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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
/ X / Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended December 31, 1993.
/ / Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission file no. 1-7088
AMERICAN BUSINESS PRODUCTS, INC.
(Exact name of registrant as specified in its charter)
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<S> <C>
GEORGIA 58-1030529
(State of Incorporation) (I.R.S. Employer Identification No.)
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2100 RIVEREDGE PARKWAY, SUITE 1200, ATLANTA, GEORGIA 30328
(Address of principal executive offices, including zip code)
(404) 953-8300
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
- ------------------- -----------------------
Common Stock, $2 par value New York Stock Exchange
Common Stock Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES NO X
--- ---
THE AGGREGATE MARKET VALUE OF THE REGISTRANT'S OUTSTANDING COMMON STOCK, $2.00
PAR VALUE PER SHARE, HELD BY NON-AFFILIATES OF THE REGISTRANT ON March 8, 1994
WAS $158,804,172.
There were 10,682,799 shares of Common Stock outstanding on March 8, 1994.
DOCUMENTS INCORPORATED HEREIN BY REFERENCE
PORTIONS OF THE REGISTRANT'S 1993 ANNUAL REPORT FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1993, ARE INCORPORATED BY REFERENCE IN PARTS I AND II HEREOF.
PORTIONS OF THE REGISTRANT'S PROXY STATEMENT FOR THE 1994 ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON APRIL 27, 1994, ARE INCORPORATED BY REFERENCE IN
PART III hEREOF.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. / X /
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PART I
ITEM 1 - BUSINESS
General
American Business Products was incorporated under the laws of Delaware
in December 1967 to acquire the stock of Curtis 1000 Inc., a producer of
envelopes and forms which has operated since 1882. Hereinafter, American
Business Products, Inc. and its subsidiaries are collectively referred to as
the "Company." In April 1986, the Company was reincorporated under the laws of
Georgia. The Company is one of the nation's leading producers of printed
business supplies, principally envelope products and custom business forms.
Additionally, the Company manufactures and distributes books for the publishing
industry and also is engaged in specialty extrusion coating and laminating of
papers, films, and nonwoven fabrics for packaging.
On September 1, 1993, the Company acquired all of the stock of Home
Safety Equipment, Inc., d/b/a Discount Labels for $26,745,000. Discount Labels
is located in New Albany, Indiana and is engaged in the manufacture and sale of
custom-printed labels. In addition, on October 28, 1993, the Company acquired
certain assets of International Envelope Company for $15,125,000. Located
principally in Exton, Pennsylvania, International Envelope Company is engaged
in the manufacture of envelopes. (See "Item 1 - Business - Business
Segments.")
Business Segments
The Company's product line is among the broadest in the industry and
is composed of three business segments: business supplies printing, book
manufacturing, and specialty extrusion coating and laminating.
Business supplies printing consists principally of the manufacture of
specialty mailers and envelopes of all kinds, and the printing and production
of business forms. The manufacture and distribution of specialty labels is a
growing part of this segment. The Company produces a complete line of standard
and special types and sizes of commercial mailing products including specialty
mailers, which utilize multi-part forms and envelopes. Business forms include
customized continuous forms for computer printers and word processors,
snap-apart forms and checks, statements and invoices as well as other forms,
with several thousand types of forms produced. Business supplies printing
accounted for 74% of the Company's sales in 1993, 74% in 1992, and 77% in 1991.
Book manufacturing consists of the printing and binding of both hard
cover and soft cover books for the publishing industry. In addition, the
Company provides storage and order fulfillment services by shipping orders to
publishers' customers from a large, centrally located distribution center.
This business segment accounted for 9% of the Company's sales in 1993, 9% in
1992, and 9% in 1991.
Specialty extrusion coating and laminating, the Company's newest
business segment, consists of applying plastic coatings in varying degrees of
thickness to rolls of paper, film or fabric. The Company also prints and
metalizes certain of these products for customers. The materials produced by
this segment are used primarily for packaging consumer products such as
individual servings of sugar, salt and pepper, sugar substitutes, and candy and
ice cream bars, as well as medical and pharmaceutical products. These
materials also are used for composite can liners and release liner papers for
pressure sensitive products such as labels. This business
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segment accounted for 17% of the Company's sales in 1993, 17% in 1992, and 14%
of sales in 1991.
Financial information regarding the Company's three business segments
is presented in the Notes to Consolidated Financial Statements under the
heading "Business Segment Information" on page 24 of the Company's 1993 Annual
Report, which information is incorporated herein by reference. Portions of the
1993 Annual Report are filed as Exhibit 13 to this Annual Report on Form 10-K.
Production
Substantially all of the Company's products are manufactured by wholly
owned subsidiaries of the Company in 41 manufacturing facilities located
throughout the United States. (See "Item 2 - Properties.") The principal raw
materials used by the Company in the manufacture of its products are paper,
carbon, ink and poly-resins. All purchases of such materials are made at
competitive prices negotiated with suppliers. The Company believes that there
are sufficient alternative sources of supply to provide its raw material
requirements if for any reason its present suppliers are unable to do so.
Trademarks
The Company or its subsidiaries holds trademarks which management
believes are sufficient for the operation of its properties without any
substantial restrictions and adequate for the operation of each of its business
segments.
Backlog
As of February 28, 1994, the Company had backlogs believed to be firm
of approximately $36.6 million for business supplies printing, approximately
$5.8 million for book manufacturing and approximately $8.8 million for
extrusion coating and laminating. Comparable backlogs as of February 28, 1993
were approximately $33.0 million for business supplies printing, approximately
$4.9 million for book manufacturing and approximately $12.4 million for
extrusion coating and laminating. All present backlogs are expected to be
filled within the current fiscal year.
Distribution and Customers
The Company's products are sold throughout the United States, and less
than 1% of the Company's sales in any year have been outside of the United
States. The Company's products are sold principally through approximately 750
sales representatives who sell only the Company's products. No customer or
related group of customers in 1993 accounted for 10% or more of the sales of
the Company. Demand for the Company's business supplies printing, book
manufacturing and extrusion coating and laminating generally is not seasonal.
Competition
Business supplies printing, book manufacturing, and specialty
extrusion coating are highly competitive industries. Principal methods of
competition are pricing and service. The business supplies industry consists
of thousands of commercial printing enterprises, ranging from small family
operations to large corporations. In marketing many of its products, the
Company competes with some larger nationwide firms which have more resources
than the Company as well as numerous local and regional businesses, most of
which are smaller than the Company. The Company has generally maintained or
increased its market share against competitors, large and small, by using to
advantage its sales force, unusually large for its industries, and by the
ability to process numerous small orders efficiently. Based on annual revenues
attributable to the production of business supplies, the Company is a
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leading United States producer of printed business supplies. No competitor is
known to offer the complete range of products offered by the Company, which
believes it is among a relatively few companies with the capital resources to
acquire automated equipment and maintain multiple work shifts as necessary.
In the envelope industry, which had United States sales of
approximately $2.7 billion in 1993, according to the Department of Commerce,
the Company's largest subsidiary, Curtis 1000 Inc., is believed to be the
leading direct-to-user marketer of business envelopes in the United States
based on annual revenues, yet still has only a small share of the total market.
Within the industry, the Company also holds a strong competitive position in
the sale of specialty envelopes, including those manufactured from paper and a
synthetic, olefin. Specialty envelopes comprise the strongest sector of this
industry and offer the most favorable growth outlook, the Department of
Commerce reported in its 1994 Industrial Outlook.
The business forms industry, a segment of commercial printing, is
composed of several hundred companies of varying sizes. On the basis of forms
sales, the Company believes it is the fifth largest of these companies. Sales
of manifold business forms in the United States in 1993 were estimated at
approximately $6.7 billion by the United States Department of Commerce. This
maturing industry has been characterized by strong pricing competition in
recent years.
Book printing, which had industry sales in the United States of $4.6
billion in 1993, is also highly competitive, and the Company competes with
numerous other book manufacturers, many of which are larger and have
substantially more resources than the Company and therefore possible advantages
in production and marketing economies of scale and efficiencies. However, the
Company has targeted certain segments of the industry as more attractive
sectors, including university presses and publishers of religious books, while
specializing in short to medium runs of book printing.
Major competitors for the extrusion coating and laminating business
segment, which nationally had 1993 sales of approximately $3 billion, are
relatively few. They include Thilmany (division of International Paper),
several divisions of James River Corporation and Twin Pack (Canada). While
management believes none of these competitors is superior to the Company's
subsidiary, Jen-Coat, Inc. ("Jen-Coat") in terms of quality and service, the
factors which have been advantageous to Jen-Coat, including competition on the
basis of price intensified in 1993, resulting in pressure on Jen-Coat's profit
margin despite sharply higher sales. The Company has gained some competitive
advantage by introducing new products, a strategy that is expected to continue
to benefit the Company.
In addition, the Company hopes to expand Jen-Coat's market share
through research and development of new products for customers. The estimated
amounts spent by the Company for Jen-coat's research and development activities
during 1993, 1992 and 1991 were $401,000, $204,000 and $110,000, respectively.
Entry barriers to this industry include a capital investment which is
significant for small companies and highly individual market niches with
relatively low sales volume which deters larger companies.
Within the combined markets of the Company, the Company's total share
of sales is relatively small, providing the opportunity to increase market
share through innovative and creative products and effective marketing, which
are major elements of the Company's strategy for growth.
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Environmental Matters
While the Company knows of no significant environmental liabilities
involving its operations, it is currently analyzing several potential
environmental issues. Reserves for possible losses have been recorded based on
the Company's current assessment.
Employees
At December 31, 1993, the Company had approximately 4,320 full-time
employees. No significant number of employees is covered by any collective
bargaining agreement.
International Operations
The Company has a European joint venture, Curtis 1000 Europe GmbH
("CURTIS 1000 European"), which is 50% owned by the Company and has plants in
four countries: Germany, England, Luxembourg and Poland. (See Part I - Item 2
- - Properties.") Curtis 1000 Europe manufactures and sells envelopes of all
kinds. The Company's share of net income of Curtis 1000 Europe, which is not
significant, is translated at average exchange rates prevailing during the
year, and is included in the Consolidated Financial Statements of the Company
and Notes to Consolidated Financial Statements which are incorporated herein by
reference. (See Part II, Item 8 - Financial Statements and Supplementary
Data.")
ITEM 2 - PROPERTIES
The Company's executive offices are located in approximately 21,400
square feet of space at 2100 RiverEdge Parkway, Suite 1200, Atlanta, Georgia
30328. The offices are leased from an unaffiliated party under a lease
expiring on January 26, 2003.
The principal properties of the Company include production facilities,
administrative/sales offices and warehouses. The Company operates 41
production facilities throughout the United States encompassing approximately
1,975,844 square feet. The Company owns 30 of these facilities while 11 are
leased facilities. In addition, the Company and a European joint
venture/partner operate production facilities which are owned or leased by the
joint venture in Germany, Poland, England, and Luxembourg. The facilities in
Germany and Poland are owned by the joint venture, and the facilities in
England and Luxembourg are leased.
The Company leases 60 administrative/sales offices and 6 warehouses,
all of which are located in the United States. All of the Company's production
facilities, administrative/sales offices and warehouses are used in the
Company's business supplies printing business except for three of such
facilities which are used in the Company's book manufacturing business and one
which is used in the extrusion coating and laminating business.
Certain properties owned by the Company are held subject to mortgages.
See the information set forth under the heading "Long Term Debt" in the Notes
to Consolidated Financial Statements on page 20 in the Company's 1993 Annual
Report, which information is incorporated herein by reference.
The Company believes that all of its properties and equipment are in
good condition, fully utilized and suitable for the purposes for which they are
being used.
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ITEM 3 - LEGAL PROCEEDINGS
As of March 25, 1994, there were no material pending legal
proceedings, other than routine litigation incidental to the business, to which
the Company or its subsidiaries was a party or of which any of their properties
were the subject and none are expected by management to materially effect the
Company's financial position and results of operations.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of the shareholders of the Company
during the fourth quarter of 1993.
ITEM 4 (A) - EXECUTIVE OFFICERS OF THE REGISTRANT
Set forth below is information as of March 25, 1994 regarding the
executive officers of the Company:
THOMAS R. CARMODY, 60, has served as President and Chief Executive Officer of
the Company since July 1988. From July 1985 until July 1988, he served as
President and Chief Operating Officer and he served as Executive Vice President
and Chief Operating Officer from July 1982 until July 1985. He has been a
director since 1983 and has served with the Company or Curtis 1000 Inc. for
over 38 years.
WILLIAM C. DOWNER, 57, has served as Vice President-Finance and Chief Financial
and Accounting Officer of the Company since August 1982. He has served with
the Company or Curtis 1000 Inc. for over 26 years.
DAWN M. GRAY, 49, has served as Secretary of the Company since July 1989. She
served as Assistant Secretary from October 1976 to June 1989. She has served
with the Company or Curtis 1000 Inc. for over 27 years.
ROBERT W. GUNDECK, 51, has served as Executive Vice President and Chief
Operating Officer of the Company since January 1993. He served as Vice
President-Corporate Development of the Company from July 1990 to December 1992.
He served as Director of Corporate Development from March 1988 to June 1990.
He has served with the Company for over 6 years.
RICHARD A. LEFEBER, 58, has served as Vice President-Administration of the
Company since January 1980. He served as Secretary of the Company from August
1982 to June 1989. He has served with the Company or Curtis 1000 Inc. for over
36 years.
BOBBY ROGERS, 60, has served as Vice President-Information Systems of the
Company since January 1981. He has served with the Company or Curtis 1000 Inc.
for over 32 years.
The Board of Directors elects officers annually in April for one year
terms or until their successors are elected and qualified. Officers are
subject to removal by the Board of Directors at any time.
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PART II
ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Information relating to the market for, holders of and dividends paid
on the Company's Common Stock is set forth under the captions "Stock Exchange
Listing," "Shareholders of Record," "Quarterly Data 1993" and "Quarterly Data
1992" on the inside front cover and pages 14 and 15 of the Company's 1993
Annual Report, which information is incorporated herein by reference.
ITEM 6 - SELECTED FINANCIAL DATA
Selected consolidated financial data for the Company for each year of
the eleven year period ended December 31, 1993 is set forth under the caption
"Eleven Year Financial Review" on pages 14 and 15 in the Company's 1993 Annual
Report, which information is incorporated herein by reference.
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
A discussion of the Company's financial condition and results of
operations at and for the dates and periods covered by the consolidated
financial statements set forth in the Company's 1993 Annual Report is set forth
under the caption "Management's Discussion and Analysis" on pages 25 through 27
of the Company's 1993 Annual Report. Such discussion is incorporated herein by
reference.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following Consolidated Financial Statements of the Company and its
subsidiaries, together with the Independent Auditors' Report, which are set
forth on pages 16 through 24 in the Company's 1993 Annual Report, are
incorporated herein by reference:
Consolidated Statements of Income for each of the three years
in the period ended December 31, 1993
Consolidated Balance Sheets as of December 31, 1993 and 1992
Consolidated Statements of Cash Flows for each of the three
years in the period ended December 31, 1993
Notes to Consolidated Financial Statements
The supplementary consolidated financial information regarding the
Company which is required by Item 302 of Regulation S-K is set forth under the
caption "Quarterly Data 1993" on page 14 and "Quarterly Data 1992" on page 15
of the Company's 1993 Annual Report. Such information is incorporated herein
by reference.
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
There has been no change of independent accountants by the Company in
the past two fiscal years or subsequently.
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PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information relating to the directors of the Company is set forth in
"Proposal 1 - Election of Directors" under the captions "Nominees,"
"Information Regarding Nominees and Directors" and "Meetings and Committees of
the Board of Directors" in the Company's definitive Proxy Statement for its
1994 Annual Meeting of Shareholders to be held on April 27, 1994 (the "Proxy
Statement"). Such information is incorporated herein by reference. Pursuant
to Instruction 3 of Item 401(b) of Regulation S-K and General Instruction G(3)
of Form 10-K, information relating to the executive officers of the Company is
set forth in Part I, Item 4(A) of this Report under the caption "Executive
Officers of the Registrant." Information regarding compliance by directors and
executive officers of the Company and owners of more than ten percent of the
Company's Common Stock with the reporting requirements of Section 16(a) of the
Securities Exchange Act of 1934, as amended, is set forth in the Proxy
Statement under the caption "Compliance with Section 16(a) of the Securities
Exchange Act of 1934." Such information is incorporated herein by reference.
ITEM 11 - EXECUTIVE COMPENSATION
Information relating to compensation of the executive officers and
directors of the Company is set forth in "Proposal 1 - Election of Directors"
under the caption "Director Compensation" and in "Executive Compensation" in
the Proxy Statement. Such information is incorporated herein by reference.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information regarding ownership of the Company's $2.00 par value
Common Stock by certain persons is set forth in "Voting" under the caption
"Principal Shareholders" and in "Proposal 1 - Election of Directors" under the
caption "Information Regarding Nominees and Directors" and under the caption
"Executive Compensation" in the Proxy Statement. Such information is
incorporated herein by reference.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company is aware of no relationships or transactions between the
Company and affiliates of the Company which are required to be reported under
this Item 13.
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Documents filed as part of this Report:
1. Financial Statements
The Consolidated Financial Statements and the Independent
Auditors' Report thereon which are required to be filed as
part of this Report are included in the Company's 1993 Annual
Report and are set forth in and incorporated by reference in
Part II, Item 8 hereof. These Consolidated Financial
Statements are as follows:
Consolidated Statements of Income for each of the three years
in the period ended December 31, 1993
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Consolidated Balance Sheets as of December 31, 1993 and 1992
Consolidated Statements of Cash Flows for each of the three
years in the period ended December 31, 1993
Notes to Consolidated Financial Statements
2. Financial Statement Schedules
The financial statement schedules filed as part of this Report
pursuant to Article 12 of Regulation S-X and the Independent
Auditors' Report in connection therewith are contained in the
Index of Financial Statement Schedules on page S-1 of this
Report. All other schedules for which provision is made in
the applicable accounting regulations of the Securities and
Exchange Commission have been omitted because such schedules
are not required under the related instructions or are
inapplicable or because the information required is included
in the Consolidated Financial Statements or notes thereto.
3. Exhibits
The exhibits required to be filed as part of this Report are
set forth in the Index of Exhibits on page E-1 of this Report.
(b) Reports on Form 8-K:
On October 29, 1993, the Company filed a Current Report on Form 8-K to
report the acquisition of International Envelope Company of Exton, PA.
On November 5, 1993, the Company filed a Current Report on Form 8-K/A
which amended a Current Report on Form 8-K filed September 13, 1993,
and contained required Item 7 Financial Statements and Exhibits.
(c) The exhibits required to be filed as part of this Report are set forth
in the Index of Exhibits on page E-1 of this Report.
(d) The financial statement schedules required to be filed as part of this
Report are set forth in the Index of Financial Statement Schedules on
page S-1 of this Report.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
AMERICAN BUSINESS PRODUCTS, INC.
BY: /s/ Thomas R. Carmody
------------------------------------
Thomas R. Carmody
President and Chief Executive Officer
DATE: March 25, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
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SIGNATURE TITLE DATE
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* F. Duane Ackerman Director March 25, 1994
- ---------------------
F. Duane Ackerman
*John E Aderhold Director March 25, 1994
- ---------------------
John E. Aderhold
* W. J. Biggers Director and March 25, 1994
- ---------------------
W. J. Biggers Chairman of the Board
/s/ Thomas R. Carmody Director, President March 25, 1994
- --------------------- and Chief Executive
Thomas R. Carmody Officer
* Henry Curtis VII Director March 25, 1994
- ---------------------
Henry Curtis VII
</TABLE>
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SIGNATURE TITLE DATE
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* Herbert J. Dickson Director March 25, 1994
- -----------------------
Herbert J. Dickson
* Robert W. Gundeck Director March 25, 1994
- -----------------------
Robert W. Gundeck
* Hollis L. Harris Director March 25, 1994
- -----------------------
Hollis L. Harris
* W. Stell Huie Director March 25, 1994
- -----------------------
W. Stell Huie
* Thomas F. Keller Director March 25, 1994
- -----------------------
Thomas F. Keller
* G. Harold Northrop Director March 25, 1994
- -----------------------
G. Harold Northrop
* Marvin E. Schmalzried Director March 25, 1994
- -----------------------
Marvin E. Schmalzried
/s/ William C. Downer Vice President-Finance March 25, 1994
- ----------------------- and Chief Financial
William C. Downer and Accounting Officer
* By:/s/ Dawn M. Gray
-------------------------------
Dawn M. Gray,
Attorney-in-Fact
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AMERICAN BUSINESS PRODUCTS, INC.
INDEX OF FINANCIAL STATEMENT SCHEDULES
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PAGE
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Independent Auditors' Report S-2
Schedules of the Company and Subsidiaries
V - Plant and Equipment S-3
VI - Accumulated Depreciation and
Amortization of Plant and Equipment S-4
VIII - Valuation Reserves S-5
</TABLE>
S-1
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INDEPENDENT AUDITORS' REPORT
American Business Products, Inc.:
We have audited the consolidated financial statements of American Business
Products, Inc. and subsidiaries as of December 31, 1993 and 1992, and for each
of the three years in the period ended December 31, 1993, and have issued our
report thereon dated February 25, 1994; such financial statements and report
are included in your 1993 Annual Report to Shareholders and are incorporated
herein by reference. Our audits also included the consolidated financial
statement schedules of American Business Products, Inc. and subsidiaries
listed in Item 14. These consolidated financial statement schedules are the
responsibility of the Company's management. Our responsibility is to express
an opinion based on our audits. In our opinion, such consolidated financial
statement schedules, when considered in relation to the basic consolidated
financial statements taken as a whole, present fairly in all material respects
the information set forth therein.
DELOITTE & TOUCHE
Atlanta, Georgia
February 25, 1994
S-2
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SCHEDULE V
AMERICAN BUSINESS PRODUCTS, INC. AND SUBSIDIARIES
PLANT AND EQUIPMENT
(IN THOUSANDS)
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OTHER CHANGES
BEGINNING ADDITIONS ADD (DEDUCT) ENDING
DESCRIPTION BALANCE AT COST RETIREMENTS DESCRIBE (1) BALANCE
------------------------------------- --------- --------- ----------- ------------- --------
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For the Year Ended December 31, 1991:
Land 5,106 251 191 5,076
Buildings and improvements 37,171 3,165 2,150 38,186
Machinery and equipment 87,871 11,140 6,351 92,660
------- ------ ----- -------
TOTAL 130,058 14,556 8,692 135,922
For the Year Ended December 31, 1992:
Land 5,076 295 416 4,955
Buildings and improvements 38,186 3,862 305 41,743
Machinery and equipment 92,660 13,120 3,012 102,768
------- ------ ----- -------
TOTAL 135,922 17,277 3,733 149,466
For the Year Ended December 31, 1993:
Land 4,955 870 115 5,940
Buildings and improvements 41,743 3,615 339 3,456 48,475
Machinery and equipment 102,768 11,496 3,248 10,789 121,805
------- ------ ----- ------ -------
TOTAL 149,466 15,981 3,587 14,360 176,220
</TABLE>
(1) Cost of assets acquired from Discount Labels, Inc. on September 1,
1993, $7,600.
Cost of assets acquired from International Envelope Co. on October 28,
1993, $6,760.
S-3
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SCHEDULE VI
AMERICAN BUSINESS PRODUCTS, INC. AND SUBSIDIARIES
ACCUMULATED DEPRECIATION AND AMORTIZATION
OF PLANT AND EQUIPMENT
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONS
CHARGED TO OTHER CHANGES
BEGINNING COSTS AND ADD (DEDUCT) ENDING
DESCRIPTION BALANCE EXPENSES RETIREMENTS DESCRIBE BALANCE
------------------------------------ --------- ---------- ----------- ---------------- ----------
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For the Year Ended December 31,1991:
Buildings and improvements 11,638 1,713 905 12,446
Machinery and equipment 46,380 9,240 5,494 50,126
------ ------ ------ ------
TOTAL 58,018 10,953 6,399 62,572
For the Year Ended December 31, 1992:
Buildings and improvements 12,446 1,776 283 13,939
Machinery and equipment 50,126 10,033 2,558 57,601
------ ------ ------ ------
TOTAL 62,572 11,809 2,841 71,540
For the Year Ended December 31, 1993:
Buildings and improvements 13,939 1,945 333 15,551
Machinery and equipment 57,601 11,394 2,774 66,221
------ ------ ------ ------
TOTAL 71,540 13,339 3,107 81,772
</TABLE>
S-4
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SCHEDULE VIII
AMERICAN BUSINESS PRODUCTS, INC. AND SUBSIDIARIES
VALUATION RESERVES
(IN THOUSANDS)
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<CAPTION>
ADDITIONS
CHARGED TO OTHER CHANGES
BEGINNING COSTS AND ADD (DEDUCT) ENDING
DESCRIPTION BALANCE EXPENSES DESCRIBE (1) DEDUCTIONS (2) BALANCE
-------------------------------------- ------------ -------- ----------- ----------- -------
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For the Year Ended December 31, 1991:
Allowance for doubtful accounts 1,635 1,165 1,142 1,658
For the Year Ended December 31, 1992:
Allowance for doubtful accounts 1,658 1,049 869 1,838
For the Year Ended December 31, 1993:
Allowance for doubtful accounts 1,838 1,072 238 930 2,218
</TABLE>
(1) Reserve assumed from Discount Labels, Inc. on September 1, 1993.
(2) Deductions represent uncollectible accounts charged off, less
recoveries.
S-5
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AMERICAN BUSINESS PRODUCTS, INC.
INDEX OF EXHIBITS
Where an exhibit is filed by incorporation by reference to a previously
filed registration statement or report, such registration statement or report
is identified in parentheses.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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<S> <C>
3.1 Articles of Incorporation (Exhibit 3(a), Annual Report on Form 10-K for the fiscal year ended December 31,
1989).
3.2 Restated Bylaws, as amended (Exhibit 3(b), Annual Report on Form 10-K for the fiscal year ended December
31, 1990).
4.1 Note Agreement dated as of October 1, 1990 among the Company and the institutional investors listed on
Schedule I thereto, together with the form of 9.92% Senior Note to be used in connection therewith (Exhibit
4, Annual Report on Form 10-K for the fiscal year ended December 31, 1990).
4.2 Note Agreement dated as of December 1, 1993 among the Company and the institutional investors listed on
Schedule I thereto, together with the form of 5.77% Senior Note to be used in connection therewith.
4.3 Form of Rights Agreement dated as of October 25, 1989 between the Company and Citizens and Southern Trust
Company (Georgia), N.A. (Exhibit 4, Current Report on Form 8-K dated October 25, 1989).
4.4 First Amendment to Rights Agreement dated as of August 10, 1992 between the Company and Wachovia Bank of
North Carolina, N.A., as successor Rights Agent (Exhibit 4(c), Annual Report on Form 10-K for the fiscal
year ended December 31, 1992).
10.1 Executive Compensation Plans and Arrangements:
(a) Supplemental Retirement Income Plan (Exhibit 10(a), Annual Report on Form 10-K for the fiscal year
ended December 31, 1989).
(b) Deferred Compensation Investment Plan (Directors) (Exhibit 10(b), Annual Report on Form 10-K for
the fiscal year ended December 31, 1989).
</TABLE>
<PAGE> 18
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
(c) Deferred Compensation Investment Plan (Executives) (Exhibit 10(c), Annual Report on Form 10-K for
the fiscal year ended December 31, 1989).
(d) 1981 Stock Option Plan (Exhibit 10(d), Annual Report on Form 10-K for the fiscal year ended
December 31, 1989).
(e) Deferred Compensation Plan for Directors (Exhibit 10(e), Annual Report on Form 10-K for the fiscal
year ended December 31, 1989).
(f) American Business Products, Inc. Executive Retirement Plan dated September 14, 1992 (Exhibit
10(h), Annual Report on Form 10-K for the fiscal year ended December 31, 1992).
(g) 1991 Stock Option Plan, and form of proposed First Amendment thereto.
(h) Form of proposed 1993 Directors Stock Incentive Plan.
10.2 Agreement for the Purchase of Stock dated as of September 21, 1990 by and among the Company, Edward C.
Leavy, Edward C. Leavy, Executor under the will of Jean L. Leavy, and James B. Kauffman relating to the
purchase of Jen-Coat, Inc. (Exhibit 2, Current Report on Form 8-K, dated October 1, 1990).
10.3 (a) Stock Purchase Agreement dated September 1, 1993 among the Company, Home Safety Equipment Co.,
Inc., and William Frederick Conway, Sr., Betty Conway, Allen C. Conway, Winifred Conway Arledge,
William Frederick Conway, Jr., Winifred B. Arledge, QSST Trust #1, Winifred B. Arledge, QSST Trust
#2, Allen C. Conway, QSST Trust #1, Allen C. Conway, QSST Trust #2, Allen C. Conway, QSST Trust
#3, and William Frederick Conway, Jr., QSST Trust #1, William Frederick Conway, Jr., QSST Trust #2
</TABLE>
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<PAGE> 19
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
(Exhibit 2, Current Report on Form 8-K dated September 13, 1993).
(b) Non-Competition Agreement dated as of August 10, 1993 by and among William Frederick Conway, Sr.,
Betty Conway, Allen C. Conway, Winifred Conway Arledge, Sol A. Arledge, and William Frederick
Conway, Jr. and the Company (Exhibit 99.1, Current Report on Form 8-K, dated September 13, 1993).
13 Portions of the inside cover page and pages 14 through 27 of the Company's 1993 Annual Report which are
incorporated herein by reference.
21 Subsidiaries of the Registrant.
23 Consent of Independent Auditors.
24 Power of Attorney.
</TABLE>
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<PAGE> 1
EXHIBIT 4.2
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AMERICAN BUSINESS PRODUCTS, INC.
NOTE AGREEMENT
Dated as of December 1, 1993
$48,000,000 5.77% Senior Notes
Due December 1, 2003
----------------------------------------------------------------
----------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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Page
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Section 1. DESCRIPTION OF NOTES AND COMMITMENT
1.1 Description of Notes . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Commitment; Closing Date . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Other Purchasers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2. PREPAYMENT OF NOTES
2.1 Required Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Prepayment of Notes Upon Change in Control . . . . . . . . . . . . . . . 2
2.4 Prepayment for Certain Non-Fundamental Changes . . . . . . . . . . . . . 3
2.5 No Other Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.6 Notice of Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.7 Surrender of Notes on Transfer or Exchange . . . . . . . . . . . . . . . 4
2.8 Allocation of Prepayment . . . . . . . . . . . . . . . . . . . . . . . 4
2.9 Direct Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.10 Payments Due on Non-Business Days. . . . . . . . . . . . . . . . . . . . 4
Section 3. REPRESENTATIONS
3.1 Representations of the Company . . . . . . . . . . . . . . . . . . . . . 5
3.2 Reprsentations of the Company . . . . . . . . . . . . . . . . . . . . . 11
Section 4. CLOSING CONDITIONS
4.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . 12
4.2 Legal Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.3 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.4 Sale of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.5 Legality of Investment . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.6 Satisfactory Proceedings . . . . . . . . . . . . . . . . . . . . . . . . 13
4.7 Payment of Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . 13
4.8 Private Placement Number . . . . . . . . . . . . . . . . . . . . . . . . 13
4.9 Waiver of Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
(i)
<PAGE> 3
<TABLE>
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Page
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Section 5. COMPANY AND NOTEHOLDER COVENANTS
5.1 Corporate Existence . . . . . . . . . . . . . . . . . . 13
5.2 Insurance . . . . . . . . . . . . . . . . . . . . . . . 13
5.3 Taxes, Claims for Labor and Materials
and Compliance with Laws . . . . . . . . . . . . . . . 14
5.4 Maintenance of Properties . . . . . . . . . . . . . . . 14
5.5 Maintenance of Records . . . . . . . . . . . . . . . . 14
5.6 Nature of Business . . . . . . . . . . . . . . . . . . 14
5.7 Net Worth . . . . . . . . . . . . . . . . . . . . . . 15
5.8 Funded Debt . . . . . . . . . . . . . . . . . . . . . 15
5.9 Subsidiary Funded Debt . . . . . . . . . . . . . . . . 15
5.10 Limitations on Liens . . . . . . . . . . . . . . . . . 15
5.11 Merger or Consolidation . . . . . . . . . . . . . . . . 17
5.12 Sale of Assets. . . . . . . . . . . . . . . . . . . . . 18
5.13 Repurchase of Notes . . . . . . . . . . . . . . . . . . 18
5.14 Transactions with Affiliates. . . . . . . . . . . . . . 19
5.15 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.16 Financial Reports and Rights of Inspection . . . . . . 19
5.17 Filings with S&P and NAIC . . . . . . . . . . . . . . . 22
5.18 Information to Prospective Purchasers . . . . . . . . . 23
Section 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR
6.1 Nature of Events . . . . . . . . . . . . . . . . . . . 23
6.2 Acceleration of Maturities . . . . . . . . . . . . . . 25
6.3 Rescission of Acceleration . . . . . . . . . . . . . . 25
6.4 Other Remedies . . . . . . . . . . . . . . . . . . . . 26
6.5 Conduct No Waiver; Collection Expenses . . . . . . . . 26
6.6 Remedies Cumulative . . . . . . . . . . . . . . . . . . 26
6.7 Notice of Default . . . . . . . . . . . . . . . . . . . 26
Section 7. AMENDMENTS, WAIVERS AND CONSENTS
7.1 Consent Required . . . . . . . . . . . . . . . . . . . 27
7.2 Effect of Amendment or Waiver . . . . . . . . . . . . . 27
7.3 Solicitation of Noteholders . . . . . . . . . . . . . . 27
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<CAPTION>
Page
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Section 8. INTERPRETATION OF AGREEMENT; DEFINITIONS
8.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.2 Accounting Principles . . . . . . . . . . . . . . . . . . . . . 35
8.3 Directly or Indirectly . . . . . . . . . . . . . . . . . . . . . 35
8.4 Valuation Principles . . . . . . . . . . . . . . . . . . . . . . 35
Section 9. REGISTRATION, TRANSFER, EXCHANGE
AND REPLACEMENT OF NOTES
9.1 Registered Notes . . . . . . . . . . . . . . . . . . . . . . . . 35
9.2 Exchange of Notes . . . . . . . . . . . . . . . . . . . . . . . 35
9.3 Replacement of Notes . . . . . . . . . . . . . . . . . . . . . . 36
Section 10. MISCELLANEOUS
10.1 Expenses, Stamp Tax Indemnity . . . . . . . . . . . . . . . . . 36
10.2 Powers and Rights Not Waived; Remedies Cumulative . . . . . . . 37
10.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.4 Reproduction of Documents . . . . . . . . . . . . . . . . . . . 37
10.5 Successors and Assigns . . . . . . . . . . . . . . . . . . . . 38
10.6 Survival of Covenants and Representations . . . . . . . . . . . 38
10.7 Integration; Severability . . . . . . . . . . . . . . . . . . . 38
10.8 Governing Law Consent to Jurisdiction . . . . . . . . . . . . . 38
10.9 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.10 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.11 Agent's Fee . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Annex I: Subsidiaries
Annex II: Description of Liens
Annex III: Description of Indebtedness
Annex IV: Summary of Insurance
Annex V: Waivers
Annex VI: Form of Summary Financial Information
Exhibit A: Form of 5.77% Senior Note Due December 1, 2003
Exhibit B: Legal Opinion of Special Counsel for the Purchasers
Exhibit C: Legal Opinion of Counsel for the Company
</TABLE>
(iii)
<PAGE> 5
AMERICAN BUSINESS PRODUCTS, INC.
2100 River Edge Parkway, Suite 1200
Atlanta, Georgia 30328
NOTE AGREEMENT
Dated as of December 1, 1993
To each of the Purchasers
listed on Schedule I Hereto
Gentlemen:
The undersigned, AMERICAN BUSINESS PRODUCTS, INC., a Georgia
corporation (the "Company"), agrees with you as follows:
Section 1. DESCRIPTION OF NOTES AND COMMITMENT
1.1 Description of Notes. The Company will authorize the issuance and
sale of $48,000,000 aggregate principal amount of its 5.77% Senior Notes due
December 1, 2003 (the "Notes") to be dated the date of issue, to bear interest
from such date at the rate of 5.77% per annum, to mature December 1, 2003, to
bear interest on overdue principal (including any overdue required or optional
prepayment), Make-Whole Amount, if any, and (to the extent legally enforceable)
on any overdue installment of interest at the greater of (i) the arithmetic
mean of the rates of interest published for the five Business Days preceding
the applicable payment date by The Wall Street Journal (or any successor
publication) under the caption "Money Rates -- Prime Rate" plus two percent
(2%) or (ii) 7.77%, and to be substantially in the form attached hereto as
Exhibit A. Interest on the Notes shall be payable semi-annually in arrears on
June 1 and December 1 of each year, commencing June 1, 1994, and at maturity
and shall be computed on the basis of a 360-day year of twelve 30-day months.
The Notes are not subject to prepayment or redemption at the option of the
Company prior to their expressed maturity dates except on the terms and
conditions and in the amounts and with the Make-Whole Amount, if any, set forth
in Section 2 of this Agreement. The term "Notes" as used herein shall include
the Note delivered pursuant to this Agreement and each Note issued upon
transfer thereof or in exchange therefor. Any reference to you in this
Agreement shall in all instances be deemed to include any nominee of yours or
any separate account on whose behalf you are purchasing Notes. You, together
with the other purchasers named in Schedule I, are hereinafter sometimes
referred to as the "Purchasers."
1.2 Commitment. Closing Date. Subject to the terms and conditions
hereof and on the basis of the representations and warranties hereinafter set
forth, the Company agrees to issue and sell to you, and you agree to purchase
from the Company, Notes of the Company in the
<PAGE> 6
principal amount set opposite your name in Schedule I at a price of 100% of the
principal amount thereof on the Closing Date hereinafter defined.
Delivery of the Notes will be made at the offices of Gardner, Carton &
Douglas, 321 North Clark Street, Quaker Tower, Chicago, Illinois 60610, at
10:00 a.m., Chicago Time, on December 15, 1993 or at such later time or on such
other date as may be mutually agreed upon by the Company and the Purchasers
(the "Closing Date"). Delivery of the Notes to you on the Closing Date shall be
against payment of the purchase price thereof in Federal Funds or other
immediately available funds in U.S. dollars transmitted to NationsBank,
Atlanta, Georgia, ABA No. 061000052, for deposit in the Company's Account No.
02243459. The Notes will be delivered to you in the fully registered form for
the full amount of your purchase, registered in your name or in the name of
your nominee, all as you may specify in Schedule I attached hereto. If on the
Closing Date the Company shall fail to tender the Note to you, you shall be
relieved of all remaining obligations under this Agreement. Nothing in the
preceding sentence shall relieve the Company of any liability occasioned by
such failure to deliver the Note.
1.3 Other Purchasers. Your obligation and the obligations of the
Company hereunder are subject to the execution and delivery of this Agreement
by the other Purchasers. The obligations of each Purchaser shall be several and
not joint and no Purchaser shall be liable or responsible for the act of any
other Purchaser.
Section 2. PREPAYMENT OF NOTES
2.1 Required Prepayments. In addition to payment of all outstanding
principal of the Notes at maturity and regardless of the amount of Notes that
may be outstanding from time to time, the Company agrees that it will prepay
and apply and there shall become due and payable $6,857,143 of the outstanding
principal amount of the Notes, or such lesser amount as would constitute
payment in full on the Notes on such date, on December 1 of each year,
commencing December 1, 1997. The entire unpaid principal amount of the Notes
shall become due and payable on December 1, 2003. Each such prepayment shall be
at a price of 100% of the principal amount prepaid, together with interest
accrued thereon to the date of prepayment. No Make-Whole Amount or any other
premium shall be payable in connection with any required prepayment made when
due pursuant to this Section 2.1.
2.2 Optional Prepayments. Upon notice as provided in Section 2.6, the
Company may prepay the outstanding Notes, in whole or in part (but if in part
in a principal amount of not less than $ 1,000,000, or such less amount as
shall then be outstanding), on any Business Day by payment of the principal
amount of the Notes to be prepaid, plus accrued interest thereon to the date of
such prepayment, together with the Make-Whole Amount, if any, then applicable.
2.3 Prepayment of Notes upon Change in Control. (a) In the event of a
Change in Control, the Company shall, immediately upon learning thereof, but in
any event within five Business Days after the date of occurrence of such Change
in Control, give written notice to each holder of outstanding Notes of the
Change in Control, accompanied by a certificate of an authorized officer of the
Company certifying that a Change in Control has occurred. Such notice
-2 -
<PAGE> 7
shall (i) contain the written, irrevocable offer of the Company to prepay, on a
Business Day specified in such notice (the "Prepayment Date") which shall be a
date not less than 30 nor more than 90 calendar days after the date on which
the notice of such Change in Control was received by each holder of the Notes,
the entire principal amount of the Notes held by each holder at a price equal
to 100% thereof, together with interest accrued thereon to (but not including)
the Prepayment Date and the Make-Whole Amount, if any, (ii) include a
calculation of the estimated amount of the Make-Whole Amount, (iii) state the
accrued interest applicable to the prepayment and (iv) specify the date by
which any holder of a Note that wishes to accept such offer must deliver notice
thereof to the Company which shall not be earlier than 10 calendar days prior
to the Prepayment Date. Not earlier than 7 calendar days prior to the
Prepayment Date, the Company shall give notice to all holders of Notes
identifying each holder (and the principal amount of Notes held) who has given
notice of acceptance of the Company's offer, and thereafter any holder may
change its response to the Company's offer by notice to such effect delivered
to the Company not less than 3 calendar days prior to the Prepayment Date. The
aggregate principal amount of Notes held by holders who have accepted the
Company's offer and not revoked such acceptance shall become due and payable on
the Prepayment Date at a price equal to 100% of the principal amount of the
Notes so to be prepaid and accrued interest thereon to the Prepayment Date
together with the Make-Whole Amount, if any, then applicable.
(b) In the event that the chief executive, chief operating officer or
the chief financial officer of the Company becomes aware that an agreement has
been entered into or a written offer is made which will or, in the case of any
such offer, could result in a Change in Control, the Company will notify the
holders of the Notes of such event promptly upon obtaining knowledge thereof
but in any event within five days, making specific reference to this Section
2.3, to the facts and circumstances surrounding any such event in reasonable
detail, and to the rights of the holders of the Notes hereunder.
2.4 Prepayment for Certain Non-Fundamental Changes. In the event that
the Company delivers a Non-Fundamental Change Request to each Noteholder, and
such Non-Fundamental Change is not consented to by Noteholders holding at least
67% in aggregate principal amount of the Notes then outstanding, then, upon
notice as provided in Section 2.6, the Company may prepay the entire principal
amount of all Notes held by each non-consenting Noteholder, at a price equal to
100% of the principal amount of the Notes to be prepaid and accrued interest
thereon to the date of such prepayment, together with the Make-Whole Amount, if
any, then applicable.
2.5 No Other Prepayments. Except as provided in Sections 2.1, 2.2,
2.3 and 2.4, the Notes shall not be prepayable in whole or in part prior to
their maturity.
2.6 Notice of Prepayments. (a) The Company shall give written notice
of any prepayment of the Notes pursuant to Section 2.2 or 2.4 to each holder
thereof, not less than 30 days nor more than 60 days before the date fixed for
such optional prepayment, specifying (i) such date, (ii) the principal amount
of the holder's Notes to be prepaid on such date and (iii) the accrued interest
applicable to the prepayment. Such notice of prepayment shall also certify all
information required to be provided by the Company pursuant to Section 2.3 and
-3 -
<PAGE> 8
Section 2.4. Notice of such prepayment having been so given, the aggregate
principal amount of the Notes specified in such notice, together with the
Make-Whole Amount, if any, and accrued interest thereon, shall become due and
payable on the prepayment date specified in such notice.
(b) In the case of any prepayment of the Notes pursuant to Section
2.2, 2.3 or 2.4, the Company shall also give notice to each holder of the Notes
by telecopy, telegram or other sameday written communication on the
Determination Date (confirmed in a writing delivered at least two Business Days
prior to the payment date) of the estimated Make-Whole Amount applicable to
such prepayment and the details of the calculations used to determine the
amount of such Make-Whole Amount.
2.7 Surrender of Notes on Transfer or Exchange. Upon any partial
transfer or partial exchange of a Note pursuant to Section 9.2, such Note
shall, at the option of the holder thereof, (i) be surrendered to the Company
pursuant to Section 9.2 hereof in exchange for one or more new Notes equal to
the principal amount remaining unpaid on the surrendered Note or (ii) be made
available to the Company for notations thereon of the portion of the principal
so prepaid or exchanged. In case the entire principal amount of any Note is
prepaid or exchanged, such Note shall be surrendered to the Company upon
request for cancellation and shall not be reissued, and no Note shall be issued
in lieu of such Note.
2.8 Allocation of Prepayments. All partial prepayments of the Notes
pursuant to Sections 2.1 and 2.2 shall be allocated to all outstanding Notes
ratably in accordance with the unpaid principal amount thereof. Any prepayment
of less than all the Notes pursuant to Section 2.2, 2.3 or 2.4 shall be applied
ratably to the required prepayments under Section 2.1.
2.9 Direct Payment. Notwithstanding any other provision contained in
the Notes or this Agreement, the Company will pay all sums becoming due on each
Note held by you by wire transfer of immediately available funds to such
account in your name as you have designated in Schedule I hereto, or as you may
otherwise designate by notice to the Company, in each case without presentment
and without notations being made thereon, except that any such Note so paid or
prepaid in full shall be surrendered to the Company upon request for
cancellation. Any wire transfer shall identify such payment in the manner set
forth in the attached Schedule I and shall identify the payment as principal,
Make-Whole Amount, if any, and/or interest. If the transferee of any Note held
by you is an Institutional Holder or its nominee and shall request the Company
to make all payments on account of such Note that are payable in cash either by
check or by wire transfer of immediately available funds at an address
specified in such request, the Company will make such payments in compliance
with such request.
2.10 Pavements Due on Non-Business Days. In any case where the date of
any required prepayment of the Notes or any scheduled interest payment date on
the Notes or the date fixed for any other payment of any Note or exchange of
any Note is not a Business Day, then such payment or prepayment need not be
made on such scheduled date but may be made on the next succeeding Business Day
(with interest accrued to the actual payment date), with the same force and
effect as if made on the due date.
-4-
<PAGE> 9
Section 3. REPRESENTATIONS
3.1 Representations of the Company. As an inducement to, and as part
of the consideration for, your purchase of the Notes pursuant to this
Agreement, the Company represents and warrants to you as follows:
(a) Corporate Organization and Authority. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Georgia and has full corporate power and authority to own and operate
its property, to carry on its business as now conducted, to enter into this
Agreement and to issue and sell the Notes as contemplated in this Agreement.
The Company and each of its Subsidiaries has all franchises, licenses, permits
and other authority necessary to carry on its business as now being conducted
and to own and operate its property.
(b) Qualification to Do Business. The Company is duly licensed or
qualified and in good standing as a foreign corporation authorized to do
business in each jurisdiction where the nature of its business or the character
of its properties makes such qualification or licensing necessary, except for
such jurisdictions where the failure to be so qualified or licensed will not
have a Material Adverse Effect on the Company. A list of those jurisdictions
wherein the Company is qualified to do business is set forth in the attached
Annex I.
(c) Subsidiaries. The Company has no Subsidiaries except those listed
in Annex I, which correctly sets forth the percentage of the outstanding
capital stock or equivalent interest of each Subsidiary which is owned, of
record or beneficially, by the Company and/or one or more Subsidiaries and
whether such Subsidiary is a Restricted Subsidiary. Each Subsidiary has been
duly organized and is validly existing and in good standing under the laws of
its jurisdiction of incorporation or organization and is duly licensed or
qualified in each other jurisdiction where the nature of its business or the
character of its properties makes such qualification or licensing necessary,
except for such jurisdictions where the failure to be so qualified or licensed
will not have a Material Adverse Effect on such Subsidiary. A list of those
jurisdictions wherein each Subsidiary is qualified to do business is set forth
in the attached Annex I. Each Subsidiary has full corporate power and authority
and all necessary licenses and permits to own its properties and to carry on
its business as now conducted, except for such licenses and permits the failure
of which to obtain will not have a Material Adverse Effect on such Subsidiary.
The Company and/or one or more Subsidiaries have good and marketable title to
all of the shares it purports to own of the capital stock of each Subsidiary,
free and clear in each case of any Lien, and all such shares have been duly
issued and are fully paid and nonassessable.
(d) Financial Statements. The consolidated balance sheets of the
Company and its Subsidiaries as of December 31, 1991 and December 31, 1992, and
the related consolidated statements of income, changes in stockholders' equity
and cash flows for the two years ended December 31, 1991 and December 31, 1992,
certified by the Company's independent public accountants, copies of which have
heretofore been delivered to you, were prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
-5-
<PAGE> 10
involved (except as otherwise noted therein) and present fairly the financial
condition and results of operations and cash flows of the Company and its
Subsidiaries for and as of the end of each of such years. The unaudited
consolidated balance sheet of the Company and its Subsidiaries as of June 30,
1993 and June 30, 1992 and the unaudited statements of income, changes in
stockholders' equity and cash flows for the six-month period ended on said
dates have been prepared in accordance with generally accepted accounting
principles consistently applied, are correct and complete and present fairly
the financial position of the Company and its Subsidiaries as of said dates and
the result of their operations and cash flows for said period, subject to
customary year-end adjustments.
(e) No Contingent Liabilities or Adverse Changes. Neither the Company
nor any of its Subsidiaries has any contingent liabilities which are material
to the Company or any of its Subsidiaries other than as described in the
financial statements referred to in paragraph (d) of this Section 3.1. Since
December 31, 1992, there have been no material adverse changes in the
condition, financial or other, of the Company or any of its Subsidiaries.
(f) No Pending Litigation or Proceedings. There are no actions, suits
or proceedings pending or, to the best knowledge of the Company and its
Subsidiaries, affecting or threatened against the Company or any of its
Subsidiaries, at law or in equity or before or by any Federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality or arbitration board or tribunal, domestic or foreign, which
might result, either individually or collectively, in any Material Adverse
Effect on the Company or any of its Subsidiaries or which could have a material
adverse effect on the consummation of the transactions contemplated hereby.
(g) Compliance with Law. (i) Neither the Company nor any of its
Subsidiaries is: (x) in default with respect to any order, writ, injunction or
decree of any court, governmental authority or arbitration board or tribunal to
which it is a named party; or (y) in violation of any law, rule, regulation,
ordinance or order relating to its or their respective businesses, except for
any such violations which would not individually or in the aggregate have a
Material Adverse Effect on the Company or any of its Subsidiaries or which
would not individually or in the aggregate have a material adverse effect on
the consummation of the transactions contemplated hereby.
(ii) Neither the Company nor any Subsidiary is in violation of
any applicable Federal, state, or local laws, statutes, rules, regulations or
ordinances relating to public health, safety or the environment, including,
without limitation, relating to releases, discharges, emissions or disposals to
air, water, land or ground water, to the withdrawal or use of ground water, to
the use, handling or disposal of polychlorinated biphenyls, asbestos or urea
formaldehyde, to the treatment, storage, disposal or management of hazardous
substances (including, without limitation, petroleum, crude oil or any fraction
thereof, or other hydrocarbons), pollutants or contaminants, to exposure to
toxic, hazardous or other controlled, prohibited or regulated substances which
violation could have a Material Adverse Effect on the Company and its
Subsidiaries. The Company does not know of any liability of the Company or any
Subsidiary under the Comprehensive Environmental Response, Compensation and
Liability
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Act of 1980, as amended (42 U.S.C. Section 9601 et seq.), or the Resource
Conservation and Recovery Act of 1976, as amended (42 U.S.C. Section 6901 et
seq.) which might result, individually or in the aggregate, in a Material
Adverse Effect.
(iii) Neither the Company, any Subsidiary nor any Affiliate of
the Company is an entity defined as a "designated national" within the meaning
of the Foreign Assets Control Regulations, 31 C.F.R. Chapter V, or for any
other reason, subject to any restriction or prohibition under, or is in
violation of, any Federal statute or Presidential Executive Order, or any rules
or regulations of any department, agency or administrative body promulgated
under any such statute or Order, concerning trade or other relations with any
foreign country or any citizen or national thereof or the ownership or
operation of any property.
(h) Pension Reform Act of 1974. Assuming your representations in
Section 3.2 of this Agreement are true and accurate, neither the purchase of
the Notes by you nor the consummation of any of the other transactions
contemplated by this Agreement is or will constitute a "prohibited transaction"
within the meaning of Section 4975 of the Internal Revenue Code of 1986, as
amended (the "Code"), or Section 406 of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"). The Internal Revenue Service has issued a
determination that each "employee pension benefit plan," as defined in Section
3 of ERISA (a "Plan"), established, maintained or contributed to by the Company
or any Subsidiary (except for any Plan which is unfunded and maintained
primarily for the purpose of providing deferred compensation and supplemental
retirement benefits for a select group of management or highly compensated
employees) is qualified under Section 401(a) and related provisions of the
Code and that each related trust or custodial account is exempt from taxation
under Section 501(a) of the Code. All Plans of the Company or any Subsidiary
comply in all material respects with ERISA and other applicable laws. There
exist with respect to the Company or any Subsidiary no "multi-employer plans,"
as defined in Section 4001(a)(3) of ERISA, for which a material withdrawal or
termination liability may be incurred. There exist with respect to all Plans or
trusts established or maintained by the Company or any Subsidiary: (i) no
material accumulated funding deficiency within the meaning of ERISA; (ii) no
termination of any Plan or trust which would result in any material liability
to the Pension Benefit Guaranty Corporation ("PBGC") or any "reportable event,"
as that term is defined in ERISA, which is likely to constitute grounds for
termination of any Plan or trust by the PBGC; and (iii) no "prohibited
transaction," as that term is defined in ERISA, which is likely to subject any
Plan, trust or party dealing with any such Plan or trust to any material tax or
penalty on prohibited transactions imposed by Section 4975 of the Code. As of
the last valuation date, December 10, 1992, the present value of all benefits
vested under all Plans did not exceed the value of the assets of the Plans
allocable to such vested benefits by an amount greater than $500,000 in the
aggregate.
(i) Title to Properties. The Company and each of its Subsidiaries have
(i) good and marketable title in fee simple under applicable law to all the
real property owned by each of them and (ii) good title to all of the other
property it purports to own, including that reflected in the consolidated
balance sheet delivered pursuant to Paragraph (d) of this Section 3.1 or
subsequently acquired by the Company or any Subsidiary (except as sold or
otherwise disposed of in the ordinary course of business), in each case free
from all Liens of any kind, except
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(x) those securing Indebtedness for borrowed money of the Company or a
Subsidiary which are listed in the attached Annex II and (y) other Liens
permitted pursuant to Paragraphs (a), (c) or (d) of Section 5.10 hereof,
provided that any such Liens described in clauses (x) and (y) above do not,
individually or in the aggregate, materially impair the use or value of the
property in the operation of the business of the Company and its Subsidiaries,
taken as a whole.
(j) Leases. The Company and each Subsidiary enjoy peaceful and
undisturbed possession under all leases under which the Company or such
Subsidiary is a lessee or is operating. None of such leases contains any
provision which might materially and adversely affect the operation or use of
the property so leased. All of such leases are valid and subsisting and none of
them is in default.
(k) Franchises. Patents, Trademarks and Other Rights. The Company and
each Subsidiary have all franchises, permits, licenses and other authority as
are necessary to enable them to carry on their respective businesses as now
being conducted and as proposed to be conducted, and none of them is in default
under any of such franchises, permits, licenses or other authority. The Company
and each Subsidiary own or possess all patents, trademarks, service marks,
trade names, copyrights, licenses and rights with respect to the foregoing
necessary for the present conduct of their businesses, without any known
conflict with the rights of others.
(l) Status of Notes and Sale of Notes. (1) The Notes have been duly
authorized on the part of the Company and, when issued, will constitute the
legal, valid and binding obligations of the Company, enforceable in accordance
with their terms, except to the extent that enforcement of the Notes may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws of general application relating to or affecting the enforcement of
the rights of creditors or secured parties or by general principles of equity.
The sale of the Notes and compliance by the Company with all of the provisions
of this Agreement and of the Notes (i) are within the corporate powers of the
Company, (ii) have been duly authorized by proper corporate action and (iii)
are legal and will not result in any breach of any of the provisions of, or
constitute a default under, conflict with or result in the creation of any lien
or encumbrance upon any property of the Company or any Subsidiary under the
provisions of, any charter instrument, bylaw, loan agreement, indenture or
other agreement or instrument to which the Company or any Subsidiary is a party
or by which any of them or their property may be bound.
(2) Upon issuance of the Notes, the Notes are not, or will not be, of
the same class as securities listed on a national securities exchange
registered under Section 6 of the Exchange Act or quoted in a U.S. automated
inter-dealer quotation system, within the meaning of Rule 144A.
(m) No Defaults. No event has occurred and no condition exists which,
upon the issuance of the Notes, would constitute a Default or an Event of
Default under this Agreement. Neither the Company nor any Subsidiary is in
default, and no event has occurred which with notice or passage of time or both
would constitute a default, under any charter instrument, bylaw, loan
agreement, indenture or other material agreement or instrurnent to which it is
a party or by which it or its property may be bound nor has the Company or any
Subsidiary obtained any
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<PAGE> 13
waivers with respect to any such defaults under any loan agreements or other
material agreements or instruments, except such waivers copies of which are
attached as Annex V hereto.
(n) Governmental Consent. Neither the nature of the Company or any of
its Subsidiaries, nor their respective businesses or properties, nor any
relationship between the Company or any of its Subsidiaries and any other
Person, nor any circumstances in connection with the offer, issue, sale or
delivery of the Notes is such as to require a consent, approval or
authorization of, or filing, registration or qualification with, any
governmental authority in connection with the execution and delivery of this
Agreement or the offer, issue, sale or delivery of the Notes or compliance with
the terms hereof or thereof.
(o) Taxes. (i) All tax returns required to be filed by the Company or
any Subsidiary in any jurisdiction have in fact been filed, and all taxes,
assessments, fees and other governmental charges upon the Company or any
Subsidiary, or upon any of their respective properties, income or franchises,
which are due and payable, have been paid timely or within appropriate
extension periods. The Company does not know of any proposed additional tax
assessment against it or of any basis for one which would have a Material
Adverse Effect on the Company and its Subsidiaries taken as a whole.
(ii) The respective Federal income tax liabilities of the
Company and its Subsidiaries have been finally determined by the Internal
Revenue Service and satisfied for all taxable years to and including the
taxable year ended December 31,1987 and no material controversy in respect of
additional income taxes due since said date is pending or to the knowledge of
the Company threatened. The consolidated provisions for taxes on the books of
the Company and each Subsidiary are adequate for all open years and for the
current fiscal period.
(p) Status under Certain Statutes. Neither the Company nor any
Subsidiary is: (i) a "public utility company" or a "holding company," or an
"affiliate" or a "subsidiary company" of a "holding company," or an "affiliate"
of such a "subsidiary company," as such terms are defined in the Public Utility
Holding Company Act of 1935, as amended, or (ii) a "public utility" as defined
in the Federal Power Act, as amended, or (iii) an "investment company" or an
"affiliated person" thereof or an "affiliated person" of any such "affiliated
person," as such terms are defined in the Investment Company Act of 1940, as
amended.
(q) Private Offering. Neither the Company nor NationsBanc Capital
Markets Inc. ("NCMI") (the only Person authorized or employed by the Company as
agent, broker, dealer or otherwise in connection with the offering of the Notes
or any similar security of the Company) has offered any of the Notes or any
similar security of the Company for sale to, or solicited offers to buy any
thereof from, or otherwise approached or negotiated with respect thereto with,
any prospective purchaser, other than not more than 45 institutional investors,
including the Purchasers, referred to in a letter from NCMI dated December 15,
1993 (the "Offeree Letter"), a copy of which has been delivered to your special
counsel, each of whom was offered all or a portion of the Notes at private sale
for investment. In making the representation with respect to NCMI in the
preceding sentence, the Company has relied solely on the Offeree Letter. The
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<PAGE> 14
Company agrees that neither the Company nor anyone acting on its authorization
will offer the Notes or any part thereof or any similar securities for issue or
sale to, or solicit any offer to acquire any of the same from, anyone so as to
bring the issuance and sale of the Notes within the provisions of Section 5 of
the Securities Act.
(r) Effect of Other Instruments. Neither the Company nor any
Subsidiary is bound by any agreement or instrument or subject to any charter or
other corporate restriction which has or might have (i) a Material Adverse
Effect on the Company or any Subsidiary or (i) a material adverse effect on the
Company's ability to perform its obligations under this Agreement and the Note.
(s) Use of Proceeds. The Company will apply the proceeds from the sale
of the Notes to provide for the acquisition of the capital stock of Conway
Enterprises (approximately $25,000,000), certain assets and liabilities of
International Envelope Company (approximately $ 13,000,000) and for general
corporate purposes. None of the transactions contemplated in this Agreement
(including, without limitation thereof, the use of the proceeds from the sale
of the Notes) will violate or result in a violation of Section 7 of the
Exchange Act or any regulations issued pursuant thereto, including, without
limitation, Regulations G, T, U and X of the Board of Governors of the Federal
Reserve System (12 C.F.R., Chapter II). Neither the Company nor any Subsidiary
owns or intends to carry or purchase any "margin stock" within the meaning of
Regulation G, and none of the proceeds from the sale of the Notes will be used
to purchase or carry or refinance any borrowing the proceeds of which were used
to purchase or carry any "margin stock" or "margin security" in violation of
Regulations G, T, U or X.
(t) Condition of Property. All of the facilities of the Company and
each of its Subsidiaries are in sound operating condition and repair except for
facilities being repaired in the ordinary course of business.
(u) Books and Records. The Company and each of its Subsidiaries
maintain books, records and accounts which, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of their respective
assets, and maintain a system of internal accounting controls sufficient to
provide reasonable assurances that (i) transactions are executed in accordance
with management's general or specific authorization; (ii) transactions are
recorded as necessary (x) to permit preparation of financial statements in
accordance with generally accepted accounting principles and (y) to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(v) Full Disclosure. The Private Placement Memorandum dated September,
1993, including all exhibits and appendices thereto (the "Private Placement
Memorandum"), previously furnished to you contains a full and complete
description of the business conducted and proposed to be conducted by the
Company and its Subsidiaries and the principal properties of the Company and
its Subsidiaries. Neither the Private Placement Memorandum, including any
exhibits and appendices thereto, nor the financial statements referred to in
Paragraph (d) of this
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<PAGE> 15
Section 3.1, nor this Agreement, nor any other statement or document furnished
by the Company to you in connection with the negotiation of the sale of the
Notes contains any untrue statement of a material fact or omit a material fact
necessary to make the statements contained therein or herein not misleading.
There is no fact known, or which, with reasonable diligence would be known, by
the Company which the Company has not disclosed to you in writing which has or,
so far as the Company can now foresee, might have (i) a Material Adverse Effect
on the Company or any of its Subsidiaries or (ii) a material adverse effect on
the ability of the Company to perform its undertakings under and in respect of
this Agreement and the Notes.
(w) Indebtedness. The Company and the Restricted Subsidiaries have no
Indebtedness outstanding as of the date hereof and as of the Closing Date other
than as set forth on Annex III.
(x) Solvency. The Company and its Subsidiaries, individually, and the
Company and its Subsidiaries, taken as a whole on a consolidated basis, are
Solvent. For purposes hereof, "Solvent" shall mean, with respect to any Person
on any date of determination, that on such date: (a) to the best of such
Person's knowledge, the sum of such Person's assets, at a fair valuation,
exceeds its debts; (b) such Person has not incurred, has not intended to incur
and does not believe that it will incur debts beyond its ability to pay such
debts as such debts mature; and (c) such Person's assets do not constitute
unreasonably small capital with which to conduct its business. For purposes
hereof debt means any liability on a "claim" and "claim" means: (i) right to
payment whether or not such a right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured; or (ii) right to an equitable remedy
for breach of performance if such breach gives rise to a payment, whether or
not such right to an equitable remedy is reduced to judgment, fixed,
contingent, matured, unmatured, disputed, undisputed, secured or unsecured.
3.2 Representations of the Purchasers. (a) Each of you represent, and
in entering into this Agreement the Company understands, that you are acquiring
such Notes for the purpose of investment and not with a view to the resale or
distribution thereof, and that you have no present intention of selling,
negotiating or otherwise disposing of the Notes; provided that the disposition
of your property shall at all times be and remain within your control. You
acknowledge that the Notes have not been registered under the Securities Act
and you understand that the Notes must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption from such
registration is available.
(b) Each of you acknowledge that you are an Institutional Holder. Each
of you further acknowledge that the Company has made available to you a copy of
the Private Placement Memorandum dated September 1993 relating to the issuance
and sale of the Notes.
(c) You further represent that either: (i) no part of the funds to be
used by you to purchase the Notes constitutes assets allocated to any separate
account maintained by you; or (ii) no part of the funds to be used by you to
purchase the Notes constitutes assets allocated to any separate account
maintained by you such that the application of such funds constitutes a
prohibited transaction under Section 406 of the Employee Retirement Income
Security Act of
11
<PAGE> 16
1974 ("ERISA") or Section 4975 of the Internal Revenue Code of 1986, as
amended; or (iii) all or a part of such funds constitute assets of one or more
separate accounts maintained by you, and you have disclosed to the Company the
names of such employee benefit plans whose assets in such separate account or
accounts exceed 10% of the total assets as of the date of such purchase and the
Company has advised you in writing (and in making the representations set forth
in this clause (iii) you are relying on such advice) that the Company is not a
party-in-interest nor are the Notes employer securities with respect to the
particular employee benefit plan disclosed to the Company by you as aforesaid
(for the purpose of this clause (iii), all employee benefit plans maintained by
the same employer or employee organizations are deemed to be a single plan). As
used in this Section, the terms "separate account", "party-in-interest",
"employer securities" and "employee benefit plan" shall have the respective
meanings assigned to them in ERISA.
Section 4. CLOSING CONDITIONS
Your obligation to purchase the Notes on the Closing Date shall be
subject to the performance by the Company of its agreements hereunder which by
the terms hereof are to be performed at or prior to the time of delivery of the
Notes and to the following further conditions precedent:
4.1 Representations and Warranties. The representations and warranties
of the Company contained in this Agreement or otherwise made in connection
herewith shall be true and correct on the Closing Date and you shall receive
from the Company a certificate dated such Closing Date, and executed by the
President or the Chief Financial Officer of the Company to such effect.
4.2 Legal Opinions. You shall receive from Gardner, Carton & Douglas,
who are acting as your special counsel in this transaction, and from Long,
Aldridge & Norman, counsel of the Company, their respective opinions, addressed
to you dated the Closing Date, in form and substance satisfactory to you, and
covering the matters set forth in Exhibits B and C, respectively, hereto.
4.3 Events of Default. No event shall have occurred and be continuing
on the Closing Date which would constitute a Default or an Event of Default,
and the Company shall have delivered to you on the Closing Date a certificate
signed by the President or the Chief Financial Officer of the Company to such
effect.
4.4 Sale of Notes. The Company shall have consummated the sale of the
entire principal amount of the Notes scheduled to be sold on the Closing Date
to the Purchasers pursuant to this Agreement.
4.5 Legality of Investment. Your acquisition of the Notes shall
constitute a legal investment as of the Closing Date under the laws and
regulations of each jurisdiction to which you may be subject (without resort to
any "basket" or "leeway" provision which permits the making of an investment
without restriction as to the character of the particular investment being
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<PAGE> 17
made), and such acquisition shall not subject you to any penalty or other
onerous condition in or pursuant to any such law or regulation; and you shall
have received such certificates or other evidence as you may reasonably request
to establish compliance with this condition.
4.6 Satisfactory Proceedings. All proceedings taken in connection with
the transactions contemplated by this Agreement, and all documents necessary to
the consummation thereof, shall be satisfactory in form and substance to you
and your special counsel, and you and your special counsel shall have received
a copy (executed or certified as may be appropriate) of all legal documents or
proceedings taken in connection with the consummation of said transactions.
4.7 Payment of Fees and Expenses. The Company shall have paid all of
your fees and expenses, including without limitation the fees and expenses of
your special counsel, incurred through the Closing Date and incident to all
proceedings in connection with, transactions contemplated by, and documents
incident to this Note Agreement and the Notes.
4.8 Private Placement Number. A private placement number shall have
been obtained from Standard & Poor's Corporation.
4.9 Waiver of Conditions. If on the Closing Date the Company fails to
tender to you the Notes to be issued to you on such date or if the conditions
specified in this Section 4 have not been fulfilled, you may thereupon elect to
be relieved of all further obligations under this Agreement. Without limiting
the foregoing, if the conditions specified in this Section 4 have not been
fulfilled, you may waive compliance by the Company with any such condition to
such extent as you may in your sole discretion determine. Nothing in this
Section 4.9 shall operate to relieve the Company of any of its obligations
hereunder or to waive any of your rights against the Company.
Section 5. COMPANY AND NOTEHOLDER COVENANTS
From and after the Closing Date and continuing so long as any amount
remains unpaid on any Note:
5.1 Corporate Existence. The Company will preserve and keep in force
and effect, and will cause each Subsidiary to preserve and keep in force and
effect, its corporate existence and all licenses and permits necessary to the
proper conduct of its business and will use, and will cause each Subsidiary to
use, its best efforts to maintain and preserve all of its rights, powers,
privileges and franchises which in the good faith opinion of the Board of
Directors of the Company continue to be advantageous to the Company and its
Subsidiaries, provided that the foregoing shall not prevent any transaction
permitted by Section 5.11.
5.2 Insurance. The Company will maintain, and will cause each
Subsidiary to maintain, insurance coverage in such forms and amounts and
against such risks, including without limitation insurance with respect to its
property, the operation thereof and its business
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<PAGE> 18
against casualties, contingencies and risks and insurance against loss or
damage from such hazard and risks to the person or property of others, as are
customary for corporations similarly situated and engaged in the same or a
similar business and owning and operating similar properties. All such
insurance shall be carried with financially sound and reputable insurers. A
summary of insurance presently in force is set forth in Annex IV hereto.
5.3 Taxes, Claims for Labor and Materials, and Compliance with Laws.
The Company will promptly pay and discharge when due, and will cause each
Subsidiary promptly to pay and discharge when due, all taxes, assessments and
governmental charges or levies imposed upon the Company or such Subsidiary,
respectively, or upon or in respect of all or any part of the property or
business of the Company or such Subsidiary or upon properties leased by it (but
only to the extent required to do so by the applicable lease), all trade
accounts payable in accordance with usual and customary business terms, and all
claims for work, labor or materials, which if unpaid might become a Lien or
charge upon any property of the Company or such Subsidiary; provided the
Company or such Subsidiary shall not be required to pay any such tax,
assessment, charge, levy, account payable or claim if (i) the validity,
applicability or amount thereof is being contested in good faith by appropriate
actions or proceedings which will prevent the forfeiture or sale of any
property of the Company or such Subsidiary and any material interference with
the use thereof by the Company or such Subsidiary and (ii) the Company or such
Subsidiary shall set aside on its books reserves deemed by it to be adequate
with respect thereto. The Company will comply and will cause each Subsidiary to
comply with all laws, ordinances or governmental rules and regulations to which
it is subject and the failure with which to comply could result in a Material
Adverse Effect, including without limitation, the Occupational Safety and
Health Act of 1970, ERISA and all laws, ordinances, governmental rules and
regulations relating to environmental protection in all applicable
jurisdictions.
5.4 Maintenance of Properties. The Company will maintain, preserve and
keep, and will cause each Subsidiary to maintain, preserve and keep, its
properties which are used or useful in the conduct of its business (whether
owned in fee or a leasehold interest) in good repair and working order and from
time to time will make all necessary repairs, replacements, renewals and
additions so that at all times the efficiency thereof shall be maintained.
5.5 Maintenance of Records. The Company will keep, and will cause each
Subsidiary to keep, at all times proper books of record and account in which
full, true and correct entries will be made of all dealings or transactions of
or in relation to the business and affairs of the Company or such Subsidiary,
in accordance with generally accepted accounting principles consistently
applied throughout the period involved (except for such changes as are
disclosed in such financial statements or in the notes thereto and concurred in
by the independent certified public accountants), and the Company will, and
will cause each Subsidiary to, provide reasonable protection against loss or
damage to such books of record and account.
5.6 Nature of the Business. Neither the Company nor any of its
Subsidiaries will engage in any business if, as a result, the general nature of
the business, taken on a consolidated basis, which would then be engaged in by
the Company and its Subsidiaries would be substantially
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<PAGE> 19
changed from the general nature of the business engaged in by the Company and
its Subsidiaries on the date of this Agreement.
5.7 Net Worth. The Company will maintain Consolidated Net Worth as of
the end of each fiscal quarter at an amount not less than the sum of (a)
$95,000,000, plus (b) 25% of Consolidated Net Income, calculated on a
cumulative basis, for each of the fiscal years and each interim fiscal quarter
of the Company commencing after September 30, 1993, provided however that, for
purposes of this Section 5.7, Consolidated Net Losses in any such fiscal year
or interim fiscal quarter shall not be applied to reduce such accumulated
Consolidated Net Income.
5.8 Funded Debt. The Company will not, at any time, permit
Consolidated Funded Debt to exceed 50% of Consolidated Net Capitalization.
5.9 Subsidiary Funded Debt. The Company will not permit any Restricted
Subsidiary to create, assume, incur, guarantee or permit to exist any Funded
Debt other than: (a) Funded Debt of any Restricted Subsidiary owing to the
Company or to other Restricted Subsidiaries; (b) existing Funded Debt described
in Annex III hereto; and (c) Funded Debt which, after giving effect thereto and
to the application of the proceeds thereof, would not result in (i) the
aggregate outstanding principal amount of Funded Debt issued by Restricted
Subsidiaries (excluding Funded Debt incurred or existing pursuant to clauses
(a) and (b) of this Section 5.9) plus (ii) Indebtedness secured by Liens
incurred pursuant to Section 5.10(i), to exceed 15% of Consolidated Tangible
Net Worth; provided that the Company shall at all times remain in compliance
with Section 5.8.
5.10 Limitations on Liens. The Company will not, and will not permit
any Restricted Subsidiary to, create or incur, or suffer to be incurred or to
exist, any Lien of any kind on its or their property or assets, whether now
owned or hereafter acquired, or upon any income or profits therefrom, or
transfer any property for the purpose of subjecting the same to the payment of
obligations in priority to the payment of its or their general creditors, or
acquire or agree to acquire any property or assets upon conditional sales
agreements or other title retention devices, except:
(a) Liens for property taxes and assessments or governmental charges
or levies, provided that payment thereof is not at the time required by Section
5.3;
(b) Liens of or resulting from any judgment or award, the time for the
appeal or petition for rehearing of which shall not have expired, or in respect
of which the Company or a Restricted Subsidiary shall at any time in good faith
be prosecuting an appeal or proceeding for a review and in respect of which a
stay of execution pending such appeal or proceeding for review shall have been
secured;
(c) any mechanic's, materialmen's, warehousemen's, supplier's or
vendor's lien or right in respect thereof, and deposits, pledges or liens to
secure statutory obligations or surety bonds or other Liens of like general
nature incurred in the ordinary course of business and not in connection with
the borrowing of money, provided that in each case
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the obligation secured is not overdue or, if overdue, is being contested in
good faith by appropriate actions or proceedings that will prevent a forfeiture
or sale of any property and an adequate book reserve shall have been set aside
with respect thereto;
(d) exceptions in the nature of easements, rights of others for
rights-of-way, utilities and other similar purposes, or zoning or other
restrictions as to the use of real properties which customarily exist on
properties of such kind and which do not materially impair their use and/or
value in the operation of the business of the Company and its Restricted
Subsidiaries;
(e) Liens existing as of the date hereof, securing Indebtedness of the
Company or any Restricted Subsidiary outstanding on such date, which are listed
in the attached Annex II;
(f) Liens incurred after the date hereof given to secure the payment
of the purchase price incurred in connection with the acquisition of tangible
personal property or real property, including Liens existing on such property
at the time of the acquisition thereof by the Company or a Restricted
Subsidiary, provided that (i) the Lien shall attach solely to the property
acquired or purchased, (ii) at the time of acquisition of such property, the
aggregate amount remaining unpaid on all Indebtedness secured by Liens on such
property whether or not assumed by the Company or a Restricted Subsidiary shall
not exceed an amount equal to 100% of the lesser of the total purchase price or
fair market value at the time of acquisition of such property (as determined in
good faith by the Board of Directors of the Company), or in the case of any
such Lien created or incurred in connection with any issue of industrial
development bonds or pollution control financing 100% of the lesser of the
total purchase price or fair market value at the time of such issuance of the
projects or facilities being financed or, in the case of any Capitalized Lease,
100% of the total purchase price or fair market value at the time of entering
into the Capitalized Lease of the property subject to such Capitalized Lease,
(iii) such Lien is incurred with respect to such fixed assets at the time of,
or within 90 days after, such acquisition; and (iv) the aggregate amount of
Indebtedness secured by Liens pursuant to this paragraph (f) does not exceed
20% of Consolidated Tangible Net Worth;
(g) Liens resulting from extensions, renewals, refinancings and
refundings of Indebtedness secured by Liens permitted by paragraphs (e) and (f)
above; provided there is no increase in the outstanding principal amount of
Indebtedness secured thereby and any new Liens attached only to the same
property theretofore subsequent to such earlier Lien;
(h) Liens securing Indebtedness owed by a Restricted Subsidiary to the
Company or to another Restricted Subsidiary; and
(i) Liens which are not permitted by the foregoing paragraphs (a)
through (h) above, and which are incurred to secure Indebtedness; provided that
(y) the aggregate
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principal amount of Indebtedness so secured and incurred pursuant to
this paragraph (i) plus (z) Subsidiary Funded Debt incurred pursuant
to Section 5.9(c) shall not, in the aggregate, exceed 15% of
Consolidated Tangible Net Worth.
5.11 Merger or Consolidation. The Company will not, and will not
permit any Restricted Subsidiary to, merge or consolidate with any other
Person, except that
(a) The Company may consolidate with or merge into any Person or
permit any other Person to merge into it, provided that immediately after
giving effect thereto,
(i) The Company is the successor corporation or, if the
Company is not the successor corporation, the successor corporation
is a corporation organized under the laws of a state of the United
States of America or the District of Columbia and shall expressly
assume in writing the Company's obligations under the Notes and this
Agreement;
(ii) There shall exist no Default or Event of Default; and
(iii) The Company or such successor corporation could incur
at least $1.00 of additional Funded Debt pursuant to Section 5.8.
(b) Any Restricted Subsidiary may (i) merge into the Company or
another Wholly-Owned Restricted Subsidiary or (ii) sell, transfer or lease all
or any part of its assets to the Company or to another Wholly-Owned Restricted
Subsidiary or (iii) merge into any Person which, as a result of such merger,
concurrently becomes a Restricted Subsidiary, provided in each such instance
that there shall exist no Default or Event of Default.
(c) The Company will not permit any Restricted Subsidiary to issue or
sell any shares of stock of any class (including as "stock" for the purposes of
this Section 5.11, any warrants, rights or options to purchase or otherwise
acquire stock or other securities exchangeable for or convertible into stock)
of such Restricted Subsidiary to any Person other than the Company or a
Wholly-Owned Restricted Subsidiary, except for the purpose of qualifying
directors, or except in satisfaction of the validly pre-existing preemptive
rights of minority shareholders in connection with the simultaneous issuance of
stock to the Company and/or a Restricted Subsidiary whereby the Company and/or
such Restricted Subsidiary maintain their same proportionate interest in such
Restricted Subsidiary.
(d) The Company will not sell, transfer or otherwise dispose of any
shares of stock in any Restricted Subsidiary (except to qualify directors) or
any Indebtedness of any Restricted Subsidiary, and will not permit any
Subsidiary to sell, transfer or otherwise dispose of (except to the Company or
a Wholly-Owned Restricted Subsidiary) any shares of stock or any Indebtedness
of any other Restricted Subsidiary, unless:
(i) simultaneously with such sale, transfer, or disposition,
all shares of stock and all Indebtedness of such Restricted
Subsidiary at the time owned by the Company
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and by every other Restricted Subsidiary shall be sold, transferred or disposed
of as an entirety;
(ii) the Board of Directors of the Company shall have
determined, as evidenced by a resolution thereof, that the retention
of such stock and Indebtedness is no longer in the best interests of
the Company;
(iii) such stock and Indebtedness is sold, transferred or
otherwise disposed of to a Person, for cash consideration and on
terms reasonably deemed by the Board of Directors to be adequate and
satisfactory;
(iv) the Subsidiary being disposed of shall not have any
continuing investment in the Company or any other Restricted
Subsidiary not being simultaneously disposed of; and
(v) such sale or other disposition of the assets of the
Company and its Subsidiaries is permitted by Section 5.12.
5.12 Sale of Assets. During any fiscal year, the Company will not, and
will not permit any Restricted Subsidiary to, sell, lease, transfer or
otherwise dispose of any assets, in one or a series of transactions, other than
in the ordinary course of business, to any Person, other than the Company or a
Wholly-Owned Restricted Subsidiary (collectively a "Disposition"), if after
giving effect to such Disposition, (i) the aggregate book value of all
Dispositions made during such fiscal year would exceed twenty percent (20%) of
Consolidated Tangible Net Worth as of the end of the immediately preceding
fiscal year or (ii) the Consolidated Net Income derived from all such assets
sold, leased, transferred or otherwise disposed of contributed in excess of 20%
of Consolidated Net Income determined as of the end of the Company's preceding
fiscal year. Notwithstanding the foregoing, the Company may make a Disposition
in excess of the aforesaid percentages if the Company shall, within 180 days
after such Disposition, use the net proceeds from the sale of such assets to
invest in other tangible property and of at least equivalent value for use in
the business of the Company and its Restricted Subsidiaries. For purposes of
this Section 5.12, sales of or realization on accounts receivable which have
been delinquent for no less than 90 days shall not constitute Dispositions;
provided, however, that such sales or realization shall not exceed, in the
aggregate, 10% of Consolidated Net Income as of the end of the immediately
preceding fiscal year.
5.13 Repurchase of Notes. Except as otherwise provided in Section 2.4,
neither the Company nor any Subsidiary or Affiliate, directly or indirectly,
may repurchase or make any offer to repurchase any Notes unless the offer has
been made in writing to each holder of Notes at the time outstanding to
repurchase Notes, pro rata, from all holders of the Notes at the same time and
upon the same terms. In case the Company, any Subsidiary or Affiliate
repurchases any Notes, such Notes shall thereafter be cancelled and such Notes
shall not be deemed to be outstanding for any of the purposes of this Agreement
or the Notes and no Notes shall be issued in substitution therefor.
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5.14 Transactions with Affiliates. The Company will not, and will not
permit any Subsidiary to, enter into or be a party to, any transaction or
arrangement with any Affiliate (including without limitation, the purchase
from, sale to or exchange of property with, or the rendering of any service by
or for, any Affiliate), except in the ordinary course of and pursuant to the
reasonable requirements of the Company's or such Subsidiary's business and upon
fair and reasonable terms no less favorable to the Company or such Subsidiary
than would obtain in a comparable arm's-length transaction with a Person other
than an Affiliate.
5.15 ERISA. (a) The Company agrees that all assumptions and methods
used to determine the actuarial valuation of employee benefits, both vested and
unvested, under any Plan of the Company or any Subsidiary, and each such Plan,
whether now or hereafter existing, will comply in all material respects with
ERISA and other applicable laws.
(b) The Company will not at any time permit any Plan established,
maintained or contributed to by it or any Subsidiary or "affiliate" (as defined
in Section 407(d)(7) of ERISA) to:
(i) engage in any "prohibited transaction" as such term is
defined in Section 4975 of the Code or in Section 406 of ERISA;
(ii) incur any "accumulated funding deficiency" as such term
is defined in Section 302 of ERISA, whether or not waived; or
(iii) be terminated under circumstances which are likely to
result in the imposition of a Lien on the property of the Company or
any Subsidiary pursuant to Section 4068 of ERISA, if and to the
extent such termination is within the control of the Company;
if the event or condition described in (i), (ii) or (iii) above is likely to
subject the Company or any Subsidiary or "affiliate" (as defined in Section
407(d)(7) of ERISA) to a liability which, in the aggregate, is material in
relation to the business, operations, property or condition, financial or
other, of the Company or any of its Subsidiaries.
(c) Upon the request of you or any other Institutional Holder, the
Company will furnish a copy of the annual report of each Plan (Form 5500)
required to be filed with the Internal Revenue Service. Copies of annual
reports shall be delivered no later than 30 days after the later of the date
such report has been filed with the Internal Revenue Service or the date the
copy is requested.
5.16 Financial Reports and Rights of Inspection. The Company will
furnish by overnight courier to each other Institutional Holder of the then
outstanding Notes (in duplicate if so requested):
(a) Quarterly Statements. As soon as available and in any event within
45 days after the end of each of the first three quarterly fiscal periods of
each fiscal year, copies of:
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(i) consolidated balance sheets of the Company and its
Restricted Subsidiaries as of the close of such quarter setting forth
in comparative form the figures for the corresponding period of the
preceding fiscal year;
(ii) consolidated statements of income and cash flows of the
Company and its Restricted Subsidiaries for such quarterly period and
for the portion of the fiscal year ending with such quarter, setting
forth in comparative form the figures for the corresponding periods of
the preceding fiscal year; and
(iii) consolidated statements of changes in stockholder's
equity of the Company and its Restricted Subsidiaries for the portion
of the fiscal year ending with such quarter, setting forth in
comparative form the figures for the corresponding period of the
preceding fiscal year, all in reasonable detail prepared in
accordance with generally accepted accounting principles consistently
applied (except for such changes as are disclosed in such financial
statements or in the notes thereto and concurred in by the Company's
independent certified public accountants) subject to normal year-end
adjustments and certified as complete and correct and as fairly
presenting the financial condition and results from operations of the
Company and its Restricted Subsidiaries by an authorized financial
officer of the Company;
(b) Annual Statements. As soon as available and in any event within
120 days after the last day of each fiscal year of the Company, copies of:
(i) consolidated balance sheets of the Company and its
Restricted Subsidiaries as of the end of such fiscal year, and
(ii) consolidated statements of income, cash flows and
changes in stockholder's equity of the Company and its Restricted
Subsidiaries for such fiscal year, in each case setting forth in
comparative form the consolidated and consolidating figures for the
preceding fiscal year, all in reasonable detail and accompanied by an
opinion thereon (which shall not be qualified by reasons of any
limitation as to scope) of Deloitte & Touche, or any other firm of
independent public accountants of recognized national standing
selected by the Company, to the effect that the consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles consistently applied (except for noted changes
in application in which such accountants concur) and present fairly
the financial condition of the Company and its Restricted Subsidiaries
and that the examination of such accountants in connection with such
financial statements has been made in accordance with generally
accepted auditing standards and accordingly, includes such tests of
the accounting records and such other auditing procedures as were
considered necessary in the circumstances;
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(c) Summary Consolidating Information. On the dates that the Company
provides the quarterly and annual statements to the Noteholders required by
paragraphs (a) and (b) above, the Company shall also provide to the Noteholders
summary consolidating financial information for the Company and each
Restricted Subsidiary (whether now or hereafter designated) in the form
attached hereto as Annex VI;
(d) Audit Reports. Promptly upon receipt thereof, delivered by
overnight courier, one copy of each interim or special audit made by
independent accountants of the books of the Company or any Restricted
Subsidiary, and the Company's or such Subsidiary's written response, if any,
thereto;
(e) SEC and Other Reports. Promptly upon their becoming available,
delivered by overnight courier, one copy of each report, and any registration
statement or prospectus filed by the Company or any Restricted Subsidiary with
any securities exchange or the Securities and Exchange Commission or any
successor agency, and copies of any orders in any proceedings to which the
Company or any of its Subsidiaries is a party, issued by any governmental
agency, Federal or state, having jurisdiction over the Company or any of its
Restricted Subsidiaries;
(f) Materials Sent to Stockholders. Promptly upon their becoming
available, delivered by overnight courier, one copy of each financial
statement, report, notice or proxy statement sent by the Company or any
Restricted Subsidiary to stockholders generally;
(g) Officers' Certificates. Within the periods provided in paragraphs
(a) and (b) above, a certificate of an authorized financial officer of the
Company, delivered by overnight courier, stating that he has reviewed the
provisions of this Agreement and setting forth: (i) the information and
computations (in sufficient detail) required in order to establish whether the
Company was in compliance with the requirements of Section 5.7 through Section
5.12, inclusive, at the end of the period covered by the financial statements
then being furnished, and (ii) whether there existed as of the date of such
financial statements and whether, to the best of such officer's knowledge,
there exists on the date of the certificate or existed at any time during the
period covered by such financial statements any Default or Event of Default
and, if any such condition or event existed during such period or exists on the
date of the certificate, specifying the nature and period of existence thereof
and the action the Company has taken, is taking or proposes to take with
respect thereto;
(h) Accountant's Certificates. Within the period provided in paragraph
(b) above, a certificate of the accountants who render an opinion with respect
to such financial statements, delivered by overnight courier, stating that they
have reviewed this Agreement and stating further, whether in making their
audit, such accountants have become aware of any Default or Event of Default
under any of the terms or provisions of this Agreement insofar as any such
terms or provisions pertain to or involve accounting matters or determinations,
and if any such condition or event then exists, specifying the nature and
period of existence thereof; and
(i) Litigation. Within 15 days after the Company obtains knowledge
thereof, notice, delivered by overnight courier, of any pending or threatened
litigation not fully covered by
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insurance or as to which an insurance company has not accepted liability or
governmental proceeding against the Company or any Restricted Subsidiary in
which the damages sought exceed $5,000,000, individually or in the aggregate,
or which might otherwise materially adversely affect the business, operations
or condition, financial or other, of the Company or any of its Restricted
Subsidiaries; and
(j) Requested Information; Inspections: Confidentiality. (i) With
reasonable promptness, such other data and information as you or any such
Institutional Holder may reasonably request.
(ii) Without limiting the foregoing, the Company will permit
you, so long as you are the holder of any Note, and each Institutional Holder
of the then outstanding Notes (or such Persons as either you or such holder may
designate), to visit and inspect any of the properties of the Company or any
Subsidiary, to examine all their books of account, records, reports and other
papers, to make copies and extracts therefrom, and to discuss their respective
affairs, finances and accounts with their respective officers, employees, and
independent public accountants (and by this provision the Company authorizes
said accountants to discuss with you the finances and affairs of the Company
and its Subsidiaries) all at such reasonable times and as often as may be
reasonably requested. The Company shall not be required to pay or reimburse you
or any such holder for expenses which you or any such holder may incur in
connection with any such visitation or inspection so long as no Default or
Event of Default shall have occurred and be continuing.
(iii) You and each other Noteholder agrees to treat any
information obtained by such Person pursuant to this Section 5.16 which is
marked and otherwise treated as confidential by the Company as confidential;
provided, however, that nothing herein contained shall limit or impair the
right or obligation of any holder of the Notes to disclose such information:
(i) to its directors, auditors, attorneys, employees or agents who would have
access to such information in the normal course of the performance of such
Person's duties, (ii) when required by any law, ordinance or governmental
order, regulation, rule, policy, investigation or any regulatory authority
request, (iii) as may be required in any report, statement or testimony
submitted to any municipal, state, provincial or federal regulatory body having
or claiming to have jurisdiction over such Noteholder or to the National
Association of Insurance Commissioners or similar organizations or their
successors, (iv) in connection with the enforcement of the terms and conditions
of this Agreement and the Notes, (v) which is publicly available or readily
ascertainable from public sources, or which is received by any Noteholder of
the Notes from a third Person who or which is not bound to keep the same
confidential, (vi) in connection with any proceeding, case or matter pending
(or on its face purported to be pending) before any court, tribunal,
arbitration board or any governmental agency, commission, authority, board or
similar entity, (vii) to the extent necessary in connection with any
contemplated transfer of any of the Notes by a Noteholder or (viii) to any
other holder of the Notes.
5.17 Filings with S&P and NAIC. The Company consents to the filing of
copies of this Agreement with Standard & Poor's Corporation ("S&P") in
connection with obtaining a "private placement number" from S&P. The Company
further consents to the furnishing to the
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National Association of Insurance Commissioners of copies of the audited
consolidated financial statements referred to in Paragraph (b) of Section 5.16.
5.18 Information to Prospective Purchasers. In the case that the
Company is not subject to Section 13 or l 5(d) of the Securities Exchange Act
of 1934, as amended, the Company agrees, upon the request of any Institutional
Holder, to deliver to the Institutional Holder and any prospective purchaser
designated by such Institutional Holder promptly following the request of such
Institutional Holder or such prospective purchaser the following information:
(i) a brief statement of the nature of the business of the
Company and the products and services it offers, current as of a date
within 11 months of such request;
(ii) the audited financial statements of the Company referred
to in Paragraph (b) of Section 5.16 for the most recent fiscal year
for which such financial statements are required to be delivered
pursuant to Paragraph (b) of Section 5.16 and for the two immediately
preceding fiscal years;
(iii) unaudited financial statements of the Company referred
to in Paragraph (a) of Section 5.16 for the most recent fiscal period
for which such financial statements are required to be delivered
pursuant to Paragraph (a) of Section 5.16 and for the comparable
fiscal period for each of the two immediately preceding fiscal years;
and
(iv) such other information which the Institutional Holder or
the prospective purchaser may reasonably request in order to comply
with the information requirements of Rule 144A.
Section 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR
6.1 Events of Default. Any one or more of the following shall
constitute an "Event of Default" as the term is used herein:
(a) Default shall occur in the payment of interest on any Note when
the same shall have become due and such default shall continue for more than
five Business Days; or
(b) DEFAULT SHALL occur in the making of any required prepayment on
any of the Notes as provided in Section 2.1 or in the making of any other
payment of the principal of any Note or the Make-Whole Amount thereon at the
expressed or any accelerated maturity date or at any date fixed for prepayment;
or
(c) Default shall be made in the payment of the principal of or
interest or premium on Indebtedness of the Company or any Restricted Subsidiary
aggregating in excess of $2,000,000, as and when the same shall become due and
payable by the lapse of time, by declaration, by call for redemption or
otherwise, and such default shall continue beyond the period of grace, if any,
allowed with respect thereto; or
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(d) Default or the happening of any event shall occur under any
indentures, agreements, or other instruments under which any Indebtedness of
the Company or any Restricted Subsidiary aggregating in excess of $2,000,000
may be issued and such default or event shall continue for a period of time
sufficient to permit the acceleration of the maturity of Indebtedness of the
Company or any Restricted Subsidiary outstanding thereunder; or the sums due
thereunder shall have been accelerated and such acceleration shall not have
been annulled or rescinded; or
(e) Default shall occur in the observance or performance of any
covenant or agreement contained in Sections 5.7 through 5.12, inclusive; or
(f) Default shall occur in the observance or performance of any other
provision of this Agreement which is not remedied within 30 calendar days after
such default shall have become known to any offlcer of the Company; or
(g) Any representation or warranty made by the Company herein, or made
by the Company in any statement or certificate furnished by the Company in
connection with the consummation of the issuance and delivery of the Notes or
furnished by the Company pursuant hereto, is untrue as of the date of the
issuance or making thereof; or
(h) Any judgment, writ or warrant of attachment or any similar process
in an aggregate amount in excess of $2,000,000 shall be entered or filed
against the Company or any Restricted Subsidiary or against any property or
assets of either and remain unpaid, unvacated, unbonded or unstayed (through
appeal or otherwise) for a period of 30 days after the Company receives notice
thereof; or
(i) The Company or any Subsidiary shall incur a "Distress Termination"
(as defined in Title IV of ERISA) of any Plan or any trust created thereunder
which results in material liability to the PBGC, the PBGC shall institute
proceedings to terminate any Plan or any trust created thereunder, or a trustee
shall be appointed by a United States District Court pursuant to Section
4042(b) of ERISA to administer any Plan or any trust created thereunder; or
(j) The Company or any Restricted Subsidiary shall
(i) generally not pay its debts as they become due or admit
in writing its inability to pay its debts generally as they become due;
(ii) file a petition in bankruptcy or for reorganization or
for the adoption of an arrangement under the Federal Bankruptcy Code
or any similar applicable bankruptcy or insolvency law, as now or in
the future amended (herein collectively called "Bankruptcy Laws"), or
an answer or other pleading admitting or failing to deny the material
allegations of such a petition or seeking, consenting to or
acquiescing in relief provided for under the Bankruptcy Laws;
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(iii) make an assignment of all or a substantial part of its
property for the benefit of its creditors;
(iv) seek or consent to or acquiesce in the appointment of
a receiver, liquidator, custodian or trustee of it or for all or a
substantial part of its property;
(v) be subject to the entry of a court order, which shall
not be vacated, set aside or stayed within 45 days from the date of
entry, appointing a receiver, liquidator, custodian or trustee of it
or for all or a substantial part of its property;
(vi) be subject to the institution against it of bankruptcy,
reorganization, arrangement or insolvency proceedings, or other
proceedings pursuant to the Bankruptcy Laws or any other proceedings
for judicial modification or alteration of the rights of creditors,
which proceedings are not dismissed within 60 days after such
institution or which otherwise result in the Company or such
Restricted Subsidiary being finally adjudicated a bankrupt or
insolvent; or
(vii) be subject to the assumption of custody or
sequestration by a court of competent jurisdiction of all or a
substantial part of its property, which custody or sequestration shall
not be suspended or terminated within 60 days from its inception;
6.2 Acceleration of Maturities. When any Event of Default described in
paragraph (a) or (b) of Section 6.1 has occurred and is continuing, any holder
of any Note may, and when any Event of Default described in paragraphs (c)
through (i), both inclusive, of said Section 6.1 has occurred and is
continuing, the holder or holders of 25 % or more of the principal amount of
the Notes at the time outstanding may, by notice in writing, declare the entire
principal, together with the Make-Whole Amount set forth below, and all
interest accrued on all Notes, to be, and all Notes shall thereupon become,
forthwith due and payable, without any presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived. When any Event of
Default described in paragraph (j) of Section 6.1 has occurred and is
continuing, all of the Notes, together with the Make-Whole Amount set forth
below and all interest accrued thereon, shall automatically become forthwith
due and payable, without any presentment, demand, protest or notice of any
kind, all of which are hereby expressly waived. Upon the Notes becoming due and
payable as a result of any Event of Default as aforesaid, the Company will
forthwith pay to the holders of the Notes the entire principal and interest
accrued on the Notes and, to the extent permitted by law, as liquidated
damages, a premium equal to the Make-Whole Amount. The Company further agrees
to pay to the holder or holders of the Notes all costs and expenses incurred by
them in the collection or enforcement of any Notes upon any default hereunder
or thereon, including reasonable compensation to such holder's or holders'
attorneys for all services rendered in connection therewith.
6.3 Rescission of Acceleration. The provisions of Section 6.2 are
subject to the condition that if the principal of and accrued interest on all
or any outstanding Notes have been declared immediately due and payable by
reason of the occurrence of any Event of Default, the holders of 67 % in
aggregate principal amount of the Notes then outstanding may, by written
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instrument filed with the Company, rescind and annul such declaration and the
consequences thereof, provided that at the time such declaration is annulled
and rescinded:
(a) no judgment or decree has been entered for the payment of any
monies due pursuant to the Notes or this Agreement;
(b) all arrears of interest upon all the Notes and all other sums
payable under the Notes and under this Agreement (except any principal,
interest or Make-Whole Amount on the Notes which has become due and payable
solely by reason of such declaration under Section 6.2) shall have been duly
paid; and
(c) each and every other Default and Event of Default shall have been
made good, cured or waived pursuant to Section 7.1;
and provided further, that no such rescission and annulment shall extend to or
affect any subsequent Event of Default or impair any right consequent thereto.
6.4 Other Remedies. If any Event of Default shall be continuing, any
holder of Notes may enforce its rights by suit in equity, by action at law, or
by any other appropriate proceedings, whether for the specific performance (to
the extent permitted by law) of any covenant or agreement contained in this
Agreement or in the Notes or in aid of the exercise of any power granted in
this Agreement, and may enforce the payment of any Note held by such holder and
any of its other legal or equitable rights.
6.5 Conduct No Waiver: Collection Expenses. No course of dealing on
the part of any holder of Notes, nor any delay or failure on the part of any
holder of Notes to exercise any of its rights, shall operate as a waiver of
such rights or otherwise prejudice such holder's rights, powers and remedies.
If the Company fails to pay, when due, the principal of, or the Make-Whole
Amount, if any, or interest on, any Note, or fails to comply with any other
provision of this Agreement, the Company will pay to each holder, to the extent
permitted by law, on demand, such further amounts as shall be sufficient to
cover the cost and expenses, including but not limited to reasonable attomeys'
fees, incurred by such holders of the Notes in collecting any sums due on the
Notes or in otherwise enforcing any of their rights.
6.6 Remedies Cumulative. No right or remedy conferred upon or reserved
to any holder of Notes under this Agreement is intended to be exclusive of any
other right or remedy, and every right and remedy shall be cumulative and in
addition to every other right or remedy given hereunder or now or hereafter
existing under any applicable law. Every right and remedy given by this
Agreement or by applicable law to any holder of Notes may be exercised from
time to time and as often as may be deemed expedient by such holder, as the
case may be.
6.7 Notice of Default. With respect to Events of Default or claimed
defaults, the Company will give the following notices:
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(a) The Company promptly, but in any event within three Business Days,
will furnish to each holder of a Note written notice of the occurrence of a
Default or an Event of Default. Such notice shall specify the nature of such
Default or Event of Default, the period of existence thereof and what action
the Company has taken or is taking or proposes to take with respect thereto.
(b) If the holder of any Note or of any other evidence of Indebtedness
of the Company or any Subsidiary gives any notice or takes any other action
with respect to a claimed default, the Company will forthwith give written
notice thereof to each holder of the then outstanding Notes, describing the
notice or action and the nature of the claimed default.
Section 7. AMENDMENTS, WAIVERS AND CONSENTS
7.1 Consent Required. Any term, covenant, agreement or condition of
this Agreement may, with the consent of the Company, be amended or compliance
therewith may be waived (either generally or in a particular instance and
either retroactively or prospectively), if the Company shall have obtained the
consent in writing of the holders of at least 67% in aggregate principal amount
of Notes then outstanding; provided that without the written consent of the
holders of all of the Notes then outstanding, no such waiver, modification,
alteration or amendment shall be effective (i) which will change the time of
payment (including any prepayment required by Section 2.1) of the principal of
or the interest on any Note or Make-Whole Amount or reduce the principal amount
of any Note or the Make-Whole Amount, if any, or change the rate of interest
thereon, or (ii) which will change any of the provisions with respect to
optional prepayments, or (iii) which will change the percentage of holders of
the Notes required to consent to any such amendment, alteration or modification
or (iv) which will change any of the provisions of Section 2.6, 2.7, 5.13 or 6
or this Section 7.
For the purpose of determining whether holders of the requisite
principal amount of Notes have made or concurred in any waiver, consent,
approval, notice or other communication under this Agreement, Notes held in the
name of, or owned beneficially by, the Company, any Subsidiary or any Affiliate
of any thereof, shall not be deemed outstanding.
7.2 Effect Amendment or Waiver. Any such amendment or waiver shall
apply equally to all of the holders of the Notes and shall be binding upon
them, upon each future holder of any Note and upon the Company, whether or not
such Note shall have been marked to indicate such amendment or waiver. No such
amendment or waiver shall extend to or affect any obligation not expressly
amended or waived or impair any right consequent thereon.
7.3 Solicitation of Noteholders. The Company will not solicit, request
or negotiate for or with respect to any proposed waiver or amendment of any of
the provisions of this Agreement or the Notes unless each holder of the Notes
(irrespective of the amount of Notes then owned by it) shall be informed
thereof by the Company and shall be afforded the opportunity of considering the
same and shall be supplied by the Company with sufficient information to enable
it to make an informed decision with respect thereto. Executed or true and
correct copies of any
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waiver or consent effected pursuant to the provisions of this Section 7 shall
be delivered by the Company to each holder of outstanding Notes within fifteen
(15) days of the date on which the same shall have been executed and
delivered by the holder or holders of the requisite percentage of outstanding
Notes. Except as otherwise provided in Section 2.4, the Company will not, and
will not permit any Subsidiary or Affiliate to, directly or indirectly, pay or
cause to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, to any holder of the Notes as consideration for or
as inducement to the entering into by any holder of the Notes of any waiver or
amendment of any of the terms and provisions of the Agreements unless such
remuneration is concurrently paid, on the same terms, ratably to the holders of
all the Notes then outstanding.
Section 8. INTERPRETATION OF AGREEMENT; DEFINITIONS
8.1 Definitions. Unless the context otherwise requires, the terms
hereinafter set forth when used herein shall have the following meanings and
the following definitions shall be equally applicable to both the singular and
plural forms of any of the terms herein defined:
"Affiliate" shall mean any Person (other than a Subsidiary) (i) which
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, the Company, (ii) which
beneficially owns or holds 5% or more of any class of the Voting Stock of the
Company or (iii) 5% or more of the Voting Stock (or in the case of a Person
which is not a corporation, 5% or more of the equity interest) of which is
beneficially owned or held by the Company or a Subsidiary. The term "affiliate"
shall mean, as to any particular Person other than the Company, any Person
which directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with such Person. The term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of Voting Stock, by contract or otherwise.
"Business Day" shall mean a day other than a Saturday, Sunday or a
legal holiday or a day on which banking institutions in Chicago, Illinois or
Atlanta, Georgia are authorized by law to close.
"Capitalized Lease" shall mean any lease of property, real or
personal, the obligation for Rentals with respect to which is required to be
capitalized in accordance with generally accepted accounting principles.
"Capitalized Rentals" shall mean as of the date of any determination
the amount at which the aggregate Rentals due and to become due under all
Capitalized Leases under which the Company or any Subsidiary is a lessee would
be reflected as a liability on a consolidated balance sheet of the Company and
its Subsidiaries.
"Change in Control" shall mean the acquisition, through purchase or
otherwise (including the agreement to act in concert without more), by any
Person or group of Persons acting in
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concert, directly or indirectly, in one or more transactions, of beneficial
ownership of securities representing more than 30% of the combined voting power
of the Company's Voting Stock, determined on the date prior to the date of such
acquisition. For purposes of this definition, "beneficial ownership" shall have
the meaning set forth in Rule 13d-3 under the Exchange Act.
"Consolidated Funded Debt" as of any date of determination thereof
shall mean Funded Debt of the Company and its Restricted Subsidiaries
determined on a consolidated basis in accordance with generally accepted
accounting principles.
"Consolidated Net Capitalization" shall mean, on a consolidated basis
for the Company and its Restricted Subsidiaries, total assets (excluding
minority interests) less investments (including minority interests) in and
loans to Unrestricted Subsidiaries, less all items that would appear on the
liability side of a balance sheet except capital stock, surplus and Funded
Debt, all determined in accordance with generally accepted accounting
principles.
"Consolidated Net Income" or "Consolidated Net Loss" for any period
shall mean the gross revenues of the Company and its Restricted Subsidiaries
for such period, less all expenses and other proper charges (including taxes on
income), determined on a consolidated basis in accordance with generally
accepted accounting principles consistently applied and after eliminating
earnings or losses attributable to outstanding minority interests, but
excluding in any event:
(a) any gains or losses on the sale or other disposition (other than
in the ordinary course of business) of investments or fixed or capital assets,
and any taxes on such excluded gains and any tax deductions or credits on
account of any such excluded losses;
(b) the proceeds of any life insurance policy on the life of any
officer, director or employee of the Company or any of its Restricted
Subsidiaries;
(c) net income and losses of any Restricted Subsidiary accrued prior
to the date it became a Restricted Subsidiary;
(d) net income and losses of any corporation (other than a Restricted
Subsidiary), substantially all of the assets of which have been acquired by the
Company or any Restricted Subsidiary in any manner, realized by such other
corporation prior to the date of such acquisition;
(e) net income and losses of any corporation (other than a Restricted
Subsidiary) with which the Company or a Restricted Subsidiary shall have
consolidated or which shall have merged into or with the Company or a
Restricted Subsidiary prior to the date of such consolidation or merger;
(f) net income of any business entity (other than a Restricted
Subsidiary) in which the Company or any Restricted Subsidiary has an ownership
interest unless such net income shall
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have actually been received by the Company or such Restricted Subsidiary in the
form of cash distributions;
(g) any portion of the net income of any Restricted Subsidiary which
for any reason is unavailable for payment of dividends to the Company or any
other Restricted Subsidiary;
(h) earnings resulting from any reappraisal, revaluation or
write-up of assets;
(i) any deferred or other credit representing any excess of the equity
in any Restricted Subsidiary at the date of acquisition thereof over the amount
invested in such Restricted Subsidiary;
(j) any gain arising from the acquisition of any securities of the
Company or any Restricted Subsidiary;
(k) any reversal of any contingency reserve, except to the extent that
provisions for such contingency reserve shall have been made from income
arising during such period; and
(l) any other extraordinary gain.
"Consolidated Net Worth" shall mean Consolidated Net Capitalization
less Consolidated Funded Debt, all determined in accordance with generally
accepted accounting principles.
"Consolidated Tangible Net Worth" shall mean Consolidated Net Worth
less all goodwill, trade names, trademarks, patents, organization expense,
unamortized debt discount and expense and other similar intangibles properly
classified as such in accordance with generally accepted accounting principles;
provided, however, that, in computing Consolidated Tangible Net Worth, the
Company shall include intangible assets in an amount equal to $16,000,000.
"Current Debt" shall mean all Indebtedness for borrowed money or which
has been incurred in connection with the acquisition of property or assets, the
final maturity of which Indebtedness is one year or less from the date of
determination.
"Default" shall mean any event or condition, the occurrence of which
would, with the lapse of time or the giving of notice, or both, constitute an
Event of Default as defined in Section 6. 1.
"Determination Date" shall mean the date which is three (3) business
days before the date fixed for a prepayment pursuant to Section 2.2, 2.3 or 2.4
or the date of declaration of acceleration pursuant to Section 6.2.
"Event of Default" shall have the meaning assigned thereto in Section
6.1.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and as it may be further amended from time to time.
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"FASB 106" shall mean Statement of Accounting Standards No. 106,
Employers' Accounting for Postretirement Benefits Other Than Pensions, issued
by the Financial Accounting Standards Board of the Financial Accounting
Foundation.
"Funded Debt" of any Person shall mean (i) all Indebtedness for
borrowed money or which has been incurred in connection with the acquisition of
property or assets in each case having a final maturity of more than one year
from the date of origin thereof (or which is renewable or extendible at the
option of the obligor for a period or periods more than one year from the date
of origin), excluding current maturities which are included as current
liabilities on the balance sheet of such Person prepared in accordance with
generally accepted accounting principles, (ii) all Capitalized Rentals, (iii)
all Guaranties of Funded Debt of others and (iv) the amount by which Current
Debt outstanding (if any) at the last day of a thirty day period within the
previous twelve months representing the lowest daily levels of Current Debt for
a thirty day period during such previous twelve months exceeds zero; provided,
however, that Funded Debt shall not include any policy loans against the cash
value of life insurance policies which are reflected on a net asset basis in
accordance with generally accepted accounting principles.
"Guaranties" by any Person shall mean all obligations (other than
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect, guaranteeing
any indebtedness, dividend or other obligation, of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, all obligations incurred through an agreement, contingent
or otherwise, by such Person: (i) to purchase such Indebtedness or obligation
or any property or assets constituting security therefor, (ii) to advance or
supply funds (x) for the purchase or payment of such Indebtedness or
obligation, or (y) to maintain fixed charge coverage or working capital or
other balance sheet condition or otherwise to advance or make available funds
for the purchase or payment of such Indebtedness or obligation, or (iii) to
lease property or to purchase securities or other property or services
primarily for the purpose of assuring the owner of such Indebtedness or
obligation of the ability of the primary obligor to make payment of the
Indebtedness or obligation, or (iv) otherwise to assure the owner of the
Indebtedness or obligation of the primary obligor against loss in respect
thereof. For the purposes of all computations made under this Agreement, a
Guaranty in respect of any Indebtedness for borrowed money shall be deemed to
be Indebtedness equal to the principal amount of such Indebtedness for borrowed
money which has been guaranteed, and a Guaranty in respect of any other
obligation or liability or any dividend shall be deemed to be Indebtedness
equal to the maximum aggregate amount of such obligation, liability or
dividend.
"Indebtedness" of any Person shall mean and include all obligations of
such Person which in accordance with generally accepted accounting principles
shall be classified upon a balance sheet of such Person as liabilities of such
Person, and in any event shall include all (i) obligations of such Person for
borrowed money or which has been incurred in connection with the acquisition of
property or assets, (ii) obligations secured by any Lien on property or assets
owned by such Person, even though such Person has not assumed or become liable
for the payment of such obligations, (iii) obligations created or arising under
any conditional sale or other title
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retention agreement with respect to property acquired by such Person,
notwithstanding the fact that the rights and remedies of the seller, lender or
lessor under such agreement in the event of default are limited to repossession
or sale of property, (iv) Guaranties, (v) Capitalized Rentals under any
Capitalized Lease and (vi) any recourse obligations arising upon a sale of
assets. For the purpose of computing "Indebtedness" of any Person, there shall
be excluded any particular Indebtedness to the extent that, upon or prior to
the maturity thereof, there shall have been irrevocably deposited with the
proper depositary in trust the necessary funds (or evidences of indebtedness or
other securities, if permitted by the instrument creating such Indebtedness)
for the payment, redemption or satisfaction of such Indebtedness; and
thereafter such funds and evidences of Indebtedness so deposited shall not be
included in any computation of the assets of such Person.
"Institutional Holder" shall mean any bank, trust company, insurance
company, pension fund, investment company or other financial institution,
including, without limiting the foregoing, any "qualified institutional buyer"
within the meaning of Rule 144A, which is or becomes a holder of any Note.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind, including any agreement to grant any
of the foregoing, any conditional sale or other title retention agreement, any
lease in the nature thereof (including Capitalized Leases), and the filing of
or agreement to file any financing statement under the Uniform Commercial Code
of any jurisdiction in connection with any of the foregoing.
"Make-Whole Amount" shall mean at any Determination Date with respect
to Notes being prepaid pursuant to Section 2.2, 2.3 or 2.4 or paid as a result
of the existence of an Event of Default pursuant to Section 6.2, to the extent
that the Reinvestment Yield on such Determination Date is lower than the
interest rate payable on or in respect of the Notes, the excess of (a) the
present value of the remaining principal and interest payments to become due
(exclusive of accrued interest on the Notes through the date of prepayment) on
the Notes to be prepaid, all determined by discounting such payments at a rate
that is equal to the Reinvestment Yield over (b) the aggregate principal amount
of the Notes on such series then to be paid or prepaid. To the extent that the
Reinvestment Yield on any Determination Date is equal to or higher than the
interest rate payable on or in respect of the Notes, the Make-Whole Amount is
zero.
"Material Adverse Effect" shall mean a material adverse effect on the
business, properties, prospects and profits, operations or condition, financial
or otherwise, of the Company and its Subsidiaries taken as a whole.
"Non-Fundamental Change" shall mean any amendment, waiver,
modification or alteration to this Agreement except one (i) which will change
the time of payment (including any prepayment required by Section 2.1 ) of the
principal of or the interest on any Note or Make-Whole Amount or reduce the
principal amount of any Note or the Make-Whole Amount, if any, or change the
rate of interest thereon, or (ii) which will change any of the provisions with
respect to optional prepayments, or (iii) which will change the percentage of
holders of the Notes
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required to consent to any such amendment, waiver, modification or alteration
or (iv) which will change any of the provisions of Section 2.6, 2.7, 5.13 or 6
or Section 7.
"Non-Fundamental Change Request" shall mean any written request for
the Noteholders to consent to a Non-Fundamental Change pursuant to Section 7.1.
Each Non-Fundamental Change Request shall (i) request a written consent of the
Noteholders to the Non-Fundamental Change within not less than 10 days nor more
than 30 days after the date on which such Non-Fundamental Change Request was
received by such Noteholder and (ii) state that, unless the Company receives a
written consent from such Noteholder to the Non-Fundamental Change within the
time specified in such Non-Fundamental Change Request, the Company may prepay
all Notes held by each non-consenting Noteholder in accordance with Section
2.4.
"Noteholders" shall mean any holder of a Note.
"Person" shall mean an individual, partnership, corporation, trust,
estate or unincorporated organization, and a government or agency or political
subdivision thereof.
"Reinvestment Yield" shall mean the sum of (i) the yield set forth on
page "USD" of the Bloomberg Financial Markets Service at 11:00 a.m. Central
Time on the Determination Date opposite the maturity of the U.S. Treasury
Security corresponding to the Weighted Average Life to Maturity, rounded to the
nearest month, of the principal amount of the Notes to be prepaid, plus (ii)
(A) .50 of 1% with respect to Notes to be prepaid pursuant to Section 2.2 or
2.4 or Notes the payment of which has been accelerated with premium pursuant to
Section 6.2 or (B) .75 of 1% with respect to Notes to be prepaid pursuant to
Section 2.3. If no maturity exactly corresponding to such rounded Weighted
Average Life to Maturity shall appear therein, yields for the two most closely
corresponding published maturities (one of which occurs prior and the other
subsequent to the Weighted Average Life to Maturity) shall be calculated
pursuant to the foregoing sentence and the Reinvestment Yield shall be
interpolated from such yields on a straight-line basis (rounding in each of
such relevant periods to the nearest month).
"Rentals" shall mean and include all rents (including as such all
payments which the lessee is obligated to make to the lessor on termination of
the lease or surrender of the property) payable by the Company or a Subsidiary,
as lessee or sublessee under a lease of real or personal property, but shall
be exclusive of any amounts required to be paid by the Company or a Subsidiary
(whether or not designated as rents or additional rents) on account of
maintenance, repairs, insurance, taxes, and similar charges.
"Restricted Subsidiary" shall mean any Subsidiary in which the Company
or its Restricted Subsidiaries owns 80% or more of the Voting Stock and which
is not an Unrestricted Subsidiary.
"Rule 144A" shall mean Rule 144A promulgated pursuant to the
Securities Act, as such rule may be amended from time to time.
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"Securities Act" shall mean the Securities Act of 1933, as amended,
and as it may be further amended from time to time.
"Senior Funded Debt" shall mean the Notes and any other Funded Debt
which is not expressed to be subordinate or junior in right of payment to any
other Indebtedness of the Company.
"Subsidiary" shall mean a subsidiary of the Company; "subsidiary"
shall mean, as to any particular parent corporation, any corporation of which
more than 50% (by number of votes) of the Voting Stock shall be owned or
controlled by such parent corporation and/or one or more corporations which are
themselves subsidiaries of such parent corporation.
"Unrestricted Subsidiary" shall mean any Subsidiary that has been
designated by the Company's Board of Directors as an Unrestricted Subsidiary,
provided that the Subsidiary has not been previously designated as a Restricted
Subsidiary and at the time of such designation (i) the Subsidiary so designated
neither owns, directly or indirectly, any Funded Debt or capital stock of any
Restricted Subsidiary and (ii) immediately thereafter the Company could incur
an additional $1 of Funded Debt pursuant to Section 5.8.
"Voting Stock" shall mean the capital stock of any class or classes of
a corporation, the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of the members of the board of
directors of such corporation, or Persons performing similar functions
(irrespective of whether or not at the time stock of any class shall have or
might have special voting power or rights by reason of the happening of any
contingency). Reference to a percentage of Voting Stock shall mean a percentage
of the votes represented by such Voting Stock and not to the number of shares
if there are classes of Voting Stock possessing different voting rights.
"Weighted Average Life to Maturity" shall mean, at any date, the
number of years obtained by dividing (a) the then outstanding principal amount
of the Notes to be prepaid into (b) the sum of the products obtained by
multiplying (i) the amount of each then remaining installment, sinking fund,
serial maturity or other required payment, including payment at final maturity,
foregone by such prepayment of the Notes, calculated prior to the making of any
such prepayment of the Notes by (ii) the number of years (calculated to the
nearest 1/12th) which will elapse between such date and the making of such
payment.
"Wholly-Owned" when used in connection with any Subsidiary shall mean
a Subsidiary of which all of the issued and outstanding shares of stock (except
shares required as directors' qualifying shares) and all Indebtedness for
borrowed money shall be owned by the Company and/or one or more of its
Wholly-Owned Subsidiaries.
Terms which are defined in other Sections of this Agreement shall have
the meanings specified therein.
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8.2 Accounting Principles. Where the character or amount of any asset
or liability or item of income or expense is required to be determined or any
consolidation or other accounting computation is required to be made for the
purposes of this Agreement, the same shall be done in accordance with generally
accepted accounting principles in force in the United States from time to time,
except where such principles are inconsistent with the requirements of this
Agreement.
8.3 Directly or Indirectly. Where any provision in this Agreement
refers to action to be taken by any Person, or which such Person is prohibited
from taking, such provision shall be applicable whether the action in question
is taken directly or indirectly by such Person.
8.4 Valuation Principles. Except when indicated expressly to the
contrary by the use of terms such as "fair value," "fair market value" or
"market value," each asset, each liability and each capital item of any Person,
and any quantity derivable by a computation involving any of such assets,
liabilities or capital items, shall be taken at the net book value thereof for
all purposes of this Agreement. "Net book value" with respect to any asset,
liability or capital item of any Person shall mean the amount at which the same
is recorded or, in accordance with generally accepted accounting principles,
should have been recorded in the books of account of such Person, as reduced by
any reserves which have been or, in accordance with generally accepted
accounting principles, should have been set aside with respect thereto, but in
every case (whether or not permitted in accordance with generally accepted
accounting principles) without giving effect to any write-up, write-down or
write-off (other than any write-down or write-off the entire amount of which
was charged to Consolidated Net Income or to a reserve which was a charge to
Consolidated Net Income) relating thereto which was made after the date of this
Agreement.
Section 9. REGISTRATION, TRANSFER, EXCHANGE AND REPLACEMENT OF NOTES
9.1 Registered Notes. The Company shall cause to be kept at its
principal office a register for the registration and transfer of the Notes
(hereinafter called the "Note Register"). The names and addresses of the
holders of the Notes, the transfer of Notes and the names and addresses of the
transferees of the Notes shall be registered in the Note Register.
The Person in whose name any registered Note shall be registered shall
be deemed and treated as the owner and holder thereof for all purposes of this
Agreement and the Company shall not be affected by any notice to the contrary,
until due presentment of such Note for registration of transfer so provided in
this Section 9. Payment of or on account of the principal, Make-Whole Amount,
if any, and interest on any registered Note shall be made to or upon the
written order of such registered holder.
9.2 Exchange of Notes. At any time, and from time to time, upon
surrender for exchange or registration of transfer of any Note at the office of
the Company designated for
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notices in accordance with Section 10.3, the Company shall execute and deliver
in exchange therefor, without expense to the holder, except as set forth below,
one or more new Notes for the same aggregate principal amount as the then
unpaid principal amount of the Note so surrendered, in authorized
denominations, dated as of the date to which interest has been paid on the Note
so surrendered (or, if no interest has been paid, the date of such surrendered
Note), registered in the name of such Person or Persons, or order, as may be
designated by such holder in writing, and otherwise of the same form and tenor
as the Notes so surrendered for exchange. Every Note surrendered for transfer
of registration shall be duly endorsed or accompanied by a written instrument
of transfer duly executed by the registered holder of such Note or its attorney
duly authorized in writing. The Company may require the payment of a sum
sufficient to cover any stamp tax or governmental charge imposed upon such
exchange or transfer. The Notes are issuable only in fully registered form and
in denominations of at least $500,000 (or the remaining outstanding balance if
less than $100,000).
9.3 Replacement of Notes. Upon receipt of evidence satisfactory to the
Company of the loss, theft, mutilation or destruction of any Note, and in the
case of any such loss, theft or destruction upon delivery of a bond of
indemnity in such form and amount as shall be reasonably satisfactory to the
Company, or in the event of such mutilation upon surrender and cancellation of
the Note, the Company will make and deliver, without expense to the holder
thereof, a new Note of like tenor in lieu of such lost, stolen, destroyed or
mutilated Note. If any Purchaser or any other Institutional Holder is the owner
of any such lost, stolen or destroyed Note, then the affidavit of an authorized
officer of such owner setting forth the fact of loss, theft or destruction and
of its ownership of the Note at the time of such loss, theft or destruction
shall be accepted as satisfactory evidence thereof and no further indemnity
shall be required as a condition to the execution and delivery of a new Note
other than the written agreement of such owner to indemnify the Company.
Section 10. MISCELLANEOUS
10.1 Expenses. Stamp Tax Indemnity. Whether or not the transactions
herein contemplated shall be consummated, the Company agrees to pay directly
all of your out-of-pocket expenses in connection with the preparation,
execution and delivery of this Agreement and the transactions contemplated
hereby, including but not limited to out-of-pocket expenses, S&P filing fees in
connection with obtaining a "private placement number," the reasonable charges
and disbursements of Gardner, Carton & Douglas, your special counsel,
duplicating and printing costs and charges for shipping the Notes, adequately
insured to you at your home office or at such other place as you may designate,
and all similar expenses relating to any amendment, waivers or consents
pursuant to the provisions hereof The Company also agrees that it will pay and
save you harmless from and against any and all liability with respect to stamp
and other taxes, if any, which may be payable or which may be determined to be
payable in connection
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with the execution and delivery of this Agreement or the Notes (but not in
connection with a transfer of any Note), whether or not any Notes are then
outstanding. The Company agrees to protect and indemnify you against any
liability for any and all brokerage fees and commissions payable or claimed to
be payable to any Person in connection with the transactions contemplated by
this Agreement. The obligations of the Company under this Section 10.1 and the
obligations of the Company to pay costs and expenses under Sections 5.16, 6.2
and 6.5 shall survive the retirement of the Notes.
10.2 Powers and Rights Not Waived; Remedies Cumulative. No delay or
failure on the part of the holder of any Note in the exercise of any power or
right shall operate as a waiver thereof; nor shall any single or partial
exercise of the same preclude any other or further exercise thereof, or the
exercise of any other power or right, and the rights and remedies of the holder
of any Note are cumulative to and are not exclusive of any rights or remedies
any such holder would otherwise have, and no waiver or consent, given or
extended pursuant to Section 7 hereof shall extend to or affect any obligation
or right not expressly waived or consented to.
10.3 Notices. Except as otherwise expressly provided herein, all
communications provided for hereunder shall be in writing and, if to you, by
facsimile, followed by overnight courier delivery for which a signed receipt
was obtained, addressed (i) if to you, to your address appearing on Schedule I
to this Agreement or such other address as you or the subsequent holder of any
Note may designate to the Company in writing, and (ii) if to the Company, to
American Business Products, Inc., 2100 River Edge Parkway, Suite 1200, Atlanta,
Georgia 30328, Attention: Chief Financial Officer, or to such other address as
the Company may in writing designate to you or the holders of the Notes.
10.4 Reproduction of Documents. This Agreement and all documents
relating hereto, including without limitation (a) consents, waivers and
modifications which may hereafter be executed, (b) documents received by you at
the closing of the purchase of the Notes, and (c) financial statements,
certificates and other information previously or hereafter furnished to you,
may be reproduced by you by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process, and you may
destroy any original document so reproduced. The Company agrees and stipulates
that any such reproduction (except of the Notes themselves) which is legible
shall be admissible in evidence as the original itself in any judicial or
administrative proceeding (whether or not the original is in existence and
whether or not such reproduction was made by you in the regular course of
business) and that any enlargement, facsimile or further reproduction of such
reproduction shall likewise be admissible in evidence; provided that nothing
herein contained shall preclude the Company from objecting to the admission of
any reproduction on the basis that such reproduction is not accurate, has been
altered or is otherwise incomplete.
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10.5 Successors and Assigns. This Agreement shall be binding upon the
Company and its successors and assigns and shall inure to your benefit and to
the benefit of your successors and assigns, including each successive holder or
holders of any Notes.
10.6 Survival of Covenants and Representations. All covenants,
representations and warranties made by the Company herein and in any
certificates delivered pursuant hereto, whether or not in connection with the
Closing Date, (i) shall be deemed to have been relied upon by you,
notwithstanding any investigation heretofore or hereafter made by you or on
your behalf, and (ii) shall survive the closing and the delivery of this
Agreement and the Notes.
10.7 Integration; Severability. This Agreement embodies the entire
agreement and understanding between you and the Company, and supersedes all
prior agreements and understandings relating to the subject matter hereof. In
case any one or more of the provisions contained in this Agreement or in any
Note, or application thereof, shall be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein and therein, and any other application thereof, shall not in
any way be affected or impaired thereby and it is hereby declared the intention
of the parties that they would have executed the remaining portion of this
Agreement without including therein any such part, parts, or portion which may,
for any reason, be hereafter declared invalid, illegal or unenforceable.
10.8 Governing Law Consent to Jurisdiction. This Agreement and the
Notes issued and sold hereunder shall be governed by and construed in
accordance with the internal laws of the State of Illinois. THE COMPANY
IRREVOCABLY AGREES THAT, SUBJECT TO THE NOTEHOLDER'S SOLE AND ABSOLUTE CONSENT
TO A CONTRARY JURISDICTION, ALL ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER OR
RESPECT ARISING OUT OF OR FROM OR RELATED TO THIS AGREEMENT OR THE NOTES SHALL
BE LITIGATED ONLY IN COURTS HAVING SITUS WITHIN THE CITY OF CHICAGO, COUNTY OF
COOK, STATE OF ILLINOIS. THE COMPANY HEREBY CONSENTS AND SUBMITS TO THE
JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN SAID CITY,
COUNTY AND STATE. THE COMPANY HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER
OR CHANGE THE VENUE OF ANY LITIGATION BROUGHT AGAINST THE COMPANY BY THE
NOTEHOLDERS IN ACCORDANCE WITH THIS PARAGRAPH.
10.9 Headings. The descriptive headings of the various Sections or
parts of this agreement are for convenience only and do not constitute a part
of this Agreement and shall not affect the meaning or construction of any of the
provisions hereof.
10.10 Counterparts. This Agreement may be executed simultaneously in
one or more counterparts, each of which shall be deemed an original, but all
such counterparts shall together constitute one and the same instrument.
-38-
<PAGE> 43
10.11 Agent's Fee. The Company agrees to pay, and agrees the
Purchasers shall have no obligation to pay, any fees and expenses due and owing
to any person, firm or corporation for services of such person, firm or
corporation as agent, broker or dealer for the Company with respect to the
offer and sale of the Notes.
-39-
<PAGE> 44
IN WITNESS WHEREOF, the Company and the Purchasers have caused this
Agreement to be executed and delivered by their respective officer or officers
thereunto duly authorized.
AMERICAN BUSINESS PRODUCTS, INC.
By: /s/ Thomas R. Carmody
---------------------------
Title: President
ALLSTATE LIFE INSURANCE COMPANY
By: /s/ Patricia W. Wilson
---------------------------
By: /s/ Gary W. Fridley
---------------------------
Authorized Signatories
AID ASSOCIATION FOR LUTHERANS
By: /s/ James Abitz
---------------------------
Title: Vice President-Securities
NATIONWIDE LIFE INSURANCE COMPANY
By: /s/ Jeffrey G. Milburn
---------------------------
Title: Vice President
Corporate Fixed-Income Securities
EMPLOYERS LIFE INSURANCE COMPANY
OF WAUSAU
By: /s/ Jeffrey G. Milburn
---------------------------
Title: Attorney-in-Fact
-40-
<PAGE> 45
SCHEDULE I
Principal Amount of Notes to Be Purchased
-----------------------------------------
Name and Address of Purchaser Principal Amount of Notes
- ----------------------------- -------------------------
$20,000,000
Allstate Life Insurance Company
Suite G4A
2880 Sanders Road
Northbrook, Illinois 60062
Attn: Investment Operations
Private Placements
Telephone: (708) 402-8709
Telecopy: (708) 402-7331
All notices of scheduled payments and written confirmations of such wire
transfer should be sent to the address above. All payments by Fedwire transfer
of immediately available funds, identifying the name of the Issuer (and the
Credit, if any), the Private Placement Number preceded by "DPP" and the payment
as principal, interest or premium, in the format as follows:
BBK = Harris Trust and Savings Bank
ABA #071000288
BNF = Allstate Life Insurance Company
Collection Account #168-117-0
ORG = American Business Products, Inc.
OBI = DPP (PPN: 024763 A@3)
Payment Due Date (MM/DD/YY)-
P______ (Enter "P" and amount of principal being
remitted, for example, P5000000.00) (Enter "I" and
amount of interest being remitted, for example,
I225000.00)
-41-
<PAGE> 46
Securities to be delivered to:
Harris Trust and Savings Bank
111 West Monroe Street
Master Trust Department, 5E
Chicago, Illinois 60690
Attention: Lisa Cox
For Allstate Life Insurance Company/
Safekeeping Account No. 23-91317
All financial reports, compliance certificates and all other written
communications, including notice of prepayments, to be sent to:
Allstate Life Insurance Company
Private Placements Department
Suite J2A
3100 Sanders Road
Northbrook, IL 60062
Tax ID #36-2554642
-42-
<PAGE> 47
SCHEDULE I
----------
Principal Amount of Notes to Be Purchased
-----------------------------------------
Name and Address of Purchaser Principal Amount of Notes
- ----------------------------- -------------------------
Aid Association for Lutherans $15,000,000
4321 North Ballard Road
Appleton, Wisconsin 54919
Attn: Investment Accounting
All notices of scheduled payments and written confirmations of such
wire transfer should be sent to the address above. All payments by
Fedwire transfer of immediately available funds, identifying the name of
the Issuer as follows:
Harris Trust and Savings Bank, Chicago
ABA #071-000-288
A/C #109-211-3
Attn: Trust Collection/P&I
Ref. Information
Security Description
PPN: 024763 A@3
Payable Date
Principal & Interest breakdown
Interest rate for variable rate
Securities to be delivered to:
Ms. Polly Jozefczyk
Investment Manager Relations - 5W
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, IL 60690
All financial reports, compliance certificates and all other written
communications, including notice of prepayments, to be sent to:
Harris Trust and Savings Bank
Institutional Custody - 5E
111 West Monroe Street
Chicago, IL 60690-0755
-43-
<PAGE> 48
All other communications to:
Aid Association for Lutherans
Attention: Investment Department
4321 North Ballard Road
Appleton, WI 54919
Tax ID #39-0123480
-44-
<PAGE> 49
SCHEDULE I
----------
Principal Amount of Notes to Be Purchased
-----------------------------------------
Name and Address of Purchaser Principal Amount of Notes
- ----------------------------- -------------------------
Nationwide Life Insurance Company $10,000,000
One Nationwide Plaza (1-32-09)
Columbus, Ohio 43215-2220
Attn: Corporate Money Management
All notices of scheduled payments and written confirmations of such
wire transfer should be sent to the address above. All payments by
Fedwire transfer of immediately available funds, identifying the name of
the Issuer as follows:
Society National Bank/Cleveland
900 Euclid Avenue
Cleveland, Ohio 44115
ABA: #041001039
For the account of Nationwide Life Insurance Company
Account #1000-52-9588
Securities to be delivered to:
Mr. Anthony E. Hunter
Huntington Trust Company, N.A.
7575 Huntington Park Drive HM0221
Columbus, Ohio 43235
All financial reports, compliance certificates and all other written
communications, including notice of prepayments, to be sent to:
Nationwide Life Insurance Company
One Nationwide Plaza (1-33-07)
Columbus, Ohio 43215-2220
Attention: Corporate Fixed-Income Securities
Phone Number: 614-249-7882
FAX Number: 614-249-4553
Tax ID #31-4156830
-45-
<PAGE> 50
SCHEDULE I
----------
Principal Amount of Notes to Be Purchased
-----------------------------------------
Name and Address of Purchaser Principal Amount of Notes
- ----------------------------- -------------------------
Employers Life Insurance Company of Wausau $3,000,000
2000 Westwood Avenue
Wausau, Wisconsin 54401
Attn: Ms. Lorraine Moran
All notices of scheduled payments and written confirmations of such
wire transfer should be sent to the address above. All payments by
Fedwire transfer of immediately available funds, identifying the name of
the Issuer as follows:
Firstar Bank Milwaukee, N.A.
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
ABA: #75000022
For credit to Firstar Trust Company
Account #112-950-027
For further credit to Employers Life Insurance
Company of Wausau
Account #0557511
Securities to be delivered to:
Firstar Bank Milwaukee, N.A.
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attn: Securities Dept. - Clybourn Level
with a copy of the Note sent to:
Employers Life Insurance Company of Wausau
2000 Westwood Avenue
Wausau, Wisconsin 54401
Attention: Ms. Lorraine Moran
-46-
<PAGE> 51
All financial reports, compliance certificates and all other written
communications, including notice of prepayments, to be sent to:
Employers Life Insurance Company of Wausau
One Nationwide Plaza (1-33-07)
Columbus, Ohio 43215-2220
Attention: Corporate Fixed-Income Securities
Phone Number: 614-249-7882
FAX Number: 614-249-4553
Name of nominee in which Notes are to be registered: EMPL & CO.
Tax ID #39-1049873
-47-
<PAGE> 52
EXHIBIT A
AMERICAN BUSINESS PRODUCTS, INC.
5.77% SENIOR NOTE
Due December 1, 2003
-------------
THIS NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF
1933, AS AMENDED. THIS NOTE MAY BE OFFERED OR SOLD ONLY IF REGISTERED UNDER
SAID ACT OR IF AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
THIS NOTE MAY BE SUBJECT TO A HOME OFFICE PAYMENT AGREEMENT AND
ACCORDINGLY ANY PROSPECTIVE PURCHASER HEREOF SHOULD FIRST VERIFY THE UNPAID
PRINCIPAL AMOUNT HEREOF WITH THE COMPANY.
-------------
Registered Note No. R-____ December ___, 1993
$___________
American Business Products, Inc., a Georgia corporation (the "Company"),
for value received, hereby promises to pay to _________________ or registered
assigns, on the first day of December, 2003, the principal amount of _______
_____________ Dollars ($_________) and to pay interest (computed on the basis
of a 360-day year of twelve 30-day months) on the principal amount from time to
time remaining unpaid hereon at the rate of five and seventy-seven hundredths
percent (5.77%) per annum from the date hereof until maturity, payable on June
1 and December 1 in each year, commencing June 1, 1994, and at maturity, and to
pay interest on overdue principal, Make-Whole Amount (as defined in the Note
Agreement hereinafter defined) and (to the extent legally enforceable) on any
overdue installment of interest at the greater of (a) the arithmetic mean of
the rates of interest published for the 5 Business Days preceding the
applicable payment date by The Wall Street Journal (or any successor
publication) under the caption "Money Rates -- Prime Rate" plus two percent
(2%) or (b) seven and seventy-seven hundredths percent (7.77%) per annum after
maturity or the due date thereof, whether by acceleration or otherwise, until
paid. Payments of the principal of, the Make-Whole Amount, if any, and interest
on this Note shall be made in lawful money of the United States of America in
the manner and at the place provided in Section 2.9 of the Note Agreement.
This Note is issued under and pursuant to the terms and provisions of
the Note Agreement, dated as of December 1, 1993, entered into between the
Company and the Purchasers listed on Schedule I thereto (the "Note Agreement"),
and this Note and any holder hereof are
-1-
<PAGE> 53
entitled to all of the benefits provided for by such Note Agreement or referred
to therein. The provisions of the Note Agreement are hereby incorporated in
this Note to the same extent as if set forth at length herein.
As provided in the Note Agreement, upon surrender of this Note for
registration of transfer, duly endorsed or accompanied by a written instrument
of transfer duly executed by the registered holder hereof or such holder's
attorney duly authorized in writing, a new Note for a like unpaid principal
amount will be issued to, and registered in the name of, the transferee upon
the payment of the taxes or other governmental charges, if any, that may be
imposed in connection therewith. The Company may treat the person in whose name
this Note is registered as the owner hereof for the purpose of receiving
payment and for all other purposes, and the Company shall not be affected by
any notice to the contrary.
This Note may be declared due prior to its expressed maturity date,
voluntary prepayments may be made hereon and certain prepayments are required
to be made hereon, all in the events, on the terms and in the manner as
provided in the Note Agreement. Such prepayments include certain required
prepayments on December 1 of each year, commencing December 1, 1997 and certain
optional prepayments, some of which are with a Make-Whole Amount.
Should the indebtedness represented by this Note or any part thereof
be collected in any proceeding provided for in the Note Agreement or be placed
in the hands of attorneys for collection, the Company agrees to pay, in
addition to the principal, Make-Whole Amount, if any, and interest due and
payable hereon, all costs of collecting this Note, including reasonable
attorneys' fees and expenses.
This Note and said Note Agreement are governed by and construed in
accordance with the laws of the State of Illinois.
AMERICAN BUSINESS PRODUCTS, INC.
By:
------------------------------
Its:
-2-
<PAGE> 1
EXHIBIT 10.1(g)
AMERICAN BUSINESS PRODUCTS, INC.
1991 STOCK OPTION PLAN
1. Purpose.
The purpose of this 1991 Stock Option Plan (the "Plan") is to
further the growth and development of American Business Products, Inc. (the
"Company"), by encouraging employees (including officers and directors who are
employees) of the Company and its subsidiaries to obtain a proprietary interest
in the Company by owning its stock. The Company intends that the Plan will
provide such persons with an added incentive to continue in the employ and
service of the Company and its subsidiaries and will stimulate their efforts in
promoting the growth, efficiency and profitability of the Company. The Company
also intends that the Plan will afford the Company and its subsidiaries a means
of attracting to its service persons of outstanding quality.
It is further intended that part of the Plan qualify as an
incentive stock option plan, and that any option granted in accordance with
such portion of the Plan qualify as an incentive stock option ("ISO"), all
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"). The tax effects of any other stock option (a "Non-ISO")
or stock appreciation rights ("SAR's") granted hereunder should be determined
under Code Section 83. Unless otherwise specified, the term "Options" shall
refer to both ISO's and Non-ISO's, and to any Reload Options (as described in
Section 5(i) hereof) granted in connection therewith.
The Company does not do business in, and does not do business
with any person or group located in, South Africa. Investors and/or Plan
participants may contact the Office of the Secretary of State, Room 100, 1230 J
Street, Sacramento, California 95814, telephone (916) 327-6427, for information
regarding the Company's current business dealings, if any, with South Africa.
2. Administration.
(a) The Plan shall be administered and interpreted by the
Compensation and Nominating Committee of the Board of Directors of the Company
(the "Compensation Committee"). The Board of Directors, in accordance with the
applicable provisions of the Company's By-Laws, shall appoint the Compensation
Committee from among its nonemployee members to serve at the pleasure of the
Board. The Board from time to time may remove members from, or add members to,
the Compensation Committee and shall fill all vacancies thereon. The
Compensation Committee shall be composed of three or more nonemployee
directors; provided, during the time any director is serving on the
Compensation Committee, he shall not be eligible to participate in the Plan [or
any other discretionary stock plan of the Company or any parent or subsidiary
corporation of the Company (as defined in Sections 424(e) and 424(f) of the
Code, respectively, and hereinafter referred to as a "Parent" and "Subsidiary,"
respectively)], and he shall not have been eligible to participate in the Plan
(or any other discretionary stock plan of the Company, a Parent or Subsidiary)
during the 1-year period immediately prior to his serving on the Compensation
Committee. Generally, this provision means that each member of the
Compensation Committee (i) is not eligible to participate, and (ii) must not
have been eligible to participate for the 1-year period immediately preceding
the date he became a Committee member. This provision is intended to comply
with the "disinterested persons rule" of Rule 16b-3 of the Securities Exchange
Act of 1934, as amended, or any successor rule or regulation, and shall be
interpreted and construed in a manner which assures compliance with said Rule.
To the extent said Rule is modified to reduce or increase the restrictions on
who may serve on the Compensation Committee, the Plan shall be deemed modified
in a similar manner.
(b) The Compensation Committee shall select one of its
members as its chairman and shall hold its meetings at such times and at such
places as it shall deem advisable. A majority of the Compensation Committee
shall constitute a quorum, and all decisions and selections made by the
Compensation Committee pursuant to the provisions of the Plan shall be made by
a majority of its members who are present and voting at
<PAGE> 2
the meeting. The Compensation Committee shall keep minutes of its proceedings
and shall report the same to the Board of Directors at its next succeeding
meeting.
(c) Subject to the provisions of the Plan, the Compensation
Committee shall have the authority and sole discretion to determine and
designate, from time to time, those persons eligible for a grant of Options
under the Plan, those persons to whom Options are to be granted, the purchase
price of the shares covered by any Options granted, the time or times at which
Options shall be granted, whether any SAR's shall be granted in tandem with any
Options, and the manner in and conditions under which Options or SAR's are
exercisable (including, without limitation, any limitations or restrictions
thereon). In making such determinations, the Compensation Committee may take
into account the nature of the services rendered by the respective persons to
whom Options may be granted, their present and potential contributions to the
Company's success and such other factors as the Compensation Committee, in its
sole discretion, shall deem relevant. Subject to the express provisions of the
Plan, the Compensation Committee also shall have authority to interpret the
Plan, to prescribe, amend and rescind rules and regulations relating to it, to
determine the terms and provisions of the instruments by which Options shall be
evidenced (which shall not be inconsistent with the terms of the Plan), and to
make all other determinations necessary or advisable for the administration of
the Plan, all of which determinations shall be final, binding and conclusive.
(d) In addition to such other rights of indemnification as
they have as directors or as members of the Compensation Committee, the members
of the Compensation Committee shall be indemnified by the Company against
reasonable expenses (including, without limitation, attorneys' fees) actually
and necessarily incurred in connection with the defense of any action, suit or
proceeding, or in connection with any appeal, to which they or any of them may
be a party by reason of any action taken or failure to act under or in
connection with the Plan or any Options granted hereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is
approved to the extent required by and in the manner provided by the By-Laws of
the Company relating to indemnification of directors) or paid by them in
satisfaction of a judgment in any such action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such Committee member or members did not act in a manner he or
they reasonably believed to be in or not opposed to the best interest of the
Company.
3. Stock.
The stock reserved for issuance in accordance with and subject
to the Options and other provisions of the Plan shall be authorized but
unissued or reacquired shares of the $2.00 par value common stock of the
Company (the "Common Stock"). Subject to readjustment in accordance with the
provisions of Section 7, the total number of shares of the Common Stock for
which Options may be granted to persons participating in the Plan shall not
exceed in the aggregate 300,000 shares of Common Stock, less any shares used as
payment for SAR's pursuant to Section 6(a). Notwithstanding the foregoing,
shares of Common Stock allocable to the unexercised portion of any expired or
terminated Option again may become subject to Options under the Plan.
4. Eligibility to Receive Options; Type of Options.
(a) Except as provided in subsections (b) and (c) hereof,
the persons eligible to receive Options hereunder shall be key employees
(including officers whether or not they also are directors, but excluding
directors who are not otherwise employees) of the Company and its Subsidiaries.
The Compensation Committee from time to time may select such persons (from that
group specified above) to whom Options are to be offered and granted hereunder;
such selected persons hereinafter are referred to individually as "Optionee"
and collectively as "Optionees".
(b) No director shall be eligible to receive any Options
(i) during the period he is serving on the Compensation Committee, or (ii)
during the 1-year period prior to the date he is to begin serving on the
Compensation Committee.
-2-
<PAGE> 3
(c) The Compensation Committee may grant, at any time, new
Options to a person who previously has received Options, whether such Options
still are outstanding, previously have been exercised in whole or in part, have
expired or are cancelled in connection with the issuance of new Options. The
purchase price of any new Options may be established by the Compensation
Committee without regard to any existing Option Price (as described below).
5. Terms and Conditions of Options.
Options may be granted to Optionees from time to time and at
such times as may be authorized by the Compensation Committee. Subject to the
provisions hereinafter set forth, each Option granted under the Plan shall be
designated either as an ISO or a Non-ISO. In addition, pursuant to the terms
of Section 6, the Compensation Committee may grant SAR's in tandem with any
Option. In its authorization of the granting of an Option hereunder, the
Compensation Committee shall specify the name of the Optionee, the number of
shares of stock subject to such Option, whether such Option is an ISO or a
Non-ISO and whether such Option shall be accompanied by SAR's. The
Compensation Committee then shall prepare a written agreement, executed and
dated by the Company, evidencing such Option (the "Option Agreement") and
setting forth the terms and conditions of such Option; provided, an Option
Agreement evidencing both an ISO and a Non-ISO shall identify clearly the
status and terms of each Option. The Compensation Committee shall present such
Option Agreement to the Optionee. Upon execution of such Option Agreement by
the Optionee, such Option shall be deemed to have been granted effective as of
the date of grant specified in subsection (c)(i) hereof. The failure of the
Optionee to execute the Option Agreement within 30 days after the date of the
receipt of same shall render the Option Agreement and the underlying Option
null and void ab initio. Option Agreements and the Options granted thereby
shall comply with and be subject to the following terms and conditions:
(a) Optionee and Number of Shares. Each Option Agreement
shall state the name of the Optionee and the total number of shares of the
Common Stock to which it pertains.
(b) Employment. Each Optionee shall agree to remain in the
employ of, and to render such services to, the Company or a Parent or a
Subsidiary for such period and pursuant to such terms, as the Compensation
Committee may require in the Option Agreement; provided, such Agreement shall
not impose upon the Company or a Parent or a Subsidiary any obligation to
retain the Optionee in its employ for any period.
(c) Option Price.
(i) The purchase price of the shares of Common
Stock underlying each Option (the "Option Price") shall be determined by
the Compensation Committee, which determination shall be final, binding
and conclusive; provided, in no event shall the Option Price of any
Option be less than 100 percent (110 percent in the case of ISO's
granted to Optionees who own more than 10 percent of the voting power of
all classes of stock of the Company, a Parent or a Subsidiary) of the
fair market value of the Common Stock on the date the Option is granted.
Upon execution of an Option Agreement by both the Company and Optionee,
the date on which the Compensation Committee granted the Option shall be
considered the date on which such Option is granted; provided, any
Option granted (pursuant to an executed Option Agreement) to a
prospective employee of the Company or a Subsidiary prior to the
commencement of his employment shall be deemed to be granted on, and
shall become effective on, the first day of employment.
(ii) The fair market value per share of the Common
Stock on any particular date shall be the closing sale price of the
Common Stock as reflected on the New York Stock Exchange (the "NYSE") on
the last day the Common Stock trades on the NYSE prior to such date.
If, for any reason, the fair market value per share of the Common Stock
cannot be ascertained or is unavailable for a particular date, the fair
market value of such stock shall be determined as of the nearest
preceding date on which such fair market value can be ascertained
pursuant to the terms hereof.
-3-
<PAGE> 4
(d) Terms of Options. Terms of Options granted under the
Plan shall commence on the date of grant and shall expire on such date as the
Compensation Committee may determine for each Option; provided, in no event
shall any Option be exercisable after 10 years (5 years in the case of Options
granted to Optionees who own more than 10 percent of the voting power of all
classes of stock of the Company, a Parent or a Subsidiary) from the date the
Option is granted. Any Reload Option granted pursuant to Section 5(i) hereof
shall expire as of the date of expiration of the original Option with respect
to which such Reload Option is granted. No Option shall be granted hereunder
after 10 years from the earlier of the date the Plan is approved by the
shareholders or is adopted by the Board of Directors.
(e) ISO's Converted to Non-ISO's. In the event any part or
all of an ISO granted under the Plan at any time fails to satisfy all of the
requirements of an incentive stock option, then such ISO shall be split into an
ISO and Non-ISO so that the portion of the Option, if any, that still qualifies
as an incentive stock option shall remain an ISO, and the portion that does not
qualify as an incentive stock option shall become a Non-ISO. Such split of an
ISO into an ISO portion and a Non-ISO portion shall be evidenced by one or more
Option Agreements, as long as each Option is identified clearly as to its
status as an ISO or Non-ISO.
(f) Terms of Exercise. Subject to the terms of this
Section and Section 4, the Compensation Committee may specify the terms
pursuant to which each Option may be exercised. Each Option shall become
exercisable in such installments (which need not be equal and which may or may
not correspond to a vesting schedule specified by the Compensation Committee)
and at such times as designated by the Compensation Committee; provided,
notwithstanding anything herein to the contrary, no Option, or portion thereof,
or related SAR may be exercised until the expiration of the holding period
described in subsection (l) hereof. Options shall become exercisable in
increments which may be cumulative but which shall not exceed in any 1 year 25
percent of the number of shares subject to the Option, and no Option shall
become exercisable except following expiration of 1 year of continued
employment immediately following the date upon which the Option is granted.
This means that an Option may become exercisable for a maximum number of shares
equal to (i) after one year of such continued employment, 25 percent of the
number of shares initially subject to the Option; (ii) after 2 years of such
continued employment, 50 percent of the number of shares initially subject to
the Option; (iii) after 3 years of such continued employment, 75 percent of the
number of shares subject to the Option; and (iv) after 4 years of such
continued employment, 100 percent of the number of shares initially subject to
the Option. Notwithstanding the above, all Options shall become immediately
exercisable for 100 percent of the number of shares subject to the Options upon
a Change in Control (as defined in Section 8 hereof).
(g) Method of Exercise. All Options granted hereunder
shall be exercised by written notice directed to the Secretary of the Company
at its principal place of business or to such other person as the Compensation
Committee may direct. Each notice of exercise shall identify the Option that
the Optionee is exercising (in whole or in part) and shall be accompanied by
payment of the Option Price for the number of shares specified in such notice
and by any documents required by Section 9(a). The Company shall make delivery
of such shares within a reasonable period of time; provided, if any law or
regulation requires the Company to take any action [including, but not limited
to, the filing of a registration statement under the Securities Act of 1933, as
amended (the "1933 Act"), and causing such registration statement to become
effective] with respect to the shares specified in such notice before the
issuance thereof, then the date of delivery of such shares shall be extended
for the period necessary to take such action. In the event an Optionee
exercises both an ISO and a Non-ISO, separate certificates shall be issued to
such Optionee for the ISO and Non-ISO shares.
(h) Medium and Time of Payment.
(i) The Option Price shall be payable upon the
exercise of the Option in an amount equal to the number of shares then
being purchased times the per share Option Price. Payment, at the
election of the Optionee [or his successors as provided in Section
5(j)(iii)], shall be (A) in cash; (B) by delivery to the Company of a
certificate or certificates for shares of the Common Stock duly endorsed
for transfer to the Company with signature guaranteed by a member firm
of a national stock exchange or by
-4-
<PAGE> 5
a national or state bank (or guaranteed or notarized in such other
manner as the Compensation Committee may require); or (C) by a
combination of (A) and (B). Notwithstanding the foregoing, an Optionee
must have held any shares of Common Stock used to pay the Option Price
for at least 6 months prior to the date such payment is made. In the
event of any payment by delivery of shares of the Common Stock, such
shares shall be valued on the basis of the fair market value of the
Common Stock on the date of exercise. Fair market value shall be
determined in the manner provided in Section 5(c)(ii) (dealing with
determining Option Price). If the Optionee makes payment by delivery of
shares of the Common Stock, the value of such Common Stock shall be less
than or equal to the total Option Price payment. If the Optionee
delivers Common Stock with a value that is less than the total Option
Price, then such Optionee shall pay the balance of the total Option
Price in cash.
(ii) In addition to the payment of the purchase
price of the shares then being purchased, an Optionee also shall pay in
cash (or have withheld from his normal pay) an amount equal to the
amount, if any, which the Company at the time of exercise is required to
withhold under the income tax withholding provisions of the Code and of
the income tax laws of the state of the Optionee's residence.
(i) Reload Options. At the time of granting any ISO or
Non-ISO hereunder, the Compensation Committee shall designate, in its
discretion, whether such ISO or Non-ISO shall be accompanied by a "Reload
Option". A "Reload Option" shall be an Option that is granted (i) to an
Optionee who pays for exercise of all or part of such ISO or Non-ISO with
shares of the Common Stock pursuant to subsection 5(h) hereof, (ii) for the
same number of shares as is exchanged in payment for the exercise of such ISO
or Non-ISO; (iii) as of the date of such payment, and (iv) subject to all of
the same terms and conditions as such ISO or Non-ISO; provided, the Option
Price for shares subject to the Reload Option shall be determined pursuant to
Section 5(c) hereof on the basis of the fair market value of such shares on the
date the Reload Option is granted. In addition, the Compensation Committee, in
its discretion, may grant one or more successive Reload Options to an Optionee
who pays for exercise of a Reload Option with shares of the Common Stock. In
no event shall the term of any Reload Option extend beyond the original term of
the ISO or Non-ISO with respect to which such Reload Option was granted.
(j) Effect of Termination of Employment or Death. Except
as provided in parts (i), (ii) and (iii) of this subsection, no Option shall be
exercisable unless the Optionee thereof shall have been an employee (including
an officer, but excluding a director who otherwise has not been an employee) of
the Company and/or a Parent or a Subsidiary from the date of the granting of
the Option until the date of exercise; provided, the Compensation Committee, in
its sole discretion, may waive the application of this Section 5(j) with
respect to any Non-ISO's granted hereunder and, instead, may provide an
expiration date or dates in a Non-ISO Option Agreement.
(i) In the event an Optionee during his life ceases
to be an employee of the Company (including any Parent or Subsidiary)
for any reason other than retirement under the terms of one of the
Company's qualified retirement plans, disability or death, any Option or
unexercised portion thereof granted to him shall terminate on and shall
not be exercisable after the earlier to occur of (a) the expiration date
of the Option, or (b) termination of employment; provided, the
Compensation Committee may provide in the Option Agreement that such
Option or any unexercised portion thereof shall terminate sooner, and
may provide that, if employment is terminated by the Company because of
an act or acts by an Optionee involving fraud, dishonesty, theft,
embezzlement or the like, no portion of such Optionee's Option shall be
exercisable after the Company gives notice to such Optionee of
termination of employment. For purposes of the preceding sentence, an
Optionee's resignation in anticipation of termination of employment by
the Company because of an act or acts of the type listed after the
semicolon in the preceding sentence shall constitute a notice of
termination by the Company. Notwithstanding the foregoing, in the event
that an Optionee's employment terminates for a reason other than death,
disability or retirement (as provided in the preceding sentence) at any
time after a Change in Control, the term of all Options shall be
extended through the 3-month period immediately following the date of
such termination; provided, this extension shall apply to ISOs only to
the extent it does not cause the term of such ISOs to exceed the maximum
term
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<PAGE> 6
permitted under Code Section 422 or does not cause such ISOs to lose
their status as incentive stock options. Prior to the earlier of the
dates specified in the first sentence of this subsection (5)(j)(i), the
Option shall be exercisable only in accordance with its terms and only
for the number of shares exercisable on the date of termination of
employment. The question of whether an authorized leave of absence or
absence for military or government service or for any other reason shall
constitute a termination of employment for purposes of the Plan shall be
determined by the Compensation Committee, which determination shall be
final and conclusive.
(ii) Upon an Optionee's retirement under the terms
of one of the Company's qualified retirement plans or the termination of
an Optionee's employment due to disability, as determined by the
Compensation Committee in its sole discretion, any Option or unexercised
portion thereof granted to him which is otherwise exercisable shall
terminate on and shall not be exercisable after the earlier to occur of
(a) the expiration date of such Option, or (b) 3 months (or 1 year, if
due to disability) after the date on which such Optionee ceases to be an
employee of the Company (including any Parent or Subsidiary); provided,
the Compensation Committee may provide in the Option Agreement that such
Option or any unexercised portion thereof shall terminate sooner. Prior
to the earlier of such dates, such Option shall be exercisable only in
accordance with its terms and only for the number of shares exercisable
on the date such Optionee's employment ceases; provided, the
Compensation Committee, in its discretion, may waive the restrictions on
exercise contained in Section 5(f).
(iii) In the event of the death of the Optionee while
he is an employee of the Company or a Parent or a Subsidiary or within 3
months after the date on which such Optionee's employment terminated due
to retirement with the Company's consent or due to disability, as
determined by the Compensation Committee in its sole discretion, any
Option or unexercised portion thereof granted to him may be exercised
without regard to the restrictions on exercise contained in Section 5(f)
by his personal representatives, heirs or legatees at any time prior to
the expiration of 1 year from the date of death of such Optionee, but in
no event later than the date of expiration of the option period;
provided, the Compensation Committee may provide in the Option Agreement
that such Option or any unexercised portion thereof shall terminate
sooner. Such exercise shall be effected pursuant to the terms of this
Section 5 as if such personal representatives, heirs or legatees are the
named Optionee.
(k) Restrictions on Transfer and Exercise of Options. No
Option shall be assignable or transferable by the Optionee except by will or by
the laws of descent and distribution; and, during the lifetime of an Optionee,
the Option shall be exercisable only by him.
(l) Holding Period. No Option or SAR granted hereunder may
be exercised within the 12-month period immediately following the date of
grant; provided, this limitation shall not apply in the event the Optionee dies
or becomes disabled within such 12-month period.
(m) Rights as a Shareholder. An Optionee shall have no
rights as a shareholder with respect to shares covered by his Option until date
of the issuance of the shares to him and only after the Option Price of such
shares is fully paid. Unless specified in Section 7, no adjustment will be
made for dividends or other rights for which the record date is prior to the
date of such issuance.
(n) Miscellaneous Provisions. The Option Agreements
authorized under the Plan shall contain such other provisions, including,
without limitation, restrictions upon the exercise of the Option as the
Compensation Committee shall deem advisable. In the event of any conflict
between the provisions of an Option Agreement and the Plan, the Plan shall
control.
(o) No Obligation to Exercise Option. The granting of an
Option shall impose no obligation upon the Optionee to exercise such Option.
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<PAGE> 7
(p) Resales to Company. In the event that an Option or any
portion thereof is exercised and within 1 year after such exercise the
Optionee's employment with the Company is terminated for any reason other than
death, disability (as determined by the Compensation Committee) or retirement,
then the Common Stock acquired by the Optionee as a result of such exercise
must be offered by the Optionee to the Company upon such termination at the
Option Price paid by the Optionee. The Company will have 60 days from the date
of such termination within which to accept such offer and pay the purchase
price in cash. Notwithstanding anything to the contrary in the Plan, the
resales to the Company provided in this Section shall not apply to any Options
exercised by optionees after a Change in Control.
6. Stock Appreciation Rights.
(a) Pursuant to such terms and conditions as the
Compensation Committee deems appropriate in each case, the Compensation
Committee may authorize the Company to accept an Optionee's surrender of his
right to exercise an Option (or any portion thereof), in consideration for the
payment by the Company of an amount equal to the excess of the fair market
value of the shares of Common Stock subject to such Option (or portion thereof)
surrendered over the Option Price of such shares; provided, SAR's granted with
respect to ISO's must be granted at the same time that the ISO's are granted.
SAR's shall be granted with respect to a Reload Option if and to the extent
SAR's are granted with respect to the original Option. An Optionee may elect to
receive payment for exercise of any SAR in the form of shares of Common Stock
valued at the then fair market value thereof or in cash, or partly in cash and
partly in shares of Common Stock; provided, the Compensation Committee, in its
sole discretion, may consent to or disapprove, in whole or in part, an
Optionee's election to receive full or partial payment in cash. If the
Compensation Committee disapproves such an election, the Compensation Committee
shall specify the manner in which payment for exercise of the SAR shall be
made. The Compensation Committee may specify payment in shares of Common Stock
or in a combination of shares of Common Stock and cash in an amount not greater
than the amount of cash specified in the Optionee's election. For purposes
hereof, fair market value of the shares shall be determined as of the date of
exercise of the SAR and pursuant to the terms of Section 5(c). Payment in
shares of Common Stock shall reduce the number of shares subject to the Plan by
the number of shares so paid. Notwithstanding the foregoing, after a Change in
Control (as described in Section 8), the Compensation Committee shall not have
the discretion to disapprove any election by an Optionee to exercise an SAR.
(b) Any election by an Optionee to receive payment for
exercise of an SAR shall be made in the same manner and pursuant to the same
procedures prescribed for the exercise of the corresponding Option; provided,
an Optionee shall only be permitted to exercise SAR's with respect to a maximum
of 25 percent of the exercisable portion of the Option.
(c) Any Option surrendered as provided in this Section
shall be cancelled by the Company, and the underlying shares of Common Stock
shall not be subject to further grant hereunder.
(d) The Compensation Committee shall be authorized
hereunder to make payment to the Optionee in shares of Common Stock only if
Section 83 of the Code applies to the Common Stock transferred to the Optionee.
(e) Notwithstanding anything contained herein to the
contrary, the SAR's provided in this Section, by their terms, shall meet the
following requirements:
(i) The SAR's shall expire no later than the
expiration date of the underlying Option to which such rights relate;
(ii) The SAR's may be for no more than 100 percent
of the difference between the exercise price of the underlying Option
and the fair market value of the Common Stock subject to the underlying
Option at the time such SAR's are exercised;
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<PAGE> 8
(iii) The SAR's may be transferable only when the
underlying Option is transferable, and under the same conditions;
(iv) The SAR's may be exercised only when the
underlying Option is eligible to be exercised;
(v) The SAR's may be exercised only when the fair
market value of the Common Stock subject to the underlying Option
exceeds the Option Price of such Option, and only upon expiration of the
holding period described in Section 5(l); and
(vi) The SAR's may be exercised only if such
exercise has the same economic and tax consequences as the exercise of
the underlying Option followed by an immediate sale of the Common Stock
acquired thereby.
7. Adjustments Upon Changes in Capitalization.
(a) In the event that the outstanding shares of the Common
Stock of the Company are hereafter increased or decreased or changed into or
exchanged for a different number or kind of shares or other securities of the
Company by reason of a recapitalization, reclassification, stock split,
combination of shares or dividend payable in shares of the Common Stock, the
following rules shall apply:
(i) The Compensation Committee shall make an
appropriate adjustment in the number and kind of shares available for
the granting of Options under the Plan.
(ii) The Compensation Committee also shall make an
appropriate adjustment in the number and kind of shares as to which
outstanding Options, or portions thereof then unexercised, shall be
exercisable, to the end that the Optionee's proportionate interest shall
be maintained as before the occurrence of such event; any such
adjustment in any outstanding Options shall be made without change in
the total price applicable to the unexercised portion of such Option and
with a corresponding adjustment in the Option Price per share. No
fractional shares shall be issued or optioned in making the foregoing
adjustments, and the number of shares available under the Plan or the
number of shares subject to any outstanding Options shall be the next
lower number of shares, rounding all fractions downward.
(iii) Any adjustment to or assumption of ISO's under
this Section shall be made in accordance with Code Section 424(a) and
the regulations promulgated thereunder so as to preserve the status of
such ISO's as incentive stock options under Code Section 422.
(iv) If any rights or warrants to subscribe for
additional shares are given pro rata to holders of outstanding shares of
the class or classes of stock then set aside for the Plan, each Optionee
shall be entitled to the same rights or warrants on the same basis as
holders of the outstanding shares with respect to such portion of his
Option as is exercised on or prior to the record date for determining
shareholders entitled to receive or exercise such rights or warrants.
(b) Subject to any required action by the shareholders, if
the Company shall be a party to any reorganization involving merger,
consolidation, acquisition of the stock or acquisition of the assets of the
Company which does not constitute a Change in Control, the Compensation
Committee, in its discretion, may declare that:
(i) any or all outstanding Options granted
hereunder shall become immediately nonforfeitable and exercisable (to
the extent permitted under federal or state securities laws);
(ii) any Option granted but not yet exercised shall
pertain to and apply, with appropriate adjustment as determined by the
Compensation Committee, to the securities of the resulting
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<PAGE> 9
corporation to which a holder of the number of shares of the Common
Stock subject to such Options would have been entitled; and/or
(iii) any or all Options granted hereunder are to
become immediately nonforfeitable and exercisable (to the extent
permitted under federal or state securities laws) and are to be
terminated after giving at least 30 days' notice to the Optionees to
whom such Options have been granted.
(c) If the Board adopts a plan of dissolution and
liquidation that is approved by the shareholders of the Company, the
Compensation Committee shall give each Optionee notice of such event at least
10 days prior to its effective date, and the rights of all Optionees shall
become immediately nonforfeitable and exercisable (to the extent permitted
under federal or state securities laws).
(d) Any issuance by the Company of stock of any class, or
securities convertible into shares of stock of any class, shall not affect, and
no adjustment by reason thereof shall be made with respect to, the number or
price of shares of the Common Stock subject to any Option, except as
specifically provided otherwise in this Section 7. The grant of Options
pursuant to the Plan shall not affect in any way the right or power of the
Company to make adjustments, reclassifications, reorganizations or changes of
its capital or business structure or to merge, consolidate or dissolve, or to
liquidate, sell or transfer all or any part of its business or assets. All
adjustments the Compensation Committee makes under this Section 7 shall be
conclusive.
8. CHANGE IN CONTROL.
(a) For purposes of the Plan, a "Change in Control" shall
mean the occurrence of any one of the events described in this Section 8(a).
For purposes of this Section 8, the terms used in this Section with an initial
capital letter shall have the meanings set forth in Section 8(b) unless
otherwise defined in the Plan.
(i) The acquisition by a Person, together with
Affiliates and Associates of such Person, whether by purchase, tender
offer, exchange, reclassification, recapitalization, merger or
otherwise, of a sufficient number of shares of Common Stock or Common
Stock Equivalents to constitute the Person an Acquiring Person; or
(ii) The acquisition by a Person (other than the
Curtis Investment Company, LP), together with Affiliates and Associates
of such Person, of a number of shares of Common Stock (but not less than
20 percent of the shares of Common Stock) equal to or greater than the
number of shares of Common Stock held by any Person who or who, together
with all Affiliates and Associates of such Person, is the Beneficial
Owner of 30 percent or more of the shares of Common Stock as of the
effective date of the Plan; or
(iii) During any period of two consecutive years,
individuals who at the beginning of such period constitute the Board
cease for any reason to constitute at least a majority thereof, unless
the election of each director who was not a director at the beginning of
such period has been approved in advance by a majority of the Continuing
Directors then in office; or
(iv) Any merger or consolidation the result of which
is that less than 70 percent of the common stock, Voting Securities or
other equity interests of the surviving or resulting corporation or
other Person shall be owned in the aggregate by the former shareholders
of the Company, other than Affiliates or Associates of any party to such
merger or consolidation, as the same shall have existed immediately
prior to such merger or consolidation; or
(v) The sale by the Company, in one transaction or
a series of related transactions, whether in liquidation, dissolution or
otherwise, of assets or earning power aggregating more than 50
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<PAGE> 10
percent of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons.
(b) The following definitions shall apply in determining
when a Change in Control has occurred:
(i) "Acquiring Person" shall mean any Person who or
which, together with all Affiliates and Associates of such Person, shall
become the Beneficial Owner of 30 percent or more of the shares of
Common Stock then outstanding, but shall not include the Company, any
Subsidiary of the Company, or any Person who or which, together with all
Affiliates and Associates of such Person, is the Beneficial Owner of 30
percent or more of the shares of Common Stock as of the effective date
of the Plan, any employee benefit plan of the Company or of any
Subsidiary of the Company [if approved by a majority of the Continuing
Directors], or any Person or entity organized, appointed or established
by the Company for or pursuant to the terms of any such plan.
(ii) "Affiliate" shall have the meaning ascribed to
such term in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended and in effect on the
effective date of the Plan (the "Exchange Act").
(iii) "Associate" shall mean:
(A) Any corporation or organization, or
parent or subsidiary of such corporation or organization, of
which a Person is an officer, director or partner or is,
directly or indirectly, the Beneficial Owner of 10 percent or
more of any class of equity securities;
(B) Any trust or other estate in which a
Person has a beneficial interest of 10 percent or more or as to
which such Person serves as trustee or in a similar fiduciary
capacity; and
(C) Any brother or sister (whether by
whole or half blood), ancestor, lineal descendant or spouse of a
Person, or any such relative of such spouse.
(iv) "Beneficial Owner" shall mean, with respect to
any securities, any Person who, together with such Person's Affiliates
and Associates, directly or indirectly:
(A) Has the right to acquire such
securities (whether such right is exercisable immediately or
only after the passage of time) pursuant to any agreement,
arrangement or understanding (whether or not in writing) or upon
the exercise of conversion rights, exchange rights, rights,
warrants or options, or otherwise; provided, a Person shall not
be deemed the Beneficial Owner of, or to Beneficially Own:
(1) Securities acquired by
participation in good faith in a firm commitment
underwriting by a Person engaged in business as an
underwriter of securities until the expiration of 40
days after the date of such acquisition; or
(2) Securities tendered pursuant to
a tender or exchange offer made by such Person or any
of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or
exchange; or
(3) Securities issuable upon
exercise of rights issued to all shareholders
generally, which rights are only exercisable upon
separation from the Common Stock, or securities
issuable upon exercise of rights that have separated
from
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<PAGE> 11
the Common Stock upon the occurrence of events
specified in a rights agreement between the Company and
a rights agent;
(B) Has the right to vote or dispose of or
has Beneficial Ownership (as determined pursuant to Rule 13d-3
of the General Rules and Regulations under the Exchange Act) of
such securities, including pursuant to any agreement,
arrangement or understanding, whether or not in writing;
provided, a Person shall not be deemed the Beneficial Owner of,
or to Beneficially Own, any security under this subparagraph
(ii) as a result of an agreement, arrangement or understanding
to vote such security if such agreement, arrangement or
understanding:
(1) Arises solely from a revocable
proxy given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with,
the applicable provisions of the General Rules and
Regulations under the Exchange Act; and
(2) Is not also then reportable by
such Person on Schedule 13D under the Exchange Act (or
any comparable or successor report); or
(C) With respect to any securities which
are Beneficially Owned, directly or indirectly, by any other
Person (or any Affiliate or Associate thereof), has any
agreement, arrangement or understanding (whether or not in
writing), for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described herein or disposing
of any voting securities of the Company.
(vi) "Common Stock Equivalents" shall mean preferred
stock or other equity securities of the Company having the right to be
converted by the holders thereof into shares of Common Stock, or having
the right to vote generally for the election of directors and on other
matters. For purposes of determining the total amount of Common Stock
and Common Stock Equivalents owned by any Person, such Common Stock
Equivalents shall be equal to the number of shares into which they may
be converted by the holders thereof, or in the case of securities that
are not convertible having the right to vote, shall be equal to the
number of votes they are entitled to cast in elections for directors.
(vii) "Continuing Director" shall mean:
(A) Any member of the Board who is not an
Acquiring Person, or an Affiliate or Associate of an Acquiring
Person, or a representative of an Acquiring Person or of any
such Affiliate or Associate, and was a member of the Board prior
to the effective date of the Plan; or
(B) Any Person who subsequently becomes a
member of the Board who is not an Acquiring Person, or an
Affiliate or Associate of an Acquiring Person, or a
representative of an Acquiring Person or of any such Affiliate
or Associate, if such Person's nomination for election or
election to the Board is recommended or approved by a majority
of the Continuing Directors.
(viii) "Person" shall mean any individual, firm,
corporation, partnership or other entity.
(ix) "Subsidiary" shall mean any corporation,
partnership, joint venture, trust or other entity more than 50 percent
of the Voting Securities of which are Beneficially Owned, directly or
indirectly, by a Person.
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<PAGE> 12
(x) "Voting Securities" shall mean any class of
then outstanding shares of stock or other beneficial interests entitled
to vote in election of directors or other Persons charged with
management of a Person."
9. Employee's Agreement and Securities Registration.
(a) If, in the opinion of counsel for the Company, such
action is necessary or desirable, no Options shall be granted to any Optionee,
unless, at the time of grant, such Optionee (i) represents and warrants that he
will acquire the Common Stock for investment only and not for purposes of
resale or distribution, and (ii) makes such further representations and
warranties as are deemed necessary or desirable by counsel to the Company with
regard to holding and resale of the Common Stock. If at the time of the
exercise of any Option or the exercise of an SAR paid in whole or in part in
shares of Common Stock, it is necessary or desirable, in the opinion of counsel
for the Company, in order to comply with any applicable laws or regulations
relating to the sale of securities, that the Optionee represent and warrant
that he is purchasing or acquiring the Common Stock for investment and not with
any present intention to resell or distribute the same or make other and
further representations and warranties with regard to the holding and resale of
such shares, the Optionee shall, upon the request of the Compensation
Committee, execute and deliver to the Company an agreement or affidavit to such
effect. Should the Compensation Committee have reasonable cause to believe
that such Optionee did not execute such agreement in good faith, the Company
shall not be bound by the exercise of the Option. All certificates issued
pursuant to the Plan shall be marked with the following restrictive legend or
similar legend, if such marking, in the opinion of counsel to the Company, is
necessary or desirable:
The shares evidenced by this certificate have not been registered under
the Securities Act of 1933, as amended (the "1933 Act"), or under the
securities laws of any state (the "State Securities Acts") and have been
issued or sold in reliance upon applicable exemptions from the
registration requirements of such laws.
These shares are held by an "affiliate" of the Company (as such term is
defined in Rule 144 promulgated by the Securities and Exchange
Commission under the 1933 Act). Accordingly, these shares may not be
sold, assigned, hypothecated, pledged or otherwise transferred except
(i) pursuant to an effective registration statement under the 1933 Act
and any applicable State Securities Acts with respect to the resale of
such shares, (ii) in accordance with said Rule 144, or (iii) upon the
issuance to the Company of a favorable opinion of counsel or the
submission to the Company of such other evidence as may be satisfactory
to the Company that such proposed sale, assignment, encumbrance or other
transfer will not be in violation of the 1933 Act or any applicable
State Securities Acts or any rules or regulations thereunder. Any
attempted transfer of the certificate representing these shares which is
in violation of the preceding restrictions will not be recognized by the
Company, nor will any transferee of such shares be recognized as the
owner thereof by the Company.
If the Common Stock to be acquired upon the exercise of an Option or any SAR is
registered with the Securities and Exchange Commission as of the date of
granting an Option or SAR, or if such Common Stock is registered as of the date
of exercise, then the Compensation Committee, in its discretion, may dispense
with the above investment affidavits and the Common Stock may be issued without
the first sentence of the restrictive legend set forth above. If the Common
Stock is held by a Optionee who is not an affiliate, as that term is defined in
Rule 144 of the 1933 Act, or who ceases to be an affiliate, the Compensation
Committee, in its discretion, may dispense with or authorize the removal of the
remainder of the restrictive legend set forth above.
(b) In the event that the Company in its sole discretion
shall deem it necessary or advisable to register, under the 1933 Act or any
state securities acts, any shares with respect to which Options have been
granted hereunder, then the Company shall take such action at its own expense
before delivery of the certificates representing such shares to a Optionee. In
the event the shares of Common Stock of the Company shall be listed on any
national stock exchange at the time of the exercise of an Option or SAR, the
Company shall make prompt application for the listing of the shares of Common
Stock to be issued on such stock exchange of such shares, at
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<PAGE> 13
the sole expense of the Company.
10. Effective Date; Amendment and Termination of the Plan.
(a) The Plan shall be effective as of January 1, 1991, and
no Options shall be granted hereunder prior to said date; provided, adoption of
the Plan shall be approved by the holders of a majority of the voting power of
the outstanding shares of the Common Stock within 12 months of adoption of the
Plan by the Board, and failure to obtain such approval shall render the Plan
null and void ab initio.
(b) In the event the Board shall determine that a portion
of the Plan does not qualify as an "Incentive Stock Option Plan" pursuant to
Code Section 422 or that the Plan is not in the best interest of the Company or
its shareholders for any reason, the Board shall have the power to add to,
amend or repeal any of the provisions of the Plan, to suspend the operation of
the entire Plan or any of its provisions for any period or periods or to
terminate the Plan in whole or in part. In the event of any such action, the
Compensation Committee shall prepare written procedures which, when approved by
the Board, shall govern the administration of the Plan resulting from such
addition, amendment, repeal, suspension or termination. Notwithstanding the
above provisions, no such addition, amendment, repeal, suspension or
termination shall affect, in any way, the rights of the Optionees who have
outstanding Options without the consent of such Optionees, nor may any such
change in the Plan be made without the prior approval of the holders of a
majority of the outstanding Common Stock if (i) such change would cause the
applicable portions of the Plan to fail to qualify as an "Incentive Stock
Option Plan" pursuant to Code Section 422, or (ii) such shareholder approval is
required under Code Section 422, Regulation Section 16b-3 promulgated under the
Securities Exchange Act of 1934 or any other applicable law or regulation.
11. Application of Funds.
The proceeds received by the Company from the sale of the Common
Stock subject to the Options granted hereunder will be used for general
corporate purposes.
12. Notices.
All notices or other communications by an Optionee to the
Compensation Committee pursuant to or in connection with the Plan shall be
deemed to have been duly given when received in the form specified by the
Compensation Committee at the location, or by the person, designated by the
Compensation Committee for the receipt thereof. Such specific instructions and
designation may be set forth in the Option Agreements.
13. Term of Plan.
Subject to the terms of Section 10(b), the Plan shall terminate
upon the later of (i) the complete exercise or lapse of the last outstanding
Option, or (ii) the last date upon which Options may be granted hereunder.
ADOPTED BY THE BOARD OF DIRECTORS OF AMERICAN BUSINESS PRODUCTS, INC. ON
DECEMBER 5, 1990.
APPROVED BY THE SHAREHOLDERS OF AMERICAN BUSINESS PRODUCTS, INC. ON APRIL 24,
1991.
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<PAGE> 14
FIRST AMENDMENT
TO THE
AMERICAN BUSINESS PRODUCTS, INC. 1991 STOCK OPTION PLAN
This First Amendment to the American Business Products, Inc.
1991 Stock Option Plan (the "Plan") is made and entered into this _____ day of
_________________, 1994, by American Business Products, Inc. (the "Company").
WHEREAS, at its meeting on December 8, 1993, the Board of
Directors of the Company (the "Board") determined to amend to Plan to extend
the post-retirement exercise period of options granted under the Plan,
contingent upon shareholder approval;
WHEREAS, Section 10 of the Plan provides that the Company may
amend the Plan upon Board approval;
NOW, THEREFORE, the Plan is hereby amended as follows:
1. Section 5(j)(ii) of the Plan shall be amended by deleting that
subsection in its entirety and substituting in lieu thereof the following
subsections:
(ii) Upon an Optionee's retirement under the terms of one of
the Company's qualified retirement plans, any Option or
unexercised portion thereof granted to him which is otherwise
exercisable shall terminate on and shall not be exercisable
after the expiration date of such Option; provided, any ISO or
unexercised portion thereof which remains unexercised on the
date 3 months after the date on which such Optionee ceases to be
an employee of the Company (including any Parent or Subsidiary)
shall convert to a Non-ISO for the remainder of its exercise
period. Upon an Optionee's termination of employment due to
disability (as determined by the Compensation Committee in its
sole discretion), any Option or unexercised portion thereof
granted to him which is otherwise exercisable shall terminate on
and shall not be exercisable after the earlier to occur of (a)
the expiration date of such Option, or (b) 1 year after the date
on which such Optionee ceases to be an employee of the Company
(including any Parent or Subsidiary). Notwithstanding the above,
the Compensation Committee may provide in the Option Agreement
that such Option or any unexercised portion thereof shall
terminate sooner. An Option shall be exercisable only in
accordance with its terms and only for the number of shares
exercisable on the date such Optionee's employment ceases;
provided, the Compensation Committee, in its discretion, may
waive the vesting restrictions on exercise contained in
Section 5(f).
2. Except as specifically set forth herein, the terms of the
Plan shall remain in full force and effect.
IN WITNESS WHEREOF, the Company has caused this First Amendment
to the Plan to be executed by its duly authorized officer as of the date first
above written.
AMERICAN BUSINESS PRODUCTS, INC.
By:
-------------------------------
Title:
----------------------------
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<PAGE> 1
EXHIBIT 10.1(h)
AMERICAN BUSINESS PRODUCTS, INC.
1993 DIRECTORS STOCK INCENTIVE PLAN
<PAGE> 2
AMERICAN BUSINESS PRODUCTS, INC.
1993 DIRECTORS STOCK INCENTIVE PLAN
1. PURPOSE.
The purpose of the American Business Products, Inc. 1993
Directors Stock Incentive Plan (the "Plan") is to further the growth and
development of American Business Products, Inc. (the "Company"), by encouraging
directors who are not otherwise employees of the Company or its subsidiaries to
obtain a proprietary interest in the Company by owning its stock. The Company
intends that the Plan will provide such persons with an added incentive to
continue to serve as directors of the Company and will stimulate their efforts
in promoting the growth, efficiency and profitability of the Company. The
Company also intends that the Plan will afford the Company a means of
attracting to service on its Board persons of outstanding quality. Unless
otherwise specified, the term "Options" shall refer to nonqualified stock
options granted in connection herewith, and the term "Stock Rights" shall refer
to Options and Restricted Stock (as described in Section 6 hereof).
2. ADMINISTRATION.
(a) General Administration. The Plan shall be administered
and interpreted by those members of the Executive Committee of the Company who
are not eligible to participate in the Plan (the "Committee"). Subject to the
express provisions of the Plan, the Committee also shall have authority to
interpret the Plan, to prescribe, amend and rescind rules and regulations
relating to it, to determine the terms and provisions of the instruments by
which Stock Rights shall be evidenced (which shall not be inconsistent with the
terms of the Plan), and to make all other determinations necessary or advisable
for the administration of the Plan, all of which determinations shall be final,
binding and conclusive. The Committee shall be composed of two or more
directors.
(b) Organization. The Committee may select one of its
members as its chairman and shall hold its meetings at such times and at such
places as it shall deem advisable. A majority of the Committee shall
constitute a quorum, and such majority shall determine its actions. The
Committee shall keep minutes of its proceedings and shall report the same to
the Board of Directors at the meeting next succeeding.
(c) Indemnification. In addition to such other rights of
indemnification as they have as directors or as members of the Committee, the
members of the Committee, to the extent permitted by applicable law, shall be
indemnified by the Company against reasonable expenses (including, without
limitation, attorneys' fees) actually and necessarily incurred in connection
with the defense of any action, suit or proceeding, or in connection with any
appeal, to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan or any Stock
Rights granted hereunder, and against all amounts paid by them in settlement
thereof (provided such settlement is approved to the extent required by and in
the manner provided by applicable law and/or the Bylaws of the Company relating
to indemnification of directors) or paid by them in satisfaction of a judgment
in any such action, suit or proceeding, except in relation to matters as to
which it shall be adjudged in such action, suit or proceeding that such
Committee member or members did not act in good faith and in a manner he or
they reasonably believed to be in or not opposed to the best interest of the
Company.
<PAGE> 3
3. STOCK.
The stock subject to the Stock Rights and other provisions of
the Plan shall be authorized but unissued or reacquired shares of the $2.00 par
value common stock of the Company (the "Common Stock"). Subject to
readjustment in accordance with the provisions of Section 7 the total number of
shares of the Common Stock for which Stock Rights may be granted to persons
participating in the Plan shall not exceed in the aggregate 150,000 shares.
Notwithstanding the foregoing, shares of Common Stock allocable to the
unexercised portion of any expired, cancelled or terminated Option again shall
become subject to Stock Rights under the Plan.
4. ELIGIBILITY TO RECEIVE STOCK RIGHTS.
The persons eligible to receive Stock Rights hereunder shall be
directors who are not otherwise compensated employees of the Company or its
subsidiaries. The individuals eligible to receive Stock Rights hereunder shall
be referred to individually as "Optionee" and collectively as "Optionees."
5. TERMS AND CONDITIONS OF STOCK RIGHTS.
(a) Election to Receive Option in Lieu of Director's Retainer
Fees. At least six months prior to the date of each annual shareholders
meeting (and in any event at least six months prior to the date on which any
Option is granted hereunder), each eligible director may submit to the
Committee an irrevocable written election to receive an Option in lieu of all
or any whole percentage of his director's retainer fee payable for the
following year (such year running from the date of one annual shareholders
meeting to the next annual shareholders meeting). Such an election to receive
an Option in lieu of director's retainer fees shall continue in effect from
year to year until the termination of the director's service to the Board or,
if earlier, until the director delivers a written revocation of such election
or new election to the Committee.
(b) Agreement. The Committee shall prepare a written
agreement, executed and dated by the Company, evidencing the Option granted to
an Optionee (the "Option Agreement") and setting forth the terms and conditions
of such Option. The Committee shall present such Option Agreement to the
Optionee and upon execution of such Option Agreement by the Optionee, such
Option shall be deemed to have been granted effective as of the date specified
in the Option Agreement. The failure of the Optionee to execute the Option
Agreement within 30 days after the date of the receipt of same shall render the
Option Agreement and the underlying Option null and void ab initio. Option
Agreements and the Options granted thereby shall comply with and be subject to
the following terms and conditions:
(c) Optionee and Number of Shares.
(i) Effective as of date of the each annual
shareholders meeting, including the shareholders meeting at which the
Plan was initially approved, each eligible director who has elected to
forego all or any percentage of his director's retainer fees for the
following year in exchange for an Option, shall receive an Option to
purchase Common Stock of the Company. The Committee shall calculate the
number of shares subject to the Option by dividing the amount of the
director's retainer fees which the director has designated to forego by
the amount of the difference between the fair market value of the Common
Stock on the date of grant and the Option Price, as defined in
subsection (e) of this section.
(ii) Each Option Agreement shall state the name of
the Optionee and the total number of shares of the Common Stock to which
it pertains.
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<PAGE> 4
(d) Vesting.
(i) Each Option shall first become fully
exercisable (that is, vested) as of the first anniversary of the date of
grant.
(ii) Notwithstanding subsection (i) above, each
Option shall become fully exercisable in the event of any of the
following:
(A) the date as of which the Board determines,
on the basis of medical evidence, that the Optionee has become
totally and permanently disabled;
(B) the date the Optionee has both reached
age 70 and retired from service on the Board;
(C) the Optionee's date of death; or
(D) the date the Optionee ceases to serve on
the Board for any reason; provided, that the provisions of
subsection 5(j)(i) may apply.
(iii) The Option Agreement and the Optionee's right
as to vested stock options shall not impose upon the Company any
obligation to retain the Optionee as a director for any period.
(iv) Notwithstanding the above, all Options shall
become immediately exercisable for 100 percent of the number of
shares subject to the Options upon a Change in Control (as
defined in Section 8 hereof).
(e) Option Price.
(i) The purchase price of each of the shares of
Common Stock underlying each Option (the "Option Price") shall be
one-half of the fair market value of the Common Stock on the date the
Option is granted.
(ii) If the Common Stock subject to the Plan is
registered on a national securities exchange (as such term is defined by
the Securities Exchange Act of 1934, as amended (the "Exchange Act")) on
the date of determination, the fair market value per share shall be the
closing price of a share of the Common Stock on said national securities
exchange on the date of grant of the option. If shares are publicly
traded on a national securities exchange but no shares of the Common
Stock are traded on that date (or if records of such sales are
unavailable or burdensome to obtain) but there were shares traded on
dates within a reasonable period both before and after such date, the
fair market value shall be the average of the closing prices of the
Common Stock on the nearest date before and the nearest date after the
date of determination. If the Common Stock is traded both on a national
securities exchange and in the over-the-counter market, the closing
price shall be determined by the closing price on the national
securities exchange, unless transactions on such exchange and in the
over-the-counter market are jointly reported on a consolidated reporting
system in which case the closing price shall be determined by reference
to such consolidated reporting system.
(f) Terms of Options. Terms of Options granted under the
Plan shall commence on the date the Option is granted and shall expire three
months following the tenth anniversary of the date the Option is granted. No
Option shall be granted hereunder after 10 years from the earlier of the date
the Plan is approved by the shareholders or is adopted by the Board of
Directors.
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<PAGE> 5
(g) Terms of Exercise. The exercise of an Option may be
for less than the full number of shares of Common Stock subject to such Option,
but such exercise shall not be made for less than the lesser of (i) 100 shares
or (ii) the total remaining shares of Common Stock subject to such Option.
Subject to the other restrictions on exercise set forth herein, the unexercised
portion of an Option may be exercised at a later date by the Optionee.
(h) Method of Exercise. All Options granted hereunder
shall be exercised by written notice directed to the Secretary of the Company
at its principal place of business or to such other person as the Committee may
direct. Each notice of exercise shall be accompanied by payment of the Option
Price for the number of shares specified in such notice and by any documents
required by Section 9(a). The Company shall make delivery of such shares
within a reasonable period of time; provided, if any law or regulation requires
the Company to take any action (including, but not limited to, the filing of a
registration statement under the Securities Act of 1933, as amended (the "1933
Act"), with respect to the shares specified in such notice before the issuance
thereof, then the date of delivery of such shares shall be extended for the
period necessary to take such action.
(i) Medium and Time of Payment.
(i) The Option Price shall be payable upon the
exercise of the Option in an amount equal to the number of shares then
being purchased times the per share Option Price. Payment, at the
election of the Optionee or his successors as provided in Section
5(j)(ii), shall be (A) in cash; (B) by delivery to the Company of a
certificate or certificates for shares of the Common Stock duly endorsed
for transfer to the Company with signature guaranteed by a member firm
of a national stock exchange or by a national or state bank (or
guaranteed or notarized in such other manner as the Committee may
require); or (C) by a combination of (A) and (B).
(ii) If all or part of the Option Price is paid by
delivery of shares of the Common Stock, the following conditions shall
apply:
(A) Such shares shall be valued on the basis
of the fair market value of the Common Stock on the
date of exercise. Fair market value shall be
determined in the manner provided in Section 5(e)(ii)
(dealing with determining Option Price);
(B) On the date of such payment, Optionee must
have held any shares of Common Stock used to pay the
Option Price for at least 6 months from (X) the date of
acquisition, in the case of shares acquired other than
through a stock option or other stock award plan, or
(Y) the date of grant or award in the case of shares
acquired through such a plan; and
(C) The value of such Common Stock shall be
less than or equal to the total Option Price payment.
If the Optionee delivers Common Stock with a value that
is less than the total Option Price, then such Optionee
shall pay the balance of the total Option Price in
cash.
(j) Effect of Termination of Service or Death. Except as
provided in parts (i), (ii) and (iii) of this subsection, no Option shall be
exercisable unless the Optionee thereof shall have been a director of the
Company from the date the Option was granted until the date of exercise.
(i) In the event an Optionee ceases to be a
director of the Company for any reason during a year for which he has
elected to forego all or some percentage of his director's retainer fees
in exchange for an Option, prior to his earning his full director's
retainer fee for that
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<PAGE> 6
year, the Committee shall cancel the portion of his Option for that year
which is attributable to the unearned director's fees.
(ii) In the event an Optionee ceases to be a
director of the Company for any reason other than death, any Option or
unexercised portion thereof granted to him which is otherwise
exercisable shall terminate on and shall not be exercisable after the
earlier of (a) the expiration date of the Option, or (b) 3 months after
the date the director ceases to be a director of the Company. Prior to
the earlier of the dates specified in the first sentence of this
subsection (5)(j)(ii), the Option shall be exercisable only in
accordance with its terms.
(iii) In the event of the death of an Optionee, any
Option or unexercised portion thereof granted to him which is otherwise
exercisable may be exercised by the executor or administrator of his
estate at any time prior to the expiration of 1 year from the date of
death of such Optionee.
(k) Restrictions on Transfer and Exercise of Stock Rights.
No Option shall be assignable or transferable by the Optionee except by will or
by the laws of descent and distribution; and, during the lifetime of an
Optionee, the Option shall be exercisable only by him.
(l) Rights as a Shareholder. An Optionee shall have no
rights as a shareholder with respect to shares covered by his Option until the
date of issuance of the shares to him and only after the Option Price of such
shares is fully paid. Unless specified in Section 7, no adjustment will be
made for dividends or other rights for which the record date is prior to the
date of such issuance.
(m) Miscellaneous Provisions. In the event of any conflict
between the provisions of an Option Agreement and the Plan, the Plan shall
control.
(n) No Obligation to Exercise Option. The granting of an
Option shall impose no obligation upon the Optionee to exercise such Option.
6. RESTRICTED STOCK AWARDS.
An award of Restricted Stock shall provide the recipient with
immediate rights of ownership in the shares of Common Stock underlying the
award, but such shares shall be subject to such restrictions as the Committee
shall specify and shall be subject to forfeiture by the recipient until the
earlier of (i) the time such restrictions lapse or are satisfied, or (ii) the
time such shares are forfeited. Upon an award of Restricted Stock hereunder,
the Committee shall issue a written agreement, executed and dated by the
Company, specifying the name of the recipient, the number of shares of
Restricted Stock to be awarded and the restrictions to which such Restricted
Stock shall be subject (the "Restriction Agreement"). The Committee shall
present such Restriction Agreement to the recipient. The failure of the
recipient to execute the Restriction Agreement within 30 days after the date of
the receipt of same shall render the Restriction Agreement and the underlying
award of Restricted Stock null and void ab initio. Restriction Agreements and
the Restricted Stock awarded thereby shall comply with and be subject to the
following terms and conditions:
(a) Recipient and Number of Shares. Each eligible director
shall receive Restricted Stock in accordance with the following formula:
(i) As of the date of the initial approval of the
Plan by the shareholders, or if later, upon an eligible director's
initial election to the Board, he shall receive 200 shares of Restricted
Stock.
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<PAGE> 7
(ii) As of the date of the annual shareholders
meeting which follows an employee director's (i.e., an ineligible
director) retirement as an employee of the Company and continuance in
his role as a director (therefore becoming an eligible director), he
shall receive 200 shares of Restricted Stock.
(iii) As of the beginning date of each of his
subsequent three-year terms as a director, he shall receive 100 shares
of Restricted Stock; provided, that upon the beginning date of his
eighth three-year term, he shall receive 200 shares of Restricted Stock.
(iv) Notwithstanding any other provision of this
Plan, no director shall receive more than 1,000 shares of Restricted
Stock.
Each Restriction Agreement shall state the name of the recipient and the
total number of shares of the Common Stock to which it pertains.
(b) Restrictions on Stock. A recipient of Restricted Stock
shall become vested and obtain a nonforfeitable interest in the Restricted
Stock as of the date three years after the date of grant; provided, that such
three-year period shall be waived and the recipient shall be deemed fully
vested in the Restricted Stock upon one of the following events:
(i) the date as of which the Board determines, on
the basis of medical evidence, that the Optionee has become totally and
permanently disabled;
(ii) the date the Optionee has both reached age 70
and retired from service on the Board;
(iii) the Optionee's date of death; or
(iv) the date the Optionee ceases to serve on the
Board for any reason.
(c) Delivery of Restricted Stock.
(i) The Company shall make delivery of the shares
of Restricted Stock within a reasonable period of time after execution
of a Restriction Agreement; provided, if any law or regulation requires
the Company to take any action (including, but not limited to, the
filing of a registration statement under the 1933 Act and causing such
registration statement to become effective) with respect to such shares
before the issuance thereof, then the date of delivery of such shares
shall be extended for the period necessary to take such action.
(ii) Unless the certificates representing shares of
the Restricted Stock are deposited with a custodian pursuant to
Paragraph (iii) of this subsection, each such certificate shall bear the
following legend (in addition to any other legend required pursuant to
Section 9):
"The transferability of this certificate and the shares of stock
represented hereby are subject to the restrictions, terms and
conditions (including forfeiture and restrictions against
transfer) contained in the American Business Products, Inc. 1993
Directors Stock Incentive Plan and a Restriction Agreement,
dated ___________, 19__, between _____________________________
and American Business Products, Inc.. The Plan and Restriction
Agreement are on file in the office of the Secretary of American
Business Products, Inc."
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<PAGE> 8
Such legend shall be removed from any certificate evidencing such shares
of Restricted Stock as of the date that such shares become
nonforfeitable.
(iii) As an alternative to delivering a stock
certificate to the recipient pursuant to paragraph (ii) of this
subsection, any certificate evidencing Restricted Stock may be deposited
by the Company with a custodian to be designated by the Committee. The
Company shall cause the custodian to issue to the recipient a receipt
for any Restricted Stock deposited with it in accordance with this
subsection. Such custodian shall hold the deposited certificates and
deliver the same to the recipient in whose name the shares of Restricted
Stock evidenced thereby are registered only after such shares become
nonforfeitable.
(d) Transfer. No shares of Restricted Stock shall be sold,
exchanged, transferred, pledged, hypothecated or otherwise disposed of while
such shares are still subject to restriction, except that such Restricted Stock
may be bequeathed by will or transferred by operation of the laws of descent
and distribution.
(e) Waiver of Restrictions. If the Committee determines
that, in certain circumstances determined by the Committee, a waiver of any or
all remaining restrictions with respect to a recipient's Restricted Stock would
be desirable, it may elect in its sole discretion to waive such remaining
restrictions.
(f) Rights as a Shareholder. Upon the award of Restricted
Stock to the recipient, the recipient shall, except as set forth in Section
6(d), have all of the rights of a shareholder with respect to the Restricted
Stock, including the right to vote the shares of Restricted Stock and to
receive all dividends or other distributions paid or made with respect to the
Restricted Stock.
7. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
(a) Recapitalization. In the event that the outstanding
shares of the Common Stock of the Company are hereafter increased or decreased
or changed into or exchanged for a different number or kind of shares or other
securities of the Company by reason of a recapitalization, reclassification,
stock split, combination of shares or dividend payable in shares of the Common
Stock, the following rules shall apply:
(i) The Committee shall make an appropriate
adjustment in the number and kind of shares available for the granting
of Stock Rights under the Plan.
(ii) The Committee also shall make an appropriate
adjustment in the number and kind of shares as to which outstanding
Options, or portions thereof then unexercised, shall be exercisable, or
as to which Restricted Stock has been awarded but not yet issued, to the
end that the Optionee's proportionate interest shall be maintained as
before the occurrence of such event; any such adjustment in any
outstanding Options shall be made without change in the total price
applicable to the unexercised portion of such Option and with a
corresponding adjustment in the Option Price per share. No fractional
shares shall be issued or optioned in making the foregoing adjustments,
and the number of shares available under the Plan or the number of
shares subject to any outstanding Stock Rights shall be the next lower
number of shares, rounding all fractions downward.
(iii) If any rights or warrants to subscribe for
additional shares are given pro rata to holders of outstanding shares of
the class or classes of stock then set aside for the Plan, (A) each
Optionee shall be entitled to the same rights or warrants on the same
basis as holders of the outstanding shares with respect to such portion
of his Option as is exercised on or prior to the record date for
determining shareholders entitled to receive or exercise such rights or
warrants and
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<PAGE> 9
(B) each recipient to whom Restricted Stock has been awarded but not yet
issued shall be entitled to the same rights or warrants as holders of
the same number of shares.
(iv) If a recipient becomes entitled to an adjustment
in the number or kind or shares or other securities of the Company by
reason of his ownership of Restricted Stock, such shares or other
securities shall be subject to the same terms and restrictions as the
Restricted Stock with respect to which such shares are issued.
(b) Reorganization. Subject to any required action by the
shareholders, if the Company shall be a party to any reorganization involving
merger, consolidation, acquisition of the stock of the Company or acquisition
of the assets of the Company which does not constitute a Change in Control (as
defined in Section 8), and if the agreement memorializing such reorganization
so provides, any Option granted but not yet exercised or any Restricted Stock
awarded but not yet issued shall pertain to and apply, with appropriate
adjustment as determined by the Committee, to the securities of the resulting
corporation to which a holder of the number of shares of the Common Stock
subject to such Stock Rights would have been entitled. If such agreement does
not so provide, then any or all Stock Rights granted hereunder shall terminate
after giving at least 30 days' prior written notice to the Optionees to whom
such Stock Rights have been granted.
(c) Dissolution and Liquidation. If the Board adopts a
plan of dissolution and liquidation that is approved by the shareholders of the
Company, the Committee shall give each Optionee written notice of such event at
least 10 days prior to its effective date.
(d) Limits on Adjustments. Any issuance by the Company of
stock of any class, or securities convertible into shares of stock of any
class, shall not affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of the Common Stock subject to any
Stock Right, except as specifically provided otherwise in this Section 7. The
grant of Stock Rights pursuant to the Plan shall not affect in any way the
right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge,
consolidate or dissolve, or to liquidate, sell or transfer all or any part of
its business or assets. All adjustments the Committee makes under this Section
7 shall be conclusive.
8. CHANGE IN CONTROL.
(a) For purposes of the Plan, a "Change in Control" shall
mean the occurrence of any one of the events described in this Section 8(a).
For purposes of this Section 8, the terms used in this Section with an initial
capital letter shall have the meanings set forth in Section 8(b) unless
otherwise defined in the Plan.
(i) The acquisition by a Person, together with
Affiliates and Associates of such Person, whether by purchase, tender
offer, exchange, reclassification, recapitalization, merger or
otherwise, of a sufficient number of shares of Common Stock or Common
Stock Equivalents to constitute the Person an Acquiring Person; or
(ii) The acquisition by a Person (other than the
Curtis Investment Company, LP), together with Affiliates and Associates
of such Person, of a number of shares of Common Stock (but not less than
20 percent of the shares of Common Stock) equal to or greater than the
number of shares of Common Stock held by any Person who or who, together
with all Affiliates and Associates of such Person, is the Beneficial
Owner of 30 percent or more of the shares of Common Stock as of the
effective date of the Plan; or
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<PAGE> 10
(iii) During any period of two consecutive years,
individuals who at the beginning of such period constitute the Board
cease for any reason to constitute at least a majority thereof, unless
the election of each director who was not a director at the beginning of
such period has been approved in advance by a majority of the Continuing
Directors then in office; or
(iv) Any merger or consolidation the result of which
is that less than 70 percent of the common stock, Voting Securities or
other equity interests of the surviving or resulting corporation or
other Person shall be owned in the aggregate by the former shareholders
of the Company, other than Affiliates or Associates of any party to such
merger or consolidation, as the same shall have existed immediately
prior to such merger or consolidation; or
(v) The sale by the Company, in one transaction or
a series of related transactions, whether in liquidation, dissolution or
otherwise, of assets or earning power aggregating more than 50 percent
of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person or Persons.
(b) The following definitions shall apply in determining
when a Change in Control has occurred:
(i) "Acquiring Person" shall mean any Person who or
which, together with all Affiliates and Associates of such Person, shall
become the Beneficial Owner of 30 percent or more of the shares of
Common Stock then outstanding, but shall not include the Company, any
Subsidiary of the Company, or any Person who or which, together with all
Affiliates and Associates of such Person, is the Beneficial Owner of 30
percent or more of the shares of Common Stock as of the effective date
of the Plan, any employee benefit plan of the Company or of any
Subsidiary of the Company [if approved by a majority of the Continuing
Directors], or any Person or entity organized, appointed or established
by the Company for or pursuant to the terms of any such plan.
(ii) "Affiliate" shall have the meaning ascribed to
such term in Rule 12b-2 of the General Rules and Regulations under the
Exchange Act and in effect on the effective date of the Plan.
(iii) "Associate" shall mean:
(A) Any corporation or organization, or
parent or subsidiary of such corporation or organization, of
which a Person is an officer, director or partner or is,
directly or indirectly, the Beneficial Owner of 10 percent or
more of any class of equity securities;
(B) Any trust or other estate in which a
Person has a beneficial interest of 10 percent or more or as to
which such Person serves as trustee or in a similar fiduciary
capacity; and
(C) Any brother or sister (whether by
whole or half blood), ancestor, lineal descendant or spouse of a
Person, or any such relative of such spouse.
(iv) "Beneficial Owner" shall mean, with respect to
any securities, any Person who, together with such Person's Affiliates
and Associates, directly or indirectly:
(A) Has the right to acquire such
securities (whether such right is exercisable immediately or
only after the passage of time) pursuant to any agreement,
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<PAGE> 11
arrangement or understanding (whether or not in writing) or upon the
exercise of conversion rights, exchange rights, rights, warrants or
options, or otherwise; provided, a Person shall not be deemed the
Beneficial Owner of, or to Beneficially Own:
(1) Securities acquired by
participation in good faith in a firm commitment
underwriting by a Person engaged in business as an
underwriter of securities until the expiration of 40
days after the date of such acquisition; or
(2) Securities tendered pursuant to
a tender or exchange offer made by such Person or any
of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or
exchange; or
(3) Securities issuable upon
exercise of rights issued to all shareholders
generally, which rights are only exercisable upon
separation from the Common Stock, or securities
issuable upon exercise of rights that have separated
from the Common Stock upon the occurrence of events
specified in a rights agreement between the Company and
a rights agent;
(B) Has the right to vote or dispose of or
has Beneficial Ownership (as determined pursuant to Rule 13d-3 of the
General Rules and Regulations under the Exchange Act) of such
securities, including pursuant to any agreement, arrangement or
understanding, whether or not in writing; provided, a Person shall not
be deemed the Beneficial Owner of, or to Beneficially Own, any security
under this subparagraph (ii) as a result of an agreement, arrangement
or understanding to vote such security if such agreement, arrangement or
understanding:
(1) Arises solely from a revocable
proxy given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with,
the applicable provisions of the General Rules and
Regulations under the Exchange Act; and
(2) Is not also then reportable by
such Person on Schedule 13D under the Exchange Act (or
any comparable or successor report); or
(C) With respect to any securities which
are Beneficially Owned, directly or indirectly, by any other Person (or
any Affiliate or Associate thereof), has any agreement, arrangement or
understanding (whether or not in writing), for the purpose of acquiring,
holding, voting (except pursuant to a revocable proxy as described
herein or disposing of any voting securities of the Company.
(vi) "Common Stock Equivalents" shall mean preferred
stock or other equity securities of the Company having the right to be
converted by the holders thereof into shares of Common Stock, or having
the right to vote generally for the election of directors and on other
matters. For purposes of determining the total amount of Common Stock
and Common Stock Equivalents owned by any Person, such Common Stock
Equivalents shall be equal to the number of shares into which they may
be converted by the holders thereof, or in the case of securities that
are not convertible having the right to vote, shall be equal to the
number of votes they are entitled to cast in elections for directors.
-10-
<PAGE> 12
(vii) "Continuing Director" shall mean:
(A) Any member of the Board who is not an
Acquiring Person, or an Affiliate or Associate of an Acquiring
Person, or a representative of an Acquiring Person or of any
such Affiliate or Associate, and was a member of the Board prior
to the effective date of the Plan; or
(B) Any Person who subsequently becomes a
member of the Board who is not an Acquiring Person, or an
Affiliate or Associate of an Acquiring Person, or a
representative of an Acquiring Person or of any such Affiliate
or Associate, if such Person's nomination for election or
election to the Board is recommended or approved by a majority
of the Continuing Directors.
(viii) "Person" shall mean any individual, firm,
corporation, partnership or other entity.
(ix) "Subsidiary" shall mean any corporation,
partnership, joint venture, trust or other entity more than 50 percent
of the Voting Securities of which are Beneficially Owned, directly or
indirectly, by a Person.
(x) "Voting Securities" shall mean any class of
then outstanding shares of stock or other beneficial interests entitled
to vote in election of directors or other Persons charged with
management of a Person."
9. OPTIONEE'S AGREEMENT AND SECURITIES REGISTRATION.
(a) Agreement. If such action is necessary or desirable,
no Stock Rights shall be granted to any Optionee, unless, at the time of grant,
such Optionee (i) represents and warrants that he will acquire the stock for
investment only and not for purposes of resale or distribution, and (ii) makes
such further representations and warranties as are deemed necessary or
desirable by counsel to the Company with regard to holding and resale of the
stock. If, at the time of the exercise of any Option or the issuance of any
Restricted Stock, it is necessary or desirable, in the opinion of counsel for
the Company, in order to comply with any applicable laws or regulations
relating to the sale of securities, that the Optionee represent and warrant
that he is purchasing or acquiring the Common Stock for investment and not with
any present intention to resell or distribute the same or make other and
further representations and warranties with regard to the holding and resale of
such shares, the Optionee shall, upon the request of the Committee, execute and
deliver to the Company an agreement to such effect. Should the Committee have
reasonable cause to believe that such Optionee did not execute such agreement
in good faith, the Company shall not be bound by the exercise of the Option or
any agreement to issue the Restricted Stock, whichever is applicable. In
addition to any restrictive legend required pursuant to Section 6, all
certificates issued pursuant to the Plan shall be marked with the following
restrictive legend or similar legend, if such marking, in the opinion of
counsel to the Company, is necessary or desirable:
The shares evidenced by this certificate have not been registered under
the Securities Act of 1933, as amended (the "1933 Act"), or under the
securities laws of any state (the "State Securities Acts") and have been
issued or sold in reliance upon applicable exemptions from the
registration requirements of such laws.
These shares are held by an "affiliate" of the Company (as such term is
defined in Rule 144 promulgated by the Securities and Exchange
Commission under the 1933 Act). Accordingly, these shares may not be
sold, hypothecated, pledged or otherwise transferred, except (i)
pursuant to an effective registration statement under the 1933 Act and
any applicable State Securities Acts with
-11-
<PAGE> 13
respect to such shares, (ii) in accordance with said Rule 144, or (iii)
upon the issuance to the Company of a favorable opinion of counsel or
the submission to the Company of such other evidence as may be
satisfactory to the Company that such proposed sale, assignment,
encumbrance or other transfer will not be in violation of the 1933 Act
or any applicable State Securities Acts or any rules or regulations
thereunder. Any attempted transfer of the certificate representing
these shares which is in violation of the preceding restrictions will
not be recognized by the Company, nor will any transferee of such shares
be recognized as the owner thereof by the Company.
If the Common Stock to be acquired upon the exercise of an Option is registered
with the Securities and Exchange Commission as of the date of granting an
Option, of if such Common Stock is registered as of the date of exercise, then
the Committee, in its discretion may dispense with the above investment
affidavits and the Common Stock may be issued without the first sentence of the
restrictive legend set forth above. If the Common Stock is held by an Optionee
who is not an affiliate, as that term is defined in Rule 144 of the 1933 Act,
or who ceases to be an affiliate, the Committee, in its discretion, may
dispense with or authorize the removal of the restrictive legend set forth
above.
(b) Registration. In the event that the Company in its
sole discretion shall deem it necessary or advisable to register, under the
1933 Act or any state securities acts, any shares with respect to which Stock
Rights have been granted hereunder, then the Company shall take such action at
its own expense before delivery of the certificates representing such shares to
an Optionee. In the event the shares of Common Stock of the Company shall be
listed on any national stock exchange at the time of the exercise of any
Option, the Company shall make prompt application for the listing of the shares
of Common Stock to be issued on such stock exchange of such shares, at the sole
expense of the Company.
10. EFFECTIVE DATE; AMENDMENT AND TERMINATION OF THE PLAN.
(a) Effective Date. The Plan shall be effective as of the
date as of October 1, 1993, and no Stock Rights shall be granted hereunder
prior to said date; provided, adoption of the Plan shall be approved by the
holders of a majority of the voting power of the outstanding shares of the
Common Stock not later than the earlier of (i) the annual meeting of the
shareholders of the Company which immediately follows the date of the first
grant of an Option hereunder, or (ii) 12 months after the adoption of the Plan
by the Board. Shareholder approval shall be made by a majority of the votes
cast at a duly held meeting at which a quorum representing a majority of all
outstanding voting stock is, either in person or by proxy, present and voting
on the Plan. Failure to obtain such approval shall render the Plan and any
Stock Rights granted hereunder null and void ab initio.
(b) Amendment and Termination. In the event the Board
shall determine that the Plan is not in the best interest of the Company or its
shareholders for any reason, the Board shall have the power to add to, amend or
repeal any of the provisions of the Plan, to suspend the operation of the
entire Plan or any of its provisions for any period or periods or to terminate
the Plan in whole or in part. In the event of any such action, the Committee
shall prepare written procedures that, when approved by the Board, shall govern
the administration of the Plan resulting from such addition, amendment, repeal,
suspension or termination. Notwithstanding the above provisions, no such
addition, amendment, repeal, suspension or termination shall affect, in any
way, the rights of the Optionees who have outstanding Stock Rights without the
consent of such Optionees. Shareholder approval shall be made by a majority of
the votes cast at a duly held meeting at which a quorum representing a majority
of all outstanding voting stock is, either in person or by proxy, present and
voting at the meeting. In any event, amendments to the Plan may not be made
more than once every six months, unless necessary to comply with changes in the
Internal Revenue Code, the Employee Retirement Income Security Act or any rules
or regulations issued thereunder.
-12-
<PAGE> 14
11. APPLICATION OF FUNDS.
The proceeds received by the Company from the sale of the Common
Stock subject to the Stock Rights granted hereunder will be used for general
corporate purposes.
12. NOTICES.
All notices or other communications by an Optionee to the
Committee pursuant to or in connection with the Plan shall be deemed to have
been duly given when received in the form specified by the Committee at the
location, or by the person, designated by the Committee for the receipt
thereof.
13. TERM OF PLAN.
Subject to the terms of Section 10(b), the Plan shall terminate
upon the later of (i) the complete exercise or lapse of the last outstanding
Option, or (ii) the last date upon which Stock Rights may be granted hereunder.
14. TAXATION AND WITHHOLDING ISSUES.
Each eligible director shall be individually responsible for any
taxation results from the grant or award of Stock Rights under the Plan.
Because the eligible directors are not employees of the Company, the Company
shall not withhold for any state, local or federal taxes resulting from the
grants or awards under the Plan.
15. COMPLIANCE WITH RULE 16B-3. This Plan is intended to be in
compliance with the requirements of Rule 16b-3 as promulgated under Section 16
of the Exchange Act.
ADOPTED BY BOARD OF DIRECTORS ON OCTOBER 27, 1993
APPROVED BY SHAREHOLDERS ON
-----------------------------
-13-
<PAGE> 1
EXHIBIT 13
STOCK EXCHANGE LISTING
American Business Products, Inc.'s Common Stock is listed on the New York Stock
Exchange. Ticker Symbol: ABP.
SHAREHOLDERS OF RECORD
On March 1, 1994 there were approximately 2,200 shareholders of record of the
Company's Common Stock.
inside front cover
<PAGE> 2
ELEVEN YEAR FINANCIAL REVIEW
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
(In thousands, except per share and employee data)
1993 1992 1991 1990
<S> <C> <C> <C> <C>
Net Sales (A) ........................................ $486,139 $463,470 $446,533 $398,794
Cost of Goods Sold (A) ............................... 339,746 322,402 307,656 272,376
Earnings
Before Taxes(A) ..................................... 26,643 30,487 26,736 22,465
After Taxes(A) ...................................... 16,683 19,582(C) 16,488 14,268
Per Common Share(A) ................................. 1.56 1.83(C) 1.55 1.33
Dividends Paid
Common Stock ........................................ 8,013 7,487 6,692 6,295
Per Common Share .................................... .75 .700 .627 .587
Interest Expense ..................................... 6,604 6,270 5,784 3,313
Capital Expenditures-Net.............................. 15,981 17,277 14,556 10,053
Depreciation and Amortization......................... 14,661 12,897 12,041 9,650
Salaries and Wages ................................... 123,747 121,572 116,936 112,778
Current Assets........................................ 141,768 121,938 115,735 107,418
Current Liabilities................................... 55,330 44,509 42,809 39,825
Working Capital ...................................... 86,438 77,429 72,926 67,593
Plant and Equipment .................................. 94,448 77,926 73,350 72,040
Total Assets ......................................... 302,192 237,238 218,086 207,003
Long-Term Debt ....................................... 85,580 40,005 41,673 43,339
Retained Earnings .................................... 107,728 99,117 99,585 97,055
Average Number of Common
Shares Outstanding................................... 10,683 10,691 10,671 10,717
Stockholders' Equity ................................. 127,093 118,819 119,783 109,875
Book Value per Common Share .......................... 11.90 11.12 11.21 10.31
Number of Employees................................... 4,320 3,727 3,894 3,986
</TABLE>
QUARTERLY DATA 1993
(UNAUDITED)
<TABLE>
<CAPTION>
1st 2nd 3rd 4th
<S> <C> <C> <C> <C>
Net Sales ............................................ $117,749 $115,338 $119,516 $133,537
Gross Margin ......................................... 35,996 33,824 35,055 41,788
Net Income ........................................... 4,670 3,638 3,586 4,789
Earnings Per Share ................................... .44 .34 .34 .45
Dividends Per Share .................................. .1875 .1875 .1875 .1875
Price Range of Common
Stock (High-Low) ................................... 30.25-27.13 28.38-24.00 28.75-22.00 25.00-21.13
</TABLE>
Per share figures have been adjusted to reflect a 3-for-2 stock split in 1983,
a 5-for-4 stock split in 1989 and a 3-for-2 stock split in 1991.
(A) Years from 1982 through 1987 have been restated to eliminate discontinued
operation.
(B) Before extraordinary loss (net of income taxes) of $2,223 or $.21 per
share.
(C) Before change in accounting principles of $12,449 or $1.16 per share.
-14-
<PAGE> 3
<TABLE>
<CAPTION>
1989 1988 1987 1986 1985 1984 1983
<S> <C> <C> <C> <C> <C> <C>
$387,140 $358,242 $325,768 $311,620 $296,493 $275,242 $235,388
265,549 246,555 221,953 209,647 197,001 186,116 157,948
22,101 21,510 19,864 21,589 24,052 20,922 17,896
13,617 13,010 11,156 11,286(B) 12,426 10,813 9,395
1.27 1.21 1.04 1.05(B) 1.16 1.01 .89
5,608 5,027 4,566 4,333 3,644 3,185 2,572
.523 .469 .427 .405 .341 .299 .242
2,165 1,563 1,435 1,141 1,233 1,005 969
12,794 11,787 12,010 13,233 8,720 8,623 5,322
8,806 7,632 6,701 5,930 5,311 4,726 4,391
110,353 101,416 96,718 91,684 85,356 77,070 67,884
95,088 90,987 84,415 81,831 75,168 69,088 64,975
36,451 35,983 32,563 28,947 25,800 25,167 24,288
58,637 55,004 51,852 52,884 49,368 43,921 40,687
62,767 58,197 54,077 50,195 46,349 40,007 34,123
164,140 152,257 141,036 134,394 127,801 113,407 102,005
11,277 8,858 10,088 12,919 15,558 12,608 10,454
89,082 83,532 75,549 70,744 67,142 59,337 52,704
10,728 10,712 10,701 10,692 10,674 10,665 10,632
103,264 95,145 87,117 82,278 78,619 70,773 64,068
9.61 8.88 8.14 7.69 7.36 6.63 6.01
4,034 4,007 3,867 3,785 3,795 3,602 3,429
</TABLE>
QUARTERLY DATA 1992
(UNAUDITED)
<TABLE>
<CAPTION>
1st 2nd 3rd 4th
<S> <C> <C> <C> <C>
Net Sales ........................ $118,772 $113,228 $114,371 $117,099
Gross Margin...................... 36,297 33,807 34,542 36,422
Net Income ....................... 4,290(C) 6,377 4,279 4,636
Earnings Per Share ............... .40(C) .60 .40 .43
Dividends Per Share .............. .175 .175 .175 .175
Price Range of Common
Stock (High-Low)................. 28.38-23.75 31.25-27.25 28.75-22.75 29.00-24.13
</TABLE>
-15-
<PAGE> 4
CONSOLIDATED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
NET SALES ....................................... $486,139 $463,470 $446,533
-------- -------- --------
COST AND EXPENSES
Cost of goods sold ............................. 339,746 322,402 307,656
Selling and administrative expenses ............ 114,263 109,858 107,475
454,009 432,260 415,131
-------- -------- --------
OPERATING INCOME ................................ 32,130 31,210 31,402
OTHER INCOME (EXPENSE)
Sale of assets ................................. 48 4,619 104
Interest expense ............................... (6,604) (6,270) (5,784)
Miscellaneous-net .............................. 1,069 928 1,014
-------- -------- --------
INCOME BEFORE INCOME TAXES AND CUMULATIVE
EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES ..... 26,643 30,487 26,736
PROVISION FOR INCOME TAXES
Current
Federal ....................................... 8,992 10,688 9,918
State ......................................... 2,677 2,899 2,813
Deferred........................................ (1,709) (2,682) (2,483)
-------- -------- --------
9,960 10,905 10,248
-------- -------- --------
INCOME BEFORE CUMULATIVE EFFECT OF
CHANGES IN ACCOUNTING PRINCIPLES ............... 16,683 19,582 16,488
CUMULATIVE EFFECT OF CHANGES IN
ACCOUNTING PRINCIPLES .......................... (12,449)
-------- -------- --------
NET INCOME ...................................... $ 16,683 $ 7,133 $ 16,488
======== ======== ========
PER COMMON SHARE
Income before cumulative effect of changes
in accounting principles ...................... $ 1.56 $ 1.83 $ 1.55
Net income ..................................... $ 1.56 $ 0.67 $ 1.55
</TABLE>
See Notes to Consolidated Financial Statements
-16-
<PAGE> 5
CONSOLIDATED BALANCE SHEETS
DECEMBER 31
(Dollars in thousands)
<TABLE>
<CAPTION>
1993 1992
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents........................................... $ 30,151 $ 30,025
Accounts receivable, less allowances of $2,218 and $1,838 ......... 65,000 53,671
Inventories......................................................... 45,687 37,272
Other............................................................... 930 970
-------- --------
Total Current Assets .............................................. 141,768 121,938
PLANT AND EQUIPMENT-AT COST
Land ............................................................... 5,940 4,955
Buildings and improvements ......................................... 48,475 41,743
Machinery and equipment ............................................ 121,805 102,768
-------- --------
176,220 149,466
Less accumulated depreciation ...................................... 81,772 71,540
-------- -------
94,448 77,926
INTANGIBLE ASSETS FROM ACQUISITIONS
Goodwill, less amortization of $1,651 and 1,084 ................... 31,634 16,068
Other, less amortization of $3,173 and $2,467 ...................... 3,274 1,281
-------- --------
34,908 17,349
DEFERRED INCOME TAXES ............................................... 7,963 7,889
OTHER ASSETS ........................................................ 23,105 12,136
-------- --------
$302,192 $237,238
======== ========
CURRENT LIABILITIES
Accounts payable ................................................... $ 36,241 $ 30,632
Salaries and wages ................................................. 8,530 7,428
Profit sharing contributions ....................................... 4,106 4,781
Income taxes ....................................................... 200
Current maturities of long-term debt ............................... 6,253 1,668
-------- --------
Total Current Liabilities ....................................... 55,330 44,509
LONG-TERM DEBT AND CAPITAL LEASES ................................... 85,580 40,005
SUPPLEMENTAL RETIREMENT BENEFITS .................................... 12,880 12,331
POST RETIREMENT BENEFITS ............................................ 21,309 21,574
STOCKHOLDERS' EQUITY
Common stock-$2 par value; authorized 50,000,000
shares, issued 10,774,484 shares .................................. 21,549 21,549
Additional paid-in capital ......................................... 19
Retained earnings .................................................. 107,728 99,117
Foreign currency translation adjustment ............................ (433) (268)
-------- --------
128,844 120,417
Less 92,391 and 89,010 shares of Common Stock in treasury-at cost .. 1,751 1,598
-------- --------
127,093 118,819
-------- --------
$302,192 $237,238
======== ========
</TABLE>
See Notes to Consolidated Financial Statements
-17-
<PAGE> 6
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31
(In thousands)
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income ....................................................... $ 16,683 $ 7,133 $ 16,488
Adjustments to reconcile net income to net cash provided by
operating activities (net of effects from acquired businesses):
Depreciation and amortization .................................. 14,661 12,897 12,041
(Increase) in accounts receivable .............................. (7,482) (800) (1,082)
(Increase) decrease in inventories ............................. (4,244) 112 (2,237)
Decrease (increase) in other current assets .................... 255 (745) 166
(Gain) on disposition of plant and equipment ................... (48) (4,619) (104)
(Increase) decrease in intangible and other assets ............. (866) (441) (3,237)
Increase in accounts payable ................................... 3,408 4,388 2,665
(Decrease) increase in other current liabilities ............... (2,007) (2,824) 2,759
Increase in supplemental retirement benefits ................... 1,793 2,516 2,340
(Decrease) increase in post retirement benefits ................ (265) 21,574
Deferred income taxes .......................................... (1,709) (11,705) (2,483)
-------- -------- --------
Total adjustments ............................................. 3,496 20,353 10,828
-------- -------- --------
Net cash provided by operating activities ..................... 20,179 27,486 27,316
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions, net of cash acquired ............................... (35,402)
(Increase) decrease in annuity contracts ......................... (7,467) (1,223) 40
(Increase) decrease in cash value of life insurance .............. (3,647) (366) 653
Additions to plant and equipment ................................. (15,981) (17,277) (14,556)
Proceeds from dispositions of plant and equipment ................ 529 5,511 2,397
-------- -------- --------
Net cash used in investing activities ......................... (61,968) (13,355) (11,466)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in long-term debt ....................................... 51,602
Reductions of long-term debt ..................................... (1,442) (1,533) (4,105)
Repurchase of common stock ....................................... (340) (667) (344)
Sales and exchanges of common stock .............................. 108 325 455
Dividends paid ................................................... (8,013) (7,487) (6,692)
-------- -------- --------
Net cash (used) provided in financing activities .............. 41,915 (9,362) (10,686)
-------- -------- --------
Net increase in cash and cash equivalents ......................... 126 4,769 5,164
Cash and cash equivalents at beginning of year .................... 30,025 25,256 20,092
-------- -------- --------
Cash and cash equivalents at end of year .......................... $ 30,151 $ 30,025 $ 25,256
======== ======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest (net of amount capitalized) ............................ $ 6,241 $ 3,313 $ 6,718
Income taxes .................................................... 10,772 16,395 11,896
Liabilities assumed in acquisition ............................... 6,471
</TABLE>
See Notes to Consolidated Financial Statements
-18-
<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation: The consolidated financial statements include the
accounts of the Company and its subsidiaries. Intercompany balances and
transactions have been eliminated.
Cash and Temporary Investments: The Company invests cash in excess of daily
operating requirements in income producing investments. Such amounts, invested
in short-term instruments stated at cost which approximates market, were
$18,891,000 in 1993 and $23,452,000 in 1992. All such investments have an
original maturity of three months or less and for purposes of the statement of
cash flows are considered to be cash equivalents.
Amounts due banks upon the clearance of certain checks under the Company's
cash management program have been included in accounts payable. At December 31,
1993 and 1992 such amounts were $4,723,000 and $5,457,000.
Inventories: Inventories are valued at the lower of cost (first-in,
first-out) or market.
Intangible Assets: The excess of cost over amounts assigned to tangible
assets of purchased subsidiaries is being amortized on the straight-line basis
over periods of 5 to 40 years.
Plant and Equipment: Plant and equipment is stated at cost. Depreciation is
computed using the straight-line method for financial reporting purposes.
Accelerated depreciation methods are used for income tax purposes.
Long-Term Debt: The fair value of the Company's long-term debt is based on
management's estimate of current market prices for the same issues. Fair value
at December 31, 1993 is estimated to be $87,000,000.
Net Income per Common Share: Net income per common share is based upon
the weighted average number of shares outstanding, 10,682,504 in 1993,
10,690,937 in 1992 and 10,670,937 in 1991. The dilutive effect of outstanding
stock options is not significant.
Foreign Currency Translation: The Company's investment in a 50%-owned foreign
joint venture is translated at the rate in effect at the balance sheet date.
The Company's share of net income of the joint venture is translated at average
exchange rates prevailing during the year. Resulting translation adjustments
after 1991 are reported separately as a component of stockholders' equity.
Postemployment Benefits: In November 1992, the Financial Accounting Standards
Board issued Financial Accounting Standard No. 112, "Employers' Accounting for
Postemployment Benefits," which will be effective in 1994. The standard defines
postemployment benefits as those benefits provided to former or inactive
employees after employment, but before retirement, such as severance benefits,
disability-related benefits and the continuation of life insurance coverage.
This pronouncement will require employers to recognize the obligation to
provide postemployment benefits if the obligation is attributable to employees'
services already rendered, employees' rights to those benefits accumulate or
vest, payment of the benefits is probable, and the amount of the benefits can
be reasonably estimated. The full impact of this new standard has not been
determined. The Company plans to adopt this statement in 1994.
Reclassifications: Certain amounts have been reclassified in the 1992 and
1991 financial statements to conform to the classifications used in 1993.
INVENTORIES
<TABLE>
<CAPTION>
1993 1992
<S> <C> <C>
Inventories (000's)
Products finished or in process ............................. $24,510 $18,900
Raw materials ............................................... 20,771 17,956
Supplies .................................................... 406 416
------- -------
$45,687 $37,272
======= =======
</TABLE>
-19-
<PAGE> 8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
LONG-TERM DEBT
<TABLE>
<CAPTION>
1993 1992
<S> <C> <C>
Long-Term Debt and Leases (000's)
Senior notes, 9.92%, due 1994 to 2000......................................................... $25,714 $30,000
Senior notes, 5.77%, due 1997 to 2003......................................................... 48,000
Note payable to bank, 9.375%, principal due to 1996 .......................................... 3,100 3,500
Note payable to bank, variable at LIBOR plus 1.15%, principal due to 2000 .................... 1,219
Mortgage note, variable at 56% of bank's base rate plus .25% not to exceed
15%, principal due to 1999 .................................................................. 2,500 3,000
Mortgage note, 6.75%, principal due to 2003 .................................................. 2,125
Mortgage note, variable at 75.8% of prime rate not to exceed 11%, principal due to 2001 ...... 1,908 2,225
Mortgage note, variable at 79.4% of prime rate not to exceed 11-3/4%, principal due to 1999 .. 878 1,009
Other ........................................................................................ 136 271
------- -------
$85,580 $40,005
======= =======
</TABLE>
The net carrying amount of plant, equipment and other assets assigned as
collateral to the above obligations was approximately $25,923,000 in 1993 and
$22,499,000 in 1992. The Company has agreed to certain restrictive covenants
during the terms of some of these agreements. Under the most restrictive of the
covenants, the Company must maintain tangible net worth not less than
approximately $95,000,000 plus 25% of net income earned after 1992 and must
limit the amount of Senior Funded Debt to not more than 43% of total
capitalization. The Company has entered into interest-rate swap arrangements
which expire in 1996 in the amount of $3,500,000. The aggregate amounts of
long-term debt and capitalized lease obligations maturing during the next five
years are approximately: 1994-$6,253,000; 1995-$6,295,000; 1996-$8,458,000;
1997-$12,615,000; 1998-$12,615,000. Loans from life insurance companies
aggregating approximately $39,600,000 are secured by the cash values of the
underlying life insurance policies and such loans have been netted against the
cash values. Interest is payable annually at rates ranging from 11.5% to 13%.
STOCK OPTIONS
The Company's 1981 Stock Option Plan expired in 1991. Under the Plan, the
Company had granted both nonqualified and incentive stock options. Twenty-five
percent of each grant became exercisable in each succeeding year.
During 1993 and 1992 incentive stock options were exercised for 10,016 shares
and 27,287 shares at prices ranging from $9.24 a share to $16.80 a share.
Options were canceled in 1993 and 1992 for 1,255 shares and 750 shares.
At December 31, 1993 incentive stock options for 55,782 shares were
outstanding, of which options for 51,343 shares were exercisable at prices
ranging from $9.26 to $16.80 a share. The Company has reserved 55,782 shares of
Common Stock for issuance under the Plan.
During 1991 the Company adopted a nonqualified Stock Option Plan under which
options could be granted at fair market value to employees and has reserved a
total of 450,000 shares of Common Stock for issuance. The Plan contains a stock
appreciation right (SAR) feature under which employees may elect to receive
cash in lieu of Common Stock for up to 25% of the options exercised.
Twenty-five percent of each grant becomes exercisable in each succeeding year.
The Company granted incentive stock options (without SAR) for 35,600 shares at
$24.25 and 1,500 shares at $27.75 in 1993 and for 29,900 shares at $29.25 and
1,000 shares at $24.13 in 1992. Options for 96,875 shares were outstanding at
December 31, 1993 of which 22,100 shares were exercisable at prices ranging
from $16.75 to $29.25 a share.
-20-
<PAGE> 9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
INCOME TAXES
Deferred income taxes have been provided for the effects of reporting items of
income and expense for financial accounting purposes in years different from
those in which they are recognized for income tax purposes. In 1992 the Company
adopted Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes". This change in accounting principle resulted in a decrease in
deferred income tax liabilities of $850,000.
The provision for income taxes is reconciled with the Federal statutory rate
as follows (000's):
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Income tax at Federal statutory rate ............................ $ 9,325 $10,366 $ 9,090
State income taxes net of Federal income tax benefit ............ 1,702 1,689 1,688
Non-taxable life insurance proceeds and increase in cash value .. (1,054) (1,190) (541)
Other ........................................................... (13) 40 11
--------- ------- -------
$ 9,960 $10,905 $10,248
========= ======= =======
</TABLE>
The preceding summary does not include in 1992 the deferred tax benefit of
$850,000 described above nor deferred tax benefits of $8,173,000 related to the
cumulative effect of the change in accounting for postretirement benefits
adopted in 1992.
Components of the net deferred income tax asset at December 31, 1993 and 1992
are as follows (000's):
<TABLE>
<CAPTION>
1993 1992
<S> <C> <C>
Deferred Income Tax Assets:
Postretirement benefits .................................... $13,249 $13,141
Other ...................................................... 2,913 $ 2,442
------- -------
16,162 15,583
------- -------
Deferred Income Tax Liabilities:
Depreciation................................................ 8,199 6,713
Other ...................................................... -- 981
------- -------
8,199 7,694
------- -------
Net Deferred Income Tax Asset ............................... $ 7,963 $ 7,889
======= =======
</TABLE>
EMPLOYEE RETIREMENT PLANS
The Company and its principal subsidiaries have profit sharing and other
retirement plans covering their employees. The Company's contributions, which
are principally discretionary, were approximately $4,430,000 in 1993, $4,675,000
in 1992 and $4,615,000 in 1991.
During 1978 the Company entered into agreements with key officers of the
Company and its subsidiaries which provide for nonvested supplemental
retirement benefits. In 1985 the Company entered into similar additional
agreements with directors and key officers. The Company has made current
provisions for future payments due under these agreements. The amounts charged
to operations in 1993, 1992, and 1991 were approximately $3,340,000, $3,140,000
and $2,550,000.
COMMITMENTS AND CONTINGENCIES
Rental expense under operating leases was approximately $3,888,000 in 1993,
$3,952,000 in 1992 and $4,033,000 in 1991. Minimum rental commitments under
noncancelable leases other than capital leases are approximately:
1994-$3,768,000; 1995-$2,978,000; 1996-$2,643,000; 1997-$2,295,000;
1998-$2,177,000; and $13,287,000 thereafter.
The Company is currently analyzing several potential environmental issues.
Reserves for possible losses have been recorded based on the Company's current
assessment.
In the opinion of management, no litigation or claims are pending against the
Company which will have an adverse material effect on its financial statements.
-21-
<PAGE> 10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
STOCKHOLDERS' EQUITY
The Company has authorized 500,000 shares of Preferred Stock without par
value. No shares have been issued.
Following is a summary of transactions in stockholders' equity for the
three years ended December 31, 1993. Amounts are in thousands of dollars, except
per share amounts.
<TABLE>
<CAPTION>
FOREIGN
ADDITIONAL CURRENCY
PAID-IN RETAINED TRANSLATION TRANSLATION
COMMON STOCK CAPITAL EARNINGS TREASURY STOCK ADJUSTMENTS
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C> <C> <C> <C>
Balance December 31, 1990.......... 7,183,040 $14,366 $ 120 $ 97,055 (78,671) ($1,666) $ 0
Net income ....................... 16,488
Dividends paid, $.627 per share .. (6,692)
Three-for-two stock split ........ 3,591,069 7,182 (1) (7,190) (30,361)
Exercise of stock options ........ (119) (76) 31,347 648
Repurchase of Common Stock ....... (13,398) (332)
---------- ------- ----- -------- -------- ------ ----
Balance December 31, 1991 ......... 10,774,109 21,548 0 99,585 (91,083) (1,350) 0
Net income ....................... 7,133
Dividends paid, $.70 per share ... (7,487)
Exercise of stock options ........ 375 1 19 (114) 27,287 419
Repurchase of Common Stock ....... (25,214) (667)
Foreign currency translation ..... (268)
---------- ------- ----- -------- -------- ------ ----
Balance December 31,1992 .......... 10,774,484 $21,549 $ 19 $ 99,117 (89,010) ($1,598) ($268)
Net income ....................... 16,683
Dividends paid, $.75 per share ... (8,013)
Exercise of stock options ........ (19) (59) 10,019 186
Repurchase of Common Stock ....... (13,400) (339)
Foreign currency translation ..... (165)
---------- ------- ----- -------- ------ ------- -----
Balance December 31, 1993 .......... 10,774,484 $21,549 $ 0 $107,728 (92,391) ($1,751) ($433)
========== ======= ===== ======== ======= ====== =====
</TABLE>
On October 23, 1991 the Board of Directors authorized a three-for-two stock
split of the Company's common shares payable on December 16, 1991 in the form
of a 50% stock dividend to stockholders of record December 2, 1991. The par
value of the additional 3,591,069 shares of common stock issued was credited to
common stock. Fractional shares were paid in cash based on the closing price on
the record date adjusted for the stock split. All share and per share data have
been adjusted to reflect the stock split.
On October 25, 1989 the Board of Directors adopted a Share Rights Plan and
declared a dividend of one Right for each outstanding share of Common Stock on
November 6, 1989. Such Rights become exercisable, or transferable apart from
the Common Stock, twenty days after a person or group (Acquiring Person) has
acquired beneficial ownership of 20% of the Common Stock or after a person or
group has acquired beneficial ownership of 10% of the Common Stock and, after
reasonable inquiry and investigation, has been declared by the Board of
Directors to be an "Adverse Person" Each Right then may be exercised to acquire
a number of shares of Common Stock equal to one share of Common Stock
multiplied by a fraction, the numerator of which is the number of shares of
Common Stock outstanding on the date that an Acquiring Person or an Adverse
Person was first determined to be such (Stock Acquisition Date) and the
denominator of which is the number of Rights outstanding on the Stock
Acquisition Date that are not owned by the Acquiring Person or Adverse Person.
The price to be paid for each share of Common Stock acquired by exercise of
Rights is 20% of market value on the Stock Acquisition Date. In general, the
Rights may be redeemed by the Company at a price of $.01 at any time until
twenty days following the Stock Acquisition Date. The Rights will expire on
November 6, 1999.
-22-
<PAGE> 11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ACQUISITIONS
On September 1, 1993 the Company acquired all of the stock of Home Safety
Equipment Co., Inc., d/b/a Discount Labels (DL) for $26,745,000. DL is located
in New Albany, Indiana and is engaged in the manufacture and sale of
custom-printed labels. The acquisition has been recorded under the purchase
method of accounting and the results of operations of DL have been included in
the Company's consolidated financial statements since acquisition. The excess
of the purchase price over the estimated fair market value of the assets
acquired was approximately $17,550,000.
On October 28, 1993 the Company acquired certain assets of International
Envelope Company (IE) for $15,125,000. IE is located principally in Exton,
Pennsylvania and is engaged in the manufacture of envelopes. The acquisition
has been recorded under the purchase method of accounting and the results of
operations of IE have been included in the Company's consolidated financial
statements since acquisition. The excess of the purchase price over the fair
value of the assets acquired was approximately $1,175,000.
Summarized below are the unaudited consolidated results of the Company, DL
and IE on a pro forma basis as though DL and IE had been acquired on January 1,
1992. This summary is presented for comparative purposes only and is not
necessarily indicative of the results of operations which actually would have
occurred or which may occur in the future.
Year ended December 31
(In thousands except per share amounts)
<TABLE>
<CAPTION>
1993 1992
<S> <C> <C>
Net sales ............................... $538,000 $527,000
======== ========
Income before cumulative
effect of changes in
accounting principles .................. $ 18,000 $ 19,000
======== ========
Income per share before
cumulative effect of changes in
accounting principles .................. $ 1.68 $ 1.82
======== ========
</TABLE>
POSTRETIREMENT BENEFITS
OTHER THAN PENSIONS
The Company provides certain health care and life insurance benefits for
eligible retired employees. Substantially all of the Company's employees may
become eligible for these benefits if they reach normal retirement age while
working for the Company. The health care plan is contributory and is adjusted
periodically based on actual experience while the life insurance plan is
noncontributory. Neither plan is funded.
Prior to 1992, the Company recorded retiree healthcare and life insurance
expenses in the year the benefits were paid. During 1992, the Company adopted
Statement of Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions," retroactive to January 1, 1992.
This statement requires the accrual of the cost of providing postretirement
benefits for medical and life insurance coverage over the active service
periods of its employees. The Company elected to immediately recognize the
accumulated liability at January 1, 1992 of $19,377,000 for healthcare and life
insurance benefits and $2,095,000 for other postretirement income benefits. The
cumulative effect of this change in accounting principle was a reduction in net
income of $13,299,000 or $1.24 per share.
As of January 1, 1993 the Company made modifications to the above plans which
reduced its obligations under the above plans by approximately $13,900,000.
Such amount is being amortized over the remaining active service periods of its
employees.
The following table presents a reconciliation of the plan's funded status at
December 31 (000's):
Accumulated Postretirement Benefit Obligation:
<TABLE>
<CAPTION>
1993 1992
<S> <C> <C>
Retired employees .................. $ 5,172 $ 7,669
Fully eligible active employees .... 453 2,702
Other active employees ............. 4,998 11,203
-------- -------
$ 10,623 $21,574
-------- -------
Unrecognized prior service
cost reduction .................... 13,068
Unrecognized net loss .............. (2,382)
------- -------
Postretirement benefits ............ $21,309 $21,574
======= =======
Net Periodic Benefit Cost for 1993:
Service cost ....................... $ 244 $ 1,083
Interest cost ...................... 791 1,743
Net amortization ................... (819)
------- -------
$ 216 $ 2,826
======= =======
</TABLE>
The assumed health care cost trend rate for 1994 is 11.5% decreasing by 1/2%
each year through 1998 and thereafter decreasing annually by 1% to a rate of
5.5% in 2002 and beyond. The assumed discount rate used in determining the
accumulated postretirement benefit obligation was 7.5% and 9% at December 31,
1993 and 1992.
If the health care cost trend rate were increased by one percent for all
future years, the accumulated postretirement benefit obligation as of December
31, 1993 would be .2% greater and the aggregate of service and interest costs
would have increased by .3%.
-23-
<PAGE> 12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BUSINESS SEGMENT INFORMATION (000's)
<TABLE>
<CAPTION>
DEPRECIATION & CAPITAL IDENTIFIABLE OPERATING
SALES AMORTIZATION EXPENDITURES ASSETS PROFIT
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1993
Business Supplies Printing ...... $357,910 $ 8,928 $ 9,849 $184,736 $21,856
Book Manufacturing .............. 44,031 1,803 1,493 19,607 5,935
Extrusion Coating & Laminating .. 84,198 2,628 3,171 45,354 10,003
Corporate ....................... 1,302 1,468 52,495 (5,664)
-------- ------- ------- -------- -------
$486,139 $14,661 $15,981 $302,192 $32,130
======== ======= ======= ======== =======
YEAR ENDED DECEMBER 31, 1992
Business Supplies Printing ...... $341,141 $ 7,838 $ 7,718 $133,578 $17,937
Book Manufacturing .............. 43,393 1,723 1,320 18,763 6,576
Extrusion Coating & Laminating .. 78,936 2,181 6,691 44,440 11,440
Corporate ....................... 1,155 1,548 40,457 (4,743)
-------- ------- ------- -------- -------
$463,470 $12,897 $17,277 $237,238 $31,210
======== ======= ======= ======== =======
YEAR ENDED DECEMBER 31, 1991
Business Supplies Printing ...... $342,273 $ 7,608 $ 9,330 $127,510 $22,153
Book Manufacturing .............. 41,647 1,698 1,096 20,137 5,184
Extrusion Coating & Laminating .. 62,613 1,860 2,793 39,181 9,092
Corporate ....................... 875 1,337 31,258 (5,027)
-------- ------- ------- -------- -------
$446,533 $12,041 $14,556 $218,086 $31,402
======== ======= ======= ======== =======
</TABLE>
The Company's three operating business segments are: business supplies
printing, consisting principally of business forms and envelope products, the
manufacture of books and the extrusion of polyethylene onto lightweight papers
and non-wovens.
Operating profit for each segment is sales less operating expenses. In
computing operating profit for each segment, the following items have not been
added or deducted: general corporate expenses, interest expense, income from
investments and income taxes.
Identifiable assets are those assets used in each segments operation.
Corporate assets consist of cash, temporary investments and other noncurrent
assets not used in the operation of a segment.
In 1992 the Company adopted Statement of Financial Accounting Standards No.
106, "Employers' Accounting for Postretirement Benefits Other Than Pensions,"
the cumulative effect of which was accounted for as a change in accounting
principle. This change also had the effect of reducing operating profit in 1992
for each of the Company's business segments as follows (000's): Business
Supplies Printing, $2,041; Book Manufacturing, $85; Extrusion Coating &
Laminating, $18; Corporate, $53.
INDEPENDENT AUDITORS' REPORT
The Stockholders of
American Business Products, Inc.:
We have audited the consolidated balance sheets of American Business Products,
Inc. and subsidiaries as of December 31, 1993 and 1992 and the related
consolidated statements of income and cash flows for each of the three years in
the period ended December 31, 1993. These financial statements are the
responsibility of the company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of American Business Products, Inc.
and subsidiaries at December 31, 1993 and 1992, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1993 in conformity with generally accepted accounting principles.
As discussed in the Notes to the Consolidated Financial Statements, in 1992
the Company changed its methods of accounting for postretirement benefits
other than pensions and for income taxes.
DELOITTE & TOUCHE
Atlanta, Georgia
February 25, 1994
-24-
<PAGE> 13
MANAGEMENT'S DISCUSSION AND ANALYSIS
LINES OF BUSINESS
American Business Products, Inc. manufactures and markets envelope
products, business forms, labels, and other supplies for business and
industry; manufactures and distributes hardcover and softcover books for the
publishing industry; and produces and markets extrusion coating and
laminating of papers, films, and nonwoven fabrics for use in medical,
industrial, and consumer packaging of products.
ACQUISITIONS
The acquisition of Discount Labels of New Albany, Indiana, on September
1, 1993, expanded the Company's share of the market for specialty labels.
ABP effected the transaction by acquiring all the stock of privately held
Home Safety Equipment Company doing business as Conway Enterprises or
Discount Labels. Discount Labels engages in the production of a wide variety
of labels which are customized and distributed through a network of dealers
in the United States.
On October 28, 1993, the Company acquired the assets of International
Envelope Company of Exton, Pennsylvania, to increase substantially ABP's
share of the domestic market for Tyvek(R) envelopes. International Envelope
Company converts Tyvek(R), a synthetic material produced by DuPont, into
envelope products including flat and expansion envelopes. International
Envelope Company is believed by Management to be the world's largest
converter of Tyvek(R) into envelopes.
RESULTS OF OPERATIONS
The Company's 1993 sales reached a record $486,139,000, an increase of
$22,669,000, or 4.9% over 1992. The business supplies printing segment sales
were up $16,800,000, or 4.9% for the year, after including approximately
$16,500,000 sales from the two acquisitions. The book manufacturing segment
increased 1.4% to a new record, and the extrusion coating and laminating
segment advanced 6.7% to a record. The Company's core business lines
continued to feel the effects of a slow-growing economy, strong pricing
competition, and over-capacity in the business forms industry. The outlook
for business supplies depends largely on economic growth. Unit sales of
business supplies increased modestly as did book manufacturing, while
extrusion coating and laminating achieved strong unit growth.
In 1992, sales were a record $463,470,000, up 3.8% over 1991, as
extrusion coating and laminating registered strong growth of 26.1% in sales,
with book manufacturing gaining 4.2% in sales, while the business supplies
segment sales increased only .1% as the result of the combination of factors
influencing 1993.
Sales for 1991 were a record $446,533,000, up 12% over 1990, as
extrusion coating and laminating achieved a high growth rate while the other
two business segments, business supplies printing and book manufacturing,
declined as the result of the same general conditions prevailing in 1992.
In 1993, the Company derived 73.6% of sales from envelope products,
business forms, labels, and related business supplies printing; 9.1% from
book printing and distributing operations; and 17.3% from extrusion coating
and laminating. Sales by business segments in 1992 were 73.6% from envelope
products, business forms, labels and related business supplies; 9.4% from
book printing and distributing; and 17.0% from extrusion coating and
laminating. In 1991, the same segments had sales, respectively, of 76.7%,
9.3%, and 14.0%.
The Company's gross profit margin (the difference between net sales and
cost of products sold, expressed as a percentage of net sales) was 30.1% in
1993 compared with 30.4% in 1992 and 31.1% in 1991.
Selling, general and administrative expenses (as a percentage of net
sales) were 23.5% in 1993, compared to 23.7% in 1992 and 24.1% in 1991. The
decrease for 1993 resulted from a general reduction in expenses and a slight
attrition of .08% in the total number of employees before inclusion of
employees of the two companies acquired in 1993.
-25-
<PAGE> 14
MANAGEMENT'S DISCUSSION AND ANALYSIS
The Company's income tax rate in 1993 increased to 37.4% from 35.8% in
1992 principally as the result of changes in Federal income tax law. The 1992
rate declined from 38.3% in 1991 as a result of higher non-taxable investment
income.
The effect of inflation on sales and operating income was minimal in
1993 as the result of the slow economy and generally stable costs, as had been
the case in the preceding two years.
In 1992, the Company adopted the Statement of Financial Accounting
Standards No. 106, "Employers' Accounting for Postretirement Benefits Other
than Pensions." Implementation was required by 1993, and the Company elected
earlier adoption of the standard. This required the Company to record
retroactively to the first quarter of 1992 a one-time, after-tax charge to net
income of approximately $13,299,000. The charge did not affect cash flow and
was accounted for as a change in accounting method. Expenses for 1992, net of
the income tax benefit, increased by approximately $1,360,000 as a result of
adopting this standard. In early 1993, the Company implemented measures to
reduce future costs.
The Company also elected early adoption of Statement of Financial
Accounting Standards No. 109, which provides for changes in the method of
determining deferred income taxes. Adoption of the standard resulted in an
increase in net income of $850,000 and was accounted for as a change in
accounting method.
Net income for 1992 included a gain of $2.9 million or $.27 per share
from the sale of land at the Company's headquarters location. This sale
resulted from the renegotiation of the Company's space lease which was
contingent on the sale of the property.
In November, 1992, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 112, "Employers' Accounting for
Post-employment Benefits," which will be implemented in the first quarter of
1994. From a preliminary review of the likely effects of adoption of this
standard, the Company does not anticipate a significant effect on net income or
the Company's financial condition.
While the Company knows of no significant environmental liabilities
involving its operations, it is currently analyzing several potential
environmental issues. Reserves for possible losses have been recorded based on
the Company's current assessment. The Company has adopted a policy of
commitment to protection of the environment and natural resources.
FINANCIAL POSITION
The Company's total cash and cash equivalents at December 31, 1993,
amounted to $30,151,000, an increase of $126,000 over a year earlier. The
primary sources of cash were funds provided by operating activities
($20,179,000) and financing activities ($41,915,000), and the primary use of
cash was for investing activities ($61,968,000).
At December 31, 1992, cash and cash equivalents amounted to
$30,025,000, an increase of $4,769,000 over a year earlier. The primary source
of cash was funds provided by operating activities ($27,486,000), and the
primary uses of cash were for investing activities ($13,355,000) and financing
activities ($9,362,000).
At December 31, 1991, cash and cash equivalents amounted
to $25,256,000, an increase of $5,164,000 over a year earlier. Primary cash
source was funds provided by operating activities ($27,316,000), and the
primary uses of cash were for investing activities ($11,466,000) and financing
activities ($10,686,000).
The principal components of cash provided by operating activities in
1993 were net income ($16,683,000) and depreciation and amortization
($14,661,000). In 1992, the principal sources of cash from operating
activities were net income before accounting changes ($19,582,000) and
depreciation and amortization ($12,897,000). In 1991, the principal sources of
cash from operating activities were net income ($16,488,000) and depreciation
and amortization ($12,041,000).
-26-
<PAGE> 15
MANAGEMENT'S DISCUSSION AND ANALYSIS
The principal investing activity in 1993 was the acquisition of
Discount Labels and International Envelope Company, and in addition, capital
expenditures for upgrading and improving equipment and plants. The principal
investing activity in 1992 was capital expenditures for upgrading and improving
equipment and plants, including a major expansion of the manufacturing facility
by the extrusion coating and laminating company, which repeated the 1991
pattern of investing activity.
The Company's ratio of long term debt to total capitalization was
40.2% at December 31, 1993, reflecting increased debt employed in the two
acquisitions which were for cash, compared with ratios of 25.1% at December
31, 1992, and 25.8% at December 31, 1991. The Company believes its internal
cash flows should be sufficient to generate cash for normal operations.
Under the Company's plan to repurchase up to 1,125,000 shares of its
Common Stock in varying amounts over an indefinite period, the Company acquired
13,400 shares at prevailing market prices of approximately $339,000 in 1993.
The Company acquired 18,400 shares at the prevailing market price of
approximately $497,000 in 1992 and 5,100 shares at prevailing market prices of
approximately $70,000 in 1991.
ENVIRONMENTAL PROTECTION POLICY
American Business Products, Inc. is committed to the protection and
preservation of the environment and our natural resources within the Company's
overall commitment to corporate responsibility and good citizenship. ABP seeks
not only to comply with all applicable laws and regulations but also to monitor
the effects of products and their manufacture upon the environment and to
increase awareness and concern for protecting and preserving the environment
and the world's natural resources.
-27-
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF AMERICAN BUSINESS PRODUCTS, INC.
The subsidiaries of the Company as of March 25, 1994, all of which are
wholly-owned, are set forth below:
<TABLE>
<CAPTION>
NAME STATE OF INCORPORATION
---- ----------------------
<S> <C>
American Fiber-Velope Mfg. Co. Delaware
BookCrafters USA, Inc. Michigan
Curtis 1000 Inc. Georgia
Discount Labels, Inc. Indiana
Jen-Coat, Inc. Massachusetts
Vanier Graphics Corporation California
d/b/a Vanier Business Forms
& Services
</TABLE>
The results of operations of all subsidiaries described above are
included in the Consolidated Financial Statements incorporated by reference in
this Annual Report on Form 10-K.
<PAGE> 1
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
33-39314 of American Business Products, Inc. on Form S-8 of our reports dated
February 25, 1994, appearing and incorporated by reference in this Annual
Report on Form 10-K of American Business Products, Inc. for the year ended
December 31, 1993.
DELOITTE & TOUCHE
Atlanta, Georgia
March 24, 1994
<PAGE> 1
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints THOMAS R. CARMODY, W. C. DOWNER AND DAWN
M. GRAY, and each of them, his true and lawful attorneys-in-fact and agents,
with full power of substitution, for him and in his name, place and stead, in
any and all capacities, to sign the Annual Report on Form 10-K of American
Business Products, Inc., for the fiscal year ended December 31, 1993, and any
and all amendments to such Annual report and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission and the New York Stock Exchange, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their or his substitute or substitutes, lawfully may
do or cause to be done by virtue thereof.
This 9th day of February, 1994.
<TABLE>
<S> <C>
/S/ F. Duane Ackerman /S/ Robert W. Gundeck
- ----------------------------- ----------------------------
F. Duane Ackerman Robert W. Gundeck
/S/ John E. Aderhold /S/ Hollis L. Harris
- ----------------------------- ----------------------------
John E. Aderhold Hollis L. Harris
/S/ W. Joseph Biggers /S/ W. Stell Huie
- ----------------------------- ----------------------------
W. Joseph Biggers W. Stell Huie
/S/ Thomas R. Carmody /S/ Thomas F. Keller
- ----------------------------- ----------------------------
Thomas R. Carmody Thomas F. Keller
/S/ Henry Curtis, VII /S/ G. HaroldNorthrop
- ----------------------------- ----------------------------
Henry Curtis, VII G. Harold Northrop
/S/ Herbert J. Dickson /S/ Marvin Schmalzried
- ----------------------------- ----------------------------
Herbert J. Dickson Marvin Schmalzried
</TABLE>
