions pursuant to Rule 144 under the Securities Act (in
any such case, such period being called the "SHELF REGISTRATION PERIOD"). The
Company shall be deemed not to have used its reasonable best efforts to keep the
Shelf Registration Statement effective during the requisite period if it
voluntarily takes any action that would result in Holders of Transfer Restricted
Securities covered thereby not being able to offer and sell such Transfer
Restricted Securities during that period, unless such action is required by
applicable law; PROVIDED, HOWEVER, that the foregoing shall not apply to actions
taken by the Issuers in good faith and for valid business reasons (not including
avoidance of their obligations hereunder), including without limitation, the
acquisition or divestiture of assets, so long as the Issuers within 90 days
thereafter comply with the requirements of Section 4(j). Any such period during
which the Issuers fail to keep the Shelf Registration Statement effective and
usable for offers and sales of Securities, Exchange Securities and Private
Exchange Securities is referred to as a "Suspension Period." A Suspension
Period shall commence on and include the date that the Issuers give notice that
the Shelf Registration Statement is no longer effective or the prospectus
included therein is no longer usable for offers and sales of Securities,
Exchange Securities and Private Exchange Securities and shall end on the date
when each Holder of Securities, Exchange Securities and
-6-
<PAGE>
Private Exchange Securities covered by such Shelf Registration Statement either
receives copies of the supplemented or amended prospectus contemplated by
Section 4(j) or is advised in writing by the Issuers that the use of the
prospectus may be resumed. If one or more Suspension Periods occur, the
two-year period referenced above shall be extended by the aggregate of the
number of days included in each such Suspension Period.
(c) Notwithstanding any other provisions hereof, the Issuers will
ensure that (i) any Shelf Registration Statement and any amendment thereto and
any prospectus forming part thereof and any supplement thereto complies in all
material respects with the Securities Act and the rules and regulations of the
Commission thereunder, (ii) any Shelf Registration Statement and any amendment
thereto (in either case, other than with respect to information included therein
in reliance upon or in conformity with written information furnished to the
Issuers by or on behalf of any Holder specifically for use therein (the
"HOLDERS' INFORMATION")) does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading and
(iii) any prospectus forming part of any Shelf Registration Statement, and any
supplement to such prospectus (in either case, other than with respect to
Holders' Information), does not include an untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
3. ADDITIONAL AMOUNTS. (a) The parties hereto agree that the
Holders of Transfer Restricted Securities will suffer damages if the Issuers
fail to fulfill their obligations under Section 1 or Section 2, as applicable,
and that it would not be feasible to ascertain the extent of such damages.
Accordingly, if (i) the applicable Registration Statement is not filed with the
Commission on or prior to 60 days after the Issue Date, (ii) the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case may be,
is not declared effective within 150 days after the Issue Date (or in the case
of a Shelf Registration Statement required to be filed in response to a change
in law or the applicable interpretations of the Commission's staff, if later,
within 45 days after publication of the change in law or interpretation),
(iii) the Registered Exchange Offer is not consummated on or prior to 200 days
after the Issue Date, or (iv) the Shelf Registration Statement is filed and
declared effective within 150 days after the Issue Date (or in the case of a
Shelf Registration Statement required to be filed in response to a change in law
or the applicable interpretations of the Commission's staff, if later, within
45 days after publication of the change in law or interpretation) but shall
thereafter cease to be effective (at any time that the Company is obligated to
maintain the effectiveness thereof) without being succeeded within 90 days by an
additional Registration Statement filed and declared effective (each such event
referred to in clauses (i) through (iv), a "REGISTRATION DEFAULT"), the Company
will be obligated to pay liquidated damages ("ADDITIONAL AMOUNTS") to each
Holder of Transfer Restricted Securities, during the period of one or more such
Registration Defaults, in an amount equal to $ 0.192 per week per $1,000
principal amount of Transfer Restricted Securities held by such Holder until
(i) the applicable Registration Statement is filed, (ii) the Exchange Offer
Registration Statement is declared effective, (iii) the Registered Exchange
Offer is consummated, or (iv) the Shelf Registration Statement is declared
effective or the Shelf Registration Statement again becomes effective, as the
case may be. Following the cure of all Registration Defaults, the accrual of
Additional Amounts will cease. As used herein, the term "TRANSFER RESTRICTED
SECURITIES" means (i) each Security until the date on which such Security has
been exchanged for a freely transferable Exchange Security in the Registered
Exchange Offer, (ii) each Security or Private Exchange Security until the date
on which it has been effectively registered under the Securities Act and
disposed of in accordance with the
-7-
<PAGE>
Shelf Registration Statement or (iii) each Security or Private Exchange Security
until the date on which it is distributed to the public pursuant to Rule 144
under the Securities Act or is saleable pursuant to Rule 144(k) under the
Securities Act. Notwithstanding anything to the contrary in this Section 3(a),
the Company shall not be required to pay Additional Amounts to a Holder of
Transfer Restricted Securities if such Holder failed to comply with its
obligations to make the representations set forth in the second to last
paragraph of Section 1 or failed to provide the information required to be
provided by it, if any, pursuant to Section 4(n).
(b) The Company shall notify the Trustee and the Paying Agent under
the Indenture immediately upon the happening of each and every Registration
Default. The Company shall pay the Additional Amounts due on the Transfer
Restricted Securities by depositing with the Paying Agent (which may not be the
Company nor any Guarantor for these purposes), in trust, for the benefit of the
Holders thereof, prior to 10:00 a.m., New York City time, on the next interest
payment date specified by the Indenture and the Securities, sums sufficient to
pay the Additional Amounts then due. The Additional Amounts due shall be
payable on each interest payment date specified by the Indenture and the
Securities to the record holder entitled to receive the interest payment to be
made on such date. Each obligation to pay Additional Amounts shall be deemed to
accrue from and including the date of the applicable Registration Default.
(c) The parties hereto agree that the Additional Amounts provided for
in this Section 3 constitute a reasonable estimate of and are intended to
constitute the sole damages that will be suffered by Holders of Transfer
Restricted Securities by reason of the failure of (i) the Shelf Registration
Statement or the Exchange Offer Registration Statement to be filed, (ii) the
Shelf Registration Statement to be declared and remain effective or (iii) the
Exchange Offer Registration Statement to be declared effective and the
Registered Exchange Offer to be consummated, in each case to the extent required
by this Agreement.
4. REGISTRATION PROCEDURES. In connection with any Registration
Statement, the following provisions shall apply:
(a) The Company shall (i) furnish to each Initial Purchaser, prior to
the filing thereof with the Commission, a copy of the Registration Statement and
each amendment thereof and each supplement, if any, to the prospectus included
therein and shall use its reasonable best efforts to reflect in each such
document, when so filed with the Commission, such comments as any Initial
Purchaser may reasonably propose; (ii) include the information set forth in
Annex A hereto on the cover, in Annex B hereto in the "Exchange Offer
Procedures" section and the "Purpose of the Exchange Offer" section and in
Annex C hereto in the "Plan of Distribution" section of the prospectus forming a
part of the Exchange Offer Registration Statement, and include the information
set forth in Annex D hereto in the Letter of Transmittal delivered pursuant to
the Registered Exchange Offer; and (iii) if requested by any Initial Purchaser,
include the information required by Items 507 or 508 of Regulation S-K, as
applicable, in the prospectus forming a part of the Exchange Offer Registration
Statement.
(b) The Company shall advise each Initial Purchaser, each Exchanging
Dealer and the Holders (if applicable) and, if requested by any such person,
confirm such advice in writing (which advice pursuant to clauses (ii)-(v) shall
be accompanied by an instruction to suspend the use of the prospectus until the
requisite changes have been made):
-8-
<PAGE>
(i) when any Registration Statement and any amendment thereto
has been filed with the Commission and when such Registration Statement or
any post-effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments or
supplements to any Registration Statement or the prospectus included
therein or for additional information;
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of any Registration Statement or the
initiation of any proceedings for that purpose;
(iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Securities, the
Exchange Securities or the Private Exchange Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose; and
(v) of the happening of any event that requires the making of
any changes in any Registration Statement or the prospectus included
therein in order that the statements therein are not misleading and do not
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading.
(c) The Company will make every reasonable effort to obtain the
withdrawal at the earliest possible time of any order suspending the
effectiveness of any Registration Statement.
(d) The Company will furnish to each Holder of Transfer Restricted
Securities included within the coverage of any Shelf Registration Statement,
without charge, at least one conformed copy of such Shelf Registration Statement
and any post-effective amendment thereto, including financial statements and
schedules and, if any such Holder so requests in writing, all exhibits thereto
(including those, if any, incorporated by reference).
(e) The Company will, during the Shelf Registration Period, promptly
deliver to each Holder of Transfer Restricted Securities included within the
coverage of any Shelf Registration Statement, without charge, as many copies of
the prospectus (including each preliminary prospectus) included in such Shelf
Registration Statement and any amendment or supplement thereto as such Holder
may reasonably request; and the Issuers consent to the use of such prospectus or
any amendment or supplement thereto by each of the selling Holders of Transfer
Restricted Securities in connection with the offer and sale of the Transfer
Restricted Securities covered by such prospectus or any amendment or supplement
thereto.
(f) The Company will furnish to each Initial Purchaser and each
Exchanging Dealer, and to any other Holder who so requests, without charge, at
least one conformed copy of the Exchange Offer Registration Statement and any
post-effective amendment thereto, including financial statements and schedules
and, if any Initial Purchaser or Exchanging Dealer or any such Holder so
requests in writing, all exhibits thereto (including those, if any, incorporated
by reference).
(g) The Company will, during the Exchange Offer Registration
Period or the Shelf Registration Period, as applicable, promptly deliver to
each Initial Purchaser, each
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<PAGE>
Exchanging Dealer and such other Holders that are required to deliver a
prospectus following the Registered Exchange Offer, without charge, as many
copies of the final prospectus included in the Exchange Offer Registration
Statement or the Shelf Registration Statement and any amendment or supplement
thereto as such Initial Purchaser, Exchanging Dealer or other Holders may
reasonably request; and the Issuers consent to the use of such prospectus or
any amendment or supplement thereto by any such Initial Purchaser, Exchanging
Dealer or other Holders, as applicable, as aforesaid.
(h) Prior to the effective date of any Registration Statement, the
Issuers will use their reasonable best efforts to register or qualify, or
cooperate with the Holders of Securities, Exchange Securities or Private
Exchange Securities included therein and their respective counsel in connection
with the registration or qualification of, such Securities, Exchange Securities
or Private Exchange Securities for offer and sale under the securities or blue
sky laws of such jurisdictions as any such Holder reasonably requests in writing
and do any and all other acts or things necessary or advisable to enable the
offer and sale in such jurisdictions of the Securities, Exchange Securities or
Private Exchange Securities covered by such Registration Statement; PROVIDED
that in no event shall any of the Issuers be obligated to qualify as a foreign
corporation in any jurisdiction in which it is not then so qualified or to take
any action which would subject it to general consent to service of process in
any action other than one arising out of the issuance of the Exchange Securities
or Private Exchange Securities in any such jurisdiction where it is not then so
subject, or to subject itself to the payment of taxes in excess of a nominal
amount in any jurisdiction where it is not then so subject.
(i) The Issuers will cooperate with the Holders of Securities,
Exchange Securities or Private Exchange Securities to facilitate the timely
preparation and delivery of certificates representing Securities, Exchange
Securities or Private Exchange Securities to be sold pursuant to any
Registration Statement free of any restrictive legends and in such denominations
and registered in such names as the Holders thereof may request in writing prior
to sales of Securities, Exchange Securities or Private Exchange Securities
pursuant to such Registration Statement.
(j) If (i) any event contemplated by Section 4(b)(ii) through (v)
occurs during the period for which the Issuers are required to maintain an
effective Registration Statement, or (ii) a Suspension Period remains in effect
more than 90 days after the occurrence thereof, the Issuers will promptly
prepare and file with the Commission a post-effective amendment to the
Registration Statement or a supplement to the related prospectus or file any
other required document so that, as thereafter delivered to purchasers of the
Securities, Exchange Securities or Private Exchange Securities from a Holder,
such prospectus will not include an untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
(k) Not later than the effective date of the applicable Registration
Statement, the Issuers will provide a CUSIP number for the Securities, the
Exchange Securities and the Private Exchange Securities, as the case may be, and
provide the applicable trustee with certificates for the Securities, the
Exchange Securities or the Private Exchange Securities, as the case may be, in a
form eligible for deposit with The Depository Trust Company.
(l) The Issuers will comply with all applicable rules and regulations
of the Commission and will make generally available to their security holders as
soon as practicable after
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<PAGE>
the effective date of the applicable Registration Statement an earning statement
satisfying the provisions of Section 11(a) of the Securities Act; PROVIDED that
in no event shall such earning statement be delivered later than 45 days after
the end of a 12-month period (or 90 days, if such period is a fiscal year)
beginning with the first month of the Company's first fiscal quarter commencing
after the effective date of the applicable Registration Statement, which
statement shall cover such 12-month period.
(m) The Issuers will cause the Indenture or the Exchange Securities
Indenture, as the case may be, to be qualified under the Trust Indenture Act as
required by applicable law in a timely manner.
(n) The Company may require each Holder of Transfer Restricted
Securities to be registered pursuant to any Shelf Registration Statement to
furnish to the Company such information concerning the Holder and the
distribution of such Transfer Restricted Securities as the Company may from time
to time reasonably require for inclusion in such Shelf Registration Statement,
and the Issuers may exclude from such registration the Transfer Restricted
Securities of any Holder that fails to furnish such information within a
reasonable time after receiving such request.
(o) In the case of a Shelf Registration Statement, each Holder of
Transfer Restricted Securities to be registered pursuant thereto agrees by
acquisition of such Transfer Restricted Securities that, upon receipt of any
notice from the Company (i) of a Suspension Period under Section 2(b) or (ii)
pursuant to Section 4(b)(ii) through (v), such Holder will discontinue
disposition of such Transfer Restricted Securities until such Holder's receipt
of (x) notice that the Suspension Period has ended or (y) copies of the
supplemental or amended prospectus contemplated by Section 4(j), as the case may
be or until advised in writing (the "ADVICE") by the Company that the use of the
applicable prospectus may be resumed. If the Company shall give any notice
under Section 4(b)(ii) through (v) during the period that the Company is
required to maintain an effective Registration Statement (the "EFFECTIVENESS
PERIOD"), such Effectiveness Period shall be extended by the number of days
during such period from and including the date of the giving of such notice to
and including the date when each seller of Transfer Restricted Securities
covered by such Registration Statement shall have received (x) the copies of the
supplemental or amended prospectus contemplated by Section 4(j) (if an amended
or supplemental prospectus is required) or (y) the Advice (if no amended or
supplemental prospectus is required).
(p) In the case of a Shelf Registration Statement, the Issuers shall
enter into such customary agreements (including, if requested, an underwriting
agreement in customary form) and take all such other action, if any, as Holders
of a majority in aggregate principal amount of the Securities, Exchange
Securities and Private Exchange Securities being sold or the managing
underwriters (if any) shall reasonably request in order to facilitate any
disposition of Securities, Exchange Securities or Private Exchange Securities
pursuant to such Shelf Registration Statement.
(q) In the case of a Shelf Registration Statement, the Company shall
(i) make reasonably available for inspection by a representative of, and Special
Counsel (as defined below) acting for, Holders of a majority in aggregate
principal amount of the Securities, Exchange Securities and Private Exchange
Securities being sold and any underwriter participating in any disposition of
Securities, Exchange Securities or Private Exchange Securities pursuant to such
Shelf Registration Statement, all relevant financial and other records,
pertinent corporate documents and
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<PAGE>
properties of United, the Company and its subsidiaries and (ii) use its
reasonable best efforts to have its officers, directors, accountants and counsel
supply all relevant information reasonably requested by such representative,
Special Counsel or any such underwriter (an "INSPECTOR") in connection with such
Shelf Registration Statement.
(r) In the case of a Shelf Registration Statement, each of the
Issuers shall, if requested by Holders of a majority in aggregate principal
amount of the Securities, Exchange Securities and Private Exchange Securities
being sold, their Special Counsel or the managing underwriters (if any) in
connection with such Shelf Registration Statement, use its reasonable best
efforts to cause (i) its counsel to deliver an opinion relating to the Shelf
Registration Statement and the Securities, Exchange Securities or Private
Exchange Securities, as applicable, in customary form, (ii) its officers to
execute and deliver all customary documents and certificates requested by
Holders of a majority in aggregate principal amount of the Securities, Exchange
Securities and Private Exchange Securities being sold, their Special Counsel or
the managing underwriters (if any) and (iii) its independent public accountants
to provide a comfort letter or letters in customary form, subject to receipt of
appropriate documentation as contemplated, and only if permitted, by Statement
of Auditing Standards No. 72.
5. REGISTRATION EXPENSES. The Issuers will bear all expenses
incurred in connection with the performance of their obligations under
Sections 1, 2, 3 and 4 and the Issuers will reimburse the Initial Purchasers and
the Holders for the reasonable fees and disbursements of one firm of attorneys
chosen by the Holders of a majority in aggregate principal amount of the
Securities, the Exchange Securities and the Private Exchange Securities to be
sold pursuant to each Registration Statement (the "SPECIAL COUNSEL") acting for
the Initial Purchasers or Holders in connection therewith.
6. INDEMNIFICATION. (a) In the event of a Shelf Registration
Statement or in connection with any prospectus delivery pursuant to an Exchange
Offer Registration Statement by an Initial Purchaser or Exchanging Dealer, as
applicable, each of the Issuers, jointly and severally, shall indemnify and hold
harmless each Holder (including, without limitation, any such Initial Purchaser
or Exchanging Dealer), its affiliates, their respective officers, directors,
employees, representatives and agents, and each person, if any, who controls
such Holder within the meaning of the Securities Act or the Exchange Act
(collectively referred to for purposes of this Section 6 and Section 7 as a
Holder) from and against any loss, claim, damage or liability, joint or several,
or any action in respect thereof (including, without limitation, any loss,
claim, damage, liability or action relating to purchases and sales of
Securities, Exchange Securities or Private Exchange Securities), to which that
Holder may become subject, whether commenced or threatened, under the Securities
Act, the Exchange Act, any other federal or state statutory law or regulation,
at common law or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained in any such Registration Statement
or any prospectus forming part thereof or in any amendment or supplement thereto
or (ii) the omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, and shall reimburse each Holder promptly upon demand for any legal
or other expenses reasonably incurred by that Holder in connection with
investigating or defending or preparing to defend against or appearing as a
third party witness in connection with any such loss, claim, damage, liability
or action as such expenses are incurred; PROVIDED, HOWEVER, that the Issuers
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of, or is based upon, an untrue statement
or alleged untrue statement in or omission or alleged omission from any of such
documents in reliance upon and in conformity with any Holders' Information; and
PROVIDED, FURTHER, that with respect to any such untrue statement in or omission
from any related preliminary prospectus, the indemnity agreement contained in
this Section 6(a) shall not inure to the benefit of any Holder from whom the
person asserting any such loss, claim, damage, liability or action received
Securities, Exchange Securities or Private Exchange Securities to the extent
that such loss, claim, damage,
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<PAGE>
liability or action of or with respect to such Holder results from the fact that
both (A) a copy of the final prospectus was not sent or given to such person at
or prior to the written confirmation of the sale of such Securities, Exchange
Securities or Private Exchange Securities to such person and (B) the untrue
statement in or omission from the related preliminary prospectus was corrected
in the final prospectus unless, in either case, such failure to deliver the
final prospectus was a result of non-compliance by the Company with Section 4(e)
or 4(g).
(b) In the event of a Shelf Registration Statement, each Holder shall
indemnify and hold harmless each of the Issuers, their respective affiliates,
their respective officers, directors, employees, representatives and agents, and
each person, if any, who controls each Issuer within the meaning of the
Securities Act or the Exchange Act (collectively referred to for purposes of
this Section 6(b) and Section 7 as the Issuers), from and against any loss,
claim, damage or liability, joint or several, or any action in respect thereof,
to which the Issuers may become subject, whether commenced or threatened, under
the Securities Act, the Exchange Act, any other federal or state statutory law
or regulation, at common law or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained in any such Registration
Statement or any prospectus forming part thereof or in any amendment or
supplement thereto or (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, but in each case only to the extent that the untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with any Holders' Information furnished to
the Issuers by such Holder, and shall reimburse the Issuers promptly upon demand
for any legal or other expenses reasonably incurred by the Issuers in connection
with investigating or defending or preparing to defend against or appearing as a
third party witness in connection with any such loss, claim, damage, liability
or action as such expenses are incurred; PROVIDED, HOWEVER, that no such Holder
shall be liable for any indemnity claims hereunder in excess of the amount of
net proceeds received by such Holder from the sale of Securities, Exchange
Securities or Private Exchange Securities pursuant to such Shelf Registration
Statement.
(c) Promptly after receipt by an indemnified party under this Section
6 of notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to Section 6(a) or 6(b), notify the indemnifying
party in writing of the claim or the commencement of that action; PROVIDED,
HOWEVER, that the failure to notify the indemnifying party shall not relieve it
from any liability which it may have under this Section 6 except to the extent
that it has been materially prejudiced (through the forfeiture of substantive
rights or defenses) by such failure; and PROVIDED, FURTHER, that the failure to
notify the indemnifying party shall not relieve it from any liability which it
may have to an indemnified party otherwise than under this Section 6. If any
such claim or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it wishes, jointly with any other
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<PAGE>
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 6 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than the reasonable costs of investigation; PROVIDED, HOWEVER,
that an indemnified party shall have the right to employ its own counsel in any
such action, but the fees, expenses and other charges of such counsel for the
indemnified party will be at the expense of such indemnified party unless
(1) the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based upon advice of counsel to the indemnified party) that there may
be legal defenses available to it or other indemnified parties that are
different from or in addition to those available to the indemnifying party,
(3) a conflict or potential conflict exists (based upon advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (4) the indemnifying party
has not in fact employed counsel reasonably satisfactory to the indemnified
party to assume the defense of such action within a reasonable time after
receiving notice of the commencement of the action, in each of which cases the
reasonable fees, disbursements and other charges of counsel will be at the
expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm of attorneys (in
addition to any local counsel) at any one time for all such indemnified party or
parties. Each indemnified party, as a condition of the indemnity agreements
contained in Sections 6(a) and 6(b), shall use all reasonable efforts to
cooperate with the indemnifying party in the defense of any such action or
claim. No indemnifying party shall be liable for any settlement of any such
action effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent or if there be a
final judgment for the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment. No indemnifying
party shall, without the prior written consent of the indemnified party (which
consent shall not be unreasonably withheld), effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release in
form and substance reasonably satisfactory to such indemnified party of such
indemnified party from all liability on claims that are the subject matter of
such proceeding.
7. CONTRIBUTION. If the indemnification provided for in
Section 6 is unavailable or insufficient to hold harmless an indemnified party
under Section 6(a) or 6(b), then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, (i) in such proportion as shall be appropriate to
reflect the relative benefits received by the Issuers from the offering and sale
of the Securities, on the one hand, and a Holder with respect to the sale by
such Holder of Securities, Exchange Securities or Private Exchange Securities,
on the other, or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Issuers on the one hand and such Holder on the other with respect
to the statements or omissions that resulted in such loss, claim, damage or
liability, or action in respect thereof, as well as any other relevant equitable
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<PAGE>
considerations. The relative benefits received by the Issuers on the one hand
and a Holder on the other with respect to such offering and such sale shall be
deemed to be in the same proportion as the total net proceeds from the offering
of the Securities (before deducting expenses) received by or on behalf of the
Issuers as set forth in the table on the cover of the Offering Memorandum, on
the one hand, bear to the total proceeds received by such Holder with respect to
its sale of Securities, Exchange Securities or Private Exchange Securities, on
the other. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to the Issuers or
information supplied by the Issuers on the one hand or to any Holders'
Information supplied by such Holder on the other, the intent of the parties and
their relative knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The parties hereto agree that it
would not be just and equitable if contributions pursuant to this Section 7 were
to be determined by PRO RATA allocation or by any other method of allocation
that does not take into account the equitable considerations referred to herein.
The amount paid or payable by an indemnified party as a result of the loss,
claim, damage or liability, or action in respect thereof, referred to above in
this Section 7 shall be deemed to include, for purposes of this Section 7, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending or preparing to defend any such
action or claim. Notwithstanding the provisions of this Section 7, an
indemnifying party that is a Holder of Securities, Exchange Securities or
Private Exchange Securities shall not be required to contribute any amount in
excess of the amount by which the total price at which the Securities, Exchange
Securities or Private Exchange Securities sold by such indemnifying party to any
purchaser exceeds the amount of any damages which such indemnifying party has
otherwise paid or become liable to pay by reason of any untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
8. RULES 144 AND 144A. The Issuers shall use their reasonable
best efforts to file the reports required to be filed by them under the
Securities Act and the Exchange Act in a timely manner and, if at any time the
Issuers are not required to file such reports, each will, upon the written
request of any Holder of Transfer Restricted Securities, make publicly available
other information so long as necessary to permit sales of such Holder's Transfer
Restricted Securities pursuant to Rules 144 and 144A. Each of the Issuers
covenants that it will take such further action as any Holder of Transfer
Restricted Securities may reasonably request, all to the extent required from
time to time to enable such Holder to sell Transfer Restricted Securities
without registration under the Securities Act within the limitation of the
exemptions provided by Rules 144 and 144A (including, without limitation, the
requirements of Rule 144A(d)(4)). Upon the written request of any Holder of
Transfer Restricted Securities, the Issuers shall deliver to such Holder a
written statement as to whether they have complied with such requirements.
Notwithstanding the foregoing, nothing in this Section 8 shall be deemed to
require the Issuers to register any of their securities pursuant to the Exchange
Act.
9. UNDERWRITTEN REGISTRATIONS. If any of the Transfer
Restricted Securities covered by any Shelf Registration Statement are to be sold
in an underwritten offering, the investment banker or investment bankers and
manager or managers that will administer the offering will be selected by the
Holders of a majority in aggregate principal amount of such Transfer Restricted
Securities included in such offering, subject to the consent of the Company
(which shall
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<PAGE>
not be unreasonably withheld or delayed), and such Holders shall be responsible
for all underwriting commissions and discounts in connection therewith.
No person may participate in any underwritten registration hereunder
unless such person (i) agrees to sell such person's Transfer Restricted
Securities on the basis reasonably provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and
(ii) completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.
10. MISCELLANEOUS. (a) AMENDMENTS AND WAIVERS. The provisions
of this Agreement may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless the
Issuers have obtained the written consent of Holders of a majority in aggregate
principal amount of the Securities, the Exchange Securities and the Private
Exchange Securities, taken as a single class. Notwithstanding the foregoing, a
waiver or consent to depart from the provisions hereof with respect to a matter
that relates exclusively to the rights of Holders whose Securities, Exchange
Securities or Private Exchange Securities are being sold pursuant to a
Registration Statement and that does not directly or indirectly affect the
rights of other Holders may be given by Holders of a majority in aggregate
principal amount of the Securities, the Exchange Securities and the Private
Exchange Securities being sold by such Holders pursuant to such Registration
Statement.
(b) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail,
telecopier or air courier guaranteeing next-day delivery:
(1) if to a Holder, at the most current address given by such Holder
to the Company in accordance with the provisions of this Section 10(b),
which address initially is, with respect to each Holder, the address of
such Holder maintained by the Registrar under the Indenture, with a copy in
like manner to Chase Securities Inc. and Bear, Stearns & Co. Inc.;
(2) if to an Initial Purchaser, initially at its address set forth in
the Purchase Agreement; and
(3) if to the Company or any Guarantor, initially at the address of
the Company set forth in the Purchase Agreement.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; one business day after
being delivered to a next-day air courier; five business days after being
deposited in the mail; and when receipt is acknowledged by the recipient's
telecopier machine, if sent by telecopier.
(c) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
Company, each of the Guarantors and their respective successors and assigns.
(d) COUNTERPARTS. This Agreement may be executed in any number of
counterparts (which may be delivered in original form or by telecopier) and by
the parties hereto in
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<PAGE>
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
(e) DEFINITION OF TERMS. For purposes of this Agreement, (a) the
term "business day" means any day on which The New York Stock Exchange, Inc. is
open for trading, (b) the term "subsidiary" has the meaning set forth in
Rule 405 under the Securities Act and (c) except where otherwise expressly
provided, the term "affiliate" has the meaning set forth in Rule 405 under the
Securities Act.
(f) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.
(h) REMEDIES. In the event of a breach by the Issuers or by any
Holder of any of their obligations under this Agreement, each Holder, or the
Issuers, as the case may be, in addition to being entitled to exercise all
rights granted by law, including recovery of damages (other than the recovery of
damages for a breach by the Issuers of obligations under Sections 1 or 2 for
which Additional Amounts have been paid pursuant to Section 3), will be entitled
to specific performance of its rights under this Agreement. The Issuers and
each Holder agree that monetary damages would not be adequate compensation for
any loss incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agree that, in the event of any action for specific
performance in respect of such breach, it shall waive the defense that a remedy
at law would be adequate.
(i) NO INCONSISTENT AGREEMENTS. Each of the Company and the
Guarantors, jointly and severally, represents, warrants and agrees that (i) it
has not entered into, shall not, on or after the date of this Agreement, enter
into any agreement that is inconsistent with the rights granted to the Holders
in this Agreement or otherwise conflicts with the provisions hereof, (ii) it has
not previously entered into any agreement which remains in effect granting any
registration rights with respect to any of its debt securities to any person and
(iii) without limiting the generality of the foregoing, without the written
consent of the Holders of a majority in aggregate principal amount of the then
outstanding Transfer Restricted Securities, it shall not grant to any person the
right to request the Company or any Guarantor to register any debt securities of
the Company or any Guarantor under the Securities Act unless the rights so
granted are not in conflict or inconsistent with the provisions of this
Agreement.
(j) NO PIGGYBACK ON REGISTRATIONS. None of the Issuers or any of
their security holders (other than the Holders of Transfer Restricted Securities
in such capacity) shall have the right to include any securities of any such
Issuer in any Shelf Registration or Registered Exchange Offer other than
Transfer Restricted Securities.
(k) SEVERABILITY. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall
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<PAGE>
use their reasonable best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
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<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
among the Company, the Guarantors and the Initial Purchasers.
Very truly yours,
UNITED STATIONERS SUPPLY CO.
By
------------------------------
Name:
Title:
UNITED STATIONERS INC.
By
------------------------------
Name:
Title:
LAGASSE BROS., INC.
By
------------------------------
Name:
Title:
AZERTY INCORPORATED
By
------------------------------
Name:
Title:
POSITIVE ID WHOLESALE INC.
By
------------------------------
Name:
Title:
AP SUPPORT SERVICES INCORPORATED
By
------------------------------
Name:
Title:
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<PAGE>
Accepted:
CHASE SECURITIES INC.
By
----------------------------
Authorized Signatory
BEAR, STEARNS & CO. INC.
By
----------------------------
Authorized Signatory
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<PAGE>
- ------------------------------------------------------------------------------
UNITED STATIONERS SUPPLY CO.,
as Issuer
LAGASSE BROS., INC.,
AZERTY INCORPORATED,
POSITIVE ID WHOLESALE INC.
AND
AP SUPPORT SERVICES INCORPORATED
as Guarantors
AND
THE BANK OF NEW YORK,
a New York banking corporation,
as Trustee
--------------------------------
SECOND SUPPLEMENTAL INDENTURE
Dated as of April 3, 1998
to
Indenture
Dated as of May 3, 1995
--------------------------------
$100,000,000
12 3/4% Senior Subordinated Notes
due 2005
- ------------------------------------------------------------------------------
<PAGE>
SECOND SUPPLEMENTAL INDENTURE dated as of April 3, 1998, among
UNITED STATIONERS SUPPLY CO., an Illinois corporation (the "COMPANY");
LAGASSE BROS., INC., a Louisiana corporation, AZERTY INCORPORATED, a Delaware
corporation, POSITIVE ID WHOLESALE INC., a Delaware corporation, and AP
SUPPORT SERVICES INCORPORATED, a Delaware corporation (collectively, the
"SUBSIDIARIES"); and THE BANK OF NEW YORK, a New York banking corporation, as
Trustee (the "TRUSTEE").
WHEREAS, the Company and United Stationers Inc., a Delaware
corporation, have heretofore executed and delivered to the Trustee an
Indenture dated as of May 3, 1995, as amended by that certain First
Supplemental Indenture dated as of July 28, 1995 (as amended, the
"INDENTURE"), providing for the issuance of up to $150,000,000 aggregate
principal amount of the Company's 12 3/4% Senior Subordinated Notes due 2005
(the "SECURITIES"), of which $100,000,000 aggregate principal amount remain
outstanding as of the date hereof;
WHEREAS, the Company, the Subsidiaries and the Trustee desire by
this Second Supplemental Indenture, pursuant to and as contemplated by
Sections 901 and 1017 of the Indenture, that each of the Subsidiaries become
a Guarantor thereunder;
WHEREAS, the execution and delivery of this Second Supplemental
Indenture has been authorized by resolutions of the Boards of Directors of
the Company and the Subsidiaries;
WHEREAS, all conditions and requirements necessary to make this
Second Supplemental Indenture a valid, binding and legal instrument in
accordance with its terms have been performed and fulfilled by the parties
hereto and the execution and delivery thereof have been in all respects duly
authorized by the parties hereto.
NOW, THEREFORE, in consideration of the above premises, each party
agrees, for the benefit of the others and for the equal and ratable benefit
of the holders of the Securities, as follows:
2
<PAGE>
ARTICLE ONE
ASSUMPTION OF OBLIGATIONS AS GUARANTOR
Section 101. ASSUMPTION. Each of the Subsidiaries hereby
expressly and unconditionally assumes each and every covenant, agreement and
undertaking of a Guarantor in the Indenture as of the date of this Second
Supplemental Indenture, and also hereby expressly and unconditionally assumes
each and every covenant, agreement and undertaking of a Guarantor in each
Security outstanding on the date of this Second Supplemental Indenture.
Section 102. WAIVER. Each Subsidiary hereby expressly waives,
and agrees that it will not in any manner whatsoever claim or take the
benefit or advantage of, any rights or reimbursement, indemnity or
subrogation or any other rights against the Company or any Guarantor as a
result of any payment by such Subsidiary with respect to Guaranteed Debt.
ARTICLE TWO
MISCELLANEOUS PROVISIONS
Section 201. TERMS DEFINED. For all purposes of this Second
Supplemental Indenture, except as otherwise defined or unless the context
otherwise requires, terms used in capitalized form in this Second
Supplemental Indenture and defined in the Indenture have the meanings
specified in the Indenture.
Section 202. INDENTURE. Except as amended hereby, the Indenture
and the Securities are in all respects ratified and confirmed and all the
terms shall remain in full force and effect.
Section 203. GOVERNING LAW. This Second Supplemental Indenture
shall be governed by and construed in accordance with the laws of the State
of New York applicable applied to contracts to be performed entirely within
the State of New York, without regard to principles of conflict of laws.
Section 204. SUCCESSORS. All agreements of the Company, United
and the Subsidiaries in this Second Supplemental Indenture and the Securities
shall bind their successors. All agreements of the Trustee in this Second
Supplemental Indenture shall bind its successors.
3
<PAGE>
Section 205. DUPLICATE ORIGINALS. All parties may sign any
number of copies of this Second Supplemental Indenture. Each signed copy
shall be an original, but all of them together shall represent the same
agreement.
Section 206. SEVERABILITY. In case any one or more of the
provisions in this Second Supplemental Indenture or in the Securities shall
be held invalid, illegal or unenforceable, in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions shall not in any way be affected or
impaired thereby, it being intended that all of the provisions hereof shall
be enforceable to the full extent permitted by law.
Section 207. TRUSTEE DISCLAIMER. The Trustee accepts the
amendment of the Indenture effected by this Second Supplemental Indenture and
agrees to execute the trust created by the Indenture as hereby amended, but
only upon the terms and conditions set forth in the Indenture, including the
terms and provisions defining and limiting the liabilities and
responsibilities of the Trustee, which terms and provisions shall in like
manner define and limit its liabilities and responsibilities in the
performance of the trust created by the Indenture as hereby amended, and
without limiting the generality of the foregoing, the Trustee shall not be
responsible in any manner whatsoever for or with respect to any of the
recitals or statements contained herein, all of which recitals or statements
are made solely by the Company and the Subsidiaries, or for or with respect
to (i) the validity or sufficiency of this Second Supplemental Indenture or
any of the terms or provisions hereof, (ii) the proper authorization hereof
by the Company and the Subsidiaries by corporate action or otherwise, (iii)
the due execution hereof by the Company and the Subsidiaries or (iv) the
consequences (direct or indirect and whether deliberate or inadvertent) of
any amendment herein provided for, and the Trustee makes no representation
with respect to any such matters.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed as of the day and year first
written above.
UNITED STATIONERS SUPPLY CO., as Issuer
By:
----------------------------------------
Title:
LAGASSE BROS., INC., as Guarantor
By:
----------------------------------------
Title:
AZERTY INCORPORATED, as Guarantor
By:
----------------------------------------
Title:
POSITIVE ID WHOLESALE INC., as Guarantor
By:
----------------------------------------
Title:
5
<PAGE>
AP SUPPORT SERVICES INCORPORATED, as Guarantor
By:
----------------------------------------
Title:
THE BANK OF NEW YORK,
as Trustee
By:
----------------------------------------
Title:
6
<PAGE>
EXHIBIT 10.1
EXECUTION COPY
************************************************************
UNITED STATIONERS SUPPLY CO.
AND
UNITED STATIONERS INC.
______________________________
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of April 3, 1998
______________________________
$500,000,000
THE CHASE MANHATTAN BANK,
as Administrative Agent
CHASE SECURITIES INC.,
as Arranger
************************************************************
<PAGE>
TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which it is
attached but is inserted for convenience of reference only.
<TABLE>
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Section 1. Definitions and Accounting Matters. . . . . . . . . . . . . . . . . . . . 2
1.01 Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.02 Accounting Terms and Determinations . . . . . . . . . . . . . . . . . . .24
1.03 Classes and Types of Loans. . . . . . . . . . . . . . . . . . . . . . . .25
Section 2. Commitments, Loans and Prepayments. . . . . . . . . . . . . . . . . . . .25
2.01 Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
2.02 Borrowings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
2.03 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
2.04 Changes of Commitments. . . . . . . . . . . . . . . . . . . . . . . . . .32
2.05 Commitment Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
2.06 Lending Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
2.07 Several Obligations; Remedies Independent . . . . . . . . . . . . . . . .34
2.08 Evidence of Debt; Registered Loans. . . . . . . . . . . . . . . . . . . .34
2.09 Optional Prepayments and Conversions or Continuations of Loan . . . . . .35
2.10 Mandatory Prepayments and Reductions of Commitments . . . . . . . . . . .35
Section 3. Payments of Principal and Interest. . . . . . . . . . . . . . . . . . . .38
3.01 Repayment of Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . .38
3.02 Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
Section 4. Payments; Pro Rata Treatment; Computations; Etc.. . . . . . . . . . . . .39
4.01 Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
4.02 Pro Rata Treatment. . . . . . . . . . . . . . . . . . . . . . . . . . . .40
4.03 Computations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
4.04 Minimum Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
4.05 Certain Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
4.06 Non-Receipt of Funds by the Administrative Agent. . . . . . . . . . . . .42
4.07 Sharing of Payments, Etc. . . . . . . . . . . . . . . . . . . . . . . . .43
Section 5. Yield Protection, Etc.. . . . . . . . . . . . . . . . . . . . . . . . . .44
5.01 Additional Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
5.02 Limitation on Types of Loans. . . . . . . . . . . . . . . . . . . . . . .46
5.03 Illegality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
5.04 Treatment of Affected Loans . . . . . . . . . . . . . . . . . . . . . . .47
5.05 Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48
(i)
<PAGE>
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5.06 Additional Costs in Respect of Letters of Credit. . . . . . . . . . . . .48
5.07 U.S. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49
5.08 Replacement of Lenders. . . . . . . . . . . . . . . . . . . . . . . . . .51
Section 6. Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
6.01 The Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
6.02 Obligations Unconditional . . . . . . . . . . . . . . . . . . . . . . . .52
6.03 Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
6.04 Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53
6.05 Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53
6.06 Continuing Guarantee. . . . . . . . . . . . . . . . . . . . . . . . . . .53
Section 7. Conditions Precedent. . . . . . . . . . . . . . . . . . . . . . . . . . .53
7.01 Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53
7.02 Initial and Subsequent Extensions of Credit . . . . . . . . . . . . . . .56
Section 8. Representations and Warranties. . . . . . . . . . . . . . . . . . . . . .56
8.01 Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . .56
8.02 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . .57
8.03 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57
8.04 No Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57
8.05 Action. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58
8.06 Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58
8.07 Use of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58
8.08 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58
8.09 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59
8.10 Investment Company Act. . . . . . . . . . . . . . . . . . . . . . . . . .59
8.11 Public Utility Holding Company Act. . . . . . . . . . . . . . . . . . . .59
8.12 Material Agreements and Liens . . . . . . . . . . . . . . . . . . . . . .59
8.13 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . .60
8.14 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61
8.15 Subsidiaries, Etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . .61
8.16 Title to Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62
8.17 True and Complete Disclosure. . . . . . . . . . . . . . . . . . . . . . .62
8.18 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62
8.19 Security Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . .62
8.20 Year 2000.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62
Section 9. Covenants of the Obligors . . . . . . . . . . . . . . . . . . . . . . . .63
9.01 Financial Statements, Etc.. . . . . . . . . . . . . . . . . . . . . . . .63
9.02 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .66
9.03 Existence, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .66
9.04 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67
9.05 Prohibition of Fundamental Changes. . . . . . . . . . . . . . . . . . . .68
(ii)
<PAGE>
<CAPTION>
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<S> <C>
9.06 Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . .69
9.07 Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71
9.08 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .72
9.09 Dividend Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . .73
9.10 Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .74
9.11 Leverage Ratio. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .74
9.12 Fixed Charges Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . .74
9.13 Interest Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . .75
9.14 Subordinated Indebtedness . . . . . . . . . . . . . . . . . . . . . . . .75
9.15 Lines of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . .76
9.16 Transactions with Affiliates. . . . . . . . . . . . . . . . . . . . . . .76
9.17 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . .76
9.18 Modifications of Certain Documents. . . . . . . . . . . . . . . . . . . .76
9.19 Ownership of the Company. . . . . . . . . . . . . . . . . . . . . . . . .77
9.20 Severance Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . .77
9.21 Taxes; Tax Sharing Agreement. . . . . . . . . . . . . . . . . . . . . . .77
9.22 Subsidiary Guarantors; Additional Mortgaged Property. . . . . . . . . . .77
9.23 Termination of ERISA Plans. . . . . . . . . . . . . . . . . . . . . . . .78
9.24 Limitations on Restrictions . . . . . . . . . . . . . . . . . . . . . . .78
9.25 Release of Security Interests. . . . . . . . . . . . . . . . . . . . . .78
Section 10. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . .79
Section 11. The Administrative Agent. . . . . . . . . . . . . . . . . . . . . . . . .82
11.01 Appointment, Powers and Immunities. . . . . . . . . . . . . . . . . . . .82
11.02 Reliance by Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . .83
11.03 Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .83
11.04 Rights as a Lender. . . . . . . . . . . . . . . . . . . . . . . . . . . .83
11.05 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . .84
11.06 Non-Reliance on Agent and Other Lenders . . . . . . . . . . . . . . . . .84
11.07 Failure to Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .85
11.08 Resignation or Removal of Administrative Agent. . . . . . . . . . . . . .85
11.09 Consents under Other Basic Documents. . . . . . . . . . . . . . . . . . .85
11.10 Collateral Sub-Agents . . . . . . . . . . . . . . . . . . . . . . . . . .86
Section 12. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .86
12.01 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .86
12.02 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .86
12.03 Expenses, Etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .86
12.04 Amendments, Etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . .87
12.05 Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . . . .88
12.06 Assignments and Participations. . . . . . . . . . . . . . . . . . . . . .88
12.07 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .91
12.08 Captions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .91
(iii)
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<S> <C>
12.09 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .91
12.10 Governing Law; Submission to Jurisdiction . . . . . . . . . . . . . . . .91
12.11 Waiver of Jury Trial. . . . . . . . . . . . . . . . . . . . . . . . . . .91
12.12 Treatment of Certain Information; Confidentiality . . . . . . . . . . . .92
12.13 Certain Tax Information . . . . . . . . . . . . . . . . . . . . . . . . .92
12.14 Acknowledgement and Consent . . . . . . . . . . . . . . . . . . . . . . .92
</TABLE>
(iv)
<PAGE>
ANNEX 1 - Lenders and Commitments
SCHEDULE I - Indebtedness and Liens
SCHEDULE II - Environmental Matters
SCHEDULE III - Subsidiaries and Investments
SCHEDULE IV - Real Property
SCHEDULE V - Litigation
SCHEDULE VI - Taxes
EXHIBIT A - Form of Security Agreement
EXHIBIT B - Form of Subsidiary Guarantee and Security
Agreement
EXHIBIT C - Form of Mortgage
EXHIBIT D-1 - Form of Opinion of General Counsel to the
- Guarantor
EXHIBIT D-2 - Form of Opinion of Weil, Gotshal & Manges LLP, special counsel
to the Obligors
EXHIBIT E - Form of Opinion of Special New York Counsel to
the Administrative Agent
EXHIBIT F - Form of Assignment and Acceptance
(v)
<PAGE>
SECOND AMENDED AND RESTATED CREDIT AGREEMENT dated as of April 3, 1998
(this "AGREEMENT") among: UNITED STATIONERS SUPPLY CO., a corporation duly
organized and validly existing under the laws of the State of Illinois (together
with its successors and assigns, the "COMPANY"); UNITED STATIONERS INC., a
corporation duly organized and validly existing under the laws of the State of
Delaware (together with its successors and assigns, the "GUARANTOR" and,
together with the Company, the "OBLIGORS"); each of the lenders that is a
signatory hereto (together with its successors and assigns in such capacity, a
"LENDER" and, collectively with the Swingline Lender referred to below, the
"LENDERS"); and THE CHASE MANHATTAN BANK, as Swingline Lender hereunder (in such
capacity, together with its successors and assigns in such capacity, the
"SWINGLINE LENDER") and as agent for the Lenders (in such capacity, together
with its successors in such capacity, the "ADMINISTRATIVE AGENT").
WHEREAS, the Company, the Guarantor, the Administrative Agent, and
certain of the Lenders are parties to a Credit Agreement dated as of March 30,
1995 (as amended and restated as of October 31, 1996, as amended pursuant to
Amendment No. 1 to Amended and Restated Credit Agreement dated as of August 18,
1997 among the Obligors, the lenders party thereto and The Chase Manhattan Bank,
as agent, and Amendment No. 2 to Amended and Restated Credit Agreement dated as
of August 29, 1997 among the Obligors, the lenders party thereto and The Chase
Manhattan Bank, as agent, and as heretofore further amended and supplemented and
in effect on the date hereof, the "EXISTING CREDIT AGREEMENT"), providing,
subject to the terms and conditions thereof for extensions of credit (by the
making of loans and issuing letters of credit) to the Company in an aggregate
principal amount not exceeding $540,000,000;
WHEREAS, the Company has entered into an agreement dated February 10,
1998 (the "PURCHASE AGREEMENT") pursuant to which the Company has agreed to
acquire for cash 100% of the issued and outstanding shares of capital stock of
each of Azerty Incorporated, a Delaware corporation ("AZERTY"), Positive ID
Wholesale Inc., a Delaware corporation ("POSITIVE"), AP Support Services
Incorporated, a Delaware corporation ("AP SUPPORT") and Azerty de Mexico, S.A.
de C.V., a Mexican corporation ("AZERTY MEXICO", and together with Azerty,
Positive and AP Support, the "ACQUIRED BUSINESSES") for a purchase price of
approximately $110,000,000 (including fees and expenses) subject to adjustment
based upon the net tangible assets of the Acquired Businesses as of the closing
of such acquisition (the "AZERTY ACQUISITION");
WHEREAS, the Obligors have requested the Lenders to amend and restate
and refinance loans under the Existing Credit Agreement to provide for
extensions of credit to the Company in an aggregate principal amount not
exceeding as of the date hereof $500,000,000, the proceeds of which will be used
(i) to refinance the Loans outstanding under and as defined in the Existing
Credit Agreement, (ii) to finance the Azerty Acquisition and (iii) to finance
the ongoing working capital requirements and for other general corporate
purposes (including, without limitation, Permitted Acquisitions (as hereinafter
defined)) of the Company and its Subsidiaries;
CREDIT AGREEMENT
<PAGE>
- 2 -
NOW, THEREFORE, the parties hereto agree as follows:
Section 1. DEFINITIONS AND ACCOUNTING MATTERS.
1.01 CERTAIN DEFINED TERMS. As used herein, the following terms
shall have the following meanings (all terms defined in this Section 1.01 or in
other provisions of this Agreement in the singular to have the same meanings
when used in the plural and VICE VERSA):
"ACCRUED WARRANT LIABILITIES" shall mean any liabilities of the
Guarantor under Section 7.02(c) of the Warrant Agreement.
"ADMINISTRATIVE QUESTIONNAIRE" shall mean an Administrative
Questionnaire in a form supplied by the Administrative Agent.
"AFFILIATE" shall mean, in respect of any Person (the "RELEVANT
PERSON"), any other Person that directly or indirectly controls, or is under
common control with, or is controlled by, the Relevant Person and, if such other
Person is an individual, any member of the immediate family (including parents,
spouse, children and siblings) of such individual and any trust whose principal
beneficiary is such individual or one or more members of such immediate family
and any Person who is controlled by any such member or trust. As used in this
definition, "CONTROL" (including, with its correlative meanings, "CONTROLLED BY"
and "UNDER COMMON CONTROL WITH") shall mean possession, directly or indirectly,
of power to direct or cause the direction of management or policies (whether
through ownership of securities or partnership or other ownership interests, by
contract or otherwise), PROVIDED that, in any event, any Person that owns
directly or indirectly securities having 5% or more of the voting power for the
election of directors or other governing body of a corporation or 5% or more of
the partnership or other ownership interests of any other Person (other than as
a limited partner of such other Person) will be deemed to control such
corporation or other Person. Notwithstanding the foregoing, (a) no individual
shall be an Affiliate of any Relevant Person solely by reason of his or her
being a director, officer or employee of such Relevant Person or any of its
Subsidiaries, (b) none of the Subsidiaries of the Guarantor shall be Affiliates
of the Guarantor or of any other Subsidiary of the Guarantor, (c) the Guarantor
shall not be an Affiliate of any of its Subsidiaries and (d) neither the
Administrative Agent nor any Lender shall be an Affiliate of the Guarantor or of
any Subsidiary of the Guarantor.
"APPLICABLE LENDING OFFICE" shall mean, for each Lender and for each
Type of Loan, the lending office designated by such Lender as such on its
Administrative Questionnaire or such other office of such Lender (or of an
affiliate of such Lender) as such Lender may from time to time specify to the
Administrative Agent and the Company for such purpose.
"APPLICABLE MARGIN" shall mean, as of any date:
(a) for Tranche A Term Loans and Revolving Credit Loans, 2.00% per
annum for Eurodollar Loans and 0.75% per annum for Base Rate Loans;
PROVIDED that the Applicable Margin for each Type of Tranche A Term Loan
and Revolving Credit Loan, for any period from and including the date on
which the Company shall have delivered a compliance certificate pursuant to
the last paragraph of Section 9.01 hereof
CREDIT AGREEMENT
<PAGE>
- 3 -
demonstrating in reasonable detail (based upon financial statements for the
fiscal period of the Guarantor most recently ended that have been delivered to
the Lenders pursuant to Section 9.01(a) or (b) hereof or, prior to the delivery
of financial statements pursuant to said Section, the financial statements of
the Guarantor referred to in Section 8.02(a) hereof) that the LEVERAGE RATIO, as
of the end of the respective quarterly fiscal period or fiscal year, is within
one of the ranges set forth below, to but excluding the date of delivery of the
next such certificate, shall equal the percentage per annum set forth below for
Tranche A Term Loans and Revolving Credit Loans of such Type:
<TABLE>
<CAPTION>
Base Rate Eurodollar
Ratio Loans Loans
----- --------- ----------
<S> <C> <C>
Greater than 4.5 to 1 .75% 2.00%
Less than or equal
to 4.5 to 1 but greater
than 4.0 to 1 .50% 1.75%
Less than or equal
to 4.0 to 1 but greater
than 3.5 to 1 .25% 1.50%
Less than or equal
to 3.5 to 1 but greater
than 3.0 to 1 .00% 1.25%
Less than or equal
to 3.0 to 1 .00% 1.00%;
</TABLE>
PROVIDED FURTHER, that for purposes of calculating the Applicable Margin at
any time prior to the delivery of the compliance certificate under the last
paragraph of Section 9.01(b) hereof for the fiscal quarter of the Guarantor
ending September 30, 1998, if the Leverage Ratio, as reflected on the then
most recent compliance certificate delivered under the last paragraph of
Section 9.01 hereof, is less than or equal to 4.0 to 1, the "Applicable
Margin" for the Revolving Credit Loans and Tranche A Loans shall be .25%
per annum (in the case of Base Rate Loans) and 1.50% per annum (in the case
of Eurodollar Loans).
(b) for Tranche B Term Loans, 2.00% per annum for Eurodollar Loans
and .75% per annum for Base Rate Loans.
"BANKRUPTCY CODE" shall mean the Federal Bankruptcy Code of 1978, as
amended from time to time.
"BASE RATE" shall mean, for any day, a rate per annum equal to the
higher of (a) the Federal Funds Rate for such day plus 1/2 of 1% and (b) the
Prime Rate for such day. Each change in any interest rate provided for herein
based upon the Base Rate resulting from a change in the Base Rate shall take
effect at the time of such change in the Base Rate.
CREDIT AGREEMENT
<PAGE>
- 4 -
"BASE RATE LOANS" shall mean Loans (other than Swingline Loans) that
bear interest at rates based upon the Base Rate.
"BASIC DOCUMENTS" shall mean, collectively, this Agreement, the
promissory notes (if any) delivered pursuant to Section 2.08(d) hereof, the
Letter of Credit Documents and the Security Documents.
"BUSINESS DAY" shall mean any day (a) on which commercial banks are
not authorized or required to close in New York City and (b) if such day relates
to a borrowing of, a payment or prepayment of principal of or interest on, a
Conversion of or into, or an Interest Period for, a Eurodollar Loan or a notice
by the Company with respect to any such borrowing, payment, prepayment,
Conversion or Interest Period, that is also a day on which dealings in Dollar
deposits are carried out in the London interbank market.
"CAPITAL EXPENDITURES" shall mean, without duplication, for any
period, expenditures (including, without limitation, the aggregate amount of
Capital Lease Obligations incurred during such period) made by the Guarantor or
any of its Subsidiaries to acquire or construct fixed assets, plant and
equipment (including renewals, improvements and replacements, but excluding
repairs) during such period computed in accordance with GAAP.
"CAPITAL LEASE OBLIGATIONS" shall mean, for any Person, all
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) Property to the extent such
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP (including Statement of Financial
Accounting Standards No. 13 of the Financial Accounting Standards Board); and,
for purposes of this Agreement, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with GAAP (including such
Statement No. 13).
"CASH FLOW" shall mean, for any period, for the Guarantor and its
Subsidiaries (determined on a consolidated basis without duplication in
accordance with GAAP), EBITDA for such period MINUS Capital Expenditures made
during such period (provided that Capital Lease Obligations shall be deducted
only to the extent of payments actually made during such period).
"CASUALTY EVENT" shall mean, with respect to any Property of any
Person, any loss of or damage to, or any condemnation or other taking of, such
Property for which such Person or any of its Subsidiaries receives insurance
proceeds, or proceeds of a condemnation award or other compensation.
"CHANGE OF CONTROL" shall mean (i) the Guarantor shall cease to own
and control, of record and beneficially, 100% of each class of outstanding
capital stock of the Company; (ii) any "person" or "group" (within the meaning
of Section 13(d) and 14(d) of the Exchange Act) other than one or more of the
Permitted Holders, shall become the ultimate "beneficial owner" (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more
than 30% of the aggregate ordinary voting power represented by the issued and
outstanding capital stock of the Guarantor; (iii) individuals who on the
Effective Date constituted the Board of Directors of the Guarantor or the
Company (together with any new directors whose election to
CREDIT AGREEMENT
<PAGE>
- 5 -
such Board of Directors or whose nomination for election by the shareholders of
the Guarantor or the Company (as the case may be), was either approved by a vote
of 66 2/3% of the directors then in office who were either directors on such
date or whose election or nomination for election was previously so approved)
shall cease for any reason to have a majority of the total voting power of such
Board of Directors then in office; or (iv) any Person or group other than the
Permitted Holders shall acquire directly or indirectly the power to direct or
cause the direction of the management or policies of the Guarantor, whether
through the ability to exercise voting power, by contract or otherwise. The
term "Permitted Holders" shall mean Randall W. Larrimore, Daniel H. Bushell,
Frederick B. Hegi, Jr., Stephen Schwarz, Michael Rowsey or Wingate Partners,
L.P., a Delaware limited partnership, and Affiliates thereof.
"CHASE" shall mean The Chase Manhattan Bank.
"CLASS" shall have the meaning assigned to such term in Section 1.03
hereof.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"COLLATERAL ACCOUNT" shall have the meaning assigned to such term in
Section 4.01 of the Security Agreement.
"COMMISSION" shall mean the Securities and Exchange Commission, or any
regulatory body that succeeds to the functions thereof.
"COMMITMENTS" shall mean the Revolving Credit Commitments and the Term
Loan Commitments.
"CONTINUE", "CONTINUATION" and "CONTINUED" shall refer to the
continuation pursuant to Section 2.09 hereof of a Eurodollar Loan from one
Interest Period to the next Interest Period.
"CONVERT", "CONVERSION" and "CONVERTED" shall refer to a conversion
pursuant to Section 2.09 hereof of one Type of Loans into another Type of Loans,
which may be accompanied by the transfer by a Lender (at its sole discretion) of
a Loan from one Applicable Lending Office to another.
"DATE HEREOF" and "DATE OF THIS AGREEMENT" shall mean April 3, 1998.
"DEBT ISSUANCE" shall mean any issuance or incurrence by the Guarantor
or any of its Subsidiaries after the Effective Date of Indebtedness under
Section 9.07(h) hereof.
"DEBT TO CASH FLOW RATIO" shall mean, as at any date, the ratio of (a)
the aggregate Indebtedness of the Guarantor and its Subsidiaries (determined on
a consolidated basis without duplication in accordance with GAAP) as of such
date to (b) Cash Flow for the Reporting Period as of such date; PROVIDED that
Indebtedness (as used in this definition of "Debt to Cash Flow Ratio") shall not
include any undrawn amount under any letter of credit issued for the account of
the Company or its Subsidiaries but shall include the funded portion of the
Receivables Financing; and PROVIDED, FURTHER, that (i) upon the consummation of
any Permitted
CREDIT AGREEMENT
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Acquisition (if the Person, line of business or division so acquired has audited
financial statements with respect to the applicable Reporting Period or, if such
audited financial statements are not available for the entire Reporting Period,
the Guarantor has delivered to the Administrative Agent an income statement and
cash flow statement for such Person, line of business or division for such
Reporting Period (which may be based in part on any audited financial statements
available for part of such Reporting Period) accompanied by a certificate of a
senior financial officer of the Guarantor stating that such officer has reviewed
the historical performance of such Person, line of business or division and
believes that such statements fairly represent in all material respects the
historical performance of such entity) or (ii) upon the consummation of the
Azerty Acquisition, the calculation of the Debt to Cash Flow Ratio (both with
respect to Cash Flow and Indebtedness) shall be calculated as if such Permitted
Acquisition or the Azerty Acquisition, as the case may be, had occurred, and any
Indebtedness incurred in connection therewith had been incurred, on the first
day of the Reporting Period during which such Permitted Acquisition or the
Azerty Acquisition, as the case may be, shall have been consummated.
"DEFAULT" shall mean an Event of Default or an event that with notice
or lapse of time or both would become an Event of Default.
"DISPOSITION" shall mean any sale, assignment, transfer or other
disposition of any Property (whether now owned or hereafter acquired) by the
Company or any of its Subsidiaries to any other Person excluding (i) any sale,
assignment, transfer or other disposition of any Property sold or disposed of in
the ordinary course of business and on ordinary business terms, (ii) the
licensing of general intangibles in the ordinary course of business, (iii) the
sale of overdue receivables in the ordinary course of business, (iv) the sale of
worn-out or obsolete equipment in the ordinary course of business and (v) any
Disposition of Property in connection with any Casualty Event.
"DIVIDEND PAYMENT" shall mean, with respect to any Person, dividends
(in cash, Property or obligations) on, or other payments or distributions on
account of, or the setting apart of money for a sinking or other analogous fund
for, or the purchase, redemption, retirement or other acquisition of, any shares
of any class of stock of such Person or of any warrants, options or other rights
to acquire the same (or to make any payments to any Person, such as "phantom
stock" payments, where the amount thereof is calculated with reference to the
fair market or equity value of such Person or any of its Subsidiaries), but
excluding (i) dividends payable solely in shares of common stock of such Person
or (ii) any cancellation of the Guarantor Note.
"DOLLARS" and "$" shall mean lawful money of the United States of
America.
"DOMESTIC SUBSIDIARY" shall mean any Subsidiary of the Guarantor that
is organized or created under the laws of the United States of America, any
State thereof or the District of Columbia.
"EBITDA" shall mean, for any period, the sum, for the Guarantor and
its Subsidiaries (determined on a consolidated basis without duplication in
accordance with GAAP), of the following: (a) net income for such period PLUS
(b) Interest Expense for such period, together with any original issue discount
to the extent deducted in calculating net income PLUS
CREDIT AGREEMENT
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(c) income taxes for such period, PLUS (d) losses attributable to equity in
Affiliates for such period PLUS (e) depreciation and amortization (to the extent
deducted in computing net income) for such period MINUS (f) extraordinary or
nonrecurring, non-cash items of income or gain for such period PLUS (g) any
extraordinary or nonrecurring, non-cash items of expense or loss for such period
MINUS (h) gains attributable to equity in Affiliates for such period PLUS (i)
all non-cash charges related to employee compensation to the extent deducted in
calculating net profits.
"EFFECTIVE DATE" shall mean the date on which the conditions to the
effectiveness of this Agreement set forth in Section 7.01 hereof shall have been
satisfied or waived.
"ENVIRONMENTAL CLAIM" shall mean, with respect to any Person, any
written or oral notice, claim, demand or other communication (collectively, a
"CLAIM") by any other Person alleging or asserting such Person's liability for
investigatory costs, cleanup costs, governmental response costs, damages to
natural resources or other Property, personal injuries, fines or penalties
arising out of, based on or resulting from (i) the presence, or Release, of any
Hazardous Material at any location, whether or not owned by such Person, or
(ii) circumstances forming the basis of any violation, or alleged violation, of
any Environmental Law. The term "Environmental Claim" shall include, without
limitation, any claim by any governmental authority for enforcement, cleanup,
removal, response, remedial or other actions or damages pursuant to any
applicable Environmental Law, and any claim by any third party seeking damages,
contribution, indemnification, cost recovery, compensation or injunctive relief
resulting from the presence of Hazardous Materials or arising from alleged
injury or threat of injury to health, safety or the environment from Hazardous
Materials.
"ENVIRONMENTAL LAWS" shall mean any and all applicable Federal, state,
local and foreign laws, rules or regulations, and applicable and legally binding
orders or decrees, in each case as now or hereafter in effect, relating to the
regulation or protection of human health, safety or the environment or to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals or toxic or hazardous substances or wastes into the
indoor or outdoor environment, including, without limitation, ambient air, soil,
surface water, ground water, wetlands, land or subsurface strata, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants, chemicals or toxic
or hazardous substances or wastes.
"EQUITY ISSUANCE" shall mean (a) any issuance or sale by the Guarantor
or any of its Subsidiaries after the Effective Date of (i) any of its capital
stock, (ii) any warrants or options exercisable in respect of its capital stock
or (iii) any other security or instrument representing an equity interest (or
the right to obtain any equity interest) in the Guarantor or any of its
Subsidiaries or (b) the receipt by the Guarantor or any of its Subsidiaries
after the Effective Date of any capital contribution (whether or not evidenced
by any equity security issued by the recipient of such contribution); PROVIDED
that Equity Issuance shall not include (1) any such issuance or sale by any
Subsidiary of the Guarantor to the Guarantor or any Wholly-Owned Subsidiary of
the Guarantor, (2) any capital contribution by the Guarantor or any Wholly-Owned
Subsidiary of the Guarantor to any Subsidiary of the Guarantor, (3) any
cancellation of the Guarantor Note after the Effective Date or (4) any warrants
or options issued to directors, officers or employees of the Guarantor or any of
its Subsidiaries pursuant to employee benefit plans, incentive plans or similar
plans or programs established in the ordinary course of business
CREDIT AGREEMENT
<PAGE>
- 8 -
and any capital stock of the Guarantor issued upon the exercise of such warrants
or options or withheld by the Guarantor or the Company to satisfy its Federal or
state withholding tax obligations in connection with the exercise of such
warrants or options by any of its directors, officers or employees.
"EQUITY RIGHTS" shall mean, with respect to any Person, any
subscriptions, options, warrants, commitments, preemptive rights or agreements
of any kind (including, without limitation, any stockholders' or voting trust
agreements) for the issuance, sale, registration or voting of, or securities
convertible into, any additional shares of capital stock of any class, or
partnership or other ownership interests of any type in, such Person.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA AFFILIATE" shall mean any corporation or trade or business that
is a member of any group of organizations (i) described in Section 414(b) or (c)
of the Code of which either Obligor is a member and (ii) solely for purposes of
potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of
the Code and the lien created under Section 302(f) of ERISA and Section 412(n)
of the Code, described in Section 414(m) or (o) of the Code of which either
Obligor is a member.
"EURODOLLAR BASE RATE" means, with respect to any Eurodollar Loan for
any Interest Period therefor, the rate per annum appearing on Page 3750 of the
Dow Jones Markets Service (or on any successor or substitute page of such
Service, or any successor to or substitute for such Service, providing rate
quotations comparable to those currently provided on such page of such Service,
as determined by the Administrative Agent from time to time for purposes of
providing quotations of interest rates applicable to Dollar deposits in the
London interbank market) at approximately 11:00 a.m. London time on the date two
Business Days prior to the first day of such Interest Period as the rate for
Dollar deposits having a term comparable to such Interest Period.
"EURODOLLAR LOANS" shall mean Loans that bear interest at rates based
on rates referred to in the definition of "Eurodollar Base Rate" in this
Section 1.01.
"EURODOLLAR RATE" shall mean, for any Eurodollar Loan for any Interest
Period therefor, a rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) determined by the Administrative Agent to be equal to the
Eurodollar Base Rate for such Loan for such Interest Period divided by 1 minus
the Reserve Requirement (if any) for such Loan for such Interest Period.
"EVENT OF DEFAULT" shall have the meaning assigned to such term in
Section 10 hereof.
"EXCESS CASH FLOW" shall mean, for any period, the excess of (a) Cash
Flow for such period MINUS (b) the aggregate amount of Fixed Charges for such
period MINUS (c) any severance payments incurred in connection with the Mergers
and paid in cash during such period.
CREDIT AGREEMENT
<PAGE>
- 9 -
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"FEDERAL FUNDS RATE" shall mean, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, PROVIDED that (a) if the day for which such rate is to
be determined is not a Business Day, the Federal Funds Rate for such day shall
be such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day and (b) if such rate is not so
published for any Business Day, the Federal Funds Rate for such Business Day
shall be the average rate charged to Chase on such Business Day on such
transactions as determined by the Administrative Agent.
"FIXED CHARGES" shall mean, for any Reporting Period, the sum, for the
Guarantor and its Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP), of the following: (a) all payments of
principal of Indebtedness scheduled to be made during such Reporting Period PLUS
(b) all Interest Expense for such Reporting Period PLUS (c) income taxes paid in
cash during such Reporting Period PLUS (d) all dividends paid in cash by the
Guarantor during such Reporting Period.
"FIXED CHARGES RATIO" shall mean, as at any date, the ratio of (a)
Cash Flow for the Reporting Period as of such date to (b) Fixed Charges for such
Reporting Period
"GAAP" shall mean generally accepted accounting principles applied on
a basis consistent with those that, in accordance with the last sentence of
Section 1.02(a) hereof, are to be used in making the calculations for purposes
of determining compliance with this Agreement in accordance with the
requirements of the Commission and the Emerging Issues Task Force established by
the Financial Accounting Standards Board.
"GUARANTEE" shall mean a guarantee, an endorsement, a contingent
agreement to purchase or to furnish funds for the payment or maintenance of, or
otherwise to be or become contingently liable under or with respect to, the
Indebtedness, net worth, working capital or earnings of any Person, or a
guarantee of the payment of dividends or other distributions upon the stock or
equity interests of any Person, or an agreement to purchase, sell or lease (as
lessee or lessor) Property, products, materials, supplies or services primarily
for the purpose of enabling a debtor to make payment of such debtor's
obligations or an agreement to assure a creditor against loss, and including,
without limitation, causing a bank or other financial institution to issue a
letter of credit or other similar instrument for the benefit of another Person,
but excluding endorsements for collection or deposit in the ordinary course of
business. The terms "GUARANTEE" and "GUARANTEED" used as a verb shall have a
correlative meaning.
"GUARANTOR NOTE" shall mean the promissory note executed by Associated
Holdings, Inc. (and subsequently assumed by the Guarantor upon the merger of
Associated Holdings, Inc. into the Guarantor) and delivered to the Company under
the Original Credit Agreement to evidence the loan made by Associated
Stationers, Inc. (which was subsequently merged into the Company) to Associated
Holdings, Inc. to finance the Mergers.
CREDIT AGREEMENT
<PAGE>
- 10 -
"GUARANTEED OBLIGATIONS" shall have the meaning assigned to such term
in Section 6.01 hereof.
"HAZARDOUS MATERIAL" shall mean, collectively, (a) any petroleum or
petroleum products, explosives, radioactive materials, asbestos that is or could
become friable, urea formaldehyde foam insulation, and transformers or other
equipment that contain polychlorinated biphenyls in excess of 50 parts per
million ("PCB'S"), (b) any chemicals or other materials or substances that are
now or hereafter become defined as or included in the definition of "hazardous
substances", "hazardous wastes", "hazardous materials", "extremely hazardous
wastes", "restricted hazardous wastes", "toxic substances", "toxic pollutants",
"contaminants", "pollutants" or words of similar import under any Environmental
Law and (c) any other chemical or other material or substance, exposure to which
is now or hereafter prohibited, limited or regulated under any Environmental
Law.
"INDEBTEDNESS" shall mean, for any Person (without duplication):
(a) obligations created, issued or incurred by such Person for borrowed money
(whether by loan, the issuance and sale of debt securities or the sale of
Property to another Person subject to an understanding or agreement, contingent
or otherwise, to repurchase such Property from such Person); (b) obligations of
such Person to pay the deferred purchase or acquisition price of Property or
services, other than trade accounts payable (other than for borrowed money)
arising, and accrued expenses incurred, in the ordinary course of business so
long as such trade accounts payable are payable within 90 days of the date the
respective goods are delivered or the respective services are rendered;
(c) Indebtedness of others secured by a Lien on the Property of such Person,
whether or not the respective Indebtedness so secured has been assumed by such
Person; (d) obligations of such Person in respect of letters of credit or
similar instruments issued or accepted by banks and other financial institutions
for account of such Person; (e) Capital Lease Obligations of such Person; (f)
Indebtedness of others Guaranteed by such Person and (g) any Redeemable Capital
Stock issued by the Guarantor or any of its Subsidiaries after the Effective
Date; PROVIDED that any Accrued Warrant Liabilities shall not constitute
"Indebtedness" hereunder. The amount of any Indebtedness of any Person
described in clause (c) above that is non-recourse to such Person shall, for
purposes of this Agreement, be deemed to be equal to the lesser of (i) the
aggregate unpaid amount of such Indebtedness and (ii) the fair market value of
the property or asset encumbered, as determined by such Person in good faith.
The amount of any Indebtedness of any Person described in clause (f) above
shall, for purposes of this Agreement, be deemed to be the aggregate amount of
Indebtedness Guaranteed by such Person (if a fixed amount) or the maximum
reasonably anticipated liability arising as a result of such Guarantee (if not a
fixed amount), determined by such Person in good faith. Notwithstanding
anything herein to the contrary, the funded portion of the sale of any
Receivables in connection with the Receivables Financing, together with any
obligation of the seller thereof to pay any discount, interest, fees,
indemnities, penalties, recourse, expenses or other amounts in connection
therewith, shall be treated as "Indebtedness" for purposes of the Agreement.
"INDENTURE (2005)" shall mean the Indenture dated as of May 3, 1995,
among the Company, the Guarantor and The Bank of New York, as Trustee, pursuant
to which the Senior Subordinated Notes Due 2005 were issued.
CREDIT AGREEMENT
<PAGE>
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"INDENTURE (TAKE OUT)" shall mean the Indenture pursuant to which the
Take-Out Notes were issued.
"INDENTURES" means the Indenture (2005) and the Indenture (Take Out)
and any other indenture pursuant to which any Senior Subordinated Notes are
issued.
"INFORMATION MEMORANDUM" means the Confidential Information Memorandum
dated March 1998 with respect to the credit facilities provided for in this
Agreement.
"INTEREST COVERAGE RATIO" shall mean, as at any date, the ratio of (a)
EBITDA for the Reporting Period as of such date to (b) Interest Expense for such
Reporting Period.
"INTEREST EXPENSE" shall mean, for any period, the sum, for the
Guarantor and its Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP), of the following: (a) all cash interest in
respect of Indebtedness (including, without limitation, the interest component
of any payments in respect of Capital Lease Obligations) accrued during such
period (whether or not actually paid during such period) PLUS (b) the net amount
payable (or MINUS the net amount receivable) under Interest Rate Protection
Agreements during such period (whether or not actually paid or received during
such period) PLUS (c) all imputed interest, whether in the form of "yield",
"discount" or similar item, that accrues during such period in respect of the
funded portion of the Receivables Financing
"INTEREST PERIOD" shall mean, with respect to any Eurodollar Loan,
each period commencing on the date such Eurodollar Loan is made or Converted
from a Base Rate Loan or the last day of the next preceding Interest Period for
such Loan and ending on the numerically corresponding day in the first, second,
third or sixth calendar month thereafter, as the Company may select as provided
in Section 4.05 hereof, except that each Interest Period that commences on the
last Business Day of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last Business Day of the appropriate subsequent calendar month.
Notwithstanding the foregoing: (i) no Interest Period for any Revolving Credit
Loan may end after the Revolving Credit Commitment Termination Date; (ii) no
Interest Period for any Term Loan of any Class may commence before and end after
any Principal Payment Date for the Loans of such Class unless, after giving
effect thereto, the aggregate principal amount of the Term Loans of such Class
having Interest Periods that end after such Principal Payment Date shall be
equal to or less than the aggregate principal amount of the Term Loans of such
Class scheduled to be outstanding after giving effect to the payments of
principal required to be made on such Principal Payment Date; (iii) each
Interest Period that would otherwise end on a day that is not a Business Day
shall end on the next succeeding Business Day (or, if such next succeeding
Business Day falls in the next succeeding calendar month, on the next preceding
Business Day); and (iv) notwithstanding clauses (i) and (ii) above, no Interest
Period shall have a duration of less than one month and, if the Interest Period
for any Eurodollar Loan would otherwise be a shorter period, such Loan shall not
be available hereunder for such period.
"INTEREST RATE PROTECTION AGREEMENT" shall mean, for any Person, an
interest rate swap, cap or collar agreement or similar arrangement between such
Person and one or more
CREDIT AGREEMENT
<PAGE>
- 12 -
financial institutions providing for the transfer or mitigation of interest
risks either generally or under specific contingencies.
"INVENTORY" shall mean office products, office furniture, computer
accessories, catalogues, janitorial or sanitary maintenance and other readily
marketable goods (including specialty products) of a type sold by the Company or
a Subsidiary in the ordinary course of business.
"INVESTMENT" shall mean, for any Person: (a) the acquisition (whether
for cash, Property, services or securities or otherwise) of capital stock,
bonds, notes, debentures, partnership or other ownership interests or other
securities of any other Person or any agreement to make any such acquisition
(including, without limitation, any "short sale" or any sale of any securities
at a time when such securities are not owned by the Person entering into such
sale but excluding any agreement referred to above if the acquisition
contemplated thereunder is expressly conditioned upon the approval of the
Lenders hereunder); (b) the making of any deposit with, or advance, loan or
other extension of credit to, any other Person (including the purchase of
Property from another Person subject to an understanding or agreement,
contingent or otherwise, to resell such Property to such Person), but excluding
any such advance, loan or extension of credit having a term not exceeding 90
days arising in connection with the sale of inventory or supplies by such Person
in the ordinary course of business; (c) the entering into of any Interest Rate
Protection Agreement, foreign currency exchange agreement or currency exchange
rate hedging arrangement; (d) the making of any payment, on behalf of any other
Person, with respect to any obligation of such other Person or (e) the making of
any capital contribution to any other Person.
"ISSUING BANK" shall mean Chase, as the issuer of Letters of Credit
under Section 2.03 hereof, together with its successors and assigns in such
capacity.
"LAGASSE" means Lagasse Bros., Inc., a Louisiana corporation.
"LETTER OF CREDIT" shall have the meaning assigned to such term in
Section 2.03 hereof.
"LETTER OF CREDIT DOCUMENTS" shall mean, with respect to any Letter of
Credit, collectively, any application therefor and any other agreements,
instruments, guarantees or other documents (whether general in application or
applicable only to such Letter of Credit) governing or providing for (a) the
rights and obligations of the parties concerned or at risk with respect to such
Letter of Credit or (b) any collateral security for any of such obligations,
each as the same may be modified and supplemented and in effect from time to
time.
"LETTER OF CREDIT FEE RATE" shall mean a rate per annum equal to
2.00%; PROVIDED that (i) the Letter of Credit Fee Rate for any period from and
including the date on which the Company shall have delivered to the
Administrative Agent a certificate pursuant to the last paragraph of Section
9.01 hereof, demonstrating in reasonable detail (based upon financial statements
for the fiscal period of the Guarantor most recently ended that have been
delivered to the Lenders pursuant to Section 9.01(a) or (b) hereof or, prior to
the delivery of financial statements pursuant to said Section, the financial
statements of the Guarantor referred to in
CREDIT AGREEMENT
<PAGE>
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Section 8.02 hereof) that the Leverage Ratio, as of the end of the respective
quarterly fiscal period or fiscal year, is within one of the ranges set forth
below to but excluding the date of delivery of the next such certificate, shall
equal the percentage set forth below:
<TABLE>
<CAPTION>
LEVERAGE RATIO RATE
-------------- ----
<S> <C>
Greater than 4.5 to 1 2.00%
Less than or equal to 4.5 to 1
but greater than 4.0 to 1 1.75%
Less than or equal to 4.0 to 1
but greater than 3.5 to 1 1.50%
Less than or equal to 3.5 to 1
but greater than 3.0 to 1 1.25%
Less than or equal to 3.0 to 1 1.00%;
</TABLE>
PROVIDED FURTHER, that (i) notwithstanding the foregoing, for purposes of
calculating the Letter of Credit Fee Rate at any time prior to the delivery of
the compliance certificate required under the last paragraph of Section 9.01
hereof for the fiscal quarter of the Guarantor ending September 30, 1998, if the
Leverage Ratio, as reflected on the then most recent compliance certificate
delivered under Section 9.01 hereof, is less than or equal to 4.0 to 1, the
"Letter of Credit Fee shall be 1.50% per annum, (ii) the "Letter of Credit Fee
Rate", during any period when an Event of Default or Default in delivery of the
certificate pursuant to the last paragraph of Section 9.01 hereof shall have
occurred and be continuing, shall be 2.00% per annum; and (iii) the Letter of
Credit Fee Rate for any Letter of Credit arising out of the purchase of goods
and requiring the presentation of a bill of lading or other transportation
document of title shall be the rate per annum set forth above MINUS 1.00%,
PROVIDED that the Letter of Credit Fee Rate with respect to any such Letter of
Credit shall at no time be less than .25% per annum.
"LETTER OF CREDIT INTEREST" shall mean, for each Revolving Credit
Lender, such Lender's participation interest (or, in the case of the Issuing
Bank, the Issuing Bank's retained interest) in the Issuing Bank's liability
under Letters of Credit and such Lender's rights and interests in Reimbursement
Obligations and fees, interest and other amounts payable in connection with
Letters of Credit and Reimbursement Obligations.
"LETTER OF CREDIT LIABILITY" shall mean, without duplication, at any
time and in respect of any Letter of Credit, the sum of (a) the undrawn amount
of such Letter of Credit PLUS (b) the aggregate unpaid principal amount of all
Reimbursement Obligations of the Company at such time due and payable in respect
of all drawings made under such Letter of Credit. For purposes of this
Agreement, a Revolving Credit Lender (other than the Issuing Bank) shall be
deemed to hold a Letter of Credit Liability in an amount equal to its
participation interest in the related Letter of Credit under Section 2.03
hereof, and the Issuing Bank shall be deemed to hold a Letter of Credit
Liability in an amount equal to its retained interest in the related Letter of
CREDIT AGREEMENT
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Credit after giving effect to the acquisition by the Revolving Credit Lenders
other than the Issuing Bank of their participation interests under said
Section 2.03.
"LEVERAGE RATIO" shall mean, as at any date, the ratio of (a) the
aggregate Indebtedness of the Guarantor and its Subsidiaries (determined on a
consolidated basis without duplication in accordance with GAAP) as of such date
to (b) EBITDA for the Reporting Period as of such date; PROVIDED that
Indebtedness (as used in this definition of "LEVERAGE RATIO") shall not include
any undrawn amount under any letter of credit issued for the account of the
Company or its Subsidiaries but shall include the funded portion of the
Receivables Financing; and PROVIDED, FURTHER, that (i) upon the consummation of
any Permitted Acquisition of a Person (if the Person, line of business or
division so acquired has audited financial statements with respect to the
applicable Reporting Period or, if such audited financial statements are not
available for the entire Reporting Period, the Guarantor has delivered to the
Administrative Agent an income statement and cash flow statement for such
Person, line of business or division for such Reporting Period (which may be
based in part on any audited financial statements available for part of such
Reporting Period) accompanied by a certificate of a senior financial officer of
the Guarantor stating that such officer has reviewed the historical performance
of such Person, line of business or division and believes that such statements
fairly represent in all material respects the historical performance of such
entity) or (ii) upon the consummation of the Azerty Acquisition, the calculation
of the LEVERAGE RATIO (both with respect to EBITDA and Indebtedness) shall be
calculated as if such Permitted Acquisition or the Azerty Acquisition, as the
case may be, had occurred, and any Indebtedness incurred in connection therewith
had been incurred, on the first day of the Reporting Period for the date of such
Permitted Acquisition or the Azerty Acquisition, as the case may be.
"LIEN" shall mean, with respect to any Property, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
Property. For purposes of this Agreement and the other Basic Documents, a
Person shall be deemed to own subject to a Lien any Property that it has
acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
(other than a lease evidencing an Operating Lease Obligation) relating to such
Property.
"LOANS" shall mean the Revolving Credit Loans, the Tranche A Term
Loans, the Tranche B Term Loans and the Swingline Loans.
"MAJORITY LENDERS" shall mean Lenders holding at least 51% of the sum
of (a) the aggregate unused Commitments, (b) the aggregate unpaid principal
amount of the Loans (other than the Swingline Loans) and (c) the aggregate
amount of all Letter of Credit Liabilities.
"MAJORITY REVOLVING CREDIT LENDERS" shall mean Revolving Credit
Lenders holding at least 51% of the aggregate amount of the Revolving Credit
Commitments or, if the Revolving Credit Commitments shall have terminated,
Lenders holding at least 51% of the sum of (a) the aggregate unpaid principal
amount of the Revolving Credit Loans PLUS (b) the aggregate amount of all Letter
of Credit Liabilities.
"MAJORITY TERM LOAN LENDERS" shall mean Majority Tranche A Term Loan
Lenders and Majority Tranche B Term Loan Lenders.
CREDIT AGREEMENT
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"MAJORITY TRANCHE A TERM LOAN LENDERS" shall mean Tranche A Term Loan
Lenders holding at least 51% of the aggregate outstanding principal amount of
the Tranche A Term Loans or, if the Tranche A Term Loans shall not have been
made, at least 51% of the Tranche A Term Loan Commitments.
"MAJORITY TRANCHE B TERM LOAN LENDERS" shall mean Tranche B Term Loan
Lenders holding at least 51% of the aggregate outstanding principal amount of
the Tranche B Term Loans or, if the Tranche B Term Loans shall not have been
made, at least 51% of the Tranche B Term Loan Commitments.
"MARGIN STOCK" shall mean "margin stock" within the meaning of
Regulations U and X.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on
(a) the Property, business, operations, financial condition, prospects,
liabilities or capitalization of the Guarantor and its Subsidiaries taken as a
whole or the Company and its Subsidiaries taken as a whole, (b) the ability of
any Obligor to perform its obligations under any of the Basic Documents to which
it is a party, (c) the validity or enforceability of any of the Basic Documents,
(d) the rights and remedies of the Lenders and the Administrative Agent under
any of the Basic Documents, (e) the consummation of the Azerty Acquisition or
the other transactions contemplated hereby or (f) the timely payment of the
principal of or interest on the Loans or the Reimbursement Obligations or other
amounts payable in connection therewith.
"MERGERS" shall mean the merger of Associated Holdings, Inc. with and
into the Guarantor and the merger of Associated Stationers, Inc. with and into
the Company, each of which was effected on March 30, 1995.
"MORTGAGES" shall mean, collectively, one or more instruments of
Mortgage, Assignment of Rents, Security Agreement and Fixture Filing or Deed of
Trust, Assignment of Rents, Security Agreement and Fixture Filing executed by
the Company in favor of the Administrative Agent for the benefit of the
Administrative Agent and the Lenders (or, in the case of a Deed of Trust, to the
Deed of Trust trustee in favor of the Administrative Agent for the benefit of
the Lenders), substantially in the form of Exhibit C hereto (conformed to local
lending practices in the jurisdiction in which the relevant real Property is
located including, without limitation, additional remedies available to lenders
in such jurisdiction and, if applicable, conformed to the extent necessary to
secure a tenant's interest in a ground lease) and covering the respective owned
and leasehold real Properties identified under the heading "Mortgages" in
Schedule IV hereto, as said instruments of Mortgage, Assignment of Rents,
Security Agreement and Fixture Filing and Deed of Trust, Assignment of Rents,
Security Agreement and Fixture Filing shall be modified, amended, extended and
supplemented and in effect from time to time.
"MULTIEMPLOYER PLAN" shall mean a multiemployer plan defined as such
in Section 3(37) of ERISA to which contributions have been made by the Guarantor
or the Company or any ERISA Affiliate and that is covered by Title IV of ERISA.
"NET AVAILABLE PROCEEDS" shall mean:
CREDIT AGREEMENT
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(i) in the case of any Disposition, the amount of Net Cash Payments
received in connection with such Disposition;
(ii) in the case of any Equity Issuance, the aggregate amount of all
cash received by the Guarantor and its Subsidiaries in respect of such
Equity Issuance net of reasonable expenses incurred in connection therewith
(including, without limitation, any underwriting, brokerage or other
customary selling commissions, all due diligence costs or expenses paid
for, or reimbursed by the Guarantor or any of its Subsidiaries, attorneys
fees and expenses paid for or reimbursed by the Guarantor or any of its
Subsidiaries and other direct costs associated therewith);
(iii) in the case of any Casualty Event, the aggregate amount of
proceeds of insurance, condemnation awards and other compensation received
by the Company and its Subsidiaries in respect of such Casualty Event net
of (A) reasonable expenses incurred by the Company and its Subsidiaries in
connection therewith (including, without limitation, any legal, accounting,
appraisal or expert fees or expenses paid for by the Company or its
Subsidiaries and other direct costs associated therewith),
(B) contractually required repayments of Indebtedness to the extent secured
by a Lien on such Property, (C) any income and transfer taxes payable by
the Company or any of its Subsidiaries in respect of such Casualty Event
and (D) other payments contractually required to be paid to lessors,
sublessors, lessees and sublessees and other holders (other than
Affiliates) of interests in the Property subject to such Casualty Event;
and
(iv) in the case of any Debt Issuance, the aggregate amount of all
cash received by the Guarantor and its Subsidiaries in respect of such Debt
Issuance net of reasonable expenses incurred in connection therewith
(including, without limitation, any underwriting, brokerage or other
customary selling commissions, all due diligence costs or expenses paid
for, or reimbursed by the Guarantor or any of its Subsidiaries, attorneys
fees and expenses paid for or reimbursed by the Guarantor or any of its
Subsidiaries and other direct costs associated therewith).
"NET CASH PAYMENTS" shall mean, with respect to any Disposition, the
aggregate amount of all cash payments (including any cash payments with respect
to non-cash consideration as received and any purchase price adjustments with
respect to such Disposition received by the Guarantor or its Subsidiaries in
connection therewith) received by the Guarantor and its Subsidiaries directly or
indirectly in connection with such Disposition; PROVIDED that (a) Net Cash
Payments shall be net of (i) the amount of any legal, title and recording tax
expenses, commissions and other fees and expenses paid by the Guarantor and its
Subsidiaries in connection with such Disposition, (ii) any Federal, state and
local income or other taxes estimated to be payable by the Guarantor and its
Subsidiaries as a result of such Disposition (but only to the extent that such
estimated taxes (other than income taxes) are in fact paid to the relevant
Federal, state or local governmental authority within three months of the date
of such Disposition), (iii) brokerage or other customary selling commissions,
(iv) expenses incurred in preparing such asset for sale and (v) purchase price
adjustments with respect to any Disposition payable by the Guarantor or any of
its Subsidiaries in connection therewith and (b) Net Cash Payments shall be net
of any repayments by the Guarantor or any of its Subsidiaries of Indebtedness
(other than Indebtedness to the Lenders hereunder) to the extent that (i) such
CREDIT AGREEMENT
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Indebtedness is secured by a Lien on the Property that is the subject of such
Disposition and (ii) the transferee of (or holder of a Lien on) such Property
requires that such Indebtedness be repaid as a condition to the purchase of such
Property.
"NET INCOME" shall mean, for any period, the consolidated net income
of the Guarantor and its Subsidiaries determined in accordance with GAAP.
"NET WORTH" shall mean, as at any date, the consolidated net worth of
the Guarantor and its Subsidiaries (determined in accordance with GAAP) MINUS
any write-up in the book value of assets resulting from a revaluation thereof
except any such write-up relating to the Mergers.
"OBLIGORS" shall mean the Company, the Guarantor and the Subsidiary
Guarantors.
"OPERATING LEASE OBLIGATIONS" shall mean, for any Person, all
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) Property other than a Capital Lease
Obligation.
"ORIGINAL CREDIT AGREEMENT" shall mean the "Existing Credit Agreement"
as defined in the Existing Credit Agreement.
"PART A PROPERTY" shall mean any of the Property described in Part A
of Schedule IV hereto under the heading "Dispositions".
"PART B PROPERTY" shall mean any of the Property described in Part B
of Schedule IV hereto under the heading "Dispositions".
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"PERMITTED ACQUISITION" shall mean any acquisition after the date
hereof by either Obligor of a Person, line of business or division engaged in
the same or substantially similar line of business as the Company and its
Subsidiaries is engaged in on the date hereof, the purchase price of which
acquisition, together with the purchase price of all other Permitted
Acquisitions, does not exceed $75,000,000; PROVIDED that no such acquisition
effected pursuant to a tender offer under Section 14(d) of the Exchange Act
shall qualify as a Permitted Acquisition unless such tender offer has been
authorized by the Board of Directors of the Person to be acquired.
"PERMITTED INVESTMENTS" shall mean: (a) direct obligations of the
United States of America, or of any agency thereof, or obligations guaranteed as
to principal and interest by the United States of America, or of any agency
thereof, in either case maturing not more than 90 days from the date of
acquisition thereof; (b) certificates of deposit issued by any bank or trust
company organized under the laws of the United States of America or any state
thereof and having capital, surplus and undivided profits of at least
$500,000,000, maturing not more than 90 days from the date of acquisition
thereof; and (c) commercial paper rated A-1 or better or P-1 by Standard &
Poor's Ratings Group or Moody's Investors Services, Inc., respectively, maturing
not
CREDIT AGREEMENT
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more than 90 days from the date of acquisition thereof; in each case so long as
the same (x) provide for the payment of principal and interest (and not
principal alone or interest alone) and (y) are not subject to any contingency
regarding the payment of principal or interest.
"PERSON" shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, limited liability company, trust,
unincorporated organization or government (or any agency, instrumentality or
political subdivision thereof).
"PLAN" shall mean an employee benefit or other plan established or
maintained by the Company or any ERISA Affiliate and that is covered by Title IV
of ERISA, other than a Multiemployer Plan.
"PLEDGE AGREEMENT" shall mean the Amended and Restated Pledge
Agreement, dated as of October 31, 1996, between the Guarantor and the
Administrative Agent, as the same shall be modified and supplemented and in
effect from time to time.
"POST-DEFAULT RATE" shall mean, in respect of any principal of any
Loan, any Reimbursement Obligation or any other amount under this Agreement or
any other Basic Document that is not paid when due (whether at stated maturity,
by acceleration, by optional or mandatory prepayment or otherwise), a rate per
annum during the period from and including the due date to but excluding the
date on which such amount is paid in full equal to (a) in the case of any
principal of any Loan or any interest thereon, 2% PLUS the Applicable Margin
with respect to such Loan PLUS the Base Rate as in effect from time to time or
(b) in the case of any other such amount, 4.00% PLUS the Base Rate as in effect
from time to time (PROVIDED that, if the amount so in default is principal of a
Eurodollar Loan and the due date thereof is a day other than the last day of the
Interest Period therefor, the "Post-Default Rate" for such principal shall be,
for the period from and including such due date to but excluding the last day of
such Interest Period, 2% PLUS the interest rate for such Loan as provided in
Section 3.02(b) hereof and, thereafter, the rate provided for above in this
definition).
"PRIME RATE" shall mean the rate of interest from time to time
announced by Chase at the Principal Office as its prime commercial lending rate.
"PRINCIPAL OFFICE" shall mean the principal office of Chase, located
on the date hereof at 270 Park Avenue, New York, New York 10017.
"PRINCIPAL PAYMENT DATE" shall mean each Quarterly Date on which a
principal payment in respect of the Term Loans is required to be made pursuant
to Section 3.01 hereof.
"PRO FORMA EFFECT" shall mean, for any event, to calculate the
operating results for the Reporting Period in respect of the date of such event
as if such event had occurred on the first day of such Reporting Period after
giving effect to any changes in the capital structure or Indebtedness (and
otherwise based upon the actual operating results for such Reporting Period).
"PROPERTY" shall mean any right or interest in or to property of any
kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
CREDIT AGREEMENT
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"QUARTERLY DATES" shall mean March 31, June 30, September 30 and
December 31 of each year, beginning with the first such date occurring after the
Effective Date; PROVIDED that, if any such date is not a Business Day, the
relevant Quarterly Date shall be the next succeeding Business Day.
"RECEIVABLES" shall mean, as at any date, the unpaid portion of the
obligation, as stated on the respective billing statement, of a customer of the
Company or any Subsidiary Guarantor in respect of Inventory sold and shipped by
(or services performed by) the Company or any Subsidiary Guarantor, as the case
may be, to such customer.
"RECEIVABLES AND RELATED ASSETS" shall mean Receivables and any
instruments, documents, chattel paper, obligations, general intangibles and
other similar assets, in each case, relating to such Receivables.
"RECEIVABLES COMPANY" shall mean USS Receivables Company, Ltd., a
Wholly-Owned Subsidiary of the Company organized as a limited liability company
under the laws of the Cayman Islands or any other Wholly-Owned Subsidiary of the
Company established for the limited purpose of acquiring and financing
Receivables and Related Assets pursuant to the Receivables Financing..
"RECEIVABLES FINANCING" shall mean the sale of Receivables and
Related Assets pursuant to the Receivables Financing Documents.
"RECEIVABLES FINANCING DOCUMENTS" shall mean the Receivables Sale
Agreement dated as of the date hereof among the Receivables Company and the
Company, as seller and servicer, the Pooling Agreement dated as of the date
hereof among the Receivables Company, and the Company, as servicer, and Chase,
as trustee and the Servicing Agreement dated as of the date hereof among the
Receivables Company, the Company, as servicer, and Chase, as trustee, and any
amendment, modification, supplement, extension or renewal of or to any such
agreement, including any supplement to the Pooling Agreement delivered
thereunder in compliance therewith, provided (i) the board of directors of the
Company shall have determined in good faith that such amendment, extension,
modification, supplement or renewal is economically fair and reasonable to the
Company and the Receivables Subsidiary, (ii) the sale of any Receivables or
Related Assets pursuant thereto is made at fair market value (as determined in
good faith by the board of directors of the Company), (iii) the financing terms,
covenants and other material provisions of such amendment, extension,
modification, renewal or supplement are market terms (as determined in good
faith by the board of directors of the Company), (iv) no portion of any
Indebtedness created thereunder is guaranteed by or is recourse to the Guarantor
or any other Subsidiary of the Guarantor (other than recourse for customary
representations, warranties, covenants and indemnities, none of which shall
relate to the collectability of the Receivables transferred thereunder) and (v)
neither the Guarantor nor any Subsidiaries of the Guarantor have any obligation
thereunder to maintain or preserve the financial condition of the Receivables
Company.
"REDEEMABLE CAPITAL STOCK" shall mean, with respect to any Person, any
capital stock of such Person that, either by its terms or by the terms of any
security into which it is convertible or exchangeable or otherwise, is or upon
the happening of an event or passage of
CREDIT AGREEMENT
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time would be, required to be redeemed or is redeemable at the option of the
holder thereof prior to April 1, 2005, or is exchangeable for debt securities at
any time at the option of the holder thereof.
"REGISTERED HOLDER" shall have the meaning assigned to such term in
Section 5.07(a)(ii) hereof.
"REGISTERED LOAN" shall have the meaning assigned to such term in
Section 2.08(e) hereof.
"REGULATIONS A, D, U AND X" shall mean, respectively, Regulations A,
D, U and X of the Board of Governors of the Federal Reserve System (or any
successor), as the same may be modified and supplemented and in effect from time
to time.
"REGULATORY CHANGE" shall mean, with respect to any Lender, any change
after the date hereof in applicable Federal, state or foreign law or regulations
(including, without limitation, Regulation D) or the adoption or making after
such date of any interpretation, directive or request applying to a class of
banks including such Lender of or under any Federal, state or foreign law or
regulations (whether or not having the force of law and whether or not failure
to comply therewith would be unlawful) by any court or governmental or monetary
authority charged with the interpretation or administration thereof.
"REIMBURSEMENT OBLIGATIONS" shall mean, at any time, the obligations
of the Company then outstanding, or that may thereafter arise in respect of all
Letters of Credit then outstanding, to reimburse amounts paid by the Issuing
Bank in respect of any drawings under a Letter of Credit.
"RELEASE" shall mean any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment.
"REPORTING PERIOD" shall mean, for any date, the period of four
consecutive fiscal quarters of the Guarantor ending (at the close of business)
on or most recently ended prior to such date.
"RESERVE REQUIREMENT" shall mean, for any Interest Period for any
Eurodollar Loan, the average maximum rate at which reserves (including, without
limitation, any marginal, supplemental or emergency reserves) are required to be
maintained during such Interest Period under Regulation D by member banks of the
Federal Reserve System in New York City with deposits exceeding one billion
Dollars against "Eurocurrency liabilities" (as such term is used in Regulation
D). Without limiting the effect of the foregoing, the Reserve Requirement shall
include any other reserves required to be maintained by such member banks by
reason of any Regulatory Change with respect to (i) any category of liabilities
that includes deposits by reference to which the Eurodollar Base Rate is to be
determined as provided in the definition of "Eurodollar Base Rate" in this
Section 1.01 or (ii) any category of extensions of credit or other assets that
includes Eurodollar Loans.
CREDIT AGREEMENT
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"RESPONSIBLE OFFICER" shall mean, with respect to any Person, the
President, the Treasurer, Chief Financial Officer and Controller of such Person
and such other officer or officers of such Person as the Administrative Agent
may from time to time agree.
"REVOLVING CREDIT COMMITMENT" shall mean, for each Revolving Credit
Lender, the obligation of such Lender to make Revolving Credit Loans in an
aggregate principal amount at any one time outstanding up to but not exceeding
the amount set forth opposite the name of such Lender on Annex 1 hereto under
the caption "Revolving Credit Commitment" (as the same may be reduced from time
to time pursuant to Section 2.04 or 2.10 hereof or reduced or increased from
time to time pursuant to assignments by or to such Revolving Credit Lender
pursuant to Section 12.06 hereof). The aggregate principal amount of the
Revolving Credit Commitments under this Agreement on the date hereof is
$250,000,000.
"REVOLVING CREDIT COMMITMENT PERCENTAGE" shall mean, with respect to
any Revolving Credit Lender, the ratio of (a) the amount of the Revolving Credit
Commitment of such Lender to (b) the aggregate amount of the Revolving Credit
Commitments of all of the Lenders.
"REVOLVING CREDIT COMMITMENT TERMINATION DATE" shall mean the
Quarterly Date falling on or nearest to March 31, 2004.
"REVOLVING CREDIT LENDERS" shall mean (a) on the date hereof, the
Lenders having Revolving Credit Commitments and (b) thereafter, the Lenders from
time to time holding Revolving Credit Loans and Revolving Credit Commitments
after giving effect to any assignments thereof permitted by Section 12.06(b)
hereof.
"REVOLVING CREDIT LOANS" shall mean the loans provided for in
Section 2.01(a) hereof, which may be Base Rate Loans and/or Eurodollar Loans.
"SECURITY AGREEMENT" shall mean the Second Amended and Restated
Security Agreement, substantially in the form of Exhibit A, between the Company
and the Administrative Agent, as the same shall be modified and supplemented and
in effect from time to time.
"SECURITY DOCUMENTS" shall mean, collectively, the Security Agreement,
the Subsidiary Guarantee and Security Agreement, the Mortgages and the Pledge
Agreement.
"SENIOR SUBORDINATED DEBT DOCUMENTS" shall mean the Senior
Subordinated Notes and the Indentures, as the same shall, subject to Section
9.18 hereof, be modified and supplemented and in effect from time to time.
"SENIOR SUBORDINATED NOTES" shall mean the Senior Subordinated Notes
Due 2005, the Take Out Notes and any other senior subordinated notes issued
pursuant to Section 9.07 hereof (including any exchange notes issued in
accordance with the Indenture under which such Senior Subordinated Notes were
issued).
"SENIOR SUBORDINATED NOTES DUE 2005" shall mean the 12-3/4% Senior
Subordinated Notes due May 1, 2005 issued by the Company pursuant to the
Indenture (2005).
CREDIT AGREEMENT
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"SUBORDINATED INDEBTEDNESS" shall mean, collectively, (a) Senior
Subordinated Notes and (b) other Indebtedness (i) for which the Company is
directly and primarily liable, (ii) in respect of which none of its Subsidiaries
is contingently or otherwise obligated and (iii) that is subordinated to the
obligations of the Company to pay principal of and interest on the Loans and
Reimbursement Obligations hereunder on terms, and pursuant to documentation
containing other terms (including interest, amortization, covenants and events
of default), in form and substance satisfactory to the Majority Lenders.
"SUBSIDIARY" shall mean, with respect to any Person, any corporation,
partnership or other entity of which at least a majority of the securities or
other ownership interests having by the terms thereof ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions of such corporation, partnership or other entity (irrespective of
whether or not at the time securities or other ownership interests of any other
class or classes of such corporation, partnership or other entity shall have or
might have voting power by reason of the happening of any contingency) is at the
time directly or indirectly owned or controlled by such Person or one or more
Subsidiaries of such Person or by such Person and one or more Subsidiaries of
such Person.
"SUBSIDIARY GUARANTEE AND SECURITY AGREEMENT" shall mean the
Subsidiary Guarantee and Security Agreement, substantially in the form of the
Subsidiary Guarantee and Security Agreement attached hereto as Exhibit B, among
the Subsidiary Guarantors and the Administrative Agent, as the same may be
modified and supplemented and in effect from time to time.
"SUBSIDIARY GUARANTORS" shall mean Lagasse, Azerty, Positive, AP
Support and each other Domestic Subsidiary of the Guarantor (other than the
Company) that shall become a "Subsidiary Guarantor" pursuant to Section 9.22
hereof.
"SWINGLINE COMMITMENT" shall mean the obligation of the Swingline
Lender to make Swingline Loans pursuant to Section 2.01(d) hereof in an
aggregate amount at any one time outstanding up to but not exceeding $25,000,000
(as the same may be reduced at any time or from time to time pursuant to Section
2.04 or 2.10 hereof).
"SWINGLINE LOANS" shall mean the loans provided for by Section 2.01(d)
hereof.
"SWINGLINE RATE" shall mean, for any day, the Base Rate in effect for
such date. Each change in any interest rate provided for herein based upon the
Swingline Rate resulting from a change to the Swingline Rate shall take effect
at the time of such change in the Swingline Rate.
"TAKE OUT NOTES" shall mean senior subordinated debentures or notes
issued by the Company after the date hereof (i) having terms (other than as to
pricing and subordination) not materially more restrictive with respect to the
Guarantor and its Subsidiaries than those terms contained in the Indenture
(2005), (ii) having subordination terms not materially less favorable to the
Lenders than those contained in the Indenture (2005), (iii) in an aggregate
principal amount not exceeding $150,000,000 at any one time outstanding, (iv)
maturing not earlier than ten years from the date hereof and (v) having a cash
interest rate or coupon of not more than 10% per
CREDIT AGREEMENT
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annum; the proceeds of which shall be used to prepay the Loans in accordance
with Section 2.10(c) hereof.
"TAX SHARING AGREEMENT" shall have the meaning assigned to such term
in Section 9.21 hereof.
"TERM LOAN COMMITMENTS" shall mean the Tranche A Term Loan Commitments
and the Tranche B Term Loan Commitments.
"TERM LOAN LENDERS" shall mean Tranche A Term Loan Lenders and Tranche
B Term Loan Lenders.
"TERM LOANS" shall mean the Tranche A Term Loans and the Tranche B
Term Loans.
"TRANCHE A TERM LOAN COMMITMENT" shall mean, for each Tranche A Term
Loan Lender, the obligation of such Lender to make a Tranche A Term Loan in the
amount set forth opposite the name of such Lender on Annex 1 hereto under the
caption "Tranche A Term Loan Commitment" (as the same may be reduced from time
to time pursuant to Section 2.04 or 2.10 hereof or reduced or increased from
time to time pursuant to assignments by or to such Term Loan Lender pursuant to
Section 12.06 hereof). The aggregate principal amount of the Tranche A Term
Loan Commitments under this Agreement on the date hereof is $150,000,000.
"TRANCHE A TERM LOAN LENDERS" shall mean (a) on the date hereof, the
Lenders having Tranche A Term Loan Commitments and (b) thereafter, the Lenders
from time to time holding Tranche A Term Loans after giving effect to any
assignments thereof permitted by Section 12.06(b) hereof.
"TRANCHE A TERM LOANS" shall mean the loans provided for by Section
2.01(b) hereof, which may be Base Rate Loans and/or Eurodollar Loans.
"TRANCHE B TERM LOAN COMMITMENT" shall mean, for each Tranche B Term
Loan Lender, the obligation of such Lender to make a Tranche B Term Loan in the
amount set forth opposite the name of such Lender on Annex 1 hereto under the
caption "Tranche B Term Loan Commitment" (as the same may be reduced from time
to time pursuant to Section 2.04 or 2.10 hereof or reduced or increased from
time to time pursuant to assignments by or to such Term Loan Lender pursuant to
Section 12.06 hereof). The aggregate principal amount of the Tranche B Term
Loan Commitments under this Agreement on the date hereof is $100,000,000.
"TRANCHE B TERM LOAN LENDERS" shall mean (a) on the date hereof, the
Lenders having Tranche B Term Loan Commitments and (b) thereafter, the Lenders
from time to time holding Tranche B Term Loans after giving effect to any
assignments thereof permitted by Section 12.06(b) hereof.
"TRANCHE B TERM LOANS" shall mean the loans provided for by Section
2.01(c) hereof, which may be Base Rate Loans and/or Eurodollar Loans.
CREDIT AGREEMENT
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"TRANSACTION DOCUMENTS" shall mean the Basic Documents and the
Purchase Agreement.
"TYPE" shall have the meaning assigned to such term in Section 1.03
hereof.
"U.S. PERSON" shall mean a citizen or resident of the United States of
America, a corporation, partnership or other entity created or organized in or
under any laws of the United States of America or any State thereof, or any
estate or trust the income of which is subject to Federal income taxation
regardless of its source.
"U.S. TAXES" shall mean any present or future tax, assessment or other
charge or levy imposed by or on behalf of the United States of America or any
taxing authority thereof.
"WARRANT AGREEMENT" shall mean the Warrant Agreement dated as of
January 31, 1992 among the Guarantor and the Holders party thereto, as amended
by Amendment No. 1 thereto, dated as of March 30, 1995, as the same shall be
further modified and supplemented and in effect from time to time.
"WHOLLY-OWNED SUBSIDIARY" shall mean, with respect to any Person, any
corporation, partnership or other entity of which all of the equity securities
or other ownership interests (other than, in the case of a corporation,
directors' qualifying shares) are directly or indirectly owned or controlled by
such Person or one or more Wholly-Owned Subsidiaries of such Person or by such
Person and one or more Wholly-Owned Subsidiaries of such Person.
1.02 ACCOUNTING TERMS AND DETERMINATIONS.
(a) Except as otherwise expressly provided herein, all accounting
terms used herein shall be interpreted, and all financial statements and
certificates and reports as to financial matters required to be delivered to the
Lenders hereunder shall (unless otherwise disclosed to the Lenders in writing at
the time of delivery thereof in the manner described in subsection (b) below) be
prepared, in accordance with generally accepted accounting principles applied on
a basis consistent with those used in the preparation of the latest financial
statements furnished to the Lenders hereunder (which, prior to the delivery of
the first financial statements under Section 9.01 hereof, shall mean the audited
consolidated financial statements of the Guarantor as at December 31, 1997
referred to in Section 8.02(a)(ii) hereof except for immaterial variations
thereto). All calculations made for the purposes of determining compliance with
this Agreement shall (except as otherwise expressly provided herein) be made by
application of generally accepted accounting principles applied on a basis
consistent with those used in the preparation of the latest annual or quarterly
financial statements furnished to the Lenders pursuant to Section 9.01 hereof
(or, prior to the delivery of the first financial statements under Section 9.01
hereof, used in the preparation of the audited consolidated financial statements
of the Guarantor as at December 31, 1997 referred to in Section 8.02(a)(ii)
hereof) unless (i) the Company shall have objected to determining such
compliance on such basis at the time of delivery of such financial statements or
(ii) the Majority Lenders shall so object in writing within 30 days after
delivery of such financial statements, in either of which events such
calculations shall be made on a basis consistent with those used in the
preparation of the latest financial statements as to which such objection shall
not have been made (which, if objection is made in respect of the first
financial statements delivered under Section 9.01 hereof, shall mean the audited
consolidated
CREDIT AGREEMENT
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financial statements of the Guarantor as at December 31, 1997 referred to in
Section 8.02(a)(ii) hereof). Notwithstanding the foregoing, all financial
statements delivered to the Lenders hereunder shall be prepared utilizing the
last-in-first-out basis of inventory valuation but all calculations made for the
purpose of determining compliance with this Agreement shall be prepared
utilizing the first-in-first-out basis of inventory valuation.
(b) The Company shall deliver to the Lenders at the same time as the
delivery of any annual or quarterly financial statement under Section 9.01
hereof (i) a description in reasonable detail of any material variation between
the application of accounting principles employed in the preparation of such
statement and the application of accounting principles employed in the
preparation of the next preceding annual or quarterly financial statements as to
which no objection has been made in accordance with the last sentence of
subsection (a) above and (ii) reasonable estimates of the difference between
such statements arising as a consequence thereof.
(c) To enable the ready and consistent determination of compliance
with the covenants set forth in Section 9 hereof, the Company will not change
the last day of its fiscal year from December 31, or the last days of the first
three fiscal quarters in each of its fiscal years from March 31, June 30 and
September 30 of each year, respectively.
1.03 CLASSES AND TYPES OF LOANS. Loans hereunder are distinguished
by "Class" and by "Type". The "Class" of a Loan (or of a Commitment to make a
Loan) refers to whether such Loan is a Revolving Credit Loan, a Tranche A Term
Loan, a Tranche B Term Loan or a Swingline Loan, each of which constitutes a
Class. The "Type" of a Loan refers to whether such Loan is a Base Rate Loan or
a Eurodollar Loan, each of which constitutes a Type. Loans may be identified by
both Class and Type.
Section 2. COMMITMENTS, LOANS AND PREPAYMENTS.
2.01 LOANS.
(a) REVOLVING CREDIT LOANS. Each Revolving Credit Lender severally
agrees, on the terms and conditions of this Agreement, to make loans to the
Company in Dollars during the period from and including the Effective Date to
but not including the Revolving Credit Commitment Termination Date in an
aggregate principal amount at any one time outstanding up to but not exceeding
the amount of the Revolving Credit Commitment of such Lender as in effect from
time to time; PROVIDED that in no event shall the aggregate outstanding
principal amount of all Revolving Credit Loans, together with the aggregate
outstanding principal amount of all Swingline Loans and the aggregate amount of
all Letter of Credit Liabilities, exceed the aggregate amount of the Revolving
Credit Commitments as in effect from time to time. Subject to the terms and
conditions of this Agreement, during such period the Company may borrow, repay
and reborrow the amount of the Revolving Credit Commitments by means of Base
Rate Loans and Eurodollar Loans and may Convert Revolving Credit Loans of one
Type into Revolving Credit Loans of another Type (as provided in Section 2.09
hereof) or Continue Revolving Credit Loans of one Type as Revolving Credit Loans
of the same Type (as provided in Section 2.09 hereof).
CREDIT AGREEMENT
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(b) TRANCHE A TERM LOANS. Each Tranche A Term Loan Lender severally
agrees, on the terms and conditions of this Agreement, to make a term loan to
the Company in Dollars on the Effective Date in an aggregate principal amount
equal to the amount of the Tranche A Term Loan Commitment of such Lender.
Thereafter the Company may Convert Tranche A Term Loans of one Type into Tranche
A Term Loans of another Type (as provided in Section 2.09 hereof) or Continue
Tranche A Term Loans of one Type as Tranche A Term Loans of the same Type (as
provided in Section 2.09 hereof).
(c) TRANCHE B TERM LOANS. Each Tranche B Term Loan Lender severally
agrees, on the terms and conditions of this Agreement, to make a term loan to
the Company in Dollars on the Effective Date in an aggregate principal amount
equal to the amount of the Tranche B Term Loan Commitment of such Lender.
Thereafter the Company may Convert Tranche B Term Loans of one Type into Tranche
B Term Loans of another Type (as provided in Section 2.09 hereof) or Continue
Tranche B Term Loans of one Type as Tranche B Term Loans of the same Type (as
provided in Section 2.09 hereof).
(d) SWINGLINE LOANS. The Swingline Lender agrees, on the terms and
conditions of this Agreement, to make loans ("SWINGLINE LOANS") to the Company
during the period from the Effective Date to but excluding the date five
Business Days prior to the Revolving Credit Commitment Termination Date in an
aggregate amount at any one time outstanding up to but not exceeding its
Swingline Commitment; PROVIDED that the aggregate principal amount of all
Revolving Credit Loans and Swingline Loans together with all Letter of Credit
Liabilities shall not at any time outstanding exceed the aggregate amount of the
Revolving Credit Commitments, as in effect from time to time. Subject to the
terms of this Agreement, the Company may borrow, repay and reborrow the amount
of the Swingline Commitment by means of Loans that bear interest at the
Swingline Rate; PROVIDED that no Swingline Loan may be borrowed to repay an
outstanding Swingline Loan.
(e) LIMIT ON EURODOLLAR LOANS. No more than seven separate Interest
Periods in respect of Eurodollar Loans of any Class from each Lender may be
outstanding at any one time.
(f) LOANS UNDER EXISTING CREDIT AGREEMENT. The principal of,
interest on and all other amounts owing in respect of any outstanding "Loan" (as
defined in the Existing Credit Agreement) under the Existing Credit Agreement
shall be repaid in full on the Effective Date, and the Loans made under this
Credit Agreement shall be substituted under the Liens of the Mortgages.
2.02 BORROWINGS.
(a) GENERAL. The Company shall give the Administrative Agent (which
shall promptly notify the relevant Lenders) or, in the case of Swingline Loans,
the Swingline Lender, notice of each borrowing hereunder as provided in
Section 4.05 hereof, which notice may be delivered by telephone if followed
promptly by notice in writing. Not later than 2:00 p.m. New York time on the
date specified for each borrowing hereunder, each relevant Lender shall make
available the amount of the Loan or Loans to be made by it on such date to the
Administrative Agent, at any account designated by the Administrative Agent with
Chase at the Principal Office, in immediately available funds, for account of
the Company. The amount so received by the
CREDIT AGREEMENT
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Administrative Agent shall, subject to the terms and conditions of this
Agreement, be made available to the Company by depositing the same, in
immediately available funds, in an account of the Company maintained with Chase
at the Principal Office designated by the Company or by repaying any then
outstanding Swingline Loan, as set forth in Section 2.02(b).
(b) BORROWINGS TO REPAY SWINGLINE LOANS. Unless the Company has
already given a notice of borrowing of Revolving Credit Loans to repay a
Swingline Loan, if any Swingline Loan remains outstanding, at any time until the
unpaid principal amount of such Swingline Loan shall have been paid in full, the
Swingline Lender may, and the Company hereby irrevocably authorizes and empowers
(which power is coupled with an interest) the Swingline Lender to, deliver, on
behalf of the Company, to the Administrative Agent under Section 2.02(a) hereof
a notice of borrowing of Revolving Credit Loans that are Base Rate Loans in an
amount equal to the then unpaid principal amount of such Swingline Loan. In the
event that the power of the Swingline Lender to give such notice of borrowing on
behalf of the Company is terminated for any reason whatsoever (including,
without limitation, a termination resulting from the occurrence of an event
specified in clause (f) or (g) of Section 10 hereof with respect to the
Company), or the Swingline Lender is otherwise precluded for any reason
whatsoever from giving a notice of borrowing on behalf of the Company as
provided in the preceding sentence, each Lender shall, upon notice from the
Swingline Lender, promptly purchase from the Swingline Lender a participation in
(or, if and to the extent specified by the Swingline Lender, an assignment of)
such Swingline Loan in the amount of the Base Rate Loan it would have been
obligated to make pursuant to such notice of borrowing. Each Lender shall, not
later than 4:00 p.m. New York time on the Business Day on which such notice is
given (if such notice is given by 12:00 noon New York time) or 11:00 a.m. New
York time on the next succeeding Business Day (if such notice is given after
12:00 p.m., but before 5:00 p.m., New York time), make available the amount of
the Base Rate Loan to be made by it (or the amount of the participation or
assignment to be purchased by it, as the case may be) to the Administrative
Agent at the account specified in Section 2.02(a) hereof and the amount so
received by the Administrative Agent shall promptly be made available to the
Swingline Lender by remitting the same, in immediately available funds, to the
Swingline Lender. Promptly following its receipt of any payment in respect of
such Swingline Loans, the Swingline Lender shall pay to each Lender that has
acquired a participation in such Swingline Loan such Lender's proportionate
share of such payment. Anything in this Agreement to the contrary
notwithstanding (including, without limitation, in Section 7.02 hereof), the
obligation of each Lender to make its Base Rate Loan (or purchase its
participation in or assignment of such Swingline Loan, as the case may be)
pursuant to this Section 2.02(b) is unconditional under any and all
circumstances whatsoever and shall not be subject to set-off, counterclaim or
defense to payment that such Lender may have or have had against the Company,
the Guarantor, the Administrative Agent, the Swingline Lender or any other
Lender and, without limiting any of the foregoing, shall be unconditional
irrespective of (i) the occurrence of any Default, (ii) the financial condition
of the Company, any Subsidiary, the Guarantor, the Administrative Agent, the
Swingline Lender or any other Lender or (iii) the termination or cancellation of
the Commitments; PROVIDED that no Lender shall be obligated to make any such
Base Rate Loan (or to purchase any such participation or direct interest in the
Swingline Loan) if (i) before the making of such Swingline Loan, such Lender had
notified the Swingline Lender that a Default had occurred and was continuing and
that such Lender would not refinance such Swingline Loan or (ii) to the extent
(and only to the extent) that such
CREDIT AGREEMENT
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Swingline Loan, together with all Revolving Credit Loans then outstanding at the
time of the making of such Swingline Loan together with the aggregate amount of
all outstanding Letter of Credit Liabilities exceeds the then aggregate amount
of the Revolving Credit Commitments at the time of the making of such Swingline
Loan. The Company agrees that any Lender so purchasing a participation (or
assignment) in such Swingline Loan may exercise all rights of set-off, bankers'
lien, counterclaim or similar rights with respect to such participation as fully
as if such Lender were a direct holder of a Swingline Loan in the amount of such
participation. The Company hereby promises to pay the Administrative Agent for
account of the Swingline Lender the entire outstanding principal amount of the
Swingline Loans, and each such Swingline Loan shall mature, on the Revolving
Credit Commitment Termination Date.
2.03 LETTERS OF CREDIT. Subject to the terms and conditions of this
Agreement, the Revolving Credit Commitments may be utilized, upon the request of
the Company, in addition to the Revolving Credit Loans provided for by
Section 2.01(a) hereof, by the issuance by the Issuing Bank of letters of credit
(collectively, "Letters of Credit") for account of the Company or any of its
Subsidiaries (as specified by the Company) and payable in Dollars, PROVIDED that
in no event shall (i) the aggregate amount of all Letter of Credit Liabilities
PLUS the aggregate outstanding principal amount of the Revolving Credit Loans
and the aggregate outstanding principal amount of the Swingline Loans, exceed
the aggregate amount of the Revolving Credit Commitments as in effect from time
to time, (ii) the outstanding aggregate amount of all Letter of Credit
Liabilities exceed $90,000,000 and (iii) the expiration date of any Letter of
Credit extend beyond the earlier of (I) the Revolving Credit Commitment
Termination Date and (II) the date twelve months following the issuance of such
Letter of Credit (or in the case of any renewal or extension thereof, twelve
months after such renewal or extension). The following additional provisions
shall apply to Letters of Credit:
(a) The Company shall give the Administrative Agent at least
three Business Days' irrevocable prior notice (effective upon receipt)
specifying the Business Day (which shall be no later than thirty days
preceding the Revolving Credit Commitment Termination Date) each Letter of
Credit is to be issued and the account party or parties therefor and
describing in reasonable detail the proposed terms of such Letter of Credit
(including the beneficiary thereof) and the nature of the transactions or
obligations proposed to be supported thereby (including whether such Letter
of Credit is to be a commercial letter of credit or a standby letter of
credit). Upon receipt of any such notice, the Administrative Agent shall
advise the Issuing Bank of the contents thereof.
(b) On each day during the period commencing with the issuance by the
Issuing Bank of any Letter of Credit and until such Letter of Credit shall
have expired or been terminated, the Revolving Credit Commitment of each
Revolving Credit Lender shall be deemed to be utilized for all purposes of
this Agreement in an amount equal to such Lender's Revolving Credit
Commitment Percentage of the then undrawn amount of such Letter of Credit.
Each Revolving Credit Lender (other than the Issuing Bank) agrees that,
upon the issuance of any Letter of Credit hereunder, it shall automatically
acquire a participation in the Issuing Bank's liability under such Letter
of Credit in an amount equal to such Lender's Revolving Credit Commitment
Percentage of such liability, and each Revolving Credit Lender (other than
the Issuing Bank) thereby shall absolutely,
CREDIT AGREEMENT
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unconditionally and irrevocably assume, as primary obligor and not as
surety, and shall be unconditionally obligated to the Issuing Bank to pay
and discharge when due, its Revolving Credit Commitment Percentage of the
Issuing Bank's liability under such Letter of Credit.
(c) Upon receipt from the beneficiary of any Letter of Credit of any
demand for payment under such Letter of Credit, the Issuing Bank shall
promptly notify the Company (through the Administrative Agent) of the
amount to be paid by the Issuing Bank as a result of such demand and the
date on which payment is to be made by the Issuing Bank to such beneficiary
in respect of such demand. Notwithstanding the identity of the account
party of any Letter of Credit, the Company hereby unconditionally agrees to
pay and reimburse the Administrative Agent for account of the Issuing Bank
for the amount of each demand for payment under such Letter of Credit that
is in substantial compliance with the provisions of such Letter of Credit
at or prior to the date on which payment is to be made by the Issuing Bank
to the beneficiary thereunder, without presentment, demand, protest or
other formalities of any kind.
(d) Forthwith upon its receipt of a notice referred to in
paragraph (c) of this Section 2.03, the Company shall advise the
Administrative Agent whether or not the Company intends to borrow hereunder
to finance its obligation to reimburse the Issuing Bank for the amount of
the related demand for payment and, if it does, submit a notice of such
borrowing as provided in Section 4.05 hereof. In the event that the
Company fails to so advise the Administrative Agent, or if the Company
fails to reimburse the Issuing Bank for a demand for payment under a Letter
of Credit by the date of such payment, the Administrative Agent shall give
each Revolving Credit Lender prompt notice of the demand for payment,
specifying such Lender's Revolving Credit Commitment Percentage of the
amount of the related demand for payment.
(e) Each Revolving Credit Lender (other than the Issuing Bank) shall
pay to the Administrative Agent for account of the Issuing Bank at the
Principal Office in Dollars and in immediately available funds, the amount
of such Lender's Revolving Credit Commitment Percentage of any payment
under a Letter of Credit upon notice by the Issuing Bank (through the
Administrative Agent) to such Revolving Credit Lender requesting such
payment and specifying such amount, unless such payment under such Letter
of Credit would not have been made but for the gross negligence or willful
misconduct of the Issuing Bank. Each such Revolving Credit Lender's
obligation to make such payment to the Administrative Agent for account of
the Issuing Bank under this paragraph (e), and the Issuing Bank's right to
receive the same, shall, subject to the preceding sentence, be absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including, without limitation, the failure of any other Revolving Credit
Lender to make its payment under this paragraph (e), the financial
condition of any Obligor (or any other account party), the existence of any
Default or the termination of the Commitments. Each such payment to the
Issuing Bank shall be made without any offset, abatement, withholding or
reduction whatsoever. If any Revolving Credit Lender shall default in its
obligation to make any such payment to the Administrative Agent for account
of the Issuing Bank, for so long as such default shall
CREDIT AGREEMENT
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continue the Administrative Agent may, at the request of the Issuing Bank,
withhold from any payments received by the Administrative Agent under this
Agreement for account of such Revolving Credit Lender the amount so in
default and, to the extent so withheld, pay the same to the Issuing Bank in
satisfaction of such defaulted obligation.
(f) Upon the making of each payment by a Revolving Credit Lender to
the Issuing Bank pursuant to paragraph (e) above in respect of any Letter
of Credit, such Lender shall, automatically and without any further action
on the part of the Administrative Agent, the Issuing Bank or such Lender,
acquire (i) a participation in an amount equal to such payment in the
Reimbursement Obligation owing to the Issuing Bank by the Company hereunder
and under the Letter of Credit Documents relating to such Letter of Credit
and (ii) a participation in a percentage equal to such Lender's Revolving
Credit Commitment Percentage in any interest or other amounts payable by
the Company hereunder and under such Letter of Credit Documents in respect
of such Reimbursement Obligation (other than the commissions, charges,
costs and expenses payable to the Issuing Bank pursuant to paragraph (g) of
this Section 2.03). Upon receipt by the Issuing Bank from or for account
of the Company of any payment in respect of any Reimbursement Obligation or
any such interest or other amount (including by way of setoff or
application of proceeds of any collateral security) the Issuing Bank shall
promptly pay to the Administrative Agent for account of each Revolving
Credit Lender entitled thereto, such Revolving Credit Lender's Revolving
Credit Commitment Percentage of such payment, each such payment by the
Issuing Bank to be made in the same money and funds in which received by
the Issuing Bank. In the event any payment received by the Issuing Bank
and so paid to the Revolving Credit Lenders hereunder is rescinded or must
otherwise be returned by the Issuing Bank, each Revolving Credit Lender
shall, upon the request of the Issuing Bank (through the Administrative
Agent), repay to the Issuing Bank (through the Administrative Agent) the
amount of such payment paid to such Lender, with interest at the rate
specified in paragraph (j) of this Section 2.03.
(g) The Company shall pay to the Administrative Agent for account of
each Revolving Credit Lender (ratably in accordance with their respective
Revolving Credit Commitment Percentages) a letter of credit fee in respect
of each Letter of Credit in an amount equal to a rate per annum equal to
the Letter of Credit Fee Rate of the daily average undrawn amount of such
Letter of Credit for the period from and including the date of issuance of
such Letter of Credit (i) in the case of a Letter of Credit that expires in
accordance with its terms, to and including such expiration date and (ii)
in the case of a Letter of Credit that is drawn in full or is otherwise
terminated other than on the stated expiration date of such Letter of
Credit, to but excluding the date such Letter of Credit is drawn in full or
is terminated (such fee to be non-refundable, to be paid in arrears on each
Quarterly Date and on the Revolving Credit Commitment Termination Date and
to be calculated for any day after giving effect to any payments made under
such Letter of Credit on such day). In addition, the Company shall pay to
the Administrative Agent for account of the Issuing Bank a fronting fee in
respect of each Letter of Credit in an amount equal to 1/4 of 1% per annum
of the daily average undrawn amount of such Letter of Credit for the period
from and including the date of issuance of such Letter of
CREDIT AGREEMENT
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Credit (i) in the case of a Letter of Credit that expires in accordance
with its terms, to and including such expiration date and (ii) in the case
of a Letter of Credit that is drawn in full or is otherwise terminated
other than on the stated expiration date of such Letter of Credit, to but
excluding the date such Letter of Credit is drawn in full or is terminated
(such fee to be non-refundable, to be paid in arrears on each Quarterly
Date and on the Revolving Credit Commitment Termination Date and to be
calculated for any day after giving effect to any payments made under such
Letter of Credit on such day) plus all commissions, charges, costs and
expenses in the amounts customarily charged by the Issuing Bank from time
to time in like circumstances with respect to the issuance of each Letter
of Credit and drawings and other transactions relating thereto and as shown
in fee schedules provided by the Issuing Bank to the Company.
(h) Promptly following the end of each calendar month, the Issuing
Bank shall deliver (through the Administrative Agent) to each Revolving
Credit Lender and the Company a notice describing the aggregate amount of
all Letters of Credit outstanding at the end of the month. Upon the
request of any Revolving Credit Lender from time to time, the Issuing Bank
shall deliver any information reasonably requested by such Lender with
respect to each Letter of Credit then outstanding.
(i) The issuance by the Issuing Bank of each Letter of Credit shall,
in addition to the conditions precedent set forth in Section 7 hereof, be
subject to the conditions precedent that (i) such Letter of Credit shall be
in such form, contain such terms and support such transactions as shall be
satisfactory to the Issuing Bank consistent with its then current practices
and procedures with respect to letters of credit of the same type and
(ii) the Company shall have executed and delivered such applications,
agreements and other instruments relating to such Letter of Credit as the
Issuing Bank shall have reasonably requested consistent with its then
current practices and procedures with respect to letters of credit of the
same type, PROVIDED that in the event of any conflict between any such
application, agreement or other instrument and the provisions of this
Agreement or any Security Document, the provisions of this Agreement and
the Security Documents shall control.
(j) To the extent that any Revolving Credit Lender shall fail to pay
any amount required to be paid pursuant to paragraph (e) or (f) of this
Section 2.03 on the due date therefor, such Lender shall pay interest to
the Issuing Bank (through the Administrative Agent) on such amount from and
including such due date to but excluding the date such payment is made at a
rate per annum equal to the Federal Funds Rate, PROVIDED that if such
Lender shall fail to make such payment to the Issuing Bank within three
Business Days of such due date, then, retroactively to the due date, such
Lender shall be obligated to pay interest on such amount at the
Post-Default Rate.
(k) The issuance by the Issuing Bank of any modification or
supplement to any Letter of Credit hereunder shall be subject to the same
conditions applicable under this Section 2.03 to the issuance of new
Letters of Credit, and no such modification or supplement shall be issued
hereunder unless either (i) the respective Letter of Credit affected
thereby would have complied with such conditions had it originally been
issued hereunder in such modified or supplemented form or (ii) the Majority
Revolving Credit
CREDIT AGREEMENT
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Lenders (if such conditions could have been amended with the consent of the
Majority Revolving Credit Lenders) or all of the Revolving Credit Lenders
(if such conditions could only have been amended with the consent of all
Revolving Credit Lenders) shall have consented thereto.
(l) Concurrently with the satisfaction of the conditions precedent
set forth in Section 7.01 hereof, all letters of credit outstanding on the
Effective Date under the Existing Credit Agreement shall be deemed to be
Letters of Credit outstanding hereunder and the Revolving Credit Lenders
shall, automatically and without further action on the part of the Agent,
the Issuing Bank or such Revolving Credit Lenders, acquire a participation
interest in each such letter of credit as if such letter of credit shall
have been issued hereunder. From and after the Effective Date, the Letter
of Credit Fee Rate with respect to any such Letter of Credit shall be
determined in accordance with the definition of "Letter of Credit Fee Rate"
as set forth in Section 1 hereof.
The Company hereby indemnifies and holds harmless each Revolving Credit Lender
and the Administrative Agent from and against any and all claims, damages,
losses, liabilities, costs or expenses that such Lender or the Administrative
Agent may incur (or that may be claimed against such Lender or the
Administrative Agent by any Person whatsoever) by reason of or in connection
with the execution and delivery or transfer of or payment or refusal to pay by
the Issuing Bank under any Letter of Credit; PROVIDED that the Company shall not
be required to indemnify any Lender or the Administrative Agent for any claims,
damages, losses, liabilities, costs or expenses to the extent, but only to the
extent, caused by (x) the willful misconduct or gross negligence of the Issuing
Bank in determining whether a request presented under any Letter of Credit
complied with the terms of such Letter of Credit or (y) the Issuing Bank's
failure to pay under any Letter of Credit after the presentation to it of a
request strictly complying with the terms and conditions of such Letter of
Credit. Nothing in this Section 2.03 is intended to limit the other obligations
of the Company, any Lender, the Issuing Bank or the Administrative Agent under
this Agreement.
2.04 CHANGES OF COMMITMENTS.
(a) The Company shall have the right at any time or from time to time
(i) to terminate or reduce the aggregate unused amount of the Term Loan
Commitments, (ii) so long as no Revolving Credit Loans, Swingline Loans or
Letter of Credit Liabilities are outstanding, to terminate the Revolving Credit
Commitments and (iii) to reduce the aggregate unused amount of the Revolving
Credit Commitments (for which purpose use of the Revolving Credit Commitments
shall be deemed to include the aggregate amount of Letter of Credit
Liabilities); PROVIDED that (x) the Company shall give notice of each such
termination or reduction as provided in Section 4.05 hereof, (y) each partial
reduction shall be in an aggregate amount at least equal to $5,000,000 (or a
larger multiple of $1,000,000) and (z) the aggregate amount of the Revolving
Credit Commitments shall at no time be less than the aggregate outstanding
principal amount of all Revolving Credit Loans, Swingline Loans and Letter of
Credit Liabilities.
(b) Any portion of the Term Loan Commitments not used on the
Effective Date shall terminate automatically at the close of business on the
Effective Date.
CREDIT AGREEMENT
<PAGE>
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(c) The Company shall have the right to terminate or reduce the
unused amount of the Swingline Commitment at any time or from time to time on
not less than three Business Days' prior notice to the Administrative Agent
(which shall promptly notify the Swingline Lender and each Lender) of each such
termination or reduction, which notice shall specify the effective date thereof
and the amount of any such reduction (which shall be in integral multiples of
$100,000) and shall be irrevocable and effective only upon receipt by the
Administrative Agent.
(d) The Commitments of any Class (including the Swingline Commitment)
once terminated or reduced may not be reinstated.
2.05 COMMITMENT FEE. The Company shall pay to the Administrative
Agent for account of each Revolving Credit Lender a commitment fee on the daily
average unused amount of the Revolving Credit Commitment of such Lender (solely
for which purpose the aggregate amount of any Letter of Credit Liabilities shall
be deemed to be a pro rata (based on the Revolving Credit Commitments) Use of
each Revolving Credit Lender's Revolving Credit Commitment and outstanding
Swingline Loans shall not constitute the use of any Revolving Credit Lender's
Revolving Credit Commitment other than the Swingline Lender), for the period
from and including the date of this Agreement to but Not including the earlier
of the date such Revolving Credit Commitment terminates or is terminated, at a
rate per annum for any period from and including the date on which the Company
shall have delivered a certificate pursuant to the last paragraph of Section
9.01 hereof demonstrating in reasonable detail (based upon financial statements
for the fiscal period of the Guarantor most recently ended that have been
delivered to the Lenders pursuant to Section 9.01(a) or (b) Hereof or, prior to
the delivery of financial statements pursuant to said section, the financial
statements of the Guarantor referred to in Section 8.02(a) hereof) that the
LEVERAGE RATIO, as of the end of the respective quarterly fiscal period or
fiscal year, is within one of the ranges set forth below, to but excluding the
date of delivery of the next such certificate, shall equal the percentage per
annum set forth below:
<TABLE>
<CAPTION>
Ratio Commitment Fee
----- --------------
<S> <C>
Greater than 4.5 to 1 .500%
Less than or equal 4.5 to 1 .375%
but greater than 3.5 to 1
Less than or equal
to 3.5 to 1 .250%
</TABLE>
PROVIDED that (i) notwithstanding the foregoing, for purposes of determining the
commitment fee at any time prior to the delivery of the compliance certificate
required under the last paragraph of Section 9.01 hereof for the fiscal quarter
of the Guarantor ending September 30, 1998, if the Leverage Ratio, as reflected
on the then most recent compliance certificate delivered under the last
paragraph of Section 9.01 hereof, is less than or equal to 4.0 to 1, the
commitment fee shall be .375% per annum and (ii) during any period when an Event
of Default or Default in delivery of the certificate pursuant to clause (ii) of
the last paragraph of Section 9.01 hereof shall have occurred and be continuing,
such rate per annum shall be .50%. Accrued commitment fees on
CREDIT AGREEMENT
<PAGE>
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each Commitment shall be payable monthly on the last Business Day of each month
and on the date such Commitment terminates or is terminated.
2.06 LENDING OFFICES. The Loans of each Class and Type made by each
Lender shall be made and maintained at such Lender's Applicable Lending Office
for loans of such Class and Type.
2.07 SEVERAL OBLIGATIONS; REMEDIES INDEPENDENT. The failure of any
Lender to make any Loan to be made by it on the date specified therefor shall
not relieve any other Lender of its obligation to make its Loan on such date,
but neither any Lender nor the Administrative Agent shall be responsible for the
failure of any other Lender to make a Loan to be made by such other Lender, and
(except as otherwise provided in Section 4.06 hereof) no Lender shall have any
obligation to the Administrative Agent or any other Lender for the failure by
such Lender to make any Loan required to be made by such Lender; PROVIDED that
nothing in this sentence shall limit the recourse of the Company against such
Lender. The amounts payable by the Company at any time hereunder to each Lender
shall be a separate and independent debt and each Lender shall be entitled,
subject to Section 10 hereof in the case of any acceleration of Indebtedness
hereunder or termination of any Commitments, to protect and enforce its rights
arising out of this Agreement, and it shall not be necessary for any other
Lender or the Administrative Agent to consent to, or be joined as an additional
party in, any proceedings for such purposes.
2.08 EVIDENCE OF DEBT; REGISTERED LOANS.
(a) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of the Company to such Lender
resulting from each Loan made by such Lender, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder.
(b) The Administrative Agent shall maintain accounts in which it
shall record (i) the amount of each Loan made hereunder, the Class and Type
thereof and the Interest Period (if any) applicable thereto, (ii) the amount of
any principal or interest due and payable or to become due and payable from the
Company to each Lender hereunder and (iii) the amount of any sum received by the
Administrative Agent hereunder for the account of the Lenders and each Lender's
share thereof.
(c) The entries made in the accounts maintained pursuant to paragraph
(a) or (b) of this Section shall (absent manifest error) be PRIMA FACIE evidence
of the existence and amounts of the obligations recorded therein; PROVIDED that
the failure of any Lender or the Administrative Agent to maintain such accounts
or any error therein shall not in any manner affect the obligation of the
Company to repay the Loans in accordance with the terms of this Agreement.
(d) Any Lender may request that Loans made by it be evidenced by a
promissory note. In such event, the Company shall prepare, execute and deliver
to such Lender a promissory note payable to the order of such Lender (or, if
requested by such Lender, to such Lender and its registered assigns) and in a
form reasonably approved by the Administrative Agent, the Lender and the
Company. Thereafter, the Loans evidenced by such promissory note and interest
thereon shall at all times (including after assignment pursuant to Section
12.06) be represented by one or
CREDIT AGREEMENT
<PAGE>
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more promissory notes in such form payable to the order of the payee named
therein (or, if such promissory note is a registered note, to such payee and its
registered assigns).
(e) Notwithstanding the foregoing, any Term Loan Lender that is not a
U.S. Person and is not a "bank" within the meaning of Section 881(c)(3)(A) of
the Code may request the Company (through the Administrative Agent), and the
Company agrees thereupon, to record on the Register referred to in
Section 12.06(g) hereof any Term Loans ("REGISTERED LOANS") held by such Lender
under this Agreement. A Term Loan once recorded on the Register may not be
removed from the Register so long as it remains outstanding.
(f) Each "Lender" under the Existing Credit Agreement shall, as soon
as practicable after the Effective Date, surrender to the Company for
cancellation any "Notes" (as defined in the Existing Credit Agreement).
2.09 OPTIONAL PREPAYMENTS AND CONVERSIONS OR CONTINUATIONS OF LOAN.
Subject to Section 4.04 hereof, the Company shall have the right to prepay
Loans, or to Convert Revolving Credit Loans and Term Loans of one Type into
Loans of another Type or continue Revolving Credit Loans and Term Loans of one
Type as Loans of the same Type, at any time or from time to time, PROVIDED that:
(a) the Company shall give the Administrative Agent (or, in the case of the
Swingline Loans, the Swingline Lender) notice of each such prepayment,
Conversion or Continuation as provided in Section 4.05 hereof (and, upon the
date specified in any such notice of prepayment, the amount to be prepaid shall
become due and payable hereunder); (b) Eurodollar Loans may be Converted only on
the last day of an Interest Period for such Loans; (c) prepayments by the
Company of the Term Loans shall be applied PRO RATA to the Tranche A Term Loans
and the Tranche B Term Loans; (d) prepayments by the Company of any Class of
Term Loans shall be applied to the remaining installments of such Term Loans pro
rata; (e) if any Swingline Loan is outstanding, the Revolving Credit Loans may
not be prepaid or converted; and (f) Swingline Loans may not be Continued.
Notwithstanding the foregoing, and without limiting the rights and remedies of
the Lenders under Section 10 hereof, in the event that any Event of Default
shall have occurred and be continuing, the Administrative Agent may (and at the
request of the Majority Lenders shall) suspend the right of the Company to
Convert any Loan into a Eurodollar Loan, or to Continue any Loan as a Eurodollar
Loan, in which event all Loans shall be Converted (on the last day(s) of the
respective Interest Periods therefor) or Continued, as the case may be, as Base
Rate Loans.
2.10 MANDATORY PREPAYMENTS AND REDUCTIONS OF COMMITMENTS.
(a) EXCESS CASH FLOW. Not later than the date 90 days after the end
of each fiscal year of the Company ending after the date hereof (commencing with
the fiscal year ending December 31, 1998), the Company shall prepay Loans
(and/or provide cover for Letter of Credit Liabilities as specified in
paragraph (g) below), and the Commitments shall be subject to automatic
reduction, without prepayment or commitment reduction premium other than any
amounts payable pursuant to Section 5.05 hereof, in an aggregate amount equal to
the excess of (A) the Required Percentage (as defined below) of Excess Cash Flow
for such fiscal year over (B) the aggregate amount of prepayments of Term Loans
made during such fiscal year pursuant to Section 2.09 hereof and, after the
payment in full of the Term Loans, the aggregate amount of voluntary reductions
of Revolving Credit Commitments made during such fiscal year pursuant to
CREDIT AGREEMENT
<PAGE>
- 36 -
Section 2.04(c) hereof, such prepayment and reduction to be effected in each
case in the manner and to the extent specified in paragraph (f) of this
Section 2.10. "REQUIRED PERCENTAGE" of Excess Cash Flow for any fiscal year
shall mean (i) if the Debt to Cash Flow Ratio as of the last day of such fiscal
year is greater than 3.75 to 1, 50% and (ii) otherwise, 0%.
(b) EQUITY ISSUANCE. If, at any time after the Effective Date, the
Guarantor or any of its Subsidiaries shall receive Net Available Proceeds from
one or more Equity Issuances, including all prior Equity Issuances as to which a
prepayment has not yet been made under this Section 2.10(b), the Company shall,
within three Business Days of receipt of such Net Available Proceeds, prepay
Loans (and/or provide cover for Letter of Credit Liabilities as specified in
paragraph (g) below), and the Commitments shall be subject to automatic
reduction, in an aggregate amount equal to 75% of the aggregate amount of such
Net Available Proceeds, such prepayment to be effected in each case in the
manner and to the extent specified in paragraph (f) of this Section 2.10;
PROVIDED that, notwithstanding the foregoing, without having to prepay Loans (x)
the Guarantor may apply, or cause to be applied, within 90 days from the receipt
thereof, up to $75,000,000 of the Net Available Proceeds received from one or
more Equity Issuances to finance Permitted Acquisitions, and (y) the Guarantor
and the Company may prepay Senior Subordinated Notes (to the extent permitted
under Section 9.14 hereof) and/or satisfy its obligations under vested
management warrants and stock options (to the extent permitted under Section
9.09 hereof) from the proceeds of one or more Equity Issuance within 60 days
after the receipt thereof.
(c) DEBT ISSUANCE. The Company shall apply the proceeds from the
Take Out Notes to the prepayment of the Loans in accordance with paragraph (f)
of this Section 2.10. In addition to the foregoing, but without limiting the
obligation of the Obligors to obtain the consent of the Majority Lenders
pursuant to Section 9.07 hereof, if, at any time after the Effective Date, the
Guarantor or any of its Subsidiaries shall receive Net Available Proceeds from
any Debt Issuance, the Company shall, within three Business Days of receipt of
such Net Available Proceeds, prepay Loans (and/or provide cover for Letter of
Credit Liabilities as specified in paragraph (g) below), and the Commitments
shall be subject to automatic reduction, in an aggregate amount equal to the
aggregate amount of such Net Available Proceeds, such prepayment to be effected
in each case in the manner and to the extent specified in paragraph (f) of this
Section 2.10; PROVIDED that, notwithstanding the foregoing, after the Tranche B
Term Loans have been repaid or prepaid in full, the Guarantor may apply, or
cause to be applied, the proceeds from any Debt Issuance (other than the Take
Out Notes) to the prepayment of the Senior Subordinated Notes without having to
prepay Loans, provided that (x) such prepayment is permitted under Section 9.14
hereof and (y) after giving effect to such prepayment not less than $100,000,000
aggregate principal amount of Senior Subordinated Notes remains outstanding.
(d) SALE OF ASSETS. Without limiting the obligation of the Company
to obtain the consent of the Majority Lenders pursuant to Section 9.05 hereof to
any Disposition not otherwise permitted hereunder, in the event that the Net
Available Proceeds of any Disposition (herein, the "CURRENT DISPOSITION"), and
of all prior Dispositions as to which a prepayment has not yet been made under
this Section 2.10(d), shall exceed $15,000,000 then, no later than five Business
Days prior to the occurrence of the Current Disposition, the Company will
deliver to the Lenders a statement, certified by a Responsible Officer of the
Company, in form and detail reasonably
CREDIT AGREEMENT
<PAGE>
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satisfactory to the Administrative Agent, of the amount of the anticipated Net
Available Proceeds of the Current Disposition and of all such prior Dispositions
as to which a prepayment has not yet been made under this Section 2.10(d) and
will prepay, upon receipt of such Net Available Proceeds, Loans (and/or provide
cover for Letter of Credit Liabilities as specified in paragraph (g) below), and
the Commitments shall be subject to automatic reduction, in an aggregate amount
equal to 100% of the Net Available Proceeds of the Current Disposition and such
prior Dispositions as to which a prepayment has not been made under this
Section 2.10(d) in excess of $15,000,000, such prepayment and reduction to be
effected in each case in the manner and to the extent specified in paragraph (f)
of this Section 2.10. Notwithstanding the foregoing, neither the Disposition of
Receivables by the Company or any of its Subsidiaries to the Receivables Company
or to the United Stationers Receivables Master Trust in connection with the
Receivables Financing nor the Disposition for fair value of any Part A Property
shall be a "Disposition" for purposes of the preceding sentence. If, however,
any Part B Property is disposed of within one year prior to or after the
Disposition of Part A Property located in the same geographical area, the
Company shall, within one year of the last of such Dispositions, apply the Net
Available Proceeds of such Dispositions to (i) the purchase or construction of a
replacement facility or (ii) the prepayment of the Loans (and/or the provision
of cover for Letter of Credit Liabilities as specified in paragraph (g) below)
and the reduction of Commitments as provided above.
(e) CASUALTY EVENTS. After the occurrence of any Casualty Event
(other than any Casualty Event with respect only to Property covered by the
Mortgages) resulting in a loss in excess of $500,000, the Company shall give
prompt notice thereof to the Administrative Agent and the Lenders. If no
Default has occurred and is continuing, the Company may, at its option, to be
exercised by delivery of notice to the Administrative Agent and the Lenders
within four months of such Casualty Event, elect to apply the Net Available
Proceeds of such Casualty Event to either (i) the repair or replacement of the
Property affected thereby or (ii) the prepayment of the Loans (and/or the
provision of cover for Letter of Credit Liabilities as specified in paragraph
(g) of this Section 2.10) in the manner and to the extent specified in paragraph
(f) of this Section 2.10. If a Default has occurred and is continuing, or if
the Company fails to make such an election within four months from the date of
any such Casualty Event, such Net Available Proceeds shall automatically be
applied to the prepayment of the Loans in the manner and to the extent specified
in paragraph (f) of this Section 2.10 (and/or the provision of cover for Letter
of Credit Liabilities as specified in paragraph (g) of this Section 2.10). If
the Company elects to so repair or replace the Property subject to such Casualty
Event, the Net Available Proceeds of such Casualty Event in excess of $500,000
shall be held by the Administrative Agent to be applied to such repair or
replacement and advanced to the Company in periodic installments upon compliance
by the Company with such reasonable conditions as may be imposed by the
Administrative Agent, including, but not limited to, reasonable retentions and
lien releases. Interest, if any, actually earned on any Net Available Proceeds
held by the Administrative Agent shall be credited to such Net Available
Proceeds, for the benefit of the Company.
(f) APPLICATION. Prepayments and reductions of Commitments described
in the above paragraphs of this Section 2.10 shall be effected as follows:
CREDIT AGREEMENT
<PAGE>
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(i) first, the amount of the prepayment specified in such paragraphs
shall be applied to the Term Loans, pro rata between each Class of Term
Loans and, as to each Class, pro rata to the remaining installments
thereof; PROVIDED that with respect to prepayments pursuant to Section
2.10(c) hereof from the gross cash proceeds of Take Out Notes, such
prepayments shall be applied first to the Tranche B Term Loans and then,
after the payment in full of the Tranche B Term Loans, to the Tranche A
Term Loans (in each case, pro rata to the remaining installments thereof);
and
(ii) second, the Revolving Credit Commitments shall be automatically
reduced in an amount equal to the amount by which the aggregate amount of
the prepayments and reductions of Commitments provided for above exceed any
excess over the amount referred to in the foregoing clause (i) (and to the
extent that, after giving effect to such reduction of Commitments, the
aggregate principal amount of Revolving Credit Loans, together with the
aggregate principal amount of the Swingline Loans and the aggregate amount
of all Letter of Credit Liabilities, would exceed the Revolving Credit
Commitments, the Company shall, first, prepay Swingline Loans, second,
prepay Revolving Credit Loans and, third, provide cover for Letter of
Credit Liabilities as specified in paragraph (g) below, in an aggregate
amount equal to such excess).
(g) COVER FOR LETTER OF CREDIT LIABILITIES. In the event that the
Company shall be required pursuant to this Section 2.10, or pursuant to
Section 10 hereof, to provide cover for Letter of Credit Liabilities, the
Company shall effect the same by paying to the Administrative Agent immediately
available funds in an amount equal to the required amount, which funds shall be
retained by the Administrative Agent in the Collateral Account (as provided
therein as collateral security in the first instance for the Letter of Credit
Liabilities) until such time as the Letters of Credit shall have been terminated
and all of the Letter of Credit Liabilities paid in full.
Section 3. PAYMENTS OF PRINCIPAL AND INTEREST.
3.01 REPAYMENT OF LOANS.
(a) REVOLVING CREDIT LOANS. The Company hereby promises to pay to
the Administrative Agent for account of each Revolving Credit Lender the entire
outstanding principal amount of such Lender's Revolving Credit Loans, and each
Revolving Credit Loan shall mature, on the Revolving Credit Commitment
Termination Date.
(b) TRANCHE A TERM LOANS. The Company hereby promises to pay to the
Administrative Agent for account of the Tranche A Term Loan Lenders the
aggregate principal amount of the Tranche A Term Loans in twenty-four (24)
consecutive installments payable on each Quarterly Date, beginning with the
Quarterly Date ending or nearest to June 30, 1998, the first four (4) of which
shall each be in the aggregate amount of $2,500,000, the next four (4) of which
shall each be in the aggregate amount of $3,750,000, the next four (4) of which
shall each be in the aggregate amount of $6,250,000, the next four (4) of which
shall each be in the aggregate amount of $7,500,000 and the last eight (8) of
which shall each be in the aggregate amount of $8,750,000.
CREDIT AGREEMENT
<PAGE>
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(c) TRANCHE B TERM LOANS. The Company hereby promises to pay to the
Administrative Agent for account of the Tranche B Term Loan Lenders the
aggregate principal amount of the Tranche B Term Loans in twenty-seven (27)
consecutive quarterly installments payable on each Quarterly Date, beginning
with the Quarterly Date ending on or nearest to June 30, 1998, the first twenty
(20) of which shall each be in the aggregate amount of $250,000 and the last
seven (7) of which shall each be in the aggregate amount of $13,571,428.57.
3.02 INTEREST. The Company hereby promises to pay to the
Administrative Agent for account of each Lender interest on the unpaid principal
amount of each Loan (including any Swingline Loan) made by such Lender for the
period from and including the date of such Loan to but excluding the date such
Loan shall be paid in full, at the following rates per annum:
(a) During such periods as such Loan is a Base Rate Loan (other than
a Swingline Loan), the Base Rate (as in effect from time to time) PLUS the
Applicable Margin,
(b) during such periods as such Loan is a Eurodollar Loan, for each
Interest Period relating thereto, the Eurodollar Rate for such Loan for
such Interest Period PLUS the Applicable Margin, and
(c) if such Loan is a Swingline Loan, the Swingline Rate (as in effect
from time to time) PLUS the Applicable Margin (determined as if such
Swingline Loans were Revolving Credit Loans that were Base Rate Loans).
Notwithstanding the foregoing, the Company hereby promises to pay to the
Administrative Agent for account of each Lender interest at the applicable
Post-Default Rate on any principal of any Loan made by such Lender, on any
Reimbursement Obligation owed to such Lender and on any other amount payable by
the Company hereunder to or for account of such Lender, that shall not be paid
in full when due (whether at stated maturity, by acceleration, by mandatory
prepayment or otherwise), for the period from and including the due date thereof
to but excluding the date the same is paid in full. Accrued interest on each
Loan shall be payable (i) in the case of a Base Rate Loan, quarterly on the
Quarterly Dates, (ii) in the case of a Eurodollar Loan, on the last day of each
Interest Period therefor and, if such Interest Period is longer than three
months, at three-month intervals following the first day of such Interest
Period, (iii) in the case of a Swingline Loan, on the last day of each calendar
month during which such Swingline Loan shall be outstanding, and (iv) in the
case of any Loan (including any Swingline Loan), upon the payment or prepayment
thereof or the Conversion of such Loan to a Loan of another Type (but only on
the principal amount so paid, prepaid or Converted), except that interest
payable at the Post-Default Rate shall be payable from time to time on demand.
Promptly after the determination of any interest rate provided for herein or any
change therein, the Administrative Agent shall give notice thereof to the
Lenders to which such interest is payable and to the Company.
Section 4. PAYMENTS; PRO RATA TREATMENT; COMPUTATIONS; ETC.
4.01 PAYMENTS.
CREDIT AGREEMENT
<PAGE>
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(a) Except to the extent otherwise provided herein, all payments of
principal, interest, Reimbursement Obligations and other amounts to be made by
the Obligors under this Agreement, and, except to the extent otherwise provided
therein, all payments to be made by the Obligors under any other Basic Document,
shall be made in Dollars, in immediately available funds, without deduction,
set-off or counterclaim, to the Administrative Agent at an account designated by
the Administrative Agent with Chase at the Principal Office, not later than
1:00 p.m. New York time on the date on which such payment shall become due (each
such payment made after such time on such due date to be deemed to have been
made on the next succeeding Business Day).
(b) Any Lender for whose account any such payment is to be made may
(but shall not be obligated to) debit the amount of any such payment that is not
made by such time to any ordinary deposit account of either Obligor with such
Lender (with notice to such Obligor and the Administrative Agent).
(c) Each Obligor shall, at the time of making each payment under this
Agreement for account of any Lender, specify to the Administrative Agent (which
shall so notify the intended recipient(s) thereof) the Loans, Reimbursement
Obligations or other amounts payable hereunder to which such payment is to be
applied (and in the event that such Obligor fails to so specify, or if an Event
of Default has occurred and is continuing, such payment shall be, subject to
Section 4.02 hereof, applied first to the Swingline Lender (to the extent any
amounts are then due and payable to the Swingline Lender on account of any
Swingline Loan) and then in payment of amounts due under this Agreement in such
manner as the Administrative Agent or the Majority Lenders, subject to
Section 4.02 hereof, may determine to be appropriate).
(d) Except to the extent otherwise provided in the last sentence of
Section 2.03(e) hereof, each payment received by the Administrative Agent under
this Agreement for account of any Lender shall be paid by the Administrative
Agent promptly to such Lender, in immediately available funds, for account of
such Lender's Applicable Lending Office for the Loan or other obligation in
respect of which such payment is made.
(e) Except to the extent otherwise provided herein, if the due date
of any payment under this Agreement would otherwise fall on a day that is not a
Business Day, such date shall be extended to the next succeeding Business Day,
and interest shall be payable for any principal so extended for the period of
such extension.
4.02 PRO RATA TREATMENT. Except to the extent otherwise provided
herein: (A) each borrowing of Loans of a particular Class from the Lenders
under Section 2.01 hereof shall be made from the relevant Lenders, each payment
of commitment fee under Section 2.05 hereof in respect of the commitments of a
particular Class shall be made for account of the relevant lenders, and each
termination or reduction of the amount of the commitments of a particular Class
under Section 2.04 hereof shall be applied to the respective commitments of such
Class of the relevant Lenders, pro rata according to the amounts of their
respective Commitments of such Class; (b) except as otherwise provided in
Section 5.04 hereof, Eurodollar Loans of any Class having the same Interest
Period shall be allocated pro rata among the relevant Lenders according to the
amounts of their respective Revolving Credit and Term Loan Commitments (in the
case of the making of Loans and Revolving Credit Loans made to
CREDIT AGREEMENT
<PAGE>
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refinance Swingline Loans) or their respective Revolving Credit and Term Loans
(in the case of Conversions and Continuations of Loans); (c) each payment or
prepayment of principal of Loans of a particular Class shall be made for account
of the relevant Lenders pro rata in accordance with the respective unpaid
principal amounts of the Loans of such Class held by them; and (d) each payment
of interest on Loans of a particular Class shall be made for account of the
relevant Lenders pro rata in accordance with the amounts of interest on such
Loans then due and payable to the respective Lenders. Notwithstanding the
foregoing, borrowings, payments and prepayments of Swingline Loans shall be made
without regard to the foregoing provisions of this Section 4.02.
4.03 COMPUTATIONS. Interest on Eurodollar Loans and Reimbursement
Obligations and commitment fees and letter of credit fees shall be computed on
the basis of a year of 360 days and actual days elapsed (including the first day
but, except as otherwise provided in section 2.03(g) hereof, excluding the last
day) occurring in the period for which payable and interest on base rate Loans
shall be computed on the basis of a year of 365 or 366 days, as the case may be,
and actual days elapsed (including the first day but excluding the last day)
occurring in the period for which payable. Notwithstanding the foregoing, for
each day that the base rate is calculated by reference to the federal funds
rate, interest on base rate Loans shall be computed on the basis of a year of
360 days and actual days elapsed.
4.04 MINIMUM AMOUNTS. Except for mandatory prepayments made
pursuant to section 2.10 hereof and conversions or prepayments made pursuant to
section 5.04 hereof, and each borrowing, conversion and partial prepayment of
principal of Loans (other than swingline Loans and revolving credit Loans made
to refinance swingline Loans) shall be in an aggregate amount at least equal to
$5,000,000 or a larger multiple of $1,000,000 (borrowings, conversions or
prepayments of or into Loans of different types or, in the case of eurodollar
Loans, having different interest periods at the same time hereunder to be deemed
separate borrowings, conversions and prepayments for purposes of the foregoing,
one for each type or interest period), PROVIDED that the aggregate principal
amount of Eurodollar Loans having the same Interest Period shall be in an amount
at least equal to $10,000,000 or a larger multiple of $1,000,000 and, if any
Eurodollar Loans would otherwise be in a lesser principal amount for any period,
such Loans shall be Base Rate Loans during such period. Each borrowing of
Swingline Loans pursuant to Section 2.01(d) hereof shall be in an aggregate
amount at least equal to $500,000 or in multiples of $100,000 in excess thereof
and each partial prepayment of Swingline Loans shall be in an aggregate amount
at least equal to $100,000 or in multiples of $100,000 in excess thereof.
4.05 CERTAIN NOTICES. Notices by the Company to the Administrative
Agent of terminations or reductions of the Commitments, of borrowings,
Conversions, Continuations and optional prepayments of Loans and of Classes of
Loans, of Types of Loans and of the duration of Interest Periods shall be
irrevocable and shall be effective only if received by the Administrative Agent
(or the Swingline Lender, as the case may be) not later than 11:00 a.m. (In the
case of notices in respect of Eurodollar Loans), 12:00 noon (in the case of
notices in respect of Base Rate Loans) and 2:00 p.m. (In the case of notices in
respect of Swingline Loans), New York time, on the number of Business Days prior
to the date of the relevant termination, reduction,
CREDIT AGREEMENT
<PAGE>
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borrowing, Conversion, Continuation or prepayment or the first day of such
Interest Period specified below:
<TABLE>
<CAPTION>
Number of
Business
Notice Days Prior
------ ----------
<S> <C>
Termination or reduction
of Commitments 3
Borrowing or prepayment of,
or Conversions into,
Base Rate Loans same day
Borrowing or prepayment of,
Conversions into, Continuations
as, or duration of Interest
Period for, Eurodollar Loans 3
Borrowing or prepayment of
Swingline Loans or termination
or reduction of Swingline
Commitment same day
</TABLE>
Each such notice of termination or reduction shall specify the amount and the
Class of the Commitments to be terminated or reduced. Each such notice of
borrowing, Conversion, Continuation or optional prepayment shall specify the
Class of Loans to be borrowed, Converted, Continued or prepaid and the amount
(subject to Section 4.04 hereof) and Type of each Loan to be borrowed,
Converted, Continued or prepaid and the date of borrowing, Conversion,
Continuation or optional prepayment (which shall be a Business Day). Each such
notice of the duration of an Interest Period shall specify the Loans to which
such Interest Period is to relate. The Administrative Agent shall promptly
notify the Lenders of the contents of each such notice. In the event that the
Company fails to select the Type of Loan, or the duration of any Interest Period
for any Eurodollar Loan, within the time period and otherwise as provided in
this Section 4.05, such Loan (if outstanding as a Eurodollar Loan) will be
automatically Converted into a Base Rate Loan on the last day of the then
current Interest Period for such Loan or (if outstanding as a Base Rate Loan)
will remain as, or (if not then outstanding) will be made as, a Base Rate Loan.
4.06 NON-RECEIPT OF FUNDS BY THE ADMINISTRATIVE AGENT. Unless the
Administrative Agent shall have been notified by a Lender or the Company (the
"PAYOR") prior to the date on which the Payor is to make payment to the
Administrative Agent of (in the case of a Lender) the proceeds of a Loan to be
made by such Lender hereunder or (in the case of the Company) a payment to the
Administrative Agent for account of one or more of the Lenders hereunder (such
payment being herein called the "REQUIRED PAYMENT"), which notice shall be
effective upon receipt, that the Payor does not intend to make the Required
Payment to the Administrative Agent, the Administrative Agent may assume that
the Required Payment has
CREDIT AGREEMENT
<PAGE>
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been made and may, in reliance upon such assumption (but shall not be required
to), make the amount thereof available to the intended recipient(s) on such
date; and, if the Payor has not in fact made the Required Payment to the
Administrative Agent, the recipient(s) of such payment shall, on demand, repay
to the Administrative Agent the amount so made available together with interest
thereon in respect of each day during the period commencing on the date (the
"ADVANCE DATE") such amount was so made available by the Administrative Agent
until the date the Administrative Agent recovers such amount at a rate per annum
equal to the Federal Funds Rate for such day and, if such recipient(s) shall
fail promptly to make such payment, the Administrative Agent shall be entitled
to recover such amount, on demand, from the Payor, together with interest as
aforesaid, PROVIDED that if neither the recipient(s) nor the Payor shall return
the Required Payment to the Administrative Agent within three Business Days of
the Advance Date, then, retroactively to the Advance Date, the Payor and the
recipient(s) shall each be obligated to pay interest on the Required Payment as
follows:
(i) if the Required Payment shall represent a payment to be made by
the Company to the Lenders, the Company and the recipient(s) shall each be
obligated retroactively to the Advance Date to pay interest in respect of
the Required Payment at the Post-Default Rate (without duplication of the
obligation of the Company under Section 3.02 hereof to pay interest on the
Required Payment at the Post-Default Rate), it being understood that the
return by the recipient(s) of the Required Payment to the Administrative
Agent shall not limit such obligation of the Company under said
Section 3.02 to pay interest at the Post-Default Rate in respect of the
Required Payment and
(ii) if the Required Payment shall represent proceeds of a Loan to be
made by the Lenders to the Company, the Payor and the Company shall each be
obligated retroactively to the Advance Date to pay interest in respect of
the Required Payment pursuant to Section 3.02 hereof, it being understood
that the return by the Company of the Required Payment to the
Administrative Agent shall not limit any claim the Company may have against
the Payor in respect of such Required Payment.
4.07 SHARING OF PAYMENTS, ETC.
(a) Each Obligor agrees that, in addition to (and without limitation
of) any right of set-off, banker's lien or counterclaim a Lender may otherwise
have, each Lender shall be entitled, at its option (to the fullest extent
permitted by law), to set off and apply any deposit (general or special, time or
demand, provisional or final), or other indebtedness, held by it for the credit
or account of such Obligor at any of its offices, in Dollars or in any other
currency, against any principal of or interest on any of such Lender's Loans,
Reimbursement Obligations or any other amount payable to such Lender hereunder,
that is not paid when due (regardless of whether such deposit or other
indebtedness are then due to such Obligor), in which case it shall promptly
notify such Obligor and the Administrative Agent thereof, PROVIDED that such
Lender's failure to give such notice shall not affect the validity thereof.
(b) If any Lender shall obtain from any Obligor payment of any
principal of or interest on any Loan of any Class or Letter of Credit Liability
owing to it or in respect of its interest in any Swingline Loan or payment of
any other amount under this Agreement or any other Basic Document through the
exercise of any right of set-off, banker's lien or counterclaim
CREDIT AGREEMENT
<PAGE>
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or similar right or otherwise (other than from the Administrative Agent as
provided herein), and, as a result of such payment, such Lender shall have
received a greater percentage of the principal of or interest on the Loans of
such Class or Letter of Credit Liabilities or in respect of its interest in any
Swingline Loan or such other amounts then due hereunder or thereunder by such
Obligor to such Lender than the percentage received by any other Lender, it
shall promptly purchase from such other Lenders participations in (or, if and to
the extent specified by such Lender, direct interests in) the Loans of such
Class or Letter of Credit Liabilities or such other amounts, respectively, owing
to such other Lenders (or in interest due thereon, as the case may be) in such
amounts, and make such other adjustments from time to time as shall be
equitable, to the end that all the Lenders shall share the benefit of such
excess payment (net of any expenses that may be incurred by such Lender in
obtaining or preserving such excess payment) pro rata in accordance with the
unpaid principal of and/or interest on the Loans of such Class, interest in the
Swingline Loans or Letter of Credit Liabilities or such other amounts,
respectively, owing to each of the Lenders. To such end all the Lenders shall
make appropriate adjustments among themselves (by the resale of participations
sold or otherwise) if such payment is rescinded or must otherwise be restored.
(c) Each Obligor agrees that any Lender so purchasing such a
participation (or direct interest) may exercise all rights of set-off, banker's
lien, counterclaim or similar rights with respect to such participation as fully
as if such Lender were a direct holder of Loans or other amounts (as the case
may be) owing to such Lender in the amount of such participation.
(d) Nothing contained herein shall require any Lender to exercise any
such right or shall affect the right of any Lender to exercise, and retain the
benefits of exercising, any such right with respect to any other indebtedness or
obligation of any Obligor. If, under any applicable bankruptcy, insolvency or
other similar law, any Lender receives a secured claim in lieu of a set-off to
which this Section 4.07 applies, such Lender shall, to the extent practicable,
exercise its rights in respect of such secured claim in a manner consistent with
the rights of the Lenders entitled under this Section 4.07 to share in the
benefits of any recovery on such secured claim.
Section 5. YIELD PROTECTION, ETC.
5.01 ADDITIONAL COSTS
(a) The Company shall pay directly to each Lender from time to time
such amounts as such Lender may determine to be reasonably necessary to
compensate such Lender for any costs that such Lender determines, in good faith,
are attributable to its making or maintaining of any Eurodollar Loans or its
obligation to make any Eurodollar Loans hereunder, or any reduction in any
amount receivable by such Lender hereunder in respect of any of such Eurodollar
Loans or such obligation (such increases in costs and reductions in amounts
receivable being herein called "ADDITIONAL COSTS"), resulting from any
Regulatory Change that:
(i) shall subject any Lender (or its Applicable Lending Office for
any of such Loans) to any tax, duty or other charge in respect of such
Loans or changes the basis of taxation of any amounts payable to such
Lender under this Agreement in respect of any of such Loans (excluding
changes in the rate of tax on the overall net income of such
CREDIT AGREEMENT
<PAGE>
- 45 -
Lender or of such Applicable Lending Office by the jurisdiction in which
such Lender has its principal office or such Applicable Lending Office); or
(ii) imposes or modifies any reserve, special deposit or similar
requirements (other than the Reserve Requirement utilized in the
determination of the Eurodollar Rate for such Loan) relating to any
extensions of credit or other assets of, or any deposits with or other
liabilities of, such Lender (including, without limitation, any of such
Loans or any deposits referred to in the definition of "Eurodollar Base
Rate" in Section 1.01 hereof), or any commitment of such Lender (including,
without limitation, the Commitments of such Lender hereunder); or
(iii) imposes any other condition affecting this Agreement (or any of
such extensions of credit or liabilities) or its Commitments.
If any Lender requests compensation from the Company under this Section 5.01(a),
the Company may, by notice to such Lender (with a copy to the Administrative
Agent), suspend the obligation of such Lender thereafter to make or Continue
Eurodollar Loans, or to Convert Base Rate Loans into Eurodollar Loans, until the
Regulatory Change giving rise to such request ceases to be in effect (in which
case the provisions of Section 5.04 hereof shall be applicable), PROVIDED that
such suspension shall not affect the right of such Lender to receive the
compensation so requested.
(b) Without limiting the effect of the provisions of paragraph (a) of
this Section 5.01 (but without duplication), in the event that, by reason of any
Regulatory Change, any Lender either (i) incurs Additional Costs based on or
measured by the excess above a specified level of the amount of a category of
deposits or other liabilities of such Lender that includes deposits by reference
to which the interest rate on Eurodollar Loans is determined as provided in this
Agreement or a category of extensions of credit or other assets of such Lender
that includes Eurodollar Loans or (ii) becomes subject to restrictions on the
amount of such a category of liabilities or assets that it may hold, then, if
such Lender so elects by notice to the Company (with a copy to the
Administrative Agent), the obligation of such Lender to make or Continue, or to
Convert Base Rate Loans into, Eurodollar Loans hereunder shall be suspended
until such Regulatory Change ceases to be in effect (in which case the
provisions of Section 5.04 hereof shall be applicable).
(c) Without limiting the effect of the foregoing provisions of this
Section 5.01 (but without duplication), the Company shall pay directly to each
Lender from time to time on request such amounts as such Lender may determine to
be necessary to compensate such Lender (or, without duplication, the bank
holding company of which such Lender is a subsidiary) for any costs that it
determines are attributable to the maintenance by such Lender (or any Applicable
Lending Office or such bank holding company), pursuant to any law or regulation
or any interpretation, directive or request (whether or not having the force of
law and whether or not failure to comply therewith would be unlawful) of any
court or governmental or monetary authority (i) following any Regulatory Change
or (ii) implementing any risk-based capital guideline or other requirement
(whether or not having the force of law and whether or not the failure to comply
therewith would be unlawful) hereafter issued by any government or governmental
or supervisory authority implementing at the national level the Basle Accord
CREDIT AGREEMENT
<PAGE>
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(including, without limitation, the Final Risk-Based Capital Guidelines of the
Board of Governors of the Federal Reserve System (12 C.F.R. Part 208,
Appendix A; 12 C.F.R. Part 225, Appendix A) and the Final Risk-Based Capital
Guidelines of the Office of the Comptroller of the Currency (12 C.F.R. Part 3,
Appendix A)), of capital in respect of its Commitments or Loans (such
compensation to include, without limitation, an amount equal to any reduction of
the rate of return on assets or equity of such Lender (or any Applicable Lending
Office or such bank holding company) to a level below that which such Lender (or
any Applicable Lending Office or such bank holding company) could have achieved
but for such law, regulation, interpretation, directive or request). For
purposes of this Section 5.01(c) and Section 5.06 hereof, "BASLE ACCORD" shall
mean the proposals for risk-based capital framework described by the Basle
Committee on Banking Regulations and Supervisory Practices in its paper entitled
"International Convergence of Capital Measurement and Capital Standards" dated
July 1988, as amended, modified and supplemented and in effect from time to time
or any replacement thereof.
(d) Each Lender shall notify the Company of any event occurring after
the date hereof entitling such Lender to compensation under paragraph (a) or (c)
of this Section 5.01 as promptly as practicable, but in any event within 45
days, after such Lender obtains actual knowledge thereof; PROVIDED that (i) if
any Lender fails to give such notice within 45 days after it obtains actual
knowledge of such an event, such Lender shall, with respect to compensation
payable pursuant to this Section 5.01 in respect of any costs resulting from
such event, only be entitled to payment under this Section 5.01 for costs
incurred from and after the date 45 days prior to the date that such Lender does
give such notice and (ii) each Lender will designate a different Applicable
Lending Office for the Loans of such Lender affected by such event if such
designation will avoid the need for, or reduce the amount of, such compensation
and will not, in the sole opinion of such Lender, be disadvantageous to such
Lender, except that such Lender shall have no obligation to designate an
Applicable Lending Office located in the United States of America. Each Lender
will furnish to the Company a certificate setting forth the basis and amount of
each request by such Lender for compensation under paragraph (a) or (c) of this
Section 5.01. Determinations and allocations by any Lender for purposes of this
Section 5.01 of the effect of any Regulatory Change pursuant to paragraph (a) or
(b) of this Section 5.01, or of the effect of capital maintained pursuant to
paragraph (c) of this Section 5.01, on its costs or rate of return of
maintaining Loans or its obligation to make Loans, or on amounts receivable by
it in respect of Loans, and of the amounts required to compensate such Lender
under this Section 5.01, shall be conclusive, PROVIDED that such determinations
and allocations are made on a good faith reasonable basis.
5.02 LIMITATION ON TYPES OF LOANS. Anything herein to the contrary
notwithstanding, if, on or prior to the determination of any Eurodollar Base
Rate for any Interest Period:
(a) the Administrative Agent determines, which determination shall be
conclusive if made in good faith, that quotations of interest rates for the
relevant deposits referred to in the definition of "Eurodollar Base Rate"
in Section 1.01 hereof are not being provided in the relevant amounts or
for the relevant maturities for purposes of determining rates of interest
for Eurodollar Loans as provided herein; or
CREDIT AGREEMENT
<PAGE>
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(b) if the related Loans are Revolving Credit Loans, the Majority
Revolving Credit Lenders or, if the related Loans are Term Loans, the
Majority Term Loan Lenders determine, which determination shall be
conclusive if made in good faith, and notify the Administrative Agent that
the relevant rates of interest referred to in the definition of "Eurodollar
Base Rate" in Section 1.01 hereof upon the basis of which the rate of
interest for Eurodollar Loans for such Interest Period is to be determined
are not likely adequately to cover the cost to such Lenders of making or
maintaining Eurodollar Loans for such Interest Period;
then the Administrative Agent shall give the Company and each Lender prompt
notice thereof and, so long as such condition remains in effect, the Lenders
shall be under no obligation to make additional Eurodollar Loans, to Continue
Eurodollar Loans or to Convert Base Rate Loans into Eurodollar Loans, and the
Company shall, on the last day(s) of the then current Interest Period(s) for the
outstanding Eurodollar Loans, either prepay such Loans or Convert such Loans
into Base Rate Loans in accordance with Section 2.09 hereof. The Administrative
Agent shall upon notice from the Majority Lenders that any such conditions are
no longer in effect promptly withdraw any such notice delivered in connection
with this Section 5.02.
5.03 ILLEGALITY. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to honor its obligation to make or maintain Eurodollar
Loans hereunder (and, in the sole opinion of such Lender, the designation of a
different Applicable Lending Office would either not avoid such unlawfulness or
would be disadvantageous to such Lender), then such Lender shall promptly notify
the Company thereof (with a copy to the Administrative Agent) and such Lender's
obligation to make or Continue, or to Convert Loans of any other Type into,
Eurodollar Loans shall be suspended until such time as such Lender may again
make and maintain Eurodollar Loans (in which case the provisions of Section 5.04
hereof shall be applicable).
5.04 TREATMENT OF AFFECTED LOANS. If the obligation of any Lender
to make Eurodollar Loans or to Continue, or to Convert Base Rate Loans into,
Eurodollar Loans shall be suspended pursuant to Section 5.01 or 5.03 hereof,
such Lender's Eurodollar Loans shall be automatically Converted into Base Rate
Loans on the last day(s) of the then current Interest Period(s) for Eurodollar
Loans (or, in the case of a Conversion required by Section 5.01(b) or 5.03
hereof, on such earlier date as such Lender may specify to the Company with a
copy to the Administrative Agent) and, unless and until such Lender gives notice
as provided below that the circumstances specified in Section 5.01 or 5.03
hereof that gave rise to such Conversion no longer exist:
(a) to the extent that such Lender's Eurodollar Loans have been so
Converted, all payments and prepayments of principal that would otherwise
be applied to such Lender's Eurodollar Loans shall be applied instead to
its Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued by such
Lender as Eurodollar Loans shall be made or Continued instead as Base Rate
Loans, and all Base Rate Loans of such Lender that would otherwise be
Converted into Eurodollar Loans shall remain as Base Rate Loans.
CREDIT AGREEMENT
<PAGE>
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If such Lender gives notice to the Company with a copy to the Administrative
Agent that the circumstances specified in Section 5.01 or 5.03 hereof that gave
rise to the Conversion of such Lender's Eurodollar Loans pursuant to this
Section 5.04 no longer exist (which such Lender agrees to do promptly upon such
circumstances ceasing to exist) at a time when Eurodollar Loans made by other
Lenders are outstanding, such Lender's Base Rate Loans shall be automatically
Converted, on the first day(s) of the next succeeding Interest Period(s) for
such outstanding Eurodollar Loans, to the extent necessary so that, after giving
effect thereto, all Loans held by the Lenders holding Eurodollar Loans and by
such Lender are held pro rata (as to principal amounts, Types and Interest
Periods) in accordance with their respective Commitments.
5.05 COMPENSATION. The Company shall pay to the Administrative
Agent for account of each Lender, upon the request of such Lender through the
Administrative Agent, such amount or amounts as shall be sufficient (in the
reasonable opinion of such Lender) to compensate it for any loss, cost or
expense that such Lender determines is attributable to:
(a) any payment, mandatory or optional prepayment or Conversion of a
Eurodollar Loan made by such Lender for any reason (including, without
limitation, the acceleration of the Loans pursuant to Section 10 hereof) on
a date other than the last day of the Interest Period for such Loan; or
(b) any failure by the Company for any reason (including, without
limitation, the failure of any of the conditions precedent specified in
Section 7 hereof to be satisfied) to borrow a Eurodollar Loan from such
Lender on the date for such borrowing specified in the relevant notice of
borrowing given pursuant to Section 2.02 hereof.
Without limiting the effect of the preceding sentence, such compensation shall
include an amount equal to the excess, if any, of (i) the amount of interest
that otherwise would have accrued on the principal amount so paid, prepaid,
Converted or not borrowed for the period from the date of such payment,
prepayment, Conversion or failure to borrow to the last day of the then current
Interest Period for such Loan (or, in the case of a failure to borrow, the
Interest Period for such Loan that would have commenced on the date specified
for such borrowing) at the applicable rate of interest for such Loan provided
for herein over (ii) the amount of interest that otherwise would have accrued on
such principal amount at a rate per annum equal to the interest component of the
amount such Lender would have bid in the London interbank market for Dollar
deposits of leading banks in amounts comparable to such principal amount and
with maturities comparable to such period (as reasonably determined by such
Lender).
5.06 ADDITIONAL COSTS IN RESPECT OF LETTERS OF CREDIT. Without
limiting the obligations of the Company under Section 5.01 hereof (but without
duplication), if as a result of any Regulatory Change or any risk-based capital
guideline or other requirement heretofore or hereafter issued by any government
or governmental or supervisory authority implementing at the national level the
Basle Accord there shall be imposed, modified or deemed applicable any tax,
reserve, special deposit, capital adequacy or similar requirement against or
with respect to or measured by reference to Letters of Credit issued or to be
issued hereunder and the result shall be to increase the cost to any Lender or
Lenders of issuing (or purchasing participations in) or maintaining its
obligation hereunder to issue (or purchase participations in) any Letter of
Credit
CREDIT AGREEMENT
<PAGE>
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hereunder or reduce any amount receivable by any Lender hereunder in respect of
any Letter of Credit (which increases in cost, or reductions in amount
receivable, shall be the result of such Lender's or Lenders' reasonable
allocation of the aggregate of such increases or reductions resulting from such
event), then, upon demand by such Lender or Lenders (through the Administrative
Agent), the Company shall pay immediately to the Administrative Agent for
account of such Lender or Lenders, from time to time as specified by such Lender
or Lenders (through the Administrative Agent), such additional amounts as shall
be sufficient to compensate such Lender or Lenders (through the Administrative
Agent) for such increased costs or reductions in amount. A statement as to such
increased costs or reductions in amount incurred by any such Lender or Lenders,
submitted by such Lender or Lenders to the Company shall be conclusive if made
in good faith and in the absence of manifest error as to the amount thereof.
5.07 U.S. TAXES.
(a) The Company agrees to pay to each Lender that is not a
U.S. Person such additional amounts as are necessary in order that the net
payment of any amount due to such non-U.S. Person hereunder after deduction for
or withholding in respect of any U.S. Taxes (other than U.S. Taxes attributable
to payments that are effectively connected with the conduct of a trade or
business within the United States of America, within the meaning of Section 864
of the Code as in effect on the date hereof, provided that the mere
participation in the transactions contemplated hereby by a foreign office of a
Lender shall not alone be deemed to result in income so connected) imposed with
respect to such payment (or, upon the failure of the Company properly to make
any such deduction or withholding required by applicable law, payment by each
Lender that is not a U.S. Person of such U.S. Taxes that should have been
deducted or withheld), will not be less than the amount stated herein to be then
due and payable, PROVIDED that the foregoing obligation to pay such additional
amounts shall not apply:
(i) to any payment to any Lender hereunder (other than in respect of
any Registered Loan) unless such Lender is, on the date hereof (or on the
date it becomes a Lender hereunder as provided in Section 12.06(b) hereof),
on the date of each payment hereunder and on the day after any change in
the Applicable Lending Office of such Lender, entitled to submit either a
Form 1001 (relating to such Lender and entitling it to a complete exemption
from withholding on all interest to be received by it hereunder in respect
of the Loans) or a Form 4224 (relating to all interest to be received by
such Lender hereunder in respect of the Loans), unless such inability is
due to a change of law (including but not limited to any change in any
applicable treaty, statute, regulation or ruling or judicial or
administrative interpretation of any of the foregoing) after the date
hereof (or the date it became a Lender hereunder as provided in Section
12.06(b) hereof),
(ii) to any payment to any Lender hereunder in respect of a
Registered Loan (a "REGISTERED HOLDER"), unless such Registered Holder (or,
if such Registered Holder is not the beneficial owner of such Registered
Loan, the beneficial owner thereof) is, on the date hereof (or on the date
such Registered Holder becomes a Lender as provided in Section 12.06(b)
hereof), on the date of each payment hereunder and on the day after any
change in the Applicable Lending Office of such Lender, entitled to submit
a Form W-8, together with an annual certificate stating that (x) such
Registered Holder (or beneficial owner, as the case may be) is not a "bank"
within the meaning of Section 881(c)(3)(A) of
CREDIT AGREEMENT
<PAGE>
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the Code, is not a resident in a foreign country specified in a notice
published under Sections 871(h)(6) or 881(c)(6) of the Code and is not a
10% shareholder of the Company within the meaning of Section 881(c)(3)(B)
of the Code, unless such Registered Holder, or beneficial owner as the case
may be, is not so entitled by reason of a change of law (including but not
limited to any change in any applicable treaty, statute, regulation or
ruling, or judicial or administrative interpretation of any of the
foregoing) occurring after the date hereof (or the date the Registered
Holder or beneficial owner, as the case may be, became a Registered Holder
or beneficial owner) and (y) such Registered Holder (or beneficial owner,
as the case may be) shall promptly notify the Company if at any time, such
Registered Holder (or beneficial owner, as the case may be) determines that
it is no longer in a position to provide such certificate to the Company
(or any other form of certification adopted by the relevant taxing
authorities of the United States of America for such purposes), or
(iii) to any U.S. Taxes imposed solely by reason of the failure by such
non-U.S. Person (or, if such non-U.S. Person is not the beneficial owner of
the relevant Loan, such beneficial owner) to comply with (x) applicable
certification, information, documentation or other reporting requirements
concerning the nationality, residence, identity or connections with the
United States of America of such non-U.S. Person (or beneficial owner, as
the case may be) if such compliance is required by statute or regulation of
the United States of America as a precondition to relief or exemption from
such U.S. Taxes and (y) this Section 5.07(a).
For the purposes of this Section 5.07(a), (A) "FORM 1001" shall mean Form 1001
(Ownership, Exemption, or Reduced Rate Certificate) of the Department of the
Treasury of the United States of America, (B) "FORM 4224" shall mean Form 4224
(Exemption from Withholding of Tax on Income Effectively Connected with the
Conduct of a Trade or Business in the United States) of the Department of the
Treasury of the United States of America and (C) "FORM W-8" shall mean Form W-8
(Certificate of Foreign Status of the Department of Treasury of the United
States of America). Each of the Forms referred to in the foregoing clauses (A),
(B) and (C) shall include such successor and related forms as may from time to
time be adopted by the relevant taxing authorities of the United States of
America to document a claim to which such Form relates.
(b) Within 30 days after paying any amount to the Administrative
Agent or any Lender from which it is required by law to make any deduction or
withholding, and within 30 days after it is required by law to remit such
deduction or withholding to any relevant taxing or other authority, the Company
shall deliver to the Administrative Agent for delivery to such non-U.S. Person
evidence reasonably satisfactory to such Person of such deduction, withholding
or payment (as the case may be).
(c) If any Lender shall be entitled to compensation under this
Section 5.07, such Lender, within a reasonable time after becoming entitled to
such compensation, shall (unless otherwise required by a governmental authority
or as a result of any law, rule, regulation, order or similar directive
applicable to such Lender) designate a different Applicable Lending Office from
that initially selected by such Lender to which payments are to be made under
the Basic Documents, if such designation would avoid the need for (or reduce the
amount of) such
CREDIT AGREEMENT
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compensation and would not, in the sole opinion of such Lender, be otherwise
disadvantageous to such Lender.
5.08 REPLACEMENT OF LENDERS. If any Lender defaults in its
obligation to make Loans under Section 2.01 hereof or requests compensation
pursuant to Section 5.01, 5.06 or 5.07 hereof, or any Lender's obligation to
make or Continue, or to Convert Loans of any Type into, any other Type of Loan
shall be suspended pursuant to Section 5.01 or 5.03 hereof (any such Lender so
defaulting or requesting such compensation or whose obligations are so
suspended, being herein called a "RELEVANT LENDER"), the Company, upon three
Business Days notice given when no Default shall have occurred and be
continuing, may require that such Relevant Lender transfer all of its right,
title and interest under this Agreement to any bank or other financial
institution identified by the Company that is satisfactory to the Administrative
Agent, in its discretion reasonably exercised (a "PROPOSED LENDER") if (i) such
Proposed Lender agrees to assume all of the obligations of such Relevant Lender
hereunder, and to purchase all of such Relevant Lender's Loans hereunder for
consideration equal to the aggregate outstanding principal amount of such
Relevant Lender's Loans, together with interest thereon to the date of such
purchase, and satisfactory arrangements are made for payment to such Relevant
Lender of all other amounts payable hereunder to such Relevant Lender on or
prior to the date of such transfer (including any fees accrued hereunder and any
amounts that would be payable under Section 5.05 hereof as if all of such
Relevant Lender's Loans were being prepaid in full on such date) and (ii) such
Relevant Lender has requested compensation pursuant to Section 5.01, 5.06 or
5.07 hereof, such Proposed Lender's aggregate requested compensation, if any,
paid pursuant to Section 5.01, 5.06 or 5.07 hereof with respect to such Relevant
Lender's Loans is lower than that of the Relevant Lender. Subject to the
provisions of Section 12.06(b) hereof, such Proposed Lender shall be a "Lender"
for all purposes hereunder. Without prejudice to the survival of any other
agreement of the Company hereunder, the agreements of the Company contained in
Sections 5.01, 5.06, 5.07 and 12 hereof (without duplication of any payments
made to such Relevant Lender by the company or the Proposed Lender) shall
survive for the benefit of such Relevant Lender under this Section 5.08 with
respect to the time prior to such replacement.
Section 6. GUARANTEE.
6.01 THE GUARANTEE. The Guarantor hereby guarantees to each Lender
and the Administrative Agent and their respective successors and assigns the
prompt payment in full when due (whether at stated maturity, by acceleration or
otherwise) of the principal of and interest on the Loans made by the Lenders to
the Company and all other amounts from time to time owing to the Lenders or the
Agent by the Company under this Agreement and by the Company under any of the
other Basic Documents, and all obligations of the Company to any Lender in
respect of any Interest Rate Protection Agreement, in each case strictly in
accordance with the terms thereof (such obligations being herein collectively
called the "GUARANTEED OBLIGATIONS"). The Guarantor hereby further agrees that
if the Company shall fail to pay in full when due (whether at stated maturity,
by acceleration or otherwise) any of the Guaranteed Obligations, the Guarantor
will promptly pay the same, without any demand or notice whatsoever, and that in
the case of any extension of time of payment or renewal of any of the Guaranteed
Obligations, the same will be promptly paid in full when due (whether at
extended
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maturity, by acceleration or otherwise) in accordance with the terms of such
extension or renewal.
6.02 OBLIGATIONS UNCONDITIONAL. The obligations of the Guarantor
under Section 6.01 hereof are absolute and unconditional irrespective of the
value, genuineness, validity, regularity or enforceability of the obligations of
the Company under this Agreement or any other agreement or instrument referred
to herein or therein, or any substitution, release or exchange of any other
guarantee of or security for any of the Guaranteed Obligations, and, to the
fullest extent permitted by applicable law, irrespective of any other
circumstance whatsoever that might otherwise constitute a legal or equitable
discharge or defense of a surety or guarantor (other than payment in full of the
Guaranteed Obligations), it being the intent of this Section 6.02 that the
obligations of the Guarantor hereunder shall be absolute and unconditional under
any and all circumstances. Without limiting the generality of the foregoing, it
is agreed that the occurrence of any one or more of the following shall not
alter or impair the liability of the Guarantor hereunder which shall remain
absolute and unconditional as described above:
(i) at any time or from time to time, without notice to the
Guarantor, the time for any performance of or compliance with any of the
Guaranteed Obligations shall be extended, or such performance or compliance
shall be waived;
(ii) any of the acts mentioned in any of the provisions of this
Agreement or any other agreement or instrument referred to herein or
therein shall be done or omitted;
(iii) the maturity of any of the Guaranteed Obligations shall be
accelerated, or any of the Guaranteed Obligations shall be modified,
supplemented or amended in any respect, or any right under this Agreement
or any other agreement or instrument referred to herein or therein shall be
waived or any other guarantee of any of the Guaranteed Obligations or any
security therefor shall be released or exchanged in whole or in part or
otherwise dealt with; or
(iv) any lien or security interest granted to, or in favor of, the
Administrative Agent or any Lender or Lenders as security for any of the
Guaranteed Obligations shall fail to be perfected.
The Guarantor hereby expressly waives diligence, presentment, demand of payment,
protest and all notices whatsoever, and any requirement that the Administrative
Agent or any Lender exhaust any right, power or remedy or proceed against the
Company under this Agreement or any other agreement or instrument referred to
herein or therein, or against any other Person under any other guarantee of, or
security for, any of the Guaranteed Obligations.
6.03 REINSTATEMENT. The obligations of the Guarantor under this
Section 6 shall be automatically reinstated if and to the extent that for any
reason any payment by or on behalf of any Obligor in respect of the Guaranteed
Obligations is rescinded or must be otherwise restored by any holder of any of
the Guaranteed Obligations, whether as a result of any proceedings in bankruptcy
or reorganization or otherwise and the Guarantor agrees that it will indemnify
the Administrative Agent and each Lender on demand for all reasonable costs and
expenses (including, without limitation, fees of counsel) incurred by the
Administrative Agent or
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such Lender in connection with such rescission or restoration, including any
such costs and expenses incurred in defending against any claim alleging that
such payment constituted a preference, fraudulent transfer or similar payment
under any bankruptcy, insolvency or similar law.
6.04 SUBROGATION. The Guarantor hereby waives, until payment in
full of the Guaranteed Obligations, all rights of subrogation or contribution,
whether arising by contract or operation of law (including, without limitation,
any such right arising under the Bankruptcy Code) or otherwise by reason of any
payment by it pursuant to the provisions of this Section 6.
6.05 REMEDIES. The Guarantor agrees that, as between the Guarantor
and the Lenders, the obligations of the Company under this Agreement may be
declared to be forthwith due and payable as provided in Section 10 hereof (and
shall be deemed to have become automatically due and payable in the
circumstances provided in said Section 10) for purposes of Section 6.01 hereof
notwithstanding any stay, injunction or other prohibition preventing such
declaration (or such obligations from becoming automatically due and payable) as
against the Company and that, in the event of such declaration (or such
obligations being deemed to have become automatically due and payable), such
obligations (whether or not due and payable by the Company) shall forthwith
become due and payable by the Guarantor for purposes of said Section 6.01.
6.06 CONTINUING GUARANTEE. The guarantee in this Section 6 is a
continuing guarantee, and shall apply to all Guaranteed Obligations whenever
arising.
Section 7. CONDITIONS PRECEDENT.
7.01 EFFECTIVENESS. The effectiveness of this Agreement (and the
amendment and restatement of the Existing Credit Agreement to be effected
hereby) is subject to the receipt by the Administrative Agent of the following
documents, each of which shall be satisfactory to the Administrative Agent (and
to the extent specified below, to each Lender) in form and substance:
(a) CORPORATE DOCUMENTS. The following documents, each certified as
indicated below:
(i) for each of the Obligors, a copy of the charter (or
equivalent documents) certified as of a date reasonably close to the
Effective Date by the Secretary of State of such Obligor's
jurisdiction of incorporation (or, in the case of the Company, the
Guarantor or Lagasse, certified copies of any amendments to such
charter since the date of the Existing Credit Agreement) and a
certificate from such Secretary of State dated as of a date reasonably
close to the Effective Date as to the good standing of and charter
documents filed by such Person;
(ii) for each of the Obligors, a certificate of the Secretary
or an Assistant Secretary of such Person, dated the Effective Date and
certifying (A) that attached thereto is a true and complete copy of
the by-laws of such Person as amended and in effect at all times from
the date on which the resolutions referred to in
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clause (B) were adopted (or, in the case of the Company, the
Guarantor and Lagasse, that there have not been any amendments to
their respective by-laws since the date of the Existing Credit
Agreement), (B) that attached thereto is a true and complete copy of
resolutions duly adopted by the board of directors of such Person
authorizing the execution, delivery and performance of such of the
Basic Documents to which such Person is or is intended to be a party
and the extensions of credit hereunder, and that such resolutions have
not been modified, rescinded or amended and are in full force and
effect, (C) that the charter of such Person had not been amended since
the date of the certification thereto furnished pursuant to clause (i)
above, and (D) as to the incumbency and specimen signature of each
officer of such Person executing such of the Basic Documents to which
such Person is intended to be a party and each other document to be
delivered by such Person from time to time in connection therewith
(and the Administrative Agent and each Lender may conclusively rely on
such certificate until it receives notice in writing from such
Person); and
(iii) for each of the Obligors, a certificate of another
officer of such Person, dated the Effective Date, as to the incumbency
and specimen signature of the Secretary or Assistant Secretary, as the
case may be, of such Person at the time of execution of the
certificate referred to in clause (ii) above.
(b) OFFICER'S CERTIFICATE. A certificate of a senior officer or
Responsible Officer of the Guarantor, dated the Effective Date, to the
effect set forth in clauses (a) and (b) of Section 7.02 hereof.
(c) OPINIONS OF COUNSEL TO THE OBLIGORS. Opinions, dated the
Effective Date, of (i) the General Counsel of the Guarantor, substantially
in the form of Exhibit D-1 hereto and covering such other matters as the
Administrative Agent or any Lender may reasonably request (and each Obligor
hereby instructs such counsel to deliver such opinion to the Lenders and
the Administrative Agent) and (ii) Weil, Gotshal & Manges LLP, special New
York counsel to the Obligors, substantially in the form of Exhibit D-2
hereto and covering such other matters as the Administrative Agent or any
Lender may reasonably request (and each Obligor hereby instructs such
counsel to deliver such opinion to the Lenders and the Administrative
Agent).
(d) OPINION OF SPECIAL NEW YORK COUNSEL TO THE ADMINISTRATIVE AGENT.
An opinion, dated the Effective Date, of Milbank, Tweed, Hadley & McCloy,
special New York counsel to the Administrative Agent, substantially in the
form of Exhibit E hereto.
(e) AZERTY ACQUISITION. Certified copies of the Purchase Agreement
and evidence that (i) the Purchase Agreement shall have been duly
authorized, executed and delivered by the parties thereto and remains in
full force and effect and has not been amended as of the Effective Date,
(ii) all material governmental approvals and material third-party consents
and approvals (if any) in connection with the Azerty Acquisition have been
obtained and remain in effect and all applicable waiting periods have
expired without any action being taken by any competent authority that
restricts, prevents or imposes materially adverse conditions upon the
making or consummation of the Azerty
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Acquisition and (iii) the Azerty Acquisition shall have been consummated in
accordance with the Purchase Agreement. In addition, the Administrative
Agent shall have received a copy of each agreement, certificate, opinion of
counsel and other material writing delivered by or on behalf of each party
to the Purchase Agreement in connection with the closing of the Azerty
Acquisition, and a letter from the Person delivering such opinion
authorizing reliance thereon by the Administrative Agent and the Lenders.
In addition, with respect to the Subsidiary Guarantors acquired in the
Azerty Acquisition, reports satisfactory to the Lenders listing the results
of filing, tax lien and judgment searches prepared by one or more firms
satisfactory to the Administrative Agent in each jurisdiction deemed
relevant by the Administrative Agent.
(f) SUBSIDIARY GUARANTEE AND SECURITY AGREEMENT. The Subsidiary
Guarantee and Security Agreement, duly executed and delivered by the
Subsidiary Guarantors. In addition, the Company shall have taken such
other action (including, without limitation, delivering to the
Administrative Agent, (i) Uniform Commercial Code (or equivalent Louisiana
statute) searches for each Subsidiary Guarantor for each jurisdiction in
which such Subsidiary Guarantor conducts its business or in which any of
its respective Properties are located (or otherwise as the Administrative
Agent may reasonably request) and (ii) for filing, appropriately completed
and duly executed copies of Uniform Commercial Code financing statements
(or equivalent Louisiana filings)) as the Administrative Agent shall have
requested in order to perfect the security interests created pursuant to
the Subsidiary Guarantee and Security Agreement.
(g) SECURITY AGREEMENT; PLEDGE OF SUBSIDIARY SHARES. The Security
Agreement, duly executed and delivered by the Company and the
Administrative Agent. In addition, the Company shall have delivered the
certificates representing 100% of the issued and outstanding shares of
capital stock of the Subsidiary Guarantors and 65% of the issued and
outstanding shares of capital stock of Azerty Mexico (in the case of each
of the Acquired Businesses, as purchased by the Company under the Purchase
Agreement) accompanied by undated stock powers executed in blank.
(h) ENVIRONMENTAL ASSESSMENT. An environmental assessment of all real Property
owned or leased by the Subsidiary Guarantors which will be covered by the
Mortgage referred to in Section 7.01(k) hereof in form and substance reasonably
satisfactory to the Majority Lenders.
(i) LITIGATION. A certificate of a senior officer of each of the
Company and each of the Acquired Businesses (or, in the case of Azerty
Mexico, from a senior officer of the Company on behalf of Azerty Mexico) to
the effect that there exists (i) no judgment, order, injunction or other
restraint issued or filed which prohibits the making of the Loans or the
consummation of the Azerty Acquisition, (ii) no action, suit, litigation,
or similar proceeding at law or in equity or by or before any court or
governmental or regulatory authority with respect to the Azerty Acquisition
or the financing thereof and (iii) no actions, suits or proceedings pending
or threatened with respect to any such party that could reasonably be
expected to have a Material Adverse Effect.
CREDIT AGREEMENT
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(j) FINANCINGS. Copies of the Receivables Financing Documents, as
executed and delivered by the parties thereto, and evidence that the
initial purchase of receivables thereunder shall have been consummated in
accordance with the terms thereof. In addition, the Administrative Agent
shall have received a copy of each agreement, certificate, opinion of
counsel and any other material writing delivered in by or on behalf of each
party to the Receivables Financing Documents and a letter from the Person
delivering such opinion authorizing reliance thereon by the Administrative
Agent and the Lenders.
(k) OTHER DOCUMENTS. Such other documents as the Administrative
Agent or any Lender or special New York counsel to the Administrative Agent
reasonably request.
7.02 INITIAL AND SUBSEQUENT EXTENSIONS OF CREDIT. The obligation of
the Lenders to make any Loan or otherwise extend any credit to either Obligor
upon the occasion of each borrowing or other extension of credit hereunder
(including the initial borrowings and continuation of the Term Loans and the
Revolving Credit Loans contemplated to occur on the Effective Date) is subject
to the further conditions precedent that, both immediately prior to the making
of such Loan or other extension of credit and also after giving effect thereto
and to the intended use thereof:
(a) no Default shall have occurred and be continuing; and
(b) the representations and warranties made by each Obligor in
Section 8 hereof and in each other Basic Document to which such Obligor is
a party, shall be true and complete in all material respects on and as of
the date of the making of such Loan or other extension of credit (and after
giving effect thereto) with the same force and effect as if made on and as
of such date (or, if any such representation or warranty is expressly
stated to have been made as of a specific date, as of such specific date).
Each notice of borrowing or request for the issuance of a Letter of Credit by
the Company hereunder shall constitute a certification by the Company to the
effect set forth in the preceding sentence (both as of the date of such notice
or request and, unless the Company otherwise notifies the Administrative Agent
prior to the date of such borrowing or issuance, as of the date of such
borrowing or issuance).
Section 8. REPRESENTATIONS AND WARRANTIES. Each Obligor
represents and warrants to the Administrative Agent and the Lenders that:
8.01 CORPORATE EXISTENCE. Each Obligor and its Subsidiaries
(including, for purposes of this Section 8.01, the Acquired Businesses): (a) is
a corporation, partnership or other entity duly organized, validly existing and
in good standing under the laws of the jurisdiction of its organization; (b) has
all requisite corporate or other 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 (c) is
qualified to do business and is in good standing in all jurisdictions in which
the nature of the business conducted by it makes
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such qualification necessary and where failure so to qualify could (either
individually or in the aggregate) reasonably be expected to have a Material
Adverse Effect.
8.02 FINANCIAL CONDITION. (a) The Obligors have heretofore
furnished to each of the Lenders the following:
(i) a consolidated pro forma balance sheet of the Guarantor and its
Subsidiaries (giving effect to the Azerty Acquisition) and the related pro
forma statements of income, retained earnings and cash flows of the
Guarantor and its Subsidiaries (giving effect to the Azerty Acquisition) as
at December 31, 1997 and
(ii) the consolidated balance sheet of the Guarantor and its
Subsidiaries as at December 31, 1997 and the related consolidated
statements of income, changes in stockholders' investment and cash flows of
the Guarantor and its Subsidiaries for the fiscal year ended on said date,
with the opinion thereon of Ernst & Young LLP.
(b) The financial statements referred to in clause (a)(i), including
the projections contained therein fairly present, in all material respects, the
Company's expectations as to the matters covered thereby as of their respective
dates, were prepared in good faith and based on reasonable assumptions as to all
factual and legal matters material to the estimates therein. The financial
statements referred to in clause (a)(ii) above fairly present, in all material
respects the consolidated financial position of the Guarantor and its
Subsidiaries as at said dates and the consolidated results of their respective
operations for the fiscal years and periods ended on said dates, in accordance
with generally accepted accounting principles and practices applied on a
consistent basis. None of the Guarantor or its Subsidiaries or any of the
Acquired Businesses has on the date hereof any material contingent liabilities,
liabilities for taxes, unusual forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments, except as referred to or
reflected or provided for in said balance sheets as at said dates. Since
December 31, 1997, there has been no material adverse change in the consolidated
financial condition, operations, business or prospects taken as a whole of the
Guarantor and its Subsidiaries from that set forth in said financial statements
as at said respective dates other than the Azerty Acquisition.
8.03 LITIGATION. Except as disclosed to the Lenders in Schedule V
hereto, there are no legal or arbitral proceedings, or any proceedings by or
before any governmental or regulatory authority or agency, now pending or (to
the knowledge of any Obligor) threatened against either Obligor or any of its
Subsidiaries that, if adversely determined, could (either individually or in the
aggregate) reasonably be expected to have a Material Adverse Effect.
8.04 NO BREACH. None of the making or performance of this Agreement
and the other Transaction Documents, the consummation of the transactions herein
and therein contemplated or compliance with the terms and provisions hereof and
thereof will conflict with or result in a breach of, or require any consent not
already obtained under, the charter or by-laws of either Obligor or any of its
Subsidiaries, or any applicable law or regulation, or any order, writ,
injunction or decree of any court or governmental authority or agency, or any
material agreement or instrument to which either Obligor or any such Subsidiary
is a party or by which any of them or any of their Property is bound or to which
any of them is subject, or constitute a
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default under any such agreement or instrument, or (except for the Liens created
pursuant to the Security Documents) result in the creation or imposition of any
Lien upon any Property of either Obligor or any such Subsidiary pursuant to the
terms of any such agreement or instrument.
8.05 ACTION. Each Obligor and each of its Subsidiaries has all
necessary corporate power, authority and legal right to execute, deliver and
perform its obligations hereunder and under each of the other Transaction
Documents to which it is a party; the execution, delivery and performance by
each Obligor and each such Subsidiary of each of the Transaction Documents to
which it is a party have been duly authorized by all necessary corporate action
on its part (including, without limitation, any required shareholder approvals);
and this Agreement has been duly and validly executed and delivered by such
Obligor and (assuming the due authorization, execution and delivery thereof by
the Administrative Agent, the Lenders and the other parties (other than an
Obligor) thereto) constitutes, and each of the other Transaction Documents to
which it is a party when executed and delivered by such Obligor or such
Subsidiary will constitute, its legal, valid and binding obligation, enforceable
against such Obligor and/or such Subsidiary, as the case may be, in accordance
with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting the rights
of creditors generally and except as such enforceability may be limited by the
application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
8.06 APPROVALS. Other than the Notification and Report Form in
respect of the Azerty Acquisition furnished to the Department of Justice and the
Federal Trade Commission pursuant to the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (which Notification and Report Form has been duly given
and all applicable waiting periods have been terminated without any action
having been taken by any competent authority that restricts, prevents or imposes
conditions upon the Azerty Acquisition), no authorizations, approvals or
consents not already duly obtained of, and no filings or registrations with, any
governmental or regulatory authority or agency, or any securities exchange, are
necessary for the execution, delivery or performance by either Obligor or any of
its Subsidiaries of the Transaction Documents to which it is a party or for the
legality, validity or enforceability hereof or thereof, except for (i) filings
and recordings in respect of the Liens created pursuant to the Security
Documents and (ii) immaterial state and municipal licenses such as business
licenses, food sales establishment licenses, required registrations with state
revenue departments and other similar ministerial licenses.
8.07 USE OF CREDIT. Neither Obligor nor any of its Subsidiaries is
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose, whether immediate, incidental or ultimate, of
buying or carrying Margin Stock. Neither the making of any of the Loans
hereunder nor the use of the proceeds thereof will violate or be inconsistent
with the provisions of Regulation U or X.
8.08 ERISA. Each Plan and, to the knowledge of the Company, each
Multiemployer Plan, is in compliance in all material respects with, and has been
administered in all material respects in compliance with, the applicable
provisions of ERISA, the Code and any other Federal or State law, and no event
or condition has occurred and is continuing as to which either Obligor would be
under an obligation to furnish a report to the Lenders under
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Section 9.01(e) hereof. As of the date of this Agreement, and for the year
preceding the date of this Agreement, neither Obligor nor, prior to the Azerty
Acquisition, any Acquired Business has contributed to any Multiemployer Plan.
8.09 TAXES. Except as set forth on Schedule VI hereto, the
Guarantor and its Subsidiaries are members of an affiliated group of
corporations filing consolidated returns for Federal income tax purposes, of
which the Guarantor is the "common parent" (within the meaning of Section 1504
of the Code) of such group. Except as set forth on Schedule VI hereto, the
Guarantor and its Subsidiaries have filed all Federal income tax returns and all
other material tax returns that are required to be filed by them and have paid
all taxes due pursuant to such returns or pursuant to any assessment received by
the Guarantor or any such Subsidiary, except for any such tax the payment of
which is being contested in good faith and by proper proceedings and against
which adequate reserves are being maintained, provided that except to the extent
set forth in Schedule VI hereto no such tax is being contested on the Effective
Date. The charges, accruals and reserves on the books of the Guarantor and its
Subsidiaries in respect of taxes and other governmental charges are, in the
opinion of the Guarantors, adequate. Except as set forth in Schedule VI hereto,
neither the Guarantor nor any of its Subsidiaries has given or been requested to
give a waiver of the statute of limitations relating to the payment of any
Federal, state, local and foreign taxes or other impositions.
8.10 INVESTMENT COMPANY ACT. Neither the Guarantor nor any of its
Subsidiaries is an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.
8.11 PUBLIC UTILITY HOLDING COMPANY ACT. Neither the Guarantor nor
any of its Subsidiaries is a "holding company", or an "affiliate" of a "holding
company" or a "subsidiary company" of a "holding company", within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
8.12 MATERIAL AGREEMENTS AND LIENS.
(a) Part A of Schedule I hereto are a complete and correct list of
each credit agreement, loan agreement, indenture, purchase agreement, guarantee,
letter of credit or other arrangement providing for or otherwise relating to
Indebtedness of the Guarantor and its Subsidiaries outstanding on the date
hereof, or that after giving effect to the Azerty Acquisition will be
outstanding on the Effective Date, and the aggregate principal or face amount
outstanding or that may become outstanding under each such arrangement is
correctly described in Part A of said Schedule I.
(b) Part B of Schedule I hereto is a complete and correct list of
each Lien securing Indebtedness of any Person outstanding on the date hereof, or
that (after giving effect to the transactions contemplated to occur on or before
the Effective Date) will be outstanding on the Effective Date (other than the
Liens created in connection with this Agreement), the aggregate principal or
face amount of which equals or exceeds (or may equal or exceed) $10,000 and
covering any Property of the Guarantor or any of its Subsidiaries, and the
aggregate Indebtedness secured (or which may be secured) by each such Lien and
the Property covered by each such Lien is correctly described in Part B of said
Schedule I.
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8.13 ENVIRONMENTAL MATTERS. Except as set forth on Schedule II
hereto,
(a) Each of the Guarantor and its Subsidiaries (including for all
purposes of this Section 8.13, the Acquired Businesses) has obtained all
environmental, health and safety permits, licenses and other authorizations
required under all Environmental Laws (collectively, "ENVIRONMENTAL
PERMITS") to carry on its business as now being or as proposed to be
conducted, except to the extent failure to have any such Environmental
Permit would not (either individually or in the aggregate) have a Material
Adverse Effect. Each of such Environmental Permits is in full force and
effect and each of the Guarantor and its Subsidiaries is in compliance with
the terms and conditions thereof, and is also in compliance with all other
applicable Environmental Laws, decrees, judgments, and injunctions, except
to the extent failure to comply therewith would not (either individually or
in the aggregate) have a Material Adverse Effect.
(b) No notice, notification, demand, request for information,
citation, summons or order is pending, no complaint is pending, no penalty
has been assessed and is outstanding and no investigation or review is
pending or, to the Guarantor's knowledge, threatened by any governmental or
other entity with respect to any alleged failure by the Guarantor or any of
its Subsidiaries to have any Environmental Permit or with respect to any
generation, treatment, storage, recycling, transportation or any Release of
any Hazardous Materials generated by the Guarantor or any of its
Subsidiaries that could reasonably be expected to result in a liability in
excess of $10,000.
(c) Neither the Guarantor nor any of its respective Subsidiaries
owns, operates or leases a treatment, storage or disposal facility
requiring a permit under the Resource Conservation and Recovery Act of
1976, as amended, or under any comparable state or local statute.
(d) There is not now nor, to the Guarantor's knowledge, has there
been in the past any PCBs, asbestos containing materials ("ACMS"), surface
impoundments or underground storage tanks at any real Property now or, to
the Guarantor's knowledge, previously owned, operated or leased by the
Guarantor or any of its Subsidiaries, the presence of which could
reasonably be expected to result in a liability in excess of $10,000.
(e) No Hazardous Materials have been otherwise Released at, on or
under any site or facility now or previously owned, operated or leased by
the Guarantor or any of its Subsidiaries that would (either individually or
in the aggregate) have a Material Adverse Effect.
(f) Neither the Guarantor nor any of its Subsidiaries has received a
notice alleging that it is a potentially responsible party under the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA"), listed for possible inclusion on the National
Priorities List ("NPL") by the Environmental Protection Agency in the
Comprehensive Environmental Response and Liability Information System, as
provided for by 40 C.F.R. Section 300.5 ("CERCLIS"), or on any similar
state or local list.
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(g) No written notification of a Release of a Hazardous Material has
been filed by or on behalf of the Guarantor or any of its Subsidiaries and
no site or facility now or, to the Guarantor's knowledge, previously owned,
operated or leased by the Guarantor or any of its Subsidiaries is listed or
proposed for listing on the NPL, CERCLIS or any similar state list of sites
requiring investigation or clean-up.
(h) No Liens exist under or pursuant to any Environmental Laws on any
real Property owned or operated by the Guarantor or any of its
Subsidiaries, and no government action has been taken or is in process that
could subject any such site or facility to such Liens and, to the best
knowledge of the Guarantor, neither the Guarantor nor any of its
Subsidiaries would be required to place any notice or restriction relating
to the presence of Hazardous Materials at any site or facility owned by it
in any deed to the real Property on which such site or facility is located.
(i) All environmental investigations, studies, audits, tests, reviews
or other analyses conducted by or that are in the possession of the
Guarantor or any of its Subsidiaries in relation to facts, circumstances or
conditions at or affecting any site or facility now or previously owned,
operated or leased by the Guarantor or any of its Subsidiaries and that
could result in a Material Adverse Effect have been made available to the
Lenders.
8.14 CAPITALIZATION.
On the date hereof, the authorized capital stock of the Company
consists of an aggregate of 890,000 shares of $1.00 par value common stock. All
of the issued and outstanding shares of the Company on such date and at such
time will be duly and validly issued, fully paid and nonassessable. As of such
date and time, all of such shares will be owned beneficially and of record by
the Guarantor and (x) there will be no outstanding Equity Rights with respect to
the Company and (y) there will be no outstanding obligations of the Company or
the Guarantor or any of their Subsidiaries to repurchase, redeem, or otherwise
acquire any shares of capital stock of the Company nor will there be any
outstanding obligations of the Company or the Guarantor or any of their
Subsidiaries to make payments to any Person, such as "phantom stock" payments,
where the amount thereof is calculated with reference to the fair market value
or equity value of the Company or any of its Subsidiaries.
8.15 SUBSIDIARIES, ETC.
(a) Part A of Schedule III hereto sets forth all Subsidiaries of the
Guarantor as of the date hereof and after giving effect to the Azerty
Acquisition.
(b) Set forth in Part B of Schedule III hereto is a complete and
correct list of all Investments held by the Guarantor or any of its Subsidiaries
on the date hereof and after giving effect to the Azerty Acquisition, and, for
each such Investment, (x) the identity of the Person or Persons holding such
Investment and (y) the nature of such Investment. Except as disclosed in
Schedule III hereto, each of the Guarantor or such Subsidiary, as the case may
be, owns on the date hereof, free and clear of all Liens (other than Liens
permitted under Section 9.06 hereof) all such Investments.
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8.16 TITLE TO ASSETS. Except as disclosed in the footnote under the
heading "Real Property Interests" in Schedule IV hereto, each of the Guarantor
and its Subsidiaries and each Acquired Business owns and has on the date hereof
good and marketable title (subject only to Liens permitted by Section 9.06
hereof) to the Properties shown to be owned in the most recent financial
statements referred to in Section 8.02 hereof (other than Properties that are
disposed of in the ordinary course of business or otherwise permitted to be
disposed of pursuant to Section 9.05 hereof or, in the case of the Acquired
Businesses, that are not material to the operation and conduct of the Guarantor
and its Subsidiaries). Each of the Guarantor and its Subsidiaries and each
Acquired Business owns and has on the date hereof good and marketable title to,
or valid leasehold interests in, and enjoys peaceful and undisturbed possession
of, all Properties (subject only to Liens permitted by Section 9.06 hereof) that
are necessary for the operation and conduct of its businesses.
8.17 TRUE AND COMPLETE DISCLOSURE. The information, reports,
financial statements, exhibits and schedules furnished in writing by or on
behalf of the Obligors to the Administrative Agent or any Lender in connection
with the negotiation, preparation or delivery of this Agreement and the other
Basic Documents or included herein or therein or delivered pursuant hereto or
thereto (including, without limitation, the Information Memorandum), when taken
as a whole, do not contain any untrue statement of material fact or omit to
state any material fact necessary to make the statements herein or therein, in
light of the circumstances under which they were made, not misleading. All
written information furnished after the date hereof by the Guarantor or any of
its Subsidiaries to the Administrative Agent and the Lenders in connection with
this Agreement and the other Basic Documents and the transactions contemplated
hereby and thereby will be true, complete and accurate in every material
respect, or (in the case of projections) based on estimates deemed in good faith
to be reasonable, on the date as of which such information is stated or
certified. There is no fact known to any Obligor that could reasonably be
expected to have a Material Adverse Effect that has not been disclosed herein,
in the other Basic Documents or in a report, financial statement, exhibit,
schedule, disclosure letter or other writing furnished to the Lenders for use in
connection with the transactions contemplated hereby or thereby.
8.18 REAL PROPERTY. Set forth on Schedule IV hereto is a list, as
of the date hereof and after giving effect to the Azerty Acquisition, of all of
the real Property interests held by the Guarantor and its Subsidiaries,
indicating in each case whether the respective Property is owned or leased, the
identity of the owner or lessee and the location of the respective Property.
8.19 SECURITY DOCUMENTS. The Security Documents create, as security
for the obligations purported to be secured thereby, a valid and enforceable
perfected interest in and Lien on all of the Properties covered thereby in favor
of the Administrative Agent, superior to and prior to the right of all third
Persons and subject to no other Liens (other than Liens permitted under Section
9.06 hereof).
8.20 YEAR 2000. The Company believes that any reprogramming
required to permit the proper functioning in and following the year 2000 of the
Company's computer systems and any necessary equipment of the Company containing
embedded microchips and the testing of all such systems and equipment as so
reprogrammed will be completed in a manner and to the extent that any failure by
the Company to complete any such reprogramming or testing
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could not reasonably be expected to have a Material Adverse Effect.
Section 9. COVENANTS OF THE OBLIGORS. Each Obligor covenants and
agrees with the Lenders and the Administrative Agent that, so long as any
Commitment, Loan or Letter of Credit Liability is outstanding and until payment
in full of all amounts payable by the Obligors hereunder:
9.01 FINANCIAL STATEMENTS, ETC. The Guarantor and the Company shall
deliver to each of the Lenders:
(a) as soon as available and in any event within 45 days after the
end of the first three quarterly fiscal periods of each fiscal year of the
Guarantor, consolidated statements of income, retained earnings and cash
flows of the Guarantor and its Subsidiaries for such period and for the
period from the beginning of the respective fiscal year to the end of such
period, and the related consolidated balance sheet as at the end of such
period, setting forth in each case in comparative form the corresponding
consolidated figures for the corresponding periods in the preceding fiscal
year, accompanied by a certificate of a Responsible Officer of the
Guarantor, which certificate shall state that said consolidated financial
statements present fairly, in all material respects, the consolidated
financial position and results of operations of the Guarantor and its
Subsidiaries, in each case in accordance with generally accepted accounting
principles, consistently applied, as at the end of, and for, such period
(subject to normal year-end audit adjustments and excluding any footnotes
thereto);
(b) as soon as available and in any event within 90 days after the
end of each fiscal year of the Guarantor, audited consolidated statements
of income, retained earnings and cash flows of the Guarantor and its
Subsidiaries, for such fiscal year and the related audited consolidated
balance sheet as at the end of such fiscal year, setting forth in each case
in comparative form (i) the corresponding consolidated figures for the
preceding fiscal year and (ii) the corresponding consolidated projected
figures contained in the business plan furnished under Section 9.01(f)
hereof in respect of such fiscal year (or in the quarterly business plan of
the Guarantor heretofore delivered to the Administrative Agent) and
accompanied by an opinion thereon of independent certified public
accountants of recognized national standing (the "ACCOUNTANTS"), which
opinion shall state that said consolidated financial statements present
fairly, in all material respects, the consolidated financial position and
results of operations of the Guarantor and its Subsidiaries as at the end
of, and for, such fiscal year in accordance with generally accepted
accounting principles, and a certificate of such accountants stating that,
in making the examination necessary for their opinion, they obtained no
knowledge, except as specifically stated, of any Default under any of
Sections 9.09 through 9.13 hereof;
(c) promptly upon their becoming available, copies of all
registration statements and regular periodic reports and other material
reports, if any, which either the Guarantor or the Company shall have filed
with the Commission (or any governmental agency substituted therefor) or
any national securities exchange;
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(d) promptly upon the mailing thereof to the shareholders of either
the Guarantor or the Company generally, copies of all financial statements,
reports and proxy statements so mailed;
(e) as soon as possible, and in any event within 21 days after either
the Guarantor or the Company knows or has reason to believe that any of the
events or conditions specified below with respect to any Plan or
Multiemployer Plan has occurred or exists, a statement signed by a
Responsible Officer of the Company setting forth details respecting such
event or condition and the action, if any, that the Guarantor or the
Company, as the case may be, or its ERISA Affiliate proposes to take with
respect thereto (and a copy of any report or notice required to be filed
with or given to PBGC by such Obligor or an ERISA Affiliate with respect to
such event or condition):
(i) any reportable event, as defined in Section 4043(b) of
ERISA and the regulations issued thereunder, with respect to a Plan,
as to which PBGC has not by regulation waived the requirement of
Section 4043(a) of ERISA that it be notified within 30 days of the
occurrence of such event (PROVIDED that a failure to meet the minimum
funding standard of Section 412 of the Code or Section 302 of ERISA,
including, without limitation, the failure to make on or before its
due date a required installment under Section 412(m) of the Code or
Section 302(e) of ERISA, shall be a reportable event regardless of the
issuance of any waivers in accordance with Section 412(d) of the
Code); and any request for a waiver under Section 412(d) of the Code
for any Plan;
(ii) the distribution under Section 4041 of ERISA of a notice
of intent to terminate any Plan or any action taken by either the
Guarantor or the Company or an ERISA Affiliate to terminate any Plan
if the assets of such Plan are insufficient to provide in full for all
of the benefit liabilities under such Plan as contemplated by
Section 4041(b) of ERISA;
(iii) the institution by PBGC of proceedings under
Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, or the receipt by either the
Guarantor or the Company any ERISA Affiliate of a notice from a
Multiemployer Plan that such action has been taken by PBGC with
respect to such Multiemployer Plan;
(iv) the complete or partial withdrawal from a Multiemployer
Plan by either Obligor or any ERISA Affiliate that results in
liability under Section 4201 or 4204 of ERISA (including the
obligation to satisfy secondary liability as a result of a purchaser
default) or the receipt by either the Guarantor or the Company or any
ERISA Affiliate of notice from a Multiemployer Plan that it is in
reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA
or that it intends to terminate or has terminated under Section 4041A
of ERISA;
(v) the institution of a proceeding by a fiduciary of any
Multiemployer Plan against either the Guarantor or the Company or any
ERISA Affiliate to enforce Section 515 of ERISA, which proceeding is
not dismissed within 30 days;
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(vi) the adoption of an amendment to any Plan that, pursuant
to Section 401(a)(29) of the Code or Section 307 of ERISA, would
result in the loss of tax-exempt status of the trust of which such
Plan is a part if either the Guarantor or the Company or an ERISA
Affiliate fails to timely provide security to the Plan in accordance
with the provisions of said Sections; and
(vii) the existence of any event or circumstance which may
reasonably be expected to constitute grounds for either the Guarantor
or the Company or any ERISA Affiliate to incur liability under Section
4062, 4063, 4064 or 4069 of ERISA;
(f) no later than 15 days prior to the end of the fiscal year of the
Company, an annual business plan for the Company and its Subsidiaries
covering the next succeeding year, in form and substance reasonably
satisfactory to the Administrative Agent (and, if reasonably requested by
the Majority Lenders prior to such date, an annual business plan for the
succeeding five-year period);
(g) as soon as available after the end of each fiscal year of the
Company, and at such other times as the Administrative Agent or the
Majority Revolving Credit Lenders may reasonably request, a report of the
Accountants as at the end of such annual period which report shall indicate
that, based upon a review by the Accountants of the Receivables other than
those transferred in connection with the Receivables Financing (including,
without limitation, verification with respect to the amount, aging,
identity and credit of the respective account debtors and the billing
practices of the Company and the Subsidiary Guarantors) and Inventory
(including, without limitation, verification as to the value, location and
respective types), the value of such Receivables and Inventory;
(h) promptly after becoming aware thereof, written notice of (i) the
assertion of any Environmental Claim by any Person against, or with respect
to the activities of, the Guarantor or any of its Subsidiaries and notice
of any alleged violation of or non-compliance with any Environmental Laws
or any permits, licenses or authorizations, other than any Environmental
Claims or alleged violations which, if adversely determined, would not have
a Material Adverse Effect, (ii) any Environmental Claim, inquiry,
proceeding, investigation, or other action, including a notice from any
governmental authority of potential environmental liability, or any
Federal, state or local environmental agency or board, that involves any
collateral security for the Loans or the Lenders' rights with respect to
any such collateral security, and (iii) any Release of a non-de minimus
quantity of Hazardous Materials at any site or facility of the Guarantor or
any Subsidiary;
(i) promptly after either the Guarantor or the Company knows or has
reason to believe that any Default has occurred, a notice of such Default
describing the same in reasonable detail and, together with such notice or
as soon thereafter as reasonably possible, a description of any action that
the Guarantor or the Company, as the case may be, has taken or proposes to
take with respect thereto; and
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(j) from time to time such other information regarding the financial
condition, operations, business or prospects of the Guarantor or any of its
Subsidiaries (including, without limitation, any Plan or Multiemployer Plan
and any reports or other information required to be filed under ERISA) as
any Lender or the Administrative Agent may reasonably request.
The Guarantor will furnish to each Lender, at the time it furnishes
each set of financial statements pursuant to paragraph (a) or (b) above, a
certificate of a Responsible Officer of the Company (i) to the effect that, to
the best of such Responsible Officer's knowledge, no Default has occurred and is
continuing (or, if any Default has occurred and is continuing, describing the
same in reasonable detail and describing any action that either the Guarantor or
the Company has taken or proposes to take with respect thereto) and (ii) setting
forth in reasonable detail the computations necessary to determine whether the
Guarantor and the Company are in compliance with Sections 9.09 through 9.13
(inclusive) as of the end of the respective quarterly fiscal period or fiscal
year.
9.02 LITIGATION. Promptly upon becoming aware thereof, the Company
(for itself and on behalf of the Guarantor and its Subsidiaries) will promptly
give to each Lender notice of all legal or arbitral proceedings, and of all
proceedings by or before any governmental or regulatory authority or agency, and
any material development in respect of such legal or other proceedings,
affecting the Guarantor or any of its Subsidiaries, except proceedings that, if
adversely determined, could not (either individually or in the aggregate)
reasonably be expected to have a Material Adverse Effect.
9.03 EXISTENCE, ETC. The Guarantor will, and will cause each of its
Subsidiaries to:
(a) preserve and maintain its legal existence and all of its material
rights, privileges, licenses and franchises (PROVIDED that nothing in this
Section 9.03 shall prohibit any transaction expressly permitted under
Section 9.05 hereof);
(b) comply with the requirements of all applicable laws, rules,
regulations and orders of governmental or regulatory authorities if failure
to comply with such requirements could (either individually or in the
aggregate) reasonably be expected to have a Material Adverse Effect;
(c) pay and discharge all material taxes, assessments and
governmental charges or levies imposed on it or on its income or profits or
on any of its Property prior to the date on which penalties attach thereto,
except for any such tax, assessment, charge or levy the payment of which is
being contested in good faith and by proper proceedings and against which
adequate reserves are being maintained;
(d) maintain all of its Properties used or useful in its business in
good working order and condition, ordinary wear and tear excepted;
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(e) keep adequate records and books of account, in which complete
entries will be made in accordance with generally accepted accounting
principles consistently applied; and
(f) permit representatives of any Lender or the Administrative Agent
upon reasonable prior notice and, during normal business hours, to examine,
copy and make extracts from its books and records, to inspect any of its
Properties, and to discuss its business and affairs with its officers and
independent certified public accountants, all to the extent reasonably
requested by such Lender or the Administrative Agent (as the case may be).
9.04 INSURANCE. The Guarantor will, and will cause each of its
Subsidiaries to, keep insured by financially sound and reputable insurers all
Property of a character usually insured by corporations engaged in the same or
similar business similarly situated against loss, damage and liability of the
kinds and in the amounts customarily insured against by such corporations.
Such insurance shall be written by financially responsible companies
selected by the Company, duly licensed to do business in the states in which the
relevant facilities are located and having an A. M. Best rating of "A-" or
better and being in a financial size category of VIII or larger, or by other
companies reasonably acceptable to the Administrative Agent. The policies for
any casualty insurance required hereunder shall either name or contain an
endorsement naming the Administrative Agent as first mortgagee and loss payee
under a first mortgage clause or endorsement without contribution substantially
equivalent to the New York standard first mortgage clause of endorsement. Each
policy referred to in this Section 9.04 shall provide that it will not be
canceled or reduced, or allowed to lapse without renewal, except after not less
than 30 days' notice to the Administrative Agent and shall also provide that the
interests of the Administrative Agent and the Lenders shall not be invalidated
by any act or negligence of the Obligor or any Person having an interest in any
Property covered by a Mortgage nor by occupancy or use of any such Property for
purposes more hazardous than permitted by such policy nor by any foreclosure or
other proceedings relating to such Property and shall otherwise be in form and
substance satisfactory to each Lender. The Company will advise the
Administrative Agent promptly of any policy cancellation, reduction or
amendment.
By October 31 of each year, the Company will deliver to the
Administrative Agent the certificates of insurance evidencing that all insurance
required to be maintained by the Company hereunder will be in effect for the 12
months beginning after the immediately succeeding November 1, subject only to
the payment of premiums as they become due. The Company will not obtain or
carry separate insurance concurrent in form or contributing in the event of loss
with that required by this Section 9.04 unless the Administrative Agent, on
behalf of the Lenders, is named as first mortgagee and loss payee as provided
herein. The Company will immediately notify the Administrative Agent whenever
any such separate insurance is obtained and shall deliver to the Administrative
Agent the certificates evidencing the same.
Without limiting the obligations of the Company under the foregoing
provisions of this Section 9.04, in the event the Company shall fail to maintain
in full force and effect insurance as required by the foregoing provisions of
this Section 9.04, then the Administrative
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Agent may, but shall have no obligation so to do, procure insurance covering the
interests of the Lenders and the Administrative Agent in such amounts and
against such risks as the Administrative Agent (or the Majority Lenders) shall
deem appropriate, and the Company shall reimburse the Administrative Agent in
respect of any premiums paid by the Administrative Agent in respect thereof.
9.05 PROHIBITION OF FUNDAMENTAL CHANGES.
(a) The Guarantor will not, nor will it permit any of its
Subsidiaries to, enter into any transaction of merger or consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution).
(b) The Guarantor will not, nor will it permit any of its
Subsidiaries to, acquire any business or Property from, or capital stock of, or
be a party to any acquisition of, any Person except for (i) the Azerty
Acquisition, (ii) purchases of inventory and other Property to be sold or used
in the ordinary course of business, (iii) Investments permitted under
Section 9.08 hereof, (iv) Capital Expenditures and (v) Permitted Acquisitions,
PROVIDED that, in the case of clause (v), after giving effect to any such
Permitted Acquisition (including after giving Pro Forma Effect), no Default
shall have occurred and be continuing.
(c) The Guarantor will not, nor will it permit any of its
Subsidiaries to, convey, sell, lease, transfer or otherwise dispose of, in one
transaction or a series of transactions, any part of its business or Property,
whether now owned or hereafter acquired, including, without limitation,
receivables and leasehold interests, but excluding (i) obsolete or worn-out
Property, tools or equipment no longer used or useful in its business, (ii) any
inventory or other Property sold or disposed of in the ordinary course of
business and on ordinary business terms, (iii) any Part A Property sold or
disposed of for fair value, (iv) any Part B Property sold or disposed of within
one year prior to or after the Disposition of any Part A Property located in the
same geographical area if the proceeds thereof are applied as provided in
Section 2.10(d) hereof, (v) shares in United Business Computers, Inc. to be
transferred as described in Schedule III hereto and (vi) other Properties sold
for fair value, PROVIDED that at least 75% of the proceeds of each such sale
shall be received in cash and the aggregate Net Available Proceeds received from
the sale of such Properties and all other Properties sold pursuant to this
clause (vi) shall not exceed $15,000,000.
(d) Notwithstanding the foregoing provisions of this Section 9.05:
(i) any Subsidiary of the Company may be merged or consolidated
with or into: (i) the Company if the Company shall be the continuing or
surviving corporation or (ii) any other such Subsidiary; PROVIDED that if
any such transaction shall be between a Subsidiary and a Wholly-Owned
Subsidiary, the Wholly-Owned Subsidiary shall be the continuing or
surviving corporation;
(ii) any Subsidiary of the Company may sell, lease, transfer or
otherwise dispose of any or all of its Property (upon voluntary liquidation
or otherwise) to the Company or a Wholly-Owned Subsidiary of the Company;
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(iii) the Company and its Subsidiaries may sell or discount, in each
case without recourse and in the ordinary course of business, receivables
more than 90 days overdue and arising in the ordinary course of business,
but only in connection with the compromise or collection thereof consistent
with customary industry practice (and not as part of any bulk sale or
financing of receivables);
(iv) the Company and its Subsidiaries may transfer condemned
Property to the respective governmental authority or agency that has
condemned the same (whether by deed in lieu of condemnation or otherwise),
and may transfer Properties that have been subject to a casualty to the
respective insurer (or its designee) of such Property as part of an
insurance settlement;
(v) the Company and its Subsidiaries may license or sublicense
software, trademarks, and other intellectual property in the ordinary
course of business which do not materially interfere with the business of
the Company or any Subsidiary;
(vi) the Company and its Subsidiaries may enter into consignment
arrangements (as consignor or consignee) or similar arrangements for the
sale of goods in the ordinary course of business and consistent with the
past practices of the Company and its Subsidiaries; and
(vii) the Company and its Subsidiaries may transfer Receivables in
connection with the Receivables Financing.
9.06 LIMITATION ON LIENS. The Guarantor will not, nor will it
permit any of its Subsidiaries to, create, incur, assume or suffer to exist any
Lien upon any of its Property, whether now owned or hereafter acquired, except:
(a) Liens created pursuant to the Security Documents;
(b) Liens in existence on the date hereof and (i) listed in Part B of
Schedule I hereto or (ii) listed in any policy of title insurance delivered
hereunder or under the Existing Credit Agreement;
(c) Liens imposed by any governmental authority for taxes,
assessments or charges not yet due or that are being contested in good
faith and by appropriate proceedings if, unless the amount thereof is not
material with respect to it or its financial condition, adequate reserves
with respect thereto are maintained on the books of the Guarantor or the
affected Subsidiaries, as the case may be, in accordance with GAAP;
(d) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, landlord's or other like Liens arising in the ordinary course
of business that are not overdue for a period of more than 30 days or that
are being contested in good faith and by appropriate proceedings and Liens
securing judgments but only to the extent for an amount and for a period
not resulting in an Event of Default under Section 10(h) hereof;
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(e) pledges or deposits under worker's compensation, unemployment
insurance and other social security legislation;
(f) deposits to secure the performance of bids, trade contracts
(other than for Indebtedness), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(g) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business and encumbrances
consisting of zoning restrictions, easements, licenses, restrictions on the
use of Property, encroachments, protrusions or minor imperfections in title
thereto that, in the aggregate, are not material in amount, and that do not
in any case materially detract from the value of the Property subject
thereto or materially interfere with the ordinary conduct of the business
of the Company or any of its Subsidiaries;
(h) Liens on Property of any corporation that becomes a Subsidiary of
the Guarantor after the Effective Date; PROVIDED that such Liens are in
existence at the time such corporation becomes a Subsidiary of the
Guarantor and were not created in anticipation thereof;
(i) Liens upon Property acquired after the date hereof (by purchase,
construction or otherwise) by the Company or any of its Subsidiaries, each
of which Liens either (A) existed on such Property before the time of its
acquisition and was not created in anticipation thereof or (B) was created
within 120 days of the acquisition or completion of construction of such
Property solely for the purpose of securing Indebtedness representing, or
incurred to finance, refinance or refund, the cost (including the cost of
construction) of such Property; PROVIDED that (i) no such Lien shall extend
to or cover any Property of the Company or such Subsidiary other than the
Property so acquired and improvements thereon and (ii) the principal amount
of Indebtedness secured by any such Lien shall at no time exceed 100% of
the fair market value (as determined in good faith by a Responsible Officer
of the Company) of such Property at the time it was acquired (by purchase,
construction or otherwise);
(j) Liens in respect of Capital Lease Obligations to the extent
permitted by Section 9.07 hereof and Liens arising under any equipment,
furniture or fixtures leases or Property consignments to the Guarantor or
any Subsidiary for which the filing of a precautionary financing statement
is permitted under Section 5.02 of the Security Agreement or Section 6.02
of the Subsidiary Guarantee and Security Agreement;
(k) licenses, leases or subleases granted to others in the ordinary
course of business not materially interfering with the conduct of the
business of the Company and its Subsidiaries taken as a whole;
(l) statutory and contractual landlords' liens under leases to which
the Company or any of its Subsidiaries is a party;
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(m) any interest or title of a lessor, sublessor, licensee or
licensor under any lease or license agreement permitted by this Agreement;
(n) Liens in favor of a banking institution arising as a matter of
law encumbering deposits (including the right of set-off) held by such
banking institutions incurred in the ordinary course of business and which
are within the general parameters customary in the banking industry;
(o) Liens in favor of customs and revenue authorities arising as a
matter of law to secure the payment of customs' duties in connection with
the importation of goods;
(p) Liens (if any) created by the Receivables Company in connection
with the Receivables Financing; and
(q) any extension, renewal or replacement of the foregoing, PROVIDED,
HOWEVER, that the Liens permitted hereunder shall not be spread to cover
any additional Indebtedness or Property (other than a substitution of like
Property).
9.07 INDEBTEDNESS. The Guarantor will not, nor will it permit any
of its Subsidiaries to, create, incur or suffer to exist any Indebtedness
except:
(a) Indebtedness to the Lenders hereunder and under the other Basic
Documents;
(b) the Guarantor Note and other Indebtedness outstanding on the date
hereof and listed in Schedule I hereto and any refinancing, refunding,
renewal or extension thereof, PROVIDED the principal amount thereof is not
materially increased after the date hereof and no Default exists at the
time of such refinancing, refunding, renewal or extension or would result
therefrom;
(c) Indebtedness of any Wholly-Owned Subsidiary of the Company (i) to
the Company in an aggregate unpaid principal amount of not more than
$25,000,000, in the case of each of Lagasse and Azerty, or $1,500,000, in
the case of any other such Wholly-Owned Subsidiary or (ii) to any other
Wholly-Owned Subsidiary of the Company;
(d) Indebtedness of the Company to the Guarantor or to any
Wholly-Owned Subsidiary of the Guarantor provided that all such
Indebtedness is subordinate on terms satisfactory to the Majority Lenders
to the Indebtedness to the Lenders hereunder and under the other Basic
Documents and is evidenced by an intercompany promissory note which is
pledged to the Administrative Agent as collateral;
(e) Indebtedness of the Company or any Subsidiary as a guarantor of
the lessee under any lease pursuant to which the Company or any Subsidiary
of the Company is a lessee so long as such lease is otherwise permitted
hereunder;
(f) Indebtedness incurred on or after the Revolving Credit Commitment
Termination Date and after the payment in full of all Revolving Credit
Loans and all Letter of Credit Liabilities for working capital or other
general corporate purposes of the
CREDIT AGREEMENT
<PAGE>
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Company and/or its Subsidiaries not to exceed $250,000,000 in the aggregate
and on terms satisfactory to the Majority Lenders in their reasonable
discretion;
(g) Indebtedness of the Company and its Subsidiaries incurred after
the Effective Date (including, without limitation, Capital Lease
Obligations and other Indebtedness secured by Liens permitted under
Sections 9.06(i) or 9.06(j) hereof) up to but not exceeding, in the case of
the Company, $20,000,000 and, in the case of any Subsidiary of the Company,
$750,000, at any one time outstanding;
(h) the Take Out Notes and after the issuance thereof any other
senior subordinated debentures or notes (which may be guaranteed by the
Guarantor and the Subsidiary Guarantors) issued by the Company (i) having
terms (other than as to pricing and subordination) not materially more
restrictive with respect to the Guarantor and its Subsidiaries than those
terms contained in the Indenture (2005), (ii) having subordination terms
not materially less favorable to the Lenders than those contained in the
Indenture (2005), (iii) in an aggregate principal amount not exceeding
$100,000,000 at any one time outstanding, (iv) maturing not earlier than
ten years from the date hereof or having an average life of not less than
nine years and (v) having a cash interest rate or coupon of not more than
10% per annum; and
(i) Indebtedness of the Receivables Company incurred in connection
with the Receivables Financing not to exceed $163,000,000 in amount at any
one time outstanding.
9.08 INVESTMENTS. The Guarantor will not, nor will it permit any of
its Subsidiaries to, make or permit to remain outstanding any Investments
except:
(a) the Guarantor Note and other Investments (other than Permitted
Investments) outstanding on the date hereof and identified in Schedule III
hereto;
(b) operating deposit accounts with banks;
(c) Permitted Investments;
(d) Investments by the Guarantor in the Company and Investments by
the Company in its Wholly-Owned Subsidiaries (other than the Receivables
Company), including, without limitation, any Investments made in connection
with the Azerty Acquisition, PROVIDED, such Investments shall not exceed
$10,000,000 in the aggregate for any such Wholly-Owned Subsidiaries that
are not Subsidiary Guarantors;
(e) deposits permitted by Section 9.06(f) hereof;
(f) Investments received in settlement of defaulted Receivables or in
connection with the bankruptcy or reorganization of suppliers and customers
and in connection with the settlement of other disputes with customers and
suppliers arising in the ordinary course of business;
(g) intercompany loans to the extent permitted by Section 9.07(c) or
(d) hereof;
CREDIT AGREEMENT
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(h) Permitted Acquisitions;
(i) Investments by the Company and its Subsidiaries in connection
with the Receivables Financing;
(j) promissory notes and other non-cash consideration received
in connection with any transfer of assets permitted under Section 9.05(c)
hereof;
(k) customer advances not to exceed $250,000 in the aggregate
at any one time outstanding; and
(l) additional Investments up to but not exceeding $10,000,000
in the aggregate at any one time outstanding.
9.09 DIVIDEND PAYMENTS.
(a) The Company will not, nor will it permit any of its Subsidiaries
to, declare or make any Dividend Payment at any time; PROVIDED, HOWEVER, that
(1) any Subsidiary of the Company may make any Dividend Payment to the Company
or any Wholly-Owned Subsidiary of the Company and (2) the Company may declare
and make Dividend Payments in cash in respect of its common stock (i) to enable
the Guarantor to pay any income, franchise or like taxes to the extent permitted
by the Tax Sharing Agreement, (ii) to enable the Guarantor to pay its operating
expenses incurred in the ordinary course of business and other corporate
overhead costs and expenses (including, without limitation, legal, accounting,
reporting, listing and similar expenses) in an aggregate amount not in excess of
$750,000 in any fiscal year, (iii) to enable the Guarantor to acquire shares of
capital stock to distribute to directors, officers and other employees pursuant
to employee benefit plans, (iv) to enable the Guarantor (A) to repurchase its
common stock and warrants and/or to redeem or repurchase vested management
options for an aggregate purchase price of no more than $1,000,000 in any
12-month period and (B) to pay Accrued Warrant Liabilities, and (v) to permit
the Guarantor to make pay dividends in respect of the common stock of the
Guarantor , subject, in the case of clauses (iii), (iv) and (v) above, to the
satisfaction of the following conditions on the date of such Dividend Payment
and after giving effect thereto and to the application of any Excess Cash Flow
then required to be applied pursuant to Section 2.10(a) hereof:
(1) no Default shall have occurred and be continuing;
(2) the Fixed Charges Ratio as at the last day of the fiscal
quarter of the Company most recently ended prior to the date of such
Dividend Payment (and after giving pro forma effect thereto) shall not
be less than 1.2 to 1;
(3) the aggregate amount of such Dividend Payments made in
cash in any fiscal year of the Company shall not exceed an amount
equal to 25% of the Excess Cash Flow for the fiscal year of the
Company most recently ended prior to the date of such Dividend
Payment;
(4) the average, for the immediately preceding 90 days, of the
excess of (i) the aggregate Revolving Credit Commitments over (ii) the
sum of the
CREDIT AGREEMENT
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outstanding principal amount of Revolving Credit Loans, and the
Swingline Loans and the aggregate amount of Letter of Credit
Liabilities shall be an amount at least equal to $50,000,000; and
(5) at least 10 Business Days (but not more than 20 Business
Days) prior to the date of each such Dividend Payment, the Company
shall have delivered to each Lender a certificate of a Responsible
Officer of the Company stating that, both before and after giving
effect to the Dividend Payment to be made, no Default exists and
demonstrating compliance with the conditions set forth in clauses (2),
(3) and (4) of this Section 9.09(a).
(b) The Guarantor will not declare or make any Dividend Payment
except (i) payments of Accrued Warrant Liabilities, (ii) repurchases of common
stock and warrants of the Guarantor and/or redemptions and repurchases of vested
management options for an aggregate purchase price of not more than $1,000,000
in any 12-month period and (iii) dividend payments in respect of its common
stock permitted under clause (v) of Section 9.09(a) above.
9.10 NET WORTH. The Guarantor will not permit Net Worth to be less
than the sum of (a) $210,000,000 plus (b) 75% of the sum of Net Income (if
positive) for each fiscal quarter of the Guarantor commencing with the first
full fiscal quarter occurring after the Effective Date plus (c) 100% of the
amount by which Net Worth shall have been increased as a result of any Equity
Issuance.
9.11 LEVERAGE RATIO. The Guarantor will not permit the Leverage
Ratio to exceed the following respective amounts at any time during the
following respective periods:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
From the date hereof
through December 30, 1998 4.50 to 1
From December 31, 1998
through December 30, 1999 4.00 to 1
From December 31, 1999
through December 30, 2000 3.75 to 1
From December 31, 2000
through December 30, 2001 3.50 to 1
From December 31, 2001
through December 30, 2002 3.25 to 1
From December 31, 2002 3.0 to 1
</TABLE>
9.12 FIXED CHARGES RATIO. The Guarantor will not permit the Fixed
Charges Ratio to be less than the following respective amounts at any time
during the following respective periods:
CREDIT AGREEMENT
<PAGE>
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<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
From the date hereof
through September 30, 1998 1.05 to 1
From October 1, 1998
through December 31, 1998 1.10 to 1
From January 1, 1999
through December 31, 1999 1.15 to 1
From January 1, 2000
and thereafter 1.20 to 1
</TABLE>
9.13 INTEREST COVERAGE RATIO. The Guarantor will not permit the
Interest Coverage Ratio to be less than the following respective amounts at any
time during the following respective periods:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
From the date hereof
through December 30, 1998 2.25 to 1
From December 31, 1998
through December 30, 1999 2.50 to 1
From December 31, 1999
through December 30, 2000 2.75 to 1
From December 31, 2000
through December 30, 2001 3.0 to 1
From December 31, 2001
and thereafter 3.25 to 1
</TABLE>
9.14 SUBORDINATED INDEBTEDNESS. The Guarantor will not, nor will it
permit any of its Subsidiaries to purchase, redeem, retire or otherwise acquire
for value, or set apart any money for a sinking, defeasance or other analogous
fund for the purchase, redemption, retirement or other acquisition of, or make
any voluntary payment or prepayment of the principal of or interest on, or any
other amount owing in respect of, any Subordinated Indebtedness, except for
(i) regularly scheduled payments or prepayments of principal and interest in
respect thereof required pursuant to the instruments evidencing such
Subordinated Indebtedness; and (ii) the prepayment of up to $100,000,000
aggregate principal amount of Senior Subordinated Notes from the proceeds of an
Equity Issuance or Debt Issuance in accordance with Section 2.10(b) or (c)
hereof and the related payment (from any permitted source) of any premium and
accrued interest with respect thereto.
CREDIT AGREEMENT
<PAGE>
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9.15 LINES OF BUSINESS. The Guarantor will not, nor will it permit
any of its Subsidiaries (including, without limitation, the Company) to, engage
to any substantial extent in any line or lines of business activity other than
(a) the business of the wholesale distribution and selling of office products,
computers, computer products, janitorial supplies and similar products and the
provision of fulfillment services and any lines of business reasonably related
thereto and (b) the sale of Receivables by the Company or any of its
Subsidiaries pursuant to the Receivables Financing.
9.16 TRANSACTIONS WITH AFFILIATES. Except as expressly permitted by
this Agreement, the Guarantor will not, nor will it permit any of its
Subsidiaries to, directly or indirectly: (a) make any Investment in an
Affiliate; (b) transfer, sell, lease, assign or otherwise dispose of any
Property to an Affiliate; (c) merge into or consolidate with or purchase or
acquire Property from an Affiliate; or (d) enter into any other transaction
directly or indirectly with or for the benefit of an Affiliate (including,
without limitation, Guarantees and assumptions of obligations of an Affiliate);
PROVIDED that (x) any Affiliate who is an individual may serve as a director,
officer, employee or consultant of the Guarantor or any of its Subsidiaries and
receive reasonable compensation for his or her services in such capacity,
(y) the Company and its Subsidiaries may enter into transactions (other than
extensions of credit by the Company or any of its Subsidiaries to an Affiliate)
providing for the leasing of Property, the rendering or receipt of services or
the purchase or sale of inventory and other Property in the ordinary course of
business if the monetary or business consideration arising therefrom would be
substantially as advantageous to the Company and its Subsidiaries as the
monetary or business consideration that would obtain in a comparable transaction
with a Person not an Affiliate and (z) the Company and its Subsidiaries may
perform their respective obligations under the Receivables Financing Documents.
9.17 USE OF PROCEEDS. The Company will use the proceeds of the Term
Loans and the Revolving Credit Loans solely (i) to consummate the Azerty
Acquisition, (ii) to refinance existing Indebtedness under the Existing Credit
Agreement and (iii) and for general corporate purposes of the Company and its
Subsidiaries (including Permitted Acquisitions). The use of the proceeds of the
Loans by the Company shall be in compliance with all applicable legal and
regulatory requirements, including, without limitation, Regulations U and X, the
Securities Act of 1933, as amended, and the Exchange Act and the regulations
thereunder; PROVIDED that neither the Administrative Agent nor any Lender shall
have any responsibility as to the use of any of such proceeds.
9.18 MODIFICATIONS OF CERTAIN DOCUMENTS. (a) Without the prior
consent of the Administrative Agent (with the approval of the Majority Lenders),
no Obligor will consent to any modification, supplement or waiver of (i) any of
the provisions of the Senior Subordinated Debt Documents (except any
supplemental indenture contemplated by Section 1017(a) or (c) of the Indenture
(2005) or any similar provision of any other Indenture) or (ii) the Guarantor
Preferred Stock or the Warrant Agreement to the extent such modification,
supplement or waiver would increase the amount of regularly scheduled Dividend
Payments in respect of Guarantor Preferred Stock or the amount of Accrued
Warrant Liabilities.
CREDIT AGREEMENT
<PAGE>
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(b) The Guarantor will not take any action to modify or supplement
the Articles of Incorporation of the Company, other than modifications that do
not adversely affect the interests of the Lenders, without the prior approval of
the Majority Lenders.
9.19 OWNERSHIP OF THE COMPANY. The Guarantor will at all times hold
not less than 100% of the issued and outstanding capital stock of the Company.
9.20 SEVERANCE PAYMENTS. Neither Obligor nor any of its
Subsidiaries shall pay any severance payments or fees or amounts to any officer
or director of any Acquired Business in connection with or as a result, directly
or indirectly, of the Azerty Acquisition except pursuant to a schedule delivered
to the Administrative Agent prior to the Effective Date and in form and
substance reasonably satisfactory to the Administrative Agent.
9.21 TAXES; TAX SHARING AGREEMENT. The Guarantor and its
Subsidiaries will file consolidated Federal income tax returns. Prior to filing
any Federal income tax returns or paying any Federal income tax after the Azerty
Acquisition, the Acquired Businesses will become a party to the tax allocation
agreement (the "TAX SHARING AGREEMENT") among the Guarantor and its
Subsidiaries.
9.22 SUBSIDIARY GUARANTORS; ADDITIONAL MORTGAGED PROPERTY.
(a) In the event that the Guarantor shall, after the Effective Date,
directly or indirectly hold or acquire any Domestic Subsidiary, the Guarantor
will notify the Lenders (through the Administrative Agent) and will, and will
cause each of its other Subsidiaries to, cause such Domestic Subsidiary (i) to
execute and deliver a written guarantee of the Guaranteed Obligations and a
security agreement in substantially the form of Exhibit A-2 hereto, MUTATIS
MUTANDIS, (ii) at the request of the Majority Lenders, to enter into a Mortgage
covering all of the interests in material real Property owned by such Domestic
Subsidiary and (iii) to deliver such proof of corporate action, incumbency of
officers, opinions of counsel and other documents as are consistent with those
delivered by the Company pursuant to Section 7.01 hereof or as the
Administrative Agent shall have reasonably requested.
(b) Subject to Section 9.25 hereof, if the Company or any of its
Domestic Subsidiaries acquires or leases any material real Property after the
Effective Date, other than any real Property encumbered by Liens permitted by
Section 9.06(i) hereof, the Company or such Subsidiary will promptly execute a
Mortgage covering the Property securing such repaid Indebtedness or such
newly-acquired Property, as the case may be, together with such surveys, title
insurance policies and endorsements, certificates of occupancy and such other
agreements, estoppels and consents (including agreements with lessors) as the
Administrative Agent may reasonably require. In addition, at the request of the
Administrative Agent, the Company shall, or shall cause such Domestic Subsidiary
to, execute a Mortgage covering any Property that is owned or leased by such
Domestic Subsidiary on the date hereof for which a Mortgage was not delivered on
the Effective Date, together with such surveys, title insurance policies and
endorsements, certificates of occupancy and such other agreements, estoppels and
consents (including agreements with lessors) as the Administrative Agent may
reasonably require with respect to such Property and which are available upon
the exercise by the Company and such Subsidiary of commercially reasonable
efforts.
CREDIT AGREEMENT
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(c) The Company will (i) not later than 90 days after the date
hereof, execute and deliver to the Administrative Agent an amendment and
confirmation or other appropriate modification to each Mortgage covering
material Property (as determined by the Administrative Agent) of the Company or,
at the request of the Administrative Agent, a new Mortgage with respect to such
Property in substantially the form of the Mortgage delivered in connection with
the Original Credit Agreement and (ii) not later than 90 days after the date
hereof, cause the applicable title company to deliver to the Administrative
Agent endorsement of the mortgagee policies of title insurance delivered by such
title company under the Existing Credit Agreement (or, if such endorsements are
not available, new mortgagee policies of title in sequence) with respect to
Properties covered by the Mortgages (other than any such Properties located in
the State of Texas and the leasehold Property of the Company located in the
State of Florida), each such amendment or modification and endorsement to be in
form and substance reasonably satisfactory to the Administrative Agent.
(d) The Company will not later than 10 days after the date hereof
deliver to the Administrative Agent a Mortgage covering the Property of Azerty
located in Orchard Park, New York, duly executed by Azerty and the
Administrative Agent, and in recordable form together with a survey of the
Property subject to the Mortgage and, not later than 45 days from the date
hereof, a fully paid title insurance policy and such other documents and
information relating thereto as the Administrative Agent may reasonably request,
in each case in form and substance reasonably satisfactory to the
Administrative Agent.
9.23 TERMINATION OF ERISA PLANS. The Company will not and will not
permit any Subsidiary to withdraw from any Multiemployer Plan or permit any
employee benefit plan maintained by it to be terminated if such withdrawal or
termination could result in withdrawal liability (as described in Part 1 of
Subtitle E of Title IV of ERISA) or the imposition of a Lien on any Property of
the Company or any Subsidiary pursuant to Section 4068 of ERISA.
9.24 LIMITATIONS ON RESTRICTIONS. The Guarantor will not and will
not permit any of its Subsidiaries to enter into any agreement or arrangement
that would prohibit, prevent or otherwise limit or impede the Guarantor or such
Subsidiary from encumbering any of its respective assets for the benefit of the
Lenders (other than any such assets subject to a Lien permitted by Section
9.06(i), (j) or(p)).
9.25 RELEASE OF SECURITY INTERESTS. If at any time the Leverage
Ratio as at the end of any fiscal quarter of the Guarantor is equal to or less
than 3.00 to 1 (as demonstrated in a certificate delivered pursuant to the last
sentence of Section 9.01 hereof), the Administrative Agent shall, upon the
request of the Company, release the Liens on all the Property covered by the
Security Documents (other than the capital stock of the Company and its
Subsidiaries and any collateral related thereto including, without limitation,
the proceeds thereof). If at any time the Guarantor or the Company shall
receive an implied investment grade rating from either Standard & Poor's Ratings
Group or Moody's Investors Service, Inc. in respect of the Guarantor's or the
Company's long-term unsecured debt, the Administrative Agent shall, upon the
request of the Company, release the Liens on all the Property covered by the
Security Documents. In the event that the Liens of the Security Documents are
released pursuant to this Section 9.25 and thereafter, at the end of any fiscal
quarter of the Guarantor, the Leverage Ratio exceeds 3.00 to 1,
CREDIT AGREEMENT
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upon the request of the Majority Lenders, the Guarantor and the Company shall,
and shall cause each Subsidiary Guarantor to, enter new security agreements,
pledges and mortgages, substantially in the form of the Security Document to
which such Person was a party prior to such release and which Security Documents
shall grant to the Administrative Agent for the benefit of the Lenders a first
priority perfected security interest in all the Property of such Person.
Section 10. EVENTS OF DEFAULT. If one or more of the following
events (herein called "EVENTS OF DEFAULT") shall occur and be continuing:
(a) Any Obligor shall (i) default in the payment when due (whether at
stated maturity or upon mandatory or optional prepayment) of any principal
of any Loan or any Reimbursement Obligation or (ii) default in the payment
when due of any interest on any Loan or any Reimbursement Obligation or any
fee or any other amount payable by it hereunder or under any other Basic
Document and such default shall continue unremedied for three or more
Business Days; or
(b) Any Obligor or any of their respective Subsidiaries (the Obligors
and such Subsidiaries herein collectively called the "RELEVANT PARTIES")
shall default in the payment when due of any principal of or interest on
any of its Indebtedness aggregating $10,000,000 or more, or in the payment
when due of any amount under any Interest Rate Protection Agreement for a
notional principal amount exceeding $10,000,000; or any event specified in
any note, agreement, indenture or other document evidencing or relating to
any such Indebtedness or any event specified in any Interest Rate
Protection Agreement shall occur if the effect of such event is to cause,
or (with the giving of any notice or the lapse of time or both) to permit
the holder or holders Indebtedness (or a trustee or agent on behalf of such
holder or holders) to cause, Indebtedness to become due, or to be prepaid
in full (whether by redemption, purchase, offer to purchase or otherwise),
prior to its stated maturity or to have the interest rate thereon reset to
a level so that securities evidencing such Indebtedness trade at a level
specified in relation to the par value thereof or, in the case of an
Interest Rate Protection Agreement, to permit the payments owing under such
Interest Rate Protection Agreement to be liquidated; or
(c) Any representation, warranty or certification made or deemed made
herein or in any Transaction Document (or in any modification or
supplement hereto or thereto) by any party thereto, or any certificate
furnished to any Lender or the Administrative Agent pursuant to the
provisions of any Basic Document, shall prove to have been false or
misleading as of the time made or furnished in any material respect; or
(d) Any Obligor (as applicable) shall default in the performance of
any of its obligations under any of Sections 9.01(i), 9.05 through 9.14,
inclusive, 9.16 through 9.20, inclusive, and 9.24 hereof or any Obligor (as
applicable) shall default in the performance of any of its obligations
under Section 4.02, 5.02 or 5.07 of the Security Agreement or the
equivalent provisions under the Subsidiary Guarantee and Security
Agreement, Section 4.02 or 4.07 of the Pledge Agreement or any provisions
of any Mortgage (or any Domestic Subsidiary shall default in the
performance of its obligations under the equivalent provisions in any
Guarantee and Security Agreement delivered pursuant to
CREDIT AGREEMENT
<PAGE>
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Section 9.22 hereof); or any Obligor shall default in the performance of
any of its other obligations in this Agreement or any other Basic Document
and such default shall continue unremedied for a period of ten or more days
after notice thereof to the Company by the Administrative Agent or any
Lender (through the Administrative Agent); or
(e) Any Relevant Party shall admit in writing its inability to, or be
generally unable to, pay its debts as such debts become due; or
(f) Any Relevant Party shall (i) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian,
trustee, examiner or liquidator of itself or of all or a substantial part
of its Property, (ii) make a general assignment for the benefit of its
creditors, (iii) commence a voluntary case under the Bankruptcy Code,
(iv) file a petition seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization, liquidation, dissolution,
arrangement or winding-up, or composition or readjustment of debts,
(v) fail to controvert in a timely and appropriate manner, or acquiesce in
writing to, any petition filed against it in an involuntary case under the
Bankruptcy Code (or any other applicable bankruptcy, insolvency or similar
law) or (vi) take any corporate action for the purpose of effecting any of
the foregoing; or
(g) A proceeding or case shall be commenced, without the application
or consent of the affected Relevant Party, in any court of competent
jurisdiction, seeking (i) its reorganization, liquidation, dissolution,
arrangement or winding-up, or the composition or readjustment of its debts,
(ii) the appointment of a receiver, custodian, trustee, examiner,
liquidator or the like of such Relevant Party or of all or any substantial
part of its Property or (iii) similar relief in respect of such Relevant
Party under any law relating to bankruptcy, insolvency, reorganization,
winding-up, or composition or adjustment of debts, and such proceeding or
case shall continue undismissed, or an order, judgment or decree approving
or ordering any of the foregoing shall be entered and continue unstayed and
in effect, for a period of 60 or more days; or an order for relief against
any Relevant Party shall be entered in an involuntary case under the
Bankruptcy Code (or any other applicable bankruptcy, insolvency or similar
law); or
(h) A final judgment or judgments for the payment of money in excess
of $5,000,000 in the aggregate (exclusive of judgment amounts fully covered
by insurance where the insurer has admitted liability in respect of such
judgment) shall be rendered by one or more courts, administrative tribunals
or other bodies having jurisdiction against any Relevant Party and the same
shall not be discharged (or provision shall not be made for such
discharge), or a stay of execution thereof shall not be procured, within 30
days from the date of entry thereof and such Relevant Party shall not,
within said period of 30 days, or such longer period during which execution
of the same shall have been stayed, appeal therefrom and cause the
execution thereof to be stayed during such appeal; or
(i) An event or condition specified in Section 9.01(e) hereof shall
occur or exist with respect to any Plan or Multiemployer Plan and, as a
result of such event or condition, together with all other such events or
conditions, the Company or any ERISA Affiliate shall incur or in the
reasonable opinion of the Majority Lenders shall be
CREDIT AGREEMENT
<PAGE>
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reasonably likely to incur a liability to a Plan, a Multiemployer Plan or
the PBGC (or any combination of the foregoing) that, in the determination
of the Majority Lenders, could (either individually or in the aggregate)
reasonably be expected to have a Material Adverse Effect; or
(j) A reasonable basis shall exist for the assertion against the
Company or any of its Subsidiaries, or any predecessor in interest of the
Company or any of its Subsidiaries or Affiliates, of (or there shall have
been asserted against the Company or any of its Subsidiaries) an
Environmental Claim that, in the judgment of the Majority Lenders is
reasonably likely to be determined adversely to the Company or any of its
Subsidiaries, and the amount thereof (either individually or in the
aggregate) is reasonably likely to have a Material Adverse Effect (insofar
as such amount is payable by the Company or any of its Subsidiaries but
after deducting any portion thereof that is reasonably expected to be paid
by other creditworthy Persons jointly and severally liable therefor); or
(k) Any Change of Control shall have occurred; or
(l) Except for expiration in accordance with its terms or a voluntary
release by the Administrative Agent on behalf of the Administrative Agent
and the Lenders, including without limitation any release of Liens
permitted under Section 9.25 or 11.09 hereof, the Liens created by the
Security Documents shall at any time not constitute a valid and perfected
Lien on the collateral intended to be covered thereby (to the extent
perfection by filing, registration, recordation or possession is required
herein or therein) in favor of the Administrative Agent, free and clear of
all other Liens (other than Liens permitted under Section 9.06 hereof or
under the respective Security Documents), or, except for expiration in
accordance with its terms, any of the Security Documents shall for whatever
reason be terminated or cease to be in full force and effect, or the
enforceability thereof shall be contested by either Obligor or any
Subsidiary Guarantor;
THEREUPON: (1) in the case of an Event of Default other than one referred to in
clause (f) or (g) of this Section 10 with respect to any Obligor, the
Administrative Agent shall, at the direction of the Majority Lenders (or, with
respect to Swingline Loans, upon request of the Swingline Lender), by notice to
the Obligors, terminate the Commitments and/or declare the principal amount then
outstanding of, and the accrued interest on, the Loans (including the Swingline
Loans), the Reimbursement Obligations and all other amounts payable by the
Obligors hereunder (including, without limitation, any amounts payable under
Section 5.05 or 5.06 hereof) to be forthwith due and payable (PROVIDED that if
so requested by the Majority Revolving Credit Lenders, the Administrative Agent
shall terminate the Revolving Credit Commitments), whereupon such amounts shall
be immediately due and payable without presentment, demand, protest or other
formalities of any kind, all of which are hereby expressly waived by each
Obligor; and (2) in the case of the occurrence of an Event of Default referred
to in clause (f) or (g) of this Section 10 with respect to any Obligor, the
Commitments shall automatically be terminated and the principal amount then
outstanding of, and the accrued interest on, the Loans, the Swingline Loans, the
Reimbursement Obligations and all other amounts payable by the Obligors
hereunder (including, without limitation, any amounts payable under Section 5.05
or 5.06 hereof) shall automatically become immediately due and payable
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without presentment, demand, protest or other formalities of any kind, all of
which are hereby expressly waived by each Obligor.
In addition, upon the occurrence and during the continuance of any
Event of Default (if the Administrative Agent has declared the principal amount
then outstanding of, and accrued interest on, the Revolving Credit Loans and all
other amounts payable by the Company hereunder to be due and payable), the
Company agrees that it shall, if requested by the Administrative Agent or the
Majority Revolving Credit Lenders through the Administrative Agent (and, in the
case of any Event of Default referred to in clause (f) or (g) of this Section 10
with respect to either Obligor, forthwith, without any demand or the taking of
any other action by the Administrative Agent or such Lenders) provide cover for
the Letter of Credit Liabilities by paying to the Administrative Agent
immediately available funds in an amount equal to the then aggregate undrawn
face amount of all Letters of Credit, which funds shall be held by the
Administrative Agent in the Collateral Account as collateral security in the
first instance for the Letter of Credit Liabilities and be subject to withdrawal
only as therein provided.
Section 11. THE ADMINISTRATIVE AGENT.
11.01 APPOINTMENT, POWERS AND IMMUNITIES. Each Lender hereby
appoints and authorizes the Administrative Agent to act as its agent hereunder
and under the other Basic Documents with such powers as are specifically
delegated to the Administrative Agent by the terms of this Agreement and of the
other Basic Documents, together with such other powers as are reasonably
incidental thereto. The Administrative Agent (which term as used in this
sentence and in Section 11.05 and the first sentence of Section 11.06 hereof
shall include reference to its affiliates and its own and its affiliates'
officers, directors, employees and agents):
(a) shall have no duties or responsibilities except those expressly
set forth in this Agreement and in the other Basic Documents, and shall not
by reason of this Agreement or any other Basic Document be a trustee for
any Lender;
(b) shall not be responsible to the Lenders for any recitals,
statements, representations or warranties contained in this Agreement or in
any other Basic Document, or in any certificate or other document referred
to or provided for in, or received by any of them under, this Agreement or
any other Basic Document, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other
Basic Document or any other document referred to or provided for herein or
therein or for any failure by the Company or any other Person to perform
any of its obligations hereunder or thereunder;
(c) shall not, except to the extent expressly instructed by the
Majority Lenders with respect to collateral security under the Security
Documents, be required to initiate or conduct any litigation or collection
proceedings hereunder or under any other Basic Document; and
(d) shall not be responsible for any action taken or omitted to be
taken by it hereunder or under any other Basic Document or under any other
document or instrument
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referred to or provided for herein or therein or in connection herewith or
therewith, except for its own gross negligence or willful misconduct.
The Administrative Agent may employ agents and attorneys-in-fact and shall not
be responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it in good faith. The Administrative Agent may
deem and treat the payee (or Registered Holder, as the case may be) of a Loan as
the holder thereof for all purposes hereof unless and until a notice of the
assignment or transfer thereof shall have been filed with the Administrative
Agent, together with the consent of the Company to such assignment or transfer
(to the extent provided in Section 12.06(b) hereof).
11.02 RELIANCE BY AGENT. The Administrative Agent shall be entitled
to rely upon any certification, notice or other communication (including,
without limitation, any thereof by telephone, telecopy, telegram or cable)
believed by it to be genuine and correct and to have been signed or sent by or
on behalf of the proper Person or Persons, and upon advice and statements of
legal counsel, independent accountants and other experts selected by the
Administrative Agent. As to any matters not expressly provided for by this
Agreement or any other Basic Document, the Administrative Agent shall in all
cases be fully protected in acting, or in refraining from acting, hereunder or
thereunder in accordance with instructions given by the Majority Lenders or, if
provided herein, in accordance with the instructions given by the Majority
Revolving Credit Lenders, the Majority Term Lenders or all of the Lenders as is
required in such circumstance, and such instructions of such Lenders and any
action taken or failure to act pursuant thereto shall be binding on all of the
Lenders.
11.03 DEFAULTS. The Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of a Default unless the Administrative
Agent has received notice from a Lender or the Company specifying such Default
and stating that such notice is a "Notice of Default". In the event that the
Administrative Agent receives such a notice of the occurrence of a Default, the
Administrative Agent shall give prompt notice thereof to the Lenders. The
Administrative Agent shall (subject to Section 11.07 hereof) take such action
with respect to such Default as shall be directed by the Majority Lenders or, if
provided herein, the Majority Revolving Credit Lenders or the Majority Term
Lenders, PROVIDED that, unless and until the Administrative Agent shall have
received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default as it shall deem advisable in the best interest of the Lenders
except to the extent that this Agreement expressly requires that such action be
taken, or not be taken, only with the consent or upon the authorization of the
Majority Lenders, the Majority Revolving Credit Lenders, the Majority Term
Lenders or all of the Lenders.
11.04 RIGHTS AS A LENDER. With respect to its Commitments, its
Swingline Commitment and the Loans made by it, Chase (and any successor acting
as Agent) in its capacity as a Lender or the Swingline Lender hereunder shall
have the same rights and powers hereunder as any other Lender and may exercise
the same as though it were not acting as the Administrative Agent, and the term
"Lender" or "Lenders" or "Swingline Lender" shall, unless the context otherwise
indicates, include the Administrative Agent in its individual capacity. Chase
(and any successor acting as Agent) and its affiliates may (without having to
account therefor to any Lender) accept deposits from, lend money to make
investments in and generally
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engage in any kind of banking, trust or other business with the Obligors (and
any of their Subsidiaries or Affiliates) as if it were not acting as the
Administrative Agent, and Chase (and any such successor) and its affiliates may
accept fees and other consideration from the Obligors for services in connection
with this Agreement or otherwise without having to account for the same to the
Lenders or the Swingline Lender.
11.05 INDEMNIFICATION. The Lenders agree to indemnify the
Administrative Agent (to the extent not reimbursed under Section 12.03 hereof,
but without limiting the obligations of the Obligors under said Section 12.03,
and including in any event any payments under any indemnity that the
Administrative Agent is required to issue to any bank referred to in
Section 4.02 of the Security Agreement to which remittances in respect of
Accounts, as defined therein, are to be made) ratably in accordance with the
aggregate principal amount of the Loans and Reimbursement Obligations held by
the Lenders (or, if no Loans or Reimbursement Obligations are at the time
outstanding, ratably in accordance with their respective Commitments), for any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind and nature
whatsoever that may be imposed on, incurred by or asserted against the
Administrative Agent (including by any Lender) arising out of or by reason of
any investigation in or in any way relating to or arising out of this Agreement
or any other Basic Document or any other documents contemplated by or referred
to herein or therein or the transactions contemplated hereby or thereby
(including, without limitation, the costs and expenses that the Obligors are
obligated to pay under Section 12.03 hereof, and including also any payments
under any indemnity that the Administrative Agent is required to issue to any
bank referred to in Section 4.02 of the Security Agreement to which remittances
in respect of Accounts, as defined therein, are to be made, but excluding,
unless a Default has occurred and is continuing, normal administrative costs and
expenses incident to the performance of its agency duties hereunder) or the
enforcement of any of the terms hereof or thereof or of any such other
documents, PROVIDED that no Lender shall be liable for any of the foregoing to
the extent they arise from the gross negligence or willful misconduct of the
party to be indemnified.
11.06 NON-RELIANCE ON AGENT AND OTHER LENDERS. Each Lender agrees
that it has, independently and without reliance on the Administrative Agent or
any other Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Guarantor and its Subsidiaries
and decision to enter into this Agreement and that it will, independently and
without reliance upon the Administrative Agent or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own analysis and decisions in taking or not taking action
under this Agreement or under any other Basic Document. The Administrative
Agent shall not be required to keep itself informed as to the performance or
observance by any Obligor of this Agreement or any of the other Basic Documents
or any other document referred to or provided for herein or therein or to
inspect the Properties or books of the Guarantor or any of its Subsidiaries.
Except for notices, reports and other documents and information expressly
required to be furnished to the Lenders by the Administrative Agent hereunder or
under the Security Documents, the Administrative Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the affairs, financial condition or business of the Guarantor or any
of its
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Subsidiaries (or any of their affiliates) that may come into the possession of
the Administrative Agent or any of its affiliates.
11.07 FAILURE TO ACT. Except for action expressly required of the
Administrative Agent hereunder and under the other Basic Documents, the
Administrative Agent shall in all cases be fully justified in failing or
refusing to act hereunder and thereunder unless it shall receive further
assurances to its satisfaction from the Lenders of their indemnification
obligations under Section 11.05 hereof against any and all liability and expense
that may be incurred by it by reason of taking or continuing to take any such
action.
11.08 RESIGNATION OR REMOVAL OF ADMINISTRATIVE AGENT. Subject to the
appointment and acceptance of a successor Administrative Agent as provided
below, the Administrative Agent may resign at any time by giving notice thereof
to the Lenders and the Obligors, and the Administrative Agent may be removed at
any time with or without cause by the Majority Lenders. Upon any such
resignation or removal, the Majority Lenders shall have the right to appoint a
successor Administrative Agent. If no successor Administrative Agent shall have
been so appointed by the Majority Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent's giving of
notice of resignation or the Majority Lenders' removal of the retiring Agent,
then the retiring Administrative Agent may, on behalf of the Lenders, appoint a
successor Administrative Agent, that shall be a bank with a combined capital and
surplus and undivided profits of at least $300,000,000. Upon the acceptance of
any appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder. After any retiring Administrative
Agent's resignation or removal hereunder as Agent, the provisions of this
Section 11 shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as the Administrative
Agent.
11.09 CONSENTS UNDER OTHER BASIC DOCUMENTS. Except as otherwise
provided in Section 12.04 hereof with respect to this Agreement, the
Administrative Agent may, with the prior consent of the Majority Lenders (but
not otherwise), consent to any modification, supplement or waiver under any of
the Basic Documents, PROVIDED that, without the prior consent of each Lender,
the Administrative Agent shall not (except as provided herein or in the Security
Documents) release any collateral or otherwise terminate any Lien under any
Basic Document providing for collateral security, or agree to additional
obligations being secured by such collateral security, except that no such
consent shall be required, and the Administrative Agent is hereby authorized, to
release any Lien (i) covering Property that is the subject of a disposition of
Property permitted hereunder, (ii) as contemplated by Section 9.25 hereof or
(iii) with respect to any Property transferred in connection with the
Receivables Financing (which release shall be deemed to have occurred without
any further action of any Person up on such transfer). The Administrative Agent
shall take any action reasonably requested by the Company (at the Company's sole
cost and expense) to release the Liens created under the Basic Documents on any
Receivables and Related Assets transferred in connection with the Receivables
Financing
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11.10 COLLATERAL SUB-AGENTS. Each Lender by its execution and
delivery of this Agreement agrees, as contemplated by Section 4.03 of the
Security Agreement, that, in the event it shall hold any Permitted Investments
referred to therein, such Permitted Investments shall be held in the name and
under the control of such Lender, and such Lender shall hold such Permitted
Investments as a collateral sub-agent for the Administrative Agent thereunder.
The Obligors by their execution and delivery of this Agreement hereby consent to
the foregoing.
Section 12. MISCELLANEOUS
12.01 WAIVER. No failure on the part of the Administrative Agent or
any Lender to exercise and no delay in exercising, and no course of dealing with
respect to, any right, power or privilege under this Agreement shall operate as
a waiver thereof, nor shall any single or partial exercise of any right, power
or privilege under this Agreement preclude any other or further exercise thereof
or the exercise of any other right, power or privilege. The remedies provided
herein are cumulative and not exclusive of any remedies provided by law.
12.02 NOTICES. Except as otherwise expressly provided herein or in
the Security Documents, all notices, requests and other communications provided
for herein and under the Security Documents (including, without limitation, any
modifications of, or waivers, requests or consents under, this Agreement) shall
be given or made in writing (including, without limitation, by telecopy)
delivered to the Administrative Agent or the Obligors at the "Address for
Notices" specified below its name on the signature pages hereof (below the name
of the Company, in the case of the Guarantor) and for any Lender at the address
specified in its Administrative Questionnaire; or, as to any party, at such
other address as shall be designated by such party in a notice to each other
party. Except as otherwise provided in this Agreement, 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, upon receipt, in each
case given or addressed as aforesaid.
12.03 EXPENSES, ETC. The Obligors agree, jointly and severally, to
pay or reimburse each of the Lenders and the Administrative Agent for: (a) all
reasonable out-of-pocket costs and expenses of the Administrative Agent
(including, without limitation, the reasonable fees and expenses of Milbank,
Tweed, Hadley & McCloy, special New York counsel to Chase) in connection with
(i) the negotiation, preparation, execution and delivery of this Agreement and
the other Basic Documents and the extension of credit hereunder and (ii) the
negotiation or preparation of any modification, supplement or waiver of any of
the terms of this Agreement or any of the other Basic Documents (whether or not
consummated); (b) all reasonable out-of-pocket costs and expenses of the Lenders
and the Administrative Agent (including, without limitation, the reasonable fees
and expenses of legal counsel for the Administrative Agent and one legal counsel
for the Lenders) in connection with (i) any Default and any enforcement or
collection proceedings resulting therefrom, including, without limitation, all
manner of participation in or other involvement with (x) bankruptcy, insolvency,
receivership, foreclosure, winding up or liquidation proceedings, (y) judicial
or regulatory proceedings and (z) workout, restructuring or other negotiations
or proceedings (whether or not the workout, restructuring or transaction
contemplated thereby is consummated) and (ii) the enforcement of this
Section 12.03; (c) all transfer, stamp, documentary or other similar taxes,
assessments or charges levied by any governmental or revenue authority in
respect of this Agreement or any of
CREDIT AGREEMENT
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the other Basic Documents or any other document referred to herein or therein
and all costs, expenses, taxes, assessments and other charges incurred in
connection with any filing, registration, recording or perfection of any
security interest contemplated by any Basic Document or any other document
referred to therein; and (d) all costs, expenses and other charges in respect of
title insurance procured with respect to the Liens created pursuant to the
Mortgages.
The Obligors hereby agree, jointly and severally, to indemnify the
Administrative Agent and each Lender and their respective directors, officers,
employees, attorneys and agents from, and hold each of them harmless against,
any and all losses, liabilities, claims, damages or expenses incurred by any of
them (including, without limitation, any and all losses, liabilities, claims,
damages or expenses incurred by the Administrative Agent to any Lender, whether
or not the Administrative Agent or any Lender is a party thereto) arising out of
or by reason of any investigation or litigation or other proceedings (including
any threatened investigation or litigation or other proceedings) relating to the
extensions of credit hereunder or any actual or proposed use by the Guarantor or
any of its Subsidiaries of the proceeds of any of the extensions of credit
hereunder, including, without limitation, the reasonable fees and disbursements
of counsel incurred in connection with any such investigation or litigation or
other proceedings (but excluding any such losses, liabilities, claims, damages
or expenses incurred by reason of the gross negligence or willful misconduct of
the Person to be indemnified or solely by reason of a breach of this Agreement
by such Person). Without limiting the generality of the foregoing, the Obligors
will (x) indemnify the Administrative Agent for any payments that the
Administrative Agent is required to make under any indemnity issued to any bank
referred to in Section 4.02 of the Security Agreement to which remittances in
respect to Accounts, as defined therein, are to be made and (y) indemnify the
Administrative Agent and each Lender from, and hold the Administrative Agent and
each Lender harmless against, any losses, liabilities, claims, damages or
expenses described in the preceding sentence (including any Lien filed against
any Property covered by the Mortgages or any part of the thereunder in favor of
any governmental entity, but excluding, as provided in the preceding sentence,
any loss, liability, claim, damage or expense incurred by reason of the gross
negligence or willful misconduct of the Person to be indemnified) arising under
any Environmental Law as a result of the past, present or future operations of
the Company or any of its Subsidiaries (or any predecessor in interest to the
Company or any of its Subsidiaries), or the past, present or future condition of
any site or facility owned, operated or leased at any time by the Company or any
of its Subsidiaries (or any such predecessor in interest), or any Release or
threatened Release of any Hazardous Materials at or from any such site or
facility, including any such Release or threatened Release that shall occur
during any period when the Administrative Agent or any Lender shall be in
possession of any such site or facility following the exercise by the
Administrative Agent or any Lender of any of its rights and remedies hereunder
or under any of the Security Documents.
12.04 AMENDMENTS, ETC. Except as otherwise expressly provided in
this Agreement, any provision of this Agreement may be modified or supplemented
only by an instrument in writing signed by the Guarantor, the Company and the
Majority Lenders, or by the Guarantor, the Company and the Administrative Agent
acting with the consent of the Majority Lenders, and any provision of this
Agreement may be waived by the Majority Lenders or by the Administrative Agent
acting with the consent of the Majority Lenders; PROVIDED that (a) no
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modification, supplement or waiver shall, unless by an instrument signed by all
of the Lenders or by the Administrative Agent acting with the consent of all of
the Lenders: (i) increase, or extend the term of any of the Commitments or the
Swingline Commitment, or extend the time or waive any requirement for the
reduction or termination of any of the Commitments or the Swingline Commitment,
(ii) extend the date fixed for the payment of principal of or interest on any
Loan, the Reimbursement Obligations or any fee hereunder, (iii) reduce the
amount of any such payment of principal, (iv) reduce the rate at which interest
is payable thereon or any fee is payable hereunder, (v) alter the rights or
obligations of the Company to prepay Loans, (vi) alter the terms of Section
11.09 hereof or this Section 12.04, (vii) modify the definition of the term
"Majority Lenders", "Majority Revolving Credit Lenders" or "Majority Term
Lenders", or modify in any other manner the number or percentage of the Lenders
required to make any determinations or waive any rights hereunder or to modify
any provision hereof, (viii) waive any of the conditions precedent set forth in
Section 7.01 or 7.02 hereof or (ix) release the Guarantor from any of its
obligations under Section 6 hereof or any Subsidiary Guarantor from any of its
obligations under Section 3 of the Subsidiary Guarantee and Security Agreement;
(b) no modification, supplement or waiver shall (i) modify in any manner any of
Sections 2.01(a), 2.03, 9.01(g) and 9.01(j) hereof or (ii) modify the definition
of the term "Letter of Credit Documents", "Letter of Credit Interest", or
"Letter of Credit Liability", without the consent of the Majority Revolving
Credit Lenders; (c) no waiver or modification with respect to clause (i) of
Section 1402 or 1502 of the Indenture (2005) or any similar provision in any
agreement or instrument evidencing Subordinated Indebtedness shall be effective
without the consent of the Lenders holding at least 66 2/3% of the sum of (i)
the aggregate unused Commitments, (ii) the aggregate unpaid principal amount of
the Loans (other than the Swingline Loans) and (iii) the aggregate amount of all
Letter of Credit Liabilities; (d) any modification of any of the rights or
obligations of the Administrative Agent or the Issuing Bank hereunder
(including, without limitation, any of the provisions of Section 11.08 hereof)
shall require the consent of the Administrative Agent or the Issuing Bank (as
the case may be); and (e) no modification, supplement or waiver with respect to
any provision of Section 2.01(d) or 2.02(b) hereof shall be effective without
the concurrence of the Swingline Lender and, if at the time any Swingline Loans
shall be outstanding, no modification, supplement or waiver with respect to any
provision of Section 9 or 10 hereof shall be effective without the concurrence
of the Swingline Lender.
12.05 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
12.06 ASSIGNMENTS AND PARTICIPATIONS.
(a) No Obligor may assign any of its rights or obligations hereunder
without the prior consent of all of the Lenders and the Administrative Agent.
(b) Each Lender may assign any of its Loans, its Commitments, and, if
such Lender is a Revolving Credit Lender, its Letter of Credit Interest and its
interest acquired under Section 2.01(d) hereof in Swingline Loans (but only with
the consent of, in the case of its outstanding Commitments, the Company and the
Administrative Agent and, in the case of the Revolving Credit Commitment or a
Letter of Credit Interest, the Issuing Bank); PROVIDED that
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(i) no such consent by the Company or the Administrative Agent shall
be required in the case of any assignment to another Lender or an Affiliate
of such assigning Lender;
(ii) except to the extent the Company and the Administrative Agent
shall otherwise consent, any such partial assignment (other than to another
Lender) shall be in an amount at least equal to $5,000,000 (or, if less,
the aggregate unpaid principal amount of the Loans and the aggregate
Commitments of such Lender);
(iii) each such assignment by a Lender of its Revolving Credit Loans,
Revolving Credit Commitment or Letter of Credit Interest shall be made in
such manner so that the same portion of its Revolving Credit Loans,
Revolving Credit Commitment and Letter of Credit Interest is assigned to
the respective assignee;
(iv) upon each such assignment, the assignor and assignee shall
deliver to the Company, the Administrative Agent and the Issuing Bank an
Assignment and Acceptance in the form of Exhibit F hereto; and
(v) no consent required of the Company or the Administrative Agent
under this Section 12.06(b) shall be unreasonably withheld or delayed.
Upon execution and delivery by the assignor and the assignee to the Company, the
Administrative Agent and the Issuing Bank of such Assignment and Acceptance, and
upon consent thereto by the Company, the Administrative Agent and the Issuing
Bank to the extent required above, the assignee shall have, to the extent of
such assignment (unless otherwise consented to by the Company, the
Administrative Agent and the Issuing Bank), the obligations, rights and benefits
of a Lender hereunder holding the Commitment(s), Loans and, if applicable,
Letter of Credit Interest (or portions thereof) assigned to it and specified in
such Assignment and Acceptance (in addition to the Commitment(s), Loans and
Letter of Credit Interest, if any, theretofore held by such assignee) and the
assigning Lender shall, to the extent of such assignment, be released from the
Commitment(s) (or portion(s) thereof) so assigned. Upon each such assignment
the assigning Lender shall pay the Administrative Agent an assignment fee of
$3,000; provided that in the case of any such assignment to a Proposed Lender
(as defined in Section 5.08 hereof), such assignment fee shall be paid by the
Company.
(c) A Lender may sell or agree to sell to one or more other Persons a
participation in all or any part of any Loans or Letter of Credit Interest held
by it, or in its Commitments, in which event each purchaser of a participation
(a "PARTICIPANT") shall be entitled to the rights and benefits of the provisions
of Section 9.01(j) hereof with respect to its participation in such Loans,
Letter of Credit Interest and Commitments as if (and the Company shall be
directly obligated to such Participant under such provisions as if) such
Participant were a "Lender" for purposes of said Section, but, except as
otherwise provided in Section 4.07(c) hereof, shall not have any other rights or
benefits under this Agreement or any other Basic Document (the Participant's
rights against such Lender in respect of such participation to be those set
forth in the agreements executed by such Lender in favor of the Participant).
All amounts payable by the Company to any Lender under Section 5 hereof in
respect of Loans, Letter of Credit Interest held by it, and its Commitments,
shall be determined as if such Lender had not sold or agreed to sell any
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participations in such Loans, Letter of Credit Interest and Commitments, and as
if such Lender were funding each of such Loan, Letter of Credit Interest and
Commitments in the same way that it is funding the portion of such Loan, Letter
of Credit Interest and Commitments in which no participations have been sold.
In no event shall a Lender that sells a participation agree with the Participant
to take or refrain from taking any action hereunder or under any other Basic
Document except that such Lender may agree with the Participant that it will
not, without the consent of the Participant, agree to (i) increase or extend the
term, or extend the time or waive any requirement for the reduction or
termination, of such Lender's related Commitment, (ii) extend the date fixed for
the payment of principal of or interest on the related Loan or Loans,
Reimbursement Obligations or any portion of any fee hereunder payable to the
Participant, (iii) reduce the amount of any such payment of principal,
(iv) reduce the rate at which interest is payable thereon, or any fee hereunder
payable to the Participant, to a level below the rate at which the Participant
is entitled to receive such interest or fee, (v) alter the rights or obligations
of the Company to prepay the related Loans or (vi) consent to any modification,
supplement or waiver hereof or of any of the other Basic Documents to the extent
that the same, under Section 11.09 or 12.04 hereof, requires the consent of each
Lender.
(d) In addition to the assignments and participations permitted under
the foregoing provisions of this Section 12.06, any Lender may (without notice
to the Company, the Administrative Agent or any other Lender and without payment
of any fee) (i) assign and pledge all or any portion of its Loans to any Federal
Reserve Bank as collateral security pursuant to Regulation A and any Operating
Circular issued by such Federal Reserve Bank and (ii) assign all or any portion
of its rights under this Agreement and its Loans to an affiliate. No such
assignment shall release the assigning Lender from its obligations hereunder.
(e) A Lender may furnish any information concerning the Obligors or
any of their respective Subsidiaries in the possession of such Lender from time
to time to assignees and participants (including prospective assignees and
participants), subject, however, to the provisions of Section 12.12(b) hereof.
(f) Anything in this Section 12.06 to the contrary notwithstanding,
no Lender may assign or participate any interest in any Loan or Reimbursement
Obligation held by it hereunder to the Company or any of its Affiliates or
Subsidiaries without the prior consent of each Lender.
(g) At the request of any Lender that is not a U.S. Person and is not
a "bank" within the meaning of Section 881(c)(3)(A) of the Code, the Company
shall maintain, or cause to be maintained, a register (the "REGISTER") that, at
the request of the Company, shall be kept by the Administrative Agent on behalf
of the Company at no charge to the Company at the address to which notices to
the Administrative Agent are to be sent hereunder, on which it enters the name
of such Lender as the registered owner of each Registered Loan held by such
Lender. A Registered Loan may only be assigned or otherwise transferred in
whole or in part by registration of such assignment or transfer on the Register.
Any assignment or transfer of all or part of such Loan shall be effected by
registration of such assignment or transfer on the Register. Prior to the
registration of assignment or transfer of any Registered Loan, the Company shall
treat the Person in whose name such Loan is registered as the owner thereof for
the purpose of receiving all payments thereon and for all other purposes,
notwithstanding notice to the contrary.
CREDIT AGREEMENT
<PAGE>
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(h) The Register shall be available for inspection by the Company and
any Lender that is a Registered Holder at any reasonable time upon reasonable
prior notice.
12.07 SURVIVAL. The obligations of the Obligors under the last
paragraph of Section 2.03 hereof and under Sections 5.01, 5.05, 5.06, 5.07 and
12.03 hereof and under Section 6.03 of the Security Agreement, Section 7.03 of
the Subsidiary Guarantee and Security Agreement, and Section 4.13 of the Pledge
Agreement, the obligations of the Guarantor under Section 6.03 hereof, and the
obligations of the Lenders under Section 11.05 hereof, shall survive the
repayment of the Loans and Reimbursement Obligations and the termination of the
Commitments and, in the case of any Lender that may assign any interest in its
Commitments, Loans or Letter of Credit Interest hereunder, shall survive the
making of such assignment, notwithstanding that such assigning Lender may cease
to be a "Lender" hereunder. In addition, each representation and warranty made,
or deemed to be made by a notice of any extension of credit (whether by means of
a Loan or a Letter of Credit), herein or pursuant hereto shall survive the
making of such representation and warranty, and no Lender shall be deemed to
have waived, by reason of making any extension of credit hereunder (whether by
means of a Loan or a Letter of Credit), any Default that may arise by reason of
such representation or warranty proving to have been false or misleading,
notwithstanding that such Lender or the Administrative Agent may have had notice
or knowledge or reason to believe that such representation or warranty was false
or misleading at the time such extension of credit was made.
12.08 CAPTIONS. The table of contents and captions and section
headings appearing herein are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this
Agreement.
12.09 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
12.10 GOVERNING LAW; SUBMISSION TO JURISDICTION. This Agreement
shall be governed by, and construed in accordance with, the law of the State of
New York. Each Obligor hereby submits to the nonexclusive jurisdiction of the
United States District Court for the Southern District of New York and of the
Supreme Court of the State of New York sitting in New York County (including its
Appellate Division), and of any other appellate court in the State of New York,
for the purposes of all legal proceedings arising out of or relating to the
Basic Documents or the transactions contemplated hereby. Each Obligor hereby
irrevocably waives, to the fullest extent permitted by applicable law, any
objection that 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.
12.11 WAIVER OF JURY TRIAL. EACH OF THE OBLIGORS, THE ADMINISTRATIVE
AGENT AND THE LENDERS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THE BASIC DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
CREDIT AGREEMENT
<PAGE>
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12.12 TREATMENT OF CERTAIN INFORMATION; CONFIDENTIALITY.
(a) Each Obligor acknowledges that from time to time financial
advisory, investment banking and other services may be offered or provided to
such Obligor or one or more of its Subsidiaries (in connection with this
Agreement or otherwise) by any Lender or by one or more subsidiaries or
affiliates of such Lender and each Obligor hereby authorizes each Lender to
share any information delivered to such Lender by such Obligor and its
Subsidiaries pursuant to this Agreement, or in connection with the decision of
such Lender to enter into this Agreement, with any such subsidiary or affiliate,
it being understood that any such subsidiary or affiliate receiving such
information shall be bound by the provisions of paragraph (b) below as if it
were a Lender hereunder. Such authorization shall survive the repayment of the
Loans and Reimbursement Obligations and the termination of the Commitments.
(b) Each Lender and the Administrative Agent agrees (on behalf of
itself and each of its affiliates, directors, officers, employees and
representatives) to use reasonable precautions to keep confidential, in
accordance with their customary procedures for handling confidential information
of the same nature and in accordance with safe and sound banking practices, any
non-public information supplied to it by any Obligor pursuant to this Agreement
that is identified by such Person as being confidential at the time the same is
delivered to the Lenders or the Administrative Agent, PROVIDED that nothing
herein shall limit the disclosure of any such information (i) to the extent
required by statute, rule, regulation or judicial process, (ii) to counsel for
any of the Lenders or the Administrative Agent, (iii) to regulatory personnel,
auditors or accountants, (iv) to the Administrative Agent or any other Lender
(or to Chase Securities, Inc.), (v) in connection with any litigation related to
the Azerty Acquisition or the transactions contemplated by the Credit Agreement
or the other Basic Documents to which the Administrative Agent or any of the
Lenders is a party, (vi) to a subsidiary or affiliate of such Lender as provided
in paragraph (a) above or (vii) to any assignee or participant (or prospective
assignee or participant) so long as such assignee or participant (or prospective
assignee or participant) first executes and delivers to the respective Lender a
confidentiality agreement containing substantially the terms set forth in this
Section 12.12 (or executes and delivers to such Lender an acknowledgement to the
effect that it is bound by the provisions of this Section 12.12(b), which
acknowledgement may be included as part of the respective assignment or
participation agreement pursuant to which such assignee or participant acquires
an interest in the Loans or Letter of Credit Interest hereunder); PROVIDED,
FURTHER, that in no event shall any Lender or the Administrative Agent be
obligated or required to return any materials furnished by any Obligor. The
obligations of any assignee that has executed a confidentiality agreement
containing substantially the terms set forth in this Section 12.12 shall be
superseded by this Section 12.12 upon the date upon which such assignee becomes
a Lender hereunder pursuant to Section 12.06(b) hereof.
12.13 CERTAIN TAX INFORMATION. Upon the reasonable request of the
Administrative Agent, the Company shall provide in writing to the Lenders on a
timely basis such information, if any, required by Treasury Regulation
Section 1.1275-2(e).
12.14 ACKNOWLEDGEMENT AND CONSENT. Each of the Company and the
Guarantor hereby acknowledges that (a) each reference in the Pledge Agreement to
the Credit Agreement shall mean the Existing Credit Agreement as amended and
restated by this Agreement, and as the
CREDIT AGREEMENT
<PAGE>
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same shall be modified and supplemented and in effect from time to time, and
(b) each reference therein to the "Agent" shall be deemed to be a reference to
the Administrative Agent.
CREDIT AGREEMENT
<PAGE>
- 94 -
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the day and year first above written.
UNITED STATIONERS SUPPLY CO.
By
----------------------------------
Title:
Address for Notices:
2200 East Golf Road
Des Plaines, Illinois 60016-1267
Attention: Chief Financial Officer
(with a copy to the General
Counsel's Office)
Telecopier No.: (847) 699-4716
Telephone No.: (847) 699-5000 x2135
UNITED STATIONERS INC.
By
----------------------------------
Title:
Address for Notices:
2200 East Golf Road
Des Plaines, Illinois 60016-1267
Attention: Chief Financial Officer
(with a copy to the General
Counsel's Office)
Telecopier No.: (847) 699-4716
Telephone No.: (847) 699-5000 x2135
CREDIT AGREEMENT
<PAGE>
- 95 -
LENDERS
THE CHASE MANHATTAN BANK
By
----------------------------------
Title: Vice President
CREDIT AGREEMENT
<PAGE>
- 96 -
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By
----------------------------------
Title:
CREDIT AGREEMENT
<PAGE>
- 97 -
THE FIRST NATIONAL BANK OF CHICAGO
By
----------------------------------
Title:
CREDIT AGREEMENT
<PAGE>
- 98 -
PNC BANK, NATIONAL ASSOCIATION
By
----------------------------------
Title:
CREDIT AGREEMENT
<PAGE>
- 99 -
ARAB BANKING CORPORATION
(B.S.C.)
By
----------------------------------
Title:
CREDIT AGREEMENT
<PAGE>
- 100 -
THE BANK OF NEW YORK
By
----------------------------------
Title:
CREDIT AGREEMENT
<PAGE>
- 101 -
BANK OF SCOTLAND
By
----------------------------------
Title:
CREDIT AGREEMENT
<PAGE>
- 102 -
BANK ONE, MILWAUKEE, NA
By
----------------------------------
Title:
CREDIT AGREEMENT
<PAGE>
- 103 -
COMERICA BANK
By
----------------------------------
Title:
CREDIT AGREEMENT
<PAGE>
- 104 -
THE FIRST NATIONAL BANK OF MARYLAND
By
----------------------------------
Title:
CREDIT AGREEMENT
<PAGE>
- 105 -
HIBERNIA NATIONAL BANK
By
----------------------------------
Title:
CREDIT AGREEMENT
<PAGE>
- 106 -
KEY BANK
By
----------------------------------
Title:
CREDIT AGREEMENT
<PAGE>
- 107 -
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., CHICAGO BRANCH
By
----------------------------------
Title:
CREDIT AGREEMENT
<PAGE>
- 108 -
MICHIGAN NATIONAL BANK
By
----------------------------------
Title:
CREDIT AGREEMENT
<PAGE>
- 109 -
NATIONAL BANK OF CANADA, a Canadian
Chartered Bank
By
----------------------------------
Title:
By
----------------------------------
Title:
CREDIT AGREEMENT
<PAGE>
- 110 -
TRANSAMERICA BUSINESS CREDIT
CORPORATION
By
----------------------------------
Title:
CREDIT AGREEMENT
<PAGE>
- 111 -
UNION BANK OF CALIFORNIA, N.A.
By
----------------------------------
Title:
CREDIT AGREEMENT
<PAGE>
- 112 -
WACHOVIA BANK, N.A.
By
----------------------------------
Title:
CREDIT AGREEMENT
<PAGE>
- 113 -
BANQUE PARIBAS
By
----------------------------------
Title:
By
----------------------------------
Title:
CREDIT AGREEMENT
<PAGE>
- 114 -
DAI-ICHI KANGYO BANK, LTD.
By
----------------------------------
Title:
CREDIT AGREEMENT
<PAGE>
- 115 -
DEUTSCHE FINANCIAL SERVICES
By
----------------------------------
Title:
CREDIT AGREEMENT
<PAGE>
- 116 -
THE FUJI BANK, LIMITED
By
----------------------------------
Title:
CREDIT AGREEMENT
<PAGE>
- 117 -
THE MITSUBISHI TRUST AND BANKING
CORPORATION CHICAGO BRANCH
By
----------------------------------
Title:
CREDIT AGREEMENT
<PAGE>
- 118 -
NATIONAL CITY BANK
By
----------------------------------
Title:
CREDIT AGREEMENT
<PAGE>
- 119 -
THE NORTHERN TRUST COMPANY
By
----------------------------------
Title:
CREDIT AGREEMENT
<PAGE>
- 120 -
VAN KAMPEN AMERICAN CAPITAL
PRIME RATE INCOME TRUST
By
----------------------------------
Title:
CREDIT AGREEMENT
<PAGE>
- 121 -
STANFIELD CAPITAL PARTNERS
By
----------------------------------
Title:
CREDIT AGREEMENT
<PAGE>
- 122 -
THE CHASE MANHATTAN BANK,
as Agent
By
----------------------------------
Title:
Address for Notices to Chase as Agent:
The Chase Manhattan Bank
New York Agency
140 East 45th Street - 29th Floor
New York, New York 10017
Attention: Agent Bank Services
Telecopier No.: (212) 622-0122
CREDIT AGREEMENT
<PAGE>
EXECUTION COPY
SECOND AMENDED AND RESTATED SECURITY AGREEMENT
SECOND AMENDED AND RESTATED SECURITY AGREEMENT dated as of April 3,
1998 between UNITED STATIONERS SUPPLY CO., a corporation duly organized and
validly existing under the laws of the State of Illinois (together with its
successors and assigns, the "COMPANY"); and THE CHASE MANHATTAN BANK, as
administrative agent for the lenders party to the Credit Agreement referred to
below (in such capacity, together with its successors in such capacity, the
"ADMINISTRATIVE AGENT").
The Company, United Stationers Inc., the parent corporation of the
Company and a corporation duly organized and validly existing under the laws of
the State of Delaware (together with its successors and assigns, the
"GUARANTOR"); certain lenders; and the Agent are parties to a Credit Agreement
dated as of March 30, 1995 (as amended and restated as of October 31, 1996 and
again as of April ____, 1998 and thereafter amended, restated, modified and
supplemented and in effect from time to time, the "CREDIT AGREEMENT"),
providing, subject to the terms and conditions thereof, for extensions of credit
(by making of loans and issuing letters of credit) to be made by said lenders to
the Company in an amount not exceeding on the date hereof $500,000,000.
The Company and the Administrative Agent are party to the Amended and
Restated Security Agreement dated as of October 31, 1996 (as hereto amended, the
"EXISTING SECURITY AGREEMENT");
To induce said lenders to enter into the Credit Agreement and to
extend credit thereunder, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company has agreed
to amend and restate the Existing Security Agreement and to pledge and grant a
security interest in the Collateral (as hereinafter defined) as security for the
Secured Obligations (as hereinafter defined). Accordingly, the parties hereto
agree as follows:
Section 1. DEFINITIONS. Terms defined in the Credit Agreement are used
herein as defined therein. In addition, as used herein:
"ACCOUNTS" shall have the meaning ascribed thereto in Section 3(c)
hereof.
"COLLATERAL" shall have the meaning ascribed thereto in Section 3
hereof.
SECURITY AGREEMENT
<PAGE>
-2-
"COLLATERAL ACCOUNT" shall have the meaning ascribed thereto in
Section 4.01 hereof.
"COPYRIGHT COLLATERAL" shall mean all Copyrights, whether now owned or
hereafter acquired by the Company, including each Copyright identified in
Annex 2 hereto.
"COPYRIGHTS" shall mean all copyrights, copyright registrations and
applications for copyright registrations, including, without limitation,
all renewals and extensions thereof, the right to recover for all past,
present and future infringements thereof, and all other rights of any kind
whatsoever accruing thereunder or pertaining thereto.
"DOCUMENTS" shall have the meaning ascribed thereto in Section 3(i)
hereof.
"EQUIPMENT" shall have the meaning ascribed thereto in Section 3(g)
hereof.
"FOREIGN SUBSIDIARY" shall mean any Subsidiary of the Company that is
not organized or created under the laws of the United States of America,
any State thereof or the District of Columbia.
"INSTRUMENTS" shall have the meaning ascribed thereto in Section 3(d)
hereof.
"INTELLECTUAL PROPERTY" shall mean, collectively, all Copyright
Collateral, all Patent Collateral and all Trademark Collateral, together
with (a) all inventions, processes, production methods, proprietary
information, know-how and trade secrets; (b)all licenses or user or other
agreements granted to the Company with respect to any of the foregoing, in
each case whether now or hereafter owned or used including, without
limitation, the licenses or other agreements with respect to the Copyright
Collateral, the Patent Collateral or the Trademark Collateral, listed in
Annex 4 hereto, except to the extent that a security interest therein may
not be granted without the consent of a licensor; (c) all information,
customer lists, identification of suppliers, data, plans, blueprints,
specifications, designs, drawings, recorded knowledge, surveys, engineering
reports, test reports, manuals, materials standards, processing standards,
performance standards, catalogs, computer and automatic machinery software
and programs; (d) all field repair data, sales data and other information
relating to sales or service of products now or hereafter manufactured; (e)
all accounting information and all media in which or on which any
information or knowledge or data or records may be recorded or stored and
all computer programs used for the compilation or printout of such
information, knowledge, records or data; (f) all licenses, consents,
permits, variances, certifications and approvals of governmental agencies
now or hereafter held by the Company, except to the extent that a security
interest therein may not be granted without the consent of a licensor; and
(g) all causes of action, claims or warranties now or hereafter owned or
acquired by the Company in respect of any of the items listed above.
"INVENTORY" shall have the meaning ascribed thereto in Section 3(e)
hereof.
SECURITY AGREEMENT
<PAGE>
-3-
"MOTOR VEHICLES" shall mean motor vehicles, tractors, trailers and
other like property, whether or not the title thereto is governed by a
certificate of title or ownership.
"PATENT COLLATERAL" shall mean all Patents, whether now owned or
hereafter acquired by the Company, including each Patent identified in
Annex 3 hereto.
"PATENTS" shall mean all patents and patent applications, including,
without limitation, the inventions and improvements described and claimed
therein together with the reissues, divisions, continuations, renewals,
extensions and continuations-in-part thereof, all income, royalties,
damages and payments now or hereafter due and/or payable under and with
respect thereto, including, without limitation, damages and payments for
past or future infringements thereof, the right to sue for past, present
and future infringements thereof, and all rights corresponding thereto
throughout the world.
"PLEDGED STOCK" shall have the meaning ascribed thereto in Section
3(a) hereof.
"SECURED OBLIGATIONS" shall mean, collectively, (a) the principal of
and interest on the Loans made by the Lenders to, and the Note(s) held by
each Lender of, the Company and all other amounts from time to time owing
to the Lenders or the Agent by the Company under the Basic Documents
including, without limitation, all Reimbursement Obligations and interest
thereon, (b) the Company's obligations to any Lender under any Interest
Rate Protection Agreement required by the Existing Credit Agreement and (c)
all obligations of the Company to the Lenders and the Agent hereunder.
"TRADEMARK COLLATERAL" shall mean all Trademarks, whether now owned or
hereafter acquired by the Company, including each Trademark identified on
Annex 4 hereto. Notwithstanding the foregoing, the Trademark Collateral
does not and shall not include any Trademark that would be rendered
invalid, abandoned, void or unenforceable by reason of its being included
as part of the Trademark Collateral.
"TRADEMARKS" shall mean all trade names, trademarks and service marks,
logos, trademark and service mark registrations, and applications for
trademark and service mark registrations, including, without limitation,
all renewals of trademark and service mark registrations, all rights
corresponding thereto throughout the world, the right to recover for all
past, present and future infringements thereof, all other rights of any
kind whatsoever accruing thereunder or pertaining thereto, together, in
each case, with the product lines and goodwill of the business connected
with the use of, and symbolized by, each such trade name, trademark and
service mark.
"UNIFORM COMMERCIAL CODE" shall mean the Uniform Commercial Code as in
effect from time to time in the State of New York.
SECURITY AGREEMENT
<PAGE>
-4-
Section 2. REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to the Lenders and the Agent that:
(a) The Company is (or, at the time that the Company acquires any
interest therein, will be) the sole beneficial owner of the Collateral and
no Lien exists or will exist upon the Collateral at any time (and no right
or option to acquire the same exists in favor of any other Person), except
for Liens permitted under Section 9.06 of the Credit Agreement and except
for the pledge and security interest in favor of the Agent for the benefit
of the Lenders created or provided for herein, which pledge and security
interest will (subject to Section 5.11 hereof) constitute a perfected
pledge and security interest in and to all of the Collateral (other than
Intellectual Property registered or otherwise located outside of the United
States of America), subject to no equal or prior security interest or
pledge except as permitted under Section 9.06 of the Credit Agreement.
(b) The Pledged Stock represented by the certificates identified in
Annex 1 hereto is, and all other Pledged Stock in which the Company shall
hereafter grant a security interest pursuant to Section 3 hereof will be,
duly authorized, validly existing, fully paid and non-assessable and none
of such Pledged Stock is or will be subject to any contractual restriction,
or any restriction under the charter or by-laws of the relevant issuer
thereof, upon the transfer of such Pledged Stock (except for any such
restriction contained herein or in the Credit Agreement).
(c) The Pledged Stock represented by the certificates identified in
Annex 1 hereto constitutes all of the issued and outstanding shares of
capital stock of each class of each issuer thereof on the date hereof(or,
in the case of any Foreign Subsidiary, not less than 65% of the issued and
outstanding shares of capital stock of each class of such Foreign
Subsidiary on the date hereof), and said Annex 1 correctly identifies, as
at the date hereof, the respective class and par value of the shares
comprising such Pledged Stock, the respective number of shares represented
by each such certificate, and the respective beneficial and registered
owner of such shares.
(d) Annexes 2, 3 and 4 hereto, respectively, set forth a complete and
correct list of all Copyrights, Patents and Trademarks owned by the Company
on the date hereof; except pursuant to licenses and other user agreements
entered into by the Company in the ordinary course of business, that are
listed in Annex 5 hereto, the Company owns and possesses the right to use,
and has done nothing to authorize or enable any other Person to use, any
Copyright, Patent or Trademark listed in said Annexes 2, 3 and 4, and all
registrations listed in said Annexes 2, 3 and 4 are valid and in full force
and effect; except as may be set forth in said Annex 5, the Company owns
and possesses the right to use all Copyrights, Patents and Trademarks.
(e) Annex 5 hereto sets forth a complete and correct list of all
licenses and other user agreements included in the Intellectual Property on
the date hereof.
SECURITY AGREEMENT
<PAGE>
-5-
(f) To the Company's knowledge, (i) except as set forth in Annex 5
hereto, there is no violation by others of any right of the Company with
respect to any Copyright, Patent or Trademark listed in Annexes 2, 3 and 4
hereto, respectively, and (ii) the Company is not infringing in any
material respect upon any Copyright, Patent or Trademark of any other
Person; and no proceedings which if adversely determined could reasonably
be expected to have a Material Adverse Effect have been instituted or are
pending against the Company or, to the Company's knowledge, threatened, and
no claim against the Company has been received by the Company, alleging any
such violation, except as may be set forth in said Annex 5.
(g) The Company does not own any Trademarks registered in the United
States of America to which the last sentence of the definition of Trademark
Collateral applies.
(h) Any goods now or hereafter produced by the Company or any of its
Subsidiaries included in the Collateral have been and will be produced in
compliance with the requirements of the Fair Labor Standards Act, as
amended.
Section 3. COLLATERAL. As collateral security for the prompt payment
in full when due (whether at stated maturity, by acceleration or otherwise) of
the Secured Obligations, the Company hereby pledges and grants to the Agent, for
the benefit of the Lenders as hereinafter provided, a security interest in all
of the Company's right, title and interest in the following Property, whether
now owned by the Company or hereafter acquired and whether now existing or
hereafter coming into existence (all being collectively referred to herein as
"COLLATERAL"):
(a) all shares of capital stock of whatever class of each Subsidiary
of the Company (other than United Business Computers, Inc., a Delaware
corporation ("UBC"), for so long as, and to the extent, the Stockholders'
Agreement dated July 1, 1993 between the Company, Theodore J. Crayne and
United Business Computers, Inc. prohibits transfer of the shares of UBC, as
described in Schedule Ill to the Credit Agreement) now or hereafter owned
by the Company or any other Subsidiary of the Company, including, without
limitation, from and after the effectiveness of the Mergers, the shares of
stock represented by the certificates identified in Annex l hereto, in each
case together with the certificates representing the same (collectively,
the "PLEDGED STOCK");
(b) all shares, securities, moneys or Property representing a dividend
on any of the Pledged Stock, or representing a distribution or return of
capital upon or in respect of the Pledged Stock or resulting from a
split-up, revision, reclassification or other like change of the Pledged
Stock, or otherwise received in exchange therefor, and any subscription
warrants, rights or options issued to the holders of, or otherwise in
respect of, the Pledged Stock;
(c) all accounts and general intangibles (each as defined in the
Uniform Commercial Code) of the Company constituting any right to the
payment of money, including (but not limited to) all moneys due and to
become due to the Company in respect of any loans or advances or for
Inventory or Equipment or other goods sold or
SECURITY AGREEMENT
<PAGE>
-6-
leased or for services rendered, all moneys due and to become due to the
Company under any guarantee (including a letter of credit) of the purchase
price of Inventory or Equipment sold by the Company and all tax refunds
(such accounts, general intangibles and moneys due and to become due being
herein called collectively "ACCOUNTS");
(d) all instruments, chattel paper or letters of credit (each as
defined in the Uniform Commercial Code) of the Company evidencing,
representing, arising from or existing in respect of, relating to, securing
or otherwise supporting the payment of, any of the Accounts, including (but
not limited to) promissory notes, drafts, bills of exchange and trade
acceptances (herein collectively called "INSTRUMENTS");
(e) all inventory (as defined in the Uniform Commercial Code) of the
Company, all goods obtained by the Company in exchange for such inventory,
and any products made or processed from such inventory including all
substances, if any, commingled therewith or added thereto (herein
collectively called "INVENTORY");
(f) all Intellectual Property and all other accounts or general
intangibles not constituting Intellectual Property or Accounts;
(g) all equipment (as defined in the Uniform Commercial Code) of the
Company, including all Motor Vehicles (herein collectively called
"EQUIPMENT");
(h) each contract and other agreement of the Company relating to the
sale or other disposition of Inventory or Equipment;
(i) all documents of title (as defined in the Uniform Commercial Code)
or other receipts of the Company covering, evidencing or representing
Inventory or Equipment (herein collectively called "DOCUMENTS");
(j) all rights, claims and benefits of the Company against any Person
arising out of, relating to or in connection with Inventory or Equipment
purchased by the Company, including, without limitation, any such rights,
claims or benefits against any Person storing or transporting such
Inventory or Equipment;
(k) the balance from time to time in the Collateral Account and all
Investment Property (as defined in Section 9-115 of the Uniform Commercial
Code) held therein; and
(l) all other tangible and intangible personal Property and fixtures
of the Company, including, without limitation, all proceeds, products,
accessions, rents, profits, income, benefits, substitutions and
replacements of and to any of the property of the Company described in the
preceding clauses of this Section 3 (including, without limitation, any
proceeds of insurance thereon and all causes of action, claims and
warranties now or hereafter held by the Company in respect of any of the
items listed above) and, to the extent related to any Property described in
said clauses or such
SECURITY AGREEMENT
<PAGE>
-7-
proceeds, products and accessions, all books, correspondence, credit files,
records, invoices and other papers, including without limitation all tapes,
cards, computer runs and other papers and documents in the possession or
under the control of the Company or any computer bureau or service company
from time to time acting for the Company;
PROVIDED that Collateral shall not include (i) shares of capital stock of any
class issued by any Foreign Subsidiary to the extent that the percentage of
issued and outstanding shares of capital stock of such class subject to the Lien
of this Agreement would constitute more than 65% of the issued and outstanding
shares of capital stock of such class, (ii) any tangible personal Property
located outside the United States of America and (iii) any Receivables
transferred by the Company in connection with the Receivables Financing and not
sold, assigned, transferred or conveyed back to the Company in accordance with
the Receivables Financing Documents.
Section 4. CASH PROCEEDS OF COLLATERAL.
4.01 COLLATERAL ACCOUNT. The Agent shall establish with Chase a
"securities account" (as defined in Section 8-501 of the Uniform Commercial
Code; herein the "COLLATERAL ACCOUNT") in respect of which the Agent is the
"entitlement holder" (as defined in Section 8-102(a)(7) of the Uniform
Commercial Code), into which there shall be deposited from time to time the cash
proceeds of any of the Collateral (including proceeds of insurance thereon)
required to be delivered to the Agent pursuant hereto and into which the Company
may from time to time deposit any additional amounts that it wishes to pledge to
the Agent for the benefit of the Lenders as additional collateral security
hereunder or that, as provided in Sections 2.10 and 10 of the Credit Agreement,
it is required to pledge as additional collateral security hereunder. The
balance from time to time in the Collateral Account shall constitute part of the
Collateral hereunder and shall not constitute payment of the Secured Obligations
until applied as hereinafter provided. As promptly as possible after any amount
is deposited into the Collateral Account pursuant to the second or third
sentence of Section 4.02 hereof, the Agent shall remit the balance of such
amount (if any) to the Company's account (#910-2-668754) with Chase. However,
the Agent may (and, if instructed by the Lenders of the Credit Agreement shall)
at any time in its (or their) discretion apply or cause to be applied the
balance from time to time outstanding to the credit of the Collateral Account to
the repayment of the principal of the Revolving Credit Loans outstanding, to
accrued interest on the principal so repaid, and to the payment of any
commitment fees with respect to the Revolving Credit Commitments, in each case
in accordance with the Credit Agreement. Notwithstanding the above, at any time
following the occurrence and during the continuance of an Event of Default, the
Agent may (and, if instructed by the Lenders as specified in Section 11.03 of
the Credit Agreement, shall) in its (or their) discretion apply or cause to be
applied (subject to collection) the balance from time to time standing to the
credit of the Collateral Account to the payment of the Secured Obligations in
the manner specified in Section 5.09 hereof. The balance from time to time in
the Collateral Account shall be subject to withdrawal only as provided herein.
4.02 PROCEEDS OF ACCOUNTS. At any time after the occurrence and
during the continuance of an Event of Default, the Company shall, upon the
request of the Administrative Agent, instruct all account debtors and other
Persons obligated in respect of all Accounts to make
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all payments in respect of the Accounts either (a) directly to the Agent (by
instructing that such payments be remitted to a post office box which shall be
in the name and under the control of the Agent) or (b) to one or more other
banks in the United States of America (by instructing that such payments be
remitted to a post office box which shall be in the name and under the control
of such other bank(s)) under arrangements, in form and substance satisfactory to
the Agent pursuant to which the Company shall have irrevocably instructed such
other bank(s) (and such other bank(s) shall have agreed) to remit all proceeds
of such payments (net of amounts applied by, or transferred to, such other
bank(s) at the instruction of the Company to be used for the payment of
operating expenses incurred by the Company in the ordinary course of its
business and due and owing at the time of such application) directly to the
Agent for deposit into the Collateral Account. All payments made to the Agent,
as provided in the preceding sentence, shall be immediately deposited in the
Collateral Account. In addition to the foregoing, the Company agrees that, at
any time after the occurrence and during the continuance of an Event of Default,
if the proceeds of any Collateral hereunder (including the payments made in
respect of Accounts) shall be received by it, the Company shall as promptly as
possible deposit such proceeds into the Collateral Account. Until so deposited,
all such proceeds shall be held in trust by the Company for and as the property
of the Agent and shall not be commingled with any other funds or property of the
Company.
4.03 INVESTMENT OF BALANCE IN COLLATERAL ACCOUNT. Amounts on deposit
in the Collateral Account shall be invested from time to time in such Permitted
Investments constituting Investment Property as the Company (or, after the
occurrence and during the continuance of an Event of Default, the Agent) shall
determine, which Permitted Investments shall be held in the name and be under
the control of the Agent, PROVIDED that (i) at any time after the occurrence and
during the continuance of an Event of Default, the Agent may (and, if instructed
by the Lenders as specified in Section 11.03 of the Credit Agreement, shall) in
its (or their) discretion at any time and from time to time elect to liquidate
any such Permitted Investments and to apply or cause to be applied the proceeds
thereof to the payment of the Secured Obligations in the manner specified in
Section 5.09 hereof and (ii) if requested by the Company, such Permitted
Investments may be held in the name and under the control of one or more of the
Lenders (and in that connection each Lender, pursuant to Section 11.10 of the
Credit Agreement, has agreed that such Permitted Investments shall be held by
such Lender as a collateral sub-agent for the Agent hereunder).
4.04 COVER FOR LETTER OF CREDIT LIABILITIES. Amounts deposited into
the Collateral Account as cover for Letter of Credit Liabilities under the
Credit Agreement pursuant to Section 2.10(h) or Section 10 thereof shall be held
by the Agent in a separate sub-account (designated "LETTER OF CREDIT LIABILITIES
SUB-ACCOUNT") and all amounts held in such sub-account shall constitute
collateral security FIRST for the Letter of Credit Liabilities outstanding from
time to time and SECOND as collateral security for the other Secured Obligations
hereunder.
Section 5. FURTHER ASSURANCES; REMEDIES. In furtherance of the grant
of the pledge and security interest pursuant to Section 3 hereof, the Company
hereby agrees with each Lender and the Agent as follows:
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5.01 DELIVERY AND OTHER PERFECTION. The Company shall:
(a) if any of the shares, securities, moneys or other Property
required to be pledged by the Company under clauses (a) and (b) of Section
3 hereof are received by the Company, forthwith either (x) transfer and
deliver to the Agent such shares or securities so received by the Company
(together with the certificates for any such shares and securities duly
endorsed in blank or accompanied by undated stock powers duly executed in
blank), all of which thereafter shall be held by the Agent, pursuant to the
terms of this Agreement, as part of the Collateral or (y) take such other
action as the Agent shall deem necessary or appropriate to duly record the
Lien created hereunder in such shares, securities, moneys or Property in
said clauses (a) and (b);
(b) deliver and pledge to the Agent any and all Instruments, including
without limitation, any subordinated note delivered in connection with the
Receivables Financing, endorsed and/or accompanied by such instruments of
assignment and transfer in such form and substance as the Agent may
reasonably request; PROVIDED, that so long as no Event of Default shall
have occurred and be continuing, the Company may retain for collection in
the ordinary course any Instruments received by the Company in the ordinary
course of business and the Agent shall, promptly upon request of the
Company, make appropriate arrangements for making any Instrument pledged by
the Company available to the Company for purposes of presentation,
collection or renewal (any such arrangement to be effected, to the extent
deemed appropriate by the Agent, against trust receipt or like document);
(c) give, execute, deliver, file and/or record any financing
statement, notice, instrument, document, agreement or other papers that may
be necessary or desirable (in the judgment of the Agent) to create,
preserve, perfect or validate the security interest granted pursuant hereto
or to enable the Agent to exercise and enforce its rights hereunder with
respect to such pledge and security interest, including, without
limitation, after the occurrence of an Event of Default, causing any or all
of the Stock Collateral to be transferred of record into the name of the
Agent or its nominee (and the Agent agrees that if any Stock Collateral is
transferred into its name or the name of its nominee, the Agent will
thereafter promptly give to the Company copies of any notices and
communications received by it with respect to the Stock Collateral),
PROVIDED that notices to account debtors in respect of any Accounts or
Instruments shall be subject to the provisions of clause (i) below;
(d) without limiting the obligations of the Company under Section
5.04(c) hereof, upon the acquisition after the date hereof by the Company
of any Equipment covered by a certificate of title or ownership, cause the
Agent to be listed as the lienholder on such certificate of title and
within 120 days of the acquisition thereof deliver evidence of the same to
the Agent;
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(e) keep full and accurate books and records relating to the
Collateral, and stamp or otherwise mark such books and records in such
manner as the Agent may reasonably require in order to reflect the security
interests granted by this Agreement;
(f) furnish to the Agent from time to time (but, unless an Event of
Default shall have occurred and be continuing, no more frequently than
quarterly) statements and schedules further identifying and describing the
Copyright Collateral, the Patent Collateral and the Trademark Collateral,
respectively, and such other reports in connection with the Copyright
Collateral, the Patent Collateral and the Trademark Collateral, as the
Agent may reasonably request, all in reasonable detail;
(g) promptly upon request of the Agent, following receipt by the
Agent of any statements, schedules or reports pursuant to clause (f) above,
modify this Agreement by amending Annexes 2, 3 and/or 4 hereto, as the case
may be, to include any Copyright, Patent or Trademark that becomes part of
the Collateral under this Agreement;
(h) permit representatives of the Agent, upon reasonable prior
notice, at any time during normal business hours to inspect and make
abstracts from its books and records pertaining to the Collateral, and
permit representatives of the Agent to be present at the Company's place of
business to receive copies of all communications and remittances relating
to the Collateral, and forward copies of any notices or communications
received by the Company with respect to the Collateral, all in such manner
as the Agent may require; and
(i) upon the occurrence and during the continuance of any Event of
Default, upon request of the Agent, promptly notify (and the Company hereby
authorizes the Agent so to notify) each account debtor in respect of any
Accounts or Instruments that such Collateral has been assigned to the Agent
hereunder, and that any payments due or to become due in respect of such
Collateral are to be made directly to the Agent.
5.02 OTHER FINANCING STATEMENTS AND LIENS. Except for financing
statements securing Liens expressly permitted by Section 9.06 of the Credit
Agreement and protective filings filed against the Company in respect of
equipment, furniture or fixtures leased to or Property consigned with the
Company, without the prior written consent of the Agent (granted with the
authorization of the Lenders as specified in Section 11.09 of the Credit
Agreement), the Company shall not file or suffer to be on file, or authorize or
permit to be filed or to be on file, in any jurisdiction, any financing
statement or like instrument with respect to the Collateral in which the Agent
is not named as the sole secured party for the benefit of the Lenders.
5.03 PRESERVATION OF RIGHTS. The Agent shall not be required to take
steps necessary to preserve any rights against prior parties to any of the
Collateral.
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<PAGE>
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5.04 SPECIAL PROVISIONS RELATING TO CERTAIN COLLATERAL.
(a) STOCK COLLATERAL.
(1) The Company will cause the Pledged Stock to constitute at all
times 100% (or, with respect to any issuer that is a Foreign Subsidiary, at
least 65%) of the total number of shares of each class of capital stock of each
Subsidiary of the Company then outstanding.
(2) Unless an Event of Default shall have occurred and be
continuing and the Agent shall have given notice to the Company of its intention
to exercise rights arising hereunder or under any other Basic Document with
respect to the Pledged Stock the Company shall have the right to exercise all
voting, consensual and other powers of ownership pertaining to the Pledged Stock
for all purposes not inconsistent with the terms of this Agreement, the Credit
Agreement, the Notes or any other instrument or agreement referred to herein or
therein, PROVIDED that the Company agrees that it will not vote the Collateral
in any manner that is inconsistent with the terms of this Agreement, the Credit
Agreement, the Notes or any such other instrument or agreement; and the Agent
shall execute and deliver to the Company or cause to be executed and delivered
to the Company all such proxies, powers of attorney, dividend and other orders,
and all such instruments, without recourse, as the Company may reasonably
request for the purpose of enabling the Company to exercise the rights and
powers that it is entitled to exercise pursuant to this Section 5.04(a)(2).
(3) Unless and until an Event of Default has occurred and is
continuing, the Company shall be entitled to receive and retain any dividends on
the Collateral paid in cash out of earned surplus.
(4) If any Event of Default shall have occurred, then so long as
such Event of Default shall continue, and whether or not the Agent or any Lender
exercises any available right to declare any Secured Obligation due and payable
or seeks or pursues any other relief or remedy available to it under applicable
law or under this Agreement, the Credit Agreement, the Notes or any other
agreement relating to such Secured Obligation, all dividends and other
distributions on the Pledged Stock shall be paid directly to the Agent and
retained by it as part of the Collateral, subject to the terms of this
Agreement, and, if the Agent shall so request in writing, the Company agrees to
execute and deliver to the Agent appropriate additional dividend, distribution
and other orders and documents to that end, PROVIDED that if such Event of
Default is cured, any such dividend or distribution theretofore paid to the
Agent shall, upon request of the Company (except to the extent theretofore
applied to the Secured Obligations), be returned by the Agent to the Company.
(b) INTELLECTUAL PROPERTY.
(1) For the purpose of enabling the Agent to exercise rights and
remedies under Section 5.05 hereof at such time as the Agent shall be lawfully
entitled to exercise such rights and remedies, and for no other purpose, the
Company hereby grants to the Agent, to the extent assignable, an irrevocable,
non-exclusive license (exercisable without payment of royalty or
SECURITY AGREEMENT
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other compensation to the Company) to use, assign, license or sublicense any of
the Intellectual Property now owned or hereafter acquired by the Company,
wherever the same may be located, including in such license reasonable access to
all media in which any of the licensed items may be recorded or stored and to
all computer programs used for the compilation or printout thereof.
(2) Notwithstanding anything contained herein to the contrary, but
subject to the provisions of Section 9.05 of the Credit Agreement that limit the
right of the Company to dispose of its Property, so long as no Event of Default
shall have occurred and be continuing, the Company will be permitted to exploit,
use, enjoy, protect, license, sublicense, assign, sell, dispose of or take other
actions with respect to the Intellectual Property in the ordinary course of the
business of the Company. In furtherance of the foregoing, unless an Event of
Default shall have occurred and be continuing the Agent shall from time to time,
upon the request of the Company, execute and deliver any instruments,
certificates or other documents, in the form so requested, that the Company
shall have certified are appropriate (in its judgment) to allow it to take any
action permitted above (including relinquishment of the license provided
pursuant to clause (1) immediately above as to any specific Intellectual
Property). Further, upon the payment in full of all of the Secured Obligations
and cancellation or termination of the Commitments and Letter of Credit
Liabilities or earlier expiration of this Agreement or release of the
Collateral, the license granted pursuant to clause (1) immediately above shall
expire by its own terms without further action on the part of the Company or the
Agent. The exercise of rights and remedies under Section 5.05 hereof by the
Agent shall not terminate the rights of the holders of any licenses or
sublicenses theretofore granted by the Company in accordance with the first
sentence of this clause (2).
(c) MOTOR VEHICLES. At any time after the occurrence and during the
continuance of an Event of Default, the Company shall, upon the request of the
Agent, deliver to the Agent originals of the certificates of title or ownership
for the Motor Vehicles owned by it with the Agent listed as lienholder and take
such other action as the Agent shall deem appropriate to perfect the security
interest created hereunder in all such Motor Vehicles.
5.05 EVENTS OF DEFAULT, ETC. During the period during which an Event
of Default shall have occurred and be continuing:
(a) the Company shall, at the request of the Agent, assemble the
Collateral owned by it at such place or places, reasonably convenient to
both the Agent and the Company, designated in its request;
(b) the Agent may make any reasonable compromise or settlement
deemed desirable with respect to any of the Collateral and may extend the
time of payment, arrange for payment in installments, or otherwise modify
the terms of, any of the Collateral;
(c) the Agent shall have all of the rights and remedies with
respect to the Collateral of a secured party under the Uniform Commercial
Code (whether or not said Code is in effect in the jurisdiction where the
rights and remedies are asserted) and such
SECURITY AGREEMENT
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additional rights and remedies to which a secured party is entitled under
the laws in effect in any jurisdiction where any rights and remedies
hereunder may be asserted, including, without limitation, the right, to the
maximum extent permitted by law, to exercise all voting, consensual and
other powers of ownership pertaining to the Collateral as if the Agent were
the sole and absolute owner thereof(and the Company agrees to take all such
action as may be appropriate to give effect to such right);
(d) the Agent in its discretion may, in its name or in the name of
the Company or otherwise, demand, sue for, collect or receive any money or
other Property at any time payable or receivable on account of or in
exchange for any of the Collateral, but shall be under no obligation to do
so; and
(e) the Agent may, upon ten business days' prior written notice to
the Company of the time and place, with respect to the Collateral or any
part thereof that shall then be or shall thereafter come into the
possession, custody or control of the Agent, the Lenders or any of their
respective agents, sell, lease, assign or otherwise dispose of all or any
part of such Collateral, at such place or places as the Agent deems best,
and for cash or for credit or for future delivery (without thereby assuming
any credit risk), at public or private sale, without demand of performance
or notice of intention to effect any such disposition or of the time or
place thereof (except such notice as is required above or by applicable
statute and cannot be waived), and the Agent or any Lender or anyone else
may be the purchaser, lessee, assignee or recipient of any or all of the
Collateral so disposed of at any public sale (or, to the extent permitted
by law, at any private sale) and thereafter hold the same absolutely, free
from any claim or right of whatsoever kind, including any right or equity
of redemption (statutory or otherwise), of the Company, any such demand,
notice and right or equity being hereby expressly waived and released. In
the event of any sale, assignment, or other disposition of any of the
Trademark Collateral, the goodwill connected with and symbolized by the
Trademark Collateral subject to such disposition shall be included, and the
Company shall supply to the Agent or its designee, for inclusion in such
sale, assignment or other disposition, all Intellectual Property relating
to such Trademark Collateral. The Agent may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from
time to time by announcement at the time and place fixed for the sale, and
such sale may be made at any time or place to which the sale may be so
adjourned.
The proceeds of each collection, sale or other disposition under this Section
5.05, including by virtue of the exercise of the license granted to the Agent in
Section 5.04(b) hereof, shall be applied in accordance with Section 5.09 hereof
The Company recognizes that, by reason of certain prohibitions
contained in the Securities Act of 1933, as amended, and applicable state
securities laws, the Agent may be compelled, with respect to any sale of all or
any part of the Collateral, to limit purchasers to those who will agree, among
other things, to acquire the Collateral for their own account, for investment
and not with a view to the distribution or resale thereof. The Company
acknowledges that any such private sales may be at prices and on terms less
favorable to the Agent than those
SECURITY AGREEMENT
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obtainable through a public sale without such restrictions, and, notwithstanding
such circumstances, agrees that any such private sale shall be deemed to have
been made in a commercially reasonable manner and that the Agent shall have no
obligation to engage in public sales and no obligation to delay the sale of any
Collateral for the period of time necessary to permit the respective issuer
thereof to register it for public sale.
5.06 DEFICIENCY. If the proceeds of sale, collection or other
realization of or upon the Collateral pursuant to Section 5.05 hereof are
insufficient to cover the costs and expenses of such realization and the payment
in full of the Secured Obligations, the Company shall remain liable for any
deficiency.
5.07 REMOVALS, ETC. Without at least 30 days' prior written notice
to the Agent, the Company shall not (i) maintain any of its books and records
with respect to the Collateral at any office or maintain its principal place of
business at any place, or permit any Inventory or Equipment to be located
anywhere, other than at 2200 East Golf Road, Des Plaines, Illinois, 60016-1267
or at one of the locations identified in Annex 6 hereto or in transit from one
of such locations to another or (ii) change its name, or the name under which it
does business, from the name shown on the signature pages hereto.
5.08 PRIVATE SALE. The Agent and the Lenders shall incur no liability
as a result of the sale of the Collateral, or any part thereof, at any private
sale pursuant to Section 5.05 hereof conducted in a commercially reasonable
manner. The Company hereby waives any claims against the Agent or any Lender
arising by reason of the fact that the price at which the Collateral may have
been sold at such a private sale was less than the price that might have been
obtained at a public sale or was less than the aggregate amount of the Secured
Obligations, even if the Agent accepts the first offer received and does not
offer the Collateral to more than one offeree.
5.09 APPLICATION OF PROCEEDS. Except as otherwise herein expressly
provided and except as provided below in this Section 5.09, the proceeds of any
collection, sale or other realization of all or any part of the Collateral
pursuant hereto, and any other cash at the time held by the Agent under Section
4 hereof or this Section 5, shall be applied by the Agent:
FIRST, to the payment of the costs and expenses of such collection,
sale or other realization, including reasonable out-of-pocket costs and
expenses of the Agent and the fees and expenses of its agents and counsel,
and all expenses incurred and advances made by the Agent in connection
therewith;
NEXT, to the payment in full of the Secured Obligations, in each case
equally and ratably in accordance with the respective amounts thereof then
due and owing or as the Lenders holding the same may otherwise agree; and
FINALLY, to the payment to the Company, or its successors or assigns,
or as a court of competent jurisdiction may direct, of any surplus then
remaining.
SECURITY AGREEMENT
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Notwithstanding the foregoing, the proceeds of any cash or other amounts held in
the "Letter of Credit Liabilities Sub-Account" of the Collateral Account
pursuant to Section 4.04 hereof shall be applied FIRST to the Letter of Credit
Liabilities outstanding from time to time and SECOND to the other Secured
Obligations in the manner provided above in this Section 5.09.
As used in this Section 5, "PROCEEDS" of Collateral shall mean cash,
securities and other Property realized in respect of, and distributions in kind
of, Collateral, including any thereof received under any reorganization,
liquidation or adjustment of debt of the Company or any issuer of or obligor on
any of the Collateral.
5.10 ATTORNEY-IN-FACT. Without limiting any rights or powers granted
by this Agreement to the Agent while no Event of Default has occurred and is
continuing, upon the occurrence and during the continuance of any Event of
Default the Agent is hereby appointed the attorney-in-fact of the Company for
the purpose of carrying out the provisions of this Section 5 and taking any
action and executing any instruments that the Agent may deem necessary or
advisable to accomplish the purposes hereof, which appointment as
attorney-in-fact is irrevocable and coupled with an interest. Without limiting
the generality of the foregoing, so long as the Agent shall be entitled under
this Section 5 to make collections in respect of the Collateral, the Agent shall
have the right and power to receive, endorse and collect all checks made payable
to the order of the Company representing any dividend, payment or other
distribution in respect of the Collateral or any part thereof and to give full
discharge for the same.
5.11 PERFECTION. Prior to or concurrently with the execution and
delivery of this Agreement, the Company shall (i) file such financing statements
and other documents in such offices as the Agent may request to perfect the
security interests granted by Section 3 of this Agreement and (ii) deliver to
the Agent all certificates listed in Annex 1 hereto, accompanied by undated
stock powers duly endorsed in executed in blank to the extent any of such
certificates have not previously been so delivered to the Agent.
5.12 TERMINATION. When all Secured Obligations shall have been paid
in full and the Commitments of the Lenders under the Credit Agreement and all
Letter of Credit Liabilities shall have expired or been terminated, this
Agreement shall terminate, and the Agent shall forthwith cause to be assigned,
transferred and delivered, against receipt but without any recourse, warranty or
representation whatsoever, any remaining Collateral and money received in
respect thereof, to or on the order of the Company and to be released and
canceled all licenses and rights referred to in Section 5.04(b) hereof. The
Agent shall also execute and deliver to the Company upon such termination such
Uniform Commercial Code termination statements, certificates for terminating the
Liens on the Motor Vehicles and such other documentation as shall be reasonably
requested by the Company to effect the termination and release of the Liens on
the Collateral. The Liens granted to the Administrative Agent hereby shall also
be released in accordance with Sections 9.25 and 11.09 of the Credit Agreement.
5.13 FURTHER ASSURANCES. The Company agrees that, from time to time
upon the written request of the Agent, the Company will execute and deliver such
further documents and
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do such other acts and things as the Agent may reasonably request in order fully
to effect the purposes of this Agreement.
5.14 RELEASE OF MOTOR VEHICLES. So long as no Event of Default shall
have occurred and be continuing, upon the request of the Company, the Agent
shall execute and deliver to the Company such instruments as the Company shall
reasonably request to remove the notation of the Agent as lienholder on any
certificate -of title for any Motor Vehicle; PROVIDED that any such instruments
shall be delivered, and the release effective only upon receipt by the Agent of
a certificate from the Company stating that the Motor Vehicle the lien on which
is to be released is to be sold or has suffered a casualty loss (with title
thereto passing to the casualty insurance company (or its designee) therefor in
settlement of the claim for such loss) and any proceeds of such sale or casualty
loss to the extent required by the Credit Agreement being paid to the Agent
hereunder.
Section 6. MISCELLANEOUS.
6.01 NO WAIVER. No failure on the part of the Agent or any Lender to
exercise, and no course of dealing with respect to, and no delay in exercising,
any right, power or remedy hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise by the Agent or any Lender of any right,
power or remedy hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. The remedies herein are cumulative
and are not exclusive of any remedies provided by law.
6.02 NOTICES. All notices, requests, consents and demands hereunder
shall be in writing and telecopied or delivered to the intended recipient at its
"Address for Notices" specified pursuant to Section 12.02 of the Credit
Agreement and shall be deemed to have been given at the times specified in said
Section 12.02.
6.03 EXPENSES. The Company agrees to reimburse each of the Lenders
and the Agent for all reasonable costs and expenses of the Lenders and the Agent
(including, without limitation, the reasonable fees and expenses of legal
counsel) in connection with (i) any Default and any enforcement or collection
proceeding resulting therefrom, including, without limitation, all manner of
participation in or other involvement with (w) performance by the Agent of any
obligations of the Company in respect of the Collateral that the Company has
failed or refused to perform, (x) bankruptcy, insolvency, receivership,
foreclosure, winding up or liquidation proceedings, or any actual or attempted
sale, or any exchange, enforcement, collection, compromise or settlement in
respect of any of the Collateral, and for the care of the Collateral and
defending or asserting fights and claims of the Agent in respect thereof, by
litigation or otherwise, including expenses of insurance, (y) judicial or
regulatory proceedings and (z) workout, restructuring or other negotiations or
proceedings (whether or not the workout, restructuring or transaction
contemplated thereby is consummated) and (ii) the enforcement of this Section
6.03, and all such costs and expenses shall be Secured Obligations entitled to
the benefits of the collateral security provided pursuant to Section 3 hereof.
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6.04 AMENDMENTS, ETC. The terms of this Agreement may be waived,
altered or amended only by an instrument in writing duly executed by the Company
and the Agent (with the consent of the Lenders as specified in Section 11.09 of
the Credit Agreement). Any such amendment or waiver shall be binding upon the
Agent and each Lender each holder of any of the Secured Obligations and the
Company.
6.05 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the respective successors and assigns of the
Company, the Agent, the Lenders and each holder of any of the Secured
Obligations (PROVIDED, however, that the Company shall not assign or transfer
its rights hereunder without the prior written consent of the Agent).
6.06 CAPTIONS. The captions and section headings appearing herein
are included solely for convenience of reference and are not intended to affect
the interpretation of any provision of this Agreement.
6.07 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and either of the parties hereto may execute this Agreement by
signing any such counterpart.
6.08 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the law of the State of New York.
6.09 AGENTS AND ATTORNEYS-IN-FACT. The Agent may employ agents and
attorneys-in-fact in connection herewith and shall not be responsible for the
negligence or misconduct of any such agents or attorneys-in-fact selected by it
in good faith.
6.10 SEVERABILITY. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(i) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Agent and the
Lenders in order to carry out the intentions of the parties hereto as nearly as
may be possible and (ii) the invalidity or unenforceability of any provision
hereof in any jurisdiction shall not affect the validity or enforceability of
such provision in any other jurisdiction.
SECURITY AGREEMENT
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EXECUTION COPY
SUBSIDIARY GUARANTEE AND SECURITY AGREEMENT
SUBSIDIARY GUARANTEE AND SECURITY AGREEMENT dated as of April 3, 1998
among LAGASSE BROS., INC., a corporation duly organized and validly existing
under the laws of the State of Louisiana ("LAGASSE"), AZERTY INCORPORATED, a
corporation duly organized and validly existing under the laws of the State of
Delaware ("AZERTY"), POSITIVE ID WHOLESALE INC., a corporation duly organized
and validly existing under the laws of the State of Delaware ("POSITIVE"), AP
SUPPORT SERVICES INCORPORATED, a corporation duly organized and validly existing
under the laws of the State of Delaware ("AP SUPPORT", and together with
Lagasse, Azerty and Positive, the "SUBSIDIARY GUARANTORS"); and THE CHASE
MANHATTAN BANK, as administrative agent for the lenders party to the Credit
Agreement referred to below (in such capacity, together with its successors in
such capacity, the "ADMINISTRATIVE AGENT").
United Stationers Supply Co. (the "COMPANY"), United Stationers Inc.,
the parent corporation of the Company and a corporation duly organized and
validly existing under the laws of the State of Delaware (together with its
successors and assigns, the "PARENT GUARANTOR" and, together with the Company,
the "OBLIGORS"), certain lenders and the Administrative Agent are parties to the
Second Amended and Restated Credit Agreement dated as of April 3, 1998 (as
amended, restated, modified and supplemented and in effect from time to time,
the "CREDIT AGREEMENT"), providing, subject to the terms and conditions thereof,
for extensions of credit (by making of loans and issuing letters of credit) to
be made by said lenders to the Company in an aggregate principal amount not
exceeding on the date hereof $500,000,000.
Lagasse and the Administrative Agent are party to a Guarantee and
Security Agreement dated as of October 31, 1996 (as hereto amended, the
"EXISTING GUARANTEE AND SECURITY AGREEMENT").
To induce said lenders to enter into the Credit Agreement and to
extend credit thereunder, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Lagasse and the
Administrative Agent have agreed to amend and restate the Existing Guarantee and
Security Agreement and the other Subsidiary Guarantors have agreed to become
parties hereto and the Subsidiary Guarantors have agreed to guarantee jointly
and severally the Guaranteed Obligations (as hereinafter defined), and to pledge
and grant a security interest in the Collateral (as hereinafter defined) as
security for the Secured Obligations (as hereinafter defined). Accordingly, the
parties hereto agree as follows:
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Section 1. DEFINITIONS. Terms defined in the Credit Agreement are
used herein as defined therein. In addition, as used herein:
"ACCOUNTS" shall have the meaning ascribed thereto in Section 4(d)
hereof.
"COLLATERAL" shall have the meaning ascribed thereto in Section 4
hereof.
"COPYRIGHT COLLATERAL" shall mean all Copyrights, whether now owned or
hereafter acquired by any Subsidiary Guarantor, including each Copyright
identified in Annex 2 hereto.
"COPYRIGHTS" shall mean all copyrights, copyright registrations and
applications for copyright registrations, including, without limitation,
all renewals and extensions thereof, the right to recover for all past,
present and future infringements thereof, and all other rights of any kind
whatsoever accruing thereunder or pertaining thereto.
"DOCUMENTS" shall have the meaning ascribed thereto in Section 4(j)
hereof.
"EQUIPMENT" shall have the meaning ascribed thereto in Section 4(h)
hereof.
"FOREIGN SUBSIDIARY" shall mean any Subsidiary of any Subsidiary
Guarantor that is not organized or created under the laws of the United
States of America, any State thereof or the District of Columbia.
"GUARANTEED OBLIGATIONS" shall have the meaning ascribed thereto in
Section 3.01 hereof.
"INSTRUMENTS" shall have the meaning ascribed thereto in Section 4(e)
hereof.
"INTELLECTUAL PROPERTY" shall mean, collectively, all Copyright
Collateral, all Patent Collateral and all Trademark Collateral, together
with (a) all inventions, processes, production methods, proprietary
information, know-how and trade secrets; (b) all licenses or user or other
agreements granted to any Subsidiary Guarantor with respect to any of the
foregoing, in each case whether now or hereafter owned or used including,
without limitation, the licenses or other agreements with respect to the
Copyright Collateral, the Patent Collateral or the Trademark Collateral,
listed in Annex 5 hereto, except to the extent that a security interest
therein may not be granted without the consent of a licensor; (c) all
information, customer lists, identification of suppliers, data, plans,
blueprints, specifications, designs, drawings, recorded knowledge, surveys,
engineering reports, test reports, manuals, materials standards, processing
standards, performance standards, catalogs, computer and automatic
machinery software and programs; (d) all field repair data, sales data and
other information relating to sales or service of products now or hereafter
manufactured; (e) all accounting information and all media in which or on
which any information or knowledge or data or records may be recorded or
stored and all
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computer programs used for the compilation or printout of such information,
knowledge, records or data; (f) all licenses, consents, permits, variances,
certifications and approvals of governmental agencies now or hereafter held
by any Subsidiary Guarantor, except to the extent that a security interest
therein may not be granted without the consent of a licensor; and (g) all
causes of action, claims or warranties now or hereafter owned or acquired
by the Company in respect of any of the items listed above.
"INVENTORY" shall have the meaning ascribed thereto in Section 4(f)
hereof.
"ISSUERS" shall mean, collectively, the respective corporations
identified on Annex 1 hereto under the caption "ISSUER".
"MOTOR VEHICLES" shall mean motor vehicles, tractors, trailers and
other like Property, whether or not the title thereto is governed by a
certificate of title or ownership.
"PATENT COLLATERAL" shall mean all Patents, whether now owned or
hereafter acquired by any Subsidiary Guarantor, including each Patent
identified in Annex 3 hereto.
"PATENTS" shall mean all patents and patent applications, including,
without limitation, the inventions and improvements described and claimed
therein together with the reissues, divisions, continuations, renewals,
extensions and continuations-in-part thereof, all income, royalties,
damages and payments now or hereafter due and/or payable under and with
respect thereto, including, without limitation, damages and payments for
past or future infringements thereof, the right to sue for past, present
and future infringements thereof, and all rights corresponding thereto
throughout the world.
"PLEDGED STOCK" shall have the meaning ascribed thereto in
Section 4(a) hereof.
"SECURED OBLIGATIONS" shall mean, collectively, (a) the Guaranteed
Obligations, which include the principal of and interest on the Loans made
by the Lenders to the Company and all other amounts from time to time owing
to the Lenders or the Administrative Agent by the Company under the Basic
Documents including, without limitation, all Reimbursement Obligations and
interest thereon, (b) obligations of the Company to any Lender under any
Interest Rate Protection Agreement required under the Existing Credit
Agreement and (c) all obligations of any Subsidiary Guarantor hereunder
and under the other Basic Documents (including, without limitation, in
respect of the guarantee under Section 3 hereof).
"STOCK COLLATERAL" shall mean, collectively, the Collateral described
in clauses (a) through (c) of Section 4 hereof and the proceeds of and to
any such Property and, to the extent related to any such Property or such
proceeds, all books, correspondence, credit files, records, invoices and
other papers.
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"SUBSIDIARY GUARANTOR COLLATERAL ACCOUNT" shall have the meaning
ascribed thereto in Section 5.01 hereof.
"TRADEMARK COLLATERAL" shall mean all Trademarks, whether now owned or
hereafter acquired by any Subsidiary Guarantor, including each Trademark
identified in Annex 4 hereto. Notwithstanding the foregoing, the Trademark
Collateral does not and shall not include any Trademark that would be
rendered invalid, abandoned, void or unenforceable by reason of its being
included as part of the Trademark Collateral.
"TRADEMARKS" shall mean all trade names, trademarks and service marks,
logos, trademark and service mark registrations, and applications for
trademark and service mark registrations, including, without limitation,
all renewals of trademark and service mark registrations, all rights
corresponding thereto throughout the world, the right to recover for all
past, present and future infringements thereof, all other rights of any
kind whatsoever accruing thereunder or pertaining thereto, together, in
each case, with the product lines and goodwill of the business connected
with the use of, and symbolized by, each such trade name, trademark and
service mark.
"UNIFORM COMMERCIAL CODE" shall mean the Uniform Commercial Code as in
effect from time to time in the State of New York.
Section 2. REPRESENTATIONS AND WARRANTIES. Each Subsidiary Guarantor
represents and warrants to the Lenders and the Administrative Agent that:
2.01 NO BREACH. None of the execution and delivery of this
Agreement, the consummation of the transactions herein contemplated or
compliance with the terms and provisions hereof will conflict with or result in
a breach of, or require any consent under, any applicable law or regulation, or
an order, writ, injunction or decree of any court or governmental authority or
agency, or any agreement or instrument to which such Subsidiary Guarantor or any
of its Subsidiaries is a party or by which any of them is bound or to which any
of them is subject, or constitute a default under any such agreement or
instrument, or (except for the Liens created hereunder) result in the creation
or imposition of any Lien upon any Property of such Subsidiary Guarantor or any
such Subsidiary pursuant to the terms of any such agreement or instrument.
2.02 ACTION. This Agreement has been duly and validly executed and
delivered by such Subsidiary Guarantor and constitutes its legal, valid and
binding obligation, enforceable in accordance with its terms.
2.03 APPROVALS. No authorizations, approvals or consents of, and no
filings or registrations with, any governmental or regulatory authority or
agency, or any securities exchange are necessary for the execution, delivery or
performance by the Subsidiary of this Agreement or for the validity or
enforceability hereof.
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2.04 COLLATERAL.
(a) Such Subsidiary Guarantor is (or, at the time that such
Subsidiary Guarantor acquires any interest therein, will be) the sole
beneficial owner of the Collateral and no Lien exists or will exist upon
the Collateral at any time (and no right or option to acquire the same
exists in favor of any other Person), except for Liens permitted under
Section 9.06 of the Credit Agreement and except for the pledge and security
interest in favor of the Administrative Agent for the benefit of the
Lenders created or provided for herein, which pledge and security interest
will (subject to Section 6.11 hereof) constitute a perfected pledge and
security interest in and to all of the Collateral (other than Intellectual
Property registered or otherwise located outside of the United States of
America), subject to no equal or prior security interest or pledge except
as permitted under Section 9.06 of the Credit Agreement.
(b) The Pledged Stock represented by the certificates identified in
Annex 1 hereto is, and all other Pledged Stock in which such Subsidiary
Guarantor shall hereafter grant a security interest pursuant to Section 3
hereof will be, duly authorized, validly existing, fully paid and
non-assessable and none of such Pledged Stock is or will be subject to any
contractual restriction, or any restriction under the charter or by-laws of
the relevant issuer thereof, upon the transfer of such Pledged Stock
(except for any such restriction contained herein or in the Credit
Agreement).
(c) The Pledged Stock represented by the certificates identified in
Annex 1 hereto constitutes all of the issued and outstanding shares of
capital stock of each class of each issuer thereof on the date hereof (or,
in the case of any Foreign Subsidiary, not less than 65% of the issued and
outstanding shares of capital stock of each class of such Foreign
Subsidiary on the date hereof), and said Annex 1 correctly identifies, as
at the date hereof, the respective class and par value of the shares
comprising such Pledged Stock, the respective number of shares represented
by each such certificate, and the respective beneficial and registered
owner of such shares.
(d) Annexes 2, 3 and 4 hereto, respectively, set forth a complete and
correct list of all Copyrights, Patents and Trademarks owned by such
Subsidiary Guarantor on the date hereof; except pursuant to licenses and
other user agreements entered into by such Subsidiary Guarantor in the
ordinary course of business, that are listed in Annex 5 hereto, such
Subsidiary Guarantor owns and possesses the right to use, and has done
nothing to authorize or enable any other Person to use, any Copyright,
Patent or Trademark listed in said Annexes 2, 3 and 4, and all
registrations listed in said Annexes 2, 3 and 4 are valid and in full force
and effect; except as may be set forth in said Annex 5, such Subsidiary
Guarantor owns and possesses the right to use all Copyrights, Patents and
Trademarks.
(e) Annex 5 hereto sets forth a complete and correct list of all
licenses and other user agreements included in the Intellectual Property on
the date hereof.
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(f) To such Subsidiary Guarantor's knowledge, (i) except as set forth
in Annex 5 hereto, there is no violation by others of any right of such
Subsidiary Guarantor with respect to any Copyright, Patent or Trademark
listed in Annexes 2, 3 and 4 hereto, respectively, and (ii) such Subsidiary
Guarantor is not infringing in any material respect upon any Copyright,
Patent or Trademark of any other Person; and no proceedings which if
adversely determined could reasonably be expected to have a Material
Adverse Effect have been instituted or are pending against such Subsidiary
Guarantor or, to such Subsidiary Guarantor's knowledge, threatened, and no
claim against such Subsidiary Guarantor has been received by such
Subsidiary Guarantor, alleging any such violation, except as may be set
forth in said Annex 5.
(g) Such Subsidiary Guarantor does not own any Trademarks registered
in the United States of America to which the last sentence of the
definition of Trademark Collateral applies.
(h) Any goods now or hereafter produced by the Subsidiary Guarantor
or any of its Subsidiaries included in the Collateral have been and will be
produced in compliance with the requirements of the Fair Labor Standards
Act, as amended.
Section 3. THE GUARANTEE.
3.01 THE GUARANTEE. The Subsidiary Guarantors hereby, jointly and
severally, guarantee to each Lender and the Administrative Agent and their
respective successors and assigns the prompt payment in full when due (whether
at stated maturity, by acceleration or otherwise) of the principal of and
interest on the Loans made by the Lenders to the Company and all other amounts
from time to time owing to the Lenders or the Administrative Agent by the
Company under the Credit Agreement and by the Company under any of the other
Basic Documents, and all Reimbursement Obligations and interest thereon, in each
case strictly in accordance with the terms thereof (such obligations being
herein collectively called the "GUARANTEED OBLIGATIONS"). The Subsidiary
Guarantor hereby further agrees that if the Company shall fail to pay in full
when due (whether at stated maturity, by acceleration or otherwise) any of the
Guaranteed Obligations, the Subsidiary Guarantor will promptly pay the same,
without any demand or notice whatsoever, and that in the case of any extension
of time of payment or renewal of any of the Guaranteed Obligations, the same
will be promptly paid in full when due (whether at extended maturity, by
acceleration or otherwise) in accordance with the terms of such extension or
renewal.
3.02 OBLIGATIONS UNCONDITIONAL. The obligations of the Subsidiary
Guarantors under Section 3.01 hereof are joint and several, absolute and
unconditional irrespective of the value, genuineness, validity, regularity or
enforceability of the obligations of the Company under the Credit Agreement or
any other agreement or instrument referred to herein or therein, or any
substitution, release or exchange of any other guarantee of or security for any
of the Guaranteed Obligations, and, to the fullest extent permitted by
applicable law, irrespective of any other circumstance whatsoever that might
otherwise constitute a legal or equitable discharge or defense
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of a surety or guarantor (other than the payment of the Guaranteed Obligations),
it being the intent of this Section 3.02 that the obligations of the Subsidiary
Guarantor hereunder shall be joint and several, absolute and unconditional under
any and all circumstances. Without limiting the generality of the foregoing, it
is agreed that the occurrence of any one or more of the following shall not
alter or impair the liability of the Subsidiary Guarantor hereunder which shall
remain joint and several, absolute and unconditional as described above:
(i) at any time or from time to time, without notice to any
Subsidiary Guarantor, the time for any performance of or compliance with
any of the Guaranteed Obligations shall be extended, or such performance or
compliance shall be waived;
(ii) any of the acts mentioned in any of the provisions of the Credit
Agreement or any other agreement or instrument referred to herein or
therein shall be done or omitted;
(iii) the maturity of any of the Guaranteed Obligations shall be
accelerated, or any of the Guaranteed Obligations shall be modified,
supplemented or amended in any respect, or any right under the Credit
Agreement or any other agreement or instrument referred to herein or
therein shall be waived or any other guarantee of any of the Guaranteed
Obligations or any security therefor shall be released or exchanged in
whole or in part or otherwise dealt with; or
(iv) any lien or security interest granted to, or in favor of, the
Administrative Agent or any Lender or Lenders as security for any of the
Guaranteed Obligations shall fail to be perfected.
Each Subsidiary Guarantor hereby expressly waives diligence, presentment, demand
of payment, protest and all notices whatsoever, and any requirement that the
Administrative Agent or any Lender exhaust any right, power or remedy or proceed
against the Company under the Credit Agreement or any other agreement or
instrument referred to herein or therein, or against any other Person under any
other guarantee of, or security for, any of the Guaranteed Obligations.
3.03 REINSTATEMENT. The obligations of each Subsidiary Guarantor
under this Section 3 shall be automatically reinstated if and to the extent that
for any reason any payment by or on behalf of any Obligor or any other
Subsidiary Guarantor in respect of the Guaranteed Obligations is rescinded or
must be otherwise restored by any holder of any of the Guaranteed Obligations,
whether as a result of any proceedings in bankruptcy or reorganization or
otherwise, and the Subsidiary Guarantor agrees that it will jointly and
severally indemnify the Administrative Agent and each Lender on demand for all
reasonable costs and expenses (including, without limitation, fees of counsel)
incurred by the Administrative Agent or such Lender in connection with such
rescission or restoration, including any such costs and expenses incurred in
defending against any claim alleging that such payment constituted a preference,
fraudulent transfer or similar payment under any bankruptcy, insolvency or
similar law.
3.04 SUBROGATION. Each Subsidiary Guarantor hereby waives, until
payment in
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full of the Guaranteed Obligations, all rights of subrogation or contribution,
whether arising by contract or operation of law (including, without limitation,
any such right arising under the Federal Bankruptcy Code) or otherwise by reason
of any payment by it pursuant to the provisions of this Section 3.
3.05 REMEDIES. Each of the Subsidiary Guarantors, jointly and
severally, agrees that, as between such Subsidiary Guarantors and the Lenders,
the obligations of the Company under the Credit Agreement may be declared to be
forthwith due and payable as provided in Section 10 of the Credit Agreement (and
shall be deemed to have become automatically due and payable in the
circumstances provided in said Section 10) for purposes of Section 3.01 hereof
notwithstanding any stay, injunction or other prohibition preventing such
declaration (or such obligations from becoming automatically due and payable) as
against the Company and that, in the event of such declaration (or such
obligations being deemed to have become automatically due and payable), such
obligations (whether or not due and payable by the Company) shall forthwith
become due and payable by such Subsidiary Guarantor for purposes of said
Section 3.01.
3.06 CONTINUING GUARANTEE. The guarantee in this Section 3 is a
continuing guarantee, and shall apply to all Guaranteed Obligations whenever
arising.
3.07 RIGHTS OF CONTRIBUTION. The Subsidiary Guarantors hereby agree,
as between themselves, that if any Subsidiary Guarantor shall become an
Excess Funding Guarantor (as defined below) by reason of the payment by such
Subsidiary Guarantor of any Guaranteed Obligations, each other Subsidiary
Guarantor shall, on demand of such excess Funding Guarantor (but subject to
the next sentence), pay to such Excess Funding Guarantor an amount equal to
such Subsidiary Guarantor's Pro Rata Share (as defined below and determined,
for this purpose, without reference to the Properties, debts and liabilities
of such Excess Funding Guarantor) of the Excess Payment (as defined below) in
respect of such Guaranteed Obligations. The payment obligation of a
Subsidiary Guarantor to any Excess Funding Guarantor under this Section 3.07
shall be subordinate and subject in right of payment to the prior payment in
full of the obligations of such Subsidiary Guarantor under the other
provisions of this Section 3 and such Excess Funding Guarantor shall not
exercise any right or remedy with respect to such excess until payment and
satisfaction in full of all of such obligations.
For purposes of this Section 3.07, (i) EXCESS FUNDING GUARANTOR shall
mean, in respect of any Guaranteed Obligations, a Subsidiary Guarantor that has
paid an amount in excess of its Pro Rata Share of such Guaranteed Obligations,
(ii) EXCESS PAYMENT shall mean, in respect of any Guaranteed Obligations, the
amount paid by an Excess Funding Guarantor in excess of its Pro Rata Share of
such Guaranteed Obligations and (iii) PRO RATA SHARE shall mean, for any
Subsidiary Guarantor, the ratio (expressed as a percentage) of (x) the amount by
which the aggregate present fair saleable value of all Properties of such
Subsidiary Guarantor (excluding any shares of stock of any other Subsidiary
Guarantor) exceeds the amount of all the debts and liabilities of such
Subsidiary Guarantor (including contingent, subordinated, unmatured and
unliquidated liabilities, but excluding the obligations of such Subsidiary
Guarantor hereunder
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and any obligations of any other Subsidiary Guarantor that have been
guaranteed by such Subsidiary Guarantor) to (y) the amount by which the
aggregate fair saleable value of all Properties of all of the Subsidiary
Guarantors exceeds the amount of all the debts and liabilities (including
contingent, subordinated, unmatured and unliquidated liabilities, but
excluding the obligations of the Subsidiary Guarantors hereunder and under
the other loan documents) of all of the Subsidiary Guarantors, determined (A)
with respect to any Subsidiary Guarantor that is a party hereto on the
Closing Date, as of the Closing Date, and (B) with respect to any other
Subsidiary Guarantor, as of the date such Subsidiary Guarantor becomes a
Subsidiary Guarantor hereunder.
3.08 GENERAL LIMITATION ON GUARANTEE OBLIGATIONS. In any action or
proceeding involving any state corporate law, or any state or Federal
bankruptcy, insolvency, reorganization or other law affecting the rights of
creditors generally, if the obligations of any Subsidiary Guarantor under
Section 3.01 hereof would otherwise, taking into account the provisions of
Section 3.07 hereof, be held or determined to be void, invalid or unenforceable,
or subordinated to the claims of any other creditors, on account of the amount
of its liability under said Section 3.01, then, notwithstanding any other
provision hereof to the contrary, the amount of such liability shall, without
any further action by such Subsidiary Guarantor, any Lender, the Administrative
Agent or any other Person, be automatically limited and reduced to the highest
amount that is valid and enforceable and not subordinated to the claims of other
creditors as determined in such action or proceeding.
Section 4. COLLATERAL. As collateral security for the prompt payment
in full when due (whether at stated maturity, by acceleration or otherwise) of
the Secured Obligations, each Subsidiary Guarantor hereby pledges and grants to
the Administrative Agent, for the benefit of the Lenders as hereinafter
provided, a security interest in all of such Subsidiary Guarantor's right, title
and interest in the following Property, whether now owned by such Subsidiary
Guarantor or hereafter acquired and whether now existing or hereafter coming
into existence (all being collectively referred to herein as "COLLATERAL"):
(a) the shares of common/preferred stock of the Issuers represented
by the certificates identified in Annex 1 hereto and all other shares of
capital stock of whatever class of the Issuers, now or hereafter owned by
such Subsidiary Guarantor, in each case together with the certificates
evidencing the same (collectively, the "PLEDGED STOCK");
(b) all shares, securities, moneys or Property representing a
dividend on any of the Pledged Stock, or representing a distribution or
return of capital upon or in respect of the Pledged Stock, or resulting
from a split-up, revision, reclassification or other like change of the
Pledged Stock or otherwise received in exchange therefor, and any
subscription warrants, rights or options issued to the holders of, or
otherwise in respect of, the Pledged Stock;
(c) without affecting the obligations of such Subsidiary Guarantor
under any provision prohibiting such action hereunder or under the Credit
Agreement, in the event
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of any consolidation or merger in which an Issuer is not the
surviving corporation, all shares of each class of the capital stock
of the successor corporation (unless such successor corporation is
such Subsidiary Guarantor itself) formed by or resulting from such
consolidation or merger (the Pledged Stock, together with all other
certificates, shares, securities, properties or moneys as may from
time to time be pledged hereunder pursuant to clause (a) or (b) above
and this clause (c) being herein collectively called the "STOCK
COLLATERAL");
(d) all accounts and general intangibles (each as defined in the
Uniform Commercial Code) of such Subsidiary Guarantor constituting any
right to the payment of money, including (but not limited to) all moneys
due and to become due to such Subsidiary Guarantor in respect of any loans
or advances or for Inventory or Equipment or other goods sold or leased or
for services rendered, all moneys due and to become due to such Subsidiary
Guarantor under any guarantee (including a letter of credit) of the
purchase price of Inventory or Equipment sold by such Subsidiary Guarantor
and all tax refunds (such accounts, general intangibles and moneys due and
to become due being herein called collectively "ACCOUNTS");
(e) all instruments, chattel paper or letters of credit (each as
defined in the Uniform Commercial Code) of such Subsidiary Guarantor
evidencing, representing, arising from or existing in respect of, relating
to, securing or otherwise supporting the payment of, any of the Accounts,
including (but not limited to) promissory notes, drafts, bills of exchange
and trade acceptances (herein collectively called "INSTRUMENTS");
(f) all inventory (as defined in the Uniform Commercial Code) of such
Subsidiary Guarantor, all goods obtained by such Subsidiary Guarantor in
exchange for such inventory, and any products made or processed from such
inventory including all substances, if any, commingled therewith or added
thereto (herein collectively called "INVENTORY");
(g) all Intellectual Property and all other accounts or general
intangibles not constituting Intellectual Property or Accounts;
(h) all equipment (as defined in the Uniform Commercial Code) of such
Subsidiary Guarantor, including all Motor Vehicles (herein collectively
called "EQUIPMENT");
(i) each contract and other agreement of such Subsidiary Guarantor
relating to the sale or other disposition of Inventory or Equipment;
(j) all documents of title (as defined in the Uniform Commercial
Code) or other receipts of such Subsidiary Guarantor covering, evidencing
or representing Inventory or Equipment (herein collectively called
"DOCUMENTS");
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(k) all rights, claims and benefits of such Subsidiary Guarantor
against any Person arising out of, relating to or in connection with
Inventory or Equipment purchased by such Subsidiary Guarantor, including,
without limitation, any such rights, claims or benefits against any Person
storing or transporting such Inventory or Equipment;
(l) the balance from time to time in the Subsidiary Guarantor
Collateral Account and all Investment Property (as defined in Section 9-115
of the Uniform Commercial Code) held therein; and
(m) all other tangible and intangible personal Property and fixtures
of such Subsidiary Guarantor, including, without limitation, all proceeds,
products, offspring, accessions, rents, profits, income, benefits,
substitutions and replacements of and to any of the Property of such
Subsidiary Guarantor described in the preceding clauses of this Section 4
(including, without limitation, any proceeds of insurance thereon and all
causes of action, claims and warranties now or hereafter held by such
Subsidiary Guarantor in respect of any of the items listed above) and, to
the extent related to any Property described in said clauses or such
proceeds, products and accessions, all books, correspondence, credit files,
records, invoices and other papers, including without limitation all tapes,
cards, computer runs and other papers and documents in the possession or
under the control of such Subsidiary Guarantor or any computer bureau or
service company from time to time acting for such Subsidiary Guarantor.
PROVIDED that Collateral shall not include (i) shares of capital stock of any
class issued by any Foreign Subsidiary to the extent that the percentage of
issued and outstanding shares of capital stock of such class subject to the Lien
of this Agreement would constitute more than 65% of the issued and outstanding
shares of capital stock of such class, (ii) any tangible personal Property
located outside the United States of America and (iii) any Receivables and
Related Assets transferred in connection with the Receivables Financing.
Section 5. CASH PROCEEDS OF COLLATERAL.
5.01 SUBSIDIARY GUARANTOR COLLATERAL ACCOUNT. The Administrative
Agent will cause to be established with Chase a cash collateral account (the
"SUBSIDIARY GUARANTOR COLLATERAL ACCOUNT"), which may be a "securities account"
(as defined in Section 8-501 or the Uniform Commercial Code) in the name and
under the sole dominion and control of the Administrative Agent (or, in the case
of a securities account, in respect of which the Administrative Agent is the
"entitlement holder" (as defined in Section 8-102(a)(7) of the Uniform
Commercial Code)), into which there shall be deposited from time to time the
cash proceeds of any of the Collateral (including proceeds of insurance thereon)
and into which any Subsidiary Guarantor may from time to time deposit any
additional amounts that it wishes to pledge to the Administrative Agent for the
benefit of the Lenders as additional collateral security hereunder or that, as
provided in Sections 2.10 and 10 of the Credit Agreement, the Company is
required to pledge as additional collateral security hereunder. The balance
from time to time in the Subsidiary Guarantor Collateral Account shall
constitute part of the Collateral hereunder and shall not constitute payment of
the Secured Obligations until applied as hereinafter provided. As promptly as
possible after any amount is deposited into the Subsidiary Guarantor Collateral
SUBSIDIARY GUARANTEE AND SECURITY AGREEMENT
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Account pursuant to the second or third sentence of Section 5.02 hereof, the
Administrative Agent shall remit the balance of such amount (if any) to the
Subsidiary Guarantor's account with Chase. However, the Administrative Agent
may (and, if instructed by the Lenders of the Credit Agreement shall) at any
time in its (or their) discretion apply or cause to be applied the balance from
time to time standing to the credit of the Subsidiary Guarantor Collateral
Account to the repayment of the principal of the Revolving Credit Loans
outstanding, to accrued interest on the principal so repaid, and to the payment
of any commitment fees with respect to the Revolving Credit Commitments, in each
case the Credit Agreement and to the extent of the Subsidiary Guarantors'
obligations hereunder. Notwithstanding the above, at any time following the
occurrence and during the continuance of an Event of Default, the Administrative
Agent may (and, if instructed by the Lenders as specified in Section 11.03 of
the Credit Agreement, shall) in its (or their) discretion apply or cause to be
applied (subject to collection) the balance from time to time standing to the
credit of the Subsidiary Guarantor Collateral Account to the payment of the
Secured Obligations in the manner specified in Section 6.09 hereof. The balance
from time to time in the Subsidiary Guarantor Collateral Account shall be
subject to withdrawal only as provided herein. [Any amount credited to the
Lagasse Collateral Account under (and as defined in) the Existing Guarantee and
Security Agreement shall be pledged hereunder by Lagasse to the Administrative
Agent and shall be forthwith deposited into the Subsidiary Guarantor Collateral
Account by the Agent under (and as defined in) the Existing Guarantee and
Security Agreement.](1)
5.02 PROCEEDS OF ACCOUNTS. At any time after the occurrence and
during the continuance of an Event of Default, each Subsidiary Guarantor shall,
upon the request of the Administrative Agent, instruct all account debtors and
other Persons obligated in respect of all Accounts to make all payments in
respect of the Accounts either (a) directly to the Administrative Agent (by
instructing that such payments be remitted to a post office box which shall be
in the name and under the control of the control of the Administrative Agent) or
(b) to one or more other banks in the United States of America (by instructing
that such payments be remitted to a post office box which shall be in the name
and under the control of such other bank(s)) under arrangements, in form and
substance satisfactory to the Administrative Agent pursuant to which such
Subsidiary Guarantor shall have irrevocably instructed such other bank (and such
other bank shall have agreed) to remit all proceeds of such payments directly to
the Administrative Agent for deposit into the Subsidiary Guarantor Collateral
Account. All payments made to the Administrative Agent, as provided in the
preceding sentence, shall be immediately deposited in the Subsidiary Guarantor
Collateral Account. In addition to the foregoing, each Subsidiary Guarantor
agrees that at any time after the occurrence and during the continuance of an
Event of Default, if the proceeds of any Collateral hereunder (including the
payments made in respect of Accounts) shall be received by it, such Subsidiary
Guarantor shall as promptly as possible deposit such proceeds into the
Subsidiary Guarantor Collateral Account. Until so deposited, all such proceeds
shall be held in trust by each Subsidiary Guarantor for and as the Property of
the Administrative Agent and shall not be commingled with any other funds or
Property of each Subsidiary Guarantor.
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(1) Are there currently any amounts in the Lagasse Collateral Account?
SUBSIDIARY GUARANTEE AND SECURITY AGREEMENT
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5.03 INVESTMENT OF BALANCE IN SUBSIDIARY GUARANTOR COLLATERAL
ACCOUNT. The cash balance standing to the credit of the Subsidiary Guarantor
Collateral Account shall be invested from time to time in such Permitted
Investments as the Subsidiary Guarantor (or, after the occurrence and during the
continuance of an Event of Default, the Administrative Agent) shall determine,
which Permitted Investments shall be held in the name and be under the control
of the Administrative Agent (and, if the Subsidiary Guarantor Collateral Account
is a securities account, credited to the Subsidiary Guarantor Collateral
Account), PROVIDED that (i) at any time after the occurrence and during the
continuance of an Event of Default, the Administrative Agent may (and, if
instructed by the Lenders as specified in Section 11.03 of the Credit Agreement,
shall) in its (or their) discretion at any time and from time to time elect to
liquidate any such Permitted Investments and to apply or cause to be applied the
proceeds thereof to the payment of the Secured Obligations in the manner
specified in Section 6.09 hereof and (ii) if requested by any Subsidiary
Guarantor, such Permitted Investments may be held in the name and under the
control of one or more of the Lenders (and in that connection each Lender,
pursuant to Section 11.10 of the Credit Agreement) has agreed that such
Permitted Investments shall be held by such Lender as a collateral sub-agent for
the Administrative Agent hereunder).
Section 6. FURTHER ASSURANCES; REMEDIES. In furtherance of the grant
of the pledge and security interest pursuant to Section 4 hereof, each
Subsidiary Guarantor hereby, jointly and severally, agrees with each Lender and
the Administrative Agent as follows:
6.01 DELIVERY AND OTHER PERFECTION. Each Subsidiary Guarantor shall:
(a) if any of the shares, securities, moneys or Property required to
be pledged by such Subsidiary Guarantor under clauses (a), (b) and (c) of
Section 4 hereof are received by such Subsidiary Guarantor, forthwith
either (x) transfer and deliver to the Administrative Agent such shares or
securities so received by such Subsidiary Guarantor (together with the
certificates for any such shares and securities duly endorsed in blank or
accompanied by undated stock powers duly executed in blank), all of which
thereafter shall be held by the Administrative Agent, pursuant to the terms
of this Agreement, as part of the Collateral or (y) take such other action
as the Administrative Agent shall deem necessary or appropriate to duly
record the Lien created hereunder in such shares, securities, moneys or
Property in said clauses (a), (b) and (c);
(b) deliver and pledge to the Administrative Agent any and all
Instruments, endorsed and/or accompanied by such instruments of assignment
and transfer in such form and substance as the Administrative Agent may
reasonably request; PROVIDED that so long as no Default shall have occurred
and be continuing, such Subsidiary Guarantor may retain for collection in
the ordinary course any Instruments received by such Subsidiary Guarantor
in the ordinary course of business and the Administrative Agent shall,
promptly upon request of the Subsidiary Guarantor, make appropriate
arrangements for making any Instrument pledged by such Subsidiary Guarantor
available to such Subsidiary Guarantor for purposes of presentation,
collection or renewal (any such arrangement to be effected, to the extent
deemed appropriate by the Administrative
SUBSIDIARY GUARANTEE AND SECURITY AGREEMENT
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Agent, against trust receipt or like document);
(c) give, execute, deliver, file and/or record any financing
statement, notice, instrument, document, agreement or other papers that may
be necessary or desirable (in the judgment of the Administrative Agent) to
create, preserve, perfect or validate the security interest granted
pursuant hereto or to enable the Administrative Agent to exercise and
enforce its rights hereunder with respect to such pledge and security
interest, including, without limitation, after the occurrence of an Event
of Default, causing any or all of the Stock Collateral to be transferred of
record into the name of the Administrative Agent or its nominee (and the
Administrative Agent agrees that if any Stock Collateral is transferred
into its name or the name of its nominee, the Administrative Agent will
thereafter promptly give to such Subsidiary Guarantor copies of any notices
and communications received by it with respect to the Stock Collateral),
PROVIDED that notices to account debtors in respect of any Accounts or
Instruments shall be subject to the provisions of clause (i) below;
(d) without limiting the obligations of such Subsidiary Guarantor
under Section 6.04(c) hereof, upon the acquisition after the date hereof by
such Subsidiary Guarantor of any Equipment covered by a certificate of
title or ownership, cause the Administrative Agent to be listed as the
lienholder on such certificate of title and within 120 days of the
acquisition thereof deliver evidence of the same to the Administrative
Agent;
(e) keep full and accurate books and records relating to the
Collateral, and stamp or otherwise mark such books and records in such
manner as the Administrative Agent may reasonably require in order to
reflect the security interests granted by this Agreement;
(f) furnish to the Administrative Agent from time to time (but,
unless a Default shall have occurred and be continuing, no more frequently
than quarterly) statements and schedules further identifying and describing
the Copyright Collateral, the Patent Collateral and the Trademark
Collateral, respectively, and such other reports in connection with the
Copyright Collateral, the Patent Collateral and the Trademark Collateral,
as the Administrative Agent may reasonably request, all in reasonable
detail;
(g) promptly upon request of the Administrative Agent, following
receipt by the Administrative Agent of any statements, schedules or reports
pursuant to clause (f) above, modify this Agreement by amending
Annexes 2, 3 and/or 4 hereto, as the case may be, to include any Copyright,
Patent or Trademark that becomes part of the Collateral under this
Agreement;
(h) permit representatives of the Administrative Agent, upon
reasonable prior notice, at any time during normal business hours to
inspect and make abstracts from its books and records pertaining to the
Collateral, and permit representatives of the
SUBSIDIARY GUARANTEE AND SECURITY AGREEMENT
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Administrative Agent to be present at such Subsidiary Guarantor's place of
business to receive copies of all communications and remittances relating
to the Collateral, and forward copies of any notices or communications
received by such Subsidiary Guarantor with respect to the Collateral, all
in such manner as the Administrative Agent may require; and
(i) upon the occurrence and during the continuance of any Default,
upon request of the Administrative Agent, promptly notify (and such
Subsidiary Guarantor hereby authorizes the Administrative Agent so to
notify) each account debtor in respect of any Accounts or Instruments that
such Collateral has been assigned to the Administrative Agent hereunder,
and that any payments due or to become due in respect of such Collateral
are to be made directly to the Administrative Agent.
6.02 OTHER FINANCING STATEMENTS AND LIENS. Except for financing
statements securing Liens expressly permitted by Section 9.06 of the Credit
Agreement and protective filings filed against the Company in respect of
equipment, furniture or fixtures leased to or Property consigned with any
Subsidiary Guarantor, no Subsidiary Guarantor shall file or suffer to be on
file, or authorize or permit to be filed or to be on file, in any jurisdiction,
any financing statement or like instrument with respect to the Collateral in
which the Administrative Agent is not named as the sole secured party for the
benefit of the Lenders.
6.03 PRESERVATION OF RIGHTS. The Administrative Agent shall not be
required to take steps necessary to preserve any rights against prior parties to
any of the Collateral.
6.04 SPECIAL PROVISIONS RELATING TO CERTAIN COLLATERAL.
(a) STOCK COLLATERAL.
(1) Each Subsidiary Guarantor will cause the Stock Collateral to
constitute at all times 100% (or, with respect to any issuer that is a Foreign
Subsidiary, at least 65%) of the total number of shares of each class of capital
stock of each Issuer then outstanding.
(2) Unless an Event of Default shall have occurred and be continuing,
and the Administrative Agent shall have given notice to the Company of its
intention to exercise rights arising hereunder or under any other Basic Document
with respect to the Stock Collateral, each Subsidiary Guarantor shall have the
right to exercise all voting, consensual and other powers of ownership
pertaining to the Stock Collateral for all purposes not inconsistent with the
terms of this Agreement, the Credit Agreement or any other instrument or
agreement referred to herein or therein, PROVIDED that such Subsidiary Guarantor
agrees that it will not vote the Stock Collateral in any manner that is
inconsistent with the terms of this Agreement, the Credit Agreement or any such
other instrument or agreement; and the Administrative Agent shall execute and
deliver to such Subsidiary Guarantor or cause to be executed and delivered to
such Subsidiary Guarantor all such proxies, powers of attorney, dividend and
other orders, and all such instruments, without recourse, as such Subsidiary
Guarantor may reasonably request for the purpose of enabling such
SUBSIDIARY GUARANTEE AND SECURITY AGREEMENT
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Subsidiary Guarantor to exercise the rights and powers that it is entitled to
exercise pursuant to this Section 6.04(a)(2).
(3) Unless and until an Event of Default has occurred and is
continuing, each Subsidiary Guarantor shall be entitled to receive and retain
any dividends on the Stock Collateral paid in cash out of earned surplus.
(4) If any Event of Default shall have occurred, then so long as such
Event of Default shall continue, and whether or not the Administrative Agent or
any Lender exercises any available right to declare any Secured Obligation due
and payable or seeks or pursues any other relief or remedy available to it under
applicable law or under this Agreement, the Credit Agreement or any other
agreement relating to such Secured Obligation, all dividends and other
distributions on the Stock Collateral shall be paid directly to the
Administrative Agent and retained by it as part of the Stock Collateral, subject
to the terms of this Agreement, and, if the Administrative Agent shall so
request in writing, each Subsidiary Guarantor agrees to execute and deliver to
the Administrative Agent appropriate additional dividend, distribution and other
orders and documents to that end, PROVIDED that if such Event of Default is
cured, any such dividend or distribution theretofore paid to the Administrative
Agent shall, upon request of such Subsidiary Guarantor (except to the extent
theretofore applied to the Secured Obligations), be returned by the
Administrative Agent to such Subsidiary Guarantor.
(b) INTELLECTUAL PROPERTY.
(1) For the purpose of enabling the Administrative Agent to exercise
rights and remedies under Section 6.05 hereof at such time as the Administrative
Agent shall be lawfully entitled to exercise such rights and remedies, and for
no other purpose, each Subsidiary Guarantor hereby grants to the Administrative
Agent, to the extent assignable, an irrevocable, non-exclusive license
(exercisable without payment of royalty or other compensation to such Subsidiary
Guarantor) to use, assign, license or sublicense any of the Intellectual
Property now owned or hereafter acquired by such Subsidiary Guarantor, wherever
the same may be located, including in such license reasonable access to all
media in which any of the licensed items may be recorded or stored and to all
computer programs used for the compilation or printout thereof.
(2) Notwithstanding anything contained herein to the contrary, but
subject to the provisions of Section 9.05 of the Credit Agreement that limit the
right of any Subsidiary Guarantor to dispose of its Property, so long as no
Event of Default shall have occurred and be continuing, each Subsidiary
Guarantor will be permitted to exploit, use, enjoy, protect, license,
sublicense, assign, sell, dispose of or take other actions with respect to the
Intellectual Property in the ordinary course of the business of such Subsidiary
Guarantor. In furtherance of the foregoing, unless an Event of Default shall
have occurred and be continuing the Administrative Agent shall from time to
time, upon the request of the relevant Subsidiary Guarantor, execute and deliver
any instruments, certificates or other documents, in the form so requested, that
such Subsidiary Guarantor shall have certified are appropriate (in its judgment)
to allow it to take any action permitted above (including relinquishment of the
license provided pursuant to clause (1)
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immediately above as to any specific Intellectual Property). Further, upon the
payment in full of all of the Secured Obligations and cancellation or
termination of the Commitments and Letter of Credit Liabilities or earlier
expiration of this Agreement or release of the Collateral, the license granted
pursuant to clause (1) immediately above shall expire by its own terms without
further action on the part of the Company or the Administrative Agent. The
exercise of rights and remedies under Section 6.05 hereof by the Administrative
Agent shall not terminate the rights of the holders of any licenses or
sublicenses theretofore granted by each Subsidiary Guarantor in accordance with
the first sentence of this clause (2).
(c) MOTOR VEHICLES. At any time after the occurrence and during the
continuance of an Event of Default, each Subsidiary Guarantor shall, upon the
request of the Administrative Agent, deliver to the Administrative Agent
originals of the certificates of title or ownership for the Motor Vehicles owned
by it with the Administrative Agent listed as lienholder and take such other
action as the Administrative Agent shall deem appropriate to perfect the
security interest created hereunder in all such Motor Vehicles.
6.05 EVENTS OF DEFAULT, ETC. During the period during which an Event
of Default shall have occurred and be continuing:
(a) each Subsidiary Guarantor shall, at the request of the
Administrative Agent, assemble the Collateral owned by it at such place or
places, reasonably convenient to both the Administrative Agent and such
Subsidiary Guarantor, designated in its request;
(b) the Administrative Agent may make any reasonable compromise or
settlement deemed desirable with respect to any of the Collateral and may
extend the time of payment, arrange for payment in installments, or
otherwise modify the terms of, any of the Collateral;
(c) the Administrative Agent shall have all of the rights and
remedies with respect to the Collateral of a secured party under the
Uniform Commercial Code (whether or not said Code is in effect in the
jurisdiction where the rights and remedies are asserted) and such
additional rights and remedies to which a secured party is entitled under
the laws in effect in any jurisdiction where any rights and remedies
hereunder may be asserted, including, without limitation, the right, to the
maximum extent permitted by law, to exercise all voting, consensual and
other powers of ownership pertaining to the Collateral as if the
Administrative Agent were the sole and absolute owner thereof (and such
Subsidiary Guarantor agrees to take all such action as may be appropriate
to give effect to such right);
(d) the Administrative Agent in its discretion may, in its name or in
the name of the relevant Subsidiary Guarantor or otherwise, demand, sue
for, collect or receive any money or Property at any time payable or
receivable on account of or in exchange for any of the Collateral, but
shall be under no obligation to do so; and
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(e) the Administrative Agent may, upon ten business days' prior
written notice to the relevant Subsidiary Guarantor of the time and place,
with respect to the Collateral or any part thereof that shall then be or
shall thereafter come into the possession, custody or control of the
Administrative Agent, the Lenders or any of their respective agents, sell,
lease, assign or otherwise dispose of all or any part of such Collateral,
at such place or places as the Administrative Agent deems best, and for
cash or for credit or for future delivery (without thereby assuming any
credit risk), at public or private sale, without demand of performance or
notice of intention to effect any such disposition or of the time or place
thereof (except such notice as is required above or by applicable statute
and cannot be waived), and the Administrative Agent or any Lender or anyone
else may be the purchaser, lessee, assignee or recipient of any or all of
the Collateral so disposed of at any public sale (or, to the extent
permitted by law, at any private sale) and thereafter hold the same
absolutely, free from any claim or right of whatsoever kind, including any
right or equity of redemption (statutory or otherwise), of such Subsidiary
Guarantor, any such demand, notice and right or equity being hereby
expressly waived and released. In the event of any sale, assignment, or
other disposition of any of the Trademark Collateral, the goodwill
connected with and symbolized by the Trademark Collateral subject to such
disposition shall be included, and such Subsidiary Guarantor shall supply
to the Administrative Agent or its designee, for inclusion in such sale,
assignment or other disposition, all Intellectual Property relating to such
Trademark Collateral. The Administrative Agent may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for
the sale, and such sale may be made at any time or place to which the sale
may be so adjourned.
The proceeds of each collection, sale or other disposition under this
Section 6.05, including by virtue of the exercise of the license granted to the
Administrative Agent in Section 6.04(b) hereof, shall be applied in accordance
with Section 6.09 hereof.
Each Subsidiary Guarantor recognizes that, by reason of certain
prohibitions contained in the Securities Act of 1933, as amended, and applicable
state securities laws, the Administrative Agent may be compelled, with respect
to any sale of all or any part of the Collateral, to limit purchasers to those
who will agree, among other things, to acquire the Collateral for their own
account, for investment and not with a view to the distribution or resale
thereof. Each Subsidiary Guarantor acknowledges that any such private sales may
be at prices and on terms less favorable to the Administrative Agent than those
obtainable through a public sale without such restrictions, and, notwithstanding
such circumstances, agrees that any such private sale shall be deemed to have
been made in a commercially reasonable manner and that the Administrative Agent
shall have no obligation to engage in public sales and no obligation to delay
the sale of any Collateral for the period of time necessary to permit the
respective Issuer or issuer thereof to register it for public sale.
6.06 DEFICIENCY. If the proceeds of sale, collection or other
realization of or upon the Collateral pursuant to Section 6.05 hereof are
insufficient to cover the costs and expenses of
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such realization and the payment in full of the Secured Obligations, each
Subsidiary Guarantor shall remain liable, jointly and severally, for any
deficiency.
6.07 REMOVALS, ETC. Without at least 10 days' prior written notice
to the Administrative Agent, no Subsidiary Guarantor shall (i) maintain any of
its books and records with respect to the Collateral at any office or maintain
its principal place of business at any place, or permit any Inventory or
Equipment to be located anywhere, other than at the address indicated beneath
the signature of the Company to the Credit Agreement or at one of the locations
identified in Annex 6 hereto or in transit from one of such locations to another
or (ii) change its name, or the name under which it does business, from the name
shown on the signature pages hereto.
6.08 PRIVATE SALE. The Administrative Agent and the Lenders shall
incur no liability as a result of the sale of the Collateral, or any part
thereof, at any private sale pursuant to Section 6.05 hereof conducted in a
commercially reasonable manner. Each Subsidiary Guarantor hereby waives any
claims against the Administrative Agent or any Lender arising by reason of the
fact that the price at which the Collateral may have been sold at such a private
sale was less than the price that might have been obtained at a public sale or
was less than the aggregate amount of the Secured Obligations, even if the
Administrative Agent accepts the first offer received and does not offer the
Collateral to more than one offeree.
6.09 APPLICATION OF PROCEEDS. Except as otherwise herein expressly
provided and except as provided below in this Section 6.09, the proceeds of any
collection, sale or other realization of all or any part of the Collateral
pursuant hereto, and any other cash at the time held by the Administrative Agent
under Section 5 hereof or this Section 6, shall be applied by the Administrative
Agent:
FIRST, to the payment of the costs and expenses of such collection,
sale or other realization, including reasonable out-of-pocket costs and
expenses of the Administrative Agent and the fees and expenses of its
agents and counsel, and all expenses incurred and advances made by the
Administrative Agent in connection therewith;
NEXT, to the payment in full of the Secured Obligations, in each case
equally and ratably in accordance with the respective amounts thereof then
due and owing or as the Lenders holding the same may otherwise agree; and
FINALLY, to the payment to such Subsidiary Guarantor, or its
successors or assigns, or as a court of competent jurisdiction may direct,
of any surplus then remaining.
As used in this Section 6, "PROCEEDS" of Collateral shall mean cash,
securities and other Property realized in respect of, and distributions in kind
of, Collateral, including any thereof received under any reorganization,
liquidation or adjustment of debt of any Subsidiary Guarantor or any issuer of
or obligor on any of the Collateral.
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6.10 ATTORNEY-IN-FACT. Without limiting any rights or powers granted
by this Agreement to the Administrative Agent while no Event of Default has
occurred and is continuing, upon the occurrence and during the continuance of
any Event of Default the Administrative Agent is hereby appointed the
attorney-in-fact of each Subsidiary Guarantor for the purpose of carrying out
the provisions of this Section 6 and taking any action and executing any
instruments that the Administrative Agent may deem necessary or advisable to
accomplish the purposes hereof, which appointment as attorney-in-fact is
irrevocable and coupled with an interest. Without limiting the generality of the
foregoing, so long as the Administrative Agent shall be entitled under this
Section 6 to make collections in respect of the Collateral, the Administrative
Agent shall have the right and power to receive, endorse and collect all checks
made payable to the order of such Subsidiary Guarantor representing any
dividend, payment or other distribution in respect of the Collateral or any part
thereof and to give full discharge for the same.
6.11 PERFECTION. Prior to or concurrently with the execution and
delivery of this Agreement, each Subsidiary Guarantor shall (i) file such
financing statements and other documents in such offices as the Administrative
Agent may request to perfect the security interests granted by Section 4 of this
Agreement and (ii) deliver to the Administrative Agent all certificates
identified in Annex 1 hereto, accompanied by undated stock powers duly executed
in blank.
6.12 TERMINATION; RELEASE OF LIENS. When all Secured Obligations
shall have been paid in full and the Commitments of the Lenders under the Credit
Agreement and all Letter of Credit Liabilities shall have expired or been
terminated, this Agreement shall terminate, and the Administrative Agent shall
forthwith cause to be assigned, transferred and delivered, against receipt but
without any recourse, warranty or representation whatsoever, any remaining
Collateral and money received in respect thereof, to or on the order of the
relevant Subsidiary Guarantor and to be released and canceled all licenses and
rights referred to in Section 6.04(b) hereof. The Administrative Agent shall
also execute and deliver to such Subsidiary Guarantor upon such termination such
Uniform Commercial Code termination statements, certificates for terminating the
Liens on the Motor Vehicles and such other documentation as shall be reasonably
requested by such Subsidiary Guarantor to effect the termination and release of
the Liens on the Collateral. The Liens granted to the Administrative Agent
hereby shall also be released in accordance with Sections 9.25 and 11.09 of the
Credit Agreement.
6.13 FURTHER ASSURANCES. Each Subsidiary Guarantor agrees that, from
time to time upon the written request of the Administrative Agent, such
Subsidiary Guarantor will execute and deliver such further documents and do such
other acts and things as the Administrative Agent may reasonably request in
order fully to effect the purposes of this Agreement.
6.14 RELEASE OF MOTOR VEHICLES. So long as no Default shall have
occurred and be continuing, upon the request of the relevant Subsidiary
Guarantor, the Administrative Agent shall execute and deliver to the Subsidiary
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Guarantor such instruments as such Subsidiary Guarantor shall reasonably request
to remove the notation of the Administrative Agent as lienholder on any
certificate of title for any Motor Vehicle; PROVIDED that any such instruments
shall be delivered, and the release effective only upon receipt by the
Administrative Agent of a certificate from such Subsidiary Guarantor stating
that the Motor Vehicle the lien on which is to be released is to be sold or has
suffered a casualty loss (with title thereto passing to the casualty insurance
company (or its designee) therefor in settlement of the claim for such loss) and
any proceeds of such sale or casualty loss being paid to the Administrative
Agent hereunder.
Section 7. MISCELLANEOUS.
7.01 NO WAIVER. No failure on the part of the Administrative Agent
or any Lender to exercise, and no course of dealing with respect to, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by the Administrative
Agent or any Lender of any right, power or remedy hereunder preclude any other
or further exercise thereof or the exercise of any other right, power or remedy.
The remedies herein are cumulative and are not exclusive of any remedies
provided by law.
7.02 NOTICES. All notices, requests, consents and demands hereunder
shall be in writing and telecopied or delivered to the intended recipient at its
"Address for Notices" specified pursuant to Section 12.02 of the Credit
Agreement and shall be deemed to have been given at the times specified in said
Section 12.02.
7.03 EXPENSES. Each Subsidiary Guarantor, jointly and severally,
agrees to reimburse each of the Lenders and the Administrative Agent for all
reasonable costs and expenses of the Lenders and the Administrative Agent
(including, without limitation, the reasonable fees and expenses of legal
counsel) in connection with (i) any Default and any enforcement or collection
proceeding resulting therefrom, including, without limitation, all manner of
participation in or other involvement with (w) performance by the Administrative
Agent of any obligations of such Subsidiary Guarantor in respect of the
Collateral that such Subsidiary Guarantor has failed or refused to perform, (x)
bankruptcy, insolvency, receivership, foreclosure, winding up or liquidation
proceedings, or any actual or attempted sale, or any exchange, enforcement,
collection, compromise or settlement in respect of any of the Collateral, and
for the care of the Collateral and defending or asserting rights and claims of
the Administrative Agent in respect thereof, by litigation or otherwise,
including expenses of insurance, (y) judicial or regulatory proceedings and (z)
workout, restructuring or other negotiations or proceedings (whether or not the
workout, restructuring or transaction contemplated thereby is consummated) and
(ii) the enforcement of this Section 7.03, and all such costs and expenses shall
be Secured Obligations entitled to the benefits of the collateral security
provided pursuant to Section 4 hereof.
7.04 AMENDMENTS, ETC. The terms of this Agreement may be waived,
altered or amended only by an instrument in writing duly executed by each
Subsidiary Guarantor and the Administrative Agent (with the consent of the
Lenders as specified in Section 11.09 of the Credit Agreement). Any such
amendment or waiver shall be binding upon the Administrative Agent
<PAGE>
- 22 -
and each Lender, each holder of any of the Secured Obligations and each
Subsidiary Guarantor.
7.05 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the respective successors and assigns of each
Subsidiary Guarantor, the Administrative Agent, the Lenders and each holder of
any of the Secured Obligations (PROVIDED, however, that no Subsidiary Guarantor
shall assign or transfer its rights hereunder without the prior written consent
of the Administrative Agent).
7.06 CAPTIONS. The captions and section headings appearing herein
are included solely for convenience of reference and are not intended to affect
the interpretation of any provision of this Agreement.
7.07 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and either of the parties hereto may execute this Agreement by
signing any such counterpart.
7.08 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the law of the State of New York.
7.09 AGENTS AND ATTORNEYS-IN-FACT. The Administrative Agent may
employ agents and attorneys-in-fact in connection herewith and shall not be
responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it in good faith.
7.10 SEVERABILITY. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(i) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Administrative
Agent and the Lenders in order to carry out the intentions of the parties hereto
as nearly as may be possible and (ii) the invalidity or unenforceability of any
provision hereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.
<PAGE>
- 23 -
IN WITNESS WHEREOF, the parties hereto have caused this Guarantee and
Security Agreement to be duly executed and delivered as of the day and year
first above written.
LAGASSE BROS., INC.
By /s/ Otis H. Holleen
-------------------------
Title: Vice President
AZERTY INCORPORATED
By /s/ Otis H. Holleen
-------------------------
Title: Vice President
POSITIVE ID WHOLESALE INC.
By /s/ Otis H. Holleen
-------------------------
Title: Vice President
AP SUPPORT SERVICES, INC.
By /s/ Otis H. Holleen
-------------------------
Title: Vice President
THE CHASE MANHATTAN BANK,
as Administrative Agent
By /s/ [ILLEGIBLE]
-------------------------
Title: VP
<PAGE>
ANNEX 1
PLEDGED STOCK
[See Section 4.05(b) and (c)]
<TABLE>
<CAPTION>
RECORD OF
CERTIFICATE BENEFICIAL NUMBER
ISSUER NUMBER OWNER SHARES PAR VALUE CLASS
------ ----------- ----------- ------ --------- -----
<S> <C> <C> <C> <C> <C>
NONE
</TABLE>
ANNEX 1 TO SUBSIDIARY GUARANTEE AND SECURITY AGREEMENT
<PAGE>
LIST OF COPYRIGHTS, COPYRIGHT REGISTRATIONS AND
APPLICATIONS FOR COPYRIGHT REGISTRATIONS
[See Section 4.05(d)]
LAGASSE BROS., INC.
<TABLE>
<CAPTION>
Title Date Filed Registration No. Effective Date
----- ---------- ---------------- --------------
<S> <C> <C> <C>
NONE
</TABLE>
AZERTY INCORPORATED
<TABLE>
<CAPTION>
Title Date Filed Registration No. Effective Date
----- ---------- ---------------- --------------
<S> <C> <C> <C>
NONE
</TABLE>
POSITIVE ID WHOLESALE INC.
<TABLE>
<CAPTION>
Title Date Filed Registration No. Effective Date
----- ---------- ---------------- --------------
<S> <C> <C> <C>
NONE
</TABLE>
AP SUPPORT SERVICES INCORPORATED
<TABLE>
<CAPTION>
Title Date Filed Registration No. Effective Date
----- ---------- ---------------- --------------
<S> <C> <C> <C>
NONE
</TABLE>
ANNEX 2 TO SUBSIDIARY GUARANTEE AND SECURITY AGREEMENT
<PAGE>
ANNEX 3
LIST OF PATENTS AND PATENT APPLICATIONS
[See Section 4.05(d)]
LAGASSE BROS, INC.
<TABLE>
<CAPTION>
File Patent Country Registration No. Date
---- ------ ------- ---------------- ----
<S> <C> <C> <C> <C>
NONE
</TABLE>
AZERTY INCORPORATED
<TABLE>
<CAPTION>
File Patent Country Registration No. Date
---- ------ ------- ---------------- ----
<S> <C> <C> <C> <C>
NONE
</TABLE>
POSITIVE ID WHOLESALE INC.
<TABLE>
<CAPTION>
File Patent Country Registration No. Date
---- ------ ------- ---------------- ----
<S> <C> <C> <C> <C>
NONE
</TABLE>
AP SUPPORT SERVICES INCORPORATED
<TABLE>
<CAPTION>
File Patent Country Registration No. Date
---- ------ ------- ---------------- ----
<S> <C> <C> <C> <C>
NONE
</TABLE>
ANNEX 3 TO SUBSIDIARY GUARANTEE AND SECURITY AGREEMENT
ANNEX 4
LIST OF TRADE NAMES, TRADEMARKS, SERVICES MARKS,
TRADEMARK AND SERVICE MARK REGISTRATIONS AND
APPLICATIONS FOR TRADEMARK AND SERVICE MARK REGISTRATIONS
[See Section 4.05(d)]
U.S. TRADEMARKS
LAGASSE BROS., INC.
<TABLE>
<CAPTION>
Application (A)
Registration (R) Registration
Mark or Series No. (S) or Filing Date
- --------------------------------------------------------------------------------
<S> <C> <C>
NONE
</TABLE>
AZERTY INCORPORATED
<TABLE>
<CAPTION>
Application (A)
Registration (R) Registration
Mark or Series No. (S) or Filing Date
- --------------------------------------------------------------------------------
<S> <C> <C>
POSITIVE ID WHOLESALE & Design (U.S.) 75/058,145(A) [__________]
AP SUPPORT SERVICES & Design 75/119,438(A)
AZERTY 1,357,709(R)
AZERTY 1,496,309(R)
AZERTY 450,077(R)
POSITIVE ID WHOLESALE & Design 75/058,145(A)
</TABLE>
ANNEX 4 TO SUBSIDIARY GUARANTEE AND SECURITY AGREEMENT
<PAGE>
ANNEX 4
POSITIVE ID WHOLESALE INC.
<TABLE>
<CAPTION>
Application (A)
Mark Registration (R) Registration
or Series No. (S) or Filing Date
- --------------------------------------------------------------------------------
<S> <C> <C>
NONE
</TABLE>
AP SUPPORT SERVICES INCORPORATED
<TABLE>
<CAPTION>
Application (A)
Registration (R) Registration
Mark or Series No. (S) or Filing Date
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
AP SUPPORT SERVICES & Design (Canada) 484,974(R) [__________]
AP SUPPORT SERVICES & Design (U.S., Class 35, 39) 75/119,438(A) [__________]
</TABLE>
ANNEX 4 TO SUBSIDIARY GUARANTEE AND SECURITY AGREEMENT
<PAGE>
FOREIGN TRADEMARKS
LAGASSE BROS, INC.
<TABLE>
<CAPTION>
Application (A) Registration or
Mark Registration (R) Country Filing Date (F)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
NONE
</TABLE>
AZERTY INCORPORATED
<TABLE>
<CAPTION>
Application (A) Registration or
Mark Registration (R) Country Filing Date (F)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
AP SUPPORT SERVICES & 484,974(R) Canada
Design
</TABLE>
POSITIVE ID WHOLESALE INC.
<TABLE>
<CAPTION>
Application (A) Registration or
Mark Registration (R) Country Filing Date (F)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
NONE
</TABLE>
AP SUPPORT SERVICES INCORPORATED
<TABLE>
<CAPTION>
Application (A) Registration or
Mark Registration (R) Country Filing Date (F)
- --------------------------------------------------------------------------------
<S> <C> <C>
NONE
</TABLE>
<PAGE>
ANNEX 5
LIST OF CONTRACTS, LICENSES AND OTHER AGREEMENTS
[See Section 4.05(d), (e) and (f)]
LAGASSE BROS, INC.
NONE
AZERTY INCORPORATED
NONE
POSITIVE ID WHOLESALE INC.
NONE
AP SUPPORT SERVICES INCORPORATED
NONE
ANNEX 5 TO SUBSIDIARY GUARANTEE AND SECURITY AGREEMENT
<PAGE>
ANNEX 6
LIST OF LOCATIONS
[See Section 6.07]
LAGASSE BROS., INC.
CALIFORNIA
LEASEHOLD
- Union City (San Francisco area) -
30580 Whipple Road
- Bell (Los Angeles area) - 5650 Bandini Blvd
FLORIDA
LEASEHOLD
- Dania (Miami area) - 2317 Stirling Road
- Tampa - 4719-27 Distribution Drive
GEORGIA
LEASEHOLD
- Atlanta - 5215 Westgate Drive, Suite E
ILLINOIS
- Glendale Heights - 100 Exchange Blvd.
INDIANA
- Indianapolis - 2402 N. Shadeland Ave.
LOUISIANA
LEASEHOLD
- Harahan (New Orleans area) - 1525 Kuebel Street
- Jefferson Parish - 5505 S. Lambert (subleased to Sears Roebuck)
MARYLAND
LEASEHOLD
- Harmans - 7447 New Ridge Road, Suite C
ANNEX 6 TO GUARANTEE AND SECURITY AGREEMENT
<PAGE>
- 2 -
MASSACHUSETTS
LEASEHOLD
- Sharon - 31 Commercial Street
NEW JERSEY
LEASEHOLD
- Edison - 60 Brunswick Avenue
NORTH CAROLINA
- Charlotte - 2700 Hutchinson McDonald Rd., Suite E
OHIO
- Valley View (Cleveland area) - 6065 Towpath Drive (subleased through
2/1/00 to Whitmire Distribution)
TEXAS
- Dallas - 4830 Lakawana Street, Suite 109
- Houston - 1218 Silber Road
- San Antonio - 4703-4735 Greatland Dr., Bldg. 5
WASHINGTON
- Kent (Seattle area) - 22035-68th Avenue South
AZERTY INCORPORATED:
- Azerty owns a 28,000 sq. ft. facility, located at 13 Centre Drive,
Orchard Park, N.Y. for which the legal description is S.B.L. No.
161.14-2-4.112.
POSITIVE ID WHOLESALE INC.:
NONE
ANNEX 6 TO GUARANTEE AND SECURITY AGREEMENT
<PAGE>
- 3 -
AP SUPPORT SERVICES INCORPORATED:
HEADQUARTERS
LAGASSE BROS. INC.
2200 East Golf Road
Des Plaines, Illinois
AZERTY INCORPORATED
13 Centre Drive
Orchard Park, New York
POSITIVE ID WHOLESALE INC.
13 Centre Drive
Orchard Park, New York
AP SUPPORT SERVICES INCORPORATED
13 Centre Drive
Orchard Park, New York
ANNEX 6 TO GUARANTEE AND SECURITY AGREEMENT
<PAGE>
EXECUTION COPY
- ------------------------------------------------------------------------------
USS RECEIVABLES COMPANY, LTD.,
as Company,
UNITED STATIONERS SUPPLY CO.,
as Servicer,
and
THE CHASE MANHATTAN BANK,
as Trustee and as Securities Intermediary
on behalf of the Holders
UNITED STATIONERS RECEIVABLES MASTER TRUST
POOLING AGREEMENT
Dated as of April 3, 1998
- ------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE I
DEFINITIONS
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Other Definitional Provisions . . . . . . . . . . . . . 21
ARTICLE II
CONVEYANCE OF RECEIVABLES;
ISSUANCE OF CERTIFICATES
Section 2.1 Conveyance of Receivables . . . . . . . . . . . . . . . 22
Section 2.2 Acceptance by Trustee . . . . . . . . . . . . . . . . . 24
Section 2.3 Representations and Warranties of the Company Relating
to the Company . . . . . . . . . . . . . . . . . . . . 24
Section 2.4 Representations and Warranties of the Company
Relating to the Receivables . . . . . . . . . . . . . . 27
Section 2.5 Transfer of Ineligible Receivables . . . . . . . . . . 28
Section 2.6 Purchase of Investor Certificateholders' Interest in
Trust Portfolio . . . . . . . . . . . . . . . . . . . . 29
Section 2.7 Affirmative Covenants of the Company . . . . . . . . . 29
Section 2.8 Negative Covenants of the Company . . . . . . . . . . . 32
ARTICLE III
RIGHTS OF HOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
Section 3.1 Establishment of Collection Account and Collection
Concentration Account; Certain Allocations . . . . . . 35
ARTICLE IV
ARTICLE IV IS RESERVED
AND MAY BE SPECIFIED IN ANY SUPPLEMENT
WITH RESPECT TO THE SERIES RELATING THERETO
ARTICLE V
THE CERTIFICATES AND INTERESTS
Section 5.1 The Certificates . . . . . . . . . . . . . . . . . . . 41
Section 5.2 Authentication of Certificates . . . . . . . . . . . . 41
<PAGE>
Section 5.3 Registration of Transfer and Exchange of Certificates . 41
Section 5.4 Mutilated, Destroyed, Lost or Stolen Certificates . . . 44
Section 5.5 Persons Deemed Owners . . . . . . . . . . . . . . . . . 44
Section 5.6 Appointment of Paying Agent . . . . . . . . . . . . . . 44
Section 5.7 Access to List of Investor Certificateholders' Names
and Addresses . . . . . . . . . . . . . . . . . . . . . 45
Section 5.8 Authenticating Agent . . . . . . . . . . . . . . . . . 46
Section 5.9 Tax Treatment . . . . . . . . . . . . . . . . . . . . . 47
Section 5.10 Company Exchanges . . . . . . . . . . . . . . . . . . . 47
Section 5.11 Book-Entry Certificates . . . . . . . . . . . . . . . . 49
Section 5.12 Notices to Clearing Agency . . . . . . . . . . . . . . 49
Section 5.13 Definitive Certificates . . . . . . . . . . . . . . . . 50
ARTICLE VI
OTHER MATTERS RELATING
TO THE COMPANY
Section 6.1 Liability of the Company . . . . . . . . . . . . . . . 50
Section 6.2 Limitation on Liability of the Company . . . . . . . . 50
ARTICLE VII
EARLY AMORTIZATION EVENTS
Section 7.1 Early Amortization Events . . . . . . . . . . . . . . . 51
Section 7.2 Additional Rights Upon the Occurrence of Certain
Events . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE VIII
THE TRUSTEE
Section 8.1 Duties of Trustee . . . . . . . . . . . . . . . . . . . 53
Section 8.2 Rights of the Trustee . . . . . . . . . . . . . . . . . 55
Section 8.3 Trustee Not Liable for Recitals in Certificates . . . . 56
Section 8.4 Trustee May Own Certificates . . . . . . . . . . . . . 56
Section 8.5 Trustee's Fees and Expenses . . . . . . . . . . . . . . 56
Section 8.6 Eligibility Requirements for Trustee . . . . . . . . . 57
Section 8.7 Resignation or Removal of Trustee . . . . . . . . . . . 57
Section 8.8 Successor Trustee . . . . . . . . . . . . . . . . . . . 58
Section 8.9 Merger or Consolidation of Trustee . . . . . . . . . . 58
Section 8.10 Appointment of Co-Trustee or Separate Trustee . . . . . 59
Section 8.11 Tax Returns . . . . . . . . . . . . . . . . . . . . . . 60
Section 8.12 Trustee May Enforce Claims Without Possession of
Certificates . . . . . . . . . . . . . . . . . . . . . 60
Section 8.13 Suits for Enforcement . . . . . . . . . . . . . . . . . 60
Section 8.14 Rights of Investor Certificateholders to Direct
Trustee . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 8.15 Reserved. . . . . . . . . . . . . . . . . . . . . . . . 61
Section 8.16 Maintenance of Office or Agency . . . . . . . . . . . . 61
Section 8.17 Limitation of Liability . . . . . . . . . . . . . . . . 61
ii
<PAGE>
ARTICLE IX
TERMINATION
Section 9.1 Termination of Trust; Liquidation of Receivables . . . 61
Section 9.2 Clean-Up Call and Final Termination Date of Investor
Certificates of any Series . . . . . . . . . . . . . . 61
Section 9.3 Final Payment with Respect to Any Series . . . . . . . 63
Section 9.4 Company's Termination Rights . . . . . . . . . . . . . 63
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . 64
Section 10.2 Protection of Right, Title and Interest to Trust . . . 65
Section 10.3 Limitation on Rights of Holders . . . . . . . . . . . . 65
Section 10.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 10.5 Severability of Provisions . . . . . . . . . . . . . . 67
Section 10.6 Assignment . . . . . . . . . . . . . . . . . . . . . . 67
Section 10.7 Certificates Nonassessable and Fully Paid . . . . . . . 67
Section 10.8 Further Assurances . . . . . . . . . . . . . . . . . . 67
Section 10.9 No Waiver; Cumulative Remedies . . . . . . . . . . . . 67
Section 10.10 Counterparts . . . . . . . . . . . . . . . . . . . . . 68
Section 10.11 Third-Party Beneficiaries . . . . . . . . . . . . . . . 68
Section 10.12 Actions by Holders . . . . . . . . . . . . . . . . . . 68
Section 10.13 Merger and Integration . . . . . . . . . . . . . . . . 68
Section 10.14 Headings . . . . . . . . . . . . . . . . . . . . . . . 68
Section 10.15 Security Agreement . . . . . . . . . . . . . . . . . . 68
Section 10.16 No Set-Off . . . . . . . . . . . . . . . . . . . . . . 68
Section 10.17 No Bankruptcy Petition . . . . . . . . . . . . . . . . 68
Section 10.18 Limitation of Liability . . . . . . . . . . . . . . . . 69
Section 10.19 Certain Information . . . . . . . . . . . . . . . . . . 69
Section 10.20 Governing Law . . . . . . . . . . . . . . . . . . . . . 69
EXHIBITS
EXHIBIT A - TO POOLING AGREEMENT -- FORM OF LOCKBOX AGREEMENT
EXHIBIT B - TO POOLING AGREEMENT -- INTERNAL OPERATING PROCEDURES MEMORANDUM
iii
<PAGE>
SCHEDULES
1. LIST OF RECEIVABLES
2. TRUST ACCOUNTS
3. ACTIONS WITH RESPECT TO CHATTEL PAPER
4. LOCATION OF CHIEF EXECUTIVE OFFICE OF THE COMPANY
5. CONTRACTUAL OBLIGATIONS
iv
<PAGE>
POOLING AGREEMENT, dated as of April 3, 1998, among USS RECEIVABLES
COMPANY, LTD., a Cayman Islands limited liability company (the "Company");
United Stationers Supply Co., an Illinois corporation ("USSC"), in its capacity
as servicer (the "Servicer"); and The Chase Manhattan Bank, a New York banking
corporation, not in its individual capacity, but solely as trustee (in such
capacity, the "Trustee").
W I T N E S S E T H:
WHEREAS, as of the date hereof, (i) the Company, the Servicer and the
Sellers (as hereinafter defined) are entering into a Receivables Sale Agreement
(as amended, supplemented or otherwise modified from time to time, the
"RECEIVABLES SALE AGREEMENT") and (ii) the Company, the Servicer, the Sellers,
in their capacities as servicers of the Receivables (in such capacities, the
"SUB-SERVICERS"), and the Trustee are entering into a Servicing Agreement (as
amended, supplemented or otherwise modified from time to time, the "SERVICING
AGREEMENT"); and
WHEREAS, the parties hereto wish to enter into this Agreement in order
to create a master trust to which the Company will transfer all of its right,
title and interest in, to and under the Receivables and other Trust Assets now
or hereafter owned by the Company and such master trust shall, from time to time
at the direction of the Company, issue one or more Series of Investor
Certificates which shall represent interests in the Receivables and such other
Trust Assets as specified herein and in the Supplement related to such Series.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 DEFINITIONS. Whenever used in this Agreement, the
following words and phrases shall have the following meanings:
"ACCOUNTS" shall have the meaning specified in subsection 2.1(a)(v) of
this Agreement.
"ADJUSTED INVESTED AMOUNT" shall have, with respect to any Outstanding
Series, the meaning assigned to such term in the related Supplement for
such Series.
"AFFILIATE" shall mean, with respect to any specified Person, any
other Person which, directly or indirectly, is in control of, is controlled
by, or is under common control with, such Person; PROVIDED that a Person
shall not be deemed an Affiliate of another Person solely by reason of an
individual serving as an officer or director of such other Person. For
purposes of this definition, "control" of a Person means the possession,
directly or indirectly, of the power to direct or cause the direction of
the management and policies of such Person, whether through the ownership
of voting securities or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"AGENT" shall mean, with respect to any Series, the Person or Persons,
if any, so designated in the related Supplement.
<PAGE>
"AGGREGATE ADJUSTED INVESTED AMOUNT" shall mean, with respect to any
date of determination, the sum of the Adjusted Invested Amounts with
respect to all Outstanding Series on such date of determination.
"AGGREGATE ALLOCATED RECEIVABLES AMOUNT" shall mean, with respect to
any date of determination, the sum of the Allocated Receivables Amounts
with respect to all Outstanding Series on such date of determination.
"AGGREGATE DAILY COLLECTIONS" shall mean, with respect to any Business
Day, the aggregate amount of all Collections deposited into the Collection
Account on such day.
"AGGREGATE INVESTED AMOUNT" shall mean, at any date of determination,
the sum of the Invested Amounts with respect to all Outstanding Series on
such date of determination.
"AGGREGATE OVERCONCENTRATION AMOUNT" shall mean, with respect to any
date of determination, the sum of the Overconcentration Amounts of all
Eligible Obligors at the end of the preceding Business Day.
"AGGREGATE RECEIVABLES AMOUNT" shall mean, with respect to any date of
determination, the aggregate Principal Amount of all Eligible Receivables
in the Trust at the end of the Business Day immediately preceding such date
less the sum of: (i) the Aggregate Overconcentration Amount; (ii) the
aggregate Rebate Reduction Amount; and (iii) the aggregate Dilution
Reduction Amount.
"AGGREGATE TARGET RECEIVABLES AMOUNT" shall mean, with respect to any
date of determination, the sum of the Target Receivables Amounts with
respect to all Outstanding Series on such date of determination.
"AGREEMENT" shall mean this Pooling Agreement and all amendments and
modifications hereof and supplements hereto, and including, unless
expressly stated otherwise, each Supplement.
"ALLOCABLE CHARGED-OFF AMOUNT" shall have, with respect to any Series,
the meaning specified in subsection 3.1(e) and in any Supplement for such
Series.
"ALLOCABLE RECOVERIES AMOUNT" shall have, with respect to any Series,
the meaning specified in subsection 3.1(e) and in any Supplement for such
Series.
"ALLOCATED RECEIVABLES AMOUNT" shall mean, with respect to any
Outstanding Series, the meaning assigned to such term in the related
Supplement for such Series.
"AMORTIZATION PERIOD" shall mean, with respect to any Outstanding
Series, the meaning assigned to such term in the related Supplement for
such Series.
"APPLICANTS" shall have the meaning specified in Section 5.7.
"AUTHORIZED NEWSPAPER" shall have the meaning specified in Section
7.2.
"BOOK-ENTRY CERTIFICATES" shall mean the Certificates issued to a
Clearing Agency to facilitate the use of book entries by such Clearing
Agency to evidence ownership of beneficial
2
<PAGE>
interests in the Certificates, transfers of which beneficial interests
shall be made through book entries by such Clearing Agency, all as
described in Section 5.11; PROVIDED, HOWEVER, that after the occurrence
of a condition whereupon book-entry registration and transfer are no
longer permitted and Definitive Certificates are issued to the
Certificate Book-Entry Holders, such Certificates shall no longer be
"Book-Entry Certificates".
"BUSINESS DAY" shall mean any day other than (i) a Saturday or a
Sunday or (ii) another day on which commercial banking institutions or
trust companies in the State of New York or in the city where the Corporate
Trust Office is located, are authorized or obligated by law, executive
order or governmental decree to be closed; PROVIDED that, when used in
connection with the calculation of Certificate Rates which are determined
by reference to LIBOR, "Business Day" shall mean any Business Day on which
dealings in Dollars between banks may be carried on in both London, England
and New York, New York.
"BUSINESS DAY RECEIVED" shall have the meaning specified in subsection
2.3(e) of the Servicing Agreement.
"CASH DILUTION PAYMENT" shall have the meaning specified in subsection
4.6(a) of the Servicing Agreement.
"CERTIFICATE" shall mean one of any Series of Investor Certificates.
"CERTIFICATE BOOK-ENTRY HOLDER" shall mean, with respect to a
Book-Entry Certificate, the Person who is listed on the books of the
Clearing Agency, or on the books of a Person maintaining an account with
such Clearing Agency, as the beneficial owner of such Book-Entry
Certificate (directly or as an indirect participant, in accordance with
the rules of such Clearing Agency).
"CERTIFICATE RATE" shall mean, with respect to any Series and Class of
Certificates, the percentage interest rate (or formula on the basis of
which such interest rate shall be determined) stated in the applicable
Supplement.
"CERTIFICATE REGISTER" shall mean the register maintained pursuant to
Section 5.3, providing for the registration of the Certificates and
transfers and exchanges thereof.
"CERTIFICATEHOLDERS' INTEREST" shall have the meaning specified in
subsection 3.1(b).
"CHARGED-OFF RECEIVABLES" shall mean all Receivables (or portions
thereof) which, in accordance with the Policies of the applicable Seller,
have or should have been written off as uncollectible, including without
limitation the Receivables of any Obligor which becomes the subject of any
voluntary or involuntary bankruptcy proceeding.
"CLASS" shall mean, with respect to any Series, any one of the classes
of Certificates of that Series as specified in the related Supplement.
"CLEAN-UP CALL PERCENTAGE" shall have, with respect to any Series, the
meaning specified in the related Supplement for such Series.
"CLEAN-UP CALL REPURCHASE PRICE" shall have the meaning specified in
Section 9.2.
3
<PAGE>
"CLEARING AGENCY" shall mean each organization registered as a
"clearing agency" pursuant to Section 17A of the Securities Exchange Act of
1934, as amended.
"CLEARING AGENCY PARTICIPANT" shall mean a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited
with such Clearing Agency.
"COLLECTION ACCOUNT" shall have the meaning specified in subsection
3.1(a).
"COLLECTION CONCENTRATION ACCOUNT" shall have the meaning specified in
subsection 3.1(a).
"COLLECTIONS" shall mean all collections and all amounts received in
respect of the Receivables, including Recoveries, Seller Repurchase
Payments, Seller Adjustment Payments, Servicer Indemnification Amounts paid
by the Servicer and any other payments received in respect of Dilution
Adjustments, together with all collections received in respect of the
Related Property in the form of cash, checks, wire transfers or any other
form of cash payment, and all proceeds of Receivables and collections
thereof (including, without limitation, collections constituting an account
or general intangible or evidenced by a note, instrument, security,
contract, security agreement, chattel paper or other evidence of
indebtedness or security, whatever is received upon the sale, exchange,
collection or other disposition of, or any indemnity, warranty or guaranty
payable in respect of, the foregoing and all "proceeds", as defined in
Section 9-306 of the UCC, of the foregoing).
"COLLECTOR" shall mean any employee employed by the Servicer or any
Sub-Servicer to collect payments in respect of Receivables in accordance
with the Policies of the Seller which generated such Receivables.
"COMPANION SERIES" shall have the meaning specified in Section 5.10.
"COMPANY" shall mean USS Receivables Company, Ltd., a Cayman Islands
limited liability company.
"COMPANY COLLECTION SUBACCOUNT" shall have the meaning specified in
subsection 3.1(a).
"COMPANY EXCHANGE" shall have the meaning specified in subsection
5.10(a).
"COMPANY INTEREST" shall have the meaning specified in subsection
3.1(b).
"CONTRACTUAL OBLIGATION" shall mean, as to any Person, any provision
of any security issued by such Person or of any agreement, instrument or
other undertaking to which such Person is a party or by which it or any of
its property is bound.
"CORPORATE TRUST OFFICE" shall mean the principal office of the
Trustee at which at any particular time its corporate trust business shall
be administered, which office at the date of the execution of this
Agreement is located at 450 West 33rd Street, New York, New York 10001
(Attention: Structured Finance Services).
"CUT-OFF DATE" shall mean the close of business on February 27, 1998.
"DCR" means Duff & Phelps Credit Rating Company.
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<PAGE>
"DEFAULTED RECEIVABLE" shall mean, as of any date of determination,
any Receivable (a) that is unpaid in whole or in part for more than 60 days
after its original due date or (b) which is, as of such date of
determination, a Charged-Off Receivable, or (c) which is, as of such date
of determination, a Disputed Receivable.
"DEFINITIVE CERTIFICATES" shall have the meaning specified in
Section 5.11.
"DELIVER" or "DELIVERED" or "DELIVERY" means, with respect to any
Eligible Investment, when the steps applicable to such item as specified
below are completed:
(i) if such item is an instrument, delivering such instrument to
the Trustee endorsed to the Trustee or in blank;
(ii) if such item is a certificated security, by delivering such
certificated security to the Trustee in bearer form or in
registered form issued to the Trustee or endorsed to the
Trustee or endorsed in blank;
(iii) if such item is an uncertificated security, (a) the Company
registers the Trustee as the registered owner, upon original
issue or registration of transfer or (b) the Company has
agreed that it will comply with entitlement orders with
respect to such uncertificated security originated by the
Trustee without further consent of the registered owner;
(iv) if such item is a security entitlement other than a United
States Security Entitlement, by causing a securities
intermediary to indicate by book entry that such security
entitlement has been credited to a securities account of the
Trustee with such securities intermediary;
(v) if such item is a United States Security Entitlement, by
causing a securities intermediary to indicate by book entry
that such United States Security Entitlement has been credited
to a securities account of the Trustee with such securities
intermediary; and
(v) if such item is a securities account, by causing the securities
intermediary to indicate by book entry that all security
entitlements carried in the securities account have been
credited to such securities account.
"DEPOSIT DATE" shall have the meaning specified in subsection 3.1(d).
"DEPOSITORY" shall mean, with respect to any Series, the Clearing
Agency designated as the "Depository" in the related Supplement.
"DEPOSITORY AGREEMENT" shall mean, with respect to any Series, an
agreement among the Company, the Trustee and a Clearing Agency, or a letter
of undertaking by the Company and the Trustee, in each case in a form
reasonably satisfactory to the Trustee and the Company.
"DILUTION ADJUSTMENTS" shall mean any rebates, discounts, refunds,
payments or other adjustments (including, without limitation, as a result
of the application of any special or other discounts or any
reconciliations) in respect of any Receivable, the amount owing for any
returns (including, without limitation, as a result of the return of any
defective goods) or cancellations and the amount of any other reduction of
any payment under any Receivable, in each case granted or made by the
applicable Seller or the Servicer to the related Obligor, PROVIDED that a
"Dilution Adjustment" does not include any Charged-Off Receivable or any
refund in either adjustment of any Excluded Receivable.
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<PAGE>
"DILUTION REDUCTION AMOUNT" shall mean the sum of (i) the six-month
rolling average of the dollar amount of credit memos issued for prompt
payment discounts and (ii) the six-month rolling average of credit memos
issued for customer cancellations each calculated for the period of six
consecutive Settlement Periods ending prior to the most recent Settlement
Report Date.
"DISPUTED RECEIVABLE" shall mean as of any Settlement Report Date, the
Receivables shown as such on the Seller's books and records (and that are
not otherwise Defaulted Receivables).
"DISTRIBUTION DATE" shall mean, except as otherwise set forth in the
applicable Supplement, the 20th day of each calendar month, beginning on
May 20, or if such 20th day is not a Business Day, the next succeeding
Business Day.
"DOLLARS," "U.S. DOLLARS", "U.S. $" and "$" shall mean dollars in
lawful currency of the United States of America.
"EARLY AMORTIZATION EVENT" shall have, with respect to any Series, the
meaning specified in Section 7.1 of this Agreement (without taking into
account any Supplements) and in any Supplement for such Series.
"EARLY AMORTIZATION PERIOD" shall have, with respect to any Series,
the definition assigned to such term in Section 7.1 of this Agreement and
in any Supplement for such Series.
"EARLY TERMINATION" shall have the meaning assigned to such term in
the Receivables Sale Agreement.
"ELIGIBLE INSTITUTION" shall mean a depositary institution or trust
company (which may include the Trustee and its affiliates) organized under
the laws of the United States of America or any one of the states thereof
or the District of Columbia; PROVIDED, HOWEVER, that at all times (i) such
depositary institution or trust company is a member of the Federal Deposit
Insurance Corporation, the certificates of deposit or unsecured and
uncollateralized debt obligations of such depositary institution or trust
company are rated in one of the two highest long-term or highest short-term
rating category by each Rating Agency and (ii) such depositary institution
or trust company has a combined capital and surplus of at least
$100,000,000.
"ELIGIBLE INVESTMENTS" shall mean any deposit accounts, securities,
instruments or security entitlements with respect to:
(a) direct obligations of, and obligations fully guaranteed as
to timely payment by, the United States of America;
(b) federal funds, demand deposits, time deposits or
certificates of deposit of any depository institution or trust company
incorporated under the laws of the United States of America or any
state thereof (or any domestic branch of a foreign bank) and subject
to supervision and examination by Federal or state banking or
depository institution authorities; PROVIDED, HOWEVER, that at the
time of the investment or contractual commitment to invest therein the
commercial paper or other short-term unsecured debt obligations (other
than such obligations the rating of which is based on the credit of a
Person other than such depository institution or trust company)
thereof shall have a credit
6
<PAGE>
rating from each of the Rating Agencies in the highest investment
category granted thereby;
(c) commercial paper rated, at the time of the investment or
contractual commitment to invest therein, in the highest rating
category by each Rating Agency;
(d) investments in money market funds (including funds for which
the Trustee or any of its Affiliates is investment manager or adviser)
rated in the highest rating category by each Rating Agency rating such
money market fund;
(e) bankers' acceptances issued by any depository institution or
trust company referred to in clause (b) above;
(f) repurchase obligations with respect to any security that is
a direct obligation of, or fully guaranteed by, the United States of
America or any agency or instrumentality thereof the obligations of
which are backed by the full faith and credit of the United States of
America, in either case entered into with a depository institution or
trust company (acting as principal) described in clause (b) above; or
(g) any other investment upon satisfaction of the Rating Agency
Condition with respect thereto.
"ELIGIBLE OBLIGOR" shall mean, as of any date of determination, each
Obligor in respect of a Receivable that satisfies the following eligibility
criteria:
(a) it is a resident of the United States, its territories or
possessions or incorporated or organized under the laws of the United
States or any state in the United States;
(b) it is not (i) the United States federal government, or any
subdivision thereof, or any agency, department or instrumentality
thereof, or (ii) a state or local government, or any subdivision
thereof, or any agency, department, or instrumentality thereof;
(c) it is not a Seller or an Affiliate of a Seller; and
(d) it is not the subject of any voluntary or involuntary
bankruptcy proceeding, unless the Obligor is a Qualifying DIP Obligor
with established debtor in possession financing;
PROVIDED, HOWEVER, that if 35% or more of the Principal Amount of
Receivables of an Obligor (measured by the Principal Amount of
Receivables of such Obligor in the Trust) is reported as being aged 90
days or more after the respective original due dates of such
Receivables as at the end of the Settlement Period immediately
preceding the most recent Settlement Report Date (commencing with the
Settlement Report Date occurring in February 1998), such Obligor shall
not be deemed an Eligible Obligor until such time as the Servicer
furnishes the Rating Agencies with a report (which may be part of a
Required Report or a Monthly Settlement Statement) indicating that
less than 35% of the Principal Amount of Receivables of such Obligor
then in the Trust are aged 90 days or more after the respective
original due dates of such Receivables.
7
<PAGE>
"ELIGIBLE RECEIVABLE" shall mean, as of any date of determination,
each Receivable owing by an Eligible Obligor that as of such date satisfies
the following eligibility criteria:
(a) it constitutes either (i) an account within the meaning of
Section 9-106 of the UCC of the State the law of which governs the
perfection of the interest granted in it or (ii) chattel paper within
the meaning of Section 9-105 of such UCC, subject, in the case of
chattel paper, to compliance with the procedures set forth in Schedule
3 hereto;
(b) it is not a Defaulted Receivable;
(c) the goods related to it shall have been shipped or the
services related to it shall have been performed and such Receivable
shall have been billed to the related Obligor;
(d) it is denominated and payable only in U.S. Dollars in the
United States;
(e) it arose in the ordinary course of business from the sale of
goods, products or services of the relevant Seller and in accordance
with the Policies of such Seller and, at such date of determination,
no Early Termination has occurred with respect to such Seller,
(f) (i) it does not contravene any applicable law, rule or
regulation and the applicable Seller is not in violation of any law,
rule or regulation in connection with it, in each case which in any
way renders such Receivable unenforceable or would otherwise impair in
any material respect the collectibility of such Receivable and (ii) it
is not subject to any investigation or proceeding known by such Seller
that would reasonably be expected to adversely affect the payment or
enforceability thereof;
(g) if the Company or the Trust is not excluded from the
definition of "investment company" pursuant to Rule 3a-7 under the
1940 Act, it is an account receivable representing all or part of the
sales price of merchandise, insurance or services within the meaning
of Section 3(c)(5) of the 1940 Act;
(h) it is not a Receivable purchased by a Seller from any
Person;
(i) it is not a Receivable for which the applicable Seller has
established an offsetting specific reserve; PROVIDED that a Receivable
subject only in part to the foregoing shall be an Eligible Receivable
to the extent not so subject;
(j) it is not a Receivable with original payment terms in excess
of 120 days from its original invoice date, or in respect of which the
applicable Seller has (i) altered the basis of the aging from the
initial due date for payment such that the final due date extends to a
date more than 120 days from its original invoice date or (ii)
otherwise made any modification except, in the case of each of the
foregoing, in the ordinary course of business and consistent with the
Policies of such Seller;
(k) all required consents, approvals or authorizations necessary
for the creation and enforceability of such Receivable and the
effective assignment and sale thereof by the applicable Seller to the
Company and by the Company to the Trust shall have been obtained with
respect to such Receivable;
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<PAGE>
(l) the applicable Seller is not in default in any material
respect under the terms of the contract, if any, from which such
Receivable arose;
(m) all right, title and interest in it has been validly sold to
the Company by the applicable Seller pursuant to the Receivables Sales
Agreement;
(n) the Company or the Trust will have legal and beneficial
ownership therein free and clear of all Liens other than such Liens
described in clauses (i) and (iv) of the definition of Permitted Liens
and such Receivable has been the subject of either a valid transfer
from the Company to the Trust or, alternatively, the grant of a first
priority perfected security interest therein to the Trust free and
clear of all Liens other than such Liens described in clauses (i) and
(iv) of the definition of Permitted Liens;
(o) it is not subject to any dispute in whole or in part or to
any offset, counterclaim, defense, rescission, recoupment or
subordination; PROVIDED that a Receivable subject only in part to any
of the foregoing shall be an Eligible Receivable to the extent not so
subject;
(p) it is at all times the legal, valid and binding obligation
of the Obligor thereon, enforceable against such Obligor to pay the
full Principal Amount thereof in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or law);
(q) as of the related Receivables Purchase Date, neither the
Company nor the applicable Seller has (i) taken any action that would
impair the rights of the Trustee or the Investor Certificateholders
therein or (ii) failed to take any action that was necessary to avoid
impairing the rights therein of the Trustee or Investor
Certificateholders;
(r) each of the representations and warranties made in the
Receivables Sale Agreement by the applicable Seller with respect to
such Receivable is true and correct in all material respects; and
(s) at the time such Receivable was sold by the applicable
Seller to the Company under the Receivables Sale Agreement, no event
described in subsection 6.01(g) of the Receivables Sale Agreement
(without giving effect to any requirement as to the passage of time)
had occurred with respect to such Seller;
"ELIGIBLE SUCCESSOR SERVICER" shall mean a Person which, at the time
of its appointment as Servicer, (i) is legally qualified and has the
corporate power and authority to service the Receivables transferred to the
Trust, (ii) has demonstrated the ability to service a portfolio of similar
receivables in accordance with the standards set forth in subsection 6.2(c)
of the Servicing Agreement and (iii) has a combined capital and surplus of
at least $5,000,000.
"ENHANCEMENT" shall mean, with respect to any Series, (i) the funds on
deposit in or credited to any bank account (or subaccount thereof) of the
Trust, (ii) any surety arrangement, any letter of credit, guaranteed rate
agreement, maturity guaranty facility, tax protection agreement, interest
rate swap, currency swap or other contract, agreement or arrangement, in
each case for the benefit of any Holders of such Series, as designated in
the applicable
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<PAGE>
Supplement and (iii) the subordination of one Class of Certificates in a
Series to another class in such Series or the subordination of any
Certificate held or interest owned by the Company to the Investor
Certificates of such Series.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"EXCHANGEABLE COMPANY INTEREST" shall have the meaning specified in
subsection 3.1(b) and shall be exchangeable as provided in Section 5.10.
"EXCHANGE DATE" shall have the meaning, with respect to any Series
issued pursuant to a Company Exchange, specified in Section 5.10.
"EXCHANGE NOTICE" shall have the meaning, with respect to any Series
issued pursuant to a Company Exchange, specified in Section 5.10.
"EXISTING COMPANION SERIES" shall have the meaning specified in
Section 5.10.
"FORCE MAJEURE DELAY" shall mean, with respect to any Servicing Party,
any cause or event which is beyond the control and not due to the
negligence of such Servicing Party which delays, prevents or prohibits the
Servicer's delivery of Required Reports and/or Monthly Settlement
Statements, including, without limitation, acts of God or the elements and
fire, but excluding strikes by any Servicing Party's employees; PROVIDED
that no such cause or event shall be deemed to be a Force Majeure Delay
unless the Servicer shall have given the Company and the Trustee written
notice promptly after the beginning of such delay.
"FRACTIONAL UNDIVIDED INTEREST" shall mean the fractional undivided
interest in the Certificateholders' Interest evidenced by an Investor
Certificate.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and the statements and
pronouncements of the Financial Accounting Standards Board and the rules
and regulations of the SEC, or such other statements by such other entity
as may be in general use by significant segments of the accounting
profession, which are applicable to the circumstances as of the date of
determination.
"GENERAL OPINION" shall mean, with respect to any action, an Opinion
of Counsel, which shall not be at the expense of the Trustee, to the effect
that (A) such action has been duty authorized by all necessary corporate
action on the part of the Servicer, the applicable Seller or Sellers or the
Company, as the case may be, (B) any agreement executed in connection with
such action constitutes a legal, valid and binding obligation of the
Servicer, the applicable Seller or Sellers or the Company, as the case may
be, enforceable in accordance with the terms thereof, except as
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar laws now
or hereinafter in effect, affecting the enforcement of creditors' rights
and except as such enforceability may be limited by general principles of
equity (whether considered in a proceeding at law or in equity) and (C) any
condition precedent to any such action specified in the applicable
agreement, if any, has been complied with, which opinion in the case of
this clause (C) may, to the extent that such opinion concerns questions of
fact, rely on an Officer's Certificate with respect to such questions of
fact.
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<PAGE>
"GOVERNMENTAL AUTHORITY" shall mean any nation or government, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of
or pertaining to government.
"HOLDERS" shall mean the collective reference to (i) the Persons in
whose names the Certificates are registered in the Certificate Register,
(ii) the owner of the Exchangeable Company Interest and (iii) if
applicable, the owner of each Series Subordinated Interest.
"INDEBTEDNESS" shall mean, with respect to any Person at any date, (a)
all indebtedness of such Person for borrowed money, (b) any obligation owed
for the deferred purchase price of property or services except trade
accounts payable arising in the ordinary course of business which are
payable according to ordinary business terms, which purchase price is
evidenced by a note or similar written instrument, (c) notes payable and
drafts accepted representing extensions of credit whether or not
representing obligations for borrowed money, (d) that portion of
obligations of such Person under capital leases which is properly
classified as a liability on a balance sheet in conformity with GAAP and
(e) all Indebtedness referred to in clauses (a) through (d) above secured
by any Lien on any property owned by such Person even though such Person
has not assumed or otherwise become liable for the payment thereof.
"INDEPENDENT PUBLIC ACCOUNTANTS" means any independent certified
public accountants of nationally recognized standing which constitute one
of the accounting firms commonly referred to as the "big six" accounting
firms (or any successor thereto); PROVIDED that such firm is independent
with respect to the Servicer within the meaning of Rule 2-01(b) of
Regulation S-X under the Securities Act.
"INELIGIBLE RECEIVABLE" shall have the meaning specified in Section
2.5(a).
"INITIAL CLOSING DATE" shall mean April 3, 1998.
"INITIAL INVESTED AMOUNT" shall mean, with respect to any Outstanding
Series, the meaning assigned to such term in the related Supplement for
such Series.
"INSOLVENCY EVENT" shall mean the occurrence of any one or more of the
Early Amortization Events specified in paragraph (a) of Section 7.1(a).
"INTERNAL OPERATING PROCEDURES MEMORANDUM" shall mean the internal
operating procedures memorandum prepared by the Trustee as set forth in
Exhibit B hereto.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of 1986.
"INVESTED AMOUNT" shall mean, with respect to any Outstanding Series,
the meaning assigned to such term in the related Supplement for such
Series.
"INVESTED PERCENTAGE" shall mean, with respect to any Outstanding
Series, the meaning assigned to such term in the related Supplement for
such Series.
"INVESTMENT EARNINGS" shall have the meaning specified in subsection
3.1(c).
"INVESTOR CERTIFICATEHOLDER" shall mean the holder of record of, or
the bearer of, an Investor Certificate.
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<PAGE>
"INVESTOR CERTIFICATES" shall mean the Certificates executed by the
Company and authenticated by or on behalf of the Trustee, substantially in
the form attached to the applicable Supplement, but shall not include any
Certificate held by the Company.
"ISSUANCE DATE" shall mean, with respect to any Series, the date of
issuance of such Series, or the date of any increase to the Invested Amount
of such Series, as specified in the related Supplement.
"LIEN" shall mean, with respect to any asset, (a) any mortgage, deed
of trust, lien, pledge, encumbrance, charge or security interest in or on
such asset (including, without limitation, any lien which may arise under
relevant state or federal law, if any), (b) the interest of a vendor or a
lessor under any conditional sale agreement, capital lease or title
retention agreement relating to such asset and (c) in the case of
securities, any purchase option, call or other similar right of a third
party with respect to such securities; PROVIDED, HOWEVER, that if a lien is
imposed under Section 412(n) of the Internal Revenue Code or Section 302(f)
of ERISA for a failure to make a required installment or other payment to a
plan to which Section 412(n) of the Internal Revenue Code or Section 302(f)
of ERISA applies, then such lien shall not be treated as a "Lien" from and
after the time any Person who is obligated to make such payment pays to
such plan the amount of such lien determined under Section 412(n)(3) of the
Internal Revenue Code or Section 302(f)(3) of ERISA, as the case may be,
and provides to the Trustee, any Agent and each Rating Agency written
evidence reasonably satisfactory to the Rating Agencies of the release of
such lien, or such lien expires pursuant to Section 412(n)(4)(B) of the
Internal Revenue Code or Section 302(f)(4)(B) of ERISA.
"LOCKBOX" shall mean the post office boxes listed on Schedule III to
the Receivables Sale Agreement to which the Obligors are instructed to
remit payments on the Receivables and/or such other post office boxes as
may be established pursuant to Section 2.3 of the Servicing Agreement.
"LOCKBOX ACCOUNT" shall mean the intervening account used by a Lockbox
Processor for deposit of funds received in a Lockbox prior to their
transfer to the Collection Concentration Account or the Collection Account.
"LOCKBOX AGREEMENT" shall mean, with respect to each Lockbox
Processor, a lockbox agreement (i) substantially in the forms set forth as
Exhibit A hereto, (ii) or in such form as the lockbox processor party
thereto employs in the ordinary course of its business for transactions of
a type similar to the one contemplated by this Agreement and which is
approved by the Trustee.
"LOCKBOX PROCESSOR" shall mean the depositary institution or
processing company (which may be the Trustee) which processes payments on
the Receivables sent by the Obligors thereon forwarded to a Lockbox.
"MATERIAL ADVERSE EFFECT" shall mean (i) with respect to a Seller or a
Servicing Party, (a) a material impairment of the ability of such Seller or
such Servicing Party, as the case may be, to perform its obligations under
the Transaction Documents, (b) a material impairment of the validity or
enforceability of any of the Transaction Documents against such Seller or
such Servicing Party, (c) a material impairment of the collectibility of
the Receivables taken as a whole or (d) a material impairment of the
interests, rights or remedies of the Trustee or the Investor
Certificateholders under or with respect to the Transaction Documents or
the Receivables taken as a whole and (ii) with respect to the Company, (a)
a material impairment of the ability of the Company to perform its
obligations under any Transaction Document to which it is a party, (b) a
12
<PAGE>
material impairment of the validity or enforceability of any of the
Transaction Documents against the Company, (c) a material impairment of the
collectibility of the Receivables taken as a whole or (d) a material
impairment of the interests, rights or remedies of the Trustee or the
Investor Certificateholders under or with respect to the Transaction
Documents or the Receivables taken as a whole.
"MONTHLY SERVICING FEE" shall have the meaning specified in subsection
2.5(a) of the Servicing Agreement.
"MONTHLY SETTLEMENT STATEMENT" shall have the meaning specified in
Section 4.2 of the Servicing Agreement.
"MOODY'S" shall mean Moody's Investors Service, Inc.
"NEW SERIES" shall have the meaning specified in Section 5.10.
"1940 ACT" shall mean the Investment Company Act of 1940, as amended.
"OBLIGOR" shall mean, with respect to any Receivable, the party
obligated to make payments with respect to such Receivable, including any
guarantor thereof.
"OFFICER'S CERTIFICATE" shall mean, unless otherwise specified in this
Agreement, a certificate signed by the Chairman of the Board, Vice Chairman
of the Board, President, Chief Financial Officer, any Vice President, any
Secretary or any Treasurer of the Servicer or the Company, as the case may
be, or, in the case of a Successor Servicer, a certificate signed by a Vice
President and the financial controller (or an officer holding an office
with equivalent or more senior responsibilities) of such Successor
Servicer.
"OPINION OF COUNSEL" shall mean a written opinion or opinions of one
or more counsel (who may be internal counsel) to the Company or the
Servicer, designated by the Company or the Servicer, as the case may be,
which is reasonably acceptable to the Trustee.
"OPTIONAL TERMINATION NOTICE" shall have, with respect to any Series,
the meaning specified in the related Supplement for such Series.
"OUTSTANDING SERIES" shall mean, at any time, a Series issued pursuant
to an effective Supplement for which the Series Termination Date for such
Series has not occurred.
"OVERCONCENTRATION AMOUNT" shall mean, at any date with respect to an
Eligible Obligor, the Principal Amount of Eligible Receivables due from
such Obligor at such date which, expressed as a percentage of the Principal
Amount of all Eligible Receivables in the Trust at such date, exceeds the
percentage set forth below for the applicable category of that Obligor at
such date (or such higher percentage after giving effect to which the
Rating Agency Condition is satisfied):
<TABLE>
<CAPTION>
MINIMUM RATING
S&P DCR Moody's Percentage
- --- --- ------- ----------
<S> <C> <C> <C>
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<PAGE>
A-1 or A+ D-1 or A+ P-1 or A1 15%
A-2 or BBB+ D-2 or BBB+ P-2 or Baa1 10%
A-3 or BBB- D-3 or BBB- P-3 or Baa3 5%
Not rated/other Not rated/other Not rated/other 2.5%
</TABLE>
; PROVIDED, HOWEVER, that all Eligible Obligors that are Affiliates of each
other shall be deemed to be a single Eligible Obligor to the extent the
Servicer knows or has reason to know of the affiliation and in that case,
the applicable debt rating for such group of Obligors shall be the debt
rating of the ultimate parent of the group; PROVIDED, FURTHER, that the
debt ratings set forth under the column headed "Moody's" or "DCR" in the
above table and the references in the immediately succeeding paragraph to
Moody's and DCR shall apply only if either Moody's or DCR is a Rating
Agency under any Supplement for an Outstanding Series.
The percentage applicable to any Obligor (or the ultimate parent of the
affiliated group of which such Obligor is a member, as the case may be)
will be the percentage associated with the lower of such Obligor's (or such
ultimate parent's, as the case may be) debt rating issued by S&P, DCR, and
Moody's; PROVIDED THAT: (i) if such debt is rated only by S&P, the
applicable percentage will be the percentage associated with the rating
issued by S&P and (ii) if S&P issues no rating with respect to such Obligor
(or such ultimate parent, as the case may be), then the percentage
applicable to such Obligor (or such ultimate parent, as the case may be)
shall be the percentage associated with the categories "Not rated/other"
and "Less than D-3 or BBB-/Not rated." The ratings specified in the table
are minimums for each percentage category, so that a rating not shown in
the table falls in the category associated with the highest rating shown in
the table that is lower than that rating. Notwithstanding the above, the
percentage applicable to any Special Obligor will be 5.0%.
"PAYING AGENT" shall mean any paying agent and co-paying agent
appointed pursuant to Section 5.6 and, unless otherwise specified in the
related Supplement of any Outstanding Series and with respect to such
Series, shall initially be the Trustee.
"PERMITTED LIENS" shall mean, at any time, for any Person:
(i) Liens created pursuant to this Agreement or the Receivables
Sale Agreement;
(ii) Liens for taxes, assessments or other governmental charges
or levies not yet due and payable or which are being contested in good
faith by appropriate proceedings and with respect to which reserves in
conformity with GAAP have been provided on the books of such Person;
(iii) Liens on a Receivable arising as a result of offsetting
specific reserves and rights of set-off, counterclaim or other
defenses with respect to such Receivable;
(iv) Any other Liens securing obligations not in excess of
$50,000 in the aggregate at any one time outstanding.
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"PERSON" shall mean any individual, partnership, limited liability
company, corporation, business trust, joint stock company, trust,
unincorporated association, joint venture, Governmental Authority or other
entity of whatever nature.
"POLICIES" shall mean, with respect to each Seller, the credit and
collection policies of such Seller, copies of which have been delivered to
the Trustee, as the same may be amended, supplemented or otherwise modified
from time to time in accordance with the Transaction Documents.
"POOLING AND SERVICING AGREEMENTS" shall mean, collectively, this
Agreement, the Servicing Agreement and each Supplement for an Outstanding
Series.
"POTENTIAL EARLY AMORTIZATION EVENT" shall mean an event which, with
the giving of notice and/or the lapse of time, would constitute an Early
Amortization Event hereunder or under any Supplement.
"POTENTIAL SERVICER DEFAULT" shall mean an event which, with the
giving of notice and/or the lapse of time, would constitute a Servicer
Default hereunder or under any Supplement.
"PREPAYMENT REQUEST" shall have, with respect to any Series, the
meaning specified in the related Supplement.
"PRINCIPAL AMOUNT" shall mean, with respect to any Receivable, the
amount due thereunder.
"PRINCIPAL TERMS" shall have the meaning, with respect to any Series
issued pursuant to a Company Exchange, specified in subsection 5.10(c).
"PUBLICATION DATE" shall have the meaning specified in Section 7.2.
"QUALIFYING DIP OBLIGOR" shall mean, as of any date of determination,
an Obligor (i) that is a debtor in possession in any voluntary or
involuntary bankruptcy proceeding, for which no trustee or examiner has
been appointed and no application is pending for the appointment of a
trustee or examiner, (ii) in a case under Chapter 11 of the Bankruptcy Code
in which no motion has been made for an order liquidating all or any
substantial portion of such debtor's assets and no motion has been made for
the conversion of such case to a case under chapter 7 of the Bankruptcy
Code, (iii) whose Receivables would, if included in the Trust Assets,
account for less than 1% of the aggregate Principal Amount of all
Receivables included in the Trust, (iv) as to which no party under any
Series Supplement has, in the exercise of its reasonable discretion, given
notice to the Company and the Servicer that such Obligor shall not be
included as an Eligible Obligor and (v) for which the Obligor has obtained
the approval of a bankruptcy court to make payment on any Receivables.
"RATING AGENCY" shall mean, with respect to each Outstanding Series,
any rating agency or agencies designated as such in the related Supplement;
PROVIDED that in the event that no Outstanding Series has been rated, then
for purposes of the definitions of "Eligible Institution" and "Eligible
Investments," "RATING AGENCY" shall mean S&P and references to "each Rating
Agency" shall refer solely to S&P.
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"RATING AGENCY CONDITION" shall mean, subject to the applicable
Supplement, with respect to any action, that each Rating Agency shall have
notified the Company, the Servicer, any Agent and the Trustee in writing
that such action will not result in a reduction or withdrawal of the rating
of any Outstanding Series or any Class of any such Outstanding Series with
respect to which it is a Rating Agency.
"REBATE REDUCTION AMOUNT" shall mean, as of any Settlement Report
Date, the highest cumulative value of accruals at the end of a Settlement
Period for rebates for electronic funds transfer payments over the prior 6
consecutive Settlement Periods (including the Settlement Period ending on
such Settlement Report Date).
"RECEIVABLE" shall mean the indebtedness and payment obligations of
any Person to a Seller (including, without limitation, obligations
constituting an account or general intangible or evidenced by a note,
instrument, contract, security agreement, chattel paper or other evidence
of indebtedness or security) arising from a sale of products or the
provision of service by such Seller, including, without limitation, any
right to payment for products sold or for services rendered, and including
the right to payment of any interest, sales taxes, finance charges,
returned check or late charges and other obligations of such Person with
respect thereto.
"RECEIVABLES PURCHASE DATE" shall mean, with respect to any
Receivable, the Business Day on which the Company purchases such Receivable
from the applicable Seller and transfers such Receivable to the Trust.
"RECEIVABLES SALE AGREEMENT" shall have the meaning specified in the
recitals hereto.
"RECORD DATE" shall mean, with respect to any Series, the date
specified as such in the applicable Supplement.
"RECOVERIES" shall mean all amounts collected (net of out-of-pocket
costs of collection) in respect of Charged-Off Receivables.
"RELATED PROPERTY" shall mean, with respect to each Receivable:
(a) all of the applicable Seller's interest in the goods
(including returned goods), if any, relating to the sale which gave
rise to such Receivable;
(b) all other security interests or Liens, and the applicable
Seller's interest in the property subject thereto, from time to time
purporting to secure payment of such Receivable, together with all
financing statements signed by an Obligor describing any collateral
securing such Receivable; and
(c) all guarantees, insurance, letters of credit and other
agreements or arrangements of whatever character from time to time
supporting or securing payment of such Receivable;
in the case of clauses (b) and (c), without limitation, whether pursuant to
the contract related to such Receivable or otherwise or pursuant to any
obligations evidenced by a note, instrument, contract, security agreement,
chattel paper or other evidence of indebtedness or security and the proceeds
thereof.
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"REPORTED PERIOD" shall have the meaning specified in Section 4.1 of
the Servicing Agreement.
"REQUIRED REPORT" shall have the meaning specified in Section 4.1 of
the Servicing Agreement.
"REQUIREMENT OF LAW" for any Person shall mean the certificate or
articles of incorporation or articles of association and by-laws or other
organizational or governing documents of such Person, and 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.
"RESIGNATION NOTICE" shall have the meaning specified in Section 6.2
of the Servicing Agreement.
"RESPONSIBLE OFFICER" shall mean (i) when used with respect to the
Trustee, any officer within the Corporate Trust Office of the Trustee
including any Vice President, any Assistant Vice President, Trust Officer
or Assistant Trust Officer or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above
designated officers and, in each case, having direct responsibility for the
administration of this Agreement and (ii) when used with respect to any
other Person, the Chairman of the Board, President, Chief Financial
Officer, any Vice President, Treasurer, Assistant Treasurer, Secretary or
Assistant Secretary of such Person.
"REVOLVING PERIOD" shall mean, with respect to any Outstanding Series,
the meaning assigned to such term in the related Supplement for such
Series.
"S&P" shall mean Standard & Poor's Ratings Services, or any successor
thereto.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SECURITIES INTERMEDIARY" shall have the meaning specified in Section
3.1(c)(ii).
"SEC" shall mean the Securities and Exchange Commission.
"SELLERS" shall mean United Stationers Supply Co. in its capacity as
Seller under the Receivables Sale Agreement and any directly or indirectly
wholly-owned subsidiary of United Stationers Inc. which has been added as a
Seller in accordance with the provisions of the Receivables Sale Agreement
and the other Transaction Documents (but, in each case, excluding any such
Subsidiaries which have been terminated as Sellers in accordance with the
provisions thereof and of the other Transaction Documents), all of the
foregoing in their capacities as Sellers under the Receivables Sale
Agreement; each, individually, a "SELLER".
"SELLER ADJUSTMENT PAYMENTS" shall have the meaning specified in
Section 2.05 of the Receivables Sale Agreement.
"SELLER REPURCHASE PAYMENTS" shall have the meaning specified in
Section 2.06 of the Receivables Sale Agreement.
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"SERIES" shall mean any series of Investor Certificates, the terms of
which are set forth in a Supplement.
"SERIES ACCOUNT" shall mean any deposit, trust, escrow, securities,
reserve or similar account maintained for the benefit of the Investor
Certificateholders of any Series or Class, as specified in any Supplement.
"SERIES COLLECTION SUBACCOUNT" shall have the meaning specified in
subsection 3.1(a).
"SERIES COLLECTION SUB-SUBACCOUNTS" shall have the meaning specified
in subsection 3.1(a).
"SERIES NON-PRINCIPAL COLLECTION SUB-SUBACCOUNT" shall have the
meaning specified in subsection 3.1(a).
"SERIES PRINCIPAL COLLECTION SUB-SUBACCOUNT" shall have the meaning
specified in subsection 3.1(a).
"SERIES SUBORDINATED INTEREST" shall mean, with respect to any Series,
the undivided retained interest of the Company in the Trust Assets, if any,
which is subordinated to the Certificateholders' Interest of such Series,
as set forth in the Supplement for such Series.
"SERIES TERMINATION DATE" shall mean, with respect to any Outstanding
Series, the meaning assigned to such term in the related Supplement for
such Series.
"SERVICE TRANSFER" shall have the meaning specified in Section 6.1 of
the Servicing Agreement.
"SERVICER" shall initially mean United Stationers Supply Co. in its
capacity as Servicer under the Transaction Documents and, after any Service
Transfer, the Successor Servicer.
"SERVICER DEFAULT" shall have, with respect to any Series, the meaning
specified in Section 6.1 of the Servicing Agreement and, if applicable, as
supplemented by the related Supplement for such Series.
"SERVICER INDEMNIFICATION AMOUNT" shall have the meaning specified in
Section 5.2(c) of the Servicing Agreement.
"SERVICER SITE REVIEW" shall mean the review performed by the Trustee
of the servicing operations of the Servicer at its offices, as provided for
in subsection 8.1(f) and as described in any Supplement or attachment
thereto.
"SERVICING AGREEMENT" shall have the meaning specified in the recitals
hereto.
"SERVICING FEE" shall have the meaning specified in subsection 2.5(a)
of the Servicing Agreement.
"SERVICING FEE PERCENTAGE" shall mean 1% per annum.
"SERVICING PARTY" shall mean the collective reference to the Servicer
and each Sub-Servicer.
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"SETTLEMENT PERIOD" shall mean (i) initially, the period commencing on
the date hereof and ending on the last day of the succeeding calendar
month, and (ii) thereafter, each calendar month.
"SETTLEMENT REPORT DATE" shall mean, except as otherwise set forth in
the applicable Supplement, the 15th day of each calendar month (or if such
15th day is not a Business Day, the next succeeding Business Day).
"SPECIAL ALLOCATION SETTLEMENT REPORT DATE" shall have the meaning
specified in subsection 3.1(e).
"SPECIAL OBLIGORS" shall mean as of any Settlement Report Date and
continuing to but not including the next Settlement Report Date, the
Obligors designated as such by the Company, each of which shall be an
Obligor that is unrated or rated below "investment grade" as to which the
concentration limit would otherwise be 2.5% but which, as to those Obligors
designated as Special Obligors, shall be 5%. The Company may designate up
to three Special Obligors in any one Settlement Period, which shall be
selected from the following Companies: BT Office Products International
Inc., Corporate Express Inc., U.S. Office Products Company, Inc., Staples
Inc., Bestbuy Supply Depot Corp. or Boise Cascade Office Products
Corporation.
"SPECIFIED BANKRUPTCY OPINION PROVISIONS" shall mean the factual
assumptions and the actions to be taken by any Seller or the Company, in
each case as specified in the legal opinion of Weil, Gotshal & Manges LLP
relating to certain bankruptcy matters and delivered on the Initial Closing
Date.
"STANDBY LIQUIDATION SYSTEM" shall mean a system by which the Trustee
will receive and store electronic information regarding Receivables from
the Servicer and each Sub-Servicer which may be utilized in the event of a
liquidation of the Receivables to be carried out by the Trustee established
pursuant to subsection 8.1(f) and as described in any Supplement or
attachment thereto.
"SUBORDINATED NOTE" shall have the meaning specified in Section 8.01
of the Receivables Sale Agreement.
"SUB-SERVICER" shall have the meaning specified in the recitals
hereto.
"SUBSIDIARY" shall mean, as to any Person, a corporation, partnership
or other entity of which shares of stock or other ownership interests
having by the terms thereof ordinary voting power (other than stock or such
other ownership interests having such power only by reason of the happening
of a contingency) to elect a majority of the board of directors or other
managers of such corporation, partnership or other entity are at the time
directly or indirectly owned, or the management of which is otherwise
controlled, through one or more intermediaries, or both, by such Person.
"SUCCESSOR SERVICER" shall have the meaning specified in Section 6.2
of the Servicing Agreement.
"SUPPLEMENT" shall mean, with respect to any Series, a supplement to
this Agreement complying with the terms of Section 5.10(c), executed in
conjunction with the issuance of any Series.
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"TARGET RECEIVABLES AMOUNT" shall mean, with respect to any
Outstanding Series, the meaning assigned to such term in the related
Supplement for such Series.
"TARGETED HOLDER" shall have the meaning specified in subsection
5.3(e).
"TARGETED INVESTOR CERTIFICATE" shall have the meaning specified in
subsection 5.3(d).
"TAX OPINION" shall mean, with respect to any action, an Opinion of
Counsel, which shall not be at the expense of the Trustee, to the effect
that, for federal income tax purposes, (i) such action will not adversely
affect the characterization as debt or as debt or an interest in a
partnership (other than a partnership taxable as a corporation), as the
case may be, of any Investor Certificates of any Outstanding Series or
Class not retained by the Company, (ii) following such action, the Trust
will not be classified as an association or a publicly traded partnership
taxable as a corporation, (iii) such action will not cause or constitute a
taxable event in which gain or loss would be recognized by any Investor
Certificateholder or the Trust and (iv) in the case of Section 5.9, the
Investor Certificates of the new Series which are not retained by the
Company will be characterized as debt or as an interest in a partnership
(other than a partnership taxable as a corporation).
"TERMINATION NOTICE" shall have the meaning specified in Section 6.1
of the Servicing Agreement.
"TRANSACTION DOCUMENTS" shall mean the collective reference to this
Agreement, the Servicing Agreement, each Supplement with respect to any
Outstanding Series, the Receivables Sale Agreement, the Lockbox Agreements,
the Certificates and any other documents delivered pursuant to or in
connection therewith.
"TRANSFER AGENT AND REGISTRAR" shall have the meaning specified in
Section 5.3 and shall initially be the Trustee.
"TRANSFER DEPOSIT AMOUNT" shall have the meaning specified in
subsection 2.5(b).
"TRANSFER OBLIGATION DATE" shall have the meaning specified in
subsection 2.5(a).
"TRANSFERRED AGREEMENTS" shall have the meaning specified in
subsection 2.1(b).
"TRUST" shall mean the United Stationers Receivables Master Trust
created by this Agreement.
"TRUST ACCOUNT" shall have the meaning, with respect to any Series,
specified in the applicable Supplement for such Series.
"TRUST ASSETS" shall have the meaning specified in Section 2.1.
"TRUST TERMINATION DATE" shall have the meaning specified in
subsection 9.1(a).
"TRUSTEE" shall mean the institution executing this Agreement as
trustee, or its successor in interest or any successor trustee appointed as
herein provided.
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"UCC" shall mean the Uniform Commercial Code, as amended from time to
time, as in effect in any specified jurisdiction or if no jurisdiction is
specified, as in effect in the State of New York.
"UNITED STATES REGULATIONS" means 31 C.F.R. Part 357; 12 C.F.R. Part
615, Subpart O; 12 C.F.R. Part 912; 12 C.F.R. Part 1511; 24 C.F.R. Part 81;
31 C.F.R. Part 354; and 18 C.F.R. Part 1314.
"UNITED STATES SECURITIES ENTITLEMENT" means a "Security Entitlement"
as defined in a United States Regulation.
"USSC" shall have the meaning specified in the recitals hereto.
Section 1.2 OTHER DEFINITIONAL PROVISIONS. (a) All terms defined
in this Agreement, the Servicing Agreement or in any Supplement shall have
such defined meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein.
(b) As used herein and in any certificate or other document made or
delivered pursuant hereto or thereto, accounting terms not defined in Section
1.1, and accounting terms partly defined in Section 1.1 to the extent not
defined, shall have the respective meanings given to them under GAAP. To the
extent that the definitions of accounting terms herein are inconsistent with
the meanings of such terms under GAAP, the definitions contained herein shall
control.
(c) 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 Section,
subsection, Schedule and Exhibit references contained in this Agreement are
references to Sections, subsections, Schedules and Exhibits in or to this
Agreement unless otherwise specified.
(d) The definitions contained in Section 1.1 are applicable to the
singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such terms.
(e) Where a definition contained in Section 1.1 specifies that such
term shall have the meaning set forth in the related Supplement, the
definition of such term set forth in the related Supplement may be preceded
by a prefix indicating (or include in its definition) the specific Series or
Class to which such definition shall apply.
(f) Where reference is made in this Agreement or any related
Supplement to the principal amount of Receivables, such reference shall,
unless explicitly stated otherwise, be deemed a reference to the Principal
Amount (as such term is defined in Section 1.1) of such Receivables.
(g) Any reference herein or in any other Transaction Document to a
provision of the Internal Revenue Code or ERISA shall be deemed a reference
to any successor provision thereto.
(h) To the extent that any provision of this Agreement or any other
Transaction Document requires that a calculation be performed with respect to
a date occurring prior to the effective date of such Transaction Document,
such calculation shall be performed as provided therein as though such
Transaction Document had been effective on and as of such prior date.
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ARTICLE II
CONVEYANCE OF RECEIVABLES;
ISSUANCE OF CERTIFICATES
Section 2.1 CONVEYANCE OF RECEIVABLES.
(a) By execution and delivery of this Agreement, the Company does
hereby transfer, assign, set over and otherwise convey to the Trust for the
benefit of the Holders, without recourse (except as specifically provided
herein), all of its present and future right, title and interest in, to and
under:
(i) all Receivables, including those existing at the close of
business on the Initial Closing Date and all Receivables thereafter
arising from time to time until but not including the Trust
Termination Date;
(ii) the Related Property;
(iii) all Collections;
(iv) all rights (including rescission, replevin or reclamation)
relating to any Receivable or arising therefrom;
(v) the Collection Account, each Lockbox and each Lockbox
Account (collectively, the "ACCOUNTS"), including (A) all funds and
other evidences of payment held therein and all certificates and
instruments, if any, from time to time representing or evidencing any
of such Accounts or any funds and other evidences of payment held
therein, (B) all investments of such funds held in such Accounts and
all certificates and instruments from time to time representing or
evidencing such investments, (C) all Eligible Investments, (D) all
notes, certificates of deposit and other instruments from time to time
hereafter delivered or transferred to, or otherwise possessed by, the
Trustee for and on behalf of the Company in substitution for any of
the then existing Accounts and (E) all interest, dividends, cash,
instruments and other property from time to time held in any and all
of the then existing Accounts; and
(vi) all monies due or to become due and all amounts received
with respect to the items listed in clauses (i) through (v) and all
proceeds (including, without limitation, whatever is received upon the
sale, exchange, collection or other disposition of the foregoing and
all "proceeds" as defined in Section 9-306 of the UCC as in effect in
the State of New York) thereof, including all Recoveries relating
thereto;
(b) The Company hereby transfers, assigns, sets over and otherwise
conveys to the Trustee for the benefit of the Holders, and grants to the
Trustee, for the benefit of the Holders, a first priority perfected security
interest in, all its right, title and interest in, to and under the
following: each of the Receivables Sale Agreement and the Servicing
Agreement, including in respect of each agreement, (A) all property assigned
thereunder and all rights of the Company to receive monies due and to become
due under or pursuant to such agreement, whether payable as fees, expenses,
costs or otherwise, (B) all rights of the Company to receive proceeds of any
insurance, indemnity, warranty or guaranty with respect to such agreement,
(C) claims of the Company for damages arising out of or for breach of or
default under such agreement, (D) the right of the Company to amend, waive or
terminate such agreement, to perform thereunder and to compel performance and
otherwise exercise all remedies thereunder, (E) all
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other rights, remedies, powers, privileges and claims of the Company under or
in connection with such agreement (whether arising pursuant to such agreement
or otherwise available to the Company at law or in equity), including the
rights of the Company to enforce such agreement and to give or withhold any
and all consents, requests, notices, directions, approvals, extensions or
waivers under or in connection therewith and (F) all monies due or to become
due and all amounts received with respect to the items listed in clauses (A)
through (F) and all proceeds (including, without limitation, whatever is
received upon the sale, exchange, collection or other disposition of the
foregoing and all "proceeds" as defined in Section 9-306 of the UCC as in
effect in the State of New York) thereof, including all Recoveries relating
thereto (all of the foregoing set forth in subclauses (A)-(F), inclusive, the
"TRANSFERRED AGREEMENTS");
Such property described in the foregoing paragraphs (a) and (b), together
with all investments and all monies on deposit in any other bank account or
accounts maintained for the benefit of any Holders for payment to Holders
shall constitute the assets of the Trust (the "TRUST ASSETS").
Subject to Section 5.9, although it is the intent of the parties to
this Agreement that the conveyance of the Company's right, title and interest
in, to and under the Receivables and the other Trust Assets described in
paragraph (a) pursuant to this Agreement shall constitute either a purchase
and sale or a loan, in the event that such conveyance is deemed to create a
loan, the Company hereby grants to the Trustee, for the benefit of the
Holders, a perfected first priority security interest in all of the Company's
present and future right, title and interest in, to and under the Receivables
and such other Trust Assets to secure the payment of the applicable Invested
Amounts, interest thereon and the other fees and expenses due to the Holders,
and that this Agreement shall constitute a security agreement under
applicable law in favor of the Trustee, for the benefit of the Holders.
(c) The assignment, set over and conveyance to the Trust pursuant
to Section 2.1(a) shall be made to the Trustee, on behalf of the Trust, and
each reference in this Agreement to such assignment, set over and conveyance
shall be construed accordingly. In connection with the foregoing assignment,
except as expressly provided otherwise in the Transaction Documents, the
Company, the Servicer and each Sub-Servicer agree to deliver to the Trustee
each Trust Asset (including any original documents or instruments included in
the Trust Assets as are necessary to effect such assignment) in which the
transfer of an interest is perfected under the UCC or otherwise solely by
possession and not by filing a financing statement or similar document.
Notwithstanding the assignment of the Transferred Agreements set
forth in Section 2.1(b), the Company does not hereby assign or delegate any
of its duties or obligations under the Receivables Sale Agreement to the
Trust or the Trustee and neither the Trust nor the Trustee accepts such
duties or obligations, and the Company shall continue to have the right and
the obligation to purchase Receivables from the Sellers thereunder from time
to time. The foregoing assignment, set-over and conveyance does not
constitute and is not intended to result in a creation or an assumption by
the Trust, the Trustee, any Investor Certificateholder or the Company, in its
capacity as a Holder, of any obligation of the Servicer, the Company, any
Seller or any other Person in connection with the Receivables or under any
agreement or instrument relating thereto, including, without limitation, any
obligation to any Obligor.
In connection with such assignment, the Company agrees to record
and file, at its own expense, any financing statements (and continuation
statements with respect to such financing statements when applicable) or,
where applicable, registrations in the appropriate records, (i) with respect
to the Receivables now existing and hereafter created and (ii) with respect
to any other Trust Assets a security interest in which may be perfected under
the relevant UCC, legislation or similar statute by such filing or
registration, as the case may be, in each case meeting the requirements of
applicable law in such manner and in such jurisdictions as are necessary to
perfect and maintain perfection of the assignment of the
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Receivables and such other Trust Assets (excluding returned merchandise) to
the Trust, and to deliver a file-stamped copy or certified statement of such
financing statement or registration or other evidence of such filing or
registration to the Trustee on or prior to the date of issuance of any
Certificates. The Trustee shall be under no obligation whatsoever to file
such financing statement, or a continuation statement to such financing
statement, or to make any other filing or other registration under the UCC,
other relevant legislation or similar statute in connection with such
transfer. The Trustee shall be entitled to conclusively rely on the filings
or registrations made by or on behalf of the Company without any independent
investigation and the Company's obligation to make such filings as evidence
that such filings have been made.
In connection with such assignment, the Company further agrees, at
its own expense, on or prior to the Initial Closing Date (a) to indicate, or
to cause to be indicated, in its computer files containing its master
database of Receivables and to cause each Seller to indicate in its records
containing its master database of Receivables that Receivables have been
conveyed to the Company or the Trust, as the case may be, pursuant to the
Receivables Sale Agreement or this Agreement, respectively, for the benefit
of the Holders and (b) to deliver, or cause to be delivered, to the Trustee
computer tapes or disks containing a true and complete list of all
Receivables transferred to the Trust specifying for each such Receivable, as
of the Cut-Off Date, (i) the identification or reference number assigned to
such Receivables by the Company and (ii) the Principal Amount of such
Receivables. Such tapes or disks shall be marked as Schedule 1 to this
Agreement and are hereby incorporated into and made a part of this Agreement.
Section 2.2 ACCEPTANCE BY TRUSTEE. (a) The Trustee hereby
acknowledges its acceptance on behalf of the Trust of all right, title and
interest to the property, now existing and hereafter created, assigned to the
Trust pursuant to Section 2.1 and declares that it shall maintain such right,
title and interest, upon the trust herein set forth, for the benefit of all
Holders.
(b) The Trustee shall have no power to create, assume or incur
indebtedness or other liabilities in the name of the Trust other than as
contemplated in this Agreement.
Section 2.3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY RELATING
TO THE COMPANY. The Company hereby represents and warrants to the Trustee
and the Trust, for the benefit of the holders of Certificates of each
Outstanding Series, as of the Issuance Date of such Series, that:
(a) CORPORATE EXISTENCE; COMPLIANCE WITH LAW. The Company (i) is a
limited liability company duly formed, validly existing and in good standing
under the laws of the jurisdiction of its organization, (ii) has all
requisite limited liability company power and authority and all legal right
to own and operate its properties, to lease the properties it operates as
lessee and to conduct its business as now conducted and proposed to be
conducted, (iii) is duly qualified as a foreign limited liability company and
is in good standing under the laws of each jurisdiction in which its business
or activities requires such qualification, except where the failure to so
qualify and be in good standing would not reasonably be likely to cause a
Material Adverse Effect, and (iv) is in compliance with all material
Requirements of Law. The Company does not engage in activities prohibited by
the Transaction Documents or its memorandum and articles of association.
(b) CORPORATE POWER; AUTHORIZATION. The Company has the corporate
power and authority, and the legal right, to execute, deliver and perform
this Agreement and the other Transaction Documents to which it is a party and
has taken all necessary corporate action to authorize the execution, delivery
and performance of this Agreement and the other Transaction Documents to
which it is a party. No consent or authorization of, filing with, notice to
or other act by or in respect of, any Governmental
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Authority or any other Person is required in connection with the execution,
delivery, performance, validity or enforceability of this Agreement and the
other Transaction Documents to which it is a party by or against the Company
other than (i) those which have duly been obtained or made and are in full
force and effect on the Initial Closing Date, (ii) any filings of UCC-1
financing statements or similar documents necessary to perfect the Company's
or the Trust's interest in the Trust Assets and (iii) those that may be
required under state securities or "blue sky" laws in connection with the
offering or sale of certificates. This Agreement and each other Transaction
Document to which the Company is a party have been duly executed and
delivered on behalf of the Company.
(c) ENFORCEABILITY. This Agreement and each of the other
Transaction Documents to which the Company is a party (i) constitute the
legal, valid and binding obligations of the Company enforceable against it in
accordance with their terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws now or hereafter in effect affecting the
enforcement of creditors' rights generally and except as such enforceability
may be limited by general principles of equity (whether considered in a
proceeding at law or in equity) and (ii) are effective and all action has
been taken to cause compliance with paragraph (n) of the definition of
Eligible Receivables.
(d) NO LEGAL BAR. The execution, delivery and performance of this
Agreement and the other Transaction Documents to which the Company is a party
will not violate any Requirement of Law, and will not result in, or require,
the creation or imposition of any Lien (other than Liens contemplated or
permitted hereby) on any of its properties or revenues pursuant to any such
Requirement of Law or Contractual Obligation.
(e) NO MATERIAL LITIGATION. There are no actions, suits,
investigations or proceedings at law or in equity (including, without
limitation, injunctions, writs or restraining orders) by or before any
arbitrator, court or Governmental Authority now pending or, to the knowledge
of the Company, threatened against or affecting the Company or any material
properties, revenues or rights of the Company which (i) involve this
Agreement or any of the other Transaction Documents or any of the
transactions contemplated hereby or thereby, or (ii) could, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect
with respect to the Company. The transactions contemplated hereunder and the
use of the proceeds thereof will not violate any Requirement of Law.
(f) NO DEFAULT. The Company is not in default under or with
respect to any of its Contractual Obligations. No Early Amortization Event
or Potential Early Amortization Event has occurred and is continuing.
(g) TAX RETURNS. The Company has filed or caused to be filed all
Federal and all other tax returns which are required to have been filed by it
and has paid or caused to be paid all taxes shown thereon to be due and
payable, and any material assessments made against it or any of its property.
No tax Lien has been filed, and, to the knowledge of the Company, no
material claim is being asserted, with respect to any such taxes. For
purposes of this paragraph, "taxes" shall mean any present or future tax,
levy, impost, duty, charge, assessment or fee of any nature (including
interest, penalties and additions thereto) that is imposed by any
Governmental Authority.
(h) LOCATION OF RECORDS; CHIEF EXECUTIVE OFFICE. The offices at
which the Company keeps its records concerning the Receivables either (x) are
located at the addresses set forth for the Sellers on Schedule II of the
Receivables Sale Agreement or (y) have been reported to the Trustee in
accordance with the provisions of subsection 2.8(l) of this Agreement. The
chief executive office of the Company is located at one of the addresses set
forth on Schedule 4 and is the place where the Company is "located"
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for the purposes of Section 9-103(3)(d) of the UCC as in effect in the State
of New York. The state and county where the chief executive office of the
Company is "located" for the purposes of Section 9-103(3)(d) of the UCC has
not changed in the past four months.
(i) SOLVENCY. Both prior to and after giving effect to the
transactions occurring on each Issuance Date, (i) the fair value of the
assets of the Company at a fair valuation will exceed the debts and
liabilities, subordinated, contingent or otherwise, of the Company; (ii) the
present fair salable value of the property of the Company will be greater
than the amount that will be required to pay the probable liabilities of the
Company on its debts and other liabilities, subordinated, contingent or
otherwise, as such debts and liabilities become absolute and matured; (iii)
the Company will be able to pay its debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and
matured; and (iv) the Company will not have unreasonably small capital with
which to conduct the business in which it is engaged as such business is now
conducted and is proposed to be conducted. For all purposes of clauses (i)
through (iv) above, the amount of contingent liabilities at any time shall be
computed as the amount that, in the light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be expected
to become an actual or matured liability. The Company does not intend to, nor
does it believe that it will, incur debts beyond its ability to pay such
debts as they mature, taking into account the timing of and amounts of cash
to be received by it and the timing of and amounts of cash to be payable in
respect of its Indebtedness.
(j) INVESTMENT COMPANY. Each of the Company and the Trust is
either not an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, or is exempt from all provisions of such act.
(k) OWNERSHIP, SUBSIDIARIES. All of the issued and outstanding
membership interests of the Company are owned, legally and beneficially, by
United Stationers Supply Co. The Company will remain at all times a single
member limited liability company and United Stationers Supply Co. will not
transfer its ownership interest in the Company at any time. The Company has
no Subsidiaries.
(l) NAMES. The legal name of the Company is as set forth in this
Agreement. The Company has not had, nor does it have, any trade names,
fictitious names, assumed names or "doing business as" names.
(m) LIABILITIES. Other than, (i) the liabilities, commitments or
obligations (whether absolute, accrued, contingent or otherwise) arising
under or in respect of the Transaction Documents and (ii) immaterial amounts
due and payable in the ordinary course of business of a special-purpose
company, the Company does not have any liabilities, commitments or
obligations (whether absolute, accrued, contingent or otherwise), whether due
or to become due.
(n) USE OF PROCEEDS; FEDERAL RESERVE BOARD REGULATION. No proceeds
of the issuance of any Investor Certificates will be used by the Company to
purchase or carry any margin stock (as defined in Regulation U of the Board
of Governors of the Federal Reserve System, as in effect from time to time).
The Company is in compliance with all applicable regulations of the Board of
Governors of the Federal Reserve System (including, without limitation,
Regulations U and G with respect to "margin stock").
(o) COLLECTION PROCEDURES. The Company and each Seller have in
place procedures pursuant to the Transaction Documents which are either
necessary or advisable to ensure the timely collection of Receivables.
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(p) LOCKBOX ACCOUNTS. Except to the extent otherwise permitted
under the terms of this Agreement, (i) each Lockbox Agreement to which the
Company is party is in full force and effect and (ii) each Lockbox Account
set forth in Schedule III to the Receivables Sales Agreement is free and
clear of any Lien (other than any right of set-off expressly provided for in
the applicable Lockbox Agreement).
(q) NO CONFLICT. The execution and delivery of this Agreement and
the Receivables Sale Agreement, the performance of the transactions
contemplated hereby and thereby and the fulfillment of the terms hereof and
thereof will not conflict with, result in any breach of any of the material
terms and provisions of, or constitute (with or without notice or lapse of
time or both) a default under, any indenture, contract, agreement, mortgage,
deed of trust, or other instrument to which the Company is a party or by
which it or any of its property is bound.
(r) ALL CONSENTS REQUIRED. All appraisals, authorizations,
consents, orders or other similar actions of any Person or of any
governmental body or official required in connection with the execution and
delivery of this Agreement, the Receivables Sale Agreement and the
Certificates, the performance of the transactions contemplated hereby and
thereby, and the fulfillment of or terms hereof and thereof, have been
obtained.
(s) BULK SALES. The execution, delivery and performance of this
Agreement do not require compliance with any "bulk sales" law by the Company.
The representations and warranties set forth in this Section 2.3
shall survive after the date made and the transfer and assignment of the
Trust Assets to the Trust. Upon discovery by a Responsible Officer of the
Company or the Servicer or by a Responsible Officer of the Trustee of a
breach of any of the foregoing representations and warranties with respect to
any Outstanding Series as of the Issuance Date of such Series, the party
discovering such breach shall give prompt written notice to the other parties
and to each Agent with respect to all Outstanding Series. The Trustee's
obligations in respect of any breach are limited as provided in subsection
8.2(g).
Section 2.4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY RELATING
TO THE RECEIVABLES. The Company hereby represents and warrants to the
Trustee and the Trust, for the benefit of the holders of Certificates of each
Outstanding Series, (x) as of the Issuance Date of such Series, and (y) with
respect to each Receivable transferred to the Trust after such Issuance Date,
as of the related Receivables Purchase Date, unless, in either case,
otherwise stated in the applicable Supplement or unless such representation
or warranty expressly relates only to a prior date, that:
(a) Schedule 1 to this Agreement sets forth in all material
respects an accurate and complete listing as of the Cut-Off Date of all
Receivables to be transferred to the Trust as of the Initial Closing Date and
the information contained therein with respect to the identity and Principal
Amount of each such Receivable is true and correct in all material respects
as of the Cut-Off Date. As of the Cut-Off Date, the aggregate amount of
Receivables owned by the Company is accurately set forth in Schedule 1 hereto.
(b) Each Receivable existing on the Initial Closing Date or, in the
case of Receivables transferred to the Trust after the Initial Closing Date,
on the date that each such Receivable shall have been transferred to the
Trust, has been conveyed to the Trust free and clear of any Lien, except for
Permitted Liens specified in clauses (i) and (iv) of the definition thereof.
(c) On the Initial Closing Date, each Receivable transferred to the
Trust that is included in the calculation of the initial Aggregate
Receivables Amount is an Eligible Receivable and, in the case
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of Receivables transferred to the Trust after the Initial Closing Date, on
the date such Receivable shall have been transferred to the Trust, each such
Receivable that is included in the calculation of the Aggregate Receivables
Amount on such date is an Eligible Receivable. Each Receivable classified as
an "Eligible Receivable" by the Company in any document or report delivered
hereunder satisfies the requirements of eligibility contained in the
definition of Eligible Receivable.
The representations and warranties set forth in this Section 2.4
shall survive after the date made and the transfer and assignment of the
Trust Assets to the Trust. Upon discovery by a Responsible Officer of the
Company or the Servicer or a Responsible Officer of the Trustee of a breach
of any of the representations and warranties with respect to each Outstanding
Series as of the Issuance Date of such Series, the party discovering such
breach shall give prompt written notice to the other parties and to each
Agent with respect to all Outstanding Series. The Trustee's obligations in
respect of any breach are limited as provided in Section 8.2(g).
Section 2.5 TRANSFER OF INELIGIBLE RECEIVABLES. (a) TRANSFER
OBLIGATION. If (i) any representation or warranty under subsections 2.4(a),
(b) or (c) is not true and correct in any material respect as of the date
specified therein with respect to any Receivable transferred to the Trust,
(ii) there is a breach of any covenant under subsection 2.8(c) with respect
to any Receivable and such breach has a material adverse effect on the
Certificateholders' Interest in such Receivable or (iii) the Trust's interest
in any Receivable is not a first priority perfected ownership or security
interest at any time as a result of any action taken by, or any failure to
take action by, the Company (any Receivable as to which the conditions
specified in any of clauses (i), (ii) or (iii) of this subsection 2.5(a)
exists is referred to herein as an "INELIGIBLE RECEIVABLE") then, upon the
earlier (the date on which such earlier event occurs, the "TRANSFER
OBLIGATION DATE") of the discovery by the Company of any such event which
continues unremedied or receipt by the Company of written notice given by the
Trustee or the Servicer of any such event which continues unremedied, the
Company shall become obligated to deposit or cause to be deposited into the
Collection Account the Transfer Deposit Amount with respect to such
Ineligible Receivable in order to transfer such Ineligible Receivables on the
terms and conditions set forth in subsection 2.5(b).
(b) TRANSFER OF RECEIVABLES. Subject to the last sentence of this
subsection 2.5(b), the Company shall, with respect to each Ineligible
Receivable required to be transferred pursuant to subsection 2.5(a), deposit
or cause to be deposited in the Collection Account in immediately available
funds on the Business Day following the related Transfer Obligation Date an
amount equal to the lesser of (x) the amount by which the Aggregate Target
Receivables Amount exceeds the Aggregate Receivables Amount (after giving
effect to the reduction thereof by the Principal Amount of such Ineligible
Receivable) and (y) the aggregate outstanding Principal Amount of each such
Ineligible Receivable (the "TRANSFER DEPOSIT AMOUNT"). Upon transfer or
deposit of the Transfer Deposit Amount, the Trust shall automatically and
without further action be deemed to transfer, assign, set over and otherwise
convey to the Company, without recourse, representation or warranty, all the
right, title and interest of the Trust in and to such Ineligible Receivable,
all monies due or to become due with respect thereto and all proceeds
thereof; and such transferred Ineligible Receivable shall be treated by the
Trust as collected in full as of the date on which it was transferred. The
Trustee shall execute such documents and instruments of transfer or
assignment prepared by and at the expense of the Company and take such other
actions as shall reasonably be requested by the Company to effect the
conveyance of such Receivables pursuant to this subsection free and clear of
the lien of this Agreement and all other liens created by the Trustee.
Except as otherwise specified in any Supplement, the obligation of the
Company to deposit or cause to be deposited the Transfer Deposit Amount with
respect to any Ineligible Receivable shall constitute the sole remedy
respecting the event giving rise to such obligation available to Investor
Certificateholders (or the Trustee on behalf of Investor Certificateholders).
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Section 2.6 PURCHASE OF INVESTOR CERTIFICATEHOLDERS' INTEREST IN
TRUST PORTFOLIO. (a) Upon the actual knowledge of a breach of any of the
representations and warranties set forth in paragraphs (a), (b), (c), (d),
(e)(i) or (q) of Section 2.3, which breach has a material adverse effect on
the interests of the holders of an Outstanding Series (without giving effect
to any Enhancement) under or with respect to the Transaction Documents, then
the Trustee, at the written direction of holders evidencing more than 50% of
the Invested Amount of such Outstanding Series, subject to Section 8.2
hereof, shall notify the Company to purchase such Outstanding Series and the
Company shall be obligated to make such purchase on the next Distribution
Date occurring at least five Business Days after receipt of such notice on
the terms and conditions set forth in subsection 2.6(b) below; PROVIDED,
HOWEVER, that no such purchase shall be required to be made if, by such
Distribution Date, the representations and warranties contained in paragraphs
(a), (b), (c), (d), (e)(i) or (q) of Section 2.3 shall be satisfied in all
material respects and any material adverse effect on the holders of such
Outstanding Series caused thereby shall have been cured.
(b) As required under subsection 2.6(a) above, the Company shall
deposit into the Collection Account for credit to the applicable subaccount
of the Collection Account on the Business Day preceding such Distribution
Date an amount equal to the purchase price (as described in the next
succeeding sentence) for the Certificateholders' Interest for such
Outstanding Series on such day. The purchase price for any such purchase
will be equal to (i) the Adjusted Invested Amount of such Outstanding Series
on the date on which the purchase is made plus (ii) an amount equal to all
interest accrued but unpaid on such Series up to the Distribution Date on
which the distribution of such deposit is scheduled to be made pursuant to
Section 9.2 plus (iii) any other amount required to be paid in connection
therewith pursuant to any Supplement. Notwithstanding anything to the
contrary in this Agreement, the entire amount of the purchase price deposited
in the Collection Account shall be distributed to the related Investor
Certificateholders on such Distribution Date pursuant to Section 9.2. If the
Trustee gives notice directing the Company to purchase the Certificates of an
Outstanding Series as provided above, except as otherwise specified in any
Supplement, the obligation of the Company to purchase such Certificates
pursuant to this Section 2.6 shall constitute the sole remedy respecting an
event of the type specified in the first sentence of this Section 2.6
available to the applicable Investor Certificateholders (or the Trustee on
behalf of such Investor Certificateholders).
Section 2.7 AFFIRMATIVE COVENANTS OF THE COMPANY. The Company
hereby covenants that, until the Trust Termination Date occurs, the Company
shall:
(a) FINANCIAL STATEMENTS. Furnish to the Trustee, each Agent and
the Rating Agencies, as soon as available, but in any event within 125 days
after the end of each fiscal year of the Company, a copy of the audited
balance sheet and statement of operations of the Company as at the end of
such year, all in reasonable detail and certified by an appropriate
Responsible Officer as correct and fairly presenting the financial position
and results of operations of the Company.
(b) PAYMENT OF OBLIGATIONS; COMPLIANCE WITH OBLIGATIONS. Pay,
discharge or otherwise satisfy at or before maturity or before they become
delinquent, as the case may be, all its material obligations of whatever
nature (including, without limitation, all taxes, assessments, levies and
other governmental charges imposed on it), except where the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings and reserves in conformity with GAAP with respect thereto have
been provided on the books of the Company. The Company shall defend the
right, title and interest of the Holders in, to and under the Receivables and
the other Trust Assets, whether now existing or hereafter created, against
all claims of third parties claiming through or under the Company, any
Seller, any Sub-Servicer or the Servicer. The Company will duly fulfill all
material obligations on its part to be fulfilled under or in connection with
each Receivable and will do nothing to impair the rights of the Holders in
such Receivable. The Company shall pay any property, excise, transfer or
similar taxes
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arising with respect to the Receivables or on account of the transactions
contemplated by the Transaction Documents.
(c) INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS. Keep
proper books of records and accounts in which full, true and correct entries
in conformity in all material respects with GAAP and all Requirements of Law
shall be made of all dealings and transactions in relation to its business
and activities; and permit representatives of the Trustee upon reasonable
advance notice (i) to visit and inspect any of its properties and examine and
make abstracts from any of its books and records during normal business hours
on any Business Day and as often as may reasonably be desired subject to the
Company's normal security and confidentiality requirements and (ii) to
discuss the business, operations, properties and financial and other
condition of the Company with officers and employees of the Company and with
its Independent Public Accountants; PROVIDED, that the Trustee shall notify
the Company prior to any contact with such Independent Public Accountants and
shall give the Company the opportunity to participate in such discussions.
(d) COMPLIANCE WITH LAW AND POLICIES. (i) Comply in all material
respects with all Requirements of Law applicable to the Company; and
(ii) Cause each Seller to perform its obligations in accordance
with, and comply in all material respects with, the applicable
Policies in regard to the Receivables and the Related Property.
(e) PURCHASE OF RECEIVABLES. Purchase Receivables solely pursuant to
(i) the Receivables Sale Agreement or (ii) this Agreement.
(f) DELIVERY OF COLLECTIONS. In the event that the Company receives
Collections directly from Obligors, deposit such Collections into the applicable
Lockbox Account within one Business Day after receipt thereof by the Company.
(g) NOTICES. Promptly (and, in any event, within five Business Days
after a Responsible Officer of the Company becomes aware of such event) give
written notice to the Trustee, each Rating Agency and each Agent for any
Outstanding Series of:
(i) the occurrence of any Early Amortization Event or Potential
Early Amortization Event; and
(ii) any Lien not permitted by subsection 2.8(c) on any
Receivable or any other Trust Assets.
(h) LOCKBOXES. (i) Maintain, and keep in full force and effect, each
Lockbox Agreement to which the Company is a party, except to the extent
otherwise permitted under the terms of this Agreement and the other Transaction
Documents; and
(ii) ensure that each related Lockbox Account shall be free and
clear of, and defend each such Lockbox Account against, any writ,
order, stay, judgment, warrant of attachment or execution or similar
process.
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(i) SEPARATE CORPORATE EXISTENCE.
(i) Maintain its own deposit, securities or other account or
accounts, separate from those of any Affiliate, with commercial
banking institutions or broker-dealers and ensure that the funds of
the Company will not be diverted to any other Person or for other than
corporate uses of the Company, nor will such funds be commingled with
the funds of any Seller or any other Subsidiary or Affiliate of any
Seller;
(ii) To the extent that it shares the same officers or other
employees as any of its members or Affiliates, the salaries of and the
expenses related to providing benefits to such officers and other
employees shall be fairly allocated among such entities, to the extent
practicable, on the basis of such entities' actual share of such costs
and to the extent such allocation is not practicable, on a basis
reasonably related to such entities' fair share of the salary and
benefit costs associated with all such common officers and employees;
(iii) To the extent that it jointly contracts with any of its
members or Affiliates to do business with vendors or service providers
or to share overhead expenses, the costs incurred in so doing shall be
allocated fairly among such entities, to the extent practicable, on
the basis of such entities' actual share of such costs and to the
extent such allocation is not practicable, on a basis reasonably
related to such entities' fair share of such costs. To the extent
that the Company contracts or does business with vendors or service
providers where the goods and services provided are partially for the
benefit of any other Person, the costs incurred in so doing shall be
fairly allocated to or among such entities for whose benefit the goods
or services are provided, to the extent practicable, on the basis of
such entities' actual share of such costs and to the extent such
allocation is not practicable, on a basis reasonably related to such
entities' fair share of such costs. All material transactions between
the Company and any of its Affiliates, whether currently existing or
hereafter entered into, shall be only on an arm's-length basis, it
being understood and agreed that the transactions contemplated in the
Transaction Documents meet the requirements of this clause (iii);
(iv) Maintain a principal executive office at a separate address
from the address of United Stationers Supply Co. and its Affiliates;
PROVIDED that reasonably segregated offices in the same building shall
constitute separate addresses for purposes of this clause (iv). To
the extent that the Company and any of its members or Affiliates have
offices in the same location, there shall be a fair and appropriate
allocation of overhead costs among them, and each such entity shall
bear its fair share of such expenses;
(v) Issue separate financial statements prepared not less
frequently than quarterly and prepared in accordance with GAAP;
(vi) Conduct its affairs in its own name and strictly in
accordance with its articles of association and observe all necessary,
appropriate and customary limited liability company formalities,
including, but not limited to, holding all regular and special
members' and directors' meetings appropriate to authorize all limited
liability company action, keeping separate and accurate minutes of its
meetings, passing all resolutions or consents necessary to authorize
actions taken or to be taken, and maintaining accurate and separate
books, records and accounts, including, but not limited to, payroll
and intercompany transaction accounts;
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(vii) Not assume or guarantee any of the liabilities of any
Seller, any Servicing Party or any Affiliate of any thereof, it being
understood that a shareholder's capital contribution is not such a
guarantee or assumption; and
(viii) Take, or refrain from taking, as the case may be, all
other actions that are necessary to be taken or not to be taken in
order to (x) ensure that the assumptions and factual recitations set
forth in the Specified Bankruptcy Opinion Provisions remain true and
correct in all material respects with respect to the Company and (y)
comply with those procedures described in such provisions which are
applicable to the Company.
(j) PRESERVATION OF CORPORATE EXISTENCE. (i) Preserve and maintain
its limited liability company existence, rights, franchises and privileges in
the jurisdiction of its formation and (ii)qualify and remain qualified in
good standing as a foreign limited liability company in each jurisdiction
where the ownership of its properties and the conduct of its business require
such qualification.
(k) NET WORTH. Maintain at all times a consolidated net worth
inclusive of its interest in the Receivables and the Related Property, as
determined in accordance with GAAP equal to $45 million.
(l) OPTIONAL TERMINATION. If the Company shall deliver an Optional
Termination Notice to the Trustee with respect to any Outstanding Series, the
Company shall deliver an Optional Termination Notice to the Trustee with
respect to all Outstanding Series.
(m) MAINTENANCE OF PROPERTY. Keep all material tangible property
useful and necessary in its business in good working order and condition
(normal wear and tear excepted), except to the extent that the failure to do
any of the foregoing with respect to any such property would not,
individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect with respect to the Company.
(n) FURTHER ASSURANCES. File, or cause to be filed, as necessary
from time to time, at the applicable Seller's expense and in accordance with
the provisions of the UCC of the applicable jurisdiction, duly completed and
executed continuation statements with respect to all financing statements
filed in connection with the transactions contemplated by the Receivables
Sale Agreement.
(o) TAX STATUS. The Company will make an election to be treated as
a disregarded entity for United States federal income tax purposes.
Section 2.8 NEGATIVE COVENANTS OF THE COMPANY. The Company hereby
covenants that, until the Trust Termination Date occurs, it shall not
directly or indirectly:
(a) ACCOUNTING OF TRANSFERS. Prepare any financial statements
which shall account for the transactions contemplated hereby in any manner
other than as a transfer of Receivables and the other Trust Assets by the
Company to the Trust or in any other respect account for or treat the
transactions under this Agreement (including for financial accounting
purposes, except as required by law) in any manner other than as transfers of
Receivables and the other Trust Assets by the Company to the Trust; PROVIDED,
HOWEVER, that this subsection shall not apply for any tax or tax accounting
purposes.
(b) LIMITATION ON INDEBTEDNESS. Create, incur, assume or suffer to
exist any Indebtedness, except: (i) Indebtedness evidenced by the
Subordinated Note; (ii) Indebtedness representing fees, expenses and
indemnities payable pursuant to and in accordance with the Transaction
Documents; and (iii) Indebtedness for services supplied or furnished to the
Company in an amount not to exceed $10,000 at any one time outstanding;
PROVIDED that any Indebtedness permitted hereunder and described
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in clauses (i) and (iii) shall be payable by the Company solely from funds
available to the Company which are not otherwise needed to be applied to the
payment of any amounts by the Company pursuant to any Pooling and Servicing
Agreements and shall be non-recourse other than with respect to proceeds in
excess of the proceeds needed to be so applied.
(c) LIMITATION ON LIENS. Create, incur, assume or suffer to exist
any Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, except for Permitted Liens, it being understood that no
Permitted Lien under clause (ii) of the definition thereof shall cover any of
the Trust Assets (except to the limited extent permitted by clause (iv) of
the definition of Permitted Liens).
(d) LIMITATION ON GUARANTEE OBLIGATIONS. Become or remain liable,
directly or contingently, in connection with any Indebtedness or other
liability of any other Person, whether by guarantee, endorsement (other than
endorsements of negotiable instruments for deposit or collection in the
ordinary course of business and reimbursement and indemnification obligations
in favor of the Trustee or the Investor Certificateholders as provided for
under this Agreement and the other Transaction Documents), agreement to
purchase or repurchase, agreement to supply or advance funds, or otherwise,
except in connection with indemnification obligations of the Company to the
limited extent provided in the Company's memorandum and articles of
association; PROVIDED that any such indemnification shall be paid solely from
funds available to the Company which are not otherwise needed to be applied
to the payment of any amounts pursuant to any Pooling and Servicing
Agreements, shall be non-recourse other than with respect to proceeds in
excess of the proceeds necessary to make such payment, and shall not
constitute a claim against the Company to the extent that insufficient
proceeds exist to make such payment.
(e) LIMITATION ON FUNDAMENTAL CHANGES. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or make any material change in its
present method of conducting business, or convey, sell, lease, assign,
transfer or otherwise dispose of, all or substantially all of its property,
business or assets other than the assignments and transfers contemplated
hereby.
(f) LIMITATION ON DIVIDENDS AND OTHER PAYMENTS. Declare or pay any
dividend on, or make any payment on account of, or set apart assets for a
sinking or other analogous fund for, the purchase, redemption, defeasance,
retirement or other acquisition of, any shares of any class of capital stock
of the Company, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in
cash or property or in obligations of the Company (any of the foregoing, a
"restricted payment"), unless (i) at the date such restricted payment is
made, the Company shall have made all payments in respect of its repurchase
obligations pursuant to this Agreement outstanding at such date and (ii) such
restricted payment is made no more frequently than on a monthly basis and is
effected in accordance with all corporate and legal formalities applicable to
the Company; PROVIDED, HOWEVER, that (A) no restricted payment shall be made
on any date if (x) a Potential Early Amortization Event of a type referred to
in clause (a)(ii) or (a)(iii) of Section 7.1 or (y) an Early Amortization
Event has occurred and is continuing (or would occur as a result of such
payment) on such date and (B) all restricted payments made on any date shall
be payable by the Company solely from funds available to the Company which
are not otherwise needed on such date to be applied to the payment of any
amounts by the Company pursuant to any Pooling and Servicing Agreement.
(g) BUSINESS OF THE COMPANY. Engage at any time in any business or
business activity other than the acquisition of Receivables Property pursuant to
the Receivables Sale Agreement, the assignments and transfers hereunder and the
other transactions contemplated by the Transaction Documents, and any activity
incidental to the foregoing and necessary or convenient to accomplish the
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foregoing, or enter into or be a party to any agreement or instrument other
than in connection with the foregoing, except those agreements or instruments
permitted under subsection 2.8(i) or set forth on Schedule 5.
(h) LIMITATION ON INVESTMENTS, LOANS AND ADVANCES. Make any
advance, loan, extension of credit or capital contribution to, or purchase
any stock, bonds, notes, debentures or other securities of or any assets
constituting a business unit of, or make any other investment in, any Person,
except for (i) any Exchangeable Company Interest, any Series Subordinated
Interest, the Receivables, the Certificates and the other Trust Assets, (ii)
the Subordinated Note and (iii) any other advance or loan made to any Seller,
PROVIDED, HOWEVER, that in the case of the preceding clause (iii), (A) no (x)
Potential Early Amortization Event of a type referred to in clause (a)(ii) or
(a)(iii) of Section 7.1 or (y) Early Amortization Event has occurred and is
continuing at the time any such investment is made (or would occur as a
result of such investment), (B) no amounts are outstanding under the
Subordinated Note, (C) the loan made is a demand loan at a market rate of
interest and (D) any such investment shall be made by the Company solely from
funds available to the Company which are not otherwise needed to be applied
to the payment of any amounts by the Company pursuant to any Pooling and
Servicing Agreement.
(i) AGREEMENTS. (i) Become a party to, or permit any of its
properties to be bound by, any indenture, mortgage, instrument, contract,
agreement, lease or other undertaking, except the Transaction Documents,
leases of office space, equipment or other facilities for use by the Company
in its ordinary course of business, employment agreements, service
agreements, agreements relating to shared employees and the other Transaction
Documents and agreements reasonably necessary or desirable to perform its
obligations under the Transaction Documents, (ii) issue any power of attorney
(except to the Trustee or the Servicer or except for the purpose of
permitting any Person to perform any ministerial functions on behalf of the
Company that are not prohibited by or inconsistent with the terms of the
Transaction Documents), or (iii) amend, supplement, modify or waive any of
the provisions of the Receivables Sale Agreement or any Lockbox Agreement or
request, consent or agree to or suffer to exist or permit any such amendment,
supplement, modification or waiver or exercise any consent rights granted to
it thereunder unless such amendment, supplement, modification or waiver or
such exercise of consent rights would not be reasonably likely to have a
Material Adverse Effect and, in the case of the Receivables Sale Agreement,
the Rating Agency Condition shall have been satisfied with respect to any
such amendments, supplements, modifications or waivers.
(j) POLICIES. Make any change or modification (or permit any
change or modification to be made) in any material respect to the Policies,
except (i) if such changes or modifications are necessary under any
Requirement of Law, (ii) if such changes or modifications would not
reasonably be likely to have a Material Adverse Effect with respect to the
Company or (iii) if the Rating Agency Condition is satisfied with respect
thereto; PROVIDED, HOWEVER, that if any change or modification, other than a
change or modification permitted pursuant to clause (i) or (ii) above, would
be reasonably likely to have a Material Adverse Effect on the interests of
the Investor Certificateholders of a Series which is not rated by a Rating
Agency, the consent of the applicable Agent (or as specified in the related
Supplement) shall be required to effect such change or modification.
(k) RECEIVABLES NOT TO BE EVIDENCED BY INSTRUMENTS. Subject to the
delivery requirement set forth in subsection 2.1(c), take any action to cause
any Receivable to be evidenced by any "instrument" other than, provided that
the procedures set forth in Schedule 3 are fully implemented with respect
thereto, an instrument which alone or together with a security agreement
constitutes "chattel paper" (each as defined in the UCC as in effect in any
state in which the Company's or the applicable Seller's chief executive
office or books and records relating to such Receivable are located), except
in connection with its enforcement or collection of a Defaulted Receivable.
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(l) OFFICES. Move outside or within the state where such office is
now located the location of its chief executive office or of any of the
offices where it keeps its records with respect to the Receivables without
(i) in the case of moves outside such state, giving 30 days' prior written
notice to the Trustee and each Rating Agency, (ii) in the case of moves
within such state, giving the Trustee prompt notice of a change within the
state where such office is now located of the location of its chief executive
office or any office where it keeps its records with respect to the
Receivables and (iii) taking all actions reasonably requested by the Trustee
(including but not limited to all filings and other acts necessary or
advisable under the UCC or similar statute of each relevant jurisdiction) in
order to continue the Trust's first priority perfected ownership or security
interest in all Receivables now owned or hereafter created; PROVIDED,
HOWEVER, that the Company shall not change the location of its chief
executive office to outside of the United States, or to a state which is
within the Tenth Circuit unless (a) it delivers an Opinion of Counsel
reasonably acceptable to the Rating Agencies to the effect that OCTAGON GAS
SYSTEMS, INC. V. RIMMER, 995 F.2d 948 (10th Cir. 1993) ("Octagon") is no
longer controlling precedent in the Tenth Circuit or (b) state law has
amended the UCC to overrule Octagon.
(m) CHANGE IN NAME. Change its name, identity or corporate
structure in any manner which would or might make any financing statement or
continuation statement (or other similar instrument) filed in accordance with
subsection 10.2(a) seriously misleading within the meaning of Section
9-402(7) of the UCC as in effect in any applicable jurisdiction in which UCC
filings have been made in respect of the Trust Assets without 30 days' prior
written notice to the Trustee and each Rating Agency.
(n) CHARTER. Amend or make any change or modification to its
memorandum and articles of association without first satisfying the Rating
Agency Condition (other than an amendment, change or modification made
pursuant to changes in law of the state of its formation or amendments to
change the Company's name (subject to compliance with clause (m) above),
resident agent or address of resident agent).
(o) ADDITION OF SELLERS. Agree to the addition of any Subsidiary
of United Stationers Supply Co. as an additional Seller pursuant to Section
9.13 of the Receivables Sale Agreement without such Subsidiary's being
simultaneously added as a Sub-Servicer (or without another Subsidiary's
simultaneously agreeing to act as a Sub-Servicer in respect of such
additional Seller) under the Transaction Documents pursuant to the Servicing
Agreement.
ARTICLE III
RIGHTS OF HOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
THE FOLLOWING PORTION OF THIS ARTICLE III
IS APPLICABLE TO ALL SERIES
EXCEPT TO THE EXTENT EXPRESSLY
PROVIDED OTHERWISE IN THE
SUPPLEMENT RELATING TO
SERIES 1998-1
Section 3.1 ESTABLISHMENT OF COLLECTION ACCOUNT AND COLLECTION
CONCENTRATION ACCOUNT; CERTAIN ALLOCATIONS. (a)(i)The Trustee, for the benefit
of the Holders as their interests appear in this Agreement, shall cause to be
established and maintained in the name of the Trust with an Eligible Institution
or with the corporate trust department of the Trustee or an affiliate of the
Trustee, a segregated
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trust account (the "COLLECTION ACCOUNT"), bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Holders. Schedule 2, which is hereby incorporated into and made a part of
this Agreement, identifies the Collection Account by setting forth the
account number of such account, the account designation of such account and
the name of the institution with which such account has been established.
The Collection Account shall be divided into individual subaccounts for each
Outstanding Series (each, respectively, a "SERIES COLLECTION SUBACCOUNT" and,
collectively, the "SERIES COLLECTION SUBACCOUNTS") and for the Company (the
"COMPANY COLLECTION SUBACCOUNT"). For administrative purposes only, the
Trustee shall establish or cause to be established for each Series, so long
as such Series is an Outstanding Series, sub-subaccounts of the Series
Collection Subaccounts with respect to such Series (respectively, the "SERIES
PRINCIPAL COLLECTION SUB-SUBACCOUNT" and "SERIES NON-PRINCIPAL COLLECTION
SUB-SUBACCOUNT" and, collectively, the "SERIES COLLECTION SUB-SUBACCOUNTS").
(ii) The Trustee also shall establish an intervening deposit account
with an Eligible Institution or with the corporate trust department of the
Trustee or an affiliate of the Trustee (the "COLLECTION CONCENTRATION
ACCOUNT") in the name of the Company, which account, so long as no
Potential Early Amortization Event or Early Amortization Event has
occurred, shall be used for the receipt of Collections transferred from the
Lockbox Accounts (to the extent so provided in the Servicing Agreement)
prior to the deposit of such Collections into the Collection Account. The
Trustee shall have the right, upon the occurrence of and during the
continuance of an Early Amortization Event or Potential Early Amortization
Event with respect to any Outstanding Series, to give irrevocable standing
instructions governing the transfer of available funds on deposit in the
Collection Concentration Account.
(b) AUTHORITY OF THE TRUSTEE IN RESPECT OF THE COLLECTION ACCOUNT AND
THE COLLECTION CONCENTRATION ACCOUNT AND HOLDERS' INTERESTS THEREIN.(i) The
Trustee, on behalf of the Holders, shall possess all right, title and interest
in all funds on deposit from time to time in the Collection Account and in all
proceeds thereof. The Collection Account shall be under the sole dominion and
control of the Trustee for the benefit of the Investor Certificateholders and,
to the extent set forth in any Supplement, any owner of any Series Subordinated
Interest. If, at any time, the Servicer has actual notice or knowledge that any
institution holding the Collection Account is other than the corporate trust
department of the Trustee or an affiliate of the Trustee, or that the
institution holding the Collection Account or the Collection Concentration
Account has ceased to be an Eligible Institution, the Servicer shall direct the
Trustee in writing to establish within 30 days a substitute account therefor
with an Eligible Institution, transfer any cash and/or any instruments to such
new account and from the date any such substitute accounts are established, such
account shall be the Collection Account (or the Collection Concentration
Account, as the case may be). Neither the Company nor the Servicer, nor any
person or entity claiming by, through or under the Company or Servicer, shall
have any right title or interest in, except to the extent expressly provided
under the Transaction Documents, or any right to withdraw any amount from, the
Collection Account. Pursuant to the authority granted to the Servicer in
subsection 2.2(a) of the Servicing Agreement, the Servicer shall have the power,
revocable by the Trustee, to instruct the Trustee in writing to make withdrawals
from and payments to the Collection Account and/or the Collection Concentration
Account for the purposes of carrying out the Servicer's or the Trustee's duties
hereunder.
(ii) Each Series of Investor Certificates shall represent Fractional
Undivided Interests in the Trust as indicated in the Supplement (including
any Enhancement applicable to such Series as specified in the related
Supplement) relating to such Series and the right to receive Collections
and other amounts at the times and in the amounts specified in this Article
III (as supplemented by the Supplement related to such Series) to be
deposited in the Collection Account and any other accounts maintained for
the benefit of the Investor Certificateholders or paid to the Investor
Certificateholders (with respect to each outstanding Series, the
"CERTIFICATEHOLDERS' INTEREST").
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The "EXCHANGEABLE COMPANY INTEREST" shall be the interest in the Trust
not represented by any Series of Investor Certificates then outstanding
or Series Subordinated Interests then in existence, including the right
to receive Collections and other amounts at the times and in the amounts
specified in this Article III to be paid to the Company (the "COMPANY
INTEREST"), and each Series Subordinated Interest, if any, shall be the
interest specified as such pursuant to the related Supplement; PROVIDED,
HOWEVER, that no such Exchangeable Company Interest or Series
Subordinated Interest shall include any interest in any Trust Account or
any other accounts maintained for the benefit of the Investor
Certificateholders, except as specifically provided in this Article III.
(c) ADMINISTRATION OF THE COLLECTION ACCOUNT. (i) At the written
direction of the Servicer, funds on deposit in the Collection Account
available for investment shall be invested by the Trustee in Eligible
Investments selected by the Company. In the absence of written direction
from the Servicer, funds in the Collection Account shall remain uninvested.
All such Eligible Investments shall be delivered to the Trustee in accordance
with the definition of "Delivery" and shall be held by the Trustee or its
nominee (including the Securities Intermediary) for the benefit of the
Investor Certificateholders or such Eligible Investments shall be promptly
credited to a securities account maintained by the Trustee with a securities
intermediary. Amounts on deposit in each Series Non-Principal Collection
Sub-subaccount shall, if applicable, be invested in Eligible Investments that
will mature, or that are payable or redeemable upon demand of the holder
thereof, so that such funds will be available on or before the Business Day
immediately preceding the next Distribution Date. None of such Eligible
Investments shall be disposed of prior to the maturity date with respect
thereto unless such disposition is reasonably necessary to prevent a loss.
All interest and investment earnings (net of losses and investment expenses)
(the "INVESTMENT EARNINGS") on funds deposited in a Series Non-Principal
Collection Sub-subaccount shall be deposited in such sub-subaccount. Amounts
on deposit in the Series Principal Collection Sub-subaccounts and any other
sub-subaccounts as specified in the related Supplement shall be invested in
Eligible Investments that mature, or that are payable or redeemable upon
demand of the holder thereof, so that such funds will be available not later
than the date which is specified in any Supplement. The Trustee, or its
nominee or custodian, shall maintain possession of the instruments or
securities, if any, evidencing any Eligible Investments from the time of
purchase thereof until the time of sale or maturity. Any Investment Earnings
on such invested funds in a Series Principal Collection Sub-subaccount and
any other sub-subaccounts as specified in the related Supplement will be
deposited in the related Series Non-Principal Collection Sub-subaccount. Any
Investment Earnings shall be included by the Company in its gross income for
all income tax purposes.
(ii) Any securities intermediary (as that term is defined in Article 8
of the UCC) maintaining a securities account for the Trustee for the
benefit of the Purchasers (the "Securities Intermediary"), and The Chase
Manhattan Bank as initial Securities Intermediary, hereby represents that
it is as of the date hereof and shall be for so long as it is the
Securities Intermediary hereunder a bank or broker-dealer that (a) in the
ordinary course of its business maintains securities accounts for others
and is acting in that capacity hereunder and (b) maintains a Participant's
Securities Account (as defined in the United States Regulations) with a
Federal Reserve Bank. The Securities Intermediary shall agree (and The
Chase Manhattan Bank as initial Securities Intermediary hereby agrees) with
the parties hereto that (x) the Collection Account (including any
sub-accounts thereof) is a securities account to which financial assets
may be credited, (y) the Trustee shall be entitled to exercise rights that
comprise such financial assets and to exercise the ordinary rights of an
entitlement holder, (z) the "securities intermediary's jurisdiction" as
defined in the UCC of the Securities Intermediary with respect to the
Eligible Investments credited to the Collection Account (including any
sub-accounts thereof) shall be the State of New York. The Securities
Intermediary shall represent and covenant (and The Chase
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Manhattan Bank hereby represents and covenants) that it is not and will not
be (as long as it is the Securities Intermediary hereunder) a party to any
agreement that is inconsistent with the provisions of this Agreement. The
Securities Intermediary shall covenant (and The Chase Manhattan Bank hereby
covenants) that it will not take any action inconsistent with the
provisions of this Agreement applicable to it. It is the intent of the
Trustee, the Servicer and the Company that the Collection Account
(including any sub-accounts thereof) shall be a securities account of the
Trustee and not an account of the Company or the Servicer. If despite such
intent, the Collection Account (including any sub-accounts thereof) is
determined to be an account of the Company or the Servicer, then the
Securities Intermediary agrees to comply with entitlement orders originated
by the Trustee without further consent by the Company or the Servicer.
(d) DAILY COLLECTIONS.(i) Promptly following its receipt of
Collections in the form of available funds in the Lockbox Accounts, but in no
event later than the Business Day following such receipt, the Servicer shall
transfer, or cause to be transferred, all Collections on deposit (less the
aggregate amount of set-offs permitted to be retained pursuant to any applicable
Lockbox Agreement) in the form of immediately available funds in the Lockbox
Accounts directly to the Collection Concentration Account, provided that in the
event of and continuance of an Potential Early Amortization Period or Early
Amortization Period, such funds shall be deposited directly into the Collection
Account, without first being deposited into the Collection Concentration
Account, and the Trustee shall instruct any Lockbox Processor to transfer all
Collections in any Lockbox Account directly to the Collection Account.
(ii) Promptly, but in no event later than the date of deposit (unless
received after 3:00 p.m., New York City time, on such date, then on the
next Business Day) (the "DEPOSIT DATE"), the Trustee shall transfer amounts
on deposit in the Collection Concentration Account into the Collection
Account.
(iii) No later than the Business Day following each Deposit Date, the
Trustee shall (in accordance with the written directions received from the
Servicer pursuant to subsection (h) below, upon which the Trustee may
conclusively rely) transfer from Aggregate Daily Collections deposited into
the Collection Account pursuant to subsection (d)(i) or (d)(ii) above on
such Deposit Date, to the respective Series Collection Subaccount, an
amount equal to the product of (x) the applicable Invested Percentage for
such Outstanding Series and (y) such Aggregate Daily Collections.
(iv) No later than the Business Day following each Deposit Date, the
Trustee shall (in accordance with the written directions received from the
Servicer pursuant to subsection (h) below, upon which the Trustee may
conclusively rely) allocate funds transferred to the Series Collection
Subaccount for each Outstanding Series pursuant to subsection (d)(iii)
above to the Series Non-Principal Collection Sub-subaccount, the Series
Principal Collection Sub-subaccount and such other Sub-subaccounts of each
such Series in accordance with the related Supplement for such Series.
(v) No later than the Business Day following each Deposit Date, except
as otherwise provided in a Supplement, the Trustee shall (in accordance
with the written directions received from the Servicer pursuant to
subsection (h) below, upon which the Trustee may conclusively rely)
transfer to the Company Collection Subaccount from Aggregate Daily
Collections deposited into the Collection Account pursuant to subsection
(d)(ii) above on such Deposit Date, the remaining funds (less an amount
equal to the costs and expenses, if any, incurred by the Trustee with
respect to the sale of the Receivables pursuant to subsection 7.2(a) or
9.1(b) and reimbursable to the Trustee as provided in Section 8.5), if any,
on deposit in the Collection
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Account on such date after giving effect to transfers to be made pursuant
to subsection (d)(iii) above.
(e) CERTAIN ALLOCATIONS DURING AN AMORTIZATION PERIOD. (i)If, on any
Settlement Report Date, an Amortization Period has commenced and is continuing
with respect to any Outstanding Series and at such Settlement Report Date, a
Revolving Period is still in effect with respect to any other Outstanding Series
(a "SPECIAL ALLOCATION SETTLEMENT REPORT DATE"), then the Servicer shall make
the following calculations:
(A) the amount (the "ALLOCABLE CHARGED-OFF AMOUNT") equal to the
excess, if any, of (I) the aggregate Principal Amount of Charged-Off
Receivables for the related Settlement Period over (II) the aggregate
Principal Amount of Recoveries received during the related Settlement
Period;
(B) the amount (the "ALLOCABLE RECOVERIES AMOUNT") equal to the
excess, if any, of (I) the aggregate Principal Amount of Recoveries
received during the related Settlement Period over (II) the aggregate
Principal Amount of Charged-Off Receivables for the related Settlement
Period; and
(ii) If, on any Special Allocation Settlement Report Date, any of the
Allocable Charged-Off Amount or the Allocable Recoveries Amount is greater
than zero for the related Settlement Period, the Trustee shall (in
accordance with written directions received pursuant to subsection (b)(i)
above, upon which the Trustee may conclusively rely) make (A) a pro rata
allocation to each Outstanding Series (based on the Invested Percentage for
such Series) of a portion (as determined in clause (iii) below) of each
such positive amount and (B) an allocation to the Exchangeable Company
Interest of the remaining portion of each such positive amount.
(iii) With respect to each portion of the Allocable Charged-Off Amount
and the Allocable Recoveries Amount which is allocated to an Outstanding
Series pursuant to subsection 3.1(e)(ii), the Trustee shall apply each such
amount to such Series in accordance with the related Supplement for such
Series.
(f) ALLOCATIONS FOR THE EXCHANGEABLE COMPANY INTEREST. (i) Until the
commencement and continuance of an Early Amortization Period, on each Business
Day and, after the occurrence and continuance of an Early Amortization Period
and until the Trust Termination Date, on each Distribution Date, after making
all allocations required pursuant to subsection 3.1(d), the Trustee shall (in
accordance with the written direction of the Servicer, upon which the Trustee
may conclusively rely) transfer to the owner of the Exchangeable Company
Interest the remaining amount on deposit in the Company Collection Subaccount.
(g) SET-OFF.(i) In addition to the provisions of Section 8.5, if the
Company shall fail to make a payment as provided in this Agreement or any
Supplement, the Servicer or the Trustee may set off and apply any amounts
otherwise payable to the Company under any Pooling and Servicing Agreement. The
Company hereby waives demand, notice or declaration of such set-off and
application; PROVIDED that notice will promptly be given to the Company of such
set-off; PROVIDED FURTHER that failure to give such notice shall not affect the
validity of such set-off.
(ii) In addition to the provisions of Section 8.5, in the event the
Servicer shall fail to make a payment as provided in any Pooling and
Servicing Agreement, the Trustee may set off and apply any amounts
otherwise payable to the Servicer in its capacity as Servicer under the
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Transaction Documents on account of such obligation. The Servicer hereby
waives demand, notice or declaration of such set-off and application;
PROVIDED that notice will promptly be given to the Servicer of such
set-off; PROVIDED FURTHER that failure to give such notice shall not
affect the validity of such set-off.
(h) ALLOCATION AND APPLICATION OF FUNDS. The Servicer shall direct
the Trustee in writing in a timely manner to apply all Collections with respect
to the Receivables as described in this Article III and in the Supplement with
respect to each Outstanding Series. The Servicer shall direct the Trustee in
writing to pay Collections to the owner of the Exchangeable Company Interest to
the extent such Collections are allocated to the Exchangeable Company Interest
under subsection 3.1(f) and as otherwise provided in this Article III.
Notwithstanding anything in this Agreement, any Supplement or any other
Transaction Document to the contrary, to the extent that the Trustee receives
any Required Report and immediately available funds prior to 2:00 p.m., New York
City time, on any Business Day, the Trustee shall make any applications of funds
required thereby on the same Business Day and otherwise on the next succeeding
Business Day.
(i) DAILY SETTLEMENTS. Subject to the express terms of any
Supplement, but notwithstanding anything in this Agreement to the contrary, for
so long as United Stationers Supply Co. remains the Servicer and no Early
Amortization Event or Potential Early Amortization Event with respect to any
Outstanding Series shall have occurred and be continuing, the Servicer shall not
be required to make daily deposits of Collections from the Collection
Concentration Account into the Collection Account as provided in subsection
3.1(d), but may withdraw such funds from the Collection Concentration Account
and make a single deposit of immediately available funds into the Collection
Account not later than 1:00 p.m., New York City time on each Business Day in an
amount equal to the aggregate amount of Collections required (determined without
regard to this section) to be deposited into the Series Non-Principal Collection
Sub-subaccount, the Series Principal Collection Sub-subaccount (less amounts
that may be paid to or at the direction of the Company pursuant to the
applicable Supplement) and such other Sub-subaccounts of each Series in
accordance with the related Supplement for such Series or such greater amount as
determined by the Servicer. To the extent that the amount deposited by the
Servicer is greater than the amount required, the excess shall be applied on
each Business Day thereafter to satisfy the deposit requirements of the
preceding sentence up to the amount of such excess.
THE REMAINDER OF ARTICLE III SHALL BE SPECIFIED
IN THE SUPPLEMENT WITH RESPECT TO EACH SERIES.
SUCH REMAINDER SHALL BE APPLICABLE ONLY TO THE
SERIES RELATING TO THE SUPPLEMENT IN WHICH
SUCH REMAINDER APPEARS.
ARTICLE IV
ARTICLE IV IS RESERVED
AND MAY BE SPECIFIED IN ANY SUPPLEMENT
WITH RESPECT TO THE SERIES RELATING THERETO
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ARTICLE V
THE CERTIFICATES AND INTERESTS
Section 5.1 THE CERTIFICATES. The Investor Certificates of each
Series and any Class thereof shall be in fully registered form and shall be
substantially in the form of the exhibits with respect thereto attached to
the applicable Supplement. The Certificates shall, upon issue, be executed
and delivered by the Company to the Trustee for authentication and redelivery
as provided in Section 5.2. Except as otherwise set forth in the related
Supplement, the Investor Certificates shall be issued in minimum
denominations of $1,000,000 and in integral multiples of $100,000 in excess
thereof unless otherwise specified in any Supplement for any Series and
Class. Unless otherwise specified in any Supplement for any Series, the
Investor Certificates shall be issued upon initial issuance as a single
global certificate in an original principal amount equal to the Initial
Invested Amount with respect to such Series. The Company is hereby
authorized to execute and deliver each Certificate on behalf of the Trust.
Each Certificate shall be executed by manual or facsimile signature on behalf
of the Company by a Responsible Officer. Certificates bearing the manual or
facsimile signature of the individual who was, at the time when such
signature was affixed, authorized to sign on behalf of the Company or the
Trustee shall not be rendered invalid, notwithstanding that such individual
has ceased to be so authorized prior to or on the date of the authentication
and delivery of such Certificates or does not hold such office at the date of
such Certificates. No Certificate shall be entitled to any benefit under
this Agreement, or be valid for any purpose, unless there appears on such
Certificate a certificate of authentication substantially in the form
provided for herein executed by or on behalf of the Trustee by the manual
signature of a duly authorized signatory, and such certificate of
authentication upon any Certificate shall be conclusive evidence, and the
only evidence, that such Certificate has been duly authenticated and
delivered hereunder. All Certificates shall be dated the date of their
authentication but failure to do so shall not render them invalid.
Section 5.2 AUTHENTICATION OF CERTIFICATES. The Trustee shall
authenticate and deliver the initial Series of the Investor Certificates that
is issued upon original issuance, upon the written order of the Company in a
form reasonably satisfactory to the Trustee, to the holders of the initial
Series of Investor Certificates, against payment to the Company of the
Initial Invested Amount. The Investor Certificates shall be duly
authenticated by or on behalf of the Trustee in authorized denominations
equal to (in the aggregate) the Initial Invested Amount and the interests
evidenced thereby, together with any Series Subordinated Interest and the
Exchangeable Company Interest, shall constitute the entire ownership of the
Trust. Upon a Company Exchange as provided in Section 5.10 and the
satisfaction of certain other conditions specified therein, the Trustee shall
authenticate and deliver the Certificates of additional Series (with the
designation provided in the applicable Supplement) (or, if provided in any
Supplement, the additional Investor Certificates of an existing Series), upon
the written order of the Company, to the Persons designated in such
Supplement. Upon the order of the Company, the Investor Certificates of any
Series shall be duly authenticated by or on behalf of the Trustee, in
authorized denominations equal to (in the aggregate) the Initial Invested
Amount of such Series of Investor Certificates.
Section 5.3 REGISTRATION OF TRANSFER AND EXCHANGE OF
CERTIFICATES.(a) The Trustee shall cause to be kept at the office or agency
to be maintained by a transfer agent and registrar (which may be the Trustee)
(the "TRANSFER AGENT AND REGISTRAR") in accordance with the provisions of
Section 8.16 a register (the "CERTIFICATE REGISTER") in which, subject to
such reasonable regulations as the Trustee may prescribe, the Transfer Agent
and Registrar shall provide for the registration of the Investor Certificates
and of transfers and exchanges of the Investor Certificates as herein
provided. The Company hereby appoints the Trustee as the initial Transfer
Agent and Registrar for the purpose of registering the Investor Certificates
and transfers and exchanges of the Investor Certificates as herein provided.
The Company, or the Trustee, as agent for the Company, may revoke such
appointment as Transfer Agent and Registrar
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and remove the then-acting Transfer Agent and Registrar if the Trustee or the
Company (as applicable) determines in its sole discretion that the
then-acting Transfer Agent and Registrar has failed to perform its
obligations under this Agreement in any material respect. The then-acting
Transfer Agent and Registrar shall be permitted to resign as Transfer Agent
and Registrar upon 30 days' written notice to the Company, the Trustee and
the Servicer; PROVIDED, HOWEVER, that such resignation shall not be effective
and the Trustee shall continue to perform its duties as Transfer Agent and
Registrar until the Trustee has appointed a successor Transfer Agent and
Registrar reasonably acceptable to the Company and such successor Transfer
Agent and Registrar has accepted such appointment. The provisions of
Sections 8.1, 8.2, 8.3, 8.5 and 10.19 shall apply to the Trustee also in its
role as Transfer Agent and Registrar for so long as the Trustee shall act as
Transfer Agent and Registrar.
The Company hereby agrees to provide the Trustee from time to time
sufficient funds, on a timely basis and in accordance with and subject to
Section 8.5, for the payment of any reasonable compensation payable to the
Transfer Agent and Registrar for its services under this Section 5.3. The
Company, Trustee and Transfer Agent and Registrar shall agree on such
compensation in writing. The Trustee hereby agrees that, upon the receipt of
such funds from the Company, it shall promptly pay the Transfer Agent and
Registrar such amounts.
Upon surrender for registration of transfer of any Investor
Certificate at any office or agency of the Transfer Agent and Registrar
maintained for such purpose, the Company shall execute, and, upon the written
request of the Company, the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Investor
Certificates in authorized denominations of the same Series representing like
aggregate Fractional Undivided Interests and which bear numbers that are not
contemporaneously outstanding.
At the option of an Investor Certificateholder, Investor
Certificates may be exchanged for other Investor Certificates of the same
Series in authorized denominations of like aggregate Fractional Undivided
Interests, bearing numbers that are not contemporaneously outstanding, upon
surrender of the Investor Certificates to be exchanged at any such office or
agency of the Transfer Agent and Registrar maintained for such purpose.
Whenever any Investor Certificates of any Series are so surrendered
for exchange, the Company shall execute, and, upon the written request of the
Company, the Trustee shall authenticate and (unless the Transfer Agent and
Registrar is different from the Trustee, in which case the Transfer Agent and
Registrar shall) deliver, the Investor Certificates of such Series which the
Investor Certificateholder making the exchange is entitled to receive. Every
Investor Certificate presented or surrendered for registration of transfer or
exchange shall be accompanied by a written instrument of transfer
substantially in the form attached to the form of such Investor Certificate
and duly executed by the holder thereof or his attorney-in-fact duly
authorized in writing delivered to the Trustee (unless the Transfer Agent and
Registrar is different from the Trustee, in which case to the Transfer Agent
and Registrar) and complying with any requirements set forth in the
applicable Supplement.
No service charge shall be made for any registration of transfer or
exchange of Investor Certificates, but the Transfer Agent and Registrar may
require any Investor Certificateholder that is transferring or exchanging one
or more Certificates to pay a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer or exchange of
Investor Certificates.
All Investor Certificates surrendered for registration of transfer
and exchange shall be cancelled and disposed of in a customary manner
satisfactory to the Trustee.
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The Company shall execute and deliver Certificates to the Trustee
or the Transfer Agent and Registrar in such amounts and at such times as are
necessary to enable the Trustee and the Transfer Agent and Registrar to
fulfill their respective responsibilities under this Agreement and the
Certificates.
No interest of any Investor Certificateholder in the Receivables
may be transferred other than by means of a transfer of an Investor
Certificate.
(b) The Transfer Agent and Registrar will maintain at its expense
in the Borough of Manhattan, The City of New York and, subject to subsection
5.3(a), if specified in the related Supplement for any Series, any other city
designated in such Supplement, an office or offices or agency or agencies
where Investor Certificates may be surrendered for registration or transfer
or exchange.
(c) Unless otherwise stated in any related Supplements,
registration of transfer of Certificates containing a legend relating to
restrictions on transfer of such Certificates (which legend shall be set
forth in the Supplement relating to such Investor Certificates) shall be
effected only if the conditions set forth in the related Supplement are
complied with.
Certificates issued upon registration or transfer of, or in
exchange for, Certificates bearing the legend referred to above shall also
bear such legend unless the Company, the Servicer, the Trustee and the
Transfer Agent and Registrar receive an Opinion of Counsel satisfactory to
each of them, to the effect that such legend may be removed.
(d) (i) The Company may not transfer, assign, exchange or
otherwise pledge or convey the Series Subordinated Interest of any Series or
the Exchangeable Company Interest except, with respect to the Exchangeable
Company Interest, pursuant to Section 5.10.
(ii) Neither the Company nor the Servicer shall at any time
participate in the listing of any Targeted Investor Certificate (as defined
below) on an "established securities market" within the meaning of Section
7704(b)(1) of the Internal Revenue Code and any proposed, temporary or
final treasury regulation thereunder as of the date hereof, including,
without limitation, an over-the-counter or interdealer quotation system
that regularly disseminates firm buy or sell quotations. "TARGETED
INVESTOR CERTIFICATE" shall mean any Certificate representing a right to
receive interest or principal with respect to any Class or Series of
Investor Certificates with respect to which an Opinion of Counsel has not
been rendered that such Certificates will be treated as debt for federal
income tax purposes (it being understood that any Certificate with respect
to which an Opinion of Counsel has been rendered that such Certificate will
be treated either as debt or as an interest in a partnership for federal
income tax purposes shall be a Targeted Investor Certificate).
(e) (i) No transfer of a Targeted Investor Certificate or grant of
a participation therein shall be permitted if (A) such transfer or grant
would cause the number of Targeted Holders (as defined below) to exceed 75 or
(B) the transferee or grantee, as the case may be, is a trust, partnership or
"S corporation" (within the meaning of Section 1361(a) of the Code) (a
"FLOW-THROUGH ENTITY"), unless such flow-through entity represents that less
than 50% of the aggregate value of such flow-through entity's assets consist
of Targeted Investor Certificates. "TARGETED HOLDER" shall mean each Holder
of or participant in a Targeted Investor Certificate; PROVIDED, HOWEVER, that
any Person holding more than one interest with respect to the Investor
Certificates or the Trust, each of which separately would cause such Person
to be a Targeted Holder, shall be treated as a single Targeted Holder.
(ii) Any determination by the Transfer Agent and Registrar (in
accordance with the information contained in the Certificate Register and
the certifications made by each transferee
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and participant pursuant to the applicable Supplement, upon which
information the Transfer Agent and Registrar may conclusively rely) that
the event described in either clause (i)(A) or (i)(B) of this subsection
5.3(e) would occur as the result of a transfer of a Targeted Investor
Certificate or the grant of a participation therein shall be (X)
communicated in writing to the transferring or granting Investor
Certificateholder prior to the effective date set out in the notice of
transfer or participation required by, or otherwise provided for under,
the related Supplement and (Y) binding upon the parties absent manifest
error.
Section 5.4 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES. If
(a) any mutilated Certificate is surrendered to the Transfer Agent and
Registrar, or the Transfer Agent and Registrar receives evidence in the form
of a certification by the holder thereof of the destruction, loss or theft of
any Certificate and (b) there is delivered to the Transfer Agent and
Registrar and the Trustee such security or indemnity as may be required by
them to save the Trust and each of them harmless, then, in the absence of
actual notice to a Responsible Officer of the Trustee or Transfer Agent and
Registrar that such Certificate has been acquired by a bona fide purchaser,
the Company shall execute and, upon the written request of the Company, the
Trustee shall authenticate and deliver, in exchange for or in lieu of any
such mutilated, destroyed, lost or stolen Certificate, a new Certificate of
like tenor and aggregate Fractional Undivided Interest and bearing a number
that is not contemporaneously outstanding. In connection with the issuance
of any new Certificate under this Section 5.4, the Trustee or the Transfer
Agent and Registrar may require the payment by the Holder of a sum sufficient
to cover any tax or other governmental expenses (including the fees and
expenses of the Trustee and Transfer Agent and Registrar) connected
therewith. Any duplicate Certificate issued pursuant to this Section 5.4
shall constitute conclusive and indefeasible evidence of ownership in the
Trust, as if originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time.
Section 5.5 PERSONS DEEMED OWNERS. At all times prior to due
presentation of a Certificate for registration of transfer, the Company, the
Trustee, the Paying Agent, the Transfer Agent and Registrar, any Agent and
any agent of any of them may treat the Person in whose name any Certificate
is registered as the owner of such Certificate for the purpose of receiving
distributions pursuant to Article IV of the related Supplement and for all
other purposes whatsoever, and neither the Trustee, the Paying Agent, the
Transfer Agent and Registrar, any Agent nor any agent of any of them shall be
affected by any notice to the contrary. Notwithstanding the foregoing
provisions of this Section 5.5, in determining whether the holders of the
requisite Fractional Undivided Interests have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Certificates
owned by the Company, the Servicer or any Affiliate thereof shall be
disregarded and deemed not to be outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent or waiver, only
Certificates which a Responsible Officer of the Trustee actually knows to be
so owned shall be so disregarded. Certificates so owned by the Company, the
Servicer or any Affiliate thereof which have been pledged in good faith shall
not be disregarded and may be regarded as outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Certificates and that the pledgee is not the Company,
the Servicer or an Affiliate thereof.
Section 5.6 APPOINTMENT OF PAYING AGENT. The Paying Agent shall
make distributions to Investor Certificateholders from the Collection Account
(and/or any other account or accounts maintained for the benefit of Holders
as specified in the related Supplement for any Series) pursuant to Articles
III and IV. The Trustee may revoke such power and remove the Paying Agent if
the Trustee determines in its sole discretion that the Paying Agent shall
have failed to perform its obligations under this Agreement in any material
respect. Unless otherwise specified in the related Supplement for any Series
and with respect to such Series, the Paying Agent shall initially be the
Trustee and, if the Trustee so chooses, any
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co-paying agent chosen by the Trustee. Each Paying Agent shall have a
combined capital and surplus of at least $50,000,000. The Paying Agent shall
be permitted to resign upon 30 days' written notice to the Trustee. In the
event that the Paying Agent shall so resign, the Trustee shall appoint a
successor to act as Paying Agent (which shall be a depositary institution or
trust company) reasonably acceptable to the Company which appointment shall
be effective on the date on which the Person so appointed gives the Trustee
written notice that it accepts the appointment. Any resignation or removal
of the Paying Agent and appointment of successor Paying Agent pursuant to
this Section 5.6 shall not become effective until acceptance of appointment
by the successor Paying Agent, as provided in this Section 5.6. The Trustee
shall cause such successor Paying Agent or any additional Paying Agent
appointed by the Trustee to execute and deliver to the Trustee an instrument
in which such successor Paying Agent or additional Paying Agent shall agree
with the Trustee that as Paying Agent, such successor Paying Agent or
additional Paying Agent will hold all sums, if any, held by it for payment to
the Investor Certificateholders in trust for the benefit of the Investor
Certificateholders entitled thereto until such sums shall be paid to such
Holders. The Paying Agent shall return all unclaimed funds to the Trustee
and upon removal of a Paying Agent such Paying Agent shall also return all
funds in its possession to the Trustee. The provisions of Sections 8.1, 8.2,
8.3, 8.5 and 10.19 shall apply to the Trustee also in its role as Paying
Agent, for so long as the Trustee shall act as Paying Agent. Any reference
in this Agreement to the Paying Agent shall include any co-paying agent, if
any, unless the context requires otherwise.
The Company hereby agrees to provide the Trustee from time to time
sufficient funds, on a timely basis and in accordance with and subject to
Section 8.5, for the payment of any reasonable compensation payable to the
Paying Agent for its services under this Section 5.6. The Trustee hereby
agrees that, upon the receipt of such funds from the Company, it shall
promptly pay the Paying Agent such amounts.
Section 5.7 ACCESS TO LIST OF INVESTOR CERTIFICATEHOLDERS' NAMES
AND ADDRESSES. The Trustee will furnish or cause to be furnished by the
Transfer Agent and Registrar to the Company, the Servicer or the Paying
Agent, within ten Business Days after receipt by the Trustee of a written
request therefor from the Company, the Servicer or the Paying Agent,
respectively, in writing, a list of the names and addresses of the Investor
Certificateholders as then recorded by or on behalf of the Trustee. If three
or more Investor Certificateholders of record or any Investor
Certificateholder of any Series or a group of Investor Certificateholders of
record representing Fractional Undivided Interests aggregating not less than
10% of the Invested Amount of the related Outstanding Series (the
"APPLICANTS") apply in writing to the Trustee, and such application states
that the Applicants desire to communicate with other Investor
Certificateholders of any Series with respect to their rights under this
Agreement or under the Investor Certificates and is accompanied by a copy of
the communication which such Applicants propose to transmit, then the
Trustee, after having been adequately indemnified by such Applicants for its
costs and expenses, shall transfer or shall cause the Transfer Agent and
Registrar to transmit, such communication to the Investor Certificateholders
reasonably promptly after the receipt of such application.
Every Investor Certificateholder, by receiving and holding an
Investor Certificate, consents to the disclosure of its name and address as
provided above and agrees with the Trustee that neither the Trustee, the
Transfer Agent and Registrar, nor any of their respective agents, officers,
directors or employees shall be held accountable by reason of the disclosure
or mailing of any such information as to the names and addresses of the
Investor Certificateholders hereunder, regardless of the sources from which
such information was derived.
As soon as practicable following each Record Date, the Trustee
shall provide to the Paying Agent or its designee, a list of Investor
Certificateholders in such form as the Paying Agent may reasonably request.
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Section 5.8 AUTHENTICATING AGENT. (a) The Trustee may appoint one
or more authenticating agents with respect to the Certificates which shall be
authorized to act on behalf of the Trustee in authenticating the Certificates
in connection with the issuance, delivery, registration of transfer, exchange
or repayment of the Certificates. Whenever reference is made in this
Agreement to the authentication of Certificates by the Trustee or the
Trustee's certificate of authentication, such reference shall be deemed to
include authentication on behalf of the Trustee by an authenticating agent
and a certificate of authentication executed on behalf of the Trustee by an
authenticating agent. Each authenticating agent must be acceptable to the
Company.
(b) Any institution succeeding to the corporate trust business of
an authenticating agent shall continue to be an authenticating agent without
the execution or filing of any paper or any further act on the part of the
Trustee or such authenticating agent.
(c) An authenticating agent may at any time resign by giving
written notice of resignation to the Trustee. Upon the receipt by the
Trustee of any such notice of resignation and upon the giving of any such
notice of termination by the Trustee, the Trustee shall immediately give
notice of such resignation or termination to the Company. Any resignation of
an authenticating agent shall not become effective until acceptance of
appointment by the successor authenticating agent as provided in this Section
5.8. The Trustee may at any time terminate the agency of an authenticating
agent by giving notice of termination to such authenticating agent. Upon
receiving such a notice of resignation or upon such a termination, or in case
at any time an authenticating agent shall cease to be acceptable to the
Trustee or the Company, the Trustee promptly shall appoint a successor
authenticating agent. Any successor authenticating agent upon acceptance of
its appointment hereunder shall become vested with all the rights, powers and
duties of its predecessor hereunder, with like effect as if originally named
as an authenticating agent. No successor authenticating agent (other than an
Affiliate of the Trustee) shall be appointed unless reasonably acceptable to
the Trustee and the Company.
(d) The Company hereby agrees to provide the Trustee from time to
time sufficient funds, on a timely basis and in accordance with and subject
to Section 8.5, for the payment of any reasonable compensation payable to
each authenticating agent for its services under this Section 5.8. The
Trustee hereby agrees that, upon the receipt of such funds from the Company
it shall pay each authenticating agent such amounts.
(e) The provisions of Sections 8.1, 8.2, 8.3 and 8.5 shall be
applicable to any authenticating agent.
(f) Pursuant to an appointment made under this Section 5.8, the
Certificates may have endorsed thereon, in lieu of the Trustee's certificate
of authentication, an alternate certificate of authentication in
substantially the following form:
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"This is one of the Certificates described in the Pooling Agreement
dated as of __________ [__], 1998, among USS Receivables Company, Ltd.,
United Stationers Supply Co., as Servicer, and The Chase Manhattan Bank, as
Trustee.
--------------------
as Authenticating Agent
for the Trustee
By
----------------------
Authorized Signatory"
Section 5.9 TAX TREATMENT. It is the intent of the Servicer, the
Company, the Investor Certificateholders and the Trustee that, for federal,
state and local income and franchise tax purposes, the Investor Certificates
be treated as evidence of indebtedness secured by the Trust Assets and the
Trust not be characterized as a "publicly traded partnership" or an
association taxable as a corporation. The Company and the Trustee, by
entering into this Agreement, and each Investor Certificateholder, by its
acceptance of its Investor Certificate, agree to treat the Investor
Certificates for federal, state and local income and franchise tax purposes
as indebtedness. The parties hereto agree that they shall not cause or
permit the making, as applicable, of any election under Treasury Regulation
Section 301.7701-3 whereby the Trust or any portion thereof would be treated
as a corporation for federal income tax purposes and, except as required by
Section 8.11, shall not file tax returns or obtain any federal employer
identification number for the Trust but shall treat the Trust as a security
device for such purposes. The provisions of this Agreement and all related
Transaction Documents shall be construed to further these intentions of the
parties. This Section 5.9 shall survive the termination of this Agreement
and shall be binding on all transferees of any of the foregoing persons.
Section 5.10 COMPANY EXCHANGES.(a) The Company may, in accordance
with the procedures set forth below, call for an adjustment of the
Exchangeable Company Interest in exchange for (i) an increase in the Invested
Amount of a Class of Investor Certificates of an Outstanding Series and an
increase in the related Series Subordinated Interest or (ii) one or more
newly issued Series of Investor Certificates and the related newly created
Series Subordinated Interest (a "NEW SERIES") (any such exchange, a "COMPANY
EXCHANGE"). The Company may perform a Company Exchange by notifying the
Trustee, in writing at least 30 days in advance (an "EXCHANGE NOTICE") of the
date upon which the Company Exchange is to occur (an "EXCHANGE DATE"). Any
Exchange Notice shall state the designation of any Series (and/or Class, if
applicable) to be issued (or supplemented) on the Exchange Date and, with
respect to each such Series (and/or Class, if applicable): (a) its additional
or Initial Invested Amount, as the case may be, if any, which in the
aggregate at any time may not be greater than the current value of the
Exchangeable Company Interest, if any, at such time, (b) its Certificate Rate
(or the method for allocating interest payments or other cash flow to such
Series), if any, and (c) whether such New Series will be a companion series
to an Outstanding Series (an "EXISTING COMPANION SERIES"; and together with
the New Series, a "COMPANION SERIES"). On the Exchange Date, the Trustee
shall, upon the written order of the Company, authenticate and deliver any
Certificates evidencing an increase in the Invested Amount of a Class of
Investor Certificates or a newly issued Series only upon delivery by the
Company to the Trustee of the following (together with the delivery by the
Company to the Trustee of any additional agreements, instruments or other
documents as are specified in the related Supplement): (a) a Supplement
executed by the Company and specifying the Principal Terms of such Series
(provided that no such Supplement shall be required for any increase in the
Invested Amount of a Class of Investor Certificates
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unless it is so required by the related Supplement), (b) a Tax Opinion
addressed to the Trustee and the Trust, (c) a General Opinion addressed to
the Trustee and the Trust and (d) written confirmation from each Rating
Agency that the Company Exchange will not result in the Rating Agency's
reducing or withdrawing its rating on any then Outstanding Series rated by
it. Upon the delivery of the items listed in clauses (a) through (d) above,
the existing Exchangeable Company Interest and the applicable Series
Subordinated Interests, as the case may be, shall be deemed cancelled, the
Trustee shall issue the applicable Series of Investor Certificates, dated the
Exchange Date, and the applicable Series Subordinated Interests and the new
Exchangeable Company Interest shall be deemed duly created, in each case as
provided above. There is no limit to the number of Company Exchanges that the
Company may perform under this Agreement. If the Company shall, on any
Exchange Date, retain any Investor Certificates issued on such Exchange Date,
it shall, prior to transferring any such Certificates to another Person,
obtain a Tax Opinion. Additional restrictions relating to a Company Exchange
may be set forth in any Supplement.
(b) Upon any Company Exchange, the Trustee, in accordance with the
written directions of the Company, shall issue to the Company under Section
5.1, for execution and redelivery to the Trustee for authentication under
Section 5.2, (i) one or more Certificates representing an increase in the
Invested Amount of an Outstanding Series or (ii) one or more new Series of
Investor Certificates. Any such Certificates shall be substantially in the
form specified in the applicable Supplement and each shall bear, upon its
face, the designation for such Series to which each such certificate belongs
so selected by the Company.
(c) In conjunction with a Company Exchange, the parties hereto
shall, except as otherwise provided in subsection (a) above, execute a
supplement to this Agreement, which shall define, with respect to any
additional Investor Certificates or newly issued Series, as the case may be:
(i) its name or designation, (ii) its additional or initial principal amount,
as the case may be (or method for calculating such amount), (iii) its coupon
rate (or formula for the determination thereof), (iv) the interest payment
date or dates and the date or dates from which interest shall accrue, (v) the
method for allocating Collections to Holders, including the applicable
Investor Percentage, (vi) the names of any accounts to be used by such Series
and the terms governing the operation of any such accounts, (vii) the issue
and term of a letter of credit or other form of Enhancement, if any, with
respect thereto, (viii) the terms, if any, on which the Certificates of such
Series may be repurchased by the Company or may be remarketed to other
investors, (ix) the Series Termination Date, (x) any deposit account
maintained for the benefit of Holders, (xi) the number of Classes of such
Series, and if more than one Class, the rights and priorities of each such
Class, (xii) the rights of the owner of the Exchangeable Company Interest
that have been transferred to the holders of such Series, (xiii) the
designation of any Series Accounts and the terms governing the operation of
any such Series Accounts, (xiv) provisions acceptable to the Trustee
concerning the payment of the Trustee's fees and expenses and (xv) other
relevant terms (all such terms, the "PRINCIPAL TERMS" of such Series). The
Supplement executed in connection with the Company Exchange shall contain
administrative provisions which are reasonably acceptable to the Trustee.
(d) In order for a New Series to be part of a Companion Series, the
Supplement for the related Existing Companion Series must provide for or
permit the Amortization Period to commence on the Issuance Date for such New
Series, and on or prior to the Issuance Date for the New Series the Servicer
and the Company shall take all actions, if any, necessary to cause the
Amortization Period for such Existing Companion Series to commence on such
Issuance Date. The proceeds from the issuance of the New Series shall be
deposited in the applicable Series Principal Collection Sub-subaccount and
the Company shall, on the Issuance Date for such New Series, deposit into the
applicable Series Non-Principal Sub-subaccount the amount of interest that
will accrue on the New Series over a period specified in the related
Supplement for such New Series. On each day on which principal is paid to the
holders of
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the Existing Companion Series, the Trustee shall distribute to the Company
from the applicable Series Principal Collection Sub-subaccount of the New
Series an amount (up to the amount of available funds in such account) equal
to the amount distributed on such day to the Investor Certificateholders of
any Existing Companion Series; PROVIDED that, after giving effect to such
distributions, the Aggregate Receivables Amount shall equal or exceed the sum
of (i) the Target Receivables Amount with respect to such Existing Companion
Series on such day, PLUS (ii) the Target Receivables Amount with respect to
the New Series on such day, PLUS (iii) the Target Receivables Amount with
respect to any other Outstanding Series on such day; PROVIDED FURTHER that
the Trustee may conclusively rely on the calculations of the Servicer of such
amounts.
(e) Except as specified in any Supplement for a related Series, all
Investor Certificates of any Series shall be equally and ratably entitled as
provided herein to the benefits hereof without preference, priority or
distinction on account of the actual time or times of authentication and
delivery, all in accordance with the terms and provisions of this Agreement
and the applicable Supplement.
Section 5.11 BOOK-ENTRY CERTIFICATES. If specified in any related
Supplement, the Investor Certificates, or any portion thereof, upon original
issuance, shall be issued in the form of one or more typewritten Certificates
representing the Book-Entry Certificates, to be delivered to the depository
specified in such Supplement (the "DEPOSITORY") which shall be the Clearing
Agency, specified by, or on behalf of, the Company for such Series. The
Investor Certificates shall initially be registered on the Certificate
Register in the name of the nominee of such Clearing Agency, and no
Certificate Book-Entry Holder will receive a definitive certificate
representing such Certificate Book-Entry Holder's interest in the Investor
Certificates, except as provided in Section 5.13. Unless and until
definitive, fully registered Investor Certificates ("DEFINITIVE
CERTIFICATES") have been issued to Holders pursuant to Section 5.13 or the
related Supplement:
(a) the provisions of this Section 5.11 shall be in full force and
effect;
(b) the Company, the Servicer and the Trustee may deal with each
Clearing Agency for all purposes (including the making of distributions on
the Investor Certificates) as the Holder without respect to whether there has
been any actual authorization of such actions by the Certificate Book-Entry
Holders with respect to such actions;
(c) to the extent that the provisions of this Section 5.11 conflict
with any other provisions of this Agreement, the provisions of this Section
5.11 shall control; and
(d) the rights of Certificate Book-Entity Holders shall be
exercised only through the Clearing Agency and the related Clearing Agency
Participants and shall be limited to those established by law and agreements
between such related Certificate Book-Entry Holders and the Clearing Agency
and/or the Clearing Agency Participants. Pursuant to the Depository
Agreement, the initial Clearing Agency will make book-entry transfers among
the Clearing Agency Participants and receive and transmit distributions of
principal and interest on the Investor Certificates to such Clearing Agency
Participants.
Notwithstanding the foregoing, no Class or Series of Investor Certificates
may be issued as Book Entry Certificates (but, instead, shall be issued as
Definitive Certificates) unless at the time of issuance of such Class or
Series the Company and the Trustee receive an opinion of independent counsel
that the Certificates of such Class or Series will be treated as indebtedness
for federal income tax purposes.
Section 5.12 NOTICES TO CLEARING AGENCY. Whenever notice or other
communication to the Holders is required under this Agreement, unless and
until Definitive Certificates shall have been
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issued to Certificate Book-Entry Holders pursuant to Section 5.13, the
Trustee shall give all such notices and communications specified herein to be
given to the Investor Certificateholders to the Clearing Agencies.
Section 5.13 DEFINITIVE CERTIFICATES. If (a)(i) the Company
advises the Trustee in writing that any Clearing Agency is no longer willing
or able to properly discharge its responsibilities under the applicable
Depository Agreement, and (ii) the Company is unable to locate a qualified
successor, (b) the Company, at its option, advises the Trustee in writing
that it elects to terminate the book-entry system through the Clearing Agency
or (c) after the occurrence of a Servicer Default, Certificate Book-Entry
Holders representing Fractional Undivided Interests aggregating more than 50%
of the Invested Amount held by such Certificate Book-Entry Holders of each
affected Series then issued and outstanding advise the Clearing Agency
through the Clearing Agency Participants in writing, and the Clearing Agency
shall so notify the Trustee, that the continuation of a book-entry system
through the Clearing Agency is no longer in the best interests of the
Certificate Book-Entry Holders, the Trustee shall notify the Clearing Agency,
which shall be responsible to notify the Certificate Book-Entry Holders, of
the occurrence of any such event and of the availability of Definitive
Certificates to Certificate Book-Entry Holders requesting the same. Upon
surrender to the Trustee of the Book-Entry Certificates by the Clearing
Agency, accompanied by registration instructions from the Clearing Agency for
registration, the Trustee shall issue the Definitive Certificates. Neither
the Company nor the Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying
on, such instructions.
ARTICLE VI
OTHER MATTERS RELATING
TO THE COMPANY
Section 6.1 LIABILITY OF THE COMPANY. The Company shall be liable
for all obligations, covenants, representations and warranties of the Company
arising under or related to this Agreement or any Supplement. Except as
provided in the preceding sentence and otherwise herein, the Company shall be
liable only to the extent of the obligations specifically undertaken by it
hereunder.
Section 6.2 LIMITATION ON LIABILITY OF THE COMPANY. Except as
provided in Sections 6.1 or otherwise provided herein, neither the Company
nor any of its directors or officers or employees or agents, in their
capacity as transferor of, or in connection with the transfer of, Receivables
and Related Property hereunder, shall be under any liability to the Trust,
the Trustee, the Holders or any other Person for any action taken or for
refraining from the taking of any action pursuant to this Agreement, whether
or not such action or inaction arises from express or implied duties under
this Agreement; PROVIDED, HOWEVER, that this provision shall not protect the
Company against any liability which would otherwise be imposed by reason of
wilful misconduct, bad faith or gross negligence in the performance of any
duties or by reason of reckless disregard of any obligations and duties
hereunder; PROVIDED, FURTHER, that this provision shall not protect any such
director, officer, employee or agent against any liability which would
otherwise be imposed on such Person pursuant to applicable law or the
Company's memorandum or articles of association by reason of wilful
misconduct, bad faith or gross negligence in the performance of such Person's
duties or by reason of reckless disregard of such Person's obligations and
duties hereunder. The Company and any director or officer or employee or
agent of the Company may rely in good faith on any document of any kind PRIMA
FACIE properly executed and submitted by any Person (other than, in the case
of the Company, the Company or the Servicer) respecting any matters arising
hereunder.
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ARTICLE VII
EARLY AMORTIZATION EVENTS
Section 7.1 EARLY AMORTIZATION EVENTS. Unless modified with
respect to any Series of Investor Certificates by any related Supplement, if
any one of the following events (each, an "EARLY AMORTIZATION EVENT") shall
occur:
(a)(i) the Company shall commence any case, proceeding or other
action (A) under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition or
other relief with respect to it or its debts, or (B) seeking appointment of a
receiver, trustee, custodian or other similar official for it or for all or
any substantial part of its assets, or the Company shall make a general
assignment for the benefit of its creditors; or (ii) there shall be commenced
against the Company any case, proceeding or other action of a nature referred
to in clause (i) above which remains undismissed, undischarged or unbonded
for a period of 60 days or an order for relief, decree, adjudication or
appointment shall occur; or (iii) there shall be commenced against the
Company any case, proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or any
substantial part of its assets which results in the entry of an order for any
such relief which shall not have been vacated, discharged, or stayed or
bonded pending appeal within 60 such days from the entry thereof; or (iv) the
Company shall take any action in furtherance of, or indicating its consent
to, approval of, or acquiescence in, any of the acts set forth in clause (i),
(ii), or (iii) above; or (v) the Company shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its debts as they
become due;
(b) the Trust or the Company shall become an "investment company"
within the meaning of the Investment Company Act of 1940, as amended;
(c) the Trust is characterized for federal income tax purposes as a
"publicly traded partnership" or as an association taxable as a corporation;
or
(d) the Trustee shall be appointed as Successor Servicer pursuant
to subsection 6.2(b) of the Servicing Agreement;
then, an "EARLY AMORTIZATION PERIOD" with respect to all Outstanding Series
shall commence without any notice or other action on the part of the Trustee
or any Investor Certificateholder immediately upon the occurrence of such
event. The Servicer shall notify each Rating Agency and the Trustee in
writing of the occurrence of any Early Amortization Period, specifying the
cause thereof. Further, upon the commencement against the Company of a case,
proceeding or other action described in clause (a)(ii) or (iii) above, the
Company shall not purchase Receivables from any Seller, or transfer
Receivables to the Trust, until such time, if any, as such case, proceeding
or other action is vacated, discharged, or stayed or bonded pending appeal.
Additional Early Amortization Events and the consequences thereof
may be set forth in each Supplement with respect to the Series relating
thereto.
Section 7.2 ADDITIONAL RIGHTS UPON THE OCCURRENCE OF CERTAIN
EVENTS. (a) If an Insolvency Event with respect to the Company occurs, the
Company shall immediately cease to transfer Receivables to the Trust and
shall promptly give notice to the Trustee of such occurrence.
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Notwithstanding any cessation of the transfer to the Trust of additional
Receivables, Receivables transferred to the Trust prior to the occurrence of
such Insolvency Event and Collections in respect of such Receivables and
interest, whenever created, accrued in respect of such Receivables, shall
continue to be a part of the Trust. Within 15 days of receipt by a
Responsible Officer of the Trustee of written notice of the occurrence of an
Insolvency Event in accordance with Section 7.1, if the Aggregate Invested
Amount and all accrued and unpaid interest thereon have not been paid to the
Investor Certificateholders, then the Trustee shall (i) publish a notice in a
newspaper with a national circulation (an "AUTHORIZED NEWSPAPER") that an
Insolvency Event has occurred and that the Trustee intends to sell, dispose
of or otherwise liquidate the Receivables and the other Trust Assets in a
commercially reasonable manner and (ii) send written notice to the Investor
Certificateholders and request instructions from such holders, which notice
shall request each Investor Certificateholder to advise the Trustee in
writing that it elects one of the following options: (A) the Investor
Certificateholder wishes the Trustee not to sell, dispose of or otherwise
liquidate the Receivables and the other Trust Assets, or (B) the Investor
Certificateholder wishes the Trustee to sell, dispose of or otherwise
liquidate the Receivables and the other Trust Assets and to instruct the
Servicer to reconstitute the Trust upon the same terms and conditions set
forth herein, or (C) the Investor Certificateholder refuses to advise the
Trustee as to the specific action the Trustee to take. If after 60 days from
the day notice pursuant to clause (i) above is first published (the
"PUBLICATION DATE"), the Trustee shall not have received written instructions
of (x) holders of Certificates representing undivided interests in the Trust
aggregating in excess of 50% of the related Invested Amount of each Series
(or in the case of a series having more than one Class of Investor
Certificates, each Class of such series) selecting option (A) above and (y)
if the owners of the Exchangeable Company Interest do not include the Company
(and following the delivery of written notice in the form referred to above
by the Company to such owners), the owners thereof representing undivided
interests in the Trust aggregating in excess of 50% of the Company Interest,
the Trustee shall instruct the Servicer to proceed to sell, dispose of, or
otherwise liquidate the Receivables and the other Trust Assets in a
commercially reasonable manner and on commercially reasonable terms, which
shall include the solicitation of competitive bids, and the Servicer shall
proceed to consummate the sale, liquidation or disposition of the Receivables
and the other Trust Assets as provided above with the highest bidder
therefor; PROVIDED, HOWEVER, that if the allocable sale price, less all
reasonable fees, expenses and other amounts due hereunder to the Trustee, its
agents and counsel to the Trustee, to be realized from such sale, liquidation
or disposition would be less than the Aggregate Invested Amount plus accrued
and unpaid interest thereon through the Distribution Date next succeeding the
date of such sale, the Trustee must receive the prior unanimous consent of
all the Investor Certificateholders to such sale, liquidation or disposition.
The Company or any of its Affiliates shall be permitted to bid for the
Receivables and the other Trust Assets. In addition, the Company or any of
its Affiliates shall have the right to match any bid by a third person and be
granted the right to purchase the Receivables and the other Trust Assets at
such matched bid price. The Trustee may obtain a prior determination from
any such conservator, receiver or liquidator that the terms and manner of any
proposed sale, disposition or liquidation are commercially reasonable. The
provisions of Sections 7.1 and 7.2 shall be cumulative. The costs and
expenses incurred by the Trustee in such sale shall be reimbursable to the
Trustee as provided in Section 8.5.
(b) The proceeds from the sale, liquidation or disposition of the
Receivables and the other Trust Assets pursuant to subsection (a) above shall be
treated as Collections on the Receivables and such proceeds will be distributed
to holders of each Series after immediately being deposited in the Collection
Account, in accordance with the provisions of subsection 3.1(d) and the related
Supplement for such Series. After giving effect to all such deposits, the
remaining funds, if any, shall be (i) paid to the Trustee in an amount equal to
the amount of any expenses incurred by the Trustee acting in its capacity either
as Trustee or as liquidating agent pursuant to subsection 7.2(a) above which
have not otherwise been reimbursed prior thereto and (ii) after giving effect to
the transfer to be made pursuant to the
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preceding clause (i), if applicable, the remainder, if any, shall be
allocated to the Company Interest and shall be released to the owner of the
Exchangeable Company Interest upon cancellation thereof.
ARTICLE VIII
THE TRUSTEE
Section 8.1 DUTIES OF TRUSTEE. (a) The Trustee, prior to the
occurrence of a Servicer Default or Early Amortization Event of which a
Responsible Officer of the Trustee has actual knowledge and after the curing
of all Servicer Defaults and Early Amortization Events which may have
occurred, undertakes to perform such duties and only such duties as are
specifically set forth in the Pooling and Servicing Agreements or any
Supplement and no implied covenants or obligations shall be read into such
Pooling and Servicing Agreements against the Trustee. After the occurrence
of a Servicer Default or Early Amortization Event to the actual knowledge of
a Responsible Officer of the Trustee (which has not been cured or waived),
the Trustee shall exercise such of the rights and powers vested in it in its
capacity as Trustee by any Pooling and Servicing Agreement and any Supplement
and shall use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct
of such person's own affairs. The provisions of this Section shall be
applicable to the Trustee in its capacity as Trustee hereunder. If the
Trustee shall have succeeded to the obligations of the Servicer, the
provisions of the Servicing Agreement shall govern the actions of the Trustee
as Successor Servicer.
(b) The Trustee may conclusively rely as to the truth of the
statements and the correctness of the opinions expressed therein upon
resolutions, certificates, statements, opinions, reports, documents, orders
or other instruments furnished to the Trustee and believed by it to be
genuine and to have been signed or presented to it pursuant to any Pooling
and Servicing Agreement by the proper party or parties and the Trustee shall
not be responsible for the accuracy of or verification of any information
contained in any report, including any calculation contained therein,
provided to it pursuant to this Agreement; PROVIDED in the case of any of the
above which are specifically required to be furnished to the Trustee pursuant
to any provision of the Pooling and Servicing Agreements, the Trustee shall,
subject to Section 8.2, examine them to determine whether they substantially
conform to the requirements of this Agreement.
(c) Subject to subsection 8.1(a), no provision of this Agreement or
any Supplement shall be construed to relieve the Trustee from liability for
its own negligent action, its own negligent failure to act or its own
misconduct; PROVIDED, HOWEVER, that:
(i) The Trustee shall not in its individual capacity be liable for an
error of judgment unless it shall be proved that the Trustee was negligent,
or acted in bad faith, in ascertaining the pertinent facts;
(ii) The Trustee shall not in its individual capacity be liable with
respect to any action taken, suffered or omitted to be taken by it in good
faith in accordance with this Agreement or at the direction of the Servicer
or the holders of Investor Certificates evidencing in excess of 50% (or
such lesser percentage as set forth in any applicable provision) of the
Aggregate Invested Amount;
(iii) The Trustee shall not be charged with knowledge of any failure
by the Servicer to comply with any of its obligations, unless a Responsible
Officer of the Trustee receives written notice of such failure from the
Servicer, any Agent or any Investor Certificateholder;
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(iv) The Trustee shall not be charged with knowledge of a Servicer
Default or Early Amortization Event unless a Responsible Officer shall have
received written notice of such default or event from the Servicer, any
Agent or any Investor Certificateholder. In the absence of receipt of such
notice, the Trustee may conclusively assume that there is no Servicer
Default or Early Amortization Event;
(v) So long as the Trustee has followed the instructions of the
Servicer, the Trustee shall not in any way be held liable by reason of any
insufficiency in any Account or subaccount thereof held by or on behalf of
the Trustee resulting from any investment loss on any Eligible Investment
included therein; and
(vi) The Trustee shall have no duty to monitor the performance of the
Servicer, nor shall it have any liability in connection with malfeasance or
nonfeasance by the Servicer. The Trustee shall have no liability in
connection with compliance of the Servicer or the Company with statutory or
regulatory requirements related to the Receivables.
(d) The Trustee shall not be required to expend or risk its own funds
or otherwise incur any financial liability in the performance of any of its
duties under any Pooling and Servicing Agreement or in the exercise of any of
its rights or powers, if the Trustee has reason to believe that the repayment of
such funds or adequate indemnity against such risk or liability is not
reasonably assured to it, and none of the provisions contained in any Pooling
and Servicing Agreement shall in any event require the Trustee to perform, or be
responsible for the manner of performance of, any obligations of the Servicer
under such Agreement except during such time, if any, as the Trustee shall be
the successor to, and be vested with the rights, duties, powers and privileges
of, the Servicer in accordance with the terms of such Agreement.
(e) Except as expressly provided in any Pooling and Servicing
Agreement, the Trustee shall have no power to vary the corpus of the Trust.
(f) Provided that the Servicer and the Company shall have provided to
the Trustee promptly upon request all books, records and other information
reasonably requested by the Trustee and shall have provided the Trustee with all
necessary access to the properties, books and records of the Servicer and the
Company pursuant to subsection 2.7(d) which the Trustee may reasonably require,
then, if so provided by the express terms of any Supplement, the Trustee shall
within the time provided by such Supplement have (i) completed the Servicer Site
Review, subject to Section 4.10 of the Servicing Agreement and (ii) established
the Standby Liquidation System, and shall have notified the Servicer, each
Rating Agency and each Investor Certificateholder of such events.
(g) The Trustee shall deliver the Internal Operating Procedures
Memorandum to the Company and the Servicer on the Initial Closing Date. From
and after such date, the Trustee shall take such actions as are set forth in the
Internal Operating Procedures Memorandum unless prevented from doing so through
no fault of the Trustee.
(h) Subject to the other provisions of this Agreement and without
limiting the generality of this Section 8.1, the Trustee shall have no duty (i)
to see to any insurance with respect to the Trust Assets, or (ii) to see to the
payment or discharge of any tax, assessment, or other governmental charge or any
lien or encumbrance of any kind owing with respect to, assessed or levied
against, any part of the Trust Assets other than from funds available in the
Collection Account.
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(i) The right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the Trustee
shall not be answerable for other than its negligence or willful misconduct in
the performance of such act.
(j) The Trustee shall not be required to give any bond or surety in
respect of the execution of the Trust created hereby or the powers granted
hereunder.
Section 8.2 RIGHTS OF THE TRUSTEE. Except as otherwise provided in
Section 8.1:
(a) The Trustee may conclusively rely on and shall be protected in
acting on, or in refraining from acting in accord with, any resolution,
Officer's Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, appraisal, bond, note or other paper or document believed by it to be
genuine and to have been signed or presented to it pursuant to any Pooling and
Servicing Agreement by the proper party or parties;
(b) The Trustee may consult with counsel of its choice (at the
Company's expense) and any Opinion of Counsel or any advice of such counsel
shall be full and complete authorization and protection in respect of any action
taken or suffered or omitted by it hereunder in good faith and in accordance
with such Opinion of Counsel;
(c) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by any Pooling and Servicing Agreement, or to
institute, conduct or defend any litigation hereunder or in relation hereto, at
the request, order or direction of any of the Holders, pursuant to the
provisions of any Pooling and Servicing Agreement, unless such Holders shall
have offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein or thereby; PROVIDED,
HOWEVER, that nothing contained herein shall relieve the Trustee of the
obligations, upon the occurrence of a Servicer Default or Early Amortization
Event of which a Responsible Officer of the Trustee has written notice (which
has not been cured), to exercise such of the rights and powers vested in it by
any Pooling and Servicing Agreement, and to use the same degree of care and
skill in their exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs. The right of the
Trustee to perform any discretionary act enumerated in this Agreement shall not
be construed as a duty, and the Trustee shall not be answerable for other than
its negligence or wilful misconduct in the performance of any such act;
(d) The Trustee shall not be personally liable for any action taken,
suffered or omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by any Pooling and
Servicing Agreement; PROVIDED that the Trustee shall be liable for its
negligence or willful misconduct;
(e) The Trustee shall not be bound to make any investigation into the
facts of matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, direction, order, approval, bond,
note or other paper or document, or to recompute the amount of any allocations
or distributions contained in any direction from the Servicer provided for under
the Agreement, unless requested in writing so to do by the holders of Investor
Certificates evidencing Fractional Undivided Interests aggregating more than 50%
of the Invested Amount of any Series which could be adversely affected if the
Trustee does not perform such acts; PROVIDED, HOWEVER, that such holders of
Investor Certificates shall reimburse the Trustee for any reasonable expense
resulting from any such investigation requested by them; PROVIDED, FURTHER, that
the Trustee shall be entitled to make such further inquiry or investigation into
such facts or matters as it may reasonably see fit, and if the Trustee shall
determine to make such further inquiry or investigation, it shall be entitled to
examine the books and
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records of the Company pursuant to subsection 2.7(d), personally or by agent
or attorney, at the sole cost and expense of the Company;
(f) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through affiliates, agents
or attorneys or a custodian or nominee, and the Trustee shall not be responsible
for any misconduct or negligence on the part of, or for the supervision of, any
such affiliate, agent, attorney, custodian or nominee appointed with due care by
it hereunder;
(g) The Trustee shall not be required to make any initial or periodic
examination of any documents or records related to the Receivables or the
Accounts for the purpose of establishing the presence or absence of defects, the
compliance by the Company with its representations and warranties or for any
other purpose; and
(h) In the event that the Trustee is also acting as Paying Agent or
Transfer Agent and Registrar hereunder, the rights and protections afforded to
the Trustee pursuant to this Article VIII shall also be afforded to such Paying
Agent or Transfer Agent and Registrar.
Section 8.3 TRUSTEE NOT LIABLE FOR RECITALS IN CERTIFICATES. The
Trustee assumes no responsibility for the correctness of the recitals contained
herein and in the Certificates (other than the certificate of authentication on
the Certificates). The Trustee makes no representations as to the validity or
sufficiency of any Pooling and Servicing Agreement or of the Certificates (other
than the certificate of authentication on the Certificates) or of any Receivable
or related document. The Trustee shall not be accountable for the use or
application by the Company of any of the Certificates or of the proceeds of such
Certificates, or for the use or application of any funds paid to the Company in
respect of the Receivables or deposited in or withdrawn from the Accounts or
other accounts hereafter established to effectuate the transactions contemplated
herein and in accordance with the terms of any Pooling and Servicing Agreement.
The Trustee shall not be accountable for the use or application by the
Servicer of any of the Certificates or of the proceeds of such Certificates, or
for the use or application of any funds paid to the Servicer or any Sub-Servicer
in respect of the Receivables or deposited in or withdrawn from the Accounts or
any Lockbox by or at the direction of the Servicer, any Sub-Servicer or the
Lockbox Processor, in each case unless the Trustee, acting in its capacity as
Successor Servicer, itself makes such use or application. The Trustee shall at
no time have any responsibility or liability for or with respect to the
legality, validity and enforceability of any Receivable.
Section 8.4 TRUSTEE MAY OWN CERTIFICATES. The Trustee in its
individual or any other capacity (a) may become the owner or pledgee of Investor
Certificates with the same rights as it would have if it were not the Trustee
and (b) may transact any banking and trust business with the Company, the
Servicer, any Sub-Servicer or any Seller as it would were it not the Trustee.
Section 8.5 TRUSTEE'S FEES AND EXPENSES. The Trustee shall be
entitled to an annual fee agreed upon in writing prior to the Initial Closing
Date to be paid by Park Avenue Receivables Corporation ("PARCO") (which annual
fee shall not be limited by any provision of law in regard to the compensation
of a trustee of an express trust) pursuant to a separate fee letter between
PARCO and the Trustee. The Trustee also shall be entitled to reimbursement from
the Servicer or the Company upon the Trustee's request for all reasonable
expenses (including, without limitation, expenses incurred in connection with
notices, requests for documentation or other communications to or directions
from Holders), disbursements, losses, liabilities, damages and advances incurred
or made by the Trustee in
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accordance with any of the provisions of any Pooling and Servicing Agreement
or by reason of its status as Trustee under any Pooling and Servicing
Agreement (including the reasonable fees and expenses of its agents, any
co-trustee and counsel) except any such expense, disbursement, loss,
liability, damage or advance as may arise from its negligence or bad faith or
willful misconduct; PROVIDED that any payments made by the Company in respect
of any of the foregoing items shall be made solely from funds available to
the Company which are not otherwise needed to be applied to the payment of
any amounts pursuant to any Pooling and Servicing Agreements, shall be
non-recourse other than with respect to proceeds in excess of the proceeds
necessary to make such payment, and shall not constitute a claim against the
Company to the extent that insufficient proceeds exist to make such payment.
Notwithstanding anything in this Agreement to the contrary, in no event shall
the Trustee be liable for special, indirect or consequential loss or damage
of any kind whatsoever (including but not limited to lost profits), even if
the Trustee has been advised of the likelihood of such loss or damage and
regardless of the form of action. To the extent that the Trustee has not
been paid for any of the foregoing items (including pursuant to the first
sentence of this Section 8.5), the Trustee shall be entitled to be paid for
such items from amounts which otherwise would be distributable to the Company
under Article III of this Agreement. The Trustee shall be entitled to
reimbursement for any reasonable out-of-pocket costs or expenses incurred in
connection with the review, negotiation, preparation, execution and delivery
of any of the Transaction Documents or in connection with the issuance of any
Certificates on the Initial Closing Date. If the Trustee is appointed
Successor Servicer in accordance with the Servicing Agreement, the Trustee,
in its capacity as Successor Servicer, shall also be entitled to be paid the
Servicing Fee and any other compensation to which the Servicer is expressly
entitled hereunder. The provisions of this Section 8.5 shall apply to the
reasonable expenses, disbursements and advances made or incurred by the
Trustee, or any other Person, in its capacity as liquidating agent, to the
extent not otherwise paid. The covenants and agreements contained in this
Section 8.5 (including, without limitation, the covenants to pay the
expenses, disbursements, losses, liabilities, damages and advances provided
for in this Section 8.5) shall survive the termination of any Pooling and
Servicing Agreement and shall be binding, as applicable, on (i) the Servicer
and any Successor Servicer and (ii) the Company.
Section 8.6 ELIGIBILITY REQUIREMENTS FOR TRUSTEE. The Trustee
hereunder shall at all times be a corporation organized and doing business
under the laws of the United States of America or any state thereof and
authorized under such laws to exercise corporate trust powers, having (or
having a holding company parent with) a combined capital and surplus of at
least $100,000,000 and subject to supervision or examination by Federal or
State authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising
or examining authority, then, for the purpose of this Section 8.6, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 8.6, the Trustee
shall resign immediately in the manner and with the effect specified in
Section 8.7.
Section 8.7 RESIGNATION OR REMOVAL OF TRUSTEE.(a) Subject to
paragraph (c) below, the Trustee may at any time resign and be discharged
from the trust hereby created by giving written notice thereof to the
Company, the Servicer and the Rating Agencies. Upon receiving such notice of
resignation, the Company shall promptly appoint a successor trustee by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the resigning Trustee and one copy to the successor trustee. If
no successor trustee shall have been so appointed and have accepted
appointment within 30 days after the giving of such notice of resignation,
the resigning Trustee may petition any court of competent jurisdiction for
the appointment of a successor trustee acceptable to the Company (which
acceptance will not unreasonably be withheld); PROVIDED that such right of
the Company to approve a successor trustee shall terminate upon the
occurrence of an Early Amortization Event.
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(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 8.6 hereof and shall fail to resign
after written request therefor by the Servicer, or if at any time the Trustee
shall be legally unable to act, or shall be adjudged a bankrupt or insolvent, or
if a receiver of the Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Company may remove the Trustee and promptly appoint a successor trustee by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the Trustee so removed and one copy to the successor trustee.
(c) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 8.7 shall
not become effective until acceptance of appointment by the successor trustee as
provided in Section 8.8.
(d) The obligations of the Company described in Section 8.5 hereof and
the obligations of the Servicer described in Section 8.5 hereof and Section 5.2
of the Servicing Agreement shall survive the removal or resignation of the
Trustee as provided in this Agreement.
(e) No Trustee under this Agreement shall be personally liable for any
action or omission of any successor trustee.
Section 8.8 SUCCESSOR TRUSTEE.(a) Any successor trustee appointed as
provided in Section 8.7 shall execute, acknowledge and deliver to the Company
and to its predecessor Trustee an instrument accepting such appointment
hereunder, and thereupon the resignation or removal of the predecessor Trustee
shall become effective and such successor trustee, without any further act, deed
or conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with like effect as if originally
named as Trustee herein. The predecessor Trustee shall deliver to the successor
trustee all documents or copies thereof, at the expense of the Servicer, and
statements held by it hereunder; and the Company and the predecessor Trustee
shall execute and deliver such instruments and do such other things as may
reasonably be required for fully and certainly vesting and confirming in the
successor trustee all such rights, power, duties and obligations.
(b) No successor trustee shall accept appointment as provided in
this Section 8.8 unless at the time of such acceptance such successor trustee
shall be eligible under the provisions of Section 8.6.
(c) Upon acceptance of appointment by a successor trustee as provided
in this Section 8.8, such successor trustee shall mail notice of such succession
hereunder to each Rating Agency and to all Holders at their addresses as shown
in the Certificate Register.
Section 8.9 MERGER OR CONSOLIDATION OF TRUSTEE. Any Person into
which the Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Person succeeding to
the corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder, provided such corporation shall be eligible under the
provisions of Section 8.6, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding. The Trustee (unless the Trustee is The Chase
Manhattan Bank) shall promptly give notice (except to the extent prohibited
under any Requirement of Law or Contractual Obligation), but in no event less
than ten days prior to any such merger or consolidation, to the Company, the
Servicer and the Rating Agencies upon any such merger or consolidation of the
Trustee.
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Section 8.10 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.(a)
Notwithstanding any other provisions of any Pooling and Servicing Agreement,
at any time, for the purpose of meeting any legal requirements of any
jurisdiction in which any part of the Trust may at the time be located, the
Trustee shall have the power and may execute and deliver all instruments to
appoint one or more persons to act as a co-trustee or co-trustees, or
separate trustee or separate trustees, of all or any part of the Trust, and
to vest in such Person or Persons, in such capacity and for the benefit of
the Holders, such title to the Trust, or any part thereof, and, subject to
the other provisions of this Section 8.10, such powers, duties, obligations,
rights and trusts as the Trustee may consider necessary or desirable. No
co-trustee or separate trustee hereunder shall be required to meet the terms
of eligibility as a successor trustee under Section 8.6 and no notice to
Holders of the appointment of any co-trustee or separate trustee shall be
required under Section 8.8. The Trustee shall promptly notify each Rating
Agency of the appointment of any co-trustee.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly
(it being understood that such separate trustee or co-trustee is not
authorized to act separately without the Trustee joining in such act),
except to the extent that under any statute of any jurisdiction in which
any particular act or acts are to be performed (whether as Trustee
hereunder or as successor to the Servicer hereunder), the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of title to
the Trust or any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate trustee or co-trustee, but
solely at the direction of the Trustee;
(ii) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder; and
(iii) the Trustee may at any time accept the resignation of or remove
any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VIII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of any Pooling and
Servicing Agreement, specifically including every provision of any Pooling and
Servicing Agreement relating to the conduct of, affecting the liability of, or
affording protection to, the Trustee. Every such instrument shall be filed with
the Trustee and a copy thereof given to the Servicer and the Company.
(d) Any separate trustee or co-trustee may at any time constitute the
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect to any
Pooling and Servicing Agreement on its behalf and in its name. If any separate
trustee or co-trustee shall die, become incapable of acting, resign or be
removed, all of its estates, properties, rights, remedies and trusts shall vest
in and be exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
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Section 8.11 TAX RETURNS. In the event the Trust shall be
required to file tax returns, the Company shall prepare and file or shall
cause to be prepared and filed (including, without limitation, by the
Servicer) any tax returns required to be filed by the Trust and shall remit
such returns to the Trustee for signature at least five Business Days before
such returns are due to be filed. The Trustee is hereby authorized to sign
any such return on behalf of the Trust. The Company shall also prepare or
shall cause to be prepared (including, without limitation, by the Servicer)
all tax information required by law to be distributed to Holders and shall
deliver such information to the Trustee at least five Business Days prior to
the date it is required by law to be distributed to the Holders. The
Trustee, upon written request, will furnish the Company, or the Company's
designee, with all such information known to the Trustee as may be reasonably
required in connection with the preparation of all tax returns of the Trust,
and shall, upon request, execute such returns. In no event shall the Trustee
in its individual capacity be liable for any liabilities, costs or expenses
of the Trust, the Holders, the Company or the Servicer arising under any tax
law or regulation, including, without limitation, federal, state or local
income or excise taxes or any other tax imposed on or measured by income (or
any interest or penalty with respect thereto or arising from any failure to
comply therewith) and the Company hereby indemnifies and holds the Trust
harmless for any such liabilities, costs and expenses.
Section 8.12 TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
CERTIFICATES. All rights of action and claims under any Pooling and
Servicing Agreement or the Certificates may be prosecuted and enforced by the
Trustee without the possession of any of the Certificates or the production
thereof in any proceeding relating thereto, and any such proceeding
instituted by the Trustee shall be brought in its own name as trustee. Any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the Holders in respect of which
such judgment has been obtained, in the manner specified in Article III
hereof.
Section 8.13 SUITS FOR ENFORCEMENT. If a Servicer Default shall
occur and be continuing, the Trustee may, as provided in Section 6.1 of the
Servicing Agreement, proceed to protect and enforce its rights and the rights
of the Holders under this Agreement or any other Transaction Document by
suit, action or proceeding in equity or at law or otherwise, whether for the
specific performance of any covenant or agreement contained in this Agreement
or any other Transaction Document or in aid of the execution of any power
granted in this Agreement or any other Transaction Document or for the
enforcement of any other legal, equitable or other remedy as the Trustee,
being advised by counsel, shall deem most effectual to protect and enforce
any of the rights of the Trustee or the Holders. Nothing herein contained
shall be deemed to authorize the Trustee to authorize or consent to or accept
or adopt on behalf of any Investor Certificateholder any plan of
reorganization, arrangement, adjustment or composition affecting the
Certificates or the rights of any holder thereof, or authorize the Trustee to
vote in respect of the claim of any Investor Certificateholder in any such
proceeding.
Section 8.14 RIGHTS OF INVESTOR CERTIFICATEHOLDERS TO DIRECT
TRUSTEE. Investor Certificateholders evidencing more than 50% of the Invested
Amount of any Series affected by the conduct of any proceeding or the
exercise of any right conferred on the Trustee shall have the right to direct
the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee; PROVIDED, HOWEVER, that, subject to Section 8.1, the Trustee shall
have the right to decline to follow any such direction if the Trustee being
advised by counsel determines that the action so directed may not lawfully be
taken, or if the Trustee in good faith shall, by a Responsible Officer or
Responsible Officers of the Trustee, determine that the proceedings so
directed would be illegal or expose it to personal liability or be unduly
prejudicial to the rights of Investor Certificateholders not party to such
direction; and PROVIDED, FURTHER, that nothing in any
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Pooling and Servicing Agreement shall impair the right of the Trustee to take
any action deemed proper by the Trustee and which is not inconsistent with
such direction of the Investor Certificateholders.
Section 8.15 Reserved.
Section 8.16 MAINTENANCE OF OFFICE OR AGENCY. The Trustee will
maintain at its expense in the Borough of Manhattan, The City of New York, an
office or offices or agency or agencies where notices and demands to or upon
the Trustee in respect of the Certificates and the Pooling and Servicing
Agreements may be served. The Trustee will give prompt written notice to the
Company, the Servicer and the Holders of any change in the location of the
Certificate Register or any such office or agency.
Section 8.17 LIMITATION OF LIABILITY. The Certificates are
executed by the Trustee, not in its individual capacity but solely as Trustee
of the Trust, in the exercise of the powers and authority conferred and
vested in it by this Agreement. Each of the undertaking and agreements made
on the part of the Trustee in the Certificates is made and intended not as a
personal undertaking or agreement by the Trustee but is made and intended for
the purpose of binding only the Trust.
ARTICLE IX
TERMINATION
Section 9.1 TERMINATION OF TRUST; LIQUIDATION OF RECEIVABLES.(a)
The Trust and the respective obligations and responsibilities of the Company,
the Servicer, the Sub-Servicers and the Trustee created hereby (other than
the obligation of the Trustee to make payments to Holders as hereafter set
forth or of the Company to prepare or cause to be prepared and filed tax or
information reports as provided in Section 8.11 hereof) shall terminate,
except with respect to any such obligations or responsibilities expressly
stated to survive such termination, on the earliest of (i) April 1, 2018 (ii)
at the option of the Company, at any time where the Aggregate Invested Amount
is zero (unless an Early Amortization Event as specified in Section 7.1 of
this Agreement shall have occurred and be continuing, in which case the
Company shall be deemed to elect to terminate the Trust pursuant to this
clause (ii)) and (iii) upon completion of distribution of the amounts
referred to in subsection 7.2(b) (the "TRUST TERMINATION DATE").
(b) If on the Distribution Date in the month immediately preceding
the month in which the Trust Termination Date described in clause (a)(i)
above occurs (after giving effect to all transfers, withdrawals, deposits and
drawings to occur on such date and the payment of principal on any Series of
Certificates to be made on the related Distribution Date pursuant to Article
III) the Invested Amount of any Series would be greater than zero, the
Trustee, at the written direction of the Servicer, shall sell within 30 days
of such Distribution Date all of the Receivables and other Trust Assets. The
proceeds of such sale shall be treated as Collections on the Receivables and
shall be allocated in accordance with Article III. During such 30-day
period, the Servicer shall continue to collect Collections on the Receivables
and allocate Collections in accordance with the provisions of Article III.
The costs and expenses incurred by the Trustee in such sale shall be
reimbursable to the Trustee as provided in Section 8.5.
Section 9.2 CLEAN-UP CALL AND FINAL TERMINATION DATE OF INVESTOR
CERTIFICATES OF ANY SERIES. (a) On the Distribution Date during the
Amortization Period with respect to any Series on which the Invested Amount
(or such other amount as may be set forth in the related Supplement) of such
Series is reduced to an amount equal to or less than the Clean-Up Call
Percentage of the
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Invested Amount for such Series as of the day preceding the beginning of such
Amortization Period (or such other amount as may be set forth in the related
Supplement), the Company shall have the option to repurchase, and to the
extent set forth in the related Supplement, shall repurchase, the entire
Certificateholders' Interest of such Series, at a purchase price equal to (i)
the outstanding Invested Amount of the Investor Certificates of such Series
PLUS (ii) accrued and unpaid interest through the date of such purchase
(after giving effect to any payment of principal and monthly interest on such
date of purchase) PLUS (iii) all other amounts payable to all Investor
Certificateholders of such Series under the related Supplement (such purchase
price, the "CLEAN-UP CALL REPURCHASE PRICE"). The amount of the Clean-Up
Call Repurchase Price will be deposited into the Collection Account for
credit to the Series Collection Subaccount for such Series on the Business
Day prior to such Distribution Date in immediately available funds and will
be passed through in full to the applicable Investor Certificateholders.
Following any such repurchase, such Certificateholders' Interest in the Trust
Assets shall terminate and such interest therein will be allocated to the
Company Interest and such Holders will have no further rights with respect
thereto. In the event that the Company fails for any reason to deposit the
Clean-Up Call Repurchase Price for such Receivables, the Certificateholders'
Interest in the Receivables and the other Trust Assets will continue and
monthly payments will continue to be made to the Holders.
(b) The amount deposited pursuant to subsection 9.2(a) shall be
paid to the Investor Certificateholders of the related Series pursuant to
Article III on the Distribution Date following the date of such deposit. All
Certificates of a Series which are purchased by the Company pursuant to
subsection 9.2(a) shall be delivered by the Company upon such purchase to,
and be canceled by (in accordance with the written directions of the
Company), the Transfer Agent and Registrar and be disposed of in a manner
satisfactory to the Trustee and the Company.
(c) All principal or interest with respect to any Series of
Investor Certificates shall be due and payable no later than the Series
Termination Date with respect to such Series. Unless otherwise provided in a
Supplement, in the event that the Invested Amount of any Series of
Certificates is greater than zero on its Series Termination Date (after
giving effect to all transfers, withdrawals, deposits and drawings to occur
on such date and the payment of principal to be made on such Series on such
date), the Trustee will sell or cause to be sold, in accordance with the
directions of Investor Certificateholders representing more than 50% of the
Invested Amount of such Series, and pay the proceeds to all Holders of such
Series PRO RATA (except that unless expressly provided to the contrary in the
related Supplement, no payment shall be made to Holders of any Class of any
Series that is by its terms subordinated to any other Class until such senior
Class of Certificates has been paid in full) in final payment of all
principal of and accrued interest on such Series of Certificates, an amount
of Receivables or interests in Receivables up to the Invested Amount of such
Series at the close of business on such date. Absent such direction from
Investor Certificateholders representing more than 50% of the Invested Amount
of such Series the Trustee shall continue to hold the Trust Assets in respect
of such Series in accordance with the terms of the Pooling and Servicing
Agreements until the Trust Termination Date (or until Investor
Certificateholders representing more than 50% of the Invested Amount of such
Series shall otherwise direct the Trustee); PROVIDED that the terms of this
Agreement, the related Supplement and the Servicing Agreement shall be deemed
to remain in full force and effect, except that no additional Receivables
shall be allocated with respect to such Series. The reasonable costs and
expenses incurred by the Trustee in such sale shall be reimbursable to the
Trustee as provided in Section 8.5. Any proceeds of such sale in excess of
such principal and interest paid shall be paid to the holder of the
Exchangeable Company Interest, unless and to the extent otherwise specified
in any applicable Supplement. Upon such Series Termination Date with respect
to the applicable series of Certificates, final payment of all amounts
allocable to any Investor Certificates of such Series shall be made in the
manner provided in this Section 9.2.
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Section 9.3 FINAL PAYMENT WITH RESPECT TO ANY SERIES. (a) Written
notice of any termination, specifying the Distribution Date upon which the
Investor Certificateholders of any Series may surrender their Investor
Certificates for payment of the final distribution with respect to such
Series and cancellation, shall be given (subject to at least 30 days' (or
such shorter period as is acceptable to the Trustee as determined in its sole
and absolute discretion) prior written notice from the Servicer to the
Trustee containing all information required for the Trustee's notice) by the
Trustee to Investor Certificateholders of such Series, mailed not later than
the fifth Business Day of the month of such final distribution and specifying
(i) the Distribution Date upon which final payment of the Investor
Certificates will be made upon presentation and surrender of Investor
Certificates at the office or offices therein designated, (ii) the amount of
any such final payment and (iii) that the Record Date otherwise applicable to
such Distribution Date is not applicable, payments being made only upon
presentation and surrender of the Investor Certificates at the office or
offices therein specified. The Servicer's notice to the Trustee in
accordance with the preceding sentence shall be accompanied by an Officer's
Certificate setting forth the information specified in Section 4.3 the
Servicing Agreement covering the period during the then current calendar year
through the date of such notice. The Trustee shall give such notice to the
Transfer Agent and Registrar and the Paying Agent at the time such notice is
given to such Investor Certificateholders.
(b) Notwithstanding the termination of the Trust pursuant to
subsection 9.1(a) or the occurrence of the Series Termination Date with
respect to any Series pursuant to Section 9.2, all funds then on deposit in
the Collection Account (but only to the extent necessary to pay all
outstanding and unpaid amounts to Certificateholders) shall continue to be
held in trust for the benefit of the Certificateholders, and the Paying Agent
or the Trustee shall pay such funds to the Certificateholders upon surrender
of their Certificates in accordance with the terms hereof. Any Certificate
not surrendered on the date specified in subsection 9.3(a)(i) shall cease to
accrue any interest provided for such Certificate from and after such date.
In the event that all of the Investor Certificateholders shall not surrender
their Certificates for cancellation within six months after the date
specified in the above mentioned written notice, the Trustee shall give a
second written notice to the remaining Investor Certificateholders of such
Series to surrender their Certificates for cancellation and receive the final
distribution will respect thereto. If within one year after the second
notice all the Investor Certificates of such Series shall not have been
surrendered for cancellation, the Trustee may take appropriate steps, or may
appoint an agent to take appropriate steps, to contact the remaining Investor
Certificateholders of such Series concerning surrender of their Certificates,
and the cost thereof shall be paid out of the funds in the Collection Account
held for the benefit of such Investor Certificateholders. The Trustee and the
Paying Agent shall pay to the Company upon request any monies held by them
for the payment of principal or interest that remains unclaimed for two
years. After payment to the Company, Holders entitled to the money must look
to the Company for payment as general creditors unless an applicable
abandoned property law designates another Person.
(c) All Certificates surrendered for payment of the final
distribution with respect to such Certificates and cancellation shall be
canceled by the Transfer Agent and Registrar and be disposed of in a
customary manner satisfactory to the Trustee.
Section 9.4 COMPANY'S TERMINATION RIGHTS. Upon the termination of
the Trust pursuant to Section 9.1 and the surrender of the Exchangeable Company
Interest and payment to the Trustee (in its capacity as such and/or in its
capacity as Successor Servicer) of all amounts owed to it under any Pooling and
Servicing Agreement, the Trustee shall assign and convey to the Company (without
recourse, representation or warranty) in exchange for the Exchangeable Company
Interest all right, title and interest of the Trust in the Trust Assets, whether
then existing or thereafter created,
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and all proceeds thereof except for amounts held by the Trustee pursuant to
subsection 9.3(b). The Trustee shall execute and deliver such instruments of
transfer and assignment, in each case without recourse, representation or
warranty, as shall be reasonably requested by the Company to vest in the
Company all right, title and interest which the Trust had in the Trust Assets.
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.1 AMENDMENT. (a) Any Pooling and Servicing Agreement,
including any schedule or exhibit thereto, may be amended in writing from
time to time by the Servicer, the Company and the Trustee, without the
consent of any holder of any outstanding Certificate, (i) to cure any
ambiguity therein, (ii) to correct or supplement any provisions therein which
may be inconsistent with any other provisions therein or (iii) to add any
other provisions thereto to change in any manner or eliminate any of the
provisions with respect to matters or questions raised under any Pooling and
Servicing Agreement which shall not be inconsistent with the provisions of
any other Pooling and Servicing Agreement; PROVIDED, HOWEVER, that such
action shall not, as evidenced by an Officer's Certificate from the Company
and, to the extent, in the reasonable view of the Company, a question of law
exists, supported by an Opinion of Counsel delivered to the Trustee,
adversely affect in any material respect the interests of the Investor
Certificateholders. The Trustee may, but shall not be obligated to, enter
into any such amendment pursuant to this paragraph or paragraph (b) below
which affects the Trustee's rights, duties or immunities under any Pooling
and Servicing Agreement or otherwise.
(b) Any Pooling and Servicing Agreement and any schedule or exhibit
thereto may also be amended in writing from time to time by the Servicer, the
Company and the Trustee with the consent of Investor Certificateholders
evidencing more than 50% of the Invested Amount of any Series adversely
affected by the amendment (or, if any such Series shall have more than one
Class of Investor Certificates adversely affected by the amendment, 50% or
more of the Invested Amount of each such Class) for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions
of such Pooling and Servicing Agreement or of modifying in any manner the
rights of holders of any Series then issued and outstanding; PROVIDED,
HOWEVER, that no such amendment shall (i) reduce in any manner the amount of,
or delay the timing of, distributions which are required to be made on any
Investor Certificate of such Series without the consent of such Investor
Certificateholder of such Series; (ii) change the definition of or the manner
of calculating the interest of any Investor Certificateholder of such Series
without the consent of such Investor Certificateholder; or (iii) reduce the
aforesaid percentage of Fractional Undivided Interests the holders of which
are required to consent to any such amendment in each case without the
consent of all Holders of each Series adversely affected in any material
respect.
(c) Notwithstanding anything in this Section 10.1 to the contrary,
the Supplement with respect to any Series may be amended on the terms and
with the procedures provided in such Supplement.
(d) The Company or the Servicer shall deliver any proposed
amendment to each Agent at least five days prior to the execution and
delivery thereof.
(e) Promptly after the execution of any such amendment or consent
the Trustee shall furnish written notification of the substance of such
amendment to each Holder of each Outstanding
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Series (or with respect to an amendment of a Supplement, of the applicable
Series), and the Servicer shall furnish written notification of the substance
of such amendment to each Rating Agency. No such amendment (including,
without limitation, the amendment of any Supplement, notwithstanding anything
to the contrary contained in any Supplement) shall be effective until the
Rating Agency Condition has been satisfied with respect thereto.
(f) It shall not be necessary for the consent of Investor
Certificateholders under this Section 10.1 to approve the particular form of
any proposed amendment, but it shall be sufficient if such consent shall
approve the substance thereof. The manner of obtaining such consents and of
evidencing the authorization of the execution thereof by Investor
Certificateholders shall be subject to such reasonable requirements as the
Trustee may prescribe.
(g) In executing or accepting any amendment pursuant to this
Section 10.1, the Trustee shall, upon request, be entitled to receive and
rely upon (i) an Opinion of Counsel (A) stating that such amendment is
authorized pursuant to a specific provision of a Pooling and Servicing
Agreement and complies with such provision, and (B) stating that all
conditions precedent to the execution and delivery of such amendment shall
have been satisfied in full, which opinion in the case of this clause (B)
may, to the extent that such opinion concerns questions of fact, rely on an
Officer's Certificate with respect to such questions of fact, (ii) a
certificate from a Responsible Officer of the Company stating that such
amendment does not adversely affect the interests of the holders of any
outstanding Certificates in any material respect except for holders of the
Series whose consent to such amendment has been obtained in accordance with
clause (b) of this Section 10.1 and (iii) a Tax Opinion.
Section 10.2 PROTECTION OF RIGHT, TITLE AND INTEREST TO TRUST.(a)
The Servicer shall cause this Agreement, any Supplement, all amendments
hereto and/or all financing statements and continuation statements and any
other necessary documents covering the Certificateholders' and the Trustee's
right, title and interest to the Trust to be promptly recorded, registered
and filed, and at all times to be kept recorded, registered and filed, all in
such manner and in such places as may be required by law fully to preserve
and protect the right, title and interest of the Trustee hereunder to all
property comprising the Trust. The Servicer shall deliver to the Trustee
file-stamped copies of, or filing receipts for, any document recorded,
registered or filed as provided above, as soon as available following such
recording, registration or filing. The Company shall cooperate fully with the
Servicer in connection with the obligations set forth above and will execute
any and all documents reasonably required to fulfill the intent of this
subsection 10.2(a).
(b) With respect to any prospective change in its name, identity or
corporate structure, the Company shall comply fully with subsection 2.8(m)
hereof and shall file such financing statements or amendments as may be
necessary to continue the perfection of the Trust's security interest in the
Receivables and the proceeds thereof. If the Company determines that no
refiling is required, it shall provide to the Trustee an Opinion of Counsel
so stating.
Section 10.3 LIMITATION ON RIGHTS OF HOLDERS.(a) The death or
incapacity of any Holder shall not operate to terminate this Agreement or the
Trust, nor shall such death or incapacity entitle such Holder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the
Trust, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.
(b) Except with respect to the Investor Certificateholders as
expressly provided in any Pooling and Servicing Agreement, no Investor
Certificateholder, solely by virtue of its status as an
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Investor Certificateholder, shall have any right to vote or in any manner
otherwise control the operation and management of the Trust, or the
obligations of the parties hereto, nor shall any Investor Certificateholder
be under any liability to any third person by reason of any action taken by
the parties to this Agreement pursuant to any provision hereof.
(c) No Investor Certificateholder, solely by virtue of its status
as an Investor Certificateholder, shall have any right by virtue of any
provisions of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Investor Certificateholders previously shall have given to the Trustee
written request to institute such action, suit or proceeding in its own name
as Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee, for 60 days after its receipt
of such notice, request and offer of indemnity, shall have neglected or
refused to institute any such action, suit or proceeding; it being understood
and intended, and being expressly covenanted by each Investor
Certificateholder with every other Investor Certificateholder and the
Trustee, that no one or more Holders shall have any right in any manner
whatever by virtue of or by availing itself or themselves of any provisions
of the Pooling and Servicing Agreements to affect, disturb or prejudice the
rights of any other of the Investor Certificateholders, or to obtain or seek
to obtain priority over or preference to any other such Investor
Certificateholder, or to enforce any right under this Agreement, except in
the manner herein provided and for the equal, ratable and common benefit of
all Investor Certificateholders. For the protection and enforcement of the
provisions of this Section 10.3, each and every Investor Certificateholder
and the Trustee shall be entitled to such relief as can be given either at
law or in equity.
(d) By their acceptance of Certificates pursuant to this Agreement
and the applicable Supplement, the Holders agree to the provisions of this
Section 10.3.
Section 10.4 NOTICES. All notices, requests and demands to or
upon the respective parties hereto to be effective shall be in writing
(including by facsimile), and, unless otherwise expressly provided herein,
shall be deemed to have been duty given or made when delivered by hand, or
three days after being deposited in the mail, postage prepaid, or, in the
case of facsimile notice or overnight courier service, when received, (i)
addressed as follows in the case of the Company, the Servicer and the Trustee
and (ii) in the case of the Sub-Servicers, as set forth under their
signatures in the Receivables Sale Agreement, or, in either case, to such
other address as may be hereafter notified by the respective parties hereto:
The Company: USS Receivables Company, Ltd.
2200 E. Golf Road
Des Plaines, Illinois 60016
Attention: Treasurer
Facsimile: 847-699-4716
with a copy to the Servicer:
The Servicer: United Stationers Supply Co.
2200 E. Golf Road
Des Plaines, Illinois 60016
Attention: Treasurer
Facsimile: 847-699-4716
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The Trustee: The Chase Manhattan Bank
450 West 33rd Street
New York, New York 10001
Attention: Structured Finance Services
Facsimile: 212-946-3916
Any notice required or permitted to be mailed to an Investor Certificateholder
shall be given by first-class mail, postage prepaid, or by overnight courier
service, at the address of such Investor Certificateholder as shown in the
Certificate Register. Any notice so given within the time prescribed in any
Pooling Agreement or Servicing Agreement shall be conclusively presumed to have
been duly given, whether or not the Investor Certificateholder receives such
notice.
Section 10.5 SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions or terms of any Pooling Agreement or Servicing
Agreement shall for any reason whatsoever be held invalid, then such covenants,
agreements, provisions or terms shall be deemed severable from the remaining
covenants, agreements, provisions or terms of such Pooling and Servicing
Agreement and shall in no way affect the validity or enforceability of the other
provisions of any Pooling and Servicing Agreement or of the Certificates or
rights of the Holders.
Section 10.6 ASSIGNMENT. Notwithstanding anything to the contrary
contained herein, except as provided in Section 5.3 of the Servicing Agreement,
no Pooling and Servicing Agreement may be assigned by the Company or the
Servicer without the prior written consent of the Trustee acting at the
direction of the holders of 66-2/3% of the Invested Amount of each Outstanding
Series and without the Rating Agency Condition's having been satisfied with
respect to such assignment.
Section 10.7 CERTIFICATES NONASSESSABLE AND FULLY PAID. It is the
intention of the parties to each Pooling and Servicing Agreement that the
Investor Certificateholders shall not be personally liable for obligations of
the Trust, that the interests in the Trust represented by the Investor
Certificates shall be nonassessable for any losses or expenses of the Trust or
for any reason whatsoever and that Investor Certificates upon authentication
thereof by the Trustee pursuant to Section 5.2 are and shall be deemed fully
paid.
Section 10.8 FURTHER ASSURANCES. The Company and the Servicer agree
to do and perform, from time to time, any and all acts and to execute any and
all further instruments required or reasonably requested by the Trustee more
fully to effect the purposes of each Pooling and Servicing Agreement, including,
without limitation, the execution of any financing statements or continuation
statements relating to the Receivables for filing under the provisions of the
UCC of any applicable jurisdiction.
Section 10.9 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise
and no delay in exercising, on the part of the Trustee or the Investor
Certificateholders, any right, remedy, power or privilege hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exhaustive of any rights, remedies, powers and privileges provided by law.
67
<PAGE>
Section 10.10 COUNTERPARTS. This Agreement may be executed in two
or more counterparts (and by different parties on separate counterparts),
each of which shall be an original, but all of which together shall
constitute one and the same instrument.
Section 10.11 THIRD-PARTY BENEFICIARIES. This Agreement will
inure to the benefit of and be binding upon the parties hereto, the Holders
and their respective successors and permitted assigns. Except as otherwise
provided in this Article X, no other Person will have any right or obligation
hereunder. No Obligor shall be notified of the transfers made pursuant to
this Agreement or any Supplement.
Section 10.12 ACTIONS BY HOLDERS. (a) Wherever in any Pooling and
Servicing Agreement a provision is made that an action may be taken or a
notice, demand or instruction given by Investor Certificateholders, such
action, notice or instruction may be taken or given by any Investor
Certificateholders of any Series, unless such provision requires a specific
percentage of Investor Certificateholders of a certain Series or all Series.
(b) Any request, demand, authorization, direction, notice, consent,
waiver or other act by an Investor Certificateholder shall bind such Investor
Certificateholder and every subsequent holder of such Certificate issued upon
the registration of transfer thereof or in exchange therefor or in lieu
thereof in respect of anything done or omitted to be done by the Trustee, the
Company or the Servicer in reliance thereon, whether or not notation of such
action is made upon such Certificate.
Section 10.13 MERGER AND INTEGRATION. Except as specifically
stated otherwise herein, this Agreement sets forth the entire understanding
of the parties relating to the subject matter hereof, and all prior
understandings, written or oral, are superseded by this Agreement and the
Servicing Agreement. This Agreement and the Servicing Agreement may not be
modified, amended, waived, or supplemented except as provided herein.
Section 10.14 HEADINGS. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation
of any provision hereof.
Section 10.15 SECURITY AGREEMENT. (a) The Company hereby grants
to the Trustee, for the benefit of the Holders, a perfected first priority
security interest in all of the Company's right, title and interest in, to
and under the Receivables and the other Trust Assets now existing and
hereafter created, all monies due or to become due and all amounts received
with respect thereto and all "proceeds" thereof (including Recoveries), to
secure all of the Company's and the Servicer's obligations hereunder,
including, without limitation, the Company's obligation to sell or transfer
Receivables hereafter created to the Trust.
(b) This Agreement shall constitute a security agreement under
applicable law.
Section 10.16 NO SET-OFF. Except as expressly provided in this
Agreement and specifically in Section 3.1(g), the Trustee agrees that it
shall have no right of set-off or banker's lien against, and no right to
otherwise deduct from, any funds held in the Collection Account for any
amount owed to it by the Company, the Servicer or any Investor
Certificateholder.
Section 10.17 NO BANKRUPTCY PETITION. The Servicer hereby
covenants and agrees that, prior to the date which is one year and one day
after the date of the end of the Amortization Period with respect to all
Outstanding Series, it will not institute against, or join any other Person
in instituting against, the Company any bankruptcy, reorganization,
arrangement, insolvency or
68
<PAGE>
liquidation proceedings, or other proceedings under any federal or state
bankruptcy law or Cayman Islands bankrupty law or similar law.
Section 10.18 LIMITATION OF LIABILITY. It is expressly understood
and agreed by the parties hereto that (a) each Pooling and Servicing
Agreement is executed and delivered by the Trustee, not individually or
personally but solely as Trustee of the Trust, in the exercise of the powers
and authority conferred and vested in it, (b) the representations,
undertakings and agreements herein made on the part of the Trust are made and
intended not as personal representations, undertakings and agreements by the
Trustee, but are made and intended for the purpose of binding only the Trust,
(c) nothing herein contained shall be construed as creating any liability of
the Trustee, individually or personally, to perform any covenant either
expressed or implied contained herein, all such liability, if any, being
expressly waived by the parties who are signatories to this Agreement and by
any Person claiming by, through or under such parties; PROVIDED, HOWEVER, the
Trustee shall be liable in its individual capacity for its own willful
misconduct, bad faith or negligence and (d) under no circumstances shall the
Trustee be personally liable for the payment of any indebtedness or expenses
of the Trust or be liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by the Trust under
any Pooling and Servicing Agreement; PROVIDED FURTHER, that the foregoing
clauses (a) through (d) shall survive the resignation or removal of the
Trustee.
The Company hereby agrees to indemnify and hold harmless the
Trustee and the Trust for the benefit of the Holders (each, an "INDEMNIFIED
PERSON") from and against any loss, liability, expense, damage or injury
suffered or sustained by reason of any acts, omissions or alleged acts or
omissions arising out of, or relating to, activities of the Company pursuant
to any Pooling and Servicing Agreement to which it is a party, including but
not limited to any judgment, award, settlement, reasonable attorneys' fees
and other reasonable costs or expenses incurred in connection with the
defense of any actual or threatened action, proceeding or claim, except to
the extent such loss, liability, expense, damage or injury resulted from the
negligence, bad faith or wilful misconduct of an indemnified person; PROVIDED
that any payments made by the Company pursuant to this subsection shall be
made solely from funds available to the Company which are not otherwise
needed to be applied to the payment of any amounts pursuant to any Pooling
and Servicing Agreements, shall be non-recourse other than with respect to
proceeds in excess of the proceeds to make such payment, and shall not
constitute a claim against the Company to the extent that insufficient
proceeds exist to make such payment.
Section 10.19 CERTAIN INFORMATION. The Servicer and the Company
shall promptly provide to the Trustee such information in computer tape, hard
copy or other form regarding the Receivables as the Trustee may reasonably
request to perform its obligations hereunder.
Section 10.20 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED
IN ACCORDANCE WITH SUCH LAWS.
69
<PAGE>
IN WITNESS WHEREOF, the Company, the Servicer and the Trustee have
caused this Agreement to be duly executed by their respective officers as of
the day and year first above written.
USS RECEIVABLES COMPANY, LTD.
By:
-----------------------------------
Name:
Title:
UNITED STATIONERS SUPPLY CO., as Servicer
By:
-----------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, not in its
individual capacity but solely as Trustee
and as Securities Intermediary
By:
-----------------------------------
Name:
Title:
<PAGE>
SCHEDULE 1
TO POOLING AGREEMENT
--------------------
RECEIVABLES
Tape to be delivered by the Company to the Trustee.
<PAGE>
SCHEDULE 2
TO POOLING AGREEMENT
--------------------
TRUST ACCOUNTS
<TABLE>
<CAPTION>
Account Name Account Number
- ------------ --------------
<S> <C>
USS Receivables 1998-1 Collection
Subaccount 507-851-641
USS Receivables 1998-1 Principal
Collection Sub-Subaccount 507-852-508
USS Receivables 1998-1 Non-Principal
Collection Sub-Subaccount 507-852-214
USS Receivables 1998-1 Accrued
Interest Sub-Subaccount 507-853-415
USS Receivables 1998-1 Collection
Account 507-855-573
</TABLE>
<PAGE>
SCHEDULE 3
TO POOLING AGREEMENT
--------------------
ACTIONS WITH RESPECT TO CHATTEL PAPER
Each Seller and the Servicer, in each case acting as custodian for the
Company, and the Company, shall immediately take all of the following actions
(in addition to all other actions set forth or reasonably requested as
described in the Transaction Documents and in all documents executed in
connection with the sale of an interest in the Receivables and the grant of a
security interest therein to other Persons) to protect or more fully evidence
the security interest granted by the Company in chattel paper evidencing
Receivables pursuant to agreements and documents entered into after the
initial Issuance Date (such chattel paper being the "CHATTEL PAPER"):
(a) Wherever it is located, maintain all Chattel Paper in
segregated storage cabinets, which cabinets will contain no other documents;
(b) Conspicuously mark each such storage cabinet to indicate that
the documents contained therein are Chattel Paper evidencing Receivables of
the Company;
(c) Stamp in red the original of the each document constituting
Chattel Paper with a legend to read as follows:
"THIS DOCUMENT AND ALL RIGHTS HEREUNDER HAVE BEEN SOLD TO USS
RECEIVABLES COMPANY, LTD. AND ARE SUBJECT TO A SECURITY INTEREST
IN FAVOR OF CHASE MANHATTAN BANK, AS TRUSTEE."
or such other legend that is reasonably acceptable to the Trustee; PROVIDED
that at any time that an Early Amortization Event has occurred and is
continuing, such Seller or the Servicer shall, at the request of the Trustee,
stamp any Chattel Paper with the above legend prior to sending it to other
parties for execution.
<PAGE>
EXHIBIT A
TO POOLING AGREEMENT
--------------------
FORM OF LOCKBOX AGREEMENT
<PAGE>
EXHIBIT B
TO POOLING AGREEMENT
--------------------
INTERNAL OPERATIONS PROCEDURES MEMORANDUM
[to be delivered]
<PAGE>
SCHEDULE 4
TO POOLING AGREEMENT
--------------------
LOCATION OF CHIEF EXECUTIVE OFFICE OF THE COMPANY
<PAGE>
SCHEDULE 5
TO POOLING AGREEMENT
--------------------
CONTRACTUAL OBLIGATIONS
<PAGE>
EXECUTION COPY
- --------------------------------------------------------------------------------
USS RECEIVABLES COMPANY, LTD.
UNITED STATIONERS SUPPLY CO.,
as Servicer,
THE CHASE MANHATTAN BANK,
as Funding Agent,
PARK AVENUE RECEIVABLES CORPORATION,
as Initial Purchaser,
THE CHASE MANHATTAN BANK,
as an APA Bank
and
THE CHASE MANHATTAN BANK,
as Trustee and as Securities Intermediary
_________________________
Series 1998-1 SUPPLEMENT
Dated as of April 3, 1998
to
POOLING AGREEMENT
Dated as of April 3, 1998
_________________________
UNITED STATIONERS RECEIVABLES MASTER TRUST
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . 1
SECTION 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
DESIGNATION OF CERTIFICATES; PURCHASE AND SALE
OF THE VFC CERTIFICATES . . . . . . . . . . . . . . 20
SECTION 2.1. Designation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.2. The Series 1998-1 Interests . . . . . . . . . . . . . . . . . . . 20
SECTION 2.3. Purchases of Interests in the VFC Certificates . . . . . . . . . . 21
SECTION 2.4. Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.5. Procedure for Initial Issuance and for Increasing the Series
1998-1 Invested Amount . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.6. Sale by the Initial Purchaser of its Series 1998-1 Purchaser
Invested Amount to the APA Banks . . . . . . . . . . . . . . . . . 24
SECTION 2.7. Procedure for Decreasing the Series 1998-1 Invested Amount;
Optional Termination . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.8. Reductions of the Commitments . . . . . . . . . . . . . . . . . . 27
SECTION 2.9. Interest, Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 2.10. Indemnification by the Company and the Servicer . . . . . . . . . 28
ARTICLE III
ARTICLE III OF THE AGREEMENT . . . . . . . . . . . . . 29
SECTION 3A.2. Establishment of Trust Accounts . . . . . . . . . . . . . . . . . 30
SECTION 3A.3. Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 3A.4. Determination of Interest . . . . . . . . . . . . . . . . . . . . 32
SECTION 3A.5. Determination of Series 1998-1 Monthly Principal . . . . . . . . . 34
SECTION 3A.6. Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE IV
DISTRIBUTIONS AND REPORTS . . . . . . . . . . . . . . 37
SECTION 4A.1. Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 4A.2. Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 4A.3. Statements and Notices . . . . . . . . . . . . . . . . . . . . . . 37
i
<PAGE>
<CAPTION>
Page
----
<S> <C>
ARTICLE V
ADDITIONAL EARLY AMORTIZATION EVENTS . . . . . . . . . . . 38
SECTION 5.1. Additional Early Amortization Events . . . . . . . . . . . . . . . 38
ARTICLE VI
SERVICING FEE . . . . . . . . . . . . . . . . . 41
SECTION 6.1. Servicing Compensation . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE VII
CHANGE IN CIRCUMSTANCES . . . . . . . . . . . . . . 41
SECTION 7.1. Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 7.2. Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 7.3. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 7.4. Break Funding Payments . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 7.5. Alternate Rate of Interest . . . . . . . . . . . . . . . . . . . . 45
SECTION 7.6. Mitigation Obligations . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES, COVENANTS . . . . . . . . . . 46
SECTION 8.1. Representations and Warranties of the Company and the Servicer . . 46
SECTION 8.2. Covenants of the Company and the Servicer . . . . . . . . . . . . 46
SECTION 8.3. Covenants of the Servicer . . . . . . . . . . . . . . . . . . . . 47
SECTION 8.4. Obligations Unaffected . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE IX
CONDITIONS PRECEDENT . . . . . . . . . . . . . . . 47
SECTION 9.1. Conditions Precedent to Effectiveness of Supplement . . . . . . . 47
ARTICLE X
THE FUNDING AGENT . . . . . . . . . . . . . . . . 50
SECTION 10.1. Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 10.2. Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 10.3. Exculpatory Provisions . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 10.4. Reliance by Funding Agent . . . . . . . . . . . . . . . . . . . . 51
SECTION 10.5. Notice of Servicer Default or Early Amortization Event or Close
Up Potential Early Amortization Event . . . . . . . . . . . . . . 51
SECTION 10.6. Non-Reliance on the Funding Agent and Other Purchasers . . . . . . 52
SECTION 10.7. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 10.8. The Funding Agent in Its Individual Capacity . . . . . . . . . . . 53
ii
<PAGE>
<CAPTION>
Page
----
<S> <C>
SECTION 10.9. Successor Funding Agent . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE XI
MISCELLANEOUS . . . . . . . . . . . . . . . . . 53
SECTION 11.1. Ratification of Agreement . . . . . . . . . . . . . . . . . . . . 53
SECTION 11.2. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 11.3. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 11.4. Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 11.5. Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 11.6. No Waiver, Cumulative Remedies . . . . . . . . . . . . . . . . . . 54
SECTION 11.7. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 11.8. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 11.9. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 11.10. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 11.11. Securities Laws; Participations; Assignments . . . . . . . . . . . 56
SECTION 11.12. Adjustments; Set-off . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 11.13. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 11.14. No Bankruptcy Petition . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 11.15. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE XII
FINAL DISTRIBUTIONS . . . . . . . . . . . . . . . 60
SECTION 12.1. Certain Distributions . . . . . . . . . . . . . . . . . . . . . . 60
EXHIBITS
Exhibit A VFC Certificate, Series 1998-1
Exhibit B Form of [Assignment] [Participation] Certification
Exhibit C Reserved.
Exhibit D Form of UCC Certificate of United Stationers Supply Co.
Exhibit E Form of Notice of Increase
Exhibit F Form of Monthly Settlement Statement
Exhibit G Form of Commitment Transfer Supplement
SCHEDULES
Schedule 1 Commitments
</TABLE>
iii
<PAGE>
Series 1998-1 SUPPLEMENT, dated as of April 3, 1998 (as amended,
supplemented or otherwise modified from time to time, this ("Supplement"), among
USS Receivables Company, Ltd., a Cayman Islands limited liability company (the
"COMPANY"), United Stationers Supply Company ("USSC"), as servicer (except where
otherwise noted) (in such capacity, the "SERVICER"), Park Avenue Receivables
Corporation, a Delaware corporation (including its successors and assigns
(excluding, however, the APA Banks as assignees pursuant to Section 2.6, the
"INITIAL PURCHASER"), the several banks or financial institutions parties to
this Supplement as of the Issuance Date (as defined below) and the other banks
or financial institutions from time to time parties hereto pursuant to
subsection 11.11 (c) (collectively, the "APA BANKS"; each, individually, an "APA
BANK"), The Chase Manhattan Bank, a New York banking corporation ("CHASE"), in
its capacity as Funding Agent (the "FUNDING AGENT"), and The Chase Manhattan
Bank, in its capacity as Trustee (the "TRUSTEE") and as Securities Intermediary
(the "SECURITIES INTERMEDIARY") under the Agreement (as defined below).
W I T N E S S E T H:
WHEREAS, the Company, the Servicer and the Trustee have entered into
a Pooling Agreement, dated as of April 3, 1998 (as amended, supplemented or
otherwise modified from time to time, the "AGREEMENT"; capitalized terms used
herein and not otherwise defined are used as defined in the Agreement);
WHEREAS, the Agreement provides, among other things, that the
Company, the Servicer and the Trustee may at any time and from time to time
enter into supplements to the Agreement for the purpose of authorizing the
issuance on behalf of the Trust by the Company for execution and redelivery to
the Trustee for authentication of one or more Series of Investor Certificates;
and
WHEREAS, the Company, the Servicer, the Trustee, the Initial
Purchaser and the APA Banks wish to supplement the Agreement as hereinafter set
forth.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby expressly acknowledged, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. (a) The following words and phrases
shall have the following meanings with respect to Series 1998-1 and the
definitions of such terms are applicable to the singular as well as the plural
form of such terms and to the masculine as well as the feminine and neuter
genders of such terms:
<PAGE>
"ACCRUAL PERIOD" shall mean the period from and including a
Distribution Date, or, in the case of the initial Accrual Period, the
Issuance Date, to but excluding the succeeding Distribution Date.
"ACCRUED EXPENSE AMOUNT" shall mean, for each Business Day during an
Accrual Period, the sum of (i) the Daily Interest Deposit for such Business
Day, (ii) the Daily Commitment Fee Deposit for such Business Day, (iii) the
Daily Utilization Fee Deposit for such Business Day, (iv) the Daily
Servicing Fee Deposit for such Business Day and (v) all Program Costs which
have accrued since the preceding Business Day.
"ACQUIRING APA BANK" shall have the meaning assigned in subsection
11.11(c).
"ADDITIONAL INTEREST" shall have the meaning assigned in subsection
3A.4(b).
"ADJUSTED LIBO RATE" shall mean, with respect to each day during
each Eurodollar Period pertaining to a portion of the Series 1998-1
Invested Amount allocated to a Eurodollar Tranche, an interest rate per
annum (rounded upwards, if necessary, to the nearest 1/16th of 1%) equal to
the LIBO Rate for such Eurodollar Period multiplied by the Statutory
Reserve Rate.
"ADJUSTED LIQUIDITY PRICE" shall mean, in determining the Purchase
Price of the Initial Purchaser's Series 1998-1 Purchaser Invested Amount on
the APA Bank Purchase Date, an amount equal to:
PI[OC + (NDR/1.05)]
where:
PI = the Invested Percentage on the
APA Bank Purchase Date;
OC = the sum of (i) any and all
amounts due and owing to the
Company in respect of Seller
Repurchase Payments and Seller
Adjustment Payments pursuant to
the Transaction Documents and
any, (ii) all amounts due and
owing to the Trust as Transfer
Deposit Amounts pursuant to
subsection 2.5(b) of the
Agreement on the APA Bank
Purchase Date and (iii) all
collections received by the
Seller which are due and owing
to PARCO under the Transaction
Documents which have not yet
been remitted to PARCO; and
2
<PAGE>
NDR = the aggregate outstanding
Principal Amount of all
Receivables that are not
Defaulted Receivables as of the
APA Bank Purchase Date.
Each of the foregoing shall be determined as of the most recent Settlement
Report Date.
"AGED RECEIVABLES RATIO" shall mean, as of the last day of each
Settlement Period, the percentage equivalent of a fraction, the numerator
of which shall be the sum of (a) the aggregate unpaid balance of
Receivables originated by the Sellers that were 60 to 89 days past due and
(b) the aggregate amount of Receivables of such Sellers that were charged
off as uncollectible prior to the day that is 60 days after its original
due date during such Settlement Period, and the denominator of which shall
be the aggregate Principal Amount of Receivables originated by the Sellers
during the third prior Settlement Period (including the Settlement Period
ended on such day).
"AGGREGATE COMMITMENT AMOUNT" shall mean the aggregate amount of the
Commitments of all APA Banks, as reduced from time to time pursuant to
Section 2.8.
"ALTERNATE BASE RATE" shall mean, for any day, a rate per annum
equal to the greatest of (a) the Prime Rate in effect on such day and (b)
the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. Any
change in the Alternate Base Rate due to a change in the Prime Rate or the
Federal Funds Effective Rate shall be effective from and including the
effective day of such change in the Prime Rate or the Federal Funds
Effective Rate, respectively.
"APA BANKS" shall have the meaning specified in the introductory
paragraph hereto.
"APA BANK PURCHASE DATE" shall mean either the date of the Purchase
or, if the APA Banks fund the Series 1998-1 Invested Amount on the Issuance
Date pursuant to Section 2.3, the Issuance Date.
"APPLICABLE MARGIN" shall mean on any date of determination (i) for
each Eurodollar Tranche, 1.50% per annum and (ii) for each Floating
Tranche, 0.25% per annum; PROVIDED, HOWEVER that, after the occurrence of a
PARCO Wind-Down Event described in clause (i) or (v) of the definition
thereof, the Applicable Margin shall mean on any date of determination for
each Eurodollar Tranche or the Floating Tranche, the applicable rate per
annum set forth below under the caption "Eurodollar Spread" or "Floating
Rate Spread," as the case may be, based upon the Pricing Leverage Ratio (as
defined in, and determined in accordance with, the Credit Agreement under
the definition of Letter of Credit Fee Rate, as in effect on the date
hereof) as of the most recent determination date:
3
<PAGE>
<TABLE>
<CAPTION>
LEVERAGE EURODOLLAR FLOATING RATE
CATEGORY RATIO SPREAD SPREAD
-------- -------- ---------- -------------
<S> <C> <C> <C>
Category 1 greater than 4.50 to 1.00 2.00% 0.75%
Category 2 greater than 4.00 to 1.00 1.75% 0.50%
and less than or equal to
4.50 to 1.00
Category 3 greater than 3.50 to 1.00 1.50% 0.25%
and less than or equal to
4.00 to 1.00
Category 4 greater than 3.00 to 1.00 1.25% 0.00%
and less than or equal to
3.50 to 1.00
Category 5 less than or equal to 3.00 1.00% 0.00%
to 1.00
</TABLE>
"ASSIGNMENT/PARTICIPATION CERTIFICATION" shall mean an assignment or
participation certification, as the case may be, in substantially the form
of Exhibit B hereto.
"AVAILABLE PRICING AMOUNT" shall mean, on any Business Day, the sum
of (i) the Unallocated Balance PLUS (ii) the Increase, if any, on such
date.
"BENEFITTED PURCHASER" shall have the meaning assigned in Section
11.12.
"BOARD" shall mean the Board of Governors of the Federal Reserve
System of the United States.
"CARRYING COST RESERVE RATIO" shall mean, as of any Settlement
Report Date and continuing until (but not including) the next Settlement
Report Date, an amount (expressed as a percentage) equal to (a) the
product of (i) 2.0 times Days Sales Outstanding as of such day and (ii)
1.30 times the Alternate Base Rate in effect as of such day divided by
(b) 365.
"CHANGE IN LAW" shall mean (a) the adoption of any law, rule or
regulation after the Issuance Date, (b) any change in law, rule or
regulation or in the interpretation or application thereof by any
Governmental Authority after the Issuance Date or (c) compliance by any
Purchaser with any request, guideline or directive (whether or not having
the force of law) of any Governmental Authority made or issued after the
Issuance Date.
"CHASE" shall have the meaning specified in the introductory
paragraph hereto.
"CLAIM" shall have the meaning assigned in subsection 2.10(a).
"COMMERCIAL PAPER" shall mean the short-term promissory notes of the
Initial Purchaser issued in the United States commercial paper market.
4
<PAGE>
"COMMITMENT" shall mean, as to any APA Bank, its obligation to
purchase a VFC Certificate on the Issuance Date, to acquire a pro rata
share of the Initial Purchaser's VFC Certificate and to maintain and,
subject to certain conditions, increase, its Series 1998-1 Purchaser
Invested Amount, in each case, in an aggregate amount not to exceed at any
one time outstanding the amount set forth opposite such APA Bank's name on
Schedule 1 under the caption "Commitment", as such amount may be reduced
from time to time as provided herein; collectively, as to all APA Banks,
the "COMMITMENTS".
"COMMITMENT EXPIRY DATE" shall mean April 2, 1999 (as may be
extended for an additional 364 days from time to time in writing by PARCO,
the Funding Agent and the APA Banks).
"COMMITMENT FEE" shall have the meaning assigned in subsection
2.9(b).
"COMMITMENT FEE RATE" shall have the meaning assigned in the Fee
Letter.
"COMMITMENT PERCENTAGE" shall mean, as to any APA Bank and as of any
date, the percentage equivalent of a fraction, the numerator of which is
such APA Bank's Commitment as set forth on Schedule 1 and the denominator
of which is the Aggregate Commitment Amount as of such date.
"COMMITMENT PERIOD" shall mean the period commencing on the Issuance
Date and terminating on the Commitment Termination Date.
"COMMITMENT REDUCTION" shall have the meaning assigned in subsection
2.8(a).
"COMMITMENT TERMINATION DATE" shall mean the earliest to occur of
(i) the date on which the Aggregate Commitment Amount has been reduced to
zero pursuant to Section 2.8 of this Agreement and (ii) the Commitment
Expiry Date.
"COMMITMENT TRANSFER SUPPLEMENT" shall have the meaning assigned in
subsection 11.11(c).
"COMPANY" shall have the meaning specified in the introductory
paragraph hereto.
"COMPANY INDEMNIFIED PERSON" shall have the meaning assigned in
subsection 2.10(a).
"CP RATE" shall mean for any day the weighted average of the
interest rates (or if issued at a discount, the weighted average of the
rates, after converting to interest-bearing equivalents) on all outstanding
Commercial Paper issued by the Initial Purchaser to fund the Initial
Purchaser's Series 1998-1 Purchaser Invested Amount.
"CP RATE PERIOD" shall mean, with respect to any CP Tranche, a
period of days not to exceed 60 days commencing on a Business Day selected
in accordance with
5
<PAGE>
subsection 3A.4(c); provided that if a CP Rate Period would end on a day
that is not a Business Day, such CP Rate Period shall end on the next
succeeding Business Day.
"CP TRANCHE" shall mean a portion of the Series 1998-1 Invested
Amount for which the Series 1998-1 Monthly Interest is calculated by
reference to a particular Discount and a particular CP Rate Period.
"CREDIT AGREEMENT" shall mean that certain Second Amended and
Restated Credit Agreement, dated as of April 3, 1998, among USSC, as
borrower, United Stationers Inc., as guarantor, The Chase Manhattan Bank,
as administrative agent, and Chase Securities Inc., as arranger, as the
same may be amended, supplemented or otherwise modified from time to time.
"DAILY COMMITMENT FEE DEPOSIT" shall mean, for any Business Day, an
amount equal to (i) the amount of Daily Commitment Fee Expense for each day
since the preceding Business Day plus (ii) the aggregate amount of all
previously accrued Daily Commitment Fee Expense that has not yet been
deposited in the Series 1998-1 Non-Principal Collection Sub-subaccount.
"DAILY COMMITMENT FEE EXPENSE" shall mean, (i) during the Series
1998-1 Revolving Period, for any day in any Accrual Period, the product of
(A) the excess of the Aggregate Commitment Amount over the aggregate Series
1998-1 Purchaser Invested Amounts of the APA Banks on such day multiplied
by (B) the Commitment Fee Rate divided by 360, (ii) during the Series
1998-1 Amortization Period, for any day prior to the APA Bank Purchase Date
in any Accrual Period, the product of (A) the Series 1998-1 Invested Amount
on such day multiplied by (B) the Commitment Fee Rate divided by 360 and
(iii) during the Series 1998-1 Amortization Period, for the APA Bank
Purchase Date or any day thereafter in any Accrual Period, zero.
"DAILY INTEREST DEPOSIT" shall mean, for any Business Day, an amount
equal to (i) the amount of Daily Interest Expense for each day since the
preceding Business Day PLUS (ii) the aggregate amount of a previously
accrued Daily Interest Expense that has not yet been deposited in the
Series 1998-1 Non-Principal Collection Sub-subaccount PLUS (iii) the
aggregate amount of all Additional Interest for each day since the
preceding Business Day.
"DAILY INTEREST EXPENSE" shall mean (i) for any day prior to the APA
Bank Purchase Date in any Accrual Period, the product of (A) the Series
1998-1 Invested Amount divided by 360 and (B) the CP Rate for such day and
(ii) for the APA Bank Purchase Date and any day thereafter in any Accrual
Period, the sum of (A) the product of (x) the sum of (a) the portion of the
Series 1998-1 Invested Amount (calculated with respect to all APA Banks
without regard to clauses (d) and (e) of the definition of Series 1998-1
Purchaser Invested Amount) allocable to the Floating Tranche on such day
and (b) for any day during the period from and including the APA Bank
Purchase Date to but excluding the Distribution Date immediately succeeding
the APA Bank Purchase Date, the Unaccrued Discount Payment Amount divided
by 365 (or 366, as the case may be)
6
<PAGE>
and (y) the Alternate Base Rate plus the Applicable Margin in effect on
such day, (B) the product of (x) the portion of the Series 1998-1 Invested
Amount (calculated with respect to all APA Banks without regard to clauses
(d) and (e) of the definition of Series 1998-1 Purchaser Invested Amount)
allocable to Eurodollar Tranches on such day divided by 360 and (y) the
weighted average Adjusted LIBO Rate plus the Applicable Margin on such day
in effect with respect thereto and (C) on the APA Bank Purchase Date, the
Unaccrued Discount Payment Amount; PROVIDED, HOWEVER, that for any such day
during the continuance of an Early Amortization Period, the "Daily Interest
Expense" for such day shall be equal to the greater of (i) the sum of the
amounts calculated pursuant to clause (ii) above and (ii) the product of
(x) the Series 1998-1 Invested Amount on such day divided by 365 (or 366,
as the case may be) and (y) the Alternate Base Rate plus the Applicable
Margin in effect on such day plus 2.00%.
"DAILY SERVICING FEE DEPOSIT" shall mean, for any Business Day, an
amount equal to (i) the amount of Daily Servicing Fee Expense for each day
since the preceding Business Day PLUS (ii) the aggregate amount of all
previously accrued Daily Servicing Fee Expense that has not yet been
deposited in the Series 1998-1 Non-Principal Collection Sub-subaccount.
"DAILY SERVICING FEE EXPENSE" shall mean, for any day in any Accrual
Period the Series 1998-1 Interests' PRO RATA portion (determined in
accordance with Section 6.1) of the Servicing Fee accruing for such day.
"DAILY UTILIZATION FEE DEPOSIT" shall mean an amount equal to (i)
the amount of Daily Utilization Fee Expense for each day since the
preceding Business Day PLUS (ii) the aggregate amount of all previously
accrued Daily Utilization Fee Expense that has not yet been deposited in
the Series 1998-1 Non-Principal Collection Sub-subaccount.
"DAILY UTILIZATION FEE EXPENSE" shall mean, (i) for any day in any
Accrual Period prior to the APA Bank Purchase Date, the product of (A) the
Series 1998-1 Invested Amount on such day multiplied by (B) the Utilization
Fee Rate divided by 360 and (ii) for any day thereafter, zero.
"DAYS SALES OUTSTANDING" shall mean, as of any Settlement Report
Date and continuing until (but not including) the next Settlement Report
Date, the number of days equal to the product of (a) 91 and (b) the amount
obtained by dividing (i) the aggregate Principal Amount of Eligible
Receivables by (ii) the aggregate Principal Amount of Receivables generated
by the Seller for the three Settlement Periods immediately preceding such
earlier Settlement Report Date.
"DECREASE" shall have the meaning assigned in subsection 2.7(a).
"DEFAULTING APA BANK" shall have the meaning assigned in subsection
2.6(c).
"DEFAULT RATIO" shall mean, for any Settlement Period, a ratio
(expressed as a percentage) equal to the quotient of (a) the sum of (i) the
aggregate outstanding Principal
7
<PAGE>
Amount of all Receivables which are unpaid in whole or in part for more
than 91 days after their respective due dates on the last day of such
Settlement Period and (ii) the aggregate amount of Disputed Receivables;
and (b) the aggregate outstanding Principal Amount of all Receivables on
such last day.
"DILUTION PERIOD" shall mean, as of any Settlement Report Date and
continuing until (but not including) the next Settlement Report Date, the
quotient of (i) the product of (A) the aggregate Principal Amount of
Receivables that were originated by the Sellers during the Settlement
Period preceding such earlier Settlement Report Date and (B) the quotient
of (1) Days Sales Outstanding as of such Settlement Report Date and (2) 30
and (ii) the Aggregate Receivables Amount as of the last day of the
Settlement Period preceding such earlier Settlement Report Date.
"DILUTION RATIO" shall mean, as of the last day of each Settlement
Period, an amount (expressed as a percentage) equal to (i) the difference
between (A) the aggregate amount of Dilution Adjustments made during such
Settlement Period and (B) the Dilution Reduction Amount divided by (ii) the
average aggregate Principal Amount of Receivables that were originated by
the Sellers during the last two Settlement Periods (including the
Settlement Period ending on such day).
"DILUTION RESERVE RATIO" shall mean, as of any Settlement Report
Date and continuing until (but not including) the next Settlement Report
Date, an amount (expressed as a percentage) that is calculated as follows:
DRR = [ (c * d) + (e-d) * (e/d) ] * f
Where:
DRR = Dilution Reserve Ratio;
c = 2.00;
d = the average of the Dilution Ratio that occurred during the
period of twelve consecutive Settlement Periods ending
immediately prior to such earlier Settlement Report Date;
e = the highest average of the Dilution Ratio that occurred
during the period of twelve consecutive Settlement Periods
ending prior to such earlier Settlement Report Date; and
f = the Dilution Period.
"DISCOUNT" shall mean, with respect to any Commercial Paper, the
interest or discount component thereof.
8
<PAGE>
"EARLY AMORTIZATION EVENT" shall have the meanings assigned in
Section 5.1 of this Supplement and Section 7.1 of the Agreement.
"EARLY AMORTIZATION PERIOD" shall have the meaning assigned in
Section 5.1 of this Supplement and Section 7.1 of the Agreement.
"EFFECTIVE DATE" shall have the meaning assigned in Section 9.1.
"ELIGIBLE ASSIGNEE" shall mean any financial institution that is a
United States Person (within the meaning of Section 7701(a)(30) of the
Internal Revenue Code) and that has a short-term debt rating of at least
A-1 from S&P and P-1 from Moody's.
"EURODOLLAR PERIOD" shall mean, with respect to any Eurodollar
Tranche, prior to the Scheduled Revolving Termination Date, a period of
between one month and six months requested by the Company commencing on a
Business Day requested by the Company and agreed to by the Funding Agent;
PROVIDED, HOWEVER, that each such Eurodollar Period shall expire on a
Distribution Date.
"EURODOLLAR TRANCHE" shall mean a portion of the Series 1998-1
Invested Amount for which the Series 1998-1 Monthly Interest is calculated
by reference to an Adjusted LIBO Rate determined by reference to a
particular Eurodollar Period.
"EXCLUDED TAXES" shall mean, with respect to the Funding Agent, any
Purchaser or any other recipient of any payment to be made by or on account
of any increased obligation of the Company hereunder, (a) income or
franchise taxes imposed on (or measured by) its net income (i) by the
United States of America, or (ii) by the jurisdiction under the laws of
which such recipient is organized or in which its principal office is
located, managed or controlled, or, in the case of any APA Bank, in which
its applicable lending office is located, or (iii) by reason of any
connection between the jurisdiction imposing such tax and the Funding
Agent, such recipient or such office other than a connection arising solely
from this Agreement or any other Transaction Document or any transaction
hereunder or thereunder, and (b) any branch profits imposed by the United
States of America or any similar tax imposed by any other jurisdiction in
which the Company is located.
"FEE LETTER" shall mean, collectively, those certain Fee Letters,
dated as of the date hereof, among the Company, the Funding Agent and the
Initial Purchaser and acknowledged by the Trustee.
"FEDERAL FUNDS EFFECTIVE RATE" shall mean, for any day, the weighted
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day that is a Business Day, the
average (rounded upwards, if necessary, to the next 1/100 of 1%) of
9
<PAGE>
the quotations for such day of such transactions received by the Funding
Agent from three Federal funds brokers of recognized standing selected by
it.
"FLOATING TRANCHE" shall mean, on or after the APA Bank Purchase
Date, that portion of the Series 1998-1 Invested Amount not allocated to a
Eurodollar Tranche for which the Series 1998-1 Monthly Interest is
calculated by reference to the Alternate Base Rate.
"FUNDING AGENT" shall have the meaning specified in the introductory
paragraph hereto.
"INCREASE" shall have the meaning assigned in subsection 2.5(a).
"INCREASE AMOUNT" shall have the meaning assigned in subsection
2.5(a).
"INCREASE DATE" shall have the meaning assigned in subsection
2.5(a).
"INDEMNIFIED TAXES" shall mean Taxes other than Excluded Taxes.
"INITIAL PURCHASER" shall have the meaning specified in the
introductory paragraph hereto.
"INITIAL SERIES 1998-1 INVESTED AMOUNT" shall have the meaning
assigned in subsection 2.5(a).
"INTEREST SHORTFALL" shall have the meaning assigned in subsection
3A.4(b).
"INVESTED PERCENTAGE" shall mean, with respect to any Business Day
(i) during the Series 1998-1 Revolving Period, the percentage equivalent of
a fraction, the numerator of which is the Series 1998-1 Allocated
Receivables Amount as of the end of the immediately preceding Business Day
and the denominator of which is the Aggregate Receivables Amount with
respect to such Business Day and (ii) during the Series 1998-1 Amortization
Period, the percentage equivalent of a fraction, the numerator of which is
the Series 1998-1 Allocated Receivables Amount as of the end of the last
Business Day of the Series 1998-1 Revolving Period (PROVIDED THAT if during
the Series 1998-1 Amortization Period, the amortization periods of all
other Outstanding Series which were outstanding prior to the commencement
of the Series 1998-1 Amortization Period commence, then, from and after the
date the last of such Series commences its Amortization Period, the
numerator shall be the Series 1998-1 Allocated Receivables Amount as of the
end of the Business Day preceding such date) and the denominator of which
is the greater of (A) the Aggregate Receivables Amount with respect to such
Business Day and (B) the sum of the numerators used to calculate the
Invested Percentage for all Outstanding Series on the Business Day for
which such percentage is determined.
"ISSUANCE DATE" shall have the meaning assigned in subsection
2.5(a).
10
<PAGE>
"LIBO RATE" shall mean, with respect to each day during each
Eurodollar Period pertaining to a Eurodollar Tranche, the rate appearing on
Page 3750 of the Telerate Service (or on any successor or substitute page
of such Service, providing rate quotations comparable to those currently
provided on such page of such Service, as determined by the Funding Agent
from time to time for purposes of providing quotations of interest rates
applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m. (London time) on the second Business Day prior to
the commencement of such Eurodollar Period, as the rate for dollar deposits
with a maturity comparable to the Eurodollar Period applicable to such
Eurodollar Tranche. In the event that such rate is not available at such
time for any reason, then the "LIBO RATE" with respect to each day during
such Eurodollar Period pertaining to such Eurodollar Tranche shall be the
rate at which dollar deposits of $5,000,000 and for a maturity comparable
to such Eurodollar Period are offered by the principal London office of the
Funding Agent in immediately available funds in the London interbank market
at approximately 11:00 a.m. (London time) on the second Business Day prior
to the commencement of such Eurodollar Period.
"LOSS RESERVE RATIO" shall mean, as of any Settlement Report Date
and continuing until (but not including) the next Settlement Report Date,
an amount (expressed as a percentage) that is calculated as follows:
LRR = (a * b)/c * d * e
Where:
LRR = Loss Reserve Ratio;
a = the aggregate Principal Amount of Receivables originated by
the Sellers during the three Settlement Periods immediately
preceding such earlier Settlement Report Date;
b = the highest three-month rolling average of the Aged
Receivables Ratio that occurred during the period of twelve
consecutive Settlement Periods ending prior to such earlier
Settlement Report Date;
c = the Aggregate Receivables Amount as of the last day of the
Settlement Period immediately preceding such earlier
Settlement Report Date; and
d = 2.00.
e = Payment Terms Factor
"LOSS-TO-LIQUIDATION RATIO" shall mean, for any Settlement Period, a
ratio (expressed as a percentage) equal to the quotient of (a) the
difference, if any, between (i) the aggregate Principal Amount of
Charged-Off Receivables with respect to such Settlement Period and the
immediately preceding two Settlement Periods and (ii) the
11
<PAGE>
aggregate amount of Recoveries during such two Settlement Periods, and (b)
the aggregate amount of Collections during such two Settlement Periods.
"MAJORITY PURCHASERS" shall mean, (i) on any day prior to the APA
Bank Purchase Date, the Initial Purchaser and the Required APA Banks and
(ii) on the APA Bank Purchase Date and any day thereafter, the Required APA
Banks.
"MAXIMUM COMMITMENT AMOUNT" shall mean $163,000,000.
"MINIMUM RATIO" shall mean, as of any Settlement Report Date and
continuing until (but not including) the next Settlement Report Date, the
sum of (i) 10% and (ii) 2.5% for each customer designated as a Special
Obligor.
"MONTHLY INTEREST PAYMENT" shall have the meaning assigned in
subsection 3A.6(a).
"NON-DEFAULTING APA BANK" shall have the meaning assigned in
subsection 2.6(c).
"OPTIONAL TERMINATION DATE" shall have the meaning assigned in
subsection 2.7(d).
"OPTIONAL TERMINATION NOTICE" shall have the meaning assigned in
subsection 2.7(d).
"OTHER TAXES" shall mean any and all current or future stamp or
documentary taxes or other excise or property taxes, charges or similar
levies arising from any payment made under the Transaction Documents or
from the execution, delivery or enforcement of, or otherwise with respect
to, any Transaction Document.
"PARCO INSOLVENCY EVENT" shall mean the occurrence of any one or
more of the following: (i) any proceeding shall have been instituted by the
Initial Purchaser seeking to adjudicate it as bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief or composition of it or its debts under any law relating
to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of any order for relief or the appointment of a receiver,
trustee or other similar official for it or any substantial part of its
property, or (ii) any proceeding of the type described in the foregoing
clause (i) shall be instituted against the Initial Purchaser and shall have
remained undismissed for a period of sixty (60) consecutive days, or an
order granting relief requested in any such proceeding shall be entered.
"PARCO RESIDUAL AMOUNT" shall have the meaning assigned in
subsection 2.6(e).
"PARCO WIND-DOWN EVENT" shall mean the occurrence of any of the
following events:
12
<PAGE>
(i) on the fifteenth Business Day prior to the Commitment Expiry
Date, the Commitments of the APA Banks have not been
extended for at least an additional 364 days;
(ii) the providers of the Initial Purchaser's program liquidity
and/or letter of credit facilities shall have given notice
that an event of default has occurred and is continuing
under their respective agreements with the Initial Purchaser
or shall have given notice that their commitments shall not
be extended thereunder;
(iii) PARCO has notified the Company that it no longer wishes to
provide funding to the Company;
(iv) the Commercial Paper shall not be rated at least A-1 by S&P
and P-1 by Moody's, respectively; and
(v) an Early Amortization Event shall have occurred and be
continuing.
"PARTICIPANTS" shall have the meaning assigned in subsection
11.11(b).
"PAYMENT TERMS FACTOR" shall mean 1.017.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA.
"POTENTIAL PARCO WIND-DOWN EVENT" shall mean any event or
circumstance that with notice, the lapse of time, or both, would become a
PARCO Wind-Down Event.
"PRIME RATE" shall mean the rate of interest per annum publicly
announced from time to time by the Funding Agent as its prime rate in
effect at its principal office in New York, New York; each change in the
Prime Rate shall be effective from and including the date such change is
publicly announced as being effective.
"PROGRAM COSTS" shall mean, for any Business Day, the sum of (i) all
expenses, indemnities and other amounts due and payable to the Purchasers
and the Funding Agent under the Agreement or this Supplement (including,
without limitation, any Article VII Costs) and (ii) the product of (A) all
unpaid fees and expenses due and payable to counsel to, and independent
auditors of, the Company (other than fees and expenses payable on or in
connection with the closing of the issuance of the Series 1998-1 Interests)
and (B) a fraction, the numerator of which is the Aggregate Commitment
Amount on such Business Day and the denominator of which is the sum of (x)
the Aggregate Invested Amounts on such Business Day (other than the Series
1998-1 Invested Amount and the Invested Amount in respect of any variable
funding certificate of any other Outstanding Series) and (y) the Aggregate
Commitment Amount on such Business Day plus the Aggregate Commitment Amount
for any variable funding certificate of any other Outstanding Series;
13
<PAGE>
PROVIDED, HOWEVER, that the amount of Program Costs payable pursuant to
subsection 3A.6(b)(iv) shall not exceed $75,000 in the aggregate in any
fiscal year of the Servicer.
"PURCHASE" shall mean the assignment by the Initial Purchaser to the
APA Banks of the Initial Purchaser's Series 1998-1 Purchaser Invested
Amount pursuant to Section 2.6.
"PURCHASE PRICE" shall mean, on the APA Bank Purchase Date, an
amount equal to the lesser of (i) the Initial Purchaser's Series 1998-1
Purchaser Invested Amount (calculated without regard to clauses (d) and (e)
of the definition of Series 1998-1 Invested Amount) and (ii) the Adjusted
Liquidity Price on such date, in each case as increased by the sum of (1)
all accrued and unpaid Discount on all outstanding Commercial Paper issued
to fund the Initial Purchaser's Series 1998-1 Purchaser Invested Amount
from the issuance date(s) thereof to but excluding the APA Bank Purchase
Date PLUS (2) the aggregate Discount to accrue on all outstanding
Commercial Paper issued to fund the Initial Purchaser's Series 1998-1
Purchaser Invested Amount from and including the APA Bank Purchase Date, to
and excluding the maturity date of each CP Tranche.
"PURCHASE PRICE DEFICIT" shall have the meaning assigned in
subsection 2.6(c).
"PURCHASER" shall mean, prior to the APA Bank Purchase Date, the
Initial Purchaser and, on and after the APA Bank Purchase Date, the APA
Banks and each Acquiring APA Bank.
"RATING AGENCY" and "RATING AGENCIES" shall mean Moody's, S&P or any
other nationally recognized statistical rating organization from which a
rating for the Commercial Paper was requested by the Initial Purchaser and
is currently in effect.
"RATING AGENCY CONDITION" shall mean, with respect to any action,
that (i) each Rating Agency shall have been given 10 days' (or such shorter
period as shall be acceptable to each Rating Agency) prior notice thereof
and that each of the Rating Agencies shall have notified the Initial
Purchaser and the Funding Agent in writing that such action will not result
in a reduction or withdrawal of the then current rating of the Commercial
Paper and (ii) the Required APA Banks shall have given their prior written
consent to such action.
"RECORD DATE" shall mean the first Business Day prior to each
Distribution Date.
"REDUCTION PERCENTAGE" shall mean the percentage equivalent of a
fraction, the numerator of which is the PARCO Residual Amount and the
denominator of which is the sum of the PARCO Residual Amount and the
Adjusted Liquidity Price on the APA Bank Purchase Date.
"REGISTER" shall mean a register maintained by the Funding Agent for
recording transfers of the Commitments.
14
<PAGE>
"REQUIRED APA BANKS" shall mean APA Banks having Commitment
Percentages in the aggregate at least equal to 66-2/3% or, if the
Commitments have been terminated, holding at least 66-2/3% of the
outstanding Series 1998-1 Invested Amount; PROVIDED that the Commitment of
any Defaulting APA Bank that has not paid all amounts due and owing by it
in respect of the purchase it was obligated to make shall not be included
in the Aggregate Commitment Amount for purposes of this definition.
"REPORTED PERIOD" shall mean, with respect to Series 1998-1, each
Business Day.
"SALE NOTICE" shall mean an irrevocable written notice given by an
authorized signatory or authorized officer of the Initial Purchaser (or on
behalf of the Initial Purchaser by Chase, in its capacity as the Initial
Purchaser's administrative agent) to the Funding Agent committing to sell,
assign and transfer to the APA Banks, the Initial Purchaser's Series 1998-1
Purchaser Invested Amount, which notice shall designate (i) the APA Bank
Purchase Date, (ii) the Initial Purchaser's Series 1998-1 Purchaser
Invested Amount, (iii) the Purchase Price (including details showing
calculation of the Purchase Price), (iv) that no PARCO Insolvency Event has
occurred and (v) wire transfer instructions specifying the account(s) into
which the proceeds of the Purchase Price shall be deposited.
"SCHEDULED REVOLVING TERMINATION DATE" shall mean the last day of
the Settlement Period ending on or immediately before January 31, 2001.
"SECURITIES INTERMEDIARY" shall have the meaning specified in the
introductory paragraph hereto.
"SERIES 1998-1" shall mean Series 1998-1, the Principal Terms of
which are set forth in this Supplement.
"SERIES 1998-1 ACCRUED INTEREST SUB-SUBACCOUNT" shall have the
meaning assigned in subsection 3A.2(a).
"SERIES 1998-1 ADJUSTED INVESTED AMOUNT" shall mean, as of any date
of determination, (i) the Series 1998-1 Invested Amount on such date, MINUS
(ii) the amount on deposit in the Series 1998-1 Principal Collection
Sub-subaccount on such date.
"SERIES 1998-1 ALLOCABLE CHARGED-OFF AMOUNT" shall mean, with
respect to any Special Allocation Settlement Report Date, the "Allocable
Charged-Off Amount", if any, which has been allocated to Series 1998-1.
"SERIES 1998-1 ALLOCABLE RECOVERIES AMOUNT" shall mean, with respect
to any Special Allocation Settlement Report Date, the "Allocable Recoveries
Amount", if any, which has been allocated to Series 1998-1.
"SERIES 1998-1 ALLOCATED RECEIVABLES AMOUNT" shall mean, on any date
of determination, the lower of (i) the Series 1998-1 Target Receivables
Amount on such day
15
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and (ii) the product of (x) the Aggregate Receivables Amount on such day
and (y) the percentage equivalent of a fraction the numerator of which is
the Series 1998-1 Target Receivables Amount on such day and the denominator
of which is the Aggregate Target Receivables Amount on such day.
"SERIES 1998-1 AMORTIZATION PERIOD" shall mean the period commencing
on the Business Day following the earliest to occur of (i) the date on
which an Early Amortization Period is declared to commence or automatically
commences, (ii) the Optional Termination Date and (iii) the Scheduled
Revolving Termination Date and ending on the earlier of (i) the date when
the Series 1998-1 Invested Amount shall have been reduced to zero and all
accrued interest and other amounts owing on the VFC Certificates and to the
Funding Agent and the Purchasers hereunder shall have been paid in full and
(ii) the Series 1998-1 Termination Date.
"SERIES 1998-1 COLLECTION SUBACCOUNT" shall have the meaning
assigned in subsection 3A.2(a).
"SERIES 1998-1 INTERESTS" shall mean, collectively, the VFC
Certificates and the Series 1998-1 Subordinated Interest.
"SERIES 1998-1 INVESTED AMOUNT" shall mean, as of any date of
determination, the sum of the Series 1998-1 Purchaser Invested Amounts of
all Purchasers on such date.
"SERIES 1998-1 MONTHLY INTEREST" shall have the meaning assigned in
subsection 3A.4(a).
"SERIES 1998-1 MONTHLY PRINCIPAL PAYMENT" shall have the meaning
assigned in Section 3A.5.
"SERIES 1998-1 NON-PRINCIPAL COLLECTION SUB-SUBACCOUNT" shall have
the meaning assigned in subsection 3A.2(a).
"SERIES 1998-1 PERIODIC SERVICING FEE" shall have the meaning
assigned in Section 6.1.
"SERIES 1998-1 PRINCIPAL COLLECTION SUB-SUBACCOUNT" shall have the
meaning assigned in subsection 3A.2(a).
"SERIES 1998-1 PURCHASER INVESTED AMOUNT" shall mean, with respect
to the Initial Purchaser on the Issuance Date or, if the Initial Purchaser
shall not fund the Initial Series 1998-1 Invested Amount, any APA Bank, an
amount equal to the Initial Series 1998-1 Invested Amount or such APA
Bank's Commitment Percentage of the Initial Series 1998-1 Invested Amount,
and with respect to the Initial Purchaser or any other Purchaser on any
date of determination thereafter, an amount equal to (a) the Initial
Purchaser's or such other Purchaser's Series 1998-1 Purchaser Invested
Amount on the immediately preceding Business Day (or, with respect to the
day as of which such other Purchaser
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acquires an interest in the Series 1998-1 Invested Amount, whether pursuant
to Section 2.6, by executing a counterpart hereof, a Commitment Transfer
Supplement or otherwise, the portion of the transferor's Series 1998-1
Purchaser Invested Amount being purchased), PLUS (b) the amount of any
increases in such Purchaser's Series 1998-1 Purchaser Invested Amount
pursuant to Section 2.5 made on such day, MINUS (c) the amount of any
distributions to such Purchaser in respect of principal received and
applied on such day minus (d) the aggregate Series 1998-1 Allocable
Charged-Off Amount applied to such Purchaser on or prior to such date
pursuant to subsection 3A.5(b)(ii) and PLUS (e) (but only to the extent of
any unreimbursed reductions made pursuant to clause (d) above) the
aggregate Series 1998-1 Allocable Recoveries Amount applied to such
Purchaser on or prior to such date pursuant to subsection 3A.5(c)(i).
"SERIES 1998-1 RATIO" shall mean, as of any Settlement Report Date
and continuing until (but not including) the next Settlement Report Date,
the greater of (i) the sum of the Loss Reserve Ratio and the Dilution
Reserve Ratio and (ii) the Minimum Ratio, in each case, then in effect.
"SERIES 1998-1 REQUIRED RESERVES" shall mean, (x) as of any date of
determination during the Series 1998-1 Revolving Period, an amount equal to
the sum of:
(a) an amount equal to the product of (i) the Series 1998-1
Adjusted Invested Amount on such day (after giving effect to any
increase or decrease thereof on such day) and (ii) the percentage
equivalent of a fraction, the numerator of which is the Series
1998-1 Ratio and the denominator of which is one MINUS the Series
1998-1 Ratio;
(b) the product of (i) the Series 1998-1 Invested Amount on such
day (after giving effect to any increase or decrease thereof on such
day), (ii) the Carrying Cost Reserve Ratio in effect on such day and
(iii) the percentage equivalent of a fraction, the numerator of
which is one and the denominator of which is one MINUS the Series
1998-1 Ratio; and
(c) the product of (i) the aggregate Principal Amount of
Receivables in the Trust on such day, (ii) the Series 1998-1
Invested Amount on such day (after giving effect to any increase or
decrease thereof on such day) DIVIDED BY the Aggregate Invested
Amount on such day, (iii) the Servicing Reserve Ratio in effect on
such day and (iv) the percentage equivalent of a fraction, the
numerator of which is one and the denominator of which is one MINUS
the Series 1998-1 Ratio;
and (y) on any date of determination during the Series 1998-1 Amortization
Period, an amount equal to the Series 1998-1 Required Reserves on the last
Business Day of the Series 1998-1 Revolving Period; PROVIDED, in each case,
that such amount shall be adjusted on each Special Allocation Settlement
Report Date, if any, to the extent required as set forth in subsection
3A.5(b)(i) and subsection 3A.5(c)(ii).
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"SERIES 1998-1 REVOLVING PERIOD" shall mean the period commencing on
the Issuance Date and terminating on the earliest to occur of the close of
business on (i) the date on which an Early Amortization Period is declared
to commence or automatically commences, (ii) the Optional Termination Date
and (iii) the Commitment Termination Date.
"SERIES 1998-1 SUBORDINATED INTEREST" shall have the meaning
assigned in subsection 2.2(b).
"SERIES 1998-1 SUBORDINATED INTEREST AMOUNT" shall mean, for any
date of determination, an amount equal to (i) the Series 1998-1 Allocated
Receivables Amount MINUS (ii) the Series 1998-1 Adjusted Invested Amount.
"SERIES 1998-1 SUBORDINATED INTEREST REDUCTION AMOUNT" shall have
the meaning assigned in subsection 2.7(b).
"SERIES 1998-1 TARGET RECEIVABLES AMOUNT" shall mean, on any date of
determination, the sum of (i) the Series 1998-1 Adjusted Invested Amount on
such day and (ii) the Series 1998-1 Required Reserves for such day.
"SERIES 1998-1 TERMINATION DATE" shall mean the Distribution Date
that occurs in July 2, 2001.
"SERIES 1998-1 TRANSACTION DOCUMENTS" shall mean this Supplement,
the Receivables Sale Agreement, the Pooling Agreement and the Servicing
Agreement.
"SERVICER" shall have the meaning specified in the introductory
paragraph hereto.
"SERVICER INDEMNIFIED PERSON" shall have the meaning assigned in
subsection 2.10(b).
"SERVICING RESERVE RATIO" shall mean, as of any Settlement Report
Date and continuing until (but not including) the next Settlement Report
Date, an amount (expressed as a percentage) equal to (i) the product of (A)
the Servicing Fee Percentage and (B) 2.0 TIMES Days Sales Outstanding as of
such earlier Settlement Report Date, DIVIDED BY (ii) 360.
"STATUTORY RESERVE RATE" shall mean a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator of
which is the number one minus the aggregate of the maximum reserve
percentages (including any marginal, special, emergency or supplemental
reserves) expressed as a decimal established by the Board to which the
Funding Agent is subject for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to Regulation D.
Eurodollar Tranches shall be deemed to constitute eurocurrency funding and
to be subject to such reserve requirements without benefit of or credit for
proration, exemptions or offsets that may be available
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from time to time to any Purchaser under such Regulation D or comparable
regulation. The Statutory Reserve Rate shall be adjusted automatically on
and as of the effective date of any change in the reserve percentage.
"SUPPLEMENT" shall have the meaning specified in the introductory
paragraph hereto.
"TAXES" shall mean any and all present or future taxes, levies,
imposts, duties, deductions, charges or withholdings imposed by any
Governmental Authority.
"THREE-MONTH SECONDARY CD RATE" shall mean, for any day, the
secondary market rate for three-month certificates of deposit reported as
being in effect on such day (or, if such day shall not be a Business Day,
the next preceding Business Day) by the Board through the public
information telephone line of the Federal Reserve Bank of New York (which
rate will, under the current practices of the Board, be published in
Federal Reserve Statistical Release H.15(519) during the week following
such day), or, if such rate is not so reported on such day or such next
preceding Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks in New York
City received at approximately 10:00 A.M., New York City time, on such day
(or, if such day shall not be a Business Day, on the next preceding
Business Day) by the Funding Agent from three New York City negotiable
certificate of deposit dealers of recognized standing selected by it.
"TRANSACTION PARTIES" shall have the meaning assigned in subsection
2.6(d).
"TRANSFER ISSUANCE DATE" shall mean the date on which a Commitment
Transfer Supplement becomes effective pursuant to the terms of such
Commitment Transfer Supplement.
"TRANSFEREE" shall have the meaning assigned in subsection 11.11(f).
"TRUST ACCOUNTS" shall have the meaning assigned in subsection
3A.2(a).
"TRUSTEE" shall have the meaning specified in the introductory
paragraph hereto.
"UCC CERTIFICATE" shall mean a certificate substantially in the form
of Exhibit D to this Supplement.
"UNACCRUED DISCOUNT PAYMENT AMOUNT" shall mean the portion of the
Purchase Price determined in accordance with clause (2) of the definition
thereof.
"UNALLOCATED BALANCE" shall mean, as of (i) any Business Day prior
to the APA Bank Purchase Date, the portion of the Series 1998-1 Invested
Amount allocated to any CP Tranche the CP Rate Period in respect of which
expires on such Business Day and (ii) the APA Bank Purchase Date or any
Business Day thereafter, the sum of (A) the portion of the Series 1998-1
Invested Amount for which interest is then being calculated
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by reference to the Alternate Base Rate and (B) the portion of the Series
1998-1 Invested Amount allocated to any Eurodollar Tranche the Eurodollar
Period in respect of which expires on such Business Day.
"USI CHANGE IN CONTROL" shall have the meaning assigned to the term
"Change of Control" in Section 1.01 of the Credit Agreement.
"USCC" shall have the meaning specified in the introductory
paragraph hereto.
"UTILIZATION FEE" shall have the meaning assigned in subsection
2.9(c).
"UTILIZATION FEE RATE" shall have the meaning assigned in the Fee
Letter.
"VFC CERTIFICATE" shall mean a VFC Certificate, Series 1998-1,
executed by the Company and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A.
"VFC CERTIFICATEHOLDERS" shall mean the Purchasers.
"VFC CERTIFICATEHOLDERS' INTEREST" shall have the meaning assigned
in subsection 2.2(a).
(b) If any term or provision contained herein conflicts with or
is inconsistent with any term, definition or provision contained in the
Agreement, the terms and provisions of this Supplement shall govern. All
Article, Section or subsection references herein shall mean Article, Section or
subsections of this Supplement, except as otherwise provided herein. Unless
otherwise stated herein, the context otherwise requires or such term is
otherwise defined in the Agreement, each capitalized term used or defined herein
shall relate only to the Series 1998-1 Interests and no other Series of Investor
Certificates issued by the Trust.
ARTICLE II
DESIGNATION OF CERTIFICATES; PURCHASE AND SALE
OF THE VFC CERTIFICATES
SECTION 2.1. DESIGNATION. The Certificates and interests created
and authorized pursuant to the Agreement and this Supplement shall be divided
into two Classes, which shall be designated respectively as (i) the "VFC
Certificates, Series 1998-1" and (ii) an interest designated as the "Series
1998-1 Subordinated Interest."
SECTION 2.2. THE SERIES 1998-1 INTERESTS.(a) The VFC Certificates
shall represent fractional undivided interests in the Trust, including the right
to receive (i) the Invested Percentage (expressed as a decimal) of Collections
received with respect to the Receivables and all other funds on deposit in the
Collection Account and (ii) all other funds on deposit in the Series Collection
Subaccounts and any subaccounts thereof (collectively, the "VFC
CERTIFICATEHOLDERS' INTEREST").
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(b) The "SERIES 1998-1 SUBORDINATED INTEREST" shall be a fractional
undivided interest in the Trust retained by the Company, consisting of the right
to receive Collections with respect to the Receivables allocated to the VFC
Certificateholders' Interest and not required to be distributed to or for the
benefit of the Purchasers. The Exchangeable Company Interest and any other
Series of Investor Certificates outstanding shall represent the ownership
interest in the remainder of the Trust not allocated pursuant hereto to the VFC
Certificateholders' Interest or the Series 1998-1 Subordinated Interest.
(c) The VFC Certificates shall be substantially in the form of
Exhibit A and shall, upon issue, be executed and delivered by the Company to the
Trustee for authentication and redelivery as provided in Section 2.4 hereof and
Section 5.2 of the Agreement.
SECTION 2.3. PURCHASES OF INTERESTS IN THE VFC CERTIFICATES.(a)
INITIAL PURCHASE. Subject to the terms and conditions of this Supplement,
including delivery of notice in accordance with Section 2.4 and 2.5, (i) on the
Issuance Date, (A) the Initial Purchaser may, in its sole discretion, purchase a
VFC Certificate in an amount equal to the Initial Series 1998-1 Invested Amount
or (B) if the Initial Purchaser shall have notified the Funding Agent that it
has elected not to purchase a VFC Certificate on the Issuance Date, each APA
Bank hereby severally agrees to purchase on the Issuance Date a VFC Certificate
in an amount equal to such APA Bank's Commitment Percentage of the Initial
Series 1998-1 Invested Amount and (ii) thereafter, (A) if the Initial Purchaser
shall have purchased a VFC Certificate on the Issuance Date, the Initial
Purchaser may, in its sole discretion, maintain its VFC Certificate, subject to
increase or decrease during the Series 1998-1 Revolving Period, in accordance
with the provisions of this Supplement and (B) if the APA Banks shall have
purchased VFC Certificates on the Issuance Date or, in any case, on or after the
APA Bank Purchase Date, the APA Banks hereby severally agree to maintain their
respective VFC Certificates, subject to increase or decrease during the Series
1998-1 Revolving Period, in accordance with the provisions of this Supplement.
The Company hereby agrees to maintain ownership of the Series 1998-1
Subordinated Interest, subject to increase or decrease during the Series 1998-1
Revolving Period, in accordance with the provisions of this Supplement.
Payments by the Initial Purchaser or the APA Banks, as the case may be, in
respect of the VFC Certificates shall be made in immediately available funds on
the Issuance Date to the Funding Agent for payment to the Company.
(b) SUBSEQUENT PURCHASES. Subject to the terms and conditions of
this Supplement, each Acquiring APA Bank hereby severally agrees to maintain its
VFC Certificate, subject to increase or decrease during the Series 1998-1
Revolving Period, in accordance with the provisions of this Supplement.
(c) MAXIMUM SERIES 1998-1 PURCHASER INVESTED AMOUNT.
Notwithstanding anything to the contrary contained in this Supplement, at no
time shall the Series 1998-1 Purchaser Invested Amount (calculated without
regard to clauses (d) and (e) of the definition thereof) of any APA Bank exceed
such APA Bank's Commitment at such time.
SECTION 2.4. DELIVERY. On the Issuance Date, the Company shall
sign, on behalf of the Trust, and shall direct the Trustee in writing pursuant
to Section 5.2 of the Agreement to duly authenticate, and the Trustee, upon
receiving such direction, shall so
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authenticate (i) the VFC Certificates in such names and such denominations and
deliver such VFC Certificates to the Funding Agent, on behalf of the Initial
Purchaser, or the APA Banks, as the case may be, in accordance with such written
directions. The VFC Certificates shall be issued in minimum denominations of
$1,000,000 and in integral multiples of $100,000 in excess thereof. The Trustee
shall mark on its books the actual Series 1998-1 Invested Amount and Series
1998-1 Subordinated Interest Amount outstanding on any date of determination,
which, absent manifest error, shall constitute PRIMA FACIE evidence of the
outstanding Series 1998-1 Invested Amount and Series 1998-1 Subordinated
Interest Amount from time to time.
SECTION 2.5. PROCEDURE FOR INITIAL ISSUANCE AND FOR INCREASING THE
SERIES 1998-1 INVESTED AMOUNT. (a) Subject to subsection 2.5(c), (i) on the date
designated in writing as provided herein (the "ISSUANCE DATE"), the Initial
Purchaser may agree, in its sole discretion, and each APA Bank hereby agrees to
purchase a VFC Certificate in accordance with Section 2.3 and (ii) on any
Business Day during the Commitment Period, the Initial Purchaser may agree, in
its sole discretion, and each APA Bank hereby agrees that the Series 1998-1
Invested Amount may be increased by increasing such Purchaser's Series 1998-1
Purchaser Invested Amount (an "INCREASE"), upon the request of the Servicer or
the Company on behalf of the Trust (each date on which an increase in the Series
1998-1 Invested Amount occurs hereunder being herein referred to as the
"INCREASE DATE" applicable to such Increase); PROVIDED, HOWEVER, that the
Servicer or the Company, as the case may be, shall have given the Funding Agent
(with a copy to the Trustee) irrevocable written notice (effective upon
receipt), substantially in the form of Exhibit E hereto, of such request no
later than (i) 11:00 a.m., New York City time, two Business Days prior to the
Issuance Date or such Increase Date, as the case may be, in the case of any
Increase Date occurring prior to the APA Bank Purchase Date or (ii) (x) if the
Initial Series 1998-1 Invested Amount or Increase Amount is to be priced solely
with reference to the Alternate Base Rate, on or prior to 12:00 noon, New York
City time, on the Issuance Date or such Increase Date, as the case may be, or
(y) if all or a portion of the Initial Series 1998-1 Invested Amount or Increase
Amount is to be allocated to a Eurodollar Tranche, 1:00 p.m., New York City
time, three Business Days prior to the Issuance Date or such Increase Date, as
the case may be, in the case of any Increase Date occurring on or after the APA
Bank Purchase Date; PROVIDED, FURTHER, that the provisions of this subsection
shall not restrict the allocations of Collections pursuant to Article III. Such
notice shall state (x) the Issuance Date or the Increase Date, as the case may
be, (y) the initial invested amount (the "INITIAL SERIES 1998-1 INVESTED
AMOUNT") or, the proposed amount of such Increase (the "INCREASE AMOUNT"), as
the case may be, and (z) on and after the APA Bank Purchase Date, what portions
thereof will be allocated to a Eurodollar Tranche and the Floating Tranche.
(b) If, prior to the APA Bank Purchase Date, the Initial Purchaser
elects not to fund any portion of a requested Increase, the Initial Purchaser
shall notify the Funding Agent thereof and deliver a Sale Notice in accordance
with Section 2.6 and each APA Bank shall purchase its Commitment Percentage of
the Initial Purchaser's Series 1998-1 Purchaser Invested Amount in accordance
with Section 2.6 and fund such Increase in an amount equal to its Commitment
Percentage of such Increase; PROVIDED, HOWEVER that an APA Bank shall not be
obligated to fund any portion of an Increase that would cause its Series 1998-1
Purchaser Invested Amount to exceed its Commitment.
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(c) The Purchasers shall not be required to make the initial
purchase of VFC Certificates on the Issuance Date or to increase their
respective Series 1998-1 Purchaser Invested Amounts on any Increase Date
hereunder unless:
(i) the related aggregate initial purchase amount or
Increase Amount is equal to $1,000,000 or an integral multiple of $100,000
in excess thereof;
(ii) after giving effect to the initial purchase amount or
Increase Amount, (A) the Series 1998-1 Invested Amount would not exceed the
Maximum Commitment Amount on the Issuance Date or such Increase Date, as
the case may be, and (B) the Series 1998-1 Allocated Receivables Amount
would not be less than the Series 1998-1 Target Receivables Amount on the
Issuance Date or such Increase Date, as the case may be;
(iii) no Early Amortization Event or Potential Early
Amortization Event shall have occurred and be continuing;
(iv) in the case of any funding by the Initial Purchaser, no
PARCO Wind-Down Event or Potential PARCO Wind-Down Event shall have
occurred and be continuing; and
(v) all of the representations and warranties made by each
of the Company, the Servicer and the Seller in each Transaction Document to
which it is a party are true and correct in all material respects on and as
of the Issuance Date or such Increase Date, as the case may be, as if made
on and as of such date (except to the extent such representations and
warranties are expressly made as of another date).
The Company's acceptance of funds in connection with (x) the initial purchase of
VFC Certificates on the Issuance Date and (y) each Increase occurring on any
Increase Date shall constitute a representation and warranty by the Company to
the Purchasers as of the Issuance Date or such Increase Date (except to the
extent such representations and warranties are expressly made as of another
date), as the case may be, that all of the conditions contained in this
subsection 2.5(c) have been satisfied.
(d) After receipt by the Funding Agent of the notice required by
subsection 2.5(a) from the Servicer or the Company on behalf of the Trust, the
Funding Agent shall, so long as the conditions set forth in subsections 2.5(a)
and (c) are satisfied, promptly provide telephonic notice (i) prior to the APA
Bank Purchase Date, to the Initial Purchaser, and (ii) on and after the APA Bank
Purchase Date, to each APA Bank, of the Increase Date and of the portion of the
Increase Amount allocable to such APA Bank (which shall equal such APA Bank's
Commitment Percentage of the Increase Amount). If the Initial Purchaser elects
to fund an Increase, the Initial Purchaser agrees to pay in immediately
available funds the amount of such Increase on the related Increase Date to the
Funding Agent for payment to the Trust for deposit in the Series 1998-1
Principal Collection Sub-subaccount. On or after the APA Bank Purchase Date,
each APA Bank agrees to pay in immediately available funds such APA Bank's,
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Commitment Percentage of each Increase on the related Increase Date to the
Funding Agent for payment to the Trust for deposit in the Series 1998-1
Principal Collection Sub-subaccount.
SECTION 2.6. SALE BY THE INITIAL PURCHASER OF ITS SERIES 1998-1
PURCHASER INVESTED AMOUNT TO THE APA BANKS. (a) On any date during the
Commitment Period, the Initial Purchaser may, in its own discretion, and the
Initial Purchaser shall upon the occurrence of a PARCO Wind-Down Event, in each
case, by delivering a Sale Notice to the Funding Agent, the Company and the
Trustee, sell to the APA Banks (in accordance with their respective Commitment
Percentages) and each APA Bank hereby agrees to purchase its Commitment
Percentage of all right, title and interest of the Initial Purchaser in its
Series 1998-1 Purchaser Invested Amount. Any Sale Notice shall be delivered by
the Initial Purchaser to the Funding Agent, the Company and the Trustee prior to
12:30 p.m., New York City time, on the APA Bank Purchase Date and shall
constitute an irrevocable offer by the Initial Purchaser to sell 100% of its
Series 1998-1 Purchaser Invested Amount at the Purchase Price. Any Sale Notice
shall be deemed to be a representation and warranty by the Initial Purchaser
that no PARCO Insolvency Event shall have occurred and be continuing. Each APA
Bank hereby agrees to purchase from the Initial Purchaser such APA Bank's
Commitment Percentage of the Initial Purchaser's Series 1998-1 Purchaser
Invested Amount for a purchase price equal to such APA Bank's Commitment
Percentage of the Purchase Price on the APA Bank Purchase Date (which date,
subject to subsection 2.6(b), may be the same as the date of the Sale Notice).
Notwithstanding anything to the contrary set forth in this Supplement, no APA
Bank shall have any obligation to purchase the Initial Purchaser's Series 1998-1
Purchaser Invested Amount if, on such Purchase Date, any PARCO Insolvency Event
shall have occurred and be continuing.
(b) If, at or prior to 12:30 p.m. New York City time, on any
Business Day, the Initial Purchaser delivers the Sale Notice to the Funding
Agent specifying that the APA Bank Purchase Date shall be the same date as the
date of the Sale Notice, the Funding Agent shall, by no later than 1:00 p.m.,
New York City time, notify (by telecopy or by telephone call promptly confirmed
in writing by telecopy) each APA Bank of the receipt and content of the Sale
Notice. Each APA Bank shall purchase its Commitment Percentage of the Initial
Purchaser's VFC Certificate by depositing its Commitment Percentage of the
Purchase Price in immediately available funds into the account(s) specified by
the Initial Purchaser in the Sale Notice no later than 2:00 p.m., New York City
time. If the Initial Purchaser delivers the Sale Notice to the Funding Agent
after 12:30 p.m., New York City time, on any Business Day or the Initial
Purchaser delivers the Sale Notice to the Funding Agent specifying that the APA
Bank Purchase Date shall be a date other than the date of the Sale Notice, the
Funding Agent shall promptly advise (by telecopy or by telephone call promptly
confirmed in writing by telecopy) each APA Bank of the receipt and content of
the Sale Notice. Notwithstanding the fact that the APA Bank Purchase Date may
occur on a date which is later than the date on which the Sale Notice is
delivered to the Funding Agent, the several obligations of each APA Bank to make
such purchase and to make payment of the amounts required to be paid by it
pursuant to subsection 2.6(a) shall arise immediately upon receipt by the
Funding Agent of the Sale Notice. Upon payment of the Purchase Price as
provided herein and delivery to the Trustee by the Funding Agent of the Initial
Purchaser's VFC Certificate, the Company shall sign, on behalf of the Trust, and
shall direct the Trustee in writing to duly authenticate, and the Trustee, upon
receiving such direction, shall so authenticate, a new VFC Certificate in the
name of each APA Bank and in a
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denomination equal to such APA Bank's Commitment Percentage as set forth in such
written direction and shall deliver such VFC Certificate to each such APA Bank
in accordance with such written direction.
(c) If, by 2:00 p.m., New York City time, one or more APA Banks
(each, a "DEFAULTING APA BANK," and each APA Bank other than the Defaulting APA
Bank(s) being referred to as a "NON-DEFAULTING APA BANK") fails to make its
Commitment Percentage of the Purchase Price available to the Funding Agent
pursuant to subsection 2.6(b) (the aggregate amount not so made available to the
Funding Agent being herein called the "PURCHASE PRICE DEFICIT"), then the
Funding Agent shall, by no later than 2:30 p.m., New York City time, instruct
each Non-Defaulting APA Bank to pay, by no later than 3:00 p.m., New York City
time, in immediately available funds, to the account designated by the Funding
Agent, an amount equal to the lesser of (x) such Non-Defaulting APA Bank's
proportionate share (based upon the relative Commitments of the Non-Defaulting
APA Banks) of the Purchase Price Deficit and (y) its unused Commitment. A
Defaulting APA Bank shall forthwith, upon demand, pay to the Funding Agent for
the ratable benefit of the Non-Defaulting APA Banks all amounts paid by each
Non-Defaulting APA Bank on behalf of such Defaulting APA Bank, together with
interest thereon, for each day from the date a payment was made by a
Non-Defaulting APA Bank until the date such Non-Defaulting APA Bank has been
paid such amounts in full, at a rate per annum equal to the sum of the Federal
Funds Effective Rate plus 2%. In addition, without prejudice to any other
rights that the Initial Purchaser may have under applicable law, each Defaulting
APA Bank shall pay to the Initial Purchaser forthwith upon demand, the
difference between the Defaulting APA Bank's unpaid Commitment Percentage of the
Purchase Price and the amount paid with respect thereto by the Non-Defaulting
APA Banks, together with interest thereon, for each day from the date of the
Funding Agent's request for such Defaulting APA Bank's Commitment Percentage of
the Purchase Price pursuant to subsection 2.6(b) until the date the requisite
amount is paid to the Initial Purchaser in full, at a rate per annum equal to
the sum of the Federal Funds Effective Rate plus 2%.
(d) The transfer of the Initial Purchaser's VFC Certificate pursuant
to this Section 2.6 shall be without recourse or warranty, express or implied,
except that such VFC Certificate is free and clear of adverse claims created by
or arising as a result of claims against the Initial Purchaser. By executing
and delivering a Sale Notice pursuant to subsection 2.6(a), (i) the Initial
Purchaser makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with the VFC Certificate or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the VFC Certificate, or any
other agreement, instrument or other document furnished pursuant thereto or in
connection therewith, including without limitation any Transaction Document, and
(ii) the Initial Purchaser makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Trust, the
Trustee, the Seller, the Servicer, or any Obligor (collectively, the
"TRANSACTION PARTIES") or the Funding Agent, or the performance or observance by
the Transaction Parties of any of their respective obligations under the VFC
Certificate or the Transaction Documents.
(e) If the Adjusted Liquidity Price on the APA Bank Purchase Date is
less than the Series 1998-1 Invested Amount on the APA Bank Purchase Date (the
amount of such
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insufficiency, the "PARCO Residual Amount"), each APA Bank agrees that (i) on
each Distribution Date after the APA Bank Purchase Date on which interest is
distributed to VFC Certificateholders pursuant to subsection 3A.6(a), the
Funding Agent shall distribute to the Initial Purchaser its Reduction Percentage
of such interest payments and (ii) on each Distribution Date after the APA Bank
Purchase Date on which amounts in reduction of the Series 1998-1 Invested Amount
are distributed to VFC Certificateholders pursuant to Section 2.7 or subsection
3A.6(c), the Funding Agent shall distribute to the Initial Purchaser its
Reduction Percentage of such amounts only after the Series 1998-1 Invested
Amount has been paid in full.
SECTION 2.7. PROCEDURE FOR DECREASING THE SERIES 1998-1 INVESTED
AMOUNT; OPTIONAL TERMINATION. (a) On any Business Day during the Series 1998-1
Revolving Period or the Series 1998-1 Amortization Period (except for
Distribution Dates during the Series 1998-1 Amortization Period (which shall be
governed by subsection 3A.6(c)), upon the written request of the Servicer or the
Company on behalf of the Trust to the Trustee, the Series 1998-1 Invested Amount
may be reduced (a "DECREASE") by the distribution by the Trustee to the Funding
Agent for the PRO RATA benefit of the Purchasers in accordance with their
respective Series 1998-1 Purchaser Invested Amount of funds on deposit in the
Series 1998-1 Principal Collection Sub-subaccount on such day in an amount not
to exceed the amount of such funds on deposit on such day; PROVIDED that the
Servicer shall have given the Funding Agent (with a copy to the Trustee)
irrevocable written notice (effective upon receipt), prior to 1:00 p.m., New
York City time, (i) on the second Business Day prior to such Decrease, in the
case of any Decrease occurring prior to the APA Bank Purchase Date and (ii) (A)
if the Decrease relates solely to a Floating Tranche, on the Business Day of
such Decrease or (B) if all or any portion of the Decrease relates to a
Eurodollar Tranche, on the Business Day that is three Business Days prior to
such Decrease, in the case of any Decrease occurring prior to the APA Bank
Purchase Date, and which notice shall state the amount of such Decrease;
PROVIDED, FURTHER, that (x) such Decrease shall be in an amount equal to
$1,000,000 and integral multiples of $100,000 in excess thereof and (y) prior to
the APA Bank Purchase Date, such Decrease shall be in an amount no greater than
the Unallocated Balance on such day.
(b) Simultaneously with any such Decrease during the Series 1998-1
Revolving Period, the Series 1998-1 Subordinated Interest Amount shall be
reduced by an amount (the "SERIES 1998-1 SUBORDINATED INTEREST REDUCTION
AMOUNT") such that the Series 1998-1 Subordinated Interest Amount shall equal
the Series 1998-1 Required Reserves after giving effect to such Decrease.
During the Series 1998-1 Revolving Period, after the distribution described in
subsection (a) above has been made, and the Series 1998-1 Subordinated Interest
Amount shall have been reduced by the Series 1998-1 Subordinated Interest
Reduction Amount, a distribution shall be made to the owner of the Series 1998-1
Subordinated Interest out of remaining funds on deposit in the Series 1998-1
Principal Collection Sub-subaccount in an amount equal to the lesser of (x) the
Series 1998-1 Subordinated Interest Reduction Amount and (y) the amount of such
remaining funds on deposit in the Series 1998-1 Principal Collection
Sub-subaccount.
(c) On or after the APA Bank Purchase Date, any reduction in the
Series 1998-1 Invested Amount on any Business Day shall be allocated first to
reduce the Unallocated Balance and then to reduce the portion of the Series
1998-1 Invested Amount allocated to Eurodollar
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Tranches in such order as the Company may select in order to minimize costs
payable pursuant to Section 7.4.
(d)(i) On any Business Day unless the Scheduled Revolving
Termination Date, an Early Amortization Event or a Potential Early Amortization
Event shall have occurred and be continuing, the Company shall have the right to
deliver an irrevocable written notice (an "OPTIONAL TERMINATION NOTICE") to the
Trustee, the Servicer and the Rating Agencies in which the Company declares that
the Series 1998-1 Revolving Period shall terminate on the date (the "OPTIONAL
TERMINATION DATE") set forth in such notice (which date, in any event, shall be
the last day of a Settlement Period which is not less than 10 days from the date
on which such notice is delivered).
(ii) From and after the Optional Termination Date, the Series 1998-1
Amortization Period shall commence for all purposes under this Agreement and the
other Transaction Documents. The Trustee shall give prompt written notice of
its receipt of an Optional Termination Notice to the Purchasers.
SECTION 2.8. REDUCTIONS OF THE COMMITMENTS. (a) On any Business Day
during the Series 1998-1 Revolving Period, the Company, on behalf of the Trust,
may, upon three Business Days' prior written notice to the Funding Agent
(effective upon receipt) (with copies to the Servicer and the Trustee) reduce or
terminate the Commitments (a "COMMITMENT REDUCTION") in a minimum aggregate
amount equal to $5,000,000 or a whole multiple of $1,000,000 in excess thereof;
PROVIDED that no such termination or reduction shall be permitted if, after
giving effect thereto and to any reduction in the Series 1998-1 Invested Amount
on such date, the Series 1998-1 Invested Amount would exceed the Aggregate
Commitment Amount then in effect. Each APA Bank's Commitment shall be reduced
by such APA Bank's Commitment Percentage of the amount of such Commitment
Reduction.
(b) On any day subsequent to the APA Bank Purchase Date, if an Early
Amortization Period has commenced, the Aggregate Commitment Amount shall be
reduced to the Series 1998-1 Invested Amount. Each APA Bank's commitment shall
be reduced by such APA Banks Commitment Percent of the amount of such reduction.
(c) Once reduced, the Commitments may not be subsequently
reinstated. Upon effectiveness of any such reduction, the Funding Agent shall
prepare a revised Schedule 1 to reflect the reduced Commitment of each APA Bank
and Schedule 1 of this Supplement shall be deemed to be automatically superseded
by such revised Schedule 1. The Funding Agent shall distribute such revised
Schedule 1 to the Company, the Servicer, the Trustee and each APA Bank.
SECTION 2.9. INTEREST, FEES. (a) Interest shall be payable on the
VFC Certificates on each Distribution Date pursuant to subsection 3A.6(a).
(b) The Trustee (acting at the written direction of the Servicer
upon which the Trustee may conclusively rely) shall distribute pursuant to
subsection 3A.6(b), from amounts on deposit in the Series 1998-1 Non-Principal
Collection Sub-subaccount, to the Funding Agent, for
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the PRO RATA account of the APA Banks in accordance with their respective
Commitment Percentages, on each Distribution Date, a commitment fee with respect
to each Accrual Period ending on such date (the "COMMITMENT FEE") (i) during the
Series 1998-1 Revolving Period at the Commitment Fee Rate of the average daily
excess of the Aggregate Commitment Amount OVER the average aggregate Series
1998-1 Purchaser Invested Amounts of the APA Banks during such Accrual Period
and (ii) during the Series 1998-1 Amortization Period at the Commitment Fee Rate
of the average daily Series 1998-1 Invested Amount during such Accrual Period;
PROVIDED HOWEVER, that no Commitment Fee will be payable hereunder for any
Accrual Period or portion thereof during the Series 1998-1 Amortization Period
that commences on or after the APA Bank Purchase Date. The Commitment Fee shall
be payable (i) monthly in arrears on each Distribution Date and (ii) on the
Commitment Termination Date. To the extent that funds on deposit in the Series
1998-1 Non-Principal Collection Sub-subaccount at any such date are insufficient
to pay the Commitment Fee due on such date, the Servicer shall so notify the
Company and the Company shall immediately pay the Funding Agent the amount of
any such deficiency.
(c) The Trustee (acting at the written direction of the Servicer
upon which the Trustee may conclusively rely) shall distribute pursuant to
subsection 3A.6(b), from amounts on deposit in the Series 1998-1 Non-Principal
Collection Sub-subaccount, to the Funding Agent, for the account of the Initial
Purchaser, on each Distribution Date prior to the APA Bank Purchase Date and on
the Distribution Date immediately succeeding the APA Bank Purchase Date, a
utilization fee (the "UTILIZATION FEE") with respect to each Accrual Period
ending on such date (or, in the case of the Distribution Date immediately
succeeding the APA Bank Purchase Date, the period from and including the
immediately preceding Distribution Date to but excluding the APA Bank Purchase
Date) at the Utilization Fee Rate of the average Series 1998-1 Invested Amount
during such period. The Utilization Fee shall be payable (i) monthly in arrears
on each Distribution Date prior to the APA Bank Purchase Date and (ii) on the
Distribution Date immediately succeeding the APA Bank Purchase Date. To the
extent that funds on deposit in the Series 1998-1 Non-Principal Collection
Sub-subaccount at any such date are insufficient to pay the Utilization Fee due
on such date, the Servicer shall so notify the Company and the Company shall
immediately pay the Funding Agent the amount of any such deficiency.
(d) Calculations of per annum rates and fees under this Supplement
shall be made on the basis of a 360- (or 365-/366-, in the case of interest on
the Floating Tranche based on the Prime Rate) day year with respect to
Commitment Fees, Utilization Fees and interest rates. Each determination of the
Adjusted LIBO Rate by the Funding Agent shall be conclusive and binding upon
each of the parties hereto in the absence of manifest error.
SECTION 2.10. INDEMNIFICATION BY THE COMPANY AND THE SERVICER. (a)
The Company agrees to indemnify and hold harmless the Trustee, the Funding
Agent, each APA Bank, each Purchaser and each of their respective officers,
directors, agents and employees (each, a "COMPANY INDEMNIFIED PERSON") from and
against any loss, liability, expense, damage or injury suffered or sustained by
(a "CLAIM") such Company indemnified person by reason of (i) any acts, omissions
or alleged acts or omissions arising out of, or relating to, activities of the
Company pursuant to any Pooling and Servicing Agreement or the other Transaction
Documents to which it is a party, (ii) a breach of any representation or
warranty made or deemed made by
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the Company (or any of its officers) in any Pooling and Servicing Agreement or
other Transaction Document or (iii) a failure by the Company to comply with any
applicable law or regulation or to perform its covenants, agreements, duties or
obligations required to be performed or observed by it in accordance with the
provisions of any Pooling and Servicing Agreement or the other Transaction
Documents, including, but not limited to, any judgment, award, settlement,
reasonable attorneys' fees and other reasonable costs or expenses incurred in
connection with the defense of any actual or threatened action, proceeding or
claim, except to the extent such loss, liability, expense, damage or injury (A)
resulted from the gross negligence, bad faith or wilful misconduct of such
Company indemnified person or its officers, directors, agents, principals,
employees or employers, (B) resulted solely from a default by an Obligor with
respect to any Receivable or (C) include any income or franchise taxes imposed
on (or measured by) any Company indemnified person's net income; PROVIDED that
any payments made by the Company pursuant to this subsection shall be made
solely from funds available to the Company which are not otherwise needed to be
applied to the payment of any amounts (other than amounts payable to the
Company) pursuant to any Pooling and Servicing Agreements, shall be non-recourse
other than with respect to proceeds in excess of the proceeds needed to make
such payment, and shall not constitute a claim against the Company to the extent
that insufficient proceeds exist to make such payment.
(b) The Servicer agrees to indemnify and hold harmless the Trustee,
the Funding Agent, each APA Bank, each Purchaser and each of their respective
officers, directors, agents and employees (each, a "SERVICER INDEMNIFIED
PERSON") from and against any Claim by reason of (i) any acts, omissions or
alleged acts or omissions arising out of, or relating to, activities of the
Servicer pursuant to any Pooling and Servicing Agreement or the other
Transaction Documents to which it is a party, (ii) a material breach of any
representation or warranty made or deemed made by the Servicer (or any of its
officers) in any Pooling and Servicing Agreement or other Transaction Document
or (iii) a failure by the Servicer to comply in any material respect with any
applicable law or regulation or to perform its covenants, agreements, duties or
obligations required to be performed or observed by it in accordance with the
provisions of any Pooling and Servicing Agreement or the other Transaction
Documents, including, but not limited to, any judgment, award, settlement,
reasonable attorneys' fees and other reasonable costs or expenses incurred in
connection with the defense of any actual or threatened action, proceeding or
claim, except to the extent such loss, liability, expense, damage or injury (A)
resulted from the gross negligence, bad faith or wilful misconduct of such
Servicer indemnified person or its officers, directors, agents, principals,
employees or employers, (B) resulted solely from a default by an Obligor with
respect to any Receivable or (C) include any income or franchise taxes imposed
on (or measured by) any Servicer indemnified person's net income.
ARTICLE III
ARTICLE III OF THE AGREEMENT
Section 3.1 of the Agreement and each other section of Article III
of the Agreement relating to another Series shall read in their entirety herein
as provided in the
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Agreement. Article III of the Agreement (except for Section 3.1 thereof and any
portion thereof relating to another Series) shall read in its entirety herein as
follows and shall be exclusively applicable to the Series 1998-1 Interests:
SECTION 3A.2. ESTABLISHMENT OF TRUST ACCOUNTS. (a) The Trustee
shall cause to be established and maintained in the name of the Trustee, on
behalf of the Trust, (i) for the benefit of the Purchasers and (ii) in the case
of clauses (A) and (B) below, for the benefit, subject to the prior and senior
interest of the Purchasers, of the owner of the Series 1998-1 Subordinated
Interest, (A) a subaccount of the Collection Account (the "SERIES 1998-1
COLLECTION SUBACCOUNT"), which subaccount is the Series Collection Subaccount
with respect to Series 1998-1; (B) two subaccounts of the Series 1998-1
Collection Subaccount: (1) the Series 1998-1 Principal Collection Sub-subaccount
and (2) the Series 1998-1 Non-Principal Collection Sub-subaccount (respectively,
the "SERIES 1998-1 PRINCIPAL COLLECTION SUB-SUBACCOUNT" and the "SERIES 1998-1
NON-PRINCIPAL COLLECTION SUB-SUBACCOUNT") and (C) a subaccount of the Series
1998-1 Non-Principal Collection Sub-subaccount (the "SERIES 1998-1 ACCRUED
INTEREST SUB-SUBACCOUNT"; all accounts established pursuant to this subsection
3A.2(a), collectively, the "TRUST ACCOUNTS"), each Trust Account to bear a
designation indicating that the funds deposited therein are held for the benefit
of the Persons (and, for each such Person, to the extent) set forth in clauses
(i) and (ii) above. The Trustee shall possess all right, title and interest in
all funds from time to time on deposit in, and all Eligible Investments credited
to, the Trust Accounts and in all proceeds thereof. The Trust Accounts shall be
under the sole dominion and control of the Trustee for the exclusive benefit of
the Persons (and, for each such Person, to the extent) set forth in clauses (i)
and (ii) above.
(b) All Eligible Investments in the Trust Accounts shall be
delivered to the Trustee in accordance with the definition of "Delivery" and
shall be held by the Trustee or its nominee (including the Securities
Intermediary) for the exclusive benefit of the Purchasers and, subject to the
prior interest of the Purchasers, the owner of the Series 1998-1 Subordinated
Interest; PROVIDED, HOWEVER, that funds on deposit in a Trust Account which is a
sub-subaccount of a Collection Account may, at the direction of the Servicer, be
invested together with funds held in other sub-subaccounts of the Collection
Account. After giving effect to any distribution to the Company pursuant to
subsection 3A.3(b), amounts on deposit and available for investment in the
Series 1998-1 Principal Collection Sub-subaccount shall be invested by the
Trustee at the written direction of the Servicer in Eligible Investments that
mature, or that are payable or redeemable upon demand of the holder thereof, (i)
in the case of any such investment made during the Series 1998-1 Revolving
Period, on or prior to the next Business Day and (ii) in the case of any such
investment made during the Series 1998-1 Amortization Period, on or prior to the
Business Day immediately preceding the next Distribution Date. Amounts on
deposit and available for investment in the Series 1998-1 Non-Principal
Collection Sub-subaccount and the Series 1998-1 Accrued Interest Sub-subaccount
shall be invested by the Trustee at the written direction of the Servicer in
Eligible Investments that mature, or that are payable or redeemable upon demand
of the holder thereof, on or prior to the Business Day immediately preceding the
next Distribution Date. As of the Business Day immediately preceding such next
Distribution Date, (x) all interest and other investment earnings (net of losses
and investment expenses) on funds deposited in the Series 1998-1 Accrued
Interest Sub-subaccount shall be deposited in the Series 1998-1 Non-Principal
Collection Sub-subaccount and (y) all interest and investment
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earnings (net of losses and investment expenses) on funds deposited in the
Series 1998-1 Principal Collection Sub-subaccount shall be deposited in the
Series 1998-1 Non-Principal Collection Sub-subaccount. If the Servicer fails to
give the Trustee investment instructions with respect to amounts on deposit in
any Series 1998-1 Collection Subaccount or any subaccount thereof, such amounts
shall remain uninvested.
(c) Any securities intermediary maintaining a securities account
for the Trustee for the benefit of the Purchasers, and The Chase Manhattan Bank
as initial Securities Intermediary, hereby represents that it is as of the date
hereof and shall be for so long as it is the Securities Intermediary hereunder a
bank or broker-dealer that (i) in the ordinary course of its business maintains
securities accounts for others and is acting in that capacity hereunder and (ii)
maintains a Participant's Securities Account (as defined in the United States
Regulations) with a Federal Reserve Bank. The Securities Intermediary shall
agree (and The Chase Manhattan Bank as initial Securities Intermediary hereby
agrees) with the parties hereto that (x) the Collection Account (including any
sub-accounts thereof) is a securities account to which financial assets may be
credited, (y) the Trustee shall be entitled to exercise rights that comprise
such financial assets and too exercise the ordinary rights of an entitlement
holder, (z) the "securities intermediary's jurisdiction" as defined in the UCC
of the Securities Intermediary with respect to the Eligible Investments credited
to the Collection Account (including any sub-accounts thereof) shall be the
State of New York. The Securities Intermediary shall represent and covenant
(and The Chase Manhattan Bank hereby represents and covenants) that it is not
and will not be (as long as it is the Securities Intermediary hereunder) a party
to any agreement that is inconsistent with the provisions of this Agreement.
The Securities Intermediary shall covenant (and The Chase Manhattan Bank hereby
covenants) that it will not take any action inconsistent with the provisions of
this Agreement applicable to it. It is the intent of the Trustee, the Servicer
and the Company that the Collection Account (including any sub-accounts thereof)
shall be a securities account of the Trustee and not an account of the Company
or the Servicer. If despite such intent, the Collection Account (including any
sub-accounts thereof) is determined to be an account of the Company or the
Servicer, then the Securities Intermediary agrees to comply with entitlement
orders originated by the Trustee without further consent by the Company or the
Servicer.
SECTION 3A.3. ALLOCATIONS. In accordance with the written direction
of the Servicer, upon which the Trustee may conclusively rely:
(a) The portion of the Aggregate Daily Collections allocated to the
Series 1998-1 Interests pursuant to Article III of the Agreement shall be
allocated and distributed as set forth in this Article III by the Trustee as
follows:
(i) on each Business Day, an amount equal to the Accrued Expense
Amount for such day (or, during the Series 1998-1 Revolving Period, such
greater amount as the Company may request in writing) shall be transferred
from the Series 1998-1 Collection Subaccount to the Series 1998-1
Non-Principal Collection Sub-subaccount; and
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(ii) following the transfers pursuant to clause (i) above, any
remaining funds on deposit in the Series 1998-1 Collection Subaccount shall
be transferred by the Trustee to the Series 1998-1 Principal Collection
Sub-subaccount.
(b)(i) On each Business Day that is not a Distribution Date during
the Series 1998-1 Revolving Period, after giving effect to (x) all allocations
of Aggregate Daily Collections and (y) any deposit resulting from an Increase,
if any, pursuant to subsection 2.5(c) on such Business Day, amounts on deposit
in the Series 1998-1 Principal Collection Sub-subaccount shall be distributed by
the Trustee to the Company to such accounts or such persons as the Company may
direct in writing (which directions may consist of standing instructions
provided by the Company that shall remain in effect until changed by the Company
in writing); PROVIDED that such distribution shall be made only if no Early
Amortization Event or Potential Early Amortization Event has occurred and is
continuing and only to the extent that, if after giving effect to such
distribution, the Series 1998-1 Target Receivables Amount would not exceed the
Series 1998-1 Allocated Receivables Amount; PROVIDED FURTHER that if the Company
or the Servicer, on behalf of the Company, shall have given the Funding Agent
irrevocable written notice (effective upon receipt) at least two Business Days
prior to such day, in the case of any notice given prior to the APA Bank
Purchase Date, on such day, in the case of any notice given on or after the APA
Bank Purchase Date with respect to the Floating Tranche, or at least three
Business Days prior to such day, in the case of any notice given on or after the
APA Bank Purchase Date with respect to a Eurodollar Tranche, the Company or the
Servicer may instruct the Trustee in writing (specifying the related amount) to
withdraw all or a portion of such amounts on deposit in the Series 1998-1
Principal Collection Sub-subaccount and apply such withdrawn amounts toward the
reduction of the Series 1998-1 Invested Amount and the Series 1998-1
Subordinated Interest Amount in accordance with Section 2.6.
(ii) On each Business Day during the Series 1998-1 Amortization
Period (including Distribution Dates), funds deposited in the Series 1998-1
Principal Collection Sub-subaccount shall be invested in Eligible Investments,
at the written direction of the Servicer pursuant to subsection 3A.2(b), that
mature on or prior to the Business Day immediately preceding the next
Distribution Date and shall be distributed on such Distribution Date in
accordance with subsection 3A.6(c). Except as set forth in subsection 3A.6(c),
no amounts on deposit in the Series 1998-1 Principal Collection Sub-subaccount
shall be distributed by the Trustee to the Company or the owner of the Series
1998-1 Subordinated Interest during the Series 1998-1 Amortization Period.
(c) On each Business Day, an amount equal to the Daily Interest
Deposit for such day shall be transferred by the Trustee from the Series 1998-1
Non-Principal Collection Sub-subaccount to the Series 1998-1 Accrued Interest
Sub-subaccount.
(d) The allocations to be made pursuant to this Section 3A.3 are
subject to the provisions of Sections 2.5, 2.6, 7.2, 9.1 and 9.4 of the
Agreement.
SECTION 3A.4. DETERMINATION OF INTEREST. (a) (i) The amount of
interest distributable with respect to the VFC Certificates ("SERIES 1998-1
MONTHLY INTEREST") on each
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Distribution Date shall be the amount of Daily Interest Expense accrued during
the Accrual Period ending on such Distribution Date as calculated by the
Servicer.
(ii) If a change in the CP Rate, the weighted average Adjusted
LIBO Rate or the Alternate Base Rate on or after any Settlement Report Date
results in a change in Series 1998-1 Monthly Interest for the Accrual
Period ending on the Distribution Date immediately succeeding such
Settlement Report Date, the Servicer shall amend the Monthly Settlement
Statement to reflect the adjustment in the Series 1998-1 Monthly Interest
for such Accrual Period caused by such change and any consequent
adjustments and the Servicer shall also provide written notification to the
Trustee of any such change. Any amendment to the Monthly Settlement
Statement pursuant to this subsection 3A.4(a)(ii) shall be completed by
1:00 p.m. on the day preceding the next Distribution Date.
(b) On each Distribution Date, the Servicer shall determine the
excess, if any (the "INTEREST SHORTFALL"), of (i) the Series 1998-1 Monthly
Interest for the Accrual Period ending on such Distribution Date OVER (ii) the
amount which will be available to be distributed to the Purchasers on such
Distribution Date in respect thereof pursuant to this Supplement. If the
Interest Shortfall with respect to any Distribution Date is greater than zero,
an additional amount ("ADDITIONAL INTEREST") equal to the product of (A) the
number of days until such Interest Shortfall shall be repaid DIVIDED BY 365 (or
366, as the case may be), (B) the Alternate Base Rate PLUS 2.0% and (C) such
Interest Shortfall (or the portion thereof which has not been paid to the
Purchasers) shall be payable as provided herein with respect to the VFC
Certificates on each Distribution Date following such Distribution Date, to but
excluding the Distribution Date on which such Interest Shortfall is paid to the
VFC Certificateholders.
(c) On any Business Day, the Company may, subject to subsection
3A.4(e), elect to allocate all or any portion of the Available Pricing Amount
(i) prior to the APA Bank Purchase Date, to one or more CP Tranches with CP Rate
Periods commencing on such Business Day by giving the Funding Agent irrevocable
written or telephonic (confirmed in writing) notice thereof, which notice must
be received by the Funding Agent prior to 1:00 p.m., New York City time, two
Business Days prior to such Business Day or (ii) on or after the APA Bank
Purchase Date, to one or more Eurodollar Tranches with Eurodollar Periods
commencing on such Business Day by giving the Funding Agent irrevocable written
or telephonic (confirmed in writing) notice thereof, which notice must be
received by the Funding Agent prior to 1:00 p.m., New York City time, three
Business Days prior to such Business Day. Such notice shall specify (i) the
applicable Business Day, (ii) the CP Rate Period for each CP Tranche or the
Eurodollar Period for each Eurodollar Tranche, as the case may be, to which a
portion of the Available Pricing Amount is to be allocated and (iii) the portion
of the Available Pricing Amount being allocated to each such CP Tranche or
Eurodollar Tranche, as the case may be. On or after the APA Bank Purchase Date,
the Funding Agent shall notify each APA Bank of the contents of each such notice
promptly upon receipt thereof. Prior to the APA Bank Purchase Date, the Company
shall allocate the Series 1998-1 Invested Amount so that the aggregate amounts
allocated to outstanding CP Rate Periods at all times equal the Series 1998-1
Invested Amount.
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(d) Any reduction in the Series 1998-1 Invested Amount on any
Business Day shall be allocated in the following order of priority:
FIRST, to reduce the Unallocated Balance, as appropriate; and
SECOND, to reduce the portion of the Series 1998-1 Invested Amount
allocated to Eurodollar Tranches in such order as the Company may select in
order to minimize costs payable pursuant to Section 7.4.
(e) Notwithstanding anything to the contrary contained in this
Section 3A.4, (i) prior to the APA Bank Purchase Date, (A) the Initial Purchaser
shall approve the length of each CP Rate Period and the portion of the Series
1998-1 Invested Amount allocated to such CP Rate Period, (B) the Initial
Purchaser may select, in its sole discretion, any new CP Rate Period if (x) the
Company fails to provide notice of a new CP Rate Period on a timely basis or (y)
the Funding Agent, on behalf of the Initial Purchaser, determines, in its sole
discretion, that the CP Rate Period requested by the Company is unavailable or
commercially undesirable, (C) the portion of the Series 1998-1 Invested Amount
allocable to each CP Tranche must be in an amount equal to $1,000,000 or an
integral multiple of $100,000 in excess thereof and (D) no more than ten CP
Tranches shall be outstanding at any one time and (ii) on and after the APA Bank
Purchase Date, (A) the portion of the Series 1998-1 Invested Amount allocable to
each Eurodollar Tranche must be in an amount equal to $500,000 or an integral
multiple of $500,000 in excess thereof, (B) no more than five Eurodollar
Tranches shall be outstanding at any one time, (C) after the occurrence and
during the continuance of any Early Amortization Event or Potential Early
Amortization Event, the Company may not elect to allocate any portion of the
Available Pricing Amount to a Eurodollar Tranche and (D) after the end of the
Series 1998-1 Revolving Period, the Company may not select any Eurodollar Period
that does not end on or prior to the next succeeding Distribution Date.
SECTION 3A.5. DETERMINATION OF SERIES 1998-1 MONTHLY PRINCIPAL. (a)
PAYMENTS OF SERIES 1998-1 PRINCIPAL. The amount (the "SERIES 1998-1 MONTHLY
PRINCIPAL PAYMENT") distributable from the Series 1998-1 Principal Collection
Sub-subaccount on each Distribution Date during the Series 1998-1 Amortization
Period, as determined by the Servicer, shall be equal to the amount on deposit
in such account on the immediately preceding Settlement Report Date; PROVIDED,
HOWEVER, that the Series 1998-1 Monthly Principal Payment on any Distribution
Date shall not exceed the Series 1998-1 Invested Amount on such Distribution
Date after giving effect to the reductions and increases pursuant to paragraphs
(b) and (c) below. Further, on any other Business Day during the Series 1998-1
Amortization Period, funds may be distributed from the Series 1998-1 Principal
Collection Sub-subaccount to the Purchasers in accordance with Section 2.7 of
this Supplement.
(b) REDUCTIONS TO SERIES 1998-1 PRINCIPAL. If, on any Special
Allocation Settlement Report Date, the Series 1998-1 Allocable Charged-Off
Amount is greater than zero for the related Settlement Period, the Trustee shall
(in accordance with written directions from the Servicer, upon which the Trustee
may conclusively rely) make the following allocations of such amounts in the
following order of priority:
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(i) the Series 1998-1 Required Reserves shall be reduced (but not
below zero) by an amount equal to the Series 1998-1 Allocable Charged-Off
Amount (which shall also be reduced by the amount so applied);
(ii) then, to the extent that the Series 1998-1 Allocable
Charged-Off Amount is greater than zero following the application in clause
(i) above, the Series 1998-1 Invested Amount shall be reduced (but not
below zero) by such remaining Series 1998-1 Allocable Charged-Off Amount
(which shall also be reduced by the amount so applied).
(c) INCREASES TO SERIES 1998-1 PRINCIPAL. If, on any Special
Allocation Settlement Report Date, the Series 1998-1 Allocable Recoveries Amount
is greater than zero for the related Settlement Period, the Trustee shall (in
accordance with written directions from the Servicer upon which the Trustee may
conclusively rely) make the following allocations (after giving effect to the
applications in paragraph (b) of such amount in the following order of
priority):
(i) the Series 1998-1 Invested Amount shall be increased (but only
to the extent of any previous reductions of the Series 1998-1 Invested
Amount pursuant to subsection 3A.5(b)(ii)) by the amount of the Series
1998-1 Allocable Recoveries Amount (which shall also be reduced by the
amount so applied);
(ii) then, to the extent that the Series 1998-1 Allocable Recoveries
Amount is greater than zero following the applications in clause (i) above,
the Series 1998-1 Required Reserves shall be increased (but only to the
extent of any previous reductions of the Series 1998-1 Required Reserves
pursuant to subsection 3A.5(b)(i)) by such remaining Series 1998-1
Allocable Recoveries Amount (which shall also be reduced by the amount so
applied).
SECTION 3A.6. APPLICATIONS. (a) The Trustee (acting at the written
direction of the Servicer upon which the Trustee may conclusively rely) shall on
each Distribution Date distribute to the Purchasers, from amounts on deposit in
the Series 1998-1 Accrued Interest Sub-subaccount, an amount equal to the Series
1998-1 Monthly Interest payable on such Distribution Date (such amount, the
"MONTHLY INTEREST PAYMENT"), PLUS the amount of any Monthly Interest Payment
previously due but not distributed to the Purchasers on a prior Distribution
Date, PLUS the amount of any Additional Interest for such Distribution Date and
any Additional Interest previously due but not distributed to the Purchasers on
a prior Distribution Date.
(b) On each Distribution Date, the Trustee shall apply funds on
deposit in the Series 1998-1 Non-Principal Collection Sub-subaccount in the
following order of priority to the extent funds are available:
(i) an amount equal to the Commitment Fee for the Accrual Period
ending on such Distribution Date shall be withdrawn from the Series 1998-1
Non-Principal Collection Sub-subaccount by the Trustee and paid to the
Funding Agent, for the PRO RATA account of the APA Banks, in accordance
with their respective Commitment Percentages;
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(ii) an aggregate amount equal to the Utilization Fee for the
Accrual Period ending on such Distribution Date shall be withdrawn from the
Series 1998-1 Non-Principal Collection Sub-subaccount by the Trustee and
paid to the Funding Agent, for the account of the Initial Purchaser;
(iii) an amount equal to any amounts owing to the Trustee pursuant
to Section 8.5 of the Agreement, shall be withdrawn from the Series 1998-1
Non-Principal Collection Sub-subaccount by the Trustee and paid to itself;
(iv) an amount equal to the Series 1998-1 Periodic Servicing Fee for
the Accrual Period ending on such Distribution Date shall be withdrawn from
the Series 1998-1 Non-Principal Collection Sub-subaccount by the Trustee
and paid to the Servicer or, if USSC or any Affiliate thereof is not the
Servicer, an amount equal to the Series 1998-1 Periodic Servicing Fee shall
be paid to the Person acting as Successor Servicer (less, in each case, any
amounts payable to the Trustee pursuant to Section 8.5 of the Agreement,
which shall be paid to the Trustee); and
(v) an amount equal to any unpaid Program Costs due and payable
shall be withdrawn from the Series 1998-1 Non-Principal Collection
Sub-subaccount by the Trustee and paid to the Persons owed such amounts.
Any remaining amounts on deposit in the Series 1998-1 Non-Principal Collection
Sub-subaccount (in excess of the Accrued Expense Amount as of such day) not
allocated pursuant to clauses (i) through (v) above shall be paid to the owner
of the Series 1998-1 Subordinated Interest; PROVIDED, HOWEVER, that during the
Series 1998-1 Amortization Period, such remaining amounts shall be deposited in
the Series 1998-1 Principal Collection Sub-subaccount for distribution in
accordance with subsection 3A.6(c).
(c) During the Series 1998-1 Amortization Period, the Trustee shall
apply, on each Distribution Date, amounts on deposit in the Series 1998-1
Principal Collection Subsubaccount in the following order of priority:
(i) an amount equal to the Series 1998-1 Monthly Principal Payment
for such Distribution Date shall be distributed from the Series 1998-1
Principal Collection Sub-subaccount to the Purchasers;
(ii) if, following the repayment in full of the Series 1998-1
Invested Amount, any amounts are owed to the Trustee, the Purchasers or any
other Person hereunder, such amounts shall be transferred from the Series
1998-1 Principal Collection Sub-subaccount and paid to the Trustee, the
Purchasers or such other Person; and
(iii) following the repayment in full of the Series 1998-1 Invested
Amount and of all of the amounts set forth in clause (ii), the remaining
amount on deposit in the Series 1998-1 Principal Collection Sub-subaccount
on such Distribution Date, if any, shall be distributed to the owner of the
Series 1998-1 Subordinated Interest.
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ARTICLE IV
DISTRIBUTIONS AND REPORTS
Article IV of the Agreement (except for any portion thereof relating
to another Series) shall read in its entirety herein as follows and the
following shall be exclusively applicable to the VFC Certificates:
SECTION 4A.1. DISTRIBUTIONS. (a) on each Distribution Date, the
Trustee shall distribute to each Purchaser its applicable PRO RATA share (based
on each such Purchaser's Series 1998-1 Invested Amount) of the amount to be
distributed to the Purchasers pursuant to Article III.
(b) All allocations and distributions hereunder shall be in
accordance with the Monthly Settlement Statement, upon which the Trustee may
conclusively rely, and shall be made in accordance with the provisions of
Section 11.4 hereof and subject to Section 3.1(h) of the Agreement.
SECTION 4A.2. Reserved.
SECTION 4A.3. STATEMENTS AND NOTICES. (a) MONTHLY SETTLEMENT
STATEMENTS. On each Settlement Report Date, the Servicer shall deliver to the
Trustee and the Funding Agent (commencing with the Settlement Report Date
occurring on April 15, 1998) a Monthly Settlement Statement in the Form of
Exhibit F setting forth, among other things, the Loss Reserve Ratio, the
Dilution Reserve Ratio, the Minimum Ratio, the Carrying Cost Reserve Ratio, the
Servicing Reserve Ratio and the components of the calculation thereof, the
Series 1998-1 Monthly Interest, the Additional Interest, the Series 1998-1
Periodic Servicing Fee, the Commitment Fee and the Series 1998-1 Monthly
Principal Payment, each as recalculated for the period until the next succeeding
Settlement Report Date. The Funding Agent shall forward a copy of each Monthly
Settlement Statement to any Purchaser upon request by such Purchaser. The
Trustee shall have no obligation whatsoever to verify the accuracy of any
information contained within the Monthly Settlement Statement, including any
calculations contained therein. A copy of any such items may be obtained by any
holder of a Certificate upon a written request delivered to the Trustee at the
Corporate Trust Office.
(b) ANNUAL CERTIFICATEHOLDERS' TAX STATEMENT. On or before January
31 of each calendar year (or such earlier date as required by applicable law),
beginning with calendar year 1999, the Company on behalf of the Trustee shall
furnish, or cause to be furnished, to each Person who at any time during the
preceding calendar year was a Purchaser, a statement prepared by the Company
containing the aggregate amount distributed to such Person for such calendar
year or the applicable portion thereof during which such Person was a Purchaser,
together with such other information as is required to be provided by an issuer
of indebtedness under the Internal Revenue Code and such other customary
information as the Company deems necessary or desirable to enable the Purchasers
to prepare their tax returns. Such obligation of the Company shall be deemed to
have been satisfied to the extent that substantially comparable information
shall have been prepared by the Servicer and provided to the Trustee or the
Funding
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Agent and to the Purchasers, in each case pursuant to any requirements of the
Internal Revenue Code as from time to time in effect.
(c) EARLY AMORTIZATION EVENT/DISTRIBUTION OF PRINCIPAL NOTICES.
Upon the occurrence of an Early Amortization Event with respect to Series
1998-1, the Company or the Servicer, as the case may be, shall give prompt
written notice thereof to the Trustee and the Funding Agent. As promptly as
reasonably practicable after its receipt of notice of the occurrence of an Early
Amortization Event with respect to Series 1998-1, the Trustee shall give notice
to the Funding Agent, who in turn shall give notice to each Purchaser. In
addition, on the Business Day preceding each day on which a distribution of
principal is to be made during the Series 1998-1 Amortization Period, the
Servicer shall direct the Funding Agent to send notice to each Purchaser, which
notice shall set forth the amount of principal to be distributed on the related
date to the Purchasers with respect to the outstanding VFC Certificates.
ARTICLE V
ADDITIONAL EARLY AMORTIZATION EVENTS
SECTION 5.1. ADDITIONAL EARLY AMORTIZATION EVENTS. If any one of
the events specified in Section 7.1 of the Agreement (after the expiration of
any grace periods or consents applicable thereto) or any one of the following
events (each, an "EARLY AMORTIZATION EVENT") shall occur during the Series
1998-1 Revolving Period with respect to the Series 1998-1 Interests:
(a) (i) failure on the part of the Servicer to direct any payment or
deposit to be made or failure of any payment or deposit to be made in
respect of interest owing on any VFC Certificates or the Commitment Fee
within two Business Days of the date such interest or Commitment Fee is due
or (ii) failure on the part of the Servicer to direct any payment or
deposit to be made or of the Company to make any payment or deposit in
respect of any other amounts owing by the Company under any Pooling and
Servicing Agreement within five Business Days of the date such other amount
is due or such deposit is required to be made;
(b) (i) failure on the part of the Company to duly observe or
perform in any material respect any of the covenants or agreements of the
Company set forth in Section 2.7 and 2.8 of the Agreement or (ii) failure
on the part of the Company duly to observe or perform in any material
respect any other covenants or agreements of the Company set forth in any
Pooling and Servicing Agreement, which failure continues unremedied until
30 days after the earlier of the date on which a Responsible Officer of the
Company or the Servicer has knowledge thereof and the date on which written
notice of such failure, requiring the same to be remedied, shall have been
given to the Company by the Trustee, or to the Company and the Trustee by
the Funding Agent or Purchasers representing 25% or more of the Series
1998-1 Invested Amount;
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(c) any representation or warranty made or deemed made by the
Company in any Pooling and Servicing Agreement to or for the benefit of the
Purchasers (i) proves to have been incorrect in any material respect when
made or when deemed made and (ii) continues to be materially incorrect
until 30 days after the earlier of the date on which a Responsible Officer
of the Company or the Servicer has knowledge thereof and the date on which
notice of such failure, requiring the same to be remedied, has been given
by the Trustee to the Company or by Purchasers representing 25% or more of
the Series 1998-1 Invested Amount to the Company and the Trustee; PROVIDED,
HOWEVER, that an Early Amortization Event with respect to the Series 1998-1
Interests shall not be deemed to have occurred under this paragraph if the
incorrectness of such representation or warranty gives rise to an
obligation to repurchase the related Receivables and the Company has
repurchased the related Receivable or all such Receivables, if applicable,
in accordance with the provisions of the Pooling and Servicing Agreements
within ten Business Days of the day on which the Company was obligated to
do so;
(d) a Servicer Default with respect to the Servicer shall have
occurred and be continuing or the Servicer shall have resigned;
(e) a Purchase Termination Event (as defined in the Receivables
Sale Agreement) shall have occurred and be continuing under the Receivables
Sale Agreement;
(f) a USI Change in Control shall have occurred, or any Seller, the
Servicer, any Sub-Servicer or the Company shall cease to be a directly or
indirectly wholly-owned, Subsidiary of United Stationers Inc.;
(g) any of the Agreement, the Servicing Agreement, this Supplement
or the Receivables Sale Agreement shall cease, for any reason, to be in
full force and effect, or the Company, the Seller or the Servicer or any
Affiliate of any thereof shall so assert in writing;
(h) the Trust shall for any reason cease to have a valid and
perfected first priority undivided ownership or security interest in the
Trust Assets, as a whole (subject to no other Liens other than Permitted
Liens, or any of USSC, the Company or any Affiliate of either thereof shall
so assert in writing;
(i) there shall have been filed against USSC, the Company or the
Trust (i) a notice of federal tax Lien from the Internal Revenue Service,
(ii) a notice of Lien from the PBGC under Section 412(n) of the Internal
Revenue Code or Section 302(f) of ERISA for a failure to make a required
installment or other payment to a plan to which either of such sections
applies or (iii) a notice of any other Lien the existence of which could
reasonably be expected to have a Material Adverse Effect on the business,
operations or financial condition of such Person, and, in each case, 40
days shall have elapsed without such notice having been effectively
withdrawn or such Lien having been released or discharged;
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(j) an Event of Default under the Credit Agreement shall have
occurred and the lender parties thereto shall have caused the indebtedness
thereunder to come due prior to its stated maturity;
(k) any action, suit, investigation or proceeding at law or in
equity (including, without limitation, injunctions, writs or restraining
orders) shall be brought or commenced or filed by or before any arbitrator,
court or Governmental Authority against the Company or the Servicer or any
properties, revenues or rights of either thereof which could reasonably be
expected to have a Material Adverse Effect with respect to such Person;
(l) (i) one or more judgments for the payment of money (to the
extent not bonded or covered by insurance to the reasonable satisfaction of
the Required APA Banks) shall be rendered against the Company (A) in an
aggregate amount greater than $50,000 or (B) that, individually or in the
aggregate, have resulted or could reasonably be expected to result in a
Material Adverse Effect or (ii) one or more judgments for the payment of
money (to the extent not bonded or covered by insurance to the reasonable
satisfaction of the Funding Agent) shall be rendered against the Servicer,
any Sub-Servicer, any Seller or any combination thereof (A) in an aggregate
amount greater than $7,500,000 or (B) that, individually or in the
aggregate, have resulted or could reasonably be expected to result in a
Material Adverse Effect and, in either case, the same shall remain
undischarged for a period of 30 consecutive days during which execution
shall not be effectively stayed, or any action shall be legally taken by a
judgment creditor to levy upon assets or properties of the Company, the
Servicer, any Sub-Servicer or any Seller to enforce any such judgment;
(m) as at the end of any Settlement Period, the average
Loss-to-Liquidation Ratio for the two preceding Settlement Periods
(including such Settlement Period then ended) shall exceed 1.0%;
(n) as at the end of any Settlement Period, the average Default
Ratio for the two preceding Settlement Periods (including such Settlement
Period then ended) shall exceed 2.75%;
(o) as at the end of any Settlement Period, the average Dilution
Ratio for the two preceding Settlement Periods (including such Settlement
Period then ended) shall exceed 4.25%;
(p) for any Settlement Period, Days Sales Outstanding shall be
more than 40 days; or
(q) the Series 1998-1 Allocated Receivables Amount shall be less
than the Series 1998-1 Target Receivables Amount for a period of two
consecutive business days.
then, in the case of (x) any event described in Section 7.1 of the Agreement,
after the applicable grace period (if any) set forth in such Section, and
paragraphs (h) and (i) above automatically
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without any notice or action on the part of the Trustee or Purchasers, an early
amortization period shall immediately commence or (y) any other event described
above, after the expiration of the applicable grace period (if any) set forth in
such subsections, the Funding Agent may, and at the written direction of the
Required APA Banks shall, by written notice then given to the Company and the
Servicer, declare that an early amortization period has commenced as of the date
of such notice with respect to Series 1998-1 (any such period under clause (x)
or (y) above, an "EARLY AMORTIZATION PERIOD").
Notwithstanding the foregoing, a delay or failure in performance
referred to in clause (a) above for a period of five Business Days after the
expiration of the applicable grace period, or in clause (b) above for a period
of 30 Business Days after the expiration of the applicable grace period, will
not constitute an Early Amortization Event if such delay or failure could not
have been prevented by the exercise of reasonable diligence by the Company and
such delay or failure was caused by a Force Majeure Delay. The Company will
nevertheless be required to use its best efforts to perform its obligations in a
timely manner in accordance with the terms of the Transaction Documents, and the
Company shall promptly give the Trustee an Officer's Certificate notifying it of
any such delay or failure.
ARTICLE VI
SERVICING FEE
SECTION 6.1. SERVICING COMPENSATION. A periodic servicing fee (the
"SERIES 1998-1 PERIODIC SERVICING FEE") shall be payable to the Servicer on each
Distribution Date for the preceding Settlement Period in an amount equal to the
product of (a) the Servicing Fee and (b) a fraction the numerator of which is
the daily average Aggregate Commitment Amount for such Settlement Period and the
denominator of which is the sum of (i) the Aggregate Invested Amounts (other
than the Series 1998-1 Invested Amount and the Invested Amount in respect of any
variable funding certificate of any other Outstanding Series) on the first day
of such Settlement Period and (ii) the Aggregate Commitment Amount on the first
day of such Settlement Period plus the aggregate Commitment amount for any
variable funding certificate of any other Outstanding Series; PROVIDED, HOWEVER,
that if an Early Amortization Event has occurred and is continuing and USSC or
any Affiliate thereof is Servicer, payment of the Series 1998-1 Periodic
Servicing Fee shall be deferred until the Series 1998-1 Invested Amount has been
paid in full.
ARTICLE VII
CHANGE IN CIRCUMSTANCES
SECTION 7.1. ILLEGALITY. Notwithstanding any other provision
herein, if any Change in Law shall make it unlawful for any APA Bank to make or
maintain its portion of the VFC Certificateholders' Interest in any Eurodollar
Tranche and such APA Bank shall notify in writing the Funding Agent, the Trustee
and the Company, then the portion of each Eurodollar Tranche applicable to such
APA Bank shall thereafter be calculated by reference to the Alternate
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Base Rate. If any such change in the method of calculating interest occurs on a
day which is not the last day of the Eurodollar Period with respect to any
Eurodollar Tranche, the Company shall pay to the Funding Agent for the account
of such APA Bank the amounts, if any, as may be required pursuant to Section
7.4.
SECTION 7.2. INCREASED COSTS. (a) If any Change in Law (except with
respect to Taxes which shall be governed by Section 7.3) shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of, or credit extended by, any APA Bank (except any such reserve
requirement reflected in the Adjusted LIBO Rate); or
(ii) impose on any APA Bank or the London interbank market any
other condition affecting the Transaction Documents or the funding of
Eurodollar Tranches by such APA Bank;
and the result of any of the foregoing shall be to increase the cost to such APA
Bank of making, converting into, continuing or maintaining Eurodollar Tranches
(or maintaining its obligation to do so) or to reduce any amount received or
receivable by such APA Bank hereunder (whether principal, interest or
otherwise), then the Company will pay to such APA Bank such additional amount or
amounts as will compensate such APA Bank for such additional costs incurred or
reduction suffered.
(b) If any APA Bank determines that any Change in Law regarding
capital requirements has or would have the effect of reducing the rate of return
on such APA Bank's capital or the capital of any corporation controlling such
APA Bank as a consequence of its obligations hereunder to a level below that
which such APA Bank or such corporation could have achieved but for such Change
in Law (taking into consideration such APA Bank's or such corporation's policies
with respect to capital adequacy), then from time to time, the Company shall pay
to such APA Bank such additional amount or amounts as will compensate such APA
Bank for any such reduction suffered.
(c) A certificate of an APA Bank setting forth in reasonable
detail the amount or amounts necessary to compensate such APA Bank as specified
in subsections (a) and (b) of this Section 7.2 shall be delivered to the Company
(with a copy to the Funding Agent) and shall be conclusive absent manifest error
provided that such Certificate is delivered in good faith and in a manner
generally consistent with such APA Bank's standard practice. The agreements in
this Section shall survive the termination of this Supplement and the Agreement
and the payment of all amounts payable hereunder and thereunder for a period of
nine months.
(d) Failure or delay on the part of any APA Bank to demand
compensation pursuant to this Section 7.2 shall not constitute a waiver of such
APA Bank's right to demand such compensation; PROVIDED that the Company shall
not be required to compensate an APA Bank pursuant to this Section 7.2 for any
increased costs or reductions incurred more than 270 days prior to the date that
such APA Bank notifies the Company of the Change in Law giving
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rise to such increased costs or reductions and of such APA Bank's intention to
claim compensation therefor; PROVIDED FURTHER that, if the Change in Law giving
rise to such increased costs or reductions is retroactive, then the 270-day
period referred to above shall be extended to include the period of retroactive
effect thereof.
SECTION 7.3. TAXES. (a) Any and all payments by or on account of
any obligation of the Company hereunder shall be made free and clear of and
without deduction for any Indemnified Taxes or Other Taxes; PROVIDED that if
the Company shall be required to deduct any Indemnified Taxes or Other Taxes
from such payments, then (i) the sum payable shall be increased as necessary
so that after making all required deductions (including deductions applicable
to additional sums payable under this Section 7.3) the Funding Agent or such
APA Bank receives an amount equal to the sum that it would have received had
no such deductions been made, (ii) the Company shall make such deductions and
(iii) the Company shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.
(b) In addition, the Company shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) Subject to paragraph (e) of this Section 7.3, the Company
shall indemnify the Funding Agent and each APA Bank within the later of 10 days
after written demand therefor and the Distribution Date next following such
demand for the full amount of any Indemnified Taxes or Other Taxes paid by the
Funding Agent or such APA Bank on or with respect to any payment by or on
account of any obligation of the Company hereunder or under any other
Transaction Document (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section 7.3) and any
penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority. A
certificate as to the amount of such payment or liability delivered to the
Company by the Funding Agent or an APA Bank shall be conclusive absent manifest
error. Any payments made by the Company pursuant to this subsection shall be
made solely from funds available to the Company which are not otherwise needed
to be applied to the payment of any amounts (other than amounts payable to the
Company) pursuant to any Pooling and Servicing Agreements, shall be non-recourse
other than with respect to proceeds in excess of the proceeds to make such
payment, and shall not constitute a claim against the Company to the extent that
insufficient proceeds exist to make such payment. The agreements in this
subsection shall survive the termination of this Supplement and the Agreement
and the payment of all amounts payable hereunder and thereunder for a period of
nine months.
(d) As soon as practicable after any payment of Indemnified
Taxes or Other Taxes by the Company to a Governmental Authority, the Company
shall deliver to the Funding Agent the original or a certified copy of a receipt
issued by such Governmental Authority evidencing such payment, a copy of the
return reporting such payment or other evidence of such payment reasonably
satisfactory to the Funding Agent.
(e) The Funding Agent and each APA Bank shall (but with respect
to any Indemnified Tax or Other Tax arising from a Change in Law, only to the
extent the Funding
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Agent or such APA Bank is legally able to do so) deliver to the Company (with a
copy to the Funding Agent) such properly completed and executed documentation
prescribed by applicable law and reasonably requested by the Company on the
later of (i) 30 Business Days after such request is made and the applicable
forms are provided to such APA Bank or (ii) 30 Business Days before prescribed
by applicable law as will permit such payments to be made without withholding or
with an exemption from or reduction of Indemnified Taxes or Other Taxes.
Failure to timely provide such documentation to the Company shall relieve the
Company of any indemnification responsibility under this Section 7.3.
(f) If the Funding Agent or an APA Bank (or a Transferee)
receives a refund solely in respect of Taxes or Other Taxes, it shall pay over
such refund to the Company to the extent that such Funding Agent or APA Bank (or
Transferee) has already received indemnity payments or additional amounts
pursuant to this Section 7.3 with respect to such Taxes or Other Taxes giving
rise to the refund, net of all out-of-pocket expenses and without interest
(other than interest paid by the relevant Governmental Authority with respect to
such refund); PROVIDED, HOWEVER, that the Company shall, upon request of the
Funding Agent or such APA Bank (or Transferee), repay such refund (plus interest
or other charges imposed by the relevant Governmental Authority) to the Funding
Agent or such APA Bank (or Transferee) if the Funding Agent or such APA Bank (or
Transferee) is required to repay such refund to such Governmental Authority.
Nothing contained herein shall require the Funding Agent or an APA Bank (or
Transferee) to make its tax returns (or any other information relating to its
taxes which it deems confidential) available to the Company or any other Person.
SECTION 7.4. BREAK FUNDING PAYMENTS. The Company agrees to
indemnify each APA Bank and to hold each APA Bank harmless from any loss or
expense which such APA Bank may sustain or incur as a consequence of (a) default
by the Company in making a borrowing of, conversion into or continuation of a
Eurodollar Tranche after the Company has given irrevocable notice requesting the
same in accordance with the provisions of this Supplement, or (b) default by the
Company in making any prepayment in connection with a Decrease after the Company
has given irrevocable notice thereof in accordance with the provisions of
Section 2.7 or (c) the making of a prepayment of a Eurodollar Tranche prior to
the termination of the Eurodollar Period for such Eurodollar Tranche. Such
indemnification may include an amount equal to the excess, if any, of (i) the
amount of interest which would have accrued on the amount so prepaid or not so
borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
the Eurodollar Period (or in the case of a failure to borrow, convert or
continue, the Eurodollar Period that would have commenced on the date of such
prepayment or of such failure) in each case at the Adjusted LIBO Rate for such
Eurodollar Tranche provided for herein over (ii) the amount of interest (as
reasonably determined by such APA Bank) which would have accrued to such APA
Bank on such amount by placing such amount on deposit for a comparable period
with leading banks in the interbank eurodollar market; PROVIDED that any
payments made by the Company pursuant to this subsection shall be made solely
from funds available to the Company which are not otherwise needed to be applied
to the payment of any amounts (other than amounts payable to the Company)
pursuant to any Pooling and Servicing Agreements, shall be non-recourse other
than with respect to proceeds in excess of the proceeds to make such payment,
and shall not constitute a claim against the Company to the extent that
insufficient
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proceeds exist to make such payment. This covenant shall survive the
termination of this Supplement and the Agreement and the payment of all amounts
payable hereunder and thereunder for a period of nine months. A certificate as
to any additional amounts payable pursuant to the foregoing sentence, showing in
reasonable detail the calculation thereof, submitted by any APA Bank to the
Company shall be conclusive absent manifest error.
SECTION 7.5. ALTERNATE RATE OF INTEREST. If prior to the
commencement of any Eurodollar Period:
(a) the Funding Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate for such Eurodollar Period,
or
(b) the Funding Agent is advised by the Majority Purchasers that
the Adjusted LIBO Rate for such Eurodollar Period will not adequately and
fairly reflect the cost to such Purchasers of making or maintaining the
Eurodollar Tranches during such Eurodollar Period,
then the Funding Agent shall forthwith give telecopy or telephonic notice
thereof to the Company, the Trustee and the Purchasers, whereupon until the
Funding Agent notifies the Company and the Trustee that the circumstances giving
rise to such notice no longer exist, the Available Pricing Amount shall not be
allocated to any Eurodollar Tranche.
SECTION 7.6. MITIGATION OBLIGATIONS. (a) If any APA Bank requests
compensation under Section 7.2, or if the Company is required to pay any
additional amount to any APA Bank or any Governmental Authority for the account
of any APA Bank pursuant to Section 7.3, then such APA Bank shall use reasonable
efforts to designate a different lending office for funding or booking its
obligations under this Supplement and the Agreement or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if, in
the judgment of such APA Bank, such designation or assignment (i) would
eliminate or reduce amounts payable pursuant to Section 7.2 or 7.3, as the case
may be, in the future and (ii) would not subject such APA Bank to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such
APA Bank. The Company hereby agrees to pay all reasonable costs and expenses
incurred by any APA Bank in connection with any such designation or assignment.
(b) If any APA Bank requests compensation under Section 7.2, or
if the Company is required to pay any additional amount to any APA Bank or any
Governmental Authority for the account of any APA Bank pursuant to Section 7.3,
or if any APA Bank defaults in its obligations hereunder, then the Company may,
at its sole expense and effort, upon notice to such APA Bank and the Funding
Agent require such APA Bank to assign and delegate, without recourse (in
accordance with and subject to the restrictions contained in Section 11.11), all
its interests, rights and obligations under this Supplement to an assignee that
shall assume such obligations (which assignee may be another APA Bank, if an APA
Bank accepts such assignment); PROVIDED that (i) the Company shall have received
the prior written consent of the Funding Agent, which consent shall not
unreasonably be withheld, (ii) such APA Bank shall have received payment of an
amount equal to its Series 1998-1 Purchaser Invested Amount,
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accrued interest thereon, accrued fees and all other amounts payable to it
hereunder, from the assignee (to the extent of such Series 1998-1 Purchaser
Invested Amount and accrued interest and fees) or the Company (in the case of
all other amounts) and (iii) in the case of any such assignment resulting from a
claim for compensation under Section 7.2 or payments required to be made
pursuant to Section 7.3, such assignment will result in a reduction in such
compensation or payments. An APA Bank shall not be required to make any such
assignment and delegation if, prior thereto, as a result of a waiver by such APA
Bank or otherwise, the circumstances entitling the Company to require such
assignment and delegation cease to apply.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES, COVENANTS
SECTION 8.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
SERVICER. The Company and the Servicer each hereby represents and warrants to
the Trustee, the Funding Agent and each of the Purchasers that each and every of
their respective representations and warranties contained in the Agreement is
true and correct in all material respects as of the Issuance Date and as of the
date of each Increase (except to the extent that any such representation or
warranty is expressly made as of another date).
SECTION 8.2. COVENANTS OF THE COMPANY AND THE SERVICER. The
Company and the Servicer hereby agree, in addition to their obligations under
the Agreement and the Servicing Agreement, that:
(a) they shall observe in all material respects each and every
of their respective covenants (both affirmative and negative) contained in
the Agreement, the Servicing Agreement, this Supplement and all other
Transaction Documents to which each is a party;
(b) they shall afford the Trustee, Funding Agent or any
representatives of the Trustee or the Funding Agent access to all records
relating to the Receivables at any reasonable time during regular business
hours, upon reasonable prior notice (and without prior notice if an Early
Amortization Event has occurred), for purposes of inspection and shall
permit the Trustee, Funding Agent or any representative of the Trustee or
the Funding Agent to visit any of the Company's or the Servicer's, as the
case may be, offices or properties during regular business hours and as
often as may reasonably be desired to discuss the business, operations,
properties, financial and other conditions of the Company or the Servicer
with their respective officers and employees and with their independent
certified public accountants; PROVIDED that the Funding Agent shall provide
the Company or the Servicer, as the case may be, with reasonable notice
prior to any such contact and shall give the Company or the Servicer the
reasonable opportunity to participate in such discussions; and
(c) neither the Company nor the Servicer shall take any action,
nor permit the Seller to take any action, requiring the satisfaction of the
Rating Agency Condition
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pursuant to any Transaction Document without the prior written consent of
the Majority Purchasers.
SECTION 8.3. COVENANTS OF THE SERVICER. The Servicer hereby agrees
that:
(a) it shall observe each and all of its respective covenants
(both affirmative and negative) contained in the Pooling and Servicing
Agreements in all material respects;
(b) it shall provide to the Funding Agent and the Rating
Agencies, simultaneously with delivery to the Trustee, all reports, notices,
certificates, statements and other documents required to be delivered to the
Trustee pursuant to the Agreement, the Servicing Agreement and the other
Transaction Documents and furnish to the Funding Agent promptly after receipt
thereof a copy of each material notice, material demand or other material
communication (excluding routine communications) received by or on behalf of the
Company or the Servicer with respect to the Transaction Documents;
(c) it shall provide notice to the Funding Agent of the
appointment of a Successor Servicer pursuant to Section 6.2 of the Servicing
Agreement; and
(d) it shall operate in good faith to allow the Trustee to use
the Servicer's available facilities, equipment, leasehold agreements, data
systems, records, files and expertise upon the Servicer's termination or
default.
SECTION 8.4. OBLIGATIONS UNAFFECTED. The obligations of the
Company and the Servicer to the Funding Agent and the Purchasers under this
Supplement shall not be affected by reason of any invalidity, illegality or
irregularity of any of the Receivables or any sale of any of the Receivables.
ARTICLE IX
CONDITIONS PRECEDENT
SECTION 9.1. CONDITIONS PRECEDENT TO EFFECTIVENESS OF SUPPLEMENT.
This Supplement shall become effective on the date (the "EFFECTIVE DATE") on
which the following conditions precedent have been satisfied:
(a) DOCUMENTS. The Funding Agent shall have received, with a
copy for the Initial Purchaser, true and complete copies of (i) the
Agreement, executed by a duly authorized officer of each of the Company,
the Servicer and the Trustee, (ii) the Servicing Agreement, executed by a
duly authorized officer of each of the Company, the Servicer and the
Trustee, (iii) the Receivables Sale Agreement, executed by a duly
authorized officer of each of the Company and the Seller, (iv) this
Supplement, executed by a duly authorized officer of each of the Company,
the Servicer, the Trustee, the Funding Agent, the Initial Purchaser and the
APA Banks and (v) the other Transaction Documents, each duly executed by
the parties thereto.
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(b) ORGANIZATIONAL DOCUMENTS, ORGANIZATIONAL PROCEEDINGS OF THE
COMPANY AND SERVICER. The Funding Agent shall have received from the
Company, the Seller and the Servicer, with a copy for the Initial
Purchaser, true and complete copies of:
(i) the articles of association, articles of incorporation or
other formation documents, including all amendments thereto, of such
Person, certified as of a recent date by the Secretary of State or
other appropriate authority of the state of formation or
incorporation, as the case may be, and a certificate of compliance,
of status or of good standing, as and to the extent applicable, of
each such Person as of a recent date, from the Secretary of State or
other appropriate authority of such jurisdiction;
(ii) a certificate of the Secretary or an Assistant Secretary
of each such Person, dated the Effective Date and certifying (A)
that attached thereto is a true and complete copy of the by laws and
articles of incorporation or articles of association of each such
Person, as in effect on the Effective Date and at all times since a
date prior to the date of the resolutions described in clause (B)
below, (B) that attached thereto is a true and complete copy of the
resolutions, in form and substance reasonably satisfactory to the
Funding Agent, of the Board of Directors of each such Person or
committees thereof authorizing the execution, delivery and
performance of the Series 1998-1 Transaction Documents to which it
is a party and the transactions contemplated thereby, and that such
resolutions have not been amended, modified, revoked or rescinded
and are in full force and effect, (C) that the articles of
association, article of incorporation or other formation documents
of each such Person has not been amended since the date of the last
amendment thereto shown on the certificate of good standing (or its
equivalent) furnished pursuant to clause (i) above and (D) as to the
incumbency and specimen signature of each officer executing any
Series 1998-1 Transaction Documents or any other document delivered
in connection herewith or therewith on behalf of each such Person;
and
(iii) a certificate of another officer as to the incumbency and
specimen signature of the Secretary or Assistant Secretary executing
the certificate pursuant to clause (ii) above.
(c) GOOD STANDING CERTIFICATES. The Funding Agent shall have
received copies of certificates of compliance, of status or of good
standing, dated as of a recent date, from the Secretary of State or other
appropriate authority of such jurisdiction, with respect to the Company,
the Servicer and the Seller, in each State where the ownership, lease or
operation of property or the conduct of business requires it to qualify as
a foreign corporation or limited liability company, except where the
failure to so qualify would not reasonably be expected to have a material
adverse effect on the business, operations, properties or condition
(financial or otherwise) of the Company, the Servicer or the Seller, as the
case may be.
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(d) CONSENTS, LICENSES, APPROVALS, ETC. The Funding Agent shall
have received, with a copy for the Initial Purchaser, certificates dated
the date hereof of a Responsible Officer of the Company, the Servicer and
the Seller either (i) attaching copies of all material consents, licenses
and approvals required in connection with the execution, delivery and
performance by the Company, the Servicer or the Seller, as the case may be,
of this Supplement or the Receivables Sale Agreement, as the case may be,
and the validity and enforceability of this Supplement and the Agreement
against the Company and the Servicer and the Receivables Sale Agreement
against the Seller, and such consents, licenses and approvals shall be in
full force and effect or (ii) stating that no such consents, licenses or
approvals are so required.
(e) NO LITIGATION. The Funding Agent shall have received
confirmation that there is no pending or, to their knowledge after due
inquiry, threatened action or proceeding affecting USSC or any of its
Subsidiaries before any Governmental Authority that could reasonably be
expected to have a Material Adverse Effect with respect to USSC and its
Subsidiaries taken as a whole.
(f) LIEN SEARCHES. The Funding Agent shall have received a
written search report listing all effective financing statements that name
the Seller or the Company as debtor or assignor and that are filed in the
jurisdictions in which filings were made pursuant to paragraph (h) below
and in any other jurisdictions that the Funding Agent determines are
reasonably necessary or appropriate, together with copies of such financing
statements (none of which, except for those described in paragraph (h)
below shall cover any Receivables), and tax and judgment lien searches
showing no such liens that are not permitted by the Transaction Documents
(g) UCC CERTIFICATE. The Funding Agent shall have received from
the Seller and the Company a UCC Certificate, completed in a manner
satisfactory to the Funding Agent, duly executed by a Responsible Officer
of the Seller or the Company, as the case may be, and dated the Issuance
Date.
(h) FILINGS, REGISTRATIONS AND RECORDINGS. Any documents
(including, without limitation, financing statements) required to be filed
in order (i) to perfect the sale of the Receivables by the Seller to the
Company pursuant to the Receivables Sale Agreement and (ii) to create, in
favor of the Trustee, a perfected ownership/security interest in the Trust
Assets under the Agreement with respect to which an ownership/security
interest may be perfected by a filing under the UCC or other comparable
statute, shall, in each case, have been properly prepared and executed for
immediate filing in each office in each jurisdiction listed in the
Agreement or the Receivables Sale Agreement, as the case may be, and such
filings are the only filings required in order to perfect the sale of the
Receivables to the Company under the Receivables Sale Agreement or to the
Trust, under the Agreement, as the case may be, in the jurisdictions listed
therein. The Funding Agent shall have received evidence reasonably
satisfactory to it of each such filing, registration or recordation and
reasonably satisfactory evidence of the payment of any necessary fee, tax
or expense relating thereto.
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(i) LEGAL OPINIONS. The Funding Agent shall have received, with
a counterpart for the Initial Purchaser and the Trustee, opinions of
counsel to the Company and the Servicer, dated the Issuance Date, as to
corporate, federal tax (tax status of the VFC Certificates as debt),
bankruptcy ("true sale" and "non-substantive consolidation"), perfection
and priority of security and/or ownership interests and other matters in
form and substance reasonably acceptable to the Funding Agent and their
counsel.
(j) FEES. The Funding Agent shall have received payment of all
fees and other amounts due and payable to it, the Initial Purchaser or the
APA Banks on or before the Effective Date.
(k) ESTABLISHMENT OF ACCOUNTS. The Funding Agent (x) shall have
received evidence reasonably satisfactory to it that the Collection Account
shall have been established in accordance with the terms and provisions of
the Pooling and Servicing Agreements, and (y) shall otherwise be satisfied
with the arrangements for collection of the Receivables pursuant thereto.
(l) POLICIES. The Funding Agent shall have received, with a
copy for the Initial Purchaser, a copy of the Policies, which shall be
reasonably satisfactory in form and substance to the Funding Agent.
(m) MATERIAL ADVERSE CHANGE. No material adverse change shall
have occurred with respect to the business, operations, property or
condition (financial or otherwise) of USSC and its Subsidiaries taken as a
whole since December 31, 1997.
ARTICLE X
THE FUNDING AGENT
SECTION 10.1. APPOINTMENT. Each Purchaser and APA Bank hereby
irrevocably designates and appoints the Funding Agent as the agent of such
Purchaser and APA Bank, respectively, under this Supplement and each such
Purchaser and APA Bank irrevocably authorizes the Funding Agent, in such
capacity, to take such action on its behalf under the provisions of this
Supplement and to exercise such powers and perform such duties as are expressly
delegated to the Funding Agent by the terms of this Supplement, together with
such other powers as are reasonably incidental thereto. In its capacity as
agent of each Purchaser and APA Bank, the Funding Agent shall act with the same
due care as it does with respect to its own investments. Subject to the
foregoing sentence or any provision to the contrary elsewhere in this
Supplement, the Funding Agent shall not have any duties or responsibilities
except those expressly set forth herein, or any fiduciary relationship with any
Purchaser or APA Bank, and no implied covenants, functions, responsibilities,
duties, obligations or liabilities shall be read into this Supplement or
otherwise exist against the Funding Agent.
SECTION 10.2. DELEGATION OF DUTIES. The Funding Agent may execute
any of its duties under this Supplement by or through agents or
attorneys-in-fact and shall be entitled to
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advice of counsel (who may be counsel for the Company or the Servicer),
independent public accountants and other experts selected by it concerning all
matters pertaining to such duties. The Funding Agent shall not be responsible
for the negligence or misconduct of any agents or attorneys-in-fact selected by
it with reasonable care.
SECTION 10.3. EXCULPATORY PROVISIONS. Neither the Funding Agent
nor any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with the Agreement or this
Supplement (x) with the consent or at the request of the Majority Purchasers or
(y) in the absence of its own gross negligence or willful misconduct or (ii)
responsible in any manner to any of the Purchasers for any recitals, statements,
representations or warranties made by the Company or any officer thereof
contained in this Supplement or any other Transaction Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Funding Agent under or in connection with, this Supplement or
any other Transaction Document or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Supplement or any other
Transaction Document or for any failure of the Company to perform its
obligations hereunder or thereunder. The Funding Agent shall not be under any
obligation to any Purchaser to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Supplement or any other Transaction Document, or to inspect the properties,
books or records of the Company.
SECTION 10.4. RELIANCE BY FUNDING AGENT. The Funding Agent shall be
entitled to rely, and shall be fully protected in relying, upon any Certificate,
writing, resolution, notice, consent, certificate, affidavit, letter, telecopy,
telex or teletype message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Company or the Servicer),
independent accountants and other experts selected by the Funding Agent 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.
The Funding Agent may deem and treat the payee of any Certificate as the owner
thereof for all purposes unless a written notice of assignment, negotiation or
transfer thereof shall have been filed with the Funding Agent. The Funding
Agent shall be fully justified in failing or refusing to take any action under
this Supplement or any other Transaction Document unless it shall first receive
such advice or concurrence of the Majority Purchasers as it deems appropriate or
it shall first be indemnified to its satisfaction by the Purchasers against any
and all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Funding Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Supplement
and the other Transaction Documents in accordance with a request of the Majority
Purchasers, and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Purchasers.
SECTION 10.5. NOTICE OF SERVICER DEFAULT OR EARLY AMORTIZATION EVENT OR
CLOSE UP POTENTIAL EARLY AMORTIZATION EVENT. The Funding Agent shall not be
deemed to have knowledge or notice of the occurrence of any Servicer Default
with respect to the Servicer or any Early Amortization Event or Potential Early
Amortization Event hereunder unless the Funding Agent
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has received notice from a Purchaser, the Company or the Servicer referring to
the Agreement or this Supplement, describing such Servicer Default or Early
Amortization Event or Potential Early Amortization Event and stating that such
notice is a "notice of a Servicer Default with respect to the Servicer" or a
"notice of an Early Amortization Event or Potential Early Amortization Event",
as the case may be. In the event that the Funding Agent receives such a notice,
the Funding Agent shall give notice thereof to the Purchasers, the Trustee, the
Company and the Servicer. The Funding Agent shall take such action with respect
to such Servicer Default or Early Amortization Event or Potential Early
Amortization Event as shall be reasonably directed by the Majority Purchasers,
PROVIDED that unless and until the Funding Agent shall have received such
directions, the Funding Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Servicer
Default or Early Amortization Event or Potential Early Amortization Event as it
shall deem advisable in the best interests of the Purchasers.
SECTION 10.6. NON-RELIANCE ON THE FUNDING AGENT AND OTHER
PURCHASERS. Each Purchaser expressly acknowledges that neither the Funding
Agent nor any of its officers, directors, employees, agents, attorneys-in-fact
or Affiliates has made any representations or warranties to it and that no act
by the Funding Agent hereinafter taken, including any review of the affairs of
the Company, shall be deemed to constitute any representation or warranty by the
Funding Agent to any Purchaser. Each Purchaser represents to the Funding Agent
that it has, independently and without reliance upon the Funding Agent or any
other Purchaser, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of the
Company and made its own decision to enter into this Supplement. Each Purchaser
also represents that it will, independently and without reliance upon the
Funding Agent or any other Purchaser, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Supplement and the other Transaction Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Company. Except for notices, reports and other documents expressly required to
be furnished to the Purchasers by the Funding Agent hereunder, the Funding Agent
shall have no duty or responsibility to provide any Purchaser with any credit or
other information concerning the business, operations, property, condition
(financial or otherwise), prospects or creditworthiness of the Company which may
come into the possession of the Funding Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates.
SECTION 10.7. INDEMNIFICATION. The Purchasers agree to indemnify
the Funding Agent in its capacity as such (to the extent not reimbursed by the
Company and the Servicer and without limiting the obligation of the Company and
the Servicer to do so), ratably according to their respective Series 1998-1
Purchaser Invested Amounts on the date on which indemnification is sought, from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever which may at any time be imposed on, incurred by or asserted against
the Funding Agent in any way relating to or arising out of the Commitments, this
Supplement, any of the other Transaction Documents or any documents contemplated
by or referred to herein or therein or the
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transactions contemplated hereby or thereby or any action taken or omitted by
the Funding Agent under or in connection with any of the foregoing; PROVIDED
that no Purchaser shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting solely from the Funding Agent's gross
negligence or willful misconduct. The agreements in this Section shall survive
the payment of all amounts payable hereunder.
SECTION 10.8. THE FUNDING AGENT IN ITS INDIVIDUAL CAPACITY. The
Funding Agent and its Affiliates may make loans to, accept deposits from and
generally engage in any kind of business with the Company, the Servicer or any
of their Affiliates as though the Funding Agent were not the Funding Agent
hereunder. With respect to any VFC Certificate held by the Funding Agent, the
Funding Agent shall have the same rights and powers under this Supplement and
the other Transaction Documents as any Purchaser and may exercise the same as
though it were not the Funding Agent, and the terms "APA Bank" and "Purchaser"
shall include the Funding Agent in its individual capacity.
SECTION 10.9. SUCCESSOR FUNDING AGENT. The Funding Agent may
resign as Funding Agent upon 10 days' notice to the Purchasers. If the Funding
Agent shall resign as Funding Agent under this Supplement, then the Majority
Purchasers shall appoint from among the Purchasers a successor administrative
agent for the Purchasers, which successor administrative agent shall be approved
by the Company and the Servicer (which approval shall not be unreasonably
withheld), whereupon such successor administrative agent shall succeed to the
rights, powers and duties of the Funding Agent, and the term "Funding Agent"
shall mean such successor administrative agent effective upon such appointment
and approval, and the former Funding Agent's rights, powers and duties as
Funding Agent shall be terminated, without any other or further act or deed on
the part of such former Funding Agent or any of the parties to this Supplement.
After any retiring Funding Agent's resignation as Funding 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 Funding Agent under this Supplement.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. RATIFICATION OF AGREEMENT. As supplemented by this
Supplement, the Agreement is in all respects ratified and confirmed and the
Agreement as so supplemented by this Supplement shall be read, taken and
construed as one and the same instrument.
SECTION 11.2. GOVERNING LAW. THIS SUPPLEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
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SECTION 11.3. FURTHER ASSURANCES. Each of the Company, the
Servicer and the Trustee agrees, from time to time, to do and perform any and
all acts and to execute any and all further instruments required or reasonably
requested by the Funding Agent or the Majority Purchasers more fully to effect
the purposes of this Supplement and the sale of the VFC Certificates hereunder,
including, without limitation, in the case of the Company and the Servicer, the
execution of any financing or registration statements or similar documents or
notices or continuation statements relating to the Receivables and the other
Trust Assets for filing or registration under the provisions of the UCC or
similar legislation of any applicable jurisdiction.
SECTION 11.4. PAYMENTS. To the extent proper payment instructions
are provided, each payment to be made hereunder shall be made on the required
payment date in lawful money of the United States and in immediately available
funds, if to the Purchasers, at the office of the Funding Agent set forth in
Section 11.9. Except as provided in subsection 2.6(e), on each Distribution
Date, the Funding Agent shall remit in like funds to each Purchaser its
applicable PRO RATA share (based on each such Purchaser's Series 1998-1
Purchaser Invested Amount) of each such payment received by the Funding Agent
for the account of the Purchasers.
SECTION 11.5. COSTS AND EXPENSES. The Company agrees to pay all
reasonable out-of-pocket costs and expenses of the Funding Agent (including,
without limitation, reasonable fees and disbursements of one counsel to the
Funding Agent) in connection with (i) the preparation, execution and delivery of
this Supplement, the Agreement and the other Transaction Documents and
amendments or waivers of any such documents and (ii) the enforcement by the
Funding Agent of the obligations and liabilities of the Company and the Servicer
under the Agreement, this Supplement, the other Transaction Documents or any
related document; PROVIDED that any payments made by the Company pursuant to
this subsection shall be made solely from funds available to the Company which
are not otherwise needed to be applied to the payment of any amounts (other than
amounts payable to the Company) pursuant to any Pooling and Servicing
Agreements, shall be non-recourse other than with respect to proceeds in excess
of the proceeds to make such payment, and shall not constitute a claim against
the Company to the extent that insufficient proceeds exist to make such payment.
SECTION 11.6. NO WAIVER, CUMULATIVE REMEDIES. No failure to
exercise and no delay in exercising, on the part of the Trustee, the Funding
Agent or any Purchaser, any right, remedy, power or privilege hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exhaustive of any rights, remedies, powers and privileges provided by law.
SECTION 11.7. AMENDMENTS. (a) Subject to subsection (c) of this
Section 11.7, this Supplement may be amended in writing from time to time by the
Servicer, the Company and the Trustee, with the consent of the Funding Agent but
without the consent of any holder of any outstanding VFC Certificate, to cure
any ambiguity, to correct or supplement any provisions herein which may be
inconsistent with any other provisions herein or to add any other provisions to
or change in any manner or eliminate any of the provisions with respect to
matters or
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questions raised under this Supplement which shall not be inconsistent with the
provisions of any Pooling and Servicing Agreement; PROVIDED, HOWEVER, that such
action shall not, as evidenced by an Officer's Certificate or, to the extent in
the reasonable view of the Company, a question of law exists, an Opinion of
Counsel delivered to the Trustee, adversely affect in any material respect the
interests of the VFC Certificateholders, including without limitation the tax
status of the VFC Certificates or of the Trust, or the APA Banks. The Trustee
may, but shall not be obligated to, enter into any such amendment pursuant to
this paragraph or paragraph (b) below which affects the Trustee's rights, duties
or immunities under any Pooling and Servicing Agreement or otherwise.
(b) Subject to subsection (c) of this Section 11.7, this
Supplement may also be amended in writing from time to time by the Servicer, the
Company and the Trustee with the consent of the Majority Purchasers for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Supplement or of modifying in any manner the rights of
the VFC Certificateholders (including, without limitation, the acceleration of
the payment of sums payable to or for the account of the Purchasers under any
provision of this Supplement); PROVIDED, HOWEVER, that no such amendment shall,
unless signed or consented to in writing by all Purchasers and each APA Bank,
(i) extend the time for payment, or reduce the amount, of any sum payable to or
for the account of any Purchaser under any provision of this Supplement or
extend the Series 1998-1 Termination Date, (ii) subject any Purchaser to any
additional obligation (including, without limitation, any change in the
determination of any amount payable by any Purchaser), (iii) change the
Aggregate Commitment Amount, the amount of any interest or fees or the
percentage of Purchasers which shall be required for any action under this
subsection or any other provision of this Supplement or (iv) change the tax
characteristics of the VFC Certificates or of the Trust.
(c) Any amendment hereof can be effected without the Funding
Agent's being party thereto; PROVIDED, HOWEVER, that no such amendment,
modification or waiver of this Supplement that affects rights or duties of the
Funding Agent shall be effective unless the Funding Agent shall have given its
prior written consent thereto.
(d) No amendment hereof shall be effective until the Rating
Agency Condition is satisfied with respect thereto.
SECTION 11.8. SEVERABILITY. If any provision hereof is void or
unenforceable in any jurisdiction, such voidness or unenforceability shall not
affect the validity or enforceability of (i) such provision in any other
jurisdiction or (ii) any other provision hereof in such or any other
jurisdiction.
SECTION 11.9. NOTICES. All notices, requests and demands to or
upon any party hereto to be effective shall be given (i) in the case of the
Company, the Servicer and the Trustee, in the manner set forth in Section 10.4
of the Agreement and (ii) in the case of the Funding Agent, the Rating Agencies,
the Initial Purchaser and each APA Bank, in writing, and, unless otherwise
expressly provided herein, shall be deemed to have been duly given or made when
delivered by hand or three days after being deposited in the mail, postage
prepaid, or, in the case of facsimile notice, when received, (A) in the case of
each APA Bank, at its address set
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<PAGE>
forth on Schedule 1 hereto and (B) addressed as follows in the case of the
Funding Agent, the Rating Agencies and the Initial Purchaser; or to such other
address as may be hereafter notified by the respective parties hereto:
Funding Agent: The Chase Manhattan Bank
450 West 33rd Street
New York, New York 10001
Attention: Andy Taylor
Fax: 212-946-7776
S&P: Standard & Poor's Ratings Service
25 Broadway
New York, New York 10004
Attention: Mark Gollenback
Fax: 212-208-1604
Moody's: Moody's Investors Service
99 Church Street
New York, New York 10007
Attention: Sam Pilcer
Fax: 212-553-3850
Initial Purchaser: Park Avenue Receivables Corporation
25 West 43rd Street, Suite 704
New York, New York 10036
Attention: Andy Stidd
Fax: 212-302-8767
SECTION 11.10. SUCCESSORS AND ASSIGNS. This Supplement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Company may not assign or transfer any
of its rights under this Supplement without the prior written consent of all of
the Purchasers, the Initial Purchaser may not assign or transfer any of its
rights under this Supplement except as set forth in Section 2.6 and each APA
Bank may not assign or transfer any of its rights under this Supplement except
as set forth in Section 11.11.
SECTION 11.11. SECURITIES LAWS; PARTICIPATIONS; ASSIGNMENTS. (a) Each
Purchaser agrees that its VFC Certificate will be acquired for investment only
and not with a view to any public distribution thereof, and that such Purchaser
will not offer to sell or otherwise dispose of its VFC Certificate (or any
interest therein) in violation of any of the registration requirements of the
Securities Act or any applicable state or other securities laws. Each Purchaser
acknowledges that it has no right to require the Company to register its VFC
Certificate under the Securities Act or any other securities law. Each
Purchaser hereby confirms and agrees that in connection with any transfer by it
of an interest in the VFC Certificate, such Purchaser has not engaged and will
not engage in a general solicitation or general advertising
56
<PAGE>
including advertisements, articles, notices or other communications published in
any newspaper, magazine or similar media or broadcast over radio or television,
or any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising.
(b) Any APA Bank may, in the ordinary course of its business and in
accordance with applicable law, at any time sell to one or more financial
institutions or other entities ("PARTICIPANTS") participations in its VFC
Certificate and its rights hereunder pursuant to documentation in form and
substance satisfactory to such APA Bank and the Participant; PROVIDED, HOWEVER,
that (i) in the event of any such sale by an APA Bank to a Participant, (A) such
APA Bank's obligations under this Supplement shall remain unchanged, (B) such
APA Bank shall remain solely responsible for the performance thereof and (C) the
Company shall continue to deal solely and directly with such APA Bank in
connection with its rights and obligations under the Pooling and Servicing
Agreements, (ii) no APA Bank shall sell any participating interest under which
the Participant shall have rights to approve any amendment to, or any consent or
waiver with respect to, any Pooling and Servicing Agreement, except to the
extent that the approval of such amendment, consent or waiver otherwise would
require the unanimous consent of all APA Banks hereunder, (iii) no sale by an
APA Bank to a Participant shall be given effect if such sale would result in
there being more than 20 Targeted Holders with respect to the VFC Certificates
or is not otherwise permitted under subsection 5.3(e) of the Agreement, and (iv)
each Participant shall, prior to becoming a Participant, execute and deliver to
the Funding Agent an Assignment/Participation Certification. The Company agrees
that each APA Bank is entitled, in its own name, to enforce for the benefit of,
or as agent for, any Participant any and all rights, claims and interest of such
Participant in respect of the Trust and the Company's obligations under this
Supplement. A Participant shall have the right to receive Article VII Costs but
only to the extent that the related selling APA Bank would have had such right
absent the sale of the related participation.
(c) Any APA Bank may, upon the satisfaction of all applicable
requirements under Section 5.3 of the Agreement, in the ordinary course of its
business and in accordance with applicable law, at any time sell all or any part
of its rights and obligations under this Supplement and the VFC Certificate to
(i) its Affiliates and to any other APA Bank and (ii) upon prior written notice
to the Funding Agent, one or more banks or other entities (an "ACQUIRING APA
BANK"), in each case pursuant to a commitment transfer supplement, substantially
in the form of Exhibit G (the "COMMITMENT TRANSFER SUPPLEMENT"), executed by
such Acquiring APA Bank, such assigning APA Bank and the Funding Agent (and, in
the case of an Acquiring APA Bank that is not then an existing APA Bank or an
Affiliate thereof, by the Company and the Servicer), and delivered to the
Funding Agent for its acceptance and recording in the Register with notice
delivered to each Rating Agency. Notwithstanding the foregoing, no APA Bank
shall so sell its rights hereunder (other than to its Affiliate or any other APA
Bank) without the prior written consent of the Company, which consent shall not
be unreasonably withheld, and no APA Bank shall sell its rights hereunder (w) if
such sale would result in there being more than 20 Targeted Holders with respect
to the VFC Certificates or more than 20 beneficial owners of the VFC
Certificates for the purposes of the 1940 Act or is not otherwise permitted
under subsection 5.3(e) of the Agreement, (x) if such Acquiring APA Bank is not
an Eligible Assignee, (y) unless such APA Bank reasonably believes that such
Acquiring APA Bank is a "qualified institutional buyer" within the meaning of
Rule 144A promulgated under the Securities Act and
57
<PAGE>
(z) unless, prior to such sale, the purchaser of such rights shall have executed
and delivered to the Funding Agent and the Transfer Agent and Registrar an
Assignment/Participation Certification. Upon such execution, delivery,
acceptance and recording, (A) the Company shall sign, on behalf of the Trust,
and shall direct the Trustee in writing to duly authenticate, and the Trustee,
upon receiving such direction, shall so authenticate, a new VFC Certificate in
the name and the denomination determined pursuant to the related Commitment
Transfer Supplement and set forth in such written direction and shall deliver
such VFC Certificate to the Acquiring APA Bank in accordance with such written
direction, and (B) from and after the Transfer Issuance Date determined pursuant
to such Commitment Transfer Supplement, (1) the Acquiring APA Bank thereunder
shall be a party hereto and, to the extent provided in such Commitment Transfer
Supplement, have the rights and obligations of an APA Bank hereunder with a
Commitment as set forth therein and (2) the transferor APA Bank thereunder
shall, to the extent provided in such Commitment Transfer Supplement, be
released from its obligations under this Supplement. Such Commitment Transfer
Supplement shall be deemed to amend this Supplement (including the Schedules
attached hereto) to the extent, and only to the extent, necessary to reflect the
addition of such Acquiring APA Bank as an "APA Bank" and the resulting
adjustment of Commitment Percentages arising from the purchase by such Acquiring
APA Bank of all or a portion of the rights and obligations of such transferor
APA Bank under this Supplement and the VFC Certificates.
(d) The Funding Agent shall maintain at its address referred to in
Section 11.9 a copy of each Commitment Transfer Supplement delivered to it.
(e) Upon its receipt of a Commitment Transfer Supplement executed by
a transferor APA Bank and an Acquiring APA Bank (and, in the case of a
Transferee that is not then an existing APA Bank or an Affiliate thereof, by the
Company and the Servicer) and a processing fee of $3,500, the Funding Agent
shall (i) promptly accept such Commitment Transfer Supplement and (ii) on the
Transfer Issuance Date determined pursuant thereto record the information
contained therein in the Register and give notice of such acceptance and
recordation to the Initial Purchaser, the APA Banks, the Servicer and the
Company.
(f) The Company and the Servicer each authorizes each APA Bank to
disclose to any Participant or Acquiring APA Bank (each, a "TRANSFEREE") and any
prospective Transferee any and all financial information in such APA Bank's
possession concerning the Company, the Servicer or the Receivables which has
been delivered to such APA Bank by the Company or the Servicer pursuant to this
Supplement or which has been delivered to such APA Bank by or on behalf of the
Company in connection with such APA Bank's credit evaluation of the Company, the
Servicer, the Trust and the Trust Assets prior to becoming a party to this
Supplement; PROVIDED, HOWEVER, the Transferee or prospective Transferee shall
have agreed to be bound by the terms and conditions of Section 11.15.
(g) Notwithstanding any other provisions herein, no transfer or
assignment of any interests or obligations of any APA Bank hereunder or any
grant of participations therein shall be permitted if such transfer, assignment
or grant would result in a prohibited transaction under Section 4975 of the
Internal Revenue Code or Section 406 of ERISA or cause the Trust Assets to be
regarded as plan assets pursuant to 29 C.F.R. Section 2510.3-101.
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<PAGE>
SECTION 11.12. ADJUSTMENTS; SET-OFF. (a) If any Purchaser (a
"BENEFITTED PURCHASER") shall at any time receive in respect of its Series
1998-1 Invested Amount any distribution of principal, interest, Commitment Fees
or other fees, or any interest thereon, or receive any collateral in respect
thereof (whether voluntarily or involuntarily, by set-off or otherwise) in a
greater proportion than any such distribution received by any other Purchaser,
if any, in respect of such other Purchaser's Series 1998-1 Invested Amount, or
interest thereon, such Benefitted Purchaser shall purchase for cash from the
other Purchasers such portion of each such other Purchaser's interest in the VFC
Certificates, or shall provide such other Purchasers with the benefits of any
such collateral, or the proceeds thereof, as shall be necessary to cause such
Benefitted Purchaser to share the excess payment or benefits of such collateral
or proceeds ratably with each of the Purchasers; PROVIDED, HOWEVER, that if all
or any portion of such excess payment or benefits is thereafter recovered from
such Benefitted Purchaser, such purchase shall be rescinded, and the purchase
price and benefits returned, to the extent of such recovery, but without
interest. The Company agrees that each Purchaser so purchasing a portion of the
VFC Certificateholders' Interest may exercise all rights of payment (including,
without limitation, rights of set-off) with respect to such portion as fully as
if such Purchaser were the direct holder of such portion.
(b) In addition to any rights and remedies of the Purchasers provided
by law, each Purchaser shall have the right, without prior notice to the
Company, any such notice being expressly waived by the Company to the extent
permitted by applicable law, upon any amount becoming due and payable by the
Company hereunder or under the VFC Certificates to set-off and appropriate and
apply against any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by such Purchaser to
or for the credit or the account of the Company. Each Purchaser agrees promptly
to notify the Company and the Funding Agent after any such set-off and
application made by such Purchaser, PROVIDED that the failure to give such
notice shall not affect the validity of such set-off and application.
SECTION 11.13. COUNTERPARTS. This Supplement may be executed in any
number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original,
and all of which taken together shall constitute one and the same agreement.
SECTION 11.14. NO BANKRUPTCY PETITION. (a) The Funding Agent and
each Purchaser hereby covenants and agrees that, prior to the date which is one
year and one day after the later of (i) the last day of the Series 1998-1
Amortization Period and (ii) the last day of the amortization period of any
other Outstanding Series, it will not institute against, or join any other
Person in instituting against, the Company any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other similar proceedings
under any federal or state bankruptcy or similar law.
(b) The Company, the Servicer, the Trustee, the Funding Agent and
each APA Bank hereby covenants and agrees that, prior to the date which is one
year and one day after the payment in full of all outstanding Commercial Paper,
it will not institute against, or join any
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<PAGE>
other Person in instituting against, the Initial Purchaser any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
similar proceedings under any federal or state bankruptcy or similar law.
SECTION 11.15. CONFIDENTIALITY. Each APA Bank agrees to keep
information obtained by it pursuant hereto and the other Transaction Documents
identified as confidential in writing at the time of delivery confidential in
accordance with such APA Bank's customary practices and agrees that it will only
use such information in connection with the transactions contemplated by the
Pooling and Servicing Agreements and not disclose any of such information other
than (a) to such APA Bank's employees, representatives, directors, attorneys,
auditors, agents, professional advisors, trustees or affiliates who are advised
of the confidential nature of such information, (b) to the extent such
information that is in the public domain at the time of disclosure, (c) to the
extent disclosure is required by law (including applicable securities laws),
regulation, subpoena or judicial order or process (PROVIDED that notice of such
requirement or order shall be promptly furnished to the Company or the Servicer
unless such notice is legally prohibited) or requested or required by bank,
securities, insurance or investment company regulations or auditors or any
administrative body or commission to whose jurisdiction such APA Bank may be
subject, (d) to any rating agency to the extent required in connection with any
rating to be assigned to such APA Bank, (e) to Transferees or prospective
Transferrees who agree to be bound by the provisions of this Section 11.15, or
(f) with the Company's or the Servicer's prior written consent. The agreements
in this Section 11.15 shall survive the termination of this Supplement and the
Agreement and the payment of all amounts payable hereunder and thereunder.
ARTICLE XII
FINAL DISTRIBUTIONS
SECTION 12.1. CERTAIN DISTRIBUTIONS. (a) Not later than 2:00 p.m.,
New York City time, on the Distribution Date following the date on which the
proceeds from the disposition of the Receivables pursuant to subsection 7.2(b)
of the Agreement are deposited into the Series 1998-1 Non-Principal Collection
Sub-subaccount and the Series 1998-1 Principal Collection Sub-subaccount, the
Trustee shall distribute such amounts pursuant to Article III of this
Supplement.
(b) Notwithstanding anything to the contrary in this Supplement or
the Agreement, any distribution made pursuant to this Section shall be deemed to
be a final distribution pursuant to Section 9.3 of the Agreement with respect to
the VFC Certificates.
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IN WITNESS WHEREOF, the Company, the Servicer, the Trustee, the
Funding Agent, the Initial Purchaser and the APA Banks have caused this Series
1998-1 Supplement to be duly executed by their respective officers as of the day
and year first above written.
USS RECEIVABLES COMPANY, LTD.
by
---------------------------------
Name:
Title:
UNITED STATIONERS SUPPLY CO., as
Servicer,
by
---------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, not in its individual
capacity but solely as Trustee
and as Securities Intermediary,
by
---------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as
Funding Agent,
by
---------------------------------
Name:
Title:
<PAGE>
PARK AVENUE RECEIVABLES CORPORATION, as Initial
Purchaser,
by
---------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
as an APA Bank,
by
---------------------------------
Name:
Title:
<PAGE>
BANK OF AMERICA, NATIONAL TRUST
AND SAVINGS ASSOCIATION
by
---------------------------------
Name:
Title:
THE NORTHERN TRUST COMPANY
by
---------------------------------
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION
by
---------------------------------
Name:
Title:
DEUTSCHE FINANCIAL SERVICES
CORPORATION
by
---------------------------------
Name:
Title:
THE BANK OF NEW YORK
by
---------------------------------
Name:
Title:
<PAGE>
STATE STREET BANK AND TRUST COMPANY
by
---------------------------------
Name:
Title:
<PAGE>
EXECUTION COPY
RECEIVABLES SALE AGREEMENT
RECEIVABLES SALE AGREEMENT, dated as of April 3, 1998 (this
"AGREEMENT"), among UNITED STATIONERS SUPPLY CO., an Illinois corporation
("USSC") (the "SELLER", and together with each other Subsidiary of UNITED
STATIONERS INC. from time to time added as a seller hereunder pursuant to
Section 9.13, the "SELLERS"); USS RECEIVABLES COMPANY, LTD., a Cayman Islands
limited liability company (the "COMPANY"); and UNITED STATIONERS SUPPLY CO., in
its capacity as servicer (the "SERVICER").
W I T N E S S E T H:
WHEREAS, the Sellers intend to sell Receivables and Receivables
Property (both as hereinafter defined) to the Company on the terms and subject
to the conditions set forth in this Agreement;
WHEREAS, the Company desires to purchase Receivables and Receivables
Property from the Sellers on the terms and subject to the conditions set forth
in this Agreement;
WHEREAS, the Sellers and the Company desire the sale of Receivables
and Receivables Property from the Sellers to the Company to be a true sale
providing the Company with the full benefits of ownership of the Receivables;
and
WHEREAS, to obtain a portion of the necessary funds to purchase such
Receivables and Receivables Property, the Company has entered into the Pooling
Agreement and the Series 1998-1 Supplement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. CERTAIN DEFINED TERMS. (a) As used in this Agreement,
the following terms shall have the following meanings (such meanings to be
equally applicable to both the singular and plural forms of the terms defined):
<PAGE>
"ABR" means, for any day, a rate per annum equal to the greater of (a)
the Prime Rate in effect on such day and (b) the Federal Funds Effective
Rate in effect on such day plus 1/2 of 1%. Any change in the ABR due to a
change in the Prime Rate or the Federal Funds Effective Rate shall be
effective as of the opening of business on the effective day of such change
in the Prime Rate or the Federal Funds Effective Rate.
"ADDITIONAL SELLER SUPPLEMENT" means an instrument substantially in
the form of Exhibit B hereto pursuant to which a Subsidiary of United Stationers
Inc. becomes a Seller party hereto.
"AUTHORIZED OFFICERS" means those officers of the Sellers designated
in Schedule I hereto (or in such other Schedule as may be delivered by the
Sellers to the other parties hereto from time to time) as duly authorized to
execute and deliver this Agreement and any instruments or documents in
connection herewith on behalf of the Sellers and to take, from time to time, all
other actions on behalf of the Sellers in connection herewith.
"CLOSING DATE" means the date of the initial issuance of the Investor
Certificates.
"CODE" means the Internal Revenue Code of 1986, and regulations
promulgated thereunder or any successor statute and related regulations.
"CONTRACT" means a contract between any Seller and any Person pursuant
to or under which such Person shall be obligated to make payments to such
Seller.
"DOCUMENTS" has the meaning specified in subsection 5.01(r).
"DISCOUNTED PERCENTAGE" has the meaning specified in Schedule VII
hereto.
"EARLY TERMINATION" has the meaning specified in Section 6.01.
"EFFECTIVE DATE" means (i) with respect to each Seller on the date
hereof, April 3, 1998 and (ii) with respect to any Subsidiary of United
Stationers Inc. added as a Seller pursuant to Section 9.13 hereof, the Seller
Addition Date with respect to each such Subsidiary.
"ERISA AFFILIATE" means, with respect to any Person, any trade or
business (whether or not incorporated) that is a member of a group of which such
Person is a member and which is treated as a single employer under Section 414
of the Internal Revenue Code.
"EXCLUDED RECEIVABLE" means any Receivable which either (i) arises
from any Seller's advertising business; (ii) is owed by a Person who is not a
resident of the United States, its territories or possessions and/or a payment
obligation of a Person that is not denominated and payable in U.S. Dollars in
the United States; (iii) is owed by a Governmental Authority; or (iv) the
payment for which is evidenced or required to be
2
<PAGE>
evidenced by a note or other promissory instrument; PROVIDED that in the event
any Excluded Receivable is included in a Required Report, for the purposes of
Section 2.01 hereof, Section 2.1 of the Pooling Agreement and the definition of
"Collections", such receivable shall not be an Excluded Receivable.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any day, the weighted
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight federal funds transactions with members of the Federal Reserve System
arranged by federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by The Chase Manhattan Bank from three federal funds
brokers of recognized standing selected by The Chase Manhattan Bank.
"INDEMNIFIED AMOUNTS" has the meaning specified in Section 7.01.
"INITIAL SUBORDINATED NOTE AMOUNT" has the meaning specified in
subsection 8.01(b).
"LIEN" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, encumbrance, charge or security interest in or on such
asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement relating to such asset and
(c) in the case of securities, any purchase option, call or other similar right
of a third party with respect to such securities; PROVIDED, HOWEVER, that if a
lien is imposed under Section 412(n) of the Internal Revenue Code or Section
302(f) of ERISA for a failure to make a required installment or other payment to
a plan to which Section 412(n) of the Internal Revenue Code or Section 302(f) of
ERISA applies, then such lien shall not be treated as a "Lien" from and after
the time any Person who is obligated to make such payment pays to such plan the
amount of such lien determined under Section 412(n)(3) of the Internal Revenue
Code or Section 302(f)(3) of ERISA, as the case may be, and provides to the
Trustee, any Agent and each Rating Agency written evidence reasonably
satisfactory to the Rating Agencies of the release of such lien, or such lien
expires pursuant to Section 412(n)(4)(B) of the Internal Revenue Code or Section
302(f)(4)(B) of ERISA.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" (within the meaning
of Section 4001(a)(3) of ERISA) and to which such Person or any ERISA Affiliate
of such Person (other than one considered an ERISA Affiliate only pursuant to
subsection (m) or (o) of Section 414 of the Internal Revenue Code) is making or
accruing an obligation to make contributions, or has within any of the preceding
five years made or accrued an obligation to make contributions.
"OUTSTANDING SALE PRICE AMOUNT" means, at any time with respect to any
Seller, the sum of (i) the aggregate purchase price received by such Seller from
the Company with respect to the aggregate outstanding Principal Amount at such
time of the Receivables of such Seller sold to the Company by such Seller on the
Effective Date and (ii) the aggregate
3
<PAGE>
Purchase Price received by such Seller from the Company with respect to the
aggregate outstanding Principal Amount at such time of the Purchased Receivables
of such Seller.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PAYMENT DATE" has the meaning specified in subsection 2.03(a).
"PLAN" means, with respect to any Person, any pension plan (other than
a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Internal Revenue Code which is maintained for employees of such
Person or any ERISA Affiliate of such Person.
"POOLING AGREEMENT" means the Pooling Agreement, dated as of the date
hereof, among the Company, the Servicer and the Trustee on behalf of the
Holders, as such agreement may be amended, supplemented, waived, or otherwise
modified from time to time, including, without limitation, the Series 1998-1
Supplement.
"POTENTIAL PURCHASE TERMINATION EVENT" means any condition or act
specified in Section 6.01 that, with the giving of notice or the lapse of time
or both, would become a Purchase Termination Event.
"PRIME RATE" means the rate of interest per annum publicly announced
from time to time by The Chase Manhattan Bank as its prime rate in effect at its
principal office in New York City; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective.
"PURCHASE PRICE" has the meaning specified in Section 2.02.
"PURCHASE TERMINATION DATE" means, with respect to any Seller, the
date on which the Company's obligation to purchase Receivables from such Seller
shall terminate, which shall be the date on which an Early Termination occurs
with respect to such Seller.
"PURCHASE TERMINATION EVENT" has the meaning specified in Section
6.01.
"PURCHASED RECEIVABLE" means, at any time, any Receivable sold to the
Company by any Seller pursuant to, and in accordance with the terms of, this
Agreement and not theretofore resold to such Seller pursuant to subsection
2.01(b) or Section 2.06.
"PURCHASED RECEIVABLES PERCENTAGE" means, with respect to any Seller
as to which USSC has submitted a Seller Termination Request, the percentage
equivalent of a fraction, the numerator of which is an amount equal to the
aggregate outstanding Principal Amount of Purchased Receivables sold by such
Seller as of the applicable Seller Termination Request Date, and the denominator
of which is an amount equal to the aggregate outstanding Principal Amount of all
Purchased Receivables as of such date.
4
<PAGE>
"RECEIVABLE" means the indebtedness and payment obligations of any
Person to a Seller (including, without limitation, obligations constituting an
account or general intangible or evidenced by a note, instrument, contract,
security agreement, chattel paper or other evidence of indebtedness or security)
arising from a sale of merchandise or the provision of services by such Seller,
including, without limitation, any right to payment for goods sold or for
services rendered, and including the right to payment of any interest, sales
taxes, finance charges, returned check or late charges and other obligations of
such Person with respect thereto; PROVIDED that, except as otherwise expressly
provided, for all purposes hereunder "RECEIVABLES" shall not include Excluded
Receivables.
"RECEIVABLES LIST" has the meaning specified in subsection 2.01(e).
"RECEIVABLES PROPERTY" has the meaning specified in Section 2.01.
"RELATED PROPERTY" means, with respect to each Receivable:
(a) all of the applicable Seller's interest in the goods
(including returned goods), if any, relating to the sale which gave rise to
such Receivable;
(b) all other security interests or Liens, and the applicable
Seller's interest in the property subject thereto from time to time
purporting to secure payment of such Receivable, together with all
financing statements signed by an Obligor describing any collateral
securing such Receivable; and
(c) all guarantees, insurance, letters of credit and other
agreements or arrangements of whatever character from time to time
supporting or securing payment of such Receivable;
in the case of clauses (b) and (c), whether pursuant to the contract related to
such Receivable or otherwise or including without limitation, pursuant to any
obligations evidenced by a note, instrument, contract, security agreement,
chattel paper or other evidence of indebtedness or security and the proceeds
thereof.
"RELEVANT UCC STATE" means each jurisdiction in which the filing of a
UCC financing statement is necessary or desirable to perfect the Company's
interest in the Receivables.
"REPORTABLE EVENT" means any reportable event as defined in Section
4043(b) of ERISA or the regulations issued thereunder with respect to a Plan
(other than a Plan maintained by an ERISA Affiliate which is considered an ERISA
Affiliate only pursuant to subsection (m) or (o) of Section 414 of the Internal
Revenue Code).
"SEC" means the United States Securities and Exchange Commission.
"SELLER ADDITION DATE" has the meaning specified in Section 3.02.
5
<PAGE>
"SELLER ADJUSTMENT PAYMENT" has the meaning specified in Section 2.05.
"SELLER REPURCHASE PAYMENT" has the meaning specified in Section 2.06.
"SELLER TERMINATION REQUEST" has the meaning specified in subsection
9.14(a).
"SELLER TERMINATION REQUEST DATE" has the meaning specified in
subsection 9.14(a).
"SERIES 1998-1 SUPPLEMENT" means the Series 1998-1 Supplement, dated
as of the date hereof, among the Company, the Servicer and the Trustee, to the
Pooling Agreement, as each such agreement may be amended, supplemented or
otherwise modified from time to time.
"SUBORDINATED NOTE" has the meaning specified in Section 8.01.
"UCC CERTIFICATE" means a certificate substantially in the form of
Exhibit C hereto.
"WITHDRAWAL LIABILITIES" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
(b) All capitalized terms used herein and not otherwise defined have
the meanings assigned such terms in Section 1.1 of the Pooling Agreement.
Section 1.02. ACCOUNTING AND UCC TERMS. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP; and all
terms used in Article 9 of the UCC that are used but not specifically defined
herein are used herein as defined therein.
Section 1.03. OTHER TERMS. The words "herein", "hereof", and
"hereunder" and words of similar import refer to this Agreement as a whole,
including the exhibits and schedules hereto, as the same may from time to time
be amended or supplemented, and not to any particular section, subsection or
clause contained in this Agreement, and all references to Sections, Exhibits and
Schedules shall mean, unless the context clearly indicates otherwise, the
Sections hereof and the Exhibits and Schedules attached hereto, the terms of
which Exhibits and Schedules are hereby incorporated into this Agreement.
Whenever appropriate, in the context, terms used herein in the singular also
include the plural, and vice versa.
Section 1.04. COMPUTATION OF TIME PERIODS. In this Agreement, in the
computation of a period of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding".
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ARTICLE II
PURCHASE AND SALE OF RECEIVABLES
Section 2.01. PURCHASE AND SALE OF RECEIVABLES. (a) Each of the
Sellers hereby sells, assigns, transfers and conveys to the Company, without
recourse (except to the limited extent provided herein), all its respective
right, title and interest in, to and under (i) all Receivables now existing and
hereafter arising from time to time, (ii) all payment and enforcement rights
(but none of the obligations) with respect to such Receivables, (iii) all
Related Property in respect of such Receivables and (iv) all Collections with
respect to the foregoing clauses (i), (ii) and (iii) (the payment and
enforcement rights, Related Property and Collections referred to in clauses
(ii), (iii) and (iv) above are hereinafter collectively referred to as the
"RECEIVABLES PROPERTY").
(b) On each applicable Effective Date and on the date of creation of
each newly created Receivable (but only so long as no Early Termination with
respect to the Seller which created such Receivable shall have occurred and be
continuing), all of the applicable Seller's right, title and interest in, to and
under (i) in the case of each such Effective Date, all then existing Receivables
and all Receivables Property in respect of such Receivables and (ii) in the case
of each such date of creation, all such newly created Receivables and all
Receivables Property in respect of such Receivables shall be immediately and
automatically sold, assigned, transferred and conveyed to the Company pursuant
to paragraph (a) above without any further action by such Seller or any other
Person. If any Seller shall not have received payment from the Company of the
Purchase Price for any newly created Receivable and the related Receivables
Property on the Payment Date therefor in accordance with the terms of subsection
2.03(b), such newly created Receivable and the Receivables Property with respect
thereto shall, upon receipt of notice from the applicable Seller of such failure
to receive payment, immediately and automatically be sold, assigned, transferred
and reconveyed by the Company to such Seller without any further action by the
Company or any other Person.
(c) The parties to this Agreement intend that the transactions
contemplated by subsections 2.01(a) and (b) hereby shall be, and shall be
treated as, a purchase by the Company and a sale by the applicable Seller of the
Purchased Receivables and the Receivables Property in respect thereof and not a
loan secured by such Purchased Receivables and Receivables Property. All sales
of Receivables and Receivables Property by any Seller hereunder shall be without
recourse to, or representation or warranty of any kind (express or implied) by,
any Seller, except as otherwise specifically provided herein. The foregoing
sale, assignment, transfer and conveyance does not constitute and is not
intended to result in a creation or assumption by the Company of any obligation
of any Seller or any other Person in connection with the Receivables, the
Receivables Property or any agreement or instrument relating thereto, including
any obligation to any Obligor. If this Agreement does not constitute a valid
sale, assignment, transfer and conveyance of all right, title and interest of
each Seller in, to and under the Purchased Receivables and the Receivables
Property in respect thereof despite the intent of the parties hereto, such
Seller hereby grants a "security interest" (as defined in the UCC) in the
Purchased Receivables, the Receivables
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Property in respect thereof and all proceeds thereof to the Company and the
parties agree that this Agreement shall constitute a security agreement under
the UCC.
(d) In connection with the foregoing conveyances, each Seller agrees
to record and file, at its own expense, financing statements (and continuation
statements with respect to such financing statements when applicable) with
respect to the Receivables and Receivables Property now existing and hereafter
acquired by the Company from the Sellers meeting the requirements of applicable
state law in such manner and in such jurisdictions as are necessary to perfect
the Company's ownership or security interest in the Receivables and Receivables
Property, and to deliver evidence of the execution and delivery of such
financing statements to the Company on or prior to the related Effective Date.
(e) In connection with the foregoing conveyances, each Seller agrees
at its own expense, as agent of the Company, (i) to indicate on the computer
files containing a master database of Receivables that all Receivables included
in such files and all Receivables Property, have been sold to the Company in
accordance with this Agreement and (ii) to deliver to the Company computer
files, microfiche lists, a typed or printed list or other tangible evidence
reasonably acceptable to the Company (the "RECEIVABLES LIST") containing true
and complete lists, as of the Cut-Off Date, of the Obligors whose Receivables
are to be transferred to the Company on the Effective Date and the balance of
the Receivables originated by each such Obligor as of the Cut-Off Date.
Section 2.02. PURCHASE PRICE. The amount payable by the Company to a
Seller, (the "PURCHASE PRICE") for Receivables and Receivables Property on any
Payment Date under this Agreement shall be equal to the product of (a) the
aggregate outstanding Principal Amount of such Receivables as set forth in the
applicable Required Report; (b) the Discounted Percentage with respect to such
Seller.
Section 2.03. PAYMENT OF PURCHASE PRICE. (c) Upon the fulfillment of
the conditions set forth in Article III, the Purchase Price for Receivables and
the Receivables Property shall be paid or provided for by the Company in the
manner provided below on each day for which a Required Report is delivered to
the Company (each such day, a "PAYMENT DATE") in respect of a Reported Period
(which Required Report shall specify, by Seller, the Principal Amount of
Receivables being sold on such Payment Date, the aggregate Purchase Price for
such Receivables and the components of payment as provided in paragraph (b)
below). The Sellers hereby appoint the Servicer as their agent to receive, for
allocation by the Servicer to the Sellers, payments of the Purchase Price of the
Receivables and the Receivables Property sold to the Company and hereby
authorize the Company to make all such payments due to any Seller directly to an
account of, or as otherwise directed by, the Servicer. The Servicer hereby
accepts and agrees to such appointment. All payments under this Agreement shall
be made not later than 3:00 p.m. (New York City time) on the date specified
therefor in Dollars in same day funds or by check, as the Servicer shall elect,
and to the bank account designated in writing by the Servicer to the Company.
(b) The Purchase Price for Receivables and Receivables Property shall
be paid by the Company on each Payment Date as follows:
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(i) by netting the amount of any Seller Adjustment Payments or
Seller Repurchase Payments pursuant to Section 2.05 or 2.06, respectively,
against such Purchase Price;
(ii) to the extent available for such purpose, in cash from
Collections released to the Company pursuant to the Pooling Agreement;
(iii) to the extent available for such purpose, in cash from the
net proceeds of a transfer of interests in Purchased Receivables by the
Company to other Persons;
(iv) at the option of the Company, by means of an addition to the
principal amount of the Subordinated Note in an aggregate amount equal to
the remaining portion of the Purchase Price; PROVIDED, HOWEVER, that with
respect to any Seller, the outstanding principal amount of such Seller's
interest in the Subordinated Note shall not at any time exceed 25% of the
Outstanding Sale Price Amount with respect to such Seller; PROVIDED FURTHER
that the Company may pay the Purchase Price by means of additions to the
principal amount of the Subordinated Note only if, at the time of such
payment and after giving effect thereto, the fair market value of the
Company's assets, including, without limitation, any beneficial interests
in or indebtedness of a trust and all Receivables and Receivables Property
the Company owns, is greater than the amount of its liabilities including
its liabilities on the Subordinated Note and all interest and other fees
due and payable under the Pooling Agreement and the other Transaction
Documents. Any such addition to the principal amount of the Subordinated
Note shall be allocated among the Sellers (PRO RATA according to the
Principal Amount of Receivables sold by each Seller) by the Servicer in
accordance with the provisions of this subsection 2.03(b)(iv) and Section
8.01. The Servicer may evidence such additional principal amounts by
recording the date and amount thereof on the grid attached to such
Subordinated Note, PROVIDED that the failure to make any such recordation
or any error in such grid shall not adversely affect any Seller's rights;
and
(v) in cash from the proceeds of capital contributed by USSC to
the Company, if any, in respect of its equity interest in the Company.
(c) The Servicer shall be responsible, in its sole discretion but in
accordance with the preceding subsection 2.03(b), for allocating among the
Sellers the payment of the Purchase Price for Receivables and any amounts netted
therefrom pursuant to subsection 2.03(b)(i), which allocation shall be, subject
to the first proviso contained in subsection 2.03(b)(iv), either in the form of
cash received from the Company or as an addition to the principal amount of a
Seller's interest in the Subordinated Note.
(d) Whenever any payment to be made under this Agreement shall be
stated to be due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day. Amounts not paid when due in accordance
with the terms of this
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Agreement shall bear interest at a rate equal at all times to the ABR PLUS 2%,
payable on demand.
Section 2.04. NO REPURCHASE. Except to the extent expressly set
forth herein, no Seller shall have any right or obligation under this Agreement,
by implication or otherwise, to repurchase from the Company any Purchased
Receivables or Receivables Property or to rescind or otherwise retroactively
affect any purchase of any Purchased Receivables or Receivables Property after
the Payment Date relating thereto.
Section 2.05. REBATES, ADJUSTMENTS, RETURNS AND REDUCTIONS;
MODIFICATIONS. From time to time, a Seller may make Dilution Adjustments to
Receivables in accordance with this Section 2.05 and subsection 5.03(c). The
Sellers, jointly and severally, agree to pay to the Company in cash, on the
first Business Day immediately succeeding the date of the grant of any Dilution
Adjustment (regardless of which Seller shall have granted such Dilution
Adjustment), the amount of any such Dilution Adjustment (a "SELLER ADJUSTMENT
PAYMENT"); PROVIDED that, prior to the occurrence of any Early Termination with
respect to all Sellers, any such Seller Adjustment Payment due to the Company on
any Payment Date shall, on such Payment Date, be netted against the Purchase
Price of newly created Receivables in accordance with subsection 2.03(b)(i) to
the extent of such Purchase Price and the remaining amount of such Seller
Adjustment Payment due to the Company after such netting, if any, shall be paid
to the Company on such date in cash. The amount of any Dilution Adjustment made
with respect to any Reported Period shall be set forth on the Required Report
prepared with respect to such Reported Period.
Section 2.06. LIMITED REPURCHASE OBLIGATION. In the event that (i)
any representation or warranty contained in Section 4.02 in respect of any
Receivable transferred to the Company is not true and correct in any material
respect on the applicable Payment Date, or (ii) there is a breach of any
covenant contained in subsection 5.01(d), (g) or (h) or Section 5.03 with
respect to any Receivable and such breach has a material adverse effect on the
Company's interest in such Receivable or (iii) the Company's interest in any
Receivable is not a first priority perfected ownership or security interest at
any time as a result of any action taken by, or any failure to take action by,
any Seller, then the Sellers, jointly and severally, agree to pay to the Company
in cash an amount equal to the Purchase Price of such Receivable (whether the
Company paid such Purchase Price in cash or otherwise) less Collections received
by the Company in respect of such Receivable, regardless of which Seller shall
have been responsible for such incorrectness or breach, such payment to occur no
later than the Payment Date occurring on the 30th day (or, if such 30th day is
not a Payment Date, on the Payment Date immediately succeeding such 30th day)
after the day such breach or incorrectness becomes known (or should have become
known with due diligence) to any Seller (unless such breach or incorrectness
shall have been cured on or before such day); PROVIDED that, prior to any Early
Termination with respect to all Sellers, any such payment due and owing to the
Company on such Payment Date shall be netted against the Purchase Price of newly
created Receivables in accordance with subsection 2.03(b)(i) to the extent of
such Purchase Price and the remaining amount of such payment due to the Company
after such netting, if any, shall be paid to the Company in cash to the extent
still unpaid on such Payment Date. Any payment by any Seller pursuant to this
Section 2.06 is referred to as a
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"SELLER REPURCHASE PAYMENT." The obligation to reacquire any Receivable shall,
upon satisfaction thereof, constitute the sole remedy respecting the event
giving rise to such obligation available to the Company. Simultaneously with
any Seller Repurchase Payment with respect to any Receivable, such Receivable
and the Receivables Property with respect thereto shall immediately and
automatically be sold, assigned, transferred and conveyed by the Company to the
applicable Seller without any further action by the Company or any other Person.
Section 2.07. OBLIGATIONS UNAFFECTED. The obligations of the Sellers
to the Company under this Agreement shall not be affected by reason of any
invalidity, illegality or irregularity of any Receivable or any sale of a
Receivable.
Section 2.08. CERTAIN CHARGES. Each Seller and the Company agree
that late charge revenue, reversals of discounts, other fees and charges and
other similar items, whenever created, accrued in respect of Purchased
Receivables shall be the property of the Company notwithstanding the occurrence
of an Early Termination and all Collections with respect thereto shall continue
to be allocated and treated as Collections in respect of Purchased Receivables.
Section 2.09. CERTAIN ALLOCATIONS. The Sellers hereby agree that,
following the occurrence of an Early Termination, all Collections and other
proceeds received in respect of Receivables generated by the Sellers shall be
applied, FIRST to pay the outstanding Principal Amount of Purchased Receivables
(as of the date of such Early Termination) of the Obligor to whom such
Collections are attributable until such Purchased Receivables are paid in full
and, SECOND to the related Seller to pay Receivables of such Obligor not sold to
the Company; PROVIDED, HOWEVER, that notwithstanding the foregoing, if an
Obligor indicates that a particular Collection be applied to a specific
Receivable of such Obligor, then such Collection shall be applied to pay such
Receivable.
Section 2.10. FURTHER ASSURANCES. From time to time at the request
of a Seller, the Company shall deliver to such Seller such documents,
assignments, releases and instruments of termination as such Seller may
reasonably request to evidence the reconveyance by the Company to such Seller of
a Receivable pursuant to the terms of Section 2.01(b) or Section 2.06, PROVIDED
that the Company shall have been paid all amounts due thereunder; and the
Company and the Servicer shall take such action as such Seller may reasonably
request, at the expense of such Seller, to assure that any such Receivable, the
Related Property and Collections with respect thereto do not remain commingled
with other Collections hereunder.
Section 2.11. PURCHASE OF SELLERS' INTEREST IN RECEIVABLES AND
RECEIVABLES PROPERTY. (a) In the event of any breach by any Seller of any of the
representations and warranties set forth in subsection 4.02(a), (b), (c), (e),
(f) or (g), as of the date made, which breach has a material adverse effect on
the interests of the Company in the Receivables or the Receivables Property,
then the Company, by notice then given in writing to such Seller, may direct
such Seller to purchase all Receivables and Receivables Property and such
Seller, jointly and severally with each of the Sellers, shall be obligated to
make such purchase on
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the next Distribution Date occurring at least five Business Days after receipt
of such notice on the terms and conditions set forth in subsection 2.11(b)
below; PROVIDED, HOWEVER, that no such purchase shall be required to be made if,
by such Distribution Date, the representations and warranties contained in
subsections 4.02(a), (b), (c), (e), (f) or (g) shall be true and correct in all
material respects, and any material adverse effect on the Company caused thereby
has been cured.
(b) Such Sellers, jointly and severally with each of the Sellers,
shall, as the purchase price for the Receivables and Receivables Property to be
purchased pursuant to subsection 2.11(a) above, pay to the Company, on the
Business Day preceding such Distribution Date, an amount equal to the purchase
price of the Purchased Receivables, less Collections received by the Company in
respect of such Purchased Receivables, as of such Distribution Date. Upon
payment of such amount, in immediately available funds, to the Company, the
Company's rights with respect to the Purchased Receivables shall terminate and
such interest therein will be transferred to such Seller and the Company shall
have no further rights with respect thereto. If the Company gives notice
directing the Seller to purchase the Purchased Receivables as provided above,
the obligation of such Seller to purchase the Purchased Receivables pursuant to
this Section 2.11 shall upon satisfaction thereof constitute the sole remedy
respecting an event of the type specified in the first sentence of this Section
2.11 available to the Company.
ARTICLE III
CONDITIONS TO PURCHASES
Section 3.01. CONDITIONS PRECEDENT TO COMPANY'S INITIAL PURCHASE.
The obligation of the Company to purchase Receivables and Receivables Property
hereunder on the Effective Date from the Sellers is subject to the conditions
precedent that the Company shall have received on or before the date of such
purchase the following, each (unless otherwise indicated) dated the day of such
sale and in form and substance reasonably satisfactory to the Company:
(a) RESOLUTIONS. Copies of the resolutions of the Board of Directors
of each Seller approving this Agreement and the other Transaction Documents
to be delivered by such Seller and the transactions contemplated thereby,
certified by the Secretary or Assistant Secretary of such Seller;
(b) SECRETARY'S CERTIFICATE. A certificate of the Secretary or
Assistant Secretary of each Seller certifying the names and true signatures
of the officers authorized on behalf of such Seller to sign this Agreement
and the other Transaction Documents to be delivered by it (on which
certificates the Company may conclusively rely until such time as the
Company shall receive from any such Seller a revised certificate with
respect to such Seller meeting the requirements of this subsection (b));
(c) CORPORATE DOCUMENTS. The certificate or articles of
incorporation of each Seller, duly certified by the secretary of state of
such Seller's jurisdiction of
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incorporation, as of a recent date acceptable to the Company, together with
a copy of the by-laws of such Seller, duly certified by the Secretary or an
Assistant Secretary of such Seller,
(d) UCC CERTIFICATE, UCC FINANCING STATEMENTS. (i) A UCC Certificate
duly executed by a Responsible Officer of the applicable Seller and dated
such date of purchase and (ii) executed copies of such proper financing
statements, filed prior to the Closing Date, naming the applicable Seller
as the seller and the Company as the purchaser of the Receivables and the
Receivables Property, in each jurisdiction in which the Company (or any of
its assignees) deems it necessary or desirable to perfect the Company's
ownership interest in all Receivables and Receivables Property under the
UCC or any comparable law of such jurisdiction;
(e) UCC SEARCHES. A written search report listing all effective
financing statements that name the applicable Seller as debtor or assignor
and that are filed in the jurisdictions in which filings were made pursuant
to subsection 3.01(d) and in any other jurisdictions that the Company
determines are necessary or appropriate, together with copies of such
financing statements (none of which, except for those described in
subsection 3.01(d) shall cover any Receivables or Receivables Property),
and tax and judgment lien searches showing no such liens that are not
permitted by the Transaction Documents;
(f) OTHER TRANSACTION DOCUMENTS. Original copies, executed by each
of the parties thereto, of each of the other Transaction Documents to be
executed and delivered in connection herewith;
(g) BACK-UP SERVICING ARRANGEMENTS. Evidence that each Seller
maintains disaster recovery systems and back-up computer and other
information management systems that, in the Company's reasonable judgment,
are sufficient to protect such Seller's business against material
interruption or loss or destruction of its primary computer and information
management systems.
(h) CONSENTS. Copies of all consents, if any (including, without
limitation, consents under loan agreements and indentures to which any
Seller or its Affiliates are parties), necessary to consummate the
transactions contemplated by the Transaction Documents;
(i) LEGAL OPINIONS. One or more legal opinions from counsel to the
Sellers and counsel to the Company to the effect that:
(A) the sales of Receivables by each Seller to the Company
pursuant to this Agreement are true sales and that such Receivables
would not be property of such Seller's bankruptcy estate;
(B) a court should not order the substantive consolidation of
the assets and liabilities of the Company with those of any Seller;
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(C) to the effect that each Seller and the Company, as
applicable, has all approvals, judicial, regulatory, legal or
otherwise, needed to execute, deliver and perform each Transaction
Document to which it is a party and that no conflict or default will
occur as a result of the execution, delivery and performance thereof;
(D) to the effect that the Company has a perfected ownership or
security interest in the Receivables and Receivables Property; and
(E) addressing other customary matters.
All of the legal opinions referred to in this subsection 3.01(i) shall be
addressed to the Trustee and any other Person reasonably requested by the
Company.
(j) LOCKBOX AGREEMENT. With respect to each Lockbox Processor, a
Lockbox Agreement signed by the Servicer, the Company, the Trustee and such
Lockbox Processor, such Lockbox Agreement to be in substantially the form
of Exhibit A to the Pooling Agreement.
(k) LIST OF OBLIGORS. A Receivables List.
Section 3.02. CONDITIONS PRECEDENT TO THE ADDITION OF A SELLER. No
Subsidiary of United Stationers Inc. approved by the Company as an additional
Seller pursuant to Section 9.13 shall be added as a Seller hereunder unless the
conditions set forth below shall have been satisfied on or before the date
designated for the addition of such Seller (the "SELLER ADDITION DATE"):
(a) ADDITIONAL SELLER SUPPLEMENT, UCC CERTIFICATE. The Company shall
have received (with a copy for the Trustee) (i) an Additional Seller
Supplement duly executed and delivered by such Seller and (ii) a UCC
Certificate duly executed by a Responsible Officer of such Seller and dated
the related Seller Addition Date.
(b) RESOLUTIONS. The Company shall have received copies of duly
adopted resolutions of the Board of Directors of such Seller as in effect
on the related Seller Addition Date and in form and substance reasonably
satisfactory to the Company, authorizing this Agreement, the documents to
be delivered by such Seller hereunder and the transactions contemplated
hereby, certified by the Secretary or Assistant Secretary of such Seller.
(c) SECRETARY'S CERTIFICATE. The Company shall have received duly
executed certificates of the Secretary or an Assistant Secretary of such
Seller, dated the related Seller Addition Date, certifying the names and
true signatures of the officers authorized on behalf of such Seller to sign
the Additional Seller Supplement or any instruments or documents in
connection with this Agreement.
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(d) CORPORATE DOCUMENTS. The Company shall have received the
certificate or articles of incorporation of such Seller, duly certified by
the secretary of state of such Seller's jurisdiction of incorporation, as
of a recent date acceptable to the Company, together with a copy of the
by-laws of such Seller, duly certified by the Secretary or an Assistant
Secretary of such Seller,
(e) LOCKBOX AGREEMENT. A Lockbox Account with respect to Receivables
to be sold by such Seller shall have been established in the name of the
Company, and the Servicer shall have delivered with respect to such Lockbox
Account a Lockbox Agreement signed by it, the Company and the Trustee to
the applicable Lockbox Processor, such Lockbox Agreement to be in
substantially the form of Exhibit A to the Pooling Agreement.
(f) UCC SEARCHES. The Company shall have received reports of UCC and
other searches of such Seller with respect to the Receivables and the
Receivables Property reflecting the absence of Liens thereon, except Liens
created in connection with a transfer by the Company of such Purchased
Receivables and except for Liens as to which the Company has received UCC
termination statements to be filed on or prior to the related Seller
Addition Date.
(g) UCC FINANCING STATEMENTS. Such Seller shall have filed and
recorded, at its own expense, UCC-1 financing statements naming the Company
as purchaser and such Seller as seller with respect to the Receivables and
the Receivables Property (excluding returned merchandise) in such manner
and in such jurisdictions as are necessary or desirable to perfect the
Company's ownership or security interest therein under the UCC and
delivered evidence of such filings to the Company; and all other action
necessary or desirable, in the opinion of the Company, to perfect the
Company's ownership or security interest in the Receivables shall have been
duly taken.
(h) LIST OF OBLIGORS. Such Seller shall have delivered to the
Company a microfiche, a typed or printed list or other tangible evidence
reasonably acceptable to the Company showing as of a date acceptable to the
Company prior to the related Seller Addition Date the Obligors whose
Receivables are to be transferred to the Company and the balance of the
Receivables with respect to each such Obligor as of such date.
(i) OPINIONS. The Company shall have received (i) legal opinions on
behalf of such Seller as to general corporate matters of such Seller
(including, without limitation, an opinion as to the perfection and
priority of the Company's interest in the Purchased Receivables) and (ii)
confirmation (A) as to the "true sale" nature of the sale of Receivables of
such Seller hereunder and (B) as to the absence of substantive
consolidation issues between such Seller, United Stationers Inc. and USSC
on the one hand and the Company on the other hand, all in form and
substance reasonably satisfactory to the Company. Such legal opinions and
confirmation shall
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be addressed to the Trustee and any other Person reasonably requested by
the Company.
(j) BACK-UP SERVICING ARRANGEMENTS. The Company shall have received
evidence that such Seller maintains disaster recovery systems and back-up
computer and other information management systems that, in the Company's
reasonable judgment, are sufficient to protect such Seller's business
against material interruption or loss or destruction of its primary
computer and information management systems.
(k) CONSENTS. The Company shall have received copies of all consents
with respect to such Seller, if any (including, without limitation,
consents under loan agreements and indentures to which such Seller or its
Affiliates are parties), necessary to consummate the transactions
contemplated by the Transaction Documents;
(l) PARTY TO SERVICING AGREEMENT. Such additional Seller shall have
become a party to the Servicing Agreement in its capacity as a Sub-Servicer
thereunder.
Section 3.03. CONDITIONS PRECEDENT TO ALL THE COMPANY'S PURCHASES OF
RECEIVABLES. The obligation of the Company to pay for any Receivable and the
Receivables Property with respect thereto on each Payment Date (including the
Effective Date) shall be subject to the further conditions precedent that, on
and as of such Payment Date:
(a) the following statements shall be true (and the acceptance by the
relevant Seller of the Purchase Price for such Receivable on such Payment
Date shall constitute a representation and warranty by such Seller that on
such Payment Date such statements are true):
(i) the representations and warranties of such Seller contained
in Section 4.02 shall be true and correct in all material respects on
and as of such Payment Date as though made on and as of such date
except to the extent any such representation or warranty is expressly
made only as of another date (in which case it shall be true and
correct in all material respects on and as of such other date);
(ii) after giving effect to such purchase, no (A) Early
Termination with respect to such Seller or (B) Potential Purchase
Termination Event with respect to a Purchase Termination Event set
forth in clause (g)(ii) of Section 6.01 shall have occurred and be
continuing; and
(iii) there has been no material adverse change since the date of
this Agreement in the collectibility of the Receivables taken as a
whole;
(b) the Company and the Trustee shall be satisfied that such Seller's
systems, procedures and recordkeeping relating to the Purchased Receivables
remain in all material respects sufficient and satisfactory in order to
permit the purchase and
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administration of the Purchased Receivables in accordance with the terms
and intent of this Agreement;
(c) the Company shall have received payment in full of all amounts
for which payment is due from such Seller pursuant to Sections 2.05, 2.06
or 7.01;
(d) the Company shall have received such other approvals, opinions or
documents as the Company may reasonably request; and
(e) such Seller shall have complied with all of its covenants in all
material respects and satisfied all of its obligations in all material
respects under this Agreement required to be complied with or satisfied as
of such date;
PROVIDED, HOWEVER, that the failure of such Seller to satisfy any of the
foregoing conditions shall not prevent such Seller from subsequently selling
Receivables upon satisfaction of all such conditions or exercising its rights
under subsection 2.01(b).
Section 3.04. CONDITION PRECEDENT TO EACH SELLER'S OBLIGATIONS. The
obligation of a Seller on each Payment Date (including on the Effective Date)
shall be subject to the condition precedent that, on such date, the following
statement shall be true (and the payment by the Company of the Purchase Price
for such Receivable on such date shall constitute a representation and warranty
by the Company that on such Payment Date such statement is true): no Early
Amortization Event or Potential Early Amortization Event of a type, with respect
to the Company, set forth in subsection 7.1(a) of the Pooling Agreement shall
have occurred and be continuing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants as to itself for the benefit of the Sellers as
follows:
(a) It (i) is a limited liability company duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
formation, and is duly qualified as a foreign limited liability company and
is in good standing in each jurisdiction in which the ownership of its
property or its business as conducted and proposed to be conducted require
such qualification or in which the failure to so qualify would not
reasonably be expected to have a Material Adverse Effect, (ii) has the
requisite limited liability company power and authority to effect the
transactions contemplated hereby, and (iii) has all requisite limited
liability company power and authority and the legal right to own, pledge,
mortgage and operate its properties, and to conduct its business as now or
currently proposed to be conducted.
(b) The execution, delivery and performance by it of this Agreement
and all instruments and documents to be delivered hereunder by it, and the
transactions
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contemplated hereby and thereby, (i) are within its limited liability
company powers, have been duly authorized by all necessary limited
liability company action, including the consent of shareholders where
required, and do not (A) contravene its memorandum and articles of
association, (B) violate any law or regulation or any order or decree of
any court or governmental instrumentality, (C) conflict with or result in
the breach of, or constitute a default under, any indenture, mortgage or
deed of trust or any material lease, agreement or other instrument binding
on or affecting it or any of its respective subsidiaries or any of its
material properties or (D) result in or require the creation or imposition
of any Lien EXCEPT as created or imposed hereunder or under the Pooling
Agreement, and no transaction contemplated hereby requires compliance on
its part with any bulk sales act or similar law, and (ii) do not require
the consent of, authorization by or approval of or notice to or filing or
registration with, any governmental body, agency, authority, regulatory
body or any other Person other than those which have been obtained or made
EXCEPT for the filing of the financing statements referred to in ARTICLE
III hereof, which filings the Sellers hereby represent shall have been duly
made prior to or substantially contemporaneously with any purchases of
Receivables and other Receivables Property and shall at all times be in
full force and effect (except as they may be terminated by the Company).
This Agreement has been duly executed and delivered by the Company and
constitutes its legal, valid and binding obligation, enforceable against it
in accordance with its terms except (A) as such enforceability may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws now or hereafter in effect
affecting the enforcement of creditors' rights in general, and (B) as such
enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity).
Section 4.02. REPRESENTATIONS AND WARRANTIES OF THE SELLERS. Each
Seller hereby represents and warrants for the benefit of the Company and its
assigns on the Closing Date and on each Payment Date, as follows:
(a) ORGANIZATION AND GOOD STANDING. Such Seller (i) is a corporation
duly organized and validly existing as a corporation in good standing under
the laws of the state of its incorporation, (ii) is duly qualified as a
foreign corporation and is in good standing in each jurisdiction in which
the failure to so qualify would reasonably be expected to have a Material
Adverse Effect and (iii) and has full corporate power, authority and legal
right to own its properties and conduct its business as such properties are
presently owned and such business is presently conducted, and to execute,
deliver and perform its obligations under this Agreement.
(b) DUE QUALIFICATION. Such Seller has obtained all necessary
licenses and approvals in all jurisdictions in which the ownership or lease
of property or the conduct of its business requires such qualification,
licenses or approvals and where the failure to preserve and maintain such
qualification, licenses or approvals is reasonably likely to have a
Material Adverse Effect.
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(c) DUE AUTHORIZATION. The execution and delivery of this Agreement
and the other Transaction Documents to which it is a party and the
consummation of the transactions provided for therein have been duly
authorized by such Seller by all necessary corporate action on its part.
(d) NO DEFAULT. Such Seller is not in default under or with respect
to any of its Contractual Obligations in any respect which would be
reasonably likely to have a Material Adverse Effect with respect to such
Seller. No (i) Early Termination or (ii) Potential Purchase Termination
Event with respect to a Purchase Termination Event set forth in clause
(g)(ii) of Section 6.01, in each case with respect to such Seller, has
occurred and is continuing.
(e) VALID SALE; BINDING OBLIGATIONS. Each transfer of Receivables
and Receivables Property made pursuant to this Agreement shall constitute a
valid sale, transfer and assignment of the Receivables and the Receivables
Property to the Company which is perfected and of first priority under
applicable law, enforceable against creditors of, and purchasers from, such
Seller; and this Agreement constitutes, and each other Transaction Document
to be signed by such Seller when duly executed and delivered will
constitute, an enforceable obligation of such Seller in accordance with its
terms, except (A) as such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
or other similar laws now or hereafter in effect affecting the enforcement
of creditors' rights in general, and (B) as such enforceability may be
limited by general principles of equity (whether considered in a suit at
law or in equity).
(f) NO VIOLATION. The execution, delivery and performance of, and
the consummation of the transactions contemplated by, this Agreement and
the other Transaction Documents and the fulfillment of the terms hereof and
thereof will not (i) conflict with, result in any breach of any of the
terms and provisions of, or constitute (with or without notice or lapse of
time or both) a default (which, in the case of clauses (B) and (C) below
would reasonably be expected to cause a Material Adverse Effect) under, (A)
the articles or certificate of incorporation or by-laws of such Seller, (B)
any contract, indenture, loan agreement, mortgage, deed of trust, or, (C)
other agreement or instrument to which such Seller is a party or by which
such Seller or any of its material properties is bound, (ii) result in the
creation or imposition of any Lien upon any of its properties pursuant to
the terms of any such contract, indenture, loan agreement, mortgage, deed
of trust, or other agreement or instrument, other than this Agreement and
the other Transaction Documents, or (iii) violate any law or any order,
rule, or regulation of any court or of any federal, state, local or other
regulatory body, administrative agency, or other governmental
instrumentality of the United States of America having jurisdiction over
such Seller or any of its properties.
(g) NO PROCEEDINGS. There are no proceedings or investigations
pending or, to the knowledge of such Seller, threatened against such Seller
before any court, regulatory body, administrative agency, or other tribunal
or governmental instrumentality (i) asserting the invalidity of this
Agreement or any other Transaction
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Document, (ii) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or any other Transaction
Document, (iii) seeking any determination or ruling that, in the reasonable
judgment of such Seller, could materially and adversely affect the
performance by such Seller of its obligations under this Agreement or any
other Transaction Document or (iv) seeking any determination or ruling that
could materially and adversely affect the validity or enforceability of
this Agreement or any other Transaction Document.
(h) BULK SALES ACT. No transaction contemplated by this Agreement or
any other Transaction Document with respect to such Seller requires
compliance with, or will be subject to avoidance under, any bulk sales act
or similar law.
(i) GOVERNMENT APPROVALS. No authorization or approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body in the United States of America is required for the due
execution, delivery and performance by such Seller of this Agreement or any
other Transaction Document to which it is a party EXCEPT for the filing of
the UCC financing statements referred to in Article III, all of which, at
the time required in Article III, shall have been duly made and shall be in
full force and effect.
(j) BONA FIDE RECEIVABLES. Each Receivable of such Seller is or will
be an account receivable arising out of such Seller's performance in
accordance with the terms of the Contract, if any, giving rise to such
Receivable. Such Seller has no knowledge of any fact which should have led
it to expect at the time of its classification of any Receivable as an
Eligible Receivable hereunder that such Eligible Receivable would not be
paid in full when due. Each Receivable sold by it hereunder and designated
on a Required Report to be an Eligible Receivable will be, at its
respective Payment Date, an Eligible Receivable. The aggregate outstanding
Principal Amount of Receivables so sold by it on any Payment Date and so
designated as Eligible Receivables is correctly set forth on the Required
Report with respect to such Payment Date.
(k) OFFICE. The principal place of business and the chief executive
office of such Seller are as indicated for such Seller on Schedule II
hereto and have not changed during the period of four consecutive months
ending on such date (unless otherwise indicated on the UCC Certificate
delivered by such Seller pursuant to subsection 3.01(d) or 3.02(a), as the
case may be), and the offices where such Seller keeps its records
concerning the Receivables and related Contracts and all purchase orders
and other agreements related to the Receivables are as indicated for such
Seller on Schedule II hereto (or at such other locations, notified to the
Company in accordance with Section 5.01(i), in jurisdictions where all
action required by subsection 5.01(p) has been taken and completed).
(l) MARGIN REGULATIONS. No use of any funds obtained by such Seller
under this Agreement or the other Transaction Documents will conflict with
or
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contravene any of Regulations G, T, U and X promulgated by the Board of
Governors of the Federal Reserve System from time to time.
(m) QUALITY OF TITLE. Each Seller is the legal and beneficial owner
of each Receivable and all Receivables Property which is to be transferred
to the Company by such Seller, and such Receivables and Receivables
Property shall be transferred by such Seller free and clear of any Lien
(other than any Lien arising under any other Transaction Document, or
arising solely as the result of any action taken by the Company hereunder);
prior to such transfer such Seller shall have made all filings under
applicable law in each relevant jurisdiction in order to protect and
perfect the Company's ownership or security interest in all Receivables and
Receivables Property against all creditors of, and purchasers from, such
Seller; and the Company shall have acquired and shall continue to have
maintained a valid and perfected first priority ownership or security
interest in each Receivable and the Receivables Property free and clear of
any Lien (other than any Lien arising solely as the result of any action
taken by the Company hereunder or by the Trustee); and no effective
financing statement or other instrument similar in effect covering any
Receivable, any interest therein or any Receivables Property with respect
thereto is on file in any recording office except such as may be filed in
favor of (i) such Seller in accordance with the Contracts, (ii) the Company
pursuant to this Agreement and (iii) the Trustee pursuant to the Pooling
Agreement.
(n) ACCURACY OF INFORMATION. All factual written information
heretofore or contemporaneously furnished by such Seller or its Affiliates
(other than the Company) to the Company for purposes of or in connection
with any Transaction Document or any transaction contemplated hereby or
thereby is, and all other such factual, written information hereafter
furnished (if prepared by such Seller or any Affiliate or, if not prepared
by such Seller or any Affiliate, to the extent that information contained
therein was supplied by such Seller or any Affiliate) by such Seller or any
Affiliate (other than the Company) to the Company pursuant to or in
connection with any Transaction Document shall be, true and accurate in
every material respect on the date as of which such information is or will
be furnished (unless such information relates to another date), and such
information is not, and shall not be (as the case may be) incomplete by
omitting to state a material fact or any fact necessary to make the
statements contained therein not misleading as of such date.
(o) PROCEEDS BANKS, PAYMENT INSTRUCTIONS. The names and addresses of
all the Lockbox Processors, together with the account numbers of the
Lockbox Accounts into which collections are deposited at such institutions,
are specified in Schedule III. The Sellers have transferred all of their
right, title and interest in each Lockbox Account to the Company. Each
Lockbox Processor has executed and delivered to the Company a Lockbox
Agreement. Each Seller, or the Servicer on its behalf, will instruct all
Obligors to make all payments in respect of the Receivables and Related
Property in accordance with subsection 2.3(a) of the Servicing Agreement.
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(p) VALID TRANSFERS. No transfer of any Receivables or any
Receivables Property to the Company by such Seller constitutes a fraudulent
transfer or fraudulent conveyance or is otherwise void or voidable under
similar laws or principles, the doctrine of equitable subordination or for
any other reason. The transfers of Receivables and Receivables Property by
such Seller to the Company pursuant to this Agreement, and all other
transactions between such Seller and the Company, have been and will be
made in good faith and without intent to hinder, delay or defraud creditors
of such Seller, and such Seller acknowledges that it has received and will
receive fair consideration and reasonably equivalent value for the
purchases by the Company of Receivables and Receivables Property hereunder.
The purchase of Receivables and Receivables Property by the Company from
such Seller constitutes a true sale of such Receivables and Receivables
Property under applicable state law.
(q) TRADE NAMES. Such Seller uses no trade name in the furnishing of
its products or services which generate Receivables other than its actual
corporate name and the trade names set forth for such Seller in Schedule VI
and in the case of trade names, only in the jurisdictions indicated on
Schedule VI. During the five years preceding the date hereof, except as
set forth in Schedule VI and in the case of trade names, only in the
jurisdictions indicated on Schedule VI, such Seller (i) has not been known
by any legal name or trade name other than its corporate name, and (ii) has
not been the subject of any merger or other corporate reorganization.
(r) COMPLIANCE WITH APPLICABLE LAWS. Such Seller is in material
compliance with the requirements of all applicable laws, rules,
regulations, and orders of all governmental authorities (federal, state,
local or foreign, and including, without limitation, environmental laws), a
breach of any of which, individually or in the aggregate, would be
reasonably likely either (i) to have a material adverse effect on (A) the
business, operations, business prospects or condition (financial or other)
of such Seller or (B) the ability of such Seller to perform its obligations
under this Agreement and the other Transaction Documents, or (ii) to impair
the collectibility of any Receivables or any Receivables Property or the
enforceability or validity of any Contract.
(s) TAXES. Such Seller has filed all federal and all material state
and local tax returns required by law to be filed and has paid or made
adequate provision for the payment of all taxes, assessments and other
governmental charges due from such Seller or is contesting any such tax,
assessment or other governmental charge in good faith through appropriate
proceedings, except where such failure would not reasonably be expected to
cause a Material Adverse Effect. Such Seller knows of no basis for any
material additional tax assessment for any fiscal year for which adequate
reserves have not been established.
(t) ACCOUNTING TREATMENT. Such Seller will not prepare any financial
statements that account for the transactions contemplated hereby in a
manner which is, nor will it in any other respect (except for tax purposes)
account for the
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transactions contemplated hereby in a manner which is, inconsistent with
the Company's ownership interest in the Receivables and Receivables
Property.
(u) ERISA MATTERS.
(i) Except as specifically disclosed in Schedule VIII hereto,
such Seller and each of its ERISA Affiliates are in compliance in all
material respects with the applicable provisions of ERISA and the
regulations and published interpretations thereunder with respect to
each Plan of such Seller or any of its ERISA Affiliates, except for
such noncompliance which could not reasonably be expected to result in
a Material Adverse Effect with respect to such Seller.
(ii) No Reportable Event has occurred as to which such Seller or
any of its ERISA Affiliates was required to file a report with the
PBGC, other than reports for which the 30-day notice requirement is
waived, reports that have been filed and reports the failure of which
to file would not reasonably be expected to result in a Material
Adverse Effect with respect to such Seller.
(iii) Except as specifically disclosed in Schedule VIII hereto,
as of the Effective Date, the present value of all benefit liabilities
under each Plan of such Seller or any of its ERISA Affiliates (on an
ongoing basis and based on those assumptions used to fund such Plan)
did not, as of the last valuation report applicable thereto, exceed
the value of the assets of such Plan, except to the extent that such
excess would not have a Material Adverse Effect with respect to such
Seller.
(iv) Neither such Seller nor any of its ERISA Affiliates has
incurred any Withdrawal Liability that could reasonably be expected to
result in a Material Adverse Effect with respect to such Seller.
(v) Neither such Seller nor any of its ERISA Affiliates has
received any notification that any Multiemployer Plan is in
reorganization or has been terminated within the meaning of Title IV
of ERISA, or that a reorganization or termination has resulted or
could reasonably be expected to result, through increases in the
contributions required to be made to such Plan or otherwise, in a
Material Adverse Effect with respect to such Seller.
(v) CREDIT AND COLLECTION POLICIES. Schedule IV accurately describes
such Seller's Policies relating to Contracts and Receivables in effect on
the Closing Date.
(w) SOLVENCY. Both prior to and after giving effect to the
transactions contemplated by the Transaction Documents, (i) the assets of
such Seller, at fair valuation, will exceed its liabilities (including
contingent liabilities), (ii) the capital of such Seller will not be
unreasonably small to conduct its business, and (iii) such Seller will not
have incurred debts, and does not intend to incur debts, beyond its ability
to pay such debts as they mature.
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(x) INVESTMENT COMPANY ACT. Neither such Seller nor any of such
Seller's Subsidiaries is (i) an "investment company" registered or required
to be registered under the 1940 Act, or (ii) a "holding company", or a
"subsidiary company" or an "affiliate" of a "holding company" within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
(y) OWNERSHIP. All of the issued and outstanding capital stock of
such Seller is owned, directly or indirectly, by United Stationers Inc.
(z) INDEBTEDNESS TO COMPANY. Immediately prior to consummation of
the transactions contemplated hereby on the Effective Date, such Seller had
no outstanding Indebtedness to the Company other than amounts permitted by
this Agreement or amounts outstanding under the Subordinated Note.
(aa) RECEIVABLES DOCUMENTS. Upon the delivery, if any, by such Seller
to the Company of licenses, rights, computer programs, related materials,
computer tapes, disks, cassettes and data relating to the administration of
the Purchased Receivables pursuant to subsection 5.01(r), the Company shall
have been furnished with all materials and data reasonably necessary to
permit timely collection of the Purchased Receivables without the
participation of such Seller in such collection.
(bb) RECEIVABLES LISTS. The Receivables Lists set forth in all
material respects an accurate and complete listing as of the Cut-Off Date
of all Receivables to be transferred to the Company on the Effective Date
and the information contained therein with respect to the identity and
Principal Amount of each such Receivable is true and correct in all
material respects as of the Cut-Off Date.
The representations and warranties set forth in this Section 4.02
shall survive the transfer and assignment of the respective Receivables to
the Company pursuant to this Agreement. Each Seller hereby represents and
warrants to the Company, as of the Effective Date and each Payment Date,
that the representations and warranties of such Seller set forth in Section
4.02 are true and correct in all material respects as of such date, except
for any representation and warranty specifically made as of an earlier
date, in which case such representation and warranty shall be true and
correct in all material respects as of such earlier date. Upon discovery
by any Seller or the Company of any material breach of any of the foregoing
representations and warranties, the party discovering such breach shall
give prompt written notice to the other.
ARTICLE V
GENERAL COVENANTS
Section 5.01. AFFIRMATIVE COVENANTS OF THE SELLERS. Each Seller
covenants that, until the Purchase Termination Date shall have occurred with
respect to such Seller and
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there are no amounts outstanding with respect to the Purchased Receivables
previously sold by such Seller to the Company (other than Charged-off
Receivables):
(a) PRESERVATION OF CORPORATE EXISTENCE AND NAME. Such Seller will
preserve and maintain in all material respects its corporate existence,
rights, franchises and privileges in the jurisdiction of its incorporation,
and qualify and remain qualified in good standing as a foreign corporation
in each jurisdiction where the failure to preserve and maintain such
existence, rights, franchises, privileges and qualification could have a
Material Adverse Effect with respect to such Seller.
(b) MAINTENANCE OF PROPERTY. Such Seller will keep all material
property and assets useful and necessary in its business in good working
order and condition (normal wear and tear excepted), except to the extent
that the failure to do any of the foregoing with respect to any such
property would not, individually or in the aggregate, be reasonably likely
to have a Material Adverse Effect with respect to the Company.
(c) DELIVERY OF COLLECTIONS. In the event that such Seller receives
Collections, such Seller agrees to pay to the applicable Lockbox Account
all payments received by such Seller in respect of the Receivables as soon
as practicable after receipt thereof by such Seller.
(d) COMPLIANCE WITH LAWS, ETC. Such Seller shall comply in all
material respects with all applicable laws, rules, regulations and orders
applicable to the Receivables and the Receivables Property, including,
without limitation, rules and regulations relating to truth in lending,
fair credit billing, fair credit reporting, equal credit opportunity, fair
debt collection practices and privacy, where failure to so comply could
reasonably be expected to have a materially adverse impact on the amount of
Collections thereunder.
(e) VISITATION RIGHTS. At any reasonable time during normal business
hours and from time to time upon reasonable prior notice, such Seller shall
permit (i) the Company, or any of its agents or representatives, (A) to
examine and make copies of and abstracts from the records, books of account
and documents (including, without limitation, computer tapes and disks) of
such Seller relating to Receivables and Related Property owned or to be
purchased by the Company hereunder, including, without limitation, the
related Contracts and purchase orders and other agreements and (B)
following the termination of the appointment of USSC as Servicer or of such
Seller as a Servicing Party with respect to the Receivables, to be present
at the offices and properties of such Seller to administer and control the
collection of amounts owing on the Purchased Receivables and (ii) the
Company, or any of its agents or representatives, or the Trustee (upon the
giving of appropriate notice to the Company) to visit the properties of
such Seller for the purpose of examining such records, books of account and
documents, and to discuss the affairs, finances and accounts of such Seller
relating to the Receivables or such Seller's performance hereunder with any
of its officers or directors and with its independent certified public
accountants;
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PROVIDED, that the Company or its agents or representatives, as the case
may be, shall notify the Seller prior to any contact with such accountants
and shall give such Seller the opportunity to participate in such
discussions.
(f) KEEPING OF RECORDS AND BOOKS OF ACCOUNT. Such Seller will
maintain and implement administrative and operating procedures (including,
without limitation, an ability to recreate records evidencing Receivables
and the Receivables Property in the event of the destruction of the
originals thereof), and keep and maintain all documents, books, records and
other information which, in each case, in the reasonable discretion of the
Company, are necessary or advisable for the collection of all Receivables
and the Receivables Property (including, without limitation, records
adequate to permit the identification of each new Receivable and all
Collections of and adjustments to each existing Receivable).
(g) PERFORMANCE AND COMPLIANCE WITH POLICIES, RECEIVABLES AND
CONTRACTS. Such Seller will (i) perform its obligations in accordance with
and comply in all material respects with the Policies, as amended from time
to time in accordance with the Transaction Documents and (ii) at its
expense, timely and fully perform and comply with all material provisions,
covenants and other promises required to be observed by it under the
Receivables and the Contracts related to the Receivables and Related
Property and all purchase orders and other agreements related to such
Receivables and Related Property.
(h) OBLIGATIONS. Such Seller shall pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case
may be, all its other obligations of whatever nature, except where (a) the
amount or validity thereof is currently being contested in good faith by
appropriate proceedings and reserves in conformity with GAAP with respect
thereto have been provided on its books, or (b) the failure to so pay,
discharge or satisfy all such obligations would not, in the aggregate, be
reasonably likely to have a Material Adverse Effect in respect of such
Seller and would not subject any of its properties to any Lien prohibited
by subsection 5.03(b).
(i) LOCATION OF RECORDS. Such Seller will keep its principal place
of business and chief executive office, and the offices where it keeps its
records concerning the Receivables, all Receivables Property, all Contracts
and purchase orders and other agreements related to such Receivables (and
all original documents relating thereto), at the addressees) of such Seller
referred to in Schedule II or, upon 30 days' prior written notice to the
Company, at such other locations in jurisdictions where all action required
by subsection 5.01(r) shall have been taken and completed; PROVIDED,
HOWEVER, that the Rating Agency Condition shall have been satisfied with
respect to any changes in location of such Seller's principal place of
business or chief executive office and such location is not in a state
which is within the Tenth Circuit unless it delivers an opinion of counsel
reasonably acceptable to the Rating Agencies to the effect that OCTAGON GAS
SYSTEMS, INC. V. RIMMER, 995 F.2d 948 (10th Cir. 1993), is no longer
controlling precedent in the Tenth Circuit.
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(j) FURNISHING COPIES, ETC. Such Seller shall furnish to the Company
(i) upon the Company's request, a certificate of a Responsible Officer with
responsibilities over the finances of such Seller certifying, as of the
date thereof, that to such Responsible Officer's knowledge, no Purchase
Termination Event has occurred and is continuing and setting forth the
computations used by such Responsible Officer in making such determination;
(ii) as soon as possible and in any event within two Business Days after a
Responsible Officer of such Seller becomes aware of the occurrence of any
Purchase Termination Event or Potential Purchase Termination Event, a
statement of a Responsible Officer of such Seller setting forth in
reasonable detail the particulars of such Purchase Termination Event or
Potential Purchase Termination Event and the action that such Seller
proposes to take or has taken with respect thereto; (iii) promptly after
obtaining knowledge that a Receivable was, at the time of the Company's
purchase thereof, not an Eligible Receivable, notice thereof; (iv) promptly
after obtaining knowledge of any threatened action or proceeding affecting
such Seller or its Subsidiaries before any court, governmental agency or
arbitrator that may reasonably be expected to materially and adversely
affect the enforceability of this Agreement and the other Transaction
Documents, notice of such action or proceeding; and (v) promptly following
the Company's request therefor, such other information, documents, records
or reports with respect to the Receivables or the related Contracts or the
conditions or operations, financial or otherwise, of such Seller, as the
Company may from time to time reasonably request.
(k) OBLIGATION TO RECORD AND REPORT. Such Seller shall, to the
fullest extent permitted by GAAP and by applicable law, record each
purchase of the Purchased Receivables as a sale on its books and records,
reflect each purchase of Purchased Receivables in its financial statements
and tax returns as a sale and recognize gain or loss, as the case may be,
on each purchase of Purchased Receivables.
(l) CONTINUING COMPLIANCE WITH THE UNIFORM COMMERCIAL CODE. Such
Seller shall, without limiting the requirements of subsection 5.01(r), at
its expense, preserve, continue, and maintain or cause to be preserved,
continued, and maintained the Company's valid and properly perfected title
to each Receivable and the Receivables Property purchased hereunder,
including, without limitation, filing or recording UCC financing statements
in each relevant jurisdiction.
(m) PROCEEDS OF RECEIVABLES. Such Seller shall use all reasonable
efforts to cause all payments made by Obligors in respect of Purchased
Receivables and Related Property to be made in accordance with subsection
2.3(a) of the Servicing Agreement.
(n) LOCKBOX AGREEMENTS. Such Seller shall, on or prior to the date
of this Agreement, deliver to the Company a Lockbox Agreement, duly
countersigned and agreed to by each bank holding a Lockbox Account of such
Seller or, if any such bank fails to agree to the terms thereof, by such
other bank as shall agree to become a
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Lockbox Processor for such Seller on the terms and conditions set forth in
such Lockbox Agreement.
(o) TAXES. Such Seller will file all federal and all material state
and local tax returns and reports required by law to be filed by it and
will pay all taxes and governmental charges thereby shown to be owing,
except any such taxes or charges which are being diligently contested in
good faith by appropriate proceedings and for which adequate reserves in
accordance with GAAP have been set aside on its books except where the
failure to file such returns and reports and pay such taxes and
governmental charges would not reasonably be expected to cause a Material
Adverse Effect.
(p) SEPARATE CORPORATE EXISTENCE OF THE COMPANY. Such Seller hereby
acknowledges that the Trustee and the Investor Certificateholders are
entering into the transactions contemplated by the Transaction Documents in
reliance upon the Company's identity as a legal entity separate from the
Sellers and all other Affiliates and that the Trustee and the Investor
Certificateholders would be prejudiced by any substantive consolidation of
the Company with any Seller. Therefore, from and after the date hereof,
such Seller will take (or refrain from taking, as the case may be) such
actions, and will cause each other Affiliate it controls to take (or
refrain from taking, as the case may be) such actions, as shall be required
in order that:
(i) Except as specifically provided in Sections 7.01 and 9.05,
no Affiliate will pay the Company's operating expenses and
liabilities, recognizing, however, that certain organizational
expenses of the Company and expenses relating to creation and initial
implementation of the securitization program contemplated by the
Transaction Documents have been or shall be paid by such Seller.
(ii) Each Affiliate will conduct its business at offices
segregated from the Company's offices. If office space is leased from
any Affiliate, a separate written lease on arm's-length terms will be
in effect at a market rental rate.
(iii) Each Affiliate will maintain corporate records and books
of account separate from those of the Company and telephone numbers,
mailing addresses, stationery and other business forms that are
separate and distinct from those of the Company.
(iv) Any financial statements of any Affiliate that are
consolidated to include the Company will contain a detailed note
substantially in the form, and to the effect, of the note set forth on
Annex 1.
(v) The Company's assets will be maintained in a manner that
facilitates their identification and segregation from those of such
Seller and the other Affiliates.
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(vi) Each Affiliate will strictly observe corporate formalities
in its dealings with the Company, and funds or other assets of the
Company will not be commingled or pooled with those of any affiliated
Person. No Affiliate will maintain joint bank accounts with the
Company or other depository accounts with the Company to which any
Affiliate has independent access.
(vii) Any transaction between the Company and any Affiliate will
be fair and equitable to the Company, will be the type of transaction
which would be entered into by a prudent Person in the position of the
Company with an Affiliate, and will be on terms which are at least as
favorable to the Company as may be obtained from a Person which is not
an Affiliate, it being understood and agreed that the transactions
contemplated in the Transaction Documents meet the requirements of
this clause (vii).
(viii) No Affiliate will hold itself out, or permit itself to be
held out, as having agreed to pay or be liable for the debts of the
Company.
(ix) The duly elected Board of Directors of the Company and the
Company's duly appointed officers shall at all times have sole
authority to control decisions and actions with respect to the daily
business affairs of the Company.
(x) Such Seller shall comply with those procedures described in
the Specified Bankruptcy Opinion Provisions which are applicable to
such Seller, except, in each case above, for such failure to take
actions or refrain from taking actions that are, in the aggregate, not
material.
(q) DEPOSITS IN PROGRAM ACCOUNTS. Such Seller shall use all
reasonable efforts to minimize the deposit of any funds other than
Collections in any of the Lockbox Accounts, the Collection Concentration
Account and the Collection Account.
(r) FURTHER ACTION EVIDENCING PURCHASES.
(i) Such Seller agrees that from time to time, at its expense,
it will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or
desirable or that the Company may reasonably request, to protect or
more fully evidence the Company's ownership, right, title and interest
in the Receivables and Receivables Property sold by such Seller and
its rights under the Contracts with respect thereto, or to enable the
Company to exercise or enforce any of its rights hereunder or under
any other Transaction Document. Without limiting the generality of
the foregoing, such Seller will upon the request of the Company (A)
execute and file, in accordance with the provisions of the UCC of the
applicable jurisdiction, continuation statements with respect to all
financing statements filed in connection with the transactions
contemplated hereby, as well as such financing or continuation
statements, or amendments thereto, and such other
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instruments or notices, as may be necessary or, in the reasonable
opinion of the Company, desirable, (B) indicate on its books and
records (including, without limitation, master data processing
records) that the Receivables and Receivables Property have been sold
and assigned to the Company and, in turn, the Company has sold and
assigned its interest therein to the Trustee, and provide to the
Company, upon request, copies of any such records, (C) contact
customers to confirm and verify Receivables and (D) obtain the
agreement of any Person having a Lien on any Receivables owned by such
Seller (other than any Lien created or imposed hereunder or under the
Pooling Agreement or any Permitted Lien) to release such Lien upon the
purchase of any such Receivables by the Company.
(ii) Such Seller hereby irrevocably authorizes the Company and
the Trustee to file one or more financing or continuation statements,
and amendments thereto, relative to all or any part of the Receivables
and Receivables Property sold or to be sold by such Seller, without
the signature of such Seller where permitted by law.
(iii) If such Seller fails to perform any of its agreements or
obligations under this Agreement, the Company or its assignees may
(but shall not be required to) perform, or cause performance of, such
agreements or obligations, and the expenses of the Company incurred in
connection therewith shall be payable by such Seller as provided in
Section 9.06.
(iv) Such Seller agrees that, whether or not a Purchase
Termination Event has occurred:
(A) the Company (and its assignees) shall have the right at
any time to notify, or require that such Seller at its own
expense notify, the respective Obligors of the Company's
ownership of the Purchased Receivables and Receivables Property
and may direct that payment of all amounts due or to become due
under the Purchased Receivables be made directly to the Company
or its designee;
(B) such Seller shall, upon the Company's written request
and at such Seller's expense, (I) assemble all of such Seller's
documents, instruments and other records (including credit files
and computer tapes or disks) that (A) evidence or will evidence
or record Receivables sold by such Seller and (B) are otherwise
necessary or desirable to effect Collections of such Purchased
Receivables (collectively, the "DOCUMENTS") and (II) deliver the
Documents to the Company or its designee at a place designated by
the Company. In recognition of such Seller's need to have access
to any Documents which may be transferred to the Company
hereunder, whether as a result of its continuing business
relationship with any Obligor for Receivables purchased hereunder
or as a result of its responsibilities as a Sub-
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Servicer, the Company hereby grants to such Seller an irrevocable
license to access the Documents transferred by such Seller to the
Company and to access any such transferred computer software in
connection with any activity arising in the ordinary course of
such Seller's business or in performance of such Seller's duties
as a Servicing Party, PROVIDED that such Seller shall not disrupt
or otherwise interfere with the Company's use of and access to
the Documents and its computer software during such license
period;
(C) such Seller hereby grants to the Company an irrevocable
power of attorney (coupled with an interest) to take any and all
steps in such Seller's name necessary or desirable, in the
reasonable opinion of the Company, to collect all amounts due
under the Purchased Receivables, including, without limitation,
endorsing such Seller's name on checks and other instruments
representing Collections, enforcing the Purchased Receivables and
exercising all rights and remedies in respect thereof, and
(D) upon written request of the Company, such Seller will
(I) deliver to the Company or a party designated by the Company
all licenses, rights, computer programs, related material,
computer tapes, disks, cassettes and data necessary to the
immediate collection of the Purchased Receivables by the Company,
with or without the participation of such Seller (excluding
software licenses which by their terms are not permitted to be so
delivered, PROVIDED that such Seller shall use reasonable efforts
to obtain consent of the relevant licensor to such delivery) and
(II) make such arrangements with respect to the collection of the
Purchased Receivables as may be reasonably required by the
Company.
(s) LEGEND REQUIREMENT FOR CHATTEL PAPER. Such Seller agrees (i) at
all times, with respect to chattel paper, to comply with the procedures set
forth in Schedule 3 to the Pooling Agreement and (ii) that any Receivable
that constitutes or is evidenced by "chattel paper" as defined in Article 9
of the UCC as in effect in the Relevant UCC State shall bear a legend
stating that such Receivable has been sold to the Company and conveyed to
the Trust.
(t) COMPUTER FILES. Such Seller shall, at its own cost and expense,
retain the ledger used by such Seller as a master record of the Obligors
and retain copies of all documents relating to each Obligor as custodian
and agent for the Company and other Persons with interests in the Purchased
Receivables and mark the computer tape or other physical records of the
Purchased Receivables to the effect that interests in the Purchased
Receivables existing with respect to the Obligors listed thereon have been
sold to the Company and that the Company has sold an interest therein and
has granted a security interest therein.
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Section 5.02. REPORTING REQUIREMENTS. Each Seller shall furnish to
the Company and its assigns from the date hereof until the Purchase Termination
Date shall have occurred with respect to such Seller and until there are no
amounts outstanding with respect to Purchased Receivables previously sold by
such Seller to the Company:
(a) COMPLIANCE CERTIFICATE. Not later than 95 days after the end of
each fiscal year and not later than 50 days after the end of each of the
first three fiscal quarters of each fiscal year, a certificate of a
Responsible Officer of such Seller stating that, to the best of such
Responsible Officer's knowledge, such Seller during such period, has
observed or performed in all material respects all of its covenants and
other agreements, and satisfied in all material respects every condition,
contained in the Transaction Documents to which it is a party to be
observed, performed or satisfied by it, and that such Responsible Officer
has obtained no knowledge of any Purchase Termination Event or Potential
Purchase Termination Event except as specified in such certificate;
(b) ERISA. Promptly after the filing or receiving thereof, copies of
all reports and notices with respect to any Reportable Event which such
Seller files under ERISA with the Internal Revenue Service, the PBGC or the
U.S. Department of Labor or which such Seller receives from the PBGC if, in
each case, such report or notice relates to an event or condition that
could reasonably be expected to give rise to a Termination Notice, an Early
Amortization Event or a Material Adverse Effect;
(c) TERMINATION EVENTS; OTHER MATERIAL EVENTS. As soon as possible
and in any event within two Business Days after a Responsible Officer of
such Seller obtains knowledge of each Purchase Termination Event, Potential
Purchase Termination Event, Servicer Default, Potential Servicer Default or
any other event that has a material likelihood of having a Material Adverse
Effect with respect to a Seller, a written statement of a Responsible
Officer of such Seller setting forth details of such event and the action
that such Seller proposes to take with respect thereto; and
(d) OTHER. Promptly, from time to time, such other information,
documents, records or reports respecting the Receivables or the condition
or operations, financial or otherwise, of such Seller as the Company may
from time to time reasonably request in order to protect the interests of
the Company under or as contemplated by the Transaction Documents.
Section 5.03. NEGATIVE COVENANTS. Each Seller covenants that, until
the Purchase Termination Date shall have occurred with respect to such Seller
and there are no amounts outstanding with respect to Purchased Receivables
previously sold by such Seller to the Company:
(a) RECEIVABLES TO BE ACCOUNTS, GENERAL INTANGIBLES OR CHATTEL PAPER.
Such Seller will take no action to cause any Receivable to be evidenced by
any "instrument" other than, PROVIDED that the procedures set forth in
Schedule 3 to the Pooling Agreement are fully implemented with respect
thereto, an instrument which
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together with a security agreement constitutes "chattel paper" (each as
defined in the UCC as in effect in the Relevant UCC State). Such Seller
will take no action to cause any Receivable to be anything other than an
"account", "general intangible" or "chattel paper" (each as defined in the
UCC as in effect in the Relevant UCC State).
(b) SECURITY INTERESTS. Except for the conveyances hereunder and as
provided below, such Seller will not sell, pledge, assign or transfer to
any other Person, or grant, create, incur, assume or suffer to exist any
other Lien on any Receivable or Receivables Property, whether now existing
or hereafter created, or any interest therein; such Seller will immediately
notify the Company of the existence of any other Lien on any Receivable or
Receivables Property; and such Seller shall defend the right, title and
interest of the Company in, to and under the Receivables or Receivables
Property, whether now existing or hereafter created, against all claims of
third parties claiming through or under such Seller; PROVIDED, HOWEVER,
that nothing in this subsection 5.03(b) shall prevent or be deemed to
prohibit such Seller from suffering to exist upon any of the Receivables
any Permitted Lien.
(c) EXTENSION OR AMENDMENT OF RECEIVABLES; INELIGIBLE RECEIVABLES.
Such Seller will not extend, rescind, cancel, make any Dilution Adjustment
to, amend or otherwise modify, or attempt or purport to extend, rescind,
cancel, make any Dilution Adjustment to, amend or otherwise modify, the
terms of any Purchased Receivables, or otherwise take any action to cause,
or which would permit, a Receivable that was designated as an Eligible
Receivable on the Payment Date relating to such Receivable to cease to be
an Eligible Receivable, except in any such case (a) in accordance with the
terms of the Policies, (b) as required by any Requirement of Law or (c) in
the case of Dilution Adjustments (whether or not permitted by any other
clause of this sentence), upon making a Seller Adjustment Payment pursuant
to Section 2.05.
(d) CHANGE IN CREDIT AND COLLECTION POLICIES. Such Seller will not
make or permit to be made any change in its Policies in any material
respect that is materially adverse to the interests of the Company or its
assigns (including the Trustee and the Investor Certificateholders).
(e) PLACE OF BUSINESS, ETC. Such Seller will not change its
principal place of business or chief executive office from the location
listed on Schedule II or change the location of its records relating to the
Receivables and Receivables Property from those specified on Schedule II,
unless in any such event such Seller shall have given the Company at least
thirty days' prior written notice thereof fully in accordance with the
terms and provisions of subsection 5.01(i) and shall have taken all action
necessary or reasonably requested by the Company to amend its existing
financing statements and continuation statements so that they are not
misleading and to file additional financing statements in all applicable
jurisdictions, if necessary, to perfect the interests of the Company in all
of the Receivables and Receivables Property.
(f) CHANGE IN NAME. Such Seller will not change its name, identity
or corporate structure in any manner which would make any financing
statement or
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continuation statement (or other similar instrument) relating to this
Agreement seriously misleading within the meaning of Section 9-402(7) of
the UCC, or impair the perfection of the Company's interest in any
Receivable under any other similar law, without having (i) delivered 30
days' prior written notice to the Company, the Servicer and the Trustee and
(ii) taken all action required by subsection 5.01(a).
(g) CHANGE IN PAYMENT INSTRUCTIONS TO OBLIGORS. Such Seller shall
not instruct the Obligor on any Receivables to make payments with respect
to such Receivables and the Receivables Property with respect thereto other
than to the places listed in Schedule III.
(h) ACCOUNTING CHANGES. Such Seller shall not make any material
change (i) in accounting treatment and reporting practices except as
permitted or required by GAAP, (ii) in tax reporting treatment except as
permitted or required by law, in any case, as disclosed in the notes to the
financial statements delivered pursuant to Section 5.02, or otherwise,
(iii) in the calculation or presentation of financial and other information
contained in other reports delivered hereunder, or (iv) in any financial
policy of such Seller if such change could have a material adverse effect
on the Receivables taken as a whole or the collection thereof.
(i) BUSINESS OF SELLERS. Such Seller shall not fail to maintain and
operate the business currently conducted by such Seller and business
activities reasonably incidental or related thereto in substantially the
manner in which it is presently conducted and operated if such failure
would change in any material respect the character of its business and such
change would be adverse to the interest of the Company or its assigns
(including the Trustee and the Investor Certificateholders), except (x) if
such change is necessary under any Requirement of Law, (y) if such change
would not reasonably be expected to have a Material Adverse Effect with
respect to the Servicer or (z) the Rating Agency Condition is satisfied
with respect thereto.
ARTICLE VI
PURCHASE TERMINATION EVENTS
Section 6.01. PURCHASE TERMINATION EVENTS. If, with respect to any
Seller, any of the following events (each, a "PURCHASE TERMINATION EVENT" with
respect to such Seller) shall have occurred and be continuing:
(a) The Seller shall fail to make any payment or deposit to be made
by it hereunder when due and such failure shall remain unremedied for two
Business Days; or
(b) There shall have occurred (i) an Early Amortization Event set
forth in Section 7.1 of the Pooling Agreement or (ii) the Amortization
Period with respect to all outstanding Series shall have occurred and be
continuing; or
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(c) Any representation or warranty made or deemed to be made by such
Seller or any of its officers under or in connection with any Transaction
Document, Monthly Settlement Statement or other information, statement,
record, certificate, document or report delivered pursuant to a Transaction
Document shall prove to have been false or incorrect in any material
respect when made or deemed made (including in each case by omission of
material information necessary to make such representation, warranty,
certificate or statement not misleading); PROVIDED, that no such event
shall constitute a Purchase Termination Event unless such event shall
continue unremedied for a period of 30 days from the earlier of (A) the
date any Responsible Officer of such Seller obtains knowledge thereof and
(B) the date such Seller receives notice of the incorrectness of such
representation or warranty from the Company, the Servicer or the Trustee;
PROVIDED, FURTHER, that a Purchase Termination Event shall not be deemed to
have occurred under this paragraph (c) based upon a breach of any
representation or warranty set forth in Section 4.02 with respect to any
Receivable if the Sellers shall have complied with the provisions of
Section 2.06 with respect to such Receivable; or
(d) Such Seller shall fail to perform or observe in any material
respect any other term, covenant or agreement contained in subsection
5.01(d), (g) or (h) or Section 5.03 of this Agreement on its part to be
performed or observed and any such failure shall remain unremedied for five
Business Days; PROVIDED, that a Purchase Termination Event shall not be
deemed to have occurred under this paragraph (d) based upon a breach of any
covenant set forth in subsection 5.01(d), (g) or (h) or Section 5.03 with
respect to any Receivable if the Sellers shall have complied with the
provisions of Section 2.06 with respect to such Receivable; or
(e) Such Seller shall fail to perform or observe in any material
respect any other term, covenant or agreement contained in any Transaction
Document on its part to be performed or observed and any such failure shall
remain unremedied for a period of 30 days from the earlier of (A) the date
any Responsible Officer of such Seller obtains knowledge of such failure
and (B) the date such Seller receives notice thereof from the Company, the
Servicer or the Trustee; or
(f) Any Transaction Document to which such Seller is a party shall
cease, for any reason, to be in full force and effect, or USSC, or other
such Seller shall so assert in writing, or the Company shall fail to have a
valid and perfected first priority ownership or security interest in the
Receivables and the Receivables Property; or
(g) (i) such Seller shall commence any case, proceeding or other
action (A) under any existing or future law of any jurisdiction, domestic
or foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts,
or (B) seeking appointment of a receiver, trustee, custodian or other
similar official for it or for all or any substantial part of its assets,
or such Seller shall make a general
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assignment for the benefit of its creditors; or (ii) there shall be
commenced against such Seller any case, proceeding or other action of a
nature referred to in clause (i) above which (A) results in the entry of an
order for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of 60 days; or (iii)
there shall be commenced against such Seller or any of its Subsidiaries any
case, proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or any
substantial part of its assets which results in the entry of an order for
any such relief which shall not have been vacated, discharged, or stayed or
bonded pending appeal within 60 days from the entry thereof, or (iv) such
Seller or any of its respective Subsidiaries shall take any action in
furtherance of, or indicating its consent to, approval of, or acquiescence
in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v)
such Seller shall generally not, or shall be unable to, or shall admit in
writing its inability to, pay its debts as they become due; or
(h) USSC has been terminated as Servicer following a Servicer Default
with respect to USSC under the Servicing Agreement; or
(i) a Responsible Officer of USSC receives notice or becomes aware
that a notice of Lien has been filed by the PBGC against any Seller, the
Company or the Trust under Section 412(n) of the Code or Section 302(f) of
ERISA for a failure to make a required installment or other payment to a
plan to which Section 412(n) of the Code or Section 302(f) of ERISA
applies;
then, (x) in the case of any Purchase Termination Event with respect to any
Seller described in paragraph (b)(i), (g) and (i) above, the obligation of the
Company to purchase Receivables from such Seller shall thereupon automatically
terminate without further notice of any kind, which is hereby waived by such
Seller, (y) in the case of any Purchase Termination Event with respect to a
Seller described in paragraph (b)(ii) above, the obligation of the Company to
purchase Receivables from such Seller shall thereupon terminate without notice
of any kind, which is hereby waived by such Seller, unless both the Company and
such Seller agree in writing that such event shall not trigger an Early
Termination hereunder and (z) in the case of any other Purchase Termination
Event with respect to any Seller, so long as such Purchase Termination Event
shall be continuing, the Company may terminate its obligation to purchase
Receivables from such Seller by written notice to such Seller (any termination
with respect to any Seller pursuant to clause (x), (y) or (z) of this Section
6.01 is herein called an "EARLY TERMINATION" with respect to such Seller);
PROVIDED, HOWEVER, that in the event of an involuntary petition or proceeding as
described in paragraphs (g)(ii) and (g)(iii) above, the Company shall not
purchase Receivables from such Seller until such time, if any, as such
involuntary petition or proceeding has been dismissed, PROVIDED that such
dismissal shall have occurred within 60 days of the filing of such petition or
the commencement of such proceeding.
Section 6.02. ADDITIONAL REMEDIES. Upon the occurrence of any
Purchase Termination Event, the Company shall have, in addition to all other
rights and remedies under this Agreement or otherwise, all other rights and
remedies provided under the UCC of
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each applicable jurisdiction and other applicable laws, which rights shall be
cumulative. Without limiting the foregoing, the occurrence of a Purchase
Termination Event shall not deny to the Company any remedy (in addition to
termination of the Company's obligation to purchase Receivables from any
relevant Seller or Sellers) to which the Company may be otherwise appropriately
entitled, whether by statute or other applicable law, at law or in equity.
ARTICLE VII
INDEMNIFICATION
Section 7.01. INDEMNITIES BY THE SELLERS. Without limiting any other
rights that the Company may have hereunder or under applicable law and subject
to Section 2.06, each Seller hereby agrees to pay, indemnify and hold the
Company harmless from and against any and all claims, losses, liabilities,
obligations, damages, penalties, actions, judgments, suits, reasonable costs
(including reasonable attorneys' fees), expenses and disbursements of any kind
or nature whatsoever related thereto (a) which may at any time be imposed on,
incurred by or asserted against the Company in any way relating to, arising out
of or resulting from this Agreement or any other Transaction Document or the
transactions contemplated hereby or thereby or any action taken or omitted by
the Company under or in connection with any of the foregoing or in respect of
any Receivable or (b) which would not have been imposed on, incurred by or
asserted against the Company but for its having purchased the Receivables
hereunder (all such claims, losses, liabilities, obligations, damages,
penalties, actions, judgments, suits, costs, expenses and disbursements being
collectively referred to as "INDEMNIFIED AMOUNTS"), PROVIDED that the Sellers
shall have no obligation under this Section 7.01 to the Company with respect to
Indemnified Amounts (i) to the extent resulting from gross negligence or willful
misconduct on the part of the Company, its agents or its assignees; (ii)
resulting from any Obligor's inability to pay an amount due and payable with
respect to a Receivable for credit reasons (it being understood that this clause
(ii) shall not limit Section 2.05), and PROVIDED, FURTHER, that if a court of
competent jurisdiction in a final non-appealable order determines that such
Indemnified Amounts arose in part from the Company's gross negligence or willful
misconduct, the Sellers shall reimburse the Company for the portion of such
claim not resulting from the Company's gross negligence or willful misconduct,
and PROVIDED, FURTHER, that to the extent a determination of gross negligence or
willful misconduct is made after the payment of any Indemnified Amounts related
thereto, the Seller shall be repaid any amounts reimbursed under the preceding
clause that, due to such determination, it should not have paid. Without
limiting or being limited by the foregoing and subject to Section 2.06, each
Seller shall pay on demand to the Company any and all amounts necessary to
indemnify the Company from and against any and all Indemnified Amounts relating
to or resulting from:
(a) the transfer by any Seller of any interest in any Receivable or
Receivables Property or proceeds thereof which are not or which cease to be
Eligible Receivables;
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(b) reliance on any representation or warranty or statement made or
deemed made by any Seller (or any of its officers) under or in connection
with this Agreement or in any certificate or report delivered pursuant
hereto that, in either case, shall have been false or incorrect in any
material respect when made or deemed made;
(c) the failure by any Seller to comply with any applicable law, rule
or regulation of any governmental authority with respect to any Receivable
or Receivables Property, or the nonconformity of any Receivable or
Receivables Property with any such applicable law, rule or regulation;
(d) the failure to vest and maintain vested in the Company an
ownership interest in any Receivable or Receivables Property, free and
clear of any Lien, other than a Lien arising under the Transaction
Documents, whether existing at the time of the purchase of such Receivable
or Receivables Property or at any time thereafter,
(e) the failure to file, or any delay in filing, financing statements
or other similar instruments or documents under the UCC of any applicable
jurisdiction or other applicable laws with respect to any Receivables or
Receivables Property of any Seller;
(f) any dispute, claim, offset or defense (other than discharge in
bankruptcy of a Seller) of the Obligor to the payment of any Receivable of
any Seller (including, without limitation, a defense based on such
Receivable or the related Contract not being fully enforceable against the
Obligor in accordance with its terms), or any other claim resulting from
the sale of the merchandise or services related to any such Receivable or
the furnishing or failure to furnish such merchandise or services;
(g) any failure of any Seller to perform its duties or obligations
under this Agreement or the Transaction Documents;
(h) any products liability claim arising out of or in connection with
merchandise, insurance or services that are the subject of any Receivable
or Receivables Property;
(i) the commingling of Collections of Receivables at any time with
other funds of any Seller;
(j) any claim involving environmental liability that relates to any
property that has been, is now or hereafter will be owned, leased, operated
or otherwise used by any Seller;
(k) any tax or governmental fee or charge (but not including
franchise taxes and taxes upon or measured by net income of the Company),
all interest and penalties thereon or with respect thereto, and all
out-of-pocket costs and expenses,
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including the reasonable fees and expenses of counsel in defending against
the same, which may arise by reason of the purchase or ownership of any
Receivable or Receivables Property, or any interest therein or in any goods
which secure any such Receivables, any Receivables Property or any other
rights or assets transferred hereunder; and
(l) any investigation, litigation or proceeding related to this
Agreement or in respect of any Receivable or Receivables Property of any
Seller.
Notwithstanding the foregoing, no Seller shall under any circumstances
be required to indemnify the Company for any Indemnified Amounts that result
from any delay in the collection of any Receivables or any default by an Obligor
with respect to any Receivables. The agreements set forth in this Section 7.01
shall survive the collection of all Receivables, the termination of this
Agreement and the payment of all amounts payable hereunder.
Section 7.02. INDEMNITIES BY THE COMPANY. Without limiting any other
rights that the Sellers may have hereunder or under applicable law, the Company
hereby agrees to indemnify each Seller from and against any and all claims,
losses and liabilities (including reasonable attorneys' fees) arising out of or
resulting from such Seller's reliance on any representation or warranty made by
the Company in this Agreement or in any certificate delivered pursuant hereto
that, in either case, shall have been false or incorrect in any material respect
when made or deemed made.
ARTICLE VIII
SUBORDINATED NOTE
Section 8.01. SUBORDINATED NOTE. (a) On the initial Effective Date,
contemporaneously with the sale of Receivables by the Sellers, the Company shall
issue to the Sellers a subordinated note substantially in the form of Exhibit A
hereto (as amended, supplemented or otherwise modified from time to time, the
"SUBORDINATED NOTE").
(b) The initial aggregate principal amount of the Subordinated Note
(the "INITIAL SUBORDINATED NOTE AMOUNT") shall be equal to $47,227,059.
(c) Following the initial Effective Date, the aggregate principal
amount of the Subordinated Note at any time shall be equal to the difference
between (i) the sum of the Initial Subordinated Note Amount and each addition to
the principal amount of the Subordinated Note with respect to each Seller
pursuant to Section 2.03 as of such time and (ii) the aggregate amount of all
payments made in respect of the principal of the Subordinated Note as of such
time. All payments made in respect of the Subordinated Note shall be allocated
among the Sellers by the Servicer and shall be allocated to pay accrued and
unpaid interest thereon, and SECOND, to pay the outstanding principal amount
thereof.
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(d) Each Seller's interest in the Subordinated Note shall be equal to
the aggregate of each addition to the Subordinated Note allocated to such Seller
pursuant to subsection 2.03(c), LESS the sum of each repayment thereof
allocated to such Seller by the Servicer in accordance with subsection 8.01(c).
Interest on the outstanding principal amount of the Subordinated Note shall
accrue on the last day of each Settlement Period at a rate per annum equal to
the ABR plus 2% from and including the initial Effective Date to but excluding
the last day of each Settlement Period and shall be paid (x) on each
Distribution Date with respect to the principal amount of the Subordinated Note
outstanding from time to time during the Settlement Period immediately preceding
such Distribution Date and/or (y) on the maturity date thereof. Principal
thereunder not paid or prepaid pursuant to the terms thereof shall be payable on
the maturity date of the Subordinated Note. Default in the payment of principal
or interest under the Subordinated Note shall not constitute a Purchase
Termination Event under this Agreement, a Servicer Default under any Servicing
Agreement or an Early Amortization Event under the Pooling Agreement or any
Supplement thereto.
Section 8.02. RESTRICTIONS ON TRANSFER OF SUBORDINATED NOTE. Neither
the Subordinated Note, nor any right of any Seller to receive payments
thereunder, shall be assigned, transferred, exchanged, pledged, hypothecated,
participated or otherwise conveyed.
ARTICLE IX
MISCELLANEOUS
Section 9.01. AMENDMENT. Neither this Agreement nor any of the terms
hereof may be amended, supplemented or modified except in a writing signed by
the Company and the Sellers. Any amendment, supplement or modification shall
not be effective until the Rating Agency Condition, if applicable, has been
satisfied.
Section 9.02. NOTICES, ETC. All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in writing
(including facsimile communication) and shall be personally delivered or sent by
certified mail, postage-prepaid, by facsimile or by overnight courier, (a) in
the case of the Company, to it at the address or facsimile number set forth in
Section 10.5 of the Pooling Agreement and (b) in the case of all other parties,
to such party at the address or facsimile number of the Servicer set forth in
Section 10.5 of the Pooling Agreement or, in the case of the foregoing clause
(a) or (b), at such other address or facsimile number as shall be designated by
the relevant party in a written notice to the other parties hereto given in
accordance with this Section 9.02. All notices and communications provided for
hereunder shall be effective, (a) if personally delivered by express mail or
courier, when received, (b) if sent by certified mail, three Business Days after
having been deposited in the mail, postage prepaid and (c) if transmitted by
facsimile, when sent, receipt confirmed by telephone or electronic means.
Section 9.03. NO WAIVER; REMEDIES. No failure on the part of the
Company to exercise, and no delay in exercising, any right under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right preclude any other
40
<PAGE>
or further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
Section 9.04. SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of the Sellers and the Company and their
respective successors (whether by merger, consolidation or otherwise) and
assigns. Each Seller agrees that it will not assign or transfer all or any
portion of its rights or obligations hereunder without the prior written consent
of the Company. The Sellers acknowledge that the Company shall assign all of
its rights hereunder to the Trustee. Each Seller consents to such assignment
and agrees that the Trustee and the Holders, to the extent provided in the
Pooling Agreement, shall be entitled to enforce the terms of this Agreement and
the rights (including, without limitation, the right to grant or withhold any
consent or waiver) of the Company directly against such Seller, whether or not a
Purchase Termination Event or a Potential Purchase Termination Event has
occurred. Each Seller further agrees that, in respect of its obligations
hereunder, it will act at the direction of and in accordance with all requests
and instructions from the Trustee until all amounts due to the Investor
Certificateholders are paid in full. The Trustee, on behalf of the Investor
Certificateholders, shall have the rights of a third-party beneficiary under
this Agreement.
Section 9.05. COSTS, EXPENSES AND TAXES. In addition to the limited
rights of indemnification granted to the Company under Article VII hereof, each
Seller agrees to pay on demand all reasonable out-of-pocket costs and expenses
of the Company in connection with the negotiation, preparation, execution and
delivery of, and any amendment, supplement or other modification to, this
Agreement, the other Transaction Documents and any other documents prepared in
connection herewith and therewith, and the consummation and administration of
the transactions contemplated hereby and thereby, including, without limitation,
the reasonable fees and out-of-pocket expenses of counsel for the Company with
respect thereto and with respect to advising the Company as to its rights and
remedies under this Agreement, the other Transaction Documents and any such
other documents, and all costs and expenses (including, without limitation,
reasonable counsel fees and expenses), in connection with the enforcement
(whether through negotiations, legal proceedings or otherwise) of this
Agreement, the other Transaction Documents and any such other documents. In
addition, each Seller agrees to pay any and all stamp and other taxes and
governmental fees payable or determined to be payable in connection with the
execution, delivery, filing and recording of this Agreement or the other
Transaction Documents to be delivered hereunder, and agree to hold the Company
harmless from and against any and all liabilities with respect to or resulting
from any delay in paying or omitting to pay such taxes and fees.
Section 9.06. INTEGRATION. This Agreement and the other Transaction
Documents contain a final and complete integration of all prior expressions by
the parties hereto with respect to the subject matter hereof and thereof and
shall together constitute the entire agreement among the parties hereto with
respect to the subject matter hereof and thereof, superseding all prior oral or
written understandings.
41
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Section 9.07. CAPTIONS AND CROSS REFERENCES. The various captions
(including, without limitation, the table of contents) in this Agreement are
provided solely for convenience of reference and shall not affect the meaning or
interpretation of any provision of this Agreement. Unless otherwise provided
herein, references in this Agreement to any "Section," "Exhibit," "Annex" or
"Schedule" are to such Section of or Exhibit or Annex or Schedule to this
Agreement, as the case may be.
Section 9.10. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
agreement.
Section 9.11. ACKNOWLEDGMENT OF ASSIGNMENTS. Each Seller hereby
acknowledges and consents to the assignment by the Company of Receivables and
Receivables Property and the rights of the Company under this Agreement pursuant
to the Pooling and Servicing Agreements. Each Seller acknowledges that the
Company will grant a security interest in the Lockbox Accounts, the Collection
Concentration Account and the Collection Account to the Trust for the benefit of
the Holders. Each Seller agrees to take any action that the Company or the
Trust may reasonably request in connection with such assignment or security
interest.
Section 9.12. NO PETITION IN BANKRUPTCY. Each Seller covenants and
agrees that prior to the date which is one year and one day after the date of
termination of this Agreement pursuant to Section 9.15, it will not institute
against or join any other Person in instituting against the Company any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
or other similar proceeding under the laws of the United States, any State of
the United States or the Cayman Islands.
Section 9.13. ADDITION OF SELLERS. Subject to the terms and
conditions hereof, from time to time one or more wholly-owned Subsidiaries of
United Stationers Inc. may become additional Sellers parties hereto, the
receivables originated by which may constitute Eligible Receivables of such
Seller. If any such Subsidiary wishes to become an additional Seller, it shall
submit a request to such effect in writing to the Company. The Company, in its
sole and absolute discretion, may, subject to the terms and provisions of the
Pooling and Servicing Agreements, agree to or deny any such request, PROVIDED
that, if the Company shall have failed to respond to any such request within 30
days after receipt thereof, such request shall be deemed to have been denied.
If the Company shall have agreed to any such request, then in the case of a
wholly-owned Subsidiary of United Stationers Inc., such wholly-owned Subsidiary
shall become an additional Seller party hereto on the related Seller Addition
Date upon satisfaction of the conditions set forth in Section 3.02 and the
conditions, if any, set forth in the Pooling and Servicing Agreements.
Section 9.14. TREATMENT OF SELLERS OTHER THAN USSC; TERMINATION
THEREOF. (a) USSC hereby covenants and agrees with the Company that USSC shall
not permit any Seller at any time to cease to be a wholly-owned Subsidiary of
United Stationers Inc., except as provided in the following paragraph (b).
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(a) If United Stationers Inc. wishes to permit any Seller to cease to
be a wholly-owned Subsidiary of United Stationers Inc., then USSC shall submit a
request (a "SELLER TERMINATION REQUEST") to such effect in writing to the
Company, which request shall be accompanied by a certificate prepared by a
Responsible Officer of the Servicer indicating the Purchased Receivables
Percentage applicable to such Seller as of the date of submission of such
request (the "SELLER TERMINATION REQUEST DATE"). The Company, in its sole and
absolute discretion, may, subject to the terms and provisions of the Pooling and
Servicing Agreements, consent to or deny any such Seller Termination Request,
PROVIDED that, if the Company shall have failed to respond to any such Seller
Termination Request within 30 days after receipt thereof, such Seller
Termination Request shall be deemed to have been denied. If the Company shall
have consented to any such Seller Termination Request, and such consent shall
not be in violation of any applicable provision of the Pooling and Servicing
Agreements, then the relevant Seller shall be terminated as a Seller hereunder
on the date of the consummation of the transaction in connection with which such
Seller ceases to be a wholly-owned Subsidiary of United Stationers inc. or, if
USSC requests in writing that the termination date be a date prior to the
consummation of such transaction, such earlier requested date (but in no event
more than 30 days prior to the consummation of such transaction); PROVIDED that
if an earlier date is so requested, USSC or any Subsidiary of United Stationers
Inc. shall have entered into a valid and legally binding agreement to effect
such transaction on or before a date certain, PROVIDED FURTHER that, if the
Purchased Receivables Percentage applicable to such Seller as of the relevant
Seller Termination Request Date is less than 10%, then the Company shall consent
to such Seller Termination Request unless such consent would violate the terms
and provisions of the Pooling and Servicing Agreements. From and after the date
any such Seller is terminated as a Seller pursuant to this subsection, the
Company shall cease buying Receivables and Receivables Property from such
Seller. Each such Seller shall be released as a Seller party hereto for all
other purposes and shall cease to be a party hereto on such termination date.
(b) A terminated Seller shall have no further obligation under any
Transaction Document, other than to repurchase Receivables previously sold by it
to the Company pursuant to Section 2.06.
Section 9.15. TERMINATION. This Agreement will terminate at such
time as (c) an Early Termination shall have occurred with respect to all Sellers
hereunder and (b) all Receivables purchased hereunder have been collected, and
the proceeds thereof turned over to the Company and all other amounts owing to
the Company hereunder shall have been paid in full or, if Receivables sold
hereunder have not been collected, such Receivables have become Defaulted
Receivables and the Company shall have completed its collection efforts with
respect thereto; PROVIDED, HOWEVER, that the indemnities of the Sellers to the
Company set forth in this Agreement shall survive such termination and PROVIDED
FURTHER that the Company shall remain entitled to receive any collections on
Receivables sold hereunder which have become Defaulted Receivables.
Section 9.16. WAIVER OF JURY TRIAL; SUBMISSION TO JURISDICTION; OTHER
WAIVERS. (c) EACH PARTY HERETO WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER
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OR RELATING TO THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT, OR ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), ACTIONS OF
ANY OF THE PARTIES HERETO OR ANY OTHER RELATIONSHIP EXISTING IN CONNECTION WITH
THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, AND AGREES THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
(b) Each of the Company and the Sellers hereby irrevocably and
unconditionally:
(i) submits itself and its property in any legal action or
proceeding relating to this Agreement and the other Transaction
Documents to which it is a party, or for recognition and enforcement
of any judgment in respect thereof, to the non-exclusive general
jurisdiction of the courts of the State of New York, the courts of the
United States of America for the Southern District of New York, and
appellate courts from any thereof;
(ii) consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or hereafter
have to the venue of any such action or proceeding in any such court
or that such action or proceeding was brought in an inconvenient court
and agrees not to plead or claim the same;
(iii) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to such Person at its address referred to in Section 9.02 or
at such other address of which the relevant Seller or the Company, as
the case may be, shall have been notified pursuant thereto;
(iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit
the right to sue in any other jurisdiction; and
(v) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or
proceeding referred to in this subsection 9.07(b) any special,
exemplary, punitive or consequential damages.
Section 9.17. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
THE SELLER:
UNITED STATIONERS SUPPLY CO.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
THE SERVICER:
UNITED STATIONERS SUPPLY CO.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
USS RECEIVABLES COMPANY, LTD.:
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
<PAGE>
EXECUTION COPY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
------------------------------
USS RECEIVABLES COMPANY, LTD.,
as Company,
UNITED STATIONERS SUPPLY CO.,
as Servicer,
and
THE CHASE MANHATTAN BANK,
as Trustee
------------------------------
SERVICING AGREEMENT
Dated as of April 3, 1998
------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Other Definitional Provisions . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
ADMINISTRATION AND SERVICING
OF RECEIVABLES
2.1. Appointment of Servicer and Sub-Servicers . . . . . . . . . . . . . 2
2.2. Servicing Procedures. . . . . . . . . . . . . . . . . . . . . . . . 3
2.3. Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.4. [Reserved]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.5. Servicing Compensation. . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
THE SERVICER AND THE SUB-SERVICERS
3.1. Corporate Existence, Compliance with Law. . . . . . . . . . . . . . 8
3.2. Corporate Power; Authorization. . . . . . . . . . . . . . . . . . . 8
3.3. Enforceability. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.4. No Legal Bar. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.5. No Material Litigation. . . . . . . . . . . . . . . . . . . . . . . 9
3.6. No Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.7. Servicing Ability . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.8. Location of Records . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE IV
COVENANTS OF THE SERVICER AND THE SUB-SERVICERS
4.1. Delivery of Required Reports. . . . . . . . . . . . . . . . . . . . 10
4.2. Delivery of Monthly Settlement Statement. . . . . . . . . . . . . . 10
4.3. Delivery of Quarterly Servicer's Certificate. . . . . . . . . . . . 11
4.4. Delivery of Independent Public Accountants' Servicing Reports . . . 11
4.5. No Guarantee or Assumption of Company's Liabilities . . . . . . . . 11
<PAGE>
4.6. Extension, Amendment and Adjustment of Receivables, Amendment
of and Compliance with Policies . . . . . . . . . . . . . . . . . . 12
4.7. Protection of Investor Certificateholders' Rights . . . . . . . . . 12
4.8. Security Interest . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.9. Location of Records . . . . . . . . . . . . . . . . . . . . . . . . 13
4.10 Visitation Rights . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.11 Lockbox Agreement; Lockbox Accounts . . . . . . . . . . . . . . . . 13
4.12 Delivery of Financial Statements. . . . . . . . . . . . . . . . . . 14
4.13 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.14 Application of Proceeds . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE V
OTHER MATTERS RELATING TO THE SERVICER AND THE SUB-SERVICERS
5.1. Merger, Consolidation, etc. . . . . . . . . . . . . . . . . . . . . 15
5.2. Indemnification of the Trust and the Trustee. . . . . . . . . . . . 15
5.3. Servicer Not to Resign. . . . . . . . . . . . . . . . . . . . . . . 17
5.4. Access to Certain Documentation and Information Regarding the
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE VI
SERVICER DEFAULTS
6.1. Servicer Default. . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.2. Trustee to Act; Appointment of Successor. . . . . . . . . . . . . . 21
6.3. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE VII
MISCELLANEOUS PROVISIONS
7.1. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.2. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.3. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.4. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.5. Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . 23
7.6. Merger and Integration. . . . . . . . . . . . . . . . . . . . . . . 23
7.7. Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.8. No Set-Off. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.9. No Bankruptcy Petition. . . . . . . . . . . . . . . . . . . . . . . 23
7.10 Consequential Damages . . . . . . . . . . . . . . . . . . . . . . . 23
7.11 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ii
<PAGE>
EXHIBITS
Exhibit A Form of Quarterly Servicer's Certificate
Exhibit B Form of Agreed Upon Procedures
iii
<PAGE>
SERVICING AGREEMENT, dated as of April 3, 1998 among USS RECEIVABLES
COMPANY, LTD., a Cayman Islands limited liability company (the "COMPANY");
United Stationers Supply Co., an Illinois corporation ("USSC"), as servicer (in
such capacity, the "SERVICER"); any other subsidiary of United Stationers Inc.
that may from time to time be added as a party hereto as a Sub-Servicer, a
"SUB-SERVICER"), and The Chase Manhattan Bank, a New York banking corporation,
not in its individual capacity, but solely as trustee (in such capacity, the
"TRUSTEE").
W I T N E S S E T H:
WHEREAS, the Company and the Sellers (as defined in the Pooling
Agreement referred to below) have entered into a Receivables Sale Agreement,
dated as of the date hereof (as amended, supplemented or otherwise modified from
time to time, the "RECEIVABLES SALE AGREEMENT");
WHEREAS, pursuant to the Receivables Sale Agreement, the Sellers sell
to the Company, and the Company purchases from the Sellers, all of the Sellers'
right, title and interest in, to and under the Receivables (as defined in the
Pooling Agreement referred to below) now existing or hereafter created and in
the rights of the Seller in, to and under all Related Property related thereto;
WHEREAS, the Company in turn has transferred the Receivables now
existing or hereafter created and the rights of the Company in, to and under all
Related Property related thereto to a master trust pursuant to a Pooling
Agreement, dated as of the date hereof (as amended, supplemented or otherwise
modified from time to time, the "POOLING AGREEMENT"), among the Company, the
Servicer and the Trustee; and
WHEREAS, the parties hereto wish to enter into this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1. DEFINITIONS. Unless otherwise defined herein, capitalized terms
which are used herein shall have the meanings assigned to such terms in Section
1.1 of the Pooling Agreement, dated as of the date hereof, among the Company,
the Servicer and the Trustee, and each Supplement thereto, including, without
limitation, the Series 1998-1 Supplement.
1.2. OTHER DEFINITIONAL PROVISIONS. (a) All terms defined herein or
in the Pooling Agreement shall have their defined meanings when used in any
certificate or other document made or delivered pursuant hereto unless otherwise
defined therein.
<PAGE>
(b) As used herein and in any certificate or other document made or
delivered pursuant hereto or thereto, accounting terms not defined in Section
1.1 of the Pooling Agreement, and accounting terms partly defined in Section 1.1
of the Pooling Agreement to the extent not defined, shall have the respective
meanings given to them under GAAP. To the extent that the definitions of
accounting terms herein are inconsistent with the meanings of such terms under
GAAP, the definitions contained herein shall control.
(c) 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 Section, subsection,
Schedule and Exhibit references contained in this agreement are references to
Sections, subsections, Schedules and Exhibits in or to this Agreement unless
otherwise specified.
(d) The definitions contained in Section 1.1 of the Agreement are
applicable to the singular as well as the plural forms of such terms and to the
masculine, the feminine and the neuter genders of such terms.
(e) Where reference is made in this Agreement or the Pooling
Agreement to the principal amount of Receivables, such reference shall, unless
explicitly stated otherwise, be deemed a reference to the Principal Amount (as
such term is defined in Section 1.1 of the Pooling Agreement) of such
Receivables.
(f) Any reference herein or in any other Transaction Document to a
provision of the Internal Revenue Code or ERISA shall be deemed a reference to
any successor provision thereto.
(g) All references herein to any agreement or instrument shall be
deemed references to such agreement or instrument as amended, supplemented or
otherwise modified from time to time unless there are any restrictions herein on
the amendment, supplementation or modification of such agreement or instrument.
ARTICLE II
ADMINISTRATION AND SERVICING
OF RECEIVABLES
2.1. APPOINTMENT OF SERVICER AND SUB-SERVICERS. USSC hereby agrees
to act as the Servicer under the Pooling Agreement and the Servicing Agreement,
the Company and the Trustee hereby consent to USSC acting as the Servicer, and
the Investor Certificateholders by their acceptance of the Certificates consent
to USSC acting as the Servicer. In addition, USSC hereby agrees to act as, and
the Company and the Trustee hereby consent to the appointment of USSC as, and
the Investor Certificateholders by their acceptance of the Certificates consent
to the appointment of USSC as, such parties' agent to coordinate the servicing
of the Receivables by the Sub-Servicers. In such agency capacities, the
Servicer will have responsibility for the management of the servicing and
receipt of Collections in respect of the Receivables and will have the authority
to make any
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management decisions relating to the Receivables to the extent such authority is
necessary or desirable and not inconsistent with the authority granted to the
Servicer under any Pooling and Servicing Agreement. The Company, the Trustee
and the Investor Certificateholders shall treat USSC as the Servicer and may
conclusively rely on the instructions, notices and reports of USSC as Servicer
for so long as USSC is the Servicer. In addition, (x) each Sub-Servicer agrees
to act as a Sub-Servicer under each Pooling Agreement and Servicing Agreement,
(y) the Company and the Trustee hereby consent to such Sub-Servicer's acting as
a Sub-Servicer and being appointed their agent to service and administer the
Receivables originated by it, and (z) the Investor Certificateholders by their
acceptance of the Certificates consent to such Sub-Servicer's acting as a
Sub-Servicer and being appointed their agent to service and administer the
Receivables originated by it. Each Sub-Servicer will be responsible, as
directed by the Servicer, for the servicing and administration of the
Receivables originated by such Sub-Servicer.
2.2. SERVICING PROCEDURES. (a) The Servicer shall, subject to the
directions, if any, of the Company, manage the servicing and administration of
the Receivables, the collection of payments due under the Receivables and the
charging off of any Receivables as uncollectible, all in accordance with all
Requirements of Law, the Policies and all the terms and provisions of the
Pooling and Servicing Agreements. The Servicer shall have full power and
authority, acting alone or through any party properly designated by it
hereunder, to do any and all things in connection with such servicing and
administration which it may deem necessary or desirable, but at all times
subject to the terms of this Agreement and the other Transaction Documents. The
Servicer shall exercise the same care and apply the same policies with respect
to the collection of the Receivables that it would exercise and apply if it
owned such Receivables, all with reasonable care and diligence and otherwise in
accordance with the foregoing requirements. Without limiting the generality of
the foregoing and subject to Section 6.1, the Servicer or its designee is hereby
authorized and empowered (i) to give direction to the Trustee with respect to
withdrawals from, and payments to, the Collection Account and/or the Collection
Concentration Account in accordance with the Required Reports and as otherwise
specified in the Pooling and Servicing Agreements, (ii) to execute and deliver,
on behalf of the Trust for the benefit of the Investor Certificateholders, any
and all instruments of satisfaction or cancellation, or of partial or full
release or discharge, and all other comparable instruments, with respect to the
Receivables and, after the delinquency of any Receivable and to the extent
permitted under and in compliance with applicable Requirements of Law, to
commence enforcement proceedings with respect to such Receivables and (iii) to
make any filings, refilings, reports, notices, applications and registrations
with, and to seek any consents or authorizations from, the SEC and any state
securities authority on behalf of the Trust as may be necessary or advisable to
comply with any federal or state securities or reporting requirements or laws.
(b) Each Servicing Party will, at its cost and expense and as agent
for the Company, the Trust and the Investor Certificateholders, use its best
efforts to collect, consistent with its past practices and in accordance with
all Requirements of Law and Policies, as and when the same becomes due, the
amount owing on each Receivable with respect to which it is the Servicing Party.
No Servicing Party will make any material changes that deviate from the Policies
in its administrative, servicing and collection systems except (i) as expressly
permitted by the terms of any Pooling and Servicing Agreement and
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(ii) after giving written notice to the Trustee and the Rating Agencies of any
such material change and receiving such parties' written consent thereto. In
the event of default under any Receivable, the responsible Servicing Party shall
have the power and authority, on behalf of the Company and the Trust for the
benefit of the Investor Certificateholders, to take such action in respect of
such Receivable as such Servicing Party may deem advisable. In the enforcement
or collection of any Receivable, the relevant Servicing Party shall be entitled
to sue thereon (i) in its own name or (ii) if, but only if, the Company consents
in writing (which consent shall not be unreasonably withheld), as agent for the
Company. In no event shall any Servicing Party be entitled to take any action
which would make the Company, the Trustee or the Investor Certificateholders a
party to any litigation without the express prior written consent of such
Person.
(c) Without limiting the generality of the foregoing and subject to
Section 6.2, each Servicing Party is hereby authorized and empowered to delegate
any or all of its servicing, collection, enforcement and administrative duties
hereunder with respect to the Receivables to a Person who agrees to conduct such
duties in accordance with the Policies. Such Servicing Party shall notify the
Company, the Trustee and any Rating Agency of the appointment of a designee as
provided for herein; PROVIDED, HOWEVER, that, in the event that such delegation
would reasonably be expected to adversely affect the ability of such Trustee,
Servicing Party or the Servicer to perform its obligations in the manner
contemplated by any Pooling and Servicing Agreement, or otherwise to have a
material adverse effect upon the Receivables taken as a whole, such Servicing
Party shall give prior written notice to the Company, the Trustee, each Agent
and the Rating Agencies of any such delegation, and prior to such delegation's
being effective, such Servicing Party and the Servicer shall have received
notice that the Rating Agency Condition shall be satisfied after giving effect
to such delegation and shall have obtained the consent of the Company and each
Agent to such delegation. No delegation of duties by a Servicing Party
permitted hereunder will relieve such Servicing Party or the Servicer of its
liability and responsibility with respect to such duties. Any agreement for the
delegation of such duties shall be deemed to be between the parties to such
agreement alone and the Trustee and holders of Investor Certificates shall not
be deemed parties thereto and shall have no obligations, duties or liabilities
with respect to any party to whom such duties are delegated.
(d) Except as provided in any Pooling and Servicing Agreement,
neither any Servicing Party nor any Successor Servicer shall be obligated to use
servicing procedures, offices, employees or accounts for servicing the
Receivables transferred to the Company and, subsequently, to the Trust, which
are separate from the procedures, offices, employees and accounts used by such
Servicing Party or such Successor Servicer, as the case may be, in connection
with servicing other receivables.
(e) Each Servicing Party shall maintain reasonable and customary
fidelity bond coverage insuring against losses through wrongdoing of its
officers and employees who are involved in the servicing of the Receivables,
including, without limitation, depositor's forgery.
(f) Each Servicing Party shall comply with and perform its servicing
obligations with respect to the Receivables in accordance with the contracts, if
any, relating
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to the Receivables and the Policies, except insofar as any failure to so comply
or perform would not reasonably be expected to have a Material Adverse Effect
with respect to the Servicer.
(g) No Servicing Party shall take any action to cause any Receivable
to be evidenced by any "instrument" (other than an instrument which constitutes
or together with a security agreement constitutes "chattel paper" (each as
defined in the UCC as in effect in any state in which the Company's or the
applicable Seller's chief executive office or books and records relating to such
Receivable are located)) or any title in bearer form except in connection with
its enforcement or collection of a Defaulted Receivable, in which event such
Servicing Party shall deliver such instrument to the Trustee as soon as
reasonably practicable but in no event more than 5 days after the execution
thereof. Each Servicing Party shall hold any chattel paper evidencing a
Receivable as custodian for the Trustee.
2.3. COLLECTIONS. (a) As of the Initial Closing Date, the
Sub-Servicers, or the Servicer on their behalf, shall have (i) established and
shall maintain (or shall cause to be established and maintained), in the name of
the Trustee and for the benefit of the Investor Certificateholders, a Lockbox, a
Lockbox Account and a Collection Account, and (ii) instructed all Obligors to
make all payments in respect of the Receivables to a Lockbox (except to the
extent that any Servicing Party, as of such date, in the normal course of its
business and consistent with past practices has permitted Obligors to remit
payments to a Collector), and such instructions thereafter shall continue to be
in full force and effect. Each Servicing Party is hereby authorized to collect
payments in accordance with the foregoing sentence. Any payments collected by a
Collector shall be deposited into a Lockbox Account within one Business Day
following receipt thereof; PROVIDED that on any business day all Collectors may
hold in the aggregate up to $150,000, provided that in all events such payments
shall be deposited within three business days following receipt thereof. All
Collections received in a Lockbox shall, within one Business Day of receipt
thereof, be deposited in a Lockbox Account. All immediately available funds
deposited in a Lockbox Account shall be transferred by the relevant Lockbox
Processor within one Business Day of receipt thereof to the Collection
Concentration Account or, in the event of an Potential Early Amortization Event
or Early Amortization Event, to the Collection Account. Except as permitted in
the first sentence of this subsection 2.3(a), in the event that any payments in
respect of the Receivables are made directly to any Servicing Party (including,
without limitation, any employees thereof or independent contractors employed
thereby), such Servicing Party shall, within one Business Day of receipt
thereof, forward such amounts to a Lockbox (including by depositing instruments
evidencing any such amounts into any such account) and, prior to forwarding such
amounts, such Servicing Party shall hold such payments in trust as custodian for
the Trustee. Each of the Company and each Servicing Party represents, warrants
and agrees that all Collections shall be collected, processed and deposited by
it pursuant to, and in accordance with the terms of, the Pooling and Servicing
Agreements.
(b) Each Lockbox Agreement shall provide that the Lockbox Processor
thereunder is irrevocably directed, and such Lockbox Processor irrevocably
agrees, to (i) deposit funds received in the Lockbox directly into the Lockbox
Account and (ii) transfer immediately available funds on deposit in the Lockbox
Account within one Business Day of
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receipt thereof to the Trustee for deposit in the Collection Concentration
Account or, in the event of an Potential Early Amortization Event or Early
Amortization Event, to the Collection Account. Each Lockbox Agreement shall be
substantially in the form of Exhibit A to the Pooling Agreement or in such form
as the Lockbox Processor party thereto employs in the ordinary course of its
business for transactions of a type similar to the one contemplated by this
Agreement, and which form shall be reasonably acceptable to the Trustee. A new
Lockbox Account may be designated from time to time by the Company and the
Servicer; PROVIDED that the Lockbox Processor chosen to maintain such new
Lockbox Account shall have entered into a Lockbox Agreement with the Company,
the Servicer and the Trustee prior to any funds being deposited into such
Lockbox Account. The Company or the Servicer shall notify each Rating Agency of
the designation of a new Lockbox Account. Prior to any resignation of the
Lockbox Processor or termination of the Lockbox Processor by the Company or the
Trustee, the Servicer hereby agrees to obtain a replacement Lockbox Processor,
the unsecured and uncollateralized obligations of which (or of its holding
company parent) are rated in one of the three highest long-term or short-term
rating categories by each Rating Agency rating such replacement Lockbox
Processor, to serve under a Lockbox Agreement which is reasonably acceptable to
the Trustee.
(c) The Trustee shall administer amounts on deposit in the Collection
Account, and the Servicer, on behalf of the Trust, shall administer amounts on
deposit in the Lockbox Accounts, in each case in accordance with the terms of
the Pooling and Servicing Agreements. Each of the Company and each Servicing
Party acknowledges and agrees that (i) it shall not have any right to withdraw
any funds on deposit in the Collection Account or any Lockbox Account, (ii) all
amounts deposited in the Collection Account or any Lockbox Account shall be
under the sole dominion and control of the Trustee (subject to the Servicer's
right to direct the application of such amounts as provided by the terms of any
Pooling and Servicing Agreement), (iii) with respect to the Eligible
Investments, the Trustee shall be entitled to exercise the rights that comprise
such financial assets and to exercise the ordinary rights of an entitlement
holder, and (iv) the securities account into which Eligible Investments may be
held or credited shall be an account of the Trustee and not the Company or the
Servicer, but if, despite such intent, the securities account is determined to
be an account of the Company or the Servicer than the securities intermediary
shall comply with entitlement orders originated by the Trustee without further
consent by the Company or the Servicer.
(d) As soon as practicable but in any event not later than the
Business Day following the date that the Servicer or a Sub-Servicer determines,
identifies and certifies in writing to the Trustee that any of the collected
funds received in any of the Lockboxes, the Lockbox Accounts, the Collection
Concentration Account or the Collection Account do not constitute Collections on
account of the Receivables, such monies which do not constitute such Collections
shall be remitted to the applicable Seller to the extent such determination and
identification is reasonably satisfactory to the Trustee.
(e) All collections received or deposited in the Collection Account
as "Collections" shall be deemed, for purposes of the Transaction Documents, to
have been received or deposited as of the Business Day Received (as defined in
the immediately succeeding sentence). As used herein, the term "BUSINESS DAY
RECEIVED" shall mean (i) if
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funds are deposited in the Collection Account by 3:00 p.m., New York City time,
such day of deposit and (ii) if funds are deposited in the Collection Account
after 3:00 p.m., New York City time, the Business Day next following such day of
deposit.
(f) Unless otherwise required by law or unless an Obligor designates
that a payment be applied to a specific Receivable, all Collections received
from an Obligor shall be applied to the oldest Receivables of such Obligor.
(g) The Servicer or Sub-Servicer, following notification that
collections of any receivable or other intangible owed to any Seller which is
not a Receivable have been deposited in error into any Lockbox Account, shall
segregate all such collections or, if such collections have been deposited into
the Collection Concentration Account or the Collection Account, shall segregate
such collections for transfer to such Seller. Promptly after such misapplied
collections have been identified in writing to the Trustee, the Trustee shall
transfer and turn over all such collections to such Seller.
2.4. [Reserved]
2.5. SERVICING COMPENSATION. (a) As full compensation for its
servicing activities hereunder and reimbursement for its expenses as set forth
in subsection 2.5(b), the Servicer shall be entitled to receive on each
Distribution Date for the preceding Settlement Period prior to the termination
of the Trust pursuant to Section 9.1 of the Pooling Agreement a servicing fee
(the "SERVICING FEE"). The Servicing Fee shall be an amount equal to (i) the
product of (A) the Servicing Fee Percentage and (B) the average aggregate
Principal Amount of the Receivables in the Trust for the Settlement Period
immediately preceding such Settlement Period (or, if such later Settlement
Period is the initial Settlement Period, the aggregate Principal Amount of the
Receivables at February 28, 1998) and (C) the number of days in such Settlement
Period, DIVIDED BY (ii) 360 (or, with respect to a particular Outstanding
Series, as shall be provided in the related Supplement). Except as otherwise
set forth in the related Supplement, the share of the Servicing Fee allocable to
each Outstanding Series for any Settlement Period shall be an amount equal to
the product of (i) the Servicing Fee for such Settlement Period and (ii) a
fraction (expressed as a percentage) (A) the numerator of which is the daily
average Invested Amount for such Settlement Period with respect to such Series
and (B) the denominator of which is the daily average Aggregate Invested Amount
for such Settlement Period (with respect to any such Series, the "MONTHLY
SERVICING FEE"); PROVIDED, HOWEVER, that if on any day USSC or any Affiliate
thereof is acting as the Servicer and an Early Amortization Event has occurred
and is continuing with respect to any Outstanding Series, payment of the Monthly
Servicing Fee with respect to such Series shall be deferred until all amounts
due under the Investor Certificates of such Series have been paid in full. The
Servicing Fee shall be payable to the Servicer solely pursuant to the terms of,
and to the extent amounts are available for payment under, Article III of the
Pooling Agreement.
(b) The Company hereby directs the Servicer, and the Servicer hereby
agrees, to pay amounts due to the Trustee pursuant to Section 8.5 of the Pooling
Agreement and the reasonable fees and disbursements of independent accountants
and counsel, including the Trustee's reasonable out-of-pocket expenses relating
to the Trustee's inspections, if any, of
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the Servicer's servicing facility in connection with the Trustee's role as
potential Successor Servicer, which inspections shall occur not more frequently
than once per calendar year, and all other out-of-pocket fees and expenses of
the Trust (including reasonable counsel fees, if any) not expressly stated
herein to be for the account of the Investor Certificateholders; PROVIDED,
HOWEVER, that in no event shall the Servicer be liable for any federal, state or
local income or franchise tax, or any interest or penalties with respect
thereto, assessed on the Trust, the Trustee or the Investor Certificateholders
except in accordance with Section 5.2 and as otherwise expressly provided
herein. Notwithstanding anything to the contrary herein or in any other Pooling
and Servicing Agreement, in the event that the Servicer fails to pay any amount
due to the Trustee pursuant to Section 8.5 of the Pooling Agreement, or
following the commencement and continuance of an Early Amortization Period, the
Trustee shall be entitled, in addition to any other rights it may have under law
and under the Pooling Agreement, to receive directly such amounts owing to it
under the Pooling and Servicing Agreements from, and in the same order of
priority as, the Servicing Fee before payment to the Servicer of any portion
thereof, PROVIDED, that in the event the Servicer shall have elected to waive
its rights to payment of the Servicing Fee or the Servicing Fee is deferred
pursuant to subsection 2.5(a), the Trustee shall nonetheless be entitled to
receive such amounts from payments which would ordinarily be applied to the
payment of the Servicing Fee, in the same order of priority as though such
Servicing Fee were payable. The Servicer shall be required to pay expenses for
its own account, and shall not be entitled to any payment therefor other than
the Servicing Fee. Nothing contained herein shall be construed to limit the
obligation of the Servicer or the Company to pay any amounts due the Trustee
pursuant to Section 8.5 of the Pooling Agreement or pursuant to the terms of any
applicable Supplement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
THE SERVICER AND THE SUB-SERVICERS
As of (a) the Initial Closing Date and (b) each Issuance Date, each
Servicing Party hereby makes the following representations and warranties to
each of the other parties hereto:
3.1. CORPORATE EXISTENCE, COMPLIANCE WITH LAW. Such Servicing Party
(i) is a corporation duly incorporated, validly existing and in good standing
under the laws of the jurisdiction of its organization, (ii) has all requisite
corporate power and authority, and all legal right, to own and operate its
properties, to lease the properties it operates as lessee and to conduct its
business as now conducted, (iii) is duly qualified as a foreign corporation to
do business and in good standing (or is exempt from such requirements) under the
laws of each jurisdiction in which the ownership or its assets or the conduct of
its business, including without limitation the servicing of Receivables as
required by this Agreement requires such qualification, or in which the failure
to so qualify would reasonably be expected to have a Material Adverse Effect,
and (iv) is in compliance with all Requirements of Law.
3.2. CORPORATE POWER; AUTHORIZATION. Such Servicing Party has the
corporate power and authority, and the legal right, to execute, deliver and
perform this
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Agreement and the other Transaction Documents to which it is a party and has
taken all necessary corporate action to authorize the execution, delivery and
performance of this Agreement and the other Transaction Documents to which it is
a party. No consent or authorization of, filing with, notice to or other act by
or in respect of, any Governmental Authority or any other Person is required in
connection with the execution, delivery, performance, validity or enforceability
of this Agreement and the other Transaction Documents to which it is a party by
or against such Servicing Party other than (i) those consents which have duly
been obtained or made and are in full force and effect on the Initial Closing
Date or the relevant Issuance Date, as the case may be, (ii) any filings of
UCC-1 financing statements necessary to perfect the Company's or the Trust's
interest in the Receivables and the Related Property, (iii) those that may be
required under state securities or "blue sky" laws in connection with the
offering or sale of Certificates and (iv) any such consent, authorization,
filing, notice or other act, the absence of which would not be reasonably likely
to have a Material Adverse Effect with respect to such Servicing Party or the
Servicer. This Agreement and each other Transaction Document to which it is a
party have been duly executed and delivered on behalf of such Servicing Party.
3.3. ENFORCEABILITY. This Agreement and each other Transaction
Document to which it is a party constitute the legal, valid and binding
obligation of such Servicing Party enforceable against it in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other similar
laws now or hereafter in effect affecting the enforcement of creditors' rights
generally and except as such enforceability may be limited by general principles
of equity (whether considered in a proceeding at law or in equity).
3.4. NO LEGAL BAR. The execution, delivery and performance of this
Agreement and each other Transaction Document to which it is a party will not
violate any Requirement of Law or Contractual Obligation of such Servicing Party
(other than any violation which would not be reasonably likely to have a
Material Adverse Effect with respect to such Servicing Party or the Servicer),
and will not result in, or require, the creation or imposition of any Lien
(other than Permitted Liens) on any of its properties or revenues pursuant to
any such Requirement of Law or Contractual Obligation.
3.5. NO MATERIAL LITIGATION. (a) There are no actions, suits,
investigations or proceedings at law or in equity or by or before any
arbitrator, court or Governmental Authority now pending or, to the knowledge of
such Servicing Party, threatened against or affecting it or any of its
properties, revenues or rights which (i) involve this Agreement, any of the
other Transaction Documents to which such Servicing Party is a party or any of
the transactions contemplated hereby or thereby or (ii) if adversely determined,
could individually or in the aggregate, result in a Material Adverse Effect with
respect to such Servicing Party or the Servicer.
(b) Such Servicing Party is not in default under or with respect to
any Requirement of Law where such default would be reasonably likely to have a
Material Adverse Effect with respect to such Servicing Party or the Servicer.
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3.6. NO DEFAULT. Such Servicing Party is not in default under or
with respect to any of its Contractual Obligations in any respect which would be
reasonably likely to have a Material Adverse Effect with respect to such
Servicing Party or the Servicer. No Servicer Default or Potential Servicer
Default has occurred and is continuing.
3.7. SERVICING ABILITY. As of the related Issuance Date, there has
not been since the date of this Agreement any material adverse change in the
ability of such Servicing Party to perform its obligations as Servicer under any
Transaction Document.
3.8. LOCATION OF RECORDS. The offices at which such Servicing Party
keeps its records concerning the Receivables serviced by it either (i) are
located at the addresses set forth on Schedule II to the Receivables Sale
Agreement or (ii) have been notified to the Company and the Trustee in
accordance with the provisions of Section 4.9. Such Servicing Party's place of
business or chief executive office if such servicing party has more than one
place of business is located at one of such locations.
ARTICLE IV
COVENANTS OF THE SERVICER AND THE SUB-SERVICERS
4.1. DELIVERY OF REQUIRED REPORTS. Unless otherwise specified in the
Supplement with respect to any Series, for each Business Day or other specified
period (a "REPORTED PERIOD") and with respect to each Outstanding Series, the
Servicer shall submit to the Trustee and the relevant Agent, if any, no later
than 1:00 p.m., New York City time, on the second Business Day following the end
of each Reported Period, a written report substantially in the form attached to
the related Supplement of each such Series (the "REQUIRED REPORT") setting forth
for the Reported Period total Collections, Receivables and Eligible Receivables
created, and such other information as the Trustee or such Agent may reasonably
request. The Required Report may be delivered in an electronic format mutually
agreed upon by the Servicer and the Trustee, or pending such agreement, by
facsimile. By delivery of a Required Report, the Servicer shall be deemed to
have made a representation and warranty that all information set forth therein
is true and correct.
4.2. DELIVERY OF MONTHLY SETTLEMENT STATEMENT. Unless otherwise
specified in the Supplement with respect to any Outstanding Series, the Servicer
hereby covenants and agrees that it shall deliver to the Trustee, each Agent and
each Rating Agency by 11:00 a.m., New York City time, on each Settlement Report
Date, a certificate of a Responsible Officer of the Servicer substantially in
the form attached to the related Supplement of each such Series (a "MONTHLY
SETTLEMENT STATEMENT") setting forth, as of the last day of the Settlement
Period most recently ended and for such Settlement Period, (a) the information
described in the form of such Monthly Settlement Statement, with such changes as
may be agreed to by the Servicer and the Trustee, subject to satisfaction of the
Rating Agency Condition (unless a Responsible Officer of the Servicer certifies
that such changes could not reasonably be expected to have a materially adverse
effect on the interests of the Trust or the Investor Certificateholders for the
applicable Series under the Transaction Documents). The delivery of such
certificate shall constitute a certification by the Servicer that, to the best
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knowledge of such Responsible Officer of the Servicer, the information contained
therein is true and correct in all material respects and the Servicer has
performed in all material respects all of its obligations under each Transaction
Document throughout such preceding Settlement Period (or, if there has been a
material default in the performance of any such obligation, specifying each such
default known to such officer and the nature and status thereof). A copy of
each Monthly Settlement Statement may be obtained by any Investor
Certificateholder upon a request in writing to the Trustee addressed to the
Corporate Trust Office.
4.3. DELIVERY OF QUARTERLY SERVICER'S CERTIFICATE. The Servicer
agrees that it shall deliver to the Trustee, each Agent and each Rating Agency,
a certificate of a Responsible Officer of the Servicer, substantially in the
form of Exhibit A hereto, stating that:
(a) a review of the activities of each of the Company and the
Servicer during the preceding calendar quarter (or in the case of the first
such certificate issued after the Initial Closing Date, during the period
from the Initial Closing Date) and of its performance under each
Transaction Document was made under the supervision of such Responsible
Officer; and
(b) to the best of such Responsible Officer's knowledge, based on
such review, (i) each of the Company and the Servicer has performed in all
material respects its obligations under each Transaction Document
throughout the period covered by such certificate (or, if there has been a
material default in the performance of any such obligation, specifying each
such default known to such Responsible Officer and the nature and status
thereof) and (ii) each Required Report and Monthly Settlement Statement
delivered during such period was accurate and correct in all material
respects, except as specified in such certificate.
Such certificate shall be delivered by the Servicer within 45 days after the end
of each calendar quarter commencing with the quarter ending on or about June 30,
1998. A copy of such certificate may be obtained by any Investor
Certificateholder by a request in writing to the Trustee addressed to the
Corporate Trust Office.
4.4. DELIVERY OF INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING REPORTS.
The Servicer shall cause Independent Public Accountants to furnish to the
Company, the Trustee and each Rating Agency within 90 days following the last
day of each fiscal year of the Servicer (commencing with the fiscal year ending
on or about December 31, 1998) a letter to the effect that such firm has
performed certain agreed upon procedures (as set forth in Exhibit B hereto)
relating to the Servicer and each Sub-Servicer with respect to the Receivables
and each such Person's performance hereunder during the preceding fiscal year
and describing such firm's findings with respect to such procedures. A copy of
such report may be obtained by any Investor Certificateholder upon a request in
writing to the Trustee addressed to the Corporate Trust Office.
4.5. NO GUARANTEE OR ASSUMPTION OF COMPANY'S LIABILITIES. Each
Servicing Party hereby covenants and agrees that it will not guarantee or assume
the obligations or
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liabilities of the Company under the Pooling and Servicing Agreements, or any
other obligations or liabilities of the Company, in an aggregate amount
exceeding $25,000 at any one time outstanding, it being understood that a
shareholder's capital contribution is not such a guarantee or assumption.
4.6. EXTENSION, AMENDMENT AND ADJUSTMENT OF RECEIVABLES, AMENDMENT OF
AND COMPLIANCE WITH POLICIES. (a) Each Servicing Party hereby covenants and
agrees with the Trustee that it shall not extend, rescind, cancel, amend or
otherwise modify, or attempt or purport to extend, rescind, cancel, amend or
otherwise modify, the terms of, or grant any Dilution Adjustment to, any
Receivable, or otherwise take any action which is intended to cause or permit an
Eligible Receivable to cease to be an Eligible Receivable, except in any such
case (i) in accordance with the terms of the Policies, (ii) as required by any
Requirement of Law or (iii) in the case of any Dilution Adjustments (whether or
not permitted by any other clause of this sentence), upon the payment by or on
behalf of the applicable Seller of a Seller Adjustment Payment pursuant to
Section 2.05 of the Receivables Sale Agreement. Any Dilution Adjustment
authorized to be made pursuant to the preceding sentence shall result in the
reduction, on the Business Day on which such Dilution Adjustment arises or is
identified, in the aggregate Principal Amount of Receivables used to calculate
the Aggregate Receivables Amount. If, as a result of such a reduction, the
Aggregate Receivables Amount is less than the Aggregate Target Receivables
Amount, the Company (in addition to the obligation of the applicable Seller
under the Receivables Sale Agreement in respect of such Dilution Adjustment)
shall be required to pay into the Series Principal Collection Sub-subaccount
with respect to each Outstanding Series in immediately available funds within
one Business Day of such determination such Series PRO RATA share of the amount
(the "CASH DILUTION PAYMENT") by which the Aggregate Target Receivables Amount
exceeds the Aggregate Receivables Amount.
(b) No Servicing Party shall make or permit to be made any change or
modification to the Policies in any material respect, except (i) if such changes
or modifications are necessary under any Requirement of Law, (ii) if such
changes or modifications would not reasonably be expected to have a Material
Adverse Effect with respect to the Servicer or (iii) if the Rating Agency
Condition is satisfied with respect thereto. The Servicer shall provide notice
to the Company, the Trustee and each Rating Agency of any modification of the
Policies.
(c) Each Servicing Party shall perform its obligations in accordance
with and comply in all material respects with the Policies.
4.7. PROTECTION OF INVESTOR CERTIFICATEHOLDERS' RIGHTS. Each
Servicing Party hereby agrees with the Trustee that it shall take no action, nor
intentionally omit to take any action, which could reasonably be expected to
materially adversely impair the rights, remedies or interests of the Investor
Certificateholders under the Transaction Documents in respect of the
Receivables, nor shall it reschedule, revise or defer payments due on any
Receivable except in accordance with the Policies or Section 4.6 above.
4.8. SECURITY INTEREST. Each Servicing Party hereby covenants and
agrees that it shall not sell, pledge, assign or transfer to any other Person,
or grant, create, incur,
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assume or suffer to exist any Lien on, any Receivable sold and assigned to the
Company or the Trust, whether now existing or hereafter created, or any interest
therein, and such Servicing Party shall defend the right, title and interest of
the Company and the Trust in, to and under any Receivable sold and assigned to
the Company or the Trust, whether now existing or hereafter created, against all
claims of third parties claiming through or under such Servicing Party or the
Company; PROVIDED, HOWEVER, that nothing in this Section 4.8 shall prevent or be
deemed to prohibit any Servicing Party from suffering to exist upon any of the
Receivables any Permitted Liens.
4.9. LOCATION OF RECORDS. Each Servicing Party hereby covenants and
agrees that it (a) shall not move its chief executive office or any of the
offices where it keeps its records with respect to the Receivables outside of
the location specified in respect thereof on Schedule II to the Receivables Sale
Agreement, in any such case, without giving 15 days' prior written notice to the
Company, the Trustee and the Rating Agencies and (b) shall promptly take all
actions reasonably required (including but not limited to all filings and other
acts necessary or reasonably requested by the Trustee as being advisable under
the UCC) in order to continue the valid and enforceable interest of the Trust in
all Receivables now owned or hereafter created.
4.10. VISITATION RIGHTS. (a) Each Servicing Party shall, at any
reasonable time during normal business hours on any Business Day and from time
to time, upon reasonable prior notice, according to such Servicing Party's
normal security and confidentiality requirements, permit (i) the Company, the
Trustee, any Agent or any of their respective agents or representatives (A) to
examine and make copies of and abstracts from the records, books of account and
documents (including computer tapes and disks) of such Servicing Party relating
to the Receivables and (B) following the termination of the appointment of such
Servicing Party, to be present at the offices and properties of such Servicing
Party to administer and control the collection of the Receivables and (ii) the
Company, the Trustee, any Agent or any of their respective agents or
representatives to visit the properties of such Servicing Party to discuss the
affairs, finances and accounts of such Servicing Party relating to the
Receivables or such Servicing Party's performance hereunder or under any of the
other Transaction Documents to which it is a party with any of its officers or
directors and with its independent certified public accountants; PROVIDED that
the Company, the Trustee or such Agent, as the case may be, shall notify such
Servicing Party prior to any contact with such accountants and shall give such
Servicing Party the opportunity to participate in such discussions.
(b) Each Servicing Party shall provide the Trustee with such other
information as the Trustee may reasonably request in connection with the
fulfillment of the Trustee's obligations under any Pooling and Servicing
Agreement.
4.11. LOCKBOX AGREEMENT; LOCKBOX ACCOUNTS. The Servicer shall (a)
maintain, and keep in full force and effect, each Lockbox Agreement, except to
the extent otherwise permitted under the terms of the Transaction Documents, and
(b) ensure that each related Lockbox Account shall be free and clear of, and
defend each such Lockbox Account against, any writ, order, stay, judgment,
warrant of attachment or execution or similar process.
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4.12. DELIVERY OF FINANCIAL STATEMENTS. The Servicer shall furnish to
the Trustee and the Rating Agencies:
(a) as soon as available, but in any event not later than 125 days
after the end of each fiscal year of United Stationers Inc., and so long as USSC
is the Servicer, a copy of the audited consolidated balance sheets of United
Stationers Inc. as at the end of such fiscal year and the related consolidated
statements of operations, shareholders' equity and cash flows of United
Stationers Inc. for such fiscal year, setting forth in each case in comparative
form the figures for the previous fiscal year (except, in the case of the
audited financial statements for the 1997 fiscal year, such financial statements
will include a footnote describing revenues and operating income for the
preceding fiscal year (which shall reflect any significant acquisitions
occurring during such year)), and accompanied by the opinion of Ernst & Young
LLP or another nationally-recognized independent public accounting firm, which
report shall state that such consolidated financial statements present fairly
the financial position and results of operations and changes in cash flow for
the periods indicated in conformity with GAAP applied on a basis consistent with
prior years. Such opinion shall not be qualified or limited because of a
restricted or limited examination by such accountant of any material portion of
United Stationers Inc. or any of its Subsidiaries' records; and
(b) as soon as practicable, but in any event not later than 50 days
after the end of each fiscal quarter, a copy of the unaudited consolidated
balance sheets of United Stationers Inc. and the Sellers as at the end of such
quarter and the related consolidated statements of operations, shareholders'
equity and cash flows of United Stationers Inc. and the Sellers for such fiscal
quarter, and for the elapsed portion of the fiscal year then ended, certified by
an appropriate Responsible Officer as being complete and correct in all material
respects and fairly presenting the financial position and the results of
operations of United Stationers Inc. and the Sellers, setting forth in each case
in comparative form the figures as of and for the corresponding dates and
periods in the previous fiscal year.
All such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
4.13. NOTICES. The Servicer shall furnish to the Company, the Trustee
and each Rating Agency, promptly upon a Responsible Officer of the Servicer
obtaining knowledge of the occurrence of any Purchase Termination Event,
Potential Purchase Termination Event (each as defined in the Receivables Sale
Agreement), Early Amortization Event, Potential Early Amortization Event,
Servicer Default or Potential Servicer Default, written notice thereof.
4.14. APPLICATION OF PROCEEDS. So long as Section 2.10 of that
certain Second Amended and Restated Credit Agreement dated as of April 3, 1998
(the "CREDIT AGREEMENT"), by and among USSC, as borrower, United Stationers
Inc., as guarantor, The Chase Manhattan Bank, as administrative agent, and Chase
Securities Inc., as arranger, shall be in effect and shall not have been waived
in writing pursuant to the applicable waiver provisions of such Credit
Agreement, and so long as Section 1016 of that certain Indenture
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dated as of May 3, 1995 (the "INDENTURE"), among USSC, United Stationers Inc.,
and The Bank of New York, as trustee, shall be in effect and shall not have been
waived in writing pursuant to the applicable waiver provisions of such
Indenture, the Servicer shall comply in all respects with the requirements of
such Section 2.10 and Section 1016.
ARTICLE V
OTHER MATTERS RELATING TO THE SERVICER AND THE SUB-SERVICERS
5.1. MERGER, CONSOLIDATION, ETC. No Servicing Party shall
consolidate with or merge into any other corporation or convey or transfer its
properties and assets substantially as an entirety to any Person (other than the
Servicer or another Servicing Party), unless:
(a) the corporation formed by such consolidation or into which such
Servicing Party is merged or the Person which acquires by conveyance or transfer
the properties and assets of such Servicing Party substantially as an entirety
shall be a corporation organized and existing under the laws of the United
States of America or any State thereof or the District of Columbia, and, if such
Servicing Party is not the surviving entity, such corporation shall assume,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto (except as may be required in the context of an
acquisition by conveyance or transfer of the properties and assets of such
Servicing Party substantially as an entirety to such other Person), the
performance of every covenant and obligation of such Servicing Party hereunder;
and
(b) such Servicing Party has delivered to the Trustee an officer's
certificate executed by a Vice President or more senior officer and an Opinion
of Counsel addressed to the Trust and the Trustee, each stating (i) that such
consolidation, merger, conveyance or transfer complies with this Section 5.1 and
(ii) that all conditions precedent herein provided for relating to such
transaction have been complied with; PROVIDED that such Opinion of Counsel, in
the case of clause (ii) above, may, to the extent that such opinion concerns
questions of fact, rely on such officer's certificate with respect to such
questions of fact.
5.2. INDEMNIFICATION OF THE TRUST AND THE TRUSTEE. (a) The Servicer
hereby agrees to indemnify and hold harmless the Trust and the Trustee, for the
benefit of the Investor Certificateholders and the Trustee and its directors,
officers, agents and employees (each of the foregoing, an "INDEMNIFIED PERSON"),
from and against any loss, liability, expense, damage or injury suffered or
sustained by reason of any acts, omissions or alleged acts or omissions arising
out of, or relating to, activities of the Servicer pursuant to the Pooling and
Servicing Agreements, including but not limited to any judgment, award,
settlement, reasonable attorneys' fees and other reasonable costs or expenses
incurred in connection with the defense of any actual or threatened action,
proceeding or claim; PROVIDED that the Servicer shall not so indemnify any
Indemnified Person for any such loss, liability, damage, injury, cost or expense
of such Indemnified Person (i) arising solely from a default by an Obligor with
respect to any Receivable (other than arising out of (A) any discharge, claim,
offset or defense (other than discharge in bankruptcy of the Obligor) of the
Obligor to
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the payment of any Purchased Receivable arising from the actions of the Servicer
(including, without limitation, a defense based on such Purchased Receivable's
not being a legal, valid and binding obligation of such Obligor enforceable
against it in accordance with its terms), or (B) a failure by the Servicer to
perform its duties or obligations under this Agreement), or (ii) to the extent
that such liability, cost or expense arises from the gross negligence, bad faith
or willful misconduct of such Indemnified Person or any other Indemnified Person
(or any of their respective directors, officers, agents or employees); PROVIDED,
HOWEVER, that to the extent a determination of gross negligence, bad faith or
willful misconduct is made after the payment of any amounts related thereto, the
Servicer shall be repaid any amounts reimbursed under the preceding clause that,
due to such determination, it should not have paid. The provisions of this
indemnity shall run directly to, and be enforceable by, an injured party and
shall survive the termination of this Agreement and the resignation or removal
of the Servicer.
(b) In addition, the Servicer agrees to pay, indemnify and hold each
Indemnified Person harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
reasonable expenses or disbursements of any kind or nature whatsoever which may
at any time be imposed on, incurred by or asserted against such Indemnified
Person in any way relating to or arising out of any Servicing Party's breach of
any covenant contained in subsections 2.2(f), 2.2(g), 4.6, 4.7 or 4.8 with
respect to any Receivable which materially and adversely affects the interest of
the Trust, the parties hereto or the Investor Certificateholders pursuant to the
Transaction Documents in any Receivable or the collectibility of any Receivable
(an "INDEMNIFICATION EVENT").
(c) The Servicer shall indemnify the relevant Indemnified Person for
such affected Receivable pursuant to subsection 5.2(b) by depositing into the
Collection Account in immediately available funds no later than the next
Settlement Report Date occurring at least 30 days after receipt by the Servicer
of written notice of an Indemnification Event given by the applicable Seller,
the Company or the Trustee or upon a Responsible Officer of the Servicer
obtaining knowledge of an Indemnification Event, an amount equal to the
outstanding Principal Amount of such Receivable (the "SERVICER INDEMNIFICATION
AMOUNT"). Upon each such indemnification by the Servicer, the Trust shall
automatically and without further action be deemed to transfer, assign, and set
over, and otherwise convey to the Servicer, without recourse, representation or
warranty, all right, title and interest of the Trust in and to such Receivable,
all monies due or to become due with respect thereto and all proceeds thereof;
and such Receivable shall be treated by the Trust as collected in full as of the
date on which it was transferred. The Trustee shall execute such documents and
instruments of transfer or assignment and take such other actions as shall be
reasonably requested by the Servicer to effect the conveyance of any Receivable
pursuant to this subsection. The obligation of the Servicer to indemnify the
Trust for any such Receivables shall constitute the sole remedy respecting any
breach of the covenants set forth in subsections 2.2(f), 2.2(g), 4.6, 4.7 or 4.8
with respect to such Receivables available to Investor Certificateholders;
PROVIDED, HOWEVER, that the Servicer shall, in addition, indemnify each
Indemnified Person against all costs, expenses, losses, damages, claims and
liabilities, including reasonable fees and expenses of counsel, which may be
asserted against or incurred by any of them as a result of third party claims
arising out of the events or facts giving rise to such breach.
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5.3. SERVICER NOT TO RESIGN. The Servicer shall not resign from the
obligations and duties hereby imposed on it except (a) upon determination that
(i) the performance of its duties hereunder is no longer permissible under
applicable law and (ii) there is no reasonable action which the Servicer could
take to make the performance of its duties hereunder permissible under
applicable law or (b) if the Servicer is terminated as Servicer pursuant to
Section 6.1. Any such determination permitting the resignation of the Servicer
shall be evidenced as to clause (a)(i) above by an Opinion of Counsel to such
effect delivered to the Trustee. No such resignation shall become effective
until a Successor Servicer or the Trustee shall have assumed the
responsibilities and obligations of the Servicer in accordance with Section 6.2.
The Trustee, the Company and each Rating Agency shall be notified of such
resignation in writing.
5.4. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING THE
RECEIVABLES. The Servicer and the other Servicing Parties will hold in trust
for the Trustee at their respective offices such computer programs, books of
account and other records as are reasonably necessary to enable the Trustee to
determine at any time the status of the Receivables and all collections and
payments in respect thereof (including, without limitation, an ability to
recreate records evidencing Receivables in the event of the destruction of the
originals thereof).
ARTICLE VI
SERVICER DEFAULTS
6.1. SERVICER DEFAULT. If, with respect to any Servicing Party, any
one of the following events (a "SERVICER DEFAULT") shall occur and be
continuing:
(a) failure by the Servicer to deliver, within two Business Days of
the earlier date set forth below in clause (i) or (ii), any Required Report
or, within three Business Days of the earlier date set forth below in
clause (i) or (ii), any Monthly Settlement Statement, in each case
conforming in all material respects to the requirements of Section 4.1 or
4.2, as the case may be, after the earlier to occur of, in each case, (i)
the date upon which a Responsible Officer of the Servicer obtains knowledge
of the Servicer's failure to deliver such a conforming Required Report or
Monthly Settlement Statement when due under Section 4.1 or 4.2 and (ii) the
date on which written notice of the Servicer's failure to deliver such a
conforming Required Report or Monthly Settlement Statement when due under
Section 4.1 or 4.2, requiring the same to be remedied, shall have been
given to the Servicer by the Company or the Trustee, or to the Company, the
Servicer and the Trustee by holders of Investor Certificates evidencing 25%
or more of the Aggregate Invested Amount or by any Agent;
(b) failure by such Servicing Party to pay any amount required to be
paid by it under the Agreement or to give any direction with respect to the
allocation or transfer of funds under any Pooling and Servicing Agreement,
in each case on or before the date occurring five Business Days after the
earlier to occur of (i) the date
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upon which a Responsible Officer of such Servicing Party obtains knowledge
of such failure and (ii) the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to such Servicing
Party by the Company or the Trustee, or to the Company, the Servicer and
the Trustee by holders of Investor Certificates evidencing 25% or more of
the Aggregate Invested Amount or by any Agent;
(c) failure on the part of such Servicing Party duly to observe or
perform in any material respect any other covenants or agreements of such
Servicing Party set forth in any Pooling and Servicing Agreement, which
failure has a Material Adverse Effect on the holders of any Outstanding
Series or on the collectibility of the Receivables as a whole and which
Material Adverse Effect continues unremedied for 30 days after the earlier
to occur of (i) the date upon which a Responsible Officer of such Servicing
Party obtains knowledge of such failure or (ii) the date on which written
notice of such failure, requiring the same to be remedied, shall have been
given to the Company and the Servicer by the Trustee, or to the Company,
the Servicer and the Trustee by holders of Investor Certificates evidencing
25% or more of the Aggregate Invested Amount or by any Agent; PROVIDED that
no Servicer Default shall be deemed to occur under this subsection (c) if
any Servicing Party shall have complied with the provisions of subsections
5.2(b) and (c) with respect thereto;
(d) any representation, warranty or certification made by such
Servicing Party in any Pooling and Servicing Agreement or in any
certificate delivered pursuant thereto shall prove to have been incorrect
in any material respect when made or deemed made, which incorrectness has a
Material Adverse Effect on the holders of any Outstanding Series or on the
collectibility of the Receivables as a whole and which Material Adverse
Effect continues unremedied for 30 days after the earlier to occur of (i)
the date upon which a Responsible Officer of such Servicing Party obtains
knowledge of such failure or (ii) the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to the
Company and the Servicer by the Trustee, or to the Company, the Servicer
and the Trustee by holders of Investor Certificates evidencing 25% or more
of the Aggregate Invested Amount or by any Agent; PROVIDED that no Servicer
Default shall be deemed to occur under this subsection (d) if any Servicing
Party shall have complied with the provisions of subsections 5.2(b) and (c)
with respect thereto;
(e) (i) such Servicing Party shall commence any case, proceeding or
other action (A) under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, reorganization or
relief of debtors, seeking to have an order for relief entered with respect
to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts,
or (B) seeking appointment of a receiver, trustee, custodian or other
similar official for it or for all or any substantial part of its assets,
or such Servicing Party shall make a general assignment for the benefit of
its creditors; or (ii) there shall be commenced against such Servicing
Party any case, proceeding or other action of a nature referred to in
clause (i) above which remains undismissed, undischarged or unbonded for a
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period of 60 days or an order for relief, decree, adjudication or
appointment shall occur; or (iii) there shall be commenced against such
Servicing Party any case, proceeding or other action seeking issuance of a
warrant of attachment, execution, distraint or similar process against all
or any substantial part of its assets which results in the entry of an
order for any such relief which shall not have been vacated, discharged, or
stayed or bonded pending appeal within 60 such days from the entry thereof,
or (iv) such Servicing Party shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts
set forth in clauses (i), (ii), or (iii) above; or (v) such Servicing Party
shall generally not, or shall be unable to, or shall admit in writing its
inability to, pay its debts as they become due; or
(f) there shall have occurred and be continuing a Purchase
Termination Event under the Receivables Sale Agreement, except for a
Purchase Termination Event described in Section 6.01(b) of the Receivables
Sale Agreement;
(g) there shall have occurred one of the Early Amortization Events
described in Sections 7.1(a) or 7.1(d) of the Pooling Agreement;
(h) the Servicer shall have ceased to be a directly or indirectly
wholly-owned Subsidiary of United Stationers Inc.;
(i) the Servicer shall assert in writing that any of the Agreement,
the Servicing Agreement, this Supplement, or the Receivables Sale Agreement
shall cease, for any reason, to be in full force and effect;
(j) the Servicer shall assert that the Trust ceases to have a valid
and perfected first priority undivided ownership or security interest in
the Trust Assets (subject to no other Liens other than Permitted Liens
described in clauses (i) and (iv) of the definition thereof or as otherwise
specified in the Agreement or herein);
(k) there shall have been filed against the Servicer (i) a notice of
federal tax Lien from the Internal Revenue Service, (ii) a notice of Lien
from the PBGC under Section 412(n) of the Internal Revenue Code or Section
302(f) of ERISA for a failure to make a required installment or other
payment to a plan to which either of such sections applies or (iii) a
notice of any other Lien the existence of which could reasonably be
expected to have a material adverse effect on the business, operations or
financial condition of such Person, and, in each case, 40 days shall have
elapsed without such notice having been effectively withdrawn or such Lien
having been released or discharged; or
(l) any action, suit, investigation or proceeding at law or in
equity (including, without limitation, injunctions, writs or restraining
orders) shall be brought or commenced or filed by or before any arbitrator,
court or Governmental Authority against the Servicer or any properties,
revenues or rights thereof which could reasonably be expected to have a
Material Adverse Effect with respect to the Trust or any Certificateholder;
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then, in the event of any Servicer Default, so long as the Servicer Default
shall not have been remedied (or waived in accordance with the terms of the
Transaction Documents), the Trustee may, and at the written direction of the
holders of Investor Certificates evidencing more than 50% of the Aggregate
Invested Amount voting as a single class, the Trustee shall, by notice then
given in writing to such Servicing Party, each Agent and each Rating Agency (a
"TERMINATION NOTICE"), terminate all or any part of the rights and obligations
of such Servicing Party as Servicer or as a Sub-Servicer, as the case may be,
under the Pooling and Servicing Agreements. Notwithstanding anything to the
contrary in this Section 6.1, a delay in or failure of performance referred to
under clause (b) above for a period of 10 Business Days after the applicable
grace period or a delay in or failure of performance referred to under clauses
(a), (c) or (d) above for a period of 30 Business Days after the applicable
grace period shall not constitute a Servicer Default, if such delay or failure
could not have been prevented by the exercise of reasonable diligence by such
Servicing Party and such delay or failure was caused by a Force Majeure Delay.
After receipt by a Servicing Party of a Termination Notice, and on the date that
a Successor Servicer shall have been appointed by the Trustee pursuant to
Section 6.2, all authority and power of such Servicing Party under any Pooling
and Servicing Agreement to the extent specified in such Termination Notice shall
pass to and be vested in a Successor Servicer (a "SERVICE TRANSFER"); and,
without limitation, the Trustee is hereby authorized and empowered (upon the
failure of a Servicing Party to cooperate) to execute and deliver, on behalf of
such Servicing Party, as attorney-in-fact or otherwise, all documents and other
instruments upon the failure of such Servicing Party to execute or deliver such
documents or instruments, and to do and accomplish all other acts or things
necessary or appropriate to effect the purposes of such Service Transfer. Each
Servicing Party agrees to cooperate with the Trustee and such Successor Servicer
in effecting the termination of the responsibilities and rights of a Servicing
Party to conduct servicing hereunder, including, without limitation, the
transfer to such Successor Servicer of all authority of a Servicing Party to
service the Receivables provided for under the Pooling and Servicing Agreements,
including, without limitation, all authority over all Collections which shall on
the date of transfer be held by a Servicing Party for deposit, or which have
been deposited by a Servicing Party, in the Collection Account, or which shall
thereafter be received with respect to the Receivables, and in assisting the
Successor Servicer. Upon a Service Transfer, the relevant Servicing Party shall
promptly (x) assemble all of its documents, instruments and other records
(including credit files, licenses, rights, copies of all relevant computer
programs and any necessary licenses for the use thereof, related material,
computer tapes, disks, cassettes and data) that (i) evidence or will evidence or
record Receivables sold and assigned to the Trust and (ii) are otherwise
necessary or desirable to enable a Successor Servicer to effect the immediate
Collection of such Receivables, with or without the participation of the
applicable Seller and Servicing Party or the Servicer and (y) deliver or license
the use of all of the foregoing documents, instruments and other records to the
Successor Servicer at a place designated thereby. In recognition of such
Servicing Party's need to have access to any such documents, instruments and
other records which may be transferred to such Successor Servicer hereunder,
whether as a result of its continuing responsibility as a servicer of accounts
receivable which are not sold and assigned to the Trust or otherwise, such
Successor Servicer shall provide to such Servicing Party reasonable access to
such documents, instruments and other records transferred by such Servicing
Party to it in connection with any activity arising in the ordinary course of
such Servicing Party's business at any reasonable time during normal business
hours on any
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Business Day and from time to time, upon reasonable prior notice, according to
such Successor Servicing Party's normal security and confidentiality
requirements; PROVIDED that such Servicing Party shall not disrupt or otherwise
interfere with the Successor Servicer's use of and access to such documents,
instruments and other records. To the extent that compliance with this Section
6.1 shall require a Servicing Party to disclose to the Successor Servicer
information of any kind which such Servicing Party reasonably deems to be
confidential, the Successor Servicer shall be required to enter into such
customary licensing and confidentiality agreements as such Servicing Party shall
deem necessary to protect its interest. All costs and expenses incurred by the
defaulting Servicing Party, the Successor Servicer and the Trustee in connection
with any Service Transfer shall be for the account of such defaulting Servicing
Party.
6.2. TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR. (a) On and after (i)
the receipt by a Servicing Party of a Termination Notice pursuant to Section 6.1
or (ii) the date on which such Servicing Party notifies the Trustee, the
Company, each Agent and each Rating Agency in writing of its resignation
pursuant to Section 5.3 (the "RESIGNATION NOTICE"), such Servicing Party shall
continue to perform all servicing functions under the Pooling and Servicing
Agreements until the earlier of (x) the date on which a Successor Servicer is
appointed and (y) 60 days after the delivery of such Termination Notice or
Resignation Notice, as the case may be. The Trustee shall, as promptly as
reasonably possible after the giving of or receipt of a Termination Notice or
Resignation Notice, as the case may be, appoint an Eligible Successor Servicer
as successor servicer (the "SUCCESSOR SERVICER"); PROVIDED that in the event
that any Sub-Servicer shall cease to be a Servicing Party for any reason, the
Servicer shall be the Successor Servicer with respect to such terminated
Sub-Servicer for so long as the Servicer shall continue to serve in its capacity
as Servicer under the Pooling and Servicing Agreements. The Successor Servicer
shall accept its appointment by a written assumption in a form acceptable to the
Trustee.
(b) Reserved.
(c) Upon its appointment, the Successor Servicer shall be the
successor in all respects to the Servicing Party to which it is successor with
respect to servicing functions under the Pooling and Servicing Agreements (with
such changes as are agreed to between such Successor Servicer and the Trustee)
and shall be subject to all the responsibilities, duties and liabilities
relating thereto placed on such Servicing Party by the terms and provisions
hereof, and all references in any Pooling and Servicing Agreement to the
Servicer or the Sub-Servicer, as the case may be, shall be deemed to refer to
the Successor Servicer. The Successor Servicer shall manage the servicing and
administration of the Receivables, the collection of payments due under the
Receivables and the charging off of any Receivables as uncollectible, with
reasonable care, using that degree of skill and attention that is the customary
and usual standard of practice of prudent receivables servicers with respect to
all comparable receivables serviced for itself or others. The Successor
Servicer shall not be liable for, and the Servicer shall indemnify the Successor
Servicer against costs incurred by the Successor Servicer as a result of, any
acts or omissions of any Servicing Party or any events or occurrences occurring
prior to the Successor Servicer's acceptance of its appointment as Successor
Servicer.
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(d) The Company and the Trustee will review any bids obtained from
Eligible Successor Servicers and the Company and the Trustee, or the Company
(with the consent of the Trustee), may appoint any Eligible Successor Servicer
submitting such a bid as a Successor Servicer for servicing compensation not in
excess of the Servicing Fee.
(e) All authority and power granted to the Successor Servicer under
any Pooling and Servicing Agreement shall automatically cease and terminate on
the Trust Termination Date, and shall pass to and be vested in the Company and,
without limitation, the Company is hereby authorized and empowered to execute
and deliver, on behalf of the Successor Servicer, as attorney-in-fact or
otherwise, all documents and other instruments, and to do and accomplish all
other acts or things necessary or appropriate to effect the purposes of such
transfer of servicing rights from and after the Trust Termination Date. The
Successor Servicer agrees to cooperate with the Company in effecting the
termination of the responsibilities and rights of the Successor Servicer to
conduct servicing on the Receivables. The Successor Servicer shall transfer all
of its records relating to the Receivables to the Company in such form as the
Company may reasonably request and shall transfer all other records,
correspondence and documents to the Company in the manner and at such times as
the Company shall reasonably request. To the extent that compliance with this
Section 6.2 shall require the Successor Servicer to disclose to the Company
information of any kind which the Successor Servicer deems to be confidential,
the Company shall be required to enter into such customary licensing and
confidentiality agreements as the Successor Servicer and the Company shall
reasonably agree are reasonable and necessary to protect the Successor
Servicer's interests.
6.3. WAIVER OF PAST DEFAULTS. Holders of Investor Certificates
evidencing more than 50% of the Aggregate Invested Amount may waive any
continuing default by any Servicing Party or the Company in the performance of
their respective obligations hereunder and its consequences, except a default in
the failure to make any required deposits or payments in respect of any Series
of Certificates, which shall require a waiver by the holders of all of the
affected Investor Certificates. Upon any such waiver of a past default, such
default shall cease to exist, and any default arising therefrom shall be deemed
to have been remedied for every purpose of the Pooling and Servicing Agreements.
No such waiver shall extend to any subsequent or other default or impair any
right consequent thereon except to the extent expressly so waived. Either the
Company or the Servicer shall provide notice to each Rating Agency of any such
waiver.
ARTICLE VII
MISCELLANEOUS PROVISIONS
7.1. AMENDMENT. (a) This Agreement may only be amended, supplemented
or otherwise modified from time to time if such amendment, supplement or
modification is effected in accordance with the provisions of Section 10.1 of
the Pooling Agreement.
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7.2. TERMINATION. The respective obligations and responsibilities of
the parties hereto shall terminate on the Trust Termination Date (unless such
obligations or responsibilities are expressly stated to survive the termination
of this Agreement).
7.3. NOTICES. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
facsimile), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered by hand, or three days after being
deposited in the mail, postage prepaid, or, in the case of facsimile notice,
when received, addressed as set forth in Section 10.5 of the Pooling Agreement,
or to such other address as may be hereafter notified by the respective parties
hereto.
7.4. COUNTERPARTS. This Agreement may be executed in two or more
counterparts (and by different parties on separate counterparts), each of which
shall be an original, but all of which together shall constitute one and the
same instrument. Delivery of an executed counterpart of a signature page to
this Agreement by facsimile transmission shall be effective as delivery of a
manually executed counterpart of this Agreement.
7.5. THIRD-PARTY BENEFICIARIES. This Agreement will inure to the
benefit of and be binding upon the parties hereto and the Investor
Certificateholders and their respective successors and permitted assigns.
Except as otherwise provided in this Article VII, no other person will have any
right or obligation hereunder.
7.6. MERGER AND INTEGRATION. Except as specifically stated otherwise
herein, this Agreement and the other Transaction Documents set forth the entire
understanding of the parties relating to the subject matter hereof, and all
prior understandings, written or oral, are superseded by this Agreement and the
other Transaction Documents. This Agreement may not be modified, amended,
waived, or supplemented except as provided herein.
7.7. HEADINGS. The headings herein are for purposes of reference
only and shall not otherwise affect the meaning or interpretation of any
provision hereof.
7.8. NO SET-OFF. Except as expressly provided in this Agreement or
any other Transaction Document, each Servicing Party agrees that it shall have
no right of set-off or banker's lien against, and no right to otherwise deduct
from, any funds held in the Collection Account for any amount owed to it by the
Company, the Trust, the Trustee or any Investor Certificateholder.
7.9. NO BANKRUPTCY PETITION. Each Servicing Party hereby covenants
and agrees that, prior to the date which is one year and one day after the Trust
Termination Date, it will not institute against, or join any other Person in
instituting against, the Company any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any federal or
state bankruptcy or similar law.
7.10. CONSEQUENTIAL DAMAGES. In no event shall The Chase Manhattan
Bank, in its capacity as Successor Servicer (if applicable), be liable for
special, indirect or consequential loss or damage of any kind whatsoever
(including, but not limited to, lost
23
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profits), even if it has been advised of the likelihood of such loss or damage
and regardless of the form of action.
7.11. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK AND THE RIGHTS,
OBLIGATIONS AND REMEDIES OF EACH OF THE PARTIES HERETO SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
24
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IN WITNESS WHEREOF, the Company, the Servicer, the Sub-Servicers and the
Trustee have caused this Agreement to be duly executed by their respective
officers as of the day and year first above written.
USS RECEIVABLES COMPANY, LTD.
By:
-------------------------------------
Name:
Title:
UNITED STATIONERS SUPPLY CO.,
as Servicer
By:
-------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
not in its individual
capacity, but solely as
Trustee
By:
-------------------------------------
Name:
Title:
<PAGE>
EXHIBIT A
TO SERVICING AGREEMENT
FORM OF QUARTERLY SERVICER'S CERTIFICATE
(As required to be delivered within 45 days after
the end of each calendar quarter of the Servicer
pursuant to Section 4.3 of the
Servicing Agreement referred to below)
UNITED STATIONERS SUPPLY CO.
------------------------------------------
UNITED STATIONERS RECEIVABLES MASTER TRUST
------------------------------------------
The undersigned, a duly authorized representative of UNITED STATIONERS
SUPPLY CO., as Servicer (the "SERVICER") pursuant to (a) the Pooling Agreement,
dated as of April 3, 1998 (as amended, supplemented or otherwise modified from
time to time, the "POOLING AGREEMENT"), by and among USS RECEIVABLES COMPANY,
LTD., (the "COMPANY"), the Servicer and The Chase Manhattan Bank, as Trustee and
as Securities Intermediary (the "TRUSTEE") and (b) the Servicing Agreement,
dated as of April 3, 1998 (as amended, supplemented or otherwise modified from
time to time, the "SERVICING AGREEMENT"); by and among the Company, the Servicer
and the Trustee, does hereby certify, on behalf of the Servicer and the Company
and not individually, that:
1. United Stationers Supply Co. is, as of the date hereof, the Servicer
under the Pooling Agreement and Servicing Agreement.
2. The undersigned is duly authorized pursuant to the Pooling Agreement
and Servicing Agreement to execute and deliver this Certificate to the Trustee.
3. A review of the activities of the Company and the Servicer during the
calendar quarter ended ___________, ____ and of its performance under each
Transaction Document was conducted under my supervision.
4. Based on such review, to the best of my knowledge, each of the Company
and the Servicer has performed in all material respects all of its obligations
under each
<PAGE>
Transaction Document and no material default in the performance of such
obligations has occurred or is continuing except as set forth in paragraph 5
below.
5. The following is a description of all material defaults in the
performance of the Servicer or the Company under the provisions of the
Transaction Documents known to us to have been made during the calendar quarter
ended ___________, _____, which sets forth in detail (i) the nature of each such
default, (ii) the action taken by the Servicer and/or the Company, if any, to
remedy each such default and (iii) the current status of each default:
[If applicable, insert "None."]
6. The following is a description of each material inaccuracy known to us
to exist in any Required Report and/or Monthly Settlement Statement during the
calendar quarter ended ______________, _____________:
[If applicable, insert "None."]
Capitalized terms used in this certificate have the meanings ascribed to
them in the Pooling Agreement(s) and Servicing Agreement(s).
IN WITNESS WHEREOF, the undersigned has duly executed this Certificate this
___ day of ___________________, ______________.
By:
------------------------
Name:
Title:
<PAGE>
EXHIBIT B TO
SERVICING AGREEMENT
FORM OF AGREED UPON PROCEDURES
