<PAGE> 1
UNITED STATES
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 Commission File
Ended February 28, 1999 Number 1-13859
----------------- -------
AMERICAN GREETINGS CORPORATION
--------------------------------------------------
(Exact name of registrant as specified in Charter)
OHIO 34-0065325
- ------------------------ ----------------
(State of incorporation) (I.R.S. Employer
Identification No.)
One American Road , Cleveland, Ohio 44144
- ---------------------------------------- ------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (216) 252-7300
-----------------
Securities registered pursuant to Section 12 (b) of the Act:
Class A Common Shares, Par Value $1.00
Securities registered pursuant to Section 12 (g) of the Act:
Class B Common Shares, Par Value $1.00
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 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 ]
State the aggregate market value of the voting stock held by non-affiliates of
the Registrant as of April 30, 1999 - $1,692,936,713
Number of shares outstanding as of April 30, 1999:
CLASS A COMMON - 62,724,828
CLASS B COMMON - 4,673,939
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement filed with the Securities and Exchange
Commission on May 17, 1999 with respect to the 1999 Annual Meeting of
Shareholders called for June 25, 1999, are incorporated by reference into Part
III.
<PAGE> 2
PART I
Item 1. Business
American Greetings Corporation and its subsidiaries operate predominantly
in a single industry: the design, manufacture and sale of everyday and seasonal
greeting cards and other social expression products. Greeting cards, gift wrap,
paper party goods, candles, balloons, stationery and giftware are manufactured
and /or sold in the United States by American Greetings Corporation, Plus Mark,
Inc., Carlton Cards Retail, Inc., and Quality Greeting Card Distributing
Company; in Canada by Carlton Cards Limited; in the United Kingdom by Carlton
Cards Limited, Camden Graphics Group, Hanson White Ltd., and Carlton Cards Ltd.
(Ireland); in France by Carlton Cards (France) SNC; in Mexico by Carlton Mexico,
S.A. de C.V. ; in Australia by John Sands (Australia) Ltd.; in New Zealand by
John Sands (N.Z.) Ltd.; and in South Africa by S.A. Greetings Corporation (PTY)
Ltd. (80% owned). Interactive Marketing, Inc. (formerly CreataCard Interactive,
Inc.) markets e-mail greetings, personalized greeting cards and other social
expression products through the Corporation's website www.americangreetings.com,
co-branded websites and on-line services. Interactive Marketing, Inc. also
provides design and verse content which is included in various CD-Rom software
products for use on personal computers. Magnivision, Inc. produces and sells
non-prescription reading glasses and eyeware accessories, and Learning Horizons
distributes supplemental educational products. Design licensing and character
licensing are done by AGC, Inc. and Those Characters From Cleveland, Inc.,
respectively. AG Industries, Inc. manufactures custom display fixtures for the
Corporation's products and products of others. (Although other subsidiaries of
American Greetings Corporation exist, they are either inactive, of minor
importance or of a holding company nature.)
Personalized greeting cards were sold through CreataCard machines by
CreataCard, Inc. in the United States, by CreataCard Canada, Inc. in Canada and
by CreataCard (UK) Ltd. in the United Kingdom. However, during the fourth
quarter of 1999, the Corporation discontinued this business in the U.S. and
Canada.
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Many of the Corporation's products are manufactured at common production
facilities and marketed by a common sales force. Marketing and manufacturing
functions in the United States and Canada are combined; dual priced cards are
produced and distributed in both countries. Information concerning sales by
major product classifications is included in Part II, Item 7. Additionally,
information by business segment and geographic area is included in Note M to the
Consolidated Financial Statements included in Part II, Item 8.
The Corporation's products are primarily sold in about 110,000 retail
outlets worldwide. In addition, the Corporation licenses its designs to various
foreign licensees, so that in total, the Corporation's products and designs are
available in more than 84 nations around the world. The greeting card and gift
wrap industry is intensely competitive. Competitive factors include quality,
design, customer service and terms, which may include payments and other
concessions to retail customers under long-term agreements. These agreements are
discussed in greater detail below. There are an estimated 500 companies in this
industry. The Corporation's principal competitors, however, are Hallmark Cards,
Incorporated and Gibson Greetings, Inc. Based upon its general familiarity with
the greeting card and gift wrap industry and limited information as to its
competitors, the Corporation believes that it is the second largest company in
the industry and the largest publicly owned company in the industry.
The greeting card and gift wrap industry is generally mature. Total unit
sales of greeting cards for the Corporation increased 4% in 1999 after
increasing 1% in 1998. Excluding acquisitions, 1999 total unit sales would have
decreased 1% from 1998.
Production of the Corporation's products is generally on a level basis
throughout the year. Everyday inventories remain relatively constant throughout
the year, while seasonal inventories peak in advance of each major holiday
season, including Christmas, Valentine's Day, Easter, Mother's Day, Father's Day
and Graduation. Also characteristic of the business, accounts receivable for
seasonal merchandise are carried for relatively long periods, as product is
normally shipped three to five months prior to a holiday. Payments for seasonal
shipments are generally received during the month in which the major holiday
occurs, or shortly thereafter. Extended payment terms may also be offered in
response to competitive situations with individual customers. The Corporation
and many of its competitors sell seasonal greeting cards with the right of
return.
During the fiscal year, the Corporation experienced no difficulty in
obtaining raw materials from suppliers.
At February 28, 1999, the Corporation employed approximately 14,700
full-time employees and approximately 20,775 part-time employees which, when
jointly considered, equate to approximately 20,100 full-time employees.
Approximately 3,100 of the Corporation's hourly plant employees are unionized,
of which approximately 2,400 are covered by the following collective bargaining
agreements:
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<TABLE>
<CAPTION>
Union Plant Location Contract Expiration Date
- ------------------------- ------------------- ------------------------
<S> <C> <C>
International Brotherhood Bardstown, Kentucky 4/15/03
of Teamsters Corbin, Kentucky 12/01/02
Amalgamated Clothing & Greeneville, Tennessee 10/20/99
Textile Workers Union (Plus Mark)
Communication, Energy Toronto, Ontario 1/31/01
and Paperworkers Canada (Carlton Cards Limited)
</TABLE>
Other locations with unions are Cleveland, Ohio, the United Kingdom,
Mexico, Australia, New Zealand, and South Africa. The Corporation's headquarters
and other manufacturing locations are not unionized. Labor relations at each
location have generally been satisfactory.
The Corporation has a number of patents and registered trademarks which are
used in connection with its products. The Corporation's designs and verses are
protected by copyright. Although the licensing of copyrighted designs and
trademarks produces additional revenue, in the opinion of the Corporation, the
Corporation's operations are not dependent upon any individual patent,
trademark, copyright or intellectual property license. The collective value of
the Corporation's copyrights and trademarks is substantial and the Corporation
follows an aggressive policy of protecting its patents, copyrights and
trademarks.
In fiscal 1999, the Corporation's major channel of distribution continued
to be mass retail (which is comprised of mass merchandisers, chain drug stores
and supermarkets), where it is the social expression industry leader. Other
major channels of distribution include card and gift shops, military post
exchanges, combo stores (stores combining food, general merchandise and drug
items), variety stores, and department stores.
Sales to the Corporation's five largest customers, which include mass
merchandisers and major drug stores, accounted for approximately 32.0% of net
sales in fiscal 1999. Sales to retail customers are made through 21 sales
offices in the United States, Canada, the United Kingdom, Australia, New
Zealand, France, Mexico and South Africa.
The Corporation has agreements with various customers for the supply of
greeting cards and related products. Contracts are separately negotiated to meet
competitive situations; therefore, while some aspects of the agreements may be
the same or similar, important contractual terms often vary from contract to
contract. Under the agreements, customers typically receive allowances,
discounts and/or advances in consideration for the Corporation being allowed to
supply customers' stores for a stated term and/or specify a minimum sales volume
commitment.
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Some of these competitive agreements have been negotiated with customers
covering a period following that covered by current agreements and requiring the
Corporation to make advances prior to the start of such future period. The
Corporation views the use of such agreements as advantageous in developing and
maintaining business with retail customers. Although risk is inherent in the
granting of advances, payments and credits, the Corporation subjects such
customers to its normal credit review. Losses attributable to these agreements
have historically not been material. Advances, payments and credits made under
these agreements are accounted for as deferred costs. The current and long-term
portions of such deferred costs, including future payment commitments, are
disclosed in Note G to the Consolidated Financial Statements included in Part
II, Item 8. Note G also discusses the amortization policy. The Corporation
believes that these agreements represent a common practice within the industry.
Since Hallmark Cards, one of the Corporation's two principal competitors, is a
non-public company, public disclosure of its practices has been limited. Gibson
Greetings, Inc., the Corporation's other principal competitor and a public
company, has made comparable disclosures with respect to such agreements.
The operations of the Corporation, like those of other companies in our
industry, are subject to various federal, state and local environmental laws and
regulation. These laws and regulations may give rise to claims, uncertainties or
possible loss contingencies for future environmental remediation liabilities and
costs. The Corporation has implemented various programs designed to protect the
environment and comply with applicable environmental laws and regulations. The
costs associated with these compliance and remediation efforts have not and are
not expected to have a material adverse effect on the financial condition, cash
flows, or operating results of the Corporation.
5
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Item 2. Properties
As of February 28, 1999, the Corporation owns or leases
approximately 16.2 million square feet of plant, warehouse, store and office
space, of which approximately 6.0 million square feet are leased. Space needs in
the United States have been met primarily through long-term leases of properties
constructed and financed by community development corporations and
municipalities.
The following table summarizes the principal plants and
materially important physical properties of the Corporation:
<TABLE>
<CAPTION>
Expiration
Approximate Square Date of
Feet Occupied Material Principal
Location Owned Leased Leases Activity
- ----------------- ------------- -------------- -------------- ---------
<S> <C> <C> <C> <C>
Cleveland, 1,635,000 International headquarters;
Ohio general offices of U.S. Greeting
Card Division, Plus Mark, Inc., AG
Industries, Inc., Carlton Cards Retail,
Inc., Interactive Marketing, Inc.,
Learning Horizons, Inc., and AGC, Inc.;
creation and design of greeting cards,
gift wrap, paper party goods, candles,
balloons, stationery and giftware
Bardstown, 413,500 Cutting, folding, finishing, and
Kentucky packaging of greeting cards
Corbin, 1,010,000 Printing of greeting cards,
Kentucky gift wrapping and paper party
goods and manufacture of other related
products
Danville, 1,374,000 2001 Distribution of everyday greeting
Kentucky cards and related products
Harrisburg, 417,000 2007 Warehousing for seasonal
Arkansas greeting cards and related
products
Lafayette, 194,000 Manufacture of envelopes
Tennessee for greeting cards and
packaging of cards
McCrory, 771,000 2005 Order filling and shipping of
Arkansas everyday and seasonal products
</TABLE>
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<TABLE>
<CAPTION>
Expiration
Approximate Square Date of
Feet Occupied Material Principal
Location Owned Leased Leases Activity
- ----------------- ------------- -------------- -------------- ---------
<S> <C> <C> <C> <C>
Osceola, 2,800,800 Cutting, folding, finishing and
Arkansas packaging of seasonal greeting
cards and warehousing;
distribution of seasonal
products
Ripley, 165,000 Seasonal card printing and
Tennessee forms
Philadelphia, 120,000 2017 Hand finishing of greeting cards
Mississippi
Shelbyville, 250,000 2002 Warehousing for Carlton
Kentucky Cards Retail, Inc. and distribution
for Learning Horizons, Inc.
Forest City, 498,000 302,500 1999 Manufacture of the
North Carolina and Corporation's display
2001 fixtures and other custom display
fixtures by AG Industries, Inc.
Greeneville, 1,410,000 Printing and packaging of
Tennessee seasonal wrapping items
(2 locations) and order filling and shipping for
Plus Mark, Inc.
Ft. Lauderdale / 108,000 2000 General offices of Magnivision,
Miami and Inc.; manufacture, order filling
Florida 2001 and shipping of non-prescription
(2 locations) reading glasses
Toronto, 1,084,500 General offices of Carlton
Ontario, Cards (Canada) Limited;
Canada manufacture and distribution
(2 locations) of greeting cards and related products
Clayton, 208,000 General offices of John Sands
Victoria, (Australia) Ltd.; manufacture of
Australia greeting cards and related products
</TABLE>
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<TABLE>
<CAPTION>
Expiration
Approximate Square Date of
Feet Occupied Material Principal
Location Owned Leased Leases Activity
- ----------------- ------------- -------------- -------------- ---------
<S> <C> <C> <C> <C>
Auckland, 80,000 General offices of John
New Zealand Sands (New Zealand) Ltd:
manufacture of greeting
cards and related products
Dewsbury, 361,000 87,000 2001 General offices of
England and Carlton Cards (UK) Limited;
(5 locations) 2014 manufacture of greeting
cards and related products
Corby, 85,000 Distribution of greeting
England cards and related products
for Carlton Cards (UK) Limited
Mexico City, 166,000 General offices of Carlton
Mexico Mexico, S.A. de C.V. and
manufacture of greeting
cards and related products
Paris, 93,000 2000 General offices of Carlton
France Cards (France) SNC;
distribution of greeting cards
and related products
Roodepoort, 110,000 2000 General offices of
South Africa thru S.A. Greetings Corporation;
2002 manufacture and distribution
of greeting cards and
related products
London, England 42,000 2000 General offices of
(3 locations) and Camden Graphics;
2011 publishing and distribution
of greeting cards
Croydon, England
(8 locations) 42,000 104,000 2001 General offices of Hanson
thru White; manufacturer and
2011 distributor of greeting
cards and related products
</TABLE>
8
<PAGE> 9
Item 3. Legal Proceedings
BEC GROUP, INC. V. AMERICAN GREETINGS CORPORATION, MAGNIVISION, INC.
AND ERWIN WEISS, District Court of Dallas County, Texas, 160th Judicial
District, Case No. 97-00761-H
This matter was previously reported in Form 10-K for the fiscal year
ended February 28, 1998. In February 1999, the parties agreed to a settlement on
terms not material to the Corporation.
CUSTOM EXPRESSIONS ROYALTY INC., ET AL V. AMERICAN GREETINGS
CORPORATION, U.S. District Court, Northern District of North Carolina, Case No.
3:97CV356-H
This matter was previously reported in Form 10-K for the fiscal year
ended February 28, 1998 and in Form 10-Q for the quarter ended August 31, 1998.
In May 1999, the parties agreed to a settlement on terms not material to the
Corporation.
Item 4. Submission of Matters to Vote of Security Holders
None
9
<PAGE> 10
Executive Officers of the Registrant
- ------------------------------------
The following is a list of the Corporation's Executive Officers, their
ages as of May 1, 1999, their positions and offices, and number of years in
executive office:
<TABLE>
<CAPTION>
Years as
Name Age Executive Officer Current Position and Office
- ---- --- ----------------- ---------------------------
<S> <C> <C> <C>
Irving I. Stone 90 49 Founder-Chairman and
Chairman of the Executive
Committee
Morry Weiss 59 27 Chairman and
Chief Executive Officer
Edward Fruchtenbaum 51 13 President and
Chief Operating Officer
Michael B. Birkholm 47 1 Senior Vice President
Mary Ann Corrigan-Davis 45 2 Senior Vice President
Jon Groetzinger, Jr. 50 11 Senior Vice President,
General Counsel and
Secretary
John M. Klipfell 49 16 Senior Vice President
William R. Mason 54 17 Senior Vice President
William S. Meyer 52 11 Senior Vice President,
Chief Financial Officer
Patricia A. Papesh 51 4 Senior Vice President
Erwin Weiss 50 9 Senior Vice President
Jeffrey M. Weiss 35 1 Senior Vice President
George A. Wenz 54 1 Senior Vice President
Thomas T. Zinn, Sr. 50 1 Senior Vice President
Dale A. Cable 51 7 Vice President, Treasurer
Patricia L. Ripple 43 3 Vice President,
Corporate Controller
</TABLE>
Mr. Irving I. Stone is the father-in-law of Morry Weiss. Morry Weiss
and Erwin Weiss are brothers. Jeffrey M. Weiss is the son of Morry Weiss. The
Board of Directors annually elects all Executive Officers; however, Executive
Officers are subject to removal, with or without cause, at any time.
All of the Executive Officers listed above have served in the capacity
shown or similar capacities with the Corporation (or major subsidiary) over the
past five years, with the following exceptions.
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<PAGE> 11
Michael B. Birkholm was Plant Manager at Osceola, Arkansas from
September 1992 until June 1994; and Vice President, Manufacturing from June 1994
until becoming Senior Vice President in March 1998.
Mary Ann Corrigan-Davis was President of Carlton Cards Retail, Inc.
from December 1992 until January 1996, and Group Managing Director of the John
Sands Group from January 1996 until becoming Senior Vice President in May 1997.
Patricia A. Papesh was Vice President, Creative of the U.S. Greeting
Card Division from December 1992 until becoming Senior Vice President in April
1995.
Patricia L. Ripple was Director, Tax and Financial Reporting of the
Corporation from November 1991 until April 1993; and Executive Director, Tax and
Financial Reporting of the Corporation from April 1993 until becoming Vice
President and Corporate Controller in September 1996.
Jeffrey M. Weiss was Vice President, Materials Management of the
Corporation's U.S. Greeting Card Division from October 1996 until May 1997; and
Vice President, Product Management of the Corporation's U.S. Greeting Card
Division from May 1997 until becoming Senior Vice President in January 1998.
George A. Wenz was Vice President, National Accounts from October 1984
until becoming Senior Vice President in June 1997.
Thomas T. Zinn, Sr. was a Principal with Ernst & Young LLP before
joining the Corporation January 1995 as Vice President, Information Services. He
became Senior Vice President in March 1998.
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PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
(a) Market Information
- ----------------------
The Corporation's Class A Common stock was listed on the NASDAQ National Market
System through February 10, 1998. Effective February 11, 1998, the Corporation's
Class A Common stock is listed on the New York Stock Exchange under the symbol
AM. The high and low stock prices, as reported in the respective exchange's
listing, for the years ended February 28, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
----------------------------------- ------------------------------------
High Low High Low
--------------- -------------- ------------- ---------------
<S> <C> <C> <C> <C>
1st Quarter.................. $ 49-7/16 $ 44-7/8 $ 34-1/2 $ 29-1/4
2nd Quarter................. 53-3/4 36-5/8 37-1/4 33-1/8
3rd Quarter.................. 44 35 38-3/4 34
4th Quarter.................. 44-5/16 22 45-7/8 35-3/8
</TABLE>
The ratio of the Corporation's share price to earnings per share was 9.3 at
February 28, 1999 and 17.7 at February 28, 1998.
National City Bank, Cleveland, Ohio, is the Corporation's registrar and transfer
agent. There is no public market for the Class B Common Shares of the
Corporation. Pursuant to the Corporation's Amended Articles of Incorporation, a
holder of Class B Common Shares may not transfer such Class B Common Shares
(except to permitted transferees, a group that generally includes members of the
holder's extended family, family trusts and charities) unless such holder first
offers such shares to the Corporation for purchase at the most recent closing
price for the Corporation's Class A Common Shares. If the Corporation does not
purchase such Class B Common Shares, the holder must convert such shares, on a
share for share basis, into Class A Common Shares prior to any transfer.
(b) Shareholders
- ----------------
At May 1, 1999, there were approximately 28,775 holders of Class A Common Shares
and 225 holders of Class B Common Shares of record and individual participants
in security position listings.
(c) Cash Dividends
- ------------------
<TABLE>
<CAPTION>
Dividends per share declared in: 1999 1998
- -------------------------------- ----------- ----------
<S> <C> <C> <C>
1st Quarter (paid June 10, 1998 and 1997) $ .18 $ .17
2nd Quarter (paid September 10, 1998 and 1997) .19 .18
3rd Quarter (paid December 10, 1998 and 1997) .19 .18
4th Quarter (paid March 10, 1999 and 1998) .19 .18
(to be paid June 10, 1999) .19 -
----------- ----------
$ .94 $ .71
</TABLE>
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Item 6. Selected Financial Data
Years ended February 28 or 29
Thousands of dollars except per share amounts
<TABLE>
<CAPTION>
Summary of Operations
- ---------------------
1999 1998 1997 1996 1995
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales ................................ $ 2,205,706 $ 2,198,765 $ 2,161,089 $ 2,003,038 $ 1,868,927
Gross profit ............................. 1,448,626 1,408,077 1,355,965 1,241,032 1,192,842
Non-recurring charge(gain) ............... 13,925 (22,125) -- 52,061 --
Interest expense ......................... 29,326 22,992 30,749 24,290 16,871
Net income ............................... 180,222 190,084 167,095 115,135 148,792
Earnings per share ....................... 2.56 2.58 2.23 1.54 2.00
Earnings per share - assuming dilution ... 2.53 2.55 2.22 1.53 1.98
Cash dividends per share ................. .94** .71 .67 .62 .55
Fiscal year end market price per share ... 23.69 45.63 31.00 27.38 29.38
Average number of shares outstanding ..... 70,345,980 73,708,100 74,818,960 74,528,809 74,305,346
Financial Position
- ------------------
Accounts receivable ...................... $ 390,740 $ 373,594 $ 375,324 $ 353,671 $ 324,329
Inventories .............................. 251,289 271,205 303,611 335,074 279,270
Working capital .......................... 728,144 506,029 562,148 516,346 531,199
Total assets ............................. 2,419,328 2,161,464 2,135,120 2,005,832 1,761,751
Property, plant and equipment additions .. 60,950 67,898 92,895 91,590 97,290
Long-term debt ........................... 463,246 148,800 219,639 231,073 74,480
Shareholders' equity ..................... 1,346,611 1,345,217 1,361,655 1,235,022 1,159,541
Shareholders' equity per share ........... 19.49 18.90 18.16 16.53 15.61
Net return on average shareholders' equity 13.4% 14.0% 12.9% 9.6% 13.4%
Return on net sales before income taxes .. 12.8% 13.3% 11.8% 8.7% 12.2%
</TABLE>
** See Part II, Item 5(c) for detailed table.
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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
OVERVIEW
Initiatives embedded within the Corporation's long-term strategic plan increased
both operating earnings and cash flow available for acquisitions and financing
in 1999. As part of these initiatives, in the first quarter of this year, the
Corporation strengthened its position in the United Kingdom social expression
product market through the acquisition of two greeting card companies: Camden
Graphics Group in March 1998 and Hanson White Ltd., in May 1998. The Corporation
also continued to review its existing portfolio of businesses and, as a result,
discontinued the kiosk business during the fourth quarter of 1999 to focus its
electronic marketing efforts on the internet and software products. In addition,
a restructuring program designed to reduce costs and increase efficiency was
initiated this year.
The Corporation continued to generate strong cash flow and, as a result, the
Board of Directors in 1999 approved another share repurchase program of up to
4.0 million shares of Class A common stock of which 2.9 million shares were
repurchased at fiscal year-end.
CONSOLIDATED RESULTS OF OPERATIONS
REVENUE
Net sales of $2,205.7 million reflects a moderate increase of 0.3% over 1998.
While the Corporation achieved its 93rd consecutive year of revenue growth,
reduced seasonal shipments, foreign exchange rate movements and the divestiture
of two businesses in 1998 negatively impacted net sales growth. Net sales would
have increased 1.3% excluding the impact of weakened foreign currencies. The net
sales increase of 1.7% in 1998 over 1997 was also adversely affected by the
subsidiary divestitures, a de-emphasis on sales of lower margin seasonal gift
accessories and weakening of certain foreign currencies against the United
States dollar. The net sales increase in 1998 normalized for these factors was
approximately 5.5%.
Net sales of everyday cards continued to increase and were up 4.0% in 1999 after
increasing 5.8% in 1998. While everyday card sales were again strong in the
United States, increased UK market share fueled the 1999 increase. Due to both
improvements in the existing UK business and the acquisition of Camden Graphics
and Hanson White, net everyday card sales in that country increased $39.1
million. The increase in 1998 resulted from the sales growth in both the United
States and in most foreign card markets.
During the third quarter of 1999, the Corporation reduced its seasonal product
shipments to improve both sell-through and gross margins. As a result, net
seasonal card sales decreased 3.5% or $16.2 million after decreasing 1% in 1998.
In addition, seasonal promotional gift wrap sales were also reduced by $13.1
million as part of the margin improvement effort. The decrease in 1998 reflected
the Corporation's initiatives to improve sell-through of seasonal card sales
which included both targeted promotions and reduced shipments. Total unit sales
of all greeting cards increased 4% in 1999 compared to an increase of 1% in
1998. Excluding acquisitions, total unit sales would have decreased 1% from
1998.
Sales of non-card products, such as non-prescription reading glasses,
non-promotional gift wrap, party goods and supplemental education products
continued their strong performance in 1999. Net sales of these products
increased 4.3% in 1999 after increasing 4.6% in 1998.
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<PAGE> 15
The contribution of each major product category as a percent of net sales for
the past three years (due to the divestiture, excludes picture frames and hair
accessories from all three years) is:
<TABLE>
<CAPTION>
1999 1998 1997
------------- ----------- -----------
<S> <C> <C> <C>
Everyday Greeting Cards 48% 47% 46%
Seasonal Greeting Cards 20% 22% 23%
Gift Wrapping and Wrap Accessories 14% 14% 14%
All Other Products 18% 17% 17%
</TABLE>
The All Other Products classification includes giftware, ornaments,
non-prescription reading glasses, educational products, party goods, candles,
stationery, calendars, balloons, stickers and custom display fixtures.
EXPENSES AND PROFIT MARGINS
Pre-tax margin, excluding non-recurring items, significantly improved in 1999 to
13.4% compared to 12.3% in 1998 and 11.8% in 1997. The improvement in both years
was driven by gross margin improvement. Material, labor and other production
costs were 34.3% of net sales down from 36.0% in 1998 and 37.3% in 1997. This
170 basis point improvement in 1999 was gained by both reducing shipments of low
margin seasonal cards, promotional giftwrap and other accessories and by
lowering the manufacturing costs of the remaining seasonal products. The
improvement in 1998 from 1997 reflects an improved product mix as well as the
divestiture of the low margin picture frame and hair accessory businesses which
provided 70 basis points of the improvement.
Selling, distribution and marketing expenses increased slightly to 40.5% of net
sales, compared to 39.9% in 1998 and 38.9% in 1997. A new national advertising
campaign was launched in 1999 which increased selling costs by $8.4 million.
Additionally, in-store merchandiser costs were up $5.7 million due primarily to
store remodelings resulting from retailer consolidations. While competitive
costs were well managed in 1999 and remained flat to last year, these costs are
expected to continue to increase in the future. Deferred costs and the
Corporation's method of accounting for them are described in Note G to the
Consolidated Financial Statements. The increase in 1998 compared to 1997 was
primarily due to increased competitive expense resulting from higher
amortization of deferred costs.
Administrative and general expenses decreased $5.3 million in 1999 after
remaining relatively flat in 1998 from 1997. 1999 expenses were down primarily
as a result of reduced costs of corporate owned life insurance.
Other expense decreased to $1.3 million from $4.5 million in 1998 due to a gain
on the sale of an equity investment. The increased expense in 1998 from 1997 is
the result of $6.7 million of initial year 2000 costs.
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<PAGE> 16
Interest expense increased $6.3 million in 1999. The Corporation's common stock
repurchase program and acquisitions in the United Kingdom required additional
borrowings, although increased cash flow provided the majority of the funding.
Slightly higher interest rates also impacted interest expense in 1999 as the
Corporation shifted from short-term borrowings to long-term debt. In 1998,
interest expense decreased $7.8 million from 1997 due to lower borrowing
requirements as a result of strong cash flow provided by operating and investing
activities.
The 1999 effective tax rate was 36.0% compared to 35.0% in 1998 and 34.3% in
1997. While the rate for all three years reflected tax benefits of the
corporate-owned life insurance, the benefits in all years were reduced due to
the phase out of the Federal income tax deduction for interest on loans
associated with these policies. The deduction for this interest expense was
entirely eliminated as of January 1, 1999. See Note N to the Consolidated
Financial Statements for details of the differences between the Federal
statutory rate and the effective tax rate.
NON-RECURRING ITEMS
During the third quarter of 1999, the Corporation implemented action to optimize
the Corporation's cost structure and provide for operational streamlining
initiatives. Those actions eliminated fixed costs from the business and allowed
the Corporation to reallocate resources from its poor performing kiosk business
into more profitable strategies. Major elements of the restructuring included
the elimination of approximately 300 management, salaried and clerical
positions; write-off of fixed assets and other costs associated with the
Corporation's kiosk business; closure of five field sales branch offices; and
consolidation of minor business facilities.
As a result, the Corporation recorded a restructure charge of $13.9 million
($8.3 million net of tax or $0.12 earnings per share) during the third quarter
of 1999, which consisted of approximately $8.6 million of personnel-related
charges; $4.6 million of exit costs associated with discontinuing the kiosk
business; $0.4 million of costs associated with carrying vacated office space
until lease expiration or sublease; and approximately $0.3 million of other
restructure costs. The Corporation expects the plans associated with these costs
to be substantially completed during the first half of Fiscal 2000 with most of
the costs associated with the workforce reduction being incurred and paid in
1999. Employees were terminated from all areas of the domestic operations of the
Corporation, including manufacturing, sales, and administrative areas. The total
number of employees terminated was 228, along with elimination of an additional
70 unfilled positions.
Details of the restructure charge are as follows:
<TABLE>
<CAPTION>
(Thousands of dollars)
------------------------------------------------------------------
Termination Kiosk Other
Benefits Exit Costs Costs Total
------------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
Expense accrued ............ $ 8,644 $ 4,618 $ 663 $13,925
Cash expenditures .......... (5,019) (5,019)
Non-cash charges ........... (3,362) (3,362)
------- ------- ------- -------
Balance at February 28, 1999 $ 3,625 $ 1,256 $ 663 $ 5,544
======= ======= ======= =======
</TABLE>
16
<PAGE> 17
Included in accounts payable and accrued liabilities at February 28, 1999 is
$5.5 million related to severance and other exit costs for those actions that
have not yet been completed as of the end of 1999. The Corporation believes the
remaining accrued restructure liability is adequate for its remaining cash and
non-cash obligations.
While these initiatives are expected to result in annualized pre-tax savings of
approximately $12 to $15 million when completed, future incremental earnings may
not be impacted at the full amount due to management's commitment to invest in
competitive business strategies, new markets and growth opportunities.
In 1998 the Corporation divested the net assets of Acme Frame Products, Inc., a
manufacturer and distributor of picture frames and Wilhold, Inc., a manufacturer
and distributor of hair accessories. As a result of the transaction, the
Corporation recorded a non-recurring gain of $22.1 million ($13.2 million net of
tax, or earnings per share of $0.18).
NET INCOME AND EARNINGS PER SHARE
Excluding non-recurring items, net income increased 6.6% to $188.6 million or
$2.68 per share compared to net income of $176.9 million or $2.40 per share in
1998 and net income of $167.1 million or $2.23 per share in 1997. Assuming
dilution, earnings per share excluding non-recurring items were $2.65, $2.37,
and $2.22 in 1999, 1998 and 1997, respectively.
SEGMENT INFORMATION
The Corporation has adopted Statement of Financial Accounting Standards No.131
(SFAS 131), "Disclosures about Segments of an Enterprise and Related
Information", effective December 31, 1998. SFAS 131 requires disclosure of
segment information on the basis of measurement that is used internally for
evaluating segment performance and allocating resources to the Corporation's
operations. Accordingly, segment information for 1998 and 1997 has been restated
to conform to the requirements of SFAS 131. See Note M to the Consolidated
Financial Statements for further discussions of business segment information.
The Corporation is organized and managed according to a number of factors,
including product categories, geographic locations and channels of distribution.
The Social Expression Products segment primarily designs, manufactures and sells
greeting cards and other products through various channels of distribution with
mass retailers as the primary channel. As permitted under SFAS 131, certain
operating divisions have been aggregated into one reportable segment. These
operating divisions have similar economic characteristics, products, production
processes, types of customers and distribution methods.
SOCIAL EXPRESSION PRODUCTS SEGMENT
Net sales in 1999 increased 3.6% due primarily to sales growth in the United
Kingdom from both improvement in the existing business and the favorable impact
of the two greeting card acquisitions. The net sales growth in 1998 reflects the
increased sales in the United States card market as well as the United Kingdom.
Segment greeting card unit sales increased 5% in 1999 however, unit sales are
flat to 1998 excluding the impact of acquisitions.
17
<PAGE> 18
Segment earnings, net of intersegment items, increased 7.2% in 1999 due
primarily to a more favorable product mix reflecting a reduction of less
profitable seasonal shipments. Increased everyday sales in the United Kingdom as
well as the two U.K. acquisitions also favorably impacted segment profitability
in 1999. Segment earnings remained flat in 1998 compared to 1997 as an increase
in the United Kingdom card market was offset by weaker retail environments in
Canada and Mexico.
YEAR 2000
The Year 2000 issue is the result of information technology ("IT") system
programs being written using two digits rather than four digits to define the
application year. Any of the Corporation's IT systems that have date-sensitive
software may be unable to interpret appropriately the calendar Year 2000 and
thus could cause the disruption of normal business activities. The Corporation
uses IT systems in various aspects of its business, including manufacturing,
distribution, product development, and many administrative functions, and much
of this software needs to be modified or replaced. The Corporation is currently
in the process of working toward Year 2000 compliance so that all of its
material business processes and components will properly handle dates prior to,
during and after the Year 2000.
The Corporation has prioritized its IT systems into three categories: critical,
necessary or other. Failure of a "critical" system would result in a serious
disruption of revenue and would critically impact competitive advantages.
Failure of a "necessary" system would result in serious processing delays and a
significant reduction in productivity. The Corporation believes its critical
applications are Year 2000 compliant. The Corporation also believes its
necessary systems will be Year 2000 compliant by the end of the second quarter
of calendar 1999. The remainder of the Corporation's systems should be
remediated by the end of the third quarter of calendar 1999. However, given the
number of systems in the Year 2000 portfolio, slippage in the schedule could
occur but is highly unlikely.
The Corporation's non-IT systems include embedded technology such as
microcontrollers included in production equipment, environmental control
equipment and timeclocks. These non-IT systems are continuing to be assessed,
and plans continue to be updated. Remediation actions have begun.
The Corporation is also in the process of ensuring the continuity and stability
of its normal business functions by identifying and assessing potential Year
2000 compliance risks associated with its external business relationships,
including those with vendors, customers, financial institutions and employee
benefit providers. This process is currently completing its assessment phase
with potential risks being identified and contingency plans being developed.
Contingency plans will be needed in the event any of the Corporation's critical
or necessary systems are not Year 2000 compliant when required. The Corporation
does not currently anticipate such a situation and expects to complete the
contingency planning phase during the third quarter of calendar 1999.
The Corporation's current estimate of total cost to achieve Year 2000 compliance
in both its IT and non-IT systems is approximately $35 million for modifications
to existing software, software replacement, computing hardware and embedded
systems. Through February 28, 1999, $23 million has been cumulatively expended
on Year 2000 compliance.
18
<PAGE> 19
In addition, the Corporation has developed a program to provide independent
validation of its Year 2000 compliance efforts. This program includes engaging
independent consultants for audits of its completed coding corrections and for
providing guidance and suggestions for the remediation efforts.
The Corporation believes, but cannot warrant, that with timely modifications to
its existing software and conversion to new software, by both the Corporation
and its significant business partners, the Year 2000 compliance issue should not
have a material impact on the Corporation's operations. Specific factors which
might cause a material adverse effect include the availability and cost of
trained personnel and the ability to recruit and retain them, as well as the
ability to locate all system coding requiring correction. Based upon information
available at this time, the Corporation believes that the cost of modifications,
replacements and related testing will not have a material impact on the
Corporation's liquidity or results of operations. Year 2000 expenditures are
being funded through operations.
LIQUIDITY AND CAPITAL RESOURCES
Cash flow before acquisitions, divestitures and financing increased again in
1999. Cash flow provided by operating activities for 1999 increased $16.1
million after increasing $41.3 million in 1998. The improvement in 1999 reflects
an increase in net income, net of non-recurring items, and to continuing
initiatives to manage working capital. The improvement achieved in 1998
primarily reflects lower cash payments related to net deferred costs.
Trade accounts receivable, net of the effect of acquisitions and divestitures,
used $10.5 million of cash in 1999 compared to $20.6 million in 1998. The cash
use in 1999 reflects an increase in extended payment terms granted to customers.
The receivable performance in 1998 resulted from strong fourth quarter sales of
everyday cards and accessories. As a percent of net sales, accounts receivable
were 17.7% in 1999, 17.0% in 1998 and 17.4% in 1997.
Inventories as a percent of material, labor and other production costs decreased
again and were 33.2% in 1999, compared to 34.3% in 1998 and 37.7% in 1997. The
improvements in 1999 and 1998 reflect the Corporation's focus to reduce
production lead times and therefore inventory levels. These improvements were
driven by the Social Expression Products segment, where inventories declined
$23.0 million, excluding the UK acquisitions, in 1999 after decreasing $16.3
million in 1998 from 1997 levels.
Payments under agreements with certain retailers (net of related amortization)
increased $50.5 million after decreasing $79.0 million in 1998. The payments,
which were made in connection with both new and existing agreements, reflect the
fluctuations resulting from various contract payment and renewal dates. However,
the deferred costs which result from the payments are less volatile as they are
amortized over the effective period of the agreement. Total commitments under
the agreements are capitalized as deferred costs when the agreements are
consummated, and any future payment commitments are recorded as liabilities at
that time. Future payment commitments under existing agreements at the end of
1999 were $195.5 million with $81.7 million due within the next year. See Note G
to the Consolidated Financial Statements for further discussion of deferred
costs related to certain customer agreements.
19
<PAGE> 20
Investing activities reflect the $53.0 million cash portion of the acquisition
of two greeting card companies in the United Kingdom. In 1998, investing
activities include $82.0 million proceeds from the divestiture of the net assets
of Acme Frame Products, Inc. and Wilhold, Inc.
Capital expenditures decreased $6.9 million in 1999 compared to a $25.0 million
decrease in 1998. Expenditures in 1999 were principally for asset replacement,
cost reduction, system and productivity improvements. The decrease in 1998 was
due to higher levels of expenditures in 1997 for the automation of distribution
systems which was substantially completed in 1997. Capital expenditures are
expected to be approximately $70 million in 2000.
Investing activities other than capital expenditures and acquisitions and
divestitures provided $31.2 million more cash in 1999 compared to providing
$10.0 million more cash in 1998 from 1997. The increase in 1999 reflects cash
distributions received from the Corporation's investment in corporate owned life
insurance and proceeds from the sale of the Artistic Greetings stock. The
increase in 1998 is due to reduced premium payments compared to 1997 of
corporate owned life insurance premiums.
In May 1998, the Corporation filed a Form S-3 Registration Statement with the
Securities and Exchange Commission for a shelf registration to issue up to $600
million of debt securities. Under the registration, the Corporation in July 1998
completed the sale of $300 million of 30-year notes with a 6.10% coupon rate.
The majority of the proceeds were used to retire commercial paper and other
short-term debt, with the remainder used for other general corporate purposes
and short-term investments.
In August 1998, the Corporation entered into a new multi-currency credit
facility to provide liquidity and working capital financing for the Corporation
and its subsidiaries in the United States, Canada, the United Kingdom,
Australia, New Zealand and France. The aggregate availability under this
facility is approximately $715 million. A portion of the facility matures on
August 7, 2003. The balance of the facility matures on August 6, 1999. This
portion of the facility is annually renewable for an additional 364-day period
and is convertible to a term loan with a maturity of August 7, 2003.
In June 1997, the Corporation's Board of Directors authorized the repurchase of
up to 4.5 million shares of Class A common stock. The entire 4.5 million shares
were repurchased during 1998 at an average price of $37.49 per share or $168.7
million. In March 1998, the Corporation announced that its Board of Directors
authorized an additional repurchase of up to 4 million shares of Class A stock.
During 1999, 2.9 million shares were repurchased under this program at an
average price of $42.73 per share or $124.2 million. The Corporation on February
24, 1999 again announced its intention to repurchase an additional 5 million
shares of Class A stock.
The Corporation utilized a portion of the proceeds from the sales of the $300
million of debt securities to effectively shift much of its previously
short-term debt to long-term. The remaining portion of the proceeds were used to
fund various other activities including the Corporation's share repurchase
programs. The increase in use of cash in 1998 reflects the approved repurchase
of Class A common stock. Debt as a percent of total capitalization in 1999
increased to 26.3% compared to 20.6% in both 1998 and 1997.
20
<PAGE> 21
The Corporation's operating cash flow and existing credit facilities are
expected to meet currently anticipated funding requirements. The seasonal nature
of the business results in peak working capital requirements which are financed
through short term borrowings. See Note H to the Consolidated Financial
Statements for further discussion of the Corporation's credit facilities.
MARKET RISK
The Corporation's market risk is impacted from changes in interest rates and
foreign currency exchange rates. The Corporation manages interest rate exposure
through a mix of fixed and floating rate debt. Interest rate exposure was
reduced in 1999 from the sale of $300 million, 6.1% coupon rate, 30-year senior
notes, the proceeds of which reduced commercial paper and other short-term debt.
To date, risks associated with interest rate movements have not been significant
and are not expected to be so in the near term.
Approximately 17% of the Corporation's 1999 revenues were generated from
operations outside the United States. Operations in Australasia, Canada, France,
Mexico, South Africa, and the United Kingdom, are denominated in currencies
other than U.S. dollars. Each of these operations conducts substantially all of
its business in its local currency and are not subject to material operational
risks associated with fluctuations in exchange rates. While intercompany
balances with the parent company are denominated in U.S. dollars, the
Corporation's multi-currency credit facility provides the foreign operations the
ability to satisfy these balances and reduce exchange risk. Additionally, the
Corporation's net income was not materially impacted by the translation of the
foreign operations' currencies into U.S. dollars. Exposure to exchange rate
fluctuations historically have not been significant however, no assurance can be
given that future results will not be adversely affected by significant changes
in foreign currency exchange rates.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement
No.133, "Accounting for Derivative Instruments and Hedging Activities," (SFAS
133) which the Corporation is required to adopt March 1, 2000. The Corporation
is currently assessing the effect of adopting SFAS 133 but does not anticipate a
material impact on the results of operations due to the Corporation's minimal
use of derivatives.
FACTORS THAT MAY AFFECT FUTURE RESULTS
On February 24, 1999, the Corporation announced an initiative to further
strengthen its position as the productivity leader in the greeting card
industry. This initiative should result in more productive greeting card
departments in retail outlets by lowering retailer inventories to support
increased greeting card sales. The Corporation's investment in technology
improvements allows for shorter production lead times and a more efficient
retail distribution system. The Corporation's ability to more quickly offer
fresher, more innovative cards to the marketplace is key to this strategy.
Primarily as a result of this initiative, the Corporation believes Fiscal 2000
revenues will be reduced by approximately $100 million with full year 2000
earnings per share declining to approximately $2.00 to $2.10, excluding
non-recurring items. However, management remains committed to long-term growth
in both revenue and earnings per share derived from the benefits of product
innovation, cost structure optimization, and improvements in manufacturing
efficiencies.
21
<PAGE> 22
During the third quarter of 1999, the Corporation announced plans to enhance
profitability by targeting removal of $20 to $30 million from the cost structure
of the Corporation. As noted under Non-recurring Items, the Corporation
initiated the first phase of this restructure by recording a pretax charge of
$13.9 million primarily related to its domestic operations. The Corporation will
continue to conduct an evaluation of its international manufacturing and
distribution capabilities, focusing on additional cost savings and expects to
record an additional restructure charge during fiscal 2000 as part of this
initiative.
The Corporation has maintained a strong customer base in a wide variety of
channels of distribution through its investment in deferred costs related to
agreements with certain retailers and other competitive arrangements. The
agreements have lessened the impact to the Corporation from loss of business due
to the retailer consolidations which continued in 1999. These agreements have
been a strategic element of the Corporation's growth and the financial condition
of the retail customers is continually evaluated and monitored to reduce risk.
The Corporation has included in the Annual Report certain information other than
historical facts that may constitute "forward-looking" information. Actual
results may differ materially from those projected in the "forward-looking"
statements, including but not limited to the risks discussed above, as well as
retail bankruptcies, a weak retail environment and competitive terms of sale
offered to customers to expand or maintain business. Other risks, which are not
all-inclusive, include costs associated with correcting the Year 2000 issues, as
well as economic conditions in the various markets served by the Corporation's
operations.
22
<PAGE> 23
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
DERIVATIVE FINANCIAL INSTRUMENTS - The Corporation does not hold or
issue derivative financial instruments for trading purposes. As of February 28,
1999, the Corporation's subsidiary in Australia held a derivative financial
instrument to manage its exposure to fluctuations in interest rates, which is
not material to the Corporation. See Note H to the Consolidated Financial
Statements for a further discussion of the instrument.
INTEREST RATE EXPOSURE - Based on the Corporation's overall interest
rate exposure as of and during the year ended February 28, 1999, a hypothetical
10% movement in interest rates would not materially affect the Corporation's
results of operations.
FOREIGN CURRENCY EXPOSURE - The Corporation's international operations
expose it to translation risk when the local currency financial statements are
translated into U.S. dollars. As currency exchange rates fluctuate, translation
of the statements of income of international subsidiaries into U.S. dollars
could affect comparability of results between years. The earnings of the
Corporation were not materially affected by exchange rate fluctuations for the
years ended February 28, 1999, 1998 or 1997. At February 28, 1999, a
hypothetical 10% movement in foreign exchange rates would not have a material
effect on the Corporation's results of operations.
See Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations", for a discussion of the Corporation's
exposure to foreign currency translation risk.
23
<PAGE> 24
Item 8. Financial Statements and Supplementary Data
CONSOLIDATED STATEMENT OF INCOME
Years ended February 28, 1999, 1998 and 1997
Thousands of dollars except per share amounts
<TABLE>
<CAPTION>
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Net sales $ 2,205,706 $ 2,198,765 $ 2,161,089
Costs and expenses:
Material, labor and other production costs 757,080 790,688 805,124
Selling, distribution and marketing 894,323 876,822 839,916
Administrative and general 228,183 233,457 234,838
Non-recurring items 13,925 (22,125) --
Interest 29,326 22,992 30,749
Other expense (income) 1,272 4,494 (3,868)
------------ ------------ ------------
1,924,109 1,906,328 1,906,759
------------ ------------ ------------
Income before income taxes 281,597 292,437 254,330
Income taxes 101,375 102,353 87,235
------------ ------------ ------------
Net income $ 180,222 $ 190,084 $ 167,095
============ ============ ============
Earnings per share $ 2.56 $ 2.58 $ 2.23
============ ============ ============
Earnings per share - assuming dilution $ 2.53 $ 2.55 $ 2.22
============ ============ ============
Average number of shares outstanding 70,345,980 73,708,100 74,818,960
</TABLE>
See notes to consolidated financial statements.
24
<PAGE> 25
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
February 28, 1999 and 1998
Thousands of dollars
<TABLE>
<CAPTION>
ASSETS 1999 1998
---------- ----------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 144,555 $ 47,623
Trade accounts receivable, less allowances for
sales returns of $132,103 ($135,584 in 1998) and
for doubtful accounts of $15,583 ($15,661 in 1998) 390,740 373,594
Inventories 251,289 271,205
Deferred income taxes 133,092 120,507
Prepaid expenses and other 226,142 210,316
---------- ----------
Total current assets 1,145,818 1,023,245
GOODWILL 135,516 84,741
OTHER ASSETS 703,188 605,846
PROPERTY, PLANT AND EQUIPMENT - NET 434,806 447,632
---------- ----------
$2,419,328 $2,161,464
========== ==========
</TABLE>
25
<PAGE> 26
CONSOLIDATED STATEMENT OF FINANCIAL POSITION - CONTINUED
February 28, 1999 and 1998
Thousands of dollars
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY 1999 1998
------------ ------------
<S> <C> <C>
CURRENT LIABILITIES
Debt due within one year $ 17,777 $ 199,640
Accounts payable and accrued liabilities 175,366 145,554
Accrued compensation and benefits 89,284 84,997
Dividends payable 26,337 12,813
Income taxes 27,165 22,536
Other current liabilities 81,745 51,676
------------ ------------
Total current liabilities 417,674 517,216
LONG-TERM DEBT 463,246 148,800
OTHER LIABILITIES 142,045 107,509
DEFERRED INCOME TAXES 49,752 42,722
SHAREHOLDERS' EQUITY Common shares - par value $1:
Class A - 71,717,174 shares issued
less 7,283,846 Treasury shares in 1999
and 71,321,420 shares issued less
4,417,399 Treasury shares in 1998 64,433 66,904
Class B - 6,066,096 shares issued
less 1,405,711 Treasury shares in 1999
and 6,066,096 shares issued less
1,787,665 Treasury shares in 1998 4,660 4,278
Capital in excess of par value 304,086 290,820
Treasury stock (320,492) (200,380)
Accumulated other comprehensive loss (23,565) (23,437)
Retained earnings 1,317,489 1,207,032
------------ ------------
Total shareholders' equity 1,346,611 1,345,217
------------ ------------
$ 2,419,328 $ 2,161,464
============ ============
</TABLE>
See notes to consolidated financial statements.
26
<PAGE> 27
CONSOLIDATED STATEMENT OF CASH FLOWS
Years ended February 28, 1999, 1998 and 1997
Thousands of dollars
<TABLE>
<CAPTION>
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 180,222 $ 190,084 $ 167,095
Adjustments to reconcile to net cash
provided by operating activities:
Non-recurring items 5,544 (22,125) --
Depreciation 67,049 65,926 64,566
Deferred income taxes (8,940) (20,186) 294
Changes in operating assets and liabilities, net of effects from
divestiture and acquisition:
Increase in trade accounts receivable (10,450) (20,567) (25,389)
Decrease in inventories 17,809 5,915 32,371
Increase in other current assets (3,271) (4,232) (2,050)
Increase in deferred costs - net (65,588) (15,043) (93,961)
Increase in accounts payable and other liabilities 24,211 10,402 5,877
Other - net 4,682 5,018 5,100
---------- ---------- ----------
Cash Provided by Operating Activities 211,268 195,192 153,903
INVESTING ACTIVITIES:
Business (acquisition) divestiture (52,957) 82,000 --
Property, plant and equipment additions (60,950) (67,898) (92,895)
Proceeds from sale of fixed assets 2,522 2,148 2,579
Investment in corporate-owned life insurance 18,413 (6,358) (8,454)
Other 8,040 2,057 (6,283)
---------- ---------- ----------
Cash (Used) Provided by Investing Activities (84,932) 11,949 (105,053)
FINANCING ACTIVITIES:
Increase in long-term debt 317,096 9,430 8,451
Reduction of long-term debt (22,669) (6,988) (12,232)
(Decrease) increase in short-term debt (158,657) 8,049 4,869
Sale of stock under benefit plans 18,981 16,915 6,997
Purchase of treasury shares (131,745) (170,015) (1,863)
Dividends to shareholders (52,410) (51,959) (50,152)
---------- ---------- ----------
Cash Used by Financing Activities (29,404) (194,568) (43,930)
---------- ---------- ----------
INCREASE IN CASH AND EQUIVALENTS 96,932 12,573 4,920
Cash and Equivalents at Beginning of Year 47,623 35,050 30,130
---------- ---------- ----------
Cash and Equivalents at End of Year $ 144,555 $ 47,623 $ 35,050
========== ========== ==========
</TABLE>
See notes to consolidated financial statements.
27
<PAGE> 28
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Years ended February 28, 1999, 1998 and 1997
Thousands of dollars except per share amounts
<TABLE>
<CAPTION>
Common Shares Capital in Shares Held
------------- Excess of Treasury In Trust
Class A Class B Par Value Stock
---------------------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C>
BALANCE MARCH 1, 1996 $70,148 $4,560 $265,387 $ (32,835) $ -
Net income
Other comprehensive income:
Foreign currency translation adjustment
Comprehensive income
Cash dividends - $0.67 per share
Exchange of shares 131 (131)
Sale of shares under benefit
plans, including tax benefits 323 44 6,872 587
Purchase of treasury shares (8) (85) (2,609)
Sale of treasury shares 3 7
----------- -------- ---------- ----------- ------------
BALANCE FEBRUARY 28, 1997 70,594 4,388 272,262 (34,850) -
Net income
Other comprehensive income:
Foreign currency translation adjustment
Comprehensive income
Cash dividends - $0.71 per share
Exchange of shares 107 (107)
Sale of shares under benefit
plans, including tax benefits 713 33 18,386 438
Purchase of treasury shares (4,510) (45) (166,105)
Sale of treasury shares 9 172 137
--------- --------- ---------- ----------- ------------
BALANCE FEBRUARY 28, 1998 66,904 4,278 290,820 (200,380) -
Net income
Other comprehensive income:
Foreign currency translation adjustment
Unrealized gain on available-for-sale
securities (net of tax)
Comprehensive income
Issuance of shares to trust (20,480)
Cash dividends - $0.94 per share
Exchange of shares 40 (40)
Sale of shares under benefit
plans, including tax benefits 395 574 13,033 8,403
Purchase of treasury shares (2,906) (162) (128,677)
Sale of treasury shares 10 233 162
--------- --------- ---------- ----------- ------------
BALANCE FEBRUARY 28, 1999 $64,433 $4,660 $304,086 $(320,492) $(20,480)
========= ========= ========== =========== ============
</TABLE>
<TABLE>
<CAPTION>
Accumulated
Deferred Other
Compensation Comprehensive Retained
Plans Income (Loss) Earnings Total
-------------- ---------------- ------------ ------------
<S> <C> <C> <C> <C>
BALANCE MARCH 1, 1996 $ - $(24,202) $ 951,964 $1,235,022
Net income 167,095 167,095
Other comprehensive income:
Foreign currency translation adjustment 4,556 4,556
------------
Comprehensive income 171,651
Cash dividends - $0.67 per share (50,152) (50,152)
Exchange of shares
Sale of shares under benefit
plans, including tax benefits 7,826
Purchase of treasury shares (2,702)
Sale of treasury shares 10
-------------- ---------------- ------------ ------------
BALANCE FEBRUARY 28, 1997 - (19,646) 1,068,907 1,361,655
Net income 190,084 190,084
Other comprehensive income:
Foreign currency translation adjustment (3,791) (3,791)
------------
Comprehensive income 186,293
Cash dividends - $0.71 per share (51,959) (51,959)
Exchange of shares
Sale of shares under benefit
plans, including tax benefits 19,570
Purchase of treasury shares (170,660)
Sale of treasury shares 318
-------------- ---------------- ------------ ------------
BALANCE FEBRUARY 28, 1998 - (23,437) 1,207,032 1,345,217
Net income 180,222 180,222
Other comprehensive income:
Foreign currency translation adjustment (6,819) (6,819)
Unrealized gain on available-for-sale
securities (net of tax) 6,691 6,691
------------
Comprehensive income 180,094
Issuance of shares to trust 20,480 -
Cash dividends - $0.94 per share (65,935) (65,935)
Exchange of shares
Sale of shares under benefit
plans, including tax benefits (3,830) 18,575
Purchase of treasury shares (131,745)
Sale of treasury shares 405
-------------- ---------------- ------------ ------------
BALANCE FEBRUARY 28, 1999 $20,480 $(23,565) $1,317,489 $1,346,611
============== ================ ============ ============
</TABLE>
See notes to consolidated financial statements.
28
<PAGE> 29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended February 28, 1999, 1998 and 1997
Thousands of dollars except per share amounts
NOTE A - SIGNIFICANT ACCOUNTING POLICIES
Consolidation: The consolidated financial statements include the accounts of the
Corporation and its subsidiaries. All significant intercompany accounts and
transactions are eliminated.
Reclassifications: Certain amounts in the prior year financial statements have
been reclassified to conform with the 1999 presentation.
Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Cash Equivalents: The Corporation considers all highly liquid instruments
purchased with a maturity of less than three months to be cash equivalents.
Financial Instruments: The carrying value of the Corporation's financial
instruments approximate their fair market values.
Concentration of Credit Risks: The Corporation sells primarily to customers in
the retail trade, including those in the mass merchandiser, drug store,
supermarket and other channels of distribution. These customers are located
throughout the United States, Canada, the United Kingdom, Australia, New
Zealand, France, Mexico and South Africa. Sales to the Corporation's five
largest customers accounted for approximately 32% of net sales in 1999.
The Corporation conducts business based on periodic evaluations of its
customers' financial condition and generally does not require collateral. While
the competitiveness of the retail industry presents an inherent uncertainty, the
Corporation does not believe a significant risk of loss from a concentration of
credit exists.
Inventories: Finished products, work in process and raw material inventories are
carried at the lower of cost or market. The last-in, first-out (LIFO) cost
method is principally used for the majority of the domestic inventories. The
foreign subsidiaries principally use the first-in, first-out method. Display
material and factory supplies are carried at average cost.
Investment in Life Insurance: The Corporation's investment in corporate-owned
life insurance policies is recorded in other assets net of policy loans. The net
life insurance expense, including interest expense, is included in
administrative and general expenses in the Consolidated Statement of Income. The
related interest expense, which approximates amounts paid, was $54,670, $59,642
and $67,788 in 1999, 1998 and 1997, respectively.
29
<PAGE> 30
Goodwill: Goodwill represents the excess of purchase price over the estimated
fair value of net assets acquired and is amortized on a straight-line basis over
a period of 40 years for goodwill associated with the social expression product
segment and 15 years for goodwill associated with all other businesses.
Accumulated amortization of goodwill at February 28, 1999 and 1998 was $20,851
and $14,407, respectively. Goodwill is reviewed annually for impairment in
accordance with Statement of Financial Accounting Standards No. 121, "Accounting
for the Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of"
(SFAS No. 121).
Property and Depreciation: Property, plant and equipment are carried at cost.
Depreciation and amortization of buildings, equipment and fixtures is computed
principally by the straight-line method over the useful lives of the various
assets. The cost of buildings is depreciated over 25 to 40 years and equipment
and fixtures over 3 to 20 years. Property, plant and equipment are reviewed
annually for impairment in accordance with SFAS No. 121.
Revenue Recognition: Sales and related costs are recorded by the Corporation
upon shipment of products to non-related retailers and upon the sale of products
at Corporation-owned retail locations. Seasonal cards are sold with the right of
return on unsold merchandise. The Corporation provides for estimated returns of
seasonal cards when those products are shipped to non-related retailers.
Advertising Expense: Advertising costs are expensed as incurred. Advertising
expense was $67,369, $61,062 and $58,794 in 1999, 1998 and 1997, respectively.
Other Expense (Income): Other expense (income) consists primarily of costs to
convert the Corporation's computer systems to be Year 2000 compliant,
amortization of goodwill, foreign exchange gains and losses, gains and losses on
asset disposals, and royalty and interest income.
Income Taxes: Deferred income taxes are provided for temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and amounts used for income tax purposes.
Stock-Based Compensation: The Corporation has elected to follow Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" and
related interpretations in accounting for its employee stock options. Because
the exercise price of the Corporation's employee stock options equals the market
price of the underlying stock on the date of grant, no compensation expense is
recognized. The Corporation has adopted the disclosure-only provisions of
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation".
30
<PAGE> 31
Accounting Standards Changes: In 1999, the Corporation adopted the following
Statements of Financial Accounting Standards ("SFAS"):
- - SFAS No. 130, "Reporting Comprehensive Income", which requires the
components of comprehensive income to be disclosed in the financial
statements.
- - SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information", which requires disclosures of certain information about the
Corporation's operating segments on a basis consistent with the way in
which the Corporation is managed and operated.
- - SFAS No. 132, "Employer's Disclosures about Pensions and Other
Postretirement Benefits", which revises disclosures about pensions and
other postretirement benefits and requires presentation of information
about such plans in a standardized format.
Adoption of these new standards required that the Corporation reclassify prior
years' information and make certain new disclosures in the notes to the
consolidated statements.
New Pronouncements: In June 1998, SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", was issued. This standard, which
establishes new accounting and reporting standards for derivative financial
instruments, must be adopted no later than 2001. The Corporation is currently
analyzing the effect of this standard and does not expect it to have a material
effect on the Corporation's consolidated financial position, results of
operations or cash flows.
31
<PAGE> 32
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE B - NON-RECURRING ITEMS
During the quarter ended November 30, 1998, the Corporation recorded a
restructuring charge of $13,925 ($8,342 net of tax, or earnings per share of
$0.12). The primary components of this charge were employee severance and
termination benefit costs associated with a headcount reduction of approximately
300 management, salaried and clerical positions. The balance of the charge is
comprised of costs associated with exiting the Corporation's kiosk business and
lease exit costs due to the closure of certain sales offices. At February 28,
1999, $5,544 was included in accounts payable and accrued liabilities,
representing the portion of the restructuring charge not yet expended.
On August 12, 1997, the Corporation divested the net assets of two subsidiaries,
Acme Frame Products, Inc., a manufacturer and distributor of picture frames, and
Wilhold, Inc., a manufacturer and distributor of hair accessories. As a result
of the transaction, the Corporation recorded a one-time pre-tax gain of $22,125
($13,192 net of tax, or earnings per share of $0.18).
NOTE C - EARNINGS PER SHARE
The following table sets forth the computation of earnings per share and
earnings per share - assuming dilution:
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Numerator:
Net income, earnings per share and earnings
per share - assuming dilution $180,222 $190,084 $167,095
======== ======== ========
Denominator (thousands):
Denominator for earnings per share
- weighted average shares outstanding 70,346 73,708 74,819
Effect of dilutive securities - stock options 758 838 507
-------- -------- --------
Denominator for earnings per share - assuming dilution
- adjusted weighted average shares outstanding 71,104 74,546 75,326
======== ======== ========
Earnings per share $ 2.56 $ 2.58 $ 2.23
======== ======== ========
Earnings per share - assuming dilution $ 2.53 $ 2.55 $ 2.22
======== ======== ========
</TABLE>
32
<PAGE> 33
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE D - COMPREHENSIVE INCOME
In 1999, the Corporation adopted Statement of Financial Accounting Standards No.
130, "Reporting Comprehensive Income" (SFAS No. 130). SFAS No. 130 establishes
new rules for the reporting and display of comprehensive income and its
components; however, the adoption of this statement had no impact on the
Corporation's net income or shareholders' equity. SFAS No. 130 requires other
comprehensive income to include foreign currency translation adjustments and
unrealized gains on available-for-sale securities, which prior to adoption were
reported separately in shareholders' equity.
Accumulated other comprehensive income (loss) consists of the following
components:
<TABLE>
<CAPTION>
Foreign Currency Unrealized Gains Accumulated
Translation on Other
Adjustments Available-For-Sale Comprehensive
Securities Income (Loss)
----------------- ----------------------- ---------------------
<S> <C> <C> <C>
Balance at March 1, 1996 $(24,202) $(24,202)
Other comprehensive income 4,556 4,556
----------------- ---------------------
Balance at February 28, 1997 (19,646) (19,646)
Other comprehensive loss (3,791) (3,791)
----------------- ---------------------
Balance at February 28, 1998 (23,437) (23,437)
Other comprehensive income (loss) (6,819) $6,691 (128)
----------------- ----------------------- ---------------------
Balance at February 28, 1999 $(30,256) $6,691 $(23,565)
================= ======================= =====================
</TABLE>
33
<PAGE> 34
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE E - INVENTORIES
<TABLE>
<CAPTION>
1999 1998
----------------- ---------------
<S> <C> <C>
Raw material $ 37,745 $ 42,641
Work in process 25,523 37,204
Finished products 229,220 240,845
----------------- ---------------
292,488 320,690
Less LIFO reserve 89,207 90,130
----------------- ---------------
203,281 230,560
Display material and factory supplies 48,008 40,645
----------------- ---------------
$ 251,289 $ 271,205
================= ===============
</TABLE>
NOTE F - PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
1999 1998
----------------- ---------------
<S> <C> <C>
Land $ 11,288 $ 11,910
Buildings 281,726 279,395
Equipment and fixtures 665,609 647,438
----------------- ---------------
958,623 938,743
Less accumulated depreciation 523,817 491,111
----------------- ---------------
$ 434,806 $ 447,632
================= ===============
</TABLE>
34
<PAGE> 35
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE G - DEFERRED COSTS
Deferred costs relating to agreements with certain customers are charged to
operations on a straight-line basis over the effective period of each agreement,
generally three to six years. Deferred costs estimated to be charged to
operations during the next year are classified with prepaid expenses and other.
Total commitments under the agreements are capitalized as deferred costs and
future payment commitments, if any, are recorded as liabilities when the
agreements are consummated.
At February 28, 1999 and 1998 deferred costs and future payment commitments are
included in the following financial statement captions:
<TABLE>
<CAPTION>
1999 1998
----------------- ---------------
<S> <C> <C>
Prepaid expenses and other $ 192,619 $ 179,818
Other assets 595,136 481,236
Other current liabilities (81,745) (51,676)
Other liabilities (113,799) (81,080)
----------------- ---------------
$ 592,211 $ 528,298
================= ===============
</TABLE>
35
<PAGE> 36
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE H - LONG AND SHORT-TERM DEBT
On May 20, 1998, the Corporation filed a Form S-3 Registration Statement with
the Securities and Exchange Commission for a shelf registration to issue up to
$600,000 of debt securities. Under the registration, the Corporation on July 27,
1998 completed the sale of $300,000 of 30-year senior notes with a 6.10% coupon
rate. The majority of the proceeds were used to retire commercial paper and
other short-term debt, with the remainder used for other general corporate
purposes and short-term investments.
On August 7, 1998, the Corporation entered into a new multi-currency credit
facility to provide liquidity and working capital financing for the Corporation
and its subsidiaries in the United States, Canada, the United Kingdom,
Australia, New Zealand and France. The aggregate availability under this
facility is approximately $715,000 of which approximately $546,000 is available
at February 28, 1999. The United States and one-half of the Canadian portions of
the facilities, totaling $499,740, mature on August 6, 1999. The balance of the
facility matures on August 7, 2003. The United States and Canadian portions of
the facility are annually renewable for additional 364-day periods and are
convertible to term loans with a maturity of August 7, 2003. A facility fee is
due on the aggregate amount of the facility and can vary with the Corporation's
debt rating. At February 28, 1999, the facility fee is 0.075% for the non-364
day portion of the facility and 0.065% for the 364-day portion.
The borrowings of the Corporation in Canada consist solely of commercial paper.
At February 28, 1999, commercial paper borrowings were $81,824, of which $66,320
is classified as long-term. The commercial paper borrowings are supported by the
multi-currency credit facility described above.
The Corporation's subsidiaries in Mexico and South Africa have credit agreements
permitting borrowings of up to $2,088. At February 28, 1999, $1,250 is
outstanding under these foreign revolving credit facilities.
All of the Corporation's revolving credit and term loan agreements provide for
various borrowing alternatives in their respective currencies with interest
rates generally ranging from 5.0% to 9.0% for amounts borrowed as of February
28, 1999.
At February 28, 1999 and 1998, debt due within one year consists of the
following:
<TABLE>
<CAPTION>
1999 1998
------------------- ------------------
<S> <C> <C>
Current maturities of long-term debt $ 968 $ 695
Foreign revolving credit facilities 1,250 46,505
------------------- ------------------
Aggregate current maturities 2,218 47,200
Commercial paper 15,504 148,855
Other short-term debt 55 3,585
------------------- ------------------
$ 17,777 $ 199,640
=================== ==================
</TABLE>
36
<PAGE> 37
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE H - LONG AND SHORT-TERM DEBT (CONTINUED)
At February 28, 1999 and 1998, long-term debt consists of the following:
<TABLE>
<CAPTION>
1999 1998
---------------- ----------------
<S> <C> <C>
Revolving credit, commercial paper and
term loan agreements $ 154,674 $ 193,224
Notes payable 310,145 -
Other 645 2,776
---------------- ----------------
465,464 196,000
Less current maturities 2,218 47,200
---------------- ----------------
$ 463,246 $ 148,800
================ ================
</TABLE>
Aggregate maturities of long-term debt are as follows:
<TABLE>
<S> <C>
2000 $ 2,218
2001 1,221
2002 11,723
2003 33
2004 153,424
Thereafter 296,845
------------------
$ 465,464
==================
</TABLE>
At February 28, 1999 the Corporation had credit arrangements to support the
issuance of letters of credit in the amount of $99,181 with $21,450 of open
credits outstanding.
Interest paid on short-term and long-term debt was $27,831 in 1999, $22,735 in
1998 and $29,914 in 1997.
The weighted average interest rate on short-term borrowings outstanding was 5.1%
and 5.8% as of February 28, 1999 and 1998, respectively.
37
<PAGE> 38
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE H - LONG AND SHORT-TERM DEBT (CONTINUED)
As of February 28, 1999, the Corporation's subsidiary in Australia has an
interest rate swap agreement for notional borrowings of $30,950 under which the
Corporation pays a fixed rate and receives a floating rate. The pay rate and
receive rate under this agreement are 5.1% and 4.8%, respectively. This
agreement matures October 3, 1999. The floating rate under the agreement is
based on the three-month Australian Bank Bill Rate. Net payments or receipts
under the agreement are recognized as an adjustment to interest expense. The
agreement was entered into with a major financial institution, and the
Corporation anticipates that the financial institution will satisfy its
obligations under the agreement. The Corporation guarantees payment of the
subsidiary's obligations under the swap agreement. No collateral is held in
relation to the agreement.
NOTE I - RETIREMENT PLANS
The Corporation has a non-contributory profit-sharing plan with a contributory
401(k) provision covering most of its United States employees. Contributions to
the profit-sharing plan were $22,687, $23,850 and $22,990 for 1999, 1998 and
1997, respectively. The Corporation matches a portion of 401(k) employee
contributions contingent upon meeting specified annual operating results goals.
The Corporation's matching contributions were $4,622, $2,802 and $2,698 for
1999, 1998 and 1997, respectively.
The Corporation also has several defined benefit and defined contribution
pension plans covering certain employees in foreign countries. The cost of these
plans was not material in any of the years presented. In the aggregate, the
actuarially computed plan benefit obligation approximates the fair value of the
plan assets.
38
<PAGE> 39
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE J - POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Corporation sponsors a defined benefit health care plan that provides
postretirement medical benefits to full-time United States employees who are age
65 or over at retirement with 15 or more years of service and who were hired on
or before December 31, 1991. In addition, for retirements on or after January 2,
1992 the retiree must have been continuously enrolled for health care for a
minimum of five years or since January 2, 1992. The plan is contributory, with
retiree contributions adjusted periodically, and contains other cost-sharing
features such as deductibles and coinsurance. The Corporation maintains a trust
for the payment of retiree health care benefits. This trust is funded at the
discretion of management.
<TABLE>
<CAPTION>
1999 1998
--------------- ----------------
<S> <C> <C>
Change in benefit obligation:
Benefit obligation at beginning of year $ 63,677 $ 51,327
Service cost 1,817 1,711
Interest cost 4,702 4,282
Actuarial losses 9,183 10,951
Benefit payments (4,103) (4,594)
--------------- ----------------
Benefit obligation at end of year 75,276 63,677
--------------- ----------------
Change in plan assets:
Fair value of plan assets at beginning of year 39,760 32,358
Actual return on plan assets 3,072 5,093
Contributions 5,985 6,903
Benefit payments (4,103) (4,594)
--------------- ----------------
Fair value of plan assets at year end 44,714 39,760
--------------- ----------------
Funded status at February 28 (30,562) (23,917)
Unrecognized loss 21,774 13,314
---------------- ----------------
Accrued benefit cost recognized in the consolidated
statement of financial position $ (8,788) $(10,603)
================ ================
</TABLE>
39
<PAGE> 40
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE J - POSTRETIREMENT BENEFITS OTHER THAN PENSIONS (CONTINUED)
<TABLE>
<CAPTION>
1999 1998
---------------- ---------------
<S> <C> <C>
Components of net periodic benefit cost:
Service cost $1,817 $1,711
Interest cost 4,702 4,282
Expected return on plan assets (3,064) (2,508)
Amortization of actuarial loss 716 598
---------------- ---------------
Net periodic benefit cost $4,171 $4,083
================ ===============
Weighted average assumptions as of February 28:
Discount rate 6.75% 7.25%
Expected long-term return on plan assets 8.00% 8.00%
Health care cost trend rate 5.00% 5.00%
Effect of a 1% increase in health care cost trend rate on:
Service cost plus interest cost $ 1,295
Accumulated postretirement benefit obligation 13,447
Effect of a 1% decrease in health care cost trend rate on:
Service cost plus interest cost $ (1,015)
Accumulated postretirement benefit obligation (10,726)
</TABLE>
40
<PAGE> 41
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE K - LONG-TERM LEASES
The Corporation is committed under noncancelable operating leases for commercial
properties (certain of which have been subleased) and equipment, terms of which
are generally less than 25 years. Rental expense under operating leases for the
years ended February 28, 1999, 1998 and 1997 follows:
<TABLE>
<CAPTION>
1999 1998 1997
--------------- -------------- --------------
<S> <C> <C> <C>
Gross rentals $ 58,616 $ 57,320 $ 59,228
Less sublease rentals 4,470 4,985 7,423
--------------- -------------- --------------
Net rental expense $ 54,146 $ 52,335 $ 51,805
=============== ============== ==============
</TABLE>
At February 28, 1999, future minimum rental payments for noncancelable operating
leases, net of aggregate future minimum noncancelable sublease rentals, follow:
<TABLE>
<S> <C>
Gross Rentals:
2000 $ 46,746
2001 41,449
2002 35,278
2003 28,563
2004 22,941
Later years 57,187
----------------
232,164
Sublease rentals (15,202)
----------------
Net rentals $ 216,962
================
</TABLE>
41
<PAGE> 42
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE L - COMMON SHARES AND STOCK OPTIONS
At February 28, 1999 and 1998, common shares authorized consisted of:
<TABLE>
<CAPTION>
Class A Class B
------------------- ----------------
<S> <C> <C>
1999 187,600,000 15,832,968
1998 93,800,000 7,916,484
</TABLE>
Class A shares have one vote per share and Class B shares have ten votes per
share. There is no public market for the Class B common shares of the
Corporation. Pursuant to the Corporation's Amended Articles of Incorporation, a
holder of Class B common shares may not transfer such Class B common shares
(except to permitted transferees, a group that generally includes members of the
holder's extended family, family trusts and charities) unless such holder first
offers such shares to the Corporation for purchase at the most recent closing
price for the Corporation's Class A common shares. If the Corporation does not
purchase such Class B common shares, the holder must convert such shares, on a
share for share basis, into Class A common shares prior to any transfer.
Under the Corporation's Stock Option Plans, options to purchase Class A and
Class B shares are granted to directors, officers and other key employees at the
then-current market price. In general, subject to continuing employment, options
become exercisable commencing one year after date of grant in four annual
installments and expire over a period of not more than ten years from the date
of grant. The options granted to non-employee directors become exercisable in
six installments over five years.
The Corporation has elected to follow Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" (APB 25) and related
Interpretations in accounting for its employee stock options because, as
discussed below, the alternative fair value accounting provided for under
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (SFAS No. 123), requires use of option valuation models that were
not developed for use in valuing employee stock options. Under APB 25, because
the exercise price of the Corporation's employee stock options equals the market
price of the underlying stock on the date of grant, no compensation expense is
recognized.
Pro forma information regarding net income and earnings per share is required by
SFAS No. 123 and has been determined as if the Corporation had accounted for its
employee stock options issued subsequent to February 28, 1995 under the fair
value method of that Statement. The fair value for these options was estimated
at the date of grant using the Black-Scholes option pricing model.
42
<PAGE> 43
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE L - COMMON SHARES AND STOCK OPTIONS (CONTINUED)
The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility. Because
the Corporation's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.
For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options' vesting period. The pro forma
information for stock options indicates decreases in net income of $3,248 in
1999, $4,931 in 1998 and $2,347 in 1997. The pro forma information and related
assumptions under the Black-Scholes method follow:
<TABLE>
<CAPTION>
1999 1998 1997
-------------- --------------- ---------------
<S> <C> <C> <C>
Net income $ 176,974 $ 185,153 $ 164,748
Earnings per share $ 2.52 $ 2.51 $ 2.20
Earnings per share - assuming dilution $ 2.49 $ 2.48 $ 2.19
Assumptions:
Risk-free interest rate 5.4% 6.1% 6.4%
Dividend yield 1.6% 2.0% 2.4%
Expected stock volatility 0.27 0.26 0.25
Expected life in years:
Grant date to exercise date 5.6 5.6 4.6
Vest date to exercise date 2.4 2.3 2.1
</TABLE>
43
<PAGE> 44
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE L - COMMON SHARES AND STOCK OPTIONS (CONTINUED)
Stock option transactions and prices are summarized as follow:
<TABLE>
<CAPTION>
Number of Options Weighted-Average Exercise Price Per Share
------------------------------------ ----------------------------------------------------
Class A Class B Class A Class B
---------------- ---------------- ------------------------- ----------------------
<S> <C> <C> <C> <C>
Options outstanding
February 29, 1996 1,466,997 740,090 $ 20.29 $ 11.01
Granted 891,595 215,922 27.29 27.32
Exercised (317,409) (43,500) 18.10 19.31
Cancelled (84,800) - 27.13 -
---------------- ----------------
Options outstanding
February 28, 1997 1,956,383 912,512 $ 23.57 $ 14.42
Granted 1,453,677 470,000 30.45 29.50
Exercised (616,675) (33,500) 21.14 19.85
Cancelled (182,250) - 28.96 -
---------------- ----------------
Options outstanding
February 28, 1998 2,611,135 1,349,012 $ 27.58 $ 19.54
Granted 189,850 596 45.73 48.06
Exercised (395,754) (573,422) 25.54 9.07
Cancelled (127,200) (7,000) 30.25 26.13
---------------- ----------------
Options outstanding
February 28, 1999 2,278,031 769,186 $ 29.18 $ 27.30
================ ================
Options exercisable at February 28:
1999 1,235,331 490,936 $ 26.23 $ 26.23
1998 1,077,035 902,262 24.42 14.84
1997 1,169,083 689,762 20.90 12.79
</TABLE>
The weighted average remaining contractual life of the options outstanding as of
February 28, 1999 is 6.9 years.
44
<PAGE> 45
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE L - COMMON SHARES AND STOCK OPTIONS (CONTINUED)
Range of exercise prices for options outstanding:
<TABLE>
<CAPTION>
Outstanding Exercisable
----------------------------------- ---------------------------------
Weighted-
Weighted- Weighted- Average
Average Average Remaining
Exercise Optioned Exercise Optioned Exercise Contractual Life
Price Ranges Shares Price Shares Price (Years)
- ------------------------- --------------- --------------- -------------- --------------- ------------------
<S> <C> <C> <C> <C> <C>
$11.44 - 26.00 493,000 $19.79 481,800 $19.67 3.2
26.13 - 27.25 703,792 27.17 521,142 27.16 6.9
27.50 - 29.38 74,187 28.43 51,337 28.42 6.2
29.50 - 30.00 1,376,142 29.50 605,042 29.50 7.9
30.13 - 51.63 400,096 39.70 66,946 34.99 8.7
--------------- --------------
3,047,217 1,726,267
=============== ==============
</TABLE>
45
<PAGE> 46
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE M - BUSINESS SEGMENT INFORMATION
The Corporation is organized and managed according to a number of factors,
including product categories, geographic locations and channels of distribution.
The Social Expression Products segment primarily designs, manufactures and sells
greeting cards and other products through various channels of distribution with
mass retailers as the primary channel. As permitted under Statement of Financial
Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and
Related Information," certain operating divisions have been aggregated into one
reportable segment. These operating divisions have similar economic
characteristics, products, production processes, types of customers and
distribution methods.
The Corporation's non-reportable operating segments include the design,
manufacture and sale of promotional Christmas product, non-prescription reading
glasses, educational materials and display fixtures; personalized and e-mail
greeting cards; and the sale of both the Corporation's products and other
products through retail stores.
The Corporation evaluates segment performance based on earnings before foreign
currency exchange gains or losses, interest income, interest expense and income
taxes. Centrally incurred and managed costs and non-recurring items are not
allocated back to the operating segments. The accounting policies of the
reportable segments are the same as those described in Note A - Significant
Accounting Policies, except those that are related to LIFO or applicable to only
corporate items.
Intersegment sales are recorded at wholesale prices. Intersegment sales and
profits are eliminated in consolidation. All inventories resulting from
intersegment sales are carried at cost.
The reporting and evaluation of segment assets include net accounts receivable,
inventory on a "first-in, first-out" basis, display materials and factory
supplies, prepaid expenses, other assets (including net deferred costs), and net
property, plant and equipment.
Segment results are reported and evaluated at consistent exchange rates between
years to eliminate the impact of foreign currency fluctuations. An exchange rate
adjustment is included in the reconciliation of the segment results to the
consolidated results; this adjustment represents the impact on the segment
results of the difference between the exchange rates used for segment reporting
and evaluation and the actual exchange rates for the periods presented.
46
<PAGE> 47
<TABLE>
<CAPTION>
OPERATING SEGMENT INFORMATION
Net Sales Earnings
------------------------------------------- ---------------------------------------
1999 1998 1997 1999 1998 1997
------------- ----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Social Expressions Products $1,854,106 $1,786,756 $1,737,883 $450,512 $418,078 $410,915
Intersegment items (83,004) (77,836) (69,534) (58,409) (52,172) (45,653)
------------- ----------- ----------- ----------- ----------- ----------
Net 1,771,102 1,708,920 1,668,349 392,103 365,906 365,262
Non-reportable segments 454,796 487,884 481,157 41,679 30,486 16,838
Non-recurring items - - - (13,925) 22,125 -
Exchange rate adjustment (20,192) 1,961 11,583 (1,619) (16) 402
Unallocated items - net - - - (136,641) (126,064) (128,172)
------------- ----------- ----------- ----------- ----------- ----------
Consolidated $2,205,706 $2,198,765 $2,161,089 $281,597 $292,437 $254,330
============= =========== =========== =========== =========== ==========
Assets Depreciation
---------------------------------------------- -------------------------------------
1999 1998 1997 1999 1998 1997
------------ ------------ ------------- --------- --------- ----------
Social Expressions Products $1,698,251 $1,545,732 $1,522,981 $43,254 $40,143 $39,688
Non-reportable segments 277,592 295,440 349,604 24,337 25,662 24,426
Unallocated and intersegment 474,345 327,175 247,645 (99) (58) 68
items
Exchange rate adjustment (30,860) (6,883) 14,890 (443) 179 384
------------ ------------ ------------- --------- --------- ----------
Consolidated $2,419,328 $2,161,464 $2,135,120 $67,049 $65,926 $64,566
============ ============ ============= ========= ========= ==========
Capital Expenditures
------------------------------------
1999 1998 1997
--------- --------- ----------
Social Expressions Products $43,907 $45,984 $72,398
Non-reportable segments 17,553 22,064 19,880
Unallocated and intersegment - - -
items
Exchange rate adjustment (510) (150) 617
--------- --------- ----------
Consolidated $60,950 $67,898 $92,895
========= ========= ==========
OTHER INFORMATION
1999 1998 1997
------------ ------------ -----------
Product Information
Everyday greeting cards $1,051,374 $1,010,857 $ 955,430
Seasonal greeting cards 450,611 466,761 471,321
Gift wrapping and wrap 301,517 309,763 305,917
accessories
All other 402,204 411,384 428,421
------------ ------------ -----------
Consolidated Net Sales $2,205,706 $2,198,765 $2,161,089
============ ============ ===========
GEOGRAPHIC INFORMATION
Net Sales Fixed Assets - Net
---------------------------------------------- -----------------------------------------
1999 1998 1997 1999 1998 1997
------------ ------------ ------------- ---------- ------------ -----------
United States $1,819,857 $1,864,368 $1,831,834 $363,802 $371,733 $378,054
Foreign 385,849 334,397 329,255 71,004 75,899 84,733
------------ ------------ ------------- ---------- ------------ -----------
Consolidated $2,205,706 $2,198,765 $2,161,089 $434,806 $447,632 $462,787
============ ============ ============= ========== ============ ===========
</TABLE>
47
<PAGE> 48
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE N - INCOME TAXES
Income (loss) before income taxes:
<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
United States $ 300,411 $ 298,817 $ 264,077
Foreign (18,814) (6,380) (9,747)
--------- --------- ---------
$ 281,597 $ 292,437 $ 254,330
========= ========= =========
Income taxes have been provided as follows:
1999 1998 1997
--------- --------- ---------
Current:
Federal $ 111,736 $ 107,135 $ 71,582
Foreign (18,423) (6,873) 936
State and local 16,977 21,318 14,400
--------- --------- ---------
110,290 121,580 86,918
Deferred (principally federal) (8,915) (19,227) 317
--------- --------- ---------
$ 101,375 $ 102,353 $ 87,235
========= ========= =========
</TABLE>
Significant components of the Corporation's deferred tax assets and liabilities
at February 28, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
Deferred tax assets:
Sales returns $ 36,924 $ 39,152
Other 133,131 121,464
--------- ---------
170,055 160,616
Valuation allowance (10,819) (13,362)
--------- ---------
Total deferred tax assets 159,236 147,254
Deferred tax liabilities:
Depreciation 47,440 44,694
Other 28,457 24,775
--------- ---------
Total deferred tax liabilities 75,897 69,469
--------- ---------
Net deferred tax assets $ 83,339 $ 77,785
========= =========
</TABLE>
The decrease in the valuation allowance was due to decreases in net operating
loss carryforwards in the United Kingdom.
48
<PAGE> 49
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NOTE N - INCOME TAXES (CONTINUED)
The statutory federal income tax rate and the effective income tax rate are
reconciled as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------------- -------------- --------------
<S> <C> <C> <C>
Statutory rate 35.0% 35.0% 35.0%
State and local income taxes,
net of federal tax benefit 3.7 4.0 3.9
Subsidiaries' losses without tax benefit 0.1 0.7 1.0
Corporate-owned life insurance investments (2.9) (3.4) (4.3)
Other 0.1 (1.3) (1.3)
------------- -------------- --------------
Effective tax rate 36.0% 35.0% 34.3%
============= ============== ==============
</TABLE>
Income taxes paid were $102,363 in 1999, $101,261 in 1998 and $99,391 in 1997.
Deferred taxes have not been provided on approximately $30,386 of undistributed
earnings of foreign subsidiaries since substantially all of these earnings are
necessary to meet their business requirements. It is not practicable to
calculate the deferred taxes associated with these earnings, however, foreign
tax credits would be available to reduce federal income taxes in the event of
distribution. At February 28, 1999, the Corporation had approximately $74,934 of
foreign operating loss carryforwards, of which $23,885 have no expiration dates
and $51,049 have expiration dates ranging from 2000 through 2009.
The Internal Revenue Service has examined the Corporation's federal income tax
returns for the fiscal years ended 1993 through 1995 and, as part of its
Coordinated Issues Program, has made inquiries related to the Corporation's
corporate-owned life insurance programs. Although no adjustments to taxable
income have been made, the Corporation plans to fully contest any assessments
relative to corporate-owned life insurance. An examination of fiscal years 1996
and 1997 was initiated in early March 1999.
49
<PAGE> 50
QUARTERLY RESULTS OF OPERATIONS
- -------------------------------
(Unaudited)
Thousands of dollars except per share amounts
The following is a summary of the unaudited quarterly results of operations for
the years ended February 28, 1999 and 1998.
<TABLE>
<CAPTION>
Quarter Ended
--------------------------------------------------------------------
May 31 August 31 November 30 February 28
---------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
Fiscal 1999
Net sales $ 487,908 $ 479,733 $ 638,363 $ 599,702
Gross profit 328,189 309,246 412,032 399,159
Non-recurring charge - - 13,925 -
Net income 33,831 13,925 74,561 57,905
Earnings per share .47 .20 1.06 .83
Earnings per share - assuming dilution .47 .20 1.04 .82
Fiscal 1998
Net sales $ 475,059 $ 484,742 $ 639,655 $ 599,309
Gross profit 313,585 296,806 397,324 400,362
Non-recurring gain - 22,125 - -
Net income 30,259 26,097 79,038 54,690
Earnings per share .40 .35 1.07 .76
Earnings per share - assuming dilution .40 .35 1.05 .75
</TABLE>
50
<PAGE> 51
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Shareholders
American Greetings Corporation
We have audited the accompanying consolidated statement of financial position of
American Greetings Corporation as of February 28, 1999 and 1998, and the related
consolidated statements of income, shareholders' equity, and cash flows for each
of the three years in the period ended February 28, 1999. Our audits also
included the finanical statement schedule listed in the Index at Item 14(a)3.
These financial statements and schedule are the responsibility of the
Corporation's management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
American Greetings Corporation at February 28,1999 and 1998, and the
consolidated results of its operations and its cash flows for each of the three
years in the period ended February 28, 1999, in conformity with generally
accepted accounting principles. Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.
/s/ Ernst & Young LLP
Cleveland, Ohio
March 25, 1999
51
<PAGE> 52
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
There were no disagreements with the Corporation's independent
auditors on accounting or financial disclosure matters within the three year
period ended February 28, 1999, or in any period subsequent to such date.
PART III
The Corporation hereby incorporates by reference the information
called for by Part III of Form 10-K from the Corporation's Notice of Annual
Meeting of Shareholders to be held June 25, 1999, and related Proxy Statement
filed with the Securities and Exchange Commission on May 17, 1999.
(Next item is Part IV)
52
<PAGE> 53
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a)
1. Financial Statements
--------------------
Included in Part II of this report:
Consolidated Statement of Income -
Years ended February 28, 1999, 1998 and 1997
Consolidated Statement of Financial Position -
February 28, 1999 and 1998
Consolidated Statement of Cash Flows -
Years ended February 28, 1999, 1998 and 1997
Consolidated Statement of Shareholders' Equity -
Years ended February 28, 1999, 1998 and 1997
Notes to Consolidated Financial Statements -
Years ended February 28, 1999, 1998 and 1997
Quarterly Results of Operations (Unaudited)
Report of Ernst & Young LLP, Independent Auditors
2. Exhibits required by Item 601 of Regulation S-K:
(3) Articles of Incorporation and By-laws
(i) Amended Articles of Incorporation of the
Registrant
(ii) Amended Regulations of the Registrant
(4) Instruments Defining the Rights of Security Holders,
including indentures
(i) Trust Indenture, dated as of July 27, 1998, by
and between the Corporation and NBD Bank, as
Trustee, relating to 6.10% Notes
due August 1, 2028
53
<PAGE> 54
PART IV - Continued
(ii) Credit Agreement dated as of August 7,
1998 by and among American Greetings
Corporation (U.S. borrower), Carlton Cards
(France) S.N.C. (French borrower),
Carlton Cards Limited, UK Greetings
Limited, Hanson White Group Limited,
Camden Graphics Limited (UK borrowers),
Carlton Cards Limited (Canadian
borrower), John Sands (Australia) Ltd.,
John Sands (N.Z.) Ltd., John Sands
Holding Corporation (Australian
borrowers), Borrowers, and NationsBank
National Association, National City
Bank, Bank of America, National Trust
and Savings Association, Bank of America
Canada, Lenders, and the Lenders Party
Hereto From Time to Time
(10) Material Contracts
(i) (A) (i) Officers' contracts *
(ii) Employment Agreement with Edward
Fruchtenbaum, dated January 1, 1998 *
This Exhibit has been previously filed
as an Exhibit to the Registrant's Form
10-K Annual Report for the fiscal year
ended February 28, 1998, and is
incorporated herein by reference.
(ii) (A) (i) Shareholders Agreement dated November 19,
1984 *
This Exhibit has been previously filed as
an Exhibit to the Registrant's Form 10-K
Annual Report for the fiscal year ended
February 28, 1997, and is incorporated
herein by reference.
(ii) Executive Bonus Plan *
This Exhibit has been previously filed as
an Exhibit to the Registrant's Form 10-K
Annual Report for the fiscal year ended
February 28, 1997, and is incorporated
herein by reference.
(iii) Executive Incentive Compensation Plan (as
Amended and Restated as at
March 6, 1989)*
This Exhibit has been previously filed as
an Exhibit to the Registrant's Form 10-K
Annual Report for the fiscal year ended
February 28, 1997, and is incorporated
herein by reference.
(iv) Executive Deferred Compensation Plan *
54
<PAGE> 55
PART IV - Continued
(v) 1982 Incentive Stock Option Plan *
This Exhibit has been previously filed as
an Exhibit to the Registrant's Form S-8
Registration Statement (Registration No.
2-84911) dated July 1, 1983, and is
incorporated herein by
reference.
(vi) 1985 Incentive Stock Option Plan *
This Exhibit has been previously filed as
an Exhibit to the Registrant's Form S-8
Registration Statement (Registration No.
33-975) dated November 7, 1985, and is
incorporated herein by reference.
(vii) Supplemental Executive Retirement Plan *
(viii) 1987 Class B Stock Option Plan
This Exhibit has been previously filed as
an Exhibit to the Registrant's Form S-8
Registration Statement (Registration No.
33-16180) dated July 31, 1987, and is
incorporated herein by reference.
(ix) Stock Option Agreement with Morry Weiss
dated January 25,1988*
This Exhibit has been previously filed as
an Exhibit to the Registrant's Form 10-K
Annual Report for the fiscal year ended
February 28, 1997, and is incorporated
herein by reference.
(x) Loan Agreement with Edward Fruchtenbaum
dated March 1,1990 *
This Exhibit has been previously filed as
an Exhibit to the Registrant's Form 10-K
Annual Report for the fiscal year ended
February 28, 1997, and is incorporated
herein by reference.
(xi) 1992 Stock Option Plan *
This Exhibit has been previously filed as
an Exhibit to the Registrant's Form S-8
Registration Statement (Registration No.
33-58582) dated February 22,1993, and is
incorporated herein by reference.
(xii) CEO/COO Compensation Plans *
55
<PAGE> 56
PART IV - Continued
This Exhibit has been previously filed as
an Exhibit to the Registrant's Form 10-K
Annual Report for the Fiscal Year ended
February 28,1995, and is incorporated
herein by reference.
(xiii) 1995 Director Stock Plan *
This Exhibit has been previously filed as
an Exhibit to the Registrant's Form S-8
Registration Statement (Registration No.
33-61037) dated July 14, 1995, and is
incorporated herein by reference.
(xiv) 1996 Employee Stock Option Plan *
This Exhibit has been previously filed as
an Exhibit to the Registrant's Form S-8
Registration Statement (Registration No.
33-08123) dated July 15, 1996, and is
incorporated herein by reference.
(xv) 1997 Equity and Performance Incentive
Plan *
This Exhibit has been previously filed as
an Exhibit to the Registrant's Form 10-K
Annual Report for the fiscal year ended
February 28, 1997, and is incorporated
herein by reference.
(iii) (A) (i) Agreement to defer stock option gains with
Morry Weiss dated December 15, 1997 * This
Exhibit has been previously filed as an
Exhibit to the Registrant's Form 10-K
Annual Report for the fiscal year ended
February 28, 1998, and is incorporated
herein by reference.
(21) Subsidiaries of the Registrant
(23) Consent of Independent Auditors
(27) Financial Data Schedule
Executive Compensation Plans and Arrangements
The Corporation's executive compensation plans and
arrangements are listed under Exhibit 10 hereof and
marked by an asterisk (*).
(b) Reports on Form 8-K
None
56
<PAGE> 57
PART IV - Continued
(c) Exhibits listed in Item 14(a) 3. are included
herein or incorporated herein by reference.
(d) Financial Statement Schedules
The response to this portion of Item 14 is
submitted below.
3. Financial Statement Schedules
-----------------------------
Included in Part IV of the report:
Schedule II - Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are
not required under the related instructions or are inapplicable, and
therefore have been omitted.
57
<PAGE> 58
PART IV - Continued
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
AMERICAN GREETINGS CORPORATION
------------------------------
(Registrant)
Date: May 27, 1999 By: /s/ Jon Groetzinger, Jr.
-------------- ---------------------------
Jon Groetzinger, Jr.
Secretary
58
<PAGE> 59
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Irving I. Stone Founder - Chairman; )
- -------------------------------------------- Chairman of the )
Irving I. Stone Executive Committee; )
Director )
)
/s/ Morry Weiss Chairman of the Board; )
- -------------------------------------------- Chief Executive Officer; )
Morry Weiss Director )
)
/s/ Edward Fruchtenbaum President; )
- -------------------------------------------- Chief Operating Officer; )
Edward Fruchtenbaum Director )
)
/s/ Scott S. Cowen Director ) May 27, 1999
- --------------------------------------------
Scott S. Cowen )
)
/s/ Herbert H. Jacobs Director )
- --------------------------------------------
Herbert H. Jacobs )
)
/s/ Albert B. Ratner Director )
- --------------------------------------------
Albert B. Ratner )
)
/s/ Harry H. Stone Director )
- --------------------------------------------
Harry H. Stone )
)
/s/ Harriet Mouchly-Weiss Director )
- --------------------------------------------
Harriet Mouchly-Weiss )
)
/s/ James C. Spira Director )
- --------------------------------------------
James C. Spira )
)
/s/ William S. Meyer Senior Vice President; )
- -------------------------------------------- Chief Financial Officer )
William S. Meyer (principal financial officer) )
)
/s/ Patricia L. Ripple Vice President; )
- -------------------------------------------- Corporate Controller )
Patricia L. Ripple (principal accounting officer) )
</TABLE>
59
<PAGE> 60
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
AMERICAN GREETINGS CORPORATION AND SUBSIDIARIES
(000)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ------------------------------------------------------------------------------------------------------------------------------
ADDITIONS
-------------------------------------
Balance (1) (2) Balance
at Beginning Charged to Costs Charged to Other at End
Description of Period and Expenses Accounts-Describe Deductions-Describe of Period
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year ended February 28, 1999:
Deduction from asset account:
Allowance for doubtful accounts $ 15,661 $ 8,472 $ 91 (A) $ 8,641 (B) $ 15,583
========== ================== ============== ============== ==========
Allowance for sales returns $ 135,584 $ 342.267 $ 308 (A) $ 346,056 (C) $ 132,103
========== ================== ============== ============== ==========
Allowance for other assets $ 16,400 $ 0 $ 0 $ 0 $ 16,400
========== ================== ============== ============== ==========
Year ended February 28, 1998:
Deduction from asset account:
Allowance for doubtful accounts $ 15,264 $ 11,585 $ (1,119) (A) $ 10,069 (B) $ 15,661
========== ================== ============== ============== ==========
Allowance for sales returns $ 121,856 $ 337,320 $ (1,040) (A) $ 322,552 (C) $ 135,584
========== ================== ============== ============== ==========
Allowance for other assets $ 16,400 $ 0 $ 0 $ 0 $ 16,400
========== ================== ============== ============== ==========
Year ended February 28, 1997:
Deduction from asset account:
Allowance for doubtful accounts $ 16,214 $ 8,210 $ 113 (A) $ 9,273 (B) $ 15,264
========== ================== ============== ============== ==========
Allowance for sales returns $ 141,412 $ 306,755 $ 164 (A) $ 326,475 (C) $ 121,856
========== ================== ============== ============== ==========
Allowance for other assets $ 16,400 $ 0 $ 0 $ 0 $ 16,400
========== ================== ============== ============== ==========
</TABLE>
Note A: Includes translation adjustment on foreign subsidiary balances;
business unit acquisitions for the year ended February 28, 1999 of
$841 allowance for doubtful accounts and $1,816 allowance for sales
returns; business unit disposals for the year ended February 28, 1998
of $1,064 allowance for doubtful accounts and $392 allowance for sales
returns; and other minor reclasses and adjustments.
Note B: Accounts charged off, less recoveries.
Note C: Sales returns charged to the allowance account for actual returns
for the year.
S - 1
<PAGE> 1
Exhibit 3(i)
CERTIFICATE OF ADOPTION
OF
AMENDED ARTICLES OF INCORPORATION
OF
AMERICAN GREETINGS CORPORATION
Morry Weiss, President, and Allan J. Goodfellow, Secretary, of American
Greetings Corporation, an Ohio corporation with its principal office located at
Cleveland, Ohio, do hereby certify that pursuant to O.R.C. Section 1701.72(B)
the Executive Committee of the Board of Directors of said Corporation at a
meeting held on June 12, 1987 did adopt the following resolution to adopt
amended articles to consolidate all prior filings in force at that time:
RESOLVED, that the following Amended Articles of Incorporation of the
Corporation are hereby adopted to consolidate all prior filings that
are currently in force:
AMENDED ARTICLES OF INCORPORATION
FIRST: The name of the Corporation shall be AMERICAN GREETINGS
CORPORATION.
SECOND: Said Corporation is to be located in the City of Cleveland,
County of Cuyahoga and State of Ohio, and its principal business there
transacted.
THIRD: The purposes for which and for any of which said Corporation is
formed are as follows:
<PAGE> 2
2
(1) To manufacture, publish, print, cut, design, license, patent,
copyright, buy and sell, both at wholesale and retail, and otherwise deal
in greeting cards, post cards, envelopes, gift wrappings, tags, seals,
greeting card bags, display cabinets and accessories, all kinds and forms
of stationery and other printed or lithographed material and any and all
other products of every nature and description.
(2) To acquire, own, hold, use, lease, mortgage, pledge, exchange and
dispose of property of all kinds, wherever situated, including shares of
stock, bonds, debentures, notes, scrip, securities, interests in real
estate, evidences of indebtedness, contracts and obligations of any
corporation, association, firm or individual.
(3) To enter into, promote or conduct any kind of business, contract or
undertaking and for such purpose to acquire, take over and dispose of any
or all of the assets of any corporation, association, firm or individual,
to assume their rights and liabilities, guarantee or become surety for the
performance of their obligations, and participate in any way in their
affairs.
(4) To possess and exercise without restriction as fully as a natural
person might do all of the powers and authorities conferred upon or
permitted to corporations under the laws of the State of Ohio; and to do
any and all
<PAGE> 3
3
things incidental to the accomplishment of the purposes hereinbefore set
forth or incidental to the protection and benefit of the Corporation.
FOURTH: The authorized number of shares of the Corporation shall
consist of 50,258,242 shares which shall be classified as follows: 46,900,000
Class A Common Shares, par value $1 per share, and 3,958,242 Class H Common
Shares, par value $1 per share.
DIVISION A
EXPRESS TERMS OF THE CLASS A COMMON SHARES
(1) Each Class A Common Share shall be entitled to one vote upon all
matters presented to shareholders. Any proposal to amend these Amended Articles
of Incorporation to increase the authorized number of Class A Common Shares or
the authorized number of Class B Common Shares shall require for its adoption
the affirmative vote of the holders of at least two-thirds of the then
outstanding Class A Common Shares, voting as a class.
(2) The holders of Class A Common Shares shall have no preemptive rights to
purchase or have offered to them for purchase any stock of any class of the
Corporation.
DIVISION B
EXPRESS TERMS OF THE CLASS B COMMON SHARES
(1) Each Class B Common Share shall be entitled to ten Votes upon all
matters presented to shareholders. Any proposal to amend these Amended Articles
of Incorporation to increase
<PAGE> 4
4
the authorized number of Class A Common Shares or the authorized number of Class
B Common Shares shall require for its adoption the affirmative vote of the
holders of at least two-thirds of the then outstanding Class B Common Shares,
voting as a class.
(2)(a) Subject to and upon compliance with the provisions of this Article
Fourth, the Class B Common Shares shall be convertible at the option of the
holders thereof into Class A Common Shares on the basis of one Class A Common
Share for each Class B Common Share so converted.
(b) Prior to exercising the conversion privilege in respect of any Class B
Common Shares, the holder thereof shall first offer to sell all, but not less
than all, of such Class B Common Shares to the Corporation for cash at the last
publicly reported sale price for Class A Common Shares on the last day for which
sales are publicly reported before such offer is received by the Corporation.
Such offer shall be made by a written communication addressed to the Secretary
of the Corporation at its principal executive office and shall be deemed made to
the Corporation when delivered to such Secretary or any other officer of the
Corporation. The Corporation may accept such offer by giving notice of
acceptance at any time before 5 o'clock P.M., Cleveland local time, on the
business day immediately following the date of receipt of such offer by the
Corporation. Such notice of acceptance shall be given by a written communication
personally delivered to such holder of
<PAGE> 5
5
Class B Shares or mailed to such holder at his address as it appears on the
records of the Corporation or personally delivered or mailed to such
representative of such holder or at such other address as may have been
specified in such offer. Such notice of acceptance shall be deemed received when
so delivered or mailed by the Corporation, but only if the Corporation shall
have made all reasonable effort to give simultaneous notice to such holder or
his designated representative by telephone or other reasonably available means
of communication if (and then in the manner and to the place) requested in such
offer. Payment for Class B Common Shares so to be purchased by the Corporation
shall be made, against delivery of the Certificates therefor to the Corporation,
not later than the fifth business day following receipt of such offer.
(c) If the Class B Common Shares covered by an offer duly made and received
pursuant to subparagraph (b) above are not so accepted for purchase by the
Corporation, the holder thereof shall be free for a period of 30 days (such
period to begin upon the earlier of: (i) receipt of a notice from the
Corporation indicating that the Corporation has rejected such offer; or (ii) the
lapse of the period during which the Corporation may give notice of its
acceptance of such offer) to exercise the conversion privilege in respect
thereof by delivering to any Transfer Agent of the Class B Common Shares (i) the
certificate for the Class B Common Shares to be
<PAGE> 6
6
converted, (ii) written notice that the holder elects to convert such shares and
stating the name or names (with address) in which the certificate for the Class
A Common Shares is to be issued and (iii) either a copy of notice given by the
Corporation to such holder rejecting such offer or an affidavit executed by such
holder to the effect that such offer was duly made and that no response thereto
has been received after the passage of 10 business days from the date such offer
was made (or the passage of such shorter period of time as should have been
reasonable in the circumstances (but in no event less than two business days) to
ensure receipt by such holder or his designated representative of any
simultaneous telephonic or other notice requested by such holder as contemplated
by such subparagraph). Conversion shall be deemed to have been effected on the
date when such delivery is made, and such date is referred to herein as the
"conversion date." On the conversion date or as promptly thereafter as
practicable the Corporation shall issue and deliver to the holder of the Class B
Common Shares surrendered for conversion, or on his written order, a certificate
for the number of full Class A Common Shares issuable upon the conversion of
such Class B Common Shares. The person in whose name the stock certificate is to
be issued shall be deemed to have become a holder of Class A Common Shares of
record on the conversion date. The Corporation hereby reserves and shall at all
times reserve and keep available, out of its authorized and unissued Class A
<PAGE> 7
7
Common Shares, for the purpose of effecting the conversion of the Class B Common
Shares, such number of its duly authorized Class A Common Shares as shall from
time to time be sufficient to effect the conversion of all outstanding Class B
Common Shares. Class B Common Shares which are converted into Class A Common
Shares as provided in this Article Fourth shall not be reissued.
(3)(a) Class B Common Shares may be transferred, either by sale,
assignment, gift, bequest, appointment or otherwise, only to the Corporation or
to a Permitted Transferee of the holder of such Class B Common Shares (herein
referred to as a "Class B Holder") or upon conversion into Class A Common Shares
in accordance with paragraph (2) of this Division B, except that Class B Common
Shares may be issued or transferred by the Corporation to any person.
(b) For purposes of this paragraph (3), the term "Permitted Transferee"
shall have the following meaning:
(i) in the case of a Class B Holder who is a natural person holding
record and beneficial ownership of the Class B Common Shares in question,
"Permitted Transferee" means:
(A) a grandparent of such Class B Holder, (B) a lineal
descendant of a grandparent of such Class B Holder, (C) a spouse of a
lineal descendant of a grandparent of such Class B Holder, (D) a lineal
descendant of any spouse of a lineal descendant of a grandparent of
such Class B Holder or the spouse of
<PAGE> 8
8
any such spouse's lineal descendant, (E) a gratuitous transferee that
is an organization contributions to which are deductible for federal
income, estate or gift tax purposes (any such gratuitous transferee
being herein referred to as a "Charitable Organization"), (F) the
trustee of a trust (including, without limitation, a voting trust) for
the exclusive benefit of one or more of the foregoing if such trustee
is effectively prohibited from transferring shares of Class B Common
Stock to persons other than Permitted Transferees referred to in this
clause (i) and (G) any natural person with respect to whom such Class B
Holder would be a Permitted Transferee if such person desired to
transfer Class B Common Shares to such Class B Holder;
(ii) in the case of a Class B Holder holding the Class B Common Shares
in question as trustee pursuant to a trust other than a trust described in
clause (iii) below, "Permitted Transferee" means (A) the person who
established such trust and (b) a Permitted Transferee of such person
determined pursuant to clause (i) above;
(iii) in the case of a Class B Holder holding the Class B Common Shares
in question as trustee pursuant to a trust which was irrevocable on the
date the provisions of this paragraph (3) first became effective,
"Permitted Transferee" means any person to whom or for whose benefit
<PAGE> 9
9
principal may be distributed either during or at the end of the term of
such trust whether by power of appointment or otherwise;
(iv) in the case of a Class B Holder holding record (but not
beneficial) ownership of the Class B Common Shares in question as nominee
for the person who was the beneficial owner thereof on the date the
provisions of this paragraph (3) first-became effective, "Permitted
Transferee" means such beneficial owner and any Permitted Transferee of
such beneficial owner determined pursuant to clause (i), (ii), (iii), (v),
(vi), (vii), (viii) or (ix) hereof, as the case may be;
(v) in the case of a Class B Holder which is a partnership holding
record and beneficial ownership of the shares of Class B Common Stock in
question on the date the provisions of this paragraph (3) first became
effective, "Permitted Transferee" means any partner of such partnership;
(vi) in the case of a Class B Holder which is a corporation (other than
a Charitable Organization described in subclause (E) of clause (i) above)
holding record and beneficial ownership of the shares of Class B Common
Stock in question on the date the provisions of this paragraph (3) first
became effective, "Permitted Transferee" means any stockholder of such
corporation receiving shares of
<PAGE> 10
10
Class B Common Stock through a dividend or redemption or through a
distribution made upon liquidation of such corporation;
(vii) in the case of a Charitable Organization, "Permitted Transferee"
means the person who donated the Class B Common Shares in question thereto
and any Permitted Transferee of such person pursuant to clause (i) above;
(viii) in the case of the Corporation's Employees' Retirement Profit
Sharing Plan or any plan approved by the Board of Directors of the
Corporation that is similar to such plan, "Permitted Transferee" means (A)
any participant or former participant therein, (B) any Permitted Transferee
of such participant or former participant pursuant to clause (i) above and
(C) the agent acting under the Corporation's Dividend Reinvestment Plan;
(ix) in the case of any agent acting under the Corporation's Dividend
Reinvestment Plan, "Permitted Transferee" means (A) any participant or
former participant therein and (B) any Permitted Transferee of such
participant or former participant pursuant to clause (i) above; and
(x) in the case of a Class B Holder which is the estate of a deceased
Class B Holder, or which is the estate of a bankrupt or insolvent Class B
Holder, and provided such deceased, bankrupt or insolvent Class B Holder,
as the case may be, held record and beneficial ownership of the
<PAGE> 11
11
shares of Class B Common Stock in question, "Permitted Transferee" means a
Permitted Transferee of such deceased, bankrupt or insolvent Class B Holder
as determined pursuant to clause (i), (v) or (vi) above, as the case may
be.
(c) Notwithstanding anything to the contrary set forth herein, any Class B
Holder may pledge such Holder's shares of Class B Common Stock to a pledgee
pursuant to a bona fide pledge of such shares as collateral security for
indebtedness due to the pledgee, provided that such shares shall not be
transferred to or registered in the name of the pledgee and shall remain subject
to the provisions of this paragraph (3). In the event of foreclosure or other
similar action by the pledgee, such pledged shares of Class B Common Stock may
only be transferred to a Permitted Transferee of the pledgor or converted into
Class A Common Shares (after compliance with the provisions of subparagraph (2)
(b) of this Article Fourth), as the pledgee may elect.
(d) For purposes of this paragraph (3):
(i) the relationship of any person that is derived by or through legal
adoption prior to age 18 shall be considered a natural one;
(ii) the term "spouse" shall include a widow or widower;
(iii) each grandparent of any joint owner of particular Class B Common
Shares shall be considered a grandparent of all joint owners of such
shares;
<PAGE> 12
12
(iv) a minor for whom Class B Common Shares are held pursuant to a
Uniform Gifts to Minors Act or similar law shall be considered a Class B
Holder of such shares;
(v) in applying the term "exclusive benefit," a contingent trust
interest having at the time of transfer an actuarial value (under actuarial
tables then used for federal gift tax purposes for gifts between private
individuals) of not more than five percent of the value of the assets of
the trust shall be ignored; and
(vi) unless otherwise specified, the term "person" means both natural
persons and legal entities.
(e) Any purported transfer of Class B Common Shares not permitted by this
paragraph (3) shall be void and of no effect and the purported transferee shall
have no rights as a shareholder of the Corporation and no other rights against
or with respect to the Corporation. The Corporation may, as a condition to the
transfer or the registration of transfer of Class B Common Shares to a purported
Permitted Transferee, require the furnishing of such affidavits or other proof
as it deems necessary to establish that such transferee is a Permitted
Transferee.
(f) The Corporation shall conspicuously note on the certificates
representing Class B Common Shares the restrictions on transfer and registration
of transfer imposed by this paragraph (3).
<PAGE> 13
13
(4) The holders of Class B Common Shares, upon the sale for cash of
authorized but unissued Class B Common Shares, have the right to purchase such
shares in proportion to their respective holdings of Class B Common Shares, at
the price prescribed in paragraph (1) of Division C hereof during such
reasonable time and on such reasonable terms as may be fixed by the Board of
Directors. Such terms may include provision for the purchase of Class B Common
Shares offered to holders who do not timely exercise such right by the other
holders of Class B Common Shares. The holders of Class B Common Shares shall
have no other preemptive rights to purchase or have offered to them for purchase
any stock of any class of the Corporation.
DIVISION C
ADDITIONAL EXPRESS TERMS OF THE CLASS A COMMON SHARES
AND CLASS B COMMON SHARES
(1) Subject to and upon compliance with the provisions of this Article
Fourth, authorized but unissued Class B Common Shares may be issued only
simultaneously with the issuance of Class A Common Shares for cash at the same
cash price (without deduction for any commissions payable or discounts allowed)
per share; provided, however, that the number of Class B Common Shares so issued
shall not exceed the product of the number of Class A Common Shares being so
issued times the ratio of the number of Class B Common Shares issued and
outstanding at the record date fixed for determining the holders of Class B
Common Shares who have the right as provided in paragraph (4) of
<PAGE> 14
14
Division B hereof to purchase such Class B Common Shares being issued, to the
number of Class A Common Shares issued and outstanding at such date.
(2) No change of Outstanding Class A Common Shares or of Class B Common
Shares so as to effect a share dividend thereon or a split or combination
thereof shall be made unless a corresponding change is made with respect to the
shares of the other class.
(3) Except as above provided in this Article Fourth, each Class A Common
Share and each Class B Common Share shall be identical and have similar rights,
privileges, qualifications, limitations and restrictions.
FIFTH: The purposes for which this Corporation is formed may be
substantially changed by amendment thereto adopted by the affirmative vote of
the shareholders entitled to exercise two-thirds of the voting power of the
Corporation.
SIXTH: The Corporation may purchase, from time to time and to the extent of
the surplus of the aggregate of its assets over the aggregate of its liabilities
plus stated capital, shares of any class of stock issued by it. Such purchases
may be made either in the open market or at private or public sale, and in such
manner and amounts, from such holder or holders of outstanding stock of the
Corporation and at such prices as the Board of Directors of the Corporation
shall from time to time determine, and the Board of Directors is hereby
empowered to
<PAGE> 15
15
authorize such purchases from time to time without any vote of the holders of
any class of shares now or hereafter authorized and outstanding at the time of
any such purchase.
SEVENTH: No contract or other transaction between this Corporation and any
other corporation, at least a majority of the stock of which having voting power
is owned or controlled by the Corporation or which owns or controls at least a
majority of the stock having voting power of the Corporation, shall in any case
be void or voidable because of the fact that Directors of this Corporation are
Directors of such other corporation, nor shall any such Director be deemed
interested in such contract or other transaction under any of the provisions of
this Article Seventh, nor shall any such Director be liable to account because
of such interest nor need any such interest be disclosed.
No contract or other transaction entered into by the Corporation shall be
affected by the fact that any Director of the Corporation is in any way
interested in, or connected with, any party to such contract or transaction, or
himself is a party to such contract or transaction, provided that such contract
or transaction shall be approved by a majority of the Directors present at the
meeting of the Board or of the Committee authorizing or confirming such contract
or transaction, which majority shall consist of Directors not so interested or
connected. Any contract, transaction or act of the Corporation or of the Board
of Directors or of any
<PAGE> 16
16
Committee, which shall be ratified by a majority of a quorum of the shareholders
at any annual meeting, or at any special meeting called for that purpose, shall
be as valid and as binding as though ratified by every shareholder of the
Corporation.
EIGHTH: Any and every statute of the State of Ohio hereafter enacted
whereby the rights, powers or privileges of corporations or of the shareholders
of corporations organized under the laws of the State of Ohio are increased or
diminished or in any way affected, or whereby effect is given to the action
taken by any number, less than all, of the shareholders of any such corporation,
shall apply to the Corporation and shall be binding not only upon the
Corporation but upon every shareholder of the Corporation to the same extent as
if such statutes had been in force at the date of filing these Amended Articles
of Incorporation of the Corporation in the office of the Secretary of State of
Ohio.
NINTH: These Amended Articles supersede and take the place of the
heretofore existing Articles of the Corporation.
IN WITNESS WHEREOF, the above-named officers, acting for and on behalf of
the Corporation, have subscribed their names this 12th day of June, 1987.
/s/ Morry Weiss
------------------------------------
Morry Weiss, President
/s/ Allan J. Goodfellow, Secretary
------------------------------------
Allan J. Goodfellow
<PAGE> 17
Exhibit 3(i)
SECRETARY OF STATE CHARTER NUMBER: 1866778
PROCESSING STATEMENT ROLL AND FRAME: H195-0996
/91
CORPORATION: DOCUMENT NUMBER CODE FEE
--------------- ---- ---
91082901101 AND 2582755
AMERICAN GREETINGS CORPORATION INC NO FEE
021632
RETURN TO: AMERICAN GREETINGS
ATTN: J.K.ROOSA
10500 AMERICAN RD.
CLEVELAND, OH 44144 0175
<PAGE> 18
------------------------------
------------------------------
THE STATE OF OHIO
BOB TAFT
Secretary of State
186778
- CERTIFICATE -
It is hereby certified that the Secretary of State of Ohio has custody of the
Records of Incorporation and Miscellaneous Filings; that said records show the
filing and recording of: AMD INC
-------------------------------------------------------
of:
- -----------------------------------------------------------------------------
AMERICAN GREETINGS CORPORATION
Recorded on Roll H195 at Frame 0998
of the Records of Incorporation and
United States of America Miscellaneous Filings.
State of Ohio
Office of the Secretary of State
[SEAL OF SECRETARY] Witness my hand and the seal of the
Secretary of State at Columbus, Ohio,
this 29TH day of AUG, A.D. 1991.
/s/ Bob Taft
Bob Taft
Secretary of State
<PAGE> 19
[SEAL]
Prescribed by -------------------------
BOB TAFT, Secretary of State Charter No. 186778
30 East Broad Street, 14th Floor -------------
Columbus, Ohio 43266-0418 Approved RB
Form SH-AMD (January 1991) -----------------
Date 8/29/91
--------------------
Fee 25,827.55
-------------------------
CERTIFICATE OF AMENDMENT
BY SHAREHOLDERS TO THE ARTICLES OF INCORPORATION OF
American Greetings Corporation
- --------------------------------------------------------------------------------
(Name of Corporation)
Henry Lowenthal , who is:
- -------------------------
[ ] Chairman of the Board [ ] President [X] Vice President (check one)
and
Jon Groetzinger, Jr. , who is: [X] Secretary [ ] Assistant Secretary (Check
- -------------------------
one) of the above named Ohio corporation for profit do hereby certify that:
(check the appropriate box and complete the appropriate statements)
[X] a meeting, of the shareholders was duly called for the purpose of adopting
this amendment and held on July 29, 1991 at which meeting a quorum of the
shareholders was present in person or by proxy, and by the affirmative vote
of the holders of shares entitling them to exercise ** % of the voting
power of the corporation.
[ ] in a writing signed by all of the shareholders who would be entitled to
notice of a meeting held for that purpose, the following resolution to
amend the articles was adopted:
FOURTH: The authorized number of shares of the Corporation shall consist of
50,258,242 shares which shall be classified as follows: 46,900,000
Class A Common Shares, par value $1 per shares, and 3,958,242 Class B
Common Shares, par value $1 per share.
IN WITNESS WHEREOF, the above named officers, acting for and on the behalf of
the corporation, have hereto subscribed their names this 27th day of August
1991.
** Class A Common Shares 67.0% By: /s/ Henry Lowenthal
Class B Common Shares 73.7% ------------------------------------
(Vice President)
By: /s/ Jon Groetzinger, Jr.
-----------------------------------
(Secretary)
NOTE: Ohio law does not permit one officer to sign in two capacities, Two
separate signatures are required, even if this necessitates the election of a
second officer before the filing can be made.
<PAGE> 20
JAMES ROOSA
CORPORATE COUNSEL [AMERICAN GREETINGS LOGO]
- --------------------------------------------------------------------------------
10500 AMERICAN ROAD
CLEVELAND. CHIC 44144
216 / 252-7300
Bob Taft, Secretary of State August 27, 1991
30 East Broad Street, 14th Floor
Columbus, Ohio 43266-0418
Re: Certificate of Amendment -- American Greetings Corporation
----------------------------------------------------------
To Whom it may concern:
Please find enclosed for filing on behalf of American Greetings Corporation
the following items:
1) Form SH-AMD -- Certificate of Amendment (manually signed);
2) Filing Fee in the amount of $27,327.50 payable to "Secretary of State";
3) Duplicates of this letter and Form SH-AMD.
Upon receipt of these materials, please date-stamp the enclosed duplicates
and return them to me in the self-addressed, stamped
envelope enclosed for your convenience.
Sincerely,
/s/ James K. Roosa
James K. Roosa
Corporate Counsel
cc: Jon Groetzinger, Jr.
JKR: nas
Enclosure
<PAGE> 21
3/29/91 RECEIPT NO. 910829011 PAGE: 1
BATCH NO: 002324
BOB TAFT
SECRETARY OF STATE REFUND 1,499.95
**************
RECEIPT
**************
CHECK ISSUED: AMERICAN GREETINGS CORPORATION TOTAL $27,327.50
BY: 10500 AMERICAN RD -------------------------
CLEVELAND, OH 44144 -------------------------
AMERICAN GREETINGS CORPORATION
<PAGE> 22
AMERICAN GREETINGS CORPORATION
REPORT OF INSPECTORS OF ELECTION
--------------------------------
July 29, 1991
Cleveland, Ohio
We, the undersigned, duly appointed Inspectors of Election at a special
meeting of shareholders of American Greetings Corporation held at 10500 American
Road, Cleveland, Ohio, on the above date at 2:30 p.m., do hereby report that we
have examined all the proxies at said meeting; that we canvassed the
shareholders present in person at said meeting; that we checked the said proxies
and the names of the shareholders present in person with the list of
shareholders of record at the close of business on June 14, 1991, and that we
conducted all voting at said meeting.
Based on the foregoing, the undersigned further report as follows :
1. That there were outstanding and entitled to vote at said meeting 33,619,900
Class A Common Shares of the Company having one vote per share, and 2,032,900
Class B Common Shares of the Company having ten votes per share.
2. That there were present in person or by proxy holders of record, as of the
close of business on June 14, 1991, of the following Class A Common Shares and
Class B Common Shares entitled to vote at the meeting:
<TABLE>
<CAPTION>
Percentage
Total Of Total
Votes Outstanding
----- -----------
<S> <C> <C> <C> <C>
Class A Common Shares 29,175,001 x 1 = 29,175,001 86.8%
Class B Common Shares 1,504,844 x 10 = 15,048,440 74.0%
---------- -----
Total 44,223,441 82.0%
</TABLE>
-1-
<PAGE> 23
3. That a quorum was present.
4. That Albert B. Ratner, Harry H. Stone and Abraham Zaleznik were elected
Directors of the Company, having received the number of votes set opposite their
respective names as follows:
<TABLE>
<CAPTION>
Number of Number of
Nominee Shares Votes
------- --------- ----------
<S> <C> <C> <C>
Albert B. Ratner
Class A Common Shares 28,771,476 x 1 = 28,771,476
Class B Common Shares 1,500,642 x 10 = 15,006,420
----------
Total 43,777,896
Harry H. Stone
Class A Common Shares 28,654,049 x 1 = 28,654,049
Class B Common Shares 1,500,642 x 10 = 15,006,420
----------
Total 43,660,469
Abraham Zaleznik
Class A Common Shares 28,765,543 x 1 = 28,765,543
Class B Common Shares 1,500,642 x 10 = 15,006,420
----------
Total 43,771,963
</TABLE>
5. That the proposal amending Article Fourth of the Articles of the Company to
increase the authorized number of Class A and Class B Common Shares passed
having received the number of shares as follows :
<TABLE>
<CAPTION>
FOR
---
Percentage
Number of Number of of
Shares Votes Outstanding
------ ----- -----------
<S> <C> <C> <C> <C>
Class A Common 22,538,049 x 1 = 22,538,049 67.0%
Class B Common 1,497,410 x 10 = 14,974,100 73.7%
---------- -----
Total 37,512,149 69.5%
</TABLE>
-2-
<PAGE> 24
<TABLE>
<CAPTION>
AGAINST
-------
Percentage
Number of Number of of
Shares Votes Outstanding
------ ----- -----------
<S> <C> <C> <C> <C>
Class A Common 5,292,714 x 1 = 5,292,714 15.7%
Class B Common 5,011 x 10 = 50,110 0.0%
Total 5,342,824 9.9%
ABSTAIN
-------
Percentage
Number of Number of of
Shares Votes Outstanding
------ ----- -----------
Class A Common 1,388,961 x 1 = 1,388,961 4.1%
Class B Common 2,423 x 10 = 24,230 0.0%
Total 1,413,191 2.6%
</TABLE>
6. That the proposal amending Article Fourth to waive certain requirements with
respect to a specified issuance of Class B Shares and adoption of an amended and
restated 1987 Class B Stock Option Plan having received the vote of the
following number of shares failed to receive the necessary two-thirds of each
separate voting' class :
<TABLE>
<CAPTION>
FOR
---
Percentage
Number of Number of of
Shares Votes Outstanding
------ ----- -----------
<S> <C> <C> <C> <C>
Class A Common 18,045,031 x 1 = 18,045,031 53.7%
Class B Common 1,480,619 x 10 = 14,806,190 72.8%
---------- -----
Total 32,851,221 60.9%
AGAINST
-------
Percentage
Number of Number of of
Shares Votes Outstanding
------ ----- -----------
Class A Common 9,696,925 x 1 = 9,696,925 28.8%
Class B Common 18,100 x 10 = 181,000 .9%
---------- -----
Total 9,877,925 18.3%
</TABLE>
-3-
<PAGE> 25
<TABLE>
<CAPTION>
ABSTAIN
-------
Percentage
Number of Number of of
Shares Votes Outstanding
------ ----- -----------
<S> <C> <C> <C> <C>
Class A Common 1,437,943 x 1 = 1,437,943 4.3%
Class B Common 6,125 x 10 = 61,250 .3%
--------- ----
Total 1,499,193 2.8%
</TABLE>
7. The following Class A Common Shares and Class B Common Shares were voted in
favor of the resolution to adjourn the meeting:
<TABLE>
<S> <C> <C> <C>
Class A Common Shares 28,648,616 x 1 = 28,648,616
Class B Common Shares 1,500,642 x 10 = 15,006,420
----------
Total 43,655,036
</TABLE>
CERTIFIED AT CLEVELAND, OHIO, THIS 5TH DAY OF AUGUST, 1991.
/s/ Paul Ozan
-----------------------------------
/s/ John Wszelaki
-----------------------------------
/s/ Larry Potta
-----------------------------------
-4-
<PAGE> 26
JAMES ROOSA
ASSISTANT GENERAL COUNSEL
CORPORATE [AMERICAN GREETINGS LOGO]
- --------------------------------------------------------------------------------
10500 AMERICAN ROAD
CLEVELAND, OHIO 44144-2398
216/252-7300 EXT. 1158
FAX 216/252-6741
July 6, 1993
Via Overnight Mail
- ------------------
Mr. Bob Taft
Secretary of State
30 East Broad Street, 14th Floor
Columbus, Ohio 43266A0418
Re: Certificate of Amendment -- American
Greetings Corporation
------------------------------------
To whom it may concern:
Please find enclosed for filing on behalf of American Greetings Corporation
the following items:
(1) Form SH-AMD -- Certificate of Amendment (manually signed);
(2) Filing Fee in the amount of $127,180.61 payable to "Secretary of
State";
(3) Duplicates of this letter and Form SH-AMD.
Upon receipt of these materials, please date-stamp the enclosed duplicates
and return them to me in the self-addressed, stamped envelope enclosed for your
convenience.
JKR: lab
Enclosures
cc: Jon Groetzinger, Jr., Esq.
<PAGE> 27
[SEAL] ---------------------------
Prescribed by Charter No. -
BOB TAFT, Secretary of State --------------
30 East Broad Street, 14th Floor Approved A
Columbus, Ohio 43266-0418 ----------------
Form SH-AMD (January 1991) Date
-----------------------
Fee
CERTIFICATE OF AMENDMENT
BY SHAREHOLDERS TO THE ARTICLES OF INCORPORATION OF
American Greetings Corporation
- --------------------------------------------------------------------------------
(Name of Corporation)
Henry Lowenthal , who is:
- -------------------------
[ ] Chairman of the Board [ ] President [X] Senior Vice President (check one)
and
Jon Groetzinger, Jr. , who is: [X] Secretary Assistant Secretary (Check one)
- -------------------------
of the above named Ohio corporation for profit do hereby certify that: (check
the appropriate box and complete the appropriate statements)
[X] a meeting, of the shareholders was duly called for the purpose of adopting
this amendment and held on June 25, 1993 at which meeting a quorum of the
shareholders was present in person or by proxy, and by the affirmative vote
of the holders of shares entitling them to exercise *84.6% of the voting
power of the corporation.
in a writing signed by all of the shareholders who would be entitled to
notice of a meeting held for that purpose, the following resolution to
amend the articles was adopted:
FOURTH: The authorized number of shares of the Corporation shall
consist of 101,716,484 shares which shall be classified as follows:
93,800,000 Class A Common Shares, par value $1 per share, and 7,916,484
Class B Common Shares, par value $1 per share.
IN WITNESS WHEREOF, the above named officers, acting for and on the behalf of
the corporation, have hereto subscribed their names this 6th day of July, 1993.
* Class A Common Shares 78.7%(1 vote)
Class B Common Shares 93.8%(10 votes)
(2/3 of each class required by Articles)
By /s/ Henry Lowenthal
-------------------------------
(Vice President)
By /s/ Jon Groetzinger, Jr.
-------------------------------
(Secretary)
NOTE: Ohio law does not permit one officer to sign in two capacities. Two
separate signatures are required, even if this necessitates the election of a
second officer before the filing can be made.
<PAGE> 28
Return To:
PHYLLIS ALDEN
ONE AMERICAN RD
CLEVELAND, OH 44144-2398
- ---------------------------cut along the dotted line----------------------------
--------------------------------------------
--------------------------------------------
The State of Ohio
Certificate
Secretary of State - Bob Taft
186778
It is hereby certified that the Secretary of State of Ohio has custody of the
business records for AMERICAN GREETINGS CORPORATION and that said business
records show the filing and recording of:
Document(s) Document No(s):
----------- ---------------
DOMESTIC/AMENDMENT TO ARTICLES 199820100735
-----------------------
United States of America Witness my hand and the seal of the Secretary
State of Ohio of State at Columbus, Ohio, This 13th day of
Office of the Secretary of State July, A.D. 1998
[SEAL] /s/ Bob Taft
Bob Taft
Secretary of State
<PAGE> 29
CERTIFICATE OF ADOPTION
OF AMENDMENT TO
AMENDED ARTICLES OF INCORPORATION
OF
AMERICAN GREETINGS CORPORATION
Morry Weiss, Chairman of the Board, Edward Fruchtenbaum, President, and Jon
Groetzinger, Jr., Secretary of American Greetings Corporation, an Ohio
corporation, do hereby certify that, pursuant to Section 1701.71(A), Ohio
General Corporation Law, the shareholders of said Corporation, at the Annual
Meeting of Shareholders held on June 26,1998, did adopt the following resolution
to replace Article Fourth of the Amended Articles of Incorporation:
RESOLVED, that Article Fourth of the Amended Articles of Incorporation
shall be replaced by the following new Article Fourth:
"FOURTH. The authorized number of shares of the Corporation shall
consist of 203,432,968 which shall be classified as follows:
187,600,000 Class A Common Shares, par value $1 per share, and
15,832,968 Class B Common Shares, par value $1 per share."
IN WITNESS WHEREOF, the above-named officers, acting for and on behalf of
the Corporation, have subscribed their names this 7th day of July, 1998.
/s/ Morry Weiss
-------------------------------------
Morry Weiss, Chairman of the Board
/s/ Edward Fruchtenbaum
-------------------------------------
Edward Fruchtenbaum, President
/s/ Jon Groetzinger, Jr.
-------------------------------------
Jon Groetzinger, Jr., Secretary
<PAGE> 1
Exhibit 3(ii)
REGULATIONS
-----------
OF
AMERICAN GREETINGS CORPORATION
------------------------------
ARTICLE I.
SHAREHOLDERS' MEETINGS
- ----------------------
Section 1. Annual Meeting
--------------
The annual meeting of shareholders shall be held at 2:30 o'clock p.m.
E.D.T. on the fourth Friday in June in each year, if not a legal holiday, and if
a legal holiday, then on the next day not a Saturday, Sunday or legal holiday,
for the purpose of electing Directors and considering reports to be laid before
said meeting. Upon due notice there may also be considered and acted upon at an
annual meeting any matter which could properly be considered and acted upon at a
special meeting, in which case and for which purpose the annual meeting shall
also be considered as, and shall be, a special meeting. In the event the annual
meeting is not held or if Directors are not elected thereat, a special meeting
may be called and held for that purpose.
Section 2. Special Meetings
----------------
Special meetings of shareholders may be called by the Chairman of the
Board, President or by a Vice President, or by a majority of the members of the
Board of Directors acting with or without a meeting, or by the person or persons
who hold of record not less than twenty-five percent of all the shares
outstanding and entitled to be voted on any proposal to be submitted at said
meeting.
Upon request in writing by registered mail or delivered in person to the
President or Secretary by any person or persons entitled to call a meeting of
shareholders, it shall be the duty of such officer forthwith to cause to be
given, to the shareholders entitled to notice of such meeting, notice of a
meeting to be held not less than ten nor more than sixty days after the receipt
of such request, as such officer shall fix. If such notice shall not be given
within twenty days after the delivery or mailing of such request, the person or
persons requesting the meeting may fix the time of the meeting and give, or
cause to be given, notice in the manner hereinafter provided.
Section 3. Place of Meetings
-----------------
Any meeting of shareholders may be held either at the principal office of
the Corporation or at such other place
<PAGE> 2
within or without the State of Ohio as may be designated in the notice of said
meeting.
Section 4. Notice of Meetings
------------------
Not more than forty-five days nor less than five days before the date fixed
for a meeting of shareholders, whether annual or special, written notice of the
time, place and purposes of such meeting shall be given by the President or by a
Vice President or by the Secretary or by an Assistant Secretary (or in case of
their refusal, by the person or persons entitled to call the meeting under the
provisions of these Regulations). Such notice shall be served upon or mailed to
each shareholder entitled to notice of or to vote at such meeting. If such
notice is mailed, it shall be directed, postage prepaid, to the shareholders at
their respective addresses as they appear upon the records of the Corporation,
and notice shall be deemed to have been given on the day so mailed. If any
meeting is adjourned to another time or place, no notice as to such adjourned
meeting need be given other than by announcement at the meeting at which such
adjournment is taken. No business shall be transacted at any such adjourned
meeting except as might have been lawfully transacted at the meeting at which
such adjournment was taken.
Section 5. Shareholders Entitled to Notice and to Vote
-------------------------------------------
If a record date shall not be fixed or the books of the Corporation shall
not be closed against transfers of shares pursuant to statutory authority, the
record date for the determination of shareholders entitled to notice of or to
vote at any meeting of shareholders shall be the close of business on the
fifteenth day prior to the date of the meeting and only shareholders of record
at such record date shall be entitled to notice of and to vote at such meeting.
Such record date shall continue to be the record date for all adjournments of
such meeting, unless a new record date shall be fixed and notice thereof and of
the date of the adjourned meeting be given to all shareholders entitled to
notice in accordance with the new record date so fixed.
Section 6. Inspectors of Election List of Shareholders
-------------------------------------------
Inspectors of Election may be appointed to act at any meeting of
shareholders in accordance with statute.
At any meeting of shareholders a list of shareholders, alphabetically
arranged, showing the number and classes of shares held by each on the record
date applicable to such meeting shall be produced on the request of any
shareholder.
<PAGE> 3
Section 7. Quorum
------
To constitute a quorum at any meeting of shareholders, there shall be
present in person or by proxy shareholders of record entitled to exercise not
less than twenty-five percent of the voting power of the Corporation in respect
of any one of the purposes for which the meeting is called.
The shareholders present in person or by proxy, whether or not a quorum be
present, may adjourn the meeting from time to time without notice other than by
announcement at the meeting.
Section 8. Voting
------
In all cases, except where otherwise by statute or the Articles or the
Regulations provided, a majority of the votes cast shall control.
Cumulative voting in the election of Directors shall be permitted as
provided by statute.
Section 9. Report to Shareholders
----------------------
At the annual meeting, or any other meeting held in lieu thereof at which
Directors are to be elected, the officers of the Corporation shall lay before
the shareholders a financial statement as required by statute.
Section 10. Action without a Meeting
------------------------
Any action which may be taken at a meeting of shareholders may be taken
without a meeting if authorized by a writing signed by all of the holders of
shares who would be entitled to notice of a meeting for such purposes.
ARTICLE II.
BOARD OF DIRECTORS
Section 1. Number, Term of Office and Election
-----------------------------------
Upon adoption of this Article II, Section 1. by the shareholders at the
annual meeting of shareholders in 1989, the Board of Directors shall consist of
twelve (12) Directors; provided, however, that the number of Directors may be
fixed or changed by the shareholders entitled to exercise a majority of the
voting power of the shares represented at a meeting called to elect Directors
and entitled to vote at such election. The Board of Directors shall be divided
into three classes consisting of not less than three Directors each. At the
annual meeting of shareholders in 1989, four Directors shall be elected
<PAGE> 4
for a term of three years, four Directors shall be elected for a term of two
years, and four Directors shall be elected for a term of one year. Thereafter,
at each annual meeting of shareholders, or special meeting of shareholders if
called for the purpose of electing Directors, the Board of Directors shall
propose to the shareholders the number of Directors to be elected for a
three-year term to succeed the Directors of the class whose term shall expire in
that year. In case of any increase in the number of Directors of any class,
whether upon the expiration of the term of office of the Directors of a
particular class or during such term, any additional Directors elected to such
class shall hold office for a term which shall coincide with the term of such
class. In case the shareholders at any meeting for the election of Directors
shall fail to fix the number of Directors to be elected, the number elected
shall be not less than three and shall be deemed to be the number of Directors
fixed. Each Director shall hold office until the expiration of the term of
office for the class to which such Director is elected, subject, however, to
provisions of statute as to the creation of vacancies and removal. At any
meeting of shareholders at which Directors are to be elected, only persons
nominated as candidates shall be eligible for election.
The provisions of Article V, Section 6. relative to amending these
Regulations, notwithstanding, this Article II, Section 1. may only be amended by
the affirmative vote or written consent of the shareholders of record entitled
to exercise two-thirds of the voting power of the Corporation on such proposal.
Section 2. Meetings
--------
Regular meetings of the Board of Directors shall be held immediately after
the annual meeting of shareholders and at such other times and places as may be
fixed by the Board of Directors, and such meetings may be held without further
notice.
Special meetings of the Board of Directors may be called by the Chairman of
the Board or by the President or by a Vice President or by the Secretary of the
Corporation, or by not less than one-third of the Directors. Notice of the time
and place of such meeting shall be served upon or telephoned to each Director at
least twenty-four hours, or mailed or telegraphed to each Director at his
address as shown by the books of the Corporation at least forty-eight hours,
prior to the time of the meeting.
Section 3. Quorum
------
A majority of the number of Directors then in office (but in no event more
than five) shall be necessary to constitute a quorum for the transaction of
business, but if at
<PAGE> 5
any meeting of the Board there shall be less than a quorum present, a majority
of those present may adjourn the meeting from time to time without notice other
than announcement at the meeting until a quorum shall attend.
Section 4. Committees
----------
The Board of Directors may from time to time appoint certain of its members
to act as a committee or committees in the intervals between meetings of the
Board and may delegate to such committee or committees powers to be exercised
under the control and direction of the Board.
In particular, the Board of Directors may create from its membership and
define the powers and duties of an Executive Committee of not less than three
members. Except to the extent that its powers are limited by the Board, the
Executive Committee during the intervals between meetings of the Board shall
possess and may exercise under the control and direction of the Board all of the
powers of the Board of Directors in the management and control of the business
of the Corporation, regardless of whether such powers are specifically conferred
by these Regulations. All action taken by the Executive Committee shall be
reported to the Board of Directors at its first meeting thereafter.
Unless otherwise provided by the Board of Directors, a majority of the
members of any committee appointed by the Board of Directors pursuant to this
Section shall constitute a quorum at any meeting thereof and the act of a
majority of the members present at a meeting at which a quorum is present shall
be the act of such committee. Action may be taken by any such committee without
a meeting by a writing signed by all its members. Any such committee shall
prescribe its own rules for calling and holding meetings and its method of
procedure, subject to any rules prescribed by the Board of Directors, and shall
keep a written record of all action taken by it.
ARTICLE III.
OFFICERS
- --------
Section 1. Officers
--------
The Corporation may have a Chairman of the Board of Directors and shall
have a President (both of whom shall be members of the Board of Directors), a
Secretary and a Treasurer, all of whom shall be elected by the Board of
Directors. The Corporation may also have one or more Vice Presidents, Assistant
Secretaries, Assistant Treasurers and such other officers as the Board may deem
necessary, all of whom shall be elected by the
<PAGE> 6
Board of Directors or chosen by an officer or officers designated by it.
Section 2. Authority and Duties of Officers
--------------------------------
The officers of the Corporation shall have such authority and shall perform
such duties as are customarily incident to their respective offices or as may be
specified from time to time by the Board of Directors, regardless of whether
such authority and duties are customarily incident to such office.
Section 3. Compensation
------------
The Board of Directors shall fix the compensation of the Chairman of the
Board and of the President and shall fix or authorize the President or a
committee appointed by the Board to fix the compensation of any or all other
officers. The Board of Directors may allow compensation to members of any
committee and may vote compensation to any Director for attendance at meetings
or for any special services.
ARTICLE IV.
INDEMNIFICATION AND INSURANCE
- -----------------------------
Section 1. Indemnification
---------------
The Corporation shall indemnify, to the full extent then permitted by law,
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, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, trustee, officer,
employee or agent of another corporation, domestic or foreign, nonprofit or for
profit, partnership, joint venture, trust or other enterprise; provided,
however, that the Corporation shall indemnify any such agent of the Corporation
(as opposed to any Director, officer or employee of the Corporation) to an
extent greater than that required by law only if and to the extent that the
Directors may, in their discretion, so determine. The indemnification provided
hereby shall not be deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any law, the articles of incorporation or
any agreement, vote of shareholders or of disinterested Directors or otherwise,
both as to action in official capacities and as to action in another capacity
while he is a Director, officer, employee or agent, and shall continue as to a
person who has ceased to be a Director, trustee, officer, employee or agent and
shall inure to
<PAGE> 7
the benefit of heirs, executors and administrators of such a person.
Section 2. Insurance
---------
The Corporation may, to the full extent then permitted by law and
authorized by the Directors, purchase and maintain insurance on behalf of any
persons described in the preceding paragraph against any liability asserted
against and incurred by any such person in any capacity, or rising out of his
status as such, whether or not the Corporation would have the power to indemnify
such person against such liability.
ARTICLE V.
MISCELLANEOUS
- -------------
Section 1. Transfer and Registration of Certificates
-----------------------------------------
The Board of Directors shall have authority to make such rules and
regulations as it deems expedient concerning the issuance, transfer and
registration of certificates for shares and the shares represented thereby and
may appoint transfer agents and registrars thereof.
Section 2. Substituted Certificates
------------------------
Any person claiming a certificate for shares to have been lost, stolen or
destroyed shall make an affidavit or affirmation of that fact, shall give the
Corporation and its registrar or registrars and its transfer agent or agents a
bond of indemnity satisfactory to the Board of Directors or to the Executive
Committee or to the President or a Vice President and the Secretary or the
Treasurer, and, if required by the Board or the Executive Committee or such
officers, shall advertise the same in such manner as may be required, whereupon
a new certificate may be issued of the same tenor and for the same number of
shares as the one alleged to have been lost, stolen or destroyed.
Section 3. Voting upon Shares Held by the Corporation
------------------------------------------
Unless otherwise ordered by the Board of Directors, the President in person
or by proxy or proxies appointed by him shall have full power and authority on
behalf of the Corporation to vote, act and consent with respect to any shares
issued by other corporations which the Corporation may own.
<PAGE> 8
Section 4. Corporate Seal
--------------
The seal of the Corporation shall be circular in form with the name of the
Corporation stamped around the margin and the words "Corporate Seal" stamped
across the center.
Section 5. Articles to Govern
------------------
In case any provision of these Regulations shall be inconsistent with the
Articles of Incorporation, the Articles of Incorporation shall govern.
Section 6. Amendments
----------
These Regulations may be amended by the affirmative vote or the written
consent of the shareholders of record entitled to exercise a majority of the
voting power on such proposal, provided, however, that if an amendment is
adopted by written consent without a meeting of the shareholders, it shall be
the duty of the Secretary to enter the amendment in the records of the
Corporation and to mail a copy of such amendment to each shareholder of record
who would be entitled to vote thereon and did not participate in the adoption
thereof.
<PAGE> 9
AMENDMENT TO ARTICLE I, SECTION 7
OF THE CODE OF REGULATIONS
OF
AMERICAN GREETINGS CORPORATION
Article I, Section 7 of the Code of Regulations is hereby amended to read as
follows:
Except as provided below, to constitute a quorum at any meeting of
shareholders, there shall be present in person or by proxy shareholders of
record entitled to exercise not less than twenty-five percent of the voting
power of the corporation in respect of any one of the purposes for which
the meeting is called.
Where shareholder approval is a prerequisite to the listing of any
additional or new securities of the Corporation, the total vote cast on
such a proposal must represent over fifty percent in interest of all
securities entitled to vote on the proposal.
<PAGE> 1
Exhibit 4(i)
================================================================================
AMERICAN GREETINGS CORPORATION
TO
NBD BANK
Trustee
--------------
INDENTURE
Dated as of July 27, 1998
--------------
================================================================================
<PAGE> 2
..............................................................
CERTAIN SECTIONS OF THIS INDENTURE RELATING TO SECTIONS 310 THROUGH 318,
INCLUSIVE, OF THE TRUST INDENTURE ACT OF 1939:
TRUST INDENTURE
ACT SECTION INDENTURE SECTION
Section 310(a)(1) ........................................... 609
(a)(2) ........................................... 609
(a)(3) ........................................... Not Applicable
(a)(4) ........................................... Not Applicable
(b) ........................................... 608
610
Section 311(a) ........................................... 613
(b) ........................................... 613
Section 312(a) ........................................... 701
702
(b) ........................................... 702
(c) ........................................... 702
Section 313(a) ........................................... 703
(b) ........................................... 703
(c) ........................................... 703
(d) ........................................... 703
Section 314(a) ........................................... 704
(a)(4) ........................................... 101
1004
(b) ........................................... Not Applicable
(c)(1) ........................................... 102
(c)(2) ........................................... 102
(c)(3) ........................................... Not Applicable
(d) ........................................... Not Applicable
(e) ........................................... 102
Section 315(a) ........................................... 601
(b) ........................................... 602
(c) ........................................... 601
(d) ........................................... 601
(e) ........................................... 514
Section 316(a) ........................................... 101
(a)(1)(A) ........................................... 502
512
(a)(1)(B) ........................................... 513
(a)(2) ........................................... Not Applicable
(b) ........................................... 508
(c) ........................................... 104
Section 317(a)(1) ........................................... 503
(a)(2) ........................................... 504
(b) ........................................... 1003
Section 318(a) ........................................... 107
- -------------------
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE> 3
TABLE OF CONTENTS
----------
PAGE
----
PARTIES................................................................... 1
RECITALS OF THE COMPANY................................................... 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. Definitions:
Act......................................................... 2
Affiliate; control.......................................... 2
Authenticating Agent........................................ 2
Board of Directors.......................................... 2
Board Resolution............................................ 2
Business Day................................................ 2
Commission.................................................. 2
Company..................................................... 2
Company Request; Company Order.............................. 2
Consolidated Net Tangible Assets............................ 3
Corporate Trust Office...................................... 3
corporation................................................. 3
Covenant Defeasance......................................... 3
Defaulted Interest.......................................... 3
Defeasance.................................................. 3
Depositary.................................................. 3
Event of Default............................................ 3
Exchange Act................................................ 3
Expiration Date............................................. 3
Funded Debt................................................. 3
Global Security............................................. 4
Holder...................................................... 4
Indebtedness................................................ 4
Indenture................................................... 4
interest.................................................... 4
Interest Payment Date....................................... 4
Investment Company Act...................................... 4
Investments................................................. 4
Maturity.................................................... 5
- --------------
NOTE: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
<PAGE> 4
PAGE
----
Mortgage.................................................... 5
Notice of Default........................................... 5
Officers' Certificate....................................... 5
Opinion of Counsel.......................................... 5
Original Issue Discount Security............................ 5
Outstanding................................................. 5
Paying Agent................................................ 6
Person...................................................... 6
Place of Payment............................................ 6
Predecessor Security........................................ 6
Redemption Date............................................. 7
Redemption Price............................................ 7
Regular Record Date......................................... 7
Repayment Date.............................................. 7
Repayment Price............................................. 7
Restricted Subsidiary....................................... 7
Sale and Leaseback Transaction.............................. 7
Secured Debt................................................ 7
Securities.................................................. 7
Securities Act.............................................. 7
Security Register and Security Registrar.................... 7
Special Record Date......................................... 7
Stated Maturity............................................. 7
Subsidiary.................................................. 8
Trust Indenture Act......................................... 8
Trustee..................................................... 8
U.S. Government Obligation.................................. 8
Unrestricted Subsidiary..................................... 8
Vice President.............................................. 8
Wholly-owned Restricted Subsidiary.......................... 8
SECTION 102. Compliance Certificates and Opinions........................ 9
SECTION 103. Form of Documents Delivered to Trustee...................... 9
SECTION 104. Acts of Holders; Record Dates............................... 10
SECTION 105. Notices, Etc., to Trustee and Company....................... 12
SECTION 106. Notice to Holders; Waiver................................... 12
SECTION 107. Conflict with Trust Indenture Act........................... 13
SECTION 108. Effect of Headings and Table of Contents.................... 13
SECTION 109. Successors and Assigns...................................... 13
SECTION 110. Separability Clause......................................... 13
SECTION 111. Benefits of Indenture....................................... 13
SECTION 112. Governing Law............................................... 13
SECTION 113. Legal Holidays.............................................. 13
-ii-
<PAGE> 5
PAGE
----
ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally............................................. 14
SECTION 202. Form of Face of Security.................................... 14
SECTION 203. Form of Reverse of Security................................. 16
SECTION 204. Form of Legend for Global Securities........................ 20
SECTION 205. Form of Trustee's Certificate of Authentication............. 21
ARTICLE THREE
THE SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series........................ 21
SECTION 302. Denominations............................................... 24
SECTION 303. Execution, Authentication, Delivery and Dating.............. 24
SECTION 304. Temporary Securities........................................ 25
SECTION 305. Registration, Registration of Transfer and Exchange......... 26
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities............ 27
SECTION 307. Payment of Interest; Interest Rights Preserved.............. 28
SECTION 308. Persons Deemed Owners....................................... 29
SECTION 309. Cancellation................................................ 30
SECTION 310. Computation of Interest..................................... 30
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture..................... 30
SECTION 402. Application of Trust Money.................................. 31
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default........................................... 31
SECTION 502. Acceleration of Maturity; Rescission and Annulment.......... 33
-iii-
<PAGE> 6
PAGE
----
SECTION 503. Collection of Indebtedness and Suits for
Enforcement by Trustee.................................... 34
SECTION 504. Trustee May File Proofs of Claim............................ 35
SECTION 505. Trustee May Enforce Claims Without Possession
of Securities............................................. 35
SECTION 506. Application of Money Collected.............................. 35
SECTION 507. Limitation on Suits......................................... 36
SECTION 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest...................................... 37
SECTION 509. Restoration of Rights and Remedies.......................... 37
SECTION 510. Rights and Remedies Cumulative.............................. 37
SECTION 511. Delay or Omission Not Waiver................................ 37
SECTION 512. Control by Holders.......................................... 38
SECTION 513. Waiver of Past Defaults..................................... 38
SECTION 514. Undertaking for Costs....................................... 38
SECTION 515. Waiver of Usury, Stay or Extension Laws..................... 39
ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities......................... 39
SECTION 602. Notice of Defaults.......................................... 39
SECTION 603. Certain Rights of Trustee................................... 40
SECTION 604. Not Responsible for Recitals or Issuance of Securities...... 41
SECTION 605. May Hold Securities......................................... 41
SECTION 606. Money Held in Trust......................................... 41
SECTION 607. Compensation and Reimbursement.............................. 41
SECTION 608. Conflicting Interests....................................... 42
SECTION 609. Corporate Trustee Required; Eligibility..................... 42
SECTION 610. Resignation and Removal; Appointment of Successor........... 42
SECTION 611. Acceptance of Appointment by Successor...................... 44
SECTION 612. Merger, Conversion, Consolidation or Succession
to Business............................................... 45
SECTION 613. Preferential Collection of Claims Against Company........... 45
SECTION 614. Appointment of Authenticating Agent......................... 45
-iv-
<PAGE> 7
PAGE
----
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses
of Holders................................................ 47
SECTION 702. Preservation of Information; Communications
to Holders................................................ 47
SECTION 703. Reports by Trustee.......................................... 47
SECTION 704. Reports by Company.......................................... 48
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, Etc., Only on
Certain Terms............................................. 48
SECTION 802. Successor Substituted....................................... 49
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders.......... 49
SECTION 902. Supplemental Indentures with Consent of Holders............. 50
SECTION 903. Execution of Supplemental Indentures........................ 51
SECTION 904. Effect of Supplemental Indentures........................... 52
SECTION 905. Conformity with Trust Indenture Act......................... 52
SECTION 906. Reference in Securities to Supplemental Indentures.......... 52
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium and Interest.................. 52
SECTION 1002. Maintenance of Office or Agency............................. 52
SECTION 1003. Money for Securities Payments to Be Held in Trust........... 53
SECTION 1004. Statement by Officers as to Default; Notice of
Certain Events............................................ 54
SECTION 1005. Existence................................................... 54
-v-
<PAGE> 8
PAGE
----
SECTION 1006. Maintenance of Properties................................... 54
SECTION 1007. Payment of Taxes and Other Claims........................... 55
SECTION 1008. Limitation on Secured Debt.................................. 55
SECTION 1009. Limitation on Sales and Leasebacks.......................... 56
SECTION 1010. Limitation on Unsecured Funded Debt of Restricted
Subsidiaries.............................................. 57
SECTION 1011. Waiver of Certain Covenants................................. 58
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Applicability of Article..................................... 58
SECTION 1102. Election to Redeem; Notice to Trustee........................ 58
SECTION 1103. Selection by Trustee of Securities to Be Redeemed............ 59
SECTION 1104. Notice of Redemption......................................... 59
SECTION 1105. Deposit of Redemption Price.................................. 60
SECTION 1106. Securities Payable on Redemption Date........................ 60
SECTION 1107. Securities Redeemed in Part.................................. 61
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. Applicability of Article..................................... 61
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities........ 61
SECTION 1203. Redemption of Securities for Sinking Fund.................... 62
ARTICLE THIRTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1301. Company's Option to Effect Defeasance or Covenant
Defeasance................................................. 62
SECTION 1302. Defeasance and Discharge..................................... 62
SECTION 1303. Covenant Defeasance.......................................... 63
SECTION 1304. Conditions to Defeasance or Covenant Defeasance.............. 63
SECTION 1305. Deposited Money and U.S. Government Obligations to Be
Held in Trust; Miscellaneous Provisions.................... 65
SECTION 1306. Reinstatement................................................ 66
-vi-
<PAGE> 9
PAGE
----
ARTICLE FOURTEEN
REPAYMENT OF SECURITIES AT OPTION OF HOLDERS
SECTION 1401. Applicability of Article..................................... 66
SECTION 1402. Notice of Repayment Date..................................... 66
SECTION 1403. Deposit of Repayment Price................................... 67
SECTION 1404. Securities Payable on Repayment Date......................... 67
SECTION 1405. Securities Repaid in Part.................................... 67
TESTIMONIUM................................................................ 69
SIGNATURES AND SEALS....................................................... 69
ACKNOWLEDGMENTS............................................................ 70
-vii-
<PAGE> 10
INDENTURE, dated as of July 27, 1998, between American Greetings
Corporation, a corporation duly organized and existing under the laws of the
State of Ohio (herein called the "Company"), having its principal office at
One American Road, Cleveland, Ohio, 44144, and NBD Bank, a corporation duly
organized and existing under the laws of Michigan, as Trustee (herein called the
"Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
debentures, notes or other evidences of indebtedness (herein called the
"Securities"), to be issued in one or more series as in this Indenture provided.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities
by the Holders thereof, it is mutually agreed, for the equal and proportionate
benefit of all Holders of the Securities or of series thereof, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles, and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles as
are generally accepted at the date of this instrument;
<PAGE> 11
(4) unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as the case may
be, of this Indenture; and
(5) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other sub-division.
"Act", when used with respect to any Holder, has the meaning specified in
Section 104.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" means any Person authorized by the Trustee pursuant
to Section 614 to act on behalf of the Trustee to authenticate Securities of one
or more series.
"Board of Directors" means either the board of directors of the Company or
any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day", when used with respect to any Place of Payment, means each
Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in that Place of Payment are authorized or obligated by law
or executive order to close.
"Commission" means the Securities and Exchange Commission, from time to
time constituted, created under the Exchange Act, or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Company" means the Person named as the "Company" in the first paragraph of
this instrument until a successor Person shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its Vice
Chairman of the Board, its President or a Vice President, and by its Treasurer,
an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered
to the Trustee.
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"Consolidated Net Tangible Assets" means (a) the total amount of assets
(less applicable reserves and other properly deductible items) which under
generally accepted accounting principles would be included on a consolidated
balance sheet of the Company and its Restricted Subsidiaries after deducting
therefrom (i) all current liabilities (excluding therefrom any portion which is
extendible or renewable at the option of the obligor on such liability to a time
more than 12 months after the time of the computation of the amount thereof),
and (ii) all goodwill, trade names, trademarks, patents, unamortized debt
discount and expense and other like intangibles, which in each case under
generally accepted accounting principles would be included on such consolidated
balance sheet, less (b) the amount which would be so included on such
consolidated balance sheet for Investments (less applicable reserves) in
Unrestricted Subsidiaries.
"Corporate Trust Office" means the principal office of the Trustee at: 11th
Floor 611 Woodward Avenue, Detroit, MI 48226 Mail Suite 8110 at which at any
particular time its corporate trust business shall be administered.
"corporation" means a corporation, association, company, joint-stock
company or business trust.
"Covenant Defeasance" has the meaning specified in Section 1303.
"Defaulted Interest" has the meaning specified in Section 307.
"Defeasance" has the meaning specified in Section 1302.
"Depositary" means, with respect to Securities of any series issuable in
whole or in part in the form of one or more Global Securities, a clearing agency
registered under the Exchange Act that is designated to act as Depositary for
such Securities as contemplated by Section 301.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934 and any statute
successor thereto, in each case as amended from time to time.
"Expiration Date" has the meaning specified in Section 104.
"Funded Debt" means (i) all Indebtedness which by its terms matures more
than 12 months after the time of the computation of the amount thereof or which
is extendible or renewable at the option of the obligor on such Indebtedness to
a time more than 12 months after the time of the computation of the amount
thereof, (ii) all guarantees, direct or indirect, of any such Indebtedness or of
dividends, other than any guarantee in connection with the sale or discount by
the Company or any Restricted Subsidiary of accounts receivable, trade
acceptances and other paper arising in the ordinary course of business, and
(iii) in the case of any Subsidiary, all Preferred Stock of such Subsidiary,
taken at the greater of its voluntary or involuntary liquidation price at the
time of any calculation hereunder, but exclusive of accrued dividends, if any;
provided, however, that in determining the amount
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<PAGE> 13
of Funded Debt of the Company or any Subsidiary there shall not be included any
amount in respect of obligations under leases, or guarantees of obligations
under leases, whether or not such obligations or guarantees are shown on a
balance sheet as liability items. The Company or any Restricted Subsidiary shall
be deemed to have assumed Funded Debt secured by any Mortgage upon any of its
property or assets whether or not it has actually done so.
"Global Security" means a Security that evidences all or part of the
Securities of any series and bears the legend set forth in Section 204 (or such
legend as may be specified as contemplated by Section 301 for such Securities).
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Indebtedness" means (i) all items of indebtedness or liability (except
capital and retained earnings) which in accordance with generally accepted
accounting principles would be included in determining total liabilities as
shown on the liability side of a balance sheet as at the date as of which
Indebtedness is to be determined, (ii) obligations constituting Indebtedness
under the preceding clause (i) secured by any Mortgage existing on property
owned subject to such Mortgage, whether or not the obligations secured thereby
shall have been assumed, and (iii) guarantees, endorsements (other than for
purposes of collection) and other contingent obligations in respect of, or to
purchase or otherwise acquire, obligations of others constituting Indebtedness
under the preceding clause (i) or (ii); provided, however, that any obligations
or guarantees of obligations in respect of lease rentals, whether or not such
obligations or guarantees of obligations would be included as liabilities on a
consolidated balance sheet of the Company and its Restricted Subsidiaries, shall
not be included in Indebtedness.
"Indenture" means this instrument as originally executed and as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof, including, for
all purposes of this instrument and any such supplemental indenture, the
provisions of the Trust Indenture Act that are deemed to be a part of and govern
this instrument and any such supplemental indenture, respectively. The term
"Indenture" shall also include the terms of particular series of Securities
established as contemplated by Section 301.
"interest", when used with respect to an Original Issue Discount Security
which by its terms bears interest only after Maturity, means interest payable
after Maturity.
"Interest Payment Date", when used with respect to any Security, means the
Stated Maturity of an installment of interest on such Security.
"Investment Company Act" means the Investment Company Act of 1940 and any
statute successor thereto, in each case as amended from time to time.
"Investments" mean and include all investments, whether by acquisition of
stock or Indebtedness, or by loan, advance, transfer of property, capital
contribution or otherwise,
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<PAGE> 14
made by the Company or by any Restricted Subsidiary, and shall include all
guarantees, direct or indirect, by the Company or any Restricted Subsidiary of
any Indebtedness of an Unrestricted Subsidiary which by its terms matures 12
months or less from the time of computation of the amount thereof to the extent
not included as a liability or liability item on the consolidated balance sheet
of the Company and its Restricted Subsidiaries, but shall not include accounts
receivable of the Company or of any Restricted Subsidiary arising from the sale
of merchandise in the ordinary course of business.
"Maturity", when used with respect to any Security, means the date on which
the principal of such Security or an installment of principal becomes due and
payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Mortgage" means and includes any mortgage, pledge, lien, security
interest, conditional sale or other title retention agreement or similar
encumbrance.
"Notice of Default" means a written notice of the kind specified in
Section 501(4) or 501(5).
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, a Vice Chairman of the Board, the President or a Vice President, and by
the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary,
of the Company, and delivered to the Trustee. One of the officers signing an
Officers' Certificate given pursuant to Section 1004 shall be the principal
executive, financial or accounting officer of the Company.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for the Company, and who shall be acceptable to the Trustee.
"Original Issue Discount Security" means any Security which provides for an
amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 502.
"Outstanding", when used with respect to Securities, means, as of the date
of determination, all Securities theretofore authenticated and delivered under
this Indenture, except:
(1) Securities theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(2) Securities for whose payment or redemption money in the necessary
amount has been theretofore deposited with the Trustee or any Paying Agent
(other than the Company) in trust or set aside and segregated in trust by
the Company (if the Company shall act as its own Paying Agent) for the
Holders of such Securities; provided that, if such Securities are to be
redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been made;
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<PAGE> 15
(3) Securities as to which Defeasance has been effected pursuant to
Section 1302; and
(4) Securities which have been paid pursuant to Section 306 or in
exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indenture, other than any such Securities in
respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide purchaser
in whose hands such Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given, made or taken any
request, demand, authorization, direction, notice, consent, waiver or other
action hereunder as of any date, (A) the principal amount of an Original Issue
Discount Security which shall be deemed to be Outstanding shall be the amount of
the principal thereof which would be due and payable as of such date upon
acceleration of the Maturity thereof to such date pursuant to Section 502,
(B) if, as of such date, the principal amount payable at the Stated Maturity of
a Security is not determinable, the principal amount of such Security which
shall be deemed to be Outstanding shall be the amount as specified or determined
as contemplated by Section 301, (C) the principal amount of a Security
denominated in one or more foreign currencies or currency units which shall be
deemed to be Outstanding shall be the U.S. dollar equivalent, determined as of
such date in the manner provided as contemplated by Section 301, of the
principal amount of such Security (or, in the case of a Security described in
Clause (A) or (B) above, of the amount determined as provided in such Clause),
and (D) Securities owned by the Company or any other obligor upon the Securities
or any Affiliate of the Company or of 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, waiver or other action, only
Securities which the Trustee knows to be so owned shall be so disregarded.
Securities so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Securities and that the pledgee
is not the Company or any other obligor upon the Securities or any Affiliate of
the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of or any premium or interest on any Securities on behalf of the
Company.
"Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Place of Payment", when used with respect to the Securities of any series,
means the place or places where the principal of and any premium and interest on
the Securities of that series are payable as specified as contemplated by
Section 301.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under
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<PAGE> 16
Section 306 in exchange for or in lieu of a mutilated, destroyed, lost or stolen
Security shall be deemed to evidence the same debt as the mutilated, destroyed,
lost or stolen Security.
"Redemption Date", when used with respect to any Security to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price", when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Regular Record Date" for the interest payable on any Interest Payment Date
on the Securities of any series means the date specified for that purpose as
contemplated by Section 301.
"Repayment Date", when used with respect to any Security of any series to
be repaid, means the date, if any, fixed for such repayment pursuant to
Section 301.
"Repayment Price", when used with respect to any Security of any series to
be repaid, means the price, if any, at which is it to be repaid pursuant to
Section 301.
"Restricted Subsidiary" means any Subsidiary of the Company other than an
Unrestricted Subsidiary.
"Sale and Leaseback Transaction" has the meaning specified in Section 1009.
"Secured Debt" means Indebtedness, if such Indebtedness is secured by a
Mortgage upon any assets of the Company or a Restricted Subsidiary, including in
such assets, without limitation, shares of stock or Indebtedness of any
Subsidiary owned by the Company or a Restricted Subsidiary.
"Securities" has the meaning stated in the first recital of this Indenture
and more particularly means any Securities authenticated and delivered under
this Indenture.
"Securities Act" means the Securities Act of 1933 and any statute successor
thereto, in each case as amended from time to time.
"Security Register" and "Security Registrar" have the respective meanings
specified in Section 305.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which the principal of such Security or
such installment of principal or interest is due and payable.
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<PAGE> 17
"Subsidiary" means a corporation more than 50% of the outstanding voting
stock of which is owned, directly or indirectly, by the Company or by one or
more other Subsidiaries, or by the Company and one or more other Subsidiaries.
For the purposes of this definition, "voting stock" means stock which ordinarily
has voting power for the election of directors, whether at all times or only so
long as no senior class of stock has such voting power by reason of any
contingency.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at
the date as of which this instrument was executed; provided, however, that in
the event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 as so amended.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this instrument until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean or
include each Person who is then a Trustee hereunder, and if at any time there is
more than one such Person, "Trustee" as used with respect to the Securities of
any series shall mean the Trustee with respect to Securities of that series.
"U.S. Government Obligation" has the meaning specified in Section 1304.
"Unrestricted Subsidiary" means, unless otherwise designated a Restricted
Subsidiary by a Board Resolution, (i) any Subsidiary substantially all of the
physical properties of which are located, or substantially all of the business
of which is carried on, outside the United States of America ("United States of
America" shall not include the territories or possessions thereof), (ii) any
Subsidiary the primary business of which consists of financing operations in
connection with leasing and conditional sales transactions on behalf of the
Company and its Subsidiaries, and/or purchasing accounts receivable and/or
making loans secured by accounts receivable or inventory, or which is otherwise
primarily engaged in the business of a finance company, and (iii) any
Subsidiary, the primary business of which consists of owning or leasing real
estate. Any designation of an Unrestricted Subsidiary as a Restricted Subsidiary
by a Board Resolution may be terminated thereafter by a Board Resolution if, but
only if, immediately thereafter the Company could create additional Secured Debt
in accordance with Section 1008 without equally and ratably securing the Notes.
"Vice President", when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president".
"Wholly-owned Restricted Subsidiary" means any Restricted Subsidiary all
the outstanding Funded Debt and capital stock of which, other than directors'
qualifying shares, are owned by the Company or its other Wholly-owned Restricted
Subsidiaries.
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SECTION 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee such certificates and opinions as may be required under the Trust
Indenture Act. Each such certificate or opinion shall be given in the form of an
Officers' Certificate, if to be given by an officer of the Company, or an
Opinion of Counsel, if to be given by counsel, and shall comply with the
requirements of the Trust Indenture Act and any other requirements set forth in
this Indenture.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include,
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(4) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
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<PAGE> 19
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. Acts of Holders; Record Dates.
Any request, demand, authorization, direction, notice, consent, waiver or
other action provided or permitted by this Indenture to be given, made or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 601) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section.
The fact and date of the execution by any Person of any such instrument or
writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
a signer acting in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or writing,
or the authority of the Person executing the same, may also be proved in any
other manner which the Trustee deems sufficient.
The ownership of Securities shall be proved by the Security Register.
Any request, demand, authorization, direction, notice, consent, waiver or
other Act of the Holder of any Security shall bind every future Holder of the
same Security and the Holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such
Security.
The Company may set any day as a record date for the purpose of determining
the Holders of Outstanding Securities of any series entitled to give, make or
take any request, demand, authorization, direction, notice, consent, waiver or
other action provided or permitted by this Indenture to be given, made or taken
by Holders of Securities of such series, provided that the Company may not set a
record date for, and the provisions of this paragraph shall not apply with
respect to, the giving or making of any notice, declaration, request or
direction referred to in the next paragraph. If any record date is set pursuant
to this paragraph, the Holders of Outstanding Securities of the relevant series
on such record
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<PAGE> 20
date, and no other Holders, shall be entitled to take the relevant action,
whether or not such Holders remain Holders after such record date; provided that
no such action shall be effective hereunder unless taken on or prior to the
applicable Expiration Date by Holders of the requisite principal amount of
Outstanding Securities of such series on such record date. Nothing in this
paragraph shall be construed to prevent the Company from setting a new record
date for any action for which a record date has previously been set pursuant to
this paragraph (whereupon the record date previously set shall automatically and
with no action by any Person be canceled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of Outstanding Securities of the relevant
series on the date such action is taken. Promptly after any record date is set
pursuant to this paragraph, the Company, at its own expense, shall cause notice
of such record date, the proposed action by Holders and the applicable
Expiration Date to be given to the Trustee in writing and to each Holder of
Securities of the relevant series in the manner set forth in Section 106.
The Trustee may set any day as a record date for the purpose of determining
the Holders of Outstanding Securities of any series entitled to join in the
giving or making of (i) any Notice of Default, (ii) any declaration of
acceleration referred to in Section 502, (iii) any request to institute
proceedings referred to in Section 507(2) or (iv) any direction referred to in
Section 512, in each case with respect to Securities of such series. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities of such series on such record date, and no other Holders, shall be
entitled to join in such notice, declaration, request or direction, whether or
not such Holders remain Holders after such record date; provided that no such
action shall be effective hereunder unless taken on or prior to the applicable
Expiration Date by Holders of the requisite principal amount of Outstanding
Securities of such series on such record date. Nothing in this paragraph shall
be construed to prevent the Trustee from setting a new record date for any
action for which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall automatically and with
no action by any Person be canceled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of Outstanding Securities of the relevant
series on the date such action is taken. Promptly after any record date is set
pursuant to this paragraph, the Trustee, at the Company's expense, shall cause
notice of such record date, the proposed action by Holders and the applicable
Expiration Date to be given to the Company in writing and to each Holder of
Securities of the relevant series in the manner set forth in Section 106.
With respect to any record date set pursuant to this Section, the party
hereto which sets such record dates may designate any day as the "Expiration
Date" and from time to time may change the Expiration Date to any earlier or
later day; provided that no such change shall be effective unless notice of the
proposed new Expiration Date is given to the other party hereto in writing, and
to each Holder of Securities of the relevant series in the manner set forth in
Section 106, on or prior to the existing Expiration Date. If an Expiration Date
is not designated with respect to any record date set pursuant to this Section,
the party hereto which set such record date shall be deemed to have initially
designated the 180th day after such record date as the Expiration Date with
respect thereto, subject to its right to change
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<PAGE> 21
the Expiration Date as provided in this paragraph. Notwithstanding the
foregoing, no Expiration Date shall be later than the 180th day after the
applicable record date.
Without limiting the foregoing, a Holder entitled hereunder to take any
action hereunder with regard to any particular Security may do so with regard to
all or any part of the principal amount of such Security or by one or more duly
appointed agents each of which may do so pursuant to such appointment with
regard to all or any part of such principal amount.
SECTION 105. Notices, Etc., to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing
to or with the Trustee at its Corporate Trust Office, Attention: J. Michael
Banas, or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
in writing and mailed, first-class postage prepaid, to the Company
addressed to it at the address of its principal office specified in the
first paragraph of this instrument or at any other address previously
furnished in writing to the Trustee by the Company.
SECTION 106. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his address as it appears in the Security Register, not later
than the latest date (if any), and not earlier than the earliest date (if any),
prescribed for the giving of such notice. In any case where notice to Holders is
given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders. Where this Indenture provides for notice
in any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Holders shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason of
any other cause it shall be impracticable to give such notice by mail, then such
notification as shall be made with the approval of the Trustee shall constitute
a sufficient notification for every purpose hereunder.
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SECTION 107. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a provision of
the Trust Indenture Act which is required under such Act to be a part of and
govern this Indenture, the latter provision shall control. If any provision of
this Indenture modifies or excludes any provision of the Trust Indenture Act
which may be so modified or excluded, the latter provision shall be deemed to
apply to this Indenture as so modified or to be excluded, as the case may be.
SECTION 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall bind
its successors and assigns, whether so expressed or not.
SECTION 110. Separability Clause.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 111. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied, shall
give to any Person, other than the parties hereto and their successors hereunder
and the Holders, any benefit or any legal or equitable right, remedy or claim
under this Indenture.
SECTION 112. Governing Law.
This Indenture and the Securities shall be governed by and construed in
accordance with the law of the State of New York.
SECTION 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day at any Place of Payment,
then (notwithstanding any other provision of this Indenture or of the Securities
(other than a provision of any Security
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<PAGE> 23
which specifically states that such provision shall apply in lieu of this
Section)) payment of interest or principal (and premium, if any) need not be
made at such Place of Payment on such date, but may be made on the next
succeeding Business Day at such Place of Payment with the same force and effect
as if made on the Interest Payment Date or Redemption Date, or at the Stated
Maturity.
ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally.
The Securities of each series shall be in substantially the form set forth
in this Article, or in such other form as shall be established by or pursuant to
a Board Resolution or in one or more indentures supplemental hereto, in each
case with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or Depositary therefor or as may, consistently herewith, be
determined by the officers executing such Securities, as evidenced by their
execution thereof. If the form of Securities of any series is established by
action taken pursuant to a Board Resolution, a copy of an appropriate record of
such action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the Company
Order contemplated by Section 303 for the authentication and delivery of such
Securities.
The definitive Securities shall be printed, lithographed or engraved on
steel engraved borders or may be produced in any other manner, all as determined
by the officers executing such Securities, as evidenced by their execution of
such Securities.
SECTION 202. Form of Face of Security.
[INSERT APPROPRIATE TAX LEGENDS]
..........................................................
..........................................................................
No. ......... $ ........
American Greetings Corporation, a corporation duly organized and existing
under the laws of Ohio (herein called the "Company", which term includes any
successor Person under the Indenture hereinafter referred to), for value
received, hereby promises to pay to ...........................................,
or registered assigns, the principal sum of
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<PAGE> 24
...................................... Dollars on ..............................
[if the Security is to bear interest prior to Maturity, insert -- , and to pay
interest thereon from ............. or from the most recent Interest Payment
Date to which interest has been paid or duly provided for, semi-annually on
............ and ............ in each year, commencing ............, at the rate
of ....% per annum, until the principal hereof is paid or made available for
payment [if applicable, insert -- , provided that any principal and premium, and
any such installment of interest, which is overdue shall bear interest at the
rate of ...% per annum (to the extent that the payment of such interest shall be
legally enforceable), from the dates such amounts are due until they are paid or
made available for payment, and such interest shall be payable on demand]. The
interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, as provided in such Indenture, be paid to the Person in whose
name this Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest, which shall be
the ....... or ....... (whether or not a Business Day), as the case may be, next
preceding such Interest Payment Date. Any such interest not so punctually paid
or duly provided for will forthwith cease to be payable to the Holder on such
Regular Record Date and may either be paid to the Person in whose name this
Security (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to Holders of Securities
of this series not less than 10 days prior to such Special Record Date, or be
paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities of this series
may be listed, and upon such notice as may be required by such exchange, all as
more fully provided in said Indenture].
[If the Security is not to bear interest prior to Maturity, insert -- The
principal of this Security shall not bear interest except in the case of a
default in payment of principal upon acceleration, upon redemption, upon
repayment at the option of the Holder or at Stated Maturity and in such case the
overdue principal and any overdue premium shall bear interest at the rate of
....% per annum (to the extent that the payment of such interest shall be
legally enforceable), from the dates such amounts are due until they are paid or
made available for payment. Interest on any overdue principal or premium shall
be payable on demand. Any such interest on overdue principal or premium which is
not paid on demand shall bear interest at the rate of ......% per annum (to the
extent that the payment of such interest on interest shall be legally
enforceable), from the date of such demand until the amount so demanded is paid
or made available for payment. Interest on any overdue interest shall be payable
on demand.]
Payment of the principal of (and premium, if any) and [if applicable,
insert -- any such] interest on this Security will be made at the office or
agency of the Company maintained for that purpose in ............, in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts [if applicable, insert -- ;
provided, however, that at the option of the Company payment of interest may be
made by check mailed to the address of the Person entitled thereto as such
address shall appear in the Security Register].
[Insert description of the right, if any, of Holders to elect repayment.]
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<PAGE> 25
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated:
American Greetings Corporation
By.............................................
Attest:
.........................................
SECTION 203. Form of Reverse of Security.
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under an Indenture, dated as of ............... (herein called the
"Indenture", which term shall have the meaning assigned to it in such
instrument), between the Company and ..................., as Trustee (herein
called the "Trustee", which term includes any successor trustee under the
Indenture), and reference is hereby made to the Indenture for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Securities and of the terms upon
which the Securities are, and are to be, authenticated and delivered. This
Security is one of the series designated on the face hereof [if applicable,
insert -- , limited in aggregate principal amount to $...........].
[If applicable, insert -- The Securities of this series are subject to
redemption upon not less than 30 days' notice by mail, [if applicable, insert --
(1) on ........... in any year commencing with the year ...... and ending with
the year ...... through operation of the sinking fund for this series at a
Redemption Price equal to 100% of the principal amount, and (2)] at any time
[if applicable, insert -- on or after .........., 19..], as a whole or in part,
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<PAGE> 26
at the election of the Company, at the following Redemption Prices (expressed as
percentages of the principal amount): If redeemed [if applicable, insert -- on
or before ..............., ...%, and if redeemed] during the 12-month period
beginning ............. of the years indicated,
Redemption Redemption
Year Price Year Price
- ---- ---------- ---- ----------
and thereafter at a Redemption Price equal to .....% of the principal amount,
together in the case of any such redemption [if applicable, insert -- (whether
through operation of the sinking fund or otherwise)] with accrued interest to
the Redemption Date, but interest installments whose Stated Maturity is on or
prior to such Redemption Date will be payable to the Holders of such Securities,
or one or more Predecessor Securities, of record at the close of business on the
relevant Record Dates referred to on the face hereof, all as provided in the
Indenture.]
[If applicable, insert -- The Securities of this series are subject to
redemption upon not less than 30 days' notice by mail, (1) on ............ in
any year commencing with the year .... and ending with the year .... through
operation of the sinking fund for this series at the Redemption Prices for
redemption through operation of the sinking fund (expressed as percentages of
the principal amount) set forth in the table below, and (2) at any time [if
applicable, insert -- on or after ............], as a whole or in part, at the
election of the Company, at the Redemption Prices for redemption otherwise than
through operation of the sinking fund (expressed as percentages of the principal
amount) set forth in the table below: If redeemed during the 12-month period
beginning ............ of the years indicated,
Redemption Price
For Redemption Redemption Price For
Through Operation Redemption Otherwise
of the Than Through Operation
Year Sinking Fund of the Sinking Fund
- ---- ----------------- ----------------------
and thereafter at a Redemption Price equal to .....% of the principal amount,
together in the case of any such redemption (whether through operation of the
sinking fund or otherwise) with accrued interest to the Redemption Date, but
interest installments whose Stated Maturity is on or prior to such Redemption
Date will be payable to the Holders of such
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<PAGE> 27
Securities, or one or more Predecessor Securities, of record at the close of
business on the relevant Record Dates referred to on the face hereof, all as
provided in the Indenture.]
[If applicable, insert -- Notwithstanding the foregoing, the Company may
not, prior to ............., redeem any Securities of this series as
contemplated by [if applicable, insert -- Clause (2) of] the preceding paragraph
as a part of, or in anticipation of, any refunding operation by the application,
directly or indirectly, of moneys borrowed having an interest cost to the
Company (calculated in accordance with generally accepted financial practice) of
less than .....% per annum.]
[If applicable, insert -- The sinking fund for this series provides for the
redemption on ............ in each year beginning with the year ....... and
ending with the year ...... of [if applicable, insert -- not less than
$.......... ("mandatory sinking fund") and not more than] $......... aggregate
principal amount of Securities of this series. Securities of this series
acquired or redeemed by the Company otherwise than through [if applicable,
insert -- mandatory] sinking fund payments may be credited against subsequent
[if applicable, insert -- mandatory] sinking fund payments otherwise required to
be made [if applicable, insert -- , in the inverse order in which they become
due].]
[If the Security is subject to redemption of any kind, insert -- In the
event of redemption of this Security in part only, a new Security or Securities
of this series and of like tenor for the unredeemed portion hereof will be
issued in the name of the Holder hereof upon the cancellation hereof.]
The Indenture contains provisions for defeasance at any time of the entire
indebtedness of this Security or certain restrictive covenants and Events of
Default with respect to this Security, in each case upon compliance with certain
conditions set forth in the Indenture.
[If applicable, insert provisions detailing provisions with respect to
repayment at the option of the Holders and the issuance of Securities in lieu of
Securities redeemed or repaid at the option of Holders. [If applicable, insert
- -- The Indenture contains provisions for defeasance at any time of [the entire
indebtedness of this Security][or] [certain restrictive covenants and Events of
Default with respect to this Security][, in each case] upon compliance with
certain conditions set forth in the Indenture.]
[If the Security is not an Original Issue Discount Security, insert -- If
an Event of Default with respect to Securities of this series shall occur and be
continuing, the principal of the Securities of this series may be declared due
and payable in the manner and with the effect provided in the Indenture.]
[If the Security is an Original Issue Discount Security, insert -- If an
Event of Default with respect to Securities of this series shall occur and be
continuing, an amount of principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture. Such amount shall be equal to -- insert formula for determining the
amount. Upon payment (i) of the amount of principal so declared due and payable
and (ii) of interest on any overdue principal, premium and interest (in each
case to
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<PAGE> 28
the extent that the payment of such interest shall be legally enforceable), all
of the Company's obligations in respect of the payment of the principal of and
premium and interest, if any, on the Securities of this series shall terminate.]
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of 66 2/3% in principal amount of the Securities at the
time Outstanding of each series to be affected. The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Securities of each series at the time Outstanding, on behalf of the
Holders of all Securities of such series, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the registration
of transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, the Holder
of this Security shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or for
any other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in principal amount
of the Securities of this series at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default as Trustee and offered the Trustee reasonable indemnity, and the Trustee
shall not have received from the Holders of a majority in principal amount of
Securities of this series at the time Outstanding a direction inconsistent with
such request, and shall have failed to institute any such proceeding, for 60
days after receipt of such notice, request and offer of indemnity. The foregoing
shall not apply to any suit instituted by the Holder of this Security for the
enforcement of any payment of principal hereof or any premium or interest hereon
on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium and interest
on this Security at the times, place and rate, and in the coin or currency,
herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registrable in the Security Register,
upon surrender of this Security for registration of transfer at the office or
agency of the Company in any place where the principal of and any premium and
interest on this Security are payable, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Securities of this series
and of like tenor, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
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<PAGE> 29
The Securities of this series are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Securities of this series are exchangeable for a like aggregate principal amount
of Securities of this series and of like tenor of a different authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
[If applicable, insert form of option to elect repayment.]
SECTION 204. Form of Legend for Global Securities.
Unless otherwise specified as contemplated by Section 301 for the
Securities evidenced thereby, every Global Security authenticated and delivered
hereunder shall bear a legend in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A
SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE
REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE
THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
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<PAGE> 30
SECTION 205. Form of Trustee's Certificate of Authentication.
The Trustee's certificates of authentication shall be in substantially the
following form:
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
NBD BANK,
As Trustee
By.........................................
Authorized Officer
ARTICLE THREE
THE SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution and, subject to Section 303,
set forth, or determined in the manner provided, in an Officers' Certificate, or
established in one or more indentures supplemental hereto, prior to the issuance
of Securities of any series,
(1) the title of the Securities of the series (which shall distinguish
the Securities of the series from Securities of any other series);
(2) any limit upon the aggregate principal amount of the Securities of
the series which may be authenticated and delivered under this Indenture
(except for Securities authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Securities of the
series pursuant to Section 304, 305, 306, 906, 1107 or 1405 and except for
any Securities which, pursuant to Section 303, are deemed never to have
been authenticated and delivered hereunder);
(3) the Person to whom any interest on a Security of the series shall
be payable, if other than the Person in whose name that Security (or one or
more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest;
(4) the date or dates on which the principal of any Securities of the
series is payable;
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<PAGE> 31
(5) the rate or rates at which any Securities of the series shall bear
interest, if any, the date or dates from which any such interest shall
accrue, the Interest Payment Dates on which any such interest shall be
payable and the Regular Record Date for any such interest payable on any
Interest Payment Date;
(6) the place or places where the principal of and any premium and
interest on any Securities of the series shall be payable;
(7) the period or periods within which, the price or prices at which
and the terms and conditions upon which any Securities of the series may be
redeemed, in whole or in part, at the option of the Company and, if other
than by a Board Resolution, the manner in which any election by the Company
to redeem the Securities shall be evidenced;
(8) the obligation, if any, of the Company to redeem or purchase any
Securities of the series pursuant to any sinking fund or analogous
provisions or at the option of the Holder thereof and the period or periods
within which, the price or prices at which and the terms and conditions
upon which any Securities of the series shall be redeemed or purchased, in
whole or in part, pursuant to such obligation;
(9) the period or periods within which, the price or prices at which
and the terms and conditions upon which Securities of the series may be
repaid, in whole or in part, at the option of the Holders;
(10) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which any Securities of the series shall be
issuable;
(11) if the amount of principal of or any premium or interest on any
Securities of the series may be determined with reference to an index or
pursuant to a formula, the manner in which such amounts shall be
determined;
(12) if other than the currency of the United States of America, the
currency, currencies or currency units in which the principal of or any
premium or interest on any Securities of the series shall be payable and
the manner of determining the equivalent thereof in the currency of the
United States of America for any purpose, including for purposes of the
definition of "Outstanding" in Section 101;
(13) if the principal of or any premium or interest on any Securities
of the series is to be payable, at the election of the Company or the
Holder thereof, in one or more currencies or currency units other than that
or those in which such Securities are stated to be payable, the currency,
currencies or currency units in which the principal of or any premium or
interest on such Securities as to which such election is made shall be
payable, the periods within which and the terms and conditions upon which
such election is to be made and the amount so payable (or the manner in
which such amount shall be determined);
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<PAGE> 32
(14) if other than the entire principal amount thereof, the portion of
the principal amount of any Securities of the series which shall be payable
upon declaration of acceleration of the Maturity thereof pursuant to
Section 502;
(15) if the principal amount payable at the Stated Maturity of any
Securities of the series will not be determinable as of any one or more
dates prior to the Stated Maturity, the amount which shall be deemed to be
the principal amount of such Securities as of any such date for any purpose
thereunder or hereunder, including the principal amount thereof which shall
be due and payable upon any Maturity other than the Stated Maturity or
which shall be deemed to be Outstanding as of any date prior to the Stated
Maturity (or, in any such case, the manner in which such amount deemed to
be the principal amount shall be determined);
(16) if applicable, that the Securities of the series, in whole or any
specified part, shall be defeasible pursuant to Section 1302 or Section
1303 or both such Sections and, if other than by a Board Resolution, the
manner in which any election by the Company to defease such Securities
shall be evidenced;
(17) if applicable, that any Securities of the series shall be
issuable in whole or in part in the form of one or more Global Securities
and, in such case, the respective Depositaries for such Global Securities,
the form of any legend or legends which shall be borne by any such Global
Security in addition to or in lieu of that set forth in Section 204 and any
circumstances in addition to or in lieu of those set forth in Clause (2) of
the last paragraph of Section 305 in which any such Global Security may be
exchanged in whole or in part for Securities registered, and any transfer
of such Global Security in whole or in part may be registered, in the name
or names of Persons other than the Depositary for such Global Security or a
nominee thereof;
(18) any addition to or change in the Events of Default which applies
to any Securities of the series and any change in the right of the Trustee
or the requisite Holders of such Securities to declare the principal amount
thereof due and payable pursuant to Section 502;
(19) any addition to or change in the covenants set forth in Article
Ten which applies to Securities of the series; and
(20) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture, except as permitted by
Section 901(5)).
All Securities of any one series shall be substantially identical except as
to denomination and except as may otherwise be provided in or pursuant to the
Board Resolution referred to above and (subject to Section 303) set forth, or
determined in the manner provided, in the Officers' Certificate referred to
above or in any such indenture supplemental hereto.
If any of the terms of the series are established by action taken pursuant
to a Board Resolution, a copy of an appropriate record of such action shall be
certified by the Secretary
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<PAGE> 33
or an Assistant Secretary of the Company and delivered to the Trustee at or
prior to the delivery of the Officers' Certificate setting forth the terms of
the series.
SECTION 302. Denominations.
The Securities of each series shall be issuable only in registered form
without coupons and only in such denominations as shall be specified as
contemplated by Section 301. In the absence of any such specified denomination
with respect to the Securities of any series, the Securities of such series
shall be issuable in denominations of $1,000 and any integral multiple thereof.
SECTION 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its Chairman
of the Board, its Vice Chairman of the Board, its President or one of its Vice
Presidents, under its corporate seal reproduced thereon attested by its
Secretary or one of its Assistant Secretaries. The signature of any of these
officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities of any series executed by the
Company to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities, and the Trustee in accordance
with the Company Order shall authenticate and deliver such Securities. If the
form or terms of the Securities of the series have been established by or
pursuant to one or more Board Resolutions as permitted by Sections 201 and 301,
in authenticating such Securities, and accepting the additional responsibilities
under this Indenture in relation to such Securities, the Trustee shall be
entitled to receive, and (subject to Section 601) shall be fully protected in
relying upon, an Opinion of Counsel stating,
(1) if the form of such Securities has been established by or pursuant
to Board Resolution as permitted by Section 201, that such form has been
established in conformity with the provisions of this Indenture;
(2) if the terms of such Securities have been established by or
pursuant to Board Resolution as permitted by Section 301, that such terms
have been established in conformity with the provisions of this Indenture;
and
(3) that such Securities, when authenticated and delivered by the
Trustee and issued by the Company in the manner and subject to any
conditions specified in such Opinion
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<PAGE> 34
of Counsel, will constitute valid and legally binding obligations of the
Company enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
If such form or terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 301 and of the preceding
paragraph, if all Securities of a series are not to be originally issued at one
time, it shall not be necessary to deliver the Officers' Certificate otherwise
required pursuant to Section 301 or the Company Order and Opinion of Counsel
otherwise required pursuant to such preceding paragraph at or prior to the
authentication of each Security of such series if such documents are delivered
at or prior to the authentication upon original issuance of the first Security
of such series to be issued.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder. Notwithstanding the
foregoing, if any Security shall have been authenticated and delivered hereunder
but never issued and sold by the Company, and the Company shall deliver such
Security to the Trustee for cancellation as provided in Section 309, for all
purposes of this Indenture such Security shall be deemed never to have been
authenticated and delivered hereunder and shall never be entitled to the
benefits of this Indenture.
SECTION 304. Temporary Securities.
Pending the preparation of definitive Securities of any series, the Company
may execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Securities may determine, as evidenced by their
execution of such Securities.
If temporary Securities of any series are issued, the Company will cause
definitive Securities of that series to be prepared without unreasonable delay.
After the preparation of definitive Securities of such series, the temporary
Securities of such series shall be exchangeable for definitive Securities of
such series upon surrender of the temporary Securities of such series at the
office or agency of the Company in a Place of Payment for
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<PAGE> 35
that series, without charge to the Holder. Upon surrender for cancellation of
any one or more temporary Securities of any series, the Company shall execute
and the Trustee shall authenticate and deliver in exchange therefor one or more
definitive Securities of the same series, of any authorized denominations and of
like tenor and aggregate principal amount. Until so exchanged, the temporary
Securities of any series shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities of such series and tenor.
SECTION 305. Registration, Registration of Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register (the register maintained in such office and in any other
office or agency of the Company in a Place of Payment being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of transfers of Securities. The Trustee is hereby
appointed "Security Registrar" for the purpose of registering Securities and
transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security of a series at
the office or agency of the Company in a Place of Payment for that series, the
Company shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Securities of
the same series, of any authorized denominations and of like tenor and aggregate
principal amount.
At the option of the Holder, Securities of any series may be exchanged for
other Securities of the same series, of any authorized denominations and of like
tenor and aggregate principal amount, upon surrender of the Securities to be
exchanged at such office or agency. Whenever any Securities are so surrendered
for exchange, the Company shall execute, and the Trustee shall authenticate and
deliver, the Securities which the Holder making the exchange is entitled to
receive.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or for
exchange shall (if so required by the Company or the Trustee) be duly endorsed,
or be accompanied by a written instrument of transfer in form satisfactory to
the Company and the Security Registrar duly executed, by the Holder thereof or
his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 304, 906 or 1107 not involving any transfer.
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If the Securities of any series (or of any series and specified tenor) are
to be redeemed in part, the Company shall not be required (A) to issue, register
the transfer of or exchange any Securities of that series (or of that series and
specified tenor, as the case may be) during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of any
such Securities selected for redemption under Section 1103 and ending at the
close of business on the day of such mailing, or (B) to register the transfer of
or exchange any Security so selected for redemption in whole or in part, except
the unredeemed portion of any Security being redeemed in part.
The provisions of Clauses (1), (2), (3) and (4) below shall apply only to
Global Securities:
(1) Each Global Security authenticated under this Indenture shall be
registered in the name of the Depositary designated for such Global
Security or a nominee thereof and delivered to such Depositary or a nominee
thereof or custodian therefor, and each such Global Security shall
constitute a single Security for all purposes of this Indenture.
(2) Notwithstanding any other provision in this Indenture, no Global
Security may be exchanged in whole or in part for Securities registered,
and no transfer of a Global Security in whole or in part may be registered,
in the name of any Person other than the Depositary for such Global
Security or a nominee thereof unless (A) such Depositary (i) has notified
the Company that it is unwilling or unable to continue as Depositary for
such Global Security or (ii) has ceased to be a clearing agency registered
under the Exchange Act, (B) there shall have occurred and be continuing an
Event of Default with respect to such Global Security or (C) there shall
exist such circumstances, if any, in addition to or in lieu of the
foregoing as have been specified for this purpose as contemplated by
Section 301.
(3) Subject to Clause (2) above, any exchange of a Global Security for
other Securities may be made in whole or in part, and all Securities issued
in exchange for a Global Security or any portion thereof shall be
registered in such names as the Depositary for such Global Security shall
direct.
(4) Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Security or any
portion thereof, whether pursuant to this Section, Section 304, 306, 906 or
1107 or otherwise, shall be authenticated and delivered in the form of, and
shall be, a Global Security, unless such Security is registered in the name
of a Person other than the Depositary for such Global Security or a nominee
thereof.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
new Security of the same series and of like tenor and principal amount and
bearing a number not contemporaneously outstanding.
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If there shall be delivered to the Company and the Trustee (i) evidence to
their satisfaction of the destruction, loss or theft of any Security and (ii)
such security or indemnity as may be required by them to save each of them and
any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and the Trustee shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Security, a new Security
of the same series and of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
Every new Security of any series issued pursuant to this Section in lieu of
any destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities of that series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
SECTION 307. Payment of Interest; Interest Rights Preserved.
Except as otherwise provided as contemplated by Section 301 with respect to
any series of Securities, interest on any Security which is payable, and is
punctually paid or duly provided for, on any Interest Payment Date shall be paid
to the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest.
Any interest on any Security of any series which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Securities of such series (or their
respective Predecessor Securities) are registered at the close of business
on a Special Record Date for the payment of such Defaulted Interest, which
shall be fixed in the following manner. The
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Company shall notify the Trustee in writing of the amount of Defaulted
Interest proposed to be paid on each Security of such series and the date
of the proposed payment, and at the same time the Company shall deposit
with the Trustee an amount of money equal to the aggregate amount proposed
to be paid in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this
Clause provided. Thereupon the Trustee shall fix a Special Record Date for
the payment of such Defaulted Interest which shall be not more than 15 days
and not less than 10 days prior to the date of the proposed payment and not
less than 10 days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Company of such
Special Record Date and, in the name and at the expense of the Company,
shall cause notice of the proposed payment of such Defaulted Interest and
the Special Record Date therefor to be given to each Holder of Securities
of such series in the manner set forth in Section 106, not less than 10
days prior to such Special Record Date. Notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor having been so
mailed, such Defaulted Interest shall be paid to the Persons in whose names
the Securities of such series (or their respective Predecessor Securities)
are registered at the close of business on such Special Record Date and
shall no longer be payable pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest on the
Securities of any series in any other lawful manner not inconsistent with
the requirements of any securities exchange on which such Securities may be
listed, and upon such notice as may be required by such exchange, if, after
notice given by the Company to the Trustee of the proposed payment pursuant
to this Clause, such manner of payment shall be deemed practicable by the
Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
SECTION 308. Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name such Security is registered as the owner of such Security
for the purpose of receiving payment of principal of and any premium and
(subject to Section 307) any interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
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SECTION 309. Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly canceled by it. The Company may at any time deliver to the
Trustee for cancellation any Securities previously authenticated and delivered
hereunder which the Company may have acquired in any manner whatsoever, and may
deliver to the Trustee (or to any other Person for delivery to the Trustee) for
cancellation any Securities previously authenticated hereunder which the Company
has not issued and sold, and all Securities so delivered shall be promptly
canceled by the Trustee. No Securities shall be authenticated in lieu of or in
exchange for any Securities canceled as provided in this Section, except as
expressly permitted by this Indenture. All canceled Securities held by the
Trustee shall be disposed of as directed by a Company Order.
SECTION 310. Computation of Interest.
Except as otherwise specified as contemplated by Section 301 for Securities
of any series, interest on the Securities of each series shall be computed on
the basis of a 360-day year of twelve 30-day months.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of further effect
(except as to any surviving rights of registration of transfer or exchange of
Securities herein expressly provided for), and the Trustee, at the expense of
the Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered (other than
(i) Securities which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 306 and (ii) Securities for
whose payment money has theretofore been deposited in trust or segregated
and held in trust by the Company and thereafter repaid to the Company or
discharged from such trust, as provided in Section 1003) have been
delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
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(ii) will become due and payable at their Stated Maturity within
one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the
Company,
and the Company, in the case of (i), (ii) or (iii) above, has deposited or
caused to be deposited with the Trustee as trust funds in trust for the
purpose money in an amount sufficient to pay and discharge the entire
indebtedness on such Securities not theretofore delivered to the Trustee
for cancellation, for principal and any premium and interest to the date of
such deposit (in the case of Securities which have become due and payable)
or to the Stated Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607, the obligations of
the Trustee to any Authenticating Agent under Section 614 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.
SECTION 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1003, all money
deposited with the Trustee pursuant to Section 401 shall be held in trust and
applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal and any premium and
interest for whose payment such money has been deposited with the Trustee.
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default.
"Event of Default", wherever used herein with respect to Securities of any
series, means any one of the following events (whatever the reason for such
Event of Default and
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whether it shall be voluntary or involuntary or be effected by operation of law
or pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(1) default in the payment of any interest upon any Security of that
series when it becomes due and payable, and continuance of such default for
a period of 30 days; or
(2) default in the payment of the principal of or any premium on any
Security of that series at its Maturity; or
(3) default in the deposit of any sinking fund payment, when and as
due by the terms of a Security of that series; or
(4) default in the performance, or breach, of any covenant or warranty
of the Company in this Indenture (other than a covenant or warranty a
default in whose performance or whose breach is elsewhere in this Section
specifically dealt with or which has expressly been included in this
Indenture solely for the benefit of series of Securities other than that
series), and continuance of such default or breach for a period of 60 days
after there has been given, by registered or certified mail, to the Company
by the Trustee or to the Company and the Trustee by the Holders of at least
10% in principal amount of the Outstanding Securities of that series a
written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default" hereunder;
or
(5) a default under any bond, debenture, note or other evidence of
indebtedness in excess of $20,000,000 for money borrowed by the Company or
under any mortgage, indenture or instrument (including this Indenture)
under which there may be issued or by which there may be secured or
evidenced any indebtedness in excess of $20,000,000 for money borrowed by
the Company, whether such indebtedness now exists or shall hereafter be
created, which default shall have resulted in such indebtedness becoming or
being declared due and payable prior to the date on which it would
otherwise have become due and payable, without such acceleration having
been rescinded or annulled within a period of 10 days after there shall
have been given, by registered or certified mail, to the Company by the
Trustee or to the Company and the Trustee by the Holders of at least 25% in
principal amount of the Outstanding Securities of that series a written
notice specifying such default and requiring the Company to cause such
acceleration to be rescinded or annulled and stating that such notice is a
"Notice of Default" hereunder; or
(6) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Company in an involuntary case
or proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order adjudging the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in
respect of the Company under any applicable Federal or State law, or
appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or of any substantial
part of its property, or ordering the winding up or
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liquidation of its affairs, and the continuance of any such decree or order
for relief or any such other decree or order unstayed and in effect for a
period of 60 consecutive days; or
(7) the commencement by the Company of a voluntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to
be adjudicated a bankrupt or insolvent, or the consent by it to the entry
of a decree or order for relief in respect of the Company in an involuntary
case or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or to the commencement of
any bankruptcy or insolvency case or proceeding against it, or the filing
by it of a petition or answer or consent seeking reorganization or relief
under any applicable Federal or State law, or the consent by it to the
filing of such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of any substantial part of its property,
or the making by it of an assignment for the benefit of creditors, or the
admission by it in writing of its inability to pay its debts generally as
they become due, or the taking of corporate action by the Company in
furtherance of any such action; or
(8) any other Event of Default provided with respect to Securities of
that series.
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in
Section 501(6) or 501(7)) with respect to Securities of any series at the time
Outstanding occurs and is continuing, then in every such case the Trustee or the
Holders of not less than 25% in principal amount of the Outstanding Securities
of that series may declare the principal amount of all the Securities of that
series (or, if any Securities of that series are Original Issue Discount
Securities, such portion of the principal amount of such Securities as may be
specified by the terms thereof) to be due and payable immediately, by a notice
in writing to the Company (and to the Trustee if given by Holders), and upon any
such declaration such principal amount (or specified amount) shall become
immediately due and payable. If an Event of Default specified in Section 501(6)
or 501 (7) with respect to Securities of any series at the time Outstanding
occurs, the principal amount of all the Securities of that series (or, if any
Securities of that series are Original Issue Discount Securities, such portion
of the principal amount of such Securities as may be specified by the terms
thereof) shall automatically, and without any declaration or other action on the
part of the Trustee or any Holder, become immediately due and payable.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the Holders of a major-
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ity in principal amount of the Outstanding Securities of that series, by written
notice to the Company and the Trustee, may rescind and annul such declaration
and its consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest on all Securities of that series,
(B) the principal of (and premium, if any, on) any Securities of
that series which have become due otherwise than by such declaration
of acceleration and any interest thereon at the rate or rates
prescribed therefor in such Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate or rates prescribed
therefor in such Securities, and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel;
and
(2) all Events of Default with respect to Securities of that series,
other than the non-payment of the principal of Securities of that series
which have become due solely by such declaration of acceleration, have been
cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.
The Company covenants that if
(1) default is made in the payment of any interest on any Security
when such interest becomes due and payable and such default continues for a
period of 30 days, or
(2) default is made in the payment of the principal of (or premium, if
any, on) any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal and any premium and interest and, to the extent that
payment of such interest shall be legally enforceable, interest on any overdue
principal and premium and on any overdue interest, at the rate or rates
prescribed therefor in such Securities, and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel.
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If an Event of Default with respect to Securities of any series occurs and
is continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of Securities of such series by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.
SECTION 504. Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to the Company (or any other
obligor upon the Securities), its property or its creditors, the Trustee shall
be entitled and empowered, by intervention in such proceeding or otherwise, to
take any and all actions authorized under the Trust Indenture Act in order to
have claims of the Holders and the Trustee allowed in any such proceeding. In
particular, the Trustee shall be authorized to collect and receive any moneys or
other property payable or deliverable on any such claims and to distribute the
same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator
or other similar official in any such judicial proceeding is hereby authorized
by each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due 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 607.
No provision of this Indenture shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding; provided, however,
that the Trustee may, on behalf of the Holders, vote for the election of a
trustee in bankruptcy or similar official and be a member of a creditors' or
other similar committee.
SECTION 505. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities may
be prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Securities in respect of which such judgment has been
recovered.
SECTION 506. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of
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such money on account of principal or any premium or interest, upon presentation
of the Securities and the notation thereon of the payment if only partially paid
and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section 607; and
SECOND: To the payment of the amounts then due and unpaid for principal of
and any premium and interest on the Securities in respect of which or for the
benefit of which such money has been collected, ratably, without preference or
priority of any kind, according to the amounts due and payable on such
Securities for principal and any premium and interest, respectively.
SECTION 507. Limitation on Suits.
No Holder of any Security of any series shall have any right to institute
any proceeding, judicial or otherwise, with respect to this Indenture, or for
the appointment of a receiver or trustee, or for any other remedy hereunder,
unless
(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default with respect to the Securities of that
series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series shall have made written request to
the Trustee to institute proceedings in respect of such Event of Default in
its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Outstanding Securities of that series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all of such
Holders.
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SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and
Interest.
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of and any premium and (subject to Section 307)
interest on such Security on the respective Stated Maturities expressed in such
Security (or, in the case of redemption, on the Redemption Date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.
SECTION 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then and in every such case, subject to any determination in
such proceeding, the Company, the Trustee and the Holders shall be restored
severally and respectively to their former positions hereunder and thereafter
all rights and remedies of the Trustee and the Holders shall continue as though
no such proceeding had been instituted.
SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities in the last paragraph of Section
306, no right or remedy herein conferred upon or reserved to the Trustee or to
the Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Securities to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.
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SECTION 512. Control by Holders.
The Holders of a majority in principal amount of the Outstanding Securities
of any series shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee, with respect to the Securities of
such series, provided that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture, and
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
SECTION 513. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series may on behalf of the Holders of all the
Securities of such series waive any past default hereunder with respect to such
series and its consequences, except a default
(1) in the payment of the principal of or any premium or interest on
any Security of such series, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
SECTION 514. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess costs against
any such party litigant, in the manner and to the extent provided in the Trust
Indenture Act; provided that neither this Section nor the Trust Indenture Act
shall be deemed to authorize any court to require such an undertaking or to make
such an assessment in any suit instituted by the Company.
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SECTION 515. Waiver of Usury, Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any usury, stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as provided by the
Trust Indenture Act. Notwithstanding the foregoing, no provision of this
Indenture shall require the Trustee to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it. 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 shall be
subject to the provisions of this Section.
SECTION 602. Notice of Defaults.
If a default occurs hereunder with respect to Securities of any series, the
Trustee shall give the Holders of Securities of such series notice of such
default as and to the extent provided by the Trust Indenture Act; provided,
however, that in the case of any default of the character specified in
Section 501(4) with respect to Securities of such series, no such notice to
Holders shall be given until at least 30 days after the occurrence thereof. For
the purpose of this Section, the term "default" means any event which is, or
after notice or lapse of time or both would become, an Event of Default with
respect to Securities of such series.
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SECTION 603. Certain Rights of Trustee.
Subject to the provisions of Section 601:
(1) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented
by the proper party or parties;
(2) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order, and any
resolution of the Board of Directors shall be sufficiently evidenced by a
Board Resolution;
(3) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad
faith on its part, rely upon an Officers' Certificate;
(4) the Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(5) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall
have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction;
(6) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the
Company, personally or by agent or attorney; and
(7) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder.
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SECTION 604. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company,
and neither the Trustee nor any Authenticating Agent assumes any responsibility
for their correctness. The Trustee makes no representations as to the validity
or sufficiency of this Indenture or of the Securities. Neither the Trustee nor
any Authenticating Agent shall be accountable for the use or application by the
Company of Securities or the proceeds thereof.
SECTION 605. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections
608 and 613, may otherwise deal with the Company with the same rights it would
have if it were not Trustee, Authenticating Agent, Paying Agent, Security
Registrar or such other agent.
SECTION 606. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed with the Company.
SECTION 607. Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee
of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
(3) to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration
of the trust or trusts hereunder, including the costs and expenses of
defending itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder.
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SECTION 608. Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture. To the extent
permitted by such Act, the Trustee shall not be deemed to have a conflicting
interest by virtue of being a trustee under this Indenture with respect to
Securities of more than one series.
SECTION 609. Corporate Trustee Required; Eligibility.
There shall at all times be one (and only one) Trustee hereunder with
respect to the Securities of each series, which may be Trustee hereunder for
Securities of one or more other series. Each Trustee shall be a Person that is
eligible pursuant to the Trust Indenture Act to act as such has a combined
capital and surplus of at least $50,000,000. If any such Person publishes
reports of condition at least annually, pursuant to law or to the requirements
of its supervising or examining authority, then for the purposes of this Section
and to the extent permitted by the Trust Indenture Act, the combined capital and
surplus of such Person 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 with respect to the Securities of any series shall cease to be
eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.
SECTION 610. Resignation and Removal; Appointment of Successor.
No resignation or removal of the Trustee and no appointment of a successor
Trustee pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee in accordance with the applicable
requirements of Section 611.
The Trustee may resign at any time with respect to the Securities of one or
more series by giving written notice thereof to the Company. If the instrument
of acceptance by a successor Trustee required by Section 611 shall not have been
delivered to the Trustee within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Securities of such series.
The Trustee may be removed at any time with respect to the Securities of
any series by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series, delivered to the Trustee and to the
Company.
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If at any time:
(1) the Trustee shall fail to comply with Section 608 after written
request therefor by the Company or by any Holder who has been a bona fide
Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609 and shall
fail to resign after written request therefor by the Company or by any such
Holder, or
(3) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (A) the Company by a Board Resolution may remove the
Trustee with respect to all Securities, or (B) subject to Section 514, any
Holder who has been a bona fide Holder of a Security for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the removal of the Trustee with respect to all
Securities and the appointment of a successor Trustee or Trustees.
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, with respect to
the Securities of one or more series, the Company, by a Board Resolution, shall
promptly appoint a successor Trustee or Trustees with respect to the Securities
of that or those series (it being understood that any such successor Trustee may
be appointed with respect to the Securities of one or more or all of such series
and that at any time there shall be only one Trustee with respect to the
Securities of any particular series) and shall comply with the applicable
requirements of Section 611. If, within one year after such resignation, removal
or incapability, or the occurrence of such vacancy, a successor Trustee with
respect to the Securities of any series shall be appointed by Act of the Holders
of a majority in principal amount of the Outstanding Securities of such series
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment in accordance
with the applicable requirements of Section 611, become the successor Trustee
with respect to the Securities of such series and to that extent supersede the
successor Trustee appointed by the Company. If no successor Trustee with respect
to the Securities of any series shall have been so appointed by the Company or
the Holders and accepted appointment in the manner required by Section 611, any
Holder who has been a bona fide Holder of a Security of such series for at least
six months may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the appointment of a successor Trustee
with respect to the Securities of such series.
The Company shall give notice of each resignation and each removal of the
Trustee with respect to the Securities of any series and each appointment of a
successor Trustee with respect to the Securities of any series to all Holders of
Securities of such series in the manner provided in Section 106. Each notice
shall include the name of the successor Trustee with respect to the Securities
of such series and the address of its Corporate Trust Office.
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SECTION 611. Acceptance of Appointment by Successor.
In case of the appointment hereunder of a successor Trustee with respect to
all Securities, every such successor Trustee so appointed shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee; but, on the request of the
Company or the successor Trustee, such retiring Trustee shall, upon payment of
its charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee and shall duly
assign, transfer and deliver to such successor Trustee all property and money
held by such retiring Trustee hereunder.
In case of the appointment hereunder of a successor Trustee with respect to
the Securities of one or more (but not all) series, the Company, the retiring
Trustee and each successor Trustee with respect to the Securities of one or more
series shall execute and deliver an indenture supplemental hereto wherein each
successor Trustee shall accept such appointment and which (1) shall contain such
provisions as shall be necessary or desirable to transfer and confirm to, and to
vest in, each successor Trustee all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those series to which
the appointment of such successor Trustee relates, (2) if the retiring Trustee
is not retiring with respect to all Securities, shall contain such provisions as
shall be deemed necessary or desirable to confirm that all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that
or those series as to which the retiring Trustee is not retiring shall continue
to be vested in the retiring Trustee, and (3) shall add to or change any of the
provisions of this Indenture as shall be necessary to provide for or facilitate
the administration of the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental indenture shall
constitute such Trustees co-trustees of the same trust and that each such
Trustee shall be trustee of a trust or trusts hereunder separate and apart from
any trust or trusts hereunder administered by any other such Trustee; and upon
the execution and delivery of such supplemental indenture the resignation or
removal of the retiring Trustee shall become effective to the extent provided
therein and each such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee with respect to the Securities of that or those series
to which the appointment of such successor Trustee relates; but, on request of
the Company or any successor Trustee, such retiring Trustee shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder with respect to the Securities of that or those
series to which the appointment of such successor Trustee relates.
Upon request of any such successor Trustee, the Company shall execute any
and all instruments for more fully and certainly vesting in and confirming to
such successor Trustee all such rights, powers and trusts referred to in the
first or second preceding paragraph, as the case may be.
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No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 612. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.
SECTION 613. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company (or
any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
SECTION 614. Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents with respect to
one or more series of Securities which shall be authorized to act on behalf of
the Trustee to authenticate Securities of such series issued upon original issue
and upon exchange, registration of transfer or partial redemption thereof or
pursuant to Section 306, and Securities so authenticated shall be entitled to
the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a corporation organized and
doing business under the laws of the United States of America, any State thereof
or the District of Columbia, authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus of not less than $50,000,000 and
subject to supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to
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be its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time an Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section, such Authenticating
Agent shall resign immediately in the manner and with the effect specified in
this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall give notice of such
appointment in the manner provided in Section 106 to all Holders of Securities
of the series with respect to which such Authenticating Agent will serve. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.
The Trustee agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section, and the Trustee
shall be entitled to be reimbursed for such payments, subject to the provisions
of Section 607.
If an appointment with respect to one or more series is made pursuant to
this Section, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternative
certificate of authentication in the following form:
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
NBD BANK,
As Trustee
By.....................................,
As Authenticating Agent
By......................................
Authorized Officer
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ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee
(1) semi-annually, not later than the 15th day after each Regular
Record Date for each series of Securities at the time Outstanding, in such
form as the Trustee may reasonably require, of the names and addresses of
the Holders of Securities of each series as of the preceding Regular Record
Date as the case may be, and
(2) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the
time such list is furnished;
excluding from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.
SECTION 702. Preservation of Information; Communications to Holders.
The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 701 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.
The rights of Holders to communicate with other Holders with respect to
their rights under this Indenture or under the Securities, and the corresponding
rights and privileges of the Trustee, shall be as provided by the Trust
Indenture Act.
Every Holder of Securities, by receiving and holding the same, agrees with
the Company and the Trustee that neither the Company nor the Trustee nor any
agent of either of them shall be held accountable by reason of any disclosure of
information as to names and addresses of Holders made pursuant to the Trust
Indenture Act.
SECTION 703. Reports by Trustee.
The Trustee shall transmit to Holders such reports concerning the Trustee
and its actions under this Indenture as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided pursuant thereto.
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A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each stock exchange upon which any
Securities are listed, with the Commission and with the Company. The Company
will notify the Trustee when any Securities are listed on any stock exchange.
SECTION 704. Reports by Company.
The Company shall file with the Trustee and the Commission, and transmit to
Holders, such information, documents and other reports, and such summaries
thereof, as may be required pursuant to the Trust Indenture Act at the times and
in the manner provided pursuant to such Act; provided that any such information,
documents or reports required to be filed with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act shall be filed with the Trustee within
15 days after the same is so required to be filed with the Commission.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate with or merge into any other Person or
convey, transfer or lease its properties and assets substantially as an entirety
to any Person, and the Company shall not permit any Person to consolidate with
or merge into the Company or convey, transfer or lease its properties and assets
substantially as an entirety to the Company, unless:
(1) in case the Company shall consolidate with or merge into another
Person or convey, transfer or lease its properties and assets substantially
as an entirety to any Person, the Person formed by such consolidation or
into which the Company is merged or the Person which acquires by conveyance
or transfer, or which leases, the properties and assets of the Company
substantially as an entirety shall be a corporation, partnership or trust,
shall be organized and validly existing under the laws of the United States
of America, any State thereof or the District of Columbia and shall
expressly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, in form satisfactory to the Trustee, the due and
punctual payment of the principal of and any premium and interest on all
the Securities and the performance or observance of every covenant of this
Indenture on the part of the Company to be performed or observed;
(2) immediately after giving effect to such transaction and treating
any indebtedness which becomes an obligation of the Company or any
Subsidiary as a result of such transaction as having been incurred by the
Company or such Subsidiary at the time of such transaction, no Event of
Default, and no event which, after notice or lapse of time or both, would
become an Event of Default, shall have happened and be continuing;
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(3) if, as a result of any such consolidation or merger or such
conveyance, transfer or lease, properties or assets of the Company would
become subject to a mortgage, pledge, lien, security interest or other
encumbrance which would not be permitted by this Indenture, the Company or
such successor Person, as the case may be, shall take such steps as shall
be necessary effectively to secure the Securities equally and ratably with
(or prior to) all indebtedness secured thereby; and
(4) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger,
conveyance, transfer or lease and, if a supplemental indenture is required
in connection with such transaction, such supplemental indenture comply
with this Article and that all conditions precedent herein provided for
relating to such transaction have been complied with.
SECTION 802. Successor Substituted.
Upon any consolidation of the Company with, or merger of the Company into,
any other Person or any conveyance, transfer or lease of the properties and
assets of the Company substantially as an entirety in accordance with Section
801, the successor Person formed by such consolidation or into which the Company
is merged or to which such conveyance, transfer or lease is made shall succeed
to, and be substituted for, and may exercise every right and power of, the
Company under this Indenture with the same effect as if such successor Person
had been named as the Company herein, and thereafter, except in the case of a
lease, the predecessor Person shall be relieved of all obligations and covenants
under this Indenture and the Securities.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a Board
Resolution, and the Trustee, at any time and from time to time, may enter into
one or more indentures supplemental hereto, in form satisfactory to the Trustee,
for any of the following purposes:
(1) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company herein
and in the Securities; or
(2) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Securities (and if such covenants are to be
for the benefit of less than all series of Securities, stating that such
covenants are expressly being included solely for the benefit of such
series) or to surrender any right or power herein conferred upon the
Company; or
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(3) to add any additional Events of Default for the benefit of the
Holders of all or any series of Securities (and if such additional Events
of Default are to be for the benefit of less than all series of Securities,
stating that such additional Events of Default are expressly being included
solely for the benefit of such series); or
(4) to add to or change any of the provisions of this Indenture to
such extent as shall be necessary to permit or facilitate the issuance of
Securities in bearer form, registrable or not registrable as to principal,
and with or without interest coupons, or to permit or facilitate the
issuance of Securities in uncertificated form; or
(5) to add to, change or eliminate any of the provisions of this
Indenture in respect of one or more series of Securities, provided that any
such addition, change or elimination (A) shall neither (i) apply to any
Security of any series created prior to the execution of such supplemental
indenture and entitled to the benefit of such provision nor (ii) modify the
rights of the Holder of any such Security with respect to such provision or
(B) shall become effective only when there is no such Security Outstanding;
or
(6) to secure the Securities pursuant to the requirements of
Section 1008 or other wise; or
(7) to establish the form or terms of Securities of any series as
permitted by Sections 201 and 301; or
(8) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or
more series and to add to or change any of the provisions of this Indenture
as shall be necessary to provide for or facilitate the administration of
the trusts hereunder by more than one Trustee, pursuant to the requirements
of Section 611; or
(9) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture, provided that such action pursuant
to this Clause (9) shall not adversely affect the interests of the Holders
of Securities of any series in any material respect.
SECTION 902. Supplemental Indentures With Consent of Holders.
With the consent of the Holders of not less than 662/3% in principal amount
of the Outstanding Securities of each series affected by such supplemental
indenture, by Act of said Holders delivered to the Company and the Trustee, the
Company, when authorized by a Board Resolution, and the Trustee may enter into
an indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the Holders of
Securities of such series under this Indenture; provided, however, that no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Security affected thereby,
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(1) change the Stated Maturity of the principal of, or any installment
of principal of or interest on, any Security, or reduce the principal
amount thereof or the rate of interest thereon or any premium payable upon
the redemption thereof, or reduce the amount of the principal of an
Original Issue Discount Security or any other Security which would be due
and payable upon a declaration of acceleration of the Maturity thereof
pursuant to Section 502, or change any Place of Payment where, or the coin
or currency in which, any Security or any premium or interest thereon is
payable, or impair the right to institute suit for the enforcement of any
such payment on or after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date or in the case of repayment at
the option of a Holder, on or after the Repayment Date), or
(2) reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is required for any
such supplemental indenture, or the consent of whose Holders is required
for any waiver (of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences) provided for in this
Indenture, or
(3) modify any of the provisions of this Section, Section 513 or
Section 1011, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each Out standing Security affected
thereby; provided, however, that this clause shall not be deemed to require
the consent of any Holder with respect to changes in the references to "the
Trustee" and concomitant changes in this Section and Section 1011, or the
deletion of this proviso, in accordance with the requirements of Sections
611 and 901(8).
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such covenant
or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
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SECTION 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
SECTION 906. Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the execution of
any supplemental indenture pursuant to this Article may, and shall if required
by the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities of any series so modified as to conform, in the opinion of the
Trustee and the Company, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and delivered by the Trustee in
exchange for Outstanding Securities of such series.
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of and any premium
and interest on the Securities of that series in accordance with the terms of
the Securities and this Indenture.
SECTION 1002. Maintenance of Office or Agency.
The Company will maintain in each Place of Payment for any series of
Securities an office or agency where Securities of that series may be presented
or surrendered for payment, where Securities of that series may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Company in respect of the Securities of that series and this Indenture
may be served. The Company will give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders,
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notices and demands may be made or served at the Corporate Trust Office of the
Trustee, and the Company hereby appoints the Trustee as its agent to receive all
such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other offices
or agencies where the Securities of one or more series may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall in
any manner relieve the Company of its obligation to maintain an office or agency
in each Place of Payment for Securities of any series for such purposes. The
Company will give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other office or
agency.
SECTION 1003. Money for Securities Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent with respect
to any series of Securities, it will, on or before each due date of the
principal of or any premium or interest on any of the Securities of that series,
segregate and hold in trust for the benefit of the Persons entitled thereto a
sum sufficient to pay the principal and any premium and interest so becoming due
until such sums shall be paid to such Persons or otherwise disposed of as herein
provided and will promptly notify the Trustee of its action or failure so to
act.
Whenever the Company shall have one or more Paying Agents for any series of
Securities, it will, prior to each due date of the principal of or any premium
or interest on any Securities of that series, deposit with a Paying Agent a sum
sufficient to pay such amount, such sum to be held as provided by the Trust
Indenture Act, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of its action or failure so to act.
The Company will cause each Paying Agent for any series of Securities other
than the Trustee to execute and deliver to the Trustee an instrument in which
such Paying Agent shall agree with the Trustee, subject to the provisions of
this Section, that such Paying Agent will (1) comply with the provisions of the
Trust Indenture Act applicable to it as a Paying Agent and (2) during the
continuance of any default by the Company (or any other obligor upon the
Securities of that series) in the making of any payment in respect of the
Securities of that series, upon the written request of the Trustee, forthwith
pay to the Trustee all sums held in trust by such Paying Agent for payment in
respect of the Securities of that series.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
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Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of or any premium or
interest on any Security of any series and remaining unclaimed for two years
after such principal, premium or interest has become due and payable shall be
paid to the Company on Company Request, or (if then held by the Company) shall
be discharged from such trust; and the Holder of such Security shall thereafter,
as an unsecured general creditor, look only to the Company for payment thereof,
and all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause to
be published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in the Borough of
Manhattan, The City of New York, notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less than 30 days from
the date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
SECTION 1004. Statement by Officers as to Default; Notice of Certain Events.
The Company will deliver to the Trustee, within 120 days after the end of
each fiscal year of the Company ending after the date hereof, an Officers'
Certificate, stating whether or not to the best knowledge of the signers thereof
the Company is in default in the performance and observance of any of the terms,
provisions and conditions of this Indenture (without regard to any period of
grace or requirement of notice provided hereunder) and, if the Company shall be
in default, specifying all such defaults and the nature and status thereof of
which they may have knowledge.
The Company will deliver to the Trustee within five days after the
occurrence thereof notice of any acceleration which with the giving of notice
and the lapse of time would be an Event of Default within the meaning of
Section 501(5).
SECTION 1005. Existence.
Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence,
rights (charter and statutory) and franchises; provided, however, that the
Company shall not be required to preserve any such right or franchise if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and that the loss
thereof is not disadvantageous in any material respect to the Holders.
SECTION 1006. Maintenance of Properties.
The Company will cause all properties used or useful in the conduct of its
business or the business of any Subsidiary to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and will cause to be made all
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necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in the judgment of the Company may be necessary so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times; provided, however, that nothing in this Section shall prevent the
Company from discontinuing the operation or maintenance of any of such
properties if such discontinuance is, in the judgment of the Company, desirable
in the conduct of its business or the business of any Subsidiary and not
disadvantageous in any material respect to the Holders.
SECTION 1007. Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid or discharged, before
the same shall become delinquent, (1) all taxes, assessments and governmental
charges levied or imposed upon the Company or any Subsidiary or upon the income,
profits or property of the Company or any Subsidiary, and (2) all lawful claims
for labor, materials and supplies which, if unpaid, might by law become a lien
upon the property of the Company or any Subsidiary; provided, however, that the
Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose amount, applicability
or validity is being contested in good faith by appropriate proceedings.
SECTION 1008. Limitation on Secured Debt.
The Company covenants and agrees that it will not itself, and will not
permit any Restricted Subsidiary to, issue, assume, guarantee or incur any
Secured Debt, without effectively providing that the Securities of any series
(together with, if the Company shall so determine, any other Indebtedness of the
Company or such Restricted Subsidiary then existing or thereafter created
ranking equally with the Securities, including guaranty of Indebtedness of
others) shall be secured equally and ratably with (or prior to) such Secured
Debt, so long as such Secured Debt shall be so secured, except that this Section
1008 shall not apply to Secured Debt Secured by:
(1) Mortgages on property of any corporation existing at the time such
corporation becomes a Subsidiary;
(2) Mortgages on property existing at the time of acquisition thereof
or to secure the payment of all or any part of the purchase price thereof
or to secure any indebtedness incurred prior to, at the time of or within
120 days after the acquisition of such property for the purpose of
financing all or any part of the purchase price thereof;
(3) Mortgages on property in favor of the United States of America or
any state thereof, or any other country, or any political subdivision of
any of the foregoing, to secure payments pursuant to any contract or
statute or to secure any indebtedness incurred for the purpose of financing
all or any part of the purchase price or the cost of construction of the
property subject to such Mortgages;
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(4) Mortgages which secure Indebtedness owing to the Company or to a
Wholly-owned Restricted Subsidiary by a Subsidiary;
(5) Mortgages incurred or assumed in connection with the issuance of
revenue bonds the interest on which is exempt from Federal income tax
pursuant to Section 103(b) of the Internal Revenue Code of 1986, as amended
(or any successor provision thereof); or
(6) any extension, renewal or replacement (or successive extensions,
renewals or replacements), in whole or in part, of any Mortgage referred to
in the foregoing clauses (1) to (5), inclusive, or of any indebtedness
secured thereby; provided that such extension, renewal or replacement
Mortgage shall be limited to all or any part of the same property that
secured the Mortgage extended, renewed or replaced (plus improvements on
such property).
Notwithstanding the foregoing provisions of this Section 1008, the Company
and any one or more Restricted Subsidiary may, without equally and ratably
securing the Securities of any series, issue, assume, guarantee or incur Secured
Debt which would otherwise be subject to the foregoing restrictions if, after
giving effect to the Secured Debt to be issued, assumed, guaranteed or incurred,
the sum of (a) the aggregate amount of all such Secured Debt of the Company and
its Restricted Subsidiaries (not including Secured Debt permitted under clauses
(1) through (6) above) in existence at such time, (b) the aggregate value of the
Sale and Leaseback Transactions (as defined in Section 1009) in existence at
such time (not including Sale and Leaseback Transactions permitted under clauses
(2) through (4) of Section 1009) and (c) the aggregate amount of all unsecured
Funded Debt of Restricted Subsidiaries (not including any unsecured Funded Debt
permitted under clauses (2) and (3) of Section 1010) in existence at such time,
does not exceed 5% of the Company's Consolidated Net Tangible Assets.
SECTION 1009. Limitation on Sales and Leasebacks.
The Company will not itself, and will not permit any Restricted Subsidiary
to, enter into any arrangement with any bank, insurance company or other lender
or investor, or to which any such lender or investor is a party, providing for
the leasing to the Company or a Restricted Subsidiary of any real property
(except a lease for a temporary period not to exceed three years by the end of
which it is intended that the use of such real property by the lessee will be
discontinued) which has been or is to be sold or transferred by the Company or
such Restricted Subsidiary more than 120 days after the date of acquisition
thereof to such lender or investor or to any person to whom funds have been or
are to be advanced by such lender or investor on the security of such real
property (herein referred to as a "Sale and Leaseback Transaction"), except that
this Section 1009 shall not apply if:
(1) the Company or such Restricted Subsidiary could create Secured
Debt in accordance with Section 1008 in an amount equal to the value of
such Sale and Leaseback Transaction, without equally and ratably securing
the Securities of any series;
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(2) the Company (and in any such case the Company covenants that it
will) within 120 days after the Sale and Leaseback Transaction, regardless
of whether such Sale and Leaseback Transaction may have been made by the
Company or by a Restricted Subsidiary, applies an amount equal to the
greater of (i) the net proceeds of the sale of the real property leased
pursuant to such Sale and Leaseback Transaction and (ii) the fair value of
the real property so leased at the time of entering into such Sale and
Leaseback Transaction (as determined by the Board of Directors) to the
retirement (other than by payment at maturity or pursuant to any mandatory
sinking fund payment or any mandatory prepayment provision) of Funded Debt
of the Company, provided that the amount to be applied to the retirement of
Funded Debt of the Company shall be reduced by the principal amount of any
Securities delivered within 120 days after such sale to the Trustee for
retirement and cancellation;
(3) such Sale and Leaseback Transaction was effected in connection
with the issuance of revenue bonds the interest on which is exempt from
Federal income tax pursuant to Section 103(b) of the Internal Revenue Code
of 1986, as amended (or any successor provision thereof); or
(4) the net proceeds of the sale of the real property leased pursuant
to such Sale and Leaseback Transaction are applied to the purchase of
properties, facilities or equipment to be used for general operating
purposes.
For purposes of this Section 1009 and Section 1008, the term "value" shall
mean, with respect to a Sale and Leaseback Transaction, as of any particular
time, the amount equal to the greater of (i) the net proceeds of the sale of the
real property leased pursuant to such Sale and Leaseback Transaction and (ii)
the fair value of the real property so leased at the time of entering into such
Sale and Leaseback Transaction (as determined by the Board of Directors),
divided first by the number of full years in the term of the lease and then
multiplied by the number of full years of such term remaining at the time of
determination, without regard to any renewal or extension options contained in
the lease.
SECTION 1010. Limitation on Unsecured Funded Debt of Restricted Subsidiaries.
The Company will not permit any Restricted Subsidiary to, directly or
indirectly, issue, assume, guarantee or incur any unsecured Funded Debt, except
that this Section 1010 shall not apply if:
(1) the Company or such Restricted Subsidiary could create Secured
Debt in accordance with Section 1008 in an amount equal to such unsecured
Funded Debt, without equally and ratably securing the Securities of any
series;
(2) such unsecured Funded Debt is owed to the Company or any
Wholly-owned Restricted Subsidiary;
(3) such unsecured Funded Debt existed at the time such Restricted
Subsidiary first became a Restricted Subsidiary;
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(4) such unsecured Funded Debt was unsecured Funded Debt of any
corporation existing at the time of merger or consolidation with a
Restricted Subsidiary; or
(5) such unsecured Funded Debt was incurred for the purpose of
renewing or refunding unsecured Funded Debt permitted in the foregoing
clauses (3) and (4).
SECTION 1011. Waiver of Certain Covenants.
Except as otherwise specified as contemplated by Section 301 for Securities
of such series, the Company may, with respect to the Securities of any series,
omit in any particular instance to comply with any term, provision or condition
set forth in any covenant provided pursuant to Section 301(19), 901(2) or 901(7)
for the benefit of the Holders of such series or in any of Sections 1008 to
1010, inclusive, if before the time for such compliance the Holders of at least
662/3% in principal amount of the Outstanding Securities of such series shall,
by Act of such Holders, either waive such compliance in such instance or
generally waive compliance with such term, provision or condition, but no such
waiver shall extend to or affect such term, provision or condition except to the
extent so expressly waived, and, until such waiver shall become effective, the
obligations of the Company and the duties of the Trustee in respect of any such
term, provision or condition shall remain in full force and effect.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Applicability of Article.
Securities of any series which are redeemable before their Stated Maturity
shall be redeemable in accordance with their terms and (except as otherwise
specified as contemplated by Section 301 for such Securities) in accordance with
this Article.
SECTION 1102. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be evidenced by
a Board Resolution or in another manner specified as contemplated by Section 301
for such Securities. In case of any redemption at the election of the Company of
less than all the Securities of any series (including any such redemption
affecting only a single Security), the Company shall, at least 60 days prior to
the Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date, of the
principal amount of Securities of such series to be redeemed and, if applicable,
of the tenor of the Securities to be redeemed. In the case of any redemption of
Securities prior to the expiration of any restriction on such redemption
provided in the terms of such
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Securities or elsewhere in this Indenture, the Company shall furnish the Trustee
with an Officers' Certificate evidencing compliance with such restriction.
SECTION 1103. Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities of any series are to be redeemed (unless
all the Securities of such series and of a specified tenor are to be redeemed or
unless such redemption affects only a single Security), the particular
Securities to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee, from the Outstanding Securities of such series
not previously called for redemption, by such method as the Trustee shall deem
fair and appropriate and which may provide for the selection for redemption of a
portion of the principal amount of any Security of such series, provided that
the unredeemed portion of the principal amount of any Security shall be in an
authorized denomination (which shall not be less than the minimum authorized
denomination) for such Security. If less than all the Securities of such series
and of a specified tenor are to be redeemed (unless such redemption affects only
a single Security), the particular Securities to be redeemed shall be selected
not more than 60 days prior to the Redemption Date by the Trustee, from the
Outstanding Securities of such series and specified tenor not previously called
for redemption in accordance with the preceding sentence.
The Trustee shall promptly notify the Company in writing of the Securities
selected for redemption as aforesaid and, in case of any Securities selected for
partial redemption as aforesaid, the principal amount thereof to be redeemed.
The provisions of the two preceding paragraphs shall not apply with respect
to any redemption affecting only a single Security, whether such Security is to
be redeemed in whole or in part. In the case of any such redemption in part, the
unredeemed portion of the principal amount of the Security shall be in an
authorized denomination (which shall not be less than the minimum authorized
denomination) for such Security.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Securities shall relate, in the
case of any Securities redeemed or to be redeemed only in part, to the portion
of the principal amount of such Securities which has been or is to be redeemed.
SECTION 1104. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage prepaid,
mailed not less than 30 nor more than 60 days prior to the Redemption Date, to
each Holder of Securities to be redeemed, at his address appearing in the
Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
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(2) the Redemption Price,
(3) if less than all the Outstanding Securities of any series
consisting of more than a single Security are to be redeemed, the
identification (and, in the case of partial redemption of any such
Securities, the principal amounts) of the particular Securities to be
redeemed and, if less than all the Outstanding Securities of any series
consisting of a single Security are to be redeemed, the principal amount of
the particular Security to be redeemed,
(4) that on the Redemption Date the Redemption Price will become due
and payable upon each such Security to be redeemed and, if applicable, that
interest thereon will cease to accrue on and after said date,
(5) the place or places where each such Security is to be surrendered
for payment of the Redemption Price, and
(6) that the redemption is for a sinking fund, if such is the case.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company and shall be irrevocable.
SECTION 1105. Deposit of Redemption Price.
On or prior to the Repayment Date (and if on, then before 10:00 a.m.
(New York City time)), the Company shall deposit with the Trustee or with a
Paying Agent (or, if the Company is acting as its own Paying Agent, segregate
and hold in trust as provided in Section 1003) an amount of money sufficient (in
immediately available funds if payment is made on the Repayment Date) to pay the
Repayment Price of and (unless the Repayment Date shall be an Interest Payment
Date) accrued interest, if any, on all of the Securities of such series which
are to be repaid on that date.
SECTION 1106. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Company at the Redemption Price, together with accrued interest
to the Redemption Date; provided, however, that, unless otherwise specified as
contemplated by Section 301, installments of interest whose Stated Maturity is
on or prior to the Redemption Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at the
close of business on the relevant Record Dates according to their terms and the
provisions of Section 307.
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If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal and any premium shall, until paid, bear
interest from the Redemption Date at the rate prescribed therefor in the
Security.
SECTION 1107. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be surrendered at a
Place of Payment therefor (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of such Security without service
charge, a new Security or Securities of the same series and of like tenor, of
any authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered.
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. Applicability of Article.
The provisions of this Article shall be applicable to any sinking fund for
the retirement of Securities of any series except as otherwise specified as
contemplated by Section 301 for such Securities.
The minimum amount of any sinking fund payment provided for by the terms of
any Securities is herein referred to as a "mandatory sinking fund payment", and
any payment in excess of such minimum amount provided for by the terms of such
Securities is herein referred to as an "optional sinking fund payment". If
provided for by the terms of any Securities, the cash amount of any sinking fund
payment may be subject to reduction as provided in Section 1202. Each sinking
fund payment shall be applied to the redemption of Securities as provided for by
the terms of such Securities.
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities.
The Company (1) may deliver Outstanding Securities of a series (other than
any previously called for redemption) and (2) may apply as a credit Securities
of a series which have been redeemed either at the election of the Company
pursuant to the terms of such Securities or through the application of permitted
optional sinking fund payments pursuant to the terms of such Securities, in each
case in satisfaction of all or any part of any sinking fund payment with respect
to any Securities of such series required to be made pursuant to the terms of
such Securities as and to the extent provided for by the terms of such
Securities;
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provided that the Securities to be so credited have not been previously so
credited. The Securities to be so credited shall be received and credited for
such purpose by the Trustee at the Redemption Price, as specified in the
Securities so to be redeemed, for redemption through operation of the sinking
fund and the amount of such sinking fund payment shall be reduced accordingly.
SECTION 1203. Redemption of Securities for Sinking Fund.
Not less than 30 days prior to each sinking fund payment date for any
Securities, the Company will deliver to the Trustee an Officers' Certificate
specifying the amount of the next ensuing sinking fund payment for such
Securities pursuant to the terms of such Securities, the portion thereof, if
any, which is to be satisfied by payment of cash and the portion thereof, if
any, which is to be satisfied by delivering and crediting Securities pursuant to
Section 1202 and will also deliver to the Trustee any Securities to be so
delivered. Not less than 30 days prior to each such sinking fund payment date,
the Trustee shall select the Securities to be redeemed upon such sinking fund
payment date in the manner specified in Section 1103 and cause notice of the
redemption thereof to be given in the name of and at the expense of the Company
in the manner provided in Section 1104. Such notice having been duly given, the
redemption of such Securities shall be made upon the terms and in the manner
stated in Sections 1106 and 1107.
ARTICLE THIRTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1301. Company's Option to Effect Defeasance or Covenant Defeasance.
The Company may elect, at its option at any time, to have Section 1302 or
Section 1303 applied to any Securities or any series of Securities, as the case
may be, designated pursuant to Section 301 as being defeasible pursuant to such
Section 1302 or 1303, in accordance with any applicable requirements provided
pursuant to Section 301 and upon compliance with the conditions set forth below
in this Article. Any such election shall be evidenced by a Board Resolution or
in another manner specified as contemplated by Section 301 for such Securities.
SECTION 1302. Defeasance and Discharge.
Upon the Company's exercise of its option (if any) to have this Section
applied to any Securities or any series of Securities, as the case may be, the
Company shall be deemed to have been discharged from its obligations with
respect to such Securities as provided in this Section on and after the date the
conditions set forth in Section 1304 are satisfied (hereinafter called
"Defeasance"). For this purpose, such Defeasance means that the Company shall be
deemed to have paid and discharged the entire indebtedness represented
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by such Securities and to have satisfied all its other obligations under such
Securities and this Indenture insofar as such Securities are concerned (and the
Trustee, at the expense of the Company, shall execute proper instruments
acknowledging the same), subject to the following which shall survive until
otherwise terminated or discharged hereunder: (1) the rights of Holders of such
Securities to receive, solely from the trust fund described in Section 1304 and
as more fully set forth in such Section, payments in respect of the principal of
and any premium and interest on such Securities when payments are due, (2) the
Company's obligations with respect to such Securities under Sections 304, 305,
306, 1002 and 1003, (3) the rights, powers, trusts, duties and immunities of the
Trustee hereunder and (4) this Article. Subject to compliance with this Article,
the Company may exercise its option (if any) to have this Section applied to any
Securities notwithstanding the prior exercise of its option (if any) to have
Section 1303 applied to such Securities.
SECTION 1303. Covenant Defeasance.
Upon the Company's exercise of its option (if any) to have this Section
applied to any Securities or any series of Securities, as the case may be,
(1) the Company shall be released from its obligations under Section 801(3),
Sections 1006 through 1010, inclusive, and any covenants provided pursuant to
Section 301(19), 901(2) or 901(7) for the benefit of the Holders of such
Securities, and (2) the occurrence of any event specified in Sections 501(4)
(with respect to any of Section 801(3), Sections 1006 through 1010, inclusive,
and any such covenants provided pursuant to Section 301(19), 901(2) or 901(7)),
501(5) and 501(8) shall be deemed not to be or result in an Event of Default, in
each case with respect to such Securities as provided in this Section on and
after the date the conditions set forth in Section 1304 are satisfied
(hereinafter called "Covenant Defeasance"). For this purpose, such Covenant
Defeasance means that, with respect to such Securities, the Company may omit to
comply with and shall have no liability in respect of any term, condition or
limitation set forth in any such specified Section (to the extent so specified
in the case of Section 501(4)), whether directly or indirectly by reason of any
reference elsewhere herein to any such Section or by reason of any reference in
any such Section to any other provision herein or in any other document, but the
remainder of this Indenture and such Securities shall be unaffected thereby.
SECTION 1304. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to the application of Section 1302 or
Section 1303 to any Securities or any series of Securities, as the case may be:
(1) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee which satisfies the
requirements contemplated by Section 609 and agrees to comply with the
provisions of this Article applicable to it) as trust funds in trust for
the purpose of making the following payments, specifically pledged as
security for, and dedicated solely to, the benefits of the Holders of such
Securities, (A) money in an amount, or (B) U.S. Government Obligations
which through the scheduled payment of principal and interest in respect
thereof in accordance with their
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terms will provide, not later than one day before the due date of any
payment, money in an amount, or (C) a combination thereof, in each case
sufficient, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered
to the Trustee, to pay and discharge, and which shall be applied by the
Trustee (or any such other qualifying trustee) to pay and discharge, the
principal of and any premium and interest on such Securities on the
respective Stated Maturities, in accordance with the terms of this
Indenture and such Securities. As used herein, "U.S. Government Obligation"
means (x) any security which is (i) a direct obligation of the United
States of America for the payment of which the full faith and credit of the
United States of America is pledged or (ii) an obligation of a Person
controlled or supervised by and acting as an agency or instrumentality of
the United States of America the payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of
America, which, in either case (i) or (ii), is not callable or redeemable
at the option of the issuer thereof, and (y) any depositary receipt issued
by a bank (as defined in Section 3(a)(2) of the Securities Act) as
custodian with respect to any U.S. Government Obligation which is specified
in Clause (x) above and held by such bank for the account of the holder of
such depositary receipt, or with respect to any specific payment of
principal of or interest on any U.S. Government Obligation which is so
specified and held, provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable
to the holder of such depositary receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific
payment of principal or interest evidenced by such depositary receipt.
(2) In the event of an election to have Section 1302 apply to any
Securities or any series of Securities, as the case may be, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that
(A) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling or (B) since the date of this instrument,
there has been a change in the applicable Federal income tax law, in either
case (A) or (B) to the effect that, and based thereon such opinion shall
confirm that, the Holders of such Securities will not recognize gain or
loss for Federal income tax purposes as a result of the deposit, Defeasance
and discharge to be effected with respect to such Securities and will be
subject to Federal income tax on the same amount, in the same manner and at
the same times as would be the case if such deposit, Defeasance and
discharge were not to occur.
(3) In the event of an election to have Section 1303 apply to any
Securities or any series of Securities, as the case may be, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Holders of such Securities will not recognize gain or loss for
Federal income tax purposes as a result of the deposit and Covenant
Defeasance to be effected with respect to such Securities and will be
subject to Federal income tax on the same amount, in the same manner and at
the same times as would be the case if such deposit and Covenant Defeasance
were not to occur.
(4) The Company shall have delivered to the Trustee an Officer's
Certificate to the effect that neither such Securities nor any other
Securities of the same series, if then listed on any securities exchange,
will be delisted as a result of such deposit.
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<PAGE> 74
(5) No event which is, or after notice or lapse of time or both would
become, an Event of Default with respect to such Securities or any other
Securities shall have occurred and be continuing at the time of such
deposit or, with regard to any such event specified in Sections 501(6) and
(7), at any time on or prior to the 90th day after the date of such deposit
(it being understood that this condition shall not be deemed satisfied
until after such 90th day).
(6) Such Defeasance or Covenant Defeasance shall not cause the Trustee
to have a conflicting interest within the meaning of the Trust Indenture
Act (assuming all Securities are in default within the meaning of such
Act).
(7) Such Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any other agreement
or instrument to which the Company is a party or by which it is bound.
(8) Such Defeasance or Covenant Defeasance shall not result in the
trust arising from such deposit constituting an investment company within
the meaning of the Investment Company Act unless such trust shall be
registered under such Act or exempt from registration thereunder.
(9) The Company shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent with respect to such Defeasance or Covenant Defeasance have been
complied with.
SECTION 1305. Deposited Money and U.S. Government Obligations to Be Held in
Trust; Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section 1003, all money
and U.S. Government Obligations (including the proceeds thereof) deposited with
the Trustee or other qualifying trustee (solely for purposes of this Section and
Section 1306, the Trustee and any such other trustee are referred to
collectively as the "Trustee") pursuant to Section 1304 in respect of any
Securities shall be held in trust and applied by the Trustee, in accordance with
the provisions of such Securities and this Indenture, to the payment, either
directly or through any such Paying Agent (including the Company acting as its
own Paying Agent) as the Trustee may determine, to the Holders of such
Securities, of all sums due and to become due thereon in respect of principal
and any premium and interest, but money so held in trust need not be segregated
from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 1304 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of Outstanding Securities.
Anything in this Article to the contrary notwithstanding, the Trustee shall
deliver or pay to the Company from time to time upon Company Request any money
or U.S.
-65-
<PAGE> 75
Government Obligations held by it as provided in Section 1304 with respect to
any Securities which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect the Defeasance or Covenant Defeasance, as
the case may be, with respect to such Securities.
SECTION 1306. Reinstatement.
If the Trustee or the Paying Agent is unable to apply any money in
accordance with this Article with respect to any Securities by reason of any
order or judgment of any court or governmental authority enjoining, restraining
or otherwise prohibiting such application, then the obligations under this
Indenture and such Securities from which the Company has been discharged or
released pursuant to Section 1302 or 1303 shall be revived and reinstated as
though no deposit had occurred pursuant to this Article with respect to such
Securities, until such time as the Trustee or Paying Agent is permitted to apply
all money held in trust pursuant to Section 1305 with respect to such Securities
in accordance with this Article; provided, however, that if the Company makes
any payment of principal of or any premium or interest on any such Security
following such reinstatement of its obligations, the Company shall be subrogated
to the rights (if any) of the Holders of such Securities to receive such payment
from the money so held in trust.
ARTICLE FOURTEEN
REPAYMENT OF SECURITIES AT OPTION OF HOLDERS
SECTION 1401. Applicability of Article.
Securities of any series which are repayable before their Stated Maturity
at the option of the Holders shall be repayable in accordance with their terms
and (except as otherwise specified as contemplated by Section 301 for Securities
of any series) in accordance with this Article.
SECTION 1402. Notice of Repayment Date.
Notice of any Repayment Date with respect to Securities of any series shall
be given by the Company not less than 45 nor more than 60 days prior to such
Repayment Date to each Holder of Securities of such series in accordance with
Section 106.
The notice as to the Repayment Date shall state:
(1) the Repayment Date;
(2) the Repayment Price;
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<PAGE> 76
(3) the place or places where such Securities are to be surrendered
for payment of the Repayment Price and the date by which Securities must be
so surrendered in order to be repaid; and
(4) that exercise of the option to elect repayment is irrevocable.
SECTION 1403. Deposit of Repayment Price.
On or prior to the Repayment Date (and if on, then before 10:00 a.m.
(New York City time)), the Company shall deposit with the Trustee or with a
Paying Agent (or, if the Company is acting as its own Paying Agent, segregate
and hold in trust as provided in Section 1003) an amount of money sufficient (in
immediately available funds if payment is made on the Repayment Date) to pay the
Repayment Price of and (unless the Repayment Date shall be an Interest Payment
Date) accrued interest, if any, on all of the Securities of such series which
are to be repaid on that date.
SECTION 1404. Securities Payable on Repayment Date.
The form of option to elect repayment having been delivered as specified in
the form of Security for such series as provided in Section 203, the Securities
of such series so to be repaid shall, on the Repayment Date, become due and
payable at the Repayment Price applicable thereto and from and after such date
(unless the Company shall default in the payment of the Repayment Price and
accrued interest) such Securities shall cease to bear interest. Upon surrender
of any such Security for repayment in accordance with said notice, such Security
shall be paid by the Company at the Repayment Price together with accrued
interest to the Repayment Date; provided, however, that installments of interest
whose Stated Maturity is on or prior to such Repayment Date shall be payable to
the Holders of such Securities, or one or more Predecessor Securities,
registered as such at the close of business on the relevant Record Dates
according to their terms and the provisions of Section 307.
If any Security shall not be paid upon surrender thereof for repayment, the
principal (and premium, if any) shall, until paid, bear interest from the
Repayment Date at the rate prescribed therefor in such Security.
SECTION 1405. Securities Repaid in Part.
Any Security which by its terms may be repaid in part at the option of the
Holder and which is to be repaid only in part shall be surrendered at any office
or agency of the Company designated for that purpose pursuant to Section 1002
(with, if the Company or the Trustee so requires, due endorsement by, or a
written instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or his attorney duly authorized in
writing), and the Company shall execute, and the Trustee shall authenticate and
deliver to the Holder of such Security without service charge, a new Security or
Securities of the same series, of any authorized denomination as requested by
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<PAGE> 77
such Holder, in aggregate principal amount equal to and in exchange for the
unrepaid portion of the principal of the Security so surrendered.
______________________________
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<PAGE> 78
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
American Greetings Corporation
By /s/ Dale A. Cable
------------------------------------------
DALE A. CABLE
Attest:
/s/ Michael P. Burns
- -----------------------------
MICHAEL P. BURNS
NBD Bank
By
------------------------------------------
Attest:
- -----------------------------
-69-
<PAGE> 79
STATE OF OHIO )
) ss.:
COUNTY OF CUYAHOGA )
On the 27th day of July, 1998, before me personally came Dale A. Cable, to
me known, who, being by me duly sworn, did depose and say that he is Vice
President and Treasurer of American Greetings Corporation, one of the
corporations described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation; and that he signed his name thereto by like
authority.
/s/ Ruth A. Bemer
---------------------------------
Ruth A. Bemer
Notary Public - State of Ohio
My Commission Expires
December 26, 2000
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the .... day of ..........., 1998, before me personally came
..........................., to me known, who, being by me duly sworn, did
depose and say that he is .................... of .............................,
one of the corporations described in and which executed the foregoing
instrument; that he knows the seal of said corporation; that the seal affixed to
said instrument is such corporate seal; that it was so affixed by authority of
the Board of Directors of said corporation; and that he signed his name thereto
by like authority.
---------------------------------
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<PAGE> 80
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
American Greetings Corporation
By
------------------------------------------
Attest:
- -----------------------------
NBD Bank
By /s/ Nan L. Packard
-------------------------------------------
NAN L. PACKARD
Attest:
/s/ Christopher Pulley
- -----------------------------
CHRISTOPHER PULLEY
-71-
<PAGE> 81
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the .... day of ..........., 1998, before me personally came
..........................., by me duly sworn, did depose and say that he is
.................... of ............................., one of the corporations
described in and which executed the foregoing instrument; that he knows the
seal of said corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by authority of the Board of Directors
of said corporation; and that he signed his name thereto by like authority;
---------------------------------
STATE OF MICHIGAN )
) ss.:
COUNTY OF WAYNE )
On the 27th day of July, 1998, before me personally came Nan L. Packard, to
me known, by me duly sworn, did depose and say that she is vice president of NBD
Bank, one of the corporations described in and which executed the foregoing
instrument; that she knows the seal of said corporation; that the seal affixed
to said instrument is such corporate seal; that it was so affixed by authority
of the Board of Directors of said corporation; and that she signed her name
thereto by like authority;
/s/ Amy J. Brehler
---------------------------------
Amy J. Brehler
Notary Public - Wayne County, MI
My commission expires 8-24-2000
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<PAGE> 1
Exhibit 4(ii)
CREDIT AGREEMENT
by and among
AMERICAN GREETINGS CORPORATION,
as US Facility Borrower,
CARLTON CARDS (FRANCE) S.N.C., CARLTON CARDS
LIMITED, UK GREETINGS LIMITED, HANSON WHITE GROUP
LIMITED and CAMDEN GRAPHICS LIMITED,
as UK Facility Borrowers,
CARLTON CARDS LIMITED,
as Canadian Facility Borrower,
JOHN SANDS (AUSTRALIA) LTD., JOHN
SANDS (N.Z.) LTD. and JOHN SANDS
HOLDING CORPORATION,
as Australian Facility Borrowers,
NATIONSBANK, NATIONAL ASSOCIATION,
as Global Agent, Documentation Agent,
UK Facility Agent and as Lender,
NATIONAL CITY BANK,
as Co-Agent, US Facility Agent and as Lender,
BANK OF AMERICA NATIONAL TRUST and SAVINGS ASSOCIATION,
as Co-Agent and Australian Facility
Agent,
BANK OF AMERICA CANADA,
as Canadian Facility Agent and as Lender
and
THE LENDERS PARTY HERETO FROM TIME TO TIME
August 7, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
Definitions and Terms
1.01 Definitions...........................................................................................4
1.02 Rules of Interpretation..............................................................................42
ARTICLE II
The US Facility
2.01 Advances.............................................................................................43
2.02 Payment of Interest..................................................................................45
2.03 Payment of Principal.................................................................................45
2.04 Manner of Payment....................................................................................46
2.05 US Facility Notes....................................................................................46
2.06 Pro Rata Payments....................................................................................46
2.07 Reductions...........................................................................................47
2.08 Conversions and Elections of Subsequent Interest Periods.............................................47
2.09 Facility Fee.........................................................................................48
2.10 Deficiency Advances..................................................................................48
2.11 Use of Proceeds......................................................................................48
2.12 US Facility Extension................................................................................49
2.13 US Term Loan Option..................................................................................49
2.14 Participations.......................................................................................50
ARTICLE III
The UK Facility
3.01 Advances.............................................................................................51
3.02 Payment of Interest..................................................................................54
3.03 Payment of Principal.................................................................................54
3.04 Manner of Payment....................................................................................54
3.05 Evidence of Indebtedness.............................................................................55
3.06 Pro Rata Payments....................................................................................56
3.07 Reductions...........................................................................................56
3.08 Conversions and Elections of Subsequent Interest Periods.............................................56
3.09 Facility Fee.........................................................................................57
3.10 Deficiency Advances..................................................................................57
3.11 Use of Proceeds......................................................................................57
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
3.12 One Loan.............................................................................................58
3.13 Participations.......................................................................................58
ARTICLE IV
The Canadian Facility
4.01 Advances.............................................................................................60
4.02 Payment of Interest..................................................................................62
4.03 Payment of Principal.................................................................................63
4.04 Manner of Payment....................................................................................64
4.05 Evidence of Indebtedness.............................................................................65
4.06 Pro Rata Payments....................................................................................65
4.07 Reductions...........................................................................................65
4.08 Conversions and Elections of Subsequent Interest Periods.............................................66
4.09 Facility Fee.........................................................................................66
4.10 Deficiency Advances..................................................................................67
4.11 Use of Proceeds......................................................................................67
4.12 Canadian Facility Extension..........................................................................67
4.13 Canadian Term Loan Option............................................................................68
4.14 Participations.......................................................................................69
4.15 Maximum Rate of Return...............................................................................69
ARTICLE V
The Australian Facility
5.01 Advances.............................................................................................70
5.02 Payment of Interest..................................................................................73
5.03 Payment of Principal.................................................................................73
5.04 Manner of Payment....................................................................................73
5.05 Evidence of Indebtedness.............................................................................74
5.06 Pro Rata Payments....................................................................................74
5.07 Reductions...........................................................................................75
5.08 Conversions and Elections of Subsequent Interest Periods.............................................75
5.09 Facility Fee.........................................................................................76
5.10 Deficiency Advances..................................................................................76
5.11 Use of Proceeds......................................................................................77
5.12 One Loan.............................................................................................77
5.13 Participations.......................................................................................78
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE VI
Changes in Circumstances
6.01 Increased Cost and Reduced Return....................................................................79
6.02. Limitation on Types of Loans.........................................................................80
6.03. Illegality...........................................................................................81
6.04. Treatment of Affected Loans..........................................................................81
6.05. Compensation.........................................................................................82
6.06 Taxes................................................................................................82
6.07 Replacement Lender...................................................................................85
6.08 Funding..............................................................................................85
6.09 Economic and Monetary Union in the European Community................................................85
ARTICLE VII
Conditions to Making Loans
7.01 Conditions of Initial Advance........................................................................87
7.02 Conditions of Loans..................................................................................89
ARTICLE VIII
Representations and Warranties
8.01 Representations and Warranties as to Borrowers and Subsidiaries......................................91
8.02 Representations and Warranties of the Company........................................................92
ARTICLE IX
Affirmative Covenants
9.01 Financial Reports, Etc...............................................................................97
9.02 Maintain Properties..................................................................................98
9.03 Existence, Qualification, Etc........................................................................98
9.04 Regulations and Taxes................................................................................98
9.05 Insurance............................................................................................98
9.06 True Books...........................................................................................98
9.07 Right of Inspection..................................................................................99
9.08 Observe all Laws.....................................................................................99
9.09 Covenants Extending to Subsidiaries..................................................................99
9.10 Officer's Knowledge of Default.......................................................................99
9.11 Suits or Other Proceedings...........................................................................99
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
9.12 Environmental Compliance.............................................................................99
9.13 Further Assurances..................................................................................100
9.14 Continued Operations................................................................................100
9.15 Use of Proceeds.....................................................................................100
9.16 Year 2000 Compliance................................................................................100
ARTICLE X
Negative Covenants
10.01 Consolidated Funded Indebtedness to Consolidated Total Capitalization...............................102
10.02 Consolidated EBIT to Consolidated Interest Expense. ...............................................102
10.03 Liens...............................................................................................102
10.04 Transfer of Assets..................................................................................103
10.05 Merger or Consolidation.............................................................................103
10.06 Transactions with Affiliates........................................................................104
10.07 ERISA...............................................................................................104
10.08 Acquisitions........................................................................................105
10.09 Negative Pledge.....................................................................................105
10.10 Dissolution, Etc....................................................................................105
10.11 Restrictive Agreements..............................................................................105
ARTICLE XI
Events of Default and Acceleration
11.01 Events of Default...................................................................................106
11.02 Global Agent to Act.................................................................................108
11.03 Cumulative Rights...................................................................................109
11.04 No Waiver...........................................................................................109
11.05 Allocation of Proceeds..............................................................................109
11.06 Judgment Currency...................................................................................110
11.07 Funding and Payment of Participations; Conversion to US Dollars.....................................110
ARTICLE XII
The Agents
12.01 Appointment, Powers, and Immunities.................................................................113
12.02 Reliance by Agents..................................................................................113
12.03 Defaults............................................................................................114
12.04 Rights as Lender....................................................................................114
12.05 Indemnification.....................................................................................115
</TABLE>
iv
<PAGE> 6
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
12.06 Non-Reliance on Agents and Other Lenders............................................................115
12.07 Resignation of an Agent.............................................................................115
12.08 Fees................................................................................................116
ARTICLE XIII
Miscellaneous
13.01 Assignments and Participations......................................................................117
13.02 Notices.............................................................................................119
13.03 Right of Set-off; Adjustments.......................................................................121
13.04 Survival............................................................................................121
13.05 Expenses............................................................................................122
13.06 Amendments and Waivers..............................................................................122
13.07 Counterparts........................................................................................123
13.08 Termination.........................................................................................123
13.09 Usury Savings Clause................................................................................123
13.10 Indemnification; Limitation of Liability............................................................124
13.11 Agreement Controls..................................................................................125
13.12 Severability........................................................................................125
13.13 Entire Agreement....................................................................................125
13.14 Governing Law; Waiver of Jury Trial.................................................................126
EXHIBIT A Lenders' Commitments and Applicable Commitment Percentages...........................................A-1
EXHIBIT B Form of Assignment and Acceptance....................................................................B-1
EXHIBIT C Notice of Appointment (or Revocation) of Authorized Representative...................................C-1
EXHIBIT D-1 Borrowing Notice (U.S. Facility Loans)...........................................................D-1-1
EXHIBIT D-2 Borrowing Notice (UK Facility Loans).............................................................D-2-1
EXHIBIT D-3 Borrowing Notice (Canadian Facility Loans).......................................................D-3-1
EXHIBIT D-4 Borrowing Notice (Australian Facility Loans).....................................................D-4-1
EXHIBIT E Form of Guaranty Agreement...........................................................................E-1
EXHIBIT F Form of US Facility Note.............................................................................F-1
EXHIBIT G Form of Opinion of Counsel for Borrowers and Guarantor...............................................G-1
EXHIBIT H Form of Compliance Certificate.......................................................................H-1
SCHEDULE 1.01 Authorized Representatives.....................................................................Sch-1
SCHEDULE 8.02(a) Subsidiaries and Stockholders...............................................................Sch-3
SCHEDULE 8.02(f) Litigation..................................................................................Sch-4
SCHEDULE 10.03 Existing Liens................................................................................Sch-5
SCHEDULE 10.06 Transactions with Affiliates..................................................................Sch-6
</TABLE>
v
<PAGE> 7
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of August 7, 1998 (the "Agreement"), is
made by and among:
AMERICAN GREETINGS CORPORATION, a corporation duly organized and
existing under the laws of the State of Ohio (the "Company" and the "US Facility
Borrower"); and
CARLTON CARDS (FRANCE) S.N.C., a societe en nom collectif organized
under the laws of France, registered with the Registry of Commerce and of
Companies of La Courneuve under Number RCS B 387 702 954 ("Carlton France"); and
CARLTON CARDS LIMITED (Registered No. 61412), UK GREETINGS LIMITED (Registered
No. 3480710), HANSON WHITE GROUP LIMITED (Registered No. 3220599) and CAMDEN
GRAPHICS LIMITED (Registered No. 1001272), each a corporation duly organized and
existing under the laws of England and Wales (collectively, the AUK
Subsidiaries" and, together with Carlton France, the AUK Facility Borrowers");
and
CARLTON CARDS LIMITED, a corporation duly organized and existing under
the laws of Ontario, Canada (the "Canadian Facility Borrower"); and
JOHN SANDS (AUSTRALIA) LTD., JOHN SANDS HOLDING CORP. and JOHN SANDS
(N.Z.) LTD., each a corporation duly organized and existing under the laws of
Delaware and doing business in Australia (collectively, the "Australian Facility
Borrowers"; the US Facility Borrower, the UK Facility Borrowers, the Canadian
Facility Borrower and the Australian Facility Borrowers are sometimes referred
to collectively as the "Borrowers" or individually as a "Borrower"); and
NATIONSBANK, NATIONAL ASSOCIATION, BANK OF AMERICA NATIONAL TRUST &
SAVINGS ASSOCIATION, NATIONAL CITY BANK, NBD BANK, KEYBANK NATIONAL ASSOCIATION,
ROYAL BANK OF CANADA, MELLON BANK, N.A., and PNC BANK, N.A., the initial lenders
under the US Facility, and each other lender which may hereafter execute and
deliver an instrument of assignment with respect to the US Facility under this
Agreement pursuant to Section 13.01 (hereinafter such lenders may be referred to
individually as a "US Facility Lender" or collectively as the "US Facility
Lenders"); and
BANK OF AMERICA CANADA, FIRST CHICAGO NBD BANK, CANADA, ROYAL BANK OF
CANADA and MELLON BANK CANADA, the initial lenders under the Canadian Facility,
and each other lender which may hereafter execute and deliver an instrument of
assignment with respect to the Canadian Facility under this Agreement pursuant
to Section 13.01 (hereinafter such lenders may be referred to individually as a
"Canadian Facility Lender" or collectively as the "Canadian Facility Lenders");
and
NATIONSBANK, NATIONAL ASSOCIATION, NATIONAL CITY BANK, PNC BANK, N.A.
and KEYBANK NATIONAL ASSOCIATION, the initial lenders under the UK Facility, and
each other lender which may hereafter execute and deliver an instrument of
assignment with respect
<PAGE> 8
to the UK Facility under this Agreement pursuant to Section 13.01 (hereinafter
such lenders may be referred to individually as a "UK Facility Lender" or
collectively as the "UK Facility Lenders"); and
BA AUSTRALIA LIMITED, THE FIRST NATIONAL BANK OF CHICAGO, and ROYAL
BANK OF CANADA, the initial Lenders under the Australian Facility, and each
other lender which may hereafter execute and deliver an instrument of assignment
with respect to the Australian Facility under this Agreement pursuant to Section
13.01 (hereinafter such lenders may be referred to individually as an
"Australian Facility Lender" or collectively as the "Australian Facility
Lenders"; the US Facility Lenders, the Canadian Facility Lenders, the UK
Facility Lenders and the Australian Facility Lenders are sometimes referred to
collectively as the "Lenders" or individually as a "Lender"); and
NATIONAL CITY BANK, in its capacity as agent for the US Facility
Lenders (the "US Facility Agent");
NATIONSBANK, NATIONAL ASSOCIATION, in its capacity as agent for the UK
Facility Lenders (the "UK Facility Agent");
BANK OF AMERICA CANADA, a bank chartered under the laws of Canada
("BACAN"), in its capacity as agent for the Canadian Facility Lenders (the
"Canadian Facility Agent");
BANK OF AMERICA NATIONAL TRUST and SAVINGS ASSOCIATION, in its capacity
as agent for the Australian Facility Lenders (the "Australian Facility Agent";
the US Facility Agent, the UK Facility Agent, the Canadian Facility Agent and
the Australian Facility Agent are sometimes referred to collectively as the
"Facility Agents" or individually as a "Facility Agent"); and
NATIONSBANK, NATIONAL ASSOCIATION, in its capacity as global
administrative agent for each of the Lenders (the "Global Agent" and together
with the Facility Agents, the "Agents").
W I T N E S S E T H:
WHEREAS, the US Facility Borrower and certain US Facility Lenders (the
"Existing US Lenders") are parties to a Credit Agreement dated as of June 10,
1994 (the "Existing US Agreement") pursuant to which the Existing US Lenders
have made available to the US Facility Borrower a revolving credit facility of
up to US $650,000,000 (the facility described above together with any other
facilities under the Existing US Agreement are referred to collectively as the
"Prior US Facility"); and
WHEREAS, the US Facility Borrower and Carlton Cards Limited (together,
the "Existing Canadian Borrowers") and certain Canadian Facility Lenders and
other lenders (the "Existing Canadian Lenders") are parties to a Credit
Agreement dated as of January 15, 1996 (the "Existing Canadian Agreement")
pursuant to which the Existing Canadian Lenders have made available to the
Existing Canadian Borrowers a revolving credit facility of up to CAN
$100,000,000 (the facility
2
<PAGE> 9
described above together with any other facilities under the Existing Canadian
Agreement are referred to as the "Prior Canadian Facility"); and
WHEREAS, the US Facility Borrower and Carlton Cards Limited [UK] and
NatWest Finance (Ireland) ("NWFI") are parties to (i) a Loan Agreement dated as
of March 13, 1995 (the "Existing 1995 Irish Agreement"), pursuant to which NWFI
has made available to Carlton Cards Limited [UK] a term loan facility of up to
Stgpound,5,000,000, and (ii) a Loan Agreement dated as of July 13, 1993 (the
"Existing 1993 Irish Agreement) pursuant to which NWFI has made available to
Carlton Cards Limited [UK] a term loan facility of up to Stgpound,10,000,000
(the facilities described in (i) and (ii) above, together with any other
facilities under the Existing 1995 Irish Agreement and the Existing 1993 Irish
Agreement are referred to as the "Prior Irish Facility"); and
WHEREAS, Carlton France, Carlton Cards Limited [UK], and The First
National Bank of Chicago f/k/a NBD Bank, N.A. ("First Chicago") are parties to a
Credit Agreement dated as of February 1, 1994, as amended on each of July 1,
1995, October 4, 1996, December 17, 1996, February 26, 1997, March 25, 1997 and
July 25, 1997 (the "Existing French Agreement"), pursuant to which First Chicago
has made available to Carlton France total facilities of up to FF140,000,000
consisting of a FF80,000,000 term loan facility and a FF40,000,000 revolving
credit facility (the facilities described above together with any other
facilities under the Existing French Agreement are referred to as the "Prior
French Facility"); and
WHEREAS, Carlton Cards Limited [UK] and Carlton (UK) Retail, Limited
(together, the "Existing UK Borrowers") and First Chicago are parties to a
certain Revolving Credit Facility Letter Agreement dated as of August 8, 1991,
as amended on April 15, 1992, March 11, 1994 and April 11, 1995 (the "Existing
UK Agreement"), pursuant to which First Chicago has made available to the
Existing UK Borrowers a revolving credit facility of up to UK pound 17,000,000
(the facility described above together with any other facilities under the
Existing UK Agreement are referred to as the "Prior UK Facility"); and
WHEREAS, certain of the Australian Facility Borrowers (the "Existing
Australian Borrowers") and certain Australian Facility Lenders and other lenders
(the "Existing Australian Lenders") are parties to a Loan Facility Agreement
dated as of April 30, 1996 (the "Existing Australian Agreement") pursuant to
which the Existing Australian Lenders have made available to the Existing
Australian Borrowers a revolving credit facility of up to US $100,000,000
(equivalent amount) (the facility described above together with any other
facilities under the Existing Australian Agreement are referred to as the "Prior
Australian Facility" and together with the Prior US Facility, the Prior Canadian
Facility, the Prior Irish Facility, the Prior UK Facility and the Prior French
Facility, the "Prior Facilities"); and
WHEREAS, the Borrowers desire to replace the Prior Facilities with the
facilities herein provided; and
WHEREAS, (i) the US Facility Lenders are willing to make available to
the US Facility Borrower a revolving credit facility of up to $450,000,000; (ii)
the UK Facility Lenders are willing to make available to the UK Facility
Borrowers a revolving credit facility of up to pound 55,000,000,
3
<PAGE> 10
including a subfacility for the borrowing of French Francs; (iii) the Canadian
Facility Lenders are willing to make available to the Canadian Facility Borrower
a revolving credit facility of up to CAN $150,000,000; and (iv) the Australian
Facility Lenders are willing to make available to the Australian Facility
Borrowers a revolving credit facility of up to AUS $125,000,000, including a
subfacility for the borrowing of New Zealand Dollars, in each case subject to
the terms and conditions set forth herein;
NOW, THEREFORE, the Borrowers, the Lenders, and the Agents hereby agree
as follows:
ARTICLE I
Definitions and Terms
1.01 Definitions. For the purposes of this Agreement, in addition to
the definitions set forth above, the following terms shall have the respective
meanings set forth below:
"Advance" means a US Facility Advance, a UK Facility Advance,
a Canadian Facility Advance or an Australian Facility Advance, as the
case may be.
"Affected Loans" shall have the meaning therefor set forth in
Section 6.04.
"Affected Type" shall have the meaning therefor set forth in
Section 6.04.
"Affiliate" means any Person (i) which directly or indirectly
through one or more intermediaries controls, or is controlled by, or is
under common control with, the Company; or (ii) which beneficially owns
or holds 10% or more of any class of the outstanding Voting Stock of
the Company; or (iii) 10% or more of any class of the outstanding
Voting Stock (or in the case of a Person which is not a corporation,
10% or more of the equity or other ownership interest) of which is
beneficially owned or held by the Company. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through
ownership of Voting Stock, by contract or otherwise.
"Aggregate Commitment" means, with respect to any Lender, its
US Facility Commitment and, as applicable, the US Dollar Equivalent
Amount of the sum of its UK Facility Commitment, its Canadian Facility
Commitment and its Australian Facility Commitment.
"Aggregate Credit Exposure" shall have the meaning therefor
set forth in the definition of "Credit Exposure."
"Aggregate Facility Credit Exposure" shall have the meaning
therefor set forth in the definition of "Facility Credit Exposure."
4
<PAGE> 11
"Applicable Base Rate" means (i) with respect to all matters
involving the US Facility, the US Facility Base Rate, (ii) with respect
to all matters involving the Canadian Facility, the Canadian Facility
Base Rate, and (iii) with respect to all matters involving the
Australian Facility, the Australian Facility Base Rate.
"Applicable Base Rate Loan" means a Loan bearing interest at
an Applicable Base Rate.
"Applicable Borrowers" means (i) with respect to all matters
involving the US Facility, the US Facility Borrower, (ii) with respect
to all matters involving the UK Facility, the UK Facility Borrowers,
(iii) with respect to all matters involving the Canadian Facility, the
Canadian Facility Borrower, and (iv) with respect to all matters
involving the Australian Facility, the Australian Facility Borrowers.
"Applicable Commitment Percentage" means, for each Lender,
with respect to the Obligations hereunder arising in connection with
each separate Facility and the Total Facilities, a fraction (expressed
as a percentage), the numerator of which shall be the amount of such
Lender's Aggregate Commitment and the denominator of which shall be the
Total Commitment, each as of the date of determination, which
Applicable Commitment Percentage for each Lender as of the Closing Date
is as set forth in Exhibit A attached hereto and incorporated herein by
reference; provided that the Applicable Commitment Percentages of each
Lender shall be increased or decreased to reflect any assignments to or
by such Lender effected in accordance with Section 13.01 hereof.
"Applicable Currency" means (i) with respect to the US
Facility, US Dollars, (ii) with respect to the UK Facility, British
Pounds Sterling or, if the context requires, French Francs, (iii) with
respect to the Canadian Facility, Canadian Dollars and (iv) with
respect to the Australian Facility, Australian Dollars or, if the
context requires, New Zealand Dollars.
"Applicable Facility Agent" means (i) with respect to all
matters involving the US Facility, the US Facility Agent, (ii) with
respect to all matters involving the UK Facility, the UK Facility
Agent, (iii) with respect to all matters involving the Canadian
Facility, the Canadian Facility Agent and (iv) with respect to all
matters involving the Australian Facility, the Australian Facility
Agent.
"Applicable Facility Commitment" means, with respect to any
Lender and any Facility, the obligation of such Lender to incur
Facility Credit Exposure as an Applicable Lender or Participant in such
Facility, as applicable, up to an aggregate principal amount at any
time outstanding equal to the product of such Lender's Applicable
Commitment Percentage times the Applicable Total Facility Commitment,
as the same may be increased or decreased from time to time pursuant to
this Agreement.
"Applicable Fronting Commitment" means, for any Lender, (i)
with respect to the US Facility, such Lender's US Facility Fronting
Commitment, if any, (ii) with respect to the UK Facility, such Lender's
UK Facility Fronting Commitment, if any, (iii) with respect to the
5
<PAGE> 12
Canadian Facility, such Lender's Canadian Facility Fronting Commitment,
if any, and (iv) with respect to the Australian Facility, such Lender's
Australian Facility Fronting Commitment, if any.
"Applicable Fronting Percentage" means (i) for each US
Facility Lender, with respect to the Obligations hereunder arising in
connection with the US Facility, a fraction (expressed as a
percentage), the numerator of which shall be the amount of its US
Facility Fronting Commitment and the denominator of which shall be the
Total US Facility Commitment, each as of the date of determination,
which Applicable Fronting Percentage for each US Facility Lender as of
the Closing Date is as set forth in Exhibit A attached hereto and
incorporated herein by this reference; (ii) for each UK Facility
Lender, with respect to the Obligations hereunder arising in connection
with the UK Facility, a fraction (expressed as a percentage), the
numerator of which shall be the amount of its UK Facility Fronting
Commitment and the denominator of which shall be the Total UK Facility
Commitment, each as of the date of determination, which Applicable
Fronting Percentage for each UK Facility Lender as of the Closing Date
is as set forth in Exhibit A attached hereto and incorporated herein by
this reference; (iii) for each Canadian Facility Lender, with respect
to the Obligations hereunder arising in connection with the Canadian
Facility, a fraction (expressed as a percentage), the numerator of
which shall be the amount of its Canadian Facility Fronting Commitment
and the denominator of which shall be the Total Canadian Facility
Commitment, each as of the date of determination, which Applicable
Fronting Percentage for each Canadian Facility Lender as of the Closing
Date is as set forth in Exhibit A attached hereto and incorporated
herein by this reference; and (iv) for each Australian Facility Lender,
with respect to the Obligations hereunder arising in connection with
the Australian Facility, a fraction (expressed as a percentage), the
numerator of which shall be the amount of its Australian Facility
Fronting Commitment and the denominator of which shall be the Total
Australian Facility Commitment, each as of the date of determination,
which Applicable Fronting Percentage for each Australian Facility
Lender as of the Closing Date is as set forth in Exhibit A attached
hereto and incorporated herein by this reference; provided that the
Applicable Fronting Percentages of each Lender shall be increased or
decreased to reflect any assignments to or by such Lender effected in
accordance with Section 13.01 hereof.
"Applicable Lenders" means (i) with respect to all matters
involving the US Facility, the US Facility Lenders, (ii) with respect
to all matters involving the UK Facility, the UK Facility Lenders,
(iii) with respect to all matters involving the Canadian Facility, the
Canadian Facility Lenders, and (iv) with respect to all matters
involving the Australian Facility, the Australian Facility Lenders.
"Applicable Lending Office" means, for each Lender and for
each Type and Applicable Currency of Loan, the "Lending Office" of such
Lender (or of an affiliate of such Lender) designated for such Type and
Applicable Currency of Loan on the signature pages hereof or in an
Assignment and Acceptance, or such other office of such Lender (or an
affiliate of such Lender) as such Lender may from time to time specify
to the Applicable Facility Agent and the Applicable Borrowers by
written notice in accordance with the terms
6
<PAGE> 13
hereof as the office by which its Loans of such Type and Applicable
Currency are to be made and maintained.
"Applicable Margin" means (i) for purposes of calculating the
applicable interest rate for any Interest Period for each Offshore Rate
Loan, and the applicable Facility Fee, under each of the UK Facility
and the Australian Facility, and the applicable interest rate for any
Interest Period for each Canadian Facility BA Rate Loan, and the
applicable Facility Fee, under the Canadian Facility Full Maturity
Tranche, that percent per annum set forth below, which shall be (A)
determined as of the last day of each fiscal quarter of the Company
(each, a "Determination Date") and (B) effective beginning on the first
day next following the date of delivery of the certificate delivered to
the Agents pursuant to Section 9.01(a) or 9.01(b) hereof (each, a
"Compliance Certificate") as to such Determination Date (the
"Compliance Date"), with respect to all such Offshore Rate Loans and
Canadian Facility BA Rate Loans existing and the calculation of all
such Facility Fees, on and after such Compliance Date, all based upon
the computations and information set forth in the Compliance
Certificate (subject to review and approval of such computations by the
Agents) with respect to (x) the ratio of Consolidated Funded
Indebtedness to Consolidated Total Capitalization as at such
Determination Date and (y) the rating (the "Debt Rating") assigned to
each class of long term senior secured indebtedness of the Company (the
"Rated Debt") by either of S&P or Moody's as at such Determination Date
(provided that if such determination shall result in a different
Applicable Margin under (x) and (y) above, the lower Applicable Margin
shall apply):
<TABLE>
<CAPTION>
Applicable
Applicable Margin for
Company's Senior Unsecured Consolidated Margin Facility
Level Indebtedness Rating Leverage Ratio for Loans Fees
----- ------------------- -------------- --------- ----
<S> <C> <C> <C> <C>
I Either A- or higher by S&P or less than or equal to .30 to 1.00 .150% .075%
A3 or higher by Moody's
II Either BBB+ or higher by S&P less than or equal to .40 to .205% .095%
or Baa1 or higher by Moody's 1.00 and greater than .30 to 1.00
III Either BBB or higher by S&P or less than or equal to .45 to .275% .125%
Baa2 or higher by Moody's 1.00 and greater than .40 to 1.00
IV Lower than BBB by S&P or lower greater than .45 to 1.00 .350% .150%
than Baa2 by Moody's
</TABLE>
; and (ii) for purposes of calculating the applicable interest rate for
any Interest Period for each Eurodollar Rate Loan, and the applicable
Facility Fee, under the US Facility, and the applicable interest rate
for any Interest Period for each Canadian Facility BA Rate Loan, and
the applicable Facility Fee, under the Canadian Facility Renewable
Tranche, that percent per annum set forth below, which shall be (A)
determined as of each Determination Date and (B) effective beginning on
the first day next following the applicable Compliance Date, with
respect to all such Eurodollar Rate Loans and Canadian Facility BA Rate
Loans existing, and the calculation of all such Facility Fees, on and
after such Compliance Date, all based upon the computations and
information set forth in the Compliance Certificate (subject to review
7
<PAGE> 14
and approval of such computations by the Agents) with respect to (x)
the ratio of Consolidated Funded Indebtedness to Consolidated Total
Capitalization as at such Determination Date and (y) the Debt Rating
assigned to each class of Rated Debt by either of S&P or Moody's as at
such Determination Date (provided that if such determination shall
result in a different Applicable Margin under (x) and (y) above, the
lower Applicable Margin shall apply):
<TABLE>
<CAPTION>
Applicable
Applicable Margin for
Company's Senior Unsecured Consolidated Margin Facility
Level Indebtedness Rating Leverage Ratio for Loans Fees
----- ------------------- -------------- --------- ----
<S> <C> <C> <C> <C>
I Either A- or higher by S&P or less than or equal to .30 to .160% .065%
A3 or higher by Moody's 1.00
II Either BBB+ or higher by S&P or less than or equal to .40 to .215% .085%
Baa1 or higher by Moody's 1.00 and greater than .30 to
1.00
III Either BBB or higher by S&P or less than or equal to .45 to .300% .100%
Baa2 or higher by Moody's 1.00 and greater than .40 to
1.00
IV Lower than BBB by S&P and lower greater than .45 to 1.00 .375% .125%
than Baa2 by Moody's
</TABLE>
; provided, however, that if, in both (i) and (ii) above, the period to which
the Compliance Certificate relates is the third fiscal quarter of any Fiscal
Year of the Company, the Consolidated Leverage Ratio set forth in each table
above shall be adjusted as set forth below at the applicable level:
Consolidated
Level Leverage Ratio
----- --------------
I less than or equal to .35 to 1.00
II less than or equal to .425 to 1.00
and greater than .35 to 1.00
III less than or equal to .475 to 1.00 and
greater than .425 to 1.00
IV greater than .475 to 1.00
In the event that the Debt Ratings assigned by S&P and Moody's
differ by one rating level, the Applicable Margin shall be determined
by reference to the level in the charts above having the higher
assigned Debt Rating without regard to the lower assigned Debt Rating.
In the event that the Debt Ratings assigned by S&P and Moody's differ
by more than one rating level, the Applicable Margin shall be
determined by reference to the Debt Rating which is one rating level
lower than the higher assigned Debt Rating without regard to the lower
assigned Debt Rating. By way of illustration under (i) above and not
limitation, if S&P assigns a rating of BBB+ (i.e., Level II) and
Moody's assigns a rating of Baa2 (i.e., Level III), the Applicable
Margin will be .205% (i.e., Level II); if S&P assigns a rating of A-
(i.e.,
8
<PAGE> 15
Level I) and Moody's assigns a rating of Baa3 (i.e., Level IV), the
Applicable Margin will be .205% (i.e., Level II).
Notwithstanding any provision herein to the contrary, if the
Company shall fail to deliver any Compliance Certificate within the
applicable period set forth in Section 9.01(a) or (b), as the case may
be, then the Applicable Margin in each Facility shall be the highest
Applicable Margin for such Facility set forth above commencing on the
date such Compliance Certificate was required to have been delivered
until the date the appropriate Compliance Certificate is so delivered.
From the Closing Date to the first Compliance Date, the Applicable
Margin for Loans shall be .150% under (i) above and .160% under (ii)
above, and the Applicable Margin for Facility Fees shall be .075% under
(i) above and .065% under (ii) above.
The Global Agent shall give each Facility Agent, within one
(1) Business Day of receipt of any Compliance Certificate,
telefacsimile notice, or telephonic notice (confirmed in writing), of
the Applicable Margins in effect from such date.
"Applicable Rate" means the applicable interest rate for any
Fixed Rate Loan or Floating Rate Loan available in a specific Facility
as selected by the Applicable Borrower or otherwise applicable
hereunder.
"Applicable Reference Rate" means
(i) for any Eurodollar Rate Loan made under the US
Facility for any Interest Period therefor, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%)
determined by the US Facility Agent to appear on Telerate Page
3750 or other appropriate Telerate Page (or any successor
page) as the London interbank offered rate for deposits in the
Applicable Currency at approximately 11:00 A.M. (London,
England time) two (2) Business Days prior to the first day of
such Interest Period for a term comparable to such Interest
Period. If for any reason such rate is not available, the term
"Applicable Reference Rate" shall mean, for any Eurodollar
Rate Loan for any Interest Period therefor, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%)
determined by the US Facility Agent to appear on Reuters
Screen LIBO Page as the London interbank offered rate for
deposits in the Applicable Currency at approximately 11:00
A.M. (London, England time) two (2) Business Days prior to the
first day of such Interest Period for a term comparable to
such Interest Period; provided, however, if more than one rate
is specified on Reuters Screen LIBO Page, the applicable rate
shall be the arithmetic mean of all such rates (rounded
upwards, if necessary, to the nearest 1/100 of 1%); and
(ii) for any Offshore Rate Loan made in British
Pounds Sterling under the UK Facility for any Interest Period
therefor, the rate per annum equal to the sum of (a) LIBOR
plus (b) the UK Facility Mandatory Cost, in each case on the
first day of such Interest Period for a term comparable to
such Interest Period; and
9
<PAGE> 16
(iii) for any Offshore Rate Loan made in French
Francs under the UK Facility for any Interest Period therefor,
the rate per annum equal to LIBOR as of two (2) Business Days
prior to the first day of such Interest Period for a term
comparable to such Interest Period;
(iv) for any Offshore Rate Loan made in Australian
Dollars under the Australian Facility for any Interest Period
therefor, the rate per annum equal to the sum of (a) the
Australian Bank Bill Swap Reference Rate plus (b) the
additional costs (expressed as a percentage per annum and
rounded upwards, if necessary, to the nearest five decimal
places) to the Australian Facility Lenders of complying with
any reserve ratio requirement or analogous requirement of any
central banking or financial regulatory authority imposed in
respect of the funding or maintenance of the Australian
Facility Commitments or the Australian Facility Loans; and
(v) for any Offshore Rate Loan made in New Zealand
Dollars under the Australian Facility for any Interest Period
therefor, the rate per annum equal to the sum of (a) the New
Zealand Bank Bill Reference Rate plus (b) the additional costs
(expressed as a percentage per annum and rounded upwards, if
necessary, to the nearest five decimal places) to the
Australian Facility Lenders of complying with any reserve
ratio requirement or analogous requirement of any central
banking or financial regulatory authority imposed in respect
of the funding or maintenance of the Australian Facility
Commitments or the Australian Facility Loans.
"Applicable Reserve Requirement" means, at any time, for any
Eurodollar Rate Loan the maximum rate at which reserves (including,
without limitation, any marginal, special, supplemental or emergency
reserves) are required to be maintained with respect thereto under
regulations issued from time to time by the Board or other applicable
banking regulator by the member banks of the Federal Reserve System
against, "Eurocurrency liabilities" (as such term is defined in
Regulation D). Without limiting the effect of the foregoing, the
Applicable Reserve Requirement shall reflect any other reserves
required to be maintained by such member banks with respect to (i) any
category of liabilities which includes deposits by reference to which
the applicable Eurodollar Rate or any other interest rate of a Loan is
to be determined, or (ii) any category of extensions of credit or other
assets which include Eurodollar Rate Loans. An Eurodollar Rate Loan
shall be deemed to constitute Eurocurrency liabilities and as such
shall be deemed subject to reserve requirements without benefits of
credit for proration, exceptions or offsets that may be available from
time to time to the applicable Lender. The rate of interest on
Eurodollar Rate Loans shall be adjusted automatically on and as of the
effective date of any change in the Applicable Reserve Requirement.
"Applicable Total Facility Commitment" means (i) with respect
to the US Facility, the Total US Facility Commitment, (ii) with respect
to the UK Facility, the Total UK Facility Commitment, (iii) with
respect to the Canadian Facility, the Total Canadian Facility
Commitment and (iv) with respect to the Australian Facility, the Total
Australian Facility Commitment.
10
<PAGE> 17
"Assignment and Acceptance" shall mean an Assignment and
Acceptance substantially in the form of Exhibit B (with blanks
appropriately filled in) delivered to the Global Agent and the
Applicable Facility Agents in connection with an assignment of a
Lender's interest in a specific Facility under this Agreement pursuant
to Section 13.01.
"Australian Bank Bill Swap Reference Rate" means (i) for any
date of determination with respect to any Interest Period for an
Offshore Rate Loan made in Australian Dollars under the Australian
Facility, (a) the rate (expressed as a percentage yield per annum to
maturity) determined by the Australian Facility Agent to be the rate
(rounded upwards, if necessary, to the nearest 0.01%) quoted as the
average bid rate on the Reuters Monitor System page "BBSY" at or about
10:00 A.M. (Sydney, Australia time) on the first day of such Interest
Period for bank accepted bills having a term equal to (or no more than
two (2) Business Days shorter or longer than) such Interest Period, or
(b) if (x) for any reason there is no average bid rate displayed on the
Reuters Monitor System screen BBSY page for bank accepted bills of that
term or (y) the basis on which such rates are displayed on the Reuters
Monitor System screen BBSY page is changed and in the opinion of
Australian Facility Agent those rates cease to reflect the Australian
Facility Lenders' cost of funding to the same extent as at the date of
this Agreement, then the rate (expressed as a percentage yield per
annum to maturity) determined by Australian Facility Agent to be the
average of the bid rates quoted to Australian Facility Agent by three
Australian banks selected by Australian Facility Agent at or about that
time on that day for the purchase of bills accepted by such banks
having a face value amount equal to the principal amount of such
Australian Facility Loan and a term as described in clause (i)(a) of
this definition; provided that such buying rates must be for bills of
exchange which are accepted by an Australian bank selected by
Australian Facility Agent and which have a term equivalent to the
relevant Interest Period; or (ii) for any date of determination for
purposes of determining the Australian Facility Base Rate for an
Offshore Rate Loan made in Australian Dollars under the Australian
Facility, or in the event the Australian Bank Bill Swap Reference Rate
cannot be determined as described in clause (i) of this definition, the
rate determined by Australian Facility Agent to be the arithmetic mean
(rounded upwards to the nearest 1/16th of one percent) of the rates, as
supplied to Australian Facility Agent at its request, quoted by the
Australian Facility Lenders to leading banks in the Australian
interbank market at or about 10:00 A.M. (Sydney, Australia time) on
such date for the offering of overnight deposits in Australian Dollars.
"Australian Dollar Equivalent Amount" means, with respect to a
specified amount of New Zealand Dollars, the amount of Australian
Dollars into which such amount of New Zealand Dollars would be
converted, based on the applicable Spot Rate of Exchange.
"Australian Dollar Fronting Commitment" means, with respect to
each Australian Facility Lender, at any date of determination, the
obligation of such Lender to make Loans in Australian Dollars to the
Australian Facility Borrowers on behalf of all the Lenders up to an
aggregate principal amount at any one time outstanding equal to the
product of such Lender's Applicable Fronting Percentage for the
Australian Facility times the Total Australian Dollar Commitment as of
such date, as such fronting commitment may be increased or decreased
from time to time pursuant to this Agreement.
11
<PAGE> 18
"Australian Dollar Outstandings" means, at any date of
determination, that portion of the Australian Facility Outstandings
representing the aggregate principal amount of all Australian Facility
Loans outstanding in Australian Dollars.
"Australian Dollars" or "AUS $" means the lawful currency of
Australia.
"Australian Facility" means the facility described in Article
V hereof providing for Loans to the Australian Facility Borrowers by
the Australian Facility Lenders in the aggregate principal amount of
the Total Australian Facility Commitment.
"Australian Facility Advance" means a borrowing under the
Australian Facility consisting of the aggregate principal amount of an
Australian Facility Base Rate Loan or Offshore Rate Loan, as the case
may be.
"Australian Facility Agent" shall have the meaning therefor
set forth in the introduction hereto.
"Australian Facility Base Rate" means, for any day, the rate
per annum equal to the Australian Bank Bill Swap Reference Rate in
effect on such day for one-day borrowings in Australian Dollars.
"Australian Facility Base Rate Loan" means a Loan for which
the rate of interest is determined by reference to the Australian
Facility Base Rate.
"Australian Facility Borrowers" shall have the meaning
therefor set forth in the introduction hereto.
"Australian Facility Commitment" means, with respect to any
Lender, such Lender's Applicable Facility Commitment for the Australian
Facility.
"Australian Facility Fronting Commitment" means, with respect
to each Australian Facility Lender, the obligation of such Lender to
make Loans to the Australian Facility Borrowers on behalf of all the
Lenders up to an aggregate principal amount at any one time outstanding
equal to the product of such Lender's Applicable Fronting Percentage
for the Australian Facility times the Total Australian Facility
Commitment, as such fronting commitment may be increased or decreased
from time to time pursuant to this Agreement, and shall consist of such
Lender's Australian Dollar Fronting Commitment plus its New Zealand
Dollar Fronting Commitment.
"Australian Facility Lenders" means those Lenders identified
in the introduction hereto with respect to their making Australian
Facility Loans on behalf of all the Lenders.
"Australian Facility Loans" means Loans, both Australian
Facility Base Rate Loans and Offshore Rate Loans, made by the
Australian Facility Lenders pursuant to Section 5.01 hereof.
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<PAGE> 19
"Australian Facility Maximum Amount" means, with respect to
each Australian Facility Borrower, 95% of the amount by which the fair
value of its assets (determined at the lesser of fair valuation and
present fair saleable value on an orderly basis) is in excess of the
total amount of its liabilities, including without limitation
Contingent Obligations, as of the Closing Date; provided, however, that
if the calculation of Australian Facility Maximum Amount in the manner
provided above as of the date payment is required of such Australian
Facility Borrower pursuant to Article V would result in a greater
positive number, then the Australian Facility Maximum Amount shall be
such greater positive number.
"Australian Facility New Zealand Dollar Tranche" means the
facility described in Article V hereof providing for Loans funded in
New Zealand Dollars to the Australian Facility Borrowers by the
Australian Facility Lenders in an aggregate principal amount not to
exceed the Total New Zealand Dollar Commitment.
"Australian Facility Outstandings" means, at any date of
determination, the Australian Dollar Outstandings plus the New Zealand
Dollar Outstandings.
"Authorized Representative" means in the case of each of the
Company and the US Facility Borrower, the UK Facility Borrowers, the
Canadian Facility Borrower and the Australian Facility Borrowers, any
of those persons listed as such on Schedule 1.01 attached hereto, or
any other person expressly designated by the Board of Directors (or the
appropriate committee thereof) of the Company as an Authorized
Representative for purposes of this Agreement, as set forth from time
to time in a certificate in the form attached hereto as Exhibit C.
"BACAN" shall have the meaning therefor set forth in the
introduction hereto.
"Bank of America" means Bank of America National Trust &
Savings Association, a national banking association.
"Board" means the Board of Governors of the Federal Reserve
System (or any successor body).
"Borrowing Notice" means the request of the Authorized
Representative of a Borrower to obtain an Advance or to elect a
subsequent Interest Period for or Convert a Loan or Loans of any Type
hereunder, as the obtaining of such Advance, such election or
Conversion of such Loan or Loans shall be otherwise permitted herein.
Any Borrowing Notice shall be binding on and irrevocable by a Borrower
and shall be in writing and signed by the Authorized Representative of
such Borrower in the form attached hereto as Exhibit D-1 for US
Facility Loans, Exhibit D-2 for UK Facility Loans, Exhibit D-3 for
Canadian Facility Loans and Exhibit D-4 for Australian Facility Loans,
as the case may be.
"British Pounds Sterling" means the lawful currency of the
United Kingdom of Great Britain and Northern Ireland and is subject to
Section 6.09.
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<PAGE> 20
"British Pounds Sterling Fronting Commitment" means, with
respect to each UK Facility Lender, at any date of determination, the
obligation of such Lender to make Loans in British Pounds Sterling to
the UK Facility Borrowers on behalf of all the Lenders up to an
aggregate principal amount at any one time outstanding equal to the
product of such Lender's Applicable Fronting Percentage for the UK
Facility times the Total British Pounds Sterling Commitment as of such
date, as such fronting commitment may be increased or decreased from
time to time pursuant to this Agreement.
"British Pounds Sterling Outstandings" means, at any date of
determination, that portion of the UK Facility Outstandings
representing the aggregate principal amount of all UK Facility Loans
outstanding in British Pounds Sterling.
"Business Day" means (i) with respect to all notices,
determinations, fundings and payments in connection with US Facility
Loans or not related to any particular Facility, or with respect to all
notices, determinations, fundings and payments involving the Global
Agent, any day excluding Saturday, Sunday and any day which is a legal
holiday under the laws of the States of New York or Ohio or is a day on
which banking institutions located in either such state are authorized
or required by law or other governmental action to close, (ii) with
respect to all notices, determinations, fundings and payments in
connection with UK Facility Loans, any day, excluding Saturday, Sunday
and any day which is a legal holiday under the laws of England or is a
day on which banking institutions located in England are authorized or
required by law or other governmental action to close, which is a day
on which dealings in the Applicable Currency are carried on; (iii) with
respect to all notices, determinations, fundings and payments in
connection with Canadian Facility Loans, any day, other than a
Saturday, Sunday or other day on which commercial banks in New York
City or San Francisco and in Toronto, Canada are authorized or required
by law to close; (iv) with respect to all notices, determinations,
fundings and payments in connection with Australian Facility Loans, any
day, excluding Saturday, Sunday and any day which is a legal holiday
under the laws of the Province of New South Wales, Australia or is a
day on which banking institutions located in such Province are
authorized or required by law or other governmental action to close,
which is a day on which dealings in the Applicable Currency are carried
on and on which commercial banks are open for business in, and on which
dealings in Australian Dollars are carried on in, Hong Kong; and (v)
with respect to all notices, determinations, fundings and payments in
connection with any Eurodollar Rate Loan or Offshore Rate Loan, any day
that is a Business Day described above for the applicable Facility and
that is also a day for trading by and between banks in the Applicable
Currency in the applicable interbank Eurodollar Rate market or Offshore
Rate market, as applicable.
"Canadian Dollars" or "CAN $" means the lawful currency of
Canada.
"Canadian Facility" means the facility described in Article IV
hereof providing for Loans to the Canadian Facility Borrower by the
Canadian Facility Lenders in the aggregate principal amount of the
Total Canadian Facility Commitment.
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<PAGE> 21
"Canadian Facility Advance" means a borrowing under the
Canadian Facility Full Maturity Tranche or the Canadian Facility
Renewable Tranche consisting of the aggregate principal amount of a
Canadian Facility Base Rate Loan or Canadian Facility BA Rate Loan, as
the case may be.
"Canadian Facility Agent" shall have the meaning therefor set
forth in the introduction hereto.
"Canadian Facility BA Rate" means, for any Interest Period for
a Canadian Facility BA Rate Loan, the rate of interest per annum
(rounded upwards, if necessary, to the next higher 1/100 of 1%) equal
to the market bid rate determined by the Canadian Facility Agent for
banker's acceptances (with a tenor comparable to such Interest Period
and in an amount comparable to the Canadian Facility BA Rate Loan of
BACAN for such Interest Period) accepted by BACAN on the first day of
such Interest Period.
"Canadian Facility BA Rate Loan" means a Canadian Facility
Loan for which the rate of interest is determined by reference to the
Canadian Facility Fixed BA Rate.
"Canadian Facility Base Rate" means, for any day, for Canadian
Facility Loans made by Canadian Facilities Lenders, the higher of (i)
0.50% per annum above the average 30 day bankers' acceptance rate as
quoted on Reuters Service Page CDOR determined at 10:00 A.M. (Toronto,
Canada time) on such day and (ii) that annual rate of interest
designated by BACAN as its "prime rate" and established and announced
by BACAN from time to time at its offices in Toronto, Canada as the
reference rate for demand loans in Canadian Dollars made in Canada (the
"prime rate" and other rates referred to above are rates set by Bank of
America and BACAN based upon various factors including Bank of
America's and BACAN's costs and desired return, general economic
conditions and other factors, and is used as a reference point for
pricing some loans, which may be priced at, above or below such
announced rate). Any change in the reference rate announced by Bank of
America shall take effect at the opening of business on the day
specified in the public announcement of such change.
"Canadian Facility Base Rate Loan" means a Loan for which the
rate of interest is determined by reference to the Canadian Facility
Base Rate.
"Canadian Facility Borrower" shall have the meaning therefor
set forth in the introduction hereto.
"Canadian Facility Commitment" means, with respect to any
Lender, such Lender's Applicable Facility Commitment for the Canadian
Facility.
"Canadian Facility Fixed BA Rate" means, for any Interest
Period for any Canadian Facility BA Rate Loan, the rate of interest per
annum equal to the sum of the BA Rate for such Loan plus the Applicable
Margin.
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<PAGE> 22
"Canadian Facility Fronting Commitment" means, with respect to
each Canadian Facility Lender, the sum of its Canadian Facility
Renewable Tranche Fronting Commitment and its Canadian Facility Full
Maturity Tranche Fronting Commitment.
"Canadian Facility Full Maturity Tranche" means the facility
described in Article IV hereof providing for Canadian Facility Loans to
the Canadian Facility Borrower by the Canadian Facility Lenders from
the Closing Date until the Total Facility Termination Date in the
aggregate principal amount of the Canadian Facility Full Maturity
Tranche Commitment.
"Canadian Facility Full Maturity Tranche Commitment" means
that portion of the Total Canadian Facility Commitment providing for
Canadian Facility Loans to the Canadian Facility Borrower by the
Canadian Facility Lenders in the aggregate principal amount equal to
CAN $75,000,000.
"Canadian Facility Full Maturity Tranche Outstandings" means,
at any date of determination, that portion of the Canadian Facility
Outstandings representing the aggregate principal amount of all
Canadian Facility Loans outstanding under the Canadian Facility Full
Maturity Tranche.
"Canadian Facility Full Maturity Tranche Fronting Commitment"
means, with respect to each Canadian Facility Lender, the obligation of
such Lender to make or Continue Loans to the Canadian Facility Borrower
on behalf of all the Lenders up to an aggregate principal amount at any
one time outstanding equal to the product of such Lender's Applicable
Fronting Commitment for the Canadian Facility times the Canadian
Facility Full Maturity Tranche Commitment, as such fronting commitment
may be increased or decreased from time to time pursuant to this
Agreement.
"Canadian Facility Lenders" means those Lenders identified in
the introduction hereto with respect to their making Canadian Facility
Loans on behalf of all the Lenders.
"Canadian Facility Loans" means Loans, both Canadian Facility
Base Rate Loans and Canadian Facility BA Rate Loans, made by the
Canadian Facility Lenders pursuant to Article IV hereof.
"Canadian Facility Outstandings" means, at any date of
determination, the aggregate principal amount of all Canadian Facility
Loans then outstanding.
"Canadian Facility Renewable Tranche" means the facility
described in Article IV hereof providing for Canadian Facility Loans to
the Canadian Facility Borrower by the Canadian Facility Lenders from
the Closing Date until the Canadian Facility Renewable Tranche
Termination Date in the aggregate principal amount of the Canadian
Facility Renewable Tranche Commitment.
"Canadian Facility Renewable Tranche Commitment" means that
portion of the Total Canadian Facility Commitment providing for
Canadian Facility Loans to the Canadian Facility
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<PAGE> 23
Borrower by the Canadian Facility Lenders in the aggregate principal
amount equal to (i) as of the Closing Date, CAN $ 75,000,000, and (ii)
as of any subsequent date of determination thereof, such amount set
forth in (i) above as the same may be reduced from time to time
pursuant to Section 4.12 hereof.
"Canadian Facility Renewable Tranche Extension Date" means
August 5, 1999 and each date thereafter to which the Canadian Facility
Renewable Tranche Termination Date has been extended, if any, pursuant
to Section 4.12 hereof, but in no event later than August 7, 2002.
"Canadian Facility Renewable Tranche Fronting Commitment"
means, with respect to each Canadian Facility Lender, the obligation of
such Lender to make or Continue Loans to the Canadian Facility Borrower
on behalf of all the Lenders up to an aggregate principal amount at any
one time outstanding equal to the product of such Lender's Applicable
Fronting Commitment for the Canadian Facility times the Canadian
Facility Renewable Tranche Commitment, as such fronting commitment may
be increased or decreased from time to time pursuant to this Agreement.
"Canadian Facility Renewable Tranche Outstandings" means, at
any date of determination, that portion of the Canadian Facility
Outstandings representing the aggregate principal amount of all
Canadian Facility Loans outstanding under the Canadian Facility
Renewable Tranche.
"Canadian Facility Renewable Tranche Termination Date" means
the earlier of (i) August 5, 1999, or such later date with respect to
the Unutilized Canadian Facility Renewable Tranche Commitment as the
Canadian Facility Borrower and the Lenders shall agree in writing
pursuant to Section 4.12 hereof, or (ii) the Total Facility Termination
Date.
"Canadian Facility Term Loan" shall have the meaning therefor
set forth in Section 4.13.
"Canadian Facility Term Loan Facility" means the facility
described in Section 4.13 hereof providing for the conversion of
Canadian Facility Renewable Tranche Outstandings on each Canadian
Facility Renewable Tranche Extension Date to Canadian Facility Term
Loans.
"Canadian Facility Term Loan Outstandings" means, at any date
of determination, that portion of the Canadian Facility Outstandings
representing the aggregate principal amount of all Canadian Facility
Loans outstanding under the Canadian Term Loan Facility.
"Canadian Overnight Rate" means the rate of interest per annum
determined by the Canadian Facility Agent at its head office in
Toronto, Canada from time to time at which overnight deposits in
Canadian Dollars, in an amount approximately equal to the amount with
respect to which such rate is being determined, would be offered for
such day by the Canadian Facility Agent to major banks in the Canadian
interbank market. The Canadian Overnight
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<PAGE> 24
Rate for any day which is not a Business Day shall be the Canadian
Overnight Rate for the preceding Business Day.
"Capital Leases" means all leases which have been or should be
capitalized in accordance with Generally Accepted Accounting Principles
as in effect from time to time including Statement No. 13 of the
Financial Accounting Standards Board and any successor thereof.
"Change of Control" means, at any time:
(A) with respect to the Company:
(i) any "person" or "group" (each as used in
Sections 13(d)(3) and 14(d)(2) of the Exchange Act)
either (A) becomes the "beneficial owner" (as defined
in Rule 13d-3 of the Exchange Act), directly or
indirectly, of Voting Stock of the Company (or
securities convertible into or exchangeable for such
Voting Stock) representing 20% or more of the
combined voting power of all Voting Stock of the
Company (on a fully diluted basis) or (B) otherwise
has the ability, directly or indirectly, to elect a
majority of the board of directors of the Company; or
(ii) during any period of up to 24
consecutive months, commencing on the Closing Date,
individuals who at the beginning of such 24-month
period were directors of the Company shall cease for
any reason (other than the death, disability or
retirement) to constitute a majority of the board of
directors of the Company; and
(B) with respect to any Borrower other than the
Company, such Borrower ceases for any reason to be a
wholly-owned Subsidiary of the Company.
"Closing Date" means the date as of which this Agreement is
executed by the Borrowers, the Lenders and the Agents and on which the
conditions set forth in Section 7.01 hereof have been satisfied.
"Code" means the Internal Revenue Code of 1986, as amended,
and any regulations promulgated thereunder.
"Commitment" means, for any Lender, any of the Australian
Facility Commitment, Canadian Facility Commitment, UK Facility
Commitment and US Facility Commitment, as applicable.
"Company" shall have the meaning therefor set forth in the
introduction hereto.
"Compliance Certificate" shall have the meaning therefor set
forth in the definition of "Applicable Margin."
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<PAGE> 25
"Compliance Date" shall have the meaning therefor set forth in
the definition of "Applicable Margin."
"Consistent Basis" in reference to the application of
Generally Accepted Accounting Principles means the accounting
principles observed in the period referred to are comparable in all
material respects to those applied in the preparation of the audited
financial statements of the Company referred to in Section 8.02(b)(i)
hereof.
"Consolidated EBIT" means, with respect to the Company and its
Subsidiaries for the Four-Quarter Period ended on or immediately
preceding the date of computation thereof, the sum of, without
duplication, (i) Consolidated Net Income during such period, plus (ii)
Consolidated Interest Expense during such period, (iii) plus taxes paid
on income during such period, all determined on a consolidated basis in
accordance with Generally Accepted Accounting Principles applied on a
Consistent Basis.
"Consolidated Funded Indebtedness" means all Indebtedness for
Money Borrowed of the Company and its Subsidiaries, all determined on a
consolidated basis in accordance with Generally Accepted Accounting
Principles applied on a Consistent Basis.
"Consolidated Interest Expense" means, with respect to any
period of computation thereof, the gross interest expense of the
Company and its Subsidiaries, including without limitation (i) the
amortization of debt discounts, (ii) the amortization of all reserves
and fees payable in connection with the incurrence of Indebtedness to
the extent included in interest expense and (iii) the portion of any
liabilities incurred in connection with Capital Leases allocable to
interest expense, all determined on a consolidated basis in accordance
with Generally Accepted Accounting Principles applied on a Consistent
Basis.
"Consolidated Net Income" means, with respect to any period of
computation thereof, the gross revenues of the Company and its
Subsidiaries less all operating and non-operating expenses thereof
including taxes on income, all determined on a consolidated basis in
accordance with Generally Accepted Accounting Principles applied on a
Consistent Basis; but excluding as income: (i) gains on the sale,
conversion or other disposition of capital assets, (ii) gains on the
acquisition, retirement, sale or other disposition of capital stock and
other securities of the Company or any Subsidiary, (iii) gains on the
collection of proceeds of life insurance policies, (iv) any write-up of
any asset, and (v) any other gain or credit of an extraordinary nature
as determined in accordance with Generally Accepted Accounting
Principles applied on a Consistent Basis.
"Consolidated Shareholders' Equity" means, at any time as of
which the amount thereof is to be determined, the sum of the following
in respect of the Company and its Subsidiaries (determined on a
consolidated basis and excluding intercompany items among the Company
and its Subsidiaries and any upward adjustment after the Closing Date
due to revaluation of assets): (i) the amount of issued and outstanding
share capital, plus (ii) the amount of additional paid-in capital and
retained income (or, in the case of a deficit, minus the amount of such
deficit), plus (iii) the amount of any foreign currency translation
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<PAGE> 26
adjustment (if positive, or, if negative, minus the amount of such
translation adjustment) minus (iv) the absolute value of any treasury
stock, all determined in accordance with Generally Accepted Accounting
Principles applied on a Consistent Basis.
"Consolidated Total Capitalization" means the sum of
Consolidated Shareholders' Equity and Consolidated Funded Indebtedness.
"Contingent Obligation" of any Person means all contingent
liabilities required (or which, upon the creation or incurring thereof,
would be required) to be included in the consolidated financial
statements (including footnotes) of such Person in accordance with
Generally Accepted Accounting Principles applied on a Consistent Basis,
including Statement No. 5 of the Financial Accounting Standards Board,
and any obligation of such Person guaranteeing or in effect
guaranteeing any Indebtedness, dividend or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, including obligations of such Person however incurred:
(1) to purchase such Indebtedness or other obligation
or any property or assets constituting security therefor;
(2) to advance or supply funds in any manner (i) for
the purchase or payment of such Indebtedness or other
obligation, or (ii) to maintain a minimum working capital, net
worth or other balance sheet condition or any income statement
condition of the primary obligor;
(3) to grant or convey any lien, security interest,
pledge, charge or other encumbrance on any property or assets
of such Person to secure payment of such Indebtedness or other
obligation;
(4) to lease property or to purchase securities or
other property or services primarily for the purpose of
assuring the owner or holder of such Indebtedness or
obligation of the ability of the primary obligor to make
payment of such Indebtedness or other obligation; or
(5) otherwise to assure the owner of the Indebtedness
or such obligation of the primary obligor against loss in
respect thereof.
With respect to Contingent Obligations (such as litigation, guarantees
and pension plan liabilities), such liabilities shall be computed at
the amount which, in light of all the facts and circumstances existing
at the time, represent the amount which can reasonably be expected to
become an actual or matured liability.
"Continue", "Continuation", "Continuance" and "Continued"
shall refer to the continuation pursuant to Sections 2.08, 3.08, 4.08
or 5.08 hereof of a Fixed Rate Loan from one Interest Period to the
next Interest Period.
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<PAGE> 27
"Convert", "Conversion" and "Converted" shall refer to a
conversion pursuant to Sections 2.08, 3.08, 4.08 or 5.08 or Article VI
of one Type of Loan into another Type of Loan.
"Credit Exposure" means, with respect to any Lender, the
aggregate principal amount of all outstanding Loans under the Total
Facilities owing to such Lender, to the extent no other Lender has
funded and paid for a Participation in such Loans, plus all
Participations funded and paid for by such Lender in all other Loans
under the Total Facilities, and "Aggregate Credit Exposure" means the
sum of all Credit Exposures of all Lenders in the Total Facilities.
"Debt Rating" shall have the meaning therefor set forth in the
definition of "Applicable Margin."
"Default" means any event or condition which, with the giving
or receipt of notice or lapse of time or both, would constitute an
Event of Default hereunder.
"Default Rate" means (i) with respect to each Eurodollar Rate
Loan, each Offshore Rate Loan and each Canadian Facility BA Rate Loan,
until the end of the Interest Period applicable thereto, a rate of two
percent (2%) above the Eurodollar Rate, Offshore Rate or Canadian
Facility Fixed BA Rate applicable to such Loan, and thereafter at a
rate of interest per annum which shall be two percent (2%) above (A) in
the case of US Facility Loans, Canadian Facility Loans or Australian
Facility Loans, the Applicable Base Rate, and (B) in the case of UK
Facility Loans, the Offshore Rate determined based on successive
Interest Periods of one (1) month each; and (ii) with respect to each
Applicable Base Rate Loan, at a rate of interest per annum which shall
be two percent (2%) above the Applicable Base Rate.
"Determination Date" shall have the meaning therefor set forth
in the definition of "Applicable Margin."
"Eligible Assignee" with respect to a specific Facility means
(i) a Lender currently in such Facility; (ii) any other Lender, or an
affiliate of any Lender, which, through its Applicable Lending Office,
is capable of lending the Applicable Currency to the Applicable
Borrowers without the imposition of any withholding or similar taxes;
and (iii) any other Person which has and maintains an Investment Grade
Rating and which, through its Applicable Lending Office, is capable of
lending the Applicable Currency to the Applicable Borrowers without the
imposition of any withholding or similar taxes and which is approved by
the Applicable Facility Agent, the Global Agent and, unless an Event of
Default has occurred and is continuing at the time any assignment is
effected in accordance with Section 13.01, the Company, such approval
not to be unreasonably withheld or delayed by the Company, the
Applicable Facility Agent or the Global Agent and such approval to be
deemed given by the Company if no objection is received by the
assigning Lender, the Applicable Facility Agent and the Global Agent
from the Company within two (2) Business Days after notice of such
proposed assignment has been provided by the assigning Lender to the
Company; provided, however, that neither the Company nor an affiliate
of the Company shall qualify as an Eligible
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<PAGE> 28
Assignee; provided further, however, that the Company may withhold
approval hereunder in its sole discretion if such assignment would give
rise to the payment of any additional costs under Article VI.
"Employee Benefit Plan" means (i) any employee benefit plan,
including any Pension Plan, within the meaning of Section 3(3) of ERISA
which (A) is maintained for employees of the Company, any of its ERISA
Affiliates or any Subsidiary, (B) is assumed by the Company, any of its
ERISA Affiliates or any Subsidiary, in connection with any acquisition
of another Person or (C) has at any time been maintained for the
employees of the Company, or any current or former ERISA Affiliate or
any Subsidiary, or (ii) any plan, arrangement, understanding or scheme
maintained by the Company or any Subsidiary that provides retirement,
deferred compensation, employee or retiree medical or life insurance,
severance benefits or any other benefit covering any employee or former
employee and which is administered under any Foreign Benefit Law or
regulated by any Governmental Authority other than the United States of
America.
"Environmental Laws" means, collectively, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended, the Superfund Amendments and Reauthorization Act of 1986, the
Resource Conservation and Recovery Act, the Toxic Substances Control
Act, as amended, the Clean Air Act, as amended, the Clean Water Act, as
amended, any other "Superfund" or "Superlien" law or any other federal
or applicable state, local or foreign statute, law, ordinance, code,
rule, regulation, order or decree regulating, relating to, or imposing
liability or standards of conduct concerning, any hazardous, toxic or
dangerous waste, substance or material, as now or at any time hereafter
in effect.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute and all
rules and regulations promulgated thereunder.
"ERISA Affiliate", as applied to the Company, means any Person
or trade or business which is a member of a group which is under common
control with the Company, who, together with the Company, is treated as
a single employer within the meaning of Section 414(b), (c), (m) or (o)
of the Code.
"Euro" shall have the meaning therefor set forth in Section
6.09.
"Eurodollar Rate" means, for the Interest Period for any
Eurodollar Rate Loan, the rate of interest per annum determined
pursuant to the following formula:
Eurodollar Applicable Reference Rate Applicable
= ---------------------------------- +
Rate 1 - Applicable Reserve Requirement Margin
"Eurodollar Rate Loan" means a US Facility Loan for which the
rate of interest is determined by reference to the Eurodollar Rate.
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<PAGE> 29
"Event of Default" means any of the occurrences set forth as
such in Section 11.01 hereof and the expiration of any applicable
notice or cure period.
"Facility" means any of the US Facility, UK Facility, Canadian
Facility and Australian Facility, as the context may require.
"Facility Credit Exposure" means, with respect to any Lender
and any Facility, the aggregate principal amount of all outstanding
Loans under such Facility owing to such Lender, to the extent no other
Lender has funded and paid for a Participation in such Loans, plus all
Participations funded and paid for by such Lender in all other Loans
under such Facility, and "Aggregate Facility Credit Exposure" means the
sum of all Facility Credit Exposures of all Lenders in a specific
Facility.
"Facility Fee" means that fee set forth in Sections 2.09,
3.09, 4.09 and 5.09, respectively, payable in US Dollars for each
separate Facility.
"Facility Participation Amount" means, with respect to a
Lender and a specific Facility, that amount of Participations of such
Lender in such Facility as defined in Sections 2.14, 3.13, 4.14 and
5.13, respectively.
"Facility Participation Payment Date" shall have the meaning
therefor set forth in Section 11.07.
"Federal Funds Effective Rate" means, for any day, the rate
per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by
Federal funds brokers on such day, as published by the Federal Reserve
Bank of New York on the Business Day next succeeding such day; provided
that (a) if such day is not a Business Day, the Federal Funds Rate for
such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day, and
(b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate
charged to the Applicable Facility Agent (in its individual capacity)
on such day on such transactions as determined by the Applicable
Facility Agent.
"Fiscal Year" means the 12 month period of the Company
commencing on March 1 of each calendar year and ending on the last day
of February of the immediately following calendar year.
"Fixed Rate Loan" means any or all, as the context may
require, of Eurodollar Rate Loans, Offshore Rate Loans and Canadian
Facility BA Rate Loans.
"Floating Rate Loan" means any one or more, as the context may
require, of US Facility Base Rate Loans, Canadian Facility Base Rate
Loans and Australian Facility Base Rate Loans.
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"Foreign Benefit Law" means any applicable statute, law,
ordinance, code, rule, regulation, order or decree of any foreign
nation or any province, state, territory, protectorate or other
political subdivision thereof regulating, relating to, or imposing
liability or standards of conduct concerning any pension, retirement,
health care, death, disability or other employee benefit plan.
"Four-Quarter Period" means a period of four full consecutive
fiscal quarters of the Company and its Subsidiaries, taken together as
one accounting period.
"French Francs" means the official currency of the Republic of
France and is subject to Section 6.09.
"French Franc Equivalent Amount" means, with respect to a
specified amount of British Pounds Sterling, the amount of French
Francs into which such amount of British Pounds Sterling would be
converted, based on the applicable Spot Rate of Exchange.
"French Franc Fronting Commitment" means, with respect to each
UK Facility Lender, the obligation of such Lender to make Loans in
French Francs to the UK Facility Borrowers on behalf of all the Lenders
up to an aggregate principal amount at any one time outstanding equal
to the product of such Lender's Applicable Fronting Percentage for the
UK Facility times the Total French Franc Commitment, as such fronting
commitment may be increased or decreased from time to time pursuant to
this Agreement.
"French Franc Outstandings" means, at any date of
determination, that portion of the UK Facility Outstandings
representing the Sterling Equivalent Amount of the aggregate principal
amount of all UK Facility Loans outstanding in French Francs under the
UK Facility French Franc Tranche.
"Funding Bank" means, with respect to the UK Facility, any
banking institution located within France that is approved by the UK
Facility Agent and is capable of making UK Facility Advances in French
Francs to the UK Facility Borrowers.
"Further Taxes" means any and all present or future taxes,
levies, assessments, imposts, duties, deductions, fees, withholdings or
similar charges (including, without limitation, net income taxes and
franchise taxes), and all liabilities with respect thereto, imposed by
any jurisdiction on account of amounts payable or paid pursuant to
Section 6.06.
"GAAP" or "Generally Accepted Accounting Principles" means
those generally accepted principles of accounting set forth in
pronouncements of the Financial Accounting Standards Board, the
Accounting Principles Board or the American Institute of Certified
Public Accountants or which have other substantial authoritative
support and are applicable in the circumstances as of the date of a
report, as such principles are from time to time supplemented and
amended, subject to compliance at all times with Section 1.02 hereof.
"Global Agent" shall have the meaning therefor set forth in
the introduction hereto.
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<PAGE> 31
"Governmental Authority" means any federal, state, municipal,
national or other governmental department, commission, board, bureau,
court, agency or instrumentality or political subdivision thereof or
any entity or officer exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to any
government or any court, in each case whether associated with a state
of the United States, the United States, or a foreign entity or
government.
"Guarantor" means the Company in its capacity as a party to
the Guaranty.
"Guaranty" means the unconditional Guaranty Agreement in favor
of the Lenders in substantially the form attached hereto as Exhibit E
delivered to the Global Agent in accordance with Article VII hereof
pursuant to which the Guarantor guarantees the payment and performance
of all Obligations to the Lenders as more specifically set forth in
such Guaranty.
"Hazardous Material" means and includes any hazardous, toxic
or dangerous waste, substance or material, the generation, handling,
storage, disposal, treatment or emission of which is subject to any
Environmental Law in effect on any date.
"Hedging Obligations" means any and all obligations of the
Company and its Subsidiaries, whether absolute or contingent and
howsoever and whensoever created, arising, evidenced or acquired
(including all renewals, extensions and modifications thereof and
substitutions therefor), under (a) any and all agreements, devices or
arrangements designed to protect at least one of the parties thereto
from the fluctuations of interest rates, exchange rates or forward
rates applicable to such party's assets, liabilities or exchange
transactions, including, but not limited to, dollar-denominated or
cross-currency interest rate exchange agreements, forward currency
exchange agreements, interest rate cap or collar protection agreements,
forward rate currency or interest rate options, puts, warrants and
those commonly known as interest rate "swap" agreements; and (b) any
and all cancellations, buybacks, reversals, terminations or assignments
of any of the foregoing.
"Indebtedness" means, with respect to any Person, all
Indebtedness for Money Borrowed of such Person, all indebtedness of
such Person for the acquisition of property, including the deferred
purchase price of such property, other than purchases of products and
merchandise in the ordinary course of business so long as payment
therefor is due within one year, indebtedness secured by any Lien on
the property of such Person whether or not such indebtedness is
assumed, all liability of such Person by way of endorsements (other
than for collection or deposit in the ordinary course of business); all
Contingent Obligations of such Person, including the undrawn face
amount of, and unpaid reimbursement obligations in respect of, all
letters of credit issued for the account of such Person, obligations
occurring under acceptance facilities and Hedging Obligations; all
Capital Leases of such Person, and other items which in accordance with
Generally Accepted Accounting Principles are classified as liabilities
on a balance sheet; provided that in no event shall the term
Indebtedness include capital stock, surplus and retained earnings,
minority interest in the common stock of Subsidiaries, lease
obligations (other than pursuant to Capital Leases), reserves for
deferred
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<PAGE> 32
income taxes and investment credits, other deferred credits and
reserves, and deferred compensation obligations.
"Indebtedness for Money Borrowed" means, for any Person, (i)
all indebtedness, obligations and liabilities of such Person for money
borrowed which are evidenced by bonds, debentures, notes or other
similar instruments, and (ii) all Capital Leases which have been
capitalized in accordance with Generally Accepted Accounting
Principles; provided, however, the term "Indebtedness for Money
Borrowed" shall specifically exclude payroll indebtedness and trade
indebtedness incurred in the ordinary course of business (including
trade indebtedness through financial intermediaries) provided such
trade indebtedness has a maturity of less than one year.
"Interest Period" for each Fixed Rate Loan means a period
commencing on the date such Fixed Rate Loan is made, Continued or
Converted and each subsequent period commencing on the last day of the
immediately preceding Interest Period for such Fixed Rate Loan and
ending, at the Applicable Borrower's option, for any Fixed Rate Loan,
on the date one, two, three or six months thereafter as notified to the
Applicable Facility Agent in compliance with the provisions of such
Facility as set forth in Articles II, III, IV and V, respectively, by
an Authorized Representative of such Borrower prior to the beginning of
such Interest Period; provided, that,
(i) if the Authorized Representative of such Borrower
fails to notify the Applicable Facility Agent of the length of
an Interest Period in compliance with the provisions of such
Facility as set forth in Article II, Article III, Article IV
or Article V, respectively, the Fixed Rate Loan for which such
Interest Period was to be determined shall be deemed to be (A)
in the case of a US Facility Loan, Canadian Facility Loan or
Australian Facility Loan, an Applicable Base Rate Loan or (B)
in the case of a UK Facility Loan, an Offshore Rate Loan with
an Interest Period of one month, in each case as of the first
day thereof;
(ii) if an Interest Period would end on a day which
is not a Business Day, such Interest Period shall be extended
to the next Business Day (unless such extension would cause
the applicable Interest Period to end in the succeeding
calendar month, in which case such Interest Period shall end
on the next preceding Business Day);
(iii) there shall not be more than (A) ten (10)
Interest Periods in effect on any day in respect of US
Facility Loans, (B) ten (10) Interest Periods in effect on any
day in respect of UK Facility Loans, (C) ten (10) Interest
Periods in effect on any Canadian Facility Loans and (D) four
(4) Interest Periods in effect on any day in respect of
Australian Facility Loans;
(iv) any Interest Period which begins on the last
Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at
the end of such Interest Period) shall end on the last
Business Day of a calendar month;
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<PAGE> 33
(v) no Interest Period shall extend past the Total
Facility Termination Date, the US Facility Revolving Credit
Termination Date (for US Facility Loans under the US Facility
Revolving Credit Facility) or the Canadian Facility Renewable
Tranche Termination Date (for Canadian Facility Loans under
the Canadian Facility Renewable Tranche).
"Investment Grade Rating" means a rating of BBB or higher from
S&P and a rating of Baa2 or higher from Moody's.
"Lenders" shall have the meaning therefor set forth in the
introduction hereto.
"LIBOR" means, for any date of determination with respect to
any Interest Period for an Offshore Rate Loan made under the UK
Facility, (i) the rate per annum (rounded upward, if necessary, to the
nearest five decimal places) equal to the rate determined by the UK
Facility Agent to be the offered rate which appears on the page of the
Telerate Screen which displays an average British Bankers Association
Interest Settlement Rate (such page currently being page number 3740 or
3750) for deposits (for delivery on the first day of such period) with
a term equivalent to such period in the Applicable Currency, determined
as of approximately 11:00 A.M. (London, England time) on such date of
determination, or (ii) in the event the rate referenced in the
preceding clause (i) does not appear on such page or service or if such
page or service shall cease to be available, the rate per annum
(rounded upward, if necessary, to the nearest five decimal places)
equal to the rate determined by the UK Facility Agent to be the offered
rate on such other page or other service which displays an average
British Bankers Association Interest Settlement Rate for deposits (for
delivery on the first day of such period) with a term equivalent to
such period in the Applicable Currency, determined as of approximately
11:00 A.M. (London, England time) on such date of determination, or
(iii) in the event the rates referenced in the preceding clauses (i)
and (ii) are not available, the rate per annum equal to the offered
quotation rate (rounded upward, if necessary, to the nearest five
decimal places) to first class banks in the London interbank market by
the UK Facility Agent for deposits (for delivery on the first day of
the relevant period) in the Applicable Currency of amounts in Same Day
Funds comparable to the principal amount of the UK Facility Loan of
such UK Facility Agent for which LIBOR is then being determined with
maturities comparable to such period as of approximately 11:00 A.M.
(London, England time) on such date of determination.
"Lien" means any interest in property securing any obligation
owed to, or a claim by, a Person other than the owner of the property,
whether such interest is based on the common law, statute or contract,
and including but not limited to the lien or security interest arising
from a mortgage, encumbrance, pledge, security agreement, conditional
sale or trust receipt or a lease, consignment or bailment for security
purposes.
"Loan" or "Loans" means any of the Fixed Rate Loans or
Floating Rate Loans, as the context may require.
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<PAGE> 34
"Loan Documents" means this Agreement, the Notes, the Guaranty
and all other instruments and documents heretofore or hereafter
executed or delivered to and in favor of any Lenders or any Agents in
connection with the Loans made under this Agreement, as the same may be
amended, modified or supplemented from time to time.
"Loan Parties" means, collectively, each Borrower and the
Guarantor.
"Material Adverse Effect" means a material adverse effect on
(i) the business, assets, operations, condition (financial or
otherwise) or prospects of the Company and its Subsidiaries on a
consolidated basis or (ii) the ability of any of the Loan Parties to
perform their obligations and pay all amounts due hereunder or (iii)
the ability of any Agent or any Lender to enforce any of their rights
or to collect any of the Outstandings then due and payable.
"Moody's" means Moody's Investors Services, Inc.
"Multiemployer Plan" means an employee pension benefit plan
covered by Title IV of ERISA and in respect of which the Company or any
Subsidiary is an "employer" as described in Section 4001(b) of ERISA,
which is also a multiemployer plan as defined in Section 4001(a)(3) of
ERISA.
"National City Bank" means National City Bank, a national
banking association.
"NationsBank" means NationsBank, National Association, a
national banking association.
"New Zealand Bank Bill Reference Rate" means (i) for any date
of determination with respect to any Interest Period for an Offshore
Rate Loan made in New Zealand Dollars under the Australian Facility,
(a) the rate (expressed as a percentage yield per annum to maturity)
determined by the Australian Facility Agent to be the arithmetic mean
(rounded upwards, if necessary, to the nearest 0.01%) of the bid rates
on the page entitled "BKBM" (or such supplemental or other page of the
Reuters Monitor System for displaying quotations of New Zealand Bank
Bills) on the Reuters Monitor Money Rates Service at or about 10:00
A.M. (Sydney, Australia time) on the first day of such Interest Period
for bank accepted bills having a term equal to (or no more than two (2)
Business Days shorter or longer than) such Interest Period, or (b) if
(x) for any reason there is no average bid rate displayed on the
Reuters Monitor System screen page entitled BKBM for bank accepted
bills of that term or (y) the basis on which such rates are displayed
on the Reuters Monitor System screen page entitled BKBM is changed and
in the opinion of Australian Facility Agent those rates cease to
reflect the Australian Facility Lenders' cost of funding to the same
extent as at the date of this Agreement, then the rate (expressed as a
percentage yield per annum to maturity) determined by Australian
Facility Agent to be the average of the bid rates quoted to Australian
Facility Agent by three banks selected by Australian Facility Agent at
or about that time on that day for the purchase of bills accepted by
such banks having a face value amount equal to the principal amount of
such Australian Facility Loan and a term as described in clause (i)(a)
of
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<PAGE> 35
this definition; provided that such buying rates must be for bills of
exchange which are accepted by a bank selected by Australian Facility
Agent and which have a term equivalent to the relevant Interest Period;
or (ii) for any date of determination for purposes of determining the
Australian Facility Base Rate for an Offshore Rate Loan made in New
Zealand Dollars under the Australian Facility, or in the event the New
Zealand Bank Bill Reference Rate cannot be determined as described in
clause (i) of this definition, the rate determined by Australian
Facility Agent to be the arithmetic mean (rounded upwards to the
nearest 1/16th of one percent) of the rates, as supplied to Australian
Facility Agent at its request, quoted by the Australian Facility
Lenders to leading banks in the New Zealand interbank market at or
about 10:00 A.M. (Sydney, Australia time) on such date for the offering
of overnight deposits in New Zealand Dollars.
"New Zealand Dollar Equivalent Amount" means, with respect to
a specified amount of Australian Dollars, the amount of New Zealand
Dollars into which such amount of Australian Dollars would be
converted, based on the applicable Spot Rate of Exchange.
"New Zealand Dollar Fronting Commitment" means, with respect
to each Australian Facility Lender, the obligation of such Lender to
make Loans in New Zealand Dollars to the Australian Facility Borrowers
on behalf of all the Lenders up to an aggregate principal amount at any
one time outstanding equal to the product of the Lender's Applicable
Fronting Percentage for the Australian Facility times the Total New
Zealand Dollar Commitment, as such fronting commitment may be increased
or decreased from time to time pursuant to this Agreement.
"New Zealand Dollar Outstandings" means, at any date of
determination, that portion of the Australian Facility Outstandings
representing the Australian Dollar Equivalent Amount of the aggregate
principal amount of all Australian Facility Loans outstanding in New
Zealand Dollars under the Australian Facility New Zealand Dollar
Tranche.
"New Zealand Dollars" or "NZ $" means the lawful currency of
New Zealand.
"Non-Australian Lender" shall have the meaning therefor set
forth in Section 6.06(i).
"Non-Canadian Lender" shall have the meaning therefor set
forth in Section 6.06(h).
"Notes" means, collectively, the US Facility Notes and any
promissory notes that may be issued by an Applicable Borrower and
delivered to an Applicable Lender in a Facility other than the US
Facility at the request of such Lender.
"Obligations" means the obligations, liabilities and
Indebtedness of the Borrowers with respect to (i) the principal and
interest on the Loans as evidenced by the Notes and on the records of
the Applicable Facility Agents, (ii) all liabilities of any Borrower to
any Lender or any affiliate of a Lender which arise under a Swap
Agreement, and (iii) the payment and performance of all other fees,
indemnities, expenses, obligations, liabilities and Indebtedness
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<PAGE> 36
of the Borrowers to the Lenders or the Agents, under this Agreement,
under any one or more of the other Loan Documents or with respect to
the Loans.
"Offshore Currency" means any of British Pounds Sterling,
French Francs, Canadian Dollars, Australian Dollars and New Zealand
Dollars.
"Offshore Rate" means, for the Interest Period for any
Offshore Rate Loan, the rate of interest per annum determined pursuant
to the following formula:
Offshore Rate = Applicable Reference Rate + Applicable Margin
"Offshore Rate Loan" means a UK Facility Loan or Australian
Facility Loan for which the rate of interest is determined by reference
to the Offshore Rate.
"Operating Documents" means with respect to any corporation,
limited liability company, partnership, limited partnership, limited
liability partnership or other legally authorized incorporated or
unincorporated entity, the bylaws, operating agreement, partnership
agreement, limited partnership agreement or other applicable documents
relating to the operation, governance or management of such entity.
"Organizational Action" means with respect to any corporation,
limited liability company, partnership, limited partnership, limited
liability partnership or other legally authorized incorporated or
unincorporated entity, any corporate, organizational or partnership
action (including any required shareholder, member or partner action),
or other similar official action, as applicable, taken by such entity.
"Organizational Documents" means with respect to any
corporation, limited liability company, partnership, limited
partnership, limited liability partnership or other legally authorized
incorporated or unincorporated entity, the articles of incorporation,
certificate of incorporation, articles of organization, certificate of
limited partnership or other applicable organizational or charter
documents relating to the creation of such entity.
"Other Taxes" means any present or future stamp, court or
documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or from the
execution, delivery, performance, enforcement or registration of, or
otherwise with respect to, this Agreement or any other Loan Documents.
"Outstandings" means, collectively, the US Facility
Outstandings, the UK Facility Outstandings, the Canadian Facility
Outstandings and the Australian Facility Outstandings, and individually
any of the foregoing as the context may require.
"Participation" means, with respect to any Facility, the
principal amount purchased and funded by each Lender in the Loans and
Outstandings under such Facility pursuant to and in accordance with the
terms of Sections 2.14, 3.13, 4.14, 5.13 and 11.07 and "Participate"
and "Participant" shall have correlative meanings.
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<PAGE> 37
"PBGC" means the Pension Benefit Guaranty Corporation and any
successor thereto.
"Pension Plan" means any employee pension benefit plan within
the meaning of Section 3(2) of ERISA, other than a Multiemployer Plan,
which is subject to the provisions of Title IV of ERISA or Section 412
of the Code and which (i) is maintained for employees of the Company or
any of its ERISA Affiliates or is assumed by the Company or any of its
ERISA Affiliates in connection with any acquisition or (ii) has at any
time been maintained for the employees of the Company or any current or
former ERISA Affiliate.
"Permitted Acquisition" means the acquisition by the Company
or a Subsidiary of a controlling equity interest in or all or
substantially all of the assets of any Person, which satisfies each of
the following: (i) such Person is in the same or similar line or lines
of business as that engaged in by the Company and its Subsidiaries; and
(ii) no Default or Event of Default has occurred and is continuing at
the time of, or is created or results from, such transaction.
"Person" means an individual, limited liability company,
partnership, corporation, trust, unincorporated organization,
association, joint venture or other entity or a government or agency or
political subdivision thereof.
"Principal Office" means, as the context may require, (i) the
principal office of the US Facility Agent located at 1900 East Ninth
Street, Cleveland Ohio 44114, (ii) the principal office of the UK
Facility Agent located at New Broad Street House, 35 New Broad Street,
London EC2M 1NH England, (iii) the principal office of the Canadian
Facility Agent located at Bank of America Canada, Toronto Corporate
Services Office 5651, 200 Front Street West, 27th Floor, Toronto,
Ontario M5V 312 Canada, Attn: Nelson Lam and (iv) the principal office
of the Australian Facility Agent located at BA Asia Ltd., Devon House,
979 King's Road, 10th Floor, Quarry Bay, Hong Kong, Attn: Donny Lam, or
such other office and address as any such Facility Agent may from time
to time designate.
"Prior Australian Facility" shall have the meaning therefor
set forth in the introduction hereto.
"Prior Canadian Facility" shall have the meaning therefor set
forth in the introduction hereto.
"Prior Facilities" shall have the meaning therefor set forth
in the introduction hereto.
"Prior French Facility" shall have the meaning therefor set
forth in the introduction hereto.
"Prior Irish Facility" shall have the meaning therefor set
forth in the introduction hereto.
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<PAGE> 38
"Prior UK Facility" shall have the meaning therefor set forth
in the introduction hereto.
"Prior US Facility" shall have the meaning therefor set forth
in the introduction hereto.
"Rated Debt" shall have the meaning therefor set forth in the
definition of "Applicable Margin."
"Register" shall have the meaning therefor set forth in
Section 13.01(b).
"Regulation D" means Regulation D of the Board as the same may
be amended or supplemented from time to time.
"Regulatory Change" means any change effective after the
Closing Date in United States federal or state laws or regulations
(including Regulation D and capital adequacy regulations), English laws
or regulations, Canadian federal or provincial laws or regulations,
Australian federal or provincial laws or regulations, or other foreign
laws or regulations or the adoption or making after such date of any
interpretations, directives or requests applying to a class of banks,
which includes any of the Lenders, under any United States federal or
state, English, Canadian federal or provincial, Australian federal or
provincial or other foreign laws or regulations (whether or not having
the force of law) by any court or governmental or monetary authority
charged with the interpretation or administration thereof or compliance
by any Lender with any request or directive regarding capital adequacy,
whether or not having the force of law, whether or not failure to
comply therewith would be unlawful and whether or not published or
proposed prior to the Closing Date.
"Required Fronting Lenders" shall have the meaning therefor
set forth in Section 11.07(a).
"Required Lenders" means, as of any date, (i) at all times
other than following the occurrence and during the continuation of an
Event of Default, (A) with respect to the Total Facilities, Lenders on
such date, without distinction or preference as between any of the
Facilities, having Aggregate Commitments under the Total Facilities
aggregating more than 50% of the Total Commitment on such date, and (B)
with respect to any specific Facility, Lenders on such date having an
Applicable Facility Commitment aggregating more than 50% of the
Applicable Total Facility Commitment on such date and (ii) at all times
following the occurrence and during the continuation of an Event of
Default, (A) with respect to the Total Facilities, Lenders on such
date, without distinction or preference as between any of the
Facilities, having Credit Exposures aggregating more than 50% of the
Aggregate Credit Exposure on such date, and (B) with respect to any
specific Facility, Lenders on such date having Facility Credit
Exposures aggregating more than 50% of the Aggregate Facility Credit
Exposure on such date. For purposes of determining the vote of the
Required Lenders above, (i) Bank of America shall be deemed to have the
Aggregate Commitment, Applicable Facility Commitments, Credit Exposure
and Facility Credit Exposure of BACAN, BA Australia Limited and of each
branch of Bank of America designated as a Lender hereunder, (ii) Mellon
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<PAGE> 39
Bank, N.A. shall be deemed to have the Aggregate Commitment, Applicable
Facility Commitments, Credit Exposure and Facility Credit Exposure of
Mellon Bank Canada and each branch of Mellon Bank, N.A. designated as a
Lender hereunder, and (iii) NBD Bank shall be deemed to have the
Aggregate Commitment, Applicable Facility Commitments, Credit Exposure
and Facility Credit Exposure of First Chicago NBD Bank, Canada, The
First National Bank of Chicago and each branch of NBD Bank designated
as a Lender hereunder.
"Restricted Lender" shall have the meaning therefor set forth
in Section 6.07.
"Same Day Funds" means (i) with respect to disbursements and
payments in US Dollars, immediately available funds, and (ii) with
respect to disbursements and payments in an Offshore Currency, same day
or other funds as may be determined by the Applicable Facility Agent to
be customary in the place of disbursement or payment for the settlement
of international banking transactions in such Offshore Currency.
"S&P" means Standard & Poor's Rating Group, a division of
McGraw-Hill Companies, Inc.
"Solvent" means, when used with respect to any Person, that at
the time of determination:
(i) the fair value of its assets (both at fair
valuation and at present fair saleable value on an orderly
basis) is in excess of the total amount of its liabilities,
including, without limitation, Contingent Obligations; and
(ii) it is then able and expects to be able to pay
its debts as they mature; and
(iii) it has capital sufficient to carry on its
business as conducted and as proposed to be conducted.
"Spot Rate of Exchange" means (i) in determining the Sterling
Equivalent Amount of a specified amount of French Francs as of any date
under the UK Facility, the spot exchange rate determined by the UK
Facility Agent in accordance with its usual procedures for the purchase
by the UK Facility Agent of British Pounds Sterling with French Francs
at approximately 11:00 A.M. (London, England time) on the Business Day
that is three (3) Business Days prior to such date; (ii) in determining
the Australian Dollar Equivalent Amount of a specified amount of New
Zealand Dollars as of any date under the Australian Facility, the rate
quoted by the Australian Facility Agent in accordance with its
customary procedures as the spot rate for the purchase by such
Australian Facility Agent of Australian Dollars with New Zealand
Dollars at approximately 11:00 A.M. (Sydney, Australia time), on such
date as of which the foreign computation is made, for delivery two (2)
Business Days later; (iii) in determining the French Franc Equivalent
Amount of a specified amount of British Pounds Sterling as of any date
under the UK Facility, the spot exchange rate determined by the UK
Facility
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<PAGE> 40
Agent in accordance with its usual procedures for the purchase by the
UK Facility Agent of French Francs with British Pounds Sterling at
approximately 11:00 A.M. (London, England time) on the Business Day
that is three (3) Business Days prior to such date; (iv) in determining
the New Zealand Dollar Equivalent Amount of a specified amount of
Australian Dollars as of any date under the Australian Facility, the
rate quoted by the Australian Facility Agent in accordance with its
customary procedures as the spot rate for the purchase by such
Australian Facility Agent of New Zealand Dollars with Australian
Dollars at approximately 11:00 A.M. (Sydney, Australia time), on such
date as of which the foreign computation is made, for delivery two (2)
Business Days later; and (v) in determining the US Dollar Equivalent
Amount of a specified amount of any Applicable Currency as of any date,
the spot rate of exchange determined by the Global Agent in accordance
with its usual procedures for the purchase by the Global Agent of US
Dollars with such Applicable Currency at approximately 11:00 A.M.
(Charlotte, North Carolina time) on the Business Day that is two (2)
Business Days prior to such date.
"Sterling Equivalent Amount" means, with respect to a
specified amount of French Francs, the amount of British Pounds
Sterling into which such amount of French Francs would be converted,
based on the applicable Spot Rate of Exchange.
"Subsidiary" means any Person in which more than 50% of its
outstanding voting stock or rights or more than 50% of all equity
interest is owned directly or indirectly by the Company.
"Substitute Base Rate Loans" shall have the meaning therefor
set forth in Section 6.04.
"Swap Agreement" means one or more agreements with respect to
Indebtedness evidenced by the Notes or Obligations under any Facility
between one or more Borrowers and one or more Lenders, on terms
mutually acceptable to such Borrower or Borrowers and such Lender or
Lenders, which agreements create Hedging Obligations.
"Taxes" means any and all present or future taxes, levies,
assessments, imposts, duties, deductions, fees, withholdings or similar
charges, and all liabilities with respect thereto, excluding, in the
case of each Lender and each Agent, respectively, taxes imposed on or
measured by its net income by the jurisdiction (or any political
subdivision thereof) under the laws of which such Lender or such Agent,
as the case may be, is organized or maintains a lending office.
"Termination Event" means: (i) a "Reportable Event" described
in Section 4043 of ERISA and the regulations issued thereunder (unless
the notice requirement has been waived by applicable regulation); or
(ii) the withdrawal of the Company or any ERISA Affiliate from a
Pension Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA or was deemed such
under Section 4062(e) of ERISA; or (iii) the termination of a Pension
Plan, the filing of a notice of intent to terminate a Pension Plan or
the treatment of a Pension Plan amendment as a termination under
Section 4041 of ERISA; or (iv) the institution of proceedings to
terminate a Pension Plan by the PBGC; or (v) any
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<PAGE> 41
other event or condition which would constitute grounds under Section
4042(a) of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan; or (vi) the partial or
complete withdrawal of the Company or any ERISA Affiliate from a
Multiemployer Plan; or (vii) the imposition of a Lien pursuant to
Section 412 of the Code or Section 302 of ERISA; or (viii) any event or
condition which results in the reorganization or insolvency of a
Multiemployer Plan under Section 4241 or Section 4245 of ERISA,
respectively; or (ix) any event or condition which results in the
termination of a Multiemployer Plan under Section 4041A of ERISA or the
institution by the PBGC of proceedings to terminate a Multiemployer
Plan under Section 4042 of ERISA; or (x) any event or condition with
respect to any Employee Benefit Plan which is regulated by any Foreign
Benefit Law that results in such Employee Benefit Plan's termination or
the revocation of the Employee Benefit Plan's authority to operate
under the applicable Foreign Benefit Law.
"Total Australian Dollar Commitment" means, as of any date of
determination thereof, an amount equal to the Total Australian Facility
Commitment (as the same may be reduced from time to time pursuant to
this Agreement) less the New Zealand Dollar Outstandings as of such
date.
"Total Australian Facility Commitment" means an amount equal
to AUS $125,000,000 inclusive of the Total New Zealand Dollar
Commitment, each as reduced from time to time in accordance with
Section 5.07.
"Total British Pounds Sterling Commitment" means, as of any
date of determination thereof, an amount equal to the Total UK Facility
Commitment (as the same may be reduced from time to time pursuant to
this Agreement) less the French Franc Outstandings as of such date.
"Total Canadian Facility Commitment" means an amount equal to
CAN $150,000,000, as reduced from time to time in accordance with
Section 4.07, Section 4.12 or Section 4.13.
"Total Commitment" means, at any time of determination, the
Total US Facility Commitment, plus the aggregate US Dollar Equivalent
Amount of each of the Total UK Facility Commitment, the Total Canadian
Facility Commitment and the Total Australian Facility Commitment.
"Total Facilities" means, in the aggregate, all of the US
Facility, the UK Facility, the Canadian Facility and the Australian
Facility.
"Total Facility Termination Date" means the earliest to occur
of (i) August 7, 2003, or (ii) the date of termination of the Lenders'
obligations pursuant to Section 11.01 upon the occurrence of an Event
of Default, or (iii) such date as the Borrowers may voluntarily
permanently terminate all the Total Facilities by payment in full of
all Obligations.
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"Total French Franc Commitment" means, at any date of
determination, an amount equal to the French Franc Equivalent Amount of
pound 22,000,000 (as reduced from time to time in accordance with
Section 3.07) as at such date.
"Total New Zealand Dollar Commitment" means, at any date of
determination, an amount equal to the New Zealand Dollar Equivalent
Amount of AUS $12,500,000 (as reduced from time to time in accordance
with Section 5.07) as at such date.
"Total UK Facility Commitment" means an amount equal to pound
55,000,000 inclusive of the Total French Franc Commitment, each as
reduced from time to time in accordance with Section 3.07.
"Total US Facility Commitment" means an amount equal to US
$450,000,000, as reduced from time to time in accordance with Section
2.07, Section 2.12 or Section 2.13.
"Total US Facility Revolving Credit Commitment" means, as of
any date of determination thereof, an amount equal to the Total US
Facility Commitment (as the same may be reduced from time to time
pursuant to this Agreement) less the amount of US Facility Term Loan
Outstandings as of such date.
"Type" means any type of Loan (i.e., an Applicable Base Rate
Loan, Eurodollar Rate Loan, Offshore Rate Loan, Canadian Facility BA
Rate Loan or, for purposes of Article VI only, a UK Facility
Alternative Rate Loan)).
"UK Facility" means the facility described in Article III
hereof providing for Loans to the UK Facility Borrowers by the UK
Facility Lenders in the aggregate principal amount of the Total UK
Facility Commitment.
"UK Facility Advance" means a borrowing under the UK Facility
consisting of the aggregate principal amount of an Offshore Rate Loan.
"UK Facility Agent" shall have the meaning therefor set forth
in the introduction hereto.
"UK Facility Alternative Rate" means such rate of interest per
annum determined by the UK Facility Agent and the UK Facility Borrowers
as an alternative basis (i) for determining the rates of interest from
time to time applicable to Loans under the UK Facility and/or (ii) upon
which Loans may be maintained under the UK Facility, in each case
pursuant to Section 6.02 or Section 6.04, which rate of interest shall
be determined within thirty (30) days of notification to the UK
Facility Borrowers in accordance with the provisions of Section 6.02 or
Section 6.04, as applicable. If no such alternative basis is agreed
upon by the UK Facility Agent and the UK Facility Borrowers, each UK
Facility Lender shall certify a reasonable alternative basis for
maintaining Loans under the UK Facility that reflects such UK Facility
Lender's cost of funds (a "substitute basis"), which substitute basis
may (without limitation) include alternative Interest Periods,
alternative currencies or alternative rates of
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<PAGE> 43
interest but shall include a margin above the cost of funds including
the UK Facility Mandatory Cost, if any, to such UK Facility Lender and
the Applicable Margin.
"UK Facility Alternative Rate Loan" means a Loan for which the
rate of interest is determined by reference to the UK Facility
Alternative Rate, solely for purposes of Article VI.
"UK Facility Borrowers" shall have the meaning therefor set
forth in the introduction hereto.
"UK Facility Commitment" means, with respect to any Lender,
such Lender's Applicable Facility Commitment for the UK Facility.
"UK Facility French Franc Tranche" means the facility
described in Article III hereof providing for Loans funded in French
Francs to the UK Facility Borrowers by the UK Facility Lenders in an
aggregate principal amount not to exceed the Total French Franc
Commitment.
"UK Facility Fronting Commitment" means, with respect to each
UK Facility Lender, the obligation of such Lender to make Loans to the
UK Facility Borrowers on behalf of all the Lenders up to an aggregate
principal amount at any one time outstanding equal to the product of
such Lender's Applicable Fronting Percentage for the UK Facility times
the Total UK Facility Commitment, as such fronting commitment may be
increased or decreased from time to time pursuant to this Agreement,
and shall consist of such Lender's British Pounds Sterling Fronting
Commitment plus its French Franc Fronting Commitment.
"UK Facility Lenders" means those Lenders identified in the
introduction hereto with respect to their making UK Facility Loans on
behalf of all the Lenders.
"UK Facility Loans" means Offshore Rate Loans made by the UK
Facility Lenders pursuant to Section 3.01 hereof.
"UK Facility Mandatory Cost" means a rate per annum determined
by the UK Reference Bank and notified thereby to the UK Facility Agent
calculated in accordance with the following formula:
BY + S(Y-Z) + (F x 0.01)
UK Facility Mandatory Cost per annum = ------------------------
100 - (B+S)
where on the day of application of the formula:
B = The percentage of the UK Reference Bank's Eligible
Liabilities (in excess of any stated minimum) by
reference to which the Bank of England and/or the
Financial Services Authority requires the UK
Reference Bank to hold on a non-interest bearing
deposit account in accordance with its cash ratio
requirements;
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Y = The percentage rate per annum at which sterling
deposits are offered by the UK Reference Bank to
leading banks in the London interbank market at or
about 11:00 A.M. (London, England time) on that day
for the relevant period;
F = The rate of charge payable by the UK Reference Bank
to the Financial Services Authority under paragraph
2.02 or 2.03 (as appropriate) of the Fees Regulations
(but where for this purpose the figure at paragraph
2.02b or 2.03b shall be deemed to be zero) and
expressed in British Pounds Sterling per pound
1,000,000 of the Fee Base of the UK Reference Bank;
S = The percentage of the UK Reference Bank's Eligible
Liabilities which the Bank of England (or other
relevant United Kingdom governmental authority or
agency) requires the UK Reference Bank to place as a
Special Deposit; and
Z = The interest rate per annum payable by the Bank of
England to the UK Reference Bank on Special Deposits.
(a) For the purposes of this definition:
(i) "Eligible Liabilities" and "Special Deposits"
shall have the meanings given to them at the time of
application of the above formula under or pursuant to the Bank
of England Act 1998 or by the Bank of England (as
appropriate);
(ii) "Fee Base" has the meaning given to it in the
Fees Regulations;
(iii) "Fees Regulations" means:
(A) prior to March 31, 1999 the Banking
Supervision (Fees) Regulations
1998; and
(B) on or after March 31, 1999, any
regulations governing the payment
of fees for banking supervision;
(b) In the application of the above formula, B, Y, S, and Z
are included in the formula as figures and not as percentages, e.g. if
B = 0.5% and Y = 15%, BY is calculated as 0.5 x 15 and not as 0.5% x
15%. A negative result obtained from subtracting Z from Y is to be
treated as zero.
(c) (i) The above formula is applied on the first day of each
relevant period comprised in the relevant Interest Period.
(ii) Each rate calculated in accordance with the above
formula is, if necessary, rounded upward to four decimal places.
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(d) The UK Facility Agent may, from time to time, after
consultation with the Company and the Lenders, determine and notify to
the Company and the Lenders any amendments or variations which are
required to be made to the formula set out above in order to comply
with any requirements from time to time imposed by any applicable
regulatory authority in relation to UK Facility Advances denominated in
British Pounds Sterling (including, without limitation, any
requirements relating to British Pounds Sterling primary liquidity) and
any such determination shall, in the absence of manifest error, be
conclusive and binding on all the Borrowers, the Lenders, the Agents
and the Company.
"UK Facility Maximum Amount" means, with respect to each UK
Facility Borrower, 95% of the amount by which the fair value of its
assets (determined at the lesser of fair valuation and present fair
saleable value on an orderly basis) is in excess of the total amount of
its liabilities, including without limitation Contingent Obligations,
as of the Closing Date; provided, however, that if the calculation of
UK Facility Maximum Amount in the manner provided above as of the date
payment is required of such UK Facility Borrower pursuant to Article
III would result in a greater positive number, then the UK Facility
Maximum Amount shall be such greater positive number.
"UK Facility Outstandings" means, at any date of
determination, the British Pounds Sterling Outstandings plus the French
Franc Outstandings.
"UK Overnight Rate" means, for any day, the rate of interest
per annum at which overnight deposits in the Applicable Currency, in an
amount approximately equal to the amount with respect to which such
date is being determined, would be offered for such day by the UK
Facility Agents to major banks in the London or other applicable
offshore interbank market. The UK Overnight Rate for any day which is
not a Business Day shall be the UK Overnight Rate for the preceding
Business Day.
"UK Qualifying Lender" shall have the meaning therefor set
forth in Section 6.06(g).
"UK Reference Bank" means the UK Facility Lender that from
time to time is the UK Facility Agent hereunder.
"Unutilized Canadian Facility Renewable Tranche Commitment"
means, at any date of determination, the difference of the Canadian
Facility Renewable Tranche Commitment at such date less the Canadian
Facility Renewable Tranche Outstandings at such date.
"Unutilized Total US Facility Commitment" means, at any date
of determination, the difference of the Total US Facility Commitment at
such date less the US Facility Outstandings at such date.
"US Dollar Equivalent Amount" means, with respect to a
specified amount of any Applicable Currency, the amount of US Dollars
into which such amount of such Applicable Currency would be converted,
based on the applicable Spot Rate of Exchange.
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<PAGE> 46
"US Dollars" or "US $" means dollars constituting legal tender
for the payment of public and private debts in the United States of
America.
"US Facility" means the facility described in Article II
hereof providing for Loans to the US Facility Borrower by the US
Facility Lenders in the aggregate principal amount of the Total US
Facility Commitment.
"US Facility Advance" means a borrowing under the US Facility
Revolving Credit Facility consisting of the aggregate principal amount
of a US Facility Base Rate Loan or Eurodollar Rate Loan, as the case
may be.
"US Facility Agent" shall have the meaning therefor set forth
in the introduction hereto.
"US Facility Base Rate" means, for any day, the rate per annum
equal to the higher of (i) the Federal Funds Effective Rate for such
day plus one-half of one percent (.5%) and (ii) the US Prime Rate for
such day. Any change in the US Facility Base Rate resulting from a
change in the US Prime Rate or the Federal Funds Effective Rate shall
become effective on the effective date of such change in the US Prime
Rate or the Federal Funds Effective Rate.
"US Facility Base Rate Loan" means a Loan for which the rate
of interest is determined by reference to the US Facility Base Rate.
"US Facility Borrower" shall have the meaning therefor set
forth in the introduction hereto.
"US Facility Commitment" means, with respect to any Lender,
such Lender's Applicable Facility Commitment for the US Facility.
"US Facility Fronting Commitment" means, with respect to each
US Facility Lender, the obligation of such Lender to make or continue
Loans to the US Facility Borrower on behalf of all the Lenders up to an
aggregate principal amount at any one time outstanding equal to the
product of such Lender's Applicable Fronting Percentage for the US
Facility times the Total US Facility Commitment, as such fronting
commitment may be increased or decreased from time to time pursuant to
this Agreement.
"US Facility Lenders" means those Lenders identified in the
introduction hereto with respect to their making US Facility Loans on
behalf of all the Lenders.
"US Facility Loans" means Loans, both US Facility Base Rate
Loans and Eurodollar Rate Loans, made by the US Facility Lenders
pursuant to Article II hereof.
"US Facility Notes" means the promissory notes of the US
Facility Borrower executed and delivered to the US Facility Lenders as
provided in Section 2.04 hereof in substantially the form attached as
Exhibit E, with appropriate insertions as to amounts, dates and names
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<PAGE> 47
of US Facility Lenders, which US Facility Notes shall be delivered to
evidence the US Facility Loans provided for herein.
"US Facility Outstandings" means, at any date of
determination, the aggregate principal amount of all US Facility Loans
then outstanding.
"US Facility Revolving Credit Extension Date" means August 5,
1999 and each date thereafter, if any, to which the US Facility
Revolving Credit Termination Date has been extended pursuant to Section
2.12 hereof, but in no event later than August 7, 2002.
"US Facility Revolving Credit Facility" means that portion of
the US Facility described in Section 2.01 hereof providing for US
Facility Loans to the US Facility Borrower by the US Facility Lenders
in the aggregate principal amount of the Total US Facility Revolving
Credit Commitment.
"US Facility Revolving Credit Outstandings" means, at any date
of determination, that portion of the US Facility Outstandings
representing the aggregate principal amount of all US Facility Loans
outstanding under the US Facility Revolving Credit Facility.
"US Facility Revolving Credit Termination Date" means the
earlier of (i) August 5, 1999, or such later date with respect to the
Unutilized Total US Facility Commitment as the US Facility Borrower and
the Lenders shall agree in writing pursuant to Section 2.12 hereof, or
(ii) the Total Facility Termination Date.
"US Facility Term Loan" shall have the meaning therefor set
forth in Section 2.13.
"US Facility Term Loan Facility" means the facility described
in Section 2.13 hereof providing for the conversion of US Facility
Revolving Credit Outstandings on each US Facility Extension Date to US
Facility Term Loans.
"US Facility Term Loan Outstandings" means, at any date of
determination, that portion of the US Facility Outstandings
representing the aggregate principal amount of all US Facility Loans
outstanding under the US Term Loan Facility.
"US Prime Rate" means the per annum rate of interest
established from time to time by the US Facility Agent as its prime
rate, which rate may not be lowest rate charged by the US Facility
Agent to its customers.
"Voting Stock" means shares of capital stock issued by a
corporation, or equivalent interests in any other Person, the holders
of which are ordinarily, in the absence of contingencies, entitled to
vote for the election of directors (or persons performing similar
functions) of such Person, even if the right so to vote has been
suspended by the happening of such a contingency.
"Year 2000 Compliant" shall have the meaning therefor set
forth in Section 8.02(n).
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"Year 2000 Problem" shall have the meaning therefor set forth
in Section 8.02(n).
1.02 Rules of Interpretation.
(a) All accounting terms not specifically defined herein shall have the
meanings assigned to such terms and shall be interpreted in accordance with
Generally Accepted Accounting Principles applied on a Consistent Basis.
(b) The headings, subheadings and table of contents used herein or in
any other Loan Document are solely for convenience of reference and shall not
constitute a part of any such document or affect the meaning, construction or
effect of any provision thereof.
(c) Except as otherwise expressly provided, references herein to
articles, sections, paragraphs, clauses, annexes, appendices, exhibits and
schedules are references to articles, sections, paragraphs, clauses, annexes,
appendices, exhibits and schedules in or to this Agreement.
(d) All definitions set forth herein or in any other Loan Document
shall apply to the singular as well as the plural form of such defined term, and
all references to the masculine gender shall include reference to the feminine
or neuter gender, and vice versa, as the context may require.
(e) When used herein or in any other Loan Document, words such as
"hereunder", "hereto", "hereof" and "herein" and other words of like import
shall, unless the context clearly indicates to the contrary, refer to the whole
of the applicable document and not to any particular article, section,
subsection, paragraph or clause thereof.
(f) References to "including" means including without limiting the
generality of any description preceding such term.
(g) Any reference to an officer of any Borrower or any other Person by
reference to the title of such officer shall be deemed to refer to each other
officer of such Person, however titled, exercising the same or substantially
similar functions.
(h) All references to any agreement or document as amended, modified or
supplemented, or words of similar effect, shall mean such document or agreement,
as the case may be, as amended, modified or supplemented from time to time only
as and to the extent permitted therein and in the Loan Documents.
(i) In the event that pursuant to Section 6.09 hereof any amount is
borrowed and repaid in the Euro rather than any particular Applicable Currency,
then references to such Applicable Currency and all definitions related to or
derived from a reference to such Applicable Currency shall be deemed to be, or
be related to or derived from, references to the Euro, in the sole discretion of
the Applicable Facility Agent, shall be deemed modified to the extent necessary
to effect the intent of this Agreement with respect to borrowings in such
Applicable Currency.
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ARTICLE II
The US Facility
2.01 Advances
(a) Commitment. Subject to the terms and conditions of this Agreement,
each US Facility Lender severally agrees to make, on behalf of all the Lenders,
US Facility Advances in US Dollars to the US Facility Borrower from time to time
from the Closing Date until the US Facility Revolving Credit Termination Date,
on a pro rata basis as to the total borrowing requested by the US Facility
Borrower on any day determined by such US Facility Lender's Applicable Fronting
Percentage for the US Facility, up to but not exceeding the US Facility Fronting
Commitment of such US Facility Lender, and each Lender shall have a
Participation in each such US Facility Advance pursuant to Section 2.14 equal in
amount to its Applicable Commitment Percentage times such US Facility Advance;
provided, however, that the US Facility Lenders will not be required and shall
have no obligation to make any US Facility Advance (i) so long as a Default or
an Event of Default has occurred and is continuing or (ii) if the Lenders have
accelerated the maturity of the Obligations as a result of an Event of Default;
provided further, however, that immediately after giving effect to each such US
Facility Advance, (x) the US Facility Outstandings shall not exceed the Total US
Facility Commitment and (y) the US Facility Revolving Credit Outstandings shall
not exceed the Total US Facility Revolving Credit Commitment. Within such
limits, the US Facility Borrower may borrow, repay and reborrow US Facility
Loans hereunder, on a Business Day, from the Closing Date until, but (as to
borrowings and reborrowings) not including, the US Facility Revolving Credit
Termination Date; provided, however, that (A) no Eurodollar Rate Loan shall be
made which has an Interest Period that extends beyond the US Facility Revolving
Credit Termination Date and (B) each Eurodollar Rate Loan may be repaid only on
the last day of the Interest Period with respect thereto, unless such prepayment
is accompanied by the additional payment, if any, due under Section 6.05. The US
Facility Borrower agrees that if at any time the US Facility Outstandings shall
exceed the Total US Facility Commitment or the US Facility Revolving Credit
Outstandings shall exceed the Total US Facility Revolving Credit Commitment, the
US Facility Borrower shall immediately repay a principal amount of the
outstanding US Facility Loans such that, as a result of such reduction, the
Total US Facility Commitment shall equal or exceed the US Facility Outstandings
and the Total US Facility Revolving Credit Commitment shall equal or exceed the
US Facility Revolving Credit Outstandings.
(b) Amounts, Advances and Rate Selection.
(i) The principal amount outstanding on any US Facility Loan
shall be recorded in the US Facility Agent's records in US Dollars,
based on the amount of any US Facility Advance as reduced from time to
time by the amount of any principal payments with respect to such US
Facility Loan. In the event a US Facility Loan is Continued or
Converted pursuant to Section 2.08, such election shall be treated as a
US Facility Advance for purposes of this Section 2.01. There shall be
no more than ten (10) Eurodollar Rate Loans outstanding at any one time
under the US Facility.
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(ii) Each US Facility Loan and each Continuation and
Conversion under Section 2.08 shall be (A) in the case of Eurodollar
Rate Loans, in an amount not less than US $10,000,000 and if greater in
integral multiples of US $1,000,000, and (B) in the case of US Facility
Base Rate Loans in an amount not less than US $5,000,000, and, if
greater, an integral multiple of US $1,000,000.
(iii) For each US Facility Advance an Authorized
Representative shall give the US Facility Agent (A) at least three (3)
Business Days' irrevocable telefacsimile notice prior to 10:00 A.M.
(New York, New York time) of each Eurodollar Rate Loan representing a
borrowing or Continuation or Conversion hereunder and (B) irrevocable
telefacsimile notice of each US Facility Base Rate Loan representing a
borrowing or Continuation or Conversion hereunder prior to 10:00 A.M.
(New York, New York time) on the day of such proposed US Facility Base
Rate Loan. Each such notice shall be in the form of a Borrowing Notice
in the form attached hereto as Exhibit D-1, which shall be effective
upon receipt by the US Facility Agent, and shall specify the Type of
Loan, amount of the US Facility Advance to be made, the date of
borrowing and the Interest Period (if a Eurodollar Rate Loan) to be
used in the computation of interest. Neither the US Facility Agent nor
any US Facility Lender shall incur any liability to the US Facility
Borrower in acting upon any notice referred to above which the US
Facility Agent believes in good faith to have been given by an
Authorized Representative of the US Facility Borrower or for otherwise
acting in good faith, and upon funding of US Facility Loans by any US
Facility Lender in accordance with this Agreement pursuant to any such
notice, the US Facility Borrower shall have effected US Facility Loans
hereunder. A Borrowing Notice for a Eurodollar Rate Loan shall be
irrevocable, and the US Facility Borrower shall be bound to make a
borrowing in accordance therewith, unless such US Facility Borrower
pays to the US Facility Lenders such amounts as may be due under
Section 6.05 for failure of a borrowing of a Eurodollar Rate Loan to
occur on the date specified therefor in the related Borrowing Notice.
The duration of the initial Interest Period for each US Facility Loan
shall be as specified in the initial Borrowing Notice. The US Facility
Borrower shall have the option to elect the duration of any subsequent
Interest Periods and to Continue or Convert the US Facility Loans in
accordance with Section 2.08. If the US Facility Agent does not receive
a notice of election of the duration of an Interest Period or of the
Conversion of a Loan by the time prescribed hereby and by Section 2.08,
the US Facility Borrower shall be deemed to have elected to Convert
such Loan to or Continue such Loan as a US Facility Base Rate Loan
until the US Facility Borrower notifies the US Facility Agent in
accordance with Section 2.08.
(iv) Notice of receipt of each Borrowing Notice in respect of
US Facility Loans, together with the amount of each US Facility
Lender's portion of an Advance requested thereunder and the applicable
interest rate, shall be provided by the US Facility Agent to each US
Facility Lender by telefacsimile with reasonable promptness, but
(provided the US Facility Agent shall have received such notice by
10:00 A.M. (New York, New York time), not later than 12:00 noon (New
York, New York time) on the same day as the US Facility Agent's receipt
of such notice from the US Facility Borrower.
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(v) Each US Facility Lender shall, pursuant to the terms and
subject to the conditions of this Agreement, not later than 12:00 noon
(New York, New York time) on the date specified for such US Facility
Advance, make the amount of the US Facility Advance or Advances to be
made by it on such day available to the US Facility Borrower by
depositing or transferring the proceeds thereof in US Dollars and in
Same Day Funds to the US Facility Agent at its Principal Office. The
amount so received by the US Facility Agent shall, subject to the terms
of this Agreement, be made available to the US Facility Borrower by
deposit of the proceeds to an account of such US Facility Borrower
maintained at the Principal Office or otherwise as shall be directed in
the applicable Borrowing Notice.
2.02 Payment of Interest.
(a) The US Facility Borrower shall pay interest to the US Facility
Agent for the account of each US Facility Lender on the outstanding and unpaid
principal amount of each US Facility Loan made by such US Facility Lender for
the period commencing on the date of such US Facility Loan until such Loan shall
be paid, Continued or Converted, as the case may be, at the then applicable US
Facility Base Rate for US Facility Base Rate Loans or applicable Eurodollar Rate
for Eurodollar Rate Loans, such payments to be made in US Dollars; provided,
however, that if any Event of Default shall have occurred and be continuing, all
amounts outstanding hereunder shall bear interest thereafter at the Default
Rate.
(b) Interest on each US Facility Loan shall be computed on the basis of
a year of 360 days and calculated for the actual number of days elapsed.
Interest on each US Facility Loan shall be paid (i) quarterly in arrears on the
last Business Day of each fiscal quarter, commencing September 30, 1998, for
each US Facility Base Rate Loan, (ii) on the last day of the applicable Interest
Period for each Eurodollar Rate Loan and, if the Interest Period extends for
more than three months, also at intervals of three months after the first day of
the Interest Period and (iii) upon payment in full of the principal amount of
each such Loan. Interest on amounts not paid when due shall be payable on
demand.
2.03 Payment of Principal. Except as set forth in Section 2.13 with
respect to US Facility Term Loans, the principal amount of each US Facility Loan
shall be due and payable to the US Facility Agent for the benefit of each US
Facility Lender in full on the US Facility Revolving Credit Termination Date.
The principal amount of any US Facility Base Rate Loan may be prepaid in whole
or in part at any time. The principal amount of any Eurodollar Rate Loan may be
prepaid only at the end of the applicable Interest Period unless the US Facility
Borrower shall pay to the US Facility Agent for the account of the US Facility
Lenders the additional amount, if any, required under Section 6.05. All
prepayments of US Facility Loans made by the US Facility Borrower shall be in
the amount of (i) US $10,000,000, or (ii) such greater amount which is an
integral multiple of US $1,000,000, or (iii) the amount equal to all US Facility
Outstandings, or (iv) such other amount as necessary to comply with Section
2.01(a) or 2.07.
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2.04 Manner of Payment.
(a) Each payment of principal (including any prepayment) and payment of
interest and fees in respect of US Facility Loans, and any other amount required
to be paid to the US Facility Lenders with respect to the US Facility Loans,
shall be made to the US Facility Agent at its Principal Office, for the account
of each US Facility Lender's Applicable Lending Office. Each such payment shall
be made in US Dollars and in Same Day Funds before 12:00 noon (New York, New
York time) on the date such payment is due. The US Facility Agent may, but shall
not be obligated to, debit the amount of any such payment which is not made by
such time to any ordinary deposit account, if any, of the US Facility Borrower
with the US Facility Agent. The US Facility Borrower shall give the US Facility
Agent prior telephonic notice of any payment of principal, such notice to be
given by not later than 11:00 A.M. (New York, New York time), on the date of
such payment.
(b) The US Facility Agent shall deem any payment by or on behalf of the
US Facility Borrower hereunder that is not made both (i) in US Dollars and in
Same Day Funds and (ii) prior to 12:00 noon (New York, New York time) to be a
non-conforming payment. Any such payment shall not be deemed to be received by
the US Facility Agent until the later of (x) the time such funds become
available funds and (y) the next Business Day. The US Facility Agent shall give
prompt telephonic notice to the applicable Authorized Representative and each of
the US Facility Lenders (confirmed in writing) if any payment is non-conforming.
Any non-conforming payment may constitute or become a Default or Event of
Default in accordance with the terms of Section 11.01(a) and 11.01(b). Interest
shall continue to accrue on any principal as to which a non-conforming payment
is made until such funds become available funds (but in no event less than the
period from the date of such payment to the next succeeding Business Day) at
Default Rate or the maximum rate permitted by applicable law, whichever is
lower, from the date such amount was due and payable until the date such amount
is paid in full.
(c) In the event that any payment hereunder or under the US Facility
Notes becomes due and payable on a day other than a Business Day, then such due
date shall be extended to the next succeeding Business Day unless otherwise
provided under clause (ii) of the definition of "Interest Period"; provided that
interest shall continue to accrue during the period of any such extension.
2.05 US Facility Notes. US Facility Loans made by each US Facility
Lender shall be evidenced by the US Facility Note payable to the order of such
Lender in the respective amount of its Applicable Fronting Percentage of the
Total US Facility Commitment, which US Facility Note shall be dated the Closing
Date or a later date pursuant to an Assignment and Acceptance and shall be duly
completed, executed and delivered by the US Facility Borrower.
2.06 Pro Rata Payments. Except as otherwise provided herein, (a) each
payment on account of the principal of and interest on the US Facility Loans and
the fees described in Section 2.09 hereof shall be made to the US Facility Agent
for the account of the US Facility Lenders pro rata based on their Applicable
Fronting Percentages for the US Facility, (b) all payments to be made by the US
Facility Borrower for the account of each of the US Facility Lenders on account
of principal, interest and fees shall be made without diminution, set-off,
recoupment, counterclaim or, except as set forth in Section 6.06(a) hereof,
deduction, and (c) the US Facility Agent will promptly distribute
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payments received to the US Facility Lenders. Notwithstanding the foregoing, in
the event any US Facility Lender shall not be able to make an Eurodollar Rate
Loan under the circumstances provided in Section 6.01 or 6.03, interest shall be
allocated to such US Facility Lender according to the interest rate payable to
such US Facility Lender as set forth in Section 6.04.
2.07 Reductions. The US Facility Borrower shall, by notice from an
Authorized Representative, have the right from time to time (but not more
frequently than once during each fiscal quarter), upon not less than ten (10)
Business Days' written notice to the US Facility Agent, effective upon receipt,
to reduce the Total US Facility Commitment. The US Facility Agent shall give
each US Facility Lender, within one (1) Business Day, telefacsimile notice, or
telephonic notice (confirmed in writing), of such reduction. Each such reduction
shall be in the aggregate amount of US $10,000,000 or such greater amount which
is in an integral multiple of US $1,000,000, or the entire remaining Total US
Facility Commitment, and shall permanently reduce the Total US Facility
Commitment. No such reduction shall result in the payment of any Eurodollar Rate
Loan other than on the last day of the Interest Period of such Loan unless such
prepayment is accompanied by amounts due, if any, under Section 6.05. Each such
reduction of the Total US Facility Commitment shall be accompanied by payment of
the principal amount of US Facility Loans to the extent that the US Facility
Outstandings exceed the Total US Facility Commitment, or the US Facility
Revolving Credit Outstandings exceed the Total US Facility Revolving Credit
Commitment, after giving effect to such reduction, together with accrued and
unpaid interest on the amounts prepaid.
2.08 Conversions and Elections of Subsequent Interest Periods. Subject
to the limitations set forth below and in Article VI hereof, the US Facility
Borrower may:
(a) upon notice to the US Facility Agent on or before 10:00 A.M. (New
York, New York time) on any Business Day, Convert all or a part of Eurodollar
Rate Loans to US Facility Base Rate Loans under the US Facility on the last day
of the Interest Period for such Eurodollar Rate Loans; and
(b) provided that no Default or Event of Default shall have occurred
and be continuing, upon three (3) Business Days' notice to the US Facility Agent
on or before 10:00 A.M. (New York, New York time):
(i) elect a subsequent Interest Period for all or a portion of
Eurodollar Rate Loans under the US Facility to begin on the last day of
the then current Interest Period for such Eurodollar Rate Loans; and
(ii) Convert US Facility Base Rate Loans to Eurodollar Rate
Loans under the US Facility on any Business Day.
Notice of any such Continuations or Conversions shall be effected by
receipt of an appropriate Borrowing Notice and shall specify the effective date
of such Continuation or Conversion and the Interest Period to be applicable to
the US Facility Loan as Continued or Converted. Each Continuation and Conversion
pursuant to this Section 2.08 shall be subject to the limitations on Eurodollar
Rate Loans set forth in the definition of "Interest Period" herein and in
Sections 2.01 and
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2.03 and Article VI hereof. All such Continuations or Conversions of US Facility
Loans shall be effected pro rata based on the Applicable Fronting Percentages of
the US Facility Lenders for the US Facility.
2.09 Facility Fee. For the period beginning on the Closing Date and
ending on the Total Facility Termination Date, the Company agrees to pay to each
Lender at its office in the United States so designated thereby based on such
Lender's Applicable Commitment Percentage, a Facility Fee equal to the
Applicable Margin for Facility Fees times the Total US Facility Commitment. Such
payments of Facility Fees provided for in this Section 2.09 shall be due and
payable quarterly in arrears on the last Business Day of each March, June,
September and December beginning September 30, 1998 to and on the Total Facility
Termination Date. Notwithstanding the foregoing, so long as any US Facility
Lender fails to make available any portion of its US Facility Fronting
Commitment when properly requested by the US Facility Borrower, such Lender
shall not be entitled to receive payment of its pro rata share of such Facility
Fee until such Lender shall make available such portion. Such Facility Fee shall
be calculated on the basis of a year of 360 days for the actual number of days
elapsed.
2.10 Deficiency Advances. No US Facility Lender shall be responsible
for any default of any other US Facility Lender in respect to such other US
Facility Lender's obligation to make any US Facility Loan hereunder nor shall
the US Facility Fronting Commitment of any US Facility Lender or the US Facility
Commitment of any Lender be increased as a result of such default of any other
US Facility Lender. Without limiting the generality of the foregoing, in the
event any US Facility Lender shall fail to advance funds to the US Facility
Borrower as herein provided, the US Facility Agent may in its discretion, but
shall not be obligated to, make a US Facility Advance under the applicable US
Facility Note in its favor as a US Facility Lender of all or any portion of such
amount or amounts (each, a "deficiency advance") and shall thereafter be
entitled to payments of principal of and interest on such deficiency advance in
the same manner and at the same interest rate or rates to which such other US
Facility Lender would have been entitled had it made such advance under its US
Facility Note; provided that, upon payment to the US Facility Agent from such
other US Facility Lender of the entire outstanding amount of each such
deficiency advance, together with accrued and unpaid interest thereon, from the
most recent date or dates interest was paid to the US Facility Agent by the US
Facility Borrower on each US Facility Loan comprising the deficiency advance, at
the interest rate per annum for overnight borrowing by the US Facility Agent
from the Federal Reserve Bank, then such payment shall be credited against the
applicable US Facility Note of the US Facility Agent in full payment of such
deficiency advance and the US Facility Borrower shall be deemed to have borrowed
the amount of such deficiency advance from such other US Facility Lender as of
the most recent date or dates, as the case may be, upon which any payments of
interest were made by the US Facility Borrower thereon.
2.11 Use of Proceeds. The proceeds of the US Facility Loans made
pursuant to the US Facility hereunder shall be used by the US Facility Borrower
to repay and terminate the Prior US Facility, to finance capital expenditures
and Permitted Acquisitions and for other working capital and general corporate
needs of the Company and its Subsidiaries.
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2.12 US Facility Extension.
(a) With the unanimous consent of all Lenders under the Total
Facilities, at each US Facility Revolving Credit Extension Date the US Facility
Borrower can elect to extend the US Facility Revolving Credit Termination Date
for an additional period of 364 days with respect to the Unutilized Total US
Facility Commitment as at such US Facility Revolving Credit Extension Date;
provided, however, that in no event shall the US Facility Revolving Credit
Termination Date be extended beyond the Total Facility Termination Date.
(b) The US Facility Borrower shall notify the Lenders of its request
for such an extension by delivering to the US Facility Agent and the Global
Agent notice of such request signed by an Authorized Representative not more
than one hundred fifty (150) days nor less than ninety (90) days prior to the
applicable US Facility Revolving Credit Extension Date. Notice of receipt of
such request shall be provided by the US Facility Agent to the US Facility
Lenders and to each other Facility Agent, who shall in turn provide notice of
such request to the respective Lenders in each such Facility. The Global Agent
shall notify the US Facility Borrower in writing within sixty (60) days of its
receipt of such request for extension of the decision of the Lenders. Failure by
any Lender to respond to a request for an extension shall constitute a refusal
of such Lender to give its consent to such extension, and the US Facility
Revolving Credit Termination Date shall not be extended. Failure by the Global
Agent to give such notice to the US Facility Borrower as a result of not
receiving the consent of all Lenders to such extension shall constitute refusal
by the Lenders to extend the US Facility Revolving Credit Termination Date.
(c) If on any US Facility Revolving Credit Extension Date the US
Facility Borrower does not so elect to extend the US Facility Revolving Credit
Termination Date then in effect, or if all Lenders under the Total Facilities do
not unanimously consent to such extension, then as of such US Facility Revolving
Credit Termination Date, (i) in addition to any reduction required under Section
2.13 hereof, the Total US Facility Commitment as at such date shall be
permanently reduced by an amount equal to the Unutilized Total US Facility
Commitment as at such date, (ii) the Total US Facility Revolving Credit
Commitment shall be reduced to zero, and (iii) subject to the provisions of
Section 2.13 hereof, all US Facility Outstandings shall be due and payable in
full.
2.13 US Term Loan Option.
(a) At each US Facility Revolving Credit Extension Date, the US
Facility Borrower can elect to convert any or all US Facility Revolving Credit
Outstandings as of such US Facility Revolving Credit Extension Date into a term
loan on such date in the original principal amount equal to such US Facility
Revolving Credit Outstandings. US Facility Loans so converted by the US Facility
Borrower in accordance with this Section 2.13 shall be referred to as the "US
Facility Term Loans." The US Facility Term Loans shall be repaid in equal
quarterly installments on the last Business Day of each March, June, September
and December commencing with the first such date after the most recent US
Facility Revolving Credit Extension Date and continuing until and including a
final payment on the Total Facility Termination Date. The US Facility Term Loans
may be comprised of US Facility Base Rate Loans and Eurodollar Rate Loans as the
US Facility Borrower may elect in accordance with the provisions of this Article
II. The US Facility Term Loans shall bear
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interest on the same terms as the US Facility Loans prior to the conversion to
US Facility Term Loans until the Continuation or Conversion thereof pursuant to
Section 2.08 hereof. Amounts repaid or prepaid on the US Facility Term Loans may
not be reborrowed, and the Total US Facility Commitment shall be permanently
reduced by any such amounts.
(b) If on any US Facility Revolving Credit Extension Date the US
Facility Borrower does not so elect to convert all or a portion of US Facility
Revolving Credit Outstandings as of such date to US Facility Term Loans as
described in (a) above, then on the US Facility Revolving Credit Termination
Date then in effect, (i) all US Facility Revolving Credit Outstandings as of
such date which are not so converted shall be due and payable in full on the US
Facility Revolving Credit Termination Date then in effect, and (ii) in addition
to any reduction required under Section 2.12 hereof, the Total US Facility
Commitment as at such US Facility Revolving Credit Extension Date shall be
permanently reduced by an amount equal to the US Facility Revolving Credit
Outstandings as at such date which are not so converted.
2.14 Participations. On the Closing Date and each day thereafter until
the Total Facility Termination Date, each Lender (including a US Facility Lender
if necessary) will be deemed to have absolutely, irrevocably and unconditionally
purchased from each US Facility Lender a Participation in US Facility
Outstandings owing to such US Facility Lender in an amount such that, after such
purchase, each Lender will have a Facility Credit Exposure under the US Facility
equal in amount to its Applicable Commitment Percentage times the US Facility
Outstandings (referred to as the "Facility Participation Amount" for such Lender
in the US Facility). Each such Participation of each Lender in the US Facility
shall be funded in accordance with Section 11.07.
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ARTICLE III
The UK Facility
3.01 Advances
(a) Commitment. Subject to the terms and conditions of this Agreement,
each UK Facility Lender severally agrees to make, on behalf of all the Lenders,
UK Facility Advances in British Pounds Sterling or French Francs (as specified
in a Borrowing Notice) to the UK Facility Borrower requesting such UK Facility
Advance, as the case may be, as specified in such Borrowing Notice, from time to
time from the Closing Date until the Total Facility Termination Date, on a pro
rata basis as to the total borrowing requested by such UK Facility Borrower on
any day determined by such UK Facility Lender's Applicable Fronting Percentage
for UK Facility, up to but not exceeding (i) in the case of Advances in British
Pounds Sterling, the British Pounds Sterling Fronting Commitment of such UK
Facility Lender, and (ii) in the case of Advances in French Francs, the French
Franc Fronting Commitment of such UK Facility Lender, and each Lender, shall
have a Participation in each such UK Facility Advance pursuant to Section 3.13
equal in amount to its Applicable Commitment Percentage times such UK Facility
Advance; provided, however, that the UK Facility Lenders will not be required
and shall have no obligation to make any UK Facility Advance (A) so long as a
Default or an Event of Default has occurred and is continuing or (B) if the
Lenders have accelerated the maturity of the Obligations as a result of an Event
of Default; provided further, however, that immediately after giving effect to
each such UK Facility Advance, (x) the UK Facility Outstandings shall not exceed
the Total UK Facility Commitment and (y) the French Franc Outstandings shall not
exceed the Total French Franc Commitment. Within such limits, the UK Facility
Borrowers may borrow, repay and reborrow UK Facility Loans hereunder, on a
Business Day, from the Closing Date until, but (as to borrowings and
reborrowings) not including, the Total Facility Termination Date; provided,
however, that the aggregate principal amount outstanding to any UK Facility
Borrower shall not at any time exceed its UK Facility Maximum Amount; and
provided further, however, that (i) no Offshore Rate Loan shall be made which
has an Interest Period that extends beyond the Total Facility Termination Date
and (ii) each Offshore Rate Loan may be repaid only on the last day of the
Interest Period with respect thereto, unless such payment is accompanied by the
additional payment, if any, due under Section 6.05. The UK Facility Borrowers
agree that if at any time the UK Facility Outstandings shall exceed the Total UK
Facility Commitment or the French Franc Outstandings shall exceed the Total
French Franc Commitment, the UK Facility Borrowers shall immediately repay a
principal amount of the outstanding UK Facility Loans such that, as a result of
such reduction, the Total UK Facility Commitment shall equal or exceed the UK
Facility Outstandings and the Total French Franc Commitment shall equal or
exceed the French Franc Outstandings.
(b) Amounts, Advances and Rate Selection.
(i) The principal amount outstanding on any UK Facility Loan
shall be recorded in the UK Facility Agent's records in British Pounds
Sterling in the case of a UK Facility Advance of British Pounds
Sterling and in French Francs in the case of a UK Facility Advance of
French Francs, in each case based on the amount of any UK Facility
Advance as reduced from time to time by the amount of any principal
payments with respect to such UK Facility
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Advance. In the case of a UK Facility Advance of French Francs, the UK
Facility Agent shall also record the principal amount outstanding on
any such UK Facility Loan in British Pounds Sterling, based on the
Sterling Equivalent Amount of such UK Facility Advance determined based
on the Spot Rate of Exchange as of the date of such Advance, as reduced
from time to time by any principal payments with respect thereto. In
the event a UK Facility Loan is Continued pursuant to Section 3.08,
such election shall be treated as a UK Facility Advance in the
Applicable Currency of the existing Loan for purposes of this Section
3.01, with the Sterling Equivalent Amount of the principal amount of
any such Loan in French Francs determined based on the Spot Rate of
Exchange as of the date of such Continuation. The UK Facility Agent
shall adjust its books to reflect the new Sterling Equivalent Amount of
such UK Facility Loan, and in the event that such adjustment would
cause the UK Facility Outstandings to exceed the Total UK Facility
Commitment, or the French Franc Outstandings to exceed the Total French
Franc Commitment, the UK Facility Borrowers shall, immediately on the
effective date of such Continuation, repay the portion of such
Continued Loan (applying the new Spot Rate of Exchange) necessary to
ensure that thereafter the Total UK Facility Commitment shall equal or
exceed the UK Facility Outstandings and the Total French Franc
Commitment shall equal or exceed the French Franc Outstandings. There
shall be no more than ten (10) Offshore Loans outstanding at any one
time under the UK Facility.
(ii) Each UK Facility Loan and each Continuation and
Conversion under Section 3.08 in British Pounds Sterling shall be in an
amount not less than pound 3,000,000 and if greater in integral
multiples of pound 1,000,000; each UK Facility Loan and each
Continuation and Conversion under Section 3.08 in French Francs shall
be in an amount not less than the French Franc Equivalent Amount of
pound 1,000,000 and if greater in integral multiples of the French
Franc Equivalent Amount of pound 500,000.
(iii) For each UK Facility Advance an Authorized
Representative shall give the UK Facility Agent at least (A) three (3)
Business Days' irrevocable telefacsimile notice prior to 11:00 A.M.
(London, England time) of each Offshore Rate Loan in French Francs
representing a borrowing or Continuation or Conversion hereunder, and
(B) two (2) Business Days' irrevocable telefacsimile notice prior to
11:00 A.M. (London, England time) of each Offshore Rate Loan in British
Pounds Sterling representing a borrowing or Continuation or Conversion
hereunder. Each such notice shall be in the form of a Borrowing Notice
in the form attached hereto as Exhibit D-2, which shall be effective
upon receipt by the UK Facility Agent, and shall specify the Type of
Loan, whether the Loan is to be made in British Pounds Sterling or
French Francs, the amount of the UK Facility Advance to be made, the
date of borrowing and the Interest Period to be used in the computation
of interest. Neither the UK Facility Agent nor any UK Facility Lender
shall incur any liability to any UK Facility Borrower in acting upon
any notice referred to above which the UK Facility Agent believes in
good faith to have been given by an Authorized Representative of such
UK Facility Borrower or for otherwise acting in good faith, and upon
funding of UK Facility Loans by any UK Facility Lender in accordance
with this Agreement pursuant to any such notice, such UK Facility
Borrower shall have effected UK Facility Loans hereunder. A Borrowing
Notice for an Offshore Rate Loan shall be irrevocable, and UK Facility
Borrower giving such notice shall be bound to make a borrowing in
accordance therewith, unless such UK Facility
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Borrower pays to the UK Facility Lenders such amounts as may be due
under Section 6.05 for failure of a borrowing of an Offshore Rate Loan
to occur on the date specified therefor in a Borrowing Notice. The
duration of the initial Interest Period for each UK Facility Loan shall
be as specified in the initial Borrowing Notice. The UK Facility
Borrowers shall have the option to elect the duration of subsequent
Interest Periods and to Continue the UK Facility Loans in accordance
with Section 3.08. If the UK Facility Agent does not receive a notice
of election of duration of an Interest Period by the time prescribed
hereby and by Section 3.08, the applicable UK Facility Borrower shall
be deemed to have elected to Continue such Loan as an Offshore Rate
Loan with a subsequent Interest Period of one month.
(iv) Notice of receipt of each Borrowing Notice in respect of
UK Facility Loans, together with the amount of each UK Facility
Lender's portion of an Advance requested thereunder, shall be provided
by the UK Facility Agent to each UK Facility Lender by telefacsimile
with reasonable promptness, but not later than (A) with respect to UK
Facility Advances in British Pounds Sterling, 4:00 P.M. (London,
England time) on the day two (2) Business Days prior to the date of
such UK Facility Advance as set forth in such Borrowing Notice and (B)
with respect to UK Facility Advances in French Francs, 4:00 P.M.
(London, England time) on the day three (3) Business Days prior to the
date of such UK Facility Advance as set forth in such Borrowing Notice.
Notice of the applicable interest rate for the requested UK Facility
Advance shall be provided by the UK Facility Agent to each UK Facility
Lender by telefacsimile with reasonable promptness, but not later than
(C) with respect to UK Facility Advances in British Pounds Sterling,
2:00 P.M. (London, England time) on the date of the UK Facility Advance
as set forth in such Borrowing Notice and (D) with respect to UK
Facility Advances in French Francs, 2:00 P.M. (London, England time) on
the day two (2) Business Days prior to the date of such UK Facility
Advance as set forth in such Borrowing Notice.
(v) In the case of UK Facility Advances in British Pounds
Sterling, each UK Facility Lender shall, pursuant to the terms and
subject to the conditions of this Agreement, not later than 12:00 noon
(London, England time) on the date specified for such UK Facility
Advance, make the amount of the UK Facility Advance to be made by it on
such day available to the applicable UK Facility Borrower by depositing
or transferring the proceeds thereof in British Pounds Sterling and in
Same Day Funds to the UK Facility Agent at its Principal Office. The
amount so received by the UK Facility Agent shall, subject to the terms
of this Agreement, be made available to the applicable UK Facility
Borrower by deposit of the proceeds to an account of such UK Facility
Borrower maintained at the Principal Office or otherwise as shall be
directed in the applicable Borrowing Notice.
(vi) In the case of UK Facility Advances in French Francs,
each UK Facility Lender shall, pursuant to the terms and subject to the
conditions of this Agreement, not later than 9:00 A.M. (London, England
time) on the date specified for such UK Facility Advance, make the
amount of the UK Facility Advance to be made by it on such day
available to the applicable UK Facility Borrower by depositing or
transferring the proceeds thereof in French Francs and in Same Day
Funds to the account of the UK Facility Agent at the Funding Bank.
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The amount so received by the Funding Bank shall, subject to the terms
of this Agreement and upon instruction from the UK Facility Agent to
the Funding Bank on the same day but no later than 9:00 A.M. (London,
England time), be made available to the applicable UK Facility Borrower
by deposit of the amount of French Francs specified in the related
Borrowing Notice to an account of such UK Facility Borrower maintained
at the Funding Bank.
3.02 Payment of Interest.
(a) The UK Facility Borrowers shall pay interest to the UK Facility
Agent for the account of each UK Facility Lender on the outstanding and unpaid
principal amount of each UK Facility Loan made by such UK Facility Lender for
the period commencing on the date of such UK Facility Loan until such Loan shall
be paid or Continued, as the case may be, at the then applicable Offshore Rate,
such payments to be made (i) in British Pounds Sterling with respect to UK
Facility Loans made in British Pounds Sterling, and (ii) in French Francs with
respect to UK Facility Loans made in French Francs; provided, however, that if
any Event of Default shall have occurred and be continuing, all amounts
outstanding hereunder shall bear interest thereafter at the Default Rate.
(b) Interest on each UK Facility Loan shall be computed on the basis of
a year of 365 days for Advances in British Pounds Sterling and 360 days for
Advances in French Francs and calculated for the actual number of days elapsed.
Interest on each UK Facility Loan shall be paid (i) on the last day of the
applicable Interest Period for each such Offshore Rate Loan and, if the Interest
Period extends for more than three months, also at intervals of three months
after the first day of the Interest Period and (ii) upon payment in full of the
principal of each such Loan. Interest on amounts not paid when due shall be
payable on demand.
3.03 Payment of Principal. The principal amount of each UK Facility
Loan shall be due and payable to the UK Facility Agent for the benefit of each
UK Facility Lender in full on the Total Facility Termination Date. The principal
amount of any Offshore Rate Loan may be prepaid only at the end of the
applicable Interest Period unless the UK Facility Borrowers shall pay to the UK
Facility Agent for the account of the UK Facility Lenders the additional amount,
if any, required under Section 6.05 and, in the case of a prepayment of any
Offshore Rate Loan in French Francs, the applicable UK Facility Borrower
notifies the UK Facility Agent at least three (3) Business Days prior to such
prepayment. All prepayments of UK Facility Loans made by the UK Facility
Borrowers shall be in the Applicable Currency of the respective UK Facility Loan
in the amount of (i) pound 1,000,000 (or the French Franc Equivalent Amount
thereof if in French Francs) or (ii) such greater amount which is an integral
multiple of pound 500,000 (or the French Franc Equivalent Amount thereof if in
French Francs), or (iii) the amount equal to all UK Facility Outstandings, or
(iv) such other amount as necessary to comply with Section 3.01(a) or 3.07.
3.04 Manner of Payment.
(a) Each payment of principal (including any prepayment) and payment of
interest and fees in respect of UK Facility Loans, and any other amount required
to be paid to the UK Facility Lenders with respect to the UK Facility Loans,
shall be made to the UK Facility Agent at its Principal Office,
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for the account of each UK Facility Lender's Applicable Lending Office, to be
recorded in British Pounds Sterling and, if applicable, French Francs, as set
forth in Section 3.01(b). Each such payment shall be made in the Applicable
Currency of the UK Facility Loan in Same Day Funds before 1:00 P.M. (London,
England time) on the date such payment is due. The UK Facility Agent may, but
shall not be obligated to, debit the amount of any such payment which is not
made by such time to any ordinary deposit account, if any, of the applicable UK
Facility Borrower with the UK Facility Agent. The UK Facility Borrowers shall
give the UK Facility Agent prior telephonic notice of any payment of principal,
such notice to be given by (i) not later than 11:00 A.M. (London, England time)
at least two (2) Business Days prior to the date of such payment in the case of
payment of a UK Facility Loan in British Pounds Sterling and (ii) not later than
11:00 A.M. (London, England time) at least three (3) Business Days prior to the
date of such payment in the case of payment of a UK Facility Loan in French
Francs.
(b) The UK Facility Agent shall deem any payment by or on behalf of the
UK Facility Borrowers hereunder that is not made both (i) in British Pounds
Sterling in the case of UK Facility Loans made in British Pounds Sterling or in
French Francs in the case of UK Facility Loans made in French Francs and, in
either case, in Same Day Funds and (ii) prior to 1:00 P.M. (London, England
time) to be a non-conforming payment. Any such payment shall not be deemed to be
received by the UK Facility Agent until the later of (x) the time such funds
become available funds in the required Applicable Currency and (y) the next
Business Day. The UK Facility Agent shall give prompt telephonic notice to the
applicable Authorized Representative and each of the UK Facility Lenders
(confirmed in writing) if any payment is non-conforming. Any non-conforming
payment may constitute or become a Default or Event of Default in accordance
with the terms of Section 11.01(a) and 11.01(b). Interest shall continue to
accrue on any principal as to which a non-conforming payment is made until such
funds become available funds (but in no event less than the period from the date
of such payment to the next succeeding Business Day) at the Default Rate or the
maximum rate permitted by applicable law, whichever is lower, from the date such
amount was due and payable until the date such amount is paid in full.
(c) In the event that any payment hereunder becomes due and payable on
a day other than a Business Day, then such due date shall be extended to the
next succeeding Business Day unless otherwise provided under clause (ii) of the
definition of "Interest Period"; provided that interest shall continue to accrue
during the period of any such extension.
3.05 Evidence of Indebtedness. Each UK Facility Borrower hereby
authorizes each UK Facility Lender and the UK Facility Agent to record, from
time to time, in its records, the date and amount of each UK Facility Loan; the
interest rates payable by the applicable UK Facility Borrower in respect of each
UK Facility Loan and any Interest Period applicable thereto; the dates and
amounts of all payments received by such UK Facility Lender on account of
principal, interest and fees; and the amount of all the UK Facility Loans which
remain payable by the UK Facility Borrowers to such UK Facility Lender. All
amounts and other information so recorded shall be prima facie evidence thereof.
The failure to record, or any error in recording, any such amount or other
information shall not limit or impair the obligations of the UK Facility
Borrowers hereunder or under any Loan Document.
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3.06 Pro Rata Payments. Except as otherwise provided herein, (a) each
payment on account of the principal of and interest on the UK Facility Loans and
the fees described in Section 3.09 hereof shall be made to the UK Facility Agent
for the account of the UK Facility Lenders pro rata based on their Applicable
Fronting Percentages for the UK Facility, (b) all payments to be made by the UK
Facility Borrowers for the account of each of the UK Facility Lenders on account
of principal, interest and fees shall be made without diminution, set-off,
recoupment, counterclaim or, except as set forth in Section 6.06(a), deduction,
and (c) the UK Facility Agent will promptly distribute payments received to the
UK Facility Lenders. Notwithstanding the foregoing, in the event any UK Facility
Lender shall not be able to make an Eurodollar Rate Loan under the circumstances
provided in Section 6.01 or 6.03, interest shall be allocated to such UK
Facility Lender according to the interest rate payable to such UK Facility
Lender as set forth in Section 6.04.
3.07 Reductions. The UK Facility Borrowers shall, by notice from an
Authorized Representative, have the right from time to time (but not more
frequently than once during each fiscal quarter), upon not less than ten (10)
Business Days' written notice to the UK Facility Agent, effective upon receipt,
to reduce the Total UK Facility Commitment. The UK Facility Agent shall give
each UK Facility Lender, within one (1) Business Day, telefacsimile notice, or
telephonic notice (confirmed in writing), of such reduction. Each such reduction
shall be in the aggregate amount of pound 1,000,000 or such greater amount which
is in an integral multiple of pound 500,000, or the entire remaining Total UK
Facility Commitment, and shall permanently reduce the Total UK Facility
Commitment. No such reduction shall result in the payment of any Offshore Rate
Loan other than on the last day of the Interest Period of such Loan unless such
prepayment is accompanied by amounts due, if any, under Section 6.05. Each such
reduction of the Total UK Facility Commitment shall be accompanied by payment of
the principal amount of the UK Facility Loans to the extent that the UK Facility
Outstandings exceed the Total UK Facility Commitment or the French Franc
Outstandings exceed the Total French Franc Commitment, in each case after giving
effect to such reduction, together with accrued and unpaid interest on the
amounts prepaid. Any reduction of the Total UK Facility Commitment hereunder
shall result, ipso facto, in a pro rata reduction of the Total French Franc
Commitment so that, as reduced, the Sterling Equivalent Amount of the Total
French Franc Commitment shall at all times remain equal to 40% of the Total UK
Facility Commitment.
3.08 Conversions and Elections of Subsequent Interest Periods. Subject
to the limitations set forth below and in Article VI hereof, and provided that
no Default or Event of Default shall have occurred and be continuing, the UK
Facility Borrowers may, upon three (3) Business Days' notice to the UK Facility
Agent prior to 11:00 A.M. (London, England time) in the case of an Offshore Rate
Loan in British Pounds Sterling and four (4) Business Days' notice to the UK
Facility Agent prior to 11:00 A.M. (London, England time) in the case of an
Offshore Rate Loan in French Francs, elect a subsequent Interest Period for all
or a portion of Offshore Rate Loans under the UK Facility to begin on the last
day of the then current Interest Period for such Offshore Rate Loans. Notice of
any such Continuations shall be effected by receipt of an appropriate Borrowing
Notice and shall specify the effective date of such Continuation and the
Interest Period to be applicable to the UK Facility Loan as Continued. Each
Continuation pursuant to this Section 3.08 shall be subject to the limitations
on Offshore Rate Loans set forth in the definition of "Interest Period" herein
and in Section 3.01 and 3.03 and Article VI hereof. All such Continuations of UK
Facility Loans shall be
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effected pro rata based on the Applicable Fronting Percentages of the UK
Facility Lenders for the UK Facility and shall be in the same currency as the
original such Loan.
3.09 Facility Fee. For the period beginning on the Closing Date and
ending on the Total Facility Termination Date, the Company agrees to pay to each
Lender at its office in the United States so designated thereby based on such
Lender's Applicable Commitment Percentage, a Facility Fee equal to the
Applicable Margin for Facility Fees times the Total UK Facility Commitment. Such
payments of Facility Fees provided for in this Section 3.09 shall be due and
payable quarterly in arrears on the last Business Day of each March, June,
September and December beginning September 30, 1998 to and on the Total Facility
Termination Date. Notwithstanding the foregoing, so long as any UK Facility
Lender fails to make available any portion of its UK Facility Fronting
Commitment when properly requested by a UK Facility Borrower, such Lender shall
not be entitled to receive payment of its pro rata share of such Facility Fee
until such Lender shall make available such portion. Such Facility Fee shall be
calculated on the basis of a year of 365 days for the actual number of days
elapsed.
3.10 Deficiency Advances. No UK Facility Lender shall be responsible
for any default of any other UK Facility Lender in respect to such other UK
Facility Lender's obligation to make any UK Facility Loan hereunder nor shall
the UK Facility Fronting Commitment of any UK Facility Lender or the UK Facility
Commitment of any Lender be increased as a result of such default of any other
UK Facility Lender. Without limiting the generality of the foregoing, in the
event any UK Facility Lender shall fail to advance funds to a UK Facility
Borrower as herein provided, the UK Facility Agent may in its discretion, but
shall not be obligated to, make a UK Facility Advance hereunder as a UK Facility
Lender of all or any portion of such amount or amounts (each, a "deficiency
advance") and shall thereafter be entitled to payments of principal of and
interest on such deficiency advance in the same manner and at the same interest
rate or rates to which such other UK Facility Lender would have been entitled
had it made such an advance; provided that, upon payment to the UK Facility
Agent from such other UK Facility Lender of the entire outstanding amount of
each such deficiency advance, together with accrued and unpaid interest thereon,
from the most recent date or dates interest was paid to the UK Facility Agent by
the applicable UK Facility Borrower on each UK Facility Loan comprising the
deficiency advance, at the interest rate per annum equal to the UK Overnight
Rate, then such payment shall be credited against the applicable UK Facility
Outstanding owing to the UK Facility Agent in full payment of such deficiency
advance and the applicable UK Facility Borrower shall be deemed to have borrowed
the amount of such deficiency advance from such other UK Facility Lender as of
the most recent date or dates, as the case may be, upon which any payments of
interest were made by such UK Facility Borrower thereon.
3.11 Use of Proceeds. The proceeds of the UK Facility Loans made
pursuant to the UK Facility hereunder shall be used by the UK Facility Borrowers
to repay and terminate the Prior UK Facility, the Prior Irish Facility and the
Prior French Facility, to finance capital expenditures and Permitted
Acquisitions and for other working capital and general corporate needs of the UK
Facility Borrowers.
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3.12 One Loan.
(a) Subject to subsection (c) below, all UK Facility Loans and UK
Facility Advances by the UK Facility Lenders to any UK Facility Borrower shall
constitute the joint and several general obligation of each of the UK Facility
Borrowers. Each UK Facility Borrower shall be jointly and severally liable to
the UK Facility Agent and the UK Facility Lenders for all Obligations hereunder
in respect of the UK Facility, regardless of whether such Obligations arise as a
result of UK Facility Advances to such Borrower, it being stipulated and agreed
that UK Facility Advances hereunder to any UK Facility Borrower inure to the
benefit of each of the UK Facility Borrowers, and that the UK Facility Lenders
are relying on the joint and several liability of the UK Facility Borrowers in
extending credit under the UK Facility.
(b) Subject to subsection (c) below, each UK Facility Borrower
guarantees to the UK Facility Lenders the payment in full of all of the
Obligations of the other UK Facility Borrowers to the UK Facility Lenders in
respect of UK Facility and further guarantees the due performance by each other
UK Facility Borrower of its respective duties and covenants made in favor of the
UK Facility Agent and the UK Facility Lenders hereunder. Each UK Facility
Borrower agrees that the joint and several liability of the UK Facility
Borrowers shall not be impaired or affected by any modification, supplement,
extension or amendment of any contract or agreement to which the parties thereto
may hereafter agree, nor by any modification, release or other alteration of any
of the rights of the UK Facility Agent and the UK Facility Lenders with respect
to any collateral, nor by any delay, extension of time, renewal, compromise or
other indulgence granted by the UK Facility Agent and the UK Facility Lenders
with respect to any of the Obligations, nor by any other agreements or
arrangements whatever with any other UK Facility Borrower, any guarantor or any
other Person, each UK Facility Borrower hereby waiving all notice of any such
delay, extension, release, substitution, renewal, compromise or other
indulgence, and hereby consenting to be bound thereby as fully and effectually
as if it had expressly agreed thereto in advance. The liability of each UK
Facility Borrower hereunder is direct and unconditional as to all of the
Obligations hereunder in respect of the UK Facility, and may be enforced without
requiring the UK Facility Agent or the UK Facility Lenders first to resort to
any other right, remedy or security; no UK Facility Borrower shall have any
right of subrogation, reimbursement or indemnity whatsoever, nor any right of
recourse to security for any of the Obligations in respect of the UK Facility,
unless and until all of said Obligations have been paid in full.
(c) Notwithstanding subsections (a) and (b) above, the joint and
several liability of each UK Facility Borrower for, and its obligation to
guarantee payment of all Obligations of, the other UK Facility Borrowers in
respect of the UK Facility shall not at any time exceed its UK Facility Maximum
Amount.
3.13 Participations. On the Closing Date and each day thereafter until
the Total Facility Termination Date, each Lender (including a UK Facility Lender
if necessary) will be deemed to have absolutely, irrevocably and unconditionally
purchased from each UK Facility Lender a Participation in UK Facility
Outstandings owing to such UK Facility Lender in an amount such that, after such
purchase, each Lender will have a Facility Credit Exposure under the UK Facility
equal in amount to its Applicable Commitment Percentage times the UK Facility
Outstandings (referred to as the
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"Facility Participation Amount" for such Lender in the UK Facility). Each such
Participation of each Lender in the UK Facility shall be funded in accordance
with Section 11.07.
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ARTICLE IV
The Canadian Facility
4.01 Advances.
(a) Commitment. Subject to the terms and conditions of this Agreement,
each Canadian Facility Lender severally agrees to make, on behalf of all the
Lenders, Canadian Facility Advances in Canadian Dollars to the Canadian Facility
Borrower from time to time from the Closing Date until (i) the Total Facility
Termination Date in the case of the Canadian Facility Full Maturity Tranche and
(ii) the Canadian Facility Renewable Tranche Termination Date in the case of the
Canadian Facility Renewable Tranche, in each case on a pro rata basis as to the
total borrowing requested by the Canadian Facility Borrower on any day
determined by such Canadian Facility Lender's Applicable Fronting Percentage for
the Canadian Facility, up to but not exceeding (A) in the case of Advances under
the Canadian Facility Renewable Tranche, the Canadian Facility Renewable Tranche
Fronting Commitment of such Canadian Facility Lender, and (B) in the case of
Advances under the Canadian Facility Full Maturity Tranche, the Canadian
Facility Full Maturity Tranche Fronting Commitment of such Canadian Facility
Lender, and each Lender shall have a Participation in each such Canadian
Facility Advance pursuant to Section 4.14 equal in amount to its Applicable
Commitment Percentage times such Canadian Facility Advance; provided, however,
that the Canadian Facility Lenders will not be required and shall have no
obligation to make any Canadian Facility Advance (x) so long as a Default or an
Event of Default has occurred and is continuing or (y) if the Lenders have
accelerated the maturity of the Obligations as a result of an Event of Default;
provided further, however, that immediately after giving effect to each such
Canadian Facility Advance, (I) the Canadian Facility Outstandings shall not
exceed the Total Canadian Facility Commitment, (II) the Canadian Facility
Renewable Tranche Outstandings shall not exceed the Canadian Facility Renewable
Tranche Commitment, and (III) the Canadian Facility Full Maturity Tranche
Outstandings shall not exceed the Canadian Facility Full Maturity Tranche
Commitment. Within such limits, the Canadian Facility Borrower may borrow, repay
and reborrow Canadian Facility Loans hereunder, on a Business Day, from the
Closing Date until, but (as to borrowings and reborrowings) not including, (i)
the Total Facility Termination Date in the case of the Canadian Facility Full
Maturity Tranche and (ii) the Canadian Facility Renewable Tranche Termination
Date in the case of the Canadian Facility Renewable Tranche; provided, however,
that (A) no Canadian Facility BA Rate Loan shall be made which has an Interest
Period or maturity that extends beyond the Total Facility Termination Date, in
the case of the Canadian Facility Full Maturity Tranche, or the Canadian
Facility Renewable Tranche Termination Date, in the case of the Canadian
Facility Renewable Tranche, and (B) each Canadian Facility BA Rate Loan may be
repaid only on the last day of the Interest Period with respect thereto, unless
such prepayment is accompanied by the additional payment, if any, due under
Section 6.05. The Canadian Facility Borrower agrees that if at any time (x) the
Canadian Facility Outstandings shall exceed the Total Canadian Facility
Commitment, (y) the Canadian Facility Renewable Tranche Outstandings shall
exceed the Canadian Facility Renewable Tranche Commitment, or (z) the Canadian
Facility Full Maturity Tranche Outstandings shall exceed the Canadian Facility
Full Maturity Tranche Commitment, then in any such case the Canadian Facility
Borrower shall immediately repay a principal amount of the outstanding Canadian
Facility Loans such that, as a result of such reduction, (I) the Total Canadian
Facility Commitment shall equal or exceed the Canadian Facility Outstandings,
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(II) the Canadian Facility Renewable Tranche Commitment shall equal or exceed
the Canadian Facility Renewable Tranche Outstandings and (III) the Canadian
Facility Full Maturity Tranche Commitment shall equal or exceed the Canadian
Facility Full Maturity Tranche Outstandings.
(b) Amounts, Advances and Rate Selection.
(i) The principal amount outstanding on any Canadian Facility
Loan shall be recorded in the Canadian Facility Agent's records in
Canadian Dollars, based on the amount of any Canadian Facility Advance
as reduced from time to time by the amount of any principal payments
with respect to such Canadian Facility Loan. In the event a Canadian
Facility Loan is Continued or Converted pursuant to Section 4.08, such
election shall be treated as a Canadian Facility Advance for purposes
of this Section 4.01. There shall be no more than ten (10) Canadian
Facility BA Rate Loans outstanding at any one time under the Canadian
Facility.
(ii) Each Canadian Facility Loan and each Continuation and
Conversion under Section 4.08 shall be in an amount not less than CAN
$2,000,000 and, if greater, in integral multiples of CAN $100,000.
(iii) For each Canadian Facility Advance, an Authorized
Representative of the Canadian Facility Borrower shall give the
Canadian Facility Agent (A) at least two (2) Business Days' irrevocable
telefacsimile notice prior to 10:00 A.M. (Toronto, Canada time) of each
Canadian Facility BA Rate Loan representing a borrowing or Continuation
or Conversion hereunder and (B) at least two (2) Business Days'
irrevocable telefacsimile notice prior to 10:00 A.M. (Toronto, Canada
time) of each Canadian Facility Base Rate Loan representing a borrowing
or Conversion hereunder. Each such notice shall be in the form of a
Borrowing Notice in the form attached hereto as Exhibit D-3, which
shall be effective upon receipt by the Canadian Facility Agent, and
shall specify the Type of Canadian Facility Loan (Canadian Facility BA
Rate or Canadian Facility Base Rate), the amount of the Canadian
Facility Advance to be made, whether such advance is under the Canadian
Facility Renewable Tranche or the Canadian Facility Full Maturity
Tranche, the date of borrowing and the Interest Period (if a Canadian
Facility BA Rate Loan) to be used in the computation of interest.
Neither the Canadian Facility Agent nor any Canadian Facility Lender
shall incur any liability to any Canadian Facility Borrower in acting
upon any notice referred to above which the Canadian Facility Agent
believes in good faith to have been given by an Authorized
Representative of the Canadian Facility Borrower or for otherwise
acting in good faith, and upon funding of Canadian Facility Loans by
any Canadian Facility Lender in accordance with this Agreement pursuant
to any such notice, such Canadian Facility Borrower shall have effected
Canadian Facility Loans hereunder. A Borrowing Notice for a Canadian
Facility BA Rate Loan shall be irrevocable, and the Canadian Facility
Borrower shall be bound to make a borrowing in accordance therewith,
unless such Canadian Facility Borrower pays to the Canadian Facility
Lenders such amounts as may be due under Section 6.05 for failure of a
borrowing of a Canadian Facility BA Rate Loan to occur on the date
specified therefor in the related Borrowing Notice. The duration of the
initial Interest Period for each Canadian Facility BA Rate Loan shall
be as specified in the initial Borrowing Notice. The Canadian
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Facility Borrower shall have the option to elect the duration of
subsequent Interest Periods and to Continue or Convert the Loans in
accordance with Section 4.08. If the Canadian Facility Agent does not
receive a notice of election of the duration of an Interest Period or
of the Conversion of a Loan by the time prescribed hereby and by
Section 4.08, the Canadian Facility Borrower shall be deemed to have
elected to Convert such Loan to or Continue such Loan as a Canadian
Facility Base Rate Loan until the Canadian Facility Borrower notifies
the Canadian Facility Agent in accordance with Section 4.08.
(iv) Notice of receipt of each Borrowing Notice in respect of
Canadian Facility Loans shall be provided by the Canadian Facility
Agent to each Canadian Facility Lender by telefacsimile with reasonable
promptness, but not later than 12:00 noon (Toronto, Canada time) on the
same day as the Canadian Facility Agent's receipt of such notice from
the Canadian Facility Borrower so long as receipt is prior to 10:00
A.M. (Toronto, Canada time). The Canadian Facility Agent shall
determine the Canadian Facility Fixed BA Rate for a Canadian Facility
BA Rate Loan at 10:00 A.M. (Toronto, Canada time) on the day of such
proposed Canadian Facility Fixed BA Rate, and not later than 12:00 noon
(Toronto, Canada time) on such date, the Canadian Facility Agent shall
provide the Canadian Facility Borrower and each Canadian Facility
Lender notice by telefacsimile transmission of the amount of the
Canadian Facility Loan or Loans required to be made by each Canadian
Facility Lender on such date, and the applicable Canadian Facility
Fixed BA Rate.
(v) Not later than 12:00 noon (Toronto, Canada time) on the
date specified for each Canadian Facility Advance, each Canadian
Facility Lender shall, pursuant to the terms and subject to the
conditions of this Agreement, make the amount of the Canadian Facility
Advance or Advances to be made by it on such day available to the
Canadian Facility Borrower by depositing or transferring the proceeds
thereof in Canadian Dollars and Same Day Funds to the Canadian Facility
Agent at the Principal Office. The amount so received by the Canadian
Facility Agent shall, subject to the terms of this Agreement, on the
same day be made available to the Canadian Facility Borrower by
delivery to the Canadian Facility Borrower's account with the Canadian
Facility Agent.
4.02 Payment of Interest.
(a) The Canadian Facility Borrower shall pay interest to the Canadian
Facility Agent for the account of each Canadian Facility Lender on the
outstanding and unpaid principal amount of each Canadian Facility Loan made by
such Canadian Facility Lender for the period commencing on the date of such
Canadian Facility Loan until such Loan shall be paid, Continued or Converted, as
the case may be, at the then applicable Canadian Facility Base Rate for Canadian
Facility Base Rate Loans or applicable Canadian Facility Fixed BA Rate for
Canadian Facility BA Rate Loans, such payments to be made in Canadian Dollars;
provided, however, that if any Event of Default shall have occurred and be
continuing, all amounts outstanding hereunder shall bear interest thereafter at
the Default Rate.
The Canadian Facility Agent's certificate as to each rate of interest
payable hereunder shall be prima facie evidence of such rate.
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(b) Computation of Interest. The Canadian Facility Borrower shall pay
to the Canadian Facility Agent for the benefit of the Canadian Facility Lenders
interest on each Canadian Facility Loan, which interest shall be calculated on
the outstanding principal amount daily for the period:
(i) in the case of a Canadian Facility Base Rate Loan,
commencing on and including the day on which it is advanced and ending
on, but excluding, the day on which it is repaid; or
(ii) in the case of a Canadian Facility BA Rate Loan,
commencing on and including the first day of the Interest Period
relative to such Canadian Facility BA Rate Loan and ending on, but
excluding, the last day of such Interest Period,
at the rate of interest per annum equal to:
(i) the Canadian Facility Base Rate for Canadian Facility Base
Rate Loans, on the basis of a year of 365 days for the actual number of
days elapsed; or
(ii) the Canadian Facility Fixed BA Rate for Canadian Facility
BA Rate Loans, on the basis of a year of 365 days for the actual number
of days elapsed.
For the purposes of this Agreement and calculation of interest on the
basis of a year of 365 days, each rate of interest determined pursuant to such
calculation expressed as an annual rate for the purposes of the Interest Act
(Canada) is equivalent to such rate as so determined multiplied by the number of
days in the calendar year in which the same is to be ascertained and divided by
365. The parties further agree that for the purposes of the Interest Act
(Canada), (i) the principle of deemed reinvestment of interest shall not apply
to any interest calculation under this Agreement, and (ii) the rates of interest
stipulated in this Agreement are intended to be nominal rates and not effective
rates or yields.
(c) Accrual and Payment of Interest. Interest on each Canadian Facility
Loan shall accrue from day to day but shall not compound and shall be payable:
(i) in the case of a Canadian Facility Base Rate Loan or any
other amount payable hereunder other than in respect of a Canadian
Facility BA Rate Loan, monthly in arrears on the last Business Day of
each month; or
(ii) in the case of a Canadian Facility BA Rate Loan, on the
last day of the applicable Interest Period for each Canadian Facility
BA Rate Loan and, if the Interest Period extends for more than three
months, at intervals of three months after the first day of the
Interest Period and upon payment in full of the principal amount of
each such Loan.
4.03 Payment of Principal. Except as set forth in Section 4.13 with
respect to Canadian Facility Term Loans, (i) the principal amount of each
Canadian Facility Loan advanced under the Canadian Facility Full Maturity
Tranche shall be due and payable to the Canadian Facility Agent for the benefit
of the Canadian Facility Lenders in full on the Total Facility Termination Date
and (ii) the
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principal amount of each Canadian Facility Loan advanced under the Canadian
Facility Renewable Tranche shall be due and payable to the Canadian Facility
Agent for the benefit of the Canadian Facility Lenders in full on the Canadian
Facility Renewable Tranche Termination Date. The principal amount of any
Canadian Facility Base Rate Loan may be prepaid in whole or in part at any time.
The principal amount of any Canadian Facility BA Rate Loan may be prepaid only
at the end of the applicable Interest Period unless the Canadian Facility
Borrower shall pay to the Canadian Facility Agent for the account of the
Canadian Facility Lenders the additional amount, if any, required under Section
6.05. All prepayments of Canadian Facility Loans made by the Canadian Facility
Borrower shall be in the amount of (i) at least CAN $2,000,000 or (ii) the
amount equal to all Canadian Facility Outstandings, or (iii) such other amount
as necessary to comply with Section 4.01(a) or 4.07.
4.04 Manner of Payment.
(a) Each payment of principal (including any prepayment) and payment of
interest in respect of Canadian Facility Loans, and any other amount required to
be paid to the Canadian Facility Lenders with respect to the Canadian Facility
Loans, shall be made in Canadian Dollars to the Canadian Facility Agent at its
Principal Office, for the account of each Canadian Facility Lender's Applicable
Lending Office. Each such payment shall be made in Same Day Funds before 12:00
noon (Toronto, Canada time) on the date such payment is due. The Canadian
Facility Agent may, but shall not be obligated to, debit the amount of any such
payment which is not made by such time to any ordinary deposit account, if any,
of the Canadian Facility Borrower with the Canadian Facility Agent. The Canadian
Facility Borrower shall give the Canadian Facility Agent prior telephonic notice
of any payment of principal, such notice to be given by not later than 10:00
A.M. (Toronto, Canada time) one (1) Business Day prior to the date of such
payment.
(b) The Canadian Facility Agent shall deem any payment by or on behalf
of the Canadian Facility Borrower hereunder that is not made both (i) in
Canadian Dollars and in Same Day Funds and (ii) prior to 12:00 noon (Toronto,
Canada time) to be a non-conforming payment. Any such payment shall not be
deemed to be received by the Canadian Facility Agent until the later of (x) the
time such funds become available funds and (y) the next Business Day. The
Canadian Facility Agent shall give prompt telephonic notice to the applicable
Authorized Representative and each of the Canadian Facility Lenders (confirmed
in writing) if any payment is non-conforming. Any non-conforming payment may
constitute or become a Default or Event of Default in accordance with the terms
of Section 11.01(a) and 11.01(b). Interest shall continue to accrue on any
principal as to which a non-conforming payment is made until such funds become
available funds (but in no event less than the period from the date of such
payment to the next succeeding Business Day) at the Default or the maximum rate
permitted by applicable law, whichever is lower, from the date such amount was
due and payable until the date such amount is paid in full.
(c) In the event that any payment hereunder or under the Canadian
Facility Loans which bear interest at the Canadian Facility Base Rate becomes
due and payable on a day other than a Business Day, then such due date shall be
extended to the next succeeding Business Day; provided that interest shall
continue to accrue during the period of any such extension.
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4.05 Evidence of Indebtedness. The Canadian Facility Borrower hereby
authorizes each Canadian Facility Lender and the Canadian Facility Agent to
record, from time to time, in its records, the date and amount of each Canadian
Facility Loan; the interest rates payable by the Canadian Facility Borrower in
respect of each Canadian Facility Loan and any Interest Period applicable
thereto; the dates and amounts of all payments received by such Canadian
Facility Lender on account of principal, interest and fees; and the amount of
all the Canadian Facility Loans which remain payable by the Canadian Facility
Borrower to such Canadian Facility Lender. All amounts and other information so
recorded shall be prima facie evidence thereof. The failure to record, or any
error in recording, any such amount or other information shall not limit or
impair the obligations of the Canadian Facility Borrower hereunder or under any
Loan Document.
4.06 Pro Rata Payments. Except as otherwise provided herein, (a) each
payment on account of the principal of and interest on the Canadian Facility
Loans and the fees described in Section 4.09 hereof shall be made to the
Canadian Facility Agent for the account of the Canadian Facility Lenders pro
rata based on their Applicable Fronting Percentages for the Canadian Facility,
(b) all payments to be made by the Canadian Facility Borrower for the account of
each of the Canadian Facility Lenders on account of principal, interest and fees
shall be made without diminution, set-off, recoupment, counterclaim or, except
as set forth in Section 6.06(a), deduction, and (c) the Canadian Facility Agent
in all other cases will promptly distribute payments received to the Canadian
Facility Lenders. Notwithstanding the foregoing, in the event any Canadian
Facility Lender shall not be able to make a Canadian Facility BA Rate Loan under
the circumstances provided in Section 6.01 or 6.03, interest shall be allocated
to such Canadian Facility Lender according to the interest rate payable to such
Canadian Facility Lender as set forth in Section 6.04.
4.07 Reductions. The Canadian Facility Borrower shall, by notice from
an Authorized Representative, have the right from time to time (but not more
frequently than once during each fiscal quarter), upon not less than ten (10)
Business Days' written notice to the Canadian Facility Agent, effective upon
receipt, to reduce the Total Canadian Facility Commitment. The Canadian Facility
Agent shall give each Canadian Facility Lender, within one (1) Business Day,
telefacsimile notice, or telephonic notice (confirmed in writing), of such
reduction. Each such reduction shall be in the aggregate amount of CAN
$5,000,000 or such greater amount which is in an integral multiple of CAN
$5,000,000 or the entire remaining Total Canadian Facility Commitment, shall
permanently reduce the Total Canadian Facility Commitment and shall result in a
pro rata reduction of both the Canadian Facility Full Maturity Tranche
Commitment and the Canadian Facility Renewable Tranche Commitment, if such
Canadian Facility Renewable Tranche Commitment remains outstanding at the time
of such reduction. No such reduction shall result in the payment of any Canadian
Facility BA Rate Loan other than on the last day of the Interest Period of such
Loan unless such prepayment is accompanied by amounts due, if any, under Section
6.05. Each reduction of the Total Canadian Facility Commitment shall be
accompanied by payment of the Canadian Facility Loans to the extent that the (i)
Canadian Facility Outstandings exceed the Total Canadian Facility Commitment,
(ii) the Canadian Facility Renewable Tranche Outstandings exceed the Canadian
Facility Renewable Tranche Commitment or (iii) the Canadian Facility Full
Maturity Tranche Outstandings exceed the Canadian Facility Full Maturity Tranche
Commitment, in each case after giving effect to such reduction, together with
accrued and unpaid interest on the amounts prepaid.
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4.08 Conversions and Elections of Subsequent Interest Periods. Provided
that no Default or Event of Default shall have occurred and be continuing and
subject to the limitations set forth below and in Article VI hereof, the
Canadian Facility Borrower may request a Conversion or Continuation provided
that:
(a) the proceeds are used to retire the outstanding Canadian
Facility Loan (the "Outstanding Loan");
(b) the Conversion or Continuance would otherwise be a
permitted Canadian Facility Advance hereunder and the Canadian Facility
Borrower complies with each provision hereof relative to the obtaining
of a Canadian Facility Advance;
(c) the aggregate principal amount of the Conversion or
Continuance is not greater than the Outstanding Loan plus accrued
interest in the case of Canadian Facility BA Rate Loans rounded up to
the nearest CAN $100,000; and
(d) each Conversion or Continuance is made contemporaneously
with the retirement of the Outstanding Loan.
Notice of any such Conversions or Continuation shall be effected by receipt of
an appropriate Borrowing Notice and shall specify the effective date of such
Conversion or Continuation and the Interest Period to be applicable to the
Canadian Facility Loan as Continued or Converted and the Outstanding Loan to be
retired. Each Continuation and Conversion pursuant to this Section 4.08 shall be
subject to the limitations on Canadian Facility BA Rate Loans set forth in the
definition of "Interest Period" herein and in Sections 4.01 and 4.03 and Article
VI hereof. All such Continuations or Conversions of Canadian Facility Loans
shall be effected pro rata based on the Applicable Fronting Percentages of the
Canadian Facility Lenders for the Canadian Facility.
4.09 Facility Fee. For the period beginning on the Closing Date and
ending on the Total Facility Termination Date in the case of the Canadian
Facility Full Maturity Tranche, and on the Canadian Facility Renewable Tranche
Termination Date in the case of the Canadian Facility Renewable Tranche, the
Company agrees to pay to each Lender at its office in the United States so
designated thereby based on such Lender's Applicable Commitment Percentage, (a)
a Facility Fee equal to the Applicable Margin for Facility Fees with respect to
the Canadian Facility Full Maturity Tranche times the Canadian Facility Full
Maturity Tranche Commitment, and (b) a Facility Fee equal to the Applicable
Margin for Facility Fees with respect to the Canadian Facility Renewable Tranche
times the Canadian Facility Renewable Tranche Commitment. Such payments of
Facility Fees provided for in this Section 4.09 shall be due and payable
quarterly in arrears on the last Business Day of each March, June, September and
December of each year beginning September 30, 1998 to and on the Total Facility
Termination Date in the case of the Canadian Facility Full Maturity Tranche and
on the Canadian Facility Renewable Tranche Termination Date in the case of the
Canadian Facility Renewable Tranche. Notwithstanding the foregoing, so long as
any Canadian Facility Fronting Lender fails to make available any portion of its
Canadian Facility Commitment when properly requested by the Canadian Facility
Borrower, such Lender shall not be entitled to receive payment of its pro rata
share of such Facility Fees until such Lender shall make available such portion.
Such
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Facility Fees shall be calculated on the basis of a year of 360 days for the
actual number of days elapsed.
4.10 Deficiency Advances. No Canadian Facility Lender shall be
responsible for any default of any other Canadian Facility Lender in respect to
such other Canadian Facility Lender's obligation to make any Canadian Facility
Loan hereunder nor shall the Canadian Facility Fronting Commitment of any
Canadian Facility Lender or the Canadian Facility Commitment of any Lender be
increased as a result of such default of any other Canadian Facility Lender.
Without limiting the generality of the foregoing, in the event any Canadian
Facility Lender shall fail to advance funds to the Canadian Facility Borrower as
herein provided, the Canadian Facility Agent may in its discretion, but shall
not be obligated to, make a Canadian Facility Advance hereunder as a Canadian
Facility Lender of all or any portion of such amount or amounts (each, a
"deficiency advance") and shall thereafter be entitled to payments of principal
of and interest on such deficiency advance in the same manner and at the same
interest rate or rates to which such other Canadian Facility Lender would have
been entitled had it made such advance hereunder; provided that, upon payment to
the Canadian Facility Agent from such other Canadian Facility Lender of the
entire outstanding amount of each such deficiency advance, together with accrued
and unpaid interest thereon, from the most recent date or dates interest was
paid to the Canadian Facility Agent by the Canadian Facility Borrower on each
Canadian Facility Loan comprising the deficiency advance, at the interest rate
per annum equal to the Canadian Overnight Rate, then such payment shall be
credited against the applicable Canadian Facility Outstanding owing to the
Canadian Facility Agent in full payment of such deficiency advance and the
Canadian Facility Borrower shall be deemed to have borrowed the amount of such
deficiency advance from such other Canadian Facility Lender as of the most
recent date or dates, as the case may be, upon which any payments of interest
were made by the Canadian Facility Borrower thereon.
4.11 Use of Proceeds. The proceeds of the Canadian Facility Loans made
pursuant to the Canadian Facility hereunder shall be used by the Canadian
Facility Borrower to repay and terminate the Prior Canadian Facility, to finance
capital expenditures and Permitted Acquisitions and for other working capital
and general corporate needs of the Canadian Facility Borrower.
4.12 Canadian Facility Extension.
(a) With the unanimous consent of all Lenders under the Total
Facilities, at each Canadian Facility Renewable Tranche Extension Date the
Canadian Facility Borrower can elect to extend the Canadian Facility Renewable
Tranche Termination Date for an additional period of 364 days with respect to
the Unutilized Canadian Facility Renewable Tranche Commitment as at such
Canadian Facility Renewable Tranche Extension Date; provided, however, that in
no event shall the Canadian Facility Renewable Tranche Termination Date be
extended beyond the Total Facility Termination Date.
(b) The Canadian Facility Borrower shall notify the Lenders of its
request for such an extension by delivering to the Canadian Facility Agent and
the Global Agent notice of such request signed by an Authorized Representative
not more than one hundred fifty (150) days nor less than ninety (90) days prior
to the applicable Canadian Facility Renewable Tranche Extension Date. Notice of
receipt of such request shall be provided by the Canadian Facility
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Agent to the Canadian Facility Lenders and to each other Facility Agent, who
shall in turn provide notice of such request to the respective Lenders in such
Facility. The Global Agent shall notify the Canadian Facility Borrower in
writing within sixty (60) days of its receipt of such request for extension of
the decision of the Lenders. Failure by any Lender to respond to a request for
an extension shall constitute a refusal of such Lender to give its consent to
such extension, and the Canadian Facility Renewable Tranche Termination Date
shall not be extended. Failure by the Global Agent to give such notice to the
Canadian Facility Borrower as a result of not receiving the consent of all
Lenders to such extension shall constitute refusal by the Lenders to extend the
Canadian Facility Renewable Tranche Termination Date.
(c) If on any Canadian Facility Renewable Tranche Extension Date the
Canadian Facility Borrower does not so elect to extend the Canadian Facility
Renewable Tranche Termination Date then in effect, or if all Lenders under the
Total Facilities do not unanimously consent to such extension, then as of such
Canadian Facility Renewable Tranche Termination Date, (i) in addition to any
reduction required under Section 4.13 hereof, the Total Canadian Facility
Commitment as at such date shall be permanently reduced by an amount equal to
the Canadian Facility Unutilized Renewable Tranche Commitment as at such date,
(ii) the Canadian Facility Renewable Tranche Commitment shall be reduced to
zero, and (iii) subject to the provisions of Section 4.13 hereof, all Canadian
Facility Renewable Tranche Outstandings shall be due and payable in full.
4.13 Canadian Term Loan Option.
(a) At each Canadian Facility Renewable Tranche Extension Date, the
Canadian Facility Borrower can elect to convert any or all Canadian Facility
Renewable Tranche Outstandings as of such Canadian Facility Renewable Tranche
Extension Date into a term loan on such date in the original principal amount
equal to such Canadian Facility Renewable Tranche Outstandings. Canadian
Facility Loans so converted by the Canadian Facility Borrower in accordance with
this Section 4.13 shall be referred to as the "Canadian Facility Term Loans."
The Canadian Facility Term Loans shall be repaid in equal quarterly installments
on the last Business Day of each March, June, September and December commencing
with the first such date after the most recent Canadian Facility Renewable
Tranche Extension Date and continuing until and including a final payment on the
Total Facility Termination Date. The Canadian Facility Term Loans may be
comprised of Canadian Facility Base Rate Loans and Canadian Facility BA Rate
Loans as the Canadian Facility Borrower may elect in accordance with the
provisions of this Article IV. The Canadian Facility Term Loans shall bear
interest on the same terms as the Canadian Facility Loans prior to the
conversion to Canadian Facility Term Loans until the Continuation or Conversion
thereof pursuant to Section 4.08 hereof. Amounts repaid or prepaid on the
Canadian Facility Term Loans may not be reborrowed, and the Total Canadian
Facility Commitment shall be permanently reduced by any such amounts.
(b) If on any Canadian Facility Renewable Tranche Extension Date the
Canadian Facility Borrower does not so elect to convert all or a portion of its
Canadian Facility Renewable Tranche Outstandings as of such date to Canadian
Facility Term Loans as described in (a) above, then on the Canadian Facility
Renewable Tranche Termination Date then in effect, (i) all Canadian Facility
Renewable Tranche Outstandings as of such date which are not so converted shall
be due and payable in full, and (ii) in addition to any reduction required under
Section 4.12 hereof, the Total Canadian
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Facility Commitment as at such Canadian Facility Renewable Tranche Extension
Date shall be permanently reduced by an amount equal to the Canadian Facility
Renewable Tranche Outstandings as at such date which are not so converted.
4.14 Participations. On the Closing Date and each day thereafter until
the Total Facility Termination Date, each Lender (including a Canadian Facility
Lender if necessary) will be deemed to have absolutely, irrevocably and
unconditionally purchased from each Canadian Facility Lender a Participation in
Canadian Facility Outstandings owing to such Canadian Facility Lender in an
amount such that, after such purchase, each Lender will have a Facility Credit
Exposure under the Canadian Facility equal in amount to its Applicable
Commitment Percentage times the Canadian Facility Outstandings (referred to as
the "Facility Participation Amount" for such Lender in the Canadian Facility).
Each such Participation of each Lender in the Canadian Facility shall be funded
in accordance with Section 11.07.
4.15 Maximum Rate of Return. Notwithstanding any provision to the
contrary contained in this Agreement, in no event shall the aggregate "interest"
(as defined in Section 347 of the Criminal Code, Revised Statutes of Canada,
1985, C. 46 as the same may be amended, replaced or re-enacted from time to
time) payable under this Agreement exceed the effective annual rate of interest
on the "credit advanced" (as defined in that section) under this Agreement
lawfully permitted under that section and, if any payment, collection or demand
pursuant to this Agreement in respect of "interest" (as defined in that section)
is determined to be contrary to the provisions of that section, such payment,
collection or demand shall be deemed to have been made by mutual mistake of the
Canadian Facility Borrower and the Canadian Facility Lenders and the amount of
such payment or collection shall be refunded to the Canadian Facility Borrower;
for purposes of this Agreement the effective annual rate of interest shall be
determined in accordance with generally accepted actuarial practices and
principles over the term of the applicable credit advanced on the basis of
annual compounding of the lawfully permitted rate of interest and, in the event
of dispute, a certificate of a Fellow of the Canadian Institute of Actuaries
appointed by the Canadian Facility Agent will be conclusive for the purposes of
such determination.
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ARTICLE V
The Australian Facility
5.01 Advances
(a) Commitment. Subject to the terms and conditions of this Agreement,
each Australian Facility Lender severally agrees to make, on behalf of all the
Lenders, Australian Facility Advances in Australian Dollars or New Zealand
Dollars (as specified in a Borrowing Notice) to the Australian Facility Borrower
requesting such Australian Facility Advance, as the case may be, as specified in
such Borrowing Notice, from time to time from the Closing Date until the Total
Facility Termination Date, on a pro rata basis as to the total borrowing
requested by such Australian Facility Borrower on any day determined by such
Australian Facility Lender's Applicable Fronting Percentage for the Australian
Facility, up to but not exceeding (i) in the case of Advances in Australian
Dollars, the Australian Dollar Fronting Commitment of such Australian Facility
Lender, and (ii) in the case of Advances in New Zealand Dollars, the New Zealand
Dollar Fronting Commitment of such Australian Facility Lender, and each Lender
shall have a Participation in each such Australian Facility Advance pursuant to
Section 5.13 equal in amount to its Applicable Commitment Percentage times such
Australian Facility Advance; provided, however, that the Australian Facility
Lenders will not be required and shall have no obligation to make any Australian
Facility Advance (A) so long as a Default or an Event of Default has occurred
and is continuing or (B) if the Lenders have accelerated the maturity of the
Obligations as a result of an Event of Default; provided further, however, that
immediately after giving effect to each such Australian Facility Advance, (x)
the Australian Facility Outstandings shall not exceed the Total Australian
Facility Commitment and (y) the New Zealand Dollar Outstandings shall not exceed
the Total New Zealand Dollar Commitment. Within such limits, the Australian
Facility Borrowers may borrow, repay and reborrow Australian Facility Loans
hereunder, on a Business Day, from the Closing Date until, but (as to borrowings
and reborrowings) not including, the Total Facility Termination Date; provided,
however, that the aggregate principal amount outstanding to any Australian
Facility Borrower shall not at any time exceed its Australian Facility Maximum
Amount; and provided further, however, that (i) no Offshore Rate Loan shall be
made which has an Interest Period that extends beyond the Total Facility
Termination Date and (ii) each Offshore Rate Loan may be repaid only on the last
day of the Interest Period with respect thereto, unless such prepayment is
accompanied by the additional payment, if any, due under Section 6.05. The
Australian Facility Borrowers agree that if at any time the Australian Facility
Outstandings shall exceed the Total Australian Facility Commitment or the New
Zealand Dollar Outstandings shall exceed the Total New Zealand Dollar
Commitment, the Australian Facility Borrowers shall immediately repay a
principal amount of the outstanding Australian Facility Loans such that, as a
result of such reduction, the Total Australian Facility Commitment shall equal
or exceed the Australian Facility Outstandings and the Total New Zealand Dollar
Commitment shall equal or exceed the New Zealand Dollar Outstandings.
(b) Amounts, Advances and Rate Selection.
(i) The principal amount outstanding on any Australian
Facility Loan shall be recorded in the Australian Facility Agent's
records in Australian Dollars in the case of an
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Australian Facility Advance of Australian Dollars and in New Zealand
Dollars in the case of an Australian Facility Advance of New Zealand
Dollars, in each case based on the amount of any Australian Facility
Advance as reduced from time to time by the amount of any principal
payments with respect to such Australian Facility Advance. In the case
of an Australian Facility Advance of New Zealand Dollars, the
Australian Facility Agent shall also record the principal amount
outstanding on any such Australian Facility Loan in Australian Dollars,
based on the Australian Dollar Equivalent Amount of such Australia
Facility Advance determined based on the Spot Rate of Exchange as of
the date of such Advance, as reduced from time to time by any principal
payments with respect thereto. In the event an Australian Facility Loan
is Continued or Converted pursuant to Section 5.08, such election shall
be treated as an Australian Facility Advance in the Applicable Currency
of such Loan for purposes of this Section 5.01, with the Australian
Dollar Equivalent Amount of the principal amount of any such Loan in
New Zealand Dollars determined based on the Spot Rate of Exchange as of
the date of such Continuation or Conversion. The Australian Facility
Agent shall adjust its books to reflect the new Australian Dollar
Equivalent Amount of such Australian Facility Loan, and in the event
that such adjustment would cause the Australian Facility Outstandings
to exceed the Total Australian Facility Commitment, or the New Zealand
Dollar Outstandings to exceed the Total New Zealand Dollar Commitment,
the Australian Facility Borrowers shall, immediately on the effective
date of such Continuation or Conversion, repay the portion of such
Continued or Converted Loan (applying the new Spot Rate of Exchange)
necessary to ensure that thereafter the Total Australian Facility
Commitment shall equal or exceed the Australian Facility Outstandings
and the Total New Zealand Dollar Commitment shall equal or exceed the
New Zealand Dollar Outstandings. There shall be no more than four (4)
Offshore Facility Loans outstanding at any one time under the
Australian Facility.
(ii) Each Australian Facility Loan and each Continuation and
Conversion under Section 5.08 shall be (A) in the case of Offshore Rate
Loans, in an amount not less than AUS $5,000,000 (or the New Zealand
Dollar Equivalent Amount thereof if in New Zealand Dollars), and, if
greater, in integral multiples of AUS $500,000 (or the New Zealand
Dollar Equivalent Amount thereof if in New Zealand Dollars), and (B) in
the case of Australian Facility Base Rate Loans, in an amount not less
than AUS $5,000,000 (or the New Zealand Dollar Equivalent Amount
thereof if in New Zealand Dollars), and, if greater, in integral
multiples of AUS $500,000 (or the New Zealand Dollar Equivalent Amount
thereof if in New Zealand Dollars).
(iii) For each Australian Facility Advance an Authorized
Representative shall give the Australian Facility Agent at least (A)
three (3) Business Days' irrevocable telefacsimile notice prior to
11:00 A.M. (Sydney, Australia time) of each Offshore Rate Loan
representing a borrowing or Continuation or Conversion hereunder, and
(B) three (3) Business Days' irrevocable telefacsimile notice prior to
11:00 A.M. (Sydney, Australia time) of each Australian Facility Base
Rate Loan representing a borrowing or Continuation or Conversion
hereunder. Each such notice shall be in the form of a Borrowing Notice
in the form attached hereto as Exhibit D-4, which shall be effective
upon receipt by the Australian Facility Agent, and shall specify the
Type of Loan, whether the Loan is to be made in Australian Dollars or
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New Zealand Dollars, the amount of the Australian Facility Advance to
be made, the date of borrowing and the Interest Period (if an Offshore
Rate Loan) to be used in the computation of interest. Neither the
Australian Facility Agent nor any Australian Facility Lender shall
incur any liability to any Australian Facility Borrower in acting upon
any notice referred to above which the Australian Facility Agent
believes in good faith to have been given by an Authorized
Representative of such Australian Facility Borrower or for otherwise
acting in good faith, and upon funding of Australian Facility Loans by
any Australian Facility Lender in accordance with this Agreement
pursuant to any such notice, such Australian Facility Borrower shall
have effected Australian Facility Loans hereunder. A Borrowing Notice
for an Offshore Rate Loan shall be irrevocable, and Australian Facility
Borrower giving such notice shall be bound to make a borrowing in
accordance therewith, unless such Australian Facility Borrower pays to
the Australian Facility Lenders such amounts as may be due under
Section 6.05 for failure of a borrowing of an Offshore Rate Loan to
occur on the date specified therefor in a Borrowing Notice. The
duration of the initial Interest Period for each Australian Facility
Loan shall be as specified in the initial Borrowing Notice. The
Australian Facility Borrowers shall have the option to elect the
duration of subsequent Interest Periods and to Continue or Convert the
Australian Facility Loans in accordance with Section 5.08. If the
Australian Facility Agent does not receive a notice of election of
duration of an Interest Period or of the Conversion of a Loan by the
time prescribed hereby and by Section 5.08, the applicable Australian
Facility Borrower shall be deemed to have elected to Convert such Loan
to or Continue such Loan as an Australian Facility Base Rate Loan until
such Australian Facility Borrower notifies the Australian Facility
Agent in accordance with Section 5.08.
(iv) Notice of receipt of each Borrowing Notice in respect of
Australian Facility Loans, together with the amount of each Australian
Facility Lender's portion of an Advance requested thereunder and the
applicable interest rate, shall be provided by the Australian Facility
Agent to each Australian Facility Lender by telefacsimile with
reasonable promptness, but (provided the Australian Facility Agent
shall have received such notice by 11:00 A.M. (Sydney, Australia time))
not later than 2:00 P.M. (Sydney, Australia time) on the same day as
the Australian Facility Agent's receipt of such notice from the
applicable Australian Facility Borrower.
(v) Each Australian Facility Lender shall, pursuant to the
terms and subject to the conditions of this Agreement, not later than
12:00 noon (Sydney, Australia time) on the date specified for such
Australian Facility Advance, make the amount of the Australian Facility
Advance to be made by it on such day available to the applicable
Australian Facility Borrower by depositing or transferring the proceeds
thereof in Australian Dollars or New Zealand Dollars, as requested, and
in Same Day Funds to the Australian Facility Agent at its Principal
Office. The amount so received by the Australian Facility Agent shall,
subject to the terms of this Agreement, be made available to the
applicable Australian Facility Borrower by deposit of the proceeds to
an account of such Australian Facility Borrower maintained at the
Principal Office or otherwise as shall be directed in the applicable
Borrowing Notice.
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5.02 Payment of Interest.
(a) The Australian Facility Borrowers shall pay interest to the
Australian Facility Agent for the account of each Australian Facility Lender on
the outstanding and unpaid principal amount of each Australian Facility Loan
made by such Australian Facility Lender for the period commencing on the date of
such Australian Facility Loan until such Loan shall be paid, Continued or
Converted, as the case may be, at the then applicable Australian Facility Base
Rate for Australian Facility Base Rate Loans or applicable Offshore Rate for
Offshore Rate Loans, such payments to be made (i) in Australian Dollars with
respect to Australian Facility Loans made in Australian Dollars, and (ii) in New
Zealand Dollars with respect to Australian Facility Loans made in New Zealand
Dollars; provided, however, that if any Event of Default shall have occurred and
be continuing, all amounts outstanding hereunder shall bear interest thereafter
at the Default Rate.
(b) Interest on each Australian Facility Loan shall be computed on the
basis of a year of 365/366 days and calculated for the actual number of days
elapsed. Interest on each Australian Facility Loan shall be paid (i) quarterly
in arrears on the last Business Day of each fiscal quarter, commencing September
30, 1998, for each Australian Facility Base Rate Loan, (ii) on the last day of
the applicable Interest Period for each Offshore Rate Loan and, if the Interest
Period extends for more than three months, also at intervals of three months
after the first day of the Interest Period and (iii) upon payment in full of the
principal of each such Loan. Interest on amounts not paid when due shall be
payable on demand.
5.03 Payment of Principal. The principal amount of each Australian
Facility Loan shall be due and payable to the Australian Facility Agent for the
benefit of each Australian Facility Lender in full on the Total Facility
Termination Date. The principal amount of any Australian Facility Base Rate Loan
may be prepaid in whole or in part at any time. The principal amount of any
Offshore Rate Loan may be prepaid only at the end of the applicable Interest
Period unless the Australian Facility Borrowers shall pay to the Australian
Facility Agent for the account of the Australian Facility Lenders the additional
amount, if any, required under Section 6.05. All prepayments of Australian
Facility Loans made by the Australian Facility Borrowers shall be in the
Applicable Currency of the respective Australian Facility Loan in the amount of
(i) AUS $5,000,000 (or the New Zealand Dollar Equivalent Amount thereof if in
New Zealand Dollars), or (ii) such greater amount which is an integral multiple
of AUS $1,000,000 (or the New Zealand Dollar Equivalent Amount thereof if in New
Zealand Dollars), or (iii) the amount equal to all Australian Facility
Outstandings, or (iv) such other amount as necessary to comply with Section
5.01(a) or 5.07.
5.04 Manner of Payment.
(a) Each payment of principal (including any prepayment) and payment of
interest and fees in respect of Australian Facility Loans, and any other amount
required to be paid to the Australian Facility Lenders with respect to the
Australian Facility Loans, shall be made to the Australian Facility Agent at its
Principal Office, for the account of each Australian Facility Lender's
Applicable Lending Office, to be recorded in Australian Dollars and, if
applicable, New Zealand Dollars, as set forth in Section 5.01(b). Each such
payment shall be made in Applicable Currency of the Australian Facility Loan in
Same Day Funds before 12:00 noon (Sydney, Australia time) on the date such
payment is
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due. The Australian Facility Agent may, but shall not be obligated to, debit the
amount of any such payment which is not made by such time to any ordinary
deposit account, if any, of the applicable Australian Facility Borrower with the
Australian Facility Agent. The Australian Facility Borrowers shall give the
Australian Facility Agent prior telephonic notice of any payment of principal,
such notice to be given by not later than 11:00 A.M. (Sydney, Australia time),
at least three (3) Business Days prior to the date of such payment.
(b) The Australian Facility Agent shall deem any payment by or on
behalf of the Australian Facility Borrowers hereunder that is not made both (i)
in Australian Dollars in the case of Australian Facility Loans made in
Australian Dollars or in New Zealand Dollars in the case of Australian Facility
Loans made in New Zealand Dollars and, in either case, in Same Day Funds and
(ii) prior to 12:00 noon (Sydney, Australia time) to be a non-conforming
payment. Any such payment shall not be deemed to be received by the Australian
Facility Agent until the later of (x) the time such funds become available funds
in the required Applicable Currency and (y) the next Business Day. The
Australian Facility Agent shall give prompt telephonic notice to the applicable
Authorized Representative and each of the Australian Facility Lenders (confirmed
in writing) if any payment is non-conforming. Any non-conforming payment may
constitute or become a Default or Event of Default in accordance with the terms
of Section 11.01(a) and 11.01(b). Interest shall continue to accrue on any
principal as to which a non-conforming payment is made until such funds become
available funds (but in no event less than the period from the date of such
payment to the next succeeding Business Day) at the Default Rate or the maximum
rate permitted by applicable law, whichever is lower, from the date such amount
was due and payable until the date such amount is paid in full.
(c) In the event that any payment hereunder becomes due and payable on
a day other than a Business Day, then such due date shall be extended to the
next succeeding Business Day unless otherwise provided under clause (ii) of the
definition of "Interest Period"; provided that interest shall continue to accrue
during the period of any such extension.
5.05 Evidence of Indebtedness. Each Australian Facility Borrower hereby
authorizes each Australian Facility Lender and the Australian Facility Agent to
record, from time to time, in its records, the date and amount of each
Australian Facility Loan; the interest rates payable by the applicable
Australian Facility Borrower in respect of each Australian Facility Loan and any
Interest Period applicable thereto; the dates and amounts of all payments
received by such Australian Facility Lender on account of principal, interest
and fees; and the amount of all the Australian Facility Loans which remain
payable by the Australian Facility Borrowers to such Australian Facility Lender.
All amounts and other information so recorded shall be prima facie evidence
thereof. The failure to record, or any error in recording, any such amount or
other information shall not limit or impair the obligations of the Australian
Facility Borrowers hereunder or under any Loan Document.
5.06 Pro Rata Payments. Except as otherwise provided herein, (a) each
payment on account of the principal of and interest on the Australian Facility
Loans and the fees described in Section 5.09 hereof shall be made to the
Australian Facility Agent for the account of the Australian Facility Lenders pro
rata based on their Applicable Fronting Percentages for the Australian Facility,
(b) all payments to be made by the Australian Facility Borrowers for the account
of each of the
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Australian Facility Lenders on account of principal, interest and fees shall be
made without diminution, set-off, recoupment, counterclaim or, except as set
forth in Section 6.06(a), deduction, and (c) the Australian Facility Agent will
promptly distribute payments received to the Australian Facility Lenders.
Notwithstanding the foregoing, in the event any Australian Facility Lender shall
not be able to make an Offshore Rate Loan under the circumstances provided in
Section 6.01 or 6.03, interest shall be allocated to such Australian Facility
Lender according to the interest rate payable to such Australian Facility Lender
as set forth in Section 6.04.
5.07 Reductions. The Australian Facility Borrowers shall, by notice
from an Authorized Representative, have the right from time to time (but not
more frequently than once during each fiscal quarter), upon not less than ten
(10) Business Days' written notice to the Australian Facility Agent, effective
upon receipt, to reduce the Total Australian Facility Commitment. The Australian
Facility Agent shall give each Australian Facility Lender, within two (2)
Business Days, telefacsimile notice, or telephonic notice (confirmed in
writing), of such reduction. Each such reduction shall be in the aggregate
amount of AUS $5,000,000 or such greater amount which is in an integral multiple
of AUS $1,000,000, or the entire remaining Total Australian Facility Commitment,
and shall permanently reduce the Total Australian Facility Commitment. No such
reduction shall result in the payment of any Offshore Rate Loan other than on
the last day of the Interest Period of such Loan unless such prepayment is
accompanied by amounts due, if any, under Section 6.05. Each such reduction of
the Total Australian Facility Commitment shall be accompanied by payment of the
principal amount of the Australian Facility Loans to the extent that the
Australian Facility Outstandings exceed the Total Australian Facility Commitment
or the New Zealand Dollar Outstandings exceed the Total New Zealand Dollar
Commitment, in each case after giving effect to such reduction, together with
accrued and unpaid interest on the amounts prepaid. Any reduction of the Total
Australian Facility Commitment hereunder shall result, ipso facto, in a pro rata
reduction of the Total New Zealand Dollar Commitment so that, as reduced, the
Australian Dollar Equivalent Amount of the Total New Zealand Dollar Commitment
shall at all times remain equal to 10% of the Total Australian Facility
Commitment.
5.08 Conversions and Elections of Subsequent Interest Periods. Subject
to the limitations set forth below and in Article VI hereof, the Australian
Facility Borrowers may:
(a) upon notice to the Australian Facility Agent on or before 11:00
A.M. (Sydney, Australia time) on any Business Day, Convert all or a part of
Offshore Rate Loans to Australian Facility Base Rate Loans under the Australian
Facility on the last day of the Interest Period for such Offshore Rate Loans;
and
(b) provided that no Default or Event of Default shall have occurred
and be continuing, upon five (5) Business Days' notice to the Australian
Facility Agent prior to 11:00 A.M. (Sydney, Australia time):
(i) elect a subsequent Interest Period for all or a portion of
Offshore Rate Loans under the Australian Facility to begin on the last
day of the then current Interest Period for such Offshore Rate Loans;
and
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(ii) Convert Australian Facility Base Loans to Offshore Rate
Loans under the Australian Facility on any Business Day.
Notice of any such Continuations or Conversions shall be effected by
receipt of an appropriate Borrowing Notice and shall specify the effective date
of such Continuation or Conversion and the Interest Period to be applicable to
the Australian Facility Loan as Continued or Converted. Each Continuation and
Conversion pursuant to this Section 5.08 shall be subject to the limitations on
Offshore Rate Loans set forth in the definition of "Interest Period" herein and
in Section 5.01 and 5.03 and Article VI hereof. All such Continuations or
Conversions of Australian Facility Loans shall be effected pro rata based on the
Applicable Fronting Percentages of the Australian Facility Lenders for the
Australian Facility and shall be in the same currency as the original such Loan.
5.09 Facility Fee. For the period beginning on the Closing Date and
ending on the Total Facility Termination Date, the Company agrees to pay to each
Lender at its office in the United States so designated thereby based on such
Lender's Applicable Commitment Percentage, a Facility Fee equal to the
Applicable Margin for Facility Fees times the Total Australian Facility
Commitment. Such payments of Facility Fees provided for in this Section 5.09
shall be due and payable quarterly in arrears on the last Business Day of each
March, June, September and December beginning September 30, 1998 to and on the
Total Facility Termination Date. Notwithstanding the foregoing, so long as any
Australian Facility Lender fails to make available any portion of its Australian
Facility Fronting Commitment when properly requested by an Australian Facility
Borrower, such Lender shall not be entitled to receive payment of its pro rata
share of such Facility Fee until such Lender shall make available such portion.
Such Facility Fee shall be calculated on the basis of a year of 365/366 days for
the actual number of days elapsed.
5.10 Deficiency Advances. No Australian Facility Lender shall be
responsible for any default of any other Australian Facility Lender in respect
to such other Australian Facility Lender's obligation to make any Australian
Facility Loan hereunder nor shall the Australian Facility Fronting Commitment of
any Australian Facility Lender or the Australian Facility Commitment of any
Lender be increased as a result of such default of any other Australian Facility
Lender. Without limiting the generality of the foregoing, in the event any
Australian Facility Lender shall fail to advance funds to an Australian Facility
Borrower as herein provided, the Australian Facility Agent may in its
discretion, but shall not be obligated to, make an Australian Facility Advance
hereunder as an Australian Facility Lender of all or any portion of such amount
or amounts (each, a "deficiency advance") and shall thereafter be entitled to
payments of principal of and interest on such deficiency advance in the same
manner and at the same interest rate or rates to which such other Australian
Facility Lender would have been entitled had it made such advance; provided
that, upon payment to the Australian Facility Agent from such other Australian
Facility Lender of the entire outstanding amount of each such deficiency
advance, together with accrued and unpaid interest thereon, from the most recent
date or dates interest was paid to the Australian Facility Agent by the
applicable Australian Facility Borrower on each Australian Facility Loan
comprising the deficiency advance, at the interest rate per annum equal to the
customary rate set by the Australian Facility Agent for the correction of errors
among banks in Australia for three (3) Business Days and thereafter at the
Australian Facility Base Rate, then such payment shall be credited against the
applicable Australian Facility Outstanding owing to the Australian Facility
Agent in full payment of such deficiency advance and the applicable Australian
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Facility Borrower shall be deemed to have borrowed the amount of such deficiency
advance from such other Australian Facility Lender as of the most recent date or
dates, as the case may be, upon which any payments of interest were made by such
Australian Facility Borrower thereon.
5.11 Use of Proceeds. The proceeds of the Australian Facility Loans
made pursuant to the Australian Facility hereunder shall be used by the
Australian Facility Borrowers to repay and terminate the Prior Australian
Facility, to finance capital expenditures and Permitted Acquisitions and for
other working capital and general corporate needs of the Australian Facility
Borrowers.
5.12 One Loan.
(a) Subject to subsection (c) below, all Australian Facility Loans and
Australian Facility Advances by the Australian Facility Lenders to any
Australian Facility Borrower shall constitute the joint and several general
obligation of each of the Australian Facility Borrowers. Each Australian
Facility Borrower shall be jointly and severally liable to the Australian
Facility Agent and the Australian Facility Lenders for all Obligations hereunder
in respect of the Australian Facility, regardless of whether such Obligations
arise as a result of Australian Facility Advances to such Borrower, it being
stipulated and agreed that Australian Facility Advances hereunder to any
Australian Facility Borrower inure to the benefit of each of the Australian
Facility Borrowers, and that the Australian Facility Lenders are relying on the
joint and several liability of the Australian Facility Borrowers in extending
credit under the Australian Facility.
(b) Subject to subsection (c) below, each Australian Facility Borrower
guarantees to the Australian Facility Lenders the payment in full of all of the
Obligations of the other Australian Facility Borrowers to the Australian
Facility Lenders in respect of Australian Facility and further guarantees the
due performance by each other Australian Facility Borrower of its respective
duties and covenants made in favor of the Australian Facility Agent and the
Australian Facility Lenders hereunder. Each Australian Facility Borrower agrees
that the joint and several liability of the Australian Facility Borrowers shall
not be impaired or affected by any modification, supplement, extension or
amendment of any contract or agreement to which the parties thereto may
hereafter agree, nor by any modification, release or other alteration of any of
the rights of the Australian Facility Agent and the Australian Facility Lenders
with respect to any collateral, nor by any delay, extension of time, renewal,
compromise or other indulgence granted by the Australian Facility Agent and the
Australian Facility Lenders with respect to any of the Obligations, nor by any
other agreements or arrangements whatever with any other Australian Facility
Borrower, any guarantor or any other Person, each Australian Facility Borrower
hereby waiving all notice of any such delay, extension, release, substitution,
renewal, compromise or other indulgence, and hereby consenting to be bound
thereby as fully and effectually as if it had expressly agreed thereto in
advance. The liability of each Australian Facility Borrower hereunder is direct
and unconditional as to all of the Obligations hereunder in respect of the
Australian Facility, and may be enforced without requiring the Australian
Facility Agent or the Australian Facility Lenders first to resort to any other
right, remedy or security; no Australian Facility Borrower shall have any right
of subrogation, reimbursement or indemnity whatsoever, nor any right of recourse
to security for any of the Obligations in respect of the Australian Facility,
unless and until all of said Obligations have been paid in full.
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(c) Notwithstanding subsections (a) and (b) above, the joint and
several liability of each Australian Facility Borrower for, and its obligation
to guarantee payment of, all Obligations of the other Australian Facility
Borrowers in respect of the Australian Facility shall not at any time exceed its
Australian Facility Maximum Amount.
5.13 Participations. On the Closing Date and each day thereafter until
the Total Facility Termination Date, each Lender (including an Australian
Facility Lender if necessary) will be deemed to have absolutely, irrevocably and
unconditionally purchased from each Australian Facility Lender a Participation
in Australian Facility Outstandings owing to such Australian Facility Lender in
an amount such that, after such purchase, each Lender will have a Facility
Credit Exposure under the Australian Facility equal in amount to its Applicable
Commitment Percentage times the Australian Facility Outstandings (referred to as
the "Facility Participation Amount" for such Lender in the Australian Facility).
Each such Participation of each Lender in the Australian Facility shall be
funded in accordance with Section 11.07.
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ARTICLE VI
Changes in Circumstances
6.01 Increased Cost and Reduced Return.
(a) If, after the date hereof, the adoption of any applicable law,
rule, or regulation, or any change in any applicable law, rule, or regulation,
or any change in the interpretation or administration thereof by any
Governmental Authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender (or its
Applicable Lending Office) with any request or directive (whether or not having
the force of law) of any such Governmental Authority, central bank, or
comparable agency:
(i) shall subject such Lender (or its Applicable Lending
Office) to any tax, duty, or other charge with respect to any Fixed
Rate Loans, any Note, or its obligation to make or to Participate in
Fixed Rate Loans; or shall change the basis of taxation of any amounts
payable to such Lender (or its Applicable Lending Office) under this
Agreement or any Note in respect of any Fixed Rate Loans (other than
taxes imposed on the overall net income of such Lender by the
jurisdiction in which such Lender has its principal office or such
Applicable Lending Office);
(ii) shall impose, modify, or deem applicable any reserve,
special deposit, assessment, compulsory loan, or similar requirement
(other than the Applicable Reserve Requirement utilized in the
determination of the Eurodollar Rate or the Offshore Rate) relating to
any extensions of credit or other assets of, or any deposits with or
other liabilities or commitments of, such Lender (or its Applicable
Lending Office), including the Applicable Facility Commitments or
Applicable Fronting Commitments of such Lender hereunder; or
(iii) shall impose on such Lender (or its Applicable Lending
Office) or the London or applicable offshore interbank market any other
condition affecting this Agreement or any Note or any of such
extensions of credit or liabilities or commitments;
and the result of any of the foregoing is to increase the cost to such Lender
(or its Applicable Lending Office) of making, Converting into, Continuing, or
maintaining or participating in any Fixed Rate Loan or to reduce any sum
received or receivable by such Lender (or its Applicable Lending Office) under
this Agreement or any Note with respect to any Fixed Rate Loan, then each
Borrower in the Facility or Facilities in which such Lender has made, or is
obligated to make, such Fixed Rate Loans to which such increased costs relate
shall pay to such Lender on demand such amount or amounts as will compensate
such Lender for such increased cost or reduction. If any Lender requests
compensation by any Borrower under this Section 6.01(a), the applicable Borrower
may, by notice to such Lender (with a copy to the Applicable Facility Agent and
the Global Agent), suspend the obligation of such Lender to make or Continue
Loans of the Type with respect to which such compensation is requested, or to
Convert Loans of any other Type into Loans of such Type, until the event or
condition giving rise to such request ceases to be in effect (in which case the
provisions of
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Section 6.04 shall be applicable); provided that such suspension shall not
affect the right of such Lender to receive the compensation so requested.
(b) If, after the date hereof, any Lender shall have determined that
the adoption of any applicable law, rule, or regulation regarding capital
adequacy or any change therein or in the interpretation or administration
thereof by any Governmental Authority, central bank, or comparable agency
charged with the interpretation or administration thereof, or any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such Governmental Authority, central bank, or comparable agency, has or
would have the effect of reducing the rate of return on the capital of such
Lender or any corporation controlling such Lender as a consequence of such
Lender's obligations hereunder to a level below that which such Lender or such
corporation could have achieved but for such adoption, change, request, or
directive (taking into consideration its policies with respect to capital
adequacy), then from time to time upon demand each Applicable Borrower in any
Facility in which such Lender has made or is obligated to make Loans shall pay
to such Lender such additional amount or amounts as will compensate such Lender
for such reduction.
(c) Each Lender shall promptly notify the Borrowers and the Agents of
any event of which it has knowledge, occurring after the date hereof, which will
entitle such Lender to compensation pursuant to this Section 6.01 and will
designate a different Applicable Lending Office if such designation will avoid
the need for, or reduce the amount of, such compensation and will not, in the
judgment of such Lender, be otherwise disadvantageous to it. Any Lender claiming
compensation under this Section 6.01 shall furnish to the Borrowers and the
Agents a statement setting forth the additional amount or amounts to be paid to
it hereunder which shall be conclusive in the absence of manifest error. In
determining such amount, such Lender may use any reasonable averaging and
attribution methods.
6.02. Limitation on Types of Loans. If on or prior to the first day of
any Interest Period for any Fixed Rate Loan:
(a) the Applicable Facility Agent in the Facility in which
such Fixed Rate Loan is to be made or Continued or Converted determines
(which determination shall be conclusive) that by reason of
circumstances affecting the relevant market, adequate and reasonable
means do not exist for ascertaining the Eurodollar Rate or Offshore
Rate or Canadian Facility BA Rate, as the case may be, for such
Interest Period; or
(b) the Required Fronting Lenders in the Facility in which
such Fixed Rate Loan is to be made or Continued or Converted determine
(which determination shall be conclusive) and notify the Applicable
Facility Agent and the Global Agent that (i) the Eurodollar Rate will
not adequately and fairly reflect the cost to the Lenders in such
Facility of funding Fixed Rate Loans for such Interest Period or (ii)
that the Offshore Rate does not represent, in the case of the UK
Facility Lenders, the effective cost to those Lenders for deposits in
the Applicable Currency of comparable amounts for the applicable
Interest Period or, in the case of the Australian Facility Lenders, the
effective bid rate for bills of exchange of such tenor in Australian
Dollars for such Lenders or (iii) that the Canadian Facility BA Rate
does not
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represent, in the case of the Canadian Facility Lenders, the effective
cost to those Lenders for banker's acceptances of comparable amounts
for the applicable Interest Period;
then the Applicable Facility Agent shall give the Applicable Borrowers prompt
notice thereof specifying the relevant Type of Loans and the relevant amounts or
periods, and so long as such condition remains in effect, the Applicable Lenders
in such Facility or Facilities shall be under no obligation to make additional
Loans of such Type, Continue Loans of such Type, or to Convert Loans of any
other Type into Loans of such Type and the Applicable Borrower shall, on the
last day(s) of the then current Interest Period(s) for the outstanding Loans of
the affected Type, either repay such Loans or Convert such Loans into another
Type of Loan in accordance with the terms of this Agreement.
6.03. Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to make, maintain, or fund any Fixed Rate Loans
hereunder, then such Lender shall promptly notify the Applicable Borrowers in
the Facility or Facilities in which such Lender has made or is obligated to make
such Fixed Rate Loans and such Lender's obligation to make or Continue any Fixed
Rate Loans and to Convert other Types of Loans into such Fixed Rate Loans shall
be suspended until such time as such Lender may again make, maintain, and fund
such Fixed Rate Loans (in which case the provisions of Section 6.04 shall be
applicable).
6.04. Treatment of Affected Loans. If the obligation of any Lender to
make a particular Type of Fixed Rate Loan or to Continue, or to Convert Loans of
any other Type into, Loans of a particular Type shall be suspended pursuant to
Section 6.01 or 6.03 hereof (Loans of such Type being herein called "Affected
Loans" and such Type being herein called the "Affected Type"), such Lender's
Affected Loans shall be automatically Converted into, in the case of the US
Facility, the Canadian Facility or the Australian Facility, a Floating Rate Loan
applicable to the Facility or Facilities in which the Affected Loans were made
or, in the case of the UK Facility, a UK Facility Alternative Rate Loan (each
referred to as "Substitute Base Rate Loans") on the last day(s) of the then
current Interest Period(s) for Affected Loans (or, in the case of a Conversion
required by Section 6.03 hereof, on such earlier date as such Lender may specify
to the Applicable Borrower with a copy to the Applicable Facility Agent and the
Global Agent) and, unless and until such Lender gives notice as provided below
that the circumstances specified in Section 6.01 or 6.03 hereof that gave rise
to such Conversion no longer exist:
(a) to the extent that such Lender's Affected Loans have been
so Converted, all payments and prepayments of principal that would
otherwise be applied to such Lender's Affected Loans shall be applied
instead to its Substitute Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued by
such Lender as Loans of the Affected Type shall be made or Continued
instead as Substitute Base Rate Loans, and all Loans of such Lender
that would otherwise be Converted into Loans of the Affected Type shall
be Converted instead into (or shall remain as) Substitute Base Rate
Loans.
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If such Lender gives notice to the Applicable Borrowers (with a copy to the
Applicable Facility Agent and the Global Agent) that the circumstances specified
in Section 6.01 or 6.03 hereof that gave rise to the Conversion of such Lender's
Affected Loans pursuant to this Section 6.04 no longer exist (which such Lender
agrees to do promptly upon such circumstances ceasing to exist) at a time when
Loans of the Affected Type made by other Lenders are outstanding, such Lender's
Substitute Base Rate Loans shall be automatically Converted, on the first day(s)
of the next succeeding Interest Period(s) for such outstanding Loans of the
Affected Type, to the extent necessary so that, after giving effect thereto, all
Loans held by the Lenders holding Loans of the Affected Type and by such Lender
are held pro rata (as to principal amounts, Types, and Interest Periods) in
accordance with their respective Applicable Fronting Percentage applicable to
the Facility or Facilities in which the Affected Loans were made.
6.05. Compensation. Upon the request of any Lender, each Applicable
Borrower in any Facility in which such Lender has made or is obligated to make
Loans shall pay to such Lender such amount or amounts as shall be sufficient (in
the reasonable opinion of such Lender) to compensate it for any loss, cost, or
expense (including loss of anticipated profits) incurred by it as a result of:
(a) any payment, prepayment, or Conversion of a Fixed Rate
Loan for any reason (including, without limitation, the acceleration of
the Loans pursuant to Section 11.01) on a date other than the last day
of the Interest Period for such Loan; or
(b) any failure by the Applicable Borrower for any reason
(including, without limitation, the failure of any condition precedent
specified in Article VII to be satisfied) to borrow, Convert, Continue,
or prepay a Fixed Rate Loan on the date for such borrowing, Conversion,
Continuation, or prepayment specified in the relevant notice of
borrowing, prepayment, Continuation, or Conversion under this
Agreement.
6.06 Taxes.
(a) Any and all payments by any Borrower to any Lender or any Agent
under this Agreement and any other Loan Document shall be made free and clear
of, and without deduction or withholding for, any Taxes. In addition, each
Borrower shall pay all Other Taxes.
(b) If any Borrower shall be required by law to deduct or withhold any
Taxes, Other Taxes or Further Taxes from or in respect of any sum payable
hereunder to any Lender or any Agent, then:
(i) the sum payable shall be increased as necessary so that,
after making all required deductions and withholdings (including
deductions and withholdings applicable to additional sums payable under
this Section 6.06), such Lender or Agent, as the case may be, receives
and retains an amount equal to the sum it would have received and
retained had no such deductions or withholdings been made;
(ii) such Borrower shall make such deductions and
withholdings;
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(iii) such Borrower shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in
accordance with applicable law; and
(iv) such Borrower shall also pay to such Lender or Applicable
Facility Agent for the account of such Lender, at the time interest is
paid, Further Taxes in the amount that the respective Lender specifies
as necessary to preserve the after-tax yield the Lender would have
received if such Taxes, Other Taxes or Further Taxes had not been
imposed.
(c) The Company and each Borrower jointly and severally agree to
indemnify and hold harmless each Lender and each Agent for the full amount of
(i) Taxes, (ii) Other Taxes, and (iii) Further Taxes in the amount that the
respective Lender specifies as necessary to preserve the after-tax yield the
Lender would have received if such Taxes, Other Taxes or Further Taxes had not
been imposed, and any liability (including penalties, interest, additions to tax
and expenses) arising therefrom or with respect thereto, whether or not such
Taxes, Other Taxes or Further Taxes were correctly or legally asserted. Payment
under this indemnification shall be made within 30 days after the date the
applicable Lender or Agent makes written demand therefor.
(d) Within 30 days after the date of any payment by the applicable
Borrower of Taxes, Other Taxes or Further Taxes, such Borrower shall furnish to
each Applicable Lender or the Applicable Facility Agent the original or a
certified copy of a receipt evidencing payment thereof, or other evidence of
payment satisfactory to such Lender or Agent.
(e) If any Borrower is required to pay any amount to any Lender or
Agent pursuant to subsection (b) or (c) of this Section 6.06, then such Lender
shall use reasonable efforts (consistent with legal and regulatory restrictions)
to change the jurisdiction of its Applicable Lending Office so as to eliminate
any such additional payment by such Borrower which may thereafter accrue, if
such change in the sole judgment of such Lender is not otherwise disadvantageous
to such Lender.
(f) Each US Facility Lender organized under the laws of a jurisdiction
outside the United States, on or prior to the date of its execution and delivery
of this Agreement in the case of each Lender listed on the signature pages
hereof and on or prior to the date on which it becomes a US Facility Lender in
the case of each other Lender, and from time to time thereafter if requested in
writing by any US Facility Borrower or the US Facility Agent (but only so long
as such Lender remains lawfully able to do so), shall provide the Company and
the US Facility Agent with (i) Internal Revenue Service Form 1001 or 4224, as
appropriate, or any successor form prescribed by the Internal Revenue Service,
certifying that such Lender is entitled to benefits under an income tax treaty
to which the United States is a party which reduces the rate of withholding tax
on payments of interest or certifying that the income receivable pursuant to
this Agreement is effectively connected with the conduct of a trade or business
in the United States, (ii) Internal Revenue Service Form W-8 or W-9, as
appropriate, or any successor form prescribed by the Internal Revenue Service,
and (iii) any other form or certificate required by any taxing authority
(including any certificate required by Sections 871(h) and 881(c) of the
Internal Revenue Code), certifying that such Lender is entitled to an exemption
from or a reduced rate of tax on payments pursuant to this Agreement or any of
the other Loan Documents.
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(g) Each UK Facility Lender (other than a Lender entitled to receive
payments of interest in respect of each UK Facility Loan free of withholding or
deduction for or on account of United Kingdom income tax under Section 349(3)(a)
of the Income and Corporation Taxes Act 1988 of the United Kingdom (a "UK
Qualifying Lender"); provided that this subsection (e) shall apply to a UK
Qualifying Lender which loses such status, other than through a change in any
applicable law, treaty or governmental rule, regulation or order, or any change
in the interpretation, administration or application thereof after the Closing
Date or effective date thereafter it becomes a Lender, from the date of such
loss) shall deliver to the appropriate Person such application forms,
certificates, documents or other evidence as may be required from time to time,
properly completed and duly executed by such UK Facility Lender, to enable the
UK Facility Borrowers to be able to pay interest on the UK Facility Loans of
such UK Facility Lender without withholding or deduction for or on account of
any United Kingdom income tax.
(h) Each Canadian Facility Lender that is organized under the laws of
any jurisdiction other than Canada or any political subdivision thereof (a
"Non-Canadian Lender") agrees to deliver to the Canadian Facility Borrower and
Canadian Facility Agent upon request such certificates, documents or other
evidence as may be required from time to time, properly completed and duly
executed by such Non-Canadian Lender, to establish the basis for any applicable
exemption from or reduction of taxes with respect to any payments to such
Non-Canadian Lender of principal, interest, fees, commissions or any other
amount payable under this Agreement or the Canadian Facility Loans.
(i) Each Australian Facility Lender that is organized under the laws of
any jurisdiction other than Australia or any political subdivision thereof, (a
"Non-Australian Lender") agrees to deliver to the Australian Facility Borrowers
and Australian Facility Agent upon request such certificates, documents or other
evidence as may be required from time to time, properly completed and duly
executed by such Non-Australian Lender, to establish the basis for any
applicable exemption from or reduction of taxes with respect to any payments to
such Non-Australian Lender of principal, interest, fees, commissions or any
other amount payable under this Agreement or the Australian Facility Loans,
other than with respect to payments made on or in connection with Australian
Facility Loans advanced in New Zealand Dollars.
(j) For any period with respect to which a Lender has failed to provide
the Company and the Applicable Facility Agent with the appropriate form pursuant
to Section 6.06(f), (g), (h) or (i), as applicable (unless such failure is due
to a change in treaty, law, or regulation occurring subsequent to the date on
which a form originally was required to be provided), such Lender shall not be
entitled to indemnification under Section 6.06(a), (b), or (c) with respect to
Taxes imposed by the United States, United Kingdom, Canada or Australia, as
applicable (specifically exempting from this Section 6.06(j), and thereby
preserving each Lender's rights to indemnification hereunder with respect to,
Taxes imposed by New Zealand); provided, however, that should a Lender, which is
otherwise exempt from or subject to a reduced rate of withholding tax, become
subject to Taxes because of its failure to deliver a form required hereunder,
each Applicable Borrower shall take such steps as such Lender shall reasonably
request to assist such Lender to recover such Taxes.
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(k) Without prejudice to the survival of any other agreement of any
Borrower hereunder, the agreements and obligations of each Borrower contained in
this Section 6.06 shall survive the termination of the Commitments and the
payment in full of the Obligations.
6.07 Replacement Lender. In the event any Lender seeks additional
compensation pursuant to this Article VI or is restricted from making any Fixed
Rate Loan under this Agreement (a "Restricted Lender"), so long as no Default or
Event of Default shall have occurred and be continuing and the Company has
obtained a commitment from another Lender or an Eligible Assignee to become a
Lender for all purposes hereunder, the Company may cause such Restricted Lender
to be replaced by, and to assign all its Loans, Applicable Facility Commitments,
Applicable Fronting Commitments, Participations and other Obligations owing
thereto pursuant to Section 13.01 to, such other Lender or an Eligible Assignee
reasonably acceptable to the Applicable Facility Agent(s) and the Global Agent
which is not similarly restricted and will not seek such additional
compensation. Such Restricted Lender agrees to execute and to deliver to the
Global Agent and to each Applicable Facility Agent of each Facility in which
such Restricted Lender has made or was obligated to make Loans an Assignment and
Acceptance with such replacement Lender as provided in Section 13.01 hereof upon
payment at par of all principal, interest, fees and other amounts owing under
this Agreement to such Restricted Lender. The Company shall pay to the
Applicable Facility Agent the processing fee required by Section 13.01(a)(iv) in
connection with such assignment.
6.08 Funding. In the event any Borrower elects to obtain any Loans as
Fixed Rate Loans, or elects to Continue any Fixed Rate Loans or Convert any
portion of the principal amount of any Floating Rate Loans to Fixed Rate Loans,
each Lender may, if it so elects, fulfill its obligation to make or Continue any
portion of the principal amount of any Loan as, or to Convert any portion of the
principal amount of any Loan into, a Fixed Rate Loan in accordance with any
election made by such Borrower by causing a foreign branch or affiliate of such
Lender or an international banking facility created by such Lender to make such
Fixed Rate Loan; provided, that in such event such Fixed Rate Loan shall be
deemed to have been made by such Lender, and the obligation of the Borrower to
repay such Fixed Rate Loan shall nevertheless be to such Lender and shall be
deemed to be held by such Lender, to the extent of such Fixed Rate Loan, for the
account of such foreign branch, affiliate or international banking facility. In
addition, the Borrowers hereby consent and agree that, for purposes of any
determination to be made for purposes of this Agreement (including Sections
6.01, 6.02, 6.03 and 6.04), it shall be conclusively assumed that each Lender
elected to fund all Fixed Rate Loans by purchasing deposits in the Applicable
Currency in its eurocurrency office's interbank eurocurrency market.
6.09 Economic and Monetary Union in the European Community.
(a) If, as a result of the implementation of the European economic and
monetary union ("EMU"), (i) any currency available for borrowing under this
Agreement (a "national currency") ceases to be lawful currency of the state
issuing the same and is replaced by a European single or common currency (the
"Euro") or (ii) any national currency and the Euro are at the same time both
recognized by the central bank or comparable governmental authority of the state
issuing such currency as lawful currency of such state, then any amount borrowed
hereunder by any party hereto in such national currency shall be payable in such
national currency and any amount borrowed
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hereunder in the Euro shall be payable in the Euro. After the European Central
Bank and/or the comparable government authority ceases to recognize any national
currency, then the amount so payable shall be determined by redenominating or
converting such national currency into the Euro at the exchange rate officially
fixed by the European Central Bank for the purpose of implementing the EMU.
Prior to the occurrence of the event or events described in clause (i) or (ii)
of the preceding sentence, each amount payable hereunder in any such national
currency will, except as otherwise provided herein, continue to be payable only
in that national currency.
(b) The Applicable Borrowers shall from time to time, at the request of
any Lender, pay to such Lender the amount of any losses, damages, liabilities,
claims, reduction in yield, additional expense or increased cost incurred by, or
of any reduction in any amount payable to or in the effective return on its
capital to, or any decrease or delay in the payment of interest or other return
foregone by, such Lender or any of its affiliates as a result of any political,
tax, liquidity, currency exchange or market risk resulting from the introduction
of, changeover to or operation of the Euro in any applicable nation or
eurocurrency market.
(c) In addition, this Agreement (including, without limitation, the
definitions of Total French Franc Commitment, LIBOR, Offshore Rate and
Applicable Reference Rate) will be amended to the extent determined by the
Applicable Facility Agents (acting reasonably and in consultation with the
Company) to be necessary to reflect such implementation of the EMU and change in
currency and to put the Lenders and the Borrowers in the same position, so far
as possible, that they would have been in if such implementation and change in
currency had not occurred. Except as provided in the foregoing provisions of
this Section 6.09 and the requirements of Section 13.10, no such implementation
or change in currency nor any economic consequences resulting therefrom shall
(i) give rise to any right to terminate prematurely, contest, cancel, rescind,
alter, modify or renegotiate the provisions of this Agreement or (ii) discharge,
excuse or otherwise affect the performance of any obligations of any Borrower
under this Agreement, any Notes or other Loan Documents.
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ARTICLE VII
Conditions to Making Loans
7.01 Conditions of Initial Advance. The obligation of the Lenders to
make the initial Advance is subject to the following conditions precedent:
(a) The Global Agent shall have received, on the Closing Date in form
and substance satisfactory to the Agents and the Lenders the following:
(i) executed originals of each of this Agreement and the Notes
and the other Loan Documents, together with all schedules and exhibits
thereto in form and substance satisfactory to the Agents and the
Lenders;
(ii) favorable written opinion of counsel to the Company as US
Facility Borrower and Guarantor, and special U.S. counsel to each other
Borrower dated the Closing Date, addressed to the Agents and the
Lenders and satisfactory to special counsel to the Global Agent,
substantially in the form of Exhibit G attached hereto;
(iii) resolutions of the board of directors (or of the
appropriate committee thereof) of each of the Borrowers certified by
its secretary or assistant secretary as of the Closing Date, appointing
the initial Authorized Representatives and approving and adopting the
Loan Documents to be executed by such Borrower, and authorizing the
execution and delivery thereof; specimen signatures of officers of each
Borrower executing the Loan Documents, certified by the Secretary or
Assistant Secretary of such Borrower;
(iv) the Organizational Documents of each of the Borrowers
certified as of a recent date by the Secretary of State or comparable
official of its jurisdiction of organization or, if no such
certification is available, by the secretary or assistant secretary of
such Borrower;
(v) the Operating Documents of each of the Borrowers certified
as of the Closing Date as true and correct by the secretary or
assistant secretary of such Borrower;
(vi) certificates issued as of a recent date by the Secretary
of State or comparable official of the jurisdiction of the formation of
each of the Borrowers as to the corporate good standing of such
Borrower therein;
(vii) notice(s) of appointment of the initial Authorized
Representatives;
(viii) all fees payable by the Borrowers on the Closing Date
to the Agents and the Lenders;
(ix) evidence satisfactory to the Global Agent of the
repayment in full and termination of each of the Prior Facilities
simultaneously with the making of the initial Advances hereunder, and
the agreement to terminate any Liens on assets securing any
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obligations under any of the Prior Facilities which termination shall
be effected with reasonable promptness following the Closing Date;
(x) financial statements of the Borrower and its Subsidiaries
required to be delivered pursuant to Section 8.02(b)(i) hereof;
(xi) a certificate of an Authorized Representative of the
Company reasonably satisfactory to the Agents and the Lenders as to the
matters set forth in Section 7.01(b)(ii) through (iv) and 7.01(c)(i);
and
(xii) such other documents, instruments, certificates and
opinions as any Agent or any Lender may reasonably request on or prior
to the Closing Date in connection with the consummation of the
transactions contemplated hereby;
(b) Each of the following shall have occurred or be true:
(i) The Global Agent shall have completed all due diligence
with respect to the Company and its Subsidiaries in scope and
determination satisfactory to the Global Agent in its sole discretion;
(ii) There shall not be any action, suit, investigation or
proceeding pending or threatened in any court or before any arbitrator
or governmental instrumentality that (a) purports to affect the
transactions contemplated hereby, (b) would reasonably be expected to
have a Material Adverse Effect or (c) would reasonably be expected to
have a material adverse effect on the ability of the Loan Parties to
perform their respective obligations hereunder or under the other Loan
Documents;
(iii) The Company and its Subsidiaries shall be in compliance
with all existing financial and material contractual obligations before
and immediately after giving effect to the financings and other
transactions contemplated hereby;
(iv) The Company and its Subsidiaries shall have received all
government, shareholder and third-party approvals, consents and
waivers, and shall have made or given all necessary filings and
notices, as shall be required to consummate the transactions
contemplated hereby without the occurrence of any default under,
conflict with or violation of (A) any applicable law, rule, regulation,
order or decree of any court or other Governmental Authority or
arbitral authority, (B) any Organizational Document or Operating
Agreements of the Company or any Subsidiary or (C) any agreement,
document or instrument to which any of the Company or any Subsidiary is
a party or by which any of them or their properties is bound, if such
default, conflict or violation would reasonably be expected to result
in a Material Adverse Effect; and all applicable waiting periods shall
have expired without any action being taken or threatened in writing by
any authority that could restrain, prevent or impose any material
adverse conditions on the making of any Loan or other transactions
contemplated hereby, and no law or regulation shall be applicable which
would reasonably be expected to have a Material Adverse Effect; and
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(c) In the good faith judgment of the Agents and the Lenders:
(i) There shall not have occurred a material adverse change in
the business, assets, operations, condition (financial or otherwise) or
prospects of the Company and its Subsidiaries taken as a whole since
February 28, 1998 or in the facts or information regarding such
entities most recently delivered to the Global Agent by the Company or
any Borrower;
(ii) There shall not have occurred and be continuing a
material adverse change in the market for syndicated credit facilities
similar in nature to the Facilities or a material disruption of, or a
material adverse change in, financial, banking or capital market
conditions, in each case as determined by the Global Agent in its
reasonable discretion.
7.02 Conditions of Loans. The obligations of the Lenders to make any
Advances on or subsequent to the Closing Date are subject to the satisfaction of
the following conditions:
(a) the Applicable Facility Agent under a specific Facility
shall have received a Borrowing Notice if required hereby;
(b) the representations and warranties of the Borrowers set
forth in Article VII hereof and in each of the other Loan Documents
shall be true and correct on and as of the date of such Advance, with
the same effect as though such representations and warranties had been
made on and as of such date, except to the extent that such
representations and warranties expressly relate to an earlier date and
except that the financial statements referred to in Section 8.02(b)
shall be deemed to be those financial statements most recently
delivered to the Agents and the Lenders pursuant to Section 9.01
hereof;
(c) at the time of each such Advance, no Default or Event of
Default shall have occurred and be continuing;
(d) immediately after giving effect to a US Facility Advance,
(i) the US Facility Outstandings shall not exceed the Total US Facility
Commitment and (ii) the US Facility Revolving Credit Outstandings shall
not exceed the US Facility Revolving Credit Facility;
(e) immediately after giving effect to a Canadian Facility
Advance, (i) the Canadian Facility Outstandings shall not exceed the
Total Canadian Facility Commitment, (ii) the Canadian Facility
Renewable Tranche Outstandings shall not exceed the Canadian Facility
Renewable Tranche Commitment, and (iii) the Canadian Facility Full
Maturity Tranche Outstandings shall not exceed the Canadian Facility
Full Maturity Tranche Commitment;
(f) immediately after giving effect to a UK Facility Advance,
(i) the UK Facility Outstandings shall not exceed the Total UK Facility
Commitment and the French Franc Outstandings shall not exceed the Total
French Franc Commitment, and (ii) the aggregate amount borrowed by, and
outstanding to, any UK Facility Borrower shall not exceed its UK
Facility Maximum Amount;
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(g) immediately after giving effect to an Australian Facility
Advance, (i) the Australian Facility Outstandings shall not exceed the
Total Australian Facility Commitment and the New Zealand Dollar
Outstandings shall not exceed the Total New Zealand Dollar Commitment,
and (ii) the aggregate amount borrowed by, and outstanding to, any
Australian Facility Borrower shall not exceed its Australian Facility
Maximum Amount.
Each request for a borrowing, Continuation or Conversion of Loans shall
constitute a representation and warranty by the Borrowers that the conditions
set forth in clauses (b) and (c) above have been satisfied as of the date
thereof and that as of the date of such Advance there has not been any material
adverse change in the business, operations or financial condition of the Company
and its Subsidiaries.
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ARTICLE VIII
Representations and Warranties
8.01 Representations and Warranties as to Borrowers and Subsidiaries.
Each Borrower represents and warrants to and in favor of the Agents and each
Lender with respect to itself and to its Subsidiaries (which representations and
warranties shall survive the delivery of the documents mentioned herein and the
making of Loans) that:
(a) Organization and Authority.
(i) each Borrower and each of its Subsidiaries is an
entity duly organized and validly existing under the laws of
the jurisdiction of its formation;
(ii) each Borrower and each of its Subsidiaries (A)
has the requisite power and authority to own its properties
and assets and to carry on its business as now being
conducted, and (B) is qualified to do business in every
jurisdiction in which failure so to qualify would have a
Material Adverse Effect;
(iii) each Borrower has the requisite power and
authority to execute, deliver and perform this Agreement and
the Notes, and to borrow hereunder, and to execute, deliver
and perform each of the other Loan Documents to which it is a
party, including without limitation, in the case of the
Company, the Guaranty; and
(iv) when executed and delivered, each of the Loan
Documents to which such Borrower is a party will be valid and
binding obligations of such Borrower, enforceable against such
Borrower in accordance with its terms, subject to the effect
of any applicable bankruptcy, moratorium, insolvency,
reorganization or other similar law affecting the
enforceability of creditors' rights generally and to the
effect of general principles of equity which may limit the
availability of equitable remedies (whether in a proceeding at
law or in equity).
(b) Loan Documents. The execution, delivery and performance by
each Borrower of each of the Loan Documents to which it is a party:
(i) have been duly authorized by all requisite
Organizational Action (including any required shareholder
approval) of such Borrower required for the lawful execution,
delivery and performance thereof;
(ii) do not violate any provisions of (A) applicable
law, rule or regulation, (B) any judgment, writ, order,
determination, decree or arbitral award of any Governmental
Authority or arbitral authority binding on such Borrower or
its Subsidiaries or its or their properties, (C) the
Organizational Documents or Operating Documents of such
Borrower or its Subsidiaries or (D) any provisions of any
indenture, agreement or other instrument to which such
Borrower or any of its
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Subsidiaries is a party, or by which the properties or assets
of such Borrower or its Subsidiaries are bound;
(iii) does not and will not be in conflict with,
result in a breach of or constitute an event of default, or an
event which, with notice or lapse of time, or both, would
constitute an event of default, under any contract, indenture,
agreement or other instrument or document to which the
Borrower or any of its Subsidiaries is a party or by which any
of their properties are bound; and
(iv) does not and will not result in the creation or
imposition of any Lien, charge or encumbrance of any nature
whatsoever upon any of the properties or assets of such
Borrower or any of its Subsidiaries.
(c) Solvency. Each Borrower and each of its Subsidiaries is
Solvent after giving effect to the transactions contemplated by this
Agreement and the other Loan Documents and assuming an Advance on the
Closing Date equal to the Applicable Total Facility Commitment for the
Facility in which such Borrower is an Applicable Borrower.
8.02 Representations and Warranties of the Company. The Company
represents and warrants with respect to itself and its Subsidiaries (which
representations and warranties shall survive the delivery of the documents
mentioned herein and the making of Loans) that:
(a) Subsidiaries and Stockholders. It has no Subsidiaries
other than those Persons listed as Subsidiaries in Schedule 8.02(a)
hereto and additional Subsidiaries acquired after the Closing Date as
permitted under Section 10.08 hereof. The outstanding shares or other
equity interests (including options, warrants and other rights to
acquire any interest) of each such Subsidiary have been duly authorized
and validly issued and are fully paid and nonassessable; and the
Company and each such Subsidiary owns beneficially and of record all
the shares and other interests it is listed as owning in Schedule
8.02(a), free and clear of any Lien.
(b) Financial Condition.
(i) The Company has heretofore furnished to each
Lender an audited unqualified consolidated balance sheet of
the Company and its Subsidiaries as at February 28, 1998 and
the notes thereto and the related consolidated statements of
income, stockholders' equity and cash flow for the Fiscal Year
then ended, all as examined and certified by Ernst & Young,
LLP. Except as set forth therein, such financial statements
(including the notes thereto) present fairly the financial
condition of the Company and its Subsidiaries as of the end of
such Fiscal Year and results of their operations and the
changes in their stockholders' equity for the Fiscal Year then
ended, all in conformity with Generally Accepted Accounting
Principles applied on a Consistent Basis. Except as disclosed
therein, neither the Company nor any Subsidiary has, as of the
date hereof, any known and material direct liability;
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(ii) since the later of (A) the date of the audited
financial statements delivered pursuant to Section 8.02(b)(i)
hereof or (B) the date of the audited financial statements
most recently delivered pursuant to Section 9.01(a) hereof,
the Company and its Subsidiaries have not suffered or endured
any Material Adverse Effect; and
(iii) except as set forth in (A) the audited
financial statements delivered pursuant to Section 8.02(b)(i)
hereof or (B) the audited financial statements most recently
delivered pursuant to Section 9.01(a) hereof, the Company and
its Subsidiaries have not incurred, other than in the ordinary
course of business, any material Contingent Obligation or
other liability, obligation or commitment, contingent or
otherwise, which remain outstanding or unsatisfied.
(c) Title to Properties. The Company and its Subsidiaries have
good and marketable title to all their respective real and personal
properties, subject to no transfer restrictions, or Liens of any kind,
except for the transfer restrictions and Liens permitted under Section
10.03 hereof.
(d) Taxes. The Company and its Subsidiaries have filed or
caused to be filed all federal, state and local tax returns which are
required to be filed by them and, except for taxes and assessments
being contested in good faith by appropriate proceedings diligently
conducted and against which satisfactory reserves reflected in the
financial statements described in Section 8.02(b)(i) as required by
Generally Accepted Accounting Principles have been established, have
paid or caused to be paid all taxes as shown on said returns or on any
assessment received by them, to the extent that such taxes have become
due.
(e) Other Agreements. Neither the Company nor any Subsidiary
is
(i) a party to or subject to any judgment, order,
decree or any agreement or instrument, or subject to other
restrictions, which individually or in the aggregate could
reasonably be expected to result in a Material Adverse Effect;
or
(ii) in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions
contained in any agreement or instrument to which the Company
or any Subsidiary is a party, which default, if not remedied
within any applicable grace period, could reasonably be
expected to result in a Material Adverse Effect.
(f) Litigation. Except as set forth on Schedule 8.02(f)
attached hereto, there is no action, suit, investigation or proceeding
at law or in equity or by or before any governmental instrumentality or
agency or arbitral body pending, or, to the best knowledge of the
Company, threatened by or against the Company or any Subsidiary or
affecting the Company or any Subsidiary or any properties or rights of
the Company or any Subsidiary, which, if determined adversely to the
Company or such Subsidiary, could reasonably be expected to result in a
Material Adverse Effect.
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(g) Margin Stock. The proceeds of the borrowings made
hereunder will be used by the Company and the other Borrowers only for
the purposes set forth in Section 2.11, Section 3.11, Section 4.11 and
Section 5.11 hereof. None of such proceeds will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin stock
(as such term is defined in Regulation U, as amended (12 C.F.R. Part
221), of the Board) or for the purpose of reducing or retiring any
Indebtedness which was originally incurred to purchase or carry margin
stock or for any other purpose which might constitute any of the Loans
under this Agreement a "purpose credit" within the meaning of said
Regulation U or Regulation X (12 C.F.R. Part 224) of the Board. Neither
the Company nor any agent acting in its behalf has taken or will take
any action which might cause this Agreement or any of the documents or
instruments delivered pursuant hereto to violate any regulation of the
Board or to violate the Securities Exchange Act of 1934, or the
Securities Act of 1933, or any state securities laws, in each case as
in effect on the date hereof.
(h) Intellectual Property. The Company and its Subsidiaries
own or have the right to use, under valid license agreements or
otherwise, all patents, licenses, franchises, trademarks, trademark
rights, trade names, trade name rights, trade secrets, copyrights and
know how necessary and material to the conduct of their businesses as
now conducted, in all cases without known conflict with any patent,
license, franchise, trademark, trade secret and confidential commercial
or proprietary information, trade name, copyright, rights to trade
secrets or other proprietary rights of any other Person.
(i) No Untrue Statement. Neither (a) this Agreement or any
other Loan Document or certificate or document executed and delivered
by or on behalf of the Company or any other Borrower or any Subsidiary
in accordance with or pursuant to any Loan Document nor (b) any
statement, representation or warranty provided to the Agents in
connection with the negotiation or preparation of the Loan Documents
contains any misrepresentation or untrue statement of material fact or
omits to state a material fact necessary, in light of the circumstance
under which it was made, in order to make any such warranty,
representation or statement contained therein not misleading.
(j) No Consents, Etc. Neither the respective businesses or
properties of the Company or any Subsidiary nor any circumstance in
connection with the execution, delivery and performance of the Loan
Documents and the transactions contemplated thereby, is such as to
require a consent, approval or authorization of, or filing,
registration or qualification with, any Governmental Authority or any
other Person on the part of the Company or any Borrower or any
Subsidiary as a condition to the execution, delivery and performance
of, or consummation of the transactions contemplated by, this Agreement
or the other Loan Documents, or if so, such consent, approval,
authorization, filing, registration or qualification has been duly
obtained or effected, as the case may be.
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(k) ERISA.
(i) The Company, each ERISA Affiliate and each
Subsidiary is in compliance with all applicable provisions of
ERISA, the Code and the regulations and published
interpretations thereunder and in compliance with all Foreign
Benefit Laws and the regulations and published interpretations
thereunder with respect to all Employee Benefit Plans, except
for any required amendments for which the remedial amendment
period as defined in Section 401(b) of the Code has not yet
expired and except for failures to so comply that would not,
in the aggregate, reasonably be expected to result in a
Material Adverse Effect. Each Employee Benefit Plan that is
intended to be qualified under Section 401(a) of the Code has
been determined, or the Company or such ERISA Affiliate or its
Subsidiaries is in the process of obtaining a determination by
the Internal Revenue Service, to be so qualified, each trust
related to such Employee Benefit Plan has been determined to
be exempt under Section 501(a) of the Code, and each Employee
Benefit Plan subject to any Foreign Benefit Law has received
the required approvals by any Governmental Authority
regulating such Employee Benefit Plan, except for such
qualifications, exemptions and approvals the absence of which
could not reasonably be expected to result in a Material
Adverse Effect. No material liability has been incurred by the
Company or any ERISA Affiliate (including, without limitation,
taxes, penalties, funding deficiencies and required
contributions, installments or other payments) which remains
unsatisfied with respect to any Employee Benefit Plan or any
Multiemployer Plan. No Termination Event has occurred or is
reasonably expected to occur with respect to any Employee
Benefit Plan, and neither the Company nor any ERISA Affiliate
has incurred any unpaid withdrawal liability with respect to
any Multiemployer Plan, which event or liability could
reasonably be expected to result in a Material Adverse Effect;
and
(ii) To the best of the Company's knowledge, each
Employee Benefit Plan subject to Title IV of ERISA or the
funding of which is regulated by any Foreign Benefit Law,
maintained by the Company, any ERISA Affiliate or any
Subsidiary, has been administered in accordance with its terms
and is in compliance in all material respects with all
applicable requirements of ERISA and other applicable laws,
regulations and rules and any applicable Foreign Benefit Law.
(l) No Default. As of the date hereof, there does not exist
any Default or Event of Default hereunder.
(m) Hazardous Materials. The Company, each Borrower and each
Subsidiary are in compliance with all applicable Environmental Laws,
except for such noncompliance that could not reasonably be expected to
result in a Material Adverse Effect, and have been issued and maintain
all required federal, state and local permits, licenses, certificates
and approvals pertaining to Hazardous Materials that are necessary to
the conduct of their businesses, except for any such permits, licenses,
certificates or approvals the absence of which could not reasonably be
expected to result in a Material Adverse Effect. Neither the Company,
any Borrower nor any Subsidiary has been notified of any pending or
threatened action, suit,
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proceeding or investigation, and neither the Company, any Borrower nor
any Subsidiary is aware of any fact, which (A) calls into question, or
could reasonably be expected to call into question, compliance by the
Company, any Borrower or any Subsidiary with any Environmental Laws,
except for such noncompliance that could not reasonably be expected to
result in a Material Adverse Effect, or (B) seeks, or could reasonably
be expected to form the basis of a meritorious proceeding to seek to
suspend, revoke or terminate any license, permit, certification or
approval necessary for the operation of the Company's or any
Subsidiary's facility or the generation, handling, storage, treatment
or disposal of any Hazardous Material that is necessary to the conduct
of its business, except for any such license, permit, certification or
approval the absence of which could not reasonably be expected to
result in a Material Adverse Effect, or (iii) seeks to cause, or could
reasonably be expected to form the basis of a meritorious proceeding to
cause, any property of the Company or any Subsidiary to be subject to
any restrictions on ownership, use, occupancy or transferability under
any Environmental Law, which such restrictions could reasonably be
expected to have a Material Adverse Effect, or (iv) constitutes a
reasonable basis to conclude that the Company or any Subsidiary is a
potentially responsible party with regard to any release or threatened
release of a Hazardous Material.
(n) Year 2000 Compliance. The Company has (i) initiated a
review and assessment of all areas within its and each of its
Subsidiaries' business and operations (including those affected by
suppliers, vendors and customers) that could be adversely affected by
the "Year 2000 Problem" (that is, the risk that computer hardware and
software applications used by the Borrower or any of its Subsidiaries
(or suppliers, vendors and customers) may be unable to recognize and
perform properly date-sensitive functions involving certain dates prior
to and any date after December 31, 1999), (ii) developed a plan and
time line for addressing the Year 2000 Problem on a timely basis, and
(iii) to date, implemented that plan in accordance with that timetable.
Based on the foregoing, the Company believes that all computer hardware
and software applications (including those of its suppliers, vendors
and customers) that are material to its or any of its Subsidiaries'
business and operations are reasonably expected on a timely basis to be
able to perform properly date-sensitive functions for all dates before
and after January 1, 2000 (that is, be "Year 2000 Compliant"), except
to the extent that a failure to do so could not reasonably be expected
to have a Material Adverse Effect.
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ARTICLE IX
Affirmative Covenants
Until the Total Facility Termination Date, unless the Required Lenders
shall otherwise consent in writing, the Company will and will cause each
Subsidiary to:
9.01 Financial Reports, Etc.
(a) As soon as practical and in any event within 95 days after the end
of each Fiscal Year of the Company, deliver or cause to be delivered to the
Agents and each Lender (i) consolidated balance sheets of the Company and its
Subsidiaries as at the end of such Fiscal Year, and the notes thereto, and the
related consolidated statements of income, stockholders' equity and cash flow
and the respective notes thereto for such Fiscal Year, setting forth in each
case comparative financial statements for the preceding Fiscal Year, all
prepared in accordance with Generally Accepted Accounting Principles applied on
a Consistent Basis and containing, with respect to the consolidated financial
statements, opinions of Ernst & Young, LLP, or such other independent certified
public accountants selected by the Company and approved by the Required Lenders,
which are unqualified as to the scope of the audit performed and as to the
"going concern" status of the Company and its Subsidiaries and without any
exception not acceptable to the Lenders; (ii) a copy of the Company's Form 10-K
as filed with the Securities and Exchange Commission; and (iii) a certificate of
an Authorized Representative demonstrating compliance with Sections 10.01 and
10.02 of this Agreement as of such Fiscal Year end, its Debt Ratings by S&P and
Moody's as of such Fiscal Year end and the Outstandings under each Facility as
of such Fiscal Year end, which certificate shall be in the form attached as
Exhibit H;
(b) as soon as practical and in any event within 50 days after the end
of each fiscal quarter (except the last fiscal quarter of the Fiscal Year) of
the Company, deliver to the Agents and each Lender (i) consolidated balance
sheets of the Company and its Subsidiaries as at the end of such fiscal quarter
and the related consolidated statements of income, stockholders' equity and cash
flow for such fiscal quarter and for the period from the beginning of the Fiscal
Year through the end of such reporting period, prepared without notes and
accompanied by a certificate of an Authorized Representative to the effect that
such financial statements present fairly the financial position of the Company
and its Subsidiaries as of the end of such fiscal period and the results of
their operations and the changes in their financial position for such fiscal
period, in conformity with the standards set forth in GAAP with respect to
interim financials; (ii) a copy of the Company's Form 10-Q for such quarterly
period as filed with the Securities and Exchange Commission; and (iii) a
certificate of an Authorized Representative as of such fiscal quarter end
similar to that required pursuant to Section 9.01(a)(iii);
(c) promptly upon their becoming available to the Company, deliver to
the Agents and each Lender a copy of (i) all regular or special reports or
effective registration statements which the Company or any Subsidiary shall file
with the Securities and Exchange Commission (or any successor thereto) or any
securities exchange, and (ii) all reports, proxy statements, financial
statements and
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other information distributed by the Company to its stockholders, bondholders or
the financial community in general; and
(d) promptly, from time to time, deliver or cause to be delivered to
the Agents or to each Lender such other information regarding the Company's and
each Subsidiary's operations, business affairs and financial condition as any
such Agent or Lender may reasonably request to the extent such statements exist.
The Agents and the Lenders are hereby authorized to deliver a copy of
any such financial or other information delivered hereunder to the Lenders (or
any affiliate of any Lender) or to the Agents, to any Governmental Authority
having jurisdiction over any of the Agents or the Lenders pursuant to any
written request therefor or in the ordinary course of examination of loan files,
or to any other Person who shall acquire or consider the acquisition of a
participation interest in or assignment of any Loan permitted by this Agreement.
9.02 Maintain Properties. Maintain all properties necessary to its
operations in good working order and condition, ordinary wear and tear excepted,
make all needed repairs, replacements and renewals to such properties, and
maintain free from Liens all trademarks, trade names, patents, copyrights, trade
secrets, know-how and other intellectual property and proprietary information
(or adequate licenses thereto), in each case as are necessary to conduct its
business as currently conducted or as contemplated hereby, all in accordance
with customary business practices.
9.03 Existence, Qualification, Etc. Except as otherwise expressly
permitted under Section 10.05 hereof, do or cause to be done all things
necessary to preserve and keep in full force and effect its existence and all
material rights and franchises, trade names, trademarks and permits and maintain
its license or qualification to do business as a foreign corporation and good
standing in each jurisdiction in which its ownership or lease of property or the
nature of its business makes such license or qualification necessary and in
which the failure to maintain such license or qualification could reasonably be
expected to result in a Material Adverse Effect.
9.04 Regulations and Taxes. Comply with or contest in good faith by
appropriate proceedings diligently conducted all statutes and governmental
regulations and pay all taxes, assessments, governmental charges, claims for
labor, supplies, rent and any other obligation which, if unpaid, might become a
Lien against any of its properties except liabilities being contested in good
faith by appropriate proceedings diligently conducted and against which adequate
reserves as required by GAAP have been established.
9.05 Insurance. Maintain with financially sound and reputable insurers
insurance with respect to its properties and business and against such
liabilities, casualties and contingencies of such types and in such amounts as
is customary in the case of corporations engaged in the same or a similar
business or having similar properties similarly situated.
9.06 True Books. Keep true books of record and account in which full,
true and correct entries will be made of all of its dealings and transactions,
and set up on its books such reserves as may be required by Generally Accepted
Accounting Principles with respect to doubtful accounts and
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all taxes, assessments, charges, levies and claims and with respect to its
business in general, and include such reserves in interim as well as year-end
financial statements.
9.07 Right of Inspection. Permit any Person designated by any Lender or
any Agent, at such Lender's or Agent's expense, to visit and inspect any of the
properties, corporate books and financial reports of the Company and its
Subsidiaries, and to discuss its affairs, finances and accounts with its
principal officers and independent certified public accountants, all at such
reasonable times, at reasonable intervals and with reasonable prior notice;
provided, however, that following the occurrence and during the continuation of
any Default or Event of Default, such visits or inspections shall be at the
expense of the Company.
9.08 Observe all Laws. Conform to and duly observe in all material
respects all laws, rules and regulations and all other valid requirements of any
Governmental Authority with respect to the conduct of its business.
9.09 Covenants Extending to Subsidiaries. Cause each of its
Subsidiaries to do with respect to itself, its business and its assets, each of
the things required of the Company in Sections 9.02 through 9.08, inclusive,
Section 9.14 and Section 9.16.
9.10 Officer's Knowledge of Default. Upon any executive officer of the
Company obtaining knowledge of the occurrence of any Default or Event of Default
hereunder or under any other obligation of the Company or any Subsidiary to any
Lender, or any event, development or occurrence which could reasonably be
expected to result in a Material Adverse Effect, cause such executive officer or
an Authorized Representative promptly to notify the Agents and each of the
Lenders of the nature thereof, the period of existence thereof, and what action
the Company or such Subsidiary proposes to take with respect thereto.
9.11 Suits or Other Proceedings. Upon any executive officer of the
Company obtaining knowledge of any litigation, dispute or other proceedings
being instituted or threatened against the Company or any Subsidiaries, or any
attachment, levy, execution or other process being instituted against any assets
of the Company or any Subsidiaries, making a claim or claims in an aggregate
amount greater than $10,000,000 not otherwise covered by insurance, or could
reasonably be expected to have a material adverse effect on the Company and its
Subsidiaries, cause such executive officer or an Authorized Representative
promptly to deliver to the Agents and each of the Lenders written notice thereof
stating the nature and status of such litigation, dispute, proceeding, levy,
execution or other process.
9.12 Environmental Compliance.
(a) If the Company or any Subsidiary shall receive in writing
any letter, notice, complaint, order, directive, claim or citation
alleging that the Company or any Subsidiary (i) has violated any
Environmental Law, (ii) has released or is about to release any
Hazardous Material other than in compliance with all Environmental Laws
(or suffered or permitted such action by any other Person on or in
respect of property owned or operated by the Company or any Subsidiary
or any other Person handling, transporting, or disposing of any
Hazardous
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Material on behalf of the Company or any Subsidiary), or (iii) is
liable for the costs of cleaning up, removing, remediating or
responding to a release or threatened release of Hazardous Materials,
which allegation in any of the foregoing instances, if true, could
reasonably be expected to result in a Material Adverse Effect, the
Company and any Subsidiary shall (a) provide prompt written notice
thereof to the Agents describing in reasonable detail the nature of the
matter and what action the Company or the applicable Subsidiary
proposes to take with respect thereto, and (b) within the time period
permitted by the applicable Environmental Law or the Governmental
Authority responsible for enforcing such Environmental Law, remove or
remedy, or cause the applicable Subsidiary to remove or remedy, such
violation or release or satisfy such liability, unless and only during
the period that the applicability of the Environmental Law, the fact of
such violation or liability or the action required to remove or remedy
such violation is being contested by the Company or the applicable
Subsidiary by appropriate proceedings diligently conducted and all
reserves with respect thereto as may be required under Generally
Accepted Accounting Principles, if any, have been made, and no Lien in
connection therewith shall have attached to any property of the Company
or the applicable Subsidiary which shall have become enforceable
against creditors of such Person.
(b) Except for Hazardous Materials necessary for the routine
maintenance of the properties owned or operated by the Company and its
Subsidiaries or as brought on to such properties in the ordinary course
of the Company's or any Subsidiary's business, which Hazardous Material
shall be used in compliance in all material respects with all
applicable Environmental Laws, the Company covenants that it shall, and
shall cause each Subsidiary to, not permit any Hazardous Materials to
be brought on to the real property owned or operated by the Company and
its Subsidiaries, or if so brought or found located thereon, shall be
immediately removed, with proper disposal, and all environmental
cleanup requirements shall be diligently undertaken pursuant to all
Environmental Laws unless the presence of such Hazardous Materials
could not reasonably be expected to result in a Material Adverse
Effect.
9.13 Further Assurances. At the Borrowers' cost and expense, upon
request of any of the Agents, duly execute and deliver or cause to be duly
executed and delivered, to the Agents such further instruments, documents and
certificates, and do and cause to be done such further acts that may be
reasonably necessary or advisable in the opinion of the Agents or any of them to
carry out more effectively the provisions and purposes of this Agreement and the
other Loan Documents.
9.14 Continued Operations. Continue at all times to conduct its
business and engage principally in the same line or lines of business
substantially as heretofore conducted.
9.15 Use of Proceeds. Use the proceeds of the Loans solely for the
purposes specified in Sections 2.11, 3.11, 4.11 and 5.11, as applicable.
9.16 Year 2000 Compliance.
(a) At the reasonable request of any Agent or Lender, make
available to such Agent or Lender the plan and time line referred to in
Section 8.02(n)(ii), together with any updates or progress reports with
respect thereto; and
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(b) Notify the Agents and the Lenders in the event the Company
discovers or determines that any computer application (including those
of its suppliers, vendors and customers) that is material to its or any
of its Subsidiaries' business and operations will not be Year 2000
Compliant, except to the extent that such failure could not reasonably
be expected to result in a Material Adverse Effect.
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ARTICLE X
Negative Covenants
Until the Total Facility Termination Date, unless the Required Lenders
shall otherwise consent in writing, the Company will not, nor will it permit any
Subsidiary to:
10.01 Consolidated Funded Indebtedness to Consolidated Total
Capitalization. Permit the ratio of Consolidated Funded Indebtedness to
Consolidated Total Capitalization to exceed 0.50 to 1.00 at any time.
10.02 Consolidated EBIT to Consolidated Interest Expense. Permit the
ratio of Consolidated EBIT to Consolidated Interest Expense for the Four-Quarter
Period immediately preceding the date of computation to be less than 3.00 to
1.00 at any time.
10.03 Liens. Incur, create or permit to exist any Lien, charge or other
encumbrance of any nature whatsoever with respect to any property or assets now
owned or hereafter acquired by the Company or any of its Subsidiaries, other
than
(a) Liens existing as of the date hereof, none of which were
granted in connection with any of the Prior Facilities, and (i) as set
forth in Schedule 10.03 attached hereto, (ii) as otherwise exist in
France, South Africa and Mexico or (iii) which attach only to office or
retail equipment;
(b) Liens imposed by law for taxes, assessments or charges of
any Governmental Authority for claims not yet due or which are being
contested in good faith by appropriate proceedings diligently
conducted, and with respect to which adequate reserves or other
appropriate provisions are being maintained in accordance with
Generally Accepted Accounting Principles;
(c) statutory or contractual Liens of landlords and Liens of
carriers, warehousemen, mechanics, materialmen and other Liens imposed
by law or created in the ordinary course of business and in existence
less than 90 days from the date of creation thereof for amounts not yet
due or which are being contested in good faith by appropriate
proceedings diligently conducted, and with respect to which adequate
reserves or other appropriate provisions are being maintained in
accordance with Generally Accepted Accounting Principles;
(d) Liens incurred or deposits made (i) in the ordinary course
of business (including, without limitation, performance and surety
bonds) in connection with workers' compensation, unemployment insurance
and other types of social security benefits or (ii) to secure the
performance of tenders, bids, leases, contracts (other than for the
repayment of Indebtedness), statutory obligations and other similar
obligations or arising as a result of progress payments under
government contracts;
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(e) easements (including reciprocal easement agreements and
utility agreements), rights-of-way, covenants, consents, reservations,
encroachments or title defects, variations and zoning and other
restrictions, charges or encumbrances (whether or not recorded)
affecting real property, which do not interfere materially with the
ordinary conduct of the business of the Company or any Subsidiary and
which do not materially detract from the value of the property to which
they attach or materially impair the use thereof to the Company or any
Subsidiary;
(f) purchase money Liens to secure Indebtedness for Money
Borrowed incurred to purchase fixed assets, provided such Indebtedness
represents not more than 100% of the purchase price of such assets as
of the date of purchase thereof and no property other than the assets
so purchased secures such Indebtedness;
(g) Liens arising in connection with Capital Leases provided
that no such Lien shall extend to or cover any property or assets other
than assets subject to the Capital Leases; and
(h) other Liens not otherwise permitted by paragraphs (a)
through (g) of this Section 10.03 to secure Indebtedness for Money
Borrowed in an aggregate principal amount outstanding that does not
result in a Default under Section 10.01 or 10.02.
10.04 Transfer of Assets. Sell, lease, transfer or otherwise dispose of
any assets of the Company or any Subsidiary other than:
(a) dispositions of inventory in the ordinary course of
business;
(b) dispositions of assets or property that are (i)
substantially worn, damaged, obsolete, (ii) in the judgment of the
Company, no longer useful in its business or that of any Subsidiary or
(iii) replaced within a reasonable period of time with assets, property
of similar or better quality performing similar functions; and
(c) transfers of assets necessary to give effect to merger or
consolidation transactions permitted by Section 10.05.
10.05 Merger or Consolidation.
(a) Consolidate with or merge into any other Person; or
(b) permit any other Person to merge into it;
provided, however, that any Person may merge into the Company or any other
Borrower so long as no Default or Event of Default occurs or is created or
results from such transaction; and provided further, that any Subsidiary which
is not a Borrower may merge with and into any other entity if the survivor is or
becomes a Subsidiary of the Company.
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10.06 Transactions with Affiliates. Enter into any transaction after
the Closing Date, including, without limitation, the purchase, sale, lease or
exchange of property, real or personal, or the rendering of any service, with
any Affiliate of the Company, except (a) that such Persons may render services
to the Company or its Subsidiaries for compensation at the same rates generally
paid by Persons engaged in the same or similar businesses for the same or
similar services, (b) that the Company or any Subsidiary may render services to
such Person for compensation at the same rates generally charged by the Company
or such Subsidiary, (c) in the case of either (a) or (b), in the ordinary course
of business and pursuant to the reasonable requirements of the Company's (or any
Subsidiary's) business and consistent with past practice of the Company and its
Subsidiaries and upon fair and reasonable terms no less favorable to the Company
(or any Subsidiary) than would be obtained in a comparable arm's-length
transaction with a Person not an Affiliate, and (d) that the Company or its
Subsidiaries may continue those transactions described on Schedule 10.06
attached hereto.
10.07 ERISA. With respect to any Pension Plan, Employee Benefit Plan or
Multiemployer Plan:
(a) permit the occurrence of any Termination Event which would
result in any material liability on the part of the Company, any ERISA
Affiliate, or any Subsidiary to the PBGC or any Governmental Authority;
or
(b) permit the present value of all benefit liabilities under
all Employee Benefit Plans to exceed materially the current value of
the assets of such Employee Benefit Plans allocable to such benefit
liabilities; or
(c) permit any material accumulated funding deficiency (as
defined in Section 302 of ERISA and Section 412 of the Code) with
respect to any Pension Plan, whether or not waived; or
(d) fail to make any contribution or payment to any
Multiemployer Plan which the Company or any ERISA Affiliate may be
required to make under any agreement relating to such Multiemployer
Plan, or any law pertaining thereto; or
(e) engage, or permit the Company or any ERISA Affiliate to
engage, in any prohibited transaction under Section 406 of ERISA or
Sections 4975 of the Code for which a material civil penalty pursuant
to Section 502(I) of ERISA or a material tax pursuant to Section 4975
of the Code may be imposed; or
(f) permit the establishment of any Employee Benefit Plan
providing post-retirement welfare benefits or establish or amend any
Employee Benefit Plan which establishment or amendment could result in
material liability to the Company or any ERISA Affiliate or any
Subsidiary or materially increase the obligation of the Company or any
ERISA Affiliate or any Subsidiary to a Multiemployer Plan; or
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(g) fail, or permit the Company or any ERISA Affiliate or any
Subsidiary to fail, to establish, maintain and operate each Employee
Benefit Plan in compliance with the provisions of ERISA, the Code, all
applicable Foreign Benefit Laws and all other applicable laws and the
regulations and interpretations thereof except for such failure that
could not reasonably be expected to result in a Material Adverse
Effect.
10.08 Acquisitions. Enter into any agreement, contract, binding
commitment or other arrangement providing for, or otherwise effect, the
acquisition of a controlling equity or other ownership interest in, or all or
substantially all of the assets of, any Person, or take any action to solicit
the tender of securities or proxies in respect thereof in order to effect any
such acquisition, other than Permitted Acquisitions.
10.09 Negative Pledge. Enter into or cause, suffer or permit to exist
any agreement with any Person other than the Agents and the Lenders pursuant to
this Agreement or any other Loan Documents which prohibits or limits the ability
of the Company or any Subsidiary to create, incur, assume or suffer to exist any
Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired.
10.10 Dissolution, Etc. Wind up, liquidate or dissolve (voluntarily or
involuntarily) or commence or suffer any proceedings seeking any such winding
up, liquidation or dissolution, except in connection with a merger or
consolidation permitted pursuant to Section 10.05 hereof.
10.11 Restrictive Agreements. Enter into or cause, suffer or permit to
exist any agreement with any other Person which prohibits, limits or restricts
the ability of any Subsidiary to make any payments, directly or indirectly, to
the Borrowers by way of dividends, advances, repayments of loans or advances, or
other returns on investments, or any other agreement or arrangement which
restricts the ability of any such Subsidiary to make any payment, directly or
indirectly, to the Borrowers.
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ARTICLE XI
Events of Default and Acceleration
11.01 Events of Default. If any one or more of the following events
(herein called "Events of Default") shall occur for any reason whatsoever (and
whether such occurrence shall be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
Governmental Authority), that is to say:
(a) if default shall be made in the due and punctual payment
of the principal of any Loan, when and as the same shall be due and
payable whether pursuant to any provision of Article II, Article III,
Article IV or Article V hereof, at maturity, by acceleration or
otherwise; or
(b) if default shall be made in the due and punctual payment
of any amount of interest on any Loan or in the due and punctual
payment of any other obligation or of any fees or other amounts payable
to any of the Lenders or the Agents on the date on which the same shall
be due and payable and such default shall continue for five (5) days
following the date such payment is due; or
(c) if default shall be made in the performance or observance
of any covenant set forth in Sections 9.07, 9.10, 9.11, 9.14, 9.15 or
9.16 or Article X hereof; or
(d) (i) if a default shall be made in the performance or
observance of, or shall occur under, any covenant, agreement or
provision contained in this Agreement (other than as described in
clause (a), (b) or (c) above) and such default shall continue for
thirty (30) or more days after the earlier of receipt of notice of such
default by the Authorized Representative from any Agent or any Borrower
becomes aware of such default, or (ii) if a default shall be made in
the performance or observance of, or shall occur under, any covenant,
agreement or provision contained in any of the other Loan Documents
(including without limitation failure of the Guarantor to pay to the
Lenders all of the Guarantors' Obligations in accordance with and as
defined in, the Guaranty on the Business Day on which such payment has
been demanded in accordance with the terms of the Guaranty) or in any
instrument or document evidencing or creating any obligation, guaranty,
Lien or security interest in favor of any Agent or any Lender or
delivered to any of the Lenders in connection with or pursuant to this
Agreement or any of the Obligations (beyond any applicable grace period
contained therein), or (iii) if any Loan Document ceases to be in full
force and effect (other than by reason of any action by any Agent or
any Lender), or (iv) if without the written consent of all the Lenders,
this Agreement or any other Loan Document shall be disaffirmed or shall
terminate, be terminable or be terminated or become void or
unenforceable for any reason whatsoever (other than in accordance with
its terms in the absence of default or by reason of any action by the
Agents or any Lender); or
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(e) if there shall occur (i) a default, which is not waived,
in the payment of any principal, interest, premium or other amount with
respect to any Indebtedness (other than the Loans and other
Obligations) of the Company or any Subsidiary and the amount of such
Indebtedness is not less than the US Dollar Equivalent Amount of US
$20,000,000 in the aggregate outstanding, or (ii) any other event of
default as specified in any agreement or instrument under or pursuant
to which any such Indebtedness may have been issued, created, assumed,
guaranteed or secured by the Borrower or any Subsidiary, and in any
such case set forth in clause (i) or (ii) above, such default or event
of default shall continue for more than the period of grace, if any,
therein specified, or such default or event of default shall permit
(or, with the giving of notice or lapse of time or both, would permit)
the holder of any such Indebtedness (or any agent or trustee acting on
behalf of one or more holders) to accelerate the maturity thereof; or
(f) if any representation, warranty or other statement of fact
contained herein or in any other Loan Document shall be false or
misleading in any material respect when given; or
(g) if the Company or any Subsidiary shall be unable to pay
its debts generally as they become due; file a petition to take
advantage of any insolvency statute; make an assignment for the benefit
of its creditors; commence a proceeding for the appointment of a
custodian, receiver, trustee, liquidator or conservator of itself or of
the whole or any substantial part of its property; file a petition or
answer seeking receivership, liquidation, reorganization or arrangement
or similar relief under the federal bankruptcy laws or any other
applicable law or statute; or
(h) if a court of competent jurisdiction shall enter an order,
judgment or decree appointing a custodian, receiver, trustee,
liquidator or conservator of the Company or any Subsidiary or of the
whole or any substantial part of its properties and such order,
judgment or decree continues unstayed and in effect for a period of
sixty (60) days, or approve a petition filed against the Company or any
Subsidiary seeking receivership, liquidation, reorganization or
arrangement or similar relief under the federal bankruptcy laws or any
other applicable law or statute of the United States of America or any
state or similar law of any other country or province thereof, which
petition is not dismissed within sixty (60) days; or if, under the
provisions of any other law for the relief or aid of debtors, a court
of competent jurisdiction shall assume custody or control of the
Company or any Subsidiary or of the whole or any substantial part of
its properties, which control is not relinquished within sixty (60)
days; or if there is commenced against the Company or any Subsidiary
any proceeding or petition seeking receivership, liquidation,
reorganization, arrangement or similar relief under the federal
bankruptcy laws or any other applicable law or statute of the United
States of America or any state or similar law of any other country or
province thereof, which proceeding or petition remains undismissed for
a period of sixty (60) days; or if the Company or any Subsidiary takes
any action to indicate its consent to or approval of any such
proceeding or petition; or
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(i) if (i) one or more judgments or orders for the payment of
money where the amount not covered by insurance (or the amount as to
which the insurer denies liability) is in an aggregate amount in excess
of the US Dollar Equivalent Amount of US $20,000,000 is rendered
against the Company or any Subsidiary, or (ii) there is any attachment,
injunction or execution against any of the Company's or any
Subsidiary's properties for any amount in excess of the US Dollar
Equivalent Amount of US $20,000,000 in the aggregate; and such
judgment, attachment, injunction or execution remains unpaid, unstayed,
undischarged, unbonded or undismissed for a period of thirty (30) days;
or
(j) if there shall occur any Change of Control;
then, and in any such event and at any time thereafter, if such Event of Default
or any other Event of Default shall then be continuing,
(A) either or both of the following actions may be
taken: (i) the Global Agent, with the consent of the Required
Lenders with respect to the Total Facilities, may, and at the
direction of the Required Lenders with respect to the Total
Facilities, shall, declare any obligation of the Lenders to
make further Loans terminated, whereupon the obligation of
each Lender to make further Loans hereunder shall terminate
immediately, and (ii) the Global Agent shall at the direction
of the Required Lenders with respect to the Total Facilities,
at their option, declare by notice to the Borrowers any or all
of the Obligations to be immediately due and payable, and the
same, including all interest accrued thereon and all other
obligations of the Borrowers to the Agents and the Lenders,
shall forthwith become immediately due and payable without
presentment, demand, protest, notice or other formality of any
kind, all of which are hereby expressly waived, anything
contained herein or in any instrument evidencing the
Obligations to the contrary notwithstanding; provided,
however, that notwithstanding the above, if there shall occur
an Event of Default under clause (g) or (h) above, then the
obligations of the Lenders to make Loans hereunder shall
automatically terminate and any and all of the Obligations
shall be immediately due and payable without the necessity of
any action by the Global Agent or the Required Lenders with
respect to the Total Facilities or notice by the Global Agent
or the Required Lenders with respect to the Total Facilities;
provided further, however, that neither the Required Lenders
with respect to a specific Facility nor the Applicable
Facility Agent shall have any power or authority under this
Section 11.01 separate or apart from that of the Required
Lenders of the Total Facilities; and
(B) The Agents and each of the Lenders shall have all
of the rights and remedies available under the Loan Documents
or under any applicable law.
11.02 Global Agent to Act. In case any one or more Events of Default
shall occur and be continuing, the Global Agent may, and at the direction of the
Required Lenders with respect to the Total Facilities shall, proceed to protect
and enforce their rights or remedies either by suit in equity or by action at
law, or both, whether for the specific performance of any covenant, agreement or
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other provision contained herein or in any other Loan Document, or to enforce
the payment of the Obligations or any other legal or equitable right or remedy.
11.03 Cumulative Rights. No right or remedy herein conferred upon the
Lenders or the Agents is intended to be exclusive of any other rights or
remedies contained herein or in any other Loan Document, and every such right or
remedy shall be cumulative and shall be in addition to every other such right or
remedy contained herein and therein or now or hereafter existing at law or in
equity or by statute, or otherwise.
11.04 No Waiver. No course of dealing between the Borrowers and any
Lender or any Agent or any failure or delay on the part of any Lender or any
Agent in exercising any rights or remedies under any Loan Document or otherwise
available to it shall operate as a waiver of any rights or remedies and no
single or partial exercise of any rights or remedies shall operate as a waiver
or preclude the exercise of any other rights or remedies hereunder or of the
same right or remedy on a future occasion.
11.05 Allocation of Proceeds. If an Event of Default has occurred and
not been waived, and the maturity of the Obligations has been accelerated
pursuant to Article XI hereof, all payments received by the Agents hereunder in
respect of any principal of or interest on the Obligations or any other amounts
payable by the Borrowers hereunder shall be applied by the Agents in the
following order:
(a) amounts due to the Lenders pursuant to Sections 2.09,
3.09, 4.09, 5.09 and 13.05 hereof, to be applied for the ratable
benefit of the lenders without distinction or preference as among
facilities;
(b) amounts due to the Agents pursuant to Section 12.08
hereof, to be applied for the ratable benefit of the Agents;
(c) payments of interest on Loans, to be applied for the
ratable benefit of the Lenders, without distinction or preference as
among Australian Facility Loans, Canadian Facility Loans, UK Facility
Loans and US Facility Loans;
(d) payments of principal on Loans, to be applied for the
ratable benefit of the Lenders, without distinction or preference as
among Australian Facility Loans, Canadian Facility Loans, UK Facility
Loans and US Facility Loans;
(e) amounts due to the Agents or the Lenders pursuant to
Section 13.10, to be applied for the ratable benefit of the Agents and
the Lenders;
(f) payments of all other Obligations due under any of the
Loan Documents, if any, to be applied for the ratable benefit of the
Lenders and the Agents; and
(g) any surplus remaining after application as provided for
herein, to the Borrowers or as otherwise may be required by applicable
law.
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11.06 Judgment Currency. The Borrowers, the Agents and each Lender
hereby agree that if, in the event that a judgment is given in relation to any
sum due to any Agent or any Lender hereunder, such judgment is given in a
currency (the "Judgment Currency") other than that in which such sum was
originally denominated (the "Original Currency"), the Borrowers agree to
indemnify such Agent or Lender, as the case may be, to the extent that the
amount of the Original Currency which could have been purchased thereby in
accordance with normal banking procedures on the Business Day following receipt
of such sum is less than the sum which could have been so purchased thereby had
such purchase been made on the day on which such judgment was given or, if such
day is not a Business Day, on the Business Day immediately preceding the giving
of such judgment, and if the amount so purchased exceeds the amount which could
have been so purchased thereby had such purchase been made on the day on which
such judgment was given or, if such day is not a Business Day, on the Business
Day immediately preceding such judgment, such Agent or Lender agrees to remit
such excess to the Borrowers. The agreements in this Section 11.06 shall survive
payment of any such judgment.
11.07 Funding and Payment of Participations; Conversion to US Dollars.
(a) At any time after the occurrence and during the continuance of an
Event of Default, the Applicable Lenders having Applicable Fronting Commitments
aggregating more than 50% of the Applicable Total Facility Commitment with
respect to any specific Facility (the "Required Fronting Lenders") may, by
written notice to the Applicable Facility Agent (with a copy to the Company and
the Global Agent) not later than 11:00 A.M. (local time of the Principal Office
of the Applicable Facility Agent) on the second Business Day preceding the
proposed date of funding and payment by each Lender of all Participations
purchased in such Facility as provided in Article II, Article III, Article IV,
or Article V hereof (the "Facility Participation Payment Date"), request each
Lender to fund and pay for its Participation in such Facility and deliver to the
Applicable Facility Agent on the Facility Participation Payment Date an
aggregate amount of the Applicable Currency equal to such Participation (or the
British Pounds Sterling Equivalent Amount or Australian Dollar Equivalent Amount
of such Participation, as applicable). At the option of such Required Fronting
Lenders, and as set forth in such notice, (i) all outstanding Loans under such
Facility immediately shall be converted into Loans denominated in US Dollars in
an aggregate principal amount equal to the US Dollar Equivalent Amount of the
aggregate principal amount of such Loans based on the Spot Rate of Exchange on
such Facility Participation Payment Date, and (ii) each such Participation shall
be funded in an aggregate amount of US Dollars equal to the US Dollar Equivalent
Amount of such Participation. The Applicable Facility Agent will promptly
provide written notice of any such request to the other Facility Agents, who
shall promptly provide notice thereof to the Lenders in their respective
Facilities.
(b) On the applicable Facility Participation Payment Date, each
Participant in the specific Facility shall deliver the amount of such
Participant's Facility Participation Amount with respect to such Facility in the
Applicable Currency and in Same Day Funds to the Applicable Facility Agent;
provided, however, that no Participant shall be responsible for any default by
any other Participant in such other Participant's obligation to pay such amount.
Upon receipt of any such amounts from the Participants, the Applicable Facility
Agent shall distribute such amounts in Same Day Funds to the Applicable Lenders
in such amounts such that, after such distribution, each Applicable Lender and
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each Participant in such Facility has a Facility Credit Exposure under such
Facility, expressed as a percentage of the Aggregate Facility Credit Exposure
under such Facility, equal to its Applicable Commitment Percentage. In order to
evidence further such Participation (and without prejudice to the effectiveness
of the Participation provisions set forth above), each Participant agrees to
enter into a separate participation agreement at the request of any Applicable
Lender in such Facility in form and substance reasonably satisfactory to such
Lender.
(c) In the event that any Participant fails to make available to the
Applicable Facility Agent the amount of its Participation as provided herein,
the Applicable Facility Agent shall be entitled to recover such amount on behalf
of the Applicable Lenders on demand from such Participant together with interest
at the customary rate set by such Applicable Facility Agent for the correction
of errors among banks for three (3) Business Days and thereafter at a rate per
annum equal to the Applicable Base Rate with respect to such Facility (or, with
respect to the UK Facility, the Default Rate). A certificate of the Applicable
Facility Agent submitted to any Lender with respect to amounts owing hereunder
shall be conclusive in the absence of manifest error.
(d) In the event that any Applicable Lender in a specific Facility
receives a payment in respect of any Loan made under such Facility, whether
directly from the Applicable Borrower or Borrowers or otherwise, in which
Participants have purchased Participations, such Applicable Lender shall
promptly distribute to the Applicable Facility Agent, for distribution to each
such Participant that has paid all such amounts payable by it hereunder with
respect to any Loan made under such Facility by such Applicable Lender, such
Participant's Applicable Commitment Percentage of such payment. Any payment to
any Participant pursuant to the preceding sentence shall be made in US Dollars
or Applicable Currency (whichever currency was delivered for payment of such
Participation) in Same Day Funds by such Applicable Facility Agent. If any
payment received by any Applicable Lender in a specific Facility pursuant to the
immediately preceding sentence with respect to any Loan made under such Facility
by it shall be required to be returned by such Applicable Lender after such time
as such Applicable Lender has distributed such payment to the Applicable
Facility Agent, each Participant that has received a portion of such payment
shall pay to such Applicable Lender an amount equal to its Applicable Commitment
Percentage of such amount to be returned; provided, however, that no Participant
shall be responsible for any default by any other Participant in that other
Participant's obligation to pay such amount.
(e) Anything contained herein to the contrary notwithstanding, each
Participant's obligation to pay for its purchase of Participations pursuant to
subsection (a) shall be absolute, irrevocable and unconditional and shall not be
affected by any circumstance, including, without limitation, (i) any set-off,
counterclaim, recoupment, defense or other right which such Lender or
Participant may have against any Applicable Lender, the Applicable Facility
Agent, any Borrower or any other Person for any reason whatsoever; (ii) the
occurrence or continuance of an Event of Default or a Default; (iii) any adverse
change in the condition (financial or otherwise) of any Borrower; (iv) any
breach of this Agreement or any other Loan Document by any Borrower, the
Guarantor or any other Lender; or (v) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing.
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(f) Anything contained in this Agreement to the contrary
notwithstanding, no amendment, modification, termination or waiver of any
provision of this Agreement or of the other Loan Documents, and no consent to
any departure by any Borrower therefrom, shall (i) modify, terminate or waive
any provision of this Section 11.07 in any manner adverse to any Lender without
the written concurrence of such Lender, or (ii) modify, terminate or waive any
provision of this Section 11.07 in any manner adverse to any Participant without
the written concurrence of such Participant.
(g) In no event shall (i) the Participation of any Participant in any
Loans pursuant to this Section 11.07 be construed as a loan or other extension
of credit by such Participant to any Borrower, any Lender or any Facility Agent,
(ii) this Agreement be construed to require any Participant to make any Loans or
to otherwise extend any credit to any Borrower, any Lender or any Agent under
this Agreement or under the other Loan Documents, or (iii) this Agreement be
construed to require any Participant to fund or pay any amount in respect of its
Participation in any Loan except as set forth herein.
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ARTICLE XII
The Agents
12.01 Appointment, Powers, and Immunities. Each Lender hereby
irrevocably appoints and authorizes NationsBank to act as the Global Agent,
National City Bank to act as the US Facility Agent, NationsBank to act as the UK
Facility Agent, Bank of America Canada to act as the Canadian Facility Agent and
Bank of America to act as the Australian Facility Agent under this Agreement and
the other Loan Documents with such powers and discretion as are specifically
delegated to the Global Agent and the Applicable Facility Agent by the terms of
this Agreement and the other Loan Documents, together with such other powers as
are reasonably incidental thereto. Each Agent (which terms as used in this
Article hereof shall include its affiliates and its own and its affiliates'
officers, directors, employees, and agents):
(a) shall not have any duties or responsibilities except those
expressly set forth in this Agreement and shall not be a trustee or
fiduciary for any Lender;
(b) shall not be responsible to the Lenders for any recital,
statement, representation, or warranty (whether written or oral) made
in or in connection with any Loan Document or any certificate or other
document referred to or provided for in, or received by any of them
under, any Loan Document, or for the value, validity, effectiveness,
genuineness, enforceability, or sufficiency of any Loan Document, or
any other document referred to or provided for therein or for any
failure by any Borrower or any other Person to perform any of its
obligations thereunder;
(c) shall not be responsible for or have any duty to
ascertain, inquire into, or verify the performance or observance of any
covenants or agreements by any Borrower or the satisfaction of any
condition or to inspect the property (including the books and records)
of any Borrower or any of its Subsidiaries or affiliates;
(d) shall not be required to initiate or conduct any
litigation or collection proceedings under any Loan Document; and
(e) shall not be responsible for any action taken or omitted
to be taken by it under or in connection with any Loan Document, except
for its own gross negligence or willful misconduct.
Each Agent may employ agents and attorneys-in-fact and shall not be
responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care.
12.02 Reliance by Agents. Each Agent shall be entitled to rely upon any
certification, notice, instrument, writing, or other communication (including,
without limitation, any thereof by telephone or telefacsimile) believed by it to
be genuine and correct and to have been signed, sent or made by or on behalf of
the proper Person or Persons, and upon advice and statements of legal counsel
(including counsel for any Borrower), independent accountants, and other experts
selected by such
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Agent. As to any matters not expressly provided for by this Agreement, none of
the Agents shall be required to exercise any discretion or take any action, but
shall be required to act or to refrain from acting (and shall be fully protected
in so acting or refraining from acting) upon the instructions of the Required
Lenders with respect to the Total Facilities, in the case of the Global Agent,
or the Required Lenders with respect to a specific Facility or with respect to
the Total Facilities, as the context may require, in the case of any Agent, and
such instructions shall be binding on all of the Applicable Lenders; provided,
however, no Agent shall be required to take any action that exposes it to
personal liability or that is contrary to any Loan Document or applicable law or
unless it shall first be indemnified to its satisfaction by the Applicable
Lenders against any and all liability and expense which may be incurred by it by
reason of taking any such action.
12.03 Defaults. No Agent shall be deemed to have knowledge or notice of
the occurrence of a Default or Event of Default unless it has received written
notice from another Agent or a Lender or a Borrower specifying such Default or
Event of Default and stating that such notice is a "Notice of Default";
provided, that each Lender shall use its best reasonable efforts to deliver such
notice to its Applicable Facility Agent upon its knowledge of any Default or
Event of Default; provided further, that the failure to deliver such notice
shall not result in any liability to any other Lender or Agent. In the event
that any Facility Agent receives such a notice of the occurrence of a Default or
Event of Default, such Facility Agent shall give prompt notice thereof to the
Applicable Lenders in its specific Facility and the other Agents, including the
Global Agent. In the event that the Global Agent receives such a notice of the
occurrence of a Default or Event of Default, the Global Agent shall give prompt
notice thereof to all Facility Agents. The Global Agent shall (subject to
Section 12.02 hereof) take such action with respect to such Default or Event of
Default as shall reasonably be directed by the Required Lenders with respect to
the Total Facilities, provided that, unless and until the Global Agent shall
have received such directions, the Global Agent may (but shall not be obligated
to) take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable in the best interest of
the Lenders.
12.04 Rights as Lender. With respect to its Applicable Facility
Commitments and the Loans made by it, each of NationsBank (and any successor
acting as Global Agent), National City Bank (and any successor acting as US
Facility Agent), NationsBank (and any successor acting as UK Facility Agent),
Bank of America Canada (and any successor acting as Canadian Facility Agent) and
Bank of America (or any successor acting as Australian Facility Agent) in its
capacity as a Lender hereunder shall have the same rights and powers hereunder
as any other Lender and may exercise the same as though it were not acting as
the Global Agent, US Facility Agent, UK Facility Agent, Canadian Facility Agent
or Australian Facility Agent, as applicable, and the term "Lender" or "Lenders"
shall, unless the context otherwise indicates, include each of the Agents in its
individual capacity. Each of NationsBank (and any successor acting as Global
Agent), National City Bank (and any successor acting as US Facility Agent),
NationsBank (and any successor acting as UK Facility Agent), Bank of America
Canada (and any successor acting as Canadian Facility Agent) and Bank of America
(or any successor acting as Australian Facility Agent) and their respective
affiliates may (without having to account therefor to any Lender) accept
deposits from, lend money to, make investments in, provide services to, and
generally engage in any kind of lending, trust, or other business with any
Borrower or any of its Subsidiaries or affiliates as if it were not acting as
Global Agent, US Facility Agent, UK Facility Agent, Canadian Facility Agent or
Australian Facility Agent,
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as applicable, and each of NationsBank (and any successor acting as Global
Agent), National City Bank (and any successor acting as US Facility Agent),
NationsBank (and any successor acting as UK Facility Agent), Bank of America
Canada (and any successor acting as Canadian Facility Agent) and Bank of America
(and any successor acting as Australian Facility Agent) and their respective
affiliates may accept fees and other consideration from any Borrower or any of
its Subsidiaries or affiliates for services in connection with this Agreement or
otherwise without having to account for the same to the Lenders.
12.05 Indemnification. The Lenders agree to indemnify the Agents (to
the extent not reimbursed under Section 13.10 hereof, but without limiting the
obligations of the Borrowers under such Section), for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including attorneys' fees), or disbursements of any kind and nature
whatsoever that may be imposed on, incurred by or asserted against any of the
Agents (including by any Lender) in any way relating to or arising out of any
Loan Document or the transactions contemplated thereby or any action taken or
omitted by any of the Agents under any Loan Document; provided that no Lender
shall be liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the Person to be indemnified. Without
limitation of the foregoing, each Lender agrees to reimburse the Agents promptly
upon demand for its or their ratable share (based on their Applicable Commitment
Percentages) of any costs or expenses payable by the Borrowers under Section
13.06, to the extent that the Agents are not promptly reimbursed for such costs
and expenses by the Borrowers. The agreements contained in this Section shall
survive payment in full of the Obligations, termination of each Commitment and
the occurrence of the Total Facility Termination Date.
12.06 Non-Reliance on Agents and Other Lenders. Each Lender agrees that
it has, independently and without reliance on any of the Agents or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Borrowers and their
Subsidiaries and decision to enter into this Agreement and that it will,
independently and without reliance upon any of the Agents or any other Lender,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own analysis and decisions in taking or not taking
action under the Loan Documents. Except for notices, reports, and other
documents and information expressly required to be furnished to the Lenders by
the Agents hereunder, the Agents shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the affairs,
financial condition, or business of any Borrower or any of its Subsidiaries or
affiliates that may come into the possession of any of the Agents or any of its
affiliates.
12.07 Resignation of an Agent. Any of the Agents may resign at any time
by giving notice thereof (a) with respect to the resignation of the Global
Agent, to the Lenders, the Borrowers and the Facility Agents, and (b) with
respect to the resignation of any Applicable Facility Agent, to the Applicable
Lenders, the Applicable Borrowers, the Company and the Global Agent. Upon any
such resignation of the Global Agent, the Required Lenders with respect to the
Total Facilities shall have the right to appoint a successor Global Agent, which
shall be a Lender under the Total Facilities at such time and which, so long as
no Default or Event of Default exists, shall be acceptable to the Company, which
acceptance shall not be unreasonably withheld or delayed. Upon any such
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resignation of an Applicable Facility Agent, the Required Lenders with respect
to the specific Facility shall have the right to appoint a successor Facility
Agent for such Facility, which shall be a Lender under such Facility at such
time and which, so long as no Default or Event of Default exists, shall be
acceptable to the Company, which acceptance shall not be unreasonable withheld
or delayed. If no successor Global Agent or Applicable Facility Agent shall have
been so appointed and shall have accepted such appointment within thirty (30)
days after the retiring Global Agent or Applicable Facility Agent's giving of
notice of resignation, then the resignation of the retiring Global Agent or
Applicable Facility Agent as the case may be, shall nonetheless thereupon be
effective and the Facility Agents, in the case of the Global Agent's
resignation, or the Applicable Facility Lenders, in the case of an Applicable
Facility Agent's resignation, shall perform all the obligations of the retiring
Agent hereunder until such time, if any, as the Required Lenders shall appoint a
successor Agent as provided for above. Upon the acceptance of any appointment as
Global Agent or Applicable Facility Agent hereunder by a successor, such
successor shall thereupon succeed to and become vested with all the rights,
powers, discretion, privileges, and duties of the retiring Global Agent or
Applicable Facility Agent, and the retiring Global Agent or Applicable Facility
Agent shall be discharged from its duties and obligations hereunder. After any
retiring Global Agent or Applicable Facility Agent's resignation hereunder as
Global Agent or Applicable Facility Agent, the provisions of this Article XII
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as Global Agent or Applicable
Facility Agent.
12.08 Fees. The Borrowers agree to pay to each of the Agents, for its
individual account, an annual fee as from time to time agreed to by the
Borrowers and the Global Agent or Applicable Facility Agent, as applicable, in
writing.
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ARTICLE XIII
Miscellaneous
13.01 Assignments and Participations.
(a) Each Lender may assign to one or more Eligible Assignees all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Loans, its Notes, its Applicable Facility
Commitments, its Applicable Fronting Commitments and its Participations);
provided, however, that
(i) each such assignment shall be to an Eligible Assignee;
(ii) except in the case of an assignment to another Lender or
an assignment of all of a Lender's rights and obligations in the US
Facility, UK Facility, Canadian Facility or Australian Facility,
respectively, under this Agreement, any such partial assignment shall
be in an amount at least equal to US $5,000,000 of such Lender's US
Facility Commitment, pound 3,000,000 of such Lender's UK Facility
Commitment (if any), CAN $7,000,000 of such Lender's Canadian Facility
Commitment (if any) and AUS $5,000,000 of such Lender's Australian
Facility Commitment (if any);
(iii) each such assignment by a Lender shall be of a constant,
and not varying, percentage of all of its rights and obligations
(including Loans, Applicable Facility Commitments, Applicable Fronting
Commitments and Participations) under this Agreement with respect to
each Facility;
(iv) the parties to such assignment shall execute and deliver
to the Applicable Facility Agent and the Global Agent for their
acceptance an Assignment and Acceptance in the form of Exhibit B
hereto, together with any Note subject to such assignment and a
processing fee of US $5,000 payable pro rata to the Global Agent and
each Applicable Facility Agent;
(v) each assignee must be a US Facility Lender and a Lender
under at least one (1) additional Facility after giving effect to any
assignment hereunder; and
(vi) such assignee shall have an office located in the United
States.
Upon execution, delivery, and acceptance of such Assignment and
Acceptance, the assignee thereunder shall be a party hereto and, to the
extent of such assignment, have the obligations, rights, and benefits
of a Lender hereunder and the assigning Lender shall, to the extent of
such assignment, relinquish its rights and be released from its
obligations under this Agreement. Upon the consummation of any
assignment pursuant to this Section, the assignor, the Applicable
Facility Agent and the Applicable Borrowers shall make appropriate
arrangements so that, if required, new Notes are issued to the assignor
and the assignee. If the assignee is not incorporated under the laws of
the appropriate jurisdiction for the Applicable Facilities,
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it shall deliver to the Borrowers and the Applicable Facility Agent
certification as to exemption from deduction or withholding of Taxes in
accordance with Section 6.06.
(b) Each Applicable Facility Agent shall maintain at its address
referred to in Section 13.02 a copy of each Assignment and Acceptance delivered
to and accepted by it and a register for the recordation of the names and
addresses of the Applicable Lenders and each Applicable Facility Commitment of,
and principal amount of the Outstandings owing to, each such Applicable Lender
from time to time (the "Register"). The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and the
Applicable Borrowers, the Global Agent, the Applicable Facility Agent and the
Applicable Lender may treat each Person whose name is recorded in the Register
as a Lender hereunder under the Applicable Facility for all purposes of this
Agreement. The Register shall be available for inspection by any Applicable
Borrower or any Applicable Lender at any reasonable time and from time to time
upon reasonable prior notice.
(c) Upon its receipt of an Assignment and Acceptance executed by the
parties thereto, together with any Note subject to such assignment and payment
of the processing fee, the Global Agent and the Applicable Facility Agent shall,
if such Assignment and Acceptance has been completed and is in substantially the
form of Exhibit B hereto, accept such Assignment and Acceptance and record the
information contained therein in the Register, and the Applicable Facility Agent
shall thereafter give prompt notice thereof to the parties thereto.
(d) Each Lender may sell participations to one or more Persons in all
or a portion of its rights and obligations under this Agreement (including all
or a portion of its Applicable Facility Commitments, Applicable Fronting
Commitments, Participations and Outstandings owing thereto); provided, however,
that (i) such Lender's obligations under this Agreement shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations, (iii) the participant shall be entitled to
the benefit of the yield protection provisions contained in Article VI and the
right of set-off contained in Section 13.03, (iv) the Applicable Borrowers and
Applicable Lenders shall continue to deal solely and directly with such Lender
in connection with such Lender's rights and obligations under this Agreement,
and (v) such Lender shall retain the sole right to enforce the obligations of
the Applicable Borrowers relating to its Loans and its Notes and its
Participations and to approve any amendment, modification, or waiver of any
provision of this Agreement (other than amendments, modifications, or waivers
decreasing or reducing the amount of principal of or the rate at which interest
is payable or the amount of fees payable on such Loans or Notes, extending any
scheduled principal payment date or date fixed for the payment of interest on
such Loans or Notes, releasing the Guarantor or any Borrower or providing for
any assignment of their Obligations, or extending any Applicable Facility
Commitment of such Lender), each of which may, if so agreed in writing, require
the prior consent of any such participant in such Lender's Commitments and
Participations and Outstandings owing thereto before such Lender approves any
such amendment, modification or waiver.
(e) Notwithstanding any other provision set forth in this Agreement,
any Lender may at any time assign and pledge all or any portion of its Loans,
its Notes, its Obligations and its interest under the Loan Documents to any
Federal Reserve Bank as collateral security pursuant to
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Regulation A and any Operating Circular issued by such Federal Reserve Bank. No
such assignment shall release the assigning Lender from its obligations
hereunder.
(f) Any Lender may furnish any information concerning any Borrower or
any of its Subsidiaries in the possession of such Lender from time to time to
assignees and participants (including prospective assignees and participants)
evaluating the assignment or participation and subject to the prior execution by
such party of the form of confidentiality agreement required by the Company as
of the Closing Date of all Lenders.
(g) In the event that any Lender fails to maintain an Investment Grade
Rating (a "Non-Rated Lender"), such Lender shall be replaced as soon as
practicable by, and assign all its Loans, Applicable Facility Commitments,
Applicable Fronting Commitments, Participations and other Obligations owing
thereto pursuant to Section 13.01 to, a financial institution selected by the
Company and willing to become a Lender for all purposes hereunder which is an
Eligible Assignee. Such Non-Rated Lender agrees to execute and deliver to the
Global Agent and to the Applicable Facility Agent of each Facility in which such
Non-Rated Lender has made or was obligated to make Loans an Assignment and
Acceptance with such replacement Lender upon payment at par by such replacement
lender of all principal, interest, fees and other amounts owing under this
Agreement to such Non-Rated Lender. The Non-Rated Lender shall pay to the
Applicable Facility Agent the processing fee required by Section 13.01(a)(iv) in
connection with such assignment. Upon acceptance of the Assignment and
Acceptance and satisfaction of all other conditions in Section 13.01(a), (b),
(c), such replacement lender shall become a Lender hereunder.
(h) No Borrower may assign any rights, powers, duties or obligations
under this Agreement or the other Loan Documents without the prior written
consent of all the Lenders.
13.02 Notices. Any notice shall be presumed to have been received by
any party hereto and be effective (i) on the day on which delivered (including
hand delivery by commercial courier service) to such party (against receipt
therefor), (ii) on the date of receipt at such address or telefacsimile number
as may from time to time be specified by such party in written notice to the
other parties hereto, or (iii) on the fifth Business Day after the date on which
mailed, if sent prepaid by certified or registered mail, return receipt
requested, in each case delivered, transmitted or mailed, as the case may be, to
the address or telefacsimile number, as appropriate, set forth below or such
other address or number as such party shall specify by notice thereunder:
(a) if to any Borrower:
c/o American Greetings Corporation
One American Road
Cleveland, Ohio 44144
Attention: Manager of Treasury Operations
Telefacsimile: (216) 252-6791
Telephone: (216) 252-7300
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with a copy to:
American Greetings Corporation
One American Road
Cleveland, Ohio 44144
Attention: General Counsel
Telefacsimile: (216) 252-6741
Telephone: (216) 252-7300
(b) if to the Authorized Representative:
at the address set forth for
receipt of notices in the
notice of appointment thereof.
(c) if to the Global Agent:
NationsBank, N.A.
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Telefacsimile: (704) 386-8694
Telephone: (704) 386-8382
with a copy to:
NationsBank, N.A.
NationsBank Corporate Center
100 North Tryon Street
NC1 007-08-04
Charlotte, North Carolina 28255-0065
Attention: Mr. Philip S. Durand
Telefacsimile: (704) 388-0960
Telephone: (704) 386-4955
(d) if to the Agents:
At the addresses set forth on the signature pages
hereof.
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(e) if to the Lenders:
At the addresses set forth on the signature pages
hereof and on the signature page of each Assignment
and Acceptance
13.03 Right of Set-off; Adjustments.
(a) Upon the occurrence and during the continuance of any Event of
Default, each Lender (and each of its affiliates) is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by such
Lender (or any of its affiliates) to or for the credit or the account of any
Applicable Borrower against any and all of the Obligations of such Borrower now
or hereafter existing under this Agreement, any other Loan Document and the Note
of such Borrower held by such Lender, irrespective of whether such Lender shall
have made any demand under this Agreement, any other Loan Document or such Notes
and although such Obligations may be unmatured. Each Lender agrees promptly to
notify the Applicable Borrower, the Global Agent and the Applicable Facility
Agent after any such set-off and application made by such Lender; provided,
however, that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of each Lender under this Section
13.03(a) are in addition to other rights and remedies (including, without
limitation, other rights of set-off) that such Lender may have.
(b) Each Lender agrees that if it shall, through the exercise of a
right of banker's lien, set-off, counterclaim or otherwise, obtain payment with
respect to its Obligations (other than pursuant to Article VI) which results in
its receiving more than its pro rata share of the aggregate payments with
respect to all of the Obligations in a specific Facility, or with respect to all
of the Obligations in the Total Facilities, after acceleration thereof pursuant
to Section 11.01(A) (other than any payment expressly provided hereunder to be
distributed on other than a pro rata basis and payments pursuant to Article VI),
then (i) such Lender shall be deemed to have simultaneously purchased from the
other Applicable Lenders or all Lenders, as the case may be, a share in their
Obligations so that the amount of the Obligations held by each of the Applicable
Lenders or all Lenders, as the case may be, shall be pro rata and (ii) such
other adjustments shall be made from time to time as shall be equitable to
ensure that the Lenders share such payments ratably; provided, however, that for
purposes of this Section 13.03(b) the terms "pro rata" and "ratably" shall be
determined with respect to the Applicable Commitment Percentage of each Lender
after subtraction of amounts, if any, by which any such Lender has not funded
its share of the outstanding Loans. If all or any portion of any such excess
payment is thereafter recovered from the Lender which received the same, the
purchase provided in this Section 13.03 (b) shall be rescinded to the extent of
such recovery, without interest. The Borrowers expressly consent to the
foregoing arrangements and agree that each Lender so purchasing a portion of the
other Lenders' Obligations may exercise all rights of payment (including,
without limitation, all rights of set-off, banker's lien or counterclaim) with
respect to such portion as fully as if such Lender were the direct holder of
such portion.
13.04 Survival. All covenants, agreements, representations and
warranties made herein shall survive the making by the Lenders of the Loans and
the execution and delivery to the Lenders of this
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Agreement and the Notes and shall continue in full force and effect so long as
any Obligations remain outstanding or any Lender has any commitment hereunder or
any Borrower has continuing obligations hereunder unless otherwise provided
herein. Whenever in this Agreement any of the parties hereto is referred to,
such reference shall be deemed to include the successors and permitted assigns
of such party and all covenants, provisions and agreements by or on behalf of
the Borrowers which are contained in the Loan Documents shall inure to the
benefit of the successors and permitted assigns of the Lenders or any of them.
13.05 Expenses. Each Borrower jointly and severally agrees to pay on
demand all reasonable costs and expenses of the Global Agent, the Canadian
Facility Agent and the Australian Facility Agent in connection with the
syndication, preparation, execution, delivery, administration, modification, and
amendment of this Agreement, the other Loan Documents, and the other documents
to be delivered hereunder, including, without limitation, the reasonable fees
and expenses of counsel (including the allocated cost of internal counsel) for
the Global Agent and the allocated cost of internal counsel for the Canadian
Facility Agent and the Australian Facility Agent with respect thereto and with
respect to advising the Agents as to their rights and responsibilities under the
Loan Documents. Each Borrower further agrees jointly and severally to pay on
demand all costs and expenses of each Agent and each Lender, if any (including,
without limitation, reasonable attorneys' fees and expenses), in connection with
the enforcement or preservation of rights under this Agreement (whether through
negotiations, legal proceedings, or otherwise), any other Loan Documents and any
other documents to be delivered hereunder. The agreements contained in this
Section shall survive payment in full of the Obligations, termination of each
Commitment and the occurrence of the Total Facility Termination Date.
13.06 Amendments and Waivers. Any provision of this Agreement or any
other Loan Document may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed by the Borrowers and the Required Lenders
with respect to the Total Facilities, and, if Article XII or the rights or
duties of the Global Agent or any Applicable Facility Agent are affected
thereby, by the Global Agent and/or the Applicable Facility Agent, as
applicable; provided that no such amendment or waiver shall, unless signed by
all the Lenders, (i) increase the US Facility Commitment, UK Facility
Commitment, Canadian Facility Commitment or Australian Facility Commitment, or
the US Facility Fronting Commitment, UK Facility Fronting Commitment, Canadian
Facility Fronting Commitment or Australian Facility Fronting Commitment, as
applicable, of any Lender or increase the Total US Facility Commitment, the
Total UK Facility Commitment, the Total Canadian Facility Commitment or the
Total Australian Facility Commitment; (ii) reduce the principal of or rate of
interest on any Loan or any fees or other amounts payable hereunder; (iii)
postpone any date fixed for the payment of any scheduled installment of
principal of or interest on any Loan or any fees or other amounts payable
hereunder or the Total Facility Termination Date, the US Facility Revolving
Credit Termination Date or the Canadian Facility Renewable Tranche Termination
Date; (iv) change the percentage of the Applicable Facility Commitment or the
Total Commitment, as applicable, or of the Aggregate Credit Exposure or the
number of Lenders, which shall be required for the Lenders or any of them to
take any action under this Section or any other provision of this Agreement; or
(v) release or allow an assignment by any Borrower or the Guarantor; provided
further, however, that the amendment or waiver of any of the following
provisions of a specific Facility need only be signed by the Applicable
Borrowers, the Applicable Facility Agent and the Required Lenders with respect
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<PAGE> 129
to such Facility: (x) delivery of Borrowing Notices with respect to any Advance,
Continuation or Conversion under the specific Facility, (y) delivery of notice
for any reduction in the Applicable Total Facility Commitment, and (z) minimum
or integral amounts of Advances or Loans under the specific Facility.
No notice to or demand on any Borrower in any case shall entitle such
Borrower to any other or further notice or demand in similar or other
circumstances, except as otherwise expressly provided herein. No delay or
omission on any Lender's or any Agent's part in exercising any right, remedy or
option shall operate as a waiver of such or any other right, remedy or option or
of any Default or Event of Default. The rights and remedies herein provided are
cumulative and not exclusive of any rights or remedies provided by law.
13.07 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such fully-executed counterpart.
13.08 Termination. The termination of this Agreement shall not affect
any rights of the Borrowers, the Lenders or the Agents or any obligation of any
Borrower, the Lenders or any of the Agents, arising prior to the effective date
of such termination, and the provisions hereof shall continue to be fully
operative until all transactions entered into or rights created or obligations
incurred prior to such termination have been fully disposed of, concluded or
liquidated and the Obligations arising prior to or after such termination have
been irrevocably paid in full. The rights granted to the Agents for the benefit
of the Lenders hereunder and under the other Loan Documents shall continue in
full force and effect, notwithstanding the termination of this Agreement, until
termination of each Commitment and all of the Obligations have been paid in full
after the termination hereof (other than Obligations in the nature of continuing
indemnities or expense reimbursement obligations not yet due and payable, which
shall continue) or the Borrowers have furnished the Lenders and the Agents with
an indemnification satisfactory to the Agents and each Lender with respect
thereto. All representations, warranties, covenants, waivers and agreements
contained herein shall survive termination hereof until payment in full of the
Obligations unless otherwise provided herein. Notwithstanding the foregoing, if
after receipt of any payment of all or any part of the Obligations, any Lender
is for any reason compelled to surrender such payment to any Person because such
payment is determined to be void or voidable as a preference, impermissible
setoff, a diversion of trust funds or for any other reason, this Agreement shall
continue in full force and the Borrowers shall be liable to, and shall indemnify
and hold the Agents and such Lender harmless for, the amount of such payment
surrendered until the Agents and such Lender shall have been finally and
irrevocably paid in full. The provisions of the foregoing sentence shall be and
remain effective notwithstanding any contrary action which may have been taken
by the Lenders in reliance upon such payment, and any such contrary action so
taken shall be without prejudice to the Lenders' rights under this Agreement and
shall be deemed to have been conditioned upon such payment having become final
and irrevocable.
13.09 Usury Savings Clause. Notwithstanding any other provision herein,
the aggregate interest rate charged with respect to any of the Obligations,
including all charges or fees in connection
123
<PAGE> 130
therewith deemed in the nature of interest under applicable law shall not exceed
the Highest Lawful Rate (as such term is defined below). If the rate of interest
(determined without regard to the preceding sentence) under this Agreement at
any time exceeds the Highest Lawful Rate; the outstanding amount of the Loans
made hereunder shall bear interest at the Highest Lawful Rate until the total
amount of interest due hereunder equals the amount of interest which would have
been due hereunder if the stated rates of interest set forth in this Agreement
had at all times been in effect. In addition, if when the Loans made hereunder
are repaid in full the total interest due hereunder (taking into account the
increase provided for above) is less than the total amount of interest which
would have been due hereunder if the stated rates of interest set forth in this
Agreement had at all times been in effect, then to the extent permitted by law,
the Applicable Borrowers shall pay to the Applicable Facility Agent an amount
equal to the difference between the amount of interest paid and the amount of
interest which would have been paid if the Highest Lawful Rate had at all times
been in effect. Notwithstanding the foregoing, it is the intention of the
Lenders and the Borrowers to confirm strictly to any applicable usury laws.
Accordingly, if any Lender contracts for, charges, or received any consideration
which constitutes interest in excess of the Highest Lawful Rate, then any such
excess shall be cancelled automatically and, if previously paid, shall at such
Lender's option be applied to the outstanding amount of the Loans made hereunder
or be refunded to the Applicable Borrowers. As used in this paragraph, the term
"Highest Lawful Rate" means the maximum lawful interest rate, if any, that at
any time or from time to time may be contracted for, charged, or received under
the laws applicable to such Lender which are presently in effect or, to the
extent allowed by law, under such applicable laws which may hereafter be in
effect and which allow a higher maximum nonusurious interest rate than
applicable laws now allow.
13.10 Indemnification; Limitation of Liability.
(a) The Company and each Borrower jointly and severally agrees to
indemnify absolutely and unconditionally and hold harmless each Agent and each
Lender and each of their affiliates and their respective officers, directors,
employees, agents, and advisors (each, an "Indemnified Party") from and against
any and all claims, damages, losses, liabilities, costs, and expenses,
including, without limitation, all claims, damages, losses, liabilities, costs
and expenses described in Section 6.09 (the foregoing also to include, without
limitation, reasonable attorneys' fees, settlement costs and disbursements)
("Indemnified Liabilities") that may be incurred by or asserted or awarded
against any Indemnified Party, in each case arising out of or in connection with
or by reason of (including, without limitation, in connection with any
investigation, litigation, or proceeding or preparation of defense in connection
therewith) the Loan Documents, any of the transactions contemplated herein or
the actual or proposed use of the proceeds of the Loans, except to the extent
such Indemnified Liability is found in a final, non-appealable judgment by a
court of competent jurisdiction to have resulted from such Indemnified Party's
gross negligence or willful misconduct. If and to the extent the foregoing may
be unenforceable for any reason, the Company and each Borrower hereby agrees to
make the maximum contribution to the payment and satisfaction of each
Indemnified Liability which is permissible under applicable law. In the case of
an investigation, litigation or other proceeding to which the indemnity in this
Section 13.10 applies, such indemnity shall be effective whether or not such
investigation, litigation or proceeding is brought by the Company, any Borrower,
124
<PAGE> 131
its directors, shareholders or creditors or an Indemnified Party or any other
Person or any Indemnified Party is otherwise a party thereto and whether or not
the transactions contemplated hereby are consummated.
(b) Without limiting the generality of Section 13.10(a) above, the
Company and the Borrowers hereby jointly and severally agree to defend,
indemnify and hold each Indemnified Party harmless from and against any and all
Indemnified Liabilities (including, without limitation, assessment and cleanup
costs and reasonable attorneys', consultants' and other experts' fees and
disbursements, including those arising by reason of any of the aforesaid or an
action against the Company or any Subsidiary under this indemnity) arising
directly or indirectly from, out of or by reason of (a) the violation or alleged
violation of any Environmental Law by the Company or any Subsidiary or with
respect to any property owned, operated or leased by the Company or any
Subsidiary or (b) the use, generation, handling, storage, transportation,
treatment, emission, release, disclaim or disposal of any Hazardous Material by
or in respect of the Company or any Subsidiary or on or with respect to property
owned or leased or operated by the Company or any Subsidiary.
(c) The Company and each Borrower agrees that no Indemnified Party
shall have any liability (whether direct or indirect, in contract or tort or
otherwise) to it, any of its Subsidiaries or Affiliates or any security holders
or creditors thereof arising out of, related to or in connection with the
transactions contemplated herein, except to the extent that such liability is
found in a final non-appealable judgment by a court of competent jurisdiction to
have resulted from such Indemnified Party's gross negligence or willful
misconduct; provided, however, the Company and each Borrower agrees not to
assert any claim against any of the Agents, any Lender, any of their affiliates,
or any of their respective directors, officers, employees, attorneys, agents,
and advisers, on any theory of liability, for special, indirect, consequential,
or punitive damages arising out of or otherwise relating to the Loan Documents,
any of the transactions contemplated herein or the actual or proposed use of the
proceeds of the Loans.
(d) Without prejudice to the survival of any other agreement of any
Borrower hereunder, the agreements and obligations of the Company and each
Borrower contained in this Section 13.10 shall survive the payment in full of
the Obligations, termination of each Commitment and the occurrence of the Total
Facility Termination Date.
13.11 Agreement Controls. In the event that any term of any of the Loan
Documents other than this Agreement conflicts with any express term of this
Agreement, the terms and provisions of this Agreement shall control to the
extent of such conflict.
13.12 Severability. If any provision of this Agreement or the other
Loan Documents shall be determined to be illegal or invalid as to one or more
parties hereto, then such provision shall remain in effect with respect to all
parties, if any, as to whom such provision is neither illegal nor invalid, and
in any event all other provisions hereof shall remain effective and binding on
the parties hereto.
13.13 Entire Agreement. This Agreement, together with the other Loan
Documents, constitutes the entire agreement among the parties with respect to
the subject matter hereof and
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<PAGE> 132
supersedes all previous proposal, negotiations, representations and other
communications between or among the parties, both oral and written, with respect
thereto.
13.14 Governing Law; Waiver of Jury Trial.
(a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN
THOSE LOAN DOCUMENTS WHICH EXPRESSLY PROVIDE THAT THEY SHALL BE
GOVERNED BY THE LAWS OF ANOTHER JURISDICTION) SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH
STATE.
(b) EACH BORROWER HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND
CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN MAY BE
INSTITUTED IN ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY OF NEW
YORK, STATE OF NEW YORK, UNITED STATES OF AMERICA AND, BY THE EXECUTION
AND DELIVERY OF THIS AGREEMENT, EACH BORROWER EXPRESSLY WAIVES ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE IN,
OR TO THE EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTY BY, ANY
SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING, AND EACH BORROWER
HEREBY IRREVOCABLY SUBMITS GENERALLY AND UNCONDITIONALLY TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING.
(c) EACH BORROWER AGREES THAT SERVICE OF PROCESS MAY BE MADE
BY PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER
LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED
OR CERTIFIED MAIL (POSTAGE PREPAID) TO THE ADDRESS OF SUCH BORROWER
PROVIDED IN SECTION 13.02, OR BY ANY OTHER METHOD OF SERVICE PROVIDED
FOR UNDER THE APPLICABLE LAWS IN EFFECT IN THE STATE OF NEW YORK.
(d) NOTHING CONTAINED IN SUBSECTION (a) OR (b) HEREOF SHALL
PRECLUDE ANY AGENT OR ANY LENDER FROM BRINGING ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT IN THE
COURTS OF ANY JURISDICTION WHERE ANY BORROWER OR ANY BORROWER'S
PROPERTY OR ASSETS MAY BE FOUND OR LOCATED. TO THE EXTENT PERMITTED BY
THE APPLICABLE LAWS OF ANY SUCH JURISDICTION, EACH BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT AND EXPRESSLY
WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR PROCEEDING,
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<PAGE> 133
OBJECTION TO THE EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTY BY
ANY SUCH OTHER COURT OR COURTS WHICH NOW OR HEREAFTER MAY BE AVAILABLE
UNDER APPLICABLE LAW.
(e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS OR REMEDIES UNDER OR RELATED TO ANY LOAN DOCUMENT OR ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN
THE FUTURE BE DELIVERED IN CONNECTION WITH THE FOREGOING, EACH
BORROWER, EACH AGENT AND THE LENDERS HEREBY AGREE, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, THAT ANY SUCH ACTION OR PROCEEDING SHALL
BE TRIED BEFORE A COURT AND NOT BEFORE A JURY AND HEREBY IRREVOCABLY
WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PERSON
MAY HAVE TO TRIAL BY JURY IN ANY SUCH ACTION OR PROCEEDING.
[Signature pages follow.]
127
<PAGE> 134
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be made, executed and delivered by their duly authorized officers as of the day
and year first above written.
AMERICAN GREETINGS CORPORATION
By: /s/ WILLIAM S. MEYER
---------------------------------------------
Name: William S. Meyer
-------------------------------------------
Title: Vice President and Chief Financial Officer
------------------------------------------
CARLTON CARDS (FRANCE) S.N.C.
By: /s/ G. M. FRYER
---------------------------------------------
Name: Gerald M. Fryer
-------------------------------------------
Title: Gerant
-------------------------------------------
CARLTON CARDS LIMITED, a UK entity
By: /s/ G. M. FRYER
---------------------------------------------
Name: Gerald M. Fryer
-------------------------------------------
Title: Finance Director
------------------------------------------
UK GREETINGS LIMITED
By: /s/ MARY ANN CORRIGAN DAVIS
---------------------------------------------
Name: Mary Ann Corrigan Davis
-------------------------------------------
Title: Director
------------------------------------------
HANSON WHITE GROUP LIMITED
By: /s/ MARY ANN CORRIGAN DAVIS
---------------------------------------------
Name: Mary Ann Corrigan Davis
-------------------------------------------
Title: Director
------------------------------------------
Signature Page 1 of 19
<PAGE> 135
CAMDEN GRAPHICS LIMITED
By: /s/ S. T. BANKS
-----------------------------------
Name: Simon T. Banks
---------------------------------
Title: Secretary and Finance Director
---------------------------------
CARLTON CARDS LIMITED, a Canadian Company
By: /s/ PHYLLIS ALDEN
-----------------------------------
Name: Phyllis Alden
---------------------------------
Title: Secretary
---------------------------------
JOHN SANDS (AUSTRALIA) LTD.
By: /s/ MARY ANN CORRIGAN DAVIS
-----------------------------------
Name: Mary Ann Corrigan Davis
---------------------------------
Title: Director and President
---------------------------------
JOHN SANDS (N.Z.) LTD.
By: /s/ MARY ANN CORRIGAN DAVIS
-----------------------------------
Name: Mary Ann Corrigan Davis
---------------------------------
Title: Director and President
--------------------------------
JOHN SANDS HOLDING CORP.
By: /s/ MARY ANN CORRIGAN DAVIS
-----------------------------------
Name: Mary Ann Corrigan Davis
---------------------------------
Title: Director and President
---------------------------------
Signature Page 2 of 19
<PAGE> 136
NATIONSBANK, NATIONAL ASSOCIATION,
as Global Agent and as US Facility Lender
By: /s/ PHILIP DURAND
-----------------------------------
Name: Philip Durand
---------------------------------
Title: Vice President
---------------------------------
Lending Office:
NationsBank, National Association
Independence Center
NC1-001-15-05, 15th Floor
Charlotte, North Carolina 28255
Attention: Corporate Credit Services
Telephone: (704) 386-8382
Telefacsimile: (704) 386-8694
Wire Transfer Instructions:
NationsBank, National Association
Charlotte, North Carolina 28255
ABA No.: 053000196
Reference: American Greetings Corporation
Account No.: 13662122506
Attention: Corporate Credit Support
Address for Other Notices:
NationsBank, National Association
NationsBank Corporate Center
100 North Tryon Street
NC1-007-08-09
Charlotte, North Carolina 28255-0065
Attention: Mr. Philip S. Durand
Telephone: (704) 386-4955
Telefacsimile: (704) 388-0960
Signature Page 3 of 19
<PAGE> 137
NATIONSBANK, NATIONAL ASSOCIATION,
as UK Facility Agent and as UK Facility Lender
By: /s/ PHILIP S. DURAND
-----------------------------------
Name: Philip S. Durand
---------------------------------
Title: Vice President
---------------------------------
Lending Office:
Melanie Harries
Loan Administration Department
NationsBank N.A.
New Broad Street House
35 New Broad Street
London EC2M 1NH
Tel: 0171 282 6833
Fax: 0171 282 6831
Telex: 883181 NCNB G
Wire Transfer Instructions:
With respect to British Pounds Sterling:
direct by CHAPS to:
NationsBank, N.A., London
Sort Code: 40 51 15
a/c no: 00497056
Swift Address: NABKGB2X
With respect to French Francs:
Societe Generale
29 Boulevard Haussman, 75009 Paris
Swift Address: SOGEFRPP
For account: NationsBank N.A., London
Swift Address: NABKGB2X
a/c: 001 011 042 150
Address for Other Notices:
NationsBank, National Association
NationsBank Corporate Center
100 North Tryon Street
NC1-007-08-09
Charlotte, North Carolina 28255-0065
Attention: Mr. Philip S. Durand
Telephone: (704) 386-4955
Telefacsimile: (704) 388-0960
Signature Page 4 of 19
<PAGE> 138
NATIONAL CITY BANK,
as US Facility Agent and as Lender
By: /s/ ROBERT E. LITTLE
-----------------------------------
Name: Robert E. Little
Title: Vice President and Senior Lending Officer
Lending Office:
National City Bank
1900 E. Ninth Street, Loc #2077
Cleveland, Ohio 44114
Attention: Connie B. Djukic, Money Desk Area
Telephone: (216) 575-2578
Telefacsimile: (216) 575-2481
Wire Transfer Instructions for US Facility Agent:
National City Bank
Cleveland, Ohio
ABA No.: 041000124
Account No.: 151804
Beneficiary: Commercial Loan Operations,
Special Processing
Reference: American Greetings
Wire Transfer Instructions for UK Facility Agent:
GBP: Lloyds Bank PLC
Intl Banking Division
PO Box 19
London SEI 2HA
England, UK
Swift code: LOYDGB2L
Sort: 30-96-34
For Acct of: National City Bank, Cleveland
/01080203
FRF: Credit Lyonnais
International Division
19 Boulevard Des Italiens
Paris, France 75022
Swift code: CRLYFRPP
For Acct of: National City Bank, Cleveland
/091000081522
Signature Page 5 of 19
<PAGE> 139
Address for Other Notices:
For US Facility:
National City Bank
1900 E. Ninth Street, Loc #2104
Cleveland, Ohio 44114
Attention: Wendy Pollerine
Telephone: (216) 575-2560
Telefacsimile: (216) 575-2481
For UK Facility:
Fred Lingenfelder
Telephone: (216) 575-2900
Telefacsimile: (216) 575-2411
Signature Page 6 of 19
<PAGE> 140
BANK OF AMERICA CANADA,
as Canadian Facility Agent and as Canadian
Facility Lender
By: /s/ RICHARD J. HALL
-----------------------------------
Name: Richard J. Hall
---------------------------------
Title: Vice President
---------------------------------
Lending Office:
Bank of America Canada
Toronto Corporate Services Office 5651
200 Front Street West, 27th Floor
Toronto, Ontario M5V 312
Canada
Attention: Nelson Lam/Richard J. Hall
Telephone: 416.349.5496/416.348.4008
Telefacsimile: 416.349.4282/416.349.4283
Wire Transfer Instructions:
Wire payment of funds DIRECT through IIPS to:
Bank of America Canada
200 Front Street West, Toronto, Ontario
TRANSIT #: 241
SWIFT CODE: BOFACATT
Reference: Carlton Cards
Attention: Agency Administration
Signature Page 7 of 19
<PAGE> 141
BANK OF AMERICA, NATIONAL TRUST &
SAVINGS ASSOCIATION, as U.S. Facility Lender
By: /s/ PAUL HIGDON
-----------------------------------
Name: Paul Higdon
Title: Managing Director
Lending Office:
Bank of America National Trust & Savings
Association
Attention: Michael Gates
231 South LaSalle
Chicago, Illinois 60697
Telephone: (312) 828-6207
Telefacsimile: (312) 974-9626
Wire Transfer Instructions:
Bank of America National Trust & Savings
Association
B of A International
ABA No.: 071000039
Reference: American Greetings
Account No.: 4703421
Address for Other Notices:
Bank of America National Trust & Savings
Association
Attention: Michael Gates
231 South LaSalle
Chicago, Illinois 60697
Telephone: (312) 828-6207
Telefacsimile: (312) 974-9626
Signature Page 8 of 19
<PAGE> 142
BANK OF AMERICA, NATIONAL TRUST and
SAVINGS ASSOCIATION,
as Australian Facility Agent
By: /s/ GARY FLIEGER
--------------------------------
Name: Gary Flieger
Title: Vice President
Address for borrowings, payments,
conversions, continuations, fees and
interest and other operational
matters relating thereto:
Bank of America NT & SA c/o BA Asia Ltd.
Devon House
979 King's Road, 10th Floor
Quarry Bay, Hong Kong
Attention: Donny Lam
Telephone: 852.2597.3428
Telefacsimile: 852.2597.3424 or 3425
Address for all other matters
including voting, waivers,
amendments, consents, financial
statements, reporting requirements
or requests, fronting assignments
and other administrative/executive
matters of a similar nature relating
thereto:
Bank of America NT & SA
1455 Market Street, 15th Floor
San Francisco, CA 94103
Attention: Mr. Gary Flieger
Telephone: (415) 436-3484
Telefacsimile: (415) 436-3425
E-mail: [email protected]
Wire Transfer Instructions:
Payments in Australian Dollars
Bank of America NT & SA,
Sydney Branch for the account of BA
Asia Limited Account No. 97202-012
Payments in New Zealand Dollars
Bank of New Zealand - Wellington
for the account of BA Asia Limited
Account No. 260721-0000
Signature Page 9 of 19
<PAGE> 143
BA AUSTRALIA LIMITED
By: /s/ WARREN WHITLEY /s/ TONY DOWLING
----------------------------------------------
Name: Warren R. Whitley Tony Dowling
--------------------------------------------
Title: Company Secretary Vice President
and General
Manager Operations
---------------------------------------------------
BA Australia Ltd
Lending Office:
BA Australia Limited
Level 63, MLC Centre
19-29 Martin Place
Sydney, New South Wales 2000
Australia
Attention: Evelyn Kirk
Telephone: 612.9931.4237
Telefacsimile: 612.9221.1023
Wire Transfer Instructions:
Payments in Australian Dollars
Bank of America NT & SA, Sydney branch
Account No.: 11191019
BSB No.: 232001
Deposits to be made through: any National
Australia Bank Branch for further credit to Bank
of America, NT & SA, Sydney
Payments in New Zealand Dollars
Account Name: Bank of America NT&SA, Sydney branch
Bank: Bank of New Zealand, Wellington
Account No.: 5201-30600
Signature Page 10 of 19
<PAGE> 144
NBD BANK
as US Facility Lender
By: /s/ GLENN CURRIN
-----------------------------------
Name: Glenn A. Currin
Title: Vice President
Lending Office:
NBD Bank
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Glenn Currin
Vice President
Telephone: (313) 225-2637
Telefacsimile: (313) 225-1671
Wire Transfer Instructions:
NBD Bank, Detroit
ABA No.: 072000326
Reference: American Greetings
Account No.: Commercial Loans; Acct. #212115
Address for Other Administrative Notices (Including
Funding and Wires):
NBD Bank
Loan Service Associate
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Karen Graham
Telephone: (313) 225-2579
Telefacsimile: (313) 225-1586
Signature Page 11 of 19
<PAGE> 145
FIRST CHICAGO NBD BANK, CANADA,
as Canadian Facility Lender
By: /s/ GLENN CURRIN
-----------------------------------
Name: Glenn A. Currin
Title: Vice President
Lending Office:
First Chicago NBD Bank, Canada
BCE Place, P.O. Box 613
161 Bay Street, Suite 4240
Toronto, Ontario M5J 2S1
Attention: Michael Tam
Telephone: 416-365-5261
Telefacsimile: 416-363-7574
Wire Transfer Instructions:
Royal Bank of Canada, Toronto
Transit Routing #07172-003
For Credit To: First Chicago NBD Bank, Canada
Account # 000-047-1
For further credit to: Carlton Cards
Address for Other Administrative Notices:
NBD Bank
161 Bay Street, Suite 4240
Toronto, Ontario, Canada M5J2S1
Attention: Lehong Zhang
Telephone: (416) 365-8262
Telefacsimile: (416) 363-7574
Signature Page 12 of 19
<PAGE> 146
THE FIRST NATIONAL BANK OF CHICAGO,
as Australian Facility Lender
By: /s/ GLENN CURRIN
-----------------------------------
Name: Glenn A. Currin
Title: Vice President
Lending Office:
The First National Bank of Chicago
Level 19, 90 Collins Street
Melbourne Victoria 3000 Australia
Attention: Simon Milne
Telephone: 61 3 9650 1388
Telefacsimile: 61 3 9650 2721
Wire Transfer Instructions:
First Chicago, International NYC
ABA No.: 026009797
Reference: For Credit to First Chicago in Australia,
Adelaide
Account No.: 404-1008 USN50 01
For further credit to: John Sands
Address for Other Administrative Notices:
Level 4, 70 Hindmarsh Square
Adelaide S.A.
5000 Australia
Attention: Josh Whitting
Telephone: 61 8 8228 2222
Telefacsimile: 61 8 8228 2948
Signature Page 13 of 19
<PAGE> 147
KEYBANK, NATIONAL ASSOCIATION
By: /s/ RICHARD A. POHLE
-----------------------------------
Name: Richard A. Pohle
Title: Senior Vice President
Lending Office:
KeyBank National Association
127 Public Square
Cleveland, OH 44114
Attention: Mark LoSchiavo
Telephone: 216-689-0598
Telefacsimile: 216-689-4981
Wire Transfer Instructions:
US$ KeyBank National Association
ABA #041001039
ATTN: Commercial Loan Operations
RE: American Greetings Corporation
GBP: Royal Bank of Scotland
Correspondent Banking Branch
P.O. Box 450
5-10 Great Tower Street
London ec3P 3HX England
Sort Code 160034
Account No.: 12291629
Swift Address: RBOSGB2L
Account Name: KEYBANK NATIONAL
ASSOCIATION, CLEVELAND. OH
FF: Banque Nationale De Paris S.A.
Boulevard Des Italiens 16
76450 Paris Cedex 09 France
Centre D'Operations Avec L'Etranger
Bank Code: 30004 Branch Code: 00897
Account No.: 040033610
Swift Address: BNPAFRPP
Account Name: KEYBANK NATIONAL
ASSOCIATION, CLEVELAND, OH
Signature Page 14 of 19
<PAGE> 148
ROYAL BANK OF CANADA
By: /s/ MOLLY DRENNAN
-----------------------------------
Name: Molly Drennan
Title: Senior Manager
As US Facility Lender:
Lending Office:
Royal Bank of Canada
One Liberty Plaza
New York, NY 10006-1404
Attention: Danielle Gilles
Telephone: (212) 428-6332
Telefacsimile: (212) 428-2372
Wire Transfer Instructions:
Royal Bank of Canada via Chase Manhattan Bank
New York, NY
ABA No.: 0210-0002-1
Reference: Loan/Interest/Fee Payment for
American Greetings
Account No.: 920-1-033363
As Australian Facility Lender:
Lending Office:
Royal Bank of Canada
167 Mac Quarie Street
Sydney NWS 2000
AUSTRALIA
Attention: Manager Loans Administration
Telephone: 612/9233 5500
Telefacsimile: 612/9221 2261
Wire Transfer Instructions:
Royal Bank of Canada
Sydney
ABA No.: BSB-935-001
Reference: Swift - ROYCAU2S
Account No.: Royal Bank of Canada
Signature Page 15 of 19
<PAGE> 149
Address for Other Notices:
Royal Bank of Canada
167 Mac Quarie Street
Sydney NSW 2000
AUSTRALIA
Attention: Head of Corporate Banking
Telephone: 612/9233 5500
Telefacsimile: 612/9221 2261
As Canadian Facility Lender:
Lending Office:
Royal Bank of Canada
180 Wellington St. W.
Toronto, Ontario
Attention: Adam Ahmed
Telephone: (416) 974-5302
Telefacsimile: (416) 974-8119
Wire Transfer Instruction:
Royal Bank of Canada
ABA No.: N/A
Reference: EMCO
Account No.: 0002-102-683-0
Signature Page 16 of 19
<PAGE> 150
MELLON BANK, N.A.,
as US Facility Lender
By: /s/ MARK F. JOHNSTON
-----------------------------------
Name: Mark F. Johnston
Title: A. Vice President
Lending Office:
One Mellon Bank Center
Suite 4525
Pittsburgh, PA 15258
Attention: Mark F. Johnston
Telephone: (412) 236-2793
Telefacsimile: (412) 236-1914
Wire Transfer Instructions:
Mellon Bank, N.A.
Pittsburgh, PA 15259
ABA No.: 043-000-261
Reference: American Greetings
Account No.: 990-873-800
Address for Other Notices:
Mellon Bank, N.A.
Three Mellon Bank Center
Pittsburgh, PA 15259
Attention: Jodi Stewart
Telephone: (412) 236-4817
Telefacsimile: (412) 209-6129
Signature Page 17 of 19
<PAGE> 151
MELLON BANK CANADA,
as Canadian Facility Lender
By: /s/ ED Mc GRATH
-----------------------------------
Name: Ed McGrath
Title: Vice President
Lending Office:
Mellon Bank Canada
77 King Street West, Suite 3200
Toronto, Ontario M5K 1K2
Attention: Lisa Daley
Telephone: (416) 860-2436
Telefacsimile: (416) 860-2439
Wire Transfer Instructions:
Canadian Imperial Bank of Commerce
ABA No.: CIBCCATT
Reference: Carlton Cards Retail
Account No.: 65-03810
For Credit: Mellon Bank Canada, Toronto
(MELNCATT)
Address for Other Notices:
N/A
Signature Page 18 of 19
<PAGE> 152
PNC BANK, N.A.
By: /s/ MARC T. KENNEDY
-----------------------------------
Name: Marc T. Kennedy
Title: Vice President
For US Facility:
Lending Office:
249 Fifth Avenue
One PNC Plaza - 2nd Floor
Pittsburgh, PA 15222-2707
Attention: Marc T. Kennedy
Telephone: (412) 768-4323
Telefacsimile: (412) 762-6484
Wire Transfer Instructions:
PNC Bank, N.A.
Commercial Loan Operations
ABA No.: 043-000-096
Reference: American Greetings
Account No.: 196-030-890
Address for Other Notices for Operational
Matters (Wires, Payments and Draw Requests):
PNC Bank, N.A.
620 Liberty Avenue
Two PNC Plaza - 3rd Floor
Pittsburgh, PA 15222-2707
Attention: Sally Hunter
Telephone: (412) 768-3807
Telefacsimile: (412) 768-4586
For UK Facility:
Lending Office:
PNC Bank, N.A.
UK Facility Administrative Contact: Anyone in
FX Department
Telephone: 412-762-4951
Telefacsimile: 412-762-4307
Wire Transfer Instructions:
For British Pound Sterling:
Royal Bank of Scotland, PLC
Swift address: RBOSGB2L
City: London N1 8XL
Country: England
Acct No.: 122-522-16 PNC Bank
For French Francs:
Societe Generale
Swift address: SOGEFRPP
City: 75009 Paris
Country: France
Acct No.: 001014438780
Signature Page 19 of 19
<PAGE> 153
EXHIBIT LIST
EXHIBIT A Lenders' Commitments and Applicable Commitment Percentages
EXHIBIT B Form of Assignment and Acceptance
EXHIBIT C Notice of Appointment (or Revocation) of Authorized Representative
EXHIBIT D-1 Borrowing Notice (U.S. Facility Loans)
EXHIBIT D-2 Borrowing Notice (UK Facility Loans)
EXHIBIT D-3 Borrowing Notice (Canadian Facility Loans)
EXHIBIT D-4 Borrowing Notice (Australian Facility Loans)
EXHIBIT E Form of Guaranty Agreement
EXHIBIT F Form of U.S. Facility Note
EXHIBIT G Form of Opinion of Counsel for Borrowers and Guarantor
EXHIBIT H Form of compliance Certificate
SCHEDULE 1.01 Authorized Representatives
SCHEDULE 8.02(a) Subsidiaries and Stockholders
SCHEDULE 8.02(f) Litigation
SCHEDULE 10.03 Existing Liens
SCHEDULE 10.06 Transactions with Affiliates
<PAGE> 1
Exhibit (10)(i)(A)(i)
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT made at Cleveland, Ohio, this ______ day of
____________, 19____ , by and between AMERICAN GREETINGS CORPORATION, an Ohio
corporation (herein called the "Corporation") and ______________________________
(herein called "Employee").
In consideration of the covenants hereinafter set forth, the parties hereto
mutually agree as follows:
1. Subject to the provisions hereof, the Corporation shall employ Employee
as on officer of the Corporation, either elected by the Board of
Directors or appointed by the Executive Committee, or as an officer of
a subsidiary company with such duties and responsibilities as may be
assigned to him from time to time by the Board of Directors or the
Executive Committee of the Board of Directors of the Corporation and
Employee shall devote his full business time and attention and give his
best efforts to the business affairs of the Corporation and/or of such
of its subsidiaries as the Board of Directors or the Executive
Committee of the Board of Directors of the Corporation may from time to
time determine. Employee recognizes that in serving as an officer of
the Corporation or as an officer of a subsidiary he serves in such
capacity solely at the pleasure of the Board of Directors or the
Executive Committee of the Board of Directors of the Corporation and
that his employment in such capacity or in any other capacity may be
terminated at any time by the Board of Directors or the Executive
Committee of the Corporation.
2. The Corporation or a subsidiary shall, during the term of this
Employment Agreement, pay to Employee as
<PAGE> 2
minimum compensation for his services a base salary at a rate to be
fixed by the Board of Directors or the Executive Committee or the
Chairman of the Executive Committee, which rate shall not be less than
$______________________ per year, plus such additional compensation as
the Board of Directors or the Chairman of the Executive Committee or
the Executive Committee of the Board of Directors of the Corporation
may from time to time determine.
3. Employee covenants and agrees that in consideration of his employment
as an officer of the Corporation or as an officer of a subsidiary he
shall not for a period of twelve months after leaving the employ of the
Corporation or a subsidiary, regardless of the reason for such leaving,
enter into the employment, directly or indirectly or in a consulting or
free lance capacity, of any person, firm or corporation in the United
States or Canada, which at such date of leaving the employ of the
Corporation or a subsidiary shall be manufacturing or selling products
that are substantially similar in nature to the products being then
manufactured or sold by the Corporation or the subsidiary.
4. In the event that the employment of Employee under this Employment
Agreement is terminated by the Corporation or a subsidiary, the
Corporation covenants and agrees that it shall pay or cause to be paid
to Employee a continuing salary at a rate which shall be the highest
base salary rate paid Employee during the preceding six-month period
for a period of time equivalent to one-half month for each year of
employment by the Corporation or a subsidiary of the Employee, but in
no event to be less than a period of
-2-
<PAGE> 3
three months nor greater than a period of twelve months. The provisions
of this paragraph shall not be applicable if the Employee is terminated
because of a gross violation of his obligations to the Corporation.
5. In the event that Employee shall cease to be employed as an officer of
the Corporation or a subsidiary but shall continue in the employ of the
Corporation or a subsidiary, then this Employment Agreement shall
terminate twelve months after the date that Employee ceases to be
employed as an officer of the Corporation or a subsidiary.
6. I agree that during the period of my employment and thereafter, I will
keep confidential and will not disclose any information, records,
documents or trade secrets of the corporation acquired by me during my
employment, and except as required by my employment, will not remove
from the Corporation's premises any record or other document relating
to the business of the Corporation; or make copies thereof; it being
recognized by me that such information is the property of the
Corporation.
7. This Agreement shall be applied and interpreted under the laws of the
State of Ohio.
AMERICAN GREETINGS CORPORATION
By /s/ Morry Weiss
----------------------------------
----------------------------------
Employee
-3-
<PAGE> 4
OFFICERS
Jon Groetzinger, Jr.
William R. Mason
Erwin Weiss
<PAGE> 1
Exhibit 10(ii)(A)(iv)
Deferred Compensation
---------------------
Any Executive and non-Executive officer elected by the Board of Directors
("Board") above the Executive Director level may, prior to the start of a fiscal
year, enter into a deferred compensation agreement with the company whereby a
stated portion of the officer's salary and/or bonus for the fiscal year starting
on the following March 1 will be deferred.
The amount so deferred will be credited with interest calculated on an
annual average rate as actually paid by the corporation to its creditors upon
its short-term borrowings and for such a period of time that the corporation
does not have short-term borrowings, the rate shall be the actual average rate
of interest earned by the corporation upon its short-term investments.
The amount deferred is to be paid in five (5) or more equal installments
upon the retirement, death or other termination of employment of the officer.
In the event that any portion of the deferred compensation shall be held by
any taxing authority to constitute current income for tax purposes, then the
officer shall have the right to have such deferred compensation paid to him at
such time as he may direct.
<PAGE> 1
Exhibit 10(ii)(A)(vii)
TABLE OF CONTENTS
-----------------
ARTICLE I INTRODUCTION
ARTICLE II DEFINITIONS
ARTICLE III PLAN PARTICIPATION
ARTICLE IV ELIGIBILITY FOR PLAN BENEFIT
ARTICLE V AMOUNT OF PLAN BENEFIT
ARTICLE VI DEATH BENEFIT
ARTICLE VII ADMINISTRATION, FUNDING AND
PLAN MODIFICATION
ARTICLE VIII GENERAL CONDITIONS
AMENDMENT I
AMENDMENT II
<PAGE> 2
ARTICLE I
---------
INTRODUCTION
------------
1.1 NAME OF PLAN. This Plan shall be known as the American Greetings
Corporation Supplemental Executive Retirement Plan.
1.2 PURPOSE. The purpose of this Plan is to provide certain designated
Executives with retirement benefits in excess of those provided under
any other Company-sponsored plan, including the Pension Plan and the
Profit Sharing Plan.
1.3 AMENDMENT TO PRIOR PLAN. This Plan constitutes a complete amendment to,
full restatement of and continuation of the American Greetings
Corporation Supplemental Executive Compensation Plan effective as of
August 1, 1981. This amendment, restatement and continuation is made
effective as of March 1, 1986.
1.4 EFFECT OF AMENDMENT. The amendment and restatement of this Plan shall
have no adverse effect upon the benefits being paid to any Executive who
was covered by the Plan as it existed immediately prior to March 1, 1986
(including the benefits payable to a Beneficiary of such former
Executive); however, except as may be specifically provided for herein,
no such benefit shall be increased solely by reason of this amendment
and restatement of the Plan.
I-1
<PAGE> 3
ARTICLE II
----------
DEFINITIONS
-----------
The following words and phrases when used in the Plan shall have the following
meanings, unless a different meaning is plainly required by
the context.
2.1 ACCRUED BENEFIT shall have the meaning set forth in Section 5.1.
2.2 ASSUMED BONUS PERCENTAGE shall mean, for any Fiscal Year, the "assumed
bonus award percentage" to which the Executive is entitled under the
Executive Bonus Plan based on his job classification assuming a one
hundred percent (100%) bonus award (using the schedule as set forth by
the Board of Directors for the various levels of job classifications) is
payable for said Fiscal Year.
2.3 BENEFICIARY shall mean any person or persons designated by the Executive
under the Executive Life Insurance Plan to receive benefits under that
plan in the event of his death; unless, the Executive specifically
designates that another person or persons shall be the "beneficiary"
entitled to receive benefits under this Plan in the event of his death.
If no "beneficiary" is designated or there is no "beneficiary" surviving
at the time of the Executive's death, "beneficiary" shall mean the
Executive's estate.
II-1
<PAGE> 4
2.4 BOARD OF DIRECTORS shall mean the "board of directors" of the Company or
a person or persons designated to act specifically on matters relevant
to this Plan as provided in a resolution of the "board of directors".
2.5 COMPANY shall mean American Greetings Corporation, an Ohio corporation
and any successor thereto, and shall also include for the purpose of
this Plan any member of the "controlled group" as said term is defined
in the Profit Sharing Plan.
2.6 COMPENSATION shall mean, as to any calendar year preceding the calendar
year in which the Executive reaches his Normal Retirement Date, his
total earned base annual pay. In the event said Executive becomes
disabled and is eligible for and receiving benefits under the Long Term
Disability Plan, his participation in the Plan shall be deemed to
continue and, therefore, his "Compensation" shall be assumed to continue
in the same amount it was as of the calendar year preceding the date he
became disabled.
2.7 EFFECTIVE DATE shall mean March 1, 1986.
2.8 EXECUTIVE shall mean any member of the management of the Company,
designated as such by the Board of Directors.
II-2
<PAGE> 5
2.9 EXECUTIVE LIFE INSURANCE PLAN shall mean the American Greetings
Corporation Executive Life Insurance Plan, which is a plan maintained by
the Company to provide life insurance benefits to its Executives.
2.10 FINAL AVERAGE COMPENSATION shall mean an amount, expressed in dollars
and cents, derived by summing (a) the average of the Executive's two (2)
calendar years of Compensation which will afford the highest average,
and (b) which is the product derived from multiplying (i) the average of
the Executive's two (2) calendar years of Compensation which will afford
the highest average by (ii) the average of the Executive's two (2)
Fiscal Year Assumed Bonus Percentages which will afford the highest
average (or, if only one (1) Assumed Bonus Percentage is ever applicable
as to a given Executive, said Assumed Bonus Percentage shall be deemed
to be the highest average).
2.11 FISCAL YEAR shall mean the period which begins on March 1 of each year
and ends on the last day of February of the next succeeding year.
2.12 LONG TERM DISABILITY PLAN shall mean the American Greetings Corporation
Long Term Disability Plan, which is a welfare plan maintained by the
Company to provide longer-term disability benefits to its employees.
II-3
<PAGE> 6
2.13 PARTICIPANT shall mean any Executive who is or becomes eligible to
participate in this Plan in accordance with the provisions of Sections
3.1 or 3.2.
2.14 PENSION PLAN shall mean American Greetings Corporation Employees'
Retirement Income Guarantee Plan, as amended from time to time.
2.15 PENSION PLAN BENEFIT shall mean the accrued, nonforfeitable monthly
benefit (if any) to which an Executive is entitled under the Pension
Plan.
2.16 PENSION PLAN BENEFIT OFFSET shall mean the portion of a Participant's
Pension Plan Benefit (calculated on a straight life annuity basis and
expressed in dollars and cents) to which he, in the event of his death,
or his Beneficiary is entitled as of the actual date said benefit
commences.
2.17 PLAN shall mean the American Greetings Corporation Supplemental
Executive Retirement Plan, as set forth in this instrument, as amended
from time to time.
2.18 PLAN ADMINISTRATOR shall mean the person, persons or entity set forth in
Section 7.1.
II-4
<PAGE> 7
2.19 PLAN BENEFIT shall mean the amount of benefit for which a Participant is
eligible pursuant to Article IV and calculated in accordance with
Article V.
2.20 PROFIT SHARING PLAN shall mean the American Greetings Corporation
Employees' Retirement Profit Sharing Plan, as amended from time to time.
2.21 SCHEDULE shall mean a tabular summary of reduction factors referred to
in Article V, which summary is attached to and made a part of this Plan.
2.22 SERVICE shall mean all periods of time that an Executive is in the
employment of the Company (including acquired companies), up to but not
beyond said Executive's Normal Retirement Date. Service shall include
any period or periods of time an Executive (who is also a Plan
Participant) is disabled and eligible for and receiving benefits under
the Long Term Disability Plan, but in no event beyond age 65. Said
"service" shall be calculated and determined in the sole discretion of
the Board of Directors.
In this document, unless the context clearly requires otherwise, the singular
shall include the plural and the masculine gender shall include the feminine.
II-5
<PAGE> 8
ARTICLE III
-----------
PLAN PARTICIPATION
------------------
3.1 PARTICIPATION AS OF THE EFFECTIVE DATE. Each Executive who was a
Participant of the Plan on the day before the Effective Date shall
automatically be a Participant of this Plan as of the Effective Date.
3.2 PARTICIPATION AFTER THE EFFECTIVE DATE. Any other Executive shall become
a Participant of this Plan on the date he is designated as such by the
Board of Directors.
3.3 TERMINATION OF PARTICIPATION. Any Participant's participation in this
Plan may be discontinued at any time by the Board of Directors, which
discontinuation shall be set forth in writing and copies of such
discontinuation shall be delivered to the Participant and the Plan
Administrator. Subject to the provisions of Section 8.2, if, at the time
of a Participant's discontinuation of participation, he has a right to a
benefit based on the provisions of this Plan, said right shall not be
forfeitable and he shall be entitled to receive a benefit solely in
accordance with the provisions of the Plan at the time of his
discontinuation of participation.
III-1
<PAGE> 9
ARTICLE IV
----------
ELIGIBILITY FOR PLAN BENEFIT
----------------------------
4.1 NORMAL/LATE RETIREMENT DATE. The Normal Retirement Date of a Participant
shall be the first day of the month coinciding with or next following
attainment of age 65. If a Participant retires after his Normal
Retirement Date, said date shall be his Late Retirement Date.
4.2 EARLY RETIREMENT DATE. A Participant who has not reached his Normal
Retirement Date may retire on the first day of any month coinciding with
or next following:
(a) Attainment of age 55 and completion of twenty (20) years of
Service; or
(b) A date selected in the sole discretion of the Board of Directors
irrespective of said Participant's age or years of Service.
4.3 VESTING DATE. A Participant's Vesting Date shall be the first day of the
month coinciding with or next following the date as of which he has
attained age 45 and has completed twenty (20) years of Service, and:
(a) His employment has been terminated unilaterally by the Company;
or
IV-l
<PAGE> 10
(b) His classification of Executive group has been eliminated from
coverage under the Plan; or
(c) He voluntarily ends his employment because of a demotion to
non-Executive status; or
(d) He is demoted to non-Executive status but remains in the
employment of the Company.
If a Participant terminates employment on such Vesting Date, he shall be
eligible to commence to receive a Plan Benefit on his Normal Retirement
Date or on an Early Retirement Date (commencing at or after age 55). If
a Participant's employment with the Company does not terminate on said
Vesting Date, his participation in this Plan shall nonetheless terminate
as of said Vesting Date and his Accrued Benefit shall be computed and
frozen as of said date and payable at the time or times provided for
herein.
4.4 DISABILITY RETIREMENT DATE. A Participant who becomes disabled and who
is eligible for and receiving benefits under the Long Term Disability
Plan may retire on the later of the first day of the month coinciding
with or next following:
(a) Attainment of age 65, or
(b) Cessation of benefit payments under the Long Term Disability
Plan.
IV-2
<PAGE> 11
ARTICLE V
---------
AMOUNT OF PLAN BENEFIT
----------------------
5.1 ACCRUED BENEFIT. The term monthly "accrued benefit" means, as of any
date, a monthly benefit commencing on a Participant's Normal Retirement
Date in an amount equal to one-twelfth (1/12th) of the product of one
percent (1%) of a Participant's Final Average Compensation times years
of Service up to a maximum of twenty (20) years of Service.
5.2 NORMAL/LATE PLAN BENEFIT. The Normal/Late Plan Benefit payable to a
Participant who retires on his Normal/Late Retirement Date shall equal:
(a) His Accrued Benefit determined as of his Normal Retirement Date,
(b) Minus his Pension Plan Benefit Offset, if any.
5.3 EARLY PLAN BENEFIT. The Early Plan Benefit payable to a Participant who
retires on an Early Retirement Date shall equal his Accrued Benefit
determined as of such Early Retirement Date:
(a) Reduced by the appropriate reduction factor specified in the
Schedule,
(b) Minus his Pension Plan Benefit Offset, if any.
V-l
<PAGE> 12
Except as otherwise provided in the next succeeding sentence, Early
Plan Benefit payments shall commence on the later of a Participant's
earliest Early Retirement Date or the first day of the month coinciding
with or next following his attainment of age 55. In lieu of commencing
to receive his Early Plan Benefit on such date, a Participant may defer
the commencement of his payments to the first day of any month but not
beyond his Normal Retirement Date; provided that he submits written
notification to the Plan Administrator at least sixty (60) days
before the date he wishes to have his Early Plan Benefit commence.
5.4 VESTED PLAN BENEFIT. The Vested Plan Benefit payable to a Participant
who has attained a Vesting Date shall equal his Accrued Benefit
determined as of the date his participation in the Plan terminates,
which amount shall be adjusted as described in:
(a) Section 5.3(b), if the Participant does not make written request
for his Plan Benefit to commence before retiring on his Normal
Retirement Date, or
(b) Section 5.3(a) and (b), if the Participant submits a written
request at least sixty (60) days before the date on which he
wishes to retire to have his Plan Benefit commence, which date
may be the first day of any month coinciding with or next
following his attainment of age 55.
V-2
<PAGE> 13
5.5 DISABILITY PLAN BENEFIT. The Plan Benefit payable to a Participant who
retires on a Disability Retirement Date shall equal:
(a) His Accrued Benefit determined as of his Disability Retirement
Date,
(b) Minus the applicable Pension Plan Benefit Offset, if any.
Anything in this Plan to the contrary notwithstanding, an Executive who
becomes disabled on or after an Early Retirement Date but ceases to be
disabled before his Disability Plan Benefit would have otherwise
commenced shall be eligible to receive an Early Plan Benefit as provided
for in Section 5.3.
5.6 FORM OF PAYMENT. All Plan Benefits payable under this Plan will be made
on a one hundred eighty (180) month certain and continuous basis, under
which the Participant's Plan Benefit is payable to him for his lifetime,
with the provision that upon his death after the commencement of
payments to him and before a total of one hundred eighty (180) monthly
payments shall have been made, the balance of said monthly payments will
be paid to his Beneficiary.
V-3
<PAGE> 14
5.7 RECALCULATION OF PLAN BENEFITS. Anything in this Plan to the contrary
notwithstanding, any Plan Benefit calculated and payable under this
Plan, whether it is payable to a Participant or a Beneficiary named
under this Plan or named under the Pension Plan, shall be offset by any
benefit payment due from the Pension Plan (including the value of a lump
sum cashed out benefit, if any) as of the first day of the month on
which such Pension Plan payment commences.
V-4
<PAGE> 15
ARTICLE VI
----------
DEATH BENEFIT
-------------
6.1 ELIGIBILITY FOR DEATH BENEFIT. Upon the death of:
(a) A Participant who was an Executive at his date of death and was
then eligible to have elected to retire on an Early or
Normal/Late Retirement Date (including a Participant receiving
benefits under the Long Term Disability Plan who became disabled
on or after the date as of which he was eligible to retire on an
Early Retirement Date); or
(b) A Participant who was retired on an Early Retirement Date but
who had not yet commenced to be paid a Plan Benefit; or
(c) A former Participant who becomes such in accordance with Section
4.3 and dies on or after attaining age 55,
a benefit shall be paid to his Beneficiary commencing as of the first
day of the month coinciding with or next following his date of death or
the month he would have attained age 55, if later.
VI-l
<PAGE> 16
6.2 AMOUNT OF DEATH BENEFIT. The amount of benefit payable to said deceased
Participant's Beneficiary shall be determined as of its commencement
date, as if the deceased Participant had retired (or begun to receive
his Plan Benefit) on such date and had then died with the form of
payment prescribed in Section 5.6 in force.
VI-2
<PAGE> 17
ARTICLE VII
-----------
ADMINISTRATION, FUNDING AND PLAN MODIFICATION
---------------------------------------------
7.1 PLAN ADMINISTRATOR. The "administrator" of this Plan shall be the
Treasurer of the Company, who shall serve in this capacity at the
pleasure of the Board of Directors. The Plan Administrator shall
determine the amount of any payments made from this Plan, which payments
shall be subject to the approval of the Board of Directors. The records
of the Plan Administrator and Company shall be conclusive in respect to
all matters in the administration of the Plan.
7.2 APPLYING FOR BENEFITS. A letter must be filed with the Plan
Administrator by the Participant at least sixty (60) days prior to the
date said participant wishes to commence to receive his Plan Benefit.
7.3 EXPENSES. All costs and expenses incurred in the administration of this
Plan shall be paid by the Company.
7.4 FUNDING PROHIBITION. This Plan shall be and shall remain unfunded. All
benefits due or payable under this Plan shall be paid from the general
assets of the Company.
VII-l
<PAGE> 18
7.5 PLAN INTERPRETATION. All questions of interpretation, construction or
application arising under this Plan shall be decided by the Plan
Administrator, subject to the approval of the Board of Directors, which
decisions shall be final and conclusive upon all persons.
7.6 TERMINATION, SUSPENSION OR AMENDMENT OF THE PLAN. The Board of Directors
may, in its sole discretion, terminate, suspend or amend this Plan at
any time. No such termination, suspension or amendment shall adversely
affect:
(a) The benefits or rights thereto of any Participant who has
retired, whether or not he has commenced to receive a Plan
Benefit; or
(b) The right of any Participant to receive the amount, on an
immediate or deferred basis, computed under Article V to which
he would be entitled under this Plan prior to its suspension,
termination or amendment taking into account such person's age,
Service and Final Average Compensation as of the date of such
termination, suspension or amendment;
VII-2
<PAGE> 19
provided, however, that subsections (a) and (b) above shall not apply to any
such termination, suspension or amendment if a change has occurred in the law
(or the interpretation of such laws) which would result in an adverse effect to
the Company or such Participants if this Plan were to remain in effect and
unamended in its form immediately prior to such occurrence.
VII-3
<PAGE> 20
ARTICLE VIII
------------
GENERAL CONDITIONS
------------------
8.1 NO ASSIGNMENT OF BENEFIT. It is a condition of this Plan and all rights
of each Participant shall be subject thereto, that no right or interest
of any Participant of the Plan shall be assignable or subject to
execution, garnishment, attachment, pledge, bankruptcy or levy of any
kind, but excluding devolution by death or mental incompetency. Further,
no interest of a Participant and no benefit payable hereunder shall be
assigned as security for a loan, and any such purported assignment shall
be null, void and of no effect, nor shall any such interest of any such
benefit be subject in any manner, either voluntarily or involuntarily,
to anticipation, sale, transfer, assignment, or encumbrance by or
through a Participant. If any attempt is made to alienate, pledge or
charge any such interest of any such benefit for any debt, liabilities
in tort or contract, or otherwise, of any Participant contrary to the
prohibitions of the preceding sentence, then the Plan Administrator in
his discretion may suspend or forfeit the interest of such person and
during the period of such suspension, or in the case of forfeiture, the
Plan Administrator shall hold such interest for the benefit of, or shall
make the benefit payments to which such Participant would otherwise be
entitled to, to the Beneficiary or to some member of the Participant's
or Beneficiary's family to be selected in the sole discretion of the
Board of Directors.
VIII-1
<PAGE> 21
8.2 FORFEITURE OF BENEFITS. Anything in this Plan to the contrary
notwithstanding, the Company shall be relieved of any and all
obligations to commence to pay or continue the payment of benefits under
this Plan, if any Executive, who is otherwise entitled, to a Plan
Benefit, shall:
(a) At any time up to ten (10) years after his retirement, acquire
five percent (5%) or more of the voting stock of a competing
business or, without written consent of the Company, be employed
as a director, officer, employee, consultant, advisor, partner
or owner of a "competing business", where a competing business
shall be any business which is substantially similar to the
whole or any part of the business conducted by the Company;
(b) Fail to act as a consultant to the Company, upon its request,
subsequent to said Executive's termination of employment;
provided, said Executive is reimbursed at a reasonable rate of
compensation for the services being rendered;
(c) Divulge any trade secrets;
(d) Commit, attempt to commit or allegedly commit a felony, or
engage in the commission of a felonious act of any type.
VIII-2
<PAGE> 22
8.3 NO IMPLIED RIGHTS. No Participant or any other person shall have any
legal or equitable rights or interest in this Plan that are not
expressly granted in it. The Company may terminate the employment of any
Executive or other employee as freely and with the same, effect as if
this Plan were not in operation.
VIII-3
<PAGE> 23
AMERICAN GREETINGS CORPORATION
------------------------------
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
--------------------------------------
SCHEDULE A
----------
<TABLE>
<CAPTION>
Reduction Factors for Benefits
Payable Prior to Age 65
-----------------------
Age* At Which Reduction
Benefits Begin Factor
-------------- ------
<S> <C> <C>
65 0.00%
64 2.88
63 5.76
62 8.64
61 11.52
60 14.40
59 17.28
58 20.16
57 23.04
56 25.92
55 28.80
* For completed months of age, use straight line interpolation
</TABLE>
<PAGE> 24
AMENDMENT NO. 1
---------------
To
American Greetings Corporation
Supplemental Executive Retirement Plan
--------------------------------------
WHEREAS, American Greetings Corporation, an Ohio Corporation, (hereinafter
referred to as the "Company") hereby adopts this Amendment No. 1 to the American
Greetings Corporation Supplemental Executive Retirement Plan (hereinafter
referred to as the "Plan").
WHEREAS, pursuant to Section 7.6 of the Plan, the Company reserves the right to
make amendments thereto; and
NOW, THEREFORE, the Company hereby amends the Plan as follows:
1. Section 2.2 of the Plan is hereby amended in its entirety to read as
follows:
"2.2 SERVICE shall be determined in the sole discretion of the Board
of Directors and shall generally mean all periods of time that
an Executive is in the employment of the Company up to but not
beyond said Executive's Normal Retirement Date, including any
period or periods of time said Executive (who is also a Plan
Participant) is disabled and eligible for and receiving benefits
under the Long Term Disability Plan, but in no event beyond his
Normal Retirement Age."
<PAGE> 25
2. This Amendment No. 1 shall be effective_________________________________.
IN WITNESS WHEREOF, the Company, by its duly authorized officer, has caused this
Amendment No. 1 to be executed on this _________ day of ____________________.
AMERICAN GREETINGS CORPORATION
By__________________________________
Its_________________________________
<PAGE> 26
AMENDMENT NO. 2
---------------
To
American Greetings Corporation
Supplemental Executive Retirement Plan
--------------------------------------
WHEREAS, American Greetings Corporation, an Ohio Corporation, (hereinafter
referred to as the "Company") hereby adopts this Amendment No. 2 to the American
Greetings Corporation Supplemental Executive Retirement Plan (hereinafter
referred to as the "Plan").
WHEREAS, pursuant to Section 7.6 of the Plan, the Company reserves the right to
make amendments thereto; and
NOW, THEREFORE, the Company hereby amends the Plan as follows:
1. Section 2.15 of the Plan is hereby amended in its entirety to read as
follows:
"2.15 PENSION PLAN BENEFIT shall mean the accrued nonforfeitable
monthly benefit (if any) to which an executive is entitled under
the Pension Plan calculated on a straight life annuity basis."
2. Section 2.16 of the Plan is hereby amended in its entirety to read as
follows:
"2.16 PENSION PLAN BENEFIT OFFSET shall mean the amount of the
Participant's Pension Plan Benefit to which he (or, in the event
of his death, his Beneficiary) is entitled as of the actual date
said benefit is or commences to be paid from the Pension Plan,
which amount is adjusted as of said date to a value equivalent
to a one hundred eighty (180) month certain and continuous
benefit."
<PAGE> 27
3. Section 5.7 of the Plan is hereby amended to delete the words, "as of
the first day of the month on which such Pension Plan payment commences"
and substitutes a period therefor.
4. This Amendment No. 2 shall be effective _________________, _________.
IN WITNESS WHEREOF, the Company, by its duly authorized officer, has caused this
Amendment No. 2 to be executed on this ________ day of ______________________.
AMERICAN GREETINGS CORPORATION
By__________________________________
Its_________________________________
<PAGE> 1
EXHIBIT 21
American Greetings Corporation
Subsidiaries of the Registrant
State / Jurisdiction
Subsidiary of Incorporation
- ---------- ----------------
A. G. Industries, Inc. North Carolina
Camden Graphics Group United Kingdom
Carlton Cards (Canada) Limited Canada
Carlton Cards (United Kingdom) Limited United Kingdom
Carlton Cards Retail, Inc. Connecticut
CreataCard, Inc. Ohio
Interactive Marketing, Inc. Ohio
Hanson White Ltd. United Kingdom
John Sands (Australia) Ltd. Delaware
John Sands (New Zealand) Ltd. Delaware
Magnivision, Inc. Delaware
Plus Mark, Inc. Ohio
<PAGE> 1
EXHIBIT 23
American Greetings Corporation
Consent of Independent Auditors
We consent to the incorporation by reference in (i) Post-Effective Amendment
Number 1 dated May 27, 1986 to Registration Statement No. 2-89471 on Form S-3,
(ii) Post-Effective Amendment Number 1 dated May 31, 1984 to Registration
Statement No. 2-84911 on Form S-8, (iii) Registration Statement No. 33-975 on
Form S-8 dated November 7, 1985, (iv) Registration Statement No. 33-16180 on
Form S-8 dated July 31, 1987, (v) Post-Effective Amendment Number 1 dated May
17, 1991 to Registration Statement No. 33-39726 on Form S-3, (vi) Registration
Statement No. 33-45673 on Form S-8 dated February 4, 1992, (vii) Registration
Statement No. 33-58582 on Form S-8 dated February 22, 1993, (viii)
Post-Effective Amendment Number 1 dated March 29, 1993 to Registration Statement
No. 33-52196 on Form S-3, (ix) Registration Statement No. 33-50255 on Form S-3
dated September 15, 1993, (x) Registration Statement No. 33-57221 on Form S-3
dated January 16, 1995, (xi) Registration Statement No. 33-61037 on Form S-8
dated July 14, 1995, and (xii) Registration Statement No. 33-08123 on Form S-8
dated July 15, 1996, and (xiii) Registration Statement No. 33-53197 on Form S-3A
dated June 5, 1998, of our report dated March 25, 1999, with respect to the
consolidated financial statements and schedule of American Greetings Corporation
included in this Annual Report (Form 10-K) for the year ended February 28, 1999.
/s/ Ernst & Young LLP
Cleveland, Ohio
May 25, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM PART II,
ITEM 8 OF THE FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1999
<PERIOD-START> MAR-01-1998
<PERIOD-END> FEB-28-1999
<CASH> 144,555
<SECURITIES> 0
<RECEIVABLES> 390,740
<ALLOWANCES> 15,583
<INVENTORY> 251,289
<CURRENT-ASSETS> 1,145,818
<PP&E> 958,623
<DEPRECIATION> 523,817
<TOTAL-ASSETS> 2,419,328
<CURRENT-LIABILITIES> 417,674
<BONDS> 0
0
0
<COMMON> 69,093
<OTHER-SE> 1,277,518
<TOTAL-LIABILITY-AND-EQUITY> 2,419,328
<SALES> 2,205,706
<TOTAL-REVENUES> 2,205,706
<CGS> 757,080
<TOTAL-COSTS> 757,080
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 8,472
<INTEREST-EXPENSE> 29,326
<INCOME-PRETAX> 281,597
<INCOME-TAX> 101,375
<INCOME-CONTINUING> 180,222
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 180,222
<EPS-BASIC> 2.56
<EPS-DILUTED> 2.53
</TABLE>
