<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 for the fiscal year ended November 28, 1999
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 for the transition period from ______ to ______.
For the fiscal year ended November 28, 1999 Commission File No. 1-8044
HUNT CORPORATION
(Registrant)
Pennsylvania 21-0481254
(State of Incorporation) (IRS Employer Identification No.)
One Commerce Square,
2005 Market Street, Philadelphia, PA 19103-7085
(Address of Principal Executive Offices) (Zip Code)
Registrants telephone number, including area code: (215) 656-0300
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class: Name of Each Exchange on Which Registered:
Common Shares, par value New York Stock Exchange
$.10 per share
Rights to Purchase Series A Junior New York Stock Exchange
Participating Preferred Stock
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of the registrant's common shares (its only voting
stock) held by non-affiliates of the registrant as of February 1, 2000 was
approximately $92,210,000. (Reference is made to the final paragraph of Part I
herein for a statement of the assumptions upon which this calculation is based.)
The number of shares of the registrant's common shares outstanding as of
February 1, 2000 was 9,993,939.
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the registrant's definitive proxy statement relating to its
scheduled April 2000 Annual Meeting of Shareholders (which proxy statement is
expected to be filed with the Commission not later than 120 days after the end
of the registrant's last fiscal year) are incorporated by reference into Part
III of this report.
1
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Certain statements contained in this report are forward-looking statements. Such
forward-looking statements represent management's assessment based upon
information currently available, but are subject to risks and uncertainties
which could cause actual results to differ materially from those set forth in
the forward-looking statements. These risks and uncertainties include, but are
not limited to, the Company's ability to successfully complete the
implementation, and realize the anticipated growth and other benefits, of its
restructuring and strategic plans on a timely basis; the effect of, and changes
in, worldwide general economic conditions; technological and other changes
affecting the manufacture of and demand for the Company's products; competitive
and other pressures in the market place; the possible impact of Year 2000
issues; the outcome of litigation in which the Company is engaged (including
those referenced in Item 3 of this report); and other risks and uncertainties
set forth herein and as may be set forth in the Company's subsequent Forms 10-Q
and 8-K filings with the Securities and Exchange Commission.
PART I
Item 1. Business
General
Hunt Corporation and its subsidiaries (herein called the "Company," unless the
context indicates otherwise) are primarily engaged in the manufacture and
distribution of consumer products and graphics products which the Company
markets worldwide. The Company's two core business areas (segments) are:
Consumer Products, which is a group of select BOSTON, X-ACTO, and BIENFANG brand
products; and Graphic Products, which includes a full line of mounting and
finishing solutions including laminates, adhesives, and lamination sold under
the SEAL brand, as well as BIENFANG brand of foam board and project display
board products.
In October 1999, the Company initiated a comprehensive reorganization and
restructuring plan (the "1999 restructuring plan") that is expected to generate
pre-tax cost savings of $4.4 million, which are anticipated to be approximately
$1.1 million in fiscal 2000 and are expected to grow to $4.0 million in fiscal
2001 and $4.4 million per year thereafter. Although the Company expects
realization of such future cost savings, there is no assurance that such will be
the case. The adoption of this 1999 restructuring plan in the fourth quarter of
fiscal 1999 resulted in the recognition of restructuring charges totaling $6.2
million ($.39 per share) for that quarter. (Note: All earnings per share are
presented on an after-tax diluted basis.) These restructuring charges include
employee severance costs, recognition of future lease obligations, fixed asset
writedowns, and other related expenses.
The major components of the 1999 restructuring plan with principal emphasis on
the Company's Graphic Products business include: creating manufacturing centers
of excellence; outsourcing the Company's European distribution activities and
consolidating its U.S. distribution activities; and focusing its product
offering and marketing efforts. Creating manufacturing centers of excellence is
expected to result in consolidated manufacturing operations in Europe and the
U.S. These actions are intended to eliminate redundancies and reduce fixed
costs. The Company also plans to outsource and consolidate some of its
distribution activities, which is expected to improve customer service, utilize
space more efficiently, and reduce capital investment and operating costs. The
Company's focus on its product offering and marketing efforts is expected to
reduce operating costs, improve margins and inventory turns, and ultimately,
provide the foundation for further sales growth of the Company's Graphics
Products business.
In addition to the restructuring charges recognized in the fourth quarter of
fiscal 1999 of $6.2 million, the Company expects to spend approximately $3.0
million, primarily in fiscal 2000, for implementation costs. These
implementation costs will include employee retention bonuses, employee
relocation expenses, employee outplacement expenses, equipment relocation
expenses, and other related costs and will be expensed as these costs are
incurred. Capital expenditures related to the 1999 restructuring plan are
expected to total approximately $1.8 million.
2
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In April 1997, the Company initiated a new strategy for growth and restructuring
plan (the "1997 strategic plan") designed to restore higher levels of growth and
profitability and to reduce its cost structure. This plan resulted from a
strategic assessment of the Company's business, conducted with the aid of
outside consultants. The restructuring portion of the 1997 strategic plan has
been completed, resulting in a significant reduction in the Company's stock
keeping units, rationalization of its manufacturing and warehouse facilities,
and a major restructuring of its administrative and marketing and selling
functions.
In fiscal 1997, a comprehensive three-year growth plan for the Company's core
business areas was developed which established annual goals of consolidated
revenue growth of 10 percent to 15 percent and earnings growth of 15 percent to
20 percent into the next century. These revenue and earnings growth expectations
were not achieved in fiscal years 1999 or 1998, nor does the Company anticipate
such growth expectancy in fiscal 2000. Management believes that the Company had
suffered from a number of unfavorable factors during fiscal 1999 but more
critically in fiscal 1998, particularly including the economic slowdown in Asia
and Latin America, slower acceptance by users of technological changes in the
digital imaging market, unfavorable currency exchange fluctuations and higher
than anticipated start-up costs of a new United Kingdom substrate manufacturing
facility (fiscal 1998). At the same time, during 1998 the Company restructured
the consumer products plant facilities, successfully installed integrated
computer systems throughout the Company, introduced new products, bolstered
marketing capabilities with new hires in key positions, and consolidated the
graphics and substrates business areas to enhance focus on growth markets as
well as initiating its 1999 restructuring plan implementation. The Company
intends to continue to analyze costs savings opportunities in all facets of its
operations, but the Company also intends to invest in new product development
and research, especially in the large format digital printing market.
The Company's operating results for fiscal 1997 included the effects of a
pre-tax charge of $26.8 million ($1.61 per share) recorded in conjunction with
the implementation of the 1997 strategic plan. The charge to restructuring
included employee severance costs, inventory writedowns and returns and fixed
and intangible asset writedowns, recognition of future lease obligations, and
other related costs.
During fiscal 1999, the Company reduced by $.6 million pre-tax ($.04 per share)
some of its reserves established in connection with its 1997 strategic plan. The
reserve reduction related to a final resolution of lease obligations for a
vacated facility and to lower than expected severance costs. During fiscal 1998,
the Company, on a net basis, reduced by $2.9 million pre-tax ($.16 per share)
some of its restructuring reserves. The reserve reduction of $4.1 million
pre-tax ($.23 per share) related primarily to lower employee severance costs,
inventory returns, and decisions not to vacate certain leased facilities in
connection with the implementation of the 1997 strategic plan, partially offset
by additional restructuring charges of $1.2 million pre-tax ($.07 per share) in
connection with the consolidation of the graphics and substrates business units
(principally employee severance costs).
As part of the 1997 strategic plan, the Company sold its Lit-Ning Products
business (office supplies), its Hunt Data Products' MediaMate and Calise brand
products (office supplies), and its Speedball brand art products (art supplies)
during fiscal 1997. In addition, in mid-November 1997, the Company sold its
Bevis office furniture business. This latter transaction represented the last
major divestiture in the Company's 1997 strategic plan. The Bevis business is
presented as a discontinued operation in the accompanying Consolidated
Statements of Income and Notes to Consolidated Financial Statements.
During fiscal 1999, the Company reduced by $.5 million pre-tax ($.03 per share)
some of its reserves established with respect to its 1997 business divestitures.
This reduction was principally related to lower than expected inventory returns.
During fiscal 1998, the Company reduced by $1.4 million pre-tax ($.08 per share)
some of its reserves established in connection with its 1997 business
divestitures ($.7 million pre-tax, or $.04 per share) and its 1997 disposal of a
discontinued business ($.7 million pre-tax, or $.04 per share). These latter
reserve reductions were principally related to lower than expected inventory
returns.
See Item 7 herein and Notes 3 and 4 of the Notes to Consolidated Financial
Statements herein for further information.
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Business Segments
The following table sets forth the Company's net sales from continuing
operations and operating income by business segment for the last three fiscal
years. In the fourth quarter of fiscal 1999, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 131, "Disclosures about Segments of
an Enterprise and Related Information". The adoption of SFAS No. 131 did not
affect results of operations or financial position of the reported business
segments.
1999 1998 1997
------ ------ ------
Net Sales: (In millions)
Consumer products ................. $108.2 $107.9 $122.3
Graphics products ................. 136.6 138.7 137.2
------ ------ ------
Total ............................. $244.8 $246.6 $259.5
====== ====== ======
Operating Income:*
Consumer products ................. $ 18.2 $ 16.7 $ 19.6
Graphics products ................. 7.3 6.5 11.2
------ ------ ------
Total ............................. $ 25.5 $ 23.2 $ 30.8
====== ====== ======
*Excludes restructuring amounts. See Items 6 and 7 herein and Notes 3 and 18 of
the Notes to Consolidated Financial Statements herein for further information
concerning the Companys restructuring amounts and business segments (including
information concerning identifiable assets).
Consumer Products
The Company has two major classes of consumer products: office supplies and art
supplies. The amounts and percentages of net sales from continuing operations of
these product classes for the last three fiscal years were as follows:
1999 1998 1997
------------- ------------- -------------
Product Class: (Dollars in millions)
Office supplies $ 74.7 69% $ 73.9 68% $ 78.3 64%
Art supplies 33.5 31% 34.0 32% 44.0 36%
------ --- ------ --- ------ ---
Total $108.2 100% $107.9 100% $122.3 100%
====== === ====== === ====== ===
The Company's consumer office supplies products currently consist of a variety
of items sold under the Company's BOSTON brand, including: manual and electric
pencil sharpeners; paper trimmers; manual and electronic staplers; RAPID(1)
manual and electric staplers; and other office supplies products. Effective
September 1, 1999, Schwan-STABILO Schwanhausser GmbH & Co. terminated its
distribution agreement with the Company relating to highlighter markers and
writing instruments. Sales of Schwan-STABILO(2) products in fiscal 1999 were
less than 10% of the Companys consumer office products sales and less than 5% of
its total consumer products sales. As part of the 1997 strategic plan, the
Company divested some of its consumer products in 1997, including paper punches
and shredders. Fiscal year 1997 results include the sales of its Lit-Ning
Products business and its Hunt Data Products' MediaMate and Calise brand
products which were divested in February 1997. The combined sales of the
divested Lit-Ning Products' and Hunt Data Products MediaMate and Calise brand
products for fiscal 1997 (through the various divestiture dates) were $4
million.
(1) Trademark of Isaberg Rapid AB.
(2) Trademark of Schwan-STABILO Schwanhausser GmbH & Co.
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The Company's art supplies products are used primarily by commercial and amateur
artists, as well as hobbyists and craft enthusiasts and include: various types
of X-ACTO brand knives and blades; X-ACTO brand tools and kits; CONTE(3)
pastels, crayons and related drawing products, for which the Company is the
exclusive United States and Canadian distributor; commercial and fine art papers
which the Company converts, finishes and sells under its BIENFANG brand name;
and paint markers. In conjunction with the 1997 strategic plan, the Company sold
its Speedball brand art products and divested other art supplies products during
fiscal 1997. The sales of the divested Speedball brand art products for fiscal
1997 (through the divestiture date) were $7.5 million.
The Company consistently has sought to expand its consumer products business
through internal product development, the acquisition of distribution rights to
products which complement or extend the Company's established lines, the
acquisition of complementary businesses and through broadened distribution.
Examples of new consumer products introductions by the Company in recent years
are: stand-up staplers and battery operated pencil sharpeners sold under a
licensing agreement with The Coca-Cola(4) Company, BOSTON brand electric and
battery powered pencil sharpeners, a line of staplers under the STANDUP brand,
and the X-ACTO ergonomic utility knife and pumpkin carving kit.
The Company's consumer products are sold in the following domestic markets:
commercial offices, home offices and general consumer. The Company's consumer
products are sold and distributed primarily through large retail outlets, such
as office products superstores, drug and food chain stores, variety stores,
discount chains and membership chains, and through office supply wholesalers and
dealers. The consumer market has increased significantly over the last several
years primarily due to the dramatic growth of office products superstores and
discount chains. A more limited line of products is sold to schools through
specialized school supply distributors.
Graphics Products
The Company manufactures and distributes two major classes of graphics products:
supplies and equipment. The amounts and percentages of net sales from continuing
operations of these product classes for the last three fiscal years were as
follows:
1999 1998* 1997*
------------- -------------- -------------
Product Class: (Dollars in millions)
Supplies $111.6 82% $108.5 78% $106.9 78%
Equipment 25.0 18% 30.2 22% 30.3 22%
------ --- ------ --- ------ ---
Total $136.6 100% $138.7 100% $137.2 100%
====== === ====== === ====== ===
*Reclassified for comparative purposes.
The Company's graphics products are used largely by picture framers, graphic
artists, display designers and photo laboratories, and include a range of board
products consisting of: BIENFANG brand foam boards (which constitute a
significant portion, less than 45%, of supplies products) and BIENFANG brand
project display boards; and a full line of mounting and finishing solutions sold
under the SEAL brand name.
The Company consistently has sought to expand its graphics business primarily
through acquisitions of complementary businesses and of distribution rights to
complementary products manufactured by others, through internal product
development, and through broadened distribution. Major graphics products
introduced during the last several fiscal years include: the PROSEAL brand
finish system, a low-cost, one-step method of mounting and laminating digital
images; the AQUASEAL brand line of innovative, low-cost lamination products;
MIGHTY CORE, a heavy duty foam board; SINGLE STEP adhesive coated BIENFANG brand
foam board; BIENFANG brand project display boards; SHOWTIME brand portable
display products; IMAGE brand large format laminators; GARDIAN brand outdoor
protective laminates and adhesives; and PRINT MOUNT brand pressure sensitive
adhesives.
(3) Trademark of Conte S. A.
(4) Trademark of The Coca-Cola Company.
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In fiscal 1999, the Company acquired Axiom Graphics Manufacturing, Inc., a
California-based manufacturer, distributor, and marketer of wet transfer
lamination equipment and liquid laminates. This acquisition will enable the
Company to be a complete supplier of finishing solutions and to take advantage
of the growth in the outdoor sign market. In 1997, the Company acquired
Sallmetall B.V., a Dutch company, whose operations involve the design and
assembly of laminating equipment and related adhesive film coating
manufacturing. This acquisition has further strengthened the Company's position
as a leading global supplier of print finishing systems and expanded its
capacity in the growing market for wide format short-run digital imaging. See
Note 5 of the Notes to Consolidated Financial Statements.
BIENFANG foam board has been particularly important as it has allowed the
Company to penetrate the picture framing, sign, display and exhibit markets, yet
it also holds wide appeal to the traditional customer groups in art supply,
hobby/craft and office product markets. The success of foam board has been
attributable, in significant part, to the Company's ability to offer the
end-user a variety of value-added foam board products, such as colored or
adhesive-coated foam board.
Traditionally, the Company's graphics products have been distributed primarily
through wholesalers (framing, photomounting), general consumer-oriented retail
outlets (primarily office product superstores and chain stores) and industrial
concerns (photo labs, screen printers). Over the last several years,
consumer-oriented retail outlets have become an increasingly important
distribution channel for the Company's graphics products.
Sales and Marketing
General
The Company has more than 6,500 active customers, the ten largest of which
accounted for approximately 39% of its sales in fiscal 1999. Three of these ten
largest customers were office products superstore chains. The largest
single customer accounted for 8% of total sales for that year. There is a
continuing trend toward consolidation of wholesalers, dealers and superstores,
particularly in the office products market. This has resulted in an increasing
percentage of the Company's sales being attributable to a smaller number of
customers with increased buying and bargaining power. This increase in
bargaining power is likely to lead to lower selling prices for the Company's
office supplies products and board products sold to office products superstores.
Because most of the Company's sales are made from inventory, the Company
generally operates without a significant backlog. The Company's sales generally
are not subject to significant seasonal fluctuations. See Note 17 of the Notes
to Consolidated Financial Statements herein.
Domestic Operations
Domestic marketing of the Company's consumer products and graphics products is
effected principally through three separate sales forces, one each for consumer
products, graphics, and mass market. The sales forces are comprised principally
of the Company's own salespeople and independent manufacturers' representatives.
The Company currently maintains its primary domestic distribution operations in
Beacon Falls, Connecticut, and Sun Prairie, Wisconsin, for graphics products;
and in Statesville, North Carolina, for both consumer and graphics products. As
part of the 1999 restructuring plan, the Company intends to consolidate its
Beacon Falls, Connecticut, manufacturing and distribution operations with its
Statesville, North Carolina, and Sun Prairie, Wisconsin, facilities during
fiscal 2000.
Foreign Operations
The Company distributes its products in more than 60 foreign markets primarily
through its own sales force and through independent sales agents and
distributors.
Sales of consumer products and graphics products represented approximately 60%
and 40%, respectively, of the Company's export sales in fiscal 1999, with BOSTON
brand electrical and mechanical pencil sharpeners, X-ACTO brand knives and
blades, BIENFANG brand paper and foam board products, and SEAL brand mounting
and finishing solutions products accounting for the major portion of these
sales.
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Sales from foreign operations in Europe consisted primarily of graphics
products. See Note 18 of the Notes to Consolidated Financial Statements herein
for further information concerning the Company's foreign operations.
The Company maintains distribution operations in Ontario, Canada; Basildon,
England; Raalte, Netherlands; and Hong Kong. As part of the 1999 restructuring
plan, the Company intends to outsource its European distribution activities and
to close its Hong Kong distribution operation in fiscal 2000.
Foreign operations are subject to the usual risks of doing business abroad,
particularly currency fluctuations and foreign exchange controls, as well as to
general economic conditions. At the present time, the Company is experiencing
some general softness in demand for its products in Asia and Latin America,
primarily as a result of the current economic situation there. Management is
uncertain, at this point, as to the extent that the unsettled conditions in Asia
and Latin America will affect the Company's business in the future. See Item 7
herein. See also Note 1 of the Notes to Consolidated Financial Statements herein
for information concerning hedging.
Manufacturing and Production
The Company's operations include manufacturing and converting of products, as
well as purchasing and assembly of various component parts. Excluding products
for which it acts as a distributor, the vast majority of the Company's sales are
of products which are manufactured, converted or assembled by it. See Item 2
herein for information concerning the Company's major manufacturing facilities.
The Company customarily has more than one source of supply for its critical raw
materials and component parts, and its businesses have not been materially
hindered by shortages or increased prices of such items. The Company's raw
material cost increases have remained below the rate of inflation for the past
several years; however, there can be no assurances that this trend will
continue. See Item 7 herein.
Competition
The Company does not have any single competitor which offers substantially the
same overall lines of either consumer products or graphics products as the
Company. However, competition in a number of areas of the Company's businesses,
such as electric pencil sharpeners, staplers, foam board, and laminating
equipment and supplies, is substantial, and some of the Company's competitors
are larger and have considerably greater financial resources than the Company.
Because of the fragmented nature of the consumer products and graphics products
businesses, the multiple markets served by the Company, and the absence of
published market data, the Company generally is not able to
determine with certainty its relative domestic or foreign market share for its
various products. Nevertheless, the Company believes that it is among the
leaders in domestic markets in a number of its products, including manual and
electric pencil sharpeners; BIENFANG foam board products; laminating equipment;
and X-ACTO brand knives and blades.
The Company considers product performance and brand recognition to be important
competitive factors in its businesses, but competitive pricing and promotional
discounts also have become increasingly important factors, particularly in the
consumer products area.
Trademarks, Patents and Licenses
The Company's business is not dependent, to a material extent, upon any patents.
However, the Company regards its many trademarks as being of substantial value
in the marketing of its various products including particularly BOSTON(R),
X-ACTO(R), BIENFANG(R) and SEAL(R). The following additional trademarks, some of
which are mentioned in this report, are owned by the Company: AQUASEAL(TM),
CLASSIC STANDUP STAPLER(TM), DELUXE STANDUP STAPLER(TM), FLOOR GUARD(R),
GARDIAN(R), GRIP STANDUP STAPLER(TM), IMAGE(R), JET GUARD(TM), MIGHTYCORE(TM),
PALM STANDUP STAPLER(TM), PAINTERS(R), POWERHOUSE(TM), PRINT GUARD(R), PRINT
MOUNT(R), PROSEAL(TM), SHOWTIME(R), SINGLE STEP(R), and STAND-UP(R).
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As previously indicated, the Company also has been granted exclusive
distribution rights in designated territories with respect to various products,
including CONTE drawing products and RAPID manual and electric stapling
machines. Such rights customarily are granted for limited periods, after which
they expire or may be terminated at the option of the grantor. The Company's
distribution rights generally are of limited duration (the longest usually not
exceeding approximately seven years) and may be terminated or expire, in certain
cases, with as little as approximately six months' notice from the grantor of
such rights. While the Company's business is not dependent upon any of these
distribution rights (no line of such distributed products having accounted for
as much as 3% of the Companys net sales in fiscal 1999), the loss of the right
to market certain products could have an adverse effect on the Company's
profitability.
Effective September 1, 1999, Schwan-STABILO Schwanhausser GmbH & Co. terminated
its distribution agreement between them and the Company. Sales of Schwan-STABILO
products in fiscal 1999 were less than 10% of the Company's office supplies
products sales and less than 5% of its total consumer products sales.
Research and Development
During fiscal 1999, the Company spent approximately $4.0 million on
Company-sponsored research and development, as compared with approximately $3.3
million in fiscal 1998 and $3.3 million in fiscal 1997.
Personnel
As of January 2000, the Company had approximately 1,300 full-time employees.
Environmental Matters
Prior to the Company's acquisition of Seal Products, Inc. ("Seal") from Bunzl
plc in 1990, it was discovered that some hazardous waste materials had been
stored at Seal's premises, then located in Naugatuck, Connecticut. In compliance
with applicable state law, this environmental condition was reported to the
Connecticut Department of Environmental Protection by Bunzl. Seal, which now is
a subsidiary of the Company, may be partially responsible under law for the
environmental conditions on the premises and any liabilities resulting
therefrom. However, in connection with the Company's acquisition of Seal, Bunzl
agreed to take responsibility for correcting such environmental conditions and
to indemnify Seal and the Company for resulting liabilities, subject to certain
limitations. Bunzl is continuing the process of remediating these environmental
conditions. A substantial portion of the remediation has been completed,
although testing is continuing.
The Company is also involved on a continuing basis in monitoring its compliance
with environmental laws and in making capital and operating improvements
necessary to comply with existing and anticipated environmental requirements.
Despite its efforts, the Company has been cited for occasional violations or
alleged violations of environmental laws or permits and on several occasions has
been named as a potentially responsible party for remediation of sites. Expenses
incurred by the Company to date relating to violations of and compliance with
environmental laws and permits and site remediation have not been material.
While it is impossible to predict with certainty, management currently does not
foresee such expenses in the future as having a material effect on the Company's
business, results of operations or financial condition. See Note 14 of the Notes
to Consolidated Financial Statements herein.
8
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Item 2. Properties
The Company presently maintains its principal executive offices at One Commerce
Square, 2005 Market Street, Philadelphia, PA 19103 in approximately 56,000
square feet of leased space under a sublease expiring in 2002. The following
table sets forth information with respect to certain of the other facilities of
the Company:
<TABLE>
<CAPTION>
Industry Primary Approximate Owned or
segment function Location size leased
- ------- -------- -------- ---- ------
<S> <C> <C> <C> <C>
Graphics Manufacturing Statesville, NC 219,000 sq. ft. (1)
Products & Offices bldg. on
13 acres
Manufacturing, Beacon Falls, CT 66,000 sq. ft. Leased
Distribution, bldg. on (exp. 2007)
& Offices 3 acres
Manufacturing Basildon, England 64,000 sq. ft. Owned
& Offices in two bldgs.
on 3 acres
Manufacturing Basildon, England 57,000 sq. ft. Leased
on 3 acres (exp. 2022)
Manufacturing, Raalte, 90,000 sq. ft. Owned
Distribution, Netherlands in two bldgs.
& Offices on 3 acres
Consumer Manufacturing Statesville, NC 218,000 sq. ft Owned
Products & Offices bldg. on
and Graphics 16 acres
Products
Distribution Statesville, NC 320,000 sq. ft. Leased
& Offices bldg. (exp. 2005)
Distribution Ontario, Canada 59,000 sq. ft. Leased
& Offices bldg. (exp. 2001)
</TABLE>
(1) A portion of this facility was financed by the issuance of
industrial revenue bonds, due 2004, by the Iredell County Industrial
Facilities and Pollution Control Financing Authority. The Authority
retains title to the property and leases it to the Company for rental
payments equal to principal and interest payments on the books. The
Company has the option, subject to certain conditions, to purchase the
property for a nominal consideration upon payment of the bonds.
In connection with the 1999 restructuring plan, the Company intends to
consolidate its Beacon Falls, Connecticut, facility into one of its Statesville,
North Carolina, facilities and vacate one of its Raalte, Netherlands,
facilities. Subject to the preceding sentence, the Company believes that the
above facilities generally are adequately utilized and suitable for the
Company's present needs.
Item 3. Pending Legal Proceedings
The Company is not aware of any material pending legal proceedings involving the
Company or its subsidiaries other than as discussed below. See Note 14 of the
Notes to Consolidated Financial Statements herein and Item 1 -- "Environmental
Matters" herein.
9
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The Company has been sued for patent infringement with respect to one of its
minor products. After a jury trial, the U.S. District in the Western District of
Wisconsin entered judgment against the Company in this matter and awarded
damages to the plaintiffs in the amount of $3.3 million, plus interest and
costs. The verdict has been appealed, and a decision of the Court of Appeals is
expected within the relatively near future. The Company and its patent legal
counsel believe that the verdict against the Company in the trial court was
incorrect and that it will be reversed on appeal. Accordingly, the Company has
not recorded any liability in its financial statements associated with this
judgment. However, there can be no assurance that the Company will prevail in
this matter. In the event of an unfavorable final judgment against the Company,
management believes that it will not have a material impact on the Company's
financial position, but could have a material effect on quarterly or annual
results of operations.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of the security holders of the Company
during the fourth quarter of the fiscal year covered by this report.
Additional Information
The following information is furnished in this Part I pursuant to Instruction 3
to Item 401(b) of Regulation S-K:
Executive Officers of the Company
Name Age Position
- ---- --- --------
Donald L. Thompson 58 Chairman of the Board,
President and Chief Executive Officer
John W. Carney 56 Vice President, General Manager Graphics Products
William E. Chandler 56 Senior Vice President, Finance;
Chief Financial Officer, and Secretary
James P. Machut 53 Vice President, Operations/
Supply Chain Logistics Worldwide
W. Ernest Precious 58 Executive Vice President, Corporate Development
Eugene A. Stiefel 52 Vice President, Information Services
The executive officers of the Company customarily are elected annually by the
Board of Directors to serve, at the pleasure of the Board, for a period of one
year or until their successors are elected. All of the executive officers of the
Company, except for Mr. Thompson and Mr. Machut, have served in varying
executive capacities with the Company for over five years.
Mr. Thompson joined the Company and was elected an executive officer in June
1996 after 23 years at Avery Dennison Corporation, where he served in a variety
of positions, the most recent as Group Vice President of the Office Products
business.
Mr. Machut was elected an executive officer of the Company in December 1999. He
joined the Company in July 1992 and served as Vice President of Purchasing prior
to his most recent position as Vice President of Operations/Supply Chain
Logistics Worldwide.
--------------------
For the purposes of calculating the aggregate market value of the common shares
of the Company held by nonaffiliates, as shown on the cover page of this report,
it has been assumed that all the outstanding shares were held by nonaffiliates
except for the shares held by directors and executive officers of the Company.
However, this should not be deemed to constitute an admission that all directors
and executive officers of the Company are, in fact, affiliates of the Company,
or that there are not other persons who may be deemed to be affiliates of the
Company. Further information concerning shareholdings of executive officers,
directors and principal shareholders is included in the Company's definitive
proxy statement filed or to be filed with the Securities and Exchange
Commission.
10
<PAGE>
PART II
Item 5. Market for the Registrants Common Stock
and Related Stockholder Matters
The Company's common shares are traded on the New York Stock Exchange (trading
symbol "HUN"). The following table sets forth the high and low quarterly sales
prices of the Company's common shares during the two most recent fiscal years
(all as reported by The Wall Street Journal):
Fiscal Quarter
1999
-------------------------------------------
First Second Third Fourth
----- ------ ----- ------
High $14 3/16 $12 $12 1/16 $9 1/8
Low 9 1/4 9 7/16 8 1/8 6 5/8
Fiscal Quarter
1999
-------------------------------------------
First Second Third Fourth
----- ------ ----- ------
High $23 11/16 $25 3/16 $23 13/16 $16 5/16
Low 21 5/16 22 5/8 16 12 3/8
See Note 13 of the Notes to Consolidated Financial Statements herein for
information concerning certain Rights which were distributed by the Company to
shareholders and which currently are deemed to be attached to the Company's
common stock.
As of February 1, 2000, there were over 600 record holders of the Company's
common shares, which number does not include shareholders whose shares were held
in nominee name.
During the past two fiscal years, the Company has paid regular quarterly cash
dividends on its common shares at the following rates per share: 1999 -- $.1025
per quarter and 1998 -- $.1025 per quarter. Certain of the Company's credit
agreements contain representations, warranties, covenants and conditions, the
violation of which could result in restrictions on the Company's present and
future ability to pay dividends. There can be no assurance however, as to the
payment or the amount of future dividends, since they depend on the Company's
earnings, financial condition and other factors. See Note 9 of the Notes to
Consolidated Financial Statements herein.
During fiscal 1999, the Company issued from its Treasury an aggregate of 13,199
unregistered common shares as awards and grants under its non-employee director
compensation plan. Registration of such shares was not required because their
issuance did not involve a "sale" under Section 2(3) of the Securities Act of
1933, or, alternatively, their issuance was exempt pursuant to the private
offering provisions of that Act and the rules thereunder.
11
<PAGE>
Item 6. Selected Financial Data
The following table contains selected financial data derived from the Company's
audited Consolidated Financial Statements for each of the last five fiscal
years. This data should be read in conjunction with the Company's Consolidated
Financial Statements (and related notes) appearing elsewhere in this report and
with Item 7 of this report. The following data is on a continuing operations
basis.
<TABLE>
<CAPTION>
Year Ended
-----------------------------------------------------------------------
Nov. 28, Nov. 29, Nov. 30, Dec. 1, Dec. 3,
(In millions, except per share data) 1999(1) 1998(2) 1997(3) 1996(4) 1995(5)
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net sales $244.8 $246.6 $259.5 $264.5 $253.6
Income (loss) from
continuing operations 6.4 11.6 (6.1) 10.5 11.9
Income (loss) from continuing
operations per common share(6):
Basic .61 1.04 (.55) .91 .74
Diluted .61 1.01 (.55) .89 .74
Total assets 179.6 186.9 209.5 175.7 182.8
Long-term debt 56.6 57.7 54.1 64.6 3.6
Cash dividends declared per share .41 .41 .38 .38 .38
</TABLE>
(1) In fiscal 1999, the Company recorded a charge for the 1999 restructuring
plan of approximately $4.0 million after taxes ($.39 per share). In
addition, the Company reduced by $.4 million after taxes ($.04 per share)
some of its reserves established in connection with the Company's
implementation of its 1997 strategic plan and reduced by $.3 million after
taxes ($.03 per share) some its reserves in connection with its 1997
business divestitures.
(2) In fiscal 1998, the Company on a net basis reduced by $1.9 million after
taxes ($.16 per share) some of its reserves established in connection with
the implementation of the strategic plan during fiscal 1997. In addition,
the Company reduced by $.5 million after taxes ($.04 per share) some of its
reserves established in connection with its 1997 business divestitures
(excluding the Bevis office furniture business which is presented as a
discontinued operation in the Company's Consolidated Financial Statements).
(3) In fiscal 1997, the Company recorded a charge for the 1997 strategic plan
of approximately $18.5 million after taxes ($1.61 per share) and other
related costs of $2.2 million after taxes ($.19 per share) and recorded a
net gain on sales of divested businesses (excluding the discontinued
business) of $2.5 million after taxes ($.22 per share).
(4) In fiscal 1996, the Company recorded a charge for anticipated costs related
to the relocation and consolidation of certain manufacturing and
distribution operations to income from continuing operations of
approximately $.3 million after taxes ($.02 per share).
(5) In fiscal 1995, the Company recorded a charge for anticipated costs
relating to organizational changes and relocation and consolidation of
operations to income from operations of approximately $3.5 million after
taxes ($.22 per share).
(6) The average common shares outstanding (diluted) during fiscal years 1995
through 1999 were as follows:
1995 16,175,000 shares
1996 11,677,000 shares
1997 11,079,000 shares
1998 11,556,000 shares
1999 10,493,000 shares
12
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Certain statements contained in this report are forward-looking statements. Such
forward-looking statements represent management's assessment based upon
information currently available, but are subject to risks and uncertainties
which could cause actual results to differ materially from those set forth in
the forward-looking statements. These risks and uncertainties include, but are
not limited to, the Company's ability to successfully complete the
implementation, and realize the anticipated growth and other benefits, of its
restructuring and strategic plans on a timely basis; the effect of, and changes
in, worldwide general economic conditions; technological and other changes
affecting the manufacture of and demand for the Company's products; competitive
and other pressures in the marketplace; the possible impact of Year 2000 issues;
the outcome of litigation in which the Company is engaged (including those
referenced in Item 3 of this report); and other risks and uncertainties set
forth herein and as may be set forth in the Company's subsequent Forms 10-Q and
8-K filings with the Securities and Exchange Commission.
Restructuring Plans and Related Matters
In October 1999, the Company's Board of Directors approved and the Company
announced a comprehensive reorganization and restructuring plan (the "1999
restructuring plan"), which resulted in the recognition of restructuring charges
totaling $6.2 million pre-tax ($.39 per share) in the fiscal 1999 fourth
quarter. (Note: All earnings per share amounts included in Management's
Discussion and Analysis are presented on an after-tax diluted basis.) These
restructuring charges are classified as restructuring and other in the
accompanying Consolidated Statements of Income. The restructuring charges
include employee severance costs ($2.6 million), recognition of future lease
obligations ($1.8 million), fixed asset writedowns ($1.6 million), and other
related costs. Approximately 74% of the fiscal 1999 restructuring charge is for
cash items, of which $4.4 million remains accrued in the accompanying
Consolidated Balance Sheet at November 28, 1999.
The major components of the 1999 restructuring plan include creating
manufacturing centers of excellence, outsourcing the Company's European
distribution activities and consolidating its U.S. distribution activities, and
focusing its product offering and marketing efforts. Creating manufacturing
centers of excellence is expected to result in consolidated manufacturing
operations in both Europe and the U.S. These actions are intended to eliminate
redundancies and reduce fixed costs. The Company also plans to outsource and
consolidate some of its distribution activities, which is expected to improve
customer service, utilize space more efficiently, and reduce capital investment
and operating costs. The Company's focus on its product offering and marketing
efforts is expected to reduce operating costs, improve margins and inventory
turns, and ultimately, provide the foundation for further sales growth of the
Company's Graphics Products business. These actions will result in the
elimination of more than 150 positions, a few of which were eliminated during
fiscal 1999.
In addition to the restructuring charges of $6.2 million recognized in fiscal
1999, the Company expects to spend approximately $3.0 million, primarily in
fiscal 2000, for implementation costs. These implementation costs will include
employee retention bonuses, employee relocation expenses, employee outplacement
expenses, equipment relocation expenses, and other related costs and will be
expensed as they are incurred. Capital expenditures related to the 1999
restructuring plan are expected to total approximately $1.8 million.
The expected pre-tax cost savings to be generated from the 1999 restructuring
plan are expected to be approximately $1.1 million in fiscal 2000 and are
expected to grow to $4.0 million in fiscal 2001 and $4.4 million per year
thereafter. Although the Company expects realization of such future cost
savings, there can be no assurance that they will be achieved.
In April 1997, the Company initiated a new strategy for growth and restructuring
(the "1997 strategic plan") designed to restore higher levels of sales growth
and profitability and to reduce its cost structure. The key initiatives of the
1997 strategic plan were focused on a significant reduction of the Company's
stock keeping units, rationalization of manufacturing and warehouse facilities,
and a major restructuring of its administrative and marketing and selling
functions.
13
<PAGE>
Total restructuring charges recognized in fiscal 1997, in connection with the
1997 strategic plan, were $26.8 million pre-tax ($1.61 per share). This charge
to restructuring included employee severance costs ($4.1 million), inventory
writedowns and returns ($8.2 million), fixed and intangible asset writedowns
($7.9 million), recognition of future lease obligations ($3.3 million), and
other related costs.
The Company has substantially completed the implementation of its 1997 strategic
plan. Approximately $.9 million remains accrued in the accompanying Consolidated
Balance Sheets at November 28, 1999. This accrual relates largely to contractual
lease commitments with the expectation that all spending will be substantially
completed by the end of fiscal 2001.
During fiscal 1999, the Company reduced by $.6 million pre-tax ($.04 per share)
some of its reserves established in connection with the Company's implementation
of its 1997 strategic plan. This reserve reduction related primarily to a final
resolution of lease obligations for a vacated facility and to lower than
expected severance costs.
During fiscal 1998, the Company, on a net basis, reduced some of its
restructuring reserves by $2.9 million pre-tax ($.16 per share), a portion of
which is included in cost of sales ($1.4 million pre-tax). This reserve
reduction related primarily to lower than expected severance costs ($1.1
million), inventory returns ($1.4 million), decisions not to vacate certain
leased facilities ($.6 million), and other related costs ($1.0 million) in
connection with the Company's implementation of its 1997 strategic plan,
partially offset by additional restructuring charges in connection with the
consolidation of the graphics and substrates business units in fiscal 1998
relating principally to employee severance costs ($1.2 million).
In connection with the Company's 1997 strategic plan, during fiscal 1997 the
Company sold its Lit-Ning Products business (office supplies), its Hunt Data
Products' MediaMate and Calise brand products (office supplies), and its
Speedball brand art products (art supplies). In addition, in mid-November 1997,
the Company sold its Bevis office furniture business, which is presented as a
discontinued operation in the accompanying Consolidated Statements of Income and
Notes to Consolidated Financial Statements. (See Note 4 of the Notes to
Consolidated Financial Statements.) The following discussion is on a continuing
operations basis.
During fiscal 1999, the Company reduced by $.5 million pre-tax ($.03 per share)
some of its reserves established with respect to its 1997 business divestitures.
This reserve reduction was principally related to lower than expected inventory
returns.
During fiscal 1998, the Company reduced by $.7 million pre-tax ($.04 per share)
some of its reserves in connection with its 1997 business divestitures. This
reserve reduction was principally related to lower than expected inventory
returns.
In addition, the Company reduced in fiscal 1998 by $.7 million pre-tax ($.04 per
share) some of the reserves established in connection with its 1997 disposal of
the Bevis discontinued business. This reduction was largely attributable to
lower than expected costs associated with accruals, primarily for accounts
receivable and fixed assets, established at the time of the divestiture.
See the charts under "Comparison of Fiscal 1999 vs. 1998" below for information
concerning the effects of the restructuring charges and reductions on reported
operating results.
As a result of the above divestitures, including the discontinued Bevis
business, an aggregate of approximately $100 million of revenue on an annualized
basis and related profit will not be available to the Company going forward.
Management believes a critical part of the 1997 strategic plan and the 1999
restructuring plan is to offset these revenue and earnings losses through
increased focus on the Company's graphics products in the high-growth digital
imaging and sign and display markets, through leveraging the Company's brand
strength in consumer products, from internal new product development, and
through acquisitions. Also, management believes improved manufacturing
processes, rationalization of distribution facilities, and savings in
administrative, marketing, and selling support areas will help offset these
losses.
14
<PAGE>
Comparison of Fiscal 1999 vs. 1998
Net Sales. Net sales from continuing operations decreased .7% to $244.8 million
in fiscal 1999 from $246.6 million in fiscal 1998. This sales decrease was
primarily the result of lower net selling prices, partially offset by higher
unit volume, particularly from broader distribution in current sales channels,
expanded placement of existing products, and introduction of new products.
Consumer products sales of $108.2 million for fiscal 1999 increased .3% from
fiscal 1998 sales of $107.9 million. This increase was due largely to broader
distribution in current sales channels, expanded placement of existing products
and the introduction of new products, partially offset by lower net selling
prices, and lower sales of X-Acto brand products. Export sales of consumer
products decreased 12.1% in fiscal 1999 from fiscal 1998, principally due to
lower sales in Latin America.
Graphics products sales of $136.6 million for fiscal 1999 decreased 1.5% from
fiscal 1998 sales of $138.7 million. This decrease was primarily due to lower
sales of laminating equipment products (down 17.1%), partially offset by higher
sales of mounting and laminating supplies products (up 2.9%) and board products
(up 2.6%). The decrease in laminating equipment product sales was due largely to
significantly lower demand for high-end equipment products and to continued
softness in demand in Asia and Latin America. Export sales of graphics products
decreased 4.8% in fiscal 1999 from prior year. Foreign sales of graphics
products decreased 4.9% in fiscal 1999 from fiscal 1998, due largely to lower
sales of laminating equipment (down 21.7%) and to decreases in the values of the
British pound sterling and Dutch guilder, partially offset by higher sales of
mounting and laminating supplies products. Management is uncertain as to the
extent that the unsettled conditions in Asia and Latin America will affect the
Company's business in the future. In addition, the Company is uncertain if the
softness in demand for high-end laminating equipment products will continue in
the future. As a result, management has begun focusing its efforts in the lower
end of the laminating equipment market.
The following tables provide a comparison of the Company's reported results and
the results excluding restructuring related items for fiscal years 1999 and
1998:
<TABLE>
<CAPTION>
1999
-----------------------------------------------------
Gross Income from Net Per Share
(Dollars in millions except per share amounts) Profit Operations Income Amount
------ ---------- ------ ------
<S> <C> <C> <C> <C>
Reported results $92.9 $12.0 $6.4 $ .61
1999 restructuring costs -- 6.2 4.0 .39
Reversals of accruals of 1997 strategic plan -- (.6) (.4) (.04)
Gain on sale of business divestitures -- (.5) (.3) (.03)
------ ----- ----- -----
Results excluding restructuring related items $92.9 $17.1 $9.7* $ .93*
1998
-----------------------------------------------------
Gross Income from Net Per Share
(Dollars in millions except per share amounts) Profit Operations Income Amount
------ ---------- ------ ------
Reported results $94.8 $19.3 $12.1 $1.05
Reversals of accruals of 1997 strategic plan (1.4) (2.9) (1.9) (.16)
Gain on sale of business divestitures -- (.7) (.5) (.04)
Gain on sale of discontinued operations -- -- (.5) (.04)
------ ----- ----- -----
Results excluding restructuring related items $93.4 $15.7 $9.2 $.81
</TABLE>
* Net income and per share amount were favorably impacted by a decrease in
the Company's effective tax rate from 34.4% in fiscal 1998 to 29.2% in
fiscal 1999, primarily as a result of resolution of certain prior years tax
exposures (see Note 10 of the Notes to Consolidated Financial Statements).
In addition, per share amount was favorably impacted by lower average
common shares outstanding as a result of the Company's stock repurchase
program (average common shares outstanding diluted were 10,493,000 and
11,556,000 in fiscal 1999 and 1998, respectively).
15
<PAGE>
Gross Profit. The Company's gross profit margin decreased slightly to 38.0% of
net sales in fiscal 1999 from 38.4% in fiscal 1998. This decrease was primarily
the result of a $1.4 million special credit recorded in cost of sales in fiscal
1998 in connection with the Company's 1997 strategic plan, previously discussed.
Excluding the effect of this special credit, the gross profit percentage for
fiscal 1998 would have been 37.9%. The slight increase in fiscal 1999 over the
fiscal 1998 gross profit percentage, before special credit, was due to the net
result of favorable production efficiencies and favorable customer and product
mix, partially offset by lower net selling prices. The gross margin percentages
for foreign sales were 27.2% in fiscal 1999 and 22.2% in fiscal 1998. Management
expects the pressure on net selling prices attributable to the growing
bargaining power of the Company's largest customers, such as office products
superstores, to continue. The Company's raw material cost increases have
remained below the rate of inflation for the past several years; however,
management is uncertain how long this will continue.
Selling, Administrative, and General Expenses. Selling, administrative, and
general expenses decreased $1.7 million, or 2.1%, in fiscal 1999 from the
previous year. This decrease was largely attributable to lower promotional
advertising and packaging development costs, lower discretionary marketing
spending, and lower professional services expenses. These decreases were
partially offset by higher research and development expenses ($4.0 million in
fiscal 1999 versus $3.3 million in fiscal 1998) and a $1.0 million special
performance award for Company employees.
Restructuring and Other. The Company recorded pre-tax special charges of $6.2
million pre-tax ($.39 per share) in connection with the Company's 1999
restructuring plan previously discussed. All of this special charge is included
in restructuring and other in the accompanying Consolidated Statements of
Income. The cash and non-cash portions of the special charges in fiscal 1999
were $4.6 million and $1.6 million, respectively, and include employee severance
($2.6 million), future lease obligations ($1.8 million), fixed asset writedowns
($1.6 million), and other related costs.
In addition, during fiscal 1999, the Company reduced by $.6 million pre-tax
($.04 per share) some of its reserves established in connection with its 1997
strategic plan. This reserve reduction related primarily to a final resolution
of lease obligations for a vacated facility and to lower than expected severance
costs.
The Company also reduced, during fiscal 1999, by $.5 million pre-tax ($.03 per
share) some of its reserves with respect to its 1997 business divestitures. The
reserve reduction was principally related to lower than expected inventory
returns.
During fiscal 1998, the Company, on a net basis, reduced by $2.9 million pre-tax
($.16 per share), a portion of which is included in cost of sales ($1.4
million), some of its restructuring reserves. This reserve reduction related
primarily to lower than expected employee severance costs ($1.1 million),
inventory returns ($1.4 million), decisions not to vacate certain leased
facilities ($.6 million), and other related costs ($1.0 million) in connection
with the Company's implementation of its 1997 strategic plan, partially offset
by additional restructuring charges in connection with the consolidation of the
graphics and substrates business units in fiscal 1998 related principally to
employee severance costs ($1.2 million).
In addition, during fiscal 1998, the Company reduced by $.7 million pre-tax
($.04 per share) some of its reserves in connection with its 1997 business
divestitures. This reduction was principally related to lower than expected
inventory returns.
(See Note 3 of the Notes to Consolidated Financial Statements.)
Interest Expense. Interest expense increased to $4.5 million in fiscal 1999 from
$4.3 million in fiscal 1998 due to lower interest capitalized in fiscal 1999.
Interest Income. Interest income decreased $1.1 million in fiscal 1999 from
fiscal 1998 due to lower average cash balances.
Provision for Income Taxes. The Company's effective tax rate from continuing
operations decreased to 29.2% in fiscal 1999 from 34.4% in fiscal 1998,
primarily due to resolution of certain prior years' tax exposures. (See Note 10
of the Notes to Consolidated Financial Statements.)
16
<PAGE>
Comparison of Fiscal 1998 vs. 1997
Net Sales. Net sales from continuing operations decreased 5.0% to $246.6 million
in fiscal 1998 from $259.5 million in fiscal 1997 largely due to the
divestitures of the Lit-Ning, Hunt Data Products, and Speedball brand art
products businesses and, to a lesser extent, to lower sales of other products
rationalized during fiscal 1997. Excluding the divested businesses, net sales of
retained businesses would have increased 3.7% over fiscal 1997. This sales
increase was primarily the result of higher unit volume, particularly from new
products and broader distribution in existing sales channels, partially offset
by lower net selling prices.
Consumer products sales of $107.9 million for fiscal 1998 decreased 12% from
fiscal 1997 sales of $122.3 million. This decrease was principally attributable
to lower sales of art supplies (down 23%) and office supplies (down 6%), largely
from lower sales of products targeted for rationalization; to the divestiture of
the Speedball brand art products; and to lower sales of X-Acto brand products.
Excluding the divested businesses and products rationalized, consumer products
net sales would have increased 4.8% over fiscal 1997. This sales increase was
attributable primarily to the introduction of new products, expanded placement
of existing products, and broader distribution in current sales channels. Export
sales of consumer products decreased 20% in fiscal 1998 as compared to fiscal
1997, primarily due to lower sales in Canada and Latin America, resulting
principally from the decrease in the value of the Canadian dollar and to general
softness in demand as a result of current economic conditions in Latin America.
Graphics products sales increased 1.1% to $138.7 million in fiscal 1998 from
$137.2 million in fiscal 1997. This sales increase was attributable to higher
sales of supplies products (up 1.5%), partially offset by lower laminating
equipment products sales (down .3%). The increase in supplies products was due
principally to higher sales of mounting and laminating supplies to the wide
format digital imaging market, and to higher sales of board products (i. e.,
project display board). The decrease in laminating equipment products sales was
due primarily to softness in demand for such products in Asia and Latin America,
partially offset by higher sales in the U.S. Export sales of graphics products
remained essentially unchanged in fiscal 1998 from fiscal 1997. Foreign sales of
graphics products also were essentially unchanged in fiscal 1998 from 1997, with
higher sales of supplies products offset by lower sales of laminating equipment.
Changes in currency exchange rates from year to year had an insignificant impact
on foreign sales in fiscal 1998.
Gross Profit. The Company's gross profit margin increased to 38.4% of net sales
in fiscal 1998 from 36.3% in fiscal 1997. This increase was primarily the net
result of the $1.4 million special credit and the $8.2 million special charge
recorded in cost of sales in fiscal years 1998 and 1997, respectively, in
connection with the 1997 strategic plan previously discussed. Excluding the
effect of these special items, the gross profit percentages for fiscal 1998 and
1997 would have been 37.9% and 39.4%, respectively. The decrease in gross profit
percentage, before special items, was largely attributable to inventory
reductions in fiscal 1997, which resulted in liquidation of certain LIFO
inventories carried at lower costs prevailing in prior years, start-up costs
incurred in fiscal 1998 related to the Company's new foam board facility in the
United Kingdom, unfavorable overhead absorption as a result of lower than
expected sales, lower net selling prices, and changes in customer and product
mix. These higher costs in 1998 were partially offset by the cost saving
initiatives undertaken as a part of the implementation of the 1997 strategic
plan. The gross profit percentages for foreign sales were 22.2% in fiscal 1998
and 26.4% in fiscal 1997 (27.2% excluding the effect of special items).
Selling, Administrative, and General Expenses. Selling, administrative, and
general expenses decreased $5.3 million, or 6.4%, in fiscal 1998 from the
previous year. The decrease was largely attributable to lower management
incentive compensation costs ($3.3 million pre-tax); the inclusion in fiscal
1997 of consulting fees related to the Company's strategic assessment of its
operations ($1.2 million pre-tax); and the capitalization of costs ($.6 million
pre-tax) in fiscal 1998 in connection with the adoption of Statement of Position
("SOP") 98-1, "Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use." Such costs were previously expensed. These decreases
were partially offset by legal expenses principally related to patent
infringement litigation ($1.1 million) in which the Company is engaged and to
higher freight, promotion, and packaging costs.
17
<PAGE>
Restructuring and Other. During fiscal 1998, the Company, on a net basis,
reduced by $2.9 million pre-tax ($.16 per share), a portion of which is included
in costs of sales ($1.4 million), some of its restructuring reserves. This
reserve reduction related primarily to lower than expected employee severance
costs ($1.1 million), inventory returns ($1.4 million), decisions not to vacate
certain leased facilities ($.6 million), and other related costs ($1.0 million)
in connection with the Company's implementation of its strategic plan during
fiscal 1997, partially offset by additional restructuring charges in connection
with the consolidation of the graphics and substrates business units in fiscal
1998, relating principally to employee severance costs ($1.2 million).
In addition, during fiscal 1998, the Company reduced by $.7 million pre-tax
($.04 per share) some of its reserves in connection with its 1997 business
divestitures. This reduction was principally related to lower than expected
costs associated with accruals, primarily for inventory returns, established at
the time of the respective divestiture.
During fiscal 1997, the Company recorded pre-tax special charges of $26.8
million ($1.61 per share) in connection with the Company's 1997 strategic plan
previously discussed. Approximately $18.6 million ($1.12 per share) of the
fiscal 1997 special charges are included in restructuring and other in the
accompanying Consolidated Statements of Income and include employee severance
costs ($4.1 million), fixed and intangible asset writedowns ($7.9 million),
lease obligations ($3.3 million), and other related costs. In addition, during
fiscal 1997, the Company realized a net gain on business divestitures of $3.7
million pre-tax ($.22 per share).
Interest Expense. Interest expense decreased to $4.3 million in fiscal 1998 from
$4.9 million in fiscal 1997 due to lower average debt borrowings in fiscal 1998.
Interest Income. Interest income increased $2.1 million in fiscal 1998 from
fiscal 1997 due to higher average cash balances as a result of the 1997 business
divestitures.
Other Income and Expenses. Other income, net of $.2 million in fiscal 1998
versus other expense, net of $.9 million in fiscal 1997 was due principally to a
forgiveness of a loan at one of the Company's foreign operations during fiscal
1998.
Provision (Benefit) for Income Taxes. The Company's effective tax rate from
continuing operations was 34.4% in fiscal 1998. The Company realized an income
tax benefit of $2.7 million in fiscal 1997 relating to the loss from continuing
operations resulting primarily from the restructuring charge previously
mentioned. The Company's effective tax rate was a 31.0% benefit for fiscal 1997.
Financial Condition
Working capital decreased to $61.4 million at the end of fiscal 1999 from $64.6
million at the end of fiscal 1998. The Company's debt/capitalization percentage
was 45% and 43% at the end of fiscal 1999 and 1998, respectively. Funds from
operations and available cash balances were sufficient during fiscal 1999 to
fund the repurchase of $8.2 million of the Company's common shares, to fund
additions to property, plant, and equipment of $4.9 million, to pay cash
dividends of $4.3 million, and to make cash payments related to the 1999
restructuring and 1997 strategic plans of $2.1 million.
Current assets decreased to $97.3 million at the end of fiscal 1999 from $99.5
million at the end of fiscal 1998, primarily as a result of lower cash and cash
equivalents and inventories, partially offset by higher accounts receivable. The
decrease in cash and cash equivalents was largely due to items discussed in the
preceding paragraph. The decrease in inventory from $21.6 million at fiscal 1998
year-end to $20.7 million at the end of fiscal 1999 was principally attributable
to lower raw materials quantities. Accounts receivable increased to $33.4
million at the end of fiscal 1999 from $31.0 million at fiscal 1998 year-end as
a result of higher sales in the last month of fiscal 1999 and to increases in
promotional sales with extended payment terms compared to those at the end of
fiscal 1998.
Current liabilities of $35.9 million at the end of fiscal 1999 increased from
$35.0 million at the end of fiscal 1998. This increase was due largely to the
accruals associated with the Company's 1999 restructuring plan and to a $1.0
million special performance award for Company employees, partially offset by
lower accounts payable.
The increase in other non-current assets was due to increases in the cash
surrender value of officers' life insurance policies relating to the Company's
Supplemental Executive Benefits Plan.
18
<PAGE>
Other non-current liabilities decreased to $14.7 million at the end of fiscal
1999 from $15.9 million at the end of fiscal 1998 due to several factors,
including a decrease in the minimum pension liability and a reversal of a
portion of the 1997 strategic plan accrual related to a lease facility
settlement, partially offset by an increase in the Supplemental Executive
Benefits Plan liability.
The decrease in the accumulated other comprehensive loss account in
stockholders' equity of $1.4 million was due to the effect of unfavorable
currency exchange rates for the British pound sterling (the functional currency
of the Company's U.K. operations) and the Dutch guilder (the functional currency
of the Companys Netherlands operations) of $2.4 million, partially offset by a
favorable minimum pension liability adjustment of $1.0 million.
In fiscal 1999 and 1998, the Company repurchased 838,500 and 371,800 shares,
respectively, pursuant to its stock repurchase program. During fiscal 1998, the
Board of Directors authorized the Company to repurchase up to 750,000 shares of
the Company's common stock. In February 1999, the Board of Directors authorized
the repurchase of up to an additional 250,000 shares of the Company's common
stock. In September 1999, the Board of Directors authorized the Company to
purchase up to an additional $5 million of the Company's common shares through
September 30, 2000. During fiscal 1999 and 1998, the Company spent $8.2 million
and $5.7 million respectively, on its current repurchase program. The average
common shares outstanding diluted decreased from 11,556,000 shares in fiscal
1998 to 10,493,000 shares in fiscal 1999.
The Company has a revolving credit agreement of $75 million and a line of credit
agreement at one of its foreign operations of 1.5 million British pounds
sterling (approximately $2.4 million). There were outstanding borrowings
totaling $4.3 million under these credit facilities as of November 28, 1999.
Management believes that funds generated from operations, combined with the
existing credit facilities, will be sufficient to meet currently anticipated
working capital and other capital and debt service requirements. (See Note 9 of
the Notes to Consolidated Financial Statements.) Should the Company require
additional funds, management believes that the Company could obtain them at
competitive costs.
Year 2000 Issues
During fiscal 1999, the Company completed the necessary modifications to its
critical systems and applications relating to Year 2000 ("Y2K") issues. The
Company also completed its survey of its significant suppliers and
customers to assess the Company's vulnerability if these companies were to fail
to remediate their Y2K issues. The responses received indicated that the
Company's suppliers and customers were aware of the Y2K issue and were
implementing all necessary changes prior to the end of calendar year 1999.
The Company also formulated contingency plans to ensure business-critical
processes were protected from disruption and will continue to function during
and after the year 2000 and to ensure the Company's ability to produce an
acceptable level of products and services is safeguarded in the event of
failures of external systems and services. The contingency plans included, for
example, securing alternative services of supply, possible safety inventory
levels, and other back-up procedures.
The Company's costs incurred, to date, in addressing the Y2K issues have not
been significant and are being funded through operating cash flows. The total
implementation costs (relating principally to new hardware and software)
capitalized to date are $5.5 million, which represents substantially all of the
capitalized costs to be incurred. These costs not only addressed Y2K issues but
also provided for operational efficiencies and cost reductions.
Subsequent to the end of the Company's fiscal year-end, the calendar changed to
the year 2000. The business and operations of the Company experienced no
material adverse effects from the date change, and the Company has not been
notified of any disruptions or failures in the systems of any of its suppliers
or customers. There is an on-going risk that Y2K related problems could still
occur, and the Company will continue to evaluate these risks. However, the
Company currently believes that the Y2K issue will not pose any significant
operational problems.
European Monetary Union "Euro"
On January 1, 1999, several member countries of the European Union established
fixed conversion rates between their existing sovereign currencies, and adopted
the Euro as their new common legal currency. The Euro will trade on currency
exchanges and the legacy currencies will remain legal tender in the
participating countries for a transition period between January 1, 1999 and
January 1, 2002.
19
<PAGE>
During the transition period, cash-less payments can be made in the Euro, and
parties can elect to pay for goods and services and transact business using
either the Euro or a legacy currency. Between January 1, 2002 and July 1, 2002,
the participating countries will introduce Euro notes and coins and withdraw all
legacy currencies so that they will no longer be available.
The Euro conversion may affect cross-border competition by creating cross-border
price transparency. The Company has assessed its pricing/marketing strategy in
order to ensure that it remains competitive in a broader European market. The
Company has also assessed its information technology systems to allow for
transactions to take place in both the legacy currencies and the Euro and for
the eventual elimination of the legacy currencies, and has modified certain
existing contracts. The Company's currency risk and risk management for
operations in participating countries may be reduced as the legacy currencies
are converted to the Euro. Final accounting, tax, and governmental legal and
regulatory guidance has been completed. The Company will continue to evaluate
issues involving introduction of the Euro. Based on current information and the
Company's current assessment, management does not expect that the Euro
conversion will have a material adverse effect on its results of operations,
financial condition or cash flows.
New Accounting Standards
In April 1998, the Accounting Standards Executive Committee for the American
Institute of Certified Public Accountants issued Statement of Position ("SOP")
98-5, "Reporting on the Costs of Start-Up Activities." SOP 98-5 provides
guidance on the financial reporting on start-up costs and organization costs. It
requires costs of start-up activities and organization costs to be expensed as
incurred. The standard is effective for fiscal years beginning after December
15, 1998. Earlier application is encouraged.
In June 1999, the Financial Accounting Standards Board approved issuance of SFAS
No. 137, which deferred the effective date of Statement of Financial Accounting
Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging
Activities." Adoption of this statement will now be effective for fiscal years
beginning after June 15, 2000.
The adoption of SOP 98-5 and SFAS No. 137 are not expected to have a material
impact on the Company's consolidated results of operations, financial position,
or cash flows.
Environmental Matters
The Company is involved, on a continuing basis, in monitoring its compliance
with environmental laws and in making capital and operating improvements
necessary to comply with existing and anticipated environmental requirements.
Despite its efforts, the Company has been cited for occasional violations or
alleged violations of environmental laws or permits and on several occasions has
been named a potentially responsible party for the remediation of sites.
Expenses incurred by the Company for all years presented in the accompanying
consolidated financial statements relating to violations of and compliance with
environmental laws and permits and site remediation have not been material.
While it is impossible to predict with certainty, management currently does not
foresee such expenses in the future as having a material effect on the Company's
business, results of operations, or financial condition. (See Note 14 of the
Notes to Consolidated Financial Statements.)
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Market Risk
The Company is exposed to various types of market risk in the normal course of
business, including the impact of interest rate changes, foreign currency
exchange rate fluctuations, and changes in corporate tax rates. The Company
employs risk management strategies, including the use of derivatives such as
forward exchange contracts. The Company does not hold derivatives for trading
purposes. As of November 28, 1999 and November 29, 1998, there were no forward
exchange contracts outstanding.
20
<PAGE>
It is the Company's policy to enter into forward exchange contracts transactions
only to the extent necessary to achieve the desired objectives of management in
limiting the Companys exposure to the various market risks discussed in Items 1
- -- "Sales and Marketing" and 7 herein. However, the Company does not hedge all
of its market risk exposure in a manner that would completely eliminate the
impact of changes in interest rates and foreign exchange rates on the Company's
net income. The Company does not expect that the results of operations or
financial position will be materially affected by these risk management
strategies.
Interest Rate Risk Management
See Item 7 -- "Financial Condition" and Note 9 of the Notes to Consolidated
Financial Statements herein.
Foreign Exchange Risk Management
See Item 1 -- "Sales and Marketing" and Note 1 of the Notes Consolidated
Financial Statements herein.
Item 8. Financial Statements and Supplementary Data
The Financial Statements and supplementary financial information listed in the
index appearing under Item 14(a) 1 & 2 herein, together with the report of
PricewaterhouseCoopers LLP thereon, are set forth following the signature pages
below.
Item 9. Disagreements on Accounting and Financial Disclosure
Not applicable.
PART III
Incorporated by Reference
The information called for by Item 10, "Directors and Executive Officers of the
Registrant" (other than the information concerning executive officers set forth
after Item 4 herein); Item 11, "Executive Compensation"; Item 12, "Security
Ownership of Certain Beneficial Owners and Management"; and Item 13, "Certain
Relationships and Related Transactions" is incorporated herein by reference to
the following sections of the Company's definitive proxy statement for its
Annual Meeting of Shareholders scheduled to be held April 19, 2000, which
definitive proxy statement is expected to be filed with the Commission not later
than 120 days after the end of the fiscal year to which this report relates:
Form 10-K Item No. Proxy Statement Section
- ------------------ -----------------------
Item 10 Proposal 1. "ELECTION OF DIRECTORS;" "ADDITIONAL
INFORMATION -- Section 16(a) Beneficial Ownership
Reporting Compliance"
Item 11 Proposal 1. "ELECTION OF DIRECTORS" -- Compensation
of Directors;" "ADDITIONAL INFORMATION -- Executive
Compensation" (not including "Compensation Committee
Report on Executive Compensation")
Item 12 "ADDITIONAL INFORMATION -- Common Share Ownership
by Certain Beneficial Owners and Management"
Item 13 "ADDITIONAL INFORMATION -- Certain Relationships and
Related Transactions"
21
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) Documents filed as part of the Report
1. Financial Statements: Pages
Report of Independent Accountants F-1
Consolidated Statements of Income
for the fiscal years 1999, 1998 and 1997 F-2
Consolidated Balance Sheets,
November 28, 1999 and November 29, 1998 F-3
Consolidated Statements of Stockholders' Equity
for the fiscal years 1999, 1998 and 1997 F-4
Consolidated Statements of Comprehensive Income
for the fiscal years 1999, 1998 and 1997 F-5
Consolidated Statements of Cash Flows
for the fiscal years 1999, 1998 and 1997 F-6
Notes to Consolidated Financial Statements F-7 - F-29
2. Financial Statement Schedule:
Schedule II. Valuation and Qualifying Accounts
for the fiscal years 1999, 1998 and 1997 F-30
All other schedules not listed above have been omitted, since they are not
applicable or are not required, or because the required information is included
in the consolidated financial statements or notes thereto. Individual financial
statements of the Company have been omitted, since the Company is primarily an
operating company and any subsidiary companies included in the consolidated
financial statements are directly or indirectly wholly-owned and are not
indebted to any person, other than the parent or the consolidated subsidiaries,
in an amount which is material in relation to total consolidated assets at the
date of the latest balance sheet filed, except indebtedness incurred in the
ordinary course of business which is not overdue and which matures in one year.
3. Exhibits:
(3) Articles of incorporation and bylaws:
(a) Restated Articles of Incorporation, as amended (composite) (incorp. by
ref. to Ex. 3(a) to fiscal 1997 Form 10-K) (reference also is made to Exhibit
4(c)(1) below for the Designation of Powers, Preferences, Rights and
Qualifications of Preferred Stock).
(b) By-laws, as amended (incorp. by ref. to Ex. 3(b) to Form 10-Q for
quarter ended May 28, 1995).
<PAGE>
(4) Instruments defining rights of security holders, including
indentures:*
(a) Note Purchase Agreement dated as of August 1, 1996
between the Company and several insurance companies
(incorp. by ref. to Form 10-Q for quarter ended
September 1, 1996).
(b) (1) Second Amendment and Restatement of Credit
Agreement dated as of February 20, 1997 between the
Company and NationsBanks, N.A. and other lenders and
(2) Third Amendment dated as of April 24, 1998 to
Credit Agreement (incorp. by ref. to Ex. 4(b)(1) and
4(b)(2), respectively, to fiscal 1998 Form 10-K).
(c) (1) Rights Agreement dated as of August 8, 1990
(including as Exhibit A thereto the Designation of
Powers, Preferences, Rights and Qualifications of
Preferred Stock), between the Company and Mellon Bank
(East), N. A., as original Rights Agent; and (2)
Assignment and Assumption Agreement dated December 2,
1991, with American Stock Transfer and Trust Company,
as successor Rights Agent (refiled herewith).
Miscellaneous long-term debt instruments and credit facility
agreements of the Company, under which the underlying
authorized debt is equal to less than 10% of the total
assets of the Company and its subsidiaries on a consolidated
basis, may not be filed as exhibits to this report. The
Company agrees to furnish to the Commission, upon request,
copies of any such unfiled instruments.
(10) Material contracts:
(a) Lease Agreement dated June 1, 1979 and First
Supplemental Lease Agreement dated as of July 31, 1994
between the Iredell County Industrial Facilities and
Pollution Control Financing Authority and the Company
(refiled herewith).
(b) 1983 Stock Option and Stock Grant Plan, as amended, of
the Company (incorp. by ref. to Ex. 10(b) to fiscal
1996 Form 10-K).**
(c) 1993 Stock Option and Stock Grant Plan of the Company,
as amended (incorp. by ref. to Ex. 10 to Form 10-Q for
quarter ended June 1, 1997).**
(d) 1994 Non-Employee Directors' Stock Option Plan (refiled
herewith).**
(e) 1997 Non-Employee Director Compensation Plan (incorp.
by ref. to Ex. 10(f) to fiscal 1997 Form 10-K).**
(f) (1) Form of Change in Control Agreement between the
Company and various executive officers of the Company;
and (2) list of executive officers who are parties to
such Change in Control Agreements (filed herewith).**
(g) (1) Form of Supplemental Executive Benefits Plan of the
Company, effective January 1, 1997 (incorporated by
reference to Ex. 10(g)(1) of fiscal 1998 Form 10-K);
(2) Amendment No. 1 to Supplemental Executive Benefits
Plan (filed herewith); and (3) form of related Amended
and Restated Trust Agreement, effective January 1, 1997
(incorp. by ref. to Ex. 10(g)(2) to fiscal 1998 Form
10-K).**
(h) (1) Employment Agreement, dated as of April 8, 1996,
between the Company and Donald L. Thompson (incorp. by
ref. to Ex. 10 to Form 10-Q for quarter ended June 2,
1996); and (2) description of amendment to Employment
Agreement (filed herewith).**
<PAGE>
(21) Subsidiaries (filed incorp. by ref. to Ex. 11 to 1997 Form
10-K).
(23) Consent of PricewaterhouseCoopers LLP to incorporation by
reference in registration statements on Forms S-8 Nos.
333-73197, 33-57105, 33-57103, 33-70660, 33-25947, 33-6359
and 2-83144 of their report on the consolidated financial
statements and schedule included in this report (filed
herewith).
(27) Financial Data Schedule (filed herewith).
* Reference also is made to (1) Articles 5th, 6th, 7th, and 8th of the
Company's composite Articles of Incorporation (ex. 3(a) to this report) and
(2) to Sections 1, 7, and 8 of the Company's By-laws (Ex. 3(b) to this
report).
** Indicates a management contract or compensatory plan or arrangement.
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the last
quarter of the fiscal year covered by this report.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 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 CORPORATION
Dated: February 25, 2000 By: \s\ Donald L. Thompson
--------------------------------
Donald L. Thompson
Chairman, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below on behalf of the registrant and in the capacities and on
the dates indicated:
\s\ Donald L. Thompson February 25, 2000
- -----------------------------
Donald L. Thompson
Chairman, President and
Chief Executive Officer
\s\ William E. Chandler February 25, 2000
- -----------------------------
William E. Chandler
Senior Vice President,
Finance (Principal Financial Officer)
\s\ John Fanelli III February 25, 2000
- -----------------------------
John Fanelli III
Vice President, Corporate Controller
(Principal Accounting Officer)
\s\ Donald D. Belcher February 25, 2000
- -----------------------------
Donald D. Belcher
Director
\s\ Ursula M. Burns February 25, 2000
- -----------------------------
Ursula M. Burns
Director
\s\ Jack Farber February 25, 2000
- -----------------------------
Jack Farber
Director
\s\ William F. Hamilton, Ph.D. February 25, 2000
- -----------------------------
William F. Hamilton, Ph.D.
Director
\s\ Mary R. Henderson February 25, 2000
- -----------------------------
Mary R. (Nina) Henderson
Director
\s\ Gordon A. MacInnes February 25, 2000
- -----------------------------
Gordon A. MacInnes
Director
\s\ Robert H. Rock February 25, 2000
- -----------------------------
Robert H. Rock
Director
<PAGE>
\s\ Roderic H. Ross February 25, 2000
- -----------------------------
Roderic H. Ross
Director
\s\ Malcolm J. Thompson February 25, 2000
- -----------------------------
Malcolm J. Thompson
Director
\s\ Victoria B. Vallely February 25, 2000
- -----------------------------
Victoria B. Vallely
Director
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and
the Board of Directors of
Hunt Corporation:
In our opinion, the consolidated financial statements listed in the index
appearing under item 14(a)(1) on page 22 present fairly, in all material
respects, the financial position of Hunt Corporation and subsidiaries at
November 28, 1999 and November 29, 1998, and the results of their operations and
their cash flows for each of the three years in the period ended November 28,
1999 in conformity with accounting principles generally accepted in the United
States. In addition, in our opinion, the financial statement schedule listed in
the index appearing under item 14(a)(2) on page 22 presents fairly, in all
material respects, the information set forth therein when read in conjunction
with the related consolidated financial statements. These financial statements
and financial statement schedule are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements and financial statement schedule based on our audits. We conducted
our audits of these statements in accordance with auditing standards generally
accepted in the United States, which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Philadelphia, PA 19103
January 26, 2000
<PAGE>
HUNT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
for the fiscal years 1999, 1998 and 1997
(In thousands except per share amounts)
<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Net sales ............................................................ $ 244,808 $ 246,563 $ 259,540
Cost of sales ........................................................ 151,861 151,784 165,396
--------- --------- ---------
Gross profit ................................................... 92,947 94,779 94,144
Selling, general and administrative expenses ......................... 75,805 77,458 82,728
Restructuring and other .............................................. 5,185 (1,933) 14,973
--------- --------- ---------
Income (loss) from operations .................................. 11,957 19,254 (3,557)
Interest expense ..................................................... (4,471) (4,344) (4,920)
Interest income ...................................................... 1,471 2,626 538
Other income (expense), net .......................................... 126 176 (852)
--------- --------- ---------
Income (loss) from continuing operations
before income taxes ........................................ 9,083 17,712 (8,791)
Provision (benefit) for income taxes ................................. 2,656 6,089 (2,729)
--------- --------- ---------
Income (loss) from continuing operations .......................... 6,427 11,623 (6,062)
Discontinued operations:
Income from discontinued business,
net of income taxes of $2,276 ........................ -- -- 4,153
Gain on disposal of discontinued business, net of income taxes
of $260 and $9,031 in 1998 and 1997, respectively .... -- 484 15,961
--------- --------- ---------
Net income ................................... $ 6,427 $ 12,107 $ 14,052
========= ========= =========
Basic earnings (loss) per common share:
Income (loss) from continuing operations ..................... $ 0.61 $ 1.04 $ (0.55)
Income from discontinued operations .......................... -- -- 0.38
Gain on disposal of discontinued business .................... -- 0.04 1.44
--------- --------- ---------
Net income per share ......................... $ 0.61 $ 1.08 $ 1.27
========= ========= =========
Diluted earnings (loss) per common share:
Income (loss) from continuing operations ..................... $ 0.61 $ 1.01 $ (0.55)
Income from discontinued operations .......................... -- -- 0.38
Gain on disposal of discontinued business .................... -- 0.04 1.44
--------- --------- ---------
Net income per share ......................... $ 0.61 $ 1.05 $ 1.27
========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-2
<PAGE>
HUNT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
November 28, 1999 and November 29, 1998
(In thousands except share amounts)
<TABLE>
<CAPTION>
1999 1998
--------- ---------
ASSETS
Current assets:
<S> <C> <C>
Cash and cash equivalents ................................................. $ 36,897 $ 40,724
Accounts receivable, less allowance for doubtful
accounts: 1999 -- $967; 1998 -- $1,721 ............................ 33,445 31,018
Inventories ............................................................... 20,676 21,604
Deferred income taxes ..................................................... 5,406 4,769
Prepaid expenses and other current assets ................................. 850 1,402
--------- ---------
Total current assets ...................................... 97,274 99,517
Property, plant and equipment, net ................................................ 45,121 49,917
Excess of acquisition cost over net assets acquired, net .......................... 25,013 26,021
Intangible assets, net ............................................................ 2,814 3,660
Other assets ...................................................................... 9,407 7,742
--------- ---------
TOTAL ASSETS ......................................... $ 179,629 $ 186,857
========= =========
LIABILITIES
Current liabilities:
Current portion of debt ................................................... $ 23 $ 479
Accounts payable .......................................................... 10,762 12,503
Accrued expenses:
Salaries, wages and commissions ................................... 3,584 2,302
Income taxes ...................................................... 1,481 1,930
Insurance ......................................................... 1,565 2,070
Compensated absences .............................................. 2,649 2,683
Restructuring ..................................................... 4,777 2,453
Other ............................................................. 11,010 10,536
--------- ---------
Total current liabilities ................................. 35,851 34,956
Long-term debt, less current portion .............................................. 56,647 57,741
Deferred income taxes ............................................................. 1,906 374
Other non-current liabilities ..................................................... 14,710 15,906
Commitments and contingencies (see Note 14)
STOCKHOLDERS' EQUITY
Capital Stock:
Preferred, $.10 par value, authorized 1,000,000 shares (including 50,000
shares of Series A Junior Participating Preferred); none issued .......... -- --
Common, $.10 par value, authorized 40,000,000 shares;
issued: 1999 and 1998 -- 16,152,322 shares ............................... 1,615 1,615
Capital in excess of par value .................................................... 6,434 6,434
Accumulated other comprehensive loss .............................................. (2,459) (1,099)
Retained earnings ................................................................. 160,267 158,316
Less cost of treasury stock: 1999 -- 5,987,383 shares; 1998 -- 5,162,082
shares (95,342) (87,386)
--------- ---------
Total stockholders' equity ................................ 70,515 77,880
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ........... $ 179,629 $ 186,857
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
HUNT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
for the fiscal years 1999, 1998 and 1997
(In thousands except share amounts)
<TABLE>
<CAPTION>
Accumulated
Common Stock Capital in Other
-------------------- Excess of Comprehensive Retained
Issued Treasury Par Value Income (Loss) Earnings
-------- -------- -------- ------------- --------
<S> <C> <C> <C> <C> <C>
Balances, December 1, 1996
(issued 16,152,322 shares;
treasury 5,178,127 shares) ............ $ 1,615 $(87,850) $ 6,434 $ 894 $141,587
Net income .................................... 14,052
Cash dividends on common stock
($.38 per share) ...................... (4,204)
Translation adjustments
(net of tax benefit of $278) .......... (619)
Exercise of stock options
(treasury 115,473 shares, net of shares
received as payment upon exercise) .... 1,863 (220)
Issuance of stock grants
(treasury 77,430 shares) .............. 1,231 (122)
-------- -------- -------- -------- --------
Balances, November 30, 1997
(issued 16,152,322 shares;
treasury 4,985,224 shares) ............ 1,615 (84,756) 6,434 275 151,093
Net income .................................... 12,107
Cash dividends on common stock
($.41 per share) ...................... (4,604)
Translation adjustments
(net of tax expense of $90) ........... 171
Minimum pension adjustment
(net of tax benefit of $810) .......... (1,545)
Purchase of treasury shares
(371,800 shares) ...................... (5,729)
Exercise of stock options
(treasury 179,433 shares, net of shares
received as payment upon exercise) .... 2,864 (357)
Issuance of stock grants
(treasury 15,509 shares) .............. 235 77
-------- -------- -------- -------- --------
Balances, November 29, 1998
(issued 16,152,322 shares;
treasury 5,162,082 shares) ............ 1,615 (87,386) 6,434 (1,099) 158,316
Net income .................................... 6,427
Cash dividends on common stock
($.41 per share) ...................... (4,317)
Translation adjustments
(net of tax benefit of $1,005) ........ (2,437)
Minimum pension adjustment
(net of tax expense of $475) .......... 1,077
Purchase of treasury shares (838,500 shares) .. (8,171)
Issuance of stock grants
(treasury 13,199 shares) .............. 215 (159)
-------- -------- -------- -------- --------
Balances, November 28, 1999
(issued 16,152,322 shares;
treasury 5,987,383 shares) ............ $ 1,615 $(95,342) $ 6,434 $ (2,459) $160,267
======== ======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
HUNT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
for the fiscal years 1999, 1998 and 1997
(In thousands)
<TABLE>
<CAPTION>
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Net income ......................................................... $ 6,427 $ 12,107 $ 14,052
-------- -------- --------
Comprehensive income (loss):
Foreign currency translation adjustments,
net of income tax expense (benefit) of ($1,005),
$90, and ($278) in 1999, 1998 and 1997, respectively (2,437) 171 (619)
Minimum pension liability adjustments,
net of income tax expense (benefit) of
$475 and ($810) in 1999 and 1998, respectively ..... 1,077 (1,545) --
-------- -------- --------
Other comprehensive loss ........................................... (1,360) (1,374) (619)
-------- -------- --------
Comprehensive income ............................................... $ 5,067 $ 10,733 $ 13,433
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
HUNT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the fiscal years 1999, 1998 and 1997
(In thousands)
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
Cash flows from operating activities:
<S> <C> <C> <C>
Net income ......................................................................... $ 6,427 $ 12,107 $ 14,052
Adjustments to reconcile net income to net cash provided
by (used for) operating activities:
Depreciation and amortization ...................................... 8,540 8,267 9,085
Provision for inventory obsolescence ............................... 828 1,526 1,040
Provision for doubtful accounts .................................... 161 77 786
Deferred income taxes .............................................. 312 1,991 (5,721)
Loss on disposal of property, plant and equipment .................. 120 251 32
Gain on sale of businesses ......................................... (554) (1,394) (28,678)
Provision (payments/credits) for special charges ................... 3,495 (8,102) 23,781
Issuance of stock under management incentive bonus
and stock grant plans .......................................... 56 312 1,110
Changes in operating assets and liabilities,
net of acquisition of businesses:
Accounts receivable .................................... (2,962) 2,432 11,166
Inventories ............................................ (90) (1,396) 6,631
Prepaid expenses and other current assets .............. 525 634 540
Accounts payable ....................................... (1,607) 1,359 (3,594)
Accrued expenses ....................................... 297 (5,322) 8,623
Other non-current assets and liabilities ............... (679) (16,338) (652)
-------- -------- --------
Net cash provided by (used for) operating activities 14,869 (3,596) 38,201
-------- -------- --------
Cash flows from investing activities:
Additions to property, plant and equipment ......................... (4,879) (13,853) (11,787)
Proceeds from the sale of businesses ............................... -- -- 63,771
Acquisition of businesses .......................................... (1,435) -- (13,928)
Other, net ......................................................... 339 32 355
-------- -------- --------
Net cash provided by (used for) investing activities (5,975) (13,821) 38,411
-------- -------- --------
Cash flows from financing activities:
Proceeds from issuance of long-term debt ........................... 16,132 7,272 13,326
Reduction of long-term debt, including current maturities .......... (17,301) (5,500) (27,325)
Book overdrafts .................................................... 1,128 (1,281) 3,755
Purchases of treasury stock ........................................ (8,171) (5,729) --
Proceeds from exercise of stock options ............................ -- 2,507 1,643
Dividends paid ..................................................... (4,317) (4,604) (4,204)
Other, net ......................................................... (29) -- (66)
-------- -------- --------
Net cash used for financing activities ............. (12,558) (7,335) (12,871)
-------- -------- --------
Effect of exchange rate changes on cash and cash equivalents ....................... (163) 27 180
-------- -------- --------
Net increase (decrease) in cash and cash equivalents ............................... (3,827) (24,725) 63,921
Cash and cash equivalents, beginning of year ....................................... 40,724 65,449 1,528
-------- -------- --------
Cash and cash equivalents, end of year ............................................. $ 36,897 $ 40,724 $ 65,449
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
HUNT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share amounts)
1. Summary of Significant Accounting Policies:
Basis of Presentation:
The consolidated financial statements include the accounts of the Company and
its subsidiaries, all of which are wholly-owned. Significant intercompany
accounts and transactions have been eliminated. The preparation of financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates. The Company's fiscal year ends on the Sunday nearest the end of
November. Fiscal year 1999 ended November 28, 1999; fiscal year 1998 ended
November 29,1998; and fiscal year 1997 ended November 30, 1997.
Cash and Cash Equivalents:
The Company considers all highly liquid temporary cash investments purchased
with a maturity of three months or less to be cash equivalents. The Company's
cash management program utilizes zero balance accounts. Accordingly, all book
overdraft balances have been reclassified to other accrued expenses in the
accompanying Consolidated Balance Sheets and amounted to $3.6 million at
November 28, 1999 and $2.5 million at November 29, 1998.
Revenue Recognition:
Revenue is recognized when products are shipped and title has passed to the
customer.
Inventories:
Inventories are valued at the lower of cost or market. Cost is determined by the
last-in, first-out ("LIFO") method for 52% and 51% of the inventories in 1999
and 1998, respectively. Cost of the remaining inventories is determined using
the first-in, first-out ("FIFO") method. The Company uses the FIFO method of
inventory valuation for certain businesses because the related products and
operations are separate and distinct from the Company's other businesses.
Property, Plant and Equipment:
Expenditures for additions and improvements to property, plant and equipment are
capitalized, and normal repairs and maintenance are charged to expense as
incurred. The related cost and accumulated depreciation of depreciable assets
disposed of are eliminated from the accounts, and any profit or loss is
reflected in other expense, net. Long-lived assets are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. If the sum of the expected future undiscounted cash
flows is less than the carrying amount of the asset, a loss is recognized for
the difference between the fair value and carrying value of the asset.
Excess of Acquisition Cost Over Net Assets Acquired and Other Intangible Assets:
Excess of acquisition cost over net assets acquired relates principally to the
Company's acquisitions of X-Acto (1981), the Graphic Arts Group of Bunzl plc
(1990), Image Technologies (1993), Centafoam (1995), Sallmetall (1997) and Axiom
(1999). The Company's policy is to record an impairment loss against the net
unamortized excess of acquisition cost over net assets acquired and net other
intangible assets in the period when it is determined that the carrying amount
of the net assets may not be recoverable. The Company performs this evaluation
on a quarterly basis. This determination includes evaluation of factors such as
current market value, future asset utilization, business climate, and future net
cash flows (undiscounted and without interest) expected to result from the use
of the net assets.
F-7
<PAGE>
HUNT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(In thousands except share and per share amounts)
1. Summary of Significant Accounting Policies (Continued):
Depreciation and Amortization:
Depreciation for financial reporting purposes is computed using the
straight-line method over the estimated useful life of the asset as follows:
buildings, 12 to 40 years; machinery and equipment, 3 to 12 years; and leasehold
improvements over the lease term. Depreciation for tax purposes is computed
principally using accelerated methods. The excess of acquisition cost over net
assets acquired is amortized on a straight-line basis over periods ranging from
15 to 40 years. The costs of other intangible assets are amortized on a
straight-line basis over their respective estimated useful lives, ranging from 5
to 30 years. Amortization of assets under capital leases that contain purchase
options is provided over the assets' useful lives. Other capital leases are
amortized over the terms of the related leases or asset lives, if shorter.
Currency Translation:
The assets and liabilities of subsidiaries having a functional currency other
than the U.S. dollar are translated at the fiscal year-end exchange rate, while
elements of the income statement are translated at the weighted average exchange
rate for the fiscal year. The cumulative translation adjustment is recorded as a
separate component of stockholders' equity. Gains and losses on foreign currency
transactions are included in the determination of net income and are reflected
in other expense, net. Such gains and losses were not material in any of the
years presented in the consolidated financial statements.
Income Taxes:
Income tax expense (benefit) is based on pre-tax financial accounting income
(loss). Deferred tax assets and liabilities are recognized for the expected tax
consequences of temporary differences between the tax basis of assets and
liabilities and their reported amounts.
Derivatives:
Derivative financial instruments are used to hedge risk caused by fluctuating
currency. The Company periodically enters into forward exchange contracts to
hedge foreign currency transactions for periods generally consistent with its
committed exposure. These transactions were not material in any of the years
presented in the consolidated financial statements. As of November 28, 1999 and
November 29, 1998, there were no forward exchange contracts outstanding. Cash
flows from hedges are classified in the consolidated statements of cash flows in
the same category as the item being hedged. The Company does not hold or issue
financial instruments for trading purposes.
Earnings (Loss) Per Share:
Basic earnings per share is computed by dividing net earnings (loss) by the
weighted average of common shares outstanding during the year. Diluted earnings
per share reflects the potential dilution of securities that could share in
earnings, including stock options. All earnings per share amounts are presented
on an after-tax, diluted basis unless otherwise noted. A reconciliation of
weighted average common shares outstanding to weighted average of common shares
outstanding assuming dilution is shown below:
<TABLE>
<CAPTION>
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Average common shares outstanding -- basic .................... 10,488 11,220 11,079
Add: common equivalent shares representing
shares issuable upon exercise of stock options
and stock grants (antidilutive in 1997) ............... 5 336 --
------ ------ ------
Average common shares and dilutive securities outstanding ..... 10,493 11,556 11,079
====== ====== ======
</TABLE>
F-8
<PAGE>
HUNT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(In thousands except share and per share amounts)
1. Summary of Significant Accounting Policies (Continued):
Comprehensive Income:
During fiscal 1999, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 130, "Reporting Comprehensive Income." SFAS No. 130
requires the disclosure of comprehensive income, which includes, in addition to
net income, other comprehensive income consisting of unrealized gains and losses
which bypass the traditional income statement and are recorded directly into a
separate section of shareholders' equity on the balance sheet. The components of
other comprehensive income for the Company consist of unrealized gains and
losses relating to the translation of foreign currency financial statements and
minimum pension liability adjustments.
Employee Benefit Plans:
The Company and its subsidiaries have non-contributory, defined benefit pension
plans covering the majority of their employees. It is the Company's policy to
fund pension contributions in accordance with the requirements of the Employee
Retirement Income Security Act of 1974. The benefit formula used to determine
pension costs is the final-average-pay method.
During fiscal 1999, the Company adopted SFAS No. 132, "Employers Disclosures
about Pensions and Other Postretirement Benefits." SFAS No. 132 does not change
the measurement or recognition of those plans. It standardizes the disclosure
requirements for pensions and other postretirement benefits, requires additional
information on changes in the benefit obligations and fair values of plan
assets, and eliminates certain disclosures that are no longer useful.
Stock-Based Compensation Plans:
The Company applies Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees," and related interpretations in
accounting for its stock-based compensation. SFAS No. 123, "Accounting for
Stock-Based Compensation" provides the option either to continue the Company's
current method of accounting for stock-based compensation or to adopt the fair
value method of accounting. The Company elected to continue accounting for
stock-based compensation under APB No. 25.
Environmental Matters:
Environmental expenditures that relate to current operations are expensed or
capitalized as appropriate. Expenditures that relate to an existing condition
caused by past operations, and which do not contribute to current or future
revenue generation, are also expensed. The Company records liabilities for
environmental costs when environmental assessments and/or remedial efforts are
probable and the costs can be reasonably estimated. The liability for future
environmental remediation costs is evaluated on a quarterly basis by management.
Generally, the timing of these accruals coincides with the earlier of the
completion of a feasibility study or the Company's commitment to a plan of
action based on the then-known facts. Recoveries of expenditures are recognized
as a receivable only when they are estimable and probable.
Segment Information:
In fiscal 1999, the Company adopted SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information." SFAS No. 131 supersedes SFAS No. 14,
"Financial Reporting for Segments of a Business Enterprise," replacing the
"industry segment" approach with the "management" approach. The management
approach designates the internal organization that is used by management for
making operating decisions and assessing performance as the source of the
Company's reportable segments. SFAS No. 131 also requires disclosures about
products and services, geographic areas, and major customers. The adoption of
SFAS No. 131 did not affect results of operations or financial position but did
affect the disclosure of segment information. (See Note 18.)
F-9
<PAGE>
HUNT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(In thousands exceptshare and per share amounts)
2. New Accounting Standards:
In April 1998, The Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued Statement of Position ("SOP")
98-5, "Reporting on the Costs of Start-up Activities." SOP 98-5 provides
guidance on the financial reporting on start-up costs and organization costs. It
requires costs of start-up activities and organization costs to be expensed as
incurred. The standard is effective for fiscal years beginning after December
15, 1998. Earlier application is encouraged.
In June 1999, the Financial Accounting Standards Board approved issuance of SFAS
No. 137, which deferred the effective date of SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities." Adoption of this statement will
now be effective for fiscal years beginning after June 15, 2000.
The adoption of SOP 98-5 and SFAS No. 137 are not expected to have a material
impact on the Company's consolidated results of operations, financial position
or cash flows.
3. Restructuring and Other:
Restructuring and other for fiscal years 1999, 1998, and 1997 consist of the
following:
1999 1998 1997
------ ------- -------
Restructuring $5,619 $(1,534) $18,627
Net gain on divestitures (554) (650) (3,686)
Loss on disposal of property,
plant & equipment 120 251 32
------ ------- -------
$5,185 $(1,933) $14,973
====== ======= =======
During the fourth quarter of fiscal 1999, a comprehensive reorganization and
restructuring plan (the "1999 restructuring plan") was approved by the Company's
Board of Directors and resulted in recognition of restructuring charges totaling
$6.2 million pre-tax ($.39 per share). The pre-tax charges of $6.2 million are
included in restructuring and other in the accompanying Consolidated Statements
of Income. The charge to restructuring includes employee severance costs ($2.6
million, representing more than 150 employees), recognition of future lease
obligations ($1.8 million), fixed asset writedowns ($1.6 million), and other
related costs. The major components of the 1999 restructuring plan include:
creating manufacturing centers of excellence; outsourcing its European
distribution activities; consolidating its U.S. distribution activities; and
focusing its product offering and marketing efforts. Creating manufacturing
centers of excellence is expected to result in consolidating manufacturing
operations in Europe and the U.S. These actions are intended to eliminate
redundancies and reduce fixed costs. The Company also plans to outsource and
consolidate some of its distribution activities, which is expected to improve
customer service, utilize space more efficiently, and reduce capital investment
and operating costs. The Company's focus on its product offering and marketing
efforts is expected to reduce operating costs, improve margins and inventory
turns, and ultimately, provide the foundation for further sales growth of the
Company's graphics products business.
F-10
<PAGE>
HUNT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(In thousands except share and per share amounts)
3. Restructuring and Other (Continued):
The following table sets forth the details and the cumulative activity in the
various accruals associated with the above 1999 restructuring plan in the
Consolidated Balance Sheets from November 29, 1998 to November 28, 1999:
<TABLE>
<CAPTION>
Balance at Balance at
November 30, Current Cash Non-Cash November 28,
1998 Provision Credits Reductions Activity 1999
------------ --------- ------- ---------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Lease obligations -- $1,772 -- $ (6) -- $1,766
Severance -- 2,593 -- (54) -- 2,539
Fixed assets -- 1,584 -- (3) -- 1,581
Other -- 257 -- ( 80) -- 177
------ ------ ----- ------ ----- ------
Total -- $6,206 -- $ (143) -- $6,063
====== ====== ===== ====== ===== ======
</TABLE>
During fiscal 1997, the Company initiated a new strategy for growth and
restructuring (the "1997 strategic plan") designed to restore higher levels of
sales growth and profitability and to reduce its cost structure. The key
initiatives of the 1997 strategic plan were focused on significant reduction of
the Company's stock keeping units, rationalization of manufacturing and
warehouse facilities, and a major restructuring of its administrative and
marketing and selling functions. Total restructuring charges recognized in
fiscal 1997 in connection with the 1997 strategic plan were $26.8 million
pre-tax ($1.61 per share). The charge to restructuring included employee
severance costs ($4.1 million), inventory writedowns and returns ($8.2 million),
fixed and intangible asset writedowns ($7.9 million), recognition of future
lease obligations ($3.3 million), and other related costs. This charge is
included in restructuring and other, except for inventory writedowns and returns
which is included in cost of sales.
During fiscal 1999, the Company reduced by $.6 million pre-tax ($.04 per share)
some of its reserves established in connection with the Company's implementation
of its 1997 strategic plan. The reserve reduction related primarily to a final
resolution of lease obligations for a vacated facility and to lower than
expected severance costs.
During fiscal 1998, the Company, on a net basis, reduced some of its
restructuring reserves by $2.9 million pre-tax ($.16 per share), a portion of
which is included in cost of sales ($1.4 million pre-tax). This reserve
reduction related primarily to lower than expected severance costs ($1.1
million), inventory returns ($1.4 million), decisions not to vacate certain
leased facilities ($.6 million), and other related costs ($1.0 million) in
connection with the Company's implementation of its 1997 strategic plan,
partially offset by additional restructuring charges in connection with the
consolidation of the graphics and substrates business units in the fourth
quarter of fiscal 1998 relating principally to employee severance costs ($1.2
million).
The following table sets forth the details and the cumulative activity in the
various accruals and reserves associated with the above 1997 strategic plan in
the Consolidated Balance Sheets from December 1, 1997 to November 28, 1999:
<TABLE>
<CAPTION>
Balance at Balance at
December 1, Current Cash Non-Cash November 29,
1997 Provision Credits Reductions Activity 1998
------------ --------- ------- ---------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Inventory $4,519 $ 88 $(1,351) $(1,148) $(1,708) $ 400
Lease obligations 3,259 26 (599) (638) (175) 1,873
Severance 3,063 1,103 (1,403) (2,041) -- 722
Fixed assets 558 10 (531) -- 198 235
Other 2,083 18 (246) (1,390) 22 487
------ ------ ----- ------ ----- ------
Total $13,482 $1,245 $(4,130) $(5,217) $(1,663) $3,717
======= ====== ======= ======= ======= ======
</TABLE>
F-11
<PAGE>
HUNT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(In thousands exceptshare and per share amounts)
3. Restructuring and Other (Continued):
<TABLE>
<CAPTION>
Balance at Balance at
November 30, Current Cash Non-Cash November 28,
1997 Provision Credits Reductions Activity 1998
------------ --------- ------- ---------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Inventory $ 400 -- -- $ (370) $ (30) --
Lease obligations 1,873 -- $ (467) (847) (5) $ 554
Severance 722 -- (103) (573) -- 46
Fixed assets 235 -- (17) -- (218) --
Other 487 -- -- (191) -- 296
------ ---- ------ ------- ------ -----
Total $3,717 -- $ (587) $(1,981) $ (253) $ 896
====== ==== ====== ======= ====== =====
</TABLE>
During fiscal 1999, the Company reduced by $.5 million pre-tax ($.03 per share)
some of its reserves established with respect to its 1997 business divestitures.
This reserve reduction was principally related to lower than expected inventory
returns.
During fiscal 1998, the Company reduced by $.7 million pre-tax ($.04 per share)
some of its reserves in connection with its 1997 business divestitures. This
reduction was principally related to lower than expected inventory returns.
In connection with the Company's 1997 strategic plan, during fiscal 1997, the
Company sold its Lit-Ning business, its Hunt Data Products' MediaMate and Calise
brand products, and its Speedball art brand products. The combined sales of
these business units were $11.5 million in fiscal 1997 (through the various
divestiture dates). The divestitures of these businesses resulted in a net
pre-tax gain of $3.7 million ($.22 per share).
4. Discontinued Operations:
In mid-November 1997, the Company sold its Bevis office furniture business for
approximately $45.1 million. The Company recorded an after-tax gain of $16.0
million ($1.39 per share) on the sale. Included in the after-tax gain on the
sale of Bevis is income from operations of $.5 million representing the period
October 7, 1997 (measurement date) to November 13, 1997 (disposal date). Bevis
had sales of approximately $52.5 million in fiscal 1997 (through the date of
divestiture). In fiscal 1998, the Company reduced by $.7 million pretax ($.04
per share) some of its accruals established in connection with the divestiture
due to the favorable resolution of certain contingent liabilities established at
the time of divestiture.
The Bevis operation has been accounted for as a discontinued operation, and
accordingly, has been segregated in the accompanying Consolidated Statements of
Income and prior years have been reclassified to conform to the current year's
presentation. However, the Consolidated Balance Sheets and Consolidated
Statements of Cash Flows have not been reclassified.
5. Business Acquisitions:
On October 4, 1999, the Company acquired the business and assets of Axiom
Graphics Manufacturing, Inc. ("Axiom") for $1.4 million and future contingent
considerations. Axiom is a manufacturer, distributor, and marketer of a line of
liquid laminating machines and wet separator finishing devices for the large
format print industry. This acquisition was accounted for under the purchase
method of accounting and was financed from internal cash generation. The excess
of purchase price over the fair value of the net assets acquired was
approximately $1.3 million, which is being amortized on a straight line basis
for 15 years.
F-12
<PAGE>
HUNT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(In thousands except share and per share amounts)
5. Business Acquisitions (Continued):
During 1997, the Company acquired all of the outstanding stock of Sallmetall
B.V., a Dutch company, for approximately $14 million and the assumption of debt
of approximately $6 million. Sallmetall's operations involve the design and
assembly of laminating equipment and related adhesive film coating
manufacturing. The acquisition was accounted for under the purchase method of
accounting and was financed with borrowings under an existing credit facility
and from internal cash generation. The excess of purchase price over the fair
value of the net assets acquired was approximately $14 million, which is being
amortized on a straight line basis over 20 years.
Pro forma information is not presented, as these acquisitions had no material
effect on the Company's results of operations or financial condition for any of
the years presented. The results of operations of these businesses are included
in the Company's consolidated financial statements from the dates of
acquisition.
6. Inventories:
The classification of inventories at the end of fiscal years 1999 and 1998 is as
follows:
1999 1998
---- ----
Finished goods ......... $10,373 $10,704
Work in process ........ 3,337 3,033
Raw materials .......... 6,966 7,867
------- -------
$20,676 $21,604
======= =======
Inventories determined under the LIFO method were $14,062 and $14,444 at
November 28, 1999 and November 29, 1998, respectively. The current replacement
cost for these inventories exceeded the LIFO cost by $4,119 and $4,273 at
November 28, 1999 and November 29, 1998, respectively.
Inventory quantities were reduced in fiscal years 1999, 1998, and 1997,
resulting in a liquidation of LIFO inventories carried at lower costs prevailing
in prior years. The effect of these reductions was to increase net income by
$236 ($.02 per share), $110 ($.01 per share), and $1,782 ($.15 per share) in
fiscal years 1999, 1998 and 1997, respectively.
7. Property, Plant and Equipment, NET:
Property, plant and equipment, net at the end of fiscal years 1999 and 1998 is
as follows:
1999 1998
---- ----
Land and land improvements $2,512 $2,584
Buildings 16,509 15,254
Machinery and equipment 65,707 65,867
Leasehold improvements 1,271 1,296
Construction in progress 2,903 2,734
------- -------
88,902 87,735
Less accumulated depreciation and amortization 43,781 37,818
------- -------
$45,121 $49,917
======= =======
Depreciation expense was $7,053, $6,769, and $6,258 for fiscal years 1999, 1998
and 1997, respectively.
F-13
<PAGE>
HUNT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(In thousands except share and per share amounts)
8. Excess of Acquisition Cost Over Net Assets Acquired
and Intangible Assets, Net:
Excess of acquisition cost over net assets acquired at the end of fiscal years
1999 and 1998 is as follows:
1999 1998
------ ------
Excess of acquisition cost over net assets acquired $31,500 $31,454
Less accumulated amortization 6,487 5,433
------- -------
$25,013 $26,021
======= =======
Intangible assets, net at the end of fiscal years 1999 and 1998 are as follows:
1999 1998
------ ------
Covenants not to compete .............. $2,728 $2,823
Patents ............................... 1,530 1,530
Trademarks ............................ 1,197 1,209
Licensing agreements .................. 492 492
Other ................................. 2,628 3,303
------ ------
8,575 9,357
Less accumulated amortization ......... 5,761 5,697
------ ------
$2,814 $3,660
====== ======
9. Debt:
Debt at the end of fiscal years 1999 and 1998 was as follows:
1999 1998
------ ------
Senior notes (a) ............................. $50,000 $50,000
Revolving credit facility (b) ................ 4,262 4,571
Capitalized lease obligations ................ 2,011 2,024
Bank loans (c) ............................... -- 1,129
Mortgage ..................................... 397 474
Governmental development loan ................ -- 22
------- -------
56,670 58,220
Less current portion (d) ..................... 23 479
------- -------
Long-term portion ............................ $56,647 $57,741
======= =======
(a) The senior notes are payable in ten annual payments of $5 million beginning
August 1, 2002 and bear interest at a rate of 7.86%.
(b) At November 28, 1999, the Company had a revolving credit agreement that
provides for unsecured borrowings up to $75 million, which expires December
31, 2000. The interest rates under this facility (between 2.92% and 7.47%
dependent on the currency borrowed during fiscal 1999) are, at the option
of the Company, one of 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. The weighted average interest
rate was 4.99% and 5.73% at November 28, 1999 and November 29, 1998,
respectively.
F-14
<PAGE>
HUNT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(In thousands except share and per share amounts)
9. Debt (Continued):
(c) The 1998 bank loans were refinanced with revolving credit facility loans in
fiscal 1999.
(d) The weighted average interest rate was 6.20% and 6.95% at November 28, 1999
and November 29, 1998, respectively.
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. The Company
was in compliance with its debt covenants at November 28, 1999 and November 29,
1998.
The costs associated with the senior notes and revolving credit facility
referred to above are amortized over the life of each of the respective
instruments and charged to interest expense. The charge to interest expense with
respect to this amortization was $140 in fiscal years 1999 and 1998.
The Company has a line of credit agreement at one of the Company's foreign
operations that provides for unsecured borrowings up to 1.5 million British
pounds sterling (approximately $2.4 million). There were no borrowings under
this line of credit at November 28, 1999.
The capitalized lease obligations are collateralized by the property, plant and
equipment described in Note 14.
Aggregate annual maturities for all long-term debt, including the capitalized
leases, for each of the four fiscal years subsequent to December 3, 2000 are as
follows:
2001 $4,288 2003 $5,023
2002 $5,025 2004 $7,023
10. Income Taxes:
Income (loss) from continuing operations before provision (benefit) for income
taxes consists of the following:
1999 1998 1997
---- ---- ----
Domestic ................... $ 6,487 $ 16,832 $(10,774)
Foreign .................... 2,596 880 1,983
-------- ------- -------
$ 9,083 $17,712 $(8,791)
======== ======= =======
The provision (benefit) for income taxes from continuing operations consists of
the following:
1999 1998 1997
------- ------- -------
Currently payable:
Federal ..................... $ 1,686 $ 4,911 $ 94
State ....................... 208 247 661
Foreign ..................... 830 44 345
------- ------- -------
2,724 5,202 1,100
Deferred .................... (68) 887 (3,829)
------- ------- -------
$ 2,656 $ 6,089 $(2,729)
======= ======= =======
F-15
<PAGE>
HUNT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(In thousands except share and per share amounts)
10. Income Taxes (Continued):
The following is a reconciliation of the statutory federal income tax rate with
the Company's effective income tax rate from continuing operations:
1999 1998 1997
---- ---- ----
Statutory federal rate ........................ 35.0% 35.0% (35.0)%
State income taxes, net of federal tax benefit .7 .9 1.8
Amortization of assets not deductible ......... 4.4 2.3 3.9
Resolution of certain prior year's tax
exposures ................................... (11.7) (4.2) (3.6)
Other, net .................................... .8 .4 1.9
---- ---- -----
Effective tax rate from continuing operations . 29.2% 34.4% (31.0)%
==== ==== =====
The significant components of deferred tax assets and liabilities at November
28, 1999 and November 29, 1998 consist of:
<TABLE>
<CAPTION>
1999 1998
----------------------- ----------------------
Assets Liabilities Assets Liabilities
------- ----------- ------ -----------
<S> <C> <C> <C> <C>
Inventories ................................. $ 880 -- $ 1,097 --
Accrued expenses ............................ 4,101 $ 221 3,802 $ 178
Allowance for doubtful accounts ............. 186 336 99 --
Net operating loss carryforwards -- foreign . 851 -- 440 --
Pensions .................................... 3,666 -- 3,328 --
Minimum pension liability adjustment ........ 207 -- 810 --
Net operating loss carryforwards -- states .. 60 -- 35 --
Depreciation and amortization ............... -- 5,741 -- 4,947
------- ------- ------- -------
9,951 6,298 9,611 5,125
Valuation allowance ......................... (153) -- (91) --
------- ------- ------- -------
$ 9,798 $ 6,298 $ 9,520 $ 5,125
======= ======= ======= =======
</TABLE>
Included in the above table for November 28, 1999 and November 29, 1998 are
deferred tax assets of $397 and $398, respectively, relating to retained
contingencies for the discontinued operation.
As of November 28, 1999, the Company had foreign net operating loss
carryforwards of approximately $2,864 that may be carried forward indefinitely.
The valuation allowance of approximately $153 relates to net operating losses
for which realization is not more likely than not as of November 28, 1999. The
net change in the total valuation allowance for the year ended November 28, 1999
was an increase of approximately $62.
11. Employee Benefit Plans:
Pension Plans:
In fiscal 1999, the Company adopted SFAS No. 132, "Employers' Disclosures about
Pensions and Other Postretirement Benefits." SFAS No. 132 standardizes the
disclosure requirements of pensions and other postretirement benefits. Prior
years' information has been restated to conform with the new requirements.
F-16
<PAGE>
HUNT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(In thousands except share and per share amounts)
11. Employee Benefit Plans (Continued):
The components of net pension costs for fiscal years 1999, 1998, and 1997
consist of the following:
1999 1998 1997
-------- -------- --------
Service costs ................ $ 2,612 $ 2,251 $ 2,349
Interest cost ................ 3,744 3,408 3,206
Expected return on plan assets (4,101) 708 (10,461)
Net amortization and deferral 238 (5,314) 7,345
Net curtailment gain ......... -- -- (732)
-------- -------- --------
Net periodic benefit cost .... $ 2,493 $ 1,053 $ 1,707
======== ======== ========
During fiscal 1997, the Company realized a net curtailment gain of $732
resulting from its business divestitures of which $914 of the net gain is
included in the gain on discontinued business.
The reconciliations of the beginning and ending balances of benefit obligations
and fair value of plan assets and the funded status of the plans at September
30, 1999 and 1998 (dates of actuarial valuations) are as follows:
1999 1998
------- -------
Change in benefit obligation:
Benefit obligation at beginning of year ...... $56,528 $46,566
Service cost ................................. 2,612 2,251
Interest cost ................................ 3,744 3,408
Participants' contributions .................. 135 141
Actuarial (gain) loss ........................ (8,395) 6,437
Benefits paid ................................ (2,011) (2,295)
Exchange rate changes ........................ (152) 20
------- -------
Benefit obligation at end of year ............ $52,461 $56,528
======= =======
Change in plan assets:
Fair value of plan assets at beginning of year $46,538 $48,509
Actual return on plan assets ................. 7,821 (708)
Employer contributions ....................... 764 869
Participants' contributions .................. 135 141
Benefits paid ................................ (2,011) (2,295)
Exchange rate changes ........................ (118) 22
------- -------
Fair value of assets at end of year .......... $53,129 $46,538
======= =======
Reconciliation of funded status:
Funded status ................................ $ 667 $(9,991)
Unrecognized net actuarial (gain) loss ....... (7,324) 5,163
Unrecognized prior service cost .............. 1,120 1,318
Unrecognized transition obligation (asset) ... (594) (812)
Other ........................................ 58 54
------- -------
Net amount recognized ........................ $(6,073) $(4,268)
======= =======
F-17
<PAGE>
HUNT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(In thousands except share and per share amounts)
11. Employee Benefit Plans (Continued):
Amounts recognized in the Consolidated Balance Sheets are as follows:
1999 1998
------- -------
Pension benefit cost ................. $ 17 $ 106
Accrued benefit liability ............ (7,413) (7,960)
Intangible assets .................... 648 1,231
Deferred income taxes liability ...... 207 810
Accumulated other comprehensive income 468 1,545
------- -------
Net amount recognized ................ $(6,073) $(4,268)
======= =======
Significant weighted average assumptions used in determining the benefit
obligations as of the dates of actuarial valuations include:
1999 1998
------- -------
Discount rate ..................... 7.75% 6.75%
Expected return on plan assets..... 9.00% 9.00%
Rate of compensation increase...... 5.00% 5.00%
The projected benefit obligation, accumulated benefit, and fair value of plan
assets for the pension plans with accumulated benefits obligations in excess of
plan assets were $6,998, $5,264, and $0, respectively, as of November 28, 1999
and $15,030, $12,499, and $5,875, respectively, as of November 29, 1998.
The Company recognizes a minimum pension liability for underfunded plans. The
minimum liability is equal to the excess of the accumulated benefit obligation
over plan assets. A corresponding amount is recognized as either an intangible
asset, to the extent of previously unrecognized prior service cost and
previously unrecognized transition obligation, or a reduction of shareholders'
equity.
Supplemental Executive Benefits Plan:
The Company has a nonqualified, Supplemental Executive Benefits Plan that
constitutes a significant portion of the underfunded status above and covers all
officers. Expenses of $1,194, $1,001, and $698 in fiscal years 1999, 1998 and
1997, respectively, relating to this plan were actuarially determined and are
included in the pension costs described above. Contributions to the elective
salary deferral feature of the plan by the Company were $48, $51 and $45 for
fiscal years 1999, 1998 and 1997, respectively.
Employee Savings Plan:
The Company has a defined contribution 401(k) plan available to a majority of
its employees in the United States. For participating employees, the Company
matches 25 cents for each dollar contributed up to a maximum of 6% of pre-tax
compensation, subject to limitations of the plan and the Internal Revenue Code.
Contributions to the 401(k) plan by the Company were $312, $379, and $437 for
fiscal years 1999, 1998 and 1997, respectively.
12. Stock-Based Compensation Plans:
The 1993 Stock Option and Stock Grant Plan, which replaced the expired 1983
Stock Option and Stock Grant Plan, authorizes the issuance of up to 3,500,000
common shares (of which an additional 1,750,000 common shares were authorized
through a plan amendment in fiscal 1997) for the granting of incentive stock
options, nonqualified stock options and stock grants to key employees. A maximum
of 525,000 common shares under the 1993 plan may be issued in the form of stock
grants. The limit of the aggregate number of options and/or stock grants that
can be granted to any one individual in any one-year period is 300,000 shares.
The option price of
F-18
<PAGE>
HUNT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(In thousands except share and per share amounts)
12. Stock-Based Compensation Plans (Continued):
options granted under the plan may not be less than the market value of the
shares at the date granted. Options may be granted for terms of between two and
ten years and generally become exercisable not less than one year following the
date of grant. Stock grants under the 1993 plan are subject to a vesting period
or periods of between one and five years from the date of grant. Common shares
subject to a stock grant are not actually issued to a grantee until such shares
have vested under the plan. The plan also provides for the payment of an annual
cash bonus to grantees of stock grants in an amount equal to the cash dividends
which would have been received had the shares not yet vested under the grant
been actually held by the grantees.
The Company's 1983 Stock Option and Stock Grant Plan expired by its terms in
February 1993 and, while incentive stock options granted under that plan remain
outstanding, no further options may be granted under the plan. The terms of the
1983 plan are essentially similar to the terms of the 1993 plan described above.
Payment upon exercise of stock options under the 1993 and 1983 plans may be by
cash and/or by the Company's common stock in an amount equivalent to the market
value of the stock at the date exercised.
A summary of options under the Company's stock option plans is as follows:
<TABLE>
<CAPTION>
1993 Plan 1983 Plan
--------------------------------------- ------------------------------------
1999 1998 1997 1999 1998 1997
--------- --------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Outstanding,
beginning of year 1,913,027 2,080,729 994,723 170,933 252,335 355,606
Options granted ............ 139,200 143,920 1,160,456 -- -- --
Options exercised
(at an average price
per share of $14.88,
$14.88, $15.27,
$14.17, $14.17,
and $14.31,
respectively) ...... -- (120,000) (38,900) -- (80,102) (100,671)
Options expired ............ -- -- -- -- -- --
Options terminated ......... (103,550) (191,622) (35,550) (9,300) (1,300) (2,600)
--------- --------- ------- ------- ------- -------
Outstanding,
end of year ........ 1,948,677 1,913,027 2,080,729 161,633 170,933 252,335
========= ========= ========= ======= ======= =======
Average option price
per share .......... $17.27 $18.85 $17.04 $14.66 $15.11 $14.53
Outstanding
exercisable options,
end of year ........ 792,023 691,785 546,314 161,633 170,933 252,335
Shares reserved for
future stock options
and grants ......... 1,056,701 1,195,901 1,339,821 -- -- --
</TABLE>
F-19
<PAGE>
HUNT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(In thousands except share and per share amounts)
12. Stock-Based Compensation Plans (Continued):
The following table summarizes information about options outstanding at November
28, 1999:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
- ------------------------------------------------ -------------------------------------
Weighted
Average Weighted
Number Remaining Average Number Average
Range of Outstanding Contractual Exercise Exercisable Exercise
Exercise Prices at 11/28/99 Life Price at 11/28/99 Price
- --------------- ---------- ----------- -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
$ 8.41 - $11.63 163,783 7.9 years $10.20 31,583 $11.63
$13.06 - $16.88 827,073 6.1 years $15.54 823,073 $15.54
$18.63 - $24.84 1,119,454 7.4 years $19.31 99,000 $18.98
--------- --------- ------ ------ ------
$ 8.41 - $24.84 2,110,310 6.9 years $17.12 953,656 $15.77
</TABLE>
The Company adopted the 1994 Non-Employee Directors' Stock Option Plan
authorizing the granting of up to an aggregate of 90,000 common shares to
non-officer directors of the Company. Options to purchase an aggregate of 45,000
common shares at $16.875 per share were automatically granted in January 1994 in
equal amounts to each of the non-officer directors of the Company. Options
granted under this plan extend for a term of ten years and become exercisable at
the rate of 20% per year over five years commencing one year after the date of
grant. During fiscal 1999 and 1998, 5,000 common shares were separately granted
to two newly elected non-officer directors. As of November 28, 1999, only 3,000
options had been exercised under this plan.
Other Grants:
The Company has a long-term incentive compensation agreement with Donald L.
Thompson, Chairman of the Board and Chief Executive Officer, who joined the
Company in fiscal 1996. Among the provisions of this agreement is a so-called
"Phantom Stock Plan." Under this plan, Mr. Thompson earns the right to the cash
value of a total of 175,000 shares of the Company's common stock in the
following installments, provided that he is employed by the Company on each of
the dates shown: 25% on December 1, 1996, 25% on December 1, 1997, 25% on
December 1, 1998 and 25% on December 1, 1999. The charges (credits) to
administrative and general expenses with respect to this plan were $(531),
$(802) and $1,431 in fiscal years 1999, 1998 and 1997, respectively.
During 1997, the Company adopted the Non-Employee Director Compensation Plan for
non-officer directors of the Company. The plan includes a compensation package
for the Company's non-officer directors that provides for basic directors' fees
to be paid in a combination of cash and the Company's common shares. In
addition, the plan provides for annual grants of nonqualified stock options to
purchase 2,000 Company common shares at the fair market value of such common
shares on the date of the grant. These options vest after two years (subject to
possible acceleration) and extend for 10 years (subject to possible earlier
termination). During fiscal 1999 and fiscal 1998, 2,000 common shares, were
issued each year to each of the non-officer directors pursuant to this plan
(20,000 shares and 18,000 shares in fiscal 1999 and 1998, respectively). As of
November 28, 1999, no options had been exercised.
F-20
<PAGE>
HUNT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(In thousands except share and per share amounts)
12. Stock-Based Compensation Plans (Continued):
The Company has adopted the disclosure requirements of SFAS No. 123, "Accounting
for Stock-Based Compensation," and as permitted under SFAS No. 123, applies APB
No. 25 and related interpretations in accounting for its stock option plans, and
accordingly does not record compensation costs. If the Company had elected,
beginning in fiscal 1997, to recognize compensation cost based on fair value of
the options granted at grant date as prescribed by SFAS No. 123, earnings (loss)
and earnings (loss) per share would have approximated the pro forma amounts
shown below:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Earnings (loss):
As reported:
Income (loss) from continuing operations $ 6,427 $11,623 $ (6,062)
Net income ............................. $ 6,427 $12,107 $14,052
Pro forma:
Income (loss) from continuing operations $ 5,222 $10,461 $ (7,397)
Net income ............................. $ 5,222 $10,945 $12,717
Basic earnings (loss) per share:
As reported:
Income (loss) from continuing operations $ .61 $1.04 $ (.55)
Net income ............................. $ .61 $1.08 $1.27
Pro forma:
Income (loss) from continuing operations $ .50 $.93 $ (.65)
Net income ............................. $ .50 $.98 $1.10
Diluted earnings (loss) per share:
As reported:
Income (loss) from continuing operations $ .61 $1.01 $ (.55)
Net income ............................. $ .61 $1.05 $1.27
Pro forma:
Income (loss) from continuing operations $ .50 $.91 $ (.65)
Net income ............................. $ .50 $.95 $1.10
</TABLE>
The fair value of each option is estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted average
assumptions:
1999 1998 1997
---- ---- ----
Expected dividend yield 4.21% 2.40% 2.27%
Risk-free interest rate 5.45% 5.31% 6.50%
Expected volatility .... 29.99% 26.10% 24.50%
Expected life (in years) 4.4 4.1 4.3
The weighted average estimated fair values of employee stock options granted
during fiscal 1999, 1998 and 1997 were $2.18, $5.46 and $4.56 per share,
respectively. The pro forma disclosures are not likely to be representative of
the effects on earnings and earnings per common share in future years, because
they do not take into consideration pro forma compensation expense related to
grants made prior to the Company's fiscal year 1997.
F-21
<PAGE>
HUNT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(In thousands except share and per share amounts)
13. Shareholders' Rights Plan:
In 1990, the Company adopted a Shareholders' Rights Agreement and declared a
dividend of one right (a "Right") for each outstanding share of the Company's
common shares held of record as of the close of business on August 22, 1990. The
Rights initially are deemed to be attached to the common shares and detach and
become exercisable only if (with certain exceptions and limitations) a person or
group attempts to obtain beneficial ownership of 15% or more of the Company's
common shares or is determined to be an "adverse person" by the Board of
Directors of the Company. Each Right, if and when it becomes exercisable,
initially will entitle holders of the Rights to purchase one one-thousandth of a
share of Junior Participating Preferred Shares (Series A, of which 50,000 shares
currently are authorized for issuance) for $60, subject to adjustment. The
Rights will convert into the right to purchase common shares or other securities
or property of the Company or an acquiring company in certain other potential or
actual takeover situations. The Rights are redeemable by the Company at $.01 per
Right in certain circumstances and expire, unless earlier exercised or redeemed,
on December 31, 2000.
14. Commitments and Contingencies:
Leases:
The capitalized lease obligations (see Note 9) represent amounts payable under
leases that are, in substance, installment purchases. Property, plant and
equipment includes the following assets under capital leases:
1999 1998
---- ----
Land ......................... $ 152 $ 152
Buildings .................... 1,356 1,356
Machinery and equipment..... 466 814
Accumulated depreciation...... (1,812) (2,150)
------ ------
$ 162 $ 172
======= =======
The Company has the option to purchase the above assets at any time during the
terms of the leases for amounts sufficient to redeem and retire the underlying
lessor debt obligations. The capitalized lease obligations have various
principal payments that mature no later than June 15, 2004.
The minimum rental commitments under all noncancellable leases as of November
28, 1999 are as follows:
Operating
Fiscal Period Leases
2000 $ 3,232
2001 2,688
2002 2,447
2003 1,496
2004 1,348
Thereafter 5,204
-------
Minimum lease payments $16,415
=======
Rent expense, including related real estate taxes charged to operations,
amounted to $4,573, $4,818, and $5,254 for fiscal years 1999, 1998, and 1997,
respectively.
F-22
<PAGE>
HUNT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(In thousands except share and per share amounts)
14. Commitments and Contingencies (Continued):
Contingencies:
The Company has employment/severance (change in control) agreements with its
officers under which severance payments and benefits would become payable in the
event of specified terminations of employment following a change in control (as
defined) of the Company. The Company also has a termination policy applicable to
other employees which provides severance payments and benefits in the event of
certain terminations of employment. In the event of a change in control of the
Company and subsequent termination of all employees, the maximum contingent
severance liability would have been approximately $17.9 million at November 28,
1999.
Prior to the acquisition of the Graphic Arts Group by the Company from Bunzl plc
in May 1990, it was discovered that some hazardous waste materials had been
stored on the premises of one of the Graphic Arts Group companies, Seal, located
in Naugatuck, Connecticut. In compliance with applicable state law, this
environmental condition was reported to the Connecticut Department of
Environmental Protection by Bunzl. Seal, which is now a subsidiary of the
Company, may be partially responsible under law for the environmental conditions
on the premises and any liabilities resulting therefrom. However, in connection
with the Company's acquisition of Seal, Bunzl agreed to take responsibility for
correcting such environmental conditions and to indemnify Seal and the Company
for resulting liabilities, subject to certain limitations. Management believes
that this contingency will not have a material effect on the Company's results
of operations or financial condition.
The Company is also involved on a continuing basis in monitoring its compliance
with environmental laws and in making capital and operating improvements
necessary to comply with existing and anticipated environmental requirements.
Despite its efforts, the Company has been cited for occasional violations or
alleged violations of environmental laws or permits and on several occasions has
been named as a potentially responsible party for the remediation of sites.
Expenses incurred by the Company to date relating to violations of and
compliance with environmental laws and permits and site remediation have not
been material. While it is impossible to predict with certainty, management
currently does not foresee such expense in the future as having a material
effect on the Company's business, results of operations or financial condition.
The Company has been sued for patent infringement with respect to one of its
minor products. After a jury trial, the U.S. District in the Western District of
Wisconsin entered judgment against the Company in this matter and awarded
damages to the plaintiffs in the amount of $3.3 million, plus interest and
costs. The verdict has been appealed, and a decision of the Court of Appeals is
expected within the relatively near future. The Company and its patent legal
counsel believe that the verdict against the Company in the trial court was
incorrect and that it will be reversed on appeal. Accordingly, the Company has
not recorded any liability in its financial statements associated with this
judgment. However, there can be no assurance that the Company will prevail in
this matter. In the event of an unfavorable final judgment against the Company,
management believes that it will not have a material impact on the Company's
financial position, but it could have a material effect on quarterly or annual
results of operations.
There are other contingent liabilities with respect to product warranties, legal
proceedings and other matters occurring in the normal course of business. In the
opinion of management, all such matters are adequately covered by insurance or
by accruals, and if not so covered, are without merit or are of such kind, or
involve such amounts, as would not have significant effect on the financial
condition or results of operations of the Company, if disposed of unfavorably.
15. Research and Development:
Research and development expenses were approximately $4,025, $3,260, and $3,284
in fiscal years 1999, 1998 and 1997, respectively.
F-23
<PAGE>
HUNT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(In thousands except share and per share amounts)
16. Cash Flow Information:
Cash payments for interest and income taxes (net of refunds) were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Interest paid (net of amounts capitalized of $104, $376,
and $139 in fiscal 1999, 1998, and 1997, respectively) $4,661 $4,644 $5,000
Income taxes ................................................. 2,934 16,249 3,386
</TABLE>
Excluded from the accompanying Consolidated Statements of Cash Flows are the
effects of certain non-cash investing and financing activities as follows:
1999 1998 1997
---- ---- ----
Fair value of assets acquired ............ $ 441 -- $11,667
Liabilities assumed or created ........... 361 -- 11,719
Value of common shares received as payment
upon exercise of stock options ... -- $ 414 444
17. Quarterly Financial Data (unaudited):
Quarterly financial data for each of the quarters during fiscal years 1999 and
1998 are as follows:
<TABLE>
<CAPTION>
1999
---------------------------------------
First Second Third Fourth
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net sales .................................. $60,369 $61,185 $61,143 $62,111
Gross profit ............................... 22,782 23,687 22,945 23,533
Income (loss) from continuing operations.... 2,393 2,250 2,266 (482)
------- ------- ------- -------
Net income (loss) .......................... 2,393 2,250 2,266 (482)
======= ======= ======= =======
Basic earnings per common share:
Income (loss) from continuing operations.... $ .22 $ .22 $ .22 $ (.05)
------- ------- ------- -------
Net income (loss) .......................... $ .22 $ .22 $ .22 $ (.05)
======= ======= ======= =======
Diluted earnings per common share:
Income (loss) from continuing operations.... $ .22 $ .22 $ .22 $ (.05)
------- ------- ------- -------
Net income (loss) .......................... $ .22 $ .22 $ .22 $ (.05)
======= ======= ======= ========
</TABLE>
F-24
<PAGE>
HUNT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(In thousands except share and per share amounts)
17. Quarterly Financial Data (unaudited) (Continued):
<TABLE>
<CAPTION>
1998
---------------------------------------
First Second Third Fourth
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net sales ............................. $61,265 $62,381 $61,236 $61,681
Gross profit .......................... 23,683 24,617 23,242 23,237
Income from continuing operations ..... 3,313 4,840 2,818 652
Gain on sale of discontinued operations -- -- 484 --
------- ------- ------- -------
Net income ............................ 3,313 4,840 3,302 652
======= ======= ======= ========
Basic earnings per common share:
Income from continuing operations ..... $ .30 $ .43 $ .25 $ .06
Gain on sale of discontinued operations -- -- .04 --
------- ------- ------- -------
Net income ............................ $ .30 $ .43 $ .29 $ .06
======= ======= ======= ========
Diluted earnings per common share:
Income from continuing operations ..... $ .28 $ .41 $ .24 $ .06
Gain on sale of discontinued operations -- -- .04 --
------- ------- ------- -------
Net income ............................ $ .28 $ .41 $ .28 $ .06
======= ======= ======= ========
</TABLE>
The sum of the quarterly income (loss) per share data may not be the same as
income (loss) per share for the year, due to changes in the number of average
outstanding shares.
The fourth quarter of fiscal 1999 net loss includes pre-tax charges of $6.2
million ($.39 per share) relating to the implementation of the 1999
restructuring plan and pre-tax credits of $.6 million ($.04 per share) relating
to the net reduction to some of its reserves established in connection with the
implementation of the 1997 strategic plan during fiscal 1997. Also in the fourth
quarter of fiscal 1999, the Company reduced by $.5 million pre-tax ($.03 per
share) some of its reserves established in connection with its 1997 business
divestitures. (See Note 3.) In addition, the Company realized tax benefits of
$.5 million ($.05 per share) as a result of favorable resolutions of certain
prior years' tax exposures and liquidations of LIFO inventories which reduced
expenses by $335 pre-tax ($.02 per share).
The second quarter of fiscal 1998 net income includes pre-tax credits of $2.0
million ($.11 per share) and the fourth quarter of fiscal 1998 net income
includes pre-tax credits of $.7 million ($.04 per share) relating to the net
reduction to some of its reserves established in connection with the
implementation of the strategic plan during fiscal 1997. (See Note 3.) Also in
fiscal 1998, the Company reduced by $.7 million pre-tax ($.04 per share) some of
its reserves established in connection with its 1997 business divestitures of
which $.4 million pre-tax ($.02 per share) is included in the second quarter,
and $.3 million pre-tax ($.01 per share) is included in the third quarter. The
Company also reduced by $.7 million pre-tax ($.04 per share) some of its
reserves established in connection with its 1997 disposal of a discontinued
business. (See Note 3.)
The fourth quarter of fiscal 1998 net income includes higher inventory
obsolescence expense versus fiscal 1997 of approximately $.4 million pre-tax
($.03 per share). In addition, liquidations of LIFO inventories during fiscal
1998 reduced expenses in the fourth quarter by $167 pre-tax ($.01 per share).
The fourth quarter of fiscal 1998 net income also includes higher marketing and
selling expenses (principally due to timing of promotional and packaging
development related costs) and higher administrative and general expenses
(related to consulting fees) than the other quarters of fiscal 1998.
F-25
<PAGE>
HUNT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(In thousands except share and per share amounts)
18. Industry Segment Information:
During fiscal 1999, the Company adopted SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information." SFAS No. 131 requires the
presentation of descriptive information about reportable segments that is
consistent with that made available to management to assess performance. The
Company operates in two reportable business segments, each of which is a
strategic business that is managed separately because each business develops,
manufactures and sells distinct products. The business segments consist of
consumer products (including office and art supplies) and graphics products
(including supplies and equipment). The Company's management evaluates
performance based on several factors. However, the primary measurement focus is
"operating income" excluding restructuring, net gain on divestitures and any
other unusual items. The accounting policies of the segments are the same as
those described in Note 1. Previously reported segment and geographic
information has been restated to conform with SFAS No. 131 requirements.
The following table presents information about the Company's reportable
segments. Intersegment sales are recorded on a basis intended to reflect as
nearly as possible the market value of the products. Operating income
includes all revenues and expenses of the reportable segment except for
restructuring, net gain on divestitures, interest expense, interest income,
other expenses, other income, and income taxes, which are excluded from the
measure of segment profitability reviewed by the Company's management.
Identifiable assets are those assets used in the operations of each business
segment. Corporate assets include cash and miscellaneous other assets not
identifiable with any particular segment. Capital additions include amounts
related to acquisitions.
<TABLE>
<CAPTION>
Consumer Graphics
Fiscal Year 1999 Products Products Corporate Intersegment Consolidated
- ---------------- -------- -------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Intersegment sales .............. $ 839 $ 75 $ -- $ (914) $ --
========= ========= ========= ========= =========
Net external sales .............. $ 108,237 $ 136,571 $ 244,808
========= ========= =========
Operating income ................ $ 18,156 $ 7,320 $ (8,454) $ 17,022
========= ========= =========
Restructuring and
net gain on divestitures* $ (204) $ (5,593) $ 732 (5,065)
========= ========= ========= ---------
Income from operations .......... $ 11,957
Interest expense ................ (4,471)
Interest income ................. 1,471
Other income, net ............... 126
---------
Income from continuing
operations before
income taxes ............ $ 9,083
=========
Identifiable assets ............. $ 33,644 $ 93,241 $ 52,744 $ 179,629
========= ========= ========= =========
Capital additions** ............. $ 2,028 $ 2,767 $ 145 $ 4,940
========= ========= ========= =========
Depreciation and
amortization ............ $ 2,600 $ 5,627 $ 313 $ 8,540
========= ========= ========= =========
</TABLE>
* See Note 3
** Includes $.1 million of capital additions relating to business acquisition.
F-26
<PAGE>
HUNT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(In thousands except share and per share amounts)
18. Industry Segment Information (Continued):
<TABLE>
<CAPTION>
Consumer Graphics
Fiscal Year 1998 Products Products Corporate Intersegment Consolidated
- ---------------- -------- -------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Intersegment sales .............. $ 395 $ -- $ -- $ (395) $ --
========= ========= ========= ========= =========
Net external sales .............. $ 107,893 $ 138,670 $ 246,563
========= ========= =========
Operating income ................ $ 16,640 $ 6,517 $ (7,438) $ 15,719
========= ========= =========
Restructuring and
net gain on divestitures* $ 2,944 $ (334) $ 925 3,535
========= ========= ========= ---------
Income from operations .......... $ 19,254
Interest expense ................ (4,344)
Interest income.................. 2,626
Other income, net ............... 176
---------
Income from continuing
operations before
income taxes ............ $ 17,712
=========
Identifiable assets ............. $ 33,555 $ 98,297 $ 55,005 $ 186,857
========= ========= ========= =========
Capital additions ............... $ 4,357 $ 9,211 $ 285 $ 13,853
========= ========= ========= =========
Depreciation and
amortization............. $ 2,661 $ 5,241 $ 365 $ 8,267
========= ========= ========= =========
</TABLE>
*See Note 3.
<TABLE>
<CAPTION>
Consumer Graphics
Fiscal Year 1997 Products Products Corporate Intersegment Consolidated
- ---------------- -------- -------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Intersegment sales............... $ 158 $ -- $ -- $ (158) $ --
========= ========= ========= ========= =========
Net external sales .............. $ 122,311 $ 137,229 $ 259,540
========= ========= =========
Operating income ................ $ 19,630 $ 11,211 $ (11,291) $ 19,550
========= ========= =========
Restructuring and
net gain on divestitures* $ (18,160) $ (8,453) $ 3,506 (23,107)
========= ========= ========= ---------
Income from operations........... $ (3,557)
Interest expense................. (4,920)
Interest income ................. 538
Other expense, net .............. (852)
---------
Loss from continuing operations
before income taxes...... $ (8,791)
=========
Identifiable assets.............. $ 36,764 $ 90,563 $ 82,195 $ 209,522
========= ========= ========= =========
Capital additions**.............. $ 6,022 $ 9,308 $ 97 $ 15,427
========= ========= ========= =========
Depreciation and
amortization ............ $ 4,295 $ 3,166 $ 379 $7,840
========= ========= ========= =========
</TABLE>
*See Note 3.
**Includes $3.6 million of capital additions relating to business acquisition.
F-27
<PAGE>
HUNT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(In thousands except share and per share amounts)
18. Industry Segment Information (Continued):
The Company has significant sales and long-lived assets in the following
geographic areas. Sales are based on the location in which the sale originated.
Long-lived assets include property, plant and equipment, goodwill, trademarks,
and other intangibles, net of related depreciation and amortization.
<TABLE>
<CAPTION>
Net External Sales Long-Lived Assets
------------------------- ----------------------------
1999 1998 1997 1999 1998 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
North America ............ $205,663 $205,213 $214,597 $101,072 $ 81,750 $ 77,561
Europe and other ......... 39,145 41,350 44,943 44,378 50,102 49,766
Corporate ................ -- -- -- 34,179 55,005 82,195
-------- -------- -------- -------- -------- --------
Total .................... $244,808 $246,563 $259,540 $179,629 $186,857 $209,522
======== ======== ======== ======== ======== ========
</TABLE>
19. Financial Instruments:
Off-Balance Sheet Risk:
Letters of credit are issued by the Company during the ordinary course of
business through major domestic banks as required by certain vendor contracts.
As of November 28, 1999 and November 29, 1998, the Company had outstanding
letters of credit for $1 million and $1.1 million, respectively.
Financial instruments which potentially subject the Company to concentrations of
credit risk consist principally of temporary cash investments and trade
receivables. The Company places its temporary cash investments ($32.8 million
and $37.3 million at November 28, 1999 and November 29, 1998, respectively) with
quality financial institutions and, by policy, limits the amount of credit
exposure to any one financial institution.
The Company provides credit, in the normal course of business, to a large number
of distributors and retailers and generally does not require collateral or other
security to support customer receivables. Management believes that
concentrations of credit risk with respect to trade receivables are limited due
to the large number of customers comprising the Company's customer base and
their dispersion across many different industries and geographies with no single
customer accounting for more than 10% of net sales. However, the Company's ten
largest customers accounted for approximately 39% and 27% of accounts receivable
at November 28, 1999 and November 29, 1998, respectively. The Company performs
on-going credit evaluations of its customers, maintains allowances for potential
credit losses, and carries credit insurance coverage for most of its large
customer accounts.
F-28
<PAGE>
HUNT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(In thousands except share and per share amounts)
19. Financial Instruments (Continued):
Fair Value:
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments:
Cash and cash equivalents -- The carrying amount approximates fair value because
of the short maturity of these instruments.
Debt (excluding capital lease obligations) -- The fair value of the Company's
debt is estimated based on the current rates offered to the Company for debt of
the same remaining maturities.
The estimated fair values of the Company's financial instruments November 28,
1999 and November 29, 1998 are as follows:
<TABLE>
<CAPTION>
1999 1998
------------------- ------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
------ ----- ------ -----
<S> <C> <C> <C> <C>
Cash and cash equivalents ............ $36,897 $36,897 $40,724 $40,724
Debt (excluding capital
lease obligations) ........... $54,659 $56,984 $56,196 $59,677
</TABLE>
F-29
<PAGE>
Hunt Corporation and Subsidiaries
Schedule II. Valuation and Qualifying Accounts
for the fiscal years 1999, 1998 and 1997
(In thousands)
<TABLE>
<CAPTION>
Column C
Column A Column B Additions Column D Column E
- -------- -------- ---------------------- -------- --------
Balance at Charged to Charged Balance
Beginning Costs and to Other at End
Classification of Period Expenses Accounts Deductions of Period
- -------------- --------- -------- -------- ---------- ---------
1999:
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts ........... $1,721 $ 161 $14(D) $ 929(A) $ 967
====== ====== ====== ========= ======
Reserve for customer returns and deductions $1,060 $ 176 $-- $ 135(B) $1,101
====== ====== ====== ========= ======
Reserve for inventory obsolescence ........ $2,432 $ 828 $-- $ 998(C) $2,262
====== ====== ====== ========= ======
1998:
Allowance for doubtful accounts ........... $1,842 $ 77 $-- $ 198(A) $1,721
====== ====== ====== ========= ======
Reserve for customer returns and deductions $1,017 $ 92 $-- $ 49(B) $1,060
====== ====== ====== ========= ======
Reserve for inventory obsolescence ........ $1,189 $1,526 $-- $ 283(C) $2,432
====== ====== ====== ========= ======
1997:
Allowance for doubtful accounts ........... $1,809 $ 786 $185(D) $ 938(A) $1,842
====== ====== ====== ========= ======
Reserve for customer returns and deductions $1,173 $ -- $126(D) $ 282(B) $1,017
====== ====== ====== ========= ======
Reserve for inventory obsolescence ........ $2,229 $1,040 $227(D) $2,307(C) $1,189
====== ====== ====== ========= ======
</TABLE>
(A) Doubtful accounts written off, net of collection expenses.
(B) Primarily credits issued to customers.
(C) Largely the result of programs to dispose of fully reserved obsolete
inventory. Amount is net of recoveries.
(D) Primarily due to business acquisitions.
F-30
<PAGE>
EXHIBIT INDEX
(of Exhibits filed herewith)
(4)(c)(1) Rights Agreement
(4)(c)(2) Assignment and Assumption Agreement
(10)(a) Lease Agreement
(10)(d) 1994 Non-Employee Directors' Stock Option Plan
(10)(f)(1) Form of Change in Control Agreement
(10)(f)(2) List of Executive Officers Who Are Parties to
Change of Control Agreements
(10)(g)(2) Amendment No. 1 to Supplemental Executive Benefits Plan
(10)(h)(2) Description of Amendment to Employment Agreement
(23) Consent of PricewaterhouseCoopers
(27) Financial Data Schedule
<PAGE>
RIGHTS AGREEMENT
dated as of August 8, 1990
between
HUNT MANUFACTURING CO.
and
MELLON BANK (EAST), N.A.
as
Rights Agent
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Section 1. Certain Definitions...................................................................1
Section 2. Appointment of Rights Agent...........................................................6
Section 3. Issue of Rights Certificates..........................................................6
Section 4. Form of Rights Certificates...........................................................8
Section 5. Countersignature and Registration.....................................................9
Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated,
Destroyed, Lost or Stolen Rights Certificates........................................10
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights........................11
Section 8. Cancellation and Destruction of Rights Certificates..................................13
Section 9. Reservation and Availability of Capital Stock........................................13
Section 10. Preferred Stock Record Date..........................................................14
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights..........15
Section 12. Certificate of Adjusted Purchase Price or Number of Shares...........................24
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.................24
Section 14. Fractional Rights and Fractional Shares..............................................26
Section 15. Rights of Action.....................................................................28
Section 16. Agreement of Rights Holders..........................................................28
Section 17. Rights Certificate Holder Not Deemed a Stockholder...................................29
Section 18. Concerning the Rights Agent..........................................................29
Section 19. Merger or Consolidation or Change of Name of Rights Agent............................30
Section 20. Duties of Rights Agent...............................................................30
Section 21. Change of Rights Agent...............................................................32
Section 22. Issuance of New Rights Certificates..................................................33
Section 23. Redemption and Termination...........................................................33
Section 24. Notice of Certain Events.............................................................36
Section 26. Supplements and Amendments...........................................................37
Section 27. Successors...........................................................................38
Section 28. Determinations and Actions by the Board of Directors, Etc............................38
Section 29. Benefits of this Agreement...........................................................39
Section 30. Severability.........................................................................39
Section 31. Governing Law........................................................................39
Section 32. Counterparts.........................................................................39
Section 33. Table of Contents; Descriptive Headings..............................................40
</TABLE>
Exhibit A -- Designation of Powers, Preferences, Rights and
Qualifications of Preferred Stock
Exhibit B -- Form of Summary of Rights and Rights Agreement
Exhibit C -- Form of Rights Certificate
<PAGE>
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of August 8, 1990 (the
"Agreement"), between HUNT MANUFACTURING CO., a Pennsylvania corporation (the
"Company"), and MELLON BANK (EAST), N.A., a national banking corporation
("Rights Agent").
W I T N E S S E T H
WHEREAS, on August 8, 1990 (the "Rights Dividend Declaration
Date"), the Board of Directors of the Company authorized and declared a dividend
distribution of one Right for each Common Share, $.10 par value, (the "Common
Stock") of the Company outstanding at the close of business on August 22, 1990
(the "Record Date"), and has authorized the issuance of one Right (as such
number may hereinafter be adjusted pursuant to the provisions of Section 11(p)
hereof) for each share of Common Stock of the Company issued between the Record
Date (whether originally issued or delivered from the Company's treasury) and
the Distribution Date, each Right initially representing the right to purchase,
upon the terms and subject to the conditions hereinafter set forth, one
one-thousandth of a share of Series A Junior Participating Preferred Stock of
the Company having the rights, powers and preferences set forth in the
Designation of Powers, Preferences, Rights and Qualifications attached hereto as
Exhibit A (the "Rights");
NOW THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, and intending to be legally bound, the parties
hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which, together
with all Affiliates and Associates of such Person, shall be the Beneficial Owner
of 15% or more of the shares of Common Stock then outstanding; provided that any
of the following Persons who without reference to this proviso would otherwise
be an Acquiring Person shall not be an Acquiring Person for purposes of this
definition:
(i) the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the
Company, and any Person or entity organized, appointed or
established by the Company for or pursuant to the terms of any
such plan;
1
<PAGE>
(ii) any Person who or which is an individual, a trust (other than
a business trust) or an estate (including any trustee,
executor or administrator of such a trust or estate in its or
his capacity as such) who or which, as of June 20, 1990, was
the beneficial owner of shares of Common Stock, and any
individual, trust or estate (including any trustee, executor
or administrator thereof) who or which thereafter acquired or
acquires beneficial ownership of shares of Common Stock
directly or indirectly from such individual, trust or estate
by gift, devise, bequest or pursuant to the laws of descent
and distribution or, in the case of a trustee, executor or
administrator, by succession, or pursuant to any employee
benefit plans of the Company or any Subsidiary of the Company;
provided, however, that this clause (ii) shall not exclude
from the definition of "Acquiring Person" any such individual,
trust or estate or successor who or which, together with all
Affiliates and Associates, shall become after June 20, 1990
the beneficial owner of 5% or more of the then outstanding
Common Stock, excluding from the calculation of that
percentage any shares of Common Stock beneficially owned by
such Person or Persons on June 20, 1990 and any shares
subsequently acquired by such Person or Persons by gift,
devise, bequest or pursuant to the laws of the descent and
distribution or, in the case of a trustee, executor or
administrator, by succession, or pursuant to any employee
benefit plans of the Company or any Subsidiary of the Company;
or
(iii) any Person who or which shall have executed a written
agreement with the Company (approved by at least a majority of
the members of the Company's Board of Directors who are not
representatives, nominees, Affiliates or Associates of such
Person) prior to the date on which such Person (together with
its Affiliates and Associates) became the Beneficial Owner of
15% or more of the shares of Common Stock then outstanding and
which agreement imposes one or more thresholds on the amount
of such Person's Beneficial Ownership of shares of Common
Stock, if, and so long as the thresholds continue to be
binding on such Person and such Person is in substantial
compliance (as determined by at least a majority of the
members of the Company's Board of Directors who are not
representatives, nominees, Affiliates or Associates of such
Person, in their discretion) with the terms of such written
agreement or of any amendment thereto, which amendment is
approved by at least a majority of the members of the
Company's Board of Directors who are not representatives,
nominees, Affiliates or Associates of such Person; provided,
however, that no amendment of any such agreement shall cure
any prior breach of such agreement or any amendment thereto.
(b) "Act" shall mean the Securities Act of 1933.
(c) "Adverse Person" shall have the meaning set forth in Section
11(a)(ii)(B) hereof.
(d) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act.
(e) A person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire
(whether such right is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or upon the exercise
of conversion rights, exchange right, rights, warrants or
options, or otherwise; provided, however, that a Person shall
not be deemed the "Beneficial Owner" of, or to "beneficially
own," (A) securities tendered pursuant to a tender or exchange
offer made by such Person or any of such Person's Affiliates
or Associates until such tendered securities are accepted for
purchase or exchange, or (B) securities issuable upon exercise
of Rights at and time prior to the occurrence of a Triggering
Event, or (C) securities issuable upon exercise of Rights from
and after the occurrence of a Triggering Event which Rights
were acquired by such Person or any of such Person's
Affiliates or Associates prior to the Distribution Date or
pursuant to Section 3(a) or Section 22 hereof or pursuant to
Section 11(i) hereof in connection with an adjustment with
respect to any Original Rights;
2
<PAGE>
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or
dispose of or has "beneficial ownership" of (as determined
pursuant to Rule 13d-3 of the General Rules and Regulations
under the Exchange Act), including pursuant to any agreement,
arrangement or understanding (whether or not in writing),
provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own," any security
under this subparagraph (ii) as a result of an agreement,
arrangement or understanding to vote such security if such
agreement, arrangement or understanding: (A) arises solely
from a revocable proxy given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with,
the applicable provisions of the General Rules and Regulations
under the Exchange Act, and (B) is not also then reportable by
such Person on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with
which such Person (or any of such Person's Affiliates or
Associates) has any agreement, arrangement or understanding
(whether or not in writing), for the purpose of acquiring,
holding, voting (except pursuant to a revocable proxy as
described in the proviso to subparagraph (ii) of this
paragraph (e)) or disposing of any voting securities of the
Company; provided, however, that nothing in this subsection
(e) shall cause a person engaged in business as an underwriter
of securities to be the "Beneficial Owner" of, or to
"beneficially own," any securities acquired through such
person's participation in good faith in a firm commitment
underwriting until the expiration of forty days after the date
of such acquisition.
(f) "Business Day" shall mean any day other than a Saturday, Sunday or
a day on which banking institutions in the Commonwealth of Pennsylvania or the
State of New York are authorized or obligated by law or executive order to
close.
(g) "Close of Business" on any given date shall mean 5:00 P.M.,
Philadelphia time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., Philadelphia time, on the next succeeding
Business Day.
(h) "Common Stock" shall mean the Common Shares, $.10 par value, of the
Company, except that "Common Stock" when used with reference to any Person other
than the Company shall mean the capital stock of such Person with the greatest
voting power, or the equity securities or other equity interest having power to
control or direct the management, of such Person.
(i) "common stock equivalents" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(j) "Continuing Director" shall mean (i) any member of the Board of
Directors of the Company, while such Person is a member of the Board, who is not
an Acquiring Person, an Adverse Person or an Affiliate or Associate of an
Acquiring Person or an Adverse Person, or a representative of an Acquiring
Person, an Adverse Person or of any such Affiliate or Associate, and was a
member of the Board prior to the date of this Agreement, or (ii) any Person who
subsequently becomes a member of the Board, while such Person is a member of the
Board, who is not an Acquiring Person, an Adverse Person or an Affiliate or
Associate of an Acquiring Person or an Adverse Person, or a representative of an
Acquiring Person, an Adverse Person or of any such Affiliate or Associate, if
such Person's nomination for election or election to the Board is recommended or
approved by a majority of the Continuing Directors.
(k) "current market price" shall have the meaning set forth in Section
11(d) hereof.
(l) "Current Value" shall have the meaning set forth in Section
11(a)(iii) hereof.
(m) "Distribution Date" shall have the meaning set forth in Section
3(a) hereof.
(n) "equivalent preferred stock" shall have the meaning set forth in
Section 11(b) hereof.
(o) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended and in effect on the date of this Agreement.
(p) "Exchange Share" and "Exchange Value" shall have the meanings set
forth in Section 23(d) hereof.
3
<PAGE>
(q) "Expiration Date" shall have the meaning set forth in Section 7(a)
hereof.
(r) "Final Expiration Date" shall mean the close of business on
December 31, 2000.
(s) "NASDAQ" shall have the meaning set forth in Section 4(a) hereof.
(t) "Ownership Limitation" shall have the meaning set forth in Section
11(a)(ii)(B) hereof.
(u) "Person" shall mean any individual, firm, corporation, partnership
or other entity.
(v) "Preferred Stock" shall mean shares of Series A Junior
Participating Preferred Shares, $.10 par value, of the Company, and, to the
extent that there are not a sufficient number of shares of Series A Junior
Participating Preferred Shares authorized to permit the full exercise of the
Rights, any other series of Preferred Shares, par value $.10, of the Company
designated for such purpose containing terms substantially similar to the terms
of the Series A Junior Participating Preferred Shares.
(w) "Principal Party" shall have the meaning set forth in Section 13(b)
hereof.
(x) "Purchase Price" shall have the meaning set forth in Section 4(a)
hereof.
(y) "Record Date" shall mean August 8, 1990.
(z) "Redemption Price" shall have the meaning set forth in Section
23(a) hereof.
(aa) "Rights" shall have the meaning set forth in the WHEREAS clause at
the beginning of this Agreement.
(bb) "Rights Certificates" shall have the meaning set forth in Section
4(a) hereof.
(cc) "Rights Dividend Declaration Date" shall mean August 8, 1990.
(dd) "Section 11(a)(ii) Event" shall mean any event described in
Section 11(a)(ii)(A) or (B).
(ee) "Section (11)(a)(ii) Trigger Date" shall have the meaning set
forth in Section 11(a)(iii) hereof.
(ff) "Section 13 Event" shall mean any event described in clauses (x),
(y) or (z) of Section 13(a) hereof.
(gg) "Spread" shall have the meaning set forth in Section 11(a)(iii)
hereof.
(hh) "Stock Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) under the Exchange Act) by
the Company or an Acquiring Person that an Acquiring Person has become such.
(ii) "Subsidiary" shall mean, with reference to any Person, any
corporation of which an amount of voting securities sufficient to elect at least
a majority of the directors of such corporation is beneficially owned, directly
or indirectly, by such Person, or otherwise controlled by such Person.
(jj) "Substitution Period" shall have the meaning set forth in Section
11(a)(iii) hereof.
(kk) "Summary of Rights" shall have the meaning set forth in Section
3(b) hereof.
(ll) "Trading Day" shall have the meaning set forth in Section 11(d)(i)
hereof.
(mm) "Triggering Event" shall mean any Section 11(a)(ii) Event or any
Section 13 Event.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights in
accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time appoint such
Co-Rights Agents as it may deem necessary or desirable.
4
<PAGE>
Section 3. Issue of Rights Certificates.
(a) Until the date that is the earliest of:
(i) the close of business on the tenth business day after the
Stock Acquisition Date (or, if the tenth business day after the Stock
Acquisition Date occurs before the Record Date, the close of business
on the Record Date);
(ii) the close of business on the tenth business day after the
date that a tender or exchange offer by any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of
the Company or of any Subsidiary of the Company, or any Person or
entity organized, appointed or established by the Company for or
pursuant to the terms of any such plan) is first published or sent or
given within the meaning of Rule 14d-2(a) of the General Rules and
Regulations under the Exchange Act, if upon purchase of all securities
sought thereby, such Person would be the Beneficial Owner of 15% or
more of the shares of Common Stock then outstanding, unless the tender
offer or exchange offer is for all outstanding shares of Common Stock
at a price and on terms determined (as set forth in Section
11(a)(ii)(A)) by at least a majority of the members of the Board of
Directors who are not officers of the Company and who are not
representatives, nominees, Affiliates or Associates of an Acquiring
Person, after receiving advice from one or more investment banking
firms, to be (1) fair to stockholders (taking into account all factors
which such members of the Board, in their discretion, deem relevant and
(2) otherwise in the best interests of the Company and its stockholders
(also taking into account, to the extent that such members in their
discretion deem relevant, the interests of employees, suppliers,
customers, creditors, communities in which offices or other
establishments of the Company are located, and its other
constituencies), or
(iii) the close of business on the tenth day after a person
becomes an Adverse Person pursuant to the criteria set forth in
11(a)(ii)(B).
or, with respect to (i) and (ii) above, such later date or dates as the Board of
Directors may designate, which designation following the first occurrence of an
event set forth in clause (x) or (y) of the second proviso to Section 23(a)
hereof, shall be effective only if there are Continuing Directors, a majority of
whom shall have approved such later date; provided, however, that if such later
date or dates are designated, such designations shall be made on or prior to the
date which would otherwise have been controlling, (the earliest of (i), (ii)
(subject to any such delay of (i) or (ii)) or (iii) being herein referred to as
the "Distribution Date"),
then, (x) subject to the provisions of paragraph (b) of this Section 3,
the Rights will be evidenced by the certificates for the Common Stock registered
in the names of the holders of the Common Stock (which certificates for Common
Stock shall be deemed also to be certificates for Rights) and not by separate
certificates, and (y) the Rights will be transferable only in connection with
the transfer of the underlying shares of Common Stock (including a transfer to
the Company).
As soon as practicable after the Distribution Date, the Rights Agent
will send by first-class, insured, postage prepaid mail, to each record holder
of the Common Stock as of the close of business on the Distribution Date, at the
address of such holder shown on the records of the Company, one or more Rights
Certificates, evidencing one Right for each share of Common Stock so held,
subject to adjustment as provided herein. In the event that an adjustment in the
number of Rights per share of Common Stock has been made pursuant to Section
11(p) hereof, at the time of distribution of the Rights Certificates, the
Company shall, unless prohibited by the terms of any agreement to which the
Company is a party on the date of this Rights Agreement (or, if a majority of
the then Continuing Directors so agree, after the date of this Agreement), make
the necessary and appropriate rounding adjustments (in accordance with Section
14(a) hereof) so that Rights Certificates representing only whole numbers of
Rights are distributed and cash is paid in lieu of any fractional Rights, except
that if the Company is prohibited from paying cash in lieu of fractional Rights,
then the Company shall round the fractional Rights to the next highest number of
whole Rights so that Rights Certificates represent only whole numbers of Rights.
As of and after the Distribution Date, the Rights will be evidenced solely by
such Rights Certificates.
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(b) As promptly as practicable following the Record Date, the Company
will send a copy of the Summary of Rights and Rights Agreement, in substantially
the form attached hereto as Exhibit B (the "Summary of Rights"), by first-class,
postage prepaid mail, to each record holder of Common Stock as of the close of
business on the Record Date, at the address of such holder shown on the records
of the Company. Until the earlier of the Distribution Date or the Expiration
Date, the transfer of any certificates representing shares of Common Stock in
respect of which Rights have been issued shall also constitute the transfer of
the Rights associated with such shares of Common Stock.
(c) Rights shall be issued in respect of all shares of Common Stock which are
issued (whether originally issued or from the Company's treasury) after the
Record Date but prior to the earlier of the Distribution Date or the Expiration
Date. Certificates representing such shares of Common Stock shall also be deemed
to be certificates for Rights and shall bear substantially the following legend:
This certificate also evidences and entitles the
holder hereof to certain Rights as set forth in the Rights
Agreement between Hunt Manufacturing Co. (the "Company") and
Mellon Bank (East), N.A. (the "Rights Agent") dated as of
August 8, 1990, as the same may be amended (the "Rights
Agreement"), the terms of which are hereby incorporated herein
by reference and a copy of which is on file at the principal
offices of the Company. Under certain circumstances, as set
forth in the Rights Agreement, such Rights will be evidenced
by separate certificates and will no longer be evidenced by
this certificate. The Company will mail to the holder of this
certificate a copy of the Rights Agreement, as in effect on
the date of mailing, without charge promptly after receipt of
a written request therefor. Under certain circumstances set
forth in the Rights Agreement, Rights issued to, or held by,
any Person who is, was or becomes an Acquiring Person or
Adverse Person or any Affiliate or Associates thereof (as such
terms are defined in the Rights Agreement), whether currently
held by or on behalf of such Person or any subsequent holder,
will become null and void.
With respect to such certificates bearing the foregoing legend, until the
earlier of (i) the Distribution Date or (ii) the Expiration Date, the Rights
associated with the Common Stock represented by such certificates shall be
evidenced by such certificates alone, and registered holders of Common Stock
shall also be the registered holders of the associated Rights, and the transfer
of any of such certificates shall also constitute the transfer of the Rights
associated with the Common Stock represented by such certificates.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (the "Rights Certificates"), and the forms
of election to purchase and of assignment to be printed on the reverse thereof,
shall be substantially in the form set forth in Exhibit B hereto and may have
such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or any rule or regulation made pursuant thereto
or with any rule or regulation of the New York Stock Exchange or any other stock
exchange, or the regulations of the National Association of Securities Dealers
Automated Quotation System ("NASDAQ"), on which the Rights may from time to time
be listed or quoted, or to conform to usage. Subject to the provisions of
Section 11 and Section 22 hereof, the Rights Certificates, whenever distributed,
shall be dated as of the Record Date and on their face shall entitle the holders
thereof to purchase such number of one one-thousandths of a share of Preferred
Stock as shall be set forth therein at the price set forth therein (such
exercise price per one one-thousandth of a share of Preferred Stock being
hereinafter referred to as the "Purchase Price"). The amount and type of
securities purchasable upon the exercise of each Right and the Purchase Price
thereof shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or Section
22 hereof that represents Rights beneficially owned by: (i) an Acquiring Person,
an Adverse Person or any Associate or Affiliate of an Acquiring Person or
Adverse Person, (ii) a transferee of an Acquiring Person or Adverse Person (or
of any Associate or Affiliate of an Acquiring Person or Adverse Person) who
becomes a transferee after the Acquiring Person or Adverse Person becomes such,
or (iii) a transferee of an Acquiring Person or Adverse Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently with
the Acquiring Person or Adverse Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person or Adverse Person to holders of equity interests in such
Acquiring Person or Adverse Person or to any Person with whom such Acquiring
Person or Adverse Person has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (B) a transfer which the Board
of Directors of the Company has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect avoidance of Section 7(e)
hereof, and any Rights Certificate issued pursuant to Section 6, Section 11 or
Section 22 hereof upon transfer, exchange, replacement or adjustment of any
other Rights Certificate referred to in this sentence, shall contain (to the
extent feasible) the following legend:
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The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person or Adverse Person or an Affiliate or Associate of an
Acquiring Person or Adverse Person (as such terms are defined
in the Rights Agreement between Hunt Manufacturing Co. and
Mellon Bank (East), N.A. dated as of August 8, 1990, as the
same may be amended). Accordingly, this Rights Certificate and
the Rights represented hereby may become null and void in the
circumstances specified in Section 7(e) of such Agreement.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf of the Company
by its Chairman of the Board, its President or any Vice President, either
manually or by facsimile signature, and shall have affixed thereto the Company's
seal or a facsimile thereof which shall be attested by the Secretary or an
Assistant Secretary of the Company, either manually or by facsimile signature.
The Rights Certificates shall be manually countersigned by the Rights Agent and
shall not be valid for any purpose unless so countersigned. In case any officer
of the Company who shall have signed any of the Rights Certificates shall cease
to be such officer of the Company before countersignature by the Rights Agent
and issuance and delivery by the Company, such Rights Certificates,
nevertheless, may be countersigned by the Rights Agent and issued and delivered
by the Company with the same force and effect as though the person who signed
such Rights Certificates had not ceased to be such officer of the Company; and
any Rights Certificates may be signed on behalf of the Company by any person
who, at the actual date of the execution of such Rights Certificate, shall be a
proper officer of the Company to sign such Rights Certificate, although at the
date of the execution of this Rights Agreement any such person was not such an
officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or offices designated as the
appropriate place for surrender of Rights Certificates upon exercise or
transfer, books for registration and transfer of the Rights Certificates issued
hereunder. Such books shall show the names and addresses of the respective
holders of the Rights Certificates, the number of Rights evidenced on its face
by each of the Rights Certificates and the date of each of the Rights
Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Section 4(b), Section 7(e) and Section
14 hereof, at any time after the close of business on the Distribution Date, and
at or prior to the close of business on the Expiration Date, any Rights
Certificate or Certificates may be transferred, split up, combined or exchanged
for another Rights Certificate or Certificates, entitling the registered holder
to purchase a like number of one one-thousandths of a share of Preferred Stock
(or following a Triggering Event other securities, cash or other assets, as the
case may be) as the Rights Certificate or Certificates surrendered then entitled
such holder (or former holder in the case of a transfer) to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any Rights
Certificate or Certificates shall make such request in writing delivered to the
Rights Agent, and shall surrender the Rights Certificate or Certificates to be
transferred, split up, combined or exchanged at the principal office or offices
of the Rights Agent designated for such purpose. Neither the Rights Agent nor
the Company shall be obligated to take any action whatsoever with respect to the
transfer of any such surrendered Rights Certificate until the registered holder
shall have completed and signed the certificate contained in the form of
assignment on the reverse side of such Rights Certificate and shall have
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request. Thereupon the Rights Agent shall, subject to Section
4(b), Section 7(e) and Section 14 hereof, countersign and deliver to the Person
entitled thereto a Rights Certificate or Rights Certificates, as the case may
be, as so requested. The Company may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Rights Certificates.
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<PAGE>
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and reimbursement to the Company
and the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Right Certificate if
mutilated, the Company will execute and deliver a new Rights Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Rights Certificates so lost, stolen, destroyed or
mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) Subject to Section 7(e) hereof, the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein including, without limitation, the restrictions on
exercisability set forth in Section 9(c), Section 11(a)(iii) and Section 23(a)
hereof) in whole or in part at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of election to purchase and
the certificate on the reverse side thereof duly executed, to the Rights Agent
at the principal office or offices of the Rights Agent designated for such
purpose, together with payment of the aggregate purchase Price with respect to
the total number of one one-thousandths of a share of Preferred Stock (or other
securities, cash or other assets, as the case may be) as to which such
surrendered Rights are then exercisable, at or prior to the earliest of (i) the
Final Expiration Date, (ii) any expiration of the Rights pursuant to Section
13(d), or (iii) the time at which the Rights are redeemed as provided in Section
23 hereof (the earliest of (i), (ii) and (iii) being herein referred to as the
"Expiration Date").
(b) The Purchase Price for each one one-thousandth of a share of
Preferred Stock pursuant to the exercise of a Right shall initially be $60 and
shall be subject to adjustment from time to time as provided in Sections 11 and
13(a) hereof and shall be payable in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase and the certificate duly executed,
accompanied by payment, with respect to each Right so exercised, of the Purchase
Price per one one-thousandth of a share of Preferred Stock (or other shares,
securities, cash or other assets, as the case may be) to be purchased as set
forth below and an amount equal to any applicable transfer tax, the Rights Agent
shall, subject to Section 20(k) hereof, thereupon promptly (i) (A) requisition
from any transfer agent of the shares of Preferred Stock (or make available, if
the Rights Agent is the transfer agent for such shares) certificates for the
total number of one one-thousandths of a share of Preferred Stock to be
purchased, and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, or (B) if the Company shall have elected to
deposit the total number of shares of Preferred Stock issuable upon exercise of
the Rights hereunder with a depositary agent, requisition from the depositary
agent depositary receipts representing such number of one one-thousandths of a
share of Preferred Stock as are to be purchased (in which case certificates for
the shares of Preferred Stock represented by such receipts shall be deposited by
the transfer agent with the depositary agent) and the Company will direct the
depositary agent to comply with such request, (ii) requisition from the Company
the amount of cash, if any, to be paid in lieu of fractional shares in
accordance with Section 14 hereof, (iii) after receipt of such certificates or
depositary receipts, cause the same to be delivered to or upon the order of the
registered holder of such Rights Certificate, registered in such name or names
as may be designed by such holder, and (iv) after receipt thereof, deliver such
cash, if any, to or upon the order of the registered holder of such Rights
Certificate. The payment of the Purchase Price (as such amount may be reduced
pursuant to Section 11(a)(iii) hereof) shall be made (x) in cash or by certified
bank check or bank draft payable to the order of the Company or (y) if
authorized by a majority of the then Continuing Directors, by delivery of a
certificate or certificates (with appropriate stock powers executed in blank
attached thereto) evidencing a number of whole shares of Common Stock equal to
the integer obtained by dividing the then Purchase Price by the then current
Market Price (as determined pursuant to Section 11(d)) per share of Common Stock
on the date of such exercise, plus a certified bank check or bank draft payable
to the order of the Company in an amount equal to the difference between the
market value (as determined pursuant to Section 11(d)) of such whole shares and
the aggregate Purchase Price. In the event that the Company is obligated to
issue other securities of the Company, pay cash and/or distribute other property
pursuant to Section 11(a) hereof, the Company will make all arrangements
necessary so that such other securities, cash and/or other property are
available for distribution by the Rights Agent, if and when appropriate. Prior
to the occurrence of a Triggering Event, the Company reserves the right to
require that, upon any exercise of Rights, a number of Rights be exercised so
that only whole shares of Preferred Stock would be issued.
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(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to, or upon the order of, the registered
holder of such Rights Certificate, registered in such name or names as may be
designated by such holder, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Section 11(a)(ii) Event, any Rights
beneficially owned by (i) an Acquiring Person or Adverse Person, or an Associate
or Affiliate of an Acquiring Person or Adverse Person, (ii) a transferee of an
Acquiring Person or Adverse Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person or Adverse Person becomes such,
or (iii) a transferee of an Acquiring Person or Adverse Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently with
the Acquiring Person or Adverse Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person or Adverse Person to holders of equity interests in such
Acquiring Person or Adverse Person or to any Person with whom the Acquiring
Person or Adverse Person has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (B) a transfer which at least
a majority of the members of the Board of Directors of the Company who are not
officers of the Company and who are not representatives, nominees, Affiliates or
Associates of an Acquiring Person or an Adverse Person has determined is part of
a plan, arrangement or understanding which has as a primary purpose or effect
the avoidance of this Section 7(e), shall become null and void without any
further action, and no holder of such Rights shall have any rights whatsoever
with respect to such Rights, whether under any provision of this Agreement or
otherwise. The Company shall use all reasonable efforts to insure that the
provisions of this Section 7(e) and Section 4(b) hereof are complied with, but
shall have no liability to any holder of Rights Certificates or other Person as
a result of its failure to make any determinations with respect to an Acquiring
Person or Adverse Person or their respective Affiliates, Associates or
transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless such registered holder shall have (i)
completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Rights Certificate surrendered for
such exercise, and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Rights Certificates to the Company, or shall, at the written request
of the Company, destroy such cancelled Rights Certificates, and in such case
shall deliver a certificate of destruction thereof to the Company.
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Section 9. Reservation and Availability of Capital Stock.
(a) Subject to the provisions of this Agreement (including, without
limitation, Section 11(a)(iii) hereof), the Company covenants and agrees that it
will cause to be reserved and kept available out of its authorized and unissued
shares of Preferred Stock (and, following the occurrence of a Triggering Event,
out of its authorized and unissued shares of Common Stock and/or other
securities or out of its authorized and issued shares held in its treasury), the
number of shares of Preferred Stock (and, following the occurrence of a
Triggering Event, Common Stock and/or other securities) that will be sufficient
to permit the exercise in full of all outstanding Rights pursuant to the terms
of this Agreement.
(b) So long as the shares of Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or other securities) issuable
and deliverable upon the exercise of the Rights may be listed on any national
securities exchange or quoted on NASDAQ, the Company shall use its best efforts
to cause, from and after such time as the Rights become exercisable, all shares
reserved for such issuance to be listed on such exchange or quoted on NASDAQ
upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the first occurrence of a Section
11(a)(ii) Event in which the consideration to be delivered by the Company upon
exercise of the Rights has been determined in accordance with Section 11(a)(iii)
hereof, a registration statement under the Act, with respect to the securities
purchasable upon exercise of the Rights on an appropriate form, (ii) cause such
registration statement to become effective as soon as practicable after such
filing, and (iii) cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Act) until the earlier
of (A) the date as of which the Rights are no longer exercisable for such
securities, and (B) the date of the expiration of the Rights. The Company will
also take such action as may be appropriate under, or to ensure compliance with,
the securities or "blue sky" laws of the various states in connection with the
exercisability of the Rights. The Company may temporarily suspend, for a period
of time not to exceed ninety (90) days after the date set forth in clause (i) of
the first sentence of this Section 9(c), the exercisability of the Rights in
order to prepare and file such registration statement and permit it to become
effective. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect. In addition, if the Company shall determine that a
registration statement is required following the Distribution Date, the Company
may temporarily suspend the exercisability of the Rights until such time as a
registration statement has been declared effective. Notwithstanding any
provision of this Agreement to the contrary, the Rights shall not be exercisable
in any jurisdiction if the requisite qualification in such jurisdiction shall
not have been obtained, the exercise thereof shall not be permitted under
applicable law or a registration statement shall not have been declared
effective.
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(d) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all securities delivered upon exercise of
Rights shall, at the time of delivery of the certificates for such securities
(subject to payment of the Purchase Price), be duly and validly authorized and
issued and fully paid and nonassessable.
(e) The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges which may
be payable in respect of the issuance or delivery of the Rights Certificates and
of any certificates for a number of one one-thousandths of a share of Preferred
Stock (or Common Stock and/or other securities, as the case may be) upon the
exercise of Rights. The Company shall not, however, be required to pay any
transfer tax which may be payable in respect of any transfer or delivery of
Rights Certificates to a Person other than, or the issuance or delivery of a
number of one one-thousandths of a share of Preferred Stock (or Common Stock
and/or other securities, as the case may be) in respect of a name other than
that of, the registered holder of the Rights Certificates evidencing Rights
surrendered for exercise, or to issue or deliver any certificates for a number
of one one-thousandths of a share of Preferred Stock (or Common Stock and/or
other securities, as the case may be) in a name other than that of the
registered holder upon the exercise of any Rights until such tax shall have been
paid (any such tax being payable by the holder of such Rights Certificate at the
time of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each person in whose name any
certificate for a number of one one-thousandths of a share of Preferred Stock
(or Common Stock and/or other securities, as the case may be) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of
record of such fractional shares of Preferred Stock (or Common Stock and/or
other securities, as the case may be) represented thereby as of the close of
business on, and such certificate shall be dated, the date upon which the Rights
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and all applicable transfer taxes) was made; provided, however,
that if the date of such surrender and payment is a date upon which the
Preferred Stock (or Common Stock and/or other securities, as the case may be)
transfer books of the Company are closed, such Person shall be deemed to have
become the record holder of such shares (fractional or otherwise) on, and such
certificate shall be dated, the next succeeding Business Day on which the
Preferred Stock (or Common Stock and/or other securities, as the case may be)
transfer books of the Company are open.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights. The Purchase Price, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Preferred Stock
payable in shares of Preferred Stock, (B) subdivide the outstanding
Preferred Stock, (C) combine the outstanding Preferred Stock into a
smaller number of shares, or (D) issue any shares of its capital stock
in a reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a) and Section 7(e) hereof, the
Purchase Price in effect at the time of the record date for such
dividend or of the effective date of such sub-division, combination or
reclassification, and the number and kind of shares of Preferred Stock
or other capital stock, as the case may be, issuable on such date,
shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive, upon payment of
the Purchase Price then in effect, the aggregate number and kind of
shares of Preferred Stock or other capital stock, as the case may be,
which, if such Right had been exercised immediately prior to such date
and at a time when the Preferred Stock transfer books of the Company
were open, he would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination or
reclassification. If an event occurs which would require an adjustment
under both this Section 11(a)(i) and Section 11(a)(ii) hereof, the
adjustment provided for in this Section 11(a)(i) shall be in addition
to, and shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii) hereof.
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(ii) In the event that:
(A) any Person shall, at any time after the Rights Dividend
Declaration Date, be or become an Acquiring Person, unless the event
causing such Person to have become an Acquiring Person is a transaction
set forth in Section 13(a) hereof, or is an acquisition of shares of
Common Stock pursuant to a tender offer or an exchange offer for all
outstanding shares of Common Stock at a price and on terms determined
by at least a majority of the members of the Board of Directors who are
not officers of the Company and who are not representatives, nominees,
Affiliates or Associates of an Acquiring Person, after receiving advice
from one or more investment banking firms, to be (x) fair to
stockholders (taking into account all factors which such members of the
Board deem relevant) and (y) otherwise in the best interests of the
Company and its stockholders (also taking into account to the extent
that such members in their discretion deem relevant, the interests of
employees, suppliers, customers, creditors, communities in which
offices or other establishments of the Company are located, and its
other constituencies), or
(B) (1) at least a majority of the Board of Directors who are
not officers of the Company and who are not representatives, nominees,
Affiliates or Associates of a specified Person, after reasonable
inquiry and investigation, including consultation with such persons as
such directors shall have deemed appropriate, shall determine that (x)
Beneficial Ownership by such Person of an amount of Common Stock
exceeding the Ownership Limitation (as hereinafter defined) is, or
would likely be, intended to cause the Company to repurchase the Common
Stock beneficially owned by such Person or to cause pressure on the
Company to take action or enter into a transaction or series of
transactions intended to provide such Person with short-term financial
gain under circumstances where a majority of such disinterested
directors has determined that the best long-term interests of the
Company and its stockholders (also taking into account, to the extent
that such directors in their discretion deem relevant, the interests of
employees, suppliers, customers, creditors, communities in which
offices or other establishments of the Company are located, and its
other constituencies) would not be served by taking such action or
entering into such transactions or series of transactions at that time
or (y) Beneficial Ownership by such Person of an amount of Common Stock
exceeding the Ownership Limitation is causing or reasonably likely to
cause a material adverse impact (including, but not limited to,
impairment of relationships with customers, suppliers or creditors, or
impairment of the Company's ability to maintain its competitive
position) on the business or prospects of the Company (provided,
however, no such determination as provided in (x) or (y) above shall be
made with respect to any Person who or which shall have executed a
written agreement with the Company (approved by at least a majority of
the members of the Company's Board of Directors who are not
representatives, nominees, Affiliates or Associates of such Person)
which imposes one or more thresholds on the amount of such Person's
Beneficial Ownership of shares of Common Stock, if, and so long as the
thresholds continue to be binding on such Person and such Person is in
substantial compliance (as determined by at least a majority of the
members of the Company's Board of Directors who are not
representatives, nominees, Affiliates or Associates of such Person, in
their discretion) with the terms of such written agreement or of any
amendment thereto, which amendment is approved by at least a majority
of the members of the Company's Board of Directors who are not
representatives, nominees, Affiliates or Associates of such Person
(provided, however, that no amendment of any such agreement shall cure
any prior breach of such agreement or ------- ------- any amendment
thereto,)); (2) a majority of the Board of Directors who are not
officers of the Company and who are not representatives, nominees,
Affiliates or Associates of such specified Person shall designate a
specific limitation on the amount of Common Stock which such specified
Person may beneficially own, which amount (the "Ownership Limitation")
may be less than, equal to, or more than the amount of shares of Common
Stock then owned by such Person, but shall in no event be less than 10%
of the Common Stock then outstanding; and (3) such specified Person,
together with his or its Affiliates and Associates, shall (before or
after the occurrence of (1) and (2) above) beneficially own a number of
shares of Common Stock that exceeds the Ownership Limitation (a
specified Person meeting the requirements of clauses (1), (2) and (3)
of this Section 11(a)(ii)(B) being referred to as an "Adverse Person"),
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<PAGE>
then, promptly following the first occurrence of any Section 11(a)(ii)
Event, each holder of a Right (except as provided below and in Section
7(e) hereof) shall thereafter have the right to receive, upon exercise
thereof at the then current Purchase Price in accordance with the terms
of this Agreement, in lieu of a number of one one-thousandths of a
share of Preferred Stock, such number of shares of Common Stock of the
Company as shall equal the result obtained by (x) multiplying the then
current Purchase Price by the then number of one one-thousandths of a
share of Preferred Stock for which one Right was exercisable
immediately prior to the first occurrence of a Section 11(a)(ii) Event,
and (y) dividing that product (which, following such first occurrence,
shall thereafter be referred to as the "Purchase Price" for each Right
and for all purposes of this Agreement) by 50% of the current market
price (determined pursuant to Section 11(d) hereof) per share of Common
Stock on the date of such first occurrence (such number of shares
issuable upon the exercise of a Right being referred to herein as the
"Adjustment Shares").
(iii) Unless at least a majority of the members of the
Company's Board of Directors who are not officers of the Company and
who are not representatives, nominees, Affiliates or Associates of an
Acquiring Person or an Adverse Person determine that the following is
not permitted by the terms of any agreement or instrument to which the
Company is a party on the date of this Agreement (or, if a majority of
the then Continuing Directors so agree, after the date of this
Agreement), then in the event that the number of shares of Common Stock
which are authorized by the Company's articles or certificate of
incorporation but not outstanding or reserved for issuance for purposes
other than upon exercise of the Rights are not sufficient to permit the
exercise in full of the Rights in accordance with the foregoing
subparagraph (ii) of this Section 11(a), the Company shall: (A)
determine the excess of (1) the value of the Adjustment Shares issuable
upon the exercise of a Right (the "Current Value") over (2) the
Purchase Price (such excess being referred to herein as the "Spread"),
and (B) with respect to each Right, make adequate provision to
substitute for the Adjustment Shares, upon payment of the applicable
Purchase Price, (1) cash, (2) a reduction in the Purchase Price, (3)
Common Stock or other equity securities of the Company (including,
without limitation, shares, or units of shares, of preferred stock
which the Board of Directors of the Company has deemed to have
substantially the same value as shares of Common Stock (such shares of
preferred stock being referred to herein as "common stock
equivalents")), (4) debt securities of the Company, (5) other assets,
or (6) any combination of the foregoing, having an aggregate value
equal to the Current Value, where such aggregate value has been
determined by the Board of Directors of the Company based upon the
advice of a nationally recognized investment banking firm selected by
the Board of Directors of the Company; provided, however, if the
Company shall not have made adequate provision to deliver value
pursuant to clause (B) above within thirty (30) days following the
later of (x) the first occurrence of a Section 11(a)(ii) Event and (y)
the date on which the Company's right of redemption pursuant to Section
23(a) expires (the later of (x) and (y) being referred to herein as the
"Section 11(a)(ii) Trigger Date"), then the Company shall be obligated
to deliver, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, shares of Common Stock (to the
extent available) and then, if necessary, cash, which shares and/or
cash have an aggregate value equal to the Spread. If the Board of
Directors of the Company shall determine in good faith that it is
likely that sufficient additional shares of Common Stock could be
authorized for issuance upon exercise in full of the Rights, the thirty
(30) day period set forth above may be extended to the extent
necessary, but not more than ninety (90) days after the Section
11(a)(ii) Trigger Date, in order that the Company may seek shareholder
approval for the authorization of such additional shares (such period,
as it may be extended, the "Substitution Period"); provided, however,
that there shall be no obligation on the part of the Company so to seek
authorization of such additional shares. To the extent that the Company
determines that some action need be (and may be) taken pursuant to the
first and/or second sentences of this Section 11(a)(iii), the Company
(x) shall provide, subject to Section 7(e) hereof, that such action
shall apply uniformly to all outstanding Rights, and (y) may suspend
the exercisability of the Rights until the expiration of the
Substitution Period in order to seek any authorization of additional
shares and/or to decide the appropriate form of distribution to be made
pursuant to such first sentence and to determine the value thereof. In
the event of any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as
the suspension is no longer in effect. For purposes of this Section
11(a)(iii), the value of a share of Common Stock shall be the current
market price (as determined pursuant to Section 11(d) hereof) per share
of the Common Stock on the Section 11(a)(ii) Trigger Date and the value
of any "common stock equivalent" shall be deemed to have the same value
as the Common Stock on such date.
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<PAGE>
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Stock entitling them to
subscribe for or purchase (for a period expiring within forty-five (45) calendar
days after such record date) Preferred Stock (or shares having the same rights,
privileges and preferences as the shares of Preferred Stock ("equivalent
preferred stock")) or securities convertible into Preferred Stock or equivalent
preferred stock at a price per share of Preferred Stock or per share of
equivalent preferred stock (or having a conversion price per share, if a
security convertible into Preferred Stock or equivalent preferred stock) less
than the current market price (as determined pursuant to Section 11(d) hereof)
per share of Preferred Stock on such record date, the Purchase Price to be in
effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of Preferred Stock outstanding
on such record date, plus the number of shares of Preferred Stock which the
aggregate offering price of the total number of shares of Preferred Stock and/or
equivalent preferred stock so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such current market price, and the denominator of which shall be the number
of shares of Preferred Stock outstanding on such record date, plus the number of
additional shares of Preferred Stock and/or equivalent preferred stock to be
offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible). In case such subscription price may
paid by delivery of consideration part or all of which may be in a form other
than cash, the value of such consideration shall be as determined in good faith
by the Board of Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent and shall be binding on the Rights
Agent and the holders of the Rights. Shares of Preferred Stock owned by or held
for the account of the Company shall not be deemed outstanding for the purpose
of any such computation. Such adjustment shall be made successively whenever
such a record date is fixed, and in the event that such rights or warrants are
not so issued, the Purchase Price shall be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for a distribution to
all holders of Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the continuing
corporation) of evidences of indebtedness, cash (other than a regular quarterly
cash dividend out of the earnings or retained earnings of the Company), assets
(other than a dividend payable in Preferred Stock, but including any dividend
payable in stock other than Preferred Stock) or subscription rights or warrants
(excluding those referred to in Section 11(b) hereof), the Purchase Price to be
in effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the current market price (as determined pursuant to
Section 11(d) hereof) per share of Preferred Stock on such record date, less the
fair market value (as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent) of the portion of the cash, assets or evidences of indebtedness so
to be distributed or of such subscription rights or warrants applicable to a
share of Preferred Stock, and the denominator of which shall be such current
market price (as determined pursuant to Section 11(d) hereof) per share of
Preferred Stock. Such adjustments shall be made successively whenever such a
record date is fixed, and in the event that such distribution is not so made,
the Purchase Price shall be adjusted to be the Purchase Price which would have
been in effect if such record date had not been fixed.
14
<PAGE>
(d) (i) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii) hereof, the "current market
price" per share of Common Stock on any date shall be deemed to be the average
of the daily closing prices per share of such Common Stock for the thirty (30)
consecutive Trading Days (as such term is hereinafter defined) immediately prior
to such date, and for purposes of computations made pursuant to Section
11(a)(iii) hereof, the "current market price" per share of Common Stock on any
date shall be deemed to be the average of the daily closing prices per share of
such Common Stock for the ten (10) consecutive Trading Days immediately
following such date; provide however, that in the ------- ------- event that the
current market price per share of the Common Stock is determined during a period
following the announcement by the issuer of such Common Stock of (A) a dividend
or distribution on Common Stock payable in shares of Common Stock or securities
convertible into shares of Common Stock (other than the Rights), or (B) any
subdivision, combination or reclassification of such Common Stock, and prior to
the expiration of the requisite thirty (30) Trading Day or ten (10) Trading Day
period, as set forth above, after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the "current market price" shall
be properly adjusted to take into account ex-dividend trading. The closing price
for each day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the shares of Common Stock are not
listed or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading or, if the shares of Common Stock
are not listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use, or, if on any such date, the shares of Common Stock are not
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the Common Stock
selected by the Board of Directors of the Company. If on any such date no market
maker is making a market in the Common Stock, the fair value of such shares on
such date as determined in good faith by the Board of Directors of the Company
shall be used. The term "Trading Day" shall mean a day on which the principal
national securities exchange on which the shares of Common Stock are listed or
admitted to trading is open for the transaction of business or, if the shares of
Common Stock are not listed or admitted to trading on any national securities
exchange, a Business Day. If the Common Stock is not publicly held or not so
listed or traded, "current market price" per share shall mean the fair value per
share as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes.
15
<PAGE>
(ii) For the purpose of any computation hereunder, the
"current market price" per share of Preferred Stock shall be determined
in the same manner as set forth above for the Common Stock in clause
(i) of this Section 11(d) (other than the last sentence thereof). If
the current market price per share of Preferred Stock cannot be
determined in the manner provided above or if the Preferred Stock not
publicly held or listed or traded in a manner described in clause (i)
of this Section 11(d), the "current market price" per share of
Preferred Stock shall be conclusively deemed to be an amount equal to
1000 (as such number may be appropriately adjusted for such events as
stock splits, stock dividends and recapitalizations with respect to the
Preferred Stock or Common Stock occurring after the date of this
Agreement) multiplied by the current market price per share of the
Common Stock. If neither the Common Stock nor the Preferred Stock is
publicly held or so listed or traded, "current market price" per share
of the Preferred Stock shall mean the fair value per share as
determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes. For all purposes
of this Agreement, the "current market price" of one one-thousandth of
a share of Preferred Stock shall be equal to the "current market price"
of one share of Preferred Stock divided by 1000.
(e) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in the Purchase Price;
provided, however, that any adjustments which by reason of this Section 11(e)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 11 shall be made
to the nearest cent or to the nearest ten-thousandth of a share of Common Stock
or other share or one-millionth of a share of Preferred Stock, as the case may
be. Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
(3) years from the date of the transaction which mandates such adjustment, or
(ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a)(ii)
or Section 13(a) hereof, the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock other than Preferred
Stock, thereafter the number of such other shares so receivable upon exercise of
any Right and the Purchase Price thereof shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Stock contained in Sections 11(a), (b),
(c), (e), (g), (h), (i), (j), (k) and (m), and the provisions of Sections 7, 9,
10, 13 and 14 hereof with respect to the Preferred Stock shall apply on like
terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-thousandths of a
share of Preferred Stock purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.
16
<PAGE>
(h) Unless the Company shall have exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one one-thousandths of
a share of Preferred Stock (calculated to the nearest one-millionth) obtained by
(i) multiplying (x) the number of one one-thousandths of a share purchasable
with respect to a Right immediately prior to this adjustment, by (y) the
Purchase Price in effect immediately prior to such adjustment of the Purchase
Price, and (ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights, in lieu of any adjustment in the
number of one one thousandths of a share of Preferred Stock purchasable upon the
exercise of a Right. In such event, each of the Rights outstanding after the
adjustment in the number of Rights shall be exercisable for the number of one
one-thousandths of a share of Preferred Stock for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one ten-thousandth) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase Price. The
Company shall make a public announcement of its election to adjust the number of
Rights, indicating the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. This record date may be the date
on which the Purchase Price is adjusted or any day thereafter, but, if the
Rights Certificates have been issued, shall be at least ten (10) days later than
the date of the public announcement. If Rights Certificates have been issued,
upon each adjustment of the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be distributed to holders of
record of Rights Certificates on such record date Rights Certificates
evidencing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option of
the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Rights Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Rights Certificates so to be
distributed shall be issued, executed and countersigned in the manner provided
for herein (and may bear, at the option of the Company, the adjusted Purchase
Price) and shall be registered in the names of the holders of record of Rights
Certificates on the record date specified in the public announcement.
17
<PAGE>
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of one one-thousandths of a share of Preferred Stock issuable upon
the exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Purchase Price per one one-thousandth of a
share of Preferred Stock and the number of one one-thousandths of a share of
Preferred Stock which were expressed in the initial Rights Certificates issued
hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then stated value, if any, of the number of one
one-thousandths of a share of Preferred Stock issuable upon exercise of the
Rights, the Company shall take any corporate action which may, in the opinion of
its counsel, be necessary in order that the Company may validly and legally
issue fully paid and nonassessable such number of one one-thousandths of a share
of Preferred Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
the number of one one-thousandths of a share of Preferred Stock and other
capital stock or securities of the Company, if any, issuable upon such exercise
over and above the number of one one-thousandths of a share of Preferred Stock
and other capital stock or securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company shall deliver to such holder a due bill or
other appropriate instrument evidencing such holder's right to receive such
additional shares (fractional or otherwise) or securities upon the occurrence of
the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in their good faith judgment the Board of Directors of the
Company shall determine to be advisable in order that any (i) consolidation or
subdivision of the Preferred Stock, (ii) issuance wholly for cash of any shares
of Preferred Stock at less than the current market price, (iii) issuance wholly
for cash of shares of Preferred Stock or securities which by their terms are
convertible into or exchangeable for shares of Preferred Stock, (iv) stock
dividends or (v) issuance of rights, options or warrants referred to in this
Section 11, hereafter made by the Company to holders of its Preferred Stock
shall not be taxable to such stockholders.
(n) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)
hereof), (ii) merge with or into any other Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(o) hereof), or (iii)
sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction, or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other than the
Company and/or any of its Subsidiaries in one or more transactions each of which
complies with Section 11(o) hereof), if (x) at the time of or immediately after
such consolidation, merger or sale there are any rights, warrants or other
instruments or securities outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights or (y) prior to, simultaneously with or immediately after
such consolidation, merger or sale, the shareholders of the Person who
constitutes, or would constitute, the "Principal Party" for purposes of Section
13(a) hereof shall have received a distribution of Rights previously owned by
such Person or any of its Affiliates and Associates.
(o) The Company covenants and agrees that, after the Distribution Date,
it will not, except as permitted by Section 23 or Section 26 hereof, take (or
permit any Subsidiary to take) any action if at the time such action is taken it
is reasonably foreseeable that such action will diminish substantially or
otherwise eliminate the benefits intended to be afforded by the Rights.
18
<PAGE>
(p) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the Rights Dividend Declaration
Date and prior to the Distribution Date (i) declare a dividend on the
outstanding shares of Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding shares of Common Stock, or (iii) combine the
outstanding shares of Common Stock into a smaller number of shares, the number
of Rights associated with each share of Common Stock then outstanding, or issued
or delivered thereafter but prior to the Distribution Date, shall automatically
be proportionately adjusted so that the number of Rights thereafter associated
with each share of Common Stock following any such event shall equal the result
obtained by multiplying the number of Rights associated with each share of
Common Stock immediately prior to such event by a fraction the numerator of
which shall be the total number of shares of Common Stock outstanding
immediately prior to the occurrence of the event and the denominator of which
shall be the total number of shares of Common Stock outstanding immediately
following the occurrence of such event.
(q) The failure by the directors, pursuant to Section 11(a)(ii)(B)
hereof, to determine a Person to be an Adverse Person following such Person's
(alone or together with the Affiliates and Associates of such Person) becoming
the Beneficial Owner of 10% or more of the Common Stock then outstanding shall
not limit the directors' right at any time in the future to declare such Person
or, subject to Section 11(a)(ii)(B) hereof, any other Person to be an Adverse
Person. Further, nothing contained in this Agreement shall preclude a majority
of the directors who are not officers of the Company and who are not
representatives, nominees, Affiliates or Associates of a Person determined to be
an "Adverse Person" from determining to terminate such Person's status as an
"Adverse Person", but no such determination to terminate a Person's status as an
"Adverse Person" shall affect any Section 11(a)(ii) Event which shall have
occurred.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 and Section 13 hereof,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Preferred Stock and the Common Stock, a copy of such certificate, and (c) mail a
brief summary thereof to each holder of a Rights Certificate (or, if prior to
the Distribution Date, to each holder of a certificate representing shares of
Common Stock) in accordance with Section 25 hereof. The Rights Agent shall be
fully protected in relying on any such certificate and on any adjustment therein
contained.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
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<PAGE>
(a) In the event that, following the Stock Acquisition Date, directly
or indirectly, (x) the Company shall consolidate with, or merge with and into,
any other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), and the Company shall not be the continuing
or surviving corporation of such consolidation or merger, (y) any Person (other
than a Subsidiary of the Company in a transaction which complies with Section
11(o) hereof) shall consolidate with, or merge with or into, the Company, and
the Company shall be the continuing or surviving corporation of such
consolidation or merger and, in connection with such consolidation or merger,
all or part of the outstanding shares of Common Stock shall be changed into or
exchanged for stock or other securities of any other Person or cash or any other
property, or (z) the Company shall sell or otherwise transfer (or one or more of
its Subsidiaries shall sell or otherwise transfer), in one transaction or a
series of related transactions, assets or earning power aggregating more than
50% of the assets or earning power of the Company and its Subsidiaries (taken as
a whole) to any Person or Persons (other than the Company or any Subsidiary of
the Company in one or more transactions each of which complies with Section
11(o) hereof), then, and in each such case (except as may be contemplated by
Section 13(d) hereof), proper provision shall be made so that: (i) each holder
of a Right, except as provided in Section 7(e) hereof, shall thereafter have the
right to receive, upon the exercise thereof at the then current Purchase Price
in accordance with the terms of this Agreement, such number of validly
authorized and issued, fully paid, nonassessable and freely tradable shares of
Common Stock of the Principal Party (as such term is hereinafter defined), free
and clear of any and all liens, encumbrances, rights of first refusal or other
adverse claims, as shall be equal to the result obtained by (1) multiplying the
then current Purchase Price by the number of one one-thousandths of a share of
Preferred Stock for which a Right is exercisable immediately prior to the first
occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event has occurred
prior to the first occurrence of a Section 13 Event, multiplying the number of
such one one-thousandths of a share of Preferred Stock for which a Right was
exercisable immediately prior to the first occurrence of a Section 11(a)(ii)
Event by the Purchase Price in effect immediately prior to such first
occurrence), and dividing that product (which, following the first occurrence of
a Section 13 Event, shall be referred to as the "Purchase Price" for each Right
and for all purposes of this Agreement) by (2) 50% of the current market price
determined pursuant to Section 11(d)(i) hereof) per share of the Common Stock of
such Principal Party on the date of consummation of such Section 13 Event; (ii)
such Principal Party shall thereafter be liable for, and shall assume, by virtue
of such Section 13 Event, all the obligations and duties of the Company pursuant
to this Agreement; (iii) the term "Company" shall thereafter be deemed to refer
to such Principal Party, it being specifically intended that the provisions of
Section 11 hereof shall apply only to such Principal Party following the first
occurrence of a Section 13 Event; (iv) such Principal Party shall take such
steps (including, but not limited to, the reservation of a sufficient number of
shares of its Common Stock) in connection with the consummation of any such
transaction as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to its
shares of Common Stock thereafter deliverable upon the exercise of the Rights;
and (v) the provisions of Section 11(a)(ii) hereof shall be of no effect
following the first occurrence of any Section 13 Event.
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<PAGE>
(b) "Principal Party" shall mean
(i) in the case of any transaction described in clause (x) or
(y) of the first sentence of Section 13(a), the Person that is the
issuer of any securities into which shares of Common Stock of the
Company are converted in such merger or consolidation, and if no
securities are so issued, the Person that is the other party to such
merger or consolidation; and
(ii) in the case of any transaction described in clause (z) of
the first sentence of Section 13(a), the Person that is the party
receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions;
provided, however, that in any such case, (1) if the Common Stock of
such Person is not at such time and has not been continuously over the
preceding twelve (12) month period registered under Section 12 of the
Exchange Act, and such Person is a direct or indirect Subsidiary of
another Person the Common Stock of which is and has been so registered,
"Principal Party" shall refer to such other Person; and (2) in case
such Person is a Subsidiary, directly or indirectly, of more than one
Person, the Common Stocks of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons
is the issuer of the Common Stock having the greatest aggregate market
value.
(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient number of
authorized shares of its Common Stock which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 13 and unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of this Section 13
and further providing that, as soon as practicable after the date of any
consolidation, merger or sale of assets mentioned in paragraph (a) of this
Section 13, the Principal Party will
(i) prepare and file a registration statement under the Act,
with respect to the Rights and the securities purchasable upon exercise
of the Rights on an appropriate form, and will use its best efforts to
cause such registration statement to (A) become effective as soon as
practicable after such filing and (B) remain effective (with a
prospectus at all times meeting the requirements of the Act) until the
Expiration Date; and
(ii) will deliver to holders of the Rights historical
financial statements for the Principal Party and each of its Affiliates
which comply in all respects with the requirements for registration on
Form 10 under the Exchange Act.
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The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. In the event that a
Section 13 Event shall occur at any time after the occurrence of a Section
11(a)(ii) Event, the Rights which have not theretofore been exercised shall
thereafter become exercisable in the manner described in Section 13(a).
(d) Notwithstanding anything in this Agreement to the contrary, Section
13 shall not be applicable to a transaction described in subparagraphs (x) and
(y) of Section 13(a) if (i) such transaction is consummated with a Person or
Persons who acquired shares of Common Stock pursuant to a tender offer or
exchange offer for all outstanding shares of Common Stock which complies with
the provisions of Section 11(a)(ii)(A) hereof (or a wholly owned subsidiary of
any such Person or Persons), (ii) the price per share of Common Stock offered in
such transaction is not less than the price per share of Common Stock paid to
all holders of shares of Common Stock whose shares were purchased pursuant to
such tender offer or exchange offer and (iii) the form of consideration being
offered to the remaining holders of shares of Common Stock pursuant to such
transaction is the same as the form of consideration paid pursuant to such
tender offer or exchange offer. Upon consummation of any such transaction
contemplated by this Section 13(d), all Rights hereunder shall expire.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company may but shall not be required to issue fractions of
Rights, except prior to the Distribution Date as provided in Section 11(p)
hereof, or to distribute Rights Certificates which evidence fractional Rights.
If the Company shall determine not to issue fractional rights, then in lieu of
such fractional Rights, unless prohibited by the terms of any agreement to which
the Company is a party on the date of this Agreement (or, if a majority of the
then Continuing Directors so agree, after the date of this Agreement), there
shall be paid to the registered holders of the Rights Certificates with regard
to which such fractional Rights would otherwise be issuable, an amount in cash
equal to the same fraction of the current market value of a whole Right, and if
the Company is prohibited from paying cash in lieu of fractional Rights then the
Company shall round up the fractional Rights to the next highest number of whole
Rights so that Rights Certificates represent only whole numbers of Rights. For
purposes of this Section 14(a), the current market value of a whole Right shall
be the closing price of such Right for the Trading Day immediately prior to the
date on which such fractional Rights would have been otherwise issuable. The
closing price of the Rights for any day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the average of the
closing bid and asked Prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the Rights
are not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which the
Rights are listed or admitted to trading, or if the Rights are not listed or
admitted to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system then in use
or, if on any such date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by the Board of Directors of
the Company. If on any such date no such market maker is making a market in the
Rights, the fair value of the Rights on such date as determined in good faith by
the Board of Directors of the Company shall be used.
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(b) The Company shall, unless a majority of the then Continuing
Directors otherwise agree, issue fractions of shares of Preferred Stock upon
exercise of the Rights or distribute certificates which evidence fractional
shares of Preferred Stock. In the event the Company, with the concurrence of a
majority of the then Continuing Directors, determines not to issue fractional
shares of Preferred Stock, the Company shall pay to the registered holders of
Rights Certificates at the time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the current market value of a share
of Preferred Stock, or if the Company is prohibited from paying cash in lieu of
fractional shares, then such fractional shares shall be aggregated and
distributed to the Rights Agent to be sold in the open market and the proceeds
thereof distributed to the appropriate holders of Rights. For purposes of this
Section 14(b), the current market value of Preferred Stock shall be the closing
price of a share of Preferred Stock (as determined pursuant to Section 11(d)(ii)
hereof) for the Trading Day immediately prior to the date of such exercise.
(c) Following the occurrence of a Triggering Event, the Company shall,
unless a majority of the then Continuing Directors otherwise agree, issue
fractions of shares of Common Stock upon exercise of the Rights or distribute
certificates which evidence fractional shares of Common Stock (or other capital
stock, if applicable). In the event the Company, with the concurrence of a
majority of the then Continuing Directors, determines not to issue fractional
shares of Common Stock (or other capital stock, if applicable), the Company
shall pay to the registered holders of Rights Certificates at the time such
Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of a share of Common Stock (or other
capital stock, if applicable), or if the Company is prohibited from paying cash
in lieu of fractional shares, then such fractional shares shall be aggregated
and distributed to the Rights Agent to be sold in the open market and the
proceeds thereof distributed to the appropriate holders of Rights. For purposes
of this Section 14(c), the current market value of Common Stock (or other
capital stock, if applicable) shall be the closing price of a share of Common
Stock (or other capital stock, if applicable) (as determined pursuant to Section
11(d)(ii) hereof) for the Trading Day immediately prior to the date of such
exercise.
(d) The holder of a Right by the acceptance of the Rights expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right, except as permitted by this Section 14.
Section 15. Rights of Action. All rights of action in respect of this
Agreement are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Rights Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Rights Certificate in the manner provided
in such Rights Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and shall be entitled to specific performance
of the obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of Common Stock;
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(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of transfer and
with the appropriate forms and certificates fully executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the Company and
the Rights Agent may deem and treat the person in whose name a Rights
Certificate (or, prior to the Distribution Date, the associated Common Stock
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Rights Certificates or the associated Common Stock certificate made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent, subject to the last sentence of
Section 7(e) hereof, shall be required to be affected by any notice to the
contrary; and
(d) notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent shall have any liability to any holder of a
Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company shall use its
best efforts to have any such order, decree or ruling lifted or otherwise
overturned as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the number of one
one-thousandths of a share of Preferred Stock or any other securities of the
Company which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any Rights Certificate, as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in Section 24 hereof), or to receive dividends or subscription rights,
or otherwise, until the Right or Rights evidenced by such Rights Certificate
shall have been exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
disbursements and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including the costs and expenses of
defending against any claim of liability in the premises.
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(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any Rights
Certificate or certificate for Preferred Stock, Common Stock or for other
securities of the Company, instrument or assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
Successor Rights Agent shall be a party, or any corporation succeeding to the
corporate trust business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties hereto; provided, however, that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Rights Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of a predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor or in
the name of the successor Rights Agent; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Rights Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates either in its prior name
or in its changed name; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of "current market price") be proved or established by the Company
prior to taking or suffering any action hereunder, such fact or matter (unless
other evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate signed by the
Chairman of the Board, the President, any Vice President, the Treasurer, any
Assistant Treasurer, the Secretary or any Assistant Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be full authorization
to the Rights Agent for any action taken or suffered in good faith by it under
the provisions of this Agreement in reliance upon such certificate.
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(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Rights
Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Rights Certificate; nor shall it
be responsible for any adjustment required under the provisions of Section 11 or
Section 13 hereof or responsible for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that would require any
such adjustment (except with respect to the exercise of Rights evidenced by
Rights Certificates after actual notice of any such adjustment); nor shall it by
any act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Common Stock or Preferred Stock to
be issued pursuant to this Agreement or any Rights Certificate or as to whether
any shares of Common Stock or Preferred Stock will, when so issued, be validly
authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the President, any Vice President, the Secretary, any
Assistant Secretary, the Treasurer or any Assistant Treasurer of the Company,
and to apply to such officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or suffered to be taken
by it in good faith in accordance with instructions of any such officer.
(h) The Rights Agent and any stockholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniary interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct; provided, however, reasonable care was exercised in the
selection and continued employment thereof.
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(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) If, with respect to any Right Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise of transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty (30) days' notice in writing mailed to the Company, and to each
transfer agent of the Common Stock and Preferred Stock, by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent upon
thirty (30) days' notice in writing, mailed to the Rights Agent or successor
Rights Agent, as the case may be, and to each transfer agent of the Common Stock
and Preferred Stock, by registered or certified mail, and to the holders of the
Rights Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint
a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of thirty (30) days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit his Rights Certificate
for inspection by the Company), then any registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be a corporation organized and doing business
under the laws of the United States or of any state of the United States so long
as such corporation has an office in the city of New York, New York, is in good
standing, and is qualified to act as a transfer agent for equity securities
registered on the New York Stock Exchange or other securities exchange on which
equity securities of the Company are then registered. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment of a
successor Rights Agent, the Company shall file notice thereof in writing with
the predecessor Rights Agent and each transfer agent of the Common Stock and the
Preferred Stock, and shall mail a notice thereof in writing to the registered
holders of the Rights Certificates. Failure to give any notice provided for in
this Section 21, however, or any defect therein, shall not affect the legality
or validity of the resignation or removal of the Rights Agent or the appointment
of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Purchase Price or the number or kind or class of shares or other
securities or property purchasable under the Rights Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale by the Company of shares of Common Stock following the
Distribution Date and prior to the redemption or expiration of the Rights, the
Company (a) shall, with respect to shares of Common Stock so issued or sold
pursuant to the exercise of stock options or under any employee plan or
arrangement, granted or awarded as of the Distribution Date, or upon the
exercise, conversion or exchange of securities hereafter issued by the Company,
and (b) may, in any other case, if deemed necessary or appropriate by the Board
of Directors of the Company, issue Rights Certificates representing the
appropriate number of Rights in connection with such issuance or sale; provided,
however, that (i) no such Rights Certificate shall be issued if, and to the
extent that, the Company shall be advised by counsel that such issuance would
create a significant risk of material adverse tax consequences to the Company or
the Person to whom such Rights Certificate would be issued, and (ii) no such
Rights Certificate shall be issued if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of the issuance thereof.
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Section 23. Redemption and Termination.
(a) The Board of Directors of the Company may, at its option, redeem
all but not less than all the then outstanding Rights at a redemption price of
$.01 per Right, as such amount may be appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date
hereof (such redemption price being hereinafter referred to as the "Redemption
Price"), at any time on or before the earlier of (i) the close of business on
the tenth business day following the Stock Acquisition Date (or, if the Stock
Acquisition Date shall have occurred prior to the Record Date, the close of
business on the tenth business day following the Record Date) or such later date
or dates as the Board of Directors, or any duly authorized committee thereof,
may designate; provided, however, that if such later date or dates are
designated, such designation shall be made on or prior to the date prior to
which redemption would otherwise be required, or (ii) the Final Expiration Date;
provided, however, if the Board of Directors of the Company authorizes
redemption of the Rights or designates an extension of the redemption period
pursuant to clause (i) above in either of the circumstances set forth in clauses
(x) and (y) below, then there must be Continuing Directors then in office and
such authorization shall require the concurrence of a majority of such
Continuing Directors: such authorization or designation occurs (x) on or after
the time a Person becomes an Acquiring Person, or (y) on or after the date of a
change (resulting from a proxy or consent solicitation) in a majority of the
directors in office at the commencement of such solicitation if any Person who
is a participant in such solicitation has stated (or, if upon the commencement
of such solicitation, a majority of the Continuing Directors has determined in
good faith) that such Person's (or any of its Affiliates or Associates) intends
to take, or may consider taking, any action which would result in such Person
becoming an Acquiring Person or an Adverse Person or which would cause the
occurrence of a Triggering Event unless, concurrent with such solicitation, such
Person (or one or more of its Affiliates or Associates) is making a cash tender
offer pursuant to a Schedule 14D-1 (or any successor form) filed with the
Securities and Exchange Commission for all outstanding shares of Common Stock
not beneficially owned by such Person (or by its Affiliates or Associates).
Notwithstanding the foregoing, the Board of Directors of the Company may not
redeem any Rights while any Person continues to retain the status of an Adverse
Person pursuant to Section 11(a)(ii)(B). The Company may, at its option, pay the
Redemption Price in cash, shares of Common Stock (based on the "current market
price", as defined in Section 11(d)(i) hereof, of the Common Stock at the time
of redemption) or any other form of consideration deemed appropriate by the
Board of Directors and which does not violate the terms of any agreement to
which the Company is a party on the date of this Rights Agreement (or, if a
majority of the then Continuing Directors so agree, after the date of this
Agreement). Furthermore, if the Company shall determine to pay the redemption
price in Common Stock it may but shall not be required to issue fractional
shares and may aggregate fractional shares of Common Stock that would otherwise
be due to holders of Rights and distribute these shares to the Rights Agent to
be sold in the open market and the proceeds thereof shall be distributed to the
appropriate holders of Rights.
(b) Notwithstanding anything contained in this Agreement to the
contrary, the Rights shall not be exercisable after the first occurrence of a
Section 11(a)(ii) Event or Section 13 Event until such time as the Company's
right of redemption hereunder, as extended (if applicable), has expired.
(c) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights, evidence of which shall have been
filed with the Rights Agent, and without any further action and without any
notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price for
each Right so held. Promptly after the action of the Board of Directors ordering
the redemption of the Rights, the Company shall give notice of such redemption
to the Rights Agent and the holders of the then outstanding Rights by mailing
such notice to all such holders at each holder's last address as it appears upon
the registry books of the Rights Agent or, prior to the Distribution Date, on
the registry books of the Transfer Agent for the Common Stock.
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(d) (i) Subject to the limitations of applicable law and to any
restrictions set forth in any agreements to which the Company is a party on the
date of this Rights Agreement (or, if a majority of the then continuing
Directors so agree, after the date of this Agreement), the Board of Directors
(but only if there are Continuing Directors and with the concurrence of a
majority of such Continuing Directors) of the Company may, at its option, at any
time after the occurrence of a Section 11(a)(ii) Event, exchange all or part of
the then outstanding and exercisable Rights (which shall not include Rights that
have become void pursuant to the provisions of Section 7(e) hereof) for (1) one
share of Common Stock of the Company for each Right so exchanged (such share of
Common Stock issuable in exchange for one Right being referred to herein as an
"Exchange Share"), or (2) Substitute Consideration, as that term is defined
below. The Board of Directors may determine (with the consent of a majority of
the Continuing Directors) whether to deliver Exchange Shares or Substitute
Consideration. Notwithstanding the foregoing, the Board of Directors shall not
be empowered to effect such exchange at any time after any Acquiring Person or
Adverse Person (together with all Affiliates and Associates of such Acquiring
Person or Adverse Person) becomes the Beneficial Owner of shares of Common Stock
entitled to cast 50% or more of the aggregate number of votes entitled to be
cast by all shares of Common Stock then outstanding.
In the event that the Board of Directors shall determine to deliver
Substitute Consideration in exchange for Rights, the Company shall (1) determine
the value of the Exchange Shares (the "Exchange Value"), and (2) with respect to
each Right to be exchanged, make adequate provision to substitute for the
Exchange Share the following (the "Substitute Consideration"): (v) cash, (w)
common stock equivalents (as that term is defined in Section 11(a)(iii) hereof),
(x) debt securities of the Company, (y) other assets, or (z) any combination of
the foregoing, having an aggregate value equal to the Exchange Value, where such
aggregate value has been determined by the Board of Directors (with the
concurrence of a majority of the Continuing Directors) of the Company based upon
the advice of a nationally recognized investment banking firm selected by the
Board of Directors of the Company (with the concurrence of a majority of the
Continuing Directors). For purposes of this Section 23(d), the value of a share
of Common Stock shall be the current market price (as determined pursuant to
Section 11(d) hereof) per share of Common Stock on the Section 11(a)(ii) Trigger
Date; and the value of any common stock equivalent shall be deemed to have the
same value as the Common Stock on such date.
(ii) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to this Section 23(d) and
without any further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a holder of such Rights
shall be to receive the Exchange Share or Substitute Consideration for each
Right exchanged by such holder. The Company shall promptly give public notice of
any such exchange; provided, however, that the failure to give,
or any defect in, such notice shall not affect the validity of such exchange.
The Company promptly shall mail a notice of any such exchange to all of the
holders of such Rights at their last addresses as they appear upon the registry
books of the Rights Agent. Each such notice of exchange will state the method by
which the exchange for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights
which have become void pursuant to the provisions of Section 7(e) hereof) held
by each holder of Rights.
(iii) In the event that there shall not be sufficient shares of Common
Stock or common stock equivalents issued but not outstanding or authorized but
unissued to permit any exchange of Rights as contemplated by the Board of
Directors in accordance with this Section 23(d), the Company may take all such
action as may be necessary to authorize additional shares of Common Stock or
common stock equivalents for issuance upon exchange of the Rights. (iv) Unless a
majority of the then Continuing Directors otherwise agree, Company shall be
required to issue fractions of shares of Common Stock or to distribute
certificates which evidence fractional shares of Common Stock. In lieu of such
fractional shares of Common Stock, the Company shall, with the concurrence of a
majority of the then Continuing Directors, pay to the registered holders of the
Right Certificates with regard to which such fractional shares of Common Stock
would otherwise be issuable an amount in cash equal to the same fraction of the
current market value of a whole share of Common Stock.
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Section 24. Notice of Certain Events.
(a) In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any class to the
holders of Preferred Stock or to make any other distribution to the holders of
Preferred Stock (other than a regular quarterly cash dividend out of earnings or
retained earnings of the Company), or (ii) to offer to the holders of Preferred
Stock rights or warrants to subscribe for or to purchase any additional shares
of Preferred Stock or shares of stock of any class or any other securities,
rights or options, or (iii) to effect any reclassification of its Preferred
Stock (other than a reclassification involving only the subdivision of
outstanding shares of Preferred Stock), or (iv) to effect any consolidation or
merger into or with any other Person (other than a Subsidiary of the Company in
a transaction which complies with Section 11(o) hereof), or to effect any sale
or other transfer (or to permit one or more of its Subsidiaries to effect any
sale or other transfer), in one transaction or a series of related transactions,
of more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other than the
Company and/or any of its Subsidiaries in one or more transactions each of which
complies with Section 11(o) hereof), or (v) to effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the Company
shall give to each holder of a Rights Certificate, to the extent feasible and in
accordance with Section 25 hereof, a notice of such proposed action, which shall
specify the record date for the purposes of such stock dividend, distribution of
rights or warrants, or the date on which such reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution, or winding up is to take place
and the date of participation therein by the holders of the shares of Preferred
Stock, if any such date is to be fixed, and such notice shall be so given in the
case of any action covered by clause (i) or (ii) above at least twenty (20) days
prior to the record date for determining holders of the shares of Preferred
Stock for purposes of such action, and in the case of any such other action, at
least twenty (20) days prior to the date of the taking of such proposed action
or the date of participation therein by the holders of the shares of Preferred
Stock whichever shall be the earlier.
(b) In case any Section 11(a)(ii) Event hereof shall occur, then (i)
the Company shall as soon as practicable thereafter give to each holder of a
Rights Certificate, to the extent feasible and in accordance with Section 25
hereof, a notice of the occurrence of such event, which shall specify the event
and the consequences of the event to holders of Rights under Section 11(a)(ii)
hereof, and (ii) all references in the preceding paragraph to Preferred Stock
shall be deemed thereafter to refer to Common Stock and/or, if appropriate,
other securities.
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Section 25. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Rights Certificate
to or on the Company shall be sufficiently given or made if delivered by hand or
by messenger services, or if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Rights Agent), as
follows:
Hunt Manufacturing Co.
230 S. Broad Street
Philadelphia, PA 19102-4167
Attention: Secretary
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Rights Certificate to or on the Rights Agent shall be sufficiently given or made
if delivered by hand or by messenger service, or if sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with the
Company) as follows:
Mellon Bank (East), N.A.
Security Transfer Services
Four Station Square
Commerce Court, 3rd Floor
Pittsburgh, PA 15219-1173
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) shall be sufficiently given or made if delivered by hand
or by messenger service, or if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company. Any notice which is given to the holder of any Rights
Certificate (or, if prior to the Distribution Date, to the holder of
certificates representing shares of Common Stock) pursuant to this Agreement in
the manner provided for such notice shall be deemed given, whether or not such
notice is actually received.
Section 26. Supplements and Amendments. Prior to the Distribution Date
and subject to the penultimate sentence of this Section 26, the Company and the
Rights Agent shall, if the Company so directs, supplement or amend any provision
of this Agreement without the approval of any holders of certificates
representing shares of Common Stock. From and after the Distribution Date and
subject to the penultimate sentence of this Section 26, the Company and the
Rights Agent shall, if the Company so directs, supplement or amend this
Agreement without the approval of any holders of Rights Certificates in order
(i) to cure any ambiguity, (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein,
(iii) to shorten or lengthen any time period hereunder (which lengthening or
shortening, following the first occurrence of an event set forth in clause (x)
or (y) of the second proviso to Section 23(a) hereof, shall be effective only if
there are Continuing Directors and shall require the concurrence of a majority
of such Continuing Directors) or (iv) to change or supplement the provisions
hereunder in any manner which the Company may deem necessary or desirable and
which shall not adversely affect the interests of the holders of Rights
Certificates (other than an Acquiring Person, an Adverse Person, or an Affiliate
or Associate of an Acquiring Person or Adverse Person); provided, however, this
Agreement may not be supplemented or amended to lengthen, pursuant to clause
(iii) of this sentence, (A) a time period relating to when the Rights may be
redeemed at such time as the Rights already have ceased to be redeemable, or (B)
any other time period unless such lengthening is for the purpose of protecting,
enhancing or clarifying the rights of, and/or the benefits to, the holders of
Rights (other than an Acquiring Person, an Adverse Person or an Affiliate or
Associate of an Acquiring Person or Adverse Person). Upon the delivery of a
certificate from an appropriate officer of the Company which states that the
proposed supplement or amendment is in compliance with the terms of this Section
26, the Rights Agent shall execute such supplement or amendment. Notwithstanding
anything contained in this Agreement to the contrary, no supplement or amendment
shall be made which changes the Redemption Price, the Final Expiration Date, the
Purchase Price or the number of one one-thousandths of a share of Preferred
Stock for which a Right is exercisable. Prior to the Distribution Date, the
interests of the holders of Rights shall be deemed coincident with the interests
of the holders of Common Stock.
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Section 27. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder
including, without limitation, any corporation or other entity into which the
Company may be merged.
Section 28. Determinations and Actions by the Board of Directors, Etc.
For all purposes of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial Owner, shall be made in accordance with
the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations
under the Exchange Act. The Board of Directors of the Company (with, where
specifically provided for herein, the concurrence of the Continuing or
disinterested Directors) shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board (with, where specifically provided for herein, the
concurrence of the Continuing or disinterested Directors) or to the Company, or
as may be necessary or advisable in the administration of this Agreement,
including without limitation, the right and power to (i) interpret the
provisions of this Agreement, and (ii) make all determinations deemed necessary
or advisable for the administration of this Agreement (including, without
limitation, a determination to redeem or not redeem the Rights or to amend the
Agreement). All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board (with, where specifically
provided for herein, the concurrence of the Continuing or disinterested
Directors) in good faith, shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights and all other parties, and
(y) not subject the Board or the Continuing or disinterested Directors to any
liability to the holders of the Rights. Further, nothing contained in this
Agreement shall be deemed to impose on the Board of Directors or the Company any
obligation to approve a tender offer, merger, acquisition or other similar
proposal by or from a Person even though the terms of such proposal may be fair
to stockholders of the Company.
Section 29. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of the Common Stock) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, registered holders of the Common Stock).
Section 30. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court or other authority of competent
jurisdiction to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors of the Company determines in its good faith judgment that severing the
invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in Section 23 hereof
shall be extended, or if expired shall be reinstated, and shall not expire until
the close of business on the tenth day following the date of such determination
by the Board of Directors. Without limiting the foregoing, if any provision
requiring that a determination be made by less than the entire Board of
Directors (or at a time or with the concurrence of a group of directors
consisting of less than the entire Board) is held by a court or other authority
of competent jurisdiction to be invalid, void or unenforceable, such
determination shall then be made by the Board in good faith in accordance with
applicable law and the Company's certificate or articles of incorporation and
by-laws.
Section 31. Governing Law. This Agreement, each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the jurisdiction of incorporation of the Company, as the same may change
from time to time, and for all purposes shall be governed by and construed in
accordance with the laws of such jurisdiction applicable to contracts made and
to be performed entirely within such jurisdiction.
Section 32. Counterparts. This Agreement may be executed in any number
of counterparts, and each of such counterparts shall, for all purposes, be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 33. Table of Contents; Descriptive Headings. The Table of
Contents and the descriptive headings of the several Sections of this Agreement
are inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers as of the day and year first
above written.
Attest: HUNT MANUFACTURING CO.
By /s/Dennis S. Pizzica By /s/John W. Carney
-------------------------------- -----------------
Name: Dennis S. Pizzica Name: John W. Carney
Title: Assistant Secretary Title: Vice President
Attest: MELLON BANK (EAST), N.A.
By /s/Noreen Wichert By /s/William H. Price
-------------------------------- -------------------
Name: Noreen Wichert Name: William H. Price
Title: Operations Officer Title: Vice President
33
<PAGE>
Exhibit A
HUNT MANUFACTURING CO.
DESIGNATION OF POWERS, PREFERENCES, RIGHTS AND
QUALIFICATIONS OF SERIES A JUNIOR PARTICIPATING
PREFERRED STOCK
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" and the number of
shares constituting such series shall be 50,000.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock ranking prior and superior to the shares
of Series A Junior Participating Preferred Stock with respect to dividends, the
holders of shares of Series A Junior Participating Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, dividends in an amount per share
(rounded to the nearest cent) subject to the provision for adjustment
hereinafter set forth, equal to 1,000 times the aggregate per share amount of
all cash dividends (payable in cash), and 1,000 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other distributions, other
than a dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise), declared
on the Common Shares, $.10 par value, of the Company (the "Common Stock"). In
the event the Company shall at any time after August 8, 1990 (the "Rights
Declaration Date") (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the amount to which holders of shares of Series A Junior Participating Preferred
Stock were entitled immediately prior to such event shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Company shall declare a dividend or distribution on the Series
A Junior Participating Preferred Stock as provided in paragraph (A) above
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock).
(C) Dividends shall begin to accrue and be cumulative on outstanding shares of
Series A Junior Participating Preferred Stock from the date of declaration of
any dividend on the Common Stock. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series A Junior Participating
Preferred Stock in an amount less than the total amount of such dividends at the
time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares of
Series A Junior Participating Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be no more
than 30 days prior to the date fixed for the payment thereof.
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<PAGE>
Section 3. Voting Rights. The holders of shares of Series A Junior
Participating Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Series A Junior Participating Preferred Stock shall entitle the holder
thereof to 1,000 votes on all matters submitted to a vote of the shareholders of
the Company. In the event the Company shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the number of votes per share to which holders of shares of Series A Junior
Participating Preferred Stock were entitled immediately prior to such event
shall be adjusted by multiplying such number by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders of
shares of Series A Junior Participating Preferred Stock and the holders of
shares of Common Stock shall vote together as one class on all matters submitted
to a vote of the shareholders of the Company.
(C) (i) If at any time dividends on any Series A Junior Participating
Preferred Stock shall be in arrears for a period of two (2) full fiscal
quarters, the occurrence of such contingency shall mark the beginning of a
period (herein called a "default period") which shall extend until such time as
all accrued and unpaid dividends then outstanding shall have been declared and
paid or set apart for payment. During each default period, all holders of
Preferred Stock which does not rank senior to the Series A Junior Participating
Preferred Stock (including the Series A Junior Participating Preferred Stock)
with dividends in arrears thereon for a period of two (2) full fiscal quarters,
voting as a class, irrespective of series, shall have the right to elect two (2)
Directors.
(ii) During any default period, such voting right of the holders of
Series A Junior Participating Preferred Stock may be exercised initially at a
special meeting called pursuant to subparagraph (iii) of this Section 3(C) or at
any annual meeting of shareholders, and thereafter at annual meetings of
shareholders, provided that neither such voting right nor the right of the
holders of any other series of Preferred Stock, if any, to increase, in certain
cases, the authorized number of Directors shall be exercised unless the holders
of ten percent (10%) in number of shares of Preferred Stock outstanding shall be
present in person or by proxy. The absence of a quorum of the holders of Common
Stock shall not affect the exercise by the holders of Preferred Stock of such
voting right. At any meeting at which the holders of Preferred Stock shall
exercise such voting right initially during an existing default period, they
shall have the right, voting as a class, to elect Directors to fill such
vacancies, if any, in the Board of Directors as may then exist up to two (2)
Directors or, if such right is exercised at an annual meeting, to elect two (2)
Directors. If the number which may be so elected at any special meeting does not
amount to the required number, the holders of the Preferred Stock shall have the
right to make such increase in the number of Directors as shall be necessary to
permit the election by them of the required number. After the holders of the
Preferred Stock shall have exercised their right to elect Directors in any
default period and during the continuance of such period, the number of
Directors shall not be increased or decreased except by vote of the holders of
Preferred Stock as herein provided or pursuant to the rights of any equity
securities ranking senior to or pari passu with ---- ----- the Series A Junior
Participating Preferred Stock.
(iii) Unless the holders of Preferred Stock shall, during an existing
default period, have previously exercised their right to elect Directors, the
Board of Directors may order, or any shareholder or shareholders owning in the
aggregate not less than ten percent (10%) of the total number of shares of
Preferred Stock outstanding, irrespective of series, may request, the calling of
a special meeting of the holders of Preferred Stock, which meeting shall
thereupon be called by the Chairman, the President, a Vice-President or the
Secretary of the Company. Notice of such meeting and of any annual meeting at
which holders of Preferred Stock are entitled to vote pursuant to this paragraph
(C) (iii) shall be given to each holder of record of Preferred Stock by mailing
a copy of such notice to him at his last address as the same appears on the
books of the Company. Such meeting shall be called for a time not earlier than
20 days and not later than 60 days after such order or request or in default of
the calling of such meeting within 60 days after such order or request, such
meeting may be called on similar notice by any shareholder or shareholders
owning in the aggregate not less than ten percent (10%) of the total number of
shares of Preferred Stock outstanding. Notwithstanding the provisions of this
paragraph (C)(iii), no such special meeting shall be called during the period
within 60 days immediately preceding the date fixed for the next annual meeting
of the shareholders.
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<PAGE>
(iv) In any default period, the holders of Common Stock and of Series A
Junior Participating Preferred Stock, and other classes of stock of the Company
if applicable, shall continue to be entitled to elect the whole number of
Directors until the holders of Preferred Stock shall have exercised their right
to elect two (2) Directors voting as a class, after the exercise of which right
(x) the Directors so elected by the holders of Preferred Stock shall continue in
office until their successors shall have been elected by such holders or until
the expiration of the default period, and (y) any vacancy in the Board of
Directors may (except as provided in paragraph (C) (ii) of this Section 3 or in
the articles or certificate of incorporation of the Company) be filled by vote
of a majority of the remaining Directors theretofore elected by the holders of
the class of stock which elected the Director whose office shall have become
vacant. References in this paragraph (C) to Directors elected by the holders of
a particular class of stock shall include Directors elected by such Directors to
fill vacancies as provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the right
of the holders of Preferred Stock as a class to elect a Director shall cease,
(y) the term of any Director elected by the holders of Preferred Stock as a
class shall terminate, and (z) the number of Directors shall be such number as
may be provided for in the articles or certificate of incorporation or by-laws
irrespective of any increase made pursuant to the provisions of paragraph
(C)(ii) of this Section 3 (such number being subject, however, to change
thereafter in any manner provided by law or in the articles or certificate of
incorporation or by-laws). Any vacancies in the Board of Directors effected by
the provisions of clauses (y) and (z) in the preceding sentence may be filled by
a majority of the remaining Directors.
(D) Except as set forth herein or as required by law, holders of Series
A Junior Participating Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for taking any corporate
action.
Section 4. Certain Restrictions.
(A) Whenever any dividends or distributions payable on the Series A
Junior Participating Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series A Junior Participating Preferred Stock
outstanding shall have been paid in full, the Company shall not
(i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration any shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Junior Participating Preferred Stock, provided, that
the Company may at any time redeem, purchase or otherwise acquire shares of any
such junior stock in exchange for any stock of the Company ranking no higher
(either as to dividends or rights upon liquidation, dissolution or winding up)
than such junior stock;
(ii) declare or pay dividends on or make any other distributions on any
shares of stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with Series A Junior Participating Preferred Stock,
except dividends paid ratably on the Series A Junior Participating Preferred
Stock and all such parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for consideration shares
of any stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Junior Participating Preferred
Stock, provided that the Company may at any time redeem, purchase or otherwise
acquire shares of any such parity stock in exchange for shares of any stock of
the Company ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series A Junior Participating Preferred Stock
or as provided in clause (iv) below;
(iv) purchase or otherwise acquire for consideration any shares of
Series A Junior Participating Preferred Stock, or any shares of stock ranking on
a parity with the Series A Junior Participating Preferred Stock, except in
accordance with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such shares upon such
terms as the Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
3
<PAGE>
(B) The Company shall not permit any subsidiary of the Company to
purchase or otherwise acquire for consideration any shares of stock of the
Company unless the Company could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Junior
Participating Preferred Stock purchased or otherwise acquired by the Company in
any manner whatsoever shall be retired and cancelled promptly after the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Preferred Stock and may be reissued as part of
a new series of Preferred Stock to be created by resolution or resolutions of
the Board of Directors, subject to the conditions and restrictions on issuance
set forth herein.
Section 6. Liquidation, Dissolution or Winding Up. (A) Upon any
liquidation (voluntary or otherwise), dissolution or winding up of the Company,
no distribution shall be made to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series A Junior Participating Preferred Stock unless, prior thereto, the holders
of shares of Series A Junior Participating Preferred Stock shall have received
$10 per share, plus an amount equal to any accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment (the
"Series A Liquidation Preference"). Following the payment of the full amount of
the Series A Liquidation Preference, no additional distributions shall be made
to the holders of shares of Series A Junior Participating Preferred Stock
unless, prior thereto, the holders of shares of Common Stock shall have received
an amount per share (the "Common Adjustment") equal to the quotient obtained by
dividing (i) the Series A Liquidation Preference by (ii) 1,000 (as appropriately
adjusted as set forth in subparagraph C below to reflect such events as stock
splits, stock dividends and recapitalizations with respect to the Common Stock)
(such number in clause (ii), the "Adjustment Number"). Following the payment of
the full amount of the Series A Liquidation Preference and the Common Adjustment
in respect of all outstanding shares of Series A Junior Participating Preferred
Stock and Common Stock, respectively, holders of Series A Junior Participating
Preferred Stock and holders of shares of Common Stock shall receive their
ratable and proportionate share of the remaining assets to be distributed in the
ratio of the Adjustment Number to 1 with respect to such Preferred Stock and
Common Stock, on a per share basis, respectively.
(B) Notwithstanding paragraph (A) of this Section 6, (i) in the event,
however, that there are not sufficient assets available to permit payment in
full of the Series A Liquidation Preference and the liquidation preferences of
all other series of preferred stock, if any, which rank on a parity with the
Series A Junior Participating Preferred Stock, then such remaining assets shall
be distributed ratably to the holders of the Series A Participating Preferred
Stock and of any such parity shares in proportion to their respective
liquidation preferences; and (ii) in the event that after the required
distributions to holders of Preferred Stock there are not sufficient assets
available to permit payment in full of the Common Adjustment, then such
remaining assets shall be distributed ratably to the holders of Common Stock.
(C) In the event the Company shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the Adjustment Number in effect immediately prior to such event shall be
adjusted by multiplying such Adjustment Number by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
4
<PAGE>
Section 7. Consolidation, Merger, etc. In case the Company shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series A Junior Participating Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share (subject to the provision
of adjustment hereinafter set forth) equal to 1,000 times the aggregate amount
of stock, securities, cash and/or any other property (payable in kind), as the
case may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Company shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (ii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series A Junior Participating Preferred Stock shall be
adjusted by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Junior Participating
Preferred Stock shall not be redeemable.
Section 9. Ranking. The Series A Junior Participating Preferred Stock
shall rank junior to all other series of the Company's Preferred Stock as to the
payment of dividends and the distribution of assets, unless the terms of any
such series shall provide otherwise.
Section 10. Amendment. The Articles or Certificate of Incorporation of
the Company shall not be further amended in any manner which would materially
alter or change the powers, preferences or special rights of the Series A Junior
Participating Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of a majority or more of the outstanding shares
of Series A Junior Participating Preferred Stock, voting separately as a class.
Section 11. Fractional Shares. Series A Junior Participating Preferred
Stock may be issued in fractions of a share which shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting rights,
receive dividends, participate in distributions and to have the benefit of all
other rights of holders of Series A Junior Participating Preferred Stock.
5
<PAGE>
Exhibit B
HUNT MANUFACTURING CO.
SUMMARY OF RIGHTS AND RIGHTS AGREEMENT
On August 8, 1990, the Board of Directors of HUNT MANUFACTURING CO.
(the "Company") declared a dividend distribution of one right (a "Right") for
each outstanding Common Share, $.10 par value (the "Common Stock"), to holders
of Common Stock of record at the close of business on August 22, 1990. Each
Right entitles the registered holder to purchase from the Company a unit
consisting of one one-thousandth of a new Series A Junior Participating
Preferred Share, $.10 par value (the "Preferred Stock"), at a Purchase Price of
$60 per unit, subject to adjustment. The terms of the Rights are set forth in a
Rights Agreement (the "Rights Agreement") between the Company and Mellon Bank
(East), N.A., as Rights Agent.
The following description of the principal provisions of the Rights and
the Rights Agreement is a summary only, does not purport to be complete and is
qualified in its entirety by the provisions of the Rights Agreement (and
exhibits thereto), a copy of which has been filed by the Company with the
Securities and Exchange Commission. A copy of the Rights Agreement is available
free of charge from the Company upon written request directed to the Secretary
of the Company at its principal offices.
Until the Distribution Date (as defined below), (a) the Rights will be
evidenced by the Common Stock certificates and will be transferable only with
such Common Stock certificates, (b) new Common Stock certificates issued after
August 22, 1990 will contain a notation incorporating the Rights Agreement by
reference and (c) the surrender for transfer of any certificates for Common
Stock outstanding will also constitute the transfer of the Rights associated
with the Common Stock represented by such certificate. Pursuant to the Rights
Agreement, the Company reserves the right to require that, upon any exercise of
Rights, a number of Rights be exercised so that only whole shares of Preferred
Stock will be issued.
1
<PAGE>
The Rights will not become exercisable until a Distribution Date occurs
and the Company's right to redeem the Rights (as hereinafter described) has
expired. Holders of Rights will have no rights as holders of the capital stock
purchasable upon exercise of the Rights (including, without limitation, the
right to vote or receive dividends) unless and until their Rights have been
exercised. The Rights will expire at the close of business on December 31, 2000,
unless they are earlier redeemed by the Company or expire in accordance with
other provisions of the Rights Agreement as described below.
As soon as practicable after the occurrence of a Distribution Date,
Rights Certificates will be mailed to holders of record of the Common Stock as
of the close of business on the Distribution Date and, thereafter, the separate
Rights Certificates alone will represent the Rights. With limited exceptions,
except as otherwise determined by the Board of Directors, only shares of Common
Stock issued prior to the Distribution Date will be issued with Rights.
A Distribution Date will occur, upon the earliest to occur of any of
the following events:
(i) 10 business days following the date (the "Stock Acquisition Date")
of a public announcement that a person or group of affiliated or associated
persons (an "Acquiring Person") has acquired beneficial ownership of 15% or more
of the shares of Common Stock then outstanding, provided that an "Acquiring
Person" will not include (i) the Company, its subsidiaries or any of their
employee benefit plans, (ii) an individual, trust or estate who or which, as of
June 20, 1990 was the beneficial owner of shares of Common Stock, and any
individual, trust or estate who or which thereafter acquires beneficial
ownership of shares of Common Stock from such an individual, trust or estate by
gift, devise or bequest, or pursuant to any employee benefit plan of the Company
(but this exclusion will not apply to any such individual, trust or estate who
or which, but for this provision, would be an "Acquiring Person" and who or
which, together with all associates and affiliates, becomes after June 20, 1990
the beneficial owner of 5% or more of the then outstanding Common Stock,
excluding from that calculation any shares of Common Stock beneficially owned by
such Person or Persons on June 20, 1990 and any shares subsequently acquired by
gift, devise or bequest or pursuant to employment benefit plans of the Company),
or (iii) persons with whom the Company has entered into standstill agreements
prior to the time they became holders of 15% or more of the outstanding Common
Stock;
(ii) 10 business days following the commencement of a tender offer or
exchange offer that would result in a person or group beneficially owning 15% or
more of the outstanding Common Stock (unless such tender offer or exchange offer
is an offer for all outstanding Common Stock which a majority of the independent
directors of the Company determines to be fair to and otherwise in the best
interests of the Company and its stockholders (also taking into account, to the
extent such directors in their discretion deem relevant, the interests of
employees, suppliers, customers, creditors, communities in which offices or
other establishments of the Company are located, and its other constituencies);
and
2
<PAGE>
(iii) 10 days after the date on which a person becomes an "Adverse
Person". A person will become an "Adverse Person" if all of the following
occurs: (i) a majority of the independent directors, after reasonable inquiry
and investigation and consultation with such persons as they deem appropriate,
determine that (x) beneficial ownership by a specified person of an amount of
Common Stock exceeding the Ownership Limitation (as defined below) is, or would
likely be, intended to cause the Company to repurchase the Common Stock
beneficially owned by such person or to cause pressure on the Company to take
action or enter into a transaction or series of transactions intended to provide
such person with short-term financial gain under circumstances where the
majority of such independent directors determines that the best long-term
interests of the Company and its stockholders (also taking into account, to the
extent they in their discretion deem relevant, the interests of employees,
suppliers, customers, creditors, communities in which offices or other
establishments of the Company are located, and its other constituencies) would
not be served by taking such action or entering into such transactions or series
of transactions at that time or (y) beneficial ownership by such person of an
amount of Common Stock exceeding the Ownership Limitation is causing or
reasonably likely to cause a material adverse impact (including, but not limited
to, impairment of relationships with customers, suppliers or creditors or
impairment of the Company's ability to maintain its competitive position) on the
business or prospects of the Company; (ii) a majority of such independent
directors designate a specific limitation on the amount of Common Stock which
such specified person may beneficially own, which amount (the "Ownership
Limitation") may be less than, equal to, or more than the amount of shares then
owned by such person, but not less than 10% of the outstanding shares); and
(iii) the beneficial ownership of shares of such person, including such person's
affiliates and associates, shall (either before or after the occurrence of the
events specified in clauses (i) or (ii) above) exceeds the Ownership Limitation.
A majority of such independent directors also may terminate the status of a
person as an Adverse Person.
Notwithstanding the foregoing, with respect to the events specified in
clauses (a) and (b) above, the Board of Directors may designate, in accordance
with the Rights Agreement, a later date as the Distribution Date. If a person
has become an Acquiring Person or, under certain circumstances, there has been a
change in a majority of the Board as a result of a proxy solicitation, the
decision to defer the Distribution Date will require the concurrence of a
majority of the Continuing Directors. The term "Continuing Directors" means any
member of the Board of Directors of the Company who was a member of the Board
prior to the date of the Rights Agreement, and any person who is subsequently
elected to the Board if such person is recommended or approved by a majority of
the Continuing Directors, but does not include any Acquiring Person or Adverse
Person, or an affiliate or associate of any such person, or any representative
of the foregoing.
In the event that a Person actually becomes an Acquiring Person (except
pursuant to an offer for all outstanding shares of Common Stock which the
independent directors determine to be fair to and otherwise in the best
interests of the Company, its stockholders and other constituencies), or a
person becomes an Adverse Person (collectively, "Flip-In Events"), each holder
of a Right will thereafter have the right to receive, upon exercise of such
Right, instead of 1/1000th of a share of Preferred Stock for the Purchase Price,
shares of Common Stock (or, in certain circumstances, cash, property or other
securities of the Company) having a value equal to two times the Purchase Price
of the Right. Notwithstanding the foregoing, following the occurrence of any of
the Flip-In Events set forth in this paragraph, all Rights that are, or (under
certain circumstances specified in the Rights Agreement) were, beneficially
owned by any Acquiring Person or an Adverse Person or by certain related parties
will be null and void. However, Rights will not be exercisable following the
occurrence of either of the Flip-In Events set forth above until such time as
the Rights are no longer redeemable by the Company as set forth below.
3
<PAGE>
For example, at a Purchase Price of $60 per Right, each Right not owned
by an Acquiring Person or by an Adverse Person (or, by certain related parties)
following a Flip-In Event set forth in the preceding paragraph would entitle its
holder to purchase $120 worth of Common Stock (or, in certain circumstances
other cash, property or securities) for $60. Assuming that the Common Stock had
a per share value of $15 at such time, the holder of each valid Right would be
entitled to purchase 8 shares of Common Stock for $60.
The Purchase Price payable upon exercise of the Rights may be paid in
cash, by certified bank check or bank draft or, if authorized by a majority of
the Continuing Directors, by delivery of shares of Common Stock.
Following a Flip-In Event, subject to applicable law and to any
restrictions set forth in certain agreements to which the Company is a party,
the Board of Directors (with the concurrence of a majority of Continuing
Directors) may determine to exchange for any or all Rights (other than Rights
held by the Acquiring Person or Adverse Person and certain related parties) one
share of Common Stock for each Right so exchanged or substitute value in the
form of cash, property, debt or equity securities, or any combination of the
foregoing. Such exchange will be on a pro rata basis if less than all Rights are
to be exchanged, and holders of Rights will be required to pay no consideration
(other than delivery of the Right) in any such exchange.
In the event that, at any time following a Stock Acquisition Date, (a)
the Company is acquired in a merger or other business combination transaction
(other than certain specified acquisitions, or an acquisition following an offer
determined by the independent directors to be fair, as described in the third
preceding paragraph), or (b) more than 50% of the Company's assets or earning
power is sold or transferred, each holder of a Right which has not yet been
exercised (except Rights of Acquiring or Adverse Persons and certain other
related persons which previously have been voided as set forth above) shall
thereafter have the right to receive, upon exercise, common stock of the
acquiring company having a value equal to two times the Purchase Price of the
Right. The events set forth in this paragraph as well as Flip-In Events are
referred to as the "Triggering Events."
The number of Rights, the Purchase Price payable and/or the number of
Units of Preferred Stock (or other securities or property issuable upon exercise
of the Rights) and the redemption price hereinafter specified are subject to
mandatory or discretionary adjustment from time to time in certain circumstances
to prevent dilution or to avoid adverse tax consequences. With certain
exceptions, no adjustment in the Purchase Price will be required unless
cumulative adjustments amount to at least 1% of the Purchase Price.
Subject to certain restrictions, the Company may determine not to issue
fractional shares of Preferred Stock or Common Stock upon exercise or exchange
of the Rights, and, in lieu hereof, an adjustment in cash may be made based on
the market price of the Preferred Stock (or Common Stock, as the case may be).
In general, at any time until 10 business days following a Stock
Acquisition Date, or such later date as the Board of Directors may designate,
the Company may redeem the Rights in whole, but not in part, at a price of $.01
per Right (payable in cash, Common Stock or other consideration deemed
appropriate by the Board of Directors and which does not violate the terms of
certain agreements to which the Company is a party). The requirement of approval
of a majority of the Continuing Directors discussed above with respect to
extension of the Distribution Date also applies to the redemption of Rights or
the decision to designate an extended redemption period. The Company may not
redeem the Rights while a person continues to retain the status of an Adverse
Person. Immediately upon the action of the Board of Directors ordering
redemption of the Rights, the Rights will terminate and the only right of the
holders of Rights will be to receive the redemption price.
4
<PAGE>
While the distribution of the Rights will not be taxable to
stockholders or to the Company, stockholders may, depending upon the
circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock of the Company (or for other consideration) or for
common stock of an acquiring company as set forth above.
The Rights Agreement vests the authority to administer the Agreement in
the Board of Directors (and, in some circumstances, the Continuing Directors or
the independent directors). All actions, interpretations, calculations and
determinations which are taken or made by the Board of Directors (or the
Continuing Directors or the independent directors, as the case may be) in good
faith will be final and binding. Nothing contained in the Rights Agreement will
be deemed to impose on the Board of Directors or the Company any obligation to
approve a tender offer, merger, acquisition or other similar proposal by or from
a person even though the terms of such proposal may be fair to stockholders of
the Company.
Other than those provisions relating to certain principal economic
terms of the Rights which may not be amended, any of the provisions of the
Rights Agreement may be amended by the Board of Directors of the Company at any
time prior to the Distribution Date. After the Distribution Date, the provisions
of the Rights Agreement may be amended by the Board (in certain circumstances,
with the concurrence of the Continuing Directors) in order to cure any
ambiguity, to make changes which do not adversely effect the interests of
holders of Rights (excluding the interest of any Acquiring Person or Adverse
Person), or to shorten or lengthen certain time periods under the Rights
Agreement.
The issuance of the Rights has no dilutive effect on the Company and
will not affect reported earnings per share of the Company.
As previously indicated, the foregoing is only a summary of the
principal provisions of the Rights and Rights Agreement. The specific terms of
the Rights and the Preferred Stock initially issuable upon exercise of the
Rights are set forth in the Rights Agreement and the Exhibits thereto
(particularly Exhibit A thereto setting forth the powers, preferences, rights
and qualifications of the Preferred Stock and Exhibit C thereto containing the
form of Rights Certificate), and reference is made to the Rights Agreement and
exhibits, copies of which are available free of charge from the Company.
5
<PAGE>
Exhibit C
[FORM OF RIGHTS CERTIFICATE]
Certificate No. R- Rights
-----------------
NOT EXERCISABLE AFTER DECEMBER 31, 2000 OR EARLIER IF REDEEMED BY THE COMPANY.
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.01 PER
RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR ADVERSE
PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT
HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS
RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME
AN [ACQUIRING] [ADVERSE] PERSON OR AN AFFILIATE OR ASSOCIATE OF AN [ACQUIRING]
[ADVERSE] PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).
ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY
BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH
AGREEMENT.*]
Rights Certificate
HUNT MANUFACTURING CO.
This certifies that , or registered assigns, is the registered owner of
the number of Rights set forth above, each of which entitles the owner thereof,
subject to the terms, provisions and conditions of the Rights Agreement, dated
as of August 8, 1990, as the same may be modified or amended from time to time
(the "Rights Agreement"), between Hunt Manufacturing Co., a Pennsylvania
corporation (the "Company"), and Mellon Bank (East), N.A., a national banking
corporation (the "Rights Agent"), to purchase from the Company at any time prior
to 5:00 P.M. (Philadelphia time) on December 31, 2000, at the office or offices
of the Rights Agent designated for such purpose, or its successors as Rights
Agent, one one-thousandth of a fully paid, non-assessable share of Series A
Junior Participating Preferred Stock (the "Preferred Stock") of the Company, at
a purchase price of $60 per one one-thousandth of a share of Preferred Stock
(the "Purchase Price"), upon presentation and surrender of this Rights
Certificate with the Form of Election to Purchase and related Certificate duly
executed. The number of Rights evidenced by this Rights Certificate (and the
number of shares which may be purchased upon exercise hereof) set forth above,
and the Purchase Price per share set forth above, are the number and Purchase
Price as of August 8, 1990, based on the Preferred Stock as constituted at such
date. The Company reserves the right as provided in the Rights Agreement to
require prior to the occurrence of a Triggering Event (as such term is defined
in the Rights Agreement) that a number of Rights be exercised so that only whole
shares of Preferred Stock will be issued.
1
<PAGE>
Upon the occurrence of a Section 11(a)(ii) Event (as such term is
defined in the Rights Agreement), if the Rights evidenced by this Rights
Certificate are beneficially owned by (i) an Acquiring Person or Adverse Person
or an Affiliate or Associate of any such Acquiring Person or Adverse Person (as
such terms are defined in the Rights Agreement), (ii) a transferee of any such
Acquiring Person, Adverse Person, Associate or Affiliate, or (iii) under certain
circumstances specified in the Rights Agreement, a transferee of a person who,
after such transfer, became an Acquiring Person or Adverse Person or an
Affiliate or Associate of an Acquiring Person or Adverse Person, such Rights
shall become null and void and no holder hereof shall have any right with
respect to such Rights from and after the occurrence of such Section 11(a)(ii)
Event.
As provided in the Rights Agreement, the Purchase Price and the number
and kind of shares of Preferred Stock or other securities which may be purchased
upon the exercise of the Rights evidenced by this Rights Certificate are subject
to modification and adjustment upon the happening of certain events, including
Triggering Events.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificate, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the above-mentioned office of the
Rights Agent and are also available free of charge from the Company upon written
request, directed to the Secretary of the Company at its principal offices.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal office or offices of the Rights Agent designated
for such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of one one-thousandths of a share of Preferred
Stock (or other securities, if applicable) as the Rights evidenced by the Rights
Certificate or Rights Certificates surrendered shall have entitled such holder
to purchase. If this Rights Certificate shall be exercised in part, the holder
shall be entitled to receive upon surrender hereof another Rights Certificate or
Rights Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Company at its option at a redemption
price of $.01 per Right at any time prior to the earlier of the close of
business on (i) the tenth business day following the Stock Acquisition Date (as
such time period may be extended pursuant to the Rights Agreement), (ii) the
date the Rights expire pursuant to Section 13(d) of the Rights Agreement, and
(iii) the Final Expiration Date.
Subject to the provisions of the Rights Agreement, the Company may
determine not to issue fractional shares of Preferred Stock or other securities
issuable upon exercise or exchange of any Right or Rights evidenced hereby.
Fractional shares of stock may, at the election of the Company, be evidenced by
depository receipts. In lieu of fractional shares a cash payment will be made,
subject to certain exceptions, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be deemed for any
purpose the holder of shares of Preferred Stock or of any other securities of
the Company upon the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed as conferring upon the holder hereof, as such,
any of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
2
<PAGE>
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of , 19__
--------------------------------
ATTEST: HUNT MANUFACTURING CO.
By
- --------------------------------------------
Title: Title:
Countersigned:
MELLON BANK (EAST), N.A.
By
Authorized Signature
3
<PAGE>
[FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED
------------------------------------------------------------
(Please print name and address of transferee)
- --------------------------------------------------------------------------------
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint Attorney, to transfer this
Rights Certificate on the books of the within named Company, with full power of
substitution.
Dated: , 19__
-------------------
---------------------------------
Signature
Signature Guaranteed:
CERTIFICATE
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold,
assigned and transferred by or on behalf of a Person who is or was an Acquiring
Person, an Adverse Person or an Affiliate or Associate of any such Person (as
such terms are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or subsequently became an Acquiring
Person, an Adverse Person or an Affiliate or Associate of any such Person.
Dated: , 19__
-------------------
---------------------------------
Signature
Signature Guaranteed:
4
<PAGE>
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
5
<PAGE>
[FORM OF ELECTION TO PURCHASE]
(to be executed if holder desires to
exercise Rights represented by the
Rights Certificate.)
To: HUNT MANUFACTURING CO.
The undersigned hereby irrevocably elects to exercise Rights
represented by this Rights Certificate to purchase the shares of Preferred Stock
issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person or other property as may be issuable upon the
exercise of the Rights) and requests that certificates for such shares and/or
such other property be issued in the name of and delivered to:
Please insert social security or other identifying number
------------------------------------------------------------
(Please print name and address)
- -------------------------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced
by this Rights Certificate, a new Rights Certificate for the balance of such
Rights shall be registered in the name of and delivered to:
Please insert social security or other identifying number
- -------------------------------------------------------------------------------
(Please print name and address)
- -------------------------------------------------------------------------------
Dated: , 19__
-------------------
----------------------------------
Signature
Signature Guaranteed:
CERTIFICATE
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [
] are not being exercised by or on behalf of a Person who is or was an Acquiring
Person, an Adverse Person or an Affiliate or Associate of any such Person (as
such terms are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any person who is, was or became an Acquiring Person, an
Adverse Person or an Affiliate or Associate of any such Person.
Dated: , 19__
-------------------
--------------------------
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Election to Purchase and
Certificate must correspond to the name as written upon the face of this Rights
Certificate in every particular, without alternation or enlargement or any
change whatsoever.
* The portion of the legend in brackets shall be inserted only if applicable,
shall be modified to apply to an Acquiring Person or an Adverse Person as
applicable, and shall replace the preceding sentence.
6
<PAGE>
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Agreement is made as of December 2, 1991, by and among Hunt
Manufacturing Co., a Pennsylvania corporation ("Hunt"), Mellon Bank N.A., a
national bank ("Mellon") and American Stock Transfer & Trust Company, a New York
corporation ("AST")
Background
On August 8, 1990, Hunt and Mellon entered into that certain
Rights Agreement (the "Rights Agreement") with respect to which Hunt has issued
the Rights. (All capitalized terms used but not otherwise defined herein have
the same meaning as in the Rights Agreement.) Pursuant to the Rights Agreement,
Mellon has acted as the Rights Agent. The parties hereto desire to substitute
AST as successor Rights Agent, as provided herein.
NOW, THEREFORE, in consideration of the foregoing, and
themutual agreements herein contained and intending to be legally bound, the
parties hereby agree as follows:
Effective as of the opening of business on December 2, 1991,
Mellon shall be removed as Rights Agent and AST shall be the successor Rights
Agent, as provided in Section 21 of the Rights Agreement. In furtherance of the
foregoing, Mellon hereby assigns and transfers to AST and its successors and
assigns, all of the rights, powers and privileges of the Rights Agent under the
Rights Agreement, subject to all obligations, to be effective as of the opening
of business on December 2, 1991, and AST hereby accepts such assignment and
agrees to be bound by the Rights Agreement as if an original party thereto.
Each party hereto represents and warrants that it is duly
authorized to enter into this Agreement. AST further represents and warrants
that it satisfies all requirements applicable to the Rights Agent set forth in
the Rights Agreement.
Each party agrees, at any time upon request by any other party,
to do, execute and deliver all such further acts, assignments or other documents
as may be necessary to effectuate the purpose of this Agreement.
<PAGE>
IN WITNESS HEREOF, each party has caused this Agreement to be duly
executed and delivered by their respective duly authorized officers as of the
date first written above.
Attest
/s/ Judith Akodler /s/ Rudolph M. Peins, Jr.
- ----------------------------- ----------------------------------------
Rudolph M. Peins, Jr.
Sr. Vice President,
Finance & Administration
MELLON BANK N.A.
Attest
/s/ /s/
- ----------------------------- ----------------------------------------
Title
AMERICAN STOCK TRANSFER & TRUST COMPANY
Attest
/s/ /s/
- ----------------------------- ----------------------------------------
Title
<PAGE>
EXHIBIT 10(a)
June 5, 1979
$2,000,000
THE IREDELL COUNTY INDUSTRIAL FACILITIES AND POLLUTION CONTROL FINANCING
AUTHORITY INDUSTRIAL REVENUE BONDS
(HUNT MANUFACTURING CO. PROJECT)
SERIES 1979
MEMORANDUM OF LEGAL PAPERS
Legal papers required for compiling the bond transcripts
relating to the above-mentioned bonds.
Seven complete transcripts are to be prepared for distribution as follows:
1 - The Iredell County Industrial Facilities and Pollution Control Financing
Authority (the "Authority")
1 - Robert N. Randall, Esq. ("Authority Counsel")
1 - Hunt Manufacturing Co. ("Hunt")
1 - Drinker Biddle & Reath ("Company Counsel")
1 - First Union National Bank of North Carolina ("Trustee")
1 - Alex. Brown & Sons ("Underwriter")
1 - Brown, Wood, Ivey, Mitchell & Petty ("Brown Wood")
For the purpose of facilitating identification, each item should have in
the upper right hand corner the item number stated below. The numbered items
preceded by an asterisk have been or will be prepared, acquired or otherwise
furnished by Brown Wood. All items are to be prepared on letter-size paper. All
other defined terms used herein have the meanings assigned to them in the Lease
Agreement dated as of June 1, 1979, between the Authority and Hunt.
*1. Certified extracts of the minutes of the meeting of the Board of
Commissioners for Iredell County on March 15, 1977 evidencing the adoption.
of a resolution directing the giving of notice of the intention of the
County to create the Authority.
*2. Evidence of receipt of such notice by the Local Government Commission and
the Department of Economic and Natural Resources.
<PAGE>
*3. Certified extracts of the minutes of the meeting of the Board of
Commissioners for Iredell County on December 6, 1977 evidencing the
adoption of a resolution confirming the creation together with a copy of
resolution of said Board adopted on May 3, 1977, creating the Authority.
*4. Certified extracts of the minutes of an organizational meeting of the Board
of Commissioners of the Authority on October 17, 1977 evidencing:
(a) the election of officers of the Authority;
(b) the adoption of the Bylaws of the Authority; and
(c) a resolution directing the preparation of a Notice of Formation of the
Authority.
*5. Copy of the Certificate of Formation of the Authority as filed with the
DNER and LGC.
*6. Certified copy of the Bylaws of the Authority.
*7. Certified extracts of the minutes of the meeting of the Board of
Commissioners of the Authority on January 5, 1979, authorizing execution of
a Memorandum of Agreement with Hunt.
*8. Copy of the Memorandum of Agreement dated as of January 5, 1979, between
the Authority and Hunt.
*9. Certified extracts of the minutes of the Board of Commissioners for Iredell
County on February 20, 1979 evidencing the adoption of a resolution
approving the Project in principle.
*10. Affidavit of an officer of the Statesville Daily Record, Inc., with printed
clipping attached, evidencing publication in the STATESVILLE RECORD &
LANDMARK of notice of the intention of the Authority to file an application
with the Department of Commerce.
*11. Copy of the Certificate of Approval of the Project by the Secretary of the
Department of Commerce pursuant to G.S. 159C-7 and of the approval of the
Department of Community Development and Natural Resources.
2
<PAGE>
*12. Affidavit of an official of the Statesville Daily Record, Inc., with
printed clipping attached, evidencing publication in the STATESVILLE RECORD
& LANDMARK of Department of Commerce approval for the Project.
*13. Certificate of the Clerk of the Superior Court, Wake County, dated March
26, 1979 that no petition has beer. filed and no action has been commenced
seeking review of the Certificate of Approval of the Department of Commerce
of the Project.
*14. Certified extracts of the minutes of the meeting of the Board of
Commissioners of the Authority on May 15, 1979, evidencing adoption of a
resolution:
(a) approving, and authorizing acceptance of, the Deed and Bill of Sale;
(b) approving, and authorizing the execution and delivery of, the Lease;
(c) approving, and authorizing the execution and delivery of, the
Indenture;
(d) authorizing the issuance of the Bonds;
(e) approving, and authorizing the execution and delivery of, the Contract
of Purchase;
(f) approving the Official Statement and ratifying the use of the
Preliminary Official Statement; and
(g) making a tax election.
*15. Copy of letter, signed by the Chairman and the Secretary of the Authority,
by which the Authority elects to qualify its bonds for the $10,000,000
exemption, with evidence of its receipt by the IRS.
*16. Certified extracts of the minutes of the meeting of the Board of
Commissioners for Iredell County on May 15, 1979, evidencing adoption of a
resolution approving the issuance of the Bonds pursuant to G.S. 159C-4(d).
3
<PAGE>
17. Proceedings and certificate of LGC approving the issuance and sale of the
Bond pursuant to G.S. 1590-6, 8 and 9.
*18. Copy of the Deed from Hunt to the Authority.
*19. Copy of the Bill of Sale from Hunt to the Authority.
*20. Executed counterpart of the Lease.
*21. Executed counterpart of the Indenture.
*22. Executed counterpart of the Guaranty.
*23. Executed counterpart of the Contract of Purchase.
24. Copy of the Preliminary Official Statement.
25. Signed copy of Official Statement.
26. Opinion of counsel for the Authority:
(a) as to the acceptance and validity of the Deed and the Bill of Sale;
(b) as to the execution, delivery of the Lease, the Indenture and Contract
of Purchase;
(c) as to the lien of the Indenture;
(d) as to the execution, issuance and delivery of the Bonds and as to the
fulfillment of conditions to delivery of the Bonds; and
(e) as to the absence of any litigation or conflicting agreements or
obligations.
27. Opinion of Company Counsel:
(a) as to the organization, good standing, qualification to do business
and power and authority of Hunt to consummate the Project;
(b) as to the execution, delivery and approval of the Lease, the Guaranty
and the Letters of Representation; and
4
<PAGE>
(c) as to the absence of any litigation. or conflicting agreements or
obligations.
28. General Certificate of Hunt including, as Exhibits:
(a) Bylaws; and
(b) minutes of the Board of Directors approving and authorizing officers
to execute, the Deed, the Bill of Sale, the Lease, the Guaranty, the
approval of the Contract of Purchase and the Letters of
Representation.
29. Certified Articles of Incorporation of Hunt together with any amendments
thereto.
30. Certificates (i) of good standing of the Secretary of Commonwealth of
Pennsylvania; (ii) of the Secretary of State of North Carolina as to
qualification to do business and good standing in North Carolina; and (iii)
of the Department of Revenue of North Carolina as to taxes.
31. Evidence that insurance has been obtained as required of Sections 7.1 and
7.2 of the Lease.
*32. Certificate as to estimated Completion Date.
*33. Certificate of the Chairman of the Authority designating the Authority
Representative referred to in the Lease.
*34. Certificate of Hunt designating the Company Representative referred to in
the Lease.
*35. Officers and Seal Certificate of Iredell County.
*36. General Certificate of the Authority.
*37. Non-arbitrage certificates.
38. Certificate of a Vice President of Hunt accompanied by an opinion of
Company Counsel setting forth the amounts to be included in determining the
face amount of the Bond for the purpose of qualifying for the $10,000,000
exemption and attesting to the accuracy of certain statements.
5
<PAGE>
*39. Underwriter's receipt for the Bonds.
*40. Trustee's certificate of Delivery and Payment.
41. Trustee's certificate acknowledging receipt of the items required by
Section 208 of the indenture.
42. Evidence of Trustee's authority to exercise trust powers.
*43. Opinion of Brown Wood as Bond Counsel.
44. Opinions of Brown Wood relating to the Official Statement and federal
securities laws.
45. Blue Sky Survey.
46. Legal Investment Survey.
*47. Specimen Bond (including Certificate of Authentication).
*48. Copies of Financing Statements filed in Statesvil1e and Raleigh, North
Carolina.
*49. Form of Requisition and Certificate.
50. Copy of Requisition #1.
51. Cony of Letter of Coopers & Lybrand.
52. Copy of Check from Alex. Brown & Sons to First Union Bank of North
Carolina.
6
<PAGE>
THE BOARD OF COMMISSIONERS FOR THE
COUNTY OF IREDELL, CAROLINA
NOTICE OF INTENTION TO CREATE AUTHORITY
The Board of Commissioners for the County of Iredell, North Carolina, met
in regular session at the Board of Commissioners Room, County Annex Building in
Statesville, North Carolina, the regular place of meeting, at 7:30 P.M., on
March 15, 1977.
Present: Chairman Dr. Robert Long presiding, and Commissioners RHYE,
TILLEY, TROUTMAN, AND FEIMSTER. Absent: _____________________________________.
Also present: JOHN T. SMITH, COUNTY MANAGER, AND GEORGE W. WOOTEN, FINANCE
OFFICER
Commissioner RHYE introduced the following resolution which was read:
RESOLUTION DIRECTING PUBLICATION OF NOTICE OF INTENTION OF BOARD OF
COMMISSIONERS TO CREATE AN INDUSTRIAL FACILITIES AND POLLUTION
CONTROL FINANCING AUTHORITY
BE IT RESOLVED by the Board of Commissioners for the County of Iredell:
Section 1. The Board of Commissioners has determined to create by
resolution a political subdivision and body corporate and politic of the State
of North Carolina to be known as "The Iredell County Industrial Facilities and
Pollution Control Financing Authority" (the "Authority") pursuant to the
provisions of Article V, Section 9 of the
<PAGE>
Constitution of North Carolina and Chapter 159C of the General Statutes of North
Carolina (the "Act").
Section 2. In compliance with Section 159C-4(a) of the Act, the Board of
Commissioners hereby directs the Clerk to file with the Department of Natural
and Economic Resources of the State of North Carolina and the Local Government
Commission of the State of North Carolina notice of its intention to adopt a
resolution creating the Authority, which notice shall be in the form attached
hereto as EXHIBIT A.
Section 3. This resolution shall take effect upon its passage.
Commissioner Rhye moved passage of the foregoing resolution entitled:
"RESOLUTION DIRECTING PUBLICATION OF NOTICE OF INTENTION OF BOARD 0F
COMMISSIONERS TO CREATE AN INDUSTRIAL FACILITIES AND POLLUTION CONTROL FINANCING
AUTHORITY" and Commissioner Troutman seconded the motion, and the resolution was
passed by the following vote:
Ayes: Commissioners LONG, TROUTMAN, TILLEY, RHYE, AND FEIMSTER.
Noes: _____________________.
I, Alice Fortner, Clerk to the Board of Commissioners for the County of
Iredell, North Carolina, DO HEREBY CERTIFY
2
<PAGE>
that the foregoing is a true and complete copy of so much of the proceedings of
the Board of Commissioners for said County at a meeting held March 15, 1977, as
relates in any way to the resolution hereinabove set forth, and that said
proceedings are recorded in Minute Book No. 23 of the minutes of said Board,
beginning at page 379 and ending at page 379.
WITNESS my hand and the common seal of said County, this 15TH day of March,
1977.
------------------------------------
Clerk to the Board of Commissioners
3
<PAGE>
EXHIBIT A
NOTICE OF INTENTION OF THE BOARD OF
COMMISSIONERS FOR THE COUNTY OF IREDELL
TO CREATE AN INDUSTRIAL FACILITIES AND
POLLUTION CONTROL FINANCING AUTHORITY
In accordance with the provisions of Chapter 159C of the General Statutes
of North Carolina (the "Act") and particularly Section 159C-4(a) thereof, the
Board of Commissioners for the County of Iredell, North Carolina hereby gives
notice to the Department of Natural and Economic Resources of the State of North
Carolina and the Local Government Commission of North Carolina of its intention
to adopt a resolution creating "The Iredell County Industrial Facilities and
Pollution Control Financing Authority" pursuant to the provisions of the Act.
BOARD OF COMMISSIONERS FOR THE
COUNTY OF IREDELL
------------------------------------
Clerk to the Board of Commissioners
Received on ________________, 1977.
______________________________________ [DNER or LGC]
By: ______________________________________
Title: ___________________________________
<PAGE>
NOTICE OF INTENTION OF THE BOARD OF
COMMISSIONERS FOR THE COUNTY OF IREDELL
TO CREATE AN INDUSTRIAL FACILITIES AND
POLLUTION CONTROL FINANCING AUTHORITY
In accordance with the provisions of Chapter 1590 of the General Statutes
of North Carolina (the "Act") and particularly Section 159C-4(a) thereof, the
Board of Commissioners for the County of Iredell, North Carolina hereby gives
notice to the Department of Natural and Economic Resources of the State of North
Carolina and the Local Government Commission of North Carolina of its intention
to adopt a resolution creating "The Iredell County Industrial Facilities and
Pollution Control Financing Authority" pursuant to the provisions of the Act.
BOARD OF COMMISSIONERS FOR THE
COUNTY OF IREDELL
------------------------------------
Clerk to the Board of Commissioners
Received on MARCH 17, 1977.
LOCAL GOVERNMENT COMMISSION
By: JOHN D. FOUST
Title: SECRETARY
<PAGE>
NOTICE OF INTENTION OF THE BOARD OF
COMMISSIONERS FOR THE COUNTY OF IREDELL
TO CREATE AN INDUSTRIAL FACILITIES AND
POLLUTION CONTROL FINANCING AUTHORITY
In accordance with the provisions of Chapter 159C of the General Statutes
of North Carolina (the "Act") and particularly Section 159C-4(a) thereof, the
Board of Commissioners for the County of Iredell, North Carolina hereby gives
notice to the Department of Natural and Economic Resources of the State of North
Carolina and the Local Government Commission of North Carolina of its intention
to adopt a resolution creating "The Iredell County Industrial Facilities and
Pollution Control Financing Authority" pursuant to the provisions of the Act.
BOARD OF COMMISSIONERS FOR THE
COUNTY OF IREDELL
------------------------------------
Clerk to the Board of Commissioners
Received on MARCH 17, 1977.
DEPARTMENT OF NATURAL AND ECONOMIC RESOURCES
By: ______________________________________
Title: ___________________________________
<PAGE>
THE BOARD OF COMMISSIONERS
FOR
THE COUNTY OF IREDELL, NORTH CAROLINA
CREATION OF AUTHORITY
The Board of Commissioners for the County of Iredell, North Carolina,
met in regular session at the Board of Commissioners Room County Annex Building
in Statesville, North Carolina, the regular place of meeting, at 7:30 o'clock
P.M., December 6, 1977.
Present: Chairman Johnnie M. Tilley, presiding, and Commissioners LONG,
TROUTMAN, RHYE, AND FEIMSTER
Absent: None
Also present: William R. Pope, County Attorney, GEORGE W. WOOTEN, FINANCE
DIRECTOR
Commissioner Tilley introduced the following resolution which was read:
RESOLUTION 77- 34
RESOLUTION AMENDING RESOLUTION 77-21 ADOPTED ON MAY 3, 1977 CREATING THE IREDELL
COUNTY INDUSTRIAL FACILITIES AND POLLUTION CONTROL FINANCING AUTHORITY AND
CONFIRMING THE CREATION OF, AND THE APPOINTMENT OF THE COMMISSIONERS TO, THE
AUTHORITY.
WHEREAS, on May 3, 1977 the Board of Commissioners of Iredell County (the
"Board") adopted Resolution 77-21 creating,
<PAGE>
2
pursuant to Chapter 159C of the General Statutes of North Carolina as then in
effect (the "Act"), The Iredell County Industrial Facilities and Pollution
Control Financing Authority (the "Authority"); and
WHEREAS, on May 3, 1977, May 24, 1977, June 27, 1977, and August 2, 1977
and September 27, 1977, the Board appointed the commissioners of the Authority,
and
WHEREAS, certain procedural and typographical errors occurred in the
proceedings of the Board creating the Authority and appointing the commissioners
thereof; and
WHEREAS, the Board has determined to amend and ratify Resolution 77-21 and
thereby confirm the creation of, and the appointment of the commissioners to,
the Authority, now, therefore,
BE IT RESOLVED by the Board of Commissioners for the County of Iredell:
Section 1. Resolution 77-21 of the Board, adopted on May 3, 1977, creating
the Authority and the proceedings of the Board taken on May 3, 1977, May 24,
1977, June 27, 1977, August 2, 1977 and September 27, 1977 appointing the
commissioners to the Authority are hereby consolidated and amended to read as
follows:
RESOLUTION CREATING THE IREDELL COUNTY
INDUSTRIAL FACILITIES AND POLLUTION
CONTROL FINANCING AUTHORITY.
<PAGE>
3
WHEREAS, it has been determined by the Board of County Commissioners of
Iredell County, North Carolina, that there exists an urgent need to promote the
right to gainful employment opportunity, private industry, the prevention and
control of the pollution of the air, LAND AND WATERS OF THE STATE of North
Carolina, and THE SAFETY, MORALS AND HEALTH OF THE people of the state of North
Carolina, and thereby promote the general welfare of the people of the state of
North Carolina; and
WHEREAS, the Industrial and Pollution Control Facilities Financing Act,
Chapter 159C of the General Statutes of North Carolina (1975) (the "Act"), which
was enacted by the General Assembly of North Carolina, authorizes the governing
body of each county in the state of North Carolina to create authorities within
each such county; and
WHEREAS, the Board of County Commissioners of Iredell County, North
Carolina, after thorough investigation, has determined that it is desirable and
necessary that The Iredell County Industrial Facilities and Pollution Control
Financing Authority be created immediately in order to fulfill the present needs
expressed herein; and
WHEREAS, notice of its intention to adopt this resolution has been filed
with the Department of Natural and Economic Resources and the Local Government
Commission, and at least thirty days have elapsed since such notices were
received, as required by the Act, now, therefore,
BE IT RESOLVED by the Board of Commissioners for the
County of Iredell:
Section 1. There is hereby authorized and created under and pursuant to the
Act a political subdivision and body corporate and politic of the State of North
Carolina known as "The Iredell County Industrial Facilities and Pollution
Control Financing Authority."
Section 2. In furtherance of the foregoing purposes, the Authority shall
have all powers granted by the Act, as the same may be from time to time
amended,
<PAGE>
4
and such other powers as are now, or hereafter may be, conferred by law upon an
authority created for the purposes hereinabove set forth or necessary or
incidental to the powers so conferred or conducive to the furtherance thereof.
Section 3. The names, addresses and terms of office of the first members of
the Board of Commissioners of the Authority are, respectively, as follows:
Expiration of term
Name Address of office
---- ------- ---------
1. Alfred Levan Route 2, Box 385-B May 3, 1978
Statesville, NC 28677
2. Albert White 202 South Oak Street May 3, 1978
Statesville, NC 28677
3. Martha C. Dobson Route 2, Box 321
Statesville, NC 28677 May 3, 1980
4. Howard Stamey Route 6
Statesville, NC 28677 May 3, 1980
5. Frank Furches 144 Park Terrace May 3, 1982
Statesville, NC 28677
6. Rick Dagenhart P. O. Box 1064 May 3, 1982
Statesville, NC 28677
7. J. D. Chamberlain 414 Glenwood Drive May 3, 1982
Mooresville, NC 28115
Each of the above-named Commissioners is a qualified elector and resident
of Iredell County, and each shall continue in office for the term expiring on
the date set opposite his name or until his successor shall be duly appointed
and qualified. Each of the above-named Commissioners and their successors will
serve at the pleasure of the Board of Commissioners for the County of Iredell
and may be removed, with or without cause, by the Board of Commissioners for the
County of Iredell.
None of the above-named Commissioners is an officer or employee of the
State of North Carolina or any political subdivision thereof or any agency of
either.
<PAGE>
5
Section 4. Each of the Commissioners herein appointed, before entering upon
his duties, shall take and subscribe to an oath to execute the duties of his
office faithfully and impartially, and a record of each such oath shall be filed
with the Board of Commissioners for the County of Iredell and entered upon the
minutes of the next regular meeting.
Section 5. All legal matters and proceedings for the Authority shall be
conducted under the supervision and direction of the County Attorney for Iredell
County.
Section 6. The Clerk of the Board of Commissioners of Iredell County is
hereby directed to deliver a certified copy of this resolution to each
Commissioner of the Authority and to fix a time and place for a first and
organizational meeting of the Commissioners of the Authority, not later than
twenty calendar days from the date of this resolution, for the purpose of (i)
administering oaths to the Commissioners of the Authority hereby appointed, (ii)
forming the Authority, (iii) electing officers for the Authority, which must
include a chairman, vice-chairman, treasurer, secretary, and assistant
secretary, (iv) adopting bylaws, and (v) authorizing the secretary or assistant
secretary of the Authority to send notices of creation of the Authority to the
Department of Natural and Economic Resources of the State of North Carolina and
the Local Government Commission of North Carolina pursuant to Section 159C-4(f)
of the Act.
Section 7. The effective date of this resolution shall be May 3, 1977.
Section 2. The organizational meeting of the Authority, and the proceedings
of the Authority then taken in connection with the election of its officers, the
adoption of its by-laws and the adoption of a resolution directing that notice
be given of the formation of the Authority, are hereby approved, confirmed and
ratified.
<PAGE>
6
Section 3. This resolution shall take effect immediately upon its passage.
Commissioner Rhye moved the passage of the foregoing resolution entitled:
"RESOLUTION AMENDING RESOLUTION 77-21 ADOPTED ON MAY 3, 1977 CREATING THE
IREDELL COUNTY INDUSTRIAL FACILITIES AND POLLUTION CONTROL FINANCING AUTHORITY
AND CONFIRMING THE CREATION OF, AND THE APPOINTMENT OF THE COMMISSIONERS T0, THE
AUTHORITY," and the resolution was passed by the following vote:
Ayes: Commissioners Rhye, Tilley, Feimster, Troutman, and Long
Noes: None
* * * * * *
I, Alice Fortner, Clerk to the Board of Commissioners for the County of
Iredell, North Carolina, DO HEREBY CERTIFY that the foregoing is a true and
complete copy of so much of the proceedings of the Board of Commissioners for
said County at a meeting held December 6, 1977, as relates in any way to the
resolution hereinabove set forth, and that said proceedings are recorded in
Minute Book No. I of the minutes of said Board, beginning at page 210 and ending
at page 215.
WITNESS my hand and the common seal of said County, this 7th day of
December, 1977.
Clerk to the Board of Commissioners
SEAL
<PAGE>
Page 58
IREDELL COUNTY
Statesville, North Carolina 28677
ADMINISTRATIVE OFFICES
RESOLUTION 77-21
WHEREAS, it has been determined by the Board of County Commissioners of
Iredell County, North Carolina, that there exists an urgent need to promote the
right to gainful employment opportunity, private industry, the prevention and
control of the pollution of the air, land and waters of the State of North
Carolina, and the safety, morals and health of the people of the State of North
Carolina, and thereby promote the general welfare of the people of the State of
North Carolina; and
WHEREAS, the Industrial and Pollution Control Facilities Financing Act, N.
C. Gen. Stat. 153C (1975), which was enacted by the General Assembly of North
Carolina, authorizes the governing body of each county in the State of North
Carolina to create Authorities within each such county; and
WHEREAS, the Board of County Commissioners of Iredell County, North
Carolina, after thorough investigation, has determined that it is desirable and
necessary that the Iredell County Industrial Facilities and Pollution Control
Financing Authority be created immediately in order to fulfill the present needs
expressed herein; and
WHEREAS, notice of our intention to adopt this resolution has been filed
with the Department of Natural and Economic Resources and the Local Government
Commission as required by the Industrial and Pollution Control Facilities
Financing Act;
BOOK 23 PAGE 411
<PAGE>
Page 59
2
Book 23 PAGE 412
NOW, THEREFORE, BE IT RESOLVED by the Board of County Commissioners of
Iredell County, North Carolina, and it is hereby resolved by the authority of
the same, that there be and there is hereby determined and declared to be a
pressing, existing and future need for an Authority (as more fully described and
defined in the Industrial and Pollution Control Facilities Financing Act) to
function in Iredell County, North Carolina, to promote the right to gainful
employment opportunity, private, industry, the prevention and control of the
pollution of the air, land and waters of the State of North Carolina and the
safety, morals and health of the people of the State of North Carolina, and
thereby promote the general welfare of the people of the State of North
Carolina.
BE IT FURTHER RESOLVED, by the aforesaid authority, that there be and there
is hereby created in Iredell County, North Carolina, a political subdivision and
body corporate and politic of the State of North Carolina known as "The Iredell
County Industrial Facilities and Pollution Control Financing Authority" pursuant
to the Industrial and Pollution Control Facilities Financing Act and
particularly Section 159 C-4 thereof.
BE IT FURTHER RESOLVED, by the aforesaid authority, that there be and
there are hereby appointed as members of the first Board of Commissioners of the
Iredell County Industrial Facilities and Pollution Control Financing Authority
the following named persons, each of whom is a qualified elector and resident of
Iredell County and none of whom is an officer or employee of the State of North
Carolina or any political
<PAGE>
Page 60
3
subdivision or any agency of either of them:
__________________________________________________________________ 2 years
__________________________________________________________________ 2 years
__________________________________________________________________ 4 years
__________________________________________________________________ 4 years
__________________________________________________________________ 6 years
__________________________________________________________________ 6 years
__________________________________________________________________ 6 years
BE IT FURTHER RESOLVED, by the aforesaid authority that the commencing date
with the date of adoption of this resolution by the Board of Commissioners of
Iredell County, each of said persons named as commissioners above shall serve in
such capacity of the number of years set forth opposite their respective names,
and if at the end of any term of office of any commissioner, a successor thereto
shall not have been appointed, then the commissioner whose term of office shall
have expired shall continue to hold office until his successor shall be so
appointed.
BE IT FURTHER RESOLVED, by the aforesaid authority, that the Board of
Commissioners of the Authority hereinbefore appointed shall organize itself,
carry out its duties and responsibilities and exercise its powers and
prerogatives in accordance with the terms and provisions of the Industrial and
Pollution Control Facilities Financing Act as it now exists and as it might
hereafter be amended or modified.
BE IT FURTHER RESOLVED, by the aforesaid authority, that the Secretary of
the Iredell County Industrial Facilities and Pollution Control Financing
Authority shall furnish
BOOK 23 PAGE 413
<PAGE>
Page 61
4
BOOK 23 PAGE 414
immediately to the Department of Natural and Economic Resources, and the Local
Government Commission a certified copy of this resolution, a list of its
commissioners and its officers, and a description of any projects that are under
consideration. by the Authority in compliance with the mandate set forth in
Section 159 C-4(f) of the Industrial and Pollution Control Facilities Financing
Act.
BE IT FURTHER RESOLVED, by the aforesaid authority, that any and all
resolutions in conflict with this resolution be and the same are hereby
repealed.
BE IT FURTHER RESOLVED, by the aforesaid authority, that this resolution
shall be effective immediately upon its adoption by the Board of County
Commissioners of Iredell County, North Carolina, and from and after such
adoption the Iredell County Industrial Facilities and Pollution Control
Financing Authority shall be deemed to be fully created.
Adopted and approved this 3rd day of May, 1977.
BOARD OF COMMISSIONERS OF IREDELL COUNTY
________________________________________
Robert Long, D. D. S., Chairman
ATTEST:
________________________________________
Clerk
SEAL
<PAGE>
THE IREDELL COUNTY INDUSTRIAL FACILITIES
AND POLLUTION CONTROL FINANCING AUTHORITY
ORGANIZATIONAL MEETING
The Board of Commissioners of The Iredell County Industrial Facilities and
Pollution Control Financing Authority (the "Authority") met for the purpose of
organizing the Authority on OCTOBER 17, 1977, at TWO o'clock P.M., at
COMMISSIONERS ROOM, Statesville, North Carolina.
Present: Commissioners Rick Dagenhart, Martha C. Dobson, H. M. Stamey, J.
D. Chamberlain, Frank W. Furches, Albert White
Absent: Alfred Levan
Also Present: WILLIAM R. POPE, COUNTY ATTORNEY; ALICE T. Fortner, Clerk to
Board
* * * * * *
Alice Fortner, Clerk to the Board of Commissioners for the County of
Iredell announced that The Iredell County Industrial Facilities and Pollution
Financing Authority had been created by resolution adopted by the Board of
Commissioners for Iredell County on May 3, 1977 and that the following persons
have been appointed as members of the Board of Commissioners for the Authority,
each of whom shall continue in office for the term expiring on the date set
opposite his name or until his successor shall be duly appointed and qualified:
<PAGE>
Expiration of term
Name Address of office
- ---- ------- ---------
Rick Dagenhart P.O. Box 1064, Statesville, May 3, 1983
NC 28677
Frank W. Furches 144 Park Terrace, May 3, 1983
Statesville, NC 28677
J. D. Chamberlain 414 Glenwood Drive May 3, 1983
Mooresville, NC 28115
Martha C. Dobson Route 2, Box 321 May 3, 1981
Statesville, NC 28677
H. M. Stamey Route 6, Statesville, NC 28677 May 3, 1981
Alfred Levan Route 2, Box 385-B May 3, 1979
Statesville, NC 28677
Albert White 202 S. Oak Street May 3, 1979
Statesville, NC 28677
Rex Jenkins, Assistant Clerk of Superior Court, Iredell County, North
Carolina had previously administered an oath of office to each of the foregoing
members of the Board of Commissioners of the Authority that such member will
execute the duties of his office faithfully and impartially. The Clerk announced
that a record of each such oath was made for filing with the Board of
Commissioners for the County of Iredell and entering in its minutes.
The Clerk further announced that the meeting would proceed with the
election of a Chairman, Vice Chairman, Treasurer, Secretary and Assistant
Secretary, the adoption of bylaws for the regulation of the affairs and the
conduct of the business of the Authority, and the disposition of such other
matters as might properly be brought before the meeting.
Upon motion of Commissioner Chamberlain seconded by Commissioner Furches,
Commissioner Dagenhart was nominated for the office of Chairman. There being no
further nominations, the motion was put to a vote and was adopted by the
following vote:
2
<PAGE>
Ayes: Commissioners Furches, Chamberlain, Dobson, Stamey, White.
Noes: None.
Not Voting: Commissioners Dagenhart.
Commissioners Dagenhart, Chairman presided for the remainder or the
meeting.
Upon motion of Commissioner Stamey, seconded by Commissioner Chamberlain,
Commissioner Levan, was nominated for the office of vice chairman. There being
no further nominations the motion was put to a vote and was adapted by the
following vote:
Ayes: Commissioner Dobson, Stamey, Chamberlain, Furches, White, Dagenhart.
Noes: None.
Not voting: Commissioner None.
Upon motion of Commissioner Stamey, seconded by Commissioner Furches,
Commissioner Chamberlain was nominated for the office of Treasurer. There being
no further nominations, the motion. was put to a vote and was adopted by the
following vote:
Ayes: Commissioners Dagenhart, Dobson, Stamey, Furches, White.
Noes: None.
Not voting: Commissioner Chamberlain.
Upon motion of Commissioner Furches, seconded by was Commissioner Dobson,
Alice Fortner nominated for the office of Secretary. There being no further
nominations, the motion was put to vote and was adopted by the following vote:
3
<PAGE>
Ayes: Commissioners Dagenhart, Furches, Chamberlain, Dobson, Stamey, White.
Noes: None.
Not voting: Commissioner NONE.
Upon motion of Commissioner Stamey, seconded by Commissioner Chamberlain
Dobson was nominated for the office of Assistant Secretary. There being no
further nominations, the notion was out to a vote and was a adopted by the
following vote:
Ayes: Commissioners Dagenhart, Furches, Chamberlain, Stamey, White.
Noes: None.
Not voting Commissioner Dobson.
The Chairman presented a draft of proposed bylaws for the Authority which
was read in full. Commissioner Stamey moved that the bylaws be adopted as read
and incorporated the minutes of this meeting, which motion was seconded by
Commissioner Dobson. The motion was put to a vote and was adopted by the
following vote:
Ayes: Commissioners Dagenhart, Furches, Chamberlain, Dobson, Stamey, White.
Noes: None.
The bylaws as herein authorized and approved are attached hereto as Exhibit
A.
4
<PAGE>
Thereupon Commissioner Dagenhart introduced the following resolution which
was read:
RESOLUTION DIRECTING PREPARATION OF
A NOTICE OF FORMATION
BE IT RESOLVED by the Board of Commissioners of The Iredell County
Industrial Facilities and Pollution Control Financing Authority that the
Secretary of the Authority is hereby directed to prepare a written notice of
formation to be submitted on behalf of the Authority to the Department of
Natural and Economic Resources of the State of North Carolina and the Local
Government Commission of North Carolina pursuant to G.S. 159C-4(f) within 5 days
from the date of this meeting.
Commissioner Chamberlain moved the passage of foregoing resolution
entitled: "RESOLUTION DIRECTING PREPARATION OF A NOTICE OF FORMATION" and
Commissioner H. M. Stamey seconded the motion, and the resolution was passed by
the following vote:
Ayes: Commissioners Dagenhart, Furches, Chamber, Dobson, Stamey, White.
Noes: None.
I, Alice Fortner Secretary of the Board of Commissioners of The Iredell
County Industrial Facilities and Pollution Control Financing Authority DO HEREBY
CERTIFY
5.
<PAGE>
that the foregoing is a true and complete copy of the proceedings of the Board
of Commissioners of the Authority 8t a meeting held October 17, 1977, and that
said proceedings are recorded in Minute Book No. l of the minutes of said
Board, beginning at page 1 and ending at page 6.
WITNESS my hand and the official seal of the Authority this 17th day of
OCTOBER, 1977.
Secretary
[SEAL]
6.
<PAGE>
5
THE IREDELL COUNTY INDUSTRIAL
FACILITIES AND POLLUTION CONTROL
FINANCING AUTHORITY
CERTIFICATE OF FORMATION
The undersigned Secretary of The Iredell County Industrial Facilities and
Pollution Control Financing Authority (the "Authority") DOES HEREBY CERTIFY
pursuant to the provisions of G.S. 159C-4(f) that:
(a) The Authority has been duly and validly formed as authorized by
resolution of the Board of Commissioners for the County of Iredell
and a certified copy of the minutes, showing the adoption and a list
of the Commissioners of the Authority, is attached hereto as Exhibit
1;
(b) Attached hereto as Exhibit 2 is a certified copy of the minutes of the
organizational meeting of the Authority, showing a list of the
officers of the Authority; and
(c) Attached hereto as Exhibit 3 is a description of any and all projects
under consideration by the Authority.
WITNESS my hand and the official seal of the Authority, this lath day of
October 1977.
Secretary
[Seal]
<PAGE>
[SEAL]
IREDELL COUNTY
Statesville, North Carolina 28677
ADMINISTRATIVE OFFICES
October 17, 1977
Exhibit 3
At the present time, there are no projects under consideration by the Authority.
Secretary
<PAGE>
(6)
CERTIFICATION OF BY-LAWS
I, the undersigned Secretary of The Iredell County Industrial Facilities
and Pollution Control Financing Authority, hereby certify that the attached four
pages constitute a true, correct and complete copy of the By-Laws of said
Authority.
WITNESS my official signature and the corporate seal of The Iredell County
Industrial Facilities and Pollution Control Financing Authority this 5th day of
June, 1979.
(Seal)
<PAGE>
EXHIBIT A
BYLAWS OF
THE IREDELL COUNTY INDUSTRIAL FACILITIES
AND POLLUTION CONTROL FINANCING AUTHORITY
ARTICLE I
OFFICES
1. The principal office of the Authority shall be in the City of
Statesville, North Carolina, at such particular place as shall be fixed from
time to time by resolution of the Authority.
2. The permanent mailing address for purposes of all notices and
correspondence is PO BOX 803, STATESVILLE, NC 28677
3. Except as otherwise required by resolution of the Authority, or as the
business of the Authority may require, all of the books and records of the
Authority shall be kept at the office to be designated as hereinabove provided.
ARTICLE II
MEETINGS OF THE AUTHORITY
1. Meetings of the Authority may be called by the Chairman, or in his
absence from the State of North Carolina or incapacity, by the Vice Chairman,
for such time and at such place in the State of North Carolina as may be
specified in the call, upon twenty-four hours' written notice. Meetings of the
Authority may be held at any time without notice, provided all members of the
Authority are present or those not present have waived notice thereof. Such
meetings may be held at such times and places as the notice thereof or waiver
may specify. Any business of the Authority may be considered and acted upon at
any such meeting.
2. At all meetings of the Authority the following order of business shall
be observed, as far as consistent with the purpose of the meeting:
i. Reading and approval of the minutes of the preceding meeting.
ii. Reports of officers.
<PAGE>
iii. Reports of committees.
iv. Unfinished business.
v. New business.
3. The vote on the adoption of every resolution shall be by ayes and noes,
and the names of the members of voting for and against the resolution shall be
entered upon the minutes of the meeting.
ARTICLE III
OFFICERS
1. The officers of the Authority shall be a Chairman, a Vice Chairman, a
Treasurer, a Secretary and an Assistant Secretary. The Chairman, Vice Chairman,
Treasurer, Secretary and Assistant Secretary shall hold such offices until May 3
of the following year and until the election of their successors.
2. The Chairman shall be the chief executive of the Authority and shall
preside at all meetings of the Authority. Unless some other person is thereunto
specifically authorized by vote of the Authority, the Chairman shall sign all
contracts and other instruments to be executed on behalf of the Authority. He
shall perform all the duties commonly incident to this office, and shall perform
such duties and have such other powers as the Authority may from time to time
designate.
3. The Vice Chairman shall perform the duties and have the powers of the
Chairman during the absence or incapacity of the Chairman. He shall then perform
all the duties commonly incident to the office of Chairman, and shall perform
such other duties and have such other powers as the Authority may from time to
time designate.
4. Subject to the provisions of any trust. agreement or resolution securing
revenue bonds of the Authority, the Treasurer shall have the care and custody of
the funds of the Authority and shall have and exercise, under the supervision of
the Authority, all the powers and duties commonly incident to the office of
treasurer.
A-2.
<PAGE>
5. The Secretary shall attend all meetings of the Authority and act as
secretary or clerk thereof; he shall record all votes and keep accurate records
of all proceedings at such meetings in a minute book to be kept for that
purpose, which shall be open at all reasonable times to the inspection of any
member. The Secretary shall cause notice to be given of all meetings of the
Authority as required by law or by these Bylaws; he shall keep in safe custody
the official seal to all papers authorized to be executed by the Authority
requiring such seal to be affixed. He shall have authority to cause copies to be
made of all minutes and other records and documents of the Authority and to give
certificates under the official seal of the Authority to the effect that such
copies are true copies, and all persons dealing with the Authority may rely upon
such certificates.
He shall perform all the duties commonly incidently office of secretary or
clerk and shall perform such other duties and have such other powers as the
Authority from to time may designate.
6. The Assistant Secretary shall perform the duties and have the powers of
the Secretary during the absence or incapacity of the Secretary. He shall then
perform all the duties commonly incident to the office of Secretary, shall
perform such other duties and have such other powers as the Authority may from
time to time designate.
7. In addition to the officers above-mentioned, Authority may provide for
such deputies assistants and other officers as it may deem necessary from time
to time, who shall perform such duties and have such powers as the Authority may
designate
8. All legal matters and proceedings for the Authority shall be conducted
under the supervision and direction of the County Attorney for Iredell County.
ARTICLE IV
OFFICIAL SEAL
The official seal of the Authority shall consist of the embossed impression
of a circular metallic disc containing the words "THE IREDELL COUNTY INDUSTRIAL
FACILITIES AND POLLUTION CONTROL FINANCING AUTHORITY, N.C.", and the Secretary
shall secure such seal and cause an impression thereof to be made on the margin
of the minutes containing this Article.
A-3.
<PAGE>
ARTICLE V
NET EARNINGS
Any net earnings of the Authority (beyond that necessary for retirement the
revenue bonds of the Authority) of any other person the Authority) may not inure
to the benefit of any other person than the Authority.
ARTICLE VI
Except, as otherwise provided by law, these Bylaws may be amended, added
to, altered or repealed in whole or in part by the Authority at any meeting of
the Authority, provided that notice of the proposed amendment, addition,
alteration or repeal is given in the notice of such meeting, or that all members
of Authority are present at such meeting.
<PAGE>
(7)
The Iredell County Industrial Facilities and Pollution Control Financing
Authority met at the City Club in Statesville, North Carolina at 12 o'clock
noon, on January 5, 1979.
Present: Chairman Rick Dagenhart, presiding, and Commissioners Stamey,
Troutman, Chamberlain, Levan, James and White.
Absent: NONE.
Also present: Robert N. Randall, County Attorney.
* * * * *
RICK DAGENHART, Chairman, announced that the Authority had been requested
by Hunt Manufacturing Co. to agree to provide financing for the cost of
purchasing an existing manufacturing building of approximately 170,000 square
feet and the site thereof of approximately 13 acres near Statesville, in Iredell
County, or of acquiring a comparable site in Iredell County and constructing
thereon a comparable industrial building, and, in either case, of equipping the
same with light manufacturing machinery, including paper converting machinery
and related equipment, that bond counsel for the Authority had prepared and
distributed such an agreement, that counsel to the Authority had reviewed the
agreement, that the Company had executed the agreement
<PAGE>
and had requested that the Authority approve and execute the agreement, and that
he believed that it was in order for the Authority to approve the proposed
agreement and authorize its officers to execute the same.
Thereupon, Commissioner CHAMBERLAIN introduced the following resolution
which was read:
RESOLUTION AUTHORIZING EXECUTION OF AN AGREEMENT WITH HUNT MANUFACTURING
C0. RELATING TO THE FINANCING OF AN INDUSTRIAL AND MANUFACTURING PROJECT IN
IREDELL COUNTY, NORTH CAROLINA AND AUTHORIZING THE ISSUANCE OF NOT
EXCEEDING $2,000,000 BONDS OF THE AUTHORITY THEREFOR.
BE IT RESOLVED by The Iredell County Industrial Facilities and Pollution
Control Financing Authority as follows:
Section 1. The proposed Memorandum of Agreement relating to the financing
of an industrial and manufacturing project (the "Project") for Hunt
Manufacturing Co. in Iredell County, North Carolina is hereby approved in the
form of that presented at this meeting and attached hereto as Exhibit A, and the
Chairman or Vice Chairman of the Board of Commissioners and the Secretary or the
Assistant Secretary of the Authority are hereby authorized to execute and
deliver five counterparts of such Memorandum of Agreement for and on behalf of
the Authority.
Section 2. The Authority hereby agrees to issue, subject to the terms and
in accordance with provisions of Chapter 159C of the General Statutes of North
Carolina, as amended, not exceeding $2,000,000 of its bonds to pay all or a
portion of the cost of the Project, all as set forth in
2.
<PAGE>
the Memorandum of Agreement.
Section 3. This resolution shall take effect upon its passage.
Thereupon, on the motion of Commissioner CHAMBERLAIN seconded by
Commissioner LEVAN, the foregoing resolution was passed by the following vote:
Ayes: DAGENHART, STAMEY, TROUTMAN, CHAMBERLAIN, LEVAN, JAMES, AND WHITE.
Noes: NONE.
* * * * *
I, Robert Randall, Assistant Secretary of The Iredell County Industrial
Facilities and Pollution Control Financing Authority and keeper of the official
minutes thereof, DO HEREBY CERTIFY that the foregoing is a true copy of certain
of the proceedings of the Board of Commissioners of the Authority taken at a
meeting held on January 5, 1979 and is a complete copy of so much of the
recorded minutes of said meeting as relates in any way to the passage of the
resolution hereinabove set forth.
I DO HEREBY FURTHER CERTIFY that, pursuant to Article II of the Bylaws of
the Authority, I gave ail members of the Authority written notice of said
meeting not less than twenty-four hours prior to 12 o'clock noon, January 5,
1979, and that, at least forty-eight hours before said meeting, posted such
notice on the principal bulletin board or at the door of the
3.
<PAGE>
usual meeting room of the Authority and mailed or delivered such notice to each
newspaper, wire service, radio station and television station that had filed
with me a written request for notice pursuant to G.S. 143-318.8.
WITNESS my hand and the official seal of The Iredell County Industrial
Facilities and Pollution Control Financing Authority this 5th day of January,
1979.
Assistant Secretary
(Seal)
4.
<PAGE>
(8)
MEMORANDUM OF AGREEMENT
This MEMORANDUM OF AGREEMENT is between The Iredell County Industrial
Facilities and Pollution Control Financing Authority, a political subdivision
and body corporate and politic of the State of North Carolina (the "Authority"),
and Hunt Manufacturing Co., a Pennsylvania corporation qualified to do business
in the State of North Carolina (the "Company").
1. PRELIMINARY STATEMENT. Among the matters of mutual inducement and
reliance which have resulted in the execution of this Memorandum of Agreement
are the following:
(a) The Authority is a political sub division and body corporate and
politic of the State of North Carolina duly created pursuant to the
provisions of Article V, Section 9 of the Constitution of North Carolina
and Chapter 159C of the General Statutes of North Carolina (the "Act") and
is a political subdivision of a state within the meaning of Section
103(a)(1) of the Internal Revenue Code of 1954, as amended (the "Code"), or
a constituted authority authorized to issue obligations for and on behalf
of such a political subdivision,
<PAGE>
all within the meaning of the applicable regulations under the Code.
(b) The Company proposes to buy an existing manufacturing building of
approximately 170,000 square feet and the site thereof of approximately 13
acres near Statesville in Iredell County, or to acquire a comparable site
in Iredell County and construct thereon a comparable industrial building,
and, in either case, to equip the same with light manufacturing machinery,
including paper converting machinery and related equipment (the building
and the site thereof and the equipment to be installed therein being herein
called collectively the "Project").
(c) The Company expects that the Project will cost approximately
$2,000,000 inclusive of interest during the period of construction,
underwriting discount or commissions, if any, and legal, accounting,
financing and printing expenses.
(d) The Company estimates that the Project will create employment for
approximately 100 persons in Iredell County and the surrounding area.
(e) The Company expects to pay an average weekly manufacturing wage in
excess of the average weekly manufacturing wage in the County.
2.
<PAGE>
(f) The Company has requested the Authority to enter into this
Memorandum of Agreement for the purpose of declaring the Authority's
intention to provide financing to pay all or a portion of the cost of the
Project.
(g) The Company has represented that neither it nor any affiliate has
financed the Project, that neither acquisition, construction nor
installation of the Project has yet commenced and that it is essential that
the Company let contracts in connection with the acquisition, construction
and installation of the Project immediately.
(h) This Memorandum of Agreement is entered into to induce the Company
to proceed with the necessary plans for the Project and to incur costs in
connection with various phases of the Project (including plant acquisition
or construction, and the cost of the acquisition and installation of the
equipment and related expenses) and to assure the Company, prior to the
issuance of bonds of the Authority, that the Authority will, in accordance
with and subject to the provisions of the Act, issue bonds to cover costs
so incurred by the Company in connection with the Project, including such
costs incurred by the Company prior to the issuance of the bonds.
3.
<PAGE>
(i) The Company proposes that the Authority agree to issue its bonds
under the Act in an aggregate principal amount sufficient to pay all or a
portion of the cost of the Project, such bonds to be secured by the
obligation of the Company to pay the debt service thereon and by virtue of
the provisions of Section 103(b)(6) (A) or (D) of the Code, as now existing
or hereafter amended, to be exempt from Federal income taxation.
(j) The Authority has determined, based upon representations made by
the Company and without any independent investigation having been made by
the Authority, that the acquisition, construction and installation
("Acquisition") of the Project by the Company and the financing of all or a
portion of the cost of the Project by the Authority will be in furtherance
of the purpose of the Act in that it will induce the Company to acquire an
existing manufacturing plant in, or to locate a new manufacturing plant in
North Carolina and will thereby aid in alleviating unemployment and raising
below average manufacturing wages in Iredell County inasmuch as the Project
will provide new job opportunities and pay better wages than those
prevalent in Iredell County.
4.
<PAGE>
2. UNDERTAKINGS ON THE PART OF THE AUTHORITY.
In accordance with and subject to the limitations of the Act, the Authority
agrees as follows:
(a) That it will authorize the issuance and sale of one or more
issues of its revenue bonds, pursuant to the terms of the Act as then in
force, in an aggregate principal amount not exceeding $2,000,000 for the
purpose of paying all or a portion of the cost of the Project.
(b) That it will, at the proper time, and subject in all respects to
the prior advice, consent and approval of the Company, submit applications,
adopt such proceedings and authorize the execution of such documents as may
be necessary and advisable for the authorization, sale and issuance of its
bonds and the Acquisition of the Project, all as shall be authorized by the
Act and mutually satisfactory to the Authority and the Company.
5.
<PAGE>
The bonds shall not be deemed to constitute a debt or a pledge of the faith
and credit of the State of North Carolina or any political subdivision or
agency thereof, but such bonds shall be payable solely from the payments to
be provided (directly or indirectly) by the Company. The bonds issued shall
be in such aggregate principal amount, shall bear interest at such rate or
rates, shall be payable at such times and places, shall be in such forms
and denominations, shall be sold in such manner and at such time or times,
shall have such provisions for redemption, shall be executed, and shall be
secured as hereafter may be requested by the Company and fixed by the
Authority, all on terms mutually satisfactory to the Authority and the
Company.
3. UNDERTAKINGS ON THE PART OF THE COMPANY. Subject to the conditions
hereinabove and hereinafter stated, the Company agrees as follows:
(a) That it will generally arrange for, manage and carry out the
Acquisition of the Project for and on behalf of the Authority.
6.
<PAGE>
(b) That it will cooperate with the Authority in making arrangements
for the sale and issuance of the bonds in an aggregate principal amount not
exceeding $2,000,000 and that to the extent that the proceeds derived from
the sale of the bonds are not sufficient to complete the Project, the
Company will supply all additional funds which are necessary for the
completion of the Project.
(c) That contemporaneously with the delivery of the bonds the Company
will enter into a lease or other financing agreements, and such indentures,
guaranties and related agreements as shall be necessary or appropriate so
that the Company will be obligated to pay for the account of the Authority
sums sufficient in the aggregate to pay the principal of and interest and
redemption premium, if any, on the bonds when and as the same shall become
due and payable.
7.
<PAGE>
(d) That it will take such further action and adopt such proceedings
as may be required to implement its undertakings hereunder.
4. GENERAL PROVISIONS.
(a) Since it is anticipated that the Acquisition of the Project will
commence prior to the sale of the bonds and the Company knows and
acknowledges that the Authority will have no funds available to meet the
costs of the Project other than those derived from the sale of bonds, the
Company agrees that it will advance from time to time all funds necessary
for the Acquisition of the Project, and such funds when so advanced shall
be deemed funds advanced on behalf of the Authority; provided, however,
that the Authority shall not by virtue of such advances or otherwise
through this Memorandum of Agreement acquire any property interest in the
Project whatsoever. To the extent that the net proceeds derived from the
sale of the bonds are sufficient for such purpose, the Authority agrees to
repay from such net proceeds to the Company all funds so advanced promptly
after the sale of the bonds.
8.
<PAGE>
(b) The Authority and the Company agree that the Company shall provide
all services incident to the Acquisition of the Project, including, without
limitation, the preparation of plans, specifications and contract
documents, the award of contracts, the inspection and supervision of work
performed, the employment of engineers, architects, builders and other
contractors, and the provision of money to pay the cost thereof pending
reimbursement by the Authority from such bond proceeds, and the Authority
shall have no responsibility for the provision of any such services.
(c) All commitments of the Authority and of the Company pursuant to
this Memorandum of Agreement are subject to the condition that on or before
365 days from the date hereof (or such later date as shall be mutually
satisfactory to the Authority and the Company), the Authority and the
Company shall have agreed to mutually acceptable terms for the bonds and
the sale and delivery thereof and mutually acceptable terms and conditions
for the agreements referred to in Section 3(c) and the proceedings referred
to in Sections 2 and 3 hereof.
9.
<PAGE>
(d) If THE events set forth in paragraph (c) of this Section do not
take place within the time set forth or any extension thereof, the Company
agrees that it will reimburse the Authority for all reasonable
out-of-pocket expenses, arising from the execution of this Memorandum of
Agreement and the performance by the Authority of its obligations
hereunder, and this Memorandum of Agreement shall thereupon terminate.
(e) So long as this Memorandum of Agreement is in effect, all risk of
loss to the Project will be borne by the Company.
(f) The Company hereby releases the Authority from, agrees that the
Authority shall not be liable for, and agrees to indemnify and hold
harmless the Authority from, any liabilities, obligations, claims, damages,
litigation, costs and expenses (including attorneys' fees and expenses)
imposed on, incurred by or asserted against the Authority for any reason
whatsoever pertaining to the Project, the bonds or this Memorandum of
Agreement or any transaction contemplated by this Memorandum of Agreement.
10.
<PAGE>
(g) As a matter of general assurance by the Company to the Authority,
the Company hereby covenants and agrees that it will indemnify the
Authority for ail reasonable expenses, costs and obligations incurred by
the Authority under the provisions of this Memorandum of Agreement to the
end that the Authority will not suffer any out-of-pocket losses as a result
of the carrying out of any of its undertakings herein contained. It is
furthermore expressly agreed that any pecuniary liability or obligation of
the Authority hereunder shall be limited solely to the payments received by
the Authority from the Company and to moneys derived from any financing
relating to the Project, and nothing contained in this Memorandum of
Agreement shall ever be construed to constitute a personal or pecuniary
liability or charge against any Commissioner or any officer or employee of
the Authority, and in the event of a breach of any undertaking on the part
of the Authority contained in this Memorandum of Agreement, no personal or
pecuniary liability or charge payable directly or indirectly from the
general funds of the Authority shall arise therefrom.
11.
<PAGE>
(h) In any event, the provisions of this Memorandum of Agreement shall
be superseded by the agreements entered into by the Authority and the
Company in accordance with Section 3(c) of this Agreement.
IN WITNESS WHEREOF, the parties hereto have entered into this Memorandum of
Agreement by their officers thereunto duly authorized as of the _____________ of
December, 1978.
THE IREDELL COUNTY INDUSTRIAL
FACILITIES AND POLLUTION CONTROL
FINANCING AUTHORITY
By ____________________________
Chairman
(Seal)
Attest:
____________________________
Ass't Secretary
HUNT MANUFACTURING C0.
By ____________________________
Vice President
[(Seal)
Attest:
____________________________
Secretary]
12.
<PAGE>
THE BOARD OF COMMISSIONERS FOR
THE COUNTY OF IRE DELL, NORTH CAROLINA
Approval in Principle of an
INDUSTRIAL AND MANUFACTURING PROJECT
The Board of Commissioners for the County of Iredell, North Carolina, met
in regular session at Harmony Elementary School, Harmony, North Carolina, at
7:30 P.M. on FEBRUARY 20, 1979.
Present: Chairman Joe H. Troutman, presiding and Commissioners Larry M.
Rhye, Frances Murdock, Samuel Ostwalt, and William A. Mills.
Absent: None.
Also present: ROBERT N. RANDALL, ESQ., COUNTY ATTORNEY.
* * * *
Chairman Troutman announced, pursuant to Chapter 159C of the General
Statutes of North Carolina and the regulations thereunder, that he had been
advised that The Iredell County Industrial Facilities and Pollution Control
Financing Authority intended to file an application with the Secretary of the
Department of Commerce for approval of an industrial and manufacturing project
in Iredell County, North Carolina,
<PAGE>
consisting of the acquisition of an existing manufacturing building of
approximately 170,000 square feet and the site thereof of approximately 13 acres
near Statesville in Iredell County, or to acquire a comparable site in Iredell
County and construct thereon a comparable industrial building, and, in either
case, to equip the same with light manufacturing machinery, including paper
converting machinery and related equipment, to be financed for Hunt
Manufacturing Co. by not exceeding $2,000,000 aggregate principal amount. of
bonds of the Authority. Since such application for approval cannot, under
regulations of the Department of Commerce, be officially received until, among
other things, the Board approves the project in principle, the Authority has
recommended and requested that the Board pass a resolution approving the project
in principle without in any way prejudicing the right and responsibility of the
BOARD UNDER G.S. 159C-4(d) to approve or not to approve the issuance of the
bonds after the Department of Commerce has approved the project and the Local
Government Commission has approved the bond issue, by which time additional
information relative to the project, the company and the proposed financing will
have been developed.
Thereupon, Commissioner Troutman introduced the following resolution which
was read:
RESOLUTION OF APPROVAL IN PRINCIPLE OF AN INDUSTRIAL AND MANUFACTURING
PROJECT IN IREDELL COUNTY, NORTH CAROLINA, TO BE FINANCED FOR HUNT
MANUFACTURING CO. BY NOT EXCEEDING $2,000,000 AGGREGATE PRINCIPAL AMOUNT OF
BONDS OF THE IREDELL COUNTY INDUSTRIAL FACILITIES AND POLLUTION CONTROL
FINANCING AUTHORITY.
<PAGE>
BE IT RESOLVED by the Board of Commissioners for the County of Iredell:
Section 1. The proposed industrial and manufacturing project in Iredell
County, North Carolina, consisting of the acquisition of an existing
manufacturing building of approximately 170,000 square feet and the site thereof
of approximately 13 acres near Statesville, in Iredell County, or to acquire a
comparable site in Iredell County and construct thereon a comparable industrial
building, and, in either case, to equip the same with light manufacturing
machinery, including paper converting machinery and related equipment, to be
financed for Hunt Manufacturing Co. by not exceeding $2,000,000 aggregate
principal amount of bonds of The Iredell County Industrial Facilities and
Pollution Control Financing Authority is hereby approved in principle.
Section 2. The Clerk to the Board of Commissioners for the County of
Iredell, North Carolina, is directed to file a certified copy of this resolution
with the Department of Commerce.
Section 3. This resolution shall take effect immediately upon its passage.
Commissioner Ostwalt moved passage of the foregoing resolution entitled:
"RESOLUTION OF APPROVAL IN PRINCIPLE OF AN INDUSTRIAL AND MANUFACTURING PROJECT
IN IREDELL COUNTY, NORTH CAROLINA, TO BE FINANCED FOR HUNT MANUFACTURING C0.
<PAGE>
BY NOT EXCEEDING $2,000,000 AMOUNT OF BONDS OF THE IREDELL COUNTY INDUSTRIAL
FACILITIES AND POLLUTION CONTROL FINANCING AUTHORITY", Commissioner Murdock
seconded the motion, and the resolution was passed by the following vote:
Ayes: Commissioners Troutman, Ostwalt, Murdock, Mills and Rhye.
Noes: None.
* * * * *
I, Alice Fortner, Clerk to the Board of Commissioners for the County of
Iredell, North Carolina, DO HEREBY CERTIFY that the foregoing is a true and
complete copy of so much of the proceedings of the Board of Commissioners for
said County at a meeting held February 20, 1979, as relates in any way to the
resolution hereinabove set forth, and that said proceedings are recorded in
Minute Book No. II of the minutes of said Board, beginning at page 763 and
ending at page 766.
I HEREBY FURTHER CERTIFY that a schedule of regular meetings of said Board,
stating that regular meetings of said Board are held on the first Tuesdays of
each month at 7:30 P.M. at the Board of Commissioner Room in the County Annex
Building in Statesville, North Carolina, has been on file in my office pursuant
to G.S. 143-318.8 as of a date not less than seven days before said meeting.
WITNESS my hand and the common seal of said County, 20thy day of FEBRUARY,
1979.
___________________________________
Clerk to the Board of Commissioners
<PAGE>
LEGAL NOTICE
NOTICE OF APPLICATION FOR APPROVAL FOR AN INDUSTRIAL AND MANUFACTURING
PROJECT IN IREDELL COUNTY, NORTH CAROLINA
The Iredell County Industrial Facilities and Pollution Control Financing
Authority hereby gives notice that the Authority will shortly file with the
Secretary of the Department of Commerce an application for approval of an
industrial and manufacturing project for the acquisition of an existing
manufacturing building of approximately 170,000 square feet and the site thereof
of approximately 13 acres near Statesville in Iredell County, or to acquire a
comparable site in Iredell County and construct thereon a comparable industrial
building, and in either case, to equip the same with light manufacturing
machinery, including paper converting machinery and related equipment, which
project is proposed to be financed for Hunt Manufacturing Co., a private
corporation, from the proceeds of not exceeding $2,000,000 aggregate principal
amount of bonds of the Authority. The project is expected to provide employment
for approximately 100 residents of Iredell County.
Regulations adopted by the Department of Commerce provide in effect that
where significant adverse public reaction with respect to a proposed project is
received, the Secretary of the Department will request the Authority to hold a
public hearing on the proposed project for the purpose of providing the
Secretary with the views of residents of the county in which the project is to
be located. Residents of Iredell County wishing to comment on the project
proposed to be financed for Hunt Manufacturing Co., should do so to Rick
Dagenhart, Chairman, c/o The Iredell County Industrial Facilities and Pollution
Control Financing Authority, P. O. Box 788, Statesville, North Carolina 28677
AND Victor M. Barfield, Department of Commerce, P.O. Box 25249, Raleigh, N.C.
27611 (919-7334%2) within five (5) regular working days after the publication of
this notice.
Alice Fortner, Secretary of the Board of Commissioners of The Iredell
County Industrial Facilities and Pollution Control Financing Authority.
Feb. 24
NORTH CAROLINA,
IREDELL COUNTY.
AFFIDAVIT OF PUBLICATION
Before the undersigned, a Notary Public of said County AND STATE, DULY
COMMISSIONED, QUALIFIED, and authorized by law to administer oaths, personally
appeared
Chester P. Middlesworth
- --------------------------------------------------------------------------------
who being first duly sworn-deposes and says: that he (she) is
Vice President
- --------------------------------------------------------------------------------
(Owner, partner, publisher, or other officer or employee
authorized to make this affidavit)
of Statesville Daily Record, Inc.
- --------------------------------------------------------------------------------
(name of publishing concern)
engaged to the publication of a newspaper known as
Statesville Record & Landmark
- --------------------------------------------------------------------------------
(name of newspaper)
published, issued, and entered as second class mail in the City of Statesville,
in said County and State, that he (she) is authorized to make this affidavit and
sworn statement; that the notice or other legal advertisement, a true copy of
which is attached hereto. was published in
Statesville Record & Landmark
- --------------------------------------------------------------------------------
(name of newspaper)
on the following dates: February 24, 1979
and that the said newspaper in which such notice, paper, document, or legal
advertisement was published was at the time of each and every such publication,
a newspaper meeting all of the requirements and qualifications of Section 1-597
of the General Statutes of North Carolina and was a qualified newspaper within
the meaning of Section 1-597 of the General Statutes of North Carolina.
This 27th day of February 1979
- --------------------------------------------------------------------------------
(Signature of person making affidavit)
Sworn to and subscribed before me this 27th day of February 1979.
- --------------------------------------------------------------------------------
Notary Public
My commission expires: _________________________.
<PAGE>
CERTIFICATE OF APPROVAL
for
AN INDUSTRIAL PROJECT
The Iredell County industrial Facilities and Pollution
Control Financing Authority (for Hunt Manufacturing Co.)
The undersigned, SECRETARY OF THE DEPARTMENT OF COMMERCE of the State of
North Carolina (the "Secretary"), Pursuant to Section 159C-7 or the General
Statutes of North Carolina and the regulations prescribed by the Secretary
thereunder, DOES HEREBY CERTIFY, FIND AND DETERMINE as follows
(a) The Iredell County Industrial Facilities and Pollution Control
Financing Authority (the "Authority"), a political subdivision and body
corporate and politic of the State of North Carolina created by resolution
adopted by the Board of Commissioners of Iredell county, in accordance
with Chapter 159C of the General Statutes of North Carolina (the "Act ")
has filed with the Secretary pursuant to Section 159C-7 of the Act and the
regulations prescribed by the Secretary thereunder an application for
approval of its proposed industrial project which is to be financed by not
in excess of $2,000,000 aggregate principal amount of its industrial
revenue bonds.
(b) The industrial project consists of purchasing as existing
manufacturing building of approximately 170,000 square feet and the site
thereof of approximately 13 acres near Statesville, in Iredell County,
equipping the same with light manufacturing machinery, including paper
converting machinery and related equipment (the Industrial Project will
generate directly 100 new jobs in Iredell County and the surrounding area.
(c) Public notice of the Authority's submission of its application for
approval was duly published in the manner required by the regulations
prescribed by the Secretary and all comments received in accordance with
such notice have been considered by the Secretary.
(d) As required by the third full paragraph of G.S. 159C-7 of the Act,
the Department of Natural Resources and Community Development has certified
to the undersigned that the proposed Industrial Project will not have a
materially adverse effect on the environment.
<PAGE>
Upon due consideration of the Authority's application for approval and the
comments received with respect thereto and the receipt of the certification
mentioned in paragraph (d) above, the undersigned hereby further certifies finds
and determines pursuant to G.S. 139C-7 of the and the regulations of the
Secretary prescribed thereunder, as follows:
1. The Industrial Project is an "industrial project for industry" within
the meaning of G.S. 159C-3(11)(i) and thus an "industrial project"
within the meaning of G.S. 159C-7(1).
2. The operator of the proposed Industrial Project, Hunt Manufacturing
Co., pays or has agreed to pay, an average weekly manufacturing wage
which is above the average weekly manufacturing wage paid in Iredell
County or which is not less than 10% above the average weekly
manufacturing wage paid in the State of North Carolina.
3. The proposed Industrial Project will not have a materially adverse
effect on the environment.
4. The 100 new jobs to be generated directly by the Industrial Project
will be large enough in number to have a measurable impact on the area
immediately surrounding the Industrial Project and will be
commensurate with the Size and cost of to Industrial Project
5. The operator of the proposed Industrial Project has demonstrated the
capability to operate such Project.
6. The financing of the industrial Project by the Authority will not
cause or result in the abandonment of an existing industrial or
manufacturing facility of the proposed operator or an affiliate
elsewhere with the State of North Carolina.
7. The Industrial Project is hereby approved and this Certificate of
Approval shall become effective as Provided in Section 159C-7 of the
Act.
<PAGE>
3
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Approval on this 16th day of March, 1979.
D. M. FAIRCLOTH
SECRETARY OF THE DEPARTMENT OF COMMERCE OF THE
STATE 0F NORTH CAROLINA
By /s/ D. M. FAIRCLOTH
------------------------
<PAGE>
(Estoppel Notice)
The above Approval is reviewable as provided in Article 4 of Chapter 150A
of the General Statutes of North, Carolina only by an action filed, within 30
days after the date of this publication, in the Superior Court of Wake County.
If no such action is filed within such 30-day period, the validity of such
Approval shall be conclusively presumed, and no court shall have authority to
inquire into such Approval.
<PAGE>
(11(b1))
DEPARTMENT OF NATURAL RESOURCES AND COMMUNITY DEVELOPMENT
PROJECT CERTIFICATION
THE UNDERSIGNED DOES HEREBY CERTIFY to the Secretary of the Department of
Commerce as follows:
1. The Department of Natural Resources and Community Development of
the State of North Carolina is the state agency having jurisdiction over
the subject matter herein, as provided in G.S. 113A-1: et seq., G.S.
143-215.11 et. seq., G.S. 145-211, G.S. 215.1, G.S. 215.108, G.S. 159C-7
and NCAC 13G.0102(3).
2. In the case of the industrial project to be financed by not in
excess of $2,000,000 aggregate principal amount of Industrial revenue bonds
for Hunt Manufacturing Co., by The Iredell County Industrial Facilities
and Pollution Control Financing Authority, the said industrial project will
not have a materially adverse effect on the environment.
IN WITNESS WHEREOF, this certificate has been executed by the undersigned
at Raleigh, North Carolina, this 15th day of March, 1979.
Howard N. Lee, Secretary
---------------------------------
Department of Natural Resources
and
Community Development
<PAGE>
LEGAL NOTICE
CERTIFICATE OF APPROVAL for
AN INDUSTRIAL PROJECT
The Iredell County
Industrial Facilities
and Pollution Control
Financing Authority
(for Hunt
Manufacturing Co.)
The undersigned. SECRETARY OF THE DEPARTMENT OF COMMERCE of the State of
North Carolina (the "Secretary^), pursuant to Section 159C-7 of the General
Statutes of North Carolina and the regulations prescribed by the Secretary
thereunder, DOES HEREBY CERTIFY, FIND AND DETERMINE as follows:
(a) The Iredell County Industrial Facilities and Pollution Control
Financing Authority (the "Authority"), a political subdivision and body
corporate and politic of the State of North Carolina created by resolution
adopted by the Board of Commissioners for the County of Iredell, in accordance
with Chapter 159C of the General Statutes of North Carolina (the "Act") has
filed with the Secretary pursuant to Section 159C-7 of the Act and the
regulations prescribed by the Secretary thereunder an application for approval
of its proposed industrial project which is to be financed by not in excess of
$2,000.000 aggregate principal amount of its industrial revenue bonds.
(b) The industrial, project consists of purchasing an existing
manufacturing building of approximately 170,000 Square feet and the site thereof
of approximately 13 acres near Statesville, in Iredell County, of equipping the
same with light manufacturing machinery. including paper converting machinery
and related equipment (the "Industrial Project"). The Industrial Project will
generate directly 100 new jobs in Iredell County and the surrounding area.
(c) Public notice of the Authority's submission of its application for
approval was duly published in the manner required by the regulations prescribed
by the Secretary and all comments received in accordance with such notice have
been considered by the Secretary.
(d) As required by the third full paragraph of G.S. 159C-7 of the Act, the
Department of Natural Resources and Community Development has notified to the
undersigned that the proposed industrial project will not have a materially
adverse effect on the environment.
Upon due consideration of the Authority's application for approval and the
comments received with respect thereto and the receipt of the certification
mentioned in paragraph (d) above, the undersigned hereby further CERTIFIES.
FINDS AND DETERMINES, pursuant to G.S. 159C-7 of the Act and the regulations of
the Secretary prescribed thereunder, as follows:
1. The Industrial Project is an "industrial project for industry" within
the meaning of G.S. 159C-3011(i) and thus an "industrial project" within the
meaning of G.S. 159C-7(1).
2. The operator of the proposed industrial Project, Hunt Manufacturing Co.,
pays or has agreed to pay, an average weekly manufacturing wage which is above
the average weekly manufacturing wage paid in Iredell County or which is not
less than 10% above the average weekly manufacturing wage paid in the State of
North Carolina.
3. The proposed industrial Project will not have a materially adverse
effect on the environment.
4. The 100 new jobs to bit generated directly by the Industrial Project
will be large enough in number to have a measurable impact on the area
immediately surrounding the Industrial Project and will be commensurate with the
size and cost of the Industrial Project.
5. The operator of the proposed industrial Project has demonstrated the
capability to operate such Project.
6. The financing of the Industrial Project by the Authority will not cause
or result in the abandonment of an existing industrial or manufacturing facility
of the proposed operator or an affiliate elsewhere within the State of North
Carolina.
7. The Industrial Project is hereby approved and this Certificate of
Approval shall become effective as provided in Section 159C-7 of the Act.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Approval on this 16th day of March. 1979.
D. M. FAIRCLOTH, SECRETARY OF THE DEPARTMENT OF COMMERCE OF THE STATE OF
NORTH CAROLINA. By O. M. Faircloth.
March 21
NORTH CAROLINA,
IREDELL COUNTY.
AFFIDAVIT OF PUBLICATION
BEFORE THE UNDERSIGNED, a Notary Public of said County and STATE, DULY
commissioned, qualified, and authorized by law to ADMINISTER OATHS, PERSONALLY
APPEARED
Chester P. Middlesworth
- --------------------------------------------------------------------------------
who being first duly sworn, deposes and says: that he (she) is
Vice President
- --------------------------------------------------------------------------------
(Owner, partner, publisher, or other officer employee
authorized to make this affidavit)
of
Statesville Daily Record Inc.
- --------------------------------------------------------------------------------
(name of publishing concern)
engaged in the publication of a newspaper known as
Statesville Record & Landmark
- --------------------------------------------------------------------------------
(name of newspaper)
published, issued, and entered as second class mail in the City of in said
County and State, that he (she) is authorized to make this affidavit and sworn
statement; that the notice or other legal advertisement, a true copy of which is
attached hereto, was published in
Statesville Record & Landmark
- --------------------------------------------------------------------------------
(name of newspaper)
on the following dates: MARCH 21, 1979
and that the said newspaper in which such notice. paper, document, or legal
advertisement was published was at the time of each and every such publication,
a newspaper meeting all of the requirements and qualifications of Section 1-597
of the General Statutes of North Carolina and was a qualified newspaper within
the meaning of Section I-597 of the General Statutes of North Carolina.
This 23rd day of March, 1979
- --------------------------------------------------------------------------------
(Signature of person making affidavit)
Sworn to and subscribed before me, this 23rd day of March 1979.
- --------------------------------------------------------------------------------
Notary Public
My commission expires: June 13, 1981.
<PAGE>
13
STATE OF NORTH CAROLINA
SUPERIOR COURT OF WAKE COUNTY
The undersigned, CLERK OF THE SUPERIOR COURT OF WAKE COUNTY of the State of
North Carolina, DOES HEREBY CERTIFY that, as of the date hereof, no petition has
been filed and no action has been commenced in said Court seeking review
pursuant to Article 4, Chapter 150A of the General Statutes of North Carolina of
the Certificate of Approval of an Industrial Project, executed March 21, 1979,
by the Secretary of the Department of Commerce, of the State of North Carolina,
approving Hunt Manufacturing Company, project in Iredell County, North Carolina,
to be financed by an issue of bonds of The Iredell County Industrial Facilities
and Pollution Control Financing Authority.
IN WITNESS WHEREOF, the undersigned has executed this certificate on the
24th day of April, 1979.
----------------------------------
Assistant Clerk
Wake County Superior Court
<PAGE>
Exhibit 14
THE IREDELL COUNTY INDUSTRIAL FACILITIES
AND POLLUTION CONTROL FINANCING AUTHORITY
The Board of Commissioners of The Iredell County Industrial Facilities and
Pollution Control Financing Authority met at the Courthouse Annex Building in
Statesville, North Carolina, at 3:00 P.M., on May 15, 1979.
Present: Lonnie Troutman, Lois James, Albert White, and Howard Stamey.
Absent: Rick Dagenhart, Chairman; Alfred LeVan, Vice Chairman; and J. D.
Chamberlain.
Also present: Robert Randall, Attorney for the Authority
In the absence of the Chairman and Vice Chairman, Robert Randall presided
for the election of a Temporary Chairman. Howard Stamey nominated Lonnie
Troutman as Temporary Chairman. Motion to close nominations and electing Lonnie
Troutman by acclamation was made by Lois James. The motion was seconded by
Albert White. Voting on Motion: Ayes - James, White, and Stamey. Abstaining:
Troutman.
Robert Randall, Attorney for the Authority, presented the following
documents in connection with the proposed issuance by the Authority of its
Industrial Revenue Bonds (Hunt Manufacturing Co. Project), Series 1979 (the
"Bonds") in the principal amount of $2,000,000:
(a) a Deed, dated June 1, 1979, from Hunt Manufacturing Co. to the
Authority;
(b) a Bill of Sale, dated as of June 1, 1979, from Hunt Manufacturing Co.
to the Authority:
(c) a Lease Agreement, dated as of June 1, 1979, by and between the
Authority and Hunt Manufacturing Co.;
(d) an Indenture and Deed of Trust, dated as of June 1, 1979, from the
Authority to First Union National Bank of North Carolina;
(e) a Guaranty Agreement, dated as of June 1, 1979, to First Union
National Bank of North Carolina by Hunt Manufacturing Co.;
(f) a Contract of Purchase, dated as of May 15, 1979, between the
Authority and Alex. Brown & Sons;
(g) a preliminary official Statement, dated May 2, 1979; and
(h) an Official Statement, dated May 15, 1979.
<PAGE>
The documents presented were delivered to the Secretary of the Authority and
directed to be marked Exhibits A, B, C, D, E, F, G and H, respectively, to the
minutes of the meeting, and thereby to become a part of the permanent records of
the Authority.
Howard Stamey introduced the following resolution, which was read aloud:
RESOLUTION AUTHORIZING THE ISSUANCE OF $2,000,000 PRINCIPAL AMOUNT OF
INDUSTRIAL REVENUE BONDS (HUNT MANUFACTURING CO. PROJECT) SERIES 1979 OF
THE AUTHORITY, ACCEPTANCE OF A DEED AND BILL OF SALE FROM HUNT
MANUFACTURING CO., EXECUTION AND DELIVERY OF A LEASE AGREEMENT AND AN
INDENTURE AND DEED OF TRUST TO SECURE SAID BONDS, APPROVING AN OFFICIAL
STATEMENT RELATING TO SAID BONDS AWARDING SAID BONDS PURSUANT TO A
PURCHASE CONTRACT, AND MAKING A TAX ELECTION.
BE IT RESOLVED by the Board of Commissioners (the "Board") of The Iredell
County Industrial Facilities and Pollution Control Financing Authority (the
"Authority"):
Section 1. The Authority hereby approves the Deed, dated as of June 1,
1979 (the "Deed"), from Hunt Manufacturing Co. to the Authority, in
substantially the form of that which has been presented to the Board at, and has
been annexed as Exhibit A to minutes of, this meeting, and the Chairman or the
Vice Chairman and the Secretary or any Assistant Secretary of the Authority are
hereby authorized to accept the Deed for and on behalf of the Authority.
Section 2. The Authority hereby approves the Bill of Sale, dated as of
June 1, 1979 (the "Bill of Sale"), from Hunt Manufacturing Co. to the Authority
in substantially the form of that which has been presented to this Board at, and
has been annexed as Exhibit B to the minutes of, this meeting, and the Chairman
or the Vice Chairman and the Secretary or any Assistant Secretary of the
Authority are hereby authorized to accept the Bill of Sale for and on behalf of
the Authority.
Section 3. The Authority hereby approves the Lease Agreement, dated as of
June 1, 1979 (Hunt Manufacturing Co.) (the "Lease"), by and between the
Authority and Hunt Manufacturing Co. in the form of that which has been
presented to the Board at, and has been annexed as Exhibit C to the minutes of,
this meeting, and the Chairman or the
2.
<PAGE>
Vice Chairman and the Secretary or any Assistant Secretary of the Authority are
hereby authorized to execute and deliver the Lease in any number of signed
counterparts for and on behalf of the Authority in substantially such form with
such changes therein, additions thereto, and omissions therefrom as those
executing the Lease shall approve, their execution and delivery thereof
constituting the conclusive approval of the Authority of any changes therein or
additions thereto or omission therefrom.
Section 4. The Authority hereby approves the Indenture and Deed of Trust,
dated as of June 1, 1979 (the "Indenture"), from the Authority to First Union
National Bank of North Carolina, in the form of that which has been presented to
the Board at, and has been annexed as Exhibit D to the minutes of, this meeting,
and the Chairman or the vice Chairman and the Secretary or any Assistant
Secretary of the Authority are hereby authorized to execute and deliver the
Indenture, in any number of signed counterparts, for and on behalf of the
Authority in substantially such form with such changes therein, additions
thereto, and omissions therefrom as those executing the Indenture shall approve,
their execution and delivery thereof constituting the conclusive approval of the
Authority of any changes therein or additions thereto or omissions therefrom.
Section 5. For the purpose of providing funds for paying the cost of the
acquisition of approximately 12.7 acres of land and the 170,000 square foot,
more or less, industrial building located thereon located in Iredell County, and
the acquisition and installation of certain items of equipment for installation
in said building (hereinafter referred collectively as the "Project"), the
issuance of revenue bonds of the Authority pursuant to Section 9 of Article V of
the Constitution of North Carolina and Chapter 159C of the General Statutes of
North Carolina, as amended, in the aggregate principal amount of Two Million
Dollars ($2,000,000) is hereby authorized. Said bonds shall be designated "The
Iredell County Industrial Facilities and Pollution Control Financing Authority
Industrial Revenue Bonds (Hunt Manufacturing Co. Project) Series 1979"
(hereinafter referred to as the "Bonds"), and shall be in the form and have the
terms and provisions set forth in the Indenture which has been presented to the
Board at, and has been annexed as Exhibit D to the minutes of, the meeting, and
the Chairman or the Vice-Chairman and the Secretary or any Assistant Secre-
3.
<PAGE>
tary of the Authority are hereby authorized to execute and deliver the Bonds for
and on behalf of the Authority in substantially such form with such changes
therein, additions thereto, and omissions therefrom as those executing the Bonds
shall approve, their execution and delivery thereof constituting the conclusive
approval of the Authority of any changes therein, additions thereto, and
omissions therefrom.
Section 6. The Bonds shall be sold to Alex. Brown & Sons (the
"Underwriter") pursuant to the terms and provisions of the Contract of Purchase,
to be dated as of the date of this meeting (the "Purchase Contract"), between
the Authority and the Underwriter, in the form of that which has been presented
to the Board at this meeting; the terms and conditions on which the underwriter
has agreed to purchase the Bonds, as set forth therein, are hereby approved and
accepted and the Authority hereby confirms its agreement to sell the Bonds
bearing interest at the rate of 7 1/2% per annum to the Underwriter at the
purchase price of $1,956.000 and otherwise upon the terms and conditions set
forth in the Purchase Contract; and the Authority hereby authorizes the Chairman
or the Vice Chairman of the Authority to execute and deliver the Purchase
Contract, for and on behalf of the Authority, in substantially such form with
such changes therein, additions thereto, and omissions therefrom as the officer
executing the Purchase Contract shall approve, but only upon receipt of a
properly executed Letter of Representation from the Company in substantially the
form of that set for as Exhibit B to the Purchase Contract his execution and
delivery thereof constituting the conclusive approval of the Authority of any
changes therein, additions thereto, and omissions therefrom.
Section 7. The form and content of the Official Statement, together with
such changes, modifications and deletions as may be deemed necessary and
appropriate, are hereby approved and authorized in all respects, and the
Chairman or Vice Chairman of the Authority is hereby authorized and directed to
execute and deliver, on behalf of the Authority, such Official Statement, in the
form presented at this meeting together with such changes, modifications and
deletions as he, with the advice of counsel, may deem necessary and appropriate,
such execution and delivery to be conclusive evidence of the approval and
authorization thereof; the Authority hereby ratifies and approves the
distribution of the Preliminary Official Statement, dated as of May 2, 1979 (the
"Preliminary Official Statement"), and
4.
<PAGE>
approves and consents to the use of copies of the Preliminary Official
Statement, the Official Statement, the Indenture, the Lease and the Guaranty
(described in the Official STATEMENT) by the Underwriter in connection with the
public offering of the Bonds.
Section 8. The Authority hereby determines to elect to have the Bonds
qualify for the exemption from the provisions of paragraph (1) of subsection
103(b) of the Internal Revenue Code of 1954, as amended, afforded by
subparagraph (D) of paragraph (6) thereof, and authorizes the Chairman or the
Vice Chairman of the Authority to make such election on behalf of the Authority
by submitting a statement to such effect.
Section 9. The officers of the Authority are hereby authorized and directed
to execute and deliver such certificates and statements as may be required by
the Indenture, the Lease, the Purchase Contract or as otherwise required in
connection with the issuance of the Bonds. Such officers are further authorized
and directed to sign and cause to be filed such financing statements and to
cause to be recorded such instruments as counsel to the Authority shall deem
necessary or advisable in connection with the issuance of the Bonds. Such
officers shall be entitled to rely on the advice of counsel to the Authority in
deciding to take or not to take any action in connection with the issuance of
the Bonds.
Section 10. This resolution shall take effect upon its passage.
Commissioner Stamey moved passage of the foregoing resolution entitled:
"RESOLUTION AUTHORIZING THE ISSUANCE OF $2,000,000 PRINCIPAL AMOUNT OF
INDUSTRIAL REVENUE BONDS (HUNT MANUFACTURING CO. PROJECT) SERIES 1979 OF
THE AUTHORITY, ACCEPTANCE OF A DEED AND BILL OF SALE FROM HUNT
MANUFACTURING CO., EXECUTION AND DELIVERY OF A LEASE AGREEMENT AND AN
INDENTURE AND DEED OF TRUST TO SECURE SAID BONDS, APPROVING AN OFFICIAL
STATEMENT RELATING TO SAID BONDS, AWARDING SAID BONDS PURSUANT TO A
PURCHASE CONTRACT AND MAKING A TAX ELECTION."
and Commissioner James seconded the motion, and the resolution was passed by the
following vote:
5.
<PAGE>
Ayes: Stamey, White, James, and Troutman
Noes: None
* * * * *
I, Alice Fortner, Secretary of The Iredell County Industrial Facilities and
Pollution Control Financing Authority and keeper of the official minutes
thereof, DO HEREBY CERTIFY that the foregoing is a true copy of certain
proceedings of the Board of Commissioners of the Authority taken at a meeting
held on May 15, 1979 and is a complete copy of so much of the recorded minutes
of said meeting as relates in any way to the passage of the resolution
hereinabove set forth.
I DO HEREBY FURTHER CERTIFY that, pursuant to Article II of the By-laws of
the Authority, I gave all members of the Authority written notice of said
meeting not less than twenty-four hours prior to 3:00 P.M., May 15, 1979 and
that, at least forty-eight hours before said meeting, such notice was posted on
the principal bulletin board or at the door of the usual meeting room of the
Authority and mailed or delivered to each newspaper, wire service, radio station
and television station that had filed with me a written request for notice
pursuant to G.S. 143-318.8.
WITNESS my hand and the official seal of The Iredell County Industrial
Facilities and Pollution Control Financing Authority this 5th day of June, 1979.
_________________________
Secretary
(Seal)
6.
<PAGE>
THE IREDELL COUNTY INDUSTRIAL FACILITIES AND
POLLUTION CONTROL FINANCING AUTHORITY
May 29, 1979
Internal Revenue Service Center
Roosevelt Boulevard
Philadelphia, Pennsylvania
Re: Election pursuant to Section 103(b)(6)(D) of the Internal Revenue Code
of 1954, as amended, as prescribed by Treasury Regulation 1.103-10
(B)(2)(VI)
----------------------------------------------------------------------
Dear Sirs:
The Iredell County Industrial Facilities and Pollution Control Financing
Authority, a political subdivision and body corporate and politic of the State
of North Carolina created and empowered pursuant to the Industrial and Pollution
Control Facilities Financing Act, as amended (being Chapter 800 of the Session
Laws of North Carolina of 1975, which, as amended appears as Chapter 159C of the
North Carolina General Statutes), pursuant to the authority contained in a
resolution adopted by its Board of Commissioners, hereby elects to have the
provisions of Section 103(b)(6)(D) of the Internal Revenue Code of 1954, as
amended, apply to its Industrial Revenue Bonds (Hunt Manufacturing Co. Project),
Series 1979 to be issued in the aggregate principal amount of $2,000,000 and
dated as of June 1, 1979.
Pursuant to Treasury Regulation 1.103-10(b)(2)(vi)(b), the following
information is submitted:
(1) The name and address of the governmental unit is:
The Iredell County Industrial Facilities and
Pollution Control Financing Authority
P. 0. Box 788
Statesville, North Carolina 28655
(2) The name, address and employer identification number of each principal
user of the facilities included in the Project is:
Hunt Manufacturing Co.
1405 Locust Street
Philadelphia, Pennsylvania 19102
Employer I.D. No. 21-048 1254
<PAGE>
(3) The date and face amount of the issue are: Date: June 1, 1979
(anticipated date of issue is June 5, 1979) Aggregate Principal
Amount: $2,000,000.
(4) There are no outstanding issues the proceeds of which have been or
will be used primarily with respect to facilities (a) the principal
user or users of which are or will be the same or related persons as
those listed in paragraph (2) above and (b) which are located in
Iredell County.
(5) The date and amount of "Section 103(b)(6)(D) capital expenditures",
paid or incurred within the three years preceding the June 5, 1979
date on which it is anticipated the Bonds will be issued, and made
with respect to facilities described in paragraph (4), are listed in
Exhibit A attached to this statement and incorporated herein by
reference.
(6) The undersigned is duly authorized to make the above statements in the
name of The Iredell County Industrial Facilities and Pollution Control
Financing Authority. The information pertaining to capital
expenditures set forth in this certificate has been obtained from Hunt
Manufacturing Co.
Very truly yours,
The Iredell County Industrial,
Facilities and Pollution Control
Financing Authority
By ________________________________
Chairman
<PAGE>
RECEIPT OF INTERNAL REVENUE SERVICE
This will verify that on June __, 1979, the undersigned received for filing
from The Iredell County Industrial Facilities and Pollution Control Financing
Authority, North Carolina, its election, dated May __, 1979, to issue bonds in
the principal amount of $2,000,000, designated "industrial Revenue Bonds (Hunt
Manufacturing Cc. Project), Series 1979," dated as of June 1, 1979, pursuant to
the election provided for in Section 103(b)(6)(D) of the Internal Revenue Code
of 1954, as amended.
INTERNAL REVENUE SERVICE
By ________________________________
Title _____________________________
[Date Stamp]
<PAGE>
EXHIBIT A
"SECTION 103(B)(6)(D) Capital Expenditures"**
A. "Section 103(b)(6)(D) Capital Expenditures" in Iredell County, North
Carolina, financed or to be financed out of proceeds of the current subject
issue of bonds:
(i) The difference between the face of the bonds ($2,000,000) and the
amount paid by the Underwriter ($1,956,000): $ 44,000
(ii) Expenditures already incurred by the Company to be
reimbursed at bond closing: 1,956,000
(iii) Other expenditures incurred and to be incurred
and to be reimbursed out of bond proceeds:
Subtotal* $2,000,000
B. "Section 103(b)(6)(D) Capital Expenditures" related to this
Project and not to be reimbursed out of proceeds of the Bonds: $ 0
C. Other "Section 103(b)(6)(D) Capital Expenditures" (i.e., expenditures
incurred within the previous three years in Iredell County, North Carolina
not related to this Project):
Subtotal $1,121,542
----------
Total $3,121,542
==========
- ----------
* Prepared by the Company. The subtotal in Section A above should coincide
with the aggregate purchase price of the Leased Property to be financed by
the bonds.
** As defined in Treas. Reg. Section 1.103-10(b)(2).
<PAGE>
THE BOARD OF COMMISSIONERS
FOR
THE COUNTY OF IREDELL, NORTH CAROLINA
The Board of Commissioners for the County of Iredell, North Carolina, met
in regular session in Conference Rooms 1 and 2 in the Iredell County
Agricultural Center in Statesville, North Carolina, the regular place of
meeting, at 7:30 o'clock P.M., May 15, 1929.
Present: Chairman Troutman presiding, and Commissioners Rhye, Ostwalt,
Murdock, and Mills.
Absent: None.
Also present: Robert N. Randall, County Attorney.
* * * * *
Commissioner Rhye introduced the following resolution which was read aloud:
RESOLUTION APPROVING THE ISSUANCE BY THE IREDELL COUNTY INDUSTRIAL
FACILITIES AND POLLUTION CONTROL FINANCING AUTHORITY OF ITS INDUSTRIAL
REVENUE BONDS (HUNT MANUFACTURING CO. PROTECT) SERIES 1979, IN THE
AGGREGATE PRINCIPAL AMOUNT OF $2,000,000.
BE IT RESOLVED by the Board of Commissioners for the County of Iredell:
Section 1. The Board of Commissioners has determined and does hereby
declare as follows:
(a) The Board of Commissioners of The Iredell County Industrial
Facilities and Pollution Control Financing Authority (herein referred to as
the "Authority") met on May 15, 1979 and took the following action in
connection
<PAGE>
with the proposed issuance and sale of the Authority's Industrial Revenue
Bonds (Hunt Manufacturing Co. Project), Series 1979, in the aggregate
principal amount of $2,000,000:
1. authorized acceptance of a Deed, dated as of June 1, 1979,
from Hunt Manufacturing Co. to the Authority;
2. authorized acceptance of a Bill of Sale, dated as of June 1,
1979, from Hunt Manufacturing Co. to the Authority;
3. approved and authorized the execution and delivery of a Lease
Agreement, dated as of June 1, 1979, by and between the Authority and
Hunt Manufacturing Co.;
4. approved and authorized the execution and delivery of an
Indenture and Deed of Trust, dated as of June 1, 1979, between the
Authority and First Union National Bank of North Carolina (the
"Trustee"), as Trustee for the holders of said bonds;
5. authorized the Authority's Industrial Revenue Bonds (Hunt
Manufacturing Co. Project) Series 1979, in the aggregate principal
amount of $2,000,000 and directed the execution and delivery of said
bonds;
6. approved and authorized the Contract of Purchase, dated as of
May 15, 1979, between the Authority and Alex. Brown & Sons, providing
for the sale of said bonds; and
-2-
<PAGE>
7. APPROVED and authorized the use by Alex. Brown & Sons of the
Official Statement and of the Preliminary Official Statement, dated
May 2, 1979, relating to said bonds.
(b) The Board of Commissioners for the County of Iredell has reviewed
the action taken by the Board of Commissioners of the Authority in
connection with the issuance and sale of the Bonds, including a review of
the documents authorized and approved as specified above in substantially
the forms presented to the Board of Commissioners of the Authority at their
meeting on May 15, 1979, and has made such other examination and
investigation as it deems necessary and relevant as the basis for the
approval set forth herein.
Section 2. Pursuant to and in satisfaction of the requirements of Section
159C-4(d) of the General Statutes of North Carolina, the Board of Commissioners
for the County of Iredell hereby approves the issuance by the Authority of the
Authority's Industrial Revenue Bonds (Hunt Manufacturing Co. Project) Series
1979 in the aggregate principal amount of $2,000,000.
Section 3. This resolution shall take effect immediately upon its passage.
* * * * * *
-3-
<PAGE>
Commissioner Rhye moved the passage of the foregoing resolution and
Commissioner Ostwalt seconded the motion, and the resolution was passed by the
following vote:
Ayes: Commissioners Rhye, Ostwalt, Troutman, Mills, and Murdock.
Noes: None.
Abstained: None.
* * * * * *
I, Alice Fortner, Clerk to the Board of Commissioners for the County of
Iredell, North Carolina, DO HEREBY CERTIFY that the foregoing is a true and
complete copy of so much of the proceedings of the Board of Commissioners for
said County at a meeting held on May 15, 1979, as relates in any way to the
approval hereinabove set forth, and that said proceedings are recorded in Minute
Book No. II of the minutes of said Board, beginning at page 886 and ending at
page 890.
I HEREBY FURTHER CERTIFY that a schedule of regular meetings of said Board,
stating that regular meetings of said Board are held each month on the first
Tuesday at 7:30 P.M., at the Courthouse Annex Building in Statesville, North
Carolina, has been on file in my office pursuant to G.S. 143-318.8 as of a date
not less than seven days before the meeting held May 2, 1979; and that the
meeting held on May 15, 1979 was a reconvened meeting the time and place or
which was announced at the meeting on May 2, 1979.
-4-
<PAGE>
WITNESS my hand and the common seal of said County, this 15th day of May,
1979,
___________________________________
Clerk to the Board of Commissioners
[SEAL]
-5-
<PAGE>
MINUTES
OF THE EXECUTIVE COMMITTEE
OF THE LOCAL GOVERNMENT COMMISSION
June 4, 1979
The meeting was called to order by the Chairman Boyles at 11:00 P M., June
4, 1979. Members present were Messrs. Thadfire, Henry Bridges and Mark Lynch
Mr. Eure made the motion that the following resolution be adopted:
"RESOLUTION APPROVING ISSUANCE AND SALE OF A BOND OF THE IREDELL COUNTY
INDUSTRIAL FACILITIES AND POLLUTION CONTROL FINANCING AUTHORITY.
"BE IT RESOLVED by the Executive Committee of the Local Government
Commission of North Carolina:
"Section 1. It is hereby declared and determined that The Iredell County
Industrial Facilities and Pollution Control Financing Authority (the
"Authority") has filed with the Secretary of the Local Government Commission
pursuant to Section 159C-8 of Chapter 159C of the General Statutes of North
Carolina (the "ACT"), an Application for Approval of 2,000,000 Industrial
Development Revenue Bonds, Series 1979 (Hunt Manufacturing Co. Project) (the
"Bonds"), including the following documents:
1. Copy of Application for Approval of Project pursuant to Section 159C-7
of the Act as filed by the Authority with the Department of Commerce.
2. Form of Contract of Purchase dated as of June 1, 1979 between the
Authority and Alex. Brown & Sons (the "Underwriter").
3. Form of Lease Agreement dated as of June 1, 1979 by and between the
Authority, as lessor, and Hunt Manufacturing Co. (the "Company").
4. Form of Indenture and Deed of Trust dated June 1, 1979 from the
Authority to First Union National Bank of North Carolina (the
"Trustee").
5. Form of Guaranty Agreement dated as of June 1, 1979 by and between the
Company and the Trustee.
<PAGE>
6. A request by the Authority that the Local Government Commission (a)
approve the issuance of the Bonds pursuant to Section 159C-8 of the
Act, (b) approve the private sale of the Bonds on the terms and at the
price set forth in the form of the Contract of Purchase pursuant to
Section 159C-9 of the Act, and (c) determine the interest rates to be
borne by the Bonds as set forth in said Contract of Purchase pursuant
to Section 159C-6 of the Act.
"Section 2. It is hereby further declared and determined that:
(a) The Secretary of the Department of Commerce has approved the Project
to be financed with proceeds of the Bonds and such approval has become
effective pursuant to Section 159C-7 of the Act.
(b) The Commission has duly considered, among other things, the financial
responsibility and capability of the Company to fulfill its
obligations with respect to the Guaranty and the Lease in the form
filed with the Commission and the ability of the political
subdivisions in or near which the Project (described in the Lease) is
to be located to cope satisfactorily with the impact of the Project
and to provide necessary public facilities and services.
(c) The proposed date and manner of sale of the Bond will not have an
adverse effect upon any scheduled or anticipated sale of any
obligations by the State of North Carolina or any political
subdivision thereof or any agency of either of them.
"Section 3. The issuance of the Bonds is hereby approved.
"Section 4. The sale of the Bonds at private sale pursuant to an executed
Contract of Purchase substantially in the form filed with the Commission at the
purchase price of 97.8% of the aggregate principal amount thereof, plus accrued
interest, with the approval of the Authority and the Company, is in the best
interests of the Authority and will best effectuate the purposes of the Act.
"Section 5. It is hereby determined, with the approval of the Authority and
the Company, that the Bond shall bear interest at the rate of 7-1/2% per annum,
as set forth in the form of indenture and Deed of Trust filed with the
Commission.
<PAGE>
The motion was seconded by Mr. Lynch and was adopted by unanimous vote.
* * * * * *
I, JOHN D. FOUST, Secretary of the Local Government Commission of North
Carolina, D0 HEREBY CERTIFY that the foregoing is a true and correct copy of the
extracts from minutes of the commission.
WITNESS my hand at Raleigh, this 4th day of June, 1979.
By_________________________________
Secretary of the Local Government
Commission of North Carolina
<PAGE>
STATE OF NORTH CAROLINA
LOCAL GOVERNMENT COMMISSION
RALEIGH
CERTIFICATE CONCERNING AN
INDUSTRIAL DEVELOPMENT REVENUE BOND
I, John D. Foust, Secretary of the Local Government Commission of North
Carolina, DO HEREBY CERTIFY, as follows:
1. The application requesting approval of issuance of the $2,000,000
Industrial Development Revenue Bonds (Hunt Manufacturing Co. Project)
Series 1979 (the "Bonds"), by The Iredell County industrial Facilities and
Pollution Control Financing Authority (the "Authority") was duly filed on
May 15, 1979 pursuant to Section 159C-8 of the General Statutes of North
Carolina. The Bonds are to be dated as of June 1, 1979, and mature on June
1, 1999.
2. Said application was considered and the issuance of the Bond
approved by a resolution passed by the unanimous vote of the members of the
Executive Committee of the Commission present at a meeting held on June 4,
1979.
3. At said meeting, the Executive Committee of the Commission, by said
resolution, also approved the sale of the Bond at private sale to Alex.
Brown & Sons (the "Underwriter"), on the terms set forth in the form of
Contract of Purchase filed as part of said Application, and determined that
the Bonds shall bear interest at the rate of 7-1/2 % per annum as set forth
in the Indenture and Deed of Trust filed as part of said application,
pursuant to Sections 159C-9 and 195C-5, respectively, of the General
Statutes of North Carolina.
4. No request or application for the review of any resolution adopted
or other proceedings taken by the Commission or the Executive Committee
thereof with respect to the Bonds has been filed with the Commission or the
Executive Committee.
5. No litigation concerning the action of the Commission or the
Executive Committee thereof in approving the issuance and sale of the Bond
is pending or threatened insofar as I am aware.
<PAGE>
WITNESS my hand at Raleigh, this 4th day of June, 1979.
By_________________________________
Secretary of the Local Government
Commission of North Carolina
<PAGE>
STATE OF NORTH CAROLINA
COUNTY Of IREDELL
DEED
THIS DEED, made as of the 1st day of June, 1979, by HUNT MANUFACTURING C0.
(the "Grantor"), a Pennsylvania corporation, to THE IREDELL COUNTY INDUSTRIAL
FACILITIES POLLUTION CONTROL FINANCING AUTHORITY, a political subdivision and
body corporate and politic of the State of North Carolina (the "Grantee"), and
its successors and assigns,
WITNESSETH:
That the Grantor, in consideration of One Dollar and other valuable
consideration to it paid by the Grantee, the receipt of which is hereby
acknowledged, has bargained and sold, AND BY THESE PRESENTS DOES GRANT, BARGAIN,
SELL AND CONVEY UNTO THE GRANTEE, its successors and assigns, that certain tract
of land situate, lying and being in Iredell County, particularly described in
Exhibit A attached hereto thereon (collectively, the "Property").
The Property was conveyed to the Grantor by a deed, dated March 24, 1979,
recorded in Book 636, Page 547, in the office of the Register of Deeds of
Iredell County, North Carolina;
TO HAVE AND TO HOLD the aforesaid property and all privileges and
appurtenances thereunto belonging to the Grantee, its successors and assigns in
fee simple forever, but subject to the following encumbrances: (i) the Indenture
and Deed of Trust, dated as of June 1, 1979, by and between the Grantee and
First Union National Bank of North Carolina, (ii) liens for ad valorem taxes and
special assessments not then delinquent or being contested by or on behalf of
the Lessee, (iii) the Lease Agreement, dated as of June 1, 1979, by and between
the Grantor and the Grantee, (iv) UTILITY, ACCESS and other easements and rights
of way, MINERAL rights, restrictions, exceptions and encumbrances that will not
materially interfere with or impair the operations being conducted at the paper
and art/craft
<PAGE>
products manufacturing facility of the Grantor, at the Proper Property (v)
mechanics' and materialmen's liens not filed or perfected in the manner
prescribed by law, (vi) the exceptions listed in Exhibit B hereto and (vii) such
minor defects, irregularities, encumbrances, easements, rights of way and clouds
or. title, all as normally exist with respect to properties similar in character
to the Property and as do not in the aggregate materially impair the property
affected thereby for the purpose for which it is to be used by the Lessee.
And the Grantor, for Itself, its successors and assigns, covenants with the
Grantee, its heirs, successors and assigns, that it is seized of said premises
in fee and has the right to convey the same in fee simple; that the same is free
from encumbrances except as herein set forth; and that it will warrant and
defend the said title to the same against the claims (except as hereinabove set
forth) of all persons whomsoever.
The plural number as used herein. shall equally include the singular. The
masculine or feminine gender as used herein shall equally include the neuter.
IN TESTIMONY WHEREOF the Grantor has caused this instrument to be signed in
its corporate name by a Vice President and its corporate seal to be hereunto
affixed and attested by its Secretary, this day and year first above written.
HUNT MANUFACTURING CO.
By _______________________________
Vice President
(Seal)
Attest:
_______________________________
Assistant Secretary
<PAGE>
STATE OF NEW YORK
ss.:
COUNTY OF NEW YORK
The undersigned Notary Public in and for said county in said state, hereby
certify that John H. Martin personally came before me this day and acknowledged
that he is an Assistant Secretary of Hunt Manufacturing Co., a Pennsylvania
corporation, and that by authority duly given and as the act of said
corporation, the foregoing instrument was signed in its name by its Vice
President, Rudolph M. Peins, sealed with its corporate seal, and attested by
himself as its Secretary.
Witness my hand and official seal, this the _____ day of _______________,
1979.
_______________________________
Notary Public
[Seal]
My commission expires:
GLORIA J. DE SILVIO
Notary Public, State of New York
No. 24-4510091
Qualified in Kings County
Certificate filed in New York County
Commission Expires March 30, 1981
-3-
<PAGE>
Exhibit A
THIS EXHIBIT A IS ATTACHED TO AND MADE A PART OF A DEED FROM HUNT
MANUFACTURING CO. TO THE IREDELL COUNTY INDUSTRIAL FACILITIES AND
POLLUTION CONTROL FINANCING AUTHORITY DATED AS OF JUNE 1, 1979.
Description of Premises
All of that certain plot, piece or parcel of land situate, lying and being
in Iredell County, North Carolina, more particularly described as follows:
BEGINNING at a point in the center of North Carolina Highway No. 90 (West
Front Street) leading from Statesville, North Carolina, to Taylorsville, North
Carolina, said beginning point being the Southwest corner of the tract of land
conveyed to the Carnation Company by the State of North Carolina by Deed
recorded in Deed Book 134, Page 125, Iredell County Registry, and running thence
with the center of said; North Carolina Highway No. 90, North 62 degrees 22
minutes West 1043 feet to a point in the center of said North Carolina Highway
No. 90, which point the center of said North Carolina Highway No. 90 and the
center of Mecham Road, a road leading in a Northerly direction said from said
North Carolina Highway No. 90 to what was formerly a part 0.1 the Piedmont
Experiment Station Farm intersect; thence with the center line of said Mecham
Road North 08 degrees 06 minutes East 805 feet to a point in the center 1 line
of the railroad track of Alexander Railroad Company; thence with the center 1
line of the said railroad track of the Alexander Railroad Company four calls as
follows: (1) South 40 degrees 05 minutes East-839.45 feet to a point; (2) thence
South 43 degrees 01 minutes East 159 feet to a point: (3) thence South 48
degrees 10 minutes East 168.6 feet to a point; (4) thence South 52 decrees 30
minutes East 161.7 feet to a point in the center of said railroad track, and
said point being the Northwest corner of the said tract of land conveyed to the
Carnation Company by the State of North Carolina by the Deed referred to
hereinabove; thence with the Western line of said Carnation Company South 15
degrees 49 minutes 40 seconds West 324.45 feet to the point of
BEGINNING containing 12.76 acres, more or less, and the above description being
according to a man and survey made by Kestler & MacKay, Registered Surveyors,
dated April 13, 1964, revised on February 22 1979, with said revision being in
regard to the location of buildings, paving, and similar matters, and not in any
way being a revisions of property lines, including courses, degrees and
distances; and being the identical property conveyed to National Canvas Products
Corp. by Deed of Olin Corporation, dated September 26, 1975, recorded in Deed
Book 578, Page 573, Iredell County Registry.
<PAGE>
Exhibit B
THIS EXHIBIT B IS ATTACHED TO AND MADE A PART OF A DEED FROM HUNT
MANUFACTURING CO. TO THE IREDELL COUNTY INDUSTRIAL FACILITIES AND
POLLUTION CONTROL FINANCING AUTHORITY DATED AS OF JUNE 1, 1979.
1. The building line restrictions measured from the center of the Mecham
Road, as set forth in the Deed from the State of North Carolina to the Empire
Manufacturing Corporation, recorded in Deed Book 213, Page 255, Iredell County
Registry.
2. The right-of-way and easement of the Alexander Railroad Company, which
is twenty-two (22) feet wide, measured from the center or the tracks of said
railroad company; and reference is hereby made to the Deed of Alexander Railroad
Company, to the Empire Manufacturing Corporation, recorded in Deed Book 213,
Page 259, Iredell County Registry.
3. The right-of-way and easement of North Carolina Highway No. 90.
4. The right-of-way and easement of the Mecham Road.
5. Such other right-of-ways and easements of record and general easement by
prescription for city electric power lines and general electric service lines
and all such rights and easements as are shown on survey of the foregoing
property by Kestler and MacKay, North Carolina dated April 13, 1964 and revised
February 22, 1979.
<PAGE>
6. Any and all zoning ordinances and regulations which may apply to, or
AFFECT, the above-described real estate in any way or manner.
BILL OF SALE
KNOW ALL MEN BY THESE PRESENTS that the undersigned, HUNT MANUFACTURING
CO., a Pennsylvania corporation (herein called "Hunt"), for the sum of One
Dollar and other valuable consideration paid, the receipt of which is hereby
acknowledged, HEREBY GRANTS, BARGAINS, SELLS, TRANSFERS AND SETS OVER to The
Iredell County Industrial Facilities and Pollution Control Financing Authority,
a political subdivision and body corporate and politic of the State of North
Carolina (herein called the "Authority"), its successors and assigns, all of its
interest in certain equipment, fixtures and property consisting of property
other than real property under the laws of North Carolina and described in
Schedule 1 attached hereto as a part hereof (herein collectively called the
"Equipment"), and by this Bill of Sale does hereby grant, bargain, sell and
transfer the Equipment, whether or not presently existing or in the possession
of Hunt, and all its right, title and interest therein to the Authority;
TO HAVE AND TO HOLD the Equipment for itself, its successors and assigns,
forever, and Hunt hereby warrants itself to have full power, good right and
lawful authority to dispose of the Equipment in the aforesaid manner, but
subject to the following encumbrances ("Permitted Encumbrances"): (i) liens for
ad valorem taxes and special assessments not then delinquent or being contested
by or on behalf of Hunt, (ii) the Lease Agreement, dated as of June 1, 1979, by
and between Hunt and the Authority, (iii) utility, access and other easements
and rights of way, mineral rights, restrictions, exceptions and encumbrances.
that will not materially interfere with or impair the operations being conducted
at the paper and art/craft products manufacturing complex of Hunt in Iredell
County, (iv) mechanics' and materialmen's liens not filed or perfected in the
manner prescribed by law and (v) such minor defects, irregularities,
encumbrances, easements, rights of way and clouds on title, all as normally
exist with respect to properties similar in character to the Equipment and as do
not in the aggregate materially impair the property affected thereby for the
purpose for which it is to be used by Hunt.
Hunt for itself, its successors and assigns does hereby covenant and agree
with the Authority, its successors and assigns to warrant and defend the true
ownership of the Equipment by the Authority against all lawful claims and
demands (except Permitted Encumbrances) of all and every person and persons
whatsoever.
<PAGE>
Hunt further warrants that the Equipment is free and clear of all claims,
liens, security interests or other encumbrances whatsoever, except for the
Permitted Encumbrances.
Hunt and the Authority hereby acknowledge that, notwithstanding the sale of
the Equipment by Hunt to the Authority hereunder, Hunt is in possession of the
Equipment described in Schedule 1 hereto on the date hereof and, pursuant to the
Lease, will remain in possession of the Equipment after the sale thereof
hereunder. Under no circumstances shall a transfer of possession of the
Equipment to the Authority be necessary for the transfer of ownership effected
and intended to be effected by this Bill of Sale.
This Bill of Sale is made under, and shall be governed by the laws of, the
State of North Carolina.
WITNESS the following signatures and the corporate seal of Hunt as of June
1, 1979.
HUNT MANUFACTURING Co.
_______________________________
Vice President
Attest
_______________________________
Assistant Secretary
THE IREDELL COUNTY INDUSTRIAL
FACILITIES AND POLLUTION CONTROL
FINANCING AUTHORITY
_______________________________
Chairman
Attest:
_______________________________
Secretary
<PAGE>
SCHEDULE 1
The equipment consists of the following item of equipment, fixtures and
property consisting of property other than real property:
A. CAFETERIA EQUIPMENT
B. OFFICE FURNITURE AND FIXTURES PURCHASED FROM NATIONAL CANVAS PRODUCTS CORP.
C. NARROW AISLE STACKING SYSTEM
Racks & Docking
3 Stock Pickers
1 CONTROL UNIT
2 STRADDLE TRUCKS (SHELF LOADERS)
D. MACHINERY & EQUIPMENT
Air Compresor-Worthington
(with after cooler)
Air Compressor - Lincoln
Air Compressor - Wayne
Rewind Machine
Programmab1e Cutter
5 Cutter Grinders
Injection Molding Machine
Shrink Wrap Machine
Harding Precision Lathe
Electronic Digital Scale
Pebble Mill
Brazing Machine
<PAGE>
THE IREDELL COUNTY INDUSTRIAL FACILITIES
AND
Pollution Control Financing Authority,
Lessor
and
Hunt Manufacturing Co.,
Lessee
----------
LEASE AGREEMENT
----------
Dated as of June 1, 1979
Securing
Industrial Revenue Bonds
(Hunt Manufacturing Co. Project) of
The Iredell County Industrial Facilities and
Pollution Control Financing Authority
CERTAIN RIGHTS OF THE LESSOR UNDER THIS LEASE HAVE BEEN ASSIGNED TO, AND ARE
SUBJECT TO A LIEN AND SECURITY INTEREST IN FAVOR OF, FIRST UNION NATIONAL BANK
OF NORTH CAROLINA, AS TRUSTEE, UNDER AN INDENTURE AND DEED OF TRUST, DATED AS OF
JUNE 1, 1979, AS AMENDED OR SUPPLEMENTED FROM TIME TO TIME. INFORMATION
CONCERNING SUCH LIEN MAY BE OBTAINED FROM THE TRUSTEE AT ONE JEFFERSON FIRST
UNION PLAZA, CHARLOTTE, NORTH CAROLINA.
<PAGE>
TABLE OF CONTENTS
PAGE
----
Title .............................................................1
Parties........................................................... 1
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
Section 1.1. Definitions...........................................I-1
(1) "Acquisition" ..................................I-1
(2) "Acquisition Fund" .............................I-1
(3) "Additional Bonds" .............................I-1
(4) "Additional Rent" ..............................I-1
(5) "Affiliate" ....................................I-1
(6) "Authority" ....................................I-1
(7) "Authority Representative" .....................I-2
(8) "Basic Rent" ...................................I-2
(9) "Bond Fund" ....................................I-2
(10) "Bondholder" or "Holder" ......................I-2
(11) "Bonds" .......................................I-2
(12) "Code" ........................................I-2
(13) "Company" .....................................I-2
(14) "Company Representative" ......................I-2
(15) "Completion Date" .............................I-2
(16) "Cost" ........................................I-3
(17) "Counsel" .....................................I-4
(18) "default" or "event of default"................I-4
(19) "Determination of Taxability" .................I-4
(20) "Eminent Domain" ..............................I-5
(21) "Enabling Act" . ..............................I-5
(22) "Government Obligations" ......................I-5
(23) "Guarantor" ...................................I-5
(24) "Guaranty".....................................I-5
(25) "Improvements" ............................... I-5
(26) "Indenture" ...................................I-6
i.
<PAGE>
TABLE OF CONTENTS
(Continued)
PAGE
----
Section 1.1. (27) "Lease"........................................I-6
(Cont"d) (28) "Lease Term" ..................................I-6
(29) "Leased Property" .............................I-6
(30) "Net Proceeds" ................................I-6
(31) "Payment of the Bonds" ........................I-6
(32) "Permitted Encumbrances" . ....................I-6
(33) "Plans and Specifications" ....................I-7
(34) "Project" .....................................I-7
(35) "Refunding Bonds" .............................I-7
(36) "Rent" ........................................I-7
(37) "Series 1979 Bonds" ...........................I-7
(38) "Sinking Fund" ................................I-7
(39) "Tax Regulations" .............................I-7
(40) "Trustee" .....................................I-7
Section 1.2. Rules of Construction ..............................I-8
ARTICLE II
REPRESENTATIONS
Section 2.1. Representations by the Authority...................II-1
Section 2.2. Representations by the Company ....................II-1
ii.
<PAGE>
TABLE OF CONTENTS
(Continued)
PAGE
----
ARTICLE III
ACQUISITION AND INSTALLATION
OF THE PROJECT
Section 3.1. Conveyance by Company of Project
to Authority ...........................III-1
Section 3.2. Agreement to Complete
Acquisition of the Project .............III-1
Section 3.3. Company Not to Permit Nuisance
to Exist ...............................III-2
Section 3.4. Plans and Specifications; Changes
in the Project ............................III-2
Section 3.5. No Warranty by Authority ..................III-2
Section 3.6. Compliance with Indenture .................III-3
ARTICLE IV
ISSUANCE OF THE BONDS; COMPLETION DATE
Section 4.1. Agreement to Issue the Bonds ...............IV-1
Section 4.2. Disbursements from the Acquisition Fund ....IV-1
Section 4.3. Establishment of Completion Date............IV-1
Section 4.4. Disposition of Balance in Acqui-
sition Fund .............................IV-1
Section 4.5. Company Required to Pay in Event
Acquisition Fund Insufficient............IV-2
iii.
<PAGE>
TABLE OF CONTENTS
(Continued)
PAGE
----
ARTICLE V
DEMISE OF THE LEASED PROPERTY; EFFECTIVE DATE OF THIS LEASE;
DURATION; POSSESSION; RENT PROVISIONS;
TAXES AND UTILITY CHARGES
Section 5.1. Demise of the Leased Property;
Effective Date of this Lease;
Duration of Lease Term .....................V-1
Section 5.2. Quiet Enjoyment ............................V-1
Section 5.3. Rent and Other Amounts Payable .............V-1
Section 5.4. Taxes and Utility Charges ..................V-2
Section 5.5. Obligations of Company Here-
under Unconditional ........................V-4
Section 5.6. Prepayment of Rent .........................V-5
Section 5.7. Net Lease...................................V-5
ARTICLE VI
MAINTENANCE, MODIFICATIONS, REMOVALS,
ADDITIONS
Section 6.1. Maintenance and Modifications of
Leased Property by Company .............VI-1
Section 6.2. Installation of Company's Own
Property ...................VI-1
Section 6.3. Removal of Leased Equipment ...............VI-2
Section 6.4. Grant and Release of Easements ............VI-3
Section 6.5. Option to Purchase Unimproved Land.........VI-4
iv.
<PAGE>
TABLE OF CONTENTS
(Continued)
PAGE
----
ARTICLE VII
INSURANCE AND EMINENT DOMAIN
Section 7.1. Title Insurance........................VII-1
Section 7.2. Casualty and Liability Insurance
Required ............................VII-1
Section 7.3. General Requirements Applicable to
Insurance ...........................VII-2
Section 7.4. Advances by Authority or Trustee ......VII-3
Section 7.5. Company to make up Deficiency
in Insurance Coverage ...............VII-3
Section 7.6. Eminent Domain.........................VII-4
Section 7.7. Application of Net Proceeds
of Insurance and Eminent Domain
Proceedings ..........................VII-4
Section 7.8. Parties to Give Notice.................VII-5
ARTICLE VIII
SPECIAL COVENANTS
Section 8.1. Access to the Leased Property
and Inspection .......................VIII-1
Section 8.2. Company to Maintain its
Corporate Existence; Conditions
Under Which Exceptions Permitted .....VIII-1
Section 8.3. Annual Report...........................VIII-2
Section 8.4. Further Assurances and Corrective
Instruments ..........................VIII-2
Section 8.5. Recording and Filing....................VIII-3
Section 8.6. Opinions as to Recording and
Filings; Other Instruments............VIII-3
Section 8.7. Non-Arbitrage Covenant..................VIII-3
Section 8.8. Use of Bond Proceeds....................VIII-4
Section 8.9. Tax Exempt Status of Bonds..............VIII-4
Section 8.10. Indemnity Against Claims................VIII-5
Section 8.11. Release and Indemnification.............VIII-5
Section 8.12. Mechanics' Liens........................VIII-6
v.
<PAGE>
TABLE OF CONTENTS
(Continued)
PAGE
----
ARTICLE IX
ASSIGNMENT, LEASING AND SELLING
Section 9.1. Assignment of Rights by the
Authority to the Trustee ................IX-1
Section 9.2. Restrictions on Transfer of
Authority's Rights ......................IX-1
Section 9.3. Assignment and Sublease by the
Company ................................IX-2
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
Section 10.1. Events of Default Defined ...................X-1
Section 10.2. Remedies on Default .........................X-2
Section 10.3. Force Majeure ...............................X-3
Section 10.4. Application of Amounts Realized
in Enforcement of Remedies ..............X-4
Section 10.5. No Remedy Exclusive..........................X-4
Section 10.6. Agreement to Pay Attorneys'
Fees and Expenses .......................X-4
Section 10.7. Authority and Company to Give
Notice of Default .......................X-4
ARTICLE XI
PREPAYMENT OF BASIC RENT
Section 11.1. Options to Prepay Basic Rent...............XI-1
Section 11.2. Obligation to Prepay Basic Rent
and Pay Taxability Payments ............XI-2
Section 11.3. Relative Priorities and Prece-
dence of this Article
and the Indenture .......................XI-3
vi.
<PAGE>
TABLE OF CONTENTS
(Continued)
PAGE
----
ARTICLE XII
MANDATORY PURCHASE OF
LEASED PROPERTY
Section 12.1. Mandatory Purchase of Leased
Property After Payment
of Bonds ..................................XII-1
Section 12.2. Conveyance on Purchase ......................XII-1
ARTICLE XIII
MISCELLANEOUS
Section 13.1. References to Bonds Ineffective
After Bonds Paid ........................XIII-1
Section 13.2. No Additional Waiver Implied
by One Waiver ...........................XIII-1
Section 13.3. Authority Representative....................XIII-1
Section 13.4. Company Representative......................XIII-1
Section 13.5. Notices.....................................XIII-1
Section 13.6. If Payment or Performance Date
a Legal Holiday ..........................XIII-2
Section 13.7. Binding Effect..............................XIII-2
Section 13.8. Severability................................XIII-2
Section 13.9. Amendments, Changes and Modifications ......XIII-3
Section 13.10. Execution in Counterparts...................XIII-3
Section 13.11. Applicable Law..............................XIII-3
Section 13.12. No Charge Against Authority
Credit ..................................XIII-3
Section 13.13. Authority Not Liable........................XIII-3
Section 13.14. Amounts Remaining in the Bond
Fund and the Acquisition Fund.............XIII-3
Acknowledgments ...................................................XIII-4
vii.
<PAGE>
This LEASE AGREEMENT dated as of June 1, 1979 (the "Lease"), between THE
IREDELL COUNTY INDUSTRIAL FACILITIES AND POLLUTION CONTROL FINANCING AUTHORITY,
a political subdivision and body corporate and politic of the State of North
Carolina, as lessor (the "Authority"), and HUNT MANUFACTURING CO., a corporation
organized under the laws of the State of Pennsylvania and qualified to do
business as a foreign corporation in the State of North Carolina, as lessee (the
"Company"),
W I T N E S S E T H
In consideration of the respective representations and agreements
hereinafter contained, the parties hereto, recognizing that under the Enabling
Act (hereinafter defined) this Lease shall not in any way obligate the State of
North Carolina or any political subdivision or agency thereof, including Iredell
County, North Carolina and the Authority, to raise any money by taxation or use
other public moneys for any purpose in relation to the Project or the Leased
Property (as each is hereinafter defined) and that neither the State of North
Carolina nor any political subdivision or agency thereof, including Iredell
County, North Carolina and the Authority, shall pay or promise to pay any debt
or meet any financial obligation to any person at any time in relation to the
Project or the Leased Property, except from revenues received or to be received
under the provisions of this Lease or the Indenture or derived from the exercise
of the rights of the Authority or the Trustee under this Lease or the Indenture,
agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
Section 1.1. DEFINITIONS. In addition to words and terms elsewhere defined
in this Lease, the following words and terms shall have the following meanings:
(1) "Acquisition", when used in connection with the Project, shall
mean, without limitation, the acquisition, improvement, equipping and
provision of the Project.
(2) "Acquisition Fund" shall mean the fund created by Section 401 of
the Indenture.
(3) "Additional Bonds" shall mean the Bonds authorized to be issued
under Section 209 of the Indenture for the purpose of financing all or a
portion of the Cost of the Project, to the extent that the proceeds of
Series 1979 Bonds and all other available funds in the Acquisition Fund
are insufficient therefor, or the Cost of any Improvements.
(4) "Additional Rent" shall mean the amounts payable pursuant to
Section 5.3(b) hereof by the Company for the account of or to the
Authority to provide for payment of the fees and charges of the Trustee
and the paying agents for the Bonds and of certain costs and expenses
incurred by the Authority, respectively.
(5) "Affiliate" shall mean any person directly or indirectly
controlling or controlled by or under direct or indirect common control
with another person. For the purposes of this definition, "control" when
used with respect to a person means the power to direct the management and
policies of such person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise, and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
(6) "Authority" shall mean The Iredell County Industrial Facilities
and Pollution Control Financing
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Authority, a political subdivision and body corporate and politic of the
State of North Carolina, and its successors and assigns and any body
resulting from or surviving any consolidation or merger to which it or its
successors may be a party.
(7) "Authority Representative" shall mean any one of the persons at
the time designated to act on behalf of the Authority by written
certificate furnished to the Company and the Trustee containing the
specimen signatures of such persons and signed on behalf of the Authority
by its Chairman or Vice Chairman.
(8) "Basic Rent" shall mean the amounts payable pursuant to Section
5.3(a) hereof by the Company for the account of the Authority to provide
for the payment of the principal of and redemption premium, if any, and
interest on the Bonds.
(9) "Bond Fund" shall mean the fund created by Section 501 of the
Indenture.
(10) "Bondholder" or "Holder" shall mean the Registered Owner (as
defined in the Indenture) of any registered Bond and the bearer of any
coupon Bond not registered as to principal alone.
(11) "Bonds" shall mean Series 1979 Bonds, the Additional Bonds and
the Refunding Bonds.
(12) "Code" shall mean the Internal Revenue Code of 1954, as amended.
(13) "Company" shall mean Hunt Manufacturing Co., a corporation
organized and existing under the laws of the Commonwealth of Pennsylvania
and its successors and assigns and any surviving, resulting or transferee
corporation or other entity.
(14) "Company Representative" shall mean any one of the persons at the
time designated to act on behalf of the Company by written certificate
furnished to the Authority and the Trustee containing the specimen
signatures of such persons and signed on behalf of the Company by the
President, a Vice President, the Treasurer or an Assistant Treasurer
thereof. The Company Representative may be an employee of the Company.
(15) "Completion Date" shall mean the date of completion of the
Project as that date shall be certified as provided in Section 4.3
hereof.
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<PAGE>
(16) "Cost" as applied to the Project and any Improvements shall mean
all costs which the Authority or the Company may properly pay or accrue for
the Acquisition of the Project or such Improvements under the Enabling Act
and which, under generally accepted accounting principles and under
applicable regulations of the United States Department of the Treasury, are
chargeable to the capital account of the Project or such Improvements, as
the case may be, including, without limitation, in the case of the Project,
the following:
(a) obligations of the Company incurred in connection with the
purchase of the Project, including the purchase price of the
manufacturing and industrial facility for the production of paper and
other art/craft products, all legal, recording and other fees, and
taxes and expenses related thereto;
(b) obligations of the Company incurred for labor and materials
in connection with the Acquisition of the Project;
(c) preparation of the plans and specifications for the Project
(including any preliminary study or planning of the Project or any
aspect thereof);
(d) payment of the fees for engineering, supervisory and
consulting services relating to the Project;
(e) payment, to the extent they shall not be paid by a
contractor, of the premiums of all insurance and surety and
performance bonds required to be maintained in connection with the
improvement of the Project;
(f) payment of any initial or acceptance fee of the Trustee and
any fees and expenses incurred in connection with the preparation,
recording or filing of such documents, instruments or financing
statements as either the Company or the Authority may deem desirable
to perfect or protect the rights of the Authority and the Trustee
under this Lease, the Indenture and the Guaranty;
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<PAGE>
(g) payment of legal, accounting and financial advisory fees and
expenses, filing fees, and printing and engraving costs incurred in
connection with the authorization, issuance, sale and purchase of the
Series 1979 Bonds and any Additional Bonds issued to finance all or a
portion of the Cost of the Project, and the preparation of this Lease,
the Indenture, and the Guaranty;
(h) interest to accrue on the Series 1979 Bonds and any
Additional Bonds issued to finance all or a portion of the Cost of the
Project to the Completion Date;
(i) any administrative or other fees charged by the Authority,
the Department of Commerce or the Local Government Commission of the
State of North Carolina, or reimbursement thereto of expenses, in
connection with the Project to the Completion Date; and
(j) payment of any other costs and expenses relating to the
Project which would constitute costs or expenses for which the
Authority may expend Bond proceeds under the Enabling Act.
(17) "Counsel" means a lawyer or a firm of lawyers duly admitted to
practice law in one of the United States and may, but need not be, counsel to
the Authority or the Company.
(18) "default" or "event of default" shall mean any one or more of the
events or circumstances set forth in Section 10.1 hereof.
(19) "Determination of Taxability" shall mean any determination, decision
or decree made in regard to Section 103(b)(6)(d) of the Code by the Commission
or any District Director of the Internal Revenue Service or by any court of
competent jurisdiction that interest on the Series 1979 Bonds is includable in
the gross income of the recipient under Section 103 of the Code and regulations
thereunder for any reason other than that the Holder is a substantial user of
the Leased Property or a related person within the meaning of Section 103(b) (8)
of the Code.
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<PAGE>
(20) "Eminent Domain" shall mean the taking of title to, or the temporary
use of, the Leased Property or any part thereof pursuant to eminent domain or
condemnation proceedings, or by any settlement or compromise of such
proceedings, or any voluntary conveyance of the Leased Property or any part
thereof during the pendency of, or as a result of a threat of, such proceedings.
(21) "Enabling Act" shall mean Chapter 800 of the 1975 Session Laws of
North Carolina, as amended, which as codified appears as Chapter 159C of the
General Statutes of North Carolina.
(22) "Government Obligations" shall mean (a) direct obligations of the
United States of America or obligations for the payment of which the full faith
and credit of the United States of America is pledged, or (b) obligations of the
Government National Mortgage Association, Federal Intermediate Credit Banks,
Federal Banks for Cooperatives, Federal Land Banks, and Federal Home Loan Banks;
provided, however, that for purposes of Section 1301 of the Indenture, such term
shall mean the obligations described in clause (a) of this :definition only.
(23) "Guarantor" shall mean Hunt Manufacturing Co., a Pennsylvania
corporation, as guarantor under the Guaranty, and its successors and assigns
thereunder.
(24) "Guaranty" shall mean the Guaranty Agreement, rated as of the date
hereof, between the Guarantor and the Trustee, together with any amendments and
supplements thereto permitted by the Indenture, pursuant to which the Guarantor
guarantees to the Trustee timely payment of the principal of and redemption
premium, if any, and interest on the Bonds when the same shall become due and
payable.
(25) "Improvements" shall mean any real or tangible personal property
acquired, constructed or installed in, or used in, Iredell County, North
Carolina, by the Company and financed, in whole or in part, by Additional Bonds.
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<PAGE>
(26) "Indenture" shall mean the Indenture and Deed of Trust, dated as of
the date hereof, between the Authority and First Union National Bank of North
Carolina, Trustee, together with any amendments and supplements to the Indenture
permitted thereby.
(27) "Lease" shall mean this Lease Agreement, together with any amendments
and supplements hereto permitted by the Indenture.
(28) "Lease Term" shall mean the duration of the leasehold estate created
by this Lease as specified in Section 5.1 hereof.
(29) "Leased Property" shall mean the Project, any Improvements and all
additions, modifications and improvements thereto and all substitutions therefor
to the extent provided herein, less all removals therefrom as herein permitted,
as the same shall exist at any time, leased to the Company by the Authority
pursuant to this Lease, as described in Exhibit A hereto.
(30) "Net Proceeds" when used with respect to any insurance proceeds or
award resulting from, or other amount received in connection with, Eminent
Domain shall mean the gross proceeds from the insurance or such award or other
amount, less all expenses (including attorneys' fees and any extraordinary fee
of the Trustee) incurred in the realization thereof.
(31) "Payment of the Bonds" shall mean payment of the principal of and
redemption premium, if any, and interest on all the Bonds in accordance with
their terms, whether through payment at maturity or purchase or redemption or
provision for such payment in such a manner that the Bonds shall be deemed to
have been paid under the second paragraph of Section 1301 of the Indenture.
(32) "Permitted Encumbrances" shall mean, as of any particular time, (i)
liens for ad valorem taxes and special assessments, if any, not then delinquent,
to the extent permitted in Section 5.4
I-6
<PAGE>
of this Lease, (ii) this Lease and any assignment or sublease permitted hereby,
(iii) the Indenture, (iv) mechanics', materialmen's, warehousemen's, carriers'
and other similar liens to THE EXTENT PERMITTED in Section 8.12 of this Lease
and (v) such minor defects, irregularities, encumbrances, easements, rights of
way and clouds on title as normally exist with respect to properties similar in
character to the Project and as do not materially impair the property affected
thereby for the purpose for which it is used by the Company.
(33) "Plans and Specifications" means the plans and specifications prepared
for the Project as implemented, detailed or revised from time to time prior to
the completion of the Project in accordance with this Lease Agreement.
(34) "Project" shall mean, collectively, the real and tangible personal
property described in Exhibit A hereto at any time from the date of the issuance
of the Series 1979 Bonds until the Completion Date.
(35) "Refunding Bonds" shall mean the Bonds authorized to be issued under
Section 210 of the Indenture for the purpose of refunding any or all of the
Bonds of any series then outstanding.
(36) "Rent" shall mean, collectively, the Basic Rent and the Additional
Rent payable by the Company pursuant to Section 5.3 hereof.
(37) "Series 1979 Bonds" shall mean the Bonds authorized to be issued by
the Authority under Section 208 of the Indenture for the purpose of financing a
portion of the Cost of the Project.
(38) "Sinking Fund" means the Sinking Fund created by Section 302 of the
Indenture.
(39) "Tax Regulations" shall mean the applicable regulations under Section
103 of the Code whether at the time proposed, temporary, final or otherwise.
(40) "Trustee" shall mean the banking institution at the time serving as
trustee under the Indenture.
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<PAGE>
Section 1.2. RULES OF CONSTRUCTION.
(a) Words of the masculine gender shall be deemed and construed to include
correlative words of the feminine and neuter genders.
(b) Unless the context shall otherwise indicate, the terms "Bond",
"Registered Owner", "Holder", and "person" shall include the plural as well as
the singular number, and "person" shall mean any individual, corporation,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
(c) Words importing the redemption or calling for redemption of the Bonds
shall not be deemed to refer to or connote the payment of Bonds at their stated
maturity.
(d) The Table of Contents, captions and headings in this Lease are for
convenience only and in no way define, limit or describe the scope or intent of
any provisions or sections of this Lease.
(e) All references herein to particular articles or sections are
references to articles or sections of this Lease unless some other reference is
established.
(f) Any inconsistency between the provisions of this Lease and the
provisions of the Indenture shall be resolved in favor of the provisions of the
Indenture.
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<PAGE>
ARTICLE II
REPRESENTATIONS
Section 2.1. REPRESENTATIONS BY THE AUTHORITY. The Authority represents and
warrants that:
(a) The Authority is a duly constituted political subdivision and
body corporate and politic of the State of North Carolina, established
under the Enabling Act.
(b) Under the provisions of the Enabling Act, the Authority is
duly authorized to enter into, execute and deliver this Lease, to
undertake the transactions contemplated by this Lease and to carry out
its obligations hereunder.
(c) By duly adopted resolution, the Authority has duly authorized
the execution and delivery of this Lease and the Indenture and the
issuance and sale of the Series 1979 Bonds all for the purpose of
fostering and encouraging the development of industrial and
manufacturing facilities within the State of North Carolina in order
to alleviate unemployment and raise below-average manufacturing wages
in North Carolina.
(d) The Authority has obtained all approvals required by the
Enabling Act for the issuance of the Bonds, including, from the
Secretary of the Department of Commerce and from the Local Government
Commission of the State of North Carolina, approval of the Project and
of the issuance of the Series 1979 Bonds in satisfaction of the
requirements of G.S. 159C-7 and 159C-8, respectively, of the Enabling
Act.
Section 2.2. REPRESENTATIONS BY THE COMPANY. The Company represents and
warrants as follows:
(a) The Company is incorporated under the laws of the
Commonwealth of Pennsylvania and is qualified to do business as a
foreign corporation in the State of North Carolina, has legal
authority to enter into and to perform the agreements and covenants on
its part contained in this Lease and has duly authorized the execution
and delivery of this Lease.
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<PAGE>
(b) The execution and delivery of this Lease, the consummation of
the transactions contemplated hereby, and the fulfillment of or
compliance with the terms and conditions of this Lease will not
conflict with or constitute a breach of or default under the articles
of incorporation or by-laws of the Company or any agreement or
instrument to which the Company is a party or by which it is bound.
(c) At the Completion Date, the Company expects to pay to
employees at the Project an average weekly manufacturing wage which is
above the average weekly manufacturing wage paid in Iredell County.
The jobs to be created, directly and indirectly, by the operation of
the Project will be large enough in number to have a measurable impact
on the area immediately surrounding the Project and will be
commensurate with the size and nature of the Project. The Company has
the capability to operate the Project. The financing of a portion of
the cost of the Project by the Authority will not result in the
abandonment of an existing industrial or manufacturing facility of the
Company or an Affiliate of the Company elsewhere within North
Carolina.
(d) Ninety percent or more of the proceeds of the Series 1979
Bonds (after deducting amounts used to pay expenses of issuing the
Series 1979 Bonds) will be used to pay those items of the Cost of the
Project, or portions thereof, which constitute costs of acquisition,
construction, reconstruction or improvement of land or property of a
character subject to the allowance for depreciation within the meaning
of Section 103(b)(6)(A) of the Code and the Tax Regulations.
(e) None of the proceeds of the Series 1979 Bonds will be used as
working capital or to finance inventory within the meaning of Treas.
Reg. 1.103-10(b)(1)(ii) as promulgated under Section 103(b)(6)(A) of
the Code.
(f) As of the date of issuance of the Series 1979 Bonds, the sum
of (i) the face amount of all bonds issued under Section 103(b)(6) of
the Code, other than the Series 1979 Bonds, theretofore issued and
outstanding with respect to facilities located in Iredell County,
North Carolina, or with respect to facilities integrated with or
contiguous to such facilities, the principal user of which is or will
be the Company or one or more related persons (as defined in Section
103(b)(6)(C) of the Code),
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<PAGE>
and then outstanding, (ii) the aggregate amount of "capital
expenditures" (within the meaning of Section 103(b)(6)(D) of the
Code) with regard to such facilities paid or incurred during the
period beginning three years before the date of the issuance of the
Series 1979 Bonds (and financed otherwise than out of the proceeds of
the bonds described in clauses (i) and (iii) of this paragraph (f)),
and (iii) the aggregate authorized face amount of the Series 1979
Bonds, is less than $10,000,000.
(g) The Company presently expects to operate the Project for the
production of paper and other art/craft products from the Completion
Date to the expiration of this Lease.
(h) Neither the Project, nor any of the several components
thereof, had been financed by the Company or any Affiliate thereof
prior to, and the commencement of the Acquisition of the Project, and
each of the several components thereof, by the Company or any
Affiliate thereof occurred subsequent to, January 5, 1979.
(i) At the Completion Date, the Project will be a "project", and
more specifically a "manufacturing project for industry", within the
meaning of the Enabling Act.
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<PAGE>
ARTICLE III
ACQUISITION AND INSTALLATION OF THE PROJECT
Section 3.1. CONVEYANCE BY COMPANY OF PROJECT TO AUTHORITY. The Company has
heretofore assigned and transferred to the Authority by appropriate instruments
(receipt of which is hereby acknowledged by the Authority) the Project as
initially described in Exhibit A hereto. The Company hereby agrees to cause to
be executed and delivered to the Authority all such further deeds, assignments,
bills of sale and documents, if any, as shall be necessary, in the Opinion of
Counsel selected by the Authority, to subject the Leased Property to this Lease
and to the lien of the Indenture.
Section 3.2. AGREEMENT TO COMPLETE ACQUISITION OF THE PROJECT. The
Authority and the Company agree that the Company shall complete the Acquisition
of the Project with all reasonable dispatch, delays incident to strikes, riots,
acts of God or the public enemy or any delay beyond its reasonable control only
excepted; but, if such Acquisition is delayed for any reason, there shall be no
diminution in or postponement of the Rent payable by the Company pursuant to
this Lease.
The Company shall obtain all necessary permits and approvals for the
Acquisition of the Project and operation and maintenance of the Leased Property
and shall comply with all lawful requirements of any governmental body regarding
the use or condition of the Leased Property, whether existing or later enacted
or foreseen or unforeseen or whether involving any change in governmental policy
or requiring structural or other changes to be part or all of the Leased
Property and irrespective of the cost of making the same.
Nothing in this Section shall require the Company to comply with any law,
ordinance, rule or regulation or to obtain any certificate or permit if, in the
judgment of the Company, the failure to so comply or take such action would have
no material adverse effect on the Acquisition or use of the Project and, in the
event that enforcement of such law, ordinance, rule or regulation is sought by
any person, the Lessee contests such enforcement in good faith.
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<PAGE>
Section 3.3. COMPANY NOT TO PERMIT NUISANCE TO EXIST. The Company shall
operate the Leased Property in such a manner as not to commit a nuisance.
Section 3.4. PLANS AND SPECIFICATIONS; CHANGES IN THE PROJECT. The Company
shall maintain a set of Plans and Specifications at the Leased Property which
shall be available to the Authority for inspection and examination during the
Company's regular business hours, or, if the Authority shall so direct, the
Company shall file with the Authority a copy of the Plans and Specifications,
and the Authority and the Company agree that the Company may supplement, amend
and add to the Plans and Specifications, and that the Company shall be
authorized to omit or make substitutions for components of the Project, without
the approval of the Authority, provided that no such change shall be made which
shall be contrary to the representation made by the Company in Section 2.2(d),
(e), (f) or (i) hereof. Except as required by the Indenture in connection with
requisitions from the Acquisition Fund, no approvals of the Authority shall be
required for the Acquisition of the Project or for the solicitation,
negotiation, award or execution of contracts relating thereto.
In the case of any substitution mentioned in the preceding paragraph that
would render materially inaccurate the description of the Project contained in
Exhibit A to this Lease, there shall be delivered to the Trustee and the
Authority (i) a revised Exhibit A containing a description of the Project which
shall have been certified by a Company Representative, and (ii) an opinion of
Counsel, selected by the Authority, stating that the Project described in the
revised Exhibit A will constitute a "project" within the meaning of the Enabling
Act and that the expenditure of moneys in the Acquisition Fund to pay for the
Cost of the Project described therein will not cause the interest on any Bonds
then outstanding to be includable in the gross income of the Holders (except any
Holder who is a "substantial user" or "related person" within the meaning of
Section 103(b)(8) of the Code) of such Bonds for Federal income tax purposes.
Section 3.5. NO WARRANTY BY AUTHORITY. The Company recognizes that since
the components of the Project have been AND ARE to be designated and selected by
it, THE AUTHORITY HAS NOT MADE AN INSPECTION OF THE PROJECT OR OF ANY FIXTURE OR
OTHER ITEM CONSTITUTING A PORTION THEREOF, AND THE
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AUTHORITY MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED OR OTHERWISE,
WITH RESPECT TO THE SAME OR THE LOCATION, USE, DESCRIPTION, DESIGN,
MERCHANTABILITY, FITNESS FOR USE FOR ANY PARTICULAR PURPOSE, CONDITION OR
DURABILITY THEREOF, OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN,
OR AS TO THE AUTHORITY'S TITLE THERETO OR OWNERSHIP THEREOF OR OTHERWISE, IT
BEING AGREED THAT ALL RISKS INCIDENT THERETO ARE TO BE BORNE BY THE COMPANY. IN
THE EVENT OF ANY DEFECT OR DEFICIENCY OF ANY NATURE IN THE PROJECT OR ANY
FIXTURE OR OTHER ITEM CONSTITUTING A PORTION THEREOF, WHETHER PATENT OR LATENT,
THE AUTHORITY SHALL HAVE NO RESPONSIBILITY OR LIABILITY WITH RESPECT THERETO.
THE PROVISIONS OF THIS SECTION 3.5 HAVE BEEN NEGOTIATED AND ARE INTENDED TO BE A
COMPLETE EXCLUSION AND NEGATION OF ANY WARRANTIES OR REPRESENTATIONS BY THE
AUTHORITY, EXPRESS OR IMPLIED, WITH RESPECT TO THE PROJECT OR ANY FIXTURE OR
OTHER ITEM CONSTITUTING A PORTION THEREOF, WHETHER ARISING PURSUANT TO THE
UNIFORM COMMERCIAL CODE OR ANOTHER LAW NOW OR HEREAFTER IN EFFECT OR OTHERWISE.
Section 3.6. COMPLIANCE WITH INDENTURE. Unless an "event of default" under
Section 10.1 of this Lease shall have occurred and be continuing, the Authority,
at the request of the Company, shall (a) cause requisitions for payments from
the Trustee to be filed in accordance with the Indenture and (b) take any other
action authorized under the Indenture, subject to the provisions of this Lease
and the Indenture.
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ARTICLE IV
ISSUANCE OF THE BONDS; COMPLETION DATE
Section 4.1. AGREEMENT TO ISSUE THE BONDS. (a) In order to provide funds
for payment of a portion of the Cost of the Project (as presently estimated by
the Company), the Authority agrees that it will sell, issue and deliver the
Series 1979 Bonds in the aggregate principal amount of $2,000,000 to the
purchaser or purchasers thereof and deposit the proceeds of the Series 1979
Bonds with the Trustee for application as provided in Sections 208 and 211 of
the Indenture.
(b) Upon the request of the Company, the Authority agrees to
authorize the issuance of Additional Bonds and Refunding Bonds for the
purposes and upon the terms and conditions provided in the Indenture.
Section 4.2. DISBURSEMENTS FROM THE ACQUISITION FUND. In the Indenture, the
Authority has authorized and directed the Trustee to make payments from the
Acquisition Fund to pay any Cost of the Project, or to reimburse the Company for
any Cost of the Project, paid or incurred by the Company before or after the
execution and delivery of this Lease and the issuance and delivery of the Series
1979 Bonds, pursuant to requisitions complying with the provisions of Section
402 of the Indenture.
Section 4.3. ESTABLISHMENT OF COMPLETION DATE. The Completion Date of the
Project shall be the date on which the Company Representative delivers to the
Trustee a certificate stating that, except for amounts retained by the Trustee
at the Company's direction for any Cost of the Project not then due and payable,
the Acquisition of the Project has been completed substantially in accordance
with the Plans and Specifications and all costs and expenses incurred in
connection therewith have been paid. Notwithstanding the foregoing, such
certificate shall state that it is given without prejudice to any rights against
third parties which exist at the date of such certificate or which may
subsequently come into being.
Section 4.4. DISPOSITION OF BALANCE IN ACQUISITION FUND. As soon as
practicable after, and in any event within 60 days from, the receipt of the
certificate
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mentioned in Section 4.3, all amounts then in the Acquisition Fund, including
any unliquidated investments made with moneys theretofore deposited in the
ACQUISITION FUND, EXCEPT FOR AMOUNTS retained by the Trustee for any Cost of the
Project as provided in Section 4.3, at the direction of the Company
Representative, shall be (i) used for the purchase of Bonds in the open market
for the purposes of cancellation, or (ii) used for such other purposes as, in
the opinion of Counsel nationally recognized on the subject of municipal bonds,
will not cause the interest on the Bonds or any thereof to become subject to
Federal income taxes then in effect.
Section 4.5. COMPANY REQUIRED TO PAY IN EVENT ACQUISITION FUND
INSUFFICIENT. In the event the moneys in the Acquisition Fund should not be
sufficient to pay the total actual costs of the Project in full, the Company
agrees to complete the Project and to pay that portion of the Cost of the
Project in excess of the moneys available therefor in the Acquisition Fund. The
Authority makes no warranty, either express or implied, that the moneys paid
into the Acquisition Fund and available for payment of the Cost of the Project
will be sufficient to pay the total actual costs of the Project in full. The
Company agrees that if, after exhaustion of the moneys in the Acquisition Fund,
the Company should pay any portion of the Cost of the Project pursuant to the
provisions of this Section, it shall not be entitled to any reimbursement
therefor from the Authority or from the Trustee or from the Holders of any of
the Bonds and it shall not be entitled to any diminution of the Rent payable
under Section 5.3 hereof.
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ARTICLE V
DEMISE OF THE LEASED PROPERTY; EFFECTIVE DATE OF THIS LEASE;
DURATION; POSSESSION; RENT PROVISIONS;
TAXES AND UTILITY CHARGES
Section 5.1. DEMISE OF THE LEASED PROPERTY; EFFECTIVE DATE OF THIS LEASE;
DURATION OF LEASE TERM. The Authority hereby demises and leases to the Company,
and the Company hereby leases from the Authority, the Leased Property at the
Rent set forth in Section 5.3 hereof and otherwise in accordance with the
provisions hereof. This Lease shall become effective upon its delivery, and,
subject to the provisions of this Lease, including without limitation Articles X
and XI and Section 13.9 hereof, shall expire on the day following the final
maturity date of the Bonds, or if Payment of the Bonds shall not then have been
made, on the day after the date on which Payment of the Bonds shall have been
made.
Section 5.2. QUIET ENJOYMENT. The Authority hereby covenants and agrees
that it will not take any action, other than pursuant to Section 8.1 or Article
X of this Lease, to prevent the Company from having quiet and peaceable
possession and enjoyment of the Leased Property during the Lease Term and will,
at the request of the Company and at the Company's expense, to the extent that
the Authority may lawfully do so, join in any legal action in which the Company
asserts its right to such possession and enjoyment.
Section 5.3. RENT AND OTHER AMOUNTS PAYABLE. Until Payment of the Bonds
shall have been made, the Company agrees to pay Rent for the Project in the
following amounts and in accordance with the following terms and provisions:
(a) the Company shall pay Basic Rent for the Leased Property in an
aggregate amount equal to the principal of and redemption premium, if any,
and interest on the Bonds whether at maturity, upon redemption or
otherwise under the Indenture. The Company agrees to pay to the Trustee,
for the account of the Authority, the Basic Rent in
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installments in the amounts and in the manner and one day in advance of the
times required to enable the Authority to cause timely payment to be made to the
Holders of the Bonds of the principal of, redemption premium, if any, interest
on the Bonds, whether at maturity, upon redemption or otherwise and, the amount,
if any, required to be deposited in the Sinking Fund, created under the
Indenture, provided that any amount credited under the Indenture against any
payment required to be made by the Authority shall be credited against the
corresponding payment required to be made by the Company hereunder.
If the Company shall fail to make any payment of Basic Rent when due, the
payment so in default shall continue as an obligation of the Company until the
amount in default shall have been fully paid, and the Company agrees to pay the
same with interest thereon from the due date thereof at the rate of 8$ per annum
or, if the rate of 8% per annum shall be unlawful, then at the maximum rate
permitted by law, until paid.
(b) As Additional Rent, the Company agrees to pay
(i) the reasonable fees and charges of the Trustee for all
services of the Trustee (including, without limitation,
preparation of the report required by Section 404 of the
Indenture) and all its reasonable expenses (including reasonable
counsel fees) incurred under the Indenture, as and when the same
become due;
(ii) the reasonable fees and charges of the Trustee, as bond
registrar and paying agent, and any other paying agents of the
Bonds for acting as paying agents as provided in the Indenture,
as and when the same become due; and
(iii) all reasonable costs and expenses incurred by the
Authority in connection with the issuance of the Bonds and the
administration of this Lease and the Indenture.
Section 5.4. TAXES AND UTILITY CHARGES. (a) Recognizing that Article V,
ss.9 of the Constitution of North Carolina provides as to projects to be
financed
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under the Enabling Act, such as the Project, in effect that the Leased Property
and all transactions related thereto shall be subject to taxation to the extent
the Leased Property and such transactions would be subject to taxation if the
Authority were not the owner and lessor of the Leased Property, the Company will
pay, as the same respectively become due, all taxes, assessments, governmental
and other charges of any kind whatsoever that may at any time be lawfully
assessed or levied against or with respect to the Leased Property or any
buildings, structures, improvements, machinery, equipment, or other property
constructed, installed or brought by the Company in or about the Leased Property
pursuant to Section 6.2 hereof, including, without limiting the generality of
the foregoing, any tax upon or with respect to the income or profits of the
Authority from the Leased Property and which, if not paid, will become a lien on
the Leased Property or a charge on the Rent to be derived under this Lease prior
to or on a parity with the charge thereon and the pledge or assignment thereon
to be created and made in the Indenture and ad valorem, sales and excise taxes,
assessments and charges upon the Company's interest in the Leased Property, all
utility and other charges incurred in the operation, maintenance, use, occupancy
and upkeep of the Leased Property and all assessments and charges lawfully made
by any governmental body for public improvements that may be secured by lien on
the Leased Property.
(b) The Company may, at its expense, and in its own name and behalf or,
upon the written approval of the Authority (which approval shall not be
unreasonably withheld) in the name and behalf of the Authority, contest in good
faith any such levy, tax, assessment, or other charge and, in the event of any
such contest, may permit such levy, tax, assessment, or other charge so
contested to remain unpaid during the period of such contest and any appeal
therefrom unless the Authority or the Trustee shall notify the Company that, in
the opinion of Counsel, by nonpayment of any such items the lien of the
Indenture as to any part of the Rent and other revenues to be derived from this
Lease will be materially endangered or the Leased Property or any material part
thereof will be subject to imminent loss or forfeiture, in which event the
Company shall promptly pay or bond and cause to be satisfied or discharged such
levy, tax, assessment or other charge.
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The Authority at the expense of the Company will cooperate fully with the
Company in any such contest. In the event that the Company shall fail to pay or
bond any of the foregoing items required by this Section to be paid or bonded by
the Company, the Authority or the Trustee may (but shall be under no obligation
to) pay or bond the same, and the Company agrees to reimburse the Authority and
the Trustee to the extent of the amounts so advanced by them, or either of them,
with interest thereon at the rate of 8% per annum from the date of advancement
to the date of reimbursement.
(c) Promptly on request, the Company shall furnish the Authority and the
Trustee with proof of payment of any taxes, governmental charges, utility
charges, insurance premiums or other charges required to be paid by the Company
under this Lease.
Section 5.5. OBLIGATIONS OF COMPANY HEREUNDER UNCONDITIONAL. The
obligations of the Company to pay the Rent and to perform and observe the other
agreements on its part contained herein shall be absolute and unconditional and
shall not be subject to diminution by set-off, counterclaim, abatement or
otherwise. Until such time as Payment of the Bonds shall have been made, the
Company (i) shall not suspend or discontinue any payment of Rent, (ii) shall
perform and observe all of its other agreements contained in this Lease, and
(iii) except as provided herein, will not terminate this Lease for any cause
whatsoever; provided, however, that nothing contained in this Section shall be
construed to release the Authority from the performance of any of the agreements
on its part herein contained; and in the event the Authority should fail to
perform any such agreement on its part, the Company may institute such action
against the Authority as the Company may deem necessary to compel performance so
long as such action shall not violate the agreements on the part of the Company
contained in the first sentence of this Section or the provisions of Section
13.13 of this Lease or decrease the Basic Rent required to be paid by the
Company. The Company may, however, at its own cost and expense and in its own
name or in the name of the Authority, prosecute or defend any action or
proceeding or take any other action involving third persons which the Company
deems reasonably necessary in order to secure or protect its right of
possession, occupancy and use hereunder, and in such event, in the absence of
any default hereunder by the Company, the Author-
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ity hereby agrees to cooperate fully with the Company and to take all action
necessary to effect the substitution of the Company for the Authority in any
action or proceeding if the Company shall so request.
Section 5.6. PREPAYMENT OF RENT. There is expressly reserved to the Company
the right, and the Company is authorized and permitted, at any time it may
choose, to prepay all or any part of the Basic Rent as provided in Section 11.1
hereof, and the Company shall be obligated to prepay the entire unpaid balance
of the Basic Rent as provided in Section 11.2.
Section 5.7. NET LEASE. This Lease shall be deemed and construed to be a
"net lease", and the Company during the Lease shall pay, absolutely net, Rent
and all other payments required hereunder, free of any deductions, without
abatement, diminution or setoff, other than as herein expressly provided.
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ARTICLE VI
MAINTENANCE, MODIFICATIONS, REMOVALS,
ADDITIONS
Section 6.1. MAINTENANCE AND MODIFICATIONS OF LEASED PROPERTY BY COMPANY.
The Authority will be under no obligation to operate, maintain or repair the
Leased Property. The Company agrees that during the Lease Term it will at its
own expense keep the Leased Property in as reasonably safe repair and operating
condition as, in the sole opinion of the Company, is needed for its operations.
The Company may, also at its own expense, make from time to time any additions,
modifications or improvements to the Leased Property that it may deem desirable
for its business purposes and that do not materially impair the effective use,
or in the sole opinion of the Company materially decrease the value, of the
Leased Property. All such additions, modifications and improvements so made by
the Company shall become a part of the Leased Property; provided that any
machinery, equipment or other property constructed and installed by the Company,
from other than Bond proceeds or other moneys in the Acquisition Fund, in
accordance with the provisions of Section 6. 2 hereof shall not become part of
the Leased Property and may be removed by the Company at any time and from time
to time while it is not in default under this Lease.
Section 6.2. INSTALLATION OF COMPANY'S OWN PROPERTY. Subject to the
provisions of Sections 6.1 and 6.3 hereof, nothing contained in this Lease shall
prevent the Company, from time to time, at its own expense, from constructing,
placing, or installing in or upon the land comprising a part of the Leased
Property, improvements, machinery, equipment or other property. Subject to the
provisions of Sections 6.1 and 6.3 hereof, all such additional improvements,
machinery, equipment or other property shall remain the sole property of the
Company in which neither the Authority nor the Trustee shall have any interest,
shall not become part of the Leased Property, and may be modified or removed
subject to Section 6.1 hereof at any time while the Company is not in default
hereunder; provided, however, that any damage to the Leased Property occasioned
by such removal shall be repaired by the Company at its own expense. Subject to
the right of the Company to
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contest the same in good faith, the Company agrees to pay when due the purchase
price of, and all costs and expenses with respect to, the acquisition,
construction and installation of any such additional buildings, structures,
improvements, machinery, equipment or other property.
Section 6.3. REMOVAL OF LEASED EQUIPMENT. Subject to the provisions of
Section 10.1(f) hereof, the Authority shall not be under any obligation to
renew, repair or replace any inadequate, obsolete, worn-out, unsuitable,
undesirable or unnecessary Leased Property, including any machinery, equipment
or fixtures comprising a portion of the Leased Property (hereinafter in this
Section called "Leased Equipment"). In any instance where the Company in its
sole discretion determines that any items of Leased Equipment have become
inadequate, obsolete, worn-out, unsuitable, undesirable or unnecessary, the
Company may remove such items of Leased Equipment from the Leased Property and
(on behalf of, and after notice to, the Authority) sell, trade in, exchange or
otherwise dispose of such items (as a whole or piecemeal), provided that the
Company shall either:
(a) substitute and install anywhere on the Leased Property other
machinery, equipment or related property having equal or greater utility
(but not necessarily having the same function or value), in the operation
of the Leased Property (provided such removal and substitution shall not
impair operating unity), all of which substituted machinery, equipment or
related property shall be free of all liens and encumbrances (other than
Permitted Encumbrances) and shall become a part of the Leased Property;
or
(b) if it shall not make any such substitution and installation, pay
to the Trustee as a prepayment of Basic Rent pursuant to Section 11.1(b) of
this Lease for deposit to the credit of the Bond Fund and application, as
directed by the Lessee to the purchase or redemption, at the first
practicable call date of the Bonds, in accordance with the provisions of
Section 301 of the Indenture, (i) in the case of the sale of any such items
of Leased Equipment to any one other than itself or an Affiliate of the
Company or in the case of the scrapping thereof, the proceeds from such
sale or scrapping, (ii) in the case of the trade-in of any such items of
Leased Equipment, an amount equal to the amount of the credit received by
it in such trade-in, and (iii) in the
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case of the sale to itself or an Affiliate of the Company of any such items
of Leased Equipment or in the case of a disposition thereof not
specifically mentioned in clauses (i), (ii), or (iii) hereof, an amount
equal to the original cost thereof less depreciation at rates calculated in
accordance with generally accepted accounting principles or an amount equal
to the fair value thereof (as determined by the Company), whichever is
greater. In the event that the Company prior to such removal of items of
Leased Equipment from the Leased Property has contributed its own funds to
the acquisition, improvement or installation of machinery, equipment or
related property which has become part of the Leased Equipment, the Company
may take credit to the extent of the amounts so spent by it against the
requirements of subsections (a) and (b) of this Section; provided, however,
that the provisions of this sentence shall not relieve the Company of its
obligations under the third sentence of Section 6.1 hereof and provided,
further, that any machinery, equipment or related property so acquired,
improved or installed shall meet the requirements of subsection (a) of this
Section with respect to utility and encumbrances. The removal from the
Leased Property of any items of Leased Equipment pursuant to the provisions
of this Section shall not entitle the Company to any abatement or
diminution of the Rent payable under Section 5.3 hereof.
The Company will not remove, or permit the removal of, any of the Leased
Equipment except in accordance with the provisions of this Section.
Section 6.4. GRANT AND RELEASE OF EASEMENTS. If no event of default shall
have occurred and be continuing, the Company may at any time or times grant
easements, licenses, rights of way and other rights or privileges in the nature
of easements with respect to any part of the Leased Property and the Company may
release existing interests, easements, licenses, rights of way and other rights
or privileges with or without consideration, and the Authority agrees that it
shall execute and deliver and will cause, request or direct the Trustee to
execute and deliver any instrument necessary or appropriate to grant or release
any such interest, easement, license, right of way or other
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right or privilege but only upon receipt of (i) a copy of the instrument of
grant or release, and (ii) a certificate executed by a Company Representative
stating (a) that such grant or release is not materially detrimental to the
proper conduct of the operations of the Company on the Leased Property, and (b)
that such grant or release will not impair in any material respect the effective
use or interfere with the operations of the Company on the Leased Property and
will not impair the security for the Bonds under the Indenture in contravention
of the provisions thereof.
Section 6.5. OPTION TO PURCHASE UNIMPROVED LAND. Unless an event of default
shall have occurred and be continuing, the Company shall have the option to
purchase any unimproved land comprising a portion of the Leased Property (but
upon which roadways or parking lots or transportation or utility facilities may
be located) at any time and from time to time at and for a purchase price of
$15,000 per acre (but in no event less than $15,000) provided that it furnishes
the Authority with the following:
(a) a notice in writing containing (i) a statement that the Company
intends to exercise its option to purchase a portion of such land on a date
stated, which shall not be less than 45 nor more than 90 days from the date
of such notice, (ii) an adequate legal description of land with respect to
which such option is to be exercised, and (iii) a statement that the use to
which the Company intends to devote such land will promote the industrial
development of Iredell County, North Carolina;
(b) a survey showing the Leased Property and the land to be released
therefrom;
(c) a certificate of the Company Representative, dated not more than
90 days prior to the date of such requested release, stating that, in the
opinion of the signer, (i) the portion of the land to be released from the
Lease will not be needed for the operation of the Leased Property for the
purposes hereinabove authorized and (ii) such release will not impair the
usefulness of the Leased Property as a manufacturing plant or the means of
ingress thereto and egress therefrom; and
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(d) evidence of its payment to the Trustee for deposit in the Bond
Fund of an amount of money equal to the purchase price of such portion.
The Authority agrees that upon receipt of the notice and certificate required in
this Section to be furnished to it by the Company, the Authority will promptly
request the Trustee to release from this Lease and from the lien of the
Indenture the portion of the land with respect to which the Company shall have
exercised the option granted to it in this Section. In the event the Company
shall exercise the option granted to it under this Section, the Company shall
not be entitled to any abatement or diminution of the Rent except as otherwise
provided herein, and if such release relates to land on which roadways or
parking lots or transportation or utility facilities are located, the Authority
shall retain an easement to use such roadways or parking lots or transportation
or utility facilities to the extent necessary for the efficient operation of the
Leased Property.
If the Company exercises its option to purchase any unimproved part of the
Leased Property pursuant to the provisions of this Section 6.5, the Company and
the Authority agree that all walls presently standing or hereafter erected on or
contiguous to the boundary line of the land so purchased by the Company shall be
party walls and each party grants the other a 10-foot easement adjacent to any
such party wall for the purpose of inspection, maintenance, repair and
replacement thereof and the tying in of new construction. If the Company
utilizes any party wall for the purpose of tying in new construction that will
be utilized under common control with the Leased Property, the Company may also
tie in to the utility facilities on the Leased Property for the purpose of
serving the new construction and may remove any non-load-bearing wall panels in
the party wall; provided, however, that if the property so purchased ceases to
be operated under common control with the Leased Property, the Company covenants
that it will install non-load-bearing wall panels similar in quality to those
that have been removed and will provide separate utility services for the new
construction.
The closing for any purchase of any portion of the Leased Property pursuant
to this Section 6.5 shall be made in accordance with Section 12.2 hereof.
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ARTICLE VII
INSURANCE AND EMINENT DOMAIN
Section 7.1. TITLE INSURANCE. The Company will promptly obtain or cause to
be obtained title insurance on the real estate included in the Leased Property
in the form of a mortgagee title policy (including, if available, mechanics'
lien coverage) in a face amount of not less than the amount of proceeds of Bonds
used to finance that portion of the Leased Property consisting of real property,
improvements and fixtures, insuring the Trustee's interest under the Indenture
as a holder of a first lien of record on such real property, subject only to
Permitted Encumbrances. Any Net Proceeds payable to the Trustee thereunder shall
be applied as provided in Section 7.7 hereof.
Section 7.2. CASUALTY AND LIABILITY INSURANCE REQUIRED. Until Payment of
the Bonds shall be made, the Company shall keep the Leased Property continuously
insured against such risks and in such amounts, with such deductible provisions,
as are customary in connection with the operation of facilities of the type and
size comparable to the Leased Property. Subject to the provisions of Section 7.3
hereof, the Company shall carry and maintain, or cause to be carried and
maintained, and pay or cause to be paid timely the premiums for, at least the
following insurance with respect to the Leased Property and the Company (unless
the requirement therefor shall be waived by the Trustee in writing):
(1) Direct damage "all risks" casualty insurance covering without
limitation loss, including, but not limited to, the following
(a) Fire,
(b) Extended Coverage Perils,
(c) Vandalism and Malicious Mischief, and
(d) Boiler Explosion (but only if steam boilers are present),
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on a replacement cost basis in an amount equal to at least 80% of the full
insurable value thereof but not less than an amount necessary to pay,
retire and redeem all outstanding Bonds in accordance with the Indenture.
"Full insurable value" shall include the actual replacement cost of the
Leased Property, including engineering, legal and administrative fees
without deduction for depreciation. Coverage on any portion of the Project
during construction thereof shall be maintained on a completed value basis
during the course of construction.
(2) General liability insurance against liability for (i) claims for
injuries to or death of any person or damage to or loss of property arising
out of or in any way relating to the condition of the Leased Property or
any part thereof, in amounts not less than $1,500,000 for death of or
bodily injury to any one person and for all personal injuries and deaths
resulting from any one accident, and $1,000,000 for property damage in any
one accident, with an endorsement for contractual liability insurance
covering the Company's indemnity obligations set forth in Section 8.11
hereof and (ii) liability with respect to the Leased Property under the
workmen's compensation laws of North Carolina; provided, however, that the
insurance so required may be provided by blanket policies now or hereafter
maintained by the Company.
(3) The Net Proceeds of the insurance carried under this Section shall
be applied as provided in Section 7.7 hereof.
Section 7.3. GENERAL REQUIREMENTS APPLICABLE TO INSURANCE. (a) Each
insurance policy obtained in satisfaction of the requirements of Sections 7.1
and 7.2 hereof
(i) shall be by such insurer (or insurers) as shall be financially
responsible, or by an insurance fund established by the State of North
Carolina or any agency or instrumentality thereof,
(ii) shall be in such form and with such provisions (including,
without limitation and where applicable, the loss payable clause, the
waiver of subrogation clause, the deductible amount, if any, the standard
mortgagee endorsement clause and provisions relieving the insurer of
liability to the extent of minor claims and the designation of the named
assureds), as are generally considered standard provisions for the type of
insurance involved, and
(iii) shall prohibit cancellation or substantial modification by the
insurer without at least 30 days' prior written notice to the Authority and
the Trustee.
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Without limiting the generality of the foregoing, all insurance policies
REQUIRED UNDER Section 7.1 and clause (1) of SECTION 7.2 TO BE CARRIED ON THE
Leased Property shall name the Company, the Authority and the Trustee as parties
insured thereunder as the respective interest of each of such parties may appear
and the general liability policies of insurance required under clause (2)(i) of
Section 7.2 shall be endorsed to show the Authority and the Trustee as
additional insureds. The Net Proceeds from any loss under any such insurance
policy shall be applied as provided in Section 7.7 hereof. Each such policy
shall provide that losses thereunder shall be adjusted with the insurer by the
Company at its expense on behalf of the insured parties and the decision of the
Company as to any adjustment shall be final and conclusive.
(b) All such policies, or a certificate or certificates of the
insurers that such insurance is in force and effect, shall be deposited
with the Trustee, and prior to expiration of any such policy, the Company
shall furnish the Trustee with evidence satisfactory to the Trustee, that
the policy or certificate has been renewed or replaced or is no longer
required by this Lease, provided, however, that the insurance so required
may be provided by blanket policies now or hereafter maintained by the
Company.
Section 7.4. ADVANCES BY AUTHORITY OR TRUSTEE. In the event the Company
shall fail to maintain, or cause to be maintained, the full insurance coverage
required by this Lease or shall fail to keep the Leased Property in as
reasonably safe condition as its operating conditions will permit, or shall fail
to keep the Leased Property in good repair and good operating condition, the
Authority or the Trustee may (but shall be under no obligation to), after 30
days' notice to the Company, contract for the required policies of insurance and
pay the premiums on the same or make any required repairs, renewals and
replacements; and the Company agrees to reimburse the Authority and the Trustee
to the extent of the amounts so advanced by them or either of them, with
interest thereon at the rate of 8$ per annum from the date of advancement to the
date of reimbursement.
Section 7.5. COMPANY TO MAKE UP DEFICIENCY IN INSURANCE COVERAGE. The
Company agrees that to the extent that it shall not carry insurance required by
Section 7.1 or 7.2 hereof, it shall pay promptly to the Trustee for application
in accordance with the provisions of Section 7.7(b) hereof such amount as would
have been received as
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Net Proceeds by the Trustee under the provisions of Section 7.7(b) hereof had
such insurance been carried to the extent required.
SECTION 7.6. EMINENT DOMAIN. (a) Unless the Company shall exercise its
option to prepay the entire unpaid balance of the Basic Rent pursuant to the
provisions of Section 11.1(a)(ii) or (b) hereof, in the event that title to, or
the temporary use of, the Leased Property or any part thereof shall be taken by
Eminent Domain, the Company shall be obligated to continue to make the payments
of Rent specified in Section 5.3 hereof and the Authority will cause the Net
Proceeds received by it and the Trustee as a result of such Eminent Domain to be
applied as provided in Section 7.7(b) hereof.
(b) The Authority agrees that it will cooperate fully with the Company in
the handling and conduct of any prospective or pending Eminent Domain
proceedings with respect to the Leased Property or any part thereof, will not
engage attorneys or expert witnesses without the prior written consent of the
Company, and will, to the extent it may lawfully do so, permit the Company to
litigate any such proceeding in the name and behalf of the Authority. In no
event will the Authority voluntarily settle, or consent to the settlement of,
any prospective or pending Eminent Domain proceeding with respect to the Leased
Property or any part thereof without the written consent of the Company.
Section 7.7. APPLICATION OF NET PROCEEDS OF INSURANCE AND EMINENT DOMAIN
PROCEEDINGS. (a) The Net Proceeds of the insurance carried pursuant to the
provisions of Section 7.2(2) hereof shall be applied toward extinguishment or
satisfaction of the liability with respect to which such insurance proceeds may
be paid.
(b) (i) If the amount of Net Proceeds of the insurance carried with respect
to the Leased Property pursuant to the provisions of Section 7.1 can be used to
cure any defect (other than Permitted Encumbrances) in the Authority's title to
the real property included in the Leased Property covered by such insurance or
the status of the Indenture as a first mortgage lien thereon subject to
Permitted Encumbrances, such Net Proceeds shall be paid to the Company and used
to cure such defect and, if such defect cannot be so cured or if and to the
extent such proceeds are not needed or used for such purposes, such proceeds
shall be used to prepay
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BASIC RENT IN ACCORDANCE WITH THE PROVISIONS of Section 11.1(b) of this Lease
and for the redemption of Bonds in ACCORDANCE WITH THE PROVISIONS OF SECTION
301(d) of the Indenture.
(c) The Net Proceeds resulting from Eminent Domain shall be paid to, and
shall be held in escrow by the Trustee and unless the Company shall exercise its
option to prepay the entire unpaid balance of the Basic Rent pursuant to the
provisions of Section 11.1(a)(ii) hereof and applied to the prepayment of Basic
Rent in accordance with the pro visions of Section 11.1(b) of this Lease and to
the redemption Bonds in accordance with the provisions of Section 301(d) of the
Indenture.
(d) The Net Proceeds of the insurance carried with respect to the Leased
Property pursuant to the provisions of Section 7.2(1) (excluding the Net
Proceeds of any business interruption insurance, which shall be paid to the
Company), shall be paid to and held in escrow by the Trustee and, unless the
Company shall exercise its option pursuant to the provisions of Section
11.1(a)(i) hereof to prepay the entire unpaid balance of the Basic Rent, shall
be applied to the repair, replacement, renewal or improvement of the Leased
Property to a condition substantially equivalent, in the reasonable opinion of
the Company, to its condition prior to the occurrence of the event to which the
Net Proceeds were attributable.
The Company shall be entitled to the Net Proceeds of any insurance, or
resulting from Eminent Domain, relating to property of the Company not included
in the Leased Property.
Section 7.8. PARTIES TO GIVE NOTICE. In case of any material damage to or
destruction of all or any part of the Leased Property, the Company shall give
prompt notice thereof to the Authority and the Trustee. In case of a taking of
all or any part of the Leased Property or any right therein by reason of Eminent
Domain, the party upon which notice of such taking is served shall give prompt
notice to the other and the Trustee. Any such notice shall describe generally
the nature and extent of such damage or destruction or such taking.
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ARTICLE VIII
SPECIAL COVENANTS
SECTION 8.1. ACCESS TO THE LEASED PROPERTY AND INSPECTION. The Company
agrees that the Authority and the Trustee and their respective duly authorized
agents shall have (i) the right of access to the Leased Property at all
reasonable times to examine and inspect the Leased Property subject to the prior
written consent of the Company, which consent shall not be unreasonably withheld
and (ii) the right of entry into the Leased Property in the event of default for
any purpose contemplated by the Lease or the Indenture, and the Company hereby
covenants to execute, acknowledge and deliver all such further documents,
including any deed of easement, and do all such other acts and things as may be
necessary in order to grant to the Authority such rights of access and entry;
and such rights of access and entry shall not be terminated, curtailed or
otherwise limited by any sale, assignment or other transfer of the Leased
Property by the Company to any other person.
Section 8.2. COMPANY TO MAINTAIN ITS CORPORATE EXISTENCE; CONDITIONS UNDER
WHICH EXCEPTIONS PERMITTED. The Company covenants and agrees that it (a) will
maintain and preserve its corporate existence and organization, and its
authority to do business in the State of North Carolina and will not voluntarily
dissolve without first discharging its obligations under this Lease and (b) will
not dissolve or otherwise dispose of all or substantially all of its assets
(either in a single transaction or in a series of related transactions), and
will not merge or consolidate with any other corporation and will not permit one
or more corporations to merge into or consolidate with it, unless the surviving,
resulting or transferee corporation, as the case may be:
(i) is a corporation organized and existing under the laws of one of
the states of the United States of America and is duly qualified to do
business in the State of North Carolina;
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(ii) shall, in a certificate delivered to the Trustee, which
certificate shall be in a form reasonably satisfactory to the Trustee,
expressly assume, and agree to pay and to perform, all of the obligations
of the Company under this Lease;
(iii) shall deliver to the Trustee a certificate executed by its chief
financial officer stating that none of the obligations, covenants and
performances under the Guaranty will be violated or abrogated as a result
of any such sale, transfer, merger or consolidation; and
(iv) shall provide to the Trustee an opinion of Counsel, which shall
be Counsel nationally recognized on the subject of municipal bonds, to the
effect that the transaction will not cause the interest on any series of
the Bonds then outstanding to become subject to Federal income tax.
Section 8.3. ANNUAL REPORT. The Company shall furnish the Authority and the
Trustee annually, within 120 days after the end of the preceding fiscal year,
the Annual Report of the Company to its shareholders which includes the
consolidated balance sheet of the Company and its subsidiaries and the related
statements of consolidated earnings, consolidated shareholders' interest and
consolidated changes in financial position for the year ended that date,
certified by recognized public accountants.
Section 8.4. FURTHER ASSURANCES AND CORRECTIVE INSTRUMENTS. Subject to the
provisions of Section 13.9 hereof and Article XII of the Indenture, the
Authority and the Company agree that they will, from time to time, execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
such supplements and amendments hereto and such further instruments as may
reasonably be required for correcting any inadequate or incorrect description of
the Leased Property and for carrying out the intention or facilitating the
performance of this Lease.
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Section 8.5. RECORDING AND FILING. The Company will take all actions that
at the time and from time to time may be reasonably necessary (or may be
necessary in the opinion of Counsel to the Authority or the Trustee) to perfect,
preserve, protect and secure the interests of the Authority and the Trustee, or
either of them, in and to the Basic Rent and other revenues and funds receivable
under this Lease and in the Leased Property, including, without limitation, the
filing of all security agreements and financing and continuation statements that
may be required under the North Carolina Uniform Commercial Code and the
recordation of this Lease and any assignment thereof and the Indenture.
Section 8.6. OPINIONS AS TO RECORDING AND FILING OTHER INSTRUMENTS. (a)
The Company covenants that prior to each fifth anniversary date after the
issuance of each series of the Bonds it will cause Counsel acceptable to the
Trustee to render an opinion to the Authority and the Trustee not more than 60
or later than 30 days prior to each such fifth anniversary date to the effect
that all financing statements, continuation statements, notices and other
instruments required by applicable law have been recorded or filed or
re-recorded or refiled in such manner and in such places required by law in
order fully to preserve and protect the rights of the holders of the Bonds and
the Trustee in the assignment to the Trustee of the Basic Rent and other
revenues and funds receivable under this Lease and in the Leased Property as
against creditors of, or purchasers for value from, the Authority or the
Company.
(b) The Company and the Authority shall execute and deliver all instruments
and shall furnish all information and evidence deemed necessary or advisable by
such Counsel in order to enable him to render the opinion referred to in
subsection (a) of this Section 8.6. The Company shall file and re-file and
record and re-record or cause to be filed and re-filed and recorded and
re-recorded all instruments required to be filed and re-filed and recorded or
rerecorded pursuant to the opinion of such Counsel and shall continue or cause
to be continued the liens of such instruments for so long as the Bonds shall be
outstanding, except as otherwise in this Lease required.
Section 8.7. NON-ARBITRAGE COVENANT. The Company and the Authority each
covenants that it shall take no action, and the Company covenants that it will
not approve the Trustee taking any action or making
VIII-3
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any investment or use of the proceeds of any of the Bonds, which would cause any
of the Bonds to be "arbitrage bonds" within the meaning of Section 103(c) of the
Code and the Tax Regulations thereunder as the same may be applicable to the
Bonds at the time of such action, investment or use.
Section 8.8. USE OF BOND PROCEEDS. (a) The Company covenants that 90% or
more of the proceeds of each series of the Bonds (after deducting amounts used
to pay expenses of issuing the Bonds) will be used to pay those items of Cost of
the Project, or portions thereof, or Improvements, which constitute costs of
acquisition, construction, reconstruction or improvement of land or property of
a character subject to the allowance for depreciation within the meaning of
Section 103(b)(6)(A) of the Code and the Tax Regulations.
(b) The Company further covenants that none of the proceeds of the Bonds
shall be used as working capital or to finance inventory within the meaning of
Treas. Reg. 1.103-10(b)(1)(ii) as promulgated under Section 103(b)(6)A of the
Code.
Section 8.9. TAX EXEMPT STATUS OF BONDS. It is the intention of the parties
hereto that the interest paid on the Bonds will not be included in the gross
income of the recipients of said interest by reason of Section 103(a) of the
Code. In order to confirm and carry out such intention:
(a) The Company shall (i) provide such certificates of a Company
Representative, opinions of Counsel, and other evidence as may be necessary or
requested by the Authority or the Trustee to establish the exemption of the
Bonds under Section 103(a) and the absence of arbitrage expectation under
Section 103(c) of the Code, and (ii) file such information and statements,
acting alone or with the Authority, with the Internal Revenue Service as may be
required from the Company or the Authority to establish or preserve such
exemption or as may be required by Section 103 of the Code, the Tax Regulations
thereunder and related provisions of law or regulation.
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(b) The Company agrees to furnish to the Authority and to the Trustee
within 30 days after the first, second and third anniversary dates of the
issuance and delivery of the Series 1979 Bonds (i) a certificate showing the
amounts of capital expenditures of the Company and each other principal user
and related person with respect to the Leased Property and with respect to other
projects or facilities, if any, within five miles of the Leased Property or
within Iredell County, for the period beginning three years prior to the
issuance and delivery of the Series 1979 Bonds and ending on such anniversary
date, and (ii) if requested by the Trustee, an opinion of Counsel, who shall be
Counsel nationally recognized on the subject of municipal bonds, selected by the
Company and acceptable to the Trustee, stating whether, by reason of such
capital expenditures, interest on the Series 1979 Bonds shall have become
includible in the gross income of the recipients (other than substantial users
and related persons) within the meaning of Section 103(a) of the Internal
Revenue Code and Tax Regulations thereunder.
Section 8.10. INDEMNITY AGAINST CLAIMS. The Company shall pay and discharge
and shall indemnify and hold harmless the Authority from (a) any lien or charge
upon payments by the Company to, or for the account of, the Authority hereunder
and (b) any taxes, assessments, impositions and other charges in respect of the
Leased Property. If any such claim is asserted, or any such lien or charge upon
payments, or any such taxes, assessments, impositions or other charges, are
sought to be imposed, the Authority or the Trustee, as the case may be, will
give prompt notice to the Company, and the Company shall have the sole right and
duty to assume, and shall assume, the defense thereof, with full power to
litigate, compromise or settle the same in its sole discretion.
Section 8.11. RELEASE AND INDEMNIFICATION. The Company shall at all times
protect and hold the Authority, its members, officers and employees harmless
against any claims or liability resulting from any loss or damage to property or
any injury to or death of any person that may be occasioned by any cause
whatsoever pertaining to the Leased Property or the use thereof, including
without limitation any sublease thereof, such indemnification to include
reasonable expenses and attorneys' fees incurred by the Authority, its members,
officers and employees in connection therewith, provided that such indemnity
shall be effective only to the extent of any loss that may be sustained by the
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Authority, its members, officers and employees in excess of the Net Proceeds
received by it or them from any insurance carried with respect to such loss, and
provided, further, that the benefits of this Section shall not inure to the
benefit of any person other than the Authority, its members, officers and
employees. The Company hereby agrees to insure against, in the public liability
policies required in Section 7.2(2) hereof, not only its own liability in
respect of the matters there mentioned, but also the liability herein assumed.
Section 8.12. MECHANICS' LIENS. The Company will not permit any mechanics'
or other liens incurred by it to be established or remain against the Leased
Property for labor or materials furnished. The Company may, however, at its own
expense and in good faith, contest any such liens, in which event it may permit
such liens to remain unsatisfied and undischarged during the period of such
contest and any appeal therefrom unless the Authority or the Trustee shall
notify the Company that, in the opinion of Counsel, by nonpayment of any such
items the lien of the Indenture as to any part of the Rent or other revenues or
funds receivable under this Lease will be materially endangered or the Leased
Property or any material part thereof will be subject to loss or forfeiture, in
which event the Company at its own expense shall promptly pay and cause to be
satisfied or discharged or, if contested, bond all such unpaid items to the
satisfaction of the Trustee. The Authority will cooperate fully with the Company
in any such contest.
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ARTICLE IX
ASSIGNMENT, LEASING AND SELLING
Section 9.1. ASSIGNMENT OF RIGHTS BY THE AUTHORITY TO THE TRUSTEE.
Concurrently with issuance of the Series 1979 Bonds, the Authority will assign
to the Trustee certain of its rights, title and interests in and to this Lease
and to all revenues and other funds due and to become due hereunder, including,
without 1imitation, the Basic Rent, as security for payment of the principal of
and redemption premium, if any, and interest on the Bonds, and thereafter the
Trustee and the Bondholders, to the extent provided in the Indenture,
exclusively, shall be vested with, and authorized to exercise, such rights of
the Authority hereunder. The Company hereby assents to such assignment and
agrees that, as to the Trustee, its obligation to make such payments shall be
absolute and shall not be subject to any defense or any right of set-off,
counterclaim or recoupment arising out of any breach by the Authority or the
Trustee of any obligation to the Company, whether hereunder or otherwise set
forth, or out of any indebtedness or liability at any time owing to the Company
by the Authority or the Trustee.
Section 9.2. RESTRICTIONS ON TRANSFER OF AUTHORITY'S RIGHTS. The Authority
agrees that, except for the assignment of certain of its rights, title and
interests under this Lease to the Trustee as contemplated in Section 9.1 hereof,
it will not during the Lease Term sell, assign, transfer or convey its rights,
title or interests in the Leased Property, except pursuant to the Indenture and
as permitted by this Section 9.2. If the laws of' the State of North Carolina at
the time shall permit such action to be taken, nothing contained in this Section
9.2 shall prevent the consolidation of the Authority with, or merger of the
authority into, or transfer of the complete interest of the Authority in the
Leased Property or in this Lease as an entirety to, any public body the property
and income of which are not subject to taxation to any greater extent than is or
may be the property and income of the Authority and which has corporate
authority to exercise the Authority's rights granted hereunder; provided that
upon any
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such consolidation, merger or transfer, the Authority's obligations with respect
to the due and punctual payment of the principal of and redemption. premium, if
any, and interest on the Bonds according to their tenor, and the due and
punctual performance and observance of all the agreements and conditions of this
Lease to be kept and performed by the Authority, shall be expressly assumed in
writing by the public body resulting from such consolidation or surviving such
merger or to which the Leased Property shall be transferred as an entirety.
Section 9.3. ASSIGNMENT AND SUBLEASE BY THE COMPANY. The rights of the
Company under this Lease may be assigned, and the Leased Property may be
subleased as a whole or in part by the Company, without the consent of the
Authority and the Trustee; provided, however, that, except as provided in clause
(b) of Section 8.2, (a) no such assignment or subleasing shall relieve the
Company from primary liability for any of its obligations hereunder, and in the
event of any such assignment or subleasing, the Company shall continue to remain
primarily liable for payment of Rent and for the performance and observance of
the other agreements on its part herein provided to be performed and observed by
it to the same extent as though no assignment or sublease had been made, and (b)
any assignee or sublessee of the Company's interest in this Lease shall assume
the obligations of the Company hereunder to the extent of the interest assigned
or subleased, and the Company shall, not more than 60 or less than 30 days prior
to the effective date of any such assignment or sublease, furnish or cause to be
furnished to the Authority and to the Trustee a true and complete copy of each
such assignment or sublease and assumption of obligations. The Company shall not
mortgage this Lease nor mortgage, assign or pledge its interest in any sublease
or the rent payable thereunder unless such mortgage, assignment or pledge is
made expressly subject to the terns of this Lease and the Indenture.
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ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
Section 10.1. EVENTS OF DEFAULT DEFINED. The terms "event of default" and
"default" shall mean any one or more of the following events:
(a) The failure by the Company to make any payment of Basic Rent
when due.
(b) The representations or warranties of the Company contained in
Section 2.2 hereof shall prove to be incorrect at the time made in such a
material respect that the security for the Bonds shall be materially
adversely affected.
(c) An "Event of Default" as defined in any mortgage, indenture or
instrument, under which there may be issued, or by which there may be
secured or evidenced, any indebtedness of $500,000 or more of the Company,
whether such indebtedness now exists or shall hereafter be created, shall
happen and shall result in such indebtedness becoming or being declared
due and payable prior to the date on which it would otherwise become due
and payable, and such acceleration shall not be rescinded or annulled
within 10 days after written notice of such acceleration to the Company.
(d) The dissolution or liquidation of the Company or the filing by
the Company of a voluntary petition in bankruptcy, or the failure by the
Company promptly to lift or suspend any execution, garnishment or
attachment of such consequence as will impair the ability of the Company
to complete the Project or carry on its normal business operations, or the
commission by the Company of any act of bankruptcy, or the adjudication of
the Company as a bankrupt, or the assignment by the Company for the
benefit of its creditors, or the entry by the Company into an agreement of
composition with its creditors, or if a petition or answer proposing the
adjudication of the Company as a bankrupt or its reorganization,
arrangement or debt readjustment under any present or future federal
bankruptcy act or any similar federal or state law shall be filed in any
court and such petition or answer shall not be discharged or denied within
90 days after the filing thereof.
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(e) Failure by the Company to observe and perform any covenant,
condition or agreement on the part of the Company under this Lease, other
than as referred to in the preceding paragraphs of this Section, for a
period of 30 days after written notice, specifying such failure and
requesting that it be remedied, is given to the Company by the Authority,
unless such failure cannot be remedied within 30 days and the Company has
instituted corrective action within 30 days after such notice and
diligently pursues such action until such failure is remedied.
(f) Cessation of operation by the Company of the Leased Property
prior to Payment of the Bonds; provided, that actions taken by the Company
in accordance with the provisions of Sections 8.2, 9.3, 11.1 and 11.2 of
this Lease shall not be a default under this paragraph (f).
(g) An "event of default" as defined in clause (a), (b), (c) or (d)
of Section 801 of the Indenture or as defined in Section 4.1 of the
Guaranty shall have occurred and be continuing.
Section 10.2. REMEDIES ON DEFAULT. In the event any of the Bonds shall at
the time be outstanding and unpaid in any principal amount and provision for the
payment thereof shall not have been made in accordance with the provisions of
the Indenture, whenever any event of default referred to in Section 10.1 hereof
shall have happened and be continuing, the Authority may take any one or more of
the following remedial steps:
(a) By written notice to the Company declare all installments of
Basic Rent payable for the remainder of the Lease Term to be immediately
due and payable, whereupon the same shall become immediately due and
payable.
(b) Take whatever action at law or in equity may appear necessary or
desirable to collect the Rent then due and thereafter to become due or to
enforce the performance and observance of any obligation, agreement or
covenant of the Company under this Lease.
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Without limiting the foregoing, the Authority shall, if then permitted by
law, have as to any portion of the Leased Property constituting fixtures all the
remedies of a secured party under the Uniform Commercial Code of the State of
North Carolina and such further remedies as from time to time may hereafter be
provided in such jurisdiction for a secured party.
In the enforcement of the remedies provided in this Section 10.2, the
Authority may treat all expenses of enforcement, including, without limitation,
legal, accounting, advertising and trustee's fees and expenses, as Additional
Rent then due and owing.
Section 10.3 FORCE MAJEURE. The definitions of "event of default" and
"default" in Section 10.1 are subject to the qualification that if by reason of
force majeure the Company is unable in whole or in part to carry out its
obligations under this Lease, other than those contained in Articles V, VII and
VIII (except Section 8.1) hereof, the Company shall not be deemed in default
during the continuance of such inability. The term "force majeure" as used
herein shall mean, without limitation, the following: acts of God; strikes,
lockouts or other industrial disturbances; acts of public enemies; orders of any
kind of the government of the United States or of North Carolina or any of their
departments, agencies, or officials, or any civil or military authority;
insurrections; riots; epidemics; landslides; lightning; earthquake; fire;
hurricanes; storms; floods; washouts; droughts; arrests; restraint of government
and people; civil disturbances; explosions; breakage of or accident to
machinery, transmission pipes, or canals; partial or entire failure of
utilities; or any other cause or event not reasonably within the control of, or
reasonably foreseeable and preventable by, the Company. The Company agrees,
however, to remedy with all reasonable dispatch the cause or causes preventing
the Company from carrying out its agreements; provided that the settlement of
strikes, lockouts and other industrial disturbances shall be entirely within the
discretion of the Company and the Company shall not be required to make any
settlement of strikes, lockouts and other industrial disturbances by acceding to
the demands of the opposing party or parties when such course is in the judgment
of the Company unfavorable to the Company.
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Section 10.4. APPLICATION OF AMOUNTS REALIZED IN ENFORCEMENT OF REMEDIES.
Any amounts collected pursuant to action taken under Section 10.2 hereof shall
be paid into the Bond Fund and applied in accordance with the provisions of
Section 306 of the Indenture or, if Payment of the Bonds shall have been made,
shall be applied according to the provisions of Section 13.14 hereof.
Section 10.5. NO REMEDY EXCLUSIVE. No remedy herein conferred upon or
reserved to the Authority is intended to be exclusive of any other available
remedy or remedies, but each and every such remedy shall be cumulative and shall
be in addition to every other remedy given under this Lease or now or hereafter
existing at law or in equity or by statute. No delay or omission to exercise any
right or power accruing upon default shall impair any such right or power or
shall be construed to be a waiver thereof, but any such right and power may be
exercised from time to time and as often as may be deemed expedient.
Section 10.6. AGREEMENT TO PAY ATTORNEYS' FEES AND EXPENSES. In any event
of default, if the Authority or the Trustee employs attorneys or incurs other
expenses for the collection of amounts payable hereunder or the enforcement of
the performance or observance of any covenants or agreements on the part of the
Company herein contained, the Company agrees that it will on demand therefor pay
to the Authority or the Trustee, as the case may be, the reasonable fees of such
attorneys and such other expenses so incurred by the Authority or the Trustee.
Section 10.7. AUTHORITY AND COMPANY TO GIVE NOTICE OF DEFAULT. The
Authority and the Company severally covenant that they will, at the expense of
the Company, promptly give to the Trustee written notice of any event of default
under this Lease of which they shall have actual knowledge or written notice,
but the Authority shall not be liable, except as provided in Section 13.13
hereof, for negligence in failing to give such notice.
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ARTICLE XI
PREPAYMENT OF BASIC RENT
Section 11.1. OPTIONS TO PREPAY BASIC RENT. (a) The Company is hereby
granted the option to prepay, at any time, in full the Basic Rent payable under
Section 5.3(a) hereof if
(i) the Leased Property shall have beer. damaged or destroyed to the
extent that it would not be practicable or desirable to rebuild, repair or
restore the Leased Property within a period of one year after the
occurrence of such damage or destruction; or
(ii) there occurs the condemnation of all or any part of the Leased
Property or the taking by Eminent Domain of such use or control of the
Leased Property to such an extent that the Lessee is prevented or would
likely be prevented from using the Leased Property for its normal purposes
and operations for a period of one year or more after such occurrence; or
(iii) there shall have occurred a change in the Constitution of the
State of North Carolina or the United States of America or any legislative,
administrative or judicial action which shall render this Lease void or
unenforceable or impossible of performance.
Such option may be exercised in accordance with subsection (c) of this
Section by delivery to the Trustee of a resolution of the Board of Directors of
the Company stating that an event referred to in clause (i), (ii), or (iii)
above and described in the resolution has occurred and that, as a result of
such, the Company has discontinued, or at the earliest practicable date will
discontinue, its operation of the Leased Property. In the event that the Company
shall exercise its option to prepay the Basic Rent under clause (i), (ii) or
(iii) of this Section, all the Bonds then outstanding under the Indenture shall
be called for redemption in accordance with the provisions of Section 301(b) of
the Indenture.
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(b) Except during the continuance of an event of default the Company is
HEREBY GRANTED the option to PREPAY, AT ANY TIME, ALL OR ANY PORTION OF THE
UNPAID balance of the Basic Rent payable under Section 5.3(a) hereof by taking,
or causing the Authority to take, the actions required (i) to pay or redeem, or
to provide for the payment or redemption, of all of the Bonds then outstanding
or (ii) to effect a partial payment or redemption of the Bonds or (iii) to
obtain credit against any sinking fund redemption requirements if permitted and
as provided in the Indenture. If the Company shall exercise its option under
this subsection (b) to prepay all or a portion of the unpaid balance of the Rent
and shall have notified the Authority in accordance with subsection (c) of this
Section that all or a portion of the Basic Rent so prepaid is to be applied to
the redemption of the Bonds, such redemption shall be made pursuant to the
provisions of Section 301(d) of the Indenture.
(c) To exercise an option granted in subsection (a) or (b) of this
Section, the Company shall give written notice to the Authority and the Trustee
which shall specify therein (i) the date of such prepayment, which shall not be
less than 45 days from the date the notice is mailed, (ii) the amount of the
Basic Rent to be prepaid, (iii) the application of the moneys or obligations to
be used to effect such prepayment and (iv) if Bonds are to be redeemed pursuant
to the Indenture, (A) the date of redemption, (B) the series and maturity of the
Bonds to be redeemed, (C) the principal amount of the Bonds to be redeemed, and
(D) the applicable redemption provision of the Indenture.
Section 11.2. OBLIGATION TO PREPAY BASIC RENT AND PAY TAXABILITY PAYMENTS.
In the event of a Determination of Taxability, the Company shall be required to
prepay the Basic Rent with respect to the Series 1979 Bonds.
Within 30 days after the date of the occurrence of the Determination of
Taxability the Company shall give a written notice to the Authority and the
Trustee which shall specify the date selected by the Company for such
prepayment, such date to be not more than 90 days after the date of the
occurrence of the Determination of Taxability.
XI-2
<PAGE>
Section 11.3. RELATIVE PRIORITIES AND PRECEDENCE OF THIS ARTICLE AND THE
INDENTURE. The rights and options and the obligations of the Company in this
Article XI shall be and remain prior and superior to the Indenture and may be
exercised or shall be fulfilled, as the case may be, whether or not the Company
is in default hereunder, provided that such default will not result in
nonfulfillment of any condition to the exercise of any such right or option.
The obligations of the Company in Section 11.2 of this Article shall
supersede the rights and options of the Company in Section 11.1 of this Article.
XI-3
<PAGE>
ARTICLE XII
MANDATORY PURCHASE OF LEASED PROPERTY
Section 12.1. MANDATORY PURCHASE OF LEASED PROPERTY AFTER PAYMENT OF BONDS.
The Company hereby agrees to purchase, and the Authority hereby agrees to sell,
the Leased Property for the sum of $10 at the expiration or sooner termination
of the Lease following Payment of the Bonds.
Section 12.2. CONVEYANCE ON PURCHASE. Following Payment of the Bonds, at
the closing of the purchase of the Leased Property, the Authority will, upon
receipt of the purchase price, deliver to the Company documents conveying and
quitclaiming all of its rights, title and interest in and to the Leased
Property, as it then exists, and releasing any security interest it may have
therein, to the Company subject only to the following: (i) those liens and
encumbrances to which the title to the Leased Property or such portion thereof
was subject at the date of execution of the Lease; (ii) any liens and
encumbrances thereafter created by the Company or to the creation or suffering
of which the Company consented; (iii) any liens and encumbrances resulting from
the failure of the Company to discharge or observe any of its obligations under
this Lease; (iv) Permitted Encumbrances other than the Indenture and this Lease;
and (v) the rights and title of any taker by Eminent Domain.
XII-1
<PAGE>
ARTICLE XIII
MISCELLANEOUS
Section 13.1. REFERENCES TO BONDS INEFFECTIVE AFTER BONDS PAID. Upon
Payment of the Bonds, and payment of Additional Rent which may become due,
including all fees and charges of the Trustee, all references in this Lease to
the Bonds and the Trustee shall be ineffective and the Trustee, the Authority
and the holders of any of the Bonds shall not thereafter have any rights
hereunder, excepting those that shall have theretofore vested.
Section 13.2. NO ADDITIONAL WAIVER IMPLIED BY ONE WAIVER. In the event any
agreement contained in this Lease should be breached by either party and
thereafter waived by the other party, such waiver shall be limited to the
particular breach so waived and shall not be deemed to waive any other breach
hereunder.
Section 13.3. AUTHORITY REPRESENTATIVE. Whenever under the provisions of
this Lease the approval of the Authority is required or the Authority is
required to take some action at the request of the Company, such approval shall
be made or such action shall be taken by the Authority Representative; and the
Company and the Trustee shall be authorized to act on any such approval or
action.
Section 13.4. COMPANY REPRESENTATIVE. Whenever under the provisions of this
Lease the approval of the Company is required or the Company is required to take
some action at the request of the Authority, such approval shall be made or such
action shall be taken by the Company Representative; and the Authority and the
Trustee shall be authorized to act on any such approval or action.
Section 13.5. NOTICES. All notices, certificates or other communications
hereunder shall be sufficiently given and shall be deemed given when delivered
by hand delivery or on the second day following the day on which
XIII-1
<PAGE>
the same has been mailed by registered or certified mail, postage prepaid,
addressed as follows: if to the Authority, The Iredell County Industrial
Facilities and Pollution Control Financing Authority, P.O. Box 788, Statesville,
North Carolina 28677; if to the Company or Guarantor, Hunt Manufacturing Co.,
1405 Locust St., Philadelphia, Pennsylvania 19102, Attention: Secretary; and if
to the Trustee, First Union National Bank of North Carolina, One First Union
Plaza, Charlotte, North Carolina 28288, Attention: Corporate Trust Department. A
duplicate copy of each notice, certificate or other communication given
hereunder by either the Authority or the Company to the other shall also be
given to the Trustee. The Authority, the Company and the Trustee may, by notice
given hereunder, designate any further or different addresses to which
subsequent notices, certificates or other communications shall be sent.
Notwithstanding the assignment of its rights under this Lease to the Trustee as
referred to in Section 9.1, the Authority shall continue to receive, and the
Company agrees to continue to furnish to the Authority, all notices which under
this Lease are to be given to the Authority.
Section 13.6. IF PAYMENT OR PERFORMANCE DATE A LEGAL HOLIDAY. If the date
for making payment of Rent, or the last date for performance of any act or the
exercising of any right, as provided in this Lease, shall be a legal holiday or
a day on which banking institutions in the States of North Carolina or
Pennsylvania, are authorized by law to remain closed, such payment may be made
or act performed or right exercised on the next succeeding day not a legal
holiday or a day on which such banking institutions are authorized by law to
remain closed.
Section 13.7. BINDING EFFECT. This Lease shall inure to the benefit of and
shall be binding upon the Authority, the Company and their respective successors
and assigns, subject, however, to the provisions contained in Sections 8.2 and
9.2.
Section 13.8. SEVERABILITY. In the event any provision of this Lease shall
be held invalid or unenforceable by any court of competent jurisdiction, such
holding shall not invalidate or render unenforceable any other provision hereof.
XIII-2
<PAGE>
Section 13.9. AMENDMENTS, CHANGES AND MODIFICATIONS. Subsequent to the
issuance of the Bonds and prior to Payment of the Bonds, this Lease may not be
effectively amended, changed, modified, altered or terminated except in
accordance with the Indenture.
Section 13.10. EXECUTION IN COUNTERPARTS. This Lease may be executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
Section 13.11. APPLICABLE LAW. This Lease shall be governed by and
construed in accordance with the laws of the State of North Carolina.
Section 13.12. NO CHARGE AGAINST AUTHORITY CREDIT. No provision hereof
shall be construed to impose a charge against the general credit of the
Authority or any personal or pecuniary liability upon any Commissioner, official
or employee of the Authority.
Section 13.13. AUTHORITY NOT LIABLE. Notwithstanding any other provision of
this Lease, (a) the Authority shall not be liable to the Company, the Trustee,
any holder of any of the Bonds, or any other person for any failure of the
Authority to take action under this Lease unless the Authority (i) is requested
in writing by an appropriate person to take such action, (ii) is assured to its
satisfaction of payment of or reimbursement for any expenses in such action, and
(iii) is afforded, under the existing circumstances, a reasonable period to take
such action, and (b) except with respect to any action for specific performance
or any action in the nature of a prohibitory or mandatory injunction, neither
the Authority nor any Commissioner of the Authority or any other official or
employee of the Authority shall be liable to the Company, the Trustee, any
holder of any of the Bonds, or any other person for any action taken by it or by
its officers, servants, agents or employees, or for any failure to take action
under this Lease or the Indenture. In acting under this Lease, or in refraining
from acting under this Lease, the Authority may conclusively rely on the advice
of its Counsel.
Section 13.14. AMOUNTS REMAINING IN THE BOND FUND AND THE ACQUISITION FUND.
It is agreed by the parties hereto that any amounts remaining in the Bond Fund
and
XIII-3
<PAGE>
the Acquisition Fund or otherwise in trust with the Trustee upon the expiration
or sooner termination of the Lease as provided in this Lease, after Payment of
the Bonds, and any Additional Rent which may become due, including the fees,
charges and expenses of the Trustee, the paying agents and the Authority in
accordance with the Lease and the Indenture, shall be disposed of in accordance
with the provisions of Section 504 of the Indenture.
IN WITNESS WHEREOF, the Authority and the Company have caused this Lease to
be executed in their respective legal names and their respective corporate seals
to be hereunto affixed, and the signatures of duly authorized persons to be
attested, all as of the date first above written.
THE IREDELL COUNTY INDUSTRIAL
FACILITIES AND POLLUTION CONTROL
FINANCING AUTHORITY
(SEAL]
By: ________________________________
Chairman
Attest:
________________________________
Secretary
HUNT MANUFACTURING C0.
By: ________________________________
Vice President
[SEAL]
Attest:
________________________________
Assistant Secretary
XIII-4
<PAGE>
STATE OF NEW YORK
: ss.:
COUNTY OF NEW YORK
I, the undersigned Notary Public, certify that Alice Fortner personally
came before me this day and acknowledged that she is Secretary of The Iredell
County Industrial Facilities and Pollution Control Financing Authority, a body
corporate and politic, and that by authority duly given and as the act of said
Authority, the foregoing instrument was signed in its name by its chairman,
sealed with its official seal, and attested by herself as its Secretary. My
Commission expires ______________.
Witness my hand and official seal, this the ____ day of ______________,
1979.
________________________________
[SEAL]
STATE OF NEW YORK
: ss.:
COUNTY OF NEW YORK
I, the undersigned Notary Public, certify that John H. Martin personally
came before me this day and acknowledged that he is an Assistant Secretary of
Hunt Manufacturing Co., a Pennsylvania corporation, and that by authority duly
given and as the act of the corporation, the foregoing instrument was signed in
its name by its Vice President, sealed with its corporate seal, and attested by
himself as its Assistant Secretary. My Commission expires
Witness my hand and official seal, this the ____ day of ______________,
1979.
________________________________
[SEAL]
<PAGE>
EXHIBIT A
This Project consists principally of the following listed real and tangible
personal property.
1. Certain real property located in Iredell County, North Carolina,
together with all buildings and improvements therein, such real property being
more particularly described as follows:
BEGINNING at a point in the center of North Carolina Highway No. 90 (West
Front Street) leading from Statesville, North Carolina, to Taylorsville, North
Carolina, said beginning point being the Southwest corner of the tract of land
conveyed to the Carnation Company by the State of North Carolina by Deed
recorded in Deed Book 134, Page 125, Iredell County Registry, and running thence
with the center of said; North Carolina Highway No. 90, North 62 degrees 22
minutes West 1043 feet to a point in the center of said North Carolina Highway
No. 90, which point the center of said North Carolina Highway No. 90 and the
center of Mecham Road, a road leading in a Northerly direction SAID from said
North Carolina Highway No. 90 to what was formerly a part 0.1 the Piedmont
Experiment Station Farm intersect; thence with the center line of said Mecham
Road North 08 degrees 06 minutes East 805 feet to a point in the center 1 line
of the railroad track of ALEXANDER Railroad Company; thence with the center 1
line of the said railroad track of the Alexander Railroad Comnany four calls as
follows: (1) South 40 degrees 05 minutes East-839.45 feet to a point; (2) thence
South 43 degrees 01 minutes East 159 feet to a point: (3) thence South 48
degrees 10 minutes East 168.6 feet to a point; (4) thence South 52 decrees 30
minutes East 161.7 feet to a point in the center of said railroad track, and
said point being the Northwest corner of the said tract of land conveyed to the
Carnation Company by the State of North Carolina by the Deed referred to
hereinabove; thence with the Western line of said Carnation Company South 15
degrees 49 minutes 40 seconds West 324.45 feet to the point of BEGINNING
containing 12.76 acres, more or less, and the above description being according
to a map and survey made by Kestler & MacKay, Registered Surveyors, dated April
13, 1964, revised on February 22 1979, with said revision being in regard to the
location of buildings, paving, and similar matters, and not in any way being a
revisions of property lines, including courses, degrees and distances; and being
the identical property conveyed to National Canvas Products Corp. by Deed of
Olin Corporation, dated September 26, 1975, recorded in Deed Book 578, Page 573,
Iredell County Registry.
EXHIBIT A
2. Cont.
2. Certain machinery, equipment and tangible personal property located on
the aforesaid real property consisting principally of the following item:
A. CAFETERIA EQUIPMENT
B. OFFICE FURNITURE AND FIXTURES PURCHASED FROM NATIONAL CANVAS PRODUCTS CORP.
C. NARROW AISLE STACKING SYSTEM
Racks & Docking
3 Stock Pickers
1 Control Unit
2 Straddle Trucks (shelf loaders)
D. MACHINERY & EQUIPMENT
Air Compresor-Worthington
(with after cooler)
Air Compressor - Lincoln
Air Compressor - Wayne
Rewind Machine
Programmable Cutter
5 Cutter Grinders
Injection Molding Machine
Shrink Wrap Machine
Harding Precision Lathe
Electronic Digital Scale
Pebble Mill
Brazing Machine
<PAGE>
The Iredell County Industrial Facilities
and
Pollution Control Financing Authority
to
First Union National Bank of North Carolina,
Trustee
----------
INDENTURE AND DEED OF TRUST
----------
Dated as of June 1, 1979
Securing
Industrial Revenue Bonds
(Hunt Manufacturing Co. Project)
of
The Iredell County Industrial Facilities and
Pollution Control Financing Authority
<PAGE>
TABLE OF CONTENTS
PAGE
----
Parties .....................................................1
Forms:
Form of Coupon Bonds ....................................5
Form of Coupons ........................................13
Form of Registered Bond Without Coupons ................15
Certificate of Authentication ..........................17
Granting Clause ............................................19
Habendum Clause ............................................20
ARTICLE I
Definitions and Rules of Construction
Section 101. Definitions. ................................I-1
(1) "Acquisition" ...........................I-1
(2) "Acquisition Fund" ......................I-1
(3) "Additional Bonds" ......................I-1
(4) "Additional Rent" .......................I-1
(5) "Affiliate" .............................I-1
(6) "Authority" .............................I-1
(7) "Authority Representative" ..............I-2
(8) "Basic Rent" ............................I-2
(9) "Bond Fund" .............................I-2
(10) "Bond Registrar" ........................I-2
(11) "Bondholder" or "Holder" ................I-2
(12) "Bondholders of Record" .................I-2
(13) "Bonds" .................................I-2
(14) "Code" ..................................I-2
(15) "Company" ...............................I-2
(16) "Company Representative" ................I-2
(17) "Completion Date" .......................I-3
(18) "Cost" . ................................I-3
(19) "Counsel" ...............................I-4
(20) "default" or "event of default ..........I-4
(21) "Determination of Taxability"............I-5
(22) "Enabling Act" ..........................I-5
i.
<PAGE>
TABLE OF CONTENTS
(Continued)
PAGE
----
Section 101. DEFINITIONS. (Continued)
(23) "Government Obligations" .............I-5
(24) "Guarantor" ..........................I-5
(25) "Guaranty" ...........................I-5
(26) "Improvements" .......................I-5
(27) "Indenture" ..........................I-6
(28) "Lease" ..............................I-6
(29) "Leased Equipment" ...................I-6
(30) "Leased Property" ....................I-6
(31) "Lessee" .............................I-6
(32) "Newspaper" ..........................I-6
(33) "outstanding" ........................I-6
(34) "Paying Agents" ......................I-7
(35) "Payment of the Bonds" ...............I-7
(36) "Project" ............................I-7
(37) "Refunding Bonds" ....................I-8
(38) "Registered Owner" ...................I-8
(39) "Rent" ...............................I-8
(40) "responsible officer" ................I-8
(41) "Series 1979 Bonds" ..................I-8
(42) "Sinking Fund" .......................I-8
(43) "State" ..............................I-8
(44) "Tax Regulations" ....................I-8
(45) "Trustee" ............................I-8
Section 102. Rules of Construction ....................I-9
ARTICLE II
Form, Execution, Authentication, and
Delivery of Bonds
Section 201. Limitation on Issuance of Bonds .........II-1
Section 202. Form of Bonds............................II-1
Section 203. Details of the Bonds;
Execution and Payment .................II-1
Section 204. Authentication of Bonds .................II-2
Section 205. Registration and Registration
of Transfer of Bonds ..................II-3
Section 206. Conversion and Reconversion
of Bonds ..............................II-4
Section 207. Ownership of Bonds ......................II-5
ii.
<PAGE>
TABLE OF CONTENTS
(Continued)
ARTICLE II
(Continued)
PAGE
----
Section 208. Authorization of the Series
1979 Bonds ...........................II-6
Section 209. Additional Bonds ......................II-8
Section 210. Refunding Bonds ......................II-11
Section 211. Application of Accrued
Interest .........................II-12
Section 212. Temporary Bonds ......................II-12
Section 213. Replacement of Mutilated,
Destroyed, Lost or Stolen Bonds ...II-13
ARTICLE III
Redemption of Bonds
Section 301. Redemption of Bonds ..................III-1
Section 302. Sinking Fund..........................III-3
Section 303. Notice of Redemption .................III-3
Section 304. Effect of calling for Redemption .....III-4
Section 305. Unpaid Coupons .......................III-5
Section 306. Partial Redemption ...................III-5
ARTICLE IV
Acquisition Fund
Section 401. Creation of and Deposits to
the Acquisition Fund .............IV-1
Section 402. Payments from the Acquisition
Fund .............................IV-1
Section 403. Trustee may Rely on Requisitions ......IV-3
Section 404. Status Report .........................IV-4
Section 405. Completion Date .......................IV-4
Section 406. Transfers to the Bond Fund ............IV-4
iii.
<PAGE>
TABLE OF CONTENTS
(Continued)
ARTICLE V
Bond Fund
PAGE
----
Section 501. Creation of and deposits to
the Bond Fund .....................V-1
Section 502. Use of moneys in the bond
Fund ...... .......................V-1
Section 503. Moneys withdrawn from bond
Fund ..............................V-2
Section 504. Non-Presentment of Bonds
or Coupons ...........................V-2
Section 505. Cancellation of Bonds
Upon Payment .........................V-3
ARTICLE VI
Depositaries of Moneys, Security for Deposits
and Investment of Funds
Section 601. Security for Deposits ................VI-1
Section 602. Investment of Moneys .................VI-1
ARTICLE VII
Particular Covenants and Provisions;
Possession, Use and Partial Release of
Trust Estate
Section 701. Covenant to Pay Bonds; Bonds
Limited Obligations of the
Authority ............................VII-1
Section 702. Indenture Subordinate to
Lease ................................VII-1
iv.
<PAGE>
TABLE OF CONTENTS
(Continued)
ARTICLE VII (Continued)
PAGE
----
Section 703. Covenants to Perform
Obligations under this
Indenture ........................VII-2
Section 704. Covenant to Perform
Obligations under the Lease.......VII-2
Section 705. Trustee May Enforce
Authority's Rights Under
Lease ............................VII-3
Section 706. Covenant Against Arbitrage ...........VII-3
Section 707. Partial Release of Trust
Estate ..........................VII-4
Section 708. Modifications of Trust Estate
at Lessee's Expense to
Remain Sole Property of
Lessee ...........................VII-4
Section 709. Covenant as to Use of Trust
Estate ...........................VII-4
ARTICLE VIII
Default and Remedies
Section 801. Defaults...............................VIII-1
Section 802. Acceleration ..........................VIII-2
Section 803. Trustee May Bring Suit ................VIII-3
Section 804. Power of Sale..........................VIII-4
Section 805. Trustee May File Claim in
Bankruptcy .......................VIII-6
Section 806. Pro Rata Application of Funds..........VIII-7
Section 807. Effect of discontinuance of
Proceedings ......................VIII-9
Section 808. Holders of Majority in Prin-
cipal Amount of Bonds May
Control Proceedings ..............VIII-9
Section 809. Restrictions Upon Actions by
Individual Bondholder ............VIII-10
Section 810. Receiver...............................VIII-11
Section 811. Actions by Trustee ....................VIII-11
v.
<PAGE>
TABLE OF CONTENTS
(Continued)
PAGE
----
ARTICLE VIII
(Continued)
Section 812. No Remedy Exclusive...........................VIII-11
Section 813. No Delay or Omission Construed
to be a Waiver .............................VIII-11
Section 814. Waiver of Defaults............................VIII-11
Section 815. Remedies Herein Additional
to Remedies in Lease .......................VIII-12
ARTICLE IX
Concerning the Trustee
Section 901. Acceptance of Trusts............................IX-1
Section 902. Trustee to Give Notice of Defaults .............IX-2
Section 903. Trustee Entitled to Indemnity ..................IX-3
Section 904. Trustee not Responsible
for Insurance, Taxes,
Execution of Indenture, Acts
of the Authority or Applica-
tion of Moneys Applied in
Accordance with this
Indenture .....................................IX-3
Section 905. Compensation.....................................IX-4
Section 906. Trustee to Preserve Records .....................IX-4
Section 907. Trustee May Be Bondholder........................IX-5
Section 908. Trustee not Responsible
for Recitals .................................IX-5
Section 909. Trustee Responsibility for
Recording ....................................IX-5
Section 910. Trustee May Rely on
Certificates .................................IX-5
vi.
<PAGE>
TABLE OF CONTENTS
(Continued)
PAGE
----
Section 911. Qualification of the
Trustee ...................................IX-6
Section 912. Resignation and Removal of
Trustee ......................................IX-6
Section 913. Successor Trustee ..............................IX-8
ARTICLE X
Execution of Instruments by Bondholders
and Proof of Ownership of Bonds;
Lists of Bondholders
PAGE
----
Section 1001. Execution of Instruments by
Bondholders and Proof of
Ownership of Bonds ........................X-1
Section 1002. Preservation of Information;
Communications to Bondholders................X-2
ARTICLE XI
Supplements and Amendments to Indenture
Section 1101. Supplements and Amendments not
Requiring Bondholder Consent..............XI-1
Section 1102. Supplements and Amendments
Requiring Consent of Holders
of 2/3 in Principal Amount
of Bonds .................................XI-2
Section 1103. Supplements and Amendments
Deemed Part of Indenture .................XI-4
Section 1104. Discretion of Trustee in
Entering into Supplements
and Amendments ...........................XI-4
Section 1105. Consent of Lessee Required ....................XI-5
vii.
<PAGE>
TABLE OF CONTENTS
(Continued)
ARTICLE XII
Supplements and Amendments
to Other Agreements
PAGE
Section 1201. Supplements and Amendments
Not Requiring Consent ..............................XII-1
Section 1202. Supplements and Amendments
Requiring Consent of Holders
of 2/3 Principal Amount
of Bonds ...........................................XII-2
ARTICLE XIII
Defeasance
Section 1301. Defeasance...........................................XIII-1
ARTICLE XIV
Miscellaneous Provisions
Section 1401. Covenants of Authority Bind
its Successors .....................................XIV-1
Section 1402. Notices..............................................XIV-1
Section 1403. Designation of Additional
Paying Agents ......................................XIV-2
Section 1404. Substitute Publication...............................XIV-2
Section 1405. Rights under Indenture...............................XIV-2
Section 1406. Form of Certificates and Opinions ...................XIV-3
Section 1407. Severability ........................................XIV-3
Section 1408. Covenants of Authority not
Covenants of Officials
Individually ......................................XIV-4
viii.
<PAGE>
TABLE OF CONTENTS
(Continued)
ARTICLE XIV
(Continued)
PAGE
----
Section 1409. North Carolina Law Governs .............XIV-4
Section 1410. Payments Due on Sundays and
Holidays .............................XIV-4
Section 1411. Execution in Counterparts ..............XIV-4
Section 1412. Headings not Part of Indenture..........XIV-4
Acknowledgments ......................................XIV-5
ix.
<PAGE>
This INDENTURE AND DEED OF TRUST dated as of June 1, 1979 (the
"Indenture"), between THE IREDELL COUNTY INDUSTRIAL FACILITIES AND POLLUTION
CONTROL FINANCING AUTHORITY, a political subdivision and body corporate and
politic of the State of North Carolina, and FIRST UNION NATIONAL BANK OF NORTH
CAROLINA, a BANKING ASSOCIATION duly incorporated and existing under the laws of
the United States and having its principal corporate trust office in the City of
Charlotte, North Carolina, which is authorized under such laws to exercise trust
powers and is subject to examination by such authority (said banking association
and any banking institution becoming successor trustee under this Indenture
being herein called the "Trustee"),
W I T N E S S E T H
WHEREAS, the General Assembly of the State of North Carolina has found and
determined (among other things) that
(a) there exists in the State a critical condition of unemployment and
a scarcity of employment opportunities,
(b) the economic insecurity which results from such unemployment and
scarcity of employment opportunities constitutes a serious menace to the
safety, morals and general welfare of the entire State,
(c) such unemployment and scarcity of employment opportunities have
caused many workers and their families, including young adults upon whom
future economic prosperity is dependent, to migrate elsewhere to find
employment and establish homes,
(d) such emigration has resulted in a reduced rate of growth in the
tax base of the counties and other local governmental units of the State
which impairs the financial ability of such counties and other local
governmental units to support education and other local governmental
services,
(e) such unemployment results in obligations to grant public
assistance and to pay unemployment compensation,
<PAGE>
(f) the aforesaid conditions can best be remedied by the attraction,
stimulation, expansion and rehabilitation and revitalization of industrial
and manufacturing facilities for industry in the State, and
(g) there is a need to stimulate a larger flow of private investment
funds into industrial building programs into the State; and
WHEREAS, the General Assembly enacted Chapter 800 of the Session Laws of
North Carolina of 1975, known as the Industrial and Pollution Control Facilities
Financing Act, as amended, which as codified appears as Chapter 159C of the
North Carolina Statutes (hereinafter sometimes called the "Enabling Act"),
declaring it to be the intent of the Legislature of North Carolina by the
passage of the Enabling Act to authorize counties to create authorities in the
State of North Carolina to aid in the financing of industrial and manufacturing
facilities for the purpose of alleviating unemployment or raising below average
manufacturing wages by financing industrial and manufacturing facilities which
provide job opportunities or pay better wages than those prevalent in the area;
and
WHEREAS, pursuant to and in accordance with the provisions of the Enabling
Act, the Board of Commissioners of Iredell County, North Carolina, has created
by resolution "The Iredell County Industrial Facilities and Pollution Control
Financing Authority" (herein sometimes called the "Authority"); and
WHEREAS, the Enabling Act authorizes the Authority to acquire by purchase,
lease, gift or otherwise any property, real or personal, improved or unimproved,
and interests in land less than the fee thereof, for the construction, operation
or maintenance of, and to construct, acquire, own, repair, maintain, extend,
improve, rehabilitate, renovate, furnish and equip, industrial and manufacturing
projects, to make and execute lease agreements and security documents containing
an assignment, pledge, mortgage or other encumbrance on all or part of the
Authority's interest in, or right to receive revenues with respect to, a project
and any other property provided under a lease agreement; and
2.
<PAGE>
WHEREAS, the Authority is authorized by the Enabling Act to issue bonds for
the purpose of paying all or any part of the cost of any project, the principal
of and redemption premium, if any, and interest on which bonds shall be payable
solely from the funds provided by the operator or other obligor upon the lease
agreement or any guaranty agreement or other contract or agreement to make
payments to, or for the benefit of, the Authority; and
WHEREAS, the Authority has made arrangements with Hunt Manufacturing Co., a
Pennsylvania corporation (hereinafter called the "Company") qualified to do
business in the State of North Carolina, for the acquisition, improvement and
provision. of the Project (hereinafter defined) in Iredell County, North
Carolina; and
WHEREAS, for the purpose of providing funds to pay a portion of the cost of
the Project, the Authority has duly authorized the issuance of bonds of the
Authority in the aggregate principal amount of $2,000,000, designated
"Industrial Revenue Bonds (Hunt Manufacturing Co., Project), Series 1979", dated
as of June 1, 1979, and bearing interest and maturing in annual installments,
subject to the right of prior redemption, all as hereinafter set forth (said
bonds being hereinafter sometimes called the "Series 1979 Bonds"); and
WHEREAS, the Authority has entered into a Lease Agreement dated as of the
date hereof (said Lease Agreement and any and all amendments and supplements
thereto being herein collectively called the "Lease" and the lessee thereunder
at the time being hereinafter sometimes called the "Lessee"), with the Company,
under which the Authority has demised and leased the property comprising the
Project and substitutions, renewals and replacements therefor less removals
therefrom (herein called the "Leased Property") to the Company and the Company
has leased the Leased Property from the Authority and has agreed to pay rent
therefor in amounts sufficient to pay the principal of and redemption premium,
if any, and interest on the Series 1979 Bonds and any additional and refunding
bonds issued under this Indenture (the Series 1979 Bonds and any additional and
refunding bonds being herein called, collectively, the "Bonds"); and
3.
<PAGE>
WHEREAS, the Authority is entering into this Indenture for the purpose of
authorizing the Bonds and securing the payment thereof by assigning certain of
its interests in the Lease, including its rights to a portion of the rental
payments thereunder; and
WHEREAS, the Company has entered into a Guaranty Agreement, dated the date
hereof (herein called the "Guaranty"), with the Trustee, whereby the Company has
unconditionally guaranteed for the benefit of the holders of the Bonds and the
interest coupons appertaining thereto, if any, the full and prompt payment of
the principal of and redemption premium, if any, and interest on the Bonds; and
WHEREAS, the Authority has determined that the definitive Series 1979 Bonds
to be issued and the interest coupons to be attached thereto and the provisions
for registration to be endorsed thereon and the certificate of authentication by
the Trustee to be endorsed on all such Bonds shall be, respectively,
substantially in the following forms, with such variations, omissions and
insertions as are required or permitted by this Indenture:
4.
<PAGE>
No . ................... [FORM OF BONDS] $5,000
United States of America State of North Carolina
THE IREDELL COUNTY INDUSTRIAL FACILITIES AND
POLLUTION CONTROL FINANCING AUTHORITY
INDUSTRIAL REVENUE BOND
(HUNT MANUFACTURING C0. PROJECT), SERIES 1979
The Iredell County Industrial Facilities and Pollution Control Financing
Authority (herein called the "Authority"), a political subdivision and body
corporate and politic duly organized and existing under the Constitution and
laws of the State of North Carolina, for value received, hereby promises to pay,
solely from the special fund provided therefor, as hereinafter referred to, the
bearer or, if this Bond be registered, to the registered owner hereof on the 1st
day of June, 1999 (or earlier as hereinafter set forth), upon the presentation
and surrender hereof, the principal sum of
FIVE THOUSAND DOLLARS
and to pay, solely from said special fund, interest thereon from the date hereof
at the rate of seven and one-half percent (7 1/2%) per annum until payment of
said principal sum, such interest to the maturity hereof being payable
semi-annually on the 1st days of June and December in each year, the first
interest payment date being December 1, 1979. The principal of and redemption
premium, if any, and interest on this Bond are payable in any coin or currency
of the United States of America which on the respective dates of payment thereof
shall be legal tender for the payment of public and private debts. Unless this
Bond be registered, payments of interest accruing on this Bond shall be payable
upon the presentation and surrender of the coupons representing such interest as
the same respectively become due. The interest on this Bond, if registered, is
payable to the registered owner hereof by check mailed to the registered owner
at his address as it appears on the Bond registration books of the Authority.
The principal of and redemption premium, if any, on this Bond and the interest
on this Bond, unless registered, are payable at the principal corporate trust
office of First Union National Bank of North Carolina,
5.
<PAGE>
in the City of Charlotte, North Carolina, or its successors in trust, as Trustee
under the Indenture (hereinafter mentioned).
This Bond is issued under and pursuant to the Constitution and laws of the
State of North Carolina, particularly the Industrial and Pollution Control
Facilities Financing Act, as amended, which as codified appears as Chapter 159C
of the General Statutes of North Carolina (herein called the "Enabling Act"),
and under and pursuant to resolutions duly adopted by the Authority. This Bond
and the redemption premium, if any, and the interest hereon shall not be deemed
to constitute or to create in any manner a debt, liability or obligation of the
State of North Carolina or of any political subdivision or any agency thereof or
a pledge of the faith and credit of the State of North Carolina or any such
political subdivision or any such agency, but shall be limited obligations of
the Authority payable solely from the revenues and other funds pledged therefor
and shall not be payable from any assets or funds of the Authority other than
the revenues and other funds pledged therefor, and neither the faith and credit
nor the taxing power of the State of North Carolina or any political,
subdivision or any agency thereof is pledged to the payment of the principal of
or redemption premium, if any, or the interest on this Bond.
This Bond is one of a duly authorized issue of industrial revenue bonds of
the Authority in the aggregate principal amount of $2,000,000, known as "The
Iredell County Industrial Facilities and Pollution Control Financing Authority
Industrial Revenue Bonds (Hunt Manufacturing Co. Project), Series 1979" (herein
called the "Series 1979 Bonds"), dated as of the 1st day of June, 1979, and
maturing, subject to prior redemption as hereinafter mentioned, on June 1, 1999.
The Series 1979 Bonds have been issued for the purpose of paying the cost
of acquiring, improving, equipping, and providing for the installation of
manufacturing facility for Hunt Manufacturing Co., a Pennsylvania corporation
qualified to do business in North Carolina (herein called the "Company") for the
production of paper and other art/craft products in Iredell County, North
Carolina (the facility and site thereof, the improvements thereto and the
equipment acquired therefor being herein called the "Project"). The Indenture
also provides for the issuance, from time to time, under the conditions and
restrictions therein set forth, of additional
6.
<PAGE>
series of bonds for the purpose of financing all or any portion of the cost of
completing the Project, of financing for the Company all or any portion of any
other real or tangible personal property in Iredell County, North Carolina, (all
such real and personal property being herein called the "Improvements") and of
refunding all or any of the bonds of any series issued under the provisions of
the Indenture. All such additional series of bonds issued under the Indenture,
together with the Series 1979 Bonds, are herein called the "Bonds".
All of the Bonds are issued or are to be issued under and pursuant to an
Indenture and Deed of Trust dated as of June 1, 1979 (said Indenture and Deed of
Trust, together with all such supplements and amendments thereto as therein
permitted, being herein called the "Indenture"), by and between the Authority
and First Union National Bank of North Carolina, Charlotte, North Carolina (said
banking association and any banking institution becoming successor trustee under
the Indenture being herein called the "Trustee"). An executed counterpart of the
Indenture is on file at the principal corporate trust office of the Trustee.
Reference is hereby made to the Indenture for the provisions, among others, with
respect to the custody and application of the proceeds of the Bonds, the
collection and disposition of rent and other revenues, a description of the
funds charged with and pledged to the payment of the principal of and redemption
premium, if any, and interest on the Bonds, the nature and extent of the
security, the terms and conditions under which the Bonds are or may be issued,
the rights, duties and obligations of the Authority and of the Trustee and the
rights of the holders of the Bonds, and, by the acceptance of this Bond, the
holder hereof assents to all of the provisions of the Indenture.
The Authority has entered into a Lease Agreement dated as of June 1, 1979
(herein called the "Lease"), with Hunt Manufacturing Co., a Pennsylvania
corporation qualified to do business in the State of North Carolina (herein
called the "Company"), under which the Authority has demised and leased the
Project and any Improvements and any substitutions therefor, less any property
removed therefrom, as permitted by the Lease and the Indenture, as the same
shall exist at any time (herein called the "Leased Property") to the Company and
the Company has leased the Leased Property from the
7.
<PAGE>
Authority. The Lease provides for the payment by the Company of rent at the
times required and in amounts sufficient to pay the principal of and redemption
premium, if any, and interest on all the Bonds as the same shall become due and
payable (herein called "Basic Rent") and certain fees and expenses of the
Authority and the Trustee, and the Lease further obligates the Company to pay
the cost of maintaining the Leased Property and keeping the same insured. The
Lease provides that the payments of Basic Rent shall be made directly to the
Trustee for the account of the Authority.
The Company has entered into a Guaranty Agreement dated as of June 1, 1979
(herein called the "Guaranty"), with the Trustee, whereby the Company has
unconditionally guaranteed, for the benefit of the holders of the Bonds, the
full and prompt payment of the principal of and redemption premium, if any, and
interest on the Bonds, when and as the same shall become due and payable.
Under the Indenture the Authority has, for the benefit of the holders of
the Bonds, assigned and conveyed to the Trustee in trust the Authority's
interests (i) in the real property and improvements and fixtures thereon
comprising a portion of the Leased Property, (ii) in all tangible property,
other than real property, comprising a portion of the Leased Property, (iii) in
the proceeds of any property covered by clauses (i) and (ii) above which shall
be sold or otherwise disposed of in accordance with the Indenture, (iv) in the
Lease (subject to the reservation of certain rights of the Authority under the
Lease, including its rights to payment of certain expenses and to indemnity),
including the Basic Rent and other revenues derived therefrom; and, (v) all
moneys and securities in the Bond Fund (as hereinafter defined), and, until
applied to the payment of any item of the cost of the Project in accordance with
the Indenture and the Lease or otherwise applied as permitted under the
Indenture, all moneys and securities in the Acquisition Fund under the
Indenture. The Indenture further provides that payments of Basic Rent and all
such revenues, including any payments pursuant to the Guaranty, are to be
deposited with the Trustee to the credit of a special fund designated "The
Iredell County Industrial Facilities and Pollution Control Financing Authority
Industrial Revenue Bonds (Hunt Manufac-
8.
<PAGE>
turing Co. Project) Bond Fund", which special fund is equally and ratably
pledged to and charged with the payment of the principal of and redemption
premium, if any, and interest on all Bonds issued under the Indenture.
The Company may obtain a release from the lien of the Indenture of
equipment and unimproved land, upon substitution and payment therefor, in
accordance with the provisions of the Lease and the Indenture.
The Bonds are issuable as coupon Bonds, registrable as to both principal
and interest, in the denomination of $5,000 each.
Subject to the next two succeeding paragraphs, the Series 1979 Bonds are
not callable for redemption prior to June 1, 1989.
If,
(i) the Leased Property shall have been damaged or destroyed to the
extent that it would not be practicable or desirable to rebuild, repair or
restore the Leased Property within a period of one year after the
occurrence of such damage or destruction; or
(ii) there occurs the taking by Eminent Domain (as defined in the
Lease) of all or any part of the Leased Property to such an extent that the
Company is prevented or would likely be prevented from using the Leased
Property for its normal purposes and operations for a period of one year
after such occurrence; or
(iii) there shall have occurred a change in the Constitution of the
State of North Carolina or the United States of America or any legislative,
administrative or judicial action which shall render the Lease void or
unenforceable or impossible of performance
and the Company shall deliver to the Trustee a resolution of the Board of
Directors of the Company stating that as a result of an event described in
clause (i), (ii), or (iii) above, the Company has discontinued or will
discontinue
9.
<PAGE>
its operation of the Leased Property, then the Company may direct the Trustee to
call all the Bonds then outstanding under the Indenture for redemption in whole
on the date, not more than 180 days after the adoption of such resolution,
selected by the Company. The redemption price payable in connection with an
event described in clause (i), (ii) or (iii) above shall be equal to the
principal amount thereof plus accrued interest to the redemption date and
without redemption premium.
Upon the occurrence of a Determination of Taxability, which is defined in
the Indenture to mean any determination, decision or decree made in regard to
Section 103(b)(6)(D) of the Internal Revenue Code of 1954, as amended (the
"Code"), by the Commissioner or any District Director of the Internal Revenue
Service or decision by any court of competent jurisdiction that interest on the
Series 1979 Bonds is includable in the gross income of a Bondholder (other than
a Bondholder who is a "substantial user" of the Project or a "related person",
within the meaning of Section 103(b)(8) of the Code), the Series 1979 Bonds
shall be called for redemption in whole on the date, not more than 90 days
following the date of such Determination, selected by the Company at the
principal amount thereof, plus interest accrued thereon to the date fixed for
redemption.
The Series 1979 Bonds may be called for redemption not earlier than June 1,
1989 in whole at any time, or in part on any interest payment date selected by
the Company, at the applicable redemption price (expressed as a percentage of
principal amount) set forth in the table below plus interest accrued to the date
fixed for redemption:
Redemption Redemption
Periods Prices
- ------- ------
June 1, 1989 to May 31, 1990 103%
June 1, 1990 to May 31, 1991 102 1/2%
June 1, 1991 to May 31, 1992 102%
June 1, 1992 to May 31, 1993 101 1/2%
June 1, 1993 to May 31, 1994 101%
June 1, 1994 to May 31, 1995 100 1/2%
June 1, 1995 and thereafter 100%
10.
<PAGE>
In addition, Series 1979 Bonds shall be called for redemption, pursuant to
the sinking fund redemption requirements of Section 302 of the Indenture, at the
principal amount thereof plus accrued interest to the redemption date and
without premium on the following dates in the following principal amounts:
Redemption Principal Redemption Principal
Date Amount Date Amount
---- ------ ---- ------
June 1, 1995 $350,000 June 1, 1997 $400,000
June 1, 1996 $370,000 June 1, 1998 $425,000
Unless otherwise previously retired, there will remain $455,000 principal
amount of Series 1979 Bonds stated to mature on June 1, 1999 to be paid at
maturity on June 1, 1999.
If less than all of the Bonds of any one maturity of a series shall be
called for redemption, the particular Bonds to be redeemed from such series and
maturity shall be selected by lot by the Trustee or in such other manner as the
Trustee in its discretion may deem fair and appropriate.
Any such redemption, whether in whole or in part, shall be made upon at
least 30, but not more than 60, days' prior notice by (a) publication in a daily
newspaper, or a financial journal, published or circulated in the Borough of
Manhattan, City and State of New York, and (b) mailing to all registered owners
of Bonds to be redeemed at their addresses as they appear on the registration
books kept by the Trustee and to each other holder of Bonds to be redeemed who
shall have filed with the Trustee the number or numbers of such Bonds and his
address, as provided in the Indenture, and shall be made in the manner and under
the terms and conditions, all as provided in the Indenture, but, if notice is so
published, failure so to mail any such notice shall not affect the validity of
the proceedings for such redemption. On the date designated for redemption,
notice having been published, the Bonds so called for redemption shall become
and be due and payable at the redemption price provided for redemption of such
Bonds on such date, and, if moneys for payment of the redemption price and
accrued interest shall be held by the Trustee or by any paying AGENT, all as
provided in the Indenture, interest on such Bonds so called for redemption shall
cease to accrue, the coupons for any such interest payable subsequent to the
redemption date shall be void, such Bonds so called for redemption shall cease
to be entitled to any benefit or security under the Indenture, and the holders
or registered
11.
<PAGE>
owners thereof shall have no rights in respect of such Bonds so called for
redemption except to receive payment of the redemption price thereof so held by
the Trustee or by any paying agent.
In the event that all the Bonds then outstanding shall be registered, the
Trustee shall be required to give notice only as provided in clause (b) above.
The holder of this Bond shall have no right to enforce the provisions of
the Indenture or to institute action to enforce the covenants therein, or to
take any action with respect to any event of default under the Indenture, or to
institute, appear in or defend any suit or other proceeding with respect
thereto, except as provided in the Indenture.
In certain events, on the conditions, in the manner and with the effect set
forth in the Indenture, the principal of all the Bonds then outstanding under
the Indenture may become or may be declared due and payable before the stated
maturities thereof, together with the interest accrued thereon.
Modifications or alterations of the Lease, the Indenture and the Guaranty
and any supplement or amendment thereto may be made only to the extent and in
the circumstances permitted by the Indenture and may be made in certain cases
without the consent of all the holders of the Bonds.
This Bond may be registered as to both principal and interest in accordance
with the provisions endorsed hereon and subject to the terms and provisions of
the Indenture.
This Bond and the interest coupons appertaining hereto shall be governed by
and construed in accordance with the laws of the State of North Carolina.
All acts, conditions and things required to happen, exist and be performed
precedent to and in the issuance of this Bond and the execution of the Indenture
have happened, exist and have been performed as so required.
This Bond shall not be valid or become obligatory for any purpose or be
entitled to any benefit or security under the Indenture until it shall have been
authenticated by the execution by the Trustee of the certificate of
authentication endorsed hereon.
12.
<PAGE>
IN WITNESS WHEREOF, The Iredell County Industrial Facilities and Pollution
Control Financing Authority has caused this Bond to be executed with the
facsimile signature of its Chairman or its Vice Chairman and a facsimile of its
official seal to be imprinted hereon and attested by its Secretary or an
Assistant Secretary, and the attached interest coupons to bear the facsimile
signature of said Chairman or Vice Chairman, all as of the 1st day of June,
1979.
______________________________
Chairman
[SEAL]
______________________________
Secretary
13.
<PAGE>
PROVISIONS FOR REGISTRATION
This Bond may be registered as to both principal and interest on the books
of The Iredell County Industrial Facilities and Pollution Control Financing
Authority, kept by the Trustee under the within-mentioned Indenture, as Bond
Registrar, upon presentation hereof to the Bond Registrar, which shall detach
and retain in its custody all unmatured coupons and all matured coupons, if any,
not theretofore paid or provided for, and shall make notation of such
registration in the registration blank below, and the registration of this Bond
may thereafter be transferred only upon an assignment duly executed by the
registered owner or his attorney or legal representative in such form as shall
be satisfactory to the Bond Registrar, such registration of transfer to be made
on such books and endorsed hereon by the Bond Registrar; after such registration
or registration of transfer the principal of and redemption premium, if any, and
interest on this Bond shall be payable only to or upon the order of the
registered owner or his legal representative. This Bond, if converted into a
bond registered as to both principal and interest, may be reconverted into a
coupon bond upon presentation hereof to the Bond Registrar, accompanied by an
instrument duly executed by the registered owner or his attorney or legal
representative in such form as shall be satisfactory to the Bond Registrar; and
upon any such reconversion the Bond Registrar shall reattach hereto the coupons
representing the interest to become due thereafter on this Bond to the date of
maturity and the interest, if any, not theretofore paid and shall make notation
in the registration blank below whether this Bond is registered or is payable to
bearer.
Date of Name of Signature of
Registration Registered Owner Bond Registrar
- ------------ ---------------- --------------
................. ....................... ..................
................. ....................... ..................
................. ....................... ..................
[FORM OF COUPONS]
No. .............
On __________________ 1, ____, The Iredell County Industrial Facilities and
Pollution Control Financing Authority will
14.
<PAGE>
pay to bearer (unless the Bond mentioned below shall previously have become
payable as provided in the Indenture referred to in said Bond and provision for
payment thereof shall have been duly made) at the principal office of First
Union National Bank of North Carolina, in the City of Charlotte, North Carolina,
upon the presentation and surrender hereof, the amount shown hereon in any coin
or currency of the United States of America which at the time of payment is
legal tender for the payment of public and private debts, solely from the
special fund referred to in, for the semi-annual interest then due upon, its
Industrial Revenue Bond (Hunt Manufacturing Co. Project), Series 1979, dated as
of June 1, 1979.
No. .............
THE IREDELL COUNTY INDUSTRIAL FACILITIES AND
POLLUTION CONTROL FINANCING AUTHORITY
__________________
Chairman
15.
<PAGE>
CERTIFICATE OF AUTHENTICATION
This Bond is one of the Bonds of the series designated therein and issued
under the provisions of the within-mentioned Indenture.
First Union National Bank of North Carolina,
As Trustee
By____________________________________
Authorized Officer
; and
WHEREAS, the execution and delivery of this Indenture and the Lease have
been duly authorized by resolution of the Authority; and
WHEREAS, all acts, conditions, and things required by the Constitution and
laws of the State of North Carolina to happen, exist and be performed precedent
to and in the execution and delivery of this Indenture and the Lease have
happened, exist and have keen performed as so required in order to make this
Indenture a valid and binding indenture and deed of trust for the security of
the bonds in accordance with its terms and in order to make the Lease a valid
and binding agreement in accordance with its terms; and
WHEREAS, the Trustee has accepted the trusts created by this Indenture and
in evidence thereof has joined in the execution hereof;
NOW, THEREFORE, in consideration of the premises, of the acceptance by the
Trustee of the trusts hereby created, and of the purchase and acceptance of the
Bonds by the holders thereof, and also for and in consideration of the sum of
One Dollar ($1.00) to the Authority in hand paid by the Trustee at or before.
the execution and delivery of this Indenture, the receipt of which is hereby
acknowledged, and for the purpose of fixing and declaring the terms and
conditions upon which the Bonds are to be issued, authenticated, delivered,
secured and accepted by all persons who shall from time to time be or become
registered owners thereof, and in order to secure the payment of all the Bonds
at any time issued and outstanding here-
16.
<PAGE>
under the redemption premium, if any. and interest thereon according to their
tenor. purport and effect, and in order to secure the performance and observance
of all the covenants, agreements and conditions therein and herein contained.
the Authority does hereby bargain, mortgage, convey, grant, pledge and assign
unto First Union National Bank of North Carolina, as Trustee, and unto its
successors in trust, and to its assigns, forever,
(a) the interest of the Authority in and to the real property and
premises situated in Iredell County, North Carolina, as described in
Exhibit A hereto, together with all improvements now or hereafter erected
thereon, all rights, appurtenances, easements, privileges, remainders and
reversions appertaining thereto and all apparatus, equipment, fixtures and
articles of personal property now or hereafter attached to the Leased
Property as fixtures, and replacements thereof, including, but not limited
to, all heating, refrigerating, air conditioning, gas, plumbing and
electric apparatus and equipment, all boilers, engines, motors, power
equipment, piping and plumbing fixtures, pumps, tanks, lighting equipment
and systems, fire prevention and sprinkling equipment and systems, and
other things now or hereafter thereon or therein, including all interests
of any owner of the Leased Property in any of such items at any time
acquired under conditional sale contracts or installment sale contracts
(the foregoing together with so much of the Leased Property as under North
Carolina law constitutes real property or fixtures being hereinafter
collectively referred to as the "Trust Estate"), excluding, however, from
this Indenture and the Trust Estate any property which is installed by the
Lessee under Section 6.2, and any property or interest therein which is
removed, released or purchased under Section 6.3, 6.4 or 6.5, of the Lease
(b) a security interest in all tangible property, other than real
property, comprising a portion of the Leased Property, as described in
Exhibit A hereto (hereinafter sometimes called the "Leased Equipment"),
including all items of machinery and equipment hereafter acquired by the
Authority and required to by subjected to the lien of this Indenture or
intended so to be, including but not limited to, all substitutions,
renewals or replacements of, and additions, improvements, accumulations and
accessions to, the Leased Equipment
17.
<PAGE>
or any portion thereof whether pursuant to the Lease or otherwise, and
excluding, however, from this Indenture and the Leased Equipment any
property which is installed by the Lessee under Section 6.2 and any
property or interest therein which is reserved, released or purchased under
Section 6.3 or 6.4, of the Lease;
(c) all proceeds of any property covered by clauses (a) and (b) above
which shall be sold or otherwise disposed of in accordance with the
Indenture; and
(d) all right, title and interest of the Authority in the Lease,
including, without limitation, the Basic Rent and the remedies set forth in
Section 10.2(a), and other revenues and payments to be made to the
Authority or for its account, reserving, however, the rights of the
Authority under Sections 5.3(b)(iii), 7.4, 8.1, 8.3, 8.10, 8.11, 9.3, 10.6,
11.1(b), 11.2, 13.5, 13.12 and 13.13 of the Lease;
(e) all moneys and securities in the Bond Fund (as hereinafter
defined), and until applied in payment of any item of the Cost (as
hereinafter defined) of the Project in accordance with Section 402 hereof
and the Lease or otherwise applied as permitted hereunder, all moneys and
securities in the Acquisition Fund (as hereinafter defined);
TO HAVE AND TO HOLD the same forever, subject, however, to the rights of
the Lessee under the Lease and to the exceptions, reservations and matters
therein and herein recited and to Permitted Encumbrances (as defined in the
Lease) but IN TRUST, nevertheless, for the equal and proportionate benefit and
security of the holders and registered owners from time to time of the Bonds
authenticated and delivered hereunder and issued by the Authority and
outstanding, without preference, priority or distinction as to lien or
otherwise, except as otherwise hereinafter provided, of any one Bond over any
other Bond, by reason of priority in the issue, sale or negotiation thereof or
otherwise;
PROVIDED, HOWEVER, that if, after the rights, title and interest of the
Trustee in and to the estate pledged and assigned to it under this Indenture
shall have ceased,
18.
<PAGE>
terminated and become void in accordance with Article XIII hereof, the principal
of and redemption premium, if any, and interest on all of the Bonds shall have
been paid to the Bondholders or shall have been paid to the Lessee pursuant to
Section 504 hereof, then this Indenture and all covenants, agreements and other
obligations of the Authority hereunder shall cease, determine and be void, and
thereupon the Trustee shall cancel and discharge this Indenture and execute and
deliver to the Authority and the Lessee such instruments in writing as shall be
required to evidence the discharge hereof; otherwise, this Indenture shall be
and remain in full force and effect.
THIS INDENTURE FURTHER WITNESSETH, and it is expressly declared, that all
Bonds issued and secured hereunder are to be issued, authenticated and delivered
and the Trust Estate and the Basic Rent and other revenues and funds herein
pledged are to be dealt with and disposed of under, upon and subject to the
terms, conditions, stipulations, covenants, agreements, trusts, uses and
purposes as hereinafter expressed, and the Authority has agreed and covenanted,
and does hereby agree and covenant, with the Trustee and with the respective
holders and owners of said Bonds and of any coupons representing interest
thereon, as follows, that is to say:
19.
<PAGE>
ARTICLE I
Definitions and Rules of Construction
Section 101. DEFINITIONS. In addition to words and terms elsewhere defined
in this Indenture, the following words and terms shall have the following
meanings:
(1) "Acquisition" when used in connection with the Project, shall
mean, without limitation, the acquisition, improvement and provision of
the Project.
(2) "Acquisition Fund" shall mean the fund created by Section 401
hereof.
(3) "Additional Bonds" shall mean the Bonds authorized to be issued
under Section 209 of this Indenture for the purpose of financing all or
any portion of (a) the Cost of the Project to the extent that the proceeds
of the Series 1979 Bonds and any other available funds in the Acquisition
Fund are insufficient therefor or (b) the Cost of any Improvements.
(4) "Additional Rent" shall mean the amounts payable pursuant to
Section 5.3(b) of the Lease by the Company for the account of or to the
Authority to provide for payment of the fees and charges of the Trustee,
the Paying Agents and of certain costs and expenses incurred by the
Authority, respectively.
(5) "Affiliate" shall mean any person directly or indirectly
controlling or controlled by or under direct or indirect common control
with another person. For the purposes of this definition, "control" when
used with respect to a person shall mean the power to direct the
management and policies of such person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise, and
the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
(6) "Authority" shall mean The Iredell County Industrial Facilities
and Pollution Control Financing Authority, a political subdivision and
body corporate and politic of the State of North Carolina, and its
successors and assigns and any body resulting from or surviving any
consolidation or merger to which it or its successors may be a party.
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(7) "Authority Representative" shall mean any one of the persons at
the. time designated to act on behalf of the Authority by written
certificate furnished to the Company and the Trustee containing the
specimen signatures of such persons and signed on behalf of the Authority
by its Chairman or Vice Chairman.
(8) "Basic Rent" shall mean the amounts payable pursuant to Section
5.3(a) of the Lease by the Company for the account of the Authority to
provide for the payment of the principal of and premium, if any, and
interest on the Bonds.
(9) "Bond Fund" shall mean the fund created by Section 501 hereof.
(10) "Bond Registrar" shall mean such person as shall be appointed
under the provisions of Section 206 of this Indenture to keep the books for
the registration and for the registration of transfer of Bonds.
(11) "Bondholder" or "Holder" shall mean the Registered Owner of any
Bond registered as to both principal and interest and the bearer of any
Bond not so registered.
(12) "Bondholders of Record" shall mean all Registered Owners and all
other Holders who shall have filed with the Trustee a written request to
receive notices to be given to Bondholders of Record under this Indenture
and the number or numbers of their Bonds.
(13) "Bonds" shall mean the Series 1979 Bonds, the Additional Bonds
and the Refunding Bonds.
(14) "Code" shall mean the Internal Revenue Code of 1954, as amended.
(15) "Company" shall mean Hunt Manufacturing Co., a corporation
organized and existing under the laws of the State of Pennsylvania and its
successors and assigns and any surviving, resulting or transferee
corporation or other entity.
(16) "Company Representative" shall mean any one of the persons at the
time designated to act on
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behalf of the Company by written certificate furnished to the Authority and
the Trustee containing the specimen signatures of such persons and signed
on behalf of the Company by the President, a Vice President, the Treasurer
or an Assistant Treasurer thereof. The Company Representative may be an
employee of the Company.
(17) "Completion Date" shall mean the date of completion of the
Project as that date shall be certified as provided in Section 4.3 of the
Lease.
(18) "Cost" as applied to the Project and any Improvements shall mean
all costs which the Authority or the Company may properly pay or accrue for
the Acquisition of the Project or such Improvements under the Enabling Act
and which, under generally accepted accounting principles and under
applicable regulations of the United States Department of the Treasury, are
chargeable to the capital account of the Project or such Improvements, as
the case may be, including, without limitation, in the case of the Project,
the following:
(a) obligations of the Company incurred in connection with the
purchase of the Project, including the purchase price of the
industrial and manufacturing facility, for the production of paper and
other art-craft products, acquired by the Company all legal, recording
and other fees, taxes and expenses related thereto;
(b) obligations of the Company incurred for labor and materials
in connection with the Acquisition of the Project;
(c) preparation of the plans and specifications for the Project
(including any preliminary study or planning of the Project or any
aspect thereof;
(d) payment of the fees for engineering, supervisory and
consulting services relating to the Project;
(e) payment, to the extent they shall not be paid by a
contractor, of the premiums of all insurance and surety and
performance bonds required to be maintained in connection with the
improvement of the Project;
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(f) payment of any initial or acceptance fee of the Trustee and
any fees and expenses incurred in connection with the preparation,
recording or filing of such documents, instruments or financing
statements as either the Company or the Authority may deem desirable
to perfect or protect the rights of the Authority and the Trustee
under the Lease, this Indenture and the Guaranty;
(g) payment of legal, accounting and financial advisory fees and
expenses, filing fees, and printing and engraving costs incurred in
connection with the authorization, issuance, sale and purchase of the
Series 1979 Bonds or any Additional Bonds and any Additional Bonds
issued to finance all or a portion of the Cost of completing the
Project, and the preparation of the Lease, this Indenture, and the
Guaranty;
(h) interest to accrue on the Series 1979 Bonds or any Additional
Bonds and any Additional Bonds issued to finance all or a portion of
the Cost of completing the Project to the Completion Date;
(i) any administrative or other fees charged by the Authority,
the Department of Commerce or the Local Government Commission of the
State of North Carolina, or reimbursement thereto of expenses, in
connection with the Project to the Completion Date; and
(j) payment of any other costs and expenses relating to the
Project which would constitute costs or expenses for which the
Authority may expend Bond proceeds under the Enabling Act.
(19) "Counsel" shall mean a lawyer or a firm of lawyers duly admitted
to practice law in one of the United States and may, but need not, be
counsel to the Authority or the Lessee.
(20) "default" or "event of default" shall mean any one or more of the
events or circumstances set forth in Section 801 hereof.
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(21) "Determination of Taxability" shall mean any determination,
decision or decree made in regard to Section 103(b)(6)(d) of the Code by
the Commissioner or any District Director of the Internal Revenue Service
or by any court of competent jurisdiction that interest on the Series 1979
Bonds is includable in the gross income of the recipient thereof under
Section 103 of the Code and regulations thereunder for any reason other
than that the Holder is a "substantial user" of Project or a "related
person" within the meaning of Section 103(b)(8) of the Code.
(22) "Enabling Act" shall mean Chapter 800 of the 1975 Session Laws of
North Carolina, as amended, which as codified appears as Chapter 159C of
the General Statutes of North Carolina.
(23) "Government Obligations" shall mean (a) direct obligations of the
United States of America or obligations for the payment of which the full
faith and credit of the United States of America is pledged, or (b)
obligations of the Government National Mortgage Association, Federal
Intermediate Credit Banks, Federal Banks for Cooperatives, Federal Land
Banks, Federal Home Loan Banks and Federal Farm Credit Consolidated System;
provided, however, that for purposes of Section 1301 of this Indenture,
such term shall mean the obligations described in clause (a) of this
definition only.
(24) "Guarantor" shall mean Hunt Manufacturing Co., a Pennsylvania
corporation, as guarantor under the Guaranty, and its successors and
assigns thereunder.
(25) "Guaranty" shall mean the Guaranty Agreement dated as of the date
hereof, between the Guarantor and the Trustee, pursuant to which the
Guarantor guarantees to the Trustee payment of the principal of and
premium, if any, and interest on the Bonds when the same shall become due
and payable, together with any amendments and supplements thereto permitted
by this Indenture.
(26) "Improvements" shall mean any real or tangible personal property
acquired, constructed or installed in, or used in, Iredell County, North
Carolina, by the Company and financed, in whole or in part, by Additional
Bonds.
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(27) "Indenture" shall mean this Indenture and Deed of Trust, together
with any amendments and supplements hereto permitted hereby.
(28) "Lease" shall mean the Lease Agreement, dated as of the date
hereof, between the Authority and the Company, together with any amendments
and supplements thereto permitted hereby.
(29) "Leased Equipment" shall mean all items of machinery and
equipment owned or hereafter acquired by the Authority and required to be
subjected to the lien of this Indenture or intended so to be, including but
not limited to, all substitutes, renewals or re placements of, and
additions, improvements, accumulations and accessions to, the Leased
Equipment or any portion thereof whether pursuant to the Lease or
otherwise, excluding, however, from this Indenture and the Trust Estate any
property which is installed by the Lessee under Section 6.2, and any
property or interest therein which is reserved, released or purchased under
Section 6.3 or 6.4, of the Lease.
(30) "Leased Property" shall mean the Project, any Improvements and
all additions, modifications and improvements thereto and all substitutions
therefor to the extent provided herein, less all removals therefrom as
permitted by the Lease, as the same shall exist at any time, leased to the
Company by the Authority pursuant to the Lease.
(31) "Lessee" shall mean the lessee at the time being under the Lease.
(32) "Newspaper" shall mean a newspaper regularly published in the
English language.
(33) "outstanding" when used with respect to the Bonds shall mean,
as of the date of determination, all Bonds theretofore authenticated and
delivered, except:
(i) Bonds paid or redeemed or purchased by the Paying Agents or
delivered to the Trustee for cancellation;
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(ii) Bonds deemed to have been paid in accordance with Article
XIII hereof; and
(iii) Bonds in exchange for or in lieu of which other Bonds
have been authenticated and delivered pursuant to this Indenture;
provided, however, that in determining whether the holders of the requisite
principal amount of outstanding Bonds have given any request, demand,
authorization, direction, notice, consent or waiver, Bonds owned by the
Authority, the Company or the Guarantor or any other obligor upon the Bonds
or the Lease or any Affiliate of the Company or such other obligor shall be
disregarded and deemed not to be outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent or waiver, only Bonds
which the Trustee knows to be so owned shall be so disregarded. Bonds so
owned which have been pledged in good faith may be regarded as outstanding
if the pledgee establishes to the satisfaction of the Trustee the pledgee's
right so to act with respect to such Bonds and that the pledgee is not the
Authority or the Company or the Lessee or the Guarantor or any other
obligor upon the Bonds or the Lease or the Guaranty or any Affiliate of the
Company or the Lessee or the Guarantor or such other obligor.
(34) "Paying Agents" shall mean the one or more banking institutions
at which the principal of and redemption premium, if any, and interest on
Bonds (unless registered) shall be made payable as provided in this
Indenture.
(35) "Payment of the Bonds" shall mean payment of the principal of and
redemption premium, if any, and interest on all the Bonds in accordance
with their terms, whether through payment at maturity or purchase or
redemption or provision for such payment in such a manner that the Bonds
shall be deemed to have been paid under the second paragraph of Section
1301.
(36) "Project" shall mean the property described in Exhibit A to the
Lease at any time from the date of
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the issuance of the Series 1979 Bonds until the Completion Date.
(37) "Refunding Bonds" shall mean the Bonds authorized to be issued
under Section 210 of this Indenture for the purpose of refunding any or all
of the Bonds of any series then outstanding.
(38) "Registered. Owner" shall mean the person or persons in whose
name or names a particular Bond is registered on the books kept by the Bond
Registrar for such purpose under Section 206 of this Indenture.
(39) "Rent" shall mean, collectively, the Basic Rent and the
Additional Rent payable by the Lessee pursuant to Section 5.3 of the Lease.
(40) "responsible officer" when used with respect to the Trustee shall
mean the chairman or vice-chairman of the board of directors, the chairman
or vice-chairman of the executive committee of the board of directors, the
president, any vice president, the secretary, any assistant secretary, the
treasurer, any assistant treasurer, the cashier, any assistant cashier, any
trust officer or assistant trust officer, the controller and any assistant
controller or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.
(41) "Series 1979 Bonds" shall mean the Bonds authorized to be issued
by the Authority under Section 208 of this Indenture for the purpose of
financing a portion of the Cost of the Project.
(42) "State" shall mean the State of North Carolina.
(43) "Tax Regulations" shall mean the applicable regulations under
Section 103 of the Code whether at the time proposed, temporary, final or
otherwise.
(44) "Trustee" shall mean the banking institution at the time serving
as trustee under this Indenture.
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Section 102. RULES OF CONSTRUCTION. (a) Words of the masculine gender shall
be deemed and construed to include correlative words of the feminine and neuter
genders.
(b) Unless the context shall otherwise indicate, the terms "Bond",
"Registered Owner", "Holder", and "person" shall include the plural as well as
the singular number, "person" shall mean any individual, corporation,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
(c) Words importing the redemption or calling for redemption of Bonds
shall not be deemed to refer to or connote the payment of Bonds at their stated
maturity.
(d) The Table of Contents, captions or headings in this Indenture are for
convenience only and in no way define, limit or describe the scope or intent of
any provisions or sections of this Indenture.
(e) All references herein to particular articles or sections are
references to articles or sections of this Indenture unless some other reference
is established.
(f) Any inconsistency between the provisions of the Lease and the
provisions of this Indenture shall be resolved in favor of the provisions of
this Indenture.
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ARTICLE II
Form, Execution, Authentication and
Delivery of Bonds
Section 201. LIMITATION ON ISSUANCE OF BONDS. No Bonds may be issued under
the provisions of this Indenture except in accordance with the provisions of
this Article.
Section 202. FORM OF BONDS. The definitive Bonds shall be issuable as
coupon Bonds in the denomination of $5,000 each, registrable as to both
principal and interest. The Bonds shall be substantially in the form hereinabove
set forth, with such appropriate variations, omissions and insertions as are
permitted or required by this Indenture, and may have endorsed thereon such
legends or text as may be necessary or appropriate to conform to any applicable
rules and regulations of any governmental authority ox any usage or requirement
of law with respect thereto.
Section 203. DETAILS OF THE BONDS; EXECUTION AND PAYMENT. Each coupon Bond,
unless registered, shall bear interest from its date. Bond registered as to both
principal and interest shall bear interest from the interest payment date next
preceding the date on which it was last registered, unless last registered on an
interest payment date, in which case it shall bear interest from such interest
payment date, or, unless last registered prior to the first interest payment
date, in which case it shall bear interest from its date; provided, however,
that, if at the time of last registration of any Bond interest on such Bond is
in default, such Bond shall bear interest from the date to which it has been
paid or, if no interest has been paid, from its date.
The Bonds shall be signed by, or executed with the facsimile signature of,
the Chairman or the Vice Chairman of the Authority, and the official seal of the
Authority shall be impressed, or a facsimile thereof imprinted, thereon and
attested by the Secretary or an Assistant Secretary of the Authority. The
coupons attached to the Bonds shall be substantially in the form hereinabove set
forth and shall bear the facsimile signature of the Chairman or Vice Chairman of
the Authority.
In case any officer of the Authority whose signature or whose facsimile
signature shall appear on any Bonds or coupons shall cease to be such officer
before the delivery of such Bonds, such signature or such facsimile shall
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nevertheless be valid and sufficient for all purposes the same as if he had
remained in office until such delivery, and also any Bond may be signed by such
persons as at the actual time of the execution of such Bond shall be the proper
officers to sign such Bond although at the date of such Bond such persons may
not have been such officers.
The principal of and redemption premium, if any, and interest on the Bonds
shall be payable in any coin or currency of the United States of America which
on the respective dates of payment thereof is legal tender for the payment of
public and private debts. The principal of and redemption premium, if any, and
interest on Bonds (unless registered) shall be payable at the principal
corporate trust offices of the Paying Agents. The principal of and premium, if
any, on all Bonds registered as to both principal and interest shall be payable
at the principal corporate trust office of the Trustee, and payment of the
interest, on each Bond registered as to both principal and interest shall be
made by the Trustee on each interest payment date to the person appearing on the
registration books of the Authority hereinafter provided for as the registered
owner thereof by check mailed to such registered owner at his address as it
appears on such registration books. Payment of the principal of and redemption
premium, if any, on all Bonds shall be made upon the presentation and surrender
of such Bonds as the same shall become due and payable. Payment of the interest
on the Bonds (unless registered) shall be made upon the presentation and
surrender of the coupons representing such interest as the same become due and
payable.
Section 204. AUTHENTICATION OF BONDS. Only such Bonds as shall have
endorsed thereon a certificate of authentication substantially in the form
hereinbefore set forth, duly executed by the Trustee, shall be entitled to any
benefit or security under this Indenture. No Bond, and no coupon appertaining to
any Bond, shall be valid or obligatory for any purpose unless and until such
certificate of authentication shall have been duly executed by the Trustee, and
such certificate of the Trustee upon any such Bond shall be conclusive evidence
that such Bond has been duly authenticated and delivered under this Indenture.
The Trustee's certificate of authentication on any Bond shall be deemed to have
been duly executed if signed by an authorized officer of the Trustee, but it
shall not be necessary that the same officer sign the certificate of
authentication on all of the Bonds that may be issued hereunder at any one time.
Before authenticating or delivering any Bonds the Trustee shall detach and
cancel all matured coupons, if any,
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appertaining thereto, except any coupons which represent unpaid interest.
Section 205. REGISTRATION AND REGISTRATION OF TRANSFER OF BONDS. Title to
any Bond, unless such Bond is registered in the manner hereinafter provided, and
to any interest coupon shall pass by delivery in the same manner as a negotiable
instrument payable to bearer. The Trustee is hereby appointed as Bond Registrar
and as such shall keep books for the registration and for the registration of
transfer of Bonds as provided in this Indenture. Any unregistered Bond may be
registered as to both principal and interest upon presentation thereof to the
Bond Registrar, accompanied by all unmatured coupons and all matured coupons, if
any, not theretofore paid or provided for, and the Bond Registrar shall make
notation of such registration thereon and detach therefrom and retain in its
custody all such coupons. The transfer of any Bond registered as to both
principal and interest may thereafter be registered only upon an assignment duly
executed by the registered owner or his attorney or legal representative in such
form as shall be satisfactory to the Bond Registrar, such registration of
transfer to be made on such books and endorsed on the Bond by the Bond
Registrar. No charge shall be made to any Bondholder for the privilege of
registration and registration of transfer hereinabove granted, but any
Bondholder requesting any such registration or registration of transfer shall
pay any tax or other governmental charge required to be paid with respect
thereto. The Bond Registrar shall not be required to register the transfer of
any Bond registered as to both principal and interest (i) during the period of
15 days next preceding any interest payment date on such Bond or (ii) after such
Bond shall have been selected for redemption. No Bond registered as to principal
and interest shall thereafter be discharged from registration except as provided
in Section 207 of this Article.
Section 206. CONVERSION AND RECONVERSION OF BONDS. Any Bond registered as
to both principal and interest may be reconverted into a coupon bond upon
presentation thereof to the Bond Registrar, together with an instrument
requesting such reconversion duly executed by the registered owner or his
attorney or legal representative and in such form as shall be satisfactory to
the Bond Registrar. Upon any such presentation the Bond Registrar shall reattach
to such Bond the coupons representing the interest to become due thereafter on
the Bond to the date of maturity and the interest then due and unpaid, if any,
and shall make notation thereon that the Bond is payable to bearer.
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Upon every reconversion of Bonds under the provisions of this Indenture,
the Bond Registrar shall require the payment of any tax or other governmental
charge required to be paid with respect to such reconversion to be made by the
Bondholder requesting such reconversion. The Bond Registrar shall not be
required to reconvert any Bond under the provisions of this Section during the
period of 15 days next preceding any interest payment date on such Bond or after
such Bond shall have been selected for redemption.
Section 207. OWNERSHIP OF BONDS. As to any Bond registered as to both
principal and interest, the person in whose name the same shall be registered
shall be deemed and regarded as the absolute owner thereof for all purposes, and
payment of or on account of the principal of and redemption premium, if any, and
interest on any such Bond shall be made only to or upon the order of the
registered owner thereof or his registered assigns. All such payments shall be
valid and effectual to satisfy and discharge the liability upon such Bond,
including the interest thereon, to the extent of the sum or sums so paid. The
Authority, the Trustee, the Bond Registrar, any Paying Agent and the Company may
deem and treat the bearer of any Bond which shall not at the time be registered
as to both principal and interest, and the bearer of any coupon appertaining to
any Bond, as the absolute owner of such Bond or coupon, as the case may be,
whether such Bond or coupon shall be overdue or not, for the purpose of
receiving payment thereof and for all other purposes whatsoever. The Authority,
the Trustee, the Bond Registrar, any Paying Agent and the Company shall not be
affected by any notice to the contrary.
Section 208. AUTHORIZATION OF THE SERIES 1979 BONDS. There shall be
initially issued under and secured by this Indenture the Series 1979 Bonds of
the Authority, in the aggregate principal amount of Two Million Dollars
($2,000,000), for the purpose of providing funds for paying a portion of the
Cost of the Project. The Bonds shall be designated "Industrial Revenue Bonds
(Hunt Manufacturing Co. Project), Series 1979", shall be dated as of the 1st day
of June, 1979, and shall be stated to mature June 1, 1999 (subject to the right
of prior redemption as hereinafter provided) and shall bear interest at the rate
of seven and one-half percent (7 1/2%) per annum, payable semi-annually on June
1 and December 1 of each year until paid, the first payment of interest being
due December 1, 1979.
The Series 1979 Bonds shall be executed substantially in the forms and
manner hereinabove set forth and delivered
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to the Trustee for authentication, but prior to or simultaneously with the
authentication and delivery of the Series 1979 Bonds by the Trustee there shall
be filed with the Trustee the following:
(a) A copy, certified by the Secretary or an Assistant Secretary of
the Authority, of a resolution or resolutions authorizing the issuance of
the Series 1979 Bonds, designating the Paying Agent or Agents for the
Series 1979 Bonds, awarding the Series 1979 Bonds and directing the
authentication and delivery of the Series 1979 Bonds to or upon the order
of the purchasers therein named upon payment of the purchase price therein
set forth.
(b) An executed counterpart of the Lease.
(c) An opinion of Counsel for the Authority, which may be bond counsel
to the Authority, stating that the signer is of the opinion that the
execution and delivery of the Lease have been duly authorized by the
Authority, that the Lease is in the form so authorized and has been duly
executed by the Authority and that, assuming proper authorization and the
execution of the Lease by the Company, the Lease is valid and binding in
accordance with its terms.
(d) An opinion of Counsel for the Company stating that the signer is
of the opinion that the execution and delivery of the Lease have been duly
authorized by the Company, that the Lease is in the form so authorized and
has been duly executed by the Company and that assuming proper
authorization and execution of the Lease by the Authority, the Lease is
valid and binding obligation of the Company.
(e) An executed counterpart of the Guaranty.
(f) An opinion of counsel for the Guarantor stating that the signer is
of the opinion that the execution and delivery of the Guaranty have been
duly authorized by the Guarantor, that the Guaranty is in the form so
authorized and has been duly executed by the Guarantor, and that the
Guaranty is valid, binding and enforceable
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in accordance with its terms, subject to any applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws and subject TO
the further qualification that the availability of specific enforcement
remedies may be subject to the discretion of the courts.
(g) An opinion of Counsel admitted to practice law in the State of
North Carolina stating that the signer is of the opinion that copies of
such instruments and financing statements (described in such opinion) as
are necessary, have been recorded and filed in the manner and places
required by North Carolina law with the effect that the lien of this
Indenture has been perfected and protected and (i) constitutes as to the
Trust Estate a valid first 1ien of record and (ii) creates as to the Leased
Equipment and to the rights of the Authority under the Lease assigned under
this In denture, valid security interests in the Leased Equipment and such
rights, respectively, in any case, subject to no equal or prior liens
except for Permitted Encumbrances.
(h) Evidence satisfactory to the Trustee that the insurance policies
required by Sections 7.1 and 7.2 of the Lease have been obtained and are in
effect.
(i) An opinion of counsel for the Authority, which may be bond counsel
to the Authority, stating that the signer is of the opinion that the
issuance of the Series 1979 Bonds and the execution of this Indenture have
been duly and validly authorized, that all conditions precedent to the
delivery of the Series 1979 Bonds have been fulfilled and that the Series
1979 Bonds and this Indenture are valid and binding in accordance with
their terms.
When the documents mentioned in clauses (a) through (i) of this Section
shall have been filed with the Trustee and when the Series 1979 Bonds shall have
been executed as required by this Indenture, the Trustee shall authenticate the
Series 1979 Bonds and deliver them at one time to or upon the order of the
purchasers named in the resolution or resolutions mentioned in clause (a) of
this Section but only upon payment to the Trustee for the account of the
Authority of the purchase price of the Series 1979 Bonds. The Trustee shall be
entitled to rely conclusively upon such resolution or resolutions as to the
names of the purchasers and the amount of such purchase price.
Simultaneously with the delivery of the Series 1979 Bonds, the Trustee
shall apply the proceeds (excluding accrued interest) of the Series 1979 Bonds
to the credit of the Acquisition Fund.
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Section 209. ADDITIONAL BONDS. Bonds of the Authority, in addition to the
Series 1979 Bonds, may be issued under and secured by this Indenture at one time
or from time to time subject to the conditions hereinafter provided in this
section, for the purpose of providing funds for financing (i) all or any portion
of the Cost of the Project to the extent that the proceeds of the Series 1979
Bonds and any other available funds in the Acquisition Fund are insufficient
therefor or (ii) for the purpose of paying all or any part of the Cost of any
Improvements or (iii) for any combination of such purposes. Before any
Additional Bonds shall be issued, the Authority shall adopt a resolution
authorizing the issuance of such Bonds, fixing the amount thereof and describing
in brief and general terms the purpose or purposes for which such Additional
Bonds are being issued. Such Additional Bonds shall have the same designation,
except for an identifying series letter, year or number, as the Series 1979
Bonds and shall be dated, shall be stated to mature on such day in such year or
years, shall bear interest at such rate or rates not exceeding the maximum rate
permitted by law, and shall have such sinking fund redemption requirements, if
any, and may be made redeemable at such times and prices (subject to the
provisions of Article III of this Indenture), all as may be provided by the
resolution or resolutions authorizing the issuance of or awarding such
Additional Bonds or by a supplement to this Indenture. Except as to any
differences in the rate or rates of interest or the provisions for redemption,
such Additional Bonds shall be on a parity with and shall be entitled to the
same benefit and security of this Indenture as the Series 1979 Bonds.
Such Additional Bonds shall be executed substantially in the form and
manner hereinabove set forth and shall be deposited with the Trustee for
authentication, but on or before the date such Additional Bonds shall be
authenticated and delivered by the Trustee, there shall be filed with the
Trustee the following:
(a) A copy, certified by the Secretary or an Assistant Secretary of
the Authority, of the resolution or resolutions adopted by the Authority
authorizing the issuance, and stating the purpose, of such Additional Bonds
in the amount specified therein, designating the Paying Agent or Agents for
such Additional Bonds, awarding such Additional Bonds and directing the
authentication and delivery of such Additional Bonds to or upon the order
of the purchasers therein named upon payment of the purchase price therein
set forth.
(b) An executed counterpart of any supplement or amendment to the
Lease executed and delivered in accordance with Article XII hereof.
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(c) Opinions of Counsel for the Authority, which may be bond counsel
to the Authority, and Counsel for the Company with respect to any
supplement or amendment to the Lease of similar tenor as the opinions
furnished by each such Counsel WITH RESPECT TO THE LEASE PURSUANT to
clauses (c) and (d) of Section 208 of this Article or to the effect that no
such supplement or amendment is required.
(d) An executed counterpart of any supplement or amendment to the
Guaranty executed and delivered in accordance with Article XII hereof.
(e) An opinion of Counsel for the Guarantor with respect to any
supplement or amendment to the Guaranty of similar tenor as the opinion
furnished by each such Counsel with respect to the Guaranty pursuant to
clause (f) of Section 208 of this Article or to the effect that no such
supplement or amendment is required.
(f) An opinion of Counsel admitted to practice law in the State of
North Carolina stating that the signer is of the opinion that copies of
such instruments and financing statements (described in such opinion) as
are necessary, have been recorded and filed in the manner and places
required by North Carolina law with the effect that the lien of this
Indenture has been perfected and protected and (i) constitutes as to the
Trust Estate a valid first lien of record and (ii) creates as to the Leased
Equipment and to the rights of the Authority under the Lease assigned under
this Indenture, valid security interests in the Leased Equipment and such
rights, respectively, in any case, subject to no equal or prior liens
except for Permitted Encumbrances (as defined in the Lease) and (iii)
creates as to improvements, additions and renovations and to the rights of
the Authority under the Lease assigned under this Indenture, a valid first
lien of record or valid security interests in the improvements, additions
and renovations and such rights, respectively, in any case subject to no
equal or prior liens except for Permitted Encumbrances (as defined in the
Lease).
(g) An opinion of Counsel for the Authority, who is admitted to
practice law in the State of North Carolina, that with respect to any
improvements, additions or renovations that, title insurance obtained in
accordance with Section 7.1 of the Lease remains effective.
(h) An opinion of Counsel for the Authority, which may be bond counsel
to the Authority, with respect to any supplement or amendment to this
Indenture of similar tenor
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as the opinion furnished by such Counsel with respect to this Indenture
pursuant to clause (i) of Section 208 of this Article or to the effect that
no such supplement or amendment is required.
(i) Opinions of counsel for the Authority, which may be bond counsel
to the Authority, to the effect that the execution, issuance and delivery
of such Additional Bonds have been duly and validly authorized by the
Authority, that such Additional Bonds are in substantially the form so
authorized and have been duly executed, issued and delivered, that all
conditions precedent to the delivery of such Additional Bonds have been
fulfilled and that the Additional Bonds are valid and binding obligations
of the Authority in accordance with their terms.
When the documents mentioned above in this Section shall have been filed
with the Trustee and when the Additional Bonds shall have been executed as
required by this Indenture, the Trustee shall authenticate such Additional Bonds
and deliver them to or upon the order of the purchasers named in the resolution
or resolutions mentioned in clause (a) of this Section, but only upon payment to
the Trustee for the account of the Authority of the purchase price of such
Additional Bonds. The Trustee shall be entitled to rely conclusively upon such
resolution or resolutions as to the names of the purchasers of such Additional
Bonds and the amount of such purchase price.
The proceeds (excluding accrued interest) of all Additional Bonds shall be
deposited by the Trustee to the credit of the Acquisition Fund simultaneously
with the delivery of said Bonds.
Section 210. REFUNDING BONDS. Bonds of the Authority in addition to the
Series 1979 Bonds and any Additional Bonds issued under the provisions of
Sections 208 and 209, respectively, of this Article, may be issued under and
secured by this Indenture at one time or from time to time, subject to the
conditions hereinafter provided in this Section, for the purpose of providing
funds for refunding any or all of the Bonds then outstanding of any series,
including the payment of any redemption premium thereon, interest to accrue to
the selected redemption date, any serial maturities or any sinking fund
redemption requirements to become due prior to the selected redemption date and
any expenses in connection with such refunding. Before any Refunding
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Bonds shall be issued, the Authority shall adopt a resolution authorizing the
issuance of such Refunding Bonds, fixing the amount thereof, describing the
bonds to be refunded and estimating the costs of the refunding. Such Refunding
Bonds shall have the same designation as the Series 1979 Bonds except for an
identifying series letter, year or number and the addition of the word
"Refunding" and shall be dated, shall be stated to mature on such day in such
year or years, shall bear interest at such rate or rates not exceeding the
maximum rate permitted by law, and shall have such sinking fund redemption
requirements, if any, and may be made redeemable at such times and prices
(subject to the provisions of Article III of this Indenture), all as may be
provided by the resolution or resolutions authorizing the issuance of or
awarding such Refunding Bonds or by a supplement to this Indenture. Except as to
any differences in the maturities thereof or the rate or rates of interest or
the provisions for redemption, such Refunding Bonds shall be on a parity with
and shall be entitled to the same benefit and security of this Indenture as the
Series 1979 Bonds.
Such Refunding Bonds shall be executed substantially in the form and manner
hereinabove set forth and shall be deposited with the Trustee for
authentication, but on or before the date such Refunding Bonds shall be
authenticated and delivered by the Trustee, there shall be filed with the
Trustee documents, relating to the Refunding Bonds, similar to those mentioned
in clauses (a) through (f) and clauses (h) and (i) of Section 209 of this
Article and such additional documents as shall be required by the Trustee to
evidence that provision has been duly made in accordance with the provisions of
this Indenture for the payment at maturity or redemption date, as the case may
be, of all of the Bonds to be refunded.
When the documents mentioned above in this Section, the requirements for
which are incorporated by reference in the preceding paragraph, shall have been
filed with the Trustee and when the Refunding Bonds shall have been executed as
required by this Indenture, the Trustee shall authenticate such Refunding Bonds
and deliver them to or upon the order of the purchasers named in the resolution
or resolutions mentioned in said clause (a), but only upon payment to the
Trustee for the account of the Authority of the purchase price of such Refunding
Bonds. The Trustee shall be entitled to rely conclusively upon such resolution
or resolutions as to the names of the purchasers of such Refunding Bonds and the
amount of such purchase price.
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The proceeds (excluding accrued interest) of the Refunding Bonds shall be
deposited by the Trustee, after payment of all expenses incident to such
financing, which expenses shall be set forth by general classification in the
resolution authorizing such Bonds, to the credit of a special fund appropriately
designated to be held in trust for the sole and exclusive purpose of paying the
principal of and redemption premium, if any, and interest on the Bonds to be
refunded. Any balance of such proceeds shall be deposited to the credit of the
Bond Fund.
Section 211. APPLICATION OF ACCRUED INTEREST. All moneys received as
accrued interest on Bonds issued under the provisions of Sections 208, 209 and
210 of this Indenture shall be deposited to the credit of the Bond Fund.
Section 212. TEMPORARY BONDS. Until definitive Bonds are ready for
delivery, there may be executed, and upon request of the Authority the Trustee
shall authenticate and deliver, in lieu of definitive Bonds and subject to the
same limitations and conditions, temporary printed, engraved or lithographed
registered Bonds without coupons, in the denomination of $5,000 or any integral
multiple thereof, substantially of the tenor hereinabove set forth for
definitive Bonds and with such omissions, insertions and variations as may be
appropriate.
If temporary Bonds shall be issued, the Authority shall cause the
definitive Bonds to be prepared and to be executed and deposited with the
Trustee, and the Trustee, upon presentation to it at its principal corporate
trust office of any temporary Bond shall cancel the same and authenticate and
deliver in exchange therefor at the place designated by the holder, without
charge to the holder thereof, a definitive Bond or Bonds of an equal aggregate
principal amount, of the same series and maturity and bearing interest at the
same rate. Until so exchanged the temporary Bonds shall in all respects be
entitled to the same benefit and security of this Indenture as the definitive
Bonds to be issued and authenticated hereunder.
Section 213. REPLACEMENT OF MUTILATED, DESTROYED, LOST OR STOLEN BONDS. In
case any Bond secured hereby shall become mutilated or be destroyed, lost or
stolen, the Authority shall cause to be executed, and the Trustee shall
authenticate and deliver, a new Bond of like tenor in exchange and substitution
for and upon the cancellation
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of such mutilated Bond and its interest coupons, if any, or in lieu of and in
substitution for such Bond and its coupons, if any, destroyed, lost or stolen,
upon the Holder's paying the reasonable expenses and charges of the Authority
and the Trustee in connection therewith and, in the case of a Bond destroyed,
lost or stolen, his filing with the Trustee evidence satisfactory to it and to
the Authority that such Bond or coupons was destroyed, lost or stolen, and of
his ownership thereof, and his furnishing to the Authority and the Trustee
indemnity satisfactory to each of them; provided, that if such holder shall be a
recognized financial institution, the agreement of such institution to indemnify
the Authority and the Trustee, in a form satisfactory to them, shall constitute
satisfactory indemnity under this Section.
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ARTICLE III
REDEMPTION OF BONDS
SECTION 301. REDEMPTION OF BONDS. (a) The Bonds issued under the provisions
of this Indenture shall not be subject to prior redemption except in accordance
with the provisions of this Article III.
(b) In the event that the Authority and the Trustee shall receive written
notice pursuant to Section 11.1(c) of the Lease that the Company shall have
elected to prepay the entire unpaid balance of the Basic Rent pursuant to
subsection (a) of Section 11.1 of the Lease and that all of the Bonds are to be
redeemed, the Bonds shall be called for redemption in whole on the date selected
by the Company, but in no event more than 180 days after the date of the
adoption of the resolution of the Board of Directors of the Company referred to
in Section 11.1(a) of the Lease, at the principal amount thereof plus interest
accrued to the date fixed for redemption and without premium.
(c) The Series 1979 Bonds outstanding on the date of the occurrence of a
Determination of Taxability shall be called for redemption in whole on the date
selected by the Company, but not more than 90 days following the date of the
occurrence of the Determination of Taxability, at the principal amount thereof
plus accrued interest to the date fixed for redemption and without premium.
If there shall have occurred a Determination of Taxability, certified or
authenticated to the satisfaction of the Trustee, and the Company shall fail to
give notice thereof within 30 days or shall fail to select a date within 90 days
of the date of the occurrence of the Determination of Taxability for the
redemption of the Bonds as provided in Section 11.2 of the Lease and this
Section 301(c), the Trustee shall call all the outstanding Series 1979 Bonds for
redemption on the date 90 days following the date of the occurrence of the
Determination of Taxability.
(d) In the event that the Authority and the Trustee shall receive written
notice pursuant to Section 11.1(c) of the Lease that the Company shall have
elected to prepay all or a portion of the unpaid balance of the Basic Rent
pursuant to subsection (b) of Section 11.1 of the Lease and
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that all or a portion of such prepayment is to be applied to the redemption of
all or a portion of the Series 1979 Bonds, the Series 1979 Bonds shall be called
for redemption, not earlier than June 1, 1989, in whole on any date or in part
on any interest payment date, selected by the Lessee at the applicable
redemption price (expressed as a percentage of principal amount) set forth in
the table below plus accrued interest to the redemption date:
Redemption Redemption
Periods Prices
- ------- ------
June 1, 1989 to May 31, 1990 103%
June 1, 1990 to May 31, 1991 102 1/2%
June 1, 1991 to May 31, 1992 102%
June 1, 1992 to May 31, 1993 101 1/2%
June 1, 1993 to May 31, 1994 101%
June 1, 1994 to May 31, 1995 100 1/2%
June 1, 1995 and thereafter 100%
(e) In addition, Series 1979 Bonds shall be called for redemption, pursuant
to the sinking fund redemption requirements of, and in the principal amounts
specified in, Section 302 hereof, on June 1, 1995 and on each June 1 thereafter
to and including June 1, 1998 at the principal amount thereof plus interest
accrued thereon plus interest accrued thereon to the redemption date, and
without redemption premium.
(f) If the Authority shall authorize the issuance of any series of
Additional Bonds or Refunding Bonds, such Bonds shall have such sinking fund
redemption requirements and shall be subject to redemption at the times and
prices fixed by the resolution mentioned in clause (a) of Section 209 or the
resolution similar thereto and referred to in Section 210, as the case may be,
or, in either case by a supplement to this Indenture entered into in accordance
with Article XI of this Indenture.
(g) If less than all of the Bonds of any maturity of a series shall be
called for redemption, the particular Bonds to be redeemed shall be selected by
the Trustee, by lot or in such other manner as the Trustee in its discretion
may determine to be fair and appropriate, from the maturities, and in the
principal amounts, designated to the Trustee by the Company.
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Section 302. SINKING FUND. As and for a sinking fund for the redemption of
the Series 1979 Bonds, such Bonds shall be called for redemption on June 1,
1995, and on each succeeding June 1 to and including June 1, 1998, in the
following principal amounts:
June 1 Principal June 1 Principal
of the year Amount of the year Amount
- ----------- ------ ----------- ------
1995 $350,000 1997 $400,000
1996 370,000 1998 425,000
On or before the forty-fifth day prior to each of the sinking fund
redemption dates set forth above, the Trustee shall proceed to select for
redemption from all the Series 1979 Bonds outstanding a principal amount of such
Bonds equal to the aggregate principal amount of such Bonds to be redeemed for
the required sinking fund redemption, and shall call such bonds for the
redemption on the next June 1 and give notice of such call in accordance with
Section 303 hereof.
On or before the fiftieth day next preceding each of the sinking fund
redemption dates set forth above, the Company shall furnish the Trustee with its
certificate (i) specifying the aggregate principal amount, if any, of Series
1979 Bonds which prior to said date have been acquired, redeemed (otherwise than
through the operation of the sinking fund), purchased by the Trustee and
cancelled or delivered by the Authority or the Company to the Trustee for
cancellation or which are otherwise deemed to have been paid in accordance with
Article XIII hereof, (ii) specifying the aggregate principal amount of such
Series 1979 Bonds not theretofore applied as a credit against any sinking fund
redemption requirement and (iii) specifying the amount, if any, of such Series
1979 Bonds which the Trustee shall apply as a credit in respect of the
Authority's sinking fund redemption requirement next succeeding the date of such
certificate. Each Series 1979 Bond so to be credited shall be credited by the
Trustee at 100$ of the principal amount thereof, and any excess over the amount
required for such current sinking fund redemption requirement may be credited
against such future sinking fund redemption requirements as the Company may
specify.
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Section 303. NOTICE OF REDEMPTION. At least 30 days before the redemption
date of any Bonds the Trustee shall cause a notice of any such redemption,
signed by the Issuer, (a) to be published once in a daily Newspaper, or a
financial journal, published or circulated in the Borough of Manhattan, City and
State of New York, and (b) to be mailed by first-class mail, postage prepaid, to
all Bondholders of Record whose Bonds shall have been called for redemption,
but, if notice shall have been published as provided in clause (a), failure so
to mail any such notice shall not affect the validity of the proceedings for
such redemption. The Trustee shall not, however, be subject to any liability to
any Bondholder by reason of its failure to mail any such notice. Each such
notice shall set forth the date fixed for redemption, the redemption price to be
paid and, if less than all of the Bonds then outstanding shall be called for
redemption, the distinctive series, numbers, years and letters, if any, of such
Bonds to be redeemed and, in the case of registered Bonds without coupons to be
redeemed in part only, the portion of the principal amount thereof to be
redeemed.
In the event that all the Bonds then outstanding shall be registered as to
both principal and interest, the Trustee shall be required to give notice only
as provided in clause (b) above.
Section 304. EFFECT OF CALLING FOR REDEMPTION. On the date so designated
for redemption, notice having been published in the manner and under the
conditions hereinabove provided, the Bonds so called for redemption shall become
and be due and payable at the redemption price provided for redemption of such
Bonds on such date and, if moneys for payment of the redemption price shall be
held by the Trustee or any Paying Agent in trust for the holders of the Bonds to
be redeemed, all as provided in this Indenture, interest on the Bonds called for
redemption shall cease to accrue, the coupons for interest on any Bonds not
registered as to both principal and interest so called for redemption payable
subsequent to the redemption date shall be void, such Bonds shall cease to be
entitled to any benefit or security under this Indenture, and the Holders or
Registered Owners of such Bonds shall have no rights in respect thereof except
to receive payment of the redemption price thereof.
Section 305. UNPAID COUPONS. All unpaid coupons which appertaining to Bonds
not registered as to both principal and interest so called for redemption and
which shall have become due and payable on or prior to the date of redemption
designated in such notice shall continue to be payable to the bearers severally
and respectively upon the presentation and surrender of such coupons.
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ARTICLE IV
ACQUISITION FUND
SECTION 401. CREATION OF AND DEPOSITS TO THE ACQUISITION FUND. A special
fund is hereby created and designated "The Iredell County Industrial Facilities
and Pollution Control Financing Authority Industrial Revenue Bonds (Hunt
Manufacturing Co. Project) Acquisition Fund" (herein called the "Acquisition
Fund") to the credit of which such deposits shall be made as are required by the
provisions of this Indenture. Any moneys received by the Authority or by the
Trustee as trustee under this Indenture from any other source for payment of the
Cost of the Project or any Improvements shall be deposited to the credit of the
Acquisition Fund.
The moneys in the Acquisition Fund shall be held by the Trustee in trust
and, subject to the provisions of Sections 405, 406 and 602 of this Indenture,
shall be applied to the payment of the Cost of the Project and of any
Improvements and, pending such application, shall be subject to a lien and
charge in favor of the Holders of the Bonds issued and outstanding under this
Indenture and for the further security of such Holders until paid out or
transferred as herein provided.
Section 402. PAYMENTS FROM THE ACQUISITION FUND. Payment of the Cost of the
Project and of any Improvements shall be made from the Acquisition Fund. All
payments from the Acquisition Fund shall be subject to the provisions and
restrictions set forth in this Article and the Authority covenants that it will
not cause or permit to be paid from the Acquisition Fund any sums except in
accordance with such provisions and restrictions. Such payments shall be made by
the Trustee upon receipt of
(a) A requisition and attached certificate, signed by the Company
Representative and approved by the Authority Representative, stating to
whom the payment is to be made, the general purpose for which the
obligation to be paid was incurred and that:
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(1) the obligation stated on the requisition has been incurred by
the Authority or the Company in or about the Acquisition of the
Project or the Improvements, and that each item is a proper charge
against the Cost of Acquisition of the project or the improvements and
that the obligation has not been the basis for a prior requisition
which has been paid;
(2) no written notice of any lien, right to lien or attachment
upon, or claim affecting the right to receive payment of, any of the
moneys payable under such requisition to any of the persons, firms or
corporations named therein has been received, or if any notice of any
such lien, attachment or claim has been received, such lien,
attachment or claim has been released or discharged or will be
released or discharged upon payment of the requisition or, if
contested, bond has been made by the Company to the satisfaction of
the Trustee;
(3) such requisition contains no items representing payment on
account of any retained percentages entitled to be retained at the
date of the certificate; and
(4) the payment of such requisition will not result in less than
substantially all (not less than 90%) of the proceeds of the series of
the Bonds expended under such requisition and all prior requisitions
being considered as having been used for the acquisition,
construction, reconstruction or improvement of land or property of a
character subject to the allowance for depreciation within the reaming
of Section 103(b)(6)(A) of the Code.
(b) In addition, if any requisition includes an item for payment for
labor or to contractors, builders or materialmen, a certificate attached to
the requisition signed by the Company Representative, stating that (1)
obligations as stated on to requisition have been properly incurred, (2)
such work was actually performed or such materials or supplies were
actually furnished or installed in or about the Project or the
Improvements and
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are a proper charge against the Cost of Acquisition of the Project or the
Improvements, (3) if contested, bond has been made by the Company to the
satisfaction of the Trustee and (4) either such materials or supplies are
not subject to any lien or security interest or any such lien or security
interest will be released or discharged upon payment of the requisition.
(c) The Company shall furnish evidence satisfactory to the Trustee
that it has filed an amendment to all financing statements satisfying the
requirements of Section 9-402(5) of the Uniform Commercial Code of North
Carolina adding to the description of the Leased Equipment and Leased
Property any items, not previously included, which are acquired as part of
the Cost of Acquisition of the Project or the Improvements.
In the event that, after reasonable request made to the Authority
Representative by the Company, the Authority Representative fails or refuses to
execute or approve a requisition or certificate required by this Section 402 the
Company Representative may sign and submit to the Trustee such requisition or
certificate without obtaining the execution or approval of the Authority
Representative, provided that (i) such requisition or certificate states that
the Company has made a reasonable request for such execution or approval from
the Authority Representative and the Authority Representative has failed or
refused to comply and (ii) the Company furnishes to the Trustee indemnity
satisfactory to it in an amount not less than the amount of the requested
payment.
The Trustee is authorized and directed to apply the moneys in the
Acquisition Fund in accordance herewith but only upon receipt of the
requisitions required by this Section 402, duly executed by the persons and in
the manner provided for herein.
Section 403. TRUSTEE MAY RELY ON REQUISITIONS. All requisitions in the form
provided by Section 402 hereof and all other statements, orders, certifications
and approvals received by the Trustee, as required by this Article as conditions
of payment from the Acquisition Fund, may be conclusively relied upon by the
Trustee, and shall be retained by the Trustee, subject at all reasonable times
to examination by the Company (so long as the Lease shall remain in force and
effect), the Authority, any Bondholder and the agents and representatives
thereof.
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SECTION 404. STATUS REPORT. Within 45 days after the Completion Date of the
Project and the completion date of any Improvements, the Trustee shall, at the
expense of the Company, make a report covering all receipts and moneys then on
deposit with or in the name of the Authority or the Trustee, and any security
held therefor, any investments thereof and all transfers and disbursements made,
pursuant to the provisions of this Article IV of the Indenture. Each such report
shall state that the report has been prepared in conformity with the provisions
of this Indenture, and copies of each such report shall be filed with the
Trustee, the Company and the Authority and mailed by the Trustee to all
Bondholders of Record.
Section 405. COMPLETION DATE. The establishment of the Completion Date and
the disposition of moneys then held for the credit of the Acquisition Fund shall
be in accordance with Sections 4.3 and 4.4 of the Lease, respectively.
Section 406. TRANSFERS TO THE BOND FUND. In the event that the Company
should elect or be required to prepay Basic Rent pursuant to Section 11.1 or
Section 11.2 of the Lease or that the Trustee shall declare all of the Bonds
then outstanding to be due and payable pursuant to Section 802 hereof, the
Trustee shall, without further authorization, forthwith transfer any balance
remaining in the Acquisition Fund to the Bond Fund.
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ARTICLE V
Bond Fund
Section 501. CREATION OF AND DEPOSITS TO THE BOND FUND. A special fund is
hereby created and designated "The Iredell County Industrial Facilities and
Pollution Control. Financing Authority Industrial Revenue Bonds (Hunt
Manufacturing Co. Project) Bond Fund" (herein sometimes called the "Bond Fund").
The moneys in the Bond Fund shall be held by the Trustee in trust, and, pending
their application in accordance with the provisions of this Article V, shall be
subject to a lien and charge in favor of the Holders of the Bonds issued and
outstanding under this Indenture and for the further security of such Holders
until paid out or transferred as herein provided.
The Authority covenants that it will cause to be deposited, and the Trustee
agrees to deposit, to the credit of Bond Fund the following:
(a) any accrued interest received on the Bonds as provided in Section
211 hereof;
(b) any amount in the Acquisition Fund to be transferred to the Bond
Fund in accordance with the provisions of Section 406 hereof;
(c) the installments of Basic Rent paid by the Lessee to the Trustee
pursuant to Section 5.3(a) or prepaid pursuant to Section 6.3(b), 6.5, 7.7,
11.1 or 11.2 of the Lease;
(d) payments made by the Guarantor to the Trustee pursuant to Section
2.1 of the Guaranty;
(e) proceeds of any sale of the Trust Estate or the Leased Equipment
pursuant to Section 804 hereof;
(f) all other moneys received by the Trustee which are required, or
are accompanied by directions from the Lessee or the Authority that such
moneys are, to be paid into the Bond Fund.
Section 502. USE OF MONEYS IN THE BOND FUND. The Trustee shall, on or
before each interest payment date, withdraw from the Bond Fund and (i) remit by
mail to each Registered Owner of Bonds the amounts required for paying
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the interest on such Bonds as such interest becomes due and payable, and (ii)
set aside or deposit in trust with the Paying Agents sufficient moneys for
paying the interest on Bonds not registered as to both principal and interest
and the principal of and redemption premium, if any, on all the Bonds as the
same become due, whether at maturity or by redemption or declaration or
otherwise.
Upon receipt of a written notice from the Company pursuant to Section
11.1(c) of the Lease, and, in the case of a directed purchase of Bonds, upon the
deposit of cash or Government Obligations in the Bond Fund sufficient, together
with other amounts available therefor in the Bond Fund, to make the directed
purchase of Bonds, the Authority and the Trustee covenant and agree to take and
cause to be taken the necessary steps to redeem or purchase such principal
amount of Bonds as specified by the Company in such written notice; provided,
however, that any moneys in the Bond Fund may be used on direction of the
Company to redeem a part of the Bonds outstanding and then redeemable or to
purchase Bonds for cancellation only so long as the Lessee is not in default
with respect to any payments of Basic Rent required pursuant to Section 5.3(a)
of the Lease and to the extent said moneys are in excess of the amount required
for payment of the Bonds theretofore matured or called for redemption and
interest accrued and payable in respect of outstanding Bonds.
Section 503. MONEYS WITHDRAWN FROM BOND FUND. All moneys which the Trustee
shall have withdrawn from the Bond Fund or shall have received from any other
source and set aside for the purpose of paying any of the Bonds hereby secured,
either at the maturity thereof or upon call for redemption, shall be held in
trust for the respective Holders of such Bonds.
Section 504. NON-PRESENTMENT OF BONDS OR COUPONS. Any moneys deposited with
the Trustee or then held by the Trustee in trust for the payment of the
principal of and premium, if any, or interest on any Bond and remaining
unclaimed for two years after such principal and premium, if any, or interest
has become due and payable shall be paid to the Company or to such officer,
board or body as may then be entitled by law to receive the same. Thereafter,
the Holders of such Bonds shall look only to the Company or to such officer,
board or body, as the case may be, for payment and then only to the extent of
the amount so received without any interest thereon, and the Trustee shall have
no responsibility with respect to such moneys.
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Section 505. CANCELLATION OF BONDS UPON PAYMENT. All Bonds paid, redeemed
or purchased, either at or before maturity shall be cancelled upon payment,
redemption or purchase of such Bonds. All Bonds cancelled under any of the
provisions of this Indenture shall be cremated or otherwise destroyed by
shredding by the Trustee. The Trustee shall execute a certificate in triplicate
describing the Bonds so cremated or shredded, one executed certificate shall be
filed with the Authority, one executed certificate shall be filed with the
Company and one executed certificate shall be retained by the Trustee.
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ARTICLE VI
Depositaries of Moneys, Security for Deposits
And Investment of Funds
Section 601. SECURITY FOR DEPOSITS. All moneys deposited with the Trustee
under the provisions of this Indenture, or the Lease or the Guaranty shall be
held in trust and applied only in accordance with the provisions of this
Indenture, the Lease and the Guaranty and shall not be subject to lien or
attachment by any creditor of the Authority, the Trustee, the Company or the
Guarantor.
Section 602. INVESTMENT OF MONEYS. At the request and the direction of the
Company Representative, moneys held for the credit of the Acquisition Fund and
the Bond Fund shall be invested and reinvested by the Trustee in (i) Government
Obligations and (ii) certificates of deposit, fully secured by Government
obligations, of banks or trust companies, including the Trustee, organized under
the laws of the United States of America or any State thereof, and having
combined capital and surplus of at least $25, 000, 000, which shall mature not
later than the respective dates when the moneys held for the credit of said Fund
are anticipated to be required for the purposes intended.
Obligations so purchased as an investment of moneys in any such Fund shall
be deemed at all times to be a part of such Fund, and the interest accruing
thereon and any profit realized from such investment shall be credited to such
Fund, and any loss resulting from such investment shall be charged to such Fund.
The Trustee shall sell at the best price obtainable or present for redemption
any obligation so purchased whenever it shall be necessary so to do in order to
provide cash to meet any payment or transfer from any such Fund. Neither the
Trustee nor the Authority shall be liable or responsible for any loss resulting
from any such investment.
For the purpose of determining the amount on deposit to the credit of any
such Fund, obligations in which moneys in such Fund have been invested shall be
valued at the lower of cost or market.
If the Company Representative so directs in writing, the Trustee may make
any and all investments permitted by this Section through its own bond or
investment department.
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ARTICLE VII
Particular Covenants and Provisions; Possession,
Use and Partial Release of Trust Estate
Section 701. COVENANT TO PAY BONDS; BONDS LIMITED OBLIGATIONS OF THE
AUTHORITY. The Authority covenants that it will promptly pay the principal of
and redemption premium, if any, and interest on every Bond at the places, on the
dates and in the manner provided herein and in the Bonds according to the true
intent and meaning thereof. Except as in this Indenture otherwise provided, such
principal, redemption premium and interest are payable solely from the payments
of Basic Rent and other revenues and funds derived under the Lease and this
Indenture to the extent provided in this Indenture and from the moneys
receivable by the Trustee under the Guaranty, which payments of Basic Rent,
revenues, funds and moneys are hereby pledged to the payment of the Bonds in the
manner and to the extent hereinabove particularly specified.
Iredell County, North Carolina, shall not in any event be liable for the
payment of the principal of or redemption premium, if any, or interest on the
Bonds, or for the performance of any pledge, mortgage, obligation or agreement
of any kind whatsoever which may be undertaken by the Authority, and neither the
Bonds nor any of the agreements or obligations of the Authority shall be
construed to constitute an indebtedness of Iredell County, North Carolina,
within the meaning of any constitutional or statutory provision whatsoever. The
Bonds and the interest and redemption premium, if any, thereon shall not be
deemed to constitute or to create in any manner a debt, liability or obligation
of the State or of any political subdivision or any agency thereof or a pledge
of the faith and credit of the State or any such political subdivision or any
such agency, but shall be limited obligations of the Authority payable solely
from the revenues and other funds pledged therefor and shall not be payable from
any other assets or funds of the Authority, and neither the faith and credit nor
the taxing power of the State or any political subdivision or any agency thereof
is pledged to the payment of the principal of or the interest or redemption
premium, if any, on the Bonds.
Section 702. INDENTURE SUBORDINATE TO LEASE. This Indenture and the rights
and privileges hereunder of the Trustee and the Holders of the Bonds are speci-
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fically made subject and subordinate to the rights and privileges of the Lessee
set forth in the Lease and particularly, but without limitation, in Article VI
thereof. So long as not otherwise provided in this Indenture or the Lease, the
Lessee shall be suffered and permitted to possess, use and enjoy the Leased
Property and appurtenances so as to carry out its obligations under the Lease.
Whenever the Lessee shall have complied with the provisions and conditions
precedent set forth in Sections 6.3, 6.4 and 6.5 of the Lease, the Trustee shall
release or convey the property or interest therein to be realized or conveyed.
Section 703. COVENANTS TO PERFORM OBLIGATIONS UNDER THIS INDENTURE. The
Authority covenants that it will faithfully perform at all times any and all
covenants, undertakings, stipulations and provisions contained in this
Indenture, in any and every Bond executed, authenticated and delivered hereunder
and in all proceedings of the Authority pertaining thereto and will faithfully
observe and perform at all times any and all covenants, undertakings,
stipulations and provisions of the Lease on its part to be observed or
performed. The Authority covenants that it is duly authorized under the
Constitution and laws of the State, including particularly and without
limitation the Enabling Act, to issue the Bonds authorized hereby and to enter
into this Indenture, to pledge the Basic Rent and other funds derived from the
Lease, the Guaranty and this Indenture in the manner and to the extent herein
set forth; that all action on its part for the issuance of the Bonds issued
hereunder and the execution and delivery of this Indenture has been duly and
effectively taken; and that such Bonds in the hands of the Holders thereof are
and will be valid and enforceable obligations of the Authority according to the
tenor and import thereof.
Section 704. COVENANT TO PERFORM OBLIGATIONS UNDER THE LEASE. Subject to
the provisions of Section 705 of this Article, the Authority covenants and
agrees that it will not suffer, permit or take any action or do anything or fail
to take any action or fail to do anything which may result in the termination or
cancellation of the Lease so long as any Bonds are outstanding; that it will
punctually fulfill its obligations and will require the Lessee to perform
punctually its duties and obligations under the Lease and will otherwise
administer the Lease in accordance with its terms to assure the
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<PAGE>
continued operation, management, repair and maintenance of the Leased Property
by the Lessee and the Lessee's making in full the payments of Basic Rent
thereunder and paying the costs and expenses of operation, management, repair,
maintenance and insurance of the Leased Property in accordance with the terms of
the Lease; that it will not execute or agree to any change, amendment or
modification of or supplement to the Lease except by a supplement or an
amendment duly executed by the Authority and the Lessee with the approval of the
Trustee and upon the further terms and conditions set forth in Article XII of
this Indenture; that it will not agree to any abatement, reduction, abrogation,
waiver, diminution or other modification in any manner or to any extent
whatsoever of the obligation of the Lessee to pay the Basic Rent and to meet its
other obligations as provided in the Lease; and that it will promptly notify the
Trustee in writing of any actual or alleged event of default under or breach of
the Lease, whether by the Lessee or the Authority, and will further notify the
Trustee at least 30 days before the proposed date of effectiveness of any
proposed termination or cancellation of, or supplemental agreement to, the
Lease.
Section 705. TRUSTEE MAY ENFORCE AUTHORITY'S RIGHTS UNDER LEASE. The Lease,
a duly executed counterpart of which has been filed with the Trustee, sets forth
the covenants and obligations of the Authority and the Lessee, including a
provision in Section 13.9 thereof that subsequent to the issuance of the Bonds
and prior to Payment of the Bonds the Lease may not be effectively amended,
changed, modified, altered or terminated (other than as provided therein)
without the concurring written consent of the Trustee and otherwise as provided
in Article XII of this Indenture, and reference is hereby made to the Lease for
a detailed statement of said covenants and obligations of the Lessee under the
Lease, and the Authority agrees that the Trustee, subject to the provisions of
the Lease and this Indenture, reserving certain rights to the Authority and
respecting actions by the Trustee in its name or in the name of the Authority,
may enforce all rights of the Authority and all obligations of the Lessee under
and pursuant to the Lease for and on behalf of the Bondholders whether or not
the Authority is in default hereunder.
Section 706. COVENANT AGAINST ARBITRAGE. The Authority covenants and agrees
that it will not make or permit any use, and directs the Trustee not to make or
permit
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<PAGE>
any use, of the proceeds of the Bonds which would cause the Bonds to be
"arbitrage bonds" within the meaning of Section 103(c) of the Code and the
applicable regulations promulgated from time to time thereunder, and further
covenants that it will observe, and not violate, the requirements of Section
103(c) of the Code and any such applicable regulations to the extent necessary
so that the interest on such Bonds will not cease to be exempt from Federal
income tax by reason of such use of proceeds.
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<PAGE>
ARTICLE VIII
DEFAULT AND REMEDIES
Section 801. DEFAULTS. Each of the following events is hereby declared an
"event of default", that is to say, if
(a) Payment of any installment of interest on any of the Bonds shall
not be made when the same shall become due; or
(b) Payment of the principal of or the redemption premium, if any, on
any of the Bonds shall not be made when the same shall become due, whether
at maturity or by proceedings for redemption or otherwise; or
(c) An order or decree shall be entered, with the consent or
acquiescence of the Authority, appointing a receiver or receivers in
respect of the Basic Rent or other payments subject to the lien of this
Indenture or any part thereof, or if such order or decree, having been
entered without the consent or acquiescence of the Authority, shall not be
vacated or discharged or stayed on appeal within 90 days after the entry
thereof; or
(d) Any proceeding shall be instituted, with the consent or
acquiescence of the Authority, for the purpose of effecting a composition
between the Authority and its creditors or for the purpose of adjusting the
claims of such creditors pursuant to any Federal or state statute now or
hereafter enacted, if the claims of such creditors are under any
circumstances payable from the Basic Rent or other payments subject to the
lien of this Indenture; or
(e) An "event of default" or "default" under the Lease or the Guaranty
shall have occurred; or
(f) The Authority shall default in the due and punctual performance of
any other of the covenants, conditions, agreements and provisions
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contained in the Bonds or in this Indenture on the part of the Authority
to be performed;
provided, however, that no default specified in clause (f) of this Section above
shall constitute an event of default until written notice specifying such
default and requiring the same to be remedied shall have been given to the
Company and the Authority by the Trustee, which may give notice in its
discretion and shall give such notice at the written direction of the Holders of
not less than 25% of the aggregate principal amount of Bonds outstanding, and
the Company and the Authority shall have had 60 days after receipt of such
notice to correct said default and shall not have corrected said default within
the applicable period, and if such a default be such that it can be corrected,
but not within the applicable time period, it shall not constitute an event of
default if corrective action is instituted by the Lessee or the Authority within
the applicable period and diligently pursued until the default is corrected.
Section 802. ACCELERATION. Upon the happening and continuance of any event
of default specified in Section 801 hereof, then and in every such case the
Trustee may, and upon the written direction of the Holders of not less than a
majority in aggregate principal amount of the Bonds then outstanding shall, by a
notice in writing to the Authority and the Company, declare the principal of all
of the Bonds then outstanding (if not then due and payable) to be due and
payable immediately, and upon such declaration the same shall become and be
immediately due and payable, anything contained in the Bonds or in this
Indenture to the contrary notwithstanding; provided, however, that if at any
time after the principal of the Bonds shall have been so declared to be due and
payable, and before the entry of final judgment or decree in any suit, action or
proceeding instituted on account of such default, or before the completion of
the enforcement of any other remedy under this Indenture, sufficient moneys
shall have accumulated in the Bond Fund to pay the principal of all matured
Bonds and all arrears of interest, if any, upon all Bonds then outstanding
(except the principal of any Bonds due and payable only because of a declaration
under this Section and the interest accrued on such Bonds since the last
interest payment date), and the charges, compensation, expenses, disbursements,
advances and liabilities of the Trustee and all other
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<PAGE>
amounts then payable by the Authority hereunder shall have been paid or a sum
sufficient to pay the same shall have been deposited with the Trustee, and every
other DEFAULT KNOWN TO THE TRUSTEE IN THE OBSERVANCE OR PERFORMANCE of any
covenant, condition, agreement or provision contained in the Bonds or in this
Indenture (other than a default in the payment of the principal of such Bonds
then due and payable only because of a declaration under this Section) shall
have been remedied to the satisfaction of the Trustee, then and in every such
case the Trustee may, and upon the written direction of the holders of not less
than a majority in aggregate principal amount of the Bonds then outstanding
shall, by a notice in writing to the Authority, rescind and annul such
declaration and its consequences, but no such rescission or annulment shall
extend to or affect any subsequent default or impair any right consequent
thereon.
Section 803. TRUSTEE MAY BRING SUIT. Upon the happening and continuance of
any event of default specified in Section 801 hereof, then and in every such
case the Trustee may, and upon the written direction of the holders of not less
than a majority in aggregate principal amount of the Bonds then outstanding
hereunder shall, proceed, subject to the provisions of Section 903 hereof, to
protect and enforce its rights and the rights of the Bondholders under the laws
of the State under the Lease, the Guaranty or this Indenture by such suits,
actions or special proceedings in equity or at law, or by proceedings in the
office of any board or officer having jurisdiction, either for the specific
performance of any covenant or agreement contained herein or in aid or execution
of any power herein granted or for the enforcement of any proper legal or
equitable remedy, as the Trustee, being advised by counsel, shall deem most
effectual to protect and enforce such rights.
In the enforcement of any remedy under this Indenture the Trustee shall be
entitled to sue for, enforce payment of and recover judgment for, in its own
name and as trustee of an express trust, any and all amounts then or after any
default becoming, and at any time remaining, due from the Authority or any
lessee of the Leased Property for principal, redemption premium, if any,
interest or otherwise under any of the provisions of this Indenture or of the
Lease or of the Guaranty or any
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<PAGE>
other agreements leasing the Leased Property, and unpaid, with interest on
overdue payments of principal and of interest at the rate or rates of interest
specified in the Bonds, together with any and all costs and expenses of
collection and of all proceedings hereunder and under the Bonds, without
prejudice to any other right or remedy of the Trustee or of the Bondholders, and
to recover and enforce any judgment or decree against the Authority, but solely
as provided herein and in the Bonds, for any portion of such amounts remaining
unpaid and interest, costs and expenses as above provided, and to collect (but
solely from moneys in the Bond Fund and any other moneys available for such
purpose), in any manner provided by law, the moneys adjudged or decreed to be
payable.
Section 804. POWER OF SALE. In any case in which under the provisions of
Section 802 of this Indenture the Trustee has the right to declare the principal
of all Bonds then outstanding to be due and payable immediately, or when the
Bonds by their terms mature (upon redemption or otherwise) and are not paid,
(a) The Trustee shall have the right to enter upon the
aforementioned Leased Property to such extent and as often as the Trustee,
in its sole discretion, deems necessary or desirable in order to prevent
or cure any default by the Authority. The Trustee may take possession of
all or any part of the Trust Estate and the Leased Equipment together with
the books, papers and accounts of the Authority pertaining thereto and
hold, operate and manage the same, and from time to time make all needful
repairs and improvements as shall be deemed expedient by the Trustee; and
the Trustee may lease any part of the Trust Estate and the Leased
Equipment in the name of and for the account of the Authority, and
collect, receive and sequester the rent, revenues, receipts, earnings,
income, products and profits therefrom, and out of the same and from any
moneys received from any receiver of any part thereof pay, and set up
proper reserves for the payment of, all proper costs and expenses of so
taking, holding and managing the same, including reasonable compensation
to the Trustee, its agents and counsel, and any charges of the Trustee
hereunder, and any taxes and assessments and other charges prior to the
lien of this Indenture which the Trustee may deem it proper to pay, and
all expenses of such repairs and improvements, and apply the remainder of
the moneys so received in accordance with the provisions hereof.
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<PAGE>
(b) The Trustee shall have the right to assign to any other person,
for lawful consideration, any rents, revenues, earnings, income, products
and profits receivable under this Indenture, provided that the proceeds of
any such assignment shall be applied as provided in this Indenture.
(c)(i) The Trustee may, and upon the written request of the Holders.
of at least a majority in aggregate principal amount of Bonds then
outstanding shall, expose to sale and sell the Trust Estate at public
auction for cash, after first having complied with all applicable
requirements of North Carolina law with respect to the exercise of powers
of sale contained in deeds of trust.
(ii) The Trustee may require the successful bidder at any sale to
deposit immediately with the Trustee cash or a certified check in an
amount not to exceed five percent of his bid, provided notice of such
requirement is contained in the advertisement of the sale. The bid may
be rejected if the deposit is not immediately made and thereupon the
next highest bidder may be declared to be the purchaser. Such deposit
shall be refunded in case a resale is had; otherwise it shall be
applied to the purchase price. The sale of the Trust Estate or any
part thereof or any interest therein, whether pursuant to foreclosure,
power of sale or otherwise under this Indenture, shall forever bar any
claim with respect thereto by the Authority or the Lessee.
(iii) The Authority hereby waives, to the full extent it may
lawfully do, the benefit of all appraisement, valuation, stay,
moratorium, exemption from execution, extension and redemption laws
and any statute of limitations, now or hereafter in force, and all
rights of marshalling in the event of the sale of the Trust Estate or
any part thereof or any interest therein. The Authority also hereby
waives all errors, defects and imperfections in any proceeding
instituted by the Trustee under this Indenture.
(iv) The foregoing shall in no way be construed to limit the
powers of sale or restrict the discretion the Trustee may have under
the provisions of Article 2A
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<PAGE>
of Chapter 45 of the General Statutes of North Carolina, as the same
may be from time to time amended. Each legal, equitable or contractual
right, power or remedy of the Trustee now or hereafter provided herein
or by statute or otherwise shall be cumulative and concurrent and
shall be in addition to every other right, power and remedy, and the
exercise or beginning of the exercise by the Trustee of any one or
more of such rights, powers and remedies shall not preclude the
simultaneous or later exercise of any or all such other rights, powers
and remedies.
(d)(i) The Trustee may sell, assign, transfer and deliver the
whole or, from time to time, any part of the Leased Equipment, or any
interest in any part thereof, at any private sale or by public
auction, with or if permitted by applicable law without demand,
advertisement or notice of the time or place of sale or adjournment
thereof or otherwise, for cash, on credit or for other property: for
immediate or future delivery, and for such price or prices and on such
terms as the Authority in its sole discretion may determine, or as may
be required by applicable law. If, pursuant to applicable law, prior
notice of such sale is required to be given to the Company, the
Company hereby acknowledges that the minimum time required by such
applicable law, or if no minimum is specified, one week shall be
deemed reasonable notice. The sale of the Leased Equipment or any part
thereof shall forever bar any claim with respect thereto by the
Company.
(ii) The Trustee may require the Authority to assemble the Leased
Equipment and make it available to the Trustee at the place or places
to be designated by the Trustee and proceed by suit or suits at law or
in equity and exercise any and all of the rights, powers and remedies
of a secured party as provided under the Uniform Commercial Code of
North Carolina, as set forth in Article IX Of Chapter 25 of the
General Statutes of North Carolina, as amended.
Section 805. TRUSTEE MAY FILE CLAIM IN BANKRUPTCY. In case of the pendency
of any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other similar judicial proceeding
relative to the Authority, the Company, the Guarantor or any other obligor upon
the Lease or the Bonds
VIII-6
<PAGE>
or to property of the Authority, the Company, the Guarantor, or such other
obligor or the creditors of any of them, the Trustee (irrespective of whether
the principal of the Bonds shall then be due and payable as therein expressed or
by declaration or otherwise and irrespective of whether the Trustee shall have
made any demand on the Company for the payment of Basic Rent equal to overdue
principal or interest) shall be entitled and empowered, by intervention in such
proceeding or otherwise,
(i) to file and prove a claim for the whole amount of principal,
redemption premium, if any, and interest owing and unpaid in respect of
the Bonds and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim
for the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel) and of the Bondholders allowed in such
judicial proceeding; and
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any receiver, assignee, trustee, liquidator, sequestrator (or other similar
official) in any such judicial proceeding is hereby authorized by each
Bondholder to make such payments to the Trustee, and in the event that the
Trustee shall consent to the making of such payments directly to the
Bondholders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 903 hereof.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept, or adopt on behalf of any holder, any plan of
reorganization, arrangement, adjustment or composition affecting the Bonds or
the rights of any holder thereof, or to authorize the Trustee to vote in respect
of the claim of any Bondholder in any such proceeding.
Section 806. PRO RATA APPLICATION OF FUNDS. Anything in this Indenture to
the contrary notwithstanding, if at any time the moneys in the Bond Fund shall
not be sufficient to
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<PAGE>
pay the principal of or redemption premium. if any, or interest on the Bonds as
the same shall become due and payable (either by their terms or by acceleration
of maturity under the provisions of section 802 hereof), such moneys, together
with any moneys then available or thereafter becoming available for such
purpose, whether through the exercise of the remedies provided for in this
Article or otherwise, shall be applied as follows:
(a) If the principal of all the Bonds shall not have become due and
payable or shall not have been declared due and payable, all such moneys
shall be applied
first: to the payment to the persons entitled thereto of all
installments of interest then due and payable in the order in which
such installments became due and payable, with interest on the overdue
installments of interest at the same rate, and, if the amount
available shall not be sufficient to pay in full any particular
installment, then to the payment, ratably, according to the amounts
due on such installment, to the persons entitled thereto, without any
discrimination or preference;
second: to the payment to the persons entitled thereto of the
unpaid principal of or redemption premium, if any, on any Bonds which
shall have become due and payable (other than Bonds deemed to have
been paid in accordance with Article XIII hereof) in the order of
their due dates, with interest on the principal amount of such Bonds
at the rate specified therein from the respective dates upon which
such Bonds became due and payable, and, if the amount available shall
not be sufficient to pay in full the principal of the Bonds and
redemption premium, if any, due and payable on any particular date,
together with such interest, then to the payment first of such
interest, ratably, according to the amount of such interest due on
such date. and then to the payment of such principal and redemption
premium, if any, ratably, according to the amount of such principal
and redemption premium, if any, due on such date, to the persons
entitled thereto without any discrimination or preference; and
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<PAGE>
third: to the payment of the principal of and redemption premium,
if any, and interest on the Bonds; to the purchase and retirement of
Bonds and to the redemption of Bonds, all in accordance with the
provisions of this Indenture.
(b) If the principal of all the Bonds shall have become due and
payable or shall have been declared due and payable, all such moneys shall
be applied to the payment of the principal and interest then due upon the
Bonds, without preference or priority of principal over interest or of
interest over principal, or of any installment of interest over any other
installment of interest, or of any Bond over any other Bond, ratably,
according to the amounts due respectively for principal and interest, to
the persons entitled thereto without any discrimination or privilege.
(c) If the principal of all the Bonds shall have been declared due and
payable and if such declaration shall thereafter have been rescinded and
annulled under the provisions of Section 802 hereof. then, subject to the
provisions of subsection (b) of this Section 806 in the event that the
principal of all the Bonds shall later become due and payable or be
declared due and payable, the moneys remaining in and thereafter accruing
to the Bond Fund shall be applied in accordance with the provisions of
subsection (a) of this Section 806.
Whenever moneys are to be applied by the Trustee pursuant to the provisions
of this Section 806, such moneys shall be applied by the Trustee at such times,
and from time to time, as the Trustee in its sole discretion shall determine,
having due regard to the amount of such moneys available for application and the
likelihood of additional moneys becoming available for such application in the
future; the setting aside of such moneys, in trust for the proper purpose, shall
constitute proper application by the Trustee; and the Trustee shall incur no
liability whatsoever to the Authority, to any Bondholder or to any other person
for any delay in applying any such moneys, so long as the Trustee acts with
reasonable diligence, having due regard to the circumstances, and ultimately
applies the same in accordance with
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<PAGE>
such provisions of this Indenture as may be applicable at the time of
application by the Trustee. Whenever the Trustee shall exercise such discretion
in applying such moneys, it shall fix the date (which shall be an interest
payment date unless the Trustee shall deem another date more suitable) upon
which such application is to be made and upon such date interest on the amounts
of principal to be paid on such date shall cease to accrue. The Trustee shall
give such notice as it may deem appropriate of the fixing of any such date, and
shall not be required to make payment to the holder of any Bond until such Bond
shall be surrendered to the Trustee for appropriate endorsement, or for
cancellation if fully paid.
Section 807. EFFECT OF DISCONTINUANCE OF PROCEEDINGS. In case any
proceeding taken by the Trustee on account of any default shall have been
discontinued or abandoned for any reason, then and in every such case the
Authority, the Trustee and the Bondholders shall be restored to their former
positions and rights hereunder, respectively, and all rights, remedies, powers
and duties of the Trustee shall continue as though no proceeding had been taken.
Section 808. HOLDERS OF MAJORITY IN PRINCIPAL AMOUNT OF BONDS MAY CONTROL
PROCEEDINGS. Anything in this Indenture to the contrary notwithstanding, the
holders of a majority in principal amount of the Bonds then outstanding
hereunder shall. have the right, subject to the provisions of Section 903
hereof, by an instrument or concurrent instruments in writing executed and
delivered to the Trustee, to direct the method and place of conducting all
remedial proceedings to be taken by the Trustee hereunder or exercising any
trust or power conferred upon the Trustee, provided that such direction shall
not be otherwise than in accordance with law and the provisions of this
Indenture, and provided, further, subject to the provisions of Section 901
hereof, that the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
Section 809. RESTRICTIONS UPON ACTIONS BY INDIVIDUAL BONDHOLDER. No holder
of any of the Bonds shall have any right to institute any suit, action or
proceeding in equity or at law on any Bond or for the execution of any trust
hereunder or for any other remedy hereunder except that the holders of not less
than a majority in aggregate principal amount of the Bonds then outstanding may
institute
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<PAGE>
any such suit, action or proceeding in their own names for the benefit of all
holders of Bonds hereunder. It is understood and intended that, except as
otherwise above provided, no one or more holders of the Bonds hereby secured
shall have any right in any manner whatever by his or their action to affect,
disturb or prejudice the security of this Indenture, or to enforce any right
hereunder except in the manner herein provided and that all proceedings at law
or in equity shall be instituted, had and maintained in the manner herein
provided and for the benefit of all holders of such outstanding Bonds and
coupons, and that any individual right of action or any other right given to one
or more of such holders by law is restricted by this Indenture to the rights and
remedies herein provided. Notwithstanding any other provision in this Indenture,
the holder of any Bond shall have the right, which is absolute and
unconditional, to receive payment of the principal of and redemption premium, if
any, and interest on such Bond on the respective due dates expressed in such
Bond (or, in the case of redemption, on the redemption date) and to institute
suit for the enforcement of any such payment, and such right shall not be
impaired without the consent of such Bondholder.
Section 810. RECEIVER. Upon the occurrence of an event of default and upon
the filing of a suit or other commencement of judicial proceedings to enforce
the rights of the Trustee and of the Bondholders under this Indenture, the
Trustee shall be entitled, as a matter of right, to the appointment of a
receiver or receivers of the Rent, earnings, income and other payments under the
Lease pending such proceedings, with such powers as the court making such
appointment shall confer, whether or not any such amounts payable shall be
deemed sufficient ultimately to satisfy the Bonds outstanding hereunder.
Section 811. ACTIONS BY TRUSTEE. All rights of action under this Indenture
or under any of the Bonds secured hereby, enforceable by the Trustee, may be
enforced by it without the possession of any of the Bonds or the production
thereof in the trial or other proceeding relative thereto, and any such suit,
action or proceeding instituted by the Trustee shall be brought in its name for
the benefit of all of the holders of such Bonds, subject to the provisions of
this Indenture.
Section 812. NO REMEDY EXCLUSIVE. No remedy herein conferred upon or
reserved to the Trustee or to the holders of the Bonds is intended to be
exclusive of any other remedy
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or remedies herein provided, and each and every such remedy shall be cumulative
and shall be in addition to every other remedy given hereunder or by law.
Section 813. NO DELAY OR OMISSION CONSTRUED TO BE A WAIVER. No delay or
omission of the Trustee or of any holder of the Bonds to exercise any right or
power accruing upon any default shall impair any such right or power or shall be
construed to be a waiver of any such default or any acquiescence therein: and
every power and remedy given by this Indenture to the Trustee and to the holders
of the Bonds, respectively, may be exercised from time to time and as often as
may be deemed expedient.
Section 814. WAIVER OF DEFAULTS. The Trustee may, and upon written
direction of the holders of not less than a majority in aggregate principal
amount of the Bonds then outstanding shall, waive any default which in its
opinion shall have been remedied before the entry of final judgment or decree in
any suit, action or proceeding instituted by it under the provisions of this
Indenture or before the completion of the enforcement of any other remedy under
this Indenture. but no such waiver shall extend to or affect, any other existing
or subsequent default or defaults or impair any rights or remedies consequent
thereon.
Section 815. REMEDIES HEREIN ADDITIONAL TO REMEDIES IN LEASE. The remedies
conferred in this Article shall be in addition to all remedies provided for in
the Lease, which remedies are hereby incorporated herein by reference.
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ARTICLE IX
CONCERNING THE TRUSTEE
Section 901. ACCEPTANCE OF TRUSTS. The Trustee accepts and agrees to
execute the trusts imposed upon it by this Indenture, but only upon the terms
and conditions set forth in this Article and subject to the provisions of this
Indenture including the following express terms and conditions, to all of which
the parties hereto and the respective holders of the Bonds agree:
(a) Except during the continuance of an event of default within the
purview of Section 801 hereof,
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture; but in the case of any such certificates or
opinions which by any provision hereof are specifically required to
be furnished to the Trustee, as the case may be, the Trustee shall
be under a duty to examine the same to determine whether or not they
conform to requirements of this Indenture.
(b) In case an event of default within the purview of Section 801
hereof has occurred and is continuing, the Trustee shall exercise such of
the rights and powers vested in it by this Indenture, and use the same
degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for
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its own negligent action, its own negligent failure to act, or its own
willful misconduct, except that
(1) this subsection shall not be construed to limit the effect
of subsection (a) of this Section 901;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a responsible officer or officers of the
Trustee unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with
the direction of the holders of a majority in aggregate principal
amount of the outstanding Bonds relating to the time, method and
place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the
Trustee, under this Indenture.
(d) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee, including without limitation Sections
903 and 904 hereof, shall be subject to the provisions of this Section
901.
The Trustee also accepts, and agrees to do and perform, the duties and
obligations imposed upon it by and under the Lease and the Guaranty, but only
upon the terms and conditions set forth in the Lease, the Guaranty and this
Indenture.
Section 902. TRUSTEE TO GIVE NOTICE OF DEFAULTS. Within 60 days after the
occurrence of any event of default hereunder, the Trustee shall give to all
Bondholders notice of all defaults known to it, unless such defaults shall have
been cured or waived; provided, however, that, except in the case of a default
in the payment of the principal of or redemption premium, if any, or interest on
any Bond, the Trustee shall be protected in
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withholding such notice if and so long as the board of directors, the executive
committee or a trust committee of directors and/or responsible officers of the
Trustee in good faith determine that the withholding of such notice is in the
interests of the Bondholders. For the purpose of this Section 902, the term
"default" means any event which is, or after notice or lapse of time or both
would become, an event of default under Section 801 hereof.
Section 903. TRUSTEE ENTITLED TO INDEMNITY. The Trustee shall be under no
obligation to institute any suit, or to take any remedial proceeding under this
Indenture or under the Lease or the Guaranty, or to enter any appearance in or
in any way defend against any suit, in which it may be made a defendant, or to
take any steps in the execution of the trusts hereby created or in the
enforcement of any rights and powers hereunder or under the Lease or the
Guaranty, until it shall be indemnified to its satisfaction against any and all
costs and expenses, outlays and counsel fees and other reasonable disbursements,
and against all liability; the Trustee may, nevertheless, begin suit, or appear
in and defend suit, or do anything else in its judgment proper to be done by it
as such Trustee, without indemnity, and in such case the Authority shall
reimburse the Trustee from funds available therefor under the Lease for all
reasonable costs and expenses, outlays and counsel fees and other reasonable
disbursements properly incurred in connection therewith. If the Authority shall
fail to make reimbursement, the Trustee may reimburse itself from any moneys in
its possession under the provisions of this Indenture and shall be entitled to a
preference over any of the Bonds.
Section 904. TRUSTEE NOT RESPONSIBLE FOR INSURANCE, TAXES, EXECUTION OF
INDENTURE, ACTS OF THE AUTHORITY OR APPLICATION OF MONEYS APPLIED IN ACCORDANCE
WITH THIS INDENTURE. The Trustee shall not be under any obligation to effect or
maintain insurance or to renew any policies of insurance or to inquire as to the
sufficiency of any policies of insurance carried by the Lessee, or to report, or
make or file claims or proof of loss for, any loss or damage insured against or
which may occur, or to keep itself informed or advised as to the payment of any
taxes or assessments, or to require any such payment to be made. The Trustee
shall have no responsibility in respect of the validity, sufficiency, due
execution or
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acknowledgment of this Indenture or the validity or sufficiency of the security
provided hereunder or, except as to the authentication thereof, in respect of
the validity of the Bonds or the due execution or issuance thereof. The Trustee
shall not be under any obligation to see that any duties herein imposed upon any
party other than itself, or any covenants herein contained on the part of any
party other than itself to be performed, shall be done or performed, and the
Trustee shall be under no obligation for failure to see that any such duties or
covenants are so done or performed.
The Trustee shall not be liable or responsible because of the failure of
the Authority or of any of its employees or agents to make any collections or
deposits or to perform any act herein required of the Authority or because of
the loss of any moneys arising through the insolvency or the act or default or
omission of any other depositary in which such moneys shall have been deposited
under the provisions of this Indenture. The Trustee shall not be responsible for
the application of any of the proceeds of the Bonds or any other moneys
deposited with it and paid out, withdrawn or transferred hereunder if such
application, payment, withdrawal or transfer shall be made in accordance with
the provisions of this Indenture.
The immunities and exemptions from liability of the Trustee hereunder shall
extend to its directors, officers, employees and agents.
Section 905. COMPENSATION. Subject to the provisions of any contract
relating to the compensation of the Trustee, the Authority shall cause the
Lessee to pay to the Trustee as Additional Rent its reasonable fees and charges
in accordance with Section 5.3(b)(i) of the Lease. If the Lessee shall fail to
make any payment required by this Section 905, the Trustee may, but shall be
under no obligation to, make such payment from any moneys in its possession
under the provisions of this Indenture and shall be entitled to a preference
therefor over any of the Bonds outstanding hereunder.
Section 906. TRUSTEE TO PRESERVE RECORDS. All records and files pertaining
to the Project and the Leased Property in the custody of the Trustee shall be
open at all reasonable times to the inspection of the Authority and the Lessee
and their agents and representatives.
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Section 907. TRUSTEE MAY BE BONDHOLDER. The bank or trust company acting
as Trustee under this Indenture, and its directors, officers, employees or
agents, may in good faith buy, sell, own, hold and deal in any of the Bonds
issued under and secured by this Indenture, and may join in the capacity of a
Bondholder in any action which any Bondholder may be entitled to take with like
effect as if such bank or trust company were not the Trustee under this
Indenture.
Section 908. TRUSTEE NOT RESPONSIBLE FOR RECITALS. The recitals,
statements and representations contained herein and in the Bonds (excluding the
Trustee's certificate of authentication on the Bonds) shall be taken and
construed as made by and on the part of the Authority and not by the Trustee,
and the Trustee shall not be under any responsibility for the correctness of the
same.
Section 909. TRUSTEE RESPONSIBILITY FOR RECORDING. The Trustee shall not
be under any obligation to see to the recording or filing of this Indenture, the
Guaranty, the Lease, any financing statements or any other instrument or
otherwise to the giving to any person of notice of the provisions hereof or
thereof; provided, however, that the Trustee shall cause the opinion of Counsel
required by Section 8.6 of the Lease to be rendered in accordance with said
Section 8.6 or shall otherwise satisfy itself that such recordings and filings
have been made as are necessary to satisfy said Section 8.6.
Section 910. TRUSTEE MAY RELY ON CERTIFICATES. Subject to the provisions
of Section 901(a)(2) hereof, the Trustee shall be protected and shall incur no
liability in acting or proceeding, or in not acting or not proceeding, in good
faith, reasonably and in accordance with the terms of this Indenture, upon any
resolution, order, notice, request, consent, waiver, certificate, statement,
affidavit, requisition, bond or other paper or document which it shall in good
faith reasonably believe to be genuine and to have been adopted or signed by the
proper board or person or to have been prepared and furnished pursuant to any of
the provisions of the Lease, the Guaranty or this Indenture, or upon the written
opinion of any attorney, engineer, accountant or other expert believed by it to
be qualified in relation to the subject matter, and the Trustee shall not be
under any duty to make any investigation or inquiry as to any statements
contained or matters referred to in any such instrument.
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<PAGE>
Section 911. QUALIFICATION OF THE TRUSTEE. There shall at all times be a
trustee hereunder which shall be an association or a corporation organized and
doing business under the laws of the United States of America or of any state,
authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least $10,000,000, subject to supervision or
examination by Federal or State authority, and having its principal corporate
trust office in the State. If such association or corporation publishes reports
of condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section 911, the combined capital and surplus of such association or corporation
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time the Trustee shall cease
to be eligible in accordance with the provisions of this Section 911, it shall
resign immediately in the manner and with the effect specified in Section 912
hereof.
Section 912. RESIGNATION AND REMOVAL OF TRUSTEE. (a) No resignation or
removal of the Trustee and no appointment of a successor Trustee pursuant to
this Article shall become effective until the acceptance of appointment by the
successor Trustee under Section 913 hereof.
(b) The Trustee may resign at any time by giving written notice thereof to
the Authority, the Lessee and the Guarantor if other than the Lessee. If an
instrument of acceptance by a successor Trustee shall not have been delivered to
the Trustee within 30 days after the giving of such notice of resignation, the
retiring Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(c) The Trustee may be removed at any time by an instrument or instruments
in writing to the Trustee, with copies to the Authority, the Lessee and the
Guarantor signed by the holders of a majority in aggregate principal amount of
the Bonds then outstanding or by their attorneys; legal representatives or
agents and delivered to the Trustee, the Authority, the Lessee and the Guarantor
(such instruments to be effective only when received by the Trustee).
(d) If at any time:
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(1) the Trustee shall cease to be eligible under Section 911 hereof
and shall fail to resign after written request therefor by the Company or
by any Bondholder, or
(2) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Authority or the Lessee may remove the Trustee,
or (ii) any Bondholder may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Authority with the approval of the Lessee shall promptly appoint a successor.
If, within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by act of the
Holders of a majority in aggregate principal amount of the Bonds then
outstanding delivered to the Lessee and the retiring Trustee, the successor
Trustee so appointed shall, forth with upon its acceptance of such appointment,
become the successor Trustee and supersede the successor Trustee appointed by
the Authority and approved by the Lessee. If no successor Trustee shall have
been so appointed by the Authority and approved by the Lessee or so appointed by
the Bondholders and accepted appointment in the manner hereinafter provided, any
Bondholder who has been a bona fide holder of a Bond for at least six months
may, on be half of himself and all others similarly situated, petition any
court of competent jurisdiction for the appointment of a successor Trustee.
(f) The Authority shall give notice of each resignation and each removal of
the Trustee and each appointment of a successor Trustee by publishing notice of
such event in a daily Newspaper; or a financial journal, published or circulated
in the Borough of Manhattan, City and State of New York, and by mailing written
notice of such event by first-class mail, postage prepaid, to all Bondholders of
Record. Each notice shall include the name and address of the principal
corporate trust office of the successor Trustee.
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Section 913. SUCCESSOR TRUSTEE. Every successor Trustee appointed hereunder
shall execute, acknowledge and deliver to its predecessor, and also to the
Authority, the Lessee and the guarantor if other than the Lessee, an instrument
in writing accepting such appointment hereunder, and thereupon such successor
Trustee without any further act, shall become fully vested with all the rights,
immunities, powers and trusts, and subject to all the duties and obligations, of
its predecessors; but such predecessor shall, nevertheless, on the written
request of its successor or of the Authority and upon payment of the expenses,
charges and other disbursements of such predecessor which are payable pursuant
to the provisions of Section 905 hereof, execute and deliver an instrument
transferring to such successor Trustee all the rights, immunities, powers and
trusts of such predecessor hereunder; and every predecessor Trustee shall
deliver all property and moneys held by it hereunder to its successor, subject,
nevertheless, to its preference, if any, provided for in Sections 903 and 905
hereof. Should any instrument in writing from the Authority be required by any
successor Trustee for more fully and certainly vesting in such Trustee the
rights, immunities, powers and trusts hereby vested or intended to be vested in
the predecessor Trustee any such instrument in writing shall and will, on
request, be executed, acknowledged and delivered by the Authority.
Notwithstanding any of the foregoing provisions of this Article, any bank
or trust company having power to perform the duties and execute the trusts of
this Indenture and otherwise qualified to act as Trustee hereunder with or into
which the bank or trust company acting as Trustee, may be merged or
consolidated, or to which the assets and business of such bank or trust company
may be sold, shall be deemed the successor of the Trustee.
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ARTICLE X
Execution of Instruments by Bondholders
and Proof of Ownership of Bonds;
Lists of Bondholders
Section 1001. EXECUTION OF INSTRUMENTS BY BONDHOLDERS AND PROOF OF
OWNERSHIP OF BONDS. Any request, direction, consent or other instrument in
writing required or permitted by this Indenture to be signed or executed by
Bondholders may be in any number of concurrent instruments of similar tenor and
may be signed or executed by such Bondholders or their attorneys or legal
representatives. Proof of the execution of any such instrument and of the
ownership of Bonds shall be sufficient for any purpose of this Indenture and
shall be conclusive in favor of the Trustee with regard to any action taken by
it under such instrument if made in the following manner:
(1) The fact and date of the execution by any person of any such
instrument may be proved by the verification of any officer in any
jurisdiction who, by the laws thereof, has power to take affidavits within
such jurisdiction, to the effect that such instrument was subscribed and
sworn to before him, or by an affidavit of a witness to such execution, and
where such execution is by an officer of a corporation or association or a
member of a partnership on behalf of such corporation, association or
partnership, such verification or affidavit shall also constitute
sufficient proof of his authority.
(2) The fact of the holding of Bonds not registered as to both
principal and interest hereunder by any Bondholder and the amount and the
numbers of such Bonds and the date of his holding the same (unless such
Bonds be registered) may be proved by the affidavit of the person claiming
to be such Holder, if such affidavit shall be deemed by the Trustee to be
satisfactory, or by a certificate executed by any trust company, bank,
banker or any other depositary, wherever situated, if such certificate
shall be deemed by the Trustee to be satisfactory, showing that at the date
therein
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mentioned such person had on deposit with or exhibited to such trust
company, bank, banker or other depositary the Bonds described in such
certificate. The Trustee may conclusively assume that such ownership
continues until written notice to the contrary is served upon it. The
ownership of Bonds registered as to both principal and interest shall be
proved by the registration books kept by the Bond Registrar under the
provisions of Section 206 hereof.
Nothing contained in this Section 1001 shall be construed as limiting the
Trustee to such proof, it being intended that the Trustee may accept any other
evidence of the matters herein stated which may be sufficient. Any request or
consent of the holder of any Bond shall bind every future holder of the same
Bond or any Bond issued in place thereof in respect of anything done by the
Trustee in pursuance of such request or consent.
Notwithstanding any of the foregoing provisions of this Section 1001, the
Trustee shall not be required to recognize any person as a holder of any Bond or
coupon or to take any action at his request unless such Bond or coupon shall be
deposited with it.
Section 1002. PRESERVATION OF INFORMATION; COMMUNICATIONS TO BONDHOLDERS.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Bondholders received by the Trustee in
its capacity as Bond Registrar.
(b) If three or more Bondholders (hereinafter referred to as "applicants")
apply in writing to the Trustee and furnish reasonable proof that each such
applicant has owned a Bond for a period of at least six months preceding the
date of such application, and such application states that the applicants desire
to communicate with other Bondholders with respect to their rights under this
Indenture or under the Bonds and is accompanied by a copy of the form of
communication which such applicants propose to transmit, then the Trustee shall,
within five business days after the receipt of such application, at its
election, either
(i) afford such applicants access to the information preserved at the
time by the Trustee
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in accordance with subsection (a) of this Section 1002, or
(ii) inform such applicants as to the approximate number of
Bondholders whose names and addresses appear in the information preserved
at the time by the Trustee in accordance with subsection (a) of this
Section 1002, and as to the approximate cost of mailing to such
Bondholders the form of communication, if any, specified in such
application.
If the Trustee shall elect not to afford such applicants access to such
information, the Trustee shall, upon the written request of such applicants,
mail to each Bondholder whose name and address appears in the information
preserved at the time by the Trustee in accordance with subsection (a) of this
Section 1002 a copy of the form of communication which is specified in such
request, with reasonable promptness after a tender to the Trustee of the
material to be mailed and of payment, or provision for the payment, of the
reasonable expenses of mailing.
(c) Every Bondholder, by receiving and holding the same, agrees with the
Authority and the Trustee that neither the Authority nor the Trustee shall be
held accountable by reason of the disclosure of any such information as to the
names and addresses of the Bondholders in accordance with subsection (b) of this
Section 1002, regardless of the source from which such information was derived,
and that the Trustee shall not be held accountable by reason of mailing any
material pursuant to a request made under such subsection.
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ARTICLE XI
Supplements and Amendments to Indenture
Section 1101. SUPPLEMENTS AND AMENDMENTS NOT REQUIRING BONDHOLDER CONSENT.
The Authority and the Trustee may, without the consent or approval of, or notice
to, any of the Bondholders, enter into such supplements and amendments to this
Indenture as shall not, in the opinion of the Trustee, be detrimental to the
interests of the Bondholders (which supplements and amendments shall thereafter
form a part hereof):
(a) to cure any ambiguity or formal defect or omission in this
Indenture or in any supplement or amendment to this Indenture, or
(b) to set forth any or all matters in connection with the issuance
of Additional Bonds or Refunding Bonds, or
(c) to grant to or confer upon the Trustee, for the benefit of the
Bondholders, any additional rights, remedies, powers, authority or
security that may lawfully be granted to or conferred upon the Bondholders
or the Trustee, or
(d) to subject to this Indenture additional revenues, properties or
collateral, or
(e) to reflect any addition to, substitution for or removal from the
Trust Estate or the Leased Equipment, or
(f) in connection with any other change which, in the judgment of
the Trustee, will not restrict, limit or reduce the obligation of the
Authority to pay the principal of and redemption premium, if any, and
interest on the Bonds or otherwise impair the security of the Bondholders
under this Indenture, or
(g) to modify, amend or supplement this Indenture or any supplement
or amendment hereto in such manner as to permit the qualification hereof
and thereof under the Trust Indenture Act of 1939 or any similar Federal
statute hereafter in effect
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or to permit the qualification of the Bonds for sale under the securities
laws of any of the States of the United States, and, if they so determine,
to add to this indenture or any supplement or amendment hereto such other
terms, conditions and provisions as may be permitted by said Trust
Indenture Act of 1939 or similar Federal statute.
At least 30 days prior to the execution of any such supplement or amendment to
this Indenture, the Trustee shall cause a notice of the proposed execution
thereof to be mailed, postage prepaid, to Bondholders of Record. Such notice
shall briefly set forth the nature of the proposed supplement or amendment and
shall state that copies thereof are on file at the principal corporate trust
office of the Trustee for inspection by all Bondholders. A failure on the part
of the Trustee to mail the notice required by this Section 1101 shall not affect
the validity of such supplement or amendment.
Section 1102. SUPPLEMENTS AND AMENDMENTS REQUIRING CONSENT OF HOLDERS OF
2/3 IN PRINCIPAL AMOUNT OF BONDS. With the consent of the holders of not less
than two-thirds (2/3) in aggregate principal amount of the Bonds at the time
outstanding, the Authority and the Trustee may, from time to time and at any
time, enter into supplements and amendments to this Indenture for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of any supplement or amendment to this Indenture
or of modifying in any manner the rights of the holders of the Bonds; provided,
however, that nothing herein contained shall permit, or be construed as
permitting, (a) an extension of the maturity of the principal of or the interest
on any Bond, or (b) a reduction in the principal amount of any Bond or the
redemption premium, if any, or the rate of interest thereon, or (c) the creation
of any lien or security interest with respect to the Basic Rent or the Lease,
other than the lien created by this Indenture, or (d) a preference or priority
of any Bond or Bonds over any other Bond or Bonds, or (e) a reduction in the
aggregate principal amount of the Bonds required for consent to such
supplemental indenture. Nothing herein contained, however, shall be construed as
making necessary the approval by Bondholders of the execution of any supplement
or amendment to this Indenture as authorized in Section 1101 hereof.
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<PAGE>
It shall not be necessary for the consent of the holders of Bonds under
this Section 1102 to approve the particular form of any proposed supplement or
amendment, but it shall be sufficient if such consent shall approve the
substance thereof.
If at any time the Authority shall request the Trustee to enter into any
supplement or amendment to this Indenture for any of the purposes of this
Section 1102, the Trustee shall, at the expense of the Authority, cause notice
of the proposed execution of such supplement or amendment to be published once
in each week for four successive weeks in a daily Newspaper, or a financial
journal, published or circulated in the Borough of Manhattan, City and State of
New York, and, on or before the date of the first publication of such notice,
the Trustee shall also cause a similar notice to be mailed, postage prepaid, to
all Bondholders of Record. Such notice shall briefly set forth the nature of the
proposed supplement or amendment and shall state that copies thereof are on file
at the principal corporate trust office of the Trustee for inspection by all
Bondholders. The Trustee shall not, however, be subject to any liability to any
Bondholder by reason of its failure to mail the notice required by this Section
1102, and any such failure shall not affect the validity of such supplement or
amendment when consented to as provided in this Section 1102.
Whenever, at any time within one year after the date of the first
publication of such notice, the Authority shall deliver to the Trustee an
instrument or instruments in writing purporting to be executed by the holders of
not less than two-thirds (2/3) in aggregate principal amount of the Bonds then
outstanding, which instrument or instruments shall refer to the proposed
supplement or amendment described in such notice and shall specifically consent
to and approve the execution thereof in substantially the form of the copy
thereof referred to in such notice, thereupon, but not otherwise, the Trustee
may execute such supplement or amendment in substantially such form, without
liability or responsibility to any holder of any Bond, whether or not such
holder shall have consented thereto.
If the holders of not less than two-thirds (2/3) in aggregate principal
amount of the Bonds outstanding in the
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the time of the execution of such supplemental indenture shall have consented to
and approved the execution thereof as herein provided, no holder of any Bond
shall have any right to object to the execution of such supplement or amendment,
or to object to any of the terms and provisions contained therein or the
operation thereof or in any manner to question the propriety of the execution
thereof, or to enjoin or restrain the Trustee or the Authority from executing
the same or from taking any action pursuant to the provisions thereof.
Section 1103. SUPPLEMENTS AND AMENDMENTS DEEMED PART OF INDENTURE. Any
supplement or amendment to this Indenture executed in accordance with the
provisions of this Article shall thereafter form a part of this Indenture, and
all of the terms and conditions contained in any such supplement or amendment as
to any provision authorized to be contained therein shall be and shall be deemed
to be part of the terms and conditions of this Indenture for any and all
purposes. Upon the execution of any supplement or amendment to this Indenture
pursuant to the provisions of this Article, this Indenture shall be and be
deemed to be modified and amended in accordance therewith, and the respective
rights, duties and obligations under this Indenture of the Authority, the
Trustee and all holders of Bonds then outstanding shall thereafter be
determined, exercised and enforced hereunder, subject in all respects to such
modifications and amendments.
Section 1104. DISCRETION OF TRUSTEE IN ENTERING INTO SUPPLEMENTS AND
AMENDMENTS. In each and every case provided for in this Article, the Trustee
shall be entitled to exercise its discretion in determining whether or not to
execute any proposed supplement or amendment, if the rights, obligations and
interests of the Trustee would be thereby affected, and the Trustee shall not be
under any responsibility or liability to the Authority, the Lessee, the
Guarantor or to any Bondholder or to anyone whomsoever for its refusal in good
faith to enter into any such supplement or amendment if such supplement or
amendment is deemed by it to be contrary to the provisions of this Article. The
Trustee shall be entitled to receive, and shall be fully protected in relying
upon, an opinion of any counsel approved by it, as conclusive evidence that any
such proposed supplement or amendment does or does not comply with the
provisions of this Indenture, and
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that it is or is not proper for it, under the provisions of this Article, to
join in the execution of such supplement or amendment.
Section 1105. CONSENT OF LESSEE REQUIRED. Anything herein to the contrary
notwithstanding, any such supplement or amendment to this Indenture which
affects any right, power or authority of the Lessee under the Lease or requires
a revision of the Lease shall not become effective unless and until the Lessee
shall have consented thereto.
XI-5
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ARTICLE XII
Supplements and Amendments to Other Agreements
Section 1201. SUPPLEMENTS AND AMENDMENTS NOT REQUIRING CONSENT. The
Authority and the Trustee, or the Trustee alone in the case of the Guaranty,
may, from time to time and at any time, consent to such amendments and
supplements to the Lease or the Guaranty, as the case may be, as shall not be
inconsistent with the terms and provisions thereof and, in the opinion of the
Authority and the Trustee, or the Trustee alone in the case of the Guaranty,
shall not be detrimental to the interests of the Bondholders (which supplements
and amendments shall thereafter form a part thereof):
(a) to cure any ambiguity or formal defect or omission, or
(b) to set forth any or all of the matters in connection with the
issuance of Additional Bonds or Refunding Bonds, or
(c) to identify more precisely the property forming a part of the
Leased Property under the Lease and generally described in Exhibit A
attached thereto or to substitute, remove or release Leased Property
(consistent with the provisions hereof and of Section 6.3, 6.4 or 6.5 of
the Lease), or
(d) to grant to or confer upon the Trustee, for the benefit of the
Bondholders, any additional rights, remedies, powers, authority or security
that may lawfully be granted to or conferred upon the Bondholders or the
Trustee, or
(e) in connection with any other change which, in the judgment of the
Trustee, will not restrict, limit or reduce the obligation of the Lessee to
pay the Basic Rent or of the Guarantor to pay the principal of or
redemption premium, if any, or interest on the Bonds or otherwise impair
the security of the Bondholders under this Indenture.
XII-1
<PAGE>
At least 30 days prior to the execution of any supplement or amendment to the
Lease for any of the purposes of this Section 1201, the Trustee shall cause a
notice of the proposed execution of such supplement or amendment to be mailed,
postage prepaid, to all Bondholders of Record. Such notice shall briefly set
forth the nature of the proposed supplement or amendment and shall state that
copies thereof are on file at the principal corporate trust office of the
Trustee for inspection by .all Bondholders. A failure on the part of the Trustee
to mail the notice required by this Section 1201 shall not affect the validity
of such supplement or amendment.
Section 1202. SUPPLEMENTS AND AMENDMENTS REQUIRING CONSENT OF HOLDERS OF
2/3 IN PRINCIPAL AMOUNT OF BONDS. Except for supplements or amendments provided
for in Section 1201, the Authority and the Trustee, or the Trustee alone in the
case of the Guaranty, shall not execute and the Trustee shall not consent to any
supplement or amendment to the Lease or the Guaranty unless notice of the
proposed execution of such supplement or amendment shall have been given and the
holders of not less than two-thirds (2/3) in aggregate principal amount of the
Bonds then outstanding shall have consented to and approved the execution
thereof, all as provided for in Section 1102 hereof in the case of supplements
and amendments to the Indenture; provided that the Trustee shall be entitled to
exercise its discretion in consenting or not consenting to any such supplement
or amendment in the same manner as provided for in Section 1104 hereof in the
case of supplements and amendments to the Indenture.
XII-2
<PAGE>
ARTICLE XIII
DEFEASANCE
Section 1301. DEFEASANCE. If the Authority shall pay or cause to be paid to
the holders of all of the Bonds secured hereby the principal of and redemption
premium, if any, and interest on such Bonds which is and shall thereafter become
due and payable thereon, together with all other sums payable hereunder by the
Authority, then and in that case the rights, title and interests of the Trustee
in and to the estate pledged and assigned to it under this Indenture shall
cease, terminate and become void, and such Bonds shall cease to be entitled to
any lien, benefit or security under this Indenture. In such event, the Trustee
shall transfer and assign to the Company all property then held by the Trustee,
shall execute such documents as may be reasonably required by the Authority or
the Lessee to evidence such transfer and assignment and shall turn over to the
Company any surplus in the Bond Fund and any balance remaining in the
Acquisition Fund. If the Authority shall pay or cause to be paid to the holders
of less than all of the outstanding Bonds the principal of and redemption
premium, if any, and interest on such Bonds which is and shall thereafter become
due and payable upon such Bonds, such Bonds, or portions thereof, shall cease to
be entitled to any lien, benefit or security under this Indenture.
Any or all of the outstanding Bonds shall be deemed to have been paid
within the meaning and with the effect expressed in the foregoing paragraph of
this Section when (a) in case said Bonds or portions thereof have been selected
for redemption in accordance with Section 301 hereof prior to their maturity,
the Lessee shall have given to the Trustee irrevocable instructions to publish
in accordance with the provisions of Section 302 hereof notice of redemption of
such Bonds, or portions thereof, (b) there shall have been deposited with the
Trustee either moneys in an amount which shall be sufficient, or Government
Obligations, which shall not contain provisions permitting the redemption
thereof at the option of the issuer, the principal of and the interest on which
when due, and without any reinvestment thereof, will provide moneys which,
together with the moneys, if any, deposited with or held by the Trustee or any
Paying Agent available therefor, shall be sufficient, to pay when due the
principal of and redemption premium, if
XIII-1
<PAGE>
any, and interest due and to become due on said Bonds or portions thereof, on or
prior to the redemption date or maturity date thereof, as the case may be, and
(c) in the event said Bonds do not mature and are not to be redeemed within the
next succeeding 60 days, the Lessee shall have given the Trustee irrevocable
instructions to publish, as soon as practicable in the same manner as a notice
of redemption is published pursuant to Section 302 hereof, a notice to the
Holders of said Bonds, or portions thereof, stating that the deposit of moneys
or Government Obligations required by clause (b) of this paragraph has been made
with the Trustee and that said Bonds and coupons are deemed to have been paid in
accordance with this Section and stating such maturity or redemption date upon
which moneys are to be available for the payment of the principal of and
redemption premium, if any, and interest on said Bonds, or portions thereof.
Neither the moneys or Government Obligations deposited with the Trustee pursuant
to this Section nor principal or interest payments on any such obligations shall
be withdrawn or used for any purpose other than, and shall be held in trust for,
the payment of the principal of and redemption premium, if any, and interest on
said Bonds, or portions thereof. If payment of less than all of the Bonds is to
be provided for in the manner and with the effect expressed in this Section, the
Trustee shall select such Bonds, or portions thereof, in the manner specified in
Section 301(f) hereof for selection for redemption of less than all of the Bonds
in the principal amounts designated to the Trustee by the Company.
XIII-2
<PAGE>
ARTICLE XIV
Miscellaneous Provisions
Section 1401. COVENANTS OF AUTHORITY BIND ITS SUCCESSORS. In the event of
the dissolution of the Authority, all of the covenants, stipulations,
obligations and agreements contained in this Indenture by or in behalf of or for
the benefit of the Authority shall bind or inure to the benefit of the successor
or successors of the Authority from time to time and any officer, board,
commission, authority, agency or instrumentality to whom or to which any power
or duty affecting such covenants, stipulations, obligations and agreements shall
be transferred by or in accordance with law, and the word "Authority" as used in
this Indenture shall include such successor or successors.
Section 1402. NOTICES. Any notice, demand, direction, request or other
instrument authorized or required by this Indenture to be given to or filed with
the Authority, the Trustee, the Lessee or the Guarantor shall be deemed to have
been sufficiently given or filed for all purposes of this Indenture if mailed,
by registered mail, return receipt requested, postage prepaid, addressed as
follows:
if to the Authority, The Iredell County Industrial Facilities and
Pollution Control Financing Authority, P.O. Box 788, Statesville, North
Carolina 28655, Attention: Chairman;
if to the Trustee, First Union National Bank of North Carolina, One
First Union Plaza, Charlotte, North Carolina 28288, Attention: Corporate
Trust Department, or to any successor Trustee, if addressed to it at its
principal corporate trust office; and
if to the Lessee or Guarantor, Hunt Manufacturing Co., 1405 Locust
Street, Philadelphia, Pennsylvania, 19102, Attention: Secretary;
and if sent by telegraph, telegram report of delivery requested, addressed as
above, at the time and date appearing on the report of delivery.
XIV-1
<PAGE>
All documents received by the Trustee under the provisions of this
Indenture, or photographic copies thereof, shall be retained in its possession
until this Indenture shall be released in accordance with the provisions of the
Indenture, subject at all reasonable times to the inspection of the Authority
and the Bondholders and the agents and representatives thereof.
The Authority, the Trustee, the Lessee and the Guarantor may, by notice
given hereunder, designate any further or different addresses to which
subsequent notices, certificates or other communications shall be sent.
Section 1403. DESIGNATION OF ADDITIONAL PAYING AGENTS. The Authority hereby
covenants and agrees on the request of the Company, to cause the necessary
arrangements to be made through the Trustee and to be thereafter continued for
the designation of additional Paying Agents and for providing for the payment of
such of the Bonds and coupons appertaining thereto as shall be presented when
due at the office of the Trustee or its successor in trust hereunder, or at the
office of said additional Paying Agents. All such funds held by said additional
Paying Agents shall be held by each of them in trust and shall constitute a part
of the trust estate and shall be subject to the security interest created
hereby.
Section 1404. SUBSTITUTE PUBLICATION. If, because of the temporary or
permanent suspension of publication of any newspaper or financial journal or for
any other reason, the Trustee shall be unable to publish in a newspaper or
financial journal any notice required to be published by the provisions of this
Indenture, the Trustee shall give such notice in such other manner as in the
judgment of the Trustee shall most effectively approximate such publication
thereof, and the giving of such notice in such manner shall for all purposes of
this Indenture be deemed to be compliance with the requirements for the
publication thereof.
Section 1405. RIGHTS UNDER INDENTURE. Except as herein otherwise expressly
provided, nothing in this Indenture expressed or implied is intended or shall be
construed to confer upon any person, firm or corporation other than the parties
hereto, the Lessee, the Guarantor, and the holders of the Bonds issued under and
secured by this Indenture any right, remedy or claim,
XIV-2
<PAGE>
legal or equitable, under or by reason of this Indenture or any provision
hereof, this Indenture and all its provisions being intended to be and being for
the sole and exclusive benefit of the parties hereto, the Lessee, the Guarantor,
and the holders from time to time of the Bonds issued here under.
Section 1406. FORM OF CERTIFICATES AND OPINIONS. Upon any application or
request by the Authority or the Lessee to the Trustee to take any action under
any provision of this Indenture, the Authority or the Lessee shall furnish a
certificate of its Authority Representative or Company Representative,
respectively, stating that all conditions precedent, if any, provided for in
this Indenture relating to the proposed action have been complied with and an
opinion of counsel, stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.
Except as otherwise provided in this Indenture, any request, notice,
certificate or other instrument from the Authority or the Company to the Trustee
shall be deemed to have been signed by the proper party or parties if signed by
the Authority Representative or the Company Representative, respectively, and
the Trustee may accept and rely upon a certificate signed by the Authority
Representative as to any action taken by the Authority and by the Company
Representative as to any action taken by the Company.
Section 1407. SEVERABILITY. In case any one or more of the provisions of
this Indenture or of the Bonds or coupons issued hereunder shall for any reason
be held to be illegal or invalid, such illegality or invalidity shall not affect
any other provisions of this Indenture or of the Bonds, but this Indenture and
the Bonds shall be construed and enforced as if such illegal or invalid
provision had not been contained therein. In case any covenant, stipulation,
obligation or agreement contained in the Bonds or in this Indenture shall for
any reason be held to be in violation of law, then such covenant, stipulation,
obligation or agreement shall be deemed to be the covenant, stipulation,
obligation or agreement of the Authority to the full extent permitted by law.
XI V-3
<PAGE>
Section 1408. COVENANTS OF AUTHORITY NOT COVENANTS OF OFFICIALS
INDIVIDUALLY. All covenants, stipulations, obligations and agreements of the
Authority contained in this Indenture shall be deemed to be covenants,
stipulations, obligations and agreements of the Authority to the full extent
permitted by the Constitution and laws of North Carolina. No covenant,
stipulation, obligation or agreement contained herein shall be deemed to be a
covenant, stipulation, obligation or agreement of any present or future
Commissioner, agent or employee of the Authority in his individual capacity, and
neither the Commissioners of the Authority nor any other officer of the
Authority executing the Bonds shall be liable personally on the Bonds or be
subject to any personal liability or accountability by reason of the issuance
thereof. No Commissioner of the Authority and no officer, agent or employee of
the Authority shall incur any personal liability in acting or proceeding or in
not acting or not proceeding, in good faith, reasonably and in accordance with
the terms of this Indenture.
Section 1409. NORTH CAROLINA LAW GOVERNS. This Indenture shall be governed
by and construed in accordance with the laws of the State of North Carolina.
Section 1410. PAYMENTS DUE ON SUNDAYS AND HOLIDAYS. In any case where the
date of maturity of interest on or principal of the Bonds or the date fixed for
redemption of any Bonds shall be in the city of payment a Sunday or a legal
holiday or a day on which banking institutions are authorized by law to close,
then payment of interest or principal and redemption premium, if any, need not
be made on such date but may be made on the next succeeding business day with
the same force and effect as if made on the date of maturity or the date fixed
for redemption, and no interest on such payment shall accrue for the period
after such date.
Section 1411. EXECUTION IN COUNTERPARTS. This Indenture may be executed in
multiple counterparts, each of which shall be regarded for all purposes as an
original, and such counterparts shall constitute but one and the same
instrument.
Section 1412. HEADINGS NOT PART OF INDENTURE. Any headings preceding the
text of the several articles HEREOF, AND ANY table of contents or marginal notes
appended to copies hereof, shall be solely for convenience of reference
XIV-4
<PAGE>
and shall not constitute a part of this Indenture, and they shall not affect its
meaning, construction or effect.
IN WITNESS WHEREOF, The Iredell County Industrial Facilities and Pollution
Control Financing Authority has caused this Indenture to be executed in its name
and on its behalf by the Chairman or the Vice Chairman of the Authority and the
official seal of the Authority to be impressed hereon and attested by the
Secretary or an Assistant Secretary of the Authority; and First Union National
Bank of North Carolina has caused this Indenture to be executed in its behalf by
a vice president, and its corporate seal to be impressed hereon and attested by
a responsible officer, all as of the date and year first above written.
THE IREDELL COUNTY INDUSTRIAL
FACILITIES AND POLLUTION
CONTROL FINANCING AUTHORITY
By _______________________________
Chairman
[Seal]
Attest
_______________________________
Secretary
FIRST NATIONAL BANK OF
NORTH CAROLINA
By _______________________________
Vice President
[Seal]
Attest:
_______________________________
Assistant Secretary
XIV-5
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
I, the undersigned Notary Public, certify that Alice Fortner personally came
before me this day and acknowledged that she is Secretary of The Iredell County
Industrial Facilities and Pollution Control Financing Authority, a body
corporate and, politic, and that by authority duly given and as the act of said
Authority, the foregoing instrument was signed in its name by its chairman,
sealed with its official seal, and attested by herself as its Secretary. My
Commission expires _______________________________.
Witness my hand and official seal, this the ________ day of
_______________________________, 1979.
_______________________________
[SEAL]
STATE OF NORTH CAROLINA )
) ss.:
COUNTY OF MECKLENBURG )
I, the undersigned Notary Public, certify that Anthony A. Guthrie
personally came before me this day and acknowledged that he is Assistant
Secretary of First Union National Bank of North Carolina, a national banking
association, and that by authority duly given and as the act of said
association, the foregoing instrument was signed in its name by its Vice
President, sealed with its corporate seal, and attested by himself as its
Assistant Secretary. My Commission expires 5/31/81.
Witness my hand and official seal, this the 4th day of June, 1979.
_______________________________
[SEAL]
<PAGE>
EXHIBIT A
This Project consists principally of the following listed real and tangible
personal property.
1. Certain real property located in Iredell County, North Carolina,
together with all buildings and improvements therein, such real property being
more particularly described as follows:
BEGINNING at a point in the center of North Carolina Highway No. 90 (West
Front Street) leading from Statesville, North Carolina, to Taylorsville, North
Carolina, said beginning point being the Southwest corner of the tract of land
conveyed to the Carnation Company by the State of North Carolina by Deed
recorded in Deed Book 134, Page 125, Iredell County Registry, and running thence
with the center of said; North Carolina Highway No. 90, North 62 degrees 22
minutes West 1043 feet to a point in the center of said North Carolina Highway
No. 90, which point the center of said North Carolina Highway No. 90 and the
center of Mecham Road, a road leading in a Northerly direction SAID from said
North Carolina Highway No. 90 to what was formerly a part 0.1 the Piedmont
Experiment Station Farm intersect; thence with the center line of said Mecham
Road North 08 degrees 06 minutes East 805 feet to a point in the center 1 line
of the railroad track of Alexander Railroad Company; thence with the center 1
line of the said railroad track of the Alexander Railroad Company four calls as
follows: (1) South 40 degrees 05 minutes East-839.45 feet to a point; (2) thence
South 43 degrees 01 minutes East 159 feet to a point: (3) thence South 48
degrees 10 minutes East 168.6 feet to a point; (4) thence South 52 decrees 30
minutes East 161.7 feet to a point in the center of said railroad track, and
said point being the Northwest corner of the said tract of land conveyed to the
Carnation Company by the State of North Carolina by the Deed referred to
hereinabove; thence with the Western line of said Carnation Company South 15
degrees 49 minutes 40 seconds West 324.45 feet to the point of BEGINNING
containing 12.76 acres, more or less, and the above description being according
to a map and survey made by Kestler & MacKay, Registered Surveyors, dated April
13, 1964, revised on February 22 1979, with said revision being in regard to the
location of buildings, paving, and similar matters, and not in any way being a
revisions of property lines, including courses, degrees and distances; and being
the identical property conveyed to National Canvas Products Corp. by Deed of
Olin Corporation, dated September 26, 1975, recorded in Deed Book 578, Page 573,
Iredell County Registry.
<PAGE>
2. Certain machinery, equipment and tangible personal property located on
the aforesaid real property consisting principally of the following item:
A. CAFETERIA EQUIPMENT
B. OFFICE FURNITURE AND FIXTURES PURCHASED FROM NATIONAL CANVAS PRODUCTS CORP.
C. NARROW AISLE STACKING SYSTEM
Racks & Docking
3 Stock Pickers
1 Control Unit
2 Straddle Trucks (shelf loaders)
D. MACHINERY & EQUIPMENT
Air Compressor - Worthington (with after cooler)
Air Compressor - Lincoln
Air Compressor - Wayne
Rewind Machine
Programmable Cutter
5 Cutter Grinders
Injection Molding Machine
Shrink Wrap Machine
Harding Precision Lathe
Electronic Digital Scale
Pebble Mill
Brazing Machine
<PAGE>
================================================================================
Hunt Manufacturing Co.
to
First Union National Bank of North Carolina
as Trustee
----------
GUARANTY AGREEMENT
----------
Dated as of June 1, 1979
================================================================================
<PAGE>
GUARANTY AGREEMENT
TABLE OF CONTENTS
(THIS TABLE OF CONTENTS IS FOR CONVENIENCE
OF REFERENCE ONLY AND IS NOT A PART OF THIS
GUARANTY AGREEMENT.)
PAGE
----
PARTIES ..........................................................1
PREAMBLE..........................................................1
ARTICLE I
SECTION 1.1. Representations of the Guarantor .....................3
ARTICLE II
SECTION 2.1. The Guaranty......................................4
SECTION 2.2. Guaranty Unconditional ...........................4
SECTION 2.3. Operation of Guaranty ............................4
SECTION 2.4. Obligations of Guarantor Absolute.................5
SECTION 2.5. Waiver of Notice .................................6
SECTION 2.6. No Right of Set-off ..............................6
ARTICLE III
SECTION 3.1. Merger, Consolidation, Transfer ..................8
SECTION 3.2. Reports...........................................9
SECTION 3.3. Notice of Default ................................9
ARTICLE IV
SECTION 4.1. Events of Default ...............................10
SECTION 4.2. Remedies upon Default............... ............11
ARTICLE V
SECTION 5.1. Successors and Assigns ..........................12
SECTION 5.2. Notices..........................................12
SECTION 5.3. Amendment........................................12
SECTION 5.4. Discharge of Guarantor ..........................13
SECTION 5.5. Effect of Delay and Waivers .....................13
SECTION 5.6. Counterparts ....................................13
SECTION 5.7. Severability ....................................13
SECTION 5.8. Governing Law and Jurisdiction ..................13
SECTION 5.9. Jurisdiction; notice and service
of process ....................................14
<PAGE>
This GUARANTY AGREEMENT dated as of June 1, 1979 (the "Guaranty"), between
Hunt Manufacturing Co. (the "Guarantor"), a corporation organized and existing
under the laws of the State of Pennsylvania, and First Union National Bank of
North Carolina, a banking association duly incorporated and existing under the
laws of the United States, as trustee (the "Trustee"), under an Indenture and
Deed of Trust dated as of June 1, 1979 (the "Indenture"), between The Iredell
County Industrial Facilities and Pollution Control Financing Authority (the
"Authority") and the Trustee,
W I T N E S S E T H:
WHEREAS, prior to, or contemporaneously with, the execution of this
Guaranty there will be delivered a Lease Agreement dated as of June 1, 1979 (the
"Lease"), under which the Authority will lease to Hunt Manufacturing Co., a
Pennsylvania corporation, as lessee (the "Lessee"), certain property designated
the "Leased Property" in the Lease and therein defined; and
WHEREAS, the Authority, in order to pay the cost of the "Project" (as
defined in the Lease) will issue and sell initially "The Iredell County
Industrial Facilities and Pollution Control Financing Authority Industrial
Revenue Bonds (Hunt Manufacturing Co. Project), Series 1979", in the aggregate
principal amount of $2,000,000 (the "Series 1979 Bonds"), pursuant to the
Indenture, and will secure the Series 1979 Bonds and any additional and
refunding bonds issued by the Authority at the request of the Lessee on a parity
under the Indenture with the Series 1979 Bonds (the Series 1979 Bonds and any
such additional and refunding bonds herein called, collectively, the "Bonds") by
the assignment of substantially all of its interests in the Lease and the rent
and other revenues to be derived therefrom, in trust to the Trustee, all for the
benefit of the holders of the Bonds; and
<PAGE>
WHEREAS, the Authority requires as an inducement and a prerequisite to its
entering into the Lease and to the issuance and sale of the Bonds, for the
further security of the holders of the Bonds, that the Guarantor deliver this
Guaranty; and
WHEREAS, the Guarantor desires that the Authority enter into the Lease and
issue and sell the Bonds and lease the Leased Property, and the Guarantor is
willing to deliver this Guaranty as an inducement to the Authority so to do; and
NOW, THEREFORE, in consideration of the foregoing, the Guarantor hereby
agrees with the Trustee as follows:
2.
<PAGE>
ARTICLE I
Section 1.1. REPRESENTATIONS OF THE GUARANTOR
The Guarantor hereby represents and warrants as follows:
(a) It is a corporation duly incorporated under the laws of the
Commonwealth of Pennsylvania, is in good standing under the laws of said
Commonwealth, has power under the laws of such Commonwealth and its
Articles of Incorporation to enter into this Guaranty, and by proper
corporate action has been duly authorized to execute and deliver this
Guaranty.
(b) The execution and delivery of this Guaranty and compliance with
the terms hereof under the circumstances contemplated hereby will not
conflict with the Articles of Incorporation or bylaws of the Guarantor or
constitute on the part of the Guarantor a breach of or a default under any
agreement or other instrument to which the Guarantor is a party or any
existing law, administrative regulation, court order or consent decree to
which the Guarantor is subject.
(c) This Guaranty is made in furtherance of the purposes for which the
Guarantor was incorporated and is necessary to promote and further the
business of the Guarantor and the assumption by the Guarantor of its
obligations hereunder will result in direct financial benefits to the
Guarantor.
3.
<PAGE>
ARTICLE II
Section 2.1. THE GUARANTY
The Guarantor absolutely and unconditionally guarantees to the Trustee for
the benefit of the present and future holders of the Bonds and the interest
coupons appertaining thereto, if any, the full and prompt payment of the
principal of and redemption premium, if any, and interest on the Bonds when and
as the same shall become due, whether at the stated maturity thereof, by call
for redemption or otherwise. The Guarantor further absolutely and
unconditionally agrees to pay all reasonable expenses and charges, legal or
otherwise (including court costs and attorneys' fees) paid or incurred by the
Authority or the Trustee in realizing upon any of the payments or enforcing any
of the covenants hereby guaranteed or in enforcing this Guaranty Agreement.
Section 2.2. GUARANTY UNCONDITIONAL
This Guaranty shall be a continuing, absolute, and unconditional guaranty
and shall remain in full force and effect until Payment of the Bonds (as defined
in the Indenture) shall have been made. The obligations of the Guarantor
hereunder shall arise absolutely and unconditionally when and as each series of
the Bonds shall have been issued, sold and delivered by the Authority.
Section 2.3. OPERATION OF GUARANTY
This is a guaranty of payment and not of collection, and the Guarantor
expressly waives any right to require that any action be brought against the
Authority or to require that resort be had to any security. If the Authority
shall default in payment of the principal of or redemption premium, if any, or
interest on the Bonds whey. and as the same shall become due, whether at the
stated maturity thereof, by call for redemption or otherwise, the Guarantor,
upon demand by the Trustee or its successors or assigns, without notice other
than such demand and without the necessity of further action by the Trustee or
its successors or assigns, will promptly and fully make such payments, provided,
however, that no such demand shall be effective until the close of business on
the day any such default shall occur. In the event of such default the Trustee
shall make such demand. The Guarantor will pay all reasonable
4.
<PAGE>
costs and expenses, including attorneys' fees, paid or incurred by the Trustee
and its successors and assigns in connection with the enforcement of the
obligations of the Authority under the Indenture and of the Guarantor under this
Guaranty. All payments by the Guarantor shall be made in any coin or currency of
the United States of America which on the respective dates of payment thereof is
legal tender for the payment of public and private debts. Each default in
payment of the principal of or redemption premium, if any, or interest on any
Bond shall give rise to a separate cause of action hereunder, and separate suits
may be brought hereunder as each cause of action arises.
Section 2.4. OBLIGATIONS OF GUARANTOR ABSOLUTE
The obligations of the Guarantor hereunder shall be absolute and
unconditional and shall not be impaired, modified, released or limited by any
occurrence or condition whatsoever, including without limitation (a) any
compromise, settlement, release, waiver, renewal, extension, indulgence or
modification of or change in any of the obligations and liabilities of the
Authority contained in the Bonds or the Indenture, (b) any impairment,
modification, release or limitation of the liability of the Authority or its
estate, or any other security for the Bonds, in bankruptcy, or any remedy for
the enforcement thereof, resulting from the operation of any present or future
provision of the Bankruptcy Act, as amended, or other statute or from the
decision of any court, (c) the assertion or exercise by the Authority or its
successors or assigns, or the Trustee or its successors or assigns, of any
rights or remedies under the Indenture or this Guaranty or their delay in or
failure to assert or exercise any such rights or remedies, (d) the assignment or
mortgaging or the purported assignment or mortgaging of any property as security
for the Bonds, including all or any part of the interests of the Authority in
the Leased Property, (e) the limitation of the Authority's liability in the
payment of the principal of or redemption premium, if any, or interest on the
Bonds solely to revenues and receipts derived by it under the Lease, this
Guaranty and the Indenture, (f) the extension of the time for payment by the
Lessee of any rents or other sums or any part thereof owing
5.
<PAGE>
or payable under any of the terms and provisions of the Lease or of the time for
performance by Lessee of any other obligations under or arising out of any of
such terms and provisions or the extension or the renewal of any thereof, (g)
the modification or amendment (whether material or otherwise) of any duty,
agreement or obligation of Lessee set forth in the Lease, (h) the voluntary or
involuntary liquidation, dissolution, sale or other disposition of all or
substantially all the assets, marshalling of assets and liabilities,
receivership, insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition or readjustment of, or other similar
proceeding affecting, the Guarantor or any of its assets, or the disaffirmance
of the Lease in any such proceeding, (i) the release or discharge of the
Guarantor from the performance or observance of any agreement, covenant, term or
condition contained in any of such instruments by operation of law, (j) the
release, substitution or replacement in accordance with the terms of the Lease
of any property subject thereto, (k) the receipt and acceptance by the Authority
or the Trustee of notes, checks or other instruments for the payment of money
made by the Guarantor and extensions and renewals thereof or (1) the
unenforceability of the Lease or the Indenture.
Section 2.5. WAIVER OF NOTICE
The Guarantor unconditionally waives (a) notice of any of the matters
referred to in Section 2.4 hereof and (b) any demand (except as specified in
Section 2.3 hereof), proof or notice of nonpayment of the principal of or
redemption premium, if any, or interest on the Bonds or other payments of money
required by the Indenture or of default by the Authority or the Trustee in
performing and keeping any other covenant, condition or agreement required of it
under the Indenture.
Section 2.6. NO RIGHT OF SET-OFF
The Trustee agrees to give immediately to the Guarantor notice of any
default under the Lease or the Indenture known to the Trustee. No act of
commission or omission of any kind or at any time upon the part of the Authority
or the Trustee or the successors or
6.
<PAGE>
assigns of either in respect of arty matter whatsoever shall in any way affect
or impair the rights of the Authority or the Trustee or any successor or
assignee to enforce any right, power, or benefit of the Authority or the Trustee
under this Guaranty, and no set-off, claim, reduction or diminution of any
obligation or any defense of any kind or nature which the Guarantor has or may
have against the Authority or the Trustee or any successor or assignee shall be
available to the Guarantor or against the Authority or the Trustee (except as
representative of the holders of the Bonds) or any such successor or assignee in
any suit or action brought by the Authority or the Trustee, or such successors
or assigns, to enforce any right, power or benefit under this Guaranty. Nothing
in this Guaranty shall be construed as a waiver by the Guarantor of any rights
or claims it may have against the Authority or the Trustee under this Guaranty
or otherwise, but any recovery upon such rights and claims shall be had from the
Authority or the Trustee separately, it being the intent of this Guaranty that
the Guarantor shall be unconditionally and absolutely obligated to perform fully
all of its obligations, agreements and covenants hereunder for the benefit of
the holders of the Bonds and the interest coupons appertaining thereto.
7.
<PAGE>
ARTICLE III
Section 3.1. MERGER, CONSOLIDATION, TRANSFER
Until Payment of the Bonds shall have been made in accordance with the
Indenture, the Guarantor covenants and agrees as follows:
(i) it will maintain and preserve its corporate existence and
organization, except as provided in clause (ii) of this Section, and will
not voluntarily dissolve without first discharging its obligations under
the Guaranty; and
(ii) it will not sell, transfer or otherwise dispose of all or
substantially all of its assets (either in a single transaction or in a
series of related transactions), and will not merge or consolidate with any
other corporation and will not permit one or more corporations to merge
into or consolidate with it, unless the surviving, resulting or transferee
corporation, as the case may be:
(a) is a corporation organized and existing under the laws of one
of the states of the United States of America;
(b) shall, in a certificate delivered to the Trustee, which
certificate shall be in a form reasonably satisfactory to the Trustee,
expressly assume, and agree to pay and to perform, all of the
obligations of the Guarantor under the Guaranty;
(c) shall deliver to the Trustee a certificate executed by its
chief financial officer stating that none of the obligations,
covenants anti performances under the Guaranty will be violated or
abrogated as a result of any such sale, transfer, merger or
consolidation;
(d) shall have a net worth, determined in accordance with
generally accepted accounting principles, at least equal to 90% of the
net worth of the Guarantor as of the date of the most recent audited
consolidated financial statement of the Guarantor; and
8.
<PAGE>
(e) in the event a merger or consolidation or acquisition shall
occur within three years following the date of issuance of the Series
1979 Bonds, shall furnish an opinion of Counsel, who shall be Counsel
nationally recognized on the subject of municipal bonds, selected key
the Company and acceptable to the Trustee, to the effect that interest
on the Series 1979 Bonds will or will not become includable in the
gross income of the recipient under Section 103 of the Code and
regulations promulgated thereunder by reason of such merger,
consolidation or acquisition for any reason other than that the holder
is a substantial user or a related person within the meaning of
Section 103(b)(8) of the Code.
If the Guarantor shall be the surviving, resulting or transferee corporation, as
the case may be, then the furnishing and delivery of the certificates stipulated
in clauses (b) and (c) above shall not be required.
Section 3.2. REPORTS
The Guarantor shall furnish to the Trustee and, upon request, any
Bondholder annually, within 120 days after the end of the preceding fiscal year,
an Annual Report of the Guarantor. In addition, the Guarantor shall furnish the
Trustee and any Bondholder, upon written request therefor, (i) the report of the
Guarantor on Form 10-K filed with the Securities and Exchange Commission (the
"SEC") within a reasonable time after the filing of such report, (ii) its
reports filed with the SEC on Form 10-Q and its quarterly reports to
shareholders within a reasonable time after each quarter of each fiscal year and
(iii) its reports filed with the SEC on Form 8-K within a reasonable time after
the filing of such reports. In addition, the Guarantor shall cause to be
prepared and shall furnish the Trustee and, upon request, any Bondholder, annual
audited financial statements of the Guarantor in the event that the Guarantor
ceases to file reports with the SEC under the Securities Exchange Act of 1934.
Section 3.3. NOTICE OF DEFAULT
The Guarantor covenants that immediately after becoming aware of any
condition or event which constitutes a default or an event of default under the
Guaranty, Lease or Indenture, it will deliver to the Trustee and the Authority,
a written notice specifying the nature and period of existence of such event and
specifying what action the Guarantor is taking, or proposes to take, with
respect thereto.
9.
<PAGE>
ARTICLE IV
Section 4.1. EVENTS OF DEFAULT
The following shall be events of default hereunder:
(a) Failure by the Guarantor to make any payment required to be made
to the Trustee under this Guaranty.
(b) After telegraphic or written notice shall have keen given by the
Trustee to the Guarantor, failure by the Guarantor to observe and perform
any other obligation, covenant or performance on its part to be observed or
performed under the Guaranty and the continuation of such failure for a
period of 90 days; provided, however, that no event of default shall be
deemed to have occurred under this clause (b), so long as, in the
reasonable judgment of the Trustee, the Guarantor is acting in good faith
by appropriate proceedings to remedy or cure any such failure.
(c) A default under any mortgage, indenture or instrument, under which
there may be issued, or by which there may be secured or evidenced, any
indebtedness of tile Guarantor exceeding $500,000, in principal amount then
outstanding, whether such indebtedness now exists or shall hereafter be
created, shall happen and shall result in such indebtedness becoming or
being declared due and payable prior to the date on which it would
otherwise become due and payable, and such acceleration shall not be paid,
rescinded, annulled or otherwise satisfied in full within 10 days after
written notice of such acceleration to the Guarantor.
(d) Failure by the Guarantor to satisfy any final judgment against the
Guarantor for the payment of money within 30 days after entry thereof if at
the end of such 30-day period there shall be undischarged final judgments
against the Guarantor for the payment of money which shall alone or in the
aggregate exceed $500,000 (a judgment not being deemed final if any appeal
or further proceedings relating thereto shall be pending and a supersedeas
bond shall have been posted, or if the time within which any party may seek
an appeal or further proceedings shall not have expired).
(e) The dissolution or liquidation of the Guarantor or the filing by
the Guarantor of a voluntary petition in bankruptcy, or failure by the
Guarantor to promptly lift any execution, garnishment or attachment of such
consequence as will materially impair the Guarantor's
10.
<PAGE>
ability to carry on its normal business operations; the Guarantor's
seeking of, consenting to or acquiescing in the appointment of a receiver
of all or substantially all of its property; the commission by the
Guarantor of any act of bankruptcy; the adjudication of the Guarantor as a
bankrupt; or any assignment by the Guarantor for the benefit of its
creditors, or the entry by the Guarantor into an agreement of composition
with its creditors, or if a petition or answer proposing the adjudication
of the Guarantor as a bankrupt or its reorganization, arrangement or debt
readjustment under any present or future federal bankruptcy act or any
similar federal or state law shall be filed in any court and such petition
or answer shall not be discharged or denied within 90 days after the
filing thereof. The term "dissolution or liquidation of the Guarantor" as
used in this clause (e) shall not be construed to include the cessation of
the corporate existence of the Guarantor resulting either from a merger or
consolidation of the Guarantor into or with another corporation or a
dissolution or liquidation of the Guarantor following a sale, transfer or
other disposition of all or substantially all of its assets as an
entirety, under the conditions permitting such actions as summarized
hereinbefore.
(f) If any of the representations of the Guarantor contained in
Section 1.1 hereof shall be untrue or incorrect in any material respect.
Section 4.2. REMEDIES UPON DEFAULT
Upon the occurrence of an event of default under Section 4.1(a) of this
Guaranty, the Trustee shall act pursuant to Section 2.3 hereof.
Upon the occurrence of any event of default, the Trustee may proceed to
enforce the Guaranty by any proper suit, action or proceeding, in law or equity,
to enforce the provisions of this Guaranty.
11.
<PAGE>
ARTICLE V
Section 5.1. SUCCESSORS AND ASSIGNS
This Guaranty shall be binding upon the Guarantor, its successors and
assigns and all rights against the Guarantor arising under this Guaranty shall
be for the sole benefit of the Authority and the Trustee, their respective
successors and assigns under the Indenture and the holders of the Bonds, all of
whom shall be entitled to enforce performance and observance of this Guaranty to
the same extent as if they were parties hereto. The Trustee and the holders of
the Bonds shall be entitled to bring any suit, action or proceeding against the
Guarantor for the enforcement of any provision of this Guaranty without
exhausting any other remedies which they may have pursuant to the terms of the
Bonds or the Indenture and without resort to any other security held by or
available to the Authority or the Trustee.
Section 5.2. NOTICES
All notices or other communications hereunder shall be sufficiently given
and shall be deemed given when delivered by hand delivery or on the second day
following the day on which the same has been mailed, postage prepaid, addressed
as follows: if to the Trustee, First Union National Bank of North Carolina, One
First Union Plaza, Charlotte, North Carolina, 28288, Attention: Corporate Trust
Department; and if to the Guarantor, Hunt Manufacturing Co., 1405 Locust Street,
Philadelphia, Pennsylvania 19102, Attention: Secretary. Any notice, process,
pleadings or other papers served hereunder shall, at the same time, be sent by
registered mail to the Authority, The Iredell County Industrial Facilities anti
Pollution Control Financing Authority, P.O. Box 788, Statesville, North Carolina
28677, Attention: Chairman; or such other addresses as may be furnished in
writing by the Authority, the Company or the Trustee, as the case may be, to
each of the others.
Section 5.3. AMENDMENT
This Guaranty may be amended, modified or discharged only upon an agreement
in writing of the Guarantor, the Authority and the Trustee when, and to the
extent, permitted in the Indenture.
12.
<PAGE>
Section 5.4. DISCHARGE OF GUARANTOR
Upon Payment of the Bonds, all liability of the Guarantor hereunder shall
cease and be discharged and the Trustee shall execute and deliver to the
Guarantor an appropriate instrument in writing evidencing the release and
discharge of the Guarantor from any and all such further liability under this
Guaranty.
Section 5.5. EFFECT OF DELAY AND WAIVERS
No delay or omission to exercise any right or power accruing upon any
default, omission or failure of performance hereunder shall impair any such
right or power or shall be construed to be a waiver thereof, but any such right
and power may be exercised from time to time and as often as may be deemed
expedient. In order to entitle the Authority or the Trustee to exercise any
remedy now or hereafter existing at law or in equity or by statute, it shall not
be necessary to give any notice, other than such notice as may be herein
expressly required. In the event any provision contained in this Guaranty should
be breached by any party and thereafter waived by the other party so empowered
to act, such waiver shall be limited to the particular breach so waived and
shall not be deemed to waive any other breach hereunder. No waiver, amendment,
release or modification of this Guaranty shall be established by conduct, custom
or course of dealing, but solely by an instrument in writing duly executed by
the parties thereunto duly authorized by this Guaranty.
Section 5.6. COUNTERPARTS
This Guaranty may be executed simultaneously in several counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
Section 5.7. SEVERABILITY
The invalidity or unenforceability of any one or more phrases, sentences,
clauses or Sections contained in this Guaranty shall not affect the validity or
enforceability of the remaining portions of this Guaranty, or any part thereof.
Section 5.8. GOVERNING LAW AND JURISDICTION
This Guaranty shall be governed by and construed in accordance with the
laws of the Commonwealth of Pennsylvania.
13.
<PAGE>
Section 5.9. JURISDICTION; NOTICE AND SERVICE OF PROCESS.
The Guarantor irrevocably: (a) agrees that any suit, action or other legal
proceeding arising out of this Guaranty may be brought in the courts of the
State of North Carolina or the courts of the United States for the State of
North Carolina; (b) consents to the jurisdiction of each such court in any such
suit, action or proceeding; and (c) waives any objection which it may have to
laying of the venue of any such suit, action or proceeding in any of such
courts. For such time as the Guarantor's obligation under Section 2 of this
Guaranty shall not have been satisfied or discharged in full, the Guarantor
irrevocably agrees and consents that any service of process made by registered
mail to hunt Manufacturing Co., 1405 Locust Street, Philadelphia, Pennsylvania
19102, Attention: Secretary, or such other addresses as may be furnished by the
Guarantor to the Trustee in writing, shall be taken and held to be valid
personal service upon the Guarantor whether or not the Guarantor shall then be
doing, or at any time shall have done, business within the State of North
Carolina and that any such service of process shall be of the same force and
validity as if the service were made upon it according to the laws governing the
validity and requirements of such service in such state, and waives all claim of
error by reason of any such service.
IN WITNESS WHEREOF, the Guarantor and the Trustee have caused this Guaranty
to be executed in their respective corporate names and their respective
corporate seals to be hereunto fixed and attested key their duly authorized
officers, all as of the date first above written.
HUNT MANUFACTURING CO.
By ____________________________
Vice President
(Seal)
Attest:
____________________________
Assistant Secretary
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
By ____________________________
Vice President
(SEAL)
Attest:
____________________________
Assistant Secretary
14.
<PAGE>
$2,000,000
THE IREDELL COUNTY INDUSTRIAL FACILITIES AND
POLLUTION CONTROL FINANCING AUTHORITY
INDUSTRIAL REVENUE BONDS
(HUNT MANUFACTURING CO. PROJECT)
Series 1979
CONTRACT OF PURCHASE
May 15, 1979
The Iredell County Industrial
Facilities and Pollution Control
Financing Authority
P. 0. Box 788
Statesville, North Carolina 28677
Attention: Chairman
Gentlemen:
The undersigned acting for and on behalf of ourselves (the undersigned
being herein called the "Underwriter"), hereby offers to enter into this
Contract of Purchase with you (herein called the "Authority") for the purchase
by the Underwriter and sale by the Authority of the Authority's Industrial
Revenue Bonds specified below. This offer is made subject to acceptance by the
Authority and approval by the Company prior to 10:00 o'clock P. M., Statesville,
North Carolina time, on the date hereof, and upon such acceptance this Contract
of Purchase shall be in full force and effect in accordance with its terms and
shall be binding upon both the Authority and the Underwriter.
1. Upon the terms and conditions and upon the basis of the representations
herein set forth, the Underwriter, hereby agrees to purchase from the Authority
and the Authority hereby agrees to sell to the Underwriter all (but not less
than all) of the $2,000,000 aggregate principal amount of the Authority's
Industrial Revenue Bonds (Hunt Manufac turing Co. Project) Series 1979 (herein
referred to as the "Bonds"), for an aggregate purchase price of 9.78% of the
aggregate principal amount of the Bonds, plus interest accrued from June 1, 1979
to the date of Closing (hereinafter defined); such sale being subject to the
prior approval of terms of sale in this Contract of Purchase by the Local
Government Commission of the State of North Carolina pursuant to ss.159C-9 of
the General Statutes of North Carolina.
<PAGE>
The Bonds shall be as described in the Official Statement of the Authority
relating to the Bonds, dated May 15, 1979. Said Official Statement as may
hereafter be amended or supplemented with our consent is hereinafter called the
"Official Statement", and the Preliminary Official Statement of the Authority
relating to the Bonds dated May 2, 1979 is hereinafter called the "Preliminary
Official Statement". The Bonds shall be issued and secured under and pursuant to
an Indenture and Deed of Trust (herein called the "Indenture") to be dated as
of June 1, 1979, between the Authority and First Union National Bank of North
Carolina (herein referred to as the "Trustee"), substantially in the form
previously submitted to the Underwriter with only such changes therein as shall
be mutually agreed upon. The Authority will use the proceeds of the Bonds to
provide funds to finance a portion of the cost of acquiring, improving,
equipping and providing for a manufacturing facility for the production of paper
and other art/craft products (herein called the "Project") to be leased by the
Authority to Hunt Manufacturing Co., a Pennsylvania corporation (herein called
the "Company"), pursuant to a Lease Agreement, dated as of June 1, 1979
(hereinafter called the "Agreement") substantially in the form submitted to the
Underwriter with only such changes as shall be mutually agreed upon. Simul-
taneously with the delivery of the Bonds, the Company will enter into a Guaranty
Agreement dated as of June 1, 1979 (herein called the "Guaranty"), with the
Trustee, pursuant to which the Company will unconditionally guarantee to the
Trustee the full and prompt payment of the principal of and redemption premium,
if any, and interest on the Bonds, such Guaranty to be substantially in the form
submitted to the Underwriter, with only such changes as shall be mutually agreed
upon. The Underwriter agrees to make a public offering of the Bonds at the
initial offering price set forth in the Official Statement. Following the
initial public offering, the offering price may be changed from time to time by
the Underwriter.
2. The Underwriter herewith delivers to the Trustee a certified or official
bank check payable to tile order of the Company, in the amount of $20,000 (1% of
the aggregate principal amount of the Bonds), as security for the performance by
the Underwriter of its obligation to accept and pay for the Bonds at the Closing
in accordance with the provisions of this Contract of Purchase. Said check shall
not be negotiated or presented for payment but shall be held as security for the
Closing. Concurrently with the delivery
2.
<PAGE>
of and payment for the Bonds at the Closing, such check shall be returned to the
Underwriter. In the event the Authority does not accept this offer, or upon the
Authority's failure to deliver the Bonds at the Closing, or if the Authority
shall be unable to satisfy the conditions to the obligations of the Underwriter
contained in this Contract of Purchase, or if such obligations shall be
terminated for any reason permitted by this Contract of Purchase, such check
shall be immediately returned to the Underwriter and the Authority shall have no
further obligation hereunder and all claims or rights hereunder of the
Underwriter or the Company against the Authority shall be released and
discharged. In the event that the Underwriter fails (other than for a reason
permitted under this Contract of Purchase) to accept and pay for the Bonds at
the Closing, such check shall be cashed and the amount thereof distributed first
to defray the expenses of the Authority and any remainder shall be paid to the
Company, and such distribution of the check shall constitute full liquidated
damages for such failure and for any and all defaults hereunder on the part of
the Underwriter, and the cashing of such check shall constitute a full release
and discharge of all claims and rights hereunder of the Company and the
Authority against the Underwriter.
3. The Authority shall deliver or cause to be delivered to the Underwriter
promptly after the Authority's acceptance hereof two copies of the Official
Statement signed on behalf of the Authority by the Chairman or Vice Chairman of
the Authority and by Coopers & Lybrand. The Authority has authorized the use of
copies of the Preliminary Official Statement, the Official Statement, the
Indenture, the Agreement and the Guaranty in connection with the public
offering and sale of the Bonds.
4. The Authority hereby represents and warrants to the Underwriter that:
(a) The Authority is a political subdivision of the State of North
Carolina and a body politic and corporate, duly created and existing under
Chapter 800 of the 1975 Session Laws of North Carolina, as amended, which
as codified appears as Chapter 159C of the General Statutes of North
Carolina (the "Enabling Act"). The Authority is authorized to issue
industrial development revenue bonds in accordance with the Constitution
and the laws of North Carolina, including the Enabling Act, and to use the
proceeds thereof to
3.
<PAGE>
acquire, own, lease and dispose of properties in order to promote industry
and develop trade by inducing manufacturing and industrial enterprises to
locate or remain in the State of North Carolina.
(b) The Authority has full power and authority to issue the Bonds
pursuant to the Enabling Act, to acquire, own, construct, install, equip
and lease the Project, and to carry out and consummate all transactions
contemplated by this Contract of Purchase, the Bonds, the Agreement and the
Indenture.
(c) The Authority has duly authorized: (i) the issuance and sale of
the Bonds; (ii) the Acquisition of the Project as provided by the
Agreement; (iii) the execution, delivery and due performance of this
Contract of Purchase, the Agreement, the Indenture and the Bonds; and (iv)
the taking of any and all action as may be required on the part of the
Authority to carry out, give effect to and consummate the transactions
contemplated hereby. The Bonds, fully executed, and fully executed
counterparts of the Agreement and the Indenture, and certified copies of
the resolution of the Authority adopted on May 15, 1979, authorizing the
Authority's undertakings contemplated hereby shall be delivered to the
Underwriter by the Authority and the Company at the Closing.
(d) So long as the Bonds are outstanding, the Authority will not issue
or sell any bonds or obligations (other than the Bonds or any "Additional
Bonds" or "Refunding Bonds" as defined in, and as permitted by, the
Indenture), the interest, premium or principal of which shall be payable in
whole or in part from the revenues derived from the Agreement or the Trust
Estate or the Leased Equipment or the use of the Trust Estate or the Leased
Equipment (as defined in the "Indenture").
(e) The Authority is not required to pay any taxes on the Project or
upon the income therefrom and the interest on the Bonds is exempt from all
income taxes within the State of North Carolina.
(f) There is no action, suit, proceeding or investigation at law or in
equity or before or by any court, public board or body pending or, to the
knowledge of the Authority, threatened against or affecting the Authority,
or to the best of the knowledge of the
4.
<PAGE>
Authority any basis therefor, wherein an unfavorable decision, ruling or
finding would adversely affect the transactions contemplated by this
Contract of Purchase, or which, in any way, would adversely affect the
validity of the Bonds, the Agreement, the Indenture, the Guaranty, or any
other agreement or instrument to which the Authority is a party and which
is used or contemplated for use in consummation of the transactions
contemplated hereby.
(g) The execution and delivery of this Contract of Purchase, the
Bonds, the Agreement, the Indenture and the other agreements contemplated
hereby and in compliance with the provisions hereof will not conflict with,
or constitute on the part of the Authority a breach of, or a default under,
any existing law, administrative regulation, decree, court order or any
provision of any legislative act, constitutional or other proceeding
applicable to or establishing or relating to the establishment of the
Authority or its affairs or resolutions, or any agreement, indenture,
mortgage, lease or other instrument to which the Authority is subject or by
which it is or may be bound.
It is specifically understood and agreed that the Authority makes no
representation as to the financial position or business condition of the Company
and does not represent or warrant as to any of the statements, materials
(financial or otherwise), representations or certifications furnished or to be
made and furnished by the Company in connection with the sale of the Bonds, or
as to the correctness, completeness or accuracy of such statements.
5. At 10:00 o'clock A.M., New York City time, on June 5, 1979, or at such
other time or on such earlier or later date as the Underwriter, the Company and
the Authority may mutually agree upon (herein called the "Closing") the
Authority will deliver or cause to be delivered to the Underwriter at the
offices of Brown, Wood, Ivey, Mitchell & Petty, Suite 3500, One Liberty Plaza,
New York, New York or at such other place as the Underwriter, the Company and
the Authority may mutually agree upon, the Bonds in definitive form (all of the
Bonds and the coupons appertaining thereto to be lithographed on steel engraved
borders), duly executed and authenticated, such delivery to be made against
delivery
5.
<PAGE>
of the purchase price to the Trustee at such office (or such other place or
places of payment as shall be mutually agreed upon by the Underwriter, the
Company and the Authority). It is anticipated that CUSIP identification numbers
will be printed on the Bonds, but neither the failure to print such number on
any Bond nor any error with respect thereto shall constitute cause for a failure
or refusal by the Underwriter to accept delivery of and pay for the Bonds in
accordance with the terms of this Contract of Purchase. All expenses in relation
to the printing of CUSIP numbers on said Bonds and the CUSIP Service Bureau
charge for the assignment of said numbers shall be paid for by the Authority
from the proceeds of the Bonds or, if the Bonds shall not be issued, by the
Company. The purchase price for the Bonds shall be paid by certified or official
bank check or checks payable in New York Clearing House funds to the order of
the Trustee. The Bonds will be made available for checking and packaging at the
office of The Signature Company not less than 20 hours prior to the Closing.
6. The Underwriter has entered into this Contract of Purchase in reliance
upon the representations and agreements of the Authority herein and the
performance by the Authority of its obligations hereunder, both as of the date
hereof and as of the date of Closing. The Underwriter's obligations under this
Contract of Purchase are and shall be subject to the following further
conditions:
(a) at the time of Closing, the Official Statement, the Indenture, the
Agreement, the Guaranty and the Letters of Representation attached hereto
as Exhibit A and Exhibit B (herein called the "Letters of Representation")
shall be in full force and effect as valid and binding agreements between
or among the various parties thereto and shall not have been amended,
modified or supplemented except as may have been agreed to in writing by
the Underwriter, and the Authority shall have duly adopted and there shall
be in full force and effect such resolutions as in the opinion of Brown,
Wood, Ivey, Mitchell & Petty, New York, New York (herein called "Bond
Counsel") shall be necessary in connection with the transactions
contemplated hereby;
(b) the Underwriter shall have the right to cancel its obligations to
purchase the Bonds if between the date hereof and the Closing (i)
legislation shall have been enacted by the Congress of the United States or
the General Assembly of the State of
6.
<PAGE>
North Carolina, or adopted by either House of the Congress, or recommended
to the Congress for passage by the President of the United States, or
favorably reported for passage to either House of the Congress by any
committee of either such body to which such legislation has been referred
for consideration, or a decision shall have been rendered by a court of the
United States or the State of North Carolina or the Tax Court of the United
States, or a ruling shall have been made or a regulation shall have been
proposed or made by the Treasury Department of the United States or the
Internal Revenue Service or North Carolina authority, with respect to
Federal or North Carolina taxation upon revenues or other income of the
general character to be derived by the Authority or upon interest received
on obligations of the general character of the Bonds, which in the
reasonable opinion of the Underwriters materially adversely affects the
market for the Bonds, or (ii) there shall exist any event which in the
reasonable opinion of Underwriter, either (A) makes untrue or incorrect
in any material respect any statement or information contained in the
Official Statement or (B) is not reflected in the Official Statement but
should be reflected therein to make the statements made therein, in the
light of the circumstances under which they were made, not misleading, or
(iii) there shall have occurred any new outbreak of hostilities or other
national or international calamity or crisis, the effect of such outbreak,
calamity or crisis on the financial markets of the United States being such
as would make it impracticable, in the reasonable opinion of the
Underwriter, for the Underwriter to market the Bonds or enforce contracts
for the sale of the Bonds, or (iv) there shall be in force a general
suspension of trading on the New York Stock Exchange or minimum or maximum
prices for trading shall have been fixed and be in force, or maximum ranges
for prices for securities shall have been required and be in force on the
New York Stock Exchange, whether by virtue of a determination by the
Exchange or by order of the Securities and Exchange Commission or any other
governmental authority, or (v) a general banking moratorium shall have been
declared by either Federal or New York authorities having jurisdiction and
be in force;
(c) at the time of the Closing the Underwriter shall receive an
opinion of Drinker Biddle & Reath,
7.
<PAGE>
Counsel to the Company, dated the date of the Closing, to the effect that:
(i) the Company has been duly incorporated and is validly
existing under the laws of the Commonwealth of Pennsylvania and has
due corporate authority to carry on its business as described in the
Appendix, to convey its property to the Authority, to lease property
from the Authority and to guarantee the Bonds;
(ii) the Deed, dated as of June 1, 1979 (the "Deed"), from the
Company to the Authority has been duly authorized, executed and
delivered by the Company;
(iii) the Bill of Sale dated as of June 1, 1979 (the "Bill of
Sale"), from the Company to the Authority has been duly authorized,
executed and delivered by the Company;
(iv) the Agreement has been duly authorized, executed and
delivered by the Company and is a legal, valid and binding obligation
of the Company; and
(v) the Guaranty has been duly authorized, executed and delivered
by the Company and is a valid, binding obligation of the Company
enforceable in accordance with its terms, subject to any applicable
bankruptcy, reorganization, insolvency, moratorium or other laws
affecting creditors' rights and to the further qualification that the
availability of specific enforcement remedies may be subject to the
discretion of the courts;
and such counsel will further advise that, on the basis of a general review and
discussion with certain officers of the Company, but without independent check
or verification except as indicated, nothing has come to the attention of such
counsel that leads such counsel to believe that the Appendix to the Official
Statement at the date of Closing contained an untrue statement of a material
fact or omitted to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, with the proviso that such counsel's knowledge of the
business and affairs of the
8.
<PAGE>
Company is limited so that it would not necessarily recognize the import to such
business or affairs of a particular set of facts or circumstances;
(d) at or prior to the Closing Date the Underwriter shall receive the
following legal opinions, dated the Closing Date, in the form attached as
Exhibits C, D and E, respectively, hereto, (i) of Bond Counsel as to the
validity of the Bonds; (ii) of Bond Counsel as to certain other matters;
and (iii) of Robert N. Randall, Esq., counsel to the Authority; the
respective forms of such opinions shall be subject, in each case, only to
such changes therein as Bond Counsel shall approve;
(e) receipt of a certificate of the Chairman or the Vice Chairman, or
of another duly authorized official or officials of the Authority, dated
the date of Closing, to the effect that (i) on and as of the date of
Closing, each of the representations and warranties of the Authority set
forth in Section 4 hereof is true, correct and complete and all agreements
of the Authority herein provided and contemplated to be performed on or
prior to the Closing have been so performed; (ii) the executed copies of
the Agreement and the Indenture and the certified copy of the Resolution
are true, correct and complete copies of such documents and have not been
modified, amended or rescinded but remain in full force and effect as of
the Closing; (iii) the Bonds have been duly authorized, executed and
delivered by the Authority; (iv) this Contract of Purchase, the Indenture
and the Agreement and any and all other agreements and documents required
to be executed and delivered by the Authority in order to carry out, give
effect to and consummate the transactions contemplated hereby and by the
Indenture have each been duly authorized, executed and delivered by the
Authority, and as of the Closing each is in full force and effect and all
right, title and interest inuring to the Authority under the Agreement have
been duly pledged, and the payments thereunder assigned, to the Trustee
under the Indenture for the benefit of the holders of the Bonds; (v) there
is no action, suit, proceeding or investigation at law or in equity or
before or by any court, public board or body pending or to the knowledge of
the Authority threatened against or affecting the Authority, or to the
knowledge
9.
<PAGE>
of the Authority any basis therefor, wherein an unfavorable decision,
ruling or finding would adversely affect the transactions contemplated by
this Contract of Purchase, or which, in any way, would adversely affect the
validity of the Bonds, the Agreement, the Indenture, The Guaranty or any
other agreement or instrument to which the Authority is a party and which
is used or contemplated for use in consummation of the transactions
contemplated hereby; and (vi) to the best knowledge of the Authority no
legislation, ordinance, rule or regulation shall have been enacted or
introduced or favorably reported for passage by any governmental body,
department or agency of the State or a decision by any court of competent
jurisdiction of the State rendered which would adversely affect the
exemption from all direct taxation of the bonds of the Authority;
(f) receipt of a certificate of the Secretary or an Assistant
Secretary of the Company, dated the date of Closing, as to the due
authorization, execution and delivery by the Company of this Contract of
Purchase, the Deed, the Bill of Sale, the Agreement, the Guaranty and any
and all other agreements and documents required to be executed and
delivered by the Company in order to carry out, give effect to and
consummate the transactions contemplated hereby and by the Deed, the Bill
of Sale, the Agreement, the Indenture and the Guaranty listing all such
agreements and documents; and, annexing copies of resolutions of the Board
of Directors, of the Company with respect to such authorization;
(g) receipt of a certificate of the President or a Vice President of
the Company, dated the date of Closing, certifying that (i) the Company
does not have any material contingent obligations which are not disclosed
in the Official Statement; (ii) so far as is known to the Company there are
no material legal proceedings, pending or threatened, to which the Company
is or may be made a party or to which any of its property is or may become
subjected, which has not been disclosed in the Official Statement; (iii)
there is no action or proceeding pending or to his best knowledge,
threatened, looking toward the dissolution or liquidation of the Company
and there is no action or proceeding pending, or to his best knowledge
threatened, by or against the Company affecting the validity and
enforceability of the terms of the Agreement, the Guaranty or this Contract
of Purchase; and (iv) the
10.
<PAGE>
representations and warranties of the Company contained in the Letter of
Representation are true, correct and complete as of the date of Closing,
with the same effect as if those representations and warranties had been
made on and as of such date;
(h) receipt of a letter from Coopers & Lybrand, dated the date of
Closing, in form and sub stance satisfactory to the Underwriter, to the
effect that (i) they are independent certified public account ants with
respect to the Company within the meaning of the Securities Exchange Act of
1934, as amended (the "Securities Exchange Act") and the rules and
regulations published thereunder (the "Regulations"); (ii) in their
opinion, the financial statements examined by them and included in the
Appendix to the Official Statement (the "Appendix") comply as to form in
all material respects with the accounting requirements of the Securities
Exchange Act and the Regulations applicable to annual reports on Form 10-h
as if such requirements were applicable to the Appendix; and (iii) on the
basis of (1) a reading of the unaudited financial statements included in
the Appendix, (2) a reading of the unaudited amounts of operating revenues,
operating income, net income, earnings available for Common Stock and
earnings per average share of Common Stock for the quarters ended February
26, 1978 and March 4, 1979 included in the Appendix and the related
unaudited statement of income from which these amounts were derived, (3) a
reading of the latest available unaudited financial statements of the
Company, (4) a reading of the minutes of the 1979 meetings of the Board of
Directors, and (5) inquiries of officers of the Company who have
responsibility for financial and accounting matters (it being understood
that the foregoing procedures do not constitute an examination made in
accordance with generally accepted auditing standards and would not
necessarily reveal matters of significance with respect to the comments
made in such letter, and accordingly that Coopers & Lybrand make no
representation as to the sufficiency of such procedures for the
Underwriter's purposes), nothing has come to their attention which caused
them to believe that (A) the unaudited financial statements included in the
Appendix do not comply as to form in all material respects with the
accounting requirements of the Securities Exchange Act and the Regulations
applicable to quarterly reports on Form 10-Q as if such requirements were
applicable to the Appendix or said
11.
<PAGE>
unaudited financial statements are not fairly presented in conformity with
generally accepted accounting principles applied on a basis substantially
consistent (except as otherwise disclosed in the Appendix) with that of the
audited financial statements included in the Appendix, (B) the unaudited
amounts of operating revenues, operating income, net income, earnings
available for Common Stock and earnings per average share of Common Stock
for the quarters ended February 26, 1978 and March 4, 1979 included in the
Appendix were not determined on a basis substantially consistent (except as
otherwise disclosed in the Appendix) with that of the corresponding amounts
in the audited statement of income included in the Appendix, or (C) at the
date of the latest available financial statements and at a specified date
not later than five business days prior to the time of the date of the
Closing there was any change in the capital stock or long-term debt (except
for sinking fund requirements) of the Company, or decrease in its net
assets, in each case as compared with amounts shown in the December 3, 1978
balance sheet included in the Appendix, except in all instances for changes
or decreases which the Appendix discloses have occurred or may occur or
occasioned by the declaration of dividends or by the issuance of shares of
Common Stock pursuant to the Company's Non-Qualified Stock Option Plan;
provided, that said letter may vary from the requirements specified above
in such manner as the Underwriter in its sole discretion may deem not to be
material or as may be acceptable to the Underwriter;
(i) two executed or certified copies of the Agreement, the Indenture
and the Guaranty;
(j) a certificate, satisfactory in form and substance to the
Underwriter of one or more duly authorized officers of the Trustee dated
the date of the Closing, as to the due acceptance of the Indenture by the
Trustee and the due authentication and delivery of the Bonds by the
Trustee;
(k) a certificate of the Chairman or Vice Chairman of the Authority to
the effect that, on the basis of the facts, estimates and circumstances
(including covenants of the County and the Company and representations of
the Company) in existence on the date of Closing, which facts, estimates
and circumstances shall be set forth therein, it is not expected that the
proceeds of the Bonds will be used in a manner that would cause the
12.
<PAGE>
Bonds to be arbitrage bonds within the meaning of Section 103(c) of the
Internal Revenue Code of 1954, as amended to the date of such certificate,
and Proposed Treasury Regulations ss.1.103-13, 51.103-14 and ss.1.103-15;
and
(1) such additional certificates, instruments or other documents as
the Underwriters may reasonably require to evidence the accuracy, as of
the date of the Closing, of the representations and warranties herein
contained, and the due performance and satisfaction by the Authority and
the Company at or prior to such time of all agreements then to be
performed and all conditions then to be satisfied by either of them in
connection with this Contract of Purchase, the Agreement, the Indenture
and the Guaranty.
If the conditions to the Underwriters' obligations contained in this
Contract of Purchase are not satisfied or if the Underwriter's obligations shall
be terminated by the Underwriter for any reason permitted by this Contract of
Purchase, this Contract of Purchase shall terminate and neither the Underwriter
nor the Authority shall have any further obligation hereunder, except that the
check referred to in Section 2 hereof shall be returned to the Underwriter.
8. After the Closing (a) the Authority will not adopt any amendment of or
supplement to the Official Statement to which the Underwriter shall object in
writing or which shall be disapproved by Bond Counsel, and (b) if any event
relating to or affecting the Authority or the Company shall occur as a result of
which it is necessary, in the opinion of said counsel, or of the Company, to
amend or supplement the Official Statement in order to make the Official
Statement not. misleading in the light of the circumstances existing at the time
it is delivered to a purchaser, the Authority will, at the expense of the
Company, forthwith prepare and furnish to the Underwriter a reasonable number of
copies of an amendment of or supplement to the Official Statement (in form and
substance satisfactory to said counsel) which will amend or supplement the
Official Statement so that it will not contain an untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances existing at the time the Official
Statement is delivered to a purchaser, not misleading. For the purposes of this
section, the Authority will furnish such information with respect to itself and
cause the Company to furnish all such other information as the Underwriter may
from time to time request, with any and all costs thereof to be borne by the
Company.
13.
<PAGE>
9. All expenses and costs of the Authority incident to the performance of
its obligations in connection with the authorization, issuance and sale of the
Bonds to the Under writer, including, without limitation, the costs of printing
or reproducing the Bonds, the Indenture, the Agreement, the Guaranty, this
Contract of Purchase and the Official Statement and all ancillary papers, in
reasonable quantities, credit rating agency fees, fees and expenses of the
Authority, fees and expenses of counsel for the Underwriter for blue sky and
legal investment surveys and related services, and of Brown, Wood, Ivey,
Mitchell & Petty, as Bond Counsel, and the Trustee's fee and expenses, shall be
paid from the proceeds of the Bonds, and to the extent not so paid shall be paid
by the Company, as provided in the Agreement. Except as included in the items
above, all out-of-pocket expenses of the Underwriter, including traveling and
other expenses and the fees and expenses of Brown, Wood, Ivey, Mitchell & Petty,
as counsel for the Underwriter, shall be paid by the Underwriter.
10. All communications hereunder shall be in writing and, unless otherwise
directed in writing, shall be addressed as follows: If to the Authority at P.O.
Box 788, Statesville, North Carolina 28677, Attention: Chairman; if to the
Company at 1405 Locust Street, Philadelphia, Pennsylvania 19102, Attention:
Secretary; if to the Underwriter at Alex. Brown & Sons, One Thirty-five East
Baltimore Street, Baltimore, Maryland 21202, Attention: James T. Cavanaugh III.
11. This Agreement shall be governed by and construed in accordance with
the applicable laws of the State of North Carolina.
12. This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of the Underwriter, the Authority and the Company. The
terms "successors" and "assigns" used in this Agreement shall not include any
purchaser, as such purchaser, of any of the Bonds from the Underwriter.
All representations, warranties and agreements of the Authority in this
Contract of Purchase shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any of the Underwriter
and shall survive the delivery of and payment for the Bonds.
ALEX. BROWN & SONS
By: _________________________________
(General Partner)
14.
<PAGE>
Accepted:
THE IREDELL COUNTY INDUSTRIAL FACILITIES
AND POLLUTION CONTROL FINANCING AUTHORITY
By: _________________________________
[Vice] Chairman
Attest: _____________________________
[Assistant] Secretary
(Seal)
Approved:
HUNT MANUFACTURING CO.
By: _________________________________
Vice President
15.
<PAGE>
EXHIBIT A TO THE
CONTRACT OF PURCHASE
LETTER OF REPRESENTATION
May 15, 1979
Alex. Brown & Sons
One Thirty-five East Baltimore Street
Baltimore, Maryland 21202
Dear Sirs:
Pursuant to a Contract of Purchase dated May 15, 1979 (the "Contract of
Purchase"), between you (the "Underwriter") and The Iredell County Industrial
Facilities and Pollution Control Financing Authority (the "Authority") which
Hunt Manufacturing Co. (the "Company") has approved, the Authority proposes to
issue $2,000,000 aggregate principal amount of its Industrial Revenue Bonds
(Hunt Manufacturing Co. Project), Series 1979 (herein called the "Bonds"),
under an Indenture and Deed of Trust to be dated as of June 1, 1979 (the
"Indenture"), between the Authority and the Trustee named in the Indenture.
To induce the Underwriter to enter into the Contract of Purchase and to
induce the Authority to authorize the issuance of, and the Underwriter to make
the offering and sale of, the Bonds therein contemplated, the Company hereby
represents, warrants and agrees with the Underwriter as follows:
(a) The financial statements constituting part of the Appendix (the
"Appendix") to the Official Statement relating to the Bonds (the "Official
Statement") present fairly the financial condition and operations of the
Company at the respective dates or for the respective periods to which they
apply; such financial statements have been prepared in each case in
accordance with generally accepted accounting principles
A-1
<PAGE>
consistently applied throughout the periods involved except as otherwise
indicated in the Appendix; Coopers & Lybrand are, to the best knowledge of
the Company, independent certified public accountants with respect to the
Company as defined in the Securities EXCHANGE ACT OF 1934, AS AMENDED, AND
the regulations published thereunder.
(b) Except as reflected in, or contemplated by, the Appendix, since
the most recent dates as of which information is given in the Appendix,
there has not been any material adverse change in the business, properties
or financial condition of the Company, and since such dates there has not
been any material transaction entered into by the Company other than
transactions contemplated by the Appendix and transactions in the ordinary
course of business. The Company has no material contingent obligation which
is not disclosed in the Appendix.
(c) The execution and delivery of the Lease Agreement, to be dated as
of June 1, 1979 (the "Agreement"), between the Authority and the Company,
the Guaranty Agreement, dated as of June 1, 1979 (the "Guaranty"), by the
Company to the Trustee and the Contract of Purchase, the consummation of
the transactions therein contemplated, the fulfillment of the terms thereof
and the compliance with the terms and conditions therein contained will not
result in a breach of any of the terms or provisions of or constitute a
default under the Company's Articles of Incorporation, as amended, or any
indenture or other agreement or instrument which the Company has assumed or
to which it is now a party or, to the knowledge of the Company, any order,
rule, decree or regulation applicable to the Company of any Federal or
state court, regulatory board or body or administrative agency having
jurisdiction over the Company or its property.
(d) The Agreement, the Guaranty and this Letter of Representation have
been duly authorized by and, when executed and delivered by the Company
will be, valid instruments legally binding upon the Company enforceable in
accordance with their terms (except as limited by bankruptcy, insolvency or
other laws affecting creditor's rights and as specific remedies may be
limited in the discretion of the courts).
(e) Except as disclosed in or contemplated by the Official Statement,
there is no action, suit, proceeding,
A-2
<PAGE>
inquiry or investigation, at law or in equity, or before or by any court,
public board or body, pending, or to the knowledge of the Company
threatened, wherein an unfavorable decision, ruling or finding would, (i)
in the opinion of the Company after giving effect to insurance coverage
result in any material adverse change in the business, properties or
operations of the Company, (ii) materially adversely affect the
transactions contemplated by the Official Statement or (iii) adversely
affect the validity or enforceability of the Bonds, the Indenture, the
Agreement, the Guaranty or the Contract of Purchase.
(f) The Company will not take or omit to take any action which action
or omission will in any way cause the proceeds from the sale of the Bonds
to be applied in a manner contrary to that provided in the Indenture and
the Agreement, as in force from time to time.
(g) The Company has not taken and will not take any action and knows
of no action that any other person, firm or corporation has taken or
intends to take, which would cause interest on the bonds to be includable
in the gross income of the recipients thereof, other than any recipient who
is a "substantial user" of the Project (as defined in the Indenture) or a
"related person", as provided in Section 103(b)(8) of the Internal Revenue
Code of 1954, as amended, for federal income tax purposes. The Company
shall file or cause to be filed with the Internal Revenue Service of the
United States Treasury Department or any other authorized governmental
agency any and all statements or other instruments required under the
Internal Revenue Code of 1954, as amended, including Section 103 thereof,
and the regulations thereunder, in order that the interest on the Bonds
shall continue to be excludable from the gross income of the recipients
thereof for federal income tax purposes.
(h) The Company will deliver all opinions, certificates, letters and
other instruments and documents required to be delivered by it or its
counsel by the Contract of Purchase.
(i) The Company has authorized and consents to the use by the
Underwriter of the Official Statement in both its preliminary and final
forms, including the Appendix. The information with respect to the Company
A-3
<PAGE>
included in the Official Statement including the Appendix and the
descriptions contained therein of the Agreement and the Guaranty and the
participation of the Company in the transactions contemplated thereby, are
true, correct and complete and do not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading, except that the
Company makes no representation, warranty or agreement as to the
information contained in the Official Statement under the captions
"Authority," "Tax Exemption," and "Underwriting".
(j) The Company agrees to indemnify and hold harmless the Underwriter
and each person, if any, who controls the Underwriter within the meaning of
Section 15 of the Securities Act, as follows:
(i) against any and all loss, liability, claim, damage and
expense, whatsoever arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Preliminary
Official Statement dated May 2, 1979 (the Preliminary Official
Statement") relating to the Bonds and the Official Statement (or any
amendment or supplement thereto), or the omission or alleged omission
therefrom of a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, unless such
statement or omission or such alleged statement or omission was made
in reliance upon and in conformity with written information furnished
to the Company by the Underwriter expressly for use in the Preliminary
Official Statement and the Official Statement (or any amendment or
supplement thereto);
(ii) against any and all loss, liability, claim, damage and
expense whatsoever to the extent of the aggregate amount paid in
settlement of any litigation, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission or any
such alleged untrue statement or omission, if such settlement is
effected with the written consent of the Company; and
A-4
<PAGE>
(iii) against any and all expense whatsoever reasonably incurred
in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or
(ii) above.
This indemnity agreement is subject to the condition that insofar as
it relates to any untrue statement or omission, or any alleged untrue
statement or omission made in the Official Statement but eliminated or
remedied in a supplement or amendment thereto, such indemnity agreement
shall not inure to the benefit of the Underwriter from and after such time
if the Underwriter fails to use the Official Statement as so supplemented
or amended. In no case shall the Company be liable under this indemnity
agreement with respect to any claim made against the Underwriter or any
such controlling person unless the Company shall be notified in writing of
the nature of the claim within a reasonable time after the assertion
thereof, but failure so to notify the Company shall not relieve it from any
liability which it may have otherwise than on account of this indemnity
agreement. The Company shall be entitled to participate at its own expense
in the defense, or, if it so elects, within a reasonable time after receipt
of such notice, to assume the defense of any suit brought to enforce any
such claim, but if it so elects to assume the defense, such defense shall
be conducted by counsel chosen by it and approved by the Underwriter or
controlling person or persons, defendant or defendants in any suit so
brought, which approval shall not be unreasonably withheld. In the event
that the Company elects to assume the defense of any such suit and retains
such counsel, the Underwriter or controlling person or persons, defendant
or defendants in the suit, shall bear the fees and expenses of any
additional counsel thereafter retained by then unless approved by the
Company. In the event that the parties to any such action (including
impleaded parties) include both the Company and the Underwriter or any such
controlling person and the Underwriter shall have been advised by counsel
chosen by it and satisfactory to the Company that there may be one or more
legal defenses available to it which are different from or
A-5
<PAGE>
additional to those available to the Company, the Company shall not have
the right to assume the defense of such action on behalf of the Underwriter
and will reimburse the Underwriter and any person controlling such
Underwriter as aforesaid for the reasonable fees and expenses of any
counsel retained by them, it being understood that the Company shall not,
in connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys for the Underwriter
and controlling persons, which firm shall be designated in writing by the
Underwriter unless approved by the Company. The Company agrees to notify
the Underwriter within a reasonable time of the assertion of any claim
against it or any person who controls the Company within the meaning of
Section 15 of the Securities Act, in connection with the sale of the Bonds.
The representations, warranties, agreements and indemnities contained
herein shall survive the sale and delivery of, and payment for, the Bonds and
shall remain operative regardless of any investigation made by or on behalf of
the Underwriter.
This Letter of Representation shall be binding upon and inure solely to the
benefit of the Underwriter and each controlling person and the Company and, to
the extent set forth herein, persons controlling you, and your respective
personal representatives, successors and assigns, and no other person or firm
shall acquire or have any right under or by virtue of this Letter of
Representation.
If the foregoing is in accordance with your understanding of the agreement
between us, kindly sign and return to the Company the enclosed duplicate of this
Letter of Representation whereupon this will constitute a binding agreement
between us in accordance with the terms hereof.
Very truly yours,
HUNT MANUFACTURING CO.
By: _____________________________
Vice President
A-6
<PAGE>
Accepted and confirmed as of the date first above written.
ALEX. BROWN & SONS
BY: _____________________________
(General Partner)
A-7
<PAGE>
EXHIBIT B
to the
Contract of Purchase
LETTER OF REPRESENTATION
May 15, 1979
THE IREDELL COUNTY INDUSTRIAL FACILITIES
AND POLLUTION CONTROL FINANCING AUTHORITY
P. O. Box 788
Statesville, North Carolina 28677
Attention: Chairman
Dear Sirs:
Pursuant to a Contract of Purchase dated May 15, 1979 (the "Contract of
Purchase"), between The Iredell County Industrial Facilities and Pollution
Control Financing Authority (the "Authority") and Alex. Brown & Sons (the
"Underwriter"), which Hunt Manufacturing Co. (the "Company") has approved, the
Authority proposes to issue $2,000,000 aggregate principal amount of its
Industrial Revenue Bonds (Hunt Manufacturing Co. Project), Series 1979 (herein
called the "Bonds"), under an Indenture and Deed of Trust to be dated as of June
1, 1979 (the "Indenture"), between the Authority and the Trustee named in the
Indenture.
To induce the Authority to enter into the Contract of Purchase and to
authorize the issuance of, and the Underwriter to .make the offering and sale
of, the Bonds therein contemplated, the Company hereby represents, warrants and
agrees with the Authority as follows:
(a) The financial statements constituting part of the Appendix (the
"Appendix") to the Official Statement relating to the Bonds (the "Official
Statement") preSENT FAIRLY THE FINANCIAL condition and operations of the
Company at the respective dates or for the respective periods to which they
apply; such financial statements have been prepared in each case in
accordance with generally accepted accounting principles consistently
applied throughout the periods involved except as otherwise indicated in
the Appendix; Coopers & Lybrand are, to the best knowledge of the Company,
B-1
<PAGE>
independent certified public accountants with respect to the Company, as
defined in the Securities Exchange Act of 1934, as amended and the
regulations published thereunder.
(b) Except as reflected in, or contemplated by, the Appendix, since
the most recent dates as of which information is given in the Appendix,
there has not been any material adverse change in the business, properties
or financial condition of the Company, and since such dates there has not
been any material transaction entered into by the Company other than
transactions contemplated by the Appendix and transactions in the ordinary
course of business. The Company has no material contingent obligation which
is not disclosed in the Appendix.
(c) The execution and delivery of the Lease Agreement, to be dated as
of June 1, 1979 (the "Agreement"), between the Authority and the Company,
the Guaranty Agreement, dated as of June 1, 1979 (the "Guaranty"), by the
Company to the Trustee and the Contract of Purchase, the consummation of
the transactions therein contemplated, the fulfillment of the terms thereof
and the compliance with the terms and conditions therein contained will not
result in a breach of any of the terms or provisions of or constitute a
default under the Company's Articles of Incorporation, as amended, or any
indenture or other agreement or instrument which the Company has assumed
or to which it is now a party or, to the knowledge of the Company, any
order, rule, decree or regulation applicable to the Company of any Federal
or state court, regulatory board or body or administrative agency having
jurisdiction over the Company or its property.
(d) The Agreement, the Guaranty and this Letter of Representation have
been duly authorized by, and, when executed and delivered by the Company,
will be, valid instruments legally binding upon the Company enforceable in
accordance with their terms (except as limited by bankruptcy, insolvency or
other laws affecting creditors' rights and as specific remedies may be
limited in the discretion of the courts).
(e) Except as disclosed in or contemplated by the Official Statement,
there is no action, suit, proceeding,
B-2
<PAGE>
inquiry or investigation, at law or in equity, or before or by any court,
public board or body, pending, or to the KNOWLEDGE OF THE COMPANY
threatened, wherein an unfavorable decision, ruling or finding would, (i)
in the opinion of the Company involve after giving effect to insurance
coverage result in any material adverse change in the business, properties
or operations of the Company, (ii) materially adversely affect the
transactions contemplated by the Official Statement or (iii) adversely
affect the validity or enforceability of the Bonds, the Indenture, the
Agreement, the Guaranty or the Contract of Purchase.
(f) The Company will not take or omit to take any action which action
or omission will in any way cause the proceeds from the sale of the Bonds
to be applied in a manner contrary to that provided in the Indenture and
the Agreement, as in force from time to time.
(g) The Company has not taken and will not take any action and knows
of no action that any other person, firm or corporation has taken or
intends to take, which would cause interest on the bonds to be includable
in the gross income of the recipients thereof, other than any recipient who
is a "substantial user" of the Project (as defined in the Indenture) or a
"related person", as provided in Section 103(b)(8) of the Internal Revenue
Code of 1954, as amended, for federal income tax purposes. The Company
shall file or cause to be filed with the Internal Revenue Service of the
United States Treasury Department or any other authorized governmental
agency any and all statements or other instruments required under the
Internal Revenue Code of 1954, as amended, including Section 103 thereof,
and the regulations thereunder, in order that the interest on the Bonds
shall continue to be excludable from the gross income of the recipients
thereof for federal income tax purposes.
(h) The Company will deliver all opinions, certificates, letters and
other instruments and documents required to be delivered by it or its
counsel by the Contract of Purchase.
(i) The Company has authorized and consents to the use by the
Underwriter of the Official Statement in both its preliminary and final
forms, including the Appendix. The information with respect to the Company
B-3
<PAGE>
included in the official Statement including the Appendix and the
descriptions contained therein of the Agreement and the Guaranty and the
participation of the Company in the transactions contemplated thereby, are
true, correct and complete and do not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading, except that the
Company makes no representation, warranty or agreement as to the
information contained in the Official Statement under the captions
"Authority", "Tax Exemption" and "Underwriting".
(j) The Company agrees to indemnify and hold harmless the Authority
and any member, officer, official and employee of the Authority (the
"Indemnified Parties"), as follows:
(i) against any and all loss, liability, claim, damage and
expense, whatsoever arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Preliminary
Official Statement dated May 2, 1979, (the "Preliminary Official
Statement") relating to the Bonds and the Official Statement (or any
amendment or supplement thereto), or the omission or alleged omission
therefrom of a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, unless such
statement or omission or such alleged statement or omission was made
in reliance upon and in conformity with written information furnished
to the Company by the Underwriter expressly for use in the Preliminary
Official Statement and the Official Statement (or any amendment or
supplement thereto);
(ii) against any and all loss, liability, claim, damage and
expense whatsoever to the extent of the aggregate amount paid in
settlement of any litigation, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission or any
such alleged untrue statement or omission, if such settlement is
effected with the written consent of the Company; and
(iii) against any and all expense whatsoever reasonably incurred
in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such
B-4
<PAGE>
alleged untrue statement or omission, to the extent that any such
expense is not paid under (i) or (ii) above.
In no case shall the Company be liable under this indemnity agreement with
respect to any claim made against any Indemnified Party unless the Company shall
be notified in writing of the nature of the claim within a reasonable time after
the assertion thereof, but failure so to notify the Company shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. The Company shall be entitled to participate at its expense in the
defense, or, if it so elects, within a reasonable time after receipt of such
notice, to assume the defense of any suit brought to enforce any such claim, but
if it so elects to assume the defense, such defense shall be conducted by
counsel chosen by it and approved by the Indemnified Parties, defendant or
defendants in any suit so brought, which approval shall not be unreasonably
withheld. In the event that the Company elects to assume the defense of any such
suit and retains such counsel, the Indemnified Parties, defendant or defendants
in the suit, shall bear the fees and expenses of any additional counsel
thereafter retained by any Indemnified Party unless approved by the Company. In
the event that the parties to any such action (including impleaded parties)
include both the Company and one or more Indemnified Parties and any such
Indemnified Party shall have been advised by counsel chosen by it and
satisfactory to the Company that there may be one or more legal defenses
available to it which are different from or additional to those available to the
Company, the Company shall not have the right to assume the defense of such
action on behalf of such Indemnified Party and will reimburse the Indemnified
Parties, as aforesaid for the reasonable fees and expenses of any counsel
retained by them, it being understood that the Company shall not, in connection
with any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys for such Indemnified Parties which firm shall be designated in writing
by the Authority unless approved by the Company. The Company agrees to notify
the Authority within a reasonable time of the assertion of any claim against it
or any person who controls the
B-5
<PAGE>
Company within the meaning of Section 15 of the Securities Act of 1933, as
amended, in connection with the sale of the Bonds.
The representations, warranties, agreements and indemnities contained
herein shall survive the sale and delivery of, and payment for, the Bonds and
shall remain operative regardless of any investigation made by the Authority or
on its behalf.
This Letter of Representation shall be binding upon and inure solely to the
benefit of the Authority and the Company and, to the extent set forth herein,
the members, officers, officials of the Authority, and their respective personal
representatives, successors and assigns, and no other person or firm shall
acquire or have any right under or by virtue of this Letter of Representation.
If the foregoing is in accordance with your understanding of the agreement
between us, kindly sign and return to the Company the enclosed duplicate of this
Letter of Representation whereupon this will constitute a binding agreement
between us in accordance with the terms hereof.
Very truly yours,
HUNT MANUFACTURING CO.:
By: _______________________
Vice President
Accepted and confirmed as of
the date first above written.
THE IREDELL COUNTY INDUSTRIAL FACILITIES
AND POLLUTION CONTROL FINANCING AUTHORITY
By: _______________________
[Vice] Chairman
ATTEST _______________________
[ASSISTANT] SECRETARY
B-6
<PAGE>
Exhibit D
June 5, 1979
The Iredell County Industrial
Facilities and Pollution
Control Financing Authority
Statesville, North Carolina
Alex. Brown & Sons
Baltimore, Maryland
Re: $2,000,000 Industrial Revenue Bonds
(Hunt Manufacturing Co. Project),
Series 1979 of the Iredell County
Industrial Facilities and Pollution
Control Financing Authority, dated
June 1, 1979
-----------------------------------
GENTLEMEN:
Reference is made to our opinion delivered to you concurrently herewith
and relating to the above-captioned Bonds. Terms not defined herein shall have
the meanings given to such terms in said opinion.
The Contract of Purchase, dated May 15, 1979 (the "Purchase Contract"),
between the Authority and Alex. Brown & Sons, has been duly authorized, executed
and delivered by the Authority.
The offer and sale of the Bonds do not require registration of the Bonds
under the Securities Act of 1933, as amended, or qualification of the Indenture
under the Trust Indenture Act of 1939, as amended.
This letter is furnished by us solely for the benefit of the Authority and
the Underwriter, in connection with the provisions of the Contract of Purchase
and may not be relied upon by any other person.
Very truly yours,
<PAGE>
We cannot, of course, make any representations to you as to the accuracy
or completeness of statements of fact contained in the Official Statement.
Nothing, however, has come to our attention that would lead us to believe that
the Official Statement (other than financial statements therein, as to which no
opinion need be expressed) contains an untrue statement of a material fact or
omits to state a material fact required to be stated therein, or necessary to
make the statements therein in the light of the circumstances under which they
were made, not misleading.
Very truly yours,
<PAGE>
The Authority and Hunt have entered into a Lease Agreement, dated as of
June 1, 1979 (the "Lease"), pursuant to which the Authority has agreed to
acquire the Project and to lease the "Leased Property" (being the Project and
all additions, modifications and improvements thereto and substitutions
therefor, less removals therefrom, as permitted by the Lease) to Hunt and Hunt
has agreed to lease the Leased Property from the Authority and to make certain
rental payments therefor, including payments of amounts sufficient to provide
for the payment of the principal of and premium, if any, and interest on the
Bonds (the "Basic Rent").
The Bonds are being issued under an Indenture and Deed of Trust, dated as
of June 1, 1979 (the "Indenture"), from the Authority to First Union National
Bank of North Carolina (the "Trustee"). The Bonds are to be secured by (i) the
Indenture, pursuant to which the Authority has assigned to the Trustee certain
of the Authority's rights, title and interests in and to the Lease, including
its rights to the Basic Rent, and its rights, title and interests in and to the
real and tangible personal property comprising the Leased Property, including
any rights to the net proceeds of the sale thereof and (ii) a Guaranty
Agreement, dated as of June 1, 1979 (the "Guaranty"), between Hunt, as
guarantor, and the Trustee.
We have examined such documents, records of the Authority and Hunt and
other instruments, including counterparts or certified copies of the Lease, the
Indenture, the Guaranty, the Official Statement dated May, 1979 (the "Official
Statement"), relating to the offering and sale of the Bonds and certain other
documents, as we deem necessary to enable us to express the opinions set forth
below.
Based on the foregoing, we are of the opinion that:
1. The Authority is a political subdivision and body corporate and politic
of the State of North Carolina validly organized and existing under the Enabling
Act, with full authority to undertake the Project, to lease the Leased Property
to Hunt as provided in the Lease, to execute and DELIVER the Lease and the
Indenture and to issue and sell the Bonds.
(a) The Bonds are exempt from registration pursuant to the Securities
Act of 1933, as amended; and
(b) The Indenture is exempt from qualification as an indenture
pursuant to the Trust Indenture Act of 1939, as amended.
<PAGE>
EXHIBIT E
June 5, 1979
The Tredell County Industrial Facilities
and Pollution Control Financing Authority
Statesville, North Carolina
Brown, Wood, Ivey, Mitchell & Fetty New York, New York
Alex. Brown & Sons
Baltimore, Maryland
Gentlemen:
I am counsel for The Iredell County Industrial Facilities and Pollution
Control Financing Authority (the "Authority"). In connection with the issuance
and sale of the Authority's Industrial Revenue Bonds (Hunt Manufacturing Co.
Project), Series 1979 in the aggregate principal amount of $2,000,000 (the
"Bonds"), I have examined the following: Article V, Section 9 of the
Constitution of North Carolina; Chapter 159C of the General Statutes of forth
Carolina as amended (the "Act"); the resolutions of the Authority relating to
the Bonds adopted January 5, 1979 and May 15, 1979; the Deed dated as of June 1,
1979 (the "Deed") from Hunt Manufacturing Co., a Pennsylvania corporation
("Hunt") to the Authority; the Bill of Sale dated as of June 1, 1979 (the "Bill
of Sale") from Hunt to the Authority; the Lease Agreement dated as of June 1,
1979 (the "Lease") by and between the Authority and Hunt; the Indenture and Deed
of Trust dated as of June 1, 1979 (the "Indenture"); from the Authority to First
Union National Bank of North Carolina (the "Trustee"); the Contract of Purchase
dated May 15, 1979 (the "Purchase Contract") by and between the Authority and
Alex. Brown & Sons (the "Underwriter"); the Guaranty Agreement dated as of June
1, 1979 (the "Guaranty") from Hunt to the Trustee; and such other records of the
Authority and other documents as I have deemed relevant and necessary as a basis
for the opinions set forth herein.
Based on the foregoing examinations, investigations, filings and inquiries
and legal considerations which I deem relevant, I am of the opinion that:
<PAGE>
1. The acceptance of the Deed and Bill of Sale has been duly
authorized by the Authority, the Deed and Bill of Sale are in substantially
the form so authorized, and assuming proper authorization, execution and
delivery of the Deed and Bill of Sale by Hunt, the Deed and Bill of Sale
are valid and binding in accordance with their terms.
2. The execution and delivery of the Lease have been duly authorized
by the Authority, the Lease is in substantially the form so approved and
has been duly executed and delivered by the Authority.
3. The execution and delivery of the Indenture have been duly
authorized by the Authority, the Indenture is in substantially the form so
approved and has been duly executed and delivered by the Authority, and,
assuming that the Indenture constitutes a legal, valid and binding
obligation of the Authority in accordance with its terms, the Indenture
creates a valid first lien of record on the Trust Estate and valid security
interests in the Leased Property (as defined in the Indenture) and in the
Basic Rent (as defined in the Lease) in the Trustee for the benefit of the
holders of the Bonds, subject to no prior or equal lien or encumbrance.
4. The execution and delivery of the Purchase Contract have been duly
authorized by the Authority, the Purchase Contract is in substantially the
form so approved and has been duly executed and delivered by the Authority.
5. The execution, issuance and delivery of the Bonds have been duly
and validly authorized by the authority, all conditions precedent to the
delivery of the Bonds have been fulfilled, and the Bonds are valid and
binding in accordance with their terms.
6. There is no suit, proceeding, inquiry or investigation, at law or
in equity, or before or by any court, public authority or body, pending or,
to the best of my knowledge, threatened against or directly affecting the
Authority, nor to the best of my knowledge is there any basis therefor, (a)
to restrain or enjoin the issuance and sale of the Bonds or the performance
by the Authority of the Lease, the Indenture or the Purchase Contract,
including without limitation the collection of the Basic Rent and other
revenues to be received under the Lease and the assignment thereof under
the Indenture to the Trustee for the benefit of the holders of the Bonds or
(b) wherein
COPY MISSING
<PAGE>
PRELIMINARY OFFICIAL STATEMENT DATED MAY 2, 1979
NEW ISSUE
In the opinion of Bond Counsel, interest on the Series 1979 Bonds is exempt
under existing statutes, regulations and court decisions from all present
Federal income taxes, except for interest on any Series 1979 Bond for any period
during which such Series 1979 Bond is held by a person who is a "substantial
user of the Project or a "related person", within the meaning of Section
103(b)(8) of the Internal Revenue Code of 1954, as amended, and such interest is
exempt from all income taxes within the State of North Carolina.
$2,000,000
The Iredell County Industrial Facilities and
Pollution Control Financing Authority
(North Carolina)
Industrial Revenue Bonds
(Hunt Manufacturing Co. Project)
Series 1979
Dated: June 1, 1999 Due: June 1, 1999
(subject to prior redemption as described herein)
The Series 1979 Bonds will be payable, except to the extent payable from bond
proceeds, solely from rentals payable by Hunt Manufacturing Co. under a Lease
Agreement, which will be assigned to the Trustee by the Authority under an
Indenture and Deed of Trust, pursuant to which the Authority will also deed in
trust to the Trustee the real property and fixtures and grant a security
interest in the tangible personal property and fixtures comprising the Leased
Property, and from any payments made pursuant to the absolute and unconditional
guarantee of the principal of and redemption premium, if any, and interest on
the Series 1979 Bonds under a Guaranty Agreement by
HUNT MANUFACTURING CO.
The Series 1979 Bonds will be issuable and payable as set forth herein. First
Union National Bank of North Carolina, Charlotte, North Carolina, is the
Trustee, the Bond Registrar and a paying agent for the Series 1979 Charter
Bonds.
The Series 1979 Bonds are subject to redemption prior to maturity as described
herein.
Price: _____%
(plus accrued interest from June 1, 1979)
----------------------
The Series 1979 Bonds will be offered subject to the approving opinion of Brown,
Wood, Ivey, Mitchell & Petty, New York, New York, as Bond Counsel, and to
certain other conditions. Certain legal matters pertaining to Hunt Manufacturing
Co. and its obligations under the Guaranty Agreement will be passed upon by
Drinker Biddle & Reath, as counsel to the Company.
ALEX. BROWN & SONS
Established 1800
BALTIMORE, MARYLAND
_________________, 1979
This Preliminary Official Statement and the information contained herein
is subject to completion and amendment and is not yet finally adopted.
Upon the sale of the Series 1979 Bonds, the Authority will complete and
adopt its Official Statement substantially in this form.
<PAGE>
The information contained in this Official Statement has been obtained from
Hunt Manufacturing Co. or other sources deemed reliable by the Authority. No
representation or warranty is made as to the accuracy or completeness of such
information, and nothing contained in this official Statement is, or shall be
relied on as, a promise or representation by the Underwriter. The Official
Statement is submitted in connection with the sale of securities as referred to
herein, and may not be reproduced or be used, in whole or in part, for any other
purpose. The delivery of this Official Statement at any time does not imply that
information herein or in the Appendix hereto is correct as of any time
subsequent to its date.
No dealer, salesman or any other person has been authorized by the
Authority, or by Hunt Manufacturing Co., or by the Underwriter to give any
information or to make any representation other than as contained in this
Official Statement in connection with the offering described herein, and, if
given or made, such other information or representation must not be relied upon
as having been authorized by any of the foregoing. This Official Statement does
not constitute an offer of any securities other than those described on the
cover page or an offer to sell or a solicitation of an offer to buy in any
jurisdiction in which it is unlawful for such person to make such offer,
solicitation or sale.
TABLE OF CONTENTS
Page
----
OFFICIAL STATEMENT
Introductory Statement............................................1
The Authority.....................................................3
The Project.......................................................3
The Series 1979 Bonds.............................................3
The Lease Agreement...............................................8
The Indentu15 and Deed of Trust..................................15
The Guaranty Agreement...........................................23
Underwriting.....................................................25
Tax Exemption....................................................25
Legality.........................................................26
Miscellaneous....................................................26
APPENDIX
Hunt Manufacturing Co.
Annual Report on Form 10-K......................................A-1
Quarterly Report on Form 10-Q...................................B-1
Certain Additional Financial Information........................C-1
<PAGE>
OFFICIAL STATEMENT
$2,000,000
THE IREDELL COUNTY INDUSTRIAL FACILITIES AND
POLLUTION CONTROL FINANCING AUTHORITY
(NORTH CAROLINA)
INDUSTRIAL REVENUE BONDS
(HUNT MANUFACTURING CO. PROJECT)
SERIES 1979
----------
INTRODUCTORY STATEMENT
This Official Statement, including the cover page and reverse thereof, of
The Iredell County Industrial Facilities and Pollution Control Financing
Authority (the "Authority") is provided for the purpose of setting forth
information in connection with the sale by the Authority of its Industrial
Revenue Bonds (Hunt Manufacturing Co. Project), Series 1979, in the aggregate
principal amount of $2,000,000 (the "Series 1979 Bonds").
The Series 1979 Bonds are to be issued pursuant to the provisions of an
Indenture and Deed of Trust dated as of June 1, 1979 (the "Indenture") between
the Authority and First Union National Bank of North Carolina (the "Trustee") to
provide funds to finance a portion of the cost of acquiring, improving,
equipping and providing for a manufacturing and industrial facility for the
production of paper and other art/craft products (referred to herein as the
"Project", together with any substitutions therefor, less any property removed
therefrom, which is herein called the "Leased Property" including the "Leased
Equipment", defined hereinafter) in Iredell County, North Carolina.
The Project will be acquired and leased by the Authority to Hunt
Manufacturing Co. (the "Company"), pursuant to a Lease Agreement dated as of
June 1, 1979 (the "Lease"), between the Authority and the Company, under the
terms of which the Company will be obligated to make rental payments ("Basic
Rent") which will be sufficient to pay the principal of and redemption premium,
if any, and interest on the Series 1979 Bonds and any additional bonds and any
refunding bonds issued under the Indenture (collectively, the "Bonds") as the
same become due and payable. The Authority will con-
<PAGE>
vey and assign its interest in the real property, and the improvements and
fixtures now or hereafter erected thereon (collectively referred to as the
"Trust Estate"), and grant and assign a security interest in the tangible
personal property and fixtures (collectively referred to as the "Leased
Equipment") comprising the Leased Property and all of its rights in the Lease
(except its rights to reimbursement of expenses, to indemnification, to receive
notices and certain other rights), including Basic Rent, and pledge all moneys
and securities in the Bond Fund created under the Indenture and, until applied
to the cost of the Project, all moneys and securities in the Acquisition Fund
created under the Indenture, to the Trustee under the Indenture for the benefit
of the holders of the Bonds.
Simultaneously with the issuance and delivery of the Series 1979 Bonds, the
Company (also referred to as the "Guarantor") will deliver to the Trustee a
Guaranty Agreement dated as of June 1, 1979 (the "Guaranty"), under the terms of
which the Guarantor will absolutely and unconditionally guarantee the full and
prompt payment of the principal of and redemption premium, if any, and interest
on the Bonds when and as the same become due.
Brief descriptions of the Authority, the Project and the Series 1979 Bonds,
and summaries of certain provisions of the Lease, the Indenture and the Guaranty
are included herein. The Appendix to this Official Statement has been furnished
by the Company and consists of the Company's Annual Report on Form 10-K for the
year ended December 4, 1978, the Company's Quarterly Report on Form 10-Q for the
quarter ended March 4, 1979 and certain additional financial information.
The descriptions and summaries contained herein do not purport to be
comprehensive or definitive and are expressly made subject to the exact
provisions of the complete documents. For complete details of the provisions and
conditions of these documents, prospective purchasers of the Series 1979 Bonds
are referred to the Lease, the Indenture and the Guaranty, copies of which may
be obtained from Alex. Brown & Sons at 135 East Baltimore Street, Baltimore,
Maryland 21202 and are also available for examination at the principal corporate
trust office of the Trustee. All references herein to the Lease, the Indenture
and the Guaranty are qualified in their entirety by reference to each such
document and references herein to the Series 1979 Bonds are qualified in their
entirety by reference to the form thereof included in the Indenture and the
information with respect thereto included in the aforesaid documents.
2.
<PAGE>
THE AUTHORITY
The Authority is a political subdivision and body corporate and politic of
the State of North Carolina, duly created and existing pursuant to Chapter 800
of the 1975 Session Laws of North Carolina, as amended, which as codified
appears as Chapter 1590 of the General Statutes of North Carolina, known as the
Industrial and Pollution Control Facilities Financing Act. Under the
Constitution and laws of the State of North Carolina, the Authority is
authorized to issue the Series 1979 Bonds, to acquire the project, to lease the
Project to the Company and to secure the payment of the Bonds by an assignment
and conveyance of the Trust Estate to the Trustee in trust, and the assignment
and grant to the Trustee of a security interest in the Leased Property and by an
assignment to the Trustee of all payments of Basic Rent to be received by the
Authority under the Lease.
THE PROJECT
The Project consists of the acquisition of approximately 12.7 acres of land
in Statesville, North Carolina and the industrial building of approximately
170,000 square feet located thereon, the making of certain improvements to said
building and the acquisition and installation of certain equipment and machinery
to be used in the production of paper and other art/craft products. The Company
anticipates that, upon completion, the operations of its Bienfang Paper Products
unit will be housed in the project.
THE SERIES 1979 BONDS
The Series 1979 Bonds will be dated as of June 1, 1979, and interest
thereon will be payable semi-annually on the first days of June and December in
each year, the first interest payment date being December 1, 1979.
The Series 1979 Bonds will be issuable as coupon bonds, registrable as to
both principal and interest, in the denomination of $5,000 each. The principal
of and redemption premium, if any, and interest on bonds (unless registered)
will be payable at the principal office of First Union National Bank of North
Carolina, as Paying Agent. The principal of and redemption premium, if any, on
registered Bonds registered as to both principal and interest will be payable at
the principal corporate trust office of the Trustee. Interest on bonds
registered as to both principal and interest will be payable by the Trustee by
check mailed to the registered owner at the address shown on the registration
books of the Authority kept by the Trustee as Bond Registrar.
3.
<PAGE>
Security for the Series 1979 Bonds
The Series 1979 Bonds are payable, except to the extent payable from bond
proceeds, solely out of the payments of Basic Rent to be made by the Company to
the Trustee, any payments made by the Company pursuant to the Guaranty, any net
proceeds realized from the sale of the Trust Estate and the Leased Equipment
(all such moneys to be deposited by the Trustee in the Bond Fund under the
Indenture) and, until applied to the cost of the Project, all moneys and
securities in the Acquisition Fund under the Indenture which are pledged,
equally and ratably, to the payment of the Series 1979 Bonds and any additional
and refunding Bonds issued under the Indenture
The Lease requires the Company to obtain and maintain certain insurance
with respect to the Leased Property, and permits the Company to grant and
release easements and purchase unimproved portions of the Trust Estate and the
Leased Equipment. See "THE LEASE AGREEMENT - Insurance and Eminent Domain" and
"THE LEASE AGREEMENT - Maintenance and Modifications" herein.
The Series 1979 Bonds will be limited obligations of the Authority payable
solely from the revenues and other funds pledged therefor, and neither the faith
and credit nor the taxing power of the State of North Carolina or any political
subdivision or any agency thereof will be pledged to the payment of the
principal of or the interest or redemption premium, if any, on the Series 1979
Bonds.
Redemption
Extraordinary optional Redemption
The Bonds are callable for redemption at any time in whole if,
(i) the Leased Property shall have been damaged or destroyed to the
extent that it would not be practicable or desirable to rebuild, repair or
restore the Leased Property within a period of one year after the
occurrence of such damage or destruction; or
(ii) there occurs the condemnation or other taking by Eminent Domain
(as defined in the Lease) of all or any part of the Leased Property to such
an extent that the Lessee is prevented or would likely be prevented from
using the Leased Property for its normal purposes and operations for a
period of one year after such occurrence; or
4.
<PAGE>
(iii) there shall have occurred a change in the Constitution of the
State of North Carolina or the United States of America or any legislative,
administrative or judicial action which shall render the Lease void or
unenforceable or impossible of performance;
and the Company shall deliver to the Trustee a resolution of the Board of
Directors of the Company stating that as a result of an event described in
clause (i), (ii) or (iii) above, the Company has discontinued or will
discontinue its operation of the Leased Property. Then, in such case, the
Company may direct the Trustee to call all the Bonds then outstanding under the
Indenture for redemption in whole on the date, not more than 180 days after the
adoption of such resolution, selected by the Company at a redemption price equal
to the principal amount thereof plus accrued interest to the redemption date
anti without redemption premium.
Mandatory Redemption if Bonds Determined Taxable
The Series 1979 Bonds are callable upon a Determination of Taxability,
which is defined by the Indenture to mean any determination, decision or decree
made in regard to Section 103(b)(6)(d) of the Internal Revenue Code of 1954, as
amended (the "Internal Revenue Code"), by the Commissioner or any District
Director of the Internal Revenue service or by any court of competent
jurisdiction that interest on the Series 1979 Bonds is includable in the gross
income of the recipient thereof under Section 103 of the Internal Revenue Code
and the regulations thereunder for any reason other than that the Holder of such
Bonds is a substantial user of the Leased Property or a related person. For
redemption in whole on the date, not more than 90 days following the date of
such determination, selected by the Company at a redemption price equal to the
principal amount thereof, plus interest accrued thereon to the date fixed for
redemption.
Optional Redemption
The Series 1979 Bonds may be redeemed prior to their maturity, not earlier
than June 1, 1989, either in whole at any time or in part on any interest
payment date, selected by the Company, at the redemption prices (expressed as
percentages of the principal amount) set forth below, plus accrued interest to
the redemption date:
5.
<PAGE>
Redemption Dates Redemption
(both dates inclusive) Prices
---------------------- ------
June 1, 1989 to May 1990 103%
June 1, 1990 to May 1991 102 1/2%
June 1, 1991 to May 1992 102%
June 1, 1992 to May 1993 101 1/2%
June 1, 1993 to May 1994 101%
June 1, 1994 to May 1995 100 1/2%
June 1, 1995 and thereafter 100%
Mandatory Sinking Fund Redemption
As and for a sinking fund for the redemption of the Series 1979 Bonds, such
Bonds shall be called for redemption on June 1, 1995, and on each succeeding
June 1 to and including June 1, 1999, in the following principal amounts:
June 1 Principal June 1 Principal
of the year Amount of the year Amount
----------- ------ ----------- ------
1995 $350,000 1998 $425,000
1996 370,000 *1999 455,000
1997 400,000
- ----------
* Final Maturity.
On or before the forty-fifth day prior to each of the sinking fund
redemption dates set forth above, the Trustee shall proceed to select for
redemption from all the Series 1979 Bonds outstanding a principal amount of such
Bonds equal to the aggregate principal amount of such Bonds to be redeemed for
the required sinking fund redemption.
There may be credited, at the direction of the Company, against the sinking
fund redemption requirements the principal amount of any Series 1979 Bonds which
shall have been theretofore acquired, redeemed (otherwise than through the
operation of the sinking fund) or purchased by or delivered to the Trustee for
cancellation or which are otherwise deemed to have been paid under the terms of
the Indenture, and which shall not have been previously so applied as a credit.
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Notice of Redemption
At least 30 days before the redemption date of any Bonds the Trustee shall
cause a notice of any such redemption, signed by the Authority, (a) to be
published once in a daily newspaper, or a financial journal, published or
circulated in the Borough of Manhattan, City and State of New York, and (b) to
be mailed by first-class mail, postage prepaid, to all holders of registered
Bonds and all other holders who shall have filed with the Trustee a request to
receive notices to be given under the Indenture, whose Bonds shall have been
called for redemption, but failure so to mail any such notice shall not affect
the validity of the proceedings for such redemption. In the event that all the
Bonds then outstanding shall be registered Bonds without coupons, the Trustee
shall only be required to give notice as provided in (b) above.
Additional Bonds
Additional Bonds may be issued for the purpose of providing funds for
financing all or a portion of the cost of the project to the extent that the
proceeds of the Series 1979 Bonds and other available funds in the Acquisition
Fund are insufficient therefor or for the cost of paying all or any part of the
cost of any other facilities for the Company in Iredell County or for any
combination of such purposes or to refund any or all of the Bonds of any series
outstanding under the Indenture. Such additional Bonds shall be on a parity with
and shall be entitled to the same benefit and security of the Indenture as the
Series 1979 Bonds.
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THE LEASE AGREEMENT
The following is a summary of certain provisions of the Lease.
Lease Term
The Lease becomes effective upon its delivery and, subject to certain
provisions of the Lease (including particularly the provisions described
hereinafter under "Events of Default" and "Remedies on Default" and "Options to
Prepay Basic Rent"), will expire on the day following (i) the final maturity
date of the Bonds or (ii) such later date on which the Bonds shall have been
paid in full. The Lease may be terminated prior to its expiration in the event
all of the Bonds have been paid or provisions for payment thereof shall have
been made.
Acquisition and Installation of the Project; Issuance of the Bonds
In order to provide funds for the payment of the cost of the Project, the
Authority will issue the Series 1979 Bonds and deposit the sale proceeds with
the Trustee for application as provided in the Indenture. Upon the request of
the Company, the Authority agrees to authorize the issuance of additional series
of Bonds for the purposes and upon the terms and conditions provided in the
Indenture.
Disbursements from Acquisition Fund
The Authority authorizes the Trustee to make payments from the Acquisition
Fund established under the Indenture to pay the cost of the Project, including
reimbursement to the Company for the purchase price of the existing industrial
building and the site thereof and all legal, recording and other fees, taxes and
expenses related thereto; obligations incurred for labor and materials in
connection with the improvement, equipping and furnishing of the building; and
all expenses incurred in connection with the issuance of the Bonds, including
printing expenses and fees of financial and legal advisors and agents. Any
amounts remaining in the Acquisition Fund 60 days after the completion date of
the Project will be used either for the purchase of Bonds in the open market or
for other purposes approved by bond counsel.
In the Event Proceeds of Bonds Are Insufficient
If amounts credited to the Acquisition Fund are not sufficient to pay all
costs of the Project, the Company is to complete the Project and pay all excess
costs thereof. The Company will not be entitled to any reimbursement therefor or
any diminution in rent.
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Rent Provisions
The Company will pay, as Basic Rent, installments in the amounts and in the
manner required to enable the Authority to cause timely payment to be made to
the holders of the Bonds of the principal of and redemption premium, if any, and
interest on the Bonds, whether at maturity, upon redemption or otherwise,
provided that any amount credited under the Indenture against any payment
required to be made by the Authority shall be credited against the corresponding
payment required to be made by the Company under the Lease. Basic Rent will be
paid directly to the Trustee for deposit into the Bond Fund established by the
Indenture.
As Additional Rent, the Company will pay the reasonable fees, charges and
expenses of the Trustee (including the Trustee's counsel fees), as Trustee, Bond
Registrar and Paying Agent and all reasonable costs and expenses incurred by the
Authority in connection with the issuance of the Bonds and administration of the
Lease and the Indenture.
The Lease is a "net lease", and the Company is to pay, absolutely net, rent
and all other payments required thereunder, free of any deductions, without
abatement, diminution or set-off other than as therein expressly provided. The
Company is to pay, when due, all taxes, assessments and governmental charges
with respect to the Leased Property, all utility and other charges incurred in
the operation of the Leased Property and all assessments and charges lawfully
made by any governmental body for public improvements that may be secured by a
lien on the Leased Property. The Company may in good faith contest any such
taxes, assessments or other charges and permit the same to remain unpaid during
the period of such contest and any appeal therefrom. If the Authority or the
Trustee shall notify the Company that, in the opinion of independent North
Carolina counsel, by nonpayment of any such items the lien of the Indenture as
to any part of the rent or as to any part of the Leased Property will be
materially endangered or subject to loss or forfeiture, such taxes, assessments
or other charges are to be paid or bonded promptly.
Maintenance and Modifications
The Company agrees that during the Lease Term it will at its own expense
keep the Leased Property in as reasonably safe repair and operating condition as
is needed for its
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operations. The Company may, also at its own expense, make from time to time any
additions modifications or improvements to the Leased Property that it may deem
desirable for its business purposes and that do not materially impair the
effective use, or materially decrease the value, of the Leased Property. All
such additions, modifications and improvements so made by the Company shall
become a part of the Leased Property; provided that any improvements, machinery,
equipment or other property installed by the Company without expense to the
Authority shall not become part of the Leased Property and may be removed by the
Company at any time and from time to time while it is not in default under the
Lease. In any instance where the Company has determined to remove items of
Leased Equipment and sell, exchange, trade-in or otherwise dispose of such
items, the Company shall either make appropriate substitutions therefor, which
shall become a part of the Leased Property, or pay to the Trustee, as a
prepayment of Basic Rent, the proceeds of the sale of such Leased Equipment, the
amount of credit received in the case of a trade-in of Leased Equipment or in
the case of another disposition, an amount equal to the original cost thereof
less depreciation at generally accepted rates. If no event of default shall have
occurred and be continuing, the Company may at any time grant easements with
respect to the Leased Property and release the same without consideration, where
such grant or release will not materially impair the Leased Property. Unless an
event of default shall have occurred and be continuing, the Company shall have
the option to purchase unimproved land comprising a portion of the leased
property at a purchase price of $15,000 per acre, in accordance with the lease
terms.
Insurance and Eminent Domain
The Company will obtain title insurance on the Leased Property in the form
of a mortgagee title policy (including if available mechanics' lien coverage) in
the face amount of not less than $1,500,000 insuring the Trustee's lien under
the Indenture. Until all amounts due on the Bonds are paid in full, the Company
will maintain in force, in specified amounts, casualty insurance, workmen's
compensation insurance, and liability insurance, (which may be provided for by
blanket policies of the Company). Such casualty insurance shall include
coverage for fire, extended coverage perils, vandalism and malicious mischief
and boiler explosion (but only if steam boilers are present), with respect to
the Leased Property on a replacement basis, in an amount equal to at least 80%
of full insurable value at not less than an amount necessary to pay, retire and
redeem all outstanding Bonds. All such policies will contain provisions
generally considered
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to be standard for the type of insurance involved, including deductible amounts
and all such policies, or certificates thereof, will be deposited with the
Trustee. If the net proceeds from title insurance with respect to the Leased
Property can be used to cure any defect in the Authority's title to the real
property included in the Leased Property or the lien of the Indenture, such net
proceeds shall be paid to the Company and used to cure any defect (other than
Permitted Encumbrances, as defined in the Lease) in the Authority's title to the
real property covered by such insurance and, if not needed or used for such
purposes, shall be used to prepay Basic Rent and for the redemption of Bonds.
The net proceeds of insurance, other than title insurance, carried with respect
to the Leased Property (excluding the net proceeds of business interruption
insurance), and the net proceeds resulting from Eminent Domain shall be paid to,
or retained by, the Company, and unless the Company shall exercise its right to
prepay the unpaid balance of Basic Rent pursuant to the Indenture, said net
proceeds shall be applied to the repair, replacement, renewal or improvement of
the Leased Property to its condition prior to the event attributable to the net
proceeds.
Company to Maintain Corporate Existence
The Company agrees that during the term of the Lease it will maintain its
corporate existence, will not dissolve or otherwise dispose of all or
substantially all of its assets and will not consolidate with or merge into
another corporation or permit one or more other corporations to consolidate with
or merge into it; unless the surviving, resulting or transferee corporation, as
the case may be, (i) is a corporation organized and existing under the laws of
one of the states of the United States and is duly qualified to do business in
North Carolina; (ii) shall assume and agree to pay and perform all of the
Company's obligations under the Lease; (iii) shall deliver to the Trustee a
certificate executed by its chief financial officer stating that none of the
obligations, covenants and performances under the Guaranty will be violated by
such sale, merger or consolidation; and (iv) shall provide to the Trustee an
opinion of Counsel, which shall be Counsel nationally recognized on the subject
of municipal bonds, to the effect that the transaction will not cause the
interest on any series of the Bonds then outstanding to become subject to
Federal income tax.
11.
Assignment and Subleasing
Concurrently with the issuance of the Series 1979 Bonds, the Authority will
assign to the Trustee, by means of the Indenture, substantially all of its
rights, title and interest in the Lease as security for payment of the Bonds.
The Company may assign the Lease or sublease the Leased Property and Leased
Equipment without the consent of the Authority or the Trustee, provided that (a)
no assignment or sublease shall relieve the company from primary liability for
any of its obligations under the Lease and (b) the assignee or sublessee shall
assume the obligations of the Company under the Lease to the extent of the
interest assigned or subleased.
Events of Default
Each of the following is an "event of default" under the Lease:
(a) The failure by the Company to make any payment of Basic Rent when
due.
(b) The representations or warranties of the Company contained in
Section 2.2 thereof shall prove to be incorrect at the time made in such a
material respect that the security for the Bonds shall be materially
adversely affected.
(c) An "Event of Default" (as defined in any mortgage, indenture or
instrument, under which there may be issued, or by which there may be
secured or evidenced, any indebtedness of $500,000 or more of the Company,
whether such indebtedness now exists or shall hereafter be created) shall
happen and shall result in such indebtedness becoming or being declared due
and payable prior to the date on which it would otherwise become due and
payable, and such acceleration shall not be rescinded or annulled within 10
days after written notice of such acceleration to the Company.
(d) The dissolution or liquidation of the company or the filing by the
Company of a voluntary petition in bankruptcy, or the failure by the
Company promptly to lift or suspend any execution, garnishment or
attachment of such consequence as will impair the ability of the Company to
complete the Project or carry on its normal business operations, or the
commission by the Company of any act of
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bankruptcy, or the adjudication of the Company as a bankrupt, or the
assignment by the Company for the benefit of its creditors, or the entry by
the Company into an agreement of composition with its creditors, or if a
petition or answer proposing the adjudication of the Company as a bankrupt
or its reorganization, arrangement or debt readjustment under any present
or future federal bankruptcy act or any similar federal or state law shall
be filed in any court and such petition or answer shall not be discharged
or denied within 90 days after the filing thereof.
(e) Failure by the Company to observe and perform any covenant,
condition or agreement on the part of the Company under the Lease, other
than as referred to in the preceding paragraphs, for a period of 30 days
after written notice, specifying such failure and requesting that it be
remedied, is given to the Company by the Authority, unless such failure
cannot be remedied within 30 days and the Company has instituted corrective
action within 30 days after such notice and diligently pursues such action
until such failure is remedied.
(f) Cessation of operation by the Company of the Leased Property prior
to Payment of the Bonds; provided, that actions taken by the Company in
accordance with the Lease shall not be a default under this paragraph (f).
(g) The occurrence of certain "events of default" under the Indenture,
including failure to make any payment with respect to the Bonds or the
appointment of a receiver for a bankruptcy proceeding respecting the Basic
Rent, or any default under the Guaranty, shall have occurred and be
continuing.
Except in respect of the Company's obligation set forth in the Lease to pay
rent, maintain insurance coverage, provide periodic audited financial
statements, and indemnify the Authority against all claims and expenses, the
definitions of "event of default" are subject to the qualification that the
Company shall not be deemed in default if the Company is unable to carry out its
obligations under the Lease by reason of "force majeure", including, among other
things, acts of God, industrial disturbance, acts of public enemies,
governmental or military orders, insurrections and riots, storms or any other
cause or event not reasonably within the
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control of the Company. The Company agrees, however, to remedy with all
reasonable dispatch the cause preventing it from carrying out its agreements,
provided that the settlement of industrial disturbances will be entirely within
the discretion of the Company.
Remedies on Default
Whenever any such event of default shall have occurred, the Authority may
take any of the following remedial steps:
(a) declare all unpaid and unmatured installments of Basic Rent to be
immediately due and payable;
(b) take whatever action at law or at equity may appear necessary or
desirable to collect all rent payable under the Lease or to enforce the
performance of any obligation of the Company under the Lease.
Options to Prepay Basic Rent
Except during the continuance of an event of default the Company is granted
the option to prepay, at any time, in full Basic Rent if any of certain
extraordinary events shall have occurred described herein under "THE SERIES 1979
BONDS - Redemption - Extraordinary Optional Redemption", and the Company has the
option to prepay all or any portion of the Basic Rent and cause such payment to
be applied to the purchase or redemption of Bonds or as credit against the
sinking fund redemption requirements as provided by the Indenture.
Obligation to Prepay Basic Rent
In the event of a Determination of Taxability, the Company shall be
required to prepay the Basic Rent with respect to the Series 1979 Bonds and
cause the redemption thereof as described under "THE SERIES 1979 BONDS -
Redemption - Mandatory Redemption - Bonds Determined Taxable".
Obligation to Purchase Leased Property
The Company is required to purchase the Leased Property for $10 at the
expiration or sooner termination of the Lease following payment of the Bonds in
full.
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Amendments to Lease
The Lease provides that the Lease may not be amended or terminated except
in accordance with the Indenture.
THE INDENTURE AND DEED OF TRUST
The following is a summary of certain provisions of the Indenture.
Trustee
The Authority has designated First Union National Bank of North Carolina,
as Trustee under the Indenture.
Security
For the benefit of the holders of the Bonds as security for the fulfillment
of the obligations of the Authority under the Indenture, the Authority has
thereunder mortgaged, conveyed, granted, pledged and assigned to the Trustee
(i) the interest of the Authority in and to the Leased Property
consisting of real property including improvements, appurtenances and
fixtures erected thereon;
(ii) a security interest in all tangible property other than real
property, comprising a portion of the Leased Property, including all items
of machinery and equipment acquired by the Authority and referred to in the
Indenture as "Leased Equipment";
(iii) all proceeds of any property covered by clauses (i) and (ii)
sold or otherwise disposed of in accordance with the Indenture;
(iv) the Lease, including Basic Rent and other revenues, subject,
however, to certain retained rights of the Authority under the Lease; and
(v) all moneys and securities in the Bond Fund and until applied to
the Cost of the Project, all moneys and securities in the Acquisition Fund.
Registration and Transfer of Bonds
The Trustee is appointed Bond Registrar and as such will keep books for the
registration and for the registration of
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transfer of Bonds. At the option of the bearer, any Bond may be registered as to
both principal and interest on the books of the Bond Registrar upon presentation
thereof to the Bond Registrar, accompanied by all unmatured coupons and all
matured coupons not paid or provided for. The transfer of any Bond registered as
to both principal and interest may thereafter be registered on such books only
upon an assignment duly executed by the registered owner or his attorney or
legal representative. Any Bond registered as to both principal and interest may
be reconverted into a coupon bond upon presentation thereof to the Bond
Registrar.
Acquisition Fund
The Indenture creates a special fund called the "Acquisition Fund" to the
credit of which the net proceeds of the Bonds and any other moneys received by
the Authority or by the Trustee from any other source for payment of the Cost of
the Project will be deposited. Pending such application, the moneys in the
Acquisition Fund will be subject to a lien in favor of the holders of the Bonds.
The Trustee is authorized to make payments from the Acquisition Fund only upon
receipt of the requisitions and certificates required by the Lease. In the event
that the Company elects or is required to prepay the Basic Rent in whole and
cause all the Bonds then outstanding to be redeemed, or the Trustee declares all
of the Bonds then outstanding to be due and payable, the Trustee shall, without
further authorization, transfer any balance remaining in the Acquisition Fund to
the Bond Fund described below.
Bond Fund
The Indenture creates a special fund called the "Bond Fund", which will be
held by the Trustee in trust. Pending application, moneys in the Bond Fund will
be subject to a lien in favor of the holders of the Bonds. The following moneys
will be deposited to the credit of the Bond Fund:
(a) The accrued interest initially received by the Authority on the
sale of the Bonds.
(b) Any amount in the Acquisition Fund required to be transferred to
the Bond Fund by the Indenture.
(c) The installments of Basic Rent paid or prepaid by the Company.
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(d) Any payments made to the Trustee pursuant to the Guaranty.
(e) Any amounts paid to the Trustee in connection with the removal of
equipment under the Lease.
(f) The proceeds of the foreclosure on and sale of any of the Leased
Property.
(g) All other moneys received by the Trustee which are required to be
paid into the Bond Fund.
The Trustee shall, on or before each payment date, withdraw from the Bond
Fund and (i) remit by mail to each owner of Bonds registered as to both
principal and interest the amounts required for paying the interest on such
Bonds then due and payable, (ii) set aside or deposit in trust with the Paying
Agent sufficient moneys for paying the interest on the Bonds not registered,
then due and payable and (iii) set aside or deposit in trust with the Paying
Agent sufficient moneys for paying the principal of and redemption premium, if
any, on the Bonds then due, whether at maturity or by redemption or declaration
or otherwise.
Moneys held for the credit of the Bond Fund will be held in trust and
disbursed by the Trustee for (a) the payment of interest on the Bonds as it
becomes due and payable, or (b) the payment of the principal of the Bonds at
their maturity, or (c) the payment of the purchase price or redemption price of
the Bonds before their maturity. Whenever the moneys held for the credit of the
Bond Fund shall be sufficient for payment in full of the Bonds then outstanding,
such moneys shall be applied by the Trustee to the payment, purchase or
redemption of the Bonds.
Security for Deposits
All moneys deposited with the Trustee under the provisions of the
Indenture, or the Lease or the Guaranty shall be held in trust and applied only
in accordance with the provisions of the Indenture, the Lease and the Guaranty
and shall not be subject to lien or attachment by any creditor of the Authority,
the Trustee or the Company.
Investment of Money
At the written request of the Company, money held for the credit of the
Acquisition Fund and the Bond Fund
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will be invested and reinvested by the Trustee in Government Obligations (as
defined in the Indenture) and certificates of deposit, fully secured by such
Government Obligations, of banks or trust companies having a combined capital
and surplus of at least $25,000,000. The Trustee will sell at the best price
obtainable or present for redemption any such obligation if necessary in order
to provide cash to meet any required payment. Neither the Trustee nor the
Authority will be liable for any loss resulting from any such investment.
Default and Remedies
Each of the following events is defined as an "event of default" under the
Indenture:
(a) Payment of any installment of interest on any of the Bonds shall
not be made when due.
(b) Payment of the principal of or redemption premium, if any, on any
of the Bonds shall not be made when due, whether at maturity or by
proceedings for redemption or otherwise.
(c) An order or decree shall be entered, appointing a receiver in
respect of the rent or other payments subject to the lien of the Indenture,
either (i) with the consent or acquiescence of the Authority, or (ii)
without its consent or acquiescence if not discharged or stayed on appeal
within 90 days.
(d) Any proceeding shall be instituted, with the consent or
acquiescence of the Authority, for the purpose of effecting a composition
between the Authority and its creditors or adjusting the claims of such
creditors, any such claims or composition being payable from the rent or
other payments subject to the lien of the Indenture.
(e) An event of default under the Lease or under the Guaranty shall
have occurred.
(f) The Authority shall default in the due and punctual performance of
any other of the covenants, conditions and agreements applicable to it in
the Bonds or the Indenture; provided, however, that no default specified in
this clause (f) shall constitute an event
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of default until written notice specifying such default and requiring the
same to be remedied shall have been given to the Company and the Authority
by the Trustee, which may give notice in its discretion and shall give such
notice at the written direction of the Holders of not less than 25% of the
aggregate principal amount of Bonds outstanding, and the Company and the
Authority shall have had 60 days after receipt of such notice to correct
said default and shall not have corrected said default within the
applicable period, and if such a default be such that it can be corrected,
but not within the applicable time period, it shall not constitute an event
of default if corrective action is instituted by the Lessee or the
Authority within the applicable period and diligently pursued until the
default is corrected.
Upon the happening and continuance of any event of default under the
Indenture, then and in every such case the Trustee may, and upon the
written direction of the Holders of not less than a majority in aggregate
principal amount of the Bonds then outstanding shall, declare the principal
of all of the Bonds then outstanding (if not then due and payable) to be
due and payable immediately, and upon such declaration the same shall
become and be immediately due and payable, anything contained in the Bonds
or in the Indenture to the contrary notwithstanding; provided, however,
that if sufficient moneys shall have accumulated in the Bond Fund to pay
the principal of all matured Bonds and all arrears of interest, if any,
upon all Bonds then outstanding (except the principal of any Bonds not then
due and payable by their terms and the interest accrued on such Bonds since
the last interest payment date), and the charges, compensation, expenses,
disbursements, advances and liabilities of the Trustee and all other
amounts then payable by the Authority hereunder shall have been paid and
every other default known to the Trustee (other than a default in the
payment of the principal of such Bonds then due and payable only because of
an acceleration shall have been remedied to the satisfaction of the
Trustee, then and in every such case the Trustee may, and upon the written
direction of the holders of not less than a majority in aggregate principal
amount of the Bonds then outstanding shall, by a notice in writing to the
Authority, rescind and annul such declaration and its consequences, but no
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such rescission or annulment shall extend to or affect any subsequent
default or impair any right consequent thereon.
Upon the happening and continuance of any event of default specified
in the Indenture, then and in every such case the Trustee may, and upon the
written direction of the holders of not less than a majority in aggregate
principal amount of the Bonds then outstanding thereunder shall, proceed,
subject to the provisions of the Indenture, to protect and enforce its
rights and the rights of the Bondholders under the laws of the State of
North Carolina under the Lease, the Guaranty or the Indenture by such
suits, actions or special proceedings in equity or at law, or by
proceedings in the office of any board or officer having jurisdiction,
either for the specific performance of any covenant or agreement contained
in the Indenture or in aid or execution of any power therein granted or for
the enforcement of any proper legal or equitable remedy, as the Trustee,
being advised by counsel, shall deem most effectual to protect and enforce
such rights.
In any case in which under the Indenture the Trustee has the right to
declare the principal of all the Bonds then outstanding to be due and
payable immediately, or when the Bonds mature (by redemption or otherwise)
and are not paid, the Trustee may: (i) take possession of the Trust Estate
in order to manage, operate, or lease same, and (ii) assign rents,
revenues, earnings, income, products and profits receivable under the
Indenture and (iii) may and, upon written request of the holders of at
least a majority of the aggregate principal amount of the Bonds
outstanding, shall, sell the Trust Estate at public auction for cash,
pursuant to the general statutes of the state of North Carolina.
Defeasance
If when the Bonds shall have become due and payable as provided in the
Indenture, the whole amount of the principal and redemption premium, if any, and
interest so due and payable upon all of the Bonds and coupons then outstanding
shall be paid or sufficient moneys, or Government Obligations the principal of
and interest on which when due will provide
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sufficient moneys, shall be held by the Trustee or the Paying Agent for such
purpose under the provisions of the Indenture, and provision shall also be made
for paying all other sums payable by the Authority, including the Trustee's and
Paying Agent's fees and expenses, then and in such case the right, title and
interest of the Trustee in the Trust Estate shall thereupon cease, and the
Trustee in such case, on demand of the Authority, will release the Trust Estate,
and, subject to the provisions of the Lease, will turn over to the Company any
surplus in the Bond Fund and all balances remaining in any other funds or
accounts.
The Trustee's Functions
The Trustee shall be under no obligation to institute any suit, or to take
any remedial proceedings, until it shall be indemnified to its satisfaction
against any and all costs and expenses, outlays and counsel fees and other
reasonable disbursements, and against all liability (except for its own
negligence, bad faith or willful misconduct as provided in the Indenture). The
Trustee shall not be under any obligation to see that any duties imposed upon
any party other than itself, or any covenants on the part of any party other
than itself to be performed, shall be done or performed, and the Trustee shall
be under no obligation for failure to see that any such duties or covenants are
so done or performed.
The Indenture contains certain provisions with respect to the execution of
instruments by Bondholders, proof of ownership of bonds, and communications to
Bondholders by other Bondholders.
The Trustee may, upon written notice to the Authority, the Company and
certain Bondholders as provided in the Indenture, resign the trust created by
the Indenture. The Indenture provides that any successor Trustee shall be a bank
or trust company having trust powers and otherwise qualified to act as Trustee.
Supplements and Amendments to Indenture
The Authority and the Trustee may, without the consent of the Bondholders,
enter into supplements or amendments to the Indenture:
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(a) to cure any ambiguity or formal defect or omission in the
Indenture, or
(b) to set forth any and all matters in connection with the issuance
of additional Bonds or refunding Bonds, or
(c) to grant to the Trustee, for the benefit of the Bondholders, any
additional rights, remedies, powers, authority or security, or
(d) to subject to the Indenture additional revenues, properties or
collateral, or
(e) to reflect any addition to substitution for or removal from the
Trust Estate required or permitted under the Lease, or
(f) in connection with any other change which, in the judgment of the
Trustee, will not restrict, limit or reduce the obligation of the Authority
to pay the principal of and redemption premium, if any, and interest on the
Bonds or otherwise impair the security of the Bondholders under the
Indenture, or
(g) to modify, amend or supplement the Indenture in such manner as to
permit the qualification of the Indenture under the Trust Indenture Act of
1939 or under the securities laws of any of the states of the United
States.
With the consent of the holders of not less than two-thirds in aggregate
principal amount of the Bonds at the time outstanding, the Authority and the
Trustee may enter into supplements and amendments to the Indenture for the
purpose of adding any provisions or changing in any manner or eliminating any of
the provisions of the Indenture; provided, however, that nothing herein
contained shall permit (a) an extension of the maturity of the principal of or
the interest on any Bond or of the due date of any Sinking Fund Redemption
Requirement, or (b) a reduction in the principal amount of any Bond or the
redemption premium, if any, or the rate of interest thereon, or (c) creation of
any lien or security interest with respect to the Lease, other than the lien
created by the Indenture, or (d) a
22.
preference or priority of any Bond or Bonds over any other Bond or Bonds, or (e)
a reduction in the aggregate principal amount of the Bonds required for consent
to such supplemental indenture.
Supplements and Amendments to Other Agreements
The Authority and the Trustee, or the Trustee alone in the case of the
Guaranty, may consent to supplements and amendments to the Lease and the
Guaranty:
(a) to cure any ambiguity or formal defect or omission, or
(b) to set forth any and all of the matters in connection with the
issuance of Additional Bonds or Refunding Bonds, or
(c) to identify more precisely the property forming a part of the
Leased Property under the Lease or to substitute Leased Property, or
(d) to grant to or confer upon the Trustee, for the benefit of the
Bondholders, any additional rights, remedies, powers, authority or
security, or
(e) in connection with any other change which, in the judgment of the
Trustee, will not restrict, limit or reduce the obligation of the Company
to pay the Basic Rent or otherwise impair the security of the Bondholders.
The Authority and the Trustee, or the Trustee alone in the case of the
Guaranty, will not execute and the Trustee will not consent to any other
supplement or amendment to the Lease or the Guaranty without the consent or
approval of the holders of not less than two-thirds in aggregate principal
amount of the Bonds then outstanding.
THE GUARANTY AGREEMENT
The following is a summary of certain provisions of the Guaranty.
The Company (also referred to as the "Guarantor") unconditionally
guarantees to the Trustee for the benefit of
23.
<PAGE>
the holders of the Bonds (and the interest coupons, if any) the full and prompt
payment of the principal of and redemption premium, if any, and interest on the
Bonds. The Guaranty is continuing, absolute and unconditional, and is a guaranty
of payment and not of collection. If the Authority shall default in payment of
the principal of or redemption premium, if any, or interest on the Bonds when
and as the same shall become due, whether at the stated maturity thereof, by
call for redemption or otherwise, the Guarantor, upon demand by the Trustee or
its successors or assigns, without notice other than such demand and without the
necessity of further action by the Trustee or its successors or assigns, will
promptly and fully make such payments, provided, however, that no such demand
shall be effective until the close of business on the day any such default shall
occur. In the event of such default, the Trustee shall make such demand. The
Guarantor will pay all reasonable costs and expenses, including attorneys' fees,
paid or incurred by the Trustee and its successors and assigns in connection
with the enforcement of the obligations of the Authority under the Indenture and
of the Guarantor under this Guaranty. All payments by the Guarantor shall be
made in any coin or currency of the United States of America which on the
respective dates of payment thereof is legal tender for the payment of public
and private debts. Each default in payment of the principal of or redemption
premium, if any, or interest on any Bond shall give rise to a separate cause of
action hereunder, and separate suits may be brought hereunder as each cause of
action arises. The Company unconditionally waives the right to receive notice of
any event relating to nonpayment on the Bonds as a condition to its obligation
under the Guaranty. No claim, set-off or any defense of any kind which the
Company may have against the Authority or the Trustee will relieve the Company
of its obligations under the Guaranty.
In the Guaranty, the Company covenants and agrees, among other things,
that, so long as the Bonds shall be outstanding it will not, transfer or
otherwise dispose of all or substantially all of its assets (either in a single
transaction or in a series of related transactions), and will not merge or
consolidate with any other corporation and will not permit one or more
corporations to merge into or consolidate with it, unless the surviving,
resulting or transferee corporation, as the case may be:
(a) shall have a net worth, determined in accordance with generally
accepted accounting principles, at least equal to 90$ of the net worth of
the Guarantor as of the date of the most recent audited consolidated
financial statement of the Guarantor; and
24.
<PAGE>
(b) in the event a merger or consolidation or acquisition shall occur
within three years following the date of issuance of the Series 1979 Bonds,
shall furnish an opinion of Counsel which shall be Counsel nationally
recognized on the subject of municipal bonds and selected by the Company
and acceptable to the Trustee, to the effect that interest on the Series
1979 Bonds will not become includable in the gross income of the recipient
under Section 103 of the Code and regulations promulgated thereunder by
reason of such merger, consolidation or acquisition for any reason other
than that the Holder is a substantial user or a related person within the
meaning of Section 103(b)(8) of the Code.
UNDERWRITING
The Underwriter has agreed, subject to certain conditions, to purchase the
Series 1979 Bonds from the Authority and has agreed to pay therefor a price
equal to ___ % of the total principal amount of the Series 1979 Bonds, plus
accrued interest thereon from June 1, 1979. After the Series 1979 Bonds are
released for sale, the initial public offering price and other terms may be
varied from time to time by the Underwriter and the Series 1979 Bonds may be
offered and sold at prices lower than the initial public offering price to
certain dealers (including dealers who may sell Bonds into their investment
accounts). The Underwriter is obligated to purchase all of the Bonds if any of
the Bonds are purchased. The Company has agreed to indemnify the Underwriter
against certain civil liabilities, including liabilities under the Federal
securities laws.
TAX EXEMPTION
In the opinion of Brown, Wood, Ivey, Mitchell & Petty, New York, New York,
as Bond Counsel, based on existing statutes, regulations and court decisions,
the interest on the Bonds is exempt from all present Federal income taxes,
except that no opinion is expressed with respect to interest on any Bond for any
period during which it is held by a person who is a "substantial user" of the
Project or a "related person" as provided in Section 103(b)(8) of the Internal
Revenue Code of 1954, as amended, and the applicable regulations thereunder. In
addition, in the opinion of Bond Counsel, the interest on the Bonds is exempt
from all income taxes within the State of North Carolina.
25.
<PAGE>
The Authority will issue its certificate to the effect that on the basis of
facts, estimates and circumstances represented by the Company to be in existence
on the date of delivery of the Bonds, it is not expected that the proceeds of
the Bonds will be used in a manner that would cause the Bonds to be "arbitrage
bonds" under Section 103(c) of the Internal Revenue Code of 1954, as amended,
and the applicable regulations thereunder.
LEGALITY
Legal matters incident to the authorization and issuance of the Series 1979
Bonds are subject to the unqualified approving opinion of Brown, Wood, Ivey,
Mitchell & Petty, New York, New York, as Bond Counsel. Brown, Wood, Ivey,
Mitchell & Petty have reviewed the statements in this Official Statement under
the captions "The Bonds", "The Lease", "The Indenture" and "The Guaranty" and
believe that insofar as such statements constitute summaries of the documents
referred to therein, such statements constitute fair summaries of said
documents, but said firm expresses no further opinion with respect to the
accuracy, completeness or sufficiency of this Official Statement. The
Underwriter and Bond Counsel will receive the opinion of Drinker Biddle & Reath
with respect to certain matters pertaining to the Company.
MISCELLANEOUS
All information contained in this Official Statement regarding the Project
and the Company and in the Appendix hereto has been furnished solely by the
Company, and the consolidated financial statements of the Company included in
the Appendix hereto have been so included in reliance on the report of Coopers &
Lybrand, independent certified public accountants, and on their authority as
experts in auditing and accounting. The Authority assumes no responsibility for
the accuracy or completeness of the information contained in this Official
Statement except for the information contained herein under the heading "The
Authority".
THE IREDELL COUNTY INDUSTRIAL
FACILITIES AND POLLUTION
CONTROL FINANCING AUTHORITY
____________________________
Chairman
26.
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 3, 1978 Commission file number 0-6085
HUNT MANUFACTURING C0.
(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.)
1405 Locust Street, Philadelphia, Pa. 19102
------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (215) 735-7695
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
- ------------------- -------------------
None --
Securities registered pursuant to Section 12(g) of the Act:
Common Shares (Par Value $.10 per Share)
- --------------------------------------------------------------------------------
(Title of class)
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
Shares of common stock outstanding as of December 3, 1978 - 1,165,420
A-1
<PAGE>
Item 1 - BUSINESS
General
Hunt Manufacturing Co. and its subsidiaries (hereinafter sometimes
collectively referred to as the "Company") are primarily engaged in the
manufacture and/or distribution of office equipment and supplies and art/craft
products for the business, education and hobby markets. The Company also is
engaged, to a lesser extent, in the manufacture of various types of small metal
drawn parts for other manufacturers, primarily in the cosmetics, fishing rod,
automotive and mechanical pen and pencil industries.
The table on the following page sets forth certain information with respect
to the Company's various industry segments, and its export sales, for the fiscal
years 1974 through 1978.
Principal Products
Office Equipment and Supplies. The Company manufactures manual pencil
sharpeners which it markets under its BOSTON(R) brand name. These sharpeners are
available in a wide range of prices and models and offer a variety of features
to fit the particular needs of users, including screw or vacuum-type mounts,
self-feeding mechanisms and adjustable cutters for producing fine, blunt or
draftsmen's points.
Other products which the Company manufactures under its BOSTON(R) label
include a popular-priced, light electric pencil sharpener, a battery operated
pencil sharpener, a heavy-duty electric pencil sharpener, an electric letter
opener, and a wide variety of paper punches. It also produces several sizes of
metal "bulldog" spring clips for fastening papers or similar materials together.
Through its Lit-Ning operation, the Company also manufactures and
distributes, under its Lit-Ning(R) label, various models of desk-top metal
office files, racks, stands, tables, organizers and accessories. The Lit-Ning
operation was acquired by the Company on December 1, 1975.
<PAGE>
<TABLE>
<CAPTION>
Segment and Export Information
(in thousands)
1978 1977 1976 1975 1974
(53 weeks) (52 weeks) (52 weeks) (52 weeks) (52 weeks)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net sales of each segment are as follows:
Office equipment and supplies $ 22,916 $ 19,103 $ 15,306 $ 7,916 $ 7,379
Art/craft products 16,676 14,063 13,142 11,866 11,693
Other 3,713 2,986 2,428 1,764 2,657
-------- -------- -------- -------- --------
Net sales $ 43,305 $ 36,152 $ 30,876 $ 21,546 $ 21,729
======== ======== ======== ======== ========
Operating profit of each segment
is as follows:
Office equipment and supplies 4,082 3,690 2,716 1,538 975
Art/craft products 1,456 1,294 1,191 1,492 1,801
Other 784 532 533 320 534
-------- -------- -------- -------- --------
Operating profits of
segments 6,322 5,516 4,440 3,350 3,310
General corporate expenses (823) (825) (551) (379) (381)
Interest expense (343) (289) (338) (83) (156)
Other (expense) income, net (94) 54 35 61 (70)
-------- -------- -------- -------- --------
Income before income taxes $ 5,062 $ 4,456 $ 3,586 $ 2,949 $ 2,703
======== ======== ======== ======== ========
Identifiable assets of each
segment are as follows:
Office equipment and supplies 13,097 9,963 8,385 3,169 3,072
Art/craft products 8,044 7,303 7,203 6,436 6,895
Other 2,437 2,147 1,967 1,650 1,680
Corporate assets 497 689 425 1,099 486
-------- -------- -------- -------- --------
Total Assets $ 24,075 $ 20,102 $ 17,980 $ 12,354 $ 12,133
======== ======== ======== ======== ========
Domestic export sales to various
countries $ 4,065 $ 3,276 $ 2,763 $ 2,366 $ 2,122
======== ======== ======== ======== ========
</TABLE>
Note: The above data has been presented in accordance with the provisions of
Financial Accounting Standards Board Statement No. 14.
<PAGE>
ART/CRAFT MATERIALS. The Company produces a wide variety of supplies, sold
both singly and in kits, for the student, the hobbyist and the amateur, the
professional, and the commercial artist. Through its Bienfang operation it
offers various lines of high quality sketching, tracing, water-color and acrylic
paint papers, as well as poster and mat boards.
The Company manufactures under its SPEEDBALL(R) label various products
including: lettering pens, steel brushes, and assorted colors of inks for poster
and sign making and lettering work; a complete line of block printing equipment,
including cutting tools, presses, rollers and water-soluble and oil base inks;
screen printing kits with unique water soluble inks; and a complete line of
acrylic-polymer paints.
The Company is also the exclusive distributor in the United States and
Canada for OSMIROID(TM)* brand automatic feed lettering, writing and sketching
pens.
The Company manufactures, under its VANGUARD I(R) label, a complete line of
high quality acrylic-polymer artists' paints (the formulation for which was
developed by the Company), various other artists' mediums and interchangeable
painting knives. Acrylic paints, which are water-soluble while wet and
waterproof after drying, are the most popular type of artists' colors. The
Company also offers a line of oil artists' paints which it markets under the
FIDELIS(TM) label.
The Company also publishes a number of textbooks and teaching aids on such
subjects as lettering, cartooning, print making and polymer painting, primarily
for use in schools and by amateur artists.
Other Products
The Company also produces and finishes a variety of small metal drawn parts
for incorporation into the products of other manufacturers. The major items in
this line are component parts for ball-point pens, decorative caps, ferrules for
two-piece fishing rods and other miscellaneous items for the cosmetic and
automotive markets. These items are made of aluminum, steel, brass or nickel
silver, with a number of different finishes including chrome, gold plate,
anodized aluminum and colored lacquers.
COMPETITION
The Company has only one major competitor, Berol Corporation, in the manual
pencil sharpener field, and Management
- ----------
* Trademark of E S Perry Ltd.
-3-
<PAGE>
believes that the Company enjoys an equal share of this market. Management
further believes the Company produces most of the dip-type lettering pens sold
in the United States and holds a leading position in block printing inks and
supplies sold to schools. It is believed that the various paper and related
products of the Company's Bienfang operation, taken as a whole, account for
approximately 15 to 20 percent of the applicable market. It is further believed
that the Company's Lit-Ning operation has the major share of the market for
desk-top files, racks, and accessories. It is estimated that Lit-Ning has
approximately four major competitors. The Company's other products generally
account for smaller portions of their respective markets and are in direct
competition with products of other companies. A number of the Company's
competitors are larger and have greater financial resources than the Company,
and in a few instances (most notably Panasonic in the electric pencil sharpener
market), these competitors are dominant in the field.
MARKETING AND DISTRIBUTION
Marketing of the Company's office and art/craft lines throughout the United
States and Canada is effected principally through 33 salesmen, 7 regional
managers and 76 independent representatives who sell to wholesalers and dealers,
including school supply distributors, mail order houses, chain outlets and art
supply, office supply and stationery stores. Some of these customers, in turn,
resell to federal, state and local governments. As part of its sales effort, the
Company also conducts demonstrations and workshops for school art teachers,
local art groups and local retailers.
The metal, component-part products of the Company are marketed on a more
limited basis throughout the United States, primarily by its 4 independent
representatives. Two customers accounted for approximately 55$ and five
customers accounted for about 64%, of the sales of this Division during the
Company's last fiscal year.
The Company has approximately 5,000 active customers, the six largest of
which accounted for approximately 18$ of its total sales during the Company's
most recent fiscal year. No other customer accounted for as much as 2$ of such
sales.
The Company's export sales, limited to its office equipment and supplies
and art supplies lines, amounted to 41 $4,065,000 in 1978 as compared with
$3,276,000 in 1977. The Company, through its International Division, distributes
these products in approximately 70 foreign countries. Most of its other foreign
sales are made through 58 independent distributors or sales agents in the
various countries. The
-4-
<PAGE>
Company also has a Domestic International Sales Corporation (DISC) in order to
take advantage of certain tax deferrals available to such corporations.
Most of the Company's sales are made from inventory, and accordingly, the
Company has no significant sales backlog. The Company's business, as a whole, is
not subject to marked seasonal fluctuations. However, school supply distributors
generally make the major portion of their purchases from the Company during the
period from April through August of each year in preparation for school openings
in September. Payment for such purchases is customarily not due until September
or October, so that the Company must make short-term borrowings from banks in
order to provide adequate working capital during this period. See "Management's
Discussion and Analysis of the Consolidated Summary of Operations" herein.
PATENTS, TRADEMARKS, ETC.
The Company's business is not presently dependent, to a material extent,
upon any patents, franchises, licenses or concessions. Many of the Company's
products, however, are sold under various brandnames, such as BOSTON(R),
DUOMAT(R), LIT-NING(R), SPEEDBALL(R) and VANGUARD I(R), which are of significant
value to the Company. The Company believes that its rights to its material
brandnames are adequately protected.
RESEARCH AND DEVELOPMENT
During fiscal year 1978, the Company spent approximately $273,000 on
Company-sponsored research and development projects, as opposed to approximately
$230,000 for the previous fiscal year. In both years the Company had four
employees engaged primarily in research and development activities.
RAW MATERIALS AND ENERGY SUPPLIES
From time to time in the past, the Company has experienced some shortages
in, and increased prices for, various raw materials, but so far it has been able
to secure an adequate supply of the necessary materials.
-5-
<PAGE>
The Company is also dependent upon a constant energy supply in its
manufacturing processes and in order to heat and light its various facilities.
over the past several years the company has made significant expenditures in an
attempt to reduce its dependence on those sources of energy which are in
particularly short supply and to provide alternate standby capabilities. As a
result, the Company's operations have not been materially affected by energy
shortages.
It is difficult to predict what effect shortages of raw materials or
continued shortages of natural gas or other energy supplies, and/or increased
costs for same, might have on the Company.
EMPLOYEES
The Company currently has approximately 981 employees.
RELOCATION
The Company announced in January 1979 that its Bienfang Paper Products
operations would be transferred from its Metuchen, New Jersey plant to a
facility in Statesville, North Carolina. This move, which will occur during
fiscal 1979, will enable the Company to consolidate its Art/Craft operation in
Statesville.
-6-
<PAGE>
ITEM 2.
CONSOLIDATED SUMMARY OF OPERATIONS
<TABLE>
<CAPTION>
Fiscal Year
Dec 3, 1978 Nov 27, 1977 Nov 28, 1976 Nov 30, 1975 Dec 1, 1974
(53 Weeks) (52 Weeks) (52 Weeks) (52 Weeks) (52 Weeks)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net sales $43,305,225 $36,152,253 $30,875,336 $21,546,118 $21,729,091
Gross profit 17,503,739 14,912,303 12,834,168 8,701,391 8,462,747
Selling, administrative
and other 12,098,414 10,167,175 8,910,371 5,668,909 5,603,327
Interest expense 343,454 288,946 338,190 83,426 155,938
Income before income taxes 5,061,871 4,456,182 3,585,607 2,949,056 2,70,482
Provision for taxes 2,361,083 2,121,675 1,680,374 1,408,000 1,293,000
Net income 2,700,788 2,334,507 1,905,233 1,541,056 1,410,482
Dividends paid 582,710 463.,543 341,759 295,411 218,322
Per share of common stock*
Net income 1.86 1.61 1.32 1.07 .99
Dividends to stockholders .40 .32 .237 .205 .154
Average shares outstanding* 1,455,836 1,448,185 1,442,966 1,440,266 1,421,089
</TABLE>
* Restated to reflect the five-for-four common stock splits declared in 1979
and 1977.
NOTE: The consolidated summary of operations includes the results of operations
of Lit-Ning Industries and its subsidiary, Lit-Ning Products Company, since
December 1, 1975, the date of its acquisition. Unaudited pro forma combined
net sales and net income of Hunt Manufacturing Co. and subsidiaries and
Lit-Ning for the year ended November 30, 1975 would have been $26,995,000
and $1,630,000 ($1.13 per share), respectively, had the acquisition been
effected as of December 2, 1974.
-7-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE SUMMARY OF OPERATIONS
NET SALES
Consolidated net sales for 1978 increased $7.2 million, or 19.8%, from
1977, with all operating segments reporting increases over the prior year. Of
the total increase in 1978, approximately $3.8 million was in Office Equipment
and Supplies, which were 20.0% ahead of 1977. LIT-NING(R) metal office files,
racks, and desk organizers and BOSTON(R) paper punches and electric pencil
sharpener sales were all up significantly over 1977. Art/Craft products
increased $2.6 million, or 18.6%, over 1977. New acrylic paints introduced in
1978, as well as new lines of paper products, contributed substantially to these
results. Calligraphy products, including OSMIROID(R) pens, SPEEDBALL(R) pens and
inks, and related supplies increased substantially over 1977. Other products
increased $0.7 million, or 24.3%, over 1977.
During 1977, net sales increased $5.3 million, or 17%, over the prior year,
with all operating segments recording increases. Office Equipment and Supplies
increased $3.9 million, or 25.6%, and Art/Craft products increased $0.9 million,
or 6.8%, over 1976. During 1977, weakness in our school markets softened the
Art/Craft products sales growth.
GROSS PROFIT
In 1978, gross profit increased $2.6 million, or 17%, over 1977. Gross
profit as a percentage of net sales was virtually unchanged from 1977. During
1978, sharply higher material cost increases were experienced in addition to
higher labor and energy costs. These cost increases were offset by improved
operating efficiencies resulting from cost savings programs at all plant
locations and price increases.
In 1977, gross profit increased $2.1 million, or 16%, over 1976. Gross
profit was 41% of net sales in 1977, unchanged from 1976.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
These expenses increased $1.8 million, or 17.5%, over 1977. Selling and
shipping expenses generally increased in proportion to net sales increases;
however, administrative expenses increased at a lesser rate.
-8-
<PAGE>
In 1977, selling, general and administrative expenses increased $1.3
million, or 14%, over 1976, but declined as a percentage of net sales from 29$
in 1976 to 28$ in 1977.
INTEREST AND OTHER EXPENSES
interest expense increased $55,000 in 1978, up 18.9 over 1977, as a result
of higher interest rates on short-term seasonal borrowings and the addition of
$1 million of long-term debt to finance the expansion of the Company's facility
in Kentucky. Interest expense decreased $49,000 in 1977, down 15% from 1976, due
to lower average outstanding short-term balances and reduction of long-term
debt.
Other expense was $94,000 in 1978, as compared to other income of $54,000
in 1977. Other expense in 1978 includes the write-off of goodwill and trademarks
on product lines acquired in prior years which no longer have any value to the
Company. In addition, foreign currency exchange losses increased by $88,000 in
1978 over 1977, principally due to losses on conversion of Canadian currency to
U. S. funds.
INCOME TAXES
The effective income tax rate in 1978 decreased to 47% compared to 48% in
1977 due to greater investment tax credits and greater DISC benefits on export
income.
-9-
<PAGE>
<PAGE>
....1109
ITEM 3 - PROPERTIES
The Company maintains its principal executive offices at 405 Locust Street,
Philadelphia, Pa. 19102 in approximately 12,500 square feet of leased space
under a lease expiring in 1981.
The following table sets forth certain information with respect to the
other facilities of the Company:
<TABLE>
<CAPTION>
Industry Approximate Owned or
Segment Function Location Size Leased
- ------- -------- -------- ---- ------
<S> <C> <C> <C> <C>
Office Equip- Manufacturing Fresno, CA 30,000 sq. ft. Owned
ment & Supplies & Offices 2 Bldgs. on 1 acre
Manufacturing Florence, KY 104,000 sq. ft. (1)
& Offices Bldg.on 27 acres
Art/Craft Manufacturing & Metuchen, NJ 114,000 sq. ft. Leased (2)
Materials Offices (Exp.1983)
Office Equip- Manufacturing Statesville, 125,000 sq. ft. Owned
ment & Supplies & Offices NC Bldg. on 16 acres
and Art/Craft
Materials Warehouse Statesville, 37,000 sq. ft. Leased
NC (Exp.1979)
Warehouse Statesville, 10,000 sq. ft. Leased
NC (Year to Year)
Warehouse Fresno, CA 37,500 sq. ft. Leased
(Exp.1982)
Warehouse Toronto, 11,300 sq. ft. Leased
Canada (Exp.1981)
Regional Office Des Plaines, 610 sq. ft. Leased
IL (Exp.1981)
Other Manufacturing Sarasota, FL 31,000 sq. ft. Owned (3)
& Offices 2 Bldgs. on 1 acre
</TABLE>
- ----------
(1) The construction and expansion of this facility was financed by the
issuance of industrial revenue bonds by the City of Florence, Kentucky. The
City retains title to the property and leases it to the Company for rental
payments equivalent to principal and interest payments on the bonds. The
Company has the option, subject to certain
-10-
<PAGE>
conditions, to extend the term of the leases and to purchase the property.
See Note 10 to Notes to Consolidated Financial Statements herein.
(2) In January 1979, the Company announced its decision to transfer its
Bienfang Paper Products operations from Metuchen, New Jersey to
Statesville, North Carolina as promptly as practicable. The Company has
made arrangements to secure a 170,000 square foot building on approximately
13 acres in the Statesville area to house the Bienfang operations. The
Company has not finally determined whether or not it will retain the
Metuchen facility following the move of the Bienfang operations.
(3) Subject to a mortgage payable until 1991 with a present principal balance
of approximately $167,000.
At present, all of the Company's facilities are believed to be adequately
utilized and suitable for the Company's needs, although future expansion may be
necessary in certain segments of the Company's operations.
Item 4 - PARENTS AND SUBSIDIARIES
(a) PARENTS. George E. Bartol, III, by reason of his ownership of
approximately 22%* of the outstanding Common Shares of the Company and his
position as Chairman of the Board and Chief Executive Officer of the Company,
may be deemed to be a parent of the Company within the meaning of the Securities
Exchange Act of 1934 and the rules and regulations hereunder.
- ----------
* In addition, approximately 30% of the outstanding Common Shares of the
Company are held either in irrevocable trusts set up by Mr. Bartol for the
benefit of his children and grandchildren or are held directly by Mr.
Bartol's four adult daughters.
(b) Subsidiaries.
Percentage
Place of of Voting
Name Incorporation Power
- ---- ------------- -----
Hunt World Trade Corporation Florida 100%
Productos Hunt de Mexico Mexico 49%
-11-
<PAGE>
The financial statements of the Hunt World Trade Corporation, a DISC, are
consolidated with those of the Company, and the Company's investment in Hunt
Productos de Mexico is stated in the Company's financial statements at cost.
Item 5 - PENDING LEGAL PROCEEDINGS
There are no material pending legal proceedings, other than routine
litigation incidental to the business of the Company, to which the company or
any of its subsidiaries is a party or to which any of its or their property is
subject.
Item 6 - INCREASES AND DECREASES IN OUTSTANDING SECURITIES AND INDEBTEDNESS
(a) Equity Securities. Increases and decreases in outstanding equity in
1978 were as follows:
SHARES
------
Balance,
November 27, 1977 1,158,857
Shares issued under:
Management Incentive
Bonus Plan 1,188
Qualified Stock Option Plan 5,375
---------
Balance
December 3, 1978 1,165,420
=========
Reference is made to the Company's Report on Form 10-Q for the first fiscal
quarter of 1978 for further information concerning such transactions.
On January 24, 1979 the Board of Directors on the Company declared a
five-for-four split of the Company's Common Shares, in the form of a 25$ share
distribution, payable February 28, 1979 to shareholders of record on February 7,
1979.
-12-
<PAGE>
(b) INDEBTEDNESS. In December 1977, the Company entered into an agreement
with the city of Florence, Kentucky to finance expansion of the Company's plant
located there through the issuance of $1 million in industrial revenue bonds.
The bonds will be repaid over 15 years at an average interest rate of 6.9%. The
net proceeds of $962,500 were used to add 27,000 square feet to the
manufacturing plant and for the purchase of machinery and equipment for
production expansion and modernization.
During the year, the Company had fluctuating balances on short-term
borrowings (pursuant to its informal lines of credit) from commercial banks. The
Company also decreased the amount of its outstanding long-term indebtedness
through periodic payments made pursuant to the terms of such obligations.
Reference is made to the Company's Reports on Form 10-Q for each of its first
three fiscal quarters of 1978.
Item 7 - CHANGES IN SECURITIES AND CHANGES IN SECURITY FOR REGISTERED SECURITIES
Not applicable.
Item 8 - DEFAULTS UPON SENIOR SECURITIES
Not applicable.
Item 9 - APPROXIMATE NUMBER OF EQUITY SECURITY HOLDERS
Approximate number of record
Title of Class holders as of December 3, 1978
-------------- ------------------------------
Common Shares, par value 823
$.10 per share
Item 10 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Omitted, since reported in the Company's Report on Form 10-K for the
quarter ended May 28, 1978.
-13-
<PAGE>
ITEM 11 - INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 410 of the Pennsylvania Business Corporation Law empowers a
Pennsylvania corporation to indemnify directors, officers and others against
certain liabilities. Article 5 of the Company's By-laws embodies, in substantial
part, the scope of indemnification empowered by that Section.
The Company has also secured and maintains an insurance policy insuring its
directors and officers, subject to certain limitations, against liabilities
which they may incur in their capacities as, or by reason of their being,
directors and officers, including certain liabilities with respect to which such
directors and officers might not be entitled to indemnification by the Company.
This insurance policy also provides for reimbursement of the Company for amounts
paid to directors and officers by way of indemnification. The Company also has
secured and maintains a fiduciary insurance policy insuring its directors,
officers and others against liabilities arising with respect to certain employee
benefit plans.
The following information is furnished in this Report PURSUANT TO
Instruction 4 to Item 3(b) of Regulation S-K
Executive officers of the Registrant
NAME AGE POSITION
- ---- --- --------
GEORGE E. BARTOL, III 57 Chairman of the Board of
Directors and Chief Executive
Officer
CHARLES W. NAYLOR 48 President
ROBERT B. FRITSCH 47 Vice President, Office Products
Division
GEORGE P. JOHNSON 62 Vice President, Manufacturing
RONALD J. NAPLES 33 Vice President, International
RUDOLPH M. PEINS, JR. 48 Vice President, Secretary and
Treasurer
ANDREW J. WANING 60 Vice President, Personnel
Services
DANIEL H. SCHEESER 57 General Manager, Peterson
Division
-14-
<PAGE>
All of the executive officers are members of the Executive Operating
Committee of the Company. The executive officers of the Company are elected
annually by the Board of Directors to serve for a period of one year or until
their successors are elected and qualify. All of the executive officers of the
Company except Messrs. Naples and Scheeser have served in varying capacities
with the Company for over five years.
Mr. Bartol has been Chairman of the Board of the Company for a number of
years. He also served as Chief Executive Officer of the Company for a number of
years until April 1973. From the fall of 1973 through mid-February 1975, Mr.
Bartol served as Executive Deputy Secretary of Commerce of the Commonwealth of
Pennsylvania to which he devoted the major portion of his time. He re-entered
the full-time employment of the Company in 1975 and re-assumed the duties of
Chief Executive Officer on December 1, 1975. In June 1976 he also re-assumed the
office of President, which he held until November 30, 1977 when Mr. Naylor
became President. Mr. Naylor had previously been in charge of the Company's
Peterson Division for eight years.
Prior to his coming to the Company in July 1976, Mr. Naples had served as
Executive Director of The Presidential Task Force on Power Plant Acceleration
(1975-1976) and Special Assistant to the Administrator of the Federal Energy
Administration (1974-1975). Before that he attended the Harvard Graduate School
of Business (from which he received an M.B.A. Degree in 1974) and was employed
briefly by Loeb, Rhoades & Co., investment bankers (1973), where he served as an
Associate in Corporate Finance.
Mr. Scheeser came to the Company in 1977 from GTE Sylvania where he had
served as plant manager for more than ten years.
- 15 -
<PAGE>
Item 13 - FINANCIAL STATEMENTS, EXHIBITS FILED, AND REPORTS ON FORM 8-K
PAGES
(a) Financial Statements and Schedules:
Report of Independent Certified Public Accountants F-1
Financial Statements:
Consolidated Balance Sheets,
December 3, 1978 and November 27, 1977 F-2
Consolidated Statements of Income and
Retained Earnings for the years ended
December 3, 1978 and November 27, 1977 F-3
Consolidated Statements of Changes in
Financial Position for the years ended
December 3, 1978 and November 27, 1977 F-4
Notes to Consolidated Financial Statements F-5 - F-17
Schedules:
II. Amounts Receivable from Underwriters, Promoters, Directors, Officers,
Employees and Principal Holders (Other than Affiliates) of Equity
Securities of the Person and its Affiliates for the years ended
December 3, 1978 and November 27, 1977 F-18
V. Property, Plant and Equipment for the years ended December 3, 1978
and November 27, 1977 F-19
VI. Accumulated Depreciation and Amortization of Property,
Plant and Equipment for the years ended December 3, 1978
and November 27, 1977 F-20
VII. Intangible Assets, Preoperating Expenses and Similar
Deferrals for the years ended December 3, 1978
and November 27, 1977 F-21
-16-
<PAGE>
Schedules, continued: Pages
- --------------------- -----
XII. Valuation and Qualifying Accounts and Reserves for the years
ended December 3, 1978 and November 27, 1977 F-22
XVI. Supplementary Income Statement Information for the years ended
December 3, 1978 and November 27, 1977 F-23
All other schedules not listed above have been omitted since they are not
applicable or not required or because the required information is included in
the consolidated financial statements or notes thereto.
Individual financial statements of the Company have been omitted since the
Company is primarily an operating company and all subsidiary companies included
in the consolidated financial statements are wholly-owned and are not indebted
to any person, other than the parent or the consolidated subsidiaries, in an
amount which is material in relation to total consolidated assets at the date of
the latest balance sheet filed, except indebtedness incurred in the ordinary
course of business which is not overdue and which matures in one year.
(b) EXHIBITS
1. Non-Qualified Stock Option Plan of the Company.
2. Computation of fully-diluted per share earnings (pursuant to
Instruction 3 of Item 2).
3. Letter dated January 24, 1979 from Coopers & Lybrand concerning the
Company's change in accounting principles from FIFO to LIFO.
Miscellaneous long-term debt instruments of the Company under each of
which the underlying debt is equal to less than 5% of the total assets of
the Company are not filed as exhibits. The Company agrees to furnish to the
Securities and Exchange Commission, upon request, copies of any such
instruments.
-17-
<PAGE>
(c) Form 8-K Reports
The Company did not file any Reports on Form 8-K during or with
respect to its last fiscal quarter of 1978.
-18-
<PAGE>
Part II of this Report is omitted, since the company intends to file with
the Securities and Exchange Commission a definitive proxy statement, pursuant to
Regulation 14A under the Securities Exchange Act of 1934, involving the election
of directors, not later than 120 days after the end of its 1978 fiscal year.
SIGNATURE
Pursuant to the requirements of Section 13 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.
By /s/ RUDOLPH M. PEINS, JR.
-----------------------------
Rudolph M. Peins, Jr.
Vice President
Dated: February 28, 1979
-19-
<PAGE>
Financial Statements
to
Form 10-K
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of
Hunt Manufacturing Co.:
We have examined the consolidated balance sheets of Hunt Manufacturing Co.
and subsidiaries at December 3, 1978 and November 27, 1977, and the related
consolidated statements of income and retained earnings and changes in financial
position for the years then ended, and the related supporting schedules. Our
examinations were made in accordance with generally accepted auditing standards
and, accordingly, included such tests of the accounting records and such other
auditing procedures as we considered necessary in the circumstances.
In our opinion, the financial statements referred to above (pages F-2 to
F-17, inclusive) present fairly the consolidated financial position of Hunt
Manufacturing Co. and subsidiaries at December 3, 1978 and November 27, 1977,
and the consolidated results of their operations and changes in financial
position for the years then ended, and the supporting schedules (pages F-18 to
F-23, inclusive) present fairly the information required to be included therein,
all in conformity with generally accepted accounting principles applied on a
consistent basis except for the change, with which we concur, in the method of
inventory valuation as described in Note 2 to the consolidated financial
statements.
COOPERS & LYBRAND
1900 Three Girard Plaza
Philadelphia, Pennsylvania
January 24, 1979
F-1
<PAGE>
HUNT MANUFACTURING CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 3, 1978 and November 27, 1977
1978 1977
---- ----
ASSETS
Current assets:
Cash $ 234,393 $ 392,831
Accounts receivable, less allowance for
doubtful accounts: 1978, $161,000;
1977, $131,000 (Schedule XII) 8,263,231 6,373,722
Inventories (Notes 1 and 2):
Finished and partly finished products 4,364,094 4,071,218
Raw materials and supplies 2,654,883 2,047,731
Prepaid expenses 184,622 187,253
----------- -----------
Total current assets 15,701,226 13,072,755
Property, plant and equipment, at
cost, less accumulated depreciation
(Notes 1, 3 and 10)
(Schedules V and VI) 7,609,413 6,200,078
Intangible assets, at cost, less
amortization (Notes 1 and 4)
(Schedule VII) 561,224 661,982
Loans to officers, collateralized by
cash value of life insurance
(Schedule II) 77,646 75,663
Other assets 125,541 91,889
----------- -----------
$24,075,050 $20,102,367
=========== ===========
See accompanying notes
F-2
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES
1978 1977
---- ----
<S> <C> <C>
Current liabilities:
Demand notes payable, bank (Note 5) $ 400,000 $ --
Current portion of long-term debt (Note 5) 372,742 418,987
Accounts payable 1,747,167 1,210,152
Accrued liabilities:
Salaries, wages and commissions 1,183,396 1,060,291
Pensions (Notes 1 and 7) 295,693 236,398
Income taxes 628,811 556,042
Other 399,780 544,199
----------- -----------
Total current liabilities 5,027,589 4,026,069
----------- -----------
Long-term debt, less current portion (Note 5) 2,818,009 2,223,566
----------- -----------
Deferred income taxes (Notes 1 and 6) 583,200 411,300
----------- -----------
Commitments (Note 10)
STOCKHOLDERS' EQUITY
(Notes 8, 9 and 14)
Capital stock:
Preferred, $.10 par value, authorized
1,000,000 shares; none issued -- --
Common, $.10 par value, authorized
3,000,000 shares; issued 1978 - 1,165,420
shares, 1977 - 1,158,857 shares 116,542 115,886
Capital in excess of par value 359,391 273,305
Retained earnings 15,170,319 13,052,241
----------- -----------
Total stockholders' equity 15,646,252 13,441,432
----------- -----------
$24,075,050 $20,102,367
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-2
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
for the years ended December 3, 1978 and November 27, 1977
1978 1977
---- ----
(53 Weeks) (52 Weeks)
Net sales $43,305,225 $36,152,253
Cost of sales 25,801,486 21,239,950
----------- -----------
Gross profit 17,503,739 14,912,303
----------- -----------
Selling and shipping expenses 8,890,242 7,439,738
Administrative and general expenses 3,114,490 2,781,344
----------- -----------
12,004,732 10,221,082
----------- -----------
Income from operations 5,499,007 4,691,221
Interest expense (343,454) (288,946)
Other (expense) income, net (93,682) 53,907
----------- -----------
Income before income taxes 5,061,871 4,456,182
Provision for income taxes (Notes 1 and 6) 2,361,083 2,121,675
----------- -----------
Net income 2,700,788 2,334,507
Retained earnings, beginning of year 13,052,241 11,181,277
----------- -----------
15,753,029 13,515,784
Less cash dividends on common stock:
1978, $.40 per share; 1977, $.32
per share* 582,710 463,543
----------- -----------
Retained earnings, end of year $15,170,319 13,052,241
=========== ===========
Average shares of
common stock outstanding* 1,455,836 1,448,185
=========== ===========
Earnings per common share* $ 1.86 1.61
=========== ===========
* Restated to reflect the five-for-four stock split declared in 1979.
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
for the years ended December 3, 1978 and November 27, 1977
<TABLE>
<CAPTION>
1978 1977
---- ----
(53 Weeks) (52 Weeks)
<S> <C> <C>
Working capital provided from:
Net income $ 2,700,788 $ 2,334,507
Items not affecting working capital:
Depreciation and amortization 745,540 630,471
Deferred income taxes 171,900 208,100
Disposals of plant and equipment 34,264 40,251
----------- -----------
Provided from operations 3,652,492 3,213,329
Additions to long-term debt 1,012,650 --
Proceeds from exercise of stock option
and bonus plans 86,742 33,540
Other, net 16,935 15,202
----------- -----------
4,768,819 3,262,071
----------- -----------
Working capital used for:
Additions to property, plant
and equipment 2,140,951 1,295,354
Additions to intangible assets -- 2,013
Cash dividends 582,710 463,543
Cash for fractional shares for stock split -- 1,107
Repayments and current maturities
of long-term debt 418,207 502,964
----------- -----------
3,141,868 2,264,981
----------- -----------
Increase in working capital $ 1,626,951 $ 997,090
=========== ===========
Changes in components of working capital:
Cash (158,438) 122,894
Accounts receivable 1,889,512 942,787
Inventories 900,028 342,956
Prepaid expenses (2,631) 102,411
Notes payable and current
portion of long-term debt (353,755) 93,077
Accounts payable (537,015) (53,219)
Accrued expenses (110,750) (367,662)
----------- -----------
Increase in working capital $ 1,626,951 $ 997,090
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF CONSOLIDATION:
The consolidated financial statements include the accounts of the company and
its subsidiaries, all of which are wholly-owned.
FISCAL YEAR:
The company's fiscal year ended on the Sunday nearest the end of November.
Fiscal year 1978 ended December 3, 1978; fiscal year 1977 ended November 27,
1977. Fiscal year 1978 comprised fifty-three weeks; fiscal year 1977 comprised
fifty-two weeks.
INVENTORIES:
Inventories are valued at the lower of cost or market. During 1978, the company
adopted the last-in, first-out (LIFO) method of determining cost for
substantially all inventories (Note 2). Previously, cost was determined by the
first-in, first-out (FIFO) method.
PROPERTY, PLANT AND EQUIPMENT:
All expenditures for additions and improvements to property, plant and equipment
are capitalized and normal repairs and maintenance are charged to expense as
incurred. The related cost and accumulated depreciation of depreciable assets
disposed of are eliminated from the related accounts and any profit or loss is
reflected in income.
DEPRECIATION AND AMORTIZATION:
Depreciation for financial reporting purposes for the majority of assets is
computed by the straight-line method. Depreciation FOR TAX PURPOSES is computed
using accelerated methods. Intangible assets are amortized on a straight-line
basis over the assets' useful lives. Amortization of assets under capital leases
which contain purchase options is provided over the assets' useful lives. Other
capital leases are amortized over the terms of the related leases or asset
lives, if shorter.
The estimated lives of the assets are as follows:
Factory buildings and components, 8 to 40 years
Machinery and equipment, 10 to 12 years
Autos and trucks, 4 to 6 years
Tools and dies, 6 years
Leasehold improvements, term of lease
Continued
F-5
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued:
INCOME TAXES:
Investment tax credits are accounted for using the flow-through method, whereby
provisions for current income taxes are reduced by available credits. Federal
income taxes have not been provided for the undistributed earnings of the
company's domestic international sales corporation (DISC) since the company
intends to permanently reinvest such earnings. If provided, the federal income
tax on these earnings would have been insignificant.
PENSIONS:
The majority of the employees of the company and its subsidiaries are covered
under noncontributory pension plans. Pension costs under these plans are
computed on the basis of accepted actuarial methods and include current service
costs and amortization of prior service costs over approximately 30 years. The
policy is to fund pension costs accrued.
EARNINGS PER SHARE:
Earnings per share are calculated based on the weighted average number of common
shares outstanding restated to reflect the five-for-four stock split declared in
1979. The effect of the outstanding stock options is not material and has not
been included in the calculation.
FOREIGN EXCHANGE:
Other expense and income includes foreign currency losses of $148,000 and
$60,000 in 1978 and 1977, respectively.
2. INVENTORIES:
Effective with the year ended December 3, 1978, the company adopted the last-in,
first-out (LIFO) method of determining cost for substantially all of its
inventories. This change was made because management believes that the LIFO
method (which generally matches current costs with current revenues) has the
effect of minimizing the impact of price level changes on inventory valuations.
The effect of the change was to reduce inventories by $343,060 and net income by
$16,100 ($.12 per share) from that which would otherwise have been reported.
There is no cumulative effect of the change on prior years since the inventory
at November 27, 1977 is the beginning inventory for LIFO purposes.
Continued
F-6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
2. INVENTORIES, continued:
The amounts of inventories used in the determination of cost of sales for
the fiscal years ended in 1978 and 1977 were as follows:
November 28, 1976 $5,775,993
November 27, 1977 6,118,949
December 3, 1978 7,018,977
3. PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment at the end of each fiscal year is as follows:
1978 1977
---- ----
Land and land improvements $ 258,201 $ 258,201
Buildings 3,669,351 3,181,265
Machinery and equipment 8,408,480 7,001,250
Leasehold improvements 101,838 100,603
Construction in process 622,900 517,992
----------- -----------
13,060,770 11,059,311
Less accumulated depreciation 5,451,357 4,859,233
----------- -----------
$ 7,609,413 $ 6,200,078
=========== ===========
4. INTANGIBLE ASSETS:
Intangible assets (at cost less amortization) at the end of each fiscal
year are as follows:
1978 1977
---- ----
Patents and patent applications $113,243 $135,007
Trademarks, tradenames, etc. 76,262 115,183
Leasehold equity 156,153 172,410
Cost incurred in excess of net assets purchased 215,566 239,382
-------- --------
$561,224 $661,982
======== ========
Leasehold equity is the portion of the purchase price of an acquired
business assigned to a favorable lease commitment.
Continued
F-7
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
5. DEBT:
SHORT-TERM NOTES PAYABLE, BANKS:
The company has several informal lines of credit with various banks under which
it may borrow, at the prime rate of interest, amounts well in excess of its
seasonal short-term needs. There are no compensating balance requirements or
restrictions associated with these arrangements.
The average outstanding short-term borrowings during 1978 and 1977 were
$1,059,000 and $1,0143,000 at an average interest rate of 8.9% and 6.9%,
respectively. The averages were computed using the daily loan balance: and the
annual interest expense. The maximum amounts of short-term borrowings at any
month-end during 1978 and 1977 were $3,300,000 and $2,573,000, respectively.
LONG-TERM:
Long-term debt at the end of each fiscal year is summarized as follows:
1978 1977
---- ----
Term notes payable to banks $ 163,361 $ 228,701
Capitalized lease obligation (see Note 10) 1,769,424 848,750
Mortgage note, interest at 2,013 payable monthly,
including interest until 1991 167,516 174,649
Notes to former shareholders of acquired company 1,090,450 1,390,450
3,190,751 2,642,553
Less current portion 372,742 418,987
$2,818,009 $2,223,566
As of December 3, 1978, the term notes payable to banks consist of
$90,000 note payable in quarterly installments of $15,000 to March 31, 190 plus
interest at 1/2% above the prime commercial bank rates. $73,361 note pay able in
monthly installments of $985 to September 1, 1937 including interest at 8-1/2%.
Continued
F-8
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
5. DEBT, continued:
LONG-TERM, continued:
The notes to former shareholders of the acquired company are pay able in
semiannual installments of $100,000 through June 1980 and $790,450 in December
1980, plus interest at 7%. The notes are collateralized by irrevocable letters
of credit equal to the unpaid principal balance.
The capitalized lease obligations and the mortgage note are collateralized by
certain property, plant and equipment.
Aggregate annual maturities for all long-term debt, including the capitalized
leases, for each of the four fiscal years subsequent to December 2, 1979 are as
follows:
1980 $249,000
1981 922,000
1982 143,000
1983 143,000
6. INCOME TAXES:
The provision for income taxes consists of the following:
1978 1977
---- ----
Currently payable:
Federal $1,956,552 $1,652,000
State and foreign 232,631 261,575
---------- ----------
2,189,183 1,913,575
Deferred 171,900 208,100
---------- ----------
$2,361,083 2,121,675
========== =========
Deferred income taxes, resulting from timing differences between amounts
reported for financial accounting and income tax purposes, relate principally to
depreciation.
The amount of investment tax credit used in the determination of federal income
tax expense for 1978 and 1977 is $134,000 and $99,000, respectively.
Continued
F-9
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
6. INCOME TAXES, CONTINUED:
The following is a reconciliation of the statutory federal income tax rate with
the company's effective income tax rate.
1978 1977
---- ----
Statutory federal rate 48.0% 48.0%
State income taxes, net of federal tax benefit 2.6 2.8
Investment tax credits (2.6) (2.2)
Other, net (1.4) (1.0)
---- ----
Effective tax rate 46.6% 47.6%
==== ====
7. PENSION PLANS:
Total pension expense was $314,313 in 1978 and $248,476 in 1977. the increase in
pension expense results principally from a change in the actuarial assumptions
relating to future compensation levels and increased benefits. As of September
30, 1978, the date of the latest actuarial valuation, unfunded prior service
liabilities at the latest valuation date approximated $245,000.
8. STOCK OPTIONS AND BONUS PLAN:
Under the company's qualified stock option plan, officers and key employees of
the company and its subsidiaries were granted options to purchase shares of the
company's common stock at not less than the fair market value at date of grant.
As of December 3, 1978, no further options may be granted and options
outstanding are exercisable from one to five years following the date of grant.
A summary of shares under option pursuant to the plan, with shares, option
prices and market values, is as follows:
CONTINUED
F-10
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
8. STOCK OPTIONS AND BONUS PLAN, continued:
<TABLE>
<CAPTION>
Option Price Market Value
Number ------------ ------------
of Per Per
Shares* Share* Total Share* Total
------- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C>
Shares under option:
November 27, 1977:
Fiscal year granted:
1973(b) 5,937 $11.283 $66,994 $11.283(a) $66,994
1975(b) 3,125 4.88 15,250 4.88(a) 15,250
----- ------- -------
9,062 $82,244 $82,244
===== ======= =======
December 3, 1978:
Fiscal year granted:
1975(b) 1,562 $ 4.88 7,625 $ 4.88(a) 7,625
----- ------- -------
1,562 $ 7,625 $ 7,625
===== ======= =======
Options exercised:
Fiscal year:
1977 4,687 $ 7.155 $33,540 $ 8.64(c) $40,500
===== ======= =======
1978 6,719 4.88 65,804 13.00 88,194
===== to ======= to =======
11.283 13.16(c)
</TABLE>
* Restated to reflect the five-for-four stock split declared in 1979.
(a) At the dates options were granted.
(b) Options expire five years from dated granted.
(c) At the dates options were exercised.
Options for 781 shares, at an option price of $11.28 per share, expired during
1978 and none expired in 1977. No options became exercisable during 1978 and
1977.
Shares under option at December 3, 1978 consist of 9,062 shares currently
exercisable. When options are exercised, the excess of the option price received
over the par value of the common shares issued will be credited to capital in
excess of par value of stock. No charges have been made to income with respect
to stock options.
Continued
F-11
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
8. STOCK OPTIONS AND BONUS PLAN, continued:
The company has a management incentive bonus plan for key management employees.
Under the plan, key employees may be granted an annual cash bonus up to 50% of
the individual's annual base salary. The aggregate bonuses for the management
group cannot exceed 30% of the total annual base salaries of those persons
eligible to participate in the plan. An individual may elect to receive up to
40% of his bonus in the company's common stock, in which case the bonus will be
increased up to 20%. Shares to be issued for fiscal 1978 will be 4,536. The
charges to income under the plan in 1978 and 1977 were $133,535 and $75,537,
respectively.
The Board of Directors adopted a non-qualified stock option plan during 1978
under which options for 2,500 shares may be granted to key employees. Under the
plan the option price is to be not less than 759 of the fair market value of the
shares at the date granted. No options have been granted as of December 3, 1978.
9. COMMON STOCK AND CAPITAL IN EXCESS OF PAR VALUE:
Changes in common stock and capital in excess of par value are as follows:
Capital
Common in Excess
Shares Stock Par Value
------ ----- ---------
Balance, November 27, 1977 1,158,857 $115,886 $273,305
Shares issued under:
Management incentive bonus plan 1,188 119 20,820
Stock option plan 5,375 537 65,266
Balance, December 3, 1978 1,165,420 $116,542 $359,391
Continued
F-12
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
10. LEASES:
Capitalized lease obligations (see Note 5) represent amounts payable under
leases which are in substance installment purchases. The leases provide for
rental payments equivalent to principal and interest payments on the debt
obligations of the lessors. Property, plant and equipment includes the following
assets under capital leases:
1978 1977
---- ----
Land $ 162,000 $ 162,000
Building 1,298,600 838,000
Machinery and equipment 481,100 --
Accumulated depreciation (93,000) (42,000)
$ 1,848,700 $ 958,000
The company has the option to purchase the above assets any time during the term
of the leases for amounts sufficient to redeem and retire all outstanding lessor
debt obligations plus $12,400.
The minimum rental commitments under all noncancelable leases as of December 3,
1978 are as follows:
Operating Capitalized
Fiscal Period Leases Leases
------------- ------ ------
1979 $ 426,000 $ 213,000
1980 275,000 215,000
1981 233,000 21,000
1982 116,000 21,000
1983 17,000 211,000
1983-1992 -- 1,580,000
---------- ---------
Minimum lease payments $1,067,000 2,654,000
Less interest ========== (885,000)
---------
Present value of minimum lease payments 1,769,000
=========
Rent expense, including related real estate taxes and insurance charged to
operations, amounted to $814,939 and $741,022 for 1978 and 1977, respectively.
Continued
F-13
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
11. RESEARCH AND DEVELOPMENT:
Research and development expenses were approximately $273,000 and $230,000 in
1976 and 1977, respectively.
12. QUARTERLY FINANCIAL DATA (UNAUDITED):
Results of operations for each of the quarters during fiscal 1978 and 1977 are
as follows (in thousands except per share data):
1978
--------------------------------------------
First Second Third Fourth Total
----- ------ ----- ------ -----
Net sales $8,376 $11,237 $11,856 $11,836 $43,305
Gross profit (as reported 3,426 4,530 4,933 - -
Gross profit (as restated) 3,360 4,441 4,839 4,864 17,504
Net income (as reported) 442 754 852 - -
Net income (as restated) 410 710 806 775 2,701
Net income per share (as reported) .30 .52 .58 - -
Net income per share (as restated) .28 .49 .55 .54 1.86
1977
--------------------------------------------
First Second Third Fourth Total
----- ------ ----- ------ -----
Net sales $7,721 $ 9,614 $9,403 $ 9,414 $36,152
Gross profit 3,035 3,909 3,930 4,038 14,912
Net income 406 626 674 628 2,334
Net income per share .28 .43 .47 .43 1.61
Continued
F-14
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
12. QUARTERLY FINANCIAL DATA (UNAUDITED), CONTINUED:
Quarterly results for the first three quarters in fiscal 1978 have been restated
to give effect to the change in the company's method of valuing inventory to the
LIFO method (Note 2). All per share data has been restated to reflect the
five-for-four stock split declared in 1979.
The fiscal quarters of the company contain 13 weeks except the third quarter of
1978 which contains 14 weeks.
13. INDUSTRY SEGMENT INFORMATION (IN THOUSANDS OF DOLLARS):
The company operates principally in two industries, (1) Office Equipment and
Supplies and (2) Art/Craft Products. The company and its subsidiaries are
primarily engaged in the manufacture of such products for the business,
education and hobby markets. The company also manufactures a variety of metal
component parts used by other manufacturers in several different industries.
Export sales aggregating $4,065 and $3,276 in 1978 and 1977, respectively, were
made to customers in various countries.
Identifiable assets are assets used in the operations of each business segment.
Corporate assets include cash and miscellaneous other assets not identifiable
with any particular segment.
Operating profits include all revenues and expenses of the reportable segment,
except for general corporate expenses, interest expense, other income (expense)
and income taxes.
The effect of changing to the LIFO method of valuing inventories reduced the
1978 operating profit of Office Equipment and Supplies, Art/Craft Products and
Other by $167, $141 and $35, respectively.
Continued
F-15
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
13. INDUSTRY SEGMENT INFORMATION (IN THOUSANDS OF DOLLARS), continued:
<TABLE>
<CAPTION>
Office
Year Ended Equipment Art/Craft Corp.
1978 and Supplies Products Other Assets Consolidated
---- ------------ -------- ----- ------ ------------
<S> <C> <C> <C> <C> <C>
Net sales $22,916 $16,676 $3,713 $43,305
======= ======= ====== =======
Operating profit $ 4,082 $ 1,456 $ 784 6,322
======= ======= ======
General corporate (823)
Interest expense (343)
Other expense (94)
-------
Income before
income taxes $ 5,062
Identifiable assets $13,097 $ 8,044 $2,437 $497 $24,075
======= ======= ====== ==== =======
Capital additions $ 1,708 $ 130 $ 277 $ 26 $ 2,141
======= ======= ====== ==== =======
Depreciation
and amortization $ 432 $ 175 $ 126 $ 13 $ 746
======= ======= ====== ==== =======
Year Ended
1977
----
Net sales $19,103 $14,063 $2,986 $36,152
======= ======= ====== =======
Operating profit $ 3,690 $ 1,294 $ 532 5,516
======= ======= ====== =======
General corporate (825)
Interest expense (289)
Other income 54
-------
Income before
income taxes $ 4,456
=======
Identifiable assets $ 9,963 $ 7,303 $2,147 $689 20,102
======= ======= ====== ==== =======
Capital additions $ 769 $ 223 $ 257 $ 46 1,295
======= ======= ====== ==== =======
Depreciation
and amortization $ 359 $ 166 $ 95 $ 10 $ 630
======= ======= ====== ==== =======
</TABLE>
Continued
F-16
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
14. SUBSEQUENT EVENTS:
On January 24, 1979, subsequent to the company reporting its earnings for the
year ended December 3, 1978, the Board of Directors declared a five-for-four
common stock split to be made on February 28, 1979 to stockholders of record
February 7, 1979. This stock split will result in the issuance of a maximum of
291,355 additional shares of common stock, par value $.10 per share (fractional
shares will be paid in cash) and will be accounted for by the transfer of
approximately $29,136 to the common stock capital account from capital in excess
of par value.
All per share computations in these statements and the stock option data in note
8 have been restated to reflect this split.
The company announced on January 16, 1979 that its Bienfang Paper Products
operation would be transferred from its Metuchen, New Jersey plant to a facility
in Statesville, North Carolina. This move, which will occur during fiscal 1979,
will enable the company to consolidate its Art/Craft operations.
F-17
<PAGE>
SCHEDULE II. AMOUNTS RECEIVABLE FROM UNDERWRITERS, PROMOTERS, DIRECTORS,
OFFICERS, EMPLOYEES AND PRINCIPAL HOLDERS (Other Than Affiliates) OF
EQUITY SECURITIES OF THE PERSON AND ITS AFFILIATES
Column A Column B Column C Column E
- -------- -------- -------- --------
Balance Balance
Receivable Receivable
at at Close
Beginning of Period,
Name of Debtor of Period Additions Not Current
- -------------- --------- --------- -----------
Year ended November 27, 1977:
George E. Bartol, III $34,915 $ 952 $35,867
George P. Johnson 38,861 935 39,796
------- ------ -------
$73,776 $1,887 $7,663
======= ====== =======
Year ended December 3, 1978:
George E. Bartol, III 35,867 889 36,756
George P. Johnson 39,796 1,094 40,890
------- ------ -------
$75,663 $1,983 $77,646
======= ====== =======
F-18
<PAGE>
SCHEDULE V. PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column F
-------- -------- -------- -------- --------
Balance at Balance at
Beginning Additions End
Classification of Period at Cost Retirements of Period
-------------- --------- ------- ----------- ---------
Year ended November 27, 1977:
<S> <C> <C> <C> <C>
Land and land improvements $ 278,601 -- $ 20,400 $ 258,201
Buildings 2,782,750 $ 404,213 5,698 3,181,265
Machinery and equipment 6,085,642 964,806 49,198 7,001,250
Leasehold improvements 97,415 3,188 -- 100,603
Construction in process 594,845 (76,853)(A) -- 517,992
$ 9,839,253 $ 1,295,354 $ 75,296 $ll,059,311
Year ended December 3, 1978:
Land and land improvements 258,201 -- -- 258,201
Buildings 3,181,265 488,086 -- 3,669,351
Machinery and equipment 7,001,250 1,544,163(B) 136,933 8,408,480
Leasehold improvements 100,603 3,794 2,559 101,838
Construction in process 517,992 104,908(A) -- 622,900
$11,059,311 $ 2,140,951 $139,492 $13,060,770
</TABLE>
(A) Represents net increase (decrease) for the year.
(B) Principally additions in Office Equipment and Supplies segment during 1978.
F-19
<PAGE>
SCHEDULE VI. ACCUMULATED DEPRECIATION AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Additions,
Balance at Charged Balance at
Beginning to Costs End
Description of Period and Expenses Retirements of Period
----------- --------- ------------ ----------- ---------
<S> <C> <C> <C> <C>
Year ended November 27, 1977:
Land improvements $ 4,111 $ 1,642 -- $ 5,753
Buildings 908,413 98,388 $ 2,704 1,004,097
Machinery and equipment 3,355,266 473,481 32,341 3,796,406
Leasehold improvements 47,468 5,509 -- 52,977
---------- -------- -------- ----------
$4,315,258 $579,020 $ 35,045 $4,859,233
========== ======== ======== ==========
Year ended December 3, 1978:
Land improvements 5,753 1,643 -- 7,396
Buildings 1,004,097 108,194 -- 1,112,291
Machinery and equipment 3,796,406 582,039 102,669 4,275,776
Leasehold improvements 52,977 5,476 2,559 55,894
---------- -------- -------- ----------
$4,859,233 $697,352 $105,228 $5,451,357
========== ======== ======== ==========
</TABLE>
F-20
<PAGE>
SCHEDULE VII. INTANGIBLE ASSETS, PREOPERATING EXPENSES, AND SIMILAR DEFERRALS
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F
- -------- -------- -------- -------- -------- --------
Deductions,
Balance at Charged to Other Balance at
Beginning Additions Costs and Charges Close of
Description of Period at Cost Expenses Add (Deduct) Period
- ----------- --------- ------- -------- ------------ ------
Intangible Assets
Year ended November 27, 1977:
<S> <C> <C> <C> <C> <C>
Patents and patent applications $ 160,021 -- $ 25,014 -- $ 135,007
Trademarks, trade names, etc 116,092 $ 2,013 2,922 -- 115,183
Leasehold equity 188,667 -- 16,257 -- 172,410
Cost incurred in excess of
net assets purchased 246,640 -- 7,258 -- 239,382
--------- --------- --------- ---------
711,420 $ 2,013 $ 51,451(A) -- $ 661,982
========= ========= ========= =========
Year ended December 3, 1978:
Patents and patent applications 135,007 -- 21,764 -- 113,243
Trademarks, trade names, etc 115,183 -- 2,922 $ (35,999) 76,262
Leasehold equity 172,410 -- 16,257 -- 156,153
Cost incurred in excess of
net assets purchased 239,382 -- 7,245 (16,571) 215,566
--------- --------- --------- ---------
$ 661,982 -- $ 48,188(A) $ (52,570)(B) $ 561,224
========= ========= ========= =========
</TABLE>
(A) Amortization credited to intangible assets.
(B) Write-off of goodwill and trademarks which no longer have value.
F-21
<PAGE>
SCHEDULE XII. VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
- -------- -------- -------- -------- --------
Additions
--------------------------
Balance at Charged to Charged to Balance at
Beginning Cost and Other End of
Description of Period Expenses Accounts Deductions Period
- ----------- --------- -------- -------- ---------- ------
<S> <C> <C> <C> <C> <C>
Year ended November 27, 1977:
Doubtful accounts (deducted
from assets) $120,000 $ 88,000 $7,000(1) $84,000(2) $131,000
Year ended December 3, 1978:
Doubtful accounts (deducted
from assets) $131,000 $105,000 $2,000(1) $77,000(2) $161,000
</TABLE>
(1) Recoveries of accounts previously written off.
(2) Doubtful accounts written off, net of collection expenses.
F-22
<PAGE>
SCHEDULE XVI. SUPPLEMENTARY INCOME STATEMENT INFORMATION
Column A Column B
-------- --------
CHARGED TO COSTS AND EXPENSES
-----------------------------
ITEM 1977 1978
---- ---- ----
Depreciation of property,
plant and equipment $ 579,020 $ 697,352
========== ==========
Taxes, other than income taxes:
Payroll taxes $ 516,991 $ 612,549
========== ==========
City, county and state taxes $ 384,850 $ 560,927
========== ==========
Rents $ 741,022 $ 814,939
========== ==========
Advertising costs $ 880,616 $1,272,679
========== ==========
F-23
<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For Quarter Ended March 4, 1979 COMMISSION FILE NO. 0-6085
HUNT MANUFACTURING C0.
------------------------------------------------------
(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.)
1405 Locust Street, Philadelphia, PA 19102
- ------------------------------------ -----
(Address of principle executive offices) (Zip Code)
Registrant's telephone number, including area code (215) 735-7695
NOT APPLICABLE
--------------
Former name, former address and former fiscal year,
if changed since last report
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
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the period covered by this report.
1,461,777 Common Shares, par value $.10 per share.
B-1
<PAGE>
HUNT MANUFACTURING C0.
INDEX
PAGE NO.
-------
Part I Financial Information:
Consolidated Condensed Balance Sheet
March 4, 1979 and February 26, 1978 3
Consolidated Condensed Statement of Income 4
Three Months Ended March 4, 1979 and
February 26, 1978
Consolidated Condensed Statement of Changes 5
in Financial Position
Three Months Ended March 4, 1979
and February 26, 1978
Notes to Consolidated Condensed Financial 6
Statements
Management's Discussion and Analysis of the 7 & 8
Consolidated Condensed Statement of Income
Part II Other Information 9 & 10
B-2
<PAGE>
HUNT MANUFACTURING C0.
CONSOLIDATED CONDENSED BALANCE SHEET
MARCH 4, 1979 AND FEBRUARY 26, 1978
UNAUDITED
(DOLLARS IN THOUSANDS)
ASSETS 1979 1978
------ ---- ----
Current assets
Cash $ 355 $ 239
Marketable securities - 748
Accounts receivable, net 7,968 6,174
Inventories
Raw materials 2,866 1,989
Work-in-process 2,083 1,601
Finished goods 2,870 2,939
------- -------
Total inventories 7,819 6,529
Prepaid expenses 246 183
------- -------
Total current assets 16,388 13,873
Property, plant and equipment, net 7,644 6,237
Intangible assets 550 647
Loans to officers 78 76
Other assets 117 138
------- -------
Total Assets $24,777 $20,971
======= =======
LIABILITIES and STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt 373 361
Accounts payable 2,011 1,050
Accrued liabilities:
Salaries, wages and commissions 815 719
Pensions 378 283
Income taxes 710 634
Other 1,106 567
------- -------
Total current liabilities 5,393 3,614
Long-term debt less current portion 2,781 3,153
Deferred income taxes 618 411
Stockholders' equity
Capital stock:
Common, $.10 par value, authorized
3,000,000 shares; issued
1,461,777 - 1979; 1,456,775 - 1978 146 117
Capital in excess of par value of stock 389 359
Retained earnings 15,450 13,317
------- -------
Total stockholders' equity 15,985 13,793
------- -------
Total liabilities and equity $24,777 $20,971
======= =======
See accompanying notes to consolidated condensed financial statements.
B-3
<PAGE>
HUNT MANUFACTURING C0.
CONSOLIDATED CONDENSED STATEMENT OF INCOME
THE 3 MONTHS ENDED MARCH 4, 1979 AND FEBRUARY 26, 1978
UNAUDITED
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
Three Months Ending
March 4, 1979 February 26, 1978
------------- -----------------
Net sales $11,057 $8,376
Cost of sales 6,668 5,016
------- ------
Gross profit 4,389 3,360
------- ------
Selling expenses 2,203 1,846
Administrative expenses 820 660
------- ------
Total selling and
administrative expenses 3,023 2,506
------- ------
Income from operations 1,366 854
Other expenses, net 87 83
Provision for plant relocation 460 -
------- ------
Income before taxes 819 771
Provision for income taxes 357 361
------- ------
Net income $ 462 $ 410
======= ======
Average common shares
outstanding 1,459,828 1,452,944
Net income per
common share $.32 $.28
Dividends per share $.125 $.10
See accompanying notes to consolidated condensed financial statements.
B-4
<PAGE>
HUNT MANUFACTURING C0.
CONDENSED STATEMENT OF CHANGES IN FINANCIAL POSITION
(o THREE MONTHS ENDED MARCH 4, 1979 AND FEBRUARY 26, 1978
UNAUDITED
(DOLLARS IN THOUSANDS)
1979 1978
---- ----
Sources of working capital:
Working capital provided by operations $ 702 $ 610
Proceeds from exercise of stock options 59 87
Deferred taxes 35 --
Additions to long-term debt -- 1,000
Other 8 --
------ ------
804 1,697
Uses of working capital:
Additions to property, plant and equipment 262 223
Dividends declared 183 146
Reduction of long-term debt 37 71
Other, net -- 45
------ ------
482 485
------ ------
Increase in working capital $ 322 $1,212
====== ======
See accompanying notes to consolidated condensed financial statements.
B-5
<PAGE>
HUNT MANUFACTURING C0.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1 - In the opinion of management the accompanying unaudited Financial Statements
reflect all adjustments (consisting of only normal accruals) to present fairly
the company's financial position as of march 4, 1979 and February 26, 1978, and
the results of operations and changes in financial position for the three months
then ended.
2 - Certain Advertising, Marketing and Administrative expenses are accrued or
deferred as of the interim reporting date to provide an appropriate cost in the
period and to normalize the expenses within the fiscal year. the net effect does
not have any material impact on the results of operations for the periods
presented.
3 - The earnings per share are calculated based on the weighted average number
of shares outstanding, restated to reflect the five-for-four stock split
declared in January, 1979. shares under option are common stock equivalents, but
are not used in computing earnings per share because the dilutive effect would
be less than 1%.
4 - The 1978 results have been restated to give effect to the adoption of LIFO
and the five-for-four stock split declared in January, 1979.
5 - The first quarter results of 1979 include a provision of $460,000 for the
anticipated costs relating to the relocation of the Company's Bienfang Paper
operation from Metuchen, New Jersey to Statesville, North Carolina.
B-6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF CONSOLIDATED CONDENSED STATEMENT OF INCOME
NET SALES
Net sales of $11,057, 000 were 32.0% ahead of the $8,376,000 reported for
the same period in 1978. Sales in all segments of the Company experienced
significant improvements over last year with office products being particularly
noteworthy registering an increase of 42.5% over 1978. Sales of a new
competitively priced electric sharpener in the end of 1978 contributed
significantly to the gain in Office Products. It is important to note that the
first quarter of 1978 was adversely affected in sales and production because of
the severe weather conditions which disrupted the Company's operations.
Art/Craft products and Other Product sales increased 20.5% and 32.1%,
respectively, over the first quarter of 1978.
GROSS PROFIT
Gross Profit of $4,389,000 for the quarter increased 30.6% over the
$3,360,000 for the quarter in 1978. Gross profit as a percentage of sales
declined slightly to 39.7% of net sales versus 40.1% in the first quarter of
1978. Product mix variations were the significant factor reducing overall gross
margin.
SELLING & ADMINISTRATIVE EXPENSES
Total selling and administrative expenses of $3,023,000 increased 20.6%
over the $2,506,000 in the first quarter of 1978. These expenses did not
increase as rapidly as sales because of the depressed sales for the first
quarter of 1978 mentioned in the paragraph above, as well as investments that
had been made in the first quarter of 1978 in marketing expenses.
PROVISION FOR PLANT RELOCATION
The first quarter of 1979 includes a provision of $460,000 for the
anticipated costs relating to the relocation of our Bienfang Paper Operation
from Metuchen, New Jersey to Statesville, North Carolina. Although this
relocation will not occur until later in the year, generally accepted accounting
principles require that these costs be charged to operations when they can be
reasonably estimated. this move will enable the company to consolidate its
Art/Craft operations.
NET INCOME
Net income of $462,000 increased 12.8% over the $410,000 for the first
quarter of 1978. Net income increased at a faster rate than income before income
taxes because the effective tax rate provision for
B-7
<PAGE>
1979 of 43.5% is lower than the 46.8% in the first quarter of 1978. This is due
to the reductions in the corporate income tax rate as well as greater investment
tax credits anticipated in 1979 over 1978.
Comparisons with the quarter immediately preceeding would not be
meaningful due to the seasonality of the Company's sales and business.
B-8
<PAGE>
PART II. OTHER INFORMATION
Item 5. Increases in amounts of the company's outstanding securities or
long-term debt.
(Increase in outstanding securities):
Title of Class Amount
- -------------- ------
- - Common Stock $.10 par value, as reported in
10-K Annual Report for the year ended
December 3, 1978 1,165,420
- - Common stock outstanding as of March 4, 1979 1,461,777
Capital in
Total Excess of Par
Transactions Proceeds Capital Value
- ------------ -------- ------- -----
- - 625 shares issued December 22, 1978
by exercise of stock option $ 3,813 $ 63 $ 3,750
- - 3,629 shares issued January 9, 1979
as Management Incentive Bonus Plan 59,879 363 59,516
- - 292,103 shares issued February 28, 1979
by five-for-four stock split - 29,210 (29,210)
- - Cash issued February 28, 1979 for
fractional shares in lieu of stock (4,607) - (4,607)
------- ------- --------
$59,085 $29,636 $29,449
======= ======= =======
- - The above mentioned transactions involved the issuance of unregistered
securities under the Securities Act of 1933. Registration of the shares
under the Securities Act of 1933 is not required by reason of the exemption
afforded by Section 4(2) of said Act to "Transaction by an issuer not
involving any public offering," and wherein the recipient represented and
warranted such stock was taken for investment purposes only.
- - Proceeds from the above mentioned transaction will be utilized for plant
equipment.
B-9
<PAGE>
ITEM 8. OTHER MATERIALLY IMPORTANT EVENTS.
The Company is concluding negotiations for the purchase of a building in
Statesville, North Carolina that will house the Bienfang Paper operation to be
transferred from Metuchen, New Jersey. This building, as wel1 as various
machinery and equipment associated with it, is expected to be financed by an
Industrial Revenue Bond issue of approximately $2,000,000.
The Company's existing facility in Metuchen is leased and negotiations are
being conducted with the lessor to terminate the lease amicably.
ITEM 9. EXHIBITS AND REPORTS ON FORM 8-K.
(b) Report on Form 8-K - There were no reports on Form 8-K the three months
ended March 4, 1979.
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.
(registrant)
Date 4-6-79 ______________________________________
Rudolph M. Peins, Jr.
Vice President, Treasurer & Secretary
Chief Financial Officer
Date 4-6-79 ______________________________________
Charles W. Naylor
President
B-10
<PAGE>
Certain Additional Financial Information
The following tables set forth certain summaries of financial information
relating to the Company and are intended to illustrate certain effects the
transactions relating to the Series 1979 Bonds would have had if they had been
consummated in the Company's fiscal year ended December 3, 1978.
HUNT MANUFACTURING CO.
Ratio of Earnings to Fixed Charges
Years Ended 1974 thru 1978
<TABLE>
<CAPTION>
Relating to
12/1/74 11/30/75 11/28/76 11/27/77 12/3/78 Series 1979 Bonds
------- -------- -------- -------- ------- -----------------
(52 wk) (52 wk) (52 wk) (52 wk) (53 wk)
<S> <C> <C> <C> <C> <C> <C>
Earnings before
Fixed Charges 2,985,082 3,179,020 4,100,275 4,955,771 5,607,770 5,607,770
Fixed Charges 281,600 229,964 514,668 499,589 545,899 685,899*
Ratio of Earnings
to Fixed Charges 10.60 13.82 7.97 9.92 10.27 8.18*
</TABLE>
- ----------
* Calculated at an assumed rate on the Series 1979 Bonds of 7%. Each
incremental change of 1/8% in the actual interest rate would result in an
change of approximately .03 in the adjusted Ratio of Earnings to Fixed
Charges.
C-1
<PAGE>
HUNT MANUFACTURING C0.
STATEMENT OF CAPITALIZATION
<TABLE>
<CAPTION>
As Adjusted for
Fiscal Year Ended obligations relating
December 3, 1978 to Series 1979 Bonds
---------------- --------------------
Amount Ratio Amount Ratio
------ ----- ------ -----
<S> <C> <C> <C> <C>
Long Term Debt (1)
Term Notes Payable to
Banks 97,546 .5 97,546 .5
Capitalized Lease Obligations 1,672,126 9.1 3,672,126 17.9
Mortgage Note 157,887 .9 157,887 .8
Notes to former Shareholders
of Acquired Company 890,450 4.8 890,450 4.4
---------- ----- ---------- -----
Total Long Term Debt 2,818,009 15.3 4,818,009 23.5
---------- ----- ---------- -----
Common Equity
Common Stock $.10 par value
Authorized 3,000,000 shares,
1,165,420 shares outstanding 116,542 116,542
Capital in Excess of Par value 359,391 359,391
Retained Earnings 15,170,319 15,170,319
---------- ----------
Total Common Equity 15,646,252 84.7 15,646,252 76.5
---------- ----- ---------- -----
Total Capitalization 18,464,261 100.0 20,464,261 100.0
========== ===== ========== =====
</TABLE>
(1) Excludes Long Term Debt due within one year in the amount of $372,742.
C-2
<PAGE>
NEW ISSUE
In the opinion of Bond Counsel, interest on the Series 1979 Bonds is exempt
under existing statutes, regulations and court decisions from all present
Federal income taxes, except for interest on any Series 1979 Bond for any period
during which such Series 1979 Bond is held by a person who is a "substantial
user" of the Project or a "related person", within the meaning of Section
103(b)(8) of the Internal Revenue Code of 1954, as amended, and such interest is
exempt from all income taxes within the State of North Carolina. (See "TAX
EXEMPTION," herein.)
$2,000,000
THE IREDELL COUNTY INDUSTRIAL FACILITIES AND
POLLUTION CONTROL FINANCING AUTHORITY
(NORTH CAROLINA)
7 1/2 % INDUSTRIAL REVENUE BONDS
(HUNT MANUFACTURING CO. PROJECT)
SERIES 1979
Dated: June 1, 1979 Due: June 1, 1999
(subject to prior redemption as described herein)
The Series 1979 Bonds will be payable, except to the extent payable from
bond proceeds, solely from rentals payable by Hunt Manufacturing Co. under a
Lease Agreement, which will be assigned to the Trustee by the Authority under an
Indenture and Deed of Trust, pursuant to which the Authority will also deed in
trust to the Trustee the real property and fixtures and grant a security
interest in the tangible personal property and fixtures comprising the Leased
Property, and from any payments made pursuant to the absolute and unconditional
guarantee of the principal of and redemption premium, if any, and interest on
the Series 1979 Bonds under a Guaranty Agreement by
HUNT MANUFACTURING CO.
The Series 1979 Bonds will be issuable and payable as set forth herein.
First Union National Bank of North Carolina, Charlotte, North Carolina, is the
Trustee, the Bond Registrar and a paying agent for the Series 1979 Bonds.
The Series 1979 Bonds are subject to redemption prior to maturity as
described herein.
Price: 100%
(plus accrued interest from June 1, 1979)
The Series 1979 Bonds will be offered subject to the approving opinion of
Brown, Wood, Ivey, Mitchell & Petty, New York, New York, as Bond Counsel and to
certain other conditions. Certain legal matters pertaining to Hunt Manufacturing
Co. and its obligations under the Guaranty Agreement will be passed upon by
Drinker Biddle & Reath, as counsel to the Company.
ALEX. BROWN & SONS
Established 1800
BALTIMORE, MARYLAND
May 15, 1979
<PAGE>
The information contained in this Official Statement has been obtained from
Hunt Manufacturing Co. or other sources deemed reliable by the Authority. No
representation or warranty is made as to the accuracy or completeness of such
information, and nothing contained in this Official Statement is, or shall be
relied on as, a promise or representation by the Underwriter. The Official
Statement is submitted in connection with the sale of securities as referred to
herein, and may not be reproduced or be used, in whole or in part, for any other
purpose. The delivery of this Official Statement at any time does not imply that
information herein or in the Appendix hereto is correct as of any time
subsequent to its date.
No dealer, salesman or any other person has been authorized by the
Authority, or by Hunt Manufacturing Co., or by the Underwriter to give any
information or to make any representation other than as contained in this
Official Statement in connection with the offering described herein, and, if
given or made, such other information or representation must not be relied upon
as having been authorized by any of the foregoing. This Official Statement does
not constitute an offer of any securities other than those described on the
cover page or an offer to sell or a solicitation of an offer to buy in any
jurisdiction in which it is unlawful for such person to make such offer,
solicitation or sale.
TABLE OF CONTENTS
PAGE
----
OFFICIAL STATEMENT
Introductory Statement .....................................1
The Authority ..............................................3
The Project ................................................3
The Series 1979 Bonds ......................................3
The Lease Agreement ........................................8
The Indenture and Deed of Trust ............................15
The Guaranty Agreement .....................................23
Underwriting ...............................................25
Tax Exemption ..............................................25
Legality ...................................................26
Miscellaneous ..............................................26
APPENDIX
Hunt Manufacturing Co.
Annual Report on Form 10-K .................................A-1
Quarterly Report on Form 10-Q ..............................B-1
Certain Additional Financial Information ...................C-1
<PAGE>
OFFICIAL STATEMENT
$2,000,000
THE IREDELL COUNTY INDUSTRIAL FACILITIES AND
POLLUTION CONTROL FINANCING AUTHORITY
(NORTH CAROLINA)
INDUSTRIAL REVENUE BONDS
(HUNT MANUFACTURING CO. PROJECT)
SERIES 1979
----------
INTRODUCTORY STATEMENT
This Official Statement, including the cover page and reverse thereof, of
The Iredell County Industrial Facilities and Pollution Control Financing
Authority (the "Authority") is provided for the purpose of setting forth
information in connection with the sale by the Authority of its Industrial
Revenue Bonds (Hunt Manufacturing Co. Project), Series 1979, in the aggregate
principal amount of $2,000,000 (the "Series 1979 Bonds").
The Series 1979 Bonds are to be issued pursuant to the provisions of an
Indenture and Deed of Trust dated as of June 1, 1979 (the "Indenture") between
the Authority and First Union National Bank of North Carolina (the "Trustee") to
provide funds to finance a portion of the cost of acquiring, improving,
equipping and providing for a manufacturing and industrial facility for the
production of paper and other art/craft products (referred to herein as the
"Project", which together with any substitutions therefor, less any property
removed therefrom, is herein called the "Leased Property") in Iredell County,
North Carolina.
The Project will be acquired and leased by the Authority to Hunt
Manufacturing Co. (the "Company"), pursuant to a Lease Agreement dated as of
June 1, 1979 (the "Lease"), between the Authority and the Company, under the
terms of which the Company will be obligated to make rental payments ("Basic
Rent") which will be sufficient to pay the principal of and redemption premium,
if any, and interest on the Series 1979 Bonds and any additional bonds and any
refunding bonds issued under the Indenture (collectively, the "Bonds") as the
same become due and payable. The Authority will con-
<PAGE>
vey and assign its interest in the real property, and the improvements and
fixtures now or hereafter erected thereon (collectively referred to as the
"Trust Estate"), and grant and assign a security interest in the tangible
personal property and fixtures (collectively referred to as the "Leased
Equipment") comprising the Leased Property and all of its rights in the Lease
(except its rights to reimbursement of expenses, to indemnification, to receive
notices and certain other rights), including Basic Rent, aria pledge all moneys
and securities in the Bond Fund created under the Indenture and, until applied
to the cost of the Project, all moneys and securities in the Acquisition Fund
created under the Indenture, to the Trustee under the Indenture for the benefit
of the holders of the Bonds.
Simultaneously with the issuance and delivery of the Series 1979 Bonds, the
Company (also referred to as the "Guarantor") will deliver to the Trustee a
Guaranty Agreement dated as of June 1, 1979 (the "Guaranty"), under the terms of
which the Guarantor will absolutely and unconditionally guarantee the full and
prompt payment of the principal of and redemption premium, if any, and interest
on the Bonds when and as the same become due.
Brief descriptions of the Authority, the Project and the Series 1979 Bonds,
and summaries of certain provisions of the Lease, the Indenture and the Guaranty
are included herein. The Appendix to this Official Statement has been furnished
by the Company and consists of the Company's Annual Report on Form 10-K for the
year ended December 4, 1978, the Company's Quarterly Report on Form 10-Q for the
quarter ended March 4, 1979 and certain additional financial information.
The descriptions and summaries contained herein do not purport to be
comprehensive or definitive and are expressly made subject to the exact
provisions of the complete documents. For complete details of the provisions and
conditions of these documents, prospective purchasers of the Series 1979 Bonds
are referred to the Lease, the Indenture and the Guaranty, copies of which may
be obtained from Alex. Brown & Sons at 135 East Baltimore Street, Baltimore,
Maryland 21202 and are also available for examination at the principal corporate
trust office of the Trustee. All references herein to the Lease, the Indenture
and the Guaranty are qualified in their entirety by reference to each such
document and references herein to the Series 1979 Bonds are qualified in their
entirety by reference to the form thereof included in the Indenture and the
information with respect thereto included in the aforesaid documents.
2.
<PAGE>
THE AUTHORITY
The Authority is a political subdivision and body corporate and politic of
the State of North Carolina, duly created and existing pursuant to Chapter 800
of the 1975 Session Laws of North Carolina, as amended, which as codified
appears as Chapter 159C of the General Statutes of North Carolina, known as the
Industrial and Pollution Control Facilities Financing Act. Under the
Constitution and laws of the State of North Carolina, the Authority is
authorized to issue the Series 1979 Bonds, to acquire the Project, to lease the
Project to the Company and to secure the payment of the Bonds by an assignment
and conveyance of the Trust Estate to the Trustee in trust, and the assignment
and grant to the Trustee of a security interest in the Leased Property and by an
assignment to the Trustee of all payments of Basic Rent to be received by the
Authority under the Lease.
THE PROJECT
The Project consists of the acquisition of approximately 12.7 acres of land
in Statesville, North Carolina and the industrial building of approximately
170,000 square feet located thereon, the making of certain improvements to said
building and the acquisition and installation of certain equipment and machinery
to be used in the production of paper and other art/craft products. The Company
anticipates that, upon completion, the operations of its Bienfang Paper Products
unit will be housed in the Project.
THE SERIES 1979 BONDS
The Series 1979 Bonds will be dated as of June 1, 1979, and interest
thereon will be payable semi-annually on the first days of June and December in
each year, the first interest payment date being December 1, 1979.
The Series 1979 Bonds will be issuable as coupon bonds, registrable as to
both principal and interest, in the denomination of $5,000 each. The principal
of and redemption premium, if any, and interest on bonds (unless registered)
will be payable at the principal office of First Union National Bank of North
Carolina, as Paying Agent. The principal of and redemption premium, if any, on
registered Bonds registered as to both principal and interest will be payable at
the principal corporate trust office of the Trustee. Interest on bonds
registered as to both principal and interest will be payable by the Trustee by
check mailed to the registered owner at the address shown on the registration
books of the Authority kept by the Trustee as Bond Registrar.
3.
<PAGE>
SECURITY FOR THE SERIES 1979 BONDS
The Series 1979 Bonds are payable, except to the extent payable from bond
proceeds, solely out of the payments of Basic Rent to be made by the Company to
the Trustee, any payments made by the Company pursuant to the Guaranty, any net
proceeds realized from the sale of the Trust Estate and the Leased Equipment
(all such moneys to be deposited by the Trustee in the Bond Fund under the
Indenture) and, until applied to the cost of the Project, all moneys and
securities in the Acquisition Fund under the Indenture, which are pledged,
equally and ratably, to the payment of the Series 1979 Bonds and any additional
and refunding Bonds issued under the Indenture.
The Lease requires the Company to obtain and maintain certain insurance
with respect to the Leased Property, and permits the Company to grant and
release easements and purchase unimproved portions of the Trust Estate and the
items of Leased Equipment. See "THE LEASE AGREEMENT Insurance and Eminent
Domain" and "THE LEASE AGREEMENT Maintenance and Modifications" herein.
The Series 1979 Bonds will be limited obligations of the Authority payable
solely from the revenues and other funds pledged therefor, and neither the faith
and credit nor the taxing power of the State of North Carolina or any political
subdivision or any agency thereof will be pledged to the payment of the
principal of or the interest or redemption premium, if any, on the Series 1979
Bonds.
REDEMPTION
Extraordinary Optional Redemption
The Bonds are callable for redemption at any time in whole if,
(i) the Leased Property shall have been damaged or destroyed to the
extent that it would not be practicable or desirable to rebuild, repair or
restore the Leased Property within a period of one year after the
occurrence of such damage or destruction; or
(ii) there occurs the condemnation or other taking by Eminent Domain
(as defined in the Lease) of all or any part of the Leased Property to such
an extent that the Lessee is prevented or would likely be prevented from
using the Leased Property for its normal purposes and operations for a
period of one year after such occurrence; or
4.
<PAGE>
(iii) there shall have occurred a change in the Constitution of the
State of North Carolina or the United States of America or any
legislative, administrative or judicial action which shall render the Lease
void or unenforceable or impossible of performance;
and the Company shall deliver to the Trustee a resolution of the Board of
Directors of the Company stating that as a result of an event described in
clause (i), (ii) or (iii) above, the Company has discontinued or will
discontinue its operation of the Leased Property. Then, in such case, the
Company may direct the Trustee to call all the Bonds then outstanding under the
Indenture for redemption in whole on the date, not more than 180 days after the
adoption of such resolution, selected by the Company at a redemption price equal
to the principal amount thereof plus accrued interest to the redemption date and
without redemption premium.
Mandatory Redemption if Bonds Determined Taxable
The Series 1979 Bonds are callable upon a Determination of Taxability,
which is defined by the Indenture to mean any determination, decision or decree
made in regard to Section 103(b)(6)(D) of the Internal Revenue Code of 1954, as
amended (the "Internal Revenue Code"), by the Commissioner or any District
Director of the Internal Revenue Service or by any court of competent
jurisdiction that interest on the Series 1979 Bonds is includable in the gross
income of the recipient thereof under Section 103 of the Internal Revenue Code
and the regulations thereunder for any reason other than that the holder of such
Bonds is a "substantial user" of the Project or a "related person" within the
meaning of Section 103(b)(8) of the Internal Revenue Code, for redemption in
whole on the date, not more than 90 days following the date of such
Determination, selected by the Company, at a redemption price equal to the
principal amount thereof, plus interest accrued thereon to the date fixed for
redemption.
Optional Redemption
The Series 1979 Bonds may be redeemed prior to their maturity, not earlier
than June 1, 1989, either in whole at any time or in part on any interest
payment date, selected by the Company, at the redemption prices (expressed as
percentages of the principal amount) set forth below, plus accrued interest to
the redemption date:
5.
<PAGE>
REDEMPTION DATES REDEMPTION
(BOTH DATES INCLUSIVE) PRICES
---------------------- ------
JUNE 1, 1989 TO MAY 31, 1990 103%
JUNE 1, 1990 TO MAY 31, 1991 102 1/2%
JUNE 1, 1991 TO MAY 31, 1992 102%
JUNE 1, 1992 TO MAY 31, 1993 101 1/2%
JUNE 1, 1993 TO MAY 31, 1994 101%
JUNE 1, 1994 TO MAY 31, 1995 100 1/2%
JUNE 1, 1995 AND THEREAFTER 100%
MANDATORY SINKING FUND REDEMPTION
As and for a sinking fund for the redemption of the Series 1979 Bonds, such
Bonds shall be called for redemption on June 1, 1995, and on each succeeding
June 1 to and including June 1, 1999, in the following principal amounts:
JUNE 1 PRINCIPAL JUNE 1 PRINCIPAL
OF THE YEAR AMOUNT OF THE YEAR AMOUNT
- ----------- ------ ----------- ------
1995 $350,000 1958 $425,000
1996 370,000 *1999 455,000
1997 400,000
- ----------
* FINAL MATURITY.
On or before the forty-fifth day prior to each of the sinking fund
redemption dates set forth above, the Trustee shall proceed to select for
redemption from all the Series 1979 Bonds outstanding a principal amount of such
bonds equal to the aggregate principal amount of such Bonds to be redeemed for
the required sinking fund redemption.
There may be credited, at the direction of the Company, against the sinking
fund redemption requirements the principal amount of any Series 1979 Bonds which
shall have been theretofore acquired, redeemed (otherwise than through the
operation of the sinking fund) or purchased by or delivered to the Trustee for
cancellation or which are otherwise deemed to have been paid under the terms of
the Indenture, and which shall not have been previously so applied as a credit.
6.
<PAGE>
NOTICE OF REDEMPTION
At least 30 days before the redemption date of any Bonds the Trustee shall
cause a notice of any such redemption, signed by the Authority, (a) to be
published once in a daily newspaper, or a financial journal, published or
circulated in the Borough of Manhattan, City and State of New York, and (b) to
be mailed by first-class mail, postage prepaid, to all holders of registered
Bonds and all other holders who shall have filed with the Trustee a request to
receive notices to be given under the Indenture, whose Bonds shall have been
called for redemption, but failure so to mail any such notice shall not affect
the validity of the proceedings for such redemption. In the event that all the
Bonds then outstanding shall be registered Bonds without coupons, the Trustee
shall only be required to give notice as provided in (b) above.
ADDITIONAL BONDS
Additional Bonds may be issued for the purpose of providing funds for
financing all or a portion of the cost of the Project to the extent that the
proceeds of the Series 1979 Bonds and other available funds in the Acquisition
Fund are insufficient therefor or for the cost of paying all or any part of the
cost of any other facilities for the Company in Iredell County or for any
combination of such purposes or to refund any or all of the Bonds of any series
outstanding under the Indenture. Such additional Bonds shall be on a parity with
and shall be entitled to the same benefit and security of the Indenture as the
Series 1979 Bonds.
7.
<PAGE>
THE LEASE AGREEMENT
THE FOLLOWING IS A SUMMARY OF CERTAIN PROVISIONS OF THE LEASE.
LEASE TERM
The Lease becomes effective upon its delivery and, subject to certain
provisions of the lease (including particularly the provisions described
hereinafter under "Events of Default" and "Remedies on Default" and "Options to
prepay basic rent"), will expire on the day following (i) the final maturity
date of the bonds or (ii) such later date on which the Bonds shall have been
paid in full. The Lease may be terminated prior to its expiration in the event
all of the bonds have been paid or provisions for payment thereof shall have
been made.
ACQUISITION AND INSTALLATION OF THE PROJECT; ISSUANCE OF THE BONDS
In order to provide funds for the payment of the cost of the Project, the
authority will issue the Series 1979 Bonds and deposit the sale proceeds with
the Trustee for application as provided in the Indenture. Upon the request of
the Company, the Authority agrees to authorize the issuance of additional series
of Bonds for the purposes and upon the terms and conditions provided in the
Indenture.
DISBURSEMENTS FROM ACQUISITION FUND
The Authority authorizes the Trustee to make payments from the Acquisition
Fund established under the Indenture to pay the cost of the Project, including
reimbursement to the company for the purchase price of the existing industrial
building and the site thereof and all legal, recording and other fees, taxes and
expenses related thereto; obligations incurred for labor and materials in
connection with the improvement, equipping and furnishing of the building; and
all expenses incurred in connection with the issuance of the series 1979 bonds,
including printing expenses and fees of financial and legal advisors and agents.
any amounts remaining in the Acquisition Fund 60 days after the completion date
of the project will be used either for the purchase of bonds in the open market
or for other purposes approved by bond counsel.
IN THE EVENT PROCEEDS OF BONDS ARE INSUFFICIENT
If amounts credited to the Acquisition Fund are not sufficient to pay all
costs of the Project, the Company is to complete the project and pay all excess
costs thereof. The Company will not be entitled to any reimbursement therefor or
any diminution in rent.
8.
<PAGE>
RENT PROVISIONS
The Company will pay, as Basic Rent, installments in the amounts and in
the manner required to enable the Authority to cause timely payment to be made
to the holders of the Bonds of the principal of and redemption premium, if any,
and interest on the Bonds, whether at maturity, upon redemption or otherwise,
provided that any amount credited under the Indenture against any payment
required to be made by the Authority shall be credited against the corresponding
payment required to be made by the Company under the Lease. Basic Rent will be
paid directly to the Trustee for deposit into the Bond Fund established by the
Indenture.
As Additional Rent, the Company will pay the reasonable fees, charges and
expenses of the Trustee (including the Trustee's counsel fees), as Trustee, Bond
Registrar and Paying Agent and all reasonable costs and expenses incurred by the
Authority in connection with the issuance of the Bonds and administration of the
Lease and the Indenture.
The Lease is a "net lease", and the Company is to pay, absolutely net,
rent and all other payments required thereunder, free of any deductions, without
abatement, diminution or set-off other than as therein expressly provided. The
Company is to pay, when due, all taxes, assessments and governmental charges
with respect to the Leased Property, all utility and other charges incurred in
the operation of the Leased Property and all assessments and charges lawfully
made by any governmental body for public improvements that may be secured by a
lien on the Leased Property. The Company may in good faith contest any such
taxes, assessments or other charges and permit the same to remain unpaid during
the period of such contest and any appeal therefrom. If the Authority or the
Trustee shall notify the Company that, in the opinion of independent North
Carolina counsel, by nonpayment of any such items the lien of the Indenture as
to any part of the rent or as to any part of the Leased Property will be
materially endangered or subject to loss or forfeiture, such taxes, assessments
or other charges are to be paid or bonded promptly.
MAINTENANCE AND MODIFICATIONS
The Company agrees that during the Lease Term it will at its own expense
keep the Leased Property in as reasonably safe repair and operating condition as
is needed for its
9.
<PAGE>
operations. The Company may, also at its own expense, make from time to time any
additions, modifications or improvements to the Leased Property that it may deem
desirable for its business purposes and that do not materially impair the
effective use, or materially decrease the value, of the Leased Property. All
such additions, modifications and improvements so made by the Company shall
become a part of the Leased Property; provided that any improvements, machinery,
equipment or other property installed by the Company without expense to the
Authority shall not become part of the Leased Property and may be removed by the
Company at any time and from time to time while it is not in default under the
Lease. In any instance where the Company has determined to remove items of
Leased Equipment and sell, exchange, trade-in or otherwise dispose of such
items, the Company shall either make appropriate substitutions therefor, which
shall become a part of the Leased Property, or pay to the Trustee, as a
prepayment of Basic Rent, the proceeds of the sale of such Leased Equipment, the
amount of credit received in the case of a trade-in of Leased Equipment or in
the case of another disposition, an amount equal to the original cost thereof
less depreciation at generally accepted rates. If no event of default shall have
occurred and be continuing, the Company may at any time grant easements with
respect to the Leased Property and release the same without consideration, where
such grant or release will not materially impair the Leased Property. Unless an
event of default shall have occurred and be continuing, the Company shall have
the option to purchase unimproved land comprising a portion of the Leased
Property at a purchase price of $15,000 per acre, which will be paid to the
Trustee for deposit in the Bond Fund in accordance with the Lease terms.
INSURANCE AND EMINENT DOMAIN
The Company will obtain title insurance on the Leased Property in the form
of a mortgagee title policy (including if available mechanics' lien coverage) in
the face amount of not less than $1,500,000 insuring the Trustee's lien under
the Indenture. Until all amounts due on the Bonds are paid in full, the Company
will maintain in force, in specified amounts, casualty insurance workmen's
compensation insurance, and liability insurance (which may be provided for by
blanket policies of the Company). Such casualty insurance shall include coverage
for fire, extended coverage perils, vandalism and malicious mischief and boiler
explosion (but only if steam boilers are present), with respect to the Leased
Property on a replacement basis, in an amount equal to at least 80% of full
insurable value at not less than an amount necessary to pay, retire and redeem
all outstanding Bonds. All such policies will contain provisions generally
considered
10.
<PAGE>
to be standard for the type of insurance involved, including deductible amounts
and all such policies, or certificates thereof, will be deposited with the
Trustee. If the net proceeds from title insurance with respect to the Leased
Property can be used to cure any defect (other than permitted encumbrances, as
defined in the Lease) in the Authority's title to the real property included in
the leased property or the lien of the indenture, such net proceeds shall be
paid to the company and used to cure such defect in the authority's title to the
real property covered by such insurance and, if not needed or used for such
purposes, shall be used to prepay basic rent and for the redemption of bonds.
the net proceeds of insurance, other than title insurance, carried with respect
to the leased property (excluding the net proceeds of business interruption
insurance which shall in all cases belong to the Company), and the net proceeds
resulting from eminent domain shall be paid to, or retained by, the Company, and
unless the Company shall exercise its right to prepay the unpaid balance of
Basic Rent pursuant to the Indenture, said net proceeds shall be applied to the
repair, replacement, renewal or improvement of the Leased Property to its
condition prior to the event attributable to the net proceeds.
COMPANY TO MAINTAIN CORPORATE EXISTENCE
The Company agrees that during the term of the Lease it will maintain its
corporate existence, will not dissolve or otherwise dispose of all or
substantially all of its assets and will not consolidate with or merge into
another corporation or permit one or more other corporations to consolidate with
or merge into it; unless the surviving, resulting or transferee corporation, as
the case may be, (i) is a corporation organized and existing under the laws of
one of the states of the united states and is duly qualified to do business in
North Carolina; (ii) shall assume and agree to pay and perform all of the
Company's obligations under the lease; (iii) shall deliver to the Trustee a
certificate executed by its chief financial officer stating that none of the
obligations, covenants and performances under the guaranty will be violated by
such sale, merger or consolidation; and (iv) shall provide to the Trustee an
opinion of Counsel, which shall be counsel nationally recognized on the subject
of municipal bonds, to the effect that the transaction will not cause the
interest on any series of the bonds then outstanding to become subject to
Federal income tax.
11.
<PAGE>
ASSIGNMENT AND SUBLEASING
Concurrently with the issuance of the Series 1979 Bonds, the Authority will
assign to the Trustee, by means of the Indenture, substantially all of its
rights, title and interest in the Lease as security for payment of the Bonds.
The Company may assign the Lease or sublease the Leased Property and Leased
Equipment without the consent of the Authority or the Trustee, provided that (a)
no assignment or sublease shall relieve the Company from primary liability for
any of its obligations under the Lease and (b) the assignee or sublessee shall
assume the obligations of the Company under the Lease to the extent of the
interest assigned or subleased.
EVENTS OF DEFAULT
Each of the following is an "event of default" under the Lease:
(a) The failure by the Company to make any payment of Basic Rent when
due.
(b) The representations or warranties of the Company contained in
Section 2.2 thereof shall prove to be incorrect at the time made in such a
material respect that the security for the Bonds shall be materially
adversely affected.
(c) An "Event of Default" (as defined in any mortgage, indenture or
instrument, under which there may be issued, or by which there may be
secured or evidenced, any indebtedness of $500,000 or more of the Company,
whether such indebtedness now exists or shall hereafter be created) shall
happen and shall result in such indebtedness becoming or being declared due
and payable prior to the date on which it would otherwise become due and
payable, and such acceleration shall not be rescinded or annulled within 10
days after written notice of such acceleration to the Company.
(d) The dissolution or liquidation of the Company or the filing by the
Company of a voluntary petition in bankruptcy, or the failure by the
Company promptly to lift or suspend any execution, garnishment or
attachment of such consequence as will impair the ability of the Company to
complete the Project or carry on its normal business operations, or the
commission by the Company of any act of
12.
<PAGE>
bankruptcy, or the adjudication of the Company as a bankrupt, or the
assignment by the Company for the benefit of its creditors, or the entry by
the Company into an agreement of composition with its creditors, or if a
petition or answer proposing the adjudication of the company as a bankrupt
or its reorganization, arrangement or debt readjustment under any present
or future federal bankruptcy act or any similar federal or state law shall
be filed in any court and such petition or answer shall not be discharged
or denied within 90 days after the filing thereof.
(e) Failure by the Company to observe and perform any covenant,
condition or agreement on the part of the Company under the Lease, other
than as referred to in the preceding paragraphs, for a period of 30 days
after written notice, specifying such failure and requesting that it be
remedied, is given to the company by the authority or the Trustee, unless
such failure cannot be remedied within 30 days and the Company has
instituted corrective action within 30 days after such notice and
diligently pursues such action until such failure is remedied.
(f) Cessation of operation by the Company of the Leased Property prior
to Payment of the Bonds; provided, that actions taken by the Company in
accordance with the Lease shall not be a default under this paragraph (f).
(g) The occurrence of certain "events of default" under the Indenture,
including failure to make any payment with respect to the Bonds or the
appointment of a receiver for a bankruptcy proceeding respecting the Basic
Rent, or any default under the Guaranty, shall have occurred and be
continuing.
Except in respect of the Company's obligation set forth in the Lease to pay
rent, maintain insurance coverage, provide periodic audited financial
statements, and indemnify the Authority against all claims and expenses, the
definitions of "event of default" are subject to the qualification that the
company shall not be deemed in default if the company is unable to carry out its
obligations under the lease by reason of "force majeure", including, among other
things, acts of God, industrial disturbance, acts of public enemies,
governmental or military orders, insurrections and riots, storms or any other
cause or event not reasonably within the
13.
<PAGE>
control of the Company. The Company agrees, however, to remedy with all
reasonable dispatch the cause preventing it from carrying out its agreements,
provided that the settlement of industrial disturbances will be entirely within
the discretion of the Company.
REMEDIES ON DEFAULT
Whenever any such event of default shall have occurred, the Authority may
take any of the following remedial steps:
(a) declare all unpaid and unmatured installments of Basic Rent to be
immediately due and payable;
(b) take whatever action at law or at equity may appear necessary or
desirable to collect all rent payable under the Lease or to enforce the
performance of any obligation of the Company under the Lease.
OPTIONS TO PREPAY BASIC RENT
Except during the continuance of an event of default the Company is granted
the option to prepay, at any time, in full Basic Rent if any of certain
extraordinary events shall have occurred described herein under "THE SERIES 1979
BONDS -- Redemption - Extraordinary Optional Redemption", and the Company has
the option to prepay all or any portion of the Basic Rent and cause such payment
to be applied to the purchase or redemption of Bonds or as credit against the
sinking fund redemption requirements as provided by the Indenture.
OBLIGATION TO PREPAY BASIC RENT
In the event of a Determination of Taxability, the Company shall be
required to prepay the Basic Rent with respect to the Series 1979 Bonds and
cause the redemption thereof as described under "THE SERIES 1979 BONDS -
Redemption Mandatory Redemption if Bonds Determined Taxable".
OBLIGATION TO PURCHASE LEASED PROPERTY
The Company is required to purchase the Leased Property for $10 at the
expiration or sooner termination of the Lease following payment of the Bonds in
full.
14.
<PAGE>
AMENDMENTS TO LEASE
The Lease provides that the Lease may not be amended or terminated except
in accordance with the Indenture.
THE INDENTURE AND DEED OF TRUST
The following is a summary of certain provisions of the Indenture.
TRUSTEE
The Authority has designated First Union National Bank of North Carolina,
as Trustee under the Indenture.
SECURITY
For the benefit of the holders of the Bonds as security for the fulfillment
of the obligations of the Authority under the Indenture, the Authority has
thereunder mortgaged, conveyed, granted, pledged and assigned to the Trustee:
(i) the interest of the Authority in and to the Leased Property
consisting of real property including improvements, appurtenances and
fixtures erected thereon;
(ii) a security interest in all tangible property other than real
property, comprising a portion of the Leased Property, including all items
of machinery and equipment acquired by the Authority and referred to in the
Indenture as "Leased Equipment";
(iii) all proceeds of any property covered by clauses (i) and (ii)
sold or otherwise disposed of in accordance with the Indenture;
(iv) the Lease, including Basic Rent and other revenues, subject,
however, to certain retained rights of the Authority under the Lease; and
(v) all moneys and securities in the Bond Fund and until applied to
the Cost of the Project, all moneys and securities in the Acquisition Fund.
REGISTRATION AND TRANSFER OF BONDS
The Trustee is appointed Bond Registrar and as such will keep books for the
registration and for the registration of
15.
<PAGE>
transfer of Bonds. At the option of the bearer, any Bond may be registered as to
both principal and interest on the books of the Bond Registrar upon presentation
thereof to the Bond Registrar, accompanied by all unmatured coupons and all
matured coupons not paid or provided for. The transfer of any Bond registered as
to both principal and interest may thereafter be registered on such books only
upon an assignment duly executed by the registered owner or his attorney or
legal representative. Any Bond registered as to both principal and interest may
be reconverted into a coupon bond upon presentation thereof to the Bond
Registrar.
ACQUISITION FUND
The Indenture creates a special fund called the "Acquisition Fund" to the
credit of which the net proceeds of the Series 1979 Bonds and any other moneys
received by the Authority or by the Trustee from any other source for payment of
the Cost of the Project will be deposited. Pending such application, the moneys
in the Acquisition Fund will be subject to a lien in favor of the holders of the
Bonds. The Trustee is authorized to make payments from the Acquisition Fund only
upon receipt of the requisitions and certificates required by the Lease. In the
event that the Company elects or is required to prepay the Basic Rent in whole
and cause all the Bonds then outstanding to be redeemed, or the Trustee declares
all of the Bonds then outstanding to be due and payable, the Trustee shall,
without further authorization, transfer any balance remaining in the Acquisition
Fund to the Bond Fund described below.
BOND FUND
The Indenture creates a special fund called the "Bond Fund", which will be
held by the Trustee in trust. Pending application, moneys in the Bond Fund will
be subject to a lien in favor of the holders of the Bonds. The following moneys
will be deposited to the credit of the Bond Fund:
(a) The accrued interest initially received by the Authority on the
sale of the Bonds.
(b) Any amount in the Acquisition Fund required to be transferred to
the Bond Fund by the Indenture.
(c) The installments of Basic Rent paid or prepaid by the Company.
16.
<PAGE>
(d) Any payments made to the Trustee pursuant to the Guaranty.
(e) Any amounts paid to the Trustee in connection with the removal of
equipment under the Lease.
(f) The proceeds of the foreclosure on and sale of any of the Leased
Property.
(g) All other moneys received by the Trustee which are required to be
paid into the Bond Fund.
The Trustee shall, on or before each payment date, withdraw from the Bond
Fund and (i) remit by mail to each owner of Bonds registered as to both
principal and interest the amounts required for paying the interest on such
Bonds then due and payable, (ii) set aside or deposit in trust with the Paying
Agent sufficient moneys for paying the interest on the Bonds not registered,
then due and payable and (iii) set aside or deposit in trust with the Paying
Agent sufficient moneys for paying the principal of and redemption premium, if
any, on the Bonds then due, whether at maturity or by redemption or declaration
or otherwise.
Moneys held for the credit of the Bond Fund will be held in trust and
disbursed by the Trustee for (a) the payment of interest on the Bonds as it
becomes due and payable, or (b) the payment of the principal of the Bonds at
their maturity, or (c) the payment of the purchase price or redemption price of
the Bonds before their maturity. Whenever the moneys held for the credit of the
Bond Fund shall be sufficient for payment in full of the Bonds then outstanding,
such moneys shall be applied by the Trustee to the payment, purchase or
redemption of the Bonds.
SECURITY FOR DEPOSITS
All moneys deposited with the Trustee under the provisions of the
Indenture, or the Lease or the Guaranty shall be held in trust and applied only
in accordance with the provisions of the Indenture, the Lease and the Guaranty
and shall not be subject to lien or attachment by any creditor of the Authority,
the Trustee or the Company.
INVESTMENT OF MONEY
At the written request of the Company, money held for the credit of the
Acquisition Fund and the Bond Fund
17.
<PAGE>
will be invested and reinvested by the Trustee in Government Obligations (as
defined in the Indenture) and certificates of deposit, fully secured by such
Government Obligations, of banks or trust companies having a combined capital
and surplus of at least $25,000,000. The Trustee will sell at the best price
obtainable or present for redemption any such obligation if necessary in order
to provide cash to meet any required payment. Neither the Trustee nor the
Authority will be liable for any loss resulting from any such investment.
DEFAULT AND REMEDIES
Each of the following events is defined as an "event of default" under the
Indenture:
(a) Payment of any installment of interest on any of the Bonds shall
not be made when due.
(b) Payment of the principal of or redemption premium, if any, on any
of the Bonds shall not be made when due, whether at maturity or by
proceedings for redemption or otherwise.
(c) An order or decree shall be entered, appointing a receiver in
respect of the rent or other payments subject to the lien of the Indenture,
either (i) with the consent or acquiescence of the Authority, or (ii)
without its consent or acquiescence if not discharged or stayed on appeal
within 90 days.
(d) Any proceeding shall be instituted, with the consent or
acquiescence of the Authority, for the purpose of effecting a composition
between the Authority and its creditors or adjusting the claims of such
creditors, any such claims or composition being payable from the rent or
other payments subject to the lien of the Indenture.
(e) An event of default under the Lease or under the Guaranty shall
have occurred.
(f) The Authority shall default in the due and punctual performance of
any other of the covenants, conditions and agreements applicable to it in
the Bonds or the Indenture; provided, however, that no default specified in
this clause (f) shall constitute an event
18.
<PAGE>
of default until written notice specifying such default and requiring the
same to be remedied shall have been given to the Company and the Authority
by the Trustee, which may give notice in its discretion and shall give such
notice at the written direction of the Holders of not less than 25$ of the
aggregate principal amount of Bonds outstanding, and the Company and the
Authority shall have had 60 days after receipt of such notice to correct
said default and shall not have corrected said default within the
applicable period, and if such a default be such that it can be corrected,
but not within the applicable time period, it shall not constitute an event
of default if corrective action is instituted by the Company or the
Authority within the applicable period and diligently pursued until the
default is corrected.
Upon the happening and continuance of any event of default under the
Indenture, then and in every such case the Trustee may, and upon the
written direction of the holders of not less than a majority in aggregate
principal amount of the Bonds then outstanding shall, declare the principal
of all of the Bonds then outstanding (if not then due and payable) to be
due and payable immediately, and upon such declaration the same shall
become and be immediately due and payable, anything contained in the Bonds
or in the Indenture to the contrary notwithstanding; provided, however,
that if sufficient moneys shall have accumulated in the Bond Fund to pay
the principal of all matured Bonds and all arrears of interest, if any,
upon all Bonds then outstanding (except the principal of any Bonds not then
due and payable by their terms and the interest accrued on such Bonds since
the last interest payment date), and the charges, compensation, expenses,
disbursements, advances and liabilities of the Trustee and all other
amounts then payable by the Authority hereunder shall have been paid and
every other default known to the Trustee (other than a default in the
payment of the principal of such Bonds then due and payable only because of
an acceleration shall have been remedied to the satisfaction of the
Trustee, then and in every such case the Trustee may, and upon the written
direction of the holders of not less than a majority in aggregate principal
amount of the Bonds then outstanding shall, by a notice in writing to the
Authority, rescind and annul such declaration and its consequences, but no
19.
<PAGE>
such rescission or annulment shall extend to or affect any subsequent
default or impair any right consequent thereon.
Upon the happening and continuance of any event of default specified
in the Indenture, then and in every such case the Trustee may, and upon the
written direction of the holders of not less than a majority in aggregate
principal amount of the Bonds then outstanding thereunder shall, proceed,
subject to the provisions of the Indenture, to protect and enforce its
rights and the rights of the Bondholders under the laws of the State of
North Carolina under the Lease, the Guaranty or the Indenture by such
suits, actions or special proceedings in equity or at law, or by
proceedings in the office of any board or officer having jurisdiction,
either for the specific performance of any covenant or agreement contained
in the Indenture or in aid or execution of any power therein granted or for
the enforcement of any proper legal or equitable remedy, as the Trustee,
being advised by counsel, shall deem most effectual to protect and enforce
such rights.
In any case in which under the Indenture the Trustee has the right to
declare the principal of all the Bonds then outstanding to be due and
payable immediately, or when the Bonds mature (by redemption or otherwise)
and are not paid, the Trustee may: (i) take possession of the Trust Estate
and the Leased Equipment in order to manage, operate, or lease same, and
(ii) assign rents, revenues, earnings, income, products and profits
receivable under the Indenture and (iii) may and, upon written request of
the holders of at least a majority of the aggregate principal amount of the
Bonds outstanding, shall, sell the Trust Estate and the Leased Equipment
pursuant to the General Statutes of the State of North Carolina.
DEFEASANCE
If when the Bonds shall have become due and payable as provided in the
Indenture, the whole amount of the principal and redemption premium, if any, and
interest so due and payable upon all of the Bonds and coupons then outstanding
shall be paid or sufficient moneys, or Government Obligations the principal of
and interest on which when due will provide
20.
<PAGE>
sufficient moneys, shall be held by the Trustee or the paying Agent for such
purpose under the provisions of the Indenture, and provision shall also be made
for paying all other sums payable by the Authority, including the Trustee's and
Paying Agent's fees and expenses, then and in such case the right, title and
interest of the Trustee in the Trust Estate and the Leased Equipment shall
thereupon cease, and the Trustee in such case, on demand of the Authority, will
release the Trust Estate, and, subject to the provisions of the Lease, will turn
over to the Company any surplus in the Bond Fund and all balances remaining in
any other funds or accounts.
THE TRUSTEE'S FUNCTIONS
The Trustee shall be under no obligation to institute any suit, or to take
any remedial proceedings, until it shall be indemnified to its satisfaction
against any and all costs and expenses, outlays and counsel fees and other
reasonable disbursements, and against all liability (except for its own
negligence, bad faith or willful misconduct as provided in the Indenture). The
Trustee shall not be under any obligation to see that any duties imposed upon
any party other than itself, or any covenants on the part of any party other
than itself to be performed, shall be done or performed, and the Trustee shall
be under no obligation for failure to see that any such duties or covenants are
so done or performed.
The Indenture contains certain provisions with respect to the execution of
instruments by Bondholders, proof of ownership of bonds, and communications to
Bondholders by other Bondholders.
The Trustee may, upon written notice to the Authority, the Company and
certain Bondholders as provided in the Indenture, resign the trust created by
the Indenture. The Indenture provides that any successor Trustee shall be a bank
or trust company having trust powers and otherwise qualified to act as Trustee.
SUPPLEMENTS AND AMENDMENTS TO INDENTURE
The Authority and the Trustee may, without the consent of the Bondholders,
enter into supplements or amendments to the Indenture
21.
<PAGE>
(a) to cure any ambiguity or formal defect or omission in the
Indenture, or
(b) to set forth any and all matters in connection with the issuance
of additional Bonds or refunding Bonds, or
(c) to grant to the Trustee, for the benefit of the Bondholders, any
additional rights, remedies, powers, authority or security, or
(d) to subject to the Indenture additional revenues, properties or
collateral, or
(e) to reflect any addition to substitution for or removal from the
Leased Property required or permitted under the Lease, or
(f) in connection with any other change which, in the judgment of
the Trustee, will not restrict, limit or reduce the obligation of the
Authority to pay the principal of and redemption premium, if any, and
interest on the Bonds or otherwise impair the security of the Bondholders
under the Indenture, or
(g) to modify, amend or supplement the Indenture in such manner as
to permit the qualification of the Indenture under the Trust Indenture Act
of 1939 or under the securities laws of any of the states of the United
States.
With the consent of the holders of not less than two-thirds in aggregate
principal amount of the Bonds at the time outstanding, the Authority and the
Trustee may enter into supplements and amendments to the Indenture for the
purpose of adding any provisions or changing in any manner or eliminating any of
the provisions of the Indenture; provided, however, that nothing herein
contained shall permit (a) an extension of the maturity of the principal of or
the interest on any Bond or of the due date of any Sinking Fund Redemption
Requirement, or (b) a reduction in the principal amount of any Bond or the
redemption premium, if any, or the rate of interest thereon, or (c) creation of
any lien or security interest with respect to the Lease, other than the lien
created by the Indenture, or (d) a
22.
<PAGE>
preference or priority of any Bond or Bonds over any other Bond or Bonds, or (e)
a reduction in the aggregate principal amount of the Bonds required for consent
to such supplemental indenture.
SUPPLEMENTS AND AMENDMENTS TO OTHER AGREEMENTS
The Authority and the Trustee, or the Trustee alone in the case of the
Guaranty, may consent to supplements and amendments to the Lease and the
Guaranty:
(a) to cure any ambiguity or formal defect or omission, or
(b) to set forth any and all of the matters in connection with the
issuance of additional Bonds or refunding Bonds, or
(c) to identify more precisely the property forming a part of the
Leased Property under the Lease or to substitute Leased Property, or
(d) to grant to or confer upon the Trustee, for the benefit of the
Bondholders, any additional rights, remedies, powers, authority or
security, or
(e) in connection with any other change which, in the judgment of
the Trustee, will not restrict, limit or reduce the obligation of the
Company to pay the Basic Rent or otherwise impair the security of the
Bondholders.
The Authority and the Trustee, or the Trustee alone in the case of the
Guaranty, will not execute and the Trustee will not consent to any other
supplement or amendment to the Lease or the Guaranty without the consent or
approval of the holders of not less than two-thirds in aggregate principal
amount of the Bonds then outstanding.
THE GUARANTY AGREEMENT
THE FOLLOWING IS A SUMMARY OF CERTAIN PROVISIONS OF THE GUARANTY.
The Company (also referred to as the "Guarantor") unconditionally
guarantees to the Trustee for the benefit of
23.
<PAGE>
the holders of the Bonds (and the interest coupons, if any) the full and prompt
payment of the principal of and redemption premium, if any, and interest on the
Bonds. The Guaranty is continuing, absolute and unconditional, and is a guaranty
of payment and not of collection. If the Authority shall default in payment of
the principal of or redemption premium, if any, or interest on the Bonds when
and as the same shall become due, whether at the stated maturity thereof, by
call for redemption or otherwise, the Guarantor, upon demand by the Trustee or
its successors or assigns, without notice other than such demand and without the
necessity of further action by the Trustee or its successors or assigns, will
promptly and fully make such payments, provided, however, that no such demand
shall be effective until the close of business on the day any such default shall
occur. In the event of such default, the Trustee shall make such demand. The
Guarantor will pay all reasonable costs and expenses, including attorneys' fees,
paid or incurred by the Trustee and its successors and assigns in connection
with the enforcement of the obligations of the Authority under the Indenture and
of the Guarantor under this Guaranty. All payments by the Guarantor shall be
made in any coin or currency of the United States of America which on the
respective dates of payment thereof is legal tender for the payment of public
and private debts. Each default in payment of the principal of or redemption
premium, if any, or interest on any Bond shall give rise to a separate cause of
action hereunder, and separate suits may be brought hereunder as each cause of
action arises. The Company unconditionally waives the right to receive notice of
any event relating to nonpayment on the Bonds as a condition to its obligation
under the Guaranty. No claim, set-off or any defense of any kind which the
Company may have against the Authority or the Trustee will relieve the Company
of its obligations under the Guaranty.
In the Guaranty, the Company covenants and agrees, among other things,
that, so long as the Bonds shall be outstanding it will not, transfer or
otherwise dispose of all or substantially all of its assets (either in a single
transaction or in a series of related transactions), and will not merge or
consolidate with any other corporation and will not permit one or more
corporations to merge into or consolidate with it, unless the surviving,
resulting or transferee corporation, as the case may be:
(a) shall have a net worth, determined in accordance with generally
accepted accounting principles, at least equal to 90$ of the net worth of
the Guarantor as of the date of the most recent audited consolidated
financial statement of the Guarantor; and
24.
<PAGE>
(b) in the event a merger or consolidation or acquisition shall occur
within three years following the date of issuance of the Series 1979 Bonds,
shall furnish an opinion of Counsel which shall be Counsel nationally
recognized on the subject of municipal bonds and selected by the Company
and acceptable to the Trustee, to the effect that interest on the Series
1979 Bonds will not become includable in the gross income of the recipient
under Section 103 of the Code and regulations promulgated thereunder by
reason of such merger, consolidation or acquisition for any reason other
than that the Holder is a substantial user or a related person within the
meaning of Section 103(b)(8) of the Code.
UNDERWRITING
The Underwriter has agreed, subject to certain conditions, to purchase the
Series 1979 Bonds from the Authority and has agreed to pay therefor a price
equal to $1,956,000, plus accrued interest thereon from June 1, 1979. After the
Series 1979 Bonds are released for sale, the initial public offering price and
other terms may be varied from time to time by the Underwriter and the Series
1979 Bonds may be offered and sold at prices lower than the initial public
offering price to certain dealers (including dealers who may sell Bonds into
their investment accounts). The Underwriter is obligated to purchase all of the
Series 1979 Bonds if any of the Series 1979 Bonds are purchased. The Company has
agreed to indemnify the Underwriter against certain civil liabilities, including
liabilities under the Federal securities laws.
TAX EXEMPTION
In the opinion of Brown, Wood, Ivey, Mitchell & Petty, New York, New York,
as Bond Counsel, based on existing statutes, regulations and court decisions,
the interest on the Bonds is exempt from all present Federal income taxes,
except that no opinion is expressed with respect to interest on any Bond for any
period during which it is held by a person who is a "substantial user" of the
Project or a "related person" within the meaning of Section 103(b)(8) of the
Internal Revenue Code, and the applicable regulations thereunder. Such opinion
will further state, however, that such tax exemption will terminate as to the
Series 1979 Bonds in the event that the $10,000,000 limitation on bond issuance
and capital expenditures in Iredell County relating to the Company imposed by
Section 103(b)(6)(D) of the Internal Revenue Code is exceeded within three years
after the date of issuance of the Series 1979 Bonds. (See "THE SERIES 1979 BONDS
- - Redemption - Mandatory Redemption if Bonds Determined
25.
<PAGE>
Taxable.") In addition, in the opinion of Bond Counsel, the interest on the
Series 1979 Bonds is exempt from all income taxes within the State of North
Carolina.
The Authority will issue its certificate to the effect that on the basis of
facts, estimates and circumstances represented by the Company to be in existence
on the date of delivery of the Bonds, it is not expected that the proceeds of
the Series 1979 Bonds will be used in a manner that would cause the Series 1979
Bonds to be "arbitrage bonds" under Section 103(c) of the Internal Revenue Code,
and the applicable regulations thereunder.
LEGALITY
Legal matters incident to the authorization and issuance of the Series 1979
Bonds are subject to the unqualified approving opinion of Brown, Wood, Ivey,
Mitchell & Petty, New York, New York, as Bond Counsel. Brown, Wood, Ivey,
Mitchell & Petty have reviewed the statements ire this Official Statement under
the captions "THE BONDS", "THE LEASE AGREEMENT", "THE INDENTURE AND DEED OF
TRUST" and "THE GUARANTY" and believe that insofar as such statements
constitute summaries of the documents referred to therein, such statements
constitute fair summaries of said documents. The Underwriter and Bond Counsel
will receive the opinion of Drinker Biddle & Reath with respect to certain legal
matters pertaining to the Company and its obligations under the Guaranty.
MISCELLANEOUS
All information contained in this Official Statement regarding the Project
and the Company and in the Appendix hereto has been furnished solely by the
Company, and the consolidated financial statements of the Company included in
the Appendix hereto have been so included in reliance on the report of Coopers &
Lybrand, independent certified public accountants, and on their authority as
experts in auditing and accounting. The Authority assumes no responsibility for
the accuracy or completeness of the information contained in this Official
Statement except for the information contained herein under the heading "The
Authority".
THE IREDELL COUNTY INDUSTRIAL
FACILITIES AND POLLUTION CONTROL
FINANCING AUTHORITY
By: _____________________________
Chairman
26.
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 3, 1978 Commission file number 0-6085
HUNT MANUFACTURING C0.
(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.)
1405 Locust Street, Philadelphia, Pa. 19102
------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (215) 735-7695
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
- ------------------- -------------------
None --
Securities registered pursuant to Section 12(g) of the Act:
Common Shares (Par Value $.10 per Share)
- --------------------------------------------------------------------------------
(Title of class)
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
Shares of common stock outstanding as of December 3, 1978 - 1,165,420
A-1
<PAGE>
Item 1 - BUSINESS
General
Hunt Manufacturing Co. and its subsidiaries (hereinafter sometimes
collectively referred to as the "Company") are primarily engaged in the
manufacture and/or distribution of office equipment and supplies and art/craft
products for the business, education and hobby markets. The Company also is
engaged, to a lesser extent, in the manufacture of various types of small metal
drawn parts for other manufacturers, primarily in the cosmetics, fishing rod,
automotive and mechanical pen and pencil industries.
The table on the following page sets forth certain information with respect
to the Company's various industry segments, and its export sales, for the fiscal
years 1974 through 1978.
Principal Products
Office Equipment and Supplies. The Company manufactures manual pencil
sharpeners which it markets under its BOSTON(R) brand name. These sharpeners are
available in a wide range of prices and models and offer a variety of features
to fit the particular needs of users, including screw or vacuum-type mounts,
self-feeding mechanisms and adjustable cutters for producing fine, blunt or
draftsmen's points.
Other products which the Company manufactures under its BOSTON(R) label
include a popular-priced, light electric pencil sharpener, a battery operated
pencil sharpener, a heavy-duty electric pencil sharpener, an electric letter
opener, and a wide variety of paper punches. It also produces several sizes of
metal "bulldog" spring clips for fastening papers or similar materials together.
Through its Lit-Ning operation, the Company also manufactures and
distributes, under its Lit-Ning(R) label, various models of desk-top metal
office files, racks, stands, tables, organizers and accessories. The Lit-Ning
operation was acquired by the Company on December 1, 1975.
-1-
<PAGE>
<TABLE>
<CAPTION>
Segment and Export Information
(in thousands)
1978 1977 1976 1975 1974
(53 weeks) (52 weeks) (52 weeks) (52 weeks) (52 weeks)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net sales of each segment are as follows:
Office equipment and supplies $ 22,916 $ 19,103 $ 15,306 $ 7,916 $ 7,379
Art/craft products 16,676 14,063 13,142 11,866 11,693
Other 3,713 2,986 2,428 1,764 2,657
-------- -------- -------- -------- --------
Net sales $ 43,305 $ 36,152 $ 30,876 $ 21,546 $ 21,729
======== ======== ======== ======== ========
Operating profit of each segment
is as follows:
Office equipment and supplies 4,082 3,690 2,716 1,538 975
Art/craft products 1,456 1,294 1,191 1,492 1,801
Other 784 532 533 320 534
-------- -------- -------- -------- --------
Operating profits of
segments 6,322 5,516 4,440 3,350 3,310
General corporate expenses (823) (825) (551) (379) (381)
Interest expense (343) (289) (338) (83) (156)
Other (expense) income, net (94) 54 35 61 (70)
-------- -------- -------- -------- --------
Income before income taxes $ 5,062 $ 4,456 $ 3,586 $ 2,949 $ 2,703
======== ======== ======== ======== ========
Identifiable assets of each
segment are as follows:
Office equipment and supplies 13,097 9,963 8,385 3,169 3,072
Art/craft products 8,044 7,303 7,203 6,436 6,895
Other 2,437 2,147 1,967 1,650 1,680
Corporate assets 497 689 425 1,099 486
-------- -------- -------- -------- --------
Total Assets $ 24,075 $ 20,102 $ 17,980 $ 12,354 $ 12,133
======== ======== ======== ======== ========
Domestic export sales to various
countries $ 4,065 $ 3,276 $ 2,763 $ 2,366 $ 2,122
======== ======== ======== ======== ========
</TABLE>
Note: The above data has been presented in accordance with the provisions of
Financial Accounting Standards Board Statement No. 14.
-2-
<PAGE>
ART/CRAFT MATERIALS. The Company produces a wide variety of supplies, sold
both singly and in kits, for the student, the hobbyist and the amateur, the
professional, and the commercial artist. Through its Bienfang operation it
offers various lines of high quality sketching, tracing, water-color and acrylic
paint papers, as well as poster and mat boards.
The Company manufactures under its SPEEDBALL(R) label various products
including: lettering pens, steel brushes, and assorted colors of inks for poster
and sign making and lettering work; a complete line of block printing equipment,
including cutting tools, presses, rollers and water-soluble and oil base inks;
screen printing kits with unique water soluble inks; and a complete line of
acrylic-polymer paints.
The Company is also the exclusive distributor in the United States and
Canada for OSMIROID(TM)* brand automatic feed lettering, writing and sketching
pens.
The Company manufactures, under its VANGUARD I(R) label, a complete line of
high quality acrylic-polymer artists' paints (the formulation for which was
developed by the Company), various other artists' mediums and interchangeable
painting knives. Acrylic paints, which are water-soluble while wet and
waterproof after drying, are the most popular type of artists' colors. The
Company also offers a line of oil artists' paints which it markets under the
FIDELIS(TM) label.
The Company also publishes a number of textbooks and teaching aids on such
subjects as lettering, cartooning, print making and polymer painting, primarily
for use in schools and by amateur artists.
Other Products
The Company also produces and finishes a variety of small metal drawn parts
for incorporation into the products of other manufacturers. The major items in
this line are component parts for ball-point pens, decorative caps, ferrules for
two-piece fishing rods and other miscellaneous items for the cosmetic and
automotive markets. These items are made of aluminum, steel, brass or nickel
silver, with a number of different finishes including chrome, gold plate,
anodized aluminum and colored lacquers.
COMPETITION
The Company has only one major competitor, Berol Corporation, in the manual
pencil sharpener field, and Management
- ----------
* Trademark of E S Perry Ltd.
-3-
<PAGE>
believes that the Company enjoys an equal share of this market. Management
further believes the Company produces most of the dip-type lettering pens sold
in the United States and holds a leading position in block printing inks and
supplies sold to schools. It is believed that the various paper and related
products of the Company's Bienfang operation, taken as a whole, account for
approximately 15 to 20 percent of the applicable market. It is further believed
that the Company's Lit-Ning operation has the major share of the market for
desk-top files, racks, and accessories. It is estimated that Lit-Ning has
approximately four major competitors. The Company's other products generally
account for smaller portions of their respective markets and are in direct
competition with products of other companies. A number of the Company's
competitors are larger and have greater financial resources than the Company,
and in a few instances (most notably Panasonic in the electric pencil sharpener
market), these competitors are dominant in the field.
MARKETING AND DISTRIBUTION
Marketing of the Company's office and art/craft lines throughout the United
States and Canada is effected principally through 33 salesmen, 7 regional
managers and 76 independent representatives who sell to wholesalers and dealers,
including school supply distributors, mail order houses, chain outlets and art
supply, office supply and stationery stores. Some of these customers, in turn,
resell to federal, state and local governments. As part of its sales effort, the
Company also conducts demonstrations and workshops for school art teachers,
local art groups and local retailers.
The metal, component-part products of the Company are marketed on a more
limited basis throughout the United States, primarily by its 4 independent
representatives. Two customers accounted for approximately 55$ and five
customers accounted for about 64%, of the sales of this Division during the
Company's last fiscal year.
The Company has approximately 5,000 active customers, the six largest of
which accounted for approximately 18$ of its total sales during the Company's
most recent fiscal year. No other customer accounted for as much as 2$ of such
sales.
The Company's export sales, limited to its office equipment and supplies
and art supplies lines, amounted to 41 $4,065,000 in 1978 as compared with
$3,276,000 in 1977. The Company, through its International Division, distributes
these products in approximately 70 foreign countries. Most of its other foreign
sales are made through 58 independent distributors or sales agents in the
various countries. The
-4-
<PAGE>
Company also has a Domestic International Sales Corporation (DISC) in order to
take advantage of certain tax deferrals available to such corporations.
Most of the Company's sales are made from inventory, and accordingly, the
Company has no significant sales backlog. The Company's business, as a whole, is
not subject to marked seasonal fluctuations. However, school supply distributors
generally make the major portion of their purchases from the Company during the
period from April through August of each year in preparation for school openings
in September. Payment for such purchases is customarily not due until September
or October, so that the Company must make short-term borrowings from banks in
order to provide adequate working capital during this period. See "Management's
Discussion and Analysis of the Consolidated Summary of Operations" herein.
PATENTS, TRADEMARKS, ETC.
The Company's business is not presently dependent, to a material extent,
upon any patents, franchises, licenses or concessions. Many of the Company's
products, however, are sold under various brandnames, such as BOSTON(R),
DUOMAT(R), LIT-NING(R), SPEEDBALL(R) and VANGUARD I(R), which are of significant
value to the Company. The Company believes that its rights to its material
brandnames are adequately protected.
RESEARCH AND DEVELOPMENT
During fiscal year 1978, the Company spent approximately $273,000 on
Company-sponsored research and development projects, as opposed to approximately
$230,000 for the previous fiscal year. In both years the Company had four
employees engaged primarily in research and development activities.
RAW MATERIALS AND ENERGY SUPPLIES
From time to time in the past, the Company has experienced some shortages
in, and increased prices for, various raw materials, but so far it has been able
to secure an adequate supply of the necessary materials.
-5-
<PAGE>
The Company is also dependent upon a constant energy supply in its
manufacturing processes and in order to heat and light its various facilities.
over the past several years the company has made significant expenditures in an
attempt to reduce its dependence on those sources of energy which are in
particularly short supply and to provide alternate standby capabilities. As a
result, the Company's operations have not been materially affected by energy
shortages.
It is difficult to predict what effect shortages of raw materials or
continued shortages of natural gas or other energy supplies, and/or increased
costs for same, might have on the Company.
EMPLOYEES
The Company currently has approximately 981 employees.
RELOCATION
The Company announced in January 1979 that its Bienfang Paper Products
operations would be transferred from its Metuchen, New Jersey plant to a
facility in Statesville, North Carolina. This move, which will occur during
fiscal 1979, will enable the Company to consolidate its Art/Craft operation in
Statesville.
-6-
<PAGE>
ITEM 2.
CONSOLIDATED SUMMARY OF OPERATIONS
<TABLE>
<CAPTION>
Fiscal Year
Dec 3, 1978 Nov 27, 1977 Nov 28, 1976 Nov 30, 1975 Dec 1, 1974
(53 Weeks) (52 Weeks) (52 Weeks) (52 Weeks) (52 Weeks)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net sales $43,305,225 $36,152,253 $30,875,336 $21,546,118 $21,729,091
Gross profit 17,503,739 14,912,303 12,834,168 8,701,391 8,462,747
Selling, administrative
and other 12,098,414 10,167,175 8,910,371 5,668,909 5,603,327
Interest expense 343,454 288,946 338,190 83,426 155,938
Income before income taxes 5,061,871 4,456,182 3,585,607 2,949,056 2,70,482
Provision for taxes 2,361,083 2,121,675 1,680,374 1,408,000 1,293,000
Net income 2,700,788 2,334,507 1,905,233 1,541,056 1,410,482
Dividends paid 582,710 463.,543 341,759 295,411 218,322
Per share of common stock*
Net income 1.86 1.61 1.32 1.07 .99
Dividends to stockholders .40 .32 .237 .205 .154
Average shares outstanding* 1,455,836 1,448,185 1,442,966 1,440,266 1,421,089
</TABLE>
* Restated to reflect the five-for-four common stock splits declared in 1979
and 1977.
NOTE: The consolidated summary of operations includes the results of operations
of Lit-Ning Industries and its subsidiary, Lit-Ning Products Company, since
December 1, 1975, the date of its acquisition. Unaudited pro forma combined
net sales and net income of Hunt Manufacturing Co. and subsidiaries and
Lit-Ning for the year ended November 30, 1975 would have been $26,995,000
and $1,630,000 ($1.13 per share), respectively, had the acquisition been
effected as of December 2, 1974.
-7-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE SUMMARY OF OPERATIONS
NET SALES
Consolidated net sales for 1978 increased $7.2 million, or 19.8%, from
1977, with all operating segments reporting increases over the prior year. Of
the total increase in 1978, approximately $3.8 million was in Office Equipment
and Supplies, which were 20.0% ahead of 1977. LIT-NING(R) metal office files,
racks, and desk organizers and BOSTON(R) paper punches and electric pencil
sharpener sales were all up significantly over 1977. Art/Craft products
increased $2.6 million, or 18.6%, over 1977. New acrylic paints introduced in
1978, as well as new lines of paper products, contributed substantially to these
results. Calligraphy products, including OSMIROID(R) pens, SPEEDBALL(R) pens and
inks, and related supplies increased substantially over 1977. Other products
increased $0.7 million, or 24.3%, over 1977.
During 1977, net sales increased $5.3 million, or 17%, over the prior year,
with all operating segments recording increases. Office Equipment and Supplies
increased $3.9 million, or 25.6%, and Art/Craft products increased $0.9 million,
or 6.8%, over 1976. During 1977, weakness in our school markets softened the
Art/Craft products sales growth.
GROSS PROFIT
In 1978, gross profit increased $2.6 million, or 17%, over 1977. Gross
profit as a percentage of net sales was virtually unchanged from 1977. During
1978, sharply higher material cost increases were experienced in addition to
higher labor and energy costs. These cost increases were offset by improved
operating efficiencies resulting from cost savings programs at all plant
locations and price increases.
In 1977, gross profit increased $2.1 million, or 16%, over 1976. Gross
profit was 41% of net sales in 1977, unchanged from 1976.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
These expenses increased $1.8 million, or 17.5%, over 1977. Selling and
shipping expenses generally increased in proportion to net sales increases;
however, administrative expenses increased at a lesser rate.
-8-
<PAGE>
In 1977, selling, general and administrative expenses increased $1.3
million, or 14%, over 1976, but declined as a percentage of net sales from 29$
in 1976 to 28$ in 1977.
INTEREST AND OTHER EXPENSES
interest expense increased $55,000 in 1978, up 18.9 over 1977, as a result
of higher interest rates on short-term seasonal borrowings and the addition of
$1 million of long-term debt to finance the expansion of the Company's facility
in Kentucky. Interest expense decreased $49,000 in 1977, down 15% from 1976, due
to lower average outstanding short-term balances and reduction of long-term
debt.
Other expense was $94,000 in 1978, as compared to other income of $54,000
in 1977. Other expense in 1978 includes the write-off of goodwill and trademarks
on product lines acquired in prior years which no longer have any value to the
Company. In addition, foreign currency exchange losses increased by $88,000 in
1978 over 1977, principally due to losses on conversion of Canadian currency to
U.S. funds.
INCOME TAXES
The effective income tax rate in 1978 decreased to 47% compared to 48% in
1977 due to greater investment tax credits and greater DISC benefits on export
income.
-9-
<PAGE>
ITEM 3 - PROPERTIES
The Company maintains its principal executive offices at 405 Locust Street,
Philadelphia, Pa. 19102 in approximately 12,500 square feet of leased space
under a lease expiring in 1981.
The following table sets forth certain information with respect to the
other facilities of the Company:
<TABLE>
<CAPTION>
Industry Approximate Owned or
Segment Function Location Size Leased
- ------- -------- -------- ---- ------
<S> <C> <C> <C> <C>
Office Equip- Manufacturing Fresno, CA 30,000 sq. ft. Owned
ment & Supplies & Offices 2 Bldgs. on 1 acre
Manufacturing Florence, KY 104,000 sq. ft. (1)
& Offices Bldg.on 27 acres
Art/Craft Manufacturing & Metuchen, NJ 114,000 sq. ft. Leased (2)
Materials Offices (Exp.1983)
Office Equip- Manufacturing Statesville, 125,000 sq. ft. Owned
ment & Supplies & Offices NC Bldg. on 16 acres
and Art/Craft
Materials Warehouse Statesville, 37,000 sq. ft. Leased
NC (Exp.1979)
Warehouse Statesville, 10,000 sq. ft. Leased
NC (Year to Year)
Warehouse Fresno, CA 37,500 sq. ft. Leased
(Exp.1982)
Warehouse Toronto, 11,300 sq. ft. Leased
Canada (Exp.1981)
Regional Office Des Plaines, 610 sq. ft. Leased
IL (Exp.1981)
Other Manufacturing Sarasota, FL 31,000 sq. ft. Owned (3)
& Offices 2 Bldgs. on 1 acre
</TABLE>
- ----------
(1) The construction and expansion of this facility was financed by the
issuance of industrial revenue bonds by the City of Florence, Kentucky. The
City retains title to the property and leases it to the Company for rental
payments equivalent to principal and interest payments on the bonds. The
Company has the option, subject to certain
-10-
<PAGE>
conditions, to extend the term of the leases and to purchase the property.
See Note 10 to Notes to Consolidated Financial Statements herein.
(2) In January 1979, the Company announced its decision to transfer its
Bienfang Paper Products operations from Metuchen, New Jersey to
Statesville, North Carolina as promptly as practicable. The Company has
made arrangements to secure a 170,000 square foot building on approximately
13 acres in the Statesville area to house the Bienfang operations. The
Company has not finally determined whether or not it will retain the
Metuchen facility following the move of the Bienfang operations.
(3) Subject to a mortgage payable until 1991 with a present principal balance
of approximately $167,000.
At present, all of the Company's facilities are believed to be adequately
utilized and suitable for the Company's needs, although future expansion may be
necessary in certain segments of the Company's operations.
Item 4 - PARENTS AND SUBSIDIARIES
(a) PARENTS. George E. Bartol, III, by reason of his ownership of
approximately 22%* of the outstanding Common Shares of the Company and his
position as Chairman of the Board and Chief Executive Officer of the Company,
may be deemed to be a parent of the Company within the meaning of the Securities
Exchange Act of 1934 and the rules and regulations hereunder.
- ----------
* In addition, approximately 30% of the outstanding Common Shares of the
Company are held either in irrevocable trusts set up by Mr. Bartol for the
benefit of his children and grandchildren or are held directly by Mr.
Bartol's four adult daughters.
(b) Subsidiaries.
Percentage
Place of of Voting
Name Incorporation Power
- ---- ------------- -----
Hunt World Trade Corporation Florida 100%
Productos Hunt de Mexico Mexico 49%
-11-
<PAGE>
The financial statements of the Hunt World Trade Corporation, a DISC, are
consolidated with those of the Company, and the Company's investment in Hunt
Productos de Mexico is stated in the Company's financial statements at cost.
Item 5 - PENDING LEGAL PROCEEDINGS
There are no material pending legal proceedings, other than routine
litigation incidental to the business of the Company, to which the company or
any of its subsidiaries is a party or to which any of its or their property is
subject.
Item 6 - INCREASES AND DECREASES IN OUTSTANDING SECURITIES AND INDEBTEDNESS
(a) Equity Securities. Increases and decreases in outstanding equity in
1978 were as follows:
SHARES
------
Balance,
November 27, 1977 1,158,857
Shares issued under:
Management Incentive
Bonus Plan 1,188
Qualified Stock Option Plan 5,375
---------
Balance
December 3, 1978 1,165,420
=========
Reference is made to the Company's Report on Form 10-Q for the first fiscal
quarter of 1978 for further information concerning such transactions.
On January 24, 1979 the Board of Directors on the Company declared a
five-for-four split of the Company's Common Shares, in the form of a 25$ share
distribution, payable February 28, 1979 to shareholders of record on February 7,
1979.
-12-
<PAGE>
(b) INDEBTEDNESS. In December 1977, the Company entered into an agreement
with the city of Florence, Kentucky to finance expansion of the Company's plant
located there through the issuance of $1 million in industrial revenue bonds.
The bonds will be repaid over 15 years at an average interest rate of 6.9%. The
net proceeds of $962,500 were used to add 27,000 square feet to the
manufacturing plant and for the purchase of machinery and equipment for
production expansion and modernization.
During the year, the Company had fluctuating balances on short-term
borrowings (pursuant to its informal lines of credit) from commercial banks. The
Company also decreased the amount of its outstanding long-term indebtedness
through periodic payments made pursuant to the terms of such obligations.
Reference is made to the Company's Reports on Form 10-Q for each of its first
three fiscal quarters of 1978.
Item 7 - CHANGES IN SECURITIES AND CHANGES IN SECURITY FOR REGISTERED SECURITIES
Not applicable.
Item 8 - DEFAULTS UPON SENIOR SECURITIES
Not applicable.
Item 9 - APPROXIMATE NUMBER OF EQUITY SECURITY HOLDERS
Approximate number of record
Title of Class holders as of December 3, 1978
-------------- ------------------------------
Common Shares, par value 823
$.10 per share
Item 10 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Omitted, since reported in the Company's Report on Form 10-K for the
quarter ended May 28, 1978.
-13-
<PAGE>
ITEM 11 - INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 410 of the Pennsylvania Business Corporation Law empowers a
Pennsylvania corporation to indemnify directors, officers and others against
certain liabilities. Article 5 of the Company's By-laws embodies, in substantial
part, the scope of indemnification empowered by that Section.
The Company has also secured and maintains an insurance policy insuring its
directors and officers, subject to certain limitations, against liabilities
which they may incur in their capacities as, or by reason of their being,
directors and officers, including certain liabilities with respect to which such
directors and officers might not be entitled to indemnification by the Company.
This insurance policy also provides for reimbursement of the Company for amounts
paid to directors and officers by way of indemnification. The Company also has
secured and maintains a fiduciary insurance policy insuring its directors,
officers and others against liabilities arising with respect to certain employee
benefit plans.
The following information is furnished in this Report PURSUANT TO
Instruction 4 to Item 3(b) of Regulation S-K
Executive officers of the Registrant
NAME AGE POSITION
- ---- --- --------
GEORGE E. BARTOL, III 57 Chairman of the Board of
Directors and Chief Executive
Officer
CHARLES W. NAYLOR 48 President
ROBERT B. FRITSCH 47 Vice President, Office Products
Division
GEORGE P. JOHNSON 62 Vice President, Manufacturing
RONALD J. NAPLES 33 Vice President, International
RUDOLPH M. PEINS, JR. 48 Vice President, Secretary and
Treasurer
ANDREW J. WANING 60 Vice President, Personnel
Services
DANIEL H. SCHEESER 57 General Manager, Peterson
Division
-14-
<PAGE>
All of the executive officers are members of the Executive Operating
Committee of the Company. The executive officers of the Company are elected
annually by the Board of Directors to serve for a period of one year or until
their successors are elected and qualify. All of the executive officers of the
Company except Messrs. Naples and Scheeser have served in varying capacities
with the Company for over five years.
Mr. Bartol has been Chairman of the Board of the Company for a number of
years. He also served as Chief Executive Officer of the Company for a number of
years until April 1973. From the fall of 1973 through mid-February 1975, Mr.
Bartol served as Executive Deputy Secretary of Commerce of the Commonwealth of
Pennsylvania to which he devoted the major portion of his time. He re-entered
the full-time employment of the Company in 1975 and re-assumed the duties of
Chief Executive Officer on December 1, 1975. In June 1976 he also re-assumed the
office of President, which he held until November 30, 1977 when Mr. Naylor
became President. Mr. Naylor had previously been in charge of the Company's
Peterson Division for eight years.
Prior to his coming to the Company in July 1976, Mr. Naples had served as
Executive Director of The Presidential Task Force on Power Plant Acceleration
(1975-1976) and Special Assistant to the Administrator of the Federal Energy
Administration (1974-1975). Before that he attended the Harvard Graduate School
of Business (from which he received an M.B.A. Degree in 1974) and was employed
briefly by Loeb, Rhoades & Co., investment bankers (1973), where he served as an
Associate in Corporate Finance.
Mr. Scheeser came to the Company in 1977 from GTE Sylvania where he had
served as plant manager for more than ten years.
- 15 -
<PAGE>
Item 13 - FINANCIAL STATEMENTS, EXHIBITS FILED, AND REPORTS ON FORM 8-K
PAGES
(a) Financial Statements and Schedules:
Report of Independent Certified Public Accountants F-1
Financial Statements:
Consolidated Balance Sheets,
December 3, 1978 and November 27, 1977 F-2
Consolidated Statements of Income and
Retained Earnings for the years ended
December 3, 1978 and November 27, 1977 F-3
Consolidated Statements of Changes in
Financial Position for the years ended
December 3, 1978 and November 27, 1977 F-4
Notes to Consolidated Financial Statements F-5 - F-17
Schedules:
II. Amounts Receivable from Underwriters, Promoters, Directors, Officers,
Employees and Principal Holders (Other than Affiliates) of Equity
Securities of the Person and its Affiliates for the years ended
December 3, 1978 and November 27, 1977 F-18
V. Property, Plant and Equipment for the years ended December 3, 1978
and November 27, 1977 F-19
VI. Accumulated Depreciation and Amortization of Property,
Plant and Equipment for the years ended December 3, 1978
and November 27, 1977 F-20
VII. Intangible Assets, Preoperating Expenses and Similar
Deferrals for the years ended December 3, 1978
and November 27, 1977 F-21
-16-
<PAGE>
Schedules, continued: Pages
- --------------------- -----
XII. Valuation and Qualifying Accounts and Reserves for the years
ended December 3, 1978 and November 27, 1977 F-22
XVI. Supplementary Income Statement Information for the years ended
December 3, 1978 and November 27, 1977 F-23
All other schedules not listed above have been omitted since they are not
applicable or not required or because the required information is included in
the consolidated financial statements or notes thereto.
Individual financial statements of the Company have been omitted since the
Company is primarily an operating company and all subsidiary companies included
in the consolidated financial statements are wholly-owned and are not indebted
to any person, other than the parent or the consolidated subsidiaries, in an
amount which is material in relation to total consolidated assets at the date of
the latest balance sheet filed, except indebtedness incurred in the ordinary
course of business which is not overdue and which matures in one year.
(b) EXHIBITS
1. Non-Qualified Stock Option Plan of the Company.
2. Computation of fully-diluted per share earnings (pursuant to
Instruction 3 of Item 2).
3. Letter dated January 24, 1979 from Coopers & Lybrand concerning the
Company's change in accounting principles from FIFO to LIFO.
Miscellaneous long-term debt instruments of the Company under each of which
the underlying debt is equal to less than 5% of the total assets of the Company
are not filed as exhibits. The Company agrees to furnish to the Securities and
Exchange Commission, upon request, copies of any such instruments.
-17-
<PAGE>
(c) Form 8-K Reports
The Company did not file any Reports on Form 8-K during or with
respect to its last fiscal quarter of 1978.
-18-
<PAGE>
Part II of this Report is omitted, since the company intends to file with
the Securities and Exchange Commission a definitive proxy statement, pursuant to
Regulation 14A under the Securities Exchange Act of 1934, involving the election
of directors, not later than 120 days after the end of its 1978 fiscal year.
SIGNATURE
Pursuant to the requirements of Section 13 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.
By /s/ RUDOLPH M. PEINS, JR.
-----------------------------
Rudolph M. Peins, Jr.
Vice President
Dated: February 28, 1979
-19-
<PAGE>
Financial Statements
to
Form 10-K
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of
Hunt Manufacturing Co.:
We have examined the consolidated balance sheets of Hunt Manufacturing Co.
and subsidiaries at December 3, 1978 and November 27, 1977, and the related
consolidated statements of income and retained earnings and changes in financial
position for the years then ended, and the related supporting schedules. Our
examinations were made in accordance with generally accepted auditing standards
and, accordingly, included such tests of the accounting records and such other
auditing procedures as we considered necessary in the circumstances.
In our opinion, the financial statements referred to above (pages F-2 to
F-17, inclusive) present fairly the consolidated financial position of Hunt
Manufacturing Co. and subsidiaries at December 3, 1978 and November 27, 1977,
and the consolidated results of their operations and changes in financial
position for the years then ended, and the supporting schedules (pages F-18 to
F-23, inclusive) present fairly the information required to be included therein,
all in conformity with generally accepted accounting principles applied on a
consistent basis except for the change, with which we concur, in the method of
inventory valuation as described in Note 2 to the consolidated financial
statements.
COOPERS & LYBRAND
1900 Three Girard Plaza
Philadelphia, Pennsylvania
January 24, 1979
F-1
<PAGE>
HUNT MANUFACTURING CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 3, 1978 and November 27, 1977
1978 1977
---- ----
ASSETS
Current assets:
Cash $ 234,393 $ 392,831
Accounts receivable, less allowance for
doubtful accounts: 1978, $161,000;
1977, $131,000 (Schedule XII) 8,263,231 6,373,722
Inventories (Notes 1 and 2):
Finished and partly finished products 4,364,094 4,071,218
Raw materials and supplies 2,654,883 2,047,731
Prepaid expenses 184,622 187,253
----------- -----------
Total current assets 15,701,226 13,072,755
Property, plant and equipment, at
cost, less accumulated depreciation
(Notes 1, 3 and 10)
(Schedules V and VI) 7,609,413 6,200,078
Intangible assets, at cost, less
amortization (Notes 1 and 4)
(Schedule VII) 561,224 661,982
Loans to officers, collateralized by
cash value of life insurance
(Schedule II) 77,646 75,663
Other assets 125,541 91,889
----------- -----------
$24,075,050 $20,102,367
=========== ===========
See accompanying notes to consolidated financial statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES
1978 1977
---- ----
<S> <C> <C>
Current liabilities:
Demand notes payable, bank (Note 5) $ 400,000 $ --
Current portion of long-term debt (Note 5) 372,742 418,987
Accounts payable 1,747,167 1,210,152
Accrued liabilities:
Salaries, wages and commissions 1,183,396 1,060,291
Pensions (Notes 1 and 7) 295,693 236,398
Income taxes 628,811 556,042
Other 399,780 544,199
----------- -----------
Total current liabilities 5,027,589 4,026,069
----------- -----------
Long-term debt, less current portion (Note 5) 2,818,009 2,223,566
----------- -----------
Deferred income taxes (Notes 1 and 6) 583,200 411,300
----------- -----------
Commitments (Note 10)
STOCKHOLDERS' EQUITY
(Notes 8, 9 and 14)
Capital stock:
Preferred, $.10 par value, authorized
1,000,000 shares; none issued -- --
Common, $.10 par value, authorized
3,000,000 shares; issued 1978 - 1,165,420
shares, 1977 - 1,158,857 shares 116,542 115,886
Capital in excess of par value 359,391 273,305
Retained earnings 15,170,319 13,052,241
----------- -----------
Total stockholders' equity 15,646,252 13,441,432
----------- -----------
$24,075,050 $20,102,367
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-2
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
for the years ended December 3, 1978 and November 27, 1977
1978 1977
---- ----
(53 Weeks) (52 Weeks)
Net sales $43,305,225 $36,152,253
Cost of sales 25,801,486 21,239,950
----------- -----------
Gross profit 17,503,739 14,912,303
----------- -----------
Selling and shipping expenses 8,890,242 7,439,738
Administrative and general expenses 3,114,490 2,781,344
----------- -----------
12,004,732 10,221,082
----------- -----------
Income from operations 5,499,007 4,691,221
Interest expense (343,454) (288,946)
Other (expense) income, net (93,682) 53,907
----------- -----------
Income before income taxes 5,061,871 4,456,182
Provision for income taxes (Notes 1 and 6) 2,361,083 2,121,675
----------- -----------
Net income 2,700,788 2,334,507
Retained earnings, beginning of year 13,052,241 11,181,277
----------- -----------
15,753,029 13,515,784
Less cash dividends on common stock:
1978, $.40 per share; 1977, $.32
per share* 582,710 463,543
----------- -----------
Retained earnings, end of year $15,170,319 13,052,241
=========== ===========
Average shares of
common stock outstanding* 1,455,836 1,448,185
=========== ===========
Earnings per common share* $ 1.86 $ 1.61
=========== ===========
* Restated to reflect the five-for-four stock split declared in 1979.
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
for the years ended December 3, 1978 and November 27, 1977
<TABLE>
<CAPTION>
1978 1977
---- ----
(53 Weeks) (52 Weeks)
<S> <C> <C>
Working capital provided from:
Net income $ 2,700,788 $ 2,334,507
Items not affecting working capital:
Depreciation and amortization 745,540 630,471
Deferred income taxes 171,900 208,100
Disposals of plant and equipment 34,264 40,251
----------- -----------
Provided from operations 3,652,492 3,213,329
Additions to long-term debt 1,012,650 --
Proceeds from exercise of stock option
and bonus plans 86,742 33,540
Other, net 16,935 15,202
----------- -----------
4,768,819 3,262,071
----------- -----------
Working capital used for:
Additions to property, plant
and equipment 2,140,951 1,295,354
Additions to intangible assets -- 2,013
Cash dividends 582,710 463,543
Cash for fractional shares for stock split -- 1,107
Repayments and current maturities
of long-term debt 418,207 502,964
----------- -----------
3,141,868 2,264,981
----------- -----------
Increase in working capital $ 1,626,951 $ 997,090
=========== ===========
Changes in components of working capital:
Cash (158,438) 122,894
Accounts receivable 1,889,512 942,787
Inventories 900,028 342,956
Prepaid expenses (2,631) 102,411
Notes payable and current
portion of long-term debt (353,755) 93,077
Accounts payable (537,015) (53,219)
Accrued expenses (110,750) (367,662)
----------- -----------
Increase in working capital $ 1,626,951 $ 997,090
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF CONSOLIDATION:
The consolidated financial statements include the accounts of the company and
its subsidiaries, all of which are wholly-owned.
FISCAL YEAR:
The company's fiscal year ended on the Sunday nearest the end of November.
Fiscal year 1978 ended December 3, 1978; fiscal year 1977 ended November 27,
1977. Fiscal year 1978 comprised fifty-three weeks; fiscal year 1977 comprised
fifty-two weeks.
INVENTORIES:
Inventories are valued at the lower of cost or market. During 1978, the company
adopted the last-in, first-out (LIFO) method of determining cost for
substantially all inventories (Note 2). Previously, cost was determined by the
first-in, first-out (FIFO) method.
PROPERTY, PLANT AND EQUIPMENT:
All expenditures for additions and improvements to property, plant and equipment
are capitalized and normal repairs and maintenance are charged to expense as
incurred. The related cost and accumulated depreciation of depreciable assets
disposed of are eliminated from the related accounts and any profit or loss is
reflected in income.
DEPRECIATION AND AMORTIZATION:
Depreciation for financial reporting purposes for the majority of assets is
computed by the straight-line method. Depreciation FOR TAX PURPOSES is computed
using accelerated methods. Intangible assets are amortized on a straight-line
basis over the assets' useful lives. Amortization of assets under capital leases
which contain purchase options is provided over the assets' useful lives. Other
capital leases are amortized over the terms of the related leases or asset
lives, if shorter.
The estimated lives of the assets are as follows:
Factory buildings and components, 8 to 40 years
Machinery and equipment, 10 to 12 years
Autos and trucks, 4 to 6 years
Tools and dies, 6 years
Leasehold improvements, term of lease
Continued
F-5
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued:
INCOME TAXES:
Investment tax credits are accounted for using the flow-through method, whereby
provisions for current income taxes are reduced by available credits. Federal
income taxes have not been provided for the undistributed earnings of the
company's domestic international sales corporation (DISC) since the company
intends to permanently reinvest such earnings. If provided, the federal income
tax on these earnings would have been insignificant.
PENSIONS:
The majority of the employees of the company and its subsidiaries are covered
under noncontributory pension plans. Pension costs under these plans are
computed on the basis of accepted actuarial methods and include current service
costs and amortization of prior service costs over approximately 30 years. The
policy is to fund pension costs accrued.
EARNINGS PER SHARE:
Earnings per share are calculated based on the weighted average number of common
shares outstanding restated to reflect the five-for-four stock split declared in
1979. The effect of the outstanding stock options is not material and has not
been included in the calculation.
FOREIGN EXCHANGE:
Other expense and income includes foreign currency losses of $148,000 and
$60,000 in 1978 and 1977, respectively.
2. INVENTORIES:
Effective with the year ended December 3, 1978, the company adopted the last-in,
first-out (LIFO) method of determining cost for substantially all of its
inventories. This change was made because management believes that the LIFO
method (which generally matches current costs with current revenues) has the
effect of minimizing the impact of price level changes on inventory valuations.
The effect of the change was to reduce inventories by $343,060 and net income by
$16,100 ($.12 per share) from that which would otherwise have been reported.
There is no cumulative effect of the change on prior years since the inventory
at November 27, 1977 is the beginning inventory for LIFO purposes.
Continued
F-6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
2. INVENTORIES, continued:
The amounts of inventories used in the determination of cost of sales for
the fiscal years ended in 1978 and 1977 were as follows:
November 28, 1976 $5,775,993
November 27, 1977 6,118,949
December 3, 1978 7,018,977
3. PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment at the end of each fiscal year is as follows:
1978 1977
---- ----
Land and land improvements $ 258,201 $ 258,201
Buildings 3,669,351 3,181,265
Machinery and equipment 8,408,480 7,001,250
Leasehold improvements 101,838 100,603
Construction in process 622,900 517,992
----------- -----------
13,060,770 11,059,311
Less accumulated depreciation 5,451,357 4,859,233
----------- -----------
$ 7,609,413 $ 6,200,078
=========== ===========
4. INTANGIBLE ASSETS:
Intangible assets (at cost less amortization) at the end of each fiscal
year are as follows:
1978 1977
---- ----
Patents and patent applications $113,243 $135,007
Trademarks, tradenames, etc. 76,262 115,183
Leasehold equity 156,153 172,410
Cost incurred in excess of net assets purchased 215,566 239,382
-------- --------
$561,224 $661,982
======== ========
Leasehold equity is the portion of the purchase price of an acquired
business assigned to a favorable lease commitment.
Continued
F-7
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
5. DEBT:
SHORT-TERM NOTES PAYABLE, BANKS:
The company has several informal lines of credit with various banks under which
it may borrow, at the prime rate of interest, amounts well in excess of its
seasonal short-term needs. There are no compensating balance requirements or
restrictions associated with these arrangements.
The average outstanding short-term borrowings during 1978 and 1977 were
$1,059,000 and $1,0143,000 at an average interest rate of 8.9% and 6.9%,
respectively. The averages were computed using the daily loan balance: and the
annual interest expense. The maximum amounts of short-term borrowings at any
month-end during 1978 and 1977 were $3,300,000 and $2,573,000, respectively.
LONG-TERM:
Long-term debt at the end of each fiscal year is summarized as follows:
1978 1977
---- ----
Term notes payable to banks $ 163,361 $ 228,701
Capitalized lease obligation (see Note 10) 1,769,424 848,750
Mortgage note, interest at 2,013 payable monthly,
including interest until 1991 167,516 174,649
Notes to former shareholders of acquired company 1,090,450 1,390,450
3,190,751 2,642,553
Less current portion 372,742 418,987
$2,818,009 $2,223,566
As of December 3, 1978, the term notes payable to banks consist of
$90,000 note payable in quarterly installments of $15,000 to March 31, 190 plus
interest at 1/2% above the prime commercial bank rates. $73,361 note pay able in
monthly installments of $985 to September 1, 1937 including interest at 8-1/2%.
Continued
F-8
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
5. DEBT, continued:
LONG-TERM, continued:
The notes to former shareholders of the acquired company are pay able in
semiannual installments of $100,000 through June 1980 and $790,450 in December
1980, plus interest at 7%. The notes are collateralized by irrevocable letters
of credit equal to the unpaid principal balance.
The capitalized lease obligations and the mortgage note are collateralized by
certain property, plant and equipment.
Aggregate annual maturities for all long-term debt, including the capitalized
leases, for each of the four fiscal years subsequent to December 2, 1979 are as
follows:
1980 $249,000
1981 922,000
1982 143,000
1983 143,000
6. INCOME TAXES:
The provision for income taxes consists of the following:
1978 1977
---- ----
Currently payable:
Federal $1,956,552 $1,652,000
State and foreign 232,631 261,575
---------- ----------
2,189,183 1,913,575
Deferred 171,900 208,100
---------- ----------
$2,361,083 2,121,675
========== ==========
Deferred income taxes, resulting from timing differences between amounts
reported for financial accounting and income tax purposes, relate principally to
depreciation.
The amount of investment tax credit used in the determination of federal income
tax expense for 1978 and 1977 is $134,000 and $99,000, respectively.
Continued
F-9
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
6. INCOME TAXES, CONTINUED:
The following is a reconciliation of the statutory federal income tax rate with
the company's effective income tax rate.
1978 1977
---- ----
Statutory federal rate 48.0% 48.0%
State income taxes, net of federal tax benefit 2.6 2.8
Investment tax credits (2.6) (2.2)
Other, net (1.4) (1.0)
---- ----
Effective tax rate 46.6% 47.6%
==== ====
7. PENSION PLANS:
Total pension expense was $314,313 in 1978 and $248,476 in 1977. the increase in
pension expense results principally from a change in the actuarial assumptions
relating to future compensation levels and increased benefits. As of September
30, 1978, the date of the latest actuarial valuation, unfunded prior service
liabilities at the latest valuation date approximated $245,000.
8. STOCK OPTIONS AND BONUS PLAN:
Under the company's qualified stock option plan, officers and key employees of
the company and its subsidiaries were granted options to purchase shares of the
company's common stock at not less than the fair market value at date of grant.
As of December 3, 1978, no further options may be granted and options
outstanding are exercisable from one to five years following the date of grant.
A summary of shares under option pursuant to the plan, with shares, option
prices and market values, is as follows:
CONTINUED
F-10
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
8. STOCK OPTIONS AND BONUS PLAN, continued:
<TABLE>
<CAPTION>
Option Price Market Value
Number ------------ ------------
of Per Per
Shares* Share* Total Share* Total
------- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C>
Shares under option:
November 27, 1977:
Fiscal year granted:
1973(b) 5,937 $11.283 $66,994 $11.283(a) $66,994
1975(b) 3,125 4.88 15,250 4.88(a) 15,250
----- ------- -------
9,062 $82,244 $82,244
===== ======= =======
December 3, 1978:
Fiscal year granted:
1975(b) 1,562 $ 4.88 7,625 $ 4.88(a) 7,625
----- ------- -------
1,562 $ 7,625 $ 7,625
===== ======= =======
Options exercised:
Fiscal year:
1977 4,687 $ 7.155 $33,540 $ 8.64(c) $40,500
===== ======= =======
1978 6,719 4.88 65,804 13.00 88,194
===== to ======= to =======
11.283 13.16(c)
</TABLE>
* Restated to reflect the five-for-four stock split declared in 1979.
(a) At the dates options were granted.
(b) Options expire five years from dated granted.
(c) At the dates options were exercised.
Options for 781 shares, at an option price of $11.28 per share, expired during
1978 and none expired in 1977. No options became exercisable during 1978 and
1977.
Shares under option at December 3, 1978 consist of 9,062 shares currently
exercisable. When options are exercised, the excess of the option price received
over the par value of the common shares issued will be credited to capital in
excess of par value of stock. No charges have been made to income with respect
to stock options.
Continued
F-11
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
8. STOCK OPTIONS AND BONUS PLAN, continued:
The company has a management incentive bonus plan for key management employees.
Under the plan, key employees may be granted an annual cash bonus up to 50% of
the individual's annual base salary. The aggregate bonuses for the management
group cannot exceed 30% of the total annual base salaries of those persons
eligible to participate in the plan. An individual may elect to receive up to
40% of his bonus in the company's common stock, in which case the bonus will be
increased up to 20%. Shares to be issued for fiscal 1978 will be 4,536. The
charges to income under the plan in 1978 and 1977 were $133,535 and $75,537,
respectively.
The Board of Directors adopted a non-qualified stock option plan during 1978
under which options for 2,500 shares may be granted to key employees. Under the
plan the option price is to be not less than 759 of the fair market value of the
shares at the date granted. No options have been granted as of December 3, 1978.
9. COMMON STOCK AND CAPITAL IN EXCESS OF PAR VALUE:
Changes in common stock and capital in excess of par value are as follows:
Capital
Common in Excess
Shares Stock Par Value
------ ----- ---------
Balance, November 27, 1977 1,158,857 $115,886 $273,305
Shares issued under:
Management incentive bonus plan 1,188 119 20,820
Stock option plan 5,375 537 65,266
--------- -------- --------
Balance, December 3, 1978 1,165,420 $116,542 $359,391
========= ======== ========
Continued
F-12
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
10. LEASES:
Capitalized lease obligations (see Note 5) represent amounts payable under
leases which are in substance installment purchases. The leases provide for
rental payments equivalent to principal and interest payments on the debt
obligations of the lessors. Property, plant and equipment includes the following
assets under capital leases:
1978 1977
---- ----
Land $ 162,000 $ 162,000
Building 1,298,600 838,000
Machinery and equipment 481,100 --
Accumulated depreciation (93,000) (42,000)
----------- -----------
$ 1,848,700 $ 958,000
=========== ===========
The company has the option to purchase the above assets any time during the term
of the leases for amounts sufficient to redeem and retire all outstanding lessor
debt obligations plus $12,400.
The minimum rental commitments under all noncancelable leases as of December 3,
1978 are as follows:
Operating Capitalized
Fiscal Period Leases Leases
------------- ------ ------
1979 $ 426,000 $ 213,000
1980 275,000 215,000
1981 233,000 21,000
1982 116,000 21,000
1983 17,000 211,000
1983-1992 -- 1,580,000
---------- ---------
Minimum lease payments $1,067,000 2,654,000
Less interest ========== (885,000)
---------
Present value of minimum lease payments 1,769,000
=========
Rent expense, including related real estate taxes and insurance charged to
operations, amounted to $814,939 and $741,022 for 1978 and 1977, respectively.
Continued
F-13
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
11. RESEARCH AND DEVELOPMENT:
Research and development expenses were approximately $273,000 and $230,000 in
1976 and 1977, respectively.
12. QUARTERLY FINANCIAL DATA (UNAUDITED):
Results of operations for each of the quarters during fiscal 1978 and 1977 are
as follows (in thousands except per share data):
1978
--------------------------------------------
First Second Third Fourth Total
----- ------ ----- ------ -----
Net sales $8,376 $11,237 $11,856 $11,836 $43,305
Gross profit (as reported 3,426 4,530 4,933 - -
Gross profit (as restated) 3,360 4,441 4,839 4,864 17,504
Net income (as reported) 442 754 852 - -
Net income (as restated) 410 710 806 775 2,701
Net income per share (as reported) .30 .52 .58 - -
Net income per share (as restated) .28 .49 .55 .54 1.86
1977
--------------------------------------------
First Second Third Fourth Total
----- ------ ----- ------ -----
Net sales $7,721 $ 9,614 $9,403 $ 9,414 $36,152
Gross profit 3,035 3,909 3,930 4,038 14,912
Net income 406 626 674 628 2,334
Net income per share .28 .43 .47 .43 1.61
Continued
F-14
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
12. QUARTERLY FINANCIAL DATA (UNAUDITED), CONTINUED:
Quarterly results for the first three quarters in fiscal 1978 have been restated
to give effect to the change in the company's method of valuing inventory to the
LIFO method (Note 2). All per share data has been restated to reflect the
five-for-four stock split declared in 1979.
The fiscal quarters of the company contain 13 weeks except the third quarter of
1978 which contains 14 weeks.
13. INDUSTRY SEGMENT INFORMATION (IN THOUSANDS OF DOLLARS):
The company operates principally in two industries, (1) Office Equipment and
Supplies and (2) Art/Craft Products. The company and its subsidiaries are
primarily engaged in the manufacture of such products for the business,
education and hobby markets. The company also manufactures a variety of metal
component parts used by other manufacturers in several different industries.
Export sales aggregating $4,065 and $3,276 in 1978 and 1977, respectively, were
made to customers in various countries.
Identifiable assets are assets used in the operations of each business segment.
Corporate assets include cash and miscellaneous other assets not identifiable
with any particular segment.
Operating profits include all revenues and expenses of the reportable segment,
except for general corporate expenses, interest expense, other income (expense)
and income taxes.
The effect of changing to the LIFO method of valuing inventories reduced the
1978 operating profit of Office Equipment and Supplies, Art/Craft Products and
Other by $167, $141 and $35, respectively.
Continued
F-15
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
13. INDUSTRY SEGMENT INFORMATION (IN THOUSANDS OF DOLLARS), continued:
<TABLE>
<CAPTION>
Office
Year Ended Equipment Art/Craft Corp.
1978 and Supplies Products Other Assets Consolidated
---- ------------ -------- ----- ------ ------------
<S> <C> <C> <C> <C> <C>
Net sales $22,916 $16,676 $3,713 $43,305
======= ======= ====== =======
Operating profit $ 4,082 $ 1,456 $ 784 6,322
======= ======= ======
General corporate (823)
Interest expense (343)
Other expense (94)
-------
Income before
income taxes $ 5,062
Identifiable assets $13,097 $ 8,044 $2,437 $497 $24,075
======= ======= ====== ==== =======
Capital additions $ 1,708 $ 130 $ 277 $ 26 $ 2,141
======= ======= ====== ==== =======
Depreciation
and amortization $ 432 $ 175 $ 126 $ 13 $ 746
======= ======= ====== ==== =======
Year Ended
1977
----
Net sales $19,103 $14,063 $2,986 $36,152
======= ======= ====== =======
Operating profit $ 3,690 $ 1,294 $ 532 5,516
======= ======= ====== =======
General corporate (825)
Interest expense (289)
Other income 54
-------
Income before
income taxes $ 4,456
=======
Identifiable assets $ 9,963 $ 7,303 $2,147 $689 20,102
======= ======= ====== ==== =======
Capital additions $ 769 $ 223 $ 257 $ 46 1,295
======= ======= ====== ==== =======
Depreciation
and amortization $ 359 $ 166 $ 95 $ 10 $ 630
======= ======= ====== ==== =======
</TABLE>
Continued
F-16
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
14. SUBSEQUENT EVENTS:
On January 24, 1979, subsequent to the company reporting its earnings for the
year ended December 3, 1978, the Board of Directors declared a five-for-four
common stock split to be made on February 28, 1979 to stockholders of record
February 7, 1979. This stock split will result in the issuance of a maximum of
291,355 additional shares of common stock, par value $.10 per share (fractional
shares will be paid in cash) and will be accounted for by the transfer of
approximately $29,136 to the common stock capital account from capital in excess
of par value.
All per share computations in these statements and the stock option data in note
8 have been restated to reflect this split.
The company announced on January 16, 1979 that its Bienfang Paper Products
operation would be transferred from its Metuchen, New Jersey plant to a facility
in Statesville, North Carolina. This move, which will occur during fiscal 1979,
will enable the company to consolidate its Art/Craft operations.
F-17
<PAGE>
SCHEDULE II. AMOUNTS RECEIVABLE FROM UNDERWRITERS, PROMOTERS, DIRECTORS,
OFFICERS, EMPLOYEES AND PRINCIPAL HOLDERS (Other Than Affiliates) OF
EQUITY SECURITIES OF THE PERSON AND ITS AFFILIATES
Column A Column B Column C Column E
- -------- -------- -------- --------
Balance Balance
Receivable Receivable
at at Close
Beginning of Period,
Name of Debtor of Period Additions Not Current
- -------------- --------- --------- -----------
Year ended November 27, 1977:
George E. Bartol, III $34,915 $ 952 $35,867
George P. Johnson 38,861 935 39,796
------- ------ -------
$73,776 $1,887 $7,663
======= ====== =======
Year ended December 3, 1978:
George E. Bartol, III 35,867 889 36,756
George P. Johnson 39,796 1,094 40,890
------- ------ -------
$75,663 $1,983 $77,646
======= ====== =======
F-18
<PAGE>
SCHEDULE V. PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column F
-------- -------- -------- -------- --------
Balance at Balance at
Beginning Additions End
Classification of Period at Cost Retirements of Period
-------------- --------- ------- ----------- ---------
Year ended November 27, 1977:
<S> <C> <C> <C> <C>
Land and land improvements $ 278,601 -- $ 20,400 $ 258,201
Buildings 2,782,750 $ 404,213 5,698 3,181,265
Machinery and equipment 6,085,642 964,806 49,198 7,001,250
Leasehold improvements 97,415 3,188 -- 100,603
Construction in process 594,845 (76,853)(A) -- 517,992
----------- ----------- -------- -----------
$ 9,839,253 $ 1,295,354 $ 75,296 $ll,059,311
=========== =========== ======== ===========
Year ended December 3, 1978:
Land and land improvements 258,201 -- -- 258,201
Buildings 3,181,265 488,086 -- 3,669,351
Machinery and equipment 7,001,250 1,544,163(B) 136,933 8,408,480
Leasehold improvements 100,603 3,794 2,559 101,838
Construction in process 517,992 104,908(A) -- 622,900
----------- ----------- -------- -----------
$11,059,311 $ 2,140,951 $139,492 $13,060,770
=========== =========== ======== ===========
</TABLE>
(A) Represents net increase (decrease) for the year.
(B) Principally additions in Office Equipment and Supplies segment during 1978.
F-19
<PAGE>
SCHEDULE VI. ACCUMULATED DEPRECIATION AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Additions,
Balance at Charged Balance at
Beginning to Costs End
Description of Period and Expenses Retirements of Period
----------- --------- ------------ ----------- ---------
<S> <C> <C> <C> <C>
Year ended November 27, 1977:
Land improvements $ 4,111 $ 1,642 -- $ 5,753
Buildings 908,413 98,388 $ 2,704 1,004,097
Machinery and equipment 3,355,266 473,481 32,341 3,796,406
Leasehold improvements 47,468 5,509 -- 52,977
---------- -------- -------- ----------
$4,315,258 $579,020 $ 35,045 $4,859,233
========== ======== ======== ==========
Year ended December 3, 1978:
Land improvements 5,753 1,643 -- 7,396
Buildings 1,004,097 108,194 -- 1,112,291
Machinery and equipment 3,796,406 582,039 102,669 4,275,776
Leasehold improvements 52,977 5,476 2,559 55,894
---------- -------- -------- ----------
$4,859,233 $697,352 $105,228 $5,451,357
========== ======== ======== ==========
</TABLE>
F-20
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE VII. INTANGIBLE ASSETS, PREOPERATING EXPENSES, AND SIMILAR DEFERRALS
Column A Column B Column C Column D Column E Column F
- -------- -------- -------- -------- -------- --------
Deductions,
Balance at Charged to Other Balance at
Beginning Additions Costs and Charges Close of
Description of Period at Cost Expenses Add (Deduct) Period
- ----------- --------- ------- -------- ------------ ------
Intangible Assets
Year ended November 27, 1977:
<S> <C> <C> <C> <C> <C>
Patents and patent applications $ 160,021 -- $ 25,014 -- $ 135,007
Trademarks, trade names, etc 116,092 $ 2,013 2,922 -- 115,183
Leasehold equity 188,667 -- 16,257 -- 172,410
Cost incurred in excess of
net assets purchased 246,640 -- 7,258 -- 239,382
--------- --------- --------- ---------
711,420 $ 2,013 $ 51,451(A) -- $ 661,982
========= ========= ========= ========= =========
Year ended December 3, 1978:
Patents and patent applications 135,007 -- 21,764 -- 113,243
Trademarks, trade names, etc 115,183 -- 2,922 $ (35,999) 76,262
Leasehold equity 172,410 -- 16,257 -- 156,153
Cost incurred in excess of
net assets purchased 239,382 -- 7,245 (16,571) 215,566
--------- --------- --------- ---------
$ 661,982 -- $ 48,188(A) $ (52,570)(B) $ 561,224
========= ========= ========= =========
</TABLE>
(A) Amortization credited to intangible assets.
(B) Write-off of goodwill and trademarks which no longer have value.
F-21
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE XII. VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
Column A Column B Column C Column D Column E
- -------- -------- -------- -------- --------
Additions
--------------------------
Balance at Charged to Charged to Balance at
Beginning Cost and Other End of
Description of Period Expenses Accounts Deductions Period
- ----------- --------- -------- -------- ---------- ------
<S> <C> <C> <C> <C> <C>
Year ended November 27, 1977:
Doubtful accounts (deducted
from assets) $120,000 $ 88,000 $7,000(1) $84,000(2) $131,000
======== ======== ======== ========= ========
Year ended December 3, 1978:
Doubtful accounts (deducted
from assets) $131,000 $105,000 $2,000(1) $77,000(2) $161,000
======== ======== ======== ========= ========
</TABLE>
(1) Recoveries of accounts previously written off.
(2) Doubtful accounts written off, net of collection expenses.
F-22
<PAGE>
SCHEDULE XVI. SUPPLEMENTARY INCOME STATEMENT INFORMATION
Column A Column B
-------- --------
CHARGED TO COSTS AND EXPENSES
-----------------------------
ITEM 1977 1978
---- ---- ----
Depreciation of property,
plant and equipment $ 579,020 $ 697,352
========== ==========
Taxes, other than income taxes:
Payroll taxes $ 516,991 $ 612,549
========== ==========
City, county and state taxes $ 384,850 $ 560,927
========== ==========
Rents $ 741,022 $ 814,939
========== ==========
Advertising costs $ 880,616 $1,272,679
========== ==========
F-23
<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For Quarter Ended March 4, 1979 COMMISSION FILE NO. 0-6085
HUNT MANUFACTURING C0.
------------------------------------------------------
(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.)
1405 Locust Street, Philadelphia, PA 19102
- ------------------------------------ -----
(Address of principle executive offices) (Zip Code)
Registrant's telephone number, including area code (215) 735-7695
NOT APPLICABLE
--------------
Former name, former address and former fiscal year,
if changed since last report
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
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the period covered by this report.
1,461,777 Common Shares, par value $.10 per share.
B-1
<PAGE>
HUNT MANUFACTURING C0.
INDEX
PAGE NO.
-------
Part I Financial Information:
Consolidated Condensed Balance Sheet
March 4, 1979 and February 26, 1978 3
Consolidated Condensed Statement of Income 4
Three Months Ended March 4, 1979 and
February 26, 1978
Consolidated Condensed Statement of Changes 5
in Financial Position
Three Months Ended March 4, 1979
and February 26, 1978
Notes to Consolidated Condensed Financial 6
Statements
Management's Discussion and Analysis of the 7 & 8
Consolidated Condensed Statement of Income
Part II Other Information 9 & 10
B-2
<PAGE>
HUNT MANUFACTURING C0.
CONSOLIDATED CONDENSED BALANCE SHEET
MARCH 4, 1979 AND FEBRUARY 26, 1978
UNAUDITED
(DOLLARS IN THOUSANDS)
ASSETS 1979 1978
------ ---- ----
Current assets
Cash $ 355 $ 239
Marketable securities - 748
Accounts receivable, net 7,968 6,174
Inventories
Raw materials 2,866 1,989
Work-in-process 2,083 1,601
Finished goods 2,870 2,939
------- -------
Total inventories 7,819 6,529
Prepaid expenses 246 183
------- -------
Total current assets 16,388 13,873
Property, plant and equipment, net 7,644 6,237
Intangible assets 550 647
Loans to officers 78 76
Other assets 117 138
------- -------
Total Assets $24,777 $20,971
======= =======
LIABILITIES and STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt 373 361
Accounts payable 2,011 1,050
Accrued liabilities:
Salaries, wages and commissions 815 719
Pensions 378 283
Income taxes 710 634
Other 1,106 567
------- -------
Total current liabilities 5,393 3,614
Long-term debt less current portion 2,781 3,153
Deferred income taxes 618 411
Stockholders' equity
Capital stock:
Common, $.10 par value, authorized
3,000,000 shares; issued
1,461,777 - 1979; 1,456,775 - 1978 146 117
Capital in excess of par value of stock 389 359
Retained earnings 15,450 13,317
------- -------
Total stockholders' equity 15,985 13,793
------- -------
Total liabilities and equity $24,777 $20,971
======= =======
See accompanying notes to consolidated condensed financial statements.
B-3
<PAGE>
HUNT MANUFACTURING C0.
CONSOLIDATED CONDENSED STATEMENT OF INCOME
THE 3 MONTHS ENDED MARCH 4, 1979 AND FEBRUARY 26, 1978
UNAUDITED
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
Three Months Ending
March 4, 1979 February 26, 1978
------------- -----------------
Net sales $11,057 $8,376
Cost of sales 6,668 5,016
------- ------
Gross profit 4,389 3,360
------- ------
Selling expenses 2,203 1,846
Administrative expenses 820 660
------- ------
Total selling and
administrative expenses 3,023 2,506
------- ------
Income from operations 1,366 854
Other expenses, net 87 83
Provision for plant relocation 460 -
------- ------
Income before taxes 819 771
Provision for income taxes 357 361
------- ------
Net income $ 462 $ 410
======= ======
Average common shares
outstanding 1,459,828 1,452,944
Net income per
common share $.32 $.28
Dividends per share $.125 $.10
See accompanying notes to consolidated condensed financial statements.
B-4
<PAGE>
HUNT MANUFACTURING C0.
CONDENSED STATEMENT OF CHANGES IN FINANCIAL POSITION
(o THREE MONTHS ENDED MARCH 4, 1979 AND FEBRUARY 26, 1978
UNAUDITED
(DOLLARS IN THOUSANDS)
1979 1978
---- ----
Sources of working capital:
Working capital provided by operations $ 702 $ 610
Proceeds from exercise of stock options 59 87
Deferred taxes 35 --
Additions to long-term debt -- 1,000
Other 8 --
------ ------
804 1,697
Uses of working capital:
Additions to property, plant and equipment 262 223
Dividends declared 183 146
Reduction of long-term debt 37 71
Other, net -- 45
------ ------
482 485
------ ------
Increase in working capital $ 322 $1,212
====== ======
See accompanying notes to consolidated condensed financial statements.
B-5
<PAGE>
HUNT MANUFACTURING C0.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1 - In the opinion of management the accompanying unaudited Financial Statements
reflect all adjustments (consisting of only normal accruals) to present fairly
the company's financial position as of march 4, 1979 and February 26, 1978, and
the results of operations and changes in financial position for the three months
then ended.
2 - Certain Advertising, Marketing and Administrative expenses are accrued or
deferred as of the interim reporting date to provide an appropriate cost in the
period and to normalize the expenses within the fiscal year. the net effect does
not have any material impact on the results of operations for the periods
presented.
3 - The earnings per share are calculated based on the weighted average number
of shares outstanding, restated to reflect the five-for-four stock split
declared in January, 1979. shares under option are common stock equivalents, but
are not used in computing earnings per share because the dilutive effect would
be less than 1%.
4 - The 1978 results have been restated to give effect to the adoption of LIFO
and the five-for-four stock split declared in January, 1979.
5 - The first quarter results of 1979 include a provision of $460,000 for the
anticipated costs relating to the relocation of the Company's Bienfang Paper
operation from Metuchen, New Jersey to Statesville, North Carolina.
B-6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF CONSOLIDATED CONDENSED STATEMENT OF INCOME
NET SALES
Net sales of $11,057, 000 were 32.0% ahead of the $8,376,000 reported for
the same period in 1978. Sales in all segments of the Company experienced
significant improvements over last year with office products being particularly
noteworthy registering an increase of 42.5% over 1978. Sales of a new
competitively priced electric sharpener in the end of 1978 contributed
significantly to the gain in Office Products. It is important to note that the
first quarter of 1978 was adversely affected in sales and production because of
the severe weather conditions which disrupted the Company's operations.
Art/Craft products and Other Product sales increased 20.5% and 32.1%,
respectively, over the first quarter of 1978.
GROSS PROFIT
Gross Profit of $4,389,000 for the quarter increased 30.6% over the
$3,360,000 for the quarter in 1978. Gross profit as a percentage of sales
declined slightly to 39.7% of net sales versus 40.1% in the first quarter of
1978. Product mix variations were the significant factor reducing overall gross
margin.
SELLING & ADMINISTRATIVE EXPENSES
Total selling and administrative expenses of $3,023,000 increased 20.6%
over the $2,506,000 in the first quarter of 1978. These expenses did not
increase as rapidly as sales because of the depressed sales for the first
quarter of 1978 mentioned in the paragraph above, as well as investments that
had been made in the first quarter of 1978 in marketing expenses.
PROVISION FOR PLANT RELOCATION
The first quarter of 1979 includes a provision of $460,000 for the
anticipated costs relating to the relocation of our Bienfang Paper Operation
from Metuchen, New Jersey to Statesville, North Carolina. Although this
relocation will not occur until later in the year, generally accepted accounting
principles require that these costs be charged to operations when they can be
reasonably estimated. this move will enable the company to consolidate its
Art/Craft operations.
NET INCOME
Net income of $462,000 increased 12.8% over the $410,000 for the first
quarter of 1978. Net income increased at a faster rate than income before income
taxes because the effective tax rate provision for
B-7
<PAGE>
1979 of 43.5% is lower than the 46.8% in the first quarter of 1978. This is due
to the reductions in the corporate income tax rate as well as greater investment
tax credits anticipated in 1979 over 1978.
Comparisons with the quarter immediately preceeding would not be
meaningful due to the seasonality of the Company's sales and business.
B-8
<PAGE>
PART II. OTHER INFORMATION
Item 5. Increases in amounts of the company's outstanding securities or
long-term debt.
(Increase in outstanding securities):
Title of Class Amount
- -------------- ------
- - Common Stock $.10 par value, as reported in
10-K Annual Report for the year ended
December 3, 1978 1,165,420
- - Common stock outstanding as of March 4, 1979 1,461,777
Capital in
Total Excess of Par
Transactions Proceeds Capital Value
- ------------ -------- ------- -----
- - 625 shares issued December 22, 1978
by exercise of stock option $ 3,813 $ 63 $ 3,750
- - 3,629 shares issued January 9, 1979
as Management Incentive Bonus Plan 59,879 363 59,516
- - 292,103 shares issued February 28, 1979
by five-for-four stock split - 29,210 (29,210)
- - Cash issued February 28, 1979 for
fractional shares in lieu of stock (4,607) - (4,607)
------- ------- --------
$59,085 $29,636 $29,449
======= ======= =======
- - The above mentioned transactions involved the issuance of unregistered
securities under the Securities Act of 1933. Registration of the shares
under the Securities Act of 1933 is not required by reason of the exemption
afforded by Section 4(2) of said Act to "Transaction by an issuer not
involving any public offering," and wherein the recipient represented and
warranted such stock was taken for investment purposes only.
- - Proceeds from the above mentioned transaction will be utilized for plant
equipment.
B-9
<PAGE>
ITEM 8. OTHER MATERIALLY IMPORTANT EVENTS.
The Company is concluding negotiations for the purchase of a building in
Statesville, North Carolina that will house the Bienfang Paper operation to be
transferred from Metuchen, New Jersey. This building, as wel1 as various
machinery and equipment associated with it, is expected to be financed by an
Industrial Revenue Bond issue of approximately $2,000,000.
The Company's existing facility in Metuchen is leased and negotiations are
being conducted with the lessor to terminate the lease amicably.
ITEM 9. EXHIBITS AND REPORTS ON FORM 8-K.
(b) Report on Form 8-K - There were no reports on Form 8-K the three months
ended March 4, 1979.
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.
(registrant)
Date 4-6-79 ______________________________________
Rudolph M. Peins, Jr.
Vice President, Treasurer & Secretary
Chief Financial Officer
Date 4-6-79 ______________________________________
Charles W. Naylor
President
B-10
<PAGE>
Certain Additional Financial Information
The following tables set forth certain summaries of financial information
relating to the Company and are intended to illustrate certain effects the
transactions relating to the Series 1979 Bonds would have had if they had been
consummated in the Company's fiscal year ended December 3, 1978.
HUNT MANUFACTURING CO.
Ratio of Earnings to Fixed Charges
Years Ended 1974 thru 1978
<TABLE>
<CAPTION>
As adjusted for
Obligations
Relating to
12/1/74 11/30/75 11/28/76 11/27/77 12/3/78 Series 1979 Bonds
------- -------- -------- -------- ------- -----------------
(52 wk) (52 wk) (52 wk) (52 wk) (53 wk)
<S> <C> <C> <C> <C> <C> <C>
Earnings before
Fixed Charges 2,985,082 3,179,020 4,100,275 4,955,771 5,607,770 5,607,770
Fixed Charges 281,600 229,964 514,668 499,589 545,899 685,899*
Ratio of Earnings
to Fixed Charges 10.60 13.82 7.97 9.92 10.27 8.18*
</TABLE>
- ----------
* Calculated at an assumed rate on the Series 1979 Bonds of 7%. Each
incremental change of 1/8% in the actual interest rate would result in an
change of approximately .03 in the adjusted Ratio of Earnings to Fixed
Charges.
C-1
<PAGE>
HUNT MANUFACTURING C0.
STATEMENT OF CAPITALIZATION
<TABLE>
<CAPTION>
As Adjusted for
Fiscal Year Ended obligations relating
December 3, 1978 to Series 1979 Bonds
---------------- --------------------
Amount Ratio Amount Ratio
------ ----- ------ -----
<S> <C> <C> <C> <C>
Long Term Debt (1)
Term Notes Payable to
Banks 97,546 .5 97,546 .5
Capitalized Lease Obligations 1,672,126 9.1 3,672,126 17.9
Mortgage Note 157,887 .9 157,887 .8
Notes to former Shareholders
of Acquired Company 890,450 4.8 890,450 4.4
---------- ----- ---------- -----
Total Long Term Debt 2,818,009 15.3 4,818,009 23.5
---------- ----- ---------- -----
Common Equity
Common Stock $.10 par value
Authorized 3,000,000 shares,
1,165,420 shares outstanding 116,542 116,542
Capital in Excess of Par value 359,391 359,391
Retained Earnings 15,170,319 15,170,319
---------- ----------
Total Common Equity 15,646,252 84.7 15,646,252 76.5
---------- ----- ---------- -----
Total Capitalization 18,464,261 100.0 20,464,261 100.0
========== ===== ========== =====
</TABLE>
(1) Excludes Long Term Debt due within one year in the amount of $372,742.
C-2
<PAGE>
LAW OFFICES OF
NEEL & RANDALL
[ LETTERHEAD ]
June 5, 1979
The Iredell County Industrial Facilities
and Pollution Control Financing
Authority Statesville North Carolina
Brown, Wood, Ivey, Mitchell & Petty
New York, New York
Alex. Brown & Sons
Baltimore, Maryland
Gentlemen:
I am counsel for The Iredell County Industrial Facilities and Pollution
Control Financing Authority (the "Authority"). In connection with the issuance
and sale of the Authority's Industrial Revenue Bonds (Hunt Manufacturing Co.
Project) Series 1979 in the aggregate principal amount of $2,000,000 (the
"Bonds"), I have examined the following: Article 7, Section 9 of the
Constitution of North Carolina; Chapter 159C of the General Statutes of North
Carolina as amended (the "Act"); the resolutions of the Authority relating to
the Bonds adopted January 5, 19 7 9 and May 15, 1979; the Deed dated as of June
1, 1979 (the "Deed") from Hunt Manufacturing Co., a Pennsylvania COrporation
("Hunt") to the Authority the Bill of Sale dated as of June 1, 1979 (the "Bill
of Sale" ) from Hunt to the Authority; the Lease Agreement dated as of June 1,
1979 (the "Lease") by and between the Authority and Hunt; the Indenture and Deed
of Trust dated as of June 1, 1979 (the "Indenture"); from the Authority to First
Union National Bank of North Carolina (the "Trustee"); the Contract of purchase
dated May 15, 1979 (the "Purchase Contract") by and between the Authority and
Alex. Brown & Sons (the "Underwriter" ), the Guaranty dated as of June 1, 1979
(the "Guaranty") from Hunt to the Trustee; and such other records of the
Authority and other documents I have deemed relevant and necessary as a basis
for the opinions set forth herein.
Based on the foregoing examinations, investigations, filings, and inquiries
and legal considerations which I deem relevant, I am of the opinion that:
<PAGE>
1. The acceptance of the Deed and Bill of Sale has been duly authorized by
the Authority, the Deed and Bill of Sale are in substantially the form so
authorized, and assuming proper authorization, execution and delivery of the
Deed and Bill of Sale by Hunt, the Deed and Bill of Sale are valid and binding
in accordance with their terms.
2. The execution and delivery of the Lease have been duly authorized by the
Authority, the Lease is in substantially the form so approved and has been duly
executed and delivered by the Authority.
3. The execution and delivery of the Indenture have been duly authorized by
the Authority, the Indenture is in substantially the form so approved and has
been duly executed and delivered by the Authority, and, assuming that the
Indenture constitutes a legal, valid and binding obligation of the Authority in
accordance with its terms, the Indenture creates a valid first lien of record on
the Trust Estate and valid security interests in the Leased Property (as defined
in the Indenture) and in the Basic Rent (as defined in the Lease) in the Trustee
for the benefit of the holders of the Bonds, subject to no prior or equal lien
or encumbrance other than Permitted Encumbrances as defined in the Indenture.
4. The execution and delivery of the Purchase Contract have been duly
authorized by the Authority, the Purchase Contract is in substantially the form
so approved and has been duly executed and delivered by the Authority.
5. The execution, issuance and delivery of the Bonds have been duly and
validly authorized by the Authority, all conditions precedent to the delivery of
the Bonds have been fulfilled, and the Bonds are valid and binding in accordance
with their terms.
6. There is no suit, proceeding, inquiry or investigation, at law or in
equity, or before or by any court, public authority or body, pending or, to the
best of my knowledge, threatened against or directly affecting the Authority,
nor to the best of my knowledge is there any basis therefor, (a) to restrain or
enjoin the issuance and sale of the Bonds or the performance by the Authority of
the Lease, the Indenture or the Purchase Contract, including without limitation
the collection of the Basic Rent and other revenues to be received under the
Lease and the assignment thereof under the Indenture to the Trustee for the
benefit of the holders of the Bonds or (b) wherein
<PAGE>
an unfavorable decision, ruling or finding would (i) have a material adverse
effect on the transactions contemplated thereby or (ii) adversely affect or put
in question the validity or enforceability of the bonds, the ease, the Indenture
or the Purchase Contract or any other agreement, instrument or document to which
the Authority is a party or by which it is bound and which relates to the
consummation by the Authority of the transactions contemplated by the Lease, the
Indenture or the Purchase Contract or (c) to contest the legal existence or
powers of the Authority or title to any of its offices of any officer whose
signature appears on the Bonds.
7. I have made such examination and investigation as is necessary to enable
me to express informed opinions as to the matters covered hereby.
This will advise you that tie following documents have been recorded this
day at the office of the Register of Deeds for Iredell County, North Carolina.
The Deed has been recorded in Book 17o. 639 at page 25 at 11:35 A.M.
The Lease has been recorded in Book No. 639 at page 31 at 11:40 A.M.
The Indenture has been recorded in Mortgage Book No. 502 at page 4 at 11:45
A.M.
Financing Statements relating to the machinery equipment and other tangible
personal property under the Lease and the Indenture are filed as follows
In the office of the Register Of Deeds, Iredell County, North Carolina, on
June 4, 1979 at 11:00 A.M., File No. 8845.
In the office of the Secretary of State of North Carolina, on June 4, 1979
at 2:13 File No. C-22376.
In the office of the Register of Deeds, Iredell County, North Carolina, on
June 4, 1979 at 11:10 A.M., File No. 8047.
In the office of the Secretary of State of North Carolina, on June 4, 1979
at 2:14 P.M. File No. C-22378.
Financing Statements relating to the contract rights, accounts receivable
and general intangibles under the Indenture are filed as follows:
<PAGE>
In the office of the Register of Deeds of Iredell County, North Carolina,
on June 4, 1979 at 11:05 A.M., File No. 8846.
In the office of the Secretary of State of North Carolina, on June 4, 1979
at 2:14 P.M., File No. C-22377.
Sincerely,
Robert N. Randall
<PAGE>
(27)
LAW OFFICES
of
DRINKER BIDDLE & REATH
[LETTERHEAD]
Alex. Brown & Sons
135 Baltimore Street
Baltimore, Maryland
The Iredell County Industrial
Facilities and Pollution Control
Financing Authority
Statesville, North Carolina
First Union National Bank of
North Carolina
Charlotte, North Carolina
Re: $2,000,000 Industrial Revenue Bonds
(Hunt Manufacturing Co. Project),
Series 1979 of the Iredell County
Industrial Facilities and Pollution
Control Financing Authority, dated
June 1, 1979
------------------------------------------
Gentlemen:
We have acted as counsel to Hunt Manufacturing Co. (the "Company") in
connection with the issuance and sale by The Iredell County Industrial
Facilities and Pollution Control Financing Authority (the "Authority") to Alex.
Brown & Sons of the Authority's Industrial Revenue Bonds (Hunt Manufacturing Co.
Project), Series 1979, in the aggregate principal amount of $2,000,000 (the
"Bonds") pursuant to the Contract of Purchase dated May 15, 1979 (the "Contract
of Purchase"). The Bonds are being issued pursuant to Chapter 800 of the 1975
Session Laws of North Carolina, as amended, which as codified appears as Chapter
159C of the General Statutes of North Carolina (the "Enabling Act").
The proceeds of the Bonds are to be used to provide funds to finance the
cost of acquiring, improving, equipping
<PAGE>
DRINKER BIDDLE & REATH
Page 2
June 5, 1979
and providing for the installation of an industrial manufacturing facility (the
"Project") for the production of paper and other art/craft products, operated by
the Company located in Iredell County, North Carolina.
The Authority and the Company have entered into a Lease Agreement, dated as
of June 1, 1979 (the "Lease"), pursuant to which the Authority has agreed to
acquire the Project and to lease the "Leased Property" (being the Project and
all additions, modifications and improvements thereto and substitutions
therefor, less removals therefrom, as permitted by the Lease) to the Company and
the Company has agreed to lease the Leased Property from the Authority and to
make certain rental payments therefor, including payments of amounts sufficient
to provide for the payment of the principal of and premium, if any, and interest
on the Bonds (the "Basic Rent").
The Bonds are being issued under an Indenture and Deed of Trust, dated as
of June 1, 1979 (the "Indenture"), from the Authority to First Union National
Bank of North Carolina (the "Trustee"). The Bonds are to be secured by (i) the
Indenture, pursuant to which the Authority has assigned to the Trustee certain
of the Authority's rights, title and interests in and to the Lease, including
its rights to the Basic Rent, and its rights, title and interests in and to the
real and tangible personal property comprising the Leased Property, including
any rights to the net proceeds of the sale thereof and (ii) a Guaranty
Agreement, dated as of June 1, 1979 (the "Guaranty"), between the Company, as
guarantor, and the Trustee.
We have examined such documents, records of the Company and other
instruments, including certificates of appropriate authorities, counterparts or
certified copies of the Lease, the Indenture, the Guaranty, the Contract of
Purchase and the Official Statement dated May 15, 1979 (the "Official
Statement"), relating to the offering and sale of the Bonds and certain other
documents, as we deem necessary to enable us to express the opinions set forth
below. In all such examinations, we have assumed the genuineness of all
signatures on original and
<PAGE>
DRINKER BIDDLE & REATH
Page 3
June 5, 1979
certified documents and the conformity to authentic original and certified
documents of all copies submitted to us as conformed or machine copies. As to
various questions of fact material to our opinion, we have relied upon
representations or certificates of officers of the Company.
We point out that we are members of the bar only of the Commonwealth of
Pennsylvania and, as such, are not experts of the laws of any jurisdiction other
than those of the Commonwealth of Pennsylvania and the United States of America.
Consequently, we express no opinion on the laws of any other jurisdiction.
Based upon the foregoing and subject to the qualifications and limitations
hereinbefore and hereinafter stated, we are of the opinion that:
(a) the Company has been duly incorporated and is validly existing
under the laws of the Commonwealth of Pennsylvania and has due corporate
authority to carry on its business as described in the Appendix to the
Official Statement, to convey its property to the Authority, to lease
property from the Authority and to guarantee the Bonds;
(b) the Deed, dated as of June 1, 1979 from the Company to the
Authority with respect to certain of the Leased Property has been duly
authorized, executed and delivered by the Company;
(c) the Bill of Sale dated as of June 1, 1979 from the Company to the
Authority with respect to certain of the Leased Property has been duly
authorized, executed and delivered by the Company;
(d) the approval of the Contract of Purchase by the Company has been
duly authorized, executed and delivered by the Company; and the Letters of
Representation attached as exhibits thereto have been duly authorized,
executed and delivered by the Company and are legal valid and binding
obligations of the Company (subject to possible limitations imposed by
courts on the right to indemnification);
<PAGE>
DRINKER BIDDLE & REATH
Page 4
June 5, 1979
(e) the Lease has been duly authorized, executed and delivered by the
Company and is a legal, valid and binding obligation of the Company; and
(f) the Guaranty has been duly authorized, executed and delivered by
the Company and is a valid, binding obligation of the Company, enforceable
in accordance with its terms.
Our opinion as to the binding nature and enforceability of instruments
executed and delivered. by the Company is subject to any applicable bankruptcy,
reorganization, insolvency, moratorium or other laws affecting creditors' rights
and subject to the further qualification that the availability of specific
enforcement remedies may be subject to the discretion of the courts.
We cannot, of course, make any representations to you as to the accuracy or
completeness of the statements of fact contained in the Official Statement or
the Appendix thereto. Nevertheless, we advise you that, on the basis of a
general review and discussion with certain officers of the Company, but without
independent check or verification except as indicated, nothing has come to our
attention that leads us to believe that the Appendix to the Official Statement
(other than financial statements which are not within the scope of this
paragraph) at the date hereof contains an untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. We must point out, however, that our knowledge of the business and
affairs of the Company is limited so that we would not necessarily recognize the
import to such business or affairs of a particular set of facts or
circumstances.
Very truly yours,
DRINKER BIDDLE & REATH
JCBJr/VSJr/slp
<PAGE>
(28-a)
HUNT MANUFACTURING C0.
CERTIFICATE OF ASSISTANT SECRETARY
This Certificate is furnished pursuant to Section 6(f) of the Contract of
Purchase dated May 15, 1979 between Alex. Brown & Sons and The Iredell County
Industrial Facilities and Pollution Control Financing Authority, and approved by
Hunt Manufacturing Co. (the "Company"), relating to the issuance and purchase of
$2,000,000 principal amount of industrial revenue bonds; and the definitions
contained in said Contract of Purchase shall apply to the terms used herein.
The undersigned, Assistant Secretary of the Company, does hereby certify as
follows:
1. The Contract of Purchase, the Letters of Representation, the Deed,
the Bill of Sale, the Agreement, the Guaranty and any and all other
agreements executed and delivered by the Company in order to carry out,
give effect to and consummate the transactions contemplated therein have
been duly authorized, executed and delivered by the Company.
2. Attached hereto as Exhibit A is a true, correct and complete copy
of resolutions of the Company's Board of Directors duly and validly adopted
April 18, 1979, which resolutions have not been amended, modified,
rescinded or revoked and are now in full force and effect;
3. Attached hereto as Exhibits B and C, respectively, are true and
correct copies of the Articles of Incorporation and by-laws of the Company,
in each case as amended, in effect as of the date hereof.
4. The persons named below are (and have been since prior to December
1, 1978) the duly elected or appointed and qualified officers of the
Company holding the respective positions set forth opposite their names:
Name Position
---- --------
George P. Johnson Vice President
Rudolph M. Peins, Jr. Vice President, Treasurer
and Secretary
John H. Martin Assistant Secretary
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Certificate this 5th
day of June, 1979.
(SEAL)
--------------------------
John H. Martin
Assistant Secretary
The undersigned, Vice President of the Company, does hereby certify that
John H. Martin is (and has been since prior to December 1, 1978) the duly
elected, qualified and acting Assistant Secretary of the Company.
--------------------------
Rudolph M. Peins, Jr.
Vice President
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<PAGE>
EXHIBIT A
Resolutions of Board of Directors of
HUNT MANUFACTURING CO.
RESOLVED, that the Chairman, President and any Vice President of this
Corporation, or any of them, are hereby authorized, on behalf of this
Corporation, to enter into an industrial revenue financing with the Iredell
County Industrial Facilities and Pollution Control Financing Authority (the
"Authority") providing for. the issuance by the Authority of approximately
$2,000,000 principal amount of industrial revenue bonds, with a term of
approximately twenty years and an interest rate of less than eight percent, for
the purpose of financing this Corporation's new facility in Statesville, North
Carolina, all on such terms not inconsistent with the foregoing as such
officers, or any of them, shall approve.
FURTHER RESOLVED, that the Chairman, President or any Vice President of
this Corporation, or any of them, are hereby authorized, in connection with such
financing: (1) to prepare and approve the official Statement relating to the
Bonds, (2) to appoint a trustee, and (3) to execute on behalf of this
Corporation: (i) such documents as may be necessary to convey this Corporation's
new facility and related equipment to the Authority, (ii) a Lease of such
facility and related equipment from the Authority to this Corporation, (iii) a
Guaranty from this Corporation to the Trustee, and (iv) a Contract of Purchase
between Alex. Brown & Sons, the Authority and this Corporation, and the Letters
of Representation referred to therein, all in substantially the forms discussed
at this meeting, with such changes therein as such officers, or any of" them,
with the advice of counsel, shall approve, their execution of any such documents
to constitute conclusive evidence of such approval.
FURTHER RESOLVED, that the proper officers or this Corporation are hereby
authorized to execute such other agreements or documents, and to take such other
actions, as may be necessary or appropriate to effectuate the purposes of the
foregoing resolutions.
<PAGE>
Commonwealth of Pennsylvania
Department of State
Corporation Bureau
Articles of Amendment
In compliance with the requirements of Article VIII of the Business
Corporation Law, approved the 5th day of May, 1933, P.L. 364, as amended, the
applicant desiring to amend its Articles hereby certifies, under its corporate
seal that
1. The name of the corporation is: Hunt Manufacturing Co.
2. The location of its registered office is: 1405 Locust Street, Philadelphia,
Pennsylvania 19102.
3. The corporation was formed under the Act of: May 5, 1933, as amended.
4. Its date of incorporation is: November 5, 1962.
5. (Strike out (a) or (b) below, whichever is not applicable)
(a) The meeting of the shareholders of the corporation at which the
amendment was adopted was held at the date and place and pursuant to
the kind and period of notice herein stated.
Time: The 17th day of November, 1970.
Place: 1405 Locust Street, Philadelphia, Pennsylvania.
Kind and period of notice: 10 days written notice.
6. At the time of the action of the shareholders:
(a) The total number of shares outstanding was: 4,525.
(b) The number of shares entitled to vote was:* 4,525.
7. In the action taken by the shareholders:
(a) the number of shares voted in favor of the amendment was:** 4,373.
(b) The number of shares voted against the amendment was:** none
* If the shares of any class were entitled to vote as a class, the number of
shares of each class so entitled and the number of shares of all other
classes entitled to vote should be set forth.
** If the shares of any class were entitled to vote as a class, the number of
shares of each class and the number of shares of all other classes voted
for and against such amendment respectively should be set forth.
NOTE: If the effect of the amendment is to increase the authorized capital stock
of the corporation, excise tax at the rate of 1/5 of 1% on the amount of
increase will be due and payable with the filing of the amendment.
NOTE: Filing fee--$30.00. (In addition to any amount of excise tax due and
owing)
<PAGE>
8. The amendment adopted by the shareholders, set forth in full, follows.
See attached pages.
IN TESTIMONY WHEREOF, the applicant has caused these Articles of Amendment
to be signed by its President or Vice President and its corporate seal, duly
attested by its Secretary of Treasurer, to be hereunto affixed this 13th day of
January, 1971.
HUNT MANUFACTURING CO.
By: ______________________________
(President or Vice President)
Attest:
______________________________
(Asst. Secretary or Treasurer)
(CORPORATE SEAL)
Approved and filed in the Department of State on the 14th day of January,
A.D. 1971.
-----------------------------
Secretary of the Commonwealth
<PAGE>
RESOLVED, that the Articles of Incorporation of this Corporation be amended
by restating the same in their entirety as follows:
"1st. The name of the corporation is Hunt Manufacturing Co.
2nd. The location and post office address of its registered office in
the Commonwealth of Pennsylvania is 1405 Locust Street, Philadelphia,
Pennsylvania.
3rd. The corporation shall have unlimited power to engage in and to do
any lawful act concerning any or all lawful business for which corporations
may be incorporated under the Act of May 5, 1933, P.L. 364, as amended.
The corporation is organized under the Act of May 5, 1933, P.L. 364,
as amended.
4th. The term for which it is to exist is perpetual.
5th. The aggregate number of shares which the Corporation shall have
authority to issue is:
4,000,000 shares, divided into 1,000,000 Preferred Shares of the par value
of $.10 per share, and 3,000,000 Common Shares of the par value of $.10 per
share.
A description of the shares of each class and a statement of the
preferences, qualifications, limitations, restrictions, and the special or
relative rights granted to or imposed upon the shares of each class, except such
thereof as the Board of Directors is authorized to fix, as hereinafter provided,
is as follows:
<PAGE>
I. PREFERRED SHARES
The Preferred Shares may be divided into and issued in series, each series
to be so designated as to distinguish the shares thereof from the shares of all
other series and classes. The Board of Directors of the Corporation shall have
authority, by resolution, to divide any or all of the Preferred Shares into one
or more series and, with respect to each series to establish and, prior to the
issue thereof, to fix and determine a distinguishing designation therefor and to
fix and determine:
(a) the rate at which dividends on the shares shall be declared and
paid or set aside for payment; whether dividends at the rate so determined
shall be cumulative and if so from what date or dates and on what terms;
and whether the shares shall be entitled to any participating or other
dividends in addition to dividends at the rate so determined, and if so on
what terms;
(b) whether or not the shares shall have voting rights, in addition to
the voting rights provided by law, and if so, the terms and conditions
thereof;
(c) whether the shares shall have conversion privileges and, if so,
the terms and conditions of such conversion, including provisions for any
adjustment of the conversion rate;
(d) whether or not the shares shall be redeemable, and, if so, the
terms and conditions of such redemption, including the date or dates upon
or after which they shall be redeemable, and the amount per share payable
in case of redemption, which amount may vary under different conditions and
at different redemption dates;
<PAGE>
(e) whether any shares shall be redeemed through sinking fund
payments, and, if so, on what terms;
(f) the rights of the shares of each series in the event of voluntary
or involuntary liquidation, dissolution, winding up or distribution of the
assets of the Corporation; and
(g) any other relative rights, preferences and limitations of each
series.
II. COMMON SHARES
Except as expressly provided by law or by resolution of the Board of
Directors pursuant to the authority granted under Article 5I hereof, all voting
rights shall be vested in the holders of the Common Shares.
FURTHER RESOLVED, that upon the effective date of the proposed restatement
of the Company's Articles of Incorporation each of the 4,525 issued and
outstanding Common Shares (par value $25 per share) of the Company shall be
split up, divided and changed into 196 Common Shares of the par value of $.10
per share, a total of 886,900 such shares.
<PAGE>
Commonwealth of Pennsylvania
Department of State
Office of the
Secretary of the Commonwealth
TO ALL TO WHOM THESE PRESENTS SHALL COME, GREETING:
WHEREAS, In and by Article VIII of the Business Corporation Law, approved
the fifth day of May, Anno Domini one thousand nine hundred and thirty-three,
the Department of State is authorized and required to issue a
CERTIFICATE OF AMENDMENT
evidencing the amendment and restatement of the Articles of Incorporation in
their entirety of a business corporation organized under or subject to the
provisions of that Law; and
WHEREAS, The stipulations and conditions of that Law pertaining to the
amendment of Articles of Incorporation have been fully complied with by
HUNT MANUFACTURING CO.
HENCEFORTH, The "Articles," as defined in Article I of the Business
Corporation Law, shall not include any prior documents.
THEREFORE, KNOW YE, That subject to the Constitution of this Commonwealth
and under the authority of the Business Corporation Law, I do by these presents,
which I have caused to be Sealed with the Great Seal of the Commonwealth, extend
the rights and powers of the corporation named above, in accordance with the
terms and provisions of the Articles of Amendment presented by it to the
Department of State, with full power and authority to use and enjoy such rights
and powers, subject to all the provisions and restrictions of the Business
Corporation Law and all other applicable laws of this Commonwealth.
GIVEN under my Hand and the Great Seal of the Commonwealth, at the City of
Harrisburg, this 14th day of January, in the year of our Lord, one thousand nine
hundred and seventy-one, and of the Commonwealth, the one hundred and
ninety-fifth.
- -------------------------------
Secretary of the Commonwealth
<PAGE>
Commonwealth of Pennsylvania
[ seal ]
April 11, 1973
TO ALL TO WHOM THESE PRESENTS SHALL COME, GREETING:
IN RE: "HUNT MANUFACTURING CO."
I, C. DELORES TUCKER, Secretary of the Commonwealth of the Commonwealth of
Pennsylvania do hereby certify that the foregoing and annexed is a true and
correct photocopy of Articles of Amendment restating the Articles of
Incorporation in their entirety and Certificate of Amendment which appear of
record in this Department.
IN TESTIMONY WHEREOF, I have hereunto set my hand and caused the seal of
the Secretary's Office to be affixed, the day and year above written.
- -------------------------------
Secretary of the Commonwealth
<PAGE>
EXHIBIT C
BY-LAWS
of
HUNT MANUFACTURING CO.
(A Pennsylvania Corporation)
Section 1. MEETINGS OF SHAREHOLDERS
Section 1.01. PLACE OF MEETING. Meetings of shareholders of the Corporation
shall be held at such place, within the Commonwealth of Pennsylvania or
elsewhere, as may be fixed by the Board of Directors. If no place is so fixed,
they shall be held at the office of the Corporation in Philadelphia,
Pennsylvania.
Section 1.02. ANNUAL MEETING. The annual meeting of shareholders, for the
election of directors and the transaction of any other business which may be
brought before the meeting, shall be held, unless the Board of Directors shall
fix some other hour or date therefor, at 2:00 o'clock P.M. on the third Tuesday
in April in each year, if not a legal holiday under the laws of Pennsylvania,
and, if a legal holiday, then on the next succeeding secular day not a legal
holiday under the laws of Pennsylvania. If for any reason such meeting is not
held at the time fixed therefor, such election may be held at a subsequent
meeting called for that purpose.
Section 1.03. NOTICE OF MEETINGS. Notice of every annual meeting of
shareholders shall be given by the Secretary.
Notice of all meetings of shareholders shall be given to each shareholder
of record entitled to vote at the meeting, at least ten days prior to the day
named for the meeting, unless a greater period of notice is by law required in a
particular case.
Section 1.04. ORGANIZATION. At every meeting of the shareholders, the
Chairman of the Board, or in his absence, the President, or in the absence of
the President, a Vice President, or in the absence of the Chairman, the
President and all Vice Presidents, a chairman chosen by the shareholders, shall
act as chairman; and the Secretary, or in his absence, a person appointed by the
chairman, shall act as secretary.
<PAGE>
Section 1.05. VOTING. Except as otherwise specified herein or in the
Articles or provided by law, all matters shall be decided by the vote of the
shareholders present, in person or by proxy, entitled to cast at least a
majority of the votes which all shareholders present are entitled to cast,
although such vote be less than a majority of the votes which all the
shareholders entitled to vote thereon would be entitled to cast.
In each election of directors, the candidates receiving the highest number
of votes, up to the number of directors to be elected in such election, shall be
elected.
Section 2. DIRECTORS
Section 2.01. NUMBER AND TERM OF OFFICE. The number of directors shall be
seven or such greater number, not to exceed twelve, as shall be designated, from
time to time, by standing resolution of the Board. Each director shall be
elected for a term of one year. [Amended May 1, 1974]
Section 2.02. RESIGNATIONS. Any director may resign at any time by giving
written notice to the Board of Directors, to the Chairman of the Board, to the
President, or to the Secretary. Such resignation shall take effect at the time
of the receipt of such notice or at any later time specified therein; and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
Section 2.03. ANNUAL MEETING. Immediately after each annual election of
directors, the Board of Directors shall meet for the purpose of organization,
election of officers, and the transaction of other business, at the place where
such election of directors was held. Notice of such meeting need not be given.
In the absence of a quorum at said meeting, the same may be held at any other
time and place which shall be specified in a notice given as hereinafter
provided for special meetings of the Board of Directors.
Section 2.04. REGULAR MEETINGS. Regular meetings of the Board of Directors
shall be held at such time and place as shall be designated from time to time by
standing resolution of the Board. Notice of such meetings need not be given. If
the date fixed for any such regular meeting be a legal holiday under the laws of
the State where such meeting is to be held, then the
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<PAGE>
same shall be held on the next succeeding secular day not a legal holiday under
the laws of said State, or at such other time as may be determined by resolution
of the Board. At such meetings the directors may transact such business as may
be brought before the meeting.
Section 2.05. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by the Chairman of the Board, by the President, by a Vice
President, or by two or more of the directors, and shall be held at such time
and place as shall be designated in the call for the meeting. Written notice of
each special meeting shall be given, by or at the direction of the person or
persons authorized to call such meeting, to each director, at least three days
prior to the day named for the meeting.
Section 2.06. ORGANIZATION. Every meeting of the Board of Directors shall
be presided over by the Chairman of the Board, if he is present, and, if not,
the President, or in the absence of the Chairman of the Board and the President,
a Vice President, or in the absence of the Chairman of the Board, the President
and all the Vice Presidents, a chairman chosen by a majority of the directors
present. The Secretary, or in his absence, a person appointed by the Chairman,
shall act as secretary.
Section 2.07. PARTICIPATION IN MEETINGS. One or more directors may
participate in a meeting of the Board or a committee of the Board by means of
conference telephone or similar communications equipment by which all persons
participating in the meeting can hear each other.
Section 2.08. COMPENSATION OF DIRECTORS. Each director shall be entitled to
receive a fee, in such amount, if any, as may from time to time be fixed by the
Board of Directors, for each meeting of the Board of any committee thereof,
regular or special, attended by him. Directors may also be reimbursed by the
Corporation for all reasonable expenses incurred in travelling to and from the
place of each meeting of the Board of any such committee.
Section 3. COMMITTEES
Section 3.01. EXECUTIVE COMMITTEE. If an Executive Committee or one or more
other committees is or are designated by
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<PAGE>
the Board of Directors to exercise the authority of the Board in the management
of the Corporation, such committee(s) shall keep regular minutes of its or their
proceedings and report the same to the Board at each regular meeting.
Section 3.02. OTHER COMMITTEES. The Board of Directors may, at any time and
from time to time, appoint such standing committees and/or special committees,
consisting of directors or others, to perform such duties and make such
investigations and reports as the Board shall by resolution determine. Such
committees shall determine their own organization and times and places of
meeting, unless otherwise directed by such resolution.
SECTION 4. OFFICERS
Section 4.01. NUMBER. The officers of the Corporation shall be a Chairman
of the Board, a President, a Secretary, a Treasurer, and one or more Vice
Presidents, one or more Assistant Secretaries, one or more Assistant Treasurers,
and such other officers as the Board of Directors may from time to time
determine.
Section 4.02. QUALIFICATIONS. The officers shall be natural persons of full
age.
Section 4.03. ELECTION AND TERM OF OFFICE. The officers of the Corporation
shall be elected by the Board of Directors at its annual meeting, but the Board
may elect officers or fill vacancies among the officers at any other meeting.
Subject to earlier termination of office, each officer shall hold office for one
year and until his successor shall have been elected and qualified.
Section 4.04. RESIGNATIONS. Any officer may resign at any time by giving
written notice to the Board of Directors, or to the Chairman of the Board, or to
the President, or to the Secretary of the Corporation. Any such resignation
shall take effect at the time of the receipt of such notice or at any later time
specified therein; and, unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective.
Section 4.05. CHAIRMAN OF THE BOARD. The Chairman of the Board shall be the
chief executive officer of the Corporation and shall preside at the meetings of
the Board and
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<PAGE>
shareholders, shall be responsible for establishing corporate policy in
conjunction with the Board, and shall also perform such other duties as may be
specified by the Board from time to time. [Amended July 25, 1973 and November
23, 1977]
Section 4.06. THE PRESIDENT. The President shall be the chief operating
officer of the Corporation and shall have general supervision over the business
and operations of the Corporation, subject, however, to the control of the Board
of Directors and the Chairman of the Board. He or the Chairman shall sign,
execute, and acknowledge, in the name of the Corporation, deeds, mortgages,
bonds, contracts, and other instruments authorized by the Board, except in cases
where the signing and execution thereof shall be expressly delegated by the
Board to some other officer or agent of the Corporation; and, in general, he
shall perform all duties incident to the office of President, and such other
duties as from time to time may be assigned to him by the Board or the Chairman.
In addition he shall preside at meetings of the Board and/or shareholders in the
absence of the Chairman of the Board. [Amended July 25, 1973 and November 23,
1977]
Section 4.07. THE VICE PRESIDENTS. In the absence or disability of the
President or when so directed by the Chairman or the President, any Vice
President may perform all the duties of the President, and, when so acting,
shall have all the powers of, and be subject to all the restrictions upon, the
President. The Vice Presidents also shall perform such other duties as from time
to time may be assigned to them respectively by the Board, the Chairman or the
President. [Amended July 25, 1973 and November 23, 19771
Section 4.08. THE SECRETARY. The Secretary shall record all the votes of
the shareholders and of the directors and the minutes of the meetings of the
shareholders and of the Board of Directors in a book or books to be kept for
that purpose; he shall see that notices of meetings of the Board and
shareholders are given and that all records and reports are properly kept and
filed by the Corporation as required by law; he shall be the custodian of the
seal of the Corporation and shall see that it is affixed to all documents to be
executed on behalf of the Corporation under its seal; and, in general, he shall
perform all duties incident to the office of Secretary, and such other duties as
may from time to time be assigned to him by the Board, the Chairman or the
President. [Amended July 25, 1973 and November 23, 19771
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<PAGE>
Section 4.09. ASSISTANT SECRETARIES. In the absence or disability of the
Secretary or when so directed by the Secretary, any Assistant Secretary may
perform all the duties of the Secretary, and, when so acting, shall have all the
powers of, and be subject to all the restrictions upon, the Secretary. The
Assistant Secretaries shall perform such other duties as from time to time may
be assigned to them respectively by the Board, the Chairman, the President, or
the Secretary. [Amended July 25, 1973 and November 23, 1977]
Section 4.10. THE TREASURER. The Treasurer shall have charge of all
receipts and disbursements of the Corporation and shall have or provide for the
custody of its funds and securities; he shall have full authority to receive and
give receipts for all money due and payable to the Corporation, and to endorse
checks, drafts, and warrants in its name and on its behalf and to give full
discharge for the same; he shall deposit all funds of the Corporation, except
such as may be required for current use, in such banks or other places of
deposit as the Board may from time to time designate; and, in general, he shall
perform all duties incident to the office of Treasurer and such other duties as
may from time to time be assigned to him by the Board, the Chairman or the
President. [Amended- July 25, 1973 and November 23, 1977]
Section 4.11. ASSISTANT TREASURERS. In the absence or disability of the
Treasurer or when so directed by the Treasurer, any Assistant Treasurer may
perform all the duties of the Treasurer, and, when so acting, shall have all the
powers of, and be subject to all the restrictions upon, the Treasurer. The
Assistant Treasurers shall perform such other duties as from time to time may be
assigned to them respectively by the Board, the Chairman, the President or the
Treasurer. [Amended July 25, 1973 and November 23, 1977]
Section 4.12. COMPENSATION OF OFFICERS AND OTHERS. The compensation of all
officers shall be fixed from time to time by the Board of Directors, or any
committee or officer authorized by the Board so to do. No officer shall be
precluded from receiving such compensation by reason of the fact that he is also
a director of the Corporation.
Additional compensation, fixed as above provided, may be paid to any
officers or employees for any year or years, based upon the success of the
operations of the Corporation during such year.
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<PAGE>
Section 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 5.01. RIGHT TO INDEMNIFICATION. The Corporation shall indemnify any
person who was or is a party or is THREATENED TO be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he is or
was a director or officer of the Corporation, or is or was serving at the
request of the Corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, as follows:
(a) if the action, suit or proceeding is not by or in the right of the
Corporation
(1) against expenses (including attorneys' fees), actually and
reasonably incurred by him in connection therewith to the extent that
he has been successful on the merits or otherwise in defense of such
action, suit or proceeding, or of any claim, issue or matter therein,
and
(2) against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred
by him in connection therewith if he had acted in good faith and in a
manner he reasonably believed to be in, or not opposed to, the best
interests of the Corporation, and, with respect to any criminal action
or proceeding, had no reason able cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner
which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was
unlawful.
(b) if the action, suit or proceeding is by or in the right of the
Corporation
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<PAGE>
(1) against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith to the extent that
he has been successful on the merits or otherwise in defense of such
action, suit or proceeding, or of any claim, issue or matter therein,
and
(2) against expenses (including attorneys' fees), actually and
reasonably incurred by him in connection with the defense or
settlement thereof if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of
the Corporation, except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the Corporation for negligence or
misconduct in the performance of his duty to the Corporation unless
and only to the extent that a court of common pleas of the county in
which the registered office of the Corporation is located or the court
in which such action, suit or proceeding was brought shall determine
upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity.
Section 5.02. PROCEDURE TO BE FOLLOWED. Any indemnification under paragraph
(a)(2) or. (b)(2) of Section 5.01 (unless ordered by a court or made pursuant to
a determination by a court as hereinafter provided) shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the director or officer is proper in the circumstances
because he has met the applicable standard of conduct set forth in such
paragraph (a)(2) or (b)(2). Such determination shall be made (a) by the Board of
Directors by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, or (b) if such a quorum is not
obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (c) by the
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<PAGE>
shareholders. In the absence of a determination that indemnification is proper
as aforesaid, the director or officer may apply to a court of common pleas of
the county in which the registered office of the Corporation is located or the
court in which the action, suit or proceeding was brought, which shall determine
whether the director or officer has met the applicable standard of conduct set
forth in such paragraph (a)(2) or (b)(2). If the court shall determine that he
has, indemnification shall be made under such paragraph (a)(2) or (b)(2).
Section 5.03. PAYMENT OF EXPENSES IN ADVANCE. Expenses incurred in
defending an action, suit or proceeding referred to in Section 5.01 may be paid
by the Corporation in advance of the final disposition of such action, suit or
proceeding as authorized by the Board of Directors, by the shareholders, or by a
court, in the manner provided in Section 5.02, upon receipt of an undertaking by
or on behalf of the director or officer (regardless of his financial
responsibility) to repay such amount unless it shall ultimately be determined
that he is entitled to be indemnified by the Corporation as authorized in this
section.
Section 5.04. OTHER RIGHTS. The indemnification provided by these By-Laws
shall not be deemed exclusive of any other rights to which a person seeking
indemnification may be entitled under any agreement, vote of shareholders or
disinterested directors, or otherwise both as to action in his official capacity
and as to action in another capacity while holding such office, and shall
continue as to a person who has ceased to be a director or officer and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
Section 5.05. INSURANCE. The Corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against any liability
asserted against him and incurred by him in any such capacity or arising out of
his status as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of these By-Laws.
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<PAGE>
Section 5.06. INDEMNIFICATION OF FIDUCIARIES UNDER EMPLOYEE BENEFIT PLANS.
For purposes only of Section 5.01 through 5.05 of these By-Laws; (a) each person
who is or was a director, officer or employee of the Corporation or of a
wholly-owned subsidiary of the Corporation and is or was a "fiduciary" with
regard to any "employee benefit plan" (as such terms are defined in Sections
3(21) and 3(3), respectively, of the Employee Retirement Income Security Act of
1974) of the Corporation or of a wholly-owned subsidiary of the Corporation
shall be deemed to be a director or officer of the Corporation in his capacity
as a "fiduciary" with respect to any such plan; (b) any pending or threatened
action, suit or proceeding against him as such a "fiduciary" shall be deemed to
be by reason of the fact that he was a director or officer of the Corporation;
and (c) the rights of such persons to indemnification by the Corporation shall
be governed by, and administered in accordance with, Sections 5.01 through 5.05
of these By-Laws. (Added July 21, 1976)
Section 6. BORROWING, DEPOSITS, PROXIES, ETC.
Section 6.01. BORROWING, ETC. No officer, agent or employee of the
Corporation shall have any power or authority to borrow money on its behalf, to
pledge its credit, or to mortgage or pledge its real or personal property,
except within the scope and to the extent of the authority delegated by
resolution of the Board of Directors. Authority may be given by the Board for
any of the above purposes and may be general or limited to specific instances.
Section 6.02. DEPOSITS. All funds of the Corporation shall be deposited
from time to time to the credit of the Corporation in such banks, trust
companies, or other depositaries as the Board of Directors may approve or
designate, and all such funds shall be withdrawn only upon checks signed by such
one or more officers or employees as the Board shall from time to time
determine.
Section 6.03. PROXIES. Unless otherwise ordered by the Board of Directors,
any officer of the Corporation may appoint an attorney or attorneys (who may be
or include such officer himself), in the name and on behalf of the Corporation,
to cast the votes which the Corporation may be entitled to cast as a shareholder
or otherwise in any other corporation any of whose shares or other securities
are held by or for the Corporation, at meetings of the
-10-
<PAGE>
holders of the shares or other securities of such other corporation, or, in
connection with the ownership of such shares or other securities, to consent in
writing to any action by such other corporation, and may instruct the person or
persons so appointed as to the manner of casting such votes or giving such
consent, and my execute or cause to be executed in the name and on behalf of the
Corporation and under its seal such written proxies or other instruments as he
may deem necessary or proper. in the premises.
Section 7. SHARE CERTIFICATES: TRANSFER
Section 7.01. SHARE CERTIFICATES. Share certificates shall be signed by the
Chairman of the Board or the President and by the Secretary or the Treasurer or
an Assistant Secretary or an Assistant Treasurer of the Corporation, but, to the
extent permitted by law, such signatures may be facsimiles, engraved or printed.
Section 7.02. TRANSFER OF SHARES. Transfer of share certificates and the
shares represented thereby shall be made only on the books of the Corporation by
the owner thereof or by his attorney thereunto authorized, by a power of
attorney duly executed, and filed with the Secretary or a Transfer Agent of the
Corporation, and on surrender of the share certificates.
Section 7.03. TRANSFER AGENT AND REGISTRAR; REGULATIONS. The Corporation
may, if and whenever the Board of Directors so determines, maintain, in the
Commonwealth of Pennsylvania, or any other state of the United States, one or
more transfer offices or agencies, each in charge of a transfer Agent designated
by the Board, where the shares of the Corporation shall be transferable, and
also one or more registry offices, each in charge of a Registrar designated by
the Board, where such shares shall be registered; and no certificates for shares
of the Corporation in respect of which a Transfer Agent and Registrar shall have
been designated shall be valid unless countersigned by such Transfer Agent and
registered by such Registrar. The Board may also make such additional rules and
regulations as it may deem expedient concerning the issue, transfer and
registration of share certificates.
Section 7.04. LOST, DESTROYED AND MUTILATED CERTIFICATES. The Board of
Directors, by standing resolution or by resolutions with respect to particular
cases, may authorize the issue of new share certificates in lieu of share
certificates lost, destroyed or mutilated, upon such terms and conditions as the
Board may direct.
-11-
<PAGE>
Section 8. AMENDMENTS
Section 8.01. Any or all of the provisions of these By-Laws, whether
contractual in nature or merely regulatory of the internal affairs of the
Corporation, may be amended or repealed (a) except as otherwise provided in the
Business Corporation Law, by a majority vote of the members of the Board of
Directors, or (b) by vote of the shareholders entitled to cast at least a
majority of the votes which all shareholders are entitled to cast thereon, at
any regular or special meeting duly convened after notice of such purpose to the
directors or shareholders, as the case may be.
No provision of these By-Laws shall vest any property right in any
shareholder.
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<PAGE>
(28-b)
HUNT MANUFACTURING CO.
CERTIFICATE OF VICE PRESIDENT
This Certificate is furnished pursuant to Section 6(g) of the Contract of
Purchase dated May 15, 1979 between Alex. Brown & Sons and The Iredell County
Industrial Facilities and Pollution Control Financing Authority, and approved by
Hunt Manufacturing Co. (the "Company"), relating to the issuance and purchase of
$2,000,000 principal amount of industrial revenue bonds; and the definitions
contained in said Contract of Purchase shall apply to the terms used herein.
The undersigned Vice President of the Company does hereby certify that:
1. The Company does not have any material contingent obligations which
are not disclosed in the Official Statement:
2. So far as is known to the Company there are no material legal
proceedings, pending or threatened, to which the Company is or may be made
a party or to which any of its property is or may become subjected, which
has not been disclosed in the Official Statement;
3. There is no action or proceeding pending or to his best knowledge,
threatened, looking toward the dissolution or liquidation of the Company
and there is no action or proceeding pending, or to his best knowledge
threatened, by or against the Company affecting the validity and
enforceability of the terms of the Agreement, the Guaranty or the Contract
of Purchase: and
4. The representations and warranties of the Company contained in the
Letter of Representations attached as exhibits to the Contract of Purchase
are true, correct and complete as of the date hereof, with the same effect
as if those representations and warranties had been made on and as of this
date.
IN WITNESS WHEREOF, the undersigned has executed this certificate this 5th
day of June, 1979.
-----------------------------
/s/ Rudolph M. Peins, Jr.
Vice President
<PAGE>
Commonwealth of Pennsylvania
Department of State
Corporation Bureau
Articles of Amendment
In compliance with the requirements of Article VIII of the Business
Corporation Law, approved the 5th day of May, 1933, P.L. 364, as amended, the
applicant desiring to amend its Articles hereby certifies, under its corporate
seal that
1. The name of the corporation is: Hunt Manufacturing Co.
2. The location of its registered office is: 1405 Locust Street, Philadelphia,
Pennsylvania 19102.
3. The corporation was formed under the Act of: May 5, 1933, as amended.
4. Its date of incorporaiton is: November 5, 1962.
5. (Strike out (a) or (b) below, whichever is not applicable)
(a) The meeting of the shareholders of the corporation at which the
amendment was adopted was held at the date and place and pursuant to
the kind and period of notice herein stated.
Time: The 17th day of November, 1970.
Place: 1405 Locust Street, Philadelphia, Pennsylvania.
Kind and period of notice: 10 days written notice.
6. At the time of the action of the shareholders:
(a) The total number of shares outstanding was: 4,525.
(b) The number of shares entitled to vote was:* 4,525.
7. In the action taken by the shareholders:
(a) the number of shares voted in favor of the amendment was:** 4,373.
(b) The number of shares voted against the amendment was:** none
* If the shares of any class were entitled to vote as a class, the number of
shares of each class so entitled and the number of shares of all other
classes entitled to vote should be set forth.
** If the shares of any class were entitled to vote as a class, the number of
shares of each class and the number of shares of all other classes voted
for and against such amendment respectively should be set forth.
NOTE: If the effect of the amendment is to increase the authorized capital stock
of the corporation, excise tax at the rate of 1/5 of 1% on the amount of
increase will be due and payable with the filing of the amendment.
NOTE: Filing fee--$30.00. (In addition to any amount of excise tax due and
owing)
<PAGE>
8. The amendment adopted by the shareholders, set forth in full, follows.
See attached pages.
IN TESTIMONY WHEREOF, the applicant has caused these Articles of Amendment
to be signed by its President or Vice President and its corporate seal, duly
attested by its Secretary of Treasurer, to be hereunto affixed this 13th day of
January, 1971.
HUNT MANUFACTURING CO.
By: ______________________________
(President or Vice President)
Attest:
______________________________
(CORPORATE SEAL)
Approved and filed in the Department of State on the 14th day of January,
A.D. 1971.
-----------------------------
Secretary of the Commonwealth
<PAGE>
RESOLVED, that the Articles of Incorporation of this Corporation be amended
by restating the same in their entirety as follows:
"1st. The name of the corporation is Hunt Manufacturing Co.
2nd. The location and post office address of its registered office in
the Commonwealth of Pennsylvania is 1405 Locust Street, Philadelphia,
Pennsylvania.
3rd. The corporation shall have unlimited power to engage in and to do
any lawful act concerning any or all lawful busines for which corporations
may be incorporated under the Act of May 5, 1933, P.L. 364, as amended.
The corporation is organized under the Act of May 5, 1933, P.L. 364, as
amended.
4th. The term for which it is to exist is perpetual.
5th. The aggregate number of shares which the Corporation shall have
authority to issue is:
4,000,000 shares, divided into 1,000,000 Preferred Shares of the par value
of $.10 per share, and 3,000,000 Common Shares of the par value of $.10 per
share.
A description of the shares of each class and a statement of the
preferences, qualifications, limitations, restrictions, and the special or
relative rights granted to or imposed upon the shares of each class, except such
thereof as the Board of Directors is authorized to fix, as hereinafter provided,
is as follows:
<PAGE>
I. PREFERRED SHARES
The Preferred Shares may be divided into and issued in series, each series
to be so designated as to distinguish the shares thereof from the shares of all
other series and classes. The Board of Directors of the Corporation shall have
authority, by resolution, to divide any or all of the Preferred Shares into one
or more series and, with respect to each series to establish and, prior to the
issue thereof, to fix and determine a distinguishing designation therefor and to
fix and determine:
(a) the rate at which dividends on the shares shall be declared and
paid or set aside for payment; whether dividends at the rate so determined
shall be cumulative and if so from what date or dates and on what terms;
and whether the shares shall be entitled to any participating or other
dividends in addition to dividends at the rate so determined, and if so on
what terms;
(b) whether or not the shares shall have voting rights, in addition to
the voting rights provided by law, and if so, the terms and conditions
thereof;
(c) whether the shares shall have conversion privileges and, if so,
the terms and conditions of such conversion, including provisions for any
adjustmnt of the conversion rate;
(d) whether or not the shares shall be redeemable, and, if so, the
terms and conditions of such redemption, including the date or dates upon
or after which they shall be redeemable, and the amount per share payable
in case of redemption, which amount may vary under different conditions and
at different redemption dates;
<PAGE>
(e) whether any shares shall be redeemed through sinking fund
payments, and, if so, on what terms;
(f) the rights of the shares of each series in the event of voluntary
or involuntary liquidation, dissolution, winding up or distribution of the
assets of the Corporation; and
(g) any other relative rights, preferences and limitations of each
series.
II. COMMON SHARES
Except as expressly provided by law or by resolution of the Board of
Directors pursuant to the authority granted under Article 5I hereof, all voting
rights shall be vested in the holders of the Common Shares.
FURTHER RESOLVED, that upon the effective date of the proposed restatement
of the Company's Articles of Incorporation each of the 4,525 issued and
outstanding Common Shares (par value $25 per share) of the Company shall be
split up, divided and changed into 196 Common Shares of the par value of $.10
per share, a total of 886,900 such shares.
<PAGE>
Commonwealth of Pennsylvania
Department of State
Office of the
Secretary of the Commonwealth
TO ALL TO WHOM THESE PRESENTS SHALL COME, GREETING:
WHEREAS, In and by Article VIII of the Business Corporation Law, approved
the fifth day of May, Anno Domini one thousand nine hundred and thirty-three,
the Department of State is authorized and required to issue a
CERTIFICATE OF AMENDMENT
evidencing the amendment and restatement of the Articles of Incorporation in
their entirety of a business corporation organized under or subject to the
provisions of that Law; and
WHEREAS, The stipulations and conditions of that Law pertaining to the
amendment of Articles of Incorporation have been fully complied with by
HUNT MANUFACTURING CO.
HENCEFORTH, The "Articles," as defined in Article I of the Business
Corporation Law, shall not include any prior documents.
THEREFORE, KNOW YE, That subject to the Constitution of this Commonwealth
and under the authority of the Business Corporation Law, I do by these presents,
which I have caused to be Sealed with the Great Seal of the Commonwealth, extend
the rights and powers of the corporation named above, in accordance with the
terms and provisions of the Articles of Amendment presented by it to the
Department of State, with full power and authority to use and enjoy such rights
and powers, subject to all the provisions and restrictions of the Business
Corporation Law and all other applicable laws of this Commonwealth.
GIVEN under my Hand and the Great Seal of the Commonwealth, at the City of
Harrisburg, this 14th day of January, in the year of our Lord, one thousand nine
hundred and seventy-one, and of the Commonwealth, the one hundred and
ninety-fifth.
- -------------------------------
Secretary of the Commonwealth
<PAGE>
PENNSYLVANIA
ARTICLES OF MERGER
OF
BIENFANG PAPER COMPANY INC.
INTO
HUNT MANUFACTURING C0.
* * * * * * *
TO THE DEPARTMENT OF STATE COMMONWEALTH OF PENNSYLVANIA:
In compliance with the requirements of Article IX of the Pennsylvania
Business Corporation Law, as amended, providing for the merger of corporations,
Bienfang Paper Company Inc., a New York corporation, and Hunt Manufacturing Co.
a Pennsylvania corporation, hereby certify under their respective corporate
seals as follows:
l. The surviving corporation is Hunt Manufacturing Co., (hereinafter
sometimes referred to as tie "Surviving Corporation"), and its registered office
in this Commonwealth is 1405 Locust Street, Philadelphia, Pennsylvania 19102.
2. The merging corporation, Bienfang Paper Company Inc. (hereinafter
sometimes referred to as the "Merging Corporation") is not qualified as a
foreign corporation in Pennsylvania but maintains a registered office at 125
Jackson Avenue, Edison, New Jersey 08817.
<PAGE>
3. The merger shall become effective upon the filing of the Articles of
Merger by the Department of State of Pennsylvania and a Certificate of Merger by
the Department of State of New York. For all accounting and administrative
purposes the effective date of the mercer shall be as of the close of business
on that date.
4. At all times material hereto, the Surviving Corporation has been the
owner of all of the issued and outstanding shares of capital stock of the
Merging Corporation.
5. (a) The Plan of Merger was adopted by the Surviving Corporation in
accordance with the provisions of Section 9.02.1 of the Pennsylvania Business
Corporation Law.
(b) The Plan of Mercer has been authorized and approved with respect to the
Merging Corporation in accordance with the laws of the State of New York.
6. The Plan of Merger is as follows:
At the effective date of the merger, Bienfang Paper Company, Inc., a New
York Corporation and wholly-owned subsidiary of Hunt Manufacturing Co. shall be
merged into Hunt Manufacturing Co. In accordance with the corporatiomn laws of
the States of New York and Pennsylvania, Hunt Manufacturing Co. as the Surviving
Corporation, shalll continue to exist with its Articles of Incorporation
unchanged by reason of said merger.
At the effective date of the merger, the issued and outstanding shares of
capital stock of Bienfang paper Company Inc. shall be surrendered and cencelled,
and no shares or other securities or cash or obligations of Hunt Manufacturing
Co. shall be issued in exchange therefor.
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<PAGE>
IN TESTIMONY WHEREOF, each undersigned corporation has caused these
Articles of Merger to be signed by a duly authorized officer and its corporate
seal duly attested by answer such officer, to be hereunto affixed this _____ day
of ____________, 19____.
Hunt Manufacturing Co.
By: _________________________________
Alvan R. Alley, President
(CORPORATE SEAL) Attest:
------------------------------
Rudolph M. Peins, Jr., Secretary
BIENFANG PAPER COMPANY INC.
By: __________________________________
Alvan R. Alley, Chairman of the Board
(CORPORATE SEAL) Attest:
__________________________________
Rudolph M. Peins, Jr., Secretary
Approved and filed in the Department of State on the 20th day of December
A.D. 1971.
- --------------------------------
Secretary of the Commonwealth
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<PAGE>
Commonwealth of Pennsylvania
Department of State
TO ALL TO WHOM THESE PRESENTS SHALL COME, GREETING:
WHEREAS, under the provisions of Article IX of the Business Corporation Law
(Act of May 5, 1933, P.L. 364), as amended, the Department of State is
authorized and required to issue a
CERTIFICATE OF MERGER
evidencing the merger of any one or more domestic corporations, and any one or
more foreign corporations into one of such domestic corporations under the
provisions of that law;
AND WHEREAS, The stipulations and conditions of that law relating to the
merger of such corporations have been fully complied with by BIENFANG PAPER
COMPANY, INC., a New York corporation, and HUNT MANUFACTURING CO., a
Pennsylvania corporation.
IT IS, THEREFORE, CERTIFIED, That from the Articles of Merger filed with
the Department of State, it appears that BIENFANG PAPER COMPANY, INC., the New
York corporation, has been merged into HUNT MANUFACTURING CO., being the
Pennsylvania corporation.
THEREFORE, KNOW YE, That subject to the Constitution of this Commonwealth,
and under authority of the Business Corporation Law, I DO BY THESE PRESENTS,
which I have caused to be sealed with the Great Seal of the Commonwealth, hereby
declare that the Pennsylvania corporation shall be the surviving corporation,
under the name, style and title of
HUNT MANUFACTURING CO.
and shall continue to be invested with all the franchises and be subject to all
the duties of a domestic business corporation under the Business Corporation
Law.
GIVEN under my Hand and the Great Seal of the Commonwealth, at the City of
Harrisburg, this 20th day of December in the year of our Lord one thousand nine
hundred and seventy-one and of the Commonwealth the one hundred and
ninety-sixth.
- --------------------------------
Secretary of the Commonwealth
<PAGE>
COMMONWEALTH OF PENNSYLVANIA
DEPARTMENT OF STATE
CORPORATION BUREAU
In compliance with the requirements of section 903 of the Business
Corporation Law, set of May 8, 1983 (P.L. 364) (15 P.S. section 1903) the
undersigned corporations, desiring to effect a merger, hereby certify that:
1. The name of the corporation surviving the merger is: Hunt Manufacturing Co.
2. (Check and complete one of the following):
[x] The surviving corporation is a domestic corporation and the location
of its registered office in this Commonwealth is the Department of
State is hereby authorized to correct the following statement to
conform to the Records of the Department: 1405 Locust Street,
Philadelphia, Pennsylvania 19103.
3. Non-Qualified Foreign Corporations
Name Address
---- -------
Lit-Ning Industries Suite 906
(California Corporation) 10889 Wilshire Boulevard
Los Angeles, California
Lit-Ning Products Company 2496 South Cherry
(California Corporation) Fresno, California
<PAGE>
4. Check and if appropriate, complete one of the following:
[x} The plan of merger shall be effective upon filing these Articles of
Merger in the Department of State.
5. The manner in which the plan of merger was adopted by each domestic
corporation is as follows:
Hunt Manufacturing Co.
Approved by action of the board of directors pursuant to section 902.1 of the
Business Corporation Law.
6. (Strike out this paragraph if no foreign corporation is party to the
merger.) The plan was authorized, adopted or approved, as the case may be,
by the foreign corporation for each of the foreign corporations, in
accordance with the laws of the organization in which it was formed.
7. The planned merger is set forth in Exhibit A attached hereto and made a
part hereof.
<PAGE>
IN TESTIMONY WHEREOF, each undersigned corporation has caused these
Articles of Merger to be signed by a duly authorized officer and its corporate
seal duly attested by answer such officer, to be hereunto affixed this _____ day
of ____________, 19____.
Hunt Manufacturing Co.
By: _____________________________
Alvan R. Alley, President
Attest:
- ------------------------------
Rudolph M. Peins, Jr.,
Secretary
Lit-Ming Industries
By: _____________________________
Alvan R. Alley, President
Attest:
- ------------------------------
Rudolph M. Peins, Jr.,
Secretary
Lit-Ming Industries
By: _____________________________
Alvan R. Alley, President
Attest:
- ------------------------------
Rudolph M. Peins, Jr.,
Secretary
(CORPORATE SEAL)
<PAGE>
PLAN OF MERGER MERGING LIT-NING INDUSTRIES AND
LIT-NING PRODUCTS COMPANY
INTO HUNT MANUFACTURING CO.
LIT-NING INDUSTRIES and LIT-NING PRODUCTS COMPANY, both California
corporations, and HUNT MANUFACTURING CO., a Pennsylvania corporation, have
agreed that LIT-NING INDUSTRIES and LIT-NING PRODUCTS COMPANY (hereinafter
called the "Merging Corporations") shall merge into HUNT MANUFACTURING CO.
(hereinafter called the "Surviving Corporation"), pursuant to Article IX of the
Pennsylvania Business Corporation Law and Sections 4118 and 4119 of the
California General Corporation Law.
The terms and conditions of the merger and mode of carrying the same into
effect are as follows:
I. At the effective date of the merger, the Merging Corporations, both
wholly-owned subsidiaries of the Surviving Corporation, shall be merged
into the Surviving Corporation in accordance with the corporation law of
the States of California and Pennsylvania.
II. At the effective date of the merger, the issued and outstanding
shares of capital stock of both of the Merging Corporations shall be
surrendered and cancelled, and no shares or other securities or cash or
obligations of the Surviving Corporation shall be issued in exchange
therefore.
<PAGE>
III. The merger is to be effective upon filing the Articles of Merger
in the Department of State.
IV. The Articles of Incorporation as amended of the Surviving
Corporation shall not be further amended as a result of the merger.
-2-
<PAGE>
Commonwealth of Pennsylvania
Department of State
To All in Whom These Presents Shall Come, Greeting:
WHEREAS, Under the provisions of Article IX of the Business Corporation Law
(Act of May 5, 1933, P.L. 364), as amended, the Department of State is
authorized and required under
CERTIFICATE OF MERGER
evidencing the merger of any one or more domestic corporations and any one or
more foreign corporations into one of such corporations under the provisions of
that law; and
WHEREAS, The regulations and conditions of that law relating to the merger
of the corporations have been duly complied with by PETERSON MANUFACTURING
COMPANY, a Florida corporation and HUNT MANUFACTURING CO., a Pennsylvania
corporation.
IT IS, THEREFORE, CERTIFIED, That from the Articles of Merger filed with
the Department of State, it appears that LIT-NING INDUSTRIES and LIT-NING
PRODUCTS COMPANY, the California corporations, have been merged into HUNT
MANUFACTURING CO., being the Pennsylvania corporation.
THEREFORE, KNOW YE, That subject to the Constitution of this Commonwealth,
and under authority of the Business Corporation Law, I DO BY THESE PRESENTS,
which I have caused to be sealed with the Great Seal of the Commonwealth, hereby
declare that HUNT MANUFACTURING CO., the Pennsylvania corporation, shall be the
surviving corporation.
GIVEN Under my Hand and the Great Seal of the Commonwealth, at the City of
Harrisburg, this 15th day of March in the year of our Lord one thousand nine
hundred and seventy-six and of the Commonwealth __________.
- --------------------------------------
Secretary of the Commowealth
<PAGE>
COMMONWEALTH OF PENNSYLVANIA
DEPARTMENT OF STATE
CORPORATION BUREAU
In compliance with the requirements of section 903 of the Business
Corporation Law, set of May 8, 1983 (P.L. 364) (15 P.S. section 1903) the
undersigned corporations, desiring to effect a merger, hereby certify that:
1. The name of the corporation surviving the merger is: Hunt Manufacturing Co.
2. (Check and complete one of the following):
[x] The surviving corporation is a domestic corporation and the location
of its registered office in this Commonwealth is the Department of
State is hereby authorized to correct the following statement to
conform to the Records of the Department: 1405 Locust Street,
Philadelphia, Pennsylvania 19103.
3. Non-Qualified Foreign Corporation
Name Registered Office
---- -----------------
Peterson Manufacturing Company 1226 Northport Drive
Sarasota, Florida 33577
<PAGE>
4. Check and if appropriate, complete one of the following:
[ ] The plan of merger shall be effective upon filing these Articles of
Merger in the Department of State.
[x] The plan of merger shall be effective on September 26, 1976 at
Midnight.
5. The manner in which the plan of merger was adopted by each domestic
corporation is as follows:
Hunt Manufacturing Co.
Approved by action of the board of directors pursuant to section 902.1 of
the Business Corporation Law.
6. (Strike out this paragraph if no foreign corporation is party to the
merger.) The plan was authorized, adopted or approved, as the case may be,
by the foreign corporation for each of the foreign corporations, in
accordance with the laws of the organization in which it was formed.
7. The planned merger is set forth in Exhibit A attached hereto and made a
part hereof.
<PAGE>
IN TESTIMONY WHEREOF, each undersigned corporation has caused these
Articles of Merger to be signed by a duly authorized officer and its corporate
seal duly attested by answer such officer, to be hereunto affixed this 20th day
of September, 1976.
HUNT MANUFACTURING CO.
By: _______________________________________
Raymond P. Van Orden, Vice President
Attest:
- -----------------------------
Rudolph M. Peins, Jr.,
Secretary
PETERSON MANUFACTURING COMPANY
By: ________________________________
George E. Harrod, III,
Chairman of the Board
Attest:
- -----------------------------
Rudolph M. Peins, Jr.,
Secretary
<PAGE>
PLAN OF MERGER MERGING PETERSON MANUFACTURING COMPANY
INTO HUNT MANUFACTURING CO.
PETERSON MANUFACTURING COMPANY, a Florida corporation, and HUNT
MANUFACTURING CO., a Pennsylvania corporation, have agreed that PETERSON
MANUFACTURING COMPANY (hereinafter called the "Merging Corporations") shall
merge into HUNT MANUFACTURING CO. (hereinafter called the "Surviving
Corporation"), pursuant to Article IX of the Pennsylvania Business Corporation
Law and Sections 74 and 78 of the Florida General Corporation Law.
The terms and conditions of the merger and mode of carrying the same into
effect are as follows:
I. At the effective date of the merger, the Merging Corporations, both
wholly-owned subsidiaries of the Surviving Corporation, shall be merged
into the Surviving Corporation in accordance with the corporation law of
the States of Florida and Pennsylvania.
II. The outstanding shares of capital stock of the Surviving
Corporation shall remain outstanding in the hands of the holders thereof.
The stated capital applicable thereto shall not be changed by the merger.
<PAGE>
III. At the effective date of the merger, the issued and outstanding
shares of capital stock of both of the Merging Corporations shall be
surrendered and cancelled, and no shares or other securities or cash or
obligations of the Surviving Corporation shall be issued in exchange
therefore.
IV. The Articles of Incorporation as amended of the Surviving
Corporation shall continue to be the Articles of Incorporation of the
Surviving Corporation, unchanged by the reason of the merger.
V. The merger is to be effective at midnight on September 26, 1976.
VI. The Surviving Corporation owns all of the outstanding stock of the
Merging Corporation, the Florida corporation which is a party to the
matter, therefore no provisions for rights of dissenting shareholders
pursuant to Section 76(2) of the Florida General Corporation Act are
necessary.
-2-
<PAGE>
Commonwealth of Pennsylvania
Department of State
To All in Whom These Presents Shall Come, Greeting:
WHEREAS, Under the provisions of Article IX of the Business Corporation Law
(Act of May 5, 1933, P.L. 364), as amended, the Department of State is
authorized and required under
CERTIFICATE OF MERGER
evidencing the merger of any one or more domestic corporations and any one or
more foreign corporations into one of such corporations under the provisions of
that law; and
WHEREAS, The regulations and conditions of that law relating to the merger
of the corporations have been duly complied with by PETERSON MANUFACTURING
COMPANY, a Florida corporation and HUNT MANUFACTURING CO., a Pennsylvania
corporation.
IT IS, THEREFORE, CERTIFIED, That from the Articles of Merger filed with
the Department of State, it appears that LIT-NING INDUSTRIES and LIT-NING
PRODUCTS COMPANY, the California corporations, have been merged into HUNT
MANUFACTURING CO., being the Pennsylvania corporation.
THEREFORE, KNOW YE, That subject to the Constitution of this Commonwealth,
and under authority of the Business Corporation Law, I DO BY THESE PRESENTS,
which I have caused to be sealed with the Great Seal of the Commonwealth, hereby
declare that HUNT MANUFACTURING CO., the Pennsylvania corporation, shall be the
surviving corporation.
GIVEN Under my Hand and the Great Seal of the Commonwealth, at the City of
Harrisburg, this 15th day of March in the year of our Lord one thousand nine
hundred and seventy-six and of the Commonwealth __________.
- --------------------------------------
Secretary of the Commowealth
<PAGE>
CAN'T READ THE REST OF THESE PAGES
<PAGE>
Commonwealth of Pennsylvania
[ SEAL ]
May 30, 1979
To All to Whom These Presents Come: Greeting:
IN RE: "HUNT MANUFACTURING CO."
I, ETHEL D. ALLEN, D.O., Secretary of the Commonwealth of the Commonwealth
of Pennsylvania do hereby certify that the foregoing and annexed is a true and
correct photocopy of Articles of Amendment restating the Articles of
Incorporation in their entirety and all Amendments which appear of record in
this Department.
IN TESTIMONY WHEREOF, I have hereunto set my hand and caused the seal of
the Secretary's Office to be affixed, the day and year above written.
[ SEAL ]
- -----------------------------
Secretary of the Commonwealth
DSCB40 (REV. 12-77)
<PAGE>
[SEAL]
STATE OF NORTH CAROLINA
DEPARTMENT OF REVENUE
P. 0. BOX 25000
RALEIGH, N. C. 27640
DEPUTY SECRETARY
May 23, 1979
Hunt Manufacturing Company
140:1 Locust Street
Philadelphia, Pennsylvania 19102
Attention: Mr. Rudolph M. Peins, Jr.
Re: Tax Status
Gentlemen:
We hereby certify that Hunt Manufacturing Company has tiled all corporation
income and franchise tax =returns due this Department to date and has paid the
taxes shown due thereon. We further certify that there are no outstanding income
and franchise tax assessments.
Returns not barred by the statute of limitations are, of course, subject to
final audit.
Very truly yours,
-----------------------------
B. Matthews Director
Corporate Income & Franchise Tax Division
hw
<PAGE>
Commonwealth of Pennsylvania
[ SEAL ]
May 30, 1979
To All to Whom These Presents Come: Greeting:
I DO HEREBY CERTIFY, That from an examination of the indices and corporate
records of this department, it appears that on November 5, 1962, a Certificate
of Incorporation was issued to a Pennsylvania corporation entitled "HUNT
MANUFACTURING C0."
I DO FURTHER CERTIFY, That no proceedings in dissolution adversely
affecting the corporate existence of the foregoing have subsequently been filed.
WHEREFORE, it appears that this corporation remains a presently subsisting
corporation as of the date hereof.
IN TESTIMONY WHEREOF, I have hereunto set my hand and caused the Great Seal
of the Commonwealth to be affixed, the day and year above written.
-----------------------------
Secretary of the Commonwealth
<PAGE>
[SEAL]
STATE OF NORTH
CAROLINA
Department of The
Secretary of State
I, THAD SURE, Secretary of State of the State of North Carolina, do hereby
certify that HUNT MANUFACTURING CO. a corporation organized under the laws of
PENNSYLVANIA, was duly domesticated in the State of North Carolina by issuance
of a Certificate of Authority on the 30th day of November, 1962;
AND I FURTHER certify that said HUNT MANUFACTURING CO. is authorized to
transact such business in this State as is permitted by its certificate of
incorporation and Chapter 55, General Statutes of North Carolina, entitled
"Business Corporation Act" and is in good standing so far as is shown by the
records of my office.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal.
DONE IN OFFICE at Raleigh, this the 22nd day of May, 1979.
-----------------------------
THAD EURE
Secretary of State
By
-----------------------------
Deputy Secretary of State
<PAGE>
FRANK B. HALL & CO. OF PENNSYLVANIA, INC.
2700 - TWO INA PLAZA, 1622 ARCH STREET
PHILA., PA. 19103
CERTIFICATE OF INSURANCE
This is to certify to Whom It May Concern
Address_____________________________________________________________________.
that the following described policies are in force at this date.
Name of Insured: Hunt Manufacturing Co. -- Bienfang Paper Division
Policy No. Various Expiring various
INSURER AND
DESCRIPTION OF COVERAGE LIMITS
----------------------- ------
INDUSTRIAL RISK INSURERS
- ------------------------
Policy No. 31-7-04199 $2,689,000 Bldg
Policy Expiration: 12/1/80 $ 720, 000 Contents
Fire, Extended Coverage & Vandalism $2, 780, 000 Inventory
Location: Meecham & West Front
Statesville, N. C.
Business Interruption
HOME INDEMNITY CO.
- ------------------
Policy No. GA 9-72 42 89
Policy Expiration: 3/2/80
General Liability Including Products $500,000/500,000 B. I.
$100,000/ 100,000 P. D.
FRANK B. MALL & CO. OF PENNSYLVANIA, INC.
Date Issued May 30, 1979
- -----------------------------------
AUTHORIZED REPRESENTATIVE
<PAGE>
Frank H. Hall & Co. of Pennsylvania, Inc.
2700 - Two INA Plaza, 1622 Arch St.
Philadelphia, Penna.
NAME AND ADDRESS OF INSURED:
Hunt Manufacturing Co., et al
1405 Locust Street
Philadelphia, Pennsylvania 19102
COMPANIES AFFORDING COVERAGES
COMPANY
LETTER A First State Insurance
COMPANY
LETTER B
COMPANY
LETTER C
COMPANY
LETTER D
COMPANY
LETTER E
This is to certify that policies of insurance listed below have been issued to
the insured named above and are in force at this time.
<TABLE>
<CAPTION>
LIMITS OF LIABILITY (IN THOUSANDS (000)
-----------------------------------------
COMPANY POLICY EACH
LETTER TYPE OF INSURANCE POLICY NUMBER EXPIRATION DATE OCCURRENCE AGGREGATE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
GENERAL LIABILITY
BODILY INJURY $ $
COMPREHENSIVE FORM
PREMISES-OPERATIONS PROPERTY DAMAGE $ $
EXPLOSION AND COLLAPSE HAZARD
UNDERGROUND HAZARD
PRODUCTS/COMPLETED
OPERATIONS HAZARD
BODILY INJURY AND
CONTRACTUAL INSURANCE PROPERTY DAMAGE
COMBINED $ $
BROAD FORM PROPERTY DAMAGE
INDEPENDENT CONTRACTORS
PERSONAL INJURY PERSONAL INJURY $ $
- ----------------------------------------------------------------------------------------------------------------------------------
AUTOMOBILE LIABILITY BODILY INJURY $ $
(EACH PERSON)
COMPREHENSIVE FORM BODILY INJURY $ $
(EACH ACCIDENT)
OWNED
PROPERTY DAMAGE $ $
HIRED
NON-OWNED BODILY INJURY $ $
AND PROPERTY
DAMAGE COMBINED
- ----------------------------------------------------------------------------------------------------------------------------------
<PAGE>
- ----------------------------------------------------------------------------------------------------------------------------------
EXCESS LIABILITY
[X] UMBRELLA FORM 943365 3/2/80 BODILY INJURY AND $1,500,000
PROPERTY DAMAGE
OTHER THAN UMBRELLA FORM COMBINED $1,500,000
- ----------------------------------------------------------------------------------------------------------------------------------
WORKERS' COMPENSATION AND
EMPLOYER'S LIABILITY
- ----------------------------------------------------------------------------------------------------------------------------------
OTHER
- ----------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OPERATIONS/LOCATIONS/VEHICLES
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
CANCELLATION: Should any of the above described policies be cancelled before the
expiration date thereof, the issuing company will endeavor to mail 30 days
written notice to the below named certificate holder, but failure to mail such
notice shall impose no obligation or liability of any kind upon the company.
NAME AND ADDRESS OF CERTIFICATEHOLDER
James S. Hogg, Esq.
Brown, Wood, Ivey, Mitchell & Petty
1 Liberty Plaza
New York, New York
Date Issued: June 5, 1979
- ------------------------------
AUTHORIZED REPRESENTATIVE
<PAGE>
AMERICAN LAND TITLE ASSOCIATION
OWNER'S POLICY FORM B-1970
(Amended 10-17-70)
CHICAGO TITLE INSURANCE COMPANY
SUBJECT TO THE EXCLUSIONS FROM COVERAGE THE EXCEPTIONS CONTAINED IN SCHEDULE B
AND THE PROVISIONS OF THE CONDITIONS AND STIPULATIONS HEREOF, CHICAGO TITLE
INSURANCE COMPANY, a Missouri corporation, herein called the Company, insures,
as of Date of Policy shown in Schedule A, against loss or Damage, not /exceeding
the amount of insurance stated in Schedule A, and costs, attorneys' fees and
expenses which the Company may become obligated to pay hereunder, sustained or
incurred by the insured by reason of:
1. Title to the estate or interest described in Schedule A being vested
otherwise than as stated therein;
2. Any defect in or lien or encumbrance on such title;
3. Lack of a right of access to and from the land; or
4. Unmarketability of such title.
In Witness Whereof, CHICAGO TITLE INSURANCE COMPANY has caused this policy to be
signed and sealed as of the date of policy shown in Schedule A, the policy to
become valid when countersigned by an authorized signatory.
CHICAGO TITLE INSURANCE COMPANY
By: _____________________________
President
Attest: _____________________________
Secretary
[SEAL]
Issued by:
NORTH CAROLINA TITLE COMPANY
P. O. Box 3074
Winston-Salem, North Carolina 27102
(919) 748-5148
IMPORTANT
THIS POLICY NECESSARILY RELATES SOLELY TO THE TITLE AS OF THE DATE OF THE
POLICY. IN ORDER THAT A PURCHASER OF THE REAL ESTATE DESCRIBED HEREIN MAY BE
INSURED AGAINST DEFECTS, LIENS OR ENCUMBRANCES, THIS POLICY SHOULD BE REISSUED
IN THE NAME OF SUCH PURCHASER.
COPYRIGHT 1969 AMERICAN LAND TITLE ASSOCIATION
<PAGE>
EXCLUSIONS FROM COVERAGE
The following matters are expressly excluded from the coverage of this policy:
1. Any law, ordinance or governmental regulation (including but not
limited to building and zoning ordinances) restricting or regulating
or prohibiting the occupancy, use or enjoyment of the land, or
regulating the character, dimensions or location of any improvement
now or hereafter erected on the land, or prohibiting a separation in
ownership or a reduction in the dimensions or area of the land, or
the effect of any violation of any such law, ordinance or
governmental regulation.
2. Rights of eminent domain or governmental rights of police power
unless notice of the exercise of such rights appears in the public
records at Date of Policy.
3. Defects, liens, encumbrances, adverse claims, or other matters (a)
created, suffered, assumed or agreed to by the insured claimant; (b)
not known to the Company and not shown by the public records but
known to the insured claimant either at Date of Policy or at the date
such claimant acquired an estate or interest insured by this policy
and not disclosed in writing by the insured claimant to the Company
prior to the date such insured claimant became an insured hereunder;
(c) resulting in no loss or damage to the insured claimant; (d)
attaching or created subsequent to Date of Policy; or (e) resulting
in loss or damage which would not have been sustained if the insured
claimant had paid value for the estate or interest insured by this
policy.
<PAGE>
SCHEDULE A
Number 34 004 04 06242
Date OF POLICY June 5, 1979 at 11:45 a.m.
Amount of Insurance $1,500,000.00
1. Name of Insured:
The Iredell County Industrial Facilities and Pollution Control Financing
Authority
2. The estate or interest in the land described herein and which is covered by
this policy is:
Fee simple
3. The estate or interest referred to herein is at Date of Policy vested in
the insured.
4. The land herein described is encumbered by the following mortgage or trust
deed, and assignments:
Deed of Trust from The Iredell County Industrial Facilities and Pollution
Control Financing Authority, to First Union National Bank of North Carolina
as Trustee, dated May 1, 1979, filed for record June 5, 1979 at 11:45 a.m.
in Book 502, page 404, in the Office of the Tester of Deeds, Iredell
County, North Carolina, securing $1,500,000.00. and the mortgages or trust
deeds, if any, shown in Schedule B hereof.
5. The land referred to in this policy is described as follows:
See attached Exhibit "A"
THIS POLICY VALID ONLY IF SCHEDULE B IS ATTACHED.
<PAGE>
SCHEDULE B
Policy Number 34 004 04 06242
---------------
OWNERS
This policy does not insure against loss or damage by reason of the following
exceptions:
GENERAL EXCEPTIONS:
(1) Rights or claims of parties in possession not shown by the public records.
(2) Encroachments, overlaps, boundary line disputes, and any other matters
which would be disclosed by an accurate survey and inspection of the
premises.
(3) Easements or claims of easements not shown by the public records.
(4) Any lien, or right to a lien, for services, labor, or material heretofore
or hereafter furnished, imposed by law and not shown by the public records.
(5) Taxes or special assessments which are not shown as existing liens by the
public records.
Special Exceptions: The mortgage, if any, referred to in Item 4 of Schedule
A. Standard Exceptions 1, 2, 3, 4 and 5 above are hereby deleted from this
policy.
(6) General and special taxes for the year 1979 and subsequent years, none of
which are currently due and payable.
(7) Deed of Trust to First Union National Bank of North Carolina as Trustee,
filed for record June 5, 1979 at 11:45 a.m. in Book 502, page 404, Iredell
County Registry, securing $1,500,000.00.
(8) General easement by prescription for city electric power lines and general
electric service lines; thirty (30) foot easement and right of way by
prescription for North Carolina Highway Number 90 .(West Front Street) for
highway purposes; thirty (30) foot easement and right of way by
prescription for Mechan Road for highway purposes; twenty-two (22) foot
easement and right of way by prescription for Alexander Railroad, all as
shown on survey of subject property by Kestler and MacKay, R.L.S., dated
April 13, 1964; revised to October 9, 1969 and rechecked and re-drawn
February 22, 1979; and rights of others in and to their use.
(9) Ten (10) foot easement and right of way to City of Statesville, North
Carolina, along the eastern boundary of the insured premises for
underground water and sewer lines; recorded in Book 255, page 218, in the
Office of the Register of Deeds for Iredell County, North Carolina.
(10) Rights of others entitled thereto in and to the use of the Siding which
lies within the insured premises and the Alexander Railroad right of way as
shown on survey prepared by Kestler and MacKay, R.L.S., dated April 13,
1964; revised to October 9, 1969 and rechecked and re-drawn February 22,
1979.
(11) Sanitary sewer lines, sprinkler lines, manholes, junction box, electric
power and service lines, poles, transformers, retaining wall, storm drain,
all as shown on survey prepared by Kestler and MacKay, R.L.S., dated April
13, 1964; revised to October 9, 1969 and rechecked and re-drawn February
22, 1979.
(12) Such state of facts as would be disclosed by an accurate survey and
inspection of the premises subsequent to February 22, 1979.
Countersigned
CONTINUED:
- -----------------------------
Authorized Signatory
SCHEDULE B OF THIS POLICY CONSISTS OF 2 PAGES.
<PAGE>
(Schedule B continued)
Policy Number 34 004 04 06242
------------------
OWNERS
Policy Number
------------------
LOAN
(13) Lease Agreement between The Iredell County Industrial Facilities and
Pollution Control Financing Authority, Lessor and Hunt Manufacturing Co.,
Lessee, dated June 1, 1979, filed for record June 5, 1979 at 11:40 a.m. in
Deed Book 639, page 31, Iredell County Registry.
<PAGE>
EXHIBIT "A"
LYING IN STATESVILLE TOWNSHIP COUNTY OF IREDELL STATE OF NORTH CAROLINA, AND
DESCRIBED AS FOLLOWS:
BEGINNING at a point in the center of N.C. Highway No. 90 (West Front Street)
leading from Statesville, N.C. to Taylorsville, N.C., said beginning point
being the Southwest corner of the tract of land conveyed to the Carnation
Company by the State of North Carolina by deed recorded in Deed Book 134, page
125, in the Iredell County Registry, N.C., and running thence with the center of
said N.C. Highway No. 90, North 62(degree) 22' West 1043 feet to a point in the
center of said N.C. Highway No. 90, at which point the center of said N.C.
Highway No. 90 and the center of Mecham Road (a road leading in a Northerly
direction from said N.C. Highway No. 90 to Piedmont Experiment Station Farm)
intersect; thence with the center line of said Mecham Road North 08(degree) 06'
East 805 feet to a point in the center line of the railroad track of Alexander
Railroad Company; thence with the center line of the said railroad track of the
Alexander Railroad Company four calls as follows: (1) South 40(degree) 05' East
839.45 feet to a point; (2) thence South 43(degree) 01' EAST 159 FEET to a
point; (3) thence South 48(degree) 10o East 168.6 feet to a point; (4) thence
South 52(degree) 30' East 161.7 feet to a point in the center of said railroad
track, and said point being the Northwest corner of the said tract of land
conveyed to the Carnation Company by the State of North Carolina, by the deed
referred to hereinabove; thence with the Western line of said Carnation Company,
South 15(degree) 49' 40" West 324.45 feet to the point of BEGINNING, containing
12.76 acres, more or less. For back reference see deed dated September 26, 1975,
and recorded in Deed Book 578, page 573, Iredell County Registry, North
Carolina.
<PAGE>
CONDITIONS AND STIPULATIONS
1. DEFINITION OF TERMS
The following terms when used in this policy mean:
(a) "insured": the insured named in Schedule A, and, subject to rights or
defenses the Company may have had against the named insured those who succeed to
the interest of such insured by operation of law as distinguished from purchase
including, but not limited to, heirs, distributees, devisees, survivors,
personal representatives, next of kin, or corporate or fiduciary successors.
(b) "insured claimant": an insured claiming loss or damage hereunder.
(c) "knowledge": actual knowledge, not constructive knowledge or notice
which may be imputed to an insured by reason of any public records.
(d) "land": the land described, specifically or by reference in Schedule A,
and improvements affixed thereto which by law constitute real property;
provided, however, the term "land" does not include any property beyond the
lines of the area specifically described or referred to in Schedule A, nor any
right, title, interest, estate or easement in abutting streets, roads, avenues,
alleys, lanes, ways or waterways, but nothing herein shall modify or limit the
extent to which a right of access to and from the land is insured by this
policy.
(e) "mortgage": mortgage, deed of trust, trust deed, or other security
instrument.
(f) "public records": those records which by law impart constructive notice
of matters relating to said land.
2. CONTINUATION OF INSURANCE AFTER CONVEYANCE OF TITLE
The coverage of this policy shall continue in force as of Date of Policy in
favor of an insured so long as such insured retains an estate or interest in the
land, or holds an indebtedness secured by a purchase money mortgage given by a
purchaser from such insured, or so long as such insured shall have liability by
reason of covenants of warranty made by such insured in any transfer or
conveyance of such estate or interest; provided, however, this policy shall not
continue in force in favor of any purchaser from such insured of either said
estate or interest or the indebtedness secured by a purchase money mortgage
given to such insured.
3. DEFENSE AND PROSECUTION OF ACTIONS-NOTICE OF CLAIM TO BE GIVEN BY AN
INSURED CLAIMANT
(a) The Company, at its own cost and without undue delay, shall provide for
the defense of an insured in all litigation consisting of actions or proceedings
commenced against such insured, or a defense interposed against an insured in an
action to enforce a contract for a sale of the estate or interest in said land,
to the extent that such litigation is founded upon an alleged defect, lien,
encumbrance, or other matter insured against by this policy.
(b) The insured shall notify the Company promptly in writing (i) in case
any action or proceeding is begun or defense is interposed as set forth in (a)
above, (ii) in case knowledge shall come to an insured hereunder of any claim of
title or interest which is adverse to the title to the estate or interest, as
insured, and which might cause loss or damage for which the Company may be
liable by virtue of this policy, or (iii) if title to the estate or interest, as
insured, is rejected as unmarketable. If such prompt notice shall not be given
to the Company, then as to such insured all liability of the Company shall cease
and terminate in regard to the matter or matters for which such prompt notice is
required; provided, however, that failure to notify shall in no case prejudice
the rights of any such insured under this policy unless the Company shall be
prejudiced by such failure and then only to the extent of such prejudice.
(c) The Company shall have the right at its own cost to institute and
without undue delay prosecute any action or proceeding or to do any other act
which in its opinion may be necessary or desirable to establish the title to the
estate or interest as insured, and the Company may take any appropriate action
under the terms of this policy, whether or not it shall be liable thereunder,
and shall not thereby concede liquidity or waive any provision of this policy.
(d) Whenever the Company shall have brought any action or interposed a
defense as required or permitted by the provisions of this policy, the Company
may pursue any such litigation to final determination by a court of competent
jurisdiction and expressly reserves the right, in its sole discretion, to appeal
from any adverse judgment or order.
<PAGE>
(e) In all cases where this policy permits or requires the Company to
prosecute or provide for the defense of any action or proceeding, the insured
hereunder shall secure to the Company the right to so prosecute or provide
defense in such action or proceeding, and all appeals therein, and permit the
Company to use, at its option, the name of such insured for such purpose.
Whenever requested by the Company, such insured shall give the Company all
reasonable aid in any such action or proceeding, in effecting settlement,
securing evidence, obtaining witnesses, or prosecuting or defending such action
or proceeding, and the Company shall reimburse such insured for any expense so
incurred.
4. NOTICE OF LOSS-LIMITATION OF ACTION
In addition to the notices required under paragraph 3(b) of these
Conditions and Stipulations, a statement in writing of any loss or damage for
which it is claimed the Company is liable under this policy shall be furnished
to the Company within 90 days after such loss or damage shall have been
determined and no right of action shall accrue to an insured claimant until 30
days after such statement shall have been furnished. Failure to furnish such
statement of loss or damage shall terminate any liability of the Company under
this policy as to such loss or damage.
5. OPTIONS TO PAY OR OTHERWISE SETTLE CLAIMS
The Company shall have the option to pay or otherwise settle for or in the
name of an insured claimant any claim insured against or to terminate all
liability and obligations of the Company hereunder by paying or tendering
payment of the amount of insurance under this policy together with any costs,
attorneys' fees and expenses incurred up to the time of such payment or tender
of payment, by the insured claimant and authorized by the Company.
6. DETERMINATION AND PAYMENT OF LOSS
(a) The liability of the Company under this policy shall in no case exceed
the least of:
(i) the actual loss of the insured claimant; or
(ii) the amount of insurance stated in Schedule A.
(b) The Company will pay, in addition to any loss insured against by this
policy, all costs imposed upon an insured in litigation carried on by the
Company for such insured, and all costs, attorneys' fees and expenses in
litigation carried on by such insured with the written authorization of the
Company.
(c) When liability has been definitely fixed in accordance with the
conditions of this policy, the loss or damage shall be payable within 30 days
thereafter.
7. LIMITATION OF LIABILITY
No claim shall arise or be maintainable under this policy (a) if the
Company, after having received notice of an alleged defect, lien or encumbrance
insured against hereunder, by litigation or otherwise, removes such defect, lien
or encumbrance or establishes the title, as insured, within a reasonable time
after receipt of such notice; (b) in the event of litigation until there has
been a final determination by a court of competent jurisdiction, and disposition
of all appeals therefrom, adverse to the title, as insured, as provided in
paragraph 3 hereof; or (c) for liability voluntarily assumed by an insured in
settling any claim or suit without prior written consent of the Company.
8. REDUCTION OF LIABILITY
All payments under this policy, except payments made for costs, attorneys'
fees and expenses, shall reduce the amount of the insurance pro tanto. No
payment shall be made without producing this policy for endorsement of such
payment unless the policy be lost or destroyed, in which case proof of such loss
or destruction shall be furnished to the satisfaction of the Company.
9. LIABILITY NONCUMULATIVE
It is expressly understood that the amount of insurance under this policy
shall be reduced by any amount the Company may pay under
CONDITIONS AND STIPULATIONS (Continued on Reverse Side)
<PAGE>
CONDITIONS AND STIPULATIONS (Continued)
any policy insuring either (a) a mortgage shown or referred to in Schedule B
hereof which is a lien on the estate or interest covered by the policy, or (b) a
mortgage hereafter executed by an insured which is a charge or lien on the
estate or interest described or referred to in Schedule A, and the amount so
paid shall be deemed a payment under this policy. The Company shall have the
option to apply to the payment of any such mortgages any amount that otherwise
would be payable hereunder to the insured owner of the estate or interest
covered by this policy and the amount so paid shall be deemed a payment under
this policy to said insured owner.
10. APPORTIONMENT
If the land described in Schedule A consists of two or more parcels which
are not used as a single site, and a loss is established affecting one or more
of said parcels but not all, the loss shall be computed and settled on a pro
rata basis as if the amount of insurance under this policy was divided pro rata
as to the value on Date of Policy of each separate parcel to the whole,
exclusive of any improvements made subsequent to Date of Policy, unless a
liability or value has otherwise been agreed upon as to each such parcel by the
Company and the insured at the time of the issuance of this policy and shown by
an express statement herein or by an endorsement attached hereto.
11. SUBROGATION UPON PAYMENT OR SETTLEMENT
Whenever the Company shall have settled a claim under this policy, all
right of subrogation shall vest in the Company unaffected by any act of the
insured claimant. The Company shall be subrogated to and be entitled to all
rights and remedies which such insured claimant would have had against any
person or property in respect to such claim had this policy not been issued, and
if requested by the Company, such insured claimant shall transfer to the Company
all rights and remedies against any person or property necessary in order to
perfect such right of subrogation and shall permit the Company to use the name
of such insured claimant in any transaction or litigation involving such rights
or remedies. If the payment does not cover the loss of such insured claimant,
the Company shall be subrogated to such rights and remedies in the proportion
which said payment bears to the amount of said loss. If loss should result from
any act of such insured claimant, such act shall not void this policy, but the
Company, in that event, shall be required to pay only that part of any losses
insured against hereunder which shall exceed the amount, if any, lost to the
Company by reason of the impairment of the right of subrogation.
12. LIABILITY LIMITED TO THIS POLICY
This instrument together with all endorsements and other instruments, if
any, attached hereto by the Company is the entire policy and contract between
the insured and the Company.
Any claim of loss or damage, whether or not based on negligence, and which
arises out of the status of the title to the estate or interest covered hereby
or any action asserting such claim, shall be restricted to the provisions and
conditions and stipulations of this policy.
No amendment of or endorsement to this policy can be made except by writing
endorsed hereon or attached hereto signed by either the President, a Vice
President, the Secretary, an Assistant Secretary, or validating officer or
authorized signatory of the Company.
13. NOTICES, WHERE SENT
All notices required to be given the Company and any statement in writing
required to be furnished the Company shall be addressed to its principal office
at 111 West Washington Street, Chicago, Illinois 60602, or at any branch office
of the Company.
<PAGE>
American Land Title Association
Owner's Policy Form B-1970
(Amended 10-17-70)
POLICY
OF
TITLE
INSURANCE
NORTH CAROLINA TITLE COMPANY
P. O. Box 3074
Winston-Salem, North Carolina 27102
CHICAGO
TITLE INSURANCE
COMPANY
111 WEST WASHINGTON STREET
CHICAGO, ILLINOIS 60602
2
<PAGE>
AMERICAN LAND TITLE ASSOCIATION
LOAN POLICY-1970
(Amended 10-17-70)
34 004 02 32631
SUBJECT TO THE EXCLUSIONS FROM COVERAGE, THE EXCEPTIONS CONTAINED IN SCHEDULE B
AND THE PROVISIONS OF THE CONDITIONS AND STIPULATIONS HEREOF, CHICAGO TITLE
INSURANCE COMPANY, a Missouri corporation, herein called the Company, insures,
as of Date of Policy shown in Schedule A, against loss or damage, not exceeding
the amount of insurance stated in Schedule A, and costs, attorneys' fees and
expenses which the Company may become obligated to pay hereunder, sustained or
incurred by the insured by reason of:
1. Title to the estate or interest described in Schedule A being
vested otherwise than as stated therein;
2. Any defect in or lien or encumbrance on such title;
3. Lack of a right of access to and from the land;
4. Unmarketability of such title;
5. The invalidity or unenforceability of the lien of the insured
mortgage upon said estate or interest except to the extent that such
invalidity or unenforceability, or claim thereof, arises out of the
transaction evidenced by the insured mortgage and is based upon
(a) usury, or
(b) any consumer credit protection or truth in lending law;
6. The priority of any lien or encumbrance over the lien of the
insured mortgage;
7. Any statutory lien for labor or material which now has gained or
hereafter may gain priority over the lien of the insured mortgage, except
any such lien arising from an improvement on the land contracted for and
commenced subsequent to Date of Policy not financed in whole or in part by
proceeds of the indebtedness secured by the insured mortgage which at Date
of Policy the insured has advanced or is obligated to advance; or
8. The invalidity or unenforceability of any assignment, shown in
Schedule A, of the insured mortgage or the failure of said assignment to
vest title to the insured mortgage in the named insured assignee free and
clear of all liens.
In Witness Whereof, CHICAGO TITLE INSURANCE COMPANY has caused this policy
to be signed and sealed as of the date of policy shown in Schedule A, the policy
to become valid when countersigned by an authorized signatory.
Issued by: CHICAGO TITLE INSURANCE COMPANY
NORTH CAROLINA TITLE COMPANY By:
1100 South Stratford Road
Stratford Executive Park
Winston-Salem, North Carolina 27103
(919) 748-5148 President.
ATTEST:
Secretary.
Copyright 1969 American Land Title Association
<PAGE>
EXCLUSIONS FROM COVERAGE
The following matters are expressly excluded from the coverage of this policy:
1. Any law, ordinance or governmental regulation (including but not limited to
building and zoning ordinances) restricting or regulating or prohibiting
the occupancy, use or enjoyment of the land, or regulating the character,
dimensions or location of any improvement now or hereafter erected on the
land, or prohibiting a separation in ownership or reduction in the
dimensions or area of the land, or the effect of any violation of any such
law, ordinance or governmental regulation.
2. Rights of eminent domain or governmental rights of police power unless
notice of the exercise of such rights appears in the public records at Date
of Policy.
3. Defects, liens, encumbrances, adverse claims, or other matters (a) created,
suffered, assumed or agreed to by the insured claimant; (b) not known to
the Company and not shown by the public records but known to the insured
claimant either at Date of Policy or at the date such claimant acquired an
estate or interest insured by this policy or acquired the insured mortgage
and not disclosed in writing by the insured claimant to the Company prior
to the date such insured claimant became an insured hereunder; (c)
resulting in no loss or damage to the insured claimant; (d) attaching or
created subsequent to Date of Policy (except to the extent insurance is
afforded herein as to any statutory lien for labor or material).
4. Unenforceability of the lien of the insured mortgage because of failure of
the insured at Date of Policy or of any subsequent owner of the
indebtedness to comply with applicable "doing business" laws of the state
in which the land is situated.
CONDITIONS AND STIPULATIONS
1. DEFINITION OF TERMS
The following terms when used in this policy mean:
(a) "insured": the insured named in Schedule A. The term "insured" also
includes (i) the owner of the indebtedness secured by the insured mortgage and
each successor in ownership of such indebtedness (reserving, however, all rights
and defenses as to any such successor who acquires the indebtedness by operation
of law as distinguished from purchase including, but not limited to, heirs,
distributees, devisees, survivors, personal representatives, next of kin or
corporate or fiduciary successors that the Company would have had against the
successor's transferor), and further includes (ii) any governmental agency or
instrumentality which is an insurer or guarantor under an insurance contract or
guaranty insuring or guaranteeing said indebtedness, or any part thereof,
whether named as an insured herein or not, and (iii) the parties designated in
paragraph 2(a) of these Conditions and Stipulations.
(b) "insured claimant": an insured claiming loss or damage hereunder.
(c) "knowledge": actual knowledge, not constructive knowledge or notice
which may be imputed to an insured by reason of any public records.
(d) "land": the land described, specifically or by reference in Schedule A,
and improvements affixed thereto which by law constitute real property;
provided, however, the term "land" does not include any property beyond the
lines of the area specifically described or referred to in Schedule A, nor any
right, title, interest, estate or easement in abutting streets, roads, avenues,
alleys, lanes, ways or waterways, but nothing herein shall modify or limit the
extent to which a right of access to and from the land is insured by this
policy.
(e) "mortgage": mortgage, deed of trust, trust deed, or other security
instrument.
(f) "public records": those records which by law impart constructive notice
of matters relating to said land.
CONDITIONS AND STIPULATIONS (Continued on page below Inserts)
<PAGE>
LOAN FORM
SCHEDULE A
NUMBER 34 004 02 32631
DATE OF POLICY June 5, 1979 at 11:45 a.m.
AMOUNT OF INSURANCE $1,500,000.00
1. NAME OF INSURED:
First Union National Bank of North Carolina, as Trustee
2. THE ESTATE OR INTEREST REFERRED TO HEREIN IS AT DATE OF POLICY VESTED IN:
The Iredell County Industrial Facilities and Pollution Control Financing
Authority
3. THE ESTATE OR INTEREST IN THE LAND DESCRIBED IN THIS SCHEDULE AND WHICH IS
ENCUMBERED BY THE INSURED MORTGAGE IS:
FEE SIMPLE
4. THE MORTGAGE, HEREIN REFERRED TO AS THE INSURED MORTGAGE, AND THE
ASSIGNMENTS THEREOF, IF ANY, ARE DESCRIBED AS FOLLOWS:
Deed of Trust from The Iredell County Industrial Facilities and Pollution
Control Financing Authority, to First Union National Bank of North Carolina
as Trustee, dated May 1, 1979, filed for record June 5, 1979 at 11:45 a.m.
in Book 502, page 404, in the Office of the Register of Deeds, Iredell
County, North Carolina, securing $1,500,000.00.
5. THE LAND REFERRED TO IN THIS POLICY IS DESCRIBED AS FOLLOWS:
See attached Exhibit "A"
THIS POLICY VALID ONLY IF SCHEDULE B IS ATTACHED.
<PAGE>
LOAN FORM
SCHEDULE B
POLICY NUMBER 34 004 02 32631
---------------
LOAN
THIS POLICY DOES NOT INSURE AGAINST LOSS OR DAMAGE BY REASON OF THE FOLLOWING:
1. General and special taxes for the year 1979 and subsequent years, none of
which are currently due and payable.
2. General easement by prescription for city electric power lines and general
electric service lines; thirty (30) foot easement and right of way by
prescription for North Carolina Highway Number 90 (West Front Street) for
highway purposes; thirty (30) foot easement and right of way by
prescription for Mechan Road for highway purposes; twenty-two (22) foot
easement and right of way by prescription for Alexander Railroad, all as
shown on survey of subject property by Kestler and MacKay, R.L.S., dated
April 13, 1964; revised to October 9, 1969 and rechecked and re-drawn
February 22, 1979; and rights of others in and to their use.
3. Ten (10) foot easement and right of way to City of Statesville, North
Carolina, along the eastern boundary of the insured premises for
underground water and sewer lines; recorded in Book 255, page 218, in the
Office of the Register of Deeds for Iredell County, North Carolina.
4. Rights of others entitled thereto in and to the use of the Siding which
lies within the insured premises and the Alexander Railroad right of way as
shown on survey prepared by Kestler and MacKay, R.L.S., dated April 13,
1964; revised to October 9, 1969 and rechecked and re-drawn February 22,
1979.
5. Sanitary sewer lines, sprinkler lines, manholes, junction box, electric
power and service lines, poles, transformers, retaining wall, storm drain,
all as shown on survey prepared by Kestler and MacKay, R.L.S., dated April
13, 1964; revised to October 9, 1969 and rechecked and re-drawn February
22, 1979.
6. Such state of facts as would be disclosed by an accurate survey and
inspection of the premises subsequent to February 22, 1979.
7. Lease Agreement between The Iredell County Industrial Facilities and
Pollution Control Financing Authority, Lessor and Hunt Manufacturing Co.,
Lessee, dated June 1, 1979, filed for record June 5, 1979 at 11:40 a.m. in
Deed Book 639, page 31, Iredell County Registry.
COUNTERSIGNED
- ------------------------------
AUTHORIZED SIGNATORY
gs
SCHEDULE B OF THIS POLICY CONSISTS OF 1 PAGES.
<PAGE>
EXHIBIT "A"
LYING IN STATESVILLE TOWNSHIP, COUNTY OF IREDELL, STATE OF NORTH CAROLINA, AND
DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT IN THE CENTER OF N.C. HIGHWAY NO. 90 (WEST FRONT STREET)
LEADING FROM STATESVILLE, N.C. TO TAYLORSVILLE, N.C., SAID BEGINNING POINT
BEING THE SOUTHWEST CORNER OF THE TRACT OF LAND CONVEYED TO THE CARNATION
COMPANY BY THE STATE OF NORTH CAROLINA BY DEED RECORDED IN DEED BOOK 134, PAGE
125, IN THE IREDELL COUNTY REGISTRY, N.C., AND RUNNING THENCE WITH THE CENTER OF
SAID N.C. HIGHWAY NO. 90, NORTH 62(DEGREE) 22' WEST 1043 FEET TO A POINT IN THE
CENTER OF SAID N.C. HIGHWAY NO. 90, AT WHICH POINT THE CENTER OF SAID N.C.
HIGHWAY NO. 90 AND THE CENTER OF MECHAM ROAD (A ROAD LEADING IN A NORTHERLY
DIRECTION FROM SAID N.C. HIGHWAY NO. 90 TO PIEDMONT EXPERIMENT STATION FARM)
INTERSECT; THENCE WITH THE CENTER LINE OF SAID MECHAM ROAD NORTH 08(DEGREE) 06'
EAST 805 FEET TO A POINT IN THE CENTER LINE OF THE RAILROAD TRACK OF ALEXANDER
RAILROAD COMPANY; THENCE WITH THE CENTER LINE OF THE SAID RAILROAD TRACK OF THE
ALEXANDER RAILROAD COMPANY FOUR CALLS AS FOLLOWS: (1) SOUTH 40(DEGREE) 05' EAST
839.45 FEET TO A POINT; (2) THENCE SOUTH 43(DEGREE) 01' EAST 159 FEET TO A
POINT; (3) THENCE SOUTH 48(DEGREE) 10O EAST 168.6 FEET TO A POINT; (4) THENCE
SOUTH 52(DEGREE) 30' EAST 161.7 FEET TO A POINT IN THE CENTER OF SAID RAILROAD
TRACK, AND SAID POINT BEING THE NORTHWEST CORNER OF THE SAID TRACT OF LAND
CONVEYED TO THE CARNATION COMPANY BY THE STATE OF NORTH CAROLINA, BY THE DEED
REFERRED TO HEREINABOVE; THENCE WITH THE WESTERN LINE OF SAID CARNATION COMPANY,
SOUTH 15(DEGREE) 49' 40" WEST 324.45 FEET TO THE POINT OF BEGINNING, CONTAINING
12.76 ACRES, MORE OR LESS. FOR BACK REFERENCE SEE DEED DATED SEPTEMBER 26, 1975,
AND RECORDED IN DEED BOOK 578, PAGE 573, IREDELL COUNTY REGISTRY, NORTH
CAROLINA.
<PAGE>
CONDITIONS AND STIPULATIONS (Continued)
2. (A) CONTINUATION OF INSURANCE AFTER ACQUISITION OF TITLE
This policy shall continue in force as of Date of Policy in favor ____
insured who acquires all or any part of the estate or interest in ___ and
described in Schedule A by foreclosure, trustee's sale, conveyance in lieu of
foreclosure, or other legal manner which discharges the lien of the insured
mortgage, and if the insured is a corporation, its transferee of the estate or
interest so acquired, provided the transferee is the parent or wholly owned
subsidiary of the insured; and in favor of any governmental agency or
instrumentality which acquires all or any part of the estate or interest
pursuant to a contract of insurance or guaranty insuring or guaranteeing the
indebtedness secured by the insured mortgage; provided that the amount of
insurance hereunder after such acquisition, exclusive of costs, attorneys' fees
and expenses which the Company may become obligated to pay, shall not exceed the
least of:
(i) the amount of insurance stated in Schedule A;
(ii) the amount of the unpaid principal of the indebtedness as defined in
paragraph 8 hereof, plus interest thereon, expenses of foreclosure and amounts
advanced to protect the lien of the insured mortgage and secured by said insured
mortgage at the time of acquisition of such estate or interest in the land; or
(iii) the amount paid by any governmental agency or instrumentality, if
such agency or instrumentality is the insured claimant, in the acquisition of
such estate or interest in satisfaction of its insurance contract or guaranty.
(B) CONTINUATION OF INSURANCE AFTER CONVEYANCE OF TITLE
The coverage of this policy shall continue in force as of Date of Policy in
favor of an insured so long as such insured retains an estate or interest in the
land, or holds an indebtedness secured by a purchase money mortgage given by a
purchaser from such insured, or so long as such insured shall have liability by
reason of covenants of warranty made by such insured in any transfer or
conveyance of such estate or interest; provided, however, this policy shall not
continue in force in favor of any purchaser from such insured of either said
estate or interest or the indebtedness secured by a purchase money mortgage
given to such insured.
3. DEFENSE AND PROSECUTION OF ACTIONS-NOTICE OF CLAIM
TO BE GIVEN BY AN INSURED CLAIMANT
(a) The Company, at its own cost and without undue delay, shall provide for
the defense of an insured in all litigation consisting of actions or proceedings
commenced against such insured, or defenses, restraining orders or injunctions
interposed against a foreclosure of the insured mortgage or a defense interposed
against an insured in an action to enforce a contract for a sale of the
indebtedness secured by the insured mortgage, or a sale of the estate or
interest in said land, to the extent that such litigation is founded upon an
alleged defect, lien, encumbrance, or other matter insured against by this
policy.
(b) The insured shall notify the Company promptly in writing (i) in case
any action or proceeding is begun or defense or restraining order or injunction
is interposed as set forth in (a) above, (ii) in case knowledge shall come to an
insured hereunder of any claim of title or interest which is adverse to the
title to the estate or interest or the lien of the insured mortgage, as insured,
and which might cause loss or damage for which the Company may be liable by
virtue of this policy, or (iii) if title to the estate or interest or the lien
of the insured mortgage, as insured, is rejected as unmarketable. If such prompt
notice shall not be given to the Company, then as to such insured all liability
of the Company shall cease and terminate in regard to the matter or matters for
which such prompt notice is required; provided, however, that failure to notify
shall in no case prejudice the rights of any such insured under this policy
unless the Company shall be prejudiced by such failure and then only to the
extent of such prejudice.
(c) The Company shall have the right at its own cost to institute and
without undue delay prosecute any action or proceeding or to do any other act
which in its opinion may be necessary or desirable to establish the title to the
estate or interest or the lien of the insured mortgage, as insured, and the
Company may take any appropriate action under the terms of this policy, whether
or not it shall be liable thereunder, and shall not thereby concede liability or
waive any provision of this policy.
(d) Whenever the Company shall have brought any action or interposed a
defense as required or permitted by the provisions of this policy, the Company
may pursue any such litigation to final determination by a court of competent
jurisdiction and expressly reserves the right, in its sole discretion, to appeal
from any adverse judgment or order.
<PAGE>
(e) In all cases where this policy permits or requires the Company to
prosecute or provide for the defense of any action or proceeding, the insured
hereunder shall secure to the Company the right to so prosecute or provide
defense in such action or proceeding, and all appeals therein, and permit the
Company to use, at its option, the name of such insured for such purpose.
Whenever requested by the Company, such insured shall give the Company all
reasonable aid in any such action or proceeding, in effecting settlement,
securing evidence, obtaining witnesses, or prosecuting or defending such action
or proceeding, and the Company shall reimburse such insured for any expense so
incurred.
4. NOTICE OF LOSS-LIMITATION OF ACTION
In addition to the notices required under paragraph 3(b) of these
Conditions and Stipulations, a statement in writing of any loss or damage for
which it is claimed the Company is liable under this policy shall be furnished
to the Company within 90 days after such loss or damage shall have been
determined and no right of action shall accrue to an insured claimant until 30
days after such statement shall have been furnished. Failure to furnish such
statement of loss or damage shall terminate any liability of the Company under
this policy as to such loss or damage.
5. OPTIONS TO PAY OR OTHERWISE SETTLE CLAIMS
The Company shall have the option to pay or otherwise settle for or in the
name of an insured claimant any claim insured amount or to terminate all
liability and obligations of the Company hereunder by paying or tendering
payment of the amount of insurance under this policy together with any costs,
attorneys' fees and expenses incurred up to the time of such payment or tender
of payment by the insured claimant and authorized by the Company. In case loss
or damage is claimed under this policy by an insured, the Company shall have the
further option to purchase such indebtedness for the amount owing thereon
together with all costs, attorneys' fees and expenses which the Company is
obligated hereunder to pay. If the Company offers to purchase said indebtedness
as herein provided, the owner of such indebtedness shall transfer and assign
said indebtedness and the mortgage and any collateral securing the same to the
Company upon payment therefor as herein provided.
6. DETERMINATION AND PAYMENT OF LOSS
(a) The liability of the Company under this policy shall in no case exceed
the least of:
(i) the actual loss of the insured claimant; or
(ii) the amount of insurance stated in Schedule A, or, if applicable,
the amount of insurance as defined in paragraph 2(a) hereof; or
(iii) the amount of the indebtedness secured by the insured mortgage
as determined under paragraph 8 hereof, at the time the loss or damage
insured against hereunder occurs, together with interest thereon.
(b) The Company will pay, in addition to any loss insured against by this
policy, all costs imposed upon an insured in litigation carried on by the
Company for such insured, and all costs, attorneys' fees and expenses in
litigation carried on by such insured with the written authorization of the
Company.
(c) When liability has been definitely fixed in accordance with the
conditions of this policy, the loss or damage shall be payable within 30 days
thereafter.
CONDITIONS AND STIPULATIONS (Continued on Reverse Side)
<PAGE>
CONDITIONS AND STIPULATIONS (Continued)
7. LIMITATION OF LIABILITY
__________ claim shall arise or be maintainable under this policy (a) if
the Company after having received notice of an alleged defect, lien or
encumbrance insured against hereunder, by litigation or otherwise, removes such
defect, lien or encumbrance or establishes the title, or the lien of the insured
mortgage, as insured, within a reasonable time after receipt of such notice; (b)
in the event of litigation until there has been a final determination by a court
of competent jurisdiction, and disposition of all appeals therefrom, adverse to
the title or to the lien of the insured mortgage, as insured, as provided in
paragraph 3 hereof; or (c) for liability voluntarily assumed by an insured in
settling any claim or suit without prior written consent of the Company.
8. REDUCTION OF LIABILITY
(a) All payments under this policy, except payments made for costs,
attorneys' fees and expenses, shall reduce the amount of the insurance pro
tanto; provided, however, such payments, prior to the acquisition of title to
said estate or interest as provided in paragraph 2(a) of these Conditions and
Stipulations, shall not reduce pro tanto the amount of the insurance afforded
hereunder except to the extent that such payments reduce the amount of the
indebtedness secured by the insured mortgage.
Payment in full by any person or voluntary satisfaction or release of the
insured mortgage shall terminate all liability of the Company except as provided
in paragraph 2(a) hereof.
(b) The liability of the Company shall not be increased by additional
principal indebtedness created subsequent to Date of Policy, except as to
amounts advanced to protect the lien of the insured mortgage and secured
thereby.
No payment shall be made without producing this policy for endorsement of
such payment unless the policy be lost or destroyed, in which case proof of loss
or destruction shall be furnished to the satisfaction of the Company.
9. LIABILITY NON-CUMULATIVE
If the insured acquires title to the estate or interest in satisfaction of
the indebtedness secured by the insured mortgage, or any part thereof, it is
expressly understood that the amount of insurance under this policy shall be
reduced by any amount the Company may pay under any policy insuring a mortgage
hereafter executed by an insured which is a charge or lien on the estate or
interest described or referred to in Schedule A, and the amount so paid shall be
deemed a payment under this policy.
<PAGE>
10. SUBROGATION UPON PAYMENT ERR SETTLEMENT
Whenever the Company shall have settled a claim under this policy, all
right of subrogation shall vest in the Company unaffected by any act of the
insured claimant, except that the owner of the indebtedness secured by the
insured mortgage may release or substitute the personal liability of any debtor
or guarantor, or extend or otherwise modify the terms of payment, or release a
portion of the estate or interest from the lien of the insured mortgage, or
release any collateral security for the indebtedness, provided such act occurs
prior to receipt by the insured of notice of any claim of title or interest
adverse to the title to the estate or interest or the priority of the lien of
the insured mortgage and does not result in any loss of priority of the lien of
the insured mortgage. The Company shall be subrogated to and be entitled to all
rights and remedies which such insured claimant would have had against any
person or property in respect to such claim had this policy not been issued, and
if requested by the Company, such insured claimant shall transfer to the Company
all rights and remedies against any person or property necessary in order to
perfect such right of subrogation and shall permit the Company to use the name
of such insured claimant in any transaction or litigation involving such rights
or remedies. If the payment does not cover the loss of such insured claimant,
the Company shall be subrogated to such rights and remedies in the proportion
which said payment bears to the amount of said loss, but such subrogation shall
be in subordination to the insured mortgage. If loss of priority should result
from any act of such insured claimant, such act shall not void this policy, but
the COMPANY, in that event, shall be required to pay only that part of any
losses insured against hereunder which shall exceed the amount, if any, last to
the Company by reason of the impairment of the right of subrogation.
11. LIABILITY LIMITED TO THIS POLICY
This instrument together with all endorsements and other instruments, if
any, attached hereto by the Company is the entire policy aid contract between
the insured and the Company.
Any claim of loss or damage, whether or not based on negligence and which
arises out of the status of the lien of the insured mortgage of the title to the
estate or interest covered hereby or any action asserting such claim, shall be
restricted to the provisions and conditions and stipulations of this policy.
No amendment of or endorsement to this policy can be made except by writing
endorsed hereon or attached hereto signed by either the President, a Vice
President, the Secretary, an Assistant Secretary, or validating officer or
authorized signatory of the Company.
12. NOTICES, WHERE SENT
All notices required to be given the Company and any statement in writing
required to be furnished the Company shall be addressed to its principal office
at 111 West Washington Street, Chicago, Illinois 60602, or at any branch office
of the Company.
<PAGE>
American Land Title Association
Loan Policy-1970
(Amended 10-17-70)
POLICY
OF
TITLE
INSURANCE
NORTH CAROLINA TITLE COMPANY
1100 South Stratford Road
Stratford Executive Park
Winston-Salem, North Carolina 27103
111 WEST WASHINGTON STREET
CHICAGO, ILLINOIS, 60602
<PAGE>
CERTIFICATE AS TO ESTIMATED COMPLETION DATE
THE UNDERSIGNED VICE PRESIDENT of Hunt Manufacturing Co., the lessee under
the Lease Agreement dated as of June 1, 1979, by and between The Iredell County
Industrial Facilities and Pollution Control Financing Authority and Hunt
Manufacturing Co., DOES HEREBY CERTIFY as follows:
1. The undersigned has made inquiries as to the progress of the
acquisition, improvement and installation of the Project (as defined in the
Lease) for the purpose of estimating the Completion Date (as defined in the
Lease) thereof;
2. In the opinion of the undersigned, the under signed has made such
examination and investigation as is necessary to enable him to express an
informed opinion as to the estimated Completion Date of the Project; and
3. The Completion Date of the Project is June 5, 1979.
Dated: June 5, 1979.
-----------------------
Vice President
<PAGE>
(33)
(See Item Number 36)
<PAGE>
(34)
CERTIFICATE DESIGNATING COMPANY REPRESENTATIVE
The undersigned Vice President of Hunt Manufacturing Co., a Pennsylvania
corporation, DOES HEREBY DESIGNATE each of the following persons as the Company
Representative for purposes of the Lease Agreement dated as of June 1, 1979
between The Iredell County Industrial Facilities and Pollution Control Financing
Authority and Hunt Manufacturing Co.:
Title Name Specimen Signature
----- ---- ------------------
Company
Representative ------------------
Company
Representative ------------------
Company
Representative ------------------
WITNESS my hand this 4th day of June, 1979.
-----------------------
Vice President
<PAGE>
(35)
IREDELL COUNTY
OFFICERS AND SEAL CERTIFICATE
I, Alice Fortner, Clerk to the Board of Commissioners for the County of
Iredell, North Carolina, DO HEREBY CERTIFY as follows:
1. The following is a correct list of the names of certain officers of said
County who have held office from a date or dates prior to February 20, 1979, and
of the dates of expiration their respective terms of office:
OFFICE OFFICER EXPIRATION OF TERM
------ ------- ------------------
Chairman, Board of Joe H. Troutman, III December 1, 1981
Commissioners
Vice Chairman, Board Larry M. Rhye December 1, 1981
of Commissioners
Member, Board of William A. Mills December 1, 1983
Commissioners
Member, Board of Frances L. Murdock December 1, 1983
Commissioners
Member, Board of Samuel Ostwalt December 1, 1981
Commissioners
County Attorney Robert N. Randall, Esq. At the pleasure of
the Board
Clerk to the Board Alice Fortner At the pleasure of
of Commissioners the Board
2. Regular meetings of the Board of Commissioners of said County are held
on the 1st and 3rd Tuesdays of each month at 7:30 P.M.
3. The common seal of said County, being the only seal used by said County
in the execution of bonds, notes and contracts, is the seal an impression of
which is affixed opposite my signature upon this certificate.
4. The following is a correct list of the names of the members of the
Board of Commissioners of The Iredell County Industrial Facilities and Pollution
Control Financing Authority who have held office from a date or dates prior to
January 5, 1979 through the date hereof and of the dates of expiration of their
terms of office:
<PAGE>
MEMBER EXPIRATION OF TERM
- ------ ------------------
Rick J. Dagenhart May 3, 1982
Alfred LeVan May 3, 1984
Lois E. James May 3, 1980
Howard M. Stamey May 3, 1980
Albert White May 3, 1984
J. D. Chamberlain May 3, 1982
Lonnie Troutman May 3, 1982
Appointed January 19, 1979
WITNESS my hand and said official seal this 5th day of June, 1979.
-------------------------------------
Clerk to the Board of Commissioners
[Seal]
<PAGE>
(36)
GENERAL CERTIFICATE OF THE IREDELL COUNTY
INDUSTRIAL FACILITIES AND POLLUTION CONTROL
FINANCING AUTHORITY
The undersigned officers of The Iredell County Industrial Facilities and
Pollution Control Financing Authority (the "Authority") DO HEREBY CERTIFY as
follows:
1. They are the duly elected or appointed, qualified and acting
incumbents of their respective offices of the Authority and as such are
familiar with its books and official records.
2. The Authority is a duly constituted and validly existing political
subdivision and body corporate and politic of the State of North Carolina
validly acting by and through its Board of Commissioners (the "Board of
Commissioners") as the governing body of the Authority, vested with the
powers and rights conferred upon the Authority pursuant to the provisions
of Article V, Section 9 of the Constitution of North Carolina by Chapter
159C of the General Statutes of North Carolina, as amended.
3. The following is a correct list of the names of certain current
officers of the Authority who have held office from a date or dates prior
to January 5, 1979 and of the dates of expiration of their terms of office:
OFFICE OFFICER EXPIRATION OF TERM
------ ------- ------------------
Chairman Rick Dagenhart May 3, 1979
Vice Chairman Alfred Levan May 3, 1979
Secretary Alice Fortner May 3, 1979
Assistant Robert N. Randall, Esq. May 3, 1979
Secretary
No election of successor officers of the Authority has taken place.
4. The following are the true and genuine signatures of certain
officers of the Authority:
OFFICER SIGNATURE
- ------- ---------
Chairman ____________________________________
Vice Chairman ____________________________________
Secretary ____________________________________
Assistant Secretary ____________________________________
<PAGE>
5. The following resolution (the "Resolution") was duly adopted by THE
Board of Commissioners of the Authority on May 15, 1979, has not been modified,
amended or repealed and has from its date of adoption been and is now in full
force and effect:
RESOLUTION AUTHORIZING THE ISSUANCE OF $2,000,000 PRINCIPAL AMOUNT OF
INDUSTRIAL REVENUE BONDS (HUNT MANUFACTURING C0. PROJECT) SERIES 1979 OF
THE AUTHORITY, ACCEPTANCE OF A DEED AND BILL OF SALE FROM HUNT
MANUFACTURING CO., EXECUTION AND DELIVERY OF A LEASE AGREEMENT AND AN
INDENTURE AND DEED OF TRUST TO SECURE SAID BONDS, APPROVING AN OFFICIAL
STATEMENT RELATING TO SAID BONDS AWARDING SAID BONDS PURSUANT TO A PURCHASE
CONTRACT, AND MAKING A TAX ELECTION.
6. Robert N. Randall, Esq. serves as counsel to the Authority.
7. The following described instruments, as executed and delivered by
the duly authorized officers of the Authority, are in substantially the
same form and text as the copies of such instruments which were presented
to and approved by the resolution of the Board of Commissioners of the
Authority adopted at a duly called meeting of the Authority held on May 15,
1979:
(a) Contract of Purchase, dated May 15, 1979, by and between the
Authority and Alex. Brown & Sons (the "Underwriters") with the
approval of Hunt Manufacturing Co., (the "Company);
(b) Deed, dated as of June 1, 1979 from the Company to the
Authority;
(c) Bill of Sale, dated as of June 1, 1979, from the Company to
the Authority;
(d) Lease Agreement, dated as of June 1, 1979 (the "Lease
Agreement"), by and between the Authority and the Company;
(e) Indenture and Deed of Trust, dated as of June 1, 1979 (the
"Indenture"), from the Authority to First Union National Bank of North
Carolina (the "Trustee"); and
(f) Official Statement dated May 15, 1979.
2.
<PAGE>
8. The Guaranty Agreement, as executed and delivered by the Company
and the Trustee is in substantially the same form and text as the copy of
such agreement which was presented to and approved by the resolution of the
Board of Commissioners of the Authority adopted at a duly called meeting of
the Authority held on May 15, 1979.
9. The appropriate officers of the Authority did officially execute,
by facsimile signature of the Chairman of the Authority, and attest, by
manual signature of the undersigned Secretary, the Industrial Revenue Bonds
(Hunt Manufacturing Co. Project) Series 1979 in the aggregate principal
amount of $2, 000, 000, described in Schedule I hereto (the "Bonds"), a
facsimile of the official seal of the Authority has been imprinted on said
Bonds.
10. The official seal of the Authority, being the only seal used by
the Authority in the execution of bonds, notes and contracts, is the seal
an impression of which is affixed opposite our signatures set forth
hereinafter upon this certificate.
11. On and as of the date hereof, each of the representations and
warranties of the Authority set forth in Section 4 of the Contract of
Purchase is true, correct and complete and all agreements of the Authority
in the Contract of Purchase provided and contemplated to be performed on or
prior to the Closing have been so performed.
12. The executed copies of the Lease Agreement and the Indenture and
the certified copy of the Resolution are true, correct and complete copies
of such documents and have not been modified, amended or rescinded but
remain in full force and effect as of the date hereof.
13. The Bonds have been duly authorized, executed and delivered by the
Authority. The Contract of Purchase, the Indenture and the Agreement and
any and all other agreements and documents required to be executed and
delivered by the Authority in order to carry out, give effect to and
consummate the transactions contemplated the Contract of Purchase and by
the Indenture have each been duly authorized, executed and delivered by the
Authority, and as of the date hereof each is in full force and effect and
all right, title and interest inuring to the Authority under the Lease
Agreement have been duly pledged, and the payments thereunder assigned, to
the Trustee under the Indenture for the benefit of the holders of the
Bonds.
3.
<PAGE>
14. There is no action, suit, proceeding or investigation at law or in
equity or before or by any court, public board or body pending or to the
knowledge of the Authority threatened against or affecting the Authority,
or to the knowledge of the Authority any basis therefor, wherein an
unfavorable decision, ruling or finding would adversely affect the
transactions contemplated by the Contract of Purchase, or which, in any
way, would adversely affect the validity of the Bonds, the Lease Agreement,
the Indenture, the Guaranty or any other agreement or instrument to which
the Authority is a party and which is used or contemplated for use in
consummation of the transactions contemplated the Contract of Purchase.
15. To the best knowledge of the Authority no legislation, ordinance,
rule or regulation has been enacted or introduced or favorably reported for
passage by any governmental body, department or agency of the State of
North Carolina, or a decision by any court of competent jurisdiction of the
State of North Carolina rendered which would adversely affect the exemption
from taxation of the bonds of the Authority.
Each of the following persons is hereby designated as the Authority
Representative for purposes of the Lease Agreement:
Title Name Specimen Signature
- ----- ---- ------------------
Authority
Representative ___________________________ ____________________________
Authority
Representative ___________________________ ____________________________
Authority
Representative ___________________________ ____________________________
WITNESS our hands this 5th day of June, 1979.
_______________________________________
Chairman of The Iredell County
Industrial Facilities and Pollution
Control Financing Authority
_______________________________________
Secretary of The Iredell County
Industrial Facilities and Pollution
Control Financing Authority
(SEAL)
4.
<PAGE>
SCHEDULE I
The Iredell County Industrial Facilities and Pollution Control Financing
Authority Industrial Revenue Bonds (Hunt Manufacturing Co. Project), Series 1979
are issued in the aggregate principal amount of $2,000,000 and consist of 400
coupon bonds, registrable as to both principal and interest, each bond in the
principal amount of $5,000, numbered 1-400, inclusive, dated as of and bearing
interest from June 1, 1979 at the rate of 7 1/2% per annum, payable
semi-annually on the 1st days of June and December of each year (first interest
being payable December 1, 1979), and maturing on June 1, 1999, subject to prior
redemption as provided therein.
<PAGE>
(37)
CERTIFICATE AS TO ARBITRAGE
$2,000,000
The Iredell County Industrial Facilities and Pollution Control
Financing Authority Industrial Revenue Bonds (Hunt Manufacturing
Co. Project), Series 1979
I, Rick J. Dagenhart, Chairman of The Iredell County Industrial Facilities
and Pollution Control Financing Authority (the "Authority"), being one of the
officers of the Authority duly charged, with others, by resolution of the Board
of Commissioners of the Authority, with the responsibility for issuing the
Authority's $2,000,000 Industrial Revenue Bonds (Hunt Manufacturing Co.
Project), Series 1979 (the "Series 1979 Bonds"), HEREBY CERTIFY pursuant to
sections 1.103-13, 1.103-14 and 1.103-15 of the Proposed Treasury Regulations
under Section 103(c) of the Internal Revenue Code of 1954, as amended (the
"Code") as follows:
1. The Series 1979 Bonds are being issued to provide for the deposit
to the Acquisition Fund, established pursuant to the Indenture and Deed of
Trust (the "Indenture"), dated as of June 1, 1979, between the Authority
and First Union National Bank of North Carolina (the "Trustee") as
hereinafter described, the amounts necessary for the purposes of (a)
financing all or a portion of the cost of
<PAGE>
acquiring, improving, equipping and providing for the installation of a
manufacturing facility for the production of paper and other art/craft
products (such manufacturing facility, as more particularly described in
Exhibit A attached to the Lease Agreement (the "Agreement"), dated as of
June 1, 1979, between the Authority and Hunt Manufacturing Co. (the
"Company") hereinafter referred to as the "Project"), (b) paying the legal,
accounting, financial and printing expenses, fees and all other expenses,
including Underwriter's discount, incurred in connection with the issuance
of the Series 1979 Bonds (the "Issuance Expenses"). The accrued interest on
the Series 1979 Bonds in the amount of $1,666.67 will be deposited to the
credit of the Bond Fund.
2. The estimated total costs of acquiring, constructing and installing
the Project will not be less than $2,000,000. The said total costs are
expected to be financed with proceeds from the sale of the Series 1979
Bonds and to the extent that such proceeds are not sufficient, the
Company's own funds.
3. The Authority does not expect to sell or otherwise dispose of any
property comprising a part of the Project prior to June 1, 1999, the
maturity date of the Series 1979 Bonds.
2.
<PAGE>
4. On the basis of the facts, estimates and circumstances in existence
on the date hereof, which is the date on which the Series 1979 Bonds are to
be physically delivered in exchange for the issue price thereof
(hereinafter "date of issue"), and in reliance upon the certificate
attached as Exhibit A hereto, I reasonably expect the following in respect
of the Series 1979 Bonds and as to the use of the proceeds thereof
(a) All proceeds to be derived by the Authority from the sale of
the Series 1979 Bonds (representing $2,000,000 face amount of the
Series 1979 Bonds, less Underwriter's discount of $44,000, plus
accrued interest on the Series 1979 Bonds to the date hereof of
$1,666.67) are expected to be needed and fully expended as follows:
All of the proceeds, other than the accrued interest, will
be deposited in the Acquisition Fund created by the Indenture,
and will be applied within three years of June 5, 1979 to pay a
portion of the cost of the Project, including expenses
anticipated to be incurred in connection with the issuance of the
Series 1979 Bonds and interest on the Series 1979 Bonds during
the period prior to the completion of the Project. All of this
amount will immediately be requisitioned by the Company to
reimburse it for moneys previously expended by it for a portion
of the costs of acquiring, constructing and installing the
Project.
3.
<PAGE>
The amount of accrued interest, $1,666.67 will be deposited
to the credit of the Bond Fund and will be used to pay a portion
of the interest on the Series 1979 Bonds payable December 1,
1979.
(b) The total proceeds to be received by the Authority for the
sale of the Series 1979 Bonds do not exceed the total of the amount
necessary for the purposes described in subparagraph (a) of this
paragraph 4.
(c) The acquisition, construction and installation of the Project
has been completed.
(d) There are no funds, other than the Bond Fund, established by
the Authority or the Company pursuant to the Indenture, the Agreement,
or the Guaranty Agreement, dated as of June 1, 1979, between the
Company and the Trustee (the "Guaranty"), or any other agreement or
understanding which are reasonably expected to be used to pay debt
service on the Series 1979 Bonds. There are no funds, other than the
Bond Fund, established by the Authority or the Company pursuant to the
Indenture, the Agreement, the Guaranty, or any other agreement or
understanding, pledged as collateral for the Series 1979 Bonds for
which there is a reasonable assurance that amounts therein will be
available to pay debt service on the Series 1979 Bonds if the
Authority or the Company encounters financial difficulties.
4.
<PAGE>
(e) The Bond Fund will be used primarily to achieve a proper
matching of Basic Rent, as defined in the Agreement, paid to the
Trustee by the Company for the account of the Authority pursuant to
the Agreement, and debt service on the Series 1979 Bonds within each
bond year. Amounts deposited to such Fund will be depleted immediately
for payment of debt service on the Series 1979 Bonds and in any event
will be depleted at least once a year, except for any carryover amount
which will not exceed the greater of (A) one year's earnings on the
amounts deposited to such Fund, or (B) 1/12 of annual debt service on
the Series 1979 Bonds. Interest on the Series 1979 Bonds during the
construction period may be funded from the Acquisition Fund.
(f) The moneys relating to the Series 1979 Bonds will be invested
as follows:
(i) proceeds derived from the sale of the Series 1979 Bonds
deposited in the Acquisition Fund will be invested at an
unrestricted yield for the period prior to their expenditure for
the purposes of which the Series 1979 Bonds are issued, but in no
event for a period in excess of three years from the date of
issue;
(ii) proceeds derived from the sale of the Series 1979 Bonds
deposited in the Bond Fund as accrued interest will be invested
at an unrestricted
5.
<PAGE>
yield prior to the expenditure thereof within three years of the
date hereof;
(iii) amounts earned from the investment of any of the
proceeds derived from the sale of the Series 1979 Bonds will be
invested at an unrestricted yield for a period not in excess of
the greater of three years from the date of issue of the Series
1979 Bonds or one year from the date of receipt of the amount
earned;
(iv) amounts deposited to the Bond Fund, and investment
earnings on amounts so deposited, shall be invested at an
unrestricted yield prior to their expenditure but in no event for
a period in excess of thirteen months from the date of deposit to
such Fund; and
(v) any amounts derived from the sale of the Series 1979
Bonds, together with investment earnings thereon, and amounts
deposited to the Bond Fund, together with earnings on such
amounts, not invested at an unrestricted yield, as described in
parts (i) through (iv) of this subparagraph, will not be invested
at a yield in excess of the yield on the Bonds, except that such
amounts, to the extent they do not exceed fifteen percent of the
face amount of the Series 1979
6.
<PAGE>
Bonds, may be invested at an unrestricted yield.
(g) No portion of the proceeds of the Series 1979 Bonds will be
used as a substitute for other funds which were designated as a source
of financing for any portion of the cost of the Project and which have
been or will be used to acquire directly or indirectly securities
producing a yield in excess of the yield on the Series 1979 Bonds.
5. Pursuant to the Agreement, the Company is obligated to pay to the
Authority during the term of the Agreement (not to exceed the maturity of
the Bonds) as Basic Rent amounts sufficient to pay debt service on the
Bonds when due and, as Additional Rent, certain costs and expenses,
exclusive of costs and expenses payable from the proceeds of the sale of
the Bonds. The yield on the Agreement will not exceed the yield on the
Series 1979 Bonds plus 1/8 of one percentage point.
6. For purposes of this Certificate, "yield" means, except with
respect to the Agreement, that yield which when used in computing the
present worth of all payments of principal and interest to be paid on an
obligation produces an amount equal to the purchase price of such
obligation. With respect to the Agreement, "yield" means that yield which
when used in computing the present worth of all
7.
<PAGE>
payments made pursuant to Section 5.3 of the Agreement produces an amount equal
to the purchase price of the Agreement. The yield on obligations acquired with
the proceeds derived from the sale of the Series 1979 Bonds, including the
Agreement, shall be calculated by the use of the same frequency interval of
compounding interest. The purchase price of the Series 1979 Bonds means the
initial offering price of such bonds to the public by Alex. Brown & Sons (the
"Underwriter"). The purchase price of the Agreement means the aggregate face
amount of the Series 1979 Bonds less Issuance Expenses. For purposes of
computing yield on the Agreement, each or any of the payments made pursuant to
Section 5.3 of the Agreement shall be reduced by certain amounts, the present
value (using as a discount rate the yield on the Series 1979 Bonds) of which is
equal to or less than the present value of the costs of issuing, carrying or
repaying the Series 1979 Bonds, the Underwriter's spread and the costs of
acquiring and carrying the Agreement.
7. The facts, estimates and circumstances in paragraphs 2, 3, 4 and 5 are
made in reliance on representations hereto prepared by a Vice President of the
Company. The Authority is not aware of any facts or circumstances that would
cause it to question the accuracy of the representations made by the Company.
8.
<PAGE>
8. In Section 706 of the Indenture the Authority has covenanted that it
will not make or permit any use, and directs the Trustee not to make or permit
any use, of the proceeds of the Series 1979 Bonds which would cause the Series
1979 Bonds to be "arbitrage bonds" within the meaning of Section 103(c) of the
Code and the applicable regulations promulgated from time to time thereunder.
9. The Authority has not received notice that its certificate may not be
relied upon with respect to its issues, nor has it been advised that the
Commissioner of Internal Revenue has listed or is contemplating listing the
Authority as a governmental unit whose arbitrage certification may not be relied
upon.
10. To the best of my knowledge, information and belief, the above
expectations are reasonable.
IN WITNESS WHEREOF, I have hereunto set my hand this 5th day of June, 1979.
_____________________________________
Chairman of The Iredell County
Industrial Facilities and Pollution
Control Financing Authority
9.
<PAGE>
EXHIBIT A
CERTIFICATE AS TO ARBITRAGE
$2,000,000
The Iredell County Industrial Facilities and Pollution Control
Financing Authority Industrial Revenue Bonds (Hunt Manufacturing Co.
Project), Series 1979
I, Rudolph M. Peins, Vice President, Treasurer and Secretary of Hunt
Manufacturing Co., a Pennsylvania corporation (the "Company"), DO HEREBY CERTIFY
as follows:
1. The Industrial Development Revenue Bonds (Hunt Manufacturing Co.
Project), Series 1979, dated as of June 1, 1979, in the principal amount of
$2,000,000 (the "Series 1979 Bonds") of The Iredell County Industrial
Facilities and Pollution Control Financing Authority (the "Authority") are
being issued this day to provide for the deposit to the Acquisition Fund,
established pursuant to the Indenture and Deed of Trust (the "Indenture"),
dated as of June 1, 1979, between the Authority and First Union National
Bank of North Carolina (the "Trustee") as hereinafter described, the
amounts necessary for the purposes of (a) financing a portion of the cost
of acquiring, improving, equipping and providing for the installation of a
manufacturing facility for the production of paper and other art/craft
products (such manufacturing facility, as more
<PAGE>
particularly described in Exhibit A attached to the Lease Agreement (the
"Agreement"), dated as of June 1, 1979, between the Authority and the
Company, is hereinafter referred to as the "Project"), (b) paying the
legal, accounting, financial and printing expenses, fees and all other
expenses, including Underwriter's discount, incurred in connection with the
issuance of the Series 1979 Bonds (the "Issuance Expenses"). The accrued
interest on the Series 1979 Bonds in the amount of $1,666.67 will be
deposited to the credit of the Bond Fund.
2. The estimated total costs of acquiring, constructing and installing
the Project will not be less than $2,000,000. The said total costs are
expected to be financed with proceeds from the sale of the Series 1979
Bonds and, to the extent that such proceeds are not sufficient, the
Company's own funds.
3. The Company does not presently expect to cause the Authority to
sell or otherwise dispose of any property comprising a part of the Project
prior to June 1, 1999, the maturity date of the Series 1979 Bonds.
4. On the basis of the facts, estimates and circumstances in existence
on the date hereof, which is the date on which the Series 1979 Bonds are to
be physically delivered in exchange for the issue price thereof
(hereinafter
2.
<PAGE>
"date of issue"), I reasonably expect the following in respect of the
Series 1979 Bonds and as to the use of the proceeds thereof:
(a) All of the proceeds to be derived by the Authority from the
sale of the Series 1979 Bonds (representing $2,000,000 face amount of
the Series 1979 Bonds, less Underwriter's discount of $44,000 plus
accrued interest on the Series 1979 Bonds the date hereof of
$1,666.67) are expected to be needed and fully expended as follows:
All of the proceeds, other than accrued interest will be
deposited in the Acquisition Fund created by the Indenture, and
will be applied within three years of June 1, 1979 to pay a
portion of the cost of the Project, including expenses
anticipated to be incurred in connection with the issuance of the
Series 1979 Bonds and interest on the Series 1979 Bonds during
the period prior to the completion of the Project. All of this
amount will immediately be requisitioned by the Company to
reimburse it for moneys previously expended by it for a portion
of the costs of acquiring, constructing and installing the
Project.
The amount of accrued interest, $1,666.67 will be deposited
to the credit of the Bond Fund and will be used to pay a portion
of the interest on the Series 1979 Bonds payable December 1,
1979.
3.
<PAGE>
(b) The total proceeds to be received by the Authority for the
sale of the Series 1979 Bonds do not exceed the total of the amount
necessary for the purposes described in subparagraph (a) of this
paragraph 4.
(c) The acquisition, construction and installation of the Project
has been completed.
(d) There are no funds, other than the Bond Fund, established by
the Authority or the Company pursuant to the Indenture, the Agreement,
or the Guaranty Agreement, dated as of June 1, 1979, between the
Company and the Trustee (the "Guaranty"), or any other agreement or
understanding which are reasonably expected to be used to pay debt
service on the Series 1979 Bonds. There are no funds, other than the
Bond Fund, established by the Authority or the Company pursuant to the
Indenture, the Agreement, the Guaranty, or any other agreement or
understanding, pledged as collateral for the Series 1979 Bonds for
which there is a reasonable assurance that amounts therein will be
available to pay debt service on the Series 1979 Bonds if the
Authority or the Company encounters financial difficulties.
(e) The Bond Fund will be used primarily to achieve a proper
matching of Basic Rent, as defined in the Agreement, paid to the
Trustee by the Company for the account of the Authority pursuant to
the Agreement, and debt service on the
4.
<PAGE>
Series 1979 Bonds within each bond year. Amounts deposited to such
Fund will be depleted immediately for payment of debt service on the
Series 1979 Bonds and in any event will be depleted at least once a
year, except for any carryover amount which will not exceed the
greater of (A) one year's earnings on the amounts deposited to such
Fund, or (B) 1/12 of annual debt service on the Series 1979 Bonds.
Interest on the Series 1979 Bond during the construction period prior
to the completion of the Project may be funded from the Acquisition
Fund.
(f) The moneys relating to the Series 1979 Bonds will be invested
as follows:
(i) proceeds derived from the sale of the Series 1979 Bonds
deposited in the Acquisition Fund will be invested at an
unrestricted yield for the period prior to their expenditure for
the purposes of which the Series 1979 Bonds are issued, but in no
event for a period in excess of three years from the date of
issue;
(ii) proceeds derived from the sale of the Series 1979 Bonds
deposited in the Bond Fund as accrued interest will be invested
at an unrestricted yield prior to the expenditure thereof within
three years of the date hereof;
5.
<PAGE>
(iii) amounts earned from the investment of any of the
proceeds derived from the sale of the Series 1979 Bonds will be
invested at an unrestricted yield for a period not in excess of
the greater of three years from the date of issue of the Series
1979 Bonds or one year from the date of receipt of the amount
earned;
(iv) amounts deposited to the Bond Fund, and investment
earnings on amounts so deposited, shall be invested at an
unrestricted yield prior to their expenditure but in no event for
a period in excess of thirteen months from the date of deposit to
such Fund; and
(v) any amounts derived from the sale of the Series 1979
Bonds, together with investment earnings thereon, and amounts
deposited to the Bond Fund, together with earnings on such
amounts, not invested at an unrestricted yield, as described in
parts (i) through (iv) of this subparagraph, will not be invested
at a yield in excess of the yield on the Bonds, except that such
amounts, to the extent they do not exceed fifteen percent of the
face amount of the Series 1979 Bonds, may be invested at an
unrestricted yield.
6.
<PAGE>
(g) No portion of the proceeds of the Series 1979 Bonds will be
used as a substitute for other funds which were designated as a source
of financing for any portion of the cost of the Project and which have
been or will be used to acquire directly or indirectly securities
producing a yield in excess of the yield on the Series 1979 Bonds.
5. Pursuant to the Agreement, the Company is obligated to pay to the
Authority during the term of the Agreement (not to exceed the maturity of
the Bonds) as Basic Rent amounts sufficient to pay debt service on the
Bonds when due and, as Additional Rent, certain costs and expenses,
exclusive of costs and expenses payable from the proceeds of the sale of
the Bonds. The yield on the Agreement will not exceed the yield on the
Series 1979 Bonds plus 1/8 of one percentage point.
6. For purposes of this Certificate, "yield" means, except with
respect to the Agreement, that yield which when used in computing the
present worth of all payments of principal and interest to be paid on an
obligation produces an amount equal to the purchase price of such
obligation. With respect to the Agreement, "yield" means that yield which
when used in computing the present worth of all payments made pursuant to
Section 5.3 of the Agreement produces an amount equal to the purchase
price of the Agreement.
7.
<PAGE>
The yield on obligations acquired with the proceeds derived from the sale
of the Series 1979 Bonds, including the yield on the Agreement, shall be
calculated by the use of the same frequency interval of compounding
interest. The purchase price of the Series 1979 Bonds means the initial
offering price of such bonds to the public by Alex. Brown & Sons (the
"Underwriter"). The purchase price of the Agreement means the aggregate
face amount of the Series 1979 Bonds less Issuance Expenses. For purposes
of computing yield on the Agreement, each or any of the payments made
pursuant to Section 5.3 of the Agreement shall be reduced by certain
amounts, the present value (using as a discount rate the yield on the
Series 1979 Bonds) of which is equal to or less than the present value of
the costs of issuing, carrying or repaying the Series 1979 Bonds, the
Underwriter's spread and the costs, if any, of acquiring and carrying the
Agreement.
7. In Section 706 of the Indenture the Authority has covenanted that
it will not make or permit any use, and directs the Trustee not to make or
permit any use, of the proceeds of the Series 1979 Bonds which would cause
the Series 1979 Bonds to be "arbitrage bonds" within the meaning of Section
103(c) of the Code and the applicable regulations promulgated from time to
time thereunder.
8.
<PAGE>
8. To the best of my knowledge, information and belief, the above
expectations are reasonable.
9. The Authority is hereby authorized and requested to deliver a
Certificate as to Arbitrage as required by Section 1.103-13(a)(2) of the
Proposed Treasury Regulations under Section 103(c) of the Code. The
Authority is hereby expressly authorized to rely upon the statements made,
and expectations expressed, herein, and I, for and on behalf of the
Company, hereby warrant and represent to the Authority that all such
statements are accurate and that all such expectations are reasonable and
made in good faith upon information the undersigned deems reliable.
IN WITNESS WHEREOF, I have hereunto set my hand this 5th day of June, 1979.
_______________________________________
Vice President, Treasurer and
Secretary of Hunt Manufacturing Co.
9.
<PAGE>
LAW OFFICES
DRINKER BIDDLE & REATH
1100 PHILADELPHIA NATIONAL BANK BUILDING
BROAD AND CHESTNUT STREETS
PHILADELPHIA, PA. 19107
TELEPHONE (213) 986-2700
CABLE: DEBEMAC
TELEX: 634664
June 5, 1979
The Iredell Industrial Facilities and
Pollution Control Financing Authority
P.O. Box 788
Statesville, North Carolina
Brown, Wood, Ivey, Mitchell & Petty
One Liberty Plaza
New York, New York 10006
Re: $2,000,000 The Iredell County Industrial
Facilities and Pollution Control Financing
Authority Industrial Revenue Bonds (Hunt
Manufacturing Co. Project), Series 1979
----------------------------------------------
Dear Sirs:
We represent Hunt Manufacturing Co. (the "Company") in connection with the
above-captioned matter. This opinion is furnished to (i) The Iredell County
Industrial Facilities and Pollution Control Financing Authority (the
"Authority") in its capacity as issuer of the bonds described above (the
"Bonds") and (ii) Messrs. Brown, Wood, Ivey, Mitchell & Petty, in their capacity
as Bond Counsel, for purposes of their opinion as to the exemption from Federal
income tax of the interest on the Bonds.
At your request and at the request of the Company, we have consulted with
and advised Rudolph M. Peins, Secretary, Treasurer and Vice President of the
Company, as to the meaning of the definitions in Section 103(b)(6)(D) of the
Internal Revenue Code of 1954, as amended, and regulations thereunder and the
requisite and appropriate scope of the examination and investigation of the
records of the Company and otherwise regarding past and future "capital
expenditures" (within the
<PAGE>
DRINKER BIDDLE & REATH
-2-
meaning of said Section 103(b)(6)(D)), all in connection with the preparation
and delivery to you of the certificate to which this opinion is attached (the
"Certificate"), and we have reviewed Exhibit "A" to the Certificate, all for the
purpose of assuring you that such officer has been afforded adequate counsel and
has been suitably advised to deliver the Certificate.
Based on such certification, our understanding of the appreciation which
such officer has of such definitions, the examination and investigation
performed by such officer and/or other employees, and our review of the
Certificate (but without having undertaken any independent investigation or
examination of the records of the Company or otherwise), we are of the opinion
that the consultation afforded and advice. given such officer was sufficient to
permit him to have performed an informed examination and investigation of the
records of the Company and otherwise for the purpose of their certification of
the amount of "capital expenditures" paid or incurred by the Company within the
three years prior to the date of issuance of the Bonds, and nothing has come to
our attention that leads us to believe that the Certificate contains any
misstatement or error or fails to contain any fact necessary to make the
Certificate true and accurate. Accordingly, we are of the opinion that each of
you is entitled to rely upon the Certificate.
Very truly yours,
--------------------------------
DRINKER BIDDLE & REATH
WCM/JCB/sg
<PAGE>
HUNT MANUFACTURING C0.
June 5, 1979
The Iredell County Industrial
Facilities and Pollution Control
Financing Authority
P. 0. Box 788
Statesville, North Carolina
Brown, Wood, Ivey, Mitchell & Petty
One Liberty Plaza
New York, New York 10006
Re: $2,000,000 Industrial Revenue Bonds
(Hunt Manufacturing Co. Project),
Series 1979 of The Iredell County
Industrial Facilities and Pollution
Control Financing Authority
Dear Sirs:
This certificate is furnished to: (i) The Iredell County Industrial
Facilities and Pollution Control Financing Authority (the "Authority") in its
capacity as issuer of the bonds (the "Bonds") described above and (ii) Messrs.
Brown, Wood, Ivey, Mitchell & Petty, in their capacity as Bond Counsel, for
purposes of their opinion as to the exemption from Federal income tax of the
interest on the Bonds.
The undersigned has examined a copy of the Lease Agreement dated as of June
1, 1979 (the "Lease"), between the Authority and Hunt Manufacturing Co. (the
"Company"), and various records of the Company. The undersigned and other
representatives of the Company have consulted and have been advised by the
Company's counsel, Drinker Biddle & Reath, as to the appropriate interpretation
of the definitions in Section 103(b)(6)(D) of the Internal Revenue Code of 1954,
as amended (the "Code"), and the applicable regulations thereunder and as to the
requisite and appropriate scope, extent,
<PAGE>
method and manner of any examination and investigation of the records of the
Company and otherwise regarding past "capital expenditures" (within the meaning
of Section 103(b) (6)(D) of the Code), and the undersigned believes, based on
such consultation and such investigation and examination, that the Company has
made such examination and investigation as is necessary to certify as to the
amounts that are required to be included in determining the "aggregate
authorized face amount" of the Bonds pursuant to Section 103(b)(6)(D) of the
Code, and to declare the statements made and the information given by the
Authority in its statement electing to qualify the Bonds for the $10,000,000
exemption afforded by said Section 103(b)(6)(D) of the Code to be true and
correct.
Based on the foregoing examination and investigation, the undersigned DOES
HEREBY CERTIFY AND DECLARE as follows:
1. The aggregate amount of capital expenditures (as defined by
Treasury Regulation ss. 1.103-10(b)(2) to include any expenditure which was
or could have been treated as a capital expenditure under any rule or
election under the Code) with respect to facilities located in the same
county as the project for which the proceeds of the Bonds are to be
expended, or within a 35 mile radius of such project, the principal user of
which was or is the Company or a related person (as defined in Section
103(b)(6)(C)) paid or incurred during the period beginning three years
before the date of issuance of the Bonds, and financed otherwise than out
of the proceeds of the Bonds and otherwise than out of the proceeds of
other outstanding issues to which Section 103(b)(6)(A) of the Code applies,
is $1,121,542.
2. There are no prior outstanding issues to be taken into account
under Section 103(b)(6)(B) of the Code.
3. The Company has agreed that 90% or more of the proceeds of the
Bonds computed without regard to the costs of issuing the Bonds will be
used for the acquisition, construction or improvement of land or property
of a character subject to the allowance for depreciation under Section 167
of the Code, or to pay interest during construction which would be
chargeable to the capital account of such property with a proper election
under Section 266 of the Code, and no part of such proceeds will be used by
the Company, directly or indirectly, as working capital or to finance
inventory.
<PAGE>
4. The statement made and the information given therein concerning or
provided by the Company by the Authority in its statement, a copy of which
is annexed hereto, electing to qualify the Bonds for the $10,000,000
exemption afforded by Section 103(b)(6)(D) of the Code are true and
correct.
5. I have made such examination and investigation as is necessary to
have enabled me to express an informed opinion as to the foregoing matters.
--------------------------------
Vice President
Hunt Manufacturing Co.
<PAGE>
EXHIBIT A
"Section 103(b)(6)(D) Capital Expenditures"**
A. "Section 103(b)(6)(D) Capital Expenditures" in Iredell
County, North Carolina, financed or to be financed out
of proceeds of the current subject issue of bonds:
(i) The difference between
the face of the bonds ($2,000,000)
and the amount paid by the Underwriter ($1,956,000): $ 44,000
(ii) Expenditures already
incurred by the Company to
be reimbursed at bond closing: 1,956,000
(iii) Other expenditures incurred and to be incurred and
to be reimbursed out of bond proceeds: ----------
Subtotal* $2,000,000
B. "Section 103(b)(6)(D) Capital Expenditures" related to this
Project and not to be reimbursed out of proceeds of the
Bonds: $ 0
C. Other "Section 1C3(b)(6)(D) Capital Expenditures"
(i.e., expenditures incurred within to previous three years in
Iredell County, North Carolina not related to this
Project):
Subtotal $1,121,542
----------
Total $3,121,542
==========
- ----------
* Prepared by the Company. The subtotal in Section A above should coincide
with the aggregate purchase price of the Leased Property to be financed by
the bonds.
** As defined in Treas. Reg. Section 1.103-10(b)(2).
<PAGE>
(39)
UNDERWRITER'S RECEIPT FOR BONDS
The undersigned hereby acknowledges receipt from The Iredell County
Industrial Facilities and Pollution Control Financing Authority this day of
2,000,000 aggregate principal amount of The Iredell County Industrial Facilities
and Pollution Control Financing Authority Industrial Revenue Bonds (Hunt
Manufacturing Company Project), Series 1979, as described in Schedule I hereto.
June 5, 1979
Alex. Brown & Sons
By:
-----------------------------
Authorized Representative
<PAGE>
SCHEDULE I
The Iredell County Industrial Facilities and Pollution Control Financing
Authority Industrial Revenue Bonds (Hunt Manufacturing Co. Project), Series 1979
are issued in the aggregate principal amount of $2,000,000 and consist of 400
coupon bonds, registrable as to both principal and interest, each bond in the
principal amount of $5,000, numbered 1-400, inclusive, dated as of and bearing
interest from June 1, 1979 at the rate of 7 1/2% per annum, payable
semi-annually on the 1st days of June and December of each year (first interest
being payable December 1, 1979), and maturing on June 1, 1999, subject to prior
redemption as provided therein.
<PAGE>
(40)
TRUSTEE'S CERTIFICATE OF DELIVERY AND
PAYMENT AND APPLICATION OF BOND PROCEEDS
First Union National Bank of North Carolina, as Trustee (the "Trustee")
under the Indenture and Deed of Trust, dated as of June 1, 1979 (THE
"INDENTURE"), BY AND between The Iredell County Industrial Facilities and
Pollution Control Financing Authority (the "Authority") and the Trustee, DOES
HEREBY CERTIFY as follows:
1. The $2,000,000 aggregate principal amount of Industrial Revenue Bonds (Hunt
Manufacturing Company Project), Series 1979 of the Authority (the "Bonds"),
as described in Schedule I hereto, have this day been delivered to or upon
the order of Alex. Brown & Sons, as the purchaser named in the resolution
of the Authority, upon payment to the Trustee, for the account of the
Authority, of the purchase price of the Bonds aggregating $1,957,666.67
computed as follows:
Contract Price $1,956,000.00
Accrued interest from June l,
1979 to date of payment for
the Bonds 1,666.67
Total Purchase Price $1,957,666.67
2. Pursuant to the provisions of the last paragraph of Section 208 of the
Indenture, the proceeds of the Bonds have been applied as follows:
(a) The accrued interest on the Bonds in the amount of $1,666.67 has been
deposited to the credit of the Bond Fund under the Indenture.
(b) The balance of the proceeds of the Bonds has been deposited to the
credit of the Acquisition Fund under the indenture.
June 5, 1979.
First Union National Bank of
North Carolina
As Trustee
By______________________________
Authorized Officer
<PAGE>
(41)
TRUSTEE'S RECEIPT FOR ITEMS REQUIRED BY
SECTION 208 OF THE INDENTURE AND
DEED OF TRUST
First Union National Bank of North Carolina, as Trustee under the Indenture
and Deed of Trust, dated as of June 1, 1979 (the "Indenture"), by and between
The Iredell County Industrial Facilities and Pollution Control Financing
Authority (the "Authority") and said First Union National Bank of North
Carolina, DOES HEREBY ACKNOWLEDGE RECEIPT of the several items required to be
delivered to the Trustee pursuant to Section 208 of the Indenture as a condition
precedent to its authentication of the $2,000,000 aggregate principal amount of
Industrial Revenue Bonds (Hunt Manufacturing Co. Project), Series 1979 of the
Authority, as follows (all terms hereinafter used having the meanings assigned
thereto by the Indenture):
(a) A copy, certified by the Secretary or an Assistant Secretary of
the Authority, of a resolution or resolutions authorizing the issuance of
the Series 1979 Bonds, designating the Paying Agent or Agents for the
Series 1979 Bonds, awarding the Series 1979 Bonds and directing the
authentication and delivery of the Series 1979 Bonds to or upon the order
of the purchasers therein named upon payment of the purchase price therein
set forth.
(b) An executed counterpart of the Lease.
(c) An opinion of Counsel for the Authority, which may be bond counsel
to the Authority, stating that the signer is of the opinion that the
execution and delivery of the Lease have been duly authorized by the
Authority, that the Lease is in the form so authorized and has been duly
executed by the Authority and that, assuming proper authorization and the
execution of the Lease by the Company, the Lease is valid and binding in
accordance with its terms.
(d) An opinion of Counsel for the Company stating that the signer is
of the opinion that the execution and delivery of the Lease have been duly
authorized by the Company, that the Lease is in the form so authorized and
has been duly executed by the Company and that assuming proper
authorization and execution of the Lease by the Authority, the Lease is
valid and binding obligation of the Company.
<PAGE>
(e) An executed counterpart of the Guaranty.
(f) An opinion of Counsel for the Guarantor stating that the signer is
of the opinion that the execution and delivery of the Guaranty have been
duly authorized by the Guarantor, that the Guaranty is in the form so
authorized and has been duly executed by the Guarantor, and that the
Guaranty is valid, binding and enforceable in accordance with its terms,
subject to any applicable bankruptcy, reorganization, insolvency,
moratorium or other similar laws and subject to the further qualification
that the availability of specific enforcement remedies may be subject to
the discretion of the courts.
(g) An opinion of Counsel admitted to practice law in the State of
North Carolina stating that the signer is of the opinion that copies of
such instruments and financing statements (described in such opinion) as
are necessary, have been recorded and filed in the manner and places
required by North Carolina law with the effect that the lien of this
Indenture has been perfected and protected and (i) constitutes as to the
Trust Estate a valid first lien of record and (ii) creates as to the Leased
Equipment and to the rights of the Authority under the Lease assigned under
this In denture, valid security interests in the Leased Equipment, and such
rights, respectively, in any case, subject to no equal or prior liens
except for Permitted Encumbrances.
(h) Evidence satisfactory to the Trustee that the insurance policies
required by Sections 7.1 and 7.2 of the Lease have been obtained and are in
effect.
(i) An opinion of Counsel for the Authority, which may be bond counsel
to the Authority, stating that the signer is of the opinion that the
issuance of the Series 1979 Bonds and the execution of the Indenture have
been duly and validly authorized, that all conditions precedent to the
delivery of the Series 1979 Bonds have been fulfilled and that the Series
1979 Bonds and the Indenture are valid and binding in accordance with their
terms.
June 5, 1979.
FIRST UNION NATION BANK OF NORTH CAROLINA,
as trustee
By______________________________
Authorized Officer
<PAGE>
Comptroller of the Currency
Treasury Department of the
United States
WHEREAS, FIRST UNION NATIONAL BANK OF NORTH CAROLINA, located in Charlotte.
State of North Carolina, being a National Banking Association, organized under
the statutes of the United States, has made application for authority to act as
fiduciary
AND WHEREAS, applicable provisions of the statutes of the United States
authorize the grant of such authority;
NOW THEREFORE, I hereby certify that the necessary approval has been given
and that the said association is authorized to act in all fiduciary capacities
permitted by such statutes.
IN TESTIMONY WHEREOF, witness my signature and seal of office this fourth
day of May, 1968
J.T. Watson
-----------------------------------
Acting Comptroller of the Currency
[SEAL]
Charter No. 15650
<PAGE>
BY-LAWS OF
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
ARTICLE I
MEETINGS OF SHAREHOLDERS
SECTION 1.1 ANNUAL MEETING. The regular annual meeting of the shareholders
for the election of directors and the transaction of whatever other business as
may properly come before the meeting, shall be held at the main office of the
association, City of Charlotte, North Carolina, or such other place as the Board
of Directors may designate on the fourth Tuesday of April in each year,
commencing with the year 1971, if not a legal holiday, and if a legal holiday,
then on the next business day following. Notice of such meeting shall be mailed,
postage prepaid, at least ten days prior to the date thereof, addressed to each
shareholder at his address appearing on the books of the association. If, from
any cause, an election of directors is not made on the said day, the Board of
Directors shall order the election to be held on some subsequent day, as soon
thereafter as practicable, according to the provisions of law; and notice
thereof shall be given in the manner herein provided for the annual meeting. The
holders of a majority of the outstanding shares entitled to vote, and
represented at any meeting of the shareholders, may choose persons to act as
Chairman and as Secretary of the meeting.
SECTION 1.2. SOCIAL MEETINGS. Except as otherwise specifically provided by
statute, special meetings of the shareholders may be called for any purpose at
any time by the Board of Directors or by any three or more shareholders owning,
in the aggregate, not less than ten percent of the stock of the Association.
Every such special meeting, unless otherwise provided by law, shall be
<PAGE>
called by mailing, postage prepaid, not less than ten days prior to the date
fixed for such meeting, to each shareholder at his address appearing on the
books of the Association, a notice stating the purpose of the meeting.
SECTION 1.3. NOMINATIONS FOR DIRECTORS. Nominations for election to the
Board of Directors may be made by the Board of Directors or by any stockholder
of any outstanding class of capital stock of the bank entitled to vote for the
election of directors. Nominations, other than those made by or on behalf of the
existing management of the bank, shall be made in writing and shall be delivered
or mailed to the President of the Bank and to the Comptroller of the Currency,
Washington, D. C., not less than 14 days nor more than 50 days prior to any
meeting of stockholders called for the election of directors, provided however,
that if less than 21 days notice of such meeting is given to shareholders, such
nomination shall be mailed or delivered to the President of the Bank and to the
Comptroller of the Currency not later than the close of business on the seventh
day following the day on which the notice of meeting was mailed. Such
notification shall contain the following information to the extent known to the
notifying shareholder: (a) the name and address of each proposed nominee; (b)
the principal occupation of each proposed nominee; (c) the total number of
shares of capital stock of the bank that will be voted for each proposed
nominee; (d) the name and residence address of the notifying shareholder; and
(e) the number of shares of capital stock of the bank owned by the notifying
shareholder. Nominations not made in accordance herewith may, in his discretion,
be disregarded by the chairman of the meeting, and upon his instructions, the
vote tellers may disregard all votes cash for each such nominee.
<PAGE>
SECTION 1.4. JUDGES OF ELECTION. The Board may at any time appoint from
among the shareholders three or more persons to serve as Judges of Election at
any meeting of shareholders; to act as judges and tellers with respect to all
votes by ballot at such meeting and to file with the Secretary of the meeting a
Certificate under their hands, certifying the result thereof.
SECTION 1.5. PROXIES. Shareholders may vote at any meeting of the
shareholders by proxies duly authorized in writing, but no officer or employee
of this Association shall act as proxy. Proxies shall be valid only for one
meeting, to be specified therein, and any adjournments of such meeting. Proxies
shall be dated and shall be filed with the records of the meeting.
SECTION 1.6. QUORUM. A majority of the outstanding capital stock,
represented in person or by proxy, shall constitute a quorum at any meeting of
shareholders, unless otherwise provided by law; but less than a quorum may
adjourn any meeting, from time to time, and the meeting may be held, as
adjourned, without further notice. A majority of the votes cast shall decide
every question or matter submitted to the shareholders at any meeting, unless
otherwise provided by law or by the Articles of Association.
ARTICLE II
DIRECTORS
SECTION 2.1. BOARD OF DIRECTORS. The Board of Directors (hereinafter
referred to as the "Board"), shall have power to manage and administer the
business and affairs of the Association. Except as expressly limited by law, all
corporate powers of the Association shall be vested in and may be exercised by
said Board.
<PAGE>
SECTION 2.2. NUMBER. The Board shall consist of not less than five nor more
than twenty-five shareholders, the exact number within such minimum and maximum
limits to be fixed and determined from time to time by resolution of a majority
of limits to be fixed and determined from time to time by resolution of a
majority of the full Board or by resolution of the shareholders at any meeting
thereof; provided, however, that a majority of the full Board of Directors may
not increase the number of directors to a number which, (1) exceeds by more than
two the number of directors last elected by shareholders where such number was
fifteen or less, and (2) to a number which exceeds by more than four the number
of directors last elected by shareholders, where such number was sixteen or
more, but in no event shall the number of directors exceed twenty-five.
SECTION 2.3. ORGANIZATION MEETING. The Secretary of the meeting upon
receiving the certificate of the judges, of the result of any election, shall
notify the directors-elect of their election and of the time at which they are
required to meet at the Main Office of the Association for the purpose of
organizing the new Board and electing and appoint officers of the Association
for the succeeding year. Such meeting shall be appointed to be held on the day
of the election or as soon thereafter as practicable, and, in any event, within
thirty (30) days thereof. If, at the time fixed for such meeting, there shall
not be a quorum present, the directors present may adjourn the meeting from time
to time, until a quorum is obtained.
SECTION 2.4. REGULAR MEETINGS. The Regular Meetings of the Board of
Directors shall be held, without notice, on the fourth Tuesday of each month at
the Main Office or at such other place and time as may be designated by
<PAGE>
the Board of Directors. When any regular meeting of the Board falls upon a
holiday, the meeting shall be held on the next banking business day unless the
Board shall designate some other day.
SECTION 2.5. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by the President of the Association, or at the request of three
(3) or more directors. Each member of the Board of Directors shall be given
notice stating the time and place, by telegram, letter, or in person, of each
such special meeting.
SECTION 2.6. QUORUM. A majority of the directors shall constitute a quorum
at any meeting, except when otherwise provided by law; but a less number may
adjourn any meeting, from time to time, and the meeting may be held, as
adjourned, without further notice.
SECTION 2.7. VACANCIES. When any vacancy occurs among the directors, the
remaining members of the Board, in accordance with the laws of the United
States, may appoint a director to fill such vacancy at any regular meeting of
the Board, or at a special meeting called for that purpose.
SECTION 2.8. ADVISORY BOARDS. The Board of Directors may appoint an
Advisory Board or Boards in such place or places as the Board of Directors may
determine. Each such Advisory Board shall consist of as many persons as the
Board of Directors may determine. The duties of each Advisory Board shall be to
consult and advise with the Board of Directors and senior officers of the Bank
with regard to the best interests of the Association and to perform such other
duties as the Board of Directors may lawfully delegate.
<PAGE>
ARTICLE III
COMMITTEES OF THE BOARD
SECTION 3.1. The Board of Directors shall appoint such Committees as may be
required by applicable law or regulation and such other Committees as it shall
deem advisable for the conduct of the affairs of this Association. The
membership, duties, powers and responsibilities of each such Committee shall be
determined by the Board of Directors in conformity with applicable law or
regulation, and if there be no applicable law or regulation, then as the Board
of Directors shall decide. No committee shall be authorized to transact any
business or perform any act which the Board alone is by law or regulation
authorized to transact or perform.
ARTICLE IV
OFFICERS AND EMPLOYEES
SECTION 4.1. OFFICERS. The officers of this Association may be a Chairman
of the Board, one or more Vice Chairmen, a President, one or more Vice
Presidents, a Secretary, and such other officers as may be appointed by the
Board of Directors. The Chairman of the Board and the President shall be a
member of the Board of Directors. Any two offices or more may be held by one
person, but no officer shall sign or execute any document in more than one
capacity.
Section 4.2. Election, Term of Office, and Qualification. Each officer
shall be chosen by the Board of Directors and shall hold office until the annual
meeting of the Board of Directors held next after his election or until his
successor shall have been duly chosen and qualified, or until his death, or
until he shall resign, or shall have been disqualified, or shall have been
<PAGE>
removed from office.
SECTION 4.3. CHIEF EXECUTIVE OFFICER. The Board of Directors shall
designate one of its members to be the President of this Association, and the
officer so designated shall be an ex officio member of all committees of the
Association except the Examining Committee, and its Chief Executive Officer
unless some other officer is so designated by the Board of Directors.
SECTION 4.4. DUTIES OF OFFICERS. The duties of all officers shall be
prescribed by the Board of Directors. Nevertheless, the Board of Directors may
delegate to the Chief Executive Officer the authority to prescribe the duties of
other officers of the corporation not inconsistent with law, the charter, and
these By-laws, and to appoint other employees, prescribe their duties, and to
dismiss them. Notwithstanding such delegation of authority, any officer or
employee also may be dismissed at any time by the Board of Directors.
SECTION 4.5. OTHER EMPLOYEES. The Board of Directors may appoint from time
to time such tellers, vault custodians, bookkeepers, and other clerks, agents,
and employees as it may deem advisable for the prompt and orderly transaction of
the business of the Association, define their duties, fix the salary to be paid
them, and dismiss them. Subject to the authority of the Board of Directors, the
Chief Executive Officer or any other officer of the Association authorized by
him, may appoint and dismiss all such tellers, vault custodians, bookkeepers and
other clerks, agents, and employees, prescribe their duties and the conditions
of their employment, and from time to time fix their compensation.
<PAGE>
SECTION 4.6. REMOVAL AND RESIGNATION. Any officer or employee of the
Association may be removed either with or without cause by the Board of
Directors. Any employee other than an officer elected by the Board of Directors
may be dismissed in accordance with the provisions of the preceding Section 4.
5. Any officer may resign at any time by giving written notice to the Board of
Directors or to the Chief Executive Officer of the Association. Any such
resignation shall become effective upon its being accepted by the Board of
Directors, or the Chief Executive Officer.
ARTICLE V
TRUST DIVISION
SECTION 5.1. TRUST DIVISION. There shall be a division of the Association
known as the Trust Division which shall perform the fiduciary responsibilities
of the Association. The Trust Division shall consist of three service areas,
Personal Trust and Agency Services, Corporate Trust and Agency Services and
Investment Counseling Services. The General Office or these services shall be
located in Charlotte, N. C., with City Trust Offices located in such cities
within the State of North Carolina as designated by the Board of Directors.
SECTION 5.2. Trust OFFICERS. There shall be a General Trust Officer of this
association whose duties shall be to manage, supervise and direct all the
activities of the Trust Division. Further, there shall be a Senior Trust Officer
designated or each of the three major service areas listed in Section 5.1 to
assist the General Trust Officer in the performance of his duties. They shall do
or cause to be done all things necessary or proper in carrying out the business
of the Trust Division in accordance with provisions of law and regulation.
<PAGE>
SECTION 5.3. GENERAL TRUST COMMITTEE. There shall be a General Trust
Committee composed of not less than four (4) members of the Board of Directors
of this Association who shall be appointed annually or from time to time by its
membership. The General Trust Officer shall serve an ex-officio member of the
Committee. Each member shall serve until his successor is appointed. The
Chairman of the Board of Directors shall have the power to make temporary
appointments to the General Trust Committee, to act in place of members
previously elected who temporarily cannot attend its meetings. Any member of the
Committee may be removed with or without cause by the Board of Directors. The
Committee shall counsel and advise on all matters relating to the business or
affairs of the Trust Division and shall enact overall policies for the conduct
of the business of the Trust Division including but not limited to: General
administration, investment policies, new business development, review for
approval of major assignments of functional responsibilities. The Committee
shall meet at least quarterly or as called for by its Chairman or any three (3)
members of the Committee. A quorum shall consist of three (3) members. In
carrying out its responsibilities, the General Trust Committee will review the
actions of all officers, employees and Committees utilized by this Association
and may assign the administration and performance of any fiduciary powers or
duties to any officer or employee or to any Trust Investment Committee, City
Trust Committee, Account Review Committee, or other committees as it shall
designate. One of the methods to be used in the review process will be the
thorough scrutiny of the Report of Examination by the Office of the Comptroller
of the Currency and the Audit Division of First Union Corporation. These reviews
should in no way be viewed as the pre-emption of authority granted to the
Examining Committee. The Chairman of the General Trust Committee shall be
appointed by the Chairman of the Board of Directors. He shall record in
appropriate minutes all actions taken by the Committee, signed by its secretary
and approved by its Chairman. Further, the Committee shall
<PAGE>
summarize all actions taken by it and shall submit a report of its proceedings
to the Board of Directors at its next regularly scheduled meeting following a
meeting of the General Trust Committee. As required by Section 9.7 of Regulation
9 of the Comptroller of the Currency, the Board of Directors retains
responsibility for the proper exercise of fiduciary powers of the Association.
The Trust Division will maintain a list of securities approved for
investment in fiduciary accounts and will from time to time provide the General
Trust Committee with current information relative to such list and also with
respect to transactions in other securities not on such list. It is the policy
of this Association that members of the General Trust Committee should not buy,
sell or trade in securities which are on such approved list or in any other
securities in which the Trust Division has taken, or intends to take, a position
in fiduciary accounts in any circumstances in which any such transaction could
be viewed as a possible conflict of interest or could constitute a violation of
applicable law or governmental regulation. Accordingly, if any such securities
are owned by any member of the General Trust Committee at the time of
appointment to such Committee, the Trust Division shall be promptly so informed
in writing. If any member of the General Trust Committee intends to buy, sell,
or trade in any such securities while serving as a member of the Committee, he
should first notify the Trust Division in order to make certain that any
proposed transaction will not constitute a violation of this policy or of
applicable law or governmental regulation.
SECTION 5.4. TRUST INVESTMENT COMMITTEE. There shall be a Trust investment
Committee composed of not less than seven (7) officers and/or employees this
association who shall be appointed annually or from time to time by the
<PAGE>
Board of Directors. Each member shall serve until his successor is appointed.
Meetings shall be called by the Chairman or any two members of the Committee. A
quorum shall consist of five (5) members. The Trust Investment Committee shall
exercise such fiduciary powers and perform such duties as may be assigned to it
by the General Trust Committee. A11 actions taken by the Trust Investment
Committee shall be recorded in appropriate minutes, signed by the Secretary
thereof, approved by its Chairman and submitted to the General Trust Committee
at its ensuing regular meeting for its review.
SECTION 5.5. CITY TRUST COMMITTEES. There shall be a City Trust Committee
at each City Trust Office composed of not more than eight (8) officers and/or
advisory directors who shall be appointed annually or from time to time by the
Board of Directors. Each member shall serve until his successor is appointed.
Meetings shall be called by the Chairman or any three (3) members of the
Committee. A quorum shall consist of five (5) members. Each City Trust Committee
shall exercise such fiduciary powers and perform such duties relating to its
City Trust Office as may be assigned to it by the General Trust Committee. A11
actions taken by a City Trust Committee shall be recorded in appropriate
minutes, signed by the Secretary thereof, approved by its Chairman, and
submitted to the General Trust Committee at its ensuing regular meeting for its
review.
SECTION 5.6. TRUST ACCOUNT REVIEW COMMITTEE. There shall be a Trust Account
Review Committee composed of not less than four (4) officers and/or employees of
this association, who shall be appointed annually or from time to time by the
Board of Directors. Each member shall serve until his successor is appointed.
Meetings shall be called by the Chairman or any
<PAGE>
two members of the Committee. a quorum shall consist of three members. The Trust
Account Review Committee shall exercise such fiduciary powers and perform such
duties as may be assigned to it by the General Trust Committee. All actions
taken by the Trust Account Review Committee shall be recorded in appropriate
minutes, signed by the Secretary thereof, approved by its Chairman and submitted
to the General Trust Committee at its ensuing regular meeting for its review.
SECTION 5.7. AUTHENTICATIONS OR CERTIFICATES. All authentications or
certifications by the Association as trustee under any indenture, mortgage, deed
of trust or other instrument securing bonds, notes, debentures or other
obligations of any person or corporation, and all certificates as registrar or
transfer agent, and all certificates of deposit for stocks, bonds or other
securities, and interim and trust certificates may be signed or countersigned on
behalf of the Association by any officer of the Association or by any other
person appointed for that purpose by the Board of Directors.
SECTION 5.8. VOTING STOCK HELD IN A FIDUCIARY CAPACITY. The vote of this
Association as stockholder in any corporation in which it may hold capital stock
as trustee or other fiduciary capacity may be cast at stockholders' meetings of
such corporation by any officer of the Association, in person or by some person
authorized by written proxy signed by any officer; provided, however, that such
proxy if given to any person not an officer or director of this Association
shall be limited to a single meeting and shall either be limited to voting for
trustees
<PAGE>
or directors or shall direct how such proxyholder shall vote. The above proviso,
however, shall not apply to stock held by this Association under a written
agreement which expressly provides for the giving of proxies.
SECTION 5.9. SUBSTITUTION OF ATTORNEY IN FACT IN TRANSFER OF STOCK.
Whenever this ASSOCIATION HAS BEEN OR MAY BE APPOINTED attorney in fact with
power of substitution in and about the transfer of shares of capital stock of
any corporation, any officer of the Association may substitute by proper written
instrument an attorney in fact to act in the place and stead of this Association
in and about such transfer.
ARTICLE VI
STOCK AND STOCK CERTIFICATES
SECTION 6.1. TRANSFERS. Shares of stock shall be transferable on the books
of the Association, and a transfer book shall be kept in which all transfers of
STOCK shall be recorded. Every person becoming a shareholder by such transfer
shall, in proportion to his shares, succeed to all rights and liabilities of the
prior holder of such shares.
SECTION 6.2. STOCK CERTIFICATES. Certificates of stock shall bear the
signature of the Chairman, the Vice Chairman, the President, or a Vice President
(which may be engraved, printed, or impressed), and shall be signed manually or
by facsimile process by the Secretary, Assistant Secretary, Cashier, Assistant
Cashier, or any other officer appointed by the Board of Directors for that
purpose, to be known as an Authorized Officer, and the seal of the Association
shall be engraved thereon. Each certificate shall recite on its face that the
stock represented thereby is transferable only upon the books of the Association
properly endorsed.
<PAGE>
ARTICLE VII
CORPORATE SEAL
The President, the Cashier, the Secretary, or any Assistant Cashier, or
Assistant Secretary, or other officer thereunto designated by the Board of
Directors shall have authority to affix the corporate seal to any document
requiring such seal, and to attest the same. Such seal shall be substantially in
the following form.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
SECTION 8.1. FISCAL YEAR. The fiscal year of the Association shall be the
calendar year.
SECTION 8.2. EXECUTION OF INSTRUMENTS. All agreements, indentures,
mortgages, deeds, conveyances, transfers, certificates, declarations, receipts,
discharges, releases, satisfactions, settlements, petitions, schedules,
accounts, affidavits, bonds, undertakings, proxies, and other instruments or
documents may be signed, executed, acknowledged, verified, delivered or accepted
in behalf of the Association by the Chairman of the Board, or the President, or
any Vice Chairman of the Board, any Vice President or Assistant Vice President,
or the Secretary or Assistant Secretary, Cashier, or Assistant Cashier, or, if
in connection with the exercise of fiduciary powers of the Association, by any
of said officers or by any Trust Officer or Assistant Trust Officer; provided,
however, that where required, any
<PAGE>
such instrument shall be attested by one of said officers other than the officer
executing such instrument. Any such instruments may also be executed,
acknowledged, verified, delivered, or accepted in behalf of the Association in
such other manner and by such other officers as the Board of Directors may from
time to time direct. The provisions of this Section 8.2 are supplementary to
any other provision of these By-laws.
SECTION 8.3. RECORDS. The Articles of Association, the By-laws, and the
proceedings of all meetings of the shareholders, the Board of Directors,
standing committees of the Board, shall be recorded in appropriate minute books
provided for the purpose. The minutes of each meeting shall be signed by the
Secretary, Cashier, or other officer appointed to act as Secretary of the
meeting.
ARTICLE IX
BY-LAWS
SECTION 9.1. INSPECTION. A copy of the By-laws, with all amendments
thereto, shall at all times be kept in a convenient place at the Head Office of
the Association, and shall be open for inspection to all shareholders, during
banking hours.
SECTION 9.2. AMENDMENTS. The By-laws may be amended, altered or repealed,
at any regular or special meeting of the Board of Directors, by a vote of a
majority of the whole number of Directors.
<PAGE>
EXHIBIT A
First Union National Bank of North Carolina
ARTICLE X
EMERGENCY BYLAWS
In the event of an emergency declared by the President of the United States
or the person performing his functions, the officers and employees of this
Association will continue to conduct the affairs of the Association under such
guidance from the directors or the Executive Committee as may be available
except as to matters which by statute require specific approval of the Board of
Directors and subject to conformance with any applicable governmental directives
during the emergency.
OFFICERS PRO TEMPORE AND DISASTER
Section 1. The surviving members of the Board of Directors or the Executive
Committee shall have the power, in the absence or disability of any officer, or
upon the refusal of any officer to act, to delegate and prescribe such officer's
powers and duties to any other officer, or to any director, for the time being.
Section 2. In the event of a state of disaster of sufficient severity to
prevent the conduct and management of the affairs and business of this
Association by its directors and officers as contemplated by these Bylaws, any
two or more available members of the then incumbent Executive Committee shall
constitute a quorum of that Committee for the full conduct and management of the
affairs and business of the Association in accordance with the provisions of
Article II of these Bylaws; and in addition, such Committee shall be empowered
to exercise all of the powers reserved to the General Trust Committee under
Section 5.3 of Article V hereof. In the event of the unavailability, at such
time, of a minimum of two members of the then incumbent Executive Committee, any
three available directors shall constitute the Executive Committee for the full
conduct and management of the affairs and business of the association in
accordance with the foregoing provisions of this section. This Bylaw shall be
subject to implementation by resolutions of the Board of Directors passed from
time to time for that purpose, and any provisions of these Bylaws (other than
this section) and any resolutions which are contrary to the provisions of this
section or to the provisions of any such implementary resolutions shall be
suspended until it shall be determined by an interim Executive Committee acting
under this section that it shall be to the advantage of this .association to
resume the conduct and management of its affairs and business under all of the
other provisions of these Bylaws.
Officer Succession
BE IT RESOLVED, that if consequent upon war or warlike damage or disaster,
the Chief Executive Officer of this Association cannot be located by the then
acting Head Office or is unable to assume or to continue normal executive
duties, then the authority and duties of the Chief Executive Officer shall,
without further
<PAGE>
action of the Board of Directors, be automatically assumed by one of the
following persons in the order designated:
Chairman
President
Division Head/Area Administrator - Within this officer class, officers shall
take seniority on the basis of length of service in such office or, in the event
of equality, length of service as an officer of the Association.
Any one of the above persons who in accordance with this resolution assumes
the authority and duties of the Chief Executive Officer shall continue to serve
until he resigns or until five-sixths of the other officers who are attached to
the then acting Head Office decide in writing he is unable to perform said
duties or until the elected Chief Executive Officer of this Association, or a
person higher on the above list, shall become available to perform the duties of
Chief Executive Officer of the Association.
BE IT FURTHER RESOLVED, that anyone dealing with this Association may
accept a certification by any three officers that a specified individual is
acting as Chief Executive Officer in accordance with this resolution; and that
anyone accepting such certification may continue to consider it in force until
notified in writing of a change, said notice of change to carry the signatures
of three officers of the Association.
Alternate Locations
The offices of the Association at which its business shall be conducted
shall be the main office thereof in each city which is designated as a City
Office (arid branches, if any), and any other legally authorized location which
may be leased or acquired by this association to carry on its business. During
an emergency resulting in any authorized place of business of this association
being unable to function, the business ordinarily conducted at such location
shall be relocated elsewhere in suitable quarters, in addition to or in lieu of
the locations heretofore mentioned, as may be designated by the Board of
Directors or by the Executive Committee or by such persons as are then, in
accordance with resolutions adopted from time to time by the Board of Directors
dealing with the exercise of authority in the time of such emergency, conducting
the affairs of this Association. Any temporarily relocated place of business of
this Association shall be returned to its legally authorized location as soon as
practicable and such temporary place of business shall then be discontinued.
Acting Head Offices
BE IT RESOLVED, that in case of and provided because of war or warlike
damage or disaster, the General Office of this association, located in
Charlotte, North Carolina, is unable temporarily to continue its functions, the
Raleigh Office,
<PAGE>
located in Raleigh, North Carolina, shall automatically and without further
action of this Board of Directors, become the "Acting Head Office of this
Association";
BE IT FURTHER RESOLVED, that if by reason of said war or warlike damage or
disaster, both the General Office of this Association and the said Raleigh
Office of this Association are unable to carry on their functions, then and in
such case, the Asheville Office of this Association, located in Asheville, North
Carolina, shall, without further action of this Board of Directors, become the
"Acting Head Office of this Association"; and if neither the Raleigh Office nor
the Asheville Office can carry on their functions, then the Greensboro Office of
this Association, located in Greensboro, North Carolina, shall, without further
action of this Board of Directors, become the "Acting Head Office of this
Association"; and if neither the Raleigh Office, the Asheville Office, nor the
Greensboro Office can carry on their functions, then the Lumberton Office of
this Association, located in Lumberton, North Carolina, shall, without further
action of this Board of Directors, become the "Acting Head Office of this
Association." The Head Office shall resume its functions at its legally
authorized location as soon as practicable.
<PAGE>
TRUSTEE CERTIFICATE
First Union National Bank of North Carolina, a national banking
association, as Trustee under a Trust Indenture dated as of June 1, 1979 (the
"Indenture"), between the Iredell County Industrial Facilities and Pollution
Control Financing Authority ("Authority") and First Union National Bank of North
Carolina (the "Trustee"), does hereby certify that:
(1) The Trustee is a national banking association organized under the
statutes of the United States of America and has been granted authority
under the laws of the United States of America, to act in a fiduciary
capacity, as evidenced by the attached certificate dated Hay 4, 1968, from
the Office of the Comptroller of the Currency, and such certificate still
remains in full force and effect.
(2) John M. Soldati, Vice President, and Anthony A. Guthrie, Assistant
Vice President, are authorized to execute on behalf of the Trustee the
Trust Indenture dated as of June 1, 1979, between the Authority and the
Trustee securing $2,000,000 Industrial Revenue Bonds (Hunt Manufacturing
Company Project - Guarantor) Series 1979.
(3) John M. Soldati, Vice President, and Anthony A. Guthrie, Assistant
Vice President, are authorized to execute on behalf of the Trustee the
Guaranty Agreement by and between the Trustee and Hunt Manufacturing
Company Project dated as of June 1, 1979.
(4) Pursuant to Section 204 of the Indenture, the Trustee upon written
order of the Authority has authenticated and delivered $2,000,000
Industrial Revenue Bonds (Hunt Manufacturing Company Project - Guarantor),
Series 19'9 (the "Bonds"), bearing the rates and with the maturity date as
set forth in Schedule I hereto by signing the Trustee's Certificate of
Authentication on the Bonds, by either of the following authorized officers
of the Trustee as their names, titles and specimen signatures appear.
--------------------------------
John M. Soldati
Vice President
--------------------------------
Anthony A. Guthrie
Assistant Vice President
<PAGE>
and the proceeds have been applied by the Trustee in accordance with
Section 204 of the Indenture.
(5) The following officers as their names, titles and specimen
signatures appear are authorized to execute on behalf of the Trustee any of
the documents relating to the issuance of Bonds dated as of June 1, 1979.
--------------------------------
John M. Soldati
Vice President
--------------------------------
Anthony A. Guthrie
Assistant Vice President
(6) John M. Soldati, Vice President, and Anthony A. Guthrie, Assistant
Vice President, are duly appointed officers of the Trustee and are
authorized to execute and deliver on behalf of the Trustee as evidenced by
the attached extract of Section 8.2 of the By-Laws of the Trustee which
still remain in full force and effect on this date.
IN WITNESS HEREOF, First Union National Bank of North Carolina has caused
this Certificate to be executed by Frederick E. Hill, Vice President and Trust
Officer this 5th day of June, 1979.
By: __________________________________
Vice President and Trust Officer
(SEAL)
I, C. Franklin Furr, do hereby certify I am an Assistant Secretary of First
Union National Bank of North Carolina, that Frederick E. Hill is a duly elected,
qualified and acting Vice President and Trust Officer of First Union National
Bank of North Carolina and that pursuant to the authority contained in the
By-Laws or First Union National Bank of North Carolina was duly authorized to
execute on behalf of First Union National Bank of North Carolina the foregoing
Certificate and the signature appearing above is the genuine signature of
Frederick E. Hill.
By: __________________________________
Assistant Secretary
June 5, 1979
<PAGE>
SCHEDULE I
The Iredell County Industrial Facilities and Pollution Control Financing
Authority Industrial Revenue Bonds (Hunt Manufacturing Co. Project), Series 1979
are issued in the aggregate principal amount of $2,000,000 and consist of 400
coupon bonds, registrable as to both principal and interest, each bond in the
principal amount of $5,000, numbered 1-400, inclusive, dated as of and bearing
interest from June 1, 1979 at the rate of 7 1/2% per annum, payable
semi-annually on the 1st days of June and December of each year (first interest
being payable December 1, 1979), and maturing on June 1, 1999, subject to prior
redemption as provided therein.
<PAGE>
BROWN, WOOD, IVEY, MITCHELL & PETTY
ONE LIBERTY PLAZA, NEW YORK, N. Y. 10006
212-349-7500
[LETTERHEAD]
June 5, 1979
The Iredell County Industrial
Facilities and Pollution
Control Financing Authority
Statesville, North Carolina
Alex. Brown & Sons
Baltimore, Maryland
Re: $2,000,000 Industrial Revenue Bonds
(Hunt Manufacturing Co. Project),
Series 1979 of The Iredell County
Industrial Facilities and Pollution
Control Financing Authority, dated
June 1, 1979
-------------------------------------------
Gentlemen:
We have acted as Bond Counsel in connection with the issuance by The
Iredell County Industrial Facilities and Pollution Control Financing Authority,
a political subdivision and body corporate and politic of the State of North
Carolina (the "Authority"), of its industrial Revenue Bonds (Hunt Manufacturing
Co. Project), Series 1979, in the aggregate principal amount of $2,000,000 (the
"Series 1979 Bonds"). The Bonds are being issued pursuant to Chapter 800 of the
1975 Session Laws of North Carolina, as amended, which as codified appears as
Chapter 159C of the General Statutes of North Carolina (the "Enabling Act"). The
Series 1979 Bonds and any additional bonds issued under the Indenture
(hereinafter mentioned) are herein referred to as the "Bonds".
The proceeds of the Series 1979 Bonds are to be used to provide funds to
finance the cost of acquiring, improving, equipping and providing for the
installation of a manufacturing facility (the "Project") for Hunt Manufacturing
Co. (the "Company") for the production of paper and other art/craft products in
Iredell County, North Carolina.
<PAGE>
The Authority and the Company have entered into a Lease Agreement, dated as
of June 1, 1979 (the "Lease"), pursuant to which the Authority has agreed to
acquire the Project and to lease the "Leased Property" (being the Project and
all additions, modifications and improvements thereto and substitutions
therefor, less removals therefrom, as permitted by the Lease) to the Company and
the Company has agreed to lease the Leased Property from the Authority and to
make certain rental payments therefor, including payments of amounts sufficient
to provide for the payment of the principal of and redemption premium, if any,
and interest on the Bonds (the "Basic Rent").
All of the Bonds are to be issued under an Indenture and Deed of Trust,
dated as of June 1, 1979 (the "Indenture"), from the Authority to First Union
National Bank of North Carolina (the "Trustee"). The Bonds are to be secured by
(i) the Indenture, pursuant to which the Authority has assigned to the Trustee
certain of the Authority's rights, title and interests in and to the Lease,
including its rights to the Basic Rent, and its rights, title and interests in
and to the real and tangible personal property comprising the Leased Property,
including any rights to the net proceeds of the sale thereof and (ii) a Guaranty
Agreement, dated as of June 1, 1979 (the "Guaranty"), between the Company, as
guarantor, and the Trustee.
The Indenture provides for the issuance, from time to time, under the
conditions, limitations and restrictions therein set forth, of additional series
of Bonds for the purpose of providing additional funds to pay the cost of the
Project or the cost of any Improvements (as defined in the Indenture) and for
the purpose of refunding all or any Bonds then outstanding of any series.
In our capacity as Bond Counsel we have examined such documents, records of
the Authority and the Company and other instruments, including counterparts or
certified copies of the Lease, the Indenture, the Guaranty and certain other
documents, as we deem necessary to enable us to express the opinions set forth
below. Our opinions regarding procedures and actions of the Authority are based
upon an examination of certificates and certified extracts of the proceedings of
the Authority relating to its authorization and approval of the documents and
instruments, and an opinion of counsel to the Authority, of even date herewith,
as to the authority, procedures and actions of the Authority in the
authorization and issuance of the Bonds. Our opinions
<PAGE>
regarding due execution and delivery of the Lease by the Company are based upon
an opinion of Drinker Biddle & Reath, counsel to the Company, of even date
herewith, as to the authority, procedures and actions of the Company.
We have examined fully executed and authenticated Bond No. 1, being a
coupon Bond in the denomination of $5,000.
Based on the foregoing, we are of the opinion that:
1. The Authority is a political subdivision and body corporate and
politic of the State of North Carolina validly organized and existing under
the Enabling Act, with full authority to undertake the Project, to lease
the Leased Property to the Company as provided in the Lease, to execute and
deliver the Lease and the Indenture and to issue and sell the Bonds.
2. The Lease has been duly authorized, executed and delivered by the
Authority and the Company and constitutes a legal, valid and binding
obligation of such parties and is enforceable against the Company in
accordance with its terms, subject to applicable bankruptcy,
reorganization, insolvency, moratorium or similar laws.
3. The Indenture has been duly authorized, executed and delivered by
the Authority and the Trustee and constitutes a legal, valid and binding
obligation of such parties in accordance with its terms; provided, however,
that we express no opinion as to the Authority's title to the Leased
Property or as to the Trustee's lien on the Leased Property.
4. The issuance and sale of the Series 1979 Bonds have been duly
authorized by the Authority; the Series 1979 Bonds have been duly executed
and delivered by the Authority, and the Series 1979 Bonds constitute legal,
valid and binding limited obligations of the Authority, payable in
accordance with their terms solely from the Basic Rent, amounts realized
from the disposition of the Leased Property and any payments made pursuant
to the Guaranty, and the Series 1979 Bonds do not constitute or create in
any manner a debt, liability or obligation of the State of North Carolina
or of any political subdivision or agency thereof and do not directly or
contingently obligate the State of North Carolina or any political
subdivision or agency thereof to levy or to pledge any form of taxation
whatever therefor.
5. Under the Enabling Act, interest on the Series 1979 Bonds is exempt
from all income taxes within the State of North Carolina.
<PAGE>
6. Based on existing statutes, regulations and court decisions,
interest on the Series 1979 Bonds is exempt from all present Federal income
taxes except for interest on any Series 1979 Bond for any period during
which it is held by a person who is a "substantial user" of the Project or
a "related person" as provided in Section 103(b)(8) of the Internal Revenue
Code of 1954, as amended, and the applicable regulations thereunder;
provided, however that such tax exemption will terminate as to the Series
1979 Bonds in the event that the $10,000,000 limitation on bond issuance
and capital expenditures imposed by Section 103(b)(6)(D) of said Code is
exceeded within three years after the date of issuance of the Series 1979
Bonds.
In rendering the opinion expressed in Paragraph 6 and with your consent, we
have relied upon a certificate of even date herewith of an officer of the
Company accompanied by a letter from Drinker Biddle & Reath, as counsel to the
Company, as to the absence of any prior issues of bonds within the meaning of
Section 103(b)(6)(B) of the Code and as to the aggregate amount of capital
expenditures to be taken into account under Section 103(b)(6)(D) of the Code,
and we have made no independent investigation of such matters.
Very truly yours,
--------------------------
<PAGE>
BROWN, WOOD, IVEY, MITCHELL & PETTY
ONE LIBERTY PLAZA, NEW YORK, N. Y. 10006
212-349-7500
[LETTERHEAD]
June 5, 1979
The Iredell County Industrial
Facilities and Pollution
Control Financing Authority
Statesville, North Carolina
Alex. Brown & Sons
Baltimore, Maryland
Re: $2,000,000 Industrial Revenue Bonds
(Hunt Manufacturing Co. Project),
Series 1979 of The Iredell County
Industrial Facilities and Pollution
Control Financing Authority, dated
June 1, 1979
---------------------------------------
Gentlemen:
Reference is made to our opinion as Bond Counsel delivered to you
concurrently herewith and relating to the above-captioned Bonds. Terms not
defined herein. shall have the meanings given to such terms in said opinion.
The Contract of Purchase, dated May 15, 1979 (the "Purchase Contract"),
between the Authority and Alex. Brown. & Sons, has been duly authorized,
executed, and delivered by the Authority.
The offer and sale of the Series 1979 Bonds do not require registration of
the Bonds under the Securities Act of 1933, as amended, or qualification of the
Indenture under the Trust Indenture Act of 1939, as amended.
This letter is furnished by us solely for the benefit of the Authority and
the Underwriter, in connection with the provisions of the Contract of Purchase
and may not be relied upon by any other person.
Very truly yours,
--------------------------
<PAGE>
BROWN, WOOD, IVEY, MITCHELL & PETTY
ONE LIBERTY PLAZA, NEW YORK, N. Y. 10006
212-349-7500
[LETTERHEAD]
June 5, 1979
The Iredell County Industrial
Facilities and Pollution
Control Financing Authority
Statesville, North Carolina
Alex. Brown & Sons
Baltimore, Maryland
Hunt Manufacturing Co.
Philadelphia, Pennsylvania
Re: $2,000,000 Industrial Revenue Bonds
(Hunt Manufacturing Co. Project),
Series 1979 of The Iredell County
Industrial Facilities and Pollution
Control Financing Authority, dated
June 1, 1979
--------------------------------------
Gentlemen:
Reference is made to our opinion as Bond Counsel delivered to you
concurrently herewith and relating to the above-captioned Bonds. Terms not
defined herein shall have the meanings given to such terms in said opinion.
We have reviewed the statements in the Preliminary Official Statement dated
May 2, 1979 and the Official Statement dated May 15, 1979 of the Authority
relating to the Bonds under the captions "The Bonds", "The Lease", "The
Indenture" and "The Guaranty" and believe that insofar as such statements
constitute summaries of the documents referred to therein, such statements
constitute fair summaries of said documents.
Very truly yours,
--------------------------
<PAGE>
BROWN, WOOD, IVEY, MITCHELL & PETTY
ONE LIBERTY PLAZA, NEW YORK, N.Y. 10006
212-349-7500
[LETTERHEAD]
June 5, 1979
Alex. Brown & Sons
135 Baltimore Street
Baltimore, Maryland
Re: $2,000,000 Industrial Revenue Bonds
(Hunt Manufacturing Co. Project),
Series 1979 of The Iredell County
Industrial Facilities and Pollution
Control Financing Authority, dated
June 1, 1979
-------------------------------------
Gentlemen:
We have acted as your counsel in connection with the issuance and sale by
The Iredell County Industrial Facilities and Pollution. Control Financing
Authority (the "Authority") to you and your purchase of the Authority's
Industrial Revenue Bonds (Hunt Manufacturing Co. Project), Series 1979, in the
aggregate principal amount of $2,000,000 (the "Bonds") pursuant to the Contract
of Purchase dated May 15, 1979 (the "Contract of Purchase"). The Bonds are
being issued pursuant to Chapter 800 of the 1975 Session Laws of North Carolina,
as amended, which as codified appears as Chapter 1590 of the General Statutes of
North Carolina (the "Enabling Act").
The proceeds of the Bonds are to be used to provide funds to finance the
cost of acquiring, improving, equipping and providing for the installation of an
industrial manufacturing facility (the "Project") for the production or paper
and other art/craft products, operated by Hunt Manufacturing Co. ("Hunt")
located in Iredell County, North Carolina.
<PAGE>
The Authority and Hunt have entered into a Lease Agreement, dated as of
June 1, 1979 (the "Lease"), pursuant to which the Authority has agreed to
acquire the project and to lease the "Leased Property" (being the Project and
all additions, modifications and improvements thereto and substitutions
therefor, less removals therefrom, as permitted by the Lease) to Hunt and Hunt
has agreed to lease the Leased Property from the Authority and to make certain
rental payments therefor, including payments of amounts sufficient to provide
for the payment of the principal of and premium, if any, and interest on the
Bonds (the "Basic Rent").
The Bonds are being issued under an Indenture and Deed of. Trust, dated as
of June 1, 1979 (the "Indenture"), from the Authority to First Union National
Bank of North Carolina (the "Trustee"). The Bonds are to be secured by (i) the
Indenture, pursuant to which the Authority has assigned to the Trustee certain
of the Authority's rights, title and interests in and to the Lease, including
its rights to the Basic Rent, and its rights, title and interests in and to the
real and tangible personal property comprising the Leased Property, including
any rights to the net proceeds of the sale thereof and (ii) a Guaranty
Agreement, dated as of June 1, 1979 (the "Guaranty"), between Hunt, as
guarantor, and the Trustee.
We have examined such documents, records of the Authority and Hunt and
other instruments, including counterparts or certified copies of the Lease, the
Indenture, the Guaranty, the Preliminary Official Statement dated May 2, 1979
(the "Preliminary Official Statement"), the Official Statement dated May 15,
1979 (the "Official Statement"), relating to the offering and sale of the Bonds
and certain other documents, as we deem necessary to enable us to express the
opinions set forth below.
We cannot, of course, make any representations to you as to the accuracy or
completeness of statements of fact contained in the Official Statement. Nothing,
however, has come to our attention that would lead us to believe that the
Official Statement (other than financial statements therein, as to which no
opinion is expressed) contains an untrue statement of a material fact or omits
to state a material fact required to be stated therein, or necessary to make the
statements therein in the light of the circumstances under which they were made,
not misleading.
Very truly yours,
--------------------------
<PAGE>
BROWN, WOOD, IVEY, MITCHELL & PETTY
One Liberty Plaza
New York, N.Y. 10006
----------
PRELIMINARY BLUE SKY SURVEY
----------
$2,000,000
(Approximate)
THE IREDELL COUNTY INDUSTRIAL FACILITIES A14D
POLLUTION CONTROL FINANCING AUTHORITY
(North Carolina)
Industrial Revenue Bonds
(Hunt Manufacturing Co. Project)
Series 1979
May 2, 1979
ALEX. BROWN & SONS
Manager
135 East Baltimore Street
Baltimore, Md. 21202
Dear Sirs:
In connection with the proposed offering of approximately $2,000,000
aggregate principal amount of Industrial Revenue Bonds (Hunt Manufacturing Co.
Project), Series 1979 (the "Bonds"), of The Iredell County Industrial Facilities
and Pollution Control Financing Authority (the "Authority"), we submit herewith
our survey which indicates the jurisdictions in which the Bonds may be sold by
the Underwriters and other dealers or brokers in compliance with the "blue sky"
or securities laws of such jurisdictions.
We have prepared this survey as attorneys admitted to practice in New York
and have not obtained opinions of local counsel in other jurisdictions. Our
survey is based upon an examination of the statutes and regulations, if any, of
<PAGE>
the various jurisdictions as reported in standard compilations, upon
interpretive advice obtained from representatives of certain securities
commissions and upon the information contained in the current form of the
preliminary official statement relating to the Bonds furnished by the Authority.
Our survey is based further upon the fact that the Authority is a political
subdivision and a body corporate and politic of the State of North Carolina.
Except where formally notified that a securities commission's policy is to the
contrary, we have assumed in this survey that the Guaranty Agreement is not a
separate security subject to qualification under the various "blue sky" laws.
Our survey is subject to the broad discretionary powers of securities
commissioners or other authorized officials to withdraw or deny the exempt
status accorded by statute to particular classes of securities, to require
additional information and to issue stop orders or to revoke or to suspend
permits where they have been granted. Our survey does not purport to cover the
requirements or restrictions, if any, with respect to advertising matter. In
those jurisdictions where persons registered or licensed as dealers or brokers
may sell the Bonds, it is assumed that such persons have complied with
applicable statutes and regulations concerning dealers or brokers and concerning
the registration or licensing of salesmen.
Any statement in our survey with respect to sales to banks, savings
institutions, trust companies insurance companies or the like refers only to the
requirements of the securities laws relating to such sales and does not purport
to cover the question of whether the Bonds will be legal for investment by such
institutions.
Very truly yours,
------------------------------------
BROWN, WOOD, IVEY, MITCHELL & PETTY
2.
<PAGE>
$2,000,000
(Approximate)
THE IREDELL COUNTY INDUSTRIAL FACILITIES AND
POLLUTION CONTROL FINANCING AUTHORITY
(North Carolina)
Industrial Revenue Bonds
(Hunt Manufacturing Co. Project)
Series 1979
----------
PRELIMINARY BLUE SKY SURVEY
----------
PART I
SALES TO THE PUBLIC
A.
Our survey indicates that the Bonds may be sold to the public in the
following jurisdictions without registration or other filings relating thereto
by reason of available exemptions or otherwise, subject to the specific
requirement that the sellers, unless otherwise noted below, must be registered
or licensed as dealers or brokers therein:
Alabama Indiana North Carolina
Alaska Kansas North Dakota
Arkansas Kentucky Oregon
Colorado Louisiana Pennsylvania
Connecticut Maine Puerto Rico
Delaware Maryland Rhode Island
District of Massachusetts South Carolina
Columbia Mississippi Tennessee
Florida Missouri Utah
Georgia Montana Vermont
Hawaii Nebraska Virginia
Idaho Nevada(1) West Virginia
Illinois New Mexico Wyoming
- ----------
(1) Dealer registration is not required of a broker or dealer registered
pursuant to the provisions of the Securities Exchange Act of 1934 or a
person who is a member of the National Association of Securities Dealers,
Inc.
<PAGE>
2.
B.
Our survey indicates that in the jurisdictions listed below certain action
must be taken to establish an exempt status for or to register or qualify the
Bonds for sale to the public by dealers or brokers registered or licensed
therein. Such action is being taken and, before any of the Bonds are sold in
these jurisdictions, inquiry should be made of Alex. Brown & Sons as to whether
the action required to be taken has been completed.
New Jersey New York Ohio
C.
No action is being taken to register or qualify the Bonds for sale to the
public in the following jurisdictions:
Arizona Minnesota Texas
California New Hampshire Washington
Iowa Oklahoma Wisconsin
Michigan South Dakota
PART II
EXEMPT TRANSACTIONS
For the jurisdictions set forth in Parts I B and I C above, our survey
indicates that the Bonds may be sold to the institutions or persons noted below
without registration or other filings therein relating to the Bonds and without
the sellers thereof being required to be registered or licensed as dealers or
brokers therein, except as otherwise indicated:
Arizona .........To any bank, savings institution, insurance
company, dealer, any agency or instru-
mentality of the United States or of a
state or to any person a principal part
of whose business consists of buying
securities, provided the person making
the sale is registered as a dealer in
Arizona.
<PAGE>
3.
California.......To any broker-dealer, bank, savings and loan
association, trust company, insurance com-
pany, Investment company registered under
the Investment Company Act of 1940, pension
or profit-sharing trust; any college or
university which has total endowment funds
(including annuity and life income funds)
of not less than $5,000,000 according to
its most recent audited financial statement;
any corporation which has a net worth on a
consolidated basis according to its most
recent audited financial statement of not
less than $14,000,000; any wholly-owned
subsidiary of any of the foregoing insti-
tutional investors; or to the federal govern
ment, any agency or instrumentality of the
federal government, any corporation wholly
owned by the federal government, any state,
any city, city and county, or county, or any
agency or instrumentality of a state, city,
city and county, or county, or any state
university or state college, and any re-
tirement system fore the benefit of em-
ployees of any of the foregoing; provided
the person making the sale, if not regis-
tered, has no place of business in California
and such person is registered as a broker
or dealer under the Securities Exchange Act
of 1934, has not previously had any certi-
ficate denied or revoked under the California
Corporate Securities Law of 1968 or any pre-
decessor statute and does not direct offers
to sell or buy into California in any manner
to persons or institutions other than the
foregoing; and provided further, if the
securities are not qualified for sale,
any purchaser which is an institutional
investor represents that it is purchasing
for its own account (or for an account
for which it is acting as trustee) for
investment and not with a view to or for
sale in connection with any distribution
of the security.
<PAGE>
4.
Iowa............. To any bank, savings institution, trust com-
pany, insurance company, investment company
as defined in the Investment Company Act of
1940, pension or profit-sharing trust, or
other financial institution or institutional
Buyer, or to any broker-dealer, whether the
purchaser is acting for itself or as a trus-
tee, provided the person making the sale, if
not registered, has no place of business in
Iowa and effects transactions in Iowa ex-
clusively with or through such persons or
institutions.
Michigan ........To any bank, savings institution, trust company,
insurance company, investment company as de-
fined in the Investment Company Act of 1940,
pension or profit-sharing trust, or other
financial institution or institutional buyer,
or to any broker-dealer, whether the pur-
chaser is acting for itself or as a trustee,
provided the person making the sale, if not
registered, has no place of business in Michi-
gan and effects transactions in Michigan ex-
clusively with or through such persons or
institutions.
Minnesota........To any bank, savings institution, trust com-
pany, insurance company, investment company
as defined in the Investment Company Act
of 1940, pension or profit-sharing trust,
or other financial institution or institu-
tional buyer, or to any broker-dealer,
whether the purchaser is acting for itself
or in some fiduciary capacity, provided the
person making the sale, if not registered,
has no place of business in Minnesota and
effects transactions in Minnesota exclu-
sively with or through such persons or
institutions.
New Hampshire....To no one.
New Jersey.......To no one.
<PAGE>
5.
New York......... To no one.
Ohio............. To any dealer. A person licensed as a deal-
er in Ohio may sell to any corporation,
bank, trust company, building and loan
association, savings association, insur-
ance company, pension fu.nd or trust, em-
ployees' profit-sharing fund or trust, any
association engaged, as a substantial part
of its business or operations, in purchas-
ing or holding securities, or to any trust
in respect of which a bank, trust company,
building and loan association or savings
association is trustee or co-trustee, or
to any dealer.
Oklahoma......... To any bank, savings institution,-trust company,
insurance company, investment company as de-
fined in the Investment Company Act of 1940,
pension or profit-sharing trust, or other
financial institution or institutional buyer,
or to any broker-dealer, whether the purchaser
is acting for itself or as a trustee, provided
the person making the sale, if not registered,
has no place of business in Oklahoma and ef-
fects transactions in Oklahoma exclusively
with or through such persons or institutions.
South Dakota...... To any bank, savings institution, trust com-
pany, insurance company, savings and loan
association, investment company as defined
in the Investment Company Act of 1940, or
pension or profit-sharing trust, or the
state or any state agency or political
subdivision thereof, or other financial
institution or other institutional buyer,
or to any licensed broker, whether the
purchaser is acting for itself or as
trustee.
Texas............To any bank, trust company, building and loan
association, insurance company, surety
or guaranty company, savings institution,
investment company as defined in the Invest-
ment Company Act of 1940, small business
investment company as defined in the Small
<PAGE>
6.
Business Investment Act of 1958, or to any registered dealer
actually engaged in buying and selling securities.
Washington.......To any bank, savings institution, trust com-
pany, insurance company, investment company
as defined in the Investment Company Act of
1940, pension or profit-sharing trust, or
other financial institution or institutional
buyer, or to any broker-dealer, whether
the purchaser is acting for itself or in
some fiduciary capacity.
Wisconsin........To any bank, savings institution, trust com-
pany, insurance company, broker-dealer,
savings and loan association, investment
company as defined in the Investment
Company Act of 1940, or pension or profit
sharing trust, or the state or any agency
or political subdivision thereof, or to any
other financial institution or institutional
investor, including any endowment or trust
fund of a charitable organization specified
in section 170(b)(1)(A) of the Internal
Revenue Code, any issuer which has any class
of securities registered under section 12 of
the Securities Exchange Act of 1934 (and any
wholly-owned subsidiary thereof) and any
other corporation, partnership or associa-
tion which has been in existence for ten
years or whose net assets exceed $250,000
and whose principal purpose as stated in its
articles, by-laws or other organizational
instrument is investing in securities
(provided that the seller obtains records
confirming such facts prior to effecting
transactions with any such investor),
whether the purchaser is acting for itself
or as trustee, provided the person making
the sale, if not registered, has no place
of business in Wisconsin and effects trans-
actions in Wisconsin exclusively with or
through such persons or institutions.
<PAGE>
(46)
BROWN, WOOD, IVEY, MITCHELL & PETTY
One Liberty Plaza
New York, N.Y. 10006
----------
LEGAL INVESTMENT SURVEY
----------
$2,000,000
(Approximate)
THE IREDELL COUNTY INDUSTRIAL FACILITIES AND
POLLUTION CONTROL FINANCING AUTHORITY
(North Carolina)
Industrial Revenue Bonds
(Hunt Manufacturing Co. Project)
Series 1979
May 2, 1979
ALEX. BROWN & SONS
Manager
135 East Baltimore Street
Baltimore, Md. 21202
Dear Sirs:
We submit herewith our survey relating to the eligibility or the proposed
issue of approximately $2,000,000 aggregate principal amount of Industrial
Revenue Bonds (Hunt Manufacturing Co. Project), Series 1979 (the "Bonds"), of
The Iredell County Industrial Facilities and Pollution Control Financing
Authority (the "Authority") for investment by savings banks, trust funds, life
insurance companies and insurance companies other than life under the statutes
of the various states of the United States, the District of Columbia and the
Commonwealth of Puerto Rico.
Our survey is based upon an examination of the applicable statutes as
reported in standard compilations and upon the information contained in the
current form of the preliminary official statement relating to the Bonds
furnished by the Authority. Our survey is based further upon the fact that
<PAGE>
the Authority is a political subdivision and a body corporate and politic of the
State of North Carolina. We have prepared this survey as attorneys admitted to
practice in New York and have not obtained opinions of local counsel in other
jurisdictions. Furthermore, we have not endeavored to obtain any official
rulings from state authorities save with respect to general interpretation of
certain statutory provisions.
Attention is called to the fact that in certain jurisdictions investors of
the types mentioned above are permitted to invest only particular funds, or a
specified portion or percentage of their funds, in the classes of securities to
which the Bonds belong and to the fact that specific action by the boards of
directors or investment committees of such investors may be required in order to
make the investment. The attached summary does not attempt to deal with
restrictions or requirements of this nature, nor does it take into consideration
the necessity of court orders for, or the effect of applicable trust instruments
upon, the investment of trust funds nor limitations as to the investment of
particular funds, such as funds held by guardians and other types of personal
fiduciaries. The conclusions stated with respect to insurance companies other
than life may in certain cases be inapplicable to certain special types of
insurance companies.
Our survey is only for the general guidance of the Underwriters in
appraising and analyzing the potential market for the Bonds, and each ultimate
investor should independently satisfy itself that investment in the Bonds is
legal as to such investor. Any statement in the attached summary with respect to
the eligibility of the Bonds for investment refers only to the legal investment
laws applicable to the named institutions and does not purport to cover the
requirements of the securities laws relating to sales to such institutions.
Very truly yours,
------------------------------------
BROWN, WOOD, IVEY, MITCHELL & PETTY
2.
<PAGE>
$2,000,000
(Approximate)
THE IREDELL COUNTY INDUSTRIAL FACILITIES AND
POLLUTION CONTROL FINANCING AUTHORITY
(North Carolina)
Industrial Revenue Bonds
(Hunt Manufacturing Co. Project)
Series 1979
----------
LEGAL INVESTMENT SURVEY
----------
<TABLE>
<CAPTION>
Insurance
Savings Life Insurance Companies
Jurisdiction Banks Trust Funds Companies Other Than Life
- ------------ ----- ----------- --------- ---------------
<S> <C> <C> <C> <C>
Alabama ................(1) Not Legal Legal (1)
Alaska .................(2) (1) Legal Legal
Arizona ................ (1) (1) (3) (3)
Arkansas ...............(2) Prudent Investor Test (3) (3)
California ..........Not Legal Prudent Investor Test Legal(4) Legal(4)
Colorado ...............(5) Prudent Investor Test Legal Legal
Connecticut ............(3) Prudent Investor Test legal (1)
Delaware ...............(1) Prudent Investor Test Legal Legal
District of Columbia....(6) Prudent Investor Test Legal Legal
Florida ................(1) Prudent Investor Test Legal Legal
Georgia ................(7) (8) Legal Legal
Hawaii ..............Not Legal Prudent Investor Test Legal Legal
Idaho ...............Not Legal Prudent Investor Test Legal Legal
Illinois ...............(7) Prudent Investor Test Legal Legal
Indiana .............Legal(9) Prudent Investor Test Legal Legal
Iowa ...................(1) Prudent Investor Test Legal Legal
Kansas .................(7) Prudent Investor Test Legal Legal
Kentucky ...............(1) Prudent Investor Test Legal Legal
Louisiana ...........Not Legal Prudent Investor Test Legal Legal
Maine ..................(3) Prudent Investor Test Legal Legal
Maryland ..............(10) (1) Legal Legal
Massachusetts ..........(3) (1) Legal Legal
Michigan ...............(7) Prudent Investor Test Legal Legal
Minnesota ..............(3) Prudent Investor Test Legal Legal
Mississippi ............(1) Prudent Investor Test Legal Legal
Missouri ...............(1) (1) Legal (1)
Montana .............Not Legal Prudent Investor Test Legal Legal
Nebraska ...............(1) Prudent Investor Test Legal Legal
Nevada .................(2) Prudent Investor Test Legal Legal
New Hampshire ..........(3) Prudent Investor Test Legal Legal
New Jersey .............(3) Prudent Investor Test Legal Legal
New Mexico .............(5) Prudent Investor Test Legal Legal
New York ...............(3) Prudent Investor Test Legal Legal
North Carolina..........(1) Prudent Investor Test Legal Legal
North Dakota ...........(1) Prudent Investor Test Legal Legal
</TABLE>
<PAGE>
2.
<TABLE>
<CAPTION>
Insurance
Savings Life Insurance Companies
Jurisdiction Banks Trust Funds Companies Other Than Life
- ------------ ----- ----------- --------- ---------------
<S> <C> <C> <C> <C>
Ohio .....................(7) Prudent Investor Test Legal Legal
Oklahoma .................(7) Prudent Investor Test Legal Legal
Oregon ...................(3) Prudent Investor Test Legal Legal
Pennsylvania ..........Legal(11) Prudent Investor Test Legal Legal
Puerto Rico ...........Legal(11) (1) (3) (3)
Rhode Island .............(3) Trustees have discretion (1) (1)
South Carolina ...........(1) Prudent Investor Test Legal(12) Legal(12)
South Dakota....... ......(1) Prudent Investor Test Legal Legal
Tennessee ................(2) Prudent Investor Test Legal Legal
Texas ....................(5) Prudent Investor Test Legal Legal(13)
Utah .....................(1) Prudent Investor Test Legal Legal
Vermont ..................(3) (1) Legal Legal
Virginia .................(1) Prudent Investor Test Legal Legal
Washington ...............(3) Prudent Investor Test Legal Legal
West Virginia ............(1) Not Legal Legal Legal
Wisconsin .............Legal(14) Prudent Investor Test legal legal
Wyoming...................(1) Prudent Investor Test Legal legal
</TABLE>
- ----------
(1) No relevant statute.
(2) Legal for state banks.
(3) Although the Bonds are not specifically legal for investment, the statute
permits certain limited funds to be invested in securities not otherwise
eligible, provided that in certain instances the in vestment is prudent or
is approved by the proper state authority.
(4) For "excess funds investments" provided that the Bonds qualify as a "sound
investment."
(5) The statute permits a state bank to make any investment which such bank
could make were it operating as a national bank. Federal statutes and
regulations relating to national banks permit investment in "marketable
investment securities."
(6) There are no provisions in the District of Columbia Code expressly
governing investments by banks organized under the laws of the District of
Columbia. National banks and District of Columbia banks which are members
of the Federal Reserve System are permitted to invest in "marketable
investment securities."
<PAGE>
3.
(7) Legal for banks generally provided that the Bonds are "marketable
investment securities."
(8) Prudent Investor Test applies as to executors and trustees acting under
instruments made after July 1, 1972; otherwise, not legal.
(9) Provided that the Bonds are a legal investment under the laws of Indiana
for financial institutions acting as trustee or in any other fiduciary
capacity.
(10) The statute provides that any deposit of money in a savings institution
"shall be invested or loaned out on good security, in the discretion of the
directors."
(11) Provided that the Prudent Investor Test is met.
(12) Provided that the Bonds are valued in accordance with methods and amounts
as determined by the Committee on Valuation of Securities of the National
Association of Insurance Commissioners.
(13) For funds over and above minimum capital stock, minimum surplus and all
reserves required by law.
(14) Provided that the Bonds are of "recognized bank investment quality."
<PAGE>
UNITED STATES OF AMERICA STATE OF NORTH CAROLINA
THE IREDELL COUNTY INDUSTRIAL FACILITIES AND
POLLUTION CONTROL FINANCING AUTHORITY
INDUSTRIAL REVENUE BOND
(HUNT MANUFACTURING CO. PROJECT),
SERIES 1979
THE IREDELL COUNTY INDUSTRIAL FACILITIES AND POLLUTION CONTROL FINANCING
AUTHORITY (herein called the "Authority"), a political subdivision and body
corporate and politic duly organized and existing under the Constitution and
laws of the State of North Carolina, for value received, hereby promises to pay,
solely from the special fund provided therefor as hereinafter referred to, to
the bearer or, if this Bond be registered, to the registered owner hereof on the
1st day of June, 1999 (or earlier as hereinafter set forth), upon the
presentation and surrender hereof, the principal sum of
FIVE THOUSAND DOLLARS
and to pay, solely from said special fund, interest thereon from the date hereof
at the rate of seven and one-half percent (7 1/2 %) per annum until payment of
said principal sum, such interest to the maturity hereof being payable
semi-annually on the 1st days of June and December in each year, the first
interest payment date being December 1, 1979. The principal of and redemption
premium, if any, and interest on this Bond are payable in any coin or currency
of the United States of America which on the respective dates of payment thereof
shall be legal tender for the payment of public and private debts. Unless this
Bond be registered, payments of interest accruing on this Bond shall be payable
upon the presentation and surrender of the coupons representing such interest as
the same respectively become due. The interest on this Bond, if registered, is
payable to the registered owner hereof by check mailed to the registered owner
at his address as it appears on the Bond registration books of the Authority.
The principal of and redemption premium, if any, on this Bond and the interest
on this Bond, unless registered, are payable at the principal corporate trust
office of First Union National Bank of North Carolina, in the City of Charlotte,
North Carolina, or its successors in trust, as Trustee under the Indenture
(hereinafter mentioned).
This Bond is issued under and pursuant to the Constitution and laws of the
State of North Carolina, particularly the Industrial and Pollution Control
Facilities Financing Act, as amended, which as codified appears as Chapter 1590
of the General Statutes of North Carolina (hereinafter called the "Enabling
Act"), and under and pursuant to resolutions duly adopted by the Authority. This
Bond and the redemption premium, if any, and the interest hereon shall not be
deemed to constitute or to create in any manner a debt, liability or obligation
of the State of North Carolina or of any political subdivision or any agency
thereof or a pledge of the faith and credit of the State of North Carolina or
any such political subdivision or any such agency, but shall be limited
obligations of the Authority payable solely from the revenues and other funds
pledged therefor and shall not be payable from any assets or funds of the
Authority other than the revenues and other funds pledged therefor, and neither
the faith and credit nor the taxing power of the State of North Carolina or any
political subdivision or any agency thereof is pledged to the payment Of the
principal of or redemption premium, if any, or the interest on this Bond.
This Bond is one of a duly authorized issue of industrial revenue bonds of
the Authority in the aggregate principal amount of $2,000,000, known as "The
Iredell County Industrial Facilities and Pollution Control Financing Authority
Industrial Revenue Bonds (Hunt Manufacturing Co. Project), Series 1979" ("herein
called the Series 1979 Bonds"), dated as of the first day of June, 1979, and
maturing, subject to prior redemption as hereinafter mentioned, on June 1, 1999.
The Series 1979 Bonds have bean issued for the purpose of paying the cost
of acquiring, improving, equipping, and providing for the installation of a
manufacturing facility for Hunt Manufacturing Co., a Pennsylvania corporation
qualified to do business in the state of North Carolina (herein called the
"Company"), for the productionof paper and other art/craft products in Iredell
County, North Carolina (the facility and site thereof, the improvements thereto
and the equipment acquired therefor being herein called the "Project"). The
Indenture also provides for the issuances, from time to time, under the
conditions and restrictions therein set forth, of additional series of bonds for
the purpose of financing all or any portion of the cost of completing the
Project, of financing for the Company all or any portion of any other real or
tangible personal property in Iredell County, North Carolina (all such real and
personal property being herein called the "Improvements") and of refunding all
or any of the bonds of any series issued under the provisions of the Indenture.
All such additional series of bonds issued under the Indenture, together with
the Series 1979 Bonds, are herein called the "Bonds".
All of the Bonds are issued or are to be issued under and pursuant to an
Indenture and Deed of Trust dated as of June 1, 1979 (said Indenture and Deed of
Trust, together with all such supplements and amendments thereto as therein
permitted, being herein called the "Indenture"), by and between the Authority
and First Union National Bank of North Carolina, Charlotte, North Carolina (said
banking association and any banking institution becoming successor trustee under
the Indenture being herein called the "Trustee"). An executed counterpart of the
Indenture is on file at the principal corporate trust office of the Trustee.
Reference is hereby made to the Indenture for the provisions, among others, with
respect to the custody and application of the proceeds of the Bonds, the
collection and disposition of rent and other revenues, a description or the
funds charged with and pledged to the payment of the principal of and redemption
premium, if any, and interest on the Bonds, the nature and extent of the
security, the terms and conditions use which the Bonds are or may be issued, the
rights, duties and obligations of the Authority and of the Trustee and the
rights of the holders of the Bonds, and, by the acceptance of this Bond, the
holder hereof assents to all of the provisions of the Indenture.
The Authority has entered into a Lease Agreement dated as of June 1, 1979
(herein called the "Lease"), with the Company under which the Authority has
demised and leased the Project and any Improvements and any substitutions
therefor, less any property removed therefrom, as permitted by the Lease and the
Indenture, as the same shall exist at any time (herein called the "Leased
Property") to the Company and the Company has leased the Leased Property from
the Authority. The Lease provides for the payment by the Company of rent at the
times required and in amounts sufficient to pay the principal of and redemption
premium, if any, and interest on all the Bonds as the same shall be become due
and payable (herein called "Basic Rent") and certain fees and expenses of the
Authority and the Trustee, and the Lease further obligates the Company to pay
the cost of maintaining the Leased Property and keeping the same insured. The
Lease provides that the payments of Basic Rent shall be made directly to the
Trustee for the account of the Authority.
The Company has entered into a Guaranty Agreement dated as of June 1, 1979
(herein called the "Guaranty"), with the Trustee, whereby the Company has
unconditionally guaranteed, for the benefit of the holders of the Bonds, the
full and prompt payment of the principal of and redemption premium, if any, and
interest on the Bonds, when and as the same shall become due and payable.
Under the Indenture the Authority has, for the benefit of the holders of
the Bonds, assigned and conveyed to the Trustee in trust the Authority's
interests (i) in the real property and improvements and fixtures thereon
comprising a portion of the Leased Property, (ii) in all tangible property,
other than real property, comprising a portion of the Leased Property, (iii) in
the proceeds of any property covered by clauses (i) and (ii) above which shall
be sold or otherwise disposed of in accordance with the Indenture, (iv) in the
Lease (subject to the reservation of certain rights of the Authority under the
Lease, including its rights to payment of certain expenses and to indemnity),
including the Basic Rent and other revenues derived therefrom and, (v) all
moneys and securities in the Bond Fund (as hereinafter defined), and, until
applied to the payment of any item of the cost of the Project in accordance with
the Indenture and the Lease or otherwise applied as permitted under the
Indenture, all moneys and securities in the Acquisition Fund under the
Indenture. The Indenture further provides that payments of Basic Rent and all
such revenues, including any payments pursuant to the Guaranty, are to be
deposited with the Trustee to the credit of a special fund designated "The
Iredell County Industrial Facilities and Pollution Control Financing Authority
Industrial Revenue Bonds (Hunt Manufacturing Co. Project) Bond Fund", which
special fund is equally and ratably pledged to and charged with the payment of
the principal of and redemption premium, if any, and interest on all Bonds
issued under the Indenture.
The Company may obtain a release from the lien of the Indenture of
equipment and unimproved land, upon substitution and payment therefor, in
accordance with the provisions of the Lease and the Indenture.
The Bonds are issuable as coupon Bonds, registrable as to both principal
and interest, in the denomination of $5,000 each.
<PAGE>
Subject to the next two succeeding paragraphs, the Series 1979 Bonds are
not callable for redemption prior to June 1, 1989.
If,
(i) the Leased Property shall have been damaged or destroyed to the
extent that it would not be practicable or desirable to rebuild, repair or
restore the Leased Property within a period of one year after the
occurrence of such damage or destruction; or
(ii) there occurs the taking by Eminent Domain (as defined in the
Lease) of all or any part of the Leased Property to such an extent that the
Company is prevented or would likely be prevented from using the Leased
Property for its normal purposes and operations for a period of one year
after such occurrence; or
(iii) there shall have occurred a change in the Constitution of the
State of North Carolina or the United States of America or any legislative,
administrative or judicial action which shall render the Lease void or
unenforceable or impossible of performance and the Company shall deliver to
the Trustee a resolution of the Board of Directors of the Company stating
that as a result of an event described in clause (i), (ii), or (iii) above,
the Company has discontinued or will discontinue its operation of the
Leased Property, then the Company may direct the Trustee to call all the
Bonds then outstanding under the Indenture for redemption in whole on the
date, not more than 180 days after the adoption of such resolution,
selected by the Company. The redemption price payable in connection with an
event described in clause (i), (ii), or (iii) above shall be equal to the
principal amount thereof plus accrued Interest to the redemption date and
without redemption premium.
Upon the occurrence of a Determination of Taxability, which is defined in
the Indenture to mean any determination, decision or decree made in regard to
Section 103(b)(6)(D) of the Internal Revenue Code of 1954, as amended (the
"Code"), by the Commissioner or any District Director of the Internal Revenue
Service or decision by any court of competent jurisdiction that interest on the
Series 1979 Bonds is includable in the gross income of a Bondholder (other than
a Bondholder who is a "substantial user of the Project" or a "related person",
within the meaning of Section 103(b)(8) of the Code), the Series 1979 Bonds
shall be called for redemption in whole on the date, not more than 90 days
following the date of such Determination, selected by the Company at the
principal amount thereof, plus interest accrued thereon to the date fixed for
redemption.
The Series 1979 Bonds may be called for redemption not earlier than June 1,
1989 in whole at any time, or in part on any interest payment date selected by
the Company, at the applicable redemption price (expressed as a percentage of
principal amount) set forth in the table below plus interest accrued to the date
fixed for redemption:
Redemption Redemption
Periods Prices
------- ------
June 1, 1989 to May 31, 1990 ....................103 %
June 1, 1990 to May 31, 1991 .................102 1/2%
June 1, 1991 to May 31, 1992 ....................102 %
June 1, 1992 to May 31, 1993..................101 1/2%
June 1, 1993 to May 31, 1994 ....................101 %
June 1, 1994 to May 31, 1995..................100 1/2%
June 1, 1995 and thereafter......................100 %
In addition, Series 1979 Bonds shall be called for redemption, pursuant to
the sinking fund redemption requirements of Section 302 of the Indenture, at the
principal amount thereof plus accrued interest to the redemption date and
without premium on the following dates in the following principal amounts:
Redemption Principal Redemption Principal
Date Amount Date Amount
---- ------ ---- ------
June 1, 1995 $350,000 June 1, 1997 $400,000
June 1, 1996 $370,000 June 1, 1998 $425,000
Unless otherwise previously retired, there will remain $455,000 principal
amount of Series 1979 Bonds stated to mature on June 1, 1999 to be paid at
maturity on June 1, 1999.
If less than all of the Bonds of any one maturity of a series shall be
called for redemption, the particular Bonds to be redeemed from such series and
maturity shall be selected by lot by the Trustee or in such other manner as the
Trustee in its discretion may deem fair and appropriate.
Any such redemption, whether in whole or in part, shall be made upon at
least 30, but not more than 60 days prior notice by (a) publication in a daily
newspaper, or a finan, published or circulated in the Borough of Manhattan, City
and State of New York, and (b) mailing to all registered owners of Bonds to be
redeemed at their addresses as they appear on the registration books kept by the
Trustee and to each other holder of Bonds to be redeemed who shall have filed
with the Trustee the number or numbers of such Bonds and his address, as
provided in the Indenture, and shall be made in the manner and under the terms
and conditions, all as provided in the Indenture, but, if notice is so
published, failure so to mail any such notice shall not affect the validity of
the proceedings for such redemption. On the date designated for redemption,
notice having been published, the Bonds so called for redemption shall become
and be due and payable at the redemption price provided for redemption of such
Bonds on such date, and, if moneys for payment of the redemption price and
accrued interest shall be held by the Trustee or by any paying agent, all as
provided in the Indenture, interest on such Bonds so called for redemption shall
cease to accrue, the coupons for any such interest payable subsequent to the
redemption date shall be void, such Bonds so called for redemption shall cease
to be entitled to any benefit or security under the Indenture, and the holders
or registered owners thereof shall have no rights in respect of such Bonds so
called for redemption except to receive payment of the redemption price thereof
so held by the Trustee or by any paying agent.
In the event that all the Bonds then outstanding shall be registered, the
Trustee shall be required to give notice only as provided in clause (b) above.
The holder of this Bond shall have no right to enforce the provisions of
the Indenture or to institute action to enforce the covenants therein, or to
take any action with respect to any event of default under the Indenture, or to
institute, appear in or defend any suit or other proceeding with respect
thereto, except as provided in the Indenture.
In certain events, on the conditions, in the manner and with the effect set
forth in the Indenture, the principal of all the Bonds then outstanding under
the Indenture may become or may be declared due and payable before the stated
maturities thereof, together with the interest accrued thereon.
Modifications or alterations of the Lease, the Indenture and the Guaranty
and any supplement or amendment thereto may be made only to the extent and in
the circumstances permitted by the Indenture and may be made in certain cases
without the consent of all the holders of the Bonds.
This Bond may be registered as to both principal and interest in accordance
with the provisions endorsed hereon and subject to the terms and provisions of
the Indenture.
This Bond and the interest coupons appertaining hereto shall be governed by
and construed in accordance with the laws of the State of North Carolina.
All acts, conditions and things required to happen, exist and be performed
precedent to and in the issuance of this Bond and the execution of the Indenture
have happened, exist and have been performed as so required.
This Bond shall not be valid or become obligatory for any purpose or be
entitled to any benefit or security under the Indenture until it shall have been
authenticated by the execution by the Trustee of the certificate of
authentication endorsed hereon.
CERTIFICATE OF AUTHENTICATION
This Bond is one of the Bonds of the series designated therein and issued
under the provisions of the within-mentioned Indenture. FIRST UNION NATIONAL
BANK OF NORTH CAROLINA, As Trustee
By
- -----------------------------
Authorized Officer
- -----------------------------
Chairman
- -----------------------------
Secretary
[SEAL]
IN WITNESS WHEREOF, THE IREDELL COUNTY INDUSTRIAL FACILITIES AND POLLUTION
CONTROL FINANCING AUTHORITY has caused this Bond to be executed with the
facsimile signature of its Chairman or its Vice Chairman and a facsimile of its
official seal to be imprinted hereon and attested by its Secretary or an
Assistant Secretary, and the attached interest coupons to bear the facsimile
signature of said Chairman or Vice Chairman, all as of the 1st day of June,
1979.
<PAGE>
STANDARD FORM UNIFORM COMMERCIAL CODE
STATEMENTS OF CONTINUATION, PARTIAL RELEASE, ASSIGNMENT, ETC.- FORM UCC-3
INSTRUCTIONS:
1. PLEASE TYPE THIS FORM. Fold only along perforation for mailing.
2. Remove Secured Party and Debtor copies and send other 3 copies with
interleaved carbon paper to the filing officer.
3. Enclose filing fees(s), and fill in original Financing Statement number and
date filed.
4. If the space provided for any item(s) on the form is inadequate the item(s)
should be continued on additional sheets, preferably 5" x 8" or 8" x 10".
Only one copy of such additional sheets need be presented to the filing
officer with a set of three copies of Form UCC-3. Long schedules of
collateral, etc., may be on any size paper that is convenient for the
secured party. Indicate the number of additional sheets attached.
5. If collateral is crops or goods which are or are to become fixtures,
describe generally the real estate and give name of record owner.
6. At the time of filing, filing officer will return third copy as an
acknowledgement.
- --------------------------------------------------------------------------------
This STATEMENT is presented to a filing officer for filing pursuant to the
Uniform Commercial Code:
<TABLE>
<CAPTION>
<S> <C> <C>
3. Maturity date (if any):
1. Debtor(s) (Last Name First) and address(es) 2. Secured Party(ies) and address(es) For Filing Officer (Date,
Hunt Manufacturing Co. The Iredell County Industrial Time and Filing Office)
1405 Locust Street Facilities and Pollution Control
Philadelphia, Pa. 19102 Financing Authority, County Annex Building
Statesville, N.C. 28655
</TABLE>
- --------------------------------------------------------------------------------
4. This statement refers to original Financing Statement bearing File No. 8845
Filed with Office of Register of Deeds, Iredell County. Date Filed June 4, 1979
- --------------------------------------------------------------------------------
5. [ ] Continuation. The original financing statement between the foregoing
Debtor and Secured Party, bearing file number shown above, is still
effective.
6. [ ] Termination. Secured party no longer claims a security interest
under the financing statement bearing file number shown above.
7. [ ] Assignment. The secured party's right under the financing statement
bearing file number shown above to the property described in Item 10
have been assigned to the assignee whose name and address appears in
Item 10.
8. [X] Amendment. Financing Statement bearing file number shown above is
amended as set forth in Item 10.
9. [ ] Release. Secured Party releases the collateral described in Item 10
from the financing statement bearing file number shown above.
- --------------------------------------------------------------------------------
10. Schedule 1 to said Financing Statement is hereby amended by deleting
Items (1) and (2) and adding the following:
(1) CAFETERIA EQUIPMENT
(2) OFFICE FURNITURE AND FIXTURES PURCHASED FROM NATIONAL CANVAS
PRODUCTS CORP.
(2a) NARROW AISLE STACKING SYSTEM
Racks and Docking 1 Control Unit
3 Stock Pickers 2 Straddle Truck
No. of additional Sheets presented:
HUNT MANUFACTURING CO. THE IREDELL COUNTY INDUSTRIAL FACILITIES
AND POLLUTION CONTROL FINANCING AUTHORITY
By: ___________________________________ By: __________________________________
Signature(s) of Debtor(s)(necessary Signature(s) of Secured Party(ies)
only if Item 8 is applicable).
(1) Filing Officer Copy - Alphabetical
STANDARD FORM-FORM UCC-3
<PAGE>
STANDARD FORM UNIFORM COMMERCIAL CODE
STATEMENTS OF CONTINUATION, PARTIAL RELEASE, ASSIGNMENT, ETC.- FORM UCC-3
INSTRUCTIONS:
1. PLEASE TYPE THIS FORM. Fold only along perforation for mailing.
2. Remove Secured Party and Debtor copies and send other 3 copies with
interleaved carbon paper to the filing officer.
3. Enclose filing fees(s), and fill in original Financing Statement number and
date filed.
4. If the space provided for any item(s) on the form is inadequate the item(s)
should be continued on additional sheets, preferably 5" x 8" or 8" x 10".
Only one copy of such additional sheets need be presented to the filing
officer with a set of three copies of Form UCC-3. Long schedules of
collateral, etc., may be on any size paper that is convenient for the
secured party. Indicate the number of additional sheets attached.
5. If collateral is crops or goods which are or are to become fixtures,
describe generally the real estate and give name of record owner.
6. At the time of filing, filing officer will return third copy as an
acknowledgement.
- --------------------------------------------------------------------------------
This STATEMENT is presented to a filing officer for filing pursuant to the
Uniform Commercial Code:
<TABLE>
<CAPTION>
<S> <C> <C>
3. Maturity date (if any):
1. Debtor(s) (Last Name First) and address(es) 2. Secured Party(ies) and address(es) For Filing Officer (Date,
The Iredell County Industrial First Union National Bank of Time and Filing Office)
Facilities and Pollution Control North Carolina
Financing Authority, County Annex Building One First Union Plaza
Statesville, N.C. 28677 Charlotte, N.C. 28288
</TABLE>
- --------------------------------------------------------------------------------
4. This statement refers to original Financing Statement bearing File No.
C-22378
Filed with Secretary of State of North Carolina. Date Filed June 4, 1979
- --------------------------------------------------------------------------------
5. [ ] Continuation. The original financing statement between the foregoing
Debtor and Secured Party, bearing file number shown above, is still
effective.
6. [ ] Termination. Secured party no longer claims a security interest
under the financing statement bearing file number shown above.
7. [ ] Assignment. The secured party's right under the financing statement
bearing file number shown above to the property described in Item 10
have been assigned to the assignee whose name and address appears in
Item 10.
8. [X] Amendment. Financing Statement bearing file number shown above is
amended as set forth in Item 10.
9. [ ] Release. Secured Party releases the collateral described in Item 10
from the financing statement bearing file number shown above.
- --------------------------------------------------------------------------------
10. Schedule 1 to said Financing Statement is hereby amended by deleting
Items (1) and (2) and adding the following:
(1) CAFETERIA EQUIPMENT
(2) OFFICE FURNITURE AND FIXTURES PURCHASED FROM NATIONAL CANVAS
PRODUCTS CORP.
(2a) NARROW AISLE STACKING SYSTEM
Racks and Docking 1 Control Unit
3 Stock Pickers 2 Straddle Truck
No. of additional Sheets presented:
THE IREDELL COUNTY INDUSTRIAL FACILITIES FIRST UNION NATIONAL BANK OF
AND POLLUTION CONTROL FINANCING AUTHORITY NORTH CAROLINA
By: ___________________________________ By:_________________________________
Signature(s) of Debtor(s)(necessary Signature(s) of Secured Party(ies)
only if Item 8 is applicable).
STANDARD FORM-FORM UCC-3
(1) Filing Officer Copy - Alphabetical
<PAGE>
STANDARD FORM UNIFORM COMMERCIAL CODE
STATEMENTS OF CONTINUATION, PARTIAL RELEASE, ASSIGNMENT, ETC.- FORM UCC-3
INSTRUCTIONS:
1. PLEASE TYPE THIS FORM. Fold only along perforation for mailing.
2. Remove Secured Party and Debtor copies and send other 3 copies with
interleaved carbon paper to the filing officer.
3. Enclose filing fees(s), and fill in original Financing Statement number and
date filed.
4. If the space provided for any item(s) on the form is inadequate the item(s)
should be continued on additional sheets, preferably 5" x 8" or 8" x 10".
Only one copy of such additional sheets need be presented to the filing
officer with a set of three copies of Form UCC-3. Long schedules of
collateral, etc., may be on any size paper that is convenient for the
secured party. Indicate the number of additional sheets attached.
5. If collateral is crops or goods which are or are to become fixtures,
describe generally the real estate and give name of record owner.
6. At the time of filing, filing officer will return third copy as an
acknowledgement.
- --------------------------------------------------------------------------------
This STATEMENT is presented to a filing officer for filing pursuant to the
Uniform Commercial Code:
<TABLE>
<CAPTION>
<S> <C> <C>
3. Maturity date (if any):
1. Debtor(s) (Last Name First) and address(es) 2. Secured Party(ies) and address(es) For Filing Officer (Date,
Hunt Manufacturing Co. The Iredell County Industrial Time and Filing Office)
1405 Locust Street Facilities and Pollution Control
Philadelphia, Pa. 19102 Financing Authority, County Annex Building
Statesville, N.C. 28655
</TABLE>
- --------------------------------------------------------------------------------
4. This statement refers to original Financing Statement bearing File No.
C-22376
Filed with Secretary of State of North Carolina. Date Filed June 4, 1979
- --------------------------------------------------------------------------------
5. [ ] Continuation. The original financing statement between the foregoing
Debtor and Secured Party, bearing file number shown above, is still
effective.
6. [ ] Termination. Secured party no longer claims a security interest
under the financing statement bearing file number shown above.
7. [ ] Assignment. The secured party's right under the financing statement
bearing file number shown above to the property described in Item 10
have been assigned to the assignee whose name and address appears in
Item 10.
8. [X] Amendment. Financing Statement bearing file number shown above is
amended as set forth in Item 10.
9. [ ] Release. Secured Party releases the collateral described in Item 10
from the financing statement bearing file number shown above.
- --------------------------------------------------------------------------------
10. Schedule 1 to said Financing Statement is hereby amended by deleting
Items (1) and (2) and adding the following:
(1) CAFETERIA EQUIPMENT
(2) OFFICE FURNITURE AND FIXTURES PURCHASED FROM NATIONAL CANVAS
PRODUCTS CORP.
(2a) NARROW AISLE STACKING SYSTEM
Racks and Docking 1 Control Unit
3 Stock Pickers 2 Straddle Truck
No. of additional Sheets presented:
HUNT MANUFACTURING CO. THE IREDELL COUNTY INDUSTRIAL FACILITIES
AND POLLUTION CONTROL FINANCING AUTHORITY
By: ___________________________________ By: __________________________________
Signature(s) of Debtor(s)(necessary Signature(s) of Secured Party(ies)
only if Item 8 is applicable).
(1) Filing Officer Copy - Alphabetical
STANDARD FORM-FORM UCC-3 (For Use In Most States)
<PAGE>
STANDARD FORM UNIFORM COMMERCIAL CODE
STATEMENTS OF CONTINUATION, PARTIAL RELEASE, ASSIGNMENT, ETC.- FORM UCC-3
INSTRUCTIONS:
1. PLEASE TYPE THIS FORM. Fold only along perforation for mailing.
2. Remove Secured Party and Debtor copies and send other 3 copies with
interleaved carbon paper to the filing officer.
3. Enclose filing fees(s), and fill in original Financing Statement number and
date filed.
4. If the space provided for any item(s) on the form is inadequate the item(s)
should be continued on additional sheets, preferably 5" x 8" or 8" x 10".
Only one copy of such additional sheets need be presented to the filing
officer with a set of three copies of Form UCC-3. Long schedules of
collateral, etc., may be on any size paper that is convenient for the
secured party. Indicate the number of additional sheets attached.
5. If collateral is crops or goods which are or are to become fixtures,
describe generally the real estate and give name of record owner.
6. At the time of filing, filing officer will return third copy as an
acknowledgement.
- --------------------------------------------------------------------------------
This STATEMENT is presented to a filing officer for filing pursuant to the
Uniform Commercial Code:
<TABLE>
<CAPTION>
<S> <C> <C>
3. Maturity date (if any):
1. Debtor(s) (Last Name First) and address(es) 2. Secured Party(ies) and address(es) For Filing Officer (Date,
The Iredell County Industrial First Union National Bank of Time and Filing Office)
Facilities and Pollution Control North Carolina
Financing Authority, County Annex Building One First Union Plaza
Statesville, N.C. 28677 Charlotte, N.C. 28288
</TABLE>
- --------------------------------------------------------------------------------
4. This statement refers to original Financing Statement bearing File No. 8847
Filed with Office of Register of Deeds, Iredell County.
Date Filed June 4, 1979
- --------------------------------------------------------------------------------
5. [ ] Continuation. The original financing statement between the foregoing
Debtor and Secured Party, bearing file number shown above, is still
effective.
6. [ ] Termination. Secured party no longer claims a security interest
under the financing statement bearing file number shown above.
7. [ ] Assignment. The secured party's right under the financing statement
bearing file number shown above to the property described in Item 10
have been assigned to the assignee whose name and address appears in
Item 10.
8. [X] Amendment. Financing Statement bearing file number shown above is
amended as set forth in Item 10.
9. [ ] Release. Secured Party releases the collateral described in Item 10
from the financing statement bearing file number shown above.
- --------------------------------------------------------------------------------
10. Schedule 1 to said Financing Statement is hereby amended by deleting
Items (1) and (2) and adding the following:
(1) CAFETERIA EQUIPMENT
(2) OFFICE FURNITURE AND FIXTURES PURCHASED FROM NATIONAL CANVAS
PRODUCTS CORP.
(2a) NARROW AISLE STACKING SYSTEM
Racks and Docking 1 Control Unit
3 Stock Pickers 2 Straddle Truck
No. of additional Sheets presented:
THE IREDELL COUNTY INDUSTRIAL FACILITIES FIRST UNION NATIONAL BANK OF
AND POLLUTION CONTROL FINANCING AUTHORITY NORTH CAROLINA
By: ___________________________________ By:_________________________________
Signature(s) of Debtor(s)(necessary Signature(s) of Secured Party(ies)
only if Item 8 is applicable).
STANDARD FORM-FORM UCC-3
(1) Filing Officer Copy - Alphabetical
<PAGE>
FORM UCC-2
REORDER FROM
MUNICIPAL FORMS & SYSTEMS CO., INC.
P.O. BOX 2171 - DURHAM, N.C. 27702
UNIFORM COMMERCIAL CODE FINANCING STATEMENT
ALABAMA DELAWARE KANSAS MICHIGAN NEBRASKA OKLAHOMA VIRGINIA
ALASKA IDAHO KENTUCKY MINNESOTA N. HAMPSHIRE OREGON W. VIRGINIA
ARIZONA ILLINOIS MAINE MISSISSIPPI N. JERSEY S. CAROLINA WISCONSIN
ARKANSAS INDIANA MARYLAND MISSOURI N. DAKOTA TENNESSEE WYOMING
COLORADO IOWA MASS. MONTANA OHIO VERMONT DT. OF COL.
This FINANCING STATEMENT is presented to a Filing Officer for filing
pursuant to the Uniform Commercial Code.
No. of Additional Sheets Presented:
1. Debtor(s) (Last Name First) and Address(es):
The Iredell County Industrial Facilities and Pollution Control Financing
Authority, County Annex Building, South Center St., Statesville, N.C. 28655
2. Secured Party(ies) Name(s) and Address(es):
First Union National Bank of North Carolina
One First Union Plaza
Charlotte, N.C. 28288
3. Maturity Date (Optional):
4. For Filing Officer: Date, Time, File No., Filing Office:
5. Assignee(s) of Secured Party, Address(es):
6. [ ] The described crops are growing or to be grown on the real property
described in Item 7.
[X] The described goods are or are to be affixed to the real property
described in Item 7.
7. This Financing Statement covers the following types of items or collateral:
(Describe real estate, including record owner it item 6 is applicable)
The machinery, equipment, fixtures and other tangible personal property,
including but not 1imited to the items generally described in Schedule 1,
leased under the Lease Agreement, dated as of June 1, 1979, by the secured
party, as lessor, to the debtor, as lessee. Said machinery, equipment,
fixtures and other tangible personal property are or are to be located on
the real estate described in Schedule 2 hereto.
Record Owner: The Iredell County Industrial Facilities and
Pollution Control Financing Authority
COLLATERAL IS OR INCLUDES FIXTURES
[X] Proceeds** [ ] Products of the collateral are also covered.
8. Signatures: If debtor's signature ommitted pursuant to G.S. 25-9-402(2),
indicate reason.
The Iredell County Industrial Facilities
and Pollution Control Financing Authority
By________________________________________
Debtor(s) or Assignor(s)
First Union National Bank of North Carolina
By________________________________________
Secured Party(ies) or Assignee(s)
FINANCING STATEMENT
Standard Form Approved by
Secretary of State of North Carolina
AND OTHER STATES SHOWN ABOVE
(1) Filing Officer Copy - Numerical
<PAGE>
SCHEDULE I
(1) Building Improvements
(2) Narrow Aisle Stacking System
(3) Air-Compressor - Worthington
Air-Compressor - Lincoln
Air-Compressor - Wayne
Rewind Machine
Programable Cutter
Five (5) Cutter Grinders
Ejection Molding Machine
Shrink Rap Machine
Precission Lathe
Electronic Digital Scale
Pebble Mill
Brazing Machine
<PAGE>
SCHEDULE 2
All that tract of real estate conveyed by National Canvas Products Corp. to
Hunt Manufacturing Co., by deed dated March 24, 1979, and recorded in Deed Book
636, page 547, in the Office of the Register of Deeds for Iredell County, North
Carolina, described as follows:
Lying and being in Iredell County, State of North Carolina, and more
particularly described as follows:
BEGINNING at a point in the center of North Carolina Highway No. 90 (West
Front Street) leading from Statesville, North Carolina, to Taylorsville, North
Carolina, said beginning point being the Southwest corner of the tract of land
conveyed to the Carnation Company by the State of North Carolina by Deed
recorded in Deed Book 134, Page 125, Iredell County Registry, and running thence
with the center of said North Carolina Highway No. 90, North 62 degrees 22
minutes West 1043 feet to a point in the center of said North Carolina Highway
No. 90, at which point the center of said North Carolina Highway No. 90 and the
center of Mecham Road, a road leading in a Northerly direction from said North
Carolina Highway No. 90 to what was formerly a part of the Piedmont Experiment
Station Farm intersect; thence with the center line of said Mecham Road North 08
degrees 06 minutes East 805 feet to a point in the center line of the railroad
track of Alexander Railroad Company; thence with the center line of said
railroad track of the Alexander Railroad Company four calls as follows: (1)
South 40 degrees 05 minutes East 839.45 feet to a point; (2) thence South 43
degrees 01 minutes East 159 feet to a point; (3) thence South 48 degrees 10
minutes East 168.6 feet to a point; (4) thence South 52 degrees 30 minutes East
161.7 feet to a point in the center of said railroad track, and said point being
the Northwest corner of the said tract of land conveyed to the Carnation Company
by the State of North Carolina by the Deed referred to hereinabove; thence with
the Western line of said Carnation Company South 15 degrees 49 minutes 40
seconds West 324.45 feet to the point of BEGINNING, containing 12.76 acres, more
or less.
<PAGE>
FORM UCC-2
REORDER FROM
MUNICIPAL FORMS & SYSTEMS CO., INC.
P.O. BOX 2171 - DURHAM, N.C. 27702
UNIFORM COMMERCIAL CODE FINANCING STATEMENT
ALABAMA DELAWARE KANSAS MICHIGAN NEBRASKA OKLAHOMA VIRGINIA
ALASKA IDAHO KENTUCKY MINNESOTA N. HAMPSHIRE OREGON W. VIRGINIA
ARIZONA ILLINOIS MAINE MISSISSIPPI N. JERSEY S. CAROLINA WISCONSIN
ARKANSAS INDIANA MARYLAND MISSOURI N. DAKOTA TENNESSEE WYOMING
COLORADO IOWA MASS. MONTANA OHIO VERMONT DT. OF COL.
This FINANCING STATEMENT is presented to a Filing Officer for filing
pursuant to the Uniform Commercial Code.
No. of Additional Sheets Presented:
1. Debtor(s) (Last Name First) and Address(es):
The Iredell County Industrial Facilities and Pollution Control Financing
Authority, County Annex Building, South Center St., Statesville, N.C. 28655
2. Secured Party(ies) Name(s) and Address(es):
First Union National Bank of North Carolina
One First Union Plaza
Charlotte, N.C. 28288
3. Maturity Date (Optional):
4. For Filing Officer: Date, Time, File No., Filing Office:
5. Assignee(s) of Secured Party, Address(es):
6. [ ] The described crops are growing or to be grown on the real property
described in Item 7.
[ ] The described goods are or are to be affixed to the real property
described in Item 7.
7. This Financing Statement covers the following types of items or collateral:
(Describe real estate, including record owner it item 6 is applicable)
Certain of the Debtors' rights, title and interest in and to the Lease
Agreement, dated as of June 1, 1979, between the Debtor and Hunt
Manufacturing Co., including without limitation, all rents to become
due under the Lease Agreement as Basic Rent, prepayments of Basic
Rent, interest, damages, or otherwise, assigned to the Secured
Party under an Indenture and Deed of Trust, dated as of June 1, 1979,
between the Debtor and the Secured Party.
[ ] Proceeds** [ ] Products of the collateral are also covered.
8. Signatures: If debtor's signature ommitted pursuant to G.S. 25-9-402(2),
indicate reason.
The Iredell County Industrial Facilities
and Pollution Control Financing Authority
By________________________________________
Debtor(s) or Assignor(s)
First Union National Bank of North Carolina
By________________________________________
Secured Party(ies) or Assignee(s)
FINANCING STATEMENT
Standard Form Approved by
Secretary of State of North Carolina
AND OTHER STATES SHOWN ABOVE
(1) Filing Officer Copy - Numerical
<PAGE>
<PAGE>
FORM UCC-2
REORDER FROM
MUNICIPAL FORMS & SYSTEMS CO., INC.
P.O. BOX 2171 - DURHAM, N.C. 27702
UNIFORM COMMERCIAL CODE FINANCING STATEMENT
ALABAMA DELAWARE KANSAS MICHIGAN NEBRASKA OKLAHOMA VIRGINIA
ALASKA IDAHO KENTUCKY MINNESOTA N. HAMPSHIRE OREGON W. VIRGINIA
ARIZONA ILLINOIS MAINE MISSISSIPPI N. JERSEY S. CAROLINA WISCONSIN
ARKANSAS INDIANA MARYLAND MISSOURI N. DAKOTA TENNESSEE WYOMING
COLORADO IOWA MASS. MONTANA OHIO VERMONT DT. OF COL.
This FINANCING STATEMENT is presented to a Filing Officer for filing
pursuant to the Uniform Commercial Code.
No. of Additional Sheets Presented:
1. Debtor(s) (Last Name First) and Address(es):
Hunt Manufacturing Co., 1405 Locust Street, Philadelphia, Pa. 19102
2. Secured Party(ies) Name(s) and Address(es):
The Iredell County Industrial Facilities and Pollution Control Financing
Authority, County Annex Building, Statesville, N.C. 28655
3. Maturity Date (Optional):
4. For Filing Officer: Date, Time, File No., Filing Office:
5. Assignee(s) of Secured Party, Address(es):
First Union National Bank of North Carolina
One First Union Plaza
Charlotte, N.C. 28288
6. [ ] The described crops are growing or to be grown on the real property
described in Item 7.
[X] The described goods are or are to be affixed to the real property
described in Item 7.
7. This Financing Statement covers the following types of items or collateral:
(Describe real estate, including record owner it item 6 is applicable)
The machinery, equipment, fixtures and other tangible personal property,
including but not 1imited to the items generally described in Schedule 1,
leased under the Lease Agreement, dated as of June 1, 1979, by the secured
party, as lessor, to the debtor, as lessee. Said machinery, equipment,
fixtures and other tangible personal property are or are to be located on
the real estate described in Schedule 2 hereto.
Record Owner: The Iredell County Industrial Facilities and
Pollution Control Financing Authority
COLLATERAL IS OR INCLUDES FIXTURES
[X] Proceeds** [ ] Products of the collateral are also covered.
8. Signatures: If debtor's signature ommitted pursuant to G.S. 25-9-402(2),
indicate reason.
Hunt Manufacturing Co.
By________________________________________
Debtor(s) or Assignor(s)
First Union National Bank of North Carolina
By________________________________________
Secured Party(ies) or Assignee(s)
FINANCING STATEMENT
Standard Form Approved by
Secretary of State of North Carolina
AND OTHER STATES SHOWN ABOVE
(1) Filing Officer Copy - Numerical
<PAGE>
SCHEDULE I
(1) Building Improvements
(2) Narrow Aisle Stacking System
(3) Air-Compressor - Worthington
Air-Compressor - Lincoln
Air-Compressor - Wayne
Rewind Machine
Programable Cutter
Five (5) Cutter Grinders
Ejection Molding Machine
Shrink Rap Machine
Precission Lathe
Electronic Digital Scale
Pebble Mill
Brazing Machine
<PAGE>
SCHEDULE 2
All that tract of real estate conveyed by National Canvas Products Corp. to
Hunt Manufacturing Co., by deed dated March 24, 1979, and recorded in Deed Book
636, page 547, in the Office of the Register of Deeds for Iredell County, North
Carolina, described as follows:
Lying and being in Iredell County, State of North Carolina, and more
particularly described as follows:
BEGINNING at a point in the center of North Carolina Highway No. 90 (West
Front Street) leading from Statesville, North Carolina, to Taylorsville, North
Carolina, said beginning point being the Southwest corner of the tract of land
conveyed to the Carnation Company by the State of North Carolina by Deed
recorded in Deed Book 134, Page 125, Iredell County Registry, and running thence
with the center of said North Carolina Highway No. 90, North 62 degrees 22
minutes West 1043 feet to a point in the center of said North Carolina Highway
No. 90, at which point the center of said North Carolina Highway No. 90 and the
center of Mecham Road, a road leading in a Northerly direction from said North
Carolina Highway No. 90 to what was formerly a part of the Piedmont Experiment
Station Farm intersect; thence with the center line of said Mecham Road North 08
degrees 06 minutes East 805 feet to a point in the center line of the railroad
track of Alexander Railroad Company; thence with the center line of said
railroad track of the Alexander Railroad Company four calls as follows: (1)
South 40 degrees 05 minutes East 839.45 feet to a point; (2) thence South 43
degrees 01 minutes East 159 feet to a point; (3) thence South 48 degrees 10
minutes East 168.6 feet to a point; (4) thence South 52 degrees 30 minutes East
161.7 feet to a point in the center of said railroad track, and said point being
the Northwest corner of the said tract of land conveyed to the Carnation Company
by the State of North Carolina by the Deed referred to hereinabove; thence with
the Western line of said Carnation Company South 15 degrees 49 minutes 40
seconds West 324.45 feet to the point of BEGINNING, containing 12.76 acres, more
or less.
<PAGE>
(49)
No.
REQUISITION AND CERTIFICATE
_________________________, 197__
First Union National Bank of
North Carolina, as Trustee
Charlotte, North Carolina
Sirs:
On behalf of Hunt Manufacturing Co., a Pennsylvania corporation ("Hunt"), I
hereby requistion from the funds representing the proceeds of the sale of the
Industrial Revenue Bonds (Hunt Manufacturing Co. Project), Series 1979, issued
by The Iredell County Industrial Facilities and Pollution Control Financing
Authority, dated as of June 1, 1979 (the "Bonds'), and held by you as trustee
under the Indenture and Deed of Trust dated as of June 1, 1979, between The
Iredell County Industrial Facilities and Pollu tion Control Financing Authority
(the "Authority") and you, the sum of $____________ to be paid to
________________________ for expenses incurred in acquisition and installa tion
of the Project as described in Exhibit A hereto.
I hereby certify that:
(1) such obligation has been incurred by the Authority 9r the Company
in or about the Acquisition of the Project or the improvements, and that
each item is a proper charge against the Cost of Acquisition of the Project
or the Improvements and that the obligation has not been the basis for a
prior requisition which has been paid;
(2) no written notice of any lien, right to lien or attachment upon,
or claim affecting the right to receive payment of, any of the moneys
payable under this requisition to any of the persons, firms or corporations
named therein has been received, or if any notice of any such lien,
attachment or claim has been received, such lien, attachment or claim has
been released or discharged or will be released or discharged upon payment
of the requisition or, if contested, bond has been made by the Company to
the satisfaction of the Trustee;
<PAGE>
(3) this requisition contains no items representing payment on account
of any retained percentages entitled to be retained at the date of the
certificate; and
(4) the payment of this requisition will not result in less than
substantially all (not less than 90%) of the proceeds of the series of the
Bonds expended under such requisition and all prior requisitions being
considered as having been used for the acquisition, construction,
reconstruction or improvement of land or property of a character subject to
the allowance for depreciation within the meaning of Section 103(b)(6)(A)
of the Code.
[For use only when any requisition includes an item for payment for labor
or to contractors, builders or materialmen.]
[I further certify that (1) obligations as stated on this requisition have
been properly incurred, (2) such work was actually performed or such materials
or supplies were actually furnished or installed in or about the Project or the
Improvements and are a proper charge against the Cost of Acquisition of the
Project or the Improvements, (3) if contested, bond has been made by the Company
to the satisfaction of the Trustee and (4) either such materials or supplies are
not subject to any lien or security interest or any such lien or security
interest will be released or discharged upon payment of the requisition.]
---------------------------------
Company Representative
Approved:
- ---------------------------------
Authority Representative
<PAGE>
(50)
REQUISITION AND CERTIFICATE
June 5, 1979
First Union National Bank of
North Carolina, as Trustee
Charlotte, North Carolina
SIRS:
On behalf of Hunt Manufacturing Co., a Pennsylvania corporation ("Hunt"), I
hereby requistion from the funds representing the proceeds of the sale of the
industrial Revenue Bonds (Hunt Manufacturing Co. Project), Series 1979, issued
by The Iredell County Industrial Facilities and Pollution Control Financing
Authority, dated as of June 1, 1979 (the "Bonds"), and held by you as trustee
under the indenture and Deed of Trust dated as of June 1, 1979, between The
Iredell County Industrial Facilities and Pollu tion Control Financing Authority
(the "Authority") and you, the sum of $1,956,000 to be paid to Hunt
Manufacturing Co. for expenses incurred in acquisition and installa tion of the
Project as described in Exhibit A hereto.
I hereby certify that:
(1) such obligation. has been incurred by the Authority or the Company
in or about the Acquisition of the Project or the Improvements, and that
each item is a proper charge against the Cost of Acquisition of the Project
or the Improvements and that the obligation has not been the basis for a
prior requisition which has been paid;
(2) no written notice of any lien, right to lien or attachment upon,
or claim affecting the right to receive payment of, any of the moneys
payable under this requisition to any of the persons, firms or corporations
named therein has been received, or if any notice of any such lien,
attachment or claim has been received, such lien, attachment or claim has
been released or discharged or will be released or discharged upon payment
of the requisition or, if contested, bond has been made by the Company to
the satisfaction of the Trustee;
<PAGE>
(3) this requisition contains no items representing payment on account
of any retained percentages entitled to be retained at the date of the
certificate; and
(4) the payment of this reauisition will not result in less than
substantially all (not less than 90%) of the proceeds of the series of the
Bonds expended under such requisition and all prior requisitions being
considered as having been used for the acquisition, construction,
reconstruction or improvement of land or property of a character subject to
the allowance for depreciation within the meaning of Section 103(b)(6)(A)
of the Code.
I further certify that (1) obligations as stated on this requisition have
been properly incurred, (2) such work was actually performed.or such materials
or supplies were actually furnished or installed in or about the Project or the
Improvements and are a proper charge against the Cost of Acauisition of the
Project or the Improvements, (3) if contested, bond has been made by the Company
to the satisfaction of the Trustee and (4) either such materials or supplies are
not subject to any lien or security interest or any such lien or security
interest will be released or discharged upon payment of the requisition.
---------------------------------
Company Representative
Approved:
- ---------------------------------
Authority Representative
<PAGE>
COOPERS & LYBRAND
CERTIFIED PUBLIC ACCOUNTANTS
1900 THREE GIRARD PLAZA
A MEMBER FIRM OF PHILADELPHIA, PA. 19102
COOPERS & LYBRAND (INTERNATIONAL) (215) 569-2000
June 5, 1979
Alex. Brown & Sons
Baltimore, Maryland
as Underwriters pursuant to
the Contract to Purchase
Industrial Revenue Bonds
Series 1979 with Hunt
Manufacturing Co.
Gentlemen:
We have examined the consolidated balance sheets of Hunt Manufacturing Co.
and subsidiaries (the "Company") at December 3, 1978 and November 27, 1977, and
the related consolidated statements of income and retained earnings and changes
in financial position for the years then ended, and the related supporting
schedules, included in the Appendix to the Official Statement for the $2,000,000
Iredell County Industrial Facilities and Pollution Control Financing Authority
(North Carolina) Industrial Revenue Bonds (Hunt Manufacturing Co. Project)
Series 1979; our report with respect thereto is included in the Appendix to the
Official Statement. Such Appendix and Official Statement are referred to herein
as the "Appendix" and the "Official Statement," respectively.
In connection with the Official Statement:
1. We are independent certified public accountants with respect to the
Company within the meaning of the Codification of Statement on Auditing
Standards, Section AU 620, of the American Institute of Certified Public
Accountants and the Securities and Exchange Act of 1934 (the "Act") and the
applicable rules and regulations published thereunder.
<PAGE>
Alex. Brown & Sons - 2 June 5, 1979
2. In our opinion, the audited consolidated financial statements
(included in the Official Statement) examined by us comply as to form in
all material respects with the applicable accounting requirements for Form
10-K Annual Report pursuant to the Act and the published rules and
regulations thereunder.
3. We have not examined any financial statements (in cluding condensed
financial statements) of the Company as of any date or for any period subse
quent to December 3, 1978; although we have made an examination for the
year ended December 3, 1978, the purpose (and therefore the scope) of such
ex amination was to enable us to express our opinion on the financial
statements as of December 3, 1978, and for the year then ended, but not as
to the financial statements for any interim period included within such
year. Therefore, we are unable to and do not express any opinion on the
unaudited con solidated condensed balance sheets as of March 4, 1979 and
February 26, 1978; unaudited consolidated condensed statements of income
and changes in financial position for the three-month periods ended March
4, 1979 and February 26, 1978; or on the finan cial position, results of
operations or changes in financial position as of any date or for any
period subsequent to December 3, 1978.
4. For the purposes of this letter we have read the 1979 minutes of
the Board of Directors of the Company as set forth in the appropriate
minute books at May 29, 1979, officials of the Company having advised us
that the minutes of all such meetings through that date were set forth
therein, and have carried out other procedures to May 29, 1979 (our work
did not extend to the period from May 30, 1979 to June 5, 1979, inclusive)
as follows:
a. With respect to the three-month periods ended March 4, 1979
and February 26, 1978, we have:
(1) read the unaudited consolidated condensed balance sheets
as of March 4, 1979 and February 26, 1978, and unaudited
consolidated condensed statements of income and changes in
financial position for the three-month periods then ended,
included in the Appendix;
<PAGE>
Alex. Brown & Sons - 3 June 5, 1979
(2) read the unaudited amounts of net sales, income from
operations, net income and net income per common share for the
quarters ended March 4, 1979 and Febru ary 26, 1978, included in
the unaudited consolidated condensed statements of income
included in the Appendix, and;
(3) made inquiries of certain officials of the Company who h
have responsibility for financial and accoting matters as to (i)
whether the unaudited financial statements referred to under a(1)
above comply as to form in all material respects with the
applicable accounting requirements for Form 10-Q Quarterly Report
under the Act; and (ii) whether said financial statements are
fairly presented in conformity with generally accepted accounting
principles applied on a basis substantially consistent with that
of the audited financial statements included in the Appendix.
b. With respect to the period from March 5, 1979 to April 29, 1979, we
have:
(1) read the unaudited consolidated condensed balance sheet as of
April 29, 1979 and the unaudited consolidated condensed statement of
income for the two months ended April 29, 1979 furnished us by the
Company, officials of the Company having advised us that no such
financial statements as of any date or for any period subsequent to
April 29, 1979, were available; and
(2) made inquiries of certain officials of the Company who have
responsibility for financial and accounting matters as to whether the
unaudited financial statements referred to under b(1) above are stated
on a basis substantially consistent with that of the audited financial
statements included in the Appendix.
<PAGE>
Alex. Brown & Sons - 4 June 5, 1979
The foregoing procedures do not constitute an examination made in
accordance with generally accepted auditing standards. Also, they would not
necessarily reveal matters of significance with respect to the comments in the
following paragraph. Accordingly, we make no representations as to the
sufficiency of the foregoing procedures for your purposes.
5. Nothing came to our attention as a result of the foregoing
procedures, however, that caused us to believe that:
a. (i) the unaudited consolidated condensed financial statements
described in 4a(1) above, included in the Appendix, do not comply as
to form in all material respects with the applicable account ing
requirements for Form 10-Q Quarterly Report under the Act; or (ii)
said financial statements are not fairly presented in conformity with
generally accepted account ing principles applied on a basis sub
stantially consistent with that of the unaudited financial statements,
except that notes and other disclosures to the condensed financial
statements referred to in 4a(1) are not as complete and detailed
because of different reporting requirements; (iii) the unaudited
amounts of net sales, income from operations, net income and net
income per common share included in the unaudited consolidated
condensed financial statements in the Appendix were not determined on
a basis substantially consistent with that of the audited financial
statements referred to in paragraph 2 above; or
b. At April 29, 1979, there was any change in the capital stock
or long-term debt of the Com pany or any decreases in consolidated net
assets as compared with amounts shown in the December 3, 1978 audited
balance sheet in cluded in the Official Statement, except as follows:
<PAGE>
Alex. Brown & Sons - 5 June 5, 1979
CAPITAL STOCK:
Capital stock transactions as disclosed on page B-9 of Form 10-Q included in the
Appendix.
LONG-TERM DEBT:
The scheduled current maturities of longterm debt; and, an additional long-term
debt aggregating approximately $9,000, which resulted from a capital lease
obligation.
6. As mentioned under 4b(1), Company officials have advised us that no
consolidated statements as of any date or for any period subsequent to
April 29, 1979, are avail able; accordingly, the procedures carried out by
us with respect to changes in financial statement items after April 29,
1979, have, of necessity, been even more limited than those with respect to
the periods referred to in 4. We have made inquiries of certain officials
of the Company who have responsibility for financial and accounting matters
as to whether there was any change at May 29, 1979, in the capital stock or
long-term debt of the Company or any de creases in consolidated net assets
as compared with amounts shown on the March 4, 1979 consolidated condensed
unaudited balance sheet included in the Appendix. On the basis of these
inquiries and our reading of the minutes as described in 14, nothing came
to our attention that caused us to believe that there was any such change
or decrease, except for the scheduled current maturities of long-term debt.
7. This letter is solely for the information of, axed assistance to,
the underwriter in conducting and documenting its investigation of the
affairs of the Company in connection with the offering of the $2,000,000
Iredell County Industrial Facilities and Pollution Control Financing
Authority (North Carolina) Industrial Revenue Bonds (Hunt Manufacturing Co.
Project) Series 1979, covered by the
<PAGE>
Alex. Brown & Sons - 6 June 5, 1979
Official Statement, and is not to be used, circulated, quoted, or otherwise
referred to within or without the underwriting firm for any other purpose,
including but not limited to the registration, purchase or sale of
securities, nor is, it to be filed with or referred to in whole or in part
in the Official Statement or any other documents except that reference may
be made to it in the underwriting agreement or in any list or closing
documents pertaining to the offering of the bonds covered by the official
Statement.
Very truly yours,
COOPERS & LYBRAND
<PAGE>
[CANCELLED CHECK]
ALEX. BROWN & SONS
ESTABLISHED 1800
NO. 363717
JUNE 5, 1979
Pay to the order of:
FIRST UNION NATIONAL BANK $1,957,666.67
2,000,000 IREDELL CNTY N.C. IND. FAC * POLLUT CONTROL 7.50%
6/1/99
<PAGE>
IREDELL COUNTY INDUSTRIAL FACILITIES
AND POLLUTION CONTROL FINANCING AUTHORITY
$2,000,000
Industrial Revenue Refunding Bond
(Hunt Manufacturing Co. Project)
Series 1994
---------------------------
CLOSING DOCUMENTS
---------------------------
July 31, 1994
DRINKER BIDDLE & REATH
Bond Counsel
<PAGE>
IREDELL COUNTY INDUSTRIAL FACILITIES
AND POLLUTION CONTROL FINANCING AUTHORITY
$2,000,000
Industrial Revenue Refunding Bond
(Hunt Manufacturing Co. Project)
Series 1994
CLOSING DOCUMENT LIST
1. First Supplemental Indenture and Deed of Trust
2. First Amended Lease Agreement
3. First Amended Guaranty Agreement
4. Tax Certificate and Agreement
5. General Certificate of Authority
6. General Certificate of Company
7. General Certificate of Trustee
8. Closing Receipt
9. Opinion of William P. Pope, Esq.
10. Opinion of Smith Helms Mulliss & Moore
11. Tax Opinion of Drinker Biddle & Reath
12. Opinion of Drinker Biddle & Reath on behalf of the Company
13. IRS Form 8038
14. Minutes and Resolution of Iredell County Industrial Facilities and
Pollution Control Financing Authority
15. TEFRA Public Approval and Affidavit of Publication for Notice of
Public Hearing
16. Approval of Local Government Commission including minutes of meeting
and certificate of approval
17. Evidence of Insurance of Company
18. Copy of Bond
19. Evidence of Notice of Redemption of 1979 Bonds
20. Purchaser's letter
21. Copies of UCC Financing Statements
<PAGE>
================================================================================
The Iredell County Industrial Facilities
and
Pollution Control Financing Authority
to
First Union National Bank of North Carolina,
as Trustee
---------------------------
FIRST SUPPLEMENTAL
INDENTURE AND DEED OF TRUST
---------------------------
Dated as of July 31, 1994
Securing
Industrial Revenue Refunding Bonds
(Hunt Manufacturing Co. Project)
of
The Iredell County Industrial Facilities and
Pollution Control Financing Authority
================================================================================
<PAGE>
This FIRST SUPPLEMENTAL INDENTURE AND DEED OF TRUST dated as of July
31, 1994, (the "First Supplemental Indenture"), between THE IREDELL COUNTY
INDUSTRIAL FACILITIES AND POLLUTION CONTROL FINANCING AUTHORITY, a political
subdivision and body corporate and politic of the State of North Carolina (the
"Authority"), and FIRST UNION NATIONAL BANK OF NORTH CAROLINA, a banking
association duly incorporated and existing under the laws of the United States
and having its principal corporate trust office in the City of Charlotte, North
Carolina, which is authorized under such laws to exercise trust powers and is
subject to examination by such authority (said banking association and any
banking institution becoming successor trustee under the Indenture (defined
herein) being herein called the "Trustee"),
W I T N E S S E T H:
WHEREAS, the General Assembly of the State of North Carolina has found
and determined (among other things) that:
(a) there exists in the State a critical condition of
unemployment and a scarcity of employment opportunities,
(b) the economic insecurity which results from such
employment and a scarcity of employment opportunities constitutes a
serious menace to the safety, morals and general welfare of the entire
State,
(c) such employment and scarcity of employment opportunities
have caused many workers and their families including young adults
upon whom future economic prosperity is dependent, to migrate
elsewhere to find employment and establish homes,
(d) such emigration has resulted in a reduced rate of growth
in the tax base of the counties and other local governmental units of
the State which impairs the financial ability of such counties and
other local governmental units to support education and other local
governmental services,
(e) such unemployment results in obligations to grant public
assistance and to pay unemployment compensation,
(f) the aforesaid conditions can best be remedied by the
attraction, stimulation, expansion and rehabilitation and
revitalization of industrial and manufacturing facilities for industry
in the State, and
(g) there is a need to stimulate a larger flow of private
investment funds into industrial building programs into the State; and
-2-
<PAGE>
WHEREAS, the General Assembly enacted Chapter 800 of the Session Laws
of North Carolina of 1975, known as the Industrial and Pollution Control
Facilities Financing Act, as amended, which as codified appears as Chapter 159C
of the North Carolina Statutes (hereinafter sometimes called the "Enabling
Act"), declaring it to be the intent of the Legislature of North Carolina by the
passage of the Enabling Act to authorize counties to create authorities in the
State of North Carolina to aid in the financing of industrial and manufacturing
facilities for the purpose of alleviating unemployment or raising below average
manufacturing wages by financing industrial and manufacturing facilities which
provide job opportunities or pay better wages than those prevalent in the area;
and
WHEREAS, pursuant to and in accordance with the provisions of the
Enabling Act, the Board of Commissioners of Iredell County, North Carolina, has
created by resolution the Authority; and
WHEREAS, the Enabling Act authorizes the Authority to acquire by
purchase, lease, gift or otherwise any property, real or personal, improved or
unimproved, and interests in land less than the fee thereof, for the
construction, operation or maintenance of, and to construct, acquire, own,
repair, maintain, extend, improve, rehabilitate, renovate, furnish and equip,
industrial and manufacturing projects, to make and execute lease agreements and
security documents containing an assignment, pledge, mortgage or other
encumbrance on all or part of the Authority's interest in, or right to receive
revenues with respect to, a project and any other property provided under a
lease agreement; and
WHEREAS, the Authority is authorized by the Enabling Act to issue bonds
for the purpose of paying all or any part of the cost of any project, the
principal of and redemption premium, if any, and interest on which bonds shall
be payable solely from the funds provided by the operator or other obligor upon
the lease agreement or any guaranty agreement or other contract or agreement to
make payments to, or for the benefit of, the Authority; and
WHEREAS, the Authority and the Trustee have heretofore entered into an
Indenture and Deed of Trust dated as of June 1, 1979 (the "Original Indenture"
and, together with this First Supplemental Indenture, the "Indenture), pursuant
to which the Authority has heretofore issued revenue bonds of the Authority in
the aggregate principal amount of $2,000,000, designated "Industrial Revenue
Bonds (Hunt Manufacturing Co. Project), Series 197911 (the "Series 1979 Bonds");
and
WHEREAS, the proceeds of the Series 1979 Bonds were applied by the
Authority to pay the costs of the Project (which capitalized terms and others
used but not defined in these Recitals are defined
-3-
<PAGE>
in the Original Indenture) on behalf of Hunt Manufacturing Co., a Pennsylvania
corporation (the "Company"); and
WHEREAS, the Authority has heretofore entered into a Lease Agreement
dated as of June 1, 1979 (the "Original Lease"), with the Company, under which
the Authority has demised and leased the Leased Property to the Company and the
Company has leased the Leased Property from the Authority and has agreed to pay
rent therefor in amounts sufficient to pay the principal of and redemption
premium, if any, and interest on the Series 1979 Bonds and any additional and
refunding bonds issued under the Indenture; and
WHEREAS, the Authority entered into the Original Indenture for the
purpose of authorizing the Bonds and securing the payment thereof by assigning
certain of its interests in the Lease, including its rights to a portion of the
rental payments thereunder; and
WHEREAS, the Company has entered into a Guaranty Agreement, dated June
1, 1979 (herein called the "Guaranty") with the Trustee, whereby the Company has
unconditionally guaranteed for the benefit of the holders of the Bonds and the
interest coupons appertaining thereto, if any, the full and prompt payment of
the principal of and redemption premium, if any, and interest on the Bonds; and
WHEREAS, the Company has requested that the Authority undertake a
program (the 111994 Refunding Project") to refund the Series 1979 Bonds for the
purpose of providing debt service savings to the Company and, in connection
therewith, the Authority has determined to issue as a series of Refunding Bonds
under the Indenture its Industrial Revenue Refunding Bond (Hunt Manufacturing
Co. Project), Series 1994 (the "Series 1994 Bond"), which Series 1994 Bond shall
be issued in fully registered form, in a single denomination equal to the entire
principal amount thereof, and, together with the certificate of authentication
of the Trustee, shall be substantially in the form attached hereto as Exhibit
11B, 11 with appropriate insertions, omissions and variations; and
WHEREAS, for the further security of the Series 1994 Bond, the Company
and the Authority have entered into a First Supplemental Lease dated as of July
31, 1994 (the "First Supplemental Lease" and, together with the Original Lease,
the "Lease"), pursuant to which the Company and the Authority have confirmed
the demise and lease of the Leased Property by the Authority to the Company and
the Company has confirmed its obligation to make rental payments under the Lease
sufficient to pay the principal, redemption premium, if any, and interest on the
Series 1994 Bond and any other Bonds issued under the Indenture; and
-4-
<PAGE>
WHEREAS, upon the issuance of the Series 1994 Bond hereunder and the
application of the proceeds thereof, together with certain additional funds
provided by the Company, as provided herein to the redemption of the Series 1979
Bonds, the Series 1979 Bonds shall no longer be Outstanding under the Indenture;
and
WHEREAS, the Company and the Authority have received a proposal for the
purchase of the Series 1994 Bond from Brown Brothers Harriman & Co. (the
"Purchaser"), a private bank, upon the terms and conditions set forth herein;
and
WHEREAS, the execution and delivery of this First Supplemental
Indenture and the First Supplemental Lease have been duly authorized by
resolution of the Authority; and
WHEREAS, all acts, conditions, and things required by the Constitution
and laws of the State of North Carolina to happen, exist and be performed
precedent to and in the execution and delivery of this First Supplemental
Indenture and the First Supplemental Lease have happened, exist and have been
performed as so required in order to make this First Supplemental Indenture,
together with the Original Indenture, a valid and binding indenture and deed of
trust for the security of the Series 1994 Bond in accordance with its terms and
in order to make the First Supplemental Lease a valid and binding agreement in
accordance with its terms; and
WHEREAS, the Trustee has accepted the trusts created by the Indenture
and in evidence thereof has joined in the execution hereof;
NOW, THEREFORE, in consideration of the premises, of the acceptance by
the Trustee of the trusts created under the Indenture, and of the purchase and
acceptance of the Series 1994 Bond by the Purchaser, and also for and in
consideration of the sum of One Dollar ($1.00) to the Authority in hand paid by
the Trustee at or before the execution and delivery of this First Supplemental
Indenture, the receipt of which is hereby acknowledged, and for the purpose of
fixing and declaring the terms and conditions upon which the Series 1994 Bond is
to be issued, authenticated, delivered, secured and accepted by the Purchaser
and all persons who shall from time to time be or become the Registered Owner
thereof, and in order to secure the payment of all the Bonds at any time issued
and outstanding hereunder and the redemption premium, if any, and interest
thereon according to their tenor, purport and effect, and in order to secure the
performance and observance of all the covenants, agreements and conditions
therein and herein contained, the Authority does hereby bargain, mortgage,
convey, grant, pledge and assign unto First Union National Bank of North
Carolina, as Trustee, and unto its successors in trust, and to its assigns,
forever:
-5-
<PAGE>
(a) the interest of the Authority in and to the real property
and premises situated in Iredell County, North Carolina, as described
in Exhibit "All hereto, together with all improvements now or
hereafter erected thereon, all rights, appurtenances, easements,
privileges, remainders and reversions appertaining thereto and all
apparatus, equipment, fixtures and articles of personal property now
or hereafter attached to the Leased Property as fixtures, and
replacements thereof, including, but not limited to, all heating,
refrigerating, air conditioning, gas, plumbing and electric apparatus
and equipment, all boilers, engines, motors, power equipment, piping
and plumbing fixtures, pumps, tanks, lighting equipment and systems,
fire prevention and sprinkling equipment and systems, and other things
now or hereafter thereon or therein, including all interests of any
owner of the Leased Property in any of such items at any time acquired
under conditional sale contracts or installment sale contracts (the
foregoing together with so much of the Leased Property as under North
Carolina law constitutes real property or fixtures being hereinafter
collectively referred to as the "Trust Estate"), excluding, however,
from the Indenture and the Trust Estate any property which is
installed by the Lessee under Section 6.2 of the Lease, and any
property or interest therein which is removed, released or purchased
under Section 6.3, 6.4 or 6.5, of the Lease;
(b) a security interest in all tangible property, other than
real property, comprising a portion of the Leased Property, as
described in the Original Indenture (hereinafter sometimes called the
"Leased Equipment"), including all items of machinery and equipment
hereafter acquired by the Authority and required to be subjected to
the lien of the Indenture or intended so to be, including but not
limited to, all substitutions, renewals or replacements of, and
additions, improvements, accumulations and accessions to, the Leased
Equipment or any portion thereof whether pursuant to the Lease or
otherwise, and excluding, however, from the Indenture and the Leased
Equipment any property which is installed by the Lessee under Section
6.2 of the Lease and any property or interest therein which is
reserved, released or purchased under Section 6.3, 6.4 or 6.5 of the
Lease;
(c) all proceeds of any property covered by clauses (a) and
(b) above which shall be sold or otherwise disposed of in accordance
with the Indenture; and
(d) all right, title and interest of the Authority in the
Lease, including, without limitation, the Basic Rent and the remedies
set forth in Section 10.2(a) of the Lease, and other revenues and
payments to be made to the Authority or for its account, reserving,
however, the rights of the Authority
-6-
<PAGE>
under Sections 5. 3 (b) (iii) , 7.4, 8. 1, 8.3, 8 .10, 8 .11, 9. 3,
10.6, 11.1(b), 11.2, 13.5, 13.12, and 13.13 of the Lease;
(e) all moneys and securities in the Bond Fund (as
hereinafter defined), and until applied in payment of any item of the
Cost (as hereinafter defined) of the Project in accordance with
Section 402 hereof and the Lease or otherwise applied as permitted
hereunder, all moneys and securities in the Acquisition Fund (as
hereinafter defined);
TO HAVE AND TO HOLD the same forever, subject, however, to the rights
of the Lessee under the Lease and to the exceptions, reservations and matters
therein and herein recited and to Permitted Encumbrances (as defined in the
Lease) but IN TRUST, nevertheless, for the equal and proportionate benefit and
security of the holders and Registered Owners from time to time of the Bonds
authenticated and delivered hereunder and issued by the Authority and
outstanding, without preference, priority or distinction as to lien or
otherwise, except that the 1979 Bonds Redemption Fund established under this
First Supplemental Indenture shall be pledged solely for the benefit and
security of the holders and Registered Owners of the Series 1979 Bonds as
provided in this First Supplemental Indenture, and except as otherwise provided
in the Indenture, of any one Bond over any other Bond, by reason of priority in
the issue, sale or negotiation thereof or otherwise;
PROVIDED, HOWEVER that if, after the rights, title and interest of the
Trustee in and to the estate pledged and assigned to it under this Indenture
shall have ceased, terminated and become void in accordance with Article XIII of
the Original Indenture, the principal of and redemption premium, if any, and
interest on all of the Bonds shall have been paid to the Bondholders or shall
have been paid to the Lessee pursuant to Section 504 of the Indenture, then the
Indenture and all covenants, agreements and other obligations of the Authority
set forth in the Indenture shall cease, determine and be void, and thereupon the
Trustee shall cancel and discharge the Indenture and execute and deliver to the
Authority and the Lessee such instruments in writing as shall be required to
evidence the discharge of the Indenture; otherwise, the Indenture shall be and
remain in full force and effect.
THIS INDENTURE FURTHER WITNESSETH, and it is expressly declared, that
the Series 1994 Bond issued and secured as a series of Refunding Bonds under the
Indenture are to be issued, authenticated and delivered and the Trust Estate and
the Basic Rent and other revenues and funds herein pledged are to be dealt with
and disposed of under, upon and subject to the terms, conditions, stipulations,
covenants, agreements, trusts, uses and purposes as hereinafter expressed, and
the Authority has agreed and covenanted, and does hereby agree and covenant,
with the Trustee and with the respective holders and owners of said Bonds and of
any coupons representing interest thereon, as follows, that is to say:
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ARTICLE I
DEFINITIONS
Section 101. Definition of Terms Used in First Supplemental Indenture.
All terms used as defined terms in the Original Indenture are used with the same
meaning in this First Supplemental Indenture (including the use thereof in the
recitals and granting clause hereof) unless expressly given a different meaning
herein or unless the context clearly otherwise requires. All terms used herein
which are defined in the recitals hereto shall have the meanings there given to
the same unless the context clearly otherwise requires and in addition, the
following terms shall have the meanings specified below:
"Base Rate" means the rate announced from time to time by the
Purchaser as its "base" rate.
"Cessation of Operation" means the failure of the Company to
operate the Leased Property as a "project" (within the meaning of the
Enabling Act).
"Interest Calculation Date" means the date of original
issuance of the Series 1994 Bond and the first day of each April,
July, October and January thereafter, whether or not a Business Day.
"Interest Payment Date" shall mean, with respect to the
Series 1994 Bonds, the last day of each March, June, September and
December, commencing September 30, 1994, and shall include the
maturity date of the Series 1994 Bond.
"Interest Period" means the period from each Interest
Calculation Date to and including the day immediately preceding the
next succeeding Interest Calculation Date.
"LIBOR" means the 90-day London Inter-Bank Offered Rate,
determined as of the opening of business on each Interest Calculation
Date by the Purchaser by reference to market reporting services
available to banks and financial institutions.
"Local Government Commission" shall mean the Local Government
Commission of the State of North Carolina.
"1979 Bonds Redemption Date" means August 1, 1994.
"1979 Redemption Fund" means the fund established solely for
the benefit and security of the holders and Registered Owners of the
Series 1979 Bonds in accordance with Section 305 of this First
Supplemental Indenture.
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"Record Date" means, with respect to any Interest Payment
Date for the Series 1994 Bond, the Business Day preceding such
Interest Payment Date.
"Tax Agreement" shall mean the Tax Certificate and Agreement
between the Company and the Authority entered into in connection with
the issuance and delivery of the Series 1994 Bond.
Unless the context clearly otherwise requires, the words "hereof",
"herein", "hereto", "hereby", and "hereunder" (except in the form of the Series
1994 Bond), whether used in the Original Indenture or this First Supplemental
Indenture, shall refer to the Indenture.
Section 102. Amendment of Certain Definitions in Original Indenture.
The following definitions contained in Article I of the Original Indenture are
hereby amended to read as follows:
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Determination of Taxability" means (a) the enactment of
legislation to or with the effect that interest payable on any Bond is
includable in the gross income of the Registered Owner of any Bond
under the federal income tax laws (except with respect to any owner
who is a "substantial user" or a related person" (as such terms are
used in the Code)), any such determination being deemed to have
occurred on the effective date of such legislation; or (b) receipt by
the Company, the Authority or the Registered Owner of any Bond of
notice that the Commissioner of Internal Revenue or any district
director of the Internal Revenue Service that based upon filings of
the Company, any review or audit of the Company, or any ground
whatsoever, shall have determined that a Taxable Event (as hereinafter
defined) has occurred; or (c) issuance of a published or private
ruling or a technical advice memorandum by the Internal Revenue
Service, or a determination by any court of competent jurisdiction,
that the interest payable on any Bond is includable for federal income
tax purposes in the gross income of any owner of any Bond (except as
aforesaid); or (d) with respect to the Series 1994 Bond, an opinion of
nationally recognized bond counsel addressed to the Registered Owner
of the Series 1994 Bond that such counsel cannot conclude that the
interest thereon is excluded from the gross income of the Registered
Owner thereof under the federal income tax laws (other than with
respect to any owner who is a "substantial user" or a related person"
(as such terms are used in the Code)). For purposes of this
definition, "Taxable Event" means the application of the proceeds of
any Bond in such manner, or the occurrence or non-occurrence of any
other event (except the enactment of legislation described in clause
(a) of the definition of Determination of Taxability above), whether
within or without the control of the Company, with the result that,
under the Code,
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the interest on any Bond is or becomes includable in the gross income
for federal income tax purposes of the Registered Owner of any Bond
(except as aforesaid).
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ARTICLE II
THE SERIES 1994 BOND
Section 201. Form; Amount and Terms.
(a) In order to provide funds for the 1994 Refunding Project, the
Series 1994 Bond is hereby authorized to be issued in the aggregate principal
amount of $2,000,000, and shall be issued as a fully registered Bond, without
coupons, substantially in the form set forth as Exhibit "B" hereto, with
appropriate insertions and deletions. The Series 1994 Bond shall be issued in a
single denomination equal to the entire outstanding principal amount thereof.
(b) The Series 1994 Bond shall mature on June 15, 2004, shall be
subject to optional or mandatory redemption or prepayment prior to maturity as
provided in Section 301 hereof and in the Series 1994 Bond and shall bear
interest from and including the date thereof, or from the most recent Interest
Payment Date to which interest has been fully paid or provided, until payment of
the principal thereof shall have been made in accordance with the provisions
thereof. Principal of and interest on the Series 1994 Bond shall be paid as
provided for in the form thereof set forth as Exhibit "B" hereto, and as
otherwise set forth in this First Supplemental Indenture.
(c) The rate of interest on the Series 1994 Bond shall be the lower of
LIBOR Rate or 75% of the Base Rate as determined in each case on each Interest
Calculation Date. All determinations of the interest rate on the Series 1994
Bond shall be calculated to three places to the right of the decimal point.
Interest, calculated on the basis of a year of 365 or 366 days, for the
actual number of days elapsed in each Interest Period, shall accrue daily and
shall be payable quarterly in arrears on each Interest Payment Date for the
Series 1994 Bond to the Registered Owner of the Series 1994 Bond as shown on the
Bond Registry on the Record Date preceding such Interest Payment Date, except
that it and to the extent that there shall be a default in the payment of the
interest due on any such Interest Payment Date, such defaulted interest shall be
paid to the Registered Owner in whose name the Series 1994 Bond is registered on
the fifth Business Day preceding the date of payment of such defaulted interest
as established by the Trustee. The amount of interest due on the Series 1994
Bond for any Interest Period shall be determined by the Purchaser who shall
notify the Trustee and the Company of the interest due on each Interest Payment
Date by telecopy not later than 1:00 p.m. on the second Business Day immediately
preceding each Interest Payment Date. The Series 1994 Bond shall bear
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interest on overdue principal and, to the extent permitted by law, on overdue
interest at the Base Rate plus 2%.
If at any time hereafter, either before or after the payment of the
entire principal of and interest on the Series 1994 Bond, there shall be a
Determination of Taxability, then, in such event, the interest rate on the
Series 1994 Bond, as in effect during any period from and after the date of the
event giving rise to the Determination of Taxability, shall be the Base Rate
plus 2%. The failure of the Registered Owner to make a demand promptly following
a Determination of Taxability shall not alter the rights or obligations of the
Authority or the Registered Owner. If there is more than one Determination of
Taxability, this paragraph shall be fully applicable to each such Determination
of Taxability, whether or not the Registered Owner exercised any or all of the
rights or remedies that arose under any prior Determination of Taxability, and
all the Registered Owner's rights and remedies shall be cumulative except to the
extent of any written waiver by the Registered Owner. If the Registered Owner
receives written notice of any Determination of Taxability, it will give prompt
written notice thereof to the Company, the Authority and the Trustee and the
Company shall have the right to require the Registered Owner to prosecute any
administrative or judicial remedies available to it unless the Registered Owner
determines, in its sole discretion, that the prosecution of such remedies is not
against its best interests, provided that the Company shall pay all expenses of
prosecuting any such remedies.
Section 202. Payment and Dating of the Series 1994 Bond.
Subject to the direct payment provisions of Section 205 below: (a) the
principal of the Series 1994 Bond shall be payable to the Registered Owner
thereof upon presentation and surrender of the Series 1994 Bond at the principal
office of the Trustee on the maturity date shown thereon unless previously
redeemed by the Authority pursuant to Section 301 or 302 of this First
Supplemental Indenture; and (b) the interest on the Series 1994 Bond shall be
payable on each Interest Payment Date by check payable to the Registered Owner
thereof as of the record date and mailed on or prior to each Interest Payment
Date by the Trustee at such owner's address as it appears on the Bond Registry.
Payment as aforesaid shall be made in such coin or currency of the United States
of America as, at the respective times of payment, shall be legal tender for the
payment of public and private debts.
The Series 1994 Bond shall be dated the date of delivery thereof.
Section 203. Form of Series 1994 Bond and Execution. Notwithstanding
any provision of the Original Indenture to the
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contrary, the Series 1994 Bond shall be issued in typewritten form and shall be
executed on behalf of the Authority by its Chairman or Vice Chairman his or her
manual or facsimile signature and the corporate seal of the Authority or a
facsimile thereof shall be impressed thereon or affixed thereto and attested by
its Secretary or any Assistant Secretary by his or her manual or facsimile
signature. In case any officer whose signature (or facsimile thereof) shall
appear on the Series 1994 Bond shall cease to be such officer before the
delivery of the Series 1994 Bond, such signature or such facsimile shall
nevertheless be valid and sufficient for all purposes, the same as if such
officer had remained in office until delivery. The Series 1994 Bond shall not be
valid or obligatory for any purpose unless and until the certificate of
authentication attached thereto shall have been duly executed by the Trustee.
The executed certificate of the Trustee upon the Series 1994 Bond shall be
conclusive evidence that the Series 1994 Bond has been authenticated and
delivered hereunder.
Section 204. Registered Bonds. The Series 1994 Bond shall be issued in
fully registered form and may be transferred or exchanged only in the manner
provided for Bonds registered as to both principal and interest in accordance
with the provisions of Article II of the Original Indenture. The Trustee, as
Bond Registrar in accordance with Section 205 of the Original Indenture, shall
keep books for the registration of the transfer and exchange of the Series 1994
Bond.
Section 205. Direct Payment to Purchaser. In accordance with the
provisions of Section 4 of the First Supplemental Lease, so long as the
Purchaser is the Registered Owner of the Series 1994 Bond, all payments by the
Company of the Basic Rent attributable to the principal and redemption price of,
and the interest on, the Series 1994 Bond, shall be paid directly by the Company
to the Purchaser. So long as the Purchaser is the Registered Owner of the Series
1994 Bond, and notwithstanding contrary provisions in this First Supplemental
Indenture or in the Original Indenture: (a) all payments of principal on the
Series 1994 Bond, whether at maturity or by prior redemption, shall be made by
the Company to the Purchaser without presentation and surrender of the Series
1994 Bond, provided that the Purchaser shall note such payments on the grid
attached to the Series 1994 Bond and, in the case of the payment in full of the
Series 1994 Bond, shall forthwith surrender the Series 1994 Bond to the Trustee
for cancellation; and (b) the Trustee shall have no responsibility with respect
to, and shall not be deemed to have any knowledge of, any Event of Default as a
result of any failure by the Company to make any payment of Basic Rent directly
to the Purchaser, unless and until the Trustee shall have received written
notification from the Purchaser of such failure.
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ARTICLE III
ISSUE, SALE AND DELIVERY OF SERIES 1994 BOND;
APPLICATION OF PROCEEDS TO REDEMPTION OF SERIES 1979 BONDS
Section 301. Purpose of Series 1994 Bond. The Series 1994 Bond shall be
issued for the purpose of providing funds for and toward the payment of the 1994
Refunding Project.
Section 302. Delivery of Series 1994 Bond. Upon the execution and
delivery of this First Supplemental Indenture, the Authority shall execute and
deliver to the Trustee for authentication the Series 1994 Bond in the aggregate
principal amount of $2,000,000 and thereupon, the Trustee shall authenticate
said Series 1994 Bond and deliver them to the Purchaser, but only upon
compliance with Section 210 of the Original Indenture and Section 303 below.
Section 303. Purchase and Sale of the Series 1994 Bond; Delivery of the
Series 1994 Bond to Purchaser.
(a) The Authority hereby agrees to sell the Series 1994 Bond to the
Purchaser, and the Purchaser shall purchase the Series 1994 Bond at a purchase
price of 100% of the principal amount thereof in accordance with the terms and
conditions set forth in Subsection (b) of this Section. The Purchaser shall
deliver such purchase price directly to the Trustee.
(b) The Authority shall deliver the Series 1994 Bond to the Purchaser
upon payment of the purchase price therefor as provided in Subsection (a) above
and the execution and delivery to the Purchaser of the following:
(i) Copies of the proceedings of the Authority relating to
the issuance of the Series 1994 Bond duly certified by the Secretary
or any Assistant Secretary of the Authority;
(ii) A copy of the resolutions of the Board of the Company
certified by the Secretary or any Assistant Secretary thereof
authorizing and approving the execution and delivery of this Agreement
and all other documents delivered pursuant to this Agreement; and (ii)
such other corporate documents and records as the Purchaser may
reasonably request;
(iii) original executed counterparts of this First
Supplemental Indenture, the First Supplemental Lease, the Tax
Agreement and other appropriate documents;
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(iv) opinions in form and substance satisfactory to the
Authority, the Trustee and the Purchaser dated as of the date of the
closing of (i) counsel for the Authority, (ii) bond counsel and (iii)
counsel for the Company; and
(v) Other customary closing certificates and documents as may
reasonably be required by the Purchaser, the Trustee or by bond
counsel.
Section 304. Proceeds of the Series 1994 Bond. The Trustee shall
deposit the proceeds of the Series 1994 Bond received in accordance with Section
303(a) above, together with the sum of $_______________ transferred by the
Company to the Trustee, in the 1979 Redemption Fund hereafter created.
Section 305. Creation of 1979 Bonds Redemption Fund. There is hereby
created and established with the Trustee a special and irrevocable trust fund
designated the 111979 Bonds Redemption Fund" (the 111979 Bonds Redemption Fund")
, to be held in the custody of the Trustee as a trust fund solely for the
benefit and security of the holders and Registered Owners of the Series 1979
Bonds. The 1979 Bonds Redemption Fund shall be held by the Trustee separate and
apart from other funds of the Authority, the Company or the Trustee, and, except
as otherwise expressly set forth in Section 307 (c) below, the Trustee hereby
waives any right it may have to set off any obligations of the Authority, the
Company or any other person against moneys in the 1979 Bonds Redemption Fund or
to apply such moneys as collateral for any such obligations. The 1979 Bonds
Redemption Fund shall not be a part of the Bond Fund and no moneys in the 1979
Bonds Redemption Fund shall be available for payment to any holder or Registered
Owner of any other Series of Bonds, including the Series 1994 Bond.
Notwithstanding anything in the Original Indenture to the contrary, the
provisions of this Section and Sections 306, 307 and 308 below are intended
solely for the benefit and security of the holders and Registered Owners of the
Series 1979 Bonds and shall not be amended or modified without the written
consent of the holders and Registered Owners of 100% in aggregate principal
amount of the Series 1979 Bonds which are not yet fully paid and discharged.
Section 306. Deposit into 1979 Bonds Redemption Fund; Investment In
Authorized Obligations.
(a) The Trustee shall deposit the foregoing amount in the 1979 Bonds
Redemption Fund and shall apply such amount immediately thereafter to only of
such obligations of the United States of America constituting "Governmental
Obligations" as defined in the Original Indenture and which matures in an amount
equal to at least
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the principal amount so invested on or before the 1979 Bonds Redemption Date.
(b) Upon the deposit of the amount described in (a) above into the 1979
Bonds Redemption Fund, the Series 1979 Bonds shall be deemed not to be
outstanding under the Original Indenture and the holders and Registered Owners
of the Series 1979 Bonds (i) shall be restricted exclusively to the amounts so
deposited in the 1979 Bonds Redemption Fund for any claim of whatsoever nature
with respect to such Series 1979 Bonds, and (ii) shall have no further rights
under the Original Indenture, except with respect to provisions of the Original
Indenture pertaining to the payment of the principal of, premium, if any, and
interest on the Series 1979 Bonds (which payments shall be made solely from the
Series 1979 Bonds Redemption Fund), and pertaining to the registration,
transfer, exchange and replacement of the Series 1979 Bonds, until such Series
1979 Bonds have been fully paid.
Section 307. Application of Amounts Held in 1979 Bonds Redemption Fund.
(a) The amounts received from the investment of the Series 1979 Bonds
Redemption Fund as provided herein shall be applied by the Trustee on the 1979
Bonds Redemption Date, the redemption price (including a one-half percent
(0.501) premium and interest accrued through the redemption date) of the Series
1979 Bonds on the 1979 Bonds Redemption Date; provided, however that the payment
of the principal and redemption price of the Series 1979 Bonds shall be made
only upon presentation and surrender of the appropriate Bonds.
(b) Balances held from time to time in the 1979 Bonds Redemption Fund
on or after the 1979 Bonds Redemption Date, shall at all times be held
uninvested as cash.
(c) After the payment, or provision for payment of Series 1979 Bonds
not presented for payment on the 1979 Bonds Redemption Date, in full of all
amounts due on the Series 1979 Bonds (including the redemption premium thereon),
any amounts remaining in the 1979 Bonds Redemption Fund, after payment of any
amounts due to the Trustee in respect of its fees and expenses, shall be
transferred to the Debt Service Fund and applied by the Trustee on the next
Interest Payment Date to the payment of a portion of the interest due on the
Series 1994 Bond.
Section 308. Instructions for Redemption of 1979 Bonds. The Trustee is
hereby irrevocably authorized and instructed by the Authority and the Company to
redeem the 1979 Bonds on the 1979 Bonds Redemption Date, and the Authority
hereby ratifies all
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actions of the Trustee taken to give notice thereof to the holders and
Registered Owners of the Series 1979 Bonds in the manner required in the
Original Indenture.
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ARTICLE IV
REDEMPTION OF SERIES 1994 BOND BEFORE MATURITY
Section 401.Redemption of the Series 1994 Bond.
(a) Optional Redemption. The Series 1994 Bond shall be subject to
optional redemption by the Authority, at the written direction of the Company,
in whole or in part (but, if in part, in the principal amount of $100,000 or
integral multiples of $5,000 in excess thereof) on any Business Day at a
redemption price equal to 100% of the principal amount thereof to be redeemed
plus accrued interest to the date of redemption.
(b) Mandatory Redemption at Option of Registered Owner.
(i) Subject to the limitations set forth in subsection (ii)
below, all or any portion of the Series 1994 Bond shall be redeemed by
the Authority, at a redemption price equal to 100% of the principal
amount thereof plus accrued interest to the date of redemption, upon
the written demand, in the form attached hereto as Exhibit "C" to this
First Supplemental Indenture, of the Registered Owner thereof to the
Trustee, with a copy to the Company. The Series 1994 Bond, or any
portion thereof, shall be redeemed, and the redemption price of the
Series 1994 Bond shall be paid to the Registered Owner of the Series
1994 Bond, on the date specified by the Registered Owner of the Series
1994 Bond.
(ii) The aggregate principal amount of the Series 1994 Bond
which may be redeemed in accordance with subsection (i) above in any
annual period commencing on June 1 of each year, when added to the
aggregate principal amount of the Series 1994 Bond redeemed in
accordance with subsection (i) above in all prior periods, shall not
exceed the aggregate amounts as follows:
Year Commencing
June 1 Amount
--------------- ------
1994 $ -0-
1995 350,000
1996 720,000
1997 1,120,000
1998 1,545,000
1999 and thereafter 2,000,000
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(c) Mandatory Redemption Upon Determination of Taxability. On the date
of the occurrence of a Determination of Taxability the Series 1994 Bond shall be
called for redemption on the date selected by the Company, but not more than 90
days following the date of the occurrence of the Determination of Taxability, at
a redemption price equal to 100% of the principal amount thereof plus accrued
interest to the date of redemption.
If there shall have occurred a Determination of Taxability, certified
or authenticated to the satisfaction of the Trustee, and the Company shall fail
to give notice thereof within 30 days or shall fail to select a date within 90
days of the date of the occurrence of the Determination of Taxability for the
redemption of the Bonds as provided in Section 11.2 of the Lease and this
Section 401(c), the Trustee shall call the Series 1994 Bond for redemption on
the date 90 days following the date of the occurrence of the Determination of
Taxability.
(d) Mandatory Redemption Upon Cessation of Operation. On the date of
the occurrence of a Cessation of Operation the Series 1994 Bond shall be called
for redemption on the date selected by the Company, but not more than 90 days
following the date of the occurrence of the Cessation of Operation, at a
redemption price equal to 100% of the principal amount thereof plus accrued
interest to the date of redemption. For the purposes of this Section 401(d), a
Cessation of Operation of the Leased Property shall not be deemed to have
occurred until 60 days shall have elapsed after written notice has been given to
the Company by the Authority or the Trustee that operations at the Leased
Property shall have ceased and the Company shall not have demonstrated to the
satisfaction of the Authority and the Trustee that the Company is operating the
Leased Property as a "project" (within the meaning of the Enabling Act).
If there shall have occurred a Cessation of Operation, certified or
authenticated to the satisfaction of the Trustee, and the Company shall fail to
give notice thereof within 30 days or shall fail to select a date within 90 days
of the date of the occurrence of the Cessation of Operation for the redemption
of the Bonds as provided in the First Supplemental Lease and this Section
401(d), the Trustee shall call the Series 1994 Bond for redemption on the date
90 days following the date of the occurrence of the Cessation of Operation.
(e) Notice of Redemption of Series 1994 Bond. Notwithstanding anything
in the Original Indenture to the contrary, except with respect to a mandatory
redemption in accordance with subsection (b) above, the Trustee shall provide
the Registered Owner of the Series 1994 Bond with notice of the date of such
redemption and the
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principal amount of the Series 1994 Bond to be redeemed by first-class mail,
postage prepaid, sent at least fifteen (15) days before such redemption date
to the Registered Owner of the Series 1994 Bond at the registered address of the
Registered Owner of the Series 1994 Bond appearing on the registration books
maintained pursuant to this Agreement as of the close of business on the day
prior to such mailing. On each such redemption date, payment or provision for
payment of the redemption price having been made, the Series 1994 Bond or the
portion thereof so called for redemption shall become due and payable on the
redemption date and interest shall cease to accrue thereon from and after the
redemption date.
(f) Payment Upon Redemption. Subject to the direct payment provisions
of Section 205 of this First Supplemental Indenture, payment in respect of the
redemption of the Series 1994 Bond shall be made by the Trustee by wire transfer
of immediately available funds to the bank account specified by the Registered
Owner of the Series 1994 Bond. Except in the event of the redemption of the
Series 1994 Bond in it entirety, any such redemption shall be made without
surrender of the Series 1994 Bond by the Registered Owner of the Series 1994
Bond for payment, provided that the Trustee's records of such payment shall be
conclusive and binding on the Registered Owner of the Series 1994 Bond, absent
manifest error; and further provided that the Registered Owner of the Series
1994 Bond shall note receipt of such payment on the grid attached to the Series
1994 Bond.
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ARTICLE V
AMENDMENTS OF ORIGINAL INDENTURE
Section 501. Issuance of 1994 Bond. Solely as it relates to the Series
1994 Bond, Section 210 of the Original Indenture is amended so that an opinion,
similar to the opinion described in Section 209(f) of the Original Indenture, is
not required to be filed with the Trustee.
Section 502. Non-Presentment of Bonds or Coupons. Section 504 of the
Original Indenture is hereby amended to read:
"In the event any Bond shall not have been
presented for payment when the principal thereof becomes
due, either at maturity, or at the date fixed for redemption
thereof or otherwise, then if funds sufficient to pay such
Bond shall have been made available to the Trustee, all
liability of the Authority for the payment of such Bond
shall forthwith cease, determine and be completely
discharged, and thereupon it shall be the duty of the
Trustee to hold such fund or funds, without liability for
interest thereon, for the benefit of the owner of such Bond,
who shall thereafter be restricted exclusively to such fund
or funds, for any claim of whatever nature on his part under
this Indenture or on, or with respect to, said Bond. Any
moneys so deposited with and held by the Trustee for five
years after the date of deposit shall be treated as
abandoned property pursuant to the provisions of N.C.G.S.
ss.116B-8 and the Trustee shall report and submit such
moneys to the escheat Fund according to the requirements of
Article 3 of Chapter 116B of the North Carolina General
Statutes. Thereafter, the owner of any Bond shall look only
to said Escheat Fund or to its successor, as the case may
be, for payment, and then only to the extent of the amount
so deposited in the Escheat Fund, without any interest
thereon, and the Company, the Issuer, the Trustee and the
Local Government Commission of the State of North Carolina
shall have no responsibility with respect to said moneys."
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Section 503. Additional Notice on Default. Section 801 of the Original
Indenture is hereby amended by adding thereto an additional sentence as follows:
The Trustee shall not give the written notice of
default described in this paragraph to the Company and the
Authority without also giving the same written notice to the
Local Government Commission.
Section 504. Qualification of Trustee. Section 911 of the Original
Indenture is hereby amended by adding thereto an additional paragraph to read in
its entirety as follows:
"Notwithstanding the foregoing, at any time that,
and for so long as, all of the Bonds Outstanding are owned
by the Purchaser, the Purchaser may, at its written election
delivered to the Trustee, the Company and the Authority,
direct the removal of the Trustee as provided in Section 912
hereof and the appointment of the Purchaser or its affiliate
Brown Brothers Harriman Trust Company ("BBH Trust") as
successor Trustee, and no further action of any party shall
be required hereunder (including, without limitation, the
publication or mailing of notice thereof in accordance with
Section 912(f)) hereof), other than compliance by the
Trustee and the Purchaser or BBH Trust, as successor
Trustee, with the provisions of Section 913 hereof."
Section 505. Certain Notices. Section 1402 of the Original Indenture is
hereby amended by adding thereto an additional paragraph to read as follows:
"So long as the Series 1994 Bond shall be owned by
the Purchaser, the Trustee shall provide to the Purchaser a
copy of each notice, demand, direction, request or other
instrument delivered to or by the Trustee under the
Indenture to the Purchaser at the following address:
Brown Brothers Harriman & Co.
1541 Walnut Street
Philadelphia, PA 19102
Attention: Carl S. Cutler"
In addition, that section is amended to provide that notices to the Company are
to be addressed to:
-22-
<PAGE>
Hunt Manufacturing Co.
230 South Broad Street
Philadelphia PA 19102
Attention: Secretary
And notices to the Local Government Commission are to be addressed to:
Local Government Commission
325 North Salisbury Street
Raleigh, North Carolina 27603-1385
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 601. Compliance With Code. The Authority covenants that it will
not take any action, omit to take any action, or permit any other person
(including the Company) to take any action or fail to take any action over which
the Authority has control, which action or inaction would cause interest on the
Series 1994 Bond to be subject to Federal income tax to a greater extent than on
the date of issuance thereof. In connection with the issuance of the Series 1994
Bond the Authority and the Company shall execute and deliver the Tax Agreement
setting forth their reasonable expectations with respect to the uses of the
proceeds of the Series 1994 Bond. The Authority agrees to comply with its
obligations set forth in such agreement as though set forth fully herein.
Section 602. Confirmation of Original Indenture. As supplemented by
this First Supplemental Indenture, the Original Indenture is in all respects'
ratified and confirmed, and the Original Indenture and this First Supplemental
Indenture shall be read, taken and construed as one and the same instrument, so
that all of the rights, remedies, terms, conditions, covenants and agreements of
the Original Indenture, as supplemented, shall apply and remain in full force
and effect with respect to this First Supplemental Indenture, the Bonds issued
under the Indenture, the Lease, and the Company and to any payments, revenues,
receipts and moneys to be derived therefrom.
Anything in this First Supplemental Indenture or in the Original
Indenture to the contrary notwithstanding, the Indenture as herein supplemented
shall continue to be enforceable and in effect with respect to the Series 1994
Bond, regardless of invalidity, unenforceability or other impairment of any of
the Series 1979 Bonds, to the same effect as is intended to obtain after such
Bonds shall have been fully paid.
-23-
<PAGE>
IN WITNESS WHEREOF, IREDELL COUNTY INDUSTRIAL FACILITIES AND POLLUTION
CONTROL FINANCING AUTHORITY has caused this First Supplemental Indenture to be
executed by its Chairman or (Vice) Chairman and its corporate seal to be
hereunto affixed, attested by its Secretary or Assistant Secretary, and FIRST
UNION NATIONAL BANK OF NORTH CAROLINA has caused this First Supplemental
Indenture to be executed by one of its Vice Presidents and its seal to be
hereunto affixed, attested by one of its Authorized Officers, all as of the day
and year first above written.
[SEAL] IREDELL COUNTY INDUSTRIAL
FACILITIES AND POLLUTION CONTROL
Attest: FINANCING AUTHORITY
By: /s/ William XXXXXXXXXXX By: /s/ J.D. Chamberlain
-------------------------- -------------------------------
(Assistant) Secretary Chairman
[SEAL] FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
Attest:
By: /s/ xxxxxxxxxxxxxxxx By: /s/ xxxxxxxxxxxxxxxxxxxx
-------------------------- -------------------------------
Authorized Officer Vice President
-24-
<PAGE>
EXHIBIT "A"
Legal Description of Leased Property
BEGINNING at the point in the center of North Carolina Highway No. 90
(West Front Street) leading from Statesville, North Carolina, to Taylorsville,
North Carolina, said beginning point being the Southwest corner of the tract of
land conveyed to the Carnation Company by the State of North Carolina by Deed
recorded in Deed Book 134, Page 125, Iredell County Registry, and running
thence with the center of said North Carolina Highway No. 90, North 62 degrees
22 minutes West 1043 feet to a point in the center of said North Carolina
Highway No. 90, at which point the center of said North Carolina Highway No. 90
and the center of Mecham Road, a road leading in a Northerly direction from
said North Carolina Highway No. 90 to what was formerly a part of the Piedmont
Experiment Station Farm intersect; thence with the center line of said Mecham
Road North 08 degrees 06 minutes East 805 feet to a point in the center line of
the railroad track of Alexander Railroad Company; thence with the center line of
the said railroad track of the Alexander Railroad Company four calls as follows:
(1) South 40 degrees 05 minutes East 839.45 feet to a point; (2) thence South 43
degrees 01 minutes East 159 feet to a point; (3) thence South 48 degrees 10
minutes East 168.6 feet to a point; (4) thence South 52 degrees 30 minutes East
161.7 feet to a point in the center of said railroad track, and said point being
the Northwest corner of the said tract of land conveyed to the Carnation Company
by the State of North Carolina by the Deed referred to hereinabove; thence with
the Western line of said Carnation Company South 15 degrees 49 minutes 40
seconds West 324.45 feet to the point of BEGINNING, containing 12.76 acres, more
or less, and the above description being according to a map and survey made by
Kestler & MacKay, Registered Surveyors, dated April 13, 1964, revised on
February 22, 1979, with said revision being in regard to the location of
buildings, paving, and similar matters, and not in any way being a revision of
property lines, including courses, degrees and distances; and being the
identical property conveyed to National Canvas Products Corp. by Deed of Olin
Corporation, dated September 26, 1975, recorded in Deed Book 578, Page 573,
Iredell County Registry.
A-1
<PAGE>
EXHIBIT "B"
[FORM OF SERIES 1994 BOND]
United States of America
State of North Carolina
IREDELL COUNTY INDUSTRIAL FACILITIES
AND POLLUTION CONTROL FINANCING AUTHORITY
Industrial Revenue Refunding Bond
(Hunt Manufacturing Co. Project)
Series 1994
No. R-1 $2,000,000.00
IREDELL COUNTY INDUSTRIAL FACILITIES AND POLLUTION CONTROL FINANCING
AUTHORITY (the "Authority"), a political subdivision and body corporate and
politic duly organized and existing under the Constitution and laws of the State
of North Carolina, for value received, hereby promises to pay (but only from the
special revenues and funds hereinafter described) to BROWN BROTHERS HARRIMAN &
CO., or its registered assigns (the "Owner"), on June 15, 2004, upon the
presentation and surrender hereof at the principal office of the Paying Agent
herein described, the principal sum of
Two Million Dollars ($2,000,000.00)
and to pay (but only out of the sources hereinafter mentioned) interest on said
principal sum at the variable interest rate described under "Interest Rate
Provisions" below. Payment of the principal of and interest on this Bond shall
be in any coin or currency of the United States of America as, at the respective
times of payment, shall be legal tender for the payment of public and private
debts.
This Bond is a duly authorized issue of revenue bonds of the Authority
issued in the original aggregate principal amount of $2,000,000 and designated
as Iredell County Industrial Facilities and Pollution Control Financing
Authority Industrial Revenue Refunding Bond (Hunt Manufacturing Co. Project),
Series 1994 (the "Bond") issued under and pursuant to the constitution and laws
of the State of North Carolina, including particularly the Industrial and
Pollution Control Financing Act, as amended, which as codified appears as
Chapter 159C of the General Statutes of North Carolina (the "Enabling Act"), a
resolution of the Authority adopted on June 2, 1994, and a Indenture and Deed of
Trust dated as of June 1, 1979 (the "Original Indenture"), as supplemented by a
First Supplemental Indenture and Deed of Trust dated as of July 31, 1994 (the
"First
B-1
<PAGE>
Supplemental Indenture" and, together with the Original Indenture, the
"Indenture") , each between the Authority and First Union National Bank of North
Carolina, as trustee (the "Trustee"). The Bond is issued by the Authority for
the purpose of refunding certain prior bonds of the Authority issued for the
purpose of financing a Project on behalf of Hunt Manufacturing Co. (the
"Company") and more particularly described in the Indenture. The Authority and
the Company have entered into a Lease Agreement dated as of June 1, 1979 (the
"Original Lease Agreement"), as amended and supplemented by a First
Supplemental Lease Agreement dated as of July 31, 1994 (the "First Supplemental
Lease Agreement" and, together with the Original Lease Agreement, the "Lease
Agreement"), under which the Authority has demised the Leased Property to the
Company, and the Company has leased the Leased Property from the Authority.
Under the Lease Agreement the Company has agreed to pay to the Trustee or
Purchaser, on behalf of the Authority, rental payments sufficient, among other
things, to provide for the payment by the Authority of the principal and
redemption price of, and interest on, this Bond. The Company has entered into a
Guaranty Agreement dated as of June 1, 1979, as amended and supplemented by the
First Amended Guaranty Agreement dated as of July 31, 1994 (the "Guaranty"),
with the Trustee, whereby the Company has unconditionally guaranteed for the
benefit of the holders and Registered Owners of all bonds issued and outstanding
under the Indenture, the full and prompt payment of the principal of and
redemption premium, if any, and interest on such bonds, including this Bond.
This Bond is and shall be issued only in one denomination equal to the
entire principal amount hereof.
This Bond is transferable, in accordance with the provisions of the
Indenture, by the Registered Owner hereof or his duly authorized attorney at the
designated office of the Trustee, upon surrender of this Bond, accompanied by a
duly executed instrument of transfer, in form satisfactory to the Trustee, and
upon payment by the Owner hereof of any taxes, fees or other governmental
charges incident to such transfer. Upon any such transfer, a new
fully-registered Bond in the same aggregate principal amount will be issued to
the transferee. The person in whose name this Bond is registered may be deemed
the holder and Registered Owner thereof for all purposes by the Authority, the
Company and the Trustee, and any notice to the contrary shall not be binding
upon the Authority, the Company or the Trustee.
B-2
<PAGE>
THIS BOND IS A LIMITED OBLIGATION OF THE AUTHORITY AND IS PAYABLE
SOLELY OUT OF AMOUNTS HELD UNDER THE INDENTURE AND AMOUNTS TO BE DERIVED FROM
THE COMPANY UNDER THE LEASE AGREEMENT AND THE GUARANTY AND IS SECURED AS SET
FORTH IN THE INDENTURE. THIS BOND AND THE INTEREST HEREON SHALL NOT BE DEEMED TO
CONSTITUTE A DEBT, LIABILITY, GENERAL OBLIGATION OR A PLEDGE OF THE FAITH AND
CREDIT OR THE TAXING POWER OF THE STATE OF NORTH CAROLINA OR ANY POLITICAL
SUBDIVISION THEREOF. NEITHER THE STATE OF NORTH CAROLINA NOR ANY POLITICAL
SUBDIVISION THEREOF NOR THE AUTHORITY SHALL BE OBLIGATED TO PAY THE PRINCIPAL OF
THIS BOND, THE INTEREST HEREON OR OTHER COSTS INCIDENT HERETO EXCEPT FROM THE
REVENUES AND FUNDS PLEDGED THEREFOR, AND NEITHER THE FAITH AND CREDIT NOR THE
TAXING POWER OF THE STATE OF NORTH CAROLINA OR ANY POLITICAL SUBDIVISION THEREOF
IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF THIS BOND OR THE INTEREST HEREON
OR OTHER COSTS INCIDENT THERETO.
Reference is made to the Indenture, the Lease Agreement and the
Guaranty for a complete description of the terms and provisions thereof,
including, among other things: a description of the property pledged and
assigned under the Indenture for the payment of the principal and redemption
price of and interest on this Bond; the provisions under which the property may
be removed from the Leased Property or other property may be substituted
therefor; a description of the duties and rights of the Trustee and the
Authority; the provisions under which the lien of the Indenture may be defeased;
and the extent and manner of enforcement of the rights of the holders and
Registered Owners of the bonds issued under the Indenture, including this Bond.
The Indenture permits the amendment thereof and of the Lease Agreement
and the Guaranty and the modifications of the rights and obligations of the
Authority and the Trustee and the rights of the Registered Owner of the Bond,
with the consent of the holders and Registered Owners of 66 2/3 percent of the
aggregate principal amount of all Bonds outstanding under the Indenture, upon
the terms set forth therein. Any consent or waiver by the Registered Owner of
this Bond shall be conclusive and binding upon such Registered Owner and upon
all future Registered Owners of this Bond and of any Bond issued upon the
transfer of this Bond whether or not notation of such consent or waiver is made
hereon.
INTEREST RATE PROVISIONS
The rate of interest on this Bond shall be the lower of LIBOR or 75%
of the Base Rate as determined on each Interest Calculation Date. For purposes
of the foregoing, the following definitions shall apply:
B-3
<PAGE>
"Base Rate" means the rate announced from time to time by BBH
as its "base" rate.
"BBH" means Brown Brothers Harriman & Co., the initial
Registered Owner of this Bond and the Purchaser described in the
Indenture.
"Interest Calculation Date" means the date of original
issuance of this Bond and the first day of each April, July, October
and January thereafter, whether or not a Business Day.
"Interest Period" means the period from each Interest
Calculation Date to and including the day immediately preceding the
next succeeding Interest Calculation Date.
"LIBOR" means the 90-day London Inter-Bank Offered Rate,
determined by BBH as of the opening of business on each Interest
Calculation Date by reference to market reporting services available to
banks and financial institutions.
All determinations of the interest rate on this Bond shall be
calculated to three places to the right of the decimal point.
Interest, calculated on the basis of a year of 365 or 366 days, for the
actual number of days elapsed in each Interest Period, shall accrue daily and
shall be payable quarterly in arrears on March 31, June 30, September 30 and
December 31 of each year, commencing September 30, 1994, and on the maturity
date hereof (each an "Interest Payment Date") to the Registered Owner hereof, as
shown on the registration books of the Trustee on the Business Day preceding
such interest payment date (a "Record Date"), except that if and to the extent
that there shall be a default in the payment of the interest due on any such
Interest Payment Date, such defaulted interest shall be paid to the Registered
Owner in whose name this Bond is registered on the fifth Business Day preceding
the date of payment of such defaulted interest. The amount of interest due
hereon for any Interest Period shall be determined by BBH in accordance with
Section 201 of the First Supplemental Indenture. Subject to the direct payment
provisions of Section 205 of the First Supplemental Indenture, interest on this
Bond shall be paid by check mailed by the Trustee to the Registered Owner
entitled thereto on each Interest Payment Date. This Bond shall bear interest on
the overdue principal and, to the extent permitted by law, on overdue interest
at the Base Rate plus 2%.
If at any time hereafter, either before or after the payment of the
entire principal of and interest on the Series 1994 Bond, there shall be a
Determination of Taxability, then, in such event,
B-4
<PAGE>
the interest rate on the Series 1994 Bond, as in effect during any period from
and after the date of the event giving rise to the Determination of Taxability,
shall be the Base Rate plus 2%. The failure of the Registered Owner to make a
demand promptly following a Determination of Taxability shall not alter the
rights or obligations of the Authority or the Registered Owner. If there is more
than one Determination of Taxability, this paragraph shall be fully applicable
to each such Determination of Taxability, whether or not the Registered Owner
exercised any or all of the rights or remedies that arose under any prior
Determination of Taxability, and all the Registered Owner's rights and remedies
shall be cumulative except to the extent of any written waiver by the Registered
Owner. If the Registered Owner receives written notice of any Determination of
Taxability, it will give prompt written notice thereof to the Company, the
Authority and the Trustee and the Company shall have the right to require the
Registered Owner to prosecute any administrative or judicial remedies available
to it unless the Registered Owner determines, in its sole discretion, that the
prosecution of such remedies is not against its best interests, provided that
the Company shall pay all expenses of prosecuting any such remedies.
REDEMPTION PROVISIONS
Optional Redemption. The Bond may be redeemed at the election of the
Authority at the direction of the Company on any Interest Payment Date, without
penalty, in whole or in part (but if in part in the principal amount of $100,000
or integral multiples of $5,000 in excess thereof), at a redemption price equal
to 100% of the principal amount thereof to be redeemed plus accrued interest to
the date of redemption upon fifteen days written notice to the Registered Owner.
Mandatory Redemption at Option of Registered Owner. Subject to the
limitations set forth in the next paragraph, all or any portion of this Bond
shall be redeemed by the Authority, at a redemption price equal to 100% of the
principal amount thereof, plus accrued interest to the date of redemption, upon
the written demand, in the form provided in the First Supplemental Indenture, of
the Registered Owner thereof to the Trustee, with a copy to the Company. The
Series 1994 Bond, or any portion thereof, shall be redeemed, and the redemption
price of the Series 1994 Bond shall be paid to the Registered Owner of the
Series 1994 Bond on the date specified by the Registered Owner hereof.
The aggregate principal amount of the this Bond which may be redeemed
in accordance with the preceding paragraph in any annual period commencing on
June 1 of each year, when added to the aggregate principal amount of the Bond
redeemed in accordance with
B-5
<PAGE>
such paragraph in all prior periods, shall not exceed the aggregate amounts as
follows:
Year Commencing
June 1 Amount
--------------- ------------
1994 $ 0
1995 350,000
1996 720,000
1997 1,120,000
1998 1,545,000
1999 and thereafter 2,000,000
Mandatory Redemption Upon Determination of Taxability. Upon the
occurrence of a Determination of Taxability, as defined in the Indenture, the
Series 1994 Bond shall be called for redemption on the date, not more than 90
days following the date of such Determination of Taxability, selected by the
Company at a redemption price equal to 100% of the principal amount thereof,
plus accrued interest to the date of redemption.
Mandatory Redemption Upon Cessation of Operation. In the event of a
Cessation of Operation, as defined in the Indenture, the Series 1994 Bond shall
be called for redemption on the date, not more than 90 days following the date
of such Cessation of Operation, selected by the Company at a redemption price
equal to 100% of the principal amount thereof, plus accrued interest to the date
of redemption.
Notice of Redemption. Except with respect to a mandatory redemption of
the Series 1994 Bond as described above, the Trustee shall provide the
Registered Owner with notice mailed by first-class mail, prepaid, at least
fifteen days before such redemption date to each such Registered Owner at the
registered address of the Registered Owner appearing on the registration books
maintained pursuant to Section 205 of the Indenture as of the close of business
on the Business Day prior to such mailing. Notice of redemption having been so
given and payment or provision for payment of such redemption price having been
so made, the Bond so called for redemption shall be due and payable on the
redemption date and interest thereon shall cease to accrue from and after such
redemption date.
Subject to the direct payment provisions of Section 205 of the First
Supplemental Indenture, in the event of a redemption of this Bond in whole, the
redemption price shall be paid to the Registered Owner only upon surrender of
this Bond at the principal office of the Trustee. In the event of a partial
redemption, payment shall be made by wire transfer of immediately available
B-6
<PAGE>
funds to such bank as the Registered Owner shall designate to the Trustee in
writing not less than two Business Days prior to the date of such payment,
without presentation and surrender of this Bond, provided (i) that the Paying
Agent's record of such payment shall be conclusive and binding upon such
Registered Owner and each succeeding Registered Owner of the Bond, and (ii) the
Registered Owner shall note such partial redemption on the grid attached to this
Bond.
No covenant or agreement contained in this Bond shall be deemed to be
the covenant or agreement of any member, officer, attorney, agent or employee of
the Authority in an individual capacity. No recourse shall be had for the
payment of principal, premium, if any, or interest on the Bond or any claim
based thereon or on any instruments and documents executed and delivered by the
Authority in connection with the Project, against any officer, member, agent,
attorney or employee of the Authority past, present or future, or any successor
body or their representative heirs, personal representatives, successors, as
such, either directly or through the Authority, or any such successor body,
whether by virtue of any constitutional provision, statute or rule of law, or by
the enforcement of any assessment or penalty, or otherwise, all of such
liability being hereby released as a condition of and as a consideration for the
execution and delivery of this Bond.
This Bond shall be governed by and construed in accordance with the
laws of the State of North Carolina. Certain capitalized terms used but not
otherwise defined herein shall have the meanings set forth in the Indenture.
This Bond shall not be valid or become obligatory for any purpose or be
entitled to any benefit or security under the Indenture until it shall have been
authenticated by the execution by the Trustee of the certificate of
authorization endorsed herein.
IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions
and things required to exist, happen and be performed precedent to and in the
execution and delivery of the Agreement and issuance of this Bond do exist, have
happened, exist and have been performed as so requested.
B-7
<PAGE>
IN WITNESS WHEREOF, the Iredell County Industrial Development Authority
has caused this Bond to be executed in its name by the manual or facsimile
signature of its Chairman or Vice Chairmen, and the manual impression or
facsimile of its corporate seal to be affixed hereto and attested by the manual
or facsimile signature of its Secretary or any Assistant Secretary.
Dated: July 31, 1994
[SEAL] IREDELL COUNTY INDUSTRIAL FACILITIES
AND POLLUTION CONTROL FINANCING
AUTHORITY
Attest:
By:_________________________________
(Vice) Chairman
By:____________________________
(Assistant) Secretary
B-8
<PAGE>
[Form of Authentication Certificate]
CERTIFICATE OF AUTHENTICATION
This Bond is an issue described in the within-mentioned Indenture.
Attached hereto is the true and complete text of the opinion of Drinker Biddle
and Reath, a signed original copy of which, dated the date of original issuance
of this Bond, is on file at the principal corporate trust office of the
undersigned in Charlotte, North Carolina.
Date of Authentication FIRST UNION NATIONAL BANK OF
NORTH CAROLINA, as Trustee
By: ____________________________
Authorized Officer
B-9
<PAGE>
SCHEDULE OF PRINCIPAL REPAYMENTS
<TABLE>
<CAPTION>
Principal
Amount Outstanding Notation
Date Paid Balance Made By
---- --------- ----------- --------
<S> <C> <C> <C>
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</TABLE>
B-10
<PAGE>
SCHEDULE OF PRINCIPAL REPAYMENTS
<TABLE>
<CAPTION>
Principal
Amount Outstanding Notation
Date Paid Balance Made By
---- --------- ----------- --------
<S> <C> <C> <C>
- ---------- ----------------- ----------------- -----------------
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</TABLE>
B-11
<PAGE>
EXHIBIT "C"
NOTICE OF MANDATORY REDEMPTION
To: FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
as Trustee
[ADDRESS]
Attention:
The undersigned, being the Registered Owner of the Series 1994 Bond
issued under and secured by that certain Indenture and Deed of Trust dated as of
June 1, 1979, as supplemented by a First Supplemental Indenture and Deed of
Trust dated as of July 31, 1994 (the "First Supplemental Indenture" and,
together with the Original Indenture, the "Indenture"), each between the
Iredell County Industrial Facilities and Pollution Control Financing Authority
(the "Authority") and First Union National Bank of North Carolina, as trustee
(the "Trustee"), hereby irrevocably elects that the principal amount of said
Series 1994 Bond set forth below (which principal amount does not exceed the
applicable limitation set forth in Section 402 (b) of the First Supplemental
Indenture) shall be redeemed by the Authority on the date also set forth below.
If the Series 1994 Bond is to be redeemed in full, the undersigned
shall surrender the Series 1994 Bond to the Trustee at its principal corporate
trust office against payment of the redemption price.
If the Series 1994 Bond is to be redeemed in part, payment of the
purchase price shall be made on the redemption date to or to the order of the
undersigned, as hereby authorized,
by wire to: ____________________________________________; or
other payment instructions _________________________________
______________________________________________________________
and the undersigned shall undertake to note such redemption on the grid attached
to the Series 1994 Bond (and the undersigned acknowledges that the Trustee's
record of such redemption and payment shall be conclusive).
C-1
<PAGE>
All capitalized terms not defined herein shall have the meanings
assigned to them in the Indenture.
Dated:
---------------------------------------
Signature of Owner or
Authorized Signatory of Owner
---------------------------------------
Please Insert Social Security Number or
Tax I.D. Number of Owner ______________
C-2
<PAGE>
FIRST SUPPLEMENTAL LEASE AGREEMENT
THIS FIRST SUPPLEMENTAL LEASE AGREEMENT dated as of July 31, 1994 (the
"First Supplemental Lease"), between THE IREDELL COUNTY INDUSTRIAL FACILITIES
AND POLLUTION CONTROL FINANCING AUTHORITY (the "Authority"), a political
subdivision and body corporate and politic of the State of North Carolina, as
Lessor, and HUNT MANUFACTURING COMPANY (the "Company"), a corporation existing
under the laws of the Commonwealth of Pennsylvania and qualified to do business
in the State of North Carolina, as Lessee.
W I T N E S S E T H:
WHEREAS, pursuant to and in accordance with the provisions of the
Enabling Act, the Board of Commissioners of Iredell County, North Carolina, has
created by resolution the Authority; and
WHEREAS, the Enabling Act authorizes the Authority to acquire by
purchase, lease, gift or otherwise any property, real or personal, improved or
unimproved, and interests in land less than the fee thereof, for the
construction, operation or maintenance of, and to construct, acquire, own,
repair, maintain, extend, improve, rehabilitate, renovate, furnish and equip,
industrial and manufacturing projects, to make and execute lease agreements and
security documents containing an assignment, pledge, mortgage or other
encumbrance on all or part of the Authority's interest in, or right to receive
revenues with respect to, a project and any other property provided under a
lease agreement; and
WHEREAS, the Authority is authorized by the Enabling Act to issue bonds
for the purpose of paying all or any part of the cost of any project, the
principal of and redemption premium, if any, and interest on which bonds shall
be payable solely from the funds provided by the operator or other obligor upon
the lease agreement or any guaranty agreement or other contract or agreement to
make payments to, or for the benefit of, the Authority; and
WHEREAS, the Authority and the Trustee have heretofore entered
into an Indenture and Deed of Trust dated as of June 1, 1979 (the "Original
Indenture" and, together with the First Supplemental Indenture, the
"Indenture"), pursuant to which the Authority has heretofore issued revenue
bonds of the Authority in the aggregate principal amount of $2,000,000,
designated "Industrial Revenue Bonds (Hunt Manufacturing Co. Project), Series
1979" (the "Series 1979 Bonds" and, together with any additional and refunding
bonds issued under the Indenture, the "Bonds"); and
WHEREAS, the proceeds of the Series 1979 Bonds were applied by the
Authority to pay the costs of the Project (which capitalized terms and others
used but not defined in these Recitals are defined in the Original Lease or the
Indenture) on behalf of Hunt Manufacturing Co., a Pennsylvania corporation (the
"Company") and
<PAGE>
WHEREAS, the Authority has heretofore entered into a Lease Agreement
dated as of June 1, 1979 (the "Original Lease"), with the Company, under which
the Authority has demised and leased the Leased Property to the Company and the
Company has leased the Leased Property, including the real property more
particularly described in Exhibit "All attached hereto and made a part hereof,
from the Authority and has agreed to pay rent therefor in amounts sufficient to
pay the principal of, redemption premium (if any) and interest on the Series
1979 Bonds and any additional and refunding bonds issued under the Indenture;
and
WHEREAS, the Authority entered into the Original Indenture for the
purpose of authorizing the Bonds and securing the payment thereof by assigning
certain of its interests in the Lease, including its rights to a portion of the
rental payments thereunder; and
WHEREAS, the Company has entered into a Guaranty Agreement dated as of
June 1, 1979, as amended and supplemented by the First Amended Guaranty dated as
of July 31, 1994 (the "Guaranty"), with the Trustee, whereby the Company has
unconditionally guaranteed for the benefit of the holders of the Bonds and the
interest coupons appertaining thereto, if any, the full and prompt payment of
the principal of and redemption premium, if any, and interest on the Bonds; and
WHEREAS, the Company has requested that the Authority undertake a
program (the "1994 Refunding Project") to refund the Series 1979 Bonds for the
purpose of providing debt service savings to the Company and, in connection
therewith, the Authority has determined to issue as a series of Refunding Bonds
under the Indenture its Industrial Revenue Refunding Bond (Hunt Manufacturing
Co. Project), Series 1994 (the "Series 1994 Bond"); and
WHEREAS, for the further security of the Series 1994 Bond, the Company
and the Authority have determined to enter into this First Supplemental Lease
(this First Supplemental Lease and the Original Lease being herein referred to
collectively as the "Lease"), pursuant to which the Company and the Authority
will confirm the demise and lease of the Leased Property by the Authority to the
Company and the Company will confirm its commitment to make rental payments
under the Lease sufficient to pay the principal, redemption premium, if any, and
interest on the Series 1994 Bond and any other Bonds; and
WHEREAS, upon the issuance of the Series 1994 Bond under the First
Supplemental Indenture and the application of the proceeds thereof, together
with certain additional funds provided by the Company, as provided herein to the
redemption of the Series 1979 Bonds, the Series 1979 Bonds shall no longer be
Outstanding under the Indenture; and
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<PAGE>
WHEREAS, the Company and the Authority have received a proposal for the
purchase of the Series 1994 Bond from Brown Brothers Harriman & Co. (the
"Purchaser"), a private bank, upon the terms and conditions set forth herein;
and
WHEREAS, the execution and delivery of this First Supplemental Lease
and the First Supplemental Indenture have been duly authorized by resolution of
the Authority; and
WHEREAS, the Authority and the Company desire to confirm the terms of
the Original Lease and to supplement said original Lease in the manner herein
provided;
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL AGREEMENT OF LEASE WITNESSETH:
That the Authority and the Company each intending to be legally bound
and in consideration of the rentals and mutual covenants herein stipulated to be
paid and performed, DO HEREBY AGREE as follows:
SECTION 1. CONFIRMATION OF ORIGINAL LEASE. Except as hereinafter
expressly provided, the Original Lease as hereby supplemented and amended shall
continue to be enforceable and in effect with respect to the Series 1994 Bond
and any other Outstanding Bonds. All obligations of the Company and the
Authority under the Original Lease in respect of, or for the benefit of the
holders of, the Series 1979 Bonds shall remain in full force and effect in
respect of and for the benefit of the holders and registered owners of the
Series 1994 Bond and any other Outstanding Bonds.
SECTION 2. DEFINITIONS. All terms used as defined terms in the Original
Lease or the Indenture are used with the same meaning in this First Supplemental
Lease (including the use thereof in the recitals above) unless expressly given a
different meaning herein or unless the context clearly otherwise requires. All
terms used herein which are defined in the recitals hereto shall have the
meanings there given to the same unless the context clearly otherwise requires,
except that the following definitions contained in Article I of the Original
Lease are hereby amended to read as follows:
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Determination of Taxability" means (a) the enactment of legislation to
or with the effect that interest payable on any Bond is includable in the gross
income of the registered owner of any
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<PAGE>
Bond under the federal income tax laws (except with respect to any owner who is
a "substantial user" or a related person" (as such terms are used in the Code)),
any such determination being deemed to have occurred on the effective date of
such legislation; or (b) receipt by the Company, the Authority or the registered
owner of any Bond of notice that the Commissioner of Internal Revenue or any
district director of the Internal Revenue Service that based upon filings of the
Company, any review or audit of the Company, or any ground whatsoever, shall
have determined that a Taxable Event (as hereinafter defined) has occurred; or
(c) issuance of a published or private ruling or a technical advice memorandum
by the Internal Revenue Service, or a determination by any court of competent
jurisdiction, that the interest payable on any Bond is includable for federal
income tax purposes in the gross income of any owner of any Bond (except as
aforesaid); or (d) with respect to the Series 1994 Bond, an opinion of
nationally recognized bond counsel addressed to the registered owner of the
Series 1994 Bond that such counsel cannot conclude that the interest thereon is
excluded from the gross income of the registered owner thereof under the federal
income tax laws (other than with respect to any owner who is a "substantial
user" or a "related person" (as such terms are used in the Code)). For purposes
of this definition, "Taxable Event" means the application of the proceeds of any
Bond in such manner, or the occurrence or non-occurrence of any other event
(except the enactment of legislation described in clause (a) of the definition
of Determination of Taxability above), whether within or without the control of
the Company, with the result that, under the Code, the interest on any Bond is
or becomes includable in the gross income for federal income tax purposes of the
registered owner of any Bond (except as aforesaid).
SECTION 3. TERM OF LEASE. In accordance with Section 5.1 of the
Original Lease, the term of the Lease shall extend until June 16, 2004 or until
the day after all Bonds issued under the Indenture have been repaid or are no
longer deemed to be outstanding under the Indenture.
SECTION 4. PAYMENT OF BASIC RENT. The Company hereby confirms its
obligation set forth in Section 5.3(a) of the Original Lease to pay Basic Rent
in such amounts and at such times as to enable the Authority to cause timely
payment to be made to the Holder of the Series 1994 Bond and to the holders of
any other Outstanding Bonds of the principal, interest, and any redemption
premium on such Bonds. Notwithstanding the provisions of Section 5.3(a) of the
Original Lease to the contrary, so long as the Purchaser is the registered owner
of the Series 1994 Bond, the Company shall pay that portion of the Basic Rent
relating to the principal and redemption price of, and interest on, the Series
1994 Bond directly to the Purchaser as provided in Section 205 of the First
Supplemental Indenture. In the event that the Company shall fail to pay any
installment of Basic Rent so payable to the Purchaser in accordance with this
Section, interest on such overdue
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<PAGE>
payment shall accrue from the due date thereof at a rate equal to the Base Rate
(as defined in the First Supplemental Indenture) plus 2%.
SECTION 5. PREPAYMENT OF RENT UPON CESSATION OF OPERATION. Article XI
of the Original Lease is hereby amended to include the following additional
section:
"Section 11.4. Obligation to Prepay Basic Rent Upon Cessation
of Operation. In the event of a Cessation of Operation, the Company
shall be required to prepay the Basic Rent with respect to the Series
1994 Bond.
Within 30 days after the date of the occurrence of
the Cessation of Operation, the Company shall give a written notice to
the Authority and the Trustee which shall specify the date selected by
the Company for such prepayment, such date to be not more than 90 days
after the date of the occurrence of the Cessation of Operation."
SECTION 6. ADDITIONAL REQUIREMENT APPLICABLE TO INSURANCE. Section 7.3
of the Original Lease is hereby amended to include the following additional
subsection:
(c) So long as the Purchaser is the Holder of the Series 1994 Bond, the
Company shall supply the Purchaser at least once annually with a certificate or
certificates of the insurers that insurance policies satisfying the requirements
of Sections 7.1 and 7.2 of the Lease are in force and effect.
SECTION 7. ADDITIONAL COVENANT OF TANGIBLE NET WORTH. In addition to
covenants set forth in Article VIII of the Original Lease, as amended hereby, so
long as the 1994 Bond shall be Outstanding, the Company additionally covenants
as follows:
For the fiscal year commencing November 28, 1993, the Company
shall maintain at all times a Consolidated Tangible Net Worth (as herein
defined) of not less than $62,000,000; provided, that for each subsequent fiscal
year of the Company, the Company shall maintain at all times a Consolidated
Tangible Net Worth equal to the amount required under this provision for the
preceding year plus $3, 000, 000. For purposes of this provision "Consolidated
Tangible Net Worth" means the excess of the aggregate net worth of the Company
and its consolidated subsidiaries, less intangibles, over the aggregate total
liabilities of the Company and its consolidated subsidiaries, determined in each
case in accordance with generally accepted accounting principles.
SECTION 8. AMENDED COVENANT TO MAINTAIN CORPORATE EXISTENCE. Section
8.2 of the Original Lease is hereby amended to read in full:
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<PAGE>
"Section 8.2. Company to Maintain its Corporate Existence. The
Company covenants and agrees that it (a) will maintain and preserve
its corporate existence and organization, and its authority to do
business in the State of North Carolina and will not voluntarily
dissolve without first discharging its obligations under this Lease,
and (b) will not dissolve or otherwise dispose of all or substantially
all of its assets (either in a single transaction or in a series of
related transactions), and will not merge or consolidate with any
other corporation and will not permit one or more corporations to
merge into or consolidate with it."
SECTION 9. INDEMNIFICATION OF LOCAL GOVERNMENT COMMISSION. The
provisions of Sections 8.10 and 8.11 of the Original Lease, indemnifying the
Authority and its members, officers and employees, shall be apply with equal
force and effect to the Local Government Commission and its members, officers
and employees.
SECTION 10. ADDITIONAL PROVISION CONCERNING NOTICES.
(a) Promptly after each June 30, the Company shall notify the North
Carolina Local Government Commission and the Authority, by first class mail, of
the aggregate principal amount of the Bonds outstanding at the close of business
on such June 30.
(b) Section 13.5 of the Original Lease is hereby amended by adding
thereto an additional paragraph to read in its entirety as follows:
"So long as the Series 1994 Bond shall be owned by the Purchaser,
the Trustee shall provide to the Purchaser a copy of each notice,
certificate or other communication delivered to or by the Trustee
under the Lease to the Purchaser at the following address:
Brown Brothers Harriman & Co.
1541 Walnut Street
Philadelphia, PA 19102
Attention: Carl S. Cutler"
In addition that section is amended to provide that notices to the Company are
to be addressed to:
Hunt Manufacturing Co.
230 South Broad Street
Philadelphia, PA 19102
Attention: Secretary
And notices to the Local Government Commission are to be addressed to:
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<PAGE>
Local Government Commission
325 North Salisbury Street
Raleigh, N.C. 27603-1385
IN WITNESS WHEREOF, the Company has caused this First Supplemental
Lease to be executed in its name and on its behalf by the Manager of the Company
and its corporate seal to be affixed hereunder and attested by its Secretary,
and the Authority has caused this First Supplemental Lease to be executed in its
name and on its behalf by its Chairman or Vice Chairman and its corporate seal
to be affixed hereto and attested by its Secretary or any Assistant Secretary as
of the date and year first above written.
HUNT MANUFACTURING COMPANY
[SEAL]
Attest: /s/ Dennis Pizzica By: /s/ William E. Chandler
---------------------------- ----------------------------
Asst. Secretary Senior Vice President
IREDELL COUNTY INDUSTRIAL
FACILITIES AND POLLUTION
[SEAL] CONTROL FINANCING AUTHORITY
Attest: ___________________________ By: _______________________
(Assistant) Secretary Chairman
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<PAGE>
COMMONWEALTH OF PENNSYLVANIA :
: ss
COUNTY OF PHILADELPHIA :
On this, the ____ day of July, 1994, before me the undersigned, a
notary public, personally appeared, __________________, who acknowledged that he
is (Vice) President of the HUNT MANUFACTURING COMPANY and that he, as such
officer, being authorized to do so, executed the foregoing Supplemental Lease,
for purposes therein contained, by signing the name of such corporation by
himself as such officer.
IN WITNESS WHEREOF, I set my hand and official seal.
_______________________________________
Notary Public
-------------------------------------------
[SEAL] Notary Seal
Lillian M. Barratt, Notary Public
Philadelphia, Philadelphia County
My Commission Expires May 10, 1997
-------------------------------------------
Member Pennsylvania Association of Notaries
COMMONWEALTH OF PENNSYLVANIA :
: ss
STATE OF NORTH CAROLINA :
On this, the__________ day of __________ 1994 before me the undersigned, ____ a
notary public, personally appeared _________________, who acknowledged that he
is (Vice) Chairman of the IREDELL COUNTY INDUSTRIAL FACILITIES AND POLLUTION
CONTROL FINANCING AUTHORITY and that he, as such officer, being authorized to do
so, executed the foregoing Second Supplemental Lease, for purposes therein
contained, by signing the name of such Authority by himself as such officer.
IN WITNESS WHEREOF, I set my hand and official seal.
_______________________________________
Notary Public
[SEAL]
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<PAGE>
EXHIBIT "A"
Description of Real Property
----------------------------
BEGINNING at the point in the center of North Carolina Highway No. 90
(West Front Street) leading from Statesville, North Carolina, to Taylorsville,
North Carolina, said beginning point being the Southwest corner of the tract of
land conveyed to the Carnation Company by the State of North Carolina by Deed
recorded in Deed Book 134, Page 125, Iredell County Registry, and running thence
with the center of said North Carolina Highway No. 90, North 62 degrees 22
minutes West 1043 feet to a point in the center of said North Carolina Highway
No. 90, at which point the center of said North Carolina Highway No. 90 and the
center of Mecham Road, a road leading in a Northerly direction from said North
Carolina Highway No. 90 to what was formerly a part of the Piedmont Experiment
Station Farm intersect; thence with the center line of said Mecham Road North 08
degrees 06 minutes East 805 feet to a point in the center line of the railroad
track of Alexander Railroad Company; thence with the center line of the said
railroad track of the Alexander Railroad Company four calls as follows: (1)
South 40 degrees 05 minutes East 839.45 feet to a point; (2) thence South 43
degrees 01 minutes East 159 feet to a point; (3) thence South 48 degrees 10
minutes East 168.6 feet to a point; (4) thence South 52 degrees 30 minutes East
161.7 feet to a point in the center of said railroad track, and said point being
the Northwest corner of the said tract of land conveyed to the Carnation Company
by the State of North Carolina by the Deed referred to hereinabove; thence with
the Western line of said Carnation Company South 15 degrees 49 minutes 40
seconds West 324.45 feet to the point of BEGINNING, containing 12.76 acres, more
or less, and the above description being according to a map and survey made by
Kestler & MacKay, Registered Surveyors, dated April 13, 1964, revised on
February 22, 1979, with said revision being in regard to the location of
buildings, paving, and similar matters, and not in any way being a revision of
property lines, including courses, degrees and distances; and being the
identical property conveyed to National Canvas Products Corp. by Deed of Olin
Corporation, dated September 26, 1975, recorded in Deed Book 578, Page 573,
Iredell County Registry.
A-1
<PAGE>
Closing Document No. 3
IREDELL COUNTY INDUSTRIAL FACILITIES
AND POLLUTION CONTROL FINANCING AUTHORITY
$2,000,000
Industrial Revenue Refunding Bond
(Hunt Manufacturing Co. Project)
Series 1994
FIRST AMENDED GUARANTY AGREEMENT
This FIRST AMENDED GUARANTY AGREEMENT dated as of July 31, 1994 (the
"Supplemental Guaranty") between Hunt Manufacturing Co. (the "Guarantor") a
corporation organized and existing under the laws of the Commonwealth of
Pennsylvania, and First Union National Bank of North Carolina, a banking
association duly incorporated under the laws of the United States, as trustee
(the "Trustee"), under an Indenture and Deed of Trust dated as of June 1, 1979,
as amended and supplemented by a Supplemental Indenture and Deed of Trust dated
as of July 31, 1994 between the Iredell County Industrial Facilities and
Pollution Control Financing Authority (the "Authority") and the Trustee,
WITNESSETH:
WHEREAS, the Authority and the Trustee have heretofore entered into an
Indenture and Deed of Trust dated as of June 1, 1979 (the "Original Indenture"
and, together with the First Supplemental Indenture dated July 31, 1994, the
"Indenture"), pursuant to which the Authority has heretofore issued revenue
bonds of the Authority in the aggregate principal amount of $2,000,000,
designated "Industrial Revenue Bonds (Hunt Manufacturing Co. Project), Series
1979" (the "Series 1979 Bonds"); and
WHEREAS, the proceeds of the Series 1979 Bonds were applied by the
Authority to pay the costs of the Project (which capitalized terms and others
used but not defined in these Recitals are defined in the Lease or the
Indenture) on behalf of Hunt Manufacturing Co., a Pennsylvania corporation (the
"Company"); and
WHEREAS, the Authority has heretofore entered into a Lease Agreement
dated as of June 1, 1979 as amended and supplemented by a Supplemental Lease
Agreement dated as of July 31, 1994 (the "Lease"), with the Company, under
which the Authority has demised and leased the Leased Property to the Company
and the Company has leased the Leased Property from the Authority and has agreed
to pay rent therefor in amounts sufficient to pay the principal of and
redemption premium, if any, and interest on the Series 1979 Bonds and any
additional and refunding bonds (such bonds being collectively, the "Bonds")
issued under the Indenture; and
<PAGE>
WHEREAS, the Company has entered into a Guaranty Agreement dated as of
June 1, 1979 (the "Original Guaranty"), with the Trustee, whereby the Company
has unconditionally guaranteed for the benefit of the holders of all Bonds
Outstanding under the Indenture and the interest coupons appertaining thereto,
if any, the full and prompt payment of the principal of, redemption premium (if
any) and interest on such Bonds; and
WHEREAS, the Company has requested that the Authority undertake a
program (the "1994 Refunding Project") to refund the Series 1979 Bonds for the
purpose of providing debt service savings to the Company and, in connection
therewith, the Authority has determined to issue as a series of Refunding Bonds
under the Indenture its Industrial Revenue Refunding Bond (Hunt Manufacturing
Co. Project), Series 1994 (the "Series 1994 Bond"); and
WHEREAS, upon the issuance of the Series 1994 Bond under the First
Supplemental Indenture and the application of the proceeds thereof, together
with certain additional funds provided by the Company, as provided herein to the
redemption of the Series 1979 Bonds, the Series 1979 Bonds shall no longer be
Outstanding under the Indenture; and
WHEREAS, the Company and the Authority have received a proposal for the
purchase of the Series 1994 Bond from Brown Brothers Harriman & Co. (the
"Purchaser"), a private bank, upon the terms and conditions set forth herein;
and
WHEREAS, the Guarantor and the Trustee desire to confirm the terms of
the Original Guaranty and to supplement said Original Guaranty in the manner
herein provided;
NOW, THEREFORE, THIS FIRST AMENDED AGREEMENT OF GUARANTEE WITNESSETH:
Section 1. Section 3.1 of the Original Guarantee is amended to read in
full:
Section 3.1. Merger, Consolidation and Transfer. The Company covenants and
agrees that it (a) will maintain and preserve its corporate existence and
organization, and its authority to do business in the State of North
Carolina and will not voluntarily dissolve without first discharging its
obligations under this Guaranty, and (b) will not dissolve or otherwise
dispose of all or substantially all of its assets (either in a single
transaction or in a series of related
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<PAGE>
transactions), and will not merge or consolidate with any other
corporation and will not permit one or more corporations to merge into or
consolidate with it."
Section 2. The Original Guarantee is amended to include Section 3.4 in
which the Company covenants as follows:
For the fiscal year commencing November 28, 1993, the Company shall
maintain at all times a Consolidated Tangible Net Worth (as herein defined)
of not less than $62,000,000; provided, that for each subsequent fiscal
year of the Company, the Company shall maintain at all times a Consolidated
Tangible Net Worth equal to the amount required under this provision for
the preceding year plus $3,000,000. For purposes of this provision
"Consolidated Tangible Net Worth" means the excess of the aggregate net
worth of the Company and its consolidated subsidiaries, less intangibles,
over the aggregate total liabilities of the Company and its consolidated
subsidiaries, determined in each case in accordance with generally accepted
accounting principles.
Section 3. Except as modified and amended hereby, the original Guaranty is
hereby ratified and confirmed.
HUNT MANUFACTURING CO.
By ____________________________
Senior Vice President
(Seal)
Attest:
_______________________________
Assistant Secretary
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
By: ___________________________
Title: Assistant Vice President
(Seal)
Attest
_______________________________
Assistant Secretary
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<PAGE>
Closing Document No. 4
IREDELL COUNTY INDUSTRIAL FACILITIES
AND POLLUTION CONTROL FINANCING AUTHORITY
$2,000,000
Industrial Revenue Refunding Bond
(Hunt Manufacturing Co. Project)
Series 1994
TAX CERTIFICATE AND AGREEMENT
This Certificate is delivered in connection with the issuance by The
Iredell County Industrial Facilities and Pollution Control Financing Authority
(the "Authority") of the above referenced bond (the "1994 Bond") pursuant to an
Indenture and Deed of Trust dated as of June 1, 1979, as amended and
supplemented by a First Supplemental Indenture and Deed of Trust dated on July
31, 1994 (collectively, the" Indenture") between the Authority and First Union
National Bank of North Carolina, as trustee (the "Trustee"). The 1994 Bond is
being issued to finance the costs of a project (the "Project") consisting of the
refunding of the currently outstanding aggregate principal amount of $2,000,000
of the Authority's Industrial Revenue Bonds (Hunt Manufacturing Co. Project),
Series 1979 (the "1979 Bonds"). The 1979 Bonds were issued to finance the costs
of a project involving the acquisition of certain real estate near Statesville,
North Carolina, and the construction thereon of manufacturing facilities (the
"Facilities", and together with the real property the "Property") for the
benefit of Hunt Manufacturing Co. (the "Company").
Pursuant to a Lease Agreement dated as of June 1, 1979, as amended by
the Supplemental Lease Agreement dated as of July 31, 1994 (collectively, the
"Lease"), between the Authority and the Company, the Authority has leased the
Property to the Company and the Company is obligated to make payments of Base
Rent thereunder in amounts sufficient, among other things, to pay the principal
of and interest an the 1994 Bond when due. The prompt payment of the principal
of and interest due on the 1994 Bond is guaranteed by the Company, pursuant to a
Guaranty Agreement dated June 1, 1979 and a First Supplemental Guaranty
Agreement dated July 31, 1994, both between the Company and the Trustee.
We, the undersigned officer of the Authority, who is charged, along
with others, with the responsibility for issuing the 1994 Bond, and the
undersigned officer of the Company, intending to be legally bound, DO HEREBY
CERTIFY, agree and covenant as follows:
1. Issue and Sale of 1994 Bond; Application of Proceeds. The 1994 Bond
is being purchased by Brown Brothers Harriman & Co. (the "Purchaser") pursuant
to a private placement and will bear interest on the outstanding balance at a
variable
<PAGE>
variable interest rate equal to the lower of the LIBOR Rate or 75% of the Base
Rate (as each is described in the Indenture). As required by the Indenture, the
proceeds of the 1994 Bond will be transferred to the Trustee, to be applied to
pay the principal amount of the 1979 Bonds that have been called for redemption
on July 31, 1994. Additional moneys required to pay the accrued interest and
redemption premium on the 1979 Bonds will be paid by the Company from sources
other than proceeds of the 1994 Bond.
2. Principal Amount. The aggregate principal amount of the 1994 Bond
does not exceed the aggregate outstanding principal amount of the 1979 Bonds.
3. Bona Fide Debt Service Fund. Under the Indenture, there is
established a Bond Fund for the segregation of funds to be applied to the
payments of the interest on, and principal maturing of the 1994 Bond. The
deposit of moneys in the Bond Fund will allow a proper matching of revenues to
payment of debt service on the 1994 Bond. The undersigned reasonably expect that
the moneys deposited in the Bond Fund will be depleted at least once every
twelve months except for a reasonably carryover amount not exceeding the greater
of (a) one year's earnings on such fund or (b) one-half of the annual debt
service on the 1994 Bond. Notwithstanding the establishment of the Bond Fund
under the Indenture, the Indenture further provides that so long as the 1994
Bond is owned by the Purchaser, the Company will make payments of debt service
on the 1994 Bond directly to the Purchaser when due.
4. No Sinking Funds. Except as described above hereof, neither the
Company nor the Authority has created or established, and the undersigned does
not expect the Company or the Authority to create or establish, any sinking
fund, debt service fund, redemption fund, replacement fund or other similar fund
which is reasonably expected to be used, directly or indirectly, for payment of
debt service on the 1994 Bond or pledged therefor.
5. Limitation on Invested Proceeds. At no time during any bond year
(each bond year being the one year period commencing on each anniversary date of
the issuance of the 1994 Bond) will the amount of Bond proceeds invested at a
yield in excess of the yield on the 1994 Bond exceed 150% of the debt service
requirements on the 1994 Bond during such year.
6. Rebate. The Company hereby covenants that it will annually retain
the services of a certified public accountant to determine the amount of
required arbitrage rebate, if any, payable to the United States Government under
Section 148 of the Internal Revenue Code of 1986, as amended, and will make any
required payments beginning not later than 60 days after the end of the fifth
bond year.
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<PAGE>
7. $10,000,000 Limit. The Authority hereby elects to have the
$10,000,000 limit for qualified small issue bonds under the Internal Revenue
Code of 1986, as amended, (the "Code"), apply to the 1994 Bond.
8. Costs of Issuance. All costs of issuing the 1994 Bond will be paid
by the Purchaser or the Company (as they have agreed between them) out of
available funds not constituting proceeds of the 1994 Bond.
9. No Other Bonds; $40 Million Limitation. Except for the 1994 Bonds,
there are to qualified small issue bonds, within the meaning of Section 144 of
the Code or a corresponding provision of prior law, presently outstanding, the
proceeds of which were used with respect to the Facilities or any other
facilities located in the incorporated municipality in which the Facilities are
located or with respect to any facilities contiguous or integrated with such
facilities within the meaning of Sections 1.10310(b) (2) (ii) (e) and
1.103-10(d) (2) of the Treasury Regulations, of which the Company, any other
person who is a principal user of the Facilities or any related person, is the
owner or other principal user. The aggregate principal amount of all tax-exempt
bonds allocated to the Company, any other person who is a principal user of the
Facilities, and any related person of the Company and any such principal user
does not exceed $40,000,000.
10. Capital Expenditures. The total amount of capital expenditures
(within the meaning of Section 144 (a) (4) (A) of the Code) paid or incurred
during the six year period beginning June 1, 1976 and ending May 31, 1982 by the
Company, other principal users or related persons with respect to the Facilities
or any other facilities located in or contiguous or integrated with facilities
located in the incorporated municipalities in which the Facilities are located,
when added to the original principal amount of the 1979 Bonds, did not exceed
$10,000,000.
11. Prohibited Uses. None of the proceeds of the 1994 Bond is used to
provide a facility the primary purpose of which is for retail food and beverage
services, automobile sales, or service, or the provision of recreation or
entertainment; no portion of the proceeds of the 1994 Bond is used to provide
financing for any residential facility, private or commercial golf course,
country club, massage parlor, tennis club, skating facility (including roller
skating, skateboard, and ice skating), racquet sports facility (including any
handball or racquetball court), hot tub facility, suntan facility or racetrack;
and no part of the proceeds of the 1994 Bond is used to provide an airplane,
skybox or other private luxury box, health club facility, facility primarily
used for gambling, or any store the principal use of which is the sale of
alcoholic beverages for consumption off premises.
-3-
<PAGE>
12. Replacement Funds. The proceeds derived from the sale of the 1994
Bond are not reasonably expected to be used to replace funds of the Company
which have been designated for the Project and were or will be used directly or
indirectly to acquire obligations which may reasonably be expected to produce a
yield during the term of the 1994 Bond which is materially higher than the yield
on the 1994 Bond.
13. No Federal Guaranty. Neither the 1994 Bond nor the obligations of
the Company under the Lease is guaranteed directly or indirectly by the Federal
government or any Federal instrumentality.
14. Yield to Authority on Loan Agreement. The Authority will not be
paid a fee with respect to the issuance of the 1994 Bond, but will be reimbursed
on the date hereof for it expenses actually incurred in administering the
financing the 1994 Bond. The yield to the Authority from the Lease, treating the
Authority's reimbursement as a payment thereunder, does not exceed the yield on
the 1994 Bond by more than 1/8 of 1%, based upon the present worth or actuarial
method using a 360-day year, compounding interest semiannually and using an
aggregate purchase price to the first buyer of the 1994 Bond of $2,000,000.
18. Public Approval. The issuance of the 1994 Bond was approved by the
Commissioners of Iredell County on June 21, 1994, after a public hearing held on
June 21, 1994, notice of which was published in the Statesville Record and
Landmark on June 7, 1994.
19. Economic Life of Assets. The average reasonably expected economic
life of the assets financed with the proceeds of the Bond is more than 25 years.
The average weighted maturity of the Bond is 9.9 years, which is not greater
than 120-06 of the average reasonably expected economic life of the financed
assets.
20. Application of Prior Reserve and Other Funds. No funds are
available in the funds and accounts established for the 1979 Bonds.
21. Authority Listing. The Authority has not been advised of any
listing or proposed listing of the Authority in the Internal Revenue Service
Bulletin as an issuer upon whose certificates pertaining to arbitrage bonds one
may not rely.
22. Reasonable Expectations. To the best of the knowledge, information
and belief of the undersigned, the above expectations are reasonable.
23. Liability of Authority. The liability of the Authority and its
officers under this Certificate shall be limited in the same manner as provided
for the payment of the Bonds in Section 701 of the Indenture and the lien of any
judgment against
-4-
<PAGE>
the Authority or its officers shall be restricted thereto. The parties hereto
acknowledge that the representations made by the Authority herein have been made
in reliance on the representation of the Company herein and in the Lease and
other instruments delivered by the Company in connection with the 1994 Bond and
the 1979 Bonds.
IN WITNESS WHEREOF, we have hereunto set our signatures on this, the
last day of July, 1994.
THE IREDELL COUNTY INDUSTRIAL FACILITIES
AND POLLUTION CONTROL FINANCING
AUTHORITY
By _____________________________________
Chairman
HUNT MANUFACTURING CO.
By: ____________________________________
Senior Vice President
-5-
<PAGE>
Closing Document No. 5
IREDELL COUNTY INDUSTRIAL FACILITIES
AND POLLUTION CONTROL FINANCING AUTHORITY
$2,000,000
Industrial Revenue Refunding Bond
(Hunt Manufacturing Co. Project)
Series 1994
GENERAL CERTIFICATE OF AUTHORITY
--------------------------------
This certification is made in connection with the issuance of the
above-referenced bond (the "Bond") by the Iredell County Industrial Facilities
and Pollution Control Financing Authority (the "Authority") pursuant to the
Indenture and Deed of Trust dated as of June 1, 1979, as amended and
supplemented by a First Supplemental Indenture and Deed of Trust dated as of
July 31, 1994 (collectively, the "Indenture"), between the Authority and First
Union National Bank of North Carolina, as trustee. All capitalized terms used
herein have the meanings assigned thereto in the Indenture.
We, the undersigned officers of the Authority, DO HEREBY CERTIFY as
follows:
1. The Authority is a public body corporate and politic and a public
instrumentality of the State of North Carolina organized and existing under the
provisions of the North Carolina Industrial and Pollution Control Facilities
Financing Act, as amended, codified as Chapter 159C of the General Statutes of
North Carolina (the "Act"), and has the power and authority to issue the
Bond for the purposes described in the Indenture and to carry out and consummate
the transactions contemplated by the Indenture.
2. The individuals named below constitute all the members of the
Authority; each such individual was at all pertinent times, and is on the date
hereof, duly appointed, qualified and acting as such member; and each of such
individuals indicated as an officer of the Authority was at all pertinent times,
and is on the date hereof, duly elected, qualified and acting as such officer:
<PAGE>
Name Title
---- -----
J. David Chamberlain Chairman
Lonnie Trootman Vice-Chairman
Herbert L. Lawton Treasurer
Alice Fortner Secretary
William P. Pope Assistant Secretary
Loren Powell Member
Dan Wallace Member
Steven Robinson Member
Lois James Member
3. The Authority has duly authorized, executed and delivered the First
Supplemental Indenture, the First Supplemental Lease and any such other
agreements and documents as may be required to be executed and delivered by the
Authority in order to carry out, give effect to and consummate the transactions
contemplated by the First Supplemental Indenture, and, assuming due
authorization, execution and delivery by the other parties thereto, the
Agreement is in full force and effect.
4. The Bond delivered at the closing held this day was duly executed
and delivered on behalf of the Authority by J. David Chamberlain, as Chairman,
and duly attested on behalf of the Authority by Alice Fortner, as Secretary; the
seal of the Authority impressed on the Bond is the corporate and common seal of
the Authority; the Bond constitutes the ' legal, valid and binding limited
obligation of the Authority, enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, moratorium, reorganization,
insolvency or other similar laws or equitable principles affecting the
enforcement of creditors, rights generally, and is entitled to the benefit and
security of the Indenture.
5. The representations and warranties made by the Authority in the
Indenture are true and correct in all material respects as of this date with the
same effect as if made on this date.
6. The Authority has performed or complied with all agreements and
conditions required by the Indenture to be performed or complied with by the
Authority at or prior to the Closing.
7. No member of the Authority is an officer, director, employee or,
directly or indirectly, the owner of any shares or other ownership interests in
the Company or any other principal user of the Project Facilities; and no member
of the Authority has any financial interest, direct or indirect, in the Project
Facilities or the financing thereof.
8. Attached hereto as Exhibit A is a true, correct and complete copy of
the Certificate of Formation of the Authority, and
-2-
<PAGE>
no amendments to or modifications of such Certificate of Formation have been
proposed or approved by the Authority, except as indicated in such Exhibit.
9. Attached hereto as Exhibit B is a true, correct and complete copy of
the By-Laws of the Authority, which were duly adopted by the Authority and are
in full force and effect on the date hereof, and no amendments to or
modifications of such By-Laws have been proposed or approved by the Authority.
10. Attached hereto as Exhibit C are true, correct and complete copies
of the authorizing resolutions of the Authority pertaining to the issuance of
the Bond and the transactions contemplated by the First Supplemental Indenture.
Such resolutions were duly adopted by a quorum of the Authority at a public
meeting duly convened pursuant to proper notice thereof given in accordance with
all requirements of law and procedural rules of the Authority, and such
resolutions have been duly recorded in the minutes of such meetings, have not
been repealed or modified since then adopted, and are in full force and effect
on the date hereof.
11. Except as contemplated by the Supplemental Indenture, the Original
Indenture has not been amended, supplemented or modified since the date of its
original execution and delivery.
IN WITNESS WHEREOF, we have hereunto set our respective signatures as
such officers and have affixed the seal of the Authority this last day of July,
1994.
IREDELL COUNTY INDUSTRIAL FACILITIES
AND POLLUTION CONTROL FINANCING
AUTHORITY
[SEAL]
By:
------------------------------
(Vice) Chairman
By:
------------------------------
(Assistant) Secretary
-3-
<PAGE>
EXHIBIT A
THE IREDELL COUNTY INDUSTRIAL
FACILITIES AND POLLUTION CONTROL
FINANCING AUTHORITY
--------------------------------
Certificate of Formation
------------------------
The undersigned Secretary of The Iredell County Industrial Facilities
and Pollution Control Financing Authority (the "Authority") DOES HEREBY CERTIFY
pursuant to the provisions of G.S. 159C-4(f) that:
(a) The Authority has been duly and validly formed as authorized by
resolution of the Board of Commissioners for the County of Iredell and
a certified copy of the minutes, showing the adoption and a list of the
Commissioners of the Authority, is attached hereto as Exhibit 1;
(b) Attached hereto as Exhibit 2 is a certified copy of the minutes of
the organizational meeting of the Authority, showing a list of the
officers of the Authority; and
(c) Attached hereto as Exhibit 3 is a description of any and all
projects under consideration by the Authority.
WITNESS my hand and the official seal of the Authority, this 17th day
of October, 1977.
----------------------
Secretary
[Seal]
<PAGE>
[LOGO]
IREDELL COUNTY
Statesville, North Carolina 28677
ADMINISTRATIVE OFFICES
October 17, 1977
Exhibit 3
At the present time, there are no projects under consideration by the Authority.
----------------------
Secretary
<PAGE>
EXHIBIT 8
BYLAWS OF
THE IREDELL COUNTY INDUSTRIAL FACILITIES
AND POLLUTION CONTROL FINANCING AUTHORITY
ARTICLE I
---------
OFFICES
-------
1. The principal office of the Authority shall be in the City of
Statesville, North Carolina, at such particular place as shall be fixed from
time to time by resolution of the Authority.
2. The permanent mailing address for purposes of all notices and
correspondence is PO Box 803, Statesville, NC 28677
3. Except as otherwise required by resolution of the Authority, or as
the business of the Authority may require, all of the books and records of the
Authority shall be kept at the office to be designated as hereinabove provided.
ARTICLE II
----------
MEETINGS OF THE AUTHORITY
-------------------------
1. Meetings of the Authority may be called by the Chairman, or in his
absence from the State of North Carolina or incapacity, by the Vice Chairman,
for such time and at such place in the State of North Carolina as may be
specified in the call, upon twenty-four hours written notice. Meetings of the
Authority may be held at any time without notice, provided all members of the
Authority are present or those not present have waived notice thereof. Such
meetings may be he: at such times and places as the notice thereof or waiver may
specify. Any business of the Authority may be considered and acted upon at any
such meeting.
2. At all meetings of the Authority the following order of business
shall be observed, as far as consistent with the purpose of the meeting:
i. Reading and approval of the minutes of the preceding meeting.
ii. Reports of officers.
<PAGE>
iii. Reports of committees.
iv. Unfinished business.
v. New business.
3. The vote on the adoption of every resolution shall be by ayes and
noes, and the names of the members voting for and against the resolution shall
be entered upon the minutes of the meeting.
ARTICLE III
-----------
OFFICERS
--------
1. The officers of the Authority shall be a Chairman, a Vice Chairman,
a Treasurer, a Secretary and an Assistant Secretary. The Chairman, Vice
Chairman, Treasurer, Secretary and Assistant Secretary shall hold such offices
until May 3 of the following year and until the election of their successors.
2. The Chairman shall be the chief executive officer of the Authority
and shall preside at all meetings of the Authority. Unless some other person is
thereunto specifically authorized by vote of the Authority, the Chairman shall
sign all contracts and other instruments to be executed on behalf of the
Authority. He shall perform all the duties commonly incident to this office, and
shall perform such other duties and have such other powers as the Authority may
from time to time designate.
3. The Vice Chairman shall perform the duties and have the powers of
the Chairman during the absence or incapacity of the Chairman. He shall then
perform all the duties commonly incident to the office of Chairman, and shall
perform such other duties and have such other powers as the Authority may from
time to time designate.
4. Subject to the provisions of any trust agreement or resolution
securing revenue bonds of the Authority, the Treasurer shall have the care and
custody of the funds of the Authority and shall have and exercise, under the
supervision of the Authority, all the powers and duties commonly incident to the
office of treasurer.
A-2.
<PAGE>
5. The Secretary shall attend all meetings of the Authority and act as
secretary or clerk thereof; he shall record all votes and keep accurate records
of all proceedings at such meetings in a minute book to be kept for that
purpose, which shall be open at all reasonable times to the inspection of any
member. The Secretary shall cause notice to be given of all meetings of the
Authority as required by law or by these Bylaws; he shall keep in safe custody
the official seal to all papers authorized to be executed by the Authority
requiring such seal to be affixed. He shall have authority to cause copies to be
made of all minutes and other records and documents of the Authority and to give
certificates under the official seal of the Authority to the effect that such
copies are true copies, and all persons dealing with the Authority may rely upon
such certificates.
He shall perform all the duties commonly incident to the office of
secretary or clerk and shall perform such other duties and have such other
powers as the Authority from time to time may designate.
6. The Assistant Secretary shall perform the duties and have the Dowers
of the Secretary during the absence or incapacity of the Secretary. He shall
then perform all the duties commonly incident to the office of Secretary, and
shall perform such other duties and have such other powers as the Authority may
from time to time designate.
7. In addition to the officers above-mentioned, the Authority may
provide for such deputies, assistants and other officers as it may deem
necessary from time to time, who shall perform such duties and have such powers
as the Authority may designate.
8. All legal matters and proceedings for the Authority shall be
conducted under the supervision and direction of the County Attorney for Iredell
County.
ARTICLE IV
----------
OFFICIAL SEAL
-------------
The official seal of the Authority shall consist of the embossed
impression of a circular metallic disc containing the words "THE IREDELL COUNTY
INDUSTRIAL FACILITIES AND POLLUTION CONTROL FINANCING AUTHORITY, N.C.", and the
Secretary shall secure such seal and cause an impression thereof to be made on
the margin of the minutes containing this Article.
A-3.
<PAGE>
ARTICLE V
---------
NET EARNINGS
------------
Any net earnings of the Authority (beyond that necessary for retirement
of the revenue bonds of the Authority) may not inure to the benefit of any other
person than the Authority.
ARTICLE VI
----------
AMENDMENTS
----------
Except as otherwise provided by law, these Bylaws may be amended, added
to, altered or repealed in whole or in part by the Authority at any meeting of
the Authority, provided that notice of the proposed amendment, addition,
alteration or repeal is given in the notice of such meeting, or that all members
of the Authority are present at such meeting.
A-4.
<PAGE>
EXHIBIT C
RESOLUTION APPROVING THE ISSUANCE
AND SALE OF UP TO $2,000,000 INDUSTRIAL REVENUE REFUNDING BONDS
(HUNT MANUFACTURING CO. PROJECT)
AND AUTHORIZING THE FILING OF AN APPLICATION
FOR APPROVAL WITH THE LOCAL GOVERNMENT COMMISSION OF
NORTH CAROLINA
The Iredell County Industrial Facilities and Pollution Control
Financing Authority met at the Upstairs Conference Room, Iredell County
Government Center, 200 South Center Street, Statesville, NC, at 12:00 Noon on
June 2, 1994.
Present: Steve Robinson, Dan Wallace, J. D. Chamberlain, Lonnie
Troutman, and Loren Powell.
Absent: Mrs. Lois James and Herbert L. Lawton
Others present: Alice Fortner, Secretary to the Authority, and William
H. McMillan, representing County Attorney William P. Pope.
Mr. McMillan presented the following documents in connection with the
proposed issuance by the Authority of its Industrial Revenue Refunding Bonds
(Hunt Manufacturing Co. Project) in the aggregate principal amount of
$2,000,000:
A. First Supplemental Indenture and Deed of Trust ("Indenture") dated
as of June 2, 1994 with form of the Authority's Industrial Revenue
Refunding Bond contained therein.
B. First Supplemental Lease Agreement ("Lease") dated as of June 2,
1994.
Mr. McMillan stated he had reviewed these documents and in his opinion,
they are in order. The documents presented were delivered to the Secretary to
the Authority and directed to be marked Exhibits A and B, respectively, and made
a part of the permanent records of the Authority. Commissioner Chamberlain
introduced the following resolution, the title of which was read aloud:
BOND RESOLUTION AUTHORIZING THE ISSUANCE AND SALE OF $2,000,000
INDUSTRIAL REVENUE REFUNDING BONDS (HUNT MANUFACTURING CO. PROJECT)
AND THE EXECUTION AND DELIVERY OF AN INDENTURE, A LEASE AND OTHER
DOCUMENTS.
WHEREAS, the Authority is authorized under the Industrial and Pollution
Control Facilities Financing Act, Chapter 159C of the General Statutes of North
Carolina, as amended (the "Act"), to
1
<PAGE>
issue refunding bonds for the purpose of refunding any outstanding bonds which
have been issued under the provisions of the Act, to pay certain costs incurred
in connection therewith and to make and execute financing agreements, security
documents and other contracts and instruments necessary or convenient in the
exercise of such powers; and
WHEREAS, Hunt Manufacturing Company, a corporation existing under the
laws of the Commonwealth of Pennsylvania, and qualified to do business in North
Carolina (the "Company"), has requested the Authority to issue its Industrial
Revenue Refunding Bonds (Hunt Manufacturing Co. Project) in the aggregate
principal amount of up to $2, 000, 000 (the "Bonds"), and loan the proceeds
thereof to the Company to refund the Authority's Industrial Revenue Bonds, dated
as of June 1, 1979 (the "Prior Bonds"), which financed the acquisition,
construction and installation of an industrial and manufacturing project (the
"Project") in Iredell County, North Carolina; and
WHEREAS, there have been submitted to this meeting forms of the
following documents:
(a) First Supplemental Indenture and Deed of Trust dated as of June 2,
1994 (the "Indenture"), between the Authority and First Union
National Bank of North Carolina (the "Trustee") with form of the
Authority's Industrial Revenue Refunding Bonds (Hunt Manufacturing
Co. Project) in the aggregate principal amount of $2,000,000 (the
"Bonds") contained therein; and
(b) First Supplemental Lease Agreement dated as of June 2, 1994 (the
"Lease") between the Authority and the Company.
WHEREAS, the Authority desires and deems it expedient to issue and sell
the Bonds pursuant to the Act, the Indenture and this Resolution and to loan the
proceeds thereof to the Company to finance the refunding of the Prior Bonds;
NOW, THEREFORE, BE IT RESOLVED by The Iredell County Industrial
Facilities and Pollution Control Financing Authority as follows:
Section 1. The Authority previously resolved in connection with the
issuance of the Prior Bonds that the Project promoted the right to gainful
employment opportunity and private industry and thereby promoted the general
welfare of the people of the State of North Carolina by, among other things,
providing jobs in Iredell County, and that the Authority, in assisting with the
financing of the acquisition, construction and installation of the Project acted
in furtherance of the public purposes for which it was created. The Authority
hereby acknowledges that the Prior Bonds to be
2
<PAGE>
refunded by the Bonds were issued under the provisions of the Act. The Authority
hereby affirms that in assisting with the refunding of the Prior Bonds, the
Authority will be acting in furtherance of the public purpose for which it was
created.
Section 2. The Authority hereby authorizes the issuance of the Bonds
pursuant to the Act, the Indenture and this Resolution and the loan of the
proceeds of sale thereof to the Company pursuant to the Lease.
Section 3. The Indenture, in the form submitted to this meeting, is
hereby approved and the Chairman or the Vice-Chairman is hereby authorized and
directed to execute and deliver and the Secretary or the Assistant Secretary is
hereby authorized and directed to attest, the Indenture substantially in such
form with insertions as may be approved by the Chairman or the Vice-chairman.
All of the provisions of the Indenture shall be deemed to be a part of this
Resolution as fully and to the same extent as if incorporated verbatim and shall
be in full force and effect from the date of the delivery thereof.
Section 4. The Lease, in the form submitted to this meeting, is hereby
approved and the Chairman or the Vice-Chairman is hereby authorized and directed
to execute and delivery, and the Secretary or the Assistant Secretary is hereby
authorized and directed or the Assistant Secretary is hereby authorized and
directed to attest, the Lease substantially in such form with such necessary and
appropriate variations, omissions and insertions as may be approved by the
Chairman or the Vice-Chairman. All of the provisions of the Lease shall be
deemed to be a part of this Resolution as fully and to the same extent as if
incorporated verbatim and shall be in full force and effect from the date of
delivery thereof.
Section 5. The Bond shall be issued, executed and delivered in
accordance with the terns and conditions of the Indenture and this Resolution.
The Bond shall bear the manual or a facsimile signature of the Chairman or the
Vice-Chairman and the seal of the Authority shall be affixed, imprinted,
lithographed or reproduced thereon, with attestation by the manual or facsimile
signature of the Secretary or the Assistant Secretary. The Bond shall bear
interest at a variable rate per annum (subject to adjustment, limitations and
conversion to a fixed rate under the conditions described in the Indenture)
determined as set forth in the Indenture. The initial rate shall be that rate
determined by the North Carolina Local Government Commission and approved by the
Chairman or Vice-chairman.
Section 6. The Bonds shall be delivered to the First Union National
Bank of North Carolina (the "Trustee") subject to and in accordance with the
Indenture and upon payment to the Trustee of the purchase price therefor in an
amount equal to the aggregate principal amount of the Bonds and the proceeds of
the sale of the
3
<PAGE>
Bonds shall be deposited by the Trustee or its designated Paying Agent to the
account of the Authority in the 1979 Bonds Redemption Fund created by the
Indenture.
Section 7. The Authority hereby elects to have the provisions of
Section 103 (b) (6) (D) of the Internal Revenue Code of 1954, as amended (the
"Code"), and any successor therefor, apply to the Bonds. The Chairman,
Vice-Chairman, Secretary or Assistant Secretary is hereby authorized and
directed to execute and cause to be maintained in the records of the Authority
or filed with the Internal Revenue Service on behalf of the Authority if
required (a) an election to have the provisions of Section 103(b)(6)(D) of the
Code apply to the Bonds and (b) an Information Return for Tax-Exempt Private
Activity Bond Issues (Form 8038) and (c) such other instruments and documents as
may be necessary or desirable to comply with applicable provisions of the Code.
In addition, the company is hereby appointed as the Authority's authorized
representative for purposes of making all (formal and informal) elections with
respect to the bonds under the Treasury Regulations (including, without
limitation, Temp. Treas. Reg. 1.148-OT through 1.148-9T).
Section 8. Pursuant to N.C.G.S. 159E-8(a) the Authority hereby
appoints First Union National Bank of North Carolina, as bond registrar, paying
agent, authenticating agent, transfer agent and tender agent pursuant to the
Indenture in connection with the issuance, sale, delivery, transfer,
registration and payment of the bonds issued under the indenture (the "Bond
Registrar"), said Bond Registrar to maintain on behalf of the Authority the
system of registration, within the meaning of N.C.G.S. 159E-2(14), of
certificated registered obligations issued under the Indenture, as more
particularly set forth in the Indenture, such provisions to control to the
extent in conflict with the provisions of N.C.G.S. 159E4(d) respecting the
setting of record dates for the payment of principal, premium, if any, or
interest on the Bonds.
Section 9. The records of the Bond Registrar pertaining to its duties
under the Indenture, including the bond registration books provided for therein,
shall be maintained by the bond Registrar, as the case may be at its principal
corporate trust offices located in Charlotte, North Carolina, or at such other
of its offices as it may notify the Authority in writing.
Section 10. The Bond Registrar shall receive such compensation and
fees, to be paid by the company, as are provided for the Indenture and the
Lease.
Section 11. The Secretary or the Assistant Secretary of the Authority
is hereby directed to transmit a certified copy of this Resolution forthwith to
the Secretary of the Local Government Commission of North Carolina, such a
transmittal to constitute the request by the Authority that the Local Government
Commission of
4
<PAGE>
North Carolina, or its duly authorized designate, approve the system of
registration of the Bonds, and the appointment of a Bond Registrar, as provided
in these Resolutions.
Section 12. The officers of the Authority are hereby authorized to file
with the Local Government Commission of North Carolina an application for
approval of the issuance of the bonds, and any actions previously taken in
applying for such approval are hereby ratified and confirmed.
Section 13. The Chairman is hereby designated the Authority
Representative, and the Secretary is hereby designated the alternative Authority
Representative, for the purpose of acting as such on behalf of the Authority
pursuant to the Lease.
Section 14. The Chairman or Vice Chairman or the Secretary or Assistant
Secretary of the Authority are hereby authorized to take such actions and
execute such documents as may be requested by the company and which are
necessary in order to effect the refunding of the bonds previously issued by the
Authority for the benefit of the Company with the proceeds of the bonds. The
Authority hereby requests and directs that the company take all steps necessary
to facilitate the refunding of the existing bonds.
Section 15. The Chairman, the Vice-Chairman, the Secretary, the
Assistant Secretary and the other officers of the Authority are hereby
authorized and directed to execute and deliver for and on behalf of the
Authority any and all financing statements, certificates, documents or other
papers, to approve the forms of any other documents, certificates, or other
papers and to perform any and all acts they may deem necessary or appropriate in
order to carry out the intent of this Resolution and the matters herein.
Section 16. This Resolution shall be in full force and effect
immediately upon its passage.
Commissioner Loren Powell moved passage of the immediately foregoing
resolution and Commissioner Steve Robinson seconded the motion, and the
resolution was passed by the following vote:
Ayes: commissioners: Powell, Robinson, Chamberlain, Troutman, and
Wallace.
Noes: None.
Abstaining: None.
* * * * *
BE IT RESOLVED that the following is hereby approved as the final
minutes of the Authority for the June 2, 1994 meeting pertaining to the proposed
issuance by the Authority of its
5
<PAGE>
Industrial Revenue Refunding Bonds (Hunt Manufacturing Co. Project) in the
aggregate principal amount of up to $2,000,000 and shall be made available by
the Secretary or the Assistant Secretary on June 2, 1994 and every day
thereafter to any member of the public requesting a copy thereof, and shall be
inserted by the Secretary or the Assistant Secretary into the compilation of
minutes of action for said June 2, 1994 meeting of the Authority to be later
prepared by the Secretary or the Assistant Secretary:
Motion was made by Commissioner Powell, seconded by commissioner
Robinson, and carried unanimously for adoption of a resolution entitled:
BOND RESOLUTION AUTHORIZING THE ISSUANCE AND SALE OF UP TO $2,000,000
INDUSTRIAL REFUNDING REVENUE BONDS (HUNT MANUFACTURING CO. PROJECT)
AND THE EXECUTION AND DELIVERY OF AN INDENTURE, A LEASE AND OTHER
DOCUMENTS.
STATE OF NORTH CAROLINA
COUNTY OF IREDELL
I, Alice Fortner, Secretary of The Iredell County Industrial Facilities
and Pollution Control Financing Authority and keeper of the official minutes
thereof, DO HEREBY CERTIFY that the foregoing is a true copy of certain
proceedings of the Board of Commissioners of the authority taken at a meeting
held on June 2, 1994, and is a complete copy of so much of the recorded minutes
of said meeting as relates in any way to the subject matter of the resolution
hereinabove set forth and that such resolution was duly adopted and remains in
full force and effect on the date hereof.
I DO HEREBY FURTHER CERTIFY THAT, at least forty-eight hours before
said meeting, I posted written notice thereof at the door of the usual meeting
room of the Authority and mailed or delivered such notice to each person,
newspaper, wire service, radio station and television station that has filed
with it a written request for notice pursuant to G.S. 143-318.12 and that,
pursuant to Article II of the Bylaws of the Authority, I have all members of the
Authority written notice of said meeting not less than twenty-four hours prior
to 12:00 Noon, June 2, 1994.
WITNESS my hand and the official seal of The Iredell County Industrial
Facilities and Pollution Control Financing Authority, this the 2nd day of June,
1994.
------------------------
Secretary
6
<PAGE>
(SEAL)
7
<PAGE>
Closing Document No. 6
IREDELL COUNTY INDUSTRIAL FACILITIES
AND POLLUTION CONTROL FINANCING AUTHORITY
$2,000,000
Industrial Revenue Refunding Bond
(Hunt Manufacturing Co. Project)
Series 1994
GENERAL CERTIFICATE OF THE COMPANY
----------------------------------
This certification is made in connection with the issuance of the
above-referenced bonds by the Iredell County Industrial Facilities and Pollution
Control Financing Authority (the "Authority") pursuant to an Indenture and Deed
of Trust dated as of June 1, 1979, as amended and supplemented by a First
Supplemental Indenture and Deed of Trust dated as of July 31, 1994
(collectively, the "Indenture"), between the Authority and First Union National
Bank of North Carolina, as trustee. All capitalized terms used herein have the
meanings assigned thereto in the Indenture.
We, the undersigned officers of the Company, DO HEREBY CERTIFY as
follows:
1. The Company is a corporation validly existing and, as
indicated by the subsistence certificate attached hereto as Exhibit A, in good
standing under the laws of the Commonwealth of Pennsylvania, and has all
necessary licenses, approvals and permits required to own or lease its
properties and operate its business as currently conducted, and has full right,
power and authority to enter into the Lease and the Guaranty, and to perform all
other acts and things provided for therein.
2. Attached hereto as Exhibit B is a true, correct and complete copy of
the articles of incorporation of the Company which have not been amended or
modified since the effective date thereof (except as indicated in such Exhibit)
and are in full force and effect on the date hereof.
3. Attached hereto as Exhibit C is a true, correct and complete copy of
the By-Laws of the Company, which have not been amended or modified since the
effective date thereof (except as indicated in such Exhibit) and are in full
force and effect as of the date hereof.
4. The individuals named below constitute certain of the officers or
other employees of the Company, which individuals have been at all pertinent
times, and are on the date hereof, duly appointed, qualified and acting as such
officers or other employees:
<PAGE>
Name Title
---- -----
Ronald J. Naples Chairman of the Board
and CEO
Robert B. Fritsch President and CEO
William E. Chandler Sr. VP, Finance; Chief
Financial Officer and
Secretary
Dennis Pizzica Treasurer
5. The representations and warranties of the Company in the Lease,
Guaranty, and Tax Certificate and Agreement are true and correct as of the date
hereof.
IN WITNESS WHEREOF, we have hereunto set our respective signatures as
such officers and have affixed the seal of the Company this last day of July,
1994.
HUNT MANUFACTURING CO.
[SEAL]
By: /s/ William E. Chandler
--------------------------------
Senior Vice President
By: /s/ Dennis Pizzica
--------------------------------
(Assistant) Secretary
-2-
<PAGE>
EXHIBIT A
COMMONWEALTH OF PENNSYLVANIA
Department of State
07/22/1994
TO ALL WHOM THESE PRESENTS SHALL COME, GREETING:
I DO HEREBY CERTIFY THAT,
HUNT MANUFACTURING CO.
is duly incorporated under the laws of the Commonwealth of Pennsylvania and
remains a subsisting corporation so far as the records of this office show, as
of the date herein.
IN TESTIMONY WHEREOF, I have
hereunto set my hand and
caused the Seal of the
Secretary's Office to be
affixed, the day and year
above written.
/s/ XXXXX XXXXX XXX
------------------------------
Secretary of the Commonwealth
<PAGE>
EXHIBIT B
PENNSYLVANIA DEPARTMENT OF STATE
CORPORATION BUREAU
ROOM 308 NORTH OFFICE BUILDING
P.O. BOX 8722
HARRISBURG, PA 17105-8722
HUNT MANUFACTURING CO.
THE CORPORATION BUREAU IS HAPPY TO SEND YOU YOUR FILED DOCUMENT. PLEASE
NOTE THE FILE DATE AND SIGNATURE OF THE SECRETARY OF THE COMMONWEALTH. THE
CORPORATION BUREAU IS HERE TO SERVE YOU AND WANTS TO THANK YOU FOR DOING
BUSINESS IN PENNSYLVANIA. IF YOU HAVE ANY QUESTIONS PERTAINING TO THE
CORPORATION BUREAU CALL 717-787-1057.
ENTITIES ACTING AS PROFESSIONAL FUNDRAISING CONSULTANTS OR PROFESSIONAL
SOLICITORS ON BEHALF OF CHARITIES SOLICITING CONTRIBUTIONS WITHIN THE
COMMONWEALTH OF PENNSYLVANIA MUST REGISTER WITH THE DEPARTMENT OF STATE, BUREAU
OF CHARITABLE ORGANIZATIONS, ROOM 308, NORTH OFFICE BUILDING, HARRISBURG,
PENNSYLVANIA 17120-0029 (717)/783-1720).
ENTITY NUMBER: 0167767
MICROFILM NUMBER: 09429
1306-1307
CAPITOL PARALEGAL
COUNTER
<PAGE>
Microfilm Number Filed with the Department of State on May 03, 1994
------------ -------------
Entity Number 167767 /s/ Robert N. Grant
-------------- --------------------------------------------------
Acting Secretary of the Commonwealth
ARTICLES OF AMENDMENT-DOMESTIC BUSINESS CORPORATION
DSCB: 15-1915 (Rev 91)
In compliance with the requirements of 15 Pa.C.S.ss.1915 (relating to
articles of amendment), the undersigned business corporation, desiring to amend
its Articles, hereby states that:
1. The name of the corporation is: Hunt Manufacturing Co.
----------------------------------------------
2. The (a) address of this corporation's current registered office in this
Commonwealth or (b) name of its commercial registered office provider and
the county of venue is (the Department is hereby authorized to correct the
following information to conform to the records of the Department):
(a) 230 South Broad Street, Philadelphia PA 19102-4167 Phila.
-------------------------------------------------------------------------
Number and Street City State Zip County
(b) c/o:
--------------------------------------------------------------------
Name of Commercial Registered Office Provider
For a corporation represented by a commercial registered office provider, the
county in (b) shall be deemed the county in which )oration is located for
venue and official publication purposes.
3. The statute by or under which it was incorporated is:
Act of May 5, 1933, P.L. 364, as amended
----------------------------------------
4. The date of its incorporation is: November 2, 1962
----------------
5. (Check, and if appropriate complete, one of the following):
X The amendment shall be effective upon filing these Articles of Amendment
--- in the Department of State.
--- The amendment shall be effective on at
---------------- -------------------
Date Hour
6. (Check one of the following):
X The amendment was adopted by the shareholders (or members) pursuant to
--- 15 Pa.C.S.ss.1914(a) and (b).
--- The amendment was adopted by the board of directors pursuant to
15 Pa.C.S.ss.1914(c).
7. (Check, and if appropriate complete, one of the following):
X The amendment adopted by the corporation, set forth in full, is as
--- follows: The first paragraph of Article 5th of the Corporation's
Restated Articles of Incorporation is amended to provide as follows:
"The aggregate number of shares which the Corporation shall have
authority to issue is: 41,000,000 shares, divided into 1,000,000
Preferred Shares of the par value of $.10 per share, and 40,000,000
Common Shares of the par value of $.10 per share.
The amendment adopted by the corporation as set forth in full in Exhibit
--- A attached hereto and made a part hereof.
May -3 94
PA Dept. of State
M. BURR KEIM COMPANY
(215) 563-8113 (800) 533-8113
<PAGE>
Microfilm Number 9044 828 Filed with the Department of State on Sep 18 1990
------------- ------------
Entity Number 167767-019
---------------- -------------------------------------------------
Secretary of the Commonwealth
STATEMENT WITH RESPECT TO SHARES-DOMESTIC BUSINESS CORPORATION
DSCB:15-1522 (Rev 89)
In compliance with the requirements of 15 Pa.C.S. ss. 1522(b) (relating to
statement with respect to shares), the under corporation, desiring to state the
designation and voting rights, preferences, limitations, and special rights, if
any, of or series of its shares, hereby states that:
1. The name of the corporation is: HUNT MANUFACTURING CO.
----------------------------------------------
- --------------------------------------------------------------------------------
2. (Check and complete one at the following):
The resolution amending the Articles under 15 Pa.C.S. ss. I522(b)
--- (relating to divisions and determinations by the board), set forth in
full, is as follows:
X The resolution amending the Articles under 15 Pa.C.S. ss. 1522(b) is set
--- forth in full in Exhibit A attached hereto and made a part hereof.
3. The aggregate number of shares of such class or series established and
designated by (a) such resolution, (b) all prior statements, if any, filed
under 15 Pa.C.S.ss.1522 or corresponding provisions of prior law with respect
thereto, and (c) any other provision of the Articles is 50,000 shares of
Senior A Junior Participating Preferred Stock.
4. The resolution was adopted by the Board of Directors or an authorized
committee thereof on August 8, 1900.
---------------
5. (Check, and if appropriate compete, one of the following):
X The resolution shall be effective upon the filing this statement with
--- respect to shares in the Department of State.
--- The resolution shall be effective on
-------------------------------------
IN TESTIMONY WHEREOF, the undersigned corporation has caused this statement
to be signed by a duty authorized officer thereof this 20 day of August 19 90.
HUNT MANUFACTURING CO.
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(Name of Corporation)
BY: /s/ XXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXX
-----------------------------------------------------
(Signature)
TITLE: Senior Vice President, Finance and Administration
--------------------------------------------------
M. BURR KEIM COMPANY PHILADELPHIA
1-800-533-8113
<PAGE>
9044 829
EXHIBIT A
---------
To Paragraph 2 of
STATEMENT WITH RESPECT TO SHARES of
HUNT MANUFACTURING CO.
Resolution of Board of Directors Adopted
August 8, 1990
-----------------------------------------
RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Company in accordance with the Provisions of its Articles of
Incorporation, a series of Preferred Stock of the Company hereby is created,
with the designations, amount, powers, preferences, rights and qualifications
set forth in Exhibit A hereto.
<PAGE>
9044 830
Exhibit A
---------
HUNT MANUFACTURING CO.
DESIGNATION OF POWERS, PREFERENCES, RIGHTS AND
QUALIFICATIONS OF SERIES A JUNIOR PARTICIPATING
PREFERRED STOCK
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" and the number of
shares constituting such series shall be 50,000.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock ranking prior and superior to the shares
of Series A Junior Participating Preferred Stock with respect to dividends, the
holders of shares of Series A Junior Participating Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, dividends in an amount per share
(rounded to the nearest cent) subject to the provision for adjustment
hereinafter set forth, equal to 1,000 times the aggregate per share amount of
all cash dividends (payable in cash), and 1,000 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other distributions, other
than a dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise), declared
on the Common Shares, $.10 par value, of the Company (the "Common Stock"). In
the event the Company shall at any time after August 8, 1990 (the "Rights
Declaration Date") (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the amount to which holders of shares of Series A Junior Participating Preferred
Stock were entitled immediately prior to such event shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and' the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Company shall declare a dividend or distribution on the
Series A Junior Participating Preferred Stock as provided in paragraph (A) above
immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock).
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9044 831
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Junior Participating Preferred Stock from the
date of declaration of any dividend on the Common Stock. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Series A
Junior Participating Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be allocated
pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of shares of Series A Junior Participating Preferred Stock entitled
to receive payment of a dividend or distribution declared thereon, which record
date shall be no more than 30 days prior to the date fixed for the payment
thereof.
Section 3. Voting Rights. The holders of shares of Series A Junior
Participating Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Junior Participating Preferred Stock shall entitle the
holder thereof to 1,000 votes on all matters submitted to a vote of the
shareholders of the Company. In the event the Company shall at any time after
the Rights Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the number of votes per share to which holders of shares of
Series A Junior Participating Preferred Stock were entitled immediately prior to
such event shall be adjusted by multiplying such number by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders of
shares of Series A Junior Participating Preferred Stock and the holders of
shares of Common Stock shall vote together as one class on all matters submitted
to a vote of the shareholders of the Company.
(C) (i) If at any time dividends on any Series A Junior
Participating Preferred Stock shall be in arrears for a period of two (2) full
fiscal quarters, the occurrence of such contingency shall mark the beginning of
a period (herein called a "default period") which shall extend until such time
as all accrued and unpaid dividends then outstanding shall have been declared
and paid or set apart for payment. During each default period all holders of
Preferred Stock
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<PAGE>
9044 832
which does not rank senior to the Series A Junior Participating Preferred Stock
(including the Series A Junior Participating Preferred Stock) with dividends in
arrears thereon for a period of two (2) full fiscal quarters, voting as a
class, irrespective of series, shall have the right to elect two (2) Directors.
(ii) During any default period, such voting right of the holders
of Series A Junior Participating Preferred Stock may be exercised initially at a
special meeting called pursuant to subparagraph (iii) of this Section 3(C) or at
any annual meeting of shareholders, and thereafter at annual meetings of
shareholders, provided that neither such voting right nor the right of the
holders of any other series of Preferred Stock, if any, to increase, in certain
cases, the authorized number of Directors shall be exercised unless the holders
of ten percent (10%) in number of shares of Preferred Stock outstanding shall be
present in person or by proxy. The absence of a quorum of the holders of Common
Stock shall not affect the exercise by the holders of Preferred Stock of such
voting right. At any meeting at which the holders of Preferred Stock shall
exercise such voting right initially during an existing default period, they
shall have the right, voting as a class, to elect Directors to fill such
vacancies, if any, in the Board of Directors as may then exist up to two (2)
Directors or, if such right is exercised at an annual meeting, to elect two (2)
Directors. If the number which may be so elected at any special meeting does not
amount to the required number, the holders of the Preferred Stock shall have the
right to make such increase in the number of Directors as shall be necessary to
permit the election by them of the required number. After the holders of the
Preferred Stock shall have exercised their right to elect Directors in any
default period and during the continuance of such period, the number of
Directors shall not be increased or decreased except by vote of the holders of
Preferred Stock as herein provided or pursuant to the rights of any equity
securities ranking senior to or pari passu with the Series A Junior
Participating Preferred Stock.
(iii) Unless the holders of Preferred Stock shall, during an
existing default period, have previously exercised their right to elect
Directors, the Board of Directors may order, or any shareholder or shareholders
owning in the aggregate not less than ten percent (10%) of the total number of
shares of Preferred Stock outstanding, irrespective of series, may request, the
calling of a special meeting of the holders of Preferred Stock, which meeting
shall
A3
<PAGE>
9044 833
thereupon be called by the Chairman, the President, a Vice-President or the
Secretary of the Company. Notice of such meeting and of any annual meeting at
which holders of Preferred Stock are entitled to vote pursuant to this paragraph
(C) (iii) shall be given to each holder of record of Preferred Stock by mailing
a copy of such notice to him at his last address as the same appears on the
books of the Company. Such meeting shall be called for a time not earlier than
20 days and not later than 60 days after such order or request or in default of
the calling of such meeting within 60 days after such order or request, such
meeting may be called on similar notice by any shareholder or shareholders
owning in the aggregate not less than ten percent (10%) of the total number of
shares of Preferred Stock outstanding. Notwithstanding the provisions of this
paragraph (C) (iii), no such special meeting shall be called during the period
within 60 days immediately preceding the date fixed for the next annual meeting
of the shareholders.
(iv) In any default period, the holders of Common Stock and of
Series A Junior Participating Preferred Stock, and other classes of stock of the
Company if applicable, shall continue to be entitled to elect the whole number
of Directors until the holders of Preferred Stock shall have exercised their
right to elect two (2) Directors voting as a class, after the exercise of which
right (x) the Directors so elected by the holders of Preferred Stock shall
continue in office until their successors shall have been elected by such
holders or until the expiration of the default period, and (y) any vacancy in
the Board of Directors may (except as provided in paragraph (C) (ii) of this
Section 3 or in the articles or certificate of incorporation of the Company) be
filled by vote of a majority of the remaining Directors theretofore elected by
the holders of the class of stock which elected the Director whose office shall
have become vacant. References in this paragraph (C) to Directors elected by the
holders of a particular class of stock shall include Directors elected by such
Directors to fill vacancies as provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the
right of the holders of Preferred Stock as a class to elect a Director shall
cease, (y) the term of any Director elected by the holders of Preferred Stock as
a class shall terminate, and (z) the number of Directors shall be such number as
may be provided for in the articles or certificate of incorporation or by-laws
irrespective of
A4
<PAGE>
9044 834
any increase made pursuant to the provisions of paragraph (C) (ii) of this
Section 3 (such number being subject, however, to change thereafter in any
manner provided by law or in the articles or certificate of incorporation or
by-laws). Any vacancies in the Board of Directors effected by the provisions of
clauses (y) and (z) in the preceding sentence may be filled by a majority of the
remaining Directors.
(D) Except as set forth herein or as required by law, holders of
Series A Junior Participating Preferred Stock shall have no special voting
rights and their consent shall not be required (except to the extent they are
entitled to vote with holders of Common Stock as set forth herein) for taking
any corporate action.
Section 4. Certain Restrictions.
(A) Whenever any dividends or distributions payable on the Series
A Junior Participating Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series A Junior Participating Preferred Stock
outstanding shall have been paid in full, the Company shall not
(i) declare or pay dividends on, make any other distributions
on, or redeem or purchase or otherwise acquire for consideration any
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Junior
Participating Preferred Stock, provided, that the Company may at any
time redeem, purchase or otherwise acquire shares of any such junior
stock in exchange for any stock of the Company ranking no higher
(either as to dividends or rights upon liquidation, dissolution or
winding up) than such junior stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with Series
A Junior Participating Preferred Stock, except dividends paid ratably
on the Series A Junior Participating Preferred Stock and all such
parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such
shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series A Junior Participating Preference Stock, provided that the
A5
<PAGE>
9044 835
Company may at any time redeem, purchase or otherwise acquire shares
of any such parity stock in exchange for shares of any stock of the
Company ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series A Junior Participating
Preferred Stock or as provided in clause (iv) below;
(iv) purchase or otherwise acquire for consideration any
shares of Series A Junior Participating Preferred Stock, or any shares
of stock ranking on a parity with the Series A Junior Participating
Preferred Stock, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of Directors) to
all holders of such shares upon such terms as the Board of Directors,
after consideration of the respective annual dividend rates and other
relative rights and preferences I of the respective series and
classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(B) The Company shall not permit any subsidiary of the Company to
purchase or otherwise acquire for consideration any shares of stock of the
Company unless the Company could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Junior
Participating Preferred Stock purchased or otherwise acquired by the Company in
any manner whatsoever shall be retired and cancelled promptly after the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Preferred Stock and may be reissued as part of
a new series of Preferred Stock to be created by resolution or resolutions of
the Board of Directors, subject to the conditions and restrictions on issuance
set forth herein.
Section 6. Liquidation, dissolution or Winding Up. (A) Upon any
liquidation (voluntary or otherwise), dissolution or winding up of the Company,
no distribution shall be made to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series A Junior Participating Preferred Stock unless, prior thereto, the holders
of shares of Series A Junior Participating Preferred Stock shall have received
$10 per share, plus an amount equal to any accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment (the
"Series A Liquidation Preference"). Following the payment of the full amount of
the Series A Liquidation Preference, no additional distributions shall be made
to the holders of
A6
<PAGE>
9044 836
shares of Series A Junior Participating Preferred Stock unless, prior thereto,
the holders of shares of Common Stock shall have received an amount per share
(the "Common Adjustment") equal to the quotient obtained by dividing (i) the
Series A Liquidation Preference by (ii) 1,000 (as appropriately adjusted as set
forth in subparagraph C below to reflect such events as stock splits, stock
dividends and recapitalizations with respect to the Common Stock) (such number
in clause (ii), the "Adjustment Number"). Following the payment of the full
amount of the Series A Liquidation Preference arid the Common Adjustment in
respect of all outstanding shares of Series A Junior Participating Preferred
Stock and Common Stock, respectively, holders of Series A Junior Participating
Preferred Stock and holders of shares of Common Stock shall receive their
ratable and proportionate share of the remaining assets to be distributed in
the ratio of the Adjustment Number to 1 with respect to such Preferred Stock
and Common Stock, on a per share basis, respectively.
(B) Notwithstanding paragraph (A) of this Section 6, (i) in the
event, however, that there are not sufficient assets available to permit payment
in full of the Series A Liquidation Preference and the liquidation preferences
of all other series of preferred stock, if any, which rank on a parity with the
Series A Junior Participating Preferred Stock, then such remaining assets shall
be distributed ratably to the holders of the Series A Participating Preferred
Stock and of any such parity shares in proportion to their respective
liquidation preferences; and (ii) in the event that after the required
distributions to holders of Preferred Stock there are not sufficient assets
available to permit payment in full of the Common Adjustment, then such
remaining assets shall be distributed ratably to the holders of Common Stock.
(C) In the event the Company shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the Adjustment Number in effect immediately prior to such event shall be
adjusted by multiplying such Adjustment Number by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Company shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any
A7
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9044 837
such case the shares of Series A Junior Participating Preferred Stock shall at
the same time be similarly exchanged or changed in an amount per share (subject
to the provision of adjustment hereinafter set forth) equal to 1,000 times the
aggregate amount of stock, securities, cash and/or any other property (payable
in kind), as the case may be, into which or for which each share of Common Stock
is changed or exchanged. In the event the Company shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (ii)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the amount set forth in the preceding sentence with respect to
the exchange or change of shares of Series A Junior Participating Preferred
Stock shall be adjusted by multiplying such amount by a fraction the numerator
of which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Junior Participating
Preferred Stock shall not be redeemable.
Section 9. Ranking. The Series A Junior Participating Preferred Stock
shall rank junior to all other series of the Company's Preferred Stock as to the
payment of dividends and the distribution of assets, unless the terms of any
such series shall provide otherwise.
Section 10. Amendment. The Articles or Certificate of Incorporation of
the Company shall not be further amended in any manner which would materially
alter or change the powers, preferences or special rights of the Series A Junior
Participating Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of a majority or more of the outstanding shares
of Series A Junior Participating Preferred Stock, voting separately as a class.
Section 11. Fractional Shares. Series A Junior Participating Preferred
Stock may be issued in fractions of a share which shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting rights,
receive dividends, participate in distributions and to have the benefit of all
other rights of holder's of Series A junior Participating Preferred Stock.
A8
<PAGE>
EXHIBIT II
Composite
Restated Articles of Incorporation
as amended
through May 12, 1986
of
HUNT MANUFACTURING CO.
lst. The name of the corporation is Hunt Manufacturing Co.
2nd. The location and post office address of its registered office in
the Commonwealth of Pennsylvania is 1405 Locust Street, Philadelphia,
Pennsylvania.
3rd. The corporation shall have unlimited power to engage in and to do
any lawful act concerning any or all lawful business for which corporations may
be incorporated under the Act of May 5, 1933, P.L. 364, as amended.
The corporation is organized under the Act of May 5, 1933, P.L. 364,
as amended.
4th. The term for which it is to exist is Perpetual.
5th. The aggregate number of shares which the
Corporation shall have authority to issue is: 21,000,000 shares,
divided into 1,000,000 Preferred Shares of the par value of $.10 per share, and
20,000,000 Common Shares of the par value of $.10 per share.
A description of the shares of each class and a statement of the
preferences, qualifications, limitations, restrictions, and the special or
relative rights granted to or imposed upon the shares of each class, except such
thereof as the Board of Directors is authorized to fix, as hereinafter provided,
is as follows:
I. PREFERRED SHARES
The Preferred Shares may be divided into and issued in series,
each series to be so designated as to distinguish the shares thereof from the
shares of all other series and classes. The Board of Directors of the
Corporation shall have authority, by resolution, to divide any or all of the
Preferred Shares into one or more series and, with respect to each series
<PAGE>
to establish and, prior to the issue thereof, to fix and determine a
distinguishing designation therefor and to fix and determine:
(a) the rate at which dividends on the shares shall be declared
and paid or set aside for payment; whether dividends at the rate so
determined shall be cumulative and if so from what date or dates and
on what terms; and whether the shares shall be entitled to any
participating or other dividends in addition to dividends at the rate
so determined, and if so on what terms;
(b) whether or not the shares shall 'have voting rights, in
addition to the voting rights provided by law, and if so, the terms
and conditions thereof;
(c) whether the shares shall have conversion privileges and, if
so, the terms and conditions of such conversion, including provisions
for any adjustment of the conversion rate;
(d) whether or not the shares shall be redeemable, and, if so, the
terms and conditions of such redemption, including the date or dates
upon or after which they shall be redeemable, and the amount per share
payable in case of redemption, which amount may vary under different
conditions and at different redemption dates;
(e) whether any shares shall be redeemed through sinking fund
payments, and, if so, on what terms;
(f) the rights of the shares of each series in the event of
voluntary or involuntary liquidation, dissolution, winding up or
distribution of the assets of the Corporation; and
(g) any other relative rights, preferences and limitations of each
series.
II. COMMON SHARES
Except as expressly provided by law or by resolution of the Board of
Directors pursuant to the authority granted under Article 5 1 hereof, all voting
rights shall be vested in the holders of the Common Shares.
-2-
<PAGE>
6th. The number of directors which shall constitute the whole board of
directors of the corporation shall be the number from tire to time fixed by the
by-laws of the corporation, and such number of directors so fixed in such
by-laws may be changed only upon the affirmative vote of (i) the holders of at
least 70% of all the securities of the corporation then entitled to vote on such
change, or (ii) two-thirds of the directors in office at the time of the vote.
At the time of the corporation's annual meeting of stockholders in
1982, the Board of Directors shall be divided into three classes: Class I, Class
II and Class III. Such classes shall consist of, as nearly as possible, equal
numbers of directors. The term of office of the initial Class I directors shall
expire at the regular annual meeting of stockholders in 1983; the term of office
of the initial Class II directors shall expire at the regular annual meeting of
stockholders in 10,84, and the term of office of the initial Class III directors
shall expire at the regular annual meeting of stockholders in 1985, or in each
case when their respective successors are thereafter elected and qualified At
each annual election held after 1982, the directors chosen to succeed those
whose terms are expiring shall be identified as being of the same class of
directors- as those whom they succeed and shall be elected for a term expiring
at the third succeeding regular annual meeting of stockholders after their
election or in each case when their respective successors are thereafter elected
and qualified.
In the event of any increase or decrease in the authorized number of
directors, (i) each director then serving as such shall nevertheless continue as
a director of the class of which he is a member until the expiration of his
current term and (ii) the newly created or eliminated directorships resulting
from such increase or decrease shall be apportioned by the Board of Directors
among the three classes of directors so as to maintain such classes as nearly
equal in number as possible. Subject to Sections 4.05(B) and 4.05(C) of the
Pennsylvania Business Corporation Law, any director my be removed with or
without cause only upon the affirmative vote of the holders of at least 70% of
all of the securities of the corporation entitled to vote for the election of
directors; provided that no director shall be removed unless the entire class of
the Board of which the director is a member is removed in any case where the
votes cast against the resolution for said director's removal represent a number
of shares sufficient, if cumulatively voted at an annual election of directors,
to elect one or more directors to the class of the director is a member.
-3-
<PAGE>
Should a vacancy occur or be created, whether arising through death,
resignation or removal (otherwise than by vote of the voting stockholders of the
corporation, as provided above) of a director or through an increase in the
number of directors of any class (effected otherwise than by vote of the voting
stockholders of the corporation, as provided above), such vacancy shall be
filled by a majority vote of the remaining directors of the class in which such
vacancy occurs or by the sole remaining director of that class if only one such
director remains or by a majority vote of the remaining directors of the other
two classes if there be no remaining member of the class in which the vacancy
occurs. In all other cases any such vacancy shall be filled by vote of the
voting stockholders of the corporation. A director so elected to fill a vacancy
shall serve for the remainder of the then present term of office of the class to
which he was elected.
7th. (A) The affirmative vote of the holders of at least 70% of all of
the securities of the corporation entitled to vote shall, except as provided in
paragraph (B) of this Article 7th, be required in order for any of the following
actions or transactions to be effected by the corporation, or approved by the
corporation as stockholder of any subsidiary of the corporation:
(i) any merger or consolidation of the corporation or any of
its subsidiaries with or into a Related Person (as hereinafter
defined) or any affiliate, subsidiary or associate (as each of said
terms is defined in the Securities Exchange Act of 1934 and the rules
and regulations promulgated thereunder) of a Related Person, or
(ii) any sale, lease, exchange or other disposition of all or
any substantial part of the assets of the corporation or any of its
subsidiaries to or with a Related Person or any affiliate, subsidiary
or associate of a Related Person, or
(iii) any issuance or delivery by the corporation of any
voting securities (or any securities or other instruments convertible
into voting securities) of the corporation or any of its subsidiaries
(other than securities issued or delivered by the corporation pursuant
to (a) any present or future stock option plan or other stock plan
created for the benefit of the officers and employees of the
corporation or any of its subsidiaries or (b) any underwritten public
offering) to a Related Person or any affiliate, subsidiary or
associate of a Related Person in exchange for cash, other assets or
securities, or any combination thereof, or
(iv) any dissolution of the corporation.
(B) The vote of the securityholders specified in paragraph (A) of this
Article 7th shall not apply to any action or transaction specified in such
paragraph if:
-4-
(i) such action or transaction is approved in advance by a majority of the
"Continuing Directors" (said term to mean and include all directors of the
corporation than in of 'Lice who were dully elected prior to the tire the
person, corporation or entity involved in such action or transaction (either
directly or with or through any affiliates, subsidiaries or associates) became a
Related Person, and all directors of the corporation elected as such at the
annual meeting of securityholders at which this Article 7th was adopted). or
(ii) such action or transaction involves solely the corporation -and one or more
subsidiaries of the corporation, or involves solely two or =re subsidiaries of
the corporation (provided that none of the stock of any such subsidiary involved
is directly or indirectly beneficially owned by a Related Person (other than
such ownership arising solely because of ownership interests in the corporation)
and, in the case of a merger, the corporation is the surviving corporation or a
subsidiary of the corporation is the surviving corporation and following such
verger the certificate or articles of incorporation of such subsidiary contain
provisions substantially the same as those in Articles 6th, 7th and 8th of these
Articles of Incorporation.
(C) In determining whether or not to approve or recommend the approval
of any transaction of the type enumerated in item (i), (ii) or (iii) of
paragraph (B) above, whether or not involving (directly or indirectly) a Related
Person, or any other transaction having a similar major effect upon the
properties, operations or control of the Company, the Board of Directors or the
Continuing Directors, as the case may be, shall be entitled to consider, as
separate and independent factors, with such relative weights as they may assign,
the following:
(i) the character, integrity, business philosophy and
financial status of the other party or parties to the transaction;
(ii) the consideration to be received by the corporation or
its securityholders in connection with such transaction, as compared
to
(a) the current market price or value of the
corporation's properties or securities;
(b) the value of the corporation, its properties or
securities in a freely negotiated transaction;
(c) the estimated future value of the corporation, its
properties or securities;
(d) such other measures of the value of the corporation,
its properties or securities as the directors may deem
appropriate;
(iii) the projected social, legal and economic effects of the
proposed action or transaction upon employees, suppliers and customers
of the corporation and the communities where the corporation does
business;
-5-
<PAGE>
(iv) the general desirability of the corporation's continuing
as an independent entity; and
(v) such other factors as they may deem relevant.
(D) The term "Related Person" as used herein shall man and include any
individual, corporation, partnership or other person or entity which, together
with its affiliates and associates and any other person or entity with which it
or its affiliates or associates has any agreement, arrangement or
understanding, directly or indirectly, for the purpose of acquiring, holding,
voting or disposing of voting securities of the corporation, directly or
indirectly beneficially owns 5% or Tore in the aggregate of the outstanding
voting securities of the corporation. A majority of the Continuing Directors
then in office shall have the power and the duty to determine for purposes of
this Article 7th, on the basis of information then known to them, who shall
constitute a Related Person and its affiliates, subsidiaries and associates. Any
such determination by the Continuing Directors shall be conclusive and binding
for all purposes.
8th. The provisions set forth in this Article 8th and in Articles 6th
and 7th herein may not be repealed or amended in any respect unless such action
is approved by the affirmative vote of the holders of at least 70% of all of the
securities of the corporation entitled to vote thereon.
-6-
<PAGE>
Microfilm Number Filed with the Department of State on May 03 1994
-------- ------------
Entity Number 167767 /s/ Robert N. Grant
-------- -------------------------------------------------
Acting Secretary of the Commonwealth
ARTICLES OF AMENDMENT-DOMESTIC BUSINESS CORPORATION
DSCB:15-1915 (Rev 91)
In compliance with the requirements of 15 Pa.C.S. section 1915
(relating to articles of amendment), the undersigned business corporation,
desiring to amend its Articles, hereby states that:
1. The name of the corporation is: Hunt Manufacturing Co.
----------------------------------------------
-----------------------------------------------------------------------------
2. The (a) address of this corporation's current registered office in this
Commonwealth or (b) name of its commercial registered office provider and the
county of venue is (the Department is hereby authorized to correct the
following information to conform to the records of the Department):
(a) 230 South Broad Street, Philadelphia PA 19102-4167 Phila.
--------------------------------------------------------------------------
Number and Street City State Zip County
(b) c/o:
---------------------------------------------------------------------
Name of Commercial Registered Office Provider County
For a corporation represented by a commercial registered office
provider, the county in (b) shall be deemed the county in which the corporation
is located for venue and official publication purposes.
3. The statute by or under which it was incorporated is:
Act of May 5, 1933, P.L. 364, as amended
-----------------------------------------------------------------------------
4. The date of its incorporation is: November 2, 1962
--------------------------------------------
5. (Check, and if appropriate complete, one of the following):
X The amendment shall be effective upon filing these Articles of Amendment
--- in the Department of State.
--- The amendment shall be effective on: at
------------------ -----------------
Date Hour
6. (Check one of the following):
X The amendment was adopted by the shareholders (or members) pursuant to
--- 15 Pa.C.S. section 1914(a) and (b).
--- The amendment was adopted by the board of directors pursuant to 15
Pa.C.S. section 1914(c).
7. (Check, and if appropriate complete, one of the following):
X The amendment adopted by the corporation, set forth in full, is as
--- follows: The first paragraph of Article 5th of the Corporation's Restated
Articles of Incorporation is amended to provide as follows:
"The aggregate number of shares which the Corporation shall have
authority to issue is: 41,000,000 shares, divided into 1,000,000
Preferred Shares of the par value of $.10 per share, and 40,000,000
Common shares of the par value of $.10 per share."
--- The amendment adopted by the corporation as set forth in full in Exhibit
A attached hereto and made a part hereof.
May -3 94
PA Dept. of State
<PAGE>
DSCB:15-1915 (Rev 91)-2
8. (Check if the amendment restates the Articles):
--- The restated Articles of Incorporation supersede the original Articles
and all amendments thereto.
IN TESTIMONY WHEREOF, the undersigned corporation has caused these
Articles of Amendment to be signed by a duly authorized officer thereof this
21st day of April 1994.
- ---- ----- --
HUNT MANUFACTURING CO.
-----------------------------------------
(Name of Corporation)
BY: /s/ William E. Chandler
-------------------------------------
William E. Chandler (Signature)
TITLE: Senior Vice President, Finance
----------------------------------
<PAGE>
DSCB: 60
C 0 M M 0 N W E A L T H 0 F P E N N S Y L V A N I A
Department of State
May 17, 1994
TO ALL WHOM THESE PRESENTS SHALL COME, GREETING:
IN RE: HUNT MANUFACTURING CO.
I, Robert N. Grant, Acting Secretary of the Commonwealth of the
Commonwealth of Pennsylvania do hereby certify that the foregoing and annexed is
a true and correct photocopy of Articles of Amendment
which appear of record in this department.
IN TESTIMONY WHEREOF, I have
hereunto set my hand and caused
the Seal of the Secretary's Office
to be affixed, the day and year
above written.
/s/ Robert N. Grant
------------------------------------
Acting Secretary of the Commonwealth
<PAGE>
Microfilm Number Filed with the Department of State on May 03 1994
-------- ------------
Entity Number 167767 /s/ Robert N. Grant
-------- -------------------------------------------------
Acting Secretary of the Commonwealth
ARTICLES OF AMENDMENT-DOMESTIC BUSINESS CORPORATION
DSCB:15-1915 (Rev 91)
In compliance with the requirements of 15 Pa.C.S. section 1915
(relating to articles of amendment), the undersigned business corporation,
desiring to amend its Articles, hereby states that:
1. The name of the corporation is: Hunt Manufacturing Co.
----------------------------------------------
-----------------------------------------------------------------------------
2. The (a) address of this corporation's current registered office in this
Commonwealth or (b) name of its commercial registered office provider and the
county of venue is (the Department is hereby authorized to correct the
following information to conform to the records of the Department):
(a) 230 South Broad Street, Philadelphia PA 19102-4167 Phila.
--------------------------------------------------------------------------
Number and Street City State Zip County
(b) c/o:
---------------------------------------------------------------------
Name of Commercial Registered Office Provider County
For a corporation represented by a commercial registered office
provider, the county in (b) shall be deemed the county in which the corporation
is located for venue and official publication purposes.
3. The statute by or under which it was incorporated is:
Act of May 5, 1933, P.L. 364, as amended
-----------------------------------------------------------------------------
4. The date of its incorporation is: November 2, 1962
--------------------------------------------
5. (Check, and if appropriate complete, one of the following):
X The amendment shall be effective upon filing these Articles of Amendment
--- in the Department of State.
--- The amendment shall be effective on: at
------------------ -----------------
Date Hour
6. (Check one of the following):
X The amendment was adopted by the shareholders (or members) pursuant to
--- 15 Pa.C.S. section 1914(a) and (b).
--- The amendment was adopted by the board of directors pursuant to 15
Pa.C.S. section 1914(c).
7. (Check, and if appropriate complete, one of the following):
X The amendment adopted by the corporation, set forth in full, is as
--- follows: The first paragraph of Article 5th of the Corporation's Restated
Articles of Incorporation is amended to provide as follows:
"The aggregate number of shares which the Corporation shall have
authority to issue is: 41,000,000 shares, divided into 1,000,000
Preferred Shares of the par value of $.10 per share, and 40,000,000
Common shares of the par value of $.10 per share."
--- The amendment adopted by the corporation as set forth in full in Exhibit
A attached hereto and made a part hereof.
May -3 94
PA Dept. of State
<PAGE>
DSCB:15-1915 (Rev 91)-2
8. (Check if the amendment restates the Articles):
--- The restated Articles of Incorporation supersede the original Articles
and all amendments thereto.
IN TESTIMONY WHEREOF, the undersigned corporation has caused these
Articles of Amendment to be signed by a duly authorized officer thereof this
21st day of April 1994.
- ---- ----- --
HUNT MANUFACTURING CO.
-----------------------------------------
(Name of Corporation)
BY: /s/ William E. Chandler
-------------------------------------
William E. Chandler (Signature)
TITLE: Senior Vice President, Finance
----------------------------------
<PAGE>
DSCB: 60
C 0 M M 0 N W E A L T H 0 F P E N N S Y L V A N I A
Department of State
May 17, 1994
TO ALL WHOM THESE PRESENTS SHALL COME, GREETING:
IN RE: HUNT MANUFACTURING CO.
I, Robert N. Grant, Acting Secretary of the Commonwealth of the
Commonwealth of Pennsylvania do hereby certify that the foregoing and annexed is
a true and correct photocopy of Articles of Amendment
which appear of record in this department.
IN TESTIMONY WHEREOF, I have
hereunto set my hand and caused
the Seal of the Secretary's Office
to be affixed, the day and year
above written.
/s/ Robert N. Grant
------------------------------------
Acting Secretary of the Commonwealth
<PAGE>
EXHIBIT C
Amended through July 26, 1990
BY-LAWS
-------
of
HUNT MANUFACTURING CO.
(A Pennsylvania Corporation)
Section 1. MEETINGS OF SHAREHOLDERS
Section 1.01. Place of Meetings of shareholders of the
Corporation shall be held at such place within the Commonwealth of Pennsylvania
or elsewhere, as may be fixed by the Board of Directors. if no place is so
fixed, they shall be held at the office of the Corporation in Philadelphia,
Pennsylvania.
Section 1.02. Annual Meeting. The annual meeting of shareholders, for
the election of directors and the transaction of any other business which may be
brought before the meeting, shall be held, unless the Board of Directors shall
fix some other hour or date therefor, at 10:00 o'clock A.M. on the third
Wednesday in April in each year, if not a legal holiday under the laws of
Pennsylvania, and, if a legal holiday, then on the next succeeding secular day
not a legal holiday under the laws of Pennsylvania. If for any reason such
meeting is not held at the time fixed therefor, such election may be held at a
subsequent meeting called for that purpose.
Section 1.03. Notice of Meetings. Notice of all meetings of
shareholders shall be given to each shareholder of record entitled to vote at
the meeting, at least ten days prior to the day named for the meeting, unless a
greater period of notice is by law required in a particular case.
Section 1.04. Organization. At every meeting of the shareholders, the
Chairman of the Board, or in his absence,
<PAGE>
the Vice Chairman, or in his absence, the President, or in his absence, a Vice
President, or in the absence of the Chairman, the Vice Chairman, the President
and all Vice Presidents, a chairman chosen by the shareholders, shall act as
chairman; and the Secretary, or in his absence, a person appointed by the
chairman, shall act as secretary.
Section 1.05. Voting. Except as otherwise specified herein or in the
Articles or provided by law, all matters shall be decided by the vote of the
shareholders present, in person or by proxy, entitled to cast at least a
majority of the votes which all shareholders present are entitled to cast,
although such vote be less than a majority of the votes which all the
shareholders entitled to vote thereon would be entitled to cast.
In each election of directors, the candidates receiving the highest
number of votes, up to the number of directors to be elected in such election,
shall be elected.
Section 2. DIRECTORS
Section 2.01. Number of Directors The number of directors of the
Corporation shall be eleven.
Section 2.02. Resignations. Any director may resign at any time by
giving written notice to the Board of Directors, directed to the Chairman of the
Board, the Vice Chairman, the President, or to the Secretary. Such resignation
shall take effect at the time of the receipt of such notice or at any later time
specified therein; and, unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective.
Section 2.03. Annual meeting. Immediately after each annual election of
directors, the Board of Directors shall meet for the purpose of organization,
election of officers, and the transaction of other business, at the place where
such election of directors was held. Notice of such meeting need not be given.
In the absence of a quorum at said meeting, the same may be held at any other
time and place which shall be specified in a notice given as hereinafter
provided for special meetings of the Board of Directors.
Section 2.04. Regular Meetings. Regular meetings of the Board of
Directors shall be held at such time and place as shall be designated from time
to time by standing resolution of the Board. Notice of such meetings need not be
given. If the date fixed for any such regular meeting be a legal holiday under
the laws of the State where such meeting is to be held,
-2-
<PAGE>
then the same shall be held on the next succeeding secular day not a legal
holiday under the laws of said State, or at such other time as may be determined
by resolution of the Board. At such meetings the directors may transact such
business as may be brought before the meeting.
Section 2.05 Special Meetings. Special meetings of the Board of
Directors may be called by the Chairman of the Board, the Vice Chairman, the
President, a vice President, or by two or more of the directors, and shall be
held at such time and place as shall be designated in the call for the meeting.
Written notice of each special meeting shall be given, by or at the direction of
the person or persons authorized to call such meeting, to each director, at
least three days prior to the date named for the meeting.
Section 2.06. Organization. Every meeting of the Board of Directors
shall be presided over by the Chairman of the Board, if he is present, and, if
not, by the Vice Chairman, or in the absence of the Chairman and Vice Chairman,
by the President, a vice President, or in the absence of the Chairman, the Vice
Chairman, the President and all the Vice Presidents, a chairman chosen by a
majority of the directors present. The Secretary, or in his absence, a person
appointed by the presiding chairman, shall act as secretary.
Section 2.07. Participation in Meetings. One or more directors may
participate in a meeting of the Board or a committee of the Board by means of
conference telephone or similar communications equipment by which all persons
participating in the meeting can hear each other.
Section 2.08. Compensation of Directors. Directors shall be entitled to
receive such compensation, if any, as may be fixed, from time to time, by the
Board of Directors. Directors may also be reimbursed by the Corporation for such
reasonable expenses incurred in attending meetings of the Board, or any
Committee thereof of which they are members, or otherwise incurred in the
performance of their duties as directors, in accordance with such policies as
the Board, from time to time, may establish.
Section 3. COMMITTEES
Section 3.01. Executive Committee. If an Executive Committee or one or
more other committees is or are designated by the Board of Directors to exercise
the authority of the Board in the management of the Corporation, such
committee(s) shall keep regular minutes of its or their proceedings and report
the same to the Board at each regular meeting.
-3-
<PAGE>
Section 3.02. other Committees. The Board of Directors may, at any time
and from time to time, appoint such standing committees and/or special
committees, consisting of directors or others, to perform such duties and make
such investigations and reports as the Board shall by resolution determine. Such
committees shall determine their own organization and times and places of
meeting, unless otherwise directed by such resolution.
Section 4. OFFICERS
Section 4.01. Number, Qualifications and Designation. The officers of
the Corporation shall be a Chairman of the Board, a President, a Secretary and a
Treasurer, and may include a Vice Chairman and one or more Corporate vice
Presidents (including Executive and Senior Vice Presidents), and also may
include such other officers as may be elected in accordance with the provisions
of Section 4.02 herein. one person may hold more than one office. Officers shall
be natural persons of full age.
Section 4.02. Subordinate Officers and Agents. The Board may, from time
to time, elect such other officers and appoint such other agents as it deems
necessary, who shall hold their offices for such terms and shall exercise such
powers and perform such duties as are provided in these By-Laws, or as the Board
may, from time to time, determine. The Board may delegate to any officer the
power to elect subordinate officers and to retain or appoint other agents and
prescribe the authority and duties of such subordinate officers or other agents.
Section 4.03. Election and Term of office. The officers of the
Corporation, except those elected 'By delegated authority pursuant to Section
4.02 herein, shall be elected by the Board of Directors at its annual meeting,
but the Board may elect officers or fill vacancies among the officers at any
other meeting. Subject to earlier termination of office, each officer shall hold
office for one year and until his successor shall have been elected and
qualified.
Section 4.04. Resignations. Any officer may resign at any time by
giving written notice to the Board of Directors, directed to the Chairman of the
Board, the Vice Chairman, the President, or to the Secretary of the Corporation.
Any such resignation shall take effect at the time of the receipt of such notice
or at any later time specified therein; and, unless otherwise specified therein,
the acceptance of such resignation shall not be necessary to make it effective.
-4-
<PAGE>
Section 4.05. The Chairman of the Board. The Chairman of the Board
shall be the chief executive officer of the Corporation and shall have overall
responsibility for the management of the business and operations of the
Corporation (subject, however, to the control of the Board). The Chairman shall
preside at the meetings of the Board and shall also perform such other duties as
may be specified by these By-Laws or as from time to time may be assigned to him
by the Board.
Section 4.06. The Vice Chairman. The vice Chairman if there be one,
shall preside at meetings of the Board in the absence of the Chairman and shall
also perform such other duties as may be specified by these By-Laws or as from
time to time may be assigned to him by the Board or the Chairman.
Section 4.07. The President. The President shall be the chief operating
officer of the Corporation and shall have the responsibility for the day-to-day
operations of the Corporation (subject, however, to the control of the Board and
the Chairman). The President, the Chairman, or the vice Chairman shall sign,
execute, and acknowledge, in the name of the Corporation, deeds, mortgages,
bonds, contracts, and other instruments authorized by the Board, except in cases
where the signing and execution thereof shall be expressly delegated by the
Board to some other officer or agent of the Corporation. He shall preside at
meetings of the Board in the absence of the Chairman and vice Chairman and, in
general, he shall perform all duties incident to the office of President, and
such other duties as may be specified by these By-Laws or as from time to time
may be assigned to him by the Board, the Chairman, or the Vice Chairman.
Section 4.08. The Vice Presidents. In the absence or disability of the
President or when so directed by the Chairman, the Vice Chairman or the
President, any Vice President (except those elected by delegated authority
pursuant to Section 4.02 herein) may perform all the duties of the President,
and, when so acting, shall have all the powers of, and be subject to all the
restrictions upon, the President. The Vice Presidents also shall perform such
other duties as from time to time may be assigned to them by the Board, the
Chairman, the Vice Chairman or the President.
Section 4.09. The Secretary. The Secretary, or any Assistant Secretary,
shall record all the votes of the shareholders and of the directors and the
minutes of the meetings of the shareholders and of the Board of Directors in a
book or books to be kept for that purpose; he shall see that notices of meetings
of the Board and shareholders are given and that all records and reports are
properly kept and filed by the
-5-
<PAGE>
Corporation as required by law; he shall be the custodian of the seal of the
Corporation and shall see that it is affixed to all documents to be executed on
behalf of the Corporation under its seal; and, in general, he shall perform such
duties incident to the office of Secretary and such other duties as may be
specified by these By-Laws or as from time to time may be assigned to him by the
Board, the Chairman, the Vice Chairman or the President.
Section 4.10. The Treasurer. The Treasurer, or an Assistant Treasurer,
shall have charge of all receipts and disbursements of the Corporation and shall
have or provide for the custody of its funds and securities; he shall have full
authority to receive and give receipts for all money due and payable to the
Corporation, and to endorse checks, drafts, and warrants in its name and on its
behalf and to give full discharge for the same; he shall deposit all funds of
the Corporation, except such as may be required for current use, in such banks
or other places of deposit as the Board may from time to time designate; and, in
general, he shall perform such other duties incident to the office of Treasurer
and such other duties as may be specified by these By-Laws or as from time to
time may be assigned to him by the Board, the Chairman, the Vice Chairman or the
President.
Section 4.11. Compensation of officers and Others. The compensation of
all officers shall be fixed from time to time by the Board of Directors, or any
committee or officer authorized by the Board so to do. No officer shall be
precluded from receiving such compensation by reason of the fact that he is also
a director of the Corporation.
Additional compensation, fixed as above provided, may be paid to any
officers or employees for any year or years, based upon the success of the
operations of the Corporation during such year.
Section 5. LIMITATION OF LIABILITY OF DIRECTORS; INDEMNIFICATION OF
DIRECTORS, OFFICERS AND OTHERS
Section 5.01. Limitation of Liability of Directors. A director of the
Corporation shall not be personally liable for monetary damages for any action
taken, or any failure to take any action, as a director except to the extent
that a director's liability for monetary damages may not be limited or avoided
under the terms of the Directors' Liability Act, 42 Pa. C.S. 58361 et seq., as
the same may be amended from time to time, or any applicable Pennsylvania
statute thereafter enacted.
-6-
<PAGE>
Section 5.02. Indemnification. The Corporation shall indemnify any
person who was or is a party (other than a party plaintiff suing in his own
behalf or in the right of the Corporation) or is threatened to be made a party
to or a subject of any threatened, pending or completed action, suit or
proceeding (collectively, a "Proceeding"), including actions by or in the right
of the Corporation, whether civil, criminal, administrative or investigative, by
reason of the fact that such person (an "Indemnified Person") is or was a
director or officer of the Corporation, or is or was serving, while a director
or officer of the Corporation, at the request of the Corporation as a director,
officer, employee, agent, fiduciary or other representative of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against expenses (including attorneys, fees), judgments, fines,
excise taxes, punitive damages and amounts paid in settlement (collectively, a
"Liability") actually and reasonably incurred by such Indemnified Person in
connection with such Proceeding, unless the act or failure to act giving rise to
the claim for indemnification is determined by a court to have constituted
willful misconduct or recklessness. If an Indemnified Person is entitled to
indemnification in respect of a portion, but not all, of any Liability, the
Corporation shall indemnify such person to the extent of such portion.
Section 5.03. Advancement of Expenses. Expenses actually and reasonably
incurred by an Indemnified Person in defending a Proceeding shall be paid by the
Corporation in advance of the final disposition of such Proceeding (regardless
of the financial condition of such Indemnified Person) upon receipt of an
undertaking by or on behalf of such person to repay such amount if it shall
ultimately be determined that such person is not entitled to be indemnified by
the Corporation.
Section 5.04. Non-Exclusivity; Indemnification Agreements. The
indemnification advancement of expenses provided by this Section 5 shall not be
deemed exclusive of any other rights to which persons seeking indemnification
may be entitled under any statute, the Corporation's Articles of Incorporation,
any insurance or other agreement, vote of shareholders or directors or
otherwise, both as to actions in their official capacity and as to actions in
another capacity while holding an office. Without limiting the generality of the
foregoing, by action of the Board of Directors (notwithstanding the interest of
its members in the transaction) the Corporation may enter into agreements with
Indemnified Persons and others providing for indemnification of such persons by
the Corporation either under the provisions of this Section 5 or otherwise, and,
in the event of any conflict between the provisions of this Section 5 and the
provisions of any such indemnification agreement, the provisions of such
indemnification agreement shall prevail.
-7-
<PAGE>
Section 5.05. Insurance. The Corporation shall have the power to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise, against any liability asserted against him and incurred by him
in any such capacity, or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against such liability under
the provisions of these By-Laws or otherwise.
Section 5.06. Security Fund. By action of the Board of Directors
(notwithstanding the interest of its members in the transaction), the
Corporation may create and fund a trust fund or fund of any nature, or otherwise
secure or insure in any manner, its obligation to indemnify and advance expenses
under the provisions of this Section 5 or otherwise.
Section 5.07. Effect; Benefit; Modification. The obligations of the
Corporation to indemnify and to advance expenses to an Indemnified Person under
the provisions of this Section 5 shall be in the nature of a contract between
the Corporation and each such Indemnified Person. Such obligations shall
continue as to, and shall inure to the benefit of the heirs, executors and
administrators of, an Indemnified Person who has ceased to hold the offices or
positions provided in Section 5.02, with respect to any claim based upon an
actual or alleged act or failure to act occurring prior to the time such person
ceased to hold such office or position. No amendment or repeal of any provision
of this section 5, and no amendment or termination of any trust or other fund
created pursuant to Section 5.06, shall alter, to the detriment of such
Indemnified Person, the right of such person to indemnification or the
advancement of expenses with respect to any claim based on an actual or alleged
act or failure to act which took place prior to such amendment, repeal or
termination.
Section 5.08. Applicability. This Section 5 shall be effective as of
January 27, 1987. Liability, indemnification and advancement of expenses for any
action or failure to act occurring prior to January 27, 1987 shall be governed
by applicable law and by Section 5 of these By-Laws as in effect at the time of
the action or failure to act.
Section 6. BORROWING, DEPOSITS, PROXIES, ETC.
Section 6.01. Borrowing, etc. No officer, agent or employee of the
Corporation shall have any power or authority to borrow money on its behalf, to
pledge its credit, or to mortgage or pledge its real or personal property,
except within the scope and to the extent of the authority delegated
-8-
<PAGE>
by resolution of the Board of Directors. Authority may be given by the Board for
any of the above purposes and may be general or limited to specific instances.
Section 6.02. Deposits. All funds of the Corporation shall be deposited
from time to time to the credit of the Corporation in such banks, trust
companies, or other depositories as the Board of Directors may approve or
designate, and all such funds shall be withdrawn only upon checks signed by such
one or more officers or employees as the Board shall from time to time determine
Section 6.03. Proxies. Unless otherwise ordered by the Board of
Directors, any officer of the Corporation may appoint an attorney or attorneys
(who may be or include such officer himself), in the name and on behalf of the
Corporation, to cast the votes which the Corporation may be entitled to cast as
a shareholder or otherwise in any other corporation any of whose shares or other
securities are held by or for the Corporation, at meetings of the holders of the
shares or other securities of such other corporation, or, in connection with the
ownership of such shares or other securities, to consent in writing to any
action by such other corporation, and may instruct the person or persons so
appointed as to the manner of casting such votes or giving such consent, and may
execute or cause to be executed in the name and on behalf of the Corporation and
under its seal such written proxies or other instruments as he may deem
necessary or proper in the premises.
Section 7. SHARE CERTIFICATES: TRANSFER
Section 7.01. Share Certificates. Share certificates shall be signed by
the Chairman of the Board, the Vice Chairman, or the President and by the
Secretary or the Treasurer or an Assistant Secretary or an Assistant Treasurer
of the Corporation, but, to the extent permitted by law, such signatures may be
facsimiles, engraved or printed.
Section 7.02. Transfer of Shares. Transfer of share certificates and
the shares represented thereby shall be made only on the books of the
Corporation by the owner thereof or by his attorney thereunto authorized, by a
power of attorney duly executed, and filed with the Secretary or a Transfer
Agent of the Corporation, and on surrender of the share certificates.
Section 7.03. Transfer Agent and Registrar; Regulations. The
Corporation may, if and whenever the Board of Directors so determines, maintain,
in the Commonwealth of Pennsylvania, or any other state of the United States,
one or more transfer offices or agencies, each in charge of a transfer Agent
designated by the Board, where the shares of the
-9-
<PAGE>
Corporation shall be transferable, and also one or more registry offices, each
in charge of a Registrar designated by the Board, where such shares shall be
registered; and no certificates for shares of the Corporation in respect of
which a Transfer Agent and Registrar shall have been designated shall be valid
unless countersigned by such Transfer Agent and registered by such Registrar.
The Board may also make such additional rules and regulations as it may deem
expedient concerning the issue, transfer and registration of share certificates.
Section 7.04. Lost, Destroyed and mutilated Certificates. The Board of
Directors, by standing resolution or by resolutions with respect to particular
cases, may authorize the issue of new share certificates in lieu of share
certificates lost, destroyed or mutilated, upon such terms and conditions as the
Board may direct.
Section 8. AMENDMENTS
Section 8.01. Any or all of the provisions of these ByLaws, whether
contractual in nature or merely regulatory of the internal affairs of the
Corporation, may be amended or repealed, except as otherwise provided in the
Business Corporation Law or the Articles, (a) by a majority vote of the members
of the Board of Directors, or (b) by vote of the shareholders entitled to cast
at least a majority of the votes which all shareholders are entitled to cast
thereon, in either case at any regular or special meeting duly convened after
notice of such purpose to the directors or shareholders, as the case may be
No provision of these By-Laws shall vest any property right in any
shareholder.
Section 9. MISCELLANEOUS
Section 9.01. Nonapplicability of Certain Laws. The following
provisions of the Act of April 27, 1990 (No. 36) amending the Pennsylvania
Business Corporation Law of 1988 and related statutes shall not be applicable to
the Corporation: (1) subsections (d) through (f) of Section 511 (15 Pa. C.S.
ss.511); (2) subsections (e) through (g) of Section 1721, (15 Pa. C.S. ss.1721);
(3) Subchapter G of Chapter 25 (15 Pa. C.S. ss.2561 through ss.2567) (including
Subchapters I (15 Pa. C.S. ss.2581 through ss.2583) and J (15 Pa. C.S. ss.2585
through ss.2588) which are dependent upon Subchapter G); and (4) Subchapter H of
Chapter 25 (15 Pa. C.S. ss.2571 through ss.2575). This Section 9.01 shall be
effective July 26, 1990.
-10-
<PAGE>
Closing Document No. 7
IREDELL COUNTY INDUSTRIAL FACILITIES
AND POLLUTION CONTROL FINANCING AUTHORITY
$2,000,000
Industrial Revenue Refunding Bond
(Hunt Manufacturing Co. Project)
Series 1994
GENERAL CERTIFICATE OF TRUSTEE
------------------------------
I, ____________, Vice President of First Union National Bank of North
Carolina, (the "Bank"), Trustee under an Indenture and Deed of Trust dated as of
June 1, 1979 (the "Original Indenture"), as amended and supplemented by a First
Supplemental Indenture and Deed of Trust dated as of July 31, 1994 (the
"Supplemental Indentures" and, together with the Original Indenture, the
"Indenture"), each between The Iredell County Industrial Facilities and
Pollution Control Financing Authority (the "Authority") and the Bank, DO HEREBY
CERTIFY that:
1. The Supplemental Indenture has been duly executed on behalf of the
Bank by ________________, as (Assistant) Vice President, the corporate seal of
the Bank has been affixed by as (Assistant) Secretary, and the Indenture has
been delivered on behalf of the Bank to the Authority.
2. The Authority's Industrial Revenue Bond, Series 1994 (Hunt
Manufacturing Co. Project) (the "Bond") has been duly authenticated on behalf of
the Bank by me, and has been delivered to or upon the order of the Authority.
3. Exhibit A attached hereto is a true and correct copy of the
Resolution of the Bank delegating to me the authority to perform the acts
performed by me on behalf of the Bank in connection with the execution and
delivery of the Supplemental Indenture, the undertaking of the obligations of
the Bank thereunder and the authentication of the Bond.
4. The Bank is a validly constituted and existing national banking
association, with full power and authority to undertake and perform each of its
duties as Trustee under the Supplemental Indenture.
5. The Trustee has duly authorized the acceptance of and has duly
accepted its appointment as Trustee under the Supplemental Indenture.
6. No further authorization or approval of any banking regulatory
agency having jurisdiction over the Bank is required
<PAGE>
with respect to the transactions on the part of the Bank contemplated by the
Supplemental Indenture.
7. Except as contemplated by the Supplemental Indenture, the Original
Indenture has not been amended, supplemented or modified since the date of its
original execution and delivery.
8. To our knowledge, no litigation is pending or threatened in any
court, either state or federal, calling into question the creation, organization
or existence of the Bank or the authority of the Bank to perform its duties
under the Indenture.
IN WITNESS WHEREOF, the undersigned has hereunto set his/her signature
as such officer and has affixed the corporate seal of the Bank, this last day of
July, 1994.
[SEAL] FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
BY: /s/ xxxxxxxxxxxxxxxxxxx
-----------------------------------
Vice President
-2-
<PAGE>
Closing Document No. 8
IREDELL COUNTY INDUSTRIAL FACILITIES
AND POLLUTION CONTROL FINANCING AUTHORITY
$2,000,000
Industrial Revenue Refunding Bond
(Hunt Manufacturing Co. Project)
Series 1994
CLOSING RECEIPT
---------------
CLOSING RECEIPT by and among the IREDELL COUNTY INDUSTRIAL FACILITIES
AND POLLUTION CONTROL AUTHORITY (the "Authority"), BROWN BROTHERS HARRIMAN & CO.
(the "Purchaser"), HUNT MANUFACTURING CO. (the "Company"), and FIRST UNION
NATIONAL BANK OF NORTH CAROLINA (the "Trustee").
"Indenture" means the Indenture and Deed of Trust dated as of June 1,
1979, as amended and supplemented by a First Supplemental Indenture and Deed of
Trust dated as of July 31, 1994, between the Authority and First Union National
Bank of North Carolina, as trustee, pursuant to which the Bond is issued.
"Bond" means the Authority's Industrial Revenue Bond (Hunt
Manufacturing Co. Project), Series 1994 issued in the aggregate principal amount
of $2,000,000, issued under the Indenture.
"Purchase Price" means the sum of $2,000,000 being the principal amount
of the Bond.
Capitalized terms used by not otherwise defined herein shall have the
meanings ascribed thereto in the Indenture.
THE AUTHORITY acknowledges that it has delivered to the Trustee the
Bond, duly executed by the signatures of the (Vice) Chairman and (Assistant)
Secretary of the Authority, and hereby: (1) requests the Trustee to authenticate
the same in accordance with the Indenture and to deliver them to the Purchaser;
and (2) directs the Purchaser to deliver the Purchase Price for the Bond to the
Trustee in accordance with Section 303 of the First Supplemental Indenture.
THE TRUSTEE hereby: (1) acknowledges receipt from the Purchaser of the
Purchase Price and from the Company of the sum of $35,000, being an amount
sufficient to pay the accrued interest and redemption premium on the Series 1979
Bonds to be redeemed on the date hereof, and (2) confirms that it has
authenticated the Bond
<PAGE>
and has delivered it to the Purchaser in accordance with the request of the
Authority.
THE PURCHASER hereby acknowledges receipt of the Bond duly executed,
attested and authenticated in the aggregate principal amount described above.
THE COMPANY hereby confirms that it has delivered to the Trustee the
sum of $35,000, to pay the accrued interest and redemption premium on the Series
1979 Bonds to be redeemed on the date hereof.
IN WITNESS WHEREOF, each of the parties making the acknowledgements,
receipts, authorizations and directions as aforesaid, has set its hand, by its
duly authorized officer, this last day of July, 1994.
IREDELL COUNTY INDUSTRIAL FACILITIES
AND POLLUTION CONTROL FINANCING
AUTHORITY
By: /s/ J.D. Chamberlain
----------------------------------
Chairman
HUNT MANUFACTURING CO.
By: /s/ William E. Chandler
----------------------------------
Senior Vice President
BROWN BROTHERS HARRIMAN & CO.
By: /s/ xxxxxxxxxxxxxxxxxx
----------------------------------
Manager
FIRST UNION NATIONAL BANK
By: /s/ xxxxxxxxxxxxxxxxxxx
----------------------------------
Vice President
-2-
<PAGE>
LAW OFFICES
POPE, McMILLAN, GOURLEY, KUTTEH & SIMON, P A.
THE JAMES IREDELL BUILDING
113 NORTH CENTER STREET SUITE 200
STATESVILLE, NORTH CAROLINA 28677
WILLIAM P. POPE MAILING ADDRESS:
WILLIAM H. McMILLAN POST OFFICE DRAWER 1776
ROBERT H. GOURLEY STATESVILLE, N.C. 285167-1776
CONSTANTINE H. KUTTEH, II (704) 873-2131
PAMELA H. SIMON TELECOPIER (704) 872-7629
LILLIAN D. MICHAELS*
MOORESVILLE NUMBER:
(704) 664-2254
*MOORESVILLE OFFICE FEDERAL ID NO.56-1637260
July 31, 1994
BROWN BROTHERS HARRIMAN & CO.
1431 Walnut Street
Philadelphia, PA 19102
HUNT MANUFACTURING CO.
230 South Broad Street
Philadelphia, PA 19102
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
230 South Tryon Street
Charlotte, NC 28288-1179
DRINKER BIDDLE & REATH
Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, PA 19107-3496
SMITH HELMS MULLISS & MOORE, L.L.P.
227 N. Tryon Street
Charlotte, NC 28202
Re: $2,000,000 Iredell County Industrial Facilities and Pollution Control
Financing Authority Industrial Revenue Refunding Bond (Hunt
Manufacturing Co.). Series 1994
-----------------------------------------------------------------------
Ladies and Gentlemen:
I have acted as county attorney for the Iredell County Industrial
Facilities and Pollution Control Financing Authority (the "Authority") in
connection with the issuance of the abovereferenced bond (the "Bond") pursuant o
the Indenture and Deed of Trust dated as of June 1, 1979 (the "Original
Indenture"), as amended and supplemented by a First Supplemental Indenture and
Deed of Trust dated as of July 31, 1994 (the "First Supplemental Indenture" and,
together with the Original Indenture the "Indenture") each between the Authority
and First National Union Bank of North Carolina as trustee (the "Trustee"). The
Bond is payable under the Indenture from, among other things, amounts payable by
Hunt Manufacturing Company (the "Company") under a Lease Agreement dated as of
June 1, 1979, as amended and supplemented by a First Supplemental Lease
Agreement dated as of July 31, 1994
<PAGE>
POPE, McMILLAN, GOULEY, KUTTEH & SIMON, P.A.
Brown Brothers Harriman & Co.
Hunt Manufacturing Co.
First Union National Bank
of North Carolina
Drinker Biddle & Reath
Smith Helms Mulliss & Moore
July 31, 1994
Page 2
(collectively, the "Lease"). The Bond is being issuedto accomplish the public
purposes of the North Carolina Industrial and Pollution Control Facilities
Financing Act, as amended (the "Act") and a resolution of the Authority adapted
on June 2, 1994 (the "Resolution"), to refund bonds issued in 1979 to finance,
for the benefit of the Company, the Project described in the Original Indenture.
Capitalized terms used but not otherwise defined herein shall have the meanings
set forth in the Indenture.
For purposes of this opinion, I have examined the Indenture, the Lease, the
Act, the Resolution and such other documents, records of the authority and other
instruments as I have deemed necessary to render this opinion.
Based upon the foregoing, I am of the opinion that:
1. The Authority is a political subdivision and body corporate and politic
of the State of North Carolina validly organized and existing under the enabling
Act, with full power and authority to enter into the First Supplemental
Indenture and the First Supplemental Lease, to undertake the transactions
contemplated therein, and to issue the Bond.
2. The execution and delivery of the First Supplemental Lease have been
duly authorized by the Authority and the First Supplemental Lease has been duly
executed and delivered by the Authority.
3. The execution and delivery of the First Supplemental Indenture has been
duly authorized by the Authority, the First Supplemental Indenture is in
substantially the form so approved and has been duly executed and delivered by
the Authority.
4. The execution, issuance, and delivery of the Bond have been duly and
validly authorized by the Authority.
5. To the best of my knowledge after reasonable inquiry, there is no legal
action or other proceeding, or any investigation or inquiry (before or by any
court, agency, arbitrator or otherwise), pending or threatened against or
affecting the Authority or any of its officials, in their respective capacities
as such, which would restrain or enjoin the issuance or delivery of the Bond or
the collection of revenues pledged under the Agreement or in any way would
contest or affect the organization or existence
<PAGE>
POPE, McMILLAN, GOULEY, KUTTEH & SIMON, P.A.
Brown Brothers Harriman & Co.
Hunt Manufacturing Co.
First Union National Bank
of North Carolina
Drinker Biddle & Reath
Smith Helms Mulliss & Moore
July 31, 1994
Page 2
of the Authority or the entitlement of any officers of the Authority to their
respective offices or which may reasonably be expected to have a material and
adverse effect upon (A) the due performance by the Authority of the transactions
contemplated by the Indenture, (B) the validity or enforceability against the
Authority of the Bond or the Indenture or any other agreement or instrument to
which the Authority is a party and that is used or contemplated for use in
consummation of the transactions contemplated hereby or thereby, or (C) the
exemption or exclusion from federal and North Carolina income taxation of the
interest on the Bond. The Authority is not, to the best of my knowledge, subject
to any judgment, decree or order entered in any lawsuit or proceeding brought
against the Authority that may reasonably be expected to have such effect.
6. All action taken by members of the Board of the Authority in connection
with the sale of the Bond and the Project have been taken in compliance in all
respects with the provisions of the enabling Act and any other applicable
provisions of North Carolina law.
Very truly yours,
/s/ William P. Pope
-------------------------------------
William P. Pope, Esquire
County Attorney, Iredell County
Industrial Facilities and Pollution
Control Financing Authority
<PAGE>
<TABLE>
<CAPTION>
SMITH HELMS MULLISS & MOORE, L. L. P.
ATTORNEYS AT LAW
CHARLOTTE, NORTH CAROLINA
<S> <C> <C> <C>
GREENSBORO RALEIGH
MAILING ADDRESS MAILING ADDRESS
POST OFFICE BOX 21927 MAILING ADDRESS STREET ADDRESS POST OFFICE BOX 27525
GREENSBORO, N.C. 27420 POST OFFICE BOX 31247 227 NORTH TRYON STREET RALEIGH, N.C. 27611
CHARLOTTE, N.C. 26236 CHARLOTTE, N.C. 28202
STREET ADDRESS STREET ADDRESS
SUITE 1400 316 WEST EDENTON STREET
300 NORTH GREENE STREET TELEPHONE 704/343-2000 RALEIGH, N.C. 27603
GREENSBORO, N.C. 27401 FACSIMILE 704/334-8467
TELEPHONE 919/755-8700
TELEPHONE 910/378-5200 FACSIMILE 919/828-7938
FACSIMILE 910/379-9558
WRITER'S DIRECT DIAL
</TABLE>
IREDELL COUNTY INDUSTRIAL
FACILITIES AND POLLUTION
CONTROL FINANCING AUTHORITY
P.O. Box 788
Statesville, NC 28687-0788
BROWN BROTHERS HARRIMAN & CO.
1531 Walnut Street
Philadelphia, PA 19102
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
230 South Tryon Street
Charlotte, NC 28288-1179
DRINKER BIDDLE & REATH
Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, PA 19107-3496
Re: $2,000,000 Iredell County Industrial Facilities and Pollution Control
Financing Authority Industrial Revenue Refunding Bond (Hunt
Manufacturing Co. Project), Series 1994
-----------------------------------------------------------------------
Ladies and Gentlemen:
We have acted as Co-Bond Counsel in connection with the issuance of the
above-mentioned bond (the "Bond") of the Iredell County Industrial Facilities
and Pollution Control Financing Authority (the "Authority"). The Bond is issued
under and pursuant to the North Carolina Industrial and Pollution Control
Facilities Financing Act, as amended (the "Enabling Act"), a resolution of the
Authority adopted on June 2, 1994 (the "Resolution"), and a Supplemental
Indenture dated July 31, 1994 (the "Supplemental Indenture, 11 and together with
the Indenture dated June 1, 1979, the "Indenture") between the Authority and
First Union National Bank of North Carolina, as trustee. All terms used but not
otherwise defined herein shall have the meaning set forth in the Indenture.
The proceeds of the Bond will be applied to a project (the 111994 Project")
consisting of the payment of certain prior bonds of the Authority (the "Prior
Bonds") the proceeds of which were
<PAGE>
Iredell County Industrial Facilities and
Pollution Control Financing Authority
Brown Brothers Harriman & Co.
First Union National Bank
of North Carolina
Drinker Biddle & Reath
July 31, 1994
Page 2
applied to finance, for the benefit of Hunt Manufacturing Co. (the "Company"),
the acquisition of certain real estate located near Statesville, North Carolina
and constructing manufacturing facilities thereon (the "Facilities"). The
Authority and the Company have entered into a Lease Agreement dated June 1, 1979
and a Supplemental Lease Agreement dated July 31, 1994 (collectively, the
"Lease"). Under the Lease, the Company has agreed to make loan payments
sufficient, inter alia, to pay the principal, redemption price or Purchase Price
of, and interest on, the Bond when and as the same shall become due.
Under the Indenture, as security for the payment of the principal,
redemption price and Purchase Price of, and interest on, the Bond, the Authority
has assigned certain of its rights under the Lease, including its right to
receive rent payments thereunder, to the Trustee. The prompt payment of the
principal of and interest due on the Bond will be guaranteed by the Company,
pursuant to a Guaranty Agreement dated June 1, 1979 and a First Supplemental
Guaranty Agreement dated July 31, 1994, both between the Company and the Trustee
(together the "Guaranty").
The Authority and the Company have made certain factual representations in
the Indenture, the Lease and a Tax Certificate and Agreement delivered on the
date hereof (the "Tax Certificate") that are material to the opinions expressed
herein, including representations concerning the reasonable expectations of the
Company and the Authority on the date hereof as to the use of the proceeds of
the Bond. We have relied upon the representations of the Authority and the
Company without undertaking to verify the same by independent investigation.
Our opinion regarding procedures and actions of the Authority is, with your
consent, based upon an examination of certificates and certified extracts of
records of the proceedings of the Authority relating to its authorization and
approval of documents and instruments herein referred to, and an opinion of
William Pope, Iredell County Attorney and counsel for the Authority of even date
herewith. In giving the opinion set forth in paragraph 2 below, we have relied
on the opinion of Drinker Biddle & Reath, counsel for the Company as to the
authorization, execution and delivery of the Supplemental Lease Agreement by the
Company and as to the legal, valid and binding nature thereof with respect to
the Company. In giving the opinions set forth below, we have assumed, with your
consent, that the Indenture dated June 1, 1979 between the
<PAGE>
Iredell County Industrial Facilities and
Pollution Control Financing Authority
Brown Brothers Harriman & Co.
First Union National Bank
of North Carolina
Drinker Biddle & Reath
July 31, 1994
Page 3
Authority and First Union National Bank of North Carolina, as trustee and the
Lease Agreement dated June 1, 1979 between the Authority and the Company are
legal, valid and binding obligations of the parties thereto and are enforceable
in accordance with their terms.
We have examined such documents, records, proceedings, statutes and
decisions as we deemed necessary to enable us to express our opinion set forth
below, including original counterparts or certified copies of the Supplemental
Indenture, the Supplemental Lease, the Resolution, the Bond, the Guaranty and
the Tax Certificate. In all cases, we have assumed the genuineness of
signatures, the authenticity of original documents and the conformity to
authentic originals of documents examined by us as copies. our opinion is given
only with respect to the laws of North Carolina as presently enacted and
construed.
Based upon the foregoing, we are of the opinion that:
1. The Authority is validly existing under the Enabling Act, with full
power and authority to enter into the Supplemental Indenture and Supplemental
Lease, to undertake the transactions contemplated therein, and to issue the
Bond.
2. The Supplemental Indenture has been duly authorized, executed and
delivered by the Authority and, assuming due execution and delivery by the other
parties thereto, constitutes a valid and binding limited obligation of the
Authority enforceable in accordance with its terms. The Authority has duly and
validly assigned to the Trustee certain of its rights and interests in the
Indenture as security for the payment of the Bond.
3. The Bond has been duly authorized, executed and issued by the Authority
and constitutes the valid and binding limited obligation of the Authority, the
principal, redemption price and Purchase Price of, and interest on, which are
payable solely from the revenues and other moneys of the Authority pledged
therefor pursuant to the Indenture.
4. Under the Enabling Act, interest on the Bond is exempt from all present
income taxes within the State of North Carolina.
The enforceability of any of the documents or instruments referred to
herein may be limited by bankruptcy, insolvency,
<PAGE>
Iredell County Industrial Facilities and
Pollution Control Financing Authority
Brown Brothers Harriman & Co.
First Union National Bank
of North Carolina
Drinker Biddle & Reath
July 31, 1994
Page 4
reorganization or similar laws relating to or limiting the enforcement of
creditors' rights. The remedial provisions of such documents and instruments may
be limited by equitable principles which may affect the remedies provided
therein, and we express no opinion as to the effect of the possible
unavailability of the remedy of specific performance. In addition, provisions
regarding payment of certain attorneys' fees may not be enforceable except to
the extent provided by North Carolina General Statutes ss. 6-21.2.
We have not prepared, assisted in the preparation of or reviewed in detail
any documents (other than the Supplemental Indenture, the Supplemental Lease and
form of Bond) or information prepared in connection with the purchase or sale of
the Bond, including without limitation any memorandum of terms or private
placement memorandum, and express no opinion as to the accuracy or completeness
of any such information.
This opinion is limited to matters of North Carolina law and no opinion is
given as to the law of any other jurisdiction. Further, we express no opinion
with respect to federal or state securities or "blue sky" laws.
The opinions expressed herein are solely for your benefit and that of the
registered owners from time to time of the Bond and may not be relied upon by,
or published or communicated by you to, any other person or entity without our
specific prior written approval in each instance.
We call your attention to the fact that the Bond is the limited obligation
of the Authority payable solely from the payments received by the Authority
pursuant to the Agreement and does not constitute a debt of the Authority or of
the State of North Carolina or any political subdivision thereof, including
Iredell County, or a pledge of the faith and credit of the Authority or the
State of North Carolina or any political subdivision thereof, including Iredell
County.
Very truly yours,
Smith Helms Mulliss & Moore, L.L.P.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
LAW OFFICES
DRINKER BIDDLE & REATH
SUITE 900 PHILADELPHIA NATIONAL BANK BUILDING SUITE 400
901 FIFTEENTH STREET, N.W. 47 HULFISH STREET
WASHINGTON. DC 20005-2503 1345 CHESTNUT STREET POST OFICE BOX 627
(202) 842-8800 PRINCETON, NJ 08542-0627
PHILADELPHIA, PA 19107-3496 (609) 921-6336
TELEPHONE: (215) 988-2700 SUITE 300
1000 WESTLAKES DRIVE
TELEX: 834684 BERWYN, PA. 19312-2409
(610) 993-2200
FAX: (215) 988-2757
</TABLE>
Closing Document No. 11
July 31, 1994
IREDELL COUNTY INDUSTRIAL
FACILITIES AND POLLUTION
CONTROL FINANCING AUTHORITY
P.O. Box 788
Statesville, NC 28687-0788
BROWN BROTHERS HARRIMAN & CO.
1531 Walnut Street
Philadelphia, PA 19102
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
230 South Tyron Street
Charlotte, NC 28288-1179
Re: $2,000,000 Iredell County Industrial Facilities and Pollution Control
Financing Authority Industrial Revenue Refunding Bond (Hunt
Manufacturing Co. Project), Series 1994
----------------------------------------------------------------------
Ladies and Gentlemen:
We have acted as Counsel for Brown Brothers Harriman & Co. in connection
with the issuance of the above-mentioned bond (the "Bond") of the Iredell County
Industrial Facilities and Pollution Control Financing Authority (the
"Authority") and have been asked to render this opinion with respect to the
exclusion from gross income for Federal tax purposes of the interest on the
Bond. The Bond is issued under and pursuant to the North Carolina Industrial and
Pollution Control Facilities Financing Act, as amended, a resolution of the
Authority adopted on June 2, 1994 (the "Resolution"), and an Indenture and Deed
of Trust as of June 1, 1979 as amended and supplemented by a First Supplemental
Indenture and Deed of Trust dated as of July 31, 1994 (collectively, the
"Indenture") between the Authority and First Union National Bank of North
Carolina, as trustee. All terms used but not otherwise defined herein shall have
the meaning set forth in the Indenture.
The proceeds of the Bond will be applied to a project (the "1994 Project")
consisting of the payment of certain prior bonds of the Authority (the "Prior
Bonds") the proceeds of which were applied to finance, for the benefit of Hunt
Manufacturing Co.
<PAGE>
DRINKER BIDDLE & REATH
Iredell County Industrial Facilities and
Pollution Control Financing Authority
Brown Brothers Harriman & Co.
First Union National Bank
of North Carolina
July 31, 1994
Page 2
(the "Company"), the acquisition of certain real estate located near
Statesville, North Carolina, and the construction and equipping of certain
manufacturing facilities thereon (the "Facilities"). The Authority and the
Company have entered into a Lease Agreement dated as of June 1, 1979, as amended
and supplemented by a Supplemental Lease Agreement dated as of July 31, 1994
(collectively, the "Lease"). Under the Lease, the Company has agreed to make
loan payments sufficient, inter alia, to pay the principal, redemption price or
Purchase Price of, and interest on, the Bond when and as the same shall become
due.
Under the Indenture, as security for the payment of the principal,
redemption price and Purchase Price of, and interest on, the Bond, the Authority
has assigned certain of its rights under the Lease, including its right to
receive rent payments thereunder, to the Trustee. The prompt payment of the
principal of and interest due on the Bond is guaranteed by the Company, pursuant
to a Guaranty Agreement dated as of June 1, 1979, as amended and supplemented by
a First Supplemental Guaranty Agreement, between the Company and the Trustee,
dated as of July 31, 1994 (collectively, the "Guaranty").
The Authority and the Company have made certain factual representations in
the Indenture, the Lease and a Tax Certificate and Agreement delivered on the
date hereof (the "Tax Certificate") that are material to the opinions expressed
herein, including representations concerning the reasonable expectations of the
Company and the Authority on the date hereof as to the use of the proceeds of
the Bond. We have relied upon the representations of the Authority and the
Company without undertaking to verify the same by independent investigation. For
the purpose of rendering this opinion, we have further relied upon the opinion
dated this date of Smith Helms Mulliss & Moore, to the effect that the Bond has
been duly authorized, executed and delivered by, and constitutes the legal,
valid and binding obligation of, the Authority.
We have examined such documents, records, proceedings, statutes and
decisions as we deemed necessary to enable us to express our opinion set forth
below, including original counterparts or certified copies of the Indenture, the
Lease, the Resolution, the Bond, the Guaranty and the Tax Certificate. In all
cases, we have assumed the genuineness of signatures, the authenticity of
original documents and the conformity to authentic originals of documents
examined by us as copies.
<PAGE>
DRINKER BIDDLE & REATH
Iredell County Industrial Facilities and
Pollution Control Financing Authority
Brown Brothers Harriman & Co.
First Union National Bank
of North Carolina
July 31, 1994
Page 3
Based upon the foregoing, we are of the opinion that under existing law, as
presently enacted and construed, interest on the Bond is excluded from gross
income for federal income tax purposes, except during any period while a Bond is
held by a "substantial user" of the facilities financed by the Bond or a
"related person" within the meaning of Section 147(a) of the Internal Revenue
Code of 1986, as amended, and is not a preference item for purposes of
determining the federal alternative minimum tax imposed on corporations and
individuals. However, interest on the Bond may be subject to the application of
the alternative minimum tax and environmental tax when held by certain
corporations, and the application of the foreign branch profits tax when held by
foreign corporations.
The opinion expressed above is subject to continued compliance by the
Authority and the Company with certain tax covenants contained in the Agreement
and the Tax Certificate. Failure to comply with such covenants may cause the
inclusion of interest on the Bond in gross income for federal income tax
purposes, in certain cases retroactive to the date of issuance of the Bond.
Ownership of the Bond may result in collateral Federal income tax
consequences to certain taxpayers, including, without limitation, financial
institutions, S corporations receiving excess net passive income, property and
casualty insurance companies, individual recipients of Social Security or
Railroad Retirement benefits and taxpayers who may be deemed to have incurred
indebtedness to purchase or carry the Bond. We express no opinion with respect
to these collateral tax consequences.
Very truly yours,
/s/ Drinker Biddle & Reath
------------------------------------
DRINKER BIDDLE & REATH
<PAGE>
[LETTERHEAD OF DRINKER BIDDLE & REATH]
Closing Document No. 12
July 31, 1994
IREDELL COUNTY INDUSTRIAL
FACILITIES AND POLLUTION
CONTROL FINANCING AUTHORITY
P.O. Box 788
Statesville, NC 28687-0788
BROWN BROTHERS HARRIMAN & CO.
1531 Walnut Street
Philadelphia, PA 19102
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
230 South Tyron Street
Charlotte, NC 28288-1179
SMITH HELMS MULLISS & MOORE
227 N. Tyron Street
Charlotte, NC 28280
Re: $2,000,000 Iredell County Industrial Facilities
and Pollution Control Financing Authority
Industrial Revenue Refunding Bond (Hunt Manufacturing
Co. Project), Series 1994
------------------------------------------------------
Ladies and Gentlemen:
We have been asked to render this opinion on behalf of Hunt Manufacturing
Co., a Pennsylvania corporation (the "Company"), in connection with a
transaction (the "Bond Transaction"), involving the issuance by the Iredell
County Industrial Facilities and Pollution Control Financing Authority (the
"Authority"), of the Bond described above (the "Bond"). The Bond is being
issued under and pursuant to an Indenture and Deed of Trust dated as of June 1,
1979, as amended and supplemented by a First Supplemental Indenture and Deed of
Trust dated as of July 31, 1994, (collectively, the "Indenture"), each between
the Authority and First Union National Bank of North Carolina, as trustee, for
the purpose of undertaking the 1994 Refunding Project described in the
Indenture. Capitalized terms used but not otherwise defined herein have the
meanings set forth in the Indenture.
<PAGE>
DRINKER BIDDLE & REATH
Iredell County Industrial Facilities and
Pollution Control Financing Authority
Brown Brothers Harriman & Co.
First Union National Bank
of North Carolina
Smith Helms Mulliss & Moore
July 31, 1994
Page 2
The Authority and the Company have entered into a Lease Agreement dated as
of June 1, 1979, as amended and supplemental by a First Supplemental Lease
Agreement dated as of July 31, 1994 (collectively, the "Lease"). Under the
Lease, the Company has agreed, among other things, to make payments thereunder
sufficient, to pay the principal, redemption price or Purchase Price of, and
interest on, the Bond when and as the same shall become due.
Under the Indenture, as security for the payment of the principal,
redemption price and Purchase Price of, and interest on, the Bond, the Authority
has assigned certain of its rights under the Lease, including its right to
receive rent payments thereunder, to the Trustee. The prompt payment of the
principal of and interest due on the Bond will be guaranteed by the Company,
pursuant to a Guaranty Agreement dated as of June 1, 1979, as amended and
supplemented by a First Supplemental Guaranty Agreement dated as of July 31,
1994 (collectively, the "Guaranty"), each between the Company and the Trustee.
The Lease and the Guaranty are sometimes herein referred to on the "Financing
Documents."
In rendering the opinions expressed therein, we have examined originals or
copies, certified or otherwise identified to our satisfaction, of the Indenture,
the Lease and the Guaranty. We have also examined such corporate records and
other agreements, documents and instruments, and such certificates or comparable
documents of public officials and officers and representatives of the Company,
and have made such inquiries of such officers and representatives and have
considered such matters of law as we have deemed appropriate as the basis for
the opinions hereinafter set forth.
In all cases, we have assumed the genuineness of signatures, the
authenticity of documents submitted to us as originals, the conformity to
authentic original documents, documents submitted to us as copies and the
accuracy and completeness of all corporate records and other information made
available to us by the Company. We have further assumed that each of the
Indenture, the Lease and the Guaranty has been duly authorized, executed and
delivered by, and are the legal, valid and binding obligations of, all parties
thereto other than the Company, as appropriate.
<PAGE>
DRINKER BIDDLE & REATH
Iredell County Industrial Facilities and
Pollution Control Financing Authority
Brown Brothers Harriman & Co.
First Union National Bank
of North Carolina
Smith Helms Mulliss & Moore
July 31, 1994
Page 3
As to questions of fact material to this opinion, we have relied upon the
accuracy of the representations and warranties made by the parties in the
Financing Documents and of the certificates and other comparable documents of
officers and representatives of the Company, upon statements made to us in
discussions with management of the Company and upon certificates of public
officials. Statements made herein "to the best of our knowledge" or with respect
to matters "known to us" are based solely upon information actually known to
those attorneys currently practicing with this firm and regularly engaged in the
representation of the Company. We have not undertaken any independent
investigation of factual matters.
Based on the foregoing, and subject to the qualifications, limitations and
assumptions stated herein, we are of the opinion that:
1. The Company is a corporation validly existing and in good standing under
the laws of the Commonwealth of Pennsylvania.
2. The Company has the corporate power to execute and deliver the Financing
Documents and to perform its obligations thereunder. The execution, delivery and
performance by the Company of the Financing Documents have been duly authorized
by all necessary corporate action on its part.
4. The Company has duly executed and delivered the Financing Documents and
each Financing Document constitutes the legal, valid and binding obligation of
the Company, enforceable against it in accordance with its respective terms.
5. The execution and delivery by the Company of the Financing Documents and
the performance thereof do not constitute a breach of, or default under, any
agreement or other instrument known to us to which the Company is a party or
violate the corporate charter or bylaws of the Company or violate the provision
of any law or regulation or any judgment, writ, injunction, decree, order or
ruling known to us of any court or governmental authority binding on the
Company.
6. No consent, approval or authorization of or filing with any Federal or
Pennsylvania governmental authority is required in connection with the execution
or delivery of the Financing Documents by the Company.
<PAGE>
DRINKER BIDDLE & REATH
Iredell County Industrial Facilities and
Pollution Control Financing Authority
Brown Brothers Harriman & Co.
First Union National Bank
of North Carolina
Smith Helms Mulliss & Moore
July 31, 1994
Page 4
Furthermore, we advise you that, to the best of our knowledge, there is no
litigation, adversarial proceeding or governmental investigation pending or
overtly threatened against the Company that would have a material adverse effect
upon the ability of the Company to enter into and perform its obligations under
the Financing Documents.
The opinions set forth above are subject to the following qualifications
and limitations:
(a) The opinions expressed above are based solely upon the laws of the
Commonwealth of Pennsylvania and the Federal law of the United States of
America. In this regard, we note that the Financing Documents purport to be
governed by the laws of the State of North Carolina, and we have assumed
for purposes of this opinion that such laws would not differ materially
from the laws of the Commonwealth of Pennsylvania. We express no opinion
with respect to the effectiveness of any choice of law provision.
(b) We express no opinion as to the effect on the enforceability of
any Financing Document of the application of equitable principles (whether
considered in the proceeding at law or in equity) or of bankruptcy,
insolvency, reorganization, moratorium and other laws now or hereafter in
effect affecting the enforcement of creditors' rights and remedies
(including those relating to fraudulent conveyances and transfers);
We further advise you that, while we regularly provide legal services to
the Company, we have not done so in connection with the Bond Transaction.
The opinions expressed above are solely for your benefit and may not be
relied upon by any other person, or by you in connection with any transaction
other than the Bond Transaction, without our written consent.
Very truly yours,
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Form 8038 Information Return for Tax-Exempt
(Rev. March 1993) Private Activity Bond Issues OMB No. 1545-0720
Department of the Treasury (Under Internal Revenue Code section 149(e))
Internal Revenue Service > See separate instructions.
- ------------------------------------------------------------------------------------------------------------------------------------
Part 1 Reporting Authority If Amended Return, check here } / /
- ------------------------------------------------------------------------------------------------------------------------------------
1. Issuer's name 2. Issuer's employer identification number
Iredell County Industrial Facilities and
Pollution Control Financing Authority 52 1311859
- ------------------------------------------------------------------------------------------------------------------------------------
3 Number and street (or P.O. box if mail is not delivered to street address Room/suite 4 Room number
P.O. Box 788 PA19 94-1
- ------------------------------------------------------------------------------------------------------------------------------------
5 City or town, state, and Zip code 6 Date of issue
Statesville, NC 28687-0788 August 1, 1994
- ------------------------------------------------------------------------------------------------------------------------------------
7 Number of issue 8 CUSIP number
Industrial Revenue Bond (Hunt Manufacturing Co. None
Project) Series 1994
- ------------------------------------------------------------------------------------------------------------------------------------
Part II Type of Issue (check applicable box(es) and enter the issue price for each) Issue Price
- ------------------------------------------------------------------------------------------------------------------------------------
9 Exempt facility bond: 9a
a / / Airport (sections 142(a)(1) and 142(c))............................................................ -----------------------
9b
b / / Docks and wharves (sections 142(a)(2) and 142(c)).................................................. -----------------------
9c
c / / Mass commuting facilities (sections 142(a)(3) and 142(c)).......................................... -----------------------
9d
d / / Water furnishing facilities (sections 142(a)(4) and 142(e))........................................ -----------------------
9e
e / / Sewage facilities (section 142(a)(5)).............................................................. -----------------------
9f
f / / Solid waste disposal facilities (section 142(a)(6))................................................ -----------------------
9g
g / / Qualified residential rental projects (sections 142(a)(7)) and 142(d)), as follows -----------------------
Meeting 20-50 test (section 142(d)(1)(A)).............................. / /
Meeting 40-60 test (section 142(d)(1)(B)).............................. / /
Meeting 25-60 test (NYC only) (section 142(d)(6))...................... / /
Has an election been made for deep rent skewing (section 142(d)(4)(B))? / / Yes / / No
9h
h / / Facilities for the local furnishing of electric energy or gas (sections 142(a)(8) and 142(f))...... -----------------------
9i
i / / Local district heating or cooling facilities (sections 142(a)(10) and 142(h))...................... -----------------------
9j
j / / Qualified hazardous waste facilities (sections 142(a)(10) and 142(h)).............................. -----------------------
9k
k / / High-speed intercity rail facilities (sections 142(a)(11), 142(c), and 142(i))..................... -----------------------
Check box if the owner elected not to claim depreciation of any tax credit (see instructions) > / /
9i
i / / Environmental enhancements of hydroelectric generating facilities (sections 142(a)(12) and 142(j)). -----------------------
9m
m / / Facilities allowed under a traditional rule of Tax Reform Act of 1986 (see instructions)........... -----------------------
Facility type......................................................................................
1986 Act section...................................................................................
10
10 / / Qualified mortgage bond (section 143(a)) (see instructions)........................................ -----------------------
If you elect to rebate arbitrage profits to the United States, check box..................... > / /
11
11 / / Qualified veterans' mortgage bond (section 143(b))................................................. -----------------------
If you elect to rebate arbitrage profits to the United States, check box..................... > / /
12 $2,000,000
12 /X/ Qualified small issue bond (section 144(a)) (see instructions)..................................... -----------------------
For $10 million small issue exemption, check box............................................. > /X/
13
13 / / Qualified student loan bond (section 144(b))....................................................... -----------------------
14
14 / / Qualified redevelopment bond (section 144(c))...................................................... -----------------------
15
15 / / Qualified hospital bond (section 145(c)) (attach schedule-see instructions)........................ -----------------------
16
16 / / Qualified 501(c)(3) bond other than a qualified hospital bond (attach schedule-see instructions)... -----------------------
17
17 / / Nongovernmental output property bond (treated as private activity bond) (section 141(d))........... -----------------------
18
18 / / Other, Describe (see instruction)> -----------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Part III Description of Bonds
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e) (f) (g)
Maturity date Interest rate Issue price Stated redemption Weighted average Yield Net
price at maturity maturity Interest cost
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
19 Final maturity 6/15/04 VR % $2,000,000 $2,000,000
-------------------------------------------------------------------------------------------------------------
20 Entire issue $2,000,000 $2,000,000 9.9 years VR % VR %
- ------------------------------------------------------------------------------------------------------------------------------------
For Paperwork Reduction Act Notice, see page 1 of the Instructions Cat. No. 49973K Form 8038 (Rev. 3-93)
5/17/93 Published by Tax Management Inc., a Subsidiary of The Bureau of National Affairs, Inc. 8038.1
<PAGE>
Form 8038 (Rev. 3-93) Page 2
- ------------------------------------------------------------------------------------------------------------------------------------
21
21 Proceeds used for accrued interest..................................................................... -----------------------
22 $2,000,000
22 Issue price of entire issue (enter amount from line 20, column (c)).................................... -----------------------
23
23 Proceeds used for bond issuance costs (including underwriters' discount) -----------------------
24
24 Proceeds used for credit engangement........................................ -----------------------
25
25 Proceeds allocated for reasonably required reserve or replacement fund...... -----------------------
26 $2,000,000
26 Proceeds used to refund prior issues (complete Part VI)..................... -----------------------
27
27 Total (add lines 23 through 26)........................................................................ -----------------------
28
28 Nonrefunding proceeds of the issue (subtract line 27 from line 22 and enter amount here)............... -----------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Part IV Description of Property Financed by Nonrefunding Proceeds
(Do not complete for qualified student loan bonds, qualified mortgage bonds, or qualified veterans' mortgage bonds.)
- ------------------------------------------------------------------------------------------------------------------------------------
Amount
29 Type of Property Financed by Nonrefunding Proceeds: -----------------------
29a
a Land................................................................................................... -----------------------
29b
b Buildings and structures............................................................................... -----------------------
29c
c Equipment with recovery period of more than 5 years.................................................... -----------------------
29d
d Equipment recovery period of 5 years or less........................................................... -----------------------
29e
e Other (describe)....................................................................................... -----------------------
- ------------------------------------------------------------------------------------------------------------------------------------
30 Standard indusrtrial classification (SIC) of the projects financed by nonrefunding proceeds.
- ------------------------------------------------------------------------------------------------------------------------------------
SIC Code Amount of nonrefunding proceeds SIC Code Amount of nonrefunding proceeds
- ------------------------------------------------------------------------------------------------------------------------------------
a $ c $
- ------------------------------------------------------------------------------------------------------------------------------------
b $ d $
- ------------------------------------------------------------------------------------------------------------------------------------
Part VI Description of Refunded Bonds (Complete this part only for refunding bonds.)
- ------------------------------------------------------------------------------------------------------------------------------------
31 Enter the remaining weighted average maturity of the bonds to be refunded............................. } 2.96 years
-----------------------
32 Enter the last date on which the refunded bonds will be called........................................ } August 1, 1994
-----------------------
33 Enter the date(s) the refunded bonds were issued > June 1, 1979
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Part VII Miscellaneous
- ------------------------------------------------------------------------------------------------------------------------------------
Commissioners of Iredell County
34 Name of governmental unit(s) approving issue (see instructions) > ..............................................................
on June 21, 1994 after a hearing on the same day
................................................................................................................................
35 Enter the amount of the bonds designated by the issuer under section 265(b)(3)(B)(i)(iii)............. }
-----------------------
36 If you have elected to pay a penalty in lieu of rebate, check box..................................... } / /
- ------------------------------------------------------------------------------------------------------------------------------------
Part VIII Volume Cap Amount
- ------------------------------------------------------------------------------------------------------------------------------------
37
37 Amount of volume cap allocated to the issuer. Attach copy of state certification....................... -----------------------
38
38 Amount of issue subject to the unified state volume cap................................................ -----------------------
39 Amount of issue not subject to the unified state volume cap or other volume limitations:
a Of Bonds for governmentally owned solid waste facilities, airports, docks, wharves, environmental 39a
enhancements of hydroelectric generating facilities, or high-speed intercity rail facilities........... -----------------------
39b
b Under a carryforward election. Attach a copy of Form 8328 to return.................................... -----------------------
39c
c Under transitional rules of the tAx Reform Act of 1986................................................. -----------------------
Enter the act section of the applicable transitional rule.......................}......................
39d $2,000,000
d Under the exception for current refunding (section 1313(a) of the Tax Reform Act of 1986).............. -----------------------
40 Amount of issue of qualified 501(c)(3) bonds:
40a
a Qualified hospital bonds............................................................................... -----------------------
40b
b Qualified nonhospital bonds ........................................................................... -----------------------
40c
c Outstanding tax-exempt nonhospital bonds .............................................................. -----------------------
41a
41a Amount of issue of qualified veterans' mortgage bonds.................................................. -----------------------
41b
b Enter the state limit on qualified veterans' mortgage bonds............................................ -----------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Under penalties of perjury, I declare that I have examined this return, and accompanying schedules and statements, and to
the best of my knowledge and belief, they are true, correct and complete.
Please /s/ J. David Chamberland
Sign ----------------------------------------------------------------------- } --------------------------------------------------
Here Signature of officer Date
J. David Chamberland Chairman
----------------------------------------------------------------------- } --------------------------------------------------
Name of above officer (type or print) Title of officer (type or print)
8038.2 Published by Tax Management Inc., a Subsidiary of The Bureau of National Affairs, Inc. 5/17/93
</TABLE>
<PAGE>
RESOLUTION APPROVING THE ISSUANCE
AND SALE OF UP TO $2,000,000 INDUSTRIAL
REVENUE REFUNDING BONDS (HUNT MANUFACTURING CO.
PROJECT) AND AUTHORIZING THE FILING OF AN APPLICATION
FOR APPROVAL WITH THE LOCAL GOVERNMENT COMMISSION OF
NORTH CAROLINA
The Iredell County Industrial Facilities and Pollution Control Financing
Authority met at the Upstairs Conference Room, Iredell County Government Center,
200 South Center Street, Statesville, NC, at 12:00 Noon on June 2, 1994.
Present: Steve Robinson, Dan Wallace, J. D. Chamberlain, Lonnie Troutman,
and Loren Powell.
Absent: Mrs. Lois James and Herbert L. Lawton
Others present: Alice Fortner, Secretary to the Authority, and William H.
McMillan, representing County Attorney William P. Pope.
Mr. McMillan presented the following documents in connection with the
proposed issuance by the Authority of its Industrial Revenue Refunding Bonds
(Hunt Manufacturing Co. Project) in the aggregate principal amount of
$2,000,000:
A. First Supplemental Indenture and Deed of Trust ("Indenture") dated as of
June 2, 1994 with form of the Authority's Industrial Revenue Refunding
Bond contained therein.
B. First Supplemental Lease Agreement ("Lease") dated as of June 2, 1994.
Mr. McMillan stated he had reviewed these documents and in his opinion,
they are in order. The documents presented were delivered to the Secretary to
the Authority and directed to be marked Exhibits A and B, respectively, and made
a part of the permanent records of the Authority. Commissioner Chamberlain
introduced the following resolution, the title of which was read aloud:
BOND RESOLUTION AUTHORIZING THE ISSUANCE AND SALE OF $2,000,000 INDUSTRIAL
REVENUE REFUNDING BONDS (HUNT MANUFACTURING CO. PROJECT) AND THE EXECUTION
AND DELIVERY OF AN INDENTURE, A LEASE AND OTHER DOCUMENTS.
WHEREAS, the Authority is authorized under the Industrial and Pollution
Control Facilities Financing Act, Chapter 159C of the General Statutes of North
Carolina, as amended (the "Act"), to issue refunding bonds for the purpose of
refunding any outstanding bonds which have been issued under the provisions of
the Act, to pay certain costs incurred in connection therewith and to make and
execute financing agreements, security documents and other contracts and
instruments necessary or convenient in the exercise of such powers; and
1
<PAGE>
WHEREAS, Hunt Manufacturing Company, a corporation existing under the laws
of the Commonwealth of Pennsylvania, and qualified to do business in North
Carolina (the "Company"), has requested the Authority to issue its Industrial
Revenue Refunding Bonds (Hunt Manufacturing Co. Project) in the aggregate
principal amount of up to $2,000,000 (the "Bonds"), and loan the proceeds
thereof to the Company to refund the Authority's Industrial Revenue Bonds, dated
as of June 1, 1979 (the "Prior Bonds"), which financed the acquisition,
construction and installation of an industrial and manufacturing project (the
"Project") in Iredell County, North Carolina; and
WHEREAS, there have been submitted to this meeting forms of the following
documents:
(a) First Supplemental Indenture and Deed of Trust dated as of June 7, 1994
(the "Indenture"), between the Authority and First Union National Bank
of North Carolina (the "Trustee") with form of the Authority's
Industrial Revenue Refunding Bonds (Hunt Manufacturing Co. Project) in
the aggregate principal amount of $2,000,000 (the "Bonds") contained
therein; and
(b) First Supplemental Lease Agreement dated as of June 1994 (the "Lease")
between the Authority and the Company.
WHEREAS, the Authority desires and deems it expedient to issue and sell the
Bonds pursuant to the Act, the Indenture and this Resolution and to loan the
proceeds thereof to the Company to finance the refunding of the Prior Bonds;
NOW, THEREFORE, BE IT RESOLVED by The Iredell County Industrial Facilities
and Pollution Control Financing Authority as follows:
Section 1. The Authority previously resolved in connection with the
issuance of the Prior Bonds that the Project promoted the right to gainful
employment opportunity and private industry and thereby promoted the general
welfare of the people of the State of North Carolina by, among other things,
providing jobs in Iredell County, and that the Authority, in assisting with the
financing of the acquisition, construction and installation of the Project acted
in furtherance of the public purposes for which it was created. The Authority
2
<PAGE>
hereby acknowledges that the Prior Bonds to be refunded by the Bonds were issued
under the provisions of the Act. The Authority hereby affirms that in assisting
with the refunding of the Prior Bonds, the Authority will be acting in
furtherance of the public purpose for which it was created.
Section 2. The Authority hereby authorizes the issuance of the Bonds
pursuant to the Act, the Indenture and this Resolution and the loan of the
proceeds of sale thereof to the Company pursuant to the Lease.
Section 3. The Indenture, in the form submitted to this meeting, is hereby
approved and the Chairman or the Vice-chairman is hereby authorized and directed
to execute and deliver and the Secretary or the Assistant Secretary is hereby
authorized and directed to attest, the Indenture substantially in such form with
insertions as may be approved by the Chairman or the Vice-Chairman. All of the
provisions of the Indenture shall be deemed to be a part of this Resolution as
fully and to the same extent as if incorporated verbatim and shall be in full
force and effect from the date of the delivery thereof.
Section 4. The Lease, in the form submitted to this meeting, is hereby
approved and the Chairman or the Vice-Chairman is hereby authorized and directed
to execute and delivery, and the Secretary or the Assistant Secretary is hereby
authorized and directed or the Assistant Secretary is hereby authorized and
directed to attest, the Lease substantially in such form with such necessary and
appropriate variations, omissions and insertions as may be approved by the
Chairman or the Vice-Chairman. All of the provisions of the Lease shall be
deemed to be a part of this Resolution as fully and to the same extent as if
incorporated verbatim and shall be in full force and effect from the date of
delivery thereof.
Section 5. The Bond shall be issued, executed and delivered in accordance
with the terms and conditions of the Indenture and this Resolution. The Bond
shall bear the manual or a facsimile signature of the Chairman or the
Vice-Chairman and the seal of the Authority shall be affixed, imprinted,
lithographed or reproduced thereon, with attestation by the manual or facsimile
signature of the Secretary or the Assistant Secretary. The Bond shall bear
interest at a variable rate per annum (subject to adjustment, limitations and
conversion to a fixed rate under the conditions described in the Indenture)
determined as set forth in the Indenture. The initial rate shall be that rate
determined by the North Carolina Local Government Commission and approved by the
Chairman or Vice-Chairman.
Section 6. The Bonds shall be delivered to the First Union National Bank of
North Carolina (the "Trustee") subject to and in accordance with the Indenture
and upon payment to the Trustee of the purchase price therefor in an amount
equal to the aggregate principal amount of the Bonds and the proceeds of the
sale of the Bonds shall be deposited by the Trustee or its designated Paying
Agent to the account of the Authority in the 1979 Bonds Redemption Fund created
by the Indenture.
3
<PAGE>
Section 7. The Authority hereby elects to have the provisions of Section
103 (b) (6) (D) of the Internal Revenue Code of 1954, as amended (the "Code"),
and any successor therefor, apply to the Bonds. The Chairman, Vice-Chairman,
Secretary or Assistant Secretary is hereby authorized and directed to execute
and cause to be maintained in the records of the Authority or filed with the
Internal Revenue Service on behalf of the Authority if required (a) an election
to have the provisions of Section 103(b)(6)(D) of the Code apply to the Bonds
and (b) an Information Return for TaxExempt Private Activity Bond Issues (Form
8038) and (c) such other instruments and documents as may be necessary or
desirable to comply with applicable provisions of the Code. In addition, the
company is hereby appointed as the Authority's authorized representative for
purposes of making all (formal and informal) elections with respect to the bonds
under the Treasury Regulations (including, without limitation, Temp. Treas. Reg.
1.148-OT through 1.148-9T).
Section 8. Pursuant to N.C.G.S. 159E-8(a) the Authority hereby appoints
First Union National Bank of North Carolina, as bond registrar, paying agent,
authenticating agent, transfer agent and tender agent pursuant to the Indenture
in connection with the issuance, sale, delivery, transfer, registration and
payment of the bonds issued under the indenture (the "Bond Registrar"), said
Bond Registrar to maintain on behalf of the Authority the system of
registration, within the meaning of N.C.G.S. 159E-2(14), of certificated
registered obligations issued under the Indenture, as more particularly set
forth in the Indenture, such provisions to control to the extent in conflict
with the provisions of N.C.G.S. 159E4(d) respecting the setting of record dates
for the payment of principal, premium, if any, or interest on the Bonds.
Section 9. The records of the Bond Registrar pertaining to its duties under
the Indenture, including the bond registration books provided for therein, shall
be maintained by the bond Registrar, as the case may be at its principal
corporate trust offices located in Charlotte, North Carolina, or at such other
of its offices as it may notify the Authority in writing.
Section 10. The Bond Registrar shall receive such compensation and fees, to
be paid by the company, as are provided for the Indenture and the Lease.
Section 11. The Secretary or the Assistant Secretary of the Authority is
hereby directed to transmit a certified copy of this Resolution forthwith to the
Secretary of the Local Government Commission of North Carolina, such a
transmittal to constitute the request by the Authority that the Local Government
4
<PAGE>
Commission of North Carolina, or its duly authorized designate, approve the
system of registration of the Bonds, and the appointment of a Bond Registrar, as
provided in these Resolutions.
Section 12. The officers of the Authority are hereby authorized to file
with the Local Government Commission of North Carolina an application for
approval of the issuance of the bonds, and any actions previously taken in
applying for such approval are hereby ratified and confirmed.
Section 13. The Chairman is hereby designated the Authority Representative,
and the Secretary is hereby designated the alternative Authority Representative,
for the purpose of acting as such on behalf of the Authority pursuant to the
Lease.
Section 14. The Chairman or Vice Chairman or the Secretary or Assistant
Secretary of the Authority are hereby authorized to take such actions and
execute such documents as may be requested by the company and which are
necessary in order to effect the refunding of the bonds previously issued by the
Authority for the benefit of the Company with the proceeds of the bonds. The
Authority hereby requests and directs that the company take all steps necessary
to facilitate the refunding of the existing bonds.
Section 15. The Chairman, the Vice-Chairman, the Secretary, the Assistant
Secretary and the other officers of the Authority are hereby authorized and
directed to execute and deliver for and on behalf of the Authority any and all
financing statements, certificates, documents or other papers, to approve the
forms of any other documents, certificates, or other papers and to perform any
and all acts they may deem necessary or appropriate in order to carry out the
intent of this Resolution and the matters herein.
Section 16. This Resolution shall be in full force and effect immediately
upon its passage. Commissioner Loren Powell moved passage of the immediately
foregoing resolution and Commissioner Steve Robinson seconded the motion, and
the resolution was passed by the following vote:
Ayes: Commissioners: Powell, Robinson, Chamberlain, Troutman, and Wallace.
Noes: None.
Abstaining: None.
* * * * *
BE IT RESOLVED that the following is hereby approved as the final minutes
of the Authority for the June 2, 1994 meeting pertaining to the proposed
issuance by the Authority of its Industrial Revenue Refunding Bonds (Hunt
5
<PAGE>
Manufacturing Co. Project) in the aggregate principal amount of up to $2,000,000
and shall be made available by the Secretary or the Assistant Secretary on June
2, 1994 and every day thereafter to any member of the public requesting a copy
thereof, and shall be inserted by the Secretary or the Assistant Secretary into
the compilation of minutes of action for said June 2, 1994 meeting of the
Authority to be later prepared by the Secretary or the Assistant Secretary:
Motion was made by Commissioner Powell, seconded by Commissioner Robinson,
and carried unanimously for adoption -of a resolution entitled:
BOND RESOLUTION AUTHORIZING THE ISSUANCE AND SALE OF UP TO $2,000,000
INDUSTRIAL REFUNDING REVENUE BONDS (HUNT MANUFACTURING CO. PROJECT) AND THE
EXECUTION AND DELIVERY OF AN INDENTURE, A LEASE AND OTHER DOCUMENTS.
STATE OF NORTH CAROLINA
COUNTY OF IREDELL
I, Alice Fortner, Secretary of The Iredell County Industrial Facilities and
Pollution Control Financing Authority and keeper of the official minutes
thereof, DO HEREBY CERTIFY that the foregoing is a true copy of certain
proceedings of the Board of Commissioners of the authority taken at a meeting
held on June 2, 1994, and is a complete copy of so much of the recorded minutes
of said meeting as relates in any way to the subject matter of the resolution
hereinabove set forth and that such resolution was duly adopted and remains in
full force and effect on the date hereof.
I DO HEREBY FURTHER CERTIFY THAT, at least forty-eight hours before said
meeting, I posted written notice thereof at the door of the usual meeting room
of the Authority and mailed or delivered such notice to each person, newspaper,
wire service, radio station and television station that has filed with it a
written request for notice pursuant to G.S. 143-318.12 and that, pursuant to
Article II of the Bylaws of the Authority, I have all members of the Authority
written notice of said meeting not less than twenty-four hours prior to 12:00
Noon, June 2, 1994.
WITNESS my hand and the official seal of The Iredell County Industrial
Facilities and Pollution control Financing Authority, this the .9^1 day of June,
1994.
/s/ XXXXXXXXXXXX
------------------------------------
Secretary
6
<PAGE>
(SEAL)
7
<PAGE>
NORTH CAROLINA
IREDELL COUNTY,
- --------------------------------------------------------------------------------
LEGAL NOTICE
- --------------------------------------------------------------------------------
PUBLIC HEARING NOTICE
The Iredell Board of Commissioners on behalf ot the Iredell County
Industrial Facilities and Pollution Control Financing Authority (the
"Authority") will hold a public hearing Tuesday, June 21, 1994, at 7:00 p.m.,
prevailing time, at the Iredell County Government Center (old courthouse) in
Statesville, North Carolina to discuss the issuance of tax-exempt revenue bonds
(the "Bonds") for the following project (the "Project"):
A. Initial Owner Hunt Manufacturing Company (the "Company")
B. Maximum Amount of Issuance: $2,000,000
C. Nature of Financed Facility: the refunding of the Authority's Industrial
Revenue Bonds, Series of the 1979 (Hunt Manufacturing Co. Project) (the "1979
Bonds") issued in the original aggregate principal amount of $2,000,000, to
finance the costs of constructing an approximately 170,000 square foot
manufacturing facility and purchasing approximately 12.7 acres of surrounding
land.
D. Location of Financed Facilities: The financed facility is located at
2020 West Front Street, Iredell, North Carolina.
At the public hearing, any and all persons in attendance will be afforded
the opportunity to comment on the proposed will be afforded the opportunity to
comment on the proposed Project and the issuance of the Bonds by the Authority.
The public hearing is held on behalf of the Authority as the issuer of the
Bonds as required by the Internal Revenue Code of 1986, as amended.
IREDELL COUNTY BOARD OF COMMISSIONERS
June 7
<PAGE>
AFFIDAVIT OF PUBLICATION
Before the undersigned, a Notary Public of said County and State, duly
commissioned, qualified, and authorized by law to administer oaths, personally
appeared W. Allison Bumgarner who being first duly sworn, deposes and says: that
she is an employee authorized to make this statement by Park Newspapers of
Statesville, Inc. engaged in the publication of a newspaper known as the
Statesville Record & Landmark published, issued, and entered as second class
mail in the city of Statesville in said County and State, that she is authorized
to make this affidavit and sworn statement; that the notice or other legal
advertisement, a true copy of which is attached hereto, was published in the
Statesville Record & Landmark on the following dated:
JUNE 7, 1994
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
and that the said newspaper in which such notice, paper, document, or legal
advertisement was published was at the time of each and every such publication,
a newspaper meeting all of the requirements and qualifications of Section 1-597
of the General Statutes of North Carolina and was a qualified newspaper within
the meaning of Section 1-597 of the General Statutes of North Carolina.
This 7th day JUNE, 1994
/s/ XXXXXXXXXXXXXXXXXXXXXXXXXX
- --------------------------------------------------------------------------------
(Signature of person making affidavit)
Sworn to and subscribed before me, this 7th day of JUNE, 1994
/s/ XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXx
- --------------------------------------------------------------------------------
Notary Public
My Commission Expires February 19, 1997
Commission expires:.............................................................
<PAGE>
***************************
EXTRACT FROM MINUTES OF IREDELL COUNTY BOARD OF COMMISSIONERS JUNE 21, 1994
BE IT RESOLVED THAT the following is hereby approved as the official
minutes of that portion of the Boardfs June 11, 1994 meeting pertaining to the
proposed issuance by The Iredell County Industrial Facilities and Pollution
Control Financing Authority of its Industrial Revenue Refunding Bond (Hunt
Manufacturing Co. Project) in the aggregate principal amount of up to
$2,000,000, which extract from minutes shall be made available by the Clerk
beginning June 23, 1994 and every day thereafter to any member of the public
requesting a copy thereof, and shall be inserted by the Clerk into the minutes
for said June 21, 1994 meeting of the Board to be later prepared by the Clerk:
Industrial Revenue Refunding Bond
(Hunt Manufacturing Co. Project)
Motion was made by Commissioner Stewart, seconded by commissioner Madison,
and carried unanimously for adoption of a resolution entitled:
RESOLUTION APPROVING THE ISSUANCE BY THE IREDELL COUNTY INDUSTRIAL
FACILITIES AND POLLUTION CONTROL FINANCING AUTHORITY OF ITS INDUSTRIAL
REVENUE REFUNDING BOND (HUNT MANUFACTURING CO. PROJECT) IN THE AGGREGATE
PRINCIPAL AMOUNT OF UP TO $2,000,000 AND AUTHORIZING THE EXECUTION AND
DELIVERY OF AN INDENTURE, A LEASE, AND OTHER DOCUMENTS
Resolution recorded in full in Minute Book No.V beginning at page N/A.
4
<PAGE>
BOND RESOLUTION AUTHORIZING THE ISSUANCE AND SALE OF UP TO $21000,000
INDUSTRIAL REVENUE REFUNDING BONDS (HUNT MANUFACTURING CO. PROJECT)
The Board of Commissioners for the County of Iredell North Carolina, met at
the County Commissioners' Meeting Room, Iredell County Government Center, 200
South Center Street, Statesville, NCI at 6:00 o'clock p.m. on June 21, 1994.
Present: Chairman Sara K. Haire, presiding, and Commissioners David A.
Boone, Diane M. Hamby, C. Douglas Madison, Jr., and Alice M. Stewart.
Absent: None.
Also present: William P. Pope, County Attorney, and Alice Fortner, Clerk to
the board.
*****************
At 7:00 p.m., the Chairman announced that the Commissioners would proceed
to hold a public hearing and would hear anyone who wished to be heard on the
proposed issuance by The Iredell County Industrial Facilities and Pollution (the
"Authority") of its Industrial Revenue Refunding Bonds in a principal amount of
up to $2,000,000 (the "Bonds") the proceeds of which will be used to redeem in
whole and refinance the Authority's Industrial Revenue Bonds (Hunt Manufacturing
Co. Project), dated as of June 1, 1979 issued in the original principal amount
of $2,000,000 (the Prior Bonds").
A Notice of Public Hearing was published in the Statesville Record &
Land-mark on June 7, 1994, a date not less than 14 days prior hereto.
The Chairman announced that the Board would hear anyone who wished to be
heard on the advisability of issuing the Bonds.
The names and addresses of the persons who were present and who offered
comments as well as persons' comments on the proposed issuance of the bonds are
attached hereto as Exhibit A.
After the Board had heard all the persons who requested to be heard,
Chairman Haire move the public hearing be closed. The motion seconded by
commissioner Stewart and was unanimously adopted.
Chairman Haire introduced the following resolution:
<PAGE>
RESOLUTION APPROVING THE ISSUANCE BY THE IREDELL COUNTY INDUSTRIAL
FACILITIES AND POLLUTION CONTROL FINANCING AUTHORITY OF ITS INDUSTRIAL
REVENUE REFUNDING BONDS (HUNT MANUFACTURING CO. PROJECT) IN THE
AGGREGATE PRINCIPAL AMOUNT OF UP TO $2,000,000 AND AUTHORIZING THE
EXECUTION AND DELIVERY OF AN INDENTURE, A LEASE AND OTHER DOCUMENTS.
BE IT RESOLVED by the Board of Commissioners for the County of Iredell:
Section 1. The Board of Commissioners has determined and does hereby
declare as follows:
(a) The Board of Commissioners of The Iredell County Industrial Facilities
and Pollution Control Financing Authority (the "Authority") met on June 2, 1994,
and took the following action in connection with the proposed issuance and sale
of the Authority's Industrial Revenue Refunding Bond (Hunt Manufacturing Co.
Project), in the principal amount of $2,000,000 (hereinafter sometimes called
the "Bond"):
(1) approved and authorized the execution, delivery and performance of the
First Supplemental Indenture and Deed of Trust dated as of June _, 1994, (the
"Indenture"), from the Authority to First Union National Bank of North Carolina,
as Trustee (the "Trustee") providing for the issuance and sale of the Bond;
(2) approved and authorized the execution, delivery and performance of the
First Supplemental Lease Agreement, dated as of June 1, 1994, between the
Authority and Hunt Manufacturing Co. (the "Company")
(3) approved and authorized the execution, delivery and performance of
various other documents and instruments by the Authority in connection with the
issuance and sale of the Bond.
(b) The Board of Commissioners for the County of Iredell has reviewed the
action taken by the Board of Commissioners of the Authority in connection with
the issuance and sale of the Bond and has made such other examination and
investigation as it deems necessary and relevant as the basis for the approval
set forth herein.
Section 2. Pursuant to and in satisfaction of the requirements of
Section 159C-4(d) of the General Statutes of North Carolina, the Board of
Commissioners for the County of Iredell hereby approves the issuance by the
Authority of the Authority's Industrial Revenue Refunding Bond (Hunt
Manufacturing Co. Project) in the aggregate principal amount of up to
$2,000,000.
<PAGE>
Section 3. The publishing of the notice of the public hearing and the
designation of this meeting as a public hearing on the revenue bond issue is
hereby ratified and approved.
Section 4. This resolution shall take effect immediately upon its passage.
VOTING: Ayes - 5 - Haire, Boone, Hamby, Stewart and Madison; Nays - 0.
<PAGE>
STATE OF NORTH CAROLINA)
) ss.:
COUNTY OF IREDELL )
I, Alice Fortner , Clerk of the Board of Commissioners of the County of
Iredell, DO HEREBY CERTIFY, as follows:
1. A regular meeting of the Board of Commissioners of the County of Iredell
(the "Board"), a county of the State of North Carolina, was duly held on June 21
, 1994, proper notice of such meeting having been given as required by North
Carolina statutes, and minutes of such meeting have been duly recorded in the
Minute Book kept by me in accordance with law for the purpose of recording the
minutes of the Board.
2. I have compared the attached extract with the minutes so recorded and
the extract is a true copy of the minutes and of the whole thereof insofar as
the minutes relate to matters referred to in such extract.
3. The minutes correctly state the time when the meeting was convened and
the place where such meeting was held and the members of the Board who attended
the meeting.
IN WITNESS WHEREOF, I have hereunto set my hand and have hereunto affixed
the corporate seal of the County, this 21st day of June, 1994.
/s/ XXXXXXXXXXXXXXXXXXXXXXXXX
----------------------------------
Clerk, Board of Commissioners
(SEAL)
<PAGE>
STATE OF NORTH CAROLINA
LOCAL GOVERNMENT COMMISSION
RALEIGH
CERTIFICATE CONCERNING
INDUSTRIAL REVENUE BONDS
I, Robert M. High, Secretary of the Local Government Commission of North
Carolina (the "Commission"), DO HEREBY CERTIFY as follows:
1. The application requesting approval of issuance of the Industrial
Revenue Refunding Bonds (Hunt Manufacturing Co. Project) in the principal amount
of $2,000,000 (the "Bonds"), by The Iredell County Industrial Facilities and
Pollution Control Financing Authority (the "Authority"), was duly filed on June
7, 1994 pursuant to Section 159C-8 of the General Statutes of North Carolina.
The Bonds are to be dated as of June 1, 1994. The principal is payable in full
on June 15, 2004.
2. Said application was considered and the issuance of the Bonds approved
by a resolution passed by the unanimous vote of the [Executive Committee of the]
Local Government Commission present at a meeting held on June 7, 1994.
3. At said meeting, the Executive Committee of the commission, by said
resolution, also (i) approved the sale of the Bonds dated as of June 1, 1994 at
a price to be approved by the Secretary of not less than 100% of the aggregate
principal amount thereof on the terms set forth in the form of Trust Indenture
filed as part of said application and determined that the Bonds shall bear
interest at the rate or rates set forth in the form of Bond filed as part of
said application, pursuant to Section 159C-6 of the General Statutes of North
Carolina with an initial rate thereon to be a rate which the Secretary in his
discretion shall approve, and (ii) approved the system of registration, as set
forth in the Trust Indenture, and the appointment of First union National Bank
of North Carolina as Trustee, Bond Registrar, Securities Depositary,
Authenticating Agent and Paying Agent pursuant thereto.
4. The principal amount of $2,000,000 of the Bonds, the purchase price for
the Bonds and 100% of the principal amount thereof and a rate not to exceed
7.0% per annum as the initial interest rate on the Bonds are hereby approved.
5. No request or application for the review of any resolution adopted or
other proceedings taken by the commission or the Executive Committee thereof
with respect to the Bonds has been filed with the Commission or the Executive
Committee.
<PAGE>
6. No litigation concerning the action of the Executive Committee of the
Local Government Commission in approving the issuance and sale of the Bonds is
pending or threatened insofar as I am aware.
WITNESS my hand at Raleigh, this 7th day of June, 1994.
By /s/ Robert M. HXXXXXXXXXXXXX
-------------------------------------
Secretary of the Local
Government Commission of
North Carolina
<PAGE>
NORTH CAROLINA DEPARTMENT OF STATE TREASURER
LOCAL GOVERNMENT COMMISSION
EXECUTIVE COMMITTEE
MINUTES
June 7, 1994
The meeting was called to order by Chairman Harlan E. Boyles at 2:00 p.m.
on the above date. Members present were: State Treasurer Harlan E. Boyles, State
Auditor Ralph Campbell, Jr., and Secretary of State Rufus Edmisten.
Member absent: Secretary of Revenue Janice Faulkner.
Mr. Campbell made the motion to approve the following resolution:
"RESOLUTION APPROVING THE FINANCING TEAM FOR THE IREDELL COUNTY INDUSTRIAL
FACILITIES AND POLLUTION CONTROL FINANCING AUTHORITY $2,000,000 INDUSTRIAL
REVENUE REFUNDING BONDS (ITUNT MANUFACTURING CO. PROJECT), SERIES 1994
WHEREAS, The Iredell County Industrial Facilities and Pollution Control
Financing Authority (the "Authority") has requested the North Carolina Local
Government Commission (the "Commission") approve their selection of the
following financing team members for the upcoming industrial revenue bond issue:
Co-Bond Counsel: Smith Helms Mulliss & Moore, L.L.P.
Drinker Biddle & Reath
Purchaser: Brown Brothers Harriman & Company
Purchaser's Counsel: Drinker Biddle & Reath
Trustee/Registrar: First Union National Bank of North Carolina
WHEREAS, based upon the information and evidence received by the
Commission, the Commission is of the opinion that the request by the Authority
should be approved.
NOW, THEREFORE, BE IT RESOLVED by the Executive Committee of the North
Carolina Local Government Commission that the above financing team is hereby
approved for the upcoming Iredell County Industrial Facilities and Pollution
Control Financing Authority $2,000,000 Industrial Revenue Refunding Bonds (Hunt
Manufacturing Co. Project), Series 1994."
Mr. Edmisten seconded the motion and the foregoing resolution was adopted
by unanimous vote.
Mr. Campbell made a motion to approve the following resolution:
"RESOLUTION APPROVING ISSUANCE AND SALE OF REFUNDING BONDS OF THE
IREDELL COUNTY INDUSTRIAL FACILITIES AND POLLUTION CONTROL FINANCING
AUTHORITY
BE IT RESOLVED by the Executive Committe of the North Carolina Local
Government Commission:
<PAGE>
Section 1. It is hereby declared and determined that The Iredell County
Industrial Facilities and Pollution Control Financing Authority (the
"Authority") has filed with the Secretary of the North Carolina Local Government
Commission (the "Commission"), pursuant to Section 159C-8 of Chapter 159C of the
General Statutes of North Carolina (the "Act"), an Application for Approval of
$2,000,000 Industrial Revenue Refunding Bonds (Hunt Manufacturing Co. Project),
Series 1994 in the principal amount of $2,000,000 (the "Bonds"), including the
following documents:
(1) Copy of Application for Approval of Project pursuant to Section
159C-7 of the Act as filed by the Authority with the Department of
Commerce.
(2) Form of First Supplemental Indenture of Trust dated as of June 15,
1994 (the "Trust Indenture") from the Authority to First Union
National Bank of North Carolina, as trustee (the "Trustee"), with the
form of Refunding Bond contained therein.
(3) Form of Supplemental Lease Agreement dated as of June 15, 1994
between the Authority and Hunt Manufacturing Co. (the "Company").
(4) A request by the Authority that the Commission (a) approve the
issuance of the Bonds pursuant to Section 159C-8 of the Act, (b)
approve the private sale of the Bonds on the terms and at the price
set forth in the form of the Trust Indenture pursuant to Section 159C9
of the Act, (c) determine the interest rate or rates to be borne by
the Bonds as set forth in said form of Bonds and described in the
Trust Indenture pursuant to Section 159C-6 of the Act, and (d) approve
the system of registration for the Bonds and the appointment of a Bond
Registrar pursuant to Section 159E of the Act.
Section 2. It is hereby further declared and determined that:
(a) The Commission has duly considered, among other things, the
financial responsibility and capability of the Company to fulfill its
obligations under the First Supplemental Lease Agreement, in the
respective forms of such documents filed with the Commission.
(b) The proposed date and manner of sale of the Bonds will not have an
adverse effect upon any scheduled or anticipated sale of any
obligations by the State of North Carolina or any political
subdivision thereof or any agency of either of them.
Section 3. The issuance of the Bonds in an aggregate principal amount not
to exceed $2,000,000 is hereby approved.
Section 4. The sale of an aggregate of $2,000,000 principal amount of Bonds
pursuant to and in accordance with the Indenture substantially in the form filed
with the Commission at the purchase price of 100% of the aggregate principal
amount thereof as the Secretary of the Commission in its discretion shaU approve
and with the approval of the Authority and the Company, is in the best interests
of the Authority and will best effectuate the purposes of the Act.
Section 5. It is hereby determined, with the approval of the Authority and
the Company, that the Bonds shaU bear interest at the rate or rates set forth in
the form of Bond and described in the form of Indenture filed with the
Commission with an initial rate which the Secretary in his discretion shaU
approve, such rate or rates to be subject to change and increase as provided
therein, however, no rate to exceed 15% per annum, and a final maturity not to
exceed December 31, 2004.
<PAGE>
Section 6. The system of registration for the Bonds, as set forth in the
Indenture, and the appointment of First Union National Bank of North Carolina,
as Trustee and as Bond Registrar, pursuant thereto are approved under Chapter
159E of the North Carolina General Statutes.
Section 7. This resolution shall be effective immediately upon its
passage."
Mr. Edmisten seconded the motion and the foregoing resolution was adopted
by unanimous vote.
******************************
I, Robert M. High, Secretary of the North Carolina Local Government
Commission, DO HEREBY CERTIFY that the foregoing is a true and corrent extract
from the minutes of the Executive Committee of the North Carolina Local
Government Commission meeting duly called and held on June 7, 1994, and sets
forth so much of said minutes as in any way relates to the introduction,
consideration and passage of the resolutions herein set forth.
WITNESS my hand at Raleigh, this 7th day of June, 1994.
By /s/ Robert M. HiXXXXXXX
-------------------------------
Secretary of the North Carolina
Local Government Commission
<PAGE>
- --------------------------------------------------------------------------------
Certificate of Insurance
THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS
UPON YOU THE CERTIFICATE HOLDER. THIS CERTIFICATE IS NOT AN INSURANCE POLICY AND
DOES NOT AMEND, EXTEND, OR ALTER THE COVERAGE AFFORDED BY THE POLICIES LISTED
BELOW:
This is to Certify that
[GRAPHIC OMITTED]
Hunt Manufacturing co., ETAL Name and
230 South Broad Street { address of
Philadelphia, PA 19102-4167 Insured.
Is, at the issue date of this certificate, insured by the Company under the
policy(ies) listed below. The insurance afforded by the listed policy(ies) is
subject to all their terms, exclusions and conditions and is not altered by any
requirement, term of condition of any contract or other document with respect
to which this certificate may be issued.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
/ / CONTINUOUS
/ / EXTENDED
TYPE OF POLICY /X/ POLICY TERM POLICY NUMBER LIMIT OF LIABILITY
- ------------------------------------------------------------------------------------------------------------------------------------
WORKERS COVERAGE AFFORDED UNDER WC EMPLOYERS LIABILITY
COMPENSATION LAW OF THE FOLLOWING STATES ----------------------------
Bodily Injury By Accident
Each
Accident
----------------------------
Bodily Injury By Disease
Policy
Limit
----------------------------
Bodily Injury By Disease
Each
Person
- ------------------------------------------------------------------------------------------------------------------------------------
GENERAL LIABILITY General Aggregate - Other than Products/Completed Operations
$2,000,000.
------------------------------------------------------------------
/X/ OCCURRENCE 11/30/94 *TB2-131-01670-153 Products/Completed Operations Aggregate
$1,000,000.
/ / CLAIMS MODE RETRO DATE ------------------------------------------------------------------
Bodily Injury and Property Damage Liability
Per
$1,000,000 Occurrence
------------------------------------------------------------------
Personal and Advertising Injury
Per Person
$1,000,000 Organization
------------------------------------------------------------------
11/30/94 TB2-131-016700-153 Other Other
Broad Form Vendors
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
AUTOMOBILE LIABIILTY Each Accident - Single Limit
B.J. and P.D. Combined
/ / OWNED ------------------------------------------------------------------
/ / NON-OWNED Each Person
------------------------------------------------------------------
/ / HIRED
Each Accident or Occurrence
------------------------------------------------------------------
Each Accident or Occurrence
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER RE: Includes all divisions and subsidiaries of
All Locations and All Jobs Hunt Manufacturing.
- ------------------------------------------------------------------------------------------------------------------------------------
ADDITIONAL COMMENTS
*Additional Insured: Iredell County Industrial Facilities and Pollution Control Financing Authority
- ------------------------------------------------------------------------------------------------------------------------------------
*If the certificate expiration date is continuous or extended term, you will be notified if coverage is terminated or reduced
before the certificate and expiration date. However, you will not be notified of the continuation of coverage.
SPECIAL NOTICE-OHIO: ANY PERSON WHO, WITH INTENT TO DEFRAUD OR KNOWING THAT HE IS FACILITATING A Liberty Mutual
FRAUD AGAINST AN INSURER, SUBMITS AN APPLICATION OR FILES A CLAIM CONTAINING A FALSE OR DECEPTIVE Insurance Group
STATEMENT IS GUILTY OF INSURANCE FRAUD.
NOTICE OF CANCELLATION: (NOT APPLICABLE UNLESS A NUMBER OF DAYS IS ENTERED BELOW.) BEFORE THE STATED EXPIRATION DATE
THE COMPANY WILL NOT CANCEL OR REDUCE THE INSURANCE AFFORDED UNDER THE ABOVE POLICIES UNTIL AT LEAST 30 DAYS
NOTICEOF SUCH CANCELLATION HAS BEEN MAILED TO:
Pollution Control Financing Authority /s/ Lorraine S. Felicione
CERTIFICATE PO Box 788 ------------------------------------------
HOLDER Statesville, NC 28687-0788 AUTHORIZED REPRESENTATIVE
7/27/94 mk Bala Cynwyd, PA 19004
------------------------------------------
DATE ISSUED OFFICE
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
Certificate of Insurance
THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS
UPON YOU THE CERTIFICATE HOLDER. THIS CERTIFICATE IS NOT AN INSURANCE POLICY AND
DOES NOT AMEND, EXTEND, OR ALTER THE COVERAGE AFFORDED BY THE POLICIES LISTED
BELOW:
This is to Certify that
[GRAPHIC OMITTED]
Hunt Manufacturing co., ETAL Name and
230 South Broad Street { address of
Philadelphia, PA 19102-4167 Insured.
Is, at the issue date of this certificate, insured by the Company under the
policy(ies) listed below. The insurance afforded by the listed policy(ies) is
subject to all their terms, exclusions and conditions and is not altered by any
requirement, term of condition of any contract or other document with respect
to which this certificate may be issued.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
/ / CONTINUOUS
/ / EXTENDED
TYPE OF POLICY /X/ POLICY TERM POLICY NUMBER LIMIT OF LIABILITY
- ------------------------------------------------------------------------------------------------------------------------------------
WORKERS COVERAGE AFFORDED UNDER WC EMPLOYERS LIABILITY
COMPENSATION LAW OF THE FOLLOWING STATES ----------------------------
Bodily Injury By Accident
Each
Accident
----------------------------
Bodily Injury By Disease
Policy
Limit
----------------------------
Bodily Injury By Disease
Each
Person
- ------------------------------------------------------------------------------------------------------------------------------------
GENERAL LIABILITY General Aggregate - Other than Products/Completed Operations
$2,000,000.
------------------------------------------------------------------
/X/ OCCURRENCE 11/30/94 *TB2-131-01670-153 Products/Completed Operations Aggregate
$1,000,000.
/ / CLAIMS MODE RETRO DATE ------------------------------------------------------------------
Bodily Injury and Property Damage Liability
Per
$1,000,000 Occurrence
------------------------------------------------------------------
Personal and Advertising Injury
Per Person
$1,000,000 Organization
------------------------------------------------------------------
11/30/94 TB2-131-016700-153 Other Other
Broad Form Vendors
- ------------------------------------------------------------------------------------------------------------------------------------
AUTOMOBILE LIABIILTY Each Accident - Single Limit
B.J. and P.D. Combined
/ / OWNED ------------------------------------------------------------------
/ / NON-OWNED Each Person
------------------------------------------------------------------
/ / HIRED
Each Accident or Occurrence
------------------------------------------------------------------
Each Accident or Occurrence
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER RE: Includes all divisions and subsidiaries of
All Locations and All Jobs Hunt Manufacturing.
- ------------------------------------------------------------------------------------------------------------------------------------
ADDITIONAL COMMENTS
*Additional Insured: First Union National Bank of North Carolina
- ------------------------------------------------------------------------------------------------------------------------------------
*If the certificate expiration date is continuous or extended term, you will be notified if coverage is terminated or reduced
before the certificate and expiration date. However, you will not be notified of the continuation of coverage.
SPECIAL NOTICE-OHIO: ANY PERSON WHO, WITH INTENT TO DEFRAUD OR KNOWING THAT HE IS FACILITATING A Liberty Mutual
FRAUD AGAINST AN INSURER, SUBMITS AN APPLICATION OR FILES A CLAIM CONTAINING A FALSE OR DECEPTIVE Insurance Group
STATEMENT IS GUILTY OF INSURANCE FRAUD.
NOTICE OF CANCELLATION: (NOT APPLICABLE UNLESS A NUMBER OF DAYS IS ENTERED BELOW.) BEFORE THE STATED EXPIRATION DATE
THE COMPANY WILL NOT CANCEL OR REDUCE THE INSURANCE AFFORDED UNDER THE ABOVE POLICIES UNTIL AT LEAST 30 DAYS
NOTICE OF SUCH CANCELLATION HAS BEEN MAILED TO:
First Union National Bank of North Carolina
Attn: Karen Atkinson /s/ Lorraine S. Felicione
CERTIFICATE 230 South Tryon Street, 8th Flr. ------------------------------------------
HOLDER Charlotte, NC 28288-1179 AUTHORIZED REPRESENTATIVE
7/27/94 mk Bala Cynwyd, PA 19004
------------------------------------------
DATE ISSUED OFFICE
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ACORD EVIDENCE OF PROPERTY INSURANCE DATE (MM/DD/YY)
/ / 6/27/94
- -----------------------------------------------------------------------------------------------------------------------------------
THIS IS EVIDENCE THAT INSURANCE AS IDENTIFIED BELOW HAS BEEN ISSUED, IS IN FORCE AND CONVEYS ALL THE RIGHTS AND PRIVILEGES
AFFORDED UNDER THE POLICY.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
INSURER COMPANY
JOHNSON & HIGGINS INDUSTRIAL RISK INSURERS
TWO LOGAN SQUARE 85 WOODLAND STREET
PHILADELPHIA, PA 1910-2797 HARTFORD CONN 06102
CODE SUBCODE
- ------------------------------------------------------------------------------------------------------------------------------------
INSURED LOAN NUMBER POLICY NUMBER
Hunt Manufacturing Co. 31359731
Dennis S. Pizzica, Treasurer ------------------------------------------------------------
230 South Broad Street EFFECTIVE DATE (MM/DD/YY) EXPIRATION DATE (MM/DD/YY) CONT. UNTIL
Philadelphia, PA 19102 12/01/93 12/01/94 TERMINATED____
IF CHECKED
----------------------------------------------------------------------------
THIS REPLACES PRIOR EVIDENCE DATED:
- ------------------------------------------------------------------------------------------------------------------------------------
LOCATION/DESCRIPTION
RE: EVIDENCE OF INSURANCE
IREDELL COUNTY INDUSTRIAL FACILITY AUTHORITY AND FIRST UNION NATIONAL BANK OF NC
ARE INCLUDED AS ADDITIONAL INSUREDS, ATIMA.
- ------------------------------------------------------------------------------------------------------------------------------------
COVERAGE / PERILS / FORMS AMOUNT OF INSURANCE DEDUCTIBLE
- ------------------------------------------------------------------------------------------------------------------------------------
so-called "All Risk" of physical loss or damage on Real & Personal 5000
Property, Business Interruption, Contingent Business Interuption,
Extra Expense and Transit
R Placemet Cost and Agreed Amount coverages apply.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
THE POLICY IS SUBJECT TO THE PREMIUMS, FORMS, AND RULES IN EFFECT FOR EACH POLICY PERIOD. SHOULD THE POLICY BE TERMINATED, THE
COMPANY WILL GIVE THE ADDITIONAL INTEREST IDENTIFIED BELOW 30 DAYS WRITTEN NOTICE, AND WILL SEND NOTIFICATION OF ANY CHANGES TO
THE POLICY THAT WOULD AFFECT THAT INTEREST, IN ACCORDANCE WITH THE POLICY PROVISIONS OR AS REQUIRED BY LAW.
- ------------------------------------------------------------------------------------------------------------------------------------
NAME AND ADDRESS NATURE OF INTEREST
FIRST UNION NATIONAL BANK / / MORTGAGE /X/ ADDITIONAL INSURED
OF NC
ATTN KAREN ATKINSON / / LOSS PAYEE / / OTHER_________________
230 SOUTH TRYON ST 8TH FLOOR -------------------------------------------------------------------------------------
CHARLOTTE NC 28288-1179 SIGNATURE OF AUTHORIZED AGENT OR COMPANY
/s/ Martin J. Samchalls
- ------------------------------------------------------------------------------------------------------------------------------------
INSURED COPY CERTIFICATE NO. 001001-0001
</TABLE>
<PAGE>
United States of America
State of North Carolina
IREDELL COUNTY INDUSTRIAL FACILITIES
AND POLLUTION CONTROL FINANCING AUTHORITY
Industrial Revenue Refunding Bond
(Hunt Manufacturing Co. Project)
Series 1994
No. R-1 $2,000,000.00
IREDELL COUNTY INDUSTRIAL FACILITIES AND POLLUTION CONTROL FINANCING
AUTHORITY (the "Authority"), a political subdivision and body corporate and
politic duly organized and existing under the Constitution and laws of the State
of North Carolina, for value received, hereby promises to pay (but only from the
special revenues and funds hereinafter described) to BROWN BROTHERS HARRIMAN &
CO., or its registered assigns (the "Owner"), on June 15, 2004, upon the
presentation and surrender hereof at the principal office of the Paying Agent
herein described, the principal sum of
Two Million Dollars ($2,000,000.00)
and to pay (but only out of the sources hereinafter mentioned) interest on said
principal sum at the variable interest rate described under "Interest Rate
Provisions" below. Payment of the principal of and interest on this Bond shall
be in any coin or currency of the United States of America as, at the respective
times of payment, shall be legal tender for the payment of public and private
debts.
This Bond is a duly authorized issue of revenue bonds of the Authority
issued in the original aggregate principal amount of $2,000,000 and designated
as Iredell County Industrial Facilities and Pollution Control Financing
Authority Industrial Revenue Refunding Bond (Hunt Manufacturing Co. Project),
Series 1994 (the "Bond") issued under and pursuant to the constitution and laws
of the State of North Carolina, including particularly the Industrial and
Pollution Control Financing Act, as amended, which as codified appears as
Chapter 159C of the General Statutes of North Carolina (the "Enabling Act"), a
resolution of the Authority adopted on June 2, 1994, and a Indenture and Deed of
Trust dated as of June 1, 1979 (the "Original Indenture"), as supplemented by a
First Supplemental Indenture and Deed of Trust dated as of July 31, 1994 (the
"First Supplemental Indenture" and, together with the Original Indenture, the
"Indenture"), each between the Authority and First Union National Bank of North
Carolina, as trustee (the "Trustee"). The Bond is issued by the Authority for
the purpose of refunding certain prior bonds of the Authority issued for the
purpose of financing a Project on behalf
<PAGE>
of Hunt Manufacturing cc. (the "Company") and more particularly described in the
Indenture. The Authority and the Company have entered into a Lease Agreement
dated as of June 1, 1979 (the "Original Lease Agreement"), as amended and
supplemented by a First Supplemental Lease Agreement dated as of July 31, 1994
(the "First Supplemental Lease Agreement" and, together with the original Lease
Agreement, the "Lease Agreement"), under which the Authority has demised the
Leased Property to the Company, and the Company has leased the Leased Property
from the Authority. Under the Lease Agreement the Company has agreed to pay to
the Trustee or Purchaser, on behalf of the Authority, rental payments
sufficient, among other things, to provide for the payment by the Authority of
the principal and redemption price of, and interest on, this Bond. The Company
has entered into a Guaranty Agreement dated as of June 1, 1979, as amended and
supplemented by the First Amended Guaranty Agreement dated as of July 31, 1994
(the "Guaranty"), with the Trustee, whereby the Company has unconditionally
guaranteed for the benefit of the holders and Registered Owners of all bonds
issued and outstanding under the Indenture, the full and prompt payment of the
principal of and redemption premium, if any, and interest on such bonds,
including this Bond.
This Bond is and shall be issued only in one denomination equal to the
entire principal amount hereof.
This Bond is transferable, in accordance with the provisions of the
Indenture, by the Registered Owner hereof or his duly authorized attorney at the
designated office of the Trustee, upon surrender of this Bond, accompanied by a
duly executed instrument of transfer, in form satisfactory to the Trustee, and
upon payment by the Owner hereof of any taxes, fees or other governmental
charges incident to such transfer. Upon any such transfer, a new
fully-registered Bond in the same aggregate principal amount will be issued to
the transferee. The person in whose name this Bond is registered may be deemed
the holder and Registered Owner thereof for all purposes by the Authority, the
Company and the Trustee, and any notice to the contrary shall not be binding
upon the Authority, the Company or the Trustee.
<PAGE>
THIS BOND IS A LIMITED OBLIGATION OF THE AUTHORITY AND IS PAYABLE
SOLELY OUT OF AMOUNTS HELD UNDER THE INDENTURE AND AMOUNTS TO BE DERIVED FROM
THE COMPANY UNDER THE LEASE AGREEMENT AND THE GUARANTY AND IS SECURED AS SET
FORTH IN THE INDENTURE. THIS BOND AND THE INTEREST HEREON SHALL NOT BE DEEMED TO
CONSTITUTE A DEBT, LIABILITY, GENERAL OBLIGATION OR A PLEDGE OF THE FAITH AND
CREDIT OR THE TAXING POWER OF THE STATE OF NORTH CAROLINA OR ANY POLITICAL
SUBDIVISION THEREOF. NEITHER THE STATE OF NORTH CAROLINA NOR ANY POLITICAL
SUBDIVISION THEREOF NOR THE AUTHORITY SHALL BE OBLIGATED TO PAY THE PRINCIPAL OF
THIS BOND, THE INTEREST HEREON OR OTHER COSTS INCIDENT HERETO EXCEPT FROM THE
REVENUES AND FUNDS PLEDGED THEREFOR, AND NEITHER THE FAITH AND CREDIT NOR THE
TAXING POWER OF THE STATE OF NORTH CAROLINA OR ANY POLITICAL SUBDIVISION THEREOF
IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF THIS BOND OR THE INTEREST HEREON
OR OTHER COSTS INCIDENT THERETO.
Reference is made to the Indenture, the Lease Agreement and the
Guaranty for a complete description of the terms and provisions thereof,
including, among other things: a description of the property pledged and
assigned under the Indenture for the payment of the principal and redemption
price of and interest on this Bond; the provisions under which the property may
be removed from the Leased Property or other property may be substituted
therefor; a description of the duties and rights of the Trustee and the
Authority; the provisions under which the lien of the Indenture may be defeased;
and the extent and manner of enforcement of the rights of the holders and
Registered Owners of the bonds issued under the Indenture, including this Bond.
The Indenture permits the amendment thereof and of the Lease Agreement
and the Guaranty and the modifications of the rights and obligations of the
Authority and the Trustee and the rights of the Registered Owner of the Bond,
with the consent of the holders and Registered Owners of 66 2/3 percent of the
aggregate principal amount of all Bonds outstanding under the Indenture, upon
the terms set forth therein. Any consent or waiver by the Registered Owner of
this Bond shall be conclusive and binding upon such Registered Owner and upon
all future Registered Owners of this Bond and of any Bond issued upon the
transfer of this Bond whether or not notation of such consent or waiver is made
hereon.
INTEREST RATE PROVISIONS
The rate of interest on this Bond shall be the lower of LIBOR or 75% of
the Base Rate as determined on each Interest Calculation Date. For purposes of
the foregoing, the following definitions shall apply:
"Base Rate" means the rate announced from time to time by BBH
as its "base" rate.
<PAGE>
"BBH" means Brown Brothers Harriman & Co., the initial
Registered Owner of this Bond and the Purchaser described in the
Indenture.
"Interest Calculation Date" means the date of original
issuance of this Bond and the first day of each April, July, October
and January thereafter, whether or not a Business Day.
" Interest Period" means the period from each Interest
Calculation Date to and including the day immediately preceding the
next succeeding Interest Calculation Date.
"LIBOR" means the 90-day London Inter-Bank Offered Rate,
determined by BBH as of the opening of business on each Interest
Calculation Date by reference to market reporting services available to
banks and financial institutions.
All determinations of the interest rate on this Bond shall be
calculated to three places to the right of the decimal point.
Interest, calculated on the basis of a year of 365 or 366 days, for the
actual number of days elapsed in each Interest Period, shall accrue daily and
shall be payable quarterly in arrears on March 31, June 30, September 30 and
December 31 of each year, commencing September 30, 1994, and on the maturity
date hereof (each an "Interest Payment Date") to the Registered owner hereof, as
shown on the registration books of the Trustee on the Business Day preceding
such interest payment date (a "Record Date"), except that if and to the extent
that there shall be a default in the payment of the interest due on any such
Interest Payment Date, such defaulted interest shall be paid to the Registered
Owner in whose name this Bond is registered on the fifth Business Day preceding
the date of payment of such defaulted interest. The amount of interest due
hereon for any Interest Period shall be determined by BBH in accordance with
Section 201 of the First Supplemental Indenture. Subject to the direct payment
provisions of Section 205 of the First Supplemental Indenture, interest on this
Bond shall be paid by check mailed by the Trustee to the Registered Owner
entitled thereto on each Interest Payment Date. This Bond shall bear interest on
the overdue principal and, to the extent permitted by law, on overdue interest
at the Base Rate plus 2%.
If at any time hereafter, either before or after the payment of the
entire principal of and interest on the Series 1994 Bond, there shall be a
Determination of Taxability, then, in such event, the interest rate on the
Series 1994 Bond, as in effect during any period from and after the date of the
event giving rise to the Determination of Taxability, shall be the Base Rate
plus 2%. The failure of the Registered Owner to make a demand promptly following
a Determination of Taxability shall not alter the rights or obligations of the
Authority or the Registered
<PAGE>
Owner. If there is more than one Determination of Taxability, this paragraph
shall be fully applicable to each such Determination of Taxability, whether or
not the Registered Owner exercised any or all of the rights or remedies that
arose under any prior Determination of Taxability, and all the Registered
owner's rights and remedies shall be cumulative except to the extent of any
written waiver by the Registered Owner. If the Registered Owner receives written
notice of any Determination of Taxability, it will give prompt written notice
thereof to the Company, the Authority and the Trustee and the Company shall have
the right to require the Registered Owner to prosecute any administrative or
judicial remedies available to it unless the Registered Owner determines, in its
sole discretion, that the prosecution of such remedies is not against its best
interests, provided that the Company shall pay all expenses of prosecuting any
such remedies.
REDEMPTION PROVISIONS
Optional Redemption. The Bond may be redeemed at the election of the
Authority at the direction of the Company on any Interest Payment Date, without
penalty, in whole or in part (but if in part in the principal amount of $100,000
or integral multiples of $5,000 in excess thereof), at a redemption price equal
to 100% of the principal amount thereof to be redeemed plus accrued interest to
the date of redemption upon fifteen days written notice to the Registered Owner.
Mandatory Redemption at Option of Registered Owner. Subject to the
limitations set forth in the next paragraph, all or any portion of this Bond
shall be redeemed by the Authority, at a redemption price equal to 100% of the
principal amount thereof, plus accrued interest to the date of redemption, upon
the written demand, in the form provided in the First Supplemental Indenture, of
the Registered Owner thereof to the Trustee, with a copy to the Company. The
Series 1994 Bond, or any portion thereof, shall be redeemed, and the redemption
price of the Series 1994 Bond shall be paid to the Registered Owner of the
Series 1994 Bond on the date specified by the Registered Owner hereof.
The aggregate principal amount of the this Bond which may be redeemed
in accordance with the preceding paragraph in any annual period commencing on
June 1 of each year, when added to the aggregate principal amount of the Bond
redeemed in accordance with such paragraph in all prior periods, shall not
exceed the aggregate amounts as follows:
<PAGE>
Year Commencing
June 1 Amount
--------------- ------
1994 $ -0-
1995 350,000
1996 720,000
1997 1,120,000
1998 1,545,000
1999 and thereafter 2,000,000
Mandatory Redemption Upon Determination of Taxabilit Upon the
occurrence of a Determination of Taxability, as defined in the Indenture, the
Series 1994 Bond shall be called for redemption on the date, not more than 90
days following the date of such Determination of Taxability, selected by the
Company at a redemption price equal to 100% of the principal amount thereof,
plus accrued interest to the date of redemption.
Mandatory Redemption Upon Cessation of Operation. In the event of a
Cessation of operation, as defined in the Indenture, the Series 1994 Bond shall
be called for redemption on the date, not more than 90 days following the date
of such Cessation of Operation, selected by the Company at a redemption price
equal to 100% of the principal amount thereof, plus accrued interest to the date
of redemption.
Notice of Redemption. Except with respect to a mandatory redemption of
the Series 1994 Bond as described above, the Trustee shall provide the
Registered Owner with notice mailed by first-class mail, prepaid, at least
fifteen days before such redemption date to each such Registered Owner at the
registered address of the Registered Owner appearing on the registration books
maintained pursuant to Section 205 of the Indenture as of the close of business
on the Business Day prior to such mailing. Notice of redemption having been so
given and payment or provision for payment of such redemption price having been
so made, the Bond so called for redemption shall be due and payable on the
redemption date and interest thereon shall cease to accrue from and after such
redemption date.
Subject to the direct payment provisions of Section 205 of the First
Supplemental Indenture, in the event of a redemption of this Bond in whole, the
redemption price shall be paid to the Registered Owner only upon surrender of
this Bond at the principal office of the Trustee. In the event of a partial
redemption, payment shall be made by wire transfer of immediately available
funds to such bank as the Registered Owner shall designate to the Trustee in
writing not less than two Business Days prior to the date of such payment,
without presentation and surrender of this Bond, provided (i) that the Paying
Agent's record of such payment shall be conclusive and binding upon such
<PAGE>
Registered Owner and each succeeding Registered Owner of the Bond, and (ii) the
Registered Owner shall note such partial redemption on the grid attached to this
Bond.
No covenant or agreement contained in this Bond shall be deemed to be
the covenant or agreement of any member, officer, attorney, agent or employee of
the Authority in an individual capacity. No recourse shall be had for the
payment of principal, premium, if any, or interest on the Bond or any claim
based thereon or on any instruments and documents executed and delivered by the
Authority in connection with the Project, against any officer, member, agent,
attorney or employee of the Authority past, present or future, or any successor
body or their representative heirs, personal representatives, successors, as
such, either directly or through the Authority, or any such successor body,
whether by virtue of any constitutional provision, statute or rule of law, or by
the enforcement of any assessment or penalty, or otherwise, all of such
liability being hereby released as a condition of and as a consideration for the
execution and delivery of this Bond.
This Bond shall be governed by and construed in accordance with the
laws of the State of North Carolina. Certain capitalized terms used but not
otherwise defined herein shall have the meanings set forth in the Indenture.
This Bond shall not be valid or become obligatory for any purpose or be
entitled to any benefit or security under the Indenture until it shall have been
authenticated by the execution by the Trustee of the certificate of
authorization endorsed herein.
IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions
and things required to exist, happen and be performed precedent to and in the
execution and delivery of the Agreement and issuance of this Bond do exist, have
happened, exist and have been performed as so requested.
<PAGE>
IN WITNESS WHEREOF, the Iredell County Industrial Development
Authority has caused this Bond to be executed in its name by the manual or
facsimile signature of its Chairman or Vice Chairmen, and the manual
impression or facsimile of its corporate seal to be affixed hereto and
attested by the manual or facsimile signature of its Secretary or any
Assistant Secretary.
Dated: July 31, 1994
[SEAL] IREDELL COUNTY INDUSTRIAL
FACILITIES AND POLLUTION CONTROL
FINANCING AUTHORITY
Attest:
By: /s/ J.D. Chamberlain
---------------------------------
Chairman
By: /s/ William L. Page
---------------------------
(Assistant) Secretary
CERTIFICATE OF AUTHENTICATION
This Bond is an issue described in the within-mentioned Indenture.
Attached hereto is the true and complete text of the opinion of Drinker Biddle
and Reath, a signed original copy of which, dated the date of original issuance
of this Bond, is on file at the principal corporate trust office of the
undersigned in Charlotte, North Carolina.
Date of Authentication FIRST UNION NATIONAL BANK OF
July 31, 1994 NORTH CAROLINA, as Trustee
By: /s/ Karen E. Atkinson
------------------------
Authorized Officer
<PAGE>
SCHEDULE OF PRINCIPAL REPAYMENTS
Principal
Amount Outstanding Notation
Date Paid Balance Made By
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<PAGE>
SCHEDULE OF PRINCIPAL REPAYMENTS
Principal
Amount Outstanding Notation
Date Paid Balance Made By
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<PAGE>
TEXT OF OPINION OF
DRINKER BIDDLE & REATH
PHILADELPHIA, PA
BOND COUNSEL
We have acted as Counsel for Brown Brothers Harriman Co. in connection
with the issuance of the above-mentioned bond (the "Bond") of the Iredell County
Industrial Facilities and Pollution Control Financing Authority (the
"Authority") and have been asked to render this opinion with respect to the
exclusion from gross income for Federal tax purposes of the interest on the
Bond. The Bond is issued under and pursuant to the North Carolina Industrial and
Pollution Control Facilities Financing Act, as amended, a resolution of the
Authority adopted on June 2, 1994 (the "Resolution"), and an Indenture and Deed
of Trust as of June 1, 1979 as amended and supplemented by a First Supplemental
Indenture and Deed of Trust dated as of July 31, 1994 (collectively, the
"Indenture") between the Authority and First Union National Bank of North
Carolina, as trustee. All terms used but not otherwise defined herein shall have
the meaning set forth in the Indenture.
The proceeds of the Bond will be applied to a project (the 111994
Project") consisting of the payment of certain prior bonds of the Authority (the
"Prior Bonds") the proceeds of which were applied to finance, for the benefit of
Hunt Manufacturing Co. (the "Company"), the acquisition of certain real estate
located near Statesville, North Carolina, and the construction and equipping of
certain manufacturing facilities thereon (the "Facilities"). The Authority and
the Company have entered into a Lease Agreement dated as of June 1, 1979, as
amended and supplemented by a Supplemental Lease Agreement dated as of July 31,
1994 (collectively, the "Lease"). Under the Lease, the Company has agreed to
make loan payments sufficient, inter alia, to pay the principal, redemption
price or Purchase Price of, and interest on, the Bond when and as the same shall
become due.
Under the Indenture, as security for the payment of the principal,
redemption price and Purchase Price of, and interest on, the Bond, the Authority
has assigned certain of its rights under the Lease, including its right to
receive rent payments thereunder, to the Trustee. The prompt payment of the
principal of and interest due on the Bond is guaranteed by the Company, pursuant
to a Guaranty Agreement dated as of June 1, 1979, as amended and supplemented by
a First Supplemental Guaranty Agreement, between the Company and the Trustee,
dated as of July 31, 1994 (collectively, the "Guaranty").
The Authority and the Company have made certain factual representations
in the Indenture, the Lease and a Tax Certificate and Agreement delivered on the
date hereof (the "Tax
<PAGE>
Certificate") that are material to the opinions expressed herein, including
representations concerning the reasonable expectations of the Company and the
Authority on the date hereof as to the use of the proceeds of the Bond. We have
relied upon the representations of the Authority and the Company without
undertaking to verify the same by independent investigation. For the purpose of
rendering this opinion, we have further relied upon the opinion dated this date
of Smith Helms Mulliss & Moore, to the effect that the Bond has been duly
authorized, executed and delivered by, and constitutes the legal, valid and
binding obligation of, the Authority.
We have examined such documents, records, proceedings, statutes and
decisions as we deemed necessary to enable us to express our opinion set forth
below, including original counterparts or certified copies of the Indenture, the
Lease, the Resolution, the Bond, the Guaranty and the Tax Certificate. In all
cases, we have assumed the genuineness of signatures, the authenticity of
original documents and the conformity to authentic originals of documents
examined by us as copies. Based upon the foregoing, we are of the opinion that
under existing law, as presently enacted and construed, interest on the Bond is
excluded from gross income for federal income tax purposes, except during any
period while a Bond is held by a "substantial user" of the facilities financed
by the Bond or a "related person" within the meaning of Section 147(a) of the
Internal Revenue Code of 1986, as amended, and is not a preference item for
purposes of determining the federal alternative minimum tax imposed on
corporations and individuals. However, interest on the Bond may be subject to
the application of the alternative minimum tax and environmental tax when held
by certain corporations, and the application of the foreign branch profits tax
when held by foreign corporations. The opinion expressed above is subject to
continued compliance by the Authority and the Company with certain tax covenants
contained in the Agreement and the Tax Certificate. Failure to comply with such
covenants may cause the inclusion of interest on the Bond in gross income for
federal income tax purposes, in certain cases retroactive to the date of
issuance of the Bond.
Ownership of the Bond may result in collateral Federal income tax
consequences to certain taxpayers, including, without limitation, financial
institutions, S corporations receiving excess net passive income, property and
casualty insurance companies, individual recipients of Social Security or
Railroad Retirement benefits and taxpayers who may be deemed to have incurred
indebtedness to purchase or carry the Bond. We express no opinion with respect
to these collateral tax consequences.
<PAGE>
Closing Document No. 19
NOTICE OF FULL REDEMPTION
Iredell County, North Carolina
Industrial Facilities and Pollution Control Financing Authority
7.50% Industrial Revenue Bonds
(Hunt Manufacturing Co. Project), Series 1979
Dated June 1, 1979 Due June 1, 1999 CUSIP No. 462673 AA2
NOTICE IS HEREBY GIVEN that, pursuant to the provisions of Section 301(d)
of the Indenture and Deed of Trust dated as of June 1, 1979 between the Iredell
County Industrial Facilities and Pollution Control Financing Authority (the
"Authority") and First Union National Bank of North Carolina, as Trustee (the
"Trustee"), ALL of the Authority's Industrial Revenue Bonds (Hunt Manufacturing
Co. Project), Series 1979 (the "Bonds") due June 1, 1999, are called for
redemption on August 1, 1994 (the "Redemption Date") at the redemption price of
100.5% of the principal amount thereof to be redeemed (the "Redemption Price"),
plus unpaid interest accrued to the Redemption Date.
The CUSIP numbers is included solely for the convenience of the bondholder.
Neither the Issuer nor First Union shall be responsible for the selection or use
of the CUSIP number, nor is any representation made as to its correctness on any
bond or as indicated in any notice.
On the Redemption Date, payment of the Bonds to be redeemed will be made
upon presentation and surrender of said Bonds (with all unmatured interest
coupons attached) to the Trustee. Interest coupons for all interest payment
dates prior to the Redemption Date should be detached and presented for payment
in the usual manner.
All Bonds should be presented to the Trustee on the Redemption Date at the
principal corporate trust office of First Union National Bank of North Carolina,
Corporate Trust Department, 230 S. Tryon Street, 11th Floor, Charlotte, North
Carolina 28288-1153.
From and after the Redemption Date, August 1, 1994, provided that
sufficient funds shall have been deposited with the Trustee as aforesaid,
interest on the Bonds shall cease to accrue and be payable and all interest
coupons for any interest payment date occurring after the Redemption Date shall
be void.
Under the provisions of the Internal Revenue Code, principal payment on
municipal securities may be subject to backup withholding of 31% of such
payments to holders who have not certified their taxpayer identification number
on Form W-9. Holders who wish to avoid backup withholding should submit a
completed and signed Form W-9 presenting securities for payment.
First Union National Bank of North Carolina FIRST
Dated: June 30, 1994 as Trustee UNION
<PAGE>
BROWN BROTHERS HARRIMAN & CO. 1531 WALNUT STREET, PHILADELPHIA 19102
BUSINESS ESTABLISHED I8I8 CABLE ADDRESS "BROWNSBANK PHILADELPHIA"
PRIVATE BANKERS TELEPHONE (215) 864-1818
July 29, 1994
Local Government Commission
325 North Salisbury Street
Raleigh, North Carolina 27603-1388
Iredell County Industrial Facilities
and Pollution Control Financing Authority
P.O. Box 788
Statesville, North Carolina 28687-0788
RE: $2,000,000 Iredell County Industrial Facilities and Pollution Control
Financing Authority Industrial Revenue Refunding Bond (Hunt Manufacturing
Co.), Series 1994
Ladies and Gentlemen:
Brown Brothers Harriman & Co. ("BBH") is purchasing the above
referenced bond in the principal amount of $2,000,000 (the 'Bond").
In connection with this purchase, BBH makes the following
representations upon which you may rely:
1. BBH has been provided with, or given access to, all financial and
other information it has requested of Hunt Manufacturing Co. (the
"Company") in connection with its purchase of the Bond.
2. BBH has such information and experience in financial and business
matters that it is capable of evaluating the merits and risks of
investment in the Bond and considers this investment to be
prudent.
3. BBH, understanding that no offering statement, prospectus,
offering circular or other comprehensive offering statement
containing material information with respect to the Bond, the
Company or the Iredell County Industrial Facilities and Pollution
Control Financing Authority is being issued in connection with
the sale of the Bond, has made its own inquiry and analysis with
respect to the Company, the Project, the Bond and the
<PAGE>
BROWN BROTHERS HARRIMAN & CO.
PHILADELPHIA, PA. 19102
Local Government Commission
Iredell County Industrial Facilities
and Pollution Control Financing Authority
July 29, 1994
Page 2
security therefor and other material factors affecting the
security for and the payment of the Bond.
4. BBH understands that the Bond is not registered under the
Securities Act of 1933.
5. BBH is purchasing the Bond for itself and not with a present view
to the resale, distribution or transfer or any interest therein,
but subject to any requirements of law that the disposition of
the Bond be and at all times remain within the control of BBH or
owners in rightful possession, and in the event BBH nevertheless
finds it necessary or desirable to resell the Bond or issue a
participation interest therein, BBH will disclose or cause to be
disclosed to any prospective buyer of the Bond from it all
information with respect to the Company, the Bond, the
instruments, documents and agreements entered into in connection
with the Bond, and any security therefor which may then be
required to be so disclosed by BBH under federal or state
securities laws.
6. This letter shall inure only to the benefit of the addressees.
Very truly yours,
BROWN BROTHERS HARRIMAN & CO.
By: /s/ Carl S. Cutler
-----------------------------
Carl S. Cutler
Title: Manager
-------------------------
<PAGE>
UNIFORM COMMERCIAL CODE -- FINANCING STATEMENT
APPROVED FOR USE IN NORTH CAROLINA
CONTACT YOUR LOCAL STATE AUTHORITY FOR USE IN YOUR PARTICULAR STATE.
<TABLE>
<S> <C> <C>
- -----------------------------------------------------------|--------------------------------------------------|--------------------
This FINANCING STATEMENT is presented to a Filing Officer | No. of Additional |
for filing pursuant to the Uniform Commercial Code. | Sheets Presented 3 |
- -----------------------------------------------------------|--------------------------------------------------|
(1) Debtor(s) (Last Name First) and Address(es): | (2) Secured Party(ies) (Name(s) and Address(es):|
(Please TYPE) | |
| The Iredell County Industrial |
Hunt Manufacturing Co. | Facilities and Pollution Control |
1405 Locust Street | Financing Authority |
Philadelphia, PA 19102 | County Annex Building |
| Statesville, NC 28655 |
- -----------------------------------------------------------|--------------------------------------------------|
(3) (a) /X/ Collateral is or includes fixtures | (4) Assignee(s) of Secured Party, Address(es): |
(b) / / Timber, Minerals or Accounts Subject | First Union National Bank of |
to G.S. 25-9-103(5) are covered | North Carolina |
(c) / / Crops Are Growing Or To Be Grown | One First Union Plaza |
On Real Property Described In Section (5). | Charlotte, NC 28288 |For
If either block 3(a) or block3(b) applies describe real | |Filing
estate, including record owner(s) in section (5) | |Officer
- -----------------------------------------------------------|--------------------------------------------------|--------------------
(5) This Financing Statement Covers the Following types [or items] of property.
See Schedule 1 attached hereto and incorporated herein by reference.
/ / Products of the Collateral Are Also Covered.
- -----------------------------------------------------------------------------------------------------------------------------------
(6) Signatures: Debtor(s) Secured Party(ies) [or Assignees]
Hunt Manufacturing Co. First Union National Bank of North Carolina
- -------------------------------------------- -----------------------------------------------------------------------
(By) William E. Clark (By)
---------------------------------------- -------------------------------------------------------------------
Standard Form Approved by N.C. Sec. of State Signature of Secured Party Permitted in Lieu of Debtor's Signature:
and other states shown above. (1) Collateral is subject to Security Interest In Another Jurisdiction
and /X/
/ / Collateral Is Brought Into This State
/ / Debtor's Location Changed To This State
(2) For Other Situations See: G.S. 25-9-402(2)
(1) Filing Officer Copy-Numerical UCC-1
</TABLE>
<PAGE>
Schedule 1
The machinery, Equipnent, fixtures and other tangible personal
property, including but not limited to the items generally described in Exhibit
A, leased under the Lease Agreement, dated as of June 1, 1979 (the "Lease"), by
the secured party, as lessor, to the debtor, as lessee. All tangible property,
other than real property, comprising a portion of the Leased Property, as
defined in the Lease (sometimes hereinafter called the "Leased Equipment"),
including all items of machinery and equipment hereafter acquired which are
intended to become part of the Leased Property and located on the real property
described in Exhibit B, and including but not limited to, all substitutions,
renewals or replacements of, and additions, improvements, accumulations and
accessions to, the Leased Equipment or any portion thereof whether pursuant to
the Lease or otherwise. Said machinery, equipment, fixtures and other tangible
personal property are or are to be located on the real estate described in
Exhibit B hereto.
<PAGE>
Exhibit A
(1) Cafeteria Equipment
(2) Office furniture and fixtures purchased from National canvas Products
Corp.
(2a) Narrow Aisle Stacking System
Racks and Docking
3 Stock Pickers
1 Control Unit
2 Straddle Truck
(3) Air-Compressor - Worthington
Air-Compressor - Lincoln
Air-Compressor - Wayne
Rewind Machine
Programable Cutter
Five (5) Cutter Grinders
Ejection Molding Machine
Shrink Rap Machine
Precission Lathe
Electronic Digital Scale
Pebble Mill
Brazing Machine
<PAGE>
Exhibit B
All that tract of real estate conveyed by National Canvas Products Corp. to
Hunt Manufacturing Co., by deed dated March 24, 1979, and recorded in Deed Book
636, page 547, in the Office of the Register of Deeds for Iredell County, North
Carolina, described as follows:
Lying and being in Iredell County, State of North Carolina, and more
particularly described as follows:
BEGINNING at a point in the center of North Carolina Highway No. 90 (West
Front Street) leading from Statesville, North Carolina, to Taylorsville, North
Carolina, said beginning point being the Southwest corner of the tract of land
conveyed to the Carnation Company by the State of North Carolina by Deed
recorded in Deed Book 134, Page 125, Iredell County Registry, and running thence
with the center of said North Carolina Highway No. 90, North 62 degrees 22
minutes West 1043 feet to a point in the center of said North Carolina Highway
No. 90, at which point the center of said North Carolina Highway No. 90 and the
center of Mecham Road, a road leading in a Northerly direction from said North
Carolina Highway No. 90 to what was formerly a part of the Piedmont Experiment
Station Farm intersect; thence with the center line of said Mecham Road North 08
degrees 06 minutes East 805 feet to a point in the center line of the railroad
tract of Alexander Railroad Company; thence with the center line of said
railroad track of the Alexander Railroad Company four calls as follows: (1)
South 40 degrees 05 minutes East 839.45 feet to a point; (2) thence South 43
degrees 01 minutes East 159 feet to a point; (3) thence South 48 degrees 10
minutes East 168.6 feet to a point; (4) thence South 52 degrees 30 minutes East
161.7 feet to a point in the center of said railroad track, and said point being
the Northwest corner of the said tract of land conveyed to the Carnation Company
by the State of North Carolina by the Deed referred to hereinabove; thence with
the Western line of said Carnation Company South 15 degrees 49 minutes 50
seconds West 324.45 feet to the point of BEGINNING, containing 12.76 acres, more
or less.
<PAGE>
HUNT MANUFACTURING CO.
1994 NON-EMPLOYEE DIRECTORS'
STOCK OPTION PLAN
1. Purpose
This 1994 Non-Employee Directors' Non-Qualified Stock Option
Plan (the "Plan") is intended to provide a means whereby Hunt Manufacturing Co.
(the "Company") through the grant to Non-Employee Directors (as defined in
Section 3 herein) of non-qualified stock options ("Options") to purchase common
shares of the Company, may attract and retain capable independent directors and
motivate them to promote the best interests of the Company and Related
Corporations.
For purposes of the Plan, a Related Corporation of the Company
shall mean either a corporate subsidiary of the Company, as defined in section
424(f) of the Internal Revenue Code of 1986, as amended ("Code"), or the
corporate parent of the Company, as defined in section 424(e) of the Code.
2. Administration
The Plan shall be administered by the Company's Compensation
Committee (the "Committee"), which shall consist of not less than two directors
of the Company who shall be appointed by, and shall serve at the pleasure of,
the Company's Board of Directors (the "Board"). Each member of such Committee,
while serving as such, shall be deemed to be acting in his or her capacity as a
director of the Company.
The Committee shall have full authority, subject to the terms
of the Plan, to interpret the Plan, but shall have no discretion with respect to
the selection of Non-Employee Directors to receive Options, the number of shares
subject to the Plan, setting the purchase price for shares subject to an Option
at other than fair market value, the method or methods for determining the
amount of Options to be granted to each Non-Employee Director, the timing of
grants hereunder or with respect to any other matter which would cause this Plan
to fail to comply with Rule 16b-3 under the Securities Exchange Act of 1934 (the
"Exchange Act"). Subject to the foregoing, the Committee may correct any defect,
supply any omission and reconcile any inconsistency in this Plan and in any
Option granted hereunder in the manner and to the extent it shall deem
desirable. The Committee also shall have the authority to establish such rules
and regulations, not inconsistent with the provisions of the Plan, for the
proper administration of the Plan, and to amend, modify or rescind any such
rules and regulations, and to make such determinations and interpretations
under, or in connection with, the Plan, as it deems necessary or advisable. All
such rules, regulations, determinations and interpretations shall be binding and
conclusive upon the Company, its shareholders and all Non-Employee Directors
(including former Non-Employee Directors), and upon their respective legal
representatives, beneficiaries, successors and assigns and upon all other
persons claiming under or through any of them.
No member of the Board or the Committee shall be liable for
any action or determination made in good faith with respect to the Plan or any
Option granted under it.
1
<PAGE>
3. Eligibility
The persons who shall be eligible to receive Options under the
Plan shall be Non-Employee Directors, which term shall mean those directors of
the Company who:
(i) are not employees of the Company or any Related Corporation; and
(ii) have not been employees of the Company or any Related Corporation
during the immediately preceding 12-month period.
4. Stock Subject to the Plan
Options may be granted under the Plan to purchase up to a
maximum of 90,000 Common Shares, par value $.10 per share ("Common Shares" or
"Shares"), subject to adjustment as provided in Section 7 herein. Shares
issuable under the Plan may be authorized but unissued Shares or reacquired
Shares, and the Company may purchase Shares required for this purpose, from time
to time, if it deems such purchase to be advisable.
If any Option granted under the Plan expires or otherwise
terminates, in whole or in part, for any reason whatever (including, without
limitation, a Non-Employee Director's surrender thereof) without having been
exercised, the Shares subject to the unexercised portion of such Option shall
continue to be available for the granting of Options under the Plan as fully as
if such Shares had never been subject to an Option.
5. Granting of Options
Subject to Section 9 herein, an Option to purchase 5,000
Shares (as adjusted pursuant to Section 7 herein) automatically shall be
granted:
(i) On January 26, 1994 to each director who is a Non-Employee
Director on such date; and
(ii) Upon the date a person who was not a Non-Employee
Director on January 26, 1994 subsequently becomes a Non-Employee Director,
whether by reason of his or her subsequent election by shareholders, appointment
by the Board to be a director or, if applicable, the expiration of the 12-month
period specified in Section 3(ii) herein with respect to a present or future
director who had previously been an employee of the Company or any Related
Corporation; provided, however, that if a Non-Employee Director who previously
received a grant of Options ceases to be a Non-Employee Director but
subsequently again becomes a Non-Employee Director, such person shall not be
eligible to receive a second grant of Options under this Section 5.
2
<PAGE>
6. Terms and Conditions of Options
Options granted pursuant to the Plan shall be non-qualified
Options not intended to qualify under section 422 of the Code and shall be
subject to the following terms and conditions:
(a) Price. The exercise price shall be the greater of 100% of
the fair market value of the optioned Shares, or the par value thereof, on the
date the Option is granted. As used in the Plan, fair market value shall mean:
(i) if the principal market for the Shares is a registered securities exchange,
the mean between the highest and lowest quoted selling prices of such Shares on
such exchange on the date of grant, or, if there are no such reported sales on
that date but there are sales on dates within a reasonable period both before
and after the date of grant, the weighted average of the means between the
highest and lowest sales on the nearest date before and the nearest date after
the date of grant, or (ii) if clause (i) above is inapplicable, such other
method of determining fair market value as shall be authorized by the Code, or
the rules or regulations thereunder, and adopted by the Committee.
Where the fair market value of the optioned Shares is
determined under clause (i) above, the average of the means between the highest
and lowest sales on the nearest date before and the nearest date after the date
of grant shall be weighted inversely by the respective numbers of trading days
between the selling dates and the date of grant (i.e., the valuation date), in
accordance with Treas. Reg.ss.20.2031-2(b)(1).
----
(b) Term. Subject to earlier termination as provided in
Subsection (d) below and in Section 7 herein, the stated term of each Option
shall be ten years from the date of grant.
(c) Exercise. Options shall be exercisable in five equal
annual installments commencing one year after the date of grant. Except as
otherwise provided in Subsections (d) and (e) below and Section 7 herein,
Options shall only be exercisable by a Non-Employee Director while he or she
remains a director of the Company. Any Option Shares, the right to the purchase
which has accrued, may be purchased at any time up to the expiration or
termination of the Option. Exercisable Options may be exercised, in whole or in
part, from time to time by giving written notice of exercise to the Company at
its principal office, specifying the number of Shares to be purchased and
accompanied by payment in full of the aggregate price for such Shares. Only full
Shares shall be issued under the Plan, and any fractional Share which might
otherwise be issuable upon exercise of an Option granted hereunder shall be
forfeited.
3
<PAGE>
The Option price shall be payable in cash or its equivalent.
(d) Effect of Ceasing to be a Director. If a Non-Employee
Director ceases to be a director of the Company for any reason, his or her then
outstanding Option shall continue to mature in accordance with its terms (except
that if such cessation is due to death, such then outstanding Option immediately
shall accelerate and become exercisable in full), and shall remain outstanding
and exercisable, but only for a period of one year following such cessation as a
director or until the earlier expiration of the stated term of such Option or
its earlier termination pursuant to Section 7 herein.
(e) Non-Transferability. No Option shall be assignable or
transferable by a Non-Employee Director otherwise than by will or by the laws of
descent and distribution, and during the lifetime of a Non-Employee Director,
his or her Option shall be exercisable only by him or her or by his or her
guardian or legal representative. If a Non-Employee Director is married at the
time of exercise and if the Non-Employee Director so requests at the time of
exercise, the certificate or certificates for the Option Shares shall be
registered in the name of the Non-Employee Director and the Non-Employee
Director's spouse, jointly, with right of survivorship.
(f) Rights as a Shareholder. A holder of an Option shall have
no rights as a shareholder with respect to any Shares covered by such Option
until the issuance of a stock certificate for such Shares to such holder.
(g) Listing and Registration of Shares. Each Option shall be
subject to the requirement that, if at any time the Committee shall determine,
in its discretion, that the listing, registration or qualification of the Shares
covered thereby upon any securities exchange or under any state or federal law,
or the consent or approval of any governmental regulatory body, is necessary or
desirable as a condition of, or in connection with, the granting of such Option
or the purchase of Shares thereunder, or that action by the Company or by the
Non-Employee Director should be taken in order to obtain an exemption from any
such requirement, no such Option may be exercised, in whole or in part, unless
and until such listing, registration, qualification, consent, approval, or
action shall have been effected, obtained, or taken under conditions acceptable
to the Committee. Without limiting the generality of the foregoing, each
Non-Employee Director or his or her legal representative or beneficiary may also
be required to give satisfactory assurance that Shares purchased upon exercise
of an Option are being purchased for investment and not with a view to
distribution, and certificates representing such Shares may be legended
accordingly.
4
<PAGE>
(h) Option Agreements. Options granted under the Plan shall be
evidenced by a written document or documents (an "Option Agreement") in such
form as the Committee shall, from time to time, approve, which Option Agreement
shall contain such provisions, not inconsistent with the provisions of the Plan
as the Committee shall deem advisable. Each Non-Employee Director shall enter
into, and be bound by, an Option Agreement.
7. Capital Adjustments, Acceleration and Cancellation of Options
The number of Shares which may be issued under the Plan, as
stated in Section 4 herein, and the number of Shares issuable upon exercise of
outstanding Options under the Plan (as well as the Option price per Share under
such outstanding Options), shall, subject to the provisions of section 424(a) of
the Code, be adjusted proportionately to reflect any stock dividend, stock
split, share combination, or similar change in the capitalization of the
Company.
In the event of a corporate transaction (as that term is
described in section 424(a) of the Code and the Treasury Regulations issued
thereunder, such as, for example, a merger, consolidation, acquisition of
property or stock, separation, reorganization, or liquidation), and, provision
is not made for the continuance and assumption of Options under the Plan, or the
substitution for such Options of new Options to acquire securities or other
property to be delivered in connection with the transaction, all unexercised
Options shall accelerate and become fully exercisable, but all unexercised
Options shall terminate on the day immediately prior to the consummation of such
corporate transaction. The Committee shall give the holders of outstanding
Options not less than ten days prior written notice of any such acceleration and
termination pursuant to this Section 7, and such outstanding Options thereafter
may be exercised in whole or in part up to and including the date of such
termination or until their earlier stated expiration date or their earlier
termination pursuant to Section 6(d) herein.
8. Amendment or Discontinuance of the Plan
The Board from time to time may suspend or discontinue the
Plan or amend it in any respect whatsoever; provided, however, that an amendment
to the Plan shall require shareholder approval (given in compliance with Rule
16b-3 under the Exchange Act) if such amendment would materially:
(i) increase the benefits accruing to Non-Employee Directors
under the Plan;
(ii) increase the number of Shares which may be issued to
Non-Employee Directors under the Plan other than as provided in Section 7
herein; or
(iii) modify the requirements as to eligibility to participate
in the Plan.
Notwithstanding the foregoing, no such suspension,
discontinuance or amendment shall materially impair the rights of any holder of
an outstanding Option without the consent of such holder. Further, the
provisions of the Plan establishing the directors eligible to receive Options
under the Plan, the timing of the grants of such Options, the purchase price for
Shares subject to Options, the number of Shares covered by each Option, the
method or methods for determining the amount of Options to be granted to each
Non-Employee Director, and any other provision of the Plan which, if amended
more than once every six months, would cause the Plan to fail to comply with
Rule 16b-3 under the Exchange Act, shall not be amended more than once every six
months.
5
<PAGE>
9. Effective Date and Duration
The Plan shall become effective on January 26, 1994, the date
on which it was adopted by the Board; provided, however, that if the Plan is not
approved by the shareholders of the Company in the manner required by Rule 16b-3
under the Exchange Act within one year after said date, the Plan and all Options
granted hereunder shall be null and void.
Unless earlier terminated as provided in the Plan, the Plan
shall terminate absolutely at 12:00 midnight on January 25, 2004, and no Options
hereunder shall be granted thereafter. Nothing contained in this Section 9,
however, shall terminate or affect the continued existence of rights created
under Options issued hereunder and then outstanding which by their terms extend
beyond such date.
10. Miscellaneous
(a) Governing Law. The operation of, and the rights of
Non-Employee Directors under, the Plan, the Option Agreements and any Options
granted hereunder shall be governed by applicable Federal law, and otherwise by
the laws of the Commonwealth of Pennsylvania.
(b) Rights. Neither the adoption of the Plan nor any action of
the Board or the Committee shall be deemed to give any individual any right to
be granted an Option, or any other right hereunder, unless and until the
Committee shall have granted such individual an Option, and then his or her
rights shall be only such as are provided by the Option Agreement.
(c) Application of Funds. The proceeds received by the Company
from the sale of Shares pursuant to Options granted under the Plan shall be used
for general corporate purposes.
(d) No Obligation to Exercise Option. The granting of an
Option shall impose no obligation upon a Non-Employee Director to exercise such
Option.
<PAGE>
(Level II)
FORM OF
CHANGE IN CONTROL AGREEMENT
AGREEMENT dated as of _________________, between HUNT
CORPORATION, a Pennsylvania corporation (the "Company"), and _______________
(the "Executive").
W I T N E S S E T H T H A T
WHEREAS, the Board of Directors of the Company has determined that it
is in the best interests of the Company and its shareholders that the Company
and its subsidiaries be able to attract, retain and motivate highly-qualified
executive personnel and, in particular, that they be assured of continuity of
management in the event of any actual or threatened change in control of the
Company; and
WHEREAS, the Board of Directors of the Company believes that the
execution by the Company of change in control agreements with certain executive
personnel, including the Executive, is an important factor in achieving this
desired end.
THEREFORE, in consideration of the mutual obligations and agreements
contained herein, and intending to be legally bound hereby, the Executive and
the Company agree as follows:
1. Term of Agreement.
This Agreement shall become effective at such time (the "Effective
Date"), if any, as a Change in Control (as defined in Section 2 hereof) of the
Company occurs; provided, however, that this Agreement shall terminate and be of
no further force and effect if: (a) a Change in Control shall not have occurred
by December 31, 2004, or such later date as shall have been approved by the
Board of Directors of the Company and agreed to by the Executive; or (b) prior
to the Effective Date, the Executive ceases, for any reason, to be an officer of
the Company, except that if the Executive's status as an officer of the Company
is terminated by the Company prior to a Change in Control and it is reasonably
demonstrated that such termination (i) was at the request of a person or entity
who or which has taken steps reasonably calculated to effect an imminent Change
in Control or (ii) otherwise arose in connection with or in anticipation of an
imminent Change in Control, then this Agreement shall become effective, and the
"Effective Date" shall be, the date of such termination.
1
<PAGE>
2. Change in Control.
As used in this Agreement, a "Change in Control" of the Company shall
be deemed to have occurred if:
(a) any person (a "Person"), as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
(other than (i) the Company and/or its wholly-owned subsidiaries, (ii) any ESOP
or other employee benefit plan of the Company, and any trustee or other
fiduciary in such capacity holding securities under such plan, (iii) any
corporation owned, directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of stock of the Company or
(iv) the Executive or any group of Persons of which he voluntarily is a part),
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing
30% or more of the combined voting power of the Company's then outstanding
securities, or such lesser percentage of voting power, but not less than 15%, as
the Board of Directors of the Company shall determine; provided, however that a
Change in Control shall not be deemed to have occurred under the provisions of
this subsection (a) by reason of the beneficial ownership of voting securities
by members of the Bartol Family (as defined below) unless and until the
beneficial ownership of all members of the Bartol Family (including any other
individuals or entities who or which, together with any member or members of the
Bartol Family, are deemed under Sections 13(d) or 14(d) of the Exchange Act to
constitute a single Person) exceeds 50% of the combined voting power of the
Company's then outstanding securities;
(b) during any two-year period beginning after October 1, 1999,
Directors of the Company in office at the beginning of such period plus any new
Director (other than a Director designated by a Person who has entered into an
agreement with the Company to effect a transaction within the purview of
subsections (a) or (c) hereof) whose election by the Board of Directors of the
Company, or whose nomination for election by the Company's shareholders, was
approved by a vote of at least two-thirds of the Directors then still in office
who either were Directors at the beginning of the period or whose election or
nomination for election was previously so approved, shall cease for any reason
to constitute at least a majority of the Board; or
(c) the Company's shareholders or the Company's Board of Directors
shall approve (i) any consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation or pursuant to which the
Company's voting common shares (the "Common Shares") would be converted into
cash, securities and/or other property, other than a merger of the Company in
which holders of Common Shares immediately prior to the merger have the same
proportionate ownership of common shares of the surviving corporation
immediately after the merger as they had in the Common Shares immediately
before, (ii) any sale, lease, exchange or other transfer (in one transaction or
a series of related transactions) of all or substantially all the assets or
earning power of the Company, or (iii) the liquidation or dissolution of the
Company.
As used in this Agreement, "members of the Bartol Family" shall mean
the wife, children and descendants of such children of the late George E. Bartol
III, their respective spouses and estates, any trusts primarily for the benefit
of any of the foregoing and the administrators, executors and trustees of any
such estates or trusts.
2
<PAGE>
3. Employment.
(a) The Company hereby agrees to continue the Executive in its employ
(directly and/or indirectly through a subsidiary), and the Executive hereby
agrees to remain in the employ of the Company (and/or any such subsidiary), for
not less than the period commencing on the Effective Date and ending on the
earlier to occur of the second anniversary of the Effective Date or the first
day of the month following the Executive's 65th birthday (the "Employment
Period"), subject to earlier termination as hereinafter provided in Section
5(a), to exercise such authority, to perform such duties, and to possess such
status, offices, support staff, titles and reporting requirements as are at
least commensurate with those generally exercised, performed and possessed by
the Executive during the 90-day period immediately prior to the Effective Date
or such lesser period as the Executive shall have been employed by the Company
or its subsidiaries (the "Base Period"). Such services shall be performed at the
location where the Executive was primarily employed during the Base Period or at
such other location as the Company may reasonably require; provided that the
Executive's travel requirements shall not be materially different in nature or
scope than during the Base Period and the Executive shall not be required to
accept a primary employment location which is more than 25 miles from the
location at which he primarily was employed during the Base Period. During the
Employment Period, and excluding any periods of vacation and sick leave to which
the Executive is entitled, the Executive agrees to perform faithfully,
diligently and efficiently his responsibilities hereunder; provided, however,
that the Executive may (i) serve on corporate, civic or charitable boards or
committees, (ii) deliver lectures, fulfill speaking engagements or teach at
educational institutions and (iii) manage personal investments, so long as such
activities do not materially interfere with the performance of the Executive's
responsibilities hereunder. To the extent that any such activities have been
conducted by the Executive prior to the Effective Date, the continued conduct of
such activities (or activities similar in nature and scope thereto) thereafter
shall be deemed not to interfere with the performance of the Executive's
responsibilities hereunder.
(b) The Executive acknowledges that nothing in this Agreement shall be
deemed to give him continued rights to employment by the Company or its
subsidiaries in an executive or any other capacity with respect to any period
prior to the Effective Date, if any, of this Agreement, or, subject to Section
1(b) hereof, to entitle the Executive to compensation or benefits in the event
of termination of the Executive's employment prior to the Effective Date.
3
<PAGE>
4. Compensation, Benefits, etc. During the Employment Period, the
Executive shall be compensated as follows:
(a) The Executive shall receive an annual cash salary, payable not less
frequently than semi-monthly, which is not less than (i) the average of the
Executive's aggregate compensation from the Company and its subsidiaries during
the two calendar years preceding the Effective Date (or such lesser period as
the Executive shall have been employed by the Company or its subsidiaries), as
reported on the Executive's Internal Revenue Service Forms W-2 (other than
compensation relating to relocation expense; the grant, exercise or settlement
of stock options; the sale or other disposition of shares received upon exercise
or settlement of such options; the grant, vesting or settlement of stock grants
made under the Company's 1983 and 1993 Stock Option and Grant Plans; or the sale
or other disposition of shares received upon vesting or settlement of such
grants), or (ii) at the Executive's sole option, exercised in writing within 90
days after the Effective Date, the Executive's average annual base salary from
the Company and its subsidiaries during such two-year period (or such lesser
period as the Executive shall have been employed by the Company or its
subsidiaries).
(b) The Executive shall be entitled to receive fringe benefits,
employee benefits and perquisites (including, but not limited to, vacation,
automobile, medical, disability, dental and life insurance benefits) which are
at least as favorable to the Executive as the fringe benefits, employee benefits
and perquisites provided directly or indirectly by the Company to executives
with comparable duties.
(c) If the Executive limits his compensation pursuant to subsection
(a)(ii) to his or her average base salary (but not otherwise), he or she shall
be eligible to participate in all stock option, restricted stock and other
short-term and long-term incentive compensation plans and programs which provide
opportunities to receive compensation which are at least as favorable to the
Executive as the opportunities provided by the Company to executives with
comparable duties.
(d) Notwithstanding any other provision of this Agreement (whether in
this Section 4, in Section 6 or elsewhere), (i) the Board of Directors may
authorize an increase in the amount, duration and nature of and or the
acceleration of any compensation or benefits payable under this Agreement, as
well as waive or reduce the requirements for entitlement thereto, and (ii) the
Company may deduct from amounts otherwise payable to the Executive such amounts
as it reasonably believes it is required to withhold for the payment of federal,
state and local taxes.
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<PAGE>
5. Early Termination of Employment.
(a) The Executive's Employment Period shall terminate prior to its
stated expiration set forth in Section 3 hereof in the following circumstances:
(i) the Executive's Death;
(ii) at the option of the Company in the event of the
Executive's Disability (as defined below);
(iii) at the option of the Company for Cause (as defined
below) or without Cause; or
(iv) upon resignation of the Executive in the circumstances
set forth in Section 6(b)(ii) or (iii).
For purposes of this Agreement: "Disability" shall mean: (1) a physical or
mental disability which, at least 26 weeks after its commencement, is determined
to be total and permanent by a physician selected by the Company or its insurers
and reasonably acceptable to the Executive or the Executive's legal
representative or (2) if the Company then has in effect a disability plan
covering executives generally, including the Executive, the definition of
covered total and permanent "disability" set forth in such plan; and "Cause"
shall mean (A) willful and material breach of this Agreement by the Executive,
(B) dishonesty, fraud, willful malfeasance, gross negligence or other gross
misconduct, in each case relating to the performance of the Executive's
employment hereunder, which is materially injurious to the Company, or (C)
conviction of or plea of guilty to a felony; such Cause to be determined, in
each case, by a resolution approved by at least two-thirds of the Directors of
the Company after having afforded the Executive a reasonable opportunity to
appear before the Board of Directors of the Company and present his position.
(b) The Company shall give the Executive not less than 60 days prior
written notice of any intended termination of the Executive's employment by the
Company and its subsidiaries for Cause or without Cause. In the event of a
proposed termination for Cause, such notice shall specify the grounds for such
termination, and the Company and its subsidiaries shall only be entitled to
terminate the Executive for Cause if the Executive shall have failed to remedy
such Cause within said 60-day notice period. The Executive shall give the
Company not less than 60 days prior written notice of any proposed resignation
by the Executive.
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6. Compensation, Benefits, etc. upon Termination.
(a) If the Executive's Employment Period is terminated by death,
Disability, resignation (other than a resignation in the circumstances set forth
in subsection (b) below) or for Cause, the Company shall be obligated only to
provide the compensation, benefits, etc. set forth in Section 4 hereof up to the
date of termination; provided, however, that the Executive shall be entitled to
such additional compensation and benefits, if any, as may be provided for under
the express terms of any benefit plans or programs of the Company and its
subsidiaries in which he is then participating.
(b) If the Executive's Employment Period is terminated by:
(i) the Company without Cause;
(ii) resignation of the Executive at any time during the
four-month period commencing one year after the Effective Date; or
(iii) resignation of the Executive as a result of: (1) a
material change in the nature or scope of the Executive's authorities,
powers, functions or duties from those described in Section 3 hereof, a
reduction in the Executive's total compensation, benefits, etc. from
those provided for in Section 4 hereof, or a material breach by the
Company of any other provision of this Agreement, or (2) a reasonable
determination by the Executive that, as a result of a Change in Control
of the Company and a change in the Company's circumstances and/or
operations thereafter significantly affecting his or her position, he
or she is unable effectively to exercise the authorities, powers,
functions or duties contemplated by Section 3 hereof; there shall have
been deemed to be a "Covered Termination" for the purposes of this
Agreement, and the Executive shall be entitled to the compensation,
benefits, etc. hereinafter provided in this Section 6.
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(c) In the event of a Covered Termination of the Executive during the
Employment Period, the Company shall pay or cause to be paid to the Executive in
cash a severance allowance (the "Severance Allowance") equal to two times the
sum of the amounts determined in accordance with the following paragraphs (i)
and (ii):
(i) an amount equivalent to the highest annualized base salary
which the Executive was entitled to receive from the Company and its
subsidiaries at any time during the Employment Period prior to the
Covered Termination; and
(ii) an amount equal to the average of the aggregate annual
cash amounts paid to the Executive under all applicable short-term and
long-term incentive compensation plans maintained by the Company and
its subsidiaries during the three calendar years prior to the year such
Covered Termination occurs (provided, however, that (1) such
calculation shall be made on an individual incentive plan basis, (2) in
determining the average amount paid under a given incentive plan during
such period there shall be excluded any year in which no amounts were
paid to the Executive under the plan, and (3) there shall be excluded
from such calculation any amounts paid to the Executive under any such
incentive compensation plan as a result of the acceleration of such
payments under such plan due to termination of the plan, a Change in
Control of the Company or a similar occurrence).
(d) The Severance Allowance shall be paid to the Executive: (i) in a
lump sum within 60 days after the date of any termination of the Executive
covered by Sections 6(b)(i) or 6(b)(iii)(1); and (ii) in 24 equal monthly
installments beginning within 30 days after any termination by the Executive
covered by Sections 6(b)(ii) or 6(b)(iii)(2), subject to subsection (h) below.
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(e) Subject to subsection (h) below:
(i) for a period of one year following a Covered Termination
of the Executive, the Company shall make or cause to be made available
to the Executive, at its expense, (1) outplacement counseling and other
outplacement services comparable to those available for the Company's
senior executives prior to the Effective Date and (2) an office with
standard telephone equipment at the Executive's primary place of
business prior to termination, or at another location reasonably
satisfactory to the Executive; and
(ii) for a period of two years following a Covered Termination
of the Executive, the Executive and the Executive's dependents shall be
entitled to participate in the Company's life, medical and dental
insurance plans at the Company's expense (to the extent provided in
such plans at the time of such covered Termination) as if the Executive
were still employed by the Company or its subsidiaries under this
Agreement. The Executive also shall be entitled during such period to
the continued use of an automobile, at the Company's or its
subsidiaries' expense, if one was being provided by the Company or its
subsidiaries for the Executive's use at the time of such Covered
Termination or at any time during the Base Period; provided that if
such automobile is under lease, such right to continued use shall not
extend beyond the expiration of the term of such lease, but if the
Company, its subsidiaries or the Executive have an option to purchase
the automobile under such lease, the Executive shall have the right to
cause such purchase option to be exercised and to purchase said
automobile at its depreciated cost (as determined in accordance with
the Company's policies as in effect on October 1, 1999).
(f) If, despite the provisions of subsection (e) above, life, medical
or dental insurance benefits are not paid or provided under any such plan to the
Executive or his dependents because the Executive is no longer an employee of
the Company or its subsidiaries, the Company itself shall, to the extent
necessary, pay or otherwise provide for such benefits to the Executive or his
dependents.
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(g) Except as expressly provided in subsections (a), (c), (d), (e) and
(f) above or under the express terms of any compensation or benefit plans of the
Company or its subsidiaries applicable to the Executive, upon the date of any
Covered Termination, all other compensation and benefits of the Executive shall
cease to accrue; provided, however, that the Severance Allowance payable
hereunder shall be in lieu of any severance payments to which the Executive
might otherwise be entitled under the terms of any severance pay plan, policy or
arrangement maintained by the Company and shall be credited against any
severance payments to which the Executive may be entitled by statute.
(h) Except as otherwise provided under the express terms of any
compensation or benefit plans of the Company or its subsidiaries, the Company's
obligations to make payments or continue benefits pursuant to sections 6(d)(ii),
6(e) and 6(f) shall terminate on the earlier to occur of: (i) the termination
date therefor specified in such sections and (ii) the date of a determination by
a court or arbitration panel pursuant to Sections 7(c) or 9 hereof,
respectively, that the Executive has materially and willfully violated the
provisions of Section 7(a) or (b) hereof. Further, in the event the Executive
becomes employed (as defined below) during the period with respect to which
payments or benefits are continuing pursuant to Sections 6(d)(ii), 6(e) and/or
6(f) hereof: (1) the Executive shall notify the Company not later than the day
such employment commences, (2) the benefits provided for in Sections 6(e) and
6(f) shall terminate as of the date of such employment, and (3) the amount of
the Severance Allowance which the Company is obligated to pay the Executive
pursuant to Section 6(d)(ii) shall be reduced on a continuing basis by the
Internal Revenue Service Form W-2 or equivalent compensation earned by the
Executive from such new employment. For the purposes of this subsection (h), the
Executive shall be deemed to have become "employed" by another entity or person
only if the Executive becomes essentially a full-time employee of a person or an
entity (not more than 30% of which is owned by the Executive and/or members of
his family); and the Executive's "family" shall mean his parents, his siblings
and their spouses, his children and their spouses, and the Executive's spouse
and her parents and siblings. Nothing herein shall relieve the Company of its
obligations for compensation or benefits accrued up to the time of termination
provided for herein.
7. Confidentiality and Non-Competition.
(a) The Executive shall hold in a fiduciary capacity for the benefit of
the Company and its subsidiaries all secret or confidential information,
knowledge or data relating to the Company or any of its subsidiaries and their
respective businesses which shall have been obtained by the Executive during the
Executive's employment by the Company or any of its subsidiaries and which shall
not have become public knowledge (other than by acts by the Executive or his
representatives in violation of this Agreement). After termination of the
Executive's employment with the Company and its subsidiaries for any reason, the
Executive shall not, without the prior written consent of the Company, use for
the Executive's own benefit or communicate or divulge to anyone other than the
Company and those designated by it any such information, knowledge or data.
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(b) The Executive agrees that, during the Executive's employment by the
Company or any of its subsidiaries and, if Executive's employment is terminated
by Executive pursuant to Sections 6(b)(ii) or 6(b)(iii)(2), for so long as
payments are being made to the Executive pursuant to Section 6(d)(ii) hereof,
the Executive shall not: (i) directly or indirectly, anywhere in the world,
manufacture, produce, sell or market or cause or assist any other person or
entity to manufacture, produce, sell or market any product in direct competition
with any product then sold or marketed by the Company or any of its
subsidiaries, whether or not utilizing any confidential information of the
Company or any of its subsidiaries, or (ii) be an employee, employer,
consultant, officer, director, partner, trustee or shareholder of more than 5%
of the outstanding common stock of any person or entity that is engaged in any
such activities.
(c) The Executive acknowledges that the covenants of the Executive
contained in subsections (a) and (b) above are reasonable and necessary for the
protection of the Company's legitimate interests. However, in the event that the
duration and/or scope of any such covenant of the Executive are finally
determined by any court or arbitration panel of applicable jurisdiction to be of
such length or breadth as to render the covenant unenforceable, the duration
and/or scope of such covenant shall be reduced to such length and/or breadth as
shall render such covenant enforceable. Notwithstanding the provisions of
Section 9 hereof, the Company shall be entitled to seek equitable remedies,
including injunctive relief, in any court of applicable jurisdiction in the
event of any breach or threatened breach by the Executive of the covenants
contained in subsection (a) above (but no such equitable judicial remedy shall
be available for a breach of subsection (b) above).
(d) In the event that it is determined by a court or arbitration panel
pursuant to Sections 7(c) or 9 hereof, respectively, that Executive has
materially and willfully violated the provisions of Section 7(a) or (b) hereof,
the court or arbitration panel may award damages to the Company; provided,
however, that such damages, in the case of a violation of Section 7(b) hereof,
shall not exceed the amount of the compensation and the cost to the Company of
the benefits received by the Executive under this Agreement during the period
that the violation existed plus interest thereon. In no event shall an asserted
violation of the provisions of Section 7(a) or (b) hereof constitute a basis for
deferring or withholding any compensation or benefits otherwise payable to the
Executive under this Agreement unless and until the existence of a material and
willful violation is determined by a court or by arbitration pursuant to
Sections 7(c) or 9 hereof, respectively.
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8. Set-Off Mitigation. Subject to Section 6(h) hereof, the Company's
obligation to make the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which the
Company may have against the Executive or others. In no event shall the
Executive be obligated to seek other employment or take any other action by way
of mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement.
9. Arbitration; Costs and Expenses of Enforcement.
(a) Except as otherwise provided in Section 7(c) and 10(b) hereof, any
controversy or claim arising out of or relating to this Agreement or the breach
thereof which cannot promptly be resolved by the parties shall be promptly
submitted to and settled exclusively by arbitration in the City of Philadelphia,
Pennsylvania in accordance with the laws of the Commonwealth of Pennsylvania by
three arbitrators, one of whom shall be appointed by the Company, one by the
Executive and the third of whom shall be appointed by the first two arbitrators.
The arbitration shall be conducted in accordance with the rules of the American
Arbitration Association, except with respect to the selection of arbitrators
which shall be as provided in this Section 9. Judgment upon the award rendered
by the arbitrators may be entered in any court having jurisdiction thereof.
(b) In the event that it shall be necessary or desirable for the
Executive to retain legal counsel and/or incur other costs and expenses in
connection with the enforcement of any and all of his rights under this
Agreement, the Company shall pay (or the Executive shall be entitled to recover
from the Company, as the case may be) his reasonable attorneys' fees and costs
and expenses in connection with the enforcement of his said rights (including
those incurred in or related to any arbitration proceedings provided for in
subsection (a) above and the enforcement of any arbitration award in court),
regardless of the final outcome, unless the arbitrators or a court shall
determine that under the circumstances recovery by the Executive of all or a
part of any such fees and costs and expenses would be unjust.
10. Limitation on Payment Obligation.
(a) For purposes of this Section 10, all terms capitalized but not
otherwise defined herein shall have the meanings as set forth in Section 280G of
the Internal Revenue Code of 1986, as amended, together with any applicable
regulations thereunder (the "Code"). In addition:
(i) The term "Parachute Payment" shall mean a payment
described in ss.280G(b)(2)(A) or ss.280G(b)(2)(B) (including, but not
limited to, any stock option rights, stock grants and other cash and
noncash compensation amounts that are treated as payments under either
such section), and not excluded under ss.280G(b)(4)(A) or
ss.280G(b)(6), of the Code;
(ii) The term "Reasonable Compensation" shall mean reasonable
compensation for prior personal services as defined in ss.280G(b)(4)(B)
of the Code and subject to the requirement that any such reasonable
compensation must be established by clear and convincing evidence; and
(iii) The portion of the "Base Amount" and the amount of
"Reasonable Compensation" allocable to any "Parachute Payment" shall be
determined in accordance with ss.280G(b)(3) and (4) of the Code.
(b) Notwithstanding any other provision of this Agreement, each
Parachute Payment to be made to or for the benefit of the Executive, whether
pursuant to this Agreement or otherwise, with respect to a Change in Control
shall be reduced if and to the extent necessary so that the aggregate Present
Value of all such Parachute Payments shall be at least one dollar ($1) less than
the greater of (i) three times the Executive's Base Amount and (ii) the
aggregate Reasonable Compensation allocable to such Parachute Payments. Unless
otherwise agreed by the Executive and the Company, any reduction in Parachute
Payments caused by reason of this subsection (b) shall be made proportionately
with respect to each such Parachute Payment.
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This subsection (b) shall be interpreted and applied to limit the
amounts otherwise payable to the Executive under this Agreement or otherwise
only to the extent required to avoid any material risk of the imposition of
excise taxes on the Executive under ss.4999 of the Code or the disallowance of a
deduction to the Company under ss.280G(a) of the Code. In the making of any such
interpretation and application, the Executive shall be presumed to be a
disqualified individual for purposes of applying the limitations set forth in
this subsection (b) without regard to whether or not the Executive meets the
definition of disqualified individual set forth in ss.280G(c) of the Code. In
the event that the Executive and the Company are unable to agree as to the
application of this subsection (b), the Company's independent auditors shall
select independent tax counsel to determine the amount of such limits. Such
selection of tax counsel shall be subject to the Executive's consent, provided
that the Executive shall not unreasonably withhold his consent. The
determination of such tax counsel under this Section shall be final and binding
upon the Executive and the Company.
(c) Notwithstanding any other provision of this Agreement, no payments
shall be made hereunder to or for the benefit of the Executive if and to the
extent that such payments are determined to be illegal.
11. Notices. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and if hand
delivered or if sent by registered or certified mail, if to the Executive, at
the last address he has filed in writing with the Company or, if to the Company,
at its principal executive offices. Notices, requests, etc. shall be effective
when actually received by the addressee or at such address.
12. Assignment and Benefit.
(a) This Agreement is personal to the Executive and shall not be
assignable by the Executive, by operation of law or otherwise, without the prior
written consent of the Company, otherwise than by will or the laws of descent
and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's heirs and legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns, including without limitation, any
subsidiary of the Company to which the Company may assign any of its rights
hereunder; provided, however, that no assignment of this Agreement by the
Company, by operation of law or otherwise, shall relieve it of its obligations
hereunder, except an assignment of this Agreement to, and its assumption by, a
successor pursuant to subsection (c) below.
(c) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation operation of law or otherwise) to
all or substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place, but, irrespective of any such assignment or assumption, this
Agreement shall inure to the benefit of and be binding upon such a successor. As
used in this Agreement, "Company" shall mean the Company as hereinbefore defined
and any successor to its business and/or assets as aforesaid.
13. Governing Law. The provisions of this Agreement shall be construed
in accordance with the laws of the Commonwealth of Pennsylvania without
reference to principles of conflicts of laws.
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14. Full Settlement. In the event of the termination of the Executive's
Employment Period under this Agreement, the payments and other benefits provided
for by this Agreement (except as otherwise provided under the express terms of
any compensation or benefit plans of the Company or its subsidiaries or as may
otherwise be provided by applicable law) shall constitute the entire obligation
of the Company and its subsidiaries to the Executive and shall also constitute
full and complete settlement of any claim under law or in equity that the
Executive might otherwise assert against the Company, its subsidiaries or any of
its or their respective directors, officers or employees on account of such
termination of employment.
15. Entire Agreement. This Agreement represents the entire agreement
and understanding of the parties with respect to the subject matter hereof, and
it may not be altered or amended except by an agreement in writing.
16. No Waiver. The failure to insist upon strict compliance with any
provision of this Agreement by any party shall not be deemed to be a waiver of
any future noncompliance with such provision or of noncompliance with any other
provision.
17. Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, the
remaining provisions of this Agreement shall be unaffected thereby and shall
remain in full force and effect.
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IN WITNESS WHEREOF, the Executive has hereunto set his hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name and on its behalf, and attested
by its Secretary or Assistant Secretary, all as of the day and year first above
written.
EXECUTIVE
HUNT CORPORATION
By
Its
ATTEST:
<PAGE>
Exhibit 10(f)(2)
HUNT CORPORATION
Executive Officers Who Are Parties to Change in Control Agreement
The following current Executive Officers of Hunt Corporation are
parties to the aforesaid Change in Control Agreement: John W. Carney, William E.
Chandler, James P. Machut, W. Ernest Precious and Eugene A. Stiefel.
Donald R. Thompson, Chairman, President and CEO of the Company, is not
a party to that Change in Control Agreement, but has change in control
provisions providing for a higher level of benefits in his April 6, 1996
Employment Agreement.
Officers who are not executive officers also are parties to change in
control agreements which are similar to those of Executive Officers, but with
lower levels of benefits.
<PAGE>
Exhibit 10(G)(2)
AMENDMENT NO. 1
TO THE
HUNT CORPORATION
SUPPLEMENTAL EXECUTIVE BENEFITS PLAN
(As Amended and Restated Effective January 1, 1997)
WHEREAS, Hunt Corporation (the "Company") maintains the Hunt
Corporation Supplemental Executive Benefits Plan (the "Plan"); and
WHEREAS, the Company most recently amended and restated the Plan
effective January 1, 1997; and
WHEREAS, the Company desires further to amend the Plan in order to
clarify certain provisions thereof; and
NOW, THEREFORE, effective January 1, 1997, the Company hereby amends
the Plan as follows:
1. Section 4.11 of the Plan is amended to read as follows:
4.11 Elective Transfer of Life Insurance Policies Providing Article IV
Benefits:
(a) Election. A Participant described in Section
4.11(c) may elect, on the Appropriate Form filed with the
Committee not later than 60 days following his or her
retirement or other separation from service, to have
transferred to him or her the life insurance policies held by
the Trust under the Plan to provide benefits to such
Participant under this Article IV, but only to the extent the
cash surrender value of such policies does not exceed the
Present Value of his or her Accrued Benefit. (A Participant
described in Section 4.11(c) who is not otherwise eligible to
receive benefits under this Article IV shall be deemed to have
made such an election.) In the event of such transfer, such
Participant shall be entitled to no further benefits under
this Article IV.
(b) Time of Transfer. In the event a Participant
makes an election under Section 4.11(a), such life insurance
policies shall be transferred to the Participant as soon as
practicable following the date such election is made, but in
no event earlier than the later of (i) 90 days after the date
such election is made, or (ii) the first day of the
Participant's first taxable year which begins after the date
such election is made.
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(c) Eligible Participants. The election described in
Section 4.11(a) shall be available to any Participant who:
(1) Retires on or after his or her Early
Retirement Date.
(2) Separates from service by reason of
Disability.
(3) Voluntarily terminates his or her
employment with the Participating Companies after
completing 15 or more Years of Vesting Service.
(4) Is involuntarily terminated for any
reason other than Cause or performance limitations,
or is involuntary terminated for performance
limitations after completing 15 or more Years of
Vesting Service, provided that (i) if such
Participant is entitled to receive "Salary
Continuation Benefits" under the Hunt Corporation
Officer Severance Plan (the "Severance Plan"), such
Participant must sign a "Separation Agreement" under
the Severance Plan, and (ii) the transfer shall not
occur until the end of the "Severance Period" under
the Severance Plan.
Notwithstanding the foregoing, this Section 4.11 shall not
apply to any Participant or his or her beneficiary if such
Participant dies before the transfer of the life insurance
policies held by the Trust under the Plan to provide benefits
to such Participant under Article IV of the Plan.
2. Section 6.5 of the Plan is amended to read as follows:
6.5 Manner, Form and Time of Distribution of Accounts:
(a) Time of Distribution: The vested balance in an
Executive Officer Participant's Accounts shall be paid, or
commence to be paid, as soon as practicable after the
Executive Officer Participant separates from service with the
Participating Companies and all their Affiliates for any
reason.
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(b) Manner of Distribution: Subject to Section 6.10,
an Executive Officer's vested Accounts shall be paid in a
single lump sum; provided, however, that an Executive Officer
who retires on or after his or her Early or Normal Retirement
Date may elect, by filing the Appropriate Form with the
Committee at least 90 days before the beginning of the
Participant's taxable year in which such distribution is to be
made or commence under Section 6.5(a), to receive distribution
of his or her vested Accounts in installments, payable
monthly, quarterly, or annually, over a period not to exceed
ten years. If an Executive Officer elects to receive
installment payments under this Section 6.5(b), the balance of
his or her Accounts shall be reduced by the amount of any
costs incurred to keep in effect the life insurance policies
held by the Trust under the Plan to provide benefits to such
Participant under this Article VI during the payment period.
(c) Death of Executive Officer Participant:
Notwithstanding any election under Section 6.5(b), if an
Executive Officer Participant dies prior to the complete
distribution of his or her Accounts, the remaining vested
balance in such Accounts shall be paid to his or her
Beneficiary in a single sum as soon as practicable after the
Executive Officer Participant's death.
(d) Form of Distribution. Except as otherwise
provided in this Section 6.5(d) or in Section 6.10,
distribution of vested Account balances not invested in
Company Securities shall be made in cash, and distribution of
vested Account balances invested in Company Securities shall
be made in Company Securities unless the Executive Officer
Participant elects to have such distribution made in cash, and
the Company's Board of Directors approves such election. Such
election shall be made by filing the Appropriate Form with the
Committee.
3. Section 6.10 of the Plan is amended to read as follows:
6.10 Elective Transfer of Life Insurance Policies Providing
Article VI Benefits: Any Participant who has a vested interest in his
or her Accounts and who does not have in effect an election to receive
distribution of his or her vested Accounts in installments under
Section 6.5(b) may elect, by filing the Appropriate Form with the
Committee, to have transferred to him or her the life insurance
policies held by the Trust under the Plan to provide benefits to such
Participant under this Article VI, after removing from such life
insurance policies the portion of such Participant's Accounts which is
not vested and any insurance company charges and fees related thereto.
If such a transfer is made, the Company shall make a single-sum cash
payment to the Participant equal to the excess, if any, of the
Participant's vested interest in his or her Accounts over the cash
value of the insurance policies. In the event of such a transfer under
this Section 6.10, such Participant shall be entitled to no further
benefits under this Article VI.
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<PAGE>
IN WITNESS WHEREOF, Hunt Corporation has caused these presents
to be duly executed this ____ day of _________, 1999.
Attest: HUNT CORPORATION
_______________________________ By: _______________________________
Secretary Senior Vice President
4
<PAGE>
Exhibit 10(h)(2)
Description of Amendment to Employment Agreement
In connection with similar amendments in October 1999 to the Company's
Change in Control Agreements with other executive officers and officers, the
Company and Donald L. Thompson agreed to amend Mr. Thompson's April 8, 1996
Employment Agreement to: (i) change the date in Section 4.5(a)(i) from December
31, 1999 to December 31, 2004; (ii) change the date in Section 4.5(b)(ii) from
June 1, 1996 to October 1, 1999; and (iii) change the date in Section
4.5(d)(v)(2) from June 1, 1996 to October 1, 1999.
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the registration
statements on Forms S-8 Nos. 333-73197, 33-57105, 33-57103, 33-70660, 33-25947,
33-6359, and 2-83144 dated March 2, 1999, December 28, 1994, December 28, 1994,
October 21, 1993, December 7, 1988, June 29, 1986 and April 8, 1983
respectively, of Hunt Corporation and subsidiaries of our report dated January
26, 2000 relating to the financial statements and financial statement schedule,
which appears in this Form 10-K.
PricewaterhouseCoopers LLP
Philadelphia, PA
February 28, 2000
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