<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 1, 1996
----------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-8044
----------------------------------------
HUNT MANUFACTURING CO.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 21-0481254
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Commerce Square 2005 Market Street, Philadelphia, PA 19103
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone no., including area code (215) 656-0300
-------------------
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 __X__ No _____
As of October 9, 1996 there were outstanding 10,970,145 shares of the
registrant's common stock.
<PAGE>
Page 2
HUNT MANUFACTURING CO.
INDEX
Page
PART I - FINANCIAL INFORMATION
---------------------
Item 1 - Financial Statements
--------------------
Condensed Consolidated Balance Sheets as of
September 1, 1996 and December 3, 1995 3
Condensed Consolidated Statements of Income -
Three Months and Nine Months Ended September 1, 1996
and September 3, 1995 4
Condensed Consolidated Statements of Cash Flows -
Nine Months Ended September 1, 1996 and
September 3, 1995 5
Notes to Condensed Consolidated Financial
Statements 6 - 8
Item 2 - Management's Discussion and Analysis of
---------------------------------------
Financial Condition and Results of Operations 9 - 13
---------------------------------------------
PART II - OTHER INFORMATION
-----------------
Item 6 - Exhibits and Reports on Form 8-K 14
--------------------------------
Signatures 15
----------
Exhibit Index 16
-------------
<PAGE>
Part I FINANCIAL INFORMATION Page 3
Item 1Financial Statements
Hunt Manufacturing Co.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands except share and per share amounts)
<TABLE>
<CAPTION>
September 1, December 3,
ASSETS 1996 1995
---------- ---------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 2,623 $ 15,503
Accounts receivable, less allowance for doubtful
accounts: 1996, $1,943 ; 1995, $2,305 49,600 42,036
Inventories:
Raw materials 12,134 12,561
Work in process 5,876 5,452
Finished goods 20,912 18,118
---------- ----------
Total inventories 38,922 36,131
Deferred income taxes 4,988 4,938
Prepaid expenses and other current assets 2,047 1,484
---------- ----------
Total current assets 98,180 100,092
Property, plant and equipment, at cost, less
accumulated depreciation and amortization:
1996, $52,026; 1995, $48,111 51,783 52,008
Intangible assets, net 25,097 25,997
Other assets 5,228 4,713
---------- ----------
Total assets $ 180,288 $ 182,810
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 0 $ 766
Accounts payable 13,044 10,759
Accrued expenses:
Salaries, wages and commissions 4,646 5,446
Income taxes 3,980 3,064
Insurance 3,086 2,449
Compensated absences 1,874 1,673
Other 5,499 6,793
---------- ----------
Total current liabilities 32,129 30,950
Long-term debt, less current portion 78,559 3,559
Deferred income taxes 3,910 4,520
Other non-current liabilities 9,287 7,588
---------- ----------
Total liabilities 123,885 46,617
---------- ----------
Stockholders' equity:
Preferred stock, $.10 par value, authorized 1,000,000
shares (including 50,000 shares of Series A Junior
Participating Preferred); none issued - -
Common stock, $.10 par value, 40,000,000 shares
authorized; issued: 1996 -16,152,322 shares;
1995 - 16,152,322 shares 1,615 1,615
Capital in excess of par value 6,434 6,434
Cumulative translation adjustment (681) (983)
Retained earnings 136,951 131,216
---------- ----------
144,319 138,282
Less cost of treasury stock:
1996 - 5,182,177 shares; 1995 - 159,159 shares (87,916) (2,089)
---------- ----------
Total stockholders' equity 56,403 136,193
---------- ----------
Total liabilities and stockholders' equity $ 180,288 $ 182,810
========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
Page 4
Hunt Manufacturing Co.
Condensed Consolidated Statements of Income
(Unaudited)
(In thousands except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
--------------------- ----------------------
Sept. 1, Sept. 3, Sept. 1, Sept. 3,
1996 1995 1996 1995
(13 weeks) (14 weeks) (39 weeks) (40 weeks)
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales $83,881 $86,302 $238,774 $231,713
Cost of sales 52,086 55,055 150,111 146,738
------- ------- -------- --------
Gross profit 31,795 31,247 88,663 84,975
Selling and shipping expense 16,197 15,862 46,251 44,964
Administrative and general
expenses 9,012 8,027 23,721 21,464
Provision for organizational changes and
relocation and consolidation of operations - 1,579 354 3,697
------- ------- -------- --------
Income from operations 6,586 5,779 18,337 14,850
Interest expense 1,384 5 3,524 58
Other expense (income), net 62 104 276 (403)
------- ------- -------- --------
Income before income taxes 5,140 5,670 14,537 15,195
Provision for income taxes 1,739 2,015 5,037 5,258
------- ------- -------- --------
Income before extraordinary item 3,401 3,655 9,500 9,937
Extraordinary loss on early extinguishment
of debt (net of income tax benefit of $134) 251 - 251 -
------- ------- -------- --------
Net income $3,150 $3,655 $9,249 $9,937
====== ====== ====== ======
Average shares of common
stock outstanding 10,970 15,959 11,625 16,009
====== ====== ====== ======
Earnings per common share:
Income before extraordinary item $0.31 $0.23 $0.82 $0.62
Extraordinary loss 0.02 - 0.02 -
------- ------- -------- --------
Net income per common share $0.29 $0.23 $0.80 $0.62
====== ====== ====== ======
Dividends per common share $0.095 $0.095 $0.285 $0.285
====== ====== ====== ======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
Page 5
Hunt Manufacturing Co.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Nine Months Ended
---------------------
Sept. 1, Sept. 3,
1996 1995
--------- ---------
Cash flows from operating activities:
<S> <C> <C>
Net income $ 9,249 $ 9,937
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 6,876 6,694
Deferred income taxes (559) (988)
Loss on disposals of property, plant and equipment 775 192
(Payments) provision for organizational changes and
relocation and consolidation of operations (1,271) 3,450
Issuance of stock under management incentive bonus
and stock grant plans 241 239
Changes in operating assets and liabilities, net of
acquisition of business (6,703) (13,456)
--------- ---------
Net cash provided by operating activities 8,608 6,068
--------- ---------
Cash flows from investing activities:
Additions to property, plant and equipment (5,720) (6,740)
Acquisition of business - (2,789)
Other, net (517) (346)
--------- ---------
Net cash used for investing activities (6,237) (9,875)
--------- ---------
Cash flows from financing activities:
Proceeds from long-term debt 127,404 930
Payments of long-term debt, including current maturities (53,170) (918)
Purchase of treasury stock (86,550) (2,841)
Proceeds from exercise of stock options 94 411
Dividends paid (3,126) (4,566)
Other, net (47) (47)
--------- ---------
Net cash used for financing activities (15,395) (7,031)
--------- ---------
Effect of exchange rate changes on cash 144 224
--------- ---------
Net decrease in cash and cash equivalents (12,880) (10,614)
Cash and cash equivalents, beginning of period 15,503 13,807
--------- ---------
Cash and cash equivalents, end of period $ 2,623 $ 3,193
========= =========
Supplemental disclosures of cash flow information:
Interest paid $ 3,084 $ 310
Income taxes paid 4,604 6,372
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
Page 6
Hunt Manufacturing Co.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. The accompanying condensed consolidated financial statements and related
notes are unaudited; however, in management's opinion all adjustments
(consisting of normal recurring accruals) necessary for a fair presentation of
the financial position at September 1, 1996 and the results of operations and
cash flows for the periods shown have been made. Such statements are presented
in accordance with the requirements of Form 10-Q and do not include all
disclosures normally required by generally accepted accounting principles or
those normally made in Form 10-K.
2. The earnings per share are calculated based on the weighted average number of
common shares outstanding. Shares issuable under outstanding stock option, stock
grant and long-term incentive compensation plans are common stock equivalents,
but are not used in computing earnings per share because the dilutive effect
would be less than 3%.
3. The pre-tax special charge of $.4 million ($.02 per share after tax) for the
first nine months of fiscal 1996 relates to the Company's fiscal 1995 decision
to relocate and consolidate certain manufacturing and distribution operations.
The provision for organizational changes of $3.7 million, or $.15 per share,
recorded in the first nine months of fiscal 1995 ($1.6 million, or $.06 per
share, for the third quarter of fiscal 1995) relates to costs incurred in
connection with the resignation and replacement of the Company's Chairman and
Chief Executive Officer and other organizational changes. Approximately $1.2
million of the provisions for organizational changes and relocation and
consolidation of operations is included in liabilities at the end of the third
quarter of fiscal 1996, which principally relates to future severance related
payments.
4. In the first quarter of fiscal 1996, the Company purchased from Mary F.
Bartol an aggregate of 2,150,165 of the Company's common shares for a cash
purchase price of $16.32 per share in a private transaction. Mary F. Bartol is
the widow of George E. Bartol III, the late Chairman of the Board, the
mother-in-law of Gordon A. MacInnes, the then Chairman of the Board, and the
mother of Victoria B. Vallely, another Director of the Company. In addition,
later in the first quarter of fiscal 1996, the Company purchased 2,954,378 of
its common shares at $17.00 net per share in cash in a tender offer. The
aggregate purchase price (plus related expenses) of the shares purchased in the
private transaction and in the tender offer was approximately $86.6 million.
5. During the first quarter of fiscal 1996, the Company obtained a new five-year
$125 million bank credit facility, consisting of a revolving credit facility in
an amount up to $81.725 million, and an amortizing term loan in the amount of
$43.275 million. The Company used borrowings of $75.0 million under this credit
facility, together with cash on hand, to fund the shares repurchased from Mary
F. Bartol and in the tender offer. (See Note 4 above.) An additional $2.4
million was borrowed through the revolving credit facility
<PAGE>
Page 7
Notes to Condensed Consolidated Financial Statements, continued
(unaudited)
during the second and third quarters of fiscal 1996 to meet current working
capital needs. This credit facility replaced the revolving credit agreements
(totalling $45 million) which were in effect at December 3, 1995.
On August 1, 1996, the Company placed $50 million of senior notes with several
insurance companies. The proceeds of this transaction were used to repay the
entire $40.9 million outstanding balance of the amortizing term loan referred to
above and to reduce the outstanding balance on the revolving credit facility
referred to above from $34.1 million to $25 million. In addition, the terms of
the credit facility were revised, among other things, to reduce the amount of
funds available under the facility from $81.725 million to $75 million; to
modify certain limitations, covenants, borrowings and facility fee margins; and
to provide for additional borrowing options.
Long-term debt at the end of the third quarter of fiscal 1996 and at the end of
fiscal 1995 was as follows:
As of
----------------------
Sept. 1, Dec. 3,
1996 1995
-------- ------
Senior Notes (a) $50,000 -
Revolving credit facility (b) 25,000 -
Line of credit - $ 766
Capitalized lease obligation 2,000 2,000
Industrial development revenue bond 1,559 1,559
-------- ------
78,559 4,325
Less current portion - 766
------- ------
Long-term debt, less current portion $78,559 $3,559
======= ======
(a) The senior notes are payable in ten annual payments of $5,000,000
beginning August 1, 2002 and bear interest at a rate of 7.86%.
(b) The revolving credit facility, which allows for borrowings of up to
$75 million, matures on December 31, 2000. The interest rates under
this facility (5.82% at September 1,1996) are, at the option of the
Company, the following: a base rate (defined as the higher of (i) the
applicable prime rate of the bank and (ii) the federal funds rate plus
50 basis points); LIBOR plus a margin of between 27.5 and 50.0 basis
points, the margin in each case to be adjusted quarterly based on the
Company's leverage ratio (as defined in the credit facility); a
competitive bid rate based on a competitive bid made by a competitive
bid lender; or a quoted rate offered by a swingline lender.
<PAGE>
Page 8
Notes to Condensed Consolidated Financial Statements, continued
(unaudited)
The senior notes and credit facility contain certain representations,
warranties, covenants, and conditions, including, but not limited to,
requirements that the Company comply with certain financial covenants,
including interest coverage, fixed charge coverage and leverage ratios,
and maintenance of certain levels of net worth, and also contain
limitations on liens, indebtedness, investments, changes in lines of
business, acquisitions, transactions with affiliates, and modifications
of certain documents.
6. As a result of the Company's issuance of the senior notes and the use of the
proceeds to pay down debt referred to in Note 5 above, the Company recorded an
after-tax loss of $.3 million, or $.02 per share, for the early extinguishment
of debt which has been reflected in the Company's Condensed Consolidated
Statements of Income as an extraordinary item.
<PAGE>
Page 9
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
The following discussion includes certain forward-looking statements. Such
forward-looking statements are subject to a number of factors, including
material risks and uncertainties, including those referred to herein and in the
Company's Reports on Form 10-K and Forms 10-Q, which could cause actual results
to differ materially from the forward-looking statements.
Financial Condition
The Company's working capital decreased to $66.1 million at the end of the third
quarter of fiscal 1996 from $69.1 million at the end of fiscal 1995 due largely
to the Company's repurchases of its common stock discussed below. The debt
capitalization percentage increased to approximately 58% at the end of the 1996
fiscal third quarter from 3% at the end of fiscal 1995 as a net result of the
Company's first quarter 1996 repurchases of an aggregate of 5,100,000 of its
common shares and related debt incurred to finance the repurchases. Available
cash balances were used to fund a portion of the common stock repurchases
(approximately $10 million), additions to property, plant and equipment of $5.7
million, and to pay cash dividends of $3.1 million.
During the third quarter of fiscal 1996, the Company refinanced $50 million of
its $125 million floating rate credit facility through a private placement of
senior notes to various insurance companies (see Note 5 to Consolidated
Financial Statements). This refinancing has provided the Company with long-term
capital at a fixed rate and cash flow flexibility that allows for continued
growth both through internal investment and possible strategic acquisitions.
Current assets decreased to $98.2 at the end of the fiscal 1996 third quarter
from $100.1 million at the end of fiscal 1995, primarily as a result of a $12.9
million decrease in cash and cash equivalents, attributable, in part, to the
uses of cash mentioned above. Accounts receivable increased to $49.6 million at
the end of the third quarter from $42.0 million at fiscal 1995 year end, largely
due to increased promotional sales with extended payment terms during the third
quarter and to a reduction in the allowance for doubtful accounts to $1.9
million at the end of the third quarter from $2.3 million at the end of fiscal
1995 as a result of improved collections. The increase in inventories from $36.1
million at fiscal 1995 year end to $38.9 million at the end of the third quarter
was principally attributable to additional inventories from new products and
higher safety stock levels for certain finished goods.
Current liabilities of $32.1 million at the end of the fiscal 1996 third quarter
increased from $31.0 million at the end of fiscal 1995 primarily as a result of
increases in accounts payable and accrued income taxes, partially offset by
decreases in accrued salary, wages and commissions, and other accrued expenses.
The increase in accounts payable to $13.0 million at the end of the third
quarter from $10.8 million at fiscal 1995 year end was largely the result of the
inventory increase discussed above, while the increase in accrued income taxes
was due to the timing of tax payments. The
<PAGE>
Page 10
decrease in salary, wages and commissions was due primarily to payments of
incentive compensation in the first quarter 1996 which had been accrued at the
end of fiscal 1995. The decrease in other accrued expenses was due principally
to payments associated with the provision for special charges discussed below.
Management expects that total fiscal 1996 expenditures for additions to
property, plant, and equipment to increase capacity and productivity will
approximate $9.6 million, of which approximately $5.7 million has been expended
through the third quarter of fiscal 1996. Management believes that funds
generated from operations, combined with the existing credit facility, will be
sufficient to meet currently anticipated working capital and other capital and
debt service requirements. Should the Company require additional funds,
management believes that the Company could obtain them at competitive costs.
Recent Developments
The Company has initiated, with the assistance of an outside consulting firm, an
intensive strategic assessment of its various business segments and markets, the
purpose of which is to assist the Company in promptly developing and
implementing a strategic plan for the operation and direction of the Company.
Results of Operations
The Company's 1996 fiscal year is comprised of 52 weeks, compared to 53 weeks
for fiscal 1995. The third quarter of fiscal 1996 and fiscal 1995 contained 13
weeks and 14 weeks, respectively, while the first nine months of fiscal 1996 and
fiscal 1995 contained 39 weeks and 40 weeks, respectively.
Net Sales
Net sales in the third quarter of fiscal 1996 decreased 2.8% to $83.9 million
from $86.3 million in the third quarter of fiscal 1995, while net sales of
$238.8 million for the first nine months of fiscal 1996 increased 3.0% over last
year's first nine months. The third quarter sales decline was partly
attributable to 7% fewer days during the quarter. Net average selling prices
increased 2.6% in the third quarter and 2.5% in the first nine months of fiscal
1996 from those in the same periods of fiscal 1995.
Art/craft products sales increased 1.3% to $41.7 million in the third quarter
and 8.4% to $118.2 million in the first nine months of fiscal 1996 from the same
periods in fiscal 1995. The increases in art/craft products sales were led by
higher sales of presentation graphics products (up 6.8% in the third quarter and
14.7% in the first nine months), partially offset by lower sales of art supplies
products (down 9.3% and 4.0%) and hobby/craft products (down 12.7% and 7.8%) in
the third quarter and first nine months, respectively, compared to the same
periods in fiscal 1995. The increases in presentation graphics products sales
were largely attributable to higher sales of
<PAGE>
Page 11
mounting and laminating products (e.g., Seal and Image Series brand mounting and
laminating equipment; and Bienfang brand foam board and project display boards).
The decreases in art supplies were due primarily to lower sales of X-Acto brand
blades and knives, while the decreases in hobby/craft products sales were due
principally to lower sales of Accent Mats brand pre-cut framing mats and craft
products, such as punch quilting and paper making kits. Export sales of
art/craft products decreased 4.6% in the third quarter and 2.5% in the first
nine months of fiscal 1996 from the same periods in fiscal 1995. Foreign sales
of art/craft products were essentially unchanged for the third quarter of fiscal
1996 from a year ago but grew by 17.4% in the first nine months of fiscal 1996
when compared to the same period of fiscal 1995, despite the effects of a
stronger U.S. dollar. The increase in the first nine months of fiscal 1996 was
primarily due to higher sales of presentation graphics products in Europe, which
includes sales of products manufactured by the Centafoam operation (acquired in
late April 1995). Excluding the sales of the Centafoam operation, foreign sales
grew 11.8% in the first nine months of fiscal 1996.
Office products sales decreased 6.5% to $42.2 million in the third quarter and
decreased 1.7% to $120.6 million in the first nine months of fiscal 1996
compared to the same fiscal 1995 periods. These decreases were primarily the
result of lower sales of desktop accessories and supplies (down 23.2% in the
third quarter and 11.2% in the first nine months of fiscal 1996) and lower
mechanical and electromechanical products sales (down 7.9% and 3.0%), partially
offset by higher sales of office furniture products (up 4.8% and 5.3%) in the
third quarter and first nine months of fiscal 1996, respectively, compared to
the same periods in fiscal 1995. The decreases in desktop accessories and
supplies were largely due to lower sales of computer accessories products. The
decreases in mechanical and electromechanical products were principally
attributable to lower sales of electric and manual pencil sharpeners and paper
shredders, partially offset by higher sales of staplers, which were due
principally to sales of Rapid brand manual and high quality electric staplers
(the distribution rights to which in the United States and Canada were obtained
in fiscal 1996). The sales decreases in desktop accessories and supplies and
mechanical and electromechanical products were due to a combination of factors:
lower consumer demand for certain products, lost distribution at some of the
Company's large retail customers, and to timing of some major product promotion
programs. The increases in office furniture product sales were due primarily to
higher sales of Bevis brand furniture products, particularly from introductions
of new products. Export sales of office products grew 35.2% and 33.4% in the
third quarter and first nine months of fiscal 1996, respectively, compared to
the same periods of fiscal 1995, primarily as a result of higher sales in
Canada, in Latin America (particularly Mexico), and in Australia.
Gross Profit
The Company's gross profit percentage increased to 37.9% of net sales in the
third quarter of fiscal 1996 from 36.2% in the corresponding quarter of fiscal
1995 and increased to 37.1% in the first nine months of fiscal 1996 from 36.7%
in the first nine months of fiscal 1995. These increases were largely the result
of higher selling prices
<PAGE>
Page 12
and lower raw material costs, partially offset by changes in sales mix (i. e.,
higher sales of office furniture products and foreign sales, which yield lower
gross profit percentages than many of the Company's other products) and to
higher customer returns. Although the Company has realized positive effects from
its recent selling price increases and to some extent, from the stabilization of
costs of some of its raw materials, management is uncertain if these conditions
will continue.
Selling, Shipping, Administrative and General Expenses
Selling and shipping expenses increased to 19.3% of net sales for the third
quarter of fiscal 1996 from 18.4% in the fiscal 1995 third quarter but were
unchanged at 19.4% of net sales for both the first nine months of fiscal 1996
and 1995. The increase in the third quarter of fiscal 1996 was largely the
result of higher shipping and distribution costs, primarily from higher freight
expenses, and marketing administrative expenses.
Administrative and general expenses increased $1.0 million, or 12.3%, in the
third quarter and increased $2.3 million, or 10.5%, in the first nine months of
fiscal 1996 compared to the prior year expense levels for the same periods.
These increases were principally the result of a charge related to incentive
compensation arrangements from the June 1, 1996 hiring of a new Chief Executive
Officer ($.7 million, $.04 per share after-tax) and to costs associated with
issuance of stock grants to certain employees.
Provision for Special Charges
In the first nine months of fiscal 1996, the Company recorded a pre-tax charge
of $.4 million, $.02 per share after tax, relating to the Company's fiscal 1995
decision to relocate and consolidate certain manufacturing and distribution
operations. In the first nine months of 1995, the Company recorded a provision
for organizational changes of $3.7 million, $.15 per share after tax, for costs
incurred in connection with the resignation and replacement of the Company's
Chairman and Chief Executive Officer and other organizational changes.
Approximately $1.2 million of the provisions for organizational changes and
relocation and consolidation of operations is included in liabilities at the end
of the third quarter of fiscal 1996, which principally relates to future
severance related payments.
Interest Expense
Interest expense increased to $1.4 million for the third quarter of fiscal 1996
from $5,000 in the fiscal 1995 third quarter and increased to $3.5 million in
the first nine months of fiscal 1996 from $58,000 in the corresponding period of
the prior year due to significant borrowings under various debt arrangements
discussed in Note 5 to Condensed Consolidated Financial Statements herein and
under "Financial Condition" above.
<PAGE>
Page 13
Other Expense (Income), Net
Other expense, net, of $.3 million in the first nine months of fiscal 1996 was
primarily due to an asset write-down related to an idle plant facility and to
losses on asset disposals. Other income, net, of $.4 million in the fiscal 1995
nine month period was largely due to a recovery of previously written-off
machinery and equipment, as well as to currency exchange gains.
Provision for Income Taxes
The effective tax rate decreased to 33.8% for the third quarter of fiscal 1996
from 35.5% incurred in the third quarter of fiscal 1995, while the effective tax
rate was 34.6% for both the first nine months of fiscal years 1996 and 1995. The
lower third quarter of fiscal 1996 effective tax rate was the result of several
factors, including lower state effective tax rates.
Extraordinary Item
During the third quarter of fiscal 1996, the Company placed $50.0 million of
senior notes with several insurance companies, the proceeds of which were used
to repay the outstanding balance of the Company's term loan and part of the
revolving credit facility. (See Note 5 to Condensed Consolidated Financial
Statements herein and under "Financial Condition" above.) As a result, the
Company recorded an after-tax loss of $.3 million, or $.02 per share, which has
been reflected in the Company's Condensed Consolidated Statements of Income as
an extraordinary item.
<PAGE>
Page 14
Part II - OTHER INFORMATION
Item 6 -Exhibits and Reports on Form 8-K
(a) Exhibits
4.1 Amendment dated as of August 1, 1996 to Credit Agreement
4.2 Note Purchase Agreement dated August 1, 1996
11. Computation of Per Share Earnings
27. Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter for which this
report is filed.
<PAGE>
Page 15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HUNT MANUFACTURING CO.
Date October 9, 1996 By /s/ William E. Chandler
---------------------- ----------------------------
William E. Chandler
Senior Vice President, Finance
(Principal Financial and Accounting Officer)
Date October 9, 1996 By /s/ Donald L. Thompson
---------------------- ---------------------------
Donald L. Thompson
Chairman of the Board
and Chief Executive Officer
<PAGE>
Page 16
EXHIBIT INDEX
Exhibit 4.1 - Amendment dated as of August 1, 1996 to Credit Agreement
--------------------------------------------------------
Exhibit 4.2 - Note Purchase Agreement dated August 1, 1996
--------------------------------------------
Exhibit 11 - Computation of Per Share Earnings
---------------------------------
Exhibit 27 - Financial Data Schedule
-----------------------
<PAGE>
FIRST AMENDMENT
TO
CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (the "Amendment"), dated as of
August 1, 1996, is by and among HUNT MANUFACTURING CO. (the "Borrower"), CERTAIN
GUARANTORS IDENTIFIED ON THE SIGNATURE PAGES HERETO, THE PERSONS IDENTIFIED AS
AN "EXISTING LENDER" ON THE SIGNATURE PAGES HERETO (the "Existing Lenders"), THE
PERSONS IDENTIFIED AS A "NEW LENDER" ON THE SIGNATURE PAGES HERETO (the "New
Lenders" and, together with the Existing Lenders, the "Lenders") and
NATIONSBANK, N.A., as agent for the Lenders (in such capacity, the "Agent").
W I T N E S S E T H:
WHEREAS, pursuant to a Credit Agreement dated as of December 19, 1995
(the "Existing Credit Agreement") among the Borrower, the Guarantors, the
Existing Lenders and the Agent, the Existing Lenders have extended commitments
to make certain credit facilities available to the Borrower; and
WHEREAS, the parties hereto have agreed to amend the
Existing Credit Agreement as set forth herein;
NOW, THEREFORE, in consideration of the agreements herein contained,
the parties hereby agree as follows:
PART I
DEFINITIONS
SUBPART 1.1. Certain Definitions. Unless otherwise defined
herein or the context otherwise requires, the following terms used in
this Amendment, including its preamble and recitals, have the following
meanings:
"Amended Credit Agreement" means the
Existing Credit Agreement as amended hereby.
"Amendment No. 1 Effective Date" is
defined in Subpart 4.1.
SUBPART 1.2. Other Definitions. Unless otherwise defined
herein or the context otherwise requires, terms used in this Amendment,
including its preamble and recitals, have the meanings provided in the
Amended Credit Agreement.
<PAGE>
PART II
AMENDMENTS TO EXISTING CREDIT AGREEMENT
Effective on (and subject to the occurrence of) the Amendment No. 1
Effective Date, the Existing Credit Agreement is hereby amended in accordance
with this Part II. Except as so amended, the Existing Credit Agreement and all
other Credit Documents shall continue in full force and effect.
SUBPART 2.1. Amendments to Section 1.1.
SUBPART 2.1.1. The following definitions in Section 1.1 of the
Existing Credit Agreement are amended in their entireties to read as
follows:
"Agent's Fees" shall have the meaning assigned to such term in
Section 3.5(c).
"Applicable Margin" means, for purposes of calculating the
applicable interest rate for any day for any Eurodollar Loan or the
applicable rate of the Facility Fee for any day for purposes of Section
3.5(a) or the applicable rate of the Standby Letter of Credit Fee for
any day for purposes of Section 3.5(b)(i), the appropriate applicable
margin corresponding to the Consolidated Leverage Ratio in effect as of
the most recent Calculation Date:
- 2 -
<PAGE>
Applicable
Margin for
Eurodollar
Loans Applicable
which are Applicable Margin for
Consolidated Revolving Margin for Standby
Pricing Leverage Credit Facility Letter of
Level Ratio Loans Fee Credit Fee
I Equal to or 27.5 bps 10.0 bps 27.5 bps
less than
2.00 to 1.00
II Greater than 35.0 bps 15.0 bps 35.0 bps
2.00 to 1.00
but equal to
or less than
2.50 to 1.00
III Greater than 42.5 bps 20.0 bps 42.5 bps
2.50 to 1.00
but equal to
or less than
3.00 to 1.00
IV Greater than 50.0 bps 25.0 bps 50.0 bps
3.00 to 1.00
Determination of the appropriate Applicable Margins based on the
Consolidated Leverage Ratio shall be made as of each Calculation Date.
The Consolidated Leverage Ratio in effect as of a Calculation Date
shall establish the Applicable Margins that shall be effective as of
the date designated by the Agent as the Applicable Margin Change Date.
The Agent shall determine the Applicable Margins as of each Calculation
Date and shall promptly notify the Borrower and the Lenders of the
Applicable Margins so determined and of the Applicable Margin Change
Date. Such determinations by the Agent of the Applicable Margins shall
be conclusive absent demonstrable error.
"Available Reinvestment Amount" means, at any time, the
aggregate amount of the Excess Sale Proceeds of all asset sales made
pursuant to Section 8.4(b)(v) with respect to which the related
Application Period has not yet expired, provided that such Excess Sale
Proceeds (i) have not been applied to the purchase, acquisition or
construction of Alternative Assets as contemplated by Section
8.4(b)(v)(B)(1) and (ii) have been applied to prepay the Loans as
contemplated by Section 8.4(b)(v)(B)(2) and Section 3.3(b)(ii).
"Commitment" means (i) with respect to each Lender, the
Revolving Commitment of such Lender, (ii) with respect to
- 3 -
<PAGE>
the Swingline Lender, the Swingline Commitment and (iii) with respect
to the Issuing Lender, the LOC Commitment.
An "Excess Sale Event" shall be deemed to have occurred if
either (1) the net book value of all assets sold pursuant to the terms
of Section 8.4(b)(v) during the preceding twelve (12) months exceeds
15% of Consolidated Total Assets as determined at the end of the
immediately preceding fiscal year or (2) the net book value of all
assets sold pursuant to the terms of Section 8.4(b)(v) during the
preceding thirty-six (36) months exceeds 30% of Consolidated Total
Assets as determined at the end of the fiscal year nearest to the date
thirty-six (36) months prior to such sale of assets.
"Interest Payment Date" means (i) as to any Base Rate Loan,
the last day of each March, June, September and December, the date of
repayment of principal of such Loan and the Termination Date and (ii)
as to any Eurodollar Loan, the last day of each Interest Period for
such Loan and on the Termination Date, and in addition where the
applicable Interest Period is more than 3 months, then also on the date
3 months from the beginning of the Interest Period, and each 3 months
thereafter. If an Interest Payment Date falls on a date which is not a
Business Day, such Interest Payment Date shall be deemed to be the next
succeeding Business Day, except that in the case of Eurodollar Loans
where the next succeeding Business Day falls in the next succeeding
calendar month, then on the next preceding Business Day.
"Interest Period" means (i) as to Eurodollar Loans, a period
of one, two, three or six month's duration, as the Borrower may elect,
commencing in each case, on the date of the borrowing (including
conversions, extensions and renewals), (ii) as to Competitive Loans, a
period commencing in each case on the date of the borrowing and ending
on the date specified in the applicable Competitive Bid whereby the
offer to make such Competitive Loan was extended (such ending date in
any event to be not less than 7 nor more than 180 days from the date of
the borrowing) and (iii) as to Swingline Loans, a period commencing in
each case on the date of the borrowing and ending on the date agreed to
by the Borrower and the Swingline Lender in accordance with the
provisions of Section 2.4(b)(i) (such ending date in any event to be
not more than seven (7) Business Days from the date of borrowing);
provided, however, (A) if any Interest Period would end on a day which
is not a Business Day, such Interest Period shall be extended to the
next succeeding Business Day (except that in the case of Eurodollar
Loans where the next succeeding Business Day falls in the next
succeeding calendar month, then on the next preceding Business Day),
(B) no Interest Period shall extend beyond the Termination Date, and
(C) in the case of Eurodollar Loans, where an Interest Period begins on
a day for which there is no numerically corresponding day in the
calendar
- 4 -
<PAGE>
month in which the Interest Period is to end, such Interest Period
shall end on the last day of such calendar month.
"Loan" or "Loans" means the Revolving Loans (or a portion of
any Revolving Loan bearing interest at the Base Rate or the Eurodollar
Rate and referred to as a Base Rate Loan or a Eurodollar Loan), the
Competitive Loans and/or the Swingline Loans (or any Swingline Loan
bearing interest at the Base Rate or the Quoted Rate and referred to as
a Base Rate Loan or a Quoted Rate Swingline Loan), individually or
collectively, as appropriate.
"Material Subsidiary" means (i) each of Bevis, Hunt Data, Hunt
Holdings, Hunt X-Acto and Seal and (ii) any other direct or indirect
Subsidiary of the Borrower which at any time on or after the Closing
Date has total assets (as determined in accordance with GAAP) equal to
or greater than $1,000,000, provided that the aggregate total assets
(as determined in accordance with GAAP) at any time of all Subsidiaries
of the Borrower excluded from this definition of "Material Subsidiary"
shall not exceed 10% of Consolidated Total Assets as of the then most
recent Calculation Date with respect to which the Agent shall have
received the Required Financial Information.
"Net Proceeds" means proceeds received by the Borrower or any
of its Subsidiaries from time to time in connection with any Asset Sale
or Equity Transaction, net of the actual costs and taxes incurred by
such Person in connection with and attributable to such Asset Sale or
Equity Transaction, as applicable.
"Note" means any Revolving Note, any Competitive Note or the
Swingline Note, as the context may require.
"Notice of Borrowing" means a written notice of borrowing in
substantially the form of Schedule 2.1(b)(i), as required by Section
2.1(b)(i).
"Participation Interest" means, the extension of credit by a
Lender by way of a purchase of a participation in any Letters of Credit
or LOC Obligations as provided in Section 2.2(c), in Swingline Loans as
provided in Section 2.4(b)(iii) or in any Loans as provided in Section
3.13.
"Permitted Investments" means Investments which are either (i)
cash and Cash Equivalents; (ii) accounts receivable created, acquired
or made by the Borrower or any of its Subsidiaries in the ordinary
course of business and payable or dischargeable in accordance with
customary trade terms; (iii) Investments consisting of stock,
obligations, securities or other property received by the Borrower or
any of its Subsidiaries in settlement of accounts receivable (created
in the ordinary course of business) from bankrupt obligors; (iv)
Investments existing as of the Closing Date
- 5 -
<PAGE>
and set forth in Schedule 1.1A; (v) Investments in any Subsidiary of
the Borrower which is a Guarantor; (vi) Investments in any Subsidiary
of the Borrower which is not a Guarantor, provided that the aggregate
outstanding principal amount of all such Investments plus all
Investments made pursuant to subsection (xv) of this definition shall
not exceed, as of the date made, 10% of Consolidated Net Worth as of
the then most recent Calculation Date with respect to which the Agent
shall have received the Required Financial Information; (vii) Guaranty
Obligations permitted by Section 8.1; (viii) acquisitions permitted by
Section 6.15 and Section 8.4(c); (ix) transactions permitted by Section
8.8; (x) loans to directors, officers, employees, agents, customers or
suppliers that do not exceed an aggregate principal amount of
$1,000,000 at any one time outstanding; (xi) Investments received as
consideration in connection with or arising by virtue of any merger,
consolidation, sale or other transfer of assets permitted under Section
8.4; (xii) Investments by the Borrower in a Subsidiary or Affiliate in
connection with a Permitted Receivables Financing; (xiii) intercompany
Indebtedness of Bevis, Seal and Hunt Europe to the Borrower incurred in
the ordinary course of business and consistent with the past practices
of such Persons or for cash management purposes and, in the case of
Hunt Europe, not exceeding $10,000,000 at any time outstanding; (xiv)
in the case of any Foreign Subsidiary of the Borrower, Investments
which may be denominated in a currency other than Dollars, having
similar liquidity, duration and credit quality of issuer as Investments
of the types described in the definition of "Cash Equivalents" set
forth in this Section 1.1; and (xv) Investments in joint ventures and
partnerships, provided that the aggregate outstanding principal amount
of all such Investments plus all Investments made pursuant to
subsection (vi) of this definition shall not exceed, as of the date
made, 10% of Consolidated Net Worth as of the then most recent
Calculation Date with respect to which the Agent shall have received
the Required Financial Information.
"Permitted Liens" means:
(i) Liens in favor of the Agent on behalf of the
Lenders;
(ii) Liens (other than Liens created or imposed under
ERISA) for taxes, assessments or governmental charges or
levies not yet due or Liens for taxes being contested in good
faith by appropriate proceedings for which adequate reserves
determined in accordance with GAAP have been established (and
as to which the Property subject to any such Lien is not yet
subject to foreclosure, sale or loss on account thereof);
- 6 -
<PAGE>
(iii) statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics, materialmen and suppliers
and other liens imposed by law or pursuant to customary
reservations or retentions of title arising in the ordinary
course of business, provided that such Liens secure only
amounts not yet due and payable or, if due and payable, are
being contested in good faith by appropriate proceedings for
which adequate reserves determined in accordance with GAAP
have been established (and as to which the Property subject to
any such Lien is not yet subject to foreclosure, sale or loss
on account thereof);
(iv) Liens (other than Liens created or imposed under
ERISA) incurred or deposits made by the Borrower or any of its
Subsidiaries in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other
types of social security, or to secure the performance of
tenders, statutory obligations, bids, leases, government
contracts, performance and return-of-money bonds and other
similar obligations (exclusive of obligations for the payment
of borrowed money);
(v) Liens in connection with attachments or judgments
(including judgment or appeal bonds) provided that the
judgments secured shall, within 60 days after the entry
thereof, have been discharged or execution thereof stayed
pending appeal, or shall have been discharged within 30 days
after the expiration of any such stay;
(vi) easements, rights-of-way, restrictions
(including zoning restrictions), minor defects or
irregularities in title and other similar charges or
encumbrances not, in any material respect, impairing the use
of the encumbered Property for its intended purposes;
(vii) Liens on Property securing purchase money
Indebtedness (including Capital Leases) to the extent
permitted under Section 8.1(c), provided that any such Lien
attaches to such Property concurrently with or within 90 days
after the acquisition thereof;
(viii) leases or subleases granted to others not
interfering in any material respect with the business
of any Credit Party;
(ix) any interest of title of a lessor under, and
Liens arising from UCC financing statements (or equivalent
filings, registrations or agreements in foreign jurisdictions)
relating to, leases permitted by this Credit Agreement;
- 7 -
<PAGE>
(x) Liens created or deemed to exist in connection
with a Permitted Receivables Financing (including any related
filings of any financing statements), but only to the extent
that any such Lien relates to the applicable receivables and
related property actually sold, contributed or otherwise
conveyed pursuant to such transaction;
(xi) normal and customary rights of setoff upon
deposits of cash in favor of banks or other depository
institutions;
(xii) Liens existing as of the Closing Date and set
forth on Schedule 1.1B; provided that (a) no such Lien shall
at any time be extended to or cover any property of any Credit
Party other than the property subject thereto on the Closing
Date and (b) the principal amount of the Indebtedness secured
by such Liens shall not be increased; and
(xiii) other Liens; provided that the aggregate
outstanding principal amount of all Indebtedness secured by
such Liens plus the aggregate outstanding principal amount of
all Indebtedness of all Subsidiaries of the Borrower plus the
aggregate outstanding obligations incurred in transactions
permitted by Section 8.12 shall not, at any time, exceed 20%
of Consolidated Net Worth as of the then most recent
Calculation Date with respect to which the Agent shall have
received the Required Financial Information.
"Pro Forma Basis" means, with respect to any transaction, that
such transaction shall be deemed to have occurred as of the first day
of the four fiscal-quarter period ending as of the most recent
Calculation Date preceding the date of such transaction with respect to
which the Agent has received the Required Financial Information. As
used herein, "transaction" means (i) any incurrence, assumption or
retirement of Indebtedness as referred to in Section 8.1(i)(i), (ii)
any sale or other disposition of assets as referred to in Section
8.3(b)(iv) or (iii) any acquisition of capital stock or securities or
any purchase, lease or other acquisition of Property as referred to in
Section 8.4(c). With respect to any transaction of the type described
in clause (i) above regarding Indebtedness which has a floating or
formula rate, the implied rate of interest for such Indebtedness for
the applicable period for purposes of this definition shall be
determined by utilizing the rate which is or would be in effect with
respect to such Indebtedness as at the relevant date of determination.
"Required Lenders" means, at any time, Lenders which are then
in compliance with their obligations hereunder (as determined by the
Agent) and holding in the aggregate at
- 8 -
<PAGE>
least 51% of (i) the Commitments to make Revolving Loans or (ii) if the
Commitments have been terminated, the outstanding Loans and
Participation Interests.
"Revolving Commitment" means, with respect to each Lender, the
commitment of such Lender, in an aggregate principal amount at any time
outstanding of up to such Lender's Revolving Commitment Percentage of
the Revolving Committed Amount, (A) to make Revolving Loans in
accordance with the provisions of Section 2.1(a), (B) to purchase
participation interests in Letters of Credit in accordance with the
provisions of Section 2.2(c) and (C) to purchase participation
interests in the Swingline Loans in accordance with the provisions of
Section 2.4(c).
SUBPART 2.1.2. The following definitions set forth in
Section 1.1 of the Existing Credit Agreement are deleted in
their entirety: "Debt Transaction," "Term Loan," "Term Loan
Commitment," "Term Loan Committed Amount," "Term Loan Unused
Fee" and "Term Note."
SUBPART 2.1.3. Section 1.1 of the Existing Credit Agreement is
amended to include the following definitions in their proper
alphabetical location:
"Competitive Bid" means an offer by a Lender to make a
Competitive Loan pursuant to the terms of Section 2.3.
"Competitive Bid Rate" means, as to any Competitive Bid made
by a Lender in accordance with the provisions of Section 2.3, the fixed
rate of interest offered by the Lender making the Competitive Bid.
"Competitive Bid Request" means a request by the Borrower for
Competitive Bids in accordance with the provisions of Section 2.3(b).
"Competitive Bid Request Fee" shall have the meaning assigned
to such term in Section 3.5(d).
"Competitive Loan" means a loan made by a Lender in its
discretion pursuant to the provisions of Section 2.3.
"Competitive Loan Lenders" means, at any time, those Lenders
which have Competitive Loans outstanding.
"Competitive Loan Maximum Amount" shall have the meaning
assigned to such term in Section 2.3(a).
"Competitive Note" means a promissory note of the Borrower in
favor of a Lender delivered pursuant to Section 2.3(i) and evidencing
the Competitive Loans, if any, of such Lender, as such promissory note
may be amended, modified, restated or replaced from time to time.
- 9 -
<PAGE>
"Consolidated Capitalization" means, at any time, the sum of
(i) Consolidated Net Worth at such time plus (ii) Consolidated Funded
Indebtedness at such time.
"Consolidated Funded Indebtedness to Capitalization Ratio"
means, as of any Calculation Date, the ratio of (i) Consolidated Funded
Indebtedness as of such Calculation Date to (ii) Consolidated
Capitalization as of such Calculation
Date.
"Consolidated Total Assets" means, at any time, all items
which, in accordance with GAAP, would be classified as assets on a
consolidated balance sheet of the Borrower as of such time minus the
amount of Contingent Liabilities for Receivables at such time as
determined in accordance with GAAP.
"Contingent Liabilities for Receivables" means, at any time,
the aggregate amount of recourse (solely for defaulted or delinquent
receivables) against the Borrower and all of its Subsidiaries under all
Permitted Receivables Financings.
"Excess Sale Proceeds" means, with respect to any Excess Sale
Event, either (1) if an Excess Sale Event is deemed to occur pursuant
to clause (1) of the definition thereof, the amount by which the Net
Proceeds of all such asset sales made during the preceding twelve (12)
months exceeds 15% of Consolidated Total Assets as determined at the
end of the immediately preceding fiscal year or (2) if an Excess Sale
Event is deemed to occur pursuant to clause (2) of the definition
thereof, the amount by which the Net Proceeds of all such asset sales
made during the preceding thirty-six (36) months exceeds 30% of
Consolidated Total Assets as determined at the end of the fiscal year
nearest to the date thirty-six (36) months prior to such sale of
assets.
"Quoted Rate" means, with respect to any Quoted Rate Swingline
Loan, the fixed percentage rate per annum offered by the Swingline
Lender and accepted by the Borrower with respect to such Swingline Loan
as provided in accordance with the provisions of Section 2.4.
"Quoted Rate Swingline Loan" means a Swingline Loan
bearing interest at a Quoted Rate.
"Senior Note" means any of the 7.86% Senior Notes due August
1, 2011, in an aggregate original principal amount of $50,000,000,
issued by the Borrower in favor of the Senior Noteholders pursuant to
the Senior Note Agreement, as the same may be amended, modified,
supplemented or replaced from time to time.
"Senior Note Agreement" means that certain Note
Purchase Agreement, dated as of August 1, 1996, by and
- 10 -
<PAGE>
between the Borrower and the Senior Noteholders, as the same may be
amended, modified, supplemented or replaced from time to time.
"Senior Noteholder" means any of the holders from time
to time of the Senior Notes.
"Swingline Commitment" means the commitment of the Swingline
Lender to make Swingline Loans in an aggregate principal amount at any
time outstanding of up to the Swingline Committed Amount.
"Swingline Committed Amount" shall have the meaning assigned
to such term in Section 2.4(a).
"Swingline Lender" means NationsBank.
"Swingline Loan" shall have the meaning assigned to such term
in Section 2.4(a).
"Swingline Note" means the promissory note of the Borrower in
favor of the Swingline Lender in the original principal amount of
$2,000,000, as such promissory note may be amended, modified, restated
or replaced from time to time.
SUBPART 2.2. Amendment to Section 2.1(a). Section 2.1(a) of
the Existing Credit Agreement is amended in its entirety to read as
follows:
2.1 Revolving Loans.
(a) Revolving Commitment. Subject to the terms and conditions
hereof and in reliance upon the representations and warranties set
forth herein, each Lender severally agrees to make available to the
Borrower such Lender's Commitment Percentage of revolving credit loans
("Revolving Loans") from time to time from the Closing Date until the
Termination Date, or such earlier date as the Revolving Commitments
shall have been terminated as provided herein for the purposes
hereinafter set forth; provided further, however, that the sum of the
aggregate principal amount of outstanding Revolving Loans shall not
exceed SEVENTY-FIVE MILLION DOLLARS ($75,000,000) (as such aggregate
maximum amount may be reduced from time to time as provided in Section
3.4, the "Revolving Committed Amount"); provided, further, (i) with
regard to each Lender individually, such Lender's outstanding Revolving
Loans shall not exceed such Lender's Commitment Percentage of the
Revolving Committed Amount, and (ii) with regard to the Lenders
collectively, the aggregate principal amount of outstanding Revolving
Loans plus LOC Obligations outstanding plus the aggregate principal
amount of outstanding Competitive Loans plus the aggregate principal
amount of outstanding Swingline Loans shall not exceed the Revolving
Committed Amount. Revolving
- 11 -
<PAGE>
Loans may consist of Base Rate Loans or Eurodollar Loans, or a
combination thereof, as the Borrower may request, and may be repaid and
reborrowed in accordance with the provisions hereof; provided, however,
that no more than 12 separate Eurodollar Loans shall be outstanding
hereunder at any time. For purposes hereof, Eurodollar Loans with
different Interest Periods shall be considered as separate Eurodollar
Loans, even if they begin on the same date, although borrowings,
extensions and conversions may, in accordance with the provisions
hereof, be combined at the end of existing Interest Periods to
constitute a new Eurodollar Loan with a single Interest Period.
Revolving Loans hereunder may be repaid and reborrowed in accordance
with the provisions hereof.
SUBPART 2.3. Amendment to Section 2.2(a). Section 2.2(a) of
the Existing Credit Agreement is amended in its entirety to read as
follows:
2.2 Letter of Credit Subfacility.
(a) Issuance. Subject to the terms and conditions hereof and
of the LOC Documents, if any, and any other terms and conditions which
the Issuing Lender may reasonably require, the Lenders will participate
in the issuance by the Issuing Lender from time to time of such Letters
of Credit from the Closing Date until the Termination Date as the
Borrower may request, in a form acceptable to the Issuing Lender;
provided, however, that (i) the LOC Obligations outstanding shall not
at any time exceed TEN MILLION DOLLARS ($10,000,000) (the "LOC
Committed Amount") and (ii) the sum of the aggregate principal amount
of outstanding Revolving Loans plus LOC Obligations outstanding plus
the aggregate principal amount of outstanding Competitive Loans plus
the aggregate principal amount of outstanding Swingline Loans shall not
at any time exceed the aggregate Revolving Committed Amount. No Letter
of Credit shall (x) have an original expiry date more than one year
from the date of issuance or (y) as originally issued or as extended,
have an expiry date extending beyond the Termination Date. Each Letter
of Credit shall comply with the related LOC Documents. The issuance and
expiry date of each Letter of Credit shall be a Business Day.
SUBPART 2.4. Amendment to Section 2.3. Section 2.3 of the
Existing Credit Agreement is amended in its entirety to read as
follows:
2.3 Competitive Loan Subfacility.
(a) Competitive Loans. Subject to the terms and
conditions and relying upon the representations and
warranties herein set forth, the Borrower may, from time to
- 12 -
<PAGE>
time from the Closing Date until the Termination Date, request and each
Lender may, in its sole discretion, agree to make, Competitive Loans to
the Borrower; provided further, however, that (i) the aggregate
principal amount of outstanding Competitive Loans shall not at any time
exceed the lesser of (a) SEVENTY-FIVE MILLION DOLLARS ($75,000,000) or
(b) the Revolving Committed Amount (the "Competitive Loan Maximum
Amount"), and (ii) the sum of the aggregate principal amount of
outstanding Revolving Loans plus LOC Obligations outstanding plus the
aggregate principal amount of outstanding Competitive Loans plus the
aggregate principal amount of outstanding Swingline Loans shall not at
any time exceed the Revolving Committed Amount. Each Competitive Loan
shall be not less than $5,000,000 in the aggregate and integral
multiples of $1,000,000 in excess thereof (or the remaining portion of
the Competitive Loan Maximum Amount, if less).
(b) Competitive Bid Requests. The Borrower may solicit
Competitive Bids by delivery of a Competitive Bid Request substantially
in the form of Schedule 2.3(b)-1 to the Agent by 12:00 Noon (Charlotte,
North Carolina time) on a Business Day not less than one (1) nor more
than four (4) Business Days prior to the date of a requested
Competitive Loan borrowing. A Competitive Bid Request shall specify (i)
the date of the requested Competitive Loan borrowing (which shall be a
Business Day), (ii) the amount of the requested Competitive Loan
borrowing and (iii) the applicable Interest Periods requested and shall
be accompanied by payment of the Competitive Bid Request Fee. The Agent
shall, promptly following its receipt of a Competitive Bid Request
under this subsection (b), notify the affected Lenders of its receipt
and the contents thereof and invite the Lenders to submit Competitive
Bids in response thereto. A form of such notice is provided in Schedule
2.3(b)-2. No more than three (3) Competitive Bid Requests (e.g., the
Borrower may request Competitive Bids for no more than three (3)
different Interest Periods at a time) shall be submitted at any one
time and Competitive Bid Requests may be made no more frequently than
once every five (5) Business Days.
(c) Competitive Bid Procedure. Each Lender may, in its sole
discretion, make one or more Competitive Bids to the Borrower in
response to a Competitive Bid Request. Each Competitive Bid must be
received by the Agent not later than 10:00 A.M. (Charlotte, North
Carolina time) on the Business Day next succeeding the date of receipt
by the Agent of the related Competitive Bid Request. A Lender may offer
to make all or part of the requested Competitive Loan borrowing and may
submit multiple Competitive Bids in response to a Competitive Bid
Request. The Competitive Bid shall specify (i) the particular
Competitive Bid Request as to which the Competitive Bid is submitted,
(ii) the minimum (which shall be not less than $5,000,000 and integral
multiples of $1,000,000 in excess thereof) and maximum principal
amounts
- 13 -
<PAGE>
of the requested Competitive Loan or Loans as to which the Lender is
willing to make, and (iii) the applicable interest rate or rates and
Interest Period or Periods therefor. A form of such Competitive Bid is
provided in Schedule 2.3(c). A Competitive Bid submitted by a Lender in
accordance with the provisions hereof shall be irrevocable. The Agent
shall promptly notify the Borrower of all Competitive Bids made and the
terms thereof.
(d) Submission of Competitive Bids by Agent. If the Agent, in
its capacity as a Lender, elects to submit a Competitive Bid in
response to any Competitive Bid Request, it shall submit such
Competitive Bid directly to the Borrower one-half of an hour earlier
than the latest time at which the other Lenders are required to submit
their Competitive Bids to the Agent in response to such Competitive Bid
Request pursuant to subsection (c) above.
(e) Acceptance of Competitive Bids. The Borrower may, in its
sole and absolute discretion, subject only to the provisions of this
subsection (e), accept or refuse any Competitive Bid offered to it. To
accept a Competitive Bid, the Borrower shall give written notification
(or telephone notice promptly confirmed in writing) substantially in
the form of Schedule 2.3(e) of its acceptance of any or all such
Competitive Bids to the Agent by 11:00 A.M. (Charlotte, North Carolina
time) on the date on which notice of the Competitive Bids is given to
the Borrower by the Agent; provided, however, (i) the failure by the
Borrower to give timely notice of its acceptance of a Competitive Bid
shall be deemed to be a refusal thereof, (ii) the Borrower may accept
Competitive Bids only in ascending order of rates, (iii) the aggregate
amount of Competitive Bids accepted by the Borrower shall not exceed
the principal amount specified in the Competitive Bid Request, (iv) the
Borrower may accept a portion of a Competitive Bid in the event, and to
the extent, acceptance of the entire amount thereof would cause the
Borrower to exceed the principal amount specified in the Competitive
Bid Request, subject however to the minimum amounts provided herein
(and provided that where two or more Lenders submit such a Competitive
Bid at the same Competitive Bid Rate, then pro rata between or among
such Lenders) and (v) no bid shall be accepted for a Competitive Loan
unless such Competitive Loan is in a minimum principal amount of
$5,000,000 and integral multiples of $1,000,000 in excess thereof,
except that where a portion of a Competitive Bid is accepted in
accordance with the provisions of subsection (iv) hereof, then in a
minimum principal amount of $5,000,000 and integral multiples of
$1,000,000 in excess thereof (but not in any event less than the
minimum amount specified in the Competitive Bid), and in calculating
the pro rata allocation of acceptances of portions of multiple bids at
a particular Competitive Bid Rate pursuant to subsection (iv) hereof,
the amounts shall be rounded to integral multiples of $1,000,000 in a
manner which shall be
- 14 -
<PAGE>
in the discretion of the Borrower. A notice of acceptance of a
Competitive Bid given by the Borrower in accordance with the provisions
hereof shall be irrevocable. The Agent shall, not later than 12:00 Noon
(Charlotte, North Carolina time) on the date of receipt by the Agent of
a notification from the Borrower of its acceptance and/or refusal of
Competitive Bids, notify each affected Lender of its receipt and the
contents thereof. Upon its receipt from the Agent of notification of
the Borrower's acceptance of its Competitive Bid in accordance with the
terms of this subsection (e), each successful bidding Lender will
thereupon become bound, subject to the other applicable conditions
hereof, to make the Competitive Loan in respect of which its bid has
been accepted.
(f) Funding of Competitive Loans. Each Lender which is to make
a Competitive Loan shall make its Competitive Loan borrowing available
to the Agent for the account of the Borrower at the office of the Agent
specified in Section 11.1, or at such other office as the Agent may
designate in writing, by 1:30 P.M. (Charlotte, North Carolina time) on
the date specified in the Competitive Bid Request in Dollars and in
funds immediately available to the Agent. Such borrowing will then be
made available to the Borrower by crediting the account of the Borrower
on the books of such office with the aggregate of the amount made
available to the Agent by the applicable Competitive Loan Lenders and
in like funds as received by the Agent.
(g) Maturity of Competitive Loans. Each Competitive Loan shall
mature and be due and payable in full on the last day of the Interest
Period applicable thereto. Unless the Borrower shall give notice to the
Agent otherwise, the Borrower shall be deemed to have requested a
Revolving Loan borrowing in the amount of the maturing Competitive
Loan, the proceeds of which will be used to repay such Competitive
Loan.
(h) Interest on Competitive Loans. Subject to the provisions
of Section 3.1, Competitive Loans shall bear interest in each case at
the Competitive Bid Rate applicable thereto. Interest on Competitive
Loans shall be payable in arrears on each Interest Payment Date.
(i) Competitive Loan Notes. The Competitive Loans made by each
Lender shall be evidenced by a duly executed promissory note of the
Borrower to each such Lender in an original principal amount equal to
the Competitive Loan Maximum Amount and substantially in the form of
Schedule 2.3(i) (such promissory note, as amended, modified, extended,
renewed or replaced from time to time is hereinafter referred to
individually as a "Competitive Note" and collectively as the
"Competitive Notes").
- 15 -
<PAGE>
SUBPART 2.5. Addition of Section 2.4. The Existing Credit
Agreement is amended by adding the following new Section 2.4
immediately succeeding Section 2.3 thereof::
2.4 Swingline Loan Subfacility.
(a) Swingline Commitment. Subject to the terms and conditions
hereof and in reliance upon the representations and warranties herein
set forth, the Swingline Lender, in its individual capacity, agrees to
make certain revolving credit loans to the Borrower (each a "Swingline
Loan" and, collectively, the "Swingline Loans") from time to time from
the Closing Date until the Termination Date for the purposes
hereinafter set forth; provided further, however, that (i) the
aggregate principal amount of Swingline Loans outstanding at any time
shall not exceed TWO MILLION DOLLARS ($2,000,000.00) (the "Swingline
Committed Amount"), and (ii) the aggregate principal amount of
outstanding Revolving Loans plus LOC Obligations outstanding plus the
aggregate principal amount of outstanding Competitive Loans plus the
aggregate principal amount of outstanding Swingline Loans shall not
exceed the Revolving Committed Amount. Swingline Loans hereunder shall
be made as Base Rate Loans or Quoted Rate Swingline Loans as the
Borrower may request in accordance with the provisions of this Section
2.4, and may be repaid and reborrowed in accordance with the provisions
hereof.
(b) Swingline Loan Advances.
(i) Notices; Disbursement. Whenever the Borrower
desires a Swingline Loan advance hereunder it shall give
written notice (or telephone notice promptly confirmed in
writing) to the Swingline Lender not later than 12:00 Noon
(Charlotte, North Carolina time) on the Business Day of the
requested Swingline Loan advance. Each such notice shall be
irrevocable and shall specify (A) that a Swingline Loan
advance is requested, (B) the date of the requested Swingline
Loan advance (which shall be a Business Day) and (C) the
principal amount of the Swingline Loan advance requested. Each
Swingline Loan shall be made as a Base Rate Loan or a Quoted
Rate Swingline Loan and shall have such maturity date as the
Swingline Lender and the Borrower shall agree upon receipt by
the Swingline Lender of any such notice from the Borrower. The
Swingline Lender shall initiate the transfer of funds
representing the Swingline Loan advance to the Borrower by
3:00 P.M. (Charlotte, North Carolina time) on the Business Day
of the requested borrowing.
(ii) Minimum Amounts. Each Swingline Loan advance shall
be in a minimum principal amount of $100,000 and in integral
multiples of $50,000 in excess thereof (or
- 16 -
<PAGE>
the remaining amount of the Swingline Committed Amount,
if less).
(iii) Repayment of Swingline Loans. The principal amount
of all Swingline Loans shall be due and payable on the earlier
of (A) the maturity date agreed to by the Swingline Lender and
the Borrower with respect to such Loan (which maturity date
shall not be a date more than seven (7) Business Days from the
date of advance thereof) or (B) the Termination Date. The
Swingline Lender may, at any time, in its sole discretion, by
written notice to the Borrower and the Lenders, demand
repayment of its Swingline Loans by way of a Revolving Loan
advance, in which case the Borrower shall be deemed to have
requested a Revolving Loan advance comprised solely of Base
Rate Loans in the amount of such Swingline Loans; provided,
however, that any such demand shall be deemed to have been
given one Business Day prior to the Termination Date and on
the date of the occurrence of any Event of Default described
in Section 9.1 and upon acceleration of the indebtedness
hereunder and the exercise of remedies in accordance with the
provisions of Section 9.2. Each Lender hereby irrevocably
agrees to make its pro rata share of each such Revolving Loan
in the amount, in the manner and on the date specified in the
preceding sentence notwithstanding (I) the amount of such
borrowing may not comply with the minimum amount for advances
of Revolving Loans otherwise required hereunder, (II) whether
any conditions specified in Section 5.2 are then satisfied,
(III) whether a Default or an Event of Default then exists,
(IV) failure of any such request or deemed request for
Revolving Loan to be made by the time otherwise required
hereunder, (V) whether the date of such borrowing is a date on
which Revolving Loans are otherwise permitted to be made
hereunder or (VI) any termination of the Commitments relating
thereto immediately prior to or contemporaneously with such
borrowing. In the event that any Revolving Loan cannot for any
reason be made on the date otherwise required above
(including, without limitation, as a result of the
commencement of a proceeding under the Bankruptcy Code with
respect to the Borrower or any other Credit Party), then each
Lender hereby agrees that it shall forthwith purchase (as of
the date such borrowing would otherwise have occurred, but
adjusted for any payments received from the Borrower on or
after such date and prior to such purchase) from the Swingline
Lender such participations in the outstanding Swingline Loans
as shall be necessary to cause each such Lender to share in
such Swingline Loans ratably based upon its Commitment
Percentage of the Revolving Committed Amount (determined
before giving effect to any termination of the Commitments
pursuant to Section 3.4), provided that (A) all interest
payable on the Swingline Loans shall
- 17 -
<PAGE>
be for the account of the Swingline Lender until the date as
of which the respective participation is purchased and (B) at
the time any purchase of participations pursuant to this
sentence is actually made, the purchasing Lender shall be
required to pay to the Swingline Lender, to the extent not
paid to the Swingline Lender by the Borrower in accordance
with the terms of subsection (c)(ii) hereof, interest on the
principal amount of participation purchased for each day from
and including the day upon which such borrowing would
otherwise have occurred to but excluding the date of payment
for such participation, at the rate equal to the Federal Funds
Rate.
(c) Interest on Swingline Loans. (i) Subject to the
provisions of Section 3.1, each Swingline Loan shall bear
interest at a per annum rate (computed on the basis of the
actual number of days elapsed over a year of 360 days) equal
to:
(A) Base Rate Loans. If such Swingline Loan is a Base
Rate Loan, the Base Rate.
(B) Quoted Rate Swingline Loans. If such Swingline Loan
is a Quoted Rate Swingline Loan, Quoted Rate applicable
thereto.
Notwithstanding any other provision to the contrary set forth in this
Credit Agreement, in the event that the principal amount of any Quoted
Rate Swingline Loan is not repaid on the last day of the Interest
Period for such Loan, then such Loan shall be automatically converted
into a Base Rate Loan at the end of such Interest Period.
(ii) Payment of Interest. Interest on Swingline Loans shall be
payable in arrears on each applicable Interest Payment Date (or at such
other times as may be specified herein).
(d) Swingline Note. The Swingline Loans shall be evidenced by
a duly executed promissory note of the Borrower to the Swingline Lender
in an original principal amount equal to the Swingline Committed Amount
substantially in the form of Schedule 2.4(d) (such promissory note, as
amended, modified, extended, renewed or replaced from time to time is
hereinafter referred to as the "Swingline Note").
SUBPART 2.6. Amendment to Section 3.2. The first sentence of
Section 3.2 of the Existing Credit Agreement is amended in its entirety
to read as follows:
3.2 Extension and Conversion. Subject to the terms of Section
5.2, the Borrower shall have the option, on any Business Day, to extend
existing Loans into a subsequent permissible Interest Period or to
convert Loans into Loans
- 18 -
<PAGE>
of another type; provided, however, that (i) except as provided in
Section 3.8, Eurodollar Loans may be converted into Base Rate Loans
only on the last day of the Interest Period applicable thereto, (ii)
Eurodollar Loans may be extended, and Base Rate Loans may be converted
into Eurodollar Loans, only if no Default or Event of Default is in
existence on the date of extension or conversion, (iii) Loans extended
as, or converted into, Eurodollar Loans shall be subject to the terms
of the definition of "Interest Period" set forth in Section 1.1 and
shall be in such minimum amounts as provided in Section 2.1(b)(ii),
(iv) no more than 12 separate Eurodollar Loans shall be outstanding
hereunder at any time, (v) any request for extension or conversion of a
Eurodollar Loan which shall fail to specify an Interest Period shall be
deemed to be a request for an Interest Period of one month and (vi)
Competitive Loans and Swingline Loans may not be extended or converted
pursuant to this Section 3.2.
SUBPART 2.7. Amendment to Section 3.3. Section 3.3 of the
Existing Credit Agreement is amended in its entirety to read as
follows:
3.3 Prepayments.
(a) Voluntary Prepayments. The Borrower shall have the right
to prepay Loans in whole or in part from time to time without premium
or penalty; provided, however, that (i) Eurodollar Loans may only be
prepaid on three Business Days' prior written notice to the Agent and
specifying the applicable Loans to be prepaid; (ii) any prepayment of
Eurodollar Loans, Competitive Loans or Quoted Rate Swingline Loans will
be subject to Section 3.11; and (iii) each such partial prepayment of
Loans shall be in a minimum principal amount of (A) in the case of
Revolving Loans and Competitive Loans, $2,000,000 and integral
multiples of $1,000,000 in excess thereof and (B) in the case of
Swingline Loans, $100,000 and integral multiples of $50,000 in excess
thereof. Subject to the foregoing terms, amounts prepaid hereunder
shall be applied as the Borrower may elect; provided that if the
Borrower fails to specify a voluntary prepayment then such prepayment
shall be applied first to Base Rate Loans and then to Eurodollar Loans
in direct order of Interest Period maturities.
(b) Mandatory Prepayments.
(i) If at any time, (A) the sum of the aggregate amount
of outstanding Revolving Loans plus LOC Obligations outstanding plus
the aggregate principal amount of outstanding Competitive Loans plus
the aggregate principal amount of outstanding Swingline Loans shall
exceed the Revolving Committed Amount or (B) the aggregate principal
amount of outstanding Competitive Loans shall exceed the Competitive
Loan Maximum Amount, the Borrower promises to
- 19 -
<PAGE>
prepay immediately the outstanding principal balance on the Revolving
Loans and/or Competitive Loans in an amount sufficient to eliminate
such excess.
(ii) (A) Upon the occurrence of any Excess Sale Event,
the Borrower shall, immediately following the related Application
Period, prepay the Loans in an amount equal to the Excess Sale Proceeds
not applied (or caused to be applied) by the Borrower during the
related Application Period to the purchase, acquisition or construction
of Alternative Assets as contemplated by the terms of Section
8.4(b)(v)(B)(1) multiplied by the percentage determined by dividing (1)
the then current Revolving Committed Amount by (2) the sum of (I) the
then current Revolving Committed Amount plus (II) if the Senior
Noteholders shall require the Borrower to prepay the Senior Notes with
any such Excess Sale Proceeds, the aggregate then outstanding principal
amount of all Senior Notes.
(B) Immediately upon the occurrence of the Fresno Asset Sale,
the Borrower shall prepay the Loans in an amount equal to 50% of the
Net Proceeds thereof in excess of $900,000.
(iii) To the extent that the aggregate cumulative amount
of cash (including cash received in respect of non-cash consideration)
Net Proceeds from Equity Transactions received by the Borrower or any
of its Subsidiaries during any fiscal year exceeds $500,000, the
Borrower shall, within 60 days of receipt of any such Net Proceeds at
any time that the Consolidated Leverage Ratio as of the most recent
fiscal quarter end with respect to which the Agent shall have received
the Required Financial Information is greater than 2.50 to 1.00, prepay
the Loans in an amount equal to 50% of the portion of such cash Net
Proceeds exceeding $500,000 not applied by the Borrower within such 60
day period to pay the purchase price in connection with any acquisition
permitted by the terms of Section 8.4(c).
(c) General. All prepayments made pursuant to this Section 3.3
shall be subject to Section 3.11, shall be applied first to Base Rate
Loans and then to Eurodollar Loans in direct order, shortest to
longest, of Interest Period maturities and shall be accompanied by
accrued interest on the principal amount being prepaid to the date of
prepayment and all other amounts due and payable hereunder with respect
to such Loans. Amounts prepaid may be reborrowed in accordance with the
provisions hereof.
SUBPART 2.8. Amendment to Section 3.4(a). Section 3.4 of the
Existing Credit Agreement is amended in its entirety to read as
follows:
3.4 Termination and Reduction of Revolving Committed
Amount.
- 20 -
<PAGE>
(a) Voluntary Reductions. The Borrower may from time to time
permanently reduce or terminate the Revolving Committed Amount in whole
or in part (in minimum aggregate amounts of $5,000,000 or in integral
multiples of $1,000,000 in excess thereof (or, if less, the full
remaining amount of the then applicable Revolving Committed Amount))
upon three Business Days' prior written notice to the Agent; provided,
however, no such termination or reduction shall be made which would
reduce the Revolving Committed Amount to an amount less than the
aggregate principal amount of outstanding Revolving Loans plus LOC
Obligations outstanding plus the aggregate principal amount of
outstanding Competitive Loans plus the aggregate principal amount of
outstanding Swingline Loans. The Agent shall promptly notify each of
the Lenders of receipt by the Agent of any notice from the Borrower
pursuant to this Section 3.4(a).
(b) Mandatory Reductions.
(i) On any date that the Revolving Loans are required to be
prepaid or the Revolving Commitments are required to be reduced
pursuant to the terms of Section 3.3(b), the Revolving Committed Amount
automatically shall be permanently reduced by the amount of such
required
prepayment.
(ii) On any date that the Borrower shall enter into a
Permitted Receivables Financing, the Revolving Committed Amount
automatically shall be permanently reduced by the facility commitment
amount of such Permitted Receivables
Financing.
(c) Termination Date. The Commitments of the Lenders
and the Issuing Lender shall automatically terminate on the
Termination Date.
SUBPART 2.9. Amendment to Section 3.5(a). Subsections (a), (c)
and (d) of Section 3.5 of the Existing Credit Agreement are amended in
their entireties to read as follows:
3.5 Fees.
(a) Facility Fee. In consideration of the Revolving
Commitments of the Lenders hereunder, the Borrower agrees to pay to the
Agent for the account of each Lender a fee (the "Facility Fee") on such
Lender's Commitment Percentage of the Revolving Committed Amount
(regardless of usage, but taking into account any permanent reductions
in the Revolving Committed Amount) computed at a per annum rate for
each day during the applicable Facility Fee Calculation Period
(hereinafter defined) at a rate equal to the Applicable Margin in
effect from time to time. The Facility Fee shall commence to accrue on
the Closing Date and shall be due and payable in arrears on the
fifteenth (15th) day of
- 21 -
<PAGE>
each January, April, July and October (and the Termination Date) for
the immediately preceding fiscal quarter (or portion thereof) (each
such fiscal quarter or portion thereof for which the Facility Fee is
payable hereunder being herein referred to as an "Facility Fee
Calculation Period"), beginning with the first of such dates to occur
after the Closing Date.
* * * * *
(c) Administrative Fees. The Borrower agrees to pay
to the Agent, for its own account and for the account of
NationsBanc Capital Markets, Inc., as applicable, the fees
referred to in the Agent's Fee Letter (collectively, the
"Agent's Fees").
(d) Competitive Bid Request Fee. The Borrower shall make
payment to the Agent for each Competitive Bid Request of a Competitive
Bid administrative fee (the "Competitive Bid Request Fee") of $1500
concurrently with delivery of any Competitive Bid Request (whether or
not any Competitive Bid is offered by a Lender or accepted by the
Borrower and whether or not any Competitive Loan is extended by any
Lender in connection with such Competitive Bid Request).
SUBPART 2.10. Amendment to Section 3.11. The first sentence of
Section 3.11 of the Existing Credit Agreement is amended in its
entirety to read as follows:
3.11 Indemnity. The Borrower promises to indemnify each Lender
and to hold each Lender harmless from any loss or expense which such
Lender may sustain or incur (other than through such Lender's gross
negligence or willful misconduct) as a consequence of (a) default by
the Borrower in making a borrowing of, conversion into or continuation
of Eurodollar Loans or Quoted Rate Swingline Loans after the Borrower
has given a notice requesting the same in accordance with the
provisions of this Credit Agreement, (b) default by the Borrower in
making any prepayment of a Eurodollar Loan or Quoted Rate Swingline
Loan after the Borrower has given a notice thereof in accordance with
the provisions of this Credit Agreement or (c) the making of a
prepayment of Eurodollar Loans or Quoted Rate Swingline Loans on a day
which is not the last day of an Interest Period with respect thereto.
SUBPART 2.11. Amendment to Section 3.12(a). Section 3.12(a) of
the Existing Credit Agreement is amended in its entirety to read as
follows:
3.12 Pro Rata Treatment. Except to the extent
otherwise provided herein:
(a) Loans. Each Loan, each payment or prepayment of
principal of any Loan or reimbursement obligations arising
- 22 -
<PAGE>
from drawings under Letters of Credit, each payment of interest on the
Loans or reimbursement obligations arising from drawings under Letters
of Credit, each payment of Facility Fees, each payment of the Standby
Letter of Credit Fee, each payment of the Trade Letter of Credit Fee,
each reduction of the Revolving Committed Amount and each conversion or
extension of any Loan, shall be allocated pro rata among the Lenders in
accordance with the respective principal amounts of their outstanding
Loans and Participation Interests. With respect to Competitive Loans,
if the Borrower fails to specify the particular Competitive Loan or
Loans as to which any payment or other amount should be applied and it
is not otherwise clear as to the particular Competitive Loan or Loans
to which such payment or other amounts relate, or any such payment or
other amount is to be applied to Competitive Loans without regard to
any such direction by the Borrower, then each payment or prepayment of
principal on Competitive Loans and each payment of interest or other
amount on or in respect of Competitive Loans, shall be allocated pro
rata among the relevant Competitive Loan Lenders in accordance with the
then outstanding amounts of their respective Competitive Loans.
SUBPART 2.12. Amendments to Section 5.1. The introductory
paragraph and subsection (c) of Section 5.1 of the Existing Credit
Agreement are amended in their entireties to read as follows:
5.1 Closing Conditions. The obligation of the Lenders to enter
into this Credit Agreement and to make the initial Loans or the Issuing
Lender to issue the initial Letter of Credit, whichever shall occur
first, shall be subject to satisfaction of the following conditions (in
form and substance acceptable to the Lenders):
* * * * *
(c) [reserved];
SUBPART 2.13. Amendments to Section 5.2. The introductory
paragraph and subsection (i) of Section 5.2 of the Existing Credit
Agreement are amended in their entireties to read as follows:
5.2 Conditions to all Extensions of Credit. The obligations of
each Lender to make, convert or extend any Loan and of the Issuing
Lender to issue or extend Letters of Credit (including the initial
Loans and the initial Letter of Credit) are subject to satisfaction of
the following conditions in addition to satisfaction on the Closing
Date of the conditions set forth in Section 5.1:
(i) The Borrower shall have delivered (A) in
the case of any Revolving Loan, an appropriate Notice
- 23 -
<PAGE>
of Borrowing or Notice of Extension/Conversion or (B) in the
case of any Letter of Credit, the Issuing Lender shall have
received an appropriate request for issuance in accordance
with the provisions of Section 2.2(b);
SUBPART 2.14. Amendment to Section 6.15. Section 6.15 of the
Existing Credit Agreement is amended in its entirety to read as
follows:
6.15 Purpose of Loans and Letters of Credit. The proceeds of
the Loans hereunder shall be used solely by the Borrower (i) to finance
or refinance the Stock Repurchase (if any), (ii) for the working
capital and general corporate purposes of the Borrower and its Domestic
Subsidiaries and (iii) to finance acquisitions by the Borrower. The
Letters of Credit shall be used only for or in connection with appeal
bonds, reimbursement obligations arising in connection with surety and
reclamation bonds, reinsurance, domestic or international trade
transactions and obligations not otherwise aforementioned relating to
transactions entered into by the Borrower in the ordinary course of
business.
SUBPART 2.15. Amendment to Section 7.11. Section 7.11 of the
Existing Credit Agreement is amended in its entirety to read as
follows:
7.11 Financial Covenants.
(a) Consolidated Net Worth. Consolidated Net Worth at all
times shall be no less than $45,000,000, increased on a cumulative
basis as of the last day of each fiscal year commencing with the last
day of fiscal year 1996, by an amount equal to 30% of Consolidated Net
Income for the fiscal year then ended.
(b) Consolidated Leverage Ratio. The Consolidated
Leverage Ratio at each Calculation Date shall be no greater
than the following proportions:
Period Ratio
------ -----
For any first fiscal 3.25 to 1.00
quarter period, second
fiscal quarter period or
fourth fiscal quarter
period occurring from
the Closing Date
through the last day of
fiscal year 1996 of the
Borrower
- 24 -
<PAGE>
For any third fiscal 3.75 to 1.00
quarter period occurring
from the Closing Date
through the last day of
fiscal year 1996 of the
Borrower
For any first fiscal 3.00 to 1.00
quarter period, second
fiscal quarter period or
fourth fiscal quarter
period occurring from
the first day of fiscal
year 1997 of the Borrower
through the last day of
such fiscal year
For any third fiscal 3.50 to 1.00
quarter period occurring
from the first day of
fiscal year 1997 of the
Borrower through the last
day of such fiscal year
For any first fiscal 2.75 to 1.00
quarter period, second
fiscal quarter period or
fourth fiscal quarter
period occurring from
the first day of fiscal
year 1998 of the Borrower
through the last day of
such fiscal year
For any third fiscal 3.25 to 1.00
quarter period occurring
from the first day of
fiscal year 1998 of the
Borrower through the last
day of such fiscal year
For any first fiscal 2.50 to 1.00
quarter period, second
fiscal quarter period or
fourth fiscal quarter
period occurring from
the first day of fiscal
year 1999 of the Borrower
and thereafter
- 25 -
<PAGE>
For any third fiscal 3.00 to 1.00
quarter period occurring
from the first day of
fiscal year 1999 of the
Borrower and thereafter
(c) Consolidated Fixed Charge Coverage Ratio. The
Consolidated Fixed Charge Coverage Ratio at each Calculation Date shall
be no less than 1.30 to 1.00.
(d) Consolidated Interest Coverage Ratio. The
Consolidated Interest Coverage Ratio at each Calculation Date shall be
no less than 2.00 to 1.00.
(e) Consolidated Funded Indebtedness to Capitalization
Ratio. The Consolidated Funded Indebtedness to
Capitalization Ratio at each Calculation Date shall be no
greater than the following proportions:
Period Ratio
------ -----
For any fiscal quarter 0.70 to 1.00
period occurring from
from the first day of the
third fiscal quarter period
of 1996 through the last
day of fiscal year 1997
of the Borrower
For any fiscal quarter 0.65 to 1.00
occurring from the first
day of fiscal year 1998 of
the Borrower through the
last day of such fiscal year
For any fiscal quarter 0.60 to 1.00
period occurring from the
first day of fiscal year
1999 of the Borrower and
thereafter
SUBPART 2.16. Amendment to Section 8.1. Section 8.1 of the
Existing Credit Agreement is amended in its entirety to read as
follows:
8.1 Indebtedness. The Borrower will not, nor will it permit
any of its Subsidiaries to, contract, create, incur, assume or permit
to exist any Indebtedness, except:
(a) Indebtedness arising under this Credit Agreement
and the other Credit Documents;
(b) Indebtedness of the Borrower and any of its
Subsidiaries existing as of the Closing Date set forth in
Schedule 8.1 (and renewals, refinancings and extensions
- 26 -
<PAGE>
thereof on terms and conditions no less favorable to such
Person than such existing Indebtedness);
(c) purchase money Indebtedness (including Capital Leases)
hereafter incurred by the Borrower or any of its Foreign Subsidiaries
to finance the purchase of fixed assets provided that (i) the aggregate
principal amount of such Indebtedness plus the aggregate outstanding
principal amount of Indebtedness permitted pursuant to clause (b) above
and clause (i)(i) below shall not exceed $10,000,000 at any time, (ii)
such Indebtedness when incurred shall not exceed the purchase price of
the asset(s) financed and (iii) no such Indebtedness shall be
refinanced for a principal amount in excess of the principal balance
outstanding thereon at the time of such refinancing;
(d) unsecured Indebtedness of the Borrower or any of its
Foreign Subsidiaries with respect to letters of credit (other than
Letters of Credit issued hereunder) provided that the aggregate maximum
amount available to be drawn under all such letters of credit, together
with all unreimbursed drawings with respect thereto, shall not exceed
$10,000,000 at any time outstanding;
(e) obligations of the Borrower in respect of interest rate
protection agreements, foreign currency exchange, commodity purchase or
option agreements or other interest or exchange rate or commodity price
hedging agreements entered into in order to manage existing or
anticipated interest rate, exchange rate or commodity price risks and
not for speculative purposes;
(f) obligations in connection with any Permitted
Receivables Financing;
(g) intercompany Indebtedness of Bevis, Seal and Hunt Europe
owing to the Borrower to the extent permitted by the definition of
"Permitted Investments" set forth in Section 1.1;
(h) Indebtedness arising under the Senior Note Agreement and
the Senior Notes in an aggregate principal amount of up to $50,000,000;
and
(i) in addition to the Indebtedness otherwise permitted
by this Section 8.1,
(i) other Indebtedness hereafter incurred by the Borrower or
any of its Foreign Subsidiaries provided that (A) in the case
of any such Indebtedness incurred by the Borrower, the loan
documentation with respect to such Indebtedness shall not
contain covenants or default provisions relating to the
Borrower and its Subsidiaries that are more restrictive than
the covenants and default provisions contained in the
- 27 -
<PAGE>
Credit Documents, (B) on the date of incurrence of such
Indebtedness after giving effect on a Pro Forma Basis to the
incurrence of such Indebtedness and to the concurrent
retirement of any other Indebtedness of the Borrower or any of
its Subsidiaries, no Default or Event of Default would exist
hereunder and (C) the aggregate principal amount of such
Indebtedness plus the aggregate outstanding principal amount
of Indebtedness permitted pursuant to clauses (b) and (c)
above shall not exceed $10,000,000 at any time; and
(ii) (A) Guaranty Obligations of the Borrower with respect to
any Indebtedness of a Foreign Subsidiary permitted under this
Section 8.1 and (B) Guaranty Obligations of any Subsidiary of
the Borrower that is a Guarantor with respect to any
Indebtedness of the Borrower permitted under this Section 8.1.
Notwithstanding the foregoing of this Section 8.1, the aggregate
outstanding principal amount of all Indebtedness hereafter incurred by
any Subsidiaries of the Borrower (other than Indebtedness permitted
under subsection (b) and (g) hereof) plus the aggregate outstanding
principal amount of all Indebtedness secured by Liens permitted under
subsection (xiii) of the definition of "Permitted Liens" plus the
aggregate outstanding obligations incurred in transactions permitted by
Section 8.12 shall not exceed, at any time, 20% of Consolidated Net
Worth as of the then most recent Calculation Date with respect to which
the Agent shall have received the Required Financial Information.
SUBPART 2.17. Amendments to Section 8.4. Subsections (b) and
(c) of Section 8.4 of the Existing Credit Agreement are amended in
their entireties to read as follows:
8.4 Consolidation, Merger, Sale or Purchase of Assets,
etc. The Borrower will not, nor will it permit any of its
Subsidiaries to:
* * * * *
(b) sell, lease, transfer or otherwise dispose of any Property
(including without limitation pursuant to any sale and leaseback
transaction) other than (i) the sale of inventory in the ordinary
course of business for fair consideration, (ii) the sale or disposition
of machinery and equipment no longer used or useful in the conduct of
such Person's business, (iii) in a Permitted Receivables Financing,
(iv) the Fresno Asset Sale, provided that the Borrower shall (A)
immediately repay or prepay in full the industrial revenue bond
financing in an outstanding principal amount as of the Closing Date of
approximately $1,600,000 relating to such assets and (B) prepay the
Loans in connection with such asset sale to the extent required by
Section 3.3(b)(ii)(B) and (v) other sales of assets,
- 28 -
<PAGE>
provided that (A) after giving effect on a Pro Forma Basis to such sale
or other disposition, no Default or Event of Default would exist
hereunder and (B) the Borrower shall give notice to the Agent and each
of the Lenders specifying the anticipated or actual date of such asset
sale, briefly describing the assets sold or to be sold and setting
forth the net book value of such assets and the aggregate consideration
and Net Proceeds to be received for such assets in connection with such
asset sale, and thereafter the Borrower shall (1) within the period of
twelve months following the consummation of such asset sale (with
respect to any such asset sale, the "Application Period"), apply (or
cause its applicable Subsidiary to apply) an amount equal to the Excess
Sale Proceeds of such asset sale to the purchase, acquisition or, in
the case of real property, construction of Alternative Assets in a
transaction complying with all of the terms and conditions of this
Credit Agreement or (2) prepay the Loans in connection with such asset
sale to the extent required by Section 3.3(b)(ii); or
(c) acquire all or any portion of the capital stock or
securities of any other Person or purchase, lease or otherwise acquire
(in a single transaction or a series of related transactions) all or
any substantial part of the Property of any other Person unless (i)
such Property or Person represents operations similar to those of
Borrower and its Subsidiaries, (ii) no Default or Event of Default
exists hereunder, and (iii) after giving effect to such transaction, no
Default or Event of Default would exist hereunder.
SUBPART 2.18. Amendment to Section 8.6. Section 8.6 of the
Existing Credit Agreement is amended in its entirety to read as
follows:
8.6 Restricted Payments. The Borrower will not, nor will it
permit any of its Subsidiaries to, directly or indirectly declare,
order, make or set apart any sum for or pay any Restricted Payment,
except (i) to make (A) dividends payable solely in the same class of
capital stock of such Person and (B) other Restricted Payments payable
solely in common stock of such Person, (ii) to make dividends or other
distributions payable to the Borrower (directly or indirectly through
Subsidiaries of the Borrower), (iii) as permitted by Section 8.7 and
(iv) so long as no Default or Event of Default exists hereunder, other
Restricted Payments made by the Borrower.
SUBPART 2.19. Amendment to Section 8.7. Section 8.7 of the
Existing Credit Agreement is amended in its entirety to read as
follows:
8.7 Prepayments of Indebtedness, etc. The Borrower
will not, nor will it permit any of its Subsidiaries to, (i)
if any Default or Event of Default has occurred and is
- 29 -
<PAGE>
continuing or would be directly or indirectly caused as a result
thereof, make (or give any notice with respect thereto) any voluntary
or optional payment or prepayment or redemption or acquisition for
value of (including without limitation, by way of depositing money or
securities with the trustee with respect thereto before due for the
purpose of paying when due), refund, refinance or exchange of any other
Indebtedness (other than Subordinated Indebtedness) or (ii) make (or
give any notice with respect thereto) any voluntary or optional payment
or prepayment or redemption or acquisition for value of (including
without limitation, by way of depositing money or securities with the
trustee with respect thereto before due for the purpose of paying when
due), refund, refinance or exchange of any Indebtedness subordinated to
the obligations of the Borrower or the Guarantors hereunder or (iii)
amend, modify or change its articles of incorporation (or corporate
charter or other similar organizational document) or bylaws (or other
similar document) where such change would have a Material Adverse
Effect.
SUBPART 2.20. Amendment to Section 8.12. Section 8.12 of the
Existing Credit Agreement is amended in its entirety to read as
follows:
8.12 Sale Leasebacks. The Borrower will not, nor will it
permit any of its Subsidiaries to, directly or indirectly, become or
remain liable as lessee or as guarantor or other surety with respect to
any lease, whether an Operating Lease or a Capital Lease, of any
Property (whether real or personal or mixed), whether now owned or
hereafter acquired, (i) which such Person has sold or transferred or is
to sell or transfer to any other Person other than the Borrower or (ii)
which such Person intends to use for substantially the same purpose as
any other Property which has been sold or is to be sold or transferred
by such Person to any other Person in connection with such lease that
would cause the aggregate outstanding obligations of the Borrower and
its Subsidiaries in respect of all such transactions plus the aggregate
outstanding principal amount of all Indebtedness secured by Liens
permitted under subsection (xiii) of the definition of "Permitted
Liens" plus the aggregate outstanding principal amount of all
Indebtedness of all Subsidiaries of the Borrower to exceed, at any
time, 20% of Consolidated Net Worth as of the then most recent
Calculation Date with respect to which the Agent shall have received
the Required Financial Information.
SUBPART 2.21. Amendment to Section 8.13. Section 8.13 of the
Existing Credit Agreement is amended in its entirety to read as
follows:
8.13 No Further Negative Pledges. The Borrower will
not, nor will it permit any of its Subsidiaries to, enter
into, assume or become subject to any agreement prohibiting
- 30 -
<PAGE>
or otherwise restricting the creation or assumption of any Lien upon
its properties or assets, whether now owned or hereafter acquired, or
requiring the grant of any security for such obligation if security is
given for some other obligation, other than (i) pursuant to the Senior
Note Agreement and the Senior Notes, in each case as in effect as of
August 1, 1996, and (ii) prohibitions against other encumbrances on
specific Property encumbered to secure payment of particular
Indebtedness (which Indebtedness relates solely to such specific
Property, and improvements and accretions thereto, and is otherwise
permitted hereby).
SUBPART 2.22. Amendments to Section 9.1. Section 9.1 of the
Existing Credit Agreement is amended by replacing the period following
subsection (k) with a semicolon followed by the word "or" and including
the following subsection (l):
9.1 Events of Default. An Event of Default shall exist upon
the occurrence of any of the following specified events (each an "Event
of Default"):
* * * * *
(l) Senior Note Agreement. There shall occur and be
continuing any Event of Default under and as defined in the
Senior Note Agreement.
SUBPART 2.23. Amendments to Section 11.6. The last sentence of
Section 11.6 of the Existing Credit Agreement is amended in its
entirety to read as follows:
No provision of Section 2.2 may be amended without the consent
of the Issuing Lender, no provision of Section 2.4 may be amended
without the consent of the Swingline Lender and no provision of Section
10 may be amended without the consent of the Agent.
SUBPART 2.24. Amendments to Schedule 2.1(a). Schedule 2.1(a)
of the Existing Credit Agreement is hereby deleted in its entirety and
a new schedule in the form of Schedule 2.1(a) attached hereto is
substituted therefor.
SUBPART 2.25. Amendments to Schedule 2.1(b)(i). Schedule
2.1(b)(i) of the Existing Credit Agreement is hereby deleted in its
entirety and a new schedule in the form of Schedule 2.1(b)(i) attached
hereto is substituted therefor.
SUBPART 2.26. Deletion of Schedule 2.3(f). Schedule 2.3(f) of
the Existing Credit Agreement is hereby deleted in its entirety.
SUBPART 2.27. Amendments to Schedule 11.3(b). Schedule 11.3(b)
of the Existing Credit Agreement is
- 31 -
<PAGE>
hereby deleted in its entirety and a new schedule in the form of
Schedule 11.3(b) attached hereto is substituted therefor.
SUBPART 2.28. Additional Schedules. The Existing Credit
Agreement is hereby amended to include Schedule 2.3(b)-1, Schedule
2.3(b)-2, Schedule 2.3(c), Schedule 2.3(e), Schedule 2.3(i) and
Schedule 2.4(d) in the forms, respectively, of Schedule 2.3(b)-1,
Schedule 2.3(b)-2, Schedule 2.3(c), Schedule 2.3(e), Schedule 2.3(i)
and Schedule 2.4(d) attached hereto.
PART III
ASSIGNMENTS AND ASSUMPTIONS
The Existing Lenders hereby sell and assign, without recourse, to the
New Lenders, and the New Lenders hereby purchase and assume, without recourse,
from the Existing Lenders, effective as of the Amendment No. 1 Effective Date,
such interests in the Existing Lenders' rights and obligations under the
Existing Credit Agreement (including, without limitation, the Commitments of the
Existing Lenders on the Amendment No. 1 Effective Date and the Revolving Loans
and LOC Obligations which are outstanding on the Amendment No. 1 Effective Date)
as shall be necessary in order to give effect to the reallocations of the
Revolving Committed Amounts and Revolving Commitment Percentages effected by the
amendment to Schedule 2.1(a) to the Existing Credit Agreement pursuant to
Subpart 2.24. Each of the Existing Lenders and the New Lenders hereby makes and
agrees to be bound by all the representations, warranties and agreements set
forth in Section 11.3(b) of the Existing Credit Agreement (as amended hereby).
From and after the Amendment No. 1 Effective Date (i) each of the New Lenders
shall be a party to and be bound by the provisions of the Existing Credit
Agreement (as amended hereby) and, to the extent of the interests assigned
hereby, have the rights and obligations of a Lender thereunder and under the
other Credit Documents and (ii) each of the Existing Lenders shall, to the
extent of the interests assigned or terminated hereby, relinquish its rights and
be released from its obligations under the Existing Credit Agreement. The Agent
hereby agrees that no transfer fee shall be payable under Section 11.3(b) of the
Existing Credit Agreement or otherwise in connection with the assignments
effected pursuant to this Part III.
PART IV
CONDITIONS TO EFFECTIVENESS
SUBPART 4.1. Amendment No. 1 Effective Date. This Amendment
shall be and become effective as of the date hereof (the "Amendment No.
1 Effective Date") when all of the conditions set forth in this Subpart
4.1 shall have been satisfied, and thereafter this
- 32 -
<PAGE>
Amendment shall be known, and may be referred to, as
"Amendment No. 1."
SUBPART 4.1.1. Execution of Counterparts of Amendment. The
Agent shall have received counterparts (or other evidence of execution,
including telephonic message, satisfactory to the Agent) of this
Amendment, which collectively shall have been duly executed on behalf
of each of the Borrower, the Guarantors, the Agent and the Lenders.
SUBPART 4.1.2. Execution of Notes. The Agent shall
have received:
(a) An appropriate original Amended and Restated
Revolving Note for each applicable Lender, executed by
the Borrower;
(b) An appropriate original Competitive Note for
each applicable Lender, executed by the Borrower; and
(c) An appropriate original Swingline Note for
the Swingline Lender, executed by the Borrower.
SUBPART 4.1.3. Senior Notes.
(a) (i) The Borrower shall have entered into the Note
Purchase Agreement(s) with each holder of a Senior Note, (ii)
the Borrower shall have executed the Senior Notes and (iii)
the Agent shall have received a copy, certified by an officer
of the Borrower as true and complete, of the Note Purchase
Agreement(s) and each of the Senior Notes as originally
executed and delivered, and no amendment or modification
thereof shall have been entered into on or prior to the
Amendment No. 1 Effective Date which shall not have been
approved by each of the Lenders.
(b) The Agent shall have received a copy certified by
a secretary or assistant secretary of the Borrower of a
resolution of the directors of the Borrower approving the Note
Purchase Agreement(s).
SUBPART 4.1.4. Prepayments. The Borrower (a) shall have
received proceeds from the sale of the Senior Notes in an aggregate
principal amount of $50,000,000 and (b) shall have (i) prepaid in full
all principal, interest and other amounts owing in respect of the Term
Loan (as defined in the Existing Credit Agreement) and (ii) prepaid the
Revolving Loans to the extent necessary to reduce the aggregate
outstanding principal balance thereof, together with the aggregate
outstanding LOC Obligations, to $75,000,000.
- 33 -
<PAGE>
PART V
MISCELLANEOUS
SUBPART 5.1. Cross-References. References in this Amendment to
any Part or Subpart are, unless otherwise specified, to such Part or
Subpart of this Amendment.
SUBPART 5.2. Instrument Pursuant to Existing Credit Agreement.
This Amendment is a Credit Document executed pursuant to the Existing
Credit Agreement and shall (unless otherwise expressly indicated
therein) be construed, administered and applied in accordance with the
terms and provisions of the Existing Credit Agreement.
SUBPART 5.3. References in Other Credit Documents. At such
time as this Amendment No. 1 shall become effective pursuant to the
terms of Subpart 4.1, all references in the Credit Documents to the
"Credit Agreement" shall be deemed to refer to the Credit Agreement as
amended by this Amendment No. 1.
SUBPART 5.4. Representations and Warranties. The Borrower
hereby represents and warrants that (i) the conditions precedent to the
initial Loans and initial Letters of Credit were satisfied as of the
Closing Date (assuming satisfaction of all requirements in such
conditions that an item be in form and/or substance reasonably
satisfactory to the Agent or any Lenders or that any event or action
have been completed or performed to the reasonable satisfaction of the
Agent or any Lenders), (ii) the representations and warranties
contained in Section 6 of the Existing Credit Agreement are correct on
and as of the date hereof as though made on and as of such date and
after giving effect to the amendments contained herein and (iii) no
Default or Event of Default exists under the Existing Credit Agreement
on and as of the date hereof.
SUBPART 5.5. Counterparts. This Amendment may be executed by
the parties hereto in several counterparts, each of which shall be
deemed to be an original and all of which shall constitute together but
one and the same agreement.
SUBPART 5.6. Governing Law. THIS AMENDMENT SHALL BE DEEMED TO
BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE
OF NORTH CAROLINA WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW
PRINCIPLES THEREOF.
- 34 -
<PAGE>
SUBPART 5.7. Successors and Assigns. This Amendment shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
[The remainder of this page has been left blank intentionally]
- 35 -
<PAGE>
Each of the parties hereto has caused a counterpart of this Amendment to be duly
executed and delivered as of the date first above written.
BORROWER: HUNT MANUFACTURING CO.
By____________________________
Title:
GUARANTORS: BEVIS CUSTOM FURNITURE, INC.
By____________________________
Title:
HUNT DATA PRODUCTS, INC.
By____________________________
Title:
HUNT HOLDINGS, INC.
By____________________________
Title:
HUNT X-ACTO, INC.
By____________________________
Title:
SEAL PRODUCTS, INC.
By____________________________
Title:
S-1
<PAGE>
EXISTING LENDERS: NATIONSBANK, N.A.,
individually in its capacity as a
Lender and in its capacity as Agent
By_____________________________
Title__________________________
ABN AMRO BANK N.V., NEW YORK BRANCH
By_____________________________
Title__________________________
BANQUE PARIBAS
By_____________________________
Title__________________________
BROWN BROTHERS HARRIMAN & CO.
By_____________________________
Title__________________________
THE CHASE MANHATTAN BANK, N.A.
By_____________________________
Title__________________________
CORESTATES BANK, N.A.
By_____________________________
Title__________________________
[Signatures Continue]
S-2
<PAGE>
FIFTH THIRD BANK
By_____________________________
Title__________________________
FIRST UNION NATIONAL BANK
By_____________________________
Title__________________________
FIRST NATIONAL BANK OF CHICAGO
By_____________________________
Title__________________________
MELLON BANK, N.A.
By_____________________________
Title__________________________
SUNTRUST BANK, ATLANTA
By_____________________________
Title__________________________
VAN KAMPEN AMERICAN CAPITAL PRIME
RATE INCOME TRUST
By_____________________________
Title__________________________
[Signatures Continue]
S-3
<PAGE>
NEW LENDERS: NATIONSBANK, N.A.,
individually in its capacity as a
Lender and in its capacity as Agent
By_____________________________
Title__________________________
BANQUE PARIBAS
By_____________________________
Title__________________________
CORESTATES BANK, N.A.
By_____________________________
Title__________________________
FIRST UNION NATIONAL BANK
By_____________________________
Title__________________________
MELLON BANK, N.A.
By_____________________________
Title__________________________
S-4
<PAGE>
Certain schedules and/or exhibits to the foregoing agreement
have been omitted, and the Company will provide them to the Securities and
Exchange Commission upon request.
S-5
<PAGE>
- --------------------------------------------------------------------------------
Hunt Manufacturing Co.
$50,000,000
7.86% Senior Notes due August 1, 2011
----------
NOTE PURCHASE AGREEMENT
----------
Dated as of August 1, 1996
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Section
Page
1. AUTHORIZATION OF NOTES................................................1
2. SALE AND PURCHASE OF NOTES; GUARANTY..................................1
2.1. Sale and Purchase of Notes..........................1
2.2. Guaranty............................................2
3. CLOSING...............................................................2
4. CONDITIONS TO CLOSING.................................................2
4.1. Representatives and Warranties......................2
4.2. Performance; No Default.............................3
4.3. Compliance Certificates.............................3
4.4. Opinions of Counsel.................................3
4.5. Purchase Permitted by applicable Law, etc...........3
4.6. Sale of Other Notes.................................4
4.7. Payment of Special Counsel Fees.....................4
4.8. Private Placement Number............................4
4.9. Changes in corporate Structure......................4
4.10. Proceedings and Documents...........................4
4.11. Subsidiary Guaranty.................................4
5. REPRESENTATIVES AND WARRANTIES OF THE COMPANY.........................5
5.1. Organization; Power and Authority...................5
5.2. Authorization.......................................5
5.3. Disclosure..........................................5
5.4. Organizations and Ownership of Shares and
Subsidiaries; Affiliates............................6
5.5. Financial Statements................................7
5.6. Compliance with Laws, Other Instruments, etc........7
5.7. Governmental Authorizations, etc....................7
5.8. Litigation; Observance of Agreements, Statutes
and Orders..........................................7
5.9. Taxes...............................................8
5.10. Title to Property; Leases...........................8
5.11. Licenses, Permits, etc..............................8
5.12. Compliance with ERISA...............................9
5.13. Private Offering by the Company....................10
5.14. Use of Proceeds; Margin Regulations................10
5.15. Existing Indebtedness; Future Liens................11
<PAGE>
5.16. Foreign Assets Control Regulations, etc............11
5.17. Status under Certain Statutes......................11
5.18. Environmental Matters..............................11
6. REPRESENTATIONS OF THE PURCHASER.....................................12
6.1. Purchase for Investment............................12
6.2. Source of Funds....................................12
7. INFORMATION AS TO COMPANY............................................14
7.1. Financial and Business Information.................14
7.2. Officer's Certificate..............................17
7.3. Inspection.........................................17
8. PREPAYMENT OF THE NOTES..............................................18
8.1. Required Prepayments...............................18
8.2. Optional Prepayments with Make-Whole Amount........18
8.3. Allocation of Partial Prepayments..................19
8.4. Maturity; Surrender, etc...........................19
8.5. Purchase of Notes..................................19
8.6. Make-Whole Amount..................................19
9. AFFIRMATIVE COVENANTS................................................21
9.1. Compliance with Law................................21
9.2. Insurance..........................................21
9.3. Maintenance of Properties..........................22
9.4. Payment of Taxes and Claims........................22
9.5. Corporate Existence, etc...........................22
10. NEGATIVE COVENANTS...................................................23
10.1. Transactions with Affiliates.......................23
10.2. Merger, Consolidation, and Sale of Assets..........23
10.3. Liens..............................................26
10.4. Consolidated Net Worth.............................28
10.5. Debt...............................................28
10.6. Fixed Charges Coverage Ratio.......................30
10.7. Restricted Payments and Restricted Investments.....30
10.8. Line of Business...................................30
11. EVENTS OF DEFAULT....................................................30
12. REMEDIES ON DEFAULT, ETC.............................................33
12.1. Acceleration.......................................33
12.2. Other Remedies.....................................33
ii
<PAGE>
12.3. Recision...........................................34
12.4. No Waivers or Election of Remedies, Expenses, etc..34
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES........................34
13.1. Registration of Notes..............................34
13.2. Transfer and Exchange of Notes.....................35
13.3. Replacement of Notes...............................35
14. PAYMENT ON NOTES.....................................................36
14.1. Place of Payment...................................36
14.2. Home Office Payment................................36
15. EXPENSES, ETC........................................................37
15.1. Transaction Expenses...............................37
15.2. Survival...........................................37
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE
AGREEMENT............................................................37
17. AMENDMENT AND WAIVER.................................................38
17.1. Requirements.......................................38
17.2. Solicitation of Holders of Notes...................38
17.3. Binding Effect, etc................................39
17.4. Notes held by Company, etc.........................39
18. NOTICES..............................................................39
19. REPRODUCTIONS OF DOCUMENTS...........................................40
20. CONFIDENTIAL INFORMATION.............................................40
21. SUBSTITUTION OF PURCHASER............................................41
22. MISCELLANEOUS........................................................42
22.1. Successors and Assigns.............................42
22.2. Payments due on Non-Business Days..................42
22.3. Severability.......................................42
22.4. Construction.......................................42
22.5. Counterparts.......................................43
22.6. Governing Law......................................43
SCHEDULE A Information Relating to Purchasers
iii
<PAGE>
SCHEDULE B Defined Terms
SCHEDULE 5.4 Subsidiaries and Affiliates of the Company and
Ownership of Subsidiary Stock
SCHEDULE 5.5 Financial Statements
SCHEDULE 5.11 Patents, etc.
SCHEDULE 5.14 Use of Proceeds
SCHEDULE 5.15 Existing Indebtedness and Liens
EXHIBIT 1 Form of 7.86% Senior Note due August 1, 2011
EXHIBIT 2 Form of Subsidiary Guaranty
EXHIBIT 4.4(a) Matters to be Covered in Opinion of Special
Counsel to the Company
EXHIBIT 4.4(b) Matters to be Covered in Opinion of Special
Counsel to the Purchasers
iv
<PAGE>
HUNT MANUFACTURING CO.
2005 Market Street
Philadelphia, Pennsylvania 19103
7.86 Senior Notes due August 1, 2011
August 1, 1996
TO EACH OF THE PURCHASERS LISTED IN
THE ATTACHED SCHEDULE A:
Ladies and Gentlemen:
Hunt Manufacturing Co., a Pennsylvania corporation (the "Company"),
agrees with you as follows:
1. AUTHORIZATION OF NOTES.
The Company will authorize the issue and sale of $50,000,000 aggregate
principal amount of its 7.86% Senior Notes due August 1, 2011 (the "Notes", such
term to include any such notes issued in substitution therefor pursuant to
Section 13 of this Agreement. The Notes shall be substantially in the form set
out in Exhibit 1, with such changes therefrom, if any, as may be approved by you
and the Company. Certain capitalized terms used in this Agreement are defined in
Schedule B; references to a "Schedule" or an "Exhibit" are, unless otherwise
specified, to a Schedule or an Exhibit attached to this Agreement.
2. SALE AND PURCHASE OF NOTES; GUARANTY.
2.1. Sale and Purchase of Notes.
Subject to the terms and conditions of this Agreement, the Company will
issue and sell to you and you will purchase from the Company, at the Closing
provided for in Section 3, Notes in the principal amount specified opposite your
name in Schedule A at the purchase price of 100% of the principal amount
thereof. The obligations of each purchaser named in Schedule A (collectively,
the "Purchasers") are several and not joint obligations and you shall have no
obligation and no liability to any Person for the performance or non-performance
by any Other Purchaser thereunder.
2.2. Guaranty.
The Notes will be guaranteed by the Subsidiary Guarantors pursuant to
the Subsidiary Guaranty. In the event that any other Subsidiary shall hereafter
<PAGE>
guaranty Indebtedness of the Company for borrowed money, the Company agrees to
cause such Subsidiary to guaranty the Notes concurrently therewith to the same
extent. Upon receipt of evidence satisfactory to you and the other holders of
the Notes that the bank lenders to the Company (and any other lenders which may
have refinanced any Indebtedness of the Company to its banks) have released any
Subsidiary Guarantor from all Guaranties of Indebtedness to such banks (and any
such other lenders), you and the other holders of Notes agree to release such
Subsidiary Guarantor from the Subsidiary Guaranty promptly thereafter.
3. CLOSING.
The sale and purchase of the Notes to be purchased by you shall occur
at the offices of Day, Berry & Howard in Hartford, Connecticut, at 11:00 a.m.,
Eastern time, at a closing (the "Closing") on August 1, 1996 or on such other
Business Day thereafter on or prior to August 15, 1996, as may be agreed upon by
the Company and you. At the Closing the Company will deliver to you the Notes to
be purchased by you in the form of a single Note (unless otherwise specified in
Schedule A) dated the date of the Closing and registered in your name (or in the
name of your nominee), against delivery by you to the Company or its order of
immediately available funds in the amount of the purchase price therefor by wire
transfer of immediately available funds to NationsBank, N.A., ABA No. 111000012
for credit to Hunt Manufacturing Co. Concentration Account 3750248339. If at the
Closing the Company shall fail to tender such Notes to you as provided above in
this Section 3, or any of the conditions specified in Section 4 shall not have
been fulfilled to your satisfaction, you shall, at your election, be relieved of
all further obligations under this Agreement, without thereby waiving any rights
you may have by reason of such failure or such nonfulfillment.
4. CONDITIONS TO CLOSING.
Your obligation to purchase and pay for the Notes to be sold to you at
the Closing is subject to the fulfillment to your satisfaction, prior to or at
the Closing, of the following conditions:
4.1. Representatives and Warranties.
The representations and warranties of the Company in this Agreement
shall be correct when made and at the time of the Closing.
4.2. Performance; No Default.
The Company shall have performed and complied with all agreements and
conditions contained in this Agreement required to be performed or complied with
by it prior to or at the Closing and after giving effect to the issue and sale
of the Notes (and the application of the proceeds thereof as contemplated by
Schedule
2
<PAGE>
5.14) no Default or Event of Default shall have occurred and be continuing.
Neither the Company nor any Subsidiary shall have entered into any transaction
since the date of the Memorandum that would have been prohibited by Sections
10.1, 10.2, 10.3, 10.5 or 10.7 hereof had such Sections applied since such date.
4.3. Compliance Certificates.
(a) Officer's Certificate. The Company shall have delivered to you an
Officer's Certificate, dated the date of the Closing, certifying that the
conditions specified in Sections 4.1, 4.2 and 4.9 have been fulfilled.
(b) Secretary's Certificate. The Company shall have delivered to you a
certificate certifying as to the resolutions attached thereto and other
corporate proceedings relating to the authorization, execution and delivery of
the Notes and the Agreements.
4.4. Opinions of Counsel.
You shall have received opinions in form and substance satisfactory to
you, dated the date of the Closing (a) from Drinker Biddle & Reath, counsel for
the Company and the Subsidiary Guarantors, and from Maynard, Cooper and Gale,
special Alabama counsel to Bevis Custom Furniture, Inc., together covering the
matters set forth in Exhibit 4.4(a) and covering such other matters incident to
the transactions contemplated hereby as you or your counsel may reasonably
request (and the Company hereby instructs its counsel to deliver such opinion to
you) and (b) from Day, Berry & Howard, your special counsel in connection with
such transactions, substantially in the form set forth in Exhibit 4.4(b) and
covering such other matters incident to such transactions as you may reasonably
request.
4.5. Purchase Permitted by applicable Law, etc.
On the date of the Closing your purchase of Notes shall (i) be
permitted by the laws and regulations of each jurisdiction to which you are
subject, without recourse to provisions (such as Section 1405(a)(8) of the New
York Insurance Law) permitting limited investments by insurance companies
without restriction as to the character of the particular investment, (ii) not
violate any applicable law or regulation (including, without limitation,
Regulation G, T or X of the Board of Governors of the Federal Reserve System)
and (iii) not subject you to any tax, penalty or liability under or pursuant to
any applicable law or regulation. If requested by you, you shall have received
an Officer's Certificate certifying as to such matters of fact as you may
reasonably specify to enable you to determine whether such purchase is so
permitted.
4.6. Sale of Other Notes.
3
<PAGE>
Contemporaneously with the Closing the Company shall sell to the Other
Purchasers and the Other Purchasers shall purchase the Notes to be purchased by
them at the Closing as specified in Schedule A.
4.7. Payment of Special Counsel Fees.
Without limiting the provisions of Section 15.1, the Company shall have
paid on or before the Closing the fees, charges and disbursements of your
special counsel referred to in Section 4.4 to the extent reflected in a
statement of such counsel rendered to the Company at least one Business Day
prior to the Closing.
4.8. Private Placement Number.
A Private Placement number issued by Standard & Poor's CUSIP Service
Bureau (in cooperation with the Securities Valuation Office of the National
Association of Insurance Commissioners) shall have been obtained for the Notes.
4.9. Changes in corporate Structure.
The Company shall not have changed its jurisdiction of incorporation or
been a party to any merger or consolidation and shall not have succeeded to all
or any substantial part of the liabilities of any other entity, at any time
following the date of the most recent financial statements referred to in
Schedule 5.5.
4.10. Proceedings and Documents.
All corporate and other proceedings in connection with the transactions
contemplated by this Agreement and all documents and instruments incident to
such transactions shall be satisfactory to you and your special counsel, and you
and your special counsel shall have received all such counterpart originals or
certified or other copies of such documents as you or they may reasonably
request.
4.11. Subsidiary Guaranty.
Each Subsidiary Guarantor shall have executed and delivered the
Subsidiary Guaranty.
5. REPRESENTATIVES AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to you that.
5.1. Organization; Power and Authority.
The Company is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation, and is duly
qualified as
4
<PAGE>
a foreign corporation and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which the
failure to be so qualified or in good standing could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. The Company
has the corporate power and authority to own or hold under lease the properties
it purports to own or hold under lease, to transact the business it transacts
and proposes to transact, to execute and deliver this Agreement and the Notes
and to perform the provisions hereof and thereof.
5.2. Authorization.
This Agreement and the Notes have been duly authorized by all necessary
corporate action on the part of the Company, and this Agreement constitutes, and
upon execution and delivery thereof each Note will constitute, a legal, valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and (ii) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
5.3. Disclosure.
The Company, through its agent, NationsBanc Capital Markets, Inc., has
delivered to you and each Other Purchaser a copy of a Private Placement
Memorandum, dated June 1996 (the "Memorandum"), relating to the transactions
contemplated hereby. The Memorandum fairly describes, in all material respects,
the general nature of the business and principal properties of the Company and
its Subsidiaries. This Agreement, the Memorandum, the documents, certificates or
other writings delivered to you by or on behalf of the Company in connection
with the transactions contemplated hereby and the financial statements listed in
Schedule 5.5, taken as a whole, do not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading in light of the circumstances under which they
were made. Except as disclosed in the Memorandum or in one of the documents,
certificates or other writings identified therein, or in the financial
statements listed in Schedule 5.5, since December 3, 1995, there has been no
change in the financial condition, operations, business, properties or prospects
of the Company or any Subsidiary except changes that individually or in the
aggregate could not reasonably be expected to have a Material Adverse Effect.
There is no fact known to the Company that could reasonably be expected to have
a Material Adverse Effect that has not been set forth herein or in the
Memorandum or in the other documents, certificates and other writings delivered
to you by or on behalf of the Company specifically for use in connection with
the transactions contemplated hereby.
5
<PAGE>
5.4. Organizations and Ownership of Shares and Subsidiaries;
Affiliates.
(a) Schedule 5.4 contains (except as noted therein) complete and
correct lists (i) of the Company's Subsidiaries, showing, as to each Subsidiary,
the correct name thereof, the jurisdiction of its organization, and the
percentage of shares of each class of its capital stock or similar equity
interests outstanding owned by the Company and each other Subsidiary, (ii) of
the Company's Affiliates, other than Subsidiaries, and (iii) of the Company's
directors and senior officers.
(b) All of the outstanding shares of capital stock or similar equity
interests of each Subsidiary shown in Schedule 5.4 as being owned by the Company
and its Subsidiaries have been validly issued, are fully paid and nonassessable
and are owned by the Company or another Subsidiary free and clear of any Lien
(except as otherwise disclosed in Schedule 5.4).
(c) Each Subsidiary identified in Schedule 5.4 is a corporation or
other legal entity duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization, and is duly qualified as a foreign
corporation or other legal entity and is in good standing in each jurisdiction
in which such qualification is required by law, other than those jurisdictions
as to which the failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Each such Subsidiary has the corporate or other power and
authority to own or hold under lease the properties it purports to own or hold
under lease and to transact the business it transacts and proposes to transact.
(d) No Subsidiary is a party to, or otherwise subject to any legal
restriction or any agreement (other than this Agreement, the agreements listed
on Schedule 5.4 and customary limitations imposed by corporate law statutes)
restricting the ability of such Subsidiary to pay dividends out of profits or
make any other similar distributions of profits to the Company or any of its
Subsidiaries that owns outstanding shares of capital stock or similar equity
interests of such Subsidiary.
5.5. Financial Statements.
The Company has delivered to each Purchaser copies of the financial
statements of the Company and its Subsidiaries listed on Schedule 5.5. All of
said financial statements (including in each case the related schedules and
notes) fairly present in all material respects the consolidated financial
position of the Company and its Subsidiaries as of the respective dates
specified in such Schedule and the consolidated results of their operations and
cash flows for the respective periods so specified and have been prepared in
accordance with GAAP consistently applied throughout the periods involved except
as set forth in the notes thereto (subject, in the case of any interim financial
statements, to normal year-end adjustments).
6
<PAGE>
5.6. Compliance with Laws, Other Instruments, etc.
The execution, delivery and performance by the Company of this
Agreement and the Notes will not (i) contravene, result in any breach of, or
constitute a default under, or result in the creation of any Lien in respect of
any property of the Company or any Subsidiary under, any indenture, mortgage,
deed of trust, loan, purchase or credit agreement, lease, corporate charter or
by-laws, or any other agreement or instrument to which the Company or any
Subsidiary is bound or by which the Company or any Subsidiary or any of their
respective properties may be bound or affected, (ii) conflict with or result in
a breach of any of the terms, conditions or provisions of any order, judgment,
decree, or ruling of any court, arbitrator or Governmental Authority applicable
to the Company or any Subsidiary or (iii) violate any provision of any statute
or other rule or regulation of any Governmental Authority applicable to the
Company or any Subsidiary.
5.7. Governmental Authorizations, etc.
No consent, approval or authorization of, or registration, filing or
declaration with, any Governmental Authority is required by the Company in
connection with the execution, delivery or performance of this Agreement or the
Notes except those, if any, which NationsBanc Capital Markets, Inc., has
obtained or made on behalf of the Company and except for the post-closing filing
of a Form D pursuant to Regulation D under the Securities Act which the Company
intends to file.
5.8. Litigation; Observance of Agreements, Statutes and Orders.
(a) There are no actions, suits or proceedings pending or, to the
knowledge of the Company, threatened against or affecting the Company or any
Subsidiary or any property of the Company or any Subsidiary in any court or
before any arbitrator of any kind or before or by any Governmental Authority
that, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
(b) Neither the Company nor any Subsidiary is in default under any term
of any agreement or instrument to which it is a party or by which it is bound,
or any order, judgment, decree or ruling of any court, arbitrator or
Governmental Authority or is in violation of any applicable law, ordinance, rule
or regulation (including without limitation Environmental Laws) of any
Governmental Authority, which default or violation, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
5.9. Taxes.
7
<PAGE>
The Company and its Subsidiaries have filed all tax returns that are
required to have been filed in any jurisdiction, and have paid all taxes shown
to be due and payable on such returns and all other taxes and assessments levied
upon them or their properties, assets, income or franchises, to the extent such
taxes and assessments have become due and payable and before they have become
delinquent, except for any taxes and assessments (i) the amount of which is not
individually or in the aggregate Material or (ii) the amount, applicability or
validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which the Company or a Subsidiary, as the case
may be, has established adequate reserves in accordance with GAAP. The Company
knows of no basis for any other tax or assessment that could reasonably be
expected to have a Material Adverse Effect. The charges, accruals and reserves
on the books of the Company and its Subsidiaries in respect of Federal, state or
other taxes for all fiscal periods are adequate. The Federal income tax
liabilities of the Company and its Subsidiaries have been determined by the
Internal Revenue Service through the fiscal year ended 1991 and Federal income
taxes have been paid for all subsequent fiscal years up to and including the
fiscal year ended 1995.
5.10. Title to Property; Leases.
The Company and its Subsidiaries have good and sufficient title
(including, where applicable, leasehold interests) to their respective
properties that individually or in the aggregate are Material, including all
such properties reflected in the most recent audited balance sheet referred to
in Section 5.5 or purported to have been acquired by the Company or any
Subsidiary after said date (except as sold or otherwise disposed of in the
ordinary course of business), in each case free and clear of Liens prohibited by
this Agreement. All leases that individually or in the aggregate are Material
are valid and subsisting and are in full force and effect in all material
respects.
5.11. Licenses, Permits, etc.
Except as disclosed in Schedule 5.11,
(a) the Company and its Subsidiaries own or possess all licenses,
permits, franchises, authorizations, patents, copyrights, service marks,
trademarks and trade names, or rights thereto, that individually or in the
aggregate are Material, without known conflict with the rights of others;
(b) to the best knowledge of the Company, no product of the Company
infringes in any material respect any license, permit, franchise, authorization,
patent, copyright, service mark, trademark, trade name or other right owned by
any other Person; and
8
<PAGE>
(c) to the best knowledge of the Company, there is no Material
violation by any Person of any right of the Company or any of its Subsidiaries
with respect to any patent, copyright, service mark, trademark, trade name or
other right owned or used by the Company or any of its Subsidiaries.
5.12. Compliance with ERISA.
The Company and each ERISA Affiliate have operated and administered
each Plan in compliance with all applicable laws except for such instances of
noncompliance as have not resulted in and could not reasonably be expected to
result in a Material Adverse Effect. Neither the Company nor any ERISA Affiliate
has incurred any liability pursuant to Title I or IV of ERISA or the penalty or
excise tax provisions of the Code relating to employee benefit plans (as defined
in Section 3 of ERISA), and no event, transaction or condition has occurred or
exists that could reasonably be expected to result in the incurrence of any such
liability by the Company or any ERISA Affiliate, or in the imposition of any
Lien on any of the rights, properties or assets of the Company or any ERISA
Affiliate, in either case pursuant to Title I or IV of ERISA or to such penalty
or excise tax provisions or to Section 401(a)(29) or 412 of the Code, other than
such liabilities or Liens as would not be individually or in the aggregate
Material.
(b) The present value of the aggregate benefit liabilities under each
of the Plans (other than Multiemployer Plans), determined as of the end of such
Plan's most recently ended plan year on the basis of the actuarial assumptions
specified for funding purposes in such Plan's most recent actuarial valuation
report, did not exceed the aggregate current value of the assets of such Plan
allocable to such benefit liabilities by more than $1,000,000 in the case of any
single Plan and by more than $5,000,000 in the aggregate for all Plans. The term
"benefit liabilities" has the meaning specified in section 4001 of ERISA and the
terms "current value" and "present value" have the meaning specified in section
3 of ERISA.
(c) The Company and its ERISA Affiliates have not incurred withdrawal
liabilities (and are not subject to contingent withdrawal liabilities) under
section 4201 or 4204 of ERISA in respect of Multiemployer Plans that
individually or in the aggregate are Material.
(d) The expected postretirement benefit obligation (determined as of
the last day of the Company's most recently ended fiscal year in accordance with
Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by section 4980B of
the Code) of the Company and its Subsidiaries is not Material.
(e) The execution and delivery of this Agreement and the issuance and
sale of the Notes hereunder will not involve any transaction that is subject to
the prohibitions of section 406 of ERISA or in connection with which a tax could
be
9
<PAGE>
imposed pursuant to section 4975(c)(1)(A)-(D) of the Code. The representation by
the Company in the first sentence of this Section 5.12(e) is made in reliance
upon and subject to the accuracy of your representation in Section 6.2 as to the
sources of the funds used to pay the purchase price of the Notes to be purchased
by you.
5.13. Private Offering by the Company.
Neither the Company nor anyone acting on its behalf has offered the
Notes or any similar securities for sale to, or solicited any offer to buy any
of the same from, or otherwise approached or negotiated in respect thereof with,
any person other than you, the Other Purchasers and not more than 60 other
Institutional Investors, each of which has been offered the Notes at a private
sale for investment. Neither the Company nor anyone acting on its behalf has
taken, or will take, any action that would subject the issuance or sale of the
Notes to the registration requirements of Section 5 of the Securities Act.
5.14. Use of Proceeds; Margin Regulations.
The Company will apply the proceeds of the sale of the Notes as set
forth in Schedule 5.14. No part of the proceeds from the sale of the Notes
hereunder will be used, directly or indirectly, for the purpose of buying or
carrying any margin stock within the meaning of Regulation G of the Board of
Governors of the Federal Reserve System (12 CFR 207), or for the purpose of
buying or carrying or trading in any securities under such circumstances as to
involve the Company in a violation of Regulation X of said Board (12 CFR 224) or
to involve any broker or dealer in a violation of Regulation T of said Board (12
CFR 220). As used in this Section, the terms "margin stock" and "purpose of
buying or carrying" shall have the meanings assigned to them in said Regulation
G.
5.15. Existing Indebtedness; Future Liens.
(a) Except as described therein, Schedule 5.15 sets forth a complete
and correct list of all outstanding Indebtedness of the Company and its
Subsidiaries as of July 17, 1996, since which date there has been no Material
change in the amounts, interest rates, sinking funds, installment payments or
maturities of the Indebtedness of the Company or its Subsidiaries. Neither the
Company nor any Subsidiary is in default and no waiver of default is currently
in effect, in the payment of any principal or interest on any Indebtedness of
the Company or such Subsidiary and no event or condition exists with respect to
any Indebtedness of the Company or any Subsidiary that would permit (or that
with notice or the lapse of time, or both, would permit) one or more Persons to
cause such Indebtedness to become due and payable before its stated maturity or
before its regularly scheduled dates of payment.
10
<PAGE>
(b) Neither the Company nor any Subsidiary has agreed or consented to
cause or permit in the future (upon the happening of a contingency or otherwise)
any of its property, whether now owned or hereafter acquired, to be subject to a
Lien not permitted by Section 10.3.
5.16. Foreign Assets Control Regulations, etc.
Neither the sale of the Notes by the Company hereunder nor its use of
the proceeds thereof will violate the Trading with the Enemy Act, as amended, or
any of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.
5.17. Status under Certain Statutes.
Neither the Company nor any Subsidiary is subject to regulation under
the Interstate Commerce Act, as amended (except to the extent, if any, that the
activities of the Company and its Subsidiaries in transporting goods sold by
them are subject to such regulation), the Investment Company Act of 1940, as
amended, the Public Utility Holding Company Act of 1935, as amended, or the
Federal Power Act, as
amended.
5.18. Environmental Matters.
Neither the Company nor any Subsidiary has knowledge of any claim or
has received any notice of any claim, and no proceeding has been instituted
raising any claim against the Company or any of its Subsidiaries or any of their
respective real properties now or formerly owned, leased or operated by any of
them or other assets, alleging any damage to the environment or violation of any
Environmental Laws, except, in each case, such as could not reasonably be
expected to result in a Material Adverse Effect. Except as otherwise disclosed
to you in writing,
(a) neither the Company nor any Subsidiary has knowledge of any facts
which would give rise to any claim, public or private, of violation of
Environmental Laws or damage to the environment emanating from, occurring on or
in any way related to real properties now or formerly owned, leased or operated
by any of them or to other assets or their use, except, in each case, such as
could not reasonably be expected to result in a Material Adverse Effect;
(b) neither the Company nor any of its Subsidiaries has stored any
Hazardous Materials on real properties now or formerly owned, leased or operated
by any of them and has not disposed of any Hazardous Materials in a manner
contrary to any Environmental Laws in each case in any manner that could
reasonably be expected to result in a Material Adverse Effect; and
11
<PAGE>
(c) all buildings on all real properties now owned, leased or operated
by the Company or any of its Subsidiaries are in compliance with applicable
Environmental Laws, except where failure to comply could not reasonably be
expected to result in a Material Adverse Effect.
6. REPRESENTATIONS OF THE PURCHASER.
6.1. Purchase for Investment.
You represent that you are purchasing the Notes for your own account or
for one or more separate accounts maintained by you or for the account of one or
more pension or trust funds and not with a view to the distribution thereof,
provided that the disposition of your or their property shall at all times be
within your or their control. You understand that the Notes have not been
registered under the Securities Act and may be resold only if registered
pursuant to the provisions of the Securities Act or if an exemption from
registration is available, except under circumstances where neither such
registration nor such an exemption is required by law, and that the Company is
not required to register the Notes.
6.2. Source of Funds.
You represent that at least one of the following statements is an
accurate representation as to each source of funds (a "Source") to be used by
you to pay the purchase price of the Notes to be purchased by you hereunder:
(a) if you are an insurance company, either (i) the Source is a
separate account that is maintained solely in connection with your fixed
contractual obligations under which the amounts payable, or credited, to any
employee benefit plan and to any participant or beneficiary of such plan
(including any annuitant) are not affected in any manner by the investment
performance of the separate account, or (ii) the Source is an "insurance company
general account" within the meaning of Department of Labor Prohibited
Transaction Exemption ("PTE") 95-60, and the amount of reserves and liabilities
for the contract(s) held by or on behalf of each employee benefit plan which has
an interest in your general account as a contractholder, together with the
amount of reserves and liabilities for the general account contracts held by or
on behalf of any other such plan maintained by the same employer (or an
affiliate thereof) or by the same employee organization, does not exceed 10% of
the total reserves and liabilities of your general account plus surplus as
determined pursuant to the provisions of Section I(a) of PTE 95-60; or
(b) the Source is either (i) an insurance company pooled separate
account, within the meaning of PTE 90-1, or (ii) a bank collective investment
fund, within the meaning of the PTE 91-38 and, except as you have disclosed to
the Company in writing pursuant to this paragraph (b), no employee benefit plan
or group of plans maintained by the same employer or employee organization
12
<PAGE>
beneficially owns more than 10% of all assets allocated to such pooled separate
account or collective investment fund; or
(c) the Source constitutes assets of an "investment fund" (within the
meaning of Part V of PTE 84-14 (the "QPAM Exemption")) managed by a "qualified
professional asset manager" or "QPAM" (within the meaning of Part V of the QPAM
Exemption), no employee benefit plan's assets that are included in such
investment fund, when combined with the assets of all other employee benefit
plans established or maintained by the same employer or by an affiliate (within
the meaning of Section V(c)(1) of the QPAM Exemption) of such employer or by the
same employee organization and managed by such QPAM, exceed 20% of total client
assets managed by such QPAM, the conditions of Part I(c) and (g) of the QPAM
Exemption are satisfied, neither the QPAM nor a person controlling or controlled
by the QPAM (applying the definition of "control" in Section V(e) of the QPAM
Exemption) owns a 5% or more interest in the Company and (i) the identity of
such QPAM and (ii) the names of all employee benefit plans whose assets are
included in such investment fund have been disclosed to the Company in writing
pursuant to this paragraph (c); or
(d) the Source is a governmental plan; or
(e) the Source is one or more employee benefit plans, or a separate
account or trust fund comprised of one or more employee benefit plans, each of
which has been identified to the Company in writing pursuant to this paragraph
(e); or
(f) the Source does not include assets of any employee benefit plan,
other than a plan exempt from the coverage of ERISA.
As used in this Section 6.2, the terms "employee benefit plan", "governmental
plan" and "separate account" shall have the respective meanings assigned to such
terms in Section 3 of ERISA.
7. INFORMATION AS TO COMPANY.
7.1. Financial and Business Information.
The Company shall deliver to each holder of Notes that is an
Institutional Investor:
(a) Quarterly Statements -- within 60 days after the end of each
quarterly fiscal period in each fiscal year of the Company (other than the last
quarterly fiscal period of each such fiscal year), duplicate copies of,
13
<PAGE>
(i) a consolidated balance sheet of the Company and its
Restricted Subsidiaries as at the end of such quarter, and
(ii) consolidated statements of income, changes in
shareholders' equity and cash flows of the Company and its Restricted
Subsidiaries, for such quarter and (in the case of the second and third
quarters) for the portion of the fiscal year ending with such quarter, setting
forth in each case in comparative form the figures for the corresponding periods
in the previous fiscal year, all in reasonable detail, prepared in accordance
with GAAP applicable to quarterly financial statements generally, and certified
by a Senior Financial Officer as fairly presenting, in all material respects,
the financial position of the companies being reported on and their results of
operations and cash flows, subject to changes resulting from year-end
adjustments, provided that delivery within the time period specified above of
copies of the Company's Quarterly Report on Form 10-Q prepared in compliance
with the requirements therefor and filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements of this Section 7.1(a) if
the financial statements included in such Quarterly Report are of the Company
and its Restricted Subsidiaries (and no other entities);
(b) Annual Statements -- within 105 days after the end of each fiscal
year of the Company, duplicate copies of,
(i) a consolidated balance sheet of the Company and its
Restricted Subsidiaries, as at the end of such year, and
(ii) consolidated statements of income, changes in
shareholders' equity and cash flows of the Company and its Restricted
Subsidiaries, for such year, setting forth in each case in comparative form the
figures for the previous fiscal year, all in reasonable detail, prepared in
accordance with GAAP, and accompanied
(A) by an opinion thereon of independent certified
public accountants of recognized national standing, which opinion shall state
that such financial statements present fairly, in all material respects, the
financial position of the companies being reported upon and their results of
operations and cash flows and have been prepared in conformity with GAAP, and
that the examination of such accountants in connection with such financial
statements has been made in accordance with generally accepted auditing
standards, and that such audit provides a reasonable basis for such opinion in
the circumstances, and
(B) a report from such accountants stating that in
connection with their audit, nothing came to their attention that caused them to
believe that the Company failed to comply with the terms, covenants, provisions,
or conditions of Sections 10.3(i), 10.4, 10.5.(b) and (c), and 10.6 of this
Agreement as they relate to accounting matters or, if they are aware that any
such condition or
14
<PAGE>
event then exists, specifying the nature and period of the existence thereof (it
being understood that such accountants shall not be liable, directly or
indirectly, for any failure to obtain knowledge of any Default or Event of
Default, even if specifically referenced in any such Section, as e.g., in clause
(iv)(A) of Section 10.5(b), unless such accountants should have obtained
knowledge thereof in making an audit in accordance with generally accepted
auditing standards), provided that the delivery within the time period specified
above of the Company's Annual Report on Form 10-K for such fiscal year (together
with the Company's annual report to shareholders, if any, prepared pursuant to
Rule 14a-3 under the Exchange Act) prepared in accordance with the requirements
therefor and filed with the Securities and Exchange Commission, together with
the accountant's certificate described in clause (B) above, shall be deemed to
satisfy the requirements of this Section 7.1(b) if the financial statements
included in such Annual Report are of the Company and its Restricted
Subsidiaries (and no other entities);
(c) SEC and Other Reports -- promptly upon their becoming available,
one copy of (i) each financial statement, report, notice or proxy statement sent
by the Company or any Subsidiary to public securities holders generally, and
(ii) each regular or periodic report (including, without limitation, each report
on Form 10-K, 10-Q or 8-K), each registration statement (without exhibits except
as expressly requested by such holder), other than registration statements on
Form S-8, and each prospectus and all amendments thereto filed by the Company or
any Subsidiary with the Securities and Exchange Commission and of all press
releases and other statements made available generally by the Company or any
Subsidiary to the public concerning developments that are Material;
(d) Notice of Default or Event of Default -- promptly, and in any event
within five days after a Responsible Officer becoming aware of the existence of
any Default or Event of Default or that any Person has given any notice or taken
any action with respect to a claimed default hereunder or that any Person has
given any notice or taken any action with respect to a claimed default of the
type referred to in Section 11(g), a written notice specifying the nature and
period of existence thereof and what action the Company is taking or proposes to
take with respect thereto;
(e) ERISA Matters -- promptly, and in any event within five days after
a Responsible Officer becoming aware of any of the following, a written notice
setting forth the nature thereof and the action, if any, that the Company or an
ERISA Affiliate proposes to take with respect thereto:
(i) with respect to any Plan, any reportable event, as defined
in section 4043(b) of ERISA and the regulations thereunder, for which notice
thereof has not been waived pursuant to such regulations as in effect on the
date hereof; or
(ii) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings under section 4042 of
ERISA for the
15
<PAGE>
termination of, or the appointment of a trustee to administer, any Plan, or the
receipt by the Company or any ERISA Affiliate of a notice from a Multiemployer
Plan that such action has been taken by the PBGC with respect to such
Multiemployer Plan; or
(iii) any event, transaction or condition that could result in
the incurrence of any liability by the Company or any ERISA Affiliate pursuant
to Title I or IV of ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans, or in the imposition of any Lien on any of
the rights, properties or assets of the Company or any ERISA Affiliate pursuant
to Title I or IV of ERISA or such penalty or excise tax provisions, if such
liability or Lien, taken together with any other such liabilities or Liens then
existing, could reasonably be expected to have a Material Adverse Effect;
(f) Notices from Governmental Authority -- promptly, and in any event
within 30 days of receipt thereof, copies of any notice to the Company or any
Subsidiary from any Federal or state Governmental Authority relating to any
order, ruling, statute or other law or regulation that could reasonably be
expected to have a Material Adverse Effect; and
(g) Requested Information -- with reasonable promptness, such other
data and information relating to the business, operations, affairs, financial
condition, assets or properties of the Company or any of its Subsidiaries or
relating to the ability of the Company to perform its obligations hereunder and
under the Notes as from time to time may be reasonably requested by any such
holder of Notes.
7.2. Officer's Certificate.
Each set of financial statements delivered to a holder of Notes
pursuant to Section 7.1(a) or Section 7.1(b) hereof shall be accompanied by a
certificate of a Senior Financial Officer setting forth:
(a) Covenant Compliance -- the information (including detailed
calculations) required in order to establish whether the Company was in
compliance with the requirements of Section 10.3(i) and Sections 10.4 through
10.6 hereof, inclusive, during the quarterly or annual period covered by the
statements then being furnished (including with respect to each such Section,
where applicable, reference to the maximum or minimum amount, ratio or
percentage, as the case may be, permissible under the terms of such Sections,
and the calculation of the amount, ratio or percentage then in existence); and
(b) Event of Default -- a statement that such officer has reviewed the
relevant terms hereof and has made, or caused to be made, under his or her
supervision, a review of the transactions and conditions of the Company and its
Subsidiaries from the beginning of the quarterly or annual period covered by the
16
<PAGE>
statements then being furnished to the date of the certificate and that such
review shall not have disclosed the existence during such period of any
condition or event that constitutes a Default or an Event of Default or, if any
such condition or event existed or exists (including, without limitation, any
such event or condition resulting from the failure of the Company or any
Subsidiary to comply with any Environmental Law), specifying the nature and
period of existence thereof and what action the Company shall have taken or
proposes to take with respect thereto.
7.3. Inspection.
The Company shall permit the representatives of each holder of Notes
that is an Institutional Investor:
(a) No Default -- if no Default or Event of Default then exists, at the
expense of such holder and upon reasonable prior notice to the Company, to visit
the principal executive office of the Company, to discuss the affairs, finances
and accounts of the Company and its Subsidiaries with the Company's officers,
and (with the consent of the Company, which consent will not be unreasonably
withheld) its independent public accountants, and (with the consent of the
Company, which consent will not be unreasonably withheld) to visit the other
offices and properties of the Company and each Subsidiary, all at such
reasonable times and as often as may be reasonably requested in writing; and
(b) Default -- if a Default or Event of Default then exists, at the
expense of the Company to visit and inspect any of the offices or properties of
the Company or any Subsidiary, to examine all their respective 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 and independent public accountants (and by this provision the Company
authorizes said accountants to discuss the affairs, finances and accounts of the
Company and its Subsidiaries), all at such times and as often as may be
requested.
8. PREPAYMENT OF THE NOTES.
8.1. Required Prepayments.
On August 1, 2002, and on each August 1 thereafter to and including
August 1, 2010, the Company will prepay $5,000,000 principal amount (or such
lesser principal amount as shall then be outstanding) of the Notes at par and
without payment of the Make-Whole Amount or any premium, provided that upon any
partial prepayment of the Notes pursuant to Sections 8.2 or 10.2 or purchase of
the Notes permitted by Section 8.5, the principal amount of each required
prepayment of the Notes becoming due under this Section 8.1 on and after the
date of such prepayment or purchase shall be reduced in the same proportion as
the
17
<PAGE>
aggregate unpaid principal amount of the Notes is reduced as a result of such
prepayment or purchase.
8.2. Optional Prepayments with Make-Whole Amount.
The Company may, at its option, upon notice as provided below, prepay
at any time all, or from time to time any part of, the Notes, in an amount not
less than 10% of the aggregate principal amount of the Notes then outstanding in
the case of a partial prepayment, at 100% of the principal amount so prepaid,
plus the Make-Whole Amount determined for the prepayment date with respect to
such principal amount. The Company will give each holder of Notes written notice
of each optional prepayment under this Section 8.2 not less than 30 days and not
more than 60 days prior to the date fixed for such prepayment. Each such notice
shall specify such date, the aggregate principal amount of the Notes to be
prepaid on such date, the principal amount of each Note held by such holder to
be prepaid (determined in accordance with Section 8.3), and the interest to be
paid on the prepayment date with respect to such principal amount being prepaid,
and shall be accompanied by a certificate of a Senior Financial Officer as to
the estimated Make-Whole Amount due in connection with such prepayment
(calculated as if the date of such notice were the date of the prepayment),
setting forth the details of such computation. Two Business Days prior to such
prepayment, the Company shall deliver to each holder of Notes a certificate of a
Senior Financial Officer specifying the calculation of such Make-Whole Amount as
of the specified prepayment date.
8.3. Allocation of Partial Prepayments.
In the case of each partial prepayment of the Notes (other than a
partial prepayment pursuant to Section 10.2), the principal amount of the Notes
to be prepaid shall be allocated among all of the Notes at the time outstanding
in proportion, as nearly as practicable, to the respective unpaid principal
amounts thereof not theretofore called for prepayment. In the case of any
partial prepayment of the Notes pursuant to Section 10.2, the principal amount
of the Notes to be prepaid shall be allocated as provided in such Section.
8.4. Maturity; Surrender, etc.
In the case of each prepayment of Notes pursuant to this Section 8, the
principal amount of each Note to be prepaid shall mature and become due and
payable on the date fixed for such prepayment, together with interest on such
principal amount accrued to such date and the applicable Make-Whole Amount, if
any. From and after such date, unless the Company shall fail to pay such
principal amount when so due and payable, together with the interest and
Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall
cease to accrue. Any Note paid or prepaid in full shall be surrendered to the
Company and
18
<PAGE>
canceled and shall not be reissued, and no Note shall be issued in lieu of any
prepaid principal amount of any Note.
8.5. Purchase of Notes.
Except as provided in Section 10.2, the Company will not and will not
permit any Affiliate to purchase, redeem, prepay or otherwise acquire, directly
or indirectly, any of the outstanding Notes except upon the payment or
prepayment of the Notes in accordance with the terms of this Agreement and the
Notes. The Company will promptly cancel all Notes acquired by it or any
Affiliate pursuant to any payment, prepayment or purchase of Notes pursuant to
any provision of this Agreement and no Notes may be issued in substitution or
exchange for any such Notes.
8.6. Make-Whole Amount.
The term "Make-Whole Amount" means, with respect to any Note, an amount
equal to the excess, if any, of the Discounted Value of the Remaining Scheduled
Payments with respect to the Called Principal of such Note over the amount of
such Called Principal, provided that the Make-Whole Amount may in no event be
less than zero. For the purposes of determining the Make-Whole Amount, the
following terms have the following meanings:
"Called Principal" means, with respect to any Note, the principal of
such Note that is to be prepaid pursuant to Section 8.2 or Section 10.2 or has
become or is declared to be immediately due and payable pursuant to Section
12.1, as the context requires.
"Discounted Value" means, with respect to the Called Principal of any
Note, the amount obtained by discounting all Remaining Scheduled Payments with
respect to such Called Principal from their respective scheduled due dates to
the Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (applied on the same
periodic basis as that on which interest on the Notes is payable) equal to the
Reinvestment Yield with respect to such Called Principal.
"Reinvestment Yield" means, with respect to the Called Principal of any
Note, 0.50% over the yield to maturity implied by (i) the yields reported, as of
10:00 A.M. (New York City time) on the second Business Day preceding the
Settlement Date with respect to such Called Principal, on the display designated
as "Page 678" on the Telerate Access Service (or such other display as may
replace Page 678 on Telerate Access Service) for actively traded U.S. Treasury
securities having a maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date, or (ii) if such yields are not reported as
of such time or the yields reported as of such time are not ascertainable, the
Treasury Constant Maturity
19
<PAGE>
Series Yields reported, for the latest day for which such yields have been so
reported as of the second Business Day preceding the Settlement Date with
respect to such Called Principal, in Federal Reserve Statistical Release H.15
(519) (or any comparable successor publication) for actively traded U.S.
Treasury securities having a constant maturity equal to the Remaining Average
Life of such Called Principal as of such Settlement Date. Such implied yield
will be determined, if necessary, by (a) converting U.S. Treasury bill
quotations to bond-equivalent yields in accordance with accepted financial
practice and (b) interpolating linearly between (1) the actively traded U.S.
Treasury security with the duration closest to and greater than the Remaining
Average Life and (2) the actively traded U.S. Treasury security with the
duration closest to and less than the Remaining Average Life.
"Remaining Average Life" means, with respect to any Called Principal,
the number of years (calculated to the nearest one-twelfth year) obtained by
dividing (i) such Called Principal into (ii) the sum of the products obtained by
multiplying (a) the principal component of each Remaining Scheduled Payment with
respect to such Called Principal by (b) the number of years (calculated to the
nearest one-twelfth year) that will elapse between the Settlement Date with
respect to such Called Principal and the scheduled due date of such Remaining
Scheduled Payment.
"Remaining Scheduled Payments" means, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due after the Settlement Date with respect to such Called
Principal if no payment of such Called Principal were made prior to its
scheduled due date, provided that if such Settlement Date is not a date on which
interest payments are due to be made under the terms of the Notes, then the
amount of the next succeeding scheduled interest payment will be reduced by the
amount of interest accrued to such Settlement Date and required to be paid on
such Settlement Date pursuant to Section 8.2, 10.2 or 12.1, as applicable.
"Settlement Date" means, with respect to the Called Principal of any
Note, the date on which such Called Principal is to be prepaid pursuant to
Section 8.2 or 10.2 or has become or is declared to be immediately due and
payable pursuant to Section 12.1, as the context requires.
9. AFFIRMATIVE COVENANTS.
The Company covenants that so long as any of the Notes are outstanding:
9.1. Compliance with Law.
The Company will and will cause each of its Subsidiaries to comply with
all laws, ordinances or governmental rules or regulations to which each of them
is subject, including, without limitation, Environmental Laws, and will obtain
and maintain in effect all licenses, certificates, permits, franchises and other
20
<PAGE>
governmental authorizations necessary to the ownership of their respective
properties or to the conduct of their respective businesses, in each case to the
extent necessary to ensure that non-compliance with such laws, ordinances or
governmental rules or regulations or failures to obtain or maintain in effect
such licenses, certificates, permits, franchises and other governmental
authorizations could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
9.2. Insurance.
The Company will and will cause each of its Subsidiaries to maintain,
with financially sound and reputable insurers, insurance with respect to their
respective properties and businesses against such casualties and contingencies,
of such types, on such terms and in such amounts (including deductibles,
co-insurance and self-insurance, if adequate reserves are maintained with
respect thereto) as is customary in the case of entities of established
reputations engaged in the same or a similar business and similarly situated.
9.3. Maintenance of Properties.
The Company will and will cause each of its Subsidiaries to maintain
and keep, or cause to be maintained and kept, their respective properties in
good repair, working order and condition (other than ordinary wear and tear), so
that the business carried on in connection therewith may be properly conducted
at all times, provided that this Section shall not prevent the Company or any
Subsidiary from discontinuing the operation and the maintenance of any of its
properties if such discontinuance is desirable in the conduct of its business
and the Company has concluded that such discontinuance could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
9.4. Payment of Taxes and Claims.
The Company will and will cause each of its Subsidiaries to file all
tax returns required to be filed in any jurisdiction and to pay and discharge
all taxes shown to be due and payable on such returns and all other taxes,
assessments, governmental charges, or levies imposed on them or any of their
properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have become delinquent
and all claims for which sums have become due and payable that have or might
become a Lien on properties or assets of the Company or any Subsidiary, provided
that neither the Company nor any Subsidiary need pay any such tax or assessment
or claims if (i) the amount, applicability or validity thereof is contested by
the Company or such Subsidiary on a timely basis in good faith and in
appropriate proceedings, and the Company or a Subsidiary has established
adequate reserves therefor in accordance with GAAP on the books of the Company
or such Subsidiary or (ii) the nonpayment of all such
21
<PAGE>
taxes and assessments in the aggregate could not reasonably be expected to have
a Material Adverse Effect.
9.5. Corporate Existence, etc.
The Company will at all times preserve and keep in full force and
effect its corporate existence. Subject to Section 10.2 the Company will at all
times preserve and keep in full force and effect the corporate existence of each
of its Subsidiaries (unless merged into the Company or a Subsidiary) and all
rights and franchises of the Company and its Subsidiaries unless, in the good
faith judgment of the Company, the termination of or failure to preserve and
keep in full force and effect such corporate existence, right or franchise could
not, individually or in the aggregate, have a Material Adverse Effect.
10. NEGATIVE COVENANTS.
The Company covenants that so long as any of the Notes are outstanding:
10.1. Transactions with Affiliates.
The Company will not and will not permit any Restricted Subsidiary to
enter into directly or indirectly any transaction or Material group of related
transactions (including without limitation the purchase, lease, sale or exchange
of properties of any kind or the rendering of any service) with any Affiliate
(other than the Company or another Restricted Subsidiary), except in the
ordinary course and pursuant to the reasonable requirements of the Company's or
such Restricted Subsidiary's business and upon fair and reasonable terms no less
favorable to the Company or such Restricted Subsidiary than would be obtainable
in a comparable arm's-length transaction with a Person not an Affiliate. It is
understood that for purposes of this Section 10.1, repurchases of the Company's
stock from shareholders upon fair and reasonable terms to the Company shall be
deemed to be in the ordinary course and pursuant to the reasonable requirements
of the Company's business.
10.2. Merger, Consolidation, and Sale of Assets.
The Company will not, and will not permit any Restricted Subsidiary to,
merge or consolidate with another corporation or dispose of all or a substantial
part of its assets, provided, however, that:
(a) any Restricted Subsidiary may merge into (i) the Company (so long
as the Company is the surviving corporation), (ii) a Wholly-Owned Restricted
Subsidiary or (iii) a corporation which becomes a Wholly-Owned Restricted
Subsidiary as a result of such merger or consolidation, and which, immediately
after the consummation of such merger or consolidation, and after giving effect
22
<PAGE>
thereto, will be in compliance with all of the provisions herein with respect to
Restricted Subsidiaries.
(b) the Company may merge or consolidate with, or convey substantially
all of its assets to, a Wholly-Owned Restricted Subsidiary or another
corporation, provided that (i) no Default or Event of Default arises from such
transaction and (ii) if the Company is not the surviving entity, (A) the
survivor shall be a corporation incorporated in the United States of America,
(B) such surviving corporation shall have executed and delivered to each holder
of any Notes its assumption of the due and punctual performance and observance
of each covenant and condition of this Agreement and the Notes, and (C) such
corporation shall have caused to be delivered to each holder of any Notes an
opinion of nationally recognized independent counsel, or other independent
counsel reasonably satisfactory to the Required Holders, to the effect that all
agreements or instruments effecting such assumption are enforceable in
accordance with their terms and comply with the terms hereof;
(c) any Restricted Subsidiary may convey all or a substantial part of
its assets to the Company or to any Wholly-Owned Restricted Subsidiary; and
(d) The Company or any Restricted Subsidiary may dispose of a
Substantial Part of the assets of the Company and its Restricted Subsidiaries
if, within 12 months after the disposition, the Net Excess Proceeds Amount
resulting from such disposition is used either (A) to reduce Senior Debt of the
Company and its Restricted Subsidiaries (including the outstanding principal of
the Notes of any holder accepting any offer of prepayment required pursuant to
Section 10.2(e) below) or (B) to acquire companies, businesses, or capital
assets which are similar in nature, purpose or business line to other assets
owned or leased by the Company and its Restricted Subsidiaries at the date of
the Closing. Promptly following any such disposition of assets, the Company will
give to each holder of Notes a statement describing the disposition and a
calculation of the Net Excess Proceeds Amount.
(e) In the event that the Company is required or chooses to reduce
Senior Debt pursuant to Section 10.2(d), the Company shall offer to prepay the
Notes in accordance with the following procedure specified in clause (i) through
clause (iv):
(i) The Company shall irrevocably offer in writing (as
provided in clause (iii) below) to apply funds equal to a portion of the Net
Excess Proceeds Amount to the prepayment of each outstanding Note (together with
all accrued interest in respect thereof as of the date of payment and the
Make-Whole Amount, if any, due in connection with such prepayment in accordance
with clause (iv) below) in an amount (as to any Note, the "Ratable Portion") for
such Note equal to the product of (x) the Net Excess Proceeds Amount being so
applied to the payment of Senior Debt multiplied by (y) a fraction the numerator
of which is the
23
<PAGE>
outstanding principal amount of such Note and the denominator of which is the
aggregate principal amount of Senior Debt of the Company and its Restricted
Subsidiaries (other than any such Senior Debt which may not be paid as a matter
of right within the time period required by Section 10.2(d) and as to which the
Company or the appropriate Restricted Subsidiary has not obtained the consent of
the holder of such Senior Debt to make such a payment).
(ii) Each holder of a Note which does not accept or reject
such offer in writing within 20 Business Days of its receipt shall be deemed to
have rejected such offer. Upon any rejection of such offer by any such holder,
the Ratable Portion which would otherwise be payable to any such rejecting
holder shall be offered pro rata to all holders accepting such offer within 5
Business Days of rejection or deemed rejection. Any such holder that does not
accept or reject such additional offer within 15 Business Days of its receipt
shall be deemed to have rejected such offer. Subject to the provisions of this
clause (ii), the Company may retain for its own purposes the Ratable Portion
which would otherwise be payable to any rejecting holder.
(iii) The written offer of the Company referred to in clause
(i) hereof will be given to each holder of Notes not less than 45 days and not
more than 60 days prior to the actual date of prepayment. Such notice will set
forth the principal amount of the Notes to be so prepaid and the amount of
accrued interest thereon being paid and will be accompanied by a certificate of
a Senior Financial Officer as to the estimated Make-Whole Amount, if any, due in
accordance with clause (iv) below in connection with such prepayment (calculated
as if the date of such notice were the date of the prepayment), setting forth
the details of such computation. Two Business Days prior to such prepayment, the
Company shall deliver to each holder of Notes a certificate of a Senior
Financial Officer specifying the calculation of such Make-Whole Amount as of the
specified prepayment date.
(iv) Any prepayment of the Notes in accordance with the
requirements of Sections 10.2(d) and (e) shall be at par and without payment of
the Make-Whole Amount or any premiums unless a premium or make-whole amount
(other than usual breakage costs associated with the payment of any loan bearing
interest at a rate based on a short term fixed rate such as LIBOR prior to the
end of the applicable interest period) is paid with respect to any other Senior
Debt which has been or is to be paid in accordance with Section 10.2(d) on
account of the same disposition of assets resulting in the prepayment of the
Notes. If any such premium or make-whole amount is paid in connection with the
payment of any such other Senior Debt, then any prepayment of the Notes in
accordance with the requirements of Sections 10.2(d) and (e) shall be
accompanied by the Make-Whole Amount determined for the principal amount to be
prepaid as of the prepayment date.
(f) For purposes of this Section 10.2, the following terms have the
following meanings:
24
<PAGE>
The Company and its Restricted Subsidiaries shall be deemed to have
disposed of a "Substantial Part" of their assets if either (i) the book value of
all assets (other than assets sold in the ordinary course of business) disposed
of by the Company and its Restricted Subsidiaries during any one fiscal year
exceeds 15 percent of Consolidated Assets determined at the end of the
immediately preceding fiscal year or (ii) the book value of all assets (other
than assets sold in the ordinary course of business) disposed of by the Company
and its Restricted Subsidiaries during any three-fiscal year period exceeds 30
percent of Consolidated Assets determined at the fiscal year-end immediately
prior to the commencement of such three-year period.
The "Net Excess Proceeds Amount" means, with respect to any disposition
of a Substantial Part of the assets of the Company and its Restricted
Subsidiaries, as applicable, either (i) if such disposition is deemed to
constitute the disposition of a Substantial Part of such assets on account of
clause (i) of the preceding paragraph, the amount by which the Net Proceeds from
all dispositions of assets (other than assets sold in the ordinary course of
business) by the Company and its Restricted Subsidiaries during the fiscal year
in question exceeds 15% of Consolidated Assets determined at the end of the
immediately preceding fiscal year or (ii) if such disposition is deemed to
constitute the disposition of a Substantial Part of the assets of the Company
and its Restricted Subsidiaries on account of clause (ii) of the preceding
paragraph, the amount by which the Net Proceeds from all dispositions of assets
(other than assets sold in the ordinary course of business) by the Company and
its Restricted Subsidiaries during the three-fiscal year period in question
exceeds 30% of Consolidated Assets determined at the fiscal year-end immediately
prior to the commencement of such three-year period.
The "Net Proceeds" from any disposition of assets by the Company or any
Restricted Subsidiary shall be the gross proceeds of such disposition less (i)
the out-of-pocket costs and expenses of the Company and Restricted Subsidiaries
(other than amounts paid to Affiliates) incurred in connection with such
disposition, and (ii) any portion thereof used to repay Debt that both (A) was
incurred to finance the acquisition or construction of such asset (or incurred
as a refinancing of any such acquisition or construction Debt) and (B) is
secured by a Lien on such asset.
10.3. Liens.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly create, incur, assume or permit to exist
(upon the happening of a contingency or otherwise) any Lien on or with respect
to any property or asset (including, without limitation, any document or
instrument in respect of goods or accounts receivable) of the Company or any
such Restricted Subsidiary, whether now owned or held or hereafter acquired, or
any income or profits therefrom, or assign or otherwise convey any right to
receive such income or profits, except:
25
<PAGE>
(a) Liens for taxes, assessments or other governmental charges which
are not yet due and payable or the payment of which is not at the time required
by Section 9.4;
(b) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and other similar Liens, in each case, incurred in the
ordinary course of business for sums not yet due and payable or the payment of
which is not at the time required by Section 9.1 or Section 9.4;
(c) leases or subleases granted to others, easements, rights-of-way,
restrictions and other similar charges or encumbrances, in each case incidental
to, and not interfering with, the ordinary conduct of the business of the
Company or any of its Restricted Subsidiaries, provided that such Liens do not,
in the aggregate, materially detract from the value of such property;
(d) Liens on property or assets of the Company or any of its Restricted
Subsidiaries securing Debt owing to the Company or to another Restricted
Subsidiary;
(e) Liens existing on the date of this Agreement and securing the Debt
of the Company and its Restricted Subsidiaries referred to in Schedule 5.15;
(f) any Lien created to secure all or any part of the purchase price or
cost of construction, or to secure Debt incurred or assumed to pay all or any
part of the purchase price or cost of construction, of tangible property (or any
improvement thereon) acquired or constructed by the Company or a Restricted
Subsidiary after the date of the Closing, provided that (i) any such Lien shall
extend solely to the item or items of such property (or improvement thereon) so
acquired or constructed and, if required by the terms of the instrument
originally creating such Lien, other property (or improvement thereon) which is
an improvement to or is acquired for specific use in connection with such
acquired or constructed property (or improvement thereon) or which is real
property being improved by such acquired or constructed property (or improvement
thereon); (ii) the principal amount of the Debt secured by any such Lien shall
at no time exceed an amount equal to the lesser of (A) the cost to the Company
or such Restricted Subsidiary of the property (or improvement thereon) so
acquired or constructed and (B) the Fair Market Value (as determined in good
faith by the board of directors of the Company) of such property (or improvement
thereon) at the time of such acquisition or construction, and (iii) any such
Lien shall be created contemporaneously with, or within 180 days after, the
acquisition or construction of such property;
(g) any Lien existing on property of a Person immediately prior to its
being consolidated with or merged into the Company or a Restricted Subsidiary or
its becoming a Restricted Subsidiary, or any Lien existing on any property
acquired by the Company or any Restricted Subsidiary at the time such property
is so
26
<PAGE>
acquired (whether or not the Debt secured thereby shall have been assumed),
provided that (i) no such Lien shall have been created or assumed in
contemplation of such consolidation or merger or such Person's becoming a
Restricted Subsidiary or such acquisition of property, and (ii) each such Lien
shall extend solely to the item or items of property so acquired and, if
required by the terms of the instrument originally creating such Lien, other
property which is an improvement to or is acquired for specific use in
connection with such acquired property;
(h) any Lien renewing, extending or refunding any Lien permitted by
paragraphs (e), (f) or (g) of this Section 10.3, provided that (i) the principal
amount of Debt secured by such Lien immediately prior to such extension, renewal
or refunding is not increased or the maturity thereof reduced, (ii) such Lien is
not extended to any other property, and (iii) immediately after such extension,
renewal or refunding no Default or Event of Default would exist; and
(i) other Liens not otherwise permitted by paragraphs (a) through (h),
provided that the outstanding principal amount of the Debt thereby secured,
together with the outstanding amount of all Debt of Restricted Subsidiaries
(without duplication but excluding debt owed to the Company or a Wholly-Owned
Restricted Subsidiary), does not exceed 20% of Consolidated Net Worth.
10.4. Consolidated Net Worth.
The Company will not, at any time, permit Consolidated Net
Worth to be less than the sum of (a) $45,000,000, plus (b) an aggregate amount
equal to 30% of its Consolidated Net Income (but, in each case, only if a
positive number) for each completed fiscal quarter subsequent to December 3,
1995.
10.5. Debt.
(a) Clean Down of Current Debt. The Company will not at any
time have any Consolidated Current Debt outstanding unless there shall have been
during the immediately preceding twelve months a period of at least thirty
consecutive days on each of which there shall have been no Consolidated Current
Debt outstanding in excess of the amount of additional Funded Debt that the
Company would have been permitted to (but did not) incur on such day under
Section 10.5 (c).
(b) Subsidiary Debt. The Company will not at any time permit
any Restricted Subsidiary to, directly or indirectly, create, incur, assume,
guarantee, have outstanding, or otherwise become or remain directly or
indirectly liable with respect to, any Debt other than:
(i) Debt of a Restricted Subsidiary outstanding on the date
hereof and disclosed in Schedule 5.15, provided that such Debt may not be
extended,
27
<PAGE>
renewed or refunded except as otherwise permitted by this Agreement, including
clause (iv) below;
(ii) Debt of a Restricted Subsidiary owed to the Company or a
Wholly-Owned Restricted Subsidiary; and
(iii) Debt of a Restricted Subsidiary outstanding at the time
such Restricted Subsidiary becomes a Restricted Subsidiary, provided that (A)
such Debt shall not have been incurred in contemplation of such Restricted
Subsidiary becoming a Restricted Subsidiary and (B) immediately after such
Restricted Subsidiary becomes a Restricted Subsidiary no Default or Event of
Default shall exist, and provided further that such Debt may not be extended,
renewed or refunded except as otherwise permitted by this Agreement, including
clause (iv) below; and
(iv) Debt of a Restricted Subsidiary in addition to that
otherwise permitted by the foregoing provisions of this Section 10.5, provided
that on the date the Restricted Subsidiary incurs or otherwise becomes liable
with respect to any such additional Debt and immediately after giving effect
thereto and the concurrent retirement of any other Debt,
(A) no Default or Event of Default exists, and
(B) the total amount of all Debt of Restricted
Subsidiaries (except Debt owed to the Company or a Wholly-Owned Restricted
Subsidiary) and the outstanding principal amount of Debt secured by Liens
permitted by Section 10.3(i) hereof (without duplication), does not exceed at
any time 20% of Consolidated Net Worth.
(c) Restrictions on Consolidated Funded Debt.
(i) The Company will not at any time permit the ratio of
Consolidated Funded Debt to Consolidated Operating Cash Flow for the most
recently ended fiscal year of the Company to exceed the following for the
periods indicated:
For Fiscal Year Ratio
1996 3.25
1997 3.00
1998 2.75
1999 and thereafter 2.50
(ii) The Company will not at any time permit the ratio of
Consolidated Funded Debt to Consolidated Total Capitalization for the most
recently
28
<PAGE>
ended fiscal quarter of the Company to exceed the following for the fiscal
quarterly periods indicated:
From Until (but not including) Ratio
---- ------------------------- -----
Closing November 30, 1997 70.0%
November 30, 1997 November 29, 1998 65.0%
November 29,1998 and thereafter 60.0%
10.6. Fixed Charges Coverage Ratio.
The Company will not, at any time, permit the Fixed Charges
Coverage Ratio to be less than 2.0 to 1.0.
10.7. Restricted Payments and Restricted Investments.
The Company will not, and will not permit any of its
Restricted Subsidiaries to, declare or make, or incur any liability to declare
or make, any Restricted Payment or Restricted Investment unless immediately
after giving effect to such action, no Default or Event of Default would exist.
10.8. Line of Business.
The Company will not, and will not permit any of its
Restricted Subsidiaries to, engage in any business if, as a result, the general
nature of the business in which the Company and its Restricted Subsidiaries,
taken as a whole, would then be engaged would be substantially changed from the
general nature of the business in which the Company and its Restricted
Subsidiaries, taken as a whole, are engaged on the date of this Agreement as
described in the Memorandum.
11. EVENTS OF DEFAULT.
An "Event of Default" shall exist if any of the following
conditions or events shall occur and be continuing:
(a) the Company defaults in the payment of any principal or
Make-Whole Amount, if any, on any Note when the same becomes due and
payable, whether at maturity or at a date fixed for prepayment or by
declaration or otherwise; or
(b) the Company defaults in the payment of any interest on any
Note for more than five Business Days after the same becomes due and
payable; or
(c) the Company defaults in the performance of or compliance
with any term contained in Section 7.1 (d); or
29
<PAGE>
(d) the Company defaults in the performance of, or compliance
with, any terms contained in Section 10 and such default is not
remedied within five days after the earlier of (i) a Responsible
Officer obtaining actual knowledge of such default and (ii) the Company
receiving written notice of such default from any holder of a Note (any
such written notice to be identified as a "notice of default" and to
refer specifically to this paragraph (d) of Section 11); or
(e) the Company defaults in the performance of or compliance
with any term contained herein (other than those referred to in
paragraphs (a), (b), (c) and (d) of this Section 11) and such default
is not remedied within 30 days after the earlier of (i) a Responsible
Officer obtaining actual knowledge of such default and (ii) the Company
receiving written notice of such default from any holder of a Note (any
such written notice to be identified as a "notice of default" and to
refer specifically to this paragraph (e) of Section 11); or
(f) any representation or warranty made in writing by or on
behalf of the Company or by any officer of the Company in this
Agreement or in any writing furnished in connection with the
transactions contemplated hereby proves to have been false or incorrect
in any material respect on the date as of which made; or
(g) (i) the Company or any Subsidiary is in default (as
principal or as guarantor or other surety) in the payment of any
principal of or premium or make-whole amount or interest on any
Indebtedness that is outstanding in an aggregate principal amount of at
least $10,000,000 beyond any period of grace provided with respect
thereto, or (ii) the Company or any Subsidiary is in default in the
performance of or compliance with any term of any evidence of any
Indebtedness in an aggregate outstanding principal amount of at least
$10,000,000 or of any mortgage, indenture or other agreement relating
thereto or any other condition exists, and as a consequence of such
default or condition such Indebtedness has become, or has been declared
(or one or more Persons are entitled to declare such Indebtedness to
be), due and payable before its stated maturity or before its regularly
scheduled dates of payment, or (iii) as a consequence of the occurrence
or continuation of any event or condition (other than the passage of
time or the right of the holder of Indebtedness to convert such
Indebtedness into equity interest and other than as provided in Section
10.2(d)), (x) the Company or any Subsidiary has become obligated to
purchase or repay Indebtedness before its regular maturity or before
its regularly scheduled dates of payment in an aggregate outstanding
principal amount of at least $10,000,000, or (y) one or more Persons
have the right to require the Company or any Subsidiary so to purchase
or repay such Indebtedness; or
30
<PAGE>
(h) the Company or any Subsidiary (i) is generally not paying,
or admits in writing its inability to pay, its debts as they become
due, (ii) files, or consents by answer or otherwise to the filing
against it of, a petition for relief or reorganization or arrangement
or any other petition in bankruptcy, for liquidation or to take
advantage of any bankruptcy, insolvency, reorganization, moratorium or
other similar law of any jurisdiction, (iii) makes an assignment for
the benefit of its creditors, (iv) consents to the appointment of a
custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its property,
(v) is adjudicated as insolvent or to be liquidated, or (vi) takes
corporate action for the purpose of any of the foregoing; or
(i) a court or governmental authority of competent
jurisdiction enters an order appointing, without consent by the Company
or any of its Subsidiaries, a custodian, receiver, trustee or other
officer with similar powers with respect to it or with respect to any
substantial part of its property, or constituting an order for relief
or approving a petition for relief or reorganization or any other
petition in bankruptcy or for liquidation or to take advantage of any
bankruptcy or insolvency law of any jurisdiction, or ordering the
dissolution, winding-up or liquidation of the Company or any of its
Subsidiaries, or any such petition shall be filed against the Company
or any of its Subsidiaries and such petition shall not be dismissed
within 60 days; or
(j) a final judgment or judgments for the payment of money
aggregating in excess of $10,000,000 are rendered against one or more
of the Company and its Subsidiaries and which judgments are not, within
60 days after entry thereof, bonded, discharged or stayed pending
appeal, or are not discharged within 60 days after the expiration of
such stay; or
(k) if (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a
waiver of such standards or extension of any amortization period is
sought or granted under section 412 of the Code, (ii) a notice of
intent to terminate any Plan shall have been or is reasonably expected
to be filed with the PBGC or the PBGC shall have instituted proceedings
under ERISA section 4042 to terminate or appoint a trustee to
administer any Plan or the PBGC shall have notified the Company or any
ERISA Affiliate that a Plan may become a subject of any such
proceedings, (iii) the aggregate "amount of unfunded benefit
liabilities" (within the meaning of section 4001(a)(18) of ERISA) under
all Plans, determined in accordance with Title IV of ERISA, shall
exceed $5,000,000, (iv) the Company or any ERISA Affiliate shall have
incurred or is reasonably expected to incur any liability pursuant to
Title I or IV of ERISA or the penalty or excise tax provisions of the
Code relating to employee benefit plans, (v) the Company or any ERISA
Affiliate withdraws
31
<PAGE>
from any Multiemployer Plan, or (vi) the Company or any Subsidiary
establishes or amends any employee welfare benefit plan that provides
post-employment welfare benefits in a manner that would increase the
liability of the Company or any Subsidiary thereunder; and any such
event or events described in clauses (i) through (vi) above, either
individually or together with any other such event or events, could
reasonably be expected to have a Material Adverse Effect.
As used in Section 11(k), the terms "employee benefit plan"
and "employee welfare benefit plan" shall have the respective meanings assigned
to such terms in Section 3 of ERISA.
12. REMEDIES ON DEFAULT, ETC.
12.1. Acceleration.
(a) If an Event of Default with respect to the Company described in
paragraph(h) or (i) of Section 11 (other than an Event of Default described in
clause (i) of paragraph (h) or described in clause (vi) of paragraph (h) by
virtue of the fact that such clause encompasses clause (i) of paragraph (h)) has
occurred, all the Notes then outstanding shall automatically become immediately
due and payable.
(b) If any other Event of Default has occurred and is continuing, the
Required Holders, may at any time at their option, by notice or notices to the
Company, declare all the Notes then outstanding to be immediately due and
payable.
(c) If any Event of Default described in paragraph (a) or (b) of
Section 11 has occurred and is continuing, any holder or holders of Notes at the
time outstanding affected by such Event of Default may at any time, at its or
their option, by notice or notices to the Company, declare all the Notes held by
it or them to be immediately due and payable.
Upon any Notes becoming due and payable under this Section 12.1,
whether automatically or by declaration, such Notes will forthwith mature and
the entire unpaid principal amount of such Notes, plus (x) all accrued and
unpaid interest thereon and (y) the Make-Whole Amount determined in respect of
such principal amount (to the full extent permitted by applicable law), shall
all be immediately due and payable, in each and every case without presentment,
demand, protest or further notice, all of which are hereby waived. The Company
acknowledges, and the parties hereto agree, that each holder of a Note has the
right to maintain its investment in the Notes free from repayment by the Company
(except as herein specifically provided for) and that the provision for payment
of a Make-Whole Amount by the Company in the event that the Notes are prepaid or
are accelerated
32
<PAGE>
as a result of an Event of Default, is intended to provide compensation for the
deprivation of such right under such circumstances.
12.2. Other Remedies.
If any Default or Event of Default has occurred and is continuing, and
irrespective of whether any Notes have become or have been declared immediately
due and payable under Section 12.1, the holder of any Note at the time
outstanding may proceed to protect and enforce the rights of such holder by an
action at law, suit in equity or other appropriate proceeding, whether for the
specific performance of any agreement contained herein or in any Note, or for an
injunction against a violation of any of the terms hereof or thereof, or in aid
of the exercise of any power granted hereby or thereby or by law or otherwise.
12.3. Recision.
At any time after any Notes have been declared due and payable pursuant
to clause (b) or (c) of Section 12.1, the holders of not less than 50% in
principal amount of the Notes then outstanding, by written notice to the
Company, may rescind and annul any such declaration and its consequences if (a)
the Company has paid all overdue interest on the Notes, all principal of and
Make-Whole Amount, if any, on any Notes that are due and payable and are unpaid
other than by reason of such declaration, and all interest on such overdue
principal and Make-Whole Amount, if any, and (to the extent permitted by
applicable law) any overdue interest in respect of the Notes, at the Default
Rate, (b) all Events of Default and Defaults, other than non-payment of amounts
that have become due solely by reason of such declaration, have been cured or
have been waived pursuant to Section 17, and (c) no judgment or decree has been
entered for the payment of any monies due pursuant hereto or to the Notes. No
rescission and annulment under this Section 12.3 will extend to or affect any
subsequent Event of Default or Default or impair any right consequent thereon.
12.4. No Waivers or Election of Remedies, Expenses, etc.
No course of dealing and no delay on the part of any holder of any Note
in exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder's rights, powers or remedies. No right, power or
remedy conferred by this Agreement or by any Note upon any holder thereof shall
be exclusive of any other right, power or remedy referred to herein or therein
or now or hereafter available at law, in equity, by statute or otherwise.
Without limiting the obligations of the Company under Section 15, the Company
will pay to the holder of each Note on demand such further amount as shall be
sufficient to cover all costs and expenses of such holder incurred in any
enforcement or collection under this Section 12, including, without limitation,
reasonable attorneys' fees, expenses and disbursements.
33
<PAGE>
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
13.1. Registration of Notes.
The Company shall keep at its principal executive office a register for
the registration and registration of transfers of Notes. The name and address of
each holder of one or more Notes, each transfer thereof and the name and address
of each transferee of one or more Notes shall be registered in such register.
Prior to due presentment for registration of transfer, the Person in whose name
any Note shall be registered shall be deemed and treated as the owner and holder
thereof for all purposes hereof, and the Company shall not be affected by any
notice or knowledge to the contrary. The Company shall give to any holder of a
Note that is an Institutional Investor promptly upon request therefor, a
complete and correct copy of the names and addresses of all registered holders
of Notes.
13.2. Transfer and Exchange of Notes.
Upon surrender of any Note at the principal executive office of the
Company for registration of transfer or exchange (and in the case of a surrender
for registration of transfer, duly endorsed or accompanied by a written
instrument of transfer duly executed by the registered holder of such Note or
his attorney duly authorized in writing and accompanied by the address for
notices of each transferee of such Note or part thereof), the Company shall
execute and deliver, at the Company's expense (except as provided below), one or
more new Notes (as requested by the holder thereof) in exchange therefor, in an
aggregate principal amount equal to the unpaid principal amount of the
surrendered Note. Each such new Note shall be payable to such Person as such
holder may request and shall be substantially in the form of Exhibit 1. Each
such new Note shall be dated and bear interest from the date to which interest
shall have been paid on the surrendered Note or dated the date of the
surrendered Note if no interest shall have been paid thereon. The Company may
require payment of a sum sufficient to cover any stamp tax or governmental
charge imposed in respect of any such transfer of Notes. Notes shall not be
transferred in denominations of less than $2,000,000, provided that (a) if
necessary to enable the registration of transfer by a holder of its entire
holding of Notes, one Note may be in a denomination of less than $2,000,000 and
(b) a Note issued at the Closing to a Purchaser in an amount of less than
$2,000,000 may be transferred in its entirety without regard to whether the
Purchaser continues to hold other Notes at the time of transfer and provided,
further, that the restrictions set forth in the preceding proviso shall not
apply to any transfer made while an Event of Default exists. Any transferee, by
its acceptance of a Note registered in its name (or the name of its nominee),
shall be deemed to have made the representations set forth in Section 6.1 and
Section 6.2.
13.3. Replacement of Notes.
34
<PAGE>
Upon receipt by the Company of evidence reasonably satisfactory to it
of the ownership of and the loss, theft, destruction or mutilation of any Note
(which evidence shall be, in the case of an Institutional Investor, notice from
such Institutional Investor of such ownership and such loss, theft, destruction
or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to it (provided that if the holder of such Note is, or is a nominee
for, an original Purchaser or another holder of a Note with a minimum net worth
of at least $10,000,000, such Person's own unsecured agreement of indemnity
shall be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation thereof,
the Company shall execute and deliver, in lieu thereof, a new Note, dated and
bearing interest from the date to which interest shall have been paid on such
lost, stolen, destroyed or mutilated Note or dated the date of such lost,
stolen, destroyed or mutilated Note if no interest shall have been paid thereon.
14. PAYMENT ON NOTES.
14.1. Place of Payment.
Subject to Section 14.2, payments of principal, Make-Whole Amount, if
any, and interest becoming due and payable on the Notes shall be made in
Philadelphia, Pennsylvania at the principal office of the Company in such city.
The Company may at any time, by notice to each holder of a Note, change the
place of payment of the Notes so long as such place of payment shall be either
the principal office of the Company in the United States or the principal office
of a bank or trust company in the United States.
14.2. Home Office Payment.
So long as you or your nominee shall be the holder of any Note, and
notwithstanding anything contained in Section 14.1 or in such Note to the
contrary, the Company will pay all sums becoming due on such Note for principal,
Make-Whole Amount, if any, and interest by the method and at the address
specified for such purpose below your name in Schedule A, or by such other
method or at such other address as you shall have from time to time specified to
the Company in writing for such purpose, without the presentation or surrender
of such Note or the making of any notation thereon, except that upon written
request of the Company made concurrently with or reasonably promptly after
payment or prepayment in full of any Note, you shall surrender such Note for
cancellation, reasonably promptly after any such request, to the Company at its
principal executive office or at the place of payment most recently designated
by the Company pursuant to Section 14.1. Prior to any sale or other disposition
of any Note held by you or your
35
<PAGE>
nominee you will, at your election, either endorse thereon the amount of
principal paid thereon and the last date to which interest has been paid thereon
or surrender such Note to the Company in exchange for a new Note or Notes
pursuant to Section 13.2. The Company will afford the benefits of this Section
14.2 to any Institutional Investor that is the direct or indirect transferee of
any Note purchased by you under this Agreement and that has made the same
agreement relating to such Note as you have made in this Section 14.2.
15. EXPENSES, ETC.
15.1. Transaction Expenses.
The Company will pay all costs and expenses (including reasonable
attorneys' fees of a special counsel and, if reasonably required, local or other
counsel) incurred by you and each Other Purchaser or holder of a Note in
connection with this Agreement and in connection with any amendments, waivers or
consents under or in respect of this Agreement or the Notes (whether or not such
amendment, waiver or consent becomes effective), including, without limitation:
(a) the costs and expenses incurred in enforcing or defending (or determining
whether or how to enforce or defend) any rights under this Agreement or the
Notes or in responding to any subpoena or other legal process or informal
investigative demand issued in connection with this Agreement or the Notes, or
by reason of being a holder of any Note, and (b) the costs and expenses,
incurred in connection with the insolvency or bankruptcy of the Company or any
Subsidiary or in connection with any work-out or restructuring of the
transactions contemplated hereby and by the Notes. The Company will pay, and
will save you and each other holder of a Note harmless from, all claims in
respect of any fees, costs or expenses if any, of brokers and finders (other
than those retained by you).
15.2. Survival.
The obligations of the Company under this Section 15 will survive the
payment or transfer of any Note, the enforcement, amendment or waiver of any
provision of this Agreement or the Notes, and the termination of this Agreement.
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE
AGREEMENT.
All representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the Notes, the purchase or transfer
by you of any Note or portion thereof or interest therein and the payment of any
Note, and may be relied upon by any subsequent holder of a Note, regardless of
any investigation made at any time by or on behalf of you or any other holder of
a Note. All statements contained in any certificate or other instrument
delivered by or on behalf of the Company pursuant to this Agreement shall be
deemed
36
<PAGE>
representations and warranties of the Company under this Agreement. Subject to
the preceding sentence, this Agreement and the Notes embody the entire agreement
and understanding between you and the Company and supersede all prior agreements
and understandings relating to the subject matter hereof.
17. AMENDMENT AND WAIVER.
17.1. Requirements.
(a) Consent of Holders. This Agreement and the Notes may be amended,
and the observance of any term hereof or of the Notes may be waived (either
retroactively or prospectively), with (and only with) the written consent of the
Company and the Required Holders, except that (a) no amendment or waiver of any
of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined term
(as it is used therein), will be effective as to you unless consented to by you
in writing, and (b) no such amendment or waiver may, without the written consent
of the holder of each Note at the time outstanding affected thereby, (i) subject
to the provisions of Section 12 relating to acceleration or rescission, change
the amount or time of any prepayment or payment of principal of, or reduce the
rate or change the time of payment or method of computation of interest or of
the Make-Whole Amount on, the Notes, (ii) change the percentage of the principal
amount of the Notes the holders of which are required to consent to any such
amendment or waiver, or (iii) amend any of Sections 8, 11(a), 11(b), 12, 17 or
20.
(b) No Other Consents. The Company shall not make any commitment, or
enter into any agreement providing, that any amendment to or any waiver or
modification of the provisions of this Agreement or the Notes shall be subject
to or require the consent or approval of any Person other than the Company and
the holders of the Notes. The Company represents and warrants that no such
commitment or agreement shall be in effect as of the time of the original
issuance of the Notes hereunder.
17.2. Solicitation of Holders of Notes.
(a) Solicitation. The Company will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Notes. The Company will deliver executed or true and correct
copies of each amendment, waiver or consent effected pursuant to the provisions
of this Section 17 to each holder of outstanding Notes promptly following the
date on which it is executed and delivered by, or receives the consent or
approval of, the requisite holders of Notes.
37
<PAGE>
(b) Payment. The Company will not directly or indirectly pay or cause
to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, or grant any security, to any holder of Notes as
consideration for or as an inducement to the entering into by any holder of
Notes or any waiver or amendment of any of the terms and provisions hereof
unless such remuneration is concurrently paid, or security is concurrently
granted, on the same terms, ratably to each holder of Notes then outstanding
even if such holder did not consent to such waiver or amendment.
17.3. Binding Effect, etc.
Any amendment or waiver consented to as provided in this Section 17
applies equally to all holders of Notes and is binding upon them and upon each
future holder of any Note and upon the Company without regard to whether such
Note has been marked to indicate such amendment or waiver. No such amendment or
waiver will extend to or affect any obligation, covenant, agreement, Default or
Event of Default not expressly amended or waived or impair any right consequent
thereon. No course of dealing between the Company and the holder of any Note nor
any delay in exercising any rights hereunder or under any Note shall operate as
a waiver of any rights of any holder of such Note. As used herein, the term
"this Agreement" and references thereto shall mean this Agreement as it may from
time to time be amended or supplemented.
17.4. Notes held by Company, etc.
Solely for the purpose of determining whether the holders of the
requisite percentage of the aggregate principal amount of Notes then outstanding
approved or consented to any amendment, waiver or consent to be given under this
Agreement or the Notes, or have directed the taking of any action provided
herein or in the Notes to be taken upon the direction of the holders of a
specified percentage of the aggregate principal amount of Notes then
outstanding, Notes directly or indirectly owned by the Company or any of its
Affiliates shall be deemed not to be outstanding.
18. NOTICES.
All notices and communications provided for hereunder shall be in
writing and sent (a) by telecopy if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:
38
<PAGE>
(i) if to you or your nominee, to you or it at the address
specified for such communications in Schedule A, or at such other address as you
or it shall have specified to the Company in writing,
(ii) if to any other holder of any Note, to such holder at
such address as such other holder shall have specified to the Company in
writing, or if to the Company, to the Company at its address set forth at the
beginning hereof to the attention of William E. Chandler, Senior Vice President,
Finance, or at such other address as the Company shall have specified to the
holder of each Note in writing. Notices under this Section 18 will be deemed
given only when actually received.
19. REPRODUCTIONS OF DOCUMENTS.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by you at the Closing (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished to you, may be reproduced by you by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and you may destroy any original document so reproduced. The
Company agrees and stipulates that, to the extent permitted by applicable law,
any such reproduction 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 any enlargement, facsimile or further reproduction of
such reproduction shall likewise be admissible in evidence. This Section 19
shall not prohibit the Company or any other holder of Notes from contesting any
such reproduction to the same extent that it could contest the original, or from
introducing evidence to demonstrate the inaccuracy of any such reproduction.
20. CONFIDENTIAL INFORMATION.
For the purposes of this Section 20, "Confidential Information" means
information delivered to you by or on behalf of the Company or any Subsidiary in
connection with the transactions contemplated by or otherwise pursuant to this
Agreement that is proprietary in nature and that was clearly marked or labeled
or otherwise adequately identified when received by you as being confidential
information of the Company or such Subsidiary, provided that such term does not
include information that (a) was publicly known or otherwise known to you prior
to the time of such disclosure, (b) subsequently becomes publicly known through
no act or omission by you or any person acting on your behalf, (c) otherwise
becomes known to you other than through disclosure by the Company or any
Subsidiary or (d) constitutes financial statements delivered to you under
Section 7.1 that are otherwise publicly available. You will maintain the
confidentiality of such Confidential Information in accordance with procedures
adopted by you in good
39
<PAGE>
faith to protect confidential information of third parties delivered to you,
provided that you may deliver or disclose Confidential Information to (i) your
directors, officers, employees, agents, attorneys and affiliates who agree to
hold confidential the Confidential Information substantially in accordance with
the terms of this Section 20 (to the extent such disclosure reasonably relates
to the administration of the investment represented by your Notes), (ii) your
financial advisors and other professional advisors who agree to hold
confidential the Confidential Information substantially in accordance with the
terms of this Section 20, (iii) any other holder of any Note, (iv) any
Institutional Investor to which you sell or offer to sell such Note or any part
thereof or any participation therein (if such Person has agreed in writing prior
to its receipt of such Confidential Information to be bound by the provisions of
this Section 20), (v) any Person from which you offer to purchase any security
of the Company (if such Person has agreed in writing prior to its receipt of
such Confidential Information to be bound by the provisions of this Section 20),
(vi) any federal or state regulatory authority having jurisdiction over you,
(vii) the National Association of Insurance Commissioners or any similar
organization, or any nationally recognized rating agency that requires access to
information about your investment portfolio or (viii) any other Person to which
such delivery or disclosure may be necessary or appropriate (w) to effect
compliance with any law, rule, regulation or order applicable to you, (x) in
response to any subpoena or other legal process, (y) in connection with any
litigation to which you are a party or (z) if an Event of Default has occurred
and is continuing, to the extent you may reasonably determine such delivery and
disclosure to be necessary or appropriate in the enforcement or for the
protection of the rights and remedies under your Notes and this Agreement. Each
holder of a Note, by its acceptance of a Note, will be deemed to have agreed to
be bound by and to be entitled to the benefits of this Section 20 as though it
were a party to this Agreement. On reasonable request by the Company in
connection with the delivery to any holder of a Note of information required to
be delivered to such holder under this Agreement or requested by such holder
(other than a holder that is a party to this Agreement or its nominee), such
holder will enter into an agreement with the Company embodying the provisions of
this Section 20.
21. SUBSTITUTION OF PURCHASER.
You shall have the right to substitute any one of your Affiliates as
the purchaser of the Notes that you have agreed to purchase hereunder, by
written notice to the Company, which notice shall be signed by both you and such
Affiliate, shall contain such Affiliate's agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in Section 6. Upon receipt
of such notice, wherever the word "you" is used in this Agreement (other than in
this Section 21), such word shall be deemed to refer to such Affiliate in lieu
of you. In the event that such Affiliate is so substituted as a purchaser
hereunder and such Affiliate thereafter transfers to you all of the Notes then
held by such Affiliate, upon receipt by the
40
<PAGE>
Company of notice of such transfer, wherever the word "you" is used in this
Agreement (other than in this Section 21), such word shall no longer be deemed
to refer to such Affiliate, but shall refer to you, and you shall have all the
rights of an original holder of the Notes under this Agreement.
22. MISCELLANEOUS.
22.1. Successors and Assigns.
All covenants and other agreements contained in this Agreement by or on
behalf of any of the parties hereto bind and inure to the benefit of their
respective successors and assigns (including, without limitation, any subsequent
holder of a Note) whether so expressed or not.
22.2. Payments due on Non-Business Days.
Anything in this Agreement or the Notes to the contrary
notwithstanding, any payment of principal of or Make-whole Amount or interest on
any Note that is due on a date other than a Business Day shall be made on the
next succeeding Business Day without including the additional days elapsed in
the computation of the interest payable on such next succeeding Business Day.
22.3. Severability.
Any provision of this Agreement that is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.
22.4. Construction.
Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent of each other covenant contained
herein, so that compliance with any one covenant shall not (absent such an
express contrary provision) be deemed to excuse compliance with any other
covenant. Where any provision herein refers to action to be taken by any Person,
or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person.
41
<PAGE>
22.5. Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be an original but all of which together shall constitute one
instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.
22.6. Governing Law.
This Agreement shall be construed and enforced in accordance with, and
the rights of the parties shall be governed by, the law of the Commonwealth of
Massachusetts excluding choice-of-law principles of the law of such State that
would require the application of the laws of a jurisdiction other than such
State.
* * * * *
If you are in agreement with the foregoing, please so indicate by
signing the acceptance on the signature page of this Agreement on which your
name appears (a total of four separate signature pages for the Purchasers follow
this page) and return it to the Company, whereupon the foregoing shall become a
binding agreement between you and the Company.
Very truly yours,
HUNT MANUFACTURING CO.
By_________________________
Name:
Title:
42
<PAGE>
The undersigned hereby accepts and enters into the foregoing Note
Purchase Agreement among the Company and the Purchasers, including the
undersigned.
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
By:______________________________
Name:
Title:
(This is one of four separate signature pages signed by the Purchasers of the
Notes. The remainder of this page is intentionally left blank.)
43
<PAGE>
The undersigned hereby accepts and enters into the foregoing Note
Purchase Agreement among the Company and the Purchasers, including the
undersigned.
ALLSTATE LIFE INSURANCE COMPANY
By:____________________________
Name:
By:____________________________
Name:
Authorized Signatories
The undersigned hereby accepts and enters into the foregoing Note
Purchase Agreement among the Company and the Purchasers, including the
undersigned.
ALLSTATE INSURANCE COMPANY
By:____________________________
Name:
By:____________________________
Name:
Authorized Signatories
(This is one of four separate signature pages signed by the Purchasers of the
Notes. The remainder of this page is intentionally left blank.)
44
<PAGE>
The undersigned hereby accepts and enters into the foregoing Note
Purchase Agreement among the Company and the Purchasers, including the
undersigned.
PROVIDENT MUTUAL LIFE INSURANCE COMPANY--COVENANT
By:____________________________
Name:
Title:
The undersigned hereby accepts and enters into the foregoing Note
Purchase Agreement among the Company and the Purchasers, including the
undersigned.
PROVIDENT MUTUAL LIFE INSURANCE COMPANY
By:____________________________
Name:
Title:
(This is one of four separate signature pages signed by the Purchasers of the
Notes. The remainder of this page is intentionally left blank.)
45
<PAGE>
The undersigned hereby accepts and enters into the foregoing Note
Purchase Agreement among the Company and the Purchasers, including the
undersigned.
MENNONITE MUTUAL AID ASSOCIATION
By:____________________________
Name:
Title:
The undersigned hereby accepts and enters into the foregoing Note
Purchase Agreement among the Company and the Purchasers, including the
undersigned.
MENNONITE RETIREMENT TRUST
By:____________________________
Name:
Title:
(This is one of four separate signature pages signed by the Purchasers of the
Notes. The remainder of this page is intentionally left blank.)
46
<PAGE>
DEFINED TERMS
As used herein, the following terms have the respective meanings set forth below
or set forth in the Section hereof following such term:
"Affiliate" means, at any time, and with respect to any Person, (a) any other
Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person, and (b) any Person beneficially owning or holding, directly
or indirectly, 10% or more of any class of voting or equity interests of the
Company or any Subsidiary or any corporation of which the Company and its
Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly,
10% or more of any class of voting or equity interests. As used in this
definition, "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 securities, by contract or otherwise.
Unless the context otherwise clearly requires, any reference to an "Affiliate"
is a reference to an Affiliate of the Company.
"Business Day" means (a) for the purposes of Section 8.6 only, any day other
than a Saturday, a Sunday or a day on which commercial banks in New York City
are required or authorized to be closed, and (b) for the purposes of any other
provision of this Agreement, any day other than a Saturday, a Sunday or a day on
which commercial banks in Charlotte, North Carolina, are required or authorized
to be closed.
"Capital Lease" means, at any time, a lease with respect to which the lessee is
required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
"Closing" is defined in Section 3.
"Code" means the Internal Revenue Code of 1986, as amended from time to time,
and the rules and regulations promulgated thereunder from time to time.
"Company" means Hunt Manufacturing Co., a Pennsylvania corporation.
"Confidential Information" is defined in Section 20.
"Consolidated Assets" means, at any time, the total assets of the Company and
its Restricted Subsidiaries which would be shown as assets on a consolidated
balance sheet of the Company and its Restricted Subsidiaries as of such time
prepared in accordance with GAAP, after eliminating all amounts properly
attributable to minority interests, if any, in the stock and surplus of
Restricted Subsidiaries.
47
<PAGE>
"Consolidated Current Debt" means, as of any date of determination, the total of
all Current Debt of the Company and its Restricted Subsidiaries outstanding on
such date, after eliminating all offsetting debits and credits between the
Company and its Restricted Subsidiaries and all other items required to be
eliminated in the course of the preparation of consolidated financial statements
of the Company and its Restricted Subsidiaries in accordance with GAAP.
"Consolidated Debt" means, as of any date of determination, the total of all
Debt of the Company and its Restricted Subsidiaries outstanding on such date,
after eliminating all offsetting debits and credits between the Company and its
Restricted Subsidiaries and all other items required to be eliminated in the
course of the preparation of consolidated financial statements of the Company
and its Restricted Subsidiaries in accordance with GAAP.
"Consolidated Funded Debt" means, as of any date of determination, the total of
all Funded Debt of the Company and its Restricted Subsidiaries outstanding on
such date, after eliminating all offsetting debits and credits between the
Company and its Restricted Subsidiaries and all other items required to be
eliminated in the course of the preparation of consolidated financial statements
of the Company and its Restricted Subsidiaries in accordance with GAAP.
"Consolidated Income Available for Fixed Charges" means, with respect to any
period, Consolidated Net Income excluding (i) non-cash charges associated with
the exercise of stock options, (ii) unusual items, including, but not limited
to, refinancing, restructuring, or reorganizational charges, (iii) effects of
changes in accounting principles, and (iv) extraordinary items for such period
plus all amounts deducted in the computation thereof on account of (a) Fixed
Charges and (b) taxes imposed on or measured by income or excess profits.
"Consolidated Net Income" means, with reference to any period, the net income
(or loss) of the Company and its Restricted Subsidiaries for such period (taken
as a cumulative whole), as determined in accordance with GAAP, after eliminating
all offsetting debits and credits between the Company and its Restricted
Subsidiaries and all other items required to be eliminated in the course of the
preparation of consolidated financial statements of the Company and its
Restricted Subsidiaries in accordance with GAAP.
"Consolidated Net Worth" means, at any time,
(a) the sum of (i) the par value (or value stated on the books of the
corporation) of the capital stock (but excluding treasury stock and capital
stock subscribed and unissued) of the Company and its Restricted Subsidiaries
plus (ii) the amount of the paid-in capital and retained earnings of the Company
and its Restricted Subsidiaries, in each case as such amounts would be shown on
a consolidated balance
48
<PAGE>
sheet of the Company and its Restricted Subsidiaries as of such time prepared in
accordance with GAAP, minus
(b) to the extent included in clause (a), all amounts properly
attributable to minority interests, if any, in the stock and surplus of
Restricted Subsidiaries.
"Consolidated Operating Cash Flow" means, in respect of any period, the sum of
(a) Consolidated Net Income excluding (i) non-cash charges associated with the
exercise of stock options, (ii) unusual items, including, but not limited to,
refinancing, restructuring, or reorganizational charges, (iii) effects of
changes in accounting principles, and (iv) extraordinary items for such period
and (b) the amount of all interest expenses, depreciation, amortization, income
taxes, deferred items and other non-cash expenses of the Company and its
Restricted Subsidiaries, but only to the extent deducted in the determination of
Consolidated Net Income for such period.
"Consolidated Total Capitalization" means, at any time, the sum of Consolidated
Net Worth and Consolidated Debt.
"Current Debt" means, with respect to any Person, all Debt of such Person which
by its terms or by the terms of any instrument or agreement relating thereto
matures on demand or within one year from the date of the creation thereof and
is not directly or indirectly renewable or extendible at the option of the
obligor in respect thereof to a date one year or more from such date, provided
that (a) Debt outstanding under a revolving credit or similar agreement which
obligates the lender or lenders to extend credit over a period of one year or
more and (b) Current Maturities of Funded Debt shall constitute Funded Debt and
not Current Debt, even though such Debt by its terms matures on demand or within
one year from such date.
"Current Maturities of Funded Debt" means, at any time and with respect to any
item of Funded Debt, the portion of such Funded Debt outstanding at such time
which by the terms of such Funded Debt or the terms of any instrument or
agreement relating thereto is due on demand or within one year from such time
(whether by sinking fund, other required prepayment or final payment at
maturity) and is not directly or indirectly renewable, extendible or refundable
at the option of the obligor under an agreement or firm commitment in effect at
such time to a date one year or more from such time.
"Debt" means, with respect to any Person, without duplication,
(a) its liabilities for borrowed money;
(b) its liabilities for the deferred purchase price of property
acquired by such Person (excluding accounts payable arising in the ordinary
course of business but including, without limitation, all liabilities created or
arising under any conditional sale or other title retention agreement with
respect to any such property);
49
<PAGE>
(c) all liabilities appearing on its balance sheet in accordance with
GAAP in respect of Capital Leases;
(d) all liabilities for borrowed money secured by any Lien with respect
to any property owned by such Person (whether or not it has assumed or otherwise
become liable for such liabilities); and
(e) any Guaranty of such Person with respect to liabilities of a type
described in any of clauses (a) through (d) hereof.
"Default" means an event or condition the occurrence or existence of which
would, with the lapse of time or the giving of notice or both, become an Event
of Default.
"Default Rate" means that rate of interest that is the greater of (i) 2.00% per
annum above the rate of interest stated in clause (a) of the first paragraph of
the Notes or (ii) 2.00% over the rate of interest publicly announced by
NationsBank, N.A. in Charlotte, North Carolina as its "base" or "prime" rate.
"Distribution" means, in respect of any corporation, association or other
business entity:
(a) dividends or other distributions or payments on capital stock or
other equity interest of such corporation, association or other business entity
(except distributions in such stock or other equity interest); and
(b) the redemption or acquisition of such stock or other equity
interests or of warrants, rights or other options to purchase such stock or
other equity interests (except when solely in exchange for such stock or other
equity interests) unless made, contemporaneously, from the net proceeds of a
sale of such stock or other equity interests.
"Environmental Laws" means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including but not limited to
those related to hazardous substances or wastes, air emissions and discharges to
waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the rules and regulations promulgated thereunder from
time to time in effect.
"ERISA Affiliate" means any trade or business (whether or not incorporated) that
is treated as a single employer together with the Company under section 414 of
the Code.
50
<PAGE>
"Event of Default" is defined in Section 11.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means, at any time and with respect to any property, the
sale value of such property that would be realized in an arm's-length sale at
such time between an informed and willing buyer and an informed and willing
seller (neither being under a compulsion to buy or sell).
"Fixed Charges" means, with respect to any period, the sum of (a) Interest
Charges for such period and (b) Lease Rentals for such period.
"Fixed Charges Coverage Ratio" means, at any time, the ratio of (a) Consolidated
Income Available for Fixed Charges for the fiscal year ending on, or most
recently ended prior to, such time to (b) Fixed Charges for such year.
"Funded Debt" means, with respect to any Person, all Debt of such Person which
by its terms or by the terms of any instrument or agreement relating thereto
matures, or which is otherwise payable or unpaid, one year or more from, or is
directly or indirectly renewable or extendible at the option of the obligor in
respect thereof to a date one year or more (including, without limitation, an
option of such obligor under a revolving credit or similar agreement obligating
the lender or lenders to extend credit over a period of one year or more) from,
the date of the creation thereof, provided that Funded Debt shall include, as at
any date of determination, Current Maturities of Funded Debt.
"GAAP" means generally accepted accounting principles as in effect from time to
time in the United States of America.
"Governmental Authority" means
(a) the government of
(i) the United States of America or any State or other
political subdivision thereof, or
(ii) any jurisdiction in which the Company or any Subsidiary
conducts all or any part of its business, or which asserts jurisdiction
over any properties of the Company or any Subsidiary, or
(b) any entity exercising executive, legislative, judicial, regulatory
or administrative functions of, or pertaining to, any such government.
"Guaranty" means, with respect to any Person, any obligation (except the
endorsement in the ordinary course of business of negotiable instruments for
deposit
51
<PAGE>
or collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person:
(a) to purchase such indebtedness or obligation or any property
constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment of such
indebtedness or obligation, or (ii) to maintain any working capital or other
balance sheet condition or any income statement condition of any other Person or
otherwise to advance or make available funds for the purchase or payment of such
indebtedness or obligation;
(c) to lease properties or to purchase properties or services primarily
for the purpose of assuring the owner of such indebtedness or obligation of the
ability of any other Person to make payment of the indebtedness or obligation;
or
(d) otherwise to assure the owner of such indebtedness or obligation
against loss in respect thereof.
In any computation of the indebtedness or other liabilities of the obligor under
any Guaranty, the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.
"Hazardous Material" means any and all pollutants, toxic or hazardous wastes or
any other substances that might pose a hazard to health or safety, the removal
of which may be required or the generation, manufacture, refining, production,
processing, treatment, storage, handling, transportation, transfer, use,
disposal, release, discharge, spillage, seepage, or filtration of which is or
shall be restricted, prohibited or penalized by any applicable law (including,
without limitation, asbestos, urea formaldehyde foam insulation and
polychlorinated biphenyls).
"Holder" means, with respect to any Note, the Person in whose name such Note is
registered in the register maintained by the Company pursuant to Section 13.1.
"Indebtedness" with respect to any Person means, at any time, without
duplication,
(a) its liabilities for borrowed money and its redemption obligations
in respect of mandatorily redeemable Preferred Stock;
(b) its liabilities for the deferred purchase price of property
acquired by such Person (excluding accounts payable arising in the ordinary
course of business but including all liabilities created or arising under any
conditional sale or other title retention agreement with respect to any such
property);
52
<PAGE>
(c) all liabilities appearing on its balance sheet in accordance with
GAAP in respect of Capital Leases;
(d) all liabilities for borrowed money secured by any Lien with respect
to any property owned by such Person (whether or not it has assumed or otherwise
become liable for such liabilities);
(e) all its liabilities in respect of unreimbursed draws under letters
of credit or instruments serving a similar function issued or accepted for its
account by banks and other financial institutions (whether or not representing
obligations for borrowed money);
(f) Swaps of such Person; and
(g) any Guaranty of such Person with respect to liabilities of a type
described in any of clauses (a) through (e) hereof.
"Institutional Investor" means (a) any original purchaser of a Note, (b) any
holder of a Note holding more than 4% of the aggregate principal amount of the
Notes then outstanding, and (c) any bank, trust company, savings and loan
association or other financial institution, any pension plan, any investment
company, any insurance company, any broker or dealer, or any other similar
financial institution or entity, regardless of legal form.
"Interest Charges" means, with respect to any period, the sum (without
duplication) of the following (in each case, eliminating all offsetting debits
and credits between the Company and its Restricted Subsidiaries and all other
items required to be eliminated in the course of the preparation of consolidated
financial statements of the Company and its Restricted Subsidiaries in
accordance with GAAP): (a) all interest in respect of Debt of the Company and
its Restricted Subsidiaries (including imputed interest on Capital Lease
obligations) deducted in determining Consolidated Net Income for such period,
and (b) all debt discount and expense amortized or required to be amortized in
the determination of Consolidated Net Income for such period.
"Investment" means any investment, made in cash or by delivery of property, by
the Company or any of its Restricted Subsidiaries (i) in any Person, whether by
acquisition of stock, indebtedness or other obligation or Security, or by loan,
Guaranty, advance, capital contribution or otherwise, or (ii) in any property.
"Lease Rentals" means, with respect to any period, the sum of the minimum amount
of rental and other obligations required to be paid during such period by the
Company or any Restricted Subsidiary as lessee under all leases of real or
personal property (other than Capital Leases), excluding any amounts required to
be paid by the lessee (whether or not therein designated as rental or additional
rental) (a) which are on account of maintenance and repairs, insurance, taxes,
assessments, water rates and
53
<PAGE>
similar charges, or (b) which are based on profits, revenues or sales realized
by the lessee from the leased property or otherwise based on the performance of
the lessee.
"Lien" means, with respect to any Person, any mortgage, lien, pledge, charge,
security interest or other encumbrance, or any interest or title of any vendor,
lessor, lender or other secured party to or of such Person under any conditional
sale or other title retention agreement or Capital Lease, upon or with respect
to any property or asset of such Person (including in the case of stock,
stockholder agreements, voting trust agreements and all similar arrangements).
"Make-Whole Amount" is defined in Section 8.6.
"Material" means material in relation to the business, operations, affairs,
financial condition, assets, properties, or prospects of the Company and its
Restricted Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a) the business,
operations, affairs, financial condition, assets or properties of the Company
and its Restricted Subsidiaries taken as a whole, or (b) the ability of the
Company to perform its obligations under this Agreement and the Notes, or (c)
the validity or enforceability of this Agreement or the Notes.
"Memorandum" is defined in Section 5.3.
"Multiemployer Plan" means any Plan that is a "multiemployer plan" (as such term
is defined in section 4001(a)(3) of ERISA).
"Notes" is defined in Section 1.
"Officer's Certificate" means a certificate of a Senior Financial Officer or of
any other officer of the Company whose responsibilities extend to the subject
matter of such certificate.
"Other Purchasers" means, with respect to any Purchaser named in Schedule A,
each other Purchaser named in such schedule.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA or any successor thereto.
"Person" means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization, or a government or
agency or political subdivision thereof.
"Plan" means an "employee benefit plan" (as defined in section 3(3) of ERISA)
that is or, within the preceding five years, has been established or maintained,
or to which
54
<PAGE>
contributions are or, within the preceding five years, have been made or
required to be made, by the Company or any ERISA Affiliate or with respect to
which the Company or any ERISA Affiliate may have any liability.
"Preferred Stock" means any class of capital stock of a corporation that is
preferred over any other class of capital stock of such corporation as to the
payment of dividends or the payment of any amount upon liquidation or
dissolution of such corporation.
"property" or "properties" means, unless otherwise specifically limited, real or
personal property of any kind, tangible or intangible, choate or inchoate.
"Purchasers" is defined in Section 2.1.
"QPAM Exemption" means Prohibited Transaction Class Exemption 84-14 issued by
the United States Department of Labor.
"Required Holders" means, at any time, the holders of at least 51% in principal
amount of the Notes at the time outstanding (exclusive of Notes then owned by
the Company or any of its Affiliates).
"Responsible Officer" means any Senior Financial Officer and any other officer
of the Company with responsibility for the administration of the relevant
portion of this agreement.
"Restricted Investments" means all Investments except the following:
(a) property to be used in the ordinary course of business of the Company and
its Restricted Subsidiaries;
(b) current assets arising from the sale of goods and services in the ordinary
course of business of the Company and its Restricted Subsidiaries;
(c) Investments in one or more Restricted Subsidiaries or any Person that
concurrently with such Investment becomes a Restricted Subsidiary;
(d) Investments in United States Governmental Securities, provided that such
obligations mature within 365 days from the date of acquisition thereof;
(e) Investments in cash, cash equivalents (within the meaning of GAAP),
certificates of deposit or banker's acceptances issued by an Acceptable Bank,
provided that such obligations mature within 365 days from the date of
acquisition thereof;
55
<PAGE>
(f) Investments in commercial paper given the highest rating by a credit rating
agency of recognized national standing and maturing not more than 270 days from
the date of creation thereof;
(g) Investments in Repurchase Agreements; and
(h) Investments in tax-exempt obligations of any state of the United States of
America, or any municipality of any such state, in each case rated "AA" or
better by S&P, "Aa2" or better by Moody's or an equivalent rating by any other
credit rating agency of recognized national standing, provided that such
obligations mature within 365 days from the date of acquisition thereof.
As used in this definition of "Restricted Investments":
"Acceptable Bank" means any bank or trust company (i) which is
organized under the laws of the United States of America or any State thereof,
(ii) which has capital, surplus and undivided profits aggregating at least
$500,000,000 and (iii) whose long-term unsecured debt obligations (or the
long-term unsecured debt obligations of the bank holding company owning all of
the capital stock of such bank or trust company) shall have been given a rating
of "A" or better by S&P, "A2" or better by Moody's or an equivalent rating by
any other credit rating agency of recognized national standing.
"Acceptable Broker-Dealer" means any Person other than a natural person
(i) which is registered as a broker or dealer pursuant to the Exchange Act and
(ii) whose long-term unsecured debt obligations shall have been given a rating
of "A" or better by S&P, "A2" or better by Moody's or an equivalent rating by
any other credit rating agency of recognized national standing.
"Moody's" means Moody's Investors Service, Inc.
"Repurchase Agreement" means any written agreement
(a) that provides for (i) the transfer of one or more United States
Governmental Securities in an aggregate principal amount at least equal
to the amount of the Transfer Price (defined below) to the Company or
any of its Subsidiaries from an Acceptable Bank or an Acceptable
Broker-Dealer against a transfer of funds (the "Transfer Price") by the
Company or such Subsidiary to such Acceptable Bank or Acceptable
Broker-Dealer, and (ii) a simultaneous agreement by the Company or such
Subsidiary, in connection with such transfer of funds, to transfer to
such Acceptable Bank or Acceptable Broker-Dealer the same or
substantially similar United States Governmental Securities for a price
not less than the Transfer Price plus a reasonable return thereon at a
date certain not later than 365 days after such transfer of funds,
56
<PAGE>
(b) in respect of which the Company or such Subsidiary shall have the
right, whether by contract or pursuant to applicable law, to liquidate
such agreement upon the occurrence of any default thereunder, and
(c) in connection with which the Company or such Subsidiary, or an
agent thereof, shall have taken all action required by applicable law
or regulations to perfect a Lien in such United States Governmental
Securities.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw Hill,
Inc.
"United States Governmental Security" means any direct obligation of,
or any obligation guaranteed by, the United States of America, or any agency
controlled or supervised by or acting as an instrumentality of the United States
of America pursuant to authority granted by the Congress of the United States of
America, so long as such obligation or guarantee shall have the benefit of the
full faith and credit of the United States of America which shall have been
pledged pursuant to authority granted by the Congress of the United States of
America.
"Restricted Payment" means any Distribution in respect of the Company
or any Restricted Subsidiary of the Company (other than on account of capital
stock or other equity interests of a Restricted Subsidiary owned legally and
beneficially by the Company or another Restricted Subsidiary), including,
without limitation, any Distribution resulting in the acquisition by the Company
of Securities which would constitute treasury stock. For purposes of this
Agreement, the amount of any Restricted Payment made in property shall be the
greater of (x) the Fair Market Value of such property (as determined in good
faith by the board of directors (or equivalent governing body) of the Person
making such Restricted Payment) and (y) the net book value thereof on the books
of such Person, in each case determined as of the date on which such Restricted
Payment is made.
"Restricted Subsidiary" shall mean any Subsidiary in existence at the
date of the Closing or created or acquired at any time thereafter, except if
designated an Unrestricted Subsidiary in compliance with the provisions
specified in the definition of "Unrestricted Subsidiary". A Subsidiary which has
been so designated as an Unrestricted Subsidiary may be redesignated a
Restricted Subsidiary but, following such redesignation, the designation of such
Subsidiary cannot be changed again so long as such Subsidiary remains a
Subsidiary.
"Security" has the meaning set forth in section 2(1) of the Securities
Act of 1933, as amended.
"Securities Act" means the Securities Act of 1933, as amended from time
to time.
57
<PAGE>
"Senior Debt" means, with respect to any Person, all Debt of such
Person other than Debt that is any manner subordinated in right of payment to
any other Debt of such Person.
"Senior Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or comptroller of the Company.
"Subsidiary" means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to a
"Subsidiary" is a reference to a Subsidiary of the Company.
"Subsidiary Guarantors" means Bevis Custom Furniture, Inc., Hunt Data
Products, Inc., Hunt Holdings, Inc., Hunt X-Acto, Inc. and Seal Products
Incorporated and any other Person which hereafter executes and delivers to the
holders of the Notes a counterpart signature page to the Subsidiary Guaranty.
"Subsidiary Guaranty" The Subsidiary Guaranty executed by the
Subsidiary Guarantors, in substantially the form of the attached Exhibit 2, as
amended from time to time.
"Swaps" means, with respect to any Person, payment obligations with
respect to interest rate swaps, currency swaps and similar obligations
obligating such Person to make payments, whether periodically or upon the
happening of a contingency. For the purposes of this Agreement, the amount of
the obligation under any Swap shall be the amount determined in respect thereof
as of the end of the then most recently ended fiscal quarter of such Person,
based on the assumption that such Swap had terminated at the end of such fiscal
quarter, and in making such determination, if any agreement relating to such
Swap provides for the netting of amounts payable by and to such Person
thereunder or if any such agreement provides for the simultaneous payment of
amounts by and to such Person, then in each such case, the amount of such
obligation shall be the net amount so determined. For purposes of this
Agreement, the obligation of any Person with respect to a Swap is considered
"Indebtedness" but is not considered "Debt".
"Unrestricted Subsidiary" shall mean any Subsidiary that has been
designated by the Company's board of directors as an Unrestricted Subsidiary,
provided that at the time of such designation (i) the Subsidiary so designated
neither owns, directly or
58
<PAGE>
indirectly, any Funded debt or capital stock of any Restricted Subsidiary; (ii)
such designation is treated as a sale of assets subject to, and complies with,
the limitations set forth in clause (v) of paragraph 6D; and (iii) immediately
thereafter no other Default or Event of Default would occur or be continuing.
"Wholly-Owned Restricted Subsidiary" means, at any time, any Restricted
Subsidiary one hundred percent (100%) of all of the equity interests (except
directors' qualifying shares) and voting interests of which are owned by any one
or more of the Company and the Company's other Wholly-Owned Restricted
Subsidiaries at such time.
59
<PAGE>
EXHIBIT 1
HUNT MANUFACTURING CO.
7.86% SENIOR NOTE DUE AUGUST 1, 2011
No. [_____] [Date]
$[_______] PPN: 445636 A* 4
FOR VALUE RECEIVED, the undersigned, HUNT MANUFACTURING CO. (herein
called the "Company"), a corporation organized and existing under the laws of
the State of Pennsylvania, hereby promises to pay to [ ], or registered assigns,
the principal sum of ________________ DOLLARS on August 1, 2011, with interest
(computed on the basis of a 360-day year of twelve 30-day months) (a) on the
unpaid balance thereof at the rate of 7.86% per annum from the date hereof,
payable semiannually, on the first day of August and February in each year,
commencing February 1, 1997 until the principal hereof shall have become due and
payable, and (b) to the extent permitted by law on any overdue payment
(including any overdue prepayment) of principal, any overdue payment of interest
and any overdue payment of any Make-Whole Amount (as defined in the Note
Purchase Agreement referred to below), payable semiannually as aforesaid (or, at
the option of the registered holder hereof, on demand), at a rate per annum from
time to time equal to the greater of (i) 9.86% or (ii) 2.00% over the rate of
interest publicly announced by NationsBank, N.A. from time to time in Charlotte,
North Carolina as its "base" or "prime" rate.
Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at 2005 Market Street, Philadelphia, Pennsylvania 19103 or at such other
place as the Company shall have designated by written notice to the holder of
this Note as provided in the Note Purchase Agreement referred to below.
This Note is one of a series of Senior Notes (herein called the
"Notes") issued pursuant to the Note Purchase Agreement, dated as of August 1,
1996 (as from time to time amended, the "Note Purchase Agreement"), among the
Company and the respective Purchasers named therein and is entitled to the
benefits thereof. Each holder of this Note will be deemed, by its acceptance
hereof, (i) to have agreed to the confidentiality provisions set forth in
Section 20 of the Note Purchase Agreement and (ii) to have made the
representation set forth in Section 6.2 of the Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note Purchase
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 principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
<PAGE>
EXHIBIT 1
registration of transfer, 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 will not be affected by any notice to
the contrary.
The Company will make required prepayments of principal on the dates
and in the amounts specified in the Note Purchase Agreement. This Note is also
subject to optional prepayment, in whole or from time to time in part, at the
times and on the terms specified in the Note Purchase Agreement, but not
otherwise.
If an Event of Default, as defined in the Note Purchase Agreement,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note Purchase
Agreement.
This Note and the Note Purchase Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall be governed by,
the law of the Commonwealth of Massachusetts excluding choice-of-law principles
of the law of such State that would require the application of the laws of a
jurisdiction other than such State.
HUNT MANUFACTURING CO.
By__________________________
Name:
Title:
2
<PAGE>
EXHIBIT 2
SUBSIDIARY GUARANTY
THIS SUBSIDIARY GUARANTY dated [ ] (the "Guaranty") is made, jointly
and severally, by each of the parties listed on the signature pages hereof and
those additional entities that hereafter become parties hereto by executing
counterpart signature pages in the form of Annex I hereof (each a "Guarantor"
and collectively the "Guarantors") in favor of (i) the Purchasers named in
Schedule I to the Note Purchase Agreement dated as of August 1, 1996 (as amended
or modified and in effect from time to time, referred to herein as the
"Agreement) between Hunt Manufacturing Co., a Pennsylvania corporation (the
"Company"), and such Purchasers (the "Purchasers") and (ii) each other holder of
the Company's 7.86% Senior Notes due August 1, 2011 (the "Notes") from time to
time and their respective successors and assigns (collectively, such Purchasers
and other holders and their respective successors and assigns are hereinafter
referred to as the "Holders"). All capitalized terms used herein and not
otherwise defined herein shall have the meanings attributed to such terms in the
Agreement.
W I T N E S S E T H:
WHEREAS, as an inducement to, and as part of the consideration for,
their purchase of the Notes, the Purchasers are to receive, in accordance with
the terms of the Agreement, a guarantee of the Company's obligations under the
Agreement and the Notes from each of the Guarantors, each of which is a
Subsidiary of the Company;
WHEREAS, certain of the proceeds of the Notes have been and will be
advanced to or for the benefit of the Guarantors, and thus, all unpaid principal
of and accrued and unpaid interest on the Notes and all other obligations of the
Company to the Holders now existing or hereafter arising under the Note were and
continue to be incurred for and have inured and will continue to inure to the
benefit of the Guarantors (which benefits are hereby acknowledged); and
WHEREAS, in consideration of the benefits that inure to the Guarantors,
the Guarantors desire to guarantee the due and punctual payment of all
Guaranteed Debt (as hereinafter defined);
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which are
acknowledged, the Guarantors, jointly and severally, covenant and agree as
follows:
1. Guaranty. Each Guarantor, jointly and severally, irrevocably and
unconditionally guarantees, subject to the limitations set forth in Section 7,
the full and prompt payment when due (whether at stated maturity, upon
acceleration or otherwise) of all unpaid principal of, accrued and unpaid
interest and Make-Whole Amount, if any, on the Notes, all accrued and unpaid
fees and all other obligations of the Company to the
<PAGE>
EXHIBIT 2
Holders now existing or hereafter incurred under or arising out of or in
connection with the Notes or the Agreement, and the performance of the Notes and
the Agreement (all such principal, interest, Make-Whole Amount, fees,
obligations and liabilities being collectively referred to herein as the
"Guaranteed Debt"), whether according to the present terms of the Guaranteed
Debt or any change or changes in the terms, covenants and conditions of any of
the Guaranteed Debt, now or at any time hereafter made or granted, or any
earlier or accelerated date or dates for payment or performance of the
agreements set forth in the Guaranteed Debt. It is understood that this Guaranty
is a continuing guarantee of the payment of the indebtedness represented by the
Guaranteed Debt, is not limited to a guarantee of collection of the indebtedness
represented by the Guaranteed Debt and shall remain in full force and effect
until the indefeasible payment in full of the Guaranteed Debt. Each Guarantor
agrees that all references in this Guaranty to Guaranteed Debt of the Company
shall include any successor or assignee of the Company so long as this Guaranty
remains in effect.
2. Waiver. Each Guarantor waives notice of the acceptance of this
Guaranty and of the occurrence of any and all of the events described in Section
3. Each Guarantor further waives presentment, protest, notice, demand or action
on delinquency in respect of the Guaranteed Debt or any part thereof. Each
Guarantor agrees that the time or place of payment of the Guaranteed Debt may be
changed or extended, in whole or in part, to a time certain or otherwise, and
may be renewed or accelerated, in whole or in part; that the Company may be
granted indulgences generally; that any of the provisions of the Notes or the
Agreement may be modified, amended or waived; that any party liable for the
payment thereof may be granted indulgences or released; and that any other party
liable for the payment of the Guaranteed Debt or liable upon any security
therefor may be released, in whole or in part, at, before and/or after the
stated, extended or accelerated maturity of the Guaranteed Debt, all without
notice to or further assent by any Guarantor, which shall remain bound thereon,
notwithstanding any such exchange, compromise, surrender, extension, renewal,
acceleration, modification, indulgence or release.
3. Certain Rights of Holders. The validity and enforceability of this
Guaranty against each Guarantor shall not be impaired or affected by any of the
following, whether occurring before or after receipt by the Holders of any
notice of termination of this Guaranty: (a) any extension, modification,
continuation or renewal of, or indulgence with respect to, or substitutions for,
the Guaranteed Debt or any part thereof or any agreement relating thereto (other
than any agreement between the Holders and one or more Guarantors specifically
modifying or amending the terms of this Guaranty in accordance with Section 9)
at any time; (b) any failure or omission to enforce any right, power or remedy
with respect to the Guaranteed Debt or any part thereof or any agreement
relating thereto; (c) any waiver of any right, power or remedy or of any default
with respect to the Guaranteed Debt or any part thereof or any agreement
relating thereto; (d) any release, surrender, compromise, settlement, waiver,
2
<PAGE>
EXHIBIT 2
subordination or modification, with or without consideration, of any other
guaranties with respect to the Guaranteed Debt or any part thereof, or any other
obligation of any Person with respect to the Guaranteed Debt or any part
thereof; (e) the enforceability or validity of the Guaranteed Debt or any part
thereof or the genuineness, enforceability or validity of any agreement relating
thereto; (f) the application of payments received from any source to the payment
of indebtedness of the Company or any Subsidiary other than the Guaranteed Debt,
any part thereof or amounts which are not covered by this Guaranty even though a
Holder might lawfully have elected to apply such payments to any part or all of
the Guaranteed Debt or to amounts which are not covered by this Guaranty; or (g)
any other circumstances which otherwise under the laws of any jurisdiction
constitute a legal or equitable discharge of a surety or a guarantor or a bar
(in the nature of a moratorium or otherwise) to the enforcement of the rights of
a Holder against the Company, all whether or not any Guarantor shall have had
notice or knowledge of any act or omission referred to in the foregoing clauses
(a) through (g) of this paragraph. Each Guarantor agrees that such Guarantor's
obligation to make payment in accordance with the terms of this Guaranty shall
not be impaired, modified, changed, released or limited in any manner whatsoever
in the event any portion of the Guaranteed Debt is invalid or unenforceable
against the Company, or by any impairment, modification, change, release or
limitations of the liability of the Company or its estate in bankruptcy
resulting from the operation of any present or future provision of the Federal
Bankruptcy Code or other similar federal or state statute, or from the decision
of any court.
4. Absolute Guaranty. The obligations of each Guarantor under this
Guaranty are joint and several and are absolute and unconditional and shall
remain in full force and effect without regard to, and shall not be released,
suspended, discharged, terminated or otherwise affected by, without limitation,
(i) any action or inaction by a Holder or any other circumstance contemplated in
Section 3; or (ii) the existence of any other guaranties of the Guaranteed Debt,
whether or not such other guaranties have been acted upon in any way.
5. Primary Liability of Guarantors. This Guaranty is a primary
obligation of each Guarantor. Each Guarantor agrees that this Guaranty may be
enforced by the Holders, or any of them, and each Guarantor hereby waives the
right to require the Holders (or any of them) to proceed against the Company or
any other person (including a co-guarantor) or to require the Holders (or any of
them) to pursue any other remedy or enforce any other right. Each Guarantor
further agrees that nothing contained herein shall prevent the Holders, or any
of them, from suing on the Notes or the Agreement or from exercising any other
rights available to it under the Notes or the Agreement and the exercise of any
of the aforesaid rights and the completion of any foreclosure proceedings shall
not constitute a discharge of any of the Guarantor's obligations hereunder.
6. Continuing Guaranty, etc. This Guaranty shall continue in full force
and effect until the Guaranteed Debt is indefeasibly paid in full,
notwithstanding any
3
<PAGE>
EXHIBIT 2
extensions, modifications, renewals or indulgences with respect to, or
substitutions for, the Guaranteed Debt. Notwithstanding the foregoing, this
Guaranty shall continue to be effective, or be reinstated, as the case may be,
if at any time payment, or any part thereof, of any of the Guaranteed Debt is
rescinded or must otherwise be restored or returned by any Holder upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Company, or upon or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, the Company or any
substantial part of its property, or otherwise, all as though such payments had
not been made. No failure or delay on the part of any holder in exercising any
right, power or privilege hereunder and no course of dealing between any
Guarantor or any Holder shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights, powers and remedies herein expressly provided are
cumulative and not exclusive of any rights, powers or remedies which any Holder
would otherwise have. No notice to or demand on any Guarantor in any case shall
entitle any Guarantor to any other or future notice or demand in similar or
other circumstances or constitute a waiver of the rights of any Holder to act in
any circumstances without notice or demand. Credit may be granted or continued
from time to time by the Holders to the Company without notice to or
authorization from any Guarantor regardless of the Company's financial or other
condition at the time of any such grant or continuation.
7. Contribution Among Guarantors.
(a) Unless otherwise agreed by and among the Guarantors in the
manner described in Section 7(c), the Guarantors acknowledge and agree
with each other that they shall share in any payment made by any of
them (a "Paying Guarantor") hereunder with respect to any or all of the
Guaranteed Debt, each in proportion to their respective Net Worths at
the time such Guarantor becomes a party to this Guaranty. For such
purposes, the term "Net Worth" shall mean, for each Guarantor, the
excess (if any, but never less than zero) of such Guarantor's total
assets over its total liabilities, as determined in accordance with
generally accepted accounting principles.
(b) Upon demand by a Paying Guarantor after making any payment
hereunder, each other Guarantor shall promptly pay to the Paying
Guarantor an amount sufficient to reimburse the Paying Guarantor for
such other Guarantor's portion of such payment, as such portion is
determined in accordance with the provisions of this Section 7.
(c) The Guarantors may from time to time change the
contribution proportion set forth in Section 7(a) to such other
proportion as may be mutually
4
<PAGE>
EXHIBIT 2
acceptable, by written agreement signed by an authorized officer of
each Guarantor that specifically refers to this Guaranty.
(d) Nothing contained in this Section 7 shall be construed as
altering, impairing or otherwise affecting the respective obligations
of each Guarantor to the Holders hereunder. The provisions of this
Section 7 shall apply to the Guarantors solely as among themselves and
shall in no way alter the obligation of each Guarantor hereunder to pay
in full to the Holders all of the Guaranteed Debt when and as required
in accordance with the other Sections of this Guaranty.
8. Successors: Assigns. This Guaranty shall be binding upon each
Guarantor and its respective successors and permitted assigns and shall inure to
the benefit of the Purchasers, each other Holder and their respective successors
and assigns. Each Guarantor expressly waives notice of transfer or assignment of
the Guaranteed Debt, or any part thereof, or of the rights of any Holder
hereunder. Failure to give notice will not affect the liabilities of each
Guarantor hereunder.
9. Amendment: Waiver. This Guaranty may be amended only by an
instrument in writing executed jointly by the Guarantors and each holder of
Notes then outstanding.
10. Note Agreement; Representation and Warranties. (a) Each Guarantor
acknowledges that an executed (or conformed) copy of the Agreement has been made
available to its principal executive officers and such officers are familiar
with the contents thereof.
(b) Each Guarantor further represents and warrants that:
(a) such Guarantor is a corporation duly organized and validly
existing in good standing under the laws of the State of its
incorporation and has the full power, authority and legal right to
enter into and perform its obligations under this Guaranty;
(b) this Guaranty has been duly authorized, executed and
delivered by each Guarantor and constitutes the legal, valid and
binding obligation of such Guarantor, enforceable against such
Guarantor in accordance with its terms.
(c) the execution, delivery and performance by such Guarantor
of this Guaranty do not require any stockholder approval or the consent
or approval of any of the creditors of such Guarantor (except such as
have already been obtained in writing), do not and will not contravene
any applicable law, rule, regulation, judgment or order and do not and
will not contravene the provisions of, constitute
5
<PAGE>
EXHIBIT 2
a breach of or default under, or result in the creation of any security
interest, lien or encumbrance on any of the property of such Guarantor
pursuant to, such Guarantor's articles of incorporation or by-laws or
any indenture, mortgage, license or other contract, agreement or
instrument to which such Guarantor is a party or by which it is bound
or to or by which any of its properties is subject or affected; and
(d) the execution, delivery and performance by such Guarantor
of this Guaranty do not require the consent, approval, authorization or
order of, the giving of notice to or the registration with, or the
taking of any other action with respect to, any governmental authority
or agency, foreign or domestic, other than such as have been duly
obtained, given or taken.
11. Set off. In addition to, and without limitation of, any rights of
the holders under applicable law, any indebtedness from such Holders to any
Guarantor (including all account balances, whether provisional or final and
whether or not collected or available) may be offset and applied toward the
payment of the obligations owing to such Holders, whether or not the Guaranteed
Debt, or any part thereof, shall then be due.
12. Notices. All notices and other communications hereunder shall be
made in the manner and with the effect provided in Section 11.2 of the
Agreement, if to any Holder, at the address for notices specified in the
Agreement, and, if to any Guarantor, to:
c/o Hunt Manufacturing Co.
One Commerce Square
2005 Market Street
Philadelphia, PA 19103
Attention: Senior Vice President/Chief Financial Officer
13. Choice of Law. This Guaranty shall be construed in accordance with
the internal laws (and not the law of conflicts) of the Commonwealth of
Massachusetts.
14. Expenses: Indemnity. In addition to its Maximum Guaranteed Amount,
each Guarantor agrees to reimburse (to the extent the Holder is not so
reimbursed by the Company or any other Guarantor) (i) each Holder for any costs
and out-of-pocket expenses (including reasonable attorneys' fees and reasonable
time charges of attorneys for such Holder, which attorneys may be employees of
such Holder) paid or incurred by such holder in connection with any amendment
and modification of this Guaranty and (ii) each Holder for any costs and
out-of-pocket expenses (including attorneys' fees and time charges of attorneys
for such Holder, which attorneys may be employees of such holder) paid or
incurred by such Holder in connection with the collection and enforcement of
this
6
<PAGE>
EXHIBIT 2
Guaranty. Each Guarantor further agrees to indemnify each Holder, and its
directors, officers and employees, against all losses, claims, damages,
penalties, judgments, liabilities and expenses (including, without limitation,
all expenses of litigation or preparation therefor whether or not such Holder is
a party thereto) which it may pay or incur arising out of or relating to this
Guaranty, provided, however, that such Holder, and its directors, officers or
employees, shall not have a right to be indemnified or held harmless hereunder
for its own gross negligence or willful misconduct. The obligations of the
Guarantors under this Section 14 shall survive the termination of this Guaranty.
15. Submission to Jurisdiction. Each Guarantor hereby irrevocably
submits to the jurisdiction of the courts of the Commonwealth of Massachusetts
and of the courts of the United States of America having jurisdiction in the
Commonwealth of Massachusetts for the purpose of any legal action or proceeding
in any such court with respect to, or arising out of, this Guaranty, the
Agreement or the Notes. The Guarantors designate and appoint the Company as
their lawful agent upon which may be served, and which may accept and
acknowledge, for and on behalf of each Guarantor, all process in any action,
suit or proceedings that may be brought against any Guarantor in any of the
courts referred to in this Section 15 and agrees that such service of process,
or the acceptance or acknowledgment thereof by said agent, shall be valid,
effective and binding in every respect, provided, however, that if said agency
shall cease for any reason whatsoever, each Guarantor designates and appoints,
without power or revocation, the Secretary of State of the Commonwealth of
Massachusetts to serve as its agent for service of process. If the Purchaser or
any other holder of any Note shall cause process to be served upon any Guarantor
by being served upon such agent, a copy of such process shall also be mailed to
such Guarantor by United States registered mail, first class postage prepaid, at
such Guarantor's address set forth in Section 12.
16. Entire Agreement; Severability of Provisions. This Guaranty
constitutes the entire agreement of the Guarantors with the Purchasers with
respect to the subject matter hereof and supersedes all prior agreements and
understandings relating to the subject matter hereof. Any provision in this
Guaranty that is held to be inoperative, unenforceable, or invalid in any
jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or
invalid without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of this Guaranty are declared to be
severable.
17. Captions. Captions are for reference only and in no way limit the
terms of this Guaranty.
18. Counterparts. This Guaranty may be executed 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. The failure
of any Guarantor to execute
7
<PAGE>
EXHIBIT 2
a counterpart hereof shall not affect or impair the validity or enforceability
of this Guaranty against any Guarantor executing this Guaranty.
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be
executed and delivered as of the date first above written.
Bevis Custom Furniture, Inc.
By:__________________________
Name:
Title:
Hunt Data Products, Inc.
By:__________________________
Name:
Title:
Hunt Holdings, Inc.
By:_________________________
Name:
Title:
Hunt X-Acto, Inc.
By:_________________________
Name:
Title:
Seal Products Incorporated
By:________________________
8
<PAGE>
EXHIBIT 2
Name:
Title:
9
<PAGE>
Annex 1 to
Subsidiary Guaranty
By its signature below the undersigned Subsidiary of Hunt Manufacturing Co. (the
"Company") hereby becomes a party to, and a Guarantor under, that certain
Subsidiary Guaranty dated _________ in favor of the Holders of the Company's
7.86% Senior Notes due August 1, 2011, all with the same force and effect as if
the undersigned were one of the original parties to such Subsidiary Guaranty.
Date: [Name of Guarantor]
- --------------------------------- -------------------------------------
By
----------------------------------
Name
Title
<PAGE>
Certain schedules and/or exhibits to the foregoing agreement
have been omitted, and the Company will provide them to the Securities and
Exchange Commission upon request.
<PAGE>
Exhibit 11
Computation of Per Share Earnings
(Unaudited)
(In thousands except per share amounts)
Three Months Ended Nine Months Ended
------------------ ------------------
Sept. 1, Sept. 3, Sept. 1, Sept. 3,
1996 1995 1996 1995
------ ------ ------ ------
Primary per share earnings
--------------------------
Earnings applicable to primary
per share earnings $3,150 $3,655 $9,249 $9,937
====== ====== ====== ======
Average number of common shares
outstanding 10,970 15,959 11,625 16,009
Add - common equivalent shares
representing shares issuable
upon exercise of stock options
and stock grants 149 187 184 123
------ ------ ------ ------
Average shares used to calculate
primary per share earnings 11,119 16,146 11,809 16,132
====== ====== ====== ======
Primary per share earning $0.28 $0.23 $0.78 $0.62
====== ====== ====== ======
Fully diluted per share earnings
--------------------------------
Earnings applicable to fully diluted
per share earnings $3,150 $3,655 $9,249 $9,937
====== ====== ====== ======
Average number of common shares
outstanding 10,970 15,959 11,625 16,009
Add - common equivalent shares
representing shares issuable
upon exercise of stock options
and stock grants 149 187 191 137
------ ------ ------ ------
Average shares used to calculate
fully diluted per share earnings 11,119 16,146 11,816 16,146
====== ====== ====== ======
Net fully diluted per share earnings $0.28 $0.23 $0.78 $0.62
====== ====== ====== ======
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000049146
<NAME> HUNT MANUFACTURING CO.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLAR
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-01-1996
<PERIOD-START> DEC-04-1995
<PERIOD-END> SEP-1-1996
<EXCHANGE-RATE> 0.00001
<CASH> 2,623
<SECURITIES> 0
<RECEIVABLES> 51,338
<ALLOWANCES> (1,738)
<INVENTORY> 38,922
<CURRENT-ASSETS> 98,180
<PP&E> 103,809
<DEPRECIATION> (52,026)
<TOTAL-ASSETS> 180,288
<CURRENT-LIABILITIES> 32,129
<BONDS> 78,559
0
0
<COMMON> 1,615
<OTHER-SE> 54,788
<TOTAL-LIABILITY-AND-EQUITY> 180,288
<SALES> 238,774
<TOTAL-REVENUES> 238,774
<CGS> 150,111
<TOTAL-COSTS> 150,111
<OTHER-EXPENSES> 70,148
<LOSS-PROVISION> 454
<INTEREST-EXPENSE> 3,524
<INCOME-PRETAX> 14,537
<INCOME-TAX> 5,037
<INCOME-CONTINUING> 9,500
<DISCONTINUED> 0
<EXTRAORDINARY> 251
<CHANGES> 0
<NET-INCOME> 9,249
<EPS-PRIMARY> .78
<EPS-DILUTED> .78
</TABLE>
