<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 16, 1997
REGISTRATION NO. 333-
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
ANACOMP, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
INDIANA 3577 35-1144230
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
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11550 NORTH MERIDIAN STREET, SUITE 600
CARMEL, INDIANA 46032
(317) 844-9666
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
------------------------------
GEORGE C. GASKIN, ESQ.
VICE PRESIDENT--LEGAL
2115 MONROE DRIVE, N.E.
ATLANTA, GEORGIA 30324
(404) 876-3361
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------------
COPIES TO:
MICHAEL C. RYAN, ESQ.
CADWALADER, WICKERSHAM & TAFT
100 MAIDEN LANE
NEW YORK, NEW YORK 10038
(212) 504-6177
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
AMOUNT MAXIMUM AGGREGATE PRICE
TITLE OF EACH CLASS OF TO BE OFFERING PRICE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER NOTE PRICE+ REGISTRATION FEE
<S> <C> <C> <C> <C>
10 7/8% Senior Subordinated Notes due 2004,
Series B................................. $200,000,000 100% $200,000,000 $60,607
</TABLE>
+ Estimated solely for purposes of computing the registration fee pursuant to
Rule 457(f).
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
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<PAGE>
PROSPECTUS SUBJECT TO COMPLETION, DATED APRIL 16, 1997
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
$200,000,000
[LOGO]
OFFER TO EXCHANGE ITS 10 7/8% SENIOR SUBORDINATED NOTES DUE 2004, SERIES B,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, FOR ANY AND ALL OF ITS OUTSTANDING
10 7/8% SENIOR SUBORDINATED NOTES DUE 2004, SERIES A
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON ,
1997, UNLESS EXTENDED.
Anacomp, Inc., an Indiana corporation ("Anacomp" or the "Company"), hereby
offers, upon the terms and subject to the conditions set forth in this
Prospectus and the accompanying letter of transmittal (the "Letter of
Transmittal" and together with this Prospectus, the "Exchange Offer"), to
exchange its 10 7/8% Senior Subordinated Notes due 2004, Series B (the "Exchange
Notes"), which have been registered under the Securities Act of 1933, as amended
(the "Securities Act"), pursuant to a Registration Statement (as defined) of
which this Prospectus is a part, for an equal principal amount of its
outstanding 10 7/8% Senior Subordinated Notes due 2004, Series A (the "Old
Notes"), of which $200 million principal amount is outstanding. The Exchange
Notes and the Old Notes are collectively referred to herein as the "Notes."
The Company will accept for exchange any and all Old Notes that are validly
tendered and not withdrawn on or prior to 5:00 p.m., New York City time, on
, 1997, unless the Exchange Offer is extended (the "Expiration
Date"). Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m.,
New York City time, on the Expiration Date. The Exchange Notes will be issued
and delivered promptly after the Expiration Date. The Exchange Offer is not
conditioned upon any minimum principal amount of Old Notes being tendered for
exchange. See "The Exchange Offer." Old Notes may be tendered only in integral
multiples of $1,000. The Company has agreed to pay the expenses of the Exchange
Offer.
The Exchange Notes will be obligations of the Company evidencing the same
debt as the Old Notes, and will be entitled to the benefits of the same
indenture, dated as of March 24, 1997 (the "Indenture"), between the Company and
IBJ Schroder Bank & Trust Company, as trustee (the "Trustee"). The form and
terms of the Exchange Notes are substantially the same as the form and terms of
the Old Notes except that the Exchange Notes have been registered under the
Securities Act. See "The Exchange Offer."
The Exchange Notes will bear interest from March 24, 1997. Holders of Old
Notes whose Old Notes are accepted for exchange will be deemed to have waived
the right to receive any payment in respect of interest on the Old Notes accrued
up until the date of the issuance of the Exchange Notes. Such waiver will not
result in the loss of interest income to such holders, since the Exchange Notes
will bear interest from the issue date of the Old Notes.
Interest on the Exchange Notes will be payable semi-annually on April 1 and
October 1 of each year, commencing October 1, 1997, accruing from March 24, 1997
at the rate of 10 7/8% per annum. The Exchange Notes will mature on April 1,
2004. Except as described below, the Company may not redeem the Exchange Notes
prior to April 1, 2000. On or after such date, the Company may redeem the
Exchange Notes, in whole or in part, at any time, at the redemption prices set
forth herein, together with accrued and unpaid interest, if any, to the date of
redemption. In addition, at any time and from time to time on or prior to April
, 2000, the Company may, subject to certain requirements, redeem up to 35% of
the aggregate principal amount of the Notes with the cash proceeds of one or
more Public Equity Offerings (as defined) at a redemption price equal to
110.875% of the principal amount to be redeemed, together with accrued and
unpaid interest, if any, to the date of redemption, PROVIDED that at least $130
million of the aggregate principal amount of the Notes remain outstanding
immediately after each such redemption. The Exchange Notes will not be subject
to any sinking fund requirement. Upon the occurrence of a Change of Control (as
defined), the Company will be required to make an offer to repurchase the
Exchange Notes at a price of 101% of the principal amount thereof, together with
accrued and unpaid interest, if any, to the date of repurchase. See "Description
of Notes--Optional Redemption" and "--Change of Control."
Each broker-dealer that receives Exchange Notes for its own account in
exchange for Old Notes, where such Old Notes were acquired by such broker-dealer
as a result of market-making or other trading activities, must acknowledge that
it will deliver a Prospectus in connection with any resale of such Exchange
Notes. The Letter of Transmittal states that, by so acknowledging and by
delivering a Prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of Exchange Notes received in exchange
for Old Notes where such Old Notes were acquired by such broker-dealer as a
result of market-making or other trading activities. The Company has agreed that
for a period of 90 days after consummation of the Exchange Offer, it will make
this Prospectus, as it may be amended or supplemented from time to time,
available to any broker-dealer for use in connection with any such resale. See
"Plan of Distribution."
There has been no public market for the Old Notes. If a market for the
Exchange Notes should develop, the Exchange Notes could trade at a discount from
their principal amount. The Company does not intend to list the Exchange Notes
on a national securities exchange or to apply for quotation of the Exchange
Notes through the National Association of Securities Dealers Automated Quotation
System. There can be no assurance that an active public market for the Exchange
Notes will develop.
SEE "RISK FACTORS" BEGINNING ON PAGE 14 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE EXCHANGE
NOTES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is , 1997.
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-4 (together with all
amendments, exhibits, schedules and supplements thereto, the "Registration
Statement") under the Securities Act with respect to the Exchange Notes offered
hereby. This Prospectus, which forms a part of the Registration Statement, does
not contain all the information set forth in the Registration Statement, certain
parts of which have been omitted in accordance with the rules and regulations of
the Commission. For further information with respect to the Company, and the
Exchange Notes offered hereby, reference is made to the Registration Statement.
Statements contained in this Prospectus as to the contents of certain documents
filed as exhibits to the Registration Statement are not necessarily complete
and, in each case, are qualified by reference to the copy of the document so
filed.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Commission. Reports,
proxy and information statements and other information filed by the Company and
the Registration Statement can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's regional offices at 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center,
13th Floor, New York, New York 10048. Copies of such material may be obtained
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Such material also can be reviewed
through the Commission's Electronic Data Gathering, Analysis, and Retrieval
System, which is publicly available through the Commission's Web site
(http://www.sec.gov). The Company intends to furnish to each holder of the
Exchange Notes annual reports containing audited financial statements and
quarterly reports containing unaudited financial information for the first three
quarters of each fiscal year. The Company also will furnish to each holder of
the Exchange Notes such other reports as may be required by applicable law. The
principal executive offices of the Company are located at 11550 North Meridian
Street, Suite 600, Carmel, Indiana 46032, telephone number (317) 844-9666.
FORWARD-LOOKING STATEMENTS
Certain statements in this Prospectus under the captions "Prospectus
Summary," "Risk Factors," "Use of Proceeds," "Management's Discussion and
Analysis of Results of Operations and Financial Condition" and "Business" and
elsewhere constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties and other important
factors that could cause the actual results, performance or achievements of the
Company, or industry results, to differ materially from any future results,
performance or achievements expressed or implied by such forward-looking
statements. Such risks, uncertainties and other important factors include, among
others: general economic and business conditions; industry capacity; industry
trends; competition; raw material costs and availability; currency fluctuations;
the loss of any significant customers; changes in business strategy or
development plans; availability, terms and deployment of capital; availability
of qualified personnel; changes in, or the failure or inability to comply with,
government regulation; and other factors referenced in this Prospectus. See
"Risk Factors." These forward-looking statements speak only as of the date of
this Prospectus. The Company disclaims any obligation or undertaking to
disseminate any updates or revisions to any forward-looking statement contained
herein to reflect any change in the Company's expectations with regard thereto
or any change in events, conditions or circumstances on which any such statement
is based.
2
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION CONTAINED ELSEWHERE IN
THIS PROSPECTUS AND IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS AND THE RELATED NOTES THERETO APPEARING
ELSEWHERE IN THIS PROSPECTUS. PROSPECTIVE INVESTORS ARE URGED TO READ THIS
PROSPECTUS IN ITS ENTIRETY BEFORE INVESTING IN THE EXCHANGE NOTES. THE COMPANY'S
FISCAL YEAR ENDS SEPTEMBER 30, AND THUS, FOR EXAMPLE, "FISCAL 1996" REFERS TO
THE FISCAL YEAR ENDED SEPTEMBER 30, 1996. FINANCIAL INFORMATION PRESENTED HEREIN
FOR THE ENTIRE FISCAL 1996 PERIOD REFLECTS THE COMBINATION OF HISTORICAL RESULTS
FOR THE EIGHT MONTHS ENDED MAY 31, 1996 FOR THE "PREDECESSOR COMPANY" (UNTIL MAY
31, 1996) AND FOR THE FOUR MONTHS ENDED SEPTEMBER 30, 1996 FOR THE "REORGANIZED
COMPANY" (STARTING MAY 31, 1996), AND THUS, THIS INFORMATION DOES NOT COMPLY
WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("GAAP") APPLICABLE TO COMPANIES
UPON EMERGENCE FROM BANKRUPTCY, WHICH CALLS FOR SEPARATE REPORTING FOR THE
REORGANIZED COMPANY AND THE PREDECESSOR COMPANY.
THE COMPANY
GENERAL
Anacomp is a leading provider of information and image management products
and services to approximately 15,000 customers in more than 65 countries. The
Company offers a broad range of short-term and long-term document management
solutions for the conversion, storage and retrieval of computer data and images
utilizing micrographics, magnetic media products and, to an increasing extent,
digital technologies. For the twelve-month period ended December 31, 1996, the
Company's revenues and EBITDA (as defined) were $472.3 million and $84.4
million, respectively.
The Company has built a strong reputation as the world's leading
full-service provider of micrographics systems, services and supplies.
Micrographics is the conversion of information stored in digital form or on
paper to microfilm or microfiche. Traditionally, micrographics has provided one
of the most cost-effective means of data storage and retrieval for
information-intensive organizations such as banks, insurance companies,
financial service companies, retailers, healthcare providers and government
agencies. The Company believes it possesses worldwide market share in excess of
40% in the largest segment of the micrographics industry, Computer Output
Microfilm ("COM"). COM consists of the high-speed conversion of digital
information directly from a computer or magnetic tape to microfilm or
microfiche.
The Company has an extensive installed base of COM equipment, which
management estimates to be in excess of 55% of the systems in use worldwide.
This installed base together with the Company's strong customer relationships
provide the Company with what management believes to be a substantial recurring
revenue stream from COM maintenance and supplies. For customers that prefer
outsourcing solutions, the Company provides COM, digital and related services
through its network of 48 service centers in the United States as well as
through a growing number of international service centers. The Company is also a
leading provider of half-inch magnetic media products for large computing
systems and is increasingly providing digital products and services to its
customers.
INFORMATION AND IMAGE MANAGEMENT INDUSTRY
The information and image management industry, which the Company believes to
be in excess of $8 billion worldwide, provides products and services utilized in
the conversion, storage and retrieval of computer data and images. Users of
these products and services must balance the ease of accessibility of
information with the cost of storing and accessing that information. The
required duration for storing certain information, as well as the necessary
frequency and availability of access to data, determine the type of media on
which the information can be stored and the related cost. In general, as
information ages, customer requirements for frequency of retrieval and speed of
delivery decline.
Historically, information management (both storage and retrieval) was
dominated by micrographics products and services, a segment in which Anacomp has
achieved a leading market position. Recent advances in digital technology have
provided customers with information management alternatives to micrographics,
which provide more rapid retrieval times but at a higher cost. Over the next few
years, the
3
<PAGE>
Company believes that micrographics technology will continue to retain certain
cost and functional advantages over alternative data storage media, which will
keep micrographics competitive in a wide range of applications. Over a longer
term, the Company believes that micrographics technology will be viewed
predominately as a reliable and cost-effective method for long-term data
storage. To achieve optimal balance of cost-effectiveness and efficiency, many
organizations convert their information to several different storage media over
the life of the information. The Company's new business strategy is to
capitalize on these industry trends by leveraging its competitive strengths to
provide new products and services while maintaining its leading market position
in COM solutions.
COMPETITIVE STRENGTHS
STRONG CUSTOMER RELATIONSHIPS
Since its inception in 1968, the Company has developed long-term
relationships with many of its customers. Among the Company's customers are
Aetna Inc., AT&T Corp., Automatic Data Processing, Inc., BankAmerica
Corporation, Citicorp, Daimler-Benz AG, Deutsche Bank AG, Eastman Kodak Company
("Kodak"), Electronic Data Systems Corporation, FMR Corp., General Electric
Capital Corporation, International Business Machines Corporation and Travelers
Group Inc. The Company believes that the strength of its customer relationships
results from consistently meeting or exceeding customer information management
needs and expectations. The Company manages these customer relationships through
its worldwide sales force of approximately 200 individuals and through its
extensive distributor networks.
LEADING MARKET SHARES
The Company believes that it is the largest manufacturer and distributor of
COM systems in the world; the largest provider of COM maintenance and supplies
in the world; the second largest provider of COM services in the United States;
the largest supplier of half-inch magnetic media products in the world; and the
largest provider of digital compact disc-recordable ("CD") output products and
services in the world. The Company's market position and customer base provide
the necessary platform to introduce new and complementary information management
products and services.
INSTALLED BASE OF EQUIPMENT
The Company believes it has the world's largest installed base of COM
equipment with an estimated market share of 55%. This extensive installed base,
together with the Company's strong customer relationships, provide the Company
with what management believes to be a substantial recurring revenue stream from
COM maintenance and supplies.
BROAD PRODUCT OFFERING
The Company has introduced new products and services in three areas: digital
solutions, complementary outsourcing services and COM enhancements. Digital
solutions include CD services marketed under the ALVA brand name and CD output
systems obtained from the acquisition of Data/Ware Development, Inc.
("Data/Ware"). Complementary outsourcing services include Print/Mail (printing
and mailing client statements and other documents) and archival storage
services. New products in COM systems include DragonCOM, a next generation COM
system which is capable of processing Asian languages.
EXPERIENCED NEW MANAGEMENT TEAM
The Company's new senior management team is led by Lang Lowrey, who became
the Company's Chief Executive Officer in October 1995, and Ralph W. Koehrer, who
became the Company's President and Chief Operating Officer in January 1997. This
management team has more than 300 cumulative years of experience in the
information and image management industry and is highly committed to executing
the Company's new business strategy.
4
<PAGE>
NEW BUSINESS STRATEGY
The Company's new management team, assembled over the last eighteen months
as a part of the Company's reorganization plan, has developed a strategy to
rationalize the Company's operations, leverage the Company's competitive
strengths and capitalize on the evolution of the information and image
management industry.
COST REDUCTION AND PRODUCTIVITY ENHANCEMENT
The Company has executed a strategy designed to: (a) reduce selling, general
and administrative expenses by reducing headcount, centralizing administrative
functions and reducing fixed operating costs and (b) develop new processes and
programs to enhance productivity and product quality. The cumulative effect of
these and other activities has been to reduce selling, general and
administrative expenses as a percentage of revenues from 22.4% for the year
ended September 30, 1995 to 19.2% for the twelve months ended December 31, 1996.
The Company's management is committed to continue cost and efficiency
improvements focusing on a number of areas including data center automation and
data transmission technology.
EXIT NON-STRATEGIC BUSINESSES
Since July 1995, the Company has exited three lower-margin, non-strategic
businesses including the filming of paper documents, the manufacturing of
microfiche and microfilm readers and reader/printers, as well as the
manufacturing of floppy diskette media.
STRENGTHEN BALANCE SHEET AND ENHANCE FINANCIAL FLEXIBILITY
Following the Company's emergence from bankruptcy proceedings in June 1996,
the Company has completed a $25 million rights offering and an $80 million
senior secured credit financing. Since June 1996, following these two
transactions and pro forma for the Offering and the Redemption, the Company will
have reduced annualized interest expense excluding amortization of discounts and
issuance costs from $38.6 million (based on capitalization data as of June 30,
1996) to $30 million (based on pro forma capitalization data as of December 31,
1996). See "Capitalization."
NEW PRODUCT OFFERINGS AND GROWTH OPPORTUNITIES
The Company is positioning itself to capitalize on its core long-term
information management competency and its significant existing customer base by
providing the latest technologies for short-term and mid-term information
management solutions. This migration towards faster growth areas of the
information and image management industry is being accomplished through internal
development, strategic acquisitions of advanced technology and joint ventures
and strategic alliances. In June 1996, the Company introduced its new DragonCOM
System, which is capable of processing Asian languages. On January 31, 1997, the
Company acquired Data/Ware, a leading manufacturer and supplier of CD output
systems. On January 22, 1997, the Company entered into a product and marketing
agreement with FileNet Corp. ("FileNet"), a leading provider of integrated
document management software, to provide a technological base for the Company's
Windows NT-based application solutions for rapid day-to-day information
management known collectively as "Concerto." Although digital storage systems
account for a small percentage of the Company's total revenues, Anacomp has
rapidly become the largest U.S. provider of CD output solutions, offering
customers high-capacity and high-speed information retrieval applications.
5
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RECENT DEVELOPMENTS
On October 30, 1996, the Company completed a $25 million rights offering
(the "Rights Offering") of its Common Stock (as defined) to its existing
stockholders that resulted in the issuance of 3.6 million shares of Common Stock
at a subscription price of $6.875 per share. (The Company's Common Stock was
quoted on , 1997 at a closing price of $ per share on the Nasdaq
National Market).
On January 22, 1997, the Company entered into a multi-year product and
marketing agreement with FileNet to provide Windows NT-based software
applications for integrated information delivery. FileNet's newest suite of
software for document imaging, document management, computer output to laser
disc ("COLD") and workflow, a set of integrated, open, componentized and
complementary solutions, will serve as the platform for multi-industry and
vertical applications developed and marketed by the Company under the Concerto
brand name.
On January 31, 1997, Anacomp acquired Data/Ware, a California-based company
that manufactures and markets CD output systems, optical storage controllers and
mainframe connectivity solutions, for $11.2 million cash paid at closing and
contingent cash and/or stock payments of up to $3.2 million based on future
performance.
On February 28, 1997, the Company refinanced (the "Senior Secured
Refinancing") the Old Senior Secured Notes (as defined) with an $80 million
senior secured credit facility (the "Senior Secured Debt") that provides for a
$25 million revolver and term loans of $55 million. The Senior Secured Debt is
secured by substantially all of the assets of the Company and contains financial
covenants and other restrictions on the Company. See "Description of the Senior
Secured Debt."
On March 24, 1997, the Company sold and issued the Old Notes (the "Old Notes
Offering"). Following the consummation of the Old Notes Offering, the Company
used a portion of the proceeds from the Old Notes Offering to redeem (the
"Redemption") all of the Company's $172 million aggregate principal amount
outstanding 13% Senior Subordinated Notes due 2002 (the "Existing Notes") at a
redemption price equal to 103% of the principal amount of the Existing Notes.
BANKRUPTCY REORGANIZATION
On June 4, 1996, the Company emerged from bankruptcy proceedings under its
Third Amended Joint Plan of Reorganization (the "Plan of Reorganization"). On
such date, the Company canceled its existing secured and subordinated debt and
its equity securities, and distributed to its creditors approximately $22.0
million in cash, $112.2 million principal amount of its 11 5/8% Senior Secured
Notes due 1999 (the "Old Senior Secured Notes"), $160 million principal amount
of the Existing Notes, 10 million shares of new common stock, par value $0.01
per share (the "Common Stock"), and warrants to purchase 362,694 shares of
Common Stock at a price of $12.23 per share for a period of five years from June
4, 1996. The Plan of Reorganization resulted in a reduction of approximately
$174 million in principal and accrued interest of the Company's debt obligations
and/or liquidation amount and accrued dividends on its preferred stock. The
resulting capital structure reduced the Company's interest expense by
approximately $31 million per year.
6
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THE EXCHANGE OFFER
<TABLE>
<S> <C>
The Exchange Offer............ $1,000 principal amount of Exchange Notes will be issued in
exchange for each $1,000 principal amount of Old Notes
validly tendered pursuant to the Exchange Offer. As of the
date hereof, $200 million in aggregate principal amount of
Old Notes are outstanding. The Company will issue the
Exchange Notes to tendering holders of Old Notes promptly
after the Expiration Date.
Resales....................... Based on an interpretation by the staff of the Commission
set forth in Morgan Stanley & Co. Incorporated, SEC
No-Action Letter (available June 5, 1991) (the "Morgan
Stanley Letter"), Exxon Capital Holdings Corporation, SEC
No-Action Letter (available May 13, 1988) (the "Exxon
Capital Letter") and similar letters, the Company believes
that Exchange Notes issued pursuant to the Exchange Offer
in exchange for Old Notes may be offered for resale, resold
and otherwise transferred by any person receiving such
Exchange Notes, whether or not such person is the holder
(other than any such holder or other person which is (i) a
broker-dealer that receives Exchange Notes for its own
account in exchange for Old Notes, where such Old Notes
were acquired by such broker-dealer as a result of mar-
ket-making or other trading activities, or (ii) an
"affiliate" of the Company within the meaning of Rule 405
under the Securities Act (collectively, "Restricted
Holders")) without compliance with the registration and
prospectus delivery provisions of the Securities Act,
provided that (a) such Exchange Notes are acquired in the
ordinary course of business of such holder or other person
(b) neither such holder nor such other person is engaged in
or intends to engage in a distribution of such Exchange
Notes and (c) neither such holder nor other person has any
arrangement or understanding with any person to participate
in the distribution of such Exchange Notes. If any person
were to be participating in the Exchange Offer for the
purposes of participating in a distribution of the Exchange
Notes in a manner not permitted by the Commission's
interpretation, such person (a) could not rely upon the
Morgan Stanley Letter, the Exxon Capital Letter or similar
letters and (b) must comply with the registration and
prospectus delivery requirements of the Securities Act in
connection with a secondary resale transaction. Each broker
or dealer that receives Exchange Notes for its own account
in exchange for Old Notes, where such Old Notes were
acquired by such broker or dealer as a result of
market-making or other activities, must acknowledge that it
will deliver a Prospectus in connection with any sale of
such Exchange Notes. See "Plan of Distribution."
Expiration Date............... 5:00 p.m., New York City time, on , 1997, unless
the Exchange Offer is extended, in which case the term
"Expiration Date" means the latest date and time to which
the Exchange Offer is extended.
Accrued Interest on the
Exchange Notes and Old
Notes....................... The Exchange Notes will bear interest from March 24, 1997.
Holders of Old Notes whose Old Notes are accepted for
exchange will be
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7
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<TABLE>
<S> <C>
deemed to have waived the right to receive any payment in
respect of interest on such Old Notes accrued to the date
of issuance of the Exchange Notes.
Conditions to the Exchange
Offer....................... The Exchange Offer is subject to certain customary
conditions. The conditions are limited and relate in
general to proceedings which have been instituted or laws
which have been adopted that might impair the ability of
the Company to proceed with the Exchange Offer. As of the
date of this Prospectus, none of these events had occurred,
and the Company believes their occurrence to be unlikely.
If any such conditions exist prior to the Expiration Date,
the Company may (a) refuse to accept any Old Notes and
return all previously tendered Old Notes, (b) extend the
Exchange Offer or (c) waive such conditions. See "The
Exchange Offer--Conditions."
Procedures for Tendering Old
Notes....................... Each holder of Old Notes wishing to accept the Exchange
Offer must complete, sign and date the Letter of
Transmittal, or a facsimile thereof, in accordance with the
instructions contained herein and therein, and mail or
otherwise deliver such Letter of Transmittal, or such
facsimile, together with the Old Notes to be exchanged and
any other required documentation to the Exchange Agent (as
defined) at the address set forth herein and therein.
Tendered Old Notes, the Letter of Transmittal and
accompanying documents must be received by the Exchange
Agent by 5:00 p.m. New York City time, on the Expiration
Date. See "The Exchange Offer--Procedures for Tendering."
By executing the Letter of Transmittal, each holder will
represent to the Company that, among other things, the
Exchange Notes acquired pursuant to the Exchange Offer are
being obtained in the ordinary course of business of the
person receiving such Exchange Notes, whether or not such
person is the holder, that neither the holder nor any such
other person is engaged in or intends to engage in a
distribution of the Exchange Notes or has an arrangement or
understanding with any person to participate in the
distribution of such Exchange Notes, and that neither the
holder nor any such other person is an "affiliate," as
defined under Rule 405 of the Securities Act, of the
Company.
Special Procedures for
Beneficial Holders.......... Any beneficial holder whose Old Notes are registered in the
name of his broker, dealer, commercial bank, trust company
or other nominee and who wishes to tender in the Exchange
Offer should contact such registered holder promptly and
instruct such registered holder to tender on his behalf. If
such beneficial holder wishes to tender on his own behalf,
such beneficial holder must, prior to completing and
executing the Letter of Transmittal and delivering his Old
Notes, either make appropriate arrangements to register
ownership of the Old Notes in such holder's name or obtain
a properly completed bond power from the registered holder.
The transfer of record ownership may take considerable
time. See "The Exchange Offer-- Procedures for Tendering."
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
Guaranteed Delivery
Procedures.................. Holders of Old Notes who wish to tender their Old Notes and
whose Old Notes are not immediately available or who cannot
deliver their Old Notes and a properly completed Letter of
Transmittal or any other documents required by the Letter
of Transmittal to the Exchange Agent prior to the
Expiration Date may tender their Old Notes according to the
guaranteed delivery procedures set forth in "The Exchange
Offer--Guaranteed Delivery Procedures."
Withdrawal Rights............. Tenders may be withdrawn at any time prior to 5:00 p.m.,
New York City time, on the Expiration Date.
Acceptance of Old Notes and
Delivery of Exchange
Notes....................... Subject to certain conditions, the Company will accept for
exchange any and all Old Notes which are properly tendered
in the Exchange Offer prior to 5:00 p.m., New York City
time, on the Expiration Date. The Exchange Notes issued
pursuant to the Exchange Offer will be delivered promptly
after the Expiration Date. See "The Exchange Offer--Terms
of the Exchange Offer."
Certain U.S. Federal Income
Tax Considerations.......... The exchange of Old Notes for Exchange Notes pursuant to
the Exchange Offer will not be a taxable event for federal
income tax purposes. A holder's holding period for Exchange
Notes will include the holding period for Old Notes. For a
discussion summarizing certain U.S. federal income tax
consequences to holders of the Exchange Notes, see "Certain
U.S. Federal Income Tax Considerations."
Exchange Agent................ IBJ Schroder Bank & Trust Company is serving as exchange
agent (the "Exchange Agent") in connection with the
Exchange Offer. The mailing address of the Exchange Agent
is IBJ Schroder Bank & Trust Company, P.O. Box 84, Bowling
Green Station, New York, New York, 10274-0084, Attention:
Reorganization Operations Department. Deliveries by hand or
overnight courier should be addressed to IBJ Schroder Bank
& Trust Company, One State Street, Securities Processing
Window SC-1, New York, New York 10004. For facsimile
transmission, use facsimile number (212) 858-2611 and
confirm by telephone at (212) 858-2657.
Use of Proceeds............... The Company will not receive any proceeds from the Exchange
Offer. See "Use of Proceeds." The Company has agreed to
bear the expenses of the Exchange Offer pursuant to the
Registration Rights Agreement (as defined). No underwriter
is being used in connection with the Exchange Offer.
</TABLE>
9
<PAGE>
SUMMARY OF TERMS OF EXCHANGE NOTES
The Exchange Offer constitutes an offer to exchange up to $200 million
aggregate principal amount of the Exchange Notes for up to an equal aggregate
principal amount of Old Notes. The Exchange Notes will be obligations of the
Company evidencing the same indebtedness as the Old Notes, and will be entitled
to the benefit of the same Indenture. The form and terms of the Exchange Notes
are substantially the same as the form and terms of the Old Notes except that
the Exchange Notes have been registered under the Securities Act. See
"Description of Notes."
COMPARISON WITH OLD NOTES
<TABLE>
<S> <C>
Freely Transferable........... The Exchange Notes will be freely transferable under the
Securities Act by holders who are not Restricted Holders.
Restricted Holders are restricted from transferring the
Exchange Notes without compliance with the registration and
prospectus delivery requirements of the Securities Act. The
Exchange Notes will be identical in all material respects
(including interest rate, maturity and restrictive
covenants) to the Old Notes, with the exception that the
Exchange Notes will be registered under the Securities Act.
See "The Exchange Offer--Terms of the Exchange Offer."
Registration Rights........... The holders of Old Notes currently are entitled to certain
registration rights pursuant to the Exchange and
Registration Rights Agreement, dated March 24, 1997 (the
"Registration Rights Agreement"), by and between the
Company and NatWest Capital Markets Limited, the initial
purchaser of the Old Notes ("NatWest"), including the right
to cause the Company to register the Old Notes under the
Securities Act if the Exchange Offer is not consummated
prior to the Exchange Offer Termination Date (as defined).
See "The Exchange Offer--Conditions." However, pursuant to
the Registration Rights Agreement, such registration rights
will expire upon consummation of the Exchange Offer.
Accordingly, holders of Old Notes who do not exchange their
Old Notes for Exchange Notes in the Exchange Offer will not
be able to reoffer, resell or otherwise dispose of their
Old Notes unless such Old Notes are subsequently registered
under the Securities Act or unless an exemption from the
registration requirements of the Securities Act is
available.
</TABLE>
TERMS OF THE EXCHANGE NOTES
<TABLE>
<S> <C>
ISSUER........................ Anacomp Inc., an Indiana corporation.
EXCHANGE NOTES OFFERED........ $200 million principal amount of 10 7/8% Senior
Subordinated Notes due 2004, Series B.
MATURITY DATE................. April 1, 2004.
INTEREST PAYMENT DATES........ April and October 1, commencing October 1, 1997. For a
discussion summarizing certain U.S. federal income tax
consequences to holders of the Notes, see "Certain U.S.
Federal Income Tax Considerations--Original Issue
Discount."
OPTIONAL REDEMPTION........... Except as described below and under "--Change of Control,"
the Company may not redeem the Exchange Notes prior to
April 1,
</TABLE>
10
<PAGE>
<TABLE>
<S> <C>
2000. On or after such date, the Company may redeem the
Exchange Notes, in whole or in part, at any time at the
redemption prices set forth herein, together with accrued
and unpaid interest, if any, to the date of redemption. In
addition, at any time and from time to time on or prior to
April 1, 2000, the Company may, subject to certain
requirements, redeem up to 35% of the aggregate principal
amount of the Notes with the cash proceeds received from
one or more Public Equity Offerings (as defined) at a
redemption price equal to 110.875% of the principal amount
to be redeemed, together with accrued and unpaid interest,
if any, to the date of redemption, PROVIDED that at least
$130 million of the aggregate principal amount of the Notes
remain outstanding immediately after each such redemption.
See "Description of Notes--Optional Redemption."
RANKING AND SUBORDINATION..... The Exchange Notes will be unsecured and will be
subordinated to all existing and future Senior Indebtedness
(as defined) of the Company. The Exchange Notes will rank
PARI PASSU with any future Senior Subordinated Indebtedness
(as defined) of the Company and will rank senior to all
other subordinated indebtedness of the Company. The
Exchange Notes will also be effectively subordinated to all
obligations of each subsidiary of the Company as may exist
from time to time. As of December 31, 1996, on a pro forma
basis after giving effect to the Old Notes Offering, the
Redemption and the Senior Secured Refinancing, the Company
would have had approximately $56 million Senior
Indebtedness outstanding (excluding unused revolving credit
commitments of $25 million). See "Description of
Notes--Ranking" and "--Subordination."
CHANGE OF CONTROL............. Upon the occurrence of a Change of Control, the Company
will be required to purchase the Notes at a purchase price
of 101% of the principal amount thereof, together with
accrued and unpaid interest, if any, to the date of
repurchase. See "Description of Notes-- Change of Control."
CERTAIN COVENANTS............. The Indenture will contain certain covenants, including,
without limitation, covenants with respect to the following
matters, (a) limitation on indebtedness, (b) limitation on
restricted payments, (c) limitation on restrictions on
distributions from restricted subsidiaries, (d) limitation
on sale of assets and restricted subsidiary stock,
(e) limitation on transactions with affiliates,
(f) limitation on liens, (g) limitation on sale/leaseback
transactions, (h) limitation on issuance and sale of
capital stock of restricted subsidiaries; and (i)
limitation on mergers, consolidations or sales of all or
substantially all of the Company's assets. See "Description
of Notes-- Certain Covenants" and "--Limitation on Merger,
Consolidation or Sale of Assets."
</TABLE>
RISK FACTORS
Prospective purchasers of the Exchange Notes should consider carefully all
of the information set forth in this Prospectus and, in particular, should
evaluate the specific factors set forth under "Risk Factors" for risks involved
with an investment in the Exchange Notes.
11
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
The following table summarizes selected consolidated historical operating
and financial data of the Company for the fiscal years ended September 30, 1995
and 1996, which were derived, except as otherwise noted, from the consolidated
financial statements of the Predecessor Company and the Reorganized Company
audited by Arthur Andersen LLP, and selected unaudited consolidated historical
operating and financial data as of December 31, 1996, for the three months ended
December 31, 1995 and 1996 and for the twelve months ended December 31, 1996,
which were derived from unaudited interim condensed consolidated financial
statements of the Predecessor Company and the Reorganized Company, and, in the
opinion of management, include all adjustments, consisting only of normal
recurring adjustments, necessary for a fair statement of the results for the
unaudited interim periods. The following should be read in conjunction with, and
is qualified in its entirety by reference to, "Selected Consolidated Financial
Data," "Management's Discussion and Analysis of Results of Operations and
Financial Condition," the Company's Consolidated Financial Statements and the
related notes thereto.
<TABLE>
<CAPTION>
TWELVE
YEAR ENDED THREE MONTHS ENDED MONTHS
SEPTEMBER 30, DECEMBER 31, ENDED
----------------------- ---------------------- DECEMBER 31,
1995(1) 1996(1)(2) 1995(1) 1996(1)(3) 1996(1)(2)(3)
----------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
(UNAUDITED) (UNAUDITED)
<CAPTION>
(DOLLARS IN THOUSANDS, EXCEPT RATIOS)
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues......................................... $ 591,189 $ 486,140 $ 130,265 $ 116,453 $ 472,328
Costs of sales and services...................... 417,335 331,122 89,599 75,039 316,562
Selling, general and administrative.............. 132,459 93,514 24,447 21,448 90,515
Amortization of reorganization asset............. -- 25,663 -- 19,247 44,910
Special and restructuring charges (4)............ 169,584 -- -- -- --
----------- ---------- ---------- ---------- ------------
Operating income (loss).......................... (128,189) 35,841 16,219 719 20,341
Interest expense--net (5)........................ 68,938 37,056 17,785 8,818 28,089
Reorganization items (6)......................... -- 92,839 -- -- 92,839
Net income (loss) (7)............................ $ (238,326) $ 142,961 $ 1,053 $ (12,914) $ 128,994
OTHER FINANCIAL DATA:
EBITDA (8)....................................... $ 77,393 $ 84,175 $ 23,095 $ 23,325 $ 84,405
Depreciation and amortization (9)................ 35,998 48,334 6,876 22,606 64,064
Capital expenditures............................. 14,372 5,823 1,161 3,202 7,864
PRO FORMA DATA (10):
Pro forma net interest expense (11).............. -- $ 30,227 $ 8,141 $ 7,060 $ 29,146
Ratio of EBITDA to pro forma net
interest expense............................... -- 2.78x 2.84x 3.30x 2.90x
Ratio of pro forma net debt to EBITDA............ -- -- -- -- 2.58x
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1996
--------------------------
ACTUAL PRO FORMA(10)
---------- --------------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents (12)....................................................... $ 81,171 $ 36,807
Reorganization value in excess of identifiable assets (13)........................... 218,473 218,473
Total assets......................................................................... 450,526 414,322
Total current liabilities (14)....................................................... 112,769 100,172
Total debt (15)...................................................................... 261,067 254,942
Stockholders' equity................................................................. 70,574 53,092
</TABLE>
(FOOTNOTES COMMENCE ON THE FOLLOWING PAGE)
12
<PAGE>
(1) Although the Plan of Reorganization was consummated on June 4, 1996, the
effective date of the consummation of the Plan of Reorganization for
financial reporting purposes is considered to be the close of business on
May 31, 1996. The Company has accounted for the restructuring using the
principles of "fresh start" reporting as required by AICPA Statement of
Position 90-7, Financial Reporting by Entities in Reorganization Under the
Bankruptcy Code ("SOP 90-7"). Pursuant to such principles, in general, the
Company's assets and liabilities were revalued. Therefore, due to the
restructuring and implementation of fresh start reporting, the consolidated
financial statements for the Reorganized Company (starting May 31, 1996) are
not comparable to those of the Predecessor Company.
(2) Results reflect the combination of historical results for the eight months
ended May 31, 1996 for the Predecessor Company and for the four months ended
September 30, 1996 for the Reorganized Company, and thus, this information,
as presented, does not comply with GAAP applicable to companies upon
emergence from bankruptcy, which calls for separate reporting for the
Reorganized Company and the Predecessor Company.
(3) Results include receipt of a one-time $3.6 million payment relating to a
long-standing OEM (as defined) purchase agreement with Kodak.
(4) Includes special charges of $136.9 million that represent a $108 million
write-off of goodwill and $28.9 million of charges associated with software
costs which are not recoverable, as well as restructuring charges of $32.7
million.
(5) Reflects interest expense and fee amortization, net of interest income.
(6) Includes income and expenses resulting from the Plan of Reorganization and
adoption of fresh start accounting, including a write-off of deferred debt
issue costs and discounts of $17.6 million, adjustments of assets and
liabilities to fair market value of $124.9 million, financial restructuring
costs of $14.9 million and interest earned on accumulated cash of $431,000.
(7) Includes an extraordinary gain, net of taxes, resulting from the discharge
of indebtedness of $52.4 million for the year ended September 30, 1996 and
the twelve months ended December 31, 1996.
(8) "EBITDA" represents earnings before interest income and expense, special
and restructuring charges, reorganization items, other income, income taxes,
depreciation and amortization. Information regarding EBITDA is presented
because management believes that certain investors use EBITDA as a measure
of an issuer's historical ability to service its debt. EBITDA should not be
considered as an alternative to, or more meaningful than, net income (as
determined in accordance with GAAP) as a measure of the Company's operating
results or cash flows (as determined in accordance with GAAP) as a measure
of the Company's liquidity. Furthermore, caution should be used in comparing
EBITDA to similarly titled measures of other companies as the definitions of
these measures may vary.
(9) Excludes amortization of debt issuance costs.
(10) The pro forma data give effect to the Old Notes Offering, the Redemption
and the Senior Secured Refinancing and the application of the estimated net
proceeds therefrom as if the Old Notes Offering, the Redemption and the
Senior Secured Refinancing had occurred at the beginning of the applicable
statement of operations periods and as of the balance sheet date. Net debt
is total debt (including current portion), net of cash and cash equivalents
(including restricted cash).
(11) Pro forma net interest expense is computed by removing from net interest
expense the interest expense associated with the Existing Notes and adding
interest expense on the Old Notes. Pro forma net interest expense also
excludes amortization of debt issuance costs and debt discount.
(12) Includes $9.6 million of restricted cash.
(13) For fresh start reporting purposes, any portion of the Company's
reorganization value not attributable to specific identifiable assets is
reported as "Reorganization value in excess of identifiable assets." This
asset is being amortized over a 3.5 year period beginning May 31, 1996.
(14) Total current liabilities exclude current portion of long-term debt.
(15) Total debt includes current portion of long-term debt, net of unamortized
debt discount.
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<PAGE>
RISK FACTORS
PROSPECTIVE INVESTORS SHOULD CAREFULLY REVIEW THE INFORMATION SET FORTH
BELOW, TOGETHER WITH THE INFORMATION AND FINANCIAL DATA SET FORTH ELSEWHERE IN
THIS PROSPECTUS, BEFORE MAKING AN INVESTMENT DECISION.
ADVERSE EFFECT OF GROWTH OF ALTERNATE TECHNOLOGIES
Revenues for the Company's micrographics services and products, including
micrographics service revenues, COM system revenues, maintenance service
revenues and micrographics equipment and supplies revenues, have been adversely
affected for each of the past four fiscal years (see "--Declines in Revenues and
Profits") and could in the future be substantially adversely affected by, among
other things, the increasing use of digital technology. Micrographics revenues
represented 76% of the Company's fiscal 1996 revenues and approximately 75% of
revenues for the first three months of fiscal 1997, and are expected to remain
the Company's primary source of revenues for the foreseeable future.
The effect of digital and other technologies on the demand for micrographics
depends, in part, on the extent of technological advances and cost decreases in
such technologies. The recent trend of technological advances and attendant
price declines in digital systems and products is expected to continue. As a
result, in certain instances, potential micrographics customers have deferred,
and may continue to defer, investments in micrographics systems (including the
Company's XFP 2000 system) and the utilization of micrographics data service
centers while evaluating the abilities of digital and other technologies.
The continuing development of local area computer networks and similar
systems based on digital technologies has resulted and will continue to result
in many Company customers changing their use of micrographics from data storage
and retrieval to primarily archival use. The Company believes this is at least
part of the reason for the declines in the past three fiscal years in both sales
and prices of the Company's duplicate film, readers and reader/printers. The
Company's service centers also are producing fewer duplicate microfiche per
original for customers, reflecting this use of micrographics primarily for
storage. The rapidly changing data storage and management industry also has
resulted in intense price competition in certain of the Company's markets,
particularly micrographics services. The Company's operating income, excluding
special and restructuring charges and amortization of reorganization asset, as a
percentage of revenue was 17% in the first three months of fiscal 1997 compared
to 13% in fiscal 1996, 7% in fiscal 1995 and 13% in fiscal 1994.
Therefore, the Company has been and expects to continue to be impacted
adversely by the decline in the market for COM services, the high fixed costs
and declining market for COM systems and the attendant reduction in equipment
and supplies. The Company's revenues for maintenance of COM systems have
declined in part because of efficiencies associated with the Company's XFP 2000
systems but are expected to decline in the event of lesser use and fewer sales
of COM systems. The growth of alternate technologies has created consolidation
in the micrographics industry. To the extent consolidation in the micrographics
industry has the effect of causing major providers of micrographics services and
products to cease providing such services and products, the negative trends in
the industry, such as competition from alternate technologies described above,
may accelerate.
DECLINES IN REVENUES AND PROFITS
As a result of the rapidly changing nature of the data storage and
management industry, the Company has experienced declining or flat revenues in
each of the last five fiscal years. Revenues for fiscal 1996 decreased $105
million from fiscal 1995. Approximately $60.1 million of this decrease was due
to the sale, discontinuance and downsizing of certain product lines in addition
to lower COM services and systems revenues. Fiscal 1995 revenues decreased $34.9
million compared to fiscal 1994, excluding acquisitions made by the Company
during the fiscal year. For further discussion by product line of recent trends
in revenues and operating margins, See "Management's Discussion and Analysis of
Results of Operations and Financial Condition."
14
<PAGE>
SUBSTANTIAL LEVERAGE
The Company has significant debt service obligations. The ability of the
Company to meet its debt service and other obligations will depend upon its
future performance and is subject to financial, economic and other factors, some
of which are beyond its control. As of December 31, 1996, on a pro forma basis
after giving effect to the Old Notes Offering, the Redemption and the Senior
Secured Refinancing, as if those transactions had occurred on such date, the
Company and its consolidated subsidiaries would have had an aggregate of $255
million of outstanding indebtedness. The Indenture permits the Company to incur
additional indebtedness, including Senior Indebtedness, subject to certain
limitations. See "Capitalization" and "Description of Notes."
The Company's high degree of leverage could have important consequences to
the holders of the Exchange Notes, including the following: (a) the Company's
ability to obtain additional financing for working capital, capital
expenditures, acquisitions, general corporate purposes or other purposes may be
impaired in the future; (b) a substantial portion of the Company's cash flow
from operations must be dedicated to the payment of principal and interest on
its indebtedness, thereby reducing the funds available to the Company for other
purposes; (c) certain of the Company's borrowings will be at variable rates of
interest (including the Senior Secured Debt), which will expose the Company to
the risk of increased interest rates; (d) the Senior Secured Debt will be
secured and matures prior to the maturity of the Exchange Notes; (e) the Company
may be substantially more leveraged than certain of its competitors, which may
place the Company at a competitive disadvantage; and (f) the Company's
substantial degree of leverage may limit its flexibility to adjust to changing
market conditions, reduce its ability to withstand competitive pressures and
make it more vulnerable to a downturn in general economic conditions or its
business. See "Description of the Senior Secured Debt" and "Description of
Notes."
ABILITY TO SERVICE DEBT
The Company's ability to make scheduled payments or to refinance its
obligations with respect to its indebtedness will depend on its financial and
operating performance, which, in turn, is subject to prevailing economic
conditions and to certain financial, business and other factors beyond its
control. If the Company's cash flow and capital resources are insufficient to
fund its debt service obligations, the Company may be forced to reduce or delay
planned expansion and capital expenditures, sell assets, obtain additional
equity capital or restructure its debt. There can be no assurance that the
Company's operating results, cash flow and capital resources will be sufficient
for payment of its indebtedness in the future. In the absence of such operating
results and resources, the Company could face substantial liquidity problems and
might be required to dispose of material assets or operations to meet its debt
service and other obligations, and there can be no assurance as to the timing of
such sales or the proceeds that the Company could realize therefrom. In
addition, because the Senior Secured Debt will bear interest at floating rates,
an increase in interest rates could adversely affect, among other things, the
Company's ability to meet its debt service obligations. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources" and "Description of the Senior
Secured Debt."
The ability of the Company to service its indebtedness will be dependent
upon the future performance of the Company. In addition, the Company believes
that its ability to repay portions of its long-term indebtedness (including the
Exchange Notes) will be dependent on the availability of refinancing
indebtedness. The future performance of the Company and the availability of
refinancing indebtedness each will be subject to general economic and market
conditions and to financial, competitive, business and other factors, including
factors beyond the Company's control.
SUBORDINATION; ASSET ENCUMBRANCES
The Exchange Notes are unsecured senior subordinated obligations of the
Company and will be expressly subordinated in right of payment to all existing
and future Senior Indebtedness, including the
15
<PAGE>
principal of (and premium, if any) and interest on and all other amounts due on
or payable under the Senior Secured Debt. As of December 31, 1996, on a pro
forma basis after giving effect to the Old Notes Offering, the Redemption and
the Senior Secured Refinancing, there would have been outstanding approximately
$56 million of Senior Indebtedness and the Company would have had availability
of $25 million under the revolving facility under the Senior Secured Debt. The
Company can also incur additional Senior Indebtedness under the terms of the
Indenture. By reason of such subordination, in the event of the insolvency,
liquidation, reorganization, dissolution or other winding-up of the Company or
upon a default in payment with respect to, or the acceleration of, any Senior
Indebtedness, the holders of such Senior Indebtedness and any other creditors
who are holders of Senior Indebtedness and creditors of subsidiaries must be
paid in full before the holders of the Exchange Notes may be paid. If the
Company incurs any additional PARI PASSU debt, the holders of such debt would be
entitled to share ratably with the holders of the Exchange Notes in any proceeds
distributed in connection with any insolvency, liquidation, reorganization,
dissolution or other winding-up of the Company. This may have the effect of
reducing the amount of proceeds paid to holders of the Notes. In addition, no
payments may be made with respect to the principal of (and premium, if any) or
interest or Liquidated Damages (as defined) on the Exchange Notes if a payment
default exists with respect to Senior Indebtedness and, under certain
circumstances, no payments may be made with respect to the principal of (and
premium, if any) or interest or Liquidated Damages, if any, on the Exchange
Notes for a period of up to 179 days if a non-payment default exists with
respect to Senior Indebtedness. In addition, the Indenture permits subsidiaries
of the Company to incur debt provided certain conditions are met. See
"Description of Notes."
The Company has granted the lenders under the Senior Secured Debt security
interests in substantially all of the current and future assets of the Company,
including a pledge of all of the issued and outstanding shares of capital stock
of the Company's future subsidiaries. In the event of a default on secured
indebtedness, whether as a result of the failure to comply with a payment or
other covenant, a cross-default, or otherwise, the parties granted such security
interests will have a prior secured claim on the capital stock of the Company
and the assets of the Company. If such parties should attempt to foreclose on
their collateral, the Company's financial condition and the value of the Notes
will be materially adversely affected. See "Description of the Senior Secured
Debt."
FRAUDULENT CONVEYANCE CONSIDERATIONS
The Old Notes Offering and the application of the net proceeds therefrom may
be subject to review under relevant federal and state fraudulent conveyance laws
if a bankruptcy, reorganization or rehabilitation case or a lawsuit (including
in circumstances where bankruptcy is not involved) were commenced by or on
behalf of unpaid creditors of the Company at some future date. These laws vary
among the various jurisdictions. In general, under these laws, if a court were
to find that, at the time an obligation (such as the Old Notes) was incurred,
either (a) such obligation was incurred with the intent of hindering, delaying
or defrauding creditors or (b) the entity incurring the obligation received less
than reasonably equivalent or fair value consideration in exchange for the
incurrence of such obligation and (i) was insolvent or was rendered insolvent by
reason thereof, (ii) was engaged in a business or transaction for which its
remaining assets constituted unreasonably small capital, (iii) intended to
incur, or believed, or reasonably should have believed, that it would incur,
debts beyond its ability to pay such debts as they matured (as all of the
foregoing terms are defined in or interpreted under the fraudulent conveyance
statutes) or (iv) such entity was a defendant in an action for money damages, or
had a judgment for money damages docketed against it (if, in either case, after
final judgment, the judgment is unsatisfied) (each of clauses (i)-(iv) above, a
"Fraudulent Conveyance"), such court could impose legal and equitable remedies,
including (x) subordination of the obligation to presently existing and future
indebtedness of the entity, (y) avoidance of the issuance of the obligation and
the liens, and direction of the repayment of any amounts paid from the proceeds
thereof to a fund for the benefit of the entity's creditors or (z) taking of
other action detrimental to the holders of the Notes.
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<PAGE>
The measures of insolvency for purposes of determining whether a Fraudulent
Conveyance occurred would vary depending upon the laws of the relevant
jurisdiction and upon the valuation assumptions and methodology applied by the
court. Generally, however, a company would be considered insolvent for purposes
of the foregoing if the sum of the company's debts, including contingent
unliquidated and unmatured liabilities, is greater than all of such company's
property at a fair valuation, or if the present fair saleable value of the
company's assets is less than the amount that will be required to pay the
probable liability on its existing debts as they become absolute and matured.
The Company believes that at the time of, or as a result of, the issuance of
the Old Notes and the use of proceeds therefrom, the Company (a) was not
insolvent or rendered insolvent under the foregoing standards, (b) was not
engaged in a business or transactions for which its remaining assets constitute
unreasonably small capital, (c) did not intend to incur, and does not believe
that it did incur, debts beyond its ability to pay such debts as they mature and
(d) had sufficient assets to satisfy any probable money judgment against it in
any pending actions. Consequently, the Company believes that even if one or more
elements of the Old Notes Offering were deemed to involve the incurrence of an
obligation for less than reasonably equivalent or fair value, a Fraudulent
Conveyance did not occur. The beliefs with regard to the solvency of the Company
are based in part on the Company's operating history and management's analysis
of internal cash flow projections and estimated values of assets and liabilities
of the Company at the time of the Old Notes Offering. There can no be assurance,
however, that a court passing on these issues would adopt the same methodology
or assumptions, or arrive at the same conclusions.
LIMITATION ON CHANGE OF CONTROL
The Indenture requires the Company, in the event of a Change of Control in
respect of which it has not elected to redeem the Notes, to repurchase any Notes
that holders thereof desire to have repurchased at 101% of the principal amount
thereof, plus accrued interest to the Change of Control repurchase date. See
"Description of Notes--Change of Control."
There can be no assurance that the Company will have funds available to
redeem or repurchase the Notes upon the occurrence of a Change of Control. In
particular, a Change of Control may cause an acceleration of the Senior Secured
Debt and other indebtedness, if any, of the Company, in which case the Senior
Secured Debt would be required to be repaid in full before redemption or
repurchase of the Notes. See "Description of Notes--Change of Control" and
"Description of the Senior Secured Debt." The inability to repay such
indebtedness, if accelerated, or to redeem or repurchase all of the Notes upon
the occurrence of a Change in Control would constitute an event of default under
the Indenture. Finally, there can be no assurance that the Company will have
funds available to repurchase the Notes upon the occurrence of a Change of
Control.
RESTRICTIONS IMPOSED BY TERMS OF THE COMPANY'S INDEBTEDNESS
The Indenture will restrict, among other things, the Company's ability to
incur additional indebtedness, incur liens, pay dividends or make certain other
restricted payments, enter into certain transactions with affiliates, impose
restrictions on the ability of a subsidiary to pay dividends or make certain
payments to the Company, merge or consolidate with any other person or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of the assets of the Company. In addition, the Senior Secured Debt contains
other and more restrictive covenants and prohibits the Company from prepaying
its other indebtedness (including the Exchange Notes). See "Description of
Notes--Certain Covenants" and "Description of the Senior Secured Debt." The
Senior Secured Debt requires the Company to maintain specified financial ratios
and satisfy certain financial condition tests. The Company's ability to meet
those financial ratios and tests can be affected by events beyond its control,
and there can be no assurance that the Company will meet those tests. A breach
of any of these covenants could result in a default under the Senior Secured
Debt and/or the Indenture. Upon the occurrence of an event of default under the
Senior Secured Debt, the lenders could elect to declare all amounts outstanding
under the Senior Secured Debt,
17
<PAGE>
together with accrued interest, to be immediately due and payable. If the
Company were unable to repay those amounts, the lenders could proceed against
the collateral granted to them to secure that indebtedness. If the lenders under
the Senior Secured Debt accelerate the payment of the indebtedness, there can be
no assurance that the assets of the Company would be sufficient to repay in full
such indebtedness and the other indebtedness of the Company, including the
Exchange Notes. See "Description of the Senior Secured Debt."
AVAILABILITY AND PRICE OF POLYESTER AND CERTAIN OTHER SUPPLIES
Polyester is the basic raw material for the Company's duplicate film and
magnetics products. Large increases in the price of polyester would likely
affect the Company's operating margins adversely as the maturity of the
Company's markets makes it difficult to effect price increases. Increased
polyester prices also could result in the loss of certain customers. Pursuant to
the terms of the Amended and Restated Master Supply Agreement, dated as of
October 8, 1993, as amended (the "SKC Agreement"), among the Company and SKC
Limited and SKC America, Inc. (collectively, "SKC"), the Company purchases all
of its duplicate microfilm and most of its base polyester products from SKC. The
SKC Agreement contains provisions relating to price which, if strictly followed,
would be burdensome to the Company. Accordingly, the Company has sought in the
past to negotiate pricing outside the terms of the SKC Agreement. The SKC
Agreement provides that magnetics-based polyester will be sold at negotiated
fair market value. There can be no assurances the Company will be successful in
such negotiations in the future.
Certain third parties are the sole suppliers of some of the Company's raw
materials and products. In addition to SKC, as described above, Kodak supplies
to the Company on an exclusive basis a proprietary, patented film canister used
in the Company's XFP 2000 COM recorder and supplies to the Company substantially
all of the Company's requirements for original microfilm for earlier-generation
COM recorders. Any disruption in the supply relationship between the Company and
such suppliers could result in delays or reductions in product shipment or
increases in product costs that adversely affect the Company's operating results
in any given period. In the event of any such disruption, there can be no
assurance that the Company could develop alternative sources at acceptable
prices and within reasonable times. For a further description of the Company's
raw material needs and supply relationships, see "Business--Raw Materials and
Suppliers."
ACQUISITIONS
The Company has used acquisitions in the past to try to offset declining
services revenues and to increase market share. The Company is expected to
depend, in part, on acquisitions to try to increase revenues and market share,
and there can be no assurance that the Company will be able to effect any such
further acquisitions. Future acquisitions could be financed by internally
generated funds, bank borrowings, public offerings or private placements of
equity or debt securities, or a combination of the foregoing. There can be no
assurance that the Company will be able to make acquisitions on terms favorable
to the Company. If the Company completes acquisitions, it will encounter various
associated risks, including the possible inability to integrate an acquired
business into the Company's manufacturing systems, increased goodwill
amortization, diversion of management's attention and unanticipated problems or
liabilities, some or all of which could have a material adverse effect on the
Company's operations and financial performance. The Company's substantial
leverage may hinder its ability to consummate future acquisitions. See
"--Substantial Leverage."
NEW PRODUCTS
The Company is introducing new information storage and delivery products,
certain of which will incorporate digital technologies. The Company historically
has not been successful in introducing new micrographics products and services,
and the Company has limited experience in the manufacture, sale or marketing of
these new products and services, especially those incorporating new digital
technologies.
18
<PAGE>
However, the Company is relying on such new products and services to generate
significant cash flows in the future.
These products and services currently are being introduced and, accordingly,
have limited or no revenues to date. The markets for such new products and
services are very competitive, and there can be no assurance that the Company's
products and services will achieve market acceptance. The Company currently is
in the process of reeducating and refocusing its sales force to sell its new
products and services, as well as its more traditional COM products and
services, and there can be no assurance that this will be successfully achieved.
The Company intends to hire limited numbers of new sales personnel to help sell
certain of its digital products and services, but needs to rely on its existing
sales force to grow the business after its introduction. In addition, the extent
to which the Company will be able to maintain technological support for such new
products is unclear. The Company's substantial leverage also may hinder the
development and deployment of new technologies. See "--Substantial Leverage."
INTERNATIONAL
The Company's financial results are dependent in part on its international
operations, which represented approximately 35% of revenues for the first three
months of fiscal 1997 and 32% of revenues for each of fiscal 1996 and 1995. The
Company expects that its international operations will continue to be a
significant portion of the Company's business as the Company seeks to expand its
international presence. Certain risks are inherent in international operations,
including exposure to currency fluctuations. From time to time in the past, the
Company's financial results have been affected both favorably and unfavorably by
fluctuations in currency exchange rates. Unfavorable fluctuations in currency
exchange rates also may have an adverse impact on the Company's revenues and
operating results. The Company currently does not enter into hedging
arrangements, although it may do so in the future. Distributions of earnings and
other payments (including interest) received from the Company's operating
subsidiaries and affiliates may be subject to withholding taxes imposed by the
jurisdictions in which such entities are formed or operating, which will reduce
the amount of after-tax cash the Company can receive from its foreign
subsidiaries.
COMPETITION
The Company competes in highly competitive markets with a significant number
of companies of varying sizes, including divisions or subsidiaries of larger
companies. A number of these competitors have multiple product lines as well as
substantially greater financial and other resources available to them, and there
can be no assurance that the Company can compete successfully with such other
companies. Competitive pressures or other factors could cause the Company's
products to lose market share or result in significant price erosion, which
would have a material adverse effect on the Company's results of operations. In
addition, the Company could be adversely impacted by First Image Management
Company ("First Image"), a division of First Data Corporation, assuming the
management of Kodak's COM customer base in the United States, which further
strengthens First Image's leading position in this market. First Image and Kodak
also announced plans to work together to develop new integrated document
management solutions, a market in which Anacomp is increasingly competing. See
"Business."
VARIATION FROM REORGANIZATION PLAN PROJECTIONS
Fiscal 1996 revenue and income were lower than fiscal 1996 revenue and
income projected in connection with the Company's reorganization because of,
among other things, the decline in COM services and systems revenues and the
increase in competition for such services and systems by alternate technologies,
the introduction of new products and services at a slower rate than expected, as
well as the impact of the Company's being in reorganization proceedings. The
Company generally does not publish its business plans and strategies or make
external projections of its anticipated financial positions or results of
operations, and did so only in the context of its reorganization proceedings.
The Company does not intend
19
<PAGE>
to update or otherwise revise any such financial projections to reflect
circumstances existing after the date the projections were included in the
disclosure statement in connection with the Company's reorganization or to
reflect the occurrence of unanticipated events, even in the event the
assumptions underlying the projections are shown to be in error or false or
misleading by reason of subsequent events. Any such financial projections should
not be relied on for any purpose.
NON-COMPARABILITY OF HISTORICAL FINANCIAL STATEMENTS
The Company's historical financial statements prior to the date the Plan of
Reorganization was consummated are not comparable to financial statements after
such date as a result of the application of fresh start reporting and,
therefore, are not indicative of the Company's future performance.
ABSENCE OF A PUBLIC MARKET
The Exchange Notes will be new securities for which there is currently no
public market. The Company does not intend to list the Exchange Notes on any
national securities exchange or to seek the admission thereof to trading in the
National Association of Securities Dealers Automated Quotation System. NatWest
has advised the Company that it may make a market in the Exchange Notes, but it
is not obligated to do so and, if commenced, may discontinue such market making
at any time. Accordingly, there can be no assurance as to the development of any
market or liquidity of any market that may develop for the Exchange Notes.
To the extent that Old Notes are tendered and accepted in the Exchange
Offer, the aggregate principal amount of Old Notes outstanding will decrease,
with a resulting decrease in the liquidity of the market therefor.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Old Notes who do not exchange their Old Notes for Exchange Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of the Old Notes set forth in the legend thereon as a consequence of
the issuance of the Old Notes pursuant to an exemption from, or in a transaction
not subject to, the registration requirements of the Securities Act. In general,
Old Notes may not be offered or sold, unless registered under the Securities
Act, except pursuant to an exemption from, or in a transaction not subject to,
the Securities Act and applicable state securities laws. The Company currently
does not anticipate that it will register the Old Notes under the Securities
Act.
USE OF PROCEEDS
The Company will not receive any proceeds from the Exchange Offer. In
consideration for issuing the Exchange Notes as contemplated in this Prospectus,
the Company will receive in exchange Old Notes of like principal amount, the
terms of which are identical in all material respects to the Exchange Notes. The
Old Notes surrendered in exchange for Exchange Notes will be retired and
canceled and cannot be reissued. Accordingly, issuance of the Exchange Notes
will not result in any increase in the indebtedness of the Company. The Company
has agreed to bear the expenses of the Exchange Offer pursuant to the
Registration Rights Agreement. No underwriter is being used in connection with
the Exchange Offer.
20
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company as of December 31, 1996 on a historical basis, as adjusted to give
effect to the Senior Secured Refinancing (including the use of the Company's
available cash in connection therewith) as if it had occurred on December 31,
1996 and pro forma as adjusted to give additional effect to the Old Notes
Offering and the Redemption as if each had also occurred on December 31, 1996.
This table should be read in conjunction with the Company's Consolidated
Financial Statements and the related notes thereto and the other information
contained in this Prospectus, including the information set forth in "Business"
and "Management's Discussion and Analysis of Results of Operations and Financial
Condition."
<TABLE>
<CAPTION>
DECEMBER 31, 1996
------------------------------------
<S> <C> <C> <C>
PRO FORMA
HISTORICAL AS ADJUSTED AS ADJUSTED
---------- ----------- -----------
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Cash and cash equivalents (1).............................................. $ 81,171 $ 32,512 $ 36,807
---------- ----------- -----------
---------- ----------- -----------
Senior debt:
Revolving credit facility (2)............................................ $ -- $ -- $ --
Term loans............................................................... -- 55,000 55,000
11 5/8% Senior Secured Notes due 1999 (including current portion)........ 97,902 -- --
Capitalized leases and other (including current portion)................. 872 872 872
Subordinated debt:
13% Senior Subordinated Notes due 2002 (3)............................... 159,637 159,637 --
10 7/8% Senior Subordinated Notes due 2004 (4)........................... -- -- 196,414
Installment notes........................................................ 2,656 2,656 2,656
---------- ----------- -----------
Total debt............................................................. 261,067 218,165 254,942
Stockholders' equity....................................................... 70,574 70,574 53,092
---------- ----------- -----------
Total capitalization....................................................... $ 331,641 $ 288,739 $ 308,034
---------- ----------- -----------
---------- ----------- -----------
</TABLE>
- ------------------------
(1) Includes $9.6 million of restricted cash.
(2) Amounts to $25 million of availability, none of which is outstanding.
(3) Net of $12.3 million unamortized debt discount.
(4) Net of $3.6 million unamortized debt discount.
21
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following table summarizes selected consolidated historical operating
and financial data of the Company for the five fiscal years ended September 30,
1996, the eight months ended May 31, 1996 and the four months ended September
30, 1996, which were derived, except as otherwise noted, from the consolidated
financial statements of the Predecessor Company and the Reorganized Company
audited by Arthur Andersen LLP, and selected unaudited consolidated historical
operating and financial data as of December 31, 1996, for the three months ended
December 31, 1995 and 1996 and for the twelve months ended December 31, 1996,
which were derived from unaudited interim condensed consolidated financial
statements of the Predecessor Company and the Reorganized Company, and, in the
opinion of management, include all adjustments, consisting only of normal
recurring adjustments, necessary for a fair statement of the results for the
unaudited interim periods. The following should be read in conjunction with, and
is qualified in its entirety by reference to, "Management's Discussion and
Analysis of Results of Operations and Financial Condition," the Company's
Consolidated Financial Statements and the related notes thereto.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PREDECESSOR
REORGANIZED
PREDECESSOR COMPANY(1) COMPANY(1)
COMPANY(1)
----------------------------------------------------------------- -----------
----------
EIGHT FOUR COMBINED THREE
MONTHS MONTHS YEAR MONTHS
YEAR ENDED SEPTEMBER 30, ENDED ENDED ENDED ENDED
------------------------------------------ MAY 31, SEPT. 30, SEPT. 30, DEC. 31,
1992 1993 1994 1995 1996 1996 1996(2) 1995
--------- --------- --------- --------- --------- ---------- --------- -----------
<CAPTION>
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT RATIOS AND PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues......................... $ 628,940 $ 590,208 $ 592,599 $ 591,189 $ 334,598 $ 151,542 $ 486,140 $ 130,265
Cost of sales and services....... 412,791 375,373 397,203 417,335 229,167 101,955 331,122 89,599
Selling, general and
administrative................. 115,847 126,201 115,819 132,459 63,826 29,688 93,514 24,447
Amortization of reorganization
asset.......................... -- -- -- -- -- 25,663 25,663 --
Special and restructuring charges
(4)............................ -- -- -- 169,584 -- -- -- --
--------- --------- --------- --------- --------- ---------- --------- -----------
Operating income (loss).......... 100,302 88,634 79,577 (128,189) 41,605 (5,764) 35,841 16,219
Interest expense--net (5)........ 68,866 65,918 64,030 68,938 25,184 11,872 37,056 17,785
Reorganization items (6)......... -- -- -- -- 92,839 -- 92,839 --
Income (loss) before
extraordinary credit and
cumulative effect of accounting
change......................... 18,221 11,691 6,955 (238,326) 112,528 (22,009) 90,519 1,053
Net income (loss) (7)(8)......... $ 26,921 $ 18,591 $ 14,955 $(238,326) $ 164,970 $ (22,009) $ 142,961 $ 1,053
--------- --------- --------- --------- --------- ---------- --------- -----------
--------- --------- --------- --------- --------- ---------- --------- -----------
Income (loss) per share (primary)
before extraordinary credit and
cumulative effect of accounting
change (net of preferred stock
dividends and discount accre-
tion) (9)...................... -- -- -- -- -- $ (2.19) -- --
Weighted average shares
outstanding (9)................ -- -- -- -- -- 10,033,576 -- --
OTHER FINANCIAL DATA:
EBITDA (10)...................... $ 134,871 $ 121,640 $ 114,192 $ 77,393 $ 59,128 $ 25,047 $ 84,175 $ 23,095
Depreciation and amortization
(11)........................... 34,569 33,006 34,615 35,998 17,523 30,811 48,334 6,876
Capital expenditures............. 18,755 20,726 18,868 14,372 3,599 2,224 5,823 1,161
Ratio of earnings to fixed
charges (12)................... 1.41x 1.27x 1.21x * 12) * 12) * 12) * 12) 1.11x
PRO FORMA DATA(13):
Pro forma net interest expense
(14)........................... -- -- -- -- -- -- $ 30,227 $ 8,141
Ratio of EBITDA to pro forma net
interest expense............... -- -- -- -- -- -- 2.78x 2.84x
Ratio of pro forma net debt to
EBITDA......................... -- -- -- -- -- -- -- --
<CAPTION>
REORGANIZED
COMPANY(1)
---------- COMBINED
THREE TWELVE
MONTHS MONTHS
ENDED ENDED
DEC. 31, DEC. 31,
1996(3) 1996(1)(2)(3)
---------- ---------
(UNAUDITED)
<S> <C> <C>
OPERATING DATA:
Revenues......................... $ 116,453 $ 472,328
Cost of sales and services....... 75,039 316,562
Selling, general and
administrative................. 21,448 90,515
Amortization of reorganization
asset.......................... 19,247 44,910
Special and restructuring charges
(4)............................ -- --
---------- ---------
Operating income (loss).......... 719 20,341
Interest expense--net (5)........ 8,818 28,089
Reorganization items (6)......... -- 92,839
Income (loss) before
extraordinary credit and
cumulative effect of accounting
change......................... (12,914) 76,552
Net income (loss) (7)(8)......... $ (12,914) $ 128,994
---------- ---------
---------- ---------
Income (loss) per share (primary)
before extraordinary credit and
cumulative effect of accounting
change (net of preferred stock
dividends and discount accre-
tion) (9)...................... $ (1.01) --
Weighted average shares
outstanding (9)................ 12,818,000 --
OTHER FINANCIAL DATA:
EBITDA (10)...................... $ 23,325 $ 84,405
Depreciation and amortization
(11)........................... 22,606 64,064
Capital expenditures............. 3,202 7,864
Ratio of earnings to fixed
charges (12)................... * 12) *(12)
PRO FORMA DATA(13):
Pro forma net interest expense
(14)........................... $ 7,060 $ 29,146
Ratio of EBITDA to pro forma net
interest expense............... 3.30x 2.90x
Ratio of pro forma net debt to
EBITDA......................... -- 2.58x
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1996
----------------------
PRO
ACTUAL FORMA(13)
---------- ----------
<S> <C> <C>
(DOLLARS IN THOUSANDS)
BALANCE SHEET DATA:
Cash and cash equivalents (15)........................................................................... $ 81,171 $ 36,807
Reorganization value in excess of identifiable assets (16)............................................... 218,473 218,473
Total assets............................................................................................. 450,526 414,322
Total current liabilities (17)........................................................................... 112,769 100,172
Total debt (18).......................................................................................... 261,067 254,942
Stockholders' equity..................................................................................... 70,574 53,092
</TABLE>
(FOOTNOTES COMMENCE ON THE FOLLOWING PAGE)
22
<PAGE>
(1) Although the Plan of Reorganization was consummated on June 4, 1996, the
effective date of the consummation of the Plan of Reorganization for
financial reporting purposes is considered to be the close of business on
May 31, 1996. The Company has accounted for the restructuring using the
principles of fresh start reporting as required by SOP 90-7. Pursuant to
such principles, in general, the Company's assets and liabilities were
revalued. Therefore, due to the restructuring and implementation of fresh
start reporting, the consolidated financial statements for the Reorganized
Company (starting May 31, 1996) are not comparable to those of the
Predecessor Company.
(2) Results reflect the combination of historical results for the eight months
ended May 31, 1996 for the Predecessor Company and for the four months ended
September 30, 1996 for the Reorganized Company, and thus, this information,
as presented, does not comply with GAAP applicable to companies upon
emergence from bankruptcy, which calls for separate reporting for the
Reorganized Company and the Predecessor Company.
(3) Results include receipt of a one-time $3.6 million payment relating to a
long-standing OEM purchase agreement with Kodak.
(4) Includes special charges of $136.9 million that represent a $108 million
write-off of goodwill and $28.9 million of charges associated with software
costs which are not recoverable, as well as restructuring charges of $32.7
million.
(5) Reflects interest expense and fee amortization, net of interest income.
(6) Includes income and expenses resulting from the Plan of Reorganization and
adoption of fresh start accounting, including a write-off of deferred debt
issue costs and discounts of $17.6 million, adjustments of assets and
liabilities to fair market value of $124.9 million, financial restructuring
costs of $14.9 million and interest earned on accumulated cash of $431,000.
(7) The Company adopted Financial Accounting Standards No. 109, Accounting for
Income Taxes, in the first quarter of fiscal 1994. The adoption resulted in
a one-time increase to fiscal 1994 net income of $8 million reflecting the
cumulative effect on prior years of this accounting change. Prior to 1993,
the Company recognized tax benefits resulting from net operating loss
carryforwards ("NOLs") as an extraordinary item in the Consolidated
Statement of Operations.
(8) Includes an extraordinary gain, net of taxes, resulting from the discharge
of indebtedness of $52.4 million for the eight months ended May 31, 1996,
the combined year ended September 30, 1996 and the combined twelve months
ended December 31, 1996.
(9) Due to implementation of the restructuring and fresh start accounting, per
share data for the Predecessor Company have been excluded as they are not
comparable.
(10) EBITDA represents earnings before interest income and expense, special and
restructuring charges, reorganization items, other income, income taxes,
depreciation and amortization. Information regarding EBITDA is presented
because management believes that certain investors use EBITDA as a measure
of an issuer's historical ability to service its debt. EBITDA should not be
considered as an alternative to, or more meaningful than, net income (as
determined in accordance with GAAP) as a measure of the Company's operating
results or cash flows (as determined in accordance with GAAP) as a measure
of the Company's liquidity. Furthermore, caution should be used in comparing
EBITDA to similarly titled measures of other companies as the definitions of
these measures may vary.
(11) Excludes amortization of debt issuance costs.
(12) For purposes of computing the ratio of earnings to fixed charges, earnings
consist of income before income taxes plus fixed charges. Fixed charges
consist of interest expense on indebtedness, amortization of deferred debt
issuance costs, accretion of the original issue discount and the portion of
rental expense under operating leases that has been deemed by the Company to
be representative of an interest factor, all on a pre-tax basis. For the
year ended September 30, 1995, the four months ended September 30, 1996 and
the three months ended December 31, 1996, income before income taxes was
inadequate to cover fixed charges. The amount of coverage deficiency was
$203.3 million, $17.6 million and $8.1 million, respectively. For the eight
months ended May 31, 1996, the combined year ended September 30, 1996 and
the combined twelve months ended December 31, 1996, this ratio is not
meaningful due to the gains recorded associated with the adoption of fresh
start accounting and discharge of indebtedness.
(13) The pro forma data give effect to the Old Notes Offering, the Redemption
and the Senior Secured Refinancing and the application of the estimated net
proceeds therefrom as if the Old Notes Offering, the Redemption and the
Senior Secured Refinancing had occurred at the beginning of the applicable
statement of operations periods and as of the balance sheet date. Net debt
is total debt (including current portion), net of cash and cash equivalents
(including restricted cash).
(14) Pro forma net interest expense is computed by removing from net interest
expense the interest expense associated with the Existing Notes and adding
interest expense on the Old Notes. Pro forma interest expense also excludes
amortization of debt issuance costs and debt discount.
(15) Includes $9.6 million of restricted cash.
(16) For fresh start reporting purposes, any portion of the Company's
reorganization value not attributable to specific identifiable assets is
reported as "Reorganization value in excess of identifiable assets." This
asset is being amortized over a 3.5 year period beginning May 31, 1996.
(17) Total current liabilities exclude current portion of long-term debt.
(18) Total debt includes current portion of long-term debt, net of unamortized
debt discount.
23
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The unaudited Pro Forma Consolidated Balance Sheet as of December 31, 1996
and the unaudited Pro Forma Consolidated Statement of Operations for the three
months ended December 31, 1996 and for the twelve months ended September 30,
1996 have been prepared giving effect to the Old Notes Offering, the Redemption
and the Senior Secured Refinancing, as if the Old Notes Offering, the Redemption
and the Senior Secured Refinancing had occurred as of the balance sheet date and
at the beginning of the applicable statement of operations periods.
The Pro Forma Unaudited Consolidated Financial Information does not purport
to be indicative of the results which would have been obtained had such
transactions in fact been completed as of the date hereof and for the periods
presented or that may be obtained in the future.
ANACOMP, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31, 1996
-------------------------------------
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
----------- ----------- -----------
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS)
ASSETS
Current assets:
Cash................................................................................ $ 81,171 $ 55,000(1) 36,807
(100,779)(2)
(2,820)(3)
(60)(4)
191,414(5)
(177,119)(6)
(10,000)(7)
Accounts and notes receivable, net of reserves...................................... 65,506 -- 65,506
Inventories......................................................................... 29,968 -- 29,968
Prepaid expenses and other.......................................................... 5,781 60(4) 5,841
----------- ----------- -----------
Total current assets.................................................................. 182,426 (44,304) 138,122
----------- ----------- -----------
Property and equipment, net........................................................... 28,147 -- 28,147
Long-term receivables, net of current portion......................................... 9,479 -- 9,479
Excess of purchase price over net assets of
businesses acquired and other intangibles............................................ 4,386 -- 4,386
Other assets.......................................................................... 7,615 3,100(3) 15,715
5,000(5)
Reorganization value in excess of identifiable assets................................. 218,473 -- 218,473
----------- ----------- -----------
$ 450,526 $ (36,204) $ 414,322
----------- ----------- -----------
----------- ----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt................................................... $ 43,897 $ (42,902)(2) $ 995
Accounts payable.................................................................... 49,242 280(3) 39,522
(10,000)(7)
Accrued compensation, benefits and withholding...................................... 13,238 -- 13,238
Accrued Income taxes................................................................ 9,537 -- 9,537
Accrued interest.................................................................... 6,893 (2,877)(2) 4,016
Other accrued liabilities........................................................... 33,859 -- 33,859
----------- ----------- -----------
TOTAL CURRENT LIABILITIES............................................................. 156,666 (55,499) 101,167
----------- ----------- -----------
----------- ----------- -----------
Long-term debt, net of current........................................................ 217,170 55,000(1) 253,947
(55,000)(2)
196,414(5)
(159,637)(6)
Other non-current liabilities......................................................... 6,116 -- 6,116
----------- ----------- -----------
TOTAL NONCURRENT LIABILITIES.......................................................... 223,286 36,777 260,063
----------- ----------- -----------
Stockholders' equity:
Common stock........................................................................ 137 -- 137
Capital in excess of par value...................................................... 104,856 -- 104,856
Cumulative translation adjustment from May 31, 1996................................. 503 -- 503
Accumulated deficit from May 31, 1996............................................... (34,922) (17,482)(6) (52,404)
----------- ----------- -----------
Total stockholders' equity............................................................ 70,574 (17,482) 53,092
----------- ----------- -----------
$ 450,526 $ (36,204) $ 414,322
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
See notes to the pro forma consolidated balance sheet.
24
<PAGE>
ANACOMP, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1996
(UNAUDITED, DOLLARS IN THOUSANDS)
The following notes set forth the explanations and assumptions used in preparing
the pro forma consolidated balance sheet.
(1) Represents issuance of term loans and receipt of cash in connection with the
Senior Secured Refinancing on February 28, 1997.
(2) Represents cash payment of $100,779 and related retirement of the Old Senior
Secured Notes in connection with the Senior Secured Refinancing, on February
28, 1997. The repayment includes accrued interest of $2,877 and outstanding
principal of $97,902 (of which $42,902 was reflected as current at December
31, 1996).
(3) Represents fees of $3,100 incurred in connection with the Senior Secured
Refinancing on February 28, 1997, which have been capitalized and will be
amortized over the term of the Senior Secured Debt, including cash paid of
$2,877 and estimated accounts payable of $280.
(4) Represents an annual loan fee for the Senior Secured Debt which has been
paid and will be amortized ratably over a twelve month period.
(5) Represents receipt of net cash proceeds of $191,414 and subordinated note
issuance in connection with the Old Notes Offering on March 24, 1997,
including long-term debt of $196,414 (net of original issue discount of
$3,586) and debt issue costs of $5,000.
(6) Represents extinguishment of the Existing Notes, without regard to income
tax considerations, as follows:
<TABLE>
<S> <C>
Cash used to extinguish Existing Notes (at face value)...................................... $ 171,960
Cash used to pay 3% call premium............................................................ 5,159
----------
Total cash paid............................................................................. 177,119
Book value of Existing Notes
at December 31, 1996 (net of unamortized debt discount of $12,323)........................ 159,637
----------
Extraordinary loss on extinguishment of debt................................................ $ 17,482
----------
----------
</TABLE>
(7) Represents cash proceeds from the Old Notes Offering used to reduce the
outstanding trade credit facility with SKC.
25
<PAGE>
ANACOMP, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED DECEMBER 31, 1996
-------------------------------------
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
----------- ----------- -----------
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS, EXCEPT PER
SHARE AMOUNTS)
Revenues:
Services provided.......................................................... $ 45,425 -- $ 45,425
Equipment and supply sales................................................. 71,028 -- 71,028
----------- ----------- -----------
Total revenues........................................................... 116,453 -- 116,453
----------- ----------- -----------
Operating costs and expenses:
Costs of services provided................................................. 24,107 -- 24,107
Costs of equipment and supplies sold....................................... 50,932 -- 50,932
Selling, general and administrative expenses............................... 21,448 -- 21,448
Amortization of reorganization asset....................................... 19,247 -- 19,247
----------- ----------- -----------
115,734 -- 115,734
----------- ----------- -----------
Income from operations before interest, other income, income taxes and
extraordinary loss......................................................... 719 -- 719
----------- ----------- -----------
Interest income.............................................................. 984 (555)(1) 429
Interest expense and fee amortization........................................ (9,802) 2,844(2) (7,489)
5,199(3)
256(4)
621(5)
(1,169)(6)
(5,438)(7)
Other loss................................................................... (15) -- (15)
----------- ----------- -----------
(8,833) 1,758 (7,075)
----------- ----------- -----------
Income (loss) before income taxes and extraordinary loss..................... (8,114) 1,758 (6,356)
Provision for income taxes................................................... 4,800 -- 4,800
----------- ----------- -----------
Net loss before extraodinary loss............................................ (12,914) 1,758 (11,156)
Extraordinary loss on extinguishment of debt................................. -- (17,482)(8) (17,482)
----------- ----------- -----------
Net loss available to common stockholders.................................... $ (12,914) (15,724) $ (28,638)
----------- ----------- -----------
----------- ----------- -----------
Net loss available to common stockholders per share.......................... $ (1.01) $ (2.23)
----------- -----------
----------- -----------
Weighted average common shares outstanding................................... 12,818 12,818
----------- -----------
----------- -----------
</TABLE>
See notes to the pro forma consolidated statement of operations.
26
<PAGE>
ANACOMP, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1996
(UNAUDITED, DOLLARS IN THOUSANDS)
The following notes set forth the explanations and assumptions used in preparing
the pro forma consolidated statement of operations.
(1) Represents reduction in interest income (at an estimated interest rate of
5%) for the three months ended December 31, 1996 due to net cash reductions
of $44,364 resulting from the Senior Secured Refinancing and the Old Notes
Offering.
(2) Represents elimination of interest expense for the three months ended
December 31, 1996 on the Old Senior Secured Notes (face amount of $97,902)
at 11 5/8%.
(3) Represents elimination of interest expense for the three months ended
December 31, 1996 on the Existing Notes (face amount of $171,960) at 13%.
(4) Represents reduction of interest expense for the three months ended December
31, 1996 on the SKC trade credit facility.
(5) Represents elimination of discount amortization for the three months ended
December 31, 1996 on the Existing Notes. For purposes of the pro forma
statement of operations, interest expense excludes amortization of debt
issuance costs and debt discount on the 10 7/8% Notes.
(6) Represents interest expense for the three months ended December 31, 1996 on
term loans (face amount of $55,000) issued in connection with the Senior
Secured Refinancing at 8 1/2%.
(7) Represents interest expense for the three months ended December 31, 1996 on
the Old Notes Offering (face amount $200,000) at 10 7/8%.
(8) Represents recognition of extraordinary loss on extinguishment of debt,
without regard to income tax considerations, in connection with the
Redemption as follows:
<TABLE>
<S> <C>
Cash used to extinguish Existing Notes (at face value)...................................... $ 171,960
Cash used to pay 3% call premium............................................................ 5,159
----------
Total cash paid............................................................................. 177,119
Book value of Existing Notes
at December 31, 1996 (net of unamortized debt discount of $12,323)........................ 159,637
----------
Extraordinary loss on extinguishment of debt................................................ $ 17,482
----------
----------
</TABLE>
27
<PAGE>
ANACOMP, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
HISTORICAL
----------------------------
<CAPTION>
PREDECESSOR REORGANIZED
COMPANY COMPANY
------------- -------------
TWELVE
MONTHS
EIGHT MONTHS FOUR MONTHS ENDED
ENDED ENDED SEPTEMBER 30,
MAY 31, SEPTEMBER 30, PRO FORMA 1996
1996 1996 ADJUSTMENTS PRO FORMA
------------- ------------- ----------- -------------
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Revenues:
Services provided................................................ $ 130,202 $ 59,055 $ -- $ 189,257
Equipment and supply sales....................................... 204,396 92,487 -- 296,883
------------- ------------- ----------- -------------
Total revenues............................................... 334,598 151,542 -- 486,140
------------- ------------- ----------- -------------
Operating costs and expenses:
Costs of services provided....................................... 72,641 31,858 -- 104,499
Costs of equipment and supplies sold............................. 156,526 70,097 -- 226,623
Selling, general and administrative expenses..................... 63,826 29,688 -- 93,514
Amortization of reorganization asset............................. -- 25,663 -- 25,663
------------- ------------- ----------- -------------
292,993 157,306 -- 450,299
------------- ------------- ----------- -------------
Income (loss) before interest, other income, reorganization items,
income taxes and extraordinary items............................. 41,605 (5,764) -- 35,841
------------- ------------- ----------- -------------
Interest income.................................................... 1,576 997 (2,218)(1) 355
Interest expense and fee amortization.............................. (26,760) (12,869) 12,965(2) (32,086)
18,738(3)
1,177(4)
1,088(5)
(4,675)(6)
(21,750)(7)
Other income....................................................... 6,968 27 -- 6,995
------------- ------------- ----------- -------------
(18,216) (11,845) 5,325 (24,736)
------------- ------------- ----------- -------------
Income (loss) before reorganization items, income taxes and
extraordinary items.............................................. 23,389 (17,609) 5,325 11,105
Reorganization items............................................... 92,839 -- -- 92,839
------------- ------------- ----------- -------------
Income (loss) before income taxes and extraordinary items.......... 116,228 (17,609) 5,325 103,944
Provision for income taxes......................................... 3,700 4,400 -- 8,100
------------- ------------- ----------- -------------
Income (loss) before extraordinary items........................... 112,528 (22,009) 5,325 95,844
Extraordinary credit-gain on discharge of indebtedness, net of
taxes............................................................ 52,442 -- -- 52,442
Extraordinary loss on extinguishment of debt....................... -- -- (17,482)(8) (17,482)
------------- ------------- ----------- -------------
Net income (loss).................................................. 164,970 (22,009) (12,157) 130,804
Preferred stock dividends and discount accretion................... 540 540
Net income (loss) available to common stockholders................. $ 164,430 $ (22,009) $ (12,157) $ 130,264
------------- ------------- ----------- -------------
------------- ------------- ----------- -------------
Net loss available to common stockholders per share................ $ (2.19)
-------------
-------------
Weighted average common shares outstanding......................... 10,034
-------------
-------------
-------------
-------------
</TABLE>
See notes to the pro forma consolidated statement of operations.
28
<PAGE>
ANACOMP, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED, DOLLARS IN THOUSANDS)
The following notes set forth the explanations and assumptions used in preparing
the pro forma consolidated statement of operations.
(1) Represents reduction in interest income (at an estimated interest rate of
5%) for the twelve months ended September 30, 1996 due to net cash
reductions of $44,364 resulting from the Senior Secured Refinancing and the
Old Notes Offering.
(2) Represents elimination of interest expense for the twelve months ended
September 30, 1996 on the Old Senior Secured Notes (face amount of $97,902)
at 11 5/8%.
(3) Represents elimination of interest expense for the twelve months ended
September 30, 1996 on the Existing Notes (face amount of $171,960) at 13%.
(4) Represents reduction of interest expense for the twelve months ended
September 30, 1996 on the SKC trade credit facility.
(5) Represents elimination of discount amortization for the twelve months ended
September 30, 1996 on the Existing Notes. For purposes of the pro forma
statement of operations, interest expense excludes amortization of debt
issuance costs and debt discount on the 10 7/8% Notes.
(6) Represents interest expense for the twelve months ended September 30, 1996
on term loans (face amount of $55,000) issued in connection with the Senior
Secured Refinancing at 8 1/2%.
(7) Represents interest expense for the twelve months ended September 30, 1996
on the Old Notes Offering (face amount of $200,000) at 10 7/8%.
(8) Represents recognition of extraordinary loss on extinguishment of debt,
without regard to income tax considerations, in connection with the
Redemption as follows:
<TABLE>
<S> <C>
Cash used to extinguish Existing Notes (at face value)...................................... $ 171,960
Cash used to pay 3% call premium............................................................ 5,159
----------
Total cash paid............................................................................. 177,119
Book value of Existing Notes
at December 31, 1996 (net of unamortized debt discount of $12,323)........................ 159,637
----------
Extraordinary loss on extinguishment of debt................................................ $ 17,482
----------
----------
</TABLE>
THE EXCHANGE OFFER
TERMS OF THE EXCHANGE OFFER
GENERAL
In connection with the sale of Old Notes to the initial purchaser pursuant
to the Purchase Agreement, dated March 19, 1997, between the Company and
NatWest, the holders of the Old Notes became entitled to the benefits of the
Registration Rights Agreement.
Under the Registration Rights Agreement, the Company became obligated to (a)
file a registration statement in connection with a registered exchange offer
within 45 days after March 24, 1997, the date the Old Notes were issued (the
"Issue Date"), and (b) cause the registration statement relating to such
registered exchange offer to become effective within 150 days after the Issue
Date. The Exchange Offer being made hereby, if consummated within the required
time periods, will satisfy the Company's obligations under the Registration
Rights Agreement. The Company understands that there are approximately 17
beneficial owners of such Old Notes. This Prospectus, together with the Letter
of Transmittal, is being sent to all such beneficial holders known to the
Company.
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal, the Company will accept all Old
Notes properly tendered and not withdrawn prior to 5:00 p.m., New York City
time, on the Expiration Date. The Company will issue $1,000 principal amount of
Exchange Notes in exchange for each $1,000 principal amount of outstanding Old
Notes accepted in the Exchange Offer. Holders may tender some or all of their
Old Notes pursuant to the Exchange Offer.
Based on an interpretation by the staff of the Commission set forth in the
Morgan Stanley Letter, the Exxon Capital Letter and similar letters, the Company
believes that Exchange Notes issued pursuant to the Exchange Offer in exchange
for Old Notes may be offered for resale, resold and otherwise transferred by any
person who received such Exchange Notes, whether or not such person is the
holder (other than Restricted Holders) without compliance with the registration
and prospectus delivery provisions of the
29
<PAGE>
Securities Act, provided that such Exchange Notes are acquired in the ordinary
course of such holder's or other person's business, neither such holder nor such
other person is engaged in or intends to engage in any distribution of the
Exchange Notes and such holders or other persons have no arrangement or
understanding with any person to participate in the distribution of such
Exchange Notes.
If any person were to be participating in the Exchange Offer for the
purposes of participating in a distribution of the Exchange Notes in a manner
not permitted by the Commission's interpretation, such person (a) could not rely
upon the Morgan Stanley Letter, the Exxon Capital Letter or similar letters and
(b) must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with a secondary resale transaction.
Each broker-dealer that receives Exchange Notes for its own account in
exchange for Old Notes, where such Old Notes were acquired by such broker-dealer
as a result of market-making or other trading activities, must acknowledge that
it will deliver a prospectus in connection with any resale of such Exchange
Notes. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of Exchange Notes received in exchange
for Old Notes where such Old Notes were acquired by such broker-dealer as result
of market-making activities or other trading activities. The Company has agreed
that, for a period of 90 days after consummation of the Exchange Offer, it will
make this Prospectus, as it may be amended or supplemented from time to time,
available to any broker-dealer for use in connection with any such resale. See
"Plan of Distribution."
The Company will not receive any proceeds from the Exchange Offer. See "Use
of Proceeds." The Company has agreed to bear the expenses of the Exchange Offer
pursuant to the Registration Rights Agreement. No underwriter is being used in
connection with the Exchange Offer.
The Company shall be deemed to have accepted validly tendered Old Notes
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
of Old Notes for the purposes of receiving the Exchange Notes from the Company
and delivering Exchange Notes to such holders.
If any tendered Old Notes are not accepted for exchange because of an
invalid tender or the occurrence of certain conditions set forth herein under
"--Conditions" without waiver by the Company, certificates for any such
unaccepted Old Notes will be returned, without expense, to the tendering holder
thereof as promptly as practicable after the Expiration Date.
Holders of Old Notes who tender in the Exchange Offer will not be required
to pay brokerage commissions or fees or, subject to the instructions in the
Letter of Transmittal, transfer taxes with respect to the exchange of Old Notes,
pursuant to the Exchange Offer. The Company will pay all charges and expenses,
other than certain applicable taxes in connection with the Exchange Offer. See
"--Fees and Expenses."
In the event the Exchange Offer is consummated, the Company will not be
required to register the Old Notes. In such event, holders of Old Notes seeking
liquidity in their investment would have to rely on exemptions to registration
requirements under the securities laws, including the Securities Act. See "Risk
Factors--Consequences of Failure to Exchange."
EXPIRATION DATE; EXTENSIONS; AMENDMENT
The term "Expiration Date" shall mean the expiration date set forth on the
cover page of this Prospectus, unless the Company, in its sole discretion,
extends the Exchange Offer, in which case the term "Expiration Date" shall mean
the latest date to which the Exchange Offer is extended.
In order to extend the Expiration Date, the Company will notify the Exchange
Agent of any extension by oral or written notice and will issue a public
announcement thereof, each prior to 9:00 a.m., New York
30
<PAGE>
City time, on the next business day after the previously scheduled Expiration
Date. Such announcement may state that the Company is extending the Exchange
Offer for a specified period of time.
The Company reserves the right (a) to delay accepting any Old Notes, to
extend the Exchange Offer or to terminate the Exchange Offer and not accept Old
Notes not previously accepted if any of the conditions set forth herein under
"--Conditions" shall have occurred and shall not have been waived by the Company
(if permitted to be waived by the Company), by giving oral or written notice of
such delay, extension or termination to the Exchange Agent, or (b) to amend the
terms of the Exchange Offer in any manner deemed by it to be advantageous to the
holders of the Old Notes. Any such delay in acceptance, extension, termination
or amendment will be followed as promptly as practicable by oral or written
notice thereof. If the Exchange Offer is amended in a manner determined by the
Company to constitute a material change, the Company will promptly disclose such
amendment in a manner reasonably calculated to inform the holders of the Old
Notes of such amendment and the Company may extend the Exchange Offer for a
period of up to ten business days, depending upon the significance of the
amendment and the manner of disclosure to holders of the Old Notes, if the
Exchange Offer would otherwise expire during such extension period.
Without limiting the manner in which the Company may choose to make public
announcement of any extension, amendment or termination of the Exchange Offer,
the Company shall have no obligation to publish, advertise, or otherwise
communicate any such public announcement, other than by making a timely release
to the Dow Jones News Service.
INTEREST ON THE EXCHANGE NOTES
The Exchange Notes will bear interest from March 24, 1997, payable
semiannually on April 1 and October 1 of each year, commencing October 1, 1997,
at the rate of 10% per annum. Holders of Old Notes whose Old Notes are accepted
for exchange will be deemed to have waived the right to receive any payment in
respect of interest on the Old Notes accrued up until the date of the issuance
of the Exchange Notes.
PROCEDURES FOR TENDERING
To tender in the Exchange Offer, a holder must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, have the signatures thereon
guaranteed if required by instruction 3 of the Letter of Transmittal, and mail
or otherwise deliver such Letter of Transmittal or such facsimile, together with
the Old Notes and any other required documents. To be validly tendered, such
documents must reach the Exchange Agent on or before 5:00 p.m., New York City
time, on the Expiration Date.
The tender by a holder of Old Notes will constitute an agreement between
such holder and the Company in accordance with the terms and subject to the
conditions set forth herein and in the Letter of Transmittal.
Delivery of all documents must be made to the Exchange Agent at its address
set forth below. Holders may also request their respective brokers, dealers,
commercial banks, trust companies or nominees to effect such tender for such
holders.
The method of delivery of Old Notes and the Letter of Transmittal and all
other required documents to the Exchange Agent is at the election and risk of
the holders. Instead of delivery by mail, it is recommended that holders use an
overnight or hand delivery service. In all cases, sufficient time should be
allowed to assure timely delivery to the Exchange Agent on or before 5:00 p.m.
New York City time, on the Expiration Date. No Letter of Transmittal or Old
Notes should be sent to the Company.
Only a holder of Old Notes may tender such Old Notes in the Exchange Offer.
The term "holder" with respect to the Exchange Offer means any person in whose
name Old Notes are registered on the
31
<PAGE>
books of the Company or any other person who has obtained a properly completed
bond power from the registered holder.
Any beneficial holder whose Old Notes are registered in the name of his
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact such registered holder promptly and instruct such
registered holder to tender on his behalf. If such beneficial holder wishes to
tender on his own behalf, such registered holder must, prior to completing and
executing the Letter of Transmittal and delivering his Old Notes, either make
appropriate arrangements to register ownership of the Old Notes in such holder's
name or obtain a properly completed bond power from the registered holder. The
transfer of record ownership may take considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by a member firm of a registered national securities
exchange or of the National Association of Securities Dealers, Inc. or a
commercial bank or trust company having an office or correspondent in the United
States (an "Eligible Institution") unless the Old Notes tendered pursuant
thereto are tendered (a) by a registered holder who has not completed the box
entitled "Special Issuance Instructions" or "Special Delivery Instructions" on
the Letter of Transmittal or (b) for the account of an Eligible Institution. In
the event that signatures on a Letter of Transmittal or a notice of withdrawal,
as the case may be, are required to be guaranteed, such guarantee must be by an
Eligible Institution.
If the Letter of Transmittal is signed by a person other than the registered
holder of any Old Notes listed therein, such Old Notes must be endorsed or
accompanied by appropriate bond powers and a proxy which authorizes such person
to tender the Old Notes on behalf of the registered holder, in each case signed
as the name of the registered holder or holders appears on the Old Notes.
If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or other acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and unless waived by the Company,
evidence satisfactory to the Company of their authority so to act must be
submitted with the Letter of Transmittal.
All questions as to the validity, form, eligibility (including time of
receipt), and withdrawal of the tendered Old Notes will be determined by the
Company in its sole discretion, which determination will be final and binding.
The Company reserves the absolute right to reject any and all Old Notes not
properly tendered or any Old Notes the Company's acceptance of which would, in
the opinion of counsel for the Company, be unlawful. The Company also reserves
the right to waive any irregularities or conditions of tender as to particular
Old Notes. The Company's interpretation of the terms and conditions of the
Exchange Offer (including the instructions in the Letter of Transmittal) will be
final and binding on all parties. Unless waived, any defects or irregularities
in connection with tenders of Old Notes must be cured within such time as the
Company shall determine. Neither the Company, the Exchange Agent nor any other
person shall be under any duty to give notification of defects or irregularities
with respect to tenders of Old Notes, nor shall any of them incur any liability
for failure to give such notification. Tenders of Old Notes will not be deemed
to have been made until such irregularities have been cured or waived. Any Old
Notes received by the Exchange Agent that are not properly tendered and as to
which the defects or irregularities have not been cured or waived will be
returned without cost to such holder by the Exchange Agent to the tendering
holders of Old Notes, unless otherwise provided in the Letter of Transmittal, as
soon as practicable following the Expiration Date.
In addition, the Company reserves the right in its sole discretion to (a)
purchase or make offers for any Old Notes that remain outstanding subsequent to
the Expiration Date or, as set forth under "-- Conditions," to terminate the
Exchange Offer in accordance with the terms of the Registration Rights Agreement
and (b) to the extent permitted by applicable law, purchase Old Notes in the
open market, in privately negotiated transactions or otherwise. The terms of any
such purchases or offers will differ from the terms of the Exchange Offer.
32
<PAGE>
By tendering, each holder will represent to the Company that, among other
things, (a) the Exchange Notes acquired pursuant to the Exchange Offer are being
obtained in the ordinary course of business of such holder or other person, (b)
neither such holder nor such other person is engaged in or intends to engage in
a distribution of the Exchange Notes (c) neither such holder or other person has
any arrangement or understanding with any person to participate in the
distribution of such Exchange Notes, and (d) such holder or other person is not
an "affiliate," as defined under Rule 405 of the Securities Act, of the Company
or, if such holder or other person is such an affiliate, will comply with the
registration and prospectus delivery requirements of the Securities Act to the
extent applicable.
Each broker-dealer that receives Exchange Notes for its own account in
exchange for Old Notes, where such Old Notes were acquired by such broker-dealer
as a result of market-making or other trading activities, must acknowledge that
it will deliver a prospectus in connection with any resale of such Exchange
Notes. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of Exchange Notes received in exchange
for Old Notes where such Old Notes were acquired by such broker-dealer as result
of market-making activities or other trading activities. The Company has agreed
that, for a period of 90 days after consummation of the Exchange Offer, it will
make this Prospectus, as it may be amended or supplemented from time to time,
available to any broker-dealer for use in connection with any such resale. See
"Plan of Distribution."
The Company will not receive any proceeds from the Exchange Offer. See "Use
of Proceeds." The Company has agreed to bear the expenses of the Exchange Offer
pursuant to the Registration Rights Agreement. No underwriter is being used in
connection with the Exchange Offer.
The Old Notes were issued on March 24, 1997 and there is no public market
for them at present. To the extent Old Notes are tendered and accepted in the
Exchange Offer, the principal amount of outstanding Old Notes will decrease with
a resulting decrease in the liquidity in the market therefor. Following the
consummation of the Exchange Offer, holders of Old Notes will continue to be
subject to certain restrictions on transfer. Accordingly, the liquidity of the
market for the Old Notes could be adversely affected.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Old Notes and (a) whose Old Notes are not
immediately available or (b) who cannot deliver their Old Notes, the Letter of
Transmittal or any other required documents to the Exchange Agent prior to the
Expiration Date, may effect a tender if: (i) the tender is make through an
Eligible Institution; (ii) prior to the Expiration Date, the Exchange Agent
receives from such Eligible Institution a properly completed and duly executed
Notice of Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder of the Old Notes, the
certificate number or numbers of such Old Notes and the principal amount of Old
Notes tendered, stating that the tender is being made thereby, and guaranteeing
that, within three business days after the Expiration Date, the Letter of
Transmittal (or facsimile thereof) together with the certificate(s) representing
the Old Notes to be tendered in proper form for transfer and any other documents
required by the Letter of Transmittal will be deposited by the Eligible
Institution with the Exchange Agent; and (iii) such properly completed and
executed Letter of Transmittal (or facsimile thereof) together with the
certificate(s) representing all tendered Old Notes in proper form for transfer
and all other documents required by the Letter of Transmittal are received by
the Exchange Agent within three business days after the Expiration Date.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the Expiration Date,
unless previously accepted for exchange.
33
<PAGE>
To withdraw a tender of Old Notes in the Exchange Offer, a written or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its address set forth herein prior to 5:00 p.m., New York City time, on
the Expiration Date. Any such notice of withdrawal must (a) specify the name of
the person having deposited the Old Notes to be withdrawn (the "Depositor"), (b)
identify the Old Notes to be withdrawn (including the certificate number or
numbers and principal amount of such Old Notes), (c) be signed by the Depositor
in the same manner as the original signature on the Letter of Transmittal by
which such Old Notes were tendered (including any required signature guarantees)
or be accompanied by documents of transfer sufficient to have the Trustee with
respect to the Old Notes register the transfer of such Old Notes into the name
of the Depositor withdrawing the tender and (d) specify the name in which any
such Old Notes are to be registered, if different from that of the Depositor.
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Company, whose
determination shall be final and binding on all parties. Any Old Notes so
withdrawn will be deemed not to have been validly tendered for purposes of the
Exchange Offer and no Exchange Notes will be issued with respect thereto unless
the Old Notes so withdrawn are validly retendered. Any Old Notes which have been
tendered but which are not accepted for exchange will be returned to the holder
thereof without cost to such holder as soon as practicable after withdrawal,
rejection of tender or termination of the Exchange Offer. Properly withdrawn Old
Notes may be retendered by following one of the procedures described above under
"--Procedures for Tendering" at any time prior to the Expiration Date.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Company will not
be required to accept for exchange, or exchange Exchange Notes for, any Old
Notes not theretofore accepted for exchange, and may terminate or amend the
Exchange Offer as provided herein before the acceptance of such Old Notes, if
the Company or the holders of at least a majority in principal amount of Old
Notes reasonably determine in good faith that any of the following conditions
exist: (a) the Exchange Notes to be received by such holders of Old Notes in the
Exchange Offer, upon receipt, will not be tradable by each such holder (other
than a holder which is an affiliate of the Company at any time on or prior to
the consummation of the Exchange Offer) without restriction under the Securities
Act and the Exchange Act and without material restrictions under the blue sky or
securities laws of substantially all of the states of the United States, (b) the
interests of the holders of the Old Notes, taken as a whole, would be materially
adversely affected by the consummation of the Exchange Offer or (c) after
conferring with counsel, the Commission is unlikely to permit the making of the
Exchange Offer prior to August 21, 1997.
Pursuant to the Registration Rights Agreement, if an Exchange Offer shall
not be consummated prior to the Exchange Offer Termination Date, the Company
will be obligated to cause to be filed with the Commission a shelf registration
statement with respect to the Old Notes (the "Shelf Registration Statement") as
promptly as practicable after the Exchange Offer Termination Date and thereafter
use its best efforts to have the Shelf Registration Statement declared
effective.
"Exchange Offer Termination Date" means the date on which the earliest of
any of the following events occurs: (a) applicable interpretations of the staff
of the Commission do not permit the Company to effect the Exchange Offer, (b)
any holder of Notes notifies the Company that either (i) such holder is not
eligible to participate in the Exchange Offer or (ii) such holder participates
in the Exchange Offer and does not receive freely transferable Exchange Notes in
exchange for tendered Old Notes or (c) the Exchange Offer is not consummated
within 180 days after the Issue Date.
If any of the conditions described above exist, the Company will refuse to
accept any Old Notes and will return all tendered Old Notes to exchanging
holders of the Old Notes.
EXCHANGE AGENT
IBJ Schroder Bank & Trust Company has been appointed as Exchange Agent for
the Exchange Offer. Questions and requests for assistance and requests for
additional copies of this Prospectus or of the Letter
34
<PAGE>
of Transmittal and deliveries of completed Letters of Transmittal with tendered
Old Notes should be directed to the Exchange Agent addressed as follows:
FACSIMILE TRANSMISSION:
(212) 858-2611
CONFIRM BY TELEPHONE:
(212) 858-2657
<TABLE>
<S> <C>
BY MAIL: BY HAND/OVERNIGHT DELIVERY:
IBJ Schroder Bank & Trust Company IBJ Schroder Bank & Trust Company
P.O. Box 84 One State Street
Bowling Green Station Securities Processing Window SC-1
New York, New York 10274-0084 New York, New York 10004
Attention: Reorganization Operations
Department
</TABLE>
The Company will indemnify the Exchange Agent and its agents for any loss,
liability or expense incurred by them, including reasonable costs and expenses
of their defense, except for any such loss, liability or expense caused by gross
negligence or bad faith.
FEES AND EXPENSES
The expenses of soliciting tenders pursuant to the Exchange Offer will be
borne by the Company. The principal solicitation for tenders pursuant to the
Exchange Offer is being made by mail. Additional solicitations may be made by
officers and regular employees of the Company and its affiliates in person, by
telephone or facsimile.
The Company will not make any payments to brokers, dealers, or other persons
soliciting acceptances of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
the Exchange Agent for its reasonable out-of-pocket expenses in connection
therewith. The Company may also pay brokerage houses and other custodians,
nominees and fiduciaries the reasonable out-of-pocket expenses incurred by them
in forwarding copies of this Prospectus, Letters of Transmittal and related
documents to the beneficial owners of the Old Notes, and in handling or
forwarding tenders for exchange.
The expenses to be incurred in connection with the Exchange Offer, including
fees and expenses of the Exchange Agent and Trustee and accounting and legal
fees and expenses, will be paid by the Company, and are estimated in the
aggregate to be approximately $250,000.
The Company will pay all transfer taxes, if any, applicable to the exchange
of Old Notes pursuant to the Exchange Offer. If, however, certificates
representing Exchange Notes (or Old Notes for principal amounts not tendered or
accepted for exchange) are to be delivered to, or are to be registered or issued
in the name of, any person other than the registered holder of the Old Notes
tendered, or if tendered Old Notes are registered in the name of any person
other than the person signing the Letter of Transmittal, or if a transfer tax is
imposed for any reason other than the exchange of Old Notes pursuant to the
Exchange Offer, then the amount of any such transfer taxes (whether imposed on
the registered holder or any other persons) will be payable by the tendering
holder. If satisfactory evidence of payment of such taxes or exemption therefrom
is not submitted with the Letter of Transmittal, the amount of such transfer
taxes will be billed directly to such tendering holder.
ACCOUNTING TREATMENT
The Company will not recognize any gain or loss for accounting purposes upon
the consummation of the Exchange Offer. The expense of the Exchange Offer will
be amortized by the Company over the term of the Exchange Notes under GAAP.
35
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The following discussion and analysis should be read in conjunction with the
selected financial information and the consolidated financial statements of the
Company and accompanying notes appearing elsewhere in this Prospectus. The
following discussion and analysis of results of operations compare (i) the
Reorganized Company's results of operations for the three months ended December
31, 1996 with the Predecessor Company's results of operations for the three
months ended December 31, 1995 and (ii) the combined Reorganized Company's
results of operations for the four months ended September 30, 1996 and the
Predecessor Company's results of operations for the eight months ended May 31,
1996 with the Predecessor Company's results of operations for fiscal 1995 and
fiscal 1994. Consequently, the fiscal 1996 information presented below does not
comply with GAAP applicable to companies upon emergence from bankruptcy, which
calls for separate reporting for the Reorganized Company and the Predecessor
Company.
On June 4, 1996, the Company emerged from bankruptcy proceedings under its
Plan of Reorganization (the "Reorganization"). The Plan of Reorganization
resulted in a reduction of approximately $174 million in principal and accrued
interest on the Company's debt obligations and in liquidation amount and accrued
dividends on its preferred stock. The resulting capital structure reduced the
Company's interest expense by approximately $31 million per year. As a result of
the Reorganization, the recording of the restructuring transaction and the
implementation of fresh start reporting, the Company's results of operations
after May 31, 1996 (the cutoff date used for financial reporting purposes) are
not comparable to results reported in prior periods. See Note 3 to the
Consolidated Financial Statements for information on consummation of the Plan of
Reorganization and implementation of fresh start reporting.
CONSOLIDATED RESULTS OF OPERATIONS
As an aid to understanding the Company's operations on a comparative basis,
the following table has been prepared to set forth certain income statement and
other data for the periods presented.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED SEPTEMBER 30, DECEMBER 31,
------------------------------- --------------------
<S> <C> <C> <C> <C> <C>
1994 1995 1996 1995 1996
--------- --------- --------- --------- ---------
Revenues:
Services provided................................................. $ 223,511 $ 219,881 $ 189,257 $ 50,928 $ 45,425
Equipment and supply sales........................................ 369,088 371,308 296,883 79,337 71,028
--------- --------- --------- --------- ---------
592,599 591,189 486,140 130,265 116,453
Operating costs and expenses:
Costs of services provided........................................ 122,628 126,493 104,499 27,838 24,107
Costs of equipment and supplies sold.............................. 274,575 290,842 226,623 61,761 50,932
Selling, general and administrative............................... 115,819 132,459 93,514 24,447 21,448
Amortization of reorganization asset.............................. -- -- 25,663 -- 19,247
Special charges................................................... -- 136,889 -- -- --
Restructuring charges............................................. -- 32,695 -- -- --
--------- --------- --------- --------- ---------
513,022 719,378 450,299 114,046 115,734
--------- --------- --------- --------- ---------
Operating income (loss)............................................. 79,577 (128,189) 35,841 16,219 719
Interest expense--net............................................... 64,030 68,938 37,056 17,785 8,818
Financial restructuring costs....................................... -- 5,987 -- 2,801 --
Other expense (income).............................................. 192 212 (6,995) (6,620) 15
--------- --------- --------- --------- ---------
Income (loss) before reorganization items, income taxes,
extraordinary credit and cumulative effect of accounting change... 15,355 (203,326) 5,780 2,253 (8,114)
Reorganization items................................................ -- -- 92,839 -- --
--------- --------- --------- --------- ---------
Income (loss) before income taxes, extraordinary credit and
cumulative effect of accounting change............................ 15,355 (203,326) 98,619 2,253 (8,114)
Provision for income taxes.......................................... 8,400 35,000 8,100 1,200 4,800
--------- --------- --------- --------- ---------
Income (loss) before extraordinary credit and cumulative effect of
accounting change................................................. 6,955 (238,326) 90,519 1,053 (12,914)
Extraordinary credit--gain on discharge of indebtedness, net of
taxes............................................................. -- -- 52,442 -- --
Cumulative effect on prior years of a change in accounting for
income taxes...................................................... 8,000 -- -- -- --
--------- --------- --------- --------- ---------
Net income (loss)................................................... $ 14,955 $(238,326) $ 142,961 $ 1,053 $ (12,914)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
EBITDA.............................................................. $ 114,192 $ 77,393 $ 84,175 $ 23,095 $ 23,325
</TABLE>
36
<PAGE>
RESULTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 1996 AND 1995
GENERAL. Anacomp reported a net loss of $12.9 million for the three months
ended December 31, 1996, compared to net income of $1.1 million for the three
months ended December 31, 1995. Included in net income for the three months
ended December 31, 1995 is a $6.2 million pre-tax gain on the sale of the Image
Conversion Services ("ICS") Division and $2.8 million of pre-tax financial
restructuring costs. Included in the net loss for the three months ended
December 31, 1996 is non-cash amortization of the Company's reorganization value
asset of $19.2 million and receipt of a one-time $3.6 million payment relating
to a long-standing original equipment manufacturer ("OEM") purchase agreement
with Kodak.
Pursuant to the OEM agreement noted above, Kodak is obligated to pay the
Company certain cash penalties if Kodak does not order and accept delivery of
certain pre-agreed numbers of XFP 2000 systems by October 1997. In a recent
amendment to the OEM agreement, the Company accepted a payment of $3.6 million
and Kodak acknowledged its obligation to order and accept delivery of an
additional 41 systems by October 1997 in order to avoid additional cash
penalties.
EBITDA was $23.3 million for the three months ended December 31, 1996
compared to $23.1 million for the three months ended December 31, 1995.
Excluding the Kodak prepayment, EBITDA was $19.7 million for the current period.
Total revenues for the first quarter of $116.5 million represents a $13.8
million decrease from the first quarter of the prior year. Approximately $5.6
million of the decrease is due to discontinuance and downsizing of product
lines, including ICS ($1.5 million), reader and reader printer products ($2.4
million), source document film ($0.7 million) and micrographics accessories ($1
million). The remaining $8.2 million decrease in revenues is due to the general
downward trend in both the micrographics and magnetics product lines.
Cost of services provided as a percentage of services revenue was 53% for
the three months ended December 31, 1996, compared to 55% for the same period of
the prior year. Cost of equipment and supplies sold as a percentage of equipment
and supplies sales, excluding the one-time $3.6 million payment noted above, was
76% for the three months ended December 31, 1996, compared to 78% for the same
period of the prior year.
Selling, general and administrative expenses ("SG&A") were 19% of revenue in
the three months ended December 31, 1996 and 1995, excluding the one-time $3.6
million payment noted above.
Interest expense and fee amortization of $9.8 million for the three months
ended December 31, 1996, decreased significantly over the prior year, due to the
Company's improved debt structure as a result of the Reorganization in fiscal
1996.
PRODUCTS AND SERVICES. The following table shows Anacomp's revenues for
each of its five product families for the three months ended December 31, 1995
and 1996:
<TABLE>
<CAPTION>
THREE MONTHS ENDED DECEMBER 31,
--------------------------------------------
<S> <C> <C> <C> <C>
1995 1996
--------------------- ---------------------
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Output Services......................................................... $ 28,081 22% $ 24,321 21%
Technology Services..................................................... 21,779 17 19,770 17
Output Systems.......................................................... 8,222 6 7,856 7
Micrographics Supplies.................................................. 40,628 31 33,980 29
Magnetic Media.......................................................... 30,285 23 26,120 22
Other................................................................... 1,271 1 4,406 4
---------- --- ---------- ---
Total................................................................... $ 130,265 100% $ 116,453 100%
---------- --- ---------- ---
---------- --- ---------- ---
</TABLE>
37
<PAGE>
Output Services. Output services revenues decreased $2.4 million for the
three months ended December 31, 1996, compared to the same three months of
fiscal 1996, excluding the effect of the ICS sale. COM services volumes
decreased 1% and average selling prices decreased 10%. Data center acquisitions
and several large customer gains have contributed to both the stabilization of
volumes and the decrease in average selling prices. The acquired data centers
contributed volumes, but at significantly lower average selling prices. The
large customer gains received favorable pricing due to their volumes. Gross
margins as a percentage of revenue decreased by 2% due to the aforementioned
impact of lower average selling prices.
Technology Services. Technology services (primarily maintenance) revenues
decreased $2 million for the three months ended December 31, 1996, primarily due
to the effect of replacing older generation COM systems with the XFP, which has
a capacity significantly greater than the older COM systems. Gross margins as a
percentage of revenue improved five percentage points as a result of decreased
personnel and supply costs. Personnel costs decreased as planned reductions in
the work force were made to bring headcount in line with the declining base of
COM recorders under maintenance.
Output Systems. Output systems primarily include COM systems and digital
systems. COM systems revenues for the three months ended December 31, 1996
decreased $2.0 million compared to the same period of the prior year. The
decrease in revenue is attributable to a decrease in the number of systems sold
and the mix and pricing of new and used systems. The Company sold or leased
twenty XFP 2000 COM systems to third party users in the current period, with a
mix of thirteen new units and seven used units. For the same period in the prior
year, the Company sold or leased 28 systems, with a mix of 27 new units and one
used unit. Gross margin as a percentage of revenue improved primarily due to the
result of manufacturing efficiencies realized during fiscal 1996. Digital
systems revenues for the three months ended December 31, 1996 were $1.6 million.
The sale of two digital systems accounted for $1.5 million in revenue total.
There were no digital systems sold for the same period of the prior year.
Micrographics Supplies. Micrographics supplies revenues for the three
months ended December 31, 1996 decreased $6.6 million compared to the same
period of the prior year. As previously mentioned, part of this decrease is due
to the discontinuance or downsizing of reader and reader printer products ($2.4
million), source document film ($0.7 million) and micrographics accessories ($1
million). The other major components of the decrease were duplicate film sales
and original COM film sales, which is consistent with long-term trends. Gross
margins as a percentage of revenue were comparable between periods.
Magnetic Media. Magnetic media revenues for the three months ended December
31, 1996 decreased $4.2 million compared to the same period of the prior year.
The decline is due mainly to the decreased unit sales in open reel tape, 3480
tape cartridges and 3490E tape cartridges. Magnetics gross margins as a
percentage of revenue increased in the current period principally due to
increases in sales prices on selected products and increased sales on higher
margin products.
FISCAL 1996, 1995 AND 1994
GENERAL. Anacomp reported net income of $143 million for the year ended
September 30, 1996 as compared to a net loss of $238.3 million and net income of
$15 million for the years ended September 30, 1995 and 1994, respectively.
Included in the fiscal 1996 net income are reorganization items of $92.8 million
and a $52.4 million extraordinary gain resulting from the discharge of
indebtedness. Included in the fiscal 1995 loss are special charges of $136.9
million, representing a write-off of goodwill of $108 million and $28.9 million
of costs associated with software investments (See Notes 8 and 18 to the
accompanying Consolidated Financial Statements). Also included in the fiscal
1995 loss is a $29 million deferred tax provision and $32.7 million of
restructuring charges.
EBITDA was $84.2 million for the year ended September 30, 1996 as compared
to $77.4 million and $114.2 million for the years ended September 30, 1995 and
1994, respectively.
Total revenues for fiscal 1996 of $486.1 million represent a $105 million
decrease from fiscal 1995. Approximately $60.1 million of the decrease is due to
the discontinuance or downsizing of certain product
38
<PAGE>
lines including ICS ($20 million), flexible diskette media ($20.2 million),
reader and reader printer products ($12.7 million ) and source document film
($7.2 million).
Total revenues for fiscal 1995 decreased $1.4 million from the prior fiscal
year. Revenues from sales of magnetics products increased $30.8 million
resulting from the acquisition of Graham Magnetics, Inc. ("Graham Magnetics") in
May 1994. In addition, the acquisition of the COM services customer base of
fourteen data service centers from National Business Systems, Inc. ("NBS") on
January 3, 1994 contributed incremental revenues of approximately $2.7 million
to the fiscal 1995 results. Offsetting these contributions were decreases in
micrographics supplies, COM systems, maintenance services and other revenues.
Anacomp's fiscal 1994 revenues totaled $592.6 million. The Graham Magnetics
acquisition contributed $22.4 million to fiscal 1994 revenues and NBS
contributed $9.1 million to fiscal 1994 revenues.
SG&A were 19.2% of revenues in fiscal 1996 compared to 22.4% in fiscal 1995.
The decrease in SG&A reflects the cost reductions implemented in late fiscal
1995 as part of the Company's reorganization. Selling, general and
administrative expenses were 19.5% of revenues in fiscal 1994.
The Company reclassified certain operating costs within costs of services
provided, costs of equipment and supplies sold and SG&A in fiscal 1995 and
fiscal 1994 to conform with the fiscal 1996 presentation.
FISCAL 1995 SPECIAL CHARGES. As mentioned above, included in the operating
results for fiscal 1995 are special charges totaling $136.9 million, including
the write-off of a portion of goodwill related to micrographics products. During
fiscal 1995, Anacomp announced several significant events which are summarized
as follows:
On April 6, 1995, the Company announced that it was withdrawing its proposed
offering of $225 million senior secured notes previously announced on January
23, 1995.
On April 27, 1995, the Company announced that it had agreed with its senior
secured lenders to make its current interest payment of $2 million on its
pre-bankruptcy senior secured debt while continuing to negotiate the
rescheduling of all or a substantial portion of the $20 million scheduled
amortization payment due April 26, 1995, which the Company failed to make, and
the waiver of certain financial covenant violations as of March 31, 1995. The
Company also announced that until an agreement was reached with its senior
secured lenders (and holders of pre-bankruptcy senior subordinated notes) the
Company would not make its $16.9 million interest payment on the pre-bankruptcy
senior subordinated notes scheduled for May 1995 and would defer making dividend
payments on the pre-bankruptcy preferred stock.
On May 15, 1995, in connection with announcing a second quarter loss of $8.2
million, the Company announced plans for a restructuring of its operations which
would include several cost cutting measures and personnel reductions. The
Company also announced the appointment of a new President.
These developments significantly constrained Anacomp's ability to finance
certain previously projected activities. In addition, in 1995 Anacomp failed to
achieve its original projections of operating results and experienced lower than
expected sales of major new software products which were first introduced in
January 1995. In light of Anacomp's withdrawn note offering, disappointing
financial performance and default on its indebtedness, the Company prepared a
new operating plan.
Based on the events discussed above and in connection with the change in
accounting discussed in Note 1 to the accompanying Consolidated Financial
Statements, Anacomp determined that goodwill had been impaired and measured the
impairment based on the fair value approach discussed in Note 1. As required by
GAAP, this accounting change, which amounted to a charge of $108 million, was
recorded as a change in estimate of goodwill and was included in the results of
operations during fiscal 1995.
Prior to fiscal 1996, Anacomp invested and capitalized over $20 million
related to the development of software to provide advanced capabilities for the
XFP 2000 related to the processing of Xerox and IBM print streams. These
software enhancements are referred to as the Xerox Compatibility Feature ("XCF")
and the Advanced Function Presentation ("AFP") feature. XCF was introduced at
the beginning of the second quarter of fiscal 1995 and AFP at the beginning of
the fourth quarter of fiscal 1995. Initial sales of
39
<PAGE>
the XCF product were significantly below expectations, as were projections for
AFP. As a result, during fiscal 1995 Anacomp wrote off $20.3 million of deferred
software costs and established a reserve of $8.6 million (none of which exists
at September 30, 1996) for future payments to IBM Pennant Systems for software
royalty and system support obligations which were not recoverable based on
revised projections. See Note 18 to the Consolidated Financial Statements.
PRODUCTS AND SERVICES. The following table shows Anacomp's revenues for
each of its five product families for the last three fiscal years:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1994 1995 1996
--------------------- --------------------- ---------------------
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Output Services............................................ $ 131,238 22% $ 132,144 22% $ 103,733 21%
Technology Services........................................ 91,339 15 86,175 15 82,105 17
Output Systems............................................. 57,627 10 51,276 9 32,794 7
Micrographics Supplies..................................... 204,346 34 190,621 32 150,449 31
Magnetic Media............................................. 97,545 16 128,353 22 112,187 23
Other...................................................... 10,504 2 2,620 0 4,872 1
---------- --- ---------- --- ---------- ---
Total.................................................... $ 592,599 100% $ 591,189 100% $ 486,140 100%
---------- --- ---------- --- ---------- ---
---------- --- ---------- --- ---------- ---
</TABLE>
Output Services. Output services revenues, which accounted for 21% of
Anacomp's revenues in fiscal 1996, were down $8.4 million compared to fiscal
1995 (excluding the effect of the ICS sale), primarily due to a 11% decrease in
volume. Output services revenues accounted for 22% of Anacomp's revenues in
fiscal 1995. Volumes were increased in fiscal 1995 due in part to the
acquisition of the COM services customer base of fourteen data service centers
from NBS. Output services revenues increased 5% in fiscal 1994 on volume
increases of 12%. The increase in fiscal 1994 volume is the result of the NBS
acquisition. Decreasing prices adversely affected Anacomp's output services
business in fiscal 1996, 1995 and 1994. Output services gross margins as a
percent of revenue decreased 1% in fiscal 1996, 7% in fiscal 1995 and 2% in
fiscal 1994.
Technology Services. Technology services revenues, which accounted for 17%
of the Company's revenues in fiscal 1996, are derived principally from the
maintenance of COM recorders and duplicators. Such revenues decreased 5% in
fiscal 1996 when compared to fiscal 1995 primarily due to the effect of
replacing older generation COM systems with the XFP 2000, which has a capacity
significantly greater than the previous generation COM systems. Technology
services accounted for 15% of fiscal 1995 revenues and were down 6% from fiscal
1994. The improvement in fiscal 1994 is largely the result of the addition of a
national data service center company to Anacomp's customer base. Gross margins
increased nearly 7% in fiscal 1996 due primarily to reductions in costs
associated with spare parts and personnel costs.
Output Systems. Output systems revenues, which accounted for 7% of the
Company's revenues in fiscal 1996, decreased $18.5 million with the sale or
lease of 118 XFP 2000 systems in fiscal 1996 compared to 156 systems in fiscal
1995. Included in output systems revenues in fiscal 1995 is $3.5 million of
sales of equipment for use in Anacomp data centers under sale and leaseback
arrangements. Output systems revenues decreased 11% in fiscal 1995 with the sale
or lease of 156 XFP 2000 systems compared to 165 systems in fiscal 1994. Output
systems gross margins improved in fiscal 1996, 1995 and 1994 despite reduced
revenues as a result of product mix of new and used systems in fiscal 1996 and
higher average selling prices in fiscal 1995 and 1994.
Micrographics Supplies. Micrographics supplies revenues, which accounted
for 31% of the Company's revenues in fiscal 1996, decreased 21% compared to
fiscal 1995 principally as a result of the discontinuance and downsizing of
product lines. Micrographics supplies revenues were 32% and 34% of the Company's
revenues in fiscal 1995 and 1994, respectively. Micrographics supplies revenues
decreased 7% in fiscal 1995, principally due to reduced demand for duplicate
film, readers and reader/printers. Micrographics supplies gross margins as a
percent of revenue increased 5% in fiscal 1996 as a result of
40
<PAGE>
changes in product mix due primarily to the sale and downsizing of product
lines. Micrographics supplies gross margins decreased 5% in fiscal 1995.
Magnetic Media. Magnetic media revenues, which accounted for 23% of the
Company's revenues in fiscal 1996, decreased $16.2 million compared to fiscal
1995. The decrease is due to the closure of the Omaha, Nebraska factory, which
produced flexible diskette media, as well as reduced unit sales of open reel
tape. Magnetic media revenues accounted for 22% of the Company's revenues in
fiscal 1995. Fiscal 1995 magnetic media revenues increased $30.8 million over
fiscal 1994. The increase is due to the contribution from the acquisition of
Graham Magnetics in May 1994. Graham Magnetics manufactured certain magnetics
products at its facility in Graham, Texas. Anacomp has shifted all its U.S.
production of those products from its Omaha, Nebraska plant to the Graham
Magnetics facility. The costs associated with this relocation were not
significant. The consolidation resulted in improved manufacturing efficiencies
and overall headcount reduction. Magnetic media gross margins have remained
level over the past three years at approximately 15%.
INTEREST EXPENSE. Interest expense and fee amortization amounted to $39.6
million in fiscal 1996 compared to $70.9 million in fiscal 1995. The decrease
relates to the discontinuance of interest accrued on the predecessor company's
old subordinated debt during the bankruptcy proceedings, as well as reduced
interest expense on the new debt instruments.
Interest expense and fee amortization was $70.9 million in fiscal 1995
compared to $67.2 million in fiscal 1994 due to $3.3 million of default interest
and interest on unpaid scheduled interest on the old senior secured debt as well
as the old senior subordinated notes which was required by the terms of the
various debt agreements.
INCOME TAXES. The Company adopted Financial Accounting Standards No. 109.
Accounting for Income Taxes, in the first quarter of fiscal 1994. The adoption
resulted in a one-time increase to income of $8 million reflecting the
cumulative effect on prior years of this accounting change. In addition, the
Company recorded a deferred tax asset of $95 million representing the U.S.
federal and state tax savings from NOLs and tax credits. The Company also
recorded a valuation allowance of $60 million, reducing the deferred tax asset
to $35 million. In determining the valuation allowance, the Company assumed
pre-tax income at levels they were experiencing at that time and considered the
impact of the reversal of temporary differences and the periods in which NOL
carryforward benefits expire.
The provision for income taxes in fiscal 1996 includes $6.1 million on
earnings of Anacomp's foreign subsidiaries and $2 million of domestic income
taxes primarily related to the alternative minimum tax and state and local
taxes. The effective rate as a percentage of income before reorganization items,
extraordinary credit, and cumulative effect of accounting change (8.2%) is lower
than the U.S. statutory rate because of non-taxable reorganization income
partially offset by increases resulting from non-deductible amortization.
Included in the provision for income taxes in fiscal 1995 is a deferred tax
provision of $29 million. The deferred tax provision includes U.S. tax on
undistributed foreign earnings of $9 million and a write-off of net deferred tax
assets of $20 million. This write-off results from the uncertainty regarding the
financial restructuring that was in progress and, accordingly, the uncertainty
regarding the ultimate benefit to be derived from Anacomp's tax loss
carryforwards. The remaining components of the provision for income taxes in
fiscal 1995 were taxes of $4.8 million on earnings of Anacomp's foreign
subsidiaries and a tax reserve adjustment of $1.2 million.
Income taxes as a percentage of income from operations was 55% in fiscal
1994. In fiscal 1994, income tax expense was reduced $1.2 million, as a result
of the favorable settlement and disposition of previously established tax
reserves. The effective tax rate was higher than the U.S. statutory rate because
of amortization of goodwill, which is not deductible for tax purposes, and
generally higher foreign tax rates. See Note 17 to the Consolidated Financial
Statements.
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LIQUIDITY AND CAPITAL RESOURCES
Anacomp's working capital at December 31, 1996, excluding the current
portion of long-term debt, was $69.7 million, compared to $26.4 million at
September 30, 1996 and a $13.8 million deficit at September 30, 1995. Net cash
provided by operating activities increased to $16.3 million for the first three
months of fiscal 1997, compared to $9.2 million in the comparable prior period.
Net cash used in investing activities was $6.6 million for the three months
ended December 31, 1996, compared to net cash provided by investing activities
of $12.4 million in the comparable prior period. This change was primarily the
result of the Company using $3.4 million of cash for acquisitions in the three
months ended December 31, 1996 while the Company generated $13.6 million in cash
for the sale of the ICS Division in the comparable prior period. Also, the
Company increased its capital expenditures for property, plant and equipment to
$3.2 million during the first three months of fiscal 1997.
To facilitate comparison of cash flow activity for fiscal 1996 to fiscal
1995, cash flows for the eight months ended May 31, 1996 and the four months
ended September 30, 1996, as discussed in the accompanying consolidated
statements of cash flows, have been combined for the following discussion. Net
cash provided by operating activities increased to $49.8 million for fiscal year
ended September 30, 1996 compared to $19.9 million in the comparable prior
period, due primarily to significant reductions in receivables and inventories
as well as non-payment of interest on subordinated debt prior to the
Reorganization. Net cash provided by investing activities increased to $3.9
million for the year ended September 30, 1996, compared to $3.1 million in the
comparable prior period.
On October 30, 1996, the Company completed the $25 million Rights Offering
of its Common Stock to its existing stockholders that resulted in the issuance
of 3.6 million shares of Common Stock. On February 28, 1997, the Company
refinanced the Old Senior Secured Notes with the Senior Secured Debt that
provides a $25 million revolver and term loans of $55 million. The Company used
available cash balances to reduce the Old Senior Secured Note balances from
$97.9 million as of December 31, 1996 to $55 million at February 28, 1997, and
the $25 million revolver remains undrawn.
Net cash provided by financing activities increased to $24.1 million for the
three months ended December 31, 1996, compared to the cash used in financing
activities of $13.7 million in the comparable prior period. This increase was
due primarily to the Company's successful Rights Offering, which provided
approximately $24.6 million in cash in the three months ended December 31, 1996,
and debt repayments of $13.7 million in the comparable prior period. Net cash
used in financial activities increased to $35.5 million in fiscal 1996 compared
to $23.6 million in fiscal 1995. Fiscal 1996 includes a $13 million repayment of
debt with proceeds from the sale of the ICS Division.
The Company's cash balance (including restricted cash) as of December 31,
1996 was $81.2 million, compared to $47.8 million at September 30, 1996 and
$19.4 million at September 30, 1995. The increase reflected as of December 31,
1996 is due primarily to cash generated from the rights offering discussed
above.
Prior to the Chapter 11 filing, the Company was experiencing a liquidity
shortfall caused by continued declining revenues and a highly leveraged balance
sheet. Upon emergence from bankruptcy proceedings, the Company's pre-petition
liquidity problems were improved.
The Company has significant debt service obligations which will include
obligations under the Notes. The ability of the Company to meet its debt service
and other obligations will depend upon its future performance and is subject to
financial, economic and other factors, some of which are beyond its control.
However, the Company believes that its cash on hand and cash generated from
operations will be sufficient to fund its debt service requirements, acquisition
strategies and working capital requirements in the foreseeable future.
Nevertheless, the Company may in the future issue debt or equity securities to
finance growth opportunities that may become available from time to time.
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BUSINESS
Anacomp is a leading provider of information and image management products
and services to approximately 15,000 customers in more than 65 countries. The
Company offers a broad range of short-term and long-term document management
solutions for the conversion, storage and retrieval of computer data and images
utilizing micrographics, magnetic media products and, to an increasing extent,
digital technologies.
The Company has built a strong reputation as the world's leading
full-service provider of micrographics systems, services and supplies.
Micrographics is the conversion of information stored in digital form or on
paper to microfilm or microfiche. Traditionally, micrographics has provided one
of the most cost-effective means of data storage and retrieval for
information-intensive organizations such as banks, insurance companies,
financial service companies, retailers, healthcare providers and government
agencies. The Company believes it possesses worldwide market share in excess of
40% in the largest segment of the micrographics industry, COM. COM consists of
the high-speed conversion of digital information directly from a computer or
magnetic tape to microfilm or microfiche.
The Company has an extensive installed base of COM equipment, which
management estimates to be in excess of 55% of the systems in use worldwide.
This installed base together with the Company's strong customer relationships
provide the Company with what management believes to be a substantial recurring
revenue stream from COM maintenance and supplies. For customers that prefer
outsourcing solutions, the Company provides COM, digital and related services
through its network of 48 service centers in the United States as well as
through a growing number of international service centers. The Company is also a
leading provider of half-inch magnetic media products for large computing
systems and is increasingly providing digital products and services to its
customers.
The Company is positioning itself to capitalize on its traditional long-term
information management competency and its significant existing customer base by
providing the latest technologies for short-term and mid-term information
solutions. This migration towards faster growth areas of the information
management industry is being accomplished through internal product development,
strategic acquisitions of advanced technology and joint ventures and strategic
alliances.
Anacomp was incorporated in Indiana in 1968. In the 1970s and 1980s, Anacomp
became the leader in the COM services portion of the micrographics industry
through acquisitions and internal growth. In 1987, the Company became the
world's leading manufacturer of COM systems by acquiring DatagraphiX, Inc. In
1988, Anacomp acquired Xidex Corporation ("Xidex"), a leading manufacturer of
magnetic media products, duplicate microfilm and microfilm readers and
reader/printers. More recently, the Company has expanded its digital products
and services through the acquisition of Data/Ware, a leading manufacturer and
supplier of CD output systems, and through its agreement with FileNet, a leading
provider of integrated document management software.
Anacomp filed for bankruptcy protection under Chapter 11 of the U.S.
Bankruptcy Code on January 5, 1996, primarily as a result of the substantial
debt incurred as a result of the Xidex acquisition. The Company emerged from
bankruptcy under its Plan of Reorganization on June 4, 1996 with significantly
reduced debt and lower interest payments, a new financial structure, a new Board
of Directors and management and a new business strategy. See "--Bankruptcy
Reorganization."
The principal executive offices of the Company are located at 11550 North
Meridian Street, Suite 600, Carmel, Indiana 46032, telephone number (317)
844-9666.
INFORMATION AND IMAGE MANAGEMENT INDUSTRY
The information and image management industry, which the Company believes to
be in excess of $8 billion worldwide, provides products and services utilized in
the conversion, storage and retrieval of computer data and images. Users of
these products and services must balance the ease of accessibility of
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information with the cost of storing and accessing that information. This
balancing and the Company's industry strategy adheres to a paradigm known as the
Information Delivery Life Cycle, which describes the relationship between the
age of information, the frequency and speed of access and the type of media upon
which the information is stored. In general, as information ages, customer
requirements for frequency of retrieval and speed of delivery decline. To
achieve the greatest degree of cost-effectiveness and efficiency, organizations
migrate their information across several different delivery systems over the
life of the information.
THE INFORMATION DELIVERY LIFE CYCLE
[LOGO]
Newly created information is generally the most frequently accessed,
requiring a high-speed storage media such as magnetic disk ("DASD"). As the
information begins to age, it is often first migrated to optical disk or CD,
which offers quick access to information at a lower cost than DASD and which has
high storage capacity. As the need to access information becomes more
infrequent, the information is next migrated to magnetic tape, an even lower
cost media that provides somewhat slower, yet readily accessible, information
delivery. Once information moves to an archival stage in its life cycle, it is
often migrated to its final media, microfilm and microfiche, which offers very
low storage costs for both archival and non-archival applications.
Anacomp's array of products and services is designed to help organizations
optimize how they store, deliver and migrate their information across this
entire life cycle. The Company believes that vendor consolidation, a gradual
shift toward integrated solutions and similar trends will favor suppliers that
can provide a broad, technologically advanced suite of products and services
across the entire cycle. The Company also believes that this market will
continue to favor suppliers with a fully developed domestic and international
infrastructure that allows them to serve large customers and benefit from
economies of scale.
Additionally, competitive pressures on companies served by Anacomp have
steadily increased the demand for outsourcing services. Concerns over technology
obsolescence, the sometimes high capital cost of information management systems
and a general recognition of the benefits of outside expertise have induced many
companies to reduce in-house expenditures on certain operations in favor of
third-party service providers. Through outsourcing, companies are able to avoid
the capital requirements of proprietary data management and storage systems, and
maintain flexibility to migrate their information as new products and
technologies become available.
Anacomp believes this trend toward outsourcing should have a positive impact
on many of the output services offered by the Company. Moreover, Anacomp seeks
to differentiate itself from other service
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providers through its value-added product features (such as customized indexes,
retrieval software and other user productivity enhancements), strong client
relationships and customer service.
Anacomp recognizes that certain products and services in the information and
image management industry are declining relative to others. Traditionally,
micrographics has provided one of the most cost-effective means of data storage
and retrieval for information-intensive organizations such as banks, insurance
companies, financial service companies, retailers, healthcare providers and
government agencies. However, the ongoing growth of local area and client/server
networks and similar systems based on digital technologies has and will continue
to result in alternative data storage and retrieval technologies for active
records management. Over the next few years, the Company believes that
micrographics technology will continue to retain certain cost and functional
advantages over alternative data storage media, which will keep micrographics
competitive in a wide range of applications. Over a longer term, the Company
believes micrographics technology will be viewed predominately as a reliable and
cost-effective method for long-term data storage.
The Company's new business strategy is to capitalize on these industry
trends by leveraging its competitive strengths to provide new products and
services while maintaning its leading market position in COM solutions.
COMPETITIVE STRENGTHS
STRONG CUSTOMER RELATIONSHIPS
Since its inception in 1968, the Company has developed long-term
relationships with many of its customers. Among the Company's customers are
Aetna Inc., AT&T Corp., Automatic Data Processing, Inc., BankAmerica
Corporation, Citicorp, Daimler-Benz AG, Deutsche Bank AG, Electronic Data
Systems Corporation, FMR Corp., General Electric Capital Corporation,
International Business Machines Corporation, Kodak and Travelers Group Inc. The
Company believes that the strength of its customer relationships results from
consistently meeting or exceeding customer information management needs and
expectations. The Company manages these customer relationships through its
worldwide sales force of approximately 200 individuals and through its extensive
distributor networks.
LEADING MARKET SHARES
The Company believes that it is the largest manufacturer and distributor of
COM systems in the world; the largest provider of COM maintenance and supplies
in the world; the second largest provider of COM services in the United States;
the largest supplier of half-inch magnetic media products in the world; and the
largest provider of digital CD output products and services in the world. The
Company's market position and customer base provide the necessary platform to
introduce new and complementary information management products and services.
INSTALLED BASE OF EQUIPMENT
The Company believes it has the world's largest installed base of COM
equipment with an estimated market share of 55%. This extensive installed base,
together with the Company's strong customer relationships, provide the Company
with what management believes to be a substantial recurring revenue stream from
COM maintenance and supplies.
BROAD PRODUCT OFFERING
The Company has introduced new products and services in three areas: digital
solutions, complementary outsourcing services and COM enhancements. Digital
solutions include CD services marketed under the ALVA brand name and CD output
systems obtained from the acquisition of Data/Ware. Complementary outsourcing
services include Print/Mail (printing and mailing client statements and other
documents)
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and archival storage services. New products in COM systems include DragonCOM, a
next generation COM system which is capable of processing Asian languages.
EXPERIENCED NEW MANAGEMENT TEAM
The Company's new senior management team is led by Lang Lowrey, who became
the Company's Chief Executive Officer in October 1995, and Ralph W. Koehrer, who
became the Company's President and Chief Operating Officer in January 1997. This
management team has more than 300 cumulative years of experience in the
information and image management industry and is highly committed to executing
the Company's new business strategy.
NEW BUSINESS STRATEGY
The Company's new management team, assembled over the last eighteen months
as a part of the Company's reorganization plan, has developed a strategic plan
to rationalize the Company's operations, leverage the Company's competitive
strengths and capitalize on the evolution in the information and image
management industry.
COST REDUCTION AND PRODUCTIVITY ENHANCEMENT
The Company has executed a strategy designed to: (a) reduce selling, general
and administrative expenses by reducing headcount, centralizing administrative
functions and reducing fixed operating costs and (b) develop new processes and
programs to enhance productivity and product quality. The cumulative effect of
these and other activities has been to reduce selling, general and
administrative expenses as a percentage of revenues from 22.4% for the year
ended September 30, 1995 to 19.2% for the twelve months ended December 31, 1996.
The Company's management is committed to continue cost and efficiency
improvements focusing on a number of areas including data center automation and
data transmission technology.
EXIT NON-STRATEGIC BUSINESSES
The Company has exited three lower-margin, non-strategic businesses
including the filming of paper documents, the manufacturing of microfiche and
microfilm readers and reader/printers, as well as the manufacturing of floppy
diskette media.
STRENGTHEN BALANCE SHEET AND ENHANCE FINANCIAL FLEXIBILITY
Following the Company's emergence from bankruptcy proceedings in June 1996,
the Company has completed a $25 million rights offering and an $80 million
senior secured credit facility. Since June 1996, following these two
transactions and pro forma for the Offering and the Redemption, the Company will
have reduced annualized net interest expense from $38.6 million (based on
capitalization data as of June 30, 1996) to $30 million (based on pro forma
capitalization data as of December 31, 1996). See "Capitalization."
NEW PRODUCT OFFERINGS AND GROWTH OPPORTUNITIES
The Company is positioning itself to capitalize on its traditional long-term
information management competency and its significant existing customer base by
providing the latest technologies for short-term and mid-term information
management solutions. This migration towards faster growth areas of the
information and image management industry is being accomplished through internal
development, strategic acquisitions of advanced technology and joint ventures
and strategic alliances. In June 1996, the Company introduced its new DragonCOM
system, which is capable of processing Asian languages. On January 31, 1997, the
Company acquired Data/Ware, a leading manufacturer and supplier of CD output
systems. On January 22, 1997, the Company entered into a partnership with
FileNet, a leading provider of
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integrated document management software, to provide a technological base for the
Company's Windows NT-based application solutions for rapid day-to-day
information management known collectively as Concerto. Although digital storage
systems account for a small percentage of the Company's total revenues, Anacomp
has rapidly become the largest United States provider of CD output solutions,
offering customers high-capacity and high-speed information retrieval
applications.
PRODUCTS AND SERVICES
Anacomp's information management solutions can be grouped into five product
families: output services, technology services, output systems, micrographics
supplies and magnetic media. The table below shows Anacomp's revenues for each
of these product families for the last three fiscal years. The information is
presented on a traditional comparative basis for the year ended September 30,
1996, to facilitate a meaningful comparison to fiscal 1995 and 1994.
Consequently, the fiscal 1996 information presented below does not comply with
accounting requirements for companies upon emergence from bankruptcy, which
calls for separate reporting for the newly Reorganized Company and the
Predecessor Company.
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1994 1995 1996
----------------------- --------------------- ---------------------
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Output Services........................................ $ 131,238 22% $ 132,144 22% $ 103,733 21%
Technology Services.................................... 91,339 15 86,175 15 82,105 17
Output Systems......................................... 57,627 10 51,276 9 32,794 7
Micrographics Supplies................................. 204,346 34 190,621 32 150,449 31
Magnetic Media......................................... 97,545 16 128,353 22 112,187 23
Other.................................................. 10,504 2 2,620 0 4,872 1
---------- --- ---------- --- ---------- ---
Total.............................................. $ 592,599 100% $ 591,189 100% $ 486,140 100%
---------- --- ---------- --- ---------- ---
---------- --- ---------- --- ---------- ---
</TABLE>
OUTPUT SERVICES
The principal output services delivered by Anacomp are COM services, CD
services, archival services and Print/Mail services. Output services are offered
through 48 service centers in the United States, as well as through startup
service centers in Canada and Europe. Output services are sold by Anacomp's
direct sales forces in the United States, Canada and Europe. The Company has
recently acquired several small COM and CD service bureaus as part of its
strategy to increase its market share in specific locations and to consolidate
portions of the maturing COM services business.
The Company plans to generate additional revenue from a multitude of
additional complementary output services including CD services, Print/Mail
services and archival services offered through the Company's service centers.
COM services comprise the Company's most profitable business line. The Company's
objective is to maintain this highly profitable business, while introducing
complementary, higher-growth services. The Company intends to market these new
services as additional, not replacement, services to its core micrographics
output services. Pursuant to this strategy, the Company envisions selling each
image it processes up to four times:
- Once to output the image to paper to be mailed directly to the clients'
customers;
- Once to output the image to CD for short-term storage and frequent
retrieval;
- Once to output the image to microfilm or microfiche for safe, long-term
storage; and
- Once to store the image on media for a customer at an Anacomp site for
archival purposes.
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The Company has a large customer base which has proved to be loyal to the
Company in the past. The Company's output services customers include a majority
of the Fortune 500 companies, banks, insurance companies, financial service
companies, retailers, healthcare providers and government agencies. No one
customer accounted for more than 10% of the Company's output services revenues
in fiscal 1996. The typical service contract is exclusive, lasts one year with a
one-year automatic renewal period and provides for usage-based monthly fees,
subject to increase on 30 days' notice. The Company believes that approximately
75% of the Company's micrographics services customers are subject to contracts
and most of such contracts are renewed annually.
Output service center industry competition is primarily limited to service
centers within a 50-mile radius of a customer because of the emphasis on prompt
turnaround. The Company and First Image (which the Company believes has
approximately 50 output service centers) are the two largest national output
service center organizations. The remainder of the market is served by regional
or local output service centers.
COM SERVICES. COM services, the delivery of micrographics outsourcing
services, represents the largest component of Anacomp's output services. The
Company believes that the COM services portion of the micrographics industry
processed over 45 billion images in 1995, generating over $350 million in
revenues. The Company believes it holds an estimated 25% to 30% market share,
second only to First Image.
On a daily basis, Anacomp's service centers receive thousands of electronic
downloads and computer tapes from customers. This information (both text and
graphics) is converted to 16mm microfilm or to microfiche, which is a four by
six-inch film medium capable of storing up to 1,000 pages of computer output.
Turnaround for a typical COM services job ranges from two hours to 36 hours,
depending on specific circumstances and requirements, and the centers generally
operate 24 hours a day every day of the year.
In response to a gradual decline in the market for micrographics services
and a more competitive market, in fiscal 1995 Anacomp completed installation of
XFP 2000 COM systems in all of its service centers, increasing the efficiency of
COM production. Additionally, the Company has upgraded many of these systems
with Anacomp-developed emulation software for IBM and Xerox laser print streams,
expanding the potential market for COM services and resulting in higher average
prices than for other COM output.
As an adjunct to COM services, Anacomp also provides External Facilities
Management ("XFM") services to selected customers. Under an XFM arrangement,
Anacomp operates and manages a customer's COM production at Anacomp's
facilities.
ALVA CD SERVICES. Although still a relatively small percentage of the
Company's revenues, Anacomp has quickly become a significant provider of digital
output services since entering this emerging market in fiscal 1995. Competition
in this industry is highly fragmented, and Anacomp believes it is one of the
three largest U.S. providers of CD output services.
Anacomp's ALVA CD services provide customers throughout the United States
and at an increasing number of the Company's international locations with
high-capacity storage and delivery solution for applications requiring frequent
and high-speed information retrieval. ALVA CD services involves storing and
indexing customer information such as invoices and customer statements onto CD.
In addition to indexed CD output, ALVA also includes sophisticated Windows
NT-based software for accessing and retrieving the data. ALVA is available at
the majority of the Company's service centers in the United States, as well as
through new Company service centers in Canada and Europe.
The Company believes that its ALVA solution has significant advantages over
competing products, primarily due to the Company's network of service centers,
its extensive knowledge of applications and indexing expertise, and ALVA's
flexible and easy-to-use user interface.
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ARCHIVAL AND PRINT/MAIL SERVICES. Anacomp provides archival storage services
at several of its service centers in the United States, providing the long-term
storage of original microfilmed records for its COM services customers. The
microfilm is stored in a secure vault within the Anacomp facility, providing
customers with a convenient and safe method of off-site storage of critical
business records. In addition, Anacomp offers customers the ability to retrieve
their records on an as-needed basis. Anacomp plans to expand this business in
fiscal 1997 by opening several new archival vaults.
The Company also intends to broaden its archival services business in the
future by storing multiple-media records--such as paper, optical disks and
magnetic tape in addition to microfiche and microfilm--at dedicated storage
facilities. Anacomp has taken a first step in this direction in October 1996 by
acquiring Archive Storage, Inc. ("ASI"), a small Massachusetts company that
operated an underground, climate-controlled storage vault. ASI also provided
records management and disaster recovery consulting services to businesses,
helping customers ensure they are storing the right information on the most
cost-effective media for the appropriate periods of time.
Anacomp plans to expand Print/Mail services, the output and mailing of
printed information, in the United States in fiscal 1997. The Company sees
Print/Mail services as complementary to the COM and CD output services it offers
to clients today, and the Company believes it can leverage its existing client
relationships and application knowledge to obtain significant Print/Mail
revenues by providing its customers with distinct cost and service advantages.
The Company currently does not believe it has significant market shares in
either archival storage services or Print/Mail services.
TECHNOLOGY SERVICES
Anacomp's technology services includes both traditional maintenance services
as well as newer professional services offered by the Company. Technology
services are sold by Anacomp's direct sales forces worldwide.
The Company provides round-the-clock maintenance and professional services
through over 600 highly trained service employees operating in various countries
worldwide and servicing approximately 2,300 of the COM recorders in use. In the
United States, over 400 field service engineers and managers provide geographic
coverage through ten districts. Internationally, maintenance services are
provided either by Anacomp employees operating in the Company's foreign
subsidiaries or by employees of dealers and distributors.
Anacomp believes that it maintains approximately 98% of its own installed
base of COM systems, as well as a large percentage of those built by other
companies. In addition, the Company provides maintenance services for
micrographics-related devices and, increasingly, non-micrographics equipment.
Since many customers tend to use the maintenance services of the vendor that
installed the system, maintenance revenues traditionally have been a function of
new COM system sales and the size of the installed base. Anacomp believes that
its COM maintenance market share is approximately 65% in the United States, 50%
in Europe and 15% in the Americas (excluding the United States) and Asia.
As sales of COM systems mature, Anacomp is seeking to expand its maintenance
services by adding non-micrographics equipment. As an example of this strategy,
Anacomp recently acquired the customer maintenance base for the computer tape
equipment manufactured and sold by Integra Technologies Corporation ("Integra").
Anacomp now provides maintenance services on these products, and it also plans
to assume product assembly in the near future.
In fiscal 1996, Anacomp identified professional services as a potential
growth area within its maintenance business. Professional services refers to the
delivery of project-specific expertise in such areas as job set-ups, user
interfaces, data communications and networking. Tasks include software
development, problem resolution and consulting. In the past, Anacomp had
provided many of these services to customers free of charge. As an example of
how the Company plans to market professional services, Anacomp now provides a
specified number of hours of "free" job set-up assistance with each XFP 2000
sold, with the customer being charged for work exceeding those hours.
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OUTPUT SYSTEMS
The principal output systems products delivered by Anacomp are COM systems
and newer electronic document management solutions. The Company sells these
products through its direct sales forces in the United States, Canada and Europe
and through distributors in Latin America, Europe and Asia. Anacomp also is an
OEM for other companies for its XFP 2000 COM system.
COM SYSTEMS. Anacomp is the world's leading manufacturer and distributor of
COM systems, offering a complete line of COM recorders, duplicators, sorters and
related software. Anacomp's installed base of COM systems, approximately 55% of
those in use worldwide, is more than twice as large as its nearest competitor,
and related sales of COM services and supplies to the installed base provide the
Company with what management believes to be a recurring revenue stream that
constitutes a significant portion of its annual revenues.
The XFP 2000, which is manufactured by the Company, is the most advanced COM
recorder on the market and has enabled the Company to capture what it believes
to be an estimated 57% of all new COM systems sold or leased. The XFP 2000 is
faster and more reliable than previous COM recorders and, through its laser
technology, has the capability to generate precise reproductions of any image.
The Company sold or leased 118 new XFP 2000 systems in fiscal 1996 compared to
156 in 1995.
Pursuant to an OEM agreement, Kodak is obligated to pay the Company certain
cash penalties if Kodak does not order and accept delivery of certain pre-agreed
numbers of XFP 2000 systems by October 1997. In a recent amendment to the OEM
agreement, the Company accepted a payment of $3.6 million in penalties and Kodak
acknowledged its obligation to order and accept delivery of an additional 41
systems by October 1997 in order to avoid additional cash penalties.
In fiscal 1996, Anacomp introduced DragonCOM, a version of the XFP 2000 for
the Asian market, which is capable of processing Chinese, Korean, Taiwanese,
Japanese and other ideographic languages utilizing the popular IBM AFP
architecture. The Company is marketing DragonCOM to customers in Asia through an
agreement with Kodak's Asia-Pacific region, in which Kodak committed to purchase
a minimum of 50 DragonCOM systems over the next four years.
Anacomp also has developed two new software products that emulate IBM and
Xerox laser print streams. AFP software developed in conjunction with IBM
enables the XFP 2000 to process and image AFP formatted data streams used by IBM
high-speed mainframe laser printers. XCF software developed in partnership with
Xerox enables the XFP 2000 to process the same data stream used by Xerox high-
speed, high-volume laser printers.
Anacomp recently introduced its Image Direct application for the XFP 2000,
which enables users to output document images directly to microfilm from desktop
workstations. The initial release of Image Direct supports TIFF images, the most
popular bitmap format in use today; additional format compatibility is expected
in future releases.
Principal customers for the Company's COM systems include
information-intensive organizations such as banks, insurance companies,
financial service companies, retailers, healthcare providers and government
agencies, as well as non-Anacomp COM service centers. While the majority of COM
systems are sold outright, the Company does offer customers lease and monthly
usage options. No customer accounted for more than 10% of the Company's output
system sales in fiscal 1996.
International sales accounted for 40% of the Company's fiscal 1996 sales of
COM system units. In foreign markets, the Company sells COM systems through
wholly owned operating subsidiaries and, in countries in which the Company does
not have a subsidiary, through dealers and agents. In 1994, Kodak became the
Company's exclusive distributor in Asia (other than Japan) and Australia.
The Company's primary competitors in the sale of COM systems are
Agfa-Gevaert AG ("Agfa") and Micrographic Technology Corporation. Competition is
based principally on product features, as well as on such factors as product
quality, service and price. Anacomp believes that it sells approximately 57% of
all
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new COM systems sold worldwide, including those sold through an OEM arrangement
with the Kodak. Competition is based principally on product features, as well as
on such factors as product quality, service and price. The Company's large
installed base is an important competitive advantage in the sale of new COM
systems because changing from one manufacturer's COM system to another is
difficult due to software conversion and operator training costs.
ELECTRONIC DATA MANAGEMENT SOLUTIONS. Anacomp is working actively to bring
to market a wide range of electronic data and image management solutions.
Foremost among these is a new product line called "Concerto," which will be a
suite of integrated software solutions relating to document management, COLD,
imaging and workflow. Based on a product and marketing partnership with industry
leader FileNet, Anacomp plans to build applications on top of FileNet's core
technology. The first of these applications, called Concerto Customer Response
System, will provide organizations with significant improvements for managing
information related to customer service operations. Other expected applications
include healthcare claims processing, litigation support and insurance claims
processing.
Anacomp also recently acquired Data/Ware, the leading provider of CD output
systems for mainframe and client/server computing environments. Data/Ware's
flagship products, the Enterprise Authoring System ("EAS") and the
Server/Enterprise Authoring System ("S/EAS"), provide companies with in-house
solutions for the highly automated output of documents to CDs.
In addition, Anacomp markets an integrated system for information management
under the brand names Folders and EOS, which is an acronym for enterprise output
systems. Launched in 1995, Folders and EOS provide data management solutions for
mainframe computing environments that allows organizations with significant data
access requirements to expedite information retrieval regardless of the data's
location. As the name indicates, Folders is software that creates electronic
document folders, allowing users to organize and store electronic documents. EOS
provides for the storage and distribution of electronically generated reports
(often voluminous), thereby enabling users to avoid paper storage of such
reports and to distribute all or selected portions of reports throughout an
organization.
Anacomp intends to position itself as a comprehensive provider of integrated
solutions for organizing, storing, routing and processing information of all
types. Although there are numerous competitors in portions of this business,
Anacomp believes it can be among the first to offer a complete solutions set. In
order to quickly and cost-effectively provide these solutions to its customers,
and to take maximum advantage of the Company's areas of expertise, Anacomp has
embarked on establishing technology alliances with the foremost providers of the
key technologies available today for managing and delivering information.
MICROGRAPHICS SUPPLIES
Anacomp sells the most comprehensive line of micrographics supplies in the
world, including original silver halide film, duplicate film, chemicals for
microfilm processing, paper and toners for reader/printers, micrographics lamps
and bulbs and other consumables. The Company also markets a complete line of
microfilm/microfiche readers. These products are sold through Anacomp's direct
sales forces and through distributor channels.
With the exception of proprietary wet and dry original halide film and
chemistry used in its COM systems, many of these products have become only
marginally profitable in recent years. To increase profitability, the Company
signed an agreement to outsource the manufacture of readers and reader/ printers
beginning in fiscal 1996 as demand and margins for these products continue to
decline. Additionally, the Company ceased production of the DS 300 in fiscal
1996 after completing a build-out of inventory. These decisions resulted in a
significant one-time write-off in fiscal 1995. However, the Company continues to
offer these types of products to its customers on a reseller basis.
The Company supplies proprietary wet and dry original halide film used in
its XFP series of COM systems and proprietary wet and dry original halide film
for its X Series, an earlier generation of Anacomp COM systems. All original
microfilm for the Company's COM systems is manufactured for the Company
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<PAGE>
by Kodak under an exclusive supply agreement in what the Company considers to be
a proprietary package.
The proprietary film used in the XFP 2000 represents the only original COM
film segment that is currently growing. The Company also believes it can
maintain its market share of XFP 2000 film sales going forward because of the
complexity of the manufacturing process, the Company's patents on its
proprietary canister and the industry's interest in other segments of the film
business.
Anacomp is the world's largest supplier of duplicate microfilm, which is
used to create one or more additional copies of original microfiche and
microfilm masters. The Company believes that its share of this estimated $75
million worldwide market is approximately 67%, which includes sales to its own
output centers. Anacomp's primary competitor in the duplicate microfilm market
is Rexham Graphics Ltd. ("Rexham") with an estimated 25% share of the worldwide
duplicate film market. For fiscal 1996, the Company believes that Kodak
accounted for approximately 25%, and First Image accounted for approximately
15%, of the Company's shipments of duplicate microfilm.
The Company sells original microfilm for Anacomp's COM systems and for other
manufacturers' COM systems, with film sold for Anacomp's systems representing
the vast majority of original microfilm sales. Anacomp competes in sales of
non-proprietary original COM microfilms with other manufacturers, including
Agfa, Fuji Photo Film U.S.A., Inc. ("Fuji"), Kodak and Imation Enterprises
Corporation ("Imation"), formerly part of 3M. For non-OEM sales of the XFP 2000,
the Company is the exclusive supplier for original microfilm because of the
proprietary nature of the canister in which the film is placed. Anacomp believes
that it sells its consumable supplies directly to more than 90% of its worldwide
installed base. The Company recently acquired the assets of one of its
competitors, COM Products, Inc. ("CPI") which provides the Company with a more
diverse customer base.
International sales in fiscal 1996 accounted for 40% of the Company's total
micrographics supplies revenues. In foreign markets, the Company offers supplies
through wholly owned operating subsidiaries and, in countries in which the
Company does not have a subsidiary, through a network of dealers and
distributors. Anacomp believes that it has an estimated 33% of the micrographics
supplies market in Europe and an estimated 39% of the supplies market in the
Americas (excluding the United States) and Asia. In Europe, the Company's
primary competitors for micrographics supplies and equipment are the Kalle
Microfilm Division of Hoechst AG, A. Messerli AG and Rexham. Its primary
competitors in Japan are Kodak and Fuji.
MAGNETIC MEDIA
Anacomp manufactures, sells and distributes a broad range of magnetic media
products such as open reel tape, 3480/3490E tape cartridges, TK 50/52 CompacTape
and back-up tape cartridges such as quarter-inch, 4mm and 8mm. Anacomp is the
world's largest manufacturer of half-inch tape products, widely used by many
organizations for the near-line storage of business data.
Anacomp is exploring new applications and markets based on its magnetics
coating capacity. In fiscal 1995, Anacomp introduced voice logging tape and
instrumentation tape. Voice logging tape is used by brokerage companies, "911"
emergency service providers and other entities to record telephone
conversations. Instrumentation tape is used by various government agencies to
measure and record sensitive data. In fiscal 1996, Anacomp began to use magnetic
coated media to manufacture transfer tape, which is found on the back of
transaction media (similar to credit and telephone cards).
The Company is actively seeking partnerships that will enable the Company to
participate in the next generation of magnetic media products, including
half-inch metal particle tape (3590 cartridges). This product will be introduced
in fiscal 1997 and is expected to enjoy significant growth as this market
expands over the next several years.
Anacomp primarily sells its magnetics products through its worldwide
distributor and dealer network and, to a lesser extent, through parts of the
Company's direct sales force. The Company markets these
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<PAGE>
products under the "Memorex," "Dysan," "Graham" and "StorageMaster" brand names,
and it also is a leading OEM for many of the magnetic media products it
manufactures.
Anacomp has no significant competitors with respect to the manufacture of
open reel tape, and believes that its worldwide market share for that product is
approximately 92%. Anacomp competes with Imation and BASF AG in the sale of
3480/3490E data cartridges. Anacomp's worldwide market share for 3480 and 3490E
data cartridges is estimated by the Company to be 38% and 35%, respectively.
ENGINEERING, RESEARCH AND DEVELOPMENT
Anacomp's engineering costs, including research and development, were
significantly reduced in fiscal 1996, primarily as a result of the substantial
completion of the IBM and Xerox print stream projects for the XFP 2000 COM
system. Research and development expenses were $3.7 million, $2.2 million and $3
million for fiscal 1996, 1995 and 1994, respectively. However, the Company
continues to make investments in projects that enhance the XFP 2000 and the
overall value of COM, including improving the speed and functionality of its
Image Direct bitmapping initiative as well as the continuing development of
DragonCOM, a version of the XFP 2000 for the Asian market that is capable of
processing double-byte ideographic languages.
The Company also launched an engineering initiative in fiscal 1996 known as
"Pegasys" to automate Anacomp's service centers and to develop a
state-of-the-art data transmission capability for these centers. Anacomp
believes that better automation of the service centers will maximize processing
capacity, increase productivity and reduce operating costs. An improved
transmission capability will enable many more of Anacomp's service customers to
send their data to the Company electronically, eliminating the need for tape
handling (on the part of both the customer and the Company's service center
staff) as well as eliminating tape pick-up and delivery. In addition, data
transmission will facilitate the Company's plan to consolidate selected service
centers in order to increase efficiencies and reduce operating costs.
Anacomp expects its current limited research and development relating to
advanced digital technologies to grow as the Company introduces new digital
products and services. In addition, the Company recently inherited a significant
engineering and research and development capability with its purchase of
Data/Ware. One of Data/Ware's significant projects is research in emerging
digital video disc technology, which most industry analysts expect to become a
major media storage option in the near future.
Anacomp's research and development costs will be tempered by the Company's
plan to acquire the rights to core technologies whenever possible. Anacomp's
focus in the digital area will be on the development of customer applications,
where the Company believes it can add value. Anacomp currently is developing a
suite of vertical software applications that is based on a joint technology
partnership with FileNet, a leader in enterprise document management software.
The Company also owns various patents and licenses covering aspects of its
product line and its production processes, as well as proprietary trade secret
information relating to its products and services. While Anacomp believes that
the protection provided by these patents, licenses and proprietary information
is important, the Company also believes that equally significant is the
knowledge and experience of its employees, and their abilities to develop and
market the Company's products and services and to provide a value-added benefit
to customers.
RAW MATERIALS AND SUPPLIERS
Polyester is the principal raw material used in the manufacture of microfilm
and magnetic media products, two of Anacomp's primary businesses. A worldwide
shortage of polyester has abated recently, and supply and demand are more in
balance now. As a result, Anacomp has seen its cost of polyester for magnetic
media products decrease recently--reversing a previous trend of increasing
costs. There can be no assurance, however, that the current trend regarding the
supply and price of polyester will continue.
SKC is Anacomp's sole supplier of duplicate microfilm, the result of a
ten-year supply agreement between the companies entered into in 1993 as part of
SKC's purchase of Anacomp's Sunnyvale, California
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<PAGE>
duplicate microfilm facilities. SKC's duplicate film production is dedicated
exclusively to Anacomp, and SKC also provides Anacomp with polyester for a large
percentage of its magnetic media products. In connection with the supply
agreement, SKC also provided Anacomp with a $15 million trade credit facility,
secured by up to $10 million of products sold to Anacomp by SKC. In addition,
under an amendment to the supply agreement executed in 1996, Anacomp agreed to
certain price increases, retroactive to 1994, and agreed to make the following
deferred payments to SKC related to the retroactive price increases: $400,000 in
1997; $600,000 in 1998; $800,000 in 1999; $800,000 in 2000; and $1,000,000 in
2001.
Pursuant to the SKC Agreement, the Company is required to purchase a
substantial portion of its polyester requirements for its magnetic media
products. In fiscal 1996, the Company believes that it used more than seven
million pounds of polyester in its magnetic business. While the Company could
purchase certain of these magnetics polyester products from vendors other than
SKC, SKC is currently the sole available source for polyester used by the
Company to manufacture many magnetics products, including open reel tape. SKC's
inability or refusal to supply this polyester in the future might force the
Company to cease manufacturing open reel tape or other magnetics products, which
would negatively impact the Company's profitability and prevent the Company from
fulfilling its contractual obligations to its customers.
Anacomp's XFP 2000 COM system utilizes a proprietary, patented original film
canister, and the original film used in that canister is supplied exclusively by
Kodak. Anacomp also purchases from Kodak substantially all of its requirements
for original microfilm for earlier-generation COM recorders manufactured by
Anacomp and others, although Anacomp has from time to time purchased original
microfilm utilized in those older COM recorders from other suppliers.
BANKRUPTCY REORGANIZATION
By early 1995, revenues from the Company's traditional micrographics
business had been declining for the last several fiscal years. The Company,
however, believed that these declines would stabilize. In addition, the Company
sought to increase revenue through opportunities related to the consolidation of
the micrographics industry, namely the development of new micrographics and
digital products and services, and investments in emerging digital technologies.
Based on this growth strategy, in March 1995, the Company attempted to
refinance certain of its existing indebtedness through a public offering of $225
million of senior secured notes. The new notes would have deferred an aggregate
of $153 million in scheduled principal payments in fiscal years 1995 through
1998, resulting in increased liquidity and cash for product development. The
Company was unable to complete the refinancing and announced the withdrawal of
the proposed offering on April 6, 1995.
As a result of the withdrawn offering and weaker than anticipated second
quarter results, including disappointing sales performance for the Company's new
products, the Company did not have sufficient cash available to make both its
$20 million scheduled principal payment due in April 1995 on its secured debt
and the $17 million scheduled interest payment due May 1995 on its 15% Senior
Subordinated Notes. The Company sought an agreement with its senior secured
lenders to reschedule its April 1995 principal payment but was unable to obtain
such an agreement.
Starting in May 1995, the Company engaged in continuous efforts to formulate
a restructuring plan to satisfy its various investor constituencies. Such
efforts included the retention of various financial advisers to assist in the
restructuring process and the development by the Company of a new business plan
and strategy to address the Company's current financial situation and
disappointing recent financial performance.
After months of discussions and negotiations with representatives of the
Company's senior secured lenders and with unofficial committees representing the
15% Senior Subordinated Notes and the 13.875% Convertible Subordinated
Debentures and 9% Convertible Subordinated Debentures, the Company reached an
agreement in principle with an unofficial committee representing holders of the
15% Senior
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Subordinated Notes. On January 5, 1996, the Company filed a prenegotiated plan
of reorganization with the U.S. Bankruptcy Court in Delaware under Chapter 11 of
the Bankruptcy Code.
On March 28, 1996, the Company submitted a Plan of Reorganization and a
Disclosure Statement to the Bankruptcy Court. The Disclosure Statement was
approved by the Bankruptcy Court on such date and was transmitted to the
creditors and preferred stockholders of the Company for solicitation of ballots
for acceptance or rejection of the Plan of Reorganization. Ballots were cast by
May 8, 1996. The Plan of Reorganization, as amended, was confirmed by the
Bankruptcy Court on May 20, 1996, and on June 4, 1996 the Company emerged from
bankruptcy under its Plan of Reorganization.
On June 4, 1996, the Company canceled its existing secured debt and
subordinated debt, including 15% Senior Subordinated Notes, 13.875% Convertible
Subordinated Debentures and 9% Convertible Subordinated Debentures and its
equity securities, including common stock, common stock purchase rights,
preferred stock and warrants, in exchange for cash, new debt securities and new
equity securities. On such date, (a) the Company's secured debt was exchanged
for $112.2 million principal amount of its Old Senior Secured Notes and a cash
payment, (b) the Company's 15% Senior Subordinated Notes and related accrued
interest was exchanged for $160.0 million principal amount of its Existing
Notes, 9,250,000 shares of Common Stock and a cash payment, (c) the Company's
13.875% and 9% Convertible Subordinated Debentures and related accrued interest
was exchanged for 750,000 shares of Common Stock and warrants to purchase
259,068 shares of Common Stock, (d) the Company's preferred stock and related
accrued dividends were exchanged for warrants to purchase 62,176 shares of
Common Stock and (e) the Company's common stock was exchanged for warrants to
purchase 41,450 shares of Common Stock. Each of the warrants is convertible into
one share of Common Stock during the five year period ending June 3, 2001 at an
exercise price of $12.23 per share. The Company simultaneously distributed to
creditors (including holders of the Old Senior Secured Notes and the Existing
Notes) approximately $22 million in cash. The Plan of Reorganization resulted in
a reduction of approximately $174 million in principal and accrued interest on
the Company's debt obligations and liquidation amount and accrued interest on
its preferred stock and reduced the Company's annual interest expense by
approximately $31 million.
EMPLOYEES
As of December 31, 1996, Anacomp employs about 2,600 people at multiple
facilities and offices in the United States, Canada, Brazil, Japan and Europe,
including 48 service centers in the United States.
As of December 31, 1996, the Company employs approximately 200 salespeople
worldwide. The Company maintains two separate domestic sales forces: (a) the
U.S. Group, which employs approximately 120 salespeople, is comprised of ten
regions responsible for sales of micrographics and CD services, COM systems and
related maintenance services, supplies and equipment, sales of digital products
and direct sales of magnetics products and (b) the Magnetics Division, which
employs approximately twenty salespeople, responsible for sales of magnetics
products primarily to dealers and distributors.
The Company employs approximately 60 non-Magnetic Division salespeople who
sell to customers located abroad. In countries in which the Company does not
have a subsidiary, the Company sells through approximately 100 distributors and
agents.
FACILITIES
The Company maintains corporate offices at 11550 North Meridian Street,
Suite 600, in Carmel, Indiana 46032 (metropolitan Indianapolis). Micrographics
manufacturing, engineering, micrographics, customer service and marketing and
product maintenance facilities are all located in Poway, California
(metropolitan San Diego). The Company's magnetics manufacturing facilities are
located in Graham, Texas and Brynmawr, Wales.
During 1994, Anacomp's Graham and Brynmawr facilities received international
recognition for quality standards, earning International Standards Organization
("ISO") 9002 certification. Anacomp's Poway facility earned ISO 9002
certification in September 1995.
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The following table indicates the square footage of Anacomp's facilities:
<TABLE>
<CAPTION>
OPERATING OTHER CORPORATE
FACILITIES FACILITIES FACILITIES TOTAL
----------- --------- ----------- ----------
<S> <C> <C> <C> <C>
United States:
Leased......................................................... 601,700 119,614 49,111 770,425
Owned.......................................................... 147,420 15,630 -- 163,050
----------- --------- ----------- ----------
749,120 135,244 49,111 933,475
----------- --------- ----------- ----------
----------- --------- ----------- ----------
International:
Leased......................................................... 105,254 29,410 -- 134,664
Owned.......................................................... 145,000 -- -- 145,000
----------- --------- ----------- ----------
250,254 29,410 -- 279,664
----------- --------- ----------- ----------
Total...................................................... 999,374 164,654 49,111 1,213,139
----------- --------- ----------- ----------
----------- --------- ----------- ----------
</TABLE>
Other Facilities consists primarily of leased space of abandoned facilities.
Approximately 151,569 square feet of the Other Facilities have been sublet to
others and an additional 13,085 square feet has been vacant since September
1996. The Company also leases standard office space for its sales and service
centers in a variety of locations. The Company considers its facilities adequate
for its present needs and does not believe that it would experience any
difficulty in replacing any of its present facilities if any of its current
agreements were terminated.
LEGAL PROCEEDINGS
The Company and its subsidiaries are potential or named defendants in
several lawsuits and claims arising in the ordinary course of business. While
the outcome of such claims, lawsuits or other proceedings against the Company
cannot be predicted with certainty, management expects that such liability, to
the extent not provided for through insurance or otherwise, will not have a
material adverse effect on the financial statements of the Company.
DTSC MATTERS
The California Department of Toxic Substances Control (the "DTSC") filed a
civil complaint on January 5, 1996, in Alameda County Superior Court against
Anacomp and Xidex that seeks civil penalties and injunctive relief pursuant to
the Hazardous Waste Control Law, Health and Safety Code Section 25100, ET SEQ.,
and California Code of Regulations, Title 22, Div. 4.5, Section 66001, ET SEQ.,
with respect to Anacomp's Sunnyvale, California facility (the "Sunnyvale
Facility"). Among other things, the DTSC contends that: (a) the Company has not
yet completed regulatory closure of the Sunnyvale Facility, which (the DTSC
contends) is required by law, (b) the closure actions that are required include
collection and analysis of soil samples, evaluation of the risks associated with
the contaminants found and, depending on those risks, removal, treatment and/or
disposal of contaminated soil and/or groundwater and (c) the Company has not
fully complied with the requirement to demonstrate financial assurance for
completing the required closure activities for the Sunnyvale Facility.
An order of the California Regional Water Quality Control Board, San
Francisco Bay Region (the "RWQCB") is also in effect with respect to the
Sunnyvale Facility (the "RWQCB Order"). The RWQCB contends that the Company is
obligated to characterize and cleanup environmental contamination at the
Sunnyvale Facility pursuant to the RWQCB Order. The Company's consultants
submitted to the RWQCB a Remedial Action Plan for addressing environmental
contamination at the Sunnyvale Facility that estimates potential environmental
costs of as much as $998,000 for soil cleanup and $1,842,000 for groundwater
cleanup, for total cleanup costs of $2,840,000. The DTSC and the RWQCB estimate
the Company's environmental cleanup liabilities for the Sunnyvale Facility will
total $3,453,900, and possibly as much as $5,008,155.
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The DTSC and the RWQCB also contend that: (a) all expenditures necessary to
comply with environmental laws are administrative expenses that the Company is
required to incur during the pendency of the Chapter 11 Cases; and (b) to the
extent the Company is required to hire professionals to comply with these
obligations, the Company must seek bankruptcy court authorization for such
expenditures, in addition to the authorization already received to pay holders
of trade claims.
The Company does not necessarily agree (and in most cases strongly
disagrees) with the contentions of the DTSC in its civil complaint and the RWQCB
Order. The Company has filed an answer to the DTSC complaint, and contends that
DTSC's civil penalties action is enjoined. On June 21, 1996, the Company filed
in the United States Bankruptcy Court for the District of Delaware ("Bankruptcy
Court") a limited objection to DTSC's $300,000 civil environmental penalty claim
and alternatively a request to equitably subordinate the claim to the allowed
claims of all the Company's creditors. The Company reserved its rights to object
to the other claims of RWQCB against the Company. RWQCB then filed a motion
requesting the Bankruptcy Court to abstain from exercising its jurisdiction over
the civil penalty claim or, alternatively, to dismiss for lack of jurisdiction.
The Company has opposed RWQCB's motion, and a hearing on the motion has been
continued.
CUSTOMS CLAIM
On or about May 26, 1996, the United States Customs Service ("Customs")
filed a Notice of Appeal from the order confirming the Plan of Reorganization
(the "Confirmation Order") and also filed an emergency motion for a stay pending
the appeal of the entry of the Confirmation Order with the Bankruptcy Court. On
May 31, 1996, the Bankruptcy Court held a hearing on the Bankruptcy Court stay
motion. After having reviewed legal briefs submitted by the parties and oral
argument, the Bankruptcy Court denied the stay motion.
On May 31, 1996 Customs filed in the United States District Court for the
District of Delaware an emergency motion for a stay pending the appeal of the
Confirmation Order and related memorandum of law. The Company filed an
opposition to the stay motion and related memorandum of law. On or about October
24, 1996, the District Court stay motion was denied as moot. On or about July
10, 1996 Customs filed its brief in support of its appeal of the order
confirming the Plan of Reorganization. The Company's brief was filed on July 24,
1996.
On June 28, 1996, Customs filed two proofs of claim, in the amounts of
$2,482,081.00 and $358,255.74, in the Bankruptcy Court against the Company. On
August 26, 1996, the Company objected to these two proofs of claim, seeking the
disallowance of the claims in their entirety.
On or about November 1, 1996, Customs filed a motion to defer the resolution
of its claims to the Court of International Trade and a motion for permission to
resolve the Company's pending administrative protests. On November 15, 1996, the
Company filed a motion for summary judgment seeking to disallow Customs claims
in their entirety. All three motions are still pending.
CONTRACT CLAIM
In September 1996, Smith Barney Inc. ("Smith Barney") filed suit in the
United States District Court for the Northern District of California seeking
approximately $2.3 million in additional fees which Smith Barney alleges it
earned for services Smith Barney provided in connection with the Company's
financial restructuring. The Company believes that the Smith Barney claim is
without merit and intends to vigorously defend against the claim.
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MANAGEMENT
The current directors and executive officers of the Company, and their ages
and positions are listed in the following table.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------------------------- --- -----------------------------------------------------
<S> <C> <C>
P. Lang Lowrey III................................... 43 Chief Executive Officer and Chairman of the Board
Ralph W. Koehrer..................................... 52 President and Chief Operating Officer
Donald L. Viles...................................... 50 Executive Vice President and Chief Financial Officer
Jeffrey R. Cramer.................................... 43 Senior Vice President--Business Development
Ray L. Dicasali...................................... 48 Senior Vice President and Chief Technology Officer
Barry L. Kasarda..................................... 53 Senior Vice President--Manufacturing and Materials
Kevin M. O'Neill..................................... 42 Senior Vice President--Global Marketing
William C. Ater...................................... 57 Vice President, Chief Administrative Officer and
Secretary
Jeffrey S. Withem.................................... 37 Vice President--Planning and Communications and Chief
of Staff
Thomas L. Brown...................................... 41 Vice President and Treasurer
K. Gordon Fife....................................... 51 Vice President--Tax
George C. Gaskin..................................... 37 Vice President--Legal and Assistant Secretary
Hasso Jenss.......................................... 53 President--European Group
Richard V. Keele..................................... 47 President--Data/Ware Group
Gary M. Roth......................................... 54 President--International Group
Thomas R. Simmons.................................... 50 President--U.S. Group
Peter Williams....................................... 44 President--Magnetics Group
Talton R. Embry...................................... 50 Director
Darius W. Gaskins, Jr................................ 59 Director
Jay P. Gilbertson.................................... 36 Director
Richard D. Jackson................................... 60 Director
George A. Poole, Jr.................................. 65 Director
Lewis Solomon........................................ 63 Director
</TABLE>
The business experience of each director and executive officer for the past
five years is described below. The current directors of the Company were elected
February 3, 1997 and will hold office until the next annual meeting of
stockholders of the Company. Each executive officer is elected for a term of one
year and holds office until his successor is chosen and qualified or until his
death, resignation or removal.
P. LANG LOWREY III was elected Chairman of the Board on June 4, 1996. Mr.
Lowrey was elected President and Chief Operating Officer in May 1995 and
subsequently assumed the duties of Chief Executive Officer, effective October 1,
1995. Prior to that, he served as Vice President--Magnetics Group from November
1992 to May 1995. He served from October 1990 to October 1992 as Vice
President-- Worldwide Marketing Division.
RALPH W. KOEHRER was elected President and Chief Operating Officer
(effective January 6, 1997) on December 10, 1996. Prior to joining the Company,
Mr. Koehrer was with Automatic Data Processing, Inc. ("ADP") for eleven years,
most recently as Corporate Vice President of ADP and as President of ADP's
Information and Processing Services division.
DONALD L. VILES was elected Executive Vice President and Chief Financial
Officer effective March 1, 1996. From October 1985 to March 1996, he served as
Vice President and Controller.
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JEFFERY R. CRAMER joined Anacomp in July 1996 with the Company's acquisition
of CPI, and was elected Senior Vice President--Business Development on February
3, 1997. Prior to joining Anacomp, Mr. Cramer had served as President of CPI for
more than the past five years.
RAY L. DICASALI was elected Senior Vice President and Chief Technology
Officer on June 3, 1996. From 1993 to 1996, Mr. Dicasali served as Senior Vice
President of Technology and Chief Information Officer of Flexel. From 1989 to
1993 Mr. Dicasali was Senior Vice President and Chief Information Officer of Dun
and Bradstreet Software.
BARRY L. KASARDA was elected Senior Vice President--Manufacturing and
Materials on June 3, 1996. From 1993 to 1996, he served as Vice President of
Materials. Prior to joining the Company, Mr. Kasarda served as Vice President
and General Manager of the ABEX Division of Parker Hannifin Corporation from
1989 to 1993.
KEVIN M. O'NEILL was elected Senior Vice President--Global Marketing on June
3, 1996. Mr. O'Neill had previously served as Vice President--Global Marketing
from 1995 until June 1996. From 1994 to 1995, Mr. O'Neill served as Vice
President of Marketing, Strategic Resellers Group. Prior to joining the Company,
Mr. O'Neill served as Senior Director, Marketing & Product Development for
Fujitsu-ICL Systems, Inc. from 1982 to 1994.
WILLIAM C. ATER was elected Vice President and Chief Administrative Officer
in February 1988. He has served as Secretary since March 1985.
JEFFREY S. WITHEM was elected Vice President, Planning and Communications
and Chief of Staff on June 3, 1996. Mr. Withem was Vice President--Strategic
Planning and Corporate Communications from October 1995 to June 1996. From 1993
to 1995, Mr. Withem served as Vice President--Marketing, for the Company's
Magnetics Group. Prior to that, he was Marketing Communications Manager for
Worldwide Marketing for the Company from 1990 to 1992.
THOMAS L. BROWN was elected Vice President and Treasurer on May 19, 1996.
From January 1995 to April 1996, Mr. Brown served as Corporate Controller of
Hurco Companies, Inc. Mr. Brown had previously served as Assistant Vice
President--Financial Reporting and Analysis for the Company from March 1991.
K. GORDON FIFE was elected Vice President--Tax in October 1985.
GEORGE C. GASKIN was elected Vice President--Legal and Assistant Secretary
on June 3, 1996. From June 1990 to June 1996, Mr. Gaskin served as Corporate
Counsel and Assistant Secretary.
RICHARD V. KEELE joined Anacomp in January 1997 with the Company's
acquisition of Data/Ware, and was elected President--Data/Ware Group on February
3, 1997. Mr. Keele had previously served as President of Data/Ware for more than
the past five years.
HASSO JENSS was elected President--European Group effective October 1, 1995.
Mr. Jenss served as Vice President--European Micrographics from November 1993 to
September 1995. Prior to that, he served from October 1989 to October 1993 as
Managing Director of Anacomp's German subsidiary.
GARY M. ROTH was elected President--International Group, effective October
1, 1995. Previously, Mr. Roth served as Vice President--Americas/Asia Division
from November 1992 to September 1995. From October 1991 to October 1992, he
served as Manager--LAAP/Canada Operations. From October 1988 to October 1991, he
served as Vice President--Data Systems Division.
THOMAS R. SIMMONS was elected President--U.S. Group, effective October 1,
1995. Previously, Mr. Simmons served as Vice President, Direct Sales
Division--East from November 1994 to September 1995. Prior to that, he served as
Vice President--Information Systems Division from November 1991 to November
1994. He served from 1987 to 1991 as Vice President--Micrographics Services
Division.
59
<PAGE>
PETER WILLIAMS was elected President--Magnetics Group, effective October 1,
1995. Previously, he served as General Manager--Magnetics European Group from
1993 to September 1995. Prior to that, he served from 1990 to 1993 as Vice
President, Wales Operations--Magnetics.
TALTON R. EMBRY has served as a director since June 4, 1996. Mr. Embry has
been Chairman and Chief Investment Officer of Magten Asset Management
Corporation ("Magten"), which is an investment advisory firm, since 1978. Mr.
Embry is also a director of Capsure Holdings Corp., Varco International Inc.,
TSX Corporation, Combined Broadcasting, Inc., BDK Holdings, Inc., Thermadyne
Holdings Corp. and Revco Drug Stores. In July 1992, Mr. Embry was elected
Co-Chairman of the Board of Directors of Revco Drug Stores.
On September 9, 1993, Magten Asset Management Corp. and Talton R. Embry,
without admitting or denying the allegations in a complaint by the Commission,
consented to the entry of judgments enjoining them from violating (and, in the
case of Mr. Embry, aiding and abetting violations of) anti-fraud and other
provisions of the Exchange Act, the Investment Advisor's Act of 1940, as
amended, and the Investment Company Act of 1940, as amended. The final judgment
to the action, SECURITIES AND EXCHANGE COMMISSION V. TALTON R. EMBRY AND MAGTEN
ASSET MANAGEMENT CORP., 93 Civ. 6294 (LMM) (filed September 9, 1993 S.D.N.Y.),
was entered on September 14, 1993.
The Commission's complaint alleged principally that Mr. Embry failed to
advise his clients of certain personal and proprietary trades relevant to the
clients' holdings and to comply with certain reporting requirements. As part of
the settlement, Mr. Embry made a $1 million payment for the benefit of certain
of Magten's clients.
At the same time, Mr. Embry, without admitting or denying the allegations in
an order filed by the Commission, settled a parallel Commission administrative
action against Mr. Embry. The administrative proceeding, the MATTER OF TALTON R.
EMBRY, Administrative Proceeding File No. 3-8153, was commenced by the
Commission on September 16, 1993. In the settlement, Mr. Embry agreed to the
appointment, for a period of five years, of an independent consultant approved
by the Commission to oversee Mr. Embry's personal securities transactions and to
conduct biannual compliance audits of Magten. Gerald Rath, Esq. of the law firm
of Bingham Dana & Gould, Boston, Massachusetts, has been appointed and approved
as the independent consultant.
On February 26, 1996, Magten and the Maryland Securities Commissioner
entered into a consent order whereby Magten paid a fine of $1,500. The Maryland
Securities Commissioner alleged that Magten effected investment advisory
transactions in Maryland prior to its registration as a Maryland investment
adviser. Magten is currently registered as an investment adviser in Maryland,
and its activities are not restricted.
DARIUS W. GASKINS, JR. has served as a director since June 4, 1996. Mr.
Gaskins has been a partner of High Street Associates, Inc. since 1991. Mr.
Gaskins also serves as a director of UNR Industries, Inc. and Northwestern Steel
and Wire Company.
JAY P. GILBERTSON has served as a director since June 4, 1996. Mr.
Gilbertson has been the Chief Financial Officer of HBO & Company since April
1993. From December 1991 until April 1993, he served as Corporate Controller of
HBO & Company.
RICHARD D. JACKSON has served as a director since June 4, 1996, and was
elected Vice Chairman of the Board of Directors on that date. Mr. Jackson has
been a consultant since 1995. He joined First Financial Management Corporation
in 1993 as Chief Operations Officer and Senior Executive Vice President. He was
elected Vice Chairman of First Financial Management Corporation in February 1995
and served in that position until August 1995. From 1990 to 1993, Mr. Jackson
served as Vice Chairman and Chief Executive Officer of the Georgia Federal Bank.
60
<PAGE>
GEORGE A. POOLE, JR. has served as a director since June 4, 1996. Mr. Poole
has been a private investor for more than the past five years and serves as a
director of US Home Corporation, Bucyrus International, Inc. and The Bibb
Company.
LEWIS SOLOMON has served as a director since June 4, 1996 and was elected
Lead Director on that date. Mr. Solomon has been Chairman of G&L Investments for
the past five years. He also serves as a director of Anadigics, Inc., Computer
Products, Inc., Cybernetics Services, Inc., ICTV, Inc., Terayon Corporation and
TSX Corporation.
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth as to the Company's
Chief Executive Officer and the other four most highly compensated executive
officers (collectively, the "Named Executive Officers") all compensation awarded
to, earned by, or paid to the Named Executive Officers for all services rendered
in all capacities to the Company and its subsidiaries for fiscal 1996, 1995 and
1994, except as otherwise specifically noted.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG
TERM
COMPEN-
SATION
-----------
ANNUAL COMPENSATION
--------------------------------- AWARDS
OTHER -----------
ANNUAL SECURITIES ALL OTHER
FISCAL COMPEN- UNDERLYING COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS SATION(1) OPTIONS(2) SATION
- ---------------------------------------- ----------- --------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
P. Lang Lowrey, III..................... 1996 $ 450,000 $ 742,152 $ 136,557(3) 40,000 --
Chairman of the Board, Chief Executive 1995 289,692 87,750 -- 375,000 --
Officer and President 1994 147,500 180,836 -- -- --
1996 206,500 41,595 -- 25,000 3,303(5)(6)
Thomas R. Simmons....................... 1995 206,500 66,374 -- -- 1,680(6)
President, U.S. Group 1994 147,500 137,011 -- -- 2,082(5)(6)
William C. Ater......................... 1996 168,000 37,544 134,697(4) 25,000 1,000(5)
Vice President, Chief Admin- 1995 154,000 21,975 -- -- -- 1,000(5)
istrative Officer and Secretary 1994 110,000 114,981 -- --
Donald L. Viles......................... 1996 157,446 45,980 -- 25,000 1,000(5)
Executive Vice President and 1995 167,846 5,000 -- -- --
Chief Financial Officer 1994 81,000 85,265 -- -- 1,000(5)
1996 170,352 29,576 -- 25,000 --
Hasso Jenss............................. 1995 172,771 72,006 -- -- --
President, European Group 1994 109,224 87,553 -- -- --
</TABLE>
- ------------------------
(1) Except as noted below, the aggregate amount of perquisites and other
personal benefits, securities or property, given to each Named Executive
Officer valued on the basis of aggregate incremental cost of the Company did
not exceed the lesser of $50,000 or 10% of the total of annual salary and
bonus for each such officer during fiscal 1996, 1995 and 1994.
(2) All stock option grants prior to June 4, 1996 were canceled as of that date.
(3) Includes $63,894 in relocation expenses and $62,410 in income tax assistance
for certain relocation expense reimbursements.
(4) Includes $69,786 in relocation expenses and $58,242 in income tax assistance
for certain relocation expense reimbursements.
(5) These figures include a $1,000 contribution per year made by the Company to
the Anacomp Savings Plus Plan for fiscal 1996 and fiscal 1994 for each of
Messrs. Simmons, Ater and Viles.
(6) Includes, $2,303, $1,680 and $1,082 in imputed interest in fiscal 1996, 1995
and 1994, respectively, on Mr. Simmons' loan from the Company. The interest
is calculated on the basis of the applicable federal rate computed by the
Internal Revenue Service.
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<PAGE>
STOCK OPTIONS
As indicated in the Summary Compensation Table, stock option grants were
made to the Named Executive Officers during fiscal 1996. The following table
sets forth additional information concerning said grants during fiscal 1996.
OPTION GRANTS IN FISCAL 1996
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
NUMBER OF % OF TOTAL GRANT- ASSUMED ANNUAL RATES OF
SECURITIES OPTIONS DATE STOCK PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE MARKET 10-YEAR OPTION TERM(1)(2)
OPTIONS EMPLOYEES IN PRICE PRICE EXPIRATION -------------------------------
NAME GRANTED FISCAL YEAR PER SHARE PER SHARE DATE 0% 5% 10%
- ---------------------------- ----------- --------------- ----------- ----------- ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
P. Lang Lowrey.............. 40,000(3) 4.22% $ 4.63 $ 8.125 08/22/2006 139,800 344,156 657,744
Thomas R. Simmons........... 25,000(3) 2.64% 4.63 8.125 08/22/2006 87,375 215,098 411,090
William C. Ater............. 25,000(3) 2.64% 4.63 8.125 08/22/2006 87,375 215,098 411,090
Donald L. Viles............. 25,000(3) 2.64% 4.63 8.125 08/22/2006 87,375 215,098 411,090
Hasso Jenss................. 25,000(3) 2.64% 4.63 8.125 08/22/2006 87,375 215,098 411,090
</TABLE>
- ------------------------
(1) The figures shown are potential future undiscounted values based on actual
option term and annual compounding at the applicable rate. Potential
realizable value equals stock price at end of option term less exercise
price, times the number of options granted.
(2) If the assumed annual rate of stock price appreciation of 0%, 5% or 10% per
year should occur, the market value per share of Common Stock at the end of
the ten-year option term would be $8.125, $13.2339 or $21.0736,
respectively.
(3) Of the options granted, one-fourth vest on June 30, 1997, one-fourth vest on
June 30, 1998, one-fourth vest on June 30, 1999 and one-fourth vest on the
earlier of (a) June 30, 2003 or (b) the date, if any, on which it is first
determined that the Company has met at least 95% of its EBITDA goal for
fiscal 1997, 1998 and 1999 combined, as such goal is described in the
Company's Third Amended Joint Plan of Reorganization. In certain
circumstances, pursuant to employment contracts, options may vest sooner
than indicated.
The following table sets forth information regarding all options exercised
during fiscal 1996 or held at September 30, 1996 by the Named Executive
Officers.
AGGREGATED OPTION EXERCISES IN FISCAL 1996 AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-
ACQUIRED VALUE OPTIONS AT FY-END MONEY OPTIONS AT FY-END
NAME ON EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
- ------------------------------------- ----------------- ------------- ----------------------- --------------------------
<S> <C> <C> <C> <C>
P. Lang Lowrey....................... 0 $ 0 0/40,000 $ 0/$144,800
Thomas R. Simmons.................... 0 0 0/25,000 0/ 90,500
William C. Ater...................... 0 0 0/25,000 0/ 90,500
Donald L. Viles...................... 0 0 0/25,000 0/ 90,500
Hasso Jenss.......................... 0 0 0/25,000 0/ 90,500
</TABLE>
- ------------------------
(1) Based on the September 30, 1996 closing price of $8.25 on the Nasdaq
National Market.
62
<PAGE>
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held 24 meetings in fiscal 1996, three
of them subsequent to June 4, 1996. No incumbent director attended less than 75%
of the meetings held by the Board of Directors and the committees on which he
served. The Board of Directors of the Company has an Audit Committee, a
Compensation Committee and an Executive Committee. The Board of Directors does
not have a nominating committee but has assigned the functions of such a
committee to the Compensation Committee.
The members of the Company's Audit Committee during fiscal 1996 were, until
June 4, 1996, Messrs. Roger S. Palamara, Richard E. Neal, Paul G. Roland and
Frederick W. Zuckerman and, from June 4, 1996 to the present, Messrs. Poole
(Chairman), Gilbertson and Solomon. The Audit Committee met one time during
fiscal 1996. The principal duties assigned to the Audit Committee are to
recommend to the Board of Directors the accounting firm to be selected as
independent accountants of the Company and to meet with the Company's
independent accountants after completion of the annual audit and their rendering
of their opinion as a result thereof, to discuss their comments thereon and the
Company's accounting methods and procedures as the Audit Committee deems
appropriate.
The members of the Company's Compensation Committee during fiscal 1996 were,
until June 4, 1996, Messrs. Palamara, Neal, Roland, Zuckerman and Clark A.
Johnson and, from June 4, 1996 to the present, Messrs. Embry (Chairman), Gaskins
and Jackson. The Compensation Committee met five times during fiscal 1996. The
Compensation Committee determines the compensation and benefits of the Chief
Executive Officer and other executive officers of the Company. It is also
responsible for evaluating the performance of existing members of the Board of
Directors and for making recommendations on new candidates for membership on the
Board of Directors. The Compensation Committee also oversees the Company's stock
option, employee stock purchase and other stock-based plans.
The members of the Company's Executive Committee during fiscal 1996 were,
from June 4, 1996 to the present, Messrs. Jackson (Chairman), Lowrey and
Solomon. The Executive Committee met one time during fiscal 1996. The Executive
Committee has and may exercise all the powers of the Board of Directors during
the intervals between meetings of the Board of Directors. It is also responsible
for reviewing possible acquisitions, mergers, joint ventures, partnerships and
other entries into new technologies.
DIRECTOR COMPENSATION
Directors who are not employees of the Company receive $1,250 for each
directors and committee meeting attended in person, $1,000 for each such meeting
attended by telephone and an annual retainer of $12,500. Employee directors
receive no fees. Each of the non-employee directors was granted options in
November 1996 to purchase 5,000 shares of Common Stock for such director's first
year of service and in February 1997 to purchase 20,000 shares of Common Stock
vesting in equal yearly installments over four years. In addition, effective
June 4, 1996, the non-employee members of the Executive Committee will receive a
retainer of $40,000 per year, payable $10,000 each quarter. From November 1995
to June 1996, Paul G. Roland as Chairman of the Board of Directors received
additional compensation of $3,500 per month, with a maximum total annual
compensation of $75,000.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee of the Board of Directors was,
during fiscal 1996, an officer or employee of the Company or any of its
subsidiaries, or was formerly an officer of the Company or any of its
subsidiaries, or had any relationships requiring disclosure by the Company.
63
<PAGE>
EMPLOYMENT CONTRACTS
With the exception of Mr. Jenss, the Named Executive Officers who continue
to be employed by the Company are party to employment agreements with the
Company. Set forth below is a brief description of each such agreement.
P. LANG LOWREY III entered into an Amended and Restated Employment Agreement
with the Company effective as of October 1, 1996, with an initial term of one
year and renewable thereafter for additional one-year terms. Mr. Lowrey also
entered into a covenant not to compete with the Company for a period of one year
following any termination of employment and not to solicit the Company's
customers for a period of two years following any termination of employment.
Pursuant to the terms of his agreement, Mr. Lowrey's compensation plan for
fiscal 1997 is composed of (a) a base salary of $500,000, (b) an area profit
bonus up to $133,333 paid monthly equal to year-to-date actual performance of
the Company's adjusted net income as a percentage of year-to-date quota for the
Company's adjusted net income, (c) a strategic focus bonus up to $100,000 paid
quarterly based on defined strategic corporate revenue goals, (d) an asset
management bonus up to $50,000 paid quarterly based on the Company's asset
management targets and (e) a corporate EBITDA bonus up to $50,000 paid after
year-end and, with the exception of the asset management bonus, may be greater
if goals are exceeded with a maximum possible total performance bonus of
$616,666.
Mr. Lowrey also has been granted, in addition to the options described above
under "Option Grants in Fiscal 1996," options under the 1996 Long-Term Incentive
Plan to acquire 190,679 shares of the Company's Common Stock at an exercise
price of $7.95 per share (the fair market price on October 1, 1996, the first
day of his employment under this agreement).
Mr. Lowrey's employment agreement further provides that, in the event of a
merger or consolidation where the Company is not the surviving company, or a
transfer of all or substantially all of the Company's assets, in either case if
the surviving or transferee company does not agree to be bound by the terms of
the employment agreement, or in the event of a change in control of the Company,
Mr. Lowrey may elect to treat his employment agreement as terminated and receive
a severance allowance equal to his prior 24 months compensation, including bonus
and benefits, but not to exceed one million dollars and the immediate vesting of
previously awarded but unvested options. In addition, Mr. Lowrey is entitled to
receive such severance allowance and the accelerated vesting of options under a
variety of other circumstances, but excluding termination for cause, his
voluntary resignation after the initial term of the agreement or his decision
not to renew the agreement at the end of its initial term or any renewal term.
RALPH W. KOEHRER entered into an Employment Agreement with the Company
effective as of January 6, 1997, with an initial term of two years and
automatically renewable thereafter for additional one-year terms. Mr. Koehrer
also entered into a covenant not to compete with the Company while an employee,
or as a consultant to the Company after any termination of employment, and not
to solicit the Company's customers for a period of two years following any
termination of employment.
Pursuant to the terms of his agreement, Mr. Koehrer's compensation plan for
fiscal 1997 is composed of (a) a base salary of $240,000, (b) a maximum annual
bonus opportunity of $160,000, payable monthly, quarterly or after year-end and
(c) a one-time relocation bonus of $150,000, one-half payable on January 6, 1997
and one-half payable upon his permanent relocation to Poway, California.
Mr. Koehrer also has been granted 85,000 incentive stock options to be
awarded at date of hire and 42,500 incentive stock options to be awarded after
two years of employment.
Mr. Koehrer's employment agreement further provides that, in the event of a
merger or consolidation where the Company is not the surviving company, or a
transfer of all or substantially all of the Company's assets, in either case if
the surviving or transferee company does not agree to be bound by the terms of
the employment agreement, or in the event of a change in control of the Company,
Mr. Koehrer may elect to
64
<PAGE>
treat his employment agreement as terminated and receive a Severance Allowance
of, INTER ALIA, $200,000 during the first year of the agreement and $400,000 in
the second year or any renewal term thereafter, which shall be in addition to
the regular compensation and benefits that he is entitled to receive up to the
date on which his employment terminates. In addition, Mr. Koehrer is entitled to
receive such severance allowance and the accelerated vesting of options under a
variety of other circumstances, but excluding termination for cause or his
voluntary resignation upon 90 days advance notice.
THOMAS R. SIMMONS entered into a three-year employment agreement with the
Company which expired on September 30, 1995, and which was subsequently renewed
for successive one-year terms expiring on September 30, 1996 and September 30,
1997. Mr. Simmons also entered into a covenant not to compete with the Company
for a period of two years following any termination of employment and not to
solicit the Company's customers for a period of two years following any
termination of employment.
Mr. Simmons' compensation plan for fiscal 1997 is composed of (a) a base
salary of $206,500, (b) an area profit bonus up to $44,477 paid monthly equal to
year-to-date actual performance of divisional EBIT as a percentage of
year-to-date quota, (c) a strategic focus bonus up to $33,358 paid quarterly
based on defined divisional strategic products and services revenue, (d) an
asset management bonus up to $16,679 paid quarterly based on the Company's asset
management targets and (e) a corporate EBITDA bonus up to $16,679 paid after
year-end based on the Company's EBITDA goal. All bonuses paid on a monthly or
quarterly basis are adjusted at year-end and, with the exception of the asset
management bonus, may be greater if goals are exceeded with a maximum possible
total performance bonus of $189,028.
Mr. Simmons' employment agreement provides that, in the event of a merger or
consolidation or a transfer of substantially all of the Company's assets or a
change in control of the Company, Mr. Simmons will receive a severance allowance
equal to his prior twelve months compensation if he is subsequently terminated
without cause or if he deems a termination to have occurred due to a demotion,
transfer or reduction in compensation. Mr. Simmons is also entitled to such
severance allowance if he is terminated without cause by the Company or if he
deems a termination to have occurred due to a demotion, transfer or reduction in
compensation.
In an addendum to Mr. Simmons' employment agreement entered into on February
24, 1997, the Company agreed to forgive a $35,000 outstanding loan made to Mr.
Simmons by the Company and to pay Mr. Simmons' additional tax liability incurred
due to such forgiveness. In exchange, Mr. Simmons agreed to relocate to San
Diego, California no later than September 30, 1997. However, if Mr. Simmons
voluntarily resigns or is terminated with cause prior to such date, Mr. Simmons
will pay the Company the amount of the loan plus the amount paid him for his
additional tax liability. The addendum also provides that if Mr. Simmons is
entitled to termination payments set forth in the employment agreement, the
Company will enter into a one-year consulting agreement with Mr. Simmons.
WILLIAM C. ATER entered into a three-year employment agreement with the
Company which expired on September 30, 1995, and which was subsequently renewed
for successive one-year terms expiring on September 30, 1996 and September 30,
1997. Such agreement was amended on June 25, 1996. Mr. Ater also entered into a
covenant not to compete with the Company for a period of one year following any
termination of employment and not to solicit the Company's customers for a
period of two years following any termination of employment.
Mr. Ater's compensation plan for fiscal 1997 is composed of (a) a base
salary of $168,000, (b) an area profit bonus up to $36,185 paid monthly equal to
year-to-date actual performance of the Company's adjusted net income as a
percentage of year-to-date quota for the Company's adjusted net income, (c) a
strategic focus bonus up to $27,139 paid quarterly based on defined strategic
corporate revenue goals, (d) an asset management bonus up to $13,569 paid
quarterly based on the Company's asset management targets and (e) a corporate
EBITDA bonus up to $13,569 paid after year-end based on the Company's EBITDA
goal. All bonuses paid on a monthly or quarterly basis are adjusted at year-end
and, with the
65
<PAGE>
exception of the asset management bonus, may be greater if goals are exceeded
with a maximum possible total performance bonus of $153,786.
Mr. Ater's employment agreement provides that, in the event of a merger or
consolidation or a transfer of substantially all of the Company's assets or a
change in control of the Company, Mr. Ater will receive a severance allowance
equal to his prior twenty-four months compensation if he is subsequently
terminated without cause or if he deems a termination to have occurred due to a
demotion, transfer or reduction in compensation. Mr. Ater is also entitled to
such severance allowance if he is terminated without cause by the Company or if
he deems a termination to have occurred due to a demotion, transfer or reduction
in compensation.
DONALD L. VILES entered into an employment agreement with the Company
effective February 15, 1996, which expires on September 30, 1998. Mr. Viles also
entered into a covenant not to compete with the Company for a period of one year
following any termination of employment and not to solicit the Company's
customers for a period of two years following any termination of employment.
Mr. Viles' compensation plan for fiscal 1997 is composed of (a) a base
salary of $168,000, (b) an area profit bonus up to $36,185 paid monthly equal to
year-to-date actual performance of the Company's adjusted net income as a
percentage of year-to-date quota for the Company's adjusted net income, (c) a
strategic focus bonus up to $27,139 paid quarterly based on defined strategic
corporation revenue goals, (d) an asset management bonus up to $13,569 paid
quarterly based on the Company's asset management targets and (e) a corporate
EBITDA bonus up to $13,569 paid after year-end based on the Company's EBITDA
goal. All bonuses paid on a monthly or quarterly basis are adjusted at year end
and, with the exception of the asset management bonus, may be greater if goals
are exceeded with a maximum possible total performance bonus of $153,786.
Mr. Viles' employment agreement provides that, in the event of a merger or
consolidation or a transfer of substantially all of the Company's assets or a
change in control of the Company or a discontinuation of the Company's business,
Mr. Viles will receive a severance allowance equal to his prior twenty-four
months compensation if he elects to treat any such occurrence as a termination
of his agreement. Mr. Viles is also entitled to such severance allowance if he
is terminated by mutual agreement or without cause by the Company or if he deems
a termination to have occurred due to a demotion, transfer or reduction in
compensation.
TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL ARRANGEMENTS
As discussed above, the employment agreements of Messrs. Lowrey, Koehrer,
Simmons, Ater and Viles provide for certain payments in the event of a
termination of employment or a change of control of the Company. Mr. Jenss is
entitled to termination pay and other benefits as provided by applicable German
labor laws.
66
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of March 31, 1997,
concerning beneficial ownership of the Common Stock by (a) each stockholder
known by the Company to own beneficially more than 5% of the outstanding shares
of Common Stock, (b) each of the Company's directors, (c) each Named Executive
Officer and (d) all directors and executive officers of the Company as a group.
Unless otherwise noted in the footnotes to the table, the stockholders named in
the table have sole voting and investment power with respect to all shares of
Common Stock indicated as being beneficially owned by the stockholder.
<TABLE>
<CAPTION>
SHARES OF STOCK
BENEFICIALLY PERCENT
NAME OWNED OF CLASS
- ----------------------------------------------------------------------------------- ---------------- -----------
<S> <C> <C>
Magten Asset Management Corp....................................................... 4,671,158(1) 34.1%
35 East 21st Street
New York, New York 10010
Franklin Resources, Inc............................................................ 1,444,670(2) 10.5
777 Mariners Island Boulevard
San Mateo, California 94403
Merrill Lynch & Co., Inc........................................................... 1,407,670(3) 10.3
World Financial Center, North Tower
250 Vesey Street
New York, New York 10281
State Street Research & Management Company......................................... 1,082,467(4) 7.9
One Financial Center
Boston, Massachusetts 02111
P. Lang Lowrey, III................................................................ -- *
Talton R. Embry.................................................................... -- *
Darius W. Gaskin, Jr............................................................... -- *
Jay P. Gilbertson.................................................................. -- *
Richard D. Jackson................................................................. 830 *
George A. Poole, Jr................................................................ 2,500 *
Lewis Solomon...................................................................... 5,000 *
Thomas R. Simmons.................................................................. -- *
William C. Ater.................................................................... 1(6) *
Donald L. Viles.................................................................... 85(7) *
Hasso Jenss........................................................................ 17(8) *
All directors and executive officers as group (23 persons)......................... 8,605(9) *
</TABLE>
- ------------------------
* Less than 1%.
(1) Magten may be deemed to be the beneficial owner of shares owned by its
investment advisory clients. Magten has shared voting power (with its
investment advisory clients and Mr. Embry) and shared dispositive power
(with its investment advisory clients and Mr. Embry) with respect to
3,737,449 and 4,671,158, respectfully, shares of the Common Stock. All of
such shares, which in the aggregate represent 34.1% of the Company's voting
securities, are beneficially owned by the investment advisory clients of
Magten and for which Magten disclaims beneficial ownership. The following
investment advisory clients of Magten have an interest in more than 5% of
the shares of Common Stock: General Motors Employees Domestic Group Pension
Trust, Bankers Trust as Trustee for the Hughes Master Retirement Trust, and
Los Angeles Fire and Police Pension Systems--Fund 2525.
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(2) Franklin Resources, Inc. has sole voting power and shared dispositive power
with respect to 1,444,670 shares of the Common Stock, for which Franklin
disclaims beneficial ownership.
(3) Merrill Lynch & Co., Inc. has shared voting power and shared dispositive
power with respect to 1,407,670 shares of the Common Stock, for which
Merrill Lynch disclaims beneficial ownership.
(4) Includes 32,284 shares issuable upon the exercise of the Company's Common
Share Warrants. State Street Research & Management Company is a wholly-owned
subsidiary of Metropolitan Life Insurance Company. State Street Research &
Management Company and Metropolitan Life Insurance Company disclaim
beneficial ownership of all of the above shares.
(5) Mr. Embry is a director, executive officer and sole stockholder of Magten
Asset Management Corp., a registered investment advisor. Mr. Embry may be
deemed to be the beneficial owner of shares owned by Magten and its
investment advisory clients as discussed in Note (1) above. Mr. Embry, as
trustee of four pension trusts for the benefit of current and former
employees of Magten (including himself), also has sole voting power and
dispositive power with respect to 53,349 shares of Common Stock held by such
trusts and sole voting and investment power with respect to 2,616 of Common
Stock held by his minor children. Mr. Embry disclaims beneficial ownership
of all of the above shares.
(6) Represents one share issuable upon the exercise of the Company's Common
Share Warrants.
(7) Includes 40 shares issuable upon the exercise of the Company's Common Share
Warrants.
(8) Represents seventeen shares issuable upon the exercise of the Company's
Common Share Warrants.
(9) Includes 60 shares issuable upon the exercise of the Company's Common Share
Warrants. Excludes shares beneficially owned by Mr. Embry, as to which Mr.
Embry disclaims beneficial ownership. See Note (5) above.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There are no relationships and related transactions that require disclosure.
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DESCRIPTION OF THE SENIOR SECURED DEBT
The following description of the Senior Secured Debt does not purport to be
complete and is subject to, and qualified in its entirety by reference to, all
of the provisions of the agreements related to the Senior Secured Debt.
GENERAL
The Senior Secured Debt is evidenced by, among other things, the Credit and
Guarantee Agreement, dated as of February 28, 1997 (the "Credit Facility"),
among the Company, certain foreign subsidiaries of the Company, several banks
and other financial institutions (the "Senior Secured Lenders"), Lehman
Commercial Paper Inc., as arranger and syndication agent, and The First National
Bank of Chicago, as administrative agent for the Senior Secured Lenders (in its
individual capacity, "First Chicago"). The Credit Facility provides for a $55
million term loan facility (the "Term Facility") and a $25 million revolving
credit facility (the "Revolving Facility"). As of February 28, 1997, $55 million
was outstanding under the Term Facility, and no amounts were outstanding under
the Revolving Facility. Up to $10 million of the Revolving Facility is available
for loans denominated in certain foreign currencies ("Multicurrency Loans"), and
up to $10 million of the Revolving Facility is available for letters of credit.
INTEREST
The Company may elect to have loans under the Term Facility or the Revolving
Facility bear interest at (a) the Alternate Base Rate (as defined) plus 2% or
(b) the Eurodollar Rate (as defined), or in the case of Multicurrency Loans, the
Eurocurrency Rate (as defined), plus 3%. Interest is payable quarterly and at
the end of the Interest Period (as defined in the Credit Facility). The
"Alternate Base Rate" for any day means the higher of (i) the corporate base
rate of interest announced by First Chicago and (ii) the federal funds rate
published by the Federal Reserve Bank of New York on the next business day plus
1/2%. The "Eurodollar Rate" for any Interest Period means (A) the applicable
London interbank offered rate for deposits in U.S. dollars two business days
prior to the first day of the Interest Period divided by (B) one minus the
"Eurocurrency Liabilities" under Regulation D of the Board of Governors of the
Federal Reserve System. The "Eurocurrency Rate" for any Interest Period means
the rate at which First Chicago offers to place deposits in the applicable
foreign currency with first-class banks in the London interbank market two
business days prior to the first day of the Interest Period.
SECURITY AND GUARANTORS
As security for the indebtedness of the Company to the Senior Secured
Lenders, the Company has granted to them a first priority security interest in
all of its tangible and intangible assets (including intellectual property, real
property and all of the capital stock of each of the Company's direct or
indirect domestic subsidiaries and 65% of the capital stock of each of the
Company's material direct foreign subsidiaries). All of the Company's
obligations under the Senior Secured Debt are unconditionally guaranteed by the
Company's direct or indirect domestic subsidiaries.
TERM
The Term Facility is repayable in thirteen quarterly installments commencing
March 31, 1998, with the final installment due on March 31, 2001. The Revolving
Facility terminates on February 28, 2001.
CERTAIN COVENANTS
In addition to customary covenants, the Credit Facility requires that the
Company: (a) maintain certain ratios of Consolidated EBITDA (as defined in the
Credit Facility) to Consolidated Interest Expense (as defined in the Credit
Facility) and certain ratios of Consolidated Indebtedness (as defined in the
Credit Facility) to Consolidated EBITDA, (b) not incur any indebtedness other
than the Notes,
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indebtedness under the Credit Facility and certain other indebtedness, (c) not
permit any lien to exist on any of its property, assets or revenues, except the
liens in favor of the Senior Secured Lenders, existing liens and certain other
liens and (d) not to incur any guarantee obligations, except the guarantee
obligations related to the Senior Secured Debt and certain other guarantee
obligations.
EVENTS OF DEFAULT
The Credit Facility contains certain events of default, including, without
limitation, the following: (a) any failure by the Company or its subsidiary to
pay principal, interest or other obligations under the Credit Facility, (b) any
representation or warranty made by the Company or its subsidiaries in the Credit
Facility or related agreements proves to have been incorrect in any material
respect when made, (c) any default by the Company or its subsidiaries in the
observance or performance of covenants or other agreements contained in the
Credit Facility or related agreements, (d) certain events of bankruptcy or
insolvency of the Company or its subsidiaries, (e) the entering of a judgment or
decree against the Company or its subsidiaries involving an aggregate liability
of $2.5 million or more, which is not vacated, discharged, stayed or bonded
pending appeal within 30 days and (f) the occurrence of certain change of
control events.
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DESCRIPTION OF NOTES
The Old Notes were and the Exchange Notes will be issued under the
Indenture. The following summary, which describes certain material provisions of
the Indenture and the Notes, does not purport to be complete, and is subject to
the detailed provisions of, and is qualified in its entirety by reference to,
the provisions of the Indenture and the Notes, including the definition therein
of certain terms. A copy of the Indenture may be obtained from the Company. The
terms of the Notes include those set forth in the Indenture and those made part
of the Indenture by reference to the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act"), as in effect on the date of the Indenture. Wherever
particular provisions or definitions in the Indenture or the Notes are referred
to in this Prospectus, such provisions or definitions are incorporated by
reference. The definitions of certain capitalized terms used in the following
summary are set forth in "--Certain Definitions" below. Other capitalized terms
used but not defined in the following summary are defined in the Indenture. For
purposes of the following summary, the term "Company" refers to Anacomp, Inc.
and does not include its subsidiaries except for purposes of financial data
determined on a consolidated basis.
GENERAL
The Notes mature on April 1, 2004, and are in an aggregate principal amount
of $200,000,000. The Notes bear interest at the rate of 10 7/8% per annum
payable semi-annually on April 1 and October 1 of each year, beginning on
October 1, 1997, to the holders of record in whose name the Note (or any
predecessor Note) is registered at the close of business on the preceding March
1 or September 1, as the case may be. Interest is computed on the basis of a
360-day year comprised of twelve 30-day months. The interest rate on the Notes
is subject to increase in certain circumstances.
Principal of, and premium, if any, and interest on, the Notes will be
payable, and the Notes are exchangeable and transferable, at an office or agency
of the Trustee at One State Street, New York, New York 10004, or such other
office or agency permitted under the Indenture. The Notes will be issued only in
fully registered form, without coupons, in denominations of $1,000 or any
integral multiple thereof.
RANKING
The Notes are general unsecured obligations of the Company and are expressly
subordinated in right of payment to all existing and future Senior Indebtedness
of the Company, including the Company's obligations under the Credit Facility
and to all indebtedness and other obligations of the Company's Subsidiaries. As
of December 31, 1996 pro forma for the Old Notes Offering, the Redemption and
the Senior Secured Refinancing, the Company had approximately $56 million of
Senior Indebtedness, substantially all of which is secured by certain assets of
the Company and certain of its subsidiaries. The Notes will rank PARI PASSU with
any future Senior Subordinated Indebtedness and senior to all Subordinated
Indebtedness of the Company.
SUBORDINATION
The Company's payment of the principal of, interest on or any other amounts
due on the Notes is expressly subordinated in the right of payment to the prior
payment in full of Senior Indebtedness. The expressions "prior payment in full,"
"payment in full" and "paid in full" and any other similar term or phrase when
used herein with respect to Senior Indebtedness means the payment in full of
such Senior Indebtedness in cash or provision for such payment in cash or
otherwise in a manner satisfactory to the holders of the Senior Indebtedness.
Upon (i) the maturity of Senior Indebtedness, whether by lapse of time, upon
redemption or by acceleration or otherwise, or (ii) any default in the payment
of any amount due in respect of principal or interest in respect of Senior
Indebtedness, or (iii) any distribution or payment of assets or securities of
the Company upon any dissolution, winding up, liquidation or reorganization of
the Company of any kind or character, the holders of Senior Indebtedness will be
entitled to receive payment in full (or to have such payment duly provided for)
of the principal thereof and interest due thereon before the holders of the
Notes are entitled to receive any payment on account of the principal of
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or interest on the Notes. During the continuance of any Default or Event of
Default (other than a Default or Event of Default relating to payment of
principal or interest, either at maturity, upon redemption, by declaration or
otherwise) under any agreement governing Senior Indebtedness permitting
acceleration of the maturity thereof (whether or note such acceleration has
occurred) and upon giving of notice thereof, no payment may be made on the Notes
for a period of 179 days after the notice is given, but payments may thereafter
be resumed unless such payments are then prohibited by Article 9 of the
Indenture. Only one notice may be given effect within any period of 360
consecutive days and no more than one notice may be given with respect to any
continuing Default or Event of Default. If in any of the situations referred to
above, a payment is made to the Trustee or to any holder of Notes before all
Senior Indebtedness has been paid in full or provision has been made for such
payment, the payment to the Trustee or such holder of the Notes must be paid
over to the holders of Notes or their representative. The failure to make
payment on account of principal of or other interest on the Notes by reason of
such subordination will not prevent the occurrence of any Event of Default.
"Senior Indebtedness" means the principal of, interest (including, without
limitation, interest at the contract rate relating to such Senior Indebtedness
accruing after any proceeding or event referred to in clauses (viii) and (ix)
under "Events of Default" on, or any other amounts due with respect to, (i) the
Senior Secured Debt, (ii) any Refinancing Indebtedness Incurred in respect of
the Senior Secured Debt or in respect of any previous Refinancing Indebtedness
Incurred in respect of such Notes and (iii) any Indebtedness Incurred pursuant
to clause (a) (ii) of the first paragraph of the "Limitation on Indebtedness"
covenant. For purposes of the "Limitation on Sales of Assets and Restricted
Subsidiary Stock" covenant, the amount of consideration received by the Company
or any Restricted Subsidiary for the assumption of Senior Indebtedness by any
purchaser of the Company's property, assets or shares shall be equal to the face
value of such Senior Indebtedness.
By reason of such subordination, in the event of the insolvency of the
Company, creditors of the Company who are not holders of Senior Indebtedness,
including the holders of the Notes, may recover less, ratably, than holders of
Senior Indebtedness.
OPTIONAL REDEMPTION
Except as set forth below, the Notes will not be redeemable at the option of
the Company prior to April 1, 2000. On and after such date, the Notes will be
redeemable at the option of the Company, in whole or in part at any time and
from time to time, on not less than 45 days' nor more than 60 days' prior notice
mailed by first-class mail to each holder's registered address, at the
redemption prices set forth below (expressed as percentage of the principal
amount), plus accrued and unpaid interest (if any) to the date of redemption
(subject to the right of the Holders of record on the relevant date to receive
interest due on the related interest payment date):
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---------------------------------------------------------------------------------- -----------
<S> <C>
2000.............................................................................. 108.156%
2001.............................................................................. 105.438%
2002.............................................................................. 102.719%
2003 and thereafter............................................................... 100.000%
</TABLE>
At any time, or from time to time, on or prior to April 1, 2000 the Company
may, at its option, use the net cash proceeds of one or more Public Equity
Offerings to redeem up to 35% of the aggregate principal amount of Notes
originally issued at a redemption price equal to 110.875% of the principal
amount thereof, plus, in each case, accrued and unpaid interest to the date of
redemption; PROVIDED that at least $130 million of the aggregate principal
amount of Notes originally issued remains outstanding after any such redemption.
In order to effect the foregoing redemption with the proceeds of any Public
Equity Offering, the Company shall make such redemption not more than 60 days
after the consummation of any such Public Equity Offering.
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As used in the preceding paragraph, "Public Equity Offering" means a public
offering of Qualified Capital Stock of the Company pursuant to a registration
statement filed with the Commission in accordance with the Securities Act.
If less than all of the Notes are to be redeemed, the Trustee shall select
by such methods as the Trustee shall deem to be fair and appropriate the
particular Notes to be redeemed or any portion thereof that is an integral
multiple of $1,000.
The Notes will not have the benefit of a sinking fund.
CHANGE OF CONTROL
Pursuant to the Indenture, a "Change of Control" means the occurrence of any
of the following events: (i) any "person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act), other than an underwriter engaged in a
firm commitment underwriting in connection with a public offering of the Voting
Stock of the Company or a Restricted Subsidiary, is or becomes the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that
a Person will be deemed to have "beneficial ownership" of all shares that any
such Person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of more
than 50% of the total voting power of the Voting Stock of the Company; (ii)
during any period of two consecutive years, individuals who at the beginning of
such period constituted the Board of Directors of the Company (together with any
new directors whose election by such Board or whose nomination for election by
the shareholders of the Company was approved by a vote of a majority of the
directors of the Company then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of such
Board then in office; or (iii) the Company, either individually or in
conjunction with one or more of its Subsidiaries, sells, conveys, leases or
otherwise transfers, or one or more of such Subsidiaries sell, convey, lease or
otherwise transfer, all or substantially all the assets of the Company and the
Restricted Subsidiaries, taken as a whole, to any Person (other than a
Restricted Subsidiary).
In the event of a Change of Control, the Company will (i) upon such Change
of Control, notify the Trustee, who will in turn notify the holders of the
Notes, in writing of the occurrence of and the circumstances and relevant facts
regarding such Change of Control and (ii) make an offer to purchase (the "Change
of Control Offer") the Notes for cash at a purchase price equal to 101% of the
principal amount thereof, plus any accrued and unpaid interest thereon to the
Change of Control Purchase Date (as defined below) (such price, together with
such interest, the "Change of Control Purchase Price") on or before the date
specified in such notice, which date must be no earlier than 30 days nor later
than 60 business days after the occurrence of the Change of Control (the "Change
of Control Purchase Date"). The Change of Control Offer will remain open from
the time such offer is made until the Change of Control Purchase Date. The
Company will purchase all Notes properly tendered in the Change of Control Offer
and not withdrawn in accordance with the procedures set forth in such notice of
withdrawal delivered to the Trustee by the holder prior to or on the Change of
Control Purchase Date. The Change of Control Offer will state, among other
things, the procedures that holders of the Notes must follow to accept the
Change of Control Offer.
The occurrence of certain of the events which would constitute a Change of
Control could constitute a default under the Company's existing and future
indebtedness. In addition, the exercise by the holders of the Notes of their
right to require the Company to repurchase Notes could cause a default under
such indebtedness, even if the Change of Control itself does not, due to the
financial effect of such repurchase on the Company. Finally, if a Change of
Control Offer is made, there can be no assurance that the Company will have
sufficient funds or other resources to pay the Change of Control Purchase Price
for all the Notes that might be delivered by holders thereof seeking to accept
the Change of Control Offer. Moreover, as of the date of the Prospectus, after
giving effect to the sale of the Notes and the application of the estimated net
proceeds therefrom as described herein, the Company would not have sufficient
funds available to purchase all of the outstanding Notes pursuant to a Change of
Control Offer. In the event that
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the Company were required to purchase outstanding Notes pursuant to a Change of
Control Offer, the Company expects that it would need to seek third-party
financing to the extent it does not have available funds to meet its purchase
obligations. However, there can be no assurance that the Company would be able
to obtain such financing on favorable terms, if at all. In addition, the
Company's ability to purchase the Notes may be limited by other then-existing
borrowing agreements (including, without limitation, the Credit Facility), and
the existence of the Change of Control (or the financial effect of the required
repurchases by the Company) could cause a default under the Credit Facility or
other indebtedness of the Company and its Subsidiaries.
The Change of Control provisions described above may deter certain mergers,
tender offers and other takeover attempts involving the Company and, thus, the
removal of incumbent management. The Change of Control provisions will not
prevent a change in a majority of the members of the Board of Directors of the
Company which is approved by a majority of the then-present Board of Directors
of the Company. One of the events that constitutes a Change of Control under the
Indenture is a sale, conveyance, transfer or lease of all or substantially all
the property of the Company and its Subsidiaries, taken as a whole, to any
Person (other than a Restricted Subsidiary). The phrase "all or substantially
all" is subject to judicial interpretation depending on the facts and
circumstances of the subject transaction. The Indenture is governed by New York
law, and there is no established quantitative definition under New York law of
"substantially all" the assets of a corporation. Accordingly in certain
circumstances it may be unclear whether a Change of Control has occurred and
whether the Company may therefore be required to make a Change of Control Offer.
The Company will comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
in connection with the repurchase of Notes pursuant to any Change of Control
Offer. To the extent that the provisions of any securities laws or regulations
conflict with provisions relating to the Change of Control Offer, the Company
will comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under the Change of Control covenant by
virtue thereof.
CERTAIN COVENANTS
The Indenture contains, among others, the following covenants:
LIMITATION ON INDEBTEDNESS
(a) The Company will not be permitted to Incur any Indebtedness; PROVIDED,
HOWEVER, that: (i) the Company may Incur Indebtedness ranking on a parity with
or which is subordinated in right of payment to the Notes pursuant to the terms
of such Indebtedness or pursuant to a written agreement if no Default or Event
of Default shall have occurred and be continuing at the time of such Incurrence
or would occur as a consequence of such Incurrence and after giving pro forma
effect to such Incurrence, the Consolidated Coverage Ratio would be equal to at
least 1.75 to 1; and (ii) the Company may Incur Indebtedness senior in right of
payment to the Notes pursuant to the terms of such Indebtedness or pursuant to a
written agreement if no Default or Event of Default shall have occurred and be
continuing at the time of such Incurrence or would occur as a consequence of
such Incurrence and (A) after giving pro forma effect to such Incurrence, the
Consolidated Coverage Ratio would be at least equal to 2.5 to 1 or (B) after
such Incurrence, the total principal amount of such Indebtedness would not
exceed $80 million.
(b) Notwithstanding the foregoing, the Company may Incur the following
Indebtedness if no Default or Event of Default shall have occurred and be
continuing at the time of such Incurrence or would occur as a consequence of
such Incurrence (collectively, "Permitted Indebtedness"): (i) Indebtedness to be
outstanding on the Issue Date (including the Senior Secured Debt) and listed on
Schedule I of the Indenture; (ii) Indebtedness represented by the Notes; (iii)
Indebtedness (A) under Interest Rate Protection Agreements relating to
Indebtedness permitted hereunder entered into in the ordinary course of the
Company's financial management and not for speculative purposes; PROVIDED,
HOWEVER, that the notional amount of each such Interest Rate Protection
Agreement does not exceed the principal amount of the Indebtedness
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to which such Interest Rate Protection Agreement relates; or (B) under Currency
Exchange Protection Agreements entered into in the ordinary course of the
Company's financial management and not for speculative purposes; PROVIDED,
HOWEVER, in the case of either clause (A) or (B), any such Interest Rate
Protection Agreement or Currency Exchange Protection Agreement, as the case may
be, does not increase the Indebtedness of the Company outstanding at any time
other than as a result of fluctuations in the interest rates or exchange rates,
as the case may be, or by reason of customary fees, indemnities and compensation
payable thereunder; (iv) Indebtedness owing to and held by any Wholly Owned
Subsidiary; PROVIDED, HOWEVER, that any subsequent issuance or transfer of any
Capital Stock that results in any such Wholly Owned Subsidiary ceasing to be a
Wholly Owned Subsidiary or any subsequent transfer of any such Indebtedness
(except to the Company or another Wholly Owned Subsidiary) will be deemed, in
each case, to constitute the Incurrence of such Indebtedness by the issuer
thereof; (v) Indebtedness Incurred in connection with a prepayment of the Notes
pursuant to a Change of Control Offer; PROVIDED, HOWEVER, that the aggregate
principal amount of such Indebtedness does not exceed 101% of the aggregate
principal amount of the Notes prepaid; PROVIDED, FURTHER, HOWEVER, that such
Indebtedness (A) has an Average Life equal to or greater than the remaining
Average Life of the Notes and (B) does not mature prior to the Stated Maturity
of the Notes; (vi) Indebtedness in respect of Purchase Money Indebtedness or
Capital Lease Obligations directly Incurred by the Company; PROVIDED, HOWEVER,
that the sum of (A) the aggregate principal amount of such Purchase Money
Indebtedness incurred by the Company or by Restricted Subsidiaries as permitted
under clause (ii) of the definition of "Permitted Restricted Subsidiary
Indebtedness" and (B) the aggregate amount of Capital Lease Obligations Incurred
by the Company or Incurred by Restricted Subsidiaries as permitted under clause
(ii) of the definition of "Permitted Restricted Subsidiary Indebtedness" does
not at any one time outstanding exceed $20 million (such maximum permitted
amount to increase by $10 million on each anniversary of the Issue Date); (vii)
Indebtedness Incurred (A) in the ordinary course of business of the Company with
respect to trade credit made available to the Company in connection with the
obtaining of goods or services by the Company (including commercial letters of
credit, bankers' acceptances or accommodation Guarantees for the benefit of
trade creditors or suppliers), in each case for a period not to exceed 180 days,
in an amount not to exceed the purchase price for the goods or services for
which such credit is made available and which do not constitute obligations for
borrowed money, and (B) with respect to standby letters of credit, performance
bonds and surety bonds that do not constitute obligations for borrowed money
Incurred by the Company in the ordinary course of business relating to services
to be performed by or on behalf of the Company; (viii) Indebtedness in respect
of Guarantees by the Company of Indebtedness of any Restricted Subsidiary
permitted to be Incurred under the definition of "Permitted Restricted
Subsidiary Indebtedness"; (ix) Refinancing Indebtedness Incurred in respect of
Indebtedness Incurred pursuant to clause (i), (ii) or (v) above; and (x) in
addition to any Indebtedness permitted by clauses (i) through (ix) above, up to
an aggregate of (A) $25 million in principal amount of Indebtedness at any one
time outstanding minus (B) the principal amount of Indebtedness at such time
outstanding of any Restricted Subsidiaries permitted pursuant to clause (vi) of
the definition of "Permitted Restricted Subsidiary Indebtedness."
The Company will not directly or indirectly Incur any Indebtedness if the
proceeds thereof are used, directly or indirectly, to repay, prepay, redeem,
defease, retire, refund or refinance any Subordinated Obligations unless such
Indebtedness is subordinated to the Notes to at least the same extent as such
Subordinated Obligations.
LIMITATION ON RESTRICTED SUBSIDIARY INDEBTEDNESS AND PREFERRED STOCK
The Company shall not permit any Restricted Subsidiary directly or
indirectly to Incur any Indebtedness or issue any Preferred Stock unless (i) no
Default or Event of Default has occurred and is continuing at the time of such
Incurrence or would occur as a consequence of such Incurrence and (ii) such
Indebtedness or Preferred Stock is Permitted Restricted Subsidiary Indebtedness.
"Permitted Restricted Subsidiary Indebtedness" is defined as: (i)
Indebtedness or Preferred Stock to be outstanding on the Issue Date and listed
on Schedule II to the Indenture; (ii) Indebtedness in respect of
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Purchase Money Indebtedness or Capital Lease Obligations directly Incurred by
any Restricted Subsidiary; PROVIDED, HOWEVER, that the sum of (A) the aggregate
amount of Capital Lease Obligations Incurred by Restricted Subsidiaries or
Incurred by the Company pursuant to clause (vi) under "Limitation on
Indebtedness" and (B) the aggregate principal amount of Purchase Money
Indebtedness Incurred by Restricted Subsidiaries or Incurred by the Company
pursuant to clause (vi) under "Limitation on Indebtedness" does not at any one
time outstanding exceed $20 million (such maximum permitted amount to increase
by $10 million on each anniversary of the Issue Date); (iii) Indebtedness
Incurred (A) in the ordinary course of business of any Restricted Subsidiary
with respect to trade credit made available to such Restricted Subsidiary in
connection with the obtaining of goods or services by such Restricted Subsidiary
(including commercial letters of credit, bankers' acceptances or accommodation
Guarantees for the benefit of trade creditors or suppliers), in each case for a
period not to exceed 180 days, in an amount not to exceed the purchase price for
the goods or services for which such credit is made available and which do not
constitute obligations for borrowed money and (B) standby letters of credit,
performance bonds and surety bonds that do not constitute obligations for
borrowed money Incurred by any Restricted Subsidiary in the ordinary course of
business relating to services to be performed by or on behalf of such Restricted
Subsidiary; (iv) Indebtedness (A) under Interest Rate Protection Agreements
relating to Indebtedness permitted hereunder entered into in the ordinary course
of any Restricted Subsidiary's financial management and not for speculative
purposes; PROVIDED, HOWEVER, that the notional amount of each such Interest Rate
Protection Agreement does not exceed the principal amount of the Indebtedness to
which such Interest Rate Protection Agreement relates; or (B) under Currency
Exchange Protection Agreements entered into in the ordinary course of any
Foreign Subsidiary's financial management and not for speculative purposes;
PROVIDED, HOWEVER, in the case of either clause (A) or (B), any such Interest
Rate Protection Agreement or Currency Exchange Protection Agreement, as the case
may be, does not increase the Indebtedness of such Subsidiary outstanding at any
time other than as a result of fluctuations in the interest rates or exchange
rates, as the case may be, or by reason of customary fees, indemnities and
compensation payable thereunder; (v) Indebtedness or Preferred Stock owing to
and held by the Company or any Wholly Owned Subsidiary; PROVIDED, HOWEVER, that
any subsequent issuance or transfer of any Capital Stock that results in any
such Wholly Owned Subsidiary ceasing to be a Wholly Owned Subsidiary or any
subsequent transfer of any such Indebtedness or Preferred Stock (except to the
Company or a Wholly Owned Subsidiary) will be deemed, in each case, to
constitute the Incurrence of such Indebtedness or Preferred Stock by the issuer
thereof; (vi) Refinancing Indebtedness Incurred in respect of Indebtedness
Incurred pursuant to clause (i) above; and (vii) in addition to any Indebtedness
permitted by clauses (i) through (v) above, up to an aggregate of $10 million in
principal amount of Indebtedness of Foreign Restricted Subsidiaries at any one
time outstanding.
LIMITATION ON RESTRICTED PAYMENTS
(a) Neither the Company nor any Restricted Subsidiary will be permitted to
(i) declare or pay any dividend on, or make any distribution on or in respect
of, its Capital Stock (including any payment in connection with any merger or
consolidation involving the Company), except dividends or distributions payable
solely in its Capital Stock (other than Disqualified Stock) or in options,
warrants or other rights to purchase such Capital Stock and except dividends or
distributions payable solely to the Company or any Restricted Subsidiary, (ii)
purchase, redeem, retire or otherwise acquire for value any Capital Stock of the
Company or any Restricted Subsidiary held by Persons other than the Company or
any Restricted Subsidiary, (iii) purchase, repurchase, redeem, defease or
otherwise acquire or retire for value (including pursuant to mandatory
repurchase covenants), prior to any scheduled repayment, scheduled sinking fund
payment or other scheduled maturity, any Subordinated Obligation or (iv) make
any Investment (other than a Permitted Investment) in any Person (any such
dividend, distribution, purchase, redemption, repurchase, defeasance, other
acquisition, retirement or Investment being herein referred to as a "Restricted
Payment"), if at the time of and after giving effect to the proposed Restricted
Payment: (a) a Default or Event of Default has occurred and is continuing (or
would result therefrom); (b) the Company could not Incur at least $1.00 of
additional Indebtedness pursuant to clause (ii) under "Limitation on
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Indebtedness"; or (c) the aggregate amount of such Restricted Payment and all
other Restricted Payments (the amount so expended, if other than in cash, to be
determined in good faith by the Board of Directors of the Company to be
evidenced by a Board Resolution furnished to the Trustee) declared or made since
the Issue Date, would exceed, without duplication, the sum of: (1) an amount
equal to 50% of the Consolidated Net Income accrued during the period (treated
as one accounting period) beginning on the first day of the fiscal quarter of
the Company immediately following the fiscal quarter in which the Issue Date
occurs and ending on the last day of the Company's last fiscal quarter ended at
least 45 days prior to the date of such proposed Restricted Payment (or, if such
Consolidated Net Income is a deficit, minus 100% of such deficit) and minus 100%
of the amount of any write-downs, write-offs, other negative revaluations and
other negative extraordinary charges not otherwise reflected in Consolidated Net
Income during such period; (2) the aggregate Net Cash Proceeds received by the
Company from the issue or sale of its Capital Stock, including Capital Stock of
the Company issued upon conversion of convertible debt or the exercise of
options, warrants or rights to purchase Capital Stock of the Company, but
excluding Disqualified Stock, subsequent to the Issue Date (other than an
issuance or sale to (x) a Subsidiary of the Company, (y) an employee stock
ownership plan or other trust established by the Company or any of its
Subsidiaries or (z) management employees); (3) the amount by which the
Indebtedness of the Company or its Restricted Subsidiaries is reduced on the
Company's balance sheet upon the conversion or exchange (other than by a
Subsidiary of the Company) subsequent to the Issue Date of any Indebtedness of
the Company or its Restricted Subsidiaries convertible or exchangeable for
Capital Stock (other than Disqualified Stock) of the Company (less the amount of
any cash or other property distributed by the Company or any Restricted
Subsidiary upon such conversion or exchange) and (4) the amount equal to the net
reduction in Investments in Unrestricted Subsidiaries resulting from (x)
payments of dividends, repayments of loans or advances or other transfers of
assets to the Company or any Restricted Subsidiary from Unrestricted
Subsidiaries or (y) the redesignation of Unrestricted Subsidiaries as Restricted
Subsidiaries (valued in each case as provided in the definition of "Investment")
not to exceed, in the case of any Unrestricted Subsidiary, the amount of
Investments previously made (and treated as a Restricted Payment) by the Company
or any Restricted Subsidiary in such Unrestricted Subsidiary.
(b) The foregoing provisions do not prohibit: (i) any purchase or redemption
of Capital Stock of the Company or Subordinated Obligations made in exchange
for, or out of the proceeds of a substantially concurrent sale of, Capital Stock
of the Company (other than Disqualified Stock and other than Capital Stock
issued or sold to a Subsidiary of the Company or an employee stock ownership
plan or other trust established by the Company or any of its Subsidiaries) or
out of proceeds of an equity contribution made substantially concurrently with
such purchase or redemption; PROVIDED, HOWEVER, that (A) such purchase or
redemption will be excluded in the calculation of the amount of Restricted
Payments and (B) the Net Cash Proceeds from such sale will be excluded from
subclause (2) of the above paragraph; (ii) any purchase or redemption of
Subordinated Obligations made in exchange for, or out of the proceeds of the
substantially concurrent sale of, Indebtedness of the Company which is permitted
to be Incurred pursuant to "--Limitation on Indebtedness"; PROVIDED, HOWEVER,
that (A) such Indebtedness is Incurred in an aggregate principal amount (or if
issued with original issue discount, an aggregate issue price) that is equal to
or less than the aggregate sum of (1) the aggregate principal amount (or if
issued with original issue discount, the aggregate accreted value) then
outstanding of such Subordinated Obligations being so purchased or redeemed and
(2) any premiums, fees and other expenses paid by the Company or any Restricted
Subsidiary in connection with such purchase or redemption, (B) such Indebtedness
is at least as subordinated to the Notes as such Subordinated Obligations so
purchased or redeemed and the covenants relating to such Indebtedness are no
more restrictive in the aggregate than those of such Subordinated Obligations,
(C) such Indebtedness has a Stated Maturity no earlier than the Stated Maturity
of such Subordinated Obligations, (D) such Indebtedness has an Average Life at
the time such Indebtedness is Incurred equal to or greater than the Average Life
of such Subordinated Obligations and (E) such purchase or redemption will be
excluded in the calculation of the amount of Restricted Payments; (iii) any
payment in cash in lieu of the issuance of fractional shares of Capital Stock to
any holder of Capital Stock warrants of the Company outstanding on the Issue
Date pursuant to the exchange of such warrants for other Capital Stock
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of the Company upon the exercise of such warrants pursuant to the terms thereof;
PROVIDED, HOWEVER, that such payment will be excluded in the calculation of the
amount of Restricted Payments; (iv) dividends paid within 60 days after the date
of declaration thereof if at such date of declaration such dividend would have
complied with the above first paragraph of this section; PROVIDED, HOWEVER, that
(A) at the time of payment of such dividend, no other Default has occurred and
is continuing (or would result therefrom) and (B) such dividend will be included
in the calculation of the amount of Restricted Payments from and after the date
of declaration of such dividend; or (v) so long as no Default or Event of
Default has occurred and is continuing or would occur as a consequence thereof,
the redemption or repurchase of Capital Stock of the Company, options in respect
thereof or related rights pursuant to and in accordance with the repurchase
provisions of any employee stock option or any stock purchase or other agreement
between the Company and any of its management employees; PROVIDED, HOWEVER, that
such redemptions or repurchases pursuant to this clause (v) from and after the
Issue Date will not in the aggregate exceed $1 million, plus the amount of any
net cash proceeds to the Company from sales of Capital Stock of the Company to
management employees subsequent to the Issue Date.
LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM RESTRICTED SUBSIDIARIES
Neither the Company nor any Restricted Subsidiary will be permitted to
create or otherwise cause or permit to exist or become effective any encumbrance
or restriction on the ability of any Restricted Subsidiary to (i) pay dividends
or make any other distributions on or in respect to its Capital Stock to the
Company or any Restricted Subsidiary or pay any Indebtedness owed to the Company
or any Restricted Subsidiary, (ii) make loans or advances to the Company or
(iii) transfer any of its property or assets to the Company or any Restricted
Subsidiary, except for (a) any encumbrance or restriction pursuant to an
agreement in effect at or entered into on the Issue Date, (b) any encumbrance or
restriction with respect to a Restricted Subsidiary pursuant to an agreement
relating to any Indebtedness Incurred by such Restricted Subsidiary on or prior
to the date on which such Restricted Subsidiary became a Subsidiary of, or was
acquired by, the Company (other than Indebtedness Incurred as consideration in,
or to provide all or any portion of the funds or credit support utilized to
consummate, the transaction or series of related transactions pursuant to which
such Restricted Subsidiary became a Subsidiary of, or was acquired by, the
Company) and outstanding on such date, (c) any encumbrance or restriction
pursuant to an agreement relating to an acquisition of property, so long as the
encumbrances or restrictions in such agreement relate solely to the property so
acquired, (d) any encumbrance or restriction pursuant to an agreement effecting
a refinancing of Indebtedness Incurred pursuant to an agreement referred to in
clause (a), (b) or (c) hereof or contained in any amendment to any such
agreement; PROVIDED, HOWEVER, that any encumbrance and any restriction contained
in any such refinancing agreement or amendment is no less favorable to the
Holders of the Notes than any encumbrance or restriction contained in such
agreement, and (e) in the case of clause (iii), certain encumbrances or
restrictions that do not, individually or in the aggregate, detract from the
value of property or assets of the Company or any Restricted Subsidiary in any
manner material to the Company or any such Restricted Subsidiary.
LIMITATION ON SALES OF ASSETS AND RESTRICTED SUBSIDIARY STOCK
The Company will not, and will not permit any Restricted Subsidiary to, make
any Asset Disposition unless (i) the Company or such Restricted Subsidiary, as
the case may be, receives consideration at the time of such Asset Disposition at
least equal to the Fair Market Value of the shares, property and assets subject
to such Asset Disposition, (ii) at least 75% of such consideration (or, in the
event of any Asset Disposition of all or any portion of the Company's Magnetics
Division or a Foreign Restricted Subsidiary, at least 50% of such consideration)
consists of cash, Temporary Cash Investments or the assumption of Senior
Indebtedness of the Company or any Restricted Subsidiary and the release of the
Company or such Restricted Subsidiary from all liability under such Senior
Indebtedness, (iii) in connection with any Asset Disposition with an aggregate
consideration greater than $10 million, the Company delivers an Officer's
Certificate to the Trustee certifying that such Asset Disposition complies with
clauses (i) and (ii) and that such Asset Disposition was approved by a majority
of the disinterested members of the Board of Directors
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of Company, as evidenced by a resolution of the Board delivered to the Trustee
and (iv) 100% of the Net Cash Proceeds of such Asset Disposition are applied as
follows: (A) within 365 days after the receipt of any Net Cash Proceeds (or
within such longer period after receipt thereof as may be permitted of the
Credit Facility) (the last day of such period, an "Application Date"), the
Company or Restricted Subsidiary, as the case may be, may apply all or a portion
of such Net Cash Proceeds to the repayment of Indebtedness under the Credit
Facility or the reinvestment (whether by acquisition of an existing business or
expansion, including, without limitation, capital expenditures) in one or more
Permitted Lines of Business, or any combination thereof, and (B) to the extent
any or all of such Net Cash Proceeds are not applied as set forth above in
clause (A), the Company will apply all remaining Net Cash Proceeds of such Asset
Disposition (the "Asset Disposition Purchase Amount") to an offer to purchase
(an "Asset Disposition Purchase Offer") Notes, on the first business day
occurring 60 business days after the Application Date (the "Asset Disposition
Purchase Date") for cash at a purchase price (such price, the "Asset Disposition
Purchase Price") equal to 100% of the principal amount of the Notes so purchased
plus accrued and unpaid interest thereon to the Asset Disposition Purchase Date,
in accordance with the procedures set forth in the Indenture. Any such Net Cash
Proceeds which remain after the acquisition by the Company of Notes tendered
(and not withdrawn) by holders of Notes pursuant to such Asset Disposition
Purchase Offer in accordance with the procedures (including proration in the
event of oversubscription) set forth in the Indenture cease to be Net Cash
Proceeds. Notwithstanding the foregoing, the Company will not be required to
make an Asset Disposition Purchase Offer until such time as the aggregate amount
of Net Cash Proceeds from Asset Dispositions required to be so applied to the
purchase of Notes exceeds $10 million (the "Asset Disposition Trigger"), and
then the total amount of such Net Cash Proceeds is required to be applied to an
Asset Disposition Offer.
Within 30 business days of the occurrence of an Asset Disposition Trigger,
(i) the Company will notify the Trustee in writing of the occurrence of the
Asset Disposition Trigger and will make the Asset Disposition Purchase Offer to
purchase Notes in an aggregate principal amount equal to the Asset Disposition
Purchase Amount at the Asset Disposition Purchase Price on or before Asset
Disposition Purchase Date, (ii) the Company will mail a copy of the Asset
Disposition Purchase Offer to each Holder of the Notes and (iii) the Company
will cause a notice of the Asset Disposition Purchase Offer to be sent to the
Dow Jones News Service or similar business news service in the United States.
The Asset Disposition Purchase Offer will remain open from the time such offer
is made until the Asset Disposition Purchase Date. The Company will purchase all
Notes properly tendered pursuant to the Asset Disposition Purchase Offer and not
withdrawn in accordance with the procedures set forth in the Asset Disposition
Purchase Notice (as defined in the Indenture). The Asset Disposition Purchase
Offer will state, among other things, the procedures that Holders of the Notes
must follow to accept the Asset Disposition Purchase Offer.
LIMITATION ON LIENS
Neither the Company nor any Restricted Subsidiary will be permitted to
create or permit to exist any lien directly or indirectly (other than Permitted
Liens) on any of its property or assets (including Capital Stock), whether owned
on the Issue Date or thereafter acquired, or any right, title or interest
thereto, unless the Company or such Restricted Subsidiary will secure all
payments hereunder and under the Notes on an equal and ratable basis with the
obligation so secured until such time as such obligation is no longer secured by
a lien.
PROHIBITION ON LAYERING
The Indenture will prohibit the Company and each Restricted Subsidiary from
incurring or suffering to exist any Indebtedness that is expressly subordinate
in right of payment to any Senior Indebtedness and senior in right of payment to
the Notes.
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LIMITATION ON TRANSACTIONS WITH AFFILIATES
Neither the Company nor any Restricted Subsidiary will be permitted to
conduct any business, enter into or permit to exist any transaction (including,
without limitation, the sale, conveyance, disposition, purchase, exchange or
lease of any property, the lending, borrowing or advancing of any money or the
rendering of any services) with, or for the benefit of, any Affiliate of the
Company (an "Affiliate Transaction") unless (i) the terms of such Affiliate
Transaction are in writing, (ii) such Affiliate Transaction is in the best
interest of the Company or such Restricted Subsidiary, as the case may be, (iii)
such Affiliate Transaction is on terms as favorable to the Company or such
Restricted Subsidiary, as the case may be, as those that could be obtained at
the time of such Affiliate Transaction for a similar transaction in arm's-length
dealings with a Person who is not such an Affiliate and (iv) with respect to
each Affiliate Transaction involving aggregate payments or value in excess of
$500,000, such Affiliate Transaction was approved by a majority of the Board of
Directors of the Company, including a majority of the disinterested members of
such Board, PROVIDED, HOWEVER, that the foregoing does not prohibit (A) any
Restricted Payment permitted to be paid as described above under "Limitation on
Restricted Payments", (B) any issuance of securities or other payments, awards
or grants in cash, securities or otherwise pursuant to, or the funding of,
employment arrangements, stock options and stock ownership plans approved by the
Board of Directories of the Company, (C) loans or advances permitted under the
Indenture to employees in the ordinary course of business in accordance with
past practices of the Company, (D) the payment of reasonable fees to directors
of the Company and its Restricted Subsidiaries who are not employees of the
Company or any Restricted Subsidiary, (E) any transaction between the Company
and a Wholly Owned Subsidiary or between Wholly Owned Subsidiaries or (F)
reasonable and customary indemnification arrangements between the Company or any
Restricted Subsidiary and their respective directors and officers (to the extent
that such indemnification arrangements are permitted under applicable law).
LIMITATION ON ISSUANCE AND SALE OF CAPITAL STOCK OF RESTRICTED SUBSIDIARIES
The Company will not permit (i) any Restricted Subsidiary to issue any
Capital Stock other than to the Company or a Wholly Owned Subsidiary; or (ii)
any Person (other than the Company or a Wholly Owned Subsidiary) to, directly or
indirectly, own or control any Capital Stock of any Restricted Subsidiary (other
than directors' qualifying shares); PROVIDED, HOWEVER, that clauses (i) and (ii)
will not prohibit (a) any sale of 100% of the shares of the Capital Stock of any
Restricted Subsidiary owned by the Company or any Wholly Owned Subsidiary
effected in accordance with "Limitation on Sales of Assets and Restricted
Subsidiary Stock" or (b) any issuance of Preferred Stock of a Restricted
Subsidiary to any Person permitted under "Limitation on Restricted Subsidiary
Indebtedness and Preferred Stock."
LIMITATION ON SALE/LEASEBACK TRANSACTIONS
The Company will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, enter into, Guarantee or otherwise become liable with
respect to any Sale/Leaseback Transaction with respect to any property or assets
unless (i) the Company or such Restricted Subsidiary, as the case may be, would
be entitled to pursuant to the Indenture Incur Indebtedness secured by a
Permitted Lien on such property or assets in an amount equal to the Attributable
Indebtedness with respect to such Sale/Leaseback Transaction, (ii) the Net Cash
Proceeds from such Sale/Leaseback Transaction are at least equal to the Fair
Market Value of the property or assets subject to such Sale/Leaseback
Transaction (such Fair Market Value determined, in the event such property or
assets have a Fair Market Value in excess of $2 million, no more than 30 days
prior to the effective date of such Sale/Leaseback Transaction, by the Board of
Directors of the Company, including a majority of the disinterested members of
such Board, as evidenced by a resolution of such Board) and (iii) the net cash
proceeds of such Sale/Leaseback Transaction are applied in accordance with the
provisions described under "Limitation on Sales of Assets and Restricted
Subsidiary Stock."
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LIMITATIONS ON MERGER, CONSOLIDATION OR SALE OF ASSETS
The Company shall not, and the Company shall not permit any Restricted
Subsidiary to, enter into any transaction or series of transactions to
consolidate, amalgamate or merge with or into any other Person (other than the
merger of a Wholly Owned Subsidiary (i) with another Wholly Owned Subsidiary or
(ii) into the Company), or directly or indirectly through its Subsidiaries sell,
convey, assign, transfer, lease or otherwise dispose of all or substantially all
its property and assets to any Person or group of affiliated Persons (other than
to one or more Wholly Owned Subsidiaries or to the Company) unless (i) if the
Company is a party to such transaction and is not the surviving entity (the
"Surviving Entity"), the Surviving Entity formed by such consolidation or
amalgamation or into which the Company is merged or that acquires, by sale,
conveyance, assignment, transfer, lease or other disposition, all or
substantially all the properties and assets of the Company as an entirety, shall
be a corporation organized and validly existing under the laws of the United
States or any State thereof or the District of Columbia and shall expressly
assume (a) by a supplemental indenture executed and delivered to the Trustee, in
form satisfactory to the Trustee, all the obligations of the Company pursuant to
the Notes and the Indenture and (b) by written instruments executed and
delivered to the Trustee, in form satisfactory to the Trustee, all the
obligations of the Company under any agreements entered into by the Company
pursuant to the Limitation on Liens covenant; (ii) the Surviving Entity, if any
Restricted Subsidiary is a party to such transaction and is not the Surviving
Entity, shall by written instruments executed and delivered to the Trustee, in
form satisfactory to the Trustee, expressly assume all the obligations of such
Restricted Subsidiary under any agreements entered into by such Restricted
Subsidiary pursuant to the Limitation on Liens covenant; (iii) immediately
before and after giving effect to such transaction or series of transactions on
a pro forma basis (and treating any Indebtedness which becomes an obligation of
the Company, the Surviving Entity or any Restricted Subsidiary as a result of
such transaction or series of transactions as having been incurred by the
Company, such Surviving Entity or such Restricted Subsidiary at the time of such
transaction or series of transactions) no Default or Event of Default shall have
occurred and be continuing; (iv) immediately after giving effect to such
transaction or series or transactions on a pro forma basis (and treating any
Indebtedness which becomes an obligation of the Company, the Surviving Entity or
any Restricted Subsidiary as a result of such transaction or series of
transactions as having been incurred by the Company, such Surviving Entity or
such Restricted Subsidiary at the time of such transaction or series of
transactions), the Company or the Surviving Entity, as the case may be, could
incur at least $1.00 of additional Indebtedness pursuant to the Limitation on
Indebtedness covenant; (v) immediately after giving effect to such transaction
or series of transactions on a pro forma basis (and treating any Indebtedness
which becomes an obligation of the Company, the Surviving Entity or any
Restricted Subsidiary as a result of such transaction or series of transactions
as having been incurred by the Company, such Surviving Entity or such Restricted
Subsidiary at the time of such transaction or series of transactions), the
Company or the Surviving Entity, as the case may be, shall have a Consolidated
Tangible Net Worth which is not less than the Consolidated Tangible Net Worth of
the Company immediately prior to such transaction or transactions; and (vi) the
Company shall have delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating (A) that such consolidation, amalgamation,
merger or transfer and such supplemental indenture (if any) and written
instrument (if any) comply with this Indenture and (B) that upon execution and
delivery of such supplemental indenture or written instrument the Company or
such Surviving Entity shall be bound by the terms of the Indenture as thereby
amended and the Indenture as thereby amended shall be enforceable against the
Company or such Surviving Entity in accordance with its terms.
Upon any transaction involving the Company in which the Company is not the
Surviving Entity, such Surviving Entity shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under this
Indenture, but the Company in the case of a transfer or lease shall not be
released from the obligation to pay the principal of, and premium, if any, or
interest on, the Notes.
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RESTRICTED AND UNRESTRICTED SUBSIDIARIES
The Board of Directors may designate any Subsidiary of the Company or any
Restricted Subsidiary to be an Unrestricted Subsidiary if (i) the Subsidiary to
be so designated does not own any Capital Stock, Redeemable Stock or
Indebtedness of, or own or hold any Lien on any property or assets of, the
Company or any other Restricted Subsidiary, (ii) the Subsidiary to be so
designated is not obligated by any Indebtedness or Lien that, if in default,
would result (with the passage of time or notice or otherwise) in a default on
any Indebtedness of the Company or any Restricted Subsidiary, and (iii) either
(A) the Subsidiary to be so designated has total assets of $1,000 or less or (B)
such designation is effective immediately upon such Person becoming a Subsidiary
of the Company or of a Restricted Subsidiary. Unless so designated as an
Unrestricted Subsidiary, any Person that becomes a Subsidiary of the Company or
any Restricted Subsidiary will be classified as a Restricted Subsidiary. Except
as provided in the first sentence of this paragraph, no Restricted Subsidiary
may be redesignated as an Unrestricted Subsidiary. Subject to the following
paragraph, an Unrestricted Subsidiary may not be redesignated as a Restricted
Subsidiary.
The Company will not, and will not permit any Restricted Subsidiary to, take
any action or enter into any transaction or series of transactions that would
result in a Person becoming a Restricted Subsidiary (whether through an
acquisition, the redesignation of an Unrestricted Subsidiary or otherwise)
unless after giving effect to such action, transaction or series of
transactions, on a pro forma basis, (i) the Company could incur at least $1.00
of additional Indebtedness pursuant to clause (i) under "--Certain Covenants--
Limitation on Indebtedness", (ii) such Restricted Subsidiary could then Incur
under "--Certain Covenants--Limitation on Restricted Subsidiary Indebtedness and
Preferred Stock" all Indebtedness as to which it is obligated at such time,
(iii) no Default or Event of Default would occur or be continuing and (iv) there
exist no Liens with respect to the property or assets of such Restricted
Subsidiary other than Permitted Liens.
EVENTS OF DEFAULT
An "Event of Default" will occur under the Indenture if (i) the Company
fails to make any payment of interest on any Note when the same is due and
payable, and such failure continues for a period of 30 days; (ii) the Company
(A) fails to make the payment of the principal of, or premium, if any, on, any
Note when the same becomes due and payable at its Stated Maturity, upon
acceleration, redemption or declaration, or otherwise or (B) fails to redeem or
purchase Notes when and to the extent required pursuant to the Indenture or the
Notes; (iii) the Company fails to comply with any of the requirements described
under Limitations on Merger, Consolidation or Sale of Assets in the Indenture;
(iv) the Company fails to comply with any of its covenants or agreements
described under "--Additional Information," "--Change of Control," or "--Certain
Covenants--Limitation on Indebtedness," "--Limitation on Restricted Subsidiary
Indebtedness and Preferred Stock," "--Limitation on Restricted Payments,"
"--Limitation Transactions with Affiliates," "--Limitation on Liens,"
"--Limitation on Restrictions on Distributions from Restricted Subsidiaries,"
"--Limitation on Sales of Assets and Restricted Subsidiary Stock," "--Limitation
on Sale/ Leaseback Transactions" or "--Limitation on Issuance and Sale of
Capital Stock of Restricted Subsidiaries" and such failure continues for 30 days
after the notice specified below, or the Company fails to give the notice
specified below; (v) the Company fails to comply with any of its agreements in
the Notes or the Indenture (other than those specified in clauses (i), (ii),
(iii) and (iv) above) and such failure continues for a period of 60 days after
the notice specified below or the Company fails to give the notice specified
below; (vi) Principal of or interest on any Indebtedness of the Company or any
Restricted Subsidiary is not paid when due within any applicable grace period
after final maturity or is accelerated by the holders thereof, if the total
amount of such Indebtedness unpaid or accelerated or exceeds $7.5 million or its
Dollar Equivalent at the time; (vii) one or more judgments or decrees
aggregating in excess of $7.5 million or its Dollar Equivalent at the time is
rendered against the Company or any Restricted Subsidiary and is not discharged
and either: (A) an enforcement proceeding has been commenced by any creditor
upon such
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judgment or decree; or (B) there is a period of 60 days following the entry of
such judgment or decree during which such judgment or decree is not discharged,
waived or the execution thereof stayed; (viii) the Company or any Restricted
Subsidiary pursuant to or within the meaning of any Bankruptcy Law: (A)
commences a voluntary case; (B) consents to the entry of an order for relief
against it in an involuntary case; (C) consents to the appointment of a
Custodian of it or for any substantial part of its property; or (D) makes a
general assignment for the benefit of its creditors; or takes any comparable
action under any foreign laws relating to insolvency; or (ix) a court of
competent jurisdiction enters an order or decree under any Bankruptcy Law that:
(A) is for relief against the Company or any Restricted Subsidiary in an
involuntary case; (B) appoints a Custodian of the Company or any Restricted
Subsidiary or for any substantial part of its property; or (C) orders the
winding up or liquidation of the Company or any Restricted Subsidiary; or any
similar relief is granted under any foreign laws and the order or decree remains
unstated and in effect for 60 days.
A Default under clause (iv) or (v) above will not be an Event of Default
until the Trustee or the holders of at least 25% in principal amount of the
Notes notify the Company of the Default and the Company does not cure such
Default within the time specified after receipt of such notice. Such notice must
specify the Default, demand that it be remedied and state that such notice is a
"Notice of Default."
The Company will deliver to the Trustee, within 30 days after the occurrence
thereof, written notice in the form of an Officers' Certificate of any event
which, with the giving of notice and the lapse of time, would become an Event of
Default under clause (iv), (v), (vi) or (vii) above, its status and what action
the Company is taking or proposes to take with respect thereto.
If an Event of Default (other than an Event of Default specified in clause
(viii) or (ix) under "Events of Default") occurs and is continuing, the Trustee
by notice to the Company, or the holders of at least 25% in principal amount of
the Notes by notice to the Trustee, may declare the principal of and accrued
interest on all the Notes to be due and payable. Upon such declaration, such
principal and interest will be due and payable immediately. If an Event of
Default specified in clause (viii) or (ix) under "--Events of Default" occurs,
the principal of and interest on all the Notes becomes immediately due and
payable without any declaration or other act on the part of the Trustee or any
holders of Notes. The holders of a majority in principal amount of the Notes by
notice to the Trustee may rescind an acceleration and its consequences if the
rescission would not conflict with any judgment or decree and if all existing
Events of Default have been cured or waived except nonpayment of principal or
interest that has become due solely because of acceleration. No such rescission
will affect any subsequent Default or impair any right consequent thereto.
A holder of Notes may not pursue any remedy with respect to the Indenture,
or the Notes the unless: (i) such holder gives to the Trustee written notice
stating that an Event of Default is continuing; (ii) holders of at least 25% in
principal amount of the Notes make a written request to the Trustee to pursue
the remedy; (iii) such holder or holders offer to the Trustee reasonable
security or indemnity against any loss, liability or expense; (iv) the Trustee
does not comply with the request within 60 days after receipt of the request and
the offer of security or indemnity; and (v) the holders of a majority in
principal amount of the Notes do not give the Trustee a direction inconsistent
with the request during such 60-day period.
A holder of a Note may not use the Indenture to prejudice the rights of
another holder of the Notes or to obtain preference or priority over another
holder of the Notes.
AMENDMENT, SUPPLEMENT AND WAIVER
Subject to certain exceptions, the Indenture may be amended or supplemented
without notice to any holder with the written consent of the holders of at least
a majority in principal amount of the Notes. However, without the consent of
each holder affected, no amendment may, among other things, (i) reduce the
percentage of principal amount of Notes whose holders must consent to an
amendment or waiver, (ii) reduce the rate of or extend the time for payment of
interest on any Notes, (iii) reduce the principal of or extend the Stated
Maturity of any Notes, (iv) reduce the premium payable upon the redemption of
any
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Note or change the time or times at which any Notes may be redeemed, (v) make
any Note payable in money other than that stated in the Notes, (vi) impair the
right of any holder of Notes to institute suit for the enforcement of any
payment on or with respect to any Notes, or (vii) make any change in certain
waiver or payment provisions of the Indenture or the second sentence of this
paragraph.
Without notice to or the consent of any holder of the Notes, the Company and
the Trustee may, among other things, amend or supplement the Indenture to cure
any ambiguity, omission, defect or inconsistency; to provide for the assumption
by a successor company to the obligations of the Company under the Indenture; to
provide for uncertificated Notes in addition to or in place of certificated
Notes, PROVIDED, HOWEVER, that the uncertificated Notes are issued in registered
form under the Code; to add Guarantees with respect to the Notes or to secure
the Notes; to add to the covenants of the Company for the benefit of the holders
of the Notes or to surrender any right or power conferred upon the Company; to
make any change that does not adversely affect the rights of any holder of the
Notes or to comply with any requirement of the SEC in connection with the
qualification of the Indenture under the Trust Indenture Act or to provide for
the acceptance of appointment hereunder by a successor Trustee.
DEFEASANCE
The Company at any time may terminate all of its obligations under, and with
respect to, the Notes and the Indenture ("legal defeasance"), except for certain
obligations, including those respecting the defeasance trust and obligations to
register the transfer or exchange of the Notes, to replace mutilated, destroyed,
lost or stolen Notes and to maintain a registrar and paying agent in respect of
the Notes. The Company at any time may terminate, among other things, its
obligations under the covenants described under "Certain Covenants" and "Change
of Control" above, and with respect to Restricted Subsidiaries, the operation of
the cross acceleration provision, certain of the bankruptcy provisions, and the
judgment default provision described under "--Events of Default" above and
certain limitations under "Merger, Consolidation or Sale of Assets" above
("covenant defeasance").
The Company may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option. If the Company exercises its
legal defeasance option, payment of the Notes may not be accelerated because of
an Event of Default with respect thereto. If the Company exercises its covenant
defeasance option, payment of the Notes may not be accelerated because of an
Event of Default specified in clause (vi), (vii) or (viii) (except with respect
to the Company) under "Events of Default" above or because of the failure of the
Company to comply with, among other things, the covenants described under
"Certain Covenants" or "Change of Control" or with certain limitations under
"Merger, Consolidation or Sale of Assets" above.
In order to exercise either defeasance option, the Company must irrevocably
deposit in trust (the "defeasance trust") with the Trustee money or U.S.
Government Obligations for the payment of principal, and interest on the Notes
to redemption or maturity, as the case may be, and must comply with certain
other conditions, including delivering to the Trustee an Opinion of Counsel to
the effect that holders of the Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such deposit and defeasance and will
be subject to federal income tax on the same amount and in the same manner and
at the same times as would have been the case if such deposit and defeasance had
not occurred (and, in the case of legal defeasance only, such Opinion of Counsel
must be based on a ruling of the Internal Revenue Service or other change in
applicable federal income tax law).
SATISFACTION AND DISCHARGE OF THE INDENTURE
The Indenture will cease to be of further effect (except as otherwise
expressly provided for in the Indenture) when either (i) all outstanding Notes
have been delivered (other than lost, stolen or destroyed Notes which have been
replaced) to the Trustee for cancellation or (ii) all outstanding Notes have
become due and payable, whether at maturity or as a result of the mailing of a
notice of redemption pursuant to the
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terms of the Indenture and the Company has irrevocably deposited with the
Trustee funds sufficient to pay at maturity or upon redemption all outstanding
Notes, including interest thereon (other than lost, stolen, mutilated or
destroyed Notes which have been replaced), and, in either case, the Company has
paid all other sums payable under the Indenture. The Trustee is required to
acknowledge satisfaction and discharge of the Indenture on demand of the Company
accompanied by an Officer's Certificate and an Opinion of Counsel at the cost
and expense of the Company.
TRANSFER AND EXCHANGE
Upon any transfer of a Note, the registrar may require a holder, among other
things, to furnish appropriate endorsements and transfer documents, and to pay
any taxes and fees required by law or permitted by the Indenture. The registrar
is not required to transfer or exchange any Notes selected for redemption nor is
the registrar required to transfer or exchange any Notes for a period of 15 days
before a selection of Notes to be redeemed. The registered holder of a Note may
be treated as the owner of it for all purposes.
CONCERNING THE TRUSTEE
IBJ Schroder Bank & Trust Company is the Trustee under the Indenture. The
Trustee's current address is One State Street, New York, New York 10004.
The holders of a majority in aggregate principal amount of the then
outstanding Notes issued under the Indenture will have the right to direct the
time, method and place of conducting any proceeding for exercising any remedy
available to the Trustee. The Indenture provides that in case an Event of
Default shall occur (which shall not be cured), the Trustee will be required, in
the exercise of its power, to use the degree of care of a prudent man in the
conduct of his own affairs. Subject to such provisions, the Trustee will be
under no obligation to exercise any of its rights or powers under the Indenture
at the request of any of the holders of the Notes issued thereunder, unless they
shall have offered to the Trustee security and indemnity satisfactory to it.
ADDITIONAL INFORMATION
So long as any Notes are outstanding, the Company will furnish to the
Trustee and the holders of Notes within fifteen days after the Company files
them with the Commission all quarterly and annual reports that the Company is
required to file with the Commission under the Exchange Act. In the event that
the Company is not at the time required to file such reports with the Commission
pursuant to the Exchange Act, the Company shall nevertheless continue to file
such reports with the Commission and furnish them to holders of the Notes as if
the Company were so required. The Company will also comply with the other
provisions of Section314(a) of the Trust Indenture Act.
GOVERNING LAW
The Indenture provides that it and the Notes will be governed by, and
construed in accordance with, the laws of the State of New York but without
giving effect to applicable principles of conflicts of law to the extent that
the application of the law of another jurisdiction would be required thereby.
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CERTAIN DEFINITIONS
The following definitions, among others, are used in the Indenture.
Prospective purchasers of Notes are encouraged to read each of the following
definitions carefully and to consider such definitions in the context in which
they are used in the Senior Secured Indenture.
"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 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.
Notwithstanding the foregoing, each Unrestricted Subsidiary shall be deemed an
Affiliate of the Company and of each other Subsidiary of the Company.
"ASSET DISPOSITION" means any direct or indirect sale, lease, transfer,
conveyance or other disposition (or series of related sales, leases, transfers,
conveyances or dispositions) of shares of Capital Stock of any Restricted
Subsidiary (other than directors' qualifying shares), property or other assets
(each referred to for the purposes of this definition as a "disposition") by the
Company or any Restricted Subsidiary (including any disposition by means of a
merger, consolidation or similar transaction), other than (i) a disposition by a
Restricted Subsidiary to the Company or by the Company or a Restricted
Subsidiary to a Wholly Owned Subsidiary, (ii) a disposition of the Company's or
any Restricted Subsidiary's accounts receivable, lease receivables or inventory
(other than the disposition of inventory pursuant to a Sale/ Leaseback
Transaction) at Fair Market Value in the Ordinary Course of Business, (iii) a
disposition of property or assets, whether in a single transaction or a series
of related transactions which constitute a single plan of disposition, that have
an aggregate Fair Market Value not in excess of $250,000, (iv) an operating
lease entered into in the ordinary course of business with respect to property,
plant or equipment that in the judgment of the Board of Directors constitutes
excess capacity or (v) a "like-kind exchange" of an asset in exchange for an
asset of a third party, so long as, in the judgment of the Company's Board of
Directors, the asset received by the Company or such Restricted Subsidiary in
such exchange (x) has a Fair Market Value at least equal to the fair market
value of the asset transferred by the Company or such Restricted Subsidiary and
(y) is usable in a Permitted Line of Business to at least the same extent as the
asset transferred by the Company or such Restricted Subsidiary. An Asset
Disposition will include the requisition of title to, seizure of or forfeiture
of any property or assets, or any actual or constructive total loss or an agreed
or compromised total loss of any property or assets. The term "Asset
Disposition" when used with respect to the Company will not include any
disposition pursuant to provisions in the Indenture which constitutes a
disposition of all or substantially all the assets of the Company.
"ATTRIBUTABLE INDEBTEDNESS", in respect of a Sale/Leaseback Transaction,
means, as at the time of determination, the greater of (i) the Fair Market Value
of the property subject to such Sale/Leaseback Transaction (as determined in
good faith by the Board of Directors) or (ii) the present value (discounted at
the interest rate borne by the Notes, compounded annually) of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in such Sale/Leaseback Transaction (including any period for
which such lease has been extended).
"AVERAGE LIFE" means, as of the date of determination, with respect to any
Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the sum
of the products of (a) the number of years from the date of determination to the
dates of each successive scheduled principal payment of such Indebtedness or
redemption of similar payment with respect to such Preferred Stock and (b) the
amount of such payment by (ii) the sum of all such payments.
"BANKRUPTCY LAW" means Title 11, United States Code, or any similar Federal
or state law for the relief of debtors.
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"BOARD" or "BOARD OF DIRECTORS" means the Board of Directors of the Company
or any committee thereof duly authorized to act on behalf of such Board.
"CAPITAL LEASE OBLIGATIONS" means an obligation that is required to be
classified and accounted for as a capital lease for financial reporting purposes
in accordance with GAAP; the amount of Indebtedness represented by such
obligation will be the capitalized amount of such obligation determined in
accordance with GAAP; and the Stated Maturity thereof will be the date of the
last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lessee without payment of a
penalty.
"CAPITAL STOCK" of any Person means any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or interests
(including partnership interests) in (however designated) equity of such Person,
including any Preferred Stock, but excluding any debt securities convertible
into such equity.
"CONSOLIDATED COVERAGE RATIO" means, as of any date of determination, the
ratio of (i) the aggregate amount of EBITDA for the period of the most recent
four consecutive fiscal quarters ending at least 45 days prior to the date of
such determination to (ii) Consolidated Interest Expense for such four fiscal
quarters; PROVIDED, HOWEVER, that (1) if the Company or any Restricted
Subsidiary has Incurred any Indebtedness since the beginning of such period that
remains outstanding or if the transaction giving rise to the need to calculate
the Consolidated Coverage Ratio is an Incurrence of Indebtedness, or both,
EBITDA and Consolidated Interest Expense for such period is to be calculated
after giving effect on a pro forma basis to such Indebtedness as if such
Indebtedness had been Incurred on the first day of such period and the discharge
of any other Indebtedness repaid, repurchased, defeased or otherwise discharged
with the proceeds of such new Indebtedness as if such discharge had occurred on
the first day of such period, (2) if since the beginning of such period the
Company or any Restricted Subsidiary has made any Asset Disposition or if the
transaction giving rise to the need to calculate the Consolidated Coverage Ratio
is an Asset Disposition, or both, EBITDA for such period will be reduced by an
amount equal to EBITDA (if positive) directly attributable to the property or
assets which are the subject of such Asset Disposition for such period, or
increased by an amount equal to EBITDA (if negative) directly attributable
thereto for such period and Consolidated Interest Expense for such period will
be reduced by an amount equal to Consolidated Interest Expense directly
attributable to any Indebtedness of the Company or any Restricted Subsidiary
repaid, repurchased, defeased or otherwise discharged with respect to the
Company and the continuing Restricted Subsidiaries in connection with such Asset
Dispositions for such period (or, if the Capital Stock of any Restricted
Subsidiary is sold, Consolidated Interest Expense for such period directly
attributable to the Indebtedness of such Restricted Subsidiary to the extent the
Company and the continuing Restricted Subsidiaries are no longer liable for such
Indebtedness after such sale), (3) above if since the beginning of such period
the Company or any Restricted Subsidiary (by merger or otherwise) has made an
Investment in any Restricted Subsidiary (or any Person which becomes a
Restricted Subsidiary) or an acquisition of assets, including any acquisition of
assets occurring in connection with a transaction causing a calculation to be
made hereunder, which constitutes all or substantially all of an operating unit
of a business, EBITDA and Consolidated Interest Expense for such period will be
calculated after giving pro forma effect thereto (including the Incurrence of
any Indebtedness) as if such Investment or acquisition occurred on the first day
of such period and (4) if since the beginning of such period any Person (that
subsequently became a Restricted Subsidiary or was merged with or into the
Company or any Restricted Subsidiary since the beginning of such period) has
made any Asset Disposition or any Investment that would have required an
adjustment pursuant to clause (2) or (3) above if made by the Company or a
Restricted Subsidiary during such period, EBITDA and Consolidated Interest
Expense for such period will be calculated after giving pro forma effect thereto
as if such Asset Disposition or Investment occurred on the first day of such
period. For purposes of this definition, whenever pro forma effect is to be
given to an acquisition of assets, the amount of income or earnings relating
thereto and the amount of Consolidated Interest Expense associated with any
Indebtedness Incurred in connection therewith, the pro forma
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calculations will be determined in good faith by a responsible financial or
accounting officer of the Company and as further contemplated by the definition
of pro forma. If any Indebtedness bears a floating rate of interest and is being
given pro forma effect, the interest expense on such Indebtedness is calculated
as if the rate in effect on the date of determination had been the applicable
rate for the entire period (taking into account any Interest Rate Protection
Agreement applicable to such Indebtedness if such Interest Rate Protection
Agreement has a remaining term in excess of 12 months).
"CONSOLIDATED INTEREST EXPENSE" means, for any period, the sum of (i) the
total cash and noncash interest expense of the Company and its consolidated
Subsidiaries, plus, to the extent not included in such interest expense, (A)
interest expense attributable to Capital Lease Obligations, (B) amortization of
debt discount and debt issuance cost, (C) capitalized interest, (D) accrued
interest, (E) commissions, discounts and other fees and charges paid or owed
with respect to letters of credit and bankers' acceptance financing, (F)
interest actually paid by the Company or any such Subsidiary under any Guarantee
of Indebtedness or other obligation of any other Person, (G) net costs
associated with Hedging Obligations (including amortization of discounts and
fees), (H) the interest portion of any deferred obligation, (I) Preferred Stock
dividends in respect of all Preferred Stock of Subsidiaries of the Company and
Redeemable Stock of the Company held by Persons other than the Company or a
Wholly Owned Subsidiary and (J) cash contributions to any employee stock
ownership plan or similar trust to the extent such contributions are used by
such plan or trust to pay interest or fees to any Person (other than the
Company) in connection with Indebtedness Incurred by such plan or trust;
PROVIDED, HOWEVER, that there will be excluded from this clause (i), (x) any
such interest expense of any Unrestricted Subsidiary to the extent the related
Indebtedness is not Guaranteed or paid by the Company or any Restricted
Subsidiary and (y) any such interest expense attributable to original issue
discount as a result of Fresh Start Accounting adjustments), less (ii) to the
extent included in clause (i), amortization or write-off of deferred financing
costs of the Company and its consolidated Subsidiaries during such period and
any charge related to any premium or penalty paid in connection with redeeming
or retiring any Indebtedness of the Company and its consolidated Subsidiaries
prior to its Stated Maturity.
"CONSOLIDATED NET INCOME" means, for any period, the net income (loss) of
the Company and its consolidated Subsidiaries for such period determined in
accordance with GAAP but excluding for such purpose the impact of any Fresh
Start Accounting adjustment; PROVIDED, HOWEVER, that there will be excluded
therefrom (i) any net income (loss) of any Person if such Person is not a
Restricted Subsidiary, except that (A) subject to the limitations contained in
clause (iv) below, the Company's equity in the net income of any such Person for
such period will be included in such Consolidated Net Income up to the aggregate
amount of cash actually distributed by such Person during such period to the
Company or a Restricted Subsidiary as a dividend or other distribution (subject,
in the case of a dividend or other distribution to a Restricted Subsidiary, to
the limitations contained in clause (iii) below) and (B) the Company's equity in
a net loss of any such Person (other than an Unrestricted Subsidiary) for such
period will be included in determining such Consolidated Net Income, (ii) any
net income (loss) of any Person acquired by the Company or a Restricted
Subsidiary in a pooling of interests transaction for any period prior to the
date of such acquisition, (iii) any net income (loss) of any Restricted
Subsidiary if such Restricted Subsidiary is subject to restrictions, directly or
indirectly, on the payment of dividends or the making of distributions by such
Restricted Subsidiary, directly or indirectly, to the Company, except that (A)
subject to the limitations contained in clause (iv) below, the Company's equity
in the net income of any such Restricted Subsidiary for such period will be
included in such Consolidated Net Income up to the aggregate amount of cash that
could have been distributed by such Restricted Subsidiary during such period to
the Company or another Restricted Subsidiary as a dividend (subject, in the case
of a dividend to another Restricted Subsidiary, to the limitation contained in
this clause) and (B) the Company's equity in a net loss of any such Restricted
Subsidiary for such period will be included in determining such Consolidated Net
Income, (iv) any gain (but not loss) realized upon the sale or other disposition
of any property, plant or equipment of the Company or its consolidated
Subsidiaries (including pursuant to any Sale/ Leaseback Transaction) which is
not sold or otherwise disposed of in the ordinary course of business,
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(v) any gain (but not loss) realized upon the sale or other disposition of any
Capital Stock of any Person, (vi) any extraordinary gain or loss, (vii) the
cumulative effect of any change in accounting principles and (viii) any
non-recurring restructuring charges for any fiscal quarter in the fiscal year of
the Company commencing October 1, 1995.
"CONSOLIDATED TANGIBLE NET WORTH" means the amount by which (i) the total of
the amounts shown on the balance sheet of the Company and its consolidated
Subsidiaries, determined on a consolidated basis in accordance with GAAP, as of
the end of the most recent fiscal quarter of the Company ending at least 45 days
prior to the taking of any action for the purpose of which the determination is
being made, as (x) the par or stated value of all outstanding Capital Stock of
the Company plus (y) paid-in capital or capital surplus relating to such Capital
Stock plus (z) any retained earnings or earned surplus exceeds (ii) the sum of
(A) any accumulated deficit, (B) any amounts attributable to Disqualified Stock,
(C) the amounts appearing on the assets side of such balance sheet for all
contracts, patents, trademarks, copyrights and other intellectual property
rights, franchises, licenses, goodwill, treasury stock, unamortized debt
discount and expense and similar intangibles, (D) any increase in the amount of
capitalized research and development and capitalized interest subsequent to the
Issue Date, and (E) the amount of any write-up subsequent to the Issue Date in
the book value of any asset owned on the Issue Date resulting from the
revaluation thereof subsequent to such date, or any write-up in excess of the
cost of any asset acquired subsequent to that date.
"CREDIT FACILITY" means the Credit and Guarantee Agreement dated as of
February 28, 1997 among the Company, the Foreign Subsidiary Borrower, the First
National Bank of Chicago, Lehman Commercial Paper, Inc. and the lenders
thereunder.
"CURRENCY EXCHANGE PROTECTION AGREEMENT" means, in respect of any Person,
any foreign exchange contract, currency swap agreement, currency option or other
similar agreement or arrangement designed to protect such Person against
fluctuations in foreign currency exchange rates.
"CUSTODIAN" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
"DEFAULT" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"DISQUALIFIED STOCK" of a Person means Redeemable Stock of such Person as to
which the maturity, mandatory redemption, conversion or exchange or redemption
at the option of the holder thereof occurs, or may occur, on or prior to the
first anniversary of the Stated Maturity of the Notes.
"DOLLAR EQUIVALENT" means, with respect to any monetary amount in a currency
other than U.S. dollars, at any time for the determination thereof, the amount
of U.S. dollars obtained by converting such foreign currency involved in such
computation into U.S. dollars at the spot rate for the purchase of U.S. dollars
with the applicable foreign currency as quoted by Citibank, N.A. in New York
City at approximately 11:00 a.m. (New York time) on the date two business days
prior to such determination.
"EBITDA" means, for any period, the Consolidated Net Income for such period,
plus, to the extent deducted in calculating such Consolidated Net Income, (i)
income tax expense, (ii) Consolidated Interest Expense, (iii) depreciation
expense, (iv) amortization expense and (v) any charge related to any premium or
penalty paid in connection with redeeming or retiring any Indebtedness prior to
its Stated Maturity, in each case for such period.
"FAIR MARKET VALUE" means, with respect to any asset or property, the price
which could be negotiated in an arm's-length free market transaction, for cash,
between a willing seller and a willing buyer, neither of whom is under undue
pressure or compulsion to complete the transaction; PROVIDED, that the foregoing
does not prohibit sales of inventory at a discount or on terms which are typical
in the industry to which such inventory relates. Fair Market Value is
determined, except as otherwise provided herein, (i) if such
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property or asset has a Fair Market Value less than $5 million, by two officers
of the Company in an Officers' Certificate delivered to the Trustee or (ii) if
such property or asset has a Fair Market Value in excess of $5 million, by the
Board of Directors as a whole and evidenced by a resolution, dated within 30
days of the relevant transaction, of such Board delivered to the Trustee.
"FOREIGN ASSET DISPOSITION" means an Asset Disposition in respect of Capital
Stock or assets of a Restricted Subsidiary of the type described in Section 936
of the Internal Revenue Code of 1986, as amended (the "Code") to the extent that
the proceeds of such Asset Disposition are received by a Person subject in
respect of such proceeds to the tax laws of a jurisdiction other than the United
States of America, any State thereof or the District of Columbia.
"FOREIGN RESTRICTED SUBSIDIARY" means, any Restricted Subsidiary that is
incorporated in a jurisdiction other than the United States of America, any
State thereof or the District of Columbia.
"FRESH START ACCOUNTING" means Fresh Start Accounting as described in
Statement of Position 90-7, "Financial Reporting by Entities in Reorganization
Under the Bankruptcy Code" (Am. Inst. of Certified Public Accountants 1990), as
then in effect, or any comparable statement then in effect.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the Issue Date, including those set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as approved by a significant segment of the accounting profession.
"GUARANTEE" means any obligation, contingent or otherwise, of any Person,
directly or indirectly guaranteeing any Indebtedness or other obligation of any
other Person and any obligation, direct or indirect, contingent or otherwise, of
such Person (i) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Indebtedness or other obligation of such other Person
(whether arising by virtue of partnership arrangements, or by agreement to
keep-well, to purchase assets, goods, securities or services, to take-or-pay or
to maintain financial statement conditions or otherwise) or (ii) entered into
for purposes of assuring in any other manner the obligee of such Indebtedness or
other obligation of the payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part); PROVIDED, HOWEVER, that the term
"Guarantee" does not include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"HEDGING OBLIGATIONS" of any Person means the obligations of such Person
pursuant to any Interest Rate Protection Agreement, Commodity Price Protection
Agreement or Currency Exchange Protection Agreement or other similar agreement
or arrangement.
"INCUR" means to, directly or indirectly, create, issue, assume, Guarantee,
incur (by conversion, exchange or otherwise) extend, assume, or otherwise become
liable for, contingently or otherwise; PROVIDED, HOWEVER, that any Indebtedness
or Capital Stock of a Person existing at the time such Person becomes a
Subsidiary (whether by merger, consolidation, acquisition or otherwise) will be
deemed to be Incurred by such Subsidiary at the time it becomes a Subsidiary.
The terms "Incurrence," "Incurred" and "Incurring" each have a correlative
meaning.
"INDEBTEDNESS" means, with respect to any Person on any date of
determination (without duplication), (i) the principal of and premium (if any)
in respect of indebtedness of such Person for borrowed money; (ii) the principal
of and premium (if any) in respect of obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments; (iii) all Capital Lease
Obligations and all Attributable Indebtedness of such Person; (iv) all
obligations of such Person to pay the deferred and unpaid purchase price of
property or services (except (A) Trade Payables and (B) any obligation to pay
any portion of such purchase price that becomes due only if the earnings
attributable to such property or services satisfy predetermined minimum amounts
subsequent to the purchase of such property or services and the amount of such
obligation cannot be determined on the date of such purchase); (v) all
obligations of such Person in
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respect of letters of credit, banker's acceptances or other similar instruments
or credit transactions (including reimbursement obligations with respect
thereto), other than obligations with respect to letters of credit securing
obligations (other than obligations described in clauses (i) through (iv) above)
entered into in the ordinary course of business of such Person to the extent
such letters of credit are not drawn upon or, if and to the extent drawn upon,
such drawing is reimbursed no later than the third business day following
receipt by such Person of a demand for reimbursement following payment on any
such letter of credit; (vi) the amount of all obligations of such Person with
respect to the redemption, repayment or other repurchase of any Disqualified
Stock or, with respect to any Subsidiary of such Person, any Preferred Stock
(but excluding in each case, any accrued dividends); (vii) all Indebtedness of
other Persons secured by a Lien on any asset of such Person, whether or not such
Indebtedness is assumed by such Person; PROVIDED, HOWEVER, that the amount of
such Indebtedness is the lesser of (A) the Fair Market Value of such asset at
such date of determination and (B) the amount of such Indebtedness of such other
Persons; (viii) all Indebtedness of other Persons to the extent Guaranteed by
such Person; and (ix) to the extent not otherwise included in the definition,
obligations of such Person in respect of Hedging Obligations. For purposes of
this definition, the maximum fixed redemption, repayment or repurchase price of
any Disqualified Stock or Preferred Stock that does not have a fixed redemption,
repayment or repurchase price is calculated in accordance with the terms of such
stock as if such stock were redeemed, repaid or repurchased on any date on which
Indebtedness is required to be determined pursuant to the Indenture; PROVIDED,
HOWEVER, that if such stock is not then permitted to be redeemed, repaid or
repurchased, the redemption, repayment or repurchase price is the book value of
such stock as reflected in the most recent financial statements of such Person.
The amount of Indebtedness of any Person at any date is the outstanding balance
at such date of all unconditional obligations as described above and the maximum
liability, upon the occurrence of the contingency giving rise to the obligation,
of any contingent obligations at such date.
"INTEREST RATE PROTECTION AGREEMENT" means, in respect of any Person, any
interest rate swap agreement, interest rate option agreement, interest rate cap
agreement, interest rate collar agreement, interest rate floor agreement or
other similar agreement or arrangement designed to protect such Person against
fluctuations in interest rates.
"INVESTMENT" in any Person means any direct or indirect advance, loan (other
than advances to customers in the ordinary course of business that are recorded
as accounts receivable on the balance sheet of such Person) or other extension
of credit (including by way of Guarantee or similar arrangement) or capital
contribution to (by means of any transfer of cash or other property to others or
any payment for property or services for the account or use of others) such
Person, or any purchase or acquisition of all or substantially all the business
or assets of, Capital Stock, Indebtedness, any other evidence of beneficial
ownership or other similar instruments issued by, such Person. For purposes of
"--Limitation on Restricted Payments" and "--Restricted and Unrestricted
Subsidiaries", (i) the term "Investment" includes the portion (proportionate to
the Company's equity interest in such Subsidiary) of the Fair Market Value of
the net assets of any Subsidiary of the Company at the time that such Subsidiary
is designated an Unrestricted Subsidiary; PROVIDED, HOWEVER, that upon a
redesignation of such Subsidiary as a Restricted Subsidiary, the Company will be
deemed to continue to have a permanent "Investment" in an Unrestricted
Subsidiary in an amount (if positive) equal to (x) the Company's "Investment" in
such Subsidiary at the time of such redesignation less (y) the portion
(proportionate to the Company's equity interest in such Subsidiary) of the Fair
Market Value of the net assets of such Subsidiary at the time that such
Subsidiary is so redesignated as a Restricted Subsidiary; and (ii) any property
transferred to or from an Unrestricted Subsidiary will be valued at its Fair
Market Value at the time of such transfer. In determining the amount of any
Investment in respect of any property or asset other than cash, such property or
asset will be valued at its Fair Market Value at the time of such Investment
(unless otherwise specified in this definition).
"ISSUE DATE" means the first date on which the Notes will be issued pursuant
to the Indenture.
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"LIEN" means any mortgage, deed of trust, pledge, hypothecation, assignment,
deposit arrangement, preference, priority, security interest, encumbrance,
easement, restriction, covenant, right-of-way, servitude, lien (statutory or
otherwise), charge, other security or similar agreement or preferential
arrangement of any kind or nature whatsoever or other adverse claim of any kind
or nature (including, without limitation, any conditional sale or other title
retention agreement or lease having substantially the same economic effect of
any of the foregoing).
"MAGNETICS DIVISION" means the property and assets of the Company or any
Restricted Subsidiary used in connection with the manufacture, marketing and
sale of magnetic tape, computer tape or other magnetic products.
"NET CASH PROCEEDS" from an Asset Disposition means the sum of (i) cash
payments and Temporary Cash Investments received (including any cash payments
received by way of deferred payment of principal pursuant to a note or
installment receivable or otherwise, but only as and when received, but
excluding any other consideration received in the form of assumption by the
acquiring person of Indebtedness or other obligations relating to such
properties or assets or received in any other non-cash form) therefrom and (ii)
the Fair Market Value of all securities issued to the Company or a Subsidiary of
the Company in connection therewith, in each case net of (A) all legal, title
and recording tax expenses, commissions and other fees and expenses incurred,
and all Federal, state, provincial, foreign and local taxes required to be paid
or accrued as a liability under GAAP as a consequence of such Asset Disposition,
(B) all payments made on any Indebtedness which is secured by any property or
assets subject to such Asset Disposition, in accordance with the terms of any
Lien upon such property or assets, or which must by its terms, or in order to
obtain a necessary consent to such Asset Disposition, or by applicable law, be
repaid out of the proceeds from such Asset Disposition, (C) all distributions
and other payments required to be made to minority interest holders in
Subsidiaries or joint ventures as a result of such Asset Disposition and (D) the
deduction of appropriate amounts to be provided by the seller as a reserve, in
accordance with GAAP, against any liabilities associated with the property or
assets disposed of in such Asset Disposition and retained by the Company or any
Restricted Subsidiary after such Asset Disposition; PROVIDED, that, in the event
that any consideration for such Asset Disposition (which would otherwise
constitute Net Cash Proceeds) is required to be held in escrow pending
determination of whether a purchase price adjustment will be made, such
consideration (or any portion thereof) will become Net Cash Proceeds only at
such time as it is released to the Company or any Restricted Subsidiary from
escrow; PROVIDED, FURTHER, that any non-cash consideration received in
connection with such Asset Disposition, which is subsequently converted to cash,
is deemed to be Net Cash Proceeds at such time and is thereafter be applied in
accordance with "-- Certain Covenants--Limitation on Sales of Assets and
Restricted Subsidiary Stock." The term "Net Cash Proceeds" from an issuance or
sale of Capital Stock means the cash proceeds of such issuance or sale, net of
attorneys' fees, accountants' fees, underwriters' or placement agents' fees,
discounts or commissions and brokerage, consultant and other fees actually
incurred in connection with such issuance or sale and net of taxes paid or
payable as a result thereof.
"OFFICER" means the Chairman of the Board, Chief Executive Officer, the
President, Chief Operating Officer, the Chief Administrative Officer, any Vice
President, the Treasurer, any Assistant Treasurer, the Secretary or any
Assistant Secretary of the Company.
"OFFICERS' CERTIFICATE" means a certificate signed by two Officers.
"OPINION OF COUNSEL" means a written opinion, in form acceptable to the
Trustee, from legal counsel who is acceptable to the Trustee. The counsel may be
an employee of or counsel to the Company or the Trustee.
"ORDINARY COURSE OF BUSINESS" means sales or assignments of inventory or
accounts receivable or the performance of services at Fair Market Value or the
collection of accounts receivable in the ordinary course of business and does
not include any sale, assignment or collection after the voluntary or
involuntary bankruptcy of the Company, including, without limitation, those
events of the type described in
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"--Events of Default." The ordinary course of business includes (i) sales of
inventory to customers, (ii) returns of merchandise to manufacturers or
distributors for refunds of merchandise to manufacturers or distributors for
refunds or credit and (iii) exchanges of inventory with manufacturers or
distributors for other inventory.
"PERMITTED INVESTMENT" means an Investment by the Company or any Restricted
Subsidiary in (i) a Wholly Owned Subsidiary (including any Person which will
become a Wholly Owned Subsidiary as a result of such Investment) or any Person
that is merged or consolidated with or into, or transfers or conveys all or
substantially all of its business or assets to, the Company or any Wholly Owned
Subsidiary at the time such Investment is made; (ii) Temporary Cash Investments;
(iii) receivables owing to the Company or such Restricted Subsidiary, if created
or acquired in the ordinary course of business and payable or dischargeable in
accordance with customary trade terms; PROVIDED, HOWEVER, that nothing in this
paragraph limits in any way the ability of the Company or such Restricted
Subsidiary to settle, compromise or otherwise deal with such receivables in the
ordinary course of business; (iv) payroll, travel and similar advances to cover
matters that are expected at the time of such advances ultimately to be treated
as expenses for accounting purposes and that are made in the ordinary course of
business; (v) loans or advances, in an aggregate principal amount of $6 million
outstanding from time to time, to employees of the Company or such Restricted
Subsidiary made in the ordinary course of business consistent with past
practices of the Company or such Restricted Subsidiary, as the case may be; (vi)
stock, obligations or securities received in settlement of debts created in the
ordinary course of business and owing to the Company or such Restricted
Subsidiary or in satisfaction of judgments; (vii) joint ventures, whether in the
form of cash or through a contribution of assets (the nature of which, if other
than cash, to be determined in good faith by the Board of Directors of the
Company, whose determination will be evidenced by a Board Resolution delivered
to the Trustee) in an amount not to exceed $10 million at any one time; (viii)
any other property, asset or Person if made pursuant to any written agreement of
the Company or such Restricted Subsidiary in effect on the Issue Date; and (ix)
Investments made as a result of the receipt of non-cash consideration from an
Asset Disposition that was made pursuant to and in compliance with "--Certain
Covenants-- Limitation on Sales of Assets and Restricted Subsidiary Stock" or a
disposition of assets pursuant to and in compliance with Limitations on Merger,
Consolidation or Sale of Assets provisions in the Indenture.
"PERMITTED LIENS" means: (i) pledges or deposits by the Company or any
Restricted Subsidiary under workmen's compensation laws, unemployment insurance
laws, other types of social security benefits or similar legislation, or good
faith deposits in connection with bids, tenders or contracts (other than for the
payment of Indebtedness ) or leases to which the Company or any Restricted
Subsidiary is a party, or deposits to secure public or statutory obligations or
deposits of cash or United States government bonds to secure surety or appeal
bonds to which the Company or any Restricted Subsidiary is a party, or deposits
as security for contested taxes or import duties or for the payment of rent, in
each case incurred by the Company or any Restricted Subsidiary in the ordinary
course of business consistent with past practice; (ii) Liens imposed by law,
such as carriers', warehousemen's and mechanics' Liens, in each case for sums
not yet due from the Company or any Restricted Subsidiary or being contested in
good faith by appropriate proceedings by the Company or any Restricted
Subsidiary, as the case may be, or other Liens arising out of judgments or
awards against the Company or any Restricted Subsidiary with respect to which
the Company or such Restricted Subsidiary, as the case may be, will then be
prosecuting an appeal or other proceedings for review; (iii) Liens for property
taxes or other taxes, assessments or governmental charges of the Company or any
Restricted Subsidiary not yet due or payable or subject to penalties for
nonpayment or which are being contested by the Company or such Restricted
Subsidiary, as the case may be, in good faith by appropriate proceedings; (iv)
Liens in favor of issuers of standby letters of credit, performance bonds and
surety bonds issued pursuant to clause (vii) under "--Certain
Covenants--Limitation on Indebtedness" or clause (iii) under "--Certain
Covenants--Limitation on Restricted Subsidiary Indebtedness and Preferred
Stock"; (v) survey exceptions, encumbrances, easements or, reservations of, or
rights of others for, licenses, rights-of-way, sewers, electric lines, telegraph
and telephone lines and other similar purposes or zoning or other restrictions
as to the use of real property of the Company or any Restricted
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Subsidiary incidental to the ordinary course of conduct of the business of the
Company or such Restricted Subsidiary or as to the ownership of properties of
the Company or any Restricted Subsidiary, which, in either case, were not
incurred in connection with Indebtedness and which do not in the aggregate
materially adversely affect the value of said properties or materially impair
their use in the operation of the business of the Company or any Restricted
Subsidiary; (vi) Liens to secure Indebtedness permitted under clauses (a)(ii)
and (b)(i) under "--Certain Covenants--Limitation on Indebtedness" or clauses
(vi) and (vii) of the definition of "Permitted Restricted Subsidiary
Indebtedness"; (vii) Liens outstanding immediately after the Issue Date as set
forth on Schedule II to the Indenture (and not otherwise permitted by clause
(vi)); (viii) Liens on property, assets or shares of stock of any Restricted
Subsidiary at the time such Restricted Subsidiary became a Subsidiary of the
Company; PROVIDED, HOWEVER, that (A) if any such Lien has been Incurred in
anticipation of such transaction, such property, assets or shares of stock
subject to such Lien will have a Fair Market Value at the date of the
acquisition thereof not in excess of the lesser of (1) the aggregate purchase
price paid or owed by the Company in connection with the acquisition of such
Restricted Subsidiary and (2) the Fair Market Value of all property and assets
of such Restricted Subsidiary
and (B) any such Lien will not extend to any other assets owned by the Company
or any Restricted Subsidiary; (ix) Liens on property or assets at the time the
Company or any Restricted Subsidiary acquired such assets, including any
acquisition by means of a merger or consolidation with or into the Company or
such Restricted Subsidiary; PROVIDED, HOWEVER, that (A) if any such Lien is
Incurred in anticipation of such transaction, such property or assets subject to
such Lien will have a Fair Market Value at the date of the acquisition thereof
not in excess of the lesser of (1) the aggregate purchase price paid or owed by
the Company or such Restricted Subsidiary in connection with the acquisition
thereof and of any other property and assets acquired simultaneously therewith
and (2) the Fair Market Value of all such property and assets acquired by the
Company or such Restricted Subsidiary and (B) any such Lien will not extend to
any other property or assets owned by the Company or any Restricted Subsidiary;
(x) Liens securing Indebtedness or other obligations of a Restricted Subsidiary
owing to the Company or a Wholly Owned Subsidiary; (xi) Liens to secure any
extension, renewal, refinancing, replacement or refunding (or successive
extensions, renewals, refinancings, replacements or refundings), in whole or in
part, of any Indebtedness secured by Liens referred to in any of clauses (vii),
(viii) and (ix); PROVIDED, HOWEVER, that any such Lien will be limited to all or
part of the same property or assets that secured the original Lien (plus
improvements on such property) and the aggregate principal amount of
Indebtedness that is secured by such Lien will not be increased to an amount
greater than the sum of (A) the outstanding principal amount, or, if greater,
the committed amount, of the Indebtedness described under clauses (vii), (viii)
and (ix) at the time the original Lien became a Permitted Lien under the
Indenture and (B) an amount necessary to pay any premiums, fees and other
expenses Incurred by the Company in connection with such refinancing, refunding,
extension, renewal or replacement; (xii) Liens on property or assets of the
Company securing Hedging Obligations so long as the related Indebtedness is, and
is permitted under "-- Certain Covenants--Limitation on Indebtedness", secured
by a Lien on the same property securing the relevant Hedging Obligation; (xiii)
Liens securing Indebtedness incurred under (A) in the case of the Company, any
revolving credit facility, PROVIDED, that such Indebtedness constitutes
permitted hereunder and such Liens relate only to accounts receivable, inventory
and proceeds thereof (other than proceeds from the disposition of inventory
pursuant to any Sale/Leaseback Transaction); and (B) in the case of any Foreign
Restricted Subsidiary, any foreign currency revolving credit facility; PROVIDED,
that such Indebtedness was incurred in compliance with clause (ii) of "--Certain
Covenants--Limitation on Restricted Subsidiary Indebtedness and Preferred Stock"
and such Liens relate only to the accounts receivable, inventory and proceeds
thereof of such Foreign Restricted Subsidiary (other than proceeds from the
disposition of inventory pursuant to any Sale/Leaseback Transaction); and (xiv)
Liens on property or assets of the Company or any Restricted Subsidiary securing
Indebtedness (1) under Purchase Money Indebtedness or Capital Lease Obligations
permitted under, in the case of the Company, clause (vi) under "-- Certain
Covenants--Limitation on Indebtedness" and, in the case of such Restricted
Subsidiary, clause (ii) under "--Certain Covenants--Limitation on Restricted
Subsidiary Indebtedness and Preferred Stock" or (2) under Sale/Leaseback
Transactions permitted under "--Certain Covenants--Limitation on Sale/
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Leaseback Transactions"; PROVIDED, that (A) the amount of Indebtedness Incurred
in any specific case does not, at the time such Indebtedness is Incurred, exceed
the lesser of the cost or Fair Market Value of the property or asset acquired or
constructed in connection with such Purchase Money Indebtedness or Capital Lease
Obligation or subject to such Sale/Leaseback Transaction, as the case may be,
(B) such Lien will attach to such property or asset upon acquisition of such
property or asset and or upon commencement of such Sale/Leaseback Transaction,
as the case may be, and (C) no property or asset of the Company or any
Restricted Subsidiary (other than the property or asset acquired or contracted
in connection with such Purchase Money Indebtedness or Capital Lease Obligation
or subject to such Sale/Leaseback Transaction, as the case may be) are subject
to any Lien securing such Indebtedness.
"PERMITTED LINE OF BUSINESS" means (i) the line or lines of business in
which the Company or any of its Subsidiaries is engaged on the Issue Date and
(ii) a line or lines of business similar or related to the line or lines of
business described in the foregoing clause (i).
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, government
or any agency or political subdivision hereof or any other entity.
"PREFERRED STOCK", as applied to the Capital Stock of any corporation, means
Capital Stock of any class or classes (however designated) which is preferred as
to the payment of dividends, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such corporation, over
shares of Capital Stock of any other class of such corporation.
"PRO FORMA" means, with respect to any calculation made or required to be
made pursuant to the terms of the Indenture, a calculation in accordance with
Article 11 of Regulation S-X promulgated under the Securities Act (to the extent
applicable) as interpreted in good faith by the Board of Directors after
consultation with the independent certified public accountants of the Company,
or otherwise a calculation made in good faith by such Board after consultation
with such independent certified public accountants, as the case may be.
"PURCHASE MONEY INDEBTEDNESS" means, with respect to any Person, all
obligations of such Person (i) consisting of the deferred purchase price of any
property or assets, conditional sale obligations, obligations under any title
retention agreement (but excluding trade accounts payable arising in the
ordinary course of business) and other purchase money obligations, in each case
where the maturity of such obligation does not exceed the anticipated useful
life of the property or asset being financed, (ii) Incurred to finance the
acquisition or construction of such property or asset and (iii) Incurred to
finance the acquisition of 100% of the Capital Stock (other than directors'
qualifying shares) of any other Person.
"QUALIFIED CAPITAL STOCK" of any Person shall mean any Capital Stock of such
Person which is not Disqualified Stock.
"REDEEMABLE STOCK" means, with respect to any Person, any Capital Stock
which by its terms (or by the terms of any security into which it is convertible
or for which it is exchangeable) or otherwise (including, without limitation,
upon the happening of any event) (i) matures or is mandatorily redeemable
pursuant to a sinking fund obligation or otherwise, (ii) is convertible or
exchangeable for Indebtedness (other than Preferred Stock) or Disqualified Stock
or (iii) is redeemable at the option of the holder thereof, in whole or in part.
"REFINANCING INDEBTEDNESS" means Indebtedness that refunds, refinances,
replaces, renews, repays or extends (including pursuant to any defeasance or
discharge mechanism) (collectively, "refinances," "refinancing" and "refinanced"
has a correlative meaning) any Indebtedness (including Indebtedness of the
Company that refinances Indebtedness of any Restricted Subsidiary and
Indebtedness of any Restricted Subsidiary that refinances Indebtedness of
another Restricted Subsidiary) including Indebtedness that
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refinances Refinancing Indebtedness; PROVIDED, that (i) the Refinancing
Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the
Indebtedness being refinanced, (ii) the Refinancing Indebtedness has an Average
Life at the time such Refinancing Indebtedness is Incurred that is equal to or
greater than the Average Life of the Indebtedness being refinanced and (iii)
such Refinancing Indebtedness is Incurred in an aggregate principal amount (or
if issued with original issue discount, an aggregate issue price) that is equal
to or less than the sum of (A) the aggregate principal amount (or if issued with
original issue discount, the aggregate accreted value) then outstanding of the
Indebtedness being refinanced and (B) any premiums, fees and other expenses paid
by the Company or the Restricted Subsidiary, as the case may be, in connection
with such refinancing; PROVIDED, FURTHER, that Refinancing Indebtedness does not
include (x) Indebtedness of a Subsidiary of the Company that refinances
Indebtedness of the Company or (y) Indebtedness of the Company or a Restricted
Subsidiary that refinances Indebtedness of an Unrestricted Subsidiary; PROVIDED,
FURTHER, that the covenants relating to the Refinancing Indebtedness are no more
restrictive in the aggregate then those of the Indebtedness being refinanced
and, if the Indebtedness being refinanced is subordinated to the Notes, the
Refinancing Indebtedness is at least as subordinated to the Notes as the
Indebtedness being refinanced.
"STATED MATURITY" means, with respect to any security, the date specified in
such security as the fixed date on which the payment of principal of such
security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency beyond the control of the issuer unless such contingency has
occurred).
"SUBORDINATED OBLIGATION" means any Indebtedness of the Company (whether
outstanding on the Issue Date or thereafter Incurred) which is subordinate or
junior in right of payment to the Notes pursuant to the terms of such
Indebtedness or pursuant to a written agreement.
"RESTRICTED SUBSIDIARY" means any Subsidiary of the Company other than an
Unrestricted Subsidiary.
"SALE/LEASEBACK TRANSACTION" means an arrangement relating to property now
owned or hereafter by the Company whereby pursuant to a direct or indirect
arrangement the Company or any Restricted Subsidiary of the Company transfers
such property to a Person and the Company or such Restricted Subsidiary leases
it from such Person.
"SUBSIDIARY" of any Person means any corporation, association, partnership
or other business entity of which more than 50% of the total voting power of
shares of Capital Stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by (i) such Person,
(ii) such Person and one or more Subsidiaries of such Person or (iii) one or
more Subsidiaries of such Person.
"TEMPORARY CASH INVESTMENTS" means any of the following: (i) investments in
U.S. Government Obligations maturing within 90 days of the date of acquisition
thereof; (ii) investments in time deposit accounts, certificates of deposit and
money market deposits maturing within 90 days of the date of acquisition thereof
issued by a bank or trust company which is organized under the laws of the
United States of America or any State thereof having capital, surplus and
undivided profits aggregating in excess of $250,000,000 (or the Dollar
Equivalent thereof) and whose long-term debt is rated "A" or higher according to
Moody's Investors Service, Inc. (or such equivalent rating by at least one
"nationally recognized statistical rating organization" (as defined in Rule 436
under the Securities Act)); (iii) repurchase obligations with a term of not more
than seven days for underlying securities of the types described in clause (i)
entered into with a bank meeting the qualifications described in clause (ii);
and (iv) investments in commercial paper, maturing not more than 90 days after
the date of acquisition, issued by a corporation (other than an Affiliate of the
Company) organized and in existence under the laws of the United States of
America with a rating at the time as of which any investment therein is made of
"P-2" (or higher) according to Moody's Investors Service, Inc. or "A-2" (or
higher) according to Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc..
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"TRADE PAYABLES" means, with respect to any Person, any accounts payable or
any indebtedness or monetary obligation to trade creditors created, assumed or
Guaranteed by such Person arising in the ordinary course of business of such
Person in connection with the acquisition of goods or services, including under
the SKC Agreement as such Agreement is amended from time to time.
"UNRESTRICTED SUBSIDIARY" means (i) each Subsidiary of the Company that the
Company has designated, or is deemed to have designated, pursuant to the
provisions described under "--Restricted and Unrestricted Subsidiaries" as an
Unrestricted Subsidiary and that has not been redesignated a Restricted
Subsidiary and (ii) any Subsidiary of an Unrestricted Subsidiary.
"U.S. GOVERNMENT OBLIGATIONS" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable or redeemable at the issuer's option.
"VOTING STOCK" of a corporation means all classes of Capital Stock of such
corporation then outstanding and normally entitled to vote in the election of
directors.
"WHOLLY OWNED SUBSIDIARY" means a Restricted Subsidiary, all the Capital
Stock of which (other than directors' qualifying shares) is owned by the Company
or another Wholly Owned Subsidiary.
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CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following summary describes the principal federal income tax
consequences of the acquisition, beneficial ownership and disposition of
Exchange Notes that are held as capital assets and received in exchange for
tendered Old Notes that were purchased at original issuance, but does not
purport to be a comprehensive description of all of the tax considerations that
may be relevant to an investment in Exchange Notes. This summary deals only with
(i) citizens or residents of the United States or any State or political
subdivision thereof, (ii) corporations, partnerships and other business entities
created or organized under the laws of the United States, (iii) estates the
income of which is subject to U.S. federal income taxation regardless of its
source and (iv) trusts with respect to which a court within the United States is
able to exercise primary supervision over its administration and one or more
U.S. fiduciaries have the authority to control all substantial decisions (each,
a "Holder"). This summary does not address investors that may be subject to
special rules, such as banks, tax-exempt entities, insurance companies, dealers
in securities, persons whose functional currency is not the U.S. dollar or
persons that will hold Exchange Notes as part of a "straddle" or "conversion
transaction" for federal income tax purposes or otherwise as part of an
integrated transaction.
This summary is based on laws, regulations, rulings and decisions in effect
as of the date of this Prospectus, all of which are subject to change, with
possible retroactive effect. No ruling from the Internal Revenue Service (the
"IRS") will be sought with respect to the Exchange Notes, and the IRS could take
a contrary view with respect to the matters described below. HOLDERS SHOULD
CONSULT THEIR TAX ADVISORS AS TO THE FEDERAL, STATE, LOCAL AND OTHER TAX
CONSEQUENCES TO THEM OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF EXCHANGE
NOTES.
CONSEQUENCES OF THE EXCHANGE
The exchange of Exchange Notes for Old Notes pursuant to the Exchange Offer
will not constitute a taxable event for federal income tax purposes.
Accordingly, no gain or loss will be recognized by a Holder upon receipt of an
Exchange Note, the holding period of an Exchange Note will include the holding
period of the Old Note exchanged therefor, and the adjusted tax basis of an
Exchange Note will be the same as the adjusted tax basis immediately before the
exchange of the Old Note exchanged therefor.
STATED INTEREST
Stated interest on the Exchange Notes will be taxable to a Holder as
ordinary interest income as the interest accrues or is paid (in accordance with
the Holder's method of tax accounting).
ORIGINAL ISSUE DISCOUNT
The Exchange Notes will be treated as issued with original issue discount
("OID") for federal income tax purposes. The aggregate amount of OID in respect
of an Exchange Note will be equal to the difference between its principal amount
and its "issue price." An Exchange Note's "issue price" is equal to the first
price (including any accrued interest) at which a substantial portion of the Old
Notes were first sold to investors.
Holders generally will be required to include OID on an Exchange Note in
income over the term of the Exchange Note as the OID accrues, without regard to
the timing of receipt of the cash attributable to such income. OID will accrue
under a constant yield method based on the original yield to maturity of the
Exchange Note calculated by reference to its issue price. The amount of OID on
an Exchange Note allocable to each semi-annual accrual period is determined by
(i) multiplying the "adjusted issued price" (as defined) of the Note at the
beginning of the accrual period by a fraction, the numerator of which is the
annual yield to maturity of the Exchange Note and the denominator of which is
two and (ii) subtracting from that product the stated interest payable on the
Exchange Note with respect to that semi-annual accrual period. The "adjusted
issue price" of an Exchange Note at the beginning of any semi-annual
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accrual period will generally be the sum of its issue price and the amount of
OID allocable to all prior accrual periods.
SALE, EXCHANGE AND RETIREMENT OF NOTES
Upon the sale, exchange or retirement of an Exchange Note, a Holder will
recognize gain or loss equal to the difference between the amount received
(other than amounts in respect of accrued and unpaid interest) and the adjusted
tax basis of the Exchange Note. A Holder's tax basis in an Exchange Note will,
in general, be such Holder's cost therefor, increased by the aggregate OID with
respect thereto previously included in income by the Holder. Any such gain or
loss will be capital gain or loss and will be long-term capital gain or loss if,
at the time of sale, exchange or retirement, the Exchange Note has been held for
more than one year.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Information reporting requirements apply to certain payments of principal of
and interest on (and the amount of OID, if any, accrued on) a debt obligation,
and to proceeds of certain sales of a debt obligation before maturity, paid to
certain nonexempt persons. In addition, a backup withholding tax also may apply
with respect to such amounts if such a person fails to provide a correct
taxpayer identification number and other information. The backup withholding tax
rate is 31%. Any amounts withheld under the backup withholding rules from a
payment to a Holder will be allowed as a refund or a credit against such
Holder's U.S. federal income tax.
STATE, LOCAL AND FOREIGN TAXES
Holders should consult their tax advisors with respect to state, local and
foreign tax considerations relevant to an investment in Exchange Notes.
99
<PAGE>
PLAN OF DISTRIBUTION
A broker-dealer that is the holder of Old Notes that were acquired for the
account of such broker-dealer as a result of market-making or other trading
activities (other than Old Notes acquired directly from the Company or any
affiliate of the Company) may exchange such Old Notes for Exchange Notes
pursuant to the Exchange Offer; PROVIDED, that each broker-dealer that receives
Exchange Notes for its own account in exchange for Old Notes, where such Old
Notes were acquired by such broker-dealer as a result of market-making or other
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of Exchange Notes received in exchange for Old Notes
where such Old Notes were acquired as a result of market-making activities or
other trading activities. The Company has agreed that for a period of 90 days
after consummation of the Exchange Offer, it will make this Prospectus, as it
may be amended or supplemented from time to time, available to any broker-dealer
for use in connection with any such resale. In addition, until , 1997,
all dealers effecting transactions in the Exchange Notes may be required to
deliver a prospectus.
The Company will not receive any proceeds from any sale of Exchange Notes by
broker-dealers or any other holder of Exchange Notes. Exchange Notes received by
broker-dealers for their own account pursuant to the Exchange Offer may be sold
from time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the Exchange Notes or
a combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer and/or the purchasers of any such
Exchange Notes. Any broker-dealer that resells Exchange Notes that were received
by it for its own account pursuant to the Exchange Offer and any broker or
dealer that participates in a distribution of such Exchange Notes may be deemed
to be an "underwriter" within the meaning of the Securities Act and any profit
on any such resale of Exchange Notes and any commissions or concessions received
by any such persons may be deemed to be underwriting compensation under the
Securities Act. The Letter of Transmittal states that by acknowledging that it
will deliver and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
For a period of 90 days after consummation of the Exchange Offer, the
Company will promptly send additional copies of this Prospectus and any
amendment or supplement to this Prospectus to any broker-dealer that requests
such documents in the Letter of Transmittal. The Company has agreed to pay all
expenses incident to the Exchange Offer and to the Company's performance of, or
compliance with, the Registration Rights Agreement (other than commissions or
concessions of any brokers or dealers) and will indemnify the holders of the
Notes (including any broker-dealers) against certain liabilities, including
liabilities under the Securities Act.
LEGAL MATTERS
Certain legal matters related to the Exchange Notes being offered hereby are
being passed upon for the Company by Cadwalader, Wickersham & Taft, New York,
New York.
EXPERTS
The consolidated balance sheets of the Company and its subsidiaries as of
September 30, 1996 and 1995, and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the three years in
the period ended September 30, 1996, included in this Prospectus, have been
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their report with respect thereto appearing herein.
100
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Consolidated Financial Statements
Report of Independent Public Accountants................................................................. F-2
Consolidated Balance Sheets as of September 30, 1996 and 1995............................................ F-3
Consolidated Statements of Operations for the four months ended September 30, 1996, the eight months
ended May 31, 1996 and the twelve months ended September 30, 1995 and 1994............................. F-4
Consolidated Statements of Cash Flows for the four months ended September 30, 1996, the eight months
ended May 31, 1996 and the twelve months ended September 30, 1995 and 1994............................. F-5
Consolidated Statements of Stockholders' Equity (Deficit) for the four months ended September 30, 1996,
the eight months ended May 31, 1996 and the twelve months ended September 30, 1995 and 1994............ F-7
Notes to Consolidated Financial Statements............................................................... F-8
Unaudited Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets as of December 31, 1996 (unaudited) and September 30, 1996......... F-39
Condensed Consolidated Statements of Operations for the three months ended December 31, 1996 (unaudited)
and 1995 (unaudited)................................................................................... F-40
Condensed Consolidated Statements of Cash Flows for the three months ended December 31, 1996 (unaudited)
and 1995 (unaudited)................................................................................... F-41
Condensed Consolidated Statements of Stockholders' Equity for the three months ended December 31, 1996
(unaudited) and 1995 (unaudited)....................................................................... F-43
Notes to Condensed Consolidated Financial Statements..................................................... F-44
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of Anacomp, Inc.:
We have audited the accompanying consolidated balance sheets of Anacomp,
Inc. (an Indiana corporation) and subsidiaries as of September 30, 1996 and
1995, and the related consolidated statements of operations, stockholders'
equity (deficit), and cash flows for the four months ended September 30, 1996,
the eight months ended May 31, 1996 and the twelve months ended September 30,
1995 and 1994. These consolidated financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
consolidated financial statements 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.
As more fully described in Note 2 to the consolidated financial statements,
effective June 4, 1996, the Company emerged from protection under Chapter 11 of
the U.S. Bankruptcy Code pursuant to a Reorganization Plan which was confirmed
by the Bankruptcy Court on May 20, 1996. In accordance with AICPA Statement of
Position 90-7, the Company adopted "Fresh Start Reporting" whereby its assets,
liabilities and new capital structure were adjusted to reflect estimated fair
values as of May 31, 1996. As a result, the consolidated financial statements
for the periods subsequent to May 31, 1996 reflect the Successor Company's new
basis of accounting and are not comparable to the Predecessor Company's pre-
reorganization consolidated financial statements.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Anacomp,
Inc. and subsidiaries as of September 30, 1996 and 1995, and the results of
their operations and their cash flows for the four months ended September 30,
1996, the eight months ended May 31, 1996 and the twelve months ended September
30, 1995 and 1994 in conformity with generally accepted accounting principles.
As explained in Note 1 to the consolidated financial statements, effective
June 30, 1995, the Company changed its method of accounting for the measurement
of goodwill impairment.
ARTHUR ANDERSEN LLP
Indianapolis, Indiana,
November 15, 1996
F-2
<PAGE>
ANACOMP, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
REORGANIZED PREDECESSOR
COMPANY COMPANY
<S> <C> <C>
----------------------------
<CAPTION>
AS OF AS OF
SEPTEMBER 30, SEPTEMBER 30,
1996 1995
------------- -------------
(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents......................................................... $ 38,198 $ 19,415
Restricted cash................................................................... 9,597 --
Accounts and notes receivable, less allowances for doubtful accounts of $6,459 and
$7,367,respectively............................................................. 58,806 90,091
Current portion of long-term receivables.......................................... 4,690 6,386
Inventories....................................................................... 31,856 53,995
Prepaid expenses and other........................................................ 4,383 5,306
------------- -------------
Total current assets................................................................ 147,530 175,193
Property and equipment, at cost less accumulated depreciation and amortization of
$3,696 and $96,898,respectively................................................... 27,102 44,983
Long-term receivables, net of current portion....................................... 10,632 12,322
Excess of purchase price over net assets of businesses acquired and other
intangibles, net.................................................................. 2,285 160,315
Reorganization value in excess of identifiable assets (See Note 3).................. 240,344 --
Other assets........................................................................ 7,528 28,216
------------- -------------
$ 435,421 $ 421,029
------------- -------------
------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current portion of long-term debt................................................. $ 31,848 $ 389,900
Accounts payable.................................................................. 48,090 57,368
Accrued compensation, benefits and withholdings................................... 13,728 20,891
Accrued income taxes.............................................................. 11,930 9,365
Accrued interest.................................................................. 10,586 40,746
Other accrued liabilities......................................................... 36,814 60,587
------------- -------------
Total current liabilities........................................................... 152,996 578,857
------------- -------------
Long-term debt, net of current portion.............................................. 217,044 --
Other noncurrent liabilities........................................................ 6,812 5,841
------------- -------------
Total noncurrent liabilities........................................................ 223,856 5,841
------------- -------------
Commitments and contingencies (See Note 18)
Redeemable preferred stock, $.01 par value, issued and outstanding 500,000 shares
(aggregate preference value of $25,000)........................................... -- 24,574
------------- -------------
Stockholders' equity (deficit):
Preferred stock, 1,000,000 shares authorized, none issued -- --
Common stock, $.01 par value; 20,000,000 and 100,000,000 shares authorized
respectively; 10,099,050 and 46,187,625 issued, respectively.................... 101 462
Capital in excess of par value.................................................... 80,318 182,725
Cumulative translation adjustment (from May 31, 1996 for Reorganized Company)..... 159 1,329
Accumulated deficit (from May 31, 1996 for Reorganized Company)................... (22,009) (372,759)
------------- -------------
Total stockholders' equity (deficit)................................................ 58,569 (188,243)
------------- -------------
$ 435,421 $ 421,029
------------- -------------
------------- -------------
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE>
ANACOMP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
REORGANIZED
COMPANY PREDECESSOR COMPANY
<S> <C> <C> <C> <C>
-----------------------------------------------------
<CAPTION>
TWELVE MONTHS
FOUR MONTHS EIGHT MONTHS ENDED
ENDED ENDED SEPTEMBER 30,
SEPTEMBER 30, MAY 31, -----------------------
1996 1996 1995 1994
------------- ------------- ----------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNT)
<S> <C> <C> <C> <C>
REVENUES:
Services provided....................................... $ 59,055 $ 130,202 $ 219,881 $ 223,511
Equipment and supply sales.............................. 92,487 204,396 371,308 369,088
------------- ------------- ----------- ----------
151,542 334,598 591,189 592,599
------------- ------------- ----------- ----------
OPERATING COSTS AND EXPENSES:
Costs of services provided.............................. 31,858 72,641 126,493 122,628
Costs of equipment and supplies sold.................... 70,097 156,526 290,842 274,575
Selling, general and administrative expenses............ 29,688 63,826 132,459 115,819
Amortization of reorganization asset.................... 25,663 -- -- --
Special charges (See Note 1)............................ -- -- 136,889 --
Restructuring charges (See Note 6)...................... -- -- 32,695 --
------------- ------------- ----------- ----------
157,306 292,993 719,378 513,022
------------- ------------- ----------- ----------
Income (loss) before interest, other income,
reorganization items, income taxes, extraordinary credit
and cumulative effect of accounting change.............. (5,764) 41,605 (128,189) 79,577
------------- ------------- ----------- ----------
Interest income........................................... 997 1,576 2,000 3,144
Interest expense and fee amortization..................... (12,869) (26,760) (70,938) (67,174)
Financial restructuring costs (See Note 7)................ -- -- (5,987) --
Other income (expense).................................... 27 6,968 (212) (192)
------------- ------------- ----------- ----------
(11,845) (18,216) (75,137) (64,222)
------------- ------------- ----------- ----------
Income (loss) before reorganization items, income taxes,
extraordinary credit, and cumulative effect of
accounting change....................................... (17,609) 23,389 (203,326) 15,355
Reorganization items (See Note 4)......................... -- 92,839 -- --
------------- ------------- ----------- ----------
Income (loss) before income taxes, extraordinary credit
and cumulative effect of accounting change.............. (17,609) 116,228 (203,326) 15,355
Provision for income taxes................................ 4,400 3,700 35,000 8,400
------------- ------------- ----------- ----------
Income (loss) before extraordinary credit and cumulative
effect of accounting change............................. (22,009) 112,528 (238,326) 6,955
Extraordinary credit--gain on discharge of indebtedness,
net of taxes (See Note 3)............................... -- 52,442 -- --
Cumulative effect on prior years of a change in accounting
for income taxes........................................ -- -- -- 8,000
------------- ------------- ----------- ----------
Net income (loss)......................................... (22,009) 164,970 (238,326) 14,955
Preferred stock dividends and discount accretion.......... -- 540 2,158 2,158
------------- ------------- ----------- ----------
Net income (loss) available to common stockholders........ $ (22,009) $ 164,430 $ (240,484) $ 12,797
------------- ------------- ----------- ----------
------------- ------------- ----------- ----------
EARNINGS (LOSS) PER COMMON ANDCOMMON EQUIVALENT SHARE..... $ (2.19)
-------------
-------------
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE>
ANACOMP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
REORGANIZED
COMPANY PREDECESSOR COMPANY
<S> <C> <C> <C> <C>
--------------------------------------------------
<CAPTION>
TWELVE MONTHS
FOUR MONTHS EIGHT MONTHS ENDED
ENDED ENDED SEPTEMBER 30,
SEPTEMBER 30, MAY 31, --------------------
1996 1996 1995 1994
------------- ------------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)........................................... $ (22,009) $ 164,970 $(238,326) $ 14,955
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Extraordinary credit...................................... -- (52,442) -- --
Non-cash reorganization items............................. -- (107,352) -- --
Depreciation and amortization............................. 31,610 18,788 43,375 40,649
Cumulative effect of a change in accounting for income
taxes................................................... -- -- -- (8,000)
Provision (benefit) for losses on accounts receivable..... 482 110 2,742 (695)
Provision for inventory valuation......................... -- -- 10,956 --
Non-cash charge in lieu of taxes.......................... 1,300 -- -- --
Deferred taxes............................................ -- -- 29,000 6,000
Special charges (See Note 1).............................. -- -- 136,889 --
Gain on sale of ICS Division.............................. -- (6,202) -- --
Other..................................................... (175) 997 6,308 776
Restricted cash requirements.................................. (2,755) (6,842) -- --
Change in assets and liabilities net of effects from
acquisitions:
Decrease in accounts and long-term receivables.............. 5,637 24,624 30,948 3,040
Decrease (increase) in inventories and prepaid expenses..... 10,416 11,174 (1,612) 15,254
Decrease (increase) in other assets......................... 1 1,094 (8,207) (11,349)
Increase (decrease) in accounts payable and accrued
expenses................................................ (17,283) (5,077) 11,465 (3,623)
Increase (decrease) in other noncurrent liabilities......... 4,671 (5,899) (3,626) (4,323)
------------- ------------- --------- ---------
Net cash provided by operating activities................. 11,895 37,943 19,912 52,684
------------- ------------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of other assets.......................... -- -- 18,777 7,805
Proceeds from sale of ICS Division.......................... -- 13,554 -- --
Purchases of property, plant and equipment.................. (2,224) (3,599) (14,372) (18,868)
Payments to acquire companies and customer rights........... (3,844) -- (1,262) (14,565)
------------- ------------- --------- ---------
Net cash provided by (used in) investing activities....... (6,068) 9,955 3,143 (25,628)
------------- ------------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock and warrants......... (139) -- 743 1,484
Proceeds from revolving line of credit and long-term
borrowing............................................... -- 2,656 22,529 39,000
Principal payments on long-term debt........................ (22,646) (15,332) (45,859) (71,095)
Preferred dividends paid.................................... -- -- (1,031) (2,062)
------------- ------------- --------- ---------
Net cash used in financing activities..................... (22,785) (12,676) (23,618) (32,673)
------------- ------------- --------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH....................... (172) 691 107 566
------------- ------------- --------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.............. (17,130) 35,913 (456) (5,051)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD.............. 55,328 19,415 19,871 24,922
------------- ------------- --------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................... $ 38,198 $ 55,328 $ 19,415 $ 19,871
------------- ------------- --------- ---------
------------- ------------- --------- ---------
</TABLE>
F-5
<PAGE>
ANACOMP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
<TABLE>
<CAPTION>
REORGANIZED
COMPANY PREDECESSOR COMPANY
<S> <C> <C> <C> <C>
--------------------------------------------------
<CAPTION>
TWELVE MONTHS
FOUR MONTHS EIGHT MONTHS ENDED
ENDED ENDED SEPTEMBER 30,
SEPTEMBER 30, MAY 31, --------------------
1996 1996 1995 1994
------------- ------------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Cash paid during the period for:
Interest.................................................... $ 5,581 $ 11,613 $ 39,426 $ 57,781
Income taxes................................................ $ 2,942 $ 3,045 $ 4,128 $ 2,007
</TABLE>
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
See Note 3 for discussion of non-cash activity related to Fresh Start
Reporting and the Reorganization. During 1996, 1995, and 1994 the Company
acquired companies and rights to provide future services. In conjunction with
these acquisitions, the purchase price consisted of the following:
<TABLE>
<CAPTION>
REORGANIZED
COMPANY PREDECESSOR COMPANY
<S> <C> <C> <C> <C>
----------------------------------------------------
<CAPTION>
TWELVE MONTHS
FOUR MONTHS EIGHT MONTHS ENDED
ENDED ENDED SEPTEMBER 30,
SEPTEMBER 30, MAY 31, --------------------
1996 1996 1995 1994
------------- --------------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Cash paid..................................................... $ 3,844 $ -- $ 1,262 $ 14,565
Credit memos issued........................................... -- -- -- 3,085
Notes payable issued.......................................... 500 -- -- 4,290
Stock issued.................................................. -- -- -- 17,201
------ ----- --------- ---------
Total fair value of acquisitions.............................. $ 4,344 $ -- $ 1,262 $ 39,141
------ ----- --------- ---------
------ ----- --------- ---------
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE>
ANACOMP, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
CAPITAL IN CUMULATIVE
COMMON EXCESS OF TRANSLATION ACCUMULATED
STOCK PAR VALUE ADJUSTMENT DEFICIT TOTAL
----------- ---------- ----------- ------------ -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE AT SEPTEMBER 30, 1993-- PREDECESSOR
COMPANY.......................................... $ 406 $ 163,209 $ (4,744) $ (145,072) $ 13,799
Common stock issued for purchases under the
Employee Stock Purchase Plan..................... 3 872 -- -- 875
Exercise of stock options.......................... 3 606 -- -- 609
Preferred stock dividends.......................... -- -- -- (2,062) (2,062)
Accretion of redeemable preferred stock discount... -- -- -- (96) (96)
Translation adjustments for twelve months.......... -- -- 4,475 -- 4,475
NBS stock issuance................................. 20 7,380 -- -- 7,400
Graham stock issuance.............................. 25 9,776 -- -- 9,801
Net income for the twelve months................... -- -- -- 14,955 14,955
----- ---------- ----------- ------------ -----------
BALANCE AT SEPTEMBER 30, 1994-- PREDECESSOR
COMPANY.......................................... 457 181,843 (269) (132,275) 49,756
Common stock issued for purchases under the
Employee Stock Purchase Plan..................... 3 689 -- -- 692
Exercise of stock options.......................... 1 50 -- -- 51
Preferred stock dividends.......................... -- -- -- (2,062) (2,062)
Accretion of redeemable preferred stock discount... -- -- -- (96) (96)
Translation adjustments for twelve months.......... -- -- 1,598 -- 1,598
Graham stock issuance.............................. 1 143 -- -- 144
Net loss for the twelve months..................... -- -- -- (238,326) (238,326)
----- ---------- ----------- ------------ -----------
BALANCE AT SEPTEMBER 30, 1995-- PREDECESSOR
COMPANY.......................................... 462 182,725 1,329 (372,759) (188,243)
Preferred stock conversion......................... 11 7,893 -- -- 7,904
Preferred stock dividends.......................... -- -- -- (516) (516)
Accretion of redeemable preferred stock discount... -- -- -- (24) (24)
Translation adjustment for eight months............ -- -- (1,560) -- (1,560)
NBS stock issuance................................. 11 (11) -- -- --
Reorganization..................................... (484) (190,607) 231 208,329 17,469
New stock issuance................................. 100 79,666 -- -- 79,766
Net income for eight months........................ -- -- -- 164,970 164,970
----- ---------- ----------- ------------ -----------
BALANCE AT MAY 31, 1996--
REORGANIZED COMPANY.............................. 100 79,666 -- -- 79,766
Common stock issued for restricted stock award..... 1 791 -- -- 792
Fees associated with rights offering............... -- (139) -- -- (139)
Translation adjustment for four months............. -- -- 159 -- 159
Net loss for four months........................... -- -- -- (22,009) (22,009)
----- ---------- ----------- ------------ -----------
BALANCE AT SEPTEMBER 30, 1996-- REORGANIZED
COMPANY.......................................... $ 101 $ 80,318 $ 159 $ (22,009) $ 58,569
----- ---------- ----------- ------------ -----------
----- ---------- ----------- ------------ -----------
</TABLE>
See notes to consolidated financial statements.
F-7
<PAGE>
ANACOMP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
CONSOLIDATION
The consolidated financial statements include the accounts of Anacomp, Inc.
("Anacomp" or the "Company") and its wholly-owned subsidiaries. Material
intercompany transactions have been eliminated. Certain amounts in the prior
year consolidated financial statements have been reclassified to conform to the
current presentation.
Due to the Reorganization and implementation of Fresh Start Reporting, the
consolidated financial statements for the Reorganized Company (period starting
May 31, 1996) are not comparable to those of the Predecessor Company. For
financial reporting purposes, the effective date of the emergence from
bankruptcy is considered to be the close of business on May 31, 1996.
A black line has been drawn on the accompanying consolidated financial
statements to distinguish between the Reorganized Company and the Predecessor
Company.
FOREIGN CURRENCY TRANSLATION
Substantially all assets and liabilities of Anacomp's international
operations are translated at the year-end exchange rates; income and expenses
are translated at the average exchange rates prevailing during the year.
Translation adjustments are accumulated in a separate section of stockholders'
equity. Foreign currency transaction gains and losses are included in net
income.
SEGMENT REPORTING
Anacomp operates in a single business segment: providing equipment, supplies
and services for information management, including storage, processing and
retrieval.
SIGNIFICANT ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.
REVENUE RECOGNITION
Revenues from sales of products and services or from lease of equipment
under sales-type leases are recorded based on shipment of products or
performance of services. Under sales-type leases, the present value of all
payments due under the lease contracts is recorded as revenue, cost of sales is
charged with the book value of the equipment plus installation costs, and future
interest income is deferred and recognized over the lease term. Revenues from
maintenance contracts are deferred and recognized in earnings on a pro rata
basis over the period of the agreements.
INVENTORIES
Inventories are stated at the lower of cost or market, with cost being
determined by methods approximating the first-in, first-out basis.
F-8
<PAGE>
ANACOMP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
The cost of the inventories is distributed as follows:
<TABLE>
<CAPTION>
REORGANIZED PREDECESSOR
COMPANY COMPANY
<S> <C> <C>
<CAPTION>
----------------------------
SEPTEMBER 30, SEPTEMBER 30,
1996 1995
------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Finished goods................................................. $ 22,557 $ 38,702
Work in process................................................ 2,748 4,955
Raw materials and supplies..................................... 6,551 10,338
------------- -------------
$ 31,856 $ 53,995
------------- -------------
------------- -------------
</TABLE>
RESTRICTED CASH
Restricted cash represents cash reserved as collateral for letters of credit
issued by the Company or cash held in escrow primarily to secure certain
contingent obligations of the Company. The contingent obligations are primarily
related to environmental liabilities and certain insurance policies.
PROPERTY AND EQUIPMENT
Property and equipment are carried at cost. Depreciation and amortization of
property and equipment are generally provided under the straight-line method for
financial reporting purposes over the shorter of the estimated useful lives or
the lease terms. Tooling costs are amortized over the total estimated units of
production, not to exceed three years. In accordance with Fresh Start Reporting,
property and equipment were reflected at fair market values as of May 31, 1996
(See Note 3).
DEBT ISSUANCE COSTS
The Company capitalizes all costs related to its issuance of debt and
amortizes those costs using the effective interest method over the life of the
related debt instruments. Debt issuance costs were $200,000 and $12.7 million at
September 30, 1996 and 1995, respectively, and are included in "Other assets" in
the accompanying Consolidated Balance Sheets. During the eight months ended May
31, 1996 and fiscal years 1995 and 1994, the Company amortized $1 million, $5.7
million and $5.3 million, respectively, of debt issuance costs which are
included in "Interest expense and fee amortization" in the accompanying
Consolidated Statements of Operations. Also, in accordance with AICPA Statement
of Position 90-7, "Financial Reporting by Entities in Reorganization Under the
Bankruptcy Code" (SOP 90-7), the Company wrote-off deferred debt issuance costs
of $11.1 million upon the date of the bankruptcy filing. These costs are
included in "Reorganization Items" in the accompanying Consolidated Statements
of Operations for the eight months ended May 31, 1996.
GOODWILL
Excess of purchase price over net assets of businesses acquired ("goodwill")
is amortized on the straight-line method over the estimated periods of future
demand for the related products acquired. Goodwill at September 30, 1996 is
being amortized over a three year period. Effective with Fresh Start Reporting,
the Company now measures impairment based on future cash flows of the related
products.
F-9
<PAGE>
ANACOMP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
For the Predecessor Company, effective June 30, 1995, Anacomp elected to
modify its method of measuring goodwill impairment to a fair value approach. If
it was determined that impairment had occurred, the excess of the unamortized
goodwill over the fair value of the goodwill applicable to the business unit was
charged to operations. For purposes of determining fair value, the Company
valued the goodwill using a multiple of cash flow from operations based on
consultation with its investment advisors. Anacomp concluded that fair value was
a better measurement of goodwill considering the Company's highly leveraged
financial condition. As discussed in Note 8, Anacomp revised its projected
operating results in fiscal 1995 which, along with applying Anacomp's revised
goodwill accounting policy, resulted in a write-off of $108 million of goodwill
for the year ended September 30, 1995. This write-off is reflected in "Special
charges" in the accompanying Consolidated Statement of Operations.
REORGANIZATION VALUE IN EXCESS OF AMOUNTS ALLOCATED TO IDENTIFIABLE ASSETS
As more fully discussed in Note 3, the Company has "reorganization value in
excess of amounts allocated to identifiable assets" of $240,344 at September 30,
1996. This asset is being amortized over a 3.5 year period beginning May 31,
1996. The carrying value of the Reorganization Asset will be periodically
reviewed if the facts and circumstances suggest that it may be impaired. The
Company will measure the impairment based upon future cash flows of the Company
over the remaining amortization period.
OTHER INTANGIBLES
Other intangibles of $21.3 million, net of accumulated amortization of $16.1
million, at September 30, 1995, represent the purchase of the rights to provide
microfilm or maintenance services to certain customers and were being amortized
on a straight-line basis over 10 years. These unamortized costs were evaluated
for impairment each period by determining their net realizable value. As
discussed in Note 3, in connection with Fresh Start Reporting, the Company
wrote-off the remaining balance of other intangibles at May 31, 1996.
RESEARCH AND DEVELOPMENT
The engineering costs associated specifically with research and development
programs are expensed as incurred, and amounted to $1.3 million for the four
months ended September 30, 1996, $2.4 million for the eight months ended May 31,
1996, $2.2 million in 1995, and $3 million in 1994. The Company supports several
engineering processes, including basic technological research, product
development and sustaining engineering support for existing customer
installations. The majority of the operating costs for engineering programs in
fiscal years 1995 and 1994 related to continued software development for the XFP
2000 COM recorder, which were recorded as deferred software costs.
Deferred software costs are the capitalized costs of software products to be
sold in future periods with COM systems or as stand alone products for current
COM system users. The unamortized costs are evaluated for impairment each period
by determining their net realizable value. Such costs are amortized over the
greater of the estimated units of sale or under the straight-line method not to
exceed five years. Due to lower than expected sales of new software products
introduced in 1995, Anacomp revised its projected future sales and operating
results of software products through 1999. As a result, during 1995 Anacomp
wrote off $20.3 million of deferred software costs and established a reserve of
$8.6 million (none of which exists at September 30, 1996) for future payments to
IBM Pennant Systems for software royalty and system support obligations which
are not recoverable based on these revised projections (See Note
F-10
<PAGE>
ANACOMP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
18). These charges are reflected in "Special charges" in the accompanying
Consolidated Statement of Operations for the fiscal year ended September 30,
1995. Unamortized deferred software costs remaining as of September 30, 1996
total $4.2 million and are included in "Other assets" on the accompanying
Consolidated Balance Sheets.
SALE-LEASEBACK TRANSACTIONS
Anacomp entered into sale-leaseback transactions of $19.3 million in 1995
and $11.9 million in 1994 relating to COM systems installed in the Company's
data service centers. Part of the proceeds were treated as fixed asset sales and
the remainder as sales of equipment. Revenues of $3.5 million and $5.6 million
were recorded for the years ended September 30, 1995 and 1994, respectively. All
profits were deferred and were being recognized over the applicable leaseback
periods. In connection with Fresh Start Reporting as discussed in Note 3, the
deferred profit amount was reduced to zero. Concurrently, the Company
established an unfavorable lease reserve related to these leases in the amount
of $8.6 million. The unfavorable lease reserve is being amortized over the
applicable lease periods.
ACCRUED LEASE RESERVES
Other noncurrent liabilities include reserves established for unfavorable
facility and equipment lease commitments, vacant facilities and related future
lease costs. Total obligations recorded for these unfavorable lease commitments
and future lease and related costs at their estimated amounts were $11.4 million
and $7.5 million at September 30, 1996 and 1995, respectively. The current
portion of these obligations was $6.8 million and $2 million as of September 30,
1996 and 1995, respectively, and is included in "Other accrued liabilities" and
"Accounts payable" in the accompanying Consolidated Balance Sheets.
INCOME TAXES
In general, Anacomp's practice has been to reinvest the earnings of its
foreign subsidiaries in those operations and to repatriate those earnings only
when it was advantageous to do so. In 1995, Anacomp changed its practice whereby
the Company now repatriates these earnings. As a result, Anacomp recorded
deferred taxes of $8.8 million on all undistributed foreign earnings in 1995.
In February 1992, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("FAS
109"). FAS 109 mandates the liability method for computing deferred income taxes
and requires that the benefit of certain loss carryforwards be estimated and
recorded as an asset unless it is "more likely than not" that the benefit will
not be realized. Another principal difference is that changes in tax rates and
laws will be reflected in income from continuing operations in the period such
changes are enacted.
Anacomp adopted FAS 109 in the first quarter of fiscal 1994. Under FAS 109,
the Company recorded a significant deferred tax asset in 1994 to reflect the
benefit of loss carryforwards that could not be recognized under prior
accounting rules. The recording of this asset reduced goodwill and increased
income as discussed in more detail in Note 17. During 1995, the valuation
allowance was increased to reduce the deferred tax asset to zero as a result of
the Company's deteriorating financial condition.
F-11
<PAGE>
ANACOMP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Anacomp considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents. These temporary
investments, primarily repurchase agreements and other overnight investments,
are recorded at cost, which approximates market.
NOTE 2. FINANCIAL REORGANIZATION:
On May 20, 1996 (the "Confirmation Date"), the U.S. Bankruptcy Court
confirmed the Company's Third Amended Joint Plan of Reorganization (the
"Reorganization"), and on June 4, 1996, the Company emerged from bankruptcy.
Pursuant to the Reorganization, on such date certain indebtedness of the Company
was canceled in exchange for cash, new indebtedness, and /or new equity
interests, certain indebtedness was reinstated, certain other prepetition claims
were discharged, certain claims were settled, executory contracts and unexpired
leases were assumed or rejected, and the members of a new Board of Directors of
the Company were designated. The Company simultaneously distributed to creditors
approximately $22 million in cash, $112.2 million principal amount of its
11 5/8% Senior Secured Notes due 1999 (the "Senior Secured Notes") and $160
million principal amount of its 13% Senior Subordinated Notes due 2002 (the
"Senior Subordinated Notes"), equity securities consisting of 10 million shares
of new common stock and 362,694 warrants, each of which is convertible into
1.0566 shares of new common stock during the five year period ending June 3,
2001 at an exercise price of $11.57 per share.
The process began January 5, 1996, when Anacomp filed a Prenegotiated Plan
of Reorganization with the U.S. Bankruptcy Court in Delaware under Chapter 11 of
the U.S. Bankruptcy Code. The Company was in default under substantially all of
its debt agreements as a result of its failure to make $89.7 million of
principal payments scheduled for April 26, 1995 and October 26, 1995 on the
senior secured credit facilities (including $60 million relating to the
revolving loan agreement which expired on October 26, 1995), $11.4 million of
principal and interest payments on the 9% Convertible Subordinated Debentures
which were due January 15, 1996, $34.1 million of interest payments scheduled
for May 1, 1995 and November 1, 1995 on its Senior Subordinated Notes, and $3.2
million of interest payments scheduled for July 15, 1995 and January 15, 1996 on
the 13.875% Subordinated Debentures, as well as certain financial covenant
violations, and the cross-default provisions of the other debt agreements.
As noted above, upon emerging from bankruptcy, the Company's Revolving Loan,
Multi-Currency Revolving Loan, Term Loans, Series B Senior Notes, 15% Senior
Subordinated Notes, 13.875% Convertible Subordinated Debentures and 9%
Convertible Subordinated Debentures were canceled. In addition, the Company's
8.25% Cumulative Convertible Redeemable Exchangeable Preferred Stock, Common
Stock, Warrants and Stock Options were canceled. In connection therewith, the
Company issued new debt and equity securities as mentioned above and described
in more detail in Notes 14 and 16.
NOTE 3. FRESH START REPORTING:
As of May 31, 1996, the Company adopted Fresh Start Reporting in accordance
with SOP 90-7. Fresh Start Reporting resulted in material changes to the
Consolidated Balance Sheet, including valuation of assets, intangible assets
(including goodwill) and liabilities at fair market value and valuation of
equity based on the appraised reorganization value of the ongoing business.
The Company's reorganization value of $350 million (the approximate fair
value) was based on the consideration of many factors and various valuation
methods, including discounted cash flows, selected
F-12
<PAGE>
ANACOMP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 3. FRESH START REPORTING: (CONTINUED)
publicly traded Company market multiples, selected acquisition transaction
multiples and other applicable ratios and valuation techniques believed by the
Company's management and its financial advisors to be representative of the
Company's business and industry. The excess of the reorganization value over the
fair value of identifiable assets and liabilities is reported as "Reorganization
value in excess of identifiable assets" in the accompanying Consolidated Balance
Sheets and is being amortized over a three and a half year period.
The Company obtained an independent appraisal of certain property and
equipment to support the fair values of such assets.
The Reorganization and the adoption of Fresh Start Reporting resulted in the
following adjustments to the Company's Consolidated Balance Sheet for the period
ended May 31, 1996:
<TABLE>
<CAPTION>
REORGANIZATION AND
PREDECESSOR FRESH START REORGANIZED
COMPANY ADJUSTMENTS COMPANY
MAY 31, ---------------------- MAY 31,
1996 DEBIT CREDIT 1996
----------- ---------- ---------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS
Total current assets....................................... $ 179,457 $ -- $ 1,881(a) $ 177,576
Property and equipment (net)............................... 35,619 -- 7,754(b) 27,865
Long-term receivables...................................... 9,411 -- -- 9,411
Excess of purchase price over net assets of businesses
acquired and other intangibles........................... 153,864 -- 124,864(c) --
29,000(d)
Reorganization value in excess of identifiable assets...... -- 267,460(e) -- 267,460
Other assets............................................... 12,862 -- 4,384(f) 7,878
600(g)
----------- ---------- ---------- -----------
$ 391,213 $ 267,460 $ 168,483 $ 490,190
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT)
Current liabilities:
Current portion of long-term debt........................ $ 380,554 $ 379,256(h) $ 36,076(i) $ 37,374
Accrued interest......................................... 52,696 48,500(h) -- 4,196
Accounts payable and other accrued liabilities........... 130,179 -- 3,673(j) 133,852
----------- ---------- ---------- -----------
Total current liabilities.................................. 563,429 427,756 39,749 175,422
----------- ---------- ---------- -----------
Total noncurrent liabilities............................... 5,130 -- 229,872(i) 235,002
Redeemable preferred stock and accrued dividends........... 18,241 18,241(k) -- --
Stockholders' equity (deficit):
Common stock............................................. 484 484(l) 100(m) 100
Capital in excess of par value........................... 190,607 190,607(l) 79,666(m) 79,666
Cumulative translation adjustment........................ (231) -- 231(l) --
Retained earnings (deficit).............................. (386,447) 29,000(d) 334,005(l) --
81,442(n)
----------- ---------- ---------- -----------
$ 391,213 $ 666,088 $ 765,065 $ 490,190
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
</TABLE>
F-13
<PAGE>
ANACOMP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 3. FRESH START REPORTING: (CONTINUED)
Explanations of the above adjustment columns are as follows:
(a) To adjust current assets to fair market value.
(b) To adjust property and equipment to estimated current fair value.
(c) To reflect the write-off of excess of purchase price over net assets of
businesses acquired and other intangibles.
(d) To provide income tax expense for gain on discharge of indebtedness,
reflected as a reduction in the goodwill of the Predecessor Company related
to the utilization of pre-acquisition NOLs.
(e) To establish the reorganization value in excess of identifiable assets. The
reorganization value in excess of identifiable assets is calculated below
(in thousands):
<TABLE>
<S> <C>
New debt......................................................... $ 270,234
New equity....................................................... 79,766
---------
Reorganization Value........................................... 350,000
Plus: Fair value of identifiable liabilities..................... 140,190
Less: Fair value of identifiable assets.......................... (222,730)
---------
$ 267,460
---------
---------
</TABLE>
(f) To adjust other long-term assets to fair market value.
(g) To write-off the remaining debt issue costs.
(h) To reflect the cancellation of the old debt and related accrued interest.
(i) To reflect issuance of new current and long-term debt.
(j) To adjust current liabilities to fair market value.
(k) To reflect the cancellation of the old preferred stock.
(l) To reflect the elimination of stockholders' equity of the Predecessor
Company.
(m) To reflect the issuance of 10 million shares of new common stock (par value
$.01) at estimated fair market value.
F-14
<PAGE>
ANACOMP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 3. FRESH START REPORTING: (CONTINUED)
(n) To reflect the extraordinary credit resulting from discharge of
indebtedness. The extraordinary credit, net of taxes, is calculated below
(in thousands):
<TABLE>
<S> <C>
Historical carrying value of old debt securities................. $ 379,256
Historical carrying value of related accrued interest............ 48,500
Unamortized portion of deferred debt issuance costs.............. (600)
Market value of consideration exchanged for the old debt:
Plan securities (face value $279,691).......................... (265,948)
New common stock (10 million new shares issued)................ (79,766)
---------
81,442
Tax provision (d).......................................... (29,000)
---------
Extraordinary credit....................................... $ 52,442
---------
---------
</TABLE>
The following Pro Forma Condensed Financial Information for the twelve
months ended September 30, 1996 and 1995, have been prepared giving effect to
the sale of the Image Conversion Services ("ICS") Division and the adjustments
related to the consummation of the Reorganization for interest expense and
intangible asset amortization. The Condensed Financial Information was prepared
as if the Pro Forma adjustments had occurred on October 1, 1995 and October 1,
1994, respectively. This information does not purport to be indicative of the
results which would have been obtained had such transactions in fact been
completed as of the date hereof and for the periods presented or that may be
obtained in the future.
ANACOMP, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
TWELVE MONTHS TWELVE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995
-------------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Total Revenues.................................................................... $ 484,637 $ 569,668
Operating costs and expenses...................................................... 493,291 763,514
Loss before interest, other income, reorganization items, income taxes and
extraordinary credit............................................................ (8,654) (193,846)
Interest expense and fee amortization............................................. (41,327) (44,301)
Net loss available to common stockholders......................................... (53,713) (277,346)
</TABLE>
F-15
<PAGE>
ANACOMP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 4. REORGANIZATION ITEMS:
In accordance with SOP 90-7, expenses of the Predecessor Company resulting
from the Chapter 11 Reorganization are reported separately as reorganization
items in the accompanying Consolidated Statement of Operations, and are
summarized below:
<TABLE>
<CAPTION>
EIGHT MONTHS
ENDED
MAY 31, 1996
-------------
(DOLLARS IN
THOUSANDS)
<S> <C>
Write-off of deferred debt issue costs and discounts........................... $ (17,551)
Adjustment of assets and liabilities to fair market value...................... 124,903
Legal and professional fees associated with bankruptcy......................... (14,944)
Interest earned on accumulated cash............................................ 431
-------------
$ 92,839
-------------
-------------
</TABLE>
NOTE 5. SALE OF ICS DIVISION:
Effective November 1, 1995, Anacomp sold its ICS Division for approximately
$13.5 million, which resulted in a net gain to the Company of $6.2 million that
is reflected in "other income (expense)" in the accompanying Consolidated
Statement of Operations. The proceeds from this sale were used to reduce the
principal balance on certain senior debt. The ICS Division performed source
document microfilm services at several facilities around the country generating
approximately $20 million of revenues per year.
NOTE 6. RESTRUCTURING CHARGES:
Included in the operating results for 1995 are restructuring charges of
$32.7 million. These charges were the result of the Company's reassessment of
its strategy for ongoing financial improvement and a decision to downsize or
exit certain areas of its business. Specifically, the Company closed its Omaha,
Nebraska magnetic media manufacturing facility, exited the manufacture of
readers and reader/printers at its San Diego, California manufacturing facility
and reduced headcount worldwide. The restructuring charges included severance
costs of $5.9 million, which included personnel related to magnetics media
manufacturing, reader and reader/printer manufacturing and other various
personnel associated with the worldwide headcount reduction. Approximately 400
people were terminated pursuant to these plans. Also included in restructuring
charges were inventory write downs of $9.1 million, excess facility reserves of
$7.7 million and other reserves of $10 million. The Company completed these
restructuring activities during fiscal 1996. The actual costs associated with
the restructuring did not vary significantly from the previously reported
amounts.
NOTE 7. FINANCIAL RESTRUCTURING COSTS:
On April 6, 1995, Anacomp announced that it had withdrawn its proposed
offering of $225 million Senior Secured Notes and a related offer to purchase up
to $50 million of the Company's outstanding 15% Senior Subordinated Notes. The
offering would have deferred an aggregate of $153 million in scheduled principal
payments in fiscal years 1995 through 1998, thereby providing Anacomp with
increased liquidity and additional cash for product development. Costs directly
related to these activities of $6 million are
included as "Financial restructuring costs" in the accompanying Consolidated
Statements of Operations for fiscal year 1995.
F-16
<PAGE>
ANACOMP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 8. EXCESS OF PURCHASE PRICE OVER NET ASSETS OF BUSINESSES ACQUIRED
(GOODWILL):
Goodwill related to the micrographics business as of September 30 is
summarized as follows:
<TABLE>
<CAPTION>
REORGANIZED PREDECESSOR
COMPANY COMPANY
--------------------------
<S> <C> <C>
<CAPTION>
AS OF
AS OF SEPTEMBER
SEPTEMBER 30, 30,
1996 1995
------------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Goodwill........................................... $ 2,419 $ 315,561
Less goodwill write-off............................ -- (108,000)
Less accumulated amortization...................... (134) (73,988)
------ -----------
$ 2,285 $ 133,573
------ -----------
------ -----------
</TABLE>
Anacomp failed to achieve its original projections of fiscal 1995 operating
results and experienced lower than expected sales of new software products first
introduced in January 1995. In light of Anacomp's withdrawn note offering,
disappointing financial performance and default on its indebtedness, the Company
prepared a revised business plan and operating forecast through 1999.
Based on these developments and in connection with the change in accounting
discussed in Note 1, Anacomp determined that goodwill had been impaired and
measured the impairment based on a fair value approach. As required by generally
accepted accounting principles, this accounting change, which amounted to a
charge of $108 million, was recorded as a change in estimate and was included in
the results of operations for the quarter ended June 30, 1995.
NOTE 9. FAIR VALUES OF FINANCIAL INSTRUMENTS:
Statement of Financial Accounting Standards No. 107, Disclosures About Fair
Value of Financial Instruments, requires disclosure of fair value information
for certain financial instruments. The carrying amounts for trade receivables
and payables are considered to be their fair values. The carrying amounts
F-17
<PAGE>
ANACOMP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 9. FAIR VALUES OF FINANCIAL INSTRUMENTS: (CONTINUED)
and fair values of the Company's other financial instruments at September 30,
1996, and 1995, are as follows:
<TABLE>
<CAPTION>
PREDECESSOR
REORGANIZED COMPANY COMPANY
<S> <C> <C> <C> <C>
----------------------------------------------
<CAPTION>
SEPTEMBER 30, 1996 SEPTEMBER 30, 1995
---------------------- ----------------------
CARRYING CARRYING
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Long-Term Debt:
11 5/8% Senior Note............................................ $ 97,902 $ 97,902 $ -- $ --
Revolving Loan................................................. -- -- 31,328 31,328
Multicurrency Revolving Loan -- -- 28,813 28,813
Term Loans..................................................... -- -- 13,039 13,039
Series B Senior Notes.......................................... -- -- 58,908 58,908
13% Senior Subordinated Note................................... 147,058 163,829 -- --
15% Senior Subordinated Notes.................................. -- -- 220,281 181,224
13.875% Convertible Subordinated Debentures.................... -- -- 21,155 4,376
9% Convertible Subordinated Debentures......................... -- -- 10,479 1,880
Redeemable Preferred Stock....................................... -- -- 24,574 --
</TABLE>
The September 30, 1996 estimated fair value of Long-Term Debt was based on
quoted market values or discounted cash flow.
The September 30, 1995 estimated fair values of Long-Term Debt and
Redeemable Preferred Stock were based on a restructuring proposal prepared as a
result of discussion and negotiations with representatives of the lenders at
that time in connection with a "prepackaged" plan of reorganization.
NOTE 10. ACQUISITIONS:
During the three years ended September 30, 1996, Anacomp made the
acquisitions set forth below, each of which has been accounted for as a
purchase. The consolidated financial statements include the operating results of
each business from the date of acquisition. Pro forma results of operations have
not been presented because the effects of these acquisitions were not
significant.
FISCAL 1996
During fiscal 1996, Anacomp acquired certain assets of a micrographics
equipment and supplies business. The acquisition was effective July 15, 1996 and
total consideration was $4.3 million, of which approximately $2.4 million was
assigned to excess of purchase price over net assets acquired. The consideration
consisted of $3.8 million in cash and a one-year note payable of $500,000 which
accrues interest at prime plus 2.75%.
FISCAL 1995
During fiscal 1995, Anacomp made no significant acquisitions.
F-18
<PAGE>
ANACOMP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 10. ACQUISITIONS: (CONTINUED)
FISCAL 1994
During fiscal 1994, Anacomp acquired 16 data service centers or the related
customer base (all were incorporated with existing Anacomp service centers), a
magnetics media manufacturing company and the customer base of a micrographics
supplies business. Total consideration for these acquisitions was $39.1 million,
of which approximately $24.2 million was assigned to excess of purchase price
over net assets of businesses acquired and other intangible assets. In
connection with these acquisitions, Anacomp issued $17.2 million of its common
stock and increased debt and accrued liabilities by $4.3 million.
NATIONAL BUSINESS SYSTEMS
One of the acquisitions included above was the purchase of the COM services
customer base of 14 data service centers operated by National Business Systems,
Inc. ("NBS"). The acquisition was effective on January 3, 1994, and the
acquisition cost consisted of the following (dollars in thousands):
<TABLE>
<S> <C>
Cash paid to NBS shareholders...................................... $ 7,400
Common stock issued to NBS shareholders............................ 7,400
Acquisition costs incurred......................................... 416
---------
$ 15,216
---------
---------
</TABLE>
Anacomp issued 1,973,000 common shares to the NBS shareholders at a price of
$3.75 per share. As part of the acquisition agreement, Anacomp agreed to provide
stock price protection at the end of two years on those shares so designated by
the NBS shareholders (1,128,000 of the shares issued were subject to this
protection). Related to this price protection, on February 15, 1996, Anacomp
issued 1,127,143 additional shares of stock to NBS shareholders. As a result of
the Reorganization, discussed in Note 2, this price protection is no longer in
effect.
GRAHAM MAGNETICS
Another of the acquisitions included above was the purchase of Graham
Acquisition Corporation ("Graham"), a magnetics media manufacturing company. The
acquisition was effective on May 4, 1994, and the acquisition cost consisted of
the following (dollars in thousands):
<TABLE>
<S> <C>
Common stock issued to Graham shareholders......................... $ 8,515
Common stock issued for a note payable............................. 1,286
Issuance of note payable to a creditor............................. 4,240
Cash paid to retire bank debt...................................... 5,540
Acquisition costs incurred......................................... 689
---------
$ 20,270
---------
---------
</TABLE>
Anacomp issued 2,129,000 common shares to the Graham shareholders based on
an agreed upon per share price. However, to determine the acquisition cost, the
shares were valued at the market price on the date of closing.
Contingent consideration of $7.6 million was payable in Anacomp common stock
and was based upon defined future earnings through September 1997. The
contingent consideration amount was $144,000 for
F-19
<PAGE>
ANACOMP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 10. ACQUISITIONS: (CONTINUED)
fiscal 1994 and zero for fiscal 1995. As a result of the Reorganization,
discussed in Note 2, this contingency is no longer in effect.
Anacomp also issued 360,000 common shares to a Graham creditor at $3.57 per
share to reduce the note payable to $4.2 million. The note was unsecured and
bore interest at 10%. Principal payments of $345,000 plus accrued interest were
payable quarterly beginning July 15, 1994. The note holder could at any time
require Anacomp to prepay any amount of the note by issuing common stock. The
shares of common stock to be issued were equal to the prepayment amount divided
by $3.57. In connection with the Plan of Reorganization, the original note was
canceled and a new promissory note was issued in the amount of $1.2 million. The
note did not bear interest and was payable in two installments; $800,000 due
within thirty days of the effective date of the bankruptcy, and $400,000 due on
or before October 30, 1996. The outstanding note balance was $400,000 and $2.5
million at September 30, 1996 and 1995, respectively. The note was paid off
subsequent to September 30, 1996.
NOTE 11. SKC AGREEMENT:
Anacomp has entered into a supply agreement (the "Supply Agreement") with
SKC America, Inc., a New Jersey corporation ("SKCA"), and SKC Limited ("SKCL"),
an affiliated corporation of SKCA organized pursuant to the laws of the Republic
of Korea. SKCA and SKCL are collectively referred to as "SKC". The Supply
Agreement expires in December 2003. Pursuant to the Supply Agreement, Anacomp
purchases substantially all of its requirements for coated duplicate microfilm
from SKC. Pursuant to the Supply Agreement, SKC also provides the Company with a
substantial portion of its polyester requirements for its magnetic media
products.
In connection with the Supply Agreement, SKC also provided the Company with
a $25 million trade credit facility (secured by up to $10 million of products
sold to the Company by SKC), all of which is outstanding at September 30, 1996.
The trade credit arrangement bears interest at 2.5% over the prime rate of The
First National Bank of Boston (10.75% as of September 30, 1996).
In connection with an amendment to the Supply Agreement as of the effective
date under the Plan of Reorganization, the Company agreed to certain price
increases, retroactive to 1994, and agreed to make the following deferred
payments related to the retroactive price increases to SKC (which are accrued in
"Other accrued liabilities" in the accompanying Consolidated Balance Sheets):
(a) $400,000 in 1997: (b) $600,000 in 1998; (c) $800,000 in 1999; (d) $800,000
in 2000; and (e) 1,000,000 in 2001.
F-20
<PAGE>
ANACOMP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 12. PROPERTY AND EQUIPMENT:
PROPERTY AND EQUIPMENT CONSIST OF THE FOLLOWING:
<TABLE>
<CAPTION>
REORGANIZED PREDECESSOR
COMPANY COMPANY
<S> <C> <C> <C>
----------------------------
<CAPTION>
ESTIMATED
USEFUL SEPTEMBER 30, SEPTEMBER 30,
LIFE IN YEARS 1996 1995
---------------- ------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Land and buildings............................................... 10-40 $ 3,148 $ 5,283
Office furniture................................................. 3-12 2,499 12,141
Manufacturing equipment and tooling.............................. 2-10 4,161 31,351
Field support spare parts........................................ 4-7 5,852 21,764
Leasehold improvements........................................... Term of Lease 852 10,782
Equipment leased to others....................................... 2-4 467 1,838
Processing equipment............................................. 3-12 13,819 58,722
------------- -------------
30,798 141,881
Less accumulated depreciation and amortization................... (3,696) (96,898)
------------- -------------
$ 27,102 $ 44,983
------------- -------------
------------- -------------
</TABLE>
NOTE 13. LONG-TERM RECEIVABLES:
Long-term receivables consist of the following:
<TABLE>
<CAPTION>
REORGANIZED PREDECESSOR
COMPANY COMPANY
<S> <C> <C>
----------------------------
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30,
1996 1995
------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Lease contracts receivable...................................... $ 12,546 $ 15,678
Notes receivable from asset sales............................... 2,260 2,619
Other........................................................... 516 411
------------- -------------
15,322 18,708
Less current portion............................................ (4,690) (6,386)
------------- -------------
$ 10,632 $ 12,322
------------- -------------
------------- -------------
</TABLE>
Lease contracts receivable result from customer leases of products under
agreements which qualify as sales-type leases. Annual future lease payments to
be received under sales-type leases are as follows:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, (DOLLARS IN THOUSANDS)
- ---------------------------------------------------------------------
<S> <C>
1997................................................................. $ 5,540
1998................................................................. 4,503
1999................................................................. 2,805
2000................................................................. 1,370
2001................................................................. 566
-------
14,784
Less deferred interest............................................... (2,238)
-------
$ 12,546
-------
-------
</TABLE>
F-21
<PAGE>
ANACOMP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 14. LONG-TERM DEBT:
Long-term debt is comprised of the following:
<TABLE>
<CAPTION>
REORGANIZED PREDECESSOR
COMPANY COMPANY
<S> <C> <C>
----------------------------
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30,
1996 1995
------------- -------------
<S> <C> <C>
(DOLLARS IN THOUSANDS)
11 5/8% Senior Secured Notes........................................................ $ 97,902 $ --
13% Senior Subordinated Notes (net of unamortized discount of $12,942).............. 147,058 --
Revolving Loan at 8.63%............................................................. -- 31,328
Multicurrency Revolving Loan at 8.44%............................................... -- 28,813
Term Loans at 8.56%................................................................. -- 13,039
Series B Senior Notes at 12.25%..................................................... -- 58,908
15% Senior Subordinated Notes (net of unamortized discount of $4,619)............... -- 220,281
13.875% Convertible Subordinated Debentures (net of unamortized discount of
$2,077)........................................................................... -- 21,155
9% Convertible Subordinated Debentures.............................................. -- 10,479
Non-interest bearing installment note payable due October 30, 1996.................. 400 2,513
Other............................................................................... 3,532 3,384
------------- -------------
248,892 389,900
Less current portion................................................................ (31,848) (389,900)
------------- -------------
$ 217,044 $ --
------------- -------------
------------- -------------
</TABLE>
SENIOR SECURED NOTES
In connection with the Reorganization, the Company issued $112.2 million
aggregate principal amount of 11 5/8% Senior Secured Notes due September 30,
1999. Interest is payable on March 31 and September 30 each year. The Company
pre-paid the September 30, 1996, installment of $14.3 million on September 3,
1996. The Company is required to redeem the remaining notes at par on each
interest payment date according to the following schedule (dollars in
thousands):
<TABLE>
<S> <C>
March 31, 1997..................................................... $ 14,286
September 30, 1997................................................. 16,163
March 31, 1998..................................................... 16,161
September 30, 1998................................................. 17,100
March 31, 1999..................................................... 17,100
September 30, 1999................................................. 17,092
---------
$ 97,902
---------
---------
</TABLE>
The Senior Secured Notes are redeemable at the option of the Company, in
whole or in part, at any time, at 100% of the principal amount thereof, plus
accrued and unpaid interest. The Company is required in certain circumstances to
make offers to purchase the Senior Secured Notes then outstanding at a purchase
price equal to 100% of the principal amount thereof, plus accrued and unpaid
interest, with the net cash proceeds of certain sales or other distributions of
assets by the Company or certain of its subsidiaries. Also, upon a change of
control, the Company is required to make an offer to purchase the
F-22
<PAGE>
ANACOMP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 14. LONG-TERM DEBT: (CONTINUED)
Senior Secured Notes then outstanding at a purchase price equal to 100% of the
principal amount thereof, plus accrued and unpaid interest.
The Senior Secured Notes are senior secured obligations of the Company and
will rank pari passu with all other existing and future senior obligations of
the Company, and senior to all existing and future subordinated or junior
indebtedness of the Company. The collateral securing the Senior Secured Notes
consists of substantially all of the assets of the Company and all future
acquired assets of the Company to the extent such assets are acquired by the
Company without secured financing.
The indenture related to the Senior Secured Notes contains covenants
limiting among other things, (i) the incurrence of additional indebtedness by
the Company and certain of its subsidiaries, (ii) the payment of dividends on,
and the redemption of, capital stock of the Company and certain of its
subsidiaries, (iii) the redemption of certain subordinated obligations of the
Company and certain of its subsidiaries and the making of certain investments by
the Company and certain of its subsidiaries, (iv) the sale by the Company and
certain of its subsidiaries of assets and certain subsidiary stock, (v)
transactions between the Company and its affiliates, (vi) liens on the
collateral securing the Senior Secured Notes, (vii) consolidations and mergers
and transfers of all or substantially all of the Company's and certain of its
subsidiaries' assets and (viii) capital expenditures. All of the limitations and
prohibitions are subject to a number of qualifications and exceptions.
The indenture also contains a covenant requiring the Company to maintain a
minimum interest coverage ratio. At September 30, 1996, the Company was in
compliance with all covenants under the Senior Secured Notes indenture.
SENIOR SUBORDINATED NOTES
In connection with the Reorganization, the Company issued $160 million
aggregate principal amount of 13% Senior Subordinated Notes due June 2002. This
debt was recorded at its estimated fair value of $146.3 million. The difference
between the aggregate principal amount and the fair value of the debt will be
amortized as a charge to interest expense over the life of the debt. Interest is
payable on June 30 and December 31 each year, beginning on December 31, 1996.
For the interest payable on December 31, 1996 and June 30, 1997, the Company
will provide Payment-In-Kind ("PIK") notes in satisfaction of its interest
obligation rather than a cash settlement. The PIK notes will have a principal
amount corresponding to the amount of interest due on the notes on the related
interest payment date.
The Company is required to redeem prior to June 30, 2001 the principal
amount of the Senior Subordinated Notes equal to the aggregate principal amount
of PIK notes issued prior to such date, plus any accrued and unpaid interest on
the PIK notes, at a redemption price equal to the price that would be then
applicable in the case of an optional redemption. The remaining Senior
Subordinated Notes are redeemable at the option of the Company, in whole or in
part, at any time, at various redemption prices ranging from 103% to 101.5% of
the principal amount thereof through December 31, 2001. Thereafter, the Senior
Subordinated Notes may be redeemed at the aggregate principal amount thereof.
Also, upon a change in control, the Company is required to make an offer to
purchase the Senior Subordinated Notes then outstanding at a purchase price
equal to 101% of the principal amount thereof, plus accrued and unpaid interest.
The Senior Subordinated Notes are unsecured senior subordinated obligations
of the Company and rank pari passu with all other existing and future
subordinated obligations of the Company. The payment
F-23
<PAGE>
ANACOMP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 14. LONG-TERM DEBT: (CONTINUED)
of principal and interest is subordinated and subject to the prior payment in
full of the Company's senior indebtedness.
The indenture related to the Senior Subordinated Notes contains covenants
limiting, among other things, (i) the incurrence of additional indebtedness by
the Company and certain of its subsidiaries, (ii) the payment of dividends on,
and the redemption of, capital stock of the Company and certain of its
subsidiaries, (iii) the redemption of certain subordinated obligations of the
Company and certain of its subsidiaries and the making of certain investments of
the Company and certain of its subsidiaries, (iv) the sale by the Company and
certain of its subsidiaries of assets and certain subsidiary stock, (v)
transactions between the Company and its affiliates, (vi) sale/leaseback
transactions by the Company and certain of its subsidiaries, (vii)
consolidations and mergers and transfers of all or substantially all of the
Company's and certain of its subsidiaries' assets and (viii) capital
expenditures. All of the limitations and prohibitions are subject to a number of
qualifications and exceptions. The indenture also contains a covenant requiring
the Company to maintain a minimum interest coverage ratio. At September 30,
1996, the Company was in compliance with all covenants under the Senior
Subordinated Notes indenture.
NOTE 15. REDEEMABLE PREFERRED STOCK:
Anacomp issued 500,000 shares of 8.25% Cumulative Convertible Redeemable
Exchangeable Preferred Stock (the "Preferred Shares") in a 1987 private
placement. Each Preferred Share had a preference value of $50 and was
convertible into Anacomp common stock at a conversion price of $7.50. The
Preferred Shares were recorded at fair value on the date of issuance less issue
costs. The excess of the preference value over the carrying value was accreted
by periodic charges to retained earnings over the original life of the issue. At
September 30, 1995, 500,000 shares were issued and outstanding. In connection
with the Reorganization discussed in Note 2 , the Preferred Shares were
canceled.
NOTE 16. CAPITAL STOCK:
REORGANIZED COMPANY
PREFERRED STOCK
The Board of Directors of the Company has the ability, at its discretion, to
create one or more series of Preferred Stock and shall determine the
preferences, limitations, and relative voting and other rights of one or more
series of Preferred Stock.
STOCK OPTION PLANS
On July 22, 1996, the Company's Board of Directors approved the 1996
Restructure Recognition Incentive Plan. Under this plan, effective August 22,
1996, the Company awarded to employees 947,500 stock options to acquire new
common stock and 99,050 shares of restricted new common stock.
With regard to the stock options, the options were granted an exercise price
of $4.63 per share of new common stock which will result in approximately $3.2
million of compensation expense over the vesting period of the options based on
the market value of the stock at August 22, 1996. 75% of the options vest
ratably during the period from June 30, 1997 to June 30, 1999. 25% of the
options vest on September 30, 1999, provided certain performance goals have been
met; otherwise the options vest on June 30, 2003. During 1996, approximately
$975,000 was recognized as compensation expense related to the options. The
F-24
<PAGE>
ANACOMP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 16. CAPITAL STOCK: (CONTINUED)
options expire 10 years after the date of the grant. As of September 30, 1996,
none of the options were exercisable.
With regard to the restricted shares of new common stock, the shares vest
immediately and thus the Company recognized approximately $0.8 million of
compensation expense immediately upon granting the award based on the market
value of the Company's stock on August 22, 1996. The shares are restricted from
sale or transfer by the recipient employees until September 30, 1997. Effective
December 6, 1996, 34,650 shares of restricted stock were returned by employees
to the Company.
In addition, on August 22, 1996, the Company's Board of Directors approved
the 1996 Long-Term Incentive Plan, which provides for the future issuance of
various forms of stock related awards including options, stock appreciation
rights and restricted shares. The Company has reserved 1,400,000 shares of new
common stock for future issuance under this plan. Future awards, including the
nature of the awards and related exercise prices, are to be determined at the
discretion of the Compensation Committee of the Board of Directors in accordance
with the plan provisions. As of September 30, 1996, no awards were issued
related to this plan. Subsequent to September 30, 1996, 438,179 stock option
awards were made to certain Executive Officers and Non-Employee Directors at
current market value on the date of grant.
WARRANTS
In connection with the Reorganization discussed in Note 2, Anacomp issued
362,694 new warrants to certain creditors and previous common and preferred
stockholders. Each new warrant was convertible into one share of new common
stock at an exercise price of $12.23 per share. In connection with the rights
offering discussed in Note 25, each new warrant is now convertible into 1.0566
shares of new common stock at an exercise price of $11.57 per share. The new
warrants expire on June 3, 2001.
OTHER ITEMS
At September 30, 1996, approximately 1.3 million shares of Anacomp new
common stock were reserved for exercise of stock options, exercise of warrants
and other corporate purposes.
PREDECESSOR COMPANY
STOCK OPTION PLANS
Anacomp's stock option plans provided that the exercise price of the options
be determined by the Board of Directors (the "Board"), and in no case be less
than 100% of fair market value at the time of grant for qualified options, or
less than the par value of the stock for non-qualified options. An option could
be exercised subject to such restrictions as the Board may impose at the time
the option was granted. In any event, each option terminated not later than 10
years after the date on which it was granted.
F-25
<PAGE>
ANACOMP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 16. CAPITAL STOCK: (CONTINUED)
No shares were available for grant at May 31, 1996. Shares available for
grant under the plans were 1,401,328 and 725,827 at September 30, 1995 and 1994,
respectively. Options outstanding, were as follows:
<TABLE>
<CAPTION>
OPTION PRICE
SHARES PER SHARE
----------- -------------------------------
<S> <C> <C> <C> <C>
OUTSTANDING AT SEPTEMBER 30, 1993......................................... 4,414,528 $ 1.000 -- $ 9.000
Granted................................................................... 205,381 2.750 -- 4.000
Canceled.................................................................. (81,908) 1.000 -- 7.875
Expired................................................................... (23,096) 2.000 -- 7.875
Exercised................................................................. (306,646) 1.000 -- 3.375
----------- --------- --- ---------
OUTSTANDING AT SEPTEMBER 30, 1994......................................... 4,208,259 1.000 -- 9.000
Granted................................................................... 1,355,736 .563 -- 2.500
Canceled.................................................................. (2,010,753) .563 -- 4.750
Expired................................................................... (20,484) 2.000 -- 4.500
Exercised................................................................. (24,863) .563 -- 2.000
----------- --------- --- ---------
OUTSTANDING AT SEPTEMBER 30, 1995......................................... 3,507,895 .563 -- 9.000
Granted................................................................... 677,181 .313 -- .313
Canceled.................................................................. (4,182,076) .313 -- 9.000
Expired................................................................... (3,000) 2.000 -- 3.500
----------- --------- --- ---------
OUTSTANDING AT MAY 31, 1996............................................... -- $ -- -- $ --
----------- --------- --- ---------
----------- --------- --- ---------
</TABLE>
All options existing at May 31, 1996 were canceled in connection with the
Company's Reorganization
discussed in Note 2.
WARRANTS
In October 1990, Anacomp issued 6,825,940 warrants ("Old Warrants") to
holders of the 15% Senior Subordinated Notes. Each Old Warrant entitled the
holder to purchase one common share at a price of $1.873 and was exercisable
through November 11, 2000, the date of expiration. In connection with the
Reorganization discussed in Note 2, the Old Warrants were canceled.
NOTE 17. INCOME TAXES:
The components of income (loss) before income taxes and extraordinary credit
were:
<TABLE>
<CAPTION>
REORGANIZED
COMPANY PREDECESSOR COMPANY
<S> <C> <C> <C> <C>
---------------------------------------------------------
<CAPTION>
TWELVE MONTHS ENDED
FOUR MONTHS EIGHT MONTHS SEPTEMBER 30,
ENDED ENDED ----------------------
SEPTEMBER 30, 1996 MAY 31, 1996 1995 1994
------------------ ------------- ----------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
United States.......................................... $ (21,602) $ 112,100 $ (209,151) $ 7,143
Foreign................................................ 3,993 4,128 5,825 8,212
-------- ------------- ----------- ---------
$ (17,609) $ 116,228 $ (203,326) $ 15,355
-------- ------------- ----------- ---------
-------- ------------- ----------- ---------
</TABLE>
F-26
<PAGE>
ANACOMP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 17. INCOME TAXES: (CONTINUED)
The components of income tax expense after utilization of net operating loss
carryforwards and the adjustment of tax reserves are summarized below:
<TABLE>
<CAPTION>
REORGANIZED COMPANY PREDECESSOR COMPANY
<S> <C> <C> <C> <C>
--------------------------------------------------------
<CAPTION>
TWELVE MONTHS ENDED
FOUR MONTHS EIGHT MONTHS SEPTEMBER 30,
ENDED ENDED --------------------
SEPTEMBER 30, 1996 MAY 31, 1996 1995 1994
------------------- ------------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Current:
Federal................................................ $ 600 $ -- $ -- $ --
Foreign................................................ 2,400 3,700 4,800 3,300
State.................................................. 100 -- -- 300
------ ------ --------- ---------
3,100 3,700 4,800 3,600
Tax reserve adjustment................................... -- -- 1,200 (1,200)
Non-cash charge in lieu of taxes......................... 1,300 -- 29,000 6,000
------ ------ --------- ---------
$ 4,400 $ 3,700 $ 35,000 $ 8,400
------ ------ --------- ---------
------ ------ --------- ---------
</TABLE>
In addition, for the eight months ended May 31, 1996, there was an
additional expense of $29 million related to the tax liability associated with
the gain on discharge of indebtedness. This liability was offset by the
utilization of net operating loss carryforwards ("NOLs"). See Note 3 for further
discussion.
The following is a reconciliation of income taxes calculated at the United
States federal statutory rate to the provision for income taxes:
<TABLE>
<CAPTION>
REORGANIZED
COMPANY PREDECESSOR COMPANY
<S> <C> <C> <C> <C>
--------------------------------------------------------
<CAPTION>
TWELVE MONTHS
FOUR MONTHS EIGHT MONTHS ENDED SEPTEMBER 30,
ENDED ENDED ---------------------
SEPTEMBER 30, 1996 MAY 31, 1996 1995 1994
------------------ ------------- ---------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Provision for income taxes at U.S. statutory rate....... $ (6,200) $ 40,700 $ (71,200) $ 5,374
Non taxable reorganization income....................... -- (43,700) -- --
Increase in deferred tax asset valuation allowance...... -- -- 51,400 --
Nondeductible amortization and write-off of intangible
assets................................................ 8,300 2,500 40,500 3,175
State and foreign income taxes.......................... 1,200 2,300 2,800 821
U.S. tax on distributed and undistributed foreign
earnings.............................................. -- -- 12,300 --
Tax reserve adjustment.................................. -- -- 1,200 (1,200)
Tax effect of pre-reorganization loss not available due
to ownership change................................... -- 2,100 -- --
Alternative minimum tax................................. 1,000 -- -- --
Other................................................... 100 (200) (2,000) 230
------- ------------- ---------- ---------
$ 4,400 $ 3,700 $ 35,000 $ 8,400
------- ------------- ---------- ---------
------- ------------- ---------- ---------
</TABLE>
F-27
<PAGE>
ANACOMP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 17. INCOME TAXES: (CONTINUED)
The Company adopted FAS 109 in the first quarter of fiscal 1994 and recorded
a deferred tax asset of $95 million representing the federal and state tax
savings from NOLs and tax credits. The Company also recorded a valuation
allowance of $60 million reducing the deferred tax asset to a net $35 million.
Recognition of the deferred tax asset reduced goodwill by $27 million and
provided a cumulative effect increase to income of $8 million. During 1994, the
net deferred tax asset was reduced to $29 million, reflecting usage of the asset
to reduce income taxes payable by $6 million. During 1995, tax effects of future
differences and carryforwards increased from $86 million to $108.4 million, an
increase of $22.4 million resulting from the tax effect of the 1995 taxable loss
($5.6 million) and the tax effect of an increase in cumulative temporary
differences ($16.8 million) between income reported for financial reporting
purposes and for tax purposes. The valuation allowance was increased from $57
million to $108.4 million to reduce the net deferred tax asset to zero as a
result of the uncertainty associated with the utilization of these assets in
future periods due to the Company's deteriorating financial condition prior to
the bankruptcy.
During 1996, tax effects of future differences and carryforwards decreased
from $108.4 million to $85.4 million, a decrease of $23 million resulting
primarily from the tax effect of a reduction in the Reorganized Company's NOLs
due to cancellation of indebtedness in connection with the bankruptcy
reorganization ($24.5 million) and the tax effect of the 1996 taxable income
($8.5 million) offset by an increase in tax credits, principally foreign tax
credits ($9 million).
F-28
<PAGE>
ANACOMP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 17. INCOME TAXES: (CONTINUED)
The components of deferred tax assets and liabilities at September 30, 1996
and September 30, 1995 are as follows:
<TABLE>
<CAPTION>
REORGANIZED PREDECESSOR
COMPANY COMPANY
<S> <C> <C>
----------------------------
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30,
NET DEFERRED TAX ASSET 1996 1995
- ------------------------------------------------------------------------------------ ------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Tax effects of future tax deductible differences related to:
Inventory reserves................................................................ $ 7,000 $ 5,700
Depreciation...................................................................... 1,600 1,700
Building reserves................................................................. 500 1,800
EPA reserve....................................................................... 2,500 2,500
Sale/leaseback of assets.......................................................... 700 2,800
Restructuring activities.......................................................... 1,200 8,000
Asset sale........................................................................ 2,600 3,200
Capitalized software.............................................................. -- 1,600
Bad debt reserve.................................................................. 1,800 2,100
Other net deductible differences.................................................. 7,800 5,500
Tax effects of future differences related to:
Undistributed foreign earnings.................................................... -- (8,800)
Leases............................................................................ (2,100) (3,300)
Capitalized software.............................................................. (2,700) --
------------- -------------
Net tax effects of future differences............................................... 20,900 22,800
------------- -------------
Tax effects of carryforward benefits:
Federal net operating loss carryforwards.......................................... 47,900 78,600
Federal general business tax credits.............................................. 3,600 3,000
Foreign tax credits............................................................... 13,000 4,000
------------- -------------
Tax effects of carryforwards........................................................ 64,500 85,600
------------- -------------
Tax effects of future taxable differences and carryforwards......................... 85,400 108,400
Less deferred tax asset valuation allowance......................................... (85,400) (108,400)
------------- -------------
Net deferred tax asset.............................................................. $ -- $ --
------------- -------------
------------- -------------
</TABLE>
At September 30, 1996, the Reorganized Company has NOLs of approximately
$133 million available to offset future taxable income. This amount will
increase to $191 million as certain temporary differences reverse in future
periods. Usage of these NOLs by the Reorganized Company is limited to
approximately $4 million annually. However, the Reorganized Company may
authorize the use of other tax planning techniques to utilize a portion of the
remaining NOLs before they expire. In any event, the Reorganized Company expects
that substantial amounts of the NOLs will expire unused.
The Reorganized Company has tax credit carryforwards of approximately $16.6
million. These tax credits are principally foreign tax credit carryforwards
resulting from inclusion of the accumulated earnings and profits of the
Reorganized Company's foreign subsidiaries in U.S. taxable income in 1996. The
Reorganized Company expects that these credits will expire unused.
F-29
<PAGE>
ANACOMP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 17. INCOME TAXES: (CONTINUED)
The tax benefits of pre-reorganization net deferred tax assets will be
reported first as a reduction of "Reorganization value in excess of identifiable
assets" and then as a credit to equity. These tax benefits will not reduce
income tax expense.
NOTE 18. COMMITMENTS AND CONTINGENCIES:
Anacomp has commitments under long-term operating leases, principally for
building space and data service center equipment. Lease terms generally cover
periods from five to twelve years. The following summarizes the future minimum
lease payments under all noncancelable operating lease obligations, including
the unfavorable lease commitments and vacant facilities discussed in Note 1,
which extend beyond one year:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, (DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------
<S> <C>
1997................................................................ $ 18,307
1998................................................................ 14,350
1999................................................................ 5,561
2000................................................................ 2,087
2001................................................................ 1,097
2002 and thereafter................................................. 7,387
-------
48,789
Less liabilities recorded as of September 30, 1996 related to
unfavorable lease commitments and future lease costs for vacant
facilities ($6,831 reflected in current liabilities).............. (11,439)
-------
$ 37,350
-------
-------
</TABLE>
The total of future minimum rentals to be received under noncancelable
subleases related to the above leases is $1.2 million. No material losses in
excess of the liabilities recorded are expected in the future.
In November 1993, Anacomp and Pennant Systems, a division of IBM, announced
a joint effort to develop software which will allow Anacomp's XFP 2000 to
process and image IBM Advanced Function Presentation ("AFP") formatted data.
This program resulted in the XFP 2000 being able to output AFP data streams,
including those containing fonts, logos, signatures and other images, onto
microfiche.
As consideration for the development of the AFP, Anacomp paid Pennant
Systems a development fee of $6.5 million. Anacomp was also required to pay
Pennant Systems minimum annual royalty payments for the licensed system
installations for six years and for ongoing system support which began in
December 1995 and continued for 10 years. As of September 30, 1995, Anacomp
established a reserve of $7.7 million for future payments to Pennant Systems for
software royalty and systems support obligations which were not recoverable as
more fully discussed in Note 1. In connection with the Company's financial
restructuring during 1996, this contract was renegotiated with Pennant and,
accordingly, no reserve requirements exist at September 30, 1996. The
renegotiated contract requires Anacomp to make future license fee payments to
Pennant Systems of $625,000 annually through fiscal year 1999.
The Company sold $10.5 million and $5.9 million of lease receivables in the
twelve months ended September 30, 1995 and 1994, respectively. Under the terms
of the sale, the purchasers have recourse to
F-30
<PAGE>
ANACOMP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 18. COMMITMENTS AND CONTINGENCIES: (CONTINUED)
the Company should the receivables prove to be uncollectable. The amount of
recourse at September 30, 1996 is $5.3 million.
Anacomp also is involved in various claims and lawsuits incidental to its
business and management believes that the outcome of any of those matters will
not have a material adverse effect on its consolidated financial position or
results of operations.
NOTE 19. SUPPLEMENTARY INCOME STATEMENT INFORMATION:
<TABLE>
<CAPTION>
REORGANIZED
COMPANY PREDECESSOR COMPANY
<S> <C> <C> <C> <C>
-------------------------------------------------------
<CAPTION>
TWELVE MONTHS ENDED
FOUR MONTHS EIGHT MONTHS SEPTEMBER 30,
ENDED ENDED --------------------
SEPTEMBER 30, 1996 MAY 31, 1996 1995 1994
------------------ ------------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Maintenance and repairs.................................. $ 3,505 $ 7,243 $ 16,609 $ 12,759
Depreciation and amortization:
Property and equipment................................. 3,696 8,573 19,406 17,524
Deferred software costs................................ 297 1,883 3,449 3,673
Intangible assets...................................... 25,853 6,841 13,143 13,418
Rent and lease expense................................... 5,936 13,958 23,755 19,371
</TABLE>
NOTE 20. OTHER ACCRUED LIABILITIES:
Other accrued liabilities consist of the following:
<TABLE>
<CAPTION>
REORGANIZED PREDECESSOR
COMPANY COMPANY
<S> <C> <C>
----------------------------
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30,
1996 1995
------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Deferred profit on sale/leaseback transactions...................................... $ -- $ 14,559
Unfavorable lease commitment related to sale/leaseback transactions................. 4,550 --
EPA reserve......................................................................... 6,961 7,350
Software license reserve............................................................ -- 7,672
Other............................................................................... 25,303 31,006
------------- -------------
$ 36,814 $ 60,587
------------- -------------
------------- -------------
</TABLE>
Xidex Corporation, a predecessor company of Anacomp, was designated by the
United States Environmental Protection Agency ("EPA") as a potentially
responsible party for investigatory and cleanup costs incurred by state and
federal authorities involving locations included on a list of EPA's priority
sites for investigation and remedial action under the federal Comprehensive
Environmental Response, Compensation, and Liability Act. The EPA reserve noted
above relates to its estimated liability for cleanup costs for the
aforementioned locations and other sites. No material losses are expected in
excess of the liabilities recorded above.
F-31
<PAGE>
ANACOMP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 21. EARNINGS (LOSS) PER SHARE:
The computation of earnings (loss) per share is based upon the weighted
average number of common shares outstanding during the period plus (in periods
in which they have a dilutive effect) the effect of common shares contingently
issuable, primarily from stock options and exercise of warrants. Fully diluted
earnings (loss) per share also reflect additional dilution related to stock
options due to the use of the market price at the end of the period, when higher
than the average price for the period. For the four months ended September 30,
1996, only primary earnings per share is presented due to the loss reported for
the period.
The weighted average number of common shares outstanding and net income
(loss) per common share for periods prior to May 31, 1996 have not been
presented because, due to the Reorganization and implementation of Fresh Start
Reporting, they are not comparable to subsequent periods.
The weighted average number of common and common equivalent shares used to
compute earnings per share is:
<TABLE>
<CAPTION>
FOUR MONTHS ENDED
SEPTEMBER 30, 1996
------------------
<S> <C>
Common and common equivalent shares....................................... 10,033,576
------------------
------------------
</TABLE>
NOTE 22. INTERNATIONAL OPERATIONS:
Anacomp's international operations are conducted principally through
subsidiaries, a substantial portion of whose operations are located in Western
Europe. Information as to U.S. and international operations for the four months
ended September 30, 1996, the eight months ended May 31, 1996 and the twelve
months ended September 30, 1995 and 1994 is as follows:
FOUR MONTHS ENDED SEPTEMBER 30, 1996--REORGANIZED COMPANY
<TABLE>
<CAPTION>
U.S. INTERNATIONAL ELIMINATION CONSOLIDATED
---------- ------------ ----------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Customer sales.............................................. $ 102,733 $ 48,809 $ -- $ 151,542
Inter-geographic............................................ 4,449 -- (4,449) --
---------- ------------ ----------- ------------
Total sales................................................. $ 107,182 $ 48,809 $ (4,449) $ 151,542
---------- ------------ ----------- ------------
---------- ------------ ----------- ------------
Operating income............................................ $ (12,401) $ 6,637 $ -- $ (5,764)
---------- ------------ ----------- ------------
---------- ------------ ----------- ------------
Identifiable assets......................................... $ 390,088 $ 45,333 $ -- $ 435,421
---------- ------------ ----------- ------------
---------- ------------ ----------- ------------
</TABLE>
EIGHT MONTHS ENDED MAY 31, 1996--PREDECESSOR COMPANY
<TABLE>
<CAPTION>
U.S. INTERNATIONAL ELIMINATION CONSOLIDATED
----------- ------------ ----------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Customer sales............................................. $ 227,742 $ 106,856 $ -- $ 334,598
Inter-geographic........................................... 12,592 -- (12,592) --
----------- ------------ ----------- ------------
Total sales................................................ $ 240,334 $ 106,856 $ (12,592) $ 334,598
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
Operating income........................................... $ 34,990 $ 6,615 $ -- $ 41,605
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
</TABLE>
F-32
<PAGE>
ANACOMP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 22. INTERNATIONAL OPERATIONS: (CONTINUED)
<TABLE>
<S> <C> <C> <C> <C>
TWELVE MONTHS ENDED SEPTEMBER 30, 1995--PREDECESSOR COMPANY
<CAPTION>
U.S. INTERNATIONAL ELIMINATION CONSOLIDATED
----------- ------------ ----------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Customer sales............................................. $ 404,239 $ 186,950 $ -- $ 591,189
Inter-geographic........................................... 24,973 -- (24,973) --
----------- ------------ ----------- ------------
Total sales................................................ $ 429,212 $ 186,950 $ (24,973) $ 591,189
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
Operating income (loss).................................... $ (135,811) $ 7,622 $ -- $ (128,189)
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
Identifiable assets........................................ $ 350,310 $ 70,719 $ -- $ 421,029
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
TWELVE MONTHS ENDED SEPTEMBER 30, 1994--PREDECESSOR COMPANY
<CAPTION>
U.S. INTERNATIONAL ELIMINATION CONSOLIDATED
----------- ------------ ----------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Customer sales............................................. $ 421,339 $ 171,260 $ -- $ 592,599
Inter-geographic........................................... 23,726 -- (23,726) --
----------- ------------ ----------- ------------
Total sales................................................ $ 445,065 $ 171,260 $ (23,726) $ 592,599
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
Operating income........................................... $ 60,794 $ 18,783 $ -- $ 79,577
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
Identifiable assets........................................ $ 590,743 $ 67,896 $ -- $ 658,639
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
</TABLE>
F-33
<PAGE>
ANACOMP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 23. QUARTERLY FINANCIAL DATA (UNAUDITED):
<TABLE>
<CAPTION>
PREDECESSOR COMPANY REORGANIZED COMPANY
---------------------------------------------------------
TWO MONTHS ONE MONTH
ENDED ENDED
FIRST SECOND MAY 31, JUNE 30, FOURTH
QUARTER QUARTER 1996 1996 QUARTER
--------- --------- ----------- ----------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
FISCAL 1996
Revenues.............................. $ 130,265 $ 125,911 $ 78,422 $ 36,786 $ 114,756
Gross profit.......................... 40,666 40,411 23,903 11,895 37,692
Income (loss) before extraordinary
credit.............................. 1,053 (10,731) 122,206 (4,372) (17,637)
Extraordinary credit:
Gain on discharge of indebtedness..... -- -- 52,442 -- --
Net income (loss)..................... 1,053 (10,731) 174,648 (4,372) (17,637)
Preferred stock dividends and discount
accretion........................... 540 -- -- -- --
--------- --------- ----------- ----------- ---------
Net income (loss) available to common
stockholders........................ $ 513 $ (10,731) $ 174,648 $ (4,372) $ (17,637)
--------- --------- ----------- ----------- ---------
--------- --------- ----------- ----------- ---------
Earnings per common share (primarily
and fully diluted):
Net loss available to common
stockholders........................ $ (.44) $ (1.75)
----------- ---------
----------- ---------
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
--------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
FISCAL 1995--PREDECESSOR COMPANY
Revenues.............................. $ 151,812 $ 151,489 $ 148,933 $ 138,955
Gross profit.......................... 49,406 45,945 45,931 32,482
Net income (loss)..................... 281 (7,664) (138,829) (92,114)
Preferred stock dividends and discount
accretion........................... 540 539 540 539
--------- --------- ----------- ----------- ---------
Net loss to common stockholders....... $ (259) $ (8,203) $(139,369) $ (92,653)
--------- --------- ----------- ---------
--------- --------- ----------- ---------
-----------
-----------
--------- --------- ----------- ---------
--------- --------- ----------- ---------
</TABLE>
F-34
<PAGE>
ANACOMP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 24. VALUATION AND QUALIFYING ACCOUNTS AND RESERVES:
The following is a summary of activity in the Company's valuation and
qualifying accounts and reserves for the periods ended September 30, 1996 and
May 31, 1996 and for the twelve months ended September 30, 1995 and 1994:
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND END OF
DESCRIPTION OF PERIOD EXPENSES DEDUCTIONS PERIOD
- ------------------------------------------------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
FOUR MONTHS ENDED SEPTEMBER 30, 1996--
REORGANIZED COMPANY
Allowance for doubtful accounts............................ $ 7,464 $ 388 $ 1,393(1) $ 6,459
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
EIGHT MONTHS ENDED MAY 31, 1996--
PREDECESSOR COMPANY
Allowance for doubtful accounts............................ $ 7,367 $ 253 $ 156(1) $ 7,464
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
TWELVE MONTHS ENDED SEPTEMBER 30, 1995-- PREDECESSOR COMPANY
Allowance for doubtful accounts.............................. $ 3,550 $ 4,670 $ 853(1) $ 7,367
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
TWELVE MONTHS ENDED SEPTEMBER 30, 1994-- PREDECESSOR COMPANY
Allowance for doubtful accounts.............................. $ 4,245 $ (268) $ 427(1) $ 3,550
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
- ------------------------
(1) Uncollectable accounts written off, net of recoveries.
NOTE 25. RIGHTS OFFERING:
On October 30, 1996, the Company completed a rights offering to its existing
shareholders resulting in the issuance of 3.6 million shares of new common
stock. For each share of Anacomp new common stock held as of the close of
business on September 18, 1996, the Company distributed 0.36 rights to purchase
additional shares of new common stock at a subscription price of $6.875 per
share. The Company will use the proceeds of the rights offering, approximately
$25 million, for the acquisition of businesses, assets and technologies.
NOTE 26. SUBSEQUENT EVENTS (UNAUDITED):
ACQUISITIONS
Subsequent to September 30, 1996, the company acquired the customer bases
and other specified assets of three businesses: Archive Storage, Inc. ("ASI"),
Precision Data Services, Inc. ("PDS"), and Integra Technologies Corporation
("ITC"). Additionally, the Company acquired all of the common stock of Data/Ware
Development Inc. ("Data/Ware").
- ASI is a Massachusetts company that specializes in the long-term storage
of critical business records. The ASI purchase price consisted of $180,000
cash at closing, the assumption of a $70,000 debt obligation, and a
contingent cash payment of up to $500,000 based on future earnings of
Anacomp's storage business.
F-35
<PAGE>
ANACOMP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 26. SUBSEQUENT EVENTS (UNAUDITED): (CONTINUED)
- PDS is a service bureau in New York specializing in Computer Output to
Microfilm ("COM"). The PDS purchase price was $1.7 million cash at
closing.
- ITC is a Massachusetts company that provides maintenance services relating
to ITC equipment sold for the cleaning, testing, certifying and degaussing
of computer tape. The ITC purchase price consisted of $1.5 million cash at
closing, the assumption of a $600,000 deferred revenue liability, and a
contingent cash payment of up to $2.7 million based on future revenues of
the ITC business.
- Data/Ware is a California company that manufactures and markets CD output
systems, optical storage controllers and mainframe connectivity solutions.
The Data/Ware purchase price consisted of $11.2 million cash paid at
closing, and contingent cash and/or stock payments of up to $3.2 million
based upon future operating results of the Data/Ware business over the
next two years.
SENIOR SECURED CREDIT FACILITY
On February 28, 1997, the Company and certain foreign subsidiaries entered
into a Credit and Guarantee Agreement (the "Credit Facility") with a syndicate
of banks and other financial institutions (collectively, the "Senior Secured
Lenders"), Lehman Commercial Paper Inc., as arranger and syndication agent, and
The First National Bank of Chicago (in its individual capacity, "First
Chicago"), as administrative agent. The Credit Facility provides for a $55
million term loan facility (the "Term Facility") and a $25 million revolving
credit facility (the "Revolving Facility"). The proceeds of the Term Facility
and available cash were used to repay the existing 11 5/8% Senior Secured Notes
due 1999 (the "Old Senior Secured Notes"). The balance of the Old Senior Secured
Notes at February 28, 1997, was $83.6 million, reflecting the prepayment of the
March 31, 1997 installment of $14.3 million made on February 20, 1997.
As of February 28, 1997, $55 million was outstanding under the Term
Facility, and no amounts were outstanding under the Revolving Facility. The
entire Revolving Facility is available for loans denominated in U.S. dollars and
certain foreign currencies ("Multicurrency Loans"), and up to $10 million of the
Revolving Facility is available for letters of credit. The Term Facility is
repayable in thirteen quarterly installments commencing March 31, 1998, with the
final installment due on March 31, 2001. The Revolving Facility terminates on
February 28, 2001.
The Company may elect to have loans under the Term Facility or the Revolving
Facility bear interest at (a) the Alternate Base Rate plus 2% or (b) the
Eurodollar Rate, or in the case of Multicurrency Loans, the Eurocurrency Rate,
plus 3%. Interest is payable quarterly and at the end of the Interest Period (as
defined in the Credit Facility). The "Alternate Base Rate" for any day means the
higher of (i) the corporate base rate of interest announced by First Chicago and
(ii) the federal funds rate published by the Federal Reserve Bank of New York on
the next business day plus 1/2%. The "Eurodollar Rate" for any Interest Period
means (A) the applicable London interbank offered rate for deposits in U.S.
dollars two business days prior to the first day of the Interest Period divided
by (B) one minus the "Eurocurrency Liabilities" under Regulation D of the Board
of Governors of the Federal Reserve System. The "Eurocurrency Rate" for any
Interest Period means the rate at which First Chicago offers to place deposits
in the applicable foreign currency with first- class banks in the London
interbank market two business days prior to the first day of the Interest
Period.
The Term Facility and the Revolving Facility are secured by all of the
Company's tangible and intangible assets (including intellectual property, real
property and all of the capital stock of each of the Company's direct or
indirect domestic subsidiaries and 65% of the capital stock of each of the
Company's
F-36
<PAGE>
ANACOMP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 26. SUBSEQUENT EVENTS (UNAUDITED): (CONTINUED)
material direct foreign subsidiaries). All of the Company's obligations under
the Credit Facility are unconditionally guaranteed by the Company's direct or
indirect domestic subsidiaries. In addition to customary covenants, the Credit
Facility requires that the Company: (a) maintain certain ratios of Consolidated
EBITDA (as defined in the Credit Facility) to Consolidated Interest Expense (as
defined in the Credit Facility) and certain ratios of Consolidated Indebtedness
(as defined in the Credit Facility) to Consolidated EBITDA, (b) not incur any
indebtedness other than the 10 7/8% Senior Subordinated Notes due 2004 (the
"Notes"), indebtedness under the Credit Facility and certain other indebtedness,
(c) not permit any lien to exist on any of its property, assets or revenues,
except the liens in favor of the Senior Secured Lenders, existing liens and
certain other liens and (d) not to incur any guarantee obligations, except the
guarantee obligations related to the Credit Facility and certain other guarantee
obligations.
The Company must use 25% of Consolidated Excess Cash Flow (as defined in the
Credit Facility) in fiscal 1997 and 50% of Consolidated Excess Cash Flow
thereafter to repay the Term Facility and reduce Revolving Facility commitments.
Additionally, 100% of the Net Proceeds (as defined in the Credit Facility) of
any Asset Sale (as defined in the Credit Facility) and 75% of proceeds from the
sale of Capital Stock (as defined in the Credit Facility) not used for
acquisitions or the repurchase of subordinated debt, must be applied to repay
the Term Facility and reduce the Revolving Facility commitments. The Term
Facility repayment schedule is as follows:
<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 30,
--------------------
<S> <C>
(DOLLARS IN
THOUSANDS)
1998.................................................................... $ 8,000
1999.................................................................... 14,000
2000.................................................................... 21,000
2001.................................................................... 12,000
-------
$ 55,000
-------
-------
</TABLE>
10 7/8% SENIOR SUBORDINATED NOTES
On March 24, 1997, the Company issued $200 million of the Notes. The Notes
were sold at a discount of 98.2071% to yield proceeds of $196.4 million. The
proceeds of the Notes were used to repay the existing 13% Senior Subordinated
Notes due 2002, including a 3% call premium and accrued interest, to reduce the
SKC trade payable by $10 million and associated accrued interest, and to pay
certain fees and expenses. As a result of the call premium ($5.2 million) and
existing discount on the 13% notes ($11.7 million), the Company will record an
extraordinary loss before income tax consideration on the extinguishment of debt
in the second quarter of fiscal 1997 of $16.9 million.
The Notes are not redeemable at the option of the Company prior to April 1,
2000. On or after such date until April 1, 2003, the Notes will be redeemable at
the option of the Company in whole or in part at prices ranging from 108.156% to
102.719% plus accrued and unpaid interest. On or after April 1, 2003, the Notes
may be redeemable at 100% plus accrued and unpaid interest. Prior to April 1,
2000, the Company may, at its option, use the net cash proceeds of one or more
Public Equity Offerings (as defined in the Indenture), to redeem up to 35% of
the aggregate principal amount at a redemption price equal to 110.875% plus
unpaid interest to the date of redemption, provided that at least $130 million
of the aggregate principal amount of Notes originally issued remains outstanding
after any such redemption.
F-37
<PAGE>
ANACOMP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 26. SUBSEQUENT EVENTS (UNAUDITED): (CONTINUED)
Also, upon a Change of Control (as defined in the Indenture), the Company is
required to make an offer to purchase the Notes then outstanding at a purchase
price equal to 101% of the principal amount thereof, plus accrued and unpaid
interest. The Notes have no sinking fund requirements and are due in full on
April 1, 2004.
The Notes are general unsecured obligations of the Company and will be
expressly subordinated in right of payment to all existing and future Senior
Indebtedness (as defined in the Indenture) of the Company. The Notes will rank
PARI PASSU with any future Senior Subordinated Indebtedness (as defined in the
Indenture), and senior to all Subordinated Indebtedness (as defined in the
Indenture) of the Company.
The indenture relating to the Notes (the "Indenture") contains covenants
related to limitations of indebtedness of the Company and restricted
subsidiaries, limitations on restricted payments, limitations on restrictions on
distributions from restricted subsidiaries, limitations on sale of assets and
restricted subsidiary stock, limitations on liens, a prohibition on layering,
limitations on transactions with affiliates, limitations on issuance and sale of
capital stock of restricted subsidiaries and limitations of sale/leaseback
transactions.
F-38
<PAGE>
ANACOMP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 1996
------------ -------------
<S> <C> <C>
(UNAUDITED)
(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
ASSETS
Current assets:
Cash and cash equivalents......................................................... $ 71,574 $ 38,198
Restricted cash................................................................... 9,597 9,597
Accounts and notes receivable, less allowances for doubtful accounts of $6,850 and
$6,768, respectively............................................................ 60,578 58,806
Current portion of long-term receivables.......................................... 4,928 4,690
Inventories....................................................................... 29,968 31,856
Prepaid expenses and other........................................................ 5,781 4,383
------------ -------------
Total current assets................................................................ 182,426 147,530
Property and equipment, at cost less accumulated depreciation and amortization...... 28,147 27,102
Long-term receivables, net of current portion....................................... 9,479 10,632
Excess of purchase price over net assets of businesses acquired and other
intangibles, net.................................................................. 4,386 2,285
Reorganization value in excess of identifiable assets............................... 218,473 240,344
Other assets........................................................................ 7,615 7,528
------------ -------------
$ 450,526 $ 435,421
------------ -------------
------------ -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt................................................. $ 43,897 $ 31,848
Accounts payable.................................................................. 49,242 48,090
Accrued compensation, benefits and withholdings................................... 13,238 13,728
Accrued income taxes.............................................................. 9,537 11,930
Accrued interest.................................................................. 6,893 10,586
Other accrued liabilities......................................................... 33,859 36,814
------------ -------------
Total current liabilities........................................................... 156,666 152,996
------------ -------------
Noncurrent liabilities:
Long-term debt, net of current portion............................................ 217,170 217,044
Other noncurrent liabilities...................................................... 6,116 6,812
------------ -------------
Total noncurrent liabilities........................................................ 223,286 223,856
------------ -------------
Stockholders' equity:
Preferred stock, 1,000,000 shares authorized, none issued......................... -- --
Common stock, $.01 par value; 20,000,000 shares authorized; 13,700,764 and
10,099,050 issued respectively.................................................. 137 101
Capital in excess of par value.................................................... 104,856 80,318
Cumulative translation adjustment from May 31, 1996............................... 503 159
Accumulated deficit from May 31, 1996............................................. (34,922) (22,009)
------------ -------------
Total stockholders' equity.......................................................... 70,574 58,569
------------ -------------
$ 450,526 $ 435,421
------------ -------------
------------ -------------
</TABLE>
See notes to condensed consolidated financial statements.
F-39
<PAGE>
ANACOMP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
REORGANIZED PREDECESSOR
COMPANY COMPANY
<S> <C> <C>
----------------------------
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
DECEMBER 31, DECEMBER 31,
1996 1995
------------- -------------
(AMOUNTS IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C>
Revenues:
Services provided................................................................. $ 45,425 $ 50,928
Equipment and supply sales........................................................ 71,028 79,337
------------- -------------
116,453 130,265
------------- -------------
Operating costs and expenses:
Costs of services provided........................................................ 24,107 27,838
Costs of equipment and supplies sold.............................................. 50,932 61,761
Selling, general and administrative expenses...................................... 21,448 24,447
Amortization of reorganization asset.............................................. 19,247 --
------------- -------------
115,734 114,046
------------- -------------
Income from operations before interest, other income, financial restructuring costs,
and income taxes.................................................................. 719 16,219
------------- -------------
Interest income..................................................................... 984 501
Interest expense and fee amortization............................................... (9,802) (18,286)
Financial restructuring costs (See Note 3).......................................... -- (2,801)
Other income (loss) (See Note 4).................................................... (15) 6,620
------------- -------------
(8,833) (13,966)
------------- -------------
Income (loss) before income taxes................................................... (8,114) 2,253
Provision for income taxes.......................................................... 4,800 1,200
------------- -------------
Net income (loss)................................................................... (12,914) 1,053
Preferred stock dividends and discount accretion.................................... -- 540
------------- -------------
Net income (loss) available to common stockholders.................................. $ (12,914) $ 513
------------- -------------
------------- -------------
Weighted average common shares outstanding.......................................... 12,818
-------------
-------------
Earnings (loss) per common and common equivalent share:
Net loss available to common stockholders......................................... $ (1.01)
-------------
-------------
</TABLE>
See notes to condensed consolidated financial statements.
F-40
<PAGE>
ANACOMP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
REORGANIZED PREDECESSOR
COMPANY COMPANY
<S> <C> <C>
----------------------------
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
DECEMBER 31, DECEMBER 31,
1996 1995
------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)................................................................. $ (12,914) $ 1,053
Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities:
Depreciation and amortization................................................... 22,967 8,017
Non-cash compensation........................................................... 259 --
Non-cash charge in lieu of taxes................................................ 2,625 --
Gain on sale of ICS Division.................................................... -- (6,202)
Other........................................................................... 184 (455)
Change in assets and liabilities, net of acquisitions:
Decrease (increase) in accounts and long-term receivables..................... (534) 10,868
Decrease in inventories and prepaid expenses.................................. 2,318 5,057
Increase in other assets...................................................... (225) (299)
Increase (decrease) in accounts payable and accrued expenses.................. 2,205 (8,727)
Decrease in other noncurrent liabilities...................................... (605) (70)
------------- -------------
Net cash provided by operating activities................................... 16,280 9,242
------------- -------------
Cash flows from investing activities:
Proceeds from sale of ICS Division................................................ -- 13,554
Purchases of property, plant and equipment........................................ (3,202) (1,161)
Payments to acquire companies and customer rights................................. (3,379) --
------------- -------------
Net cash provided by (used in) investing activities......................... (6,581) 12,393
------------- -------------
Cash flows from financing activities:
Proceeds from exercise of common stock rights..................................... 24,574 --
Principal payments on long-term debt.............................................. (482) (13,705)
------------- -------------
Net cash provided by (used in) financing activities......................... 24,092 (13,705)
------------- -------------
Effect of exchange rate changes on cash............................................. (415) (136)
------------- -------------
Increase in cash and cash equivalents............................................... 33,376 7,794
Cash and cash equivalents at beginning of period.................................... 38,198 19,415
------------- -------------
Cash and cash equivalents at end of period.......................................... $ 71,574 $ 27,209
------------- -------------
------------- -------------
</TABLE>
See notes to condensed consolidated financial statements.
F-41
<PAGE>
ANACOMP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (CONTINUED)
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
<TABLE>
<CAPTION>
REORGANIZED PREDECESSOR
COMPANY COMPANY
<S> <C> <C>
----------------------------
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
DECEMBER 31, DECEMBER 31,
1996 1995
------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Cash paid during the period for:
Interest...................................................... $ 269 $ 3,486
Income taxes.................................................. $ 2,080 $ 606
</TABLE>
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
<TABLE>
<CAPTION>
REORGANIZED PREDECESSOR
COMPANY COMPANY
<S> <C> <C>
------------------------------
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
DECEMBER 31, DECEMBER 31,
1996 1995
------------- ---------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Assets acquired by assuming liabilities......................... $ 670 $ --
Interest on subordinated notes satisfied with additional
notes......................................................... $ 11,960 $ --
</TABLE>
See notes to condensed consolidated financial statements.
F-42
<PAGE>
ANACOMP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
THREE MONTHS ENDED DECEMBER 31, 1996--REORGANIZED COMPANY
<TABLE>
<CAPTION>
CAPITAL IN CUMULATIVE
COMMON EXCESS OF TRANSLATION ACCUMULATED
STOCK PAR VALUE ADJUSTMENT DEFICIT TOTAL
----------- ---------- ------------- ------------ ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE AT SEPTEMBER 30, 1996....................... $ 101 $ 80,318 $ 159 $ (22,009) $ 58,569
Common stock issued for exercise of rights.......... 36 24,538 -- -- 24,574
Translation adjustments for period.................. -- -- 344 -- 344
Other............................................... -- -- -- 1 1
Net loss for the period............................. -- -- -- (12,914) (12,914)
----- ---------- ----- ------------ ----------
BALANCE AT DECEMBER 31, 1996........................ $ 137 $ 104,856 $ 503 $ (34,922) $ 70,574
----- ---------- ----- ------------ ----------
----- ---------- ----- ------------ ----------
</TABLE>
THREE MONTHS ENDED DECEMBER 31, 1995--PREDECESSOR COMPANY
<TABLE>
<CAPTION>
CAPITAL IN CUMULATIVE
COMMON EXCESS OF TRANSLATION ACCUMULATED
STOCK PAR VALUE ADJUSTMENT DEFICIT TOTAL
----------- ---------- ----------- ------------ -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE AT SEPTEMBER 30, 1995...................... $ 462 $ 182,725 $ 1,329 $ (372,759) $ (188,243)
Preferred stock conversion......................... 1 700 -- -- 701
Preferred stock dividends.......................... -- -- -- (516) (516)
Accretion of redeemable preferred stock discount... -- -- -- (24) (24)
Translation adjustments for period................. -- -- (796) -- (796)
Net income for the period.......................... -- -- -- 1,053 1,053
----- ---------- ----------- ------------ -----------
BALANCE AT DECEMBER 31, 1995....................... $ 463 $ 183,425 $ 533 $ (372,246) $ (187,825)
----- ---------- ----------- ------------ -----------
----- ---------- ----------- ------------ -----------
</TABLE>
See notes to condensed consolidated financial statements.
F-43
<PAGE>
ANACOMP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. GENERAL:
The Condensed Consolidated Financial Statements included herein have been
prepared by Anacomp, Inc. ("Anacomp" or the "Company") and its wholly-owned
subsidiaries without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations; however, the Company believes that the disclosures are
adequate to make the information presented not misleading. The Condensed
Consolidated Financial Statements included herein should be read in conjunction
with the financial statements and the notes thereto included in the Company's
Report on Form 10-K for the fiscal year ended September 30, 1996.
In the opinion of management, the accompanying interim Condensed
Consolidated Financial Statements contain all material adjustments necessary to
present fairly the consolidated financial condition, results of operations, and
changes in financial position and stockholders' equity of Anacomp and its
subsidiaries for the interim periods presented. Certain amounts in the prior
interim consolidated financial statements have been reclassified to conform to
the current period presentation.
Due to the Company's Reorganization and implementation of Fresh Start
Reporting, The Condensed Consolidated Financial Statements for the new
Reorganized Company (period starting May 31, 1996) are not comparable to those
of the Predecessor Company. For financial reporting purposes, the effective date
of the Reorganized Company's emergence from bankruptcy is considered to be the
close of business on May 31, 1996.
A black line has been drawn on the accompanying Condensed Consolidated
Financial Statements to distinguish between the Reorganized Company and the
Predecessor Company.
NOTE 2. COMPONENTS OF CERTAIN BALANCE SHEET ACCOUNTS:
INVENTORIES
Inventories are stated at the lower of cost or market, cost being determined
by methods approximating the first-in, first-out basis. In accordance with Fresh
Start Reporting, inventories were reflected at fair market value as of May 31,
1996.
The cost of the inventories is distributed as follows:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 1996
------------ -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Finished goods.................................................. $ 18,228 $ 22,557
Work in process................................................. 3,335 2,748
Raw materials and supplies...................................... 8,405 6,551
------------ -------------
$ 29,968 $ 31,856
------------ -------------
------------ -------------
</TABLE>
PROPERTY AND EQUIPMENT
Property and equipment are carried at cost. Depreciation and amortization of
property and equipment are generally provided under the straight-line method for
financial reporting purposes over the shorter of the estimated useful lives or
the lease terms. Tooling costs are amortized over the total estimated
F-44
<PAGE>
ANACOMP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2. COMPONENTS OF CERTAIN BALANCE SHEET ACCOUNTS: (CONTINUED)
units of production, not to exceed three years. In accordance with Fresh Start
Reporting, property and equipment were reflected at fair market values as of May
31, 1996.
RESTRICTED CASH
Restricted cash represents cash reserved as collateral for letters of credit
issued by the Company or cash held in escrow primarily to secure certain
contingent obligations of the Company. The contingent obligations are primarily
related to environmental liabilities and certain insurance policies.
NOTE 3. FINANCIAL RESTRUCTURING COSTS:
On April 6, 1995, Anacomp announced that it had withdrawn its proposed
offering of $225 Senior Secured Notes and a related offer to purchase up to $50
million of the Company's outstanding 15% Senior Subordinated Notes. The offering
would have deferred an aggregate of $153 million in scheduled principal payments
in fiscal years 1995 through 1998, thereby providing Anacomp with increased
liquidity and additional cash for product development. Costs directly related to
these activities of $2.8 million for the three months ended December 31, 1995
are included as "Financial restructuring costs" in the accompanying Condensed
Consolidated Statements of Operations.
NOTE 4. SALE OF ICS DIVISION:
Effective November 1, 1995, Anacomp sold its Image Conversion Services
Division ("ICS") for approximately $13.5 million, which resulted in a net gain
to the Company of $6.2 million. The proceeds from this sale were used to reduce
the principal balance on certain senior debt. The ICS Division performed source
document microfilm services at several facilities around the country generating
approximately $20.0 million of revenues per year.
NOTE 5. INCOME TAXES:
Income tax expense is reported for the Predecessor Company based on the
actual effective tax rate for the three month period ended December 31, 1995.
For this period, the U.S. Federal tax rate is zero because the U.S. tax
provision of $1.3 million was offset by a corresponding reduction to the
valuation allowance.
Amortization of "Reorganization value in excess of identifiable assets" is
not deductible for income tax purposes. Accordingly, the Reorganized Company
incurs income tax expense even though it reports a pre-tax loss due to such
amortization.
For the three months ended December 31, 1996, income tax expense is reported
for the Reorganized Company based upon an estimated effective tax rate for
fiscal 1997 of 43%. Also for the three months ended December 31, 1996, the
limited tax benefit of the U.S. Federal net operating loss carryforwards
("NOLs") of the Reorganized Company resulted in a credit of $2.6 million to
"Reorganization value in excess of identified assets" and does not reduce income
tax expense.
At December 31, 1996, the Reorganized Company had NOLs of approximately $122
million available to offset future taxable income. Usage of these NOLs by the
Reorganized Company is limited to approximately $4 million annually. However,
the Reorganized Company may authorize the use of other tax planning techniques
to utilize a portion of the remaining NOLs before they expire. In any event, the
F-45
<PAGE>
ANACOMP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 5. INCOME TAXES: (CONTINUED)
Reorganized Company expects that substantial amounts of the NOLs will expire
unused. NOLs available to offset taxable income for fiscal year 1997 is
estimated to be $17 million.
NOTE 6. EARNINGS (LOSS) PER SHARE:
The computation of earnings (loss) per common and common equivalent share is
based upon the weighted average number of common shares outstanding during the
periods plus (in the periods in which they have a dilutive effect) the effect of
common shares contingently issuable, primarily from stock options and exercise
of warrants.
Fully diluted earnings (loss) per share are the same as primary earnings per
share for the periods presented.
The weighted average number of common shares outstanding and net income
(loss) per common share for periods prior to May 31, 1996 have not been
presented because, due to the restructuring and implementation of Fresh Start
Reporting, they are not comparable to subsequent periods.
NOTE 7. ACQUISITIONS:
During the three months ended December 31, 1996, the Company acquired the
customer bases and other specified assets of three businesses: Archive Storage,
Inc. ("ASI"), Precision Data Services, Inc. ("PDS") and Integra Technologies
Corporation ("ITC").
- ASI is a Massachusetts company that specializes in the long-term storage
of critical business records. The ASI purchase price consisted of $180,000
cash paid at closing, the assumption of a $70,000 debt obligation, and a
contingent cash payment of up to $500,000 based upon future earnings of
Anacomp's storage business.
- PDS is a service bureau in New York specializing in Computer Output to
Microfilm ("COM"). The PDS purchase price consisted of $1.7 million cash
paid at closing.
- ITC is a Massachusetts company that provides maintenance services relating
to ITC equipment sold for the cleaning, testing, certifying and degaussing
of computer tape. The ITC purchase price consisted of $1.5 million cash
paid at closing, the assumption of a $600,000 deferred revenue liability,
and a contingent cash payment of up to $2.7 million based upon future
revenues of the ITC business.
NOTE 8. RIGHTS OFFERING:
On October 30, 1996, the Company completed a rights offering to its existing
shareholders that resulted in the issuance of 3.6 million shares of common
stock. For each share of Anacomp common stock held as of the close of business
on September 18, 1996, the Company distributed 0.36 rights to purchase an
additional share of common stock at a subscription price of $6.875 per share.
The Company will use the proceeds of the rights offering, approximately $25
million, for the acquisition of businesses, assets and technologies.
F-46
<PAGE>
ANACOMP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 9. SUBSEQUENT EVENTS:
Subsequent to December 31, 1996, the Company acquired all of the common
stock of two businesses: COM S.r.l. and Data/Ware Development, Inc.
- COM S.r.l. is a service bureau in Milan, Italy specializing in Computer
Output to Microfilm ("COM"). The COM S.r.l. purchase price consisted of
$460,000 cash paid at closing, and represents the Company's first European
service bureau.
- Data/Ware Development, Inc. is a California based company that
manufactures and markets CD output systems, optical storage controllers,
and mainframe connectivity solutions. The Data/Ware purchase price
consisted of $11.2 million cash paid at closing, and contingent cash
and/or stock payments of up to $3.2 million based upon future operating
results of the Data/Ware business over the next two years.
On January 22, 1997, the Company reached a multi-year product and marketing
agreement with FileNet Corp to provide Windows-Registered Trademark- NT-based
software applications for integrated information delivery. FileNet Corp's newest
suite of document management and workflow software, a set of integrated, open,
componentized and complementary solutions, will serve as the platform for
vertical applications developed and marketed by the Company under the name
Concerto-TM-. In connection with this agreement the Company is required to
prepay software license fees of $1.0 million to FileNet Corp. during the second
quarter of fiscal 1997.
On January 27, 1997, the Company reached an agreement with Lehman Brothers
for the refinancing of the Company's 11 5/8% Senior Secured Notes. Lehman
Brothers has agreed to underwrite a new $80 million debt facility, consisting of
$55 million in term loans and a revolver of up to $25 million. The Company
intends to pre-pay the next principal installment of approximately $14.3 million
on its existing Senior Secured Notes, which had a balance outstanding of $97.9
million at December 31, 1996. On February 28, 1997, the Company will use
available cash and borrowings under the new senior debt facility to redeem the
balance of the Senior Secured Notes, reducing the Company's senior debt to $55
million in new term loans and leaving the $25 million revolver undrawn.
Accordingly, $42.9 million of senior secured notes outstanding at December 31,
1996 are reflected as current portion of long-term debt in the accompanying
Condensed Consolidated Balance Sheet. This agreement replaces the former
agreement with Lehman Brothers reached on November 20, 1996 to underwrite a
similar debt facility, as noted in the Company's Report on Form 10-K for the
fiscal year ended September 30, 1996.
On February 3, 1997, the Company's shareholders approved the Anacomp, Inc.
1997 Qualified Employee Stock Purchase Plan (the "Stock Purchase Plan"). The
Stock Purchase Plan allows qualified employees to purchase shares of the
Company's common stock at the lower of 85% of the fair market value at the date
of purchase or 85% of the fair market value on the first day of the offering
period. A maximum of 500,000 shares of common stock is available for purchase
under the Stock Purchase Plan.
On February 3, 1997, the Company's shareholders approved the Anacomp, Inc.
1996 Long-Term Incentive Plan (the "Incentive Plan"). The Company has reserved
1,450,000 shares of its common stock for issuance in connection with options and
awards under this plan.
F-47
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON, OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATION, OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, IN CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY ANACOMP, INC. OR THE INITIAL PURCHASER. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE NOTES
IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION TO SUCH PERSON. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS
PROSPECTUS OR IN THE AFFAIRS OF ANACOMP, INC. OR ANY OF ITS SUBSIDIARIES SINCE
THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Available Information........................... 2
Forward Looking Statements...................... 2
Prospectus Summary.............................. 3
Risk Factors.................................... 14
Use of Proceeds................................. 20
Capitalization.................................. 21
Selected Consolidated Financial Data............ 22
Pro Forma Unaudited Consolidated Financial
Information................................... 24
Management's Discussion and Analysis of Results
of Operations and Financial Condition......... 36
Business........................................ 43
Management...................................... 58
Security Ownership of Certain Beneficial Owners
and Management................................ 67
Certain Relationships and Related
Transactions.................................. 68
Description of the Senior Secured Debt.......... 69
Description of Notes............................ 71
Certain U.S. Federal Income Tax
Considerations................................ 98
Plan of Distribution............................ 100
Legal Matters................................... 100
Experts......................................... 100
Index to Consolidated Financial Statements...... F-1
</TABLE>
UNTIL , 1997 (40 DAYS AFTER THE DATE OF THIS PROSPECTUS) ALL DEALERS
EFFECTING TRANSACTIONS IN THE EXCHANGE NOTES, WHETHER OR NOT PARTICIPATING IN
THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION
TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS
AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
[LOGO]
OFFER TO EXCHANGE ITS
10 7/8% SENIOR SUBORDINATED NOTES
DUE 2004, SERIES B,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED,
FOR ANY AND ALL OF ITS OUTSTANDING
10 7/8% SENIOR SUBORDINATED NOTES
DUE 2004, SERIES A
---------------------
PROSPECTUS
---------------------
, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company is empowered by Chapter 37 of the Indiana Business Corporation
Law (the "IBCL"), subject to the procedures and limitations therein, to
indemnify any person against expenses (including counsel fees) and the
obligation to pay a judgment, settlement, penalty, fine or reasonable expenses
incurred with respect to a threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative and whether
formal or informal, in which such person is made a party by reason of such
person's being or having been a director, officer, employee or agent of the
Company. The statute provides that indemnification pursuant to its provisions is
not exclusive of other rights of indemnification to which a person may be
entitled under a corporation's articles of incorporation or bylaws, vote of
directors or stockholders, or otherwise.
Article IX of the Company's Amended and Restated Articles of Incorporation
allows the Company to indemnify any person in connection with any claim, action,
suit or proceeding arising by reason of such person's status as a director,
officer, employee or agent of the Company or service at the request of the
Company as a director, officer, employee, agent or fiduciary of another entity,
if such person is wholly successful with respect to the claim, action, suit or
proceeding or, if not wholly successful, if such person acted in good faith in
what the person reasonably believed to be in the best interests of the Company
or at least not opposed to its best interests and, with respect to any criminal
proceeding, is determined to have had reasonable cause to believe that such
person's conduct was lawful or had no reasonable cause to believe that the
conduct was unlawful.
The foregoing statements are subject to the detailed provisions of the IBCL
and the Company's Amended and Restated Articles of Incorporation.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- -----------------------------------------------------------------------------------------------------
<C> <C> <S>
2.1 -- Third Amended Joint Plan of Reorganization of the Company and certain of its subsidiaries.(1)
3.1 -- Amended and Restated Articles of Incorporation of the Company.(2)
3.2 -- Amended and Restated Bylaws of the Company.(2)
4.1 -- Form of Common Stock Certificate.(2)
4.2 -- Warrant Agreement, dated as of June 4, 1996, between the Company and ChaseMellon Shareholder
Services, L.L.C.(2)
4.3 -- Form of Warrant Certificate.(2)
4.4 -- Indenture, dated as of March 24, 1997, between the Company and IBJ Schroder Bank & Trust Company, as
trustee, relating to the Company's 10% Senior Subordinated Notes due 2004.
4.5 -- Purchase Agreement, dated March 19, 1997, between the Company and NatWest Capital Markets Limited,
relating to the Company's 10% Senior Subordinated Notes due 2004.
4.6 -- Exchange and Registration Rights Agreement, dated March 19, 1997, between the Company and NatWest
Capital Markets Limited, relating to the Company's 10% Senior Subordinated Notes due 2004.
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- -----------------------------------------------------------------------------------------------------
<C> <C> <S>
4.7 -- Form Letter of Transmittal, relating to the Company's 10% Senior Subordinated Notes due 2004.
5.1 -- Opinion of Cadwalader, Wickersham & Taft.
8.1 -- Opinion of Cadwalader, Wickersham & Taft (included in Exhibit 5.1).
10.1 -- Amended and Restated Employment Agreement, effective October 1, 1996, between the Company and P. Lang
Lowrey III.(3)
10.2 -- Employment Agreement, effective January 6, 1997, between the Company and Ralph W. Koehrer.
10.3 -- Employment Agreement, effective March 1, 1992, between the Company and Thomas R. Simmons.(4)
10.4 -- Employment Agreement, effective October 1, 1992, between the Company and William C. Ater.(3)
10.5 -- Employment Agreement, effective February 15, 1996, between the Company and Donald L. Viles.(3)
10.6 -- Common Stock Registration Rights Agreement, dated as of June 4, 1996, by and among the Company and
Holders of Registrable Shares.(2)
10.7 -- Credit and Guarantee Agreement, dated as of February 28, 1997, among the Company, certain foreign
subsidiary borrowers, the several banks and other financial institutions from time to time parties
thereto, Lehman Commercial Paper Inc., as arranger and syndication agent, and The First National Bank
of Chicago, as administrative agent.
10.8 -- Guarantee and Collateral Agreement, dated as of February 28, 1997, made by the Company in favor of
The First National Bank of Chicago.
10.9 -- Amended and Restated Master Supply Agreement, dated October 8, 1993, by and among the Company, SKC
America, Inc. and SKC Limited.(4)
10.10 -- First Cumulative Amendment to the Amended and Restated Master Supply Agreement, dated May 17, 1996,
by and among the Company, SKC America, Inc. and SKC Limited.(5)
12.1 -- Statement regarding computation of ratio of earnings to fixed charges.
21.1 -- Subsidiaries.(3)
23.1 -- Consent of Cadwalader, Wickersham & Taft (included in Exhibit 5.1).
23.2 -- Consent of Arthur Andersen LLP.
24.1 -- Powers of Attorney pursuant to which amendments to this Registration Statement may be filed (included
in the signature page).
25.1 -- Statement of Eligibility and Qualification on Form T-1 of IBJ Schroder Bank & Trust Company.
</TABLE>
- ------------------------
(1) Incorporated by reference to the Company's Form 8-A filed with the
Securities and Exchange Commission on May 15, 1996 (File No. 0-7641)
(2) Incorporated by reference to the Company's Form 8-K filed with the
Securities and Exchange Commission on June 19, 1996 (File No. 1-8328).
(3) Incorporated by reference to the Company's Form 10-K for the year ended
September 30, 1996.
(4) Incorporated by reference to the Company's Form 10-K for the year ended
September 30, 1993.
II-2
<PAGE>
(5) Incorporated by reference to the Company's Pre-Effective Amendment No. 1 to
Form S-1 filed with the Exchange Commission on September 19, 1996 (File No.
333-9395)
(b) Financial Statement Schedules.
Financial Statement Schedules are not filed herewith because the Schedules
are either inapplicable or the required information is represented in the
consolidated financial statements or the notes thereto.
ITEM 22. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling the
Registrant pursuant to the foregoing provisions, the Registrant has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of a registration statement in reliance upon Rule 430A and contained in the
form of prospectus filed by the Registrant pursuant to
II-3
<PAGE>
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to
be part of the registration statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned Registrant hereby undertakes to supply be means of a post-
effective amendment all information concerning a transaction, and the company
being acquired involved therein, that was not the subject of and included in the
registration statement when it became effective.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Carmel, State of Indiana,
on April 16, 1997.
ANACOMP, INC.
BY: /S/ RALPH W. KOEHRER
-----------------------------------------
RALPH W. KOEHRER
President and Chief Operating Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints P. Lang Lowrey III, Donald L. Viles and George C.
Gaskin, Esq. and each of them, his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform such and every act and thing requisite and necessary to be done, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on April 16, 1997
SIGNATURE TITLE
- ------------------------------ --------------------------
Chief Executive Officer
/S/ P. LANG LOWREY, III and Chairman of the
- ------------------------------ Board (Principal
P. LANG LOWREY, III Executive Officer)
Executive Vice President
/S/ DONALD L. VILES and Chief Financial
- ------------------------------ Officer (Principal
DONALD L. VILES Financial and Accounting
Officer)
/s/ TALTON R. EMBRY
- ------------------------------ Director
TALTON R. EMBRY
/S/ DARIUS W. GASKINS, JR.
- ------------------------------ Director
DARIUS W. GASKINS, JR.
/S/ JAY P. GILBERTSON
- ------------------------------ Director
JAY P. GILBERTSON
/S/ RICHARD D. JACKSON
- ------------------------------ Director
RICHARD D. JACKSON
/S/ GEORGE A. POOLE, JR.
- ------------------------------ Director
GEORGE A. POOLE, JR.
/S/ LEWIS SOLOMON
- ------------------------------ Director
LEWIS SOLOMON
II-5
<PAGE>
Exhibit 4.4
---------------------------------------------
ANACOMP, INC.
10 7/8% Senior Subordinated Notes due 2004, Series A
10 7/8% Senior Subordinated Notes due 2004, Series B
----------------------------------
INDENTURE
Dated as of March 24, 1997
----------------------------------
IBJ SCHRODER BANK & TRUST COMPANY,
Trustee
---------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1 Definitions and Incorporation by Reference........................ 1
SECTION 1.1. Definitions............................................ 1
SECTION 1.2. Other Definitions...................................... 21
SECTION 1.3. Incorporation by Reference of Trust
Indenture Act........................................ 22
SECTION 1.4. Rules of Construction.................................. 23
ARTICLE 2 The Securities.................................................... 23
SECTION 2.1. Form and Dating........................................ 23
SECTION 2.2. Execution and Authentication........................... 24
SECTION 2.3. Registrar and Paying Agent............................. 24
SECTION 2.4. Deposit of Moneys; Paying Agent To Hold Money
in Trust............................................. 25
SECTION 2.5. Securityholder Lists................................... 25
SECTION 2.6. Transfer and Exchange.................................. 25
SECTION 2.7. Book-Entry Provisions for Global Securities............ 26
SECTION 2.8. Certificated Securities................................ 27
SECTION 2.9. Replacement Securities................................. 27
SECTION 2.10. Outstanding Securities................................. 28
SECTION 2.11. Temporary Securities................................... 28
SECTION 2.12. Cancellation........................................... 29
SECTION 2.13. Defaulted Interest..................................... 29
SECTION 2.14. Restrictive Legends.................................... 30
SECTION 2.15. Special Transfer Provisions............................ 32
SECTION 2.16. Record Date............................................ 34
SECTION 2.17. CUSIP Numbers.......................................... 34
ARTICLE 3 Redemption........................................................ 34
SECTION 3.1. Notices to Trustee..................................... 34
SECTION 3.2. Selection of Securities To Be Redeemed................. 35
SECTION 3.3. Notice of Redemption................................... 35
SECTION 3.4. Effect of Notice of Redemption......................... 36
SECTION 3.5. Deposit of Redemption Price............................ 36
SECTION 3.6. Securities Redeemed in Part............................ 36
ARTICLE 4 Covenants......................................................... 36
(i)
<PAGE>
Page
----
SECTION 4.1. Payment of Securities.................................. 36
SECTION 4.2. SEC Reports............................................ 37
SECTION 4.3. Limitation on Indebtedness............................. 37
SECTION 4.4. Limitation on Restricted Subsidiary Indebtedness
and Preferred Stock.................................. 40
SECTION 4.5. Limitation on Restricted Payments...................... 42
SECTION 4.6. Limitation on Restrictions on Distributions from
Restricted Subsidiaries.............................. 45
SECTION 4.7. Limitation on Sales of Assets and Restricted
Subsidiary Stock..................................... 46
SECTION 4.8. Limitation on Transactions with Affiliates............. 51
SECTION 4.9. Change of Control...................................... 52
SECTION 4.10. Compliance Certificate................................. 55
SECTION 4.11. Further Instruments and Acts........................... 55
SECTION 4.12. Limitation on Liens.................................... 56
SECTION 4.13. Limitation on Sale/Leaseback Transactions.............. 56
SECTION 4.14. Limitation on Issuance and Sale of Capital
Stock of Restricted Subsidiaries..................... 56
SECTION 4.15. Restricted and Unrestricted Subsidiaries............... 56
SECTION 4.16. Revisions to Schedules................................. 57
SECTION 4.17. Maintenance of Properties; Insurance................... 57
SECTION 4.18. Corporate Existence.................................... 58
SECTION 4.19. Taxes.................................................. 58
SECTION 4.20. Conflicting Agreements................................. 58
SECTION 4.21 Limitation on Layering................................. 58
ARTICLE 5 Merger, Consolidation or Sale of Assets........................... 60
ARTICLE 6 Defaults and Remedies............................................. 62
SECTION 6.1. Events of Default...................................... 62
SECTION 6.2. Acceleration........................................... 64
SECTION 6.3. Other Remedies......................................... 64
SECTION 6.4. Waiver of Past Defaults................................ 65
SECTION 6.5. Control by Majority.................................... 65
SECTION 6.6. Limitation on Suits.................................... 65
SECTION 6.7. Rights of Holders To Receive Payment................... 66
SECTION 6.8. Collection Suit by Trustee............................. 66
SECTION 6.9. Trustee May File Proofs of Claim....................... 66
SECTION 6.10. Priorities............................................. 66
SECTION 6.11. Undertaking for Costs.................................. 67
(ii)
<PAGE>
Page
----
SECTION 6.12. Waiver of Stay or Extension Laws....................... 67
ARTICLE 7 Trustee........................................................... 67
SECTION 7.1. Duties of Trustee...................................... 67
SECTION 7.2. Rights of Trustee...................................... 68
SECTION 7.3. Individual Rights of Trustee........................... 69
SECTION 7.4. Trustee's Disclaimer................................... 69
SECTION 7.5. Notice of Defaults..................................... 70
SECTION 7.6. Reports by Trustee to Holders.......................... 70
SECTION 7.7. Compensation and Indemnity............................. 70
SECTION 7.8. Replacement of Trustee................................. 71
SECTION 7.9. Successor Trustee by Merger............................ 72
SECTION 7.10 Eligibility; Disqualification.......................... 72
SECTION 7.11. Preferential Collection of Claims
Against Company...................................... 72
ARTICLE 8 Discharge of Indenture; Defeasance................................ 73
SECTION 8.1. Discharge of Liability on Securities;
Defeasance........................................... 73
SECTION 8.2. Conditions to Defeasance............................... 74
SECTION 8.3. Application of Trust Money............................. 75
SECTION 8.4. Repayment to Company................................... 75
SECTION 8.5. Indemnity for Government Obligations................... 75
SECTION 8.6. Reinstatement.......................................... 76
ARTICLE 9 Subordination..................................................... 76
SECTION 9.1. Securities Subordinated to Senior
Indebtedness......................................... 76
SECTION 9.2. No Payment on Securities in Certain
Circumstances........................................ 76
SECTION 9.3. Securities Subordinated to Prior Payment
of All Senior Indebtedness on Dissolution,
Liquidation or Reorganization of Company............. 78
SECTION 9.4. Securityholders To Be Subrogated to Rights
of Holders of Senior Indebtedness.................... 79
SECTION 9.5. Obligations of the Company Unconditional............... 79
SECTION 9.6. Trustee and Paying Agent Entitled To Assume
Payments Not Prohibited in Absence of Notice......... 80
SECTION 9.7. Application by Trustee of Monies
Deposited With It.................................... 80
(iii)
<PAGE>
Page
----
SECTION 9.8. Subordination Rights Not Impaired
by Acts or Omissions of Company or Holders
of Senior Indebtedness.............................. 81
SECTION 9.9. Securityholders Authorize Trustee
To Effectuate Subordination of Securities........... 81
SECTION 9.10. Right of Trustee and Paying Agent To Hold
Senior Indebtedness................................. 82
SECTION 9.11. Article 9 Not To Prevent Events of Default............ 82
SECTION 9.12. No Fiduciary Duty Created to Holders of Senior
Indebtedness........................................ 82
ARTICLE 10 Amendments and Waivers........................................... 82
SECTION 10.1. Without Consent of Holders............................ 82
SECTION 10.2. With Consent of Holders............................... 83
SECTION 10.3. Compliance with Trust Indenture Act................... 84
SECTION 10.4. Revocation and Effect of Consents
and Waivers......................................... 84
SECTION 10.5. Notation on or Exchange of Securities................. 85
SECTION 10.6. Trustee To Sign Amendments............................ 85
SECTION 10.7. Payment for Consent................................... 85
ARTICLE 11 Miscellaneous.................................................... 85
SECTION 11.1. Trust Indenture Act Controls.......................... 85
SECTION 11.2. Notices............................................... 86
SECTION 11.3. Communication by Holders with Other Holders........... 86
SECTION 11.4. Certificate and Opinion as to
Conditions Precedent................................ 87
SECTION 11.5. Statements Required in Certificate or Opinion......... 87
SECTION 11.6. Rules by Trustee, Paying Agent and Registrar.......... 87
SECTION 11.7. Legal Holidays........................................ 87
SECTION 11.8. Governing Law......................................... 88
SECTION 11.9. No Recourse Against Others............................ 88
SECTION 11.10. Successors............................................ 88
SECTION 11.11. Multiple Originals.................................... 88
SECTION 11.12. Qualification of Indenture............................ 88
SECTION 11.13. Table of Contents; Headings........................... 88
SECTION 11.14. Severability.......................................... 88
Exhibit A - Form of Security
(iv)
<PAGE>
Page
----
Schedule I - Indebtedness To Be Outstanding Immediately
After the Issue Date
Schedule II - Liens To Be Outstanding Immediately After the Issue Date
Schedule III - U.S. Restricted Subsidiaries
(v)
<PAGE>
ANACOMP, INC.
Reconciliation and tie between Trust Indenture Act of 1939 ("TIA") and Indenture
dated as of June 4, 1996.*
TIA Indenture
Section Section
- ------- -------
310(a)(1) ................................................. 7.10
(a)(2) .................................................. 7.10
(a)(3) .................................................. N.A.
(a)(4) .................................................. N.A.
(a)(5) .................................................. 7.10
(b) .................................................. 7.8, 7.10
(c) .................................................. N.A.
311(a) ................................................. 7.11
(b) .................................................. 7.11
(c) .................................................. N.A.
312(a) ................................................. 2.5
(b) .................................................. 11.3
(c) .................................................. 11.3
313(a) ................................................. 7.6
(b)(1) .................................................. N.A.
(b)(2) .................................................. 7.6
(c) .................................................. 11.2
(d) .................................................. 7.6
314(a) ................................................. 4.2, 4.10
11.2
(b) .................................................. 4.21
(c)(1) .................................................. 11.4
(c)(2) .................................................. 11.4
(c)(3) .................................................. N.A.
(d) .................................................. N.A.
(e) .................................................. 11.5
(f) .................................................. 4.10
315(a) ................................................. 7.1
(b) .................................................. 7.5; 11.2
(c) .................................................. 7.1
(d) .................................................. 7.1
(e) .................................................. 6.11
316(a)(last sentence)........................................... 2.8
(a)(1)(A) .................................................. 6.5
-i-
<PAGE>
TIA Indenture
Section Section
- ------- -------
(a)(1)(B) .................................................. 6.4
(a)(2) .................................................. N.A.
(b) .................................................. 6.7
(c) .................................................. 6.7
317(a)(1) ................................................. 6.8
(a)(2) .................................................. 6.9
(b) .................................................. 2.4
318(a) ................................................. 11.1
N.A. means Not Applicable
- ----------
* This reconciliation and tie shall not, for any purpose, be deemed to be
part of the Indenture. This reconciliation and tie shall only apply
subsequent to qualification of this Indenture under the TIA.
-ii-
<PAGE>
INDENTURE dated as of March 24, 1997, between ANACOMP, INC., an
Indiana corporation (the "Company"), and IBJ SCHRODER BANK & TRUST COMPANY, a
New York banking corporation (the "Trustee").
The Company has duly authorized the creation and issuance of up to
$200,000,000 aggregate principal amount of 10 7/8% Senior Subordinated Notes due
2004, Series A (the "Initial Securities") and $200,000,000 aggregate principal
amount of 10 7/8% Senior Subordinated Notes due 2004, Series B (the "Exchange
Securities") and, to provide therefor, the Company has duly authorized the
execution and delivery of this Indenture. All things necessary to make the
Securities (as defined herein), when duly issued and executed by the Company,
and authenticated and delivered hereunder, the valid obligations of the Company,
and to make this Indenture a valid and binding agreement of the Company have
been done.
Each party agrees as follows for the benefit of the other party and
for the equal and ratable benefit of the Holders of the Securities:
ARTICLE 1
Definitions and Incorporation by Reference
SECTION 1.1. Definitions.
"13% Notes" means the 13% Senior Subordinated Notes due 2002 of the
Company.
"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 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.
Notwithstanding the foregoing, each Unrestricted Subsidiary shall be deemed an
Affiliate of the Company and of each other Subsidiary of the Company.
"Asset Disposition" means any direct or indirect sale, lease,
transfer, conveyance or other disposition (or series of related sales, leases,
transfers, conveyances or dispositions) of shares of Capital Stock of any
Restricted Subsidiary (other than directors' qualifying shares), property or
other assets (each referred to for the purposes of this definition as a
"disposition") by the Company or any Restricted Subsidiary (including any
disposi-
<PAGE>
tion by means of a merger, consolidation or similar transaction), other than (i)
a disposition by a Restricted Subsidiary to the Company or by the Company or a
Restricted Subsidiary to a Wholly Owned Subsidiary, (ii) a disposition of the
Company's or any Restricted Subsidiary's accounts receivable, lease receivables
or inventory (other than the disposition of inventory pursuant to a
Sale/Leaseback Transaction) at Fair Market Value in the Ordinary Course of
Business, (iii) a disposition of property or assets, whether in a single
transaction or a series of related transactions which constitute a single plan
of disposition, that have an aggregate Fair Market Value not in excess of
$250,000, (iv) an operating lease entered into in the ordinary course of
business with respect to property, plant or equipment that in the judgment of
the Board of Directors constitutes excess capacity or (v) a "like-kind exchange"
of an asset in exchange for an asset of a third party, so long as, in the
judgment of the Company's Board of Directors, the asset received by the Company
or such Restricted Subsidiary in such exchange (x) has a Fair Market Value at
least equal to the fair market value of the asset transferred by the Company or
such Restricted Subsidiary and (y) is usable in a Permitted Line of Business to
at least the same extent as the asset transferred by the Company or such
Restricted Subsidiary. An Asset Disposition shall include the requisition of
title to, seizure of or forfeiture of any property or assets, or any actual or
constructive total loss or an agreed or compromised total loss of any property
or assets. The term "Asset Disposition" when used with respect to the Company
shall not include any disposition pursuant to Article 5 which constitutes a
disposition of all or substantially all the assets of the Company.
"Attributable Indebtedness," in respect of a Sale/Leaseback
Transaction, means, as at the time of determination, the greater of (i) the Fair
Market Value of the property subject to such Sale/Leaseback Transaction (as
determined in good faith by the Board of Directors) or (ii) the present value
(discounted at the interest rate borne by the Securities, compounded annually)
of the total obligations of the lessee for rental payments during the remaining
term of the lease included in such Sale/Leaseback Transaction (including any
period for which such lease has been extended).
"Authorized Denominations" shall mean denominations of $1,000, or
integral multiples thereof, except in the case of Accrued Interest Securities,
in which case Authorized Denominations shall mean any denomination.
"Average Life" means, as of the date of determination, with respect
to any Indebtedness or Preferred Stock, the quotient obtained by dividing (i)
the sum of the products of (a) the number of years from the date of
determination to the dates of each successive scheduled principal payment of
such Indebtedness or redemption or similar payment with respect to such
Preferred Stock and (b) the amount of such payment by (ii) the sum of all such
payments.
-2-
<PAGE>
"Board of Directors" means the Board of Directors of the Company or
any committee thereof duly authorized to act on behalf of such Board.
"Board Resolution" means a duly adopted resolution of the Board of
Directors in full force and effect at the time of determination and certified as
such by the Secretary or an Assistant Secretary of the Company.
"Business Day" means each day which is not a Legal Holiday.
"Capital Lease Obligations" means an obligation that is required to
be classified and accounted for as a capital lease for financial reporting
purposes in accordance with GAAP; the amount of Indebtedness represented by such
obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP; and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lessee without payment of a
penalty.
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests (including partnership interests) in (however designated) equity of
such Person, including any Preferred Stock, but excluding any debt securities
convertible into such equity.
"Change of Control" means the occurrence of any of the following
events: (i) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act), other than an underwriter engaged in a firm commitment
underwriting in connection with a public offering of the Voting Stock of the
Company or a Restricted Subsidiary, is or becomes the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person
shall be deemed to have "beneficial ownership" of all shares that any such
person has the right to acquire, whether such right is exercisable immediately
or only after the passage of time), directly or indirectly, of more than 50% of
the total voting power of the Voting Stock of the Company; (ii) during any
period of two consecutive years, individuals who at the beginning of such period
constituted the Board of Directors of the Company (together with any new
directors whose election by such Board or whose nomination for election by the
shareholders of the Company was approved by a vote of a majority of the
directors of the Company then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of such
Board then in office; or (iii) the Company, either individually or in
conjunction with one or more of its Subsidiaries, sells, conveys, leases or
otherwise transfers, or one or more of such Subsidiaries sell, convey, lease or
otherwise transfer, all or substantially all the assets of the Company and the
Restricted Subsidiaries, taken as a whole, to any Person (other than a
Restricted Subsidiary).
-3-
<PAGE>
"Code" means the Internal Revenue Code of 1986, as amended.
"Commodity Price Protection Agreement" means, in respect of a
Person, any forward contract, commodity swap agreement, commodity option
agreement or other similar agreement or arrangement designed to protect such
Person against fluctuations in commodity prices.
"Company" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor and, for purposes of
any provision contained herein and required by the TIA, each other obligor on
the indenture securities.
"Consolidated Coverage Ratio" means, as of any date of
determination, the ratio of (i) the aggregate amount of EBITDA for the period of
the most recent four consecutive fiscal quarters ending at least 45 days prior
to the date of such determination to (ii) Consolidated interest Expense for such
four fiscal quarters; provided, however, that (1) if the Company or any
Restricted Subsidiary has Incurred any Indebtedness since the beginning of such
period that remains outstanding or if the transaction giving rise to the need to
calculate the Consolidated Coverage Ratio is an Incurrence of Indebtedness, or
both, EBITDA and Consolidated Interest Expense for such period shall be
calculated after giving effect on a pro forma basis to such Indebtedness as if
such Indebtedness had been Incurred on the first day of such period and the
discharge of any other Indebtedness repaid, repurchased, defeased or otherwise
discharged with the proceeds of such new Indebtedness as if such discharge had
occurred on the first day of such period, (2) if since the beginning of such
period the Company or any Restricted Subsidiary shall have made any Asset
Disposition or if the transaction giving rise to the need to calculate the
Consolidated Coverage Ratio is an Asset Disposition, or both, EBITDA for such
period shall be reduced by an amount equal to EBITDA (if positive) directly
attributable to the property or assets which are the subject of such Asset
Disposition for such period, or increased by an amount equal to EBITDA (if
negative) directly attributable thereto for such period and Consolidated
Interest Expense for such period shall be reduced by an amount equal to the
Consolidated Interest Expense directly attributable to any Indebtedness of the
Company or any Restricted Subsidiary repaid, repurchased, defeased or otherwise
discharged with respect to the Company and the continuing Restricted
Subsidiaries in connection with such Asset Dispositions for such period (or, if
the Capital Stock of any Restricted Subsidiary is sold, Consolidated Interest
Expense for such period directly attributable to the Indebtedness of such
Restricted Subsidiary to the extent the Company and the continuing Restricted
Subsidiaries are no longer liable for such Indebtedness after such sale), (3) if
since the beginning of such period the Company or any Restricted Subsidiary (by
merger or otherwise) shall have made an Investment in any Restricted Subsidiary
(or any Person which becomes a Restricted Subsidiary) or an acquisition of
assets, including any acquisition of assets occurring in connection with a
transaction causing a calculation to be made hereunder, which constitutes all or
substantially all of an operating unit of a business, EBITDA
-4-
<PAGE>
and Consolidated Interest Expense for such period shall be calculated after
giving pro forma effect thereto (including the Incurrence of any Indebtedness)
as if such Investment or acquisition occurred on the first day of such period
and (4) if since the beginning of such period any Person (that subsequently
became a Restricted Subsidiary or was merged with or into the Company or any
Restricted Subsidiary since the beginning of such period) shall have made any
Asset Disposition or any Investment that would have required an adjustment
pursuant to clause (2) or (3) above if made by the Company or a Restricted
Subsidiary during such period, EBITDA and Consolidated Interest Expense for such
period shall be calculated after giving pro forma effect thereto as if such
Asset Disposition or Investment occurred on the first day of such period. For
purposes of this definition, whenever pro forma effect is to be given to an
acquisition of assets, the amount of income or earnings relating thereto and the
amount of Consolidated Interest Expense associated with any Indebtedness
Incurred in connection therewith, the pro forma calculations shall be determined
in good faith by a responsible financial or accounting Officer of the Company
and as further contemplated by the definition of pro forma. If any Indebtedness
bears a floating rate of interest and is being given pro forma effect, the
interest expense on such Indebtedness shall be calculated as if the rate in
effect on the date of determination had been the applicable rate for the entire
period (taking into account any Interest Rate Protection Agreement applicable to
such Indebtedness if such Interest Rate Protection Agreement has a remaining
term in excess of 12 months).
"Consolidated Interest Expense" means, for any period, the sum of
(i) the total cash and noncash interest expense of the Company and its
consolidated Subsidiaries, plus, to the extent not included in such interest
expense, (A) interest expense attributable to Capital Lease Obligations, (B)
amortization of debt discount and debt issuance cost, (C) capitalized interest,
(D) accrued interest, (E) commissions, discounts and other fees and charges paid
or owed with respect to letters of credit and bankers' acceptance financing, (F)
interest actually paid by the Company or any such Subsidiary under any Guarantee
of Indebtedness or other obligation of any other Person, (G) net costs
associated with Hedging Obligations (including amortization of discounts and
fees), (H) the interest portion of any deferred obligation, (I) Preferred Stock
dividends in respect of all Preferred Stock of Subsidiaries of the Company and
Redeemable Stock of the Company held by Persons other than the Company or a
Wholly owned Subsidiary and (J) cash contributions to any employee stock
ownership plan or similar trust to the extent such contributions are used by
such plan or trust to pay interest or fees to any Person (other than the
Company) in connection with Indebtedness incurred by such plan or trust
(provided, however, that there shall be excluded from this clause (i), (x) any
such interest expense of any Unrestricted Subsidiary to the extent the related
Indebtedness is not Guaranteed or paid by the Company or any Restricted
Subsidiary and (y) any such interest expense attributable to original issue
discount as a result of Fresh Start Accounting adjustments), less (ii) to the
extent included in clause (i), amortization or write-off of deferred financing
costs of the Company and its consolidated Subsidiaries during such period and
any charge related to any premium or penalty paid in
-5-
<PAGE>
connection with redeeming or retiring any Indebtedness of the Company and its
consolidated Subsidiaries prior to its Stated Maturity.
"Consolidated Net Income" means, for any period, the net income
(loss) of the Company and its consolidated Subsidiaries for such period
determined in accordance with GAAP but excluding for such purpose the impact of
any Fresh Start Accounting adjustment; provided, however, that there shall not
be included in such Consolidated Net Income (i) any net income (loss) of any
Person if such Person is not a Restricted Subsidiary, except that (A) subject to
the limitations contained in (iv) below, the Company's equity in the net income
of any such Person for such period shall be included in such Consolidated Net
Income up to the aggregate amount of cash actually distributed by such Person
during such period to the Company or a Restricted Subsidiary as a dividend or
other distribution (subject, in the case of a dividend or other distribution to
a Restricted Subsidiary, to the limitations contained in clause (iii) below) and
(B) the Company's equity in a net loss of any such Person (other than an
Unrestricted Subsidiary) for such period shall be included in determining such
Consolidated Net Income, (ii) any net income (loss) of any person acquired by
the Company or a Restricted Subsidiary in a pooling of interests transaction for
any period prior to the date of such acquisition, (iii) any net income (loss) of
any Restricted Subsidiary if such Restricted Subsidiary is subject to
restrictions, directly or indirectly, on the payment of dividends or the making
of distributions by such Restricted Subsidiary, directly or indirectly, to the
Company, except that (A) subject to the limitations contained in (iv) below, the
Company's equity in the net income of any such Restricted Subsidiary for such
period shall be included in such Consolidated Net Income up to the aggregate
amount of cash that could have been distributed by such Restricted Subsidiary
during such period to the Company or another Restricted Subsidiary as a dividend
(subject, in the case of a dividend to another Restricted Subsidiary, to the
limitation contained in this clause) and (B) the Company's equity in a net loss
of any such Restricted Subsidiary for such period shall be included in
determining such Consolidated Net Income, (iv) any gain (but not loss) realized
upon the sale or other disposition of any property, plant or equipment of the
Company or its consolidated Subsidiaries (including pursuant to any
Sale/Leaseback Transaction) which is not sold or otherwise disposed of in the
ordinary course of business, (v) any gain (but not loss) realized upon the sale
or other disposition of any Capital Stock of any Person, (vi) any extraordinary
gain or loss, (vii) the cumulative effect of a change in accounting principles
and (viii) any non-recurring restructuring charges for any fiscal quarter in the
fiscal year of the Company commencing October 1, 1995.
"Consolidated Tangible Net Worth" means the amount by which (i) the
total of the amounts shown on the balance sheet of the Company and its
consolidated Subsidiaries, determined on a consolidated basis in accordance with
GAAP, as of the end of the most recent fiscal quarter of the Company ending at
least 45 days prior to the taking of any action for the purpose of which the
determination is being made, as (x) the par or stated value of all outstanding
Capital Stock of the Company plus (y) paid-in capital or capital
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surplus relating to such Capital Stock plus (z) any retained earnings or earned
surplus exceeds (ii) the sum of (A) any accumulated deficit, (B) any amounts
attributable to Disqualified Stock, (C) the amounts appearing on the assets side
of such balance sheet for all contracts, patents, trademarks, copyrights and
other intellectual property rights, franchises, licenses, goodwill, treasury
stock, unamortized debt discount and expense and similar intangibles, (D) any
increase in the amount of capitalized research and development and capitalized
interest subsequent to the Issue Date, and (E) the amount of any write-up
subsequent to the Issue Date in the book value of any asset owned on the Issue
Date resulting from the revaluation thereof subsequent to such date, or any
write-up in excess of the cost of any asset acquired subsequent to that date.
"Credit Agreement" means the Credit and Guarantee Agreement dated as
of February 28, 1997 among the Company, the foreign subsidiary borrowers, the
First National Bank of Chicago, as administrative agent, Lehman Commercial
Paper, Inc., as arranger and syndication agent and the lenders thereunder.
"Currency Exchange Protection Agreement" means, in respect of any
Person, any foreign exchange contract, currency swap agreement, currency option
or other similar agreement or arrangement designed to protect such Person
against fluctuations in foreign currency exchange rates.
"Default" means any event which is, or after notice or passage of
time or both would be, an Event of Default.
"Depositary" shall mean The Depository Trust Company, its nominees,
and their respective successors.
"Disqualified Stock" of a Person means Redeemable Stock of such
Person as to which the maturity, mandatory redemption, conversion or exchange or
redemption at the option of the Holder thereof occurs, or may occur, on or prior
to the first anniversary of the Stated Maturity of the Securities.
"Dollar Equivalent" means, with respect to any monetary amount in a
currency other than U.S. dollars, at any time for the determination thereof, the
amount of U.S. dollars obtained by converting such foreign currency involved in
such computation into U.S. dollars at the spot rate for the purchase of U.S.
dollars with the applicable foreign currency as quoted by Citibank, N.A. in New
York City at approximately 11:00 a.m. (New York time) on the date two Business
Days prior to such determination.
"EBITDA" for any period means the Consolidated Net income for such
period, plus, to the extent deducted in calculating such Consolidated Net
Income, (i) income tax expense, (ii) Consolidated Interest Expense, (iii)
depreciation expense, (iv) amortization
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expense and (v) any charge related to any premium or penalty paid in connection
with redeeming or retiring any Indebtedness prior to its Stated Maturity, in
each case for such period.
"Exchange Act" means the Securities Exchange Act of 1934.
"Exchange Securities" has the meaning set forth in the preamble to
this Indenture.
"Fair Market Value" means, with respect to any asset or property,
the price which could be negotiated in an arm's-length free market transaction,
for cash, between a willing seller and a willing buyer, neither of whom is under
undue pressure or compulsion to complete the transaction; provided, that the
foregoing shall not prohibit sales of inventory at a discount or on terms which
are typical in the industry to which such inventory relates. Fair Market Value
shall be determined, except as otherwise provided herein, (i) if such property
or asset has a Fair Market Value less than $5,000,000, by two officers of the
Company in an Officers' Certificate delivered to the Trustee or (ii) if such
property or asset has a Fair Market Value in excess of $5,000,000, by the Board
of Directors as a whole and evidenced by a Board Resolution, dated within 30
days of the relevant transaction, of the Board of Directors delivered to the
Trustee.
"Foreign Asset Disposition" means an Asset Disposition in respect of
Capital Stock or assets of a Restricted Subsidiary of the type described in
Section 936 of the Code to the extent that the proceeds of such Asset
Disposition are received by a Person subject in respect of such proceeds to the
tax laws of a jurisdiction other than the United States of America, any State
thereof or the District of Columbia.
"Foreign Restricted Subsidiary" means any Restricted Subsidiary that
is incorporated in a jurisdiction other than the United States of America, any
State thereof or the District of Columbia.
"Fresh Start Accounting" means Fresh Start Accounting as described
in Statement of Position 90-7, "Financial Reporting by Entities in
Reorganization Under the Bankruptcy Code" (Am. Inst. of Certified Public
Accountants 1990), as then in effect, or any comparable statement then in
effect.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the Issue Date, including those set forth
in the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession. All ratios and computations based on
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GAAP contained in this Indenture shall be computed in conformity with GAAP
consistently applied, except as otherwise expressly provided in this Indenture.
"Guarantee" means any obligation, contingent or otherwise, of any
Person, directly or indirectly, guaranteeing any Indebtedness or other
obligation of any other Person and any obligation, direct or indirect,
contingent or otherwise, of such Person (i) to purchase or pay (or advance or
supply funds for the purchase or payment of) such Indebtedness or other
obligation of such other Person (whether arising by virtue of partnership
arrangements, or by agreement to keepwell, to purchase assets, goods, securities
or services, to take-or-pay or to maintain financial statement conditions or
otherwise) or (ii) entered into for purposes of assuring in any other manner the
obligee of such Indebtedness or other obligation of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Hedging Obligations" of any Person means the obligations of such
Person pursuant to any Interest Rate Protection Agreement, Commodity Price
Protection Agreement or Currency Exchange Protection Agreement or other similar
agreement or arrangement.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
"Incur" means to, directly or indirectly, create, issue, assume,
Guarantee, incur (by conversion, exchange or otherwise) extend, assume, or
otherwise become liable for, contingently or otherwise; provided, however, that
any Indebtedness or Capital Stock of a Person existing at the time such Person
becomes a Subsidiary (whether by merger, consolidation, acquisition or
otherwise) will be deemed to be incurred by such Subsidiary at the time it
becomes a Subsidiary. The terms "Incurrence," "Incurred" and "Incurring" shall
each have a correlative meaning.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication): (i) the principal of and premium (if any)
in respect of indebtedness of such Person for borrowed money; (ii) the principal
of and premium (if any) in respect of obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments; (iii) all Capital Lease
Obligations and all Attributable Indebtedness of such Person; (iv) all
obligations of such Person to pay the deferred and unpaid purchase price of
property or services (except (A) Trade Payables and (B) any obligation to pay
any portion of such purchase price that becomes due only if the earnings
attributable to such property or services satisfy predetermined minimum amounts
subsequent to the purchase of such property or services and the amount of such
obligation cannot be determined on the date of such
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purchase); (v) all obligations of such Person in respect of letters of credit,
banker's acceptances or other similar instruments or credit transactions
(including reimbursement obligations with respect thereto), other than
obligations with respect to letters of credit securing obligations (other than
obligations described in (i) through (iv) above) entered into in the ordinary
course of business of such Person to the extent such letters of credit are not
drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no
later than the third Business Day following receipt by such Person of a demand
for reimbursement following payment on any such letter of credit; (vi) the
amount of all obligations of such Person with respect to the redemption,
repayment or other repurchase of any Disqualified Stock or, with respect to any
Subsidiary of such Person, any Preferred Stock (but excluding, in each case, any
accrued dividends); (vii) all Indebtedness of other Persons secured by a Lien on
any asset of such Person, whether or not such Indebtedness is assumed by such
Person; provided, however, that the amount of such Indebtedness shall be the
lesser of (A) the Fair Market value of such asset at such date of determination
and (B) the amount of such Indebtedness of such other Persons; (viii) all
Indebtedness of other Persons to the extent Guaranteed by such Person; and (ix)
to the extent not otherwise included in this definition, obligations of such
Person in respect of Hedging Obligations.
For purposes of this definition, the maximum fixed redemption, repayment or
repurchase price of any Disqualified Stock or Preferred Stock that does not have
a fixed redemption, repayment or repurchase price shall be calculated in
accordance with the terms of such Stock as if such Stock were redeemed, repaid
or repurchased on any date on which Indebtedness shall be required to be
determined pursuant to the Indenture; provided, however, that if such Stock is
not then permitted to be redeemed, repaid or repurchased, the redemption,
repayment or repurchase price shall be the book value of such Stock as reflected
in the most recent financial statements of such Person. The amount of
Indebtedness of any Person at any date shall be the outstanding balance at such
date of all unconditional obligations as described above and the maximum
liability. upon the occurrence of the contingency giving rise to the obligation,
of any contingent obligations at such date.
"Indenture" means this instrument as originally executed or 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 TIA that are deemed to be a part of and govern
this instrument, and any such supplemental indenture, respectively.
"Indenture Obligations" means the obligations of the Company (and
any other obligor hereunder or under the Securities) to pay principal of, and
premium, if any, and interest (including, without limitation, any default
interest) on, the Securities when due and payable, whether at maturity, by
acceleration, call for redemption or repurchase, in each case as required
hereunder, and all other amounts due or to become due under or in
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connection with this Indenture and the Securities and the performance of all
other obligations to the Trustee and the Holders under this Indenture and the
Securities, according to the terms hereof and thereof.
"Initial Securities" has the meaning set forth in the preamble to
the Indenture.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
"Interest Rate Protection Agreement" means, in respect of any
Person, any interest rate swap agreement, interest rate option agreement,
interest rate cap agreement, interest rate collar agreement, interest rate floor
agreement or other similar agreement or arrangement designed to protect such
Person against fluctuations in interest rates.
"Investment" in any Person means any direct or indirect advance,
loan (other than advances to customers in the ordinary course of business that
are recorded as accounts receivable on the balance sheet of such Person) or
other extension of credit (including by way of Guarantee or similar arrangement)
or capital contribution to (by means of any transfer of cash or other property
to others or any payment for property or services for the account or use of
others) such Person, or any purchase or acquisition of all or substantially all
the business or assets of, Capital Stock, Indebtedness, any other evidence of
beneficial ownership or other similar instruments issued by, such Person. For
purposes of Sections 4.5 and 4.15, (i) the term "Investment" shall include the
portion (proportionate to the Company's equity interest in such Subsidiary) of
the Fair Market Value of the net assets of any Subsidiary of the Company at the
time that such Subsidiary is designated an Unrestricted Subsidiary; provided,
however, that upon a redesignation of such Subsidiary as a Restricted
Subsidiary, the Company shall be deemed to continue to have a permanent
"Investment" in an Unrestricted Subsidiary in an amount (if positive) equal to
(x) the Company's "Investment" in such Subsidiary at the time of such
redesignation less (y) the portion (proportionate to the Company's equity
interest in such Subsidiary) of the Fair Market Value of the net assets of such
Subsidiary at the time that such Subsidiary is so re-designated as a Restricted
Subsidiary; and (ii) any property transferred to or from an Unrestricted
Subsidiary shall be valued at its Fair Market Value at the time of such
transfer. In determining the amount of any Investment in respect of any property
or asset other than cash, such property or asset shall be valued at its Fair
Market Value at the time of such Investment (unless otherwise specified in this
definition).
"Issue Date" means the first date on which the Initial Securities
are issued pursuant to this Indenture.
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"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, preference, priority, security interest,
encumbrance, easement, restriction, covenant, right-of-way, servitude, lien
(statutory or otherwise), charge, other security or similar agreement or
preferential arrangement of any kind or nature whatsoever or other adverse claim
of any kind or nature (including, without limitation, any conditional sale or
other title retention agreement or lease having substantially the same economic
effect of any of the foregoing).
"Magnetics Division" means the property and assets of the Company or
any Restricted Subsidiary used in connection with the manufacture, marketing and
sale of magnetic tape, computer tape or other magnetic products.
"Net Cash Proceeds" from an Asset Disposition means the sum of (i)
cash payments and Temporary Cash Investments received (including any cash
payments received by way of deferred payment of principal pursuant to a note or
installment receivable or otherwise, but only as and when received, but
excluding any other consideration received in the form of assumption by the
acquiring person of Indebtedness or other obligations relating to such
properties or assets or received in any other non-cash form) therefrom and (ii)
the Fair Market Value of all securities issued to the Company or a Subsidiary of
the Company in connection therewith, in each case net of (A) all legal, title
and recording tax expenses, commissions and other fees and expenses incurred,
and all Federal, state, provincial, foreign and local taxes required to be paid
or accrued as a liability under GAAP as a consequence of such Asset Disposition,
(B) all payments made on any Indebtedness which is secured by any property or
assets subject to such Asset Disposition, in accordance with the terms of any
Lien upon such property or assets, or which must by its terms, or in order to
obtain a necessary consent to such Asset Disposition, or by applicable law, be
repaid out of the proceeds from such Asset Disposition, (C) all distributions
and other payments required to be made to minority interest Holders in
Subsidiaries or joint ventures as a result of such Asset Disposition and (D) the
deduction of appropriate amounts to be provided by the seller as a reserve, in
accordance with GAAP, against any liabilities associated with the property or
assets disposed of in such Asset Disposition and retained by the Company or any
Restricted Subsidiary after such Asset Disposition; provided, that, in the event
that any consideration for such Asset Disposition (which would otherwise
constitute Net Cash Proceeds) is required to be held in escrow pending
determination of whether a purchase price adjustment shall be made, such
consideration (or any portion thereof) shall become Net Cash Proceeds only at
such time as it is released to the Company or any Restricted Subsidiary from
escrow; provided, further, that any non-cash consideration received in
connection with such Asset Disposition, which is subsequently converted to cash,
shall be deemed to be Net Cash Proceeds at such time and shall thereafter be
applied in accordance with Section 4.7. The term "Net Cash Proceeds" from an
issuance or sale of Capital Stock means the cash proceeds of such issuance or
sale, net of attorneys' fees, accountants' fees, underwriters' or placement
agents' fees, discounts or commissions and brokerage,
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consultant and other fees actually incurred in connection with such issuance or
sale and net of taxes paid or payable as a result thereof.
"Non-U.S. Person" means a Person who is not a U.S. person, as
defined in Regulation S of the Securities Act.
"Officer" means the Chairman of the Board, the Chief Executive
Officer, the President, the Chief Operating Officer, the Chief Administrative
Officer, any Vice President, the Treasurer, any Assistant Treasurer, the
Secretary or any Assistant Secretary of the Company.
"Officers' Certificate" means a certificate signed by two Officers.
"Opinion of Counsel" means a written opinion, in form acceptable to
the Trustee, from legal counsel who is acceptable to the Trustee. The counsel
may be an employee of or counsel to the Company or the Trustee.
"Ordinary Course of Business" means sales or assignments of
inventory or accounts receivable or the performance of services at Fair Market
Value or the collection of accounts receivable in the ordinary course of
business and does not include any sale, assignment or collection after the
voluntary or involuntary bankruptcy of the Company, including, without
limitation, those events of the type described in Section 6.1(8) and (9). The
ordinary course of business shall include (i) sales of inventory to customers,
(ii) returns of merchandise to manufacturers or distributors for refunds or
credit and (iii) exchanges of inventory with manufacturers or distributors for
other inventory.
"pari passu," as applied to the ranking of any Indebtedness of a
Person in relation to other Indebtedness of such Person, means that each such
Indebtedness either (i) is not subordinate in right of payment to any
Indebtedness or (ii) is subordinate in right of payment to the same Indebtedness
as is the other; and is so subordinate to the same extent, and is not
subordinate in right of payment to each other or to any Indebtedness as to which
the other is not so subordinate.
"Permitted Investment" means an Investment by the Company or any
Restricted Subsidiary in (i) a Wholly Owned Subsidiary (including any Person
which will become a Wholly Owned Subsidiary as a result of such Investment) or
any Person that is merged or consolidated with or into, or transfers or conveys
all or substantially all of its business or assets to, the Company or any Wholly
Owned Subsidiary at the time such Investment is made; (ii) Temporary Cash
Investments; (iii) receivables owing to the Company or such Restricted
Subsidiary, if created or acquired in the ordinary course of business and
payable or dischargeable in accordance with customary trade terms; provided,
however, that nothing in this paragraph shall limit in any way the ability of
the Company or
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such Restricted Subsidiary to settle, compromise or otherwise deal with such
receivables in the ordinary course of business; (iv) payroll, travel and similar
advances to cover matters that are expected at the time of such advances
ultimately to be treated as expenses for accounting purposes and that are made
in the ordinary course of business; (v) loans or advances, in the aggregate
principal amount of $6,000,000 outstanding from time to time, to employees of
the Company or such Restricted Subsidiary made in the ordinary course of
business consistent with past practices of the Company or such Restricted
Subsidiary, as the case may be; (vi) stock, obligations or securities received
in settlement of debts created in the ordinary course of business and owing to
the Company or such Restricted Subsidiary or in satisfaction of judgments; (vii)
joint ventures, whether in the form of cash or through a contribution of assets
(the nature of which, if other than cash, to be determined in good faith by the
Board of Directors, whose determination shall be evidenced by a Board Resolution
delivered to the Trustee) in an amount not to exceed $10,000,000 at any one
time; (viii) any other property, asset or Person if made pursuant to any written
agreement of the Company or such Restricted Subsidiary in effect on the Issue
Date; and (ix) Investments made as a result of the receipt of non-cash
consideration from an Asset Disposition that was made pursuant to and in
compliance with the provisions of Section 4.7 or a disposition of assets
pursuant to and in compliance with the provisions of Article 5 hereof.
"Permitted Liens" means (i) pledges or deposits by the Company or
any Restricted Subsidiary under workmen's compensation laws, unemployment
insurance laws, other types of social security benefits or similar legislation,
or good faith deposits in connection with bids, tenders or contracts (other than
for the payment of Indebtedness) or leases to which the Company or any
Restricted Subsidiary is a party, or deposits to secure public or statutory
obligations or deposits of cash or United States government bonds to secure
surety or appeal bonds to which the Company or any Restricted Subsidiary is a
party, or deposits as security for contested taxes or import duties or for the
payment of rent, in each case incurred by the Company or any Restricted
Subsidiary in the ordinary course of business consistent with past practice;
(ii) Liens imposed by law, such as carriers', warehousemen's and mechanics'
Liens, in each case for sums not yet due from the Company or any Restricted
Subsidiary or being contested in good faith by appropriate proceedings by the
Company or any Restricted Subsidiary, as the case may be, or other Liens arising
out of judgments or awards against the Company or any Restricted Subsidiary with
respect to which the Company or such Restricted Subsidiary, as the case may be,
shall then be prosecuting an appeal or other proceedings for review; (iii) Liens
for property taxes or other taxes, assessments or governmental charges of the
Company or any Restricted Subsidiary not yet due or payable or subject to
penalties for nonpayment or which are being contested by the Company or such
Restricted Subsidiary, as the case may be, in good faith by appropriate
proceedings; (iv) Liens in favor of issuers of standby letters of credit,
performance bonds and surety bonds issued pursuant to Section 4.3(b)(vii)(B) or
Section 4.4(b)(iii)(B); (v) survey exceptions, encumbrances, easements or
reservations of, or rights of others for, licenses, rights-of-way, sewers,
electric lines, telegraph and telephone lines
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and other similar purposes or zoning or other restrictions as to the
use of real property of the Company or any Restricted Subsidiary incidental to
the ordinary course of conduct of the business of the Company or such Restricted
Subsidiary or as to the ownership of properties of the Company or any Restricted
Subsidiary, which, in either case, were not incurred in connection with
indebtedness and which do not in the aggregate materially adversely affect the
value of said properties or materially impair their use in the operation of the
business of the Company or any Restricted Subsidiary; (vi) Liens to secure
Indebtedness permitted under Section 4.3(a)(ii), Section 4.3(b)(i), Section
4.4(b)(vi) and Section 4.4(b)(vii); (vii) Liens outstanding immediately after
the Issue Date as set forth on Schedule II hereto (and not otherwise permitted
by clause (vi)); (viii) Liens on property, assets or shares of stock of any
Restricted Subsidiary at the time such Restricted Subsidiary became a Subsidiary
of the Company; provided, however, that (A) if any such Lien shall have been
Incurred in anticipation of such transaction, such property, assets or shares of
stock subject to such Lien shall have a Fair Market Value at the date of the
acquisition thereof not in excess of the lesser of (1) the aggregate purchase
price paid or owed by the Company in connection with the acquisition of such
Restricted Subsidiary and (2) the Fair Market Value of all property and assets
of such Restricted Subsidiary and (B) any such Lien shall not extend to any
other property or assets owned by the Company or any Restricted Subsidiary; (ix)
Liens on property or assets at the time the Company or any Restricted Subsidiary
acquired such property or assets, including any acquisition by means of a merger
or consolidation with or into the Company or such Restricted Subsidiary;
provided, however, that (A) if any such Lien shall have been incurred in
anticipation of such transaction, such property or assets subject to such Lien
shall have a Fair Market Value at the date of the acquisition thereof not in
excess of the lesser of (1) the aggregate purchase price paid or owed by the
Company or such Restricted Subsidiary in connection with the acquisition thereof
and of any other property and assets acquired simultaneously therewith and (2)
the Fair Market Value of all such property and assets acquired by the Company or
such Restricted Subsidiary and (B) any such Lien shall not extend to any other
property or assets owned by the Company or any Restricted Subsidiary; (x) Liens
securing Indebtedness or other obligations of a Restricted Subsidiary owing to
the Company or a Wholly Owned Subsidiary; (xi) Liens to secure any extension,
renewal, refinancing, replacement or refunding (or successive extensions,
renewals, refinancings, replacements or refundings), in whole or in part, of any
Indebtedness secured by Liens referred to in any of clauses (vii), (viii) and
(ix); provided, however, that any such Lien will be limited to all or part of
the same property or assets that secured the original Lien (plus improvements on
such property) and the aggregate principal amount of Indebtedness that is
secured by such Lien will not be increased to an amount greater than the sum of
(A) the outstanding principal amount, or, if greater, the committed amount, of
the Indebtedness described under clauses (vii), (viii) and (ix) at the time the
original Lien became a Permitted Lien under the Indenture and (B) an amount
necessary to pay any premiums, fees and other expenses Incurred by the Company
in connection with such refinancing, refunding, extension, renewal or
replacement; (xii) Liens on property or assets of the Company securing Hedging
Obligations so long as the
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related Indebtedness is, and is permitted to be under Section 4.3, secured by a
Lien on the same property securing the relevant Hedging Obligation; (xiii) Liens
securing Indebtedness incurred under (A) in the case of the Company, any
revolving credit facility; provided, that such indebtedness constitutes Senior
Debt permitted hereunder and such Liens relate only to accounts receivable,
inventory and proceeds thereof (other than proceeds from the disposition of
inventory pursuant to any Sale/Leaseback Transaction); and (B) in the case of
any Foreign Restricted Subsidiary, any foreign currency revolving credit
facility; provided, that such Indebtedness was incurred in compliance with
Section 4.4(b)(ii) and such Liens relate only to the accounts receivable,
inventory and proceeds thereof of such Foreign Restricted Subsidiary (other than
proceeds from the disposition of inventory pursuant to any Sale/Leaseback
Transaction); and (xiv) Liens on property or assets of the Company or any
Restricted Subsidiary securing Indebtedness (1) under Purchase Money
Indebtedness or Capital Lease Obligations permitted under, in the case of the
Company, Section 4.3(b)(vi) and, in the case of such Restricted Subsidiary,
Section 4.4(b)(ii) or (2) under Sale/Leaseback Transactions permitted under
Section 4.13; provided, that (A) the amount of Indebtedness Incurred in any
specific case does not, at the time such Indebtedness is Incurred, exceed the
lesser of the cost or Fair Market Value of the property or asset acquired or
constructed in connection with such Purchase Money Indebtedness or Capital Lease
Obligation or subject to such Sale/Leaseback Transaction, as the case may be,
(B) such Lien shall attach to such property or asset upon acquisition of such
property or asset and or upon commencement of such Sale/Leaseback Transaction,
as the case may be, and (C) no property or asset of the Company or any
Restricted Subsidiary (other than the property or asset acquired or contracted
in connection with such Purchase Money Indebtedness or Capital Lease Obligation
or subject to such Sale/Leaseback Transaction, as the case may be) are subject
to any Lien securing such Indebtedness.
"Permitted Line of Business" means (i) the line or lines of business
in which the Company or any of its Subsidiaries is engaged on the Issue Date and
(ii) a line or lines of business similar or related to the line or lines of
business described in the foregoing clause (i).
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Preferred Stock," as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however designated)
which is preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
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"principal" of a Security means the principal of the Security plus
the premium, if any, payable on the Security which is due or overdue or is to
become due at the relevant time.
"pro forma" means, with respect to any calculation made or required
to be made pursuant to the terms hereof, a calculation in accordance with
Article 11 of Regulation S-X promulgated under the Securities Act (to the extent
applicable), as interpreted in good faith by the Board of Directors after
consultation with the independent certified public accountants of the Company,
or otherwise a calculation made in good faith by the Board of Directors after
consultation with the independent certified public accountants of the Company,
as the case may be.
"Purchase Money Indebtedness" means, with respect to any Person, all
obligations of such Person (i) consisting of the deferred purchase price of any
property or assets, conditional sale obligations, obligations under any title
retention agreement (but excluding trade accounts payable arising in the
ordinary course of business) and other purchase money obligations, in each case
where the maturity of such obligation does not exceed the anticipated useful
life of the property or asset being financed, (ii) Incurred to finance the
acquisition or construction of any property or asset and (iii) Incurred to
finance the acquisition of 100% of the Capital Stock (other than directors'
qualifying shares) of any other Person.
"Qualified Capital Stock" of any person shall mean any Capital Stock
of such Person which is not Disqualified Stock.
"Qualified Institutional Buyer" or "QIB" shall have the meaning
specified in Rule 144A under the Securities Act.
"Redeemable Stock" means, with respect to any Person, any Capital
Stock which by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable) or otherwise (including, without
limitation, upon the happening of any event) (i) matures or is mandatorily
redeemable pursuant to a sinking fund obligation or otherwise, (ii) is
convertible into or exchangeable for Indebtedness (other than Preferred Stock)
or Disqualified Stock or (iii) is redeemable at the option of the Holder
thereof, in whole or in part.
"Redemption" means the redemption of the 13% Notes pursuant to the
terms of the 13% Notes and the indenture for the 13% Notes.
"Reference Bank" means a leading bank (i) engaged in transactions in
Eurodollar deposits in the international Eurocurrency market, (ii) not an
Affiliate of the Trustee and (iii) having an established place of business in
London.
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"Refinancing Indebtedness" means Indebtedness that refunds,
refinances, replaces, renews, repays or extends (including pursuant to any
defeasance or discharge mechanism) (collectively, "refinances," "refinancing"
and "refinanced" shall have a correlative meaning) any Indebtedness (including
Indebtedness of the Company that refinances Indebtedness of any Restricted
Subsidiary and Indebtedness of any Restricted Subsidiary that refinances
Indebtedness of another Restricted Subsidiary), including Indebtedness that
refinances Refinancing Indebtedness; provided, that (i) the Refinancing
Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the
Indebtedness being refinanced, (ii) the Refinancing Indebtedness has an Average
Life at the time such Refinancing Indebtedness is Incurred that is equal to or
greater than the Average Life of the Indebtedness being refinanced and (iii)
such Refinancing Indebtedness is Incurred in an aggregate principal amount (or
if issued with original issue discount, an aggregate issue price) that is equal
to or less than the sum of (A) the aggregate principal amount (or if issued with
original issue discount, the aggregate accreted value) then outstanding of the
Indebtedness being refinanced and (B) any premiums, fees and other expenses paid
by the Company or the Restricted Subsidiary, as the case may be, in connection
with such refinancing; provided, further, that Refinancing Indebtedness shall
not include (x) Indebtedness of a Subsidiary of the Company that refinances
Indebtedness of the Company or (y) Indebtedness of the Company or a Restricted
Subsidiary that refinances Indebtedness of an Unrestricted Subsidiary; provided,
further, that the covenants relating to the Refinancing Indebtedness are no more
restrictive in the aggregate than those of the Indebtedness being refinanced
and, if the Indebtedness being refinanced is subordinated to the Securities, the
Refinancing Indebtedness is at least as subordinated to the Securities as the
Indebtedness being refinanced.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated March 24, 1997, between the Company and NatWest Capital Markets
Limited.
"Restricted Security" has the meaning assigned to such term in Rule
144(a)(3) under the Securities Act.
"Restricted Subsidiary" means any Subsidiary of the Company other
than an Unrestricted Subsidiary.
"Sale/Leaseback Transaction" means an arrangement relating to
property now owned or hereafter acquired whereby pursuant to a direct or
indirect arrangement the Company or any Restricted Subsidiary of the Company
transfers such property to a Person and the Company or such Restricted
Subsidiary leases it from such Person.
"SEC" means the Securities and Exchange Commission.
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"Securities" means the Initial Securities and the Exchange
Securities treated as a single class of securities, as amended or supplemented
from time to time in accordance with the terms hereof, that are issued pursuant
to this Indenture.
"Securities Act" means the Securities Act of 1933.
"Senior Indebtedness" means the principal of, interest (including,
without limitation, interest at the contract rate relating to such Senior
Indebtedness accruing after any proceeding or event referred to in clauses (8)
and (9) of Section 6.1) on, or any other amounts due with respect to, (i) the
Senior Secured Debt, (ii) any Refinancing Indebtedness Incurred in respect of
the Senior Secured Debt or in respect of any previous Refinancing Indebtedness
Incurred in respect of such Debt and (iii) any Indebtedness Incurred pursuant to
clause (a)(ii) of Section 4.3. For purposes of Section 4.7, the amount of
consideration received by the Company or any Restricted Subsidiary for the
assumption of Senior Indebtedness by any purchaser of the company's property,
assets or shares shall be equal to the face value of such Senior Indebtedness.
"Special Redemption Date" means the date which is 45 days following
the Issue Date.
"Senior Secured Debt" means Indebtedness evidenced by the Credit
Agreement including up to $55,000,000 under a term loan facility and up to
$25,000,000 under a revolving credit facility.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the payment of principal
of such security is due and payable, including pursuant to any mandatory
redemption provision (but excluding any provision providing for the repurchase
of such security at the option of the Holder thereof upon the happening of any
contingency beyond the control of the issuer unless such contingency has
occurred).
"Subordinated Obligation" means any Indebtedness of the Company
(whether outstanding on the Issue Date or thereafter Incurred) which is
subordinate or junior in right of payment to the Securities pursuant to the
terms of such Indebtedness or pursuant to a written agreement.
"Subsidiary" of any Person means any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by (i) such
Person, (ii) such Person and one or more Subsidiaries of such Person or (iii)
one or more Subsidiaries of such Person.
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"Temporary Cash Investments" means any of the following: (i)
investments in U.S. Government Obligations maturing within 90 days of the date
of acquisition thereof, (ii) investments in time deposit accounts, certificates
of deposit and money market deposits maturing within 90 days of the date of
acquisition thereof issued by a bank or trust company which is organized under
the laws of the United States of America or any State thereof having capital,
surplus and undivided profits aggregating in excess of $250,000,000 (or the
Dollar Equivalent thereof) and whose long-term debt is rated "A" or higher
according to Moody's Investors Service, Inc. (or such equivalent rating by at
least one "nationally recognized statistical rating organization" (as defined in
Rule 436 under the Securities Act)), (iii) repurchase obligations with a term of
not more than 7 days for underlying securities of the types described in clause
(i) entered into with a bank meeting the qualifications described in clause (ii)
and (iv) investments in commercial paper, maturing not more than 90 days after
the date of acquisition, issued by a corporation (other than an Affiliate of the
Company) organized and in existence under the laws of the United States of
America with a rating at the time as of which any investment therein is made of
"P-2" (or higher) according to Moody's Investors Service, Inc. or "A-2" (or
higher) according to Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb) as in effect on the date of this Indenture; provided, however,
that in the event the Trust Indenture Act of 1939 is amended after such date,
"TIA" means, to the extent required by any such amendment, the Trust Indenture
Act of 1939, as so amended.
"Trade Payables" means, with respect to any Person, any accounts
payable or any indebtedness or monetary obligation to trade creditors created,
assumed or Guaranteed by such Person arising in the ordinary course of business
of such Person in connection with the acquisition of goods or services,
including under the Company's Amended and Restated Master Supply Agreement dated
as of October 8, 1993, among the Company, SKC Limited and SKC America, Inc., as
such Agreement is amended from time to time.
"Trustee" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and,
thereafter, means the successor.
"Trust Officer" means the Chairman of the Board, the President or
any other officer or assistant officer of the Trustee assigned by the Trustee to
administer its corporate trust matters.
"Uniform Commercial Code" means the Uniform Commercial Code as in
effect from time to time in, unless the context otherwise specifies, New York.
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"Unrestricted Subsidiary" means (i) each Subsidiary of the Company
that the Company has designated, or is deemed to have designated, pursuant to
the provisions described under Section 4.15 as an Unrestricted Subsidiary and
that has not been redesignated a Restricted Subsidiary and (ii) any Subsidiary
of an Unrestricted Subsidiary.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable or redeemable at the issuer's option.
"U.S. Restricted Subsidiary" means any Restricted Subsidiary that is
not a Foreign Restricted Subsidiary.
"Voting Stock" of a corporation means all classes of Capital Stock
of such corporation then outstanding and normally entitled to vote in the
election of directors.
"Wholly owned Subsidiary" means a Restricted Subsidiary all the
Capital Stock of which (other than directors' qualifying shares) is owned by the
Company or another wholly Owned Subsidiary.
SECTION 1.2. Other Definitions.
Defined in
Term Section
---- -------
"Affiliate Transaction"............................ 4.8
"Agent Members".................................... 2.7
"Application Date"................................. 4.7(a)
"Asset Disposition Purchase Amount"................ 4.7(a)
"Asset Disposition Purchase Date" 4.7(a)
"Asset Disposition Purchase Notice"................ 4.7(d)
"Asset Disposition Purchase Offer"................. 4.7(a)
"Asset Disposition Purchase Price"................. 4.7(a)
"Asset Disposition Trigger" ....................... 4.7(b)
"Bankruptcy Law"................................... 6.1
"Change of Control Offer".......................... 4.9(a)
"Change of Control Purchase Date".................. 4.9(a)
"Change of Control Purchase Notice"................ 4.9(a)
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"Change of Control Purchase Price"................. 4.9(a)
"covenant defeasance option"....................... 8.1(b)
"Custodian" ...................................... 6.1
"Defaulted Interest"............................... 2.11
"Event of Default"................................. 6.1
"Global Securities"................................ 2.1
"Legal Defeasance Option".......................... 8.1(b)
"Legal Holiday".................................... 11.7
"Notice of Default"................................ 6.1
"Paying Agent" .................................... 2.3
"Payment" ...................................... 9.2
"Permitted Indebtedness"........................... 4.3(b)
"Permitted Restricted Subsidiary Indebtedness"..... 4.4(b)
"Private Placement Legend"......................... 2.14
"Refinanced Indebtedness".......................... 4.3(e)
"Registrar" ...................................... 2.3
"Restricted Payment"............................... 4.5
"Special Redemption"............................... 3.02
"Special Redemption Amount"........................ 4.22
"Surviving Entity" ................................ Article 5
SECTION 1.3. Incorporation by Reference of Trust Indenture Act. This
Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Holder.
"indenture to be qualified" means this Indenture.
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"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company and any
other obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.
SECTION 1.4. Rules of Construction. Unless the context otherwise
requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the plural
include the singular;
(6) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof that
would be shown on a balance sheet of the issuer dated such date prepared
in accordance with GAAP; and
(7) the principal amount of any Preferred Stock shall be the greater
of (i) the maximum liquidation value of such Preferred Stock or (ii) the
maximum mandatory redemption or mandatory repurchase price with respect to
such Preferred Stock.
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ARTICLE 2
The Securities
SECTION 2.1. Form and Dating. The Initial Securities and the
Trustee's certificate of authentication thereon shall be substantially in the
form of Exhibit A hereto which is hereby incorporated in and expressly made a
part of this Indenture. The Exchange Securities and the Trustee's certificate of
authentication thereon shall be substantially in the form of Exhibit B hereto
which is incorporated in and expressly made a part of this Indenture. The
Securities may have notations, legends or endorsements required by law, stock
exchange rule, agreements to which the Company is subject, if any, or usage
(provided that any such notation, legend or endorsement is in a form acceptable
to the Company). The Company shall furnish any such legend not contained in
Exhibit A or Exhibit B, as the case may be, to the Trustee in writing. Each
Security shall be dated the date of its authentication. The terms of the
Securities set forth in Exhibit A or Exhibit B, as the case may be, are part of
the terms of this Indenture.
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The Securities shall be issued initially in the form of one or more
permanent global Securities in registered form, substantially in the form set
forth in Exhibit A (the "Global Securities"), deposited with, or on behalf of,
the Depositary, duly executed by the Company and authenticated by the Trustee as
hereinafter provided. Each Global Security shall bear such legend as may be
required or reasonably requested by the Depositary.
SECTION 2.2. Execution and Authentication. Two Officers shall sign
the Securities for the Company by manual or facsimile signature. The Company's
seal shall be impressed, affixed, imprinted or reproduced on the Securities and
may be in facsimile form.
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security, the Security shall be
valid nevertheless.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture.
The Trustee shall, upon a written order of the Company signed by two
Officers, authenticate and make available for delivery (i) Initial Securities
for original issue in an aggregate principal amount not to exceed $200,000,000
and (ii) Exchange Securities from time to time for issue only in exchange for a
like principal amount of Initial Securities, in each case registered in the name
of the Depositary or the nominee of the Depositary and shall deliver such Global
Securities to the Depositary or pursuant to the Depositary's instructions. Such
order shall specify the amount of the Global Securities to be authenticated.
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The aggregate principal amount of Securities outstanding at any time may not
exceed $200,000,000 except as provided in Section 2.7. The Securities shall be
issued in fully registered form, without coupons in Authorized Denominations.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate the Securities. Unless limited by the
terms of such appointment, an authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as any Registrar, Paying Agent or agent
for service of notices and demands.
SECTION 2.3. Registrar and Paying Agent. The Company shall maintain
an office or agency where Securities may be presented for registration of
transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"), at least one of
each such office to be located in the City of New York. The Registrar shall keep
a register of the Securities and of their transfer and exchange. The Company may
have one or more co-registrars and one or more additional paying agents. The
term "Paying Agent" includes any additional paying agent.
The Company shall enter into an appropriate agency agreement with
any Registrar, Paying Agent or co-registrar not a party to this Indenture, which
shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall notify
the Trustee of the name and address of any such agent. If the company fails to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be
entitled to appropriate compensation therefor pursuant to Section 7.7. The
Company or any of its domestically incorporated Wholly Owned Subsidiaries may
act as Paying Agent, Registrar, co-registrar or transfer agent.
The Company initially appoints the Trustee as Registrar and Paying
Agent in connection with the Securities.
SECTION 2.4. Deposit of Moneys; Paying Agent To Hold Money in Trust.
Prior to 11:00 a.m. New York City time on each due date of the principal and
interest on any Security, the Company shall deposit with the Paying Agent a sum
sufficient to pay such principal and interest when so becoming due. The Company
shall require each Paying Agent (other than the Trustee) to agree in writing
that the Paying Agent shall hold in trust for the benefit of Securityholders or
the Trustee all money held by the Paying Agent for the payment of principal of
or interest on the Securities and shall notify the Trustee of any default by the
Company in making any such payment. If the Company or a Subsidiary of the
Company acts as Paying Agent, it shall segregate the money held by it as Paying
Agent and hold it as a separate trust fund. The Company at any time may require
a Paying Agent to pay all money held by it to the Trustee and to account for any
funds disbursed by
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the Paying Agent. Upon complying with this Section, the Paying Agent shall have
no further liability for the money delivered to the Trustee.
SECTION 2.5. Securityholder Lists. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Securityholders. If the Trustee is not the
Registrar, the Company shall furnish to the Trustee, in writing at least five
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Securityholders.
SECTION 2.6. Transfer and Exchange. The Securities shall be issued
in registered form and shall be transferable only upon the surrender of a
Security for registration of transfer. When a Security is presented to the
Registrar or a co-registrar with a request to register a transfer, the Registrar
shall register the transfer as requested if the requirements of Section 8-401(l)
of the Uniform Commercial Code are met. When Securities are presented to the
Registrar or a co-registrar with a request to exchange them for an equal
principal amount of Securities of other denominations, the Registrar shall make
the exchange as requested if the same requirements are met. To permit
registration of transfers and exchanges, the Company shall execute and the
Trustee shall authenticate Securities at the Registrar's or co-registrar's
request. 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 pay all taxes, assessments or other governmental charges in connection with
any transfer or exchange pursuant to this Section.
Prior to the due presentation for registration of transfer of any
Security, the Company, the Trustee, the Paying Agent, the Registrar or any
co-registrar may deem and treat the person in whose name a Security is
registered as the absolute owner of such Security for the purpose of receiving
payment of principal of and interest on such Security and for all other purposes
whatsoever, whether or not such Security is overdue, and none of the Company,
the Trustee, the Paying Agent, the Registrar or any co-registrar shall be
affected by notice to the contrary. Furthermore, any Holder of a Global Security
shall, by acceptance of such Global Security, agree that transfers of beneficial
interests in such Global Security may be effected only through a book-entry
system maintained by the Depositary (or its agent), and that ownership of a
beneficial interest in the Global Security shall be required to be reflected in
a book entry.
The Company shall not be required (i) to issue, register the
transfer of or exchange Securities during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of
Securities and ending at the close of business on the day of such mailing, or
(ii) to register the transfer of or exchange any Security
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selected for redemption in whole or in part, except the unredeemed portion of
any Security being redeemed in part.
All Securities issued upon any transfer or exchange pursuant to the
terms of this Indenture will evidence the same debt and will be entitled to the
same benefits under this Indenture as the Securities surrendered upon such
transfer or exchange.
SECTION 2.7. Book-Entry Provisions for Global Securities. (a) The
Global Securities initially shall (i) be registered in the name of the
Depositary or the nominee of the Depositary and (ii) be delivered to the Trustee
as custodian for the Depositary.
Members of, or participants in, the Depositary ("Agent Members")
shall have no rights under this Indenture with respect to any Global Security
held on their behalf by the Depositary, or the Trustee as its custodian, or
under any Global Security, and the Depositary may be treated by the Company, the
Trustee and any agent of the Company or the Trustee as the absolute legal owner
of such Global Security for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent the Company, the Trustee or any agent of
the Company or the Trustee from giving effect to any written certification,
proxy or other authorization furnished by the Depositary or impair, as between
the Depositary and its Agent Members, the operation of customary practices
governing the exercise of the rights of a beneficial owner of any Security.
(b) Transfers of a Global Security shall be limited to transfers of
such Global Security in whole, but not in part, to the Depositary, its
successors or their respective nominees. Interests of beneficial owners in a
Global Security may be transferred in accordance with the applicable rules and
procedures of the Depositary and the provisions of Section 2.6.
(c) The registered holder of a Global Security may grant proxies and
otherwise authorize any person, including Agent Members and persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Securities.
SECTION 2.8. Certificated Securities. If the Depositary is at any
time unwilling or unable to continue as a depositary for the Global Security and
a successor depositary is not appointed by the Company within 90 days, the
Company will issue certificated Securities in exchange for the Global
Securities. In connection with the execution and delivery of such certificated
Securities, the Trustee shall reflect on its books and records a decrease in the
principal amount of the relevant Global Security equal to the aggregate
principal amount of such certificated Securities and the Company shall execute
and the Trustee
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shall, upon receipt of a written order of the Company signed by two officers,
authenticate and deliver one or more certificated securities in an equal
aggregate principal amount.
SECTION 2.9. Replacement Securities. If a mutilated Security is
surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate a replacement Security if the requirements of
Section 8-405 of the Uniform Commercial Code are met and the Holder satisfies
any other reasonable requirements of the Trustee or the Company. If required by
the Trustee or the Company, such Holder shall furnish an indemnity bond
sufficient in the judgment of the Company and the Trustee to protect the
Company, the Trustee, the Paying Agent, the Registrar and any co-registrar from
any loss which any of them may suffer if a Security is replaced. The Company and
the Trustee may charge the Holder for their expenses in replacing a Security.
Every replacement Security is an additional obligation of the
Company.
SECTION 2.10. Outstanding Securities. Securities outstanding at any
time are all Securities authenticated by the Trustee except for those canceled
by it, those delivered to it for cancellation and those described in this
Section as not outstanding. A Security does not cease to be outstanding because
the Company or an Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.9, it ceases to be
outstanding unless the Trustee and the Company receive proof satisfactory to
them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in accordance
with this Indenture, an a redemption date or maturity date money sufficient to
pay all principal of, and premium, if any, and interest payable on, that date
with respect to the Securities (or portions thereof) to be redeemed or maturing,
as the case may be, then on and after that date such Securities (or portions
thereof) cease to be outstanding and interest on them ceases to accrue.
In determining whether the Holders of the required principal amount
of Securities have concurred in any direction, waiver or consent, Securities
owned by the Company or by any Subsidiary thereof or by any other Affiliate
controlled by the Company shall be considered as though not outstanding, except
that for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent, only Securities which the
Trustee actually knows are so owned shall be so disregarded.
In determining whether the Holders of the required principal amount
of Securities have (i) directed the time, method or place of conducting any
proceeding for any
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remedy available to the Trustee hereunder, or exercising any trust or power
conferred upon the Trustee; (ii) consented to the waiver of any past Event of
Default and its consequences; or (iii) consented to the postponement of any
interest payment, Securities owned by Affiliates of the Company shall be
disregarded and considered as though not outstanding, except that for the
purposes of determining whether the Trustee shall be protected in relying on any
such direction, waiver or consent, only Securities which the Trustee actually
knows are so owned shall be so disregarded. The Company shall notify the Trustee
in writing when it or any of its Affiliates purchases or otherwise acquires
Securities, of the aggregate principal amount of such Securities so purchased or
otherwise acquired.
SECTION 2.11. Temporary Securities. Until definitive Securities are
ready for delivery, the Company may prepare and the Trustee shall authenticate
temporary Securities. Temporary Securities shall be substantially in the form of
definitive Securities but may have variations that the Company considers
appropriate for temporary Securities. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate definitive Securities and
deliver them in exchange for temporary Securities.
SECTION 2.12. Cancellation. The Company at any time may deliver
Securities to the Trustee for cancellation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them for registration
of transfer, exchange or payment. The Trustee and no one else shall cancel all
Securities surrendered for registration of transfer, exchange, payment or
cancellation and, upon request, deliver such canceled Securities to the Company.
The Company may not issue new Securities to replace Securities it has redeemed,
paid or delivered to the Trustee for cancellation.
SECTION 2.13. Defaulted Interest. Any interest on any Security which
is payable, but is not punctually paid or duly provided for, on the dates and in
the manner provided in the Securities and this Indenture (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Holder on the
relevant 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 (i) or (ii) below:
(i) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Securities are registered at the close
of business on a special record date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Company shall
notify the Trustee in writing of the amount of Defaulted Interest proposed
to be paid on each Security and the date of the proposed payment, and at
the same time the Company shall deposit with the Trustee an amount of
money equal to the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the Trustee
for such deposit prior to the date of the proposed payment, such money
when deposited to be held in trust for the benefit of the Persons entitled
to such
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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, 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 are registered at the
close of business on such special record date.
(ii) The Company may make payment of any Defaulted Interest on the
Securities in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities may be
listed and upon such notice as may be required by such exchange, if, after
notice given by the Company to the Trustee of the proposed payment
pursuant to this clause, such manner of payment shall be deemed
practicable by the Trustee.
Subject to the foregoing provisions of this Section 2.13, 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 2.14. Restrictive Legends. Each Global Note that constitutes
a Restricted Security shall bear the following legend (the "Private Placement
Legend") unless otherwise agreed by the Company and the Securityholder thereof:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION
HEREOF, THE SECURITYHOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR
(B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) or (7) UNDER THE SECURITIES ACT) (AN "ACCREDITED
INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY
IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT
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WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR
OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE ISSUER OR ANY
SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT,
(C) INSIDE THE UNITED STATES TO AN ACCREDITED INVESTOR THAT, PRIOR TO SUCH
TRANSFER FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A U.S.
BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF
THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE
OR REGISTRAR), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (E)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO
EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS
SECURITY WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY, IF
THE PROPOSED TRANSFEREE IS AN ACCREDITED INVESTOR, THE SECURITYHOLDER
MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE ISSUER SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION" "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO
THEM BY REGULATION S UNDER THE SECURITIES ACT.
Each Global Note shall also bear the following legends on the face
thereof:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
THE
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DEPOSITARY TO A NOMINEE OF THE DEPOSITARY, OR BY ANY SUCH NOMINEE OF THE
DEPOSITARY, OR BY THE DEPOSITARY OR NOMINEE OF SUCH SUCCESSOR DEPOSITARY
OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITARY. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED
TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A
SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF
THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH
THE RESTRICTIONS SET FORTH IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
SECTION 2.15. Special Transfer Provisions.
(a) Transfers to Non-QIB Institutional Accredited Investors and Non-
U.S. Persons. The following provisions shall apply with respect to the
registration of any proposed transfer of a Security constituting a Restricted
Security to any Institutional Accredited Investor which is not a QIB or to any
Non-U.S. Person:
(i) the Registrar shall register the transfer of any Security
constituting a Restricted Security, whether or not such Security bears the
Private Placement Legend, if (x) the requested transfer is after March 24,
2000 or (y) (1) in the case of a transfer to an Institutional Accredited
Investor which is not a QIB (excluding Non-U.S.Persons), the proposed
transferee has delivered to the Registrar a certificate substantially in
the form of Exhibit C hereto or (2) in the case of a transfer to a
Non-U.S. Person, the proposed transferor has delivered to the Registrar a
certificate substantially in the form of Exhibit D hereto; and
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(ii) if the proposed transferor is an Agent Member holding a
beneficial interest in the Global Note, upon receipt by the Registrar of
(x) the certificate, if any, required by paragraph (i) above and (y)
instructions given in accordance with the Depositary's and the Registrar's
procedures, whereupon (a) the Registrar shall reflect on its books and
records the date and (if the transfer does not involve a transfer of
outstanding certificated Securities) a decrease in the principal amount of
the Global Note in an amount equal to the principal amount of the
beneficial interest in the Global Note to be transferred, and (b) the
Company shall execute and the Trustee shall authenticate and deliver one
or more certificated Securities of like tenor and amount.
(b) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of a Security constituting
a Restricted Security to a QIB (excluding transfers to Non-U.S. Persons):
(i) the Registrar shall register the transfer if such transfer is
being made by a proposed transferor who has checked the box provided for
on the form of Security stating, or has otherwise advised the Company and
the Registrar in writing, that the sale has been effected in compliance
with the provisions of Rule 144A to a transferee who has signed the
certification provided for on the form of Security stating, or has
otherwise advised the Company and the Registrar in writing, that it is
purchasing the Security for its own account or an account with respect to
which it exercises sole investment discretion and that any such account is
a QIB within the meaning of Rule 144A, and it is aware that the sale to it
is being made in reliance on Rule 144A and acknowledges that it has
received such information regarding the Company as it has requested
pursuant to Rule 144A or has determined not to request such information
and that it is aware that the transferor is relying upon its foregoing
representations in order to claim the exemption from registration provided
by Rule 144A; and
(ii) if the proposed transferee is an Agent Member and the
Securities to be transferred consist of certificated Securities which
after transfer are to be evidenced by an interest in the Global Note, upon
receipt by the Registrar of instructions given in accordance with the
Depositary's and the Registrar's procedures, the Registrar shall reflect
on its books and records the date and an increase in the principal amount
of the Global Note in an amount equal to principal amount of the
certificated Securities to be transferred, and the Trustee shall cancel
the certificated Securities so transferred.
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(c) Private Placement Legend. Upon the registration of the transfer,
exchange or replacement of Securities not bearing the Private Placement Legend,
the Registrar shall deliver Securities that do not bear the Private Placement
Legend. Upon the registration of the transfer, exchange or replacement of
Securities bearing the Private Placement Legend, the Registrar shall deliver
only Securities that bear the Private Placement Legend unless (i) the
circumstance contemplated by paragraph (a)(i)(x) of this Section 2.15 exists or
(ii) there is delivered to the Registrar an Opinion of Counsel reasonably
satisfactory to the Company and the Trustee to the effect that neither such
legend nor the related restrictions on transfer are required in order to
maintain compliance with the provisions of the Securities Act.
(d) General. By its acceptance of any Security bearing the Private
Placement Legend, each Holder of such a Security acknowledges the restrictions
on transfer of such Security set forth in this Indenture and in the Private
Placement Legend and agrees that it will transfer such Security only as provided
in this Indenture.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to this Section 2.15 until the earlier
of (i) two years from the date of receipt or (ii) the date the Securities shall
have been redeemed or paid in full. The Company shall have the right to inspect
and make copies of all such letters, notices or other written communications at
any reasonable time upon the giving of reasonable written notice to the
Registrar.
SECTION 2.16. Record Date. The Company may set a record date for
purposes of determining the identity of Securityholders entitled to vote or to
consent to any action by vote or consent authorized or permitted by Sections 6.4
and 6.5. Unless this Indenture provides otherwise, such record date shall be the
later of 30 days prior to the first solicitation of such consent or the date of
the most recent list of Securityholders furnished to the Trustee pursuant to
Section 2.5 prior to such solicitation.
SECTION 2.17. CUSIP Numbers. The Company in issuing the Securities
may use CUSIP numbers (if then generally in use), and, if so, the Trustee shall
use CUSIP numbers in notices of redemption as of convenience to Holders;
provided, that any such notice may state that no representation is made as to
the correctness of such numbers either as printed on the Securities or as
contained in any notice of a redemption and that reliance may be placed only on
the other identification numbers printed on the Securities, and any such
redemption shall not be affected by any defect in or omission of such numbers.
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ARTICLE 3
Redemption
SECTION 3.1. Notices to Trustee. If the Company elects to redeem
Securities pursuant to paragraph 5 of the Securities or is required to redeem
Securities pursuant to paragraph 6 of the Securities, it shall notify the
Trustee in writing of the redemption date, the principal amount of Securities to
be redeemed and the paragraph of the Securities pursuant to which the redemption
will occur.
The Company shall give each notice to the Trustee provided for in
this Section at least 45 days (or such lesser time as is acceptable to the
Trustee) but not more than 60 days before the redemption date unless the Trustee
consents to a shorter period. Such notice shall be accompanied by an Officers'
Certificate and an Opinion of Counsel from the Company to the effect that such
redemption will comply with the conditions herein. If fewer than all the
securities are to be redeemed, the record date relating to such redemption shall
be selected by the Company and given to the Trustee, which record date shall be
not less than 15 days after the date of notice to the Trustee.
The Company shall give notice of a redemption pursuant to Paragraph
7 of the Securities ("Special Redemption") to the Paying Agent and the Trustee
at least three Business Days before the Redemption Date with respect to the
Special Redemption (unless a shorter notice period shall be agreed to by the
Trustee in writing), together with an Officers' Certificate stating that such
redemption will comply with the conditions contained herein.
SECTION 3.2. Selection of Securities To Be Redeemed. If fewer than
all the Securities are to be redeemed, the Trustee shall select the Securities
to be redeemed pro rata or by lot or, at the discretion of the Trustee, by a
method that complies with applicable legal and securities exchange requirements,
if any, and that the Trustee considers fair and appropriate and in accordance
with methods generally used at the time of selection by fiduciaries in similar
circumstances. The Trustee shall make the selection from outstanding Securities
not previously called for redemption. The Trustee may select for redemption
portions of the principal of Securities that have denominations larger than
$1,000. Securities and portions of them the Trustee selects shall be in
Authorized Denominations. Provisions of this Indenture that apply to Securities
called for redemption also apply to portions of Securities called for
redemption. The Trustee shall notify the Company promptly of the Securities or
portions of Securities to be redeemed.
SECTION 3.3. Notice of Redemption. At least 15 days but not more
than 60 days before a date for redemption of Securities, the Company shall mail,
or cause to be
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mailed, a notice of redemption by first-class mail to each Holder of Securities
to be redeemed.
The notice shall identify the Securities to be redeemed and shall
state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to be redeemed,
the identification and principal amounts of the particular Securities to
be redeemed;
(6) that, unless the Company defaults in making such redemption
payment, interest on Securities (or portions thereof) called for
redemption ceases to accrue on and after the redemption date;
(7) the paragraph of the Securities pursuant to which the Securities
called for redemption are being redeemed; and
(8) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the
Securities.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. In such event,
the Company shall provide the Trustee with the information required by this
Section.
SECTION 3.4. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable on
the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued interest to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the related interest payment date). Failure to give
notice or any defect in the notice to any Holder shall not affect the validity
of the notice to any other Holder.
SECTION 3.5. Deposit of Redemption Price. Prior to 11:00 a.m. New
York City time on the redemption date, the Company shall deposit with the Paying
Agent
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(or, if the Company or a Subsidiary is the Paying Agent. shall segregate and
hold in trust) money sufficient to pay the redemption price of and accrued
interest (subject to the right of Holders of record on the relevant record date
to receive interest due on the related interest payment date) on all Securities
to be redeemed on that date other than Securities or portions of Securities
called for redemption which have been delivered by the Company to the Trustee
for cancellation.
SECTION 3.6. Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, the Company shall execute and the Trustee
shall authenticate for the Holder (at the Company's expense) a new Security
equal in principal amount to the unredeemed portion of the Security surrendered.
ARTICLE 4
Covenants
SECTION 4.1. Payment of Securities. The Company shall promptly pay
the principal of and interest on the Securities on the dates and in the manner
provided in the Securities and in this Indenture. Principal and interest shall
be considered paid on the date due if on such date the Trustee or the Paying
Agent (other than the Company or a Wholly Owed Subsidiary acting as paying
agent) holds in accordance with this Indenture money sufficient to pay all
principal and interest then due.
The Company shall pay interest on overdue principal at the rate
specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
SECTION 4.2. SEC Reports. The Company shall file the annual report
and other documents, reports and information required by Section 13 or 15(d) of
the Exchange Act with the SEC and, upon such filing, the Company shall (i)
promptly furnish such reports, documents and information to the Trustee and (ii)
within 15 days after such filing with the SEC, furnish, or cause the Trustee to
furnish, such reports, documents and information to the Securityholders. The
Company shall use its best efforts to remain subject to the periodic reporting
requirements of Section 13 of the Exchange Act. In the event the Company is no
longer subject to the periodic reporting requirements of Section 13 or 15(d) of
the Exchange Act, the Company shall file with the SEC and furnish to the Trustee
and to the Securityholders the annual reports and other documents, reports and
information as if it were subject to such reporting requirements; provided,
however, that the Company shall not be so obligated to file such reports,
documents and information with the SEC if the SEC does not permit or accept such
filings, in which event such reports, documents and information shall be
provided to the Trustee and the Holders at the times the Company
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would have been required to provide such reports, documents and information had
it continued to have been subject to such reporting requirements. The Company
also shall comply with the other provisions of TIA Section 314(a).
Delivery of such reports, information and documents to the Trustee
is for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 4.3. Limitation on Indebtedness. (a) The Company shall not,
directly or indirectly, Incur any Indebtedness; provided, however, that: (i) the
Company may Incur Indebtedness ranking on a parity with the Securities or which
is subordinated in right of payment to the Securities pursuant to the terms of
such Indebtedness or pursuant to a written agreement, if no Default or Event of
Default shall have occurred and be continuing at the time of such Incurrence or
would occur as a consequence of such Incurrence and after giving pro forma
effect to such Incurrence, the Consolidated Coverage Ratio would be equal to at
least 1.75 to 1; and (ii) the Company may Incur Indebtedness senior in right of
payment to the Securities pursuant to the terms of such senior Indebtedness or
pursuant to a written agreement if no Default or Event of Default shall have
occurred and be continuing at the time of such Incurrence or would occur as a
consequence of such Incurrence and (A) after giving pro forma effect to such
Incurrence, the Consolidated Coverage Ratio would be at least equal to 2.5 to 1
or (B) after such Incurrence, the total principal amount of such Indebtedness
would not exceed $80,000,000.
(b) Notwithstanding the foregoing, the Company may Incur the
following Indebtedness if no Default or Event of Default shall have occurred and
be continuing at the time of such Incurrence or would occur as a consequence of
such Incurrence (collectively, "Permitted Indebtedness"):
(i) Indebtedness to be outstanding immediately after the Issue Date
and listed on Schedule I to this Indenture;
(ii) Indebtedness represented by the Securities;
(iii) Indebtedness (A) under Interest Rate Protection Agreements
relating to Indebtedness permitted hereunder entered into in the ordinary
course of the Company's financial management and not for speculative
purposes; provided, however, that the notional amount of each such
Interest Rate Protection Agreement does not exceed the principal amount of
the Indebtedness to which such Interest Rate Protection Agreement relates;
or (B) under Currency Exchange Protection Agreements entered into in the
ordinary course of the Company's financial manage-
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ment and not for speculative purposes; provided, however, in the case of
either clause (A) or (B), any such Interest Rate Protection Agreement or
Currency Exchange Protection Agreement, as the case may be, does not
increase the Indebtedness of the Company outstanding at any time other
than as a result of fluctuations in the interest rates or exchange rates,
as the case may be, or by reason of customary fees, indemnities and
compensation payable thereunder;
(iv) Indebtedness owing to and held by any Wholly Owned Subsidiary;
provided, however, that any subsequent issuance or transfer of any Capital
Stock that results in any such Wholly Owned Subsidiary ceasing to be a
Wholly Owned Subsidiary or any subsequent transfer of any such
Indebtedness (except to the Company or another Wholly Owned Subsidiary)
shall be deemed, in each case, to constitute the incurrence of such
Indebtedness by the issuer thereof;
(v) Indebtedness Incurred in connection with a prepayment of
Securities pursuant to a Change of Control Offer; provided, however, that
the aggregate principal amount of such Indebtedness does not exceed 101%
of the aggregate principal amount of the Securities prepaid; provided,
further, however, that such Indebtedness (A) has an Average Life equal to
or greater than the remaining Average Life of the Securities and (B) does
not mature prior to the Stated Maturity of the Securities;
(vi) Indebtedness in respect of Purchase Money Indebtedness or
Capital Lease Obligations directly Incurred by the Company; provided,
however, that the sum of (A) the aggregate principal amount of Purchase
Money Indebtedness incurred by the Company or by Restricted Subsidiaries
as permitted under Section 4.4(b)(ii) and (B) the aggregate amount of
Capital Lease Obligations Incurred by the Company or Incurred by
Restricted Subsidiaries as permitted under Section 4.4(b)(ii) does not at
any one time outstanding exceed $20,000,000 (such maximum permitted amount
to increase by $10,000,000 on each anniversary of the Issue Date);
(vii) Indebtedness Incurred (A) in the ordinary course of business
of the Company with respect to trade credit made available to the Company
in connection with the obtaining of goods or services by the Company
(including commercial letters of credit, bankers' acceptances or
accommodation Guarantees for the benefit of trade creditors or suppliers),
in each case for a period not to exceed 180 days, in an amount not to
exceed the purchase price for the goods or services for which such credit
is made available and which do not constitute obligations for borrowed
money, and (B) with respect to standby letters of credit, performance
bonds and surety bonds that do not constitute obligations for borrowed
money Incurred by the
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Company in the ordinary course of business relating to services to be
performed by or on behalf of the Company;
(viii) Indebtedness in respect of Guarantees by the Company of
Indebtedness of any Restricted Subsidiary permitted to be Incurred under
Section 4.4 (b);
(ix) Indebtedness represented by the Senior Secured Debt in an
aggregate principal amount not to exceed $80,000,000, less, at any
specified date, an amount equal to actual repayments of the Senior Secured
Debt prior to such date, regardless of any subsequent increase in the
aggregate principal amount of the Senior Secured Debt pursuant to any
amendment or modification of, or supplement to, the Senior Secured Debt or
the Credit Agreement after the Issue Date;
(xi) Refinancing Indebtedness Incurred in respect of Indebtedness
Incurred pursuant to clause (i), (ii), (v) or (ix) above; and
(xii) in addition to any Indebtedness permitted by clauses (i)
through (x) above, up to an aggregate of (A) $25,000,000 in principal
amount of Indebtedness at any one time outstanding minus (B) the principal
amount of Indebtedness at such time outstanding of any Restricted
Subsidiaries permitted pursuant to section 4.4(b)(vi).
(c) The Company shall not directly or indirectly Incur any
Indebtedness if the proceeds thereof are used, directly or indirectly, to repay,
prepay, redeem, defease, retire, refund or refinance any Subordinated
Obligations unless such Indebtedness shall be subordinated to the Securities to
at least the same extent as such Subordinated Obligations.
(d) For purposes of determining the outstanding principal amount of
any particular Indebtedness Incurred pursuant to this Section or Section 4.4,
(1) Indebtedness permitted by this Section or Section 4.4 need not be permitted
solely by reference to one provision permitting such Indebtedness but may be
permitted in part by one such provision and in part by one or more other
provisions of this Section or Section 4.4 permitting such Indebtedness and (2)
in the event that Indebtedness or any portion thereof meets the criteria of more
than one of the types of Indebtedness described in this Section or Section 4.4,
the Company, in its sole discretion, shall classify such Indebtedness and only
be required to include the amount of such Indebtedness in one of such types.
(e) For purposes of determining whether the principal amount of any
Refinancing Indebtedness permitted by this Section or Section 4.4 does not, in
the event it is issued in a currency different from the currency in which the
Indebtedness being refunded or refinanced or paid at maturity ("Refinanced
Indebtedness") was issued, exceed the principal amount of the Refinanced
Indebtedness, the spot rate for the purchase of the currency of the Refinanced
Indebtedness with the currency of the
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Refinancing Indebtedness, as published in The Wall Street Journal in the
"Exchange Rates" column under the heading "Currency Trading" on the date two
Business Days prior to such determination, shall be used. If The Wall Street
Journal does not publish such spot rate on such date, then the spot rate for the
purchase of the currency of the Refinanced Indebtedness with the currency of the
Refinancing Indebtedness, as quoted by Citibank, N.A., or any successor thereto,
in New York City at approximately 11:00 a.m. (New York time) on the date two
Business Days prior to such determination, shall be used.
Except as provided in the preceding paragraph, for purposes of
determining the Dollar Equivalent of any Indebtedness denominated in a currency
other than U.S. dollars outstanding at any time as permitted by this Section or
Section 4.4, such Dollar Equivalent shall be the Dollar Equivalent of such
currency at the date such Indebtedness is issued; provided, however, that if
such Indebtedness constituted Refinancing Indebtedness, such conversion shall be
made based on the Dollar Equivalent of the Refinanced Indebtedness at the date
of the issuance of the Refinanced Indebtedness (or any preceding Refinanced
Indebtedness, as applicable).
SECTION 4.4. Limitation on Restricted Subsidiary Indebtedness and
Preferred Stock. (a) The Company shall not permit any Restricted Subsidiary to,
directly or indirectly, Incur any Indebtedness or issue any Preferred Stock
unless (i) no Default or Event of Default shall have occurred and be continuing
at the time of such Incurrence or would occur as a consequence of such
Incurrence and (ii) such Indebtedness or Preferred Stock is Permitted Restricted
Subsidiary Indebtedness under Section 4.4(b).
(b) "Permitted Restricted Subsidiary Indebtedness" means:
(i) Indebtedness or Preferred Stock to be outstanding immediately
after the Issue Date and listed on Schedule I to this Indenture;
(ii) Indebtedness in respect of Purchase Money Indebtedness or
Capital Lease Obligations directly Incurred by any Restricted Subsidiary;
provided, however, that the sum of (A) the aggregate amount of Capital
Lease Obligations Incurred by Restricted Subsidiaries or Incurred by the
Company pursuant to Section 4.3(b)(vi) and (B) the aggregate principal
amount of Purchase Money Indebtedness Incurred by Restricted Subsidiaries
or Incurred by the Company pursuant to Section 4.3(b)(vi) does not at any
one time outstanding exceed $20,000,000 (such maximum permitted amount to
increase by $10,000,000 on each anniversary of the Issue Date);
(iii) Indebtedness incurred (A) in the ordinary course of business
of any Restricted Subsidiary with respect to trade credit made available
to such Restricted
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Subsidiary in connection with the obtaining of goods or services by such
Restricted Subsidiary (including commercial letters of credit, bankers'
acceptances or accommodation Guarantees for the benefit of trade creditors
or suppliers), in each case for a period not to exceed 180 days, in an
amount not to exceed the purchase price for the goods or services for
which such credit is made available and which do not constitute
obligations for borrowed money and (B) standby letters of credit,
performance bonds and surety bonds that do not constitute obligations for
borrowed money Incurred by any Restricted Subsidiary in the ordinary
course of business relating to services to be performed by or on behalf of
such Restricted Subsidiary;
(iv) Indebtedness (A) under Interest Rate Protection Agreements
relating to Indebtedness permitted hereunder entered into in the ordinary
course of any Restricted Subsidiary's financial management and not for
speculative purposes; provided, however, that the notional amount of each
such Interest Rate Protection Agreement does not exceed the principal
amount of the Indebtedness to which such Interest Rate Protection
Agreement relates; or (B) under Currency Exchange Protection Agreements
entered into in the ordinary course of any Foreign Subsidiary's financial
management and not for speculative purposes; provided, however, in the
case of either clause (A) or (B), any such Interest Rate Protection
Agreement or Currency Exchange Protection Agreement, as the case may be,
does not increase the Indebtedness of such Subsidiary outstanding at any
time other than as a result of fluctuations in the interest rates or
exchange rates, as the case may be, or by reason of customary fees,
indemnities and compensation payable thereunder;
(v) Indebtedness or Preferred Stock owing to and held by the Company
or any Wholly Owned Subsidiary; provided, however, that any subsequent
issuance or transfer of any Capital Stock that results in any such Wholly
Owned Subsidiary ceasing to be a Wholly Owned Subsidiary or any subsequent
transfer of any such Indebtedness or Preferred Stock (except to the
Company or a Wholly Owned Subsidiary) shall be deemed, in each case, to
constitute the incurrence of such Indebtedness or Preferred Stock by the
issuer thereof;
(vi) Refinancing Indebtedness Incurred in respect of Indebtedness
Incurred pursuant to clause (i) above; and
(vii) in addition to any Indebtedness permitted by clauses (i)
through (v) above, up to an aggregate of $10,000,000 in principal amount
of Indebtedness of Foreign Restricted Subsidiaries at any one time
outstanding.
SECTION 4.5. Limitation on Restricted Payments. (a) The Company
shall not, and shall not permit any Restricted Subsidiary, to, directly or
indirectly, (i) declare or pay any dividend on, or make any distribution on or
in respect of, its Capital
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Stock (including any payment in connection with any merger or consolidation
involving the Company), except dividends or distributions payable solely in its
Capital Stock (other than Disqualified Stock) or in options, warrants or other
rights to purchase such Capital Stock and except dividends or distributions
payable solely to the Company or any Restricted Subsidiary, (ii) purchase,
redeem, retire or otherwise acquire for value any Capital Stock of the Company
or any Restricted Subsidiary held by Persons other than the Company or a
Restricted Subsidiary, (iii) purchase, repurchase, redeem, defease or otherwise
acquire or retire for value (including pursuant to mandatory repurchase
covenants), prior to any scheduled repayment, scheduled sinking fund payment or
other scheduled maturity, any Subordinated Obligation or (iv) make any
Investment (other than a Permitted Investment) in any Person (any such dividend,
distribution, purchase, redemption, repurchase, defeasance, other acquisition,
retirement or Investment being herein referred to as a "Restricted Payment"), if
at the time of and after giving effect to the proposed Restricted Payment:
(1) a Default or Event of Default shall have occurred and be
continuing (or would result therefrom);
(2) the Company could not Incur at least $1.00 of additional
Indebtedness under Section 4.3(a)(i); or
(3) the aggregate amount of such Restricted Payment and all other
Restricted Payments (the amount so expended, if other than in cash, to be
determined in good faith by the Board of Directors, whose determination
shall be evidenced by a Board Resolution furnished to the Trustee)
declared or made since the Issue Date, would exceed, without duplication.
the sum of:
(A) an amount equal to 50% of the Consolidated Net Income
accrued during the period (treated as one accounting period)
beginning on the first day of the fiscal quarter of the Company
immediately following the fiscal quarter in which the Issue Date
occurs and ending on the last day of the Company's last fiscal
quarter ended at least 45 days prior to the date of such proposed
Restricted Payment (or, if such Consolidated Net Income shall be a
deficit, minus 100% of such deficit) and minus 100% of the amount of
any write-downs, writeoffs, other negative revaluations and other
negative extraordinary charges not otherwise reflected in
Consolidated Net Income during such period;
(B) the aggregate Net Cash Proceeds received by the Company
from the issue or sale of its Capital Stock, including Capital Stock
of the Company issued upon conversion of convertible debt or the
exercise of options, warrants or rights to purchase Capital Stock of
the Company, but excluding Disqualified Stock, subsequent to the
Issue Date (other than an
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issuance or sale to (i) a Subsidiary of the Company, (ii) an
employee stock ownership plan or other trust established by the
Company or any of its Subsidiaries or (iii) management employees);
(C) the amount by which Indebtedness of the Company or its
Restricted Subsidiaries is reduced on the Company's balance sheet
upon the conversion or exchange (other than by a Subsidiary of the
Company) subsequent to the Issue Date of any Indebtedness of the
Company or its Restricted Subsidiaries convertible or exchangeable
for Capital Stock (other than Disqualified Stock) of the Company
(less the amount of any cash or other property distributed by the
Company or any Restricted Subsidiary upon such conversion or
exchange); and
(D) the amount equal to the net reduction in Investments in
Unrestricted Subsidiaries resulting from (i) payments of dividends,
repayments of loans or advances or other transfers of assets to the
Company or any Restricted Subsidiary from Unrestricted Subsidiaries
or (ii) the redesignation of Unrestricted Subsidiaries as Restricted
Subsidiaries (valued in each case as provided in the definition of
"Investment") not to exceed, in the case of any Unrestricted
Subsidiary, the amount of Investments previously made (and treated
as a Restricted Payment) by the Company or any Restricted Subsidiary
in such Unrestricted Subsidiary.
(b) The provisions of Section 4.5(a) shall not prohibit:
(i) any purchase or redemption of Capital Stock of the Company or
Subordinated Obligations made in exchange for, or out of the proceeds of a
substantially concurrent sale of, Capital Stock of the Company (other than
Disqualified Stock and other than Capital Stock issued or sold to a
Subsidiary of the Company or an employee stock ownership plan or other
trust established by the Company or any of its Subsidiaries) or out of
proceeds of an equity contribution made substantially concurrently with
such purchase or redemption; provided, however, that (A) such purchase or
redemption shall be excluded in the calculation of the amount of
Restricted Payments and (B) the Net Cash Proceeds from such sale shall be
excluded from the calculation of amounts under Section 4.5(a)(3)(B);
(ii) any purchase or redemption of Subordinated Obligations made in
exchange for, or out of the proceeds of the substantially concurrent sale
of, Indebtedness of the Company which is permitted to be Incurred pursuant
to Section 4.3; provided, however, that (A) such Indebtedness is Incurred
in an aggregate principal amount (or if
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issued with original issue discount, an aggregate issue price) that is
equal to or less than the aggregate sum of (1) the aggregate principal
amount (or if issued with original issue discount, the aggregate accreted
value) then outstanding of such Subordinated Obligations being so
purchased or redeemed and (2) any premiums, fees and other expenses paid
by the Company or any Restricted Subsidiary in connection with such
purchase or redemption, (B) such Indebtedness is at least as subordinated
to the Securities as such Subordinated Obligations so purchased or
redeemed and the covenants relating to such Indebtedness are no more
restrictive in the aggregate than those of such Subordinated Obligations,
(C) such Indebtedness has a Stated Maturity no earlier than the Stated
Maturity of such Subordinated Obligations, (D) such Indebtedness has an
Average Life at the time such Indebtedness is Incurred equal to or greater
than the Average Life of such Subordinated Obligations and (E) such
purchase or redemption shall be excluded in the calculation of the amount
of Restricted Payments;
(iii) any payment in cash in lieu of the issuance of fractional shares
of Capital Stock to any Holder of Capital Stock warrants of the Company
outstanding on the Issue Date pursuant to the exchange of such warrants
for other Capital Stock of the Company upon the exercise of such warrants
pursuant to the terms thereof; provided, however, that such payment shall
be excluded in the calculation of the amount of Restricted Payments;
(iv) dividends paid within 60 days after the date of declaration
thereof if at such date of declaration such dividend would have complied
with Section 4.5(a); provided, however, that at the time of payment of
such dividend, no other Default shall have occurred and be continuing (or
result therefrom); provided, further, however, that such dividend shall be
included in the calculation of the amount of Restricted Payments from and
after the date of declaration of such dividend; or
(v) so long as no Default or Event of Default shall have occurred
and be continuing or would occur as a consequence thereof, the redemption
or repurchase of Capital Stock of the Company, options in respect thereof
or related rights pursuant to and in accordance with the repurchase
provisions of any employee stock option or any stock purchase or other
agreement between the Company and any of its management employees;
provided, however, that such redemptions or repurchases pursuant to this
Section 4.5(b)(v) from and after the Issue Date shall not in the aggregate
exceed $1,000,000, plus the amount of any net cash proceeds to the Company
from sales of Capital Stock of the Company to management employees
subsequent to the Issue Date.
SECTION 4.6. Limitation on Restrictions on Distributions from
Restricted Subsidiaries. The Company shall not, and shall not permit any
Restricted Subsidiary to, directly or indirectly, create or otherwise cause or
permit to exist or become effective, any encumbrance or restriction on the
ability of any Restricted Subsidiary to (i) pay dividends or
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make any other distributions on or in respect of its Capital Stock to the
Company or any Restricted Subsidiary or pay any Indebtedness owed to the Company
or any Restricted Subsidiary, (ii) make loans or advances to the Company or
(iii) transfer any of its property or assets to the Company or any Restricted
Subsidiary, except for:
(a) any encumbrance or restriction pursuant to an agreement in
effect at or entered into on the Issue Date;
(b) any encumbrance or restriction with respect to a Restricted
Subsidiary pursuant to an agreement relating to any Indebtedness Incurred
by such Restricted Subsidiary on or prior to the date on which such
Restricted Subsidiary became a Subsidiary of, or was acquired by, the
Company (other than Indebtedness Incurred as consideration in, or to
provide all or any portion of the funds or credit support utilized to
consummate, the transaction or series of related transactions pursuant to
which such Restricted Subsidiary became a Subsidiary of, or was acquired
by, the Company) and outstanding on such date;
(c) any encumbrance or restriction pursuant to an agreement relating
to an acquisition of property, so long as the encumbrances or restrictions
in such agreement relate solely to the property so acquired;
(d) any encumbrance or restriction pursuant to an agreement
effecting a refinancing of Indebtedness Incurred pursuant to an agreement
referred to in clause (a), (b) or (c) or contained in any amendment to any
such agreement; provided, however, that any encumbrance and any
restriction contained in any such refinancing agreement or amendment is no
less favorable to the Securityholders than any encumbrance or restriction
contained in such agreement; and
(e) in the case of clause (iii), any encumbrance or restriction (1)
that restricts in a customary manner the subletting, assignment or
transfer of any property or asset that is a lease, license, conveyance or
contract or similar property or asset, (2) arising by virtue of any
transfer of, agreement to transfer, option or right with respect to, or
Lien on, any property or assets of the Company or any Restricted
Subsidiary not otherwise prohibited by this Indenture or (3) arising or
agreed to in the ordinary course of business and that does not,
individually or in the aggregate, detract from the value of property or
assets of the Company or any Restricted Subsidiary in any manner material
to the Company or such Restricted Subsidiary.
SECTION 4.7. Limitation on Sales of Assets and Restricted Subsidiary
Stock. (a) The Company shall not, and shall not permit any Restricted Subsidiary
to, make any Asset Disposition unless (i) the Company or such Restricted
Subsidiary, as the case may be, receives consideration at the time of such Asset
Disposition at least equal to
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the Fair Market Value of the shares, property and assets subject to such Asset
Disposition, (ii) at least 75% of such consideration (or, in the event of any
Asset Disposition of all or any portion of the Company's Magnetics Division or a
Foreign Subsidiary, at least 50% of such consideration) consists of cash,
Temporary Cash Investments or the assumption of Senior Indebtedness of the
Company or any Restricted Subsidiary and the release of the Company or such
Restricted Subsidiary from all liability under such Senior Indebtedness, (iii)
in connection with any Asset Disposition with an aggregate consideration greater
than $10,000,000, the Company delivers an Officers' Certificate to the Trustee
certifying that such Asset Disposition complies with clauses (i) and (ii) and
that such Asset Disposition was approved by a majority of the Board of Directors
including a majority of the disinterested members of the Board of Directors, as
evidenced by a Board Resolution delivered to the Trustee and (iv) 100% of the
Net Cash Proceeds of such Asset Disposition are applied as follows: (A) within
365 days of receipt thereof (or within such longer period after receipt thereof
as may be permitted by the terms of the Credit Agreement) (the last day of such
period, the "Application Date"), the Company or such Restricted Subsidiary, as
the case may be, may apply all or a portion of such Net Cash Proceeds to the
repayment of the Senior Secured Notes or the reinvestment (whether by
acquisition of an existing business or expansion, including, without limitation,
capital expenditures) in one or more Permitted Lines of Business, or any
combination thereof, and (B) to the extent any or all of such Net Cash Proceeds
are not applied as set forth above in clause (A), the Company shall apply all
remaining Net Cash Proceeds of such Asset Disposition (the "Asset Disposition
Purchase Amount") to an offer to purchase (an "Asset Disposition Purchase
Offer") Securities, on the first Business Day occurring 60 Business Days after
the Application Date (the "Asset Disposition Purchase Date") for cash at a
purchase price (such price, the "Asset Disposition Purchase Price") equal to
100% of the principal amount of the Securities so purchased plus accrued and
unpaid interest thereon to the Asset Disposition Purchase Date, in accordance
with the procedures set forth in Section 4.7(c). Any such Net Cash Proceeds
which remain after the acquisition by the Company of Securities tendered (and
not withdrawn) by Securityholders pursuant to such Asset Disposition Purchase
Offer in accordance with the procedures (including proration in the event of
oversubscription) set forth in Section 4.7(c) shall cease to be Net Cash
Proceeds.
(b) Notwithstanding the foregoing, the Company shall not be required
to make an Asset Disposition Purchase Offer until such time as the aggregate
amount of Net Cash Proceeds from Asset Dispositions required to be so applied to
the purchase of Securities pursuant to Section 4.7 (a) exceeds $10,000,000 (the
"Asset Disposition Trigger"), and then the total amount of such Net Cash
Proceeds shall be required to be applied to an Asset Disposition Offer.
(c) Within 30 Business Days of the occurrence of an Asset
Disposition Trigger, (i) the Company shall notify the Trustee in writing of the
Asset Disposition Trigger and shall make the Asset Disposition Purchase Offer to
purchase Securities in an aggregate
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principal amount equal to the Asset Disposition Purchase Amount at the Asset
Disposition Purchase Price on or before the Asset Disposition Purchase Date,
(ii) the Company shall mail a copy of the Asset Disposition Purchase Offer to
each Securityholder and (iii) the Company shall cause a notice of the Asset
Disposition Purchase Offer to be sent to the Dow Jones News Service or similar
business news service in the United States of America. The Asset Disposition
Purchase Offer shall remain open from the time such offer is made until the
Asset Disposition Purchase Date. The Company shall purchase all Securities
properly tendered pursuant to the Asset Disposition Purchase offer and not
withdrawn in accordance with the procedures set forth in the Asset Disposition
Purchase Notice (as defined below). The Trustee shall be under no obligation to
ascertain, and the Trustee shall not be deemed to have knowledge of, the
occurrence of an Asset Disposition Trigger or to give notice with respect
thereto other than as provided above upon receipt of notice of the occurrence of
an Asset Disposition Trigger and an Asset Disposition Purchase Offer from the
Company. The Trustee may conclusively assume, in the absence of receipt of
notice of the occurrence of an Asset Disposition Trigger and an Asset
Disposition Purchase Offer from the Company, that no Asset Disposition Trigger
has occurred. The Asset Disposition Purchase Offer shall include a form of Asset
Disposition Purchase Notice to be completed by the Securityholder and shall
state or provide:
(1) the nature of the Asset Dispositions resulting in the Asset
Disposition Trigger, the date or dates such Asset Dispositions occurred
and the amount of the Asset Disposition Purchase Amount;
(2) that the Asset Disposition Purchase offer is being made pursuant
to this Section 4.7(c) and that Securities in an aggregate principal
amount equal to the Asset Disposition Purchase Amount, selected in
accordance with this Indenture (if more than such amount shall be
tendered) on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Securities in Authorized
Denominations shall be purchased) from among all the Securities properly
tendered pursuant to the Asset Disposition Purchase Offer, will be
accepted for payment;
(3) the date by which the Asset Disposition Purchase Notice pursuant
to this Section 4.7(c) must be given;
(4) the Asset Disposition Purchase Date;
(5) the Asset Disposition Purchase Price;
(6) the name and address of the Paying Agent;
(7) that Securities must be surrendered to the Paying Agent at the
office of the Paying Agent to collect payment;
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(8) information concerning the business of the Company which the
Company in good faith believes will enable such Holders to make an
informed decision (which at a minimum shall include (i) the most recently
filed Annual Report on Form 10-K (including audited consolidated financial
statements) of the Company, the most recent subsequently filed Quarterly
Report on Form 10-Q and any Current Report on Form S-K of the Company
filed subsequent to such Quarterly Report, other than Current Reports
describing Asset Dispositions otherwise described in the offering
materials (or corresponding successor reports) and (ii) a description of
material developments in the Company's business subsequent to the date of
the latest of such Reports.
(9) that the Asset Disposition Purchase Price for any Security as to
which an Asset Disposition Purchase Notice has been duly given and not
withdrawn (subject to proration if Securities with an aggregate principal
amount greater than the Asset Disposition Purchase Amount are so tendered)
will be paid promptly upon the later to occur of the third Business Day
following the Asset Disposition Purchase Date and the time of surrender of
such Security as described in clause (7);
(10) the procedures the Holder must follow to accept the Asset
Disposition Purchase Offer; and
(11) the procedures for withdrawing an Asset Disposition Purchase
Notice.
(d) A Holder may accept an Asset Disposition Purchase Offer by
delivering to the Paying Agent at the office of the Paying Agent a written
notice (an "Asset Disposition Purchase Notice") at any time prior to the close
of business in the location of the office of the Paying Agent on the Asset Sale
Purchase Date, stating:
(1) that such Holder elects to have a Security purchased pursuant to
the Asset Disposition Purchase Offer;
(2) the principal amount of the Security that the Holder elects to
have purchased by the Company, which amount must be in an Authorized
Denomination, and the certificate numbers of the Securities to be
delivered by such securityholder for purchase by the Company; and
(3) that such Security shall be purchased on the Asset Disposition
Purchase Date pursuant to the terms and conditions specified in this
Indenture.
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The delivery of such Security (together with all necessary
endorsements, as determined by the Company) to the Paying Agent at the office of
the Paying Agent prior to, on or after the Asset Disposition Purchase Date shall
be a condition to the receipt by the Holder of the Asset Disposition Purchase
Price therefor; provided, that such Asset Disposition Purchase Price shall be so
paid pursuant to this Section 4.7(d) only if the Security so delivered to the
Paying Agent shall conform in all respects to the description thereof set forth
in the related Asset Disposition Purchase Notice. If at the expiration of the
Asset Disposition Purchase Offer the aggregate principal amount of Securities
surrendered by Holders exceeds the Asset Disposition Purchase Amount, the
Company or the Trustee shall select the Securities to be purchased on a pro rata
basis (with such adjustments as may be deemed appropriate by the Company so that
only Securities in Authorized Denominations shall be purchased). Holders whose
Securities are purchased only in part will be issued new Securities equal in
principal amount to the unpurchased portion of the Securities surrendered.
The Company shall purchase from the Holder thereof, pursuant to an
Asset Disposition Purchase offer made in accordance with this Section 4.7, a
portion of a Security if the principal amount of such portion is an Authorized
Denomination. Provisions of this Indenture that apply to the purchase of all of
a Security also apply to the purchase of a portion of such Security.
The Paying Agent shall promptly notify the Company of the receipt by
it of any Asset Disposition Purchase Notice or written notice of withdrawal
thereof.
Upon receipt by the Paying Agent of the Asset Disposition Purchase
Notice, the Holder of the Security in respect of which such Asset Disposition
Purchase Notice was given shall (unless such Asset Disposition Purchase Notice
is withdrawn as specified in the following paragraph) thereafter be entitled to
receive solely the Asset Disposition Purchase Price with respect to such
Security (subject to proration if Securities with an aggregate principal amount
greater than the Asset Disposition Purchase Amount are properly tendered). Such
Asset Disposition Purchase Price shall be paid to such Securityholder by the
Paying Agent promptly upon the later of (a) the third Business Day following the
Asset Disposition Purchase Date (provided the conditions in this Section 4.7(d)
have been satisfied) and (b) the first Business Day following the time of
delivery of the Security to the Paying Agent at the office of the Paying Agent
by the Holder thereof in the manner required by this Section 4.7(d).
An Asset Disposition Purchase Notice may be withdrawn before or
after delivery by the Holder to the Paying Agent at the office of the Paying
Agent of the Security to which such Asset Disposition Purchase Notice relates,
by means of a written notice of withdrawal delivered by the Holder to the Paying
Agent at the office of the Paying Agent to
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which the related Asset Disposition Purchase Notice was delivered at any time
prior to the close of business on the Asset Disposition Purchase Date
specifying, as applicable:
(1) the certificate number of the Security in respect of which such
notice of withdrawal is being submitted;
(2) the principal amount of the Security (which shall be an
Authorized Denomination) with respect to which such notice of withdrawal
is being submitted; and
(3) the principal amount, if any, of such Security (which shall be
an Authorized Denomination) that remains subject to the original Asset
Disposition Purchase Notice and that has been or will be delivered for
purchase by the Company.
No later than the date upon which written notice of an Asset
Disposition Purchase Offer is delivered to the Trustee, the Company shall cause
to be irrevocably deposited with the Paying Agent, subject to the provisions of
Section 2.4, in cash or Temporary Cash Investments an amount sufficient to pay
the aggregate Asset Disposition Purchase Price, to be held for payment in
accordance with the provisions of this Section.
(e) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section. To the extent that the provisions of any securities laws or regulations
conflict with provisions of this Section, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under this Section by virtue thereof.
SECTION 4.8. Limitation on Transactions with Affiliates. (a) The
Company shall not, and shall not permit any Restricted Subsidiary to, directly
or indirectly, conduct any business, enter into or permit to exist any
transaction (including, without limitation, the sale, conveyance, disposition,
purchase, exchange or lease of any property, the lending the borrowing or
advancing of any money or the rendering of any services) with, or for the
benefit of, any Affiliate of the Company (an "Affiliate Transaction") unless (i)
the terms of such Affiliate Transaction are set forth in writing, (ii) such
Affiliate Transaction is in the best interest of the Company or such Restricted
Subsidiary, as the case may be, (iii) such Affiliate Transaction is on terms as
favorable to the Company or such Restricted Subsidiary, as the case may be, as
those that could be obtained at the time of such Affiliate Transaction for a
similar transaction in arm's length dealings with a Person who is not such an
Affiliate and (iv) with respect to each Affiliate Transaction involving
aggregate payments or value in excess of $500,000, the Company delivers to the
Trustee an Officers' Certificate certifying that such Affiliate Transaction was
approved by a majority of the Board of
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Directors, including a majority of the disinterested members of the Board of
Directors, as evidenced by a Board Resolution, and that such Affiliate
Transaction complies with clauses (ii) and (iii), such Board Resolution to be
dated within 30 days of such Affiliate Transaction.
(b) The provisions of Section 4.8(a) shall not prohibit (i) any
Restricted Payment permitted to be paid pursuant to Section 4.5, (ii) any
issuance of securities, or other payments, awards or grants in cash, securities
or otherwise pursuant to, or the funding of, employment arrangements, stock
options and stock ownership plans approved by the Board of Directors, (iii)
loans or advances permitted under this Indenture to employees in the ordinary
course of business in accordance with past practices of the Company, (iv) the
payment of reasonable fees to directors of the Company and its Restricted
Subsidiaries who are not employees of the Company or of Restricted Subsidiaries,
(v) any transaction between the Company and a Wholly Owned Subsidiary or between
Wholly Owned Subsidiaries or (vi) reasonable and customary indemnification
arrangements between the Company or any Restricted Subsidiary and their
respective directors and officers pursuant to which the Company or any such
Restricted Subsidiary agrees to indemnify such directors and officers against
losses and expenses incurred by such directors and officers in connection with
their service to the Company or such Restricted Subsidiary, as the case may be
(to the extent that such indemnification arrangements are permitted under
applicable law).
SECTION 4.9. Change of Control. (a) Upon a Change of Control, (i)
the Company shall notify the Trustee, who shall in turn notify the Holders, in
writing of the occurrence of the Change of Control and shall make an offer to
purchase (the "Change of Control Offer") the Securities for cash at a purchase
price equal to 101% of the principal amount thereof plus any accrued and unpaid
interest thereon collectively the "Change of Control Purchase Price") to the
Change of Control Purchase Date (as defined below) on or before the date
specified in such notice, which date shall be no earlier than 30 days and no
later than 60 Business Days after the occurrence of the Change of Control (the
"Change of Control Purchase Date"), (ii) the Company shall, or shall cause the
Trustee to, mail a copy of the Change of Control Offer to each Holder and (iii)
the Company shall cause a notice of the Change of Control Offer to be sent at
least once to the Dow Jones News Service and The Bloomberg Business News Service
or, if such news services no longer publish such notices, a similar business
news service in the United States. The Change of Control Offer shall remain open
from the time such offer is made until the Change of Control Purchase Date The
Company shall purchase all Securities properly tendered in the Change of Control
Offer and not withdrawn in accordance with the procedures set forth in Section
4.9(b). The Trustee shall be under no obligation to ascertain, and the Trustee
shall not be deemed to have knowledge of, the occurrence of a Change of Control
or to give notice with respect thereto other than as provided above upon receipt
of a Change of Control Offer from the Company The Trustee may conclusively
assume, in the absence of receipt of a Change of Control Offer from the Company,
that no Change of Control has occurred. The Change of
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Control Offer shall include a form of change of control purchase notice (the
"Change of Control Purchase Notice") to be completed by the Holder and shall
state:
(1) the events causing a Change of Control and the date such Change
of Control is deemed to have occurred;
(2) the circumstances and relevant facts regarding such Change of
Control which the Company in good faith believes will enable Holders to
make an informed decision (which at a minimum will include (i) the most
recently filed Annual Report on Form 10-K (including audited financial
statements) of the Company, the most recent subsequently filed Quarterly
Report on Form 10-Q and any Current Report on Form 8-K of the Company
filed subsequent to such Quarterly Report, (ii) a description of material
business developments in the Company's business subsequent to the date of
the latest of such Reports and (iii) information with respect to pro forma
historical income, cash flow and capitalization, each after giving effect
to such Change of Control, events causing such Change of Control and the
date such Change of Control is deemed to have occurred);
(3) that the Change of Control Offer is being made pursuant to this
Section 4.9(a) and that all Securities properly tendered pursuant to the
Change of Control Offer will be accepted for payment;
(4) the date by which the Change of Control Purchase Notice pursuant
to this Section 4.9 must be given;
(5) the Change of Control Purchase Date;
(6) the Change of Control Purchase Price;
(7) the name and address of the Paying Agent;
(8) that Securities must be surrendered to the Paying Agent at the
office of the Paying Agent to collect payment;
(9) that the Change of Control Purchase Price for any Security as to
which a Change of Control Purchase Notice has been duly given and not
withdrawn will be paid promptly upon the later of the first Business Day
following the Change of Control Purchase Date and the time of surrender of
such Security as described in clause (8);
(10) the procedure the Securityholder must follow to accept the
Change of Control Offer; and
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(11) the procedures for withdrawing a Change of Control Purchase
Notice.
(b) A Securityholder may accept a Change of Control Offer by
delivering to the Paying Agent at the office of the Paying Agent a Change of
Control Purchase Notice at any time prior to the close of business in the
location of the office of the Paying Agent on the Change of Control Purchase
Date, stating:
(1) that such Securityholder elects to have a Security purchased
pursuant to the Change of Control Offer;
(2) the principal amount of the Security that the Securityholder
elects to have purchased by the Company, which amount must be an
Authorized Denomination, and the certificate numbers of the Securities to
be delivered by such Securityholder for purchase by the Company; and
(3) that such Security shall be purchased on the Change of Control
Purchase Date pursuant to the terms and conditions specified in this
Indenture.
The delivery of such Security (together with all necessary
endorsements) to the Paying Agent at the office of the Paying Agent prior to, on
or after the Change of Control Purchase Date shall be a condition to the receipt
by the Securityholder of the Change of Control Purchase Price therefor;
provided, that such Change of Control Purchase Price shall be so paid pursuant
to this Section only if the Security so delivered to the Paying Agent shall
conform in all respects to the description thereof set forth in the related
Change of Control Purchase Notice. Securityholders whose Securities are
purchased only in part will be issued new Securities equal in principal amount
to be unpurchased portion of the Securities surrendered.
The Company shall purchase from the Holder thereof, pursuant to this
Section, a portion of a Security if the principal amount of such portion is an
Authorized Denomination. Provisions of this Indenture that apply to the Purchase
of all of a Security also apply to the Purchase of a portion of such Security.
The Paying Agent shall promptly notify the Company of the receipt by
it of any Change of Control Purchase Notice or written notice of withdrawal
thereof.
Upon receipt by the Company of the Change of Control Purchase
Notice, the Holder of the Security in respect of which such Change of Control
Purchase Notice was given shall (unless such Change of Control Purchase Notice
is withdrawn as specified in the following paragraph) thereafter be entitled to
receive solely the Change of Control Purchase
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Price with respect to such Security. Such Change of Control Purchase Price shall
be paid to such Holder promptly upon the later of (a) the first Business Day
following the Change of Control Purchase Date (provided the conditions in this
Section 4.9(b) have been satisfied) and (b) the first Business Day following the
time of delivery of the Security to the Paying Agent at the office of the Paying
Agent by the Holder thereof in the manner required by this Section 4.9(b).
A Change of Control Purchase Notice may be withdrawn before or after
delivery by the Holder to the Paying Agent at the office of the Paying Agent of
the Security to which such Change of Control Purchase Notice relates, by means
of a written notice of withdrawal delivered by the Holder to the Paying Agent at
the office of the Paying Agent to which the related Change of Control Purchase
Notice was delivered at any time prior to the close of business on the Change of
Control Purchase Date specifying, as applicable:
(1) the certificate number of the Security in respect of which such
notice of withdrawal is being submitted;
(2) the principal amount of the Security (which shall be an
Authorized Denomination) with respect to which such notice of withdrawal
is being submitted; and
(3) the principal amount, if any, of such security (which shall be
an Authorized Denomination) that remains subject to the original Change of
Control Purchase Notice and that has been or will be delivered for
purchase by the Company.
No later than the date upon which the Change of Control Offer is
delivered to the Trustee, the Company shall irrevocably deposit with the Paying
Agent, subject to the provisions of Section 2.4, in cash or Temporary Cash
Investments an amount equal to the Change of Control Purchase Price to the
Holders entitled thereto, to be held for payment in accordance with the
provisions of this Section.
(c) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section. To the extent that the provisions of any securities laws or regulations
conflict with provisions of this Section, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under this Section by virtue thereof.
SECTION 4.10. Compliance Certificate. The Company shall deliver to
the Trustee within 120 days after the end of each fiscal year of the Company an
Officers'
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Certificate stating that in the course of the performance by the signers of
their duties as Officers of the Company they would normally have knowledge of
any Default and whether or not the signers know of any Default that occurred
during such period. If they do, the certificate shall describe the Default, its
status and what action the Company is taking or proposes to take with respect
thereto. The Company also shall comply with TIA Section 314(a)(4).
SECTION 4.11. Further Instruments and Acts. Upon request of the
Trustee, the Company will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
SECTION 4.12. Limitation on Liens. The Company shall not, and shall
not permit any Restricted Subsidiary to, directly or indirectly, create or
permit to exist any Lien (other than Permitted Liens) on any of its property or
assets (including Capital Stock), whether owned on the Issue Date or thereafter
acquired, or any right, title or interest thereto, unless the Company or such
Restricted Subsidiary shall secure all payments hereunder and under the
Securities on an equal and ratable basis with the obligation so secured until
such time as such obligation is no longer secured by a Lien.
SECTION 4.13. Limitation on Sale/Leaseback Transactions. The Company
shall not, and shall not permit any Restricted Subsidiary to, directly or
indirectly, enter into, Guarantee or otherwise become liable with respect to any
Sale/Leaseback Transaction with respect to any property or assets unless.(i) the
Company or such Restricted Subsidiary, as the case may be, would be entitled
under Section 4.3(b)(vii) to incur Indebtedness secured by a Permitted Lien on
such property or assets in an amount equal to the Attributable Indebtedness with
respect to such Sale/Leaseback Transaction, (ii) the net cash proceeds from such
Sale/Leaseback Transaction are at least equal to the Fair Market Value of the
property or assets subject to such Sale/Leaseback Transaction (such Fair Market
Value determined, in the event such property or assets have a Fair Market Value
in excess of $2,000,000, no more than 30 days prior to the effective date of
such Sale/Leaseback Transaction, by the Board of Directors including a majority
of the disinterested members of the Board of Directors, as evidenced by a Board
Resolution), and (iii) the net cash proceeds of such Sale/Leaseback Transaction
are applied in accordance with Section 4.7.
SECTION 4.14. Limitation on Issuance and Sale of Capital Stock of
Restricted Subsidiaries. The Company shall not permit (i) any Restricted
Subsidiary to issue any Capital Stock other than to the Company or a Wholly
Owned Subsidiary; or (ii) any Person (other than the Company or a Wholly Owned
Subsidiary) to, directly or indirectly, own or control any Capital Stock of any
Restricted Subsidiary (other than directors' qualifying shares); provided,
however, that clauses (i) and (ii) shall not prohibit (a) any sale
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of 100% of the shares of the Capital Stock of any Restricted Subsidiary owned by
the Company or any Wholly Owned Subsidiary effected in accordance with Section
4.7, or (b) any issuance of Preferred Stock of a Restricted Subsidiary to any
Person permitted under Section 4.4.
SECTION 4.15. Restricted and Unrestricted Subsidiaries. (a) The
Board of Directors may designate any Subsidiary of the Company or any Restricted
Subsidiary to be an Unrestricted Subsidiary if (i) the Subsidiary to be so
designated does not own any Capital Stock, Redeemable Stock or Indebtedness of,
or own or hold any Lien on any property or assets of, the Company or any other
Restricted Subsidiary, (ii) the Subsidiary to be so designated is not obligated
by any Indebtedness or Lien that, if in default, would result (with the passage
of time or notice or otherwise) in a default on any Indebtedness of the Company
or any Restricted Subsidiary, and (iii) either (A) the Subsidiary to be so
designated has total assets of $1,000 or less or (B) such designation is
effective immediately upon such Person becoming a Subsidiary of the Company or
of a Restricted Subsidiary. Unless so designated as an Unrestricted Subsidiary,
any Person that becomes a Subsidiary of the Company or any Restricted Subsidiary
shall be classified as a Restricted Subsidiary. Except as provided in the first
sentence of this paragraph (a), no Restricted Subsidiary shall be redesignated
as an Unrestricted Subsidiary. Subject to Section 4.15(b), an Unrestricted
Subsidiary shall not be redesignated as a Restricted Subsidiary. Any such
designation by the Board of Directors shall be evidenced to the Trustee by
promptly filing with the Trustee a copy of the Board Resolution giving effect to
such designation and an Officers' Certificate certifying that such designation
complies with the foregoing provisions.
(b) The Company shall not, and shall not permit any Restricted
Subsidiary to, take any action or enter into any transaction or series of
transactions that would result in a Person becoming a Restricted Subsidiary
(whether through an acquisition, the redesignation of an Unrestricted Subsidiary
or otherwise) unless after giving effect to such action, transaction or series
of transactions, on a pro forma basis, (i) the Company could incur at least
$1.00 of additional Indebtedness pursuant to Section 4.3(a)(i), (ii) such
Restricted Subsidiary could then Incur under Section 4.4 all Indebtedness as to
which it is obligated at such time, (iii) no Default or Event of Default would
occur or be continuing and (iv) there exist no Liens with respect to the
property or assets of such Restricted Subsidiary other than Permitted Liens.
SECTION 4.16. Revisions to Schedules. Schedule III shall be revised
from time to time by the Company to accurately reflect all the U.S. Restricted
Subsidiaries, whether now existing or hereafter created, formed, designated or
acquired, and upon such revision a new Schedule III shall be delivered to the
Trustee.
SECTION 4.17. Maintenance of Properties; Insurance. The Company
shall, and shall cause each Restricted Subsidiary to, at all times:
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(a) maintain all property and assets necessary in its business in
good working order and condition (ordinary wear and tear excepted), in
compliance with applicable regulations, laws or restrictions and supplied
with all necessary equipment and will cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all
as in the judgment of the Company may be necessary so its business may be
properly and advantageously conducted at all times; and
(b) maintain with recognized national or international insurance
companies, or through self-insurance programs, insurance on such of its
property and assets, and against such liabilities in at least such
amounts, against at least such risks and with such deductibles or
self-insured retentions as in each case are customarily insured against in
the same general area by companies engaged in the same or a similar
business and consistent with the past practices of the Company, and
furnish to the Trustee an Officers' Certificate specifying the nature of
the insurance carried and adequacy thereof at such times as it shall
deliver to the Trustee an Officers' Certificate pursuant to Section 4.10.
SECTION 4.18. Corporate Existence. Subject to Article 5, the Company
shall do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence and the corporate, partnership or other
existence of each of its Subsidiaries, in accordance with the respective
organizational documents of the Company and each such Subsidiary and the rights
(charter and statutory), registrations, licenses and franchises of the Company
and such Subsidiaries; provided, however, that the Company shall not be required
to preserve any such right, license, registration or franchise, or the
corporate, partnership or other existence of any such Subsidiary, if the
preservation thereof is no longer desirable in the conduct of the business of
the Company and its Subsidiaries taken as a whole, and the loss thereof is not
adverse in any material respect to the Holders; provided. further, however, that
if such Subsidiary has more than a de minimis amount of assets, the Board of
Directors shall be required to make a determination to the foregoing effect.
SECTION 4.19. Taxes. The Company shall, and shall cause each of its
Subsidiaries to, pay, prior to delinquency, all taxes, assessments and
governmental levies, except as the same are being contested in good faith and by
appropriate proceedings or where the failure to pay would not have a material
adverse effect on the Company and its Subsidiaries taken as a whole.
SECTION 4.20. Conflicting Agreements. The Company shall not, and
shall not permit any of its Subsidiaries to, enter into any agreement or
instrument, other than the Senior Indenture, that by its terms expressly (i)
prohibits the Company from
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making any payments on the Securities required by the terms hereof and thereof
or (ii) making any Asset Disposition Purchase Offer or Change of Control Offer,
pursuant to Section 4.7 or 4.9, respectively.
SECTION 4.21 Limitation on Layering. The Company shall not and shall
not permit any of its Restricted Subsidiaries to incur any Indebtedness if such
Indebtedness is expressly subordinate or junior in right of payment to any
Senior Indebtedness and senior in right of payment to the Securities.
SECTION 4.22. Deposit of Funds with Trustee Pending Consummation of
the Redemption. (a) On the Issue Date, the Company shall deposit with the
Trustee as hereinafter provided $196,414,200 (the "Special Redemption Amount")
provided, however, that if the Officer's Certificate referred to in clause
(c)(i) below is delivered to the Trustee on or prior to the Issue Date then the
Company shall not be obligated to deposit the Special Redemption Amount with the
Trustee.
(b) In order to secure the full and punctual payment and performance
of the Company's obligation to redeem the Securities upon a Special Redemption,
the Company hereby grants to the Trustee, for the benefit of the holders, a
continuing security interest in and to the Special Redemption Amount, whether
now owned or existing or hereafter acquired or arising if such amount shall have
been deposited with the Trustee. The Trustee shall have no obligation to file
any financing statement or otherwise take any action to maintain or perfect any
such security interest.
(c) At all times until the earlier to occur of receipt by the
Trustee of (i) an Officers' Certificate stating that: (A) the Company has
received the consent of SKC Limited and SKC America, Inc. to the waiver of
certain terms of the Amended and Restated Master Supply Agreement dated as of
October 8, 1993 as amended by the First Cumulative Amendment, dated May 17, 1996
(the "SKC Agreement") so that the Redemption may be consummated without creating
a default or on acceleration under the SKC Agreement and that such consent is
attached to the Officers' Certificate as Exhibit A; (B) the Company has received
the approval of a majority of the holders of the Senior Secured Debt to the
terms of the Securities (including, without limitation, the subordination terms)
and such approval is attached to the Officers' Certificate as Exhibit B; and (C)
the Redemption is to be consummated on a date specified therein, which shall be
on or before the Special Redemption Date, on the terms and conditions described
in the Offering Memorandum of the Company dated March 19, 1997 relating to the
Securities (the "Offering Memorandum") in all material respects which notice of
such Redemption is attached to the Officer's Certificate as Exhibit C or (ii) a
request of the Company to deposit funds with the Paying Agent on the redemption
date pursuant to a Special Redemption, there shall be maintained with the
Trustee an account (the "Collateral Account") designated "Collateral Account"
(subject to a security interest in the name of IBJ Schroder Bank & Trust Company
"as
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Trustee,") which account shall be under the sole dominion and control of the
Trustee. On the Issue Date, the Company shall cause the Special Redemption
Amount to be deposited in the Collateral Account (subject to the proviso in
clause (a) above). Amounts on deposit in the Collateral Account shall be
invested and reinvested from time to time in Temporary Cash Investments. Any
income received with respect to the balance from time to time standing to the
credit of the Collateral Account, including any interest or capital gains on
Temporary Cash Investments, shall remain, or be deposited, in the Collateral
Account. The Trustee shall not be liable or accountable for any losses resulting
without gross negligence or willful misconduct on the part of the Trustee from
the sale or depreciation in the market value of any investment of amounts on
deposit in the Collateral Account. Subject to Article Seven hereof, the Trustee
solely in its individual capacity hereby waives any rights it may have in such
individual capacity to the Collateral
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Account and all funds and investments therein including, without limitation, any
such rights arising through any counterclaim, defense, recoupment, charge, lien
or right of set-off.
(d) Upon notice from the Company to the Trustee pursuant to
subsection (c)(i) above, the security interests in the Collateral shall
terminate as of the date of the Redemption and all funds in the Collateral
Account (the "Collateral Funds") shall be released as of the date of the
Redemption as follows: (i) $4,000,000 to NatWest Capital Markets Limited; (ii)
$192,414,200 to the Company to an account previously designated by it by wire
transfer of immediately available funds; and (iii) any remaining Collateral
Funds (including income with respect to Collateral Funds) shall be distributed
to NatWest Capital Markets Limited and the Company, as set forth in clauses (i)
and (ii) above in proportion to the respective amounts distributed to each such
Person pursuant to such clauses; provided, that the amount of Collateral Funds
distributed pursuant to clause (ii) shall be reduced to the extent that there
are insufficient Collateral Funds to make the distributions provided for in
clauses (i) and (ii) of this paragraph (d). Upon notice from the Company to the
Trustee pursuant to subsection (c)(ii) above, the Trustee shall apply the
Collateral Funds to fund the Special Redemption and the Trustee shall pay any
remaining amount in the Collateral Account in excess of the amount needed to
fund the Special Redemption to NatWest Capital Markets Limited as provided in
clause (i) above up to the amount specified therein and shall pay any remaining
funds to NatWest Capital Markets Limited and the Company in the proportions set
forth in clause (iii) above. Section 314(d) of the TIA shall not apply to the
release of Collateral pursuant to this provision if such release occurs prior to
the filing of the registration statement under the Securities Act pursuant to
the Registration Rights Agreement, after which time this sentence shall be
deemed deleted from this Indenture.
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ARTICLE 5
Merger, Consolidation or Sale of Assets
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The Company shall not, and the Company shall not permit any
Restricted Subsidiary to, enter into any transaction or series of transactions
to consolidate, amalgamate or merge with or into any other Person (other than
the merger of a Wholly Owned Subsidiary (i) with another Wholly Owned Subsidiary
or (ii) into the Company), or directly or indirectly through its Subsidiaries
sell, convey, assign, transfer, lease or otherwise dispose of all or
substantially all its property and assets to any Person or group of affiliated
Persons (other than to one or more Wholly Owned Subsidiaries or to the Company)
unless (i) if the Company is a party to such transaction and is not the
surviving entity (the "Surviving Entity"), the Surviving Entity formed by such
consolidation or amalgamation or into which the Company is merged or that
acquires, by sale, conveyance, assignment, transfer, lease or other disposition,
all or substantially all the properties and assets of the Company as an
entirety, shall be a corporation organized and validly existing under the laws
of the United States or any State thereof or the District or Columbia and shall
expressly assume (a) by a supplemental indenture executed and delivered to the
Trustee, in form satisfactory to the Trustee, all the obligations of the Company
pursuant to the Securities and the Indenture and (b) by written instruments
executed and delivered to the Trustee, in form satisfactory to the Trustee, all
the obligations of the Company under any agreements entered into by the company
to effectuate the provisions of Section 4.12 hereof; (ii) the Surviving Entity,
if any Restricted Subsidiary is a party to such transaction and is not the
Surviving Entity, shall by written instruments executed and delivered to the
Trustee, in form satisfactory to the Trustee, expressly assume all the
obligations of such Restricted Subsidiary under any agreements entered into by
such Restricted Subsidiary to effectuate the terms of Section 4.12 hereof; (iii)
immediately before and after giving effect to such transaction or series of
transactions on a pro forma basis (and treating any Indebtedness which becomes
an obligation of the Company, the Surviving Entity or any Restricted Subsidiary
as a result of such transaction or series of transactions as having been
incurred by the Company, such Surviving Entity or such Restricted Subsidiary at
the time of such transaction or series of transactions) no Default or Event of
Default shall have occurred and be continuing; (iv) immediately after giving
effect to such transaction or series of transactions on a pro forma basis (and
treating any Indebtedness which becomes an obligation of the Company, the
Surviving Entity or any Restricted Subsidiary as a result of such transaction or
series of transactions as having been incurred by the Company, such Surviving
Entity or such Restricted Subsidiary at the time of such transaction or series
of transactions), the Company or the Surviving Entity, as the case may be, could
incur at least $1.00 of additional Indebtedness pursuant to Section 4.3(a)(i);
(v) immediately after giving effect to such transaction or series of
transactions on a pro forma basis (and treating any Indebtedness which becomes
an obligation of the Company, the Surviving Entity or any Restricted Subsidiary
as a result of such transaction or series of transactions as having been
incurred by the Company, such Surviving Entity or such Restricted Subsidiary at
the time of such transaction or series of transactions), the Company or the
Surviving Entity, as the case may be, shall have a Consolidated Tangible Net
Worth which is not less than the Consolidated Tangible Net Worth of the Company
immediately prior to such transaction or transactions;
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and (vi) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating (A) that such consolidation,
amalgamation, merger or transfer and such supplemental indenture (if any) and
written instrument (if any) comply with this Indenture and (B) that upon
execution and delivery of such supplemental indenture or written instrument the
Company or such Surviving Entity shall be bound by the terms of this Indenture
as thereby amended and this Indenture as thereby amended shall be enforceable
against the Company or such Surviving Entity in accordance with its terms.
Upon any transaction involving the Company in which the Company is
not the Surviving Entity, such Surviving Entity shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture, but the Company in the case of a transfer or lease shall not be
released from the obligation to pay the principal of, and premium, if any, or
interest on, the Securities.
ARTICLE 6
Defaults and Remedies
SECTION 6.1. Events of Default. An "Event of Default" occurs if:
(1) the Company fails to make any payment of interest on any
Security when the same shall become due and payable, and such failure
continues for a period of 30 days;
(2) the Company (i) fails to make the payment of the principal of or
premium, if any, on any Security when the same becomes due and payable at
its Stated Maturity, upon acceleration, redemption or declaration, or
otherwise or (ii) fails to redeem or purchase Securities when and to the
extent required pursuant to this Indenture or the Securities;
(3) the Company fails to comply with Article 5;
(4) the Company fails to comply with Section 4.2, 4.3, 4.4, 4.5,
4.6, 4.7. 4.8, 4.9, 4.12, 4.13, 4.14, 4.20 or 4.21 (other than a failure
to purchase Securities when required under Section 4.7 or 4.9) and such
failure continues for 30 days after the notice specified below, or the
Company fails to give the notice specified below;
(5) the Company fails to comply with any of its agreements in the
Securities or this Indenture (other than those referred to in (1), (2),
(3) or (4) above)
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and such failure continues for a period of 60 days after the notice
specified below or the Company fails to give the notice specified below;
(6) Principal of or interest on any Indebtedness of the Company or
any Restricted Subsidiary for borrowed money is not paid when due within
any applicable grace period or any Indebtedness of the Company or any
Restricted Subsidiary is accelerated by the Holders thereof, in each case,
if the total amount so unpaid when due within any applicable grace period
or accelerated exceeds $7,500,000 or its Dollar Equivalent at the time;
(7) one or more judgments or decrees aggregating in excess of
$7,500,000 or its Dollar Equivalent at the time is rendered against the
Company or any Restricted Subsidiary and is not discharged and either: (A)
an enforcement proceeding has been commenced by any creditor upon such
judgment or decree; or (B) there is a period of 60 days following the
entry of such judgment or decree during which such judgment or decree is
not discharged, waived or the execution thereof stayed;
(8) the Company or any Restricted Subsidiary pursuant to or within
the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it in
an involuntary case;
(C) consents to the appointment of a Custodian of it or for
any substantial part of its property; or
(D) makes a general assignment for the benefit of its
creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(9) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company or any Restricted
Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company or any Restricted
Subsidiary or for any substantial part of its property; or
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(C) orders the winding up or liquidation of the Company or any
Restricted Subsidiary;
or any similar relief is granted under any foreign laws and the
order or decree remains unstayed and in effect for 60 days.
The foregoing will constitute Events of Default whatever the reason
for any such Event of Default and whether it is voluntary or involuntary or is
effected by reason of the provisions of Article IX of this Indenture or 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.
The term "Bankruptcy Law" means Title 11, United States Code, or any
similar Federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator, custodian or similar official
under any Bankruptcy Law.
A Default under clause (4) or (5) above is not an Event of Default
until the Trustee or the Holders of at least 25% in principal amount of the
Securities notify the Company of the Default and the Company does not cure such
Default within the time specified after receipt of such notice. Such notice must
specify the Default, demand that it be remedied and state that such notice is a
"Notice of Default".
The Company shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any event which with the giving of notice and the lapse of time would become an
Event of Default under clause (4), (5), (6) or (7) above, its status and what
action the Company is taking or proposes to take with respect thereto.
SECTION 6.2. Acceleration. If an Event of Default (other than an
Event of Default specified in Section 6.1(8) or (9) with respect to the Company)
occurs and is continuing, the Trustee by notice to the Company, or the Holders
of at least 25% in principal amount of the Securities by notice to the Trustee
(who shall promptly notify the Company), may declare the principal of and
accrued interest on all the Securities to be due and payable. Upon such a
declaration, such principal and interest shall be due and payable immediately.
If an Event of Default specified in Section 6.1(8) or (9) occurs, the principal
of and interest on all the Securities shall ipso facto become and be immediately
due and payable without any declaration or other act on the part of the Trustee
or any Securityholders. The Holders of a majority in principal amount of the
Securities by notice to the Trustee may rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default have been cured or
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waived except nonpayment of principal or interest that has become due solely
because of acceleration. No such rescission shall affect any subsequent Default
or impair any right consequent thereto.
SECTION 6.3. Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of principal of or interest on the Securities or to enforce the performance of
any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Securities or does not produce any of them in the proceeding. A delay
or omission by the Trustee or any Securityholder in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.4. Waiver of Past Defaults. The Holders of a majority in
principal amount of the Securities by notice to the Trustee may waive an
existing Default or Event of Default and its consequences except (i) a Default
or Event of Default in the payment of the principal (other than principal due by
reason of acceleration) of or interest on a Security or (ii) a Default in
respect of a provision that under Section 9.2 cannot be amended or waived
without the consent of each Securityholder affected. When a Default or Event of
Default is waived, it is deemed cured, but no such waiver shall extend to any
subsequent or other Default or impair any consequent right.
SECTION 6.5. Control by Majority. The Holders of a majority in
principal amount of the Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or by
exercising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 7.1, that the Trustee determines is unduly prejudicial to the
rights of other Securityholders or would involve the Trustee in personal
liability; provided, however, that the Trustee may take any other action deemed
proper by the Trustee that is not inconsistent with such direction. Prior to
taking any action hereunder, the Trustee shall be entitled to indemnification
satisfactory to it in its sole discretion against all losses and expenses caused
by taking or not taking such action.
SECTION 6.6. Limitation on Suits. A Securityholder may not pursue
any remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating that an
Event of Default is continuing;
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(2) the Holders of at least 25% in principal amount of the
Securities make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee security or
indemnity reasonably satisfactory to it against any loss, liability or
expense;
(4) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of security or indemnity; and
(5) the Holders of a majority in principal amount of the Securities
do not give the Trustee a direction inconsistent with the request during
such 60-day period.
A Securityholder may not use this Indenture to prejudice the rights
of another Securityholder or to obtain a preference or priority over another
Securityholder.
SECTION 6.7. Rights of Holders To Receive Payment. Notwithstanding
any other provision of this Indenture, the right of any Holder to receive
payment of principal of and interest on the Securities held by such Holder, on
or after the respective due dates expressed in the Securities, or to bring suit
for the enforcement of any such payment on or after such respective dates, shall
not be impaired or affected without the consent of such Holder.
SECTION 6.8. Collection Suit by Trustee. If an Event of Default in
payment of interest or principal specified in Section 6.1(1) or (2) occurs and
is continuing, the Trustee may recover judgment in its own name and as trustee
of an express trust against the Company for the whole amount of principal and
interest remaining unpaid (together with interest on such unpaid interest to the
extent lawful) and the amounts provided for in Section 7.7.
SECTION 6.9. Trustee May File Proofs of Claim. The Trustee may file
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to the Company, its creditors or
its property and, unless prohibited by law or applicable regulations, may vote
on behalf of the Holders in any election of a trustee in bankruptcy or other
Person performing similar functions, and any Custodian in any such judicial
proceeding is hereby authorized by each Holder to make 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 its counsel, and any other amounts due the Trustee under Section
7.7.
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SECTION 6.10. Priorities. If the Trustee collects any money or
property pursuant to this Article 6, it shall pay out the money or property in
the following order:
FIRST: to the Trustee for amounts due under Section 7.7;
SECOND: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Securities for principal and interest, respectively; and
THIRD: to the Company.
The Trustee may fix a record date and payment date for any payment
to Securityholders pursuant to this Section. At least 15 days before such record
date, the Company shall mail to each Securityholder and the Trustee a notice
that states the record date, the payment date and amount to be paid.
SECTION 6.11. 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 or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section does not apply to a suit by the
Trustee, a suit by a Holder pursuant to Section 6.7 or a suit by Holders of more
than 10% in principal amount of the Securities.
SECTION 6.12. Waiver of Stay or Extension Laws. The Company (to the
extent it may lawfully refrain from doing so) shall not at any time insist upon,
or plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, which may affect the covenants or the performance of this Indenture; and
the Company (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and shall not hinder, delay or impede
the execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law had been enacted.
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ARTICLE 7
Trustee
SECTION 7.1. Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent Person would exercise or use under the circumstances
in the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default known to
the Trustee:
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture.
However, in the case of any such certificates or opinions which by any
provision hereof are specifically required to be furnished to the Trustee,
the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture (but
need not confirm or investigate the accuracy of mathematical calculations
or other facts stated therein).
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that: (1) this paragraph does not limit the effect of paragraph (b) of
this Section; (2) the Trustee shall not be liable for any error of judgment made
in good faith by a Trust Officer unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and (3) the Trustee shall not be
liable with respect to any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to Section 6.5.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
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(f) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur 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 to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(h) 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 and to the provisions of the TIA.
SECTION 7.2. Rights of Trustee. (a) The Trustee may rely and shall
be protected in acting or in refraining from acting on any document believed by
it to be genuine and to have been signed or presented by the proper person. The
Trustee need not investigate any fact or matter stated in the 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, upon
reasonable notice to the Company, to examine the books, records and premises of
the Company, personally or by agent or attorney and to consult with the officers
and representatives of the Company, including the Company's accountants and
attorneys.
(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel, or both. The Trustee shall
not be liable for any action it takes or omits to take in good faith in reliance
on the Officers' Certificate or opinion of Counsel.
(c) The Trustee may act through agents and shall not be responsible
for the misconduct or negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute wilful
misconduct or negligence.
(e) The Trustee may consult with counsel, and the advice or opinion
of counsel with respect to legal matters relating to this Indenture and the
Securities shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder in
good faith and in accordance with the advice or opinion of such counsel.
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(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders pursuant to the provisions of this Indenture,
unless such Holders shall have offered to the Trustee security or indemnity
reasonably satisfactory to it against the costs, expenses and liabilities which
may be incurred by it in compliance with such request, order or direction.
SECTION 7.3. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar
or co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
SECTION 7.4. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for any
statement of the Company in the Indenture or in any document issued in
connection with the sale of the Securities or in the Securities other than the
Trustee's certificate of authentication.
SECTION 7.5. Notice of Defaults. If a Default occurs and is
continuing and if it is known to a Trust Officer of the Trustee, the Trustee
shall mail to each Securityholder notice of the Default within 90 days after it
occurs. Except in the case of a Default in payment of principal of or interest
on any Security (including payments pursuant to the mandatory redemption
provisions of such Security, if any), the Trustee may withhold the notice if and
so long as a committee of its Trust Officers in good faith determines that
withholding the notice is in the interests of Securityholders.
SECTION 7.6. Reports by Trustee to Holders. If required by TIA
Section 313(a), as promptly as practicable after each May 15 beginning with the
May 15 following the date of this Indenture, and in any event prior to July 15
in each year, the Trustee shall mail to each Securityholder a brief report dated
as of May 15 that complies with TIA Section 313(a). The Trustee also shall
comply with TIA Section 313(b).
A copy of each report at the time of its mailing to Securityholders
shall be filed with the SEC and each stock exchange (if any) on which the
Securities are listed. The Company agrees to notify promptly the Trustee
whenever the Securities become listed on any stock exchange and of any delisting
thereof.
SECTION 7.7. Compensation and Indemnity. The Company shall pay to
the Trustee from time to time such compensation as shall be agreed to in writing
between the Company and the Trustee for its services. The Trustee's compensation
shall not be
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limited by any law on compensation of a trustee of an express trust. The Company
shall reimburse the Trustee upon request for all reasonable out-of-pocket
expenses incurred or made by it, including costs of collection, sale or
otherwise in connection with this Indenture, in addition to the compensation for
its services. Such expenses shall include the reasonable compensation and
expenses, disbursements and advances of the Trustee's agents, counsel,
accountants and experts and court costs. The Company shall indemnify the
Trustee, its officers, directors, employees and agents, against any and all
loss, liability damage, claim or expense (including reasonable attorneys' fees
and expenses), including taxes (other than taxes based on the income of the
Trustee) incurred by it in connection with the acceptance or administration of
this trust and the performance of its duties hereunder. The Trustee shall notify
the Company promptly of any claim for which it may seek indemnity. Failure by
the Trustee to so notify the Company shall not relieve the Company of its
obligations hereunder. The Company shall defend the claim and the Trustee may
have separate counsel and the Company shall pay the fees and expenses of such
counsel. The Company need not reimburse any expense or indemnify against any
loss, liability or expense incurred by the Trustee through the Trustee's own
wilful misconduct, negligence or bad faith.
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Securities on all money or property held
or collected by the Trustee other than money or property held in trust to pay
principal of and interest on particular Securities. The Trustee's right to
receive payment of any amounts due under this Section 7.7 shall not be
subordinate to any other liability or indebtedness of the Company (even though
the Securities may be subordinate to such other liability or indebtedness).
The Company's payment obligations pursuant to this Section and the
Lien of the Trustee referred to in the preceding paragraph shall survive the
discharge of this Indenture. When the Trustee incurs expenses after the
occurrence of a Default specified in Section 6.1(8) or (9) with respect to the
Company, the expenses are intended to constitute expenses of administration
under Bankruptcy Law.
SECTION 7.8. Replacement of Trustee. The Trustee may resign at any
time by so notifying the Company. The Holders of a majority in principal amount
of the Securities may remove the Trustee by so notifying the Trustee and may
appoint a successor Trustee. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee
or its property; or
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(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company or by the Holders
of a majority in principal amount of the Securities and such Holders do not
reasonably promptly appoint a successor Trustee, or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Company shall promptly appoint a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.7.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee or the Holders of
25% in principal amount of the Securities may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this
Section, the Company's obligations under Section 7.7 shall continue for the
benefit of the retiring Trustee.
SECTION 7.9. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation or banking
association without any further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the
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name of any predecessor hereunder or in the name of the successor to the
Trustee; and in all such cases such certificates shall have the full force which
it is anywhere in the Securities or in this Indenture provided that the
certificate of the Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall at
all times satisfy the requirements of TIA Section 310(a). The Trustee shall have
a combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition. No obligor upon the Securities or
Person directly controlling, controlled by or under common control with such
obligor shall serve as Trustee upon the Securities. The Trustee shall comply
with TIA Section 310(b); provided, however, that there shall be excluded from
the operation of TIA Section 310(b) (1) any indenture or indentures under which
other securities or certificates of interest or participation in other
securities of the Company are outstanding if the requirements for such exclusion
set forth in TIA Section 310(b) (1) are met.
SECTION 7.11. Preferential Collection of Claims Against Company. The
Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated.
ARTICLE 8
Discharge of Indenture; Defeasance
SECTION 8.1. Discharge of Liability on Securities; Defeasance. (a)
When (i) the Company delivers to the Trustee all outstanding Securities (other
than Securities replaced pursuant to Section 2.9) for cancellation or (ii) all
outstanding Securities have become due and payable, whether at maturity or as a
result of the mailing of a notice of redemption pursuant to Article 3 hereof,
and the Company irrevocably deposits with the Trustee funds sufficient to pay at
maturity or upon redemption all outstanding Securities, including interest
thereon (other than Securities replaced pursuant to Section 2.9), and if in
either case the Company pays all other sums payable hereunder by the Company,
then this Indenture shall, subject to Sections 8.1(c) and 8.6, cease to be of
further effect. The Trustee shall acknowledge satisfaction and discharge of this
Indenture on demand of the Company accompanied by an Officers' Certificate and
an Opinion of Counsel and at the cost and expense of the Company.
(b) Subject to Sections 8.1(c), 8.2 and 8.6, the Company at any time
may terminate (i) all its obligations under the Securities and this Indenture
("legal defeasance option") or (ii) its obligations under Sections 4.2 (to the
extent that the failure to comply with Section 4.2 shall not violate the TIA),
4.3, 4.4, 4.5, 4.6, 4.7, 4.8, 4.9, 4.12,
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4.13, 4.14, 4.21 and 4.22, Article 5 and the related operation of Sections
6.1(3), (4) and (5) and the operation with respect to Restricted Subsidiaries of
Sections 6.1(6), (7), (8) and (9) ("covenant defeasance option"). The Company
may exercise its legal defeasance option notwithstanding its prior exercise of
its covenant defeasance option.
If the Company exercises its legal defeasance option, payment of the
Securities may not be accelerated because of an Event of Default. If the Company
exercises its covenant defeasance option, payment of the Securities may not be
accelerated because of an Event of Default specified in Sections 6.1(3), (4) or
(5) or an Event of Default with respect to a Restricted Subsidiary specified in
Sections 6.1(b), (7), (8) or (9).
Upon satisfaction of the conditions set forth herein and upon
request of the Company, the Trustee shall acknowledge in writing the discharge
of those obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b), the Company's obligations
in Sections 2.3, 2.4, 2.5, 2.6, 2.9, 7.7, 7.8, 8.4, 8.5 and 8.6 shall survive
until the Securities have been paid in full. Thereafter, the Company's
obligations in Sections 7.7, 8.4, 8.5 and 8.6 shall survive.
SECTION 8.2. Conditions to Defeasance. The Company may exercise its
legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee money
or U.S. Government Obligations for the payment of principal and interest
on the Securities to maturity or redemption, as the case may be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and without
reinvestment on the deposited U.S. Government Obligations plus any
deposited money without investment will provide cash at such times and in
such amounts as will be sufficient to pay principal and interest when due
on all the Securities to maturity or redemption, as the case may be;
(3) 123 days pass after the deposit is made and during the 123-day
period no Default specified in Section 6.1(8) or (9) with respect to the
Company occurs which is continuing at the end of the period;
(4) no Default has occurred and is continuing on the date of such
deposit and after giving effect thereto;
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(5) the deposit does not constitute a default under any other
agreement binding on the Company;
(6) the Company delivers to the Trustee an Opinion of Counsel to the
effect that the trust resulting from the deposit does not constitute, or
is qualified as, a regulated investment company under the Investment
Company Act of 1940;
(7) in the case of the legal defeasance option, the Company shall
have delivered to the Trustee an Opinion of Counsel stating that (i) the
Company has received from the Internal Revenue Service a ruling or (ii)
since the date of this Indenture there has been a change in the applicable
Federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Securityholders
will not recognize income, gain or loss for Federal income tax purposes as
a result of such defeasance and will be subject to Federal income tax on
the same amounts, in the same manner and at the same times as would have
been the case if such defeasance had not occurred;
(8) in the case of the covenant defeasance option, the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Securityholders will not recognize income, gain or loss for Federal income
tax purposes as a result of such covenant defeasance and will be subject
to Federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such covenant defeasance had not
occurred; and
(9) the Company delivers to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that all conditions precedent to the
defeasance and discharge of the Securities as contemplated by this Article
8 have been complied with.
Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date in
accordance with Article 3.
SECTION 8.3. Application of Trust Money. The Trustee shall hold in
trust money or U.S. Government Obligations deposited with it pursuant to this
Article 8. It shall apply the deposited money and the money from U.S. Government
obligations through the Paying Agent and in accordance with this Indenture to
the payment of principal of and interest on the Securities.
SECTION 8.4. Repayment to Company. The Trustee and the Paying Agent
shall promptly turn over to the Company upon request any excess money or
securities held by them at any time.
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Subject to any applicable abandoned property law, the Trustee and
the Paying Agent shall pay to the Company upon written request any money held by
them for the payment of principal or interest that remains unclaimed for two
years; provided, however, that the Trustee and the Paying Agent before being
required to make any payment may, but need not, at the expense of the Company
cause to be published once in a newspaper of general circulation in the City of
New York or mail to each Holder entitled to such money notice that such money
remains unclaimed and that after a date specified therein, which shall be at
least 30 days from the date of such publication or mailing, any unclaimed
balance of such money then remaining will be paid to the Company. After payment
to the Company, Securityholders entitled to the money must look to the Company
for payment as general creditors.
SECTION 8.5. Indemnity for Government Obligations. The Company shall
pay and shall indemnify the Trustee against any tax, fee or other charge imposed
on or assessed against deposited U.S. Government Obligations or the principal
and interest received on such U.S. Government Obligations.
SECTION 8.6. Reinstatement. If the Trustee or Paying Agent is unable
to apply any money or U.S. Government Obligations in accordance with this
Article 8 by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article 8 until such time as the Trustee
or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article 8.
ARTICLE 9
Subordination
SECTION 9.1. Securities Subordinated to Senior Indebtedness. The
Company, for itself and its successors, and each Holder, by its acceptance of
Securities, agrees that, notwithstanding anything to the contrary in Sections
6.1 and 6.2 hereof, the payment of the principal of, interest on or any other
amounts due on the Securities is subordinated in right of payment, to the extent
and in the manner provided in this Article 9, to the prior payment in full of
all Senior Indebtedness. Each Holder by its acceptance of the Securities
authorizes and directs the Trustee on its behalf to take such action as may be
necessary or appropriate to effectuate, as between the holders of Senior
Indebtedness and such Holder, the subordination provided in this Article 9.
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The expressions "prior payment in full," "payment in full" and "paid
in full" and any other similar term or phrase when used in this Article 9 with
respect to Senior Indebtedness shall mean the payment in full of such Senior
Indebtedness in cash or provision for such payment in cash or otherwise in a
manner satisfactory to the holders of the Senior Indebtedness.
This Article 9 shall constitute a continuing offer to all persons
who, in reliance upon such provisions, become holders of, or continue to hold,
Senior Indebtedness, and such provisions are made for the benefit of the holders
of Senior Indebtedness, and such holders are made obligees hereunder and they
and/or each of them may enforce such provisions to the extent and in the manner
provided herein.
SECTION 9.2. No Payment on Securities in Certain Circumstances. (a)
No direct or indirect payment (in cash, property, securities, by set-off or
otherwise) shall be made or agreed to be made on account of the principal of,
premium (if any) or interest on the Securities, or in respect of any redemption,
retirement, defeasance, purchase or other acquisition of any of the Securities,
and no Holder of any Security shall be entitled to receive any such payment (any
of the foregoing payments or actions being referred to in this Section 9.2 as a
"Payment"), on or after the occurrence of any default in the payment of
principal or interest then due and payable in respect of any Senior Indebtedness
(either at maturity, upon redemption, by acceleration or otherwise), unless and
until such default has been waived or cured or all amounts then due and payable
for principal of and interest on all Senior Indebtedness shall have been paid in
full or provision therefor in cash, in cash equivalents, or in accordance with
the terms of such Senior Indebtedness and the agreements, if any, under which
such Senior Indebtedness was issued or created, shall have been made.
(b) The Company may not make any Payment if:
(i) a default or event of default under any agreement
governing Senior Indebtedness (other than a default or event of
default relating to payment of principal or interest, either at
maturity, upon redemption, by declaration or otherwise) has occurred
and is continuing that permits the holders of such Senior
Indebtedness to accelerate its maturity (whether or not such
acceleration has occurred); and
(ii) the Company or the Trustee receives a notice of such
default or event of default from (i) the holders of a majority of
the outstanding principal amount of Indebtedness under the Senior
Indentures or (ii) the trustee representing such holders under the
Senior Indenture; provided, however, that only one such notice shall
be given effect within any period of
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360 consecutive days; provided, further, that no more than one
notice may be given with respect to any continuing default or event
of default.
Notwithstanding the provisions of this Section 9.2(b), the Company may make
Payments on the Securities when:
(1) all defaults and events of default referred to in such notice
are cured or waived; or
(2) 179 days pass after such notice is given, with respect to such
defaults and/or events of default
so long as this Article 9 (including, without limitation, Section 9.2(a))
otherwise permits a Payment at that time.
(c) In the event that notwithstanding the provisions of this Section
9.2 the Company shall make any Payment to the Trustee or any Holder of the
Securities on account of the principal of or interest on the Securities after
receiving notice (as aforesaid) of the happening of a default or event of
default on Senior Indebtedness, then, unless and until such default or event of
default shall have been cured or waived or shall have ceased to exist either due
to the passage of time as aforesaid in Section 9.2(b)(ii)(2) or otherwise, such
payment (subject to the provisions of Sections 9.6 and 9.7) shall be held by the
Trustee or such Holder, in trust for the benefit of, and subject to Sections 9.6
and 9.7, shall be paid forthwith over and delivered to, the holders of Senior
Indebtedness (pro rata as to each of such holders on the basis of the respective
amounts of Senior Indebtedness then in default held by them), as their
respective interests may appear, for application to the payment of all Senior
Indebtedness remaining unpaid to the extent necessary to pay all Senior
Indebtedness in full in accordance with its terms, after giving effect to any
concurrent payment or distribution to or for the holders of Senior Indebtedness.
The Company shall give prompt written notice to the Trustee of any
default in the payment of principal of or interest on any Senior Indebtedness or
a default which results in the acceleration of such Senior Indebtedness under
the Credit Agreement or under any agreement pursuant to which Senior
Indebtedness has been issued.
SECTION 9.3. Securities Subordinated to Prior Payment of All Senior
Indebtedness on Dissolution, Liquidation or Reorganization of Company. Upon any
distribution or payment of assets or securities of the Company upon any
dissolution, winding up, liquidation or reorganization of the Company of any
kind or character (whether voluntary or involuntary, in bankruptcy, insolvency
or receivership proceedings or upon an assignment for the benefit of creditors
or otherwise):
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(a) the holders of all Senior Indebtedness shall first be entitled
to receive payment in full (or to have such payment duly provided for) of the
principal thereof and interest due thereon and other amounts due in connection
therewith before the Holders are entitled to receive any payment or distribution
of any assets (other than Capital Stock of the Company) on account of the
principal of or interest on the Securities;
(b) any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, to which the Holders or
the Trustee on behalf of the Holders would be entitled except for the provisions
of this Article 9, including any such payment or distribution which may be
payable or deliverable by reason of the payment of any other Indebtedness of the
Company being subordinated to the payment of the Securities, shall be paid by
the liquidating trustee or agent or other person making such payment or
distribution directly to the holders of Senior Indebtedness, (pro rata as to
each such holder or trustee on the basis of the respective amounts of unpaid
Senior Indebtedness held or represented by each), to the extent necessary to
make payment in full of all Senior Indebtedness remaining unpaid except that
Holders of the Securities shall be entitled to receive securities that are
subordinated to Senior Indebtedness to at least the same degree as the
Securities; and
(c) in the event that notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, including any such payment or distribution which may be
payable or deliverable by reason of the payment of any other Indebtedness of the
Company being subordinated to the payment of the Securities, shall be received
by the Trustee or the Holders or any Paying Agent (or, if the Company is acting
as its own Paying Agent, money for any such payment or distribution shall be
segregated or held in trust) on account of principal of or interest on the
Securities before all Senior Indebtedness is paid in full, such payment or
distribution (subject to the provisions of Sections 9.6 and 9.7) shall be
received and held in trust for and shall be paid forthwith over and delivered to
the holders of the Senior Indebtedness remaining unpaid or unprovided for (pro
rata as to each of such holders on the basis of the respective amounts of Senior
Indebtedness held by them), for application to the payment of such Senior
Indebtedness until all such Senior Indebtedness shall have been paid in full,
after giving effect to any concurrent payment or distribution or provision
thereof or to or for the holders of such Senior Indebtedness, except that
Holders of the Securities shall be entitled to receive securities that are
subordinated to Senior Indebtedness to at least the same extent as the
Securities.
The Company shall give prompt written notice to the Trustee of any
dissolution, winding up, liquidation or reorganization of the Company or any
assignment for the benefit of the Company's creditors.
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SECTION 9.4. Securityholders To Be Subrogated to Rights of Holders
of Senior Indebtedness. Subject to the payment in full of all Senior
Indebtedness pursuant to this Article 9, the Holders of Securities shall be
subrogated equally and ratably to the rights of the holders of Senior
Indebtedness to receive payments or distributions of assets of the Company
applicable to the Senior Indebtedness until all amounts owing on the Securities
shall be paid in full, and for the purpose of such subrogation no such payments
or distributions to the holders of Senior Indebtedness by or on behalf of the
Company or by or on behalf of the Holders by virtue of this Article 9 which
otherwise would have been made to the Holders shall, as among the Company, its
creditors other than holders of the Senior Indebtedness and the Holders, be
deemed to be payment by the Company to or on account of the Senior Indebtedness,
it being understood that the provisions of this Article 9 are and are intended
solely for the purpose of defining the relative rights of the Holders, on the
one hand, and the holders of Senior Indebtedness, on the other hand.
SECTION 9.5. Obligations of the Company Unconditional. Nothing
contained in this Article 9 or elsewhere in this Indenture or in any Security is
intended to or shall impair, as among the Company, its creditors other than
holders of the Senior Indebtedness and the Holders, the obligation of the
Company, which is absolute and unconditional, to pay to the Holders the
principal amount of and other interest (including, to the extent lawful, any
interest on overdue installments of interest) on the Securities as and when the
same shall become due and payable in accordance with their terms, or is intended
to or shall affect the relative rights of the Holders and creditors of the
Company other than the holders of Senior Indebtedness, nor shall anything herein
or therein prevent the Trustee or any Holders from exercising, all remedies
otherwise permitted by applicable law upon Default under this Indenture, subject
to the rights, if any, under this Article 9 of the holders of Senior
Indebtedness in respect of cash, property or securities of the Company received
upon the exercise of any such remedy. Upon any distribution of assets of the
Company referred to in this Article 9, the Trustee, subject to the provisions of
Sections 7.1 and 7.2, and the Holders shall be entitled to rely upon any order
or decree made by any court of competent jurisdiction in which such dissolution,
winding up, liquidation, reorganization or similar proceedings are pending, or a
certificate of the liquidating trustee or agent or other person making any
distribution to the Trustee or to the Holders, for the purpose of ascertaining
the persons entitled to participate in such distribution, the holders of Senior
Indebtedness and other Indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article 9.
SECTION 9.6. Trustee and Paying Agent Entitled To Assume Payments
Not Prohibited in Absence of Notice. The Trustee and Paying Agent shall not at
any time be charged with knowledge of the existence of any facts which would
prohibit the making of any payment to or by the Trustee or the Paying Agent or
the taking of any other action under this Article 9 by the Trustee unless and
until the Trustee or the Paying Agent shall
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have received written notice thereof from the Company or from one or more
holders of Senior Indebtedness or from the trustee under the Senior Indenture
and, prior to the receipt of any such written notice, the Trustee and Paying
Agent, subject to the provisions of Sections 7.1 and 7.2, shall be entitled in
all respects conclusively to assume that no such facts exist.
SECTION 9.7. Application by Trustee of Monies Deposited With It.
Subject to Article 8, any deposit of monies by the Company with the Trustee or
any Paying Agent (whether or not in trust) for the payment of the principal of
or interest on any Securities shall be subject to the provisions of Sections
9.1, 9.2, 9.3 and 9.4, except that, prior to the date on which by the terms of
this Indenture any such monies may become payable for any purpose (including,
without limitation, the payment of either the principal of or the other interest
on any Security), the Trustee shall not have received with respect to such
monies the notice provided for in Section 9.6, then the Trustee or the Paying
Agent shall have full power and authority to receive such monies and to apply
the same to the purpose for which they were received. This Section shall be
construed solely for the benefit of the Trustee and Paying Agent and nothing
herein shall be construed to relieve any Holders from the duties imposed upon
them under Section 9.3(c) with respect to monies received in violation of the
provisions of this Article 9. The foregoing shall not apply if the Company acts
as its own Paying Agent.
SECTION 9.8. Subordination Rights Not Impaired by Acts or Omissions
of Company or Holders of Senior Indebtedness. No right of any present or future
holders of any Senior Indebtedness to enforce subordination as provided herein
shall at any time in any way be prejudiced or impaired by any act or failure to
act on the part of the Company or by any act or failure to act, in good faith,
by any such holder, or by any noncompliance by the Company with the terms of
this Indenture, regardless of any knowledge thereof which any such holder may
have or be otherwise charged with. The holders of Senior Indebtedness may
extend, renew, modify or amend the terms of the Senior Indebtedness or any
security therefor and release, sell or exchange such security and otherwise deal
freely with the Company, all without affecting the liabilities and obligations
of the parties to the Indenture or the Holders. No provision in any supplemental
indenture which modifies this Article 9 or otherwise affects the superior
position of the holders of the Senior Indebtedness shall be effective against
the holders of the Senior Indebtedness who have not consented thereto.
SECTION 9.9. Securityholders Authorize Trustee To Effectuate
Subordination of Securities. Each Holder by its acceptance of Securities
authorizes and expressly directs the Trustee on its behalf to take such action
as may be necessary or appropriate to effectuate the subordination provided in
this Article 9 and to protect the rights of the Holders pursuant to this
Indenture and appoints the Trustee its attorney-in-fact for such purpose,
including, in the event of any dissolution, winding up, liquidation or
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reorganization of the Company (whether in bankruptcy, insolvency, receivership,
reorganization or similar proceedings or upon an assignment for the benefit of
creditors or any other similar remedy or otherwise) tending towards liquidation
of the business and assets of the Company, the immediate filing of a claim for
the unpaid balance of its Securities in the form required in said proceedings
and causing said claim to be approved. If the Trustee does not file a proper
claim or proof of debt in the form required in such proceeding prior to 30 days
before the expiration of the time to file such claim or claims, then the holders
of Senior Indebtedness are hereby authorized to file an appropriate claim for
and on behalf of the Holders. In the event of any such proceeding, until the
Senior Indebtedness is paid in full in accordance with Section 9.3 (or adequate
provision made for such payment), without the consent of the holders of a
majority in aggregate principal amount outstanding of Senior Indebtedness, no
Holder shall waive, settle or compromise any such claim or claims relating to
the Securities that such Holder now or hereafter may have against the Company.
SECTION 9.10. Right of Trustee and Paying Agent To Hold Senior
Indebtedness. The Trustee and the Paying Agent, in their individual capacities,
shall be entitled to all of the rights set forth in this Article 9 in respect of
any Senior Indebtedness at any time held by either of them to the same extent as
any other holder of Senior Indebtedness, and nothing in this Indenture shall be
construed to deprive the Trustee or the Paying Agent of any of its rights as
such holder.
SECTION 9.11. Article 9 Not To Prevent Events of Default. The
failure to make a payment on account of principal of or other interest
(including any interest on overdue installments of interest and defaulted
interest) on the Securities by reason of any provision of this Article 9 shall
not be construed as preventing the occurrence of an Event of Default under
Section 6.1. Nothing contained in this Article 9 shall limited the right of the
Trustee or the Holders to take any action to accelerate the maturity of the
Securities pursuant to Section 6.2 or to pursue any rights or remedies hereunder
or under applicable law, subject to the rights, if any, under this Article 9 of
the holders, from time to time, of Senior Indebtedness.
SECTION 9.12. No Fiduciary Duty Created to Holders of Senior
Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness by virtue of the provisions of this Article 9,
and shall not be liable to any such holders (other than for its willful
misconduct or gross negligence) if it shall pay over to deliver to the Holders
or the Company or any other person, money or assets in compliance with the terms
of this Indenture.
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ARTICLE 10
Amendments and Waivers
SECTION 10.1. Without Consent of Holders. The Company and the
Trustee may amend this Indenture or the Securities without notice to or consent
of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article 5;
(3) to provide for uncertificated Securities in addition to or in
place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to add Guarantees with respect to the Securities or to secure
the Securities;
(5) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power herein conferred upon the
Company;
(6) to comply with any requirements of the SEC in connection with
qualifying this Indenture under the TIA;
(7) to provide for the acceptance of appointment hereunder by a
successor Trustee;
(8) to make any change that does not adversely affect the rights of
any Securityholder; or
(9) to provide for the issuance of the Exchange Securities, which
will have terms substantially identical in all material respects to the
Initial Securities (except that the transfer restrictions contained in the
Initial Securities will be modified or eliminated, as appropriate), and
which will be treated, together with any outstanding Initial Securities,
as a single issue of securities.
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provided that the Company has delivered to the Trustee an Opinion of Counsel and
an Officers' Certificate stating that such amendment or supplement complies with
the provisions of this Section 10.1.
After an amendment under this Section becomes effective, the Company
shall mail to Securityholders a notice briefly describing such amendment. The
failure to give such notice to all Securityholders, or any defect therein, shall
not impair or affect the validity of an amendment under this Section.
SECTION 10.2. With Consent of Holders. The Company and the Trustee
may amend this Indenture or the Securities without notice to any Securityholder
but with the written consent of the Holders of at least a majority in principal
amount of the Securities. In addition, the Holders of at least a majority in
principal amount of the Securities by written notice to the Trustee may waive
future compliance by the Company with any provision of this Indenture or the
Securities. However, without the consent of each Securityholder affected, an
amendment or waiver may not:
(1) reduce the percentage of principal amount of Securities whose
Holders must consent to an amendment or waiver;
(2) reduce the rate of or extend the time for payment of interest on
any Security;
(3) reduce the principal of or extend the Stated Maturity of any
Security;
(4) reduce the premium payable upon the redemption of any Security
or change the time at which any Security may be redeemed in accordance
with Article 3;
(5) make any Security payable in money other than that stated in the
Security;
(6) impair the right of any Securityholder to institute suit for
enforcement of any payment on or with respect to any Security; or
(7) make any change in Section 6.4 or 6.7 or the second sentence of
this Section which adversely affects the rights of any Securityholder.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment or waiver, but
it shall be sufficient if such consent approves the substance thereof.
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After an amendment or waiver under this Section becomes effective,
the Company shall mail to Securityholders a notice briefly describing such
amendment or waiver. The failure to give such notice to all Securityholders, or
any defect therein, shall not impair or affect the validity of an amendment or
waiver under this Section.
SECTION 10.3. Compliance with Trust Indenture Act. Every amendment
to this Indenture or the Securities shall comply with the TIA as then in effect.
SECTION 10.4. Revocation and Effect of Consents and Waivers. A
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any such
Holder or subsequent Holder may revoke the consent or waiver as to such Holder's
Security or portion of the Security if the Trustee receives the notice of
revocation before the date the amendment or waiver becomes effective. After an
amendment or waiver becomes effective, it shall bind every Securityholder.
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Securityholders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Securityholders at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such Persons
continue to be Holders after such record date. No such consent shall be valid or
effective for more than 120 days after such record date.
SECTION 10.5. Notation on or Exchange of Securities. If an amendment
changes the terms of a Security, the Trustee may require the Holder of the
Security to deliver it to the Trustee. The Trustee at the written direction of
the Company shall place an appropriate notation on the Security regarding the
changed terms and return it to the Holder. Alternatively, if the Company or the
Trustee so determines, the Company in exchange for the Security shall issue and
the Trustee shall authenticate a new Security that reflects the changed terms.
Failure to make the appropriate notation or to issue a new Security shall not
affect the validity of such amendment.
SECTION 10.6. Trustee To Sign Amendments. The Trustee shall sign any
amendment authorized pursuant to this Article 10 if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing such amendment the
Trustee shall be entitled to receive indemnity reasonably satisfactory to it and
to receive, and (subject to Section 7.1) shall be
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fully protected in relying upon, an Officers' Certificate and an Opinion of
Counsel stating that (i) such amendment is authorized or permitted by this
Indenture and that all conditions precedent to the execution, delivery and
performance of such amendment have been satisfied; and (ii) the Indenture
together with such amendment complies with the TIA.
SECTION 10.7. Payment for Consent. Neither the Company nor any
Affiliate of the Company shall, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Holder
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of this Indenture or the Securities unless such consideration is
offered to be paid to all Holders that so consent, waive or agree to amend in
the time frame set forth in solicitation documents relating to such consent,
waiver or agreement.
ARTICLE 11
Miscellaneous
SECTION 11.1. Trust Indenture Act Controls. If and to the extent
that any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by, or with another provision (an "incorporated provision")
included in this Indenture by operation of, Sections 310 to 318, inclusive, of
the TIA, such imposed duties or incorporated provision shall control.
SECTION 11.2. Notices. Any notice or communication shall be in
writing and delivered in person, by telecopier or mailed by first-class mail
addressed as follows:
if to the Company:
Anacomp, Inc.
11550 North Meridian Street
Carmel, IN 46032
Telecopy No.: (317) 843-2014
Attention of Chief Financial Officer
if to the Trustee:
IBJ Schroder Bank & Trust Company
One State Street, 11th Floor
New York, N.Y. 10004
Telecopy No.: (212) 425-0542
Attention of Corporate Trust Administration
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The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Securityholder shall be
mailed to the Securityholder at the Securityholder's address as it appears on
the registration books of the Registrar and shall be sufficiently given if so
mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 11.3. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA Section 312(c).
SECTION 11.4. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take or refrain
from taking any action under this Indenture, the Company shall furnish to the
Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
SECTION 11.5. Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or
opinion has read such covenant or condition;
(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;
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(3) a statement that, in the opinion of 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 or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 11.6. Rules by Trustee, Paying Agent and Registrar. The
Trustee may make reasonable rules for action by or a meeting of Securityholders.
The Registrar and the Paying Agent may make reasonable rules for their
functions.
SECTION 11.7. Legal Holidays. A "Legal Holiday" is a Saturday, a
Sunday or a day on which banking institutions are not required to be open in the
State of New York. If a payment date is a Legal Holiday, payment shall be made
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue for the intervening period. If a regular record date is a Legal Holiday,
the record date shall not be affected.
SECTION 11.8. Governing Law. THIS INDENTURE AND THE SECURITIES SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO
THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY. THE PARTIES HERETO SUBMIT TO THE JURISDICTION OF COURTS
LOCATED IN THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS INDENTURE.
SECTION 11.9. No Recourse Against Others. A director, officer,
employee or stockholder, as such, of the Company or the Trustee shall not have
any liability for any obligations of the Company or the Trustee, respectively,
under the Securities or this Indenture or for any claim based on, in respect of
or by reason of such obligations or their creation. By accepting a Security,
each securityholder shall waive and release all such liability. The waiver and
release shall be part of the consideration for the issue of the Securities.
SECTION 11.10. Successors. All agreements of the Company in this
Indenture and the Securities shall bind its successors. All agreements of the
Trustee in this Indenture shall bind its successors.
SECTION 11.11. Multiple Originals. The parties may sign any number
of copies of this Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement. One signed copy is enough to prove
this Indenture.
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SECTION 11.12. Qualification of Indenture. The Company shall qualify
this Indenture under the TIA in accordance with the terms and conditions of the
Registration Rights Agreement and shall pay all reasonable costs and expenses
(including attorneys' fees for the Company, the Trustee and the Holders)
incurred in connection therewith, including, but not limited to, costs and
expenses of qualification of the Indenture and the Securities and printing this
Indenture and the Securities. The Trustee shall be entitled to receive from the
Company any such Officers' Certificates, Opinions of Counsel or other
documentation as it may reasonably request in connection with any such
qualification of this Indenture under the TIA.
SECTION 11.13. Table of Contents; Headings. The table of contents,
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.
SECTION 11.14. Severability. 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.
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IN WITNESS WHEREOF, the parties have caused this Indenture to be
duly executed as of the date first written above.
ANACOMP, INC.
By: /s/ K. Gordon Fife
-----------------------------
Name: K. Gordon Fife
Title: Vice President-Tax
IBJ SCHRODER BANK & TRUST
COMPANY, as Trustee
By: /s/ Barbara McCluskey
-----------------------------
Name: Barbara McCluskey
Title: Vice President
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EXHIBIT A
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION
HEREOF, THE SECURITYHOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR
(B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) or (7) UNDER THE SECURITIES ACT) (AN "ACCREDITED
INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY
IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT WITHIN TWO YEARS
AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE TRANSFER
THIS SECURITY EXCEPT (A) TO THE ISSUER OR ANY SUBSIDIARY THEREOF, (B)
INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE
WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO
AN ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS
FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE
OBTAINED FROM THE TRUSTEE OR REGISTRAR), (D) OUTSIDE THE UNITED STATES IN
AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER
THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY
IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THIS SECURITY WITHIN TWO YEARS AFTER THE
ORIGINAL ISSUANCE OF THIS SECURITY, IF THE PROPOSED TRANSFEREE IS AN
ACCREDITED INVESTOR, THE
<PAGE>
EXHIBIT A
Page 2
SECURITYHOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND
THE ISSUER SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS
EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS
BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN,
THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE
THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY, OR BY ANY SUCH NOMINEE OF
THE DEPOSITARY, OR BY THE DEPOSITARY OR NOMINEE OF SUCH SUCCESSOR
DEPOSITARY OR ANY SUCH NOMINEE, TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF
SUCH SUCCESSOR DEPOSITARY. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO.
OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE, AND TRANSFERS OF
PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN
ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
<PAGE>
EXHIBIT A
Page 3
THIS NOTE WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR FEDERAL INCOME TAX
PURPOSES. HOLDERS OF THIS NOTE MAY CALL THE TREASURER OF ANACOMP, INC. AT
(317) 844-9666 FOR THE ISSUE PRICE, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT,
THE ISSUE DATE AND THE YIELD TO MATURITY OF THIS NOTE.
<PAGE>
EXHIBIT A
Page 4
[FORM OF FACE OF SECURITY]
$______________________
CUSIP NO. [____________]
10 7/8% Senior Subordinated Note due 2004, Series A
Global Note No._________
ANACOMP, INC., an Indiana corporation, promises to pay to _______,
or registered assigns, the principal sum of ____________ Dollars on April 1,
2004.
Interest Payment Dates: April 1 and October 1
Record Dates: March 1 and September 1
Additional provisions of this Security are set forth on the other
side of this Security.
Dated:
ANACOMP, INC.
[Seal] By:_________________________________
Vice President-Tax
_________________________________
Assistant Treasurer
<PAGE>
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
IBJ SCHRODER BANK & TRUST COMPANY, as Trustee, certifies that this
is one of the Securities referred to in the Indenture.
By_________________________________
Authorized Signatory
<PAGE>
[FORM OF REVERSE SIDE OF SECURITY]
10 7/8% Senior Subordinated Note due 2004
1. Interest
ANACOMP, INC., an Indiana corporation (such corporation, and its
successors and assigns under the Indenture hereinafter referred to, being herein
called the "Company"), promises to pay interest on the principal amount of this
Security at the rate per annum shown above. The Company will pay interest
semiannually on April 1 and October 1 (each an "Interest Payment Date") of each
year, commencing October 1, 1997. Interest on the Securities will accrue from
and including the most recent date to which interest has been paid or, if no
interest has been paid, from the date of this Security. Interest will be
computed on the basis of a 360-day year of twelve 30-day months. The Company
shall pay interest on overdue principal at the rate borne by the Securities plus
1% per annum, and it shall pay interest on overdue installments of interest at
the same rate to the extent lawful.
2. Method of Payment
The Company will pay interest on the Securities (except defaulted
interest) to the Persons who are registered holders of Securities at the close
of business on the March 1 or September 1 immediately preceding the Interest
Payment Date even if Securities are canceled after the record date and on or
before the interest payment date. Holders must surrender Securities to a Paying
Agent to collect principal payments. Except as provided in the next paragraph,
the Company will pay principal and interest in money of the United States of
America that at the time of payment is legal tender for payment of public and
private debts. However, the Company may pay principal and interest by check
payable in such money mailed to a Holder's registered address. The Company shall
pay to the Holder of this Security an amount in cash equal to 100% of the
interest payment due on such Interest Payment Date.
3. Paying Agent and Registrar
Initially, IBJ Schroder Bank & Trust Company, a New York banking
corporation ("Trustee"), will act as Paying Agent and Registrar. The Company may
appoint and change any Paying Agent, Registrar or co-registrar without notice.
The Company or any of its domestically incorporated Wholly Owned Subsidiaries
may act as Paying Agent, Registrar or co-registrar.
<PAGE>
4. Indenture
The Company issued the Securities under an Indenture dated as of
March 24, 1997 ("Indenture"), between the Company and the Trustee. The terms of
the Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). Terms
defined in the Indenture and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all such terms, and
securityholders are referred to the Indenture and the Act for a statement of
those terms.
The Securities are obligations of the Company limited to
$200,000,000 aggregate principal amount (subject to Section 2.9 of the
Indenture). The Indenture imposes certain limitations on the Company and the
Restricted Subsidiaries, including, subject to certain exceptions, limitations
on the Incurrence of Indebtedness, the payment of dividends on, and redemption
of, the Capital Stock of the Company and certain of its Subsidiaries, the
redemption of certain Subordinated Obligations of the Company and certain of its
Subsidiaries, the sale by the Company and certain of its Subsidiaries of assets
and certain Subsidiary stock, transactions with Affiliates, Sale/Leaseback
Transactions by the Company and certain of its Subsidiaries and consolidations
and mergers and transfer of all or substantially all the Company's and certain
of its Subsidiaries' assets. In addition, the Indenture limits the ability of
the Company and certain of its Subsidiaries to restrict distributions and
dividends from such Subsidiaries.
5. Optional Redemption
Except as set forth below, the Securities will not be redeemable at
the option of the Company prior to April 1, 2000. On and after such date, the
Securities will be redeemable at the option of the Company, in whole or in part
at any time and from time to time, at the redemption prices set forth below
(expressed as percentage of the principal amount), plus accrued and unpaid
interest (if any) to the date of redemption (subject to the right of the Holders
of record on the relevant date to receive interest due on the related interest
payment date):
Year Percentage
---- ----------
2000....................................... 108.156%
2001....................................... 105.438%
2002....................................... 102.719%
2003 and thereafter........................ 100.0%
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<PAGE>
At any time, or from time to time, on or prior to April 1, 2000 the
Company may, at its option, use the net cash proceeds of one or more Public
Equity Offerings (as defined) to redeem up to 35% of the aggregate principal
amount of Securities originally issued at a redemption price equal to 110.875%
of the principal amount thereof, plus, in each case, accrued and unpaid interest
to the date of redemption, provided that at least $130,000,000 of the aggregate
principal amount of Securities originally issued remains outstanding after any
such redemption. In order to effect the foregoing redemption with the proceeds
of any Public Equity Offering, the Company shall make such redemption not more
than 60 days after the consummation of any such Public Equity Offering.
As used in the preceding paragraph, "Public Equity Offering" means a
public offering of Qualified Capital Stock of the Company pursuant to a
registration statement filed with the Commission in accordance with the
Securities Act.
6. Notice of Redemption
Notice of redemption will be mailed by first class mail at least 30
days but not more than 60 days before the redemption date to each Holder of
Securities to be redeemed at his registered address. Securities in denominations
larger than $1,000 may be redeemed in part but only in Authorized Denominations.
If money sufficient to pay the redemption price of and accrued interest on all
Securities (or portions thereof) to be redeemed on the redemption date is
deposited with the Paying Agent on or before the redemption date and certain
other conditions are satisfied, on and after such date interest ceases to accrue
on such Securities (or such portions thereof) called for redemption.
7. Special Redemption
On the Special Redemption Date, the Securities will be subject to
mandatory redemption at a redemption price equal to 101% of the principal amount
of the Notes, plus accrued interest to the date of redemption, if the Redemption
has not been consummated on or prior to the Special Redemption Date.
8. Put Provisions
Upon the occurrence of a Change of Control, any Holder of Securities
will have the right to require the Company to repurchase all or any part of the
Securities of such Holder at a repurchase price equal to 101% of the principal
amount of the Securities to be repurchased plus accrued interest to the date of
repurchase (subject to the right of Holders of record on the relevant record
date to receive interest due on the related interest payment date) as provided
in, and subject to the terms of, the indenture.
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<PAGE>
Under certain circumstances, any Holder of Securities will have the
right to require the Company to repurchase all or part of the Securities of such
Holder at a repurchase price equal to 100% of the principal amount of the
Securities to be repurchased plus accrued interest to the date of repurchase
(subject to the right of Holders of record on the relevant record date to
receive interest due on the related interest payment date) from certain Net Cash
Proceeds of Asset Dispositions as provided in, and subject to the terms of the
Indenture.
9. Subordination
The Company's payment of the principal of and interest on the
Securities is subordinated and subject to the prior payment in full of the
Company's Senior Indebtedness as more fully set forth in the Indenture. Each
Holder of Securities by his acceptance hereof covenants and agrees that all
payments of the principal and interest on the Securities by the Company shall be
subordinated in accordance with Article 9 of the Indenture and each holder
accepts and agrees to be bound by such provisions.
10. Registration Rights
Pursuant to the Registration Rights Agreement, and subject to certain
terms and conditions stated therein, the Company will be obligated to consummate
an exchange offer pursuant to which the Holders of the Initial Securities shall
have the right to exchange this Security for Exchange Securities, which have
been registered under the Securities Act, in like principal amount and having
terms identical in all material respect to the Initial Securities.
11. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in Authorized
Denominations. A Holder may transfer or exchange Securities in accordance with
the Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements or transfer documents and to pay any taxes and
fees required by law or permitted by the Indenture. The Registrar need not
register the transfer of or exchange any Securities selected for redemption
(except, in the case of a Security to be redeemed in part, the portion of the
Security not to be redeemed) or any Securities for a period of 15 days before a
selection of Securities to be redeemed or 15 days before an interest payment
date.
12. Persons Deemed Owners
The registered Holder of this Security may be treated as the owner
of it for all purposes.
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<PAGE>
13. Unclaimed Money
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to the
Company at its written request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must look
only to the Company and not to the Trustee for payment.
14. Discharge and Defeasance
Subject to certain conditions, the Company at any time may terminate
some of or all its obligations under the Securities and the Indenture if the
Company deposits with the Trustee money or U.S. Government Obligations for the
payment of principal and interest on the Securities to redemption or maturity,
as the case may be.
15. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount outstanding of the Securities
and (ii) any default or noncompliance with any provision may be waived with the
written consent of the Holders of a majority in principal amount outstanding of
the Securities. Subject to certain exceptions set forth in the Indenture,
without the consent of any Securityholder, the Company and the Trustee may amend
the Indenture or the Securities to cure any ambiguity, omission, defect or
inconsistency, to comply with Article 5 of the Indenture, to provide for
uncertificated Securities in addition to or in place of certificated Securities,
to add Guarantees with respect to the Securities, to secure the Securities, to
add additional covenants or surrender rights and powers conferred on the
Company, to comply with any request of the SEC in connection with qualifying the
Indenture under the Act or to make any change that does not adversely affect the
rights of any Securityholder.
16. Defaults and Remedies
Under the Indenture, Events of Default include (i) default for 30
days in payment of interest on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon acceleration, redemption or
otherwise, or failure by the Company to redeem or Purchase Securities when
required; (iii) failure by the Company to comply with other agreements in the
Indenture or the Securities, in certain cases subject to notice and lapse of
time; (iv) certain accelerations (including failure to pay within any grace
period after final maturity) of other Indebtedness of the Company if the amount
accelerated (or so unpaid) exceeds $7,500,000 at the time; (v) certain events of
bankruptcy or insolvency with respect to the Company and any Restricted
Subsidiary; and (vi) certain judgments or decrees for the
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<PAGE>
payment of money in excess of $7,500,000. If an Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the Securities may declare all the Securities to be due and payable immediately.
Certain events of bankruptcy or insolvency are Events of Default which will
result in the Securities being due and payable immediately upon the occurrence
of such Events of Default.
Securityholders may not enforce the Indenture or the Securities
except as provided in the Indenture. The Trustee may refuse to enforce the
Indenture or the Securities unless it receives reasonable indemnity or security.
Subject to certain limitations, Holders of a majority in principal amount of the
Securities may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Securityholders notice of any continuing Default
(except a Default in payment of principal or interest) if it determines that
withholding notice is in the interest of the Holders.
17. Trustee Dealings with the Company
Subject to certain limitations imposed by the Act, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
18. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company or the Trustee shall not have any liability for any obligations of the
Company under the Securities or the Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation. By accepting a
Security, each Securityholder waives and releases all such liability. The waiver
and release are part of the consideration for the issue of the Securities.
19. Authentication
This Security shall not be valid until an authorized signatory of
the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
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<PAGE>
20. Abbreviations
Customary abbreviations may be used in the name of a Securityholder
or an assignee, such as TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with rights of survivorship and not as
tenants in common), COST (= custodian), and U/G/M/A (= Uniform Gift to Minors
Act).
21. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Securityholders. No representation is
made as to the accuracy of such numbers either as printed on the Securities or
as contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
22. GOVERNING LAW
THE INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT
TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION
OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
The Company will furnish to any Securityholder upon written request
and without charge to the Securityholder a copy of the Indenture which has in it
the text of this Security in larger type. Requests may be made to:
Anacomp, Inc.
11550 North Meridian Street
Carmel, IN 46032
Attention of Corporate Communications
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<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint _________________________ agent to transfer this
Security on the books of the Company. The agent may substitute another to act
for him.
Date:__________________ Your Signature:_________________________________________
(Sign exactly as your name appears on the
other side of the Security)
________________________________________________________________________________
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.7 or 4.9 of the Indenture, check the box:
If you want to elect to have only part of this Security purchased by the
Company pursuant to Section 4.7 or 4.9 of the Indenture, state the amount:
$_________________
Date:__________________ Your Signature:_________________________________________
(Sign exactly as your name appears on the
other side of the Security)
Signature Guarantee:_________________________________________
(Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Registrar, which
requirements include membership or participation in the
Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by
the Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934.)
<PAGE>
EXHIBIT B
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY, OR BY ANY SUCH NOMINEE OF
THE DEPOSITARY, OR BY THE DEPOSITARY OR NOMINEE OF SUCH SUCCESSOR
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF
SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN
THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET
FORTH IN THE INDENTURE.
THIS NOTE WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR FEDERAL INCOME TAX
PURPOSES. HOLDERS OF THIS NOTE MAY CALL THE TREASURER OF ANACOMP, INC. AT
(317) 844-9666 FOR THE ISSUE PRICE, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT,
THE ISSUE DATE AND THE YIELD TO MATURITY OF THIS NOTE.
<PAGE>
EXHIBIT B
Page 2
[FORM OF FACE OF SECURITY]
$_______________________
CUSIP NO. [____________]
10 7/8% Senior Subordinated Note due 2004, Series B
Global Note No._________
ANACOMP, INC., an Indiana corporation, promises to pay to _______,
or registered assigns, the principal sum of ____________ Dollars on April 1,
2004.
Interest Payment Dates: April 1 and October 1
Record Dates: March 1 and September 1
Additional provisions of this Security are set forth on the other
side of this Security.
Dated:
ANACOMP, INC.
[Seal] By:_________________________________
President
_________________________________
Secretary
<PAGE>
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
IBJ SCHRODER BANK & TRUST COMPANY, as Trustee, certifies that this
is one of the Securities referred to in the Indenture.
By_________________________________
Authorized Signatory
<PAGE>
[FORM OF REVERSE SIDE OF SECURITY]
10 7/8% Senior Subordinated Note due 2004, Series A
1. Interest
ANACOMP, INC., an Indiana corporation (such corporation, and its
successors and assigns under the Indenture hereinafter referred to, being herein
called the "Company"), promises to pay interest on the principal amount of this
Security at the rate per annum shown above. The Company will pay interest
semiannually on April 1 and October 1 (each an "Interest Payment Date") of each
year, commencing October 1, 1997. Interest on the Securities will accrue from
and including the most recent date to which interest has been paid or, if no
interest has been paid, from the date of this Security. Interest will be
computed on the basis of a 360-day year of twelve 30-day months. The Company
shall pay interest on overdue principal at the rate borne by the Securities plus
1% per annum, and it shall pay interest on overdue installments of interest at
the same rate to the extent lawful.
2. Method of Payment
The Company will pay interest on the Securities (except defaulted
interest) to the Persons who are registered holders of Securities at the close
of business on the March 1 or September 1 immediately preceding the Interest
Payment Date even if Securities are canceled after the record date and on or
before the interest payment date. Holders must surrender Securities to a Paying
Agent to collect principal payments. Except as provided in the next paragraph,
the Company will pay principal and interest in money of the United States of
America that at the time of payment is legal tender for payment of public and
private debts. However, the Company may pay principal and interest by check
payable in such money mailed to a Holder's registered address. The Company shall
pay to the Holder of this Security an amount in cash equal to 100% of the
interest payment due on such Interest Payment Date.
3. Paying Agent and Registrar
Initially, IBJ Schroder Bank & Trust Company, a New York banking
corporation ("Trustee"), will act as Paying Agent and Registrar. The Company may
appoint and change any Paying Agent, Registrar or co-registrar without notice.
The Company or any of its domestically incorporated Wholly Owned Subsidiaries
may act as Paying Agent, Registrar or co-registrar.
<PAGE>
4. Indenture
The Company issued the Securities under an Indenture dated as of
March 24, 1997 ("Indenture"), between the Company and the Trustee. The terms of
the Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). Terms
defined in the Indenture and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all such terms, and
securityholders are referred to the Indenture and the Act for a statement of
those terms.
The Securities are obligations of the Company limited to
$200,000,000 aggregate principal amount (subject to Section 2.9 of the
Indenture). The Indenture imposes certain limitations on the Company and the
Restricted Subsidiaries, including, subject to certain exceptions, limitations
on the Incurrence of Indebtedness, the payment of dividends on, and redemption
of, the Capital Stock of the Company and certain of its Subsidiaries, the
redemption of certain Subordinated Obligations of the Company and certain of its
Subsidiaries, the sale by the Company and certain of its Subsidiaries of assets
and certain Subsidiary stock, transactions with Affiliates, Sale/Leaseback
Transactions by the Company and certain of its Subsidiaries and consolidations
and mergers and transfer of all or substantially all the Company's and certain
of its Subsidiaries' assets. In addition, the Indenture limits the ability of
the Company and certain of its Subsidiaries to restrict distributions and
dividends from such Subsidiaries.
5. Optional Redemption
Except as set forth below, the Securities will not be redeemable at
the option of the Company prior to April 1, 2000. On and after such date, the
Securities will be redeemable at the option of the Company, in whole or in part
at any time and from time to time, at the redemption prices set forth below
(expressed as percentage of the principal amount), plus accrued and unpaid
interest (if any) to the date of redemption (subject to the right of the Holders
of record on the relevant date to receive interest due on the related interest
payment date):
Year Percentage
---- ----------
2000....................................... 108.156%
2001....................................... 105.438%
2002....................................... 102.719%
2003 and thereafter........................ 100.000%
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<PAGE>
At any time, or from time to time, on or prior to April 1, 2000 the
Company may, at its option, use the net cash proceeds of one or more Public
Equity Offerings (as defined) to redeem up to 35% of the aggregate principal
amount of Securities originally issued at a redemption price equal to 110.875%
of the principal amount thereof, plus, in each case, accrued and unpaid interest
to the date of redemption, provided that at least $130,000,000 of the aggregate
principal amount of Securities originally issued remains outstanding after any
such redemption. In order to effect the foregoing redemption with the proceeds
of any Public Equity Offering, the Company shall make such redemption not more
than 60 days after the consummation of any such Public Equity Offering.
As used in the preceding paragraph, "Public Equity Offering" means a
public offering of Qualified Capital Stock of the Company pursuant to a
registration statement filed with the Commission in accordance with the
Securities Act.
6. Notice of Redemption
Notice of redemption will be mailed by first class mail at least 30
days but not more than 60 days before the redemption date to each Holder of
Securities to be redeemed at his registered address. Securities in denominations
larger than $1,000 may be redeemed in part but only in Authorized Denominations.
If money sufficient to pay the redemption price of and accrued interest on all
Securities (or portions thereof) to be redeemed on the redemption date is
deposited with the Paying Agent on or before the redemption date and certain
other conditions are satisfied, on and after such date interest ceases to accrue
on such Securities (or such portions thereof) called for redemption.
7. Put Provisions
Upon the occurrence of a Change of Control, any Holder of Securities
will have the right to require the Company to repurchase all or any part of the
Securities of such Holder at a repurchase price equal to 101% of the principal
amount of the Securities to be repurchased plus accrued interest to the date of
repurchase (subject to the right of Holders of record on the relevant record
date to receive interest due on the related interest payment date) as provided
in, and subject to the terms of, the indenture.
Under certain circumstances, any Holder of Securities will have the
right to require the Company to repurchase all or part of the Securities of such
Holder at a repurchase price equal to 100% of the principal amount of the
Securities to be repurchased plus accrued interest to the date of repurchase
(subject to the right of Holders of record on the relevant record date to
receive interest due on the related interest payment date) from certain Net Cash
Proceeds of Asset Dispositions as provided in, and subject to the terms of the
Indenture.
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<PAGE>
8. Subordination
The Company's payment of the principal of and interest on the
Securities is subordinated and subject to the prior payment in full of the
Company's Senior Indebtedness as more fully set forth in the Indenture. Each
Holder of Securities by his acceptance hereof covenants and agrees that all
payments of the principal and interest on the Securities by the Company shall be
subordinated in accordance with Article 9 of the Indenture and each holder
accepts and agrees to be bound by such provisions.
9. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in Authorized
Denominations. A Holder may transfer or exchange Securities in accordance with
the Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements or transfer documents and to pay any taxes and
fees required by law or permitted by the Indenture. The Registrar need not
register the transfer of or exchange any Securities selected for redemption
(except, in the case of a Security to be redeemed in part, the portion of the
Security not to be redeemed) or any Securities for a period of 15 days before a
selection of Securities to be redeemed or 15 days before an interest payment
date.
10. Persons Deemed Owners
The registered Holder of this Security may be treated as the owner
of it for all purposes.
11. Unclaimed Money
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to the
Company at its written request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must look
only to the Company and not to the Trustee for payment.
12. Discharge and Defeasance
Subject to certain conditions, the Company at any time may terminate
some of or all its obligations under the Securities and the Indenture if the
Company deposits with the Trustee money or U.S. Government Obligations for the
payment of principal and interest on the Securities to redemption or maturity,
as the case may be.
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<PAGE>
13. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount outstanding of the Securities
and (ii) any default or noncompliance with any provision may be waived with the
written consent of the Holders of a majority in principal amount outstanding of
the Securities. Subject to certain exceptions set forth in the Indenture,
without the consent of any Securityholder, the Company and the Trustee may amend
the Indenture or the Securities to cure any ambiguity, omission, defect or
inconsistency, to comply with Article 5 of the Indenture, to provide for
uncertificated Securities in addition to or in place of certificated Securities,
to add Guarantees with respect to the Securities, to secure the Securities, to
add additional covenants or surrender rights and powers conferred on the
Company, to comply with any request of the SEC in connection with qualifying the
Indenture under the Act or to make any change that does not adversely affect the
rights of any Securityholder.
14. Defaults and Remedies
Under the Indenture, Events of Default include (i) default for 30
days in payment of interest on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon acceleration, redemption or
otherwise, or failure by the Company to redeem or Purchase Securities when
required; (iii) failure by the Company to comply with other agreements in the
Indenture or the Securities, in certain cases subject to notice and lapse of
time; (iv) certain accelerations (including failure to pay within any grace
period after final maturity) of other Indebtedness of the Company if the amount
accelerated (or so unpaid) exceeds $7,500,000 at the time; (v) certain events of
bankruptcy or insolvency with respect to the Company and any Restricted
Subsidiary; and (vi) certain judgments or decrees for the payment of money in
excess of $7,500,000. If an Event of Default occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the Securities may
declare all the Securities to be due and payable immediately. Certain events of
bankruptcy or insolvency are Events of Default which will result in the
Securities being due and payable immediately upon the occurrence of such Events
of Default.
Securityholders may not enforce the Indenture or the Securities
except as provided in the Indenture. The Trustee may refuse to enforce the
Indenture or the Securities unless it receives reasonable indemnity or security.
Subject to certain limitations, Holders of a majority in principal amount of the
Securities may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Securityholders notice of any continuing Default
(except a Default in payment of principal or interest) if it determines that
withholding notice is in the interest of the Holders.
-5-
<PAGE>
15. Trustee Dealings with the Company
Subject to certain limitations imposed by the Act, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
16. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company or the Trustee shall not have any liability for any obligations of the
Company under the Securities or the Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation. By accepting a
Security, each Securityholder waives and releases all such liability. The waiver
and release are part of the consideration for the issue of the Securities.
17. Authentication
This Security shall not be valid until an authorized signatory of
the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
18. Abbreviations
Customary abbreviations may be used in the name of a Securityholder
or an assignee, such as TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with rights of survivorship and not as
tenants in common), COST (= custodian), and U/G/M/A (= Uniform Gift to Minors
Act).
19. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Securityholders. No representation is
made as to the accuracy of such numbers either as printed on the Securities or
as contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
-6-
<PAGE>
20. GOVERNING LAW
THE INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT
TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION
OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
The Company will furnish to any Securityholder upon written request
and without charge to the Securityholder a copy of the Indenture which has in it
the text of this Security in larger type. Requests may be made to:
Anacomp, Inc.
11550 North Meridian Street
Carmel, IN 46032
Attention of Corporate Communications
-7-
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint _________________________ agent to transfer this
Security on the books of the Company. The agent may substitute another to act
for him.
Date:__________________ Your Signature:_________________________________________
(Sign exactly as your name appears on the
other side of the Security)
________________________________________________________________________________
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.7 or 4.9 of the Indenture, check the box:
If you want to elect to have only part of this Security purchased by the
Company pursuant to Section 4.7 or 4.9 of the Indenture, state the amount:
$_________________
Date:__________________ Your Signature:_________________________________________
(Sign exactly as your name appears on the
other side of the Security)
Signature Guarantee:_________________________________________
(Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Registrar, which
requirements include membership or participation in the
Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by
the Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934.)
<PAGE>
Schedule I to 10 7/8% Senior Subordinated Indenture
Indebtedness To Be Outstanding
Immediately After the Issue Date
<PAGE>
Schedule II to 10 7/8% Senior Subordinated Indenture
Liens To be Outstanding Immediately After the Issue Date
<PAGE>
Schedule III to 10 7/8% Senior Subordinated indenture
U.S. Restricted Subsidiaries
Xidex International Corporation
Dysan International Sales Corporation II
<PAGE>
EXHIBIT C
Form of Certificate To Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
IBJ Schroder Bank & Trust Company, as Trustee
One State Street, 11th Floor
New York, N.Y. 10004
Attention: Corporate Trust Administration
Re: Anacomp, Inc.
10 7/8% Senior Subordinated Notes due 2004
Ladies and Gentlemen:
In connection with our proposed purchase of 10 7/8% Senior
Subordinated Notes due 2004 (the "Securities") of Anacomp, Inc. (the "Company"),
we confirm that:
1. We have received a copy of the Offering Memorandum (the "Offering
Memorandum"), dated March 19, 1997 relating to the Securities and such other
information as we deem necessary in order to make our investment decision. We
acknowledge that we have read and agreed to the matters stated on pages (i) -
(iii) of the Offering Memorandum and in the section entitled "Transfer
Restrictions" of the Offering Memorandum including the restrictions on
duplication and circulation of the Offering Memorandum.
2. We understand that any subsequent transfer of the Securities is
subject to certain restrictions and conditions set forth in the Indenture
relating to the Securities (as described in the Offering Memorandum) and the
undersigned agrees to be bound by, and not to resell, pledge or otherwise
transfer the Securities except in compliance with, such restrictions and
conditions and the Securities Act of 1933, as amended (the "Securities Act").
3. We understand that the offer and sale of the Securities have not
been registered under the Securities Act, and that the Securities may not be
offered or sold except as permitted in the following sentence. We agree, on our
own behalf and on behalf of any accounts for which we are acting as hereinafter
stated, that if we should sell or otherwise
<PAGE>
EXHIBIT C
Page 2
transfer any Securities prior to the date which is two years after the original
issuance of the Securities, we will do so only (i) to the Company or any of its
subsidiaries, (ii) inside the United States in accordance with Rule 144A under
the Securities Act to a "qualified institutional buyer" (as defined in Rule 144A
under the Securities Act), (iii) inside the United States to an institutional
"accredited investor" (as defined below) that, prior to such transfer, furnishes
(or has furnished on its behalf by a U.S. broker-dealer) to the Trustee (as
defined in the Indenture relating to the Securities), a signed letter containing
certain representations and agreements relating to the restrictions on transfer
of the Securities, (iv) outside the United States in accordance with Rule 904 of
Regulation S under the Securities Act, (v) pursuant to the exemption from
registration provided by Rule 144 under the Securities Act (if available), or
(vi) pursuant to an effective registration statement under the Securities Act,
and we further agree to provide to any person purchasing any of the Securities
from us a notice advising such purchaser that resales of the Securities are
restricted as stated herein.
4. We are not acquiring the Securities for or on behalf of, and will
not transfer the Securities to, any pension or welfare plan (as defined in
Section 3 of the Employee Retirement Income Security Act of 1974), except as
permitted in the section entitled "Transfer Restrictions" of the Offering
Memorandum.
5. We understand that, on any proposed resale of any Securities, we
will be required to furnish to the Trustee and the Company such certification,
legal opinions and other information as the Trustee and the Company may
reasonably require to confirm that the proposed sale complies with the foregoing
restrictions. We further understand that the Securities purchased by us will
bear a legend to the foregoing effect.
6. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Securities, and we
and any accounts for which we are acting are each able to bear the economic risk
of our or their investment, as the case may be.
7. We are acquiring the Securities purchased by us for our account
or for one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any
<PAGE>
EXHIBIT C
Page 3
administrative or legal proceeding or official inquiry with respect to the
matters covered hereby.
Very truly yours,
By:___________________________
Name:
<PAGE>
EXHIBIT D
Form of Certificate To Be Delivered
in Connection with Transfers
Pursuant to Regulation S
_______________, ____
IBJ Schroder Bank & Trust Company, as Trustee
One State Street, 11th Floor
New York, N.Y. 10004
Attention: Corporate Trust Administration
Re: Anacomp, Inc.
(the "Company") 10 7/8% Senior Subordinated
Notes due 2004 (the "Securities")
Ladies and Gentlemen:
In connection with our proposed sale of $[________] aggregate
principal amount of the Securities, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the U.S. Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Securities was not made to a Person in the
United States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the United
States, or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been
pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable;
<PAGE>
EXHIBIT D
Page 2
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer restrictions
applicable to the Securities.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:___________________________
Authorized Signature
<PAGE>
Exhibit 4.5
$200,000,000
ANACOMP, INC.
10 7/8% SENIOR SUBORDINATED NOTES DUE 2004
PURCHASE AGREEMENT
<PAGE>
March 19, 1997
<PAGE>
PURCHASE AGREEMENT
March 19, 1997
NatWest Capital Markets Limited
135 Bishopsgate
London, EC2M 3XT
England
Ladies and Gentlemen:
Anacomp, Inc., an Indiana corporation (the "Company") hereby
confirms its agreement with you (the "Initial Purchaser"), as set forth below.
1. The Securities. Subject to the terms and conditions herein
contained, the Company proposes to issue and sell to the Initial Purchaser
$200,000,000 aggregate principal amount of its 10 7/8% Senior Subordinated Notes
due 2004 (the "Notes"). The Notes are to be issued under an indenture (the
"Indenture") to be dated as of March 24, 1997 by and among the Company and IBJ
Schroeder Bank & Trust Company, as trustee (the "Trustee").
The Notes will be offered and sold to the Initial Purchaser without
being registered under the Securities Act of 1933, as amended (the "Act"), in
reliance on exemptions therefrom.
In connection with the sale of the Notes, the Company has prepared a
preliminary offering memorandum dated March 17, 1997 (the "Preliminary
Memorandum") and will prepare a final offering memorandum dated March 19, 1997
(the "Final Memorandum"; the Preliminary Memorandum and the Final Memorandum
each herein being referred to as a "Memorandum") setting forth or including a
description of the terms of the Notes, the terms of the offering of the Notes, a
description of the Company and any material developments relating to the Company
occurring after the date of the most recent historical financial statements
included therein.
The Company and the Initial Purchaser will enter into a Registration
Rights Agreement (the "Registration Rights Agreement") prior to or concurrently
with the issuance of the Notes. Pursuant to the Registration Rights Agreement,
under the circumstances and the terms set forth therein, the Company will agree
to file with the Securities and Exchange Commission (the "Commission"): (i) a
registration
<PAGE>
statement on Form S-4 (the "Exchange Offer Registration Statement") relating to
a registered Exchange Offer (as defined in the Registration Rights Agreement)
for the Notes under the Act to offer to the holders of the Notes the opportunity
to exchange their Notes for an issue of notes substantially identical to the
Notes (except that (a) interest thereon will accrue from the last date on which
interest was paid on the Notes, or if no such interest has been paid, from March
24, 1997, (b) such Notes will not contain restrictions on transfer, and (c) such
Notes will not contain provisions relating to an increase in their interest rate
under certain circumstances) that would be registered under the Act (the
"Exchange Notes"); or (ii) alternatively, in the event that applicable
interpretations of the Commission do not permit the Company to effect the
Exchange Offer or do not permit any holder of the Notes to participate in the
Exchange Offer, a shelf registration statement (the "Shelf Registration
Statement") to cover resales of Notes by such holders who satisfy certain
conditions relating to, including the provision of information in connection
with the Shelf Registration Statement.
2. Representations and Warranties. The Company represents and
warrants to, and agrees with the Initial Purchaser that:
(a) Neither the Preliminary Memorandum as of the date thereof nor
the Final Memorandum nor any amendment or supplement thereto as of the
date thereof and at all times subsequent thereto up to the Closing Date
(as defined in Section 3 below) contained or contains any untrue statement
of a material fact or omitted or omits to state a material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading, except that the representations and
warranties set forth in this Section 2(a) do not apply to statements or
omissions made in reliance upon and in conformity with information
relating to the Initial Purchaser furnished to the Company in writing by
the Initial Purchaser expressly for use in the Preliminary Memorandum, the
Final Memorandum or any amendment or supplement thereto.
(b) As of the Closing Date, the Company will have the capitalization
set forth in the Final Memorandum; all of the outstanding shares of
capital stock of the Company have been, and as of the Closing Date will
be, duly authorized and validly issued, are fully paid and nonassessable
and were not issued in violation of any preemptive or similar rights;
except as set forth in the Final Memorandum, there are no (i) options,
warrants or other rights to purchase from the Company, (ii) agreements or
other obligations of the Company to issue or (iii) other rights to convert
any obligation into, or
-2-
<PAGE>
exchange any securities for, shares of capital stock of or ownership
interests in the Company outstanding. The entities listed on Schedule 2(b)
hereto are the only subsidiaries, direct or indirect of the Company
(collectively, the "Subsidiaries"). Except as disclosed on Schedule 2(b)
or as disclosed in the Final Memorandum, the Company does not own,
directly or indirectly, any capital stock or any other equity or long-term
debt securities or have any equity interest in any firm, partnership,
joint venture, limited liability company or other entity.
(c) The Company and each of the Subsidiaries has been duly
incorporated, is validly existing and is in good standing as a corporation
under the laws of its jurisdiction of incorporation, with all requisite
corporate power and authority to own its properties and conduct its
business as now conducted, and as described in the Final Memorandum; each
of the Company and the Subsidiaries is duly qualified to do business as a
foreign corporation in good standing in all other jurisdictions where the
ownership or leasing of its properties or the conduct of its business
requires such qualification, except where the failure to be so qualified
would not, individually or in the aggregate, have a material adverse
effect on the general affairs, management, business, condition (financial
or otherwise), prospects or results of operations of the Company and the
Subsidiaries, taken as a whole (any such event, a "Material Adverse
Effect").
(d) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under the Notes, the Exchange
Notes and the Private Exchange Notes (as defined in the Registration
Rights Agreement). The Notes, the Exchange Notes and the Private Exchange
Notes have each been duly and validly authorized by the Company and, when
executed by the Company and authenticated by the Trustee in accordance
with the provisions of the Indenture and, in the case of the Notes, when
delivered to and paid for by the Initial Purchaser in accordance with the
terms of this Agreement, will have been duly executed, issued and
delivered and will constitute valid and legally binding obligations of the
Company, entitled to the benefits of the Indenture and enforceable against
the Company in accordance with their terms, except that the enforcement
thereof may be subject to (i) bankruptcy, insolvency, reorganization or
other similar laws now or hereafter in effect relating to creditors'
rights generally, and (ii) general principles of equity and the discretion
of the court before which any proceeding therefor may be brought.
-3-
<PAGE>
(e) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under the Indenture. The
Indenture meets the requirements for qualification under the Trust
Indenture Act of 1939, as amended (the "TIA"). The Indenture has been duly
and validly authorized by the Company and, when executed and delivered by
the Company (assuming the due authorization, execution and delivery by the
Trustee), will constitute a valid and legally binding agreement of the
Company, enforceable against the Company in accordance with its terms,
except that the enforcement thereof may be subject to (i) bankruptcy,
insolvency, reorganization or other similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) general principles
of equity and the discretion of the court before which any proceeding
therefor may be brought.
(f) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under the Registration Rights
Agreement. The Registration Rights Agreement has been duly and validly
authorized by the Company and, when executed and delivered by the Company,
will constitute a valid and legally binding agreement of the Company
enforceable against the Company in accordance with its terms, except that
the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization or other similar laws now or hereafter in effect relating
to creditors' rights generally and (ii) general principles of equity and
the discretion of the court before which any proceeding therefor may be
brought.
(g) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. This Agreement has been
duly and validly authorized, executed and delivered by the Company.
(h) No consent, approval, authorization or order of any court or
governmental agency or body, or third party is required for the
performance of this Agreement by the Company or the consummation by the
Company of the transactions contemplated hereby that are to be completed
on or before the Closing Date, except such as have been obtained or
disclosed in the Final Memorandum and such as may be required under state
securities or "Blue Sky" laws in connection with the purchase and resale
of the Notes by the Initial Purchaser. None of the Company or the
Subsidiaries is (i) in violation of its certificate of incorporation or
bylaws (or similar organizational document), (ii) in breach or violation
of any statute, judgment, decree, order, rule or regulation applicable to
any of them or any of their respective
-4-
<PAGE>
properties or assets, or (iii) in breach of or in default under (nor has
any event occurred which, with notice or passage of time or both, would
constitute a default under) or in violation of any of the terms or
provisions of any indenture, mortgage, deed of trust, loan agreement,
note, lease, license, franchise agreement, permit, certificate, contract
or other agreement or instrument to which any of them is a party or to
which any of them or their respective properties or assets is subject
(collectively, "Contracts") except such violations, breaches or defaults
that would not, individually or in the aggregate, have a Material Adverse
Effect.
(i) The execution, delivery and performance by the Company of this
Agreement, the Indenture, and the Registration Rights Agreement and the
consummation by the Company of the transactions contemplated hereby and
thereby, and the fulfillment of the terms hereof and thereof, and the
retention by the Company of NatWest Capital Markets Limited ("NatWest")
pursuant to those certain letter agreements (including the engagement and
indemnity letter agreements) dated as of March 16, 1997 (collectively, the
"NatWest Engagement Letter") and NatWest's acting as contemplated hereby
and thereby, will not conflict with or constitute or result in a breach of
or a default under (or an event which with notice or passage of time or
both would constitute a default under) or violation of any of (i) the
terms or provisions of any Contract except such conflicts, breaches,
defaults or violations, that would not, individually or in the aggregate,
have a Material Adverse Effect (ii) the certificate of incorporation or
by-laws (or similar organizational document) of the Company or any of the
Subsidiaries, or (iii) (assuming compliance with all applicable state
securities or "Blue Sky" laws and assuming the accuracy of the
representations and warranties of the Initial Purchaser in Section 8
hereof) any statute, judgment, decree, order, rule or regulation
applicable to the Company or any of the Subsidiaries or any of their
respective properties or assets except such conflicts, breaches, defaults
or violations that would not, individually or in the aggregate, have a
Material Adverse Effect.
(j) The audited consolidated financial statements of the Company and
the Subsidiaries included in the Final Memorandum present fairly in all
material respects the financial position, results of operations and cash
flows of the Company and the Subsidiaries at the dates and for the periods
to which they relate and have (i) been prepared in accordance with
generally accepted accounting principles applied on a consistent basis and
(ii) comply in all material respects with Statement of Position 90-7 with
regards to Fresh Start Reporting, except as otherwise stated therein. The
summary and selected
-5-
<PAGE>
financial and statistical data in the Final Memorandum present fairly in
all material respects the information shown therein and have been prepared
and compiled on a basis consistent with the audited financial statements
included therein, except as otherwise stated therein. Arthur Andersen LLP
is an independent public accounting firm within the meaning of the Act and
the rules and regulations promulgated thereunder.
(k) The pro forma financial information included in the Final
Memorandum (i) comply as to form in all material respects with the
applicable requirements of Regulation S-X promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), (ii) have been
prepared in accordance with the Commission's rules and guidelines with
respect to pro forma financial statements, and (iii) have been properly
computed on the bases described therein; the assumptions used in the
preparation of the pro forma financial data and other pro forma financial
information included in the Final Memorandum are reasonable and the
adjustments used therein are appropriate to give effect to the
transactions or circumstances referred to therein.
(l) There is not pending or, to the knowledge of the Company and the
Subsidiaries, threatened any action, suit, proceeding, inquiry or
investigation to which the Company or any of the Subsidiaries is a party,
or to which the property or assets of the Company or any of the
Subsidiaries are subject, before or brought by any court, arbitrator or
governmental agency or body which, if determined adversely to the Company
or any of the Subsidiaries would, individually or in the aggregate, have a
Material Adverse Effect or which seeks to restrain, enjoin, prevent the
consummation of or otherwise challenge the issuance or sale of the Notes
to be sold hereunder or the consummation of the other transactions
described in the Final Memorandum.
(m) Each of the Company and the Subsidiaries owns or possesses
adequate licenses or other rights to use all material patents, trademarks,
service marks, trade names, copyrights and know-how necessary to conduct
the businesses now or proposed to be operated by it as described in the
Final Memorandum, and none of the Company or the Subsidiaries has received
any notice of infringement of or conflict with (or knows of any such
infringement of or conflict with) asserted rights of others with respect
to any patents, trademarks, service marks, trade names, copyrights or
know-how which, if such assertion of infringement or conflict were
sustained, would, individually or in the aggregate, have a Material
Adverse Effect.
-6-
<PAGE>
(n) Each of the Company and the Subsidiaries possesses all licenses,
permits, certificates, consents, orders, approvals and other
authorizations from, and has made all declarations and filings with, all
federal, state, local and other governmental authorities, all
self-regulatory organizations and all courts and other tribunals,
presently required or necessary to own or lease, as the case may be, and
to operate its respective properties and to carry on its respective
businesses as now or proposed to be conducted as set forth in the Final
Memorandum (collectively, the "Permits"), except where the failure to
obtain such Permits would not, individually or in the aggregate, have a
Material Adverse Effect; each of the Company and the Subsidiaries has
fulfilled and performed all of its obligations with respect to such
Permits and no event has occurred which allows, or after notice or lapse
of time would allow, revocation or termination thereof or results in any
other material impairment of the rights of the holder of any such Permit
except where such revocation, termination or impairment would not,
individually or in the aggregate, have a Material Adverse Effect; and none
of the Company or the Subsidiaries has received any notice of any
proceeding relating to revocation or modification of any such Permit,
except as described in the Final Memorandum and except where such
revocation or modification would not, individually or in the aggregate,
have a Material Adverse Effect.
(o) Since the date of the most recent financial statements appearing
in the Final Memorandum, except as described therein, (i) none of the
Company or the Subsidiaries has incurred any liabilities or obligations,
direct or contingent, or entered into or agreed to enter into any
transactions or contracts (written or oral) not in the ordinary course of
business which liabilities, obligations, transactions or contracts would,
individually or in the aggregate, be material to the general affairs,
management, business, condition (financial or otherwise), prospects or
results of operations of the Company and the Subsidiaries, taken as a
whole (a "Material Change"), (ii) none of the Company or the Subsidiaries
has purchased any of its outstanding capital stock, nor declared, paid or
otherwise made any dividend or distribution of any kind on its capital
stock and (iii) other than as described in the Final Memorandum, there
shall not have been any change in the capital stock or long-term
indebtedness of the Company or the Subsidiaries which would, individually
or in the aggregate, constitute a Material Change.
(p) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the
-7-
<PAGE>
Company and the Subsidiaries, either individually or taken as a whole,
from that set forth in the Final Memorandum (exclusive of any amendments
or supplements thereto subsequent to the date of this Agreement).
(q) Each of the Company and the Subsidiaries has filed all necessary
federal, state, local and foreign income and franchise tax returns, and
has paid all taxes shown as due thereon; and other than tax deficiencies
which the Company or any Subsidiaries is contesting in good faith and for
which the Company or such Subsidiaries has provided adequate reserves,
there is no tax deficiency that has been asserted against the Company or
any of the Subsidiaries.
(r) The statistical and market-related data included in the Final
Memorandum are based on or derived from sources which the Company and the
Subsidiaries believe to be reliable and accurate.
(s) None of the Company, the Subsidiaries or any agent acting on
their behalf has taken or will take any action that might cause this
Agreement or the sale of the Notes to violate Regulation G, T, U or X of
the Board of Governors of the Federal Reserve System, in each case as in
effect, or as the same may hereafter be in effect, on the Closing Date.
(t) Each of the Company and the Subsidiaries has good and marketable
title to all real property and good title to all personal property
described in the Final Memorandum as being owned by it and good and
marketable title to any leasehold estate in the real and personal property
described in the Final Memorandum as being leased by it free and clear of
all liens, charges, encumbrances or restrictions, except as described in
the Final Memorandum or to the extent the failure to have such title or
the existence of such liens, charges, encumbrances or restrictions would
not, individually or in the aggregate, have a Material Adverse Effect. All
leases, contracts and agreements to which the Company or any of the
Subsidiaries is a party or by which any of them is bound are valid and
enforceable against the Company or such Subsidiary, and are valid and
enforceable against the other party or parties thereto and are in full
force and effect with only such exceptions as would not, individually or
in the aggregate, have a Material Adverse Effect.
(u) There are no legal or governmental proceedings involving or
affecting the Company or any Subsidiary or any of their respective
properties or assets which would be required to be described in a
prospectus pursuant to
-8-
<PAGE>
the Act that are not described in the Final Memorandum, nor are there any
material contracts or other documents which would be required to be
described in a prospectus pursuant to the Act that are not described in
the Final Memorandum.
(v) Except as would not, individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect (A) each of the
Company and the Subsidiaries is in compliance with and not subject to
liability under applicable Environmental Laws, (B) each of the Company and
the Subsidiaries has made all filings and provided all notices required
under any applicable Environmental Law, and has and is in compliance with
all Permits required under any applicable Environmental Laws and each of
them is in full force and effect, (C) there is no civil, criminal or
administrative action, suit, demand, claim, hearing, notice of violation,
investigation, proceeding, notice or demand letter or request for
information pending or, to the knowledge of the Company or any of the
Subsidiaries, threatened against the Company or any of the Subsidiaries
under any Environmental Law, (D) no lien, charge, encumbrance or
restriction has been recorded under any Environmental Law with respect to
any assets, facility or property owned, operated, leased or controlled by
the Company or any of the Subsidiaries, (E) none of the Company or the
Subsidiaries has received notice that it has been identified as a
potentially responsible party under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA") or
any comparable state law, (F) no property or facility of the Company or
any of the Subsidiaries is (i) listed or proposed for listing on the
National Priorities List under CERCLA or is (ii) listed in the
Comprehensive Environmental Response, Compensation, Liability Information
System List promulgated pursuant to CERCLA, or on any comparable list
maintained by any state or local governmental authority.
For purposes of this Agreement, "Environmental Laws" means the
common law and all applicable federal, state and local laws or
regulations, codes, orders, decrees, judgments or injunctions issued,
promulgated, approved or entered thereunder, relating to pollution or
protection of public or employee health and safety or the environment,
including, without limitation, law relating to (i) emissions, discharges,
releases or threatened releases of hazardous materials, into the
environment (including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata), (ii) the manufacture,
processing, distribution, use, generation, treatment, storage, disposal,
transport or handling of hazardous materials, and (iii) under-
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ground and above ground storage tanks, and related piping, and emissions,
discharges, releases or threatened releases therefrom.
(w) There is no strike, labor dispute, slowdown or work stoppage
with the employees of the Company or any of the Subsidiaries which is
pending or, to the knowledge of the Company or any of the Subsidiaries,
threatened.
(x) Each of the Company and the Subsidiaries carries insurance in
such amounts and covering such risks as is adequate for the conduct of its
business and the value of its properties. Neither the Company nor any of
its Subsidiaries has received notice from any insurer or agent of such
insurer that capital improvements of other expenditures are required or
necessary to be made in order to continue such insurance.
(y) None of the Company or the Subsidiaries has any material
liability for any prohibited transaction (within the meaning of Section
4975(c) of the Code or Part 4 of Title I of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) (or an accumulated funding
deficiency within the meaning of Section 412 of the Code or Section 302 of
ERISA) or any complete or partial withdrawal liability (within the meaning
of Section 4201 of ERISA) with respect to any pension, profit sharing or
other plan which is subject to ERISA, to which the Company or any of the
Subsidiaries makes or ever has made a contribution and in which any
employee of the Company or of any Subsidiary is or has ever been a
participant. With respect to such plans, the Company and each Subsidiary
is in compliance in all material respects with all applicable provisions
of ERISA.
(z) Each of the Company and the Subsidiaries (i) makes and keeps
accurate books and records and (ii) maintains internal accounting controls
which provide reasonable assurance that (A) transactions are executed in
accordance with management's authorization, (B) transactions are recorded
as necessary to permit preparation of its financial statements and to
maintain accountability for its assets, (C) access to its assets is
permitted only in accordance with management's authorization and (D) the
reported accountability for its assets is compared with existing assets at
reasonable intervals.
(aa) None of the Company or the Subsidiaries will be an "investment
company" or "promoter" or "principal underwriter" for an "investment
company," as such terms are defined in the Investment Company Act of 1940,
as amended, and the rules and regulations thereunder.
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(bb) The Notes, the Exchange Notes, the Indenture and the
Registration Rights Agreement will conform in all material respects to the
descriptions thereof in the Final Memorandum.
(cc) No holder of securities of the Company will be entitled to have
such securities registered under the registration statements required to
be filed by the Company pursuant to the Registration Rights Agreement
other than as expressly permitted thereby.
(dd) Immediately after the consummation of the transactions
contemplated by this Agreement, the fair value and present fair saleable
value of the assets of each of the Company and the Subsidiaries (each on a
consolidated basis) will exceed the sum of its stated liabilities and
identified contingent liabilities; none of the Company or the Subsidiaries
(each on a consolidated basis) is, nor will any of the Company or the
Subsidiaries (each on a consolidated basis) be, after giving effect to the
execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby, (a) left with
unreasonably small capital with which to carry on its business as it is
currently or proposed to be conducted, (b) unable to pay its debts
(contingent or otherwise) as they mature or otherwise become due or (c)
otherwise insolvent.
(ee) None of the Company, the Subsidiaries or any of their
respective Affiliates (as defined in Rule 501(b) of Regulation D under the
Act) has directly, or through any agent, (i) sold, offered for sale,
solicited offers to buy or otherwise negotiated in respect of, any
"security" (as defined in the Act) which is or could be integrated with
the sale of the Notes in a manner that would require the registration
under the Act of the Notes or (ii) engaged in any form of general
solicitation or general advertising (as those terms are used in Regulation
D under the Act) in connection with the offering of the Notes or in any
manner involving a public offering within the meaning of Section 4(2) of
the Act. The Company has not distributed and will not distribute any
offering material in connection with the Offering other than the Final
Memorandum and any Preliminary Memorandum. No securities of the same class
as the Notes have been issued and sold by the Company within the six-month
period immediately prior to the date hereof.
(ff) Assuming the accuracy of the representations and warranties of
the Initial Purchaser in Section 8 hereof, it is not necessary in
connection with the
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offer, sale and delivery of the Notes to the Initial Purchaser in the
manner contemplated by this Agreement to register any of the Notes under
the Act or to qualify the Indenture under the TIA.
(gg) No securities of the Company or any Subsidiary are of the same
class (within the meaning of Rule 144A as promulgated under the Act ("Rule
144A")) as the Notes and listed on a national securities exchange
registered under Section 6 of the Exchange Act, or quoted in a U.S.
automated inter- dealer quotation system.
(hh) None of the Company or the Subsidiaries has taken, nor will any
of them take, directly or indirectly, any action designed to, or that
might be reasonably expected to, cause or result in stabilization or
manipulation of the price of the Notes.
(ii) None of the Company or the Subsidiaries, or any person acting
on any of their behalf (other than the Initial Purchaser) has engaged in
any directed selling efforts (as that term is defined in Regulation S
under the Act ("Regulation S")) with respect to the Securities; the
Company and its respective Affiliates and any person acting on any of
their behalf (other than the Initial Purchaser or any Affiliate of the
Initial Purchaser) have complied with the offering restrictions
requirement of Regulation S.
(jj) Each of the Preliminary Memorandum and the Final Memorandum, as
of its respective date, contains all of the information that, if requested
by a prospective purchaser of the Notes, would be required to be provided
to such prospective purchaser to Rule 144A(d)(4) under the Act.
(kk) The Notes satisfy the eligibility requirements of Rule
144A(d)(3) under the Act.
(ll) Neither the Company nor any of its Subsidiaries nor, to the
Company's knowledge, any officer or director purporting to act on behalf
of the Company or any of its Subsidiaries has at any time: (i) made any
contributions to any candidate for political office, or failed to disclose
fully any such contributions, in violation of law, (ii) made any payment
of funds to, or received or retained any funds from, any state, federal or
foreign governmental officer or official, or other person charged with
similar public or quasi-public duties, other than payments required or
allowed by applicable law, or (iii) engaged in any transactions,
maintained any bank account or used
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any corporate funds except for transactions, bank accounts and funds
which have been and are reflected in the normally maintained books and
records of the Company and its Subsidiaries.
(mm) Except as disclosed in any Memorandum, there are no material
outstanding loans or advances or material guarantees of indebtedness by
the Company or any of its Subsidiaries to or for the benefit of any of the
officers or directors of the Company or any of its Subsidiaries or any of
the members of the families of any of them.
(nn) Neither the Company nor any affiliate of the Company does
business with the government of Cuba or with any person or affiliate
located in Cuba.
(oo) None of the Company or the Subsidiaries has engaged or retained
any person, other than NatWest as the Initial Purchaser, to act as a
financial advisor, underwriter or placement agent in connection with the
issuance of the Notes and, except for the fees and expenses payable in
connection with the issuance of the Notes as described in the Final
Memorandum, no person has the right to receive a material amount of
financial advisory, underwriting, placement, finder's or similar fees in
connection with, or as a result of, the issuance of the Notes and the
purchase of the Notes by the Initial Purchaser or the consummation of the
other transactions contemplated hereby.
Any certificate signed by any officer of the Company or any
Subsidiary and delivered to the Initial Purchaser or to counsel for the Initial
Purchaser shall be deemed a joint and several representation and warranty by the
Company and each of the Subsidiaries to the Initial Purchaser as to the matters
covered thereby.
3. Purchase, Sale and Delivery of the Notes. On the basis of the
representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the Company agrees to
issue and sell to the Initial Purchaser, and the Initial Purchaser agrees to
purchase from the Company the principal amount of Notes set forth opposite its
name on Schedule 1 hereto at 96.2071% of their principal amount. One or more
certificates in definitive form for the Notes that the Initial Purchaser has
agreed to purchase hereunder, and in such denomination or denominations and
registered in such name or names as the Initial Purchaser requests upon notice
to the Company at least 36 hours prior to the Closing Date, shall be delivered
by or on behalf of the Company to the Initial Purchaser,
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<PAGE>
against payment by or on behalf of the Initial Purchaser of the purchase price
therefor by wire transfer to such account or accounts as the Company shall
specify prior to the Closing Date, or by such means as the parties hereto shall
agree prior to the Closing Date. Such delivery of and payment for the Notes
shall be made at the offices of White & Case, 1155 Avenue of the Americas, New
York, New York at 10:00 A.M., New York time, on March 24, 1997, or at such other
place, time or date as the Initial Purchaser, on the one hand, and the Company,
on the other hand, may agree upon, such time and date of delivery against
payment being herein referred to as the "Closing Date." The Company will make
such certificate or certificates for the Notes available for inspection and
packaging by the Initial Purchaser at such place as designated by the Initial
Purchaser at least 24 hours prior to the Closing Date.
4. Offering by the Initial Purchaser. The Initial Purchaser proposes
to make an offering of the Notes at the price and upon the terms set forth in
the Final Memorandum, as soon as practicable after this Agreement is entered
into and as in the judgment of the Initial Purchaser is advisable.
5. Covenants of the Company and the Subsidiaries. Each of the
Company and the Subsidiaries, jointly and severally, covenants and agrees with
the Initial Purchaser that:
(a) The Company will not amend or supplement the Final Memorandum or
any amendment or supplement thereto of which the Initial Purchaser shall
not previously have been advised and furnished a copy for a reasonable
period of time prior to the proposed amendment or supplement and as to
which the Initial Purchaser shall not have consented. The Company will
promptly, upon the reasonable request of the Initial Purchaser or counsel
for the Initial Purchaser, make any amendments or supplements to the
Preliminary Memorandum or the Final Memorandum that may be necessary or
advisable in connection with the resale of the Notes by the Initial
Purchaser.
(b) The Company will cooperate with the Initial Purchaser in
arranging for the qualification of the Notes for offering and sale under
the securities or "Blue Sky" laws of which jurisdictions as the Initial
Purchaser may designate and will continue such qualifications in effect
for as long as may be necessary to complete the resale of the Notes;
provided, however, that in connection therewith, none of the Company or
any Subsidiary shall be required to qualify as a foreign corporation or to
execute a general consent to service of process in any jurisdiction or
subject itself to taxation in excess of a nominal dollar amount in any
such jurisdiction where it is not then so subject.
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<PAGE>
(c) If, at any time prior to the completion of the distribution by
the Initial Purchaser of the Notes or the Private Exchange Notes, any
event occurs or information becomes known as a result of which the Final
Memorandum as then amended or supplemented would, in the judgment of the
Company or in the reasonable opinion of your counsel include any untrue
statement of a material fact, or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if for any other reason it is
necessary at any time to amend or supplement the Final Memorandum to
comply with applicable law, the Company and the Subsidiaries will promptly
notify the Initial Purchaser thereof and will prepare, at the expense of
the Company and the Subsidiaries, an amendment or supplement to the Final
Memorandum that corrects such statement or omission or effects such
compliance.
(d) The Company and the Subsidiaries will, without charge, provide
to the Initial Purchaser and to counsel for the Initial Purchaser as many
copies of the Preliminary Memorandum and the Final Memorandum or any
amendment or supplement thereto as the Initial Purchaser may reasonably
request.
(e) The Company will apply the net proceeds from the sale of the
Notes as set forth under "Use of Proceeds" in the Final Memorandum.
(f) From the Closing Date until the date that no Notes are
outstanding under the Indenture, the Company will furnish to the Initial
Purchaser copies of all reports and other communications (financial or
otherwise) furnished by the Company to the Trustee, or the holders of the
Notes and, as soon as available, copies of any reports or financial
statements furnished to or filed by the Company with the Commission or any
national securities exchange on which any class of securities of the
Company may be listed.
(g) Prior to the Closing Date, the Company and the Subsidiaries will
furnish to the Initial Purchaser, as soon as they have been prepared, a
copy of any unaudited interim financial statements of the Company and the
Subsidiaries for any period subsequent to the period covered by the most
recent financial statements appearing in the Final Memorandum.
(h) None of the Company, the Subsidiaries or any of their Affiliates
will sell, offer for sale or solicit offers to buy or otherwise negotiate
in respect of any "security" (as defined in the Act) which could be
integrated with the
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<PAGE>
sale of the Notes in a manner which would require the registration under
the Act of the Notes.
(i) None of the Company or the Subsidiaries will engage in any form
of "general solicitation" or "general advertising" (as those terms are
used in Regulation D under the Act) in connection with the offering of the
Notes or in any manner involving a public offering of the Notes within the
meaning of Section 4(2) of the Act.
(j) None of the Company, the Subsidiaries or their Affiliates nor
any person acting on its or their behalf to engage, in any directed
selling efforts (as that term is defined in Regulation S) with respect to
the Notes, and to comply, and to have its Affiliates and each person
acting on its or their behalf comply, with the offering restrictions
requirements of Regulation S.
(k) For so long as any of the Notes remain outstanding, the Company
and the Subsidiaries will make available, upon request, to any seller of
such Notes the information specified in Rule 144A(d)(4) under the Act,
unless the Company and the Subsidiaries are then subject to Section 13 or
15(d) of the Exchange Act.
(l) For a period of 90 days from the date of the Final Memorandum,
the Company and the Subsidiaries will not offer for sale, sell, contract
to sell or otherwise dispose of, directly or indirectly, or file a
registration statement for, or announce any offer, sale, contract for sale
of or other disposition of any debt securities issued or guaranteed by the
Company or any of its subsidiaries (other than the Notes or the Exchange
Notes or the Private Exchange Notes) without the prior written consent of
the Initial Purchaser;
(m) During the period from the Closing Date until two years after
the Closing Date, without the prior written consent of the Initial
Purchaser, the Company and the Subsidiaries will not, and will not permit
any of their affiliates (as defined in Rule 144 under the Securities Act)
to, resell any of the Notes that have been reacquired by them, except for
Notes purchased by the Company or any of its affiliates and resold in a
transaction registered under the Securities Act;
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<PAGE>
(n) In connection with the offering of the Notes, until the Initial
Purchaser shall have notified the Company of the completion of the resale
of the Notes, the Company and the Subsidiaries will not, and will cause
their affiliated purchasers (as defined in Rule 10b-6 under the Exchange
Act) not to, either alone or with one or more other persons, bid for or
purchase, for any account in which it or any of its affiliated purchasers
has a beneficial interest, any Notes, or attempt to induce any person to
purchase any Notes; and not to, and to cause its affiliated purchasers not
to, make bids or purchase for the purpose of creating actual, or apparent,
active trading in or of raising the price of the Notes;
(o) The Company and the Subsidiaries will not take any action prior
to the execution and delivery of the Indenture which, if taken after such
execution and delivery, would have violated any of the covenants contained
in the Indenture;
(p) The Company and the Subsidiaries will not take any action prior
to Closing Date which would require the Final Memorandum to be amended or
supplemented pursuant to Section 5(c);
(q) Prior to the Closing Date, the Company and the Subsidiaries will
not issue any press release or other communication directly or indirectly
or hold any press conference with respect to the Company, its condition,
financial or otherwise, or earnings, business affairs or business
prospects (except for routine oral marketing communications in the
ordinary course of business and consistent with the past practices of the
Company and of which the Initial Purchaser is notified), without the prior
written consent of the Initial Purchaser, unless in the judgment of the
Company and its counsel, after notification to the Initial Purchasers,
such press release or communication is required by law; and
(r) The Company will use its best efforts to (i) permit the Notes to
be designated PORTAL securities in accordance with the rules and
regulations adopted by the NASD relating to trading in the Private
Offerings, Resales and Trading through Automated Linkages market (the
"Portal Market") and (ii) permit the Notes to be eligible for clearance
and settlement through the Depository Trust Company.
(s) The Company will establish the "Collateral Account" as defined
in Section 4.22 of the Indenture.
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<PAGE>
6. Expenses. The Company agrees to pay all costs and expenses
incident to the performance of their obligations under this Agreement, whether
or not the transactions contemplated herein are consummated or this Agreement is
terminated pursuant to Section 11 hereof, including all costs and expenses
incident to (i) the printing, word processing or other production of documents
with respect to the transactions contemplated hereby, including any costs of
printing the Preliminary Memorandum and the Final Memorandum and any amendment
or supplement thereto, and any "Blue Sky" memoranda, (ii) all arrangements
relating to the delivery to the Initial Purchaser of copies of the foregoing
documents, (iii) the fees and disbursements of counsel, accountants and any
other experts or advisors retained by the Company, (iv) preparation (including
printing), issuance and delivery to the Initial Purchaser of the Notes, (v) the
qualification of the Notes under state securities and "Blue Sky" laws, including
filing fees and fees and disbursements of counsel for the Initial Purchaser
relating thereto, (vi) the Company's expenses in connection with any meetings
with prospective investors in the Notes, (vii) fees and expenses of the Trustee
including fees and expenses of counsel, (viii) all expenses and listing fees
incurred in connection with the application for quotation of the Notes on the
PORTAL Market, (ix) any fees charged by investment rating agencies for the
rating of the Notes. If the sale of the Notes provided for herein is not
consummated because any condition to the obligations of the Initial Purchaser
set forth in Section 7 hereof is not satisfied, because this Agreement is
terminated or because of any failure, refusal or inability on the part of the
Company to perform all obligations and satisfy all conditions on their part to
be performed or satisfied hereunder (other than solely by reason of a default by
the Initial Purchaser of their obligations hereunder after all conditions
hereunder have been satisfied in accordance herewith), the Company agrees to
promptly reimburse the Initial Purchaser upon demand for all out-of-pocket
expenses (including all fees, disbursements and charges of White & Case, counsel
for the Initial Purchaser) that shall have been incurred by the Initial
Purchaser in connection with the proposed purchase and sale of the Notes.
7. Conditions of the Initial Purchaser's Obligations. The obligation
of the Initial Purchaser to purchase and pay for the Notes shall, in its sole
discretion, be subject to the satisfaction or waiver of the following conditions
on or prior to the Closing Date:
(a) On the Closing Date, the Initial Purchaser shall have received
the opinion, dated as of the Closing Date and addressed to the Initial
Purchaser, of Cadwalader, Wickersham & Taft, counsel for the Company in
form and
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substance satisfactory to counsel for the Initial Purchaser, substantially
to the effect that:
(i) Each of the Company and the material Subsidiaries is
incorporated, validly existing and in good standing under the laws
of its respective jurisdiction of incorporation and has all
requisite corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the Final
Memorandum. Each of the Company and the material Subsidiaries is
duly qualified as a foreign corporation and is in good standing in
the jurisdictions set forth below such Subsidiaries' name on
Schedule A attached to such opinion.
(ii) All of the outstanding shares of capital stock of the
Company and the Subsidiaries have been duly authorized and validly
issued, are fully paid and nonassessable and were not issued in
violation of any preemptive or similar rights; all of the
outstanding shares of capital stock of the Subsidiaries are owned,
directly or indirectly, by the Company, free and clear of all
security interests perfected, or otherwise, and free and clear of
all other liens, encumbrances, equities and claims or restrictions
on transferability or voting.
(iii) Except as set forth in the Final Memorandum, (A) to the
knowledge of such counsel no options, warrants or other rights to
purchase from the Company or any Subsidiary shares of capital stock
or ownership interests in the Company or any Subsidiary are
outstanding, (B) no agreements or other obligations of the Company
or any Subsidiary to issue, or other rights to cause the Company or
any Subsidiary to convert, any obligation into, or exchange any
securities for, shares of capital stock or ownership interests in
the Company or any Subsidiary are outstanding and (C) no holder of
securities of the Company or any Subsidiary is entitled to have such
securities registered under a registration statement filed by the
Company and the Subsidiaries pursuant to the Registration Rights
Agreement.
(iv) The Company has all requisite corporate power and
authority to execute, deliver and perform its respective obligations
under the Indenture, the Notes, the Exchange Notes and the Private
Exchange Notes; the Indenture is in sufficient form for
qualification under the TIA; the Indenture has been duly and validly
authorized by the Company and, when duly executed and delivered by
the Company
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(assuming the due authorization, execution and delivery thereof by
the Trustee), will constitute the valid and legally binding
agreement of the Company, enforceable against the Company in
accordance with its terms, except that the enforcement thereof may
be subject to (i) bankruptcy, insolvency, reorganization, or other
similar laws now or hereafter in effect relating to creditors'
rights generally and (ii) general principles of equity and the
discretion of the court before which any proceeding therefor may be
brought.
(v) The Global Note (as such term is defined in the Indenture)
is in the form contemplated by the Indenture. The Global Note has
been duly and validly authorized by the Company and when duly
executed and delivered by the Company and paid for by the Initial
Purchaser in accordance with the terms of this Agreement (assuming
the due authorization, execution and delivery of the Indenture by
the Trustee and due authentication and delivery of the Notes by the
Trustee in accordance with the Indenture), will constitute the valid
and legally binding obligations of the Company, entitled to the
benefits of the Indenture, and enforceable against the Company in
accordance with their terms, except that the enforcement thereof may
be subject to (i) bankruptcy, insolvency, reorganization or other
similar laws now or hereafter in effect relating to creditors'
rights generally and (ii) general principles of equity and the
discretion of the court before which any proceeding therefor may be
brought.
(vi) The Exchange Notes and the Private Exchange Notes have
been duly and validly authorized by the Company, and when the
Exchange Notes and the Private Exchange Notes have been duly
executed and delivered by the Company in accordance with the terms
of the Registration Rights Agreement and the Indenture (assuming the
due authorization, execution and delivery of the Indenture by the
Trustee and due authentication and delivery of the Exchange Notes
and the Private Exchange Notes by the Trustee in accordance with the
Indenture), will constitute the valid and legally binding
obligations of the Company, entitled to the benefits of the
Indenture, and enforceable against the Company in accordance with
their terms, except that the enforcement thereof may be subject to
(i) bankruptcy, insolvency, reorganization or other similar laws now
or hereafter in effect relating to creditors' rights generally and
(ii) general principles of equity and
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the discretion of the court before which any proceeding therefor may
be brought.
(vii) The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under the
Registration Rights Agreement; the Registration Rights Agreement has
been duly and validly authorized by the Company and, when duly
executed and delivered by the Company (assuming due authorization,
execution and delivery thereof by the Initial Purchaser), will
constitute the valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms, except
that the enforcement thereof may be subject to (i) bankruptcy,
insolvency, reorganization or other similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) general
principles of equity and the discretion of the court before which
any proceeding therefor may be brought.
(viii) The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under this
Agreement and to consummate the transactions contemplated hereby;
this Agreement and the consummation by the Company of the
transactions contemplated hereby have been duly and validly
authorized by the Company. This Agreement has been duly executed and
delivered by the Company.
(ix) The Indenture, the Notes (when issued, authorized and
delivered), the Exchange Notes (when issued, authorized and
delivered) and the Registration Rights Agreement conform in all
material respects to the descriptions thereof contained in the Final
Memorandum.
(x) No legal or governmental proceedings are pending or, to
the knowledge of such counsel, threatened to which any of the
Company is a party or to which the property or assets of the Company
is subject which, if determined adversely to the Company, would
result, individually or in the aggregate, in a Material Adverse
Effect, or which seeks to restrain, enjoin, prevent the consummation
of or otherwise challenge the issuance or sale of the Notes to be
sold hereunder or the consummation of the other transactions
described in the Final Memorandum under the caption "Use of
Proceeds."
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(xi) None of the Company or any material Subsidiary is (i) in
violation of its certificate of incorporation or bylaws (or similar
organizational document) or (ii) to the knowledge of such counsel,
in breach or violation of any judgment, decree or order applicable
to any of them or any of their respective properties or assets.
(xii) The execution and delivery of this Agreement, the
Indenture, the Registration Rights Agreement and the consummation of
the transactions contemplated hereby and thereby (including, without
limitation, the issuance and sale of the Notes to the Initial
Purchaser) will not conflict with or constitute or result in a
breach or a default under (or an event which with notice or passage
of time or both would constitute a default under) or violation of
any of (i) the terms or provisions of any Contract known to such
counsel, (ii) the certificate of incorporation or bylaws (or similar
organizational document) of the Company or any material Subsidiary,
or (iii) (assuming compliance with all applicable state securities
or "Blue Sky" laws and assuming the accuracy of the representations
and warranties of the Initial Purchaser in Section 8 hereof) any
statute, judgment, decree, order, rule or regulation which, in such
counsel's experience, is normally applicable both to general
business corporations which are not engaged in regulated business
activities and to transactions of the type contemplated by the Final
Memorandum.
(xiii) No consent, approval, authorization or order of any
governmental authority is required for the issuance and sale by the
Company of the Notes to the Initial Purchaser or the other
transactions contemplated hereby, except such as are disclosed in
the Final Memorandum or as may be required under Blue Sky laws, as
to which such counsel need express no opinion, and those which have
previously been obtained.
(xiv) There are no legal or governmental proceedings involving
or affecting the Company or the Subsidiaries or any of their
respective properties or assets which would be required to be
described in a prospectus pursuant to the Act that are not described
in the Final Memorandum nor are there any material contracts or
other documents which would be required to be described in a
prospectus pursuant to the Act that are not described in the Final
Memorandum.
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<PAGE>
(xv) None of the Company or the Subsidiaries is, or
immediately after the sale of the Notes to be sold hereunder and the
application of the proceeds from such sale (as described in the
Final Memorandum under the caption "Use of Proceeds") will be, an
"investment company" as such term is defined in the Investment
Company Act of 1940, as amended.
(xvi) No registration under the Act of the Notes is required
in connection with the sale of the Notes to the Initial Purchaser as
contemplated by this Agreement and the Final Memorandum or in
connection with the initial resale of the Notes by the Initial
Purchaser in accordance with Section 8 of this Agreement, and prior
to the commencement of the Exchange Offer or the effectiveness of
the Shelf Registration Statement (as defined in the Registration
Rights Agreement), the Indenture is not required to be qualified
under the TIA, in each case assuming (i) that the purchasers who buy
such Notes in the initial resale thereof are qualified institutional
buyers as defined in Rule 144A promulgated under the Act ("QIBs") or
accredited investors as defined in Rule 501(a) (1), (2), (3) or (7)
promulgated under the Act ("Accredited Investors"), (ii) the
accuracy of the Initial Purchaser's representations in Section 8
hereof and those of the Company contained in this Agreement
regarding the absence of a general solicitation in connection with
the sale of such Notes to the Initial Purchaser and the initial
resale thereof and (iii) the due performance by the Initial
Purchaser of the agreements set forth in Section 8 hereof.
(xvii) Neither the consummation of the transactions
contemplated by this Agreement nor the sale, issuance, execution or
delivery of the Notes will violate Regulation G, T, U or X of the
Board of Governors of the Federal Reserve System.
At the time the foregoing opinion is delivered, Cadwalader,
Wickersham & Taft shall additionally state that it has participated in
conferences with officers and other representatives of the Company and the
Subsidiaries, representatives of the independent public accountants for
the Company, representatives of the Initial Purchaser and counsel for the
Initial Purchaser, at which conferences the contents of the Final
Memorandum and related matters were discussed, and, although it has not
independently verified
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and is not passing upon and assumes no responsibility for the accuracy,
completeness or fairness of the statements contained in the Final
Memorandum, no facts have come to its attention which lead it to believe
that the Final Memorandum, on the date thereof or at the Closing Date,
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements contained therein, in the light of the circumstances under
which they were made, not misleading (it being understood that such firm
need express no opinion with respect to the financial statements and
related notes thereto and the other financial, statistical and accounting
data included in the Final Memorandum). In rendering such opinion,
Cadwalader, Wickersham & Taft shall have received and may rely upon such
certificates and other documents and information as it may reasonably
request to pass on such matters. The opinion of Cadwalader, Wickersham &
Taft described in this Section shall be rendered to the Initial Purchaser
at the request of the Company and shall so state therein.
References to the Final Memorandum in this subsection (a) shall
include any amendment or supplement thereto prepared in accordance with
the provisions of this Agreement at the Closing Date.
(b) On the Closing Date, the Initial Purchaser shall have received
the opinion, in form and substance satisfactory to the Initial Purchaser,
dated as of the Closing Date and addressed to the Initial Purchaser, of
White & Case, counsel for the Initial Purchaser, with respect to certain
legal matters relating to this Agreement and such other related matters as
the Initial Purchaser may reasonably require. In rendering such opinion,
White & Case shall have received and may rely upon such certificates and
other documents and information as it may reasonably request to pass upon
such matters.
(c) The Initial Purchaser shall have received from Arthur Andersen
LLP comfort letters dated the date hereof and the Closing Date, in form
and substance satisfactory to counsel for the Initial Purchaser.
(d) The representations and warranties of the Company contained in
this Agreement shall be true and correct on and as of the date hereof and
on and as of the Closing Date as if made on and as of the Closing Date;
the statements of the Company's officers made pursuant to any certificate
delivered in accordance with the provisions hereof shall be true and
correct on and as of the date made and on and as of the Closing Date; the
Company shall
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have performed all covenants and agreements and satisfied all conditions
on their part to be performed or satisfied hereunder at or prior to the
Closing Date; and, except as described in the Final Memorandum (exclusive
of any amendment or supplement thereto after the date hereof), subsequent
to the date of the most recent financial statements in such Final
Memorandum, there shall have been no event or development that,
individually or in the aggregate, has or would be reasonably likely to
have a Material Adverse Effect.
(e) The sale of the Notes hereunder shall not be enjoined
(temporarily or permanently) on the Closing Date.
(f) The Notes shall have been approved by the NASD for trading in
the PORTAL Market.
(g) There shall not have occurred any invalidation of Rule 144A
under the Securities Act by any court or any withdrawal or proposed
withdrawal of any rule or regulation under the Securities Act or the
Exchange Act by the Commission or any amendment or proposed amendment
thereof by the Commission which in the judgment of the Initial Purchaser
would materially impair the ability of the Initial Purchaser to purchase,
hold or effect resales of the Securities as contemplated hereby.
(h) There shall have occurred any change, or any development
involving a prospective change, in the condition, financial or otherwise,
or in the earnings, business or operations, of the Company and the
Subsidiaries, taken as a whole, from that set forth in the Final
Memorandum that constitutes a Material Adverse Effect and that makes it,
in the Initial Purchaser's judgment, impracticable to market the Notes on
the terms and in the manner contemplated in the Final Memorandum.
(i) Subsequent to the date of the most recent financial statements
in the Final Memorandum (exclusive of any amendment or supplement thereto
after the date hereof), the conduct of the business and operations of the
Company shall not have been interfered with by strike, fire, flood,
hurricane, accident or other calamity (whether or not insured) or by any
court or governmental action, order or decree, and, except as otherwise
stated therein, the properties of the Company shall not have sustained any
loss or damage (whether or not insured) as a result of any such
occurrence, except any such interference, loss or damage which would not,
individually or in the aggregate, have a Material Adverse Effect.
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<PAGE>
(j) Any securities of the Company shall have been downgraded or
placed on any "watch list" for possible downgrading by any nationally
recognized statistical rating organization.
(k) The Initial Purchaser shall have received certificates of the
Company, dated the Closing Date, signed by their respective Chairman of
the Board, President or any Senior Vice President and the Chief Financial
Officer, to the effect that:
(i) The representations and warranties of the Company
contained in this Agreement are true and correct as of the date
hereof and as of the Closing Date, and the Company has performed all
covenants and agreements and satisfied all conditions on their part
to be performed or satisfied hereunder at or prior to the Closing
Date;
(ii) At the Closing Date, since the date hereof or since the
date of the most recent financial statements in the Final Memorandum
(exclusive of any amendment or supplement thereto after the date
hereof), no event or events have occurred, no information has become
known nor does any condition exist that, individually or in the
aggregate, would have a Material Adverse Effect;
(iii) The sale of the Notes hereunder has not been enjoined
(temporarily or permanently); and
(iv) such other information as the Initial Purchaser may
reasonably request.
(l) On the Closing Date, the Initial Purchaser shall have received
the Registration Rights Agreement executed by the Company and such
agreement shall be in full force and effect at all times pursuant to its
terms.
(m) The Company shall have established the "Collateral Account" as
defined in Section 4.22 of the Indenture.
On or before the Closing Date, the Initial Purchaser and counsel for
the Initial Purchaser shall have received such further documents, opinions,
certificates, letters and schedules or instruments relating to the business,
corporate, legal and
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financial affairs of the Company and the Subsidiaries as they shall have
heretofore reasonably requested from the Company and the Subsidiaries.
All such documents, opinions, certificates, letters, schedules or
instruments delivered pursuant to this Agreement will comply with the provisions
hereof only if they are reasonably satisfactory in all material respects to the
Initial Purchaser and counsel for the Initial Purchaser. The Company and the
Subsidiaries shall furnish to the Initial Purchaser such conformed copies of
such documents, opinions, certificates, letters, schedules and instruments in
such quantities as the Initial Purchaser shall reasonably request.
8. Offering of Notes; Restrictions on Transfer. The Initial
Purchaser agrees with the Company that (i) it has not and will not solicit
offers for, or offer or sell, the Notes by any form of general solicitation or
general advertising (as those terms are used in Regulation D under the Act) or
in any manner involving a public offering within the meaning of Section 4(2) of
the Act; and (ii) it has and will solicit offers for the Notes only from, and
will offer the Notes only to (A) in the case of offers inside the United States,
(x) persons whom the Initial Purchaser reasonably believes to be QIBs or, if any
such person is buying for one or more institutional accounts for which such
person is acting as fiduciary or agent, only when such person has represented to
the Initial Purchaser that each such account is a QIB, to whom notice has been
given that such sale or delivery is being made in reliance on Rule 144A, and, in
each case, in transactions under Rule 144A or (y) a limited number of other
institutional investors reasonably believed by the Initial Purchaser to be
Accredited Investors that, prior to their purchase of the Notes, deliver to the
Initial Purchaser a letter containing the representations and agreements set
forth in Appendix A to the Final Memorandum and (B) in the case of offers
outside the United States, to persons other than U.S. persons ("foreign
purchasers," which term shall include dealers or other professional fiduciaries
in the United States acting on a discretionary basis for foreign beneficial
owners (other than an estate or trust)); provided, however, that, in the case of
this clause (B), in purchasing such Notes such persons are deemed to have
represented and agreed as provided under the caption "Transfer Restrictions"
contained in the Final Memorandum.
The Initial Purchaser represents and warrants that it is a QIB, with
such knowledge and experience in financial and business matters as are necessary
in order to evaluate the merits and risks of an investment in the Notes. The
Initial Purchaser agrees to comply with the applicable provisions of Rule 144A
and Regulation S under the Act. The Initial Purchaser hereby acknowledges that
the Company and, for purposes of the opinions to be delivered to the Initial
Purchaser
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<PAGE>
pursuant to Section 7(a) hereof, counsel to the Company will rely upon the
accuracy and truth of the representations contained in this Section 8 and the
Initial Purchaser hereby consents to such reliance.
9. Indemnification and Contribution. (a) The Company and the
Subsidiaries jointly and severally agree to indemnify and hold harmless the
Initial Purchaser and its respective affiliates, directors, officers, agents,
representatives general partners and employees of such Initial Purchaser or its
affiliates, and each other person, if any, who controls the Initial Purchaser or
its affiliates within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, to the full extent lawful against any losses, claims, damages,
expenses or liabilities (or action in respect thereof, including, without,
limitation, shareholder derivative actions and arbitration proceedings) to which
any Initial Purchaser or such other person may become subject under the Act, the
Exchange Act or otherwise, insofar as any such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of any material
fact contained in any Memorandum or any amendment or supplement thereto or
any application or other document, or any amendment or supplement thereto,
executed by the Company or the Subsidiaries or based upon written
information furnished by or on behalf of the Company or the Subsidiaries
filed in any jurisdiction in order to qualify the Notes under the
securities or "Blue Sky" laws thereof or filed with any securities
association or securities exchange (each an "Application");
(ii) the omission or alleged omission to state, in any Memorandum or
any amendment or supplement thereto or any Application, a material fact
required to be stated therein or necessary to make the statements therein
not misleading; or
(iii) any breach of any of the representations and warranties of the
Company and the Subsidiaries set forth in this Agreement or the
Registration Rights Agreement,
and will reimburse, as incurred, the Initial Purchaser and each such other
person for any legal or other expenses incurred by the Initial Purchaser or such
other person in connection with investigating, defending against or appearing as
a third-party witness in connection with any such loss, claim, damage, liability
or action; provided, however, the Company and the Subsidiaries will not be
liable in any such case to the extent that any such loss, claim, damage, or
liability arises out of or is based upon
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<PAGE>
any untrue statement or alleged untrue statement or omission or alleged omission
made in any Memorandum or any amendment or supplement thereto or any Application
in reliance upon and in conformity with written information concerning the
Initial Purchaser furnished to the Company by an Initial Purchaser specifically
for use therein. This indemnity agreement will be in addition to any liabilities
or obligations that the Company and the Subsidiaries may otherwise have to the
indemnified parties, including without limitation the indemnification
obligations of the Company pursuant to the NatWest Engagement. The Company and
the Subsidiaries shall not be liable under this Section 9 for any settlement of
any claim or action effected without its prior consent, which shall not be
unreasonably withheld.
(b) The Initial Purchaser agrees to indemnify and hold harmless the
Company, their directors, their officers and each person, if any, who controls
the Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act against any losses, claims, damages or liabilities to which the
Company or any such director, officer or controlling person may become subject
under the Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon (i) any untrue statement or alleged untrue statement of any material fact
contained in any Memorandum or any amendment or supplement thereto or any
Application, or (ii) the omission or the alleged omission to state therein a
material fact required to be stated in any Memorandum or any amendment or
supplement thereto or any Application, or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
concerning the Initial Purchaser, furnished to the Company or the Subsidiaries
by the Initial Purchaser specifically for use therein; and subject to the
limitation set forth immediately preceding this clause, will reimburse, as
incurred, any legal or other expenses incurred by the Company, or any such
director, officer or controlling person in connection with investigating or
defending against or appearing as a third party witness in connection with any
such loss, claim, damage, liability or action in respect thereof. This indemnity
agreement will be in addition to any liability that the Initial Purchaser may
otherwise have to the indemnified parties. The Initial Purchaser shall not be
liable under this Section 9 for any settlement of any claim or action effected
without their written consent, which shall not be unreasonably withheld. The
Company and the Subsidiaries shall not, without the prior written consent of the
Initial Purchaser, effect any settlement or compromise of any pending or
threatened proceeding in respect of which the Initial Purchaser is or could have
been a party, or indemnity could have been sought hereunder by any Initial
Purchaser, unless such settlement (A) includes an unconditional written release
of the
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<PAGE>
Initial Purchaser, in form and substance reasonably satisfactory to the
Initial Purchaser, from all liability on claims that are the subject matter of
such proceeding and (B) does not include any statement as to an admission of
fault, culpability or failure to act by or on behalf of the Initial Purchaser.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action for which such indemnified
party is entitled to indemnification under this Section 9, such indemnified
party will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 9, notify the indemnifying party of the commencement
thereof in writing; but the omission to so notify the indemnifying party (i)
will not relieve it from any liability under paragraph (a) or (b) above unless
and to the extent such failure results in the forfeiture by the indemnifying
party of substantial rights and defenses and (ii) will not, in any event,
relieve the indemnifying party from any obligations to any indemnified party
other than the indemnification obligation provided in paragraphs (a) and (b)
above. In case any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such indemnified
party; provided, however, that if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such counsel
with a conflict of interest, (ii) the defendants in any such action include both
the indemnified party and the indemnifying party and the indemnified party shall
have been advised by counsel that there may be one or more legal defenses
available to it and/or other indemnified parties that are different from or
additional to those available to the indemnifying party, or (iii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after receipt by the indemnifying party of notice of the institution of
such action, then, in each such case, the indemnifying party shall not have the
right to direct the defense of such action on behalf of such indemnified party
or parties and such indemnified party or parties shall have the right to select
separate counsel to defend such action on behalf of such indemnified party or
parties. After notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof and approval by such indemnified
party of counsel appointed to defend such action, the indemnifying party will
not be liable to such indemnified party under this Section 9 for any legal or
other expenses, other than reasonable costs of investigation, subsequently
incurred by such indemnified party in connection with the defense thereof,
unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the immediately preceding sentence (it being
under-
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<PAGE>
stood, however, that in connection with such action the indemnifying party shall
not be liable for the expenses of more than one separate counsel (in addition to
local counsel) in any one action or separate but substantially similar actions
in the same jurisdiction arising out of the same general allegations or
circumstances, designated by the Initial Purchaser in the case of paragraph (a)
of this Section 9 or either the Company or any of the Subsidiaries in the case
of paragraph (b) of this Section 9, representing the indemnified parties under
such paragraph (a) or paragraph (b), as the case may be, who are parties to such
action or actions) or (ii) the indemnifying party has authorized in writing the
employment of counsel for the indemnified party at the expense of the
indemnifying party. After such notice from the indemnifying party to such
indemnified party, the indemnifying party will not be liable for the costs and
expenses of any settlement of such action effected by such indemnified party
without the prior written consent of the indemnifying party (which consent shall
not be unreasonably withheld), unless such indemnified party waived in writing
its rights under this Section 9, in which case the indemnified party may effect
such a settlement without such consent.
(d) In circumstances in which the indemnity agreement provided for
in the preceding paragraphs of this Section 9 is unavailable to an indemnified
party in respect of any losses, claims, damages or liabilities (or actions in
respect thereof), each indemnifying party, in order to provide for just and
equitable contribution, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect (i)
the relative benefits received by the indemnifying party or parties on the one
hand and the indemnified party on the other from the offering of the Notes or
(ii) if the allocation provided by the foregoing clause (i) is not permitted by
applicable law, not only such relative benefits but also the relative fault of
the indemnifying party or parties on the one hand and the indemnified party on
the other in connection with the statements or omissions or alleged statements
or omissions that resulted in such losses, claims, damages or liabilities (or
actions in respect thereof). The relative benefits received by the Company on
the one hand and the Initial Purchaser on the other shall be deemed to be in the
same proportion as the total proceeds from the offering ( net of commissions and
before deducting expenses) received by the Company and the Subsidiaries bear to
the total discounts and commissions received by the Initial Purchaser. The
relative fault of the parties shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand, or the Initial Purchaser on the other,
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission or
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<PAGE>
alleged statement or omission, and any other equitable considerations
appropriate in the circumstances. The Company and the Initial Purchaser agree
that it would not be equitable if the amount of such contribution were
determined by pro rata or per capita allocation or by any other method of
allocation that does not take into account the equitable considerations referred
to in the first sentence of this paragraph (d). Notwithstanding any other
provision of this paragraph (d), the Initial Purchaser shall not be obligated to
make contributions hereunder that in the aggregate exceed the total discounts,
commissions and other compensation received by the Initial Purchaser under this
Agreement, less the aggregate amount of any damages that the Initial Purchaser
has otherwise been required to pay by reason of the untrue or alleged untrue
statements or the omissions or alleged omissions to state a material fact, and
no person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this paragraph (d),
each person, if any, who controls the Initial Purchaser within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act shall have the same
rights to contribution as the Initial Purchaser, and each director of the
Company, each officer of the Company and each person, if any, who controls the
Company or the Subsidiaries within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, shall have the same rights to contribution as
the Company.
10. Survival Clause. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Company, their
respective officers and the Initial Purchaser set forth in this Agreement or
made by or on behalf of them pursuant to this Agreement shall remain in full
force and effect, regardless of (i) any investigation made by or on behalf of
the Company, any of their respective officers or directors, the Initial
Purchaser or any other person referred to in Section 9 hereof and (ii) delivery
of and payment for the Notes. The respective agreements, covenants, indemnities
and other statements set forth in Sections 6, 9 and 15 hereof shall remain in
full force and effect, regardless of any termination or cancellation of this
Agreement.
11. Termination. (a) This Agreement may be terminated in the sole
discretion of the Initial Purchaser by notice to the Company given prior to the
Closing Date in the event that the Company shall have failed, refused or been
unable to perform all obligations and satisfy all conditions on their respective
part to be performed or satisfied hereunder at or prior thereto or, if at or
prior to the Closing any of the following shall have occurred:
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(i) any of the Company or the Subsidiaries shall have sustained any
loss or interference with respect to its businesses or properties from
fire, flood, hurricane, accident or other calamity, whether or not covered
by insurance, or from any strike, labor dispute, slow down or work
stoppage or any legal or governmental proceeding, which loss or
interference has had or has a Material Adverse Effect, or there shall have
been, in the sole judgment of the Initial Purchaser, any event or
development that, individually or in the aggregate, has or could be
reasonably likely to have a Material Adverse Effect (including without
limitation a change in control of the Company or the Subsidiaries), except
in each case as described in the Final Memorandum (exclusive of any
amendment or supplement thereto);
(ii) there shall have occurred any change, or any development
involving a prospective change, in the condition, financial or otherwise,
or in the earnings, business or operations, of the Company and the
Subsidiaries, taken as a whole, from that set forth in the Final
Memorandum that is material and adverse and that makes it, in the Initial
Purchasers' judgment, impracticable to market the Notes on the terms and
in the manner contemplated in the Final Memorandum.
(iii) trading generally shall have been suspended or materially
limited on or by, as the case may be, any of the New York Stock Exchange
or the National Association of Securities Dealers, Inc. or the setting of
minimum prices for trading on such exchange or market shall have occurred
or trading of any securities of the Company shall have been suspended on
any exchange or in any over-the-counter market;
(iv) a banking moratorium shall have been declared by New York or
United States authorities;
(v) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, or (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States, (C) any material change in the financial
markets of the United States (D) or any other national or international
calamity or emergency which, in the case of (A), (B), (C) or (D) above and
in the sole judgment of the Initial Purchaser, makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Notes as contemplated by the Final Memorandum;
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(vi) the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs that in
has a material adverse effect on the financial markets in the United
States, and would, in the sole judgment of the Initial Purchaser, make it
impracticable or inadvisable to market the Notes;
(vii) the enactment, publication, decree, or other promulgation of
any federal or state statute, regulation, rule order of any court or other
governmental authority which, in your judgment, would have a Material
Adverse Effect;
(viii) any securities of the Company shall have been downgraded or
placed on any "watch list" for possible downgrading by any nationally
recognized statistical rating organization.
(b) Termination of this Agreement pursuant to this Section 11 shall
be without liability of any party to any other party except as provided in
Section 10 hereof.
12. Information Supplied by the Initial Purchaser. The statements
set forth in the last paragraph on the cover page of the Final Memorandum,
paragraphs 6 and 7 under the heading "Private Placement" in the Final Memorandum
(to the extent such statements relate to the Initial Purchaser) constitute the
only information furnished by the Initial Purchaser to the Company for the
purposes of Sections 2(a) and 9 hereof.
13. Notices. All communications hereunder shall be in writing and,
if sent to the Initial Purchaser, shall be mailed or delivered to (i) NatWest
Capital Markets Limited, 135 Bishopgate, London, England, Attention:
[___________]; with a copy to White & Case, 1155 Avenue of the Americas, New
York, NY 10036, Attention: Timothy B. Goodell, Esq.; if sent to the Company,
shall be mailed or delivered to the Company at 11550 North Meridian Street,
Suite 600, Carmel, IN 46032, Attention: Donald L. Viles with a copy to
Cadwalader, Wickersham & Taft, 100 Maiden Lane, New York, NY 10038, Attention:
Michael C. Ryan, Esq.
All such notices and communications shall be deemed to have been
duly given: when delivered by hand, if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; and one business
day after being timely delivered to a next-day air courier.
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14. Successors. This Agreement shall inure to the benefit of and be
binding upon the Initial Purchaser, the Company and their respective successors
and legal representatives, and nothing expressed or mentioned in this Agreement
is intended or shall be construed to give any other person any legal or
equitable right, remedy or claim under or in respect of this Agreement, or any
provisions herein contained; this Agreement and all conditions and provisions
hereof being intended to be and being for the sole and exclusive benefit of such
persons and for the benefit of no other person except that (i) the indemnities
of the Company and the Subsidiaries contained in Section 9 of this Agreement
shall also be for the benefit of any person or persons who control the Initial
Purchaser within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act and (ii) the indemnities of the Initial Purchaser contained in
Section 9 of this Agreement shall also be for the benefit of the directors of
the Company and officers and any person or persons who control the Company
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act.
No purchaser of Notes from the Initial Purchaser will be deemed a successor
because of such purchase.
15. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED WHOLLY THEREIN, WITHOUT GIVING EFFECT TO ANY
PROVISIONS THEREOF RELATING TO CONFLICTS OF LAW.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between the Company
and the Initial Purchaser.
Very truly yours,
ANACOMP, INC.
By: /s/ Donald Viles
-----------------------------
Name: Donald L. Viles
Title: EVP & CFO
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The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
NATWEST CAPITAL MARKETS LIMITED
By: /s/ Gregory Bowes
-------------------------
Name: Gregory Bowes
Title: Managing Director
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SCHEDULE 1
Principal
Amount of
Initial Purchaser Notes
- ----------------- ---------
NatWest Capital Markets Limited.............. $200,000,000
<PAGE>
SCHEDULE 1
Page 2
SCHEDULE 2(b)
SUBSIDIARIES
<TABLE>
<CAPTION>
Domestic Subsidiaries Percentage Ownership Jurisdiction of Organization
- --------------------- -------------------- ----------------------------
<S> <C> <C>
Dysan International Sales Corporation 100% California
II*
Xidex International Corporation* 100% California
Foreign Subsidiaries
- --------------------
Xidex GmbH Germany
Anacomp GmbH Germany
Datamagnetics GmbH Germany
Anacomp Holdings Ltd. U.K.
Anacomp Ltd. U.K.
Xidex U.K. Ltd. U.K.
Anacomp B.V. Holland
Anacomp Scandinavia A.B. Sweden
Anacomp A/S Denmark
Anacomp O.Y. Finland
Anacomp A/S Norway
Anacomp S.A. France
Anacomp GesmbH Austria
N.V. Anacomp Belgium S.A. Belgium
</TABLE>
- --------
* Has substantially no assets and/or in process of being dissolved.
<PAGE>
SCHEDULE 1
Page 3
<TABLE>
<S> <C>
Anacomp Italia S.r.l. Italy
COM S.r.l. Italy
Xidex Magnetics S.A.* Switzerland
Xidex Corp. S.A.* Switzerland
Anacomp Canada, Inc. Canada
Anacomp do Brazil Ltda. Brazil
Anacomp Japan Ltd. Japan
Anacomp Pty Ltd.* Australia
Xidex New Zealand Ltd.* New Zealand
Data-Ware Development Int'l, Ltd.** Barbados
</TABLE>
- --------
* Has subsantially no assets and/or in process of being dissolved.
** Has approximately $46,400 in assets.
<PAGE>
Exhibit 4.6
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
March 24, 1997
NatWest Capital Markets Limited
135 Bishopsgate
London EC2M 3XT
England
Dear Sirs:
Anacomp Inc., an Indiana corporation (the "Company"), proposes to
issue and sell to you (the "Initial Purchaser"), upon the terms set forth in a
purchase agreement dated February 19, 1997 (the "Purchase Agreement"),
$200,000,000 principal amount of its 10 7/8% Senior Subordinated Notes due 2004
(the "Securities") which Securities shall be unsecured and will be subordinated
to all existing and future Senior Indebtedness (as defined in the Indenture) of
the Company and will be effectively subordinated to all obligations of each
subsidiary of the Company as may exist from time to time. Unless otherwise
indicated, capitalized terms used but not specifically defined herein have the
respective meanings ascribed thereto in the Purchase Agreement. As an inducement
to the Initial Purchaser to enter into the Purchase Agreement and in
satisfaction of a condition to your obligations thereunder, the Company agrees
with you, for the benefit of the holders of the Securities (including the
Initial Purchaser) (the "Holders"), as follows:
1. Registered Exchange Offer. The Company shall prepare and, not
later than 45 days following the date on which the original Securities were sold
to the Initial Purchaser pursuant to the Purchase Agreement (the "Issue Date"),
shall file with the Securities and Exchange Commission (the "Commission") a
registration statement (the "Exchange Offer Registration Statement") on an
appropriate form under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to a proposed offer (the "Registered Exchange Offer") to the
Holders to issue and deliver to such Holders, in exchange for the Securities, a
like aggregate principal amount of debt securities of the Company (the "Exchange
Securities") identical in all material respects to the Securities, except for
the transfer restrictions, registration rights and liquidated damages relating
to the Securities, shall use its reasonable efforts to cause the Exchange Offer
Registration Statement to become effective under the Securities Act no later
than 150 days after the Issue Date and to be consummated no later than 180 days
after the Issue Date, and shall keep the Exchange Offer Registration Statement
effective for not less than 20 business days (or longer, if required by
applicable law)
<PAGE>
2
commencing the date notice of the Exchange Offer is mailed to the Holders (such
period being called the "Exchange Offer Registration Period"). The Exchange
Securities will be issued under the Indenture or an indenture (the "Exchange
Securities Indenture") between the Company and the Trustee or such other bank or
trust company reasonably satisfactory to you, as trustee (the "Exchange
Securities Trustee"), such indenture to be identical in all material respects to
the Indenture except for the transfer restrictions relating to the Securities
(as described above).
Upon the effectiveness of the Exchange Offer Registration Statement,
the Company shall promptly commence the Registered Exchange Offer, it being the
objective of such Registered Exchange Offer to enable each Holder electing to
exchange Securities for Exchange Securities (assuming that such Holder (a) is
not (i) an affiliate of the Company within the meaning of the Securities Act or
(ii) an Exchanging Dealer (as defined below) not complying with the requirements
of the next sentence, (b) acquires the Exchange Securities in the ordinary
course of such Holder's business and (c) has no arrangements or understandings
with any person to participate in the distribution of the Exchange Securities)
and to trade such Exchange Securities from and after their receipt without any
limitations or restrictions, except as provided herein, under the Securities Act
and without material restrictions under the securities laws of the several
states of the United States. The Company, the Initial Purchaser and each
Exchanging Dealer acknowledge that, pursuant to current interpretations of
Section 5 of the Securities Act by the Commission's staff, (i) each Holder which
is a broker-dealer electing to exchange Securities, acquired for its own account
as a result of market making activities or other trading activities, for
Exchange Securities (an "Exchanging Dealer"), is required to deliver a
prospectus containing the information set forth in Annex A hereto on the cover,
in Annex B hereto in the "Exchange Offer Procedures" section and the "Purpose of
the Exchange Offer" section, and in Annex C hereto in the "Plan of Distribution"
section of such prospectus in connection with a sale of any such Exchange
Securities received by such Exchanging Dealer pursuant to the Registered
Exchange Offer and (ii) if the Initial Purchaser elects to sell Exchange
Securities acquired in exchange for Securities constituting any portion of an
unsold allotment it is required to deliver a prospectus containing the
information required by Items 507 or 508 of Regulation S-K under the Securities
Act, as applicable, in connection with such a sale.
In connection with the Registered Exchange Offer, the Company shall:
(a) mail to each Holder a copy of the prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
<PAGE>
3
(b) keep the Registered Exchange offer open for not less than 20
business days commencing the date notice of the Exchange Offer is mailed
to the Holders (or longer if required by applicable law);
(c) utilize the services of a Depositary for the Registered Exchange
Offer with an address in the Borough of Manhattan, The City of New York;
(d) permit Holders to withdraw tendered Securities at any time prior
to the close of business, New York time, on the last business day on which
the Registered Exchange Offer shall remain open; and
(e) otherwise comply in all respects with all laws applicable to the
Registered Exchange Offer.
As soon as practicable after the close of the Registered Exchange
Offer, the Company shall:
(a) accept for exchange all Securities tendered and not validly
withdrawn pursuant to the Registered Exchange Offer;
(b) deliver to the Trustee for cancellation all Securities so
accepted for exchange; and
(c) cause the Trustee or the Exchange Securities Trustee, as the
case may be, promptly to authenticate and deliver to each Holder of
Securities, Exchange Securities equal in principal amount to the
Securities of such Holder so accepted for exchange.
The Company shall make available for a period of 90 days after the
consummation of the Registered Exchange Offer, a copy of a prospectus which
meets the requirements of the Securities Act and forms part of the Exchange
Offer Registration Statement to any broker-dealer for use in connection with any
resale of any Exchange Securities.
Interest on each Exchange Security issued pursuant to the Registered
Exchange Offer will accrue from the last interest payment date on which interest
was paid on the Securities surrendered in exchange therefor or, if no interest
has been paid on the Securities, from the date of original issue of the
Securities.
Each Holder participating in the Registered Exchange Offer shall be
required to represent to the Company that at the time of the consummation of the
Registered Exchange
<PAGE>
4
Offer (i) any Exchange Securities received by such Holder will be acquired in
the ordinary course of business, (ii) such Holder will have no arrangements or
understanding with any person to participate in the distribution of the Exchange
Securities within the meaning of the Securities Act and (iii) such Holder is not
an "affiliate" of the Company within the meaning of Rule 405 of the Securities
Act, or if it is an affiliate, it will comply with the registration and
prospectus delivery requirements of the Securities Act to the extent applicable.
Notwithstanding any other provisions hereof, the Company will ensure
that (i) any Exchange Offer Registration Statement and any amendment thereto and
any prospectus forming part thereof and any supplement thereto complies in all
material respects with the Securities Act and the rules and regulations
thereunder, (ii) any Exchange Offer Registration Statement and any amendment
thereto does not, when it becomes effective, contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (iii) any prospectus
forming part of any Exchange Offer Registration Statement, and any supplement to
such prospectus, does not include, as of the consummation of the Registered
Exchange Offer, an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
2. Shelf Registration. If (i) applicable interpretations of the
staff of the Commission do not permit the Company to effect the Registered
Exchange Offer as contemplated by Section 1 hereof, or (ii) any Holder either
(A) is not eligible to participate in the Registered Exchange Offer or (B)
participates in the Registered Exchange Offer and does not receive freely
transferrable Exchange Securities in exchange for tendered Securities or (iii)
for any other reason the Registered Exchange Offer is not consummated within 180
days after the Issue Date the following provisions shall apply:
(a) The Company shall as promptly as practicable file with the
Commission and thereafter shall use its best efforts to cause to be declared
effective a shelf registration statement on an appropriate form under the
Securities Act relating to the offer and sale of the Transfer Restricted
Securities (as defined below) by the Holders from time to time in accordance
with the methods of distribution set forth in such registration statement
(hereafter, a "Shelf Registration Statement" and, together with any Exchange
Offer Registration Statement, a "Registration Statement"); provided, however,
that no Holder of Securities or Exchange Securities (other than the Initial
Purchaser) shall be entitled to have Securities or Exchange Securities held by
it covered by such Shelf Registration Statement unless such Holder agrees in
writing to be bound by all the provisions of this Agreement applicable to such
Holder.
(b) The Company shall use its reasonable best efforts to keep the
Shelf Registration Statement continuously effective in order to permit the
prospectus forming part
<PAGE>
5
thereof to be usable by Holders for a period of three years from the Issue Date
or such shorter period that will terminate when all the Securities and Exchange
Securities covered by the Shelf Registration Statement have been sold pursuant
to the Shelf Registration Statement (in any such case, such period being called
the "Shelf Registration Period"). The Company shall be deemed not to have used
its reasonable best efforts to keep the Shelf Registration Statement effective
during the requisite period if it voluntarily takes any action that would result
in Holders of Securities or Exchange Securities covered thereby not being able
to offer and sell such Securities or Exchange Securities during that period,
unless such action is required by applicable law; provided, however, that the
foregoing shall not apply to actions taken by the Company in good faith and for
valid business reasons (not including avoidance of its obligations hereunder),
including, without limitation, the acquisition or divestiture of assets, so long
as the Company within 120 days thereafter complies with the requirements of
Section 4(i) hereof. Any such period during which the Company fails to keep the
Shelf Registration Statement effective and usable for offers and sales of
Securities and Exchange Securities is referred to as a "Suspension Period." A
Suspension Period shall commence on and include the date that the Company gives
notice that the Shelf Registration Statement is no longer effective or the
prospectus included therein is no longer usable for offers and sales of
Securities and Exchange Securities and shall end on the date when each Holder of
Securities and Exchange Securities covered by such registration statement either
receives the copies of the supplemented or amended prospectus contemplated by
Section 4(i) hereof or is advised in writing by the Company that use of the
prospectus may be resumed. If one or more Suspension Periods occur, the
three-year time period referenced above shall be extended by the number of days
included in each such Suspension Period.
(c) Notwithstanding any other provisions hereof, the Company will
ensure that (i) any Shelf Registration Statement and any amendment thereto and
any prospectus forming part thereof and any supplement thereto complies in all
material respects with the Securities Act and the rules and regulations
thereunder, (ii) any Shelf Registration Statement and any amendment thereto (in
either case, other than with respect to information included therein in reliance
upon or in conformity with written information furnished to the Company by or on
behalf of any Holder specifically for use therein (the "Holders' Information"))
does not, when it becomes effective, contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading and (iii) any prospectus forming
part of any Shelf Registration Statement, and any supplement to such prospectus
(in either case, other than with respect to Holders' Information), does not
include an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
3. Additional Interest. (a) The parties hereto agree that the
Holders of Securities will suffer damages if the Company fails to fulfill its
obligations under Section 1 or
<PAGE>
6
Section 2, as applicable, and that it would not be feasible to ascertain the
extent of such damages. Accordingly, if (i) the applicable Registration
Statement is not filed with the commission on or prior to 45 days after the
Issue Date, (ii) the Exchange Offer Registration Statement is not declared
effective within 150 days after the Issue Date, (iii) the Registered Exchange
Offer is not consummated or a Shelf Registration Statement has not been declared
effective on or prior to 180 days after the Issue Date (or in the case of a
Shelf Registration Statement required to be filed in response to a change in law
or the applicable interpretations of the Commission's Staff, if later, within 45
days after publication of the change in law or interpretation) but shall
thereafter cease to be effective (at any time that the Company is obligated to
maintain the effectiveness thereof) without being succeeded within 60 days by an
additional Registration Statement filed and declared effective (each such event
referred to in clauses (i) through (iii), a "Registration Default"), then the
interest rate borne by the Securities shall be increased by one-quarter of one
percent per annum following such 45-day period in the case of clause (i) above,
following such 150-day period in the case of clause (ii) above or following such
180-day period in the case of clause (iii) above, which rate will be increased
by an additional one-quarter of one percent per annum for each 90-day period
that any additional interest continues to accrue; provided, that the aggregate
increase in such annual interest rate may in no event exceed one percent. Upon
(x) the filing of the Exchange Offer Registration Statement after the 45-day
period described in clause (i) above, (y) the effectiveness of the Exchange
Offer Registration Statement after the 150-day period described in clause (ii)
above or (z) the consummation of the Registered Exchange Offer or the
effectiveness of a Shelf Registration Statement, as the case may be, after the
180-day period described in clause (iii) above, the interest rate borne by the
Securities from the date of such filing, effectiveness or consummation, as the
case may be, will be reduced to the original interest rate if the Company is
otherwise in compliance with this Section; provided, however, that if, after any
such reduction in interest rate, a different event specified in clause (i), (ii)
or (iii) above occurs, the interest rate may again be increased and thereafter
reduced pursuant to the foregoing provisions.
Pending the announcement of a material corporate transaction, if the
Company issues a notice that the Shelf Registration Statement is unusable, or
such a notice is required under applicable securities laws to be issued by the
Company and the aggregate number of days in any consecutive twelve-month period
for which all such notices are issued or required to be issued exceeds 60 days
in the aggregate, then the interest rate borne by the Securities will be
increased by one-quarter of one percent per annum following the date that such
Shelf Registration Statement ceases to be usable beyond the 60-day period
permitted above, which rate shall be increased by an additional one-quarter of
one percent per annum at the beginning of each subsequent 90-day period that
such additional interest continues to accrue; provided, that the aggregate
increase in such annual interest rate may in no event exceed one percent per
annum. Upon the Company declaring that the Shelf Registration Statement is
usable after the period of time described in the preceding sentence, the
interest rate borne by the Securities
<PAGE>
7
will be reduced to the original interest rate if the Company is otherwise in
compliance with this Section; provided, however, that if after any such
reduction in interest rate the Shelf Registration Statement again ceases to be
usable beyond the period permitted above, the interest rate may again be
increased and thereafter reduced pursuant to the foregoing provisions. "Transfer
Restricted Securities" means each Security or Exchange Security until (i) the
date on which such Security or Exchange Security has been exchanged for a freely
transferrable Exchange Security in the Registered Exchange Offer, (ii) the date
on which such Security or Exchange Security has been effectively registered
under the Securities Act and disposed of in accordance with the Shelf
Registration Statement or (iii) the date on which such Security or Exchange
Security is distributed to the public pursuant to Rule 144 under the Securities
Act or is salable pursuant to Rule 144(k) under the Securities Act.
(b) The Company shall notify the Trustee within one business day
after each and every date on which an event occurs in respect of which
additional interest is required to be paid. The Company shall pay the additional
interest due on the Transfer Restricted Securities by depositing with the Paying
Agent (as defined in the Indenture) (which shall not be the Company for these
purposes) for the Transfer Restricted Securities, in trust, for the benefit of
the Holders, prior to 10:00 a.m. on the next interest payment date specified by
the Indenture (or such other indenture), sums sufficient to pay the additional
interest then due. Any amounts of additional interest due pursuant to clauses
(a)(i), (a)(ii) or (a)(iii) of this Section 4 will be payable to the Holders of
affected Notes in cash semi-annually on each interest payment date specified by
the Indenture (or such other indenture) to the record holders entitled to
receive the interest payment to be made on such date commencing with the first
such date occurring after any such additional interest commences to accrue. The
amount of additional interest will be determined by multiplying the applicable
additional interest rate by the principal amount of the affected Securities of
such Holders, multiplied by a fraction, the numerator of which is the number of
days such additional interest rate was applicable during such period (determined
on the basis of a 360-day year comprised of twelve 30-day months and, in the
case of a partial month, the actual number of days elapsed), and the denominator
of which is 360.
4. Registration Procedures. In connection with any Registration
Statement, the following provisions shall apply:
(a) The Company shall (i) furnish to you, prior to the filing
thereof with the Commission, a copy of the Registration Statement and each
amendment thereof and each supplement, if any, to the prospectus included
therein and, in the event that the Initial Purchaser (with respect to any
portion of an unsold allotment from the original offering) is participating in
the Registered Exchange Offer or the Shelf Registration, shall use reasonable
efforts to reflect in each such document, when so filed with the Commission,
such comments as you reasonably may propose; (ii) if applicable, include the
information set forth in Annex A
<PAGE>
8
hereto on the cover, in Annex B hereto in the "Exchange Offer Procedures"
section and the "Purpose of the Exchange Offer" section and in Annex C hereto in
the "Plan of Distribution" section of the prospectus forming a part of the
Exchange Offer Registration Statement, and include the information set forth in
Annex D hereto in the Letter of Transmittal delivered pursuant to the Registered
Exchange Offer; and (iii) if requested by the Initial Purchaser, include the
information required by Items 507 or 508 of Regulation S-K under the Securities
Act, as applicable, in the prospectus forming a part of the Exchange Offer
Registration Statement.
(b) The Company shall advise you and, if requested by the Holders,
but only as to events set forth in clauses (i) and (ii) below, the Holders and,
if requested by you, confirm such advice in writing (which advice pursuant to
clauses (ii)-(iv) hereof shall be accompanied by an instruction to suspend the
use of the prospectus until the requisite changes have been made):
(i) when any Registration Statement and any amendment thereto has
been filed with the Commission and when such Registration Statement or any
post-effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments or supplements
to any Registration Statement or the prospectus included therein or for
additional information;
(iii) of the receipt by the Company of any notification with respect
to the suspension of the qualification of the Securities or the Exchange
Securities for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose; and
(iv) of the happening of any event that requires the making of any
changes in any Registration Statement or the prospectus so that, as of
such date, the statements therein are not misleading and do not omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading.
(c) The Company will furnish to each Holder of Transfer Restricted
Securities included within the coverage of any Shelf Registration Statement,
without charge, at least one copy of such Shelf Registration Statement and any
post-effective amendment thereto, including financial statements and schedules,
and, if the Holder so requests in writing, all exhibits (including those
incorporated by reference).
(d) The Company will, during the Shelf Registration Period, promptly
deliver to each Holder of Transfer Restricted Securities included within the
coverage of any Shelf Registration Statement, without charge, as many copies of
the prospectus (including each
<PAGE>
9
preliminary prospectus) included in such Shelf Registration Statement and any
amendment or supplement thereto as such Holder may reasonably request; and the
Company consents to the use in accordance with applicable law of the prospectus
or any amendment or supplement thereto by each of the selling Holders of
Transfer Restricted Securities in connection with the offering and sale of the
Transfer Restricted Securities covered by the prospectus or any amendment or
supplement thereto.
(e) The Company will furnish to each Exchanging Dealer or the
Initial Purchaser, as applicable, which so requests, without charge, at least
one copy of the Exchange Offer Registration Statement and any post-effective
amendment thereto, including financial statements and schedules, and, if the
Exchanging Dealer or Initial Purchaser, as applicable, so requests in writing,
all exhibits (including those incorporated by reference) except those previously
filed by EDGAR.
(f) The Company will, during the Exchange Offer Registration Period,
promptly deliver to each Exchanging Dealer or the Initial Purchaser, as
applicable, without charge, as many copies of the prospectus included within the
coverage of the Exchange Offer Registration Statement and any amendment or
supplement thereto as such Exchanging Dealer or the Initial Purchaser, as
applicable, may reasonably request for delivery by (i) such Exchanging Dealer in
connection with a sale of Exchange Securities received by it pursuant to the
Registered Exchange Offer or (ii) the Initial Purchaser in connection with a
sale of Exchange Securities received by it in exchange for Securities
constituting any portion of an unsold allotment; and the Company consents to the
use in accordance with applicable law of the prospectus or any amendment or
supplement thereto by any such Exchanging Dealer or the Initial Purchaser, as
applicable, as aforesaid.
(g) Prior to any public offering of Securities or Exchange
Securities pursuant to any Registration Statement, the Company will use its
reasonable best efforts to register or qualify or cooperate with the Holders of
Securities included therein and its counsel in connection with the registration
or qualification of such securities for offer and sale under the securities or
blue sky laws of such jurisdictions as any such Holder reasonably requests in
writing and do any and all other acts or things necessary or advisable to enable
the offer and sale in such jurisdictions of the Securities or Exchange
Securities covered by such Registration Statement; provided, however, that the
Company will not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action which would
subject it to general service of process or to taxation in any such jurisdiction
where it is not then so subject.
(h) The Company will cooperate with the Holders of Securities or
Exchange Securities to facilitate the timely preparation and delivery of
certificates representing Securities or Exchange Securities to be sold pursuant
to any Registration Statement free of any restrictive
<PAGE>
10
legends and in such denominations and registered in such names as Holders may
request in writing prior to sales of Securities or Exchange Securities pursuant
to such Registration Statement.
(i) If (i) any event contemplated by paragraphs (b)(ii) through (iv)
above occurs during the period in which the Company is required to maintain an
effective Registration Statement or (ii) any Suspension Period remains in effect
more than 120 days after the occurrence thereof, the Company will promptly
prepare a post-effective amendment to the Registration Statement or a supplement
to the related prospectus or file any other required document so that, as
thereafter delivered to purchasers of the Securities or purchasers of Exchange
Securities from a Holder, the prospectus will not include an untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading.
(j) Not later than the effective date of the applicable Registration
Statement, the Company will provide a CUSIP number for the Securities or
Exchange Securities, as the case may be, and provide the applicable trustee with
printed certificates for the Securities or Exchange Securities, as the case may
be, in a form eligible for deposit with The Depository Trust Company, or any
successor depository.
(k) The Company will use its best efforts to comply with all
applicable rules and regulations of the Commission and will make generally
available to its security holders as soon as practicable after the effective
date of the applicable Registration Statement an earnings statement satisfying
the provisions of Section 11(a) of the Securities Act; provided that in no event
shall such earnings statement be delivered later than 45 days after the end of a
12-month period (or 90 days, if such period is a fiscal year) beginning with the
first month of the Company's first fiscal quarter commencing after the effective
date of the applicable Registration Statement, which statements shall cover such
12-month period.
(l) The Company will cause the Indenture or the Exchange Securities
Indenture, as the case may be, to be qualified under the Trust Indenture Act as
required by applicable law in a timely manner.
(m) The Company may require each Holder of Transfer Restricted
Securities to be sold pursuant to any Shelf Registration Statement to furnish to
the Company such information regarding the Holder and the distribution of such
Transfer Restricted Securities as the Company may from time to time reasonably
require for inclusion in such Registration Statement, and the Company may
exclude from such registration the Transfer Restricted Securities of any Holder
that unreasonably fails to furnish such information within a reasonable time
after receiving such request.
<PAGE>
11
(n) In the case of a Shelf Registration Statement, each Holder of
Transfer Restricted Securities to be registered pursuant thereto agrees by
acquisition of such Transfer Restricted Securities that, upon receipt of any
notice from the Company pursuant to Section 4(b)(ii) through (iv) hereof, such
Holder will discontinue disposition of such Transfer Restricted Securities and
use of the applicable prospectus until such Holder's receipt of copies of the
supplemental or amended prospectus contemplated by Section 4(i) hereof, or until
advised in writing (the "Advice") by the Company that the use of the applicable
prospectus may be resumed. If the Company shall give any notice under Section
4(b)(ii) through (iv) during the period that the Company is required to maintain
an effective Registration Statement (the "Effectiveness Period"), such
Effectiveness Period shall be extended by the number of days during such period
from and including the date of the giving of such notice to and including the
date when each seller of Transfer Restricted Securities covered by such
Registration Statement shall have received (x) the copies of the supplemental or
amended prospectus contemplated by Section 4(i) (if an amended or supplemental
prospectus is required) or (y) the Advice (if no amended or supplemental
prospectus is required).
<PAGE>
12
5. Registration Expenses.
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by the Company
whether or not the Exchange Offer Registration Statement or a Shelf Registration
Statement is filed or becomes effective, including, without limitation, (i) all
registration and filing fees (including, without limitation, (A) fees with
respect to filings required to be made with the NASD in connection with an
underwritten offering and (B) fees and expenses of compliance with state
securities or Blue Sky laws, (ii) printing expenses, including, without
limitation, expenses of printing certificates for Securities or Exchange
Securities in a form eligible for deposit with The Depository Trust Company and
of printing prospectuses if the printing of prospectuses is requested by the
managing underwriter or underwriters, if any, by the Holders of a majority in
aggregate principal amount of the Securities included in any Registration
Statement or sold by any Exchanging Dealer, as the case may be, (iii) messenger,
telephone and delivery expenses, (iv) fees and disbursements of counsel for the
Company, (v) fees and disbursements of the Company's independent certified
public accountants (including, without limitation, the expenses of any special
audit and "cold comfort" letters required by or incident to such performance by
or incident to such performance), (vi) rating agency fees, if any, and any fees
associated with making the Securities or Exchange Securities eligible for
trading through The Depository Trust Company, (vii) Securities Act liability
insurance, if the Company desires such insurance, (viii) fees and expenses of
all other persons retained by the Company, (ix) internal expenses of the Company
(including, without limitation, all salaries and expenses of officers and
employees of the Company performing legal or accounting duties), (x) the expense
of any annual audit, (ix) the fees and expenses incurred in connection with the
listing of the securities to be registered on any securities exchange or any
inter-dealer quotation system, if applicable, and (xii) the expenses relating to
printing, word processing and distributing all Registration Statements,
underwriting agreements, securities sales agreements, indentures and any other
documents necessary in order to comply with this Agreement.
(b) The Company shall (i) reimburse the Holders of the Securities
being registered in a Shelf Registration Statement for the reasonable fees and
disbursements of not more than one counsel (in addition to appropriate local
counsel) chosen by the Holders of a majority in aggregate principal amount of
the Securities to be included in such Registration Statement and (ii) reimburse
out-of-pocket expenses (other than legal expenses) of Holders of Securities
incurred in connection with the registration and sale of the Securities pursuant
to a Shelf Registration Statement or in connection with the exchange of
Securities pursuant to the Exchange Offer. In addition, the Company shall
reimburse the Initial Purchaser for 50% of the reasonable fees and expenses of
one counsel in connection with the Exchange Offer which shall be White & Case,
and shall not be required to pay any other legal expenses of the Initial
Purchaser in connection therewith.
<PAGE>
13
6. Indemnification. (a) In the event of a Shelf Registration
Statement or in connection with any prospectus delivery pursuant to an Exchange
Offer Registration Statement by an Exchanging Dealer or the Initial Purchaser,
as applicable, the Company shall indemnify and hold harmless each Holder and
Exchanging Dealer, and each of their directors, officers, agents and employees
and each person, if any, who controls such Holder or Exchanging Dealer within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act and the directors, officers, agents and employees of such controlling
persons against any and all loss, liability, claim and damage, as incurred,
arising out of any untrue statement or alleged untrue statement of a material
fact contained in any such Registration Statement or any prospectus forming part
thereof or in any amendment or supplements thereto or the omission or alleged
omission therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; and shall reimburse each Holder promptly upon demand for any and all
expense (including, subject to Section 6(c) hereof, the fees and disbursements
of counsel chosen by the indemnified party), reasonably incurred as such
expenses are incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental or regulatory
agency or body, commenced or threatened, or any claim based upon any such untrue
statement or omission, or any such alleged untrue statement or omission;
provided, however, that (i) this indemnity shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with Holders' Information and (ii) this indemnity with
respect to any untrue statement or alleged untrue statement or omission or
alleged omission in any related preliminary prospectus shall not enure to the
benefit of any indemnified party from whom the person asserting any such loss,
claim, damage or liability received Securities or Exchange Securities if such
persons did not receive a copy of the final prospectus at or prior to the
confirmation of the sale of such Securities or Exchange Securities to such
person in any case where such delivery is required by the Securities Act and the
untrue statement or omission of material fact contained in the related
preliminary prospectus was corrected in the final prospectus unless such failure
to deliver the final prospectus was a result of noncompliance by the Company
with Sections 4(c), 4(d), 4(e) or 4(f).
(b) In the event of a Shelf Registration Statement, each Holder and
Exchanging Dealer agrees to indemnify and hold harmless the Company, its
directors, officers, agents and employees and each person, if any, who controls
the Company within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act and the directors, officers, agents and employees of such
controlling persons against any and all loss, liability, claim, damage and
expense described in the indemnity contained in Section 6(a) hereof, as
incurred, arising out of or based upon any untrue statements or omissions, or
alleged untrue statements or omissions, made in the Registration Statement (or
any amendment or supplement thereto) in reliance on and in conformity with
Holders' Information furnished to
<PAGE>
14
the Company by such Holder or Exchanging Dealer; provided, however, that no such
Holder or Exchanging Dealer shall be liable for any indemnity claims hereunder
in excess of the amount of net proceeds received by such Holder or Exchanging
Dealer from the sale of Securities or Exchange Securities pursuant to the
Registration Statement.
(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any claim or action
commenced against it in respect of which indemnity may be sought hereunder;
provided, however, that failure to so notify an indemnifying party shall not
relieve such indemnifying party from any obligation that it may have pursuant to
this Section except to the extent that it has been materially prejudiced
(through the forfeiture of substantive rights or defenses) by such failure;
provided further, however, that the failure to notify an indemnifying party
shall not relieve it from any liability that it may have to an indemnified party
otherwise than on account of this indemnity agreement. If any such claim or
action shall be brought against an indemnified party, the indemnified party
shall notify the indemnifying party thereof, and the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party. After notice from
the indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 6 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof; provided, however, that an indemnified party will have the right to
employ its own counsel in any such action, but the fees, expenses and other
charges of such counsel will be at the expense of such indemnified party unless
(1) the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based on the written advice of counsel) that there may be legal
defenses available to it or other indemnified parties that are different from or
in addition to those available to the indemnifying party, (3) a conflict or
potential conflict exists (based on the written advice of counsel to the
indemnified party) between the indemnified party and indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (4) the indemnifying party
has not in fact employed counsel to assume the defense of such action within a
reasonable time after receiving notice of the commencement of the action, in
each of which cases the reasonable fees, disbursements and other charges of
counsel for the indemnified party will be at the expense of the indemnifying
party or parties. It is understood that the indemnifying party or parties shall
not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees, disbursements and other charges
of more than one separate firm of attorneys (in addition to any local counsel)
at any one time for all such indemnified party or parties. Each indemnified
party, as a condition of the indemnity agreements contained in Sections 6(a) and
6(b), shall use all reasonable efforts to cooperate with the indemnifying party
in the defense of any such action or claim. No
<PAGE>
15
indemnifying party shall be liable for any settlement of any such action
effected without its written consent, but if settled with its written consent or
if there be a final judgment of the plaintiff in any such action, the
indemnifying party agrees to indemnify and hold harmless any indemnified party
from and against any loss or liability by reason of such settlement or judgment.
No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened proceeding
in respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party, unless
such settlement includes an unconditional release of such indemnified party from
all liability on claims that are the subject matter of such proceeding.
(d) If a claim by an indemnified party for indemnification under
this Section 6 is unenforceable even though the express provisions hereof
provide for indemnification in such case, then each applicable indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party and indemnified party in connection with the actions,
statements or omissions that resulted in such losses as well as any other
relevant equitable considerations. The relative fault of such indemnifying party
and indemnified party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission of a material fact, has been
taken or made by, or relates to information supplied by, such indemnifying party
or indemnified party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result of any losses shall
be deemed to include, subject to the limitations set forth in Section 6(c)
herein, any legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section, an indemnifying party that is a
holder of Transfer Restricted Securities or Exchange Securities shall not be
required to contribute any amount in excess of the amount by which the total
price at which the Transfer Restricted Securities or Exchange Securities sold by
such indemnifying party and distributed to the public were offered to the public
exceeds the amount of any damages that such indemnifying party would have
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 10(f) of the Securities Act)
shall be entitled to any contribution from any person who was not guilty of such
fraudulent misrepresentation.
<PAGE>
16
7. Miscellaneous. (a) Amendments and Waivers. The provisions of this
Agreement may not be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given, unless the Company
has obtained the written consent of Holders of a majority in aggregate principal
amount of the Securities and the Exchange Securities, taken as a single class.
Notwithstanding the foregoing, a waiver or consent to depart from the provisions
hereof with respect to a matter that relates exclusively to the rights of the
Holders of Securities or Exchange Securities whose Securities or Exchange
Securities are being sold pursuant to a Registration Statement and that does not
directly or indirectly affect the rights of other Holders may be given by
Holders of a majority in aggregate principal amount of the Securities or
Exchange Securities being sold by such Holders pursuant to such Registration
Statement.
(b) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail,
telecopier, or air courier guaranteeing overnight delivery:
(1) if to a Holder, at the most current address given by such Holder
to the Company in accordance with the provisions of this Section 7(b),
which address initially is, with respect to each Holder, the address of
such Holder maintained by the Registrar under the Indenture, with a copy
in like manner to NatWest Capital Markets Limited;
(2) if to you, initially at your address set forth in the Purchase
Agreement; and
(3) if to the Company, initially at the address of the Company set
forth in the Purchase Agreement.
All such notices and communications shall be deemed to have been
duly given: when delivered by hand, if personally delivered; one business day
after being delivered to a next-day air courier; five business days after being
deposited in the mail; and when receipt is acknowledged by the recipient's
telecopier machine, if telecopied.
(c) Successors And Assigns. This Agreement shall be binding upon the
Company and its successors and assigns.
(d) Counterparts. This Agreement may be executed in any number of
counterparts (which may be delivered in original form or by telecopies) and by
the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
<PAGE>
17
(e) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(f) Governing Law; Submission to Jurisdiction.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
(g) No Inconsistent Agreements. The Company has not and shall not,
on or after the date of this Agreement, enter into any agreement that is
inconsistent with the rights granted to the holders of Transfer Restricted
Securities in this Agreement or otherwise conflicts with the provisions hereof.
The Company has not previously entered into any agreement which remains in
effect granting any registration rights with respect to any of its debt
securities to any person. Without limiting the generality of the foregoing,
without the written consent of the holders of a majority in aggregate principal
amount of the then outstanding Transfer Restricted Securities, the Company shall
not grant to any person the right to request the Company to register any debt
securities of the Company under the Securities Act unless the rights so granted
are not in conflict or inconsistent with the provisions of the Agreement.
(h) No Piggyback on Registrations. Neither the Company, nor any of
its security holders (other than the holders of Transfer Restricted Securities
in such capacity) shall have the right to include any securities of the Company
in any Shelf Registration or Registered Exchange Offer other than Transfer
Restricted Securities.
(i) Severability. The remedies provided herein are cumulative and
not exclusive of any remedies provided by law. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
<PAGE>
18
(j) Remedies. In the event of a breach by the Company, or by any
holder of Transfer Restricted Securities, of any of their obligations under this
Agreement, each holder of Transfer Restricted Securities or the Company, as the
case may be, in addition to being entitled to exercise all rights granted by
law, including recovery of damages (other than the recovery of damages for a
breach by the Company of its obligations under Sections 1 or 2 hereof for which
liquidated damages have been paid pursuant to Section 3 hereof), will be
entitled to specific performance of its rights under this Agreement. The Company
and each holder of Transfer Restricted Securities agree that monetary damages
would not be adequate compensation for any loss incurred by reason of a breach
by it of any of the provisions of this Agreement and hereby further agree that,
in the event of any action for specific performance in respect of such breach,
it shall waive the defense that a remedy at law would be adequate.
<PAGE>
19
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
Very truly yours,
ANACOMP, INC.
By: /s/ Gary Bilsland
-------------------------
Name: Gary Bilsland
Title: Assistant Treasurer
<PAGE>
20
The foregoing Agreement is hereby confirmed
and accepted as of the date first above written:
NATWEST CAPITAL MARKETS LIMITED
By: /s/ Gregory Bowes
-------------------------
Name: Gregory Bowes
Title: Managing Director
<PAGE>
ANNEX A
Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Registered Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Securities.
The Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of Exchange Securities received in exchange for
Securities where such Securities were acquired by such broker-dealer as a result
of market-making activities or other trading activities. The Company has agreed
that, for a period of 90 days after the Expiration Date (as defined herein), it
will make this Prospectus available to any broker-dealer for use in connection
with any such resale. See "Plan of Distribution."
<PAGE>
ANNEX B
Each broker-dealer that receives Exchange Securities for its own
account in exchange for Securities, where such Securities were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Securities. See "Plan of Distribution."
<PAGE>
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Registered Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Securities.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of Exchange Securities
received in exchange for Securities where such Securities were acquired as a
result of market-making activities or other trading activities. The Company has
agreed that, for a period of 90 days after the Expiration Date, it will make
this Prospectus, as amended or supplemented, available to any broker-dealer for
use in connection with any such resale. In addition, until _______________,
199_, all dealers effecting transactions in the Exchange Securities may be
required to deliver a prospectus.(1)
The Company will not receive any proceeds from any sale of Exchange
Securities by broker-dealers. Exchange Securities received by broker-dealers for
their own account pursuant to the Registered Exchange Offer may be sold from
time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the Exchange
Securities or a combination of such methods of resale, at market prices
prevailing at the time of resale, at prices related to such prevailing market
prices or at negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer or the
purchasers of any such Exchange Securities. Any broker-dealer that resells
Exchange Securities that were received by it for its own account pursuant to the
Registered Exchange Offer and any broker or dealer that participates in a
distribution of such Exchange Securities may be deemed to be an "underwriter"
within the meaning of the Securities Act and any profit on any such resale of
Exchange Securities and any commission or concessions received by any such
persons may be deemed to be underwriting compensation under the Securities Act.
The Letter of Transmittal states that, by acknowledging that it will deliver and
by delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
For a period of 90 days after the Expiration Date the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Registered Exchange Offer (including the expenses of one counsel
for the Holders of the Securities) other than commissions or concessions of any
broker-dealers and will indemnify the Holders of the Securities (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
- ----------
(1) In addition, the legend required by Item 502(e) of Regulation S-K
will appear on the back cover page of the Exchange Offer prospectus.
<PAGE>
ANNEX D
|_| CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS
OR SUPPLEMENTS THERETO.
Name: _______________________________________
Address:_____________________________________
_____________________________________
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Securities. If the undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Securities that were acquired as
a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Securities; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
<PAGE>
Exhibit 4.7
LETTER OF TRANSMITTAL
TO TENDER FOR EXCHANGE
10O% SENIOR SUBORDINATED NOTES DUE 2004, SERIES A
OF
ANACOMP, INC.
PURSUANT TO
PROSPECTUS DATED , 1997
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1997, UNLESS EXTENDED. TENDERS OF 10O% SENIOR SUBORDINATED
NOTES DUE 2004, SERIES A MAY ONLY BE WITHDRAWN UNDER THE CIRCUMSTANCES DESCRIBED
IN THE PROSPECTUS AND HEREIN.
The Exchange Agent for the Exchange Offer is:
IBJ SCHRODER BANK & TRUST COMPANY
FACSIMILE TRANSMISSION:
(212) 858-2611
CONFIRM BY TELEPHONE:
(212) 858-2103
<TABLE>
<S> <C>
BY MAIL: BY HAND/OVERNIGHT DELIVERY:
IBJ Schroder Bank & Trust Company IBJ Schroder Bank & Trust Company
P.O. Box 84 One State Street
Bowling Green Station Securities Processing Window SC-1
New York, New York 10274-0084 New York, New York 10004
Attention: Reorganization Operations Department
</TABLE>
<TABLE>
<S> <C> <C> <C>
_____________________________________________________________________________________________________________________________
DESCRIPTION OF OLD NOTES TENDERED
_____________________________________________________________________________________________________________________________
Name(s) and Address(es) of Holder(s) Old Notes Tendered
(Please fill in, if blank, exactly as name(s) appear(s) on Old Notes) (Attach additional schedule, if necessary)
_____________________________________________________________________________________________________________________________
(1) (2) (3)
______________________________________________________________
Certificate Number(s) Total Principal Amount
of Old Notes Tendered
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
Total
_____________________________________________________________________________________________________________________________
</TABLE>
THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF THE PROSPECTUS, DATED
, 1997 (THE "PROSPECTUS"), OF ANACOMP, INC., AN INDIANA
CORPORATION (THE "COMPANY"), RELATING TO THE OFFER (THE "EXCHANGE OFFER") OF THE
COMPANY, UPON THE TERMS AND SUBJECT TO THE CONDITIONS SET FORTH IN THE
PROSPECTUS AND HEREIN AND THE INSTRUCTIONS HERETO, TO EXCHANGE $1,000 PRINCIPAL
AMOUNT OF ITS 10O% SENIOR SUBORDINATED NOTES DUE 2004, SERIES B (THE "EXCHANGE
NOTES") FOR EACH $1,000 PRINCIPAL AMOUNT OF THE OUTSTANDING 10O% SENIOR
SUBORDINATED NOTES DUE 2004, SERIES A (THE "OLD NOTES"), OF WHICH $200 MILLION
AGGREGATE PRINCIPAL AMOUNT IS OUTSTANDING. THE MINIMUM PERMITTED TENDER IS
$1,000 PRINCIPAL AMOUNT OF OLD NOTES, AND ALL OTHER TENDERS MUST BE IN INTEGRAL
MULTIPLES OF $1,000.
<PAGE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION BY
FACSIMILE, OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
The Exchange Offer will expire at 5:00 p.m., New York City time, on
, 1997 (the "Expiration Date"), unless extended.
HOLDERS WHO WISH TO BE ELIGIBLE TO RECEIVE EXCHANGE NOTES PURSUANT TO THE
EXCHANGE OFFER MUST VALIDLY TENDER THEIR OLD NOTES TO THE EXCHANGE AGENT ON OR
PRIOR TO THE EXPIRATION DATE.
This Letter of Transmittal should be used only to exchange the Old Notes,
pursuant to the Exchange Offer as set forth in the Prospectus.
This Letter of Transmittal is to be used (a) if Old Notes are to be
physically delivered to the Exchange Agent or (b) if delivery of Old Notes is to
be made by book-entry transfer to the account maintained by the Exchange Agent
at The Depository Trust Company ("DTC" or the "Book-Entry Transfer Facility")
pursuant to the procedures set forth in the Prospectus under the caption "The
Exchange Offer--Procedures for Tendering." Delivery of documents to the
Book-Entry Transfer Facility does not constitute deliver to the Exchange Agent.
Holders whose Old Notes are not available or who cannot deliver their Old
Notes and all other documents required hereby to the Exchange Agent on or
prior to the Expiration Date nevertheless may tender their Old Notes in
accordance with the guaranteed delivery procedures set forth in the
Prospectus under the caption "The Exchange Offer--Guaranteed Delivery
Procedures." See Instruction 1.
THE EXCHANGE OFFER IS NOT BEING MADE TO (NOR WILL THE SURRENDER OF OLD
NOTES FOR EXCHANGE BE ACCEPTED FROM OR ON BEHALF OF) HOLDERS IN ANY JURISDICTION
IN WHICH THE MAKING OR ACCEPTANCE OF THE EXCHANGE OFFER WOULD NOT BE IN
COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION.
All capitalized terms used herein and not defined herein shall have the
meanings ascribed to them in the Prospectus.
HOLDERS WHO WISH TO EXCHANGE THEIR OLD NOTES MUST COMPLETE THE BOX BELOW
ENTITLED "METHOD OF DELIVERY," COMPLETE COLUMNS (1) THROUGH (3) IN THE BOX ON
THE COVER ENTITLED "DESCRIPTION OF OLD NOTES TENDERED" AND SIGN IN THE
APPROPRIATE BOX(ES) BELOW.
2
<PAGE>
METHOD OF DELIVERY
/ / CHECK HERE IF CERTIFICATES FOR TENDERED OLD NOTES ARE ENCLOSED HEREWITH.
/ / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY
TRANSFER FACILITY SPECIFIED ABOVE AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
Name of Book-Entry Transfer Facility:
/ / The Depository Trust Company
Account Number: ___________________ Transaction Code Number:________________
/ / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE
THE FOLLOWING (SEE INSTRUCTIONS 1 AND 4):
Name(s) of Registered Holder(s): ___________________________________________
Window Ticket Number (if any): _____________________________________________
Date of Execution of Notice of Guaranteed Delivery: ________________________
Name of Eligible Institution which Guaranteed Delivery: ____________________
IF DELIVERED BY THE BOOK-ENTRY TRANSFER FACILITY, CHECK BOX OF BOOK-ENTRY
TRANSFER FACILITY:
/ / The Depository Trust Company
Account Number: ___________________ Transaction Code Number:________________
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE TEN ADDITIONAL
COPIES OF THE PROSPECTUS AND COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name: ______________________________________________________________________
Address: ___________________________________________________________________
____________________________________________________________________________
3
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the principal amount of Old Notes
indicated in the box on the cover entitled "Description of Old Notes Tendered."
Subject to, and effective upon, the acceptance for exchange of the Old Notes
tendered hereby, the undersigned hereby irrevocably sells, assigns and transfers
to or upon the order of the Company all right, title and interest in and to such
Old Notes, and hereby irrevocably constitutes and appoints the Exchange Agent
the true and lawful agent and attorney-in-fact of the undersigned (with full
knowledge that said Exchange Agent also acts as the agent of the Company and as
Trustee under the indenture governing the Old Notes and the Exchange Notes) with
respect to such Old Notes, with full power of substitution (such power of
attorney being deemed to be an irrevocable power coupled with an interest) to
(a) deliver certificates representing such Old Notes, and to deliver all
accompanying evidences of transfer and authenticity to or upon the order of the
Company upon receipt by the Exchange Agent, as the undersigned's agent, of the
Exchange Notes to which the undersigned is entitled upon the acceptance by the
Company of such Old Notes for exchange pursuant to the Exchange Offer, (b)
receive all benefits and otherwise to exercise all rights of beneficial
ownership of such Old Notes, all in accordance with the terms of the Exchange
Offer, and (c) present such Old Notes for transfer on the register for such Old
Notes.
The undersigned acknowledges that prior to this Exchange Offer, there has
been no public market for the Old Notes or the Exchange Notes. If a market for
the Exchange Notes should develop, the Exchange Notes could trade at a discount
from their principal amount. The undersigned is aware that the Company does not
intend to list the Exchange Notes on a national securities exchange and that
there can be no assurance that an active market for the Exchange Notes will
develop.
The undersigned also acknowledges that this Exchange Offer is being made in
reliance on an interpretation by the staff of the Securities and Exchange
Commission (the "Commission") that the Exchange Notes issued pursuant to the
Exchange Offer in exchange for the Old Notes may be offered for resale, resold
and otherwise transferred by any person receiving such Exchange Notes whether or
not such person is the holder thereof, (other than any such holder or other
person which is (i) a broker-dealer that receives Exchange Notes for its own
account in exchange for Old Notes, where such Old Notes were acquired by such
broker-dealer as a result of market-making or other trading activities, or (ii)
an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act of 1933, as amended (the "Securities Act")) without compliance
with the registration and prospectus delivery provisions of the Securities Act
provided that such Exchange Notes are acquired in the ordinary course of
business of such holder or other person, such holder or other person is not
engaged in or intending to engage in a distribution of the Exchange Notes, and
such holder or other person has no arrangement with any person to participate in
the distribution of such Exchange Notes. See Morgan Stanley & Co. Incorporated,
SEC No-Action Letter (available June 5, 1991) and Exxon Capital Holdings
Corporation, SEC No-Action Letter (available May 13, 1988).
If the undersigned is not a broker-dealer, the undersigned represents that
it is not engaged in, and does not intend to engage in, a distribution of
Exchange Notes. If the undersigned is a broker-dealer that will receive
Exchange Notes, it represents that the Old Notes to be exchanged for Exchange
Notes were acquired as a result of market-making activities or other trading
activities and it acknowledges that it will deliver a prospectus in connection
with any resale of such Exchange Notes; however, by so acknowledging and by
delivering a prospectus, the undersigned will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL TENDERS BE ACCEPTED FROM
OR ON BEHALF OF, HOLDERS OF THE OLD NOTES IN ANY JURISDICTION IN WHICH THE
MAKING OF THE OFFER OR ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE
LAWS OF SUCH JURISDICTION OR WOULD OTHERWISE NOT BE IN COMPLIANCE WITH ANY
PROVISION OF ANY APPLICABLE SECURITY LAW.
The undersigned represents that (a) the Exchange Notes acquired pursuant to
the Exchange Offer are being obtained in the ordinary course of business of the
undersigned or other person receiving such Exchange Notes, (b) neither the
undersigned nor any such other person is engaged in or intends to engage in a
distribution of such
4
<PAGE>
Exchange Notes, (c) neither the undersigned nor any such other person has any
arrangement or understanding with any person to participate in a distribution of
the Exchange Notes and (d) neither the undersigned nor any such other person is
an "affiliate" as defined under Rule 405 of the Securities Act, of the Company
or if such holder is such an affiliate, that such holder will comply with the
registration and the prospectus delivery requirements of the Securities Act in
connection with the disposition of any Exchange Notes to the extent applicable.
The undersigned understands and acknowledges that the Company reserves the
right in its sole discretion to purchase or make offers for any Old Notes that
remain outstanding subsequent to the Expiration Date or, as set forth in the
Prospectus under the caption "Conditions of the Exchange Offer," to terminate
the Exchange Offer and, to the extent permitted by applicable law, purchase Old
Notes in the open market, in privately negotiated transactions or otherwise.
The terms of any such purchases or offers will differ from the terms of the
Exchange Offer.
The undersigned hereby represents and warrants that the undersigned accepts
the terms and conditions of the Exchange Offer, has full power and authority to
tender, exchange, assign and transfer the Old Notes tendered hereby, and that
when the same are accepted for exchange by the Company, the Company will acquire
good and unencumbered title thereto, free and clear of all liens, restrictions,
charges and encumbrances and not subject to any adverse claim or right. The
undersigned will, upon request, execute and deliver any additional documents
deeded by the Exchange Agent or the Company to be necessary or desirable to
complete the sale, assignment and transfer of the Old Notes tendered hereby.
The undersigned agrees that all authority conferred or agreed to be
conferred by this Letter of Transmittal and every obligation of the undersigned
hereunder shall be binding upon the successors, assigns, heirs, executors,
administrators, trustees in bankruptcy and legal representatives of the
undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned. The undersigned also agrees that, except as
stated in the Prospectus, the Old Notes tendered hereby cannot be withdrawn.
The undersigned understands that tenders of the Old Notes pursuant to any
one of the procedures described in the Prospectus under the caption "The
Exchange Offer--Procedures for Tendering" and in the instructions hereto will
constitute a binding agreement between the undersigned and the Company in
accordance with the terms and subject to the conditions of the Exchange Offer.
The undersigned understands that by tendering Old Notes pursuant to one of
the procedures described in the Prospectus and the instructions thereto, the
tendering holder will be deemed to have waived the right to receive any payment
in respect of interest on the Old Notes accrued up to the date of issuance of
the Exchange Notes.
The undersigned recognizes that, under certain circumstances set forth in
the Prospectus, the Company may not be required to accept for exchange any of
the Old Notes tendered. Old Notes not accepted for exchange or withdrawn will
be returned to the undersigned at the address set forth below unless otherwise
indicated under "Special Delivery Instructions" below.
Unless otherwise indicated herein under the box entitled "Special Issuance
Instructions" below, Exchange Notes, and Old Notes not validly tendered or
accepted for exchange, will be issued in the name of the undersigned.
Similarly, unless otherwise indicated under the box entitled "Special Delivery
Instructions" below, Exchange Notes, and Old Notes not validly tendered or
accepted for exchange, will be delivered to the undersigned at the address shown
below the signature of the undersigned. The undersigned recognizes that the
Company has no obligation pursuant to the "Special Issuance Instructions" to
transfer any Old Notes from the name of the registered holder thereof if the
Company does not accept for exchange any of the principal amount of such Old
Notes so tendered.
All questions as to the validity, form, eligibility (including time of
receipt), and withdrawal of the tendered Old Notes will be determined by the
Company in its sole discretion, which determination will be final and binding.
The Company reserves the absolute right to reject any and all Old Notes not
properly tendered or any Old Notes the Company's acceptance of which would, in
the opinion of counsel for the Company, be unlawful. The Company also reserves
the right to waive any irregularities or conditions of tender as to particular
Old Notes. The Company's interpretation of the terms and conditions of the
Exchange Offer (including the instructions in this Letter of Transmittal) will
be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Old Notes must be cured within such
time as the Company shall determine. Neither
5
<PAGE>
the Company, the Exchange Agent nor any other person shall be under any duty to
give notification of defects or irregularities with respect to tenders of Old
Notes, nor shall any of them incur any liability for failure to give such
notification. Tenders of Old Notes will not be deemed to have been made until
such irregularities have been cured or waived. Any Old Notes received by the
Exchange Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned without cost to
such holder by the Exchange Agent to the tendering holders of Old Notes, unless
otherwise provided in this Letter of Transmittal, as soon as practicable
following the Expiration Date.
6
<PAGE>
THE UNDERSIGNED, BY COMPLETING THE BOX ON THE COVER ENTITLED "DESCRIPTION
OF OLD NOTES TENDERED" AND SIGNING THIS LETTER OF TRANSMITTAL, WILL BE DEEMED TO
HAVE TENDERED THE OLD NOTES AND MADE CERTAIN REPRESENTATIONS (INCLUDING AS TO
FINANCIAL STATUS) DESCRIBED IN THE PROSPECTUS AND HEREIN.
SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
X ______________________________________________________________________________
X ______________________________________________________________________________
(SIGNATURE(S) OF HOLDER(S) OR AUTHORIZED SIGNATORY)
Must be signed by the registered holder(s) of Old Notes exactly as their
name(s) appear(s) on certificate(s) for the Old Notes or by person(s)
authorized to become registered holder(s) by endorsements and documents
transmitted with this Letter of Transmittal. If signature is by a trustee,
executor, administrator, guardian, attorney-in-fact, officer of a
corporation, agent or other person acting in a fiduciary or representative
capacity, please provide the following information. See Instruction 3.
Name(s): _______________________________________________________________________
________________________________________________________________________________
(PLEASE PRINT)
Capacity (full title): _________________________________________________________
Address: _______________________________________________________________________
________________________________________________________________________________
(INCLUDING ZIP CODE)
Area Code and Telephone No.: ___________________________________________________
SIGNATURE GUARANTEE
(SEE INSTRUCTION 3)
________________________________________________________________________________
(NAME OF ELIGIBLE INSTITUTION GUARANTEEING SIGNATURE(S))
________________________________________________________________________________
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NO., INCLUDING AREA CODE, OF FIRM)
________________________________________________________________________________
(AUTHORIZED SIGNATURE)
________________________________________________________________________________
(PRINTED NAME)
________________________________________________________________________________
(TITLE)
Date: __________________, 1997
7
<PAGE>
<TABLE>
<S> <C>
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVER INSTRUCTIONS
(SEE INSTRUCTIONS 3, 4 AND 6) (SEE INSTRUCTIONS 3, 4 AND 6)
To be completed ONLY if certificates for Old To be completed ONLY if certificates for Old
Notes in a principal amount not exchanged and/or Notes in a principal amount not exchanged and/or
certificates for Exchange Notes are to be issued in certificates for Exchange Notes are to be sent to
the name of someone other than the undersigned, or someone other than the undersigned at an address
if Old Notes are to be returned by credit to an other than that shown above.
account maintained by the Book-Entry Transfer
Facility.
Issue (check appropriate box) Deliver (check appropriate box)
/ / Exchange Notes to: / / Exchange Notes to:
/ / Old Notes to: / / Old Notes to:
Name: _____________________________________________ Name: _____________________________________________
(Please Print) (Please Print)
Address: __________________________________________ Address: __________________________________________
___________________________________________________ ___________________________________________________
Zip Code Zip Code
___________________________________________________
Taxpayer Identification Number Taxpayer Identification Number
(YOU MUST ALSO COMPLETE (YOU MUST ALSO COMPLETE
SUBSTITUTE FORM W-9 BELOW.) SUBSTITUTE FORM W-9 BELOW.)
Credit unaccepted Old Notes tendered by book-entry
transfer to:
/ / The Depository Trust Company
account set forth below
___________________________________________________
(DTC ACCOUNT NUMBER)
</TABLE>
8
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the
Offer and the Solicitation
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED
DELIVERY PROCEDURES. To be effectively tendered pursuant to the Exchange Offer,
the Old Notes, together with a properly completed Letter of Transmittal (or
facsimile thereof), duly executed by the registered holder thereof, and any
other documents required by this Letter of Transmittal, must be received by the
Exchange Agent at one of its addresses set forth on the front page of this
Letter of Transmittal. If the beneficial owner of any Old Notes is not the
registered holder, then such person may validly tender his or her Old Notes only
by obtaining and submitting to the Exchange Agent a properly completed Letter of
Transmittal from the registered holder. OLD NOTES SHOULD BE DELIVERED ONLY TO
THE EXCHANGE AGENT AND NOT TO THE COMPANY OR TO ANY OTHER PERSON.
THE METHOD OF DELIVERY OF OLD NOTES AND ALL OTHER REQUIRED DOCUMENTS TO THE
EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE HOLDER, BUT IF SUCH DELIVERY
IS BY MAIL, IT IS SUGGESTED THAT THE HOLDER USE PROPERLY INSURED, REGISTERED OR
CERTIFIED MAIL WITH RETURN RECEIPT REQUESTED. INSTEAD OF DELIVERY BY MAIL, IT
IS RECOMMENDED THAT OLD NOTES BE DELIVERED BY HAND OR BY COURIER.
IF CERTIFICATES FOR OLD NOTES ARE SENT BY MAIL, IT IS SUGGESTED THAT THE
MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE EXPIRATION DATE TO PERMIT
DELIVERY TO THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE
EXPIRATION DATE.
If a holder desires to tender Old Notes and such holder's Old Notes are not
immediately available or time will not permit such holder's Letter of
Transmittal, Old Notes or other required documents to reach the Exchange Agent
on or before the Expiration Date, such holder's tender may be effected if:
(a) such tender is made by or through an Eligible Institution (as
defined);
(b) on or prior to the Expiration Date, the Exchange Agent has
received a properly completed and duly executed Notice of Guaranteed
Delivery (by facsimile transmission, mail or hand delivery) from such
Eligible Institution setting forth the name and address of the holder of
such Old Notes, the certificate numbers of such Old Notes (if available)
and the principal amount of Old Notes tendered and stating that the tender
is being made thereby and guaranteeing that, within three business days
after the Expiration Date, a duly executed Letter of Transmittal, or
facsimile thereof, together with the Old Notes, and any other documents
required by this Letter of Transmittal and the instructions hereto, will be
deposited by such Eligible Institution with the Exchange Agent; and
(c) this Letter of Transmittal (or facsimile thereof), a Notice of
Guaranteed Delivery and Old Notes, in proper form for transfer, and all
other required documents are received by the Exchange Agent within three
business days after the date of such telegram, facsimile transmission or
letter.
2. WITHDRAWAL OF TENDERS. Tendered Old Notes may be withdrawn at any
time prior to 5:00 p.m., New York City time, on the Expiration Date, unless
previously accepted for exchange.
To be effective, a written or facsimile transmission notice of withdrawal
must (a) be received by the Exchange Agent at one of its addresses set forth on
the first page of this Letter of Transmittal prior to 5:00 p.m., New York City
time, on the Expiration Date, unless previously accepted for exchange, (b)
specify the name of the person who tendered the Old Notes, (c) contain the
description of the Old Notes to be withdrawn, the certificate numbers shown on
the particular certificates evidencing such Old Notes and the aggregate
principal amount represented by such Old Notes and (d) be signed by the holder
of such Old Notes in the same manner as the original signature appears on this
Letter of Transmittal (including any required signature guarantees) or be
accompanied by evidence sufficient to have the Trustee with respect to the Old
Notes register the transfer of such Old Notes into the name of the holder
withdrawing the tender. The signature(s) on the notice of withdrawal must be
guaranteed by an Eligible Institution unless such Old Notes have been tendered
(a) by a registered holder of Old Notes who has not completed either the box
entitled "Special Issuance Instructions" or the box entitled "Special Delivery
Instructions" on this Letter of Transmittal or (b) for the account of an
Eligible Institution. All questions as to the validity, form and eligibility
(including time of receipt)of such withdrawal notices shall be
9
<PAGE>
determined by the Company, whose determination shall be final and binding on all
parties. If the Old Notes to be withdrawn have been delivered or otherwise
identified to the Exchange Agent, a signed notice of withdrawal is effective
immediately upon receipt by the Exchange Agent of a written or facsimile
transmission notice of withdrawal even if physical release is not yet effected.
In addition, such notice must specify, in the case of Old Notes tendered by
delivery of certificates for such Old Notes, the name of the registered holder
(if different from that of the tendering holder) to be credited with the
withdrawn Old Notes. Withdrawals may not be rescinded, and any Old Notes
withdrawn will thereafter be deemed not validly tendered for purposes of the
Exchange Offer. However, properly withdrawn Old Notes may be retendered by
following one of the procedures described under "The Exchange Offer--Procedures
for Tendering" in the Prospectus at any time on or prior to the applicable
Expiration Date.
3. SIGNATURES ON THIS LETTER OF TRANSMITTAL, BOND POWERS AND
ENDORSEMENTS; GUARANTEE OF SIGNATURES. If this letter of Transmittal is signed
by the registered holder(s) of the Old Notes tendered hereby, the signature must
correspond exactly with the name(s) as written on the face of the certificates
without any change whatsoever.
If any Old Notes tendered hereby are owned of record by two or more joint
owners, all such owners must sign this Letter of Transmittal.
If any Old Notes tendered hereby are registered in different names on
several certificates, it will be necessary to complete, sign and submit as many
separate copies of this Letter of Transmittal as there are different
registrations of certificates.
When this Letter of Transmittal is signed by the registered holder or
holders specified herein and tendered hereby, no endorsements of certificates or
separate bond powers are required unless Exchange Notes are to be issued, or
certificates for any untendered principal amount of Old Notes are to be
reissued, to a person other than the registered holder.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of any certificate(s) specified herein such certificates(s)
must be endorsed or accompanied by appropriate bond powers, in either case
signed exactly as the name(s) of the registered holder(s) appear(s) on the
certificate(s).
If this Letter of Transmittal or a Notice of Guaranteed Delivery or any
certificates or bond powers are signed by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations or others acting in a
fiduciary or representative capacity, such persons should so indicate when
signing, and unless waived by the Company, proper evidence satisfactory to the
Company of their authority so to act must be submitted.
Except as described below, signatures on this Letter of Transmittal or a
notice of withdrawal, as the case may be, must be guaranteed by an Eligible
Institution. Signatures on this Letter of Transmittal or a notice of
withdrawal, as the case may be, need not be guaranteed if the Old Notes tendered
pursuant hereto are tendered (a) by a registered holder of Old Notes who has not
completed either the box entitled "Special Issuance Instructions" or the box
entitled "Special Delivery Instructions" on this Letter of Transmittal or (b)
for the account of an Eligible Institution. In the event that signatures on
this Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantee must be by a firm which is a member of
a registered national securities exchange or a member of the National
Association of Securities Delivers, Inc. or by a commercial bank or trust
company having an office or correspondent in the Untied States (each as
"Eligible Institutions").
Endorsements on certificates for Old Notes or signatures on bond powers
required by this Instruction 3 must be guaranteed by an Eligible Institution.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. Tendering holders should
indicate in the applicable box the name and address to which certificates for
Exchange Notes and/or substitute certificates evidencing Old Notes for the
principal amounts not exchanged are to be issued or sent, if different from the
name and address of the person signing this Letter of Transmittal. In the case
of issuance in a different name, the employer identification or social security
number of the person named must also be indicated. If no such instructions are
given, any Old Notes not exchanged will be returned to the name and address of
the person signing this Letter of Transmittal.
10
<PAGE>
5. TAX IDENTIFICATION NUMBER AND BACKUP WITHHOLDING. Federal income tax
law of the United States requires that a holder of Old Notes whose Old Notes are
accepted for exchange provide the Company with his correct taxpayer
identification number, which, in the case of a holder who is an individual, is
his or her social security number, or otherwise establish an exemption from
backup withholding. If the Company is not provided with the correct taxpayer
identification number, the exchanging holder of Old Notes may be subject to a
$50 penalty imposed by the Internal Revenue Service (the "IRS"). In addition,
interest on the Exchange Notes acquired pursuant to the Exchange Offer may be
subject to backup withholding in an amount equal to 31% of any interest payment.
If withholding occurs and results in an overpayment of taxes, a refund may be
obtained.
To prevent backup withholding, each exchange holder of Old Notes subject to
backup withholding must provide his correct taxpayer identification number by
completing the Substitute Form W-9 provided in this Letter of Transmittal,
certifying that the taxpayer identification number provided is correct (or that
the exchanging holder of Old Notes is awaiting a taxpayer identification number)
and that either (a) the exchanging holder has not yet notified by the IRS that
such holder is subject to backup withholding as a result of failure to report
all interest or dividends or (b) the IRS has notified the exchanging holder that
such holder is no longer subject to backup withholding.
Certain exchanging holders of Old Notes (including, among others, all
corporations and certain foreign individuals) are not subject to these backup
withholding requirements. A foreign individual and other exempt holders (I.E.
corporations) should certify, in accordance with the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9," to such
exempt status on the Substitute Form W-9 provided in this Letter of Transmittal.
6. TRANSFER TAXES. Holders tendering pursuant to the Exchange Offer will
not be obligated to pay brokerage commissions or fees or to pay transfer taxes
with respect to their exchange under the Exchange Offer unless the box entitled
"Special Issuance Instructions" in this Letter of Transmittal has been
completed, or unless the Exchange Notes are to be issued to any person other
than the holder of the Old Notes tendered for exchange. The Company will pay
all other charges or expenses in connection with the Exchange Offer. If holders
tender Old Notes for exchange and the Exchange Offer is not consummated,
certificates representing the Old Notes will be returned to the holders at the
Company's expense.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the certificate(s) specified in this Letter
of Transmittal.
7. INADEQUATE SPACE. If the space provided herein is inadequate, the
aggregate principal amount of the Old Notes being tendered and the certificate
numbers (if available) should be listed on a separate schedule attached hereto
and separately signed by all parties required to sign this Letter of
Transmittal.
8. PARTIAL TENDERS. Tenders of Old Notes will be accepted only in
integral multiples of $1,000. If tenders are to be made with respect to less
than the entire principal amount of any Old Notes, fill in the principal amount
of Old Notes which are tendered in column (3) in the box on the cover entitled
"Description of Old Notes Tendered." In the case of partial tenders, new
certificates representing the Old Notes in fully registered form for the
remainder of the principal amount of the Old Notes will be sent to the person(s)
signing this Letter of Transmittal, unless otherwise indicated in the
appropriate place on this Letter of Transmittal, as promptly as practicable
after the expiration or termination of the Exchange Offer.
9. MUTILATED, LOST, STOLEN OR DESTROYED OLD NOTES. Any holder whose Old
Notes have been mutilated, lost, stolen or destroyed should contact the Exchange
Agent at the address indicated above for further instructions.
10. REQUEST FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance
or additional copies of the Prospectus or this Letter of Transmittal may be
obtained from the Exchange Agent at its telephone number set forth on the cover.
11
<PAGE>
PAYER'S NAME: IBJ SCHRODER BANK & TRUST COMPANY
- ------------------------------------------------------------------------------
SUBSTITUTE : Part I--PLEASE PROVIDE :
: YOUR TIN IN THE BOX AT : ------------------------
Form W-9 : RIGHT AND CERTIFY BY : Social Security Number
Department of the Treasury: SIGNING AND DATING :
Internal Revenue Service : BELOW. : OR
: : -----------------------
Payer's Request for : : Employer Identification
Taxpayer Identification : : Number
Number (TIN) : :
- -------------------------------------------------------------------------------
CERTIFICATION--UNDER PENALTIES OF PERJURY, I CERTIFY THAT:
(1) The number shown on this form is my correct Taxpayer Identification
Number (or I am waiting for a number to be issued to me) and
(2) I am not subject to backup withholding either because: (a) I am exempt
from backup withholding; or (b) I have not been notified by the Internal
Revenue Service (the "IRS") that I am subject to back up withholding as a
result of failure to report all interest or dividends, or (c) the IRS has
notified me that I am no longer subject to backup withholding.
:----------------------------------------------------:
: Part II--Awaiting TIN / / : Part III--Exempt / / :
:----------------------------------------------------:
CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you
have been notified by the IRS that you are subject to backup
withholding because of under-reporting interest or dividends on your
tax return. However, if after being notified by the IRS that you were
subject to backup withholding you received another notification from
the IRS stating that you are no longer subject to backup withholding,
do not cross out item (2). If you are exempt from backup withholding,
cehck the box in Part III.
Signature Date
---------------------------------------- -----------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Payer's Request for Taxpayer Identification Number (TIN)
Please fill out your name and address below:
- ------------------------------------------------------------------------------
Name
- ------------------------------------------------------------------------------
Address (Number and street)
- ------------------------------------------------------------------------------
City, State and Zip Code
- ------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER
AND THE SOLICITATION. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER OF SUBSTITUTE FORM W-9
FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART II OF SUBSTITUTE FORM W-9.
- -------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
applciation to recieve a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(b) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number to the
payor by the time of payment, 31% of all reportable payments made to me will
be withheld until I provide a number and that, if I do not provide my
taxpayer identification number within 60 days, such retained amounts shall be
remitted to the IRS as backup withholding.
Signature Date
---------------------------------------- -----------------------
- ------------------------------------------------------------------------------
12
<PAGE>
Exhibit 5.1
[Letterhead of Cadwalader, Wickersham & Taft]
__________, 1997
Anacomp, Inc.
11550 North Meridian Street
Suite 600
Carmel, IN 46032
Re: Registration Statement on Form S-4 related to 10O% Senior
Subordinated Notes due 2004
---------------------------------------------------------
Gentlemen:
We have acted as special counsel for Anacomp, Inc., an Indiana
corporation (the "Company"), in connection with the preparation of the Company's
Registration Statement on Form S-4 pursuant to the Securities Act of 1933, as
amended (the "Securities Act"), being filed with the Securities and Exchange
Commission (the "Commission") on the date hereof and to which this opinion
letter is an exhibit. The Registration Statement relates to the Company's offer
to exchange its 10O% Senior Subordinated Notes due 2004, Series B (the "Exchange
Notes") for any and all of its outstanding 10O% Senior Subordinated Notes due
2004, Series A (the "Old Notes"). The Old Notes were issued, and the Exchange
Notes are to be issued, under an indenture, dated as of March 24, 1997 (the
"Indenture"), between the Company and IBJ Schroder Bank & Trust Company, as
trustee.
In rendering the opinions expressed below, we have examined and relied
upon, among other things, (a) the Registration Statement, including the
Prospectus constituting a part thereof, (b) the Indenture filed as an exhibit to
the Registration Statement and (c) originals or copies, certified or otherwise
identified to our satisfaction, of such certificates, corporate, public or other
records, and other documents as we have deemed appropriate for the purpose of
rendering this opinion letter. In connection with such examination, we have
assumed the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents and
instruments of all documents and instruments submitted to us as copies or
specimens, and the authenticity of the originals of such documents and
instruments submitted to us as copies or specimens. We have also made such
investigations of
<PAGE>
Anacomp, Inc. -2- _________, 1997
law as we have deemed appropriate. In addition, we have assumed that the
Exchange Notes will be executed and delivered in substantially the form in which
they are filed as an exhibit to the Registration Statement.
We are members of the Bar of the State of New York, and in rendering
the opinions below, we do not purport to be an expert in, or express any opinion
concerning, the laws of any jurisdiction other than the substantive laws of the
State of New York and, where expressly referred to below, the substantive
federal laws of the United States of America (in each case without regard to
conflicts of law principles).
Based upon the foregoing and subject to the qualifications set forth
herein, we are of the opinion that:
1. The Exchange Notes will be legally and validly issued and
binding obligations of the Company (except to the extent enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar laws affecting the
enforcement of creditors' rights generally and by the effect of general
principles of equity, regardless of whether enforceability is considered in
a proceeding in equity or at law), when (a) the Registration Statement, as
finally amended, shall have become effective under the Securities Act and
the Indenture shall have been qualified under the Trust Indenture Act of
1939, as amended, and (b) the Exchange Notes shall have been duly executed,
authenticated and delivered as contemplated in the Registration Statement.
2. The statements made in the Prospectus constituting a part of
the Registration Statement under the caption "Certain U.S. Federal Income
Tax Considerations," insofar as such statements purport to summarize
certain federal income tax laws of the United States of America, constitute
a fair summary of the principal U.S. federal income tax consequences of an
investment in the Exchange Notes.
We hereby consent to the filing of this opinion letter as an exhibit
to the Registration Statement and to the reference to this Firm in the
Prospectus constituting a part of the Registration Statement under the caption
"Legal Matters," without admitting that we are "experts" within the meaning of
the Securities Act or the rules and regulations of the Commission issued
thereunder with respect to any part of the Registration Statement, including
this exhibit.
Very truly yours,
/s/ Cadwalader, Wickersham & Taft
<PAGE>
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
BETWEEN
ANACOMP, INC.
("ANACOMP")
with offices located at
11550 North Meridian Street
Suite 600
Carmel, Indiana 46032
and
RALPH KOEHRER
-------------------
("EMPLOYEE")
Date of Agreement: November 21, 1996
Effective Date of Agreement: January 6, 1997
Date of Expiration of Agreement: January 5, 1999
<PAGE>
EMPLOYMENT AGREEMENT
This Agreement is entered into between ANACOMP, INC. or any of its
subsidiaries or affiliates (herein referred to as "ANACOMP") and EMPLOYEE. The
full identification of each party, date of Agreement, effective date of
Agreement, and date of expiration of Agreement are all included on the cover
sheet immediately preceding this page which is incorporated herein by this
reference. The following conditions and terms shall apply:
SECTION I
Merger of All Prior Agreements
1.1 Merger. This Agreement and the letter agreement dated November 5,
1997 between the parties shall supersede and terminate all prior employment
contracts and agreements between EMPLOYEE and ANACOMP. In the event of any
conflict between this Agreement and such letter agreement, the terms of this
Agreement shall govern.
SECTION II
Scope and Term of Employment, Compensation
2.1 Scope of Employment. ANACOMP and EMPLOYEE mutually agree that
Addendum I, attached hereto and incorporated herein by this reference, is
intended to define the scope of employment, base salary, and incentive
compensation.
2.2 Employment Term. Subject always to termination provisions as
provided elsewhere in this Agreement, the term of this Agreement shall begin on
the Effective Date of Agreement and shall terminate on the Date of Expiration
of Agreement, both as shown on the cover sheet. Unless otherwise terminated as
provided elsewhere herein, this Agreement shall automatically renew after
expiration date on an annual basis unless either party gives the other party
thirty (30) days prior written notice requesting that said Agreement not be
renewed. If this Agreement is not renewed and EMPLOYEE continues working
beyond Termination Date at the request of ANACOMP, said employment shall be on
a month-to-month basis. If, at the expiration of the original two-year term or
any renewal term, ANACOMP declines to renew this Agreement and does not request
that EMPLOYEE continue working, EMPLOYEE shall be entitled to all benefits due
him under this Agreement and not previously paid him, and all of EMPLOYEE'S
existing already awarded options to acquire ANACOMP common stock shall
immediately vest. EMPLOYEE shall have no right to any further compensation
from ANACOMP pursuant to this Agreement.
2.3 Compensation. Compensation is confidential and is to be discussed
only with the officers of ANACOMP, as required.
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SECTION III
Fringe Benefits
3.1 Benefits. In addition to the regular compensation, EMPLOYEE shall
be entitled to the normally available employee fringe benefits including
regular holidays, vacations and health insurance. ANACOMP, however, reserves
the right to change or alter these fringe benefits from time to time with the
understanding that the EMPLOYEE will be treated on an equal basis with other
employees of similar status.
SECTION IV
Insurance on Employee
4.1 Insurance. EMPLOYEE agrees that ANACOMP may, at its option and
expense, obtain life insurance on the life of the EMPLOYEE and the ownership of
all such policies and the proceeds therefrom shall be the sole property of
ANACOMP. EMPLOYEE agrees to undergo a routine physical examination for
insurance purposes within fifteen (15) days upon the request and at the expense
of ANACOMP.
SECTION V
Relocation
5.1 Relocation. EMPLOYEE agrees that it is a condition of his
employment that he relocate to Poway, California by June 30, 1997. He further
agrees that such relocation will not trigger a termination of this Agreement
nor a right to receive the Severance Allowance pursuant to Section 6.4.2
hereof. For the purpose of this Agreement, "relocate to Poway" shall mean that
EMPLOYEE normally lives in the vicinity of Poway such that he can attend
ANACOMP's office located in Poway on a regular daily basis.
SECTION VI
Termination
6.1 Compensation and Benefits Upon Termination. This Agreement may be
terminated prior to the expiration of the initial term or any renewal term by
any of the following events:
(a) mutual written agreement expressed in a single document signed by
both ANACOMP and EMPLOYEE;
(b) voluntary written resignation by EMPLOYEE given to ANACOMP ninety
days prior to the date of resignation;
(c) death of EMPLOYEE;
(d) written notice of termination without cause as defined in Section
6.2;
(e) written notice of termination with cause as defined in Section
6.3; or
(f) the occurrence of any of the events specified in Section 6.4.1,
which EMPLOYEE elects to treat as a termination under Section 6.4.2.
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Upon termination for any of the foregoing reasons, EMPLOYEE shall
continue to render his services and shall be paid his regular compensation and
benefits up to the date of termination. If this Agreement is terminated under
Sections 6.1(b), 6.1(c) or 6.1(e), no severance allowance (as defined below)
shall be paid to EMPLOYEE (except, with respect to any termination pursuant to
Section 6.1(e), as otherwise provided in Section 6.3). If this Agreement is
terminated under Sections 6.1(a), 6.1(d) or 6.1(f), then ANACOMP shall pay to
EMPLOYEE a severance allowance equal, in the first year of this Agreement, to
$200,000 and, in the second year of this Agreement or any renewal term
thereafter, to $400,000, payable in a lump sum or biweekly at EMPLOYEE's
option, health benefits until other employment is secured or for twenty-four
months, whichever is sooner, and all of EMPLOYEE's existing already awarded
options to acquire ANACOMP common stock shall immediately vest (the "Severance
Allowance"). This Severance Allowance is in addition to the regular
compensation and benefits which EMPLOYEE shall receive up to the date of
termination. In the event of such termination, this Agreement shall be deemed
terminated for all purposes except to the extent otherwise herein provided.
6.2 Termination Without Cause. If ANACOMP concludes that EMPLOYEE's
services are no longer required, this Agreement may be terminated without cause
by giving EMPLOYEE written notice thereof. The noninsurability of EMPLOYEE,
either present or future, does not constitute grounds for termination under
this or any other section of the Agreement. If EMPLOYEE is terminated under
this section, ANACOMP shall pay EMPLOYEE the compensation, benefits and
Severance Allowance provided in Section 6.1 above.
6.3 Termination With Cause.
6.3.1 ANACOMP may immediately terminate this Agreement at any
time with cause upon written notice to the EMPLOYEE specifying the cause and
effective date of termination. As used in this section, "cause" shall mean
only the following:
(i) Inability of EMPLOYEE, as determined by ANACOMP, to perform
EMPLOYEE's assigned duties on a fulltime basis for any continuous period of one
hundred twenty (120) days or a total of one hundred eighty (180) days in any
twelve (12) month period, which period shall commence on the initial date of
this Agreement and every anniversary thereafter.
(ii) The willful and continued failure by EMPLOYEE substantially
to perform his duties and obligations, including the continued failure to meet
business goals, or the willful engagement by EMPLOYEE in misconduct which is
materially injurious to ANACOMP, monetarily or otherwise. For purposes of this
subsection, no act or failure to act on EMPLOYEE's part shall be considered
"willful" unless done or omitted to be done by EMPLOYEE in bad faith and
without reasonable belief that his action or omission was in the best interests
of ANACOMP.
(iii) The failure of EMPLOYEE to relocate permanently to Poway,
California by June 30, 1997.
6.3.2 Employee agrees that in the event written notice of
termination is given under this Section 6.3, the EMPLOYEE agrees to treat the
contents of said notice as privileged and EMPLOYEE shall have no action against
ANACOMP or any of its officers, agents or employees due to the contents of said
notice unless the contents are intentionally false and malicious. If EMPLOYEE
is terminated under this Section 6.3, he shall receive no Severance Allowance
at the time of such termination. If EMPLOYEE is given notice of termination
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under this Section 6.3 and it is later established that no "cause" existed,
EMPLOYEE shall be entitled to all compensation, benefits and allowances due him
for the period following such alleged termination and through the date of such
determination and shall be entitled to the Severance Allowance, plus legal
interest from the date of termination and all reasonable attorneys' fees
incurred by EMPLOYEE in contesting the notice of termination.
6.4 Demotion, Transfer or Reduction in Compensation, Merger, Transfer
of Assets, Change in Control or Business Discontinuation.
6.4.1 Demotion, Transfer, or Reduction in Compensation. If any
of the following takes place:
(1) EMPLOYEE is demoted, including for these purposes (i) any material
change in the title or duties described in Addendum I hereto, or (ii) any
significant reduction or change by ANACOMP in the functions, duties or
responsibilities of EMPLOYEE under this Agreement,
(2) a transfer of EMPLOYEE to another location, other than Poway or
San Diego, California, or
(3) any reduction in annual base salary (but not including a reduction
in the incentive bonus received by EMPLOYEE resulting from a decrease in Pre-
Tax Income earned by ANACOMP for the relevant period),
EMPLOYEE may, in his sole discretion, elect to treat any such occurrence as a
termination of this Agreement by giving written notice of such election to
ANACOMP, entitling EMPLOYEE to payment of the compensation, benefits and
Severance Allowance provided in Section 6.1 above. In the event ANACOMP
disputes any election made by EMPLOYEE pursuant to this Section 6.4.1, ANACOMP
shall notify EMPLOYEE in writing of such dispute within ten (10) days of
receiving EMPLOYEE's written election. If ANACOMP does not so notify EMPLOYEE
within the ten (10) day period, ANACOMP shall be deemed to have accepted
EMPLOYEE's election and shall pay all compensation, benefits and Severance
Allowance provided in Section 6.1 above.
6.4.2 Merger, Transfer of Assets, Change in Control or Business
Discontinuation. In the event of any:
(a) merger or consolidation where ANACOMP is not the consolidated
or surviving company and the surviving or resulting company does not expressly
agree to be bound by and have the benefits of the provisions of this Agreement,
or
(b) transfer of all or substantially all of the assets of ANACOMP
and the transferee of ANACOMP's assets does not expressly agree to be bound by
and have the benefits of the provisions of this Agreement, or
(c) change in control of ANACOMP of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of Regulation
14A promulgated under the Securities Exchange Act of 1934 as in effect on the
day thereof (the "Exchange Act"), provided that, without limitation, such a
change in control shall be deemed to have occurred if: (i) any person or
persons acting in concert (as such term is used in Section 13(d) and 14(d)(2)
of the Exchange Act) is or becomes the beneficial holder directly or
indirectly of securities of ANACOMP representing 25% or more of the combined
voting power of ANACOMP's then outstanding securities; (ii) during any period
of two consecutive years, individuals who at the begining of such period
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constitute the Board cease for any reason to constitute a majority thereof,
unless the election or nomination for election by ANACOMP's shareholders of
each new director was aproved by a vote of at least 2/3 of the directors who
were directors at the begining of such period; or (iii) transfer of all or
substantially all of the stock of ANACOMP and the transferee of ANACOMP's stock
does not expressly agree to be bound by and have the benefits of the provisions
of this Agreement, or
(d) discontinuation of the business by ANACOMP,
then (i) EMPLOYEE may, in his sole discretion, elect to treat any such
occurrence as a termination of this Agreement by giving written notice of such
election and immediate termination of his employment to ANACOMP, and (ii)
ANACOMP shall pay EMPLOYEE within thirty (30) days of EMPLOYEE's election and
termination of employment a payment equal to the Severance Allowance. This
Severance Allowance shall be in addition to the regular compensation and
benefits that EMPLOYEE is entitled to receive up to the date EMPLOYEE's
employment with ANACOMP terminates.
6.5 Return of Company Property. EMPLOYEE agrees to return all
property of ANACOMP, including but not limited to, details of equipment,
prices, specifications, programs, customer and prospective customer lists and
any other proprietary data or objects acquired through the EMPLOYEE's
employment with ANACOMP, within seven (7) days after termination of employment,
regardless of the reason therefor.
6.6 Waiver of Claims. All Severance Allowance payments made by
ANACOMP to EMPLOYEE pursuant to Section II hereof or this Section VI shall be
in full and complete payment of any and all claims that EMPLOYEE may have
against ANACOMP regarding his employment or the termination thereof, and
EMPLOYEE hereby expressly waives all rights that he may have to any other
payments or to bring any other claims based upon his employment or the
termination thereof. Except for the qualification with respect to employee
benefits described in Section II above, all Severance Allowance payments due
from ANACOMP to EMPLOYEE under this Agreement are absolute, and shall not be
diminished or otherwise affected by virtue of EMPLOYEE's securing alternative
employment. At the time he receives his Severance Allowance, EMPLOYEE agrees
that he will execute a release agreement in favor of ANACOMP.
SECTION VII
Restrictive Covenant and Non-Competition
Confidential Information
7.1 Non-Competition. EMPLOYEE and ANACOMP shall enter into the
"Confidentiality, Non-Competition and Non-Disclosure Agreement" attached hereto
as Addendum III. In the event of any conflict between the terms of this
Agreement and such Non-Disclosure Agreement, this Agreement shall govern. If
EMPLOYEE violates such Non-Disclosure Agreement, ANACOMP shall have the right
to stop all termination payments due under Sections II and/or VI hereof, which
have not yet been fully paid to EMPLOYEE. EMPLOYEE agrees that, upon his
relocation to Poway, California, he will, upon request by ANACOMP, execute a
revised Non-Disclosure Agreement that will comply with the laws of the State of
California.
The provisions of this Section shall not prevent EMPLOYEE from
complying with the terms of this Employment Agreement with ANACOMP nor from
owning any shares of stock of any competitor of ANACOMP so long as such shares
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are regularly traded on a recognized security exchange or are listed for trade
by NASDAQ in the Over-the-Counter Market.
SECTION VIII
Warranties and Representations
8.1 EMPLOYEE hereby warrants and represents as follows:
(1) That the execution of this Agreement and the discharge of
EMPLOYEE's obligations hereunder will not breach or conflict with any other
contract, agreement or understanding between EMPLOYEE and any other party or
parties.
(2) That EMPLOYEE has ideas, information and know-how relating to the
type of business conducted by ANACOMP and EMPLOYEE's disclosure of such ideas,
information and know-how to ANACOMP will not conflict with or violate the
rights of any third party or parties with respect thereto.
SECTION IX
Remedies
9.1 The parties agree that the remedy for breach of this Agreement
shall include actions in equity for injunctive relief as well as money damages.
The remedies given to or reserved by ANACOMP hereunder shall be cumulative and
not exclusive of any other remedy available under law.
SECTION X
No Waiver
10.1 The failure of EMPLOYER to terminate this Agreement for the
breach of any condition or covenant herein by the EMPLOYEE shall not affect
EMPLOYER's right to terminate for subsequent breaches of the same or other
conditions or covenants. The failure of either party to enforce at any time or
for any period of time any of the provisions of this Agreement shall not be
construed as a waiver of such provisions or of the right of the party
thereafter to enforce each and every such provision.
ARTICLE XI
Benefit
11.1 This Agreement shall bind, benefit, and be enforceable by
ANACOMP, its successors and assigns, and by EMPLOYEE, EMPLOYEE's heirs,
executors, administrators, and legal representatives.
ARTICLE XII
Severability
12.1 Should any provision of this Agreement not be enforceable in any
jurisdiction, the remainder of the Agreement shall not be affected thereby.
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ARTICLE XIII
Survival
13.1 The obligations contained in Sections II, VI, and VII shall
survive the termination of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be executed as of the day, month and year stated on the cover page
of this Agreement, which Agreement shall be effective only upon approval by
ANACOMP, INC., as evidenced by the authorized signature of an officer of
ANACOMP below.
APPROVED BY:
ANACOMP, INC. EMPLOYEE:
By:/s/ P. Lang Lowrey /s/ Ralph Koehrer
-------------------------------- ------------------------------
Ralph Koehrer
Title: Chief Executive Officer
----------------------------
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ADDENDUM 1
TO
EMPLOYMENT AGREEMENT DATED
BETWEEN
ANACOMP, INC. ("ANACOMP")
AND
RALPH KOEHRER (EMPLOYEE)
Scope of Employment
ANACOMP employs the EMPLOYEE in the capacity of President and Chief
Operating Officer. EMPLOYEE will be responsible for the day-to-day operations
of ANACOMP, excluding the Magnetics Division and (until EMPLOYEE's relocation
to Poway, California) the Technology Group. EMPLOYEE will report to the Chief
Executive Officer and be an advisory member of ANACOMP's Board of Directors.
Location
EMPLOYEE will be based at ANACOMP's Poway, California facility and
will be required to relocate there permanently on or before June 30, 1997.
Until EMPLOYEE's permanent relocation, ANACOMP will pay his actual and
reasonable temporary living expenses in the Poway area, up to a maximum of
$5,000 per month, plus his actual and reasonable travel expenses.
Base Salary
For all services rendered by EMPLOYEE under this Agreement, EMPLOYEE
shall receive a Base Salary of $240,000 per year payable bi-weekly. Base
Salary will be reviewed at the beginning of each fiscal year.
Incentive Compensation
Bonuses
In addition to Base Salary, EMPLOYEE shall receive an annual bonus
opportunity of $160,000, payable monthly, quarterly or after year-end, as more
particularly described in the EMPLOYEE's Compensation Plan attached hereto as
Addendum II. The annual bonus shall be established at the beginning of each
fiscal year.
In lieu of ANACOMP'S normal relocation package, EMPLOYEE shall receive
a one-time relocation bonus of $150,000, one-half of which is payable on
January 6, 1997 (or on his official date of hire if changed by mutual
agreement) and one-half of which is payable upon his permanent relocation to
Poway, California. This relocation bonus would be recoverable by ANACOMP
should EMPLOYEE resign his employment or be terminated with cause pursuant to
Section 6.3 of the Agreement within one year of his date of relocation or if
EMPLOYEE fails to relocate permanently to Poway, California by June 30, 1997.
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Stock Options
ANACOMP will award EMPLOYEE non-qualified stock options to purchase
127,500 shares of ANACOMP Common Stock at fair market value as follows:
-85,000 stock options to be awarded at date of hire which will vest in
full in three years from the date of grant
-42,500 stock options to be awarded after two years of employment which
will vest in full in three years from the date of grant
ANACOMP, INC. EMPLOYEE
By:/s/ P. Lang Lowrey /s/ Ralph Koehrer
-------------------------------- ------------------------------
Ralph Koehrer
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ADDENDUM II
CONFIDENTIALITY, NON-COMPETITION AND NON-DISCLOSURE AGREEMENT
In consideration of the employment or continued employment of Employee by
Anacomp, Inc. and its successors, assigns, subsidiaries, or duly authorized
representatives (hereinafter collectively referred to as "Anacomp") and of
the award of an option for the purchase of 85,000 shares of Anacomp, Inc.
Common Stock, par value $.01 per share, at a price of $8.4375, Employee
hereby agrees as follows:
1. Confidentiality and Trade Secrets. The Employee recognizes and
acknowledges that during the course of his/her employment, he/she will have
access to and become acquainted with confidential, trade secret and
proprietary information about Anacomp's businesses and customers
(hereinafter collectively referred to as the "Protected Information"). The
parties hereto recognize that the Protected Information available to
Employee may pertain both to customers and accounts handled by Employee
personally as well as accounts with which Employee is not personally
involved. The parties agree that all Protected Information constitutes a
trade secret of Anacomp. Protected Information may include, but is not
limited to, the names, addresses, and requirements of any customer or
prospective customer of Anacomp; the terms (including price terms) of
contractual relations with such customers; special requirements of such
customers; the identities of individual contacts at such customers; and any
other information relating to Anacomp's research, operations, business
relationships, engineering data or results, specifications, concepts,
methods, processes, rates or schedules, vendor information, products or
services (including prices, costs, sales or content), financial information
or measures, business methods, future business plans, data bases, computer
programs, designs, models, operating procedures, and knowledge of the
organization. The Employee recognizes and acknowledges that all of the
Protected Information is valuable, special and essential to the successful
and effective conduct of Anacomp's business. Therefore, the Employee shall
not, during his/her employment with Anacomp or at any time thereafter,
regardless of the reasons for leaving that employment, use, disclose or
communicate, directly or indirectly, any Protected Information to any third
party for any reason or purpose whatsoever, except as required in the course
of his/her employment with Anacomp. Further, upon the termination of
his/her employment with Anacomp, for any reason whatsoever, Employee shall
promptly return any and all copies of any written material, documents,
computer hardware and software, tools and equipment belonging to Anacomp or
relating to the business of Anacomp in his/her possession.
2. Non-Competition.
2.1 Non-Competition While an Employee or Consultant. While an employee
of Anacomp, or as a consultant to Anacomp after his termination of
employment, Employee agrees not to compete in any manner, either directly or
indirectly as an employee, consultant, investor or owner, whether for
compensation or otherwise, with Anacomp, or to assist any other person or
entity to compete with Anacomp. Further, while an employee of Anacomp,
Employee agrees not to engage in any other employment without the prior
written permission of Anacomp.
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3. Non-Solicitation.
3.1 Non-Solicitation of Employees. During the term of his/her
employment at Anacomp and for two (2) years following the termination for
any reason of such employment, Employee agrees, either on his/her own behalf
or on behalf of any other person or entity, directly or indirectly, not to
hire, solicit, or encourage to leave the employ of Anacomp any person who is
then an employee of Anacomp. The foregoing restrictions shall apply to
employees located in all geographical areas where Employee performed
services for Anacomp during the two-year period prior to his/her
termination, including areas for which Employee had supervisory authority.
3.2 Non-Solicitation of Customers. Because of Employee's access to
Protected Information of Anacomp, Employee agrees that, during the term of
his/her employment at Anacomp and for two (2) years following the
termination for any reason of such employment, he/she will not, directly or
indirectly, in connection with the products and services offered by Anacomp
and those products and services which are competitive with the products and
services of Anacomp: (a) solicit, attempt to obtain, or in any way transact
business with any customers which were customers of Anacomp during his/her
employment or at the time of his/her termination; (b) aid or assist any
other party in the solicitation of any such customers; or (c) interfere with
Anacomp's relationships with any of its customers by soliciting such
customers or inducing them to discontinue their relationships with Anacomp.
Products and services which are competitive with the products and services
of Anacomp include but are not limited to: Micrographics Products (computer
output to microfilm-COM-equipment and software, cameras and film,
processors, duplicators, retrieval and display equipment and software,
computer aided retrieval-CAR-systems, readers, reader printers, other
micrographics equipment, micrographics equipment maintenance, micrographics
consumable supplies and accessories, records management software); Output
Services (computer output to microfilm-COM, source document microfilming,
output of data to compact disk, laser printing, conversion of paper and film
to electronic images, micrographic or electronic imaging system design,
consulting and education, system implementation and integration); Electronic
Image Management Products (hardware, software, magnetics products including
tapes, tape drives and optical media supplies, maintenance of electronic
imaging equipment); Electronic Image Management Services (conversion of
computer generated data to optical or laser disk, COLD, electronic document
imaging and workflow, conversion of paper documents to electronic images,
system design consulting and education, system implementation and
integration, conversion of microfilm to electronic images); and Archival
Services (storage, management and retrieval of all forms of customer
information and business records, including but not limited to paper,
microfiche, magnetic media and digital storage media). The foregoing
restrictions shall apply to all geographical areas where Employee performed
services for Anacomp during the two-year period prior to his/her
termination, including areas for which Employee had supervisory authority.
4. Remedies. Employee acknowledges that compliance with Sections 1, 2 and
3 of this Agreement is necessary to protect the business and good will of
Anacomp and that a breach of those sections will irreparably and continually
damage Anacomp for which money damages may not be adequate. Therefore,
Employee agrees that, in the event he/she breaches or threatens to breach
any of these Sections, Anacomp shall be entitled to both a preliminary or
permanent injunction in order to prevent the continuation of such harm and
money damages insofar as they can be determined. Nothing in this Agreement,
however, shall be construed to prohibit Anacomp from also pursuing any other
remedy, the parties having agreed that all remedies shall be cumulative.
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5. Inventions. Employee agrees that all inventions, improvements,
discoveries, systems, techniques, ideas, processes, programs, and other
things of value made or conceived in whole or in part by Employee while an
employee of Anacomp shall be and remain the sole and exclusive property of
Anacomp, and he/she will disclose all such things of value to Anacomp and
will cooperate with Anacomp to insure that the ownership by Anacomp of such
things of value is protected. Nothing in this Section is meant to apply to
an invention for which no equipment, supplies, facility or trade secret
information of Anacomp was used, which was developed entirely on Employee's
own time, and which does not relate to Anacomp's business, research,
development or from any work performed by Employee for Anacomp.
6. Employment. This Agreement does not confer upon Employee any rights to
continue in the employ of Anacomp or affect in any way Anacomp's right to
terminate his/her employment at any time.
7. Severability. If any provision or clause of this Agreement, or portion
thereof, shall be held by any court or other tribunal of competent
jurisdiction to be illegal, void or unenforceable in such jurisdiction, the
remainder of such provisions shall not thereby be affected and shall be
given full effect, without regard to the invalid portion. It is the
intention of the parties that, if any court construes any provision or
clause of this Agreement, or any portion thereof, to be illegal, void or
unenforceable because of the duration of such provision or the area or
matter covered thereby, such court shall reduce the duration, area or matter
of such provision and, in its reduced form, such provision shall then be
enforceable and shall be enforced.
8. Binding Effect. The rights and obligations of this Agreement shall
inure to and be binding upon the parties and their respective heirs,
successors and assigns.
9. Attorneys' Fees. In the event of any dispute, proceeding or litigation
concerning any controversy, claim or dispute between the parties hereto,
arising out of or relating to this Agreement or the interpretation or breach
thereof, each party shall pay its own expenses, attorneys' fees, expert
fees, and costs incurred therein or in the enforcement or collection of any
judgment or award rendered therein.
10. No Waiver. Anacomp's failure to enforce any provision of this
Agreement shall not in any way be construed as a waiver of any such
provision, or prevent Anacomp thereafter from enforcing each and every
provision of this Agreement.
11. Entire Agreement. This Agreement represents the entire agreement
between Employee and Anacomp, with respect to the subject matter hereof,
superseding all previous oral and written communications, representations,
understandings or agreements.
12. Employee's Understanding. Employee represents and warrants that he/she
has read each and every term of this Agreement and understands the serious
duties and obligations imposed upon Employee thereby. Employee further
represents and warrants that he/she has had full and ample opportunity to
question Anacomp about this Agreement and each of its terms and to consult
an attorney regarding this Agreement and each of its terms. Employee
represents that he/she is free to enter this Agreement and to perform each
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of its terms and covenants. Employee represents that he/she is not
restricted or prohibited, contractually or otherwise, from entering into and
performing this Agreement, and that his or her execution and performance of
this Agreement is not a violation or breach of any other agreement between
Employee and any other person or entity.
DATED: November 21, 1996
ANACOMP, INC.
By: /s/ Eric K. Whinston /s/ Ralph Koehrer
------------------------ -----------------------------------
Eric K. Whinston Employee (signature)
Its: Vice President Ralph W. Koehrer
-----------------------------------
Employee (printed)
-----------------------------------
Current position
-----------------------------------
Current location
###-##-####
-----------------------------------
Social Security Number
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<PAGE>
EXHIBIT 10.7
EXECUTION COPY
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
$80,000,000
CREDIT AND GUARANTEE AGREEMENT
Dated as of February 28, 1997
among
ANACOMP, INC.,
THE FOREIGN SUBSIDIARY BORROWERS,
The Lenders Party Hereto,
and
THE FIRST NATIONAL BANK OF CHICAGO,
as Administrative Agent
____________________________________
LEHMAN COMMERCIAL PAPER INC.,
as Arranger and Syndication Agent
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS................................................... 1
1.1 Defined Terms................................................. 1
1.2 Other Definitional Provisions................................. 18
SECTION 2. AMOUNT AND TERMS OF REVOLVING CREDIT
COMMITMENTS.............................................. 19
2.1 Revolving Credit Commitments.................................. 19
2.2 Procedure for Revolving Credit Borrowing...................... 19
2.3 Repayment of Revolving Credit Loans; Evidence of Debt......... 20
2.4 Termination or Reduction of Revolving Credit Commitments...... 21
SECTION 3. AMOUNT AND TERMS OF TERM LOAN COMMITMENTS..................... 21
3.1 The Term Loans................................................ 21
3.2 Procedure for Term Loan Borrowing............................. 21
3.3 Repayment of Term Loans; Evidence of Debt..................... 22
SECTION 4. AMOUNT AND TERMS OF MULTICURRENCY
COMMITMENT............................................... 23
4.1 Multicurrency Commitments..................................... 23
4.2. Making the Multicurrency Loans................................ 23
4.3 Repayment of Multicurrency Loans; Evidence of Debt............ 24
SECTION 5. LETTERS OF CREDIT............................................. 25
5.1 Letters of Credit............................................. 25
5.2 Procedure for Issuance of Letters of Credit................... 26
5.3 Participating Interests....................................... 26
5.4 Payments...................................................... 27
5.5 Further Assurances............................................ 27
5.6 Obligations Absolute.......................................... 27
5.7 Letter of Credit Application.................................. 28
5.8 Purpose of Letters of Credit.................................. 28
SECTION 6. GENERAL PROVISIONS....................................... 28
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PAGE
6.1 Interest Rates and Payment Dates.............................. 28
6.2 Conversion and Continuation Options........................... 29
6.3 Minimum Amounts of Tranches................................... 30
6.4 Optional and Mandatory Prepayments............................ 30
6.5 Commitment Fees; Other Fees................................... 33
6.6 Computation of Interest and Fees.............................. 33
6.7 Inability to Determine Interest Rate.......................... 34
6.8 Pro Rata Treatment and Payments............................... 34
6.9 Illegality.................................................... 37
6.10 Requirements of Law........................................... 37
6.11 Indemnity..................................................... 38
6.12 Taxes......................................................... 39
6.13 Use of Proceeds............................................... 41
6.14 Change in Lending Office; Replacement of Lender............... 41
SECTION 7. REPRESENTATIONS AND WARRANTIES................................ 41
7.1 Financial Condition........................................... 41
7.2 No Change..................................................... 42
7.3 Corporate Existence; Compliance with Law...................... 42
7.4 Corporate Power; Authorization; Enforceable Obligations....... 43
7.5 No Legal Bar.................................................. 43
7.6 No Material Litigation........................................ 43
7.7 No Default.................................................... 43
7.8 Ownership of Property; Liens.................................. 43
7.9 Intellectual Property......................................... 44
7.10 No Burdensome Restrictions.................................... 44
7.11 Taxes......................................................... 44
7.12 Federal Regulations........................................... 44
7.13 ERISA......................................................... 45
7.14 Investment Company Act; Other Regulations..................... 45
7.15 Subsidiaries.................................................. 45
7.16 Environmental Matters......................................... 45
7.17 Solvency...................................................... 46
7.18 Security Documents............................................ 46
7.19 Regulation H.................................................. 46
7.20 Accuracy of Information....................................... 46
SECTION 8. CONDITIONS PRECEDENT.......................................... 47
8.1 Conditions to Closing Date.................................... 47
8.2 Conditions to Each Extension of Credit........................ 51
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PAGE
SECTION 9. AFFIRMATIVE COVENANTS......................................... 52
9.1 Financial Statements.......................................... 52
9.2 Certificates; Other Information............................... 52
9.3 Payment of Obligations........................................ 53
9.4 Maintenance of Existence...................................... 53
9.5 Maintenance of Property; Insurance............................ 54
9.6 Inspection of Property; Books and Records; Discussions........ 54
9.7 Notices....................................................... 54
9.8 Environmental Laws ........................................... 55
9.9 Additional Subsidiaries....................................... 55
9.10 After-Acquired Property....................................... 56
SECTION 10. NEGATIVE COVENANTS............................................ 56
10.1 Financial Condition Covenants................................. 56
10.2 Limitation on Indebtedness.................................... 57
10.3 Limitation on Liens........................................... 58
10.4 Limitation on Guarantee Obligations........................... 59
10.5 Limitation on Fundamental Changes............................. 60
10.6 Limitation on Sale of Assets.................................. 60
10.7 Limitation on Dividends....................................... 61
10.8 Limitation on Capital Expenditures............................ 61
10.9 Limitation on Investments, Loans and Advances................. 61
10.10 Limitation on Optional Payments and Modifications of Debt
Instruments................................................... 62
10.11 Limitation on Transactions with Affiliates.................... 62
10.12 Limitation on Sales and Leasebacks............................ 62
10.13 Limitation on Changes in Fiscal Year.......................... 63
10.14 Limitation on Negative Pledge Clauses......................... 63
10.15 Limitation on Lines of Business............................... 63
10.16 Limitation on Modification of SKC Arrangement................. 63
SECTION 11. GUARANTEE..................................................... 63
11.1 Guarantee..................................................... 63
11.2 No Subrogation................................................ 64
11.3 Amendments, etc. with respect to the Obligations; Waiver of
Rights........................................................ 64
11.4 Guarantee Absolute and Unconditional.......................... 65
11.5 Reinstatement................................................. 66
11.6 Payments...................................................... 66
SECTION 12. EVENTS OF DEFAULT............................................. 66
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PAGE
SECTION 13. THE ADMINISTRATIVE AGENT AND THE ARRANGER..................... 70
13.1 Appointment................................................... 70
13.2 Delegation of Duties.......................................... 70
13.3 Exculpatory Provisions........................................ 70
13.4 Reliance by Administrative Agent.............................. 70
13.5 Notice of Default............................................. 71
13.6 Non-Reliance on Administrative Agent, Arranger and Other Lenders.
71
13.7 Indemnification............................................... 72
13.8 Administrative Agent in Its Individual Capacity............... 72
13.9 Successor Administrative Agent................................ 72
13.10 The Arranger.................................................. 73
SECTION 14. MISCELLANEOUS................................................. 73
14.1 Amendments and Waivers........................................ 73
14.2 Notices....................................................... 74
14.3 No Waiver; Cumulative Remedies................................ 75
14.4 Survival of Representations and Warranties.................... 76
14.5 Payment of Expenses and Taxes................................. 76
14.6 Successors and Assigns; Participation and Assignments......... 76
14.7 Adjustments; Set-off.......................................... 79
14.8 Counterparts.................................................. 80
14.9 Severability.................................................. 80
14.10 Integration................................................... 80
14.11 GOVERNING LAW................................................. 80
14.12 Submission to Jurisdiction; Waivers........................... 80
14.13 Acknowledgements.............................................. 81
14.14 WAIVERS OF JURY TRIAL......................................... 81
14.15 Power of Attorney............................................. 81
14.16 Judgment...................................................... 82
14.17 Confidentiality............................................... 82
14.18 Matters Relating to Florida AAC Corporation................... 82
14.19 Matters Relating to Certain Existing Financing Statements..... 83
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<PAGE>
SCHEDULES:
I Commitments; Addresses
II Foreign Subsidiary Borrowers
III Available Foreign Currency Payment Offices
IV Domestic Subsidiaries; Foreign Subsidiaries
V Properties to be Mortgaged; Jurisdictions for Mortgage Recordings
VI Foreign Subsidiary Pledges
Item 1: Foreign Subsidiary Stock Pledges to be Perfected on Closing
Date
Item 2: Foreign Subsidiary Stock Pledges to be Perfected after
Closing
Date
1.1 Certain Assets to be Acquired
7.1 Contingent Liabilities
7.6 Litigation
7.8 Real Property Owned and Leased
10.2 Existing Indebtedness
10.3 Existing Liens
10.4 Existing Guarantee Obligations
EXHIBITS:
A-1 Form of Revolving Credit Note
A-2 Form of Term Note
B Form of Guarantee and Collateral Agreement
C Form of Mortgage
D Form of Joinder Agreement
E Form of Assignment and Acceptance
F-1 Form of Opinion of Cadwalader, Wickersham & Taft
F-2 Form of Opinion of Leagre & Barnes
G Matters to be Covered by Foreign Subsidiary Opinion
H Form of Borrowing Certificate
I Form of Tax Certificate
J-1 Form of Notice of Borrowing (Multicurrency Loans)
J-2 Form of Notice of Continuation (Multicurrency Loans)
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<PAGE>
CREDIT AND GUARANTEE AGREEMENT, dated as of February 28, 1997, among
ANACOMP, INC., an Indiana corporation (the "COMPANY"), each FOREIGN SUBSIDIARY
BORROWER (as hereinafter defined) (together with the Company, the "BORROWERS"),
the several banks and other financial institutions from time to time parties
hereto (the "LENDERS"), LEHMAN COMMERCIAL PAPER INC., as arranger and
syndication agent (the "ARRANGER") and THE FIRST NATIONAL BANK OF CHICAGO, a
national banking association, as administrative agent for the Lenders hereunder
(as hereinafter defined, the "ADMINISTRATIVE AGENT").
W I T N E S S E T H :
WHEREAS, the Company has requested the Lenders to extend certain
credit to the Company and the Foreign Subsidiary Borrowers; and
WHEREAS, the Lenders are willing to extend such credit on and subject
to the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, the parties hereto agree as follows:
SECTION 1. DEFINITIONS
1.1 DEFINED TERMS. As used in this Agreement, the following terms
shall have the following meanings:
"ABR LOANS": Loans, the rate of interest applicable to which is based
upon the Alternate Base Rate.
"ACQUISITION": any transaction or series of related transactions by
which the Company or any of its Subsidiaries (a) acquires any going
business or all or substantially all of the assets of any Person, whether
through purchase of assets, merger or otherwise or (b) directly or
indirectly acquires (in one transaction or in a series of related
transactions) at least (i) a majority (in number of votes) of the Capital
Stock having ordinary voting power for the election of directors (or other
managers) of any Person or (ii) a majority of the ownership interests in
any Person.
"AFFILIATE": of any Person, (a) any other Person (other than a
wholly owned Subsidiary of such Person) which, directly or indirectly, is
in control of, is controlled by, or is under common control with, such
Person or (b) any other Person who is a director or officer of (i) such
Person, (ii) any Subsidiary of such Person or (iii) any Person described in
clause (a) above. For purposes of this definition, a Person shall be
deemed to be "controlled by" such other Person if such other Person
possesses, directly or indirectly, power either to (A) vote 10% or more of
the securities having ordinary
<PAGE>
2
voting power for the election of directors of such first Person or (B)
direct or cause the direction of the management and policies of such first
Person whether by contract or otherwise.
"AGGREGATE AVAILABLE REVOLVING CREDIT COMMITMENTS": as at any date of
determination with respect to all Revolving Credit Lenders, an amount in
U.S. Dollars equal to the Available Revolving Credit Commitments of all
Revolving Credit Lenders on such date.
"AGGREGATE MULTICURRENCY OUTSTANDINGS": as at any date of
determination with respect to any Revolving Credit Lender, an amount in the
applicable Available Foreign Currencies equal to the aggregate unpaid
principal amount of such Revolving Credit Lender's Multicurrency Loans.
"AGGREGATE REVOLVING CREDIT COMMITMENTS": the aggregate amount of the
Revolving Credit Commitments of all the Revolving Credit Lenders.
"AGGREGATE REVOLVING CREDIT OUTSTANDINGS": as at any date of
determination with respect to any Lender, the sum of (a) the aggregate
unpaid principal amount of such Lender's Revolving Credit Loans on such
date and (b) such Lender's Revolving Credit Commitment Percentage of the
aggregate Letter of Credit Obligations on such date and (c) the U.S. Dollar
Equivalent of the Aggregate Multicurrency Outstandings of such Lender.
"AGGREGATE TOTAL OUTSTANDINGS": as at any date of determination with
respect to any Lender, an amount in U.S. Dollars equal to the sum of (a)
the Aggregate Revolving Credit Outstandings of such Lender on such date and
(b) the aggregate unpaid principal amount of such Lender's Term Loans on
such date.
"AGREEMENT": this Credit and Guarantee Agreement, as the same may be
amended, supplemented or otherwise modified from time to time.
"AGREEMENT CURRENCY": as defined in subsection 14.16(b).
"ALTERNATE BASE RATE": for any day, a rate of interest per annum
equal to the higher of (i) the Corporate Base Rate for such day and (ii)
the sum of Federal Funds Effective Rate for such day plus 1/2% per annum.
For purposes hereof: "CORPORATE BASE RATE" means a rate per annum equal to
the corporate base rate of interest announced by First Chicago from time to
time, changing when and as said corporate base rate changes; and "FEDERAL
FUNDS EFFECTIVE RATE" shall mean, for any day, the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day which is a Business Day, the
average of the quotations for
<PAGE>
3
the day of such transactions received by the Administrative Agent from
three federal funds brokers of recognized standing selected by it. Any
change in the Alternate Base Rate due to a change in the Corporate Base
Rate or the Federal Funds Effective Rate shall be effective as of the
opening of business on the effective day of such change in the Corporate
Base Rate or the Federal Funds Effective Rate, respectively.
"APPLICABLE MARGIN": (a) 2.00%, in the case of all ABR Loans and (b)
3.00% in the case of all Eurodollar Loans and all Multicurrency Loans.
"ASSET SALE": any sale, sale-leaseback, or other disposition by the
Company or any Subsidiary thereof of any of its property or assets,
including the stock of any Subsidiary, other than any sale, sale-leaseback
or other disposition permitted under subsections 10.6(a) through (d) or
subsection 10.12.
"ASSIGNEE": as defined in subsection 14.6(c).
"AVAILABLE FOREIGN CURRENCIES": Deutsche Marks, Pounds Sterling,
French Francs, Canadian Dollars, Belgian Francs and Italian Lire and any
other available and freely-convertible non-U.S. Dollar currency selected by
the Company and approved by the Administrative Agent and the Majority
Revolving Credit Lenders in the manner described in subsection 14.1(b).
"AVAILABLE REVOLVING CREDIT COMMITMENT": as at any date of
determination with respect to any Revolving Credit Lender, an amount in
U.S. Dollars equal to the excess, if any, of (a) the amount of such
Lender's Revolving Credit Commitment in effect on such date OVER (b) the
Aggregate Revolving Credit Outstandings of such Lender on such date.
"BENEFITTED LENDER": as defined in subsection 14.7.
"BOARD": the Board of Governors of the Federal Reserve System (or any
successor thereto).
"BORROWERS": as defined in the preamble hereto.
"BORROWING DATE": any Business Day specified in a notice pursuant to
subsection 2.2, 3.2 or 4.3 as a date on which a Borrower requests the
Lenders to make Loans hereunder.
"BUSINESS DAY": (a) when such term is used in respect of a day on
which a Loan in an Available Foreign Currency is to be made, a payment is
to be made in respect of such Loan, an Exchange Rate is to be set in
respect of such Available Foreign Currency or any other dealing in such
Available Foreign Currency is to be carried out pursuant to this Agreement,
such term shall mean a London Banking Day
<PAGE>
4
which is also a day on which banks are open for general banking business in
the city which is the principal financial center of the country of issuance
of such Available Foreign Currency and (b) when such term is used in any
context in this Agreement (including as described in the foregoing clause
(a)), such term shall mean a day which, in addition to complying with any
applicable requirements set forth in the foregoing clause (a), is a day
other than a Saturday, Sunday or other day on which commercial banks in New
York City or Chicago, Illinois are authorized or required by law to close.
"CAPITAL EXPENDITURES": direct or indirect (by way of the acquisition
of securities of a Person or the expenditure of cash or the incurrence of
Indebtedness) expenditures (other than expenditures in connection with
Acquisitions permitted hereunder) in respect of the purchase or other
acquisition of fixed or capital assets (excluding (a) any such asset
acquired in connection with normal replacement and maintenance programs
whether or not properly charged to current operations, (b) any such asset
acquired pursuant to a Financing Lease and (c) any asset described in
Schedule 1.1 acquired for fair market value).
"CAPITAL STOCK": any and all shares, interests, participation or
other equivalents (however designated) of capital stock of a corporation,
any and all equivalent ownership interests in a Person (other than a
corporation) and any and all warrants or options to purchase any of the
foregoing.
"CASH EQUIVALENTS": (a) securities with maturities of one year or
less from the date of acquisition issued or fully guaranteed or insured by
the United States Government or any agency thereof, (b) certificates of
deposit and eurodollar time deposits with maturities of one year or less
from the date of acquisition and overnight bank deposits of any Lender or
of any commercial bank having capital and surplus in excess of
$500,000,000, (c) repurchase obligations of any Lender or of any commercial
bank satisfying the requirements of clause (b) of this definition, having a
term of not more than 30 days with respect to securities issued or fully
guaranteed or insured by the United States Government, (d) commercial paper
of a domestic issuer rated at least A-2 by Standard and Poor's Rating Group
("S&P") or P-2 by Moody's Investors Service, Inc. ("MOODY'S"), (e)
securities with maturities of one year or less from the date of acquisition
issued or fully guaranteed by any state, commonwealth or territory of the
United States, by any political subdivision or taxing authority of any such
state, commonwealth or territory or by any foreign government, the
securities of which state, commonwealth, territory, political subdivision,
taxing authority or foreign government (as the case may be) are rated at
least A by S&P or A by Moody's (or the equivalent rating by either such
rating agency for such type of securities), (f) securities with maturities
of one year or less from the date of acquisition backed by standby letters
of credit issued by any commercial bank satisfying the requirements of
clause (b) of this definition or (g) shares of money market mutual or
similar funds which invest
<PAGE>
5
exclusively in assets satisfying the requirements of clauses (a) through
(f) of this definition.
"CLASS": the classification of loans as Revolving Credit Loans, Term
Loans or Multicurrency Loans, each of which categories shall be deemed to
be a "Class" of Loans.
"CLOSING DATE": the date on or before February 28, 1997 on which all
of the conditions precedent set forth in subsection 8.1 shall have been met
or waived and the initial Loans are made.
"CODE": the Internal Revenue Code of 1986, as amended from time to
time.
"COMMERCIAL LETTERS OF CREDIT": as defined in subsection 5.1(ii).
"COMMITMENTS": the collective reference to the Revolving Credit
Commitments, the Term Loan Commitments and the Multicurrency Commitments.
"COMMONLY CONTROLLED ENTITY": an entity, whether or not incorporated,
which is under common control with the Company within the meaning of
Section 4001 of ERISA or is part of a group which includes the Company and
which is treated as a single employer under Section 414 of the Code.
"CONSOLIDATED CASH FLOW": for any period, Consolidated Net Income for
such period, PLUS the sum of (i) depreciation expense and amortization
expense deducted from earnings in determining such Consolidated Net Income,
(ii) the deferred tax expense of the Company for such period and (iii) the
amount of interest expense deducted in determining and Consolidated Net
Income to the extent such interest expense represents accreted or
paid-in-kind interest, and MINUS the sum of (i) the deferred tax credit of
the Company for such period, and (ii) the aggregate amount actually paid in
cash during such period by the Company and its Subsidiaries on account of
Capital Expenditures and Acquisitions permitted hereunder (but only to the
extent not financed by Indebtedness or capital contributions), in each
case, determined on a consolidated basis in accordance with GAAP.
"CONSOLIDATED CURRENT ASSETS": at a particular date, all assets of
the Company (other than cash and cash equivalents) which, in accordance
with GAAP, would be classified on a consolidated balance sheet of the
Company and its Subsidiaries as current assets.
"CONSOLIDATED CURRENT LIABILITIES": at a particular date, all
liabilities of the Company (other than current maturities of long-term and
short-term debt) which, in accordance with GAAP, would be classified on a
consolidated balance sheet of the Company and its Subsidiaries as current
liabilities.
<PAGE>
6
"CONSOLIDATED EBITDA": for any period, the sum of (i) Consolidated
Net Income for such period, (ii) Consolidated Interest Expense for such
period, (iii) the amount of taxes, depreciation and amortization deducted
from earnings in determining such Consolidated Net Income and (iv) the
amount of any premium paid on refinanced Existing Subordinated Debt, and
any underwriting fee or similar fee not capitalized paid in connection with
the issuance of New Subordinated Debt.
"CONSOLIDATED EXCESS CASH FLOW": for any period, Consolidated Cash
Flow for such period, PLUS the net decrease during such period (if any) in
Consolidated Working Capital and MINUS the sum of (i) the net increase
during such period (if any) in Consolidated Working Capital and
(ii) scheduled principal payments in respect of the Term Loans during such
period; PROVIDED, that in determining Consolidated Excess Cash Flow for the
fiscal year ending September 30, 1997, any net decrease in Consolidated
Working Capital up to an aggregate amount of $5,000,000 shall not be
included.
"CONSOLIDATED INDEBTEDNESS": at a particular date, all Indebtedness
of the Company and its Subsidiaries, determined on a consolidated basis.
"CONSOLIDATED INTEREST EXPENSE": for any fiscal period, the amount
which would, in conformity with GAAP, be set forth opposite the caption
"interest expense" (or any like caption) on a consolidated income statement
of the Company and its Subsidiaries for such period.
"CONSOLIDATED NET INCOME": for any fiscal period, the consolidated
net income (or deficit) of the Company and its Subsidiaries for such period
(taken as a cumulative whole), determined on a consolidated basis in
accordance with GAAP; PROVIDED, that any non-cash extraordinary gains and
losses shall be excluded in determining Consolidated Net Income.
"CONSOLIDATED WORKING CAPITAL": at a particular date, Consolidated
Current Assets MINUS Consolidated Current Liabilities, in each case on such
date.
"CONTINUING DIRECTORS": the directors of the Company on the Closing
Date and each other director, if such other director's nomination for
election to the Board of Directors of the Company is recommended by a
majority of the then Continuing Directors.
"CONTRACTUAL OBLIGATION": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or
undertaking to which such Person is a party or by which it or any of its
property is bound.
<PAGE>
7
"DEFAULT": any of the events specified in Section 12, whether or not
any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.
"DOLLARS", "U.S. DOLLARS" and "$": dollars in lawful currency of the
United States of America.
"DOMESTIC SUBSIDIARY": any Subsidiary other than a Foreign
Subsidiary.
"ENVIRONMENTAL COMPLAINT": any complaint, order, citation, notice or
other written communication from any Person with respect to the existence
or alleged existence of a violation of any Environmental Laws or legal
liability resulting from air emissions, water discharges, noise emissions,
Hazardous Material or any other environmental, health or safety matter.
"ENVIRONMENTAL LAWS": any and all applicable Federal, foreign, state,
local or municipal laws, rules, orders, regulations, statutes, ordinances,
codes, decrees, requirements of any Governmental Authority and any and all
common law requirements, rules and bases of liability regulating, relating
to or imposing liability or standards of conduct concerning pollution or
protection of the environment or the Release or threatened Release of
Hazardous Materials, as now or hereafter in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"EUROCURRENCY LIABILITIES": at any time, all reserve requirements in
effect at such time (including, without limitation, basic, supplemental,
marginal and emergency reserves under any regulations of the Board or other
Governmental Authority having jurisdiction with respect thereto) dealing
with reserve requirements prescribed for eurocurrency funding (currently
referred to as "Eurocurrency Liabilities" in Regulation D of the Board)
maintained by a member bank of the Federal Reserve System.
"EUROCURRENCY RATE": with respect to any Multicurrency Loan for the
relevant Interest Period, the rate determined by the Administrative Agent
to be the rate at which First Chicago offers to place deposits in the
applicable Available Foreign Currency with first-class banks in the London
interbank market at approximately 11 A.M. (London time) two Business Days
prior to the first day of such Interest Period, in the approximate amount
of First Chicago's relevant Multicurrency Loan and having a maturity
approximately equal to such Interest Period. The Eurocurrency Rate shall
be rounded to the next higher multiple of 1/16 of 1% if the rate is not
such a multiple.
"EURODOLLAR BASE RATE": with respect to a Eurodollar Loan for the
relevant Interest Period, the applicable London interbank offered rate for
deposits in U.S. Dollars appearing on Telerate Page 3750 as of 11:00 A.M.
(London time) two Business
<PAGE>
8
Days prior to the first day of such Interest Period, and having a maturity
approximately equal to such Interest Period. If no London interbank
offered rate of such maturity then appears on Telerate Page 3750, then the
Eurodollar Base Rate shall be equal to the London interbank offered rate
for deposits in U.S. Dollars maturing immediately before or immediately
after such maturity, whichever is higher, as determined by the
Administrative Agent from Telerate Page 3750. If Telerate Page 3750 is not
available, the applicable Eurodollar Base Rate for the relevant Interest
Period shall be the rate determined by the Administrative Agent to be the
rate at which First Chicago offers to place deposits in U.S. Dollars with
first-class banks in the London interbank market at approximately 11:00
A.M. (London time) two Business Days prior to the first day of such
Interest Period, in the approximate amount of First Chicago's relevant
portion of the Eurodollar Loan and having a maturity approximately equal to
such Interest Period.
"EURODOLLAR LOANS": Revolving Credit Loans and Term Loans the rate of
interest applicable to which is based upon the Eurodollar Rate.
"EURODOLLAR RATE": with respect to a Eurodollar Loan for the relevant
Interest Period, the quotient of (a) the Eurodollar Base Rate applicable to
such Interest Period, divided by (b) one minus the Eurocurrency Liabilities
(expressed as a decimal) applicable to such Interest Period. The
Eurodollar Rate shall be rounded to the next higher multiple of 1/16 of 1%
if the rate is not such a multiple.
"EVENT OF DEFAULT": any of the events specified in Section 12,
PROVIDED that any requirement for the giving of notice, the lapse of time,
or both, or any other condition, has been satisfied.
"EXCHANGE ACT": the Securities Exchange Act of 1934, as amended.
"EXISTING SUBORDINATED DEBT": the Company's 13% Senior Subordinated
Notes, due 2002 in an original principal amount of $160,000,000.
"EXTENSION OF CREDIT": as to any Lender, the making of a Loan by such
Lender and, with respect to any Revolving Credit Lender, the issuance of
any Letter of Credit.
"FINANCING LEASE": (a) any lease of property, real or personal, the
obligations under which are capitalized on a consolidated balance sheet of
the Company and its Subsidiaries and (b) any other such lease to the extent
that the then present value of the minimum rental commitment thereunder
should, in accordance with GAAP, be capitalized on a balance sheet of the
lessee.
"FIRST CHICAGO": The First National Bank of Chicago in its individual
capacity, and its successors.
<PAGE>
9
"FOREIGN SUBSIDIARIES": each of the Subsidiaries so designated on
Schedule VI and any Subsidiaries organized outside the United States which
are created after the effectiveness hereof.
"FOREIGN SUBSIDIARY BORROWER": each Foreign Subsidiary listed as a
Foreign Subsidiary Borrower in Schedule II as amended from time to time in
accordance with subsection 14.1(b)(i).
"FOREIGN SUBSIDIARY OPINION": with respect to any Foreign Subsidiary
Borrower, a legal opinion of counsel to such Foreign Subsidiary Borrower
addressed to the Administrative Agents and the Lenders concluding that such
Foreign Subsidiary Borrower and the Loan Documents to which it is a party
substantially comply with the matters listed on Exhibit G, with such
assumptions, qualifications and deviations therefrom as the Administrative
Agent shall approve (such approval not to be unreasonably withheld).
"GAAP": generally accepted accounting principles in the United States
of America in effect from time to time.
"GOVERNMENTAL AUTHORITY": any nation or government, any state,
province or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of
or pertaining to government.
"GUARANTEE AND COLLATERAL AGREEMENT": the Guarantee and Collateral
Agreement, substantially in the form of Exhibit B, to be executed and
delivered on the Closing Date by the Company and each of its Domestic
Subsidiaries, as the same may be amended, supplemented or otherwise
modified.
"GUARANTEE OBLIGATION": as to any Person, any obligation of such
Person guaranteeing or in effect guaranteeing any Indebtedness, leases,
dividends or other obligations (the "PRIMARY OBLIGATIONS") of any other
Person (the "PRIMARY OBLIGOR") in any manner, whether directly or
indirectly, including, without limitation, any obligation of such Person,
whether or not contingent (a) to purchase any such primary obligation or
any property constituting direct or indirect security therefor, (b) to
advance or supply funds (i) for the purchase or payment of any such primary
obligation or (ii) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (c) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation
or (d) otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof; PROVIDED, HOWEVER, that the
term Guarantee Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of
any Guarantee Obligation shall be deemed to be an amount equal to the value
as of any date of determination of
<PAGE>
10
the stated or determinable amount of the primary obligation in respect of
which such Guarantee Obligation is made (unless such Guarantee Obligation
shall be expressly limited to a lesser amount, in which case such lesser
amount shall apply) or, if not stated or determinable, the value as of any
date of determination of the maximum reasonably anticipated liability in
respect thereof as determined by such Person in good faith.
"HAZARDOUS MATERIALS": any solid wastes, toxic or hazardous
substances, materials or wastes, defined, listed, classified or regulated
as such in or under any Environmental Laws, including, without limitation,
asbestos, petroleum or petroleum products (including gasoline, crude oil or
any fraction thereof), polychlorinated biphenyls, and urea-formaldehyde
insulation, and any other substance the presence of which may give rise to
liability under any Environmental Law.
"HEDGE AGREEMENT": any interest rate protection agreement, interest
rate swap or other interest rate hedge arrangement, or currency swap or
other currency hedge arrangement (other than any interest rate cap or other
similar agreement or arrangement pursuant to which the Company has no
credit exposure), to or under which the Company or any of its Subsidiaries
is a party or a beneficiary.
"HEDGE AGREEMENT OBLIGATIONS": all obligations of the Company under
any one or more Hedge Agreements to make payments to the counterparties
thereunder upon the occurrence of a termination event or similar event
thereunder.
"INDEBTEDNESS": of a Person, at a particular date, the sum (without
duplication) at such date of (a) indebtedness for borrowed money or for the
deferred purchase price of property or services in respect of which such
Person is liable as obligor (other than current trade liabilities incurred
in the ordinary course of business and payable in accordance with customary
practices, and other than SKC Arrangement Obligations), (b) indebtedness
secured by any Lien on any property or asset owned or held by such Person
regardless of whether the indebtedness secured thereby shall have been
assumed by or is a primary liability of such Person, (other than SKC
Arrangement Obligations) (c) obligations of such Person under Financing
Leases, (d) the face amount of all letters of credit issued for the account
of such person and, without duplication, the unreimbursed amount of all
drafts drawn thereunder and (e) obligations (in the nature of principal or
interest) of such Person in respect of acceptances or similar obligations
issued or created for the account of such Person.
"INSOLVENCY": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"INSOLVENT": pertaining to a condition of Insolvency.
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11
"INTEREST PAYMENT DATE": (a) as to any ABR Loan, the last day of each
March, June, September and December to occur while such Loan is
outstanding, (b) as to any Eurodollar Loan or Multicurrency Loan having an
Interest Period of three months or less, the last day of such Interest
Period and (c) as to any Eurodollar Loan or Multicurrency Loan having an
Interest Period longer than three months, (i) each day which is three
months after the first day of such Interest Period and (ii) the last day of
such Interest Period.
"INTEREST PERIOD": with respect to any Eurodollar Loan or
Multicurrency Loan:
(a) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such Eurodollar
Loan or Multicurrency Loan and ending one, two, three or six months
thereafter, as selected by the relevant Borrower in its notice of
borrowing or notice of conversion, as the case may be, given with
respect thereto; and
(b) thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such Eurodollar Loan or
Multicurrency Loan and ending one, two, three or six months
thereafter, as selected by the relevant Borrower by irrevocable notice
to the Administrative Agent not less than three Business Days prior to
the last day of the then current Interest Period with respect thereto;
PROVIDED that, all of the foregoing provisions relating to Interest Periods
are subject to the following:
(i) if any Interest Period pertaining to a Eurodollar Loan or
Multicurrency Loan would otherwise end on a day that is not a Business
Day, such Interest Period shall be extended to the next succeeding
Business Day unless the result of such extension would be to carry
such Interest Period into another calendar month in which event such
Interest Period shall end on the immediately preceding Business Day;
(ii) any Interest Period applicable to a Eurodollar Loan or
Multicurrency Loan that would otherwise extend beyond the Revolving
Credit Termination Date or, with respect to any Term Loan, the final
maturity date for such Term Loan, shall end on the Revolving Credit
Termination Date or such final maturity date; and
(iii) any Interest Period pertaining to a Eurodollar Loan or
Multicurrency Loan that 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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12
"ISSUING LENDER": First Chicago, in its capacity as issuer of the
Letters of Credit and any other Revolving Credit Lender which the Company,
the Administrative Agent and the Majority Revolving Credit Lenders shall
have approved, in its capacity as issuer of the Letters of Credit.
"JOINDER AGREEMENT": each Joinder Agreement, substantially in the
form of Exhibit D, executed and delivered pursuant to subsection 14.1(b).
"JUDGMENT CURRENCY": as defined in subsection 14.16(b).
"LENDERS": as defined in the preamble hereto.
"LETTER OF CREDIT APPLICATIONS": (a) in the case of Standby Letters
of Credit, a letter of credit application for a Standby Letter of Credit on
the standard form of the applicable Issuing Lender for standby letters of
credit, and (b) in the case of Commercial Letters of Credit, a letter of
credit application for a Commercial Letter of Credit on the standard form
of the applicable Issuing Lender for commercial letters of credit.
"LETTER OF CREDIT OBLIGATIONS": at any particular time, all
liabilities of the Company with respect to Letters of Credit, whether or
not any such liability is contingent, including (without duplication) the
sum of (a) the aggregate undrawn face amount of all Letters of Credit then
outstanding plus (b) the aggregate amount of all unpaid Reimbursement
Obligations.
"LETTERS OF CREDIT": as defined in subsection 5.1(ii).
"LIEN": any mortgage, pledge, hypothecation, assignment, deposit
arrangement (other than a bank or similar deposit account), encumbrance,
lien (statutory or other), or preference, priority or other security
agreement or similar preferential arrangement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other
title retention agreement, any Financing Lease having substantially the
same economic effect as any of the foregoing, and the filing of any
financing statement under the Uniform Commercial Code or comparable law of
any jurisdiction in respect of any of the foregoing).
"LOAN DOCUMENTS": the collective reference to this Agreement, any
Notes, any documents or instruments evidencing or governing the Security
Documents.
"LOAN PARTIES": the collective reference to the Company, the Foreign
Subsidiary Borrowers and each guarantor or grantor party to any Security
Document.
"LOANS": the collective reference to the Revolving Credit Loans, the
Term Loans and the Multicurrency Loans.
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13
"LONDON BANKING DAY": any day on which banks in London are open for
general banking business, including dealings in foreign currency and
exchange.
"MAJORITY LENDERS": (a) at any time prior to the termination of the
Commitments, Lenders having Available Revolving Credit Commitments, undrawn
Term Loan Commitments and Aggregate Total Outstandings aggregating more
than 50% of the sum of the Available Revolving Credit Commitments, undrawn
Term Loan Commitments and Aggregate Total Outstandings of all Lenders, and
(b) at any time after the termination of the Commitments, Lenders having
Aggregate Total Outstandings aggregating more than 50% of the Aggregate
Total Outstandings of all Lenders.
"MAJORITY REVOLVING CREDIT LENDERS": at any time, Revolving Credit
Lenders the Revolving Credit Commitment Percentages of which aggregate more
than 50%.
"MATERIAL ADVERSE EFFECT": a material adverse effect on (a) the
business, operations, property or condition (financial or otherwise) of the
Company and its Subsidiaries taken as a whole or (b) the validity or
enforceability of this Agreement or any of the other Loan Documents or the
rights or remedies of the Administrative Agent or the Lenders hereunder or
thereunder.
"MATERIAL ENVIRONMENTAL AMOUNT": $3,000,000.
"MATERIAL FOREIGN SUBSIDIARY": any Foreign Subsidiary accounting for
5% or more of the assets or revenues of the Company and its consolidated
Subsidiaries, taken as a whole.
"MOODY'S": Moody's Investors Service, Inc. or any successor thereto.
"MORTGAGES": the collective reference to the mortgages and deeds of
trust to be executed and delivered by the Company or the appropriate
Subsidiary, substantially in the form of Exhibit C (with such changes
therein as may be required to reflect different laws and practices in the
various jurisdictions in which the Mortgages are to be recorded), covering
the parcels of real property identified in Schedule V and such after-
acquired properties as required pursuant to subsection 9.10, as the same may be
amended, supplemented or otherwise modified from time to time.
"MULTICURRENCY LOANS": as defined in subsection 4.1.
"MULTIEMPLOYER PLAN": a Plan which is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
"NET PROCEEDS": the aggregate cash proceeds received by the Company
or any Subsidiary thereof in respect of:
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14
(a) any incurrence by the Company or any of its Subsidiaries of
any Indebtedness, or any issuance by the Company of Capital Stock,
after the Closing Date;
(b) any Asset Sale;
(c) any cash payments received in respect of promissory notes
delivered to the Company or such Subsidiary in respect of an Asset
Sale;
in each case net of (without duplication) (A) the amount required to repay
any Indebtedness (other than the Loans) secured by a Lien on any assets of
the Company or a Subsidiary of the Company that are collateral for any such
Indebtedness that are sold or otherwise disposed of in connection with such
Asset Sale, (B) the reasonable expenses (including legal fees and brokers'
and underwriters' commissions, lenders' fees or credit enhancement fees, in
any case, paid to third parties) incurred in effecting such issuance or
sale, (C) any taxes reasonably attributable to such sale and reasonably
estimated by the Company or such Subsidiary to be actually payable in cash
and (D) the amount of any reserve established in accordance with GAAP
against any liabilities associated with the assets sold, retained by the
Company or any Subsidiary, PROVIDED, that any reduction of such reserve to
the extent not accompanied by a cash payment in respect of the liabilities
reserved against shall constitute Net Proceeds.
"NEW SUBORDINATED DEBT": up to $200,000,000 in aggregate principal
amount of subordinated indebtedness of the Company issued after the Closing
Date (i) having terms and conditions (including subordination provisions)
which, in the reasonable good faith judgment of the Majority Lenders, are
at least as favorable to the Borrower and the Lenders as those applicable
to the Existing Subordinated Debt and which expressly provides that the
Obligations constitute senior indebtedness thereunder and (ii) the Net
Proceeds of which are used to repay the Existing Subordinated Debt and,
after repayment in full of the Existing Subordinated Debt (including any
prepayment penalties and premium), to prepay the Term Loans or for other
general corporate purposes. For purposes of determining whether proposed
New Subordinated Debt satisfies the conditions set forth in clause (i) of
the preceding sentence, the Company shall submit the terms of such New
Subordinated Debt in writing to the Lenders, and if the Majority Lenders,
either directly or through the Administrative Agent, do not advise the
Company within ten Business Days that such proposed New Subordinated Debt
does not satisfy such conditions, such proposed New Subordinated Debt shall
be deemed to satisfy such conditions.
"NON-EXCLUDED TAXES": as defined in subsection 6.12(a).
"NOTES": the collective reference to the Revolving Credit Notes and
the Term Notes.
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15
"OBLIGATIONS": collectively, the unpaid principal of and interest on
the Loans, the Reimbursement Obligations and all other obligations and
liabilities of the Company and each Foreign Subsidiary Borrower under or in
connection with this Agreement and the other Loan Documents (including in
each case, without limitation, interest accruing at the then applicable
rate provided in this Agreement or any other applicable Loan Document after
the maturity of the Loans and interest accruing at the then applicable rate
provided in this Agreement or any other applicable Loan Document after the
filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to the Company,
whether or not a claim for post-filing or post-petition interest is allowed
in such proceeding), whether direct or indirect, absolute or contingent,
due or to become due, or now existing or hereafter incurred, which may
arise under, out of, or in connection with, this Agreement, the Notes, the
Letters of Credit, the Letter of Credit Applications, the other Loan
Documents or any other document made, delivered or given in connection
therewith, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise
(including, without limitation, all fees and disbursements of counsel to
the Administrative Agents or to the Lenders).
"PARTICIPANTS": as defined in subsection 14.6(b).
"PARTICIPATING INTEREST": with respect to any Letter of Credit (A) in
the case of the Issuing Lender, its interest in such Letter of Credit and
any Letter of Credit Application relating thereto after giving effect to
the granting of any participating interests therein pursuant hereto and (b)
in the case of each Participating Lender, its undivided participating
interest in such Letter of Credit and any Letter of Credit Application
relating thereto.
"PARTICIPATING LENDER": any Revolving Credit Lender (other than the
Issuing Lender) with respect to its Participating Interest in a Letter of
Credit.
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA.
"PERSON": an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"PLAN": at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which the Company or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"PLEDGED STOCK": as defined in the Guarantee and Collateral
Agreement.
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16
"PROPERTY": each parcel of real property owned or operated by the
Company and its Subsidiaries.
"REGISTER": as defined in subsection 14.6(d).
"REIMBURSEMENT OBLIGATION": the obligation of the Company to
reimburse the Issuing Lender in accordance with the terms of this Agreement
and the related Letter of Credit Application for any payment made by the
Issuing Lender under any Letter of Credit.
"RELEASE" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, escaping, leaking, dumping, disposing, spreading,
depositing or dispersing of any Hazardous Materials in, unto or onto the
environment.
"REORGANIZATION": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section
4241 of ERISA.
"REPORTABLE EVENT": any of the events set forth in Section 4043(c) of
ERISA, other than those events as to which the thirty day notice period is
waived under any of subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg.
Section 4043 or any successor regulation thereto.
"REQUIREMENT OF LAW": as to (a) any Person, the certificate of
incorporation and by-laws or the partnership or limited partnership
agreement or other organizational or governing documents of such Person,
and any law, treaty, rule or regulation or determination of an arbitrator
or a court or other Governmental Authority, in each case applicable to or
binding upon such Person or any of its property or to which such Person or
any of its property is subject, and (b) any property, any law, treaty,
rule, regulation, requirement, judgment, decree or determination of any
Governmental Authority applicable to or binding upon such property or to
which such property is subject, including, without limitation, any
Environmental Laws.
"RESPONSIBLE OFFICER": with respect to any Loan Party, the chief
executive officer, the president, the chief financial officer, any vice
president, the treasurer or the assistant treasurer of such Loan Party.
"REVOLVING CREDIT COMMITMENT": as to any Revolving Credit Lender at
any time, its obligation to make Revolving Credit Loans to, and/or
participate in Letters of Credit issued for the account of, the Company in
an aggregate amount not to exceed at any time outstanding the U.S. Dollar
amount set forth opposite such Revolving Credit Lender's name in Schedule I
under the heading "Revolving Credit Commitment", as such amount may be
reduced from time to time pursuant to subsection 2.4 and the other
applicable provisions hereof.
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17
"REVOLVING CREDIT COMMITMENT PERCENTAGE": as to any Revolving Credit
Lender at any time, the percentage which such Revolving Credit Lender's
Revolving Credit Commitment then constitutes of the Aggregate Revolving
Credit Commitments (or, if the Revolving Credit Commitments have terminated
or expired, the percentage which (a) the Aggregate Revolving Credit
Outstandings of such Revolving Credit Lender at such time then constitutes
of (b) the Aggregate Revolving Credit Outstandings of all Revolving Credit
Lenders at such time).
"REVOLVING CREDIT COMMITMENT PERIOD": the period from and including
the Closing Date to but not including the Revolving Credit Termination
Date, or such earlier date on which the Revolving Credit Commitments shall
terminate as provided herein.
"REVOLVING CREDIT LENDER": each Lender having an amount greater than
zero set forth under the heading "Revolving Credit Commitment" opposite its
name on Schedule I.
"REVOLVING CREDIT LOAN": as defined in subsection 2.1.
"REVOLVING CREDIT NOTE": as defined in subsection 2.3(e).
"REVOLVING CREDIT TERMINATION DATE": February 28, 2001.
"SECURITIES ACT": the Securities Act of 1933, as amended.
"SECURITY DOCUMENTS": the collective reference to the Guarantee and
Collateral Agreement, the Mortgages and each other pledge agreement,
security document or similar agreement that may be delivered to the
Administrative Agent as collateral security for any or all of the
Obligations, in each case as amended, supplemented or otherwise modified
from time to time.
"SENIOR NOTES": the Company's 11-5/8% Senior Secured Notes due 1999.
"SKC ARRANGEMENT": the Amended and Restated Master Supply Agreement,
dated as of October 8, 1993, among the Company, SKC America, Inc. a New
Jersey corporation, and SKC Limited, a corporation organized under the laws
of the Republic of Korea, as amended, supplemented or otherwise modified
from time to time.
"SKC ARRANGEMENT OBLIGATIONS": all indebtedness, obligations and
liabilities of the Company under the SKC Arrangement.
"SINGLE EMPLOYER PLAN": any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
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18
"SOLVENT": with respect to any Person on a particular date, the
condition that on such date, (a) the fair value of the property of such
Person is greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such Person, (b) the present fair
salable value of the assets of such Person is not less than the amount that
will be required to pay the probable liability of such Person on its debts
as they become absolute and mature, (c) such Person does not intend to, and
does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature, and (d) such
Person is not engaged in business or a transaction, and is not about to
engage in business or a transaction, for which such Person's property would
constitute an unreasonably small amount of capital.
"STANDBY LETTERS OF CREDIT": as defined in subsection 5.1(i).
"SUBORDINATED DEBT": the Existing Subordinated Debt and the New
Subordinated Debt.
"SUBSIDIARY": as to any Person, a corporation, partnership or other
entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly,
through one or more intermediaries, or both, by such Person (exclusive of
any Affiliate in which such Person has a minority ownership interest).
Unless otherwise qualified, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or
Subsidiaries of the Company.
"TERM LOAN": as defined in subsection 3.1.
"TERM LOAN COMMITMENT": as to any Lender at any time, its obligation
to make Term Loans to the Company in an aggregate amount not to exceed the
amount set forth opposite such Lender's name in Schedule I under the
heading "Term Loan Commitment".
"TERM LOAN COMMITMENT PERCENTAGE": as to any Term Loan Lender at any
time, the percentage which such Term Loan Lender's Term Loan Commitment
then constitutes of the aggregate Term Loan Commitments of all Term Loan
Lenders.
"TERM LOAN LENDER": each Lender having an amount greater than zero
set forth under the heading "Term Loan Commitment" opposite its name on
Schedule I.
"TERM NOTE": as defined in subsection 3.3(e).
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19
"TRANCHE": the collective reference to Eurodollar Loans of the same
Class or Multicurrency Loans the then current Interest Periods with respect
to all of which begin on the same date and end on the same later date
(whether or not such Loans shall originally have been made on the same
day).
"TRANSFEREE": as defined in subsection 14.6(f).
"TYPE": as to any Revolving Credit Loan or Term Loan, its nature as
an ABR Loan or a Eurodollar Loan.
"U.S. DOLLAR EQUIVALENT": with respect to an amount denominated in
any currency other than U.S. Dollars, the equivalent in U.S. Dollars of
such amount, calculated on the basis of the arithmetical mean of the buy
and sell spot rates of exchange of the Administrative Agent for such
Available Foreign Currency in the London market at 11:00 a.m. London time,
two Business Days prior to the date on which such amount is to be
determined.
1.2 OTHER DEFINITIONAL PROVISIONS. (a) Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in the Notes, the other Loan Documents or any certificate or other
document made or delivered pursuant hereto.
(b) As used herein and in the Notes and any other Loan Document, and
any certificate or other document made or delivered pursuant hereto or thereto,
accounting terms relating to the Company and its Subsidiaries not defined in
subsection 1.1 and accounting terms partly defined in subsection 1.1, to the
extent not defined, shall have the respective meanings given to them under GAAP
PROVIDED that, if the Company notifies the Administrative Agent that the Company
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Company that the Majority Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, subsection,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
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20
SECTION 2. AMOUNT AND TERMS OF REVOLVING CREDIT
COMMITMENTS
2.1 REVOLVING CREDIT COMMITMENTS. (a) Subject to the terms and
conditions hereof, each Revolving Credit Lender severally agrees to make
revolving credit loans (each, a "REVOLVING CREDIT LOAN") in U.S. Dollars to the
Company from time to time during the Revolving Credit Commitment Period so long
as after giving effect thereto (i) the Available Revolving Credit Commitment of
each Revolving Credit Lender is greater than or equal to zero and (ii) the
Aggregate Revolving Credit Outstandings of all Revolving Credit Lenders do not
exceed the Aggregate Revolving Credit Commitments. During the Revolving Credit
Commitment Period the Company may use the Revolving Credit Commitments by
borrowing, prepaying the Revolving Credit Loans in whole or in part, and
reborrowing, all in accordance with the terms and conditions hereof.
(b) The Revolving Credit Loans may from time to time be (i) Eurodollar
Loans, (ii) ABR Loans or (iii) a combination thereof, as determined by the
Company and notified to the Administrative Agent in accordance with subsections
2.2 and 6.2, PROVIDED that no Revolving Credit Loan shall be made as a
Eurodollar Loan after the day that is one month prior to the Revolving Credit
Termination Date.
2.2 PROCEDURE FOR REVOLVING CREDIT BORROWING. The Company may borrow
under the Revolving Credit Commitments during the Revolving Credit Commitment
Period on any Business Day, PROVIDED that the Company shall give the
Administrative Agent irrevocable notice (which notice must be received by the
Administrative Agent prior to 11:00 A.M. (New York time) at least (a) three
Business Days prior to the requested Borrowing Date, if all or any part of the
requested Revolving Credit Loans are to be initially Eurodollar Loans, or (b)
one Business Day prior to the requested Borrowing Date, otherwise), specifying
in each case (i) the amount to be borrowed, (ii) the requested Borrowing Date,
(iii) whether the borrowing is to be of Eurodollar Loans, ABR Loans or a
combination thereof and (iv) if the borrowing is to be entirely or partly of
Eurodollar Loans, the amount of such Type of Loan and the length of the initial
Interest Periods therefor. Each borrowing under the Revolving Credit
Commitments shall be in an amount equal to (A) in the case of ABR Loans,
$1,000,000 or a whole multiple of $1,000,000 in excess thereof (or, if the then
Aggregate Available Revolving Credit Commitments are less than $1,000,000, such
lesser amount) and (B) in the case of Eurodollar Loans, $1,000,000 or a whole
multiple of $1,000,000 in excess thereof. Upon receipt of any such notice from
the Company, the Administrative Agent shall promptly notify each Revolving
Credit Lender thereof. Not later than 12:00 Noon, New York City time, on each
requested Borrowing Date each Revolving Credit Lender shall make an amount equal
to its Revolving Credit Commitment Percentage of the principal amount of the
Revolving Credit Loans requested to be made on such Borrowing Date available to
the Administrative Agent at its office specified in subsection 14.2 in U.S.
Dollars and in immediately available funds. The Administrative Agent shall on
such date credit the account of the Company on the books of such office with the
aggregate of the amounts made available to the Administrative Agent by the
Revolving Credit Lenders and in like funds as received by the Administrative
Agent.
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2.3 REPAYMENT OF REVOLVING CREDIT LOANS; EVIDENCE OF DEBT. (a) The
Company hereby unconditionally promises to pay to the Administrative Agent for
the account of each Revolving Credit Lender the then unpaid principal amount of
each Revolving Credit Loan of such Revolving Credit Lender (whether made before
or after the termination or expiration of the Revolving Credit Commitments) on
the Revolving Credit Termination Date and on such other dates and in such other
amounts as may be required from time to time pursuant to this Agreement. The
Company hereby further agrees to pay interest on the unpaid principal amount of
the Revolving Credit Loans from time to time outstanding until payment thereof
in full at the rates per annum, and on the dates, set forth in subsection 6.1.
(b) Each Revolving Credit Lender shall maintain in accordance with
its usual practice an account or accounts evidencing indebtedness of the Company
to such Revolving Credit Lender resulting from each Revolving Credit Loan of
such Revolving Credit Lender from time to time, including the amounts of
principal and interest payable thereon and paid to such Revolving Credit Lender
from time to time under this Agreement.
(c) The Administrative Agent shall maintain the Register pursuant to
subsection 14.6(d), and a subaccount therein for each Revolving Credit Lender,
in which shall be recorded (i) the amount of each Revolving Credit Loan made
hereunder, the Type thereof and each Interest Period applicable thereto, (ii)
the amount of any principal or interest due and payable or to become due and
payable from the Company to each Revolving Credit Lender hereunder in respect of
the Revolving Credit Loans and (iii) both the amount of any sum received by the
Administrative Agent hereunder from the Company in respect of the Revolving
Credit Loans and each Revolving Credit Lender's share thereof.
(d) The entries made in the Register and the accounts of each
Revolving Credit Lender maintained pursuant to subsection 2.3(b) shall, to the
extent permitted by applicable law, be PRIMA FACIE evidence of the existence and
amounts of the obligations of the Company therein recorded; PROVIDED, HOWEVER,
that the failure of any Revolving Credit Lender or the Administrative Agent to
maintain the Register or any such account, or any error therein, shall not in
any manner affect the obligation of the Company to repay (with applicable
interest) the Revolving Credit Loans made to the Company by such Revolving
Credit Lender in accordance with the terms of this Agreement.
(e) The Company agrees that, upon the request to the Administrative
Agent by any Revolving Credit Lender, the Company will execute and deliver to
such Revolving Credit Lender a promissory note of the Company evidencing the
Revolving Credit Loans of such Revolving Credit Lender, substantially in the
form of Exhibit A-1 with appropriate insertions as to date and principal amount
(each, a "REVOLVING CREDIT NOTE"); PROVIDED, that the delivery of such Revolving
Credit Notes shall not be a condition precedent to the Closing Date.
2.4 TERMINATION OR REDUCTION OF REVOLVING CREDIT COMMITMENTS. The
Company shall have the right, upon not less than five Business Days' notice to
the Administrative Agent, to terminate the Revolving Credit Commitments or, from
time to time,
<PAGE>
22
to reduce the amount of the Revolving Credit Commitments; PROVIDED that no such
termination or reduction shall be permitted if, after giving effect thereto and
to any prepayments of the Loans made on the effective date thereof, the
Available Revolving Credit Commitment of any Revolving Credit Lender would not
be greater than or equal to zero. Any such reduction shall be in an amount
equal to $1,000,000 or a whole multiple of $1,000,000 in excess thereof and
shall reduce permanently the Revolving Credit Commitments then in effect.
SECTION 3. AMOUNT AND TERMS OF TERM LOAN COMMITMENTS
3.1 THE TERM LOANS. Subject to the terms and conditions hereof, each
Term Loan Lender severally agrees to make a term loan (a "TERM LOAN") to the
Company on the Closing Date in an amount up to the amount of the Term Loan
Commitment of such Term Loan Lender. The Term Loans may be (a) Eurodollar
Loans, (b) ABR Loans, or (c) a combination thereof, as determined by the Company
and notified to the Administrative Agent in accordance with subsections 3.2 and
6.2.
3.2 PROCEDURE FOR TERM LOAN BORROWING. The Company may borrow under
the Term Loan Commitments on the Closing Date, PROVIDED that the Company shall
give the Administrative Agent irrevocable notice (which notice must be received
by the Administrative Agent prior to 11:00 A.M. (New York time) at least (a)
three Business Days prior to the requested Closing Date, if all or any part of
the requested Term Loans are to be initially Eurodollar Loans, or (b) one
Business Day prior to the requested Closing Date, otherwise), specifying in each
case (i) the amount to be borrowed, (ii) the requested Closing Date, (iii)
whether the borrowing is to be of Eurodollar Loans, ABR Loans or a combination
thereof and (iv) if the borrowing is to be entirely or partly of Eurodollar
Loans, the amount of such Type of Loan and the length of the initial Interest
Periods therefor. Upon receipt of any such notice from the Company, the
Administrative Agent shall promptly notify each Term Loan Lender. Not later
than 12:00 Noon (New York time) on the Closing Date each Term Loan Lender shall
make an amount equal to its Term Loan Commitment Percentage of the principal
amount of the Term Loans requested to be made on Closing Date available to the
Administrative Agent at its office specified in subsection 14.2 in U.S. Dollars
and in immediately available funds. The Administrative Agent shall on such date
credit the account of the Company on the books of such office with the aggregate
of the amounts made available to the Administrative Agent by the Term Loan
Lenders and in like funds as received by the Administrative Agent.
3.3 REPAYMENT OF TERM LOANS; EVIDENCE OF DEBT. (a) The Company hereby
unconditionally promises to pay to the Administrative Agent for the account of
each Term Loan Lender (i) the then unpaid principal amount of the Term Loans of
such Term Loan Lender in thirteen consecutive quarterly installments, payable on
the last day of each March, June, September and December, commencing on March
31, 1998 each of which installments shall be in an aggregate amount for all Term
Loan Lenders equal to the respective amounts set forth below:
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23
Term Loan
Quarterly Installment Amount
--------------------- ------
1 $3,000,000
2-5 2,500,000
6-9 4,500,000
10-13 6,000,000;
PROVIDED, that if the aggregate principal amount of Term Loans is less than
$55,000,000, such undrawn amount shall be applied to reduce the foregoing
amounts ratably in accordance with the originally scheduled amounts. The
Company hereby further agrees to pay interest on the unpaid principal amount of
the Term Loans from time to time outstanding from the date hereof until payment
in full thereof at the rates per annum, and on the dates, set forth in
subsection 6.1.
(b) Each Term Loan Lender shall maintain in accordance with its usual
practice an account or accounts evidencing indebtedness of the Company to such
Term Loan Lender resulting from each Term Loan of such Term Loan Lender from
time to time, including the amounts of principal and interest payable and paid
to such Term Loan Lender from time to time under this Agreement.
(c) The Administrative Agent shall maintain the Register pursuant to
subsection 14.6, and a subaccount therein for each Term Loan Lender, in which
Register and/or subaccounts shall be recorded (i) the amount of each Term Loan
made hereunder, the Type thereof and each Interest Period applicable thereto,
(ii) the amount of any principal or interest due and payable or to become due
and payable from the Company to each Term Loan Lender hereunder and (iii) both
the amount of any sum received by the Administrative Agent hereunder from the
Company and each Term Loan Lender's share thereof.
(d) The entries made in the Register and the accounts of each Term
Lender maintained pursuant to subsection 3.3(b) shall, to the extent permitted
by applicable law, be PRIMA FACIE evidence of the existence and amounts of the
obligations of the Borrower therein recorded; PROVIDED, HOWEVER, that the
failure of any Term Lender or the Administrative Agent to maintain the Register
or any such account, or any error therein, shall not in any manner affect the
obligation of the Company to repay (with applicable interest) the Term Loans
made to the Company by such Term Lender in accordance with the terms of this
Agreement.
(e) The Company agrees that, upon the request to the Administrative
Agent by any Term Lender, the Company will execute and deliver to such Lender a
promissory note of the Borrower evidencing the Term Loan of such Term Lender,
substantially in the form of Exhibit A-2 with appropriate insertions as to date
and principal amount (as amended, supplemented or otherwise modified from time
to time, a "TERM NOTE").
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24
SECTION 4. AMOUNT AND TERMS OF MULTICURRENCY
COMMITMENT
4.1 MULTICURRENCY COMMITMENTS. Subject to the terms and conditions
hereof, each Revolving Credit Lender severally agrees to make revolving credit
loans (each, a "MULTICURRENCY LOAN") in any Available Foreign Currency to the
Company or any Foreign Subsidiary Borrower from time to time during the
Revolving Credit Commitment Period so long as after giving effect thereto (a)
the Available Revolving Credit Commitment of each Revolving Credit Lender is
greater than or equal to zero and (b) the Aggregate Revolving Credit
Outstandings of all Revolving Credit Lenders do not exceed the Aggregate
Revolving Credit Commitments. During the Revolving Credit Commitment Period,
the Company or any Foreign Subsidiary Borrower may use the Revolving Credit
Commitments by borrowing, repaying the Multicurrency Loans in whole or in part,
and reborrowing, all in accordance with the terms and conditions hereof. For
the purpose of determining the Aggregate Revolving Credit Outstandings on the
date of a requested Multicurrency Loan, the U.S. Dollar Equivalent of the
Multicurrency Loan then being requested shall be aggregated with the U.S. Dollar
Equivalents of all Multicurrency Loans then outstanding (the U.S. Dollar
Equivalent of each such outstanding Multicurrency Loan to be calculated as of
the date of the most recent continuation of such Multicurrency Loan pursuant to
subsection 4.2(d) or, if not previously continued, the date of the initial
Multicurrency Loan).
4.2. MAKING THE MULTICURRENCY LOANS. (a) Each Multicurrency Loan
shall be made on notice, given by the Company to the Administrative Agent not
later than 11:00 A.M. (New York time) on the third Business Day prior to the
date of the proposed Multicurrency Loan. Each such notice (a "Notice of
Borrowing") shall be in substantially the form of Exhibit J-1, specifying
therein (i) the name of the Borrower, (ii) the date of such proposed
Multicurrency Loan, (iii) the Available Foreign Currency of such Multicurrency
Loan, (iv) the aggregate amount of such proposed Multicurrency Loan and (v) the
initial Interest Period for such Multicurrency Loan.
(b) The Administrative Agent shall give to each Revolving Credit
Lender prompt notice of the Administrative Agent's receipt of a Notice of
Borrowing. Each Revolving Credit Lender shall, before 11:00 A.M. (New York
time) on the date of the proposed Multicurrency Loan, make available to the
account of the Administrative Agent referred to on Schedule III hereto for the
Available Foreign Currency for such Multicurrency Loan (or such other locations
in the same country as may be notified to the Borrowers and Revolving Credit
Lenders by the Administrative Agent), in immediately available funds, such
Revolving Credit Lender's Revolving Credit Commitment Percentage of such
proposed Multicurrency Loan in the applicable Available Foreign Currency of such
Multicurrency Loan. After the Administrative Agent's receipt of such funds and
upon fulfillment of the applicable conditions set forth in Section 8, the
Administrative Agent will make such funds available to the applicable Borrower
at the Administrative Agent's aforesaid addresses.
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25
(c) Each Multicurrency Loan shall be in an amount in an Available
Foreign Currency of which the U.S. Dollar Equivalent is equal to at least
$1,000,000 (or, if the then Aggregate Available Revolving Credit Commitments are
less than $1,000,000, such lesser amount).
(d) At least three Business Days' prior to the end of each Interest
Period, the Company shall give the Administrative Agent notice, in substantially
the form of Exhibit J-2 to this Agreement (a "Notice of Continuation"), not
later than 11:00 A.M. (New York time) specifying the duration of the next
succeeding Interest Period. The Administrative Agent shall promptly notify each
Revolving Credit Lender of its receipt of a Notice of Continuation and the
contents thereof. If, within the time period required under the terms of this
subsection 4.2(d), the Administrative Agent does not receive a Notice of
Continuation from the Company, then, upon the expiration of the Interest Period
therefor, the applicable Interest Period in respect of such Multicurrency Loans
shall be automatically deemed to be a period of one month commencing on the last
day of the immediately preceding Interest Period and ending one month
thereafter. Notwithstanding the first sentence of this subsection 4.2(d), no
Multicurrency Loans shall be continued in accordance with a Notice of
Continuation given if, on the date of the Notice of Continuation, the Borrowers
are not in compliance with subsection 4.1, unless, one or more of the Borrowers
shall repay the Multicurrency Loans, together with all accrued interest on the
amount prepaid, such that the Borrowers are in compliance with subsection 4.1.
Notwithstanding the foregoing, upon the expiration of any Interest Period with
respect to any Multicurrency Loan at any time at which a Default or Event of
Default shall have occurred and be continuing, the applicable Interest Period in
respect of such Multicurrency Loans shall be automatically deemed to be a period
of one month commencing on the last day of the immediately preceding Interest
Period and ending one month thereafter. Each Notice of Continuation shall be
irrevocable.
4.3 REPAYMENT OF MULTICURRENCY LOANS; EVIDENCE OF DEBT. (a) The
Company and each Foreign Subsidiary Borrower hereby unconditionally promises to
pay to the Administrative Agent for the account of each Revolving Credit Lender
the then unpaid principal amount of each Multicurrency Loan of such Revolving
Credit Lender to the Company or such Foreign Subsidiary Borrower on the
Revolving Credit Termination Date and on such other date(s) and in such other
amounts as may be required from time to time pursuant to this Agreement. Each
of the Company and each Foreign Subsidiary Borrower hereby further agrees to pay
interest on the unpaid principal amount of the Multicurrency Loans advanced to
it and from time to time outstanding until payment thereof in full at the rates
per annum, and on the dates, set forth in subsection 6.1.
(b) Each Revolving Credit Lender shall maintain in accordance with its
usual practice an account or accounts evidencing indebtedness of the Company and
each Foreign Subsidiary Borrower to such Revolving Credit Lender resulting from
each Multicurrency Loan of such Revolving Credit Lender from time to time,
including the amounts of principal and interest payable thereon and paid to such
Revolving Credit Lender from time to time under this Agreement.
<PAGE>
26
(c) The Administrative Agent shall maintain the Register pursuant to
subsection 14.6(d), and a subaccount therein for each Revolving Credit Lender,
in which shall be recorded (i) the amount of each Multicurrency Loan made
hereunder, (ii) the amount of any principal or interest due and payable or to
become due and payable from the Company and each Foreign Subsidiary Borrower to
each Revolving Credit Lender hereunder in respect of the Multicurrency Loans and
(iii) both the amount of any sum received by the Administrative Agent hereunder
from the Company and each Foreign Subsidiary Borrower in respect of the
Multicurrency Loans and each Revolving Credit Lender's share thereof.
(d) The entries made in the Register and the accounts of each
Revolving Credit Lender maintained pursuant to subsection 4.3(b) shall, to the
extent permitted by applicable law, be PRIMA FACIE evidence of the existence and
amounts of the obligations of the Company and each Foreign Subsidiary Borrower
therein recorded; PROVIDED, HOWEVER, that the failure of any Revolving Credit
Lender or the Administrative Agent to maintain the Register or any such account,
or any error therein, shall not in any manner affect the obligation of the
Company or such Foreign Subsidiary Borrower to repay (with applicable interest)
the Multicurrency Loans made to the Company or such Foreign Subsidiary Borrower
by such Revolving Credit Lender in accordance with the terms of this Agreement.
SECTION 5. LETTERS OF CREDIT
5.1 LETTERS OF CREDIT. Subject to the terms and conditions of this
Agreement, the Issuing Lender, agrees, on behalf of the Revolving Credit
Lenders, and in reliance on the agreement of the Revolving Credit Lenders set
forth in subsection 5.3, to issue for the account of the Company letters of
credit in an aggregate face amount, together with any unpaid Reimbursement
Obligations, not to exceed $10,000,000 at any time outstanding, as follows:
(i) standby letters of credit (collectively, the "STANDBY LETTERS OF
CREDIT") in a form reasonably satisfactory to the Issuing Lender and in
favor of such beneficiaries as the Company shall specify from time to time
(which shall be reasonably satisfactory to the Issuing Lender); and
(ii) commercial letters of credit in the form of the Issuing Lender's
standard commercial letters of credit ("COMMERCIAL LETTERS OF CREDIT") in
favor of sellers of goods or services to the Company or its Subsidiaries
(the Standby Letters of Credit and Commercial Letters of Credit being
referred to collectively as the "LETTERS OF CREDIT");
PROVIDED that on the date of the issuance of any Letter of Credit, and after
giving effect to such issuance, the Aggregate Revolving Credit Outstandings of
all Revolving Credit Lenders do not exceed the Aggregate Revolving Credit
Commitments at such time. Each Standby Letter of Credit shall (i) have an
expiry date no later than one year from the date of issuance thereof or, if
earlier, five Business Days prior to the Revolving Credit Termination Date, (ii)
be denominated in U.S. Dollars and (iii) be in a minimum face amount of
$100,000. Each
<PAGE>
27
Commercial Letter of Credit shall (i) provide for the payment of sight drafts
when presented for honor thereunder, or of time drafts, in each case in
accordance with the terms thereof and when accompanied by the documents
described or when such documents are presented, as the case may be, (ii) be
denominated in U.S. Dollars and (iii) have an expiry date no later than six
months from the date of issuance thereof or, if earlier, five Business Days
prior to the Revolving Credit Termination Date.
5.2 PROCEDURE FOR ISSUANCE OF LETTERS OF CREDIT. The Company may from
time to time request, upon at least three Business Days' notice, the Issuing
Lender to issue a Letter of Credit by delivering to the Issuing Lender at its
address specified in subsection 14.2 a Letter of Credit Application, completed
to the satisfaction of such Issuing Lender, together with such other
certificates, documents and other papers and information as such Issuing Lender
may reasonably request. Upon receipt of any Letter of Credit Application from
the Company, the Issuing Lender will promptly, but in no event later than five
Business Days following receipt of such Letter of Credit Application, notify
each Revolving Credit Lender thereof. Upon receipt of any Letter of Credit
Application, the Issuing Lender will process such Letter of Credit Application,
and the other certificates, documents and other papers delivered in connection
therewith, in accordance with its customary procedures and shall promptly issue
such Letter of Credit (but in no event earlier than three Business Days after
receipt by the Issuing Lender of the Letter of Credit Application relating
thereto) by issuing the original of such Letter of Credit to the beneficiary
thereof and by furnishing a copy thereof to the Company and the Participating
Lenders. Prior to the issuance of any Letter of Credit, the Issuing Lender will
confirm with the Administrative Agent that the issuance of such Letter of Credit
is permitted pursuant to Section 5 and subsection 8.2. Additionally, the
Issuing Lender and the Company shall inform the Administrative Agent of any
modifications made to outstanding Letters of Credit, of any payments made with
respect to such Letters of Credit, and of any other information regarding such
Letters of Credit as may be reasonably requested by the Administrative Agent, in
each case pursuant to procedures established by the Administrative Agent.
5.3 PARTICIPATING INTERESTS. Effective as of the date of the issuance
of each Letter of Credit, the Issuing Lender agrees to allot, and does allot, to
each other Revolving Credit Lender, and each such Revolving Credit Lender
severally and irrevocably agrees to take and does take, a Participating Interest
in such Letter of Credit and the related Letter of Credit Application in a
percentage equal to such Revolving Credit Lender's Revolving Credit Commitment
Percentage. On the date that any Purchasing Lender becomes a party to this
Agreement in accordance with subsection 14.6, Participating Interests in any
outstanding Letter of Credit held by the Revolving Credit Lender from which such
Purchasing Lender acquired its interest hereunder shall be proportionately
reallotted between such Purchasing Lender and such transferor Revolving Credit
Lender. Each Participating Lender hereby agrees that its obligation to
participate in each Letter of Credit issued in accordance with the terms hereof
and to pay or to reimburse the Issuing Lender in respect of such Letter of
Credit for its participating share of the drafts drawn thereunder shall be
irrevocable and unconditional; PROVIDED that no Participating Lender shall be
liable for the payment of any
<PAGE>
28
amount under subsection 5.4(b) resulting solely from the Issuing Lender's gross
negligence or willful misconduct.
5.4 PAYMENTS. (a) The Company agrees (i) to reimburse the
Administrative Agent for the account of the Issuing Lender, forthwith upon its
demand and otherwise in accordance with the terms of the Letter of Credit
Application, if any, relating thereto, for any payment made by the Issuing
Lender under any Letter of Credit and (ii) to pay to the Administrative Agent
for the account of such Issuing Lender, interest on any unreimbursed portion of
any such payment from the date of such payment until reimbursement in full
thereof at a fluctuating rate per annum equal to the rate then borne by
Revolving Credit Loans that are ABR Loans pursuant to subsection 6.1(b) plus 2%.
(b) In the event that the Issuing Lender makes a payment under any
Letter of Credit and is not reimbursed in full therefor, forthwith upon demand
of the Issuing Lender, and otherwise in accordance with the terms hereof or of
the Letter of Credit Application, if any, relating to such Letter of Credit, the
Issuing Lender will promptly through the Administrative Agent notify each
Participating Lender that acquired its Participating Interest in such Letter of
Credit from the Issuing Lender. No later than the close of business on the date
such notice is given, each such Participating Lender will transfer to the
Administrative Agent, for the account of the Issuing Lender, in immediately
available funds, an amount equal to such Participating Lender's PRO RATA share
of the unreimbursed portion of such payment.
(c) Whenever, at any time, after the Issuing Lender has made payment
under a Letter of Credit and has received from any Participating Lender the
Participating Lender's PRO RATA share of the unreimbursed portion of such
payment, the Issuing Lender receives any reimbursement on account of such
unreimbursed portion or any payment of interest on account thereof, the Issuing
Lender will distribute to the Administrative Agent, for the account of such
Participating Lender, its PRO RATA share thereof; PROVIDED, HOWEVER, that in the
event that the receipt by the Issuing Lender of such reimbursement or such
payment of interest (as the case may be) is required to be returned, such
Participating Lender will promptly return to the Administrative Agent, for the
account of the Issuing Lender, any portion thereof previously distributed by the
Issuing Lender to it.
5.5 FURTHER ASSURANCES. The Company hereby agrees, from time to time,
to do and perform any and all acts and to execute any and all further
instruments reasonably requested by the Issuing Lender more fully to effect the
purposes of this Agreement and the issuance of the Letters of Credit issued
hereunder.
5.6 OBLIGATIONS ABSOLUTE. The payment obligations of the Company
under subsection 5.4 shall be unconditional and irrevocable and shall be paid
strictly in accordance with the terms of this Agreement under all circumstances,
including, without limitation, the following circumstances:
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29
(a) the existence of any claim, set-off, defense or other right which
the Company may have at any time against any beneficiary, or any
transferee, of any Letter of Credit (or any Persons for whom any such
beneficiary or any such transferee may be acting), the Issuing Lender or
any Participating Lender, or any other Person, whether in connection with
this Agreement, the transactions contemplated herein, or any unrelated
transaction;
(b) any statement or any other document presented under any Letter of
Credit opened for its account proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(c) payment by the Issuing Lender under any Letter of Credit against
presentation of a draft or certificate which does not comply with the terms
of such Letter of Credit, except payment resulting solely from the gross
negligence or willful misconduct of the Issuing Lender; or
(d) any other circumstances or happening whatsoever, whether or not
similar to any of the foregoing, except circumstances or happenings
resulting from the gross negligence or willful misconduct of the Issuing
Lender.
5.7 LETTER OF CREDIT APPLICATION. To the extent not inconsistent with
the terms of this Agreement (in which case the provisions of this Agreement
shall prevail), provisions of any Letter of Credit Application related to any
Letter of Credit are supplemental to, and not in derogation of, any rights and
remedies of the Issuing Lender and the Participating Lenders under this Section
5 and applicable law. The Company acknowledges and agrees that all rights of
the Issuing Lender under any Letter of Credit Application shall inure to the
benefit of each Participating Lender to the extent of its Revolving Credit
Commitment Percentage as fully as if such Participating Lender was a party to
such Letter of Credit Application.
5.8 PURPOSE OF LETTERS OF CREDIT. Each Standby Letter of Credit shall
be used by the Company solely (a) to provide credit support for borrowings by
the Company or its Subsidiaries, (b) to pay or secure the payment of the
principal amount of, and accrued interest on, and other obligations with respect
to, Industrial Revenue Bonds in accordance with the provisions of the indenture
related thereto, or (c) for other working capital purposes of the Company and
Subsidiaries in the ordinary course of business. Each Commercial Letter of
Credit will be used by the Company and Subsidiaries solely to provide the
primary means of payment in connection with the purchase of goods or services by
the Company and Subsidiaries in the ordinary course of business.
<PAGE>
30
SECTION 6. GENERAL PROVISIONS
6.1 INTEREST RATES AND PAYMENT DATES. (a) Each Eurodollar Loan shall
bear interest for each day during each Interest Period with respect thereto at a
rate per annum equal to the Eurodollar Rate determined for such Interest Period
plus the Applicable Margin.
(b) Each ABR Loan shall bear interest for each day on which it is
outstanding at a rate per annum equal to the Alternate Base Rate for such day
plus the Applicable Margin.
(c) Each Multicurrency Loan shall bear interest for each day during
each Interest Period with respect thereto at a rate per annum equal to the
Eurocurrency Rate determined for such Interest Period plus the Applicable
Margin.
(d) If all or a portion of (i) the principal amount of any Loan, (ii)
any interest payable thereon or (iii) any fee or other amount payable hereunder
shall not be paid when due (whether at the stated maturity, by acceleration or
otherwise), such amount shall bear interest for each day after the due date
until such amount is paid in full at a rate per annum equal to (x) in the case
of principal, the rate that would otherwise be applicable thereto pursuant to
the foregoing provisions of this subsection plus 2% or (y) in the case of any
such overdue interest, fee or other amount, the rate described in paragraph (b)
of this subsection plus 2%. if any Event of Default other than as described in
the preceding sentence shall occur and be continuing, and the Majority Lenders
shall give notice to the Company that this sentence shall apply, then, until
such Event of Default shall be cured or waived or such notice shall be
withdrawn, the outstanding principal amount of all Loans shall bear interest at
2% above the rate that would otherwise be applicable thereto pursuant to the
foregoing provisions of this subsection (other than the first sentence of this
paragraph (d)).
(e) Interest shall be payable in arrears on each Interest Payment
Date, PROVIDED that interest accruing pursuant to paragraph (d) of this
subsection shall be payable from time to time on demand.
6.2 CONVERSION AND CONTINUATION OPTIONS. (a) The Company may elect
from time to time to convert outstanding Eurodollar Loans (in whole or in part)
to ABR Loans of the same Class by giving the Administrative Agent at least two
Business Days' prior irrevocable notice of such election, PROVIDED that any such
conversion of Eurodollar Loans may only be made on the last day of an Interest
Period with respect thereto. The Company may elect from time to time to convert
outstanding ABR Loans (in whole or in part) to Eurodollar Loans of the same
Class by giving the Administrative Agent at least three Business Days' prior
irrevocable notice of such election. Any such notice of conversion to
Eurodollar Loans shall specify the length of the initial Interest Period or
Interest Periods therefor. Upon receipt of any such notice the Administrative
Agent shall promptly notify each relevant Lender thereof. All or any part of
outstanding Eurodollar Loans and ABR Loans may be converted as provided herein,
PROVIDED that (i) no ABR Loan may be converted into a Eurodollar Loan when any
Default or Event of Default has occurred and is continuing and the
Administrative Agent or Lenders holding the majority of the outstanding
principal amount of Loans of such Class have determined that such conversion is
not appropriate, (ii) any such conversion may
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31
only be made if, after giving effect thereto, subsection 6.3 shall not have been
violated, (iii) no ABR Loan may be converted into a Eurodollar Loan after the
date that is one month prior to the Revolving Credit Termination Date.
(b) Any Eurodollar Loans may be continued as such upon the expiration
of the then current Interest Period with respect thereto by the Company giving
notice to the Administrative Agent of the length of the next Interest Period to
be applicable to such Loans determined in accordance with the applicable
provisions of the term "Interest Period" set forth in subsection 1.1, PROVIDED
that no Eurodollar Loan may be continued as such (i) when any Default or Event
of Default has occurred and is continuing and the Administrative Agent or
Lenders holding the majority of the outstanding principal amount of Loans of
such Class have determined that such continuation is not appropriate, (ii) if,
after giving effect thereto, subsection 6.3 would be contravened or (iii) after
the date that is one month prior to the Revolving Credit Termination Date, and
PROVIDED, FURTHER, that if the Company shall fail to give such notice or if such
continuation is not permitted pursuant to the preceding proviso such Eurodollar
Loans shall be automatically converted to ABR Loans on the last day of such then
expiring Interest Period.
(c) Any Multicurrency Loans may be continued as set forth in
subsection 4.2(d).
6.3 MINIMUM AMOUNTS OF TRANCHES. All borrowings, conversions and
continuations of Loans hereunder and all selections of Interest Periods
hereunder shall be in such amounts and be made pursuant to such elections so
that, after giving effect thereto, (i) the aggregate principal amount of the
Eurodollar Loans comprising each Tranche shall be equal to $1,000,000 or a whole
multiple of $1,000,000 in excess thereof, (ii) the aggregate principal amount of
the Multicurrency Loans comprising each Tranche shall be in an amount of which
the U.S. Dollar Equivalent is at least $1,000,000 and (iii) there shall not be
more than (ten) 10 Tranches at any one time outstanding.
6.4 OPTIONAL AND MANDATORY PREPAYMENTS. (a) The Company may at any
time and from time to time prepay Revolving Credit Loans and/or Term Loans, in
whole or in part, upon at least three Business Days' irrevocable notice to the
Administrative Agent (in the case of Eurodollar Loans) and at least one Business
Day's irrevocable notice to the Administrative Agent (in the case of ABR Loans),
specifying the date and amount of prepayment and whether the prepayment is (i)
of Revolving Credit Loans, Term Loans or a combination thereof and (ii) of
Eurodollar Loans, ABR Loans or a combination thereof, and, in each case if a
combination thereof, the amount allocable to each. Upon the receipt of any such
notice the Administrative Agent shall promptly notify each Lender thereof. If
any such notice is given, the amount specified in such notice shall be due and
payable on the date specified therein. Partial prepayments of the Loans shall
be in an aggregate principal amount of $1,000,000 or a whole multiple of
$1,000,000 in excess thereof.
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32
(b) The Company or the Foreign Subsidiary Borrowers, as the case may
be, may at any time and from time to time prepay, without premium or penalty,
the Multicurrency Loans, in whole or in part, upon at least three Business Days'
irrevocable notice to the Administrative Agent specifying the date and amount of
prepayment. Upon the receipt of any such notice, the Administrative Agent shall
promptly notify each Revolving Credit Lender thereof. If any such notice is
given, the amount specified in such notice shall be due and payable on the date
specified therein. Partial prepayments of Multicurrency Loans shall be in an
aggregate principal amount of which the U.S. Dollar Equivalent is at least
$1,000,000.
(c) If, at any time during the Revolving Credit Commitment Period, for
any reason the Aggregate Revolving Credit Outstandings of all Revolving Credit
Lenders exceed the Aggregate Revolving Credit Commitments then in effect, or the
Aggregate Revolving Credit Outstandings of any Lender exceeds the Revolving
Credit Commitment of such Revolving Credit Lender then in effect, (i) the
Company shall, without notice or demand, immediately prepay the Revolving Credit
Loans and/or (ii) the Company or the Foreign Subsidiary Borrowers shall, without
notice or demand, immediately prepay the Multicurrency Loans, in an aggregate
principal amount at least sufficient to eliminate any such excess.
Notwithstanding the foregoing, mandatory prepayments of Revolving Credit Loans
or Multicurrency Loans that would otherwise be required pursuant to this
subsection 6.4(c) solely as a result of currency fluctuations from time to time
shall only be required to be made pursuant to this subsection 6.4 on the last
Business Day of each month on the basis of the U.S. Dollar Equivalent in effect
on such Business Day.
(d) If, subsequent to the Closing Date, the Company shall issue and
sell any Capital Stock, 75% of the Net Proceeds thereof shall be promptly
applied toward the prepayment of the Loans and reduction of the Revolving Credit
Commitments as set forth in subsection 6.4(h); PROVIDED, that (i) net proceeds
of any equity received by the Company and used to fund acquisitions within 180
days after receipt of such net proceeds shall not be required to be applied
toward prepayment of the Loans and (ii) net proceeds of any Capital Stock or
other equity received by the Company and used to prepay New Subordinated Debt or
Existing Subordinated Debt within 90 days after receipt of such net proceeds
shall not be required to be applied toward prepayment of the Loans.
(e) If, subsequent to the Closing Date, the Company or any of its
Subsidiaries shall receive Net Proceeds from any Asset Sale, 100% of such Net
Proceeds shall be promptly applied toward the prepayment of the Loans and
reduction of the Revolving Credit Commitments as set forth in subsection 6.4(h).
(f) If for any fiscal year, commencing with the fiscal year in which
the Closing Date occurs, there shall be Consolidated Excess Cash Flow for such
fiscal year, 25% of such Consolidated Excess Cash Flow (in the case of
Consolidated Excess Cash Flow for the fiscal year ending September 30, 1997) and
50% of such Consolidated Excess Cash Flow (in the case of any subsequent fiscal
year) shall be applied toward prepayment of the Loans and reduction of the
Revolving Credit Commitments as set forth in subsection 6.4(h). Each such
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33
prepayment shall be made on or before the date on which the financial statements
referred to in subsection 9.1(a) in respect of such fiscal year are delivered,
but in no event later than the date by which such statements are required to be
delivered pursuant to such subsection.
(g) Each prepayment of Loans pursuant to this subsection 6.4 shall be
accompanied by accrued and unpaid interest on the amount prepaid to the date of
prepayment and any amounts payable under subsection 6.11 in connection with such
prepayment.
(h) All prepayments pursuant to subsections 6.4(d), (e) and (f) shall
be applied, FIRST, to the prepayment of the Term Loans and, SECOND, to the
permanent reduction of the Revolving Credit Facility. Each such prepayment of
the Term Loans shall be applied FIRST, to the next installment due and, SECOND,
to the remaining installments thereof ratably in accordance with the then
outstanding amounts thereof; PROVIDED, that prepayments of the Term Loans with
the proceeds of the sale of the Company's magnetics business will be applied
first toward prepayment of the next four installments due under the Term Loans
and thereafter to remaining installments under the Term Loans ratably in
accordance with the then outstanding amounts thereof. Notwithstanding the
foregoing, each holder of Term Loans shall have the right to refuse all or any
portion of such prepayment allocable to its Term Loans.
(i) All such prepayments within each Class of Loans shall be applied
first to reduce outstanding ABR Loans and any amounts remaining after such
application shall, at the option of the Company, be applied to prepay Eurodollar
Loans immediately or shall be deposited in the Prepayment Account (as defined
below). The Administrative Agent will apply any cash deposited in the
Prepayment Account (i) allocable to Term Loans to prepay Eurodollar Term Loans
and (ii) allocable to Revolving Credit Loans to prepay Eurodollar Revolving
Credit Loans, in each case on the last day of their respective Interest Periods
(or, at the direction of the Company, on any earlier date) until all outstanding
Term Loans or Revolving Credit Loans, as the case may be, have been prepaid or
until all the allocable cash held in the Prepayment Account with respect to such
Loans has been exhausted. The term "PREPAYMENT ACCOUNT" shall mean an account
established by the Company with the Administrative Agent and over which the
Administrative Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal for application in accordance with this
paragraph (i). The Administrative Agent will, at the written or telephonic
request (which shall promptly be confirmed in writing) of the Company, use its
reasonable efforts to invest amounts on deposit in the Prepayment Account in the
Cash Equivalents specified in such request; PROVIDED, HOWEVER, that (i) the
Administrative Agent shall not be required to make any investment that, in its
sole judgment, would require or cause the Administrative Agent to be in, or
would result in any, violation of any law, statute, rule or regulation, (ii) the
Administrative Agent shall have no obligation to invest amounts on deposit in
the Prepayment Account if an Event of Default shall have occurred and be
continuing and (iii) no such investments shall mature after the last day of the
applicable Interest Periods of the Eurodollar Term Loans or Eurodollar Revolving
Credit Loans to be prepaid, as the case may be. The Company shall indemnify the
Administrative Agent for any losses relating to the investments so that the
amount available to prepay Eurodollar Loans on the last day of the applicable
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34
Interest Periods is not less than the amount that would have been available had
no investments been made pursuant thereto. Until no Term Loans or Revolving
Credit Loans, as the case may be, are outstanding, interest or profits, if any,
on such investments shall be deposited in the Prepayment Account and reinvested
as specified above. Upon prepayment or payment in full of all Term Loans or
Revolving Credit Loans, as the case may be, any amount remaining on deposit in
the Prepayment Account with respect to such Loans shall be paid to the Company.
If the maturity of the Loans has been accelerated pursuant to Section 12, the
Administrative Agent may, in its sole discretion, apply all amounts on deposit
in the Prepayment Account to satisfy any of the Obligations. The Company hereby
grants to the Administrative Agent, for its benefit and the benefit of the
Issuing Bank and the Lenders, a security interest in the Prepayment Account.
(j) Amounts prepaid in respect of the Term Loans may not be
reborrowed.
(k) The Revolving Credit Loans shall be prepaid and the Letters of
Credit shall be cash collateralized or replaced to the extent such extensions of
credit exceed the amount of the Revolving Credit Facility.
6.5 COMMITMENT FEES; OTHER FEES. (a) The Company agrees to pay to the
Administrative Agent for the account of each Revolving Credit Lender (other than
any Revolving Credit Lender which has defaulted in its obligation to fund a Loan
under this Agreement), a commitment fee for the period from and including the
Closing Date to but excluding the Revolving Credit Termination Date (or such
earlier date on which the Revolving Credit Commitments shall terminate as
provided herein) at the rate of 1/2 of 1% per annum on the average daily
Available Revolving Credit Commitment of such Revolving Credit Lender during the
period for which payment is made, payable quarterly in arrears on the last day
of each March, June, September and December and on the Revolving Credit
Termination Date or such earlier date on which the Revolving Credit Commitments
shall terminate as provided herein, commencing on the first such date to occur
after the date hereof.
(b) The Company shall pay (without duplication of any other fee
payable under this subsection 6.5) to the Arranger, all fees separately agreed
to by the Company and the Arranger.
(c) The Company shall pay (without duplication of any other fee
payable under this subsection 6.5) to the Administrative Agent all fees
separately agreed to by the Company and the Administrative Agent.
(d) In lieu of any letter of credit commissions and fees provided for
in any Letter of Credit Application (other than any standard issuance, amendment
and negotiation fees), the Company will pay the Administrative Agent, (i) for
the account of the Issuing Lender, a non-refundable fronting fee equal to 0.25%
per annum and (ii) for the account of the Revolving Credit Lenders, a
non-refundable Letter of Credit fee equal to the Applicable Margin in respect of
Revolving Credit Loans that are Eurodollar Loans, in each case on the
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35
amount available to be drawn under such Letter of Credit. Such fee shall be
payable quarterly in arrears on the last Business Day of each calendar quarter,
and shall be calculated on the average daily amount available to be drawn under
the Letters of Credit.
(e) The Company agrees to pay the Issuing Lender for its own account
its customary administration, amendment, transfer and negotiation fees charged
by the Issuing Lender in connection with its issuance and administration of
Letters of Credit.
6.6 COMPUTATION OF INTEREST AND FEES. (a) Interest and fees shall be
calculated on the basis of a 360-day year for the actual days elapsed; PROVIDED
that interest calculated at Alternate Base Rate (based on the Corporate Base
Rate included therein) shall be calculated on the basis of a 365- (or 366-, as
the case may be) day year for the actual days elapsed. The Administrative Agent
shall as soon as practicable notify the Company and the relevant Lenders of each
determination of a Eurodollar Rate or a Eurocurrency Rate. Any change in the
interest rate on a Loan resulting from a change in the Alternate Base Rate shall
become effective as of the opening of business on the day on which such change
becomes effective. The Administrative Agent shall as soon as practicable notify
the Company and the relevant Lenders of the effective date and the amount of
each such change in the Alternate Base Rate.
(b) Each determination of an interest rate by the Administrative Agent
pursuant to any provision of this Agreement shall be conclusive and binding on
the Borrowers and the Lenders in the absence of manifest error. Each
Administrative Agent shall, at the request of a Borrower, deliver to such
Borrower a statement showing in reasonable detail the calculations used by such
Administrative Agent in determining any interest rate pursuant to subsection
6.1(a).
6.7 INABILITY TO DETERMINE INTEREST RATE. If prior to the first day
of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrowers) that, by
reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate or the
Eurocurrency Rate, as the case may be, for such Interest Period, or
(b) the Administrative Agent has received notice from the Majority
Lenders or the Majority Revolving Credit Lenders, as the case may be, that
the Eurodollar Rate or Eurocurrency Rate, as the case may be, determined or
to be determined for such Interest Period will not adequately and fairly
reflect the cost to such Lenders of making or maintaining their Eurodollar
Loans or Multicurrency Loans, as the case may be, during such Interest
Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to the
Company and the Lenders as soon as practicable thereafter. If such notice is
given (i) any Eurodollar Loans
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36
or Multicurrency Loans, as the case may be, requested to be made on the first
day of such Interest Period shall be made as ABR Loans in U.S. Dollars, (ii) any
Revolving Credit or Term Loans that were to have been converted on the first day
of such Interest Period to or continued as Eurodollar Loans shall be converted
to or continued as ABR Loans, (iii) any outstanding Eurodollar Loans shall be
converted on the first day of such Interest Period to ABR Loans and (iv) any
Multicurrency Loans to which such Interest Period relates shall be repaid on the
first day of such Interest Period. Until such notice has been withdrawn by the
Administrative Agent, no further Eurodollar Loans or Multicurrency Loans shall
be made or continued as such, nor shall the Company have the right to convert
ABR Loans to Eurodollar Loans.
6.8 PRO RATA TREATMENT AND PAYMENTS. (a)(i) Each borrowing of
Revolving Credit Loans by the Company from the Revolving Credit Lenders
hereunder shall be made PRO RATA according to the Revolving Credit Commitment
Percentages of the Revolving Credit Lenders in effect on the date of such
borrowing. Each borrowing of Term Loans by the Company from the Term Loan
Lenders hereunder shall be made PRO RATA according to the Term Loan Commitment
Percentages of the Term Loan Lenders in effect on the date of such borrowing.
Each payment by the Company on account of any commitment fee hereunder shall be
allocated by the Administrative Agent among the Revolving Credit Lenders in
accordance with the respective amounts which such Revolving Credit Lenders are
entitled to receive pursuant to subsection 6.5(a). Any reduction of the
Revolving Credit Commitments or Term Loan Commitments, as the case may be, of
the Lenders shall be allocated by the Administrative Agent among the Lenders PRO
RATA according to the Revolving Credit Commitment Percentages or Term Loan
Commitment Percentages, as the case may be, of such Lenders. Except as provided
in subsection 6.4(h), each payment (other than any optional prepayment) by the
Company on account of principal of or interest in respect of Revolving Credit
Loans or Term Loans shall be allocated by the Administrative Agent PRO RATA
according to the respective principal amounts thereof then due and owing to each
Lender. Except as provided in subsection 6.4(h), each optional prepayment by
the Company on account of principal of or interest in respect of Revolving
Credit Loans or Term Loans shall be allocated by the Administrative Agent PRO
RATA according to the respective outstanding principal amounts thereof. All
payments (including prepayments) to be made by the Company in respect of
Revolving Credit Loans or Term Loans hereunder, whether on account of principal,
interest, fees or otherwise, shall be made without set-off or counterclaim and
shall be made prior to 12:00 Noon, New York City time, on the due date thereof
to the Administrative Agent, for the account of the Lenders entitled thereto, at
the Administrative Agent's office specified in subsection 4.2, in U.S. Dollars
and in immediately available funds. The Administrative Agent shall distribute
such payments to the Lenders entitled to receive the same promptly upon receipt
in like funds as received.
(ii) Each borrowing of Multicurrency Loans by the Company or any
Foreign Subsidiary Borrower shall be made PRO RATA according to the Revolving
Credit Commitment Percentages of the Revolving Credit Lenders. Each payment
(including each prepayment) by the Company or a Foreign Subsidiary Borrower on
account of principal of and interest on
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37
Multicurrency Loans shall be allocated by the Administrative Agent PRO RATA
according to the respective principal amounts of the Multicurrency Loans then
due and owing by the Company or such Foreign Subsidiary Borrower to each
Revolving Credit Lender. All payments (including prepayments) to be made by the
Company or a Foreign Subsidiary Borrower hereunder, whether on account of
principal, interest, fees or otherwise, shall be made without set-off or
counterclaim and shall be made at or before the payment time for the currency of
such Multicurrency Loan, on the due date thereof to the Administrative Agent,
for the account of the Revolving Credit Lenders, at the payment office for the
currency of such Multicurrency Loan, in the currency of such Multicurrency Loan
and in immediately available funds. The Administrative Agent shall distribute
such payments to the Revolving Credit Lenders entitled to receive the same
promptly upon receipt in like funds as received.
(iii) If any payment hereunder (other than payments on the Eurodollar
Loans and the Multicurrency Loans) becomes due and payable on a day other than a
Business Day, the maturity of such payment shall be extended to the next
succeeding Business Day, and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension. If
any payment on a Eurodollar Loan or a Multicurrency Loan becomes due and payable
on a day other than a Business Day, the maturity of such payment shall be
extended to the next succeeding Business Day (and, with respect to payments of
principal, interest thereon shall be payable at the then applicable rate during
such extension) unless the result of such extension would be to extend such
payment into another calendar month, in which event such payment shall be made
on the immediately preceding Business Day.
(b) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a Borrowing Date that such Lender will not make
the amount that would constitute its share of such borrowing available to such
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the
Administrative Agent may, in reliance upon such assumption, make available to
the applicable Borrower a corresponding amount. If such amount is not made
available to the Administrative Agent by the required time on the Borrowing Date
therefor, such Lender shall pay to the Administrative Agent, on demand, such
amount with interest thereon at a rate per annum equal to (i) the daily average
Federal Funds Effective Rate (in the case of a borrowing of Revolving Credit
Loans or Term Loans) and (ii) the Administrative Agent's reasonable estimate of
its average daily cost of funds (in the case of a borrowing of Multicurrency
Loans), in each case for the period until such Lender makes such amount
immediately available to the Administrative Agent. A certificate of the
Administrative Agent submitted to any Lender with respect to any amounts owing
under this subsection shall be conclusive in the absence of manifest error. If
such Lender's share of such borrowing is not made available to the
Administrative Agent by such Lender within three Business Days of such Borrowing
Date, the applicable Borrower shall repay such Lender's share of such borrowing
(together with interest thereon from the date such amount was made available to
such Borrower (i) at the rate per annum applicable to ABR Loans hereunder (in
the case of amounts made available in U.S. Dollars) and (ii) the Administrative
Agent's reasonable
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38
estimate of its average daily cost of funds PLUS the Applicable Margin
applicable to Multicurrency Loans (in the case of a borrowing of Multicurrency
Loans)) to the Administrative Agent not later than three Business Days after
receipt of written notice from the Administrative Agent specifying such Lender's
share of such borrowing that was not made available to such Administrative
Agent, and the Borrower shall have the right to pursue any remedies against
such Lender for its failure to make its portion of such borrowing available.
(c) Unless the Administrative Agent shall have been notified in
writing by any Borrower prior to a date on which a payment is due from such
Borrower hereunder that such Borrower will not make such payment available to
such Administrative Agent, the Administrative Agent may assume that such
Borrower is making such amount available to the Administrative Agent, and the
Administrative Agent may, in reliance upon such assumption, make available to
the applicable Lenders a corresponding amount. If such amount is not made
available to the Administrative Agent by the required time on the due date
therefor, the applicable Lender shall pay to the Administrative Agent, on
demand, such amount with interest thereon at a rate per annum equal to (i) the
daily average Federal Funds Effective Rate (in the case of a borrowing of
Revolving Credit Loans or Term Loans) and (ii) the Administrative Agent's
reasonable estimate of its average daily cost of funds (in the case of a
borrowing of Multicurrency Loans), in each case for the period until such Lender
makes such amount immediately available to the Administrative Agent. A
certificate of the Administrative Agent submitted to any Lender with respect to
any amounts owing under this subsection shall be conclusive in the absence of
manifest error.
6.9 ILLEGALITY. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans or Multicurrency Loans as contemplated by this Agreement, (a)
the commitment of such Lender hereunder to make Eurodollar Loans or
Multicurrency Loans, continue Eurodollar Loans or Multicurrency Loans as such
and convert ABR Loans to Eurodollar Loans shall forthwith be cancelled until
such time as it shall no longer be unlawful for such Lender to make or maintain
the affected Loans, (b) such Lender's Loans then outstanding as Eurodollar
Loans, if any, shall be converted automatically to ABR Loans on the respective
last days of the then current Interest Periods with respect to such Eurodollar
Loans or within such earlier period as may be required by law and (c) such
Lender's Multicurrency Loans shall be prepaid on the last day of the then
current Interest Period with respect thereto or within such earlier period or
may be required by law. If any such conversion of a Eurodollar Loan or
repayment of a Multicurrency Loan occurs on a day which is not the last day of
the then current Interest Period Interest Period with respect thereto, the
Company shall pay to such Lender such amounts, if any, as may be required
pursuant to subsection 6.11.
6.10 REQUIREMENTS OF LAW. (a) In the event that the adoption of or
any change in any Requirement of Law (or in the interpretation or application
thereof) or compliance by any Lender with any request or directive (whether or
not having the force of law) from any central bank or other Governmental
Authority:
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39
(i) does or shall subject any Lender to any tax of any kind whatsoever
with respect to this Agreement, any Note, any Loans made by it or any
Letter of Credit, or change the basis of taxation of payments to such
Lender of principal, fees, interest or any other amount payable hereunder
(except for changes in the rate of tax on the overall net income of such
Lender);
(ii) does or shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets held
by, or deposits or other liabilities in or for the account of, advances or
loans by, or other credit extended by, or any other acquisition of funds
by, any office of such Lender which are not otherwise included in the
determination of the Eurodollar Rate or Eurocurrency Rate; or
(iii) does or shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by any amount which such Lender deems to be material, of making, renewing or
maintaining advances or extensions of credit or to reduce any amount receivable
hereunder, in each case in respect of its Loans or Letters of Credit which it
issues or in which it holds Participating Interests, then, in any such case, the
applicable Borrower shall promptly pay such Lender, upon receipt of its demand
setting forth in reasonable detail, any additional amounts necessary to
compensate such Lender for such additional cost or reduced amount receivable,
such additional amounts together with interest on each such amount from the date
two Business Days after the date demanded until payment in full thereof at the
ABR. A certificate as to any additional amounts payable pursuant to the
foregoing sentence submitted by such Lender, through the Administrative Agent,
to the applicable Borrower shall be conclusive in the absence of manifest error.
This covenant shall survive the termination of this Agreement and payment of all
amounts outstanding hereunder for a period of one year.
(b) In the event that any Lender shall have determined that the
adoption of any law, rule, regulation or guideline regarding capital adequacy
(or any change therein or in the interpretation or application thereof) or
compliance by any Lender or any corporation controlling such Lender with any
request or directive regarding capital adequacy (whether or not having the force
of law) from any central bank or Governmental Authority, including, without
limitation, the issuance of any final rule, regulation or guideline, does or
shall have the effect of reducing the rate of return on such Lender's or such
corporation's capital as a consequence of its obligations hereunder to a level
below that which such Lender or such corporation could have achieved but for
such adoption, change or compliance (taking into consideration such Lender's or
such corporation's policies with respect to capital adequacy) by an amount
deemed by such Lender to be material, then from time to time, after submission
by such Lender to the Company (with a copy to the Administrative Agent) of a
written request therefor, the Company shall promptly pay to such Lender such
additional amount or amounts as will compensate such Lender for such reduction.
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40
(c) Any request by any Lender for compensation under this subsection
6.10 shall be accompanied by a certificate of a duly authorized officer of such
Lender setting for such information and calculations supporting such request as
such Lender shall customarily provide in similar situations.
6.11 INDEMNITY. Each Borrower agrees to indemnify each Lender and to
hold each Lender harmless from any loss or expense which such Lender may sustain
or incur as a consequence of (a) default by such Borrower in payment when due of
the principal amount of or interest on any Loans of such Lender, (b) default by
such Borrower in making a borrowing or conversion after such Borrower has given
a notice of borrowing or a notice of conversion in accordance with this
Agreement, (c) default by such Borrower in making any prepayment after such
Borrower has given a notice in accordance with this Agreement or (d) the making
of a prepayment of a Eurodollar Loan or Multicurrency Loan on a day which is not
the last day of an Interest Period with respect thereto, including, without
limitation, in each case, any such loss or expense arising from the reemployment
of funds obtained by it to maintain its Eurodollar Loans or Multicurrency Loans
hereunder or from fees payable to terminate the deposits from which such funds
were obtained, but excluding, in each case, lost profit. This covenant shall
survive termination of this Agreement and payment of all amounts outstanding
hereunder.
6.12 TAXES. (a) All payments made by any Borrower under this
Agreement shall be made free and clear of, and without reduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority excluding, in the case of the Administrative Agent and each Lender,
income or franchise taxes imposed on the Administrative Agent or such Lender by
the jurisdiction under the laws of which the Administrative Agent or such Lender
is organized or any political subdivision or taxing authority thereof or therein
or by any jurisdiction in which such Lender's lending office is located or any
political subdivision or taxing authority thereof or therein or as a result of a
connection between such Lender and any jurisdiction other than a connection
resulting solely from entering into this Agreement (all such non-excluded taxes,
levies, imposts, deductions, charges or withholdings being thereinafter called
"NON-EXCLUDED TAXES"). Subject to the provisions of subsection 6.12(c), if any
Non-Excluded Taxes are required to be withheld from any amounts payable by such
Borrower to the Administrative Agent or any Lender hereunder or under the Notes,
the amounts so payable to the Administrative Agent or such Lender shall be
increased to the extent necessary to yield to the Administrative Agent or such
Lender (after payment of all Non-Excluded Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in this
Agreement and the Notes. Whenever any Non-Excluded Taxes are paid by any
Borrower with respect to payments made in connection with this Agreement, as
promptly as possible thereafter, such Borrower shall send to the Administrative
Agent for its own account or for the account of such Lender, as the case may be,
a certified copy of an original official receipt received by such Borrower
showing payment thereof. Subject to the provisions of subsection 6.12(c), if
any Borrower fails to pay any Non-Excluded Taxes when due to the appropriate
<PAGE>
41
taxing authority or fails to remit to the Administrative Agent the required
receipts or other required documentary evidence, such Borrower shall indemnify
the Administrative Agent and the Lenders for any incremental taxes, interest or
penalties that may become payable by the Administrative Agent or any Lenders as
a result of any such failure.
(b) Each Lender that is not incorporated or organized under the laws
of the United States of America or a state thereof agrees that, prior to the
first date any payment is due to be made to it hereunder or under any Note, it
will deliver to the Company and the Administrative Agent (A) if such Lender is a
"bank" within the meaning of Section 881(c)(3)(A) of the Code, (i) two valid,
duly completed copies of United States Internal Revenue Service Form 1001 or
4224 or successor applicable form, as the case may be, certifying in each case
that such Lender is entitled to receive payments by the Borrower under this
Agreement and the Notes payable to it, without deduction or withholding of any
United States federal income taxes, and (ii) a valid, duly completed Internal
Revenue Service Form W-8 or W-9 or successor applicable form, as the case may
be, to establish an exemption from United States backup withholding tax or (B)
if such Lender is not a "bank" within the meaning of Section 881(c)(3)(A) of the
Code and cannot deliver either Internal Revenue Service Form 1001 or 4224, (i) a
certificate substantially in the form of Exhibit I (a "TAX STATUS CERTIFICATE")
and (ii) two completed and signed copies of Internal Revenue Service Form W-8 or
successor applicable form, to establish in each case that such Lender is
entitled to receive payments by the Borrowers under this Agreement and the other
Loan Documents without deduction or withholding of any United States federal
income taxes. Each Lender which delivers to the Company and the Administrative
Agent a Form 1001 or 4224 and Form W-8 or W-9 pursuant to the next preceding
sentence further undertakes to deliver to the Company and the Administrative
Agent two further copies of the said Form 1001 or 4224 and Form W-8 or W-9, or
successor applicable forms, or other manner or certification, as the case may
be, on or before the date that any such form expires or becomes obsolete or
otherwise is required to be resubmitted as a condition to obtaining an exemption
from withholding tax, or after the occurrence of any event requiring a change in
the most recent form previously delivered by it to the Company, and such
extensions or renewals thereof as may reasonably be requested by the Company,
certifying in the case of a Form 1001 or 4224 that such Lender is entitled to
receive payments by the Company under this Agreement without deduction or
withholding of any United States federal income taxes, unless any change in
treaty, law or regulation or official interpretation thereof has occurred prior
to the date on which any such delivery would otherwise be required which renders
all such forms inapplicable or which would prevent such Lender from duly
completing and delivering any such letter or form with respect to it and such
Lender advises the Company that it is not capable of receiving payments without
any deduction or withholding of United States federal income tax, and in the
case of a Form W-8 or W-9, establishing an exemption from United States backup
withholding tax.
(c) The Company shall not be required to pay any additional amounts to
the Administrative Agent or any Lender (or Transferee except to the extent such
Transferee's transferor was entitled, at the time of transfer, to receive
additional amounts from the Company) in respect of United States withholding tax
pursuant to subsection 6.12(a) if (i) the
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42
obligation to pay such additional amounts would not have arisen but for a
failure by the Administrative Agent or such Lender (or Transferee) to comply
with the requirements of subsection 6.12(b) (or in the case of a Transferee, the
requirements of subsection 14.6(h)).
(d) Each Revolving Credit Lender that is not incorporated or organized
under the laws of the jurisdiction under which a Foreign Subsidiary Borrower is
incorporated or organized shall, upon request by such Foreign Subsidiary
Borrower, within a reasonable period of time after such request, deliver to such
Foreign Subsidiary Borrower or the applicable governmental or taxing authority,
as the case may be, any form or certificate required in order that any payment
by such Foreign Subsidiary Borrower under this Agreement to such Lender may be
made free and clear of, and without deduction or withholding for or on account
of any Non-Excluded Taxes (or to allow any such deduction or withholding to be
at a reduced rate) imposed on such payment under the laws of the jurisdiction
under which such Foreign Subsidiary Borrower is incorporated or organized,
PROVIDED that such Revolving Credit Lender is legally entitled to complete,
execute and deliver such form or certificate and such completion, execution or
submission would not materially prejudice the legal position of such Revolving
Credit Lender.
(e) Except as otherwise provided in subsection 6.14(a), each Lender
agrees to use reasonable efforts (including reasonable efforts to change its
lending office) to avoid or to minimize any amounts which might otherwise be
payable pursuant to this subsection 6.12; PROVIDED, HOWEVER, that such efforts
shall not impose on such Lender any additional costs or legal or regulatory
burdens deemed by such Lender in its sole judgment to be material.
(f) The agreements in subsection 6.12(a) shall survive the termination
of this Agreement and the payment of the Notes and all other amounts payable
hereunder until the expiration of the applicable statute of limitations for such
taxes.
6.13 USE OF PROCEEDS. The proceeds of the Term Loans shall be used to
refinance the Senior Notes, to pay related fees and expenses and for general
corporate and working capital purposes of the Company and its Subsidiaries. The
proceeds of the Revolving Credit Loans and the Multicurrency Loans shall be used
for the general working capital and general corporate purposes of the Company
and its Subsidiaries. The Letters of Credit shall be used for the general
working capital purposes of the Company and its Subsidiaries.
6.14 CHANGE IN LENDING OFFICE; REPLACEMENT OF LENDER. (a) Each Lender
agrees that if it makes any demand for payment under subsection 6.10 or 6.12(a),
or if any adoption or change of the type described in subsection 6.9 shall occur
with respect to it, it will use reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions and so long as such efforts would
not be disadvantageous to it, as determined in its sole discretion) to designate
a different lending office if the making of such a designation would reduce or
obviate the need for any Borrower to make payments under subsection 6.10 or
6.12(a), or would eliminate or reduce the effect of any adoption or change
described in subsection 6.9.
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43
(b) If any Lender requests any payment under subsection 6.10 or
6.12(a), the Borrower shall have the right (i) to replace such Lender with one
or more replacement lenders, each of which shall be reasonably acceptable to the
Administrative Agent, or (ii) to replace only the Revolving Credit Commitments
(and outstanding Extensions of Credit thereunder) or only the Term Loan
Commitments (or Term Loans), as the case may be, with identical Commitments
and/or Loans of one or more replacement lenders, each of which shall be
reasonably acceptable to the Administrative Agent.
SECTION 7. REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Agreement and to make the
Loans, and to induce the Issuing Lender to issue Letters of Credit, each
Borrower hereby represents and warrants to the Administrative Agent and to each
Lender that:
7.1 FINANCIAL CONDITION. (a) The consolidated balance sheet of the
Company and its consolidated Subsidiaries as at September 30, 1996 and the
related consolidated statements of income and of cash flows for the fiscal year
ended on such date, reported on by Arthur Andersen LLP, copies of which have
heretofore been furnished to each Lender, are complete and correct in all
material respects and present fairly the consolidated financial condition of the
Company and its consolidated Subsidiaries as at such date, and the consolidated
results of their operations and their consolidated cash flows for the fiscal
year then ended. The unaudited consolidated balance sheets of the Company and
its consolidated Subsidiaries as at December 31, 1996 and the related unaudited
consolidated statements of income and of cash flows for the nine-month period
ended on such date, certified by the chief financial officer of the Company,
copies of which have heretofore been furnished to each Lender, are complete and
correct in all material respects and present fairly the consolidated financial
condition of the Borrower and its consolidated Subsidiaries as at such date, and
the consolidated results of their operations and their consolidated cash flows
for the respective nine-month period then ended (subject to normal year-end
audit adjustments). All such financial statements, including the related
schedules and notes thereto, have been prepared in accordance with GAAP applied
consistently throughout the periods involved (except as approved by such
accountants or chief financial officer, as the case may be, and as disclosed
therein). [[Except as set forth on Schedule 7.1]], neither the Company nor any
of its consolidated Subsidiaries had, at the date of the most recent balance
sheet referred to above, any material Guarantee Obligation, contingent liability
or liability for taxes, or any long-term lease or unusual forward or long-term
commitment, including, without limitation, any interest rate or foreign currency
swap or exchange transaction, which is not reflected in the foregoing statements
or in the notes thereto. During the period from September 30, 1996 to and
including the date hereof there has been no sale, transfer or other disposition
by the Company or any of its consolidated Subsidiaries of any material part of
its business or property and no purchase or other acquisition of any business or
property (including any capital stock of any other Person) material in relation
to the consolidated financial condition of the Company and
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44
its consolidated Subsidiaries at September 30, 1996, other than the sale of
inventory in the ordinary course of business.
(b) The unaudited PRO FORMA balance sheets of the Company and its
consolidated Subsidiaries as at December 31, 1996, certified by a Responsible
Officer of the Company (collectively, the "PRO FORMA BALANCE SHEET"), copies of
which have been furnished to each Lender, are the unaudited consolidated and
consolidating balance sheets of the Company and its consolidated Subsidiaries,
adjusted to give effect (as if such events had occurred on such date) to the
incurrence of the Loans and the use of the proceeds thereof on the Closing Date.
The Pro Forma Balance Sheet, together with the notes thereto, was prepared in
accordance with GAAP and reflects on a PRO FORMA basis the financial position of
the Company and its consolidated Subsidiaries as of December 31, 1996, as
adjusted as described above, assuming that the events specified in the preceding
sentence had actually occurred at such date.
7.2 NO CHANGE. Since September 30, 1996 there has been no development
or event which has had or could reasonably be expected to have a Material
Adverse Effect.
7.3 CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Each Loan Party (a) is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has the corporate power and authority, and
the legal right, to own and operate its property, to lease the property it
operates as lessee and to conduct the business in which it is currently engaged,
(c) is duly qualified as a foreign corporation and in good standing under the
laws of each jurisdiction where its ownership, lease or operation of property or
the conduct of its business requires such qualification except to the extent
that the failure to be so qualified in any such jurisdiction could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect, and (d) is
in compliance with all Requirements of Law except to the extent that the failure
to comply therewith could not, in the aggregate, reasonably be expected to have
a Material Adverse Effect.
7.4 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. Each
Loan Party has the corporate power and authority, and the legal right, to make,
deliver and perform the Loan Documents to which it is a party and to borrow
hereunder and has taken all necessary corporate action to authorize the
borrowings on the terms and conditions of this Agreement and any Notes and to
authorize the execution, delivery and performance of the Loan Documents to which
it is a party. No consent or authorization of, filing with, notice to or other
act by or in respect of, any Governmental Authority or any other Person is
required in connection with the borrowings hereunder or with the execution,
delivery, performance, validity or enforceability of the Loan Documents. This
Agreement has been, and each other Loan Document to which it is a party will be,
duly executed and delivered on behalf of each Loan Party that is a party hereto
or thereto. This Agreement constitutes, and each other Loan Document to which
it is a party when executed and delivered will constitute, a legal, valid and
binding obligation of each Loan Party that is a party hereto or thereto
enforceable against such Loan Party in accordance with its terms, subject to the
effects of bankruptcy, insolvency,
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45
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
7.5 NO LEGAL BAR. The execution, delivery and performance of the Loan
Documents, the borrowings hereunder and the use of the proceeds thereof will not
violate any Requirement of Law or Contractual Obligation of any Loan Party or of
any of its Subsidiaries and will not result in, or require, the creation or
imposition of any Lien on any of its or their respective properties or revenues
pursuant to any such Requirement of Law or Contractual Obligation.
7.6 NO MATERIAL LITIGATION. Except as set forth on Schedule 7.6, no
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of the Loan Parties,
threatened by or against any Loan Party or any of its Subsidiaries or against
any of its or their respective properties or revenues (a) with respect to any of
the Loan Documents or any of the transactions contemplated hereby or thereby, or
(b) which could reasonably be expected to have a Material Adverse Effect.
7.7 NO DEFAULT. No Loan Party nor any of its Subsidiaries is in
default under or with respect to any of its Contractual Obligations in any
respect which could reasonably be expected to have a Material Adverse Effect.
No Default or Event of Default has occurred and is continuing.
7.8 OWNERSHIP OF PROPERTY; LIENS. Each of the Loan Parties and its
Subsidiaries has good record and marketable title in fee simple to, or a valid
leasehold interest in, all its real property, and good title to, or a valid
leasehold interest in, all its other property, except to the extent that the
failure to have such title would not have a Material Adverse Effect, and none of
such property is subject to any Lien except as permitted by subsection 10.3.
With respect to real property or interests in real property, as of the Closing
Date, the Company has (i) fee title to all of the real property listed on
Schedule 7.8 under the heading "Fee Properties" (each, a "FEE PROPERTY"), and
(ii) good and valid title to the leasehold estates in all of the real property
leased by it and listed on Schedule 7.8 under the heading "Leased Properties"
(each, a "LEASED PROPERTY"), in each case free and clear of all mortgages,
liens, security interests, easements, covenants, rights-of-way and other similar
restrictions of any nature whatsoever, except (A) Liens permitted pursuant to
subsection 10.3, (B) as to Leased Property, the terms and provisions of the
respective lease therefor and any matters affecting the fee title and any estate
superior to the leasehold estate related thereto, and (C) title defects, or
leases or subleases granted to others, which are not material to the Fee
Properties or the Leased Properties, as the case may be, taken as a whole. The
Fee Properties and the Leased Properties constitute, as of the Closing Date, all
of the real property owned in fee or leased by the Company.
7.9 INTELLECTUAL PROPERTY. Each Loan Party and each of its
Subsidiaries owns, or is licensed to use or otherwise has the right to use, all
trademarks, tradenames, copyrights,
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46
patents, trade secrets and other proprietary information that it uses in the
conduct of its business as currently conducted except for those the failure to
own or license which could not reasonably be expected to have a Material Adverse
Effect (the "INTELLECTUAL PROPERTY"). To the knowledge of each Loan Party, no
claim has been asserted and is pending by any Person challenging or questioning
the use of any such Intellectual Property or the validity or enforceability of
any such Intellectual Property, nor does any Loan Party know of any valid basis
for any such claim. The use of such Intellectual Property by each Loan Party
and its Subsidiaries does not infringe on the rights of any Person, except for
such claims and infringements that, in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
7.10 NO BURDENSOME RESTRICTIONS. No Contractual Obligation of any
Loan Party or any of its Subsidiaries could reasonably be expected to have a
Material Adverse Effect.
7.11 TAXES. Each Loan Party and each of its Subsidiaries has filed or
caused to be filed all material tax returns which, to the knowledge of the Loan
Parties, are required to be filed and has paid all taxes shown to be due and
payable on said returns or on any assessments made against it or any of its
property and all other taxes, fees or other charges imposed on it or any of its
property by any Governmental Authority (other than any the amount or validity of
which are currently being contested in good faith by appropriate proceedings and
with respect to which reserves in conformity with GAAP have been provided on the
books of such Loan Party or its Subsidiaries, as the case may be); no tax Lien
has been filed, and, to the knowledge of the Loan Parties, no claim is being
asserted, with respect to any such tax, fee or other charge.
7.12 FEDERAL REGULATIONS. No part of the proceeds of any Loans will
be used for "purchasing" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation G or Regulation U of the
Board of Governors of the Federal Reserve System as now and from time to time
hereafter in effect. If requested by any Lender or the Administrative Agent,
the Borrower will furnish to the Administrative Agent and each Lender a
statement to the foregoing effect in conformity with the requirements of FR Form
G-1 or FR Form U-1 referred to in said Regulation G or Regulation U, as the case
may be.
7.13 ERISA. Neither the Company nor any Commonly Controlled Entity
has any liability in respect of any Multiemployer Plan.
7.14 INVESTMENT COMPANY ACT; OTHER REGULATIONS. The Company is not an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. The
Company is not subject to regulation under any Federal or State statute or
regulation (other than Regulation X of the Board of Governors of the Federal
Reserve System) which limits its ability to incur Indebtedness.
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47
7.15 SUBSIDIARIES. Schedule IV sets forth all Subsidiaries of the
Company as of the Closing Date.
7.16 ENVIRONMENTAL MATTERS. Except to the extent that all of the
following, taken together, could not reasonably be expected to result in a
Material Adverse Effect or to result in the payment of Material Environmental
Amount:
(a) The facilities and properties owned, leased or operated by each
Loan Party or any of its Subsidiaries (the "PROPERTIES") do not contain,
and have not previously contained, any Materials of Environmental Concern
in amounts or concentrations which (i) constitute or constituted a
violation of, or (ii) could reasonably be expected to give rise to
liability under, any Environmental Law.
(b) The Properties and all operations at the Properties are in
compliance, and have in the last five years been in compliance, in all
material respects with all applicable Environmental Laws, and there is no
contamination at, under or about the Properties or violation of any
Environmental Law with respect to the Properties or the business operated
by any Loan Party or any of its Subsidiaries (the "BUSINESS") which could
materially interfere with the continued operation of the Properties or
materially impair the fair saleable value thereof.
(c) Neither any Loan Party nor any of its Subsidiaries has received
any notice of violation, alleged violation, non-compliance, liability or
potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of the Properties or the Business,
nor does any Loan Party have knowledge or reason to believe that any such
notice will be received or is being threatened.
(d) Materials of Environmental Concern have not been transported or
disposed of from the Properties in violation of, or in a manner or to a
location which could reasonably be expected to give rise to liability
under, any Environmental Law, nor have any Materials of Environmental
Concern been generated, treated, stored or disposed of at, on or under any
of the Properties or elsewhere in violation of, or in a manner that could
reasonably be expected to give rise to liability under, any applicable
Environmental Law.
(e) No judicial proceeding or governmental or administrative action is
pending or, to the knowledge of the Loan Parties, threatened, under any
Environmental Law to which any Loan Party or any Subsidiary thereof is or
will be named as a party with respect to the Properties or the Business,
nor are there any consent decrees or other decrees, consent orders,
administrative orders or other orders, or other administrative or judicial
requirements outstanding under any Environmental Law with respect to the
Properties or the Business.
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(f) There has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related
to the operations of any Loan Party or any Subsidiary thereof in connection
with the Properties or otherwise in connection with the Business, in
violation of or in amounts or in a manner that could reasonably give rise
to liability under Environmental Laws.
7.17 SOLVENCY. Each Loan Party is, and after giving effect to the
consummation of any Acquisition and to the incurrence of all Indebtedness and
obligations being incurred in connection herewith and therewith will be and will
continue to be, Solvent.
7.18 SECURITY DOCUMENTS. (a) The Guarantee and Collateral Agreement
is effective to create in favor of the Administrative Agent, for the benefit of
the Lenders, a legal, valid and enforceable security interest in the Collateral
described, and as defined, therein and proceeds thereof, and, after taking the
actions described in Schedule 3 thereto, the Guarantee and Collateral Agreement
shall at all times constitute a fully perfected Lien on, and security interest
in, all right, title and interest of the Loan Parties in such Collateral and the
proceeds thereof, as security for the Secured Obligations (as defined in the
Guarantee and Collateral Agreement), in each case prior and superior in right to
any other Person, other than with respect to Liens expressly permitted by
subsection 10.3.
(b) Each Mortgage is effective to create in favor of the
Administrative Agent, for the benefit of the Lenders, a legal, valid and
enforceable security interest in the collateral described therein, and upon
filing the Mortgages in the jurisdictions listed on Schedule V, such security
interests will constitute perfected liens on, and security interests in, all
right, title and interest of the debtor party thereto in the collateral
described therein.
7.19 REGULATION H. No Mortgage encumbers improved real property which
is located in an area that has been identified by the Secretary of Housing and
Urban Development as an area having special flood hazards and in which flood
insurance has been made available under the National Flood Insurance Act
of 1968.
7.20 ACCURACY OF INFORMATION. No statement or information contained
in this Agreement, any other Loan Document or any other document, certificate or
statement furnished in writing to the Administrative Agent, the Arranger or the
Lenders or any of them, by or on behalf of any Loan Party for use in connection
with the transactions contemplated by this Agreement or the other Loan
Documents, taken as a whole together with all other information provided in this
Agreement, the other Loan Documents or any other such document, certificate or
statement, contained as of the date such statement, information, document or
certificate was so furnished any untrue statement of any fact material to the
interests of the Administrative Agent or any Lender, or omitted to state a fact
necessary in order to make the statements contained herein or therein not
misleading in any respect material to the interests of the Administrative Agent
or any Lender. There is no fact known to any Loan Party that could reasonably
be expected to have a Material Adverse Effect that has not been expressly
disclosed herein, in the other Loan Documents or in such other documents,
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49
certificates and statements furnished to the Administrative Agent, the Arranger
and the Lenders for use in connection with the transactions contemplated hereby
and by the other Loan Documents.
SECTION 8. CONDITIONS PRECEDENT
8.1 CONDITIONS TO CLOSING DATE. The Closing Date shall occur on the
date of satisfaction of the following conditions precedent:
(a) LOAN DOCUMENTS. The Administrative Agent shall have received (i)
this Agreement, executed and delivered by a duly authorized officer of each
of the Borrowers, with a counterpart for each Lender,(ii) the Guarantee and
Collateral Agreement, executed and delivered by a duly authorized officer
of the party thereto, with a counterpart or a conformed copy for each
Lender and (iii) the Mortgage executed and delivered by a duly authorized
officer of the party thereto, with a counterpart or a conformed copy for
each Lender.
(b) BORROWING CERTIFICATE. The Administrative Agent shall have
received, with a copy for each Lender, a certificate of the Company, dated
the Closing Date, substantially in the form of Exhibit H with appropriate
insertions and attachments, satisfactory in form and substance to the
Administrative Agent, executed by the President or any Vice President and
the Secretary or any Assistant Secretary of the Company.
(c) CORPORATE PROCEEDINGS OF THE COMPANY. The Administrative Agent
shall have received, with a counterpart for each Lender, a copy of the
resolutions, in form and substance satisfactory to the Administrative
Agent, of the Board of Directors of the Company authorizing (i) the
execution, delivery and performance of this Agreement and the other Loan
Documents to which it is a party, (ii) the borrowings contemplated
hereunder and (iii) the granting by it of the Liens created pursuant to the
Security Documents to which the Company is a party, certified by the
Secretary or an Assistant Secretary of the Company as of the Closing Date,
which certificate shall be in form and substance satisfactory to the
Administrative Agent and shall state that the resolutions thereby certified
have not been amended, modified, revoked or rescinded.
(d) COMPANY INCUMBENCY CERTIFICATE. The Administrative Agent shall
have received, with a counterpart for each Lender, a Certificate of the
Company, dated the Closing Date, as to the incumbency and signature of the
officers of the Company executing any Loan Document satisfactory in form
and substance to the Administrative Agent, executed by the President or any
Vice President and the Secretary or any Assistant Secretary of the Company.
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50
(e) CORPORATE PROCEEDINGS OF SUBSIDIARIES. The Administrative Agent
shall have received, with a counterpart for each Lender, a copy of the
resolutions, in form and substance satisfactory to the Administrative
Agent, of the Board of Directors of each Subsidiary of the Company which is
a party to a Loan Document authorizing (i) the execution, delivery and
performance of the Loan Documents to which it is a party and (ii) the
granting by it of the Liens created pursuant to the Security Documents to
which it is a party, certified by the Secretary or an Assistant Secretary
of each such Subsidiary as of the Closing Date, which certificate shall be
in form and substance satisfactory to the Administrative Agent and shall
state that the resolutions thereby certified have not been amended,
modified, revoked or rescinded.
(f) SUBSIDIARY INCUMBENCY CERTIFICATES. The Administrative Agent
shall have received, with a counterpart for each Lender, a certificate of
each Subsidiary of the Borrower which is a Loan Party, dated the Closing
Date, as to the incumbency and signature of the officers of such
Subsidiaries executing any Loan Document, satisfactory in form and
substance to the Administrative Agent, executed by the President or any
Vice President and the Secretary or any Assistant Secretary of each such
Subsidiary.
(g) CORPORATE DOCUMENTS. The Administrative Agent shall
have received, with a counterpart for each Lender, true and complete copies
of the certificate of incorporation and by-laws of each Loan Party,
certified as of the Closing Date as complete and correct copies thereof by
the Secretary or an Assistant Secretary of such Loan Party.
(h) RECAPITALIZATION. The Senior Notes shall have been repaid in full
and all Liens securing the obligations thereunder shall have been released.
(i) FEES. The Arranger and the Administrative Agent and the Lenders
shall have received all invoiced fees and expenses required to be paid on
the Closing Date.
(j) LEGAL OPINIONS. The Administrative Agent shall have received,
with a counterpart for each Lender, the following executed legal opinions:
(i) the executed legal opinion of Cadwalader, Wickersham & Taft,
counsel to the Company and the other Loan Parties, substantially in
the form of Exhibit F-1; and
(ii) the executed legal opinion of Leagre & Barnes, special
Indiana counsel to the Company and the other Loan Parties,
substantially in the form of Exhibit F-2;
each such legal opinion to cover such other matters incident to the
transactions contemplated by this Agreement as the Administrative Agent may
reasonably require.
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(k) FINANCIAL STATEMENTS. The Administrative Agent shall have
received, with a copy for each Lender, (i) audited consolidated financial
statements of the Company and its consolidated Subsidiaries for the three
most recent fiscal years ended prior to the Closing Date and unaudited
consolidated financial statements of the Company and its consolidated
Subsidiaries, reasonably satisfactory to the Lenders and certified by the
chief financial officer of the Company, for the three months ended December
31, 1996, and (ii) unaudited interim consolidated financial statements of
the Company and its consolidated Subsidiaries for each fiscal month and
quarterly period ended subsequent to the date of the latest financial
statements delivered pursuant to clause (i) of this paragraph as to which
such financial statements are available, reasonably satisfactory to the
Lenders and certified by the chief financial officer of the Company, all
such financial statements, including the related schedules and notes
thereto, having been prepared in accordance with GAAP applied consistently
throughout the periods involved (except as approved by such accountants or
chief financial officer, as the case may be, and as disclosed therein).
(l) PRO FORMA BALANCE SHEET. The Administrative Agent shall have
received, with a copy for each Lender, the Pro Forma Balance Sheet
described in subsection 7.1(b).
(m) BUSINESS PLAN. The Administrative Agent shall have received, with
a copy for each Lender, a business plan for fiscal years 1996 - 2001
reasonably satisfactory to the Lenders.
(n) ENVIRONMENTAL REPORTS AND ANALYSIS. The Administrative Agent
shall have received, with a counterpart for each Lender, such environmental
reports and analysis relating to environmental matters with respect to the
real property owned or leased by the Company and its Subsidiaries, which
the Administrative Agent, in its discretion, shall have requested.
(o) APPRAISALS. The Administrative Agent shall have received
satisfactory appraisals in respect of each parcel of real property covered
by a Mortgage.
(p) PLEDGED STOCK; STOCK POWERS. The Administrative Agent shall have
received the certificates representing the shares pledged pursuant to the
Guarantee and Collateral Agreement, together with an undated stock power
for each such certificate executed in blank by a duly authorized officer of
the pledgor thereof. All actions required to perfect the security interest
in the pledged stock of the Foreign Subsidiaries listed in Item 1 of
Schedule VI created pursuant to the Guarantee and Collateral Agreement
shall have been taken.
(q) ACTIONS TO PERFECT LIENS. The Administrative Agent shall have
received evidence in form and substance satisfactory to it that all
filings, recordings, registrations and other actions, including, without
limitation, the filing of duly executed
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financing statements on form UCC-1, necessary or, in the opinion of the
Administrative Agent, desirable to perfect the Liens created by the
Security Documents shall have been completed.
(r) LIEN SEARCHES. The Administrative Agent shall have received the
results of a recent search by a Person satisfactory to the Administrative
Agent, of the Uniform Commercial Code, judgement and tax lien filings which
may have been filed with respect to personal property of the Company and
its Subsidiaries in each of the jurisdictions and offices where assets of
the Company and its Subsidiaries are located or recorded, and such search
shall reveal no material liens on any of the assets of the Borrower or its
Subsidiaries except for liens permitted by the Loan Documents.
(s) SURVEYS. The Administrative Agent shall have received (or shall
receive within 10 Business Days after the Closing Date), and the title
insurance company issuing the policy referred to in subsection 8.1(t) (the
"TITLE INSURANCE COMPANY") shall have received, maps or plats of an
as-built survey of the sites of the property covered by each Mortgage
certified to the Administrative Agent and the Title Insurance Company in a
manner satisfactory to them, dated a date satisfactory to the
Administrative Agent and the Title Insurance Company by an independent
professional licensed land surveyor satisfactory to the Administrative
Agent and the Title Insurance Company, which maps or plats and the surveys
on which they are based shall be made in accordance with the Minimum
Standard Detail Requirements for Land Title Surveys jointly established and
adopted by the American Land Title Association and the American Congress on
Surveying and Mapping in 1992, and, without limiting the generality of the
foregoing, there shall be surveyed and shown on such maps, plats or surveys
the following: (i) the locations on such sites of all the buildings,
structures and other improvements and the established building setback
lines; (ii) the lines of streets abutting the sites and width thereof;
(iii) all access and other easements appurtenant to the sites or necessary
or desirable to use the sites; (iv) all roadways, paths, driveways,
easements, encroachments and overhanging projections and similar
encumbrances affecting the site, whether recorded, apparent from a physical
inspection of the sites or otherwise known to the surveyor; (v) any
encroachments on any adjoining property by the building structures and
improvements on the sites; and (vi) if the site is described as being on a
filed map, a legend relating the survey to said map.
(t) TITLE INSURANCE POLICY. The Administrative Agent shall have
received in respect of each parcel covered by each Mortgage a mortgagee's
title policy (or policies) or marked up unconditional binder for such
insurance dated the Closing Date. Each such policy shall (i) be in an
amount satisfactory to the Administrative Agent; (ii) be issued at ordinary
rates; (iii) insure that the Mortgage insured thereby creates a valid first
Lien on such parcel free and clear of all defects and encumbrances, except
such as may be approved by the Administrative Agent; (iv) name the
Administrative Agent for the benefit of the Lenders as the insured
thereunder; (v) be in the form of ALTA Loan Policy - 1970 (Amended
10/17/70); (vi) contain such endorsements and affirmative
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coverage as the Administrative Agent may request and (vii) be issued by
title companies satisfactory to the Administrative Agent (including any
such title companies acting as co-insurers or reinsurers, at the option of
the Administrative Agent). The Administrative Agent shall have received
evidence satisfactory to it that all premiums in respect of each such
policy, and all charges for mortgage recording tax, if any, have been paid.
(u) FLOOD INSURANCE. If requested by the Administrative Agent, the
Administrative Agent shall have received (i) a policy of flood insurance
which (A) covers any parcel of improved real property which is encumbered
by any Mortgage, (B) is written in an amount not less than the outstanding
principal amount of the indebtedness secured by such Mortgage which is
reasonably allocable to such real property or the maximum limit of coverage
made available with respect to the particular type of property under the
Act, whichever is less, and (C) has a term ending not later than the
maturity of the indebtedness secured by such Mortgage and (ii) confirmation
that the Borrower has received the notice required pursuant to Section
208(e)(3) of Regulation H of the Board of Governors of the Federal Reserve
System.
(v) COPIES OF DOCUMENTS. The Administrative Agent shall have received
a copy of all recorded documents referred to, or listed as exceptions to
title in, the title policy or policies referred to in subsection 8.1(t) and
a copy, certified by such parties as the Administrative Agent may deem
appropriate, of all other documents affecting the property covered by each
Mortgage.
8.2 CONDITIONS TO EACH EXTENSION OF CREDIT. The agreement of each
Lender to make any Extension of Credit requested to be made by it on any date
(including, without limitation, the Closing Date), is subject to the
satisfaction of the following conditions precedent as of the date such Extension
of Credit is requested to be made:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties made by each of the Loan Parties in or pursuant to the Loan
Documents shall be true and correct in all material respects on and as of
such date as if made on and as of such date.
(b) NO DEFAULT. No Default or Event of Default shall have occurred
and be continuing on such date or after giving effect to the Extension of
Credit requested to be made on such date.
(c) FOREIGN SUBSIDIARY OPINION. If such requested Extension of Credit
is the initial Multicurrency Loan to be made to any Foreign Subsidiary
Borrower, the Administrative Agent shall have received (with a copy for
each Lender) a Foreign Subsidiary Opinion in respect of such Foreign
Subsidiary Borrower.
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54
Each Extension of Credit made to a Borrower hereunder shall constitute a
representation and warranty by such Borrower as of the date of such Extension of
Credit that the conditions contained in this subsection 8.2 have been satisfied.
SECTION 9. AFFIRMATIVE COVENANTS
The Company hereby agrees that, so long as the Commitments (or any of
them) remain in effect, any Loan or Reimbursement Obligation remains outstanding
and unpaid or any other amount is owing to any Lender or either Administrative
Agent hereunder or under any other Loan Document, the Company shall and shall
cause each of its Subsidiaries to:
9.1 FINANCIAL STATEMENTS. Furnish to each Lender:
(a) as soon as available, but in any event within 90 days after the
end of each fiscal year of the Company, copies of the consolidated and
consolidating balance sheets of the Company and its consolidated
Subsidiaries as at the end of such year and the related consolidated and
consolidating statements of income and retained earnings and of cash flows
for such year, setting forth in each case in comparative form the figures
for the previous year, reported on without a "going concern" or like
qualification or exception, or qualification arising out of the scope of
the audit, by Arthur Andersen LLP or other independent certified public
accountants of nationally recognized standing; and
(b) as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each fiscal
year of the Company, the unaudited consolidated and consolidating balance
sheets of the Company and its consolidated Subsidiaries as at the end of
such quarter and the related unaudited consolidated and consolidating
statements of income and retained earnings and of cash flows of the Company
and its consolidated Subsidiaries for such quarter and the portion of the
fiscal year through the end of such quarter, setting forth in each case in
comparative form the figures for the previous year, certified by a
Responsible Officer as being fairly stated in all material respects
(subject to normal year-end audit adjustments);
all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein and except that interim statements may exclude detailed
footnote disclosure in accordance with standard practice).
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55
9.2 CERTIFICATES; OTHER INFORMATION. Furnish to each Lender:
(a) concurrently with the delivery of the financial statements
referred to in subsection 9.1(a), a certificate of the independent
certified public accountants reporting on such financial statements stating
that in making the examination necessary therefor no knowledge was obtained
of any Default or Event of Default, except as specified in such
certificate;
(b) concurrently with the delivery of the financial statements
referred to in subsections 9.1(a) and 9.1(b), a certificate of a
Responsible Officer (i) stating that, to the best of such officer's
knowledge, each Loan Party during such period has observed or performed all
of its covenants and other agreements, and satisfied every condition,
contained in this Agreement and the other Loan Documents to be observed,
performed or satisfied by it, and that such officer has obtained no
knowledge of any Default or Event of Default except as specified in such
certificate; and (ii) in the case of financial statements referred to in
subsections 9.1(a) and 9.1(b), including calculations and information
demonstrating in reasonable detail compliance with the requirements of
subsection 10.1;
(c) not later than 30 days following the end of each fiscal year of
the Company, a copy of the projections by the Company of the operating
budget of the Company and its Subsidiaries for the succeeding fiscal year,
such projections to be accompanied by a certificate of a Responsible
Officer to the effect that such projections have been prepared on the basis
of sound financial planning practice and that such officer has no reason to
believe they are incorrect or misleading in any material respect;
(d) within five Business Days after the same are filed, copies of all
financial statements and reports which the Company may make to, or file
with, the Securities and Exchange Commission or any successor or analogous
Governmental Authority;
(e) concurrently with the delivery of the financial statements
referred to in subsections 9.1(a) and 9.1(b), to the extent not included in
the financial statements and reports referred to in subsection 9.2(d), a
management narrative report explaining all significant variances from
forecasts, projections and previous results and all significant current
developments in staffing, marketing, sales and operations; and
(f) promptly, such additional financial and other information as any
Lender may from time to time reasonably request.
9.3 PAYMENT OF OBLIGATIONS. Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all its
obligations of whatever nature, except where the amount or validity thereof is
currently being contested in good faith by appropriate proceedings and reserves
in conformity with GAAP with respect thereto have been provided on the books of
the Company or its Subsidiaries, as the case may be.
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56
9.4 MAINTENANCE OF EXISTENCE. Preserve, renew and keep in full force
and effect its corporate existence and take all reasonable action to maintain
all rights, privileges and franchises necessary or desirable in the normal
conduct of its business except as otherwise permitted pursuant to subsection
10.5; and comply with all Contractual Obligations and Requirements of Law except
to the extent that failure to comply therewith could not, in the aggregate, be
reasonably expected to have a Material Adverse Effect.
9.5 MAINTENANCE OF PROPERTY; INSURANCE. Keep all property useful and
necessary in its business in good working order and condition; maintain with
financially sound and reputable insurance companies insurance on all its
property in at least such amounts and against at least such risks (but including
in any event public liability, product liability and business interruption) as
are usually insured against in the same general area by companies engaged in the
same or a similar business; and furnish to each Lender, upon written request,
full information as to the insurance carried.
9.6 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS. Keep
proper books of records and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities; and, upon prior
written notice, permit representatives of any Lender to visit and inspect any of
its properties and examine and make abstracts from any of its books and records
at any reasonable time and as often as may reasonably be desired and to discuss
the business, operations, properties and financial and other condition of the
Company and its Subsidiaries with officers and employees of the Company and its
Subsidiaries and, in the presence of an officer of the Company, with its
independent certified public accountants.
9.7 NOTICES. Promptly give notice to the Administrative Agent (who
shall promptly notify each Lender) of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Company or any of its Subsidiaries or (ii) litigation,
investigation or proceeding which may exist at any time between the Company
or any of its Subsidiaries and any Governmental Authority, which in either
case, if not cured or if adversely determined, as the case may be, could
reasonably be expected to have a Material Adverse Effect;
(c) any litigation or proceeding (including without limitation any
notice of violation, alleged violation, liability or potential liability
under any Environmental Law) affecting the Company or any of its
Subsidiaries in which the amount involved is $1,000,000 or more and not
covered by insurance or in which injunctive or similar relief is sought;
(d) the following events, as soon as possible and in any event within
30 days after any Loan Party knows or has reason to know thereof: (i) the
occurrence or
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57
expected occurrence of any Reportable Event with respect to any Plan, a
failure to make any required contribution to a Plan, the creation of any
Lien in favor of the PBGC or a Plan or any withdrawal from, or the
termination, Reorganization or Insolvency of, any Multiemployer Plan or
(ii) the institution of proceedings or the taking of any other action by
the PBGC or the Borrower or any Commonly Controlled Entity or any
Multiemployer Plan with respect to the withdrawal from, or the terminating,
Reorganization or Insolvency of, any Plan; and
(e) any development or event which has had or could reasonably be
expected to have a Material Adverse Effect.
Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Borrower proposes to take with respect thereto.
9.8 ENVIRONMENTAL LAWS . (a) Comply with, and ensure compliance by
all tenants and subtenants, if any, with, all applicable Environmental Laws and
obtain and comply in all respects with and maintain, and ensure that all tenants
and subtenants obtain and comply in all respects with and maintain, any and all
licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws, except to the extent that any failures could not,
in the aggregate, reasonably be expected to have a Material Adverse Effect or to
result in the payment of Material Environmental Amount.
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all lawful
orders and directives of all Governmental Authorities regarding Environmental
Laws except to the extent that the same are being contested in good faith by
appropriate proceedings and the pendency of such proceedings could not be
reasonably expected to have a Material Adverse Effect.
9.9 ADDITIONAL SUBSIDIARIES. (a) With respect to any Domestic
Subsidiary of the Company created or acquired after the Closing Date by the
Company, promptly (i)cause such Subsidiary to become a party to the Guarantee
and Collateral Agreement,(ii) deliver to the Administrative Agent the
certificates representing such Capital Stock, together with undated stock
powers, executed in blank, securing such Subsidiary's obligations under such
guarantee and covering the types of assets covered by the Guarantee and
Collateral Agreement, (iii)take all required actions to perfect the security
interests created by the Guarantee and Collateral Agreement in the assets of
such Subsidiary,(iv) to the extent required by subsection 9.10(a), cause such
Subsidiary to execute and deliver one or more Mortgages, in form and substance
satisfactory to the Administrative Agent, securing such Subsidiary's obligations
under such guarantee, and any other documents required under such subsection and
(v) if requested by the Administrative Agent, deliver to the Administrative
Agent legal opinions relating to the matters described in the preceding clauses
(i) through (iv)
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which opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Administrative Agent.
(b) With respect to each Foreign Subsidiary listed in Item 2 of
Schedule VI, at or within two months after the Closing Date, and with respect to
(i) each direct Material Foreign Subsidiary of the Company acquired or formed
after the Closing Date, promptly after the acquisition or formation thereof, and
(ii) each existing Foreign Subsidiary which becomes a Material Foreign
Subsidiary, execute and deliver and cause each such Foreign Subsidiary to
execute and deliver to the Administrative Agent, in form and substance
reasonably satisfactory to the Administrative Agent, such documents and
instruments (including, without limitation, pledge agreements) and take such
action (including, without limitation, the delivery of stock certificates and
instruments) as the Administrative Agent may reasonably request in order to
grant to the Administrative Agent, for the ratable benefit of the Lenders, as
collateral security for the Obligations, a first priority perfected security
interest in 65% of the Capital Stock of, or equivalent ownership interests in,
such Foreign Subsidiary, along with any warrants, options, or other rights to
acquire the same, in all cases to the extent legally permissible and practicable
and deliver to the Administrative Agent such legal opinions as it shall
reasonably request with respect thereto.
9.10 AFTER-ACQUIRED PROPERTY. (a) Upon the acquisition by the Company
or any of its Domestic Subsidiaries of any fee or leasehold interest in real
property for consideration in excess of $1,000,000, or of any Domestic
Subsidiary holding any such interest, deliver to the Administrative Agent one or
more Mortgages granting the Administrative Agent a first priority security
interest in such real property and/or leaseholds, together with (i) legal
opinions in form and substance satisfactory to the Administrative Agent and
covering the matters covered, with respect to the Mortgage delivered on the
Closing Date, by the opinions delivered pursuant to subsection 8.1(j)(ii) and
(ii) the documents which would be required under subsections 8.1(s), 8.1(t),
8.1(u) and 8.1(v), as appropriate, if such Mortgage were to have been delivered
at the Closing Date.
(b) Grant in favor of the Administrative Agent, for the benefit of the
Lenders, Liens on any other assets hereafter acquired by the Company or any
Domestic Subsidiary and on previously encumbered assets which become
unencumbered, to the extent such Liens are then permissible under applicable law
and pursuant to any agreements to which the Company or its Subsidiaries are a
party, at any time that the aggregate fair market value of such assets exceeds
$1,000,000, pursuant to documentation in form and substance satisfactory to the
Administrative Agent.
SECTION 10. NEGATIVE COVENANTS
The Company hereby agrees that, so long as the Commitments (or any of
them) remain in effect, any Loan or Reimbursement Obligation remains outstanding
and unpaid or any other amount is owing to any Lender or either Administrative
Agent hereunder or under
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59
any other Loan Document, the Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly:
10.1 FINANCIAL CONDITION COVENANTS.
(a) INTEREST COVERAGE. Permit for any period of four consecutive
fiscal quarters ending during any test period set forth below the ratio of
(i) Consolidated EBITDA for such period of four consecutive fiscal quarters
to (ii) Consolidated Interest Expense for such period of four consecutive
fiscal quarters, to be less than the ratio set forth opposite such test
period below:
Test Period Ratio
----------- -----
Closing through 9/30/97 1.50x
10/1/97 through 3/31/98 1.75x
4/1/98 through 9/30/98 2.00x
10/1/98 through 9/30/99 2.25x
10/1/99 through 9/30/00 2.50x
Thereafter 3.00x
(b) MAINTENANCE OF CONSOLIDATED INDEBTEDNESS TO CONSOLIDATED EBITDA
RATIO. Permit the ratio of (i) Consolidated Indebtedness on any date
during any test period set forth below to (ii) Consolidated EBITDA for the
four fiscal quarters most recently ended prior to such date, to be greater
than the amount set forth opposite such test period below:
Test Period Ratio
----------- -----
Closing through 9/30/97 4.50x
10/1/97 through 3/31/98 4.25x
4/1/98 through 9/30/98 4.00x
10/1/98 through 9/30/99 3.50x
10/1/99 through 9/30/00 3.25x
Thereafter 3.00x
10.2 LIMITATION ON INDEBTEDNESS. Create, incur, assume or suffer to
exist any Indebtedness, except:
(a) Indebtedness of the Borrowers under this Agreement;
(b) Existing Subordinated Debt;
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(c) New Subordinated Debt;
(d) existing Indebtedness of the Company listed on Schedule 10.2;
(e) Indebtedness of the Company to any Domestic Subsidiary of the
Company and of any Subsidiary to the Company or to any other Domestic
Subsidiary of the Company;
(f) Indebtedness under sale and leaseback transactions permitted by
subsection 10.12;
(g) Indebtedness of the Company under Hedge Agreements entered into
solely to hedge interest rate exposure and not for speculative purposes;
(h) Indebtedness of the Company or any Subsidiary incurred to finance
the acquisition, construction or improvement of any fixed or capital
assets, including obligations under Financing Leases and any Indebtedness
assumed in connection with the acquisition of any such assets or secured by
a Lien on any such extensions, renewals and replacements of any such
Indebtedness that do not increase the outstanding principal amount thereof;
PROVIDED that (A) such Indebtedness is incurred prior to or within 90 days
after such acquisition or the completion of such construction or
improvement and (B) the aggregate principal amount of Indebtedness
permitted by this paragraph (h), together with the aggregate principal
amount of Indebtedness permitted under subsection 10.2(i) then outstanding
and the aggregate amount of sale-leaseback transactions permitted under
subsection 10.12 theretofore consummated, shall not exceed $10,000,000 at
any time outstanding;
(i) Indebtedness of any Person that becomes a Subsidiary after the
date hereof; PROVIDED that (A) such Indebtedness exists at the time such
Person becomes a Subsidiary and is not created in contemplation of or in
connection with such Person becoming a Subsidiary and (B) the aggregate
principal amount of Indebtedness permitted by this paragraph (i), together
with the aggregate principal amount of Indebtedness permitted under
subsection 10.2(h) then outstanding and the aggregate amount of
sale-leaseback transactions permitted under subsection 10.12 theretofore
consummated, shall not exceed $10,000,000 at any time outstanding;
(j) Indebtedness of the Company or any Subsidiary as an account party
in respect of trade letters of credit;
(k) Indebtedness of any Foreign Subsidiaries, in addition to
Indebtedness permitted by paragraph (l), in an aggregate amount not in
excess of $10,000,000 at any time outstanding;
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61
(l) Indebtedness of any Foreign Subsidiary to any other Foreign
Subsidiary; and
(m) additional unsecured Indebtedness of the Company not exceeding
$25,000,000 in aggregate principal amount at any one time outstanding under
terms acceptable to the Administrative Agent, the proceeds of which shall
be used for Acquisitions.
10.3 LIMITATION ON LIENS. Create, incur, assume or suffer to exist
any Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings, PROVIDED that adequate reserves with
respect thereto are maintained on the books of such Person in conformity
with GAAP (or, in the case of Foreign Subsidiaries, generally accepted
accounting principles in effect from time to time in their respective
jurisdictions of incorporation);
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business which are
not overdue for a period of more than 60 days or which are being contested
in good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation;
(d) deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in
the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of such
Person;
(f) Existing Liens listed on Schedule 10.3;
(g) Liens securing Indebtedness of the Borrower permitted by
subsection 10.2(h) incurred to finance the acquisition of fixed or capital
assets (whether pursuant to a loan, a Financing Lease or otherwise),
PROVIDED that (i) such Liens shall be created substantially simultaneously
with the acquisition of such fixed or capital assets, (ii) such Liens do
not at any time encumber any property other than the property financed by
such Indebtedness, (iii) the amount of Indebtedness secured thereby is not
increased
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and (iv) the principal amount of Indebtedness secured by any such Lien
shall at no time exceed 90% of the original purchase price of such property
at the time it was acquired;
(h) Liens on current assets of any Foreign Subsidiary securing
Indebtedness of such Foreign Subsidiary permitted under subsection 10.2(k);
(i) Liens (not otherwise permitted hereunder) which secure obligations
in aggregate amount at any time outstanding not exceeding (as to the
Borrower and all Subsidiaries), and on property with an aggregate value not
exceeding, $2,000,000; and
(j) Liens created pursuant to the Security Documents.
10.4 LIMITATION ON GUARANTEE OBLIGATIONS. Create, incur, assume or
suffer to exist any Guarantee Obligation except:
(a) Guarantee Obligations in existence on the date hereof and listed
on Schedule 10.4;
(b) Guarantee Obligations incurred after the date hereof in an
aggregate amount not to exceed $2,000,000 at any one time outstanding;
(c) guarantees made in the ordinary course of its business by the
Company of obligations (other than Indebtedness) of any of its Domestic
Subsidiaries, which obligations are otherwise permitted under this
Agreement;
(d) the guarantee of the Company under this Agreement and guarantee of
the Domestic Subsidiaries under the Guarantee and Collateral Agreement;
(e) guarantees of any Foreign Subsidiary of the obligations of any
other Foreign Subsidiary; and
(f) guarantees of the Company of obligations of Foreign Subsidiaries
in an aggregate amount not in excess of $10,000,000 at any one time
outstanding.
10.5 LIMITATION ON FUNDAMENTAL CHANGES. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets, or make any material change in its present method of conducting
business, except:
(a) any Subsidiary of the Company may be merged or consolidated with
or into the Company (PROVIDED that the Company shall be the continuing or
surviving corporation) or with or into any one or more wholly owned
Subsidiaries of the
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63
Company (PROVIDED that if a Domestic Subsidiary is a party to such
transaction, such Domestic Subsidiary shall be the continuing or surviving
corporation); and
(b) any wholly owned Subsidiary may sell, lease, transfer or otherwise
dispose of any or all of its assets (upon voluntary liquidation or
otherwise) to the Company or any other wholly owned Domestic Subsidiary of
the Company.
10.6 LIMITATION ON SALE OF ASSETS. Convey, sell, lease, assign,
transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, receivables and leasehold interests), whether
now owned or hereafter acquired, or, in the case of any Subsidiary, issue or
sell any shares of such Subsidiary's Capital Stock to any Person other than the
Company or any wholly owned Domestic Subsidiary, except:
(a) the sale or other disposition of obsolete or worn out property in
the ordinary course of business;
(b) the sale of inventory in the ordinary course of business;
(c) as permitted by subsection 10.5(b);
(d) the sale or other disposition of any other property for
consideration not in excess of $500,000 in the aggregate in any fiscal
year; and
(e) any other Asset Sale; PROVIDED that (i) any consideration received
therefor has been determined by the Company's Board of Directors to be at
fair market value,(ii) in the case of the sale of the Company's magnetics
business, 75% of such consideration is paid in cash, and in the case of any
other Asset Sale, at least 90% of such consideration is paid in cash and
(iii) the Net Proceeds of each such transaction are applied to the
prepayment of the Loans as provided in subsection 6.4(e).
10.7 LIMITATION ON DIVIDENDS. Declare or pay any dividend (other than
dividends payable solely in common stock of the Company) on, or make any payment
on account of, or set apart assets for a sinking or other analogous fund for,
the purchase, redemption, defeasance, retirement or other acquisition of, any
shares of any class of Capital Stock of the Company or any Subsidiary or any
warrants or options to purchase any such Capital Stock, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either directly
or indirectly, whether in cash or property or in obligations of the Company or
any Subsidiary thereof (such declarations, payments, setting apart, purchases,
redemptions, defeasances, retirements, acquisitions and distributions being
herein called "RESTRICTED PAYMENTS").
10.8 LIMITATION ON CAPITAL EXPENDITURES. Make any Capital Expenditure
except for Capital Expenditures by the Company and its Subsidiaries in the
ordinary course of business not exceeding, in the aggregate during any fiscal
year of the Borrower, $15,000,000;
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64
PROVIDED, that up to $5,000,000 of such permitted amount not expended in any
fiscal year may be carried over for expenditure in the subsequent fiscal year.
10.9 LIMITATION ON INVESTMENTS, LOANS AND ADVANCES. Make any advance,
loan, extension of credit or capital contribution to, or purchase any stock,
bonds, notes, debentures or other securities of or any assets constituting a
business unit of, or make any other investment in, any Person, except:
(a) extensions of trade credit in the ordinary course of business;
(b) investments in Cash Equivalents;
(c) loans and advances to employees of the Company or its Subsidiaries
for travel, entertainment and relocation expenses in the ordinary course of
business in an aggregate amount for the Company and its Subsidiaries not to
exceed $1,000,000 at any one time outstanding;
(d) investments by the Company or its Subsidiaries in any wholly-owned
Subsidiary of the Company which has complied with the conditions set forth
in subsection 9.9(a) or any wholly-owned Foreign Subsidiary which has
complied with the conditions set forth in subsection 9.9(b); PROVIDED that
the aggregate amount of all such advances, loans, investments, transfers or
guarantees outstanding at any time made to or on behalf of the Foreign
Subsidiaries shall not exceed $5,000,000;
(e) investments in the form of non-cash consideration received by the
Company or any of its Subsidiaries in connection with any Asset Sale
permitted by subsection 10.6(e);
(f) Acquisitions; PROVIDED, the aggregate amount of investments
permitted pursuant to this paragraph (f) shall not exceed, while this
Agreement is in effect, the sum of (i) $100,000,000 plus (ii) 50% of
Consolidated Excess Cash Flow from the Closing Date, LESS the amount of
such Consolidated Excess Cash Flow theretofore applied to repay Existing
Subordinating Debt or New Subordinated Debt MINUS (iii) the amount of
investments made pursuant to subsection 10.9(g); and
(g) additional investments not to exceed $10,000,000 in the aggregate
while this Agreement is outstanding.
10.10 LIMITATION ON OPTIONAL PAYMENTS AND MODIFICATIONS OF DEBT
INSTRUMENTS. (a) Make any optional payment or prepayment on or redemption or
purchase of any Indebtedness (other than the Loans), (b) amend, modify or
change, or consent or agree to any amendment, modification or change to any of
the terms of any Indebtedness (excluding the Loans) (other than any such
amendment, modification or change which would extend the maturity or reduce the
amount of any payment of principal thereof or which would reduce the
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65
rate or extend the date for payment of interest thereon), or (c) amend, modify
or change the subordination provisions of any Subordinated Debt; PROVIDED that
(i) the Existing Subordinated Debt may be repaid with the proceeds of the New
Subordinated Debt and (ii) Subordinated Debt may be repaid with up to (A) 25% of
Consolidated Excess Cash Flow for the fiscal year ending September 30, 1997, (B)
50% of Consolidated Excess Cash Flow for each subsequent fiscal year and (C)
100% of the net proceeds of any sale of Capital Stock or other equity investment
in the Company to the extent applied to the prepayment of Subordinated Debt
within 90 days of the Company's receipt thereof; and PROVIDED, FURTHER, that in
addition to the repayments permitted in the immediately preceding proviso, up to
$15,000,000 of the Subordinated Debt may be repaid.
10.11 LIMITATION ON TRANSACTIONS WITH AFFILIATES. Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transaction is (a) otherwise permitted under this Agreement, (b) in the
ordinary course of the Company's or such Subsidiary's business and (c) upon fair
and reasonable terms no less favorable to the Company or such Subsidiary, as the
case may be, than it would obtain in a comparable arm's length transaction with
a Person which is not an Affiliate.
10.12 LIMITATION ON SALES AND LEASEBACKS. Enter into any arrangement
with any Person providing for the leasing by the Company or any Subsidiary of
real or personal property which has been or is to be sold or transferred by the
Company or such Subsidiary to such Person or to any other Person to whom funds
have been or are to be advanced by such Person on the security of such property
or rental obligations of the Company or such Subsidiary; provided, that such
sale leaseback transactions in an amount of, together with the aggregate
principal amount of Indebtedness permitted under subsection 10.2(h) and (i)
then outstanding, up to $10,000,000 in the aggregate while this Agreement is in
effect may be consummated by the Company.
10.13 LIMITATION ON CHANGES IN FISCAL YEAR. Permit the fiscal year of
the Borrower to end on a day other than September 30.
10.14 LIMITATION ON NEGATIVE PLEDGE CLAUSES. Enter into with any
Person any agreement, other than (a) this Agreement and (b) any industrial
revenue bonds, purchase money mortgages or Financing Leases permitted by this
Agreement (in which cases, any prohibition or limitation shall only be effective
against the assets financed thereby), which prohibits or limits the ability of
the Company or any of its Subsidiaries to create, incur, assume or suffer to
exist any Lien upon any of its property, assets or revenues, whether now owned
or hereafter acquired.
10.15 LIMITATION ON LINES OF BUSINESS. Enter into any business,
either directly or through any Subsidiary, except for the information and data
processing, management and storage businesses.
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10.16 LIMITATION ON MODIFICATION OF SKC ARRANGEMENT. Amend, modify or
change, or consent or agree to any amendment, modification or change to, any of
the terms of the SKC Arrangement if such amendment, modification or change could
be adverse to the interests of the Lenders.
SECTION 11. GUARANTEE
11.1 GUARANTEE. (a) The Company hereby unconditionally and
irrevocably guarantees to the Administrative Agent, for the ratable benefit of
the Lenders and their respective successors, indorsees, transferees and assigns,
the prompt and complete payment and performance by the Foreign Subsidiary
Borrowers when due (whether at the stated maturity, by acceleration or
otherwise) of the Obligations.
(b) The Company further agrees to pay any and all expenses (including,
without limitation, all reasonable fees and disbursements of counsel, which may
be paid or incurred by the Administrative Agent or any Lender in enforcing, or
obtaining advice of counsel in respect of, any rights with respect to, or
collecting, any or all of the Obligations and/or enforcing any rights with
respect to, or collecting against, the Company under this Section. This Section
shall remain in full force and effect until the Obligations are paid in full and
the Commitments are terminated, notwithstanding that from time to time prior
thereto the Borrowers may be free from any Obligations.
(c) No payment or payments made by any Borrower or any other Person or
received or collected by the Administrative Agent or any Lender from any
Borrower or any other Person by virtue of any action or proceeding or any
set-off or appropriation or application, at any time or from time to time, in
reduction of or in payment of the Obligations shall be deemed to modify, reduce,
release or otherwise affect the liability of the Company hereunder which shall,
notwithstanding any such payment or payments, remain liable hereunder for the
Obligations until the Obligations are paid in full and the Commitments are
terminated.
(d) The Company agrees that whenever, at any time, or from time to
time, it shall make any payment to the Administrative Agent or any Lender on
account of its liability hereunder, it will notify the Administrative Agent and
such Lender in writing that such payment is made under this Section for such
purpose.
11.2 NO SUBROGATION. Notwithstanding any payment or payments made by
the Company hereunder, or any set-off or application of funds of the Company by
the Administrative Agent or any Lender, the Company shall not be entitled to be
subrogated to any of the rights of the Administrative Agent or any Lender
against the Borrowers or against any collateral security or guarantee or right
of offset held by the Administrative Agent or any Lender for the payment of the
Obligations, nor shall the Company seek or be entitled to seek any contribution
or reimbursement from the Borrowers in respect of payments made by the
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Company hereunder, until all amounts owing to the Administrative Agent and the
Lenders by the Borrowers on account of the Obligations are paid in full and the
Commitments are terminated. If any amount shall be paid to the Company on
account of such subrogation rights at any time when all of the Obligations shall
not have been paid in full, such amount shall be held by the Company in trust
for the Administrative Agent and the Lenders, segregated from other funds of the
Company, and shall, forthwith upon receipt by the Company, be turned over to the
Administrative Agent in the exact form received by the Company (duly indorsed by
the Company to the Administrative Agent, if required), to be applied against the
Obligations, whether matured or unmatured, in such order as Administrative Agent
may determine. The provisions of this paragraph shall be effective
notwithstanding the termination of this Agreement and the payment in full of the
Obligations and the termination of the Commitments.
11.3 AMENDMENTS, ETC. WITH RESPECT TO THE OBLIGATIONS; WAIVER OF
RIGHTS. The Company shall remain obligated hereunder notwithstanding that,
without any reservation of rights against the Company, and without notice to or
further assent by the Company, any demand for payment of any of the Obligations
made by the Administrative Agent or any Lender may be rescinded by the
Administrative Agent or such Lender, and any of the Obligations continued, and
the Obligations, or the liability of any other party upon or for any part
thereof, or any collateral security or guarantee therefor or right of offset
with respect thereto, may, from time to time, in whole or in part, be renewed,
extended, amended, modified, accelerated, compromised, waived, surrendered or
released by the Administrative Agent or any Lender, and any Loan Documents and
any other documents executed and delivered in connection therewith may be
amended, modified, supplemented or terminated, in whole or in part, in
accordance with the provisions thereof as the Administrative Agent (or the
requisite Lenders, as the case may be) may deem advisable from time to time, and
any collateral security, guarantee or right of offset at any time held by the
Administrative Agent or any Lender for the payment of the Obligations may be
sold, exchanged, waived, surrendered or released. None of the Administrative
Agent or any Lender shall have any obligation to protect, secure, perfect or
insure any Lien at any time held by it as security for the Obligations or for
this Agreement or any property subject thereto. When making any demand
hereunder against the Company, the Administrative Agent or any Lender may, but
shall be under no obligation to, make a similar demand on the Borrowers or any
other guarantor, and any failure by the Administrative Agent or any Lender to
make any such demand or to collect any payments from the Borrower or any such
other guarantor or any release of the Borrowers or such other guarantor shall
not relieve the Company of its obligations or liabilities hereunder, and shall
not impair or affect the rights and remedies, express or implied, or as a matter
of law, of the Administrative Agent or any Lender against the Company. For the
purposes hereof "demand" shall include the commencement and continuance of any
legal proceedings.
11.4 GUARANTEE ABSOLUTE AND UNCONDITIONAL. The Company waives any and
all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by the Administrative Agent or
any Lender upon this Agreement or acceptance of this Agreement; the Obligations,
and any of them, shall conclusively be deemed to have been created, contracted
or incurred, or renewed, extended, amended or waived, in
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reliance upon this Agreement; and all dealings between the Borrowers and the
Company, on the one hand, and the Administrative Agent and the Lenders, on the
other, shall likewise be conclusively presumed to have been had or consummated
in reliance upon this Agreement. The Borrower waives diligence, presentment,
protest, demand for payment and notice of default or nonpayment to or upon the
Borrowers and the Company with respect to the Obligations. This Section 11
shall be construed as a continuing, absolute and unconditional guarantee of
payment without regard to (a) the validity, regularity or enforceability of this
Agreement, any other Loan Document, any of the Obligations or any other
collateral security therefor or guarantee or right of offset with respect
thereto at any time or from time to time held by the Administrative Agent or any
Lender, (b) any defense, set-off or counterclaim (other than a defense of
payment or performance) which may at any time be available to or be asserted by
the Company against the Administrative Agent or any Lender, or (c) any other
circumstance whatsoever (with or without notice to or knowledge of the Borrowers
or the Company) which constitutes, or might be construed to constitute, an
equitable or legal discharge of the Borrowers for the Obligations, or of the
Company under this Section 11, in bankruptcy or in any other instance. When
pursuing its rights and remedies hereunder against the Borrower, the
Administrative Agent and any Lender may, but shall be under no obligation to,
pursue such rights and remedies as it may have against the Borrowers or any
other Person or against any collateral security or guarantee for the Obligations
or any right of offset with respect thereto, and any failure by the
Administrative Agent or any Lender to pursue such other rights or remedies or to
collect any payments from the Borrowers or any such other Person or to realize
upon any such collateral security or guarantee or to exercise any such right of
offset, or any release of the Borrowers or any such other Person or of any such
collateral security, guarantee or right of offset, shall not relieve the Company
of any liability hereunder, and shall not impair or affect the rights and
remedies, whether express, implied or available as a matter of law, of the
Administrative Agent or any Lender against the Company. This Section 11 shall
remain in full force and effect and be binding in accordance with and to the
extent of its terms upon the Company and its successors and assigns, and shall
inure to the benefit of the Administrative Agent and the Lenders, and their
respective successors, indorsees, transferees and assigns, until all the
Obligations and the obligations of the Company under this Agreement shall have
been satisfied by payment in full and the Commitments shall be terminated,
notwithstanding that from time to time during the term of this Agreement the
Borrowers may be free from any Obligations.
11.5 REINSTATEMENT. This Section 11 shall continue to be effective,
or be reinstated, as the case may be, if at any time payment, or any part
thereof, of any of the Obligations is rescinded or must otherwise be restored or
returned by the Administrative Agent or any Lender upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of any Borrower or upon
or as a result of the appointment of a receiver, intervenor or conservator of,
or trustee or similar officer for, any Borrower or any substantial part of its
property, or otherwise, all as though such payments had not been made.
11.6 PAYMENTS. The Company hereby agrees that all payments required
to be made by it hereunder will be made to the Administrative Agent without
set-off or counterclaim
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in accordance with the terms of the Obligations, including, without limitation,
in the currency in which payment is due.
SECTION 12. EVENTS OF DEFAULT
Upon the occurrence of any of the following events:
(a) Any Borrower shall fail to pay (i) any principal of any Loans or
any Reimbursement Obligations when due (whether at the stated maturity, by
acceleration or otherwise) in accordance with the terms thereof or hereof
or (ii) any interest on any Loans, or any fee or other amount payable
hereunder, within five days after any such interest, fee or other amount
becomes due in accordance with the terms hereof; or
(b) Any representation or warranty made or deemed made by the Company
or any other Loan Party herein or in any other Loan Document or which is
contained in any certificate, document or financial or other statement
furnished at any time under or in connection with this Agreement or any
other Loan Document shall prove to have been incorrect in any material
respect on or as of the date made or deemed made; or
(c) The Company or any other Loan Party shall default in the
observance or performance of any negative covenant contained in Section 10
or in any Security Document to which it is a party; or
(d) The Company or any other Loan Party shall default in the
observance or performance of any other agreement contained in this
Agreement or any other Loan Document other than as provided in (a) through
(c) above, and such default shall continue unremedied for a period of 30
days; or
(e) Any Loan Document shall cease, for any reason, to be in full force
and effect, or the Company or any other Loan Party shall so assert; or any
security interest created by any of the Security Documents shall cease to
be enforceable and of the same effect and priority purported to be created
thereby; or
(f) The Guarantee and Collateral Agreement shall cease, for any
reason, to be in full force and effect, or any guarantor thereunder shall
so assert; or
(g) The subordination provisions contained in any instrument pursuant
to which the Subordinated Debt was created or in any instrument evidencing
such Subordinated Debt shall cease, for any reason, to be in full force and
effect or enforceable in accordance with their terms; or
(h) The Company or any of its Subsidiaries shall (i) default in any
payment of principal of or interest on any Indebtedness (other than
Indebtedness under this
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Agreement), in the payment of any Guarantee Obligation or in the payment of
any SKC Arrangement Obligation or Hedge Agreement Obligation, in any case
where the principal amount thereof then outstanding exceeds $5,000,000,
beyond the period of grace (not to exceed 30 days), if any, provided in the
instrument or agreement under which such Indebtedness, Guarantee
Obligation, SKC Arrangement Obligation or Hedge Agreement Obligation was
created; or (ii) default in the observance or performance of any other
agreement or condition relating to any such Indebtedness, Guarantee
Obligation, SKC Arrangement Obligation or Hedge Agreement Obligation or
contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event shall occur or condition exist, the effect of
which default or other event or condition is to cause, or to permit the
holder or holders of such Indebtedness, SKC Arrangement Obligation or Hedge
Agreement Obligation or, beneficiary or beneficiaries of such Guarantee
Obligation (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause, with the giving of notice if
required, such Indebtedness to become due prior to its stated maturity or
such Guarantee Obligation to become payable; or
(i)(i) The Company, any Domestic Subsidiary or any Material Foreign
Subsidiary shall commence any case, proceeding or other action (A) under
any existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization or relief of debtors,
seeking to have an order for relief entered with respect to it, or seeking
to adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition
or other relief with respect to it or its debts, or (B) seeking appointment
of a receiver, trustee, custodian or other similar official for it or for
all or any substantial part of its assets, or the Company, any Domestic
Subsidiary or any Material Foreign Subsidiary shall make a general
assignment for the benefit of its creditors; or (ii) there shall be
commenced against the Company, any Domestic Subsidiary or any Material
Foreign Subsidiary any case, proceeding or other action of a nature
referred to in clause (i) above which (A) results in the entry of an order
for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of 60 days; or (iii)
there shall be commenced against the Company, any Domestic Subsidiary or
any Material Foreign Subsidiary any case, proceeding or other action
seeking issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets which
results in the entry of an order for any such relief which shall not have
been vacated, discharged, or stayed or bonded pending appeal within 60 days
from the entry thereof; or (iv) the Company, any Domestic Subsidiary or any
Material Foreign Subsidiary shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts
set forth in clause (i), (ii), or (iii) above; or (v) the Company, any
Domestic Subsidiary or any Material Foreign Subsidiary shall generally not,
or shall be unable to, or shall admit in writing its inability to, pay its
debts as they become due; or
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(j)(i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Single
Employer Plan, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee shall
be appointed, to administer or to terminate, any Single Employer Plan,
which Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Majority Lenders, likely to
result in the termination of such Plan for purposes of Title IV of ERISA,
(iv) any Single Employer Plan shall terminate for purposes of Title IV of
ERISA, (v) the Company or any Commonly Controlled Entity shall, or in the
reasonable opinion of the Majority Lenders is likely to, incur any
liability in connection with a withdrawal from, or the Insolvency or
Reorganization of, a Multiemployer Plan or (vi) any other event or
condition shall occur or exist, with respect to a Plan; and in each case in
clauses (i) through (vi) above, such event or condition, together with all
other such events or conditions, if any, could subject the Company or any
of its Subsidiaries to any tax, penalty or other liabilities in the
aggregate material in relation to the business, operations, property or
financial or other condition of the Company and its Subsidiaries taken as a
whole; or
(k) One or more judgments or decrees shall be entered against the
Company or any of its Subsidiaries involving in the aggregate a liability
(not paid or fully covered by insurance) of $2,500,000 or more and all such
judgments or decrees shall not have been vacated, discharged, stayed or
bonded pending appeal within 30 days from the entry thereof; or
(l)(i) Any Person or "group" (within the meaning of Section 13(d) or
15(d) of the Exchange Act), other than any Person or group owning 20% or
more of the Capital Stock of the Company on the date hereof (A) shall have
acquired, combined with previous holdings, beneficial ownership of 25% or
more of any outstanding class of capital stock of the Company having
ordinary voting power in the election of directors or (B) shall obtain the
power (whether or not exercised) to elect a majority of the Company's
directors or (ii) the Board of Directors of the Company shall not consist
of a majority of Continuing Directors;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (i) above with respect of the Company
automatically the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement (including, without limitation, all Reimbursement Obligations,
regardless of whether or not such Reimbursement Obligations are then due and
payable) shall immediately become due and payable, and (B) if such event is any
other Event of Default, any of the following actions may be taken: (i) with the
consent of the Majority Lenders, the Administrative Agent may, or upon the
request of the Majority Lenders, the Administrative Agent shall, by notice to
the Company declare the Commitments to be
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terminated forthwith, whereupon the Commitments shall immediately terminate;
(ii) with the consent of the Majority Lenders, the Administrative Agent may, or
upon the direction of the Majority Lenders, the Administrative Agent shall, by
notice of default to the Company, declare the Loans hereunder (with accrued
interest thereon) and all other amounts owing under this Agreement (including
all amounts payable in respect of Letters of Credit whether or not the
beneficiaries thereof shall have presented the drafts and other documents
required thereunder) and the Notes to be due and payable forthwith, whereupon
the same shall immediately become due and payable and (iii) the Administrative
Agent may, and upon the direction of the Majority Lenders shall, exercise any
and all remedies and other rights provided pursuant to this Agreement and/or the
other Loan Documents.
With respect to all Letters of Credit with respect to which
presentment for honor shall not have occurred at the time of an acceleration
pursuant to the preceding paragraph, the Company shall at such time deposit in a
cash collateral account opened by the Administrative Agent an amount equal to
the aggregate then undrawn and unexpired amount of such Letters of Credit. The
Company hereby grants to the Administrative Agent, for the benefit of the
Issuing Lender and the Participating Lenders, a security interest in such cash
collateral to secure all obligations of the Company under this Agreement and the
other Loan Documents. Amounts held in such cash collateral account shall be
applied by the Administrative Agent to the payment of drafts drawn under such
Letters of Credit, and the unused portion thereof after all such Letters of
Credit shall have expired or been fully drawn upon, if any, shall be applied to
repay other obligations of the Company hereunder and under the Notes. After all
such Letters of Credit shall have expired or been fully drawn upon, all
Reimbursement Obligations shall have been satisfied and all other obligations of
the Company hereunder and under the Notes shall have been paid in full, the
balance, if any, in such cash collateral account shall be returned to the
Company. The Company shall execute and deliver to the Administrative Agent, for
the account of the Issuing Lender and the Participating Lenders, such further
documents and instruments as the Administrative Agent may request to evidence
the creation and perfection of the within security interest in such cash
collateral account.
Except as expressly provided above in this Section, presentment,
demand, protest and all other notices of any kind are hereby expressly waived.
SECTION 13. THE ADMINISTRATIVE AGENT AND THE ARRANGER
13.1 APPOINTMENT. Each Lender hereby irrevocably designates and
appoints the Administrative Agent as the agent of such Lender under this
Agreement and the other Loan Documents, and each such Lender irrevocably
authorizes the Administrative Agent, in such capacity, to take such action on
its behalf under the provisions of this Agreement and the other Loan Documents
and to exercise such powers and perform such duties as are expressly delegated
to the Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Administrative
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Agent shall not have any duties or responsibilities, except those expressly set
forth herein, or any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or any other Loan Document or otherwise exist
against the Administrative Agent.
13.2 DELEGATION OF DUTIES. The Administrative Agent may execute any
of its duties under this Agreement and the other Loan Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent
shall not be responsible for the negligence or misconduct of any agents or
attorneys in-fact selected by it with reasonable care.
13.3 EXCULPATORY PROVISIONS. Neither the Administrative Agent nor any
of its officers, directors, employees, agents, attorneys-in-fact or Affiliates
shall be (i) liable for any action lawfully taken or omitted to be taken by it
or such Person under or in connection with this Agreement or any other Loan
Document (except for its or such Person's own gross negligence or willful
misconduct) or (ii) responsible in any manner to any of the Lenders for any
recitals, statements, representations or warranties made by the Borrower or any
officer thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Administrative Agent under or in connection with, this
Agreement or any other Loan Document or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document or for any failure of the Borrower to perform its obligations hereunder
or thereunder. The Administrative Agent shall not be under any obligation to
any Lender to ascertain or to inquire as to the observance or performance of any
of the agreements contained in, or conditions of, this Agreement or any other
Loan Document, or to inspect the properties, books or records of the Borrower.
13.4 RELIANCE BY ADMINISTRATIVE AGENT. The Administrative Agent shall
be entitled to rely, and shall be fully protected in relying, upon any Note,
writing, resolution, notice, consent, certificate, affidavit, letter, telecopy,
telex or teletype message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Borrower), independent
accountants and other experts selected by the Administrative Agent. The
Administrative Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless a written notice of assignment, negotiation or
transfer thereof shall have been filed with the Administrative Agent. The
Administrative Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Majority Lenders as it deems
appropriate or it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Administrative Agent shall
in all cases be fully protected in acting, or in refraining from acting, under
this Agreement and the other Loan Documents in accordance with a request of
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the Majority Lenders, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders and all future holders of
the Loans.
13.5 NOTICE OF DEFAULT. The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent has received notice from a Lender or
the Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event
that the Administrative Agent receives such a notice, the Administrative Agent
shall give notice thereof to the Lenders. The Administrative Agent shall take
such action with respect to such Default or Event of Default as shall be
reasonably directed by the Majority Lenders; PROVIDED that unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Lenders.
13.6 NON-RELIANCE ON ADMINISTRATIVE AGENT, ARRANGER AND OTHER LENDERS.
Each Lender expressly acknowledges that none of the Administrative Agent, the
Arranger or any of their respective officers, directors, employees, agents,
attorneys-in-fact or Affiliates has made any representations or warranties to it
and that no act by the Administrative Agent or the Arranger hereinafter taken,
including any review of the affairs of the Borrower, shall be deemed to
constitute any representation or warranty by the Administrative Agent or the
Arranger to any Lender. Each Lender represents to the Administrative Agent and
the Arranger that it has, independently and without reliance upon the
Administrative Agent, the Arranger or any other Lender, and based on such
documents and information as it has deemed appropriate, made its own appraisal
of and investigation into the business, operations, property, financial and
other condition and creditworthiness of the Borrower and made its own decision
to make its Loans hereunder and enter into this Agreement. Each Lender also
represents that it will, independently and without reliance upon the
Administrative Agent, the Arranger or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit analysis, appraisals and decisions in taking or not taking
action under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Borrower. Except for notices, reports and other documents expressly required to
be furnished to the Lenders by the Administrative Agent hereunder, the
Administrative Agent and the Arranger shall not have any duty or responsibility
to provide any Lender with any credit or other information concerning the
business, operations, property, condition (financial or otherwise), prospects or
creditworthiness of the Borrower which may come into the possession of the
Administrative Agent or the Arranger or any of their respective officers,
directors, employees, agents, attorneys-in-fact or Affiliates.
13.7 INDEMNIFICATION. The Lenders agree to indemnify the
Administrative Agent and the Arranger in their capacities as such (to the extent
not reimbursed by the Borrower and without limiting the obligation of the
Borrower to do so), ratably according to
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their respective Aggregate Total Outstandings in effect on the date on which
indemnification is sought (or, if indemnification is sought after the date upon
which the Commitments shall have terminated and the Loans shall have been paid
in full, ratably in accordance with their Aggregate Total Outstandings
immediately prior to such date), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Loans)
be imposed on, incurred by or asserted against the Administrative Agent or the
Arranger in any way relating to or arising out of, the Commitments, this
Agreement, any of the other Loan Documents or any documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or thereby
or any action taken or omitted by the Administrative Agent or the Arranger under
or in connection with any of the foregoing; PROVIDED that no Lender shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from the Administrative Agent's or the Arranger's gross
negligence or willful misconduct. The agreements in this subsection shall
survive the payment of the Loans and all other amounts payable hereunder.
13.8 ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY. The
Administrative Agent and its Affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Borrower as though the
Administrative Agent were not the Administrative Agent hereunder and under the
other Loan Documents. With respect to the Loans made by it, the Administrative
Agent shall have the same rights and powers under this Agreement and the other
Loan Documents as any Lender and may exercise the same as though it were not the
Administrative Agent, and the terms "Lender" and "Lenders" shall include the
Administrative Agent in its individual capacity.
13.9 SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may
resign as Administrative Agent upon 10 days' notice to the Lenders. If the
Administrative Agent shall resign as Administrative Agent under this Agreement
and the other Loan Documents, then the Majority Lenders shall appoint from among
the Lenders a successor agent for the Lenders, which successor agent shall be
approved by the Borrower, whereupon such successor agent shall succeed to the
rights, powers and duties of the Administrative Agent, and the term
"Administrative Agent" shall mean such successor agent effective upon such
appointment and approval, and the former Administrative Agent's rights, powers
and duties as Administrative Agent shall be terminated, without any other or
further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement or any holders of the Loans. After any retiring
Administrative Agent's resignation as Administrative Agent, the provisions of
this Section 13 shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Administrative Agent under this Agreement and the
other Loan Documents.
13.10 THE ARRANGER. The Arranger, in its capacity as such, shall not
have any duties or responsibilities hereunder or under any Loan Document nor any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties,
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obligations or liabilities shall be read into this Agreement or otherwise exist
against the Arranger in its capacity as such.
SECTION 14. MISCELLANEOUS
14.1 AMENDMENTS AND WAIVERS. (a) Neither this Agreement or any other
Loan Document, nor any terms hereof or thereof may be amended, supplemented,
waived or modified except in accordance with the provisions of this subsection
14.1. The Majority Lenders may, or, with the written consent of the Majority
Lenders, the Administrative Agent may, from time to time, (i) enter into with
the Company written amendments, supplements or modifications hereto and to the
other Loan Documents for the purpose of adding any provisions to this Agreement
or the other Loan Documents or changing in any manner the rights or obligations
of the Lenders or of the Borrowers hereunder or thereunder or (ii) waive at the
Company's request, on such terms and conditions as the Majority Lenders or the
Administrative Agent, as the case may be, may specify in such instrument, any of
the requirements of this Agreement or the other Loan Documents or any Default or
Event of Default and its consequences; PROVIDED, HOWEVER, that no such waiver
and no such amendment, supplement or modification shall:
(A) reduce the amount or extend the scheduled date of maturity of any
Loan or of any scheduled installment thereof, or reduce the stated rate of
any interest or fee payable hereunder or extend the scheduled date of any
payment thereof or increase the amount or extend the expiration date of any
Lender's Commitments, in each case without the consent of each Lender
affected thereby;
(B) amend, supplement, modify or waive any provision of this
subsection 14.1 or reduce the percentages specified in the definition of
"Majority Lenders" or consent to the assignment or transfer by the Company
of any of its rights and obligations under this Agreement and the other
Loan Documents, in each case without the consent of all the Lenders, or
reduce the percentages specified in the definition of "Majority Revolving
Credit Lenders" without the consent of all of the Revolving Credit Lenders;
(C) amend, supplement, modify or waive any provision of Section 13 or
any other provision of this Agreement governing the rights or obligations
of the Administrative Agent without the consent of the then Administrative
Agent;
(D) extend the expiring date on any Letter of Credit beyond the
Revolving Credit Termination Date without the consent of each Revolving
Credit Lender;
(E) release the guarantee contained in Section 11 or the Guarantee
and Collateral Agreement or all or a substantial portion of the Collateral
under, and as defined in, the Security Documents without the consent of
each Lender; or
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(F) amend, supplement, modify or waive any provision of subsection
6.4(d), (e), (f) or (h) without the consent of (x) at any time prior to the
termination of the Commitments, Lenders having Available Revolving Credit
Commitments, undrawn Term Loan Commitments and Aggregate Total Outstandings
aggregating more than 60% of the sum of the Available Revolving Credit
Commitments, undrawn Term Loan Commitments and Aggregate Total Outstandings
of all Lenders, and (y) at any time after the termination of the
Commitments, Lenders having Aggregate Total Outstandings aggregating more
than 60% of the Aggregate Total Outstandings of all Lenders.
Any waiver and any amendment, supplement or modification pursuant to this
subsection 14.1 shall apply to each of the Lenders and shall be binding upon the
Borrowers, the Lenders, the Administrative Agent and all future holders of the
Loans and the Reimbursement Obligations. In the case of any waiver, the
Borrowers, the Lenders and the Administrative Agent shall be restored to their
former positions and rights hereunder and under the other Loan Documents, and
any Default or Event of Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or other Default
or Event of Default, or impair any right consequent thereon.
(b) In addition to amendments effected pursuant to the foregoing
paragraph (a), Schedule II may be amended as follows:
(i) Schedule II will be amended to add Subsidiaries of the Company as
Foreign Subsidiary Borrowers upon (A) execution and delivery by the
Company, any such Foreign Subsidiary Borrower, all the Revolving Credit
Lenders and the Administrative Agent, of a Joinder Agreement providing for
any such Subsidiary to become a Foreign Subsidiary Borrower, and (B)
delivery to the Administrative Agent of (I) a Foreign Subsidiary Opinion in
respect of such additional Foreign Subsidiary Borrower and (II) such other
documents with respect thereto as the Administrative Agent shall reasonably
request.
(ii) Schedule II will be amended to remove any Subsidiary as a Foreign
Subsidiary Borrower upon (A) execution and delivery by the Company of a
written amendment providing for such amendment and (B) repayment in full of
all outstanding Loans of such Foreign Subsidiary Borrower.
(c) The Administrative Agent shall give prompt notice to each
Revolving Credit Lender of any amendment effected pursuant to subsection
14.1(b).
14.2 NOTICES. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
facsimile transmission) and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made (a) in the case of delivery by hand,
when delivered, (b) in the case of delivery by mail, three days after being
deposited in the mails, postage prepaid, or (c) in the case of delivery by
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facsimile transmission, when sent and receipt has been confirmed, addressed as
follows in the case of the Borrowers, the Issuing Lender, the Arranger and the
Administrative Agent, and as set forth in Schedule I in the case of the other
parties hereto, or to such other address as may be hereafter notified by the
respective parties hereto:
The Borrowers: c/o Anacomp, Inc.
11550 North Meridian Street
Suite 600
Carmel, Indiana 46032
Attention: Gary Bilsland
Fax: (317) 818-3291
The Administrative
Agent: The First National Bank of Chicago
1 First National Plaza
Chicago, Illinois 60670
Attention: Courtenay Wood
Fax: (312) 732-1563
The Arranger: Lehman Commercial Paper Inc.
3 World Financial Center
New York, New York 10285
Attention: Michelle Swanson
Fax: (212) 528-0819
The Issuing Lender: The First National Bank of Chicago
1 First National Plaza
Chicago, Illinois 60670
Attention: Courtenay Wood
Fax: (312) 732-1563
PROVIDED that any notice, request or demand to or upon the Administrative Agent,
the Issuing Lender or the Lenders pursuant to subsection 2.2, 2.3, 3.2, 4.3, 5.2
or 6.2 shall not be effective until received.
14.3 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no
delay in exercising, on the part of the Administrative Agent or any Lender, any
right, remedy, power or privilege hereunder or under the other Loan Documents
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.
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79
14.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans hereunder until all obligations hereunder and under the other Loan
Documents have been paid in full and the Commitments hereunder have been
terminated.
14.5 PAYMENT OF EXPENSES AND TAXES. The Borrower agrees (a) to pay or
reimburse each of the Administrative Agent and the Arranger for all its
reasonable out-of-pocket costs and expenses incurred in connection with the
development, preparation, syndication and execution of, and any amendment,
supplement or modification to, this Agreement and the other Loan Documents and
any other documents prepared in connection herewith or therewith, and the
consummation and administration of the transactions contemplated hereby and
thereby, including, without limitation, the reasonable fees and disbursements of
counsel to the Administrative Agent and the Arranger, (b) to pay or reimburse
each Lender and the Administrative Agent for all its costs and expenses incurred
during the continuance of any Default or Event of Default in connection with the
enforcement or preservation of any rights under this Agreement, the other Loan
Documents and any such other documents, including, without limitation, the fees
and disbursements of counsel to each Lender and of counsel to the Administrative
Agent, (c) to pay, indemnify, and hold each Lender and the Administrative Agent
harmless from, any and all recording and filing fees and any and all liabilities
with respect to, or resulting from any delay in paying, stamp, excise and other
taxes, if any, which may be payable or determined to be payable in connection
with the execution and delivery of, or consummation or administration of any of
the transactions contemplated by, or any amendment, supplement or modification
of, or any waiver or consent under or in respect of, this Agreement, the other
Loan Documents and any such other documents, and (d) to pay, indemnify, and hold
each Lender, the Arranger and the Administrative Agent harmless from and against
any and all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever with respect to the execution, delivery, enforcement, performance and
administration of this Agreement, the other Loan Documents and related documents
or the use of the proceeds of the Loans, including, without limitation, any of
the foregoing relating to the violation of, noncompliance with or liability
under, any Environmental Law applicable to the operations of the Company, any of
its Subsidiaries or any of the Properties (all the foregoing in this clause (d),
collectively, the "indemnified liabilities"), PROVIDED, that the Company shall
have no obligation hereunder to the Administrative Agent, the Arranger or any
Lender with respect to indemnified liabilities arising from the gross negligence
or willful misconduct of the Administrative Agent, the Arranger or any such
Lender. The agreements in this subsection shall survive repayment of the Loans
and all other amounts payable hereunder for a period of one year.
14.6 SUCCESSORS AND ASSIGNS; PARTICIPATION AND ASSIGNMENTS. (a) This
Agreement shall be binding upon and inure to the benefit of the Borrowers, the
Lenders, the Administrative Agent and their respective successors and assigns,
except that the Borrowers
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may not assign or transfer any of their rights or obligations under this
Agreement without the prior written consent of each Lender.
(b) Any Lender may, in the ordinary course of its commercial banking
or lending business and in accordance with applicable law, at any time sell to
one or more banks or other entities ("PARTICIPANTS") participating interests in
any Loan owing to such Lender, any Commitment of such Lender or any other
interest of such Lender hereunder and under the other Loan Documents. In the
event of any such sale by a Lender of a participating interest to a Participant,
such Lender's obligations under this Agreement to the other parties to this
Agreement shall remain unchanged, such Lender shall remain solely responsible
for the performance thereof, such Lender shall remain the holder of any such
Loan for all purposes under this Agreement and the other Loan Documents, and the
Borrowers and the Administrative Agent shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Loan Documents. The Company
agrees that if amounts outstanding under this Agreement are due or unpaid, or
shall have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall, to the maximum extent
permitted by applicable law, be deemed to have the right of setoff in respect of
its participating interest in amounts owing under this Agreement to the same
extent as if the amount of its participating interest were owing directly to it
as a Lender under this Agreement, PROVIDED that, in purchasing such
participating interest, such Participant shall be deemed to have agreed to share
with the Lenders the proceeds thereof as provided in subsection 14.7(a) as fully
as if it were a Lender hereunder. The Company also agrees that each Participant
shall be entitled to the benefits of subsections 6.9, 6.10, 6.11 and 6.12 with
respect to its participation in the Commitments and the Loans outstanding from
time to time as if it was a Lender; PROVIDED that, in the case of subsection
6.12, such Participant shall have complied with the requirements of said
subsection and PROVIDED, FURTHER, that no Participant shall be entitled to
receive any greater amount pursuant to any such subsection than the transferor
Lender would have been entitled to receive in respect of the amount of the
participation transferred by such transferor Lender to such Participant had no
such transfer occurred.
(c) Any Lender may, in the ordinary course of its commercial banking
or lending business and in accordance with applicable law, at any time and from
time to time assign to any Lender or any affiliate thereof or to an additional
bank or financial institution (an "ASSIGNEE"), in the case of any assignment
relating to Loans to such an additional bank or financial institution (other
than by Lehman Commercial Paper Inc. in connection with its syndication of the
Commitments and the Loans) with the consent of the Company, the Administrative
Agent and the Arranger (which consents in each case shall not be unreasonably
withheld), all or any part of its rights and obligations under this Agreement
and the other Loan Documents pursuant to an Assignment and Acceptance,
substantially in the form of Exhibit F, executed by such Assignee, such
assigning Lender (and, to the extent required, by the Company, the
Administrative Agent and the Arranger) and delivered to the Administrative Agent
for its acceptance and recording in the Register, with a copy to the Arranger,
PROVIDED that, in the case of any such assignment to an additional bank or
financial institution, the sum
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of the aggregate principal amount of the Loans and the aggregate amount of the
Available Revolving Credit Commitment being assigned and, if such assignment is
of less than all of the rights and obligations of the assigning Lender, the sum
of the aggregate principal amount of the Loans and the aggregate amount of the
Available Revolving Credit Commitment remaining with the assigning Lender are
each not less than $5,000,000. Upon such execution, delivery, acceptance and
recording, from and after the effective date determined pursuant to such
Assignment and Acceptance, (x) the Assignee thereunder shall be a party hereto
and, to the extent provided in such Assignment and Acceptance, have the rights
and obligations of a Lender hereunder with Commitments as set forth therein, and
(y) the assigning Lender thereunder shall, to the extent provided in such
Assignment and Acceptance, be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this Agreement,
such assigning Lender shall cease to be a party hereto). Notwithstanding any
provision of this subsection and subsection 14.6(e), the consent of the Company
shall not be required, and, unless requested by the Assignee and/or the
assigning Lender, new Notes shall not be required to be executed and delivered
by the Company, for any assignment which occurs at any time when any of the
events described in clause (i) of Section 12 shall have occurred and be
continuing.
(d) The Administrative Agent shall, on behalf of the Company, maintain
at the address of the Administrative Agent referred to in subsection 14.2 a copy
of each Assignment and Acceptance delivered to it and a register (the
"REGISTER") for the recordation of the names and addresses of the Lenders and
the Commitments of, and principal amounts of the Loans owing to, each Lender
from time to time. The entries in the Register shall be conclusive, in the
absence of manifest error, and the Borrower, the Administrative Agent and the
Lenders shall treat each Person whose name is recorded in the Register as the
owner of a Loan or other obligation hereunder or under any Note as the owner
thereof for all purposes of this Agreement and the other Loan Documents,
notwithstanding any notice to the contrary. Any assignment of any Loan or other
obligation hereunder or under any Note shall be effective only upon appropriate
entries with respect thereto being made in the Register. The Register shall be
available for inspection by the Company or any Lender at any reasonable time and
from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Assignee (and, in the case of any assignment relating to
Revolving Credit Loans to an Assignee that is not then a Lender or an affiliate
thereof, by the Company and the Administrative Agent, to the extent required by
subsection 14.6(c)) together with payment to the Administrative Agent by the
assigning Lender or Assignee of a registration and processing fee of $3,500
(except that no such registration and processing fee shall be payable (x) by
Lehman Commercial Paper Inc. in connection with its syndication of the
Commitments and the Loans or (y) in the case of an Assignee which is already a
Lender or is an Affiliate of a Lender), the Administrative Agent shall (i)
promptly accept such Assignment and Acceptance and (ii) on the effective date
determined pursuant thereto record the information contained
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therein in the Register and give notice of such acceptance and recordation to
the Lenders and the Company.
(f) The Company authorizes each Lender to disclose to any Participant
or Assignee (each, a "TRANSFEREE") and any prospective Transferee, subject to
the provisions of subsection 14.18, any and all financial information in such
Lender's possession concerning the Company and its Affiliates which has been
delivered to such Lender by or on behalf of the Company pursuant to this
Agreement or which has been delivered to such Lender by or on behalf of the
Company in connection with such Lender's credit evaluation of the Company and
its Affiliates prior to becoming a party to this Agreement.
(g) For avoidance of doubt, the parties to this Agreement acknowledge
that the provisions of this subsection concerning assignments of Loans and Notes
relate only to absolute assignments and that such provisions do not prohibit
assignments creating security interests, including, without limitation, any
pledge or assignment by a Lender of any Loan or Note to any Federal Reserve Bank
in accordance with applicable law.
(h) If, pursuant to this subsection 14.6, any interest in this
Agreement or any Note or Letter of Credit is transferred to any Transferee which
is not incorporated or organized under the laws of the United States of America
or a state thereof, the assigning Lender shall cause such Transferee,
concurrently with the effectiveness of such transfer, (i) to represent to the
assigning Lender (for the benefit of the assigning Lender, the Administrative
Agent and the Borrowers) that under applicable law and treaties no Non-Excluded
Taxes will be required to be withheld by the Administrative Agent, any Borrower
or the assigning Lender with respect to any payments to be made to such
Transferee in respect of the Loans or Participating Interests, (ii) to furnish
to the assigning Lender, the Administrative Agent and the Company, such forms
and certificates required to be furnished pursuant to subsection 6.12(b) and
(iii) to agree (for the benefit of the assigning Lender, the Administrative
Agent and the Borrowers) to be bound by the provisions of subsections 6.12(b)
and (c).
14.7 ADJUSTMENTS; SET-OFF. (a) If any Lender (a "BENEFITTED LENDER")
shall at any time receive any payment of all or part of its Loans owing to it by
any Borrower, or interest thereon, or receive any collateral in respect thereof
(whether voluntarily or involuntarily, by set-off, pursuant to events or
proceedings of the nature referred to in clause (i) of Section 12 or otherwise),
in a greater proportion than any such payment to or collateral received by any
other Lender, if any, in respect of such other Lender's Loans owing to it by
such Borrower, or interest thereon, such benefitted Lender shall purchase for
cash from the other Lenders a participating interest in such portion of each
such other Lender's Loan owing to it by such Borrower, or shall provide such
other Lenders with the benefits of any such collateral, or the proceeds thereof,
as shall be necessary to cause such benefitted Lender to share the excess
payment or benefits of such collateral or proceeds ratably with each of the
Lenders; PROVIDED, HOWEVER, that if all or any portion of such excess payment or
benefits is thereafter recovered from such benefitted Lender, such purchase
shall be rescinded,
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and the purchase price and benefits returned, to the extent of such recovery,
but without interest.
(b) In addition to any rights and remedies of the Lenders provided by
law, each Lender shall have the right, without prior notice to the Company, any
such notice being expressly waived by the Company to the extent permitted by
applicable law, upon any amount becoming due and payable by the Company
hereunder (whether at the stated maturity, by acceleration or otherwise) to
set-off and appropriate and apply against such amount any and all deposits
(general or special, time or demand, provisional or final), in any currency, and
any other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by such Lender or any branch or agency thereof to or for the
credit or the account of the Company. Each Lender agrees promptly to notify the
Borrower and the Administrative Agent after any such set-off and application
made by such Lender, PROVIDED that the failure to give such notice shall not
affect the validity of such set-off and application.
14.8 COUNTERPARTS. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by facsimile transmission), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. A set of the copies of this
Agreement signed by all the parties shall be delivered to the Company and the
Administrative Agent.
14.9 SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
14.10 INTEGRATION. This Agreement and the other Loan Documents
represent the agreement of the Borrowers, the Administrative Agent and the
Lenders with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Borrowers, the Administrative
Agent or any Lender relative to the subject matter hereof not expressly set
forth or referred to herein or in the other Loan Documents.
14.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
14.12 SUBMISSION TO JURISDICTION; WAIVERS. (a) Each Borrower hereby
irrevocably and unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Agreement or any other Loan Document to which
it is a party, or for
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recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the courts of the State of New York,
the courts of the United States of America for the Southern District of New
York, and appellate courts from any thereof;
(ii) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(iii) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to such
Borrower at its address set forth in subsection 14.2 or at such other
address of which the Administrative Agent shall have been notified pursuant
thereto; and
(iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction.
(b) Each Foreign Subsidiary Borrower hereby irrevocably appoints the
Company as its agent for service of process in any proceeding referred to in
subsection 14.12(a) and agrees that service of process in any such proceeding
may be made by mailing or delivering a copy thereof to it care of Company at its
address for notice set forth in subsection 14.2.
14.13 ACKNOWLEDGEMENTS. Each Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) none of the Administrative Agent or any Lender has any fiduciary
relationship with or duty to such Borrower arising out of or in connection
with this Agreement or any of the other Loan Documents, and the
relationship between the Administrative Agents and the Lenders, on the one
hand, and the Company's, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among
the Lenders or among the Borrowers and the Lenders.
14.14 WAIVERS OF JURY TRIAL. EACH OF THE BORROWERS, THE
ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY
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AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM
THEREIN.
14.15 POWER OF ATTORNEY. Each Foreign Subsidiary Borrower hereby
grants to Company an irrevocable power of attorney to act as its
attorney-in-fact with regard to matters relating to this Agreement and each
other Loan Document, including, without limitation, execution and delivery of
any amendments, supplements, waivers or other modifications hereto or thereto,
receipt of any notices hereunder or thereunder and receipt of service of process
in connection herewith or therewith. Each Foreign Subsidiary Borrower hereby
explicitly acknowledges that the Administrative Agent and each Lender have
executed and delivered this Agreement and each other Loan Document to which it
is a party, and has performed its obligations under this Agreement and each
other Loan Document to which it is a party, in reliance upon the irrevocable
grant of such power of attorney pursuant to this subsection. The power of
attorney granted by each Foreign Subsidiary Borrower hereunder is coupled with
an interest.
14.16 JUDGMENT. (a) If for the purpose of obtaining judgment in any
court it is necessary to convert a sum due hereunder in one currency into
another currency, the parties hereto agree, to the fullest extent that they may
effectively do so, that the rate of exchange used shall be that at which in
accordance with normal banking procedures the Administrative Agent could
purchase the first currency with such other currency in the city in which it
normally conducts its foreign exchange operation for the first currency on the
Business Day preceding the day on which final judgment is given.
(b) The obligation of each Borrower in respect of any sum due from it
to any Lender hereunder shall, notwithstanding any judgment in a currency (the
"JUDGMENT CURRENCY") other than that in which such sum is denominated in
accordance with the applicable provisions of this Agreement (the "AGREEMENT
CURRENCY"), be discharged only to the extent that on the Business Day following
receipt by such Lender of any sum adjudged to be so due in the Judgment Currency
such Lender may in accordance with normal banking procedures purchase the
Agreement Currency with the Judgment Currency; if the amount of Agreement
Currency so purchased is less than the sum originally due to such Lender in the
Agreement Currency, such Borrower agrees notwithstanding any such judgment to
indemnify such Lender against such loss, and if the amount of the Agreement
Currency so purchased exceeds the sum originally due to any Lender, such Lender
agrees to remit to such Borrower such excess.
14.17 CONFIDENTIALITY. Each Lender agrees to take normal and
reasonable precautions to maintain the confidentiality of information designated
in writing as confidential and provided to it by the Company or any Subsidiary
in connection with this Agreement; PROVIDED, HOWEVER, that any Lender may
disclose such information (a) at the request of any regulatory authority having
supervisory jurisdiction over it or in connection with an examination of such
Lender by any such authority, (b) pursuant to subpoena or other court
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process, (c) when required to do so in accordance with the provisions of any
applicable law, (d) at the direction of any other Governmental Authority, (e) to
such Lender's Affiliates, independent auditors and other professional advisors
or (f) to any Transferee or potential Transferee; PROVIDED that such Transferee
agrees in writing to comply with the provisions of this subsection 14.17.
14.18 MATTERS RELATING TO FLORIDA AAC CORPORATION. The Company has
advised the Administrative Agent and the Lenders that Florida AAC Corporation, a
Subsidiary of the Company, was expected to be merged into the Company prior to
the Closing Date, but certain administrative matters relating to such merger may
not be completed in time to allow such merger to occur on or before the Closing
Date. The Company agrees that, within five Business Days after the Closing
Date, the Company will either (i) cause such merger to occur or (ii) cause
Florida AAC Corporation to become a party to the Guarantee and Collateral
Agreement and take all related actions contemplated by subsection 9.9 as if
Florida AAC Corporation were a Domestic Subsidiary created or acquired by the
Company after the Closing Date.
14.19 MATTERS RELATING TO CERTAIN EXISTING FINANCING STATEMENTS. The
Company acknowledges that Uniform Commercial Code searches have disclosed that
UCC Financing Statements naming Citibank, N.A. as secured party and the Company
as debtor (the "CITIBANK FINANCING STATEMENTS") are on file in several filing
offices, and that any Liens perfected by the Citibank Financing Statements would
not be permitted to exist pursuant to subsection 10.3. The Company has informed
the Administrative Agent and the Lenders that the Citibank Financing Statements
relate to a credit facility that was in effect prior to the Company's emerging
from bankruptcy proceedings in 1996 and that all indebtedness and other claims
under such credit facility were extinguished in such bankruptcy proceedings and
replaced in part by the Senior Notes. The Company represents and warrants that
there is no outstanding indebtedness secured by Liens that would be perfected by
the Citibank Financing Statements, and the Company covenants that it will not
incur, assume or suffer to exist any such indebtedness. The Company agrees
that, as promptly as possible, and in any event within 20 Business Days after
the Closing Date, the Company will procure, and submit to the appropriate filing
offices, termination statements executed by Citibank, N.A. in respect of each of
the Citibank Financing Statements.
<PAGE>
87
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
ANACOMP, INC.
By: /s/ Gary Bilsland
----------------------------------------
Title: Assistant Treasurer
ANACOMP GmbH
By: /s/ Hasso Jenss
----------------------------------------
Title: Managing Director
ANACOMP LTD.
By: /s/ K. Gordon Fife
----------------------------------------
Title: Vice President-Tax
ANACOMP B.V.
By: /s/ Cees de Graaff
----------------------------------------
Title: Managing Director
ANACOMP S.A.
By: /s/ K. Gordon Fife
----------------------------------------
Title: Vice President-Tax
<PAGE>
88
N.V. ANACOMP BELGIUM S.A.
By: /s/ Cees de Graaff
----------------------------------------
Title: Managing Director
XIDEX (U.K.) LTD.
By: /s/ K. Gordon Fife
----------------------------------------
Title: Vice President-Tax
ANACOMP SCANDINAVIA AB
By: /s/ Hasso Jenss
----------------------------------------
Title: Managing Director
ANACOMP CANADA, INC.
By: /s/ K. Gordon Fife
----------------------------------------
Title: Vice President-Tax
XIDEX GmbH
By: /s/ Hasso Jenss
----------------------------------------
Title: Managing Director
<PAGE>
89
LEHMAN COMMERCIAL PAPER INC.,
as Arranger and as a Lender
By: /s/ Dennis J. Dee
----------------------------------------
Title: Authorized Signatory
THE FIRST NATIONAL BANK OF CHICAGO, as
Administrative Agent, Issuing Lender and as
a Lender
By: /s/ Larry Cooper
----------------------------------------
Title: First Vice President
PRIME INCOME TRUST
By: /s/ Rajesh K. Gupta
----------------------------------------
Title:
THE ING CAPITAL SENIOR SECURED HIGH INCOME
FUND, L.P.
By: ING CAPITAL ADVISORS INC., as
Investment Advisor
By: /s/ Michael B. Hatley
----------------------------------------
Title: Vice President & Portfolio Manager
MERRILL LYNCH SENIOR FLOATING RATE FUND,
INC.
By: /s/ Anthony R. Clemente
----------------------------------------
Title: Authorized Signatory
<PAGE>
90
PILGRIM AMERICA PRIME RATE TRUST
By: /s/ Howard Tiffen
----------------------------------------
Title: Senior Vice President
PROTECTIVE LIFE INSURANCE COMPANY
By: /s/ James Dondero
----------------------------------------
Title: Authorized Signatory
VAN KAMPEN AMERICAN CAPITAL PRIME RATE
INCOME TRUST
By: /s/ Jeffrey W. Maillet
----------------------------------------
Title: Senior Vice President & Director
CRESCENT/MACH I PARTNERS, L.P.
By: TCW ASSET MANAGEMENT COMPANY, its
Investment Advisor
By: /s/ Justin L. Driscoll
----------------------------------------
Title: Senior Vice President
<PAGE>
SCHEDULE I
COMMITMENTS; ADDRESSES
A. Revolving Credit Commitment Amounts and Addresses
Revolving Credit
Revolving Credit Lender Commitment
The First National Bank of Chicago
1 First National Plaza
Chicago, Illinois 60670 $12,500,000
Lehman Commercial Paper Inc.
3 World Financial Center
200 Vesey Street
New York, New York 10285 12,500,000
TOTAL $25,000,000
<PAGE>
2
B. Term Loan Commitment Amounts and Addresses
Term Loan
Term Loan Lender Commitment
Lehman Commercial Paper Inc.
3 World Financial Center
200 Vesey Street
New York, New York 10285 $15,000,000
Merrill Lynch Senior Floating Rate Fund, Inc.
800 Scudders Mill Road
Plainsborough, New Jersey 08536
$7,000,000
Prime Income Trust
2 World Trade Center
72nd Floor
New York, New York 10048 $6,100,000
The ING Capital Senior Secured High Income Fund, L.P.
333 South Grande Avenue
Los Angeles, California 90071 $6,100,000
Pilgrim America Prime Rate Trust
2 Renaissance Square
Phoenix, Arizona 85004 $6,100,000
Protective Life Insurance Company
Two Galleria Tower
13455 Noel Road - Suite 1150
Dallas, Texas 75240 $6,100,000
Van Kampen America Capital Prime Rate Income Trust
1 Parkview Plaza
Oakbrook Terrace, Illinois 60181 $6,100,000
Crescent/Mach I Partners, L.P.
200 Park Avenue - Suite 2200
New York, New York 10166 $2,500,000
TOTAL $55,000,000
<PAGE>
SCHEDULE II
FOREIGN SUBSIDIARY BORROWERS
Jurisdiction of
NAME AND ADDRESS INCORPORATION
- ---------------- ----------------
Xidex GmbH Germany
Didierstrasse 27c
65203 Wiesbaden
Germany
Anacomp GmbH Germany
Didierstrasse 27c
65203 Wiesbaden
Germany
Anacomp Limited United Kingdom
Rosa Building
Mulberry Business Park
Fishponds Road
Wokingham Berkshire
RG41 2GY
United Kingdom
Xidex (U.K.) Limited United Kingdom
Intermediate Road
Brynmawr
Gwent
NP3 4YA
United Kingdom
Anacomp B.V. Holland
Ambachtsmark 1
1355 EA Almere-Haven
The Netherlands
Anacomp S.A. France
21 Industrielle Paris Nord II
13, Rue De La Perdrix
93290 Tremblay
France
<PAGE>
N.V. Anacomp Belgium S.A. Belgium
Excelsiorlaan 3
1930 Zaventem
Belgium
Anacomp Canada Inc. Canada
80 Riviera Drive
Markham, Ontario
Canada L3R 5M1
Anacomp Scandinavia A.B. Sweden
Arstaangsvagen 21 E
117 43 Stockholm
Sweden
2
<PAGE>
SCHEDULE III
------------
AVAILABLE FOREIGN CURRENCY PAYMENT OFFICES
OF THE ADMINISTRATIVE AGENT
Available Foreign Currency Payment Office
- -------------------------- --------------
Belgium Francs To: Generale de Banque
Brussels, Belgium
A/C 11-01-348/00/
SWIFT ADDRESS: GEBABEBB36A
For: The First National Bank of Chicago,
Chicago favor Cayman Islands Branch
Canadian Dollars
To: Bank of Nova Scotia-Toronto
International Banking Division
44 King Street West
Toronto, Ontario Canada
Account Number: 2216-19
SWIFT ADDRESS: NOSCCATT
For: The First National Bank of Chicago,
Cayman Islands Branch
Deutsche Marks To: Swiss Bank Corporation
Ulmentrasse 30 (D-6000)
Frankfurt, Germany
Account Number: 111550-5005
SWIFT ADDRESS: SBCOFEFF
For: The First National Bank of Chicago,
Cayman Islands Branch
French Francs To: Credit Commerciale de France
103 Avenue des Champes-Elysees
Paris, France
Account Number: 00203501611
SWIFT ADDRESS: CCFRFRPP
For: The First National Bank of
Chicago,Cayman Islands Branch
Italian Lira To: Cassa de Risparino delle Provincie
Lombarde, Milan
Account Number: 15387/018 (FNBC
CHICAGO) for A/C
FNBC CAYMAN ISLANDS
For: The First National Bank of Chicago,
Cayman Islands Branch
Pounds Sterling To: Midland Bank, PLC
International Division
London, England
Account Number: 35202851
SWIFT ADDRESS: MIDLGB22
For: The First National Bank of Chicago,
Cayman Islands Branch
<PAGE>
SCHEDULE IV
DOMESTIC SUBSIDIARIES; FOREIGN SUBSIDIARIES
DOMESTIC SUBSIDIARIES
- ---------------------
Dysan International Sales Corporation II*
Xidex International Corporation*
Florida AAC Corporation**
FOREIGN SUBSIDIARIES
- --------------------
Xidex GmbH (Germany)
Anacomp GmbH (Germany)
Datamagnetics GmbH (Germany)
Anacomp Holdings Ltd. (U.K.)
Anacomp Ltd. (U.K.)
Xidex U.K. Ltd. (U.K.)
Anacomp B.V. (Holland)
Anacomp Scandinavia A.B. (Sweden)
Anacomp A/S (Denmark)
Anacomp O.Y. (Finland)
Anacomp A/S (Norway)
Anacomp S.A. (France)
Anacomp GesmbH (Austria)
N.V. Anacomp Belgium S.A. (Belgium)
Anacomp Italia S.r.l. (Italy)
COM S.r.l. (Italy)
Xidex Magnetics S.A. (Switzerland)*
Xidex Corp. S.A. (Switzerland) *
Anacomp Canada, Inc. (Canada)
Anacomp do Brazil Ltda. (Brazil)
Anacomp Japan Ltd. (Japan)
Anacomp Pty Ltd. (Australia)*
Xidex New Zealand Ltd. (New Zealand)*
Data-Ware Development Int'l., Ltd. (Barbados)***
- ----------------------------------
* Has substantially no assets and/or in process of being dissolved.
** Within five (5) business days after the Closing Date will be merged into
the Company or will become a party to the Guarantee and Collateral
Agreement.
*** Has approximately $46,400 in assets.
<PAGE>
SCHEDULE V
PROPERTIES TO BE MORTGAGED;
JURISDICTIONS FOR MORTGAGE RECORDINGS
PROPERTY JURISDICTION
1715 Fourth Street Deed Records of Young County, Texas
Graham, TX 76450
<PAGE>
SCHEDULE VI
FOREIGN SUBSIDIARY PLEDGES
1. Foreign Subsidiary Stock Pledges to be Perfected on Closing Date:
Anacomp Holdings Ltd.
2. Foreign Subsidiary Stock Pledges to be Perfected After Closing Date:
Xidex GmbH
Anacomp S.A.
<PAGE>
SCHEDULE 1.1
CERTAIN ASSETS TO BE ACQUIRED
Sale Leaseback Summary
<TABLE>
<CAPTION>
Asset Asset
COMPANY UNITS COST LOW % PURCH PRICE HIGH % PURCH PRICE PERIOD
- ------- ----- ---- ----- ----------- ------ ----------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
CIT 22 5,960,500 19.10% 1,138,456 19.10% 1,138,456 97-09
Ameritech II 19 4,870,000 12.50% 608,750 20.00% 974,000 98-12
Cargill 12 3,000,000 20.00% 600,000 20.00% 600,000 99-01
CIT II 46 11,720,000 16.13% 1,890,436 16.13% 1,890,436 99-01
UJB 4 950,000 16.13% 153,235 16.13% 153,235 99-01
Prime I 8 2,000,000 7.00% 140,000 7.00% 140,000 99-12
Bell South 6 1,500,000 10.00% 150,000 10.00% 150,000 99-12
- ----------------------------------------------------------------------------------------------------
76 19,170,000 2,933,671 2,933,671
Prime II 8 2,150,000 7.00% 150,500 7.00% 150,500 00-01
- ----------------------------------------------------------------------------------------------------
125 32,150,500 4,831,377 5,196,627
=== ========== ========= =========
- ----------------------------------------------------------------------------------------------------
</TABLE>
Note: CIT, CITII and UJB all have notes. Cash outlay would be less than
CapEx/Asset price.
<PAGE>
SCHEDULE 7.1
CONTINGENT LIABILITIES
A) Letters of Credit Issued
Number Beneficiary Amount
---------------------- ------------------------- ------------
1)* NY 0688 30015500 United Pacific Insurance $ 600,000
2) NY 0692 30004293 Dept. of Health Services 232,824
3) NY 0692 30005316 Dept. of Health Services 2,000,000
4)** NY 0816 30006547 Gulf Insurance Company 400,000
5) ST 05341 Aetna Casualty and Surety 2,609,059
6) ST 05334 Center Capital 500,000
* Being replaced by LC # ST 05340
** Being replaced by LC # ST 05339
B) Subsequent to December 31, 1996, Anacomp, Inc. acquired all of the Common
Stock of COM, S.r.1. The purchase price consisted of $460 thousand in cash
paid at closing with an additional $400 thousand in guaranteed payments
over the next two years.
C) Subsequent to December 31, 1996, Anacomp, Inc. acquired all of the
common stock of DataWare Development, Inc. for a purchase price that
consisted of $11.2 million cash at closing and a contingent cash payment of
up to $3.2 million based on future income of the DataWare business over
the next two years.
<PAGE>
SCHEDULE 7.6
LITIGATION*
ANACOMP AS DEFENDANT:
<TABLE>
<CAPTION>
CASE NAME AAC'S COUNSEL CLAIM STATUS
--------- ------------- ----- ------
<S> <C> <C> <C>
In re: Xidex Corp. (Report Barry Powell Customs Service is Customs has "liquidated"
filed 11/9/92, Regulatory Grunfeld, seeking repayment by AAC's drawback entries
Audit Division, U.S. Desiderio, Lebowitz AAC of approx. without benefit of
Customs Service, & Silverman (G. $2,200,000 of duty drawback. AAC has
Department of the Treasury) Gaskin) drawback claims paid by filed a protest with
Customs for which AAC Customs for its Xidex
allegedly does not have claims (8/94), and
appropriate supporting supplemental materials to
documentation. support its previous
protective protest filing
for MID claims (10/94).
Interest is accruing on the
amount AAC allegedly owes,
and the indebtedness now
exceeds $2.8 million.
Settlement discussions are
ongoing. AAC is seeking
to litigate this matter in
the Bankruptcy Court.
Customs has sought to make
an end-run and demand that
the sureties pay Customs
the amount covered by bonds
(approximately $2.6 million).
The Court did not allow
Customs to do that and has
released the sureties
from performing under the
bonds. Anacomp has
filed a summary judgment
motion seeking to dismiss
Customs' claim, and
Customs is seeking to
move the dispute to the
Court of International
Trade.
</TABLE>
- ------------------------------------------
<PAGE>
ANACOMP AS DEFENDANT:
<TABLE>
<CAPTION>
CASE NAME AAC'S COUNSEL CLAIM STATUS
--------- ------------- ----- ------
<S> <C> <C> <C>
2. Intercargo Insurance and Jeff Smith Sureties filed to obtain Settled and paid $500,000
Old Republic Insurance v. Cadwalader an order compelling AAC to into the Court, and
Anacomp, Inc. (filed 11/8/95 (212) 504-6000 pay amounts owed to $1,250,000 when AAC
in U.S. District Court, (G. Gaskin) U.S. Customs which are emerged from
Northern District of covered by the sureties' bankruptcy. Paying an
California bonds. additional
$250,000/month until the
amount of bonds are
covered in full, and will
then pay accrued interest.
However, U.S. Customs
is seeking to force
Intercargo and the other
sureties to pay the money
over to Customs now by
making a claim on the
surety bonds. Customs
was not successful in this
approach, at which time
the Bankruptcy Court
released the sureties from
their performance
obligation under the
bonds. Customs will
most likely appeal.
3. Smith Barney, Inc. v. Chris Kearney Claim is for breach of Bankruptcy Court in
Anacomp, Inc. (filed 9/16/96 Keker & Van Nort contract, i.e., Anacomp's Delaware has vacated a
U.S. District Court, (415) 676-2272 failure to pay Smith temporary restraining
Northern District of (G. Gaskin) Barney a success fee as order that had prevented
California) a result of Anacomp's Smith Barney from
bankruptcy restructuring; pursuing this lawsuit.
Damages of $2,200,000 Thus, Smith Barney has
claimed. proceeded with its suit in
California. Anacomp is
appealing the Bankruptcy
Court's ruling in the
District Court in
Delaware and is
answering and litigating
in the District Court in
California.
</TABLE>
<PAGE>
ANACOMP AS PLAINTIFF:
<TABLE>
<CAPTION>
CASE NAME AAC'S COUNSEL CLAIM STATUS
--------- ------------- ----- ------
<S> <C> <C> <C>
1. Anacomp v. Hanny Jeff Smith Claim is for breach of Discovery to commence.
Magnetics Limited (filed Cadwalader contract, i.e., failure to Court ordered Early
9/11/96 in U.S. District (212) 504-6384 pay Anacomp $3,780,847 Neutral Evaluation to be
Court, Northern District Maria Mascaro under a 9/25/93 held during February
of California) McCutchen, Doyle Agreement between the 1997, at which the parties
Brown & Emerson parties. may try and settle.
(415) 393-2128
(G. Gaskin)
<CAPTION>
BANKRUPTCY LITIGATION:
CASE NAME AAC'S COUNSEL CLAIM STATUS
--------- ------------- ----- ------
<S> <C> <C> <C>
1. U.S. Customs Services v. Cadwalader Appeal of Confirmation District Court has not yet
Anacomp (District Court) Order based on alleged ruled.
infirmities in Bankruptcy
Plan's treatment of U.S.
Customs Services' duty
draw-back claim.
</TABLE>
<PAGE>
SCHEDULE 7.8
REAL PROPERTY OWNED AND LEASED
A. FEE INTERESTS
STREET ADDRESS
OF PROPERTY COUNTY
-------------- ------
Graham Texas Young
1715 Fourth Street
Graham, TX 76450
B. LEASEHOLD INTERESTS
STREET ADDRESS
OF PROPERTY COUNTY
-------------- ------
1121 West Grant Road Pima
Suite 407
Tucson, AZ 85705
11075 Knott Avenue Orange
Suites A, B & C
Cypress, CA 90630
1290 B Street Alameda
Suite 201
Hayward, CA 94541
12365 Crosthwaite Circle San Diego
Poway, CA 92064
1150 Folsom Street San Francisco
San Francisco, CA 94103-3997
1235 Midas Way Santa Clara
Sunnyvale, CA 94086
1282 Reamwood Santa Clara
Sunnyvale, CA 94088
1242 Kifer Road Santa Clara
Sunnyvale, CA 94086
<PAGE>
STREET ADDRESS
OF PROPERTY COUNTY
-------------- ------
21111 Oxnard Street Los Angeles
Woodland Hills, CA 91367
7808 Cherry Creek So Drive Denver
Suite 205
Denver, CO 80231
100 Prestige Park Road Hartford
East Hartford, CT 06108-1988
300 Long Beach Blvd. Fairfield
Stratford, CT 06497
2709 Art Museum Drive, #4 Duval
Jacksonville, FL 32207
14505 Commerce Way Dade
Suite 800
Miami Lakes, FL 33016
7121 Grand National Drive Orange
Suites 106, 107, 108
Orlando, FL 32819-8384
4920 West Cypress Street Hillsborough
Suite 108
Tampa, FL 33607-3802
2115 Monroe Drive NE Fulton
Atlanta, GA 30324-4832
715 Algonquin Road Cook
Suite 101
Arlington Heights, IL 60005-4418
717 West Algonquin Road Cook
Arlington Heights, IL 60005
640 N. LaSalle Street Cook
Chicago, IL 60610
11550 North Meridian St. Hamilton
5th & 6th Floor
Carmel, IN 46032
2
<PAGE>
STREET ADDRESS
OF PROPERTY COUNTY
-------------- ------
6281 Hillsdale Court Marion
Building #3
Indianapolis, IN 46250
6821 Hillsdale Court Marion
Building 3 - Suite B
Indianapolis, IN 46250
1318 Adams Street Wyandotte
Kansas City, KS 66103
1051-H Newton Pike Fayette
Lexington, KY 40511
The Fincastle Building Jefferson
303 West Broadway
Louisville, KY 40202-2105
12120-A Plum Orchard Dr. Montgomery
Silver Spring, MD 20904
5 Mount Royal Avenue Middlesex
Marlborough, MA 01752
200 Boston Avenue Middlesex
Medford, MA 02155
27 Maple Street Middlesex
Pepperell, MA 01463
So Hadley Industrial Park Hampshire
17 Industrial Drive
South Hadley, MA 01075
23399 Commerce Drive Oakland
Suite B-8
Farmington Hills, MI 48335
2520 Pilot Knob Road Hennepin
Suite 300
Minneapolis, MN 55120
3
<PAGE>
STREET ADDRESS
OF PROPERTY COUNTY
-------------- ------
602 2nd Avenue Hennepin
Suite B-93D, B-95, B-90
Minneapolis, MN 55402
1815 Belt Way Drive Ind. City
St. Louis, MO 63114-5815
55 Eagle Rock Avenue Morris
E Hanover, NJ 07936
105 Newfield Avenue Middlesex
Raritan Center
Edison, NJ 08837
300 Cooper Center
7905 Browning Rd., #300 Camden
Pennsauken, NJ 08109-4204
2415 Princeton Drive NE Bernalillo
Suite B & I
Albuquerque, NM 87107-1701
4335 Industrial Road Clark
#440
Las Vegas, NV 89103
85 Denton Avenue Nassau
New Hyde Park, NY 11040
157 Chambers Street New York
New York, NY 10007-1015
222 Broadway New York
24th Floor
New York, NY 10038
3495 Winton Place Bldg. E Ste. 5 Monroe
Rochester, NY 14609
7815 National Service Rd., 606 Guilford
Greensboro, NC 27409
4
<PAGE>
STREET ADDRESS
OF PROPERTY COUNTY
-------------- ------
6118 St. Giles Street Wake
Suite D
Raleigh, NC 27612-2604
1100 Resource Drive Cuyahoga
Brooklyn Heights, OH 44131-0000
1155 Western Avenue Hamilton
Cincinnati, OH 45203-1174
1150 Dublin Road Franklin
Suite A
Columbus, OH 43215
12060 S.W. Garden Place Washington
Tigard, OR 97223-0000
2020 Ardmore Blvd. Allegheny
Suite 325
Pittsburgh, PA 15221-4637
1715A Fourth Street Young
Graham, TX 76450
2214 Paddock Way Drive Dallas
Suite 200
Grand Prairie, TX 75050-0000
6767 Portwest Drive Harris
Suite 190
Houston, TX 77024
1288 West 2240 South Salt Lake
Suite A
Salt Lake City, UT 84119
2414 S.W. Andover St. King
Suite 100
Seattle, WA 98106
<PAGE>
SCHEDULE 10.2
EXISTING INDEBTEDNESS
I. Anacomp, Inc.
A) Letters of Credit Issued
Number Beneficiary Amount
--------------------- ------------------------ ------------
1)* NY 0688 30015500 United Pacific Insurance $ 600,000
2) NY 0692 30004293 Dept. of Health Services 232,824
3) NY 0692 30005316 Dept. of Health Services 2,000,000
4)** NY 0816 30006547 Gulf Insurance Company 400,000
5) ST 05341 Aetna Casualty andSurety 2,609,059
6) ST 05334 Center Capital 500,000
* Being replaced by LC # ST 05340
** Being replaced by LC # ST 05339
B) Indianapolis Industrial Revenue Bonds 275,000
C) AT&T Capital Lease 19,790
D) Carlisle Company Note 1,200,000
E) SKC (Not Part of Trade Credit) 2,656,000
F) COM Products 500,000
G) Hideout, Inc. 66,500
H) 13% Senior Subordinated Notes 171,960,000
I) DataWare Capital Lease 23,852
J) Purchase Price for COM S.r. 400,000
<PAGE>
K) Contingent Cash Payment for DataWare Development, Inc. 3,200,000
L) FileNet, Corp. Software License Fees 1,000,000
II. Anacomp Italia S.r.l.
A) Term Loan 69,598
2
<PAGE>
EXISTING LIENS
<TABLE>
<CAPTION>
Borrower Name Agreement Amount
- ----------------------- ----------------- ----------------------- ---------------------
<S> <C> <C> <C>
Anacomp, Inc. SKC America, Inc. Amended and Restated
and SKC Limited Master Supply Agreement $10,000,000.00
Xidex (U.K.) Limited Barclays Bank Overdraft Agreement GBP 2,400,000.00
Anacomp Italia S.r.l. Banca Commerciale Overdraft Agreement ITL 1,000,000,000.00
</TABLE>
Liens on equipment leased to third parties under operating leases
and on the related leases, incurred prior to January 5, 1996, under which the
remaining receivables aggregate not more than $4,000,000.
Cash collateral securing obligations under the letters of credit
referenced as items 1 through 4 under part I.A. of Schedule 10.2.
<PAGE>
SCHEDULE 10.4
EXISTING GUARANTEE OBLIGATIONS
None.
<PAGE>
EXHIBIT A-1
FORM OF REVOLVING CREDIT NOTE
$_____________
February___, 1997
FOR VALUE RECEIVED, the undersigned, ANACOMP, INC., an Indiana
corporation (the "COMPANY"), hereby unconditionally promises to pay to the order
of______________ (the "LENDER") at the office of THE FIRST NATIONAL BANK OF
CHICAGO, located at 1 First National Plaza, Chicago, Illinois, in lawful money
of the United States of America and in immediately available funds, on the
Revolving Credit Termination Date the principal amount of (a)___________________
DOLLARS ($__________), or, if less, (b) the aggregate unpaid principal amount of
all Revolving Credit Loans made by the Lender to the Company pursuant to
subsection 2.1 or 2.5 of the Credit Agreement, as hereinafter defined. The
Company further agrees to pay interest in like money at such office on the
unpaid principal amount hereof from time to time outstanding at the rates and on
the dates specified in subsections 6.1 and 6.2 of such Credit Agreement.
The holder of this Note is authorized to endorse on the schedules
annexed hereto and made a part hereof or on a continuation thereof which shall
be attached hereto and made a part hereof the date, Type and amount of each
Revolving Credit Loan made pursuant to the Credit Agreement and the date and
amount of each payment or prepayment of principal thereof, each continuation
thereof, each conversion of all or a portion thereof to another Type and, in the
case of Eurodollar Loans, the length of each Interest Period with respect
thereto. Each such endorsement shall constitute PRIMA FACIE evidence of the
accuracy of the information endorsed. The failure to make any such endorsement
shall not affect the obligations of the Company in respect of such Revolving
Credit Loan.
This Note (a) is one of the Revolving Credit Notes referred to in the
Credit and Guarantee Agreement dated as of February , 1997 (as amended,
supplemented or otherwise modified from time to time, the "CREDIT AGREEMENT"),
among the Company, the Foreign Subsidiary Borrowers, the Lender, the other banks
and financial institutions from time to time parties thereto, The First National
Bank of Chicago, as Administrative Agent and Lehman Commercial Paper Inc., as
Arranger and Syndication Agent, (b) is subject to the provisions of the Credit
Agreement and (c) is subject to optional and mandatory prepayment in whole or in
part as provided in the Credit Agreement. This Note is secured and guaranteed
as provided in the Loan Documents. Reference is hereby made to the Loan
Documents for a description of the properties and assets in which a security
interest has been granted, the nature and extent of the security and the
guarantees, the terms and conditions upon which the security interests and each
guarantee were granted and the rights of the holder of this Note in respect
thereof.
<PAGE>
2
Upon the occurrence of any one or more of the Events of Default, all
amounts then remaining unpaid on this Note shall become, or may be declared to
be, immediately due and payable, all as provided in the Credit Agreement.
All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
Unless otherwise defined herein, terms defined in the Credit Agreement and
used herein shall have the meanings given to them in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK.
ANACOMP, INC.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
<PAGE>
LOANS, CONVERSIONS AND REPAYMENTS OF ABR LOANS
<TABLE>
<CAPTION>
Amount Amount of ABR Loans
Converted to Amount of Principal Converted to Unpaid Principal Balance
Date Amount of ABR Loans ABR Loans of ABR Loans Repaid Eurodollar Loans of ABR Loans
- -------- ------------------- ----------- ------------------- -------------------- -------------------------
<S><C>
</TABLE>
<PAGE>
EXHIBIT A-2
FORM OF TERM NOTE
$____________ New York, New York
February __, 1997
FOR VALUE RECEIVED, the undersigned, ANACOMP, INC., an Indiana corporation
(the "COMPANY"), hereby unconditionally promises to pay to the order of
_______________ (the "LENDER") at the office of THE FIRST NATIONAL BANK OF
CHICAGO, located at 1 First National Plaza, Chicago, Illinois, in lawful money
of the United States of America and in immediately available funds, the
principal amount of _____________ DOLLARS ($_________), or, if less, the unpaid
principal amount of the Term Loan made by the Lender pursuant to subsection 3.1
of the Credit Agreement, as hereinafter defined. The principal amount shall be
paid in the amounts and on the dated specified in subsection 3.3. The Company
further agrees to pay interest in like money at such office on the unpaid
principal amount hereof from time to time outstanding at the rates and on the
dates specified in subsections 6.1 and 6.2 of such Credit Agreement.
The holder of this Note is authorized to endorse on the schedules annexed
hereto and made a part hereof or on a continuation thereof which shall be
attached hereto and made a part hereof the date, Type and amount of the Term
Loan and the date and amount of each payment or prepayment of principal with
respect thereto, each conversion of all or a portion thereof to another Type,
each continuation of all or a portion thereof as the same Type and, in the case
of Eurodollar Loans, the length of each Interest Period with respect thereto.
Each such endorsement shall constitute PRIMA FACIE evidence of the accuracy of
the information endorsed. The failure to make any such endorsement shall not
affect the obligations of the Company in respect of such Term Loan.
This Note (a) is one of the Term Notes referred to in the Credit and
Guarantee Agreement dated as of February __, 1997 (as amended, supplemented or
otherwise modified from time to time, the "CREDIT AGREEMENT"), among the
Company, the Foreign Subsidiary Borrowers, the Lender, the other banks and
financial institutions from time to time parties thereto, The First National
Bank of Chicago, as agent and Lehman Commercial Paper Inc., as Arranger and
Syndication Agent, (b) is subject to the provisions of the Credit Agreement and
(c) is subject to optional and mandatory prepayment in whole or in part as
provided in the Credit Agreement. This Note is secured and guaranteed as
provided in the Loan Documents. Reference is hereby made to the Loan Documents
for a description of the properties and assets in which a security interest has
been granted, the nature and extent of the security and the guarantees, the
terms and conditions upon which the security interests and each guarantee were
granted and the rights of the holder of this Note in respect thereof.
Upon the occurrence of any one or more of the Events of Default, all
amounts then remaining unpaid on this Note shall become, or may be declared to
be, immediately due and payable, all as provided in the Credit Agreement.
<PAGE>
All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
Unless otherwise defined herein, terms defined in the Credit Agreement and
used herein shall have the meanings given to them in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK.
ANACOMP, INC.
By:___________________________________
Name:_________________________________
Title:________________________________
-2-
<PAGE>
<TABLE>
<CAPTION>
Schedule A
to Term Loan Note
LOANS, CONVERSIONS AND REPAYMENTS OF ABR LOANS
- -----------------------------------------------------------------------------------------------------------------------------------
Amount of ABR
Amount of ABR Amount Converted Amount of Principal Loans Converted to Unpaid Principal
Date Loans to ABR Loans of ABR Loans Repaid Eurodollar Loans Balance of ABR Loans Notation Made By
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Schedule B
to Term Loan Note
LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EURODOLLAR LOANS
Interest Period and Amount of Principal
Amount of Amount Converted Eurodollar Rate with of Eurodollar Loans
Date Eurodollar Loans to Eurodollar Loans Respect Thereto Repaid
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
<CAPTION>
Amount of Eurodollar Unpaid Principal
Loans Converted to Balance of Eurodollar
Date ABR Loans Loans Notation Made By
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
</TABLE>
<PAGE>
EXHIBIT B
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GUARANTEE AND COLLATERAL AGREEMENT
made by
ANACOMP, INC.
in favor of
THE FIRST NATIONAL BANK OF CHICAGO,
as Administrative Agent
Dated as of February 28, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. DEFINED TERMS................................................... 1
1.1 Definitions........................................................ 1
1.2 Other Definitional Provisions...................................... 5
SECTION 2. GUARANTEE....................................................... 6
2.1 Guarantee.......................................................... 6
2.2 Right of Contribution.............................................. 6
2.3 No Subrogation..................................................... 6
2.4 Amendments, etc. with respect to the Borrower Obligations.......... 7
2.5 Guarantee Absolute and Unconditional............................... 7
2.6 Reinstatement...................................................... 8
2.7 Payments........................................................... 8
SECTION 3. GRANT OF SECURITY INTEREST...................................... 8
SECTION 4. REPRESENTATIONS AND WARRANTIES.................................. 9
4.1 Representations in Credit Agreement................................ 9
4.2 Title; No Other Liens.............................................. 9
4.3 Perfected First Priority Liens..................................... 10
4.4 Chief Executive Office............................................. 10
4.5 Inventory and Equipment............................................ 10
4.6 Farm Products...................................................... 10
4.7 Pledged Securities................................................. 10
4.8 Receivables........................................................ 10
4.9 Intellectual Property.............................................. 11
SECTION 5. COVENANTS....................................................... 11
5.1 Covenants in Credit Agreement...................................... 11
5.2 Delivery of Instruments and Chattel Paper.......................... 11
5.3 Maintenance of Insurance........................................... 11
5.4 Payment of Obligations............................................. 12
5.5 Maintenance of Perfected Security Interest; Further Documentation.. 12
5.6 Changes in Locations, Name, etc.................................... 12
5.7 Notices............................................................ 13
5.8 Pledged Securities................................................. 13
5.9 Receivables........................................................ 14
5.10 Intellectual Property............................................. 14
SECTION 6. REMEDIAL PROVISIONS............................................. 15
6.1 Certain Matters Relating to Receivables............................ 15
6.2 Communications with Obligors; Grantors Remain Liable............... 16
6.3 Pledged Stock...................................................... 17
6.4 Proceeds to be Turned Over To Administrative Agent................. 17
6.5 Application of Proceeds............................................ 18
6.6 Code and Other Remedies............................................ 18
i
<PAGE>
PAGE
6.7 Private Sales...................................................... 19
6.8 Waiver; Deficiency................................................. 19
SECTION 7. THE ADMINISTRATIVE AGENT........................................ 19
7.1 Administrative Agent's Appointment as Attorney-in-Fact, etc........ 19
7.2 Duty of Administrative Agent....................................... 21
7.3 Execution of Financing Statements.................................. 21
7.4 Authority of Administrative Agent.................................. 21
SECTION 8. MISCELLANEOUS................................................... 22
8.1 Amendments in Writing.............................................. 22
8.2 Notices............................................................ 22
8.3 No Waiver by Course of Conduct; Cumulative Remedies................ 22
8.4 Enforcement Expenses; Indemnification.............................. 22
8.5 Successors and Assigns............................................. 23
8.6 Set-Off............................................................ 23
8.7 Counterparts....................................................... 23
8.8 Severability....................................................... 23
8.9 Section Headings................................................... 23
8.10 Integration....................................................... 24
8.11 GOVERNING LAW..................................................... 24
8.12 Submission To Jurisdiction; Waivers............................... 24
8.13 Acknowledgements.................................................. 24
8.14 WAIVER OF JURY TRIAL.............................................. 25
8.15 Additional Grantors............................................... 25
8.16 Judgment.......................................................... 25
8.17 Releases.......................................................... 25
ii
<PAGE>
SCHEDULES
Schedule 1 Notice Addresses of Guarantors
Schedule 2 Description of Pledged Securities
Schedule 3 Filings and Other Actions Required to Perfect Security Interests
Schedule 4 Location of Jurisdiction of Organization and Chief Executive
Office
Schedule 5 Location of Inventory and Equipment
Schedule 6 Copyrights and Copyright Licenses; Patents and Patent Licenses;
Trademark and Trademark Licenses
Schedule 7 Immaterial Subsidiaries
Schedule 8 Existing Prior Liens
<PAGE>
FORM OF
GUARANTEE AND COLLATERAL AGREEMENT
GUARANTEE AND COLLATERAL AGREEMENT, dated as of February 28, 1997,
made by each of the signatories hereto (together with any other entity that may
become a party hereto as provided herein, the "GRANTORS"), in favor of THE FIRST
NATIONAL BANK OF CHICAGO, as Administrative Agent (in such capacity, the
"ADMINISTRATIVE AGENT") for the banks and other financial institutions (the
"LENDERS") from time to time parties to the Credit and Guarantee Agreement,
dated as of February 28, 1997 (as amended, supplemented or otherwise modified
from time to time, the "CREDIT AGREEMENT"), among ANACOMP, INC., an Indiana
corporation (the "COMPANY"), the Foreign Subsidiary Borrowers parties thereto
(together with the Company, the "BORROWERS"), LEHMAN COMMERCIAL PAPER INC., as
Arranger and Syndication Agent, the Lenders and the Administrative Agent.
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Lenders have severally
agreed to make extensions of credit to the Borrowers upon the terms and subject
to the conditions set forth therein;
WHEREAS, each Borrower is a member of an affiliated group of companies
that includes each other Grantor;
WHEREAS, the proceeds of the extensions of credit under the Credit
Agreement will be used in part to enable the Borrowers to make valuable
transfers to one or more of the other Grantors in connection with the operation
of their respective businesses;
WHEREAS, the Borrowers and the other Grantors are engaged in related
businesses, and each Grantor will derive substantial direct and indirect benefit
from the making of the extensions of credit under the Credit Agreement; and
WHEREAS, it is a condition precedent to the obligation of the Lenders
to make their respective extensions of credit to the Borrowers under the Credit
Agreement that the Grantors shall have executed and delivered this Agreement to
the Administrative Agent for the ratable benefit of the Lenders;
NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective extensions of credit to the Borrower
thereunder, each Grantor hereby agrees with the Administrative Agent, for the
ratable benefit of the Lenders, as follows:
SECTION 1. DEFINED TERMS
1.1 DEFINITIONS. (a) Unless otherwise defined herein, terms defined
in the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement, and the following terms which are defined in the Uniform
Commercial Code in effect in the State of New York on the date hereof are used
herein as so defined: Accounts, Chattel Paper, Documents, Equipment, Farm
Products, Instruments and Inventory.
<PAGE>
2
(b) The following terms shall have the following meanings:
"AGREEMENT": this Guarantee and Collateral Agreement, as the same may
be amended, supplemented or otherwise modified from time to time.
"BORROWER OBLIGATIONS": in respect of any Borrower, the collective
reference to the unpaid principal of and interest on the Loans made to such
Borrower, the Reimbursement Obligations of such Borrower and all other
obligations and liabilities of such Borrower (including, without
limitation, interest accruing at the then applicable rate provided in the
Credit Agreement after the maturity of such Loans and Reimbursement
Obligations and interest accruing at the then applicable rate provided in
the Credit Agreement after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating
to such Borrower, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding, and including, with respect to the
Company, its guarantee obligations pursuant to Section 12 of the Credit
Agreement) to the Administrative Agent or any Lender (or, in the case of
any Hedge Agreement referred to below, any Affiliate of any Lender),
whether direct or indirect, absolute or contingent, due or to become due,
or now existing or hereafter incurred, which may arise under, out of, or in
connection with, the Credit Agreement, this Agreement, the other Loan
Documents, any Letter of Credit or any Hedge Agreement entered into by such
Borrower with any Lender (or any Affiliate of any Lender) or any other
document made, delivered or given in connection therewith, in each case
whether on account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation,
all fees and disbursements of counsel to the Administrative Agent or to the
Lenders that are required to be paid by such Borrower pursuant to the terms
of any of the foregoing agreements).
"COLLATERAL": as defined in Section 3.
"COLLATERAL ACCOUNT": any collateral account established by the
Administrative Agent as provided in Section 6.1 or 6.4.
"COPYRIGHTS": (i) all copyrights arising under the laws of the United
States, any other country or any political subdivision thereof, whether
registered or unregistered and whether published or unpublished (including,
without limitation, those listed in SCHEDULE 6), all registrations and
recordings thereof, and all applications in connection therewith,
including, without limitation, all registrations, recordings and
applications in the United States Copyright Office, and (ii) the right to
obtain all renewals thereof.
"COPYRIGHT LICENSES": any written agreement naming any Grantor as
licensor or licensee (including, without limitation, those listed in
SCHEDULE 6), granting any right under any Copyright, including, without
limitation, the grant of rights to manufacture, distribute, exploit and
sell materials derived from any Copyright, to the extent the grant by such
Grantor of a security interest pursuant to this Agreement in its right,
title and interest in such Copyright License is not prohibited by such
Copyright License without the consent of any other party thereto, would not
give any other party to such Copyright License the right to terminate its
obligations thereunder, or is permitted with consent if all necessary
consents to such grant of a security interest have been obtained from the
other parties thereto (it being understood that the
<PAGE>
3
foregoing shall not be deemed to obligate such Grantor to obtain such
consents); PROVIDED, that the foregoing limitation shall not affect, limit,
restrict or impair the grant by such Grantor of a security interest
pursuant to this Agreement in any money or other amounts due or to become
due under any such Copyright License.
"GENERAL INTANGIBLES": all "general intangibles" as such term is
defined in Section 9-106 of the Uniform Commercial Code in effect in the
State of New York on the date hereof and, in any event, including, without
limitation, with respect to any Grantor, all contracts, agreements,
instruments and indentures in any form, and portions thereof, to which such
Grantor is a party or under which such Grantor has any right, title or
interest or to which such Grantor or any property of such Grantor is
subject, as the same may from time to time be amended, supplemented or
otherwise modified, including, without limitation, (i) all rights of such
Grantor to receive moneys due and to become due to it thereunder or in
connection therewith, (ii) all rights of such Grantor to damages arising
thereunder and (iii) all rights of such Grantor to perform and to exercise
all remedies thereunder, in each case to the extent the grant by such
Grantor of a security interest pursuant to this Agreement in its right,
title and interest in such contract, agreement, instrument or indenture is
not prohibited by such contract, agreement, instrument or indenture without
the consent of any other party thereto, would not give any other party to
such contract, agreement, instrument or indenture the right to terminate
its obligations thereunder, or is permitted with consent if all necessary
consents to such grant of a security interest have been obtained from the
other parties thereto (it being understood that the foregoing shall not be
deemed to obligate such Grantor to obtain such consents); PROVIDED, that
the foregoing limitation shall not affect, limit, restrict or impair the
grant by such Grantor of a security interest pursuant to this Agreement in
any Receivable or any money or other amounts due or to become due under any
such contract, agreement, instrument or indenture.
"GUARANTOR OBLIGATIONS": with respect to any Guarantor, the
collective reference to (i) the Borrower Obligations of all Borrowers and
(ii) all obligations and liabilities of such Guarantor which may arise
under or in connection with this Agreement or any other Loan Document to
which such Guarantor is a party, in each case whether on account of
guarantee obligations, reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including, without limitation, all fees and
disbursements of counsel to the Administrative Agent or to the Lenders that
are required to be paid by such Guarantor pursuant to the terms of this
Agreement or any other Loan Document).
"GUARANTORS": the collective reference to each Grantor other than the
Company.
"HEDGE AGREEMENTS": as to any Person, all interest rate swaps, caps
or collar agreements or similar arrangements entered into by such Person
providing for protection against fluctuations in interest rates or currency
exchange rates or the exchange of nominal interest obligations, either
generally or under specific contingencies.
"IMMATERIAL SUBSIDIARY": the Subsidiaries of the Company listed on
Schedule 7.
"INTELLECTUAL PROPERTY": the collective reference to all rights,
priorities and privileges relating to intellectual property, whether
arising under United States, multinational or foreign laws or otherwise,
including, without limitation, the Copyrights, the Copyright Licenses, the
<PAGE>
4
Patents, the Patent Licenses, the Trademarks and the Trademark Licenses,
and all rights to sue at law or in equity for any infringement or other
impairment thereof, including the right to receive all proceeds and damages
therefrom.
"INTERCOMPANY NOTE": any promissory note evidencing loans made by any
Grantor to the Company or any of its Subsidiaries.
"ISSUERS": the collective reference to each issuer of a Pledged
Security.
"NEW YORK UCC": the Uniform Commercial Code as from time to time in
effect in the State of New York.
"OBLIGATIONS": (i) in the case of each Borrower, its Borrower
Obligations, and (ii) in the case of each Guarantor, its Guarantor
Obligations.
"PATENTS": (i) all letters patent of the United States, any other
country or any political subdivision thereof, all reissues and extensions
thereof and all goodwill associated therewith, including, without
limitation, any of the foregoing referred to in SCHEDULE 6, (ii) all
applications for letters patent of the United States or any other country
and all divisions, continuations and continuations-in-part thereof,
including, without limitation, any of the foregoing referred to in SCHEDULE
6, and (iii) all rights to obtain any reissues or extensions of the
foregoing.
"PATENT LICENSE": all agreements, whether written or oral, providing
for the grant by or to any Grantor of any right to manufacture, use or sell
any invention covered in whole or in part by a Patent, including, without
limitation, any of the foregoing referred to in SCHEDULE 6, to the extent
the grant by such Grantor of a security interest pursuant to this Agreement
in its right, title and interest in such Patent License is not prohibited
by such Patent License without the consent of any other party thereto,
would not give any other party to such Patent License the right to
terminate its obligations thereunder, or is permitted with consent if all
necessary consents to such grant of a security interest have been obtained
from the other parties thereto (it being understood that the foregoing
shall not be deemed to obligate such Grantor to obtain such consents);
PROVIDED, that the foregoing limitation shall not affect, limit, restrict
or impair the grant by such Grantor of a security interest pursuant to this
Agreement in any money or other amounts due or to become due under any such
Patent License.
"PLEDGED NOTES": all Intercompany Notes at any time issued to any
Grantor and all other promissory notes issued to or held by any Grantor
(other than promissory notes issued in connection with extensions of trade
credit by any Grantor in the ordinary course of business).
"PLEDGED SECURITIES": the collective reference to the Pledged Notes
and the Pledged Stock.
"PLEDGED STOCK": the shares of Capital Stock listed on SCHEDULE 2,
together with any other shares, stock certificates, options or rights of
any nature whatsoever pledged pursuant to subsection 9.9 of the Credit
Agreement.
<PAGE>
5
"PROCEEDS": all "proceeds" as such term is defined in Section 9-
306(1) of the Uniform Commercial Code in effect in the State of New York on the
date hereof and, in any event, shall include, without limitation, all dividends
or other income from the Pledged Securities, collections thereon or
distributions or payments with respect thereto.
"RECEIVABLE": any right to payment for goods sold or leased or for
services rendered, whether or not such right is evidenced by an Instrument
or Chattel Paper and whether or not it has been earned by performance
(including, without limitation, any Account).
"SECURITIES ACT": the Securities Act of 1933, as amended.
"TRADEMARKS": (i) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, and all
goodwill associated therewith, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications in
connection therewith, whether in the United States Patent and Trademark
Office or in any similar office or agency of the United States, any State
thereof or any other country or any political subdivision thereof, or
otherwise, and all common-law rights related thereto, including, without
limitation, any of the foregoing referred to in SCHEDULE 6, and (ii) the
right to obtain all renewals thereof.
"TRADEMARK LICENSE": any agreement, whether written or oral,
providing for the grant by or to any Grantor of any right to use any
Trademark, including, without limitation, any of the foregoing referred to
in SCHEDULE 6, to the extent the grant by such Grantor of a security
interest pursuant to this Agreement in its right, title and interest in
such Trademark License is not prohibited by such Trademark License without
the consent of any other party thereto, would not give any other party to
such Trademark License the right to terminate its obligations thereunder,
or is permitted with consent if all necessary consents to such grant of a
security interest have been obtained from the other parties thereto (it
being understood that the foregoing shall not be deemed to obligate such
Grantor to obtain such consents); PROVIDED, that the foregoing limitation
shall not affect, limit, restrict or impair the grant by such Grantor of a
security interest pursuant to this Agreement in any money or other amounts
due or to become due under any such Trademark License.
"VEHICLES": all cars, trucks, trailers, construction and earth moving
equipment and other vehicles covered by a certificate of title law of any
state.
1.2 OTHER DEFINITIONAL PROVISIONS. (a) The words "hereof," "herein",
"hereto" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Section and Schedule references are to this Agreement unless
otherwise specified.
(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
(c) Where the context requires, terms relating to the Collateral or
any part thereof, when used in relation to a Grantor, shall refer to such
Grantor's Collateral or the relevant part thereof.
<PAGE>
6
SECTION 2. GUARANTEE
2.1 GUARANTEE. (a) Each of the Guarantors hereby, jointly and
severally, unconditionally and irrevocably, guarantees to the Administrative
Agent, for the ratable benefit of the Lenders and their respective successors,
indorsees, transferees and assigns, the prompt and complete payment and
performance when due (whether at the stated maturity, by acceleration or
otherwise) of the Borrower Obligations of all Borrowers.
(b) Anything herein or in any other Loan Document to the contrary
notwithstanding, the maximum liability of each Guarantor hereunder and under the
other Loan Documents shall in no event exceed the amount which can be guaranteed
by such Guarantor under applicable federal and state laws relating to the
insolvency of debtors (after giving effect to the right of contribution
established in Section 2.2).
(c) Each Guarantor agrees that the Borrower Obligations of one or more
Borrowers may at any time and from time to time exceed the amount of the
liability of such Guarantor hereunder without impairing the guarantee contained
in this Section 2 or affecting the rights and remedies of the Administrative
Agent or any Lender hereunder.
(d) The guarantee contained in this Section 2 shall remain in full
force and effect until all the Borrower Obligations and the obligations of each
Guarantor under the guarantee contained in this Section 2 shall have been
satisfied by payment in full, no Letter of Credit shall be outstanding and the
Commitments shall be terminated, notwithstanding that from time to time during
the term of the Credit Agreement the Borrowers may be free from any Borrower
Obligations.
(e) No payment made by any Borrower, any of the Guarantors, any other
guarantor or any other Person or received or collected by the Administrative
Agent or any Lender from any Borrower, any of the Guarantors, any other
guarantor or any other Person by virtue of any action or proceeding or any
set-off or appropriation or application at any time or from time to time in
reduction of or in payment of any of the Borrower Obligations shall be deemed to
modify, reduce, release or otherwise affect the liability of any Guarantor
hereunder which shall, notwithstanding any such payment (other than any payment
made by such Guarantor in respect of such Borrower Obligations or any payment
received or collected from such Guarantor in respect of such Borrower
Obligations), remain liable for the Borrower Obligations of all Borrowers up to
the maximum liability of such Guarantor hereunder until all Borrower Obligations
are paid in full, no Letter of Credit shall be outstanding and the Commitments
are terminated.
2.2 RIGHT OF CONTRIBUTION. Each Guarantor hereby agrees that to the
extent that a Guarantor shall have paid more than its proportionate share of any
payment made hereunder, such Guarantor shall be entitled to seek and receive
contribution from and against any other Guarantor hereunder which has not paid
its proportionate share of such payment. Each Guarantor's right of contribution
shall be subject to the terms and conditions of Section 2.3. The provisions of
this Section 2.2 shall in no respect limit the obligations and liabilities of
any Guarantor to the Administrative Agent and the Lenders, and each Guarantor
shall remain liable to the Administrative Agent and the Lenders for the full
amount guaranteed by such Guarantor hereunder.
<PAGE>
7
2.3 NO SUBROGATION. Notwithstanding any payment made by any Guarantor
hereunder or any set-off or application of funds of any Guarantor by the
Administrative Agent or any Lender, no Guarantor shall be entitled to be
subrogated to any of the rights of the Administrative Agent or any Lender
against any Borrower or any other Guarantor or any collateral security or
guarantee or right of offset held by the Administrative Agent or any Lender for
the payment of the Borrower Obligations, nor shall any Guarantor seek or be
entitled to seek any contribution or reimbursement from any Borrower or any
other Guarantor in respect of payments made by such Guarantor hereunder, until
all amounts owing to the Administrative Agent and the Lenders by the Borrowers
on account of the Borrower Obligations are paid in full, no Letter of Credit
shall be outstanding and the Commitments are terminated. If any amount shall be
paid to any Guarantor on account of such subrogation rights at any time when all
of the Borrower Obligations shall not have been paid in full, such amount shall
be held by such Guarantor in trust for the Administrative Agent and the Lenders,
segregated from other funds of such Guarantor, and shall, forthwith upon receipt
by such Guarantor, be turned over to the Administrative Agent in the exact form
received by such Guarantor (duly indorsed by such Guarantor to the
Administrative Agent, if required), to be applied against the Borrower
Obligations, whether matured or unmatured, in such order as the Administrative
Agent may determine.
2.4 AMENDMENTS, ETC. WITH RESPECT TO THE BORROWER OBLIGATIONS. Each
Guarantor shall remain obligated hereunder notwithstanding that, without any
reservation of rights against any Guarantor and without notice to or further
assent by any Guarantor, any demand for payment of any of the Borrower
Obligations made by the Administrative Agent or any Lender may be rescinded by
the Administrative Agent or such Lender and any of the Borrower Obligations
continued, and the Borrower Obligations, or the liability of any other Person
upon or for any part thereof, or any collateral security or guarantee therefor
or right of offset with respect thereto, may, from time to time, in whole or in
part, be renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by the Administrative Agent or any Lender, and the
Credit Agreement and the other Loan Documents and any other documents executed
and delivered in connection therewith may be amended, modified, supplemented or
terminated, in whole or in part, as the Administrative Agent (or the Required
Lenders or all Lenders, as the case may be) may deem advisable from time to
time, and any collateral security, guarantee or right of offset at any time held
by the Administrative Agent or any Lender for the payment of the Borrower
Obligations may be sold, exchanged, waived, surrendered or released. Neither
the Administrative Agent nor any Lender shall have any obligation to protect,
secure, perfect or insure any Lien at any time held by it as security for the
Borrower Obligations or for the guarantee contained in this Section 2 or any
property subject thereto.
2.5 GUARANTEE ABSOLUTE AND UNCONDITIONAL. Each Guarantor waives any
and all notice of the creation, renewal, extension or accrual of any of the
Borrower Obligations and notice of or proof of reliance by the Administrative
Agent or any Lender upon the guarantee contained in this Section 2 or acceptance
of the guarantee contained in this Section 2; the Borrower Obligations, and any
of them, shall conclusively be deemed to have been created, contracted or
incurred, or renewed, extended, amended or waived, in reliance upon the
guarantee contained in this Section 2; and all dealings between the Borrowers
and any of the Guarantors, on the one hand, and the Administrative Agent and the
Lenders, on the other hand, likewise shall be conclusively presumed to have been
had or consummated in reliance upon the guarantee contained in this Section 2.
Each Guarantor waives diligence, presentment, protest, demand for payment and
notice of default or nonpayment to or upon any Borrower or any of the Guarantors
with respect to the Borrower Obligations. Each Guarantor understands and agrees
that the guarantee contained in this Section 2 shall be construed as a
continuing,
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8
absolute and unconditional guarantee of payment without regard to (a) the
validity or enforceability of the Credit Agreement or any other Loan Document,
any of the Borrower Obligations or any other collateral security therefor or
guarantee or right of offset with respect thereto at any time or from time to
time held by the Administrative Agent or any Lender, (b) any defense, set-off or
counterclaim (other than a defense of payment or performance) which may at any
time be available to or be asserted by any Borrower or any other Person against
the Administrative Agent or any Lender, or (c) any other circumstance whatsoever
(with or without notice to or knowledge of any Borrower or such Guarantor) which
constitutes, or might be construed to constitute, an equitable or legal
discharge of any Borrower for the Borrower Obligations, or of such Guarantor
under the guarantee contained in this Section 2, in bankruptcy or in any other
instance. When making any demand hereunder or otherwise pursuing its rights and
remedies hereunder against any Guarantor, the Administrative Agent or any Lender
may, but shall be under no obligation to, make a similar demand on or otherwise
pursue such rights and remedies as it may have against any Borrower, any other
Guarantor or any other Person or against any collateral security or guarantee
for the Borrower Obligations or any right of offset with respect thereto, and
any failure by the Administrative Agent or any Lender to make any such demand,
to pursue such other rights or remedies or to collect any payments from any
Borrower, any other Guarantor or any other Person or to realize upon any such
collateral security or guarantee or to exercise any such right of offset, or any
release of any Borrower, any other Guarantor or any other Person or any such
collateral security, guarantee or right of offset, shall not relieve any
Guarantor of any obligation or liability hereunder, and shall not impair or
affect the rights and remedies, whether express, implied or available as a
matter of law, of the Administrative Agent or any Lender against any Guarantor.
For the purposes hereof "demand" shall include the commencement and continuance
of any legal proceedings.
2.6 REINSTATEMENT. The guarantee contained in this Section 2 shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Borrower Obligations is rescinded or
must otherwise be restored or returned by the Administrative Agent or any Lender
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
any Borrower or any Guarantor, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for, any
Borrower or any Guarantor or any substantial part of its property, or otherwise,
all as though such payments had not been made.
2.7 PAYMENTS. Each Guarantor hereby guarantees that payments
hereunder will be paid to the Administrative Agent without set-off or
counterclaim in the currency in which such payment is due pursuant to the Credit
Agreement at the relevant payment office specified in the Credit Agreement.
SECTION 3. GRANT OF SECURITY INTEREST
Each Grantor hereby assigns and transfers to the Administrative Agent,
and hereby grants to the Administrative Agent, for the ratable benefit of the
Lenders, a security interest in, all of the following property now owned or at
any time hereafter acquired by such Grantor or in which such Grantor now has or
at any time in the future may acquire any right, title or interest
(collectively, the "COLLATERAL"), as collateral security for the prompt and
complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of such Grantor's Obligations,:
(a) all Accounts;
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9
(b) all Chattel Paper;
(c) all Documents;
(d) all Equipment;
(e) all General Intangibles;
(f) all Instruments;
(g) all Intellectual Property;
(h) all Inventory;
(i) all Pledged Securities;
(j) all Vehicles;
(k) all books and records pertaining to the Collateral; and
(l) to the extent not otherwise included, all Proceeds and products of
any and all of the foregoing and all collateral security and guarantees
given by any Person with respect to any of the foregoing.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into the
Credit Agreement and to induce the Lenders to make their respective extensions
of credit to the Borrower thereunder, each Grantor hereby represents and
warrants to the Administrative Agent and each Lender that:
4.1 REPRESENTATIONS IN CREDIT AGREEMENT. In the case of each
Guarantor, the representations and warranties set forth in Section 8 of the
Credit Agreement as they relate to such Guarantor or to the Loan Documents to
which such Guarantor is a party, each of which is hereby incorporated herein by
reference, are true and correct, and the Administrative Agent and each Lender
shall be entitled to rely on each of them as if they were fully set forth
herein, PROVIDED that each reference in each such representation and warranty to
the Company knowledge shall, for the purposes of this Section 4.1, be deemed to
be a reference to such Guarantor's knowledge.
4.2 TITLE; NO OTHER LIENS. Except for the security interest granted
to the Administrative Agent for the ratable benefit of the Lenders pursuant to
this Agreement and the other Liens permitted to exist on the Collateral by the
Credit Agreement, such Grantor owns each item of the Collateral free and clear
of any and all Liens or claims of others except Liens permitted to exist
pursuant to the Credit Agreement. No financing statement or other public notice
with respect to all or any part of the Collateral is on file or of record in any
public office, except such as have been filed in favor of the Administrative
Agent, for the ratable benefit of the Lenders, pursuant to this Agreement or as
are permitted by the Credit Agreement.
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10
4.3 PERFECTED FIRST PRIORITY LIENS. The security interests granted
pursuant to this Agreement (a) upon completion of the filings and other actions
specified on SCHEDULE 3 (which, in the case of all filings and other documents
referred to on said Schedule, have been delivered to the Administrative Agent in
completed and duly executed form) will constitute valid perfected security
interests in all of the Collateral in favor of the Administrative Agent, for the
ratable benefit of the Lenders, as collateral security for such Grantor's
Obligations, enforceable in accordance with the terms hereof against all
creditors of such Grantor and any Persons purporting to purchase any Collateral
from such Grantor and (b) are prior to all other Liens on the Collateral in
existence on the date hereof except for (i) unrecorded Liens permitted by the
Credit Agreement which have priority over the Liens on the Collateral by
operation of law and (ii) Liens described on SCHEDULE 8 and except to the extent
that filings outside the United States might be required to perfect such
security interest in non-U.S. intellectual property.
4.4 CHIEF EXECUTIVE OFFICE. On the date hereof, such Grantor's
jurisdiction of organization and the location of such Grantor's chief executive
office or sole place of business are specified on SCHEDULE 4.
4.5 INVENTORY AND EQUIPMENT. On the date hereof, the Inventory and
the Equipment (other than mobile goods) are kept at the locations listed on
SCHEDULE 5.
4.6 FARM PRODUCTS. None of the Collateral constitutes, or is the
Proceeds of, Farm Products.
4.7 PLEDGED SECURITIES. (a) The shares of Pledged Stock pledged by
such Grantor hereunder constitute all the issued and outstanding shares of all
classes of the Capital Stock of each Issuer owned by such Grantor, except that
the shares of Pledged Stock of any Issuer which is a Foreign Subsidiary
constitute no more than 65% of all the issued and outstanding Capital Stock of
such Issuer.
(b) All the shares of the Pledged Stock have been duly and validly
issued and, to the extent the same are shares of Capital Stock of a corporation,
are fully paid and nonassessable.
(c) Each of the Pledged Notes constitutes the legal, valid and binding
obligation of the obligor with respect thereto, enforceable in accordance with
its terms, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of good
faith and fair dealing.
(d) Such Grantor is the record and beneficial owner of, and has good
and marketable title to, the Pledged Securities pledged by it hereunder, free of
any and all Liens or options in favor of, or claims of, any other Person, except
the security interest created by this Agreement.
4.8 RECEIVABLES. (a) No amount payable to such Grantor under or in
connection with any Receivable is evidenced by any Instrument or Chattel Paper
which has not been delivered to the Administrative Agent.
(b) Receivables in respect of which a Governmental Authority is the
obligor do not constitute more than 8%, in face amount, of all Receivables.
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11
(c) The amounts represented by such Grantor to the Lenders from time
to time as owing to such Grantor in respect of the Receivables will at such
times be accurate.
4.9 INTELLECTUAL PROPERTY. (a) SCHEDULE 6 lists all Intellectual
Property owned by such Grantor in its own name on the date hereof.
(b) On the date hereof, to the best of such Grantor's knowledge, all
material Intellectual Property is valid, subsisting, unexpired and enforceable,
has not been abandoned and does not infringe the intellectual property rights of
any other Person.
(c) Except as set forth in SCHEDULE 6, on the date hereof, none of the
Intellectual Property is the subject of any licensing or franchise agreement
pursuant to which such Grantor is the licensor or franchisor.
(d) No holding, decision or judgment has been rendered by any
Governmental Authority which would limit, cancel or question the validity of, or
such Grantor's rights in, any Intellectual Property in any respect that could
reasonably be expected to have a Material Adverse Effect.
(e) No action or proceeding is pending, or, to the knowledge of such
Grantor, threatened, on the date hereof (i) seeking to limit, cancel or question
the validity of any Intellectual Property or such Grantor's ownership interest
therein, or (ii) which, if adversely determined, could reasonably be expected to
have a Material Adverse Effect.
SECTION 5. COVENANTS
Each Grantor covenants and agrees with the Administrative Agent and
the Lenders that, from and after the date of this Agreement until the
Obligations shall have been paid in full, no Letter of Credit shall be
outstanding and the Commitments shall have terminated:
5.1 COVENANTS IN CREDIT AGREEMENT. In the case of each Guarantor,
such Guarantor shall comply with and perform each covenant set forth in the
Credit Agreement applicable thereto as if such Guarantor were a party to the
Credit Agreement.
5.2 DELIVERY OF INSTRUMENTS AND CHATTEL PAPER. If any amount payable
under or in connection with any of the Collateral shall be or become evidenced
by any Instrument or Chattel Paper, such Instrument or Chattel Paper shall be
immediately delivered to the Administrative Agent, duly indorsed in a manner
satisfactory to the Administrative Agent, to be held as Collateral pursuant to
this Agreement.
5.3 MAINTENANCE OF INSURANCE. (a) Such Grantor will maintain, with
financially sound and reputable companies, insurance policies (i) insuring the
Inventory, Equipment and Vehicles against loss by fire, explosion, theft and
such other casualties as may be reasonably satisfactory to the Administrative
Agent and (ii) insuring such Grantor, the Administrative Agent and the Lenders
against liability for personal injury and property damage relating to such
Inventory, Equipment and Vehicles, such policies to be in such form and amounts
and having such coverage as may be reasonably
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12
satisfactory to the Administrative Agent and the Lenders. By its acceptance of
this Agreement the Administrative Agent and each Lender acknowledges its
satisfaction with the insurance policies of the Grantors in existence on the
Closing Date.
(b) All such insurance shall (i) provide that no cancellation,
material reduction in amount or material change in coverage thereof shall be
effective until at least 30 days after receipt by the Administrative Agent of
written notice thereof, (ii) name the Administrative Agent as insured party or
loss payee, (iii) if reasonably requested by the Administrative Agent, include a
breach of warranty clause and (iv) be reasonably satisfactory in all other
respects to the Administrative Agent.
(c) The Borrower shall deliver to the Administrative Agent and the
Lenders a report of a reputable insurance broker with respect to such insurance
during the month of February in each calendar year and such supplemental reports
with respect thereto as the Administrative Agent may from time to time
reasonably request.
5.4 PAYMENT OF OBLIGATIONS. Such Grantor will pay and discharge or
otherwise satisfy at or before maturity or before they become delinquent, as the
case may be, all taxes, assessments and governmental charges or levies imposed
upon the Collateral or in respect of income or profits therefrom, as well as all
claims of any kind (including, without limitation, claims for labor, materials
and supplies) against or with respect to the Collateral, except that no such
charge need be paid if the amount or validity thereof is currently being
contested in good faith by appropriate proceedings, reserves in conformity with
GAAP with respect thereto have been provided on the books of such Grantor and
such proceedings could not reasonably be expected to result in the sale,
forfeiture or loss of any material portion of the Collateral or any interest
therein.
5.5 MAINTENANCE OF PERFECTED SECURITY INTEREST; FURTHER DOCUMENTATION.
(a) Such Grantor shall maintain the security interest created by this Agreement
as a perfected security interest having at least the priority described in
Section 4.3 and shall defend such security interest against the claims and
demands of all Persons whomsoever.
(b) Such Grantor will furnish to the Administrative Agent and the
Lenders from time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as the Administrative Agent may reasonably request, all in reasonable
detail.
(c) At any time and from time to time, upon the written request of the
Administrative Agent, and at the sole expense of such Grantor, such Grantor will
promptly and duly execute and deliver, and have recorded, such further
instruments and documents and take such further actions as the Administrative
Agent may reasonably request for the purpose of obtaining or preserving the full
benefits of this Agreement and of the rights and powers herein granted,
including, without limitation, the filing of any financing or continuation
statements under the Uniform Commercial Code (or other similar laws) in effect
in any jurisdiction with respect to the security interests created hereby.
5.6 CHANGES IN LOCATIONS, NAME, ETC. Such Grantor will not, except
upon 15 days' prior written notice to the Administrative Agent and delivery to
the Administrative Agent of (a) all additional executed financing statements and
other documents reasonably requested by the Administrative Agent to maintain the
validity, perfection and priority of the security interests provided
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13
for herein and (b) if applicable, a written supplement to SCHEDULE 5 showing any
additional location at which Inventory or Equipment shall be kept:
(i) permit any of the Inventory or Equipment to be kept at a location
other than those listed on SCHEDULE 5;
(ii) change the location of its chief executive office or sole place
of business from that referred to in Section 4.4; or
(iii) change its name, identity or corporate structure to such an
extent that any financing statement filed by the Administrative Agent in
connection with this Agreement would become misleading.
5.7 NOTICES. Such Grantor will advise the Administrative Agent and
the Lenders promptly, in reasonable detail, of:
(a)any Lien (other than security interests created hereby or Liens
permitted under the Credit Agreement) on any of the Collateral which would
adversely affect the ability of the Administrative Agent to exercise any of its
remedies hereunder; and
(b)of the occurrence of any other event which could reasonably be
expected to have a material adverse effect on the aggregate value of the
Collateral or on the security interests created hereby.
5.8 PLEDGED SECURITIES. (a) If such Grantor shall become entitled to
receive or shall receive any stock certificate (including, without limitation,
any certificate representing a stock dividend or a distribution in connection
with any reclassification, increase or reduction of capital or any certificate
issued in connection with any reorganization), option or rights in respect of
the Capital Stock of any Issuer, whether in addition to, in substitution of, as
a conversion of, or in exchange for, any shares of the Pledged Stock, or
otherwise in respect thereof, such Grantor shall accept the same as the agent of
the Administrative Agent and the Lenders, hold the same in trust for the
Administrative Agent and the Lenders and deliver the same forthwith to the
Administrative Agent in the exact form received, duly indorsed by such Grantor
to the Administrative Agent, if required, together with an undated stock power
covering such certificate duly executed in blank by such Grantor and with, if
the Administrative Agent so requests, signature guaranteed, to be held by the
Administrative Agent, subject to the terms hereof, as additional collateral
security for the Obligations, PROVIDED that the foregoing shall not require any
Grantor to so deliver any such Capital Stock of any Issuer which is a Foreign
Subsidiary if, as a result thereof, the Capital Stock of such Foreign Subsidiary
pledged hereunder would exceed 65% of all Capital Stock of such Foreign
Subsidiary. Any sums paid upon or in respect of the Pledged Securities upon the
liquidation or dissolution of any Issuer shall be paid over to the
Administrative Agent to be held by it hereunder as additional collateral
security for the Obligations, and in case any distribution of capital shall be
made on or in respect of the Pledged Securities or any property shall be
distributed upon or with respect to the Pledged Securities pursuant to the
recapitalization or reclassification of the capital of any Issuer or pursuant to
the reorganization thereof, the property so distributed shall, unless otherwise
subject to a perfected security interest in favor of the Administrative Agent,
be delivered to the Administrative Agent to be held by it hereunder as
additional collateral security for the Obligations. If any sums of money or
property so paid or distributed in respect of the
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14
Pledged Securities shall be received by such Grantor, such Grantor shall, until
such money or property is paid or delivered to the Administrative Agent, hold
such money or property in trust for the Lenders, segregated from other funds of
such Grantor, as additional collateral security for the Obligations.
(b) Without the prior written consent of the Administrative Agent,
such Grantor will not (i) vote to enable, or take any other action to permit,
any Issuer to issue any stock or other equity securities of any nature or to
issue any other securities convertible into or granting the right to purchase or
exchange for any stock or other equity securities of any nature of any Issuer,
(ii) sell, assign, transfer, exchange, or otherwise dispose of, or grant any
option with respect to, the Pledged Securities or Proceeds thereof (except
pursuant to a transaction expressly permitted by the Credit Agreement), (iii)
create, incur or permit to exist any Lien or option in favor of, or any claim of
any Person with respect to, any of the Pledged Securities or Proceeds thereof,
or any interest therein, except for the security interests created by this
Agreement or (iv) enter into any agreement or undertaking restricting the right
or ability of such Grantor or the Administrative Agent to sell, assign or
transfer any of the Pledged Securities or Proceeds thereof.
(c) In the case of each Grantor which is an Issuer, such Issuer agrees
that (i) it will be bound by the terms of this Agreement relating to the Pledged
Securities issued by it and will comply with such terms insofar as such terms
are applicable to it, (ii) it will notify the Administrative Agent promptly in
writing of the occurrence of any of the events described in Section 5.8(a) with
respect to the Pledged Securities issued by it and (iii) the terms of Section
6.3(c) shall apply to it, MUTATIS MUTANDIS, with respect to all actions that may
be required of it pursuant to Section 6.3(c) with respect to the Pledged
Securities issued by it.
5.9 RECEIVABLES. (a) Other than in the ordinary course of business
consistent with its past practice, such Grantor will not (i) grant any extension
of the time of payment of any Receivable, (ii) compromise or settle any
Receivable for less than the full amount thereof, (iii) release, wholly or
partially, any Person liable for the payment of any Receivable, (iv) allow any
credit or discount whatsoever on any Receivable or (v) amend, supplement or
modify any Receivable in any manner that could adversely affect the value
thereof.
(b) Such Grantor will deliver to the Administrative Agent a copy of
each material demand, notice or document received by it that questions or calls
into doubt the validity or enforceability of more than 5% of the aggregate
amount of the then outstanding Receivables.
5.10 INTELLECTUAL PROPERTY. (a) Such Grantor (either itself or
through licensees) will (i) continue to use each material Trademark on each and
every trademark class of goods applicable to its current line as reflected in
its current catalogs, brochures and price lists in order to maintain such
Trademark in full force free from any claim of abandonment for non-use, (ii)
maintain as in the past the quality of products and services offered under such
Trademark, (iii) use such Trademark with any appropriate notice of registration
and all other notices and legends required by applicable Requirements of Law,
(iv) not adopt or use any mark which is confusingly similar or a colorable
imitation of such Trademark unless the Administrative Agent, for the ratable
benefit of the Lenders, shall obtain a perfected security interest in such mark
pursuant to this Agreement, and (v) not (and not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act whereby such
Trademark may become invalidated or impaired in any way.
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15
(b) Such Grantor (either itself or through licensees) will not do any
act, or omit to do any act, whereby any material Patent may become forfeited,
abandoned or dedicated to the public.
(c) Such Grantor (either itself or through licensees) (i) will employ
each material Copyright and (ii) will not (and will not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act whereby any
material portion of such Copyrights may become invalidated or otherwise
impaired. Such Grantor will not (either itself or through licensees) do any act
whereby any material portion of such Copyrights may fall into the public domain.
(d) Such Grantor (either itself or through licensees) will not do any
act that knowingly uses any material Intellectual Property to infringe the
intellectual property rights of any other Person.
(e) Such Grantor will notify the Administrative Agent and the Lenders
immediately if it knows, or has reason to know, that any application or
registration relating to any material Intellectual Property may become
forfeited, abandoned or dedicated to the public, or of any adverse determination
or development (including, without limitation, the institution of, or any such
determination or development in, any proceeding in the United States Patent and
Trademark Office, the United States Copyright Office or any court or tribunal in
any country) regarding such Grantor's ownership of, or the validity of, any
material Intellectual Property or such Grantor's right to register the same or
to own and maintain the same.
(f) Whenever such Grantor, either by itself or through any agent,
employee, licensee or designee, shall file an application for the registration
of any Intellectual Property with the United States Patent and Trademark Office,
the United States Copyright Office or any similar office or agency in any State
of the United States, such Grantor shall report such filing to the
Administrative Agent within five Business Days after the last day of the fiscal
quarter in which such filing occurs. Upon request of the Administrative Agent,
such Grantor shall execute and deliver, and have recorded, any and all
agreements, instruments, documents, and papers as the Administrative Agent may
reasonably request to evidence the Administrative Agent's and the Lenders'
security interest in any Copyright, Patent or Trademark and the goodwill and
general intangibles of such Grantor relating thereto or represented thereby.
(g) Such Grantor will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the United States Patent
and Trademark Office, the United States Copyright Office or any similar office
or agency in any State of the United States, to maintain and pursue each
application (and to obtain the relevant registration) and to maintain each
registration of the material Intellectual Property, including, without
limitation, filing of applications for renewal, affidavits of use and affidavits
of incontestability.
(h) In the event that any material Intellectual Property is infringed,
misappropriated or diluted by a third party, such Grantor shall (i) take such
actions as such Grantor shall reasonably deem appropriate under the
circumstances to protect such Intellectual Property and (ii) if such
Intellectual Property is of material economic value, promptly notify the
Administrative Agent after it learns thereof and sue for infringement,
misappropriation or dilution, to seek injunctive relief where appropriate and to
recover any and all damages for such infringement, misappropriation or dilution.
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16
SECTION 6. REMEDIAL PROVISIONS
6.1 CERTAIN MATTERS RELATING TO RECEIVABLES. (a) The Administrative
Agent shall have the right to make test verifications of the Receivables in any
manner and through any medium that it reasonably considers advisable, and each
Grantor shall furnish all such assistance and information as the Administrative
Agent may require in connection with such test verifications. At any time and
from time to time (but not more frequently than once per fiscal quarter), upon
the Administrative Agent's request and at the expense of the relevant Grantor,
such Grantor shall cause independent public accountants or others satisfactory
to the Administrative Agent to furnish to the Administrative Agent reports
showing reconciliations, aging and test verifications of, and trial balances
for, the Receivables.
(b) The Administrative Agent hereby authorizes each Grantor to collect
such Grantor's Receivables, subject to the Administrative Agent's direction and
control, and the Administrative Agent may curtail or terminate said authority at
any time and only at any time after the occurrence and during the continuance of
an Event of Default. If required by the Administrative Agent at any time after
the occurrence and during the continuance of an Event of Default, any payments
of Receivables, when collected by any Grantor, (i) shall be forthwith (and, in
any event, within two Business Days) deposited by such Grantor in the exact form
received, duly indorsed by such Grantor to the Administrative Agent if required,
in a Collateral Account maintained under the sole dominion and control of the
Administrative Agent, subject to withdrawal by the Administrative Agent for the
account of the Lenders only as provided in Section 6.5, and (ii) until so turned
over, shall be held by such Grantor in trust for the Administrative Agent and
the Lenders, segregated from other funds of such Grantor. Each such deposit of
Proceeds of Receivables shall be accompanied by a report identifying in
reasonable detail the nature and source of the payments included in the deposit.
(c) At the Administrative Agent's request, at any time after the
occurrence and during the continuance of an Event of Default, each Grantor shall
deliver to the Administrative Agent all original and other documents evidencing,
and relating to, the agreements and transactions which gave rise to the
Receivables, including, without limitation, all original orders, invoices and
shipping receipts.
6.2 COMMUNICATIONS WITH OBLIGORS; GRANTORS REMAIN LIABLE. (a) The
Administrative Agent in its own name or in the name of others may at any time
after the occurrence and during the continuance of an Event of Default
communicate with obligors under the Receivables to verify with them to the
Administrative Agent's satisfaction the existence, amount and terms of any
Receivables.
(b) Upon the request of the Administrative Agent at any time after the
occurrence and during the continuance of an Event of Default, each Grantor shall
notify obligors on the Receivables that the Receivables have been assigned to
the Administrative Agent for the ratable benefit of the Lenders and that
payments in respect thereof shall be made directly to the Administrative Agent.
(c) Anything herein to the contrary notwithstanding, each Grantor
shall remain liable under each of the Receivables to observe and perform all the
conditions and obligations to be observed and performed by it thereunder, all in
accordance with the terms of any agreement giving rise thereto. Neither the
Administrative Agent nor any Lender shall have any obligation or liability under
any Receivable (or any agreement giving rise thereto) by reason of or arising
out of this Agreement or the receipt by the Administrative Agent or any Lender
of any payment relating thereto, nor shall the Administrative Agent or any
Lender be obligated in any manner to perform any of the obligations of
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17
any Grantor under or pursuant to any Receivable (or any agreement giving rise
thereto), to make any payment, to make any inquiry as to the nature or the
sufficiency of any payment received by it or as to the sufficiency of any
performance by any party thereunder, to present or file any claim, to take any
action to enforce any performance or to collect the payment of any amounts which
may have been assigned to it or to which it may be entitled at any time or
times.
6.3 PLEDGED STOCK. (a) Unless an Event of Default shall have occurred
and be continuing and the Administrative Agent shall have given notice to the
relevant Grantor of the Administrative Agent's intent to exercise its
corresponding rights pursuant to Section 6.3(b), each Grantor shall be permitted
to receive all cash dividends paid in respect of the Pledged Stock and all
payments made in respect of the Pledged Notes, in each case paid in the normal
course of business of the relevant Issuer and consistent with past practice, to
the extent permitted in the Credit Agreement, and to exercise all voting and
corporate rights with respect to the Pledged Securities; PROVIDED, HOWEVER, that
no vote shall be cast or corporate right exercised or other action taken which,
in the Administrative Agent's reasonable judgment, would impair the Collateral
or which would be inconsistent with or result in any violation of any provision
of the Credit Agreement, this Agreement or any other Loan Document.
(b) If an Event of Default shall occur and be continuing and the
Administrative Agent shall give notice of its intent to exercise such rights to
the relevant Grantor or Grantors, (i) the Administrative Agent shall have the
right to receive any and all cash dividends, payments or other Proceeds paid in
respect of the Pledged Securities and make application thereof to the
Obligations in such order as the Credit Agreement shall prescribe, and (ii) any
or all of the Pledged Securities shall be registered in the name of the
Administrative Agent or its nominee, and the Administrative Agent or its nominee
may thereafter exercise (x) all voting, corporate and other rights pertaining to
such Pledged Securities at any meeting of shareholders of the relevant Issuer or
Issuers or otherwise and (y) any and all rights of conversion, exchange and
subscription and any other rights, privileges or options pertaining to such
Pledged Securities as if it were the absolute owner thereof (including, without
limitation, the right to exchange at its discretion any and all of the Pledged
Securities upon the merger, consolidation, reorganization, recapitalization or
other fundamental change in the corporate structure of any Issuer, or upon the
exercise by any Grantor or the Administrative Agent of any right, privilege or
option pertaining to such Pledged Securities, and in connection therewith, the
right to deposit and deliver any and all of the Pledged Securities with any
committee, depositary, transfer agent, registrar or other designated agency upon
such terms and conditions as the Administrative Agent may determine), all
without liability except to account for property actually received by it, but
the Administrative Agent shall have no duty to any Grantor to exercise any such
right, privilege or option and shall not be responsible for any failure to do so
or delay in so doing.
(c) Each Grantor hereby authorizes and instructs each Issuer of any
Pledged Securities pledged by such Grantor hereunder to comply with any
instruction received by it from the Administrative Agent in writing that (i)
states that an Event of Default has occurred and is continuing and (ii) is
otherwise in accordance with the terms of this Agreement, without any other or
further instructions from such Grantor, and each Grantor agrees that each Issuer
shall be fully protected in so complying.
6.4 PROCEEDS TO BE TURNED OVER TO ADMINISTRATIVE AGENT. In addition
to the rights of the Administrative Agent and the Lenders specified in Section
6.1 with respect to payments of
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18
Receivables, if an Event of Default shall occur and be continuing, all Proceeds
received by any Grantor consisting of cash, checks and other near-cash items
shall be held by such Grantor in trust for the Administrative Agent and the
Lenders, segregated from other funds of such Grantor, and shall, forthwith upon
receipt by such Grantor, be turned over to the Administrative Agent in the exact
form received by such Grantor (duly indorsed by such Grantor to the
Administrative Agent, if required). All Proceeds received by the Administrative
Agent hereunder shall be held by the Administrative Agent in a Collateral
Account maintained under its sole dominion and control. All Proceeds while held
by the Administrative Agent in a Collateral Account (or by such Grantor in trust
for the Administrative Agent and the Lenders) shall continue to be held as
collateral security for all the Obligations and shall not constitute payment
thereof until applied as provided in Section 6.5.
6.5 APPLICATION OF PROCEEDS. At such intervals as may be agreed upon
by the Company and the Administrative Agent, or, if an Event of Default shall
have occurred and be continuing, at any time at the Administrative Agent's
election, the Administrative Agent may apply all or any part of Proceeds held in
any Collateral Account in payment of the Obligations in such order as the Credit
Agreement prescribes, and any part of such funds which the Credit Agreement does
not require to be applied in payment of the Obligations and which Administrative
Agent deems not required as collateral security for the Obligations shall be
paid over from time to time by the Administrative Agent to the Company or to
whomsoever may be lawfully entitled to receive the same. Any balance of such
Proceeds remaining after the Obligations shall have been paid in full, no
Letters of Credit shall be outstanding and the Commitments shall have terminated
shall be paid over to the Company or to whomsoever may be lawfully entitled to
receive the same.
6.6 CODE AND OTHER REMEDIES. If an Event of Default shall occur and
be continuing, the Administrative Agent, on behalf of the Lenders, may exercise,
in addition to all other rights and remedies granted to them in this Agreement
and in any other instrument or agreement securing, evidencing or relating to the
Obligations, all rights and remedies of a secured party under the New York UCC
or any other applicable law. Without limiting the generality of the foregoing,
the Administrative Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon any Grantor or any other Person
(all and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith sell,
lease, assign, give option or options to purchase, or otherwise dispose of and
deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, at any
exchange, broker's board or office of the Administrative Agent or any Lender or
elsewhere upon such terms and conditions as it may deem advisable and at such
prices as it may deem best, for cash or on credit or for future delivery without
assumption of any credit risk. The Administrative Agent or any Lender shall
have the right upon any such public sale or sales, and, to the extent permitted
by law, upon any such private sale or sales, to purchase the whole or any part
of the Collateral so sold, free of any right or equity of redemption in any
Grantor, which right or equity is hereby waived and released. Each Grantor
further agrees, at the Administrative Agent's request, to assemble the
Collateral and make it available to the Administrative Agent at places which the
Administrative Agent shall reasonably select, whether at such Grantor's premises
or elsewhere. The Administrative Agent shall apply the net proceeds of any
action taken by it pursuant to this Section 6.6, after deducting all reasonable
costs and expenses of every kind incurred in connection therewith or incidental
to the care or safekeeping of any of the Collateral or in any way relating to
the Collateral or the rights of the Administrative Agent
<PAGE>
19
and the Lenders hereunder, including, without limitation, reasonable attorneys'
fees and disbursements, to the payment in whole or in part of the Obligations,
in such order as the Credit Agreement shall prescribe, and only after such
application and after the payment by the Administrative Agent of any other
amount required by any provision of law, including, without limitation, Section
9-504(1)(c) of the New York UCC, need the Administrative Agent account for the
surplus, if any, to any Grantor. To the extent permitted by applicable law,
each Grantor waives all claims, damages and demands it may acquire against the
Administrative Agent or any Lender arising out of the exercise by them of any
rights hereunder. If any notice of a proposed sale or other disposition of
Collateral shall be required by law, such notice shall be deemed reasonable and
proper if given at least 10 Business Days before such sale or other disposition.
6.7 PRIVATE SALES. (a) Each Grantor recognizes that the
Administrative Agent may be unable to effect a public sale of any or all the
Pledged Stock, by reason of certain prohibitions contained in the Securities Act
and applicable state securities laws or otherwise, and may be compelled to
resort to one or more private sales thereof to a restricted group of purchasers
which will be obliged to agree, among other things, to acquire such securities
for their own account for investment and not with a view to the distribution or
resale thereof. Each Grantor acknowledges and agrees that any such private sale
may result in prices and other terms less favorable than if such sale were a
public sale and, notwithstanding such circumstances, agrees that any such
private sale shall be deemed to have been made in a commercially reasonable
manner. The Administrative Agent shall be under no obligation to delay a sale
of any of the Pledged Stock for the period of time necessary to permit the
Issuer thereof to register such securities for public sale under the Securities
Act, or under applicable state securities laws, even if such Issuer would agree
to do so.
(b) Each Grantor agrees to use its best efforts to do or cause to be
done all such other acts as may be necessary to make such sale or sales of all
or any portion of the Pledged Stock pursuant to this Section 6.7 valid and
binding and in compliance with any and all other applicable Requirements of Law.
Each Grantor further agrees that a breach of any of the covenants contained in
this Section 6.7 will cause irreparable injury to the Administrative Agent and
the Lenders, that the Administrative Agent and the Lenders have no adequate
remedy at law in respect of such breach and, as a consequence, that each and
every covenant contained in this Section 6.7 shall be specifically enforceable
against such Grantor, and such Grantor hereby waives and agrees not to assert
any defenses against an action for specific performance of such covenants except
for a defense that no Event of Default has occurred under the Credit Agreement.
6.8 WAIVER; DEFICIENCY. Each Grantor waives and agrees not to assert
any rights or privileges which it may acquire under Section 9-112 of the New
York UCC. Each Grantor shall remain liable for any deficiency if the proceeds
of any sale or other disposition of the Collateral are insufficient to pay its
Obligations and the fees and disbursements of any attorneys employed by the
Administrative Agent or any Lender to collect such deficiency.
SECTION 7. THE ADMINISTRATIVE AGENT
7.1 ADMINISTRATIVE AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT, ETC. (a)
Each Grantor hereby irrevocably constitutes and appoints the Administrative
Agent and any officer or agent thereof, with full power of substitution, as its
true and lawful attorney-in-fact with full irrevocable power and
<PAGE>
20
authority in the place and stead of such Grantor and in the name of such Grantor
or in its own name, for the purpose of carrying out the terms of this Agreement,
to take any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this Agreement, and, without limiting the generality of the foregoing, each
Grantor hereby gives the Administrative Agent the power and right, on behalf of
such Grantor, without notice to or assent by such Grantor, to do any or all of
the following:
(i) in the name of such Grantor or its own name, or otherwise, take
possession of and indorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
Receivable or with respect to any other Collateral and file any claim or
take any other action or proceeding in any court of law or equity or
otherwise reasonably deemed appropriate by the Administrative Agent for the
purpose of collecting any and all such moneys due under any Receivable or
with respect to any other Collateral whenever payable;
(ii) in the case of any Intellectual Property, execute and deliver,
and have recorded, any and all agreements, instruments, documents and
papers as the Administrative Agent may reasonably request to evidence the
Administrative Agent's and the Lenders' security interest in such
Intellectual Property and the goodwill and general intangibles of such
Grantor relating thereto or represented thereby;
(iii) pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, effect any repairs or any insurance
called for by the terms of this Agreement and pay all or any part of the
premiums therefor and the costs thereof;
(iv) execute, in connection with any sale provided for in Section 6.6
or 6.7, any indorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral; and
(v) (1) direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Administrative Agent or as the Administrative
Agent shall direct;(2) ask or demand for, collect, and receive payment of
and receipt for, any and all moneys, claims and other amounts due or to
become due at any time in respect of or arising out of any Collateral;(3)
sign and indorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection with any of the
Collateral;(4) commence and prosecute any suits, actions or proceedings at
law or in equity in any court of competent jurisdiction to collect the
Collateral or any portion thereof and to enforce any other right in respect
of any Collateral;(5) defend any suit, action or proceeding brought against
such Grantor with respect to any Collateral;(6) settle, compromise or
adjust any such suit, action or proceeding and, in connection therewith,
give such discharges or releases as the Administrative Agent may deem
appropriate;(7) assign any Copyright, Patent or Trademark (along with the
goodwill of the business to which any such Copyright, Patent or Trademark
pertains), throughout the world for such term or terms, on such conditions,
and in such manner, as the Administrative Agent shall in its sole
discretion determine; and (8) generally, sell, transfer, pledge and make
any agreement with respect to or otherwise deal with any of the Collateral
as fully and completely as though the Administrative Agent were the
absolute owner thereof for all purposes, and do, at the Administrative
Agent's option and such
<PAGE>
21
Grantor's expense, at any time, or from time to time, all acts and things
which the Administrative Agent reasonably deems necessary to protect,
preserve or realize upon the Collateral and the Administrative Agent's and
the Lenders' security interests therein and to effect the intent of this
Agreement, all as fully and effectively as such Grantor might do.
Anything in this Section 7.1(a) to the contrary notwithstanding, the
Administrative Agent agrees that it will not exercise any rights under the power
of attorney provided for in this Section 7.1(a) unless an Event of Default shall
have occurred and be continuing.
(b) If any Grantor fails to perform or comply with any of its
agreements contained herein, the Administrative Agent, at its option, but
without any obligation so to do, may perform or comply, or otherwise cause
performance or compliance, with such agreement.
(c) The expenses of the Administrative Agent incurred in connection
with actions undertaken as provided in this Section 7.1, together with interest
thereon at a rate per annum equal to the rate per annum at which interest would
then be payable on past due Revolving Credit Loans that are ABR Loans under the
Credit Agreement, from the date of payment by the Administrative Agent to the
date reimbursed by the relevant Grantor, shall be payable by such Grantor to the
Administrative Agent on demand.
(d) Each Grantor hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof. All powers, authorizations
and agencies contained in this Agreement are coupled with an interest and are
irrevocable until this Agreement is terminated and the security interests
created hereby are released.
7.2 DUTY OF ADMINISTRATIVE AGENT. The Administrative Agent's sole
duty with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the New York UCC or
otherwise, shall be to deal with it in the same manner as the Administrative
Agent deals with similar property for its own account. Neither the
Administrative Agent, any Lender nor any of their respective officers,
directors, employees or agents shall be liable for failure to demand, collect or
realize upon any of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon the
request of any Grantor or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof. The powers
conferred on the Administrative Agent and the Lenders hereunder are solely to
protect the Administrative Agent's and the Lenders' interests in the Collateral
and shall not impose any duty upon the Administrative Agent or any Lender to
exercise any such powers. The Administrative Agent and the Lenders shall be
accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of their officers, directors,
employees or agents shall be responsible to any Grantor for any act or failure
to act hereunder, except for their own gross negligence or willful misconduct.
7.3 EXECUTION OF FINANCING STATEMENTS. Pursuant to Section 9-402 of
the New York UCC and any other applicable law, each Grantor authorizes the
Administrative Agent to file or record financing statements and other filing or
recording documents or instruments with respect to the Collateral without the
signature of such Grantor in such form and in such offices as the Administrative
Agent reasonably determines appropriate to perfect the security interests of the
Administrative Agent under this Agreement. A photographic or other reproduction
of this Agreement shall be sufficient as a
<PAGE>
22
financing statement or other filing or recording document or instrument for
filing or recording in any jurisdiction.
7.4 AUTHORITY OF ADMINISTRATIVE AGENT. Each Grantor acknowledges that
the rights and responsibilities of the Administrative Agent under this Agreement
with respect to any action taken by the Administrative Agent or the exercise or
non-exercise by the Administrative Agent of any option, voting right, request,
judgment or other right or remedy provided for herein or resulting or arising
out of this Agreement shall, as between the Administrative Agent and the
Lenders, be governed by the Credit Agreement and by such other agreements with
respect thereto as may exist from time to time among them, but, as between the
Administrative Agent and the Grantors, the Administrative Agent shall be
conclusively presumed to be acting as agent for the Lenders with full and valid
authority so to act or refrain from acting, and no Grantor shall be under any
obligation, or entitlement, to make any inquiry respecting such authority.
SECTION 8. MISCELLANEOUS
8.1 AMENDMENTS IN WRITING. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except by a
written instrument executed by each affected Grantor and the Administrative
Agent, PROVIDED that any provision of this Agreement imposing obligations on any
Grantor may be waived by the Administrative Agent in a written instrument
executed by the Administrative Agent of the Credit Agreement.
8.2 NOTICES. All notices, requests and demands to or upon the
Administrative Agent or any Grantor hereunder shall be effected in the manner
provided for in subsection 14.2 of the Credit Agreement; PROVIDED that any such
notice, request or demand to or upon any Guarantor shall be addressed to such
Guarantor at its notice address set forth on SCHEDULE 1.
8.3 NO WAIVER BY COURSE OF CONDUCT; CUMULATIVE REMEDIES. Neither the
Administrative Agent nor any Lender shall by any act (except by a written
instrument pursuant to Section 8.1), delay, indulgence, omission or otherwise be
deemed to have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default. No failure to exercise, nor any delay in
exercising, on the part of the Administrative Agent or any Lender, any right,
power or privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Administrative Agent or any Lender of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Administrative Agent or such Lender would otherwise
have on any future occasion. The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive of any
other rights or remedies provided by law.
8.4 ENFORCEMENT EXPENSES; INDEMNIFICATION. (a) Each Guarantor agrees
to pay or reimburse each Lender and the Administrative Agent for all its costs
and expenses incurred in collecting against such Guarantor under the guarantee
contained in Section 2 or otherwise enforcing or preserving any rights under
this Agreement and the other Loan Documents to which such Guarantor is a party,
including, without limitation, the fees and disbursements of counsel to each
Lender and of counsel to the Administrative Agent.
<PAGE>
23
(b) Each Guarantor agrees to pay, and to save the Administrative Agent
and the Lenders harmless from, any and all liabilities with respect to, or
resulting from any delay in paying, any and all stamp, excise, sales or other
taxes which may be payable or determined to be payable with respect to any of
the Collateral or in connection with any of the transactions contemplated by
this Agreement.
(c) Each Guarantor agrees to pay, and to save the Administrative Agent
and the Lenders harmless from, any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever with respect to the execution, delivery,
enforcement, performance and administration of this Agreement to the extent the
Borrower would be required to do so pursuant to subsection 15.5 of the Credit
Agreement.
(d) The agreements in this Section 8.4 shall survive repayment of the
Obligations and all other amounts payable under the Credit Agreement and the
other Loan Documents.
8.5 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
successors and assigns of each Grantor and shall inure to the benefit of the
Administrative Agent and the Lenders and their successors and assigns; PROVIDED
that no Grantor may assign, transfer or delegate any of its rights or
obligations under this Agreement without the prior written consent of the
Administrative Agent.
8.6 SET-OFF. Each Grantor hereby irrevocably authorizes the
Administrative Agent and each Lender at any time and from time to time while an
Event of Default shall have occurred and be continuing, without notice to such
Grantor or any other Grantor, any such notice being expressly waived by each
Grantor, to set-off and appropriate and apply any and all deposits (general or
special, time or demand, provisional or final), in any currency, and any other
credits, indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by the Administrative Agent or such Lender to or for the credit or the
account of such Grantor, or any part thereof in such amounts as the
Administrative Agent or such Lender may elect, against and on account of the
obligations and liabilities of such Grantor to the Administrative Agent or such
Lender hereunder and claims of every nature and description of the
Administrative Agent or such Lender against such Grantor, in any currency,
whether arising hereunder, under the Credit Agreement, any other Loan Document
or otherwise, as the Administrative Agent or such Lender may elect, whether or
not the Administrative Agent or any Lender has made any demand for payment and
although such obligations, liabilities and claims may be contingent or
unmatured. The Administrative Agent and each Lender shall notify such Grantor
promptly of any such set-off and the application made by the Administrative
Agent or such Lender of the proceeds thereof, PROVIDED that the failure to give
such notice shall not affect the validity of such set-off and application. The
rights of the Administrative Agent and each Lender under this Section 8.6 are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) which the Administrative Agent or such Lender may have.
8.7 COUNTERPARTS. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
8.8 SEVERABILITY. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such
<PAGE>
24
prohibition or unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
8.9 SECTION HEADINGS. The Section headings used in this Agreement are
for convenience of reference only and are not to affect the construction hereof
or be taken into consideration in the interpretation hereof.
8.10 INTEGRATION. This Agreement and the other Loan Documents
represent the agreement of the Grantors, the Administrative Agent and the
Lenders with respect to the subject matter hereof and thereof, and there are no
promises, undertakings, representations or warranties by the Administrative
Agent or any Lender relative to subject matter hereof and thereof not expressly
set forth or referred to herein or in the other Loan Documents.
8.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
8.12 SUBMISSION TO JURISDICTION; WAIVERS. Each Grantor hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which
it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the Courts of
the State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to such
Grantor at its address referred to in Section 8.2 or at such other address
of which the Administrative Agent shall have been notified pursuant
thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to
in this Section any consequential damages.
<PAGE>
25
8.13 ACKNOWLEDGEMENTS. Each Grantor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents to which it is a
party;
(b) neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to any Grantor arising out of or in connection
with this Agreement or any of the other Loan Documents, and the
relationship between the Grantors, on the one hand, and the Administrative
Agent and Lenders, on the other hand, in connection herewith or therewith
is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among
the Lenders or among the Grantors and the Lenders.
8.14 WAIVER OF JURY TRIAL. EACH GRANTOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
8.15 ADDITIONAL GRANTORS. Each Subsidiary of the Borrower that is
required to become a party to this Agreement pursuant to subsection 10.9 of the
Credit Agreement shall become a Grantor for all purposes of this Agreement upon
execution and delivery by such Subsidiary of an Assumption Agreement in the form
of Annex 1 hereto.
8.16 JUDGMENT. (a) If for the purpose of obtaining judgment in any
court it is necessary to convert a sum due hereunder in one currency into
another currency, the parties hereto agree, to the fullest extent that they may
effectively do so, that the rate of exchange used shall be that at which in
accordance with normal banking procedures the Administrative Agent could
purchase the first currency with such other currency in the city in which it
normally conducts its foreign exchange operation for the first currency on the
Business Day preceding the day on which final judgment is given.
(b) The obligation of each Grantor in respect of any sum due from it
to the Administrative Agent or any Lender hereunder shall, notwithstanding any
judgment in a currency (the "JUDGMENT CURRENCY") other than that in which such
sum is denominated in accordance with the applicable provisions of the Loan
Documents (the "AGREEMENT CURRENCY"), be discharged only to the extent that on
the Business Day following receipt by the Administrative Agent or such Lender of
any sum adjudged to be so due in the Judgment Currency, the Administrative Agent
or such Lender may in accordance with normal banking procedures purchase the
Agreement Currency with the Judgment Currency; if the amount of Agreement
Currency so purchased is less than the sum originally due to such Lender in the
Agreement Currency, such Grantor agrees notwithstanding any such judgment to
indemnify such Lender against such loss, and if the amount of the Agreement
Currency so purchased exceeds the sum originally due to the Administrative Agent
or any Lender the Administrative Agent or, such Lender agrees to remit to such
Borrower such excess.
<PAGE>
26
8.17 RELEASES. (a) At such time as the Loans, the Reimbursement
Obligations and the other Obligations shall have been paid in full, the
Commitments have been terminated and no Letters of Credit shall be outstanding,
the Collateral shall be released from the Liens created hereby, and this
Agreement and all obligations (other than those expressly stated to survive such
termination) of the Administrative Agent and each Grantor hereunder shall
terminate, all without delivery of any instrument or performance of any act by
any party, and all rights to the Collateral shall revert to the Grantors. At
the request and sole expense of any Grantor following any such termination, the
Administrative Agent shall deliver to such Grantor any Collateral held by the
Administrative Agent hereunder, and execute and deliver to such Grantor such
documents as such Grantor shall reasonably request to evidence such termination.
(b) If any of the Collateral shall be sold, transferred or otherwise
disposed of by any Grantor in a transaction permitted by the Credit Agreement,
then the Administrative Agent, at the request and sole expense of such Grantor,
shall execute and deliver to such Grantor all releases or other documents
reasonably necessary or desirable for the release of the Liens created hereby on
such Collateral. At the request and sole expense of the Company, a Subsidiary
Guarantor shall be released from its obligations hereunder in the event that all
the Capital Stock of such Subsidiary Guarantor shall be sold, transferred or
otherwise disposed of in a transaction permitted by the Credit Agreement;
PROVIDED that the Company shall have delivered to the Administrative Agent, at
least ten Business Days prior to the date of the proposed release, a written
request for release identifying the relevant Subsidiary Guarantor and the terms
of the sale or other disposition in reasonable detail, including the price
thereof and any expenses in connection therewith, together with a certification
by the Company stating that such transaction is in compliance with the Credit
Agreement and the other Loan Documents.
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27
IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee
and Collateral Agreement to be duly executed and delivered as of the date first
above written.
ANACOMP, INC.
By:
-------------------------
Title:
THE FIRST NATIONAL BANK OF CHICAGO, as
Administrative Agent
By:___________________________
Title:
<PAGE>
ACKNOWLEDGEMENT AND CONSENT
The undersigned hereby acknowledges receipt of a copy of the Guarantee and
Collateral Agreement dated as of February 28, 1997 (the "AGREEMENT"), made by
the Grantors parties thereto for the benefit of The First National Bank of
Chicago, as Administrative Agent. The undersigned agrees for the benefit of the
Administrative Agent and the Lenders as follows:
1. The undersigned will be bound by the terms of the Agreement and will
comply with such terms insofar as such terms are applicable to the undersigned.
2. The undersigned will notify the Administrative Agent promptly in
writing of the occurrence of any of the events described in Section 5.8(a) of
the Agreement.
3. The terms of Sections 6.3(a) and 6.7 of the Agreement shall apply to
it, MUTATIS MUTANDIS, with respect to all actions that may be required of it
pursuant to Section 6.3(a) or 6.7 of the Agreement.
[NAME OF ISSUER]
By
Title
------------------------------
Address for Notices:
-------------------------
------------------------------
Fax:
------------------------------
-------------------------
<PAGE>
Annex 1 to
GUARANTEE AND COLLATERAL AGREEMENT
ASSUMPTION AGREEMENT, dated as of _____________, made by
______________________________, a ______________ corporation (the "ADDITIONAL
GRANTOR"), in favor of The First National Bank of Chicago, as administrative
agent (in such capacity, the "ADMINISTRATIVE AGENT") for the banks and other
financial institutions (the "LENDERS") parties to the Credit Agreement referred
to below. All capitalized terms not defined herein shall have the meaning
ascribed to them in such Credit Agreement.
W I T N E S S E T H :
WHEREAS, Anacomp, Inc. (the "COMPANY"), certain of its Foreign
Subsidiaries, the Lenders and the Administrative Agent have entered into a
Credit Agreement, dated as of February 28, 1997 (as amended, supplemented or
otherwise modified from time to time, the "CREDIT AGREEMENT");
WHEREAS, in connection with the Credit Agreement, the Company and
certain of its Subsidiaries (other than the Additional Grantor) have entered
into the Guarantee and Collateral Agreement, dated as of February 28, 1997 (as
amended, supplemented or otherwise modified from time to time, the "GUARANTEE
AND COLLATERAL AGREEMENT") in favor of the Administrative Agent for the benefit
of the Lenders;
WHEREAS, the Credit Agreement requires the Additional Grantor to
become a party to the Guarantee and Collateral Agreement; and
WHEREAS, the Additional Grantor has agreed to execute and deliver this
Assumption Agreement in order to become a party to the Guarantee and Collateral
Agreement;
NOW, THEREFORE, IT IS AGREED:
1. GUARANTEE AND COLLATERAL AGREEMENT. By executing and delivering
this Assumption Agreement, the Additional Grantor, as provided in Section 8.15
of the Guarantee and Collateral Agreement, hereby becomes a party to the
Guarantee and Collateral Agreement as a Grantor thereunder with the same force
and effect as if originally named therein as a Grantor and, without limiting the
generality of the foregoing, hereby expressly assumes all obligations and
liabilities of a Grantor thereunder. The information set forth in Annex 1-A
hereto is hereby added to the information set forth in Schedules ____________ to
the Guarantee and Collateral Agreement. The Additional Grantor hereby
represents and warrants that each of the representations and warranties
contained in Section 3 of the Guarantee and
______________________
* Refer to each Schedule which needs to be supplemented.
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Collateral Agreement is true and correct on and as the date hereof (after giving
effect to this Assumption Agreement) as if made on and as of such date.
2. GOVERNING LAW. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK.
IN WITNESS WHEREOF, the undersigned has caused this Assumption
Agreement to be duly executed and delivered as of the date first above written.
[ADDITIONAL GRANTOR]
By:
Name:
Title:
-3-
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EXHIBIT C
Texas
DEED OF TRUST AND SECURITY AGREEMENT
from
ANACOMP, INC., Grantor
to
GLENN D. KESSELHAUT, Trustee
for the use and
benefit of
THE FIRST NATIONAL BANK OF CHICAGO, Beneficiary
DATED AS OF FEBRUARY ___, 1997
After recording, please return to:
Simpson Thacher & Bartlett
a partnership which includes
professional corporations
425 Lexington Avenue
New York, New York 10017
ATTN: Erin L. Rothfuss, Esq.
<PAGE>
Texas
DEED OF TRUST AND SECURITY AGREEMENT
THIS DEED OF TRUST AND SECURITY AGREEMENT, dated as of February ,
1997 is made by ANACOMP, INC., an Indiana corporation, whose address is 11550
North Meridian Street, Carmel, Indiana 46032, to GLENN D. KESSELHAUT, an
individual, ("Trustee") whose address is Simpson Thacher & Bartlett, 425
Lexington Avenue, New York, New York 10017, for the use and benefit of THE FIRST
NATIONAL BANK OF CHICAGO, a national banking association ("Beneficiary"), as
administrative agent for the Lenders (as defined in the Credit Agreement
hereinafter defined), whose address is One First National Plaza, Chicago,
Illinois 60670. References to this "Deed of Trust" shall mean this instrument
and any and all renewals, modifications, amendments, supplements, extensions,
consolidations, substitutions, spreaders and replacements of this instrument.
BACKGROUND
A. Grantor is the owner of the parcel(s) of real property described
on Schedule A attached (such real property, together with all of the buildings,
improvements, structures and fixtures now or subsequently located thereon (the
"Improvements"), being collectively referred to as the "Real Estate").
B. Grantor is a party to that certain Credit Agreement dated as of
even date herewith (as the same may be amended, supplemented, modified,
extended, restated or replaced from time to time, the "Credit Agreement") among
Grantor, each Foreign Subsidiary Borrower, the several banks and other financial
institutions from time to time parties thereto (the "Lenders") and The First
National Bank of Chicago, as administrative agent for the Lenders. All defined
terms used and not defined herein shall have the meanings assigned thereto in
the Credit Agreement.
C. Pursuant to the Credit Agreement, (i) certain of the Lenders have
agreed to make revolving credit loans to Grantor (the "Revolving Credit Loans");
(ii) certain of the Lenders have agreed to make term loans to Grantor (the "Term
Loans"); (iii) certain of the Lenders have agreed to make revolving credit loans
in any Available Foreign Currency to Grantor or in U.S. Dollars or any Available
Foreign Currency to any Foreign Subsidiary Borrower (the "Multicurrency Loans");
and (iv) the Issuing Lender has agreed to issue letters of credit for the
account of Grantor. The maximum aggregate principal amount of the Loans and the
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2
Letter of Credit Obligations outstanding at any one time shall not exceed
$80,000,000.
D. The Loans may be evidenced by promissory notes of Grantor made
payable to the order of the relevant Lender (as the same may be amended,
supplemented, modified, extended, restated or replaced from time to time, the
"Notes"). Each Note bears interest at the rate stated in such Note; references
in this Deed of Trust to the "Default Rate" shall mean, at any time, the
interest rate applicable to overdue principal amounts of the Loans as provided
in the Credit Agreement. The obligation of Grantor to reimburse the Issuing
Lender for amounts drawn under Letters of Credit (the "Reimbursement
Obligation") is governed by the section of the Credit Agreement entitled
"Letters of Credit."
E. It is a condition precedent to the obligation of the Lenders to
make their respective Loans to Grantor and of the Issuing Lender to issue the
Letters of Credit for the account of Grantor that Grantor shall have executed
and delivered this Deed of Trust to Beneficiary for the benefit of Beneficiary
and the other Lenders.
NOW, THEREFORE, in consideration of the premises and to induce
Beneficiary and the other Lenders to make their respective Loans to Grantor and
the Issuing Lender to issue the Letters of Credit for the account of Grantor,
Grantor hereby agrees with Beneficiary, for the benefit of Beneficiary and the
other Lenders as follows:
GRANTING CLAUSES
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Grantor agrees that to secure:
(a) (i) the repayment of the indebtedness evidenced by the Notes, and
(ii) all interest (including, without limitation, interest accruing after
the maturity of the Loans and interest accruing after the filing of any
petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to Grantor whether or not a
claim for post-filing or post-petition interest is allowed in such
proceeding) and fees, indemnities, costs, expenses (including, without
limitation, all reasonable fees and disbursements of counsel to Beneficiary
or to the Lenders that are required to be paid by Grantor pursuant to the
terms of the Credit Agreement or this Deed of Trust) or otherwise payable
thereon, (iii) payment of the Reimbursement Obligation with respect to the
Letters of Credit, whether in respect of any drawings under any Letters of
Credit, fees, commissions, expenses or otherwise and (iv) all obligations
in respect of Hedge Agreements with any Lender (the items set forth in
clauses
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(i), (ii), (iii) and (iv) being referred to collectively as the
"Indebtedness"); and
(b) the performance of all covenants, agreements, obligations and
liabilities of Grantor (the "Obligations") under or pursuant to the
provisions of the Credit Agreement, the Notes, this Deed of Trust, any
other document securing payment of the Indebtedness (the "Security
Documents") and any amendments, supplements, extensions, renewals,
restatements, replacements or modifications of any of the foregoing (the
Notes, the Security Documents and all other documents and instruments from
time to time evidencing, securing or guaranteeing the payment of the
Indebtedness or the performance of the Obligations, as any of the same may
be amended, supplemented, extended, renewed, restated, replaced or modified
from time to time, are collectively referred to as the "Loan Documents");
GRANTOR HEREBY CONVEYS TO TRUSTEE AND HEREBY GRANTS, ASSIGNS, TRANSFERS AND SETS
OVER TO TRUSTEE AND ALSO TO SUBSTITUTE TRUSTEE (AS DEFINED BELOW), IN TRUST WITH
POWER OF SALE FOR THE USE AND BENEFIT OF BENEFICIARY, AND GRANTS BENEFICIARY AND
TRUSTEE A SECURITY INTEREST IN:
(A) the Real Estate;
(B) all the estate, right, title, claim or demand whatsoever of
Grantor, in possession or expectancy, in and to the Real Estate or any part
thereof;
(C) all right, title and interest of Grantor in, to and under all
easements, rights of way, gores of land, streets, ways, alleys, passages,
sewer rights, waters, water courses, water and riparian rights, development
rights, air rights, mineral rights and all estates, rights, titles,
interests, privileges, licenses, tenements, hereditaments and appurtenances
belonging, relating or appertaining to the Real Estate, and any reversions,
remainders, rents, issues, profits and revenue thereof and all land lying
in the bed of any street, road or avenue, in front of or adjoining the Real
Estate to the center line thereof;
(D) all of the fixtures, chattels, business machines, machinery,
apparatus, equipment, furnishings, fittings and articles of personal
property of every kind and nature whatsoever, and all appurtenances and
additions thereto and substitutions or replacements thereof (together with,
in each case, attachments, components, parts and accessories) currently
owned or subsequently acquired by Grantor and now or subsequently attached
to, or contained in or used or usable in any way in connection with any
operation or letting of the Real Estate, including but without limiting the
generality of the foregoing, all screens, awnings, shades, blinds,
curtains, draperies, artwork, carpets, rugs,
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4
storm doors and windows, furniture and furnishings, heating, electrical,
and mechanical equipment, lighting, switchboards, plumbing, ventilating,
air conditioning and air-cooling apparatus, refrigerating, and incinerating
equipment, escalators, elevators, loading and unloading equipment and
systems, stoves, ranges, laundry equipment, cleaning systems (including
window cleaning apparatus), telephones, communication systems (including
satellite dishes and antennae), televisions, computers, sprinkler systems
and other fire prevention and extinguishing apparatus and materials,
security systems, motors, engines, machinery, pipes, pumps, tanks,
conduits, appliances, fittings and fixtures of every kind and description
(all of the foregoing in this paragraph (D) being referred to as the
"Equipment");
(E) all right, title and interest of Grantor in and to all
substitutes and replacements of, and all additions and improvements to, the
Real Estate and the Equipment, subsequently acquired by or released to
Grantor or constructed, assembled or placed by Grantor on the Real Estate,
immediately upon such acquisition, release, construction, assembling or
placement, including, without limitation, any and all building materials
whether stored at the Real Estate or offsite, and, in each such case,
without any further mortgage, conveyance, assignment or other act by
Grantor;
(F) all right, title and interest of Grantor in, to and under all
leases, subleases, underlettings, concession agreements, management
agreements, licenses and other agreements relating to the use or occupancy
of the Real Estate or the Equipment or any part thereof, now existing or
subsequently entered into by Grantor and whether written or oral and all
guarantees of any of the foregoing (collectively, as any of the foregoing
may be amended, restated, extended, renewed or modified from time to time,
the "Leases"), and all rights of Grantor in respect of cash and securities
deposited thereunder and the right to receive and collect the revenues,
income, rents, issues and profits thereof, together with all other rents,
royalties, issues, profits, revenue, income and other benefits arising from
the use and enjoyment of the Trust Property (as defined below)
(collectively, the "Rents");
(G) all trade names, trade marks, logos, copyrights, good will and
books and records relating to or used in connection with the operation of
the Real Estate or the Equipment or any part thereof; all general
intangibles related to the operation of the Improvements now existing or
hereafter arising;
(H) all unearned premiums under insurance policies now or
subsequently obtained by Grantor relating to the Real
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5
Estate or Equipment and Grantor's interest in and to all proceeds of any
such insurance policies (including title insurance policies) including the
right to collect and receive such proceeds, subject to the provisions
relating to insurance generally set forth below; and all awards and other
compensation, including the interest payable thereon and the right to
collect and receive the same, made to the present or any subsequent owner
of the Real Estate or Equipment for the taking by eminent domain,
condemnation or otherwise, of all or any part of the Real Estate or any
easement or other right therein;
(I) all right, title and interest of Grantor in and to (i) all
contracts from time to time executed by Grantor or any manager or agent on
its behalf relating to the ownership, construction, maintenance, repair,
operation, occupancy, sale or financing of the Real Estate or Equipment or
any part thereof and all agreements relating to the purchase or lease of
any portion of the Real Estate or any property which is adjacent or
peripheral to the Real Estate, together with the right to exercise such
options and all leases of Equipment (collectively, the "Contracts"), (ii)
all consents, licenses, building permits, certificates of occupancy and
other governmental approvals relating to construction, completion,
occupancy, use or operation of the Real Estate or any part thereof
(collectively, the "Permits") and (iii) all drawings, plans, specifications
and similar or related items relating to the Real Estate (collectively, the
"Plans");
(J) any and all monies now or subsequently on deposit for the payment
of real estate taxes or special assessments against the Real Estate or for
the payment of premiums on insurance policies covering the foregoing
property or otherwise on deposit with or held by Beneficiary as provided in
this Deed of Trust; all capital, operating, reserve or similar accounts
held by or on behalf of Grantor and related to the operation of the Trust
Property, whether now existing or hereafter arising and all monies held in
any of the foregoing accounts and any certificates or instruments related
to or evidencing such accounts;
(K) all accounts and revenues arising from the operation of the
Improvements including, without limitation, (i) any right to payment now
existing or hereafter arising for rental of hotel rooms or other space or
for goods sold or leased or for services rendered, whether or not yet
earned by performance, arising from the operation of the Improvements or
any other facility on the Trust Property and (ii) all rights to payment
from any consumer credit-charge card organization or entity including,
without limitation, payments arising from the use of the American Express
Card, the Visa Card, the Carte Blanche Card, the Mastercard or any other
credit card, including those now existing or hereafter
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6
created, substitutions therefor, proceeds thereof (whether cash or
non-cash, movable or immovable, tangible or intangible) received upon the
sale, exchange, transfer, collection or other disposition or substitution
thereof and any and all of the foregoing and proceeds therefrom; and
(L) all proceeds, both cash and noncash, of the foregoing;
(All of the foregoing property and rights and interests now owned or
held or subsequently acquired by Grantor and described in the foregoing clauses
(A) through (E) are collectively referred to as the "Premises", and those
described in the foregoing clauses (A) through (L) are collectively referred to
as the "Trust Property").
TO HAVE AND TO HOLD the Trust Property and the rights and privileges
hereby granted unto Trustee, Substitute Trustee, their successors and assigns
for the uses and purposes set forth, until the Indebtedness is fully paid and
the Obligations fully performed.
TERMS AND CONDITIONS
Grantor further represents, warrants, covenants and agrees with
Trustee and Beneficiary as follows:
1. WARRANTY OF TITLE. Grantor warrants that Grantor has good title
to the Real Estate in fee simple and good title to the rest of the Trust
Property, subject only to the matters that are set forth in Schedule B of the
title insurance policy or policies being issued to Beneficiary to insure the
lien of this Deed of Trust (the "Permitted Exceptions") and Grantor shall
warrant, defend and preserve such title and the rights granted by this Deed of
Trust with respect thereto against all claims of all persons and entities.
Grantor further warrants that it has the right to grant this Deed of Trust.
2. PAYMENT OF INDEBTEDNESS. Grantor shall pay the Indebtedness at
the times and places and in the manner specified in the Notes and shall perform
all the Obligations.
3. REQUIREMENTS. (a) Grantor shall promptly comply with, or cause
to be complied with, and conform to all present and future laws, statutes,
codes, ordinances, orders, judgments, decrees, rules, regulations and
requirements, and irrespective of the nature of the work to be done, of each of
the United States of America, any State and any municipality, local government
or other political subdivision thereof and any agency, department, bureau,
board, commission or other instrumentality of any of them, now existing or
subsequently created (collectively, "Governmental Authority") which has
jurisdiction over the Trust Property and all covenants, restrictions and
conditions now or later of record which may be applicable to any of the Trust
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Property, or to the use, manner of use, occupancy, possession, operation,
maintenance, alteration, repair or reconstruction of any of the Trust Property.
All present and future laws, statutes, codes, ordinances, orders, judgments,
decrees, rules, regulations and requirements of every Governmental Authority
applicable to Grantor or to any of the Trust Property and all covenants,
restrictions, and conditions which now or later may be applicable to any of the
Trust Property are collectively referred to as the "Legal Requirements".
(b) From and after the date of this Deed of Trust, Grantor shall not
by act or omission permit any building or other improvement on any premises not
subject to this Deed of Trust to rely on the Premises or any part thereof or any
interest therein to fulfill any Legal Requirement, and Grantor hereby assigns to
Beneficiary any and all rights to give consent for all or any portion of the
Premises or any interest therein to be so used.
Grantor shall not by act or omission impair the integrity of any of the Real
Estate so as to constitute an illegal subdivision or to prohibit the Premises
and Improvements from being conveyed as one zoning or tax lot. Grantor
represents that the Premises are not part of a larger tract of land owned by
Grantor or its affiliates or otherwise considered as part of one zoning or tax
lot, or, if they are that any authorization or variance required for the
subdivision of such larger tract which a sale of the Premises would entail has
been obtained from all appropriate Governmental Authorities so that the Premises
and Improvements constitute one zoning or tax lot capable of being conveyed as
such. Any act or omission by Grantor which would result in a violation of any
of the provisions of this subsection shall be void.
4. PAYMENT OF TAXES AND OTHER IMPOSITIONS. (a) Promptly when due,
Grantor shall pay and discharge all taxes of every kind and nature (including,
without limitation, all real and personal property, income, franchise,
withholding, transfer, gains, profits and gross receipts taxes), all charges for
any easement or agreement maintained for the benefit of any of the Trust
Property, all general and special assessments, levies, permits, inspection and
license fees, all water and sewer rents and charges and all other public charges
even if unforeseen or extraordinary, imposed upon or assessed against or which
may become a lien on any of the Trust Property, or arising in respect of the
occupancy, use or possession thereof, together with any penalties or interest on
any of the foregoing (all of the foregoing are collectively referred to as the
"Impositions"). Grantor shall, within 30 days a request by Beneficiary, deliver
to Beneficiary (i) original or copies of receipted bills and cancelled checks
evidencing payment of such Imposition if it is a real estate tax or other public
charge and (ii) evidence acceptable to Beneficiary showing the payment of any
other such Imposition. If by law any Imposition, at Grantor's option, may be
paid in installments (whether or not interest shall accrue on the unpaid balance
of such Imposition), Grantor may elect to pay
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such Imposition in such installments and shall be responsible for the payment of
such installments with interest, if any.
(b) Nothing herein shall affect any right or remedy of Trustee or
Beneficiary under this Deed of Trust or otherwise, without notice or demand to
Grantor, to pay any Imposition after the date such Imposition shall have become
due, and to add to the Indebtedness the amount so paid, together with interest
from the time of payment at the Default Rate. Any sums paid by Trustee or
Beneficiary in discharge of any Impositions shall be (i) a charge on the
Premises secured hereby prior to any right or title to, interest in, or claim
upon the Premises subordinate to the lien of this Deed of Trust, and (ii)
payable on demand by Grantor to Trustee or Beneficiary, as the case may be,
together with interest at the Default Rate as set forth above.
(c) Grantor shall not claim, demand or be entitled to receive any
credit or credits toward the satisfaction of this Deed of Trust or on any
interest payable thereon for any taxes assessed against the Trust Property or
any part thereof, and shall not claim any deduction from the taxable value of
the Trust Property by reason of this Deed of Trust.
(d) Grantor shall have the right before any delinquency occurs to
contest or object in good faith to the amount or validity of any Imposition by
appropriate legal proceedings, but such right shall not be deemed or construed
in any way as relieving, modifying, or extending Grantor's covenant to pay any
such Imposition at the time and in the manner provided in this Section unless
(i) Grantor has given prior written notice to Beneficiary of Grantor's intent so
to contest or object to an Imposition, (ii) Grantor shall demonstrate to
Beneficiary's satisfaction that the legal proceedings shall operate conclusively
to prevent the sale of the Trust Property, or any part thereof, to satisfy such
Imposition prior to final determination of such proceedings and (iii) Grantor
shall furnish a good and sufficient bond or surety as requested by and
reasonably satisfactory to Beneficiary in the amount of the Impositions which
are being contested plus any interest and penalty which may be imposed thereon
and which could become a charge against the Real Estate or any part of the Trust
Property.
(e) Upon written notice to Grantor, Beneficiary after an Event of
Default (as defined below) shall be entitled to require Grantor to pay monthly
in advance to Beneficiary the equivalent of 1/12th of the estimated annual
Impositions. Beneficiary may commingle such funds with its own funds and
Grantor shall not be entitled to interest thereon.
5. INSURANCE. (a) Grantor shall maintain or cause to be maintained
on all of the Premises:
(i) property insurance against loss or damage by fire, lightning,
windstorm, tornado, water damage, flood,
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earthquake and by such other further risks and hazards as now are or
subsequently may be covered by an "all risk" policy or a fire policy
covering "special" causes of loss. The policy shall include building
ordinance law endorsements and the policy limits for each policy shall be
automatically reinstated after each loss. Notwithstanding any of the
foregoing, such automatic reinstatement of policy limits shall not be
required of flood and earthquake insurance policies;
(ii) comprehensive general liability insurance under a policy
including the "broad form CGL endorsement" (or which incorporates the
language of such endorsement), covering all claims for personal injury,
bodily injury or death, or property damage occurring on, in or about the
Premises in an amount not less than $10,000,000 combined single limit with
respect to injury and property damage relating to any one occurrence plus
such excess limits as Beneficiary shall request from time to time;
(iii) when and to the extent reasonably required by Beneficiary,
insurance against loss or damage by any other risk commonly insured against
by persons occupying or using like properties in the locality or localities
in which the Real Estate is situated;
(iv) insurance against rent loss, extra expense or business
interruption (and/or soft costs, in the case of new construction), if
applicable, in amounts satisfactory to Beneficiary, but not less than one
year's gross rent or gross income;
(v) during the course of any construction or repair of Improvements,
comprehensive general liability insurance under a policy including the
"broad form CGL endorsement" (or which incorporates the language of such
endorsement), (including coverage for elevators and escalators, if any).
The policy shall include coverage for independent contractors and completed
operations. The completed operations coverage shall stay in effect for two
years after construction of any Improvements has been completed. The
policy shall provide coverage on an occurrence basis against claims for
personal injury, bodily injury, death or property damage occurring on, in
or about the Premises and the adjoining streets, sidewalks and passageways,
such insurance to afford immediate minimum protection to a limit of not
less than that required by Beneficiary with respect to personal injury,
bodily injury or death to any one or more persons or damage to property;
(vi) during the course of any construction or repair of the
Improvements, workers' compensation insurance (including employer's
liability insurance) for all employees of Grantor engaged on or with
respect to the Premises in such amounts
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as are reasonably satisfactory to Beneficiary, but in no event less than
the limits established by law;
(vii) during the course of any construction, addition, alteration or
repair of the Improvements, builder's risk completed value form insurance
against "all risks of physical loss," including collapse, water damage,
flood and earthquake and transit coverage, during construction or repairs
of the Improvements, with deductible approved by Beneficiary, in
nonreporting form, covering the total value of work performed and
equipment, supplies and materials furnished (with an appropriate limit for
soft costs in the case of construction);
(viii) boiler and machinery property insurance covering pressure
vessels, air tanks, boilers, machinery, pressure piping, heating, air
conditioning and elevator equipment and escalator equipment, provided the
Improvements contain equipment of such nature, and insurance against rent,
extra expense, business interruption and soft costs, if applicable, arising
from any such breakdown, in such amounts as are reasonably satisfactory to
Beneficiary but not less than the lesser of $1,000,000 or 10% of the value
of the Improvements;
(ix) if any portion of the Premises are located in an area identified
as a special flood hazard area by the Federal Emergency Management Agency
or other applicable agency, flood insurance in an amount satisfactory to
Beneficiary, but in no event less than the maximum limit of coverage
available under the National Flood Insurance Act of 1968, as amended; and
(x) such other insurance in such amounts as Beneficiary may
reasonably request from time to time.
Each insurance policy (other than flood insurance written under the National
Flood Insurance Act of 1968, as amended, in which case to the extent available)
shall (i) provide that it shall not be cancelled, non-renewed or materially
amended without 30 days' prior written notice to Beneficiary, and (ii) with
respect to all property insurance, provide for deductibles not to exceed
$50,000, contain a "Replacement Cost Endorsement" without any deduction made for
depreciation and with no co-insurance penalty (or attaching an agreed amount
endorsement satisfactory to Beneficiary), with loss payable to Beneficiary
(modified, if necessary, to provide that the entire amount of proceeds may be
retained by Beneficiary without the obligation to rebuild) as its interest may
appear, without contribution, under a "standard" or "New York" mortgagee clause
acceptable to Beneficiary and be written by insurance companies having an A.M.
Best Company, Inc. rating of A or higher and a financial size category of not
less than XII, or otherwise as approved by Beneficiary. Liability insurance
policies shall name Beneficiary (and Trustee, if
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Trustee shall so request) as an additional insured and contain a waiver of
subrogation against Beneficiary (and Trustee, if Trustee shall so request); all
such policies shall indemnify and hold Beneficiary (and Trustee, if Trustee
shall so request) harmless from all liability claims occurring on, in or about
the Premises and the adjoining streets, sidewalks and passageways. The amounts
of each insurance policy and the form of each such policy shall at all times be
satisfactory to Beneficiary. Each policy shall expressly provide that any
proceeds which are payable to Beneficiary shall be paid by check payable to the
order of Beneficiary and requiring the endorsement of Beneficiary. If any
required insurance shall expire, be withdrawn, become void by breach of any
condition thereof by Grantor or by any lessee of any part of the Trust Property
or become void or unsafe by reason of the failure or impairment of the capital
of any insurer, or if for any other reason whatsoever such insurance shall
become unsatisfactory to Beneficiary, Grantor shall immediately obtain new or
additional insurance satisfactory to Beneficiary. Grantor shall not take out
any separate or additional insurance which is contributing in the event of loss
unless it is properly endorsed and otherwise satisfactory to Beneficiary in all
respects.
(b) Grantor shall deliver to Beneficiary an original of each
insurance policy required to be maintained, or a certificate of such insurance
acceptable to Beneficiary, together with a copy of the declaration page for each
such policy. Grantor shall (i) pay as they become due all premiums for such
insurance, (ii) not later than 10 days prior to the expiration of each policy to
be furnished pursuant to the provisions of this Section, deliver a renewed
policy or policies, or duplicate original or originals thereof, marked "premium
paid," or accompanied by such other evidence of payment satisfactory to
Beneficiary with standard non-contributory mortgagee clauses in favor of and
acceptable to Beneficiary.
(c) If Grantor is in default of its obligations to insure or deliver
any such prepaid policy or policies, then Beneficiary, at its option and without
notice, may effect such insurance from year to year, and pay the premium or
premiums therefor, and Grantor shall pay to Beneficiary on demand such premium
or premiums so paid by Beneficiary with interest from the time of payment at the
Default Rate and the same shall be deemed to be secured by this Deed of Trust
and shall be collectible in the same manner as the Indebtedness secured by this
Deed of Trust.
(d) Grantor shall increase the amount of property insurance required
to equal 100% replacement cost pursuant to the provisions of this Section at the
time of each renewal of each policy (but not later than 12 months from the date
of this Deed of Trust and each successive 12 month period to occur thereafter)
by using the F.W. Dodge Building Index to determine whether there shall have
been an increase in the replacement value since the
<PAGE>
12
most recent adjustment and, if there shall have been such an increase, the
amount of insurance required shall be adjusted accordingly.
(e) Grantor promptly shall comply with and conform to (i) all
provisions of each such insurance policy, and (ii) all requirements of the
insurers applicable to Grantor or to any of the Trust Property or to the use,
manner of use, occupancy, possession, operation, maintenance, alteration or
repair of any of the Trust Property. Grantor shall not use or permit the use of
the Trust Property in any manner which would permit any insurer to cancel any
insurance policy or void coverage required to be maintained by this Deed of
Trust.
(f) If the Trust Property, or any part thereof, shall be destroyed or
damaged by fire or any other casualty, whether insured or uninsured, or in the
event any claim is made against Grantor for any personal injury, bodily injury
or property damage incurred on or about the Real Estate, Grantor shall give
immediate notice thereof to Beneficiary. If the Trust Property is damaged by
fire or other casualty and the cost to repair such damage is less than the
lesser of (i) 50% of the replacement cost of the Improvements at the affected
Real Estate site and (ii) $100,000, then provided that no Event of Default shall
have occurred and be continuing, Grantor shall have the right to adjust such
loss, and the insurance proceeds relating to such loss may be paid over to
Grantor; provided that Grantor shall, promptly after any such damage, repair all
such damage regardless of whether any insurance proceeds have been received or
whether such proceeds, if received, are sufficient to pay for the costs of
repair. If the Trust Property is damaged by fire or other casualty, and the
cost to repair such damage exceeds the above limit, or if an Event of Default
shall have occurred and be continuing, then Grantor authorizes and empowers
Beneficiary, at Beneficiary's option and in Beneficiary's sole discretion, as
attorney-in-fact for Grantor, to make proof of loss, to adjust and compromise
any claim under any insurance policy, to appear in and prosecute any action
arising from any policy, to collect and receive insurance proceeds and to deduct
therefrom Beneficiary's expenses incurred in the collection process. Each
insurance company concerned is hereby authorized and directed to make payment
for such loss directly to Beneficiary. Beneficiary shall have the right to
require Grantor to repair or restore the Trust Property, and Grantor hereby
designates Beneficiary as its attorney-in-fact for the purpose of making any
election required or permitted under any insurance policy relating to repair or
restoration. The insurance proceeds or any part thereof received by Beneficiary
may be applied by Beneficiary toward reimbursement of all costs and expenses of
Beneficiary in collecting such proceeds, and the balance, at Beneficiary's
option in its sole and absolute discretion, to the principal (to the
installments in inverse order of maturity, if payable in installments) and
interest due or to become due under the Notes, to fulfill any other Obligation
of Grantor, to the restoration or repair of the
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13
property damaged, or released to Grantor. In the event Beneficiary elects to
release such proceeds to Grantor, Grantor shall be obligated to use such
proceeds to restore or repair the Trust Property. Application by Beneficiary of
any insurance proceeds toward the last maturing installments of principal and
interest due or to become due under the Notes shall not excuse Grantor from
making any regularly scheduled payments due thereunder, nor shall such
application extend or reduce the amount of such payments.
(g) In the event of foreclosure of this Deed of Trust or other
transfer of title to the Trust Property in extinguishment of the Indebtedness,
all right, title and interest of Grantor in and to any insurance policies
covering the Premises then in force shall pass to the purchaser or grantee and
Grantor hereby appoints Beneficiary its attorney-in-fact, in Grantor's name, to
assign and transfer all such policies and proceeds to such purchaser or grantee.
(h) Upon written notice to Grantor, Beneficiary after an Event of
Default shall be entitled to require Grantor to pay monthly in advance to
Beneficiary the equivalent of 1/12th of the estimated annual premiums due on
such insurance. Beneficiary may commingle such funds with its own funds and
Grantor shall not be entitled to interest thereon.
(i) Grantor may maintain insurance required under this Deed of Trust
by means of one or more blanket insurance policies maintained by Grantor;
PROVIDED, HOWEVER, that (A) each such blanket policy shall include an
endorsement providing that, in the event of a loss resulting from an insured
peril, insurance proceeds shall be allocated to the Trust Property in an amount
equal to the coverages required to be maintained by Grantor as provided above
and (B) the protection afforded under any such blanket policy shall be no less
than that which would have been afforded under a separate policy or policies
relating only to the Trust Property.
6. RESTRICTIONS ON LIENS AND ENCUMBRANCES. Except for the lien of
this Deed of Trust and the Permitted Exceptions, and as otherwise expressly
permitted by subsection 11.3 of the Credit Agreement, Grantor shall not further
mortgage, nor otherwise encumber the Trust Property nor create or suffer to
exist any lien, charge or encumbrance on the Trust Property, or any part
thereof, whether superior or subordinate to this Deed of Trust and whether
recourse or non-recourse.
7. TRANSFER RESTRICTIONS. Grantor shall not convey, sell, lease,
assign, transfer or otherwise dispose of the Trust Property except as expressly
permitted by subsection 11.6 of the Credit Agreement.
8. LIMITATION ON FUNDAMENTAL CHANGES. Grantor shall not enter into
any merger, consolidation or amalgamation, or
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14
liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease, assign, transfer or otherwise dispose of
all or substantially all of its property, business or assets or make any
material change in its present method of conducting business, except as
expressly permitted by subsection 11.5 of the Credit Agreement.
9. MAINTENANCE; NO ALTERATION; INSPECTION; UTILITIES. Grantor shall
maintain or cause to be maintained all the Improvements in good condition and
repair and shall not commit or suffer any waste of the Improvements. Grantor
shall repair, restore, replace or rebuild promptly any part of the Premises
which may be damaged or destroyed by any casualty whatsoever. The Improvements
shall not be demolished or materially altered, nor any material additions built,
without the prior written consent of Beneficiary, which consent shall not be
unreasonably withheld.
(b) Beneficiary and any persons authorized by Beneficiary shall have
the right to enter and inspect the Premises and the right to inspect all work
done, labor performed and materials furnished in and about the Improvements and
the right to inspect and make copies of all books, contracts and records of
Grantor relating to the Trust Property.
(c) Grantor shall pay or cause to be paid when due all utility
charges which are incurred for gas, electricity, water or sewer services
furnished to the Premises and all other assessments or charges of a similar
nature, whether public or private, affecting the Premises or any portion
thereof, whether or not such assessments or charges are liens thereon.
10. CONDEMNATION/EMINENT DOMAIN. Immediately upon obtaining
knowledge of the institution of any proceedings for the condemnation of the
Trust Property, or any portion thereof, Grantor will notify Beneficiary of the
pendency of such proceedings. Grantor authorizes Beneficiary, at Beneficiary's
option and in Beneficiary's sole discretion, as attorney-in-fact for Grantor, to
commence, appear in and prosecute, in Beneficiary's or Grantor's name, any
action or proceeding relating to any condemnation of the Trust Property, or any
portion thereof, and to settle or compromise any claim in connection with such
condemnation. If Beneficiary elects not to participate in such condemnation
proceeding, then Grantor shall, at its expense, diligently prosecute any such
proceeding and shall consult with Beneficiary, its attorneys and experts and
cooperate with them in any defense of any such proceedings. All awards and
proceeds of condemnation shall be assigned to Beneficiary to be applied in the
same manner as insurance proceeds, as provided above, and Grantor agrees to
execute any such assignments of all such awards as Beneficiary may request.
<PAGE>
15
11. RESTORATION. If Beneficiary elects to release funds to Grantor
for restoration of any of the Trust Property, then such restoration shall be
performed only in accordance with the following conditions:
(i) prior to the commencement of any restoration, the plans and
specifications for such restoration, and the budgeted costs, shall be
submitted to and approved by Beneficiary;
(ii) prior to making any advance of restoration funds, Beneficiary
shall be satisfied that the remaining restoration funds are sufficient to
complete the restoration and to pay all related expenses, including
interest on the Indebtedness (to the extent appropriate) and real estate
taxes on the Premises, during restoration;
(iii) at the time of any disbursement of the restoration funds, (A) no
Default (as defined below) shall then exist, (B) no mechanics' or
materialmen's liens shall have been filed and remain undischarged, except
those discharged by the disbursement of the requested restoration funds and
(C) a satisfactory bring-down or continuation of title insurance on the
Premises shall be delivered to Beneficiary;
(iv) disbursements shall be made from time to time in an amount not
exceeding the cost of the work completed since the last disbursement, upon
receipt of satisfactory evidence of the stage of completion and of
performance of the work in a good and workmanlike manner and in accordance
with the contracts, plans and specifications acceptable to Beneficiary;
(v) with respect to each advance of restoration funds, Beneficiary
may retain 10% of the amount of such advance as a holdback until the
restoration is fully completed;
(vi) the restoration funds shall bear no interest and may be
commingled with Beneficiary's other funds;
(vii) Beneficiary may impose such other conditions as are customarily
imposed by construction lenders; and
(viii) any restoration funds remaining shall be retained by Beneficiary
and may be applied by Beneficiary, in its sole discretion, to the
Indebtedness in the inverse order of maturity.
12. LEASES. (a) Grantor shall not (i) execute an assignment or
pledge of any Lease relating to all or any portion of the Trust Property other
than in favor of Beneficiary, or (ii) without the prior written consent of
Beneficiary, execute or permit to exist any Lease of any of the Trust Property
except as provided in subsection 11.5 of the Credit Agreement.
<PAGE>
16
(b) As to any Lease of all or any portion of the Premises consented
to by Beneficiary, Grantor shall:
(i) promptly perform all of the provisions of the Lease on the part
of the lessor thereunder to be performed;
(ii) promptly enforce all of the provisions of the Lease on the part
of the lessee thereunder to be performed;
(iii) appear in and defend any action or proceeding arising under or in
any manner connected with the Lease or the obligations of Grantor as lessor
or of the lessee thereunder;
(iv) exercise, within 5 days after a request by Beneficiary, any right
to request from the lessee a certificate with respect to the status
thereof;
(v) simultaneously deliver to Beneficiary copies of any notices of
default which Grantor may at any time forward to or receive from the
lessee;
(vi) promptly deliver to Beneficiary a fully executed counterpart of
the Lease; and
(vii) promptly deliver to Beneficiary, upon Beneficiary's request, an
assignment of the Grantor's interest under such Lease.
(c) Grantor shall deliver to Beneficiary, within 10 days after a
request by Beneficiary, a written statement, certified by Grantor as being true,
correct and complete, containing the names of all lessees and other occupants of
the Premises, the terms of all Leases of all or any portion of the Premises and
the spaces occupied and rentals payable thereunder, and a list of all Leases of
all or any portion of the Premises which are then in default, including the
nature and magnitude of the default; such statement shall be accompanied by
credit information with respect to the lessees and such other information as
Beneficiary may request.
(d) All Leases of all or any portion of the Premises entered into by
Grantor after the date hereof, if any, and all rights of any lessees thereunder
shall be subject and subordinate in all respects to the lien and provisions of
this Deed of Trust unless Beneficiary shall otherwise elect in writing.
(e) As to any Lease now in existence or subsequently consented to by
Beneficiary, Grantor shall not accept a surrender or terminate, cancel, rescind,
supplement, alter, revise, modify or amend such Lease or permit any such action
to be taken nor shall Grantor accept the payment of rent more than thirty (30)
days in advance of its due date.
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17
(f) If any act or omission of Grantor would give any lessee under any
Lease of all or any portion of the Premises the right, immediately or after
lapse of a period of time, to cancel or terminate such Lease, or to abate or
offset against the payment of rent or to claim a partial or total eviction, such
lessee shall not exercise such right until it has given written notice of such
act or omission to Beneficiary and until a reasonable period for remedying such
act or omission shall have elapsed following the giving of such notice without a
remedy being effected.
(g) In the event of the enforcement by Beneficiary of any remedy
under this Deed of Trust, the lessee under each Lease of all or any portion of
the Premises shall, if requested by Beneficiary or any other person succeeding
to the interest of Beneficiary as a result of such enforcement, attorn to
Beneficiary or to such person and shall recognize Beneficiary or such successor
in interest as lessor under the Lease without change in the provisions thereof;
provided however, that Beneficiary or such successor in interest shall not be:
(i) bound by any payment of an installment of rent or additional rent which may
have been made more than 30 days before the due date of such installment; (ii)
bound by any amendment or modification to the Lease made without the consent of
Beneficiary or such successor in interest; (iii) liable for any previous act or
omission of Grantor (or its predecessors in interest); (iv) responsible for any
monies owing by Grantor to the credit of such lessee or subject to any credits,
offsets, claims, counterclaims, demands or defenses which the lessee may have
against Grantor (or its predecessors in interest); (v) bound by any covenant to
undertake or complete any construction of the Premises or any portion thereof;
or (vi) obligated to make any payment to such lessee other than any security
deposit actually delivered to Beneficiary or such successor in interest. Each
lessee or other occupant, upon request by Beneficiary or such successor in
interest, shall execute and deliver an instrument or instruments confirming such
attornment. In addition, Grantor agrees that each Lease entered into after the
date of this Deed of Trust shall include language to the effect of subsections
(d)-(g) of this Section; provided that the provisions of such subsections shall
be self-operative and any failure of any Lease to include such language shall
not impair the binding effect of such provisions on any lessee under such Lease.
13. FURTHER ASSURANCES/ESTOPPEL CERTIFICATES. To further assure
Beneficiary's and Trustee's rights under this Deed of Trust, Grantor agrees upon
demand of Beneficiary or Trustee to do any act or execute any additional
documents (including, but not limited to, security agreements on any personalty
included or to be included in the Trust Property and a separate assignment of
each Lease in recordable form) as may be required by Beneficiary or Trustee to
confirm the rights or benefits conferred on Beneficiary or Trustee by this Deed
of Trust. Grantor, within 5 business days after request, shall deliver, in form
and substance
<PAGE>
18
satisfactory to Beneficiary, a written statement, duly acknowledged, setting
forth the amount of the Indebtedness, and whether any offsets, claims,
counterclaims or defenses exist against the Indebtedness and certifying as to
such other matters as Beneficiary shall reasonably request.
14. BENEFICIARY'S RIGHT TO PERFORM. If Grantor fails to perform any
of the covenants or agreements of Grantor, Beneficiary or Trustee, without
waiving or releasing Grantor from any obligation or default under this Deed of
Trust, may, at any time (but shall be under no obligation to) pay or perform the
same, and the amount or cost thereof, with interest at the Default Rate, shall
immediately be due from Grantor to Beneficiary or Trustee (as the case may be)
and the same shall be secured by this Deed of Trust and shall be an encumbrance
on the Trust Property prior to any right, title to, interest in or claim upon
the Trust Property attaching subsequent to the date of this Deed of Trust. No
payment or advance of money by Beneficiary or Trustee under this Section shall
be deemed or construed to cure Grantor's default or waive any right or remedy of
Beneficiary or Trustee.
15. GRANTOR'S EXISTENCE, ETC. Grantor shall do all things necessary
to preserve and keep in full force and effect its existence, franchises, rights
and privileges under the laws of the state in which it was formed and its right
to own property and transact business in the state of Texas. Grantor represents
and warrants that Grantor is a duly organized and validly existing corporation
in good standing, and this Deed of Trust has been executed by a duly authorized
officer thereof. This Deed of Trust constitutes the legal, valid and binding
obligation of Grantor, enforceable against Grantor in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally.
16. FINANCIAL STATEMENTS; CERTIFICATES; OTHER INFORMATION. Grantor
shall deliver to Beneficiary all financial statements, certificates and other
information required to be delivered pursuant to the Credit Agreement.
17. NOTICE OF CERTAIN OCCURRENCES. Grantor shall give notice to the
Administrative Agent (as defined in the Credit Agreement) promptly upon the
occurrence of the events listed in subsection 10.7 of the Credit Agreement.
18. EVENTS OF DEFAULT. The occurrence of any Event of Default as
such term is defined in the Credit Agreement shall constitute an Event of
Default hereunder.
19. REMEDIES. (a) Upon the occurrence of any Event of Default, in
addition to any other rights and remedies Beneficiary may have pursuant to the
Loan Documents, or as provided by law, and without limitation, (x) if such event
is an
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19
Event of Default specified in clause (i) or (ii) of subsection 12(i) of the
Credit Agreement, automatically the Indebtedness and all other amounts owing
under the Credit Agreement (including, without limitation, all amounts of
Letters of Credit Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents required
thereunder), the Notes, this Deed of Trust and the other Security Documents
immediately shall become due and payable, and (y) if such event is any other
Event of Default, with the consent of the Majority Lenders, the Administrative
Agent may, or upon the request of the Majority Lenders, the Administrative Agent
shall, by notice to Grantor declare the Indebtedness (together with accrued
interest thereon) and all other amounts payable under the Credit Agreement
(including, without limitation, all amounts of Letters of Credit Obligations,
whether or not the beneficiaries of the then outstanding Letters of Credit shall
have presented the documents required thereunder), the Notes, this Deed of Trust
and the other Security Documents to be immediately due and payable. Except as
expressly provided above in this Section or as required by applicable law,
notice of intention to accelerate, notice of acceleration, presentment, demand,
protest and all other notices of any kind are hereby expressly waived. In
addition, upon the occurrence of any Event of Default, Beneficiary may
immediately take such action, without notice or demand, as it deems advisable to
protect and enforce its rights against Grantor and in and to the Trust Property,
including, but not limited to, the following actions, each of which may be
pursued concurrently or otherwise, at such time and in such manner as
Beneficiary may determine, in its sole discretion, without impairing or
otherwise affecting the other rights and remedies of Beneficiary:
(i) Beneficiary may direct Trustee to sell or offer for sale the
Trust Property in such portions, order and parcels as Beneficiary may
determine, with or without having first taken possession of the same, to
the highest bidder for cash at public auction. Such sale shall be made at
the courthouse door of the County wherein the Real Estate (or any of that
portion thereof to be sold) is situated (whether the parts or parcels
thereof, if any, in different counties are contiguous or not, and without
the necessity of having any personal property hereby mortgaged present at
such sale) on the first Tuesday of any month between the hours of 10:00
a.m. and 4:00 p.m. after posting a written or printed notice or notices of
the place, time and terms of the sale of the Trust Property for twenty-one
(21) days prior to the date of the sale at the courthouse door of the
county in which the sale is to be made and at the courthouse door of any
other county in which a portion of the Trust Property may be situated and
filing a copy of such notice(s) in the office of the county clerk in each
of such counties, and by serving written notice of the proposed sale at
least twenty-one (21) days preceding the date of sale by certified mail on
Grantor and on each debtor obligated to pay the Indebtedness
<PAGE>
20
according to the records of the Beneficiary. It is agreed that the posting
and transmittal of notices may be performed by the Trustee, Beneficiary, or
by any person acting for them. Applicable notices and the sale shall be
accomplished by following the procedures permitted or required by Tex.
Prop. Code Ann. 51.002 (Vernon 1984), as same may be amended from time to
time, relating to the sale of real estate and/or by Chapter 9 of the Texas
Uniform Commercial Code relating to the sale of personal property
collateral after default by a debtor (as said Section and Chapter may now
exist or may hereafter be amended or succeeded, the "Code"), or by any
other present or subsequent articles or enactments relating to the same.
Nothing contained in this subsection (i) shall be construed to limit in any
way Trustee's rights to sell the Trust Property by private sale if, and to
the extent, that such private sale is permitted under the laws of the State
of Texas or by public or private sale after entry of judgment by any court
of competent jurisdiction ordering the same. At any such sale (1) whether
made under power herein contained, the aforesaid 51.002, the Code, any
other legal requirement or by virtue of any judicial procedure or any other
legal right, remedy or recourse, it shall not be necessary for Trustee to
have physically present, or to have constructive possession of, the Trust
Property (Grantor hereby covenanting and agreeing to deliver to Trustee any
portion of the Trust Property not actually or constructively possessed by
Trustee immediately upon demand by Trustee), and the title to and right of
possession of any such property shall pass to the purchaser thereof as
completely as if the same had been actually present and delivered to
purchaser at such sale, (2) each instrument of conveyance executed by
Trustee shall contain a special warranty of title, subject to Permitted
Encumbrances, binding upon Grantor, (3) each and every recital contained in
any instrument of conveyance made by Trustee shall be PRIMA FACIE proof of
the truth and accuracy of the matters recited therein, including, without
limitation, nonpayment of the Indebtedness, advertisement and conduct of
such sale in the manner provided herein and otherwise by law and
appointment of any successor Trustee hereunder, (4) there shall be a PRIMA
FACIE presumption that any and all prerequisites to the validity thereof
shall have been performed, (5) the receipt of Trustee or of such other
party or officer making the sale shall be a sufficient discharge to the
purchaser or purchasers for his or their purchase money and no such
purchaser or purchasers, or his or their assigns or personal
representatives, shall thereafter be obligated to see to the application of
such purchase money or be in any way answerable for any loss,
misapplication or nonapplication thereof, (6) to the fullest extent
permitted by law, Grantor shall be completely and irrevocably divested of
all of its right, title, interest, claim and demand whatsoever, either at
law or in equity, in and to the property sold and such sale shall be a
perpetual bar, both
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21
at law and in equity, against Grantor, and against any and all other
persons claiming or to claim the property sold or any part thereof, by,
through or under Grantor, and (7) to the extent and under such
circumstances as are permitted by law, Beneficiary may be a purchaser at
any such sale;
(ii) Beneficiary may, to the extent permitted by applicable law, (A)
institute and maintain an action of judicial foreclosure against all or any
part of the Trust Property, (B) institute and maintain an action on the
Notes or with respect to the Reimbursement Obligation under the Credit
Agreement, or (C) take such other action at law or in equity for the
enforcement of this Deed of Trust or any of the Loan Documents as the law
may allow. Beneficiary may proceed in any such action to final judgment
and execution thereon for all sums due hereunder, together with interest
thereon at the Default Rate and all costs of suit, including, without
limitation, reasonable attorneys' fees and disbursements. Interest at the
Default Rate shall be due on any judgment obtained by Beneficiary from the
date of judgment until actual payment is made of the full amount of the
judgment.
(iii) Beneficiary may personally, or by its agents, attorneys and
employees and without regard to the adequacy or inadequacy of the Trust
Property or any other collateral as security for the Indebtedness and
Obligations enter into and upon the Trust Property and each and every part
thereof and exclude Grantor and its agents and employees therefrom without
liability for trespass, damage or otherwise (Grantor hereby agreeing to
surrender possession of the Trust Property to Beneficiary upon demand at
any such time) and use, operate, manage, maintain and control the Trust
Property and every part thereof. Following such entry and taking of
possession, Beneficiary shall be entitled, without limitation, (x) to lease
all or any part or parts of the Trust Property for such periods of time and
upon such conditions as Beneficiary may, in its discretion, deem proper,
(y) to enforce, cancel or modify any Lease to the extent permitted by
applicable law and the terms of such Lease and (z) generally to execute, do
and perform any other act, deed, matter or thing concerning the Trust
Property as Beneficiary shall deem appropriate as fully as Grantor might
do.
(b) Beneficiary, in any action to foreclose this Deed of Trust in a
judicial procedure or in connection with the exercise of any non-judicial power
of sale by Trustee, shall be entitled to the appointment of a receiver. In case
of a trustee's sale or foreclosure sale, the Real Estate may be sold, at
Beneficiary's election, in one parcel or in more than one parcel and Beneficiary
is specifically empowered (without being required to do so, and in its sole and
absolute discretion) to
<PAGE>
22
cause successive sales of portions of the Trust Property to be held.
(c) In the event of any breach of any of the covenants, agreements,
terms or conditions contained in this Deed of Trust, and notwithstanding to the
contrary any exculpatory or non-recourse language which may be contained herein,
Beneficiary or Trustee shall be entitled to enjoin such breach and obtain
specific performance of any covenant, agreement, term or condition and
Beneficiary and Trustee shall have the right to invoke any equitable right or
remedy as though other remedies were not provided for in this Deed of Trust.
(d) Following any sale of the Trust Property, or any part hereof,
under the provisions of this instrument, all persons and parties in possession
of the property sold shall be divested of any and all interest in and claim to
the Trust Property, and shall be obligated to immediately vacate the premises,
and prior to such vacation shall be tenants at sufferance of the purchaser of
the property sold and shall be subject to eviction in an action of forcible
detainer; provided, the provisions of this subparagraph shall be subject to any
agreements made in writing by Beneficiary with reference to any existing and/or
future leases; provided, further, the purchaser at any foreclosure sale shall
have the option but not the obligation to affirm any then existing leases or
tenancies or otherwise succeed to the rights of Grantor thereunder.
20. RIGHT OF BENEFICIARY TO CREDIT SALE. Upon the occurrence of any
sale made under this Deed of Trust, whether made under the power of sale or by
virtue of judicial proceedings or of a judgment or decree of foreclosure and
sale, Beneficiary may bid for and acquire the Trust Property or any part
thereof. In lieu of paying cash therefor, Beneficiary may make settlement for
the purchase price by crediting upon the Indebtedness or other sums secured by
this Deed of Trust the net sales price after deducting therefrom the expenses of
sale and the cost of the action and any other sums which Beneficiary is
authorized to deduct under this Deed of Trust. In such event, this Deed of
Trust, the Notes and documents evidencing expenditures secured hereby may be
presented to the person or persons conducting the sale in order that the amount
so used or applied may be credited upon the Indebtedness as having been paid.
21. APPOINTMENT OF RECEIVER. If an Event of Default shall have
occurred and be continuing, Beneficiary as a matter of right and without notice
to Grantor, unless otherwise required by applicable law, and without regard to
the adequacy or inadequacy of the Trust Property or any other collateral as
security for the Indebtedness and Obligations or the interest of Grantor
therein, shall have the right to apply to any court having jurisdiction to
appoint a receiver or receivers or other manager of the Trust Property, and
Grantor hereby irrevocably consents to such appointment and waives notice of any
application therefor (except
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23
as may be required by law). Any such receiver or receivers shall have all the
usual powers and duties of receivers in like or similar cases and all the powers
and duties of Beneficiary in case of entry as provided in this Deed of Trust,
including, without limitation and to the extent permitted by law, the right to
enter into leases of all or any part of the Trust Property, and shall continue
as such and exercise all such powers until the date of confirmation of sale of
the Trust Property unless such receivership is sooner terminated.
22. EXTENSION, RELEASE, ETC. (a) Without affecting the encumbrance
or charge of this Deed of Trust upon any portion of the Trust Property not then
or theretofore released as security for the full amount of the Indebtedness,
Beneficiary may, from time to time and without notice, agree to (i) release any
person liable for the Indebtedness, (ii) extend the maturity or alter any of the
terms of the Indebtedness or any guaranty thereof, (iii) grant other
indulgences, (iv) release or reconvey, or cause to be released or reconveyed at
any time at Beneficiary's option any parcel, portion or all of the Trust
Property, (v) take or release any other or additional security for any
obligation herein mentioned, or (vi) make compositions or other arrangements
with debtors in relation thereto. If at any time this Deed of Trust shall
secure less than all of the principal amount of the Indebtedness, it is
expressly agreed that any repayments of the principal amount of the Indebtedness
shall not reduce the amount of the encumbrance of this Deed of Trust until the
encumbrance amount shall equal the principal amount of the Indebtedness
outstanding.
(b) No recovery of any judgment by Beneficiary and no levy of an
execution under any judgment upon the Trust Property or upon any other property
of Grantor shall affect the encumbrance of this Deed of Trust or any liens,
rights, powers or remedies of Beneficiary or Trustee hereunder, and such liens,
rights, powers and remedies shall continue unimpaired.
(c) If Beneficiary shall have the right to foreclose this Deed of
Trust or to direct the Trustee to exercise its power of sale, Grantor authorizes
Beneficiary at its option to foreclose the lien of this Deed of Trust (or direct
the Trustee to sell the Trust Property, as the case may be) subject to the
rights of any tenants of the Trust Property. The failure to make any such
tenants parties defendant to any such foreclosure proceeding and to foreclose
their rights, or to provide notice to such tenants as required in any statutory
procedure governing a sale of the Trust Property by Trustee, or to terminate
such tenant's rights in such sale will not be asserted by Grantor as a defense
to any proceeding instituted by Beneficiary to collect the Indebtedness or to
foreclose this Deed of Trust.
(d) Unless expressly provided otherwise, in the event that
Beneficiary's interest in this Deed of Trust and title to the Trust Property or
any estate therein shall become vested in
<PAGE>
24
the same person or entity, this Deed of Trust shall not merge in such title but
shall continue as a valid charge on the Trust Property for the amount secured
hereby.
23. SECURITY AGREEMENT UNDER UNIFORM COMMERCIAL CODE. (a) It is the
intention of the parties hereto that this Deed of Trust shall constitute a
Security Agreement within the meaning of the Code. If an Event of Default shall
occur under this Deed of Trust, then in addition to having any other right or
remedy available at law or in equity, Beneficiary shall have the option of
either (i) proceeding under the Code and exercising such rights and remedies as
may be provided to a secured party by the Code with respect to all or any
portion of the Trust Property which is personal property (including, without
limitation, taking possession of and selling such property) or (ii) treating
such property as real property and proceeding with respect to both the real and
personal property constituting the Trust Property in accordance with
Beneficiary's rights, powers and remedies with respect to the real property (in
which event the default provisions of the Code shall not apply). If Beneficiary
shall elect to proceed under the Code, then five days' notice of sale of the
personal property shall be deemed reasonable notice and the reasonable expenses
of retaking, holding, preparing for sale, selling and the like incurred by
Beneficiary shall include, but not be limited to, attorneys' fees and legal
expenses. At Beneficiary's request, Grantor shall assemble the personal
property and make it available to Beneficiary at a place designated by
Beneficiary which is reasonably convenient to both parties.
(b) Grantor and Beneficiary agree, to the extent permitted by law,
that: (i) all of the goods described within the definition of the word
"Equipment" are or are to become fixtures on the Real Estate; (ii) this Deed of
Trust upon recording or registration in the real estate records of the proper
office shall constitute a financing statement filed as a "fixture filing" within
the meaning of Sections 9-313 and 9-402 of the Code; (iii) Grantor is the record
owner of the Real Estate; and (iv) the addresses of Grantor and Beneficiary are
as set forth on the first page of this Deed of Trust.
(c) Grantor, upon request by Beneficiary from time to time, shall
execute, acknowledge and deliver to Beneficiary one or more separate security
agreements, in form satisfactory to Beneficiary, covering all or any part of the
Trust Property and will further execute, acknowledge and deliver, or cause to be
executed, acknowledged and delivered, any financing statement, affidavit,
continuation statement or certificate or other document as Beneficiary may
request in order to perfect, preserve, maintain, continue or extend the security
interest under and the priority of this Deed of Trust and such security
instrument. Grantor further agrees to pay to Beneficiary on demand all costs
and expenses incurred by Beneficiary in connection with the preparation,
execution, recording, filing and
<PAGE>
25
re-filing of any such document and all reasonable costs and expenses of any
record searches for financing statements Beneficiary shall reasonably require.
Grantor shall from time to time, on request of Beneficiary, deliver to
Beneficiary an inventory in reasonable detail of any of the Trust Property which
constitutes personal property. If Grantor shall fail to furnish any financing
or continuation statement within 10 days after request by Beneficiary, then
pursuant to the provisions of the Code, Grantor hereby authorizes Beneficiary,
without the signature of Grantor, and hereby irrevocably appoints and
constitutes Beneficiary as its true and lawful attorney-in-fact, which
appointment is coupled with an interest, in its name, place and stead to execute
and file any such financing and continuation statements. The filing of any
financing or continuation statements in the records relating to personal
property or chattels shall not be construed as in any way impairing the right of
Beneficiary to proceed against any personal property encumbered by this Deed of
Trust as real property, as set forth above.
24. ASSIGNMENT OF RENTS. (a) Grantor hereby assigns to Beneficiary,
the Rents as further security for the payment of the Indebtedness and
performance of the Obligations, and Grantor grants to Beneficiary the right to
enter the Trust Property for the purpose of collecting the same and to let the
Trust Property or any part thereof, and to apply the Rents on account of the
Indebtedness. The foregoing assignment and grant is present and absolute and
shall continue in effect until the Indebtedness is paid in full, but Beneficiary
and Trustee hereby waive the right to enter the Trust Property for the purpose
of collecting the Rents and Grantor shall be entitled to collect, receive, use
and retain the Rents until the occurrence of an Event of Default under this Deed
of Trust; such right of Grantor to collect, receive, use and retain the Rents
may be revoked by Beneficiary upon the occurrence of any Event of Default under
this Deed of Trust by giving not less than five days' written notice of such
revocation to Grantor; in the event such notice is given, Grantor shall pay over
to Beneficiary, or to any receiver appointed to collect the Rents, any lease
security deposits, and shall pay monthly in advance to Beneficiary, or to any
such receiver, the fair and reasonable rental value as determined by Beneficiary
for the use and occupancy of the Trust Property or of such part thereof as may
be in the possession of Grantor or any affiliate of Grantor, and upon default in
any such payment Grantor and any such affiliate will vacate and surrender the
possession of the Trust Property to Beneficiary or to such receiver, and in
default thereof may be evicted by summary proceedings or otherwise. Grantor
shall not accept prepayments of installments of Rent to become due for a period
of more than one month in advance (except for security deposits and estimated
payments of percentage rent, if any).
(b) Beneficiary's acceptance of this assignment shall not, prior to
entry upon and taking possession of the Trust
<PAGE>
26
Property by Beneficiary, be deemed to constitute Beneficiary a "mortgagee in
possession", nor obligate Beneficiary to appear in or defend any proceeding
relating to any of the Leases or to the Trust Property, take any action
hereunder, expend any money, incur any expenses, or perform any obligation or
liability under the Leases, or assume any obligation for any deposits delivered
to Grantor by any tenant and not delivered to Beneficiary, or render Beneficiary
liable for any injury or damage to person or property in or about the Trust
Property. Neither the collection of Rents due under the Leases herein
described, nor possession of the Trust Property by Beneficiary under any of the
circumstances set forth herein shall render Beneficiary liable with respect to
any obligations of Grantor to any tenant or subtenant under said Leases, such
liability to arise only with respect to a party purchasing the Trust Property at
a foreclosure sale or receiving a deed covering the Trust Property in lieu of
foreclosure and then to arise only with respect to obligations accruing
subsequent to such foreclosure sale or deed in lieu thereof.
(c) By Beneficiary's acceptance of this Deed of Trust, it is
understood and agreed that a full and complete release of this Deed of Trust
shall operate as a full and complete reassignment to Grantor of the
Beneficiary's rights and interests under this Section.
(d) All provisions hereof shall inure to the benefit of and all
actions authorized hereunder shall be exercisable by the Trustee or the
Substitute Trustee at Beneficiary's request.
25. TRUST FUNDS. All lease security deposits of the Real Estate
shall be treated as trust funds not to be commingled with any other funds of
Grantor. Within 10 days after request by Beneficiary, Grantor shall furnish
Beneficiary satisfactory evidence of compliance with this subsection, together
with a statement of all lease security deposits by lessees and copies of all
Leases not previously delivered to Beneficiary, which statement shall be
certified by Grantor.
26. ADDITIONAL RIGHTS. The holder of any subordinate lien or
subordinate deed of trust on the Trust Property shall have no right to terminate
any Lease whether or not such Lease is subordinate to this Deed of Trust nor
shall any holder of any subordinate lien or subordinate deed of trust join any
tenant under any Lease in any trustee's sale or action to foreclose the lien or
modify, interfere with, disturb or terminate the rights of any tenant under any
Lease. By recordation of this Deed of Trust all subordinate lienholders and the
trustees and beneficiaries under subordinate deeds of trust are subject to and
notified of this provision, and any action taken by any such lienholder or
trustee or beneficiary contrary to this provision shall be null and void. Upon
the occurrence of any Event of Default, Beneficiary may, in its sole discretion
and without regard to the adequacy of its security under this Deed of Trust,
apply all or any part of any amounts on deposit with Beneficiary
<PAGE>
27
under this Deed of Trust against all or any part of the Indebtedness. Any such
application shall not be construed to cure or waive any Default or Event of
Default or invalidate any act taken by Beneficiary on account of such Default or
Event of Default.
27. CHANGES IN METHOD OF TAXATION. In the event of the passage after
the date hereof of any law of any Governmental Authority deducting from the
value of the Premises for the purposes of taxation any lien or deed of trust
thereon, or changing in any way the laws for the taxation of mortgages or deeds
of trust or debts secured thereby for federal, state or local purposes, or the
manner of collection of any such taxes, and imposing a tax, either directly or
indirectly, on mortgages or deeds of trust or debts secured thereby, the holder
of this Deed of Trust shall have the right to declare the Indebtedness due on a
date to be specified by not less than 30 days' written notice to be given to
Grantor unless within such 30-day period Grantor shall assume as an Obligation
hereunder the payment of any tax so imposed until full payment of the
Indebtedness and such assumption shall be permitted by law.
28. NOTICES. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
facsimile transmission) and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made (a) in the case of delivery by hand,
when delivered, (b) in the case of delivery by mail, three days after being
deposited in the mails, postage prepaid, or (c) in the case of delivery by
facsimile transmission, when sent and receipt has been confirmed, addressed to
Grantor at the address given on the first page of this Deed of Trust, to
Beneficiary at the address given on the first page of this Deed of Trust and to
Trustee at the address given on the first page of this Deed of Trust. Any party
may change its address by notice to the other party. If any party other than
Grantor shall be entitled to receive copies of notices, demands or approvals,
failure of Beneficiary or Trustee to send such copies shall not impair the
effectiveness of any notice sent to Grantor.
29. NO ORAL MODIFICATION. This Deed of Trust may not be changed or
terminated orally. Any agreement made by Grantor and Beneficiary after the date
of this Deed of Trust relating to this Deed of Trust shall be superior to the
rights of the holder of any intervening or subordinate deed of trust, lien or
encumbrance. Trustee's execution of any written agreement between Grantor and
Beneficiary shall not be required for the effectiveness thereof as between
Grantor and Beneficiary.
30. PARTIAL INVALIDITY. In the event any one or more of the
provisions contained in this Deed of Trust shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision hereof, but each shall be
<PAGE>
28
construed as if such invalid, illegal or unenforceable provision had never been
included. Notwithstanding to the contrary anything contained in this Deed of
Trust or in any provisions of the Indebtedness or Loan Documents, the
obligations of Grantor and of any other obligor under the Indebtedness or Loan
Documents shall be subject to the limitation that Beneficiary shall not charge,
take or receive, nor shall Grantor or any other obligor be obligated to pay to
Beneficiary, any amounts constituting interest in excess of the maximum rate
permitted by law to be charged by Beneficiary.
31. GRANTOR'S WAIVER OF RIGHTS. To the fullest extent permitted by
law, Grantor waives the benefit of all laws now existing or that may
subsequently be enacted providing for (i) any appraisement before sale of any
portion of the Trust Property, (ii) any extension of the time for the
enforcement of the collection of the Indebtedness or the creation or extension
of a period of redemption from any sale made in collecting such debt and (iii)
exemption of the Trust Property from attachment, levy or sale under execution or
exemption from civil process. To the full extent Grantor may do so, Grantor
agrees that Grantor will not at any time insist upon, plead, claim or take the
benefit or advantage of any law now or hereafter in force providing for any
appraisement, valuation, stay, exemption, extension or redemption, or requiring
foreclosure of this Deed of Trust before exercising any other remedy granted
hereunder and Grantor, for Grantor and its successors and assigns, and for any
and all persons ever claiming any interest in the Trust Property, to the extent
permitted by law, hereby waives and releases all rights of redemption,
valuation, appraisement, stay of execution, notice of election to mature or
declare due the whole of the secured indebtedness and marshalling in the event
of exercise by Trustee or Beneficiary of the power of sale or other rights
hereby created.
32. REMEDIES NOT EXCLUSIVE. Beneficiary and Trustee shall be
entitled to enforce payment of the Indebtedness and performance of the
Obligations and to exercise all rights and powers under this Deed of Trust or
under any of the other Loan Documents or other agreement or any laws now or
hereafter in force, notwithstanding some or all of the Indebtedness and
Obligations may now or hereafter be otherwise secured, whether by deed of trust,
mortgage, security agreement, pledge, lien, assignment or otherwise. Neither
the acceptance of this Deed of Trust nor its enforcement, shall prejudice or in
any manner affect Beneficiary's or Trustee's right to realize upon or enforce
any other security now or hereafter held by Beneficiary or Trustee, it being
agreed that Beneficiary and Trustee shall be entitled to enforce this Deed of
Trust and any other security now or hereafter held by Beneficiary or Trustee in
such order and manner as Beneficiary may determine in its absolute discretion.
No remedy herein conferred upon or reserved to Trustee or Beneficiary is
intended to be exclusive of any other remedy herein or by law provided or
permitted, but each shall be
<PAGE>
29
cumulative and shall be in addition to every other remedy given hereunder or now
or hereafter existing at law or in equity or by statute. Every power or remedy
given by any of the Loan Documents to Beneficiary or Trustee or to which either
may otherwise be entitled, may be exercised, concurrently or independently, from
time to time and as often as may be deemed expedient by Beneficiary or Trustee,
as the case may be. In no event shall Beneficiary or Trustee, in the exercise
of the remedies provided in this Deed of Trust (including, without limitation,
in connection with the assignment of Rents, or the appointment of a receiver and
the entry of such receiver on to all or any part of the Trust Property), be
deemed a "mortgagee in possession," and neither Beneficiary nor Trustee shall in
any way be made liable for any act, either of commission or omission, in
connection with the exercise of such remedies.
33. MULTIPLE SECURITY. If (a) the Premises shall consist of one or
more parcels, whether or not contiguous but located in the same county, or (b)
in addition to this Deed of Trust, Beneficiary shall now or hereafter hold or be
the beneficiary of one or more additional mortgages, liens, deeds of trust or
other security (directly or indirectly) for the Indebtedness upon other property
in such county in the state of Texas (whether or not such property is owned by
Grantor or by others) or (c) both the circumstances described in clauses (a) and
(b) shall be true, then to the fullest extent permitted by law, Beneficiary may,
at its election, commence or consolidate in a single trustee's sale or
foreclosure action all trustee's sale or foreclosure proceedings against all
such collateral securing the Indebtedness (including the Trust Property), which
action may be brought or consolidated in the courts of, or sale conducted in,
such county in which such collateral is located. Grantor acknowledges that the
right to maintain a consolidated trustee's sale or foreclosure action is a
specific inducement to Beneficiary to extend the Indebtedness, and Grantor
expressly and irrevocably waives any objections to the commencement or
consolidation of the foreclosure proceedings in a single action and any
objections to the laying of venue or based on the grounds of FORUM NON
CONVENIENS which it may now or hereafter have. Grantor further agrees that if
Trustee or Beneficiary shall be prosecuting one or more foreclosure or other
proceedings against a portion of the Trust Property or against any collateral
other than the Trust Property, which collateral directly or indirectly secures
the Indebtedness, or if Beneficiary shall have obtained a judgment of
foreclosure and sale or similar judgment against such collateral (or, in the
case of a trustee's sale, shall have met the statutory requirements therefor
with respect to such collateral), then, whether or not such proceedings are
being maintained or judgments were obtained in or outside the state of Texas,
Beneficiary may commence or continue any trustee's sale or foreclosure
proceedings and exercise its other remedies granted in this Deed of Trust
against all or any part of the Trust Property and Grantor waives any objections
to the commencement or continuation of a foreclosure of this Deed of Trust or
exercise
<PAGE>
30
of any other remedies hereunder based on such other proceedings or judgments,
and waives any right to seek to dismiss, stay, remove, transfer or consolidate
either any action under this Deed of Trust or such other proceedings on such
basis. The commencement or continuation of proceedings to sell the Trust
Property in a trustee's sale, to foreclose this Deed of Trust or the exercise of
any other rights hereunder or the recovery of any judgment by Beneficiary or the
occurrence of any sale by the Trustee in any such proceedings shall not
prejudice, limit or preclude Beneficiary's right to commence or continue one or
more trustee's sales, foreclosure or other proceedings or obtain a judgment
against (or, in the case of a trustee's sale, to meet the statutory requirements
for, any such sale of) any other collateral (either in or outside the state of
Texas) which directly or indirectly secures the Indebtedness, and Grantor
expressly waives any objections to the commencement of, continuation of, or
entry of a judgment in such other sales or proceedings or exercise of any
remedies in such sales or proceedings based upon any action or judgment
connected to this Deed of Trust, and Grantor also waives any right to seek to
dismiss, stay, remove, transfer or consolidate either such other sales or
proceedings or any sale or action under this Deed of Trust on such basis. It is
expressly understood and agreed that to the fullest extent permitted by law,
Beneficiary may, at its election, cause the sale of all collateral which is the
subject of a single trustee's sale or foreclosure action at either a single sale
or at multiple sales conducted simultaneously and take such other measures as
are appropriate in order to effect the agreement of the parties to dispose of
and administer all collateral securing the Indebtedness (directly or indirectly)
in the most economical and least time-consuming manner.
34. SUCCESSORS AND ASSIGNS. All covenants of Grantor contained in
this Deed of Trust are imposed solely and exclusively for the benefit of
Beneficiary and Trustee and their respective successors and assigns, and no
other person or entity shall have standing to require compliance with such
covenants or be deemed, under any circumstances, to be a beneficiary of such
covenants, any or all of which may be freely waived in whole or in part by
Beneficiary or Trustee at any time if in the sole discretion of either of them
such waiver is deemed advisable. All such covenants of Grantor shall run with
the land and bind Grantor, the successors and assigns of Grantor (and each of
them) and all subsequent owners, encumbrancers and tenants of the Trust
Property, and shall inure to the benefit of Beneficiary, Trustee and their
respective successors and assigns. Without limiting the generality of the
foregoing, any successor to Trustee appointed by Beneficiary shall succeed to
all rights of Trustee as if such successor had been originally named as Trustee
hereunder. The word "Grantor" shall be construed as if it read "Grantors"
whenever the sense of this Deed of Trust so requires and if there shall be more
than one Grantor, the obligations of the Grantors shall be joint and several.
<PAGE>
31
35. NO WAIVERS, ETC. Any failure by Beneficiary to insist upon the
strict performance by Grantor of any of the terms and provisions of this Deed of
Trust shall not be deemed to be a waiver of any of the terms and provisions
hereof, and Beneficiary or Trustee, notwithstanding any such failure, shall have
the right thereafter to insist upon the strict performance by Grantor of any and
all of the terms and provisions of this Deed of Trust to be performed by
Grantor. Beneficiary may release, regardless of consideration and without the
necessity for any notice to or consent by the beneficiary of any subordinate
deed of trust or the holder of any subordinate lien on the Trust Property, any
part of the security held for the obligations secured by this Deed of Trust
without, as to the remainder of the security, in any way impairing or affecting
this Deed of Trust or the priority of this Deed of Trust over any subordinate
lien or deed of trust.
36. GOVERNING LAW, ETC. THIS DEED OF TRUST SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCEPT THAT GRANTOR
EXPRESSLY ACKNOWLEDGES THAT BY THEIR RESPECTIVE TERMS EACH OF THE CREDIT
AGREEMENT AND THE NOTES SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAW,
AND FOR PURPOSES OF CONSISTENCY, GRANTOR AGREES THAT IN ANY IN PERSONAM
PROCEEDING RELATED TO THIS DEED OF TRUST THE RIGHTS OF THE PARTIES TO THIS DEED
OF TRUST SHALL ALSO BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK GOVERNING CONTRACTS MADE AND TO BE PERFORMED IN THAT
STATE, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAW.
37. WAIVER OF TRIAL BY JURY. GRANTOR, TRUSTEE AND BENEFICIARY EACH
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION,
CLAIM, SUIT OR PROCEEDING RELATING TO THIS DEED OF TRUST AND FOR ANY
COUNTERCLAIM THEREIN. GRANTOR HEREBY WAIVES ALL RIGHTS TO INTERPOSE ANY
COUNTERCLAIM IN ANY SUIT BROUGHT BY BENEFICIARY OR TRUSTEE HEREUNDER AND ALL
RIGHTS TO HAVE ANY SUCH SUIT CONSOLIDATED WITH ANY SEPARATE SUIT, ACTION OR
PROCEEDING.
38. CERTAIN DEFINITIONS. Unless the context clearly indicates a
contrary intent or unless otherwise specifically provided herein, words used in
this Deed of Trust shall be used interchangeably in singular or plural form and
the word "Grantor" shall mean "each Grantor or any subsequent owner or owners of
the Trust Property or any part thereof or interest therein," the word
"Beneficiary" shall mean "Beneficiary or any subsequent holder of the Notes,"
the word "Trustee" shall mean "Trustee and any successor trustee hereunder," the
word "Notes" shall mean "the Notes or any other evidence of indebtedness secured
by this Deed of Trust," the word "person" shall include any individual,
corporation, partnership, trust, unincorporated association, government,
governmental authority, or other entity, and the words "Trust Property" shall
include any portion of the Trust Property or interest therein. Whenever the
context may require, any pronouns used herein shall include the corresponding
<PAGE>
32
masculine, feminine or neuter forms, and the singular form of nouns and pronouns
shall include the plural and vice versa. The captions in this Deed of Trust are
for convenience or reference only and in no way limit or amplify the provisions
hereof. All terms used herein which are defined in the Texas Uniform Commercial
Code shall be used in accordance with the definition therefor in said Code.
39. ENFORCEABILITY; USURY. (a) In no event shall any provision of
this Deed of Trust, the Notes, or any other instrument evidencing or securing
the Indebtedness ever obligate Grantor to pay or allow Beneficiary to collect
interest on the Notes, the Reimbursement Obligation or any other indebtedness
secured hereby at a rate greater than the maximum non-usurious rate permitted by
applicable law (herein referred to as the "Highest Lawful Rate"), or obligate
Grantor to pay any taxes, assessments, charges, insurance premiums or other
amounts to the extent that such payments, when added to the interest payable on
the Notes or the Reimbursement Obligation, would be held to constitute the
payment by Grantor of interest at a rate greater than the Highest Lawful Rate;
and this provision shall control over any provision to the contrary. To the
extent the Highest Lawful Rate is determined by reference to the laws of the
State of Texas, same shall be determined by reference to the indicated (weekly)
rate ceiling (as defined and described in Texas Revised Civil Statutes Article
5069-1.04, as amended) at the applicable time in effect.
(b) Without limiting the generality of the foregoing, in the event
the maturity of all or any part of the principal amount of the Indebtedness
shall be accelerated for any reason, then such principal amount so accelerated
shall be credited with any interest theretofore paid thereon in advance and
remaining unearned at the time of such acceleration. If, pursuant to the terms
of this Deed of Trust, the Credit Agreement or the Notes, any funds are applied
to the payment of any part of the principal amount of the Indebtedness prior to
the maturity thereof, then (a) any interest which would otherwise thereafter
accrue on the principal amount so paid by such application shall be canceled,
and (b) the Indebtedness remaining unpaid after such application shall be
credited with the amount of all interest, if any, theretofore collected on the
principal amount so paid by such application and remaining unearned at the date
of said application; and if the funds so applied shall be sufficient to pay in
full all the Indebtedness, then Beneficiary shall refund to Grantor all interest
theretofore paid thereon in advance and remaining unearned at the time of such
acceleration. Regardless of any other provision in this Deed of Trust, or in
any of the written evidences of the Indebtedness, Grantor shall never be
required to pay any unearned interest on the Indebtedness or any portion
thereof, and shall never be required to pay interest thereon at a rate in excess
of the Highest Lawful Rate construed by courts having competent jurisdiction
thereof.
<PAGE>
33
40. HOMESTEAD. Grantor represents and covenants that the Trust
Property forms no part any property owned, used or claimed by Grantor as a
business or residential homestead, or as exempt from forced sale under the laws
of the State of Texas, and disclaims and renounces all and every such claim
thereto.
41. SUBSTITUTE TRUSTEE. In case of the resignation of the Trustee,
or the inability (through death or otherwise), refusal or failure of the Trustee
to act, or at the option of Beneficiary or the Majority Lenders for any other
reason (which reason need not be stated), a substitute trustee may be named,
constituted and appointed by Beneficiary at Beneficiary's own option or at the
request of the Majority Lenders (the "Substitute Trustee"), without other
formality than an appointment and designation in writing, which appointment and
designation shall be full evidence of the right and authority to make the same
and of all facts therein recited, and this conveyance shall vest in the
Substitute Trustee the title, powers and duties herein conferred on the Trustee
originally named herein, and the conveyance of the Substitute Trustee to the
purchaser(s) at any sale of the Trust Property of any part thereof shall be
equally valid and effective. The right to appoint a Substitute Trustee shall
exist as often and whenever from any of said causes, the Trustee, original or
substitute, resigns or cannot, will not or does not act, or Beneficiary or the
Majority Lenders desire to appoint a new Trustee. No bond shall ever be
required of the Trustee, original or substitute. The recitals in any conveyance
made by the Trustee, original or substitute, shall be accepted and construed in
court and elsewhere as prima facie evidence and proof of the facts recited, and
no other proof shall be required as to the request by Beneficiary or the
Majority Lenders to the Trustee to enforce this Deed of Trust, or as to the
notice of or holding of the sale, or as to any particulars thereof, or as to the
resignation of the Trustee, original or substitute, or as to the inability,
refusal or failure of the Trustee, original or substitute, to act, or as to the
election of Beneficiary or the Majority Lenders to appoint a new Trustee, or as
to appointment of a Substitute Trustee, and all prerequisites of said sale shall
be presumed to have been performed; and each sale made under the powers herein
granted shall be a perpetual bar against Grantor and the heirs, personal
representatives, successors and assigns of Grantor. Trustee, original or
substitute, is hereby authorized and empowered to appoint any one or more
persons as attorney-in-fact to act as Trustee under him and in his name, place
and stead in order to take any actions that Trustee is authorized and empowered
to do hereunder, such appointment to be evidenced by an instrument signed and
acknowledged by said Trustee, original or substitute; and all acts done by said
attorney-in-fact shall be valid, lawful and binding as if done by said Trustee,
original or substitute, in person.
42. INDEMNIFICATION OF TRUSTEE. EXCEPT FOR GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT, TRUSTEE SHALL NOT BE LIABLE FOR ANY ACT OR OMISSION OR ERROR
OF JUDGMENT. TRUSTEE MAY RELY ON
<PAGE>
34
ANY DOCUMENT BELIEVED BY HIM IN GOOD FAITH TO BE GENUINE. ALL MONEY RECEIVED BY
TRUSTEE SHALL, UNTIL USED OR APPLIED AS HEREIN PROVIDED, BE HELD IN TRUST, AND
TRUSTEE SHALL NOT BE LIABLE FOR INTEREST THEREON. GRANTOR SHALL INDEMNIFY
TRUSTEE AGAINST ALL LIABILITY AND EXPENSES THAT HE MAY INCUR IN THE PERFORMANCE
OF HIS DUTIES HEREUNDER EXCEPT FOR GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
43. BUSINESS OR COMMERCIAL PURPOSE. Grantor warrants that the
extension of credit evidenced by the Notes and the Letters of Credit Obligations
under the Credit Agreement secured hereby are solely for business or commercial
purposes, other than agricultural purposes. Grantor further warrants that the
credit transaction evidenced by the Notes and the Letters of Credit Obligations
under the Credit Agreement are specifically exempted under Section 226.3(a) of
Regulation Z issued by the Board of Governors of the Federal Reserve System and
Title 12 (Truth in Lending Act) and Section 1603 of Title 15 (General
Provisions) of the Consumer Credit Protection Act and that no disclosures are
required to be given under such regulations and federal laws in connection with
the above transaction.
44. FINAL AGREEMENT. In consideration of the premises and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Grantor hereby confirms and agrees that this Deed of Trust
(including Schedule A), the Notes, any guarantees of the Notes executed by any
guarantors and all other Loan Documents and loan papers together constitute a
written "loan agreement" as defined in Section 26.02(a) of the Texas Business
and Commerce Code.
45. THIS WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
<PAGE>
35
This Deed of Trust has been duly executed by Grantor on the date first
above written.
ANACOMP, INC.,
an Indiana corporation
By:_____________________________
Name:
Title:
<PAGE>
State of New York )
)SS.
County of New York )
On the 27th day of February, 1997, before me personally came
_________________ to me known, who, being by me duly sworn, did depose and say
s/he resides at _______________________________________; that s/he is
________________ of Anacomp, Inc., the corporation described in and which
executed the foregoing instrument; that by order of the Board of Directors of
said corporation s/he signed his/her name.
_________________________
Notary Public
State of New York )
)SS.
County of New York )
On the 27th day of February, 1997, before me personally came
_________________ to me known, who, being by me duly sworn, did depose and say
s/he resides at _______________________________________; that s/he is
________________ of Anacomp, Inc., the corporation described in and which
executed the foregoing instrument; that by order of the Board of Directors of
said corporation s/he signed his/her name.
_________________________
Notary Public
<PAGE>
SCHEDULE A
Description of the Premises
<PAGE>
SCHEDULE A
DESCRIPTION
First Tract:
Being 8.444 acres out of Eli Sherrill Survey, Abstract Number 271, and the J.E.
Jones Survey Abstract No. 164, in Young County, Texas, and being a part of a
10.0 acre tract described in Deed from Graham Benevolent Foundation to Earl
Region et al recorded in Volume 414, Page 63, Deed Records of Young County,
Texas and described as follows:
BEGINNING at spike in North boundary line of F.M. Highway No. 2179 (formerly
Texas Highway No. 24) at the intersection of North line of Highway with South
boundary line of Old Jacksboro Road;
THENCE with the South boundary line of Old Jackson Road North 32-53 West 120.5
feet to spike and North 89-30 West 889.0 feet to spike for Northwest corner of
this tract and Northeast corner of West 60 feet (1.025 acres) of said 10.0 acre
tract;
THENCE with South East line of 1.025 acre tract 524.7 feet to spike for
Northwest corner of 0.531 acre tract;
THENCE East 154.02 feet to spike for Northeast corner of 0.531 acre tract;
THENCE South 100.61 feet to spike in North line of F.M. Highway No. 2179 at
Southeast corner of 0.531 acre tract;
THENCE North 57-10 East with North line of Highway 952.6 feet to the PLACE OF
BEGINNING; and being all of said 10.0 acres;
SAVE AND EXCEPT: the West 60 feet of said 10.0 acre tract described in Deed to
City of Graham, recorded in Volume 732, Page 185, Deed Records of Young County,
Texas, and containing 1.025 acres; and
SAVE AND EXCEPT 0.531 acre described as follows:
BEGINNING in South line of said 10 acres at the Southeast corner of the West 60
feet (1.025 acres) of said 10 acres, and being 71.4 feet North 57-10 East of the
Southeast corner of said 10 acres;
THENCE North with the East line of 1.025 acres 200 feet to spike;
<PAGE>
THENCE East 154.02 feet to spike;
THENCE South 100.61 feet to spike in North line of Highway;
THENCE South 57-10 West 183.30 feet to the PLACE OF BEGINNING.
NOTE: THIS COMPANY DOES NOT REPRESENT THAT THE ABOVE ACREAGE OR SQUARE FOOTAGE
CALCULATIONS ARE CORRECT.
SECOND TRACT:
Being 4.13 acres out of Eli Sherrill Survey, Abstract Number 271, in Young
County, Texas, being the same land described in Deed from Parameter Purchases,
Inc. to Graham Magnetics, Inc., recorded in Volume 638, Page 16, Deed Records of
Young County, Texas described as follows:
BEGINNING at corner in North boundary line of Old Jacksboro Road 350 feet West
of the EBL of said Sherrill Survey, and also being 100 feet North and 748.5 feet
South 89-30 East of the Northwest corner of 10.0 acre tract described in Deed
from Graham Benevolent Foundation to Earl Region et al, recorded in Volume 414,
Page 3, Deed Records of Young County, Texas;
THENCE North 89-30 West with North line of Old Jacksboro Road 300 feet to iron
rod of corner;
THENCE North 00-30 East 600 feet to corner;
THENCE South 89-30 East 300 feet to corner;
THENCE South 00-30 West 600 feet to PLACE OF BEGINNING.
NOTE: THIS COMPANY DOES NOT REPRESENT THAT THE ABOVE ACREAGE OR SQUARE FOOTAGE
CALCULATIONS ARE CORRECT.
THIRD TRACT:
Being 5.20 acres out of Eli Sherrill Survey, Abstract Number 271, in Young
County, Texas, being the same land described in Deed from Parameter Purchases,
Inc. to Graham Magnetics, Inc., recorded in Volume 638, Page 16, Deed Records of
Young County, Texas, and described as follows:
BEGINNING at the Southeast corner of 4.13 acres described in Second Tract above;
THENCE North 00-30 East 600 feet to Northeast corner of said 4.13 acre tract;
-2-
<PAGE>
THENCE South 89 deg. 30 min. East 396.1 feet to East line of Sherrill Survey;
THENCE South 00 deg. 18 min. West wtih East line of Sherrill Survey 229.7 feet
to corner;
THENCE West 17 feet to corner;
THENCE South 06-00 West 411 feet to corner in North boundary line of Old
Jacksboro Road;
THENCE with North line of Old Jacksboro Road North 65-45 West 96.5 feet and
North 89-30 West 252 feet to the PLACE OF BEGINNING.
NOTE: THIS COMPANY DOES NOT REPRESENT THAT THE ABOVE ACREAGE OR SQUARE FOOTAGE
CALCULATIONS ARE CORRECT.
FOURTH TRACT:
Being 1.648 acres out of Eli Sherrill Survey, Abstract Number 271, in Young
County,
Texas, being more particularly described as follows:
BEGINNING in South boundary line of Old Jacksboro Road 448.5 feet South 89-30
East of the Northwest corner of 10 acre tract described in Deed from Graham
Benevolent Foundation to East Region et al recorded in Volume 414, Page 63, Deed
Records of Young County, Texas;
THENCE North 100 feet to iron rod at Southwest corner of 4.13 acre tract
described in Second Tract;
THENCE following South line of said 4.13 acres and 5.20 acres described in Third
Tract South 89-30 East 552 feet and South 65-45 East 96.5 feet to spike;
THENCE South 05-19-34 East 107.3 feet to spike on North boundary line of F.M.
Highway No. 2179;
THENCE South 57-10 West 100 feet to East corner of 8.444 acres described in
First Tract;
THENCE following North line of 8.44 acres North 32-53 West 120.50 feet and North
89-30 West 500.5 feet tot he PLACE OF BEGINNING, and being the same land
described in Deed from the City of Graham, recorded in Volume 732, Page 186,
Deed Record of Young County, Texas.
NOTE: THIS COMPANY DOES NOT REPRESENT THAT THE ABOVE ACREAGE OR SQUARE FOOTAGE
CALCULATIONS ARE CORRECT.
-3-
<PAGE>
EXHIBIT D
FORM OF
JOINDER AGREEMENT
JOINDER AGREEMENT, dated as of the date set forth below, entered into
pursuant to the Credit And Guarantee Agreement, dated as of February __, 1997
(as amended, supplemented or otherwise modified from time to time, the "CREDIT
AGREEMENT"; terms defined therein being used herein as therein defined), among
Anacomp, Inc. (the "COMPANY"), the Foreign Subsidiary Borrowers parties thereto,
the banks and financial institutions parties thereto, The First National Bank of
Chicago, as Administrative Agent and Lehman Commercial Paper Inc., as Arranger
and Syndication Agent.
W I T N E S E T H:
WHEREAS, the parties to this Joinder Agreement wish to amend Schedule
II to the Credit Agreement in the manner hereinafter set forth; and
WHEREAS, this Joinder Agreement is entered into pursuant to subsection
14.1 of the Credit Agreement;
NOW, THEREFORE, in consideration of the premises, the parties hereto
hereby agree as follows:
1. Each of the undersigned Subsidiaries of the Company hereby
acknowledges that it has received and reviewed a copy (in execution form) of the
Credit Agreement, and agrees to:
(a) join the Credit Agreement as a Foreign Subsidiary Borrower;
(b) be bound by, and hereby confirms, all covenants, agreements, consents,
submissions, appointments and acknowledgements attributable to a
Foreign Subsidiary Borrower in the Credit Agreement; and
(c) perform all obligations required of it by the Credit Agreement.
2. Each of the undersigned Subsidiaries of the Company hereby
represents and warrants that the representations and warranties with respect to
it contained in, or made or deemed made by it in, Section 7 of the Credit
Agreement are true and correct on the date hereof.
3. The address and jurisdiction of incorporation of each undersigned
Subsidiary of the Company is set forth in Annex I to this Joinder Agreement.
<PAGE>
2
4. The Company hereby agrees that its guarantees contained in Section
11 of the Credit Agreement shall remain in full force and effect after giving
effect to this Joinder Agreement.
5. THIS JOINDER AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, each of the undersigned has caused this Joinder
Agreement to be duly executed and delivered in New York, New York by its proper
and duly authorized officer as of the date set forth below.
[NAME OF SUBSIDIARY],
Dated: ________________ as a Foreign Subsidiary Borrower
By:___________________________
Title:
ANACOMP, INC.
By:___________________________
Title:
ACCEPTED AND ACKNOWLEDGED:
The First National Bank of Chicago,
as Administrative Agent
By:______________________________
Title:
<PAGE>
ANNEX I
ADMINISTRATIVE INFORMATION
[Insert administrative information concerning Foreign Subsidiary Borrower].
<PAGE>
EXHIBIT E
FORM OF
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement, dated as of February ,
1997 (as amended, supplemented or otherwise modified from time to time, the
"CREDIT AGREEMENT"), among Anacomp, Inc. (the "COMPANY"), the Foreign Subsidiary
Borrowers (together with the Company, the "BORROWERS"), the Lenders named
therein, The First National Bank of Chicago, as administrative agent for the
Lenders (in such capacity, the "ADMINISTRATIVE AGENT") and Lehman Commercial
Paper Inc., as Arranger and Syndication Agent. Unless otherwise defined herein,
terms defined in the Credit Agreement and used herein shall have the meanings
given to them in the Credit Agreement.
The Assignor identified on Schedule l hereto (the "ASSIGNOR") and the
Assignee identified on Schedule l hereto (the "ASSIGNEE") agree as follows:
1. The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocably purchases
and assumes from the Assignor without recourse to the Assignor, as of the
Effective Date (as defined below), the interest described in Schedule 1 hereto
(the "ASSIGNED INTEREST") in and to the Assignor's rights and obligations under
the Credit Agreement with respect to those credit facilities contained in the
Credit Agreement as are set forth on Schedule 1 hereto (individually, an
"ASSIGNED FACILITY"; collectively, the "ASSIGNED FACILITIES"), in a principal
amount for each Assigned Facility as set forth on Schedule 1 hereto.
2. The Assignor (a) makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or with respect to the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Credit Agreement, any other Loan Document or any other instrument or
document furnished pursuant thereto, other than that the Assignor has not
created any adverse claim upon the interest being assigned by it hereunder and
that such interest is free and clear of any such adverse claim; (b) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrowers, any of their Subsidiaries or any other
obligor or the performance or observance by the Borrowers, any of their
Subsidiaries or any other obligor of any of their respective obligations under
the Credit Agreement or any other Loan Document or any other instrument or
document furnished pursuant hereto or thereto; and (c) attaches any Notes held
by it evidencing the Assigned Facilities and (i) requests that the
Administrative Agent, upon request by the Assignee, exchange the attached Notes
for a new Note or Notes payable to the Assignee and (ii) if the Assignor has
retained any interest in the Assigned Facility, requests that the Administrative
Agent exchange the attached Notes for a new Note or Notes payable to the
Assignor, in each case in amounts which reflect the assignment being made hereby
(and after giving effect to any other assignments which have become effective on
the Effective Date).
<PAGE>
2
3. The Assignee (a) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (b) confirms that it
has received a copy of the Credit Agreement, together with copies of the
financial statements delivered pursuant to subsection 7.1 thereof and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Acceptance; (c) agrees
that it will, independently and without reliance upon the Assignor, the
Administrative Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Credit Agreement, the
other Loan Documents or any other instrument or document furnished pursuant
hereto or thereto; (d) appoints and authorizes the Administrative Agent to take
such action as agent on its behalf and to exercise such powers and discretion
under the Credit Agreement, the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto as are delegated to the
Administrative Agent by the terms thereof, together with such powers as are
incidental thereto; and (e) agrees that it will be bound by the provisions of
the Credit Agreement and will perform in accordance with its terms all the
obligations which by the terms of the Credit Agreement are required to be
performed by it as a Lender including, if it is organized under the laws of a
jurisdiction outside the United States, its obligation pursuant to subsection
6.12(b) of the Credit Agreement.
4. The effective date of this Assignment and Acceptance shall be the
Effective Date of Assignment described in Schedule 1 hereto (the "EFFECTIVE
DATE"). Following the execution of this Assignment and Acceptance, it will be
delivered to the Administrative Agent for acceptance by it and recording by the
Administrative Agent pursuant to the Credit Agreement, effective as of the
Effective Date (which shall not, unless otherwise agreed to by the
Administrative Agent, be earlier than five Business Days after the date of such
acceptance and recording by the Administrative Agent).
5. Upon such acceptance and recording, from and after the Effective
Date, the Administrative Agent shall make all payments in respect of the
Assigned Interest (including payments of principal, interest, fees and other
amounts) to the Assignor for amounts which have accrued to the Effective Date
and to the Assignee for amounts which have accrued subsequent to the Effective
Date. The Assignor and the Assignee shall make all appropriate adjustments in
payments by the Administrative Agent for periods prior to the Effective Date or
with respect to the making of this assignment directly between themselves.
6. From and after the Effective Date, (a) the Assignee shall be a
party to the Credit Agreement and, to the extent provided in this Assignment and
Acceptance, have the rights and obligations of a Lender thereunder and under the
other Loan Documents and shall be bound by the provisions thereof and (b) the
Assignor shall, to the extent provided in this Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Credit
Agreement.
7. This Assignment and Acceptance shall be governed by and construed
in accordance with the laws of the State of New York.
<PAGE>
3
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed as of the date first above written by their respective
duly authorized officers on Schedule 1 hereto.
<PAGE>
Schedule 1
to Assignment and Acceptance
Name of Assignor:
Name of Assignee:
Effective Date of Assignment:
Credit Principal Commitment Percentage
Facility Assigned Amount Assigned Assigned
- ----------------- --------------- ------------------------
$______________ ___.________________%
[Name of Assignee] [Name of Assignor]
By:_________________________ By:_________________________
Title: Title:
Accepted: Consented To:
The First National Bank of ANACOMP, INC.
Chicago, as Administrative
Agent
By:_________________________ By:_________________________
Title: Title:
<PAGE>
EXHIBIT F-1
February 28, 1997
The First National Bank of Chicago,
as Administrative Agent
Lehman Commercial Paper Inc.,
as Arranger and Syndication Agent
And
Each of the Lenders named in Annex A hereto that are
parties to the Credit Agreement referred to below
Ladies and Gentlemen:
We have acted as special counsel to Anacomp, Inc., an Indiana
corporation ("Anacomp"), in connection with the preparation, execution and
delivery of (i) the Credit and Guarantee Agreement, dated as of February 28,
1997 (the "Credit Agreement"), among Anacomp, certain foreign subsidiaries of
Anacomp parties thereto as Foreign Subsidiary Borrowers, the lenders parties
thereto (the "Lenders"), Lehman Commercial Paper Inc., as arranger and
syndication agent, and The First National Bank of Chicago, as Administrative
Agent (in such capacity, the "Administrative Agent"). This opinion letter is
being furnished pursuant to subsection 9.1(j)(i) of the Credit Agreement.
Capitalized terms used herein shall have the meanings assigned to them in the
Credit Agreement, except as otherwise defined herein.
In rendering the opinions set forth herein, we have examined and are
familiar with originals or copies, certified or otherwise identified to our
satisfaction, of (i) the Credit Agreement, (ii) the Guarantee and Collateral
Agreement, (iii) the First Deed of Trust, Assignment of Rents, Security
Agreement and Fixture Filing, dated February 28, 1997, made by Anacomp, Inc.,
as grantor, in favor of Chicago Title Insurance Company, as trustee, for the
benefit of the Administrative Agent, as beneficiary (the "Mortgage"), (iv)
unfiled copies of financing statements naming Anacomp, as debtor, and the
Administrative Agent, as secured party (the "Financing Statements"), which we
understand will be filed in the filing offices
<PAGE>
The First National Bank of 2 February 28, 1997
Chicago, as Administrative Agent
listed on Schedule A hereto (the "Filing Offices"), (v) the Amended and
Restated Articles of Incorporation and Amended and Restated bylaws of
Anacomp as in effect on the date hereof, (vi) resolutions of the board of
directors of Anacomp relating to the Credit Agreement, the Guarantee and
Collateral Agreement, the Mortgage and the Financing Statements adopted on or
prior to the date hereof, and (vii) such certificates of public officials and
such other certificates, documents, records and statements of officers and
other representatives of Anacomp and public officials as we have deemed
appropriate or necessary as the basis for the opinions set forth below. As
to certain facts material to the opinions expressed herein, we have relied
upon, and assumed the accuracy of, (x) the representations and warranties
contained in the Credit Agreement, the Guarantee and Collateral Agreement and
the Mortgages and (y) the certificates and other documents, records and
statements referred to in item (vii) of the immediately preceding sentence.
We have assumed that each of Anacomp and each of the Foreign Subsidiary
Borrowers listed on Schedule II to the Credit Agreement (the "Existing Foreign
Subsidiary Borrowers") is a corporation validly existing and in good standing
under the laws of the jurisdiction of its incorporation and has the requisite
corporate power and authority to own, pledge, mortgage and operate its
properties, to lease the property it operates under lease and to conduct its
business as now or currently proposed to be conducted, and that the execution
and delivery by Anacomp of each of the Credit Agreement, the Guarantee and
Collateral Agreement and the Mortgage and by each of the Existing Foreign
Subsidiary Borrowers of the Credit Agreement, the performance by Anacomp of the
Credit Agreement, the Guarantee and Collateral Agreement and the Mortgage and by
each of the Existing Foreign Subsidiary Borrowers of the Credit Agreement, and
the consummation of the transactions contemplated thereby, are within the
corporate powers of Anacomp or such Existing Foreign Subsidiary Borrower, as the
case may be, and have been duly authorized by all necessary corporate action,
and that each of the Existing Foreign Subsidiary Borrowers has duly executed and
delivered the Credit Agreement. We have further assumed the genuineness of all
signatures, the legal capacity of all natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such copies. We have also assumed the due
execution and delivery, pursuant to due authorization, by the Administrative
Agent and each Lender of the Credit Agreement ,and that the Administrative Agent
will comply with its obligations under the Credit Agreement and the Guarantee
and Collateral Agreement.
Members of our firm are admitted to the bar in the State of New York,
and we express no opinion as to the laws of any jurisdiction other than the
law of the State of New York and the law of the United States of America to
the extent specified herein.
Based upon the foregoing, and in reliance thereon, and subject to the
qualifications and exceptions stated herein, we are of the opinion that:
1. Based solely upon our review of the certificates of good standing
issued by authorities in such jurisdictions, Anacomp is duly qualified as a
foreign corporation and in
<PAGE>
The First National Bank of 3 February 28, 1997
Chicago, as Administrative Agent
good standing under the laws of each jurisdiction in the United States listed
on Schedule D hereto, in the manner set forth in such certificates.
2. The execution and delivery of each of the Credit Agreement, the
Guarantee and Collateral Agreement and the Mortgage by Anacomp, the
performance by Anacomp of the Credit Agreement, the Guarantee and Collateral
Agreement and the Mortgage and the consummation of the transactions
contemplated thereby, (i) do not and will not (A) contravene Anacomp's
Amended and Restated Articles of Incorporation or Amended and Restated
bylaws, (B) violate any provision of (1) any existing law or regulation
binding on Anacomp or (2) to the best of our knowledge, any order, judgment,
award or decree of any court, governmental authority or agency binding on
Anacomp, (C) conflict with or result in the breach of, or constitute a
default under, or result in or permit the termination or acceleration of, any
agreement, contract, mortgage, lease, note, bond, credit agreement, security
agreement, guarantee or other arrangement or instrument or obligation of
Anacomp listed on Schedule C (collectively, "Contractual Obligations"), which
Contractual Obligations officers of Anacomp have represented to us constitute
all of the material contractual obligations of Anacomp as of the date hereof
or (D) result in or require the creation or imposition of any Lien upon any
property of Anacomp pursuant to any Contractual Obligations, other than those
in favor of the Administrative Agent on behalf of and for the ratable benefit
of the Lenders and (ii) do not require any consent, authorization by or
approval of, or notice to or filing or registration with, any New York or
United States Governmental Authority with respect to Anacomp or any Existing
Foreign Subsidiary Borrower, other than the filing of the Financing
Statements referred to in paragraph 5 and the recording of the Mortgage.
3. Each of the Credit Agreement and the Guarantee and Collateral
Agreement has been duly executed and delivered by, and constitutes the legal,
valid and binding obligation of, Anacomp, enforceable against Anacomp in
accordance with its terms. The Credit Agreement constitutes the legal, valid
and binding obligation of each of the Existing Foreign Subsidiary Borrowers,
enforceable against each such Existing Foreign Subsidiary Borrower in
accordance with its terms.
4. To the best of our knowledge, except as set forth in Schedule 7.6
to the Credit Agreement, there are no pending or threatened actions,
investigations or proceedings affecting Anacomp, or any of its properties,
before any court, governmental authority or arbitrator that have a reasonable
likelihood of having, individually or in the aggregate, a Material Adverse
Effect. To the best of our knowledge, (i) neither the transactions
contemplated by the Credit Agreement, or the Guarantee and Collateral
Agreement or the Mortgage nor the performance of any obligation by Anacomp
required or contemplated by the Credit Agreement, or the Guarantee and
Collateral Agreement or the Mortgage, as the case may be, is the subject of
any pending or threatened litigation and (ii) no material adverse condition
has been imposed by any governmental authority or arbitrator upon any of the
foregoing transactions.
<PAGE>
The First National Bank of 4 February 28, 1997
Chicago, as Administrative Agent
5. Anacomp is not (a) an "investment company", or a company
"controlled" by an "investment company", within the meaning of the Investment
Company Act of 1940, as amended, or (b) a "holding company" or a "subsidiary
company" of a "holding company" within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
6. Subject to the qualifications set forth in this opinion letter,
the Guarantee and Collateral Agreement creates in favor of the Administrative
Agent a security interest in the collateral described therein to which
Article 9 of the New York UCC is applicable (the "Article 9 Collateral").
Upon the filing of the Financing Statements in the Filing Offices, the
Administrative Agent will have a perfected security interest in that portion
of the Article 9 Collateral in which a security interest may be perfected by
filing a financing statement under the New York UCC (the "New York Article 9
Filing Collateral"). Subject to the qualifications set forth in this
opinion, the security interest of the Administrative Agent in that portion of
the New York Article 9 Filing Collateral consisting of the non-negotiable
instruments listed on Schedule 2 to the Guarantee and Collateral Agreement
(the "Pledged Instruments") will be a perfected security interest upon
delivery thereof to the Administrative Agent of the Pledged Instruments in
the State of New York.
7. The Guarantee and Collateral Agreement creates in favor of the
Administrative Agent a security interest under the New York UCC in the shares
of stock of the Issuers identified on Schedule 2 to the Guarantee and
Collateral Agreement under the heading "Pledged Stock" (the "Pledged Shares";
collectively, the Pledged Shares and the Article 9 Collateral is herein
referred to as the "Collateral"). With respect to any Pledged Shares which
may constitute "certificated securities" as defined in Section 8-102(1)(a) of
the New York UCC (the "New York Certificated Securities"), upon the delivery
of certificates representing the New York Certificated Securities to the
Administrative Agent in the State of New York the security interest of the
Administrative Agent in such New York Certificated Securities will be
perfected, and, assuming that the Administrative Agent acquires its interest
in the New York Certificated Securities in good faith and without notice of
any adverse claims and that each New York Certificated Security is either in
bearer form or in registered form, issued or indorsed in the name of the
Administrative Agent or in blank, the Administrative Agent will acquire its
security interest in the New York Certificated Securities free of adverse
claims.
8. The principal of, interest on, or other amounts owing with respect
to the Loans, and Reimbursement Obligations, whether incurred on the date
hereof or hereafter, constitute "Senior Indebtedness" as defined in the
Indenture, dated as of June 4, 1996 (the "Indenture"), between Anacomp and
IBJ Schroder Bank & Trust Company, as trustee, relating to the Existing
Subordinated Debt.
Anything to the contrary expressly stated or implied notwithstanding,
each of the opinions expressed herein is subject to the following
qualifications whether or not such opinions refer to such qualifications:
<PAGE>
The First National Bank of 5 February 28, 1997
Chicago, as Administrative Agent
a. (i) Our opinions set forth in paragraph 3 are subject to the effect
of applicable bankruptcy, insolvency, reorganization, moratorium and other
laws relating to, or affecting, creditors' rights and remedies generally and
general principles of equity (regardless of whether the same are considered
in a proceeding at law or equity); (ii) certain remedial provisions of the
Guarantee and Collateral Agreement and the Mortgage may be unenforceable in
whole or in part, but the inclusion of such provisions does not affect the
validity of the Guarantee and Collateral Agreement or the Mortgage, and each
of the Guarantee and Collateral Agreement and the Mortgage, in each case, as
a whole contain adequate provisions for enforcing the obligations of Anacomp
(subject to clauses (i) and (iii)) and for the practical realization of the
benefits created thereby; and (iii) with respect to the indemnity and
contribution provisions contained in either of the Credit Agreement or the
Guarantee and Collateral Agreement, our opinions are subject to the
qualification that such provisions may be limited by federal or state
securities laws or public policy considerations.
b. Our opinions in paragraph 6 are limited to Article 9 of the New York
UCC, and our opinions in paragraph 7 are limited to Article 8 of the New York
UCC, and therefore those opinion paragraphs do not address (i) laws of
jurisdictions other than New York, and of New York except for Article 9 or 8,
as the case may be, of the New York UCC, (ii) collateral of a type not
subject to Article 9 or 8, as the case may be, of the New York UCC, and (iii)
under New York UCC Section 9-103 what law governs perfection of the security
interests granted in the collateral covered by this opinion letter. In
particular, we note that the issuers of the Pledged Shares are organized
under the laws of England, France and Germany, and we express no opinion
regarding whether, under the laws of England, France or Germany or in an
action brought in an English, French or German court, the security interest
under the New York UCC in the Pledged Shares would be given effect.
c. Our opinions are limited to the laws and regulations within the scope
of this opinion in effect on the date of this opinion, and we offer no
opinion as to the possible application of the laws of other jurisdictions,
unless they are specifically referred to herein, and have no responsibility
to advise you of changes in such laws or regulations which may hereafter come
to our attention.
d. Our opinions set forth in paragraph 2 are limited to (i)
authorizations, consents, approvals, licenses and exemptions of,
registrations and filings with, reports and notices to, governmental
authorities of the State of New York or the United States of America pursuant
to the requirements of, and (ii) violations of, conflicts with and defaults
under, any laws, rules or regulations of the State of New York or the United
States, which, in our experience, are normally applicable to transactions of
the type provided for in the Credit Agreement and the Guarantee and
Collateral Agreement.
e. We express no opinion with respect to the effect of Section 552 of
the United States Bankruptcy Code (relating to property acquired by Anacomp
after the commencement of a case under the United States Bankruptcy Code with
respect to either such party) and Section 547 of the United States Bankruptcy
Code (relating to a security interest in such after-acquired property which
serves to secure antecedent debt).
<PAGE>
The First National Bank of 6 February 28, 1997
Chicago, as Administrative Agent
f. We express no opinion as to (i) the effect of the laws of any
jurisdiction in which the Administrative Agent, the Arranger or any Lender is
located (other than the State of New York) that limit the interest, fees or
other charges the Lenders may impose; (ii) the right of any Participant to
exercise any right of set off as contemplated by subsection 14.6(b) of the
Credit Agreement other than in accordance with applicable law; (iii) any
provision of the Loan Documents which is intended (I) to establish any
standard other than any standard set forth in the New York UCC as the measure
of the performance by any party thereto of such party's obligation of good
faith, diligence, reasonableness or care or the fulfillment of the duties
imposed on any secured party with respect to the disposition or redemption of
collateral, accounting for surplus proceeds of collateral or accepting
collateral in discharge of liabilities or (II) to permit modification thereof
only by means of an agreement signed in writing by the parties thereto; (iv)
except as set forth in paragraphs 6 and 7 above, the perfection or priority
of any liens or security interests purported to be granted under the Loan
Documents; (v) any provision of the Loan Documents requiring payment of
attorneys' fees, except to the extent a court determines such fees to be
reasonable; (vi) any provisions in Section 11 of the Credit Agreement or in
the Guarantee and Collateral Agreement that provide that the guarantor's
liability thereunder shall not be affected by actions or failures to act on
the part of the recipient of the guarantee or by amendments or waivers of
provisions of documents governing the guaranteed obligations; and (vii) the
effect of the compliance or noncompliance with any federal or state laws or
regulations applicable to any Lender or its affiliates because of their legal
or regulatory status or the nature of their businesses.
g. We express no opinion as to the enforceability of any provision of
any Loan Document whereby any Loan Party purports to submit to the subject
matter jurisdiction of the United States District Court for the Southern
District of New York. We note the limitations of 28 U.S.C. Section 1332 on
federal court jurisdiction where diversity of citizenship is lacking, and we
also note that such submissions cannot supersede that court's discretion in
determining whether to transfer an action from one federal court to another
under 28 U.S.C. Section 1404(a).
h. We express no opinion as to:
(i) the perfection of the security interests created by the
Guarantee and Collateral Agreement in any Collateral not located in the
State of New York or as to which a security interest may not be
perfected by filing a financing statement on Form UCC-1 in an
appropriate office within the State of New York;
(ii) changes in the status of the security interest of the
Administrative Agent and the Lenders in the Collateral under Sections
363, 364(d), 510(c) or 1129(b) of the United States Bankruptcy Code;
(iii) the validity or perfection of the security interests
<PAGE>
The First National Bank of 7 February 28, 1997
Chicago, as Administrative Agent
as against the rights of purchasers of chattel paper, instruments or
securities or of holders in due course of negotiable instruments or
holders to whom documents of title have been duly negotiated as provided
in Section 7-501 of the New York UCC, all to the extent provided in
Sections 9-308 and 9-309 of the New York UCC;
(iv) the perfection of the security interests in any Collateral
sold, exchanged, leased or otherwise disposed of by Anacomp in the
ordinary course of business as provided in the Credit Agreement and the
Guarantee and Collateral Agreement or with the consent, express or
implied, of the Administrative Agent;
(v) the perfection of the security interests in any Collateral more
than four months after such Collateral is removed from the State of New
York;
(vi) the validity or perfection of the security interests in any
Collateral constituting a right to payment under a contract as against
the rights of an assignee thereof who is also to do the performance
under the contact; and
(vii) any state or federal securities laws which may require
registration or other compliance upon the sale of any of the Collateral
pursuant to the Credit Agreement and the Guarantee and Collateral
Agreement.
Our opinions set forth in paragraphs 6 and 7 are subject to the
following further qualifications:
(a) we have assumed that the Collateral exists and that Anacomp has
sufficient rights in the Collateral for the security interest of the
Administrative Agent to attach. We express no opinion as to the nature or
extent of Anacomp's rights in, or title to, any of the Collateral;
(b) we have assumed the accuracy of the representations and warranties
of Anacomp in the Guarantee and Collateral Agreement;
(c) we have assumed that the the Loans have been made to Anacomp;
(d) the security interest of the Administrative Agent and the Lenders in
Collateral consisting of proceeds is limited to the extent set forth in
Section 9-306 of the New York UCC;
<PAGE>
The First National Bank of 8 February 28, 1997
Chicago, as Administrative Agent
(e) we express no opinion regarding the security interest of the Lender
in any item of Collateral (i) of a type listed in Section 9-104 of the New
York UCC (including but not limited to any interest in or claim in or under
any deposit account or insurance policy, or any interest which constitutes
real estate, including any lease or rents thereunder);
(f) we express no opinion as to Collateral (i) which is an accession to,
or commingled or processed with other goods to the extent that the security
interest of the Agent is limited by Section 9-314 or 9-315 of the New York
UCC or (ii) which consists or may consist of items which are subject to a
certificate of title statute of any jurisdiction or a document of title;
(g) we express no opinion as to Collateral which consists or may consist
of items which are subject to a statute, regulation or treaty of the United
States of America which provides for a national or international registration
or a national or international certificate of title for the perfection of a
security interest therein or which specifies a place of filing different from
the place specified in the New York UCC for filing to perfect such security
interest;
(h) we express no opinion as to Collateral consisting of claims against
(including accounts, chattel paper or general intangibles) any government or
governmental agency (including without limitation the United States of
America or any state thereof or any agency or department of the United States
of America or any state thereof);
(i) we express no opinion regarding the security interest of the
Administrative Agent in any Collateral consisting of copyrights, patents,
trademarks, service marks or other intellectual property;
(j) we call to your attention that in the cases of licenses or permits
issued by governmental authorities, Anacomp may not have sufficient rights
therein for the security interest of the Agent to attach and even if Anacomp
has sufficient rights for the security interest to attach, exercise of
remedies may be limited by the terms of the license or permit or require the
consent of the governmental authority issuing such license or permit. We
have further assumed that to the extent the terms of licenses or permits (or
any laws or regulations applicable thereto) prohibit or condition the
transfer of any licenses or permits, consent to the transfer under the
Guarantee and Collateral Agreement has been obtained;
(k) we express no opinion with respect to any of the New York Article 9
Filing Collateral consisting of equipment used in farming operations, or farm
products, or accounts or general intangibles arising from or relating to the
sale of farm products by a farmer, or consumer goods, crops growing or to be
grown, timber to be cut or minerals or the like (including oil and gas),
accounts subject to subsection 5 of Section 9-103 of the New York UCC, goods
which are or are to become fixtures, an
<PAGE>
The First National Bank of 9 February 28, 1997
Chicago, as Administrative Agent
ownership interest evidenced by certificates of stock or other instruments
and a leasehold evidenced by a proprietary lease, or either of the foregoing,
from a corporation or partnership formed for the purpose of cooperative
ownership of real estate, or beneficial interests in trusts or a decedent's
estate;
(l) we call to your attention that the perfection of the security
interest of the Administrative Agent will be terminated as to any Collateral
acquired by Anacomp more than four months after Anacomp changes its name,
identity or corporate structure so as to make the Financing Statements
seriously misleading, unless new appropriate financing statements indicating
the new name, identity or corporate structure of Anacomp are filed before the
expiration of such four months;
(m) we call to your attention that the New York UCC requires the filing
of continuation statements within the period of six months prior to the
expiration of five years from the date of the filing of the original
Financing Statements or the filing of any continuation statement in order to
maintain the effectiveness of the original Financing Statements;
(n) we call to your attention that the perfection and the effect of
perfection or non-perfection of the security interest may be governed by laws
other than those of the New York UCC to the extent either the Collateral or
Anacomp is or becomes located in a jurisdiction other than New York;
(o) we express no opinion as to whether any of the Pledged Shares
constitute "certificated securities" as defined in Section 8-102(1)(a) of the
New York UCC;
(p) we express no opinion as to the priority of the security interest of
the Administrative Agent in any Collateral;
(q) we express no opinion with respect to the perfection or priority of
the security interests of the Administrative Agent in the Pledged Shares; and
(r) we express no opinion with respect to proceeds of, or distributions
on, Pledged Shares; however, any security interest of the Agent in Collateral
consisting of proceeds is limited to the extent set forth in Section 9-306 in
the New York UCC.
In rendering our opinion in paragraph 8, we have assumed that, after
giving effect to the incurrence of the Obligations on the date of such
incurrence and the application of the proceeds thereof (including the
application of the proceeds of the Loans on the date hereof to the payment in
full of the Senior Notes), there is no other indebtedness of Anacomp as of
such date constituting "Senior Indebtedness" as defined in the Indenture
(other than the Loans) and that none of the Loan Documents nor the Indenture
have been amended, or otherwise modified.
<PAGE>
The First National Bank of 10 February 28, 1997
Chicago, as Administrative Agent
When in this opinion letter we have used the expression "to the best of
our knowledge," we have not made any independent investigation of the
applicable facts, but have relied solely on certificates of Anacomp and are
not aware of any facts inconsistent with the matters expressed in this
opinion letter.
In connection with our opinions expressed herein, we have assumed, with
your permission, that the Financing Statements have been or will be presented
for filing, with tender of the filling fee, to the filing officers at the
proper Filing Offices.
We have not been requested to render and, with your permission, we
express no opinion as to the applicability to any transfers by, or
obligations under the Loan Documents of, the Loan Parties of Section 548 of
the United States Bankruptcy Code or Article 10 of the New York Debtor and
Creditor Law relating to fraudulent transfers and obligations.
We understand that the opinion letters listed on Schedule B to this
opinion are being delivered to you in connection with the transactions
contemplated by the Credit Agreement and the Guarantee and Collateral
Agreement. We believe that, in the case of the opinions relating to
jurisdictions of or within the United States, you are justified in relying on
the opinions expressed therein, and in the case of the other opinions
referred to thereon, we know of no reason why you are not justified in
relying on the opinions expressed therein.
This opinion is being furnished only to you as the Administrative Agent
and Arranger under the Credit Agreement, and to your counsel, and is solely
for your and their benefit and the benefit of any present Lenders and is not
to be used, circulated, quoted, relied upon or otherwise referred to for any
purpose without our prior written consent, except that this opinion may be
referred to or disclosed to any governmental authority or representative
thereof, or pursuant to legal process, in connection with litigation, or by
your independent public accountants, any valuation consultants, any potential
or actual purchasers, assignees, or transferees of Notes, or your legal
counsel, but in any event shall not be relied upon by any of the foregoing
persons or any other persons without our prior written consent.
Very truly yours,
<PAGE>
Annex A
Lenders
Lehman Commercial Paper Inc.
The First National Bank of Chicago
Prime Income Trust
The ING Senior Secured High Income Fund, L.P.
Merrill Lynch Senior Floating Rate Fund, Inc.
Pilgrim American Group Inc.
Protective Life Insurance Company
VanKampen American Capital Prime Rate Income Trust
Crescent/Mach I Partners, L.P.
<PAGE>
Schedule A
Filing Offices
Secretary of State of New York
<PAGE>
Schedule B
Local Counsel Opinions
Opinions dated the date hereof of the following counsel:
Leagre & Barnes (Indiana)
Burlion, Bolle, Houben & Co. (Belgium)
Smith Lyons (Canada)
Slaughter & May (England)
Baker & McKenzie (France)
Doser Amereller Noack (Germany)
Trenite Van Doorne (Netherlands)
Baker & McKenzie (Sweden)
<PAGE>
Schedule C
Material Contractual Obligations
1. Employment Agreement between Anacomp, Inc. and Thomas R. Simmons,
effective October 1, 1992.
2. Amended and Restated Master Supply Agreement dated October 8, 1993, among
Anacomp, Inc., SKC America, Inc. and SKC Limited, as amended by the First
Cumulative Amendment, dated May 17, 1996.
3. Lease agreement dated June 24, 1993 and Amendment No. 1 dated October 19,
1994 between Anacomp, Inc. and Com-Lease, Inc.
4. Amended and Restated Employment Agreement between Anacomp, Inc. and P.
Lang Lowrey III, effective as of October 1, 1996.
5. Lease Agreement between Anacomp, Inc. and Pacific Burnham Properties,
Inc. dated March 5, 1991, as amended by the First Amendment to Lease dated
August 1, 1991, the Second Amendment to Lease dated September 18, 1991, the
Third Amendment to Lease dated June 25, 1992, the Fourth Amendment to Lease
dated May 27, 1993, and the Fifth Amendment to Lease dated March 1, 1996.
6. Indenture dated as of June 4, 1996 between Anacomp, Inc. and IBJ Schroder
Bank & Trust Company, as Administrative Agent, relating to Anacomp, Inc.'s
13% Senior Subordinated Notes due 2002.
7. Credit Agreement, dated as of February 28, 1997, among Anacomp, Inc., the
lenders parties thereto, and The First National Bank of Chicago, as
Administrative Agent.
8. Guarantee and Collateral Agreement, dated as of February 28, 1997,
between Anacomp, Inc. and The First National Bank of Chicago.
9. First Deed of Trust, Assignment of Rents, Security Agreement and Fixture
Filing, dated February 28, 1997, made by Anacomp, Inc., as grantor, in favor
of Chicago Title Insurance Company, as trustee, for the benefit of The First
National Bank of Chicago, as beneficiary.
10. XCF Program-Contract AI0001 dated as of October 7, 1992, made between
Xerox and Anacomp, Inc.
11. AFP/COM Base Agreement dated as of June 9, 1994, as amended, made between
International Business Machines, Inc. and Anacomp, Inc.
<PAGE>
12. Strategic Resellers Agreement dated as of November 29, 1995, made between
Optica and Anacomp, Inc.
13. Exclusive Distribution Agreement dated as of June 1, 1995, made between
Hanny Magnetics (B.V.I.) Limited, Memtek Products, Inc. and Anacomp, Inc.
14. Tape Cartridge License Agreement dated effective as of February 1, 1989,
made between Digital Equipment Corporation (subsequently assigned to Quantum
Corporation) and Anacomp, Inc.
15. Patent License Agreement dated effective as of January 1, 1992, made
between International Business Machines Corporation and Anacomp, Inc.
16. Master Agreement for Development, License and Distribution dated as of
December 31, 1996, made between FileNet Company Limited and Anacomp, Inc.
17. Distribution Agreement dated October 1, 1992, as amended, made between
Anacomp, Inc. and Eastman Kodak Company.
18. Master Supply Agreement dated July 1, 1996, made between Eastman Kodak
Company and Anacomp, Inc.
19. Duplicate Film Agreement dated July 1, 1996, made between Eastman Kodak
Company and Anacomp, Inc.
20. Master Maintenance Agreement dated October 1, 1993, made between First
Image Management Company and Anacomp, Inc.
21. Equipment and Supplies Agreement dated effective September 29, 1994, made
between First Image Management Company and Anacomp, Inc.
22. Equipment and Supplies Agreement dated September 29, 1993, made between
First Image Management Company and Anacomp, Inc.
23. Employment Agreement between Anacomp, Inc. and William C. Ater, effective
October 1, 1992.
24. Employment Agreement between Anacomp, Inc. and Donald L. Viles, effective
February 15, 1996.
25. Employment Agreement between Anacomp, Inc. and Ralph W. Koehrer,
effective January 6, 1997.
26. Third Amended Joint Plan of Reorganization of Anacomp, Inc. and certain
of its Subsidiaries.
<PAGE>
27. Warrant Agreement, dated as of June 4, 1996, between Anacomp, Inc. And
Chase Mellon Shareholder Services, L.L.C.
28. Common Stock Registration Rights Agreement, dated as of June 4, 1996, by
and among Anacomp, Inc. and the holders of Registrable Shares referenced
therein.
29. Senior Subordinated Registration Rights Agreement, , dated as of June 4,
1996, by and among Anacomp, Inc. and the holders of Registrable Shares
referenced therein.
<PAGE>
Schedule D
Good Standing Certificates
Texas
California
New York
Georgia
Massachusetts
Ohio
<PAGE>
Exhibit F-2
February 28, 1997
The First National Bank of Chicago,
as Administrative Agent
One First National Plaza
Chicago, Illinois 60670
Lehman Commercial Paper Inc.,
as Arranger and Syndication Agent
Three World Financial Center
New York, New York 10285
Each of the Lenders named in Annex A hereto that are
parties to the Credit Agreement referred to below
Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038
Ladies and Gentlemen:
We have acted as special counsel to Anacomp, Inc., an Indiana corporation
("Anacomp"), in connection with the preparation, execution and delivery of (i)
the Credit and Guarantee Agreement, dated as of February 28, 1997 (the "Credit
Agreement"), among Anacomp, certain foreign subsidiaries of Anacomp parties
thereto as Foreign Subsidiary Borrowers, the lenders party thereto
(collectively, the "Lenders"), Lehman Commercial Paper Inc., as arranger and
syndication agent, and The First National Bank of Chicago, as administrative
agent (in such capacity, the "Administrative Agent"). This opinion letter is
being furnished pursuant to subsection 9.1(j)(i) of the Credit Agreement.
Capitalized terms used herein shall have the meanings assigned to them in the
Credit Agreement, except as otherwise defined herein.
In rendering the opinions set forth herein, we have examined and are
familiar with originals or copies, certified or otherwise identified to our
satisfaction, of (i) the Credit Agreement, (ii) the Guarantee and Collateral
Agreement, (iii) the First Deed of Trust, Assignment of Rents, Security
Agreement and Fixture Filing, dated February 28, 1997, made by Anacomp, Inc., as
grantor, in favor of Chicago Title Insurance Company, as trustee, for the
benefit of the Administrative Agent, as beneficiary, (iv) unfiled copies of
financing statements naming Anacomp, as debtor and the Administrative Agent, as
secured party (the "Financing Statements"), which we understand will be filed in
the filing offices listed on Schedule A hereto
<PAGE>
The First National Bank of Chicago -2- February 28, 1997
(the "Filing Offices"), (v) the Amended and Restated Articles of Incorporation
and Amended and Restated Bylaws of Anacomp as in effect on the date hereof, (vi)
resolutions of the board of directors of Anacomp relating to the Credit
Agreement, the Guarantee and Collateral Agreement, the Mortgage and the
Financing Statements (collectively, the "Loan Documents") adopted on or prior to
the date hereof, and (vii) such certificates of public officials and such other
certificates, documents, records and statements of officers and other
representatives of Anacomp and public officials as we have deemed appropriate or
necessary as the basis for the opinions set forth below. As to certain facts
material to the opinions expressed herein, we have relied solely upon, and have
assumed the accuracy, without any investigation or inquiry, of (x) the
representations and warranties contained in the Loan Documents, and (y) the
certificates and other documents, records and statements referred to in item
(vii) of the immediately preceding sentence.
We have assumed the genuineness of all signatures, the legal capacity of
all natural persons, the authenticity of all documents submitted to us as
originals, the conformity to original documents of all documents submitted to us
as certified or photostatic copies and the authenticity of the originals of such
copies. We have also assumed the due execution and delivery, pursuant to due
authorization, by the Administrative Agent and each Lender of the Credit
Agreement, and that the Administrative Agent will comply with its obligations
under the Credit Agreement and the Guarantee and Collateral Agreement.
Members of our firm are admitted to the bar in the State of Indiana, and we
express no opinion as to the laws of any other jurisdiction.
Based upon the foregoing, and in reliance thereon, and subject to the
qualifications and exceptions stated herein, we are of the opinion that:
1. Based solely upon our review of the Certificate of Existence of
Anacomp, Inc., dated February 18, 1997, issued by the Indiana Secretary of
State, Anacomp is a corporation duly organized and validly existing under the
laws of the State of Indiana and has the corporate power to execute and deliver
the Loan Documents and to perform its obligations thereunder.
2. Anacomp has taken all necessary actions to authorize the execution of
the Loan Documents, and the execution and delivery of each of the Loan Documents
by Anacomp, the performance by Anacomp of the Loan Documents and the
consummation of the transactions contemplated thereby, (i) do not and will not
(A) contravene Anacomp's Amended and Restated Articles of Incorporation or
Amended and Restated By-Laws, (B) violate any provision of (1) any existing
Indiana law or regulation binding on Anacomp or (2) to the best of our
knowledge, any order, judgment, award or decree of any Indiana court, Indiana
governmental authority or agency binding on Anacomp, and (ii) do not require any
consent, authorization by or approval of, or notice to or filing or registration
with, any Indiana governmental authority with respect to Anacomp within the
scope of this opinion, other than the filing of the Financing Statements
referred to in paragraph 3.
<PAGE>
The First National Bank of Chicago -3- February 28, 1997
3. Subject to the qualifications set forth in this opinion letter, (a)
the Guarantee and Collateral Agreement creates in favor of the Administrative
Agent a security interest in the collateral described therein to which Article 9
of the Uniform Commercial Code as in effect on the date hereof in the State of
Indiana (the "Indiana UCC") is applicable (the "Article 9 Collateral"), and (b)
upon the filing of the Financing Statements in the Filing Offices, the
Administrative Agent will have a perfected security interest in that portion of
the Article 9 Collateral in which a security interest may be perfected by filing
a financing statement under the Indiana UCC (the "Indiana Article 9
Collateral").
In giving the opinions expressed in paragraph 3, we have assumed, with your
permission, that the Administrative Agent will comply with its obligations under
the Credit Agreement and the Guarantee and Collateral Agreement.
Anything to the contrary expressly stated or implied notwithstanding, each
of the opinions expressed herein is subject to the following qualifications
whether or not such opinions refer to such qualifications:
(a) Our opinions are limited to the Indiana laws and regulations
within the scope of this opinion in effect on the date of this opinion, and
we offer no opinion as to the possible application of the laws of other
jurisdictions, unless they are specifically referred to herein, and have no
responsibility to advise you of changes in such laws or regulations which
may hereafter come to our attention.
(b) Our opinions in paragraph 3 are limited to Article 9 of the
Indiana UCC, and therefore those opinions do not address (i) laws of
jurisdictions other than Indiana, and of Indiana except for Article 9 of
the Indiana UCC, (ii) collateral of a type not subject to Article 9 of the
Indiana UCC, and (iii) under Indiana UCC Section 9-103 which law governs
perfection of the security interests granted in the collateral covered by
this opinion letter.
(c) Our opinions set forth in paragraph 2 are limited to (i)
authorizations, consents, approvals, licenses and exemptions of,
registrations and filings with, reports and notices to, governmental
authorities of the State of Indiana pursuant to the requirements of, and
(ii) violations of, conflicts with and defaults under, any laws, rules or
regulations of the State of Indiana (other than its securities laws, as to
which we express no opinion), which, in our experience, are normally
applicable to transactions of the type provided for in the Credit Agreement
and the Guarantee and Collateral Agreement.
(d) We express no opinion with respect to Anacomp's rights in or
title to or legal or beneficial ownership of any of the Collateral.
<PAGE>
The First National Bank of Chicago -4- February 28, 1997
(e) We express no opinion with respect to the effect of Section 552
of the United States Bankruptcy Code (relating to property acquired by
Anacomp after the commencement of a case under the United States Bankruptcy
Code with respect to either such party) and Section 547 of the United
States Bankruptcy Code (relating to a security interest in such
after-acquired property which serves to secure antecedent debt).
(f) We express no opinion as to (i) any provision of the Loan
Documents which is intended (A) to establish any standard other than any
standard set forth in the Indiana UCC as the measure of the performance by
any party thereto of such party's obligation of good faith, diligence,
reasonableness or care or the fulfillment of the duties imposed on any
secured party with respect to the disposition or redemption of collateral,
accounting for surplus proceeds of collateral or accepting collateral in
discharge of liabilities or (B) to permit modification thereof only by
means of an agreement signed in writing by the parties thereto; and (ii)
except as set forth in paragraph 3 above, the perfection or priority of any
liens or security interests purported to be granted under the Loan
Documents.
(g) We express no opinion as to:
(i) the perfection of the security interests created by the
Guarantee and Collateral Agreement in any Collateral not located in
the State of Indiana or as to which a security interest may not be
perfected by filing a financing statement on Form UCC-1 in an
appropriate office within the State of Indiana;
(ii) changes in the status of the security interest of the
Administrative Agent and the Lenders in the Collateral under Sections
363, 364(d), 510(c) or 1129(b) of the United States Bankruptcy Code;
(iii) the validity or perfection of the security interests as
against the rights of purchasers of chattel paper, instruments or
securities or of holders in due course of negotiable instruments or
holders to whom documents of title have been duly negotiated as
provided in Section 7-501 of the Indiana UCC, all to the extent
provided in Sections 9-308 and 9-309 of the Indiana UCC;
(iv) the perfection of the security interests in any Article 9
Collateral sold, exchanged, leased or otherwise disposed of by Anacomp
in the ordinary course of business as provided in the Credit Agreement
and the Guarantee and Collateral Agreement or with the consent,
express or implied, of the Administrative Agent or the Lenders;
(v) the perfection of security interests in any Article 9
Collateral more than four months after such Article 9 Collateral is
removed from the State of Indiana;
<PAGE>
The First National Bank of Chicago -5- February 28, 1997
(vi) the validity or perfection of the security interests in
any Article 9 Collateral constituting a right to payment under a
contract as against the rights of an assignee thereof who is also to
do the performance under the contact; and
(vii) any state or federal securities laws which may require
registration or other compliance upon the sale of any of the Article 9
Collateral pursuant to the Credit Agreement and the Guarantee and
Collateral Agreement.
Our opinions set forth in paragraph 3 are subject to the following further
qualifications:
(a) we have assumed that the Article 9 Collateral exists and that
Anacomp has sufficient rights in the Article 9 Collateral for the security
interest of the Administrative Agent to attach. We express no opinion as
to the nature or extent of Anacomp's rights in, or title to, any of the
Article 9 Collateral;
(b) we have assumed the accuracy of the representations and
warranties of Anacomp in the Guarantee and Collateral Agreement;
(c) we have assumed that the Loan has been made to Anacomp;
(d) the security interest of the Administrative Agent and the Lenders
in collateral consisting of proceeds is limited to the extent set forth in
Section 9-306 of the Indiana UCC;
(e) we express no opinion regarding the security interest of the
Lenders in any item of Article 9 Collateral (i) of a type listed in Section
9-104 of the Indiana UCC (including but not limited to any interest in or
claim in or under any deposit account or insurance policy, or any interest
which constitutes real estate, including any lease or rents thereunder);
(f) we express no opinion as to Article 9 Collateral (i) which is an
accession to, or commingled or processed with other goods to the extent
that the security interest of the Administrative Agent or the Lenders is
limited by Section 9-314 or 9-315 of the Indiana UCC or (ii) which consists
or may consist of items which are subject to a certificate of title statute
of any jurisdiction or a document of title;
(g) we express no opinion as to Article 9 Collateral which consists
or may consist of items which are subject to a statute, regulation or
treaty of the United States of America which provides for a national or
international registration or a national or international certificate of
title for the perfection of a security interest therein or which specifies
a place of filing different from the place specified in the Indiana UCC for
filing to perfect such security interest;
<PAGE>
The First National Bank of Chicago -6- February 28, 1997
(h) we express no opinion as to Article 9 Collateral consisting of
claims against (including accounts, chattel paper or general intangibles)
any government or governmental agency (including without limitation the
United States of America or any state thereof or any agency or department
of the United States of America or any state thereof);
(i) we express no opinion regarding the security interest of the
Administrative Agent in any Article 9 Collateral consisting of copyrights,
patents, trademarks, service marks or other intellectual property;
(j) we call to your attention that in the cases of licenses or
permits issued by governmental authorities, Anacomp may not have sufficient
rights therein for the security interest of the Administrative Agent or the
Lenders to attach and even if Anacomp has sufficient rights for the
security interest to attach, exercise of remedies may be limited by the
terms of the license or permit or require the consent of the governmental
authority issuing such license or permit. We have further assumed that to
the extent the terms of licenses or permits (or any laws or regulations
applicable thereto) prohibit or condition the transfer of any licenses or
permits, consent to the transfer under the Guarantee and Collateral
Agreement has been obtained;
(k) we express no opinion with respect to any Indiana Article 9
Filing Collateral consisting of equipment used in farming operations, or
farm products, or accounts or general intangibles arising from or relating
to the sale of farm products by a farmer, or consumer goods, crops growing
or to be grown, timber to be cut or minerals or the like (including oil and
gas), accounts subject to subsection 5 of Section 9-103 of the Indiana UCC,
goods which are or are to become fixtures, an ownership interest evidenced
by certificates of stock or other instruments and a leasehold evidenced by
a proprietary lease, or either of the foregoing, from a corporation or
partnership formed for the purpose of cooperative ownership of real estate,
beneficial interests in trusts or a decedent's estate, or the
non-negotiable instruments and shares of stock listed on Schedule 2 to the
Guarantee and Collateral Agreement;
(l) we call to your attention that the perfection of the security
interest of the Administrative Agent will be terminated as to any Article 9
Collateral acquired by Anacomp more than four months after Anacomp changes
its name, identity or corporate structure so as to make the Financing
Statements seriously misleading, unless new appropriate financing
statements indicating the new name, identity or corporate structure of
Anacomp are filed before the expiration of such four months;
(m) we call to your attention that the Indiana UCC requires the
filing of continuation statements within the period of six months prior to
the expiration of five years from the date of the filing of the original
Financing Statements or the filing of any
<PAGE>
The First National Bank of Chicago -7- February 28, 1997
continuation statement in order to maintain the effectiveness of the
original Financing Statements;
(n) we call to your attention that the perfection and the effect of
perfection or non-perfection of the security interest may be governed by
laws other than those of the Indiana UCC to the extent either the Article 9
Collateral or Anacomp is or becomes located in a jurisdiction other than
Indiana; and
(o) we express no opinion as to the priority of the security interest
of the Administrative Agent in any Article 9 Collateral.
When in this opinion letter we have used the expression "to the best of our
knowledge", we have not made any independent investigation of or inquiry as to
the applicable facts, but have relied solely on certificates of Anacomp and are
not aware of any facts inconsistent with the matters expressed in this opinion
letter.
In connection with our opinions expressed herein, we have assumed, with
your permission, that the Financing Statements have been or will be presented
for filing, with tender of the filing fee, to the filing officers at the proper
Filing Offices.
This opinion is being furnished only to Cadwalader, Wickersham & Taft, as
counsel for Anacomp, to the Administrative Agent under the Credit Agreement, the
present Lenders and their counsel, and is solely for your and their benefit as
of the date hereof and is not to be used, circulated, quoted, relied upon or
otherwise referred to for any purpose without our prior written consent, except
that this opinion may be referred to or disclosed to any governmental authority
or representative thereof, or pursuant to legal process, in connection with
litigation, or by your independent public accountants, any valuation
consultants, any potential or actual purchasers, assignees, or transferees of
Notes, or your legal counsel, but in any event shall not be relied upon by any
of the foregoing persons without our prior written consent.
Very truly yours,
<PAGE>
ANNEX A
LENDERS
Lehman Commercial Paper Inc.
The First National Bank of Chicago
Prime Income Trust
The ING Capital Senior Secured High Income Fund, L.P.
Merrill Lynch Senior Floating Rate Fund, Inc.
Pilgrim America Group Inc.
Protective Life Insurance Company
Van Kampen American Capital Prime Rate Income Trust
Crescent/Mach I Partners, L.P.
<PAGE>
SCHEDULE A
FILING OFFICES
Indiana Secretary of State
Recorder of Elkhart County, Indiana
Recorder of Hamilton County, Indiana
Recorder of Marion County, Indiana
<PAGE>
EXHIBIT G
MATTERS TO BE COVERED BY
OPINIONS RELATING TO THE
FOREIGN SUBSIDIARY BORROWERS
1. The Foreign Subsidiary Borrower is duly organized, validly
existing and in good standing under the laws of __________________ [specify the
jurisdiction of its organization] (the "JURISDICTION").
2. The Foreign Subsidiary Borrower has the power and authority, and
the legal right, to make, deliver and perform its obligations under the Credit
Agreement and to borrow under the Credit Agreement. The Foreign Subsidiary
Borrower has taken all necessary corporate action to authorize the performance
of its obligations as a "Foreign Subsidiary Borrower" under the Credit Agreement
and to authorize the execution, delivery and performance of the Credit
Agreement.
3. Except for consents, authorizations, approvals, notices and
filings described on an attached schedule, all of which have been obtained, made
or waived and are in full force and effect, no consent or authorization of,
approval by, notice to, filing with or other act by or in respect of, any
Governmental Authority is required in connection with the borrowings by the
Foreign Subsidiary Borrower under the Credit Agreement or with the execution,
delivery, performance, validity or enforceability of the Credit Agreement.
4. The Credit Agreement has been duly executed and delivered on
behalf of the Foreign Subsidiary Borrower.
5. The execution and delivery of the Credit Agreement by the Foreign
Subsidiary Borrower, the performance of its obligations thereunder, the
consummation of the transactions contemplated thereby, the compliance by the
Foreign Subsidiary Borrower with any of the provisions thereof, the borrowings
under the Credit Agreement and the use of proceeds thereof, all as provided
therein, (a) will not violate, or constitute a default under, any Requirement of
Law applicable to the Foreign Subsidiary Borrower and (b) will not result in, or
require, the creation or imposition of any Lien on any of its properties or
revenues pursuant to any such Requirement of Law.
6. There are no taxes imposed by the Jurisdiction (a) on or by
virtue of the execution, delivery, enforcement or performance of the Credit
Agreement or (b) on any payment to be made by the Foreign Subsidiary Borrower
pursuant to the Credit Agreement other than any Non-Excluded Taxes payable by
the Foreign Subsidiary Borrower as provided in subsection 6.12 of the Credit
Agreement.
7. To ensure the legality, validity, enforceability or admissibility
in evidence of the Credit Agreement, it is not necessary that the Credit
Agreement or any other Loan Documents or any other document be filed, registered
or recorded with, or executed or
<PAGE>
2
notarized before, any court of other authority of the Jurisdiction or that any
registration charge or stamp or similar tax be paid on or in respect of the
Credit Agreement.
8. The Credit Agreement is in proper legal form under the laws of
the Jurisdiction for the enforcement thereof against the Foreign Subsidiary
Borrower under the laws of the Jurisdiction.
9. In any action or proceeding arising out of or relating to the
Credit Agreement in any court in the Jurisdiction, such court would recognize
and give effect to the choice of law provisions in the Credit Agreement wherein
the parties thereto agree that the Credit Agreement shall be governed by, and
construed and interpreted in accordance with, the laws of the State of New York.
10. It is not necessary under the laws of the Jurisdiction (a) in
order to enable the Administrative Agents and the Lenders or any of them to
enforce their respective rights under the Credit Agreement or (b) by reason of
the execution of the Credit Agreement [or the Joinder Agreement to which the
Foreign Subsidiary Borrower is a party] or the performance of the Credit
Agreement that any of them should be licensed, qualified or entitled to carry on
business in the Jurisdiction.
11. Neither either of the Administrative Agents nor any of the
Lenders will be deemed to be resident, domiciled, carrying on business or
subject to taxation in the Jurisdiction merely by reason of the execution of the
Credit Agreement [or the Joinder Agreement to which the Foreign Subsidiary
Borrower is a party] or the performance or enforcement of any thereof. The
performance by the Administrative Agents and the Lenders or any of them of any
action required or permitted under the Credit Agreement will not violate any law
or regulation, or be contrary to the public policy, of the Jurisdiction.
12. If any judgment of a competent court outside the Jurisdiction
were rendered against the Foreign Subsidiary Borrower in connection with any
action arising out of or relating to the Credit Agreement, such judgment would
be recognized and could be sued upon in the courts of the Jurisdiction, and such
courts would grant a judgment which would be enforceable against the Foreign
Subsidiary Borrower in the Jurisdiction without any retrial unless it is shown
that (a) the foreign court did not have jurisdiction in accordance with its
jurisdictional rules, (b) the party against whom the judgment of such foreign
court was obtained had no notice of the proceedings or (iii) the judgment of
such foreign court was obtained through collusion or fraud or was based upon
clear mistake of fact or law.
<PAGE>
EXHIBIT H
FORM OF
BORROWING CERTIFICATE
Pursuant to subsection 8.1(b) of the Credit and Guarantee Agreement,
dated as of February __, 1997 (as the same may be amended, supplemented or
otherwise modified from time to time, the "CREDIT AGREEMENT"), among Anacomp,
Inc., an Indiana corporation (the "COMPANY"), the Foreign Subsidiary Borrowers,
the several banks and other financial institutions from time to time parties
thereto (the "LENDERS"), The First National Bank of Chicago, as administrative
agent for the Lenders and Lehman Commercial Paper Inc., as Arranger and
Syndication Agent, the undersigned, ____________________ of the Company, hereby
certifies as follows:
1. The representations and warranties of the Company set forth in the
Credit Agreement and each of the other Loan Documents to which it is a
party or which are contained in any certificate, document or financial or
other statement furnished pursuant to or in connection with the Credit
Agreement or any Loan Document are true and correct in all material
respects on and as of the date hereof with the same effect as if made on
the date hereof, except for representations and warranties expressly stated
to relate to a specific earlier date, in which case such representations
and warranties are true and correct in all material respects as of such
earlier date;
2. No Default or Event of Default has occurred and is continuing as
of the date hereof or will occur after giving effect to the making of the
Loans and the issuance of the Letters of Credit requested to be made and/or
issued on the date hereof or the consummation of each of the transactions
contemplated by the Loan Documents; and
3. _________________ is and at all times since _____________ __,
199_, has been the duly elected and qualified [Assistant] Secretary of the
Company and the signature set forth on the signature line for such officer
below is such officer's true and genuine signature;
and the undersigned [Assistant] Secretary of the Company hereby certifies as
follows:
4. There are no liquidation or dissolution proceedings pending or to
my knowledge threatened against the Company or any of its Subsidiaries, nor
has any other event occurred affecting or threatening the corporate
existence of the Company or any of its Subsidiaries;
5. The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of Indiana;
<PAGE>
2
6. (a) Attached hereto as EXHIBIT A is a true and complete copy of
resolutions duly adopted by the Board of Directors of the Company on
__________ __, 1997; such resolutions have not in any way been amended,
modified, revoked or rescinded and have been in full force and effect since
their adoption to and including the date hereof and are now in full force
and effect; such resolutions are the only corporate proceedings of the
Company now in force relating to or affecting the matters referred to
therein;
(b) attached hereto as EXHIBIT B is a true and complete copy of
the By-laws of the Company as in effect at all times since __________ __,
199_, to and including the date hereof; and
(c) attached hereto as EXHIBIT C is a true and complete copy of
the Certificate of Incorporation of the Company as in effect at all times
since __________ __, ____, to and including the date hereof; and
7. The following persons are now duly elected and qualified officers
of the Company, holding the offices indicated next to their respective
names below, and such officers have held such offices with the Company at
all times since __________ __, 199_, to and including the date hereof, and
the signatures appearing opposite their respective names below are the true
and genuine signatures of such officers, and each of such officers is duly
authorized to execute and deliver on behalf of the Company, the Credit
Agreement and the other Loan Documents to which it is a party and any
certificate or other document to be delivered by the Company pursuant to
the Credit Agreement or any such Loan Document:
Name Office Signature
---- ------ ---------
[ ] [ ] _______________
[ ] [ ] _______________
Unless otherwise defined herein, capitalized terms which are defined
in the Credit Agreement and used herein are so used as so defined.
<PAGE>
3
IN WITNESS WHEREOF, the undersigned have hereunto set our names and
affixed the corporate seal.
ANACOMP, INC. ANACOMP, INC.
By:___________________________ By:____________________________
Name: Name:
Title: [Vice] President Title: [Assistant] Secretary
Date: February __, 1997 (CORPORATE SEAL)
<PAGE>
EXHIBIT I
FORM OF TAX CERTIFICATE
Reference is hereby made to the Credit and Guarantee Agreement, dated
as of February __, 199__, among ANACOMP, INC, the Foreign Subsidiary Borrowers
(as defined therein), the lenders parties thereto, The First National Bank of
Chicago, as administrative agent and Lehman Commercial Paper Inc., as arranger
and syndication agent (as amended, restated, supplemented or otherwise modified
from time to time, the "CREDIT AGREEMENT"). Pursuant to the provisions of
Section 4.11(b)(i)(B) of the Credit Agreement, the undersigned hereby certifies
that it is not a "bank" as such term is defined in Section 881(c)(3)(A) of the
Internal Revenue Code of 1986, as amended.
[NAME OF LENDER]
By:___________________
Title:
Date: _________, 19___
<PAGE>
EXHIBIT J-1
FORM OF NOTICE OF BORROWING
(for Multicurrency Loans)
The First National Bank of Chicago
as Agent for the Revolving Credit Lenders party
to the Credit Agreement referred to below
One First National Plaza, Suite 0364
Chicago, IL 60670
Attention: _______________________
[Date]
Re: ANACOMP, INC.
Ladies and Gentlemen:
The undersigned, Anacomp, Inc., refers to that certain Credit and
Guarantee Agreement, dated as of February __, 1997, among the undersigned, the
other Borrowers party thereto, the Revolving Credit Lenders party thereto and
The First National Bank of Chicago, as Administrative Agent (as it may be
amended or otherwise modified from time to time, the "Credit Agreement") and
hereby gives you notice, irrevocably pursuant to Section 4.2(a) of the Credit
Agreement, that the undersigned hereby requests a Multicurrency Loan under the
Credit Agreement, and in that connection sets forth below the information
relating to such Multicurrency Loan (the "Proposed Multicurrency Loan") as
required by Section 4.2(a) of the Credit Agreement:
(i) The Borrower making the Proposed Multicurrency Loan is
___________________.
(ii) The Business Day of the Proposed Multicurrency Loan is
_________, 19__.
(iii) The aggregate amount of the Proposed Multicurrency Loan is
________________.
(iv) The Available Foreign Currency of the Proposed Multicurrency
Loan is _______________.
(v) The initial Interest Period for such Multicurrency Loan shall
be ____________ months.
Capitalized terms not defined in this Notice of Borrowing but defined
in the Credit Agreement are being used herein as therein defined.
Very truly yours,
ANACOMP, INC.
By:________________________
Name:
Title:
<PAGE>
EXHIBIT J-2
FORM OF NOTICE OF CONTINUATION
(for Multicurrency Loans)
The First National Bank of Chicago
as Agent for the Revolving Credit Lenders party
to the Credit Agreement referred to below
One First National Plaza, Suite 0364
Chicago, IL 60670
Attention: _________________________
[Date]
Re: ANACOMP, INC.
Ladies and Gentlemen:
The undersigned, Anacomp, Inc., refers to that certain Credit and
Guarantee Agreement, dated as of February __, 1997, among the undersigned, the
other Borrowers party thereto, the Revolving Credit Lenders party thereto and
The First National Bank of Chicago, as Administrative Agent (as it may be
amended or otherwise modified from time to time, the "Credit Agreement") and
hereby gives you notice pursuant to Section 4.2(d) of the Credit Agreement that
the undersigned hereby requests a continuation on _____________ __, 19__ of
_____________________ in principal amount of presently outstanding Multicurrency
Loans having an Interest Period ending on __________ __, 19__. The Interest
Period for such amount requested to be continued is [1] [2] [3] [6] months.
In connection herewith, the undersigned hereby certifies that no
Default or Event or Default is continuing on the date hereof.
Capitalized terms not defined herein but defined in the Credit
Agreement are being used herein as therein defined.
Very truly yours,
ANACOMP, INC.
By:___________________________
Name:
Title:
<PAGE>
EXHIBIT 10.8
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GUARANTEE AND COLLATERAL AGREEMENT
made by
ANACOMP, INC.
in favor of
THE FIRST NATIONAL BANK OF CHICAGO,
as Administrative Agent
Dated as of February 28, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. DEFINED TERMS.................................................... 1
1.1 Definitions........................................................ 1
1.2 Other Definitional Provisions...................................... 5
SECTION 2. GUARANTEE........................................................ 6
2.1 Guarantee.......................................................... 6
2.2 Right of Contribution.............................................. 6
2.3 No Subrogation..................................................... 6
2.4 Amendments, etc. with respect to the Borrower Obligations.......... 7
2.5 Guarantee Absolute and Unconditional............................... 7
2.6 Reinstatement...................................................... 8
2.7 Payments........................................................... 8
SECTION 3. GRANT OF SECURITY INTEREST....................................... 8
SECTION 4. REPRESENTATIONS AND WARRANTIES................................... 9
4.1 Representations in Credit Agreement................................ 9
4.2 Title; No Other Liens.............................................. 9
4.3 Perfected First Priority Liens..................................... 10
4.4 Chief Executive Office............................................. 10
4.5 Inventory and Equipment............................................ 10
4.6 Farm Products...................................................... 10
4.7 Pledged Securities................................................. 10
4.8 Receivables........................................................ 10
4.9 Intellectual Property.............................................. 11
SECTION 5. COVENANTS........................................................ 11
5.1 Covenants in Credit Agreement...................................... 11
5.2 Delivery of Instruments and Chattel Paper.......................... 11
5.3 Maintenance of Insurance........................................... 11
5.4 Payment of Obligations............................................. 12
5.5 Maintenance of Perfected Security Interest; Further Documentation.. 12
5.6 Changes in Locations, Name, etc.................................... 12
5.7 Notices............................................................ 13
5.8 Pledged Securities................................................. 13
5.9 Receivables........................................................ 14
5.10 Intellectual Property............................................. 14
SECTION 6. REMEDIAL PROVISIONS.............................................. 15
6.1 Certain Matters Relating to Receivables............................ 15
6.2 Communications with Obligors; Grantors Remain Liable............... 16
6.3 Pledged Stock...................................................... 17
6.4 Proceeds to be Turned Over To Administrative Agent................. 17
6.5 Application of Proceeds............................................ 18
6.6 Code and Other Remedies............................................ 18
i
<PAGE>
PAGE
6.7 Private Sales...................................................... 19
6.8 Waiver; Deficiency................................................. 19
SECTION 7. THE ADMINISTRATIVE AGENT......................................... 19
7.1 Administrative Agent's Appointment as Attorney-in-Fact, etc........ 19
7.2 Duty of Administrative Agent....................................... 21
7.3 Execution of Financing Statements.................................. 21
7.4 Authority of Administrative Agent.................................. 21
SECTION 8. MISCELLANEOUS.................................................... 22
8.1 Amendments in Writing.............................................. 22
8.2 Notices............................................................ 22
8.3 No Waiver by Course of Conduct; Cumulative Remedies................ 22
8.4 Enforcement Expenses; Indemnification.............................. 22
8.5 Successors and Assigns............................................. 23
8.6 Set-Off............................................................ 23
8.7 Counterparts....................................................... 23
8.8 Severability....................................................... 23
8.9 Section Headings................................................... 23
8.10 Integration....................................................... 24
8.11 GOVERNING LAW..................................................... 24
8.12 Submission To Jurisdiction; Waivers............................... 24
8.13 Acknowledgements.................................................. 24
8.14 WAIVER OF JURY TRIAL.............................................. 25
8.15 Additional Grantors............................................... 25
8.16 Judgment.......................................................... 25
8.17 Releases.......................................................... 25
ii
<PAGE>
SCHEDULES
Schedule 1 Notice Addresses of Guarantors
Schedule 2 Description of Pledged Securities
Schedule 3 Filings and Other Actions Required to Perfect Security Interests
Schedule 4 Location of Jurisdiction of Organization and Chief Executive
Office
Schedule 5 Location of Inventory and Equipment
Schedule 6 Copyrights and Copyright Licenses; Patents and Patent Licenses;
Trademark and Trademark Licenses
Schedule 7 Immaterial Subsidiaries
Schedule 8 Existing Prior Liens
<PAGE>
GUARANTEE AND COLLATERAL AGREEMENT
GUARANTEE AND COLLATERAL AGREEMENT, dated as of February 28, 1997,
made by each of the signatories hereto (together with any other entity that may
become a party hereto as provided herein, the "GRANTORS"), in favor of THE FIRST
NATIONAL BANK OF CHICAGO, as Administrative Agent (in such capacity, the
"ADMINISTRATIVE AGENT") for the banks and other financial institutions (the
"LENDERS") from time to time parties to the Credit and Guarantee Agreement,
dated as of February 28, 1997 (as amended, supplemented or otherwise modified
from time to time, the "CREDIT AGREEMENT"), among ANACOMP, INC., an Indiana
corporation (the "COMPANY"), the Foreign Subsidiary Borrowers parties thereto
(together with the Company, the "BORROWERS"), LEHMAN COMMERCIAL PAPER INC., as
Arranger and Syndication Agent, the Lenders and the Administrative Agent.
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Lenders have severally
agreed to make extensions of credit to the Borrowers upon the terms and subject
to the conditions set forth therein;
WHEREAS, each Borrower is a member of an affiliated group of companies
that includes each other Grantor;
WHEREAS, the proceeds of the extensions of credit under the Credit
Agreement will be used in part to enable the Borrowers to make valuable
transfers to one or more of the other Grantors in connection with the operation
of their respective businesses;
WHEREAS, the Borrowers and the other Grantors are engaged in related
businesses, and each Grantor will derive substantial direct and indirect benefit
from the making of the extensions of credit under the Credit Agreement; and
WHEREAS, it is a condition precedent to the obligation of the Lenders
to make their respective extensions of credit to the Borrowers under the Credit
Agreement that the Grantors shall have executed and delivered this Agreement to
the Administrative Agent for the ratable benefit of the Lenders;
NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective extensions of credit to the Borrower
thereunder, each Grantor hereby agrees with the Administrative Agent, for the
ratable benefit of the Lenders, as follows:
SECTION 1. DEFINED TERMS
1.1 DEFINITIONS. (a) Unless otherwise defined herein, terms defined
in the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement, and the following terms which are defined in the Uniform
Commercial Code in effect in the State of New York on the date hereof are used
herein as so defined: Accounts, Chattel Paper, Documents, Equipment, Farm
Products, Instruments and Inventory.
<PAGE>
2
(b) The following terms shall have the following meanings:
"AGREEMENT": this Guarantee and Collateral Agreement, as the same may
be amended, supplemented or otherwise modified from time to time.
"BORROWER OBLIGATIONS": in respect of any Borrower, the collective
reference to the unpaid principal of and interest on the Loans made to such
Borrower, the Reimbursement Obligations of such Borrower and all other
obligations and liabilities of such Borrower (including, without
limitation, interest accruing at the then applicable rate provided in the
Credit Agreement after the maturity of such Loans and Reimbursement
Obligations and interest accruing at the then applicable rate provided in
the Credit Agreement after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating
to such Borrower, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding, and including, with respect to the
Company, its guarantee obligations pursuant to Section 12 of the Credit
Agreement) to the Administrative Agent or any Lender (or, in the case of
any Hedge Agreement referred to below, any Affiliate of any Lender),
whether direct or indirect, absolute or contingent, due or to become due,
or now existing or hereafter incurred, which may arise under, out of, or in
connection with, the Credit Agreement, this Agreement, the other Loan
Documents, any Letter of Credit or any Hedge Agreement entered into by such
Borrower with any Lender (or any Affiliate of any Lender) or any other
document made, delivered or given in connection therewith, in each case
whether on account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation,
all fees and disbursements of counsel to the Administrative Agent or to the
Lenders that are required to be paid by such Borrower pursuant to the terms
of any of the foregoing agreements).
"COLLATERAL": as defined in Section 3.
"COLLATERAL ACCOUNT": any collateral account established by the
Administrative Agent as provided in Section 6.1 or 6.4.
"COPYRIGHTS": (i) all copyrights arising under the laws of the United
States, any other country or any political subdivision thereof, whether
registered or unregistered and whether published or unpublished (including,
without limitation, those listed in SCHEDULE 6), all registrations and
recordings thereof, and all applications in connection therewith,
including, without limitation, all registrations, recordings and
applications in the United States Copyright Office, and (ii) the right to
obtain all renewals thereof.
"COPYRIGHT LICENSES": any written agreement naming any Grantor as
licensor or licensee (including, without limitation, those listed in
SCHEDULE 6), granting any right under any Copyright, including, without
limitation, the grant of rights to manufacture, distribute, exploit and
sell materials derived from any Copyright, to the extent the grant by such
Grantor of a security interest pursuant to this Agreement in its right,
title and interest in such Copyright License is not prohibited by such
Copyright License without the consent of any other party thereto, would not
give any other party to such Copyright License the right to terminate its
obligations thereunder, or is permitted with consent if all necessary
consents to such grant of a security interest have been obtained from the
other parties thereto (it being understood that the
<PAGE>
3
foregoing shall not be deemed to obligate such Grantor to obtain such
consents); PROVIDED, that the foregoing limitation shall not affect, limit,
restrict or impair the grant by such Grantor of a security interest
pursuant to this Agreement in any money or other amounts due or to become
due under any such Copyright License.
"GENERAL INTANGIBLES": all "general intangibles" as such term is
defined in Section 9-106 of the Uniform Commercial Code in effect in the
State of New York on the date hereof and, in any event, including, without
limitation, with respect to any Grantor, all contracts, agreements,
instruments and indentures in any form, and portions thereof, to which such
Grantor is a party or under which such Grantor has any right, title or
interest or to which such Grantor or any property of such Grantor is
subject, as the same may from time to time be amended, supplemented or
otherwise modified, including, without limitation, (i) all rights of such
Grantor to receive moneys due and to become due to it thereunder or in
connection therewith, (ii) all rights of such Grantor to damages arising
thereunder and (iii) all rights of such Grantor to perform and to exercise
all remedies thereunder, in each case to the extent the grant by such
Grantor of a security interest pursuant to this Agreement in its right,
title and interest in such contract, agreement, instrument or indenture is
not prohibited by such contract, agreement, instrument or indenture without
the consent of any other party thereto, would not give any other party to
such contract, agreement, instrument or indenture the right to terminate
its obligations thereunder, or is permitted with consent if all necessary
consents to such grant of a security interest have been obtained from the
other parties thereto (it being understood that the foregoing shall not be
deemed to obligate such Grantor to obtain such consents); PROVIDED, that
the foregoing limitation shall not affect, limit, restrict or impair the
grant by such Grantor of a security interest pursuant to this Agreement in
any Receivable or any money or other amounts due or to become due under any
such contract, agreement, instrument or indenture.
"GUARANTOR OBLIGATIONS": with respect to any Guarantor, the
collective reference to (i) the Borrower Obligations of all Borrowers and
(ii) all obligations and liabilities of such Guarantor which may arise
under or in connection with this Agreement or any other Loan Document to
which such Guarantor is a party, in each case whether on account of
guarantee obligations, reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including, without limitation, all fees and
disbursements of counsel to the Administrative Agent or to the Lenders that
are required to be paid by such Guarantor pursuant to the terms of this
Agreement or any other Loan Document).
"GUARANTORS": the collective reference to each Grantor other than the
Company.
"HEDGE AGREEMENTS": as to any Person, all interest rate swaps, caps
or collar agreements or similar arrangements entered into by such Person
providing for protection against fluctuations in interest rates or currency
exchange rates or the exchange of nominal interest obligations, either
generally or under specific contingencies.
"IMMATERIAL SUBSIDIARY": the Subsidiaries of the Company listed on
Schedule 7.
"INTELLECTUAL PROPERTY": the collective reference to all rights,
priorities and privileges relating to intellectual property, whether
arising under United States, multinational or foreign laws or otherwise,
including, without limitation, the Copyrights, the Copyright Licenses, the
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4
Patents, the Patent Licenses, the Trademarks and the Trademark Licenses,
and all rights to sue at law or in equity for any infringement or other
impairment thereof, including the right to receive all proceeds and damages
therefrom.
"INTERCOMPANY NOTE": any promissory note evidencing loans made by any
Grantor to the Company or any of its Subsidiaries.
"ISSUERS": the collective reference to each issuer of a Pledged
Security.
"NEW YORK UCC": the Uniform Commercial Code as from time to time in
effect in the State of New York.
"OBLIGATIONS": (i) in the case of each Borrower, its Borrower
Obligations, and (ii) in the case of each Guarantor, its Guarantor
Obligations.
"PATENTS": (i) all letters patent of the United States, any other
country or any political subdivision thereof, all reissues and extensions
thereof and all goodwill associated therewith, including, without
limitation, any of the foregoing referred to in SCHEDULE 6, (ii) all
applications for letters patent of the United States or any other country
and all divisions, continuations and continuations-in-part thereof,
including, without limitation, any of the foregoing referred to in SCHEDULE
6, and (iii) all rights to obtain any reissues or extensions of the
foregoing.
"PATENT LICENSE": all agreements, whether written or oral, providing
for the grant by or to any Grantor of any right to manufacture, use or sell
any invention covered in whole or in part by a Patent, including, without
limitation, any of the foregoing referred to in SCHEDULE 6, to the extent
the grant by such Grantor of a security interest pursuant to this Agreement
in its right, title and interest in such Patent License is not prohibited
by such Patent License without the consent of any other party thereto,
would not give any other party to such Patent License the right to
terminate its obligations thereunder, or is permitted with consent if all
necessary consents to such grant of a security interest have been obtained
from the other parties thereto (it being understood that the foregoing
shall not be deemed to obligate such Grantor to obtain such consents);
PROVIDED, that the foregoing limitation shall not affect, limit, restrict
or impair the grant by such Grantor of a security interest pursuant to this
Agreement in any money or other amounts due or to become due under any such
Patent License.
"PLEDGED NOTES": all Intercompany Notes at any time issued to any
Grantor and all other promissory notes issued to or held by any Grantor
(other than promissory notes issued in connection with extensions of trade
credit by any Grantor in the ordinary course of business).
"PLEDGED SECURITIES": the collective reference to the Pledged Notes
and the Pledged Stock.
"PLEDGED STOCK": the shares of Capital Stock listed on SCHEDULE 2,
together with any other shares, stock certificates, options or rights of
any nature whatsoever pledged pursuant to subsection 9.9 of the Credit
Agreement.
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5
"PROCEEDS": all "proceeds" as such term is defined in Section 9-
306(1) of the Uniform Commercial Code in effect in the State of New York on the
date hereof and, in any event, shall include, without limitation, all dividends
or other income from the Pledged Securities, collections thereon or
distributions or payments with respect thereto.
"RECEIVABLE": any right to payment for goods sold or leased or for
services rendered, whether or not such right is evidenced by an Instrument
or Chattel Paper and whether or not it has been earned by performance
(including, without limitation, any Account).
"SECURITIES ACT": the Securities Act of 1933, as amended.
"TRADEMARKS": (i) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, and all
goodwill associated therewith, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications in
connection therewith, whether in the United States Patent and Trademark
Office or in any similar office or agency of the United States, any State
thereof or any other country or any political subdivision thereof, or
otherwise, and all common-law rights related thereto, including, without
limitation, any of the foregoing referred to in SCHEDULE 6, and (ii) the
right to obtain all renewals thereof.
"TRADEMARK LICENSE": any agreement, whether written or oral,
providing for the grant by or to any Grantor of any right to use any
Trademark, including, without limitation, any of the foregoing referred to
in SCHEDULE 6, to the extent the grant by such Grantor of a security
interest pursuant to this Agreement in its right, title and interest in
such Trademark License is not prohibited by such Trademark License without
the consent of any other party thereto, would not give any other party to
such Trademark License the right to terminate its obligations thereunder,
or is permitted with consent if all necessary consents to such grant of a
security interest have been obtained from the other parties thereto (it
being understood that the foregoing shall not be deemed to obligate such
Grantor to obtain such consents); PROVIDED, that the foregoing limitation
shall not affect, limit, restrict or impair the grant by such Grantor of a
security interest pursuant to this Agreement in any money or other amounts
due or to become due under any such Trademark License.
"VEHICLES": all cars, trucks, trailers, construction and earth moving
equipment and other vehicles covered by a certificate of title law of any
state.
1.2 OTHER DEFINITIONAL PROVISIONS. (a) The words "hereof," "herein",
"hereto" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Section and Schedule references are to this Agreement unless
otherwise specified.
(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
(c) Where the context requires, terms relating to the Collateral or
any part thereof, when used in relation to a Grantor, shall refer to such
Grantor's Collateral or the relevant part thereof.
<PAGE>
6
SECTION 2. GUARANTEE
2.1 GUARANTEE. (a) Each of the Guarantors hereby, jointly and
severally, unconditionally and irrevocably, guarantees to the Administrative
Agent, for the ratable benefit of the Lenders and their respective successors,
indorsees, transferees and assigns, the prompt and complete payment and
performance when due (whether at the stated maturity, by acceleration or
otherwise) of the Borrower Obligations of all Borrowers.
(b) Anything herein or in any other Loan Document to the contrary
notwithstanding, the maximum liability of each Guarantor hereunder and under the
other Loan Documents shall in no event exceed the amount which can be guaranteed
by such Guarantor under applicable federal and state laws relating to the
insolvency of debtors (after giving effect to the right of contribution
established in Section 2.2).
(c) Each Guarantor agrees that the Borrower Obligations of one or more
Borrowers may at any time and from time to time exceed the amount of the
liability of such Guarantor hereunder without impairing the guarantee contained
in this Section 2 or affecting the rights and remedies of the Administrative
Agent or any Lender hereunder.
(d) The guarantee contained in this Section 2 shall remain in full
force and effect until all the Borrower Obligations and the obligations of each
Guarantor under the guarantee contained in this Section 2 shall have been
satisfied by payment in full, no Letter of Credit shall be outstanding and the
Commitments shall be terminated, notwithstanding that from time to time during
the term of the Credit Agreement the Borrowers may be free from any Borrower
Obligations.
(e) No payment made by any Borrower, any of the Guarantors, any other
guarantor or any other Person or received or collected by the Administrative
Agent or any Lender from any Borrower, any of the Guarantors, any other
guarantor or any other Person by virtue of any action or proceeding or any
set-off or appropriation or application at any time or from time to time in
reduction of or in payment of any of the Borrower Obligations shall be deemed to
modify, reduce, release or otherwise affect the liability of any Guarantor
hereunder which shall, notwithstanding any such payment (other than any payment
made by such Guarantor in respect of such Borrower Obligations or any payment
received or collected from such Guarantor in respect of such Borrower
Obligations), remain liable for the Borrower Obligations of all Borrowers up to
the maximum liability of such Guarantor hereunder until all Borrower Obligations
are paid in full, no Letter of Credit shall be outstanding and the Commitments
are terminated.
2.2 RIGHT OF CONTRIBUTION. Each Guarantor hereby agrees that to the
extent that a Guarantor shall have paid more than its proportionate share of any
payment made hereunder, such Guarantor shall be entitled to seek and receive
contribution from and against any other Guarantor hereunder which has not paid
its proportionate share of such payment. Each Guarantor's right of contribution
shall be subject to the terms and conditions of Section 2.3. The provisions of
this Section 2.2 shall in no respect limit the obligations and liabilities of
any Guarantor to the Administrative Agent and the Lenders, and each Guarantor
shall remain liable to the Administrative Agent and the Lenders for the full
amount guaranteed by such Guarantor hereunder.
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7
2.3 NO SUBROGATION. Notwithstanding any payment made by any Guarantor
hereunder or any set-off or application of funds of any Guarantor by the
Administrative Agent or any Lender, no Guarantor shall be entitled to be
subrogated to any of the rights of the Administrative Agent or any Lender
against any Borrower or any other Guarantor or any collateral security or
guarantee or right of offset held by the Administrative Agent or any Lender for
the payment of the Borrower Obligations, nor shall any Guarantor seek or be
entitled to seek any contribution or reimbursement from any Borrower or any
other Guarantor in respect of payments made by such Guarantor hereunder, until
all amounts owing to the Administrative Agent and the Lenders by the Borrowers
on account of the Borrower Obligations are paid in full, no Letter of Credit
shall be outstanding and the Commitments are terminated. If any amount shall be
paid to any Guarantor on account of such subrogation rights at any time when all
of the Borrower Obligations shall not have been paid in full, such amount shall
be held by such Guarantor in trust for the Administrative Agent and the Lenders,
segregated from other funds of such Guarantor, and shall, forthwith upon receipt
by such Guarantor, be turned over to the Administrative Agent in the exact form
received by such Guarantor (duly indorsed by such Guarantor to the
Administrative Agent, if required), to be applied against the Borrower
Obligations, whether matured or unmatured, in such order as the Administrative
Agent may determine.
2.4 AMENDMENTS, ETC. WITH RESPECT TO THE BORROWER OBLIGATIONS. Each
Guarantor shall remain obligated hereunder notwithstanding that, without any
reservation of rights against any Guarantor and without notice to or further
assent by any Guarantor, any demand for payment of any of the Borrower
Obligations made by the Administrative Agent or any Lender may be rescinded by
the Administrative Agent or such Lender and any of the Borrower Obligations
continued, and the Borrower Obligations, or the liability of any other Person
upon or for any part thereof, or any collateral security or guarantee therefor
or right of offset with respect thereto, may, from time to time, in whole or in
part, be renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by the Administrative Agent or any Lender, and the
Credit Agreement and the other Loan Documents and any other documents executed
and delivered in connection therewith may be amended, modified, supplemented or
terminated, in whole or in part, as the Administrative Agent (or the Required
Lenders or all Lenders, as the case may be) may deem advisable from time to
time, and any collateral security, guarantee or right of offset at any time held
by the Administrative Agent or any Lender for the payment of the Borrower
Obligations may be sold, exchanged, waived, surrendered or released. Neither
the Administrative Agent nor any Lender shall have any obligation to protect,
secure, perfect or insure any Lien at any time held by it as security for the
Borrower Obligations or for the guarantee contained in this Section 2 or any
property subject thereto.
2.5 GUARANTEE ABSOLUTE AND UNCONDITIONAL. Each Guarantor waives any
and all notice of the creation, renewal, extension or accrual of any of the
Borrower Obligations and notice of or proof of reliance by the Administrative
Agent or any Lender upon the guarantee contained in this Section 2 or acceptance
of the guarantee contained in this Section 2; the Borrower Obligations, and any
of them, shall conclusively be deemed to have been created, contracted or
incurred, or renewed, extended, amended or waived, in reliance upon the
guarantee contained in this Section 2; and all dealings between the Borrowers
and any of the Guarantors, on the one hand, and the Administrative Agent and the
Lenders, on the other hand, likewise shall be conclusively presumed to have been
had or consummated in reliance upon the guarantee contained in this Section 2.
Each Guarantor waives diligence, presentment, protest, demand for payment and
notice of default or nonpayment to or upon any Borrower or any of the Guarantors
with respect to the Borrower Obligations. Each Guarantor understands and agrees
that the guarantee contained in this Section 2 shall be construed as a
continuing,
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8
absolute and unconditional guarantee of payment without regard to (a) the
validity or enforceability of the Credit Agreement or any other Loan Document,
any of the Borrower Obligations or any other collateral security therefor or
guarantee or right of offset with respect thereto at any time or from time to
time held by the Administrative Agent or any Lender, (b) any defense, set-off or
counterclaim (other than a defense of payment or performance) which may at any
time be available to or be asserted by any Borrower or any other Person against
the Administrative Agent or any Lender, or (c) any other circumstance whatsoever
(with or without notice to or knowledge of any Borrower or such Guarantor) which
constitutes, or might be construed to constitute, an equitable or legal
discharge of any Borrower for the Borrower Obligations, or of such Guarantor
under the guarantee contained in this Section 2, in bankruptcy or in any other
instance. When making any demand hereunder or otherwise pursuing its rights and
remedies hereunder against any Guarantor, the Administrative Agent or any Lender
may, but shall be under no obligation to, make a similar demand on or otherwise
pursue such rights and remedies as it may have against any Borrower, any other
Guarantor or any other Person or against any collateral security or guarantee
for the Borrower Obligations or any right of offset with respect thereto, and
any failure by the Administrative Agent or any Lender to make any such demand,
to pursue such other rights or remedies or to collect any payments from any
Borrower, any other Guarantor or any other Person or to realize upon any such
collateral security or guarantee or to exercise any such right of offset, or any
release of any Borrower, any other Guarantor or any other Person or any such
collateral security, guarantee or right of offset, shall not relieve any
Guarantor of any obligation or liability hereunder, and shall not impair or
affect the rights and remedies, whether express, implied or available as a
matter of law, of the Administrative Agent or any Lender against any Guarantor.
For the purposes hereof "demand" shall include the commencement and continuance
of any legal proceedings.
2.6 REINSTATEMENT. The guarantee contained in this Section 2 shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Borrower Obligations is rescinded or
must otherwise be restored or returned by the Administrative Agent or any Lender
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
any Borrower or any Guarantor, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for, any
Borrower or any Guarantor or any substantial part of its property, or otherwise,
all as though such payments had not been made.
2.7 PAYMENTS. Each Guarantor hereby guarantees that payments
hereunder will be paid to the Administrative Agent without set-off or
counterclaim in the currency in which such payment is due pursuant to the Credit
Agreement at the relevant payment office specified in the Credit Agreement.
SECTION 3. GRANT OF SECURITY INTEREST
Each Grantor hereby assigns and transfers to the Administrative Agent,
and hereby grants to the Administrative Agent, for the ratable benefit of the
Lenders, a security interest in, all of the following property now owned or at
any time hereafter acquired by such Grantor or in which such Grantor now has or
at any time in the future may acquire any right, title or interest
(collectively, the "COLLATERAL"), as collateral security for the prompt and
complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of such Grantor's Obligations,:
(a) all Accounts;
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9
(b) all Chattel Paper;
(c) all Documents;
(d) all Equipment;
(e) all General Intangibles;
(f) all Instruments;
(g) all Intellectual Property;
(h) all Inventory;
(i) all Pledged Securities;
(j) all Vehicles;
(k) all books and records pertaining to the Collateral; and
(l) to the extent not otherwise included, all Proceeds and products of
any and all of the foregoing and all collateral security and guarantees
given by any Person with respect to any of the foregoing.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into the
Credit Agreement and to induce the Lenders to make their respective extensions
of credit to the Borrower thereunder, each Grantor hereby represents and
warrants to the Administrative Agent and each Lender that:
4.1 REPRESENTATIONS IN CREDIT AGREEMENT. In the case of each
Guarantor, the representations and warranties set forth in Section 8 of the
Credit Agreement as they relate to such Guarantor or to the Loan Documents to
which such Guarantor is a party, each of which is hereby incorporated herein by
reference, are true and correct, and the Administrative Agent and each Lender
shall be entitled to rely on each of them as if they were fully set forth
herein, PROVIDED that each reference in each such representation and warranty to
the Company knowledge shall, for the purposes of this Section 4.1, be deemed to
be a reference to such Guarantor's knowledge.
4.2 TITLE; NO OTHER LIENS. Except for the security interest granted
to the Administrative Agent for the ratable benefit of the Lenders pursuant to
this Agreement and the other Liens permitted to exist on the Collateral by the
Credit Agreement, such Grantor owns each item of the Collateral free and clear
of any and all Liens or claims of others except Liens permitted to exist
pursuant to the Credit Agreement. No financing statement or other public notice
with respect to all or any part of the Collateral is on file or of record in any
public office, except such as have been filed in favor of the Administrative
Agent, for the ratable benefit of the Lenders, pursuant to this Agreement or as
are permitted by the Credit Agreement.
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10
4.3 PERFECTED FIRST PRIORITY LIENS. The security interests granted
pursuant to this Agreement (a) upon completion of the filings and other actions
specified on SCHEDULE 3 (which, in the case of all filings and other documents
referred to on said Schedule, have been delivered to the Administrative Agent in
completed and duly executed form) will constitute valid perfected security
interests in all of the Collateral in favor of the Administrative Agent, for the
ratable benefit of the Lenders, as collateral security for such Grantor's
Obligations, enforceable in accordance with the terms hereof against all
creditors of such Grantor and any Persons purporting to purchase any Collateral
from such Grantor and (b) are prior to all other Liens on the Collateral in
existence on the date hereof except for (i) unrecorded Liens permitted by the
Credit Agreement which have priority over the Liens on the Collateral by
operation of law and (ii) Liens described on SCHEDULE 8 and except to the extent
that filings outside the United States might be required to perfect such
security interest in non-U.S. intellectual property.
4.4 CHIEF EXECUTIVE OFFICE. On the date hereof, such Grantor's
jurisdiction of organization and the location of such Grantor's chief executive
office or sole place of business are specified on SCHEDULE 4.
4.5 INVENTORY AND EQUIPMENT. On the date hereof, the Inventory and
the Equipment (other than mobile goods) are kept at the locations listed on
SCHEDULE 5.
4.6 FARM PRODUCTS. None of the Collateral constitutes, or is the
Proceeds of, Farm Products.
4.7 PLEDGED SECURITIES. (a) The shares of Pledged Stock pledged by
such Grantor hereunder constitute all the issued and outstanding shares of all
classes of the Capital Stock of each Issuer owned by such Grantor, except that
the shares of Pledged Stock of any Issuer which is a Foreign Subsidiary
constitute no more than 65% of all the issued and outstanding Capital Stock of
such Issuer.
(b) All the shares of the Pledged Stock have been duly and validly
issued and, to the extent the same are shares of Capital Stock of a corporation,
are fully paid and nonassessable.
(c) Each of the Pledged Notes constitutes the legal, valid and binding
obligation of the obligor with respect thereto, enforceable in accordance with
its terms, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of good
faith and fair dealing.
(d) Such Grantor is the record and beneficial owner of, and has good
and marketable title to, the Pledged Securities pledged by it hereunder, free of
any and all Liens or options in favor of, or claims of, any other Person, except
the security interest created by this Agreement.
4.8 RECEIVABLES. (a) No amount payable to such Grantor under or in
connection with any Receivable is evidenced by any Instrument or Chattel Paper
which has not been delivered to the Administrative Agent.
(b) Receivables in respect of which a Governmental Authority is the
obligor do not constitute more than 8%, in face amount, of all Receivables.
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11
(c) The amounts represented by such Grantor to the Lenders from time
to time as owing to such Grantor in respect of the Receivables will at such
times be accurate.
4.9 INTELLECTUAL PROPERTY. (a) SCHEDULE 6 lists all Intellectual
Property owned by such Grantor in its own name on the date hereof.
(b) On the date hereof, to the best of such Grantor's knowledge, all
material Intellectual Property is valid, subsisting, unexpired and enforceable,
has not been abandoned and does not infringe the intellectual property rights of
any other Person.
(c) Except as set forth in SCHEDULE 6, on the date hereof, none of the
Intellectual Property is the subject of any licensing or franchise agreement
pursuant to which such Grantor is the licensor or franchisor.
(d) No holding, decision or judgment has been rendered by any
Governmental Authority which would limit, cancel or question the validity of, or
such Grantor's rights in, any Intellectual Property in any respect that could
reasonably be expected to have a Material Adverse Effect.
(e) No action or proceeding is pending, or, to the knowledge of such
Grantor, threatened, on the date hereof (i) seeking to limit, cancel or question
the validity of any Intellectual Property or such Grantor's ownership interest
therein, or (ii) which, if adversely determined, could reasonably be expected to
have a Material Adverse Effect.
SECTION 5. COVENANTS
Each Grantor covenants and agrees with the Administrative Agent and
the Lenders that, from and after the date of this Agreement until the
Obligations shall have been paid in full, no Letter of Credit shall be
outstanding and the Commitments shall have terminated:
5.1 COVENANTS IN CREDIT AGREEMENT. In the case of each Guarantor,
such Guarantor shall comply with and perform each covenant set forth in the
Credit Agreement applicable thereto as if such Guarantor were a party to the
Credit Agreement.
5.2 DELIVERY OF INSTRUMENTS AND CHATTEL PAPER. If any amount payable
under or in connection with any of the Collateral shall be or become evidenced
by any Instrument or Chattel Paper, such Instrument or Chattel Paper shall be
immediately delivered to the Administrative Agent, duly indorsed in a manner
satisfactory to the Administrative Agent, to be held as Collateral pursuant to
this Agreement.
5.3 MAINTENANCE OF INSURANCE. (a) Such Grantor will maintain, with
financially sound and reputable companies, insurance policies (i) insuring the
Inventory, Equipment and Vehicles against loss by fire, explosion, theft and
such other casualties as may be reasonably satisfactory to the Administrative
Agent and (ii) insuring such Grantor, the Administrative Agent and the Lenders
against liability for personal injury and property damage relating to such
Inventory, Equipment and Vehicles, such policies to be in such form and amounts
and having such coverage as may be reasonably
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12
satisfactory to the Administrative Agent and the Lenders. By its acceptance of
this Agreement the Administrative Agent and each Lender acknowledges its
satisfaction with the insurance policies of the Grantors in existence on the
Closing Date.
(b) All such insurance shall (i) provide that no cancellation,
material reduction in amount or material change in coverage thereof shall be
effective until at least 30 days after receipt by the Administrative Agent of
written notice thereof, (ii) name the Administrative Agent as insured party or
loss payee, (iii) if reasonably requested by the Administrative Agent, include a
breach of warranty clause and (iv) be reasonably satisfactory in all other
respects to the Administrative Agent.
(c) The Borrower shall deliver to the Administrative Agent and the
Lenders a report of a reputable insurance broker with respect to such insurance
during the month of February in each calendar year and such supplemental reports
with respect thereto as the Administrative Agent may from time to time
reasonably request.
5.4 PAYMENT OF OBLIGATIONS. Such Grantor will pay and discharge or
otherwise satisfy at or before maturity or before they become delinquent, as the
case may be, all taxes, assessments and governmental charges or levies imposed
upon the Collateral or in respect of income or profits therefrom, as well as all
claims of any kind (including, without limitation, claims for labor, materials
and supplies) against or with respect to the Collateral, except that no such
charge need be paid if the amount or validity thereof is currently being
contested in good faith by appropriate proceedings, reserves in conformity with
GAAP with respect thereto have been provided on the books of such Grantor and
such proceedings could not reasonably be expected to result in the sale,
forfeiture or loss of any material portion of the Collateral or any interest
therein.
5.5 MAINTENANCE OF PERFECTED SECURITY INTEREST; FURTHER DOCUMENTATION.
(a) Such Grantor shall maintain the security interest created by this Agreement
as a perfected security interest having at least the priority described in
Section 4.3 and shall defend such security interest against the claims and
demands of all Persons whomsoever.
(b) Such Grantor will furnish to the Administrative Agent and the
Lenders from time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as the Administrative Agent may reasonably request, all in reasonable
detail.
(c) At any time and from time to time, upon the written request of the
Administrative Agent, and at the sole expense of such Grantor, such Grantor will
promptly and duly execute and deliver, and have recorded, such further
instruments and documents and take such further actions as the Administrative
Agent may reasonably request for the purpose of obtaining or preserving the full
benefits of this Agreement and of the rights and powers herein granted,
including, without limitation, the filing of any financing or continuation
statements under the Uniform Commercial Code (or other similar laws) in effect
in any jurisdiction with respect to the security interests created hereby.
5.6 CHANGES IN LOCATIONS, NAME, ETC. Such Grantor will not, except
upon 15 days' prior written notice to the Administrative Agent and delivery to
the Administrative Agent of (a) all additional executed financing statements and
other documents reasonably requested by the Administrative Agent to maintain the
validity, perfection and priority of the security interests provided
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13
for herein and (b) if applicable, a written supplement to SCHEDULE 5 showing any
additional location at which Inventory or Equipment shall be kept:
(i) permit any of the Inventory or Equipment to be kept at a location
other than those listed on SCHEDULE 5;
(ii) change the location of its chief executive office or sole place
of business from that referred to in Section 4.4; or
(iii) change its name, identity or corporate structure to such an
extent that any financing statement filed by the Administrative Agent in
connection with this Agreement would become misleading.
5.7 NOTICES. Such Grantor will advise the Administrative Agent and
the Lenders promptly, in reasonable detail, of:
(a)any Lien (other than security interests created hereby or Liens
permitted under the Credit Agreement) on any of the Collateral which would
adversely affect the ability of the Administrative Agent to exercise any of its
remedies hereunder; and
(b)of the occurrence of any other event which could reasonably be
expected to have a material adverse effect on the aggregate value of the
Collateral or on the security interests created hereby.
5.8 PLEDGED SECURITIES. (a) If such Grantor shall become entitled to
receive or shall receive any stock certificate (including, without limitation,
any certificate representing a stock dividend or a distribution in connection
with any reclassification, increase or reduction of capital or any certificate
issued in connection with any reorganization), option or rights in respect of
the Capital Stock of any Issuer, whether in addition to, in substitution of, as
a conversion of, or in exchange for, any shares of the Pledged Stock, or
otherwise in respect thereof, such Grantor shall accept the same as the agent of
the Administrative Agent and the Lenders, hold the same in trust for the
Administrative Agent and the Lenders and deliver the same forthwith to the
Administrative Agent in the exact form received, duly indorsed by such Grantor
to the Administrative Agent, if required, together with an undated stock power
covering such certificate duly executed in blank by such Grantor and with, if
the Administrative Agent so requests, signature guaranteed, to be held by the
Administrative Agent, subject to the terms hereof, as additional collateral
security for the Obligations, PROVIDED that the foregoing shall not require any
Grantor to so deliver any such Capital Stock of any Issuer which is a Foreign
Subsidiary if, as a result thereof, the Capital Stock of such Foreign Subsidiary
pledged hereunder would exceed 65% of all Capital Stock of such Foreign
Subsidiary. Any sums paid upon or in respect of the Pledged Securities upon the
liquidation or dissolution of any Issuer shall be paid over to the
Administrative Agent to be held by it hereunder as additional collateral
security for the Obligations, and in case any distribution of capital shall be
made on or in respect of the Pledged Securities or any property shall be
distributed upon or with respect to the Pledged Securities pursuant to the
recapitalization or reclassification of the capital of any Issuer or pursuant to
the reorganization thereof, the property so distributed shall, unless otherwise
subject to a perfected security interest in favor of the Administrative Agent,
be delivered to the Administrative Agent to be held by it hereunder as
additional collateral security for the Obligations. If any sums of money or
property so paid or distributed in respect of the
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14
Pledged Securities shall be received by such Grantor, such Grantor shall, until
such money or property is paid or delivered to the Administrative Agent, hold
such money or property in trust for the Lenders, segregated from other funds of
such Grantor, as additional collateral security for the Obligations.
(b) Without the prior written consent of the Administrative Agent,
such Grantor will not (i) vote to enable, or take any other action to permit,
any Issuer to issue any stock or other equity securities of any nature or to
issue any other securities convertible into or granting the right to purchase or
exchange for any stock or other equity securities of any nature of any Issuer,
(ii) sell, assign, transfer, exchange, or otherwise dispose of, or grant any
option with respect to, the Pledged Securities or Proceeds thereof (except
pursuant to a transaction expressly permitted by the Credit Agreement), (iii)
create, incur or permit to exist any Lien or option in favor of, or any claim of
any Person with respect to, any of the Pledged Securities or Proceeds thereof,
or any interest therein, except for the security interests created by this
Agreement or (iv) enter into any agreement or undertaking restricting the right
or ability of such Grantor or the Administrative Agent to sell, assign or
transfer any of the Pledged Securities or Proceeds thereof.
(c) In the case of each Grantor which is an Issuer, such Issuer agrees
that (i) it will be bound by the terms of this Agreement relating to the Pledged
Securities issued by it and will comply with such terms insofar as such terms
are applicable to it, (ii) it will notify the Administrative Agent promptly in
writing of the occurrence of any of the events described in Section 5.8(a) with
respect to the Pledged Securities issued by it and (iii) the terms of Section
6.3(c) shall apply to it, MUTATIS MUTANDIS, with respect to all actions that may
be required of it pursuant to Section 6.3(c) with respect to the Pledged
Securities issued by it.
5.9 RECEIVABLES. (a) Other than in the ordinary course of business
consistent with its past practice, such Grantor will not (i) grant any extension
of the time of payment of any Receivable, (ii) compromise or settle any
Receivable for less than the full amount thereof, (iii) release, wholly or
partially, any Person liable for the payment of any Receivable, (iv) allow any
credit or discount whatsoever on any Receivable or (v) amend, supplement or
modify any Receivable in any manner that could adversely affect the value
thereof.
(b) Such Grantor will deliver to the Administrative Agent a copy of
each material demand, notice or document received by it that questions or calls
into doubt the validity or enforceability of more than 5% of the aggregate
amount of the then outstanding Receivables.
5.10 INTELLECTUAL PROPERTY. (a) Such Grantor (either itself or
through licensees) will (i) continue to use each material Trademark on each and
every trademark class of goods applicable to its current line as reflected in
its current catalogs, brochures and price lists in order to maintain such
Trademark in full force free from any claim of abandonment for non-use, (ii)
maintain as in the past the quality of products and services offered under such
Trademark, (iii) use such Trademark with any appropriate notice of registration
and all other notices and legends required by applicable Requirements of Law,
(iv) not adopt or use any mark which is confusingly similar or a colorable
imitation of such Trademark unless the Administrative Agent, for the ratable
benefit of the Lenders, shall obtain a perfected security interest in such mark
pursuant to this Agreement, and (v) not (and not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act whereby such
Trademark may become invalidated or impaired in any way.
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15
(b) Such Grantor (either itself or through licensees) will not do any
act, or omit to do any act, whereby any material Patent may become forfeited,
abandoned or dedicated to the public.
(c) Such Grantor (either itself or through licensees) (i) will employ
each material Copyright and (ii) will not (and will not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act whereby any
material portion of such Copyrights may become invalidated or otherwise
impaired. Such Grantor will not (either itself or through licensees) do any act
whereby any material portion of such Copyrights may fall into the public domain.
(d) Such Grantor (either itself or through licensees) will not do any
act that knowingly uses any material Intellectual Property to infringe the
intellectual property rights of any other Person.
(e) Such Grantor will notify the Administrative Agent and the Lenders
immediately if it knows, or has reason to know, that any application or
registration relating to any material Intellectual Property may become
forfeited, abandoned or dedicated to the public, or of any adverse determination
or development (including, without limitation, the institution of, or any such
determination or development in, any proceeding in the United States Patent and
Trademark Office, the United States Copyright Office or any court or tribunal in
any country) regarding such Grantor's ownership of, or the validity of, any
material Intellectual Property or such Grantor's right to register the same or
to own and maintain the same.
(f) Whenever such Grantor, either by itself or through any agent,
employee, licensee or designee, shall file an application for the registration
of any Intellectual Property with the United States Patent and Trademark Office,
the United States Copyright Office or any similar office or agency in any State
of the United States, such Grantor shall report such filing to the
Administrative Agent within five Business Days after the last day of the fiscal
quarter in which such filing occurs. Upon request of the Administrative Agent,
such Grantor shall execute and deliver, and have recorded, any and all
agreements, instruments, documents, and papers as the Administrative Agent may
reasonably request to evidence the Administrative Agent's and the Lenders'
security interest in any Copyright, Patent or Trademark and the goodwill and
general intangibles of such Grantor relating thereto or represented thereby.
(g) Such Grantor will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the United States Patent
and Trademark Office, the United States Copyright Office or any similar office
or agency in any State of the United States, to maintain and pursue each
application (and to obtain the relevant registration) and to maintain each
registration of the material Intellectual Property, including, without
limitation, filing of applications for renewal, affidavits of use and affidavits
of incontestability.
(h) In the event that any material Intellectual Property is infringed,
misappropriated or diluted by a third party, such Grantor shall (i) take such
actions as such Grantor shall reasonably deem appropriate under the
circumstances to protect such Intellectual Property and (ii) if such
Intellectual Property is of material economic value, promptly notify the
Administrative Agent after it learns thereof and sue for infringement,
misappropriation or dilution, to seek injunctive relief where appropriate and to
recover any and all damages for such infringement, misappropriation or dilution.
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SECTION 6. REMEDIAL PROVISIONS
6.1 CERTAIN MATTERS RELATING TO RECEIVABLES. (a) The Administrative
Agent shall have the right to make test verifications of the Receivables in any
manner and through any medium that it reasonably considers advisable, and each
Grantor shall furnish all such assistance and information as the Administrative
Agent may require in connection with such test verifications. At any time and
from time to time (but not more frequently than once per fiscal quarter), upon
the Administrative Agent's request and at the expense of the relevant Grantor,
such Grantor shall cause independent public accountants or others satisfactory
to the Administrative Agent to furnish to the Administrative Agent reports
showing reconciliations, aging and test verifications of, and trial balances
for, the Receivables.
(b) The Administrative Agent hereby authorizes each Grantor to collect
such Grantor's Receivables, subject to the Administrative Agent's direction and
control, and the Administrative Agent may curtail or terminate said authority at
any time and only at any time after the occurrence and during the continuance of
an Event of Default. If required by the Administrative Agent at any time after
the occurrence and during the continuance of an Event of Default, any payments
of Receivables, when collected by any Grantor, (i) shall be forthwith (and, in
any event, within two Business Days) deposited by such Grantor in the exact form
received, duly indorsed by such Grantor to the Administrative Agent if required,
in a Collateral Account maintained under the sole dominion and control of the
Administrative Agent, subject to withdrawal by the Administrative Agent for the
account of the Lenders only as provided in Section 6.5, and (ii) until so turned
over, shall be held by such Grantor in trust for the Administrative Agent and
the Lenders, segregated from other funds of such Grantor. Each such deposit of
Proceeds of Receivables shall be accompanied by a report identifying in
reasonable detail the nature and source of the payments included in the deposit.
(c) At the Administrative Agent's request, at any time after the
occurrence and during the continuance of an Event of Default, each Grantor shall
deliver to the Administrative Agent all original and other documents evidencing,
and relating to, the agreements and transactions which gave rise to the
Receivables, including, without limitation, all original orders, invoices and
shipping receipts.
6.2 COMMUNICATIONS WITH OBLIGORS; GRANTORS REMAIN LIABLE. (a) The
Administrative Agent in its own name or in the name of others may at any time
after the occurrence and during the continuance of an Event of Default
communicate with obligors under the Receivables to verify with them to the
Administrative Agent's satisfaction the existence, amount and terms of any
Receivables.
(b) Upon the request of the Administrative Agent at any time after the
occurrence and during the continuance of an Event of Default, each Grantor shall
notify obligors on the Receivables that the Receivables have been assigned to
the Administrative Agent for the ratable benefit of the Lenders and that
payments in respect thereof shall be made directly to the Administrative Agent.
(c) Anything herein to the contrary notwithstanding, each Grantor
shall remain liable under each of the Receivables to observe and perform all the
conditions and obligations to be observed and performed by it thereunder, all in
accordance with the terms of any agreement giving rise thereto. Neither the
Administrative Agent nor any Lender shall have any obligation or liability under
any Receivable (or any agreement giving rise thereto) by reason of or arising
out of this Agreement or the receipt by the Administrative Agent or any Lender
of any payment relating thereto, nor shall the Administrative Agent or any
Lender be obligated in any manner to perform any of the obligations of
<PAGE>
17
any Grantor under or pursuant to any Receivable (or any agreement giving rise
thereto), to make any payment, to make any inquiry as to the nature or the
sufficiency of any payment received by it or as to the sufficiency of any
performance by any party thereunder, to present or file any claim, to take any
action to enforce any performance or to collect the payment of any amounts which
may have been assigned to it or to which it may be entitled at any time or
times.
6.3 PLEDGED STOCK. (a) Unless an Event of Default shall have occurred
and be continuing and the Administrative Agent shall have given notice to the
relevant Grantor of the Administrative Agent's intent to exercise its
corresponding rights pursuant to Section 6.3(b), each Grantor shall be permitted
to receive all cash dividends paid in respect of the Pledged Stock and all
payments made in respect of the Pledged Notes, in each case paid in the normal
course of business of the relevant Issuer and consistent with past practice, to
the extent permitted in the Credit Agreement, and to exercise all voting and
corporate rights with respect to the Pledged Securities; PROVIDED, HOWEVER, that
no vote shall be cast or corporate right exercised or other action taken which,
in the Administrative Agent's reasonable judgment, would impair the Collateral
or which would be inconsistent with or result in any violation of any provision
of the Credit Agreement, this Agreement or any other Loan Document.
(b) If an Event of Default shall occur and be continuing and the
Administrative Agent shall give notice of its intent to exercise such rights to
the relevant Grantor or Grantors, (i) the Administrative Agent shall have the
right to receive any and all cash dividends, payments or other Proceeds paid in
respect of the Pledged Securities and make application thereof to the
Obligations in such order as the Credit Agreement shall prescribe, and (ii) any
or all of the Pledged Securities shall be registered in the name of the
Administrative Agent or its nominee, and the Administrative Agent or its nominee
may thereafter exercise (x) all voting, corporate and other rights pertaining to
such Pledged Securities at any meeting of shareholders of the relevant Issuer or
Issuers or otherwise and (y) any and all rights of conversion, exchange and
subscription and any other rights, privileges or options pertaining to such
Pledged Securities as if it were the absolute owner thereof (including, without
limitation, the right to exchange at its discretion any and all of the Pledged
Securities upon the merger, consolidation, reorganization, recapitalization or
other fundamental change in the corporate structure of any Issuer, or upon the
exercise by any Grantor or the Administrative Agent of any right, privilege or
option pertaining to such Pledged Securities, and in connection therewith, the
right to deposit and deliver any and all of the Pledged Securities with any
committee, depositary, transfer agent, registrar or other designated agency upon
such terms and conditions as the Administrative Agent may determine), all
without liability except to account for property actually received by it, but
the Administrative Agent shall have no duty to any Grantor to exercise any such
right, privilege or option and shall not be responsible for any failure to do so
or delay in so doing.
(c) Each Grantor hereby authorizes and instructs each Issuer of any
Pledged Securities pledged by such Grantor hereunder to comply with any
instruction received by it from the Administrative Agent in writing that (i)
states that an Event of Default has occurred and is continuing and (ii) is
otherwise in accordance with the terms of this Agreement, without any other or
further instructions from such Grantor, and each Grantor agrees that each Issuer
shall be fully protected in so complying.
6.4 PROCEEDS TO BE TURNED OVER TO ADMINISTRATIVE AGENT. In addition
to the rights of the Administrative Agent and the Lenders specified in Section
6.1 with respect to payments of
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Receivables, if an Event of Default shall occur and be continuing, all Proceeds
received by any Grantor consisting of cash, checks and other near-cash items
shall be held by such Grantor in trust for the Administrative Agent and the
Lenders, segregated from other funds of such Grantor, and shall, forthwith upon
receipt by such Grantor, be turned over to the Administrative Agent in the exact
form received by such Grantor (duly indorsed by such Grantor to the
Administrative Agent, if required). All Proceeds received by the Administrative
Agent hereunder shall be held by the Administrative Agent in a Collateral
Account maintained under its sole dominion and control. All Proceeds while held
by the Administrative Agent in a Collateral Account (or by such Grantor in trust
for the Administrative Agent and the Lenders) shall continue to be held as
collateral security for all the Obligations and shall not constitute payment
thereof until applied as provided in Section 6.5.
6.5 APPLICATION OF PROCEEDS. At such intervals as may be agreed upon
by the Company and the Administrative Agent, or, if an Event of Default shall
have occurred and be continuing, at any time at the Administrative Agent's
election, the Administrative Agent may apply all or any part of Proceeds held in
any Collateral Account in payment of the Obligations in such order as the Credit
Agreement prescribes, and any part of such funds which the Credit Agreement does
not require to be applied in payment of the Obligations and which Administrative
Agent deems not required as collateral security for the Obligations shall be
paid over from time to time by the Administrative Agent to the Company or to
whomsoever may be lawfully entitled to receive the same. Any balance of such
Proceeds remaining after the Obligations shall have been paid in full, no
Letters of Credit shall be outstanding and the Commitments shall have terminated
shall be paid over to the Company or to whomsoever may be lawfully entitled to
receive the same.
6.6 CODE AND OTHER REMEDIES. If an Event of Default shall occur and
be continuing, the Administrative Agent, on behalf of the Lenders, may exercise,
in addition to all other rights and remedies granted to them in this Agreement
and in any other instrument or agreement securing, evidencing or relating to the
Obligations, all rights and remedies of a secured party under the New York UCC
or any other applicable law. Without limiting the generality of the foregoing,
the Administrative Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon any Grantor or any other Person
(all and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith sell,
lease, assign, give option or options to purchase, or otherwise dispose of and
deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, at any
exchange, broker's board or office of the Administrative Agent or any Lender or
elsewhere upon such terms and conditions as it may deem advisable and at such
prices as it may deem best, for cash or on credit or for future delivery without
assumption of any credit risk. The Administrative Agent or any Lender shall
have the right upon any such public sale or sales, and, to the extent permitted
by law, upon any such private sale or sales, to purchase the whole or any part
of the Collateral so sold, free of any right or equity of redemption in any
Grantor, which right or equity is hereby waived and released. Each Grantor
further agrees, at the Administrative Agent's request, to assemble the
Collateral and make it available to the Administrative Agent at places which the
Administrative Agent shall reasonably select, whether at such Grantor's premises
or elsewhere. The Administrative Agent shall apply the net proceeds of any
action taken by it pursuant to this Section 6.6, after deducting all reasonable
costs and expenses of every kind incurred in connection therewith or incidental
to the care or safekeeping of any of the Collateral or in any way relating to
the Collateral or the rights of the Administrative Agent
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19
and the Lenders hereunder, including, without limitation, reasonable attorneys'
fees and disbursements, to the payment in whole or in part of the Obligations,
in such order as the Credit Agreement shall prescribe, and only after such
application and after the payment by the Administrative Agent of any other
amount required by any provision of law, including, without limitation, Section
9-504(1)(c) of the New York UCC, need the Administrative Agent account for the
surplus, if any, to any Grantor. To the extent permitted by applicable law,
each Grantor waives all claims, damages and demands it may acquire against the
Administrative Agent or any Lender arising out of the exercise by them of any
rights hereunder. If any notice of a proposed sale or other disposition of
Collateral shall be required by law, such notice shall be deemed reasonable and
proper if given at least 10 Business Days before such sale or other disposition.
6.7 PRIVATE SALES. (a) Each Grantor recognizes that the
Administrative Agent may be unable to effect a public sale of any or all the
Pledged Stock, by reason of certain prohibitions contained in the Securities Act
and applicable state securities laws or otherwise, and may be compelled to
resort to one or more private sales thereof to a restricted group of purchasers
which will be obliged to agree, among other things, to acquire such securities
for their own account for investment and not with a view to the distribution or
resale thereof. Each Grantor acknowledges and agrees that any such private sale
may result in prices and other terms less favorable than if such sale were a
public sale and, notwithstanding such circumstances, agrees that any such
private sale shall be deemed to have been made in a commercially reasonable
manner. The Administrative Agent shall be under no obligation to delay a sale
of any of the Pledged Stock for the period of time necessary to permit the
Issuer thereof to register such securities for public sale under the Securities
Act, or under applicable state securities laws, even if such Issuer would agree
to do so.
(b) Each Grantor agrees to use its best efforts to do or cause to be
done all such other acts as may be necessary to make such sale or sales of all
or any portion of the Pledged Stock pursuant to this Section 6.7 valid and
binding and in compliance with any and all other applicable Requirements of Law.
Each Grantor further agrees that a breach of any of the covenants contained in
this Section 6.7 will cause irreparable injury to the Administrative Agent and
the Lenders, that the Administrative Agent and the Lenders have no adequate
remedy at law in respect of such breach and, as a consequence, that each and
every covenant contained in this Section 6.7 shall be specifically enforceable
against such Grantor, and such Grantor hereby waives and agrees not to assert
any defenses against an action for specific performance of such covenants except
for a defense that no Event of Default has occurred under the Credit Agreement.
6.8 WAIVER; DEFICIENCY. Each Grantor waives and agrees not to assert
any rights or privileges which it may acquire under Section 9-112 of the New
York UCC. Each Grantor shall remain liable for any deficiency if the proceeds
of any sale or other disposition of the Collateral are insufficient to pay its
Obligations and the fees and disbursements of any attorneys employed by the
Administrative Agent or any Lender to collect such deficiency.
SECTION 7. THE ADMINISTRATIVE AGENT
7.1 ADMINISTRATIVE AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT, ETC. (a)
Each Grantor hereby irrevocably constitutes and appoints the Administrative
Agent and any officer or agent thereof, with full power of substitution, as its
true and lawful attorney-in-fact with full irrevocable power and
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20
authority in the place and stead of such Grantor and in the name of such Grantor
or in its own name, for the purpose of carrying out the terms of this Agreement,
to take any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this Agreement, and, without limiting the generality of the foregoing, each
Grantor hereby gives the Administrative Agent the power and right, on behalf of
such Grantor, without notice to or assent by such Grantor, to do any or all of
the following:
(i) in the name of such Grantor or its own name, or otherwise, take
possession of and indorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
Receivable or with respect to any other Collateral and file any claim or
take any other action or proceeding in any court of law or equity or
otherwise reasonably deemed appropriate by the Administrative Agent for the
purpose of collecting any and all such moneys due under any Receivable or
with respect to any other Collateral whenever payable;
(ii) in the case of any Intellectual Property, execute and deliver,
and have recorded, any and all agreements, instruments, documents and
papers as the Administrative Agent may reasonably request to evidence the
Administrative Agent's and the Lenders' security interest in such
Intellectual Property and the goodwill and general intangibles of such
Grantor relating thereto or represented thereby;
(iii) pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, effect any repairs or any insurance
called for by the terms of this Agreement and pay all or any part of the
premiums therefor and the costs thereof;
(iv) execute, in connection with any sale provided for in Section 6.6
or 6.7, any indorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral; and
(v) (1) direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Administrative Agent or as the Administrative
Agent shall direct;(2) ask or demand for, collect, and receive payment of
and receipt for, any and all moneys, claims and other amounts due or to
become due at any time in respect of or arising out of any Collateral;(3)
sign and indorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection with any of the
Collateral;(4) commence and prosecute any suits, actions or proceedings at
law or in equity in any court of competent jurisdiction to collect the
Collateral or any portion thereof and to enforce any other right in respect
of any Collateral;(5) defend any suit, action or proceeding brought against
such Grantor with respect to any Collateral;(6) settle, compromise or
adjust any such suit, action or proceeding and, in connection therewith,
give such discharges or releases as the Administrative Agent may deem
appropriate;(7) assign any Copyright, Patent or Trademark (along with the
goodwill of the business to which any such Copyright, Patent or Trademark
pertains), throughout the world for such term or terms, on such conditions,
and in such manner, as the Administrative Agent shall in its sole
discretion determine; and (8) generally, sell, transfer, pledge and make
any agreement with respect to or otherwise deal with any of the Collateral
as fully and completely as though the Administrative Agent were the
absolute owner thereof for all purposes, and do, at the Administrative
Agent's option and such
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21
Grantor's expense, at any time, or from time to time, all acts and things
which the Administrative Agent reasonably deems necessary to protect,
preserve or realize upon the Collateral and the Administrative Agent's and
the Lenders' security interests therein and to effect the intent of this
Agreement, all as fully and effectively as such Grantor might do.
Anything in this Section 7.1(a) to the contrary notwithstanding, the
Administrative Agent agrees that it will not exercise any rights under the power
of attorney provided for in this Section 7.1(a) unless an Event of Default shall
have occurred and be continuing.
(b) If any Grantor fails to perform or comply with any of its
agreements contained herein, the Administrative Agent, at its option, but
without any obligation so to do, may perform or comply, or otherwise cause
performance or compliance, with such agreement.
(c) The expenses of the Administrative Agent incurred in connection
with actions undertaken as provided in this Section 7.1, together with interest
thereon at a rate per annum equal to the rate per annum at which interest would
then be payable on past due Revolving Credit Loans that are ABR Loans under the
Credit Agreement, from the date of payment by the Administrative Agent to the
date reimbursed by the relevant Grantor, shall be payable by such Grantor to the
Administrative Agent on demand.
(d) Each Grantor hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof. All powers, authorizations
and agencies contained in this Agreement are coupled with an interest and are
irrevocable until this Agreement is terminated and the security interests
created hereby are released.
7.2 DUTY OF ADMINISTRATIVE AGENT. The Administrative Agent's sole
duty with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the New York UCC or
otherwise, shall be to deal with it in the same manner as the Administrative
Agent deals with similar property for its own account. Neither the
Administrative Agent, any Lender nor any of their respective officers,
directors, employees or agents shall be liable for failure to demand, collect or
realize upon any of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon the
request of any Grantor or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof. The powers
conferred on the Administrative Agent and the Lenders hereunder are solely to
protect the Administrative Agent's and the Lenders' interests in the Collateral
and shall not impose any duty upon the Administrative Agent or any Lender to
exercise any such powers. The Administrative Agent and the Lenders shall be
accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of their officers, directors,
employees or agents shall be responsible to any Grantor for any act or failure
to act hereunder, except for their own gross negligence or willful misconduct.
7.3 EXECUTION OF FINANCING STATEMENTS. Pursuant to Section 9-402 of
the New York UCC and any other applicable law, each Grantor authorizes the
Administrative Agent to file or record financing statements and other filing or
recording documents or instruments with respect to the Collateral without the
signature of such Grantor in such form and in such offices as the Administrative
Agent reasonably determines appropriate to perfect the security interests of the
Administrative Agent under this Agreement. A photographic or other reproduction
of this Agreement shall be sufficient as a
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financing statement or other filing or recording document or instrument for
filing or recording in any jurisdiction.
7.4 AUTHORITY OF ADMINISTRATIVE AGENT. Each Grantor acknowledges that
the rights and responsibilities of the Administrative Agent under this Agreement
with respect to any action taken by the Administrative Agent or the exercise or
non-exercise by the Administrative Agent of any option, voting right, request,
judgment or other right or remedy provided for herein or resulting or arising
out of this Agreement shall, as between the Administrative Agent and the
Lenders, be governed by the Credit Agreement and by such other agreements with
respect thereto as may exist from time to time among them, but, as between the
Administrative Agent and the Grantors, the Administrative Agent shall be
conclusively presumed to be acting as agent for the Lenders with full and valid
authority so to act or refrain from acting, and no Grantor shall be under any
obligation, or entitlement, to make any inquiry respecting such authority.
SECTION 8. MISCELLANEOUS
8.1 AMENDMENTS IN WRITING. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except by a
written instrument executed by each affected Grantor and the Administrative
Agent, PROVIDED that any provision of this Agreement imposing obligations on any
Grantor may be waived by the Administrative Agent in a written instrument
executed by the Administrative Agent of the Credit Agreement.
8.2 NOTICES. All notices, requests and demands to or upon the
Administrative Agent or any Grantor hereunder shall be effected in the manner
provided for in subsection 14.2 of the Credit Agreement; PROVIDED that any such
notice, request or demand to or upon any Guarantor shall be addressed to such
Guarantor at its notice address set forth on SCHEDULE 1.
8.3 NO WAIVER BY COURSE OF CONDUCT; CUMULATIVE REMEDIES. Neither the
Administrative Agent nor any Lender shall by any act (except by a written
instrument pursuant to Section 8.1), delay, indulgence, omission or otherwise be
deemed to have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default. No failure to exercise, nor any delay in
exercising, on the part of the Administrative Agent or any Lender, any right,
power or privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Administrative Agent or any Lender of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Administrative Agent or such Lender would otherwise
have on any future occasion. The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive of any
other rights or remedies provided by law.
8.4 ENFORCEMENT EXPENSES; INDEMNIFICATION. (a) Each Guarantor agrees
to pay or reimburse each Lender and the Administrative Agent for all its costs
and expenses incurred in collecting against such Guarantor under the guarantee
contained in Section 2 or otherwise enforcing or preserving any rights under
this Agreement and the other Loan Documents to which such Guarantor is a party,
including, without limitation, the fees and disbursements of counsel to each
Lender and of counsel to the Administrative Agent.
<PAGE>
23
(b) Each Guarantor agrees to pay, and to save the Administrative Agent
and the Lenders harmless from, any and all liabilities with respect to, or
resulting from any delay in paying, any and all stamp, excise, sales or other
taxes which may be payable or determined to be payable with respect to any of
the Collateral or in connection with any of the transactions contemplated by
this Agreement.
(c) Each Guarantor agrees to pay, and to save the Administrative Agent
and the Lenders harmless from, any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever with respect to the execution, delivery,
enforcement, performance and administration of this Agreement to the extent the
Borrower would be required to do so pursuant to subsection 15.5 of the Credit
Agreement.
(d) The agreements in this Section 8.4 shall survive repayment of the
Obligations and all other amounts payable under the Credit Agreement and the
other Loan Documents.
8.5 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
successors and assigns of each Grantor and shall inure to the benefit of the
Administrative Agent and the Lenders and their successors and assigns; PROVIDED
that no Grantor may assign, transfer or delegate any of its rights or
obligations under this Agreement without the prior written consent of the
Administrative Agent.
8.6 SET-OFF. Each Grantor hereby irrevocably authorizes the
Administrative Agent and each Lender at any time and from time to time while an
Event of Default shall have occurred and be continuing, without notice to such
Grantor or any other Grantor, any such notice being expressly waived by each
Grantor, to set-off and appropriate and apply any and all deposits (general or
special, time or demand, provisional or final), in any currency, and any other
credits, indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by the Administrative Agent or such Lender to or for the credit or the
account of such Grantor, or any part thereof in such amounts as the
Administrative Agent or such Lender may elect, against and on account of the
obligations and liabilities of such Grantor to the Administrative Agent or such
Lender hereunder and claims of every nature and description of the
Administrative Agent or such Lender against such Grantor, in any currency,
whether arising hereunder, under the Credit Agreement, any other Loan Document
or otherwise, as the Administrative Agent or such Lender may elect, whether or
not the Administrative Agent or any Lender has made any demand for payment and
although such obligations, liabilities and claims may be contingent or
unmatured. The Administrative Agent and each Lender shall notify such Grantor
promptly of any such set-off and the application made by the Administrative
Agent or such Lender of the proceeds thereof, PROVIDED that the failure to give
such notice shall not affect the validity of such set-off and application. The
rights of the Administrative Agent and each Lender under this Section 8.6 are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) which the Administrative Agent or such Lender may have.
8.7 COUNTERPARTS. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
8.8 SEVERABILITY. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such
<PAGE>
24
prohibition or unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
8.9 SECTION HEADINGS. The Section headings used in this Agreement are
for convenience of reference only and are not to affect the construction hereof
or be taken into consideration in the interpretation hereof.
8.10 INTEGRATION. This Agreement and the other Loan Documents
represent the agreement of the Grantors, the Administrative Agent and the
Lenders with respect to the subject matter hereof and thereof, and there are no
promises, undertakings, representations or warranties by the Administrative
Agent or any Lender relative to subject matter hereof and thereof not expressly
set forth or referred to herein or in the other Loan Documents.
8.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
8.12 SUBMISSION TO JURISDICTION; WAIVERS. Each Grantor hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which
it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the Courts of
the State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to such
Grantor at its address referred to in Section 8.2 or at such other address
of which the Administrative Agent shall have been notified pursuant
thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to
in this Section any consequential damages.
<PAGE>
25
8.13 ACKNOWLEDGEMENTS. Each Grantor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents to which it is a
party;
(b) neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to any Grantor arising out of or in connection
with this Agreement or any of the other Loan Documents, and the
relationship between the Grantors, on the one hand, and the Administrative
Agent and Lenders, on the other hand, in connection herewith or therewith
is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among
the Lenders or among the Grantors and the Lenders.
8.14 WAIVER OF JURY TRIAL. EACH GRANTOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
8.15 ADDITIONAL GRANTORS. Each Subsidiary of the Borrower that is
required to become a party to this Agreement pursuant to subsection 10.9 of the
Credit Agreement shall become a Grantor for all purposes of this Agreement upon
execution and delivery by such Subsidiary of an Assumption Agreement in the form
of Annex 1 hereto.
8.16 JUDGMENT. (a) If for the purpose of obtaining judgment in any
court it is necessary to convert a sum due hereunder in one currency into
another currency, the parties hereto agree, to the fullest extent that they may
effectively do so, that the rate of exchange used shall be that at which in
accordance with normal banking procedures the Administrative Agent could
purchase the first currency with such other currency in the city in which it
normally conducts its foreign exchange operation for the first currency on the
Business Day preceding the day on which final judgment is given.
(b) The obligation of each Grantor in respect of any sum due from it
to the Administrative Agent or any Lender hereunder shall, notwithstanding any
judgment in a currency (the "JUDGMENT CURRENCY") other than that in which such
sum is denominated in accordance with the applicable provisions of the Loan
Documents (the "AGREEMENT CURRENCY"), be discharged only to the extent that on
the Business Day following receipt by the Administrative Agent or such Lender of
any sum adjudged to be so due in the Judgment Currency, the Administrative Agent
or such Lender may in accordance with normal banking procedures purchase the
Agreement Currency with the Judgment Currency; if the amount of Agreement
Currency so purchased is less than the sum originally due to such Lender in the
Agreement Currency, such Grantor agrees notwithstanding any such judgment to
indemnify such Lender against such loss, and if the amount of the Agreement
Currency so purchased exceeds the sum originally due to the Administrative Agent
or any Lender the Administrative Agent or, such Lender agrees to remit to such
Borrower such excess.
<PAGE>
26
8.17 RELEASES. (a) At such time as the Loans, the Reimbursement
Obligations and the other Obligations shall have been paid in full, the
Commitments have been terminated and no Letters of Credit shall be outstanding,
the Collateral shall be released from the Liens created hereby, and this
Agreement and all obligations (other than those expressly stated to survive such
termination) of the Administrative Agent and each Grantor hereunder shall
terminate, all without delivery of any instrument or performance of any act by
any party, and all rights to the Collateral shall revert to the Grantors. At
the request and sole expense of any Grantor following any such termination, the
Administrative Agent shall deliver to such Grantor any Collateral held by the
Administrative Agent hereunder, and execute and deliver to such Grantor such
documents as such Grantor shall reasonably request to evidence such termination.
(b) If any of the Collateral shall be sold, transferred or otherwise
disposed of by any Grantor in a transaction permitted by the Credit Agreement,
then the Administrative Agent, at the request and sole expense of such Grantor,
shall execute and deliver to such Grantor all releases or other documents
reasonably necessary or desirable for the release of the Liens created hereby on
such Collateral. At the request and sole expense of the Company, a Subsidiary
Guarantor shall be released from its obligations hereunder in the event that all
the Capital Stock of such Subsidiary Guarantor shall be sold, transferred or
otherwise disposed of in a transaction permitted by the Credit Agreement;
PROVIDED that the Company shall have delivered to the Administrative Agent, at
least ten Business Days prior to the date of the proposed release, a written
request for release identifying the relevant Subsidiary Guarantor and the terms
of the sale or other disposition in reasonable detail, including the price
thereof and any expenses in connection therewith, together with a certification
by the Company stating that such transaction is in compliance with the Credit
Agreement and the other Loan Documents.
<PAGE>
27
IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee
and Collateral Agreement to be duly executed and delivered as of the date first
above written.
ANACOMP, INC.
By: /s/ Gary Bilsland
-------------------------
Title: Assistant Treasurer
THE FIRST NATIONAL BANK OF CHICAGO, as
Administrative Agent
By: /s/ Larry Cooper
-------------------------
Title: First Vice President
<PAGE>
State of New York )
)SS.
County of New York )
On the 28th day of February, 1997, before me personally came
GARY BILSLAND to me known, who, being by me duly sworn, did depose and say s/he
resides at _______________________________________; that s/he is ASST. TREASURER
of Anacomp, Inc., the corporation described in and which executed the foregoing
instrument; that by order of the Board of Directors of said corporation s/he
signed his/her name.
/S/ Sarah L. Morris
-------------------------
Notary Public
(NOTARY STAMP)
<PAGE>
SCHEDULE 1
NOTICE ADDRESSES OF GUARANTORS
None.
<PAGE>
SCHEDULE 2
DESCRIPTION OF PLEDGED SECURITIES
Pledged Stock:
<TABLE>
<CAPTION>
CLASS OF STOCK CERTIFICATE NO. OF
ISSUER STOCK NO. SHARES
- --------------------------------------------------------------- ------------- ------------------- ------------
<S> <C> <C> <C>
Anacomp Holdings Limited....................................... Ordinary 9, 13, 15 427
Anacomp S.A.................................................... N/A N/A 227,652
Xidex GmbH..................................................... Common N/A 3,592,160
Florida AAC Corporation........................................ Common 1 1,000
</TABLE>
Pledged Notes:
<TABLE>
<CAPTION>
ISSUER PAYEE PRINCIPAL AMOUNT
- --------------------------------------------------------- ---------------- ----------------
<S> <C> <C>
Michael J. Morse (promissory note)....................... Anacomp, Inc. $ 112,448.98
Com-Lease (promissory notes and security agreements)..... Anacomp, Inc. $ 1,899,562.00
</TABLE>
<PAGE>
SCHEDULE 3
FILINGS AND OTHER ACTIONS
REQUIRED TO PERFECT SECURITY INTERESTS
UNIFORM COMMERCIAL CODE FILINGS
-------------------------------
Arizona Secretary of State
Maricopa County, Arizona
Pima County, Arizona
California Secretary of State
Alameda County, California
Los Angeles County, California
Orange County, California
San Diego County, California
San Francisco County, California
Santa Clara County, California
Yolo County, California
Colorado Secretary of State
Denver County, Colorado
Connecticut Secretary of State
Town of Stratford, Connecticut
Town of East Hartford, Connecticut
Delaware Secretary of State
Kent County, Delaware
Florida Secretary of State
Dade County, Florida
<PAGE>
Duval County, Florida
Glades County, Florida
Hillsborough County, Florida
Orange County, Florida
Fulton County, Georgia
Georgia Secretary of State
Illinois Secretary of State
Cook County, Illinois
Indiana Secretary of State
Eckhart County, Indiana
Hamilton County, Indiana
Marion County, Indiana
Iowa Secretary of State
Polk County, Iowa
Kansas Secretary of State
Wyandotte County, Kansas
Kentucky Secretary of State
Fayette County, Kentucky
Jefferson County, Kentucky
Maryland Department of Assessments and Taxation
Montgomery County, Maryland
Massachusetts Secretary of the Commonwealth
Town of Marlborough, Massachusetts
Town of Medford, Massachusetts
Town of Pepperell, Massachusetts
2
<PAGE>
Town of South Hadley, Massachusetts
Michigan Secretary of State
Ingham County, Michigan
Oakland County, Michigan
Wayne County, Michigan
Minnesota Secretary of State
Hennepin County, Minnesota
Missouri Secretary of State
City of St. Louis, Missouri
Mississippi Secretary of State
Lee County, Mississippi
Nebraska Secretary of State
Douglas County, Nebraska
Nevada Secretary of State
Clark County, Nevada
New Jersey Secretary of State
Camden County, New Jersey Register of Deeds & Mortgages
Essex County, New Jersey County Clerk
Hudson County, New Jersey
Hunterdon County, New Jersey County Clerk
Middlesex County, New Jersey County Clerk
Morris County, New Jersey County Clerk
3
<PAGE>
New Mexico Secretary of State
Bernalillo County, New Mexico
New York Secretary of State
Monroe County, New York
Nassau County, New York
New York County, New York
North Carolina Secretary of State
Guilford County, North Carolina
Wake County, North Carolina
Union County, North Carolina
Ohio Secretary of State
Cuyahoga County, Ohio
Erie County, Ohio
Franklin County, Ohio
Hamilton County, Ohio
Oregon Secretary of State
Washington County, Oregon
Pennsylvania Secretary of the Commonwealth
Allegheny County, Pennsylvania, Prothonotary
Delaware County, Pennsylvania
South Carolina Secretary of State
Richland County, South Carolina
Tennessee Secretary of State
Macon County, Tennessee
4
<PAGE>
Texas Secretary of State
Dallas County, Texas
Farrors County, Texas
Harris County, Texas
Hunt County, Texas
Young County, Texas
Utah Secretary of State
Salt Lake County, Utah
Virginia Office of State Corporation Commission
Port William County, Virginia
Washington Department of Licensing
King County, Washington
Wisconsin Secretary of State
Waukesha County, Wisconsin
PATENT AND TRADEMARK FILINGS
U.S. Patent & Trademark Office
ACTIONS WITH RESPECT TO PLEDGED STOCK
Anacomp Holdings Limited (U.K.)
THE PLEDGE IN FAVOR OF THE BANK OF NEW YORK MUST BE RELEASED. To create
an equitable charge over the pledged shares in favor of the Administrative
Agent for the ratable
5
<PAGE>
benefit of the Lenders, the share certificates along with a stock transfer
form must be delivered to the Administrative Agent.
Anacomp S.A. (France)
THE BANK OF NEW YORK MUST EXECUTE A STATEMENT OF RELEASE OF PLEDGE. After
the Guarantee and Collateral Agreement is signed, an officer of Anacomp Inc.
must execute a Statement of Pledge. Upon receipt of the duly executed Statement
of Release of Pledge and the Statement of Pledge, Anacomp S.A. must issue a
Pledge Statement and record the new pledge in the official register of transfer
of shares as well as in the individual shareholders' accounts. The board of
directors of Anacomp S.A. must pass resolutions authorizing the pledge and
authorizing persons to execute the documents necessary to effect the
transaction.
Xidex GmbH (Germany)
The pledge in favor of The Bank of New York must be released; thus, The Bank
of New York must execute a Release. To perfect a pledge of stock of a German
limited liability company, a German pledge agreement (a notarial deed) must be
executed in Germany before a German notary. This notarial deed can be signed by
German attorneys who have been granted powers of attorney to sign on behalf of
Anacomp Inc. and the Administrative Agent.
OTHER ACTIONS
None.
6
<PAGE>
SCHEDULE 4
LOCATION OF JURISDICTION OF ORGANIZATION
AND CHIEF EXECUTIVE OFFICE
<TABLE>
<CAPTION>
JURISDICTION OF
GRANTOR ORGANIZATION LOCATION OF CHIEF EXECUTIVE OFFICE
- ------------------------------------------ ------------------------- ------------------------------------------
<S> <C> <C>
Anacomp, Inc. 11550 North Meridian Street P.O. Box 40888
Indiana Indianapolis, IN 46240
</TABLE>
<PAGE>
SCHEDULE 5
LOCATION OF INVENTORY AND EQUIPMENT
STREET ADDRESS
OF PROPERTY COUNTY
- -------------------------------- -----------
1121 West Grant Road Pima
Suite 407
Tucson, AZ 85705
11075 Knott Avenue Orange
Suites A, B & C
Cypress, CA 90630
1290 B Street Alameda
Suite 201
Hayward, CA 94541
12365 Crosthwaite Circle San Diego
Poway, CA 92064
1150 Folsom Street San Francisco
San Francisco, CA 94103-3997
1235 Midas Way Santa Clara
Sunnyvale, CA 94086
1282 Reamwood Santa Clara
Sunnyvale, CA 94088
1242 Kifer Road Santa Clara
Sunnyvale, CA 94086
21111 Oxnard Street Los Angeles
Woodland Hills, CA 91367
7808 Cherry Creek So Drive Denver
Suite 205
Denver, CO 80231
100 Prestige Park Road Hartford
East Hartford, CT 06108-1988
<PAGE>
300 Long Beach Blvd. Fairfield
Stratford, CT 06497
2709 Art Museum Drive, #4 Duval
Jacksonville, FL 32207
14505 Commerce Way Dade
Suite 800
Miami Lakes, FL 33016
7121 Grand National Drive Orange
Suites 106, 107, 108
Orlando, FL 32819-8384
4920 West Cypress Street Hillsborough
Suite 108
Tampa, FL 33607-3802
2115 Monroe Drive NE Fulton
Atlanta, GA 30324-4832
715 Algonquin Road Cook
Suite 101
Arlington Heights, IL 60005-4418
717 West Algonquin Road Cook
Arlington Heights, IL 60005
640 N. LaSalle Street Cook
Chicago, IL 60610
11550 North Meridian St. Hamilton
5th & 6th Floor
Carmel, IN 46032
6281 Hillsdale Court Marion
Building #3
Indianapolis, IN 46250
6821 Hillsdale Court Marion
Building 3--Suite B
Indianapolis, IN 46250
1318 Adams Street Wyandotte
Kansas City, KS 66103
2
<PAGE>
1051-H Newton Pike Fayette
Lexington, KY 40511
The Fincastle Building Jefferson
303 West Broadway
Louisville, KY 40202-2105
12120-A Plum Orchard Dr. Montgomery
Silver Spring, MD 20904
5 Mount Royal Avenue Middlesex
Marlborough, MA 01752
200 Boston Avenue Middlesex
Medford, MA 02155
27 Maple Street Middlesex
Pepperell, MA 01463
So Hadley Industrial Park Hampshire
17 Industrial Drive
South Hadley, MA 01075
23399 Commerce Drive Oakland
Suite B-8
Farmington Hills, MI 48335
2520 Pilot Knob Road Hennepin
Suite 300
Minneapolis, MN 55120
602 2nd Avenue Hennepin
Suite B-93D, B-95, B-90
Minneapolis, MN 55402
1815 Belt Way Drive Ind. City
St. Louis, MO 63114-5815
55 Eagle Rock Avenue Morris
E Hanover, NJ 07936
105 Newfield Avenue Middlesex
Raritan Center
Edison, NJ 08837
3
<PAGE>
300 Cooper Center Camden
7905 Browning Rd.,
#300 Pennsauken, NJ 08109-4204
2415 Princeton Drive Bernalillo
NE Suite B & I
Albuquerque, NM 87107-1701
4335 Industrial Road Clark
#440
Las Vegas, NV 89103
85 Denton Avenue Nassau
New Hyde Park, NY 11040
57 Chambers Street New York
New York, NY 10007-1015
222 Broadway New York
24th Floor
New York, NY 10038
3495 Winton Place Monroe
Bldg. E Ste. 5
Rochester, NY 14609
7815 National Service Rd., 606 Guilford
Greensboro, NC 27409
6118 St. Giles Street Wake
Suite D
Raleigh, NC 27612-2604
1100 Resource Drive Cuyahoga
Brooklyn Heights, OH 44131-0000
1155 Western Avenue Hamilton
Cincinnati, OH 45203-1174
1150 Dublin Road Franklin
Suite A
Columbus, OH 43215
12060 S.W. Garden Place Washington
Tigard, OR 97223-0000
4
<PAGE>
2020 Ardmore Blvd. Allegheny
Suite 325
Pittsburgh, PA 15221-4637
1715 Fourth Street Young
Graham, TX 76450
1715A Fourth Street Young
Graham, TX 76450
2214 Paddock Way Drive Dallas
Suite 200
Grand Prairie, TX 75050-0000
6767 Portwest Drive Harris
Suite 190
Houston, TX 77024
1288 West 2240 South Salt Lake
Suite A
Salt Lake City, UT 84119
2414 S.W. Andover St. King
Suite 100
Seattle, WA 98106
<PAGE>
SCHEDULE 6
COPYRIGHTS AND COPYRIGHTS LICENSES
COPYRIGHTS
Anacomp does not own any federally-registered copyrights, nor is it a
licensee under any federally registered copyrights, except to the extent that
IBM and/or Xerox have licensed to Anacomp such companies' copyrights in the
software products that are licensed to Anacomp or described above under
"Trademark Licenses."
Anacomp does, on a routine basis, affix a copyright notice on all of its
operating and diagnostic software products; operating, user and maintenance
manuals; form agreements and contracts; advertising, sales and promotional
literature and materials; and other creative works.
COPYRIGHT LICENSES
See "Copyrights" above.
<PAGE>
SCHEDULE 6 CONT'D
PATENTS AND PATENT LICENSES
ANACOMP, INC. ISSUED PATENTS AND PENDING APPLICATIONS
<TABLE>
<CAPTION>
PATENT NO. TITLE ISSUED
- ---------- ------------------------------------------------------------------------------------------ ---------
<C> <S> <C>
4,079,296 Variable Speed AC Motor Control -Expires 03/14/95 03/14/78
4,084,212 Corona Charging Unit for Microfiche Reader/Printer--Expires 04/11/95 04/11/78
4,105,312 Carriage Mechanism for Microfiche Beam Cathode Ray Tube--Expires 08/15/95 08/08/78
4,107,582 Character Selector for a Shaped Beam Cathode Ray Tube--Expires 08/15/95 08/15/78
4,111,537 Optical Structure for Microfiche Reader--Expires 09/05/95 09/05/78
4,122,234 Article Employing A Heat Hardenable Liquid Film Forming Composition with Articles
Dispersed Therein and Method for Making Same--Expires 10/24/95 10/24/78
4,123,699 Vertically Scanning Microfilm Reader and Reader Printer--Expires 10/31/95 10/31/78
4,130,352 Portable Microfiche Reader With Foldup Lens and Mirror Assembly -Expires 12/19/96 12/19/78
4,141,640 Method and Apparatus for Developing Microfilm--Expires 02/27/96 02/27/79
4,148,582 Programmable Microfiche Duplicator and Sorter Apparatus--Expires 02/27/96 04/10/79
4,152,156 Duplication-Proof Photographic Film - Expires 05/01/96 05/01/79
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
PATENT NO. TITLE ISSUED
- ---------- ------------------------------------------------------------------------------------------ ---------
<C> <S> <C>
4,156,978 Microfiche Carrier--Expires 06/05/96 06/05/79
4,157,870 Exposure Station--Expires 06/12/96 06/12/79
4,165,160 Lamp Assembly and Power Module for Fanless Microfiche Reader--Expires 08/21/96 08/21/79
4,167,310 Lamp Assembly and Power Module for Fanless Microfiche Reader--Expires 09/11/96 09/11/79
4,169,675 Microfiche Duplicator--Expires 10/02/96 10/02/79
4,217,039 Microfiche Viewer with Rotatable Base--Expires 08/12/97 08/12/80
4,242,819 Microfiche Carrier Assembly -Expires 01/06/98 01/06/81
4,247,184 Magnetic Indexing System for Microfilm Reader--Expires 01/27/98 01/27/81
4,257,180 Microfiche Viewer--Expires 03/24/98 03/24/81
4,268,135 Image Focusing Apparatus--Expires 05/19/98 05/19/81
4,283,136 Microfiche Reader-Printer Having Multi-Format Capabilities--Expires 08/11/98 08/11/81
4,287,564 Method of Correcting for Misalignment of Microfiche Frames -Expires 09/01/98 09/01/81
4,289,396 Microfiche Reader Printer with Interchangeable Carriages--Expires 09/15/98 09/15/81
4,290,734 Rigid Disc Handling Device and Method--Expires 09/22/98 09/22/81
4,306,007 Process of Making and Using Fade-Resistant Diazo Microfilm--Expires 12/15/98 12/15/81
4,320,943 Carriage Support Arrangement for a Microfiche Reader--Expires 03/23/99 03/23/82
4,334,742 Microfiche Reader Assembly and Method--Expires 06/15/99 06/15/82
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
PATENT NO. TITLE ISSUED
- ---------- ------------------------------------------------------------------------------------------ ---------
<C> <S> <C>
4,334,743 Optical Arrangement for Use in Microfiche Reader and Method -Expires 06/15/99 06/15/82
4,337,994 Linear Beam Scanning Apparatus Especially Suitable for Recording Data on Light Sensitive
Film -Expires 07/06/99 07/06/82
4,339,181 Lens Arrangement for Microfiche Reader Assembly and Method -Expires 07/13/99 07/13/82
4,351,592 Collapsible Microfiche Reader Assembly Especially Suitable for Use in a Desk
Drawer--Expires 07/13/99 07/13/82
4,354,603 Rigid Magnetic Disc Stacker -Expires 10/19/99 10/19/82
4,367,518 Lens System for Microfiche Duplicator--Expires 01/04/00 01/04/83
4,370,689 Flexible Magnetic Recording Medium With Improved Reinforcement Means - Expires 01/25/00 01/25/83
4,385,587 Apparatus for Processing a Flexible Magnetic Recording--Expires 05/31/00 05/31/83
4,508,808 Method of Using Diazotype Photographic Materials (11 yr. Maint. Fee due 10/02/96) 04/02/85
4,555,437 Transparent Ink Jet Recording Media (Tanck Patent) (11 yr. Maint. Fee due 02/26/97) 11/26/85
4,630,427 Prescored Jacket Assembly Apparatus and Method (11 yr. Maint. Fee due 06/23/98) 12/23/86
4,652,961 Micro-Floppy Diskette with Inner Containment System (11 yr. Maint. Fee due 11/24/98) 03/24/87
4,710,691 Process & Apparatus for Characterizing & Controlling a Synchronous Motor in Microstepper
Mode (Maintenance Fee Due 06/01/95) 12/01/87
4,783,685 Reader Printer (Maintenance Fee Due 05/08/96) 11/08/88
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
PATENT NO. TITLE ISSUED
- ---------- ------------------------------------------------------------------------------------------ ---------
<C> <S> <C>
4,975,714 Focusing Mechanism for Linescan Imaging (Maintenance Fee Due 06/04/98) 12/04/90
5,095,320 Focusing Mechanism for Linescan Imaging (Maintenance Fee Due 09/10/95) 03/10/92
5,113,219 Pneumatic Pressure Pad for Cyclical Even Application of Pressure Forces, Particularly for
Contact Duplication of Microfiche (Maintenance Fee Due 11/12/95) 05/12/92
5,140,374 Reader Printer (Maintenance Fee Due 02/18/96) 08/18/92
5,148,208 Disposable Container for Dispensing of Photographic Developing Liquids (Maintenance Fee
Due 03/15/97) 09/15/92
5,153,625 Film Canister to Facilitate Diameter Sensing (Maintenance Fee Due 04/06/96) 10/06/92
5,274,323 Reloadable Canister with Replaceable Film Spool (Foreign Filed)(Maintenance Fee Due
03/21/97) 09/21/93
5,304,462 Composition for and Method of Cleaning Continuous, Nonreplenished Film Developers and
Replenished Film Developers (Maintenance Fee Due 10/19/97) 04/19/94
5,389,992 Reloadable Canister with Replaceable Film Spool (Continuation)(Maintenance Fee Due
08/14/98) 02/14/95
</TABLE>
5
<PAGE>
PATENTS REGISTERED IN THE NAME OF GRAHAM MAGNETICS, INC.,
ACQUIRED BY ANACOMP IN MAY 1994
AND SUBSEQUENTLY MERGED INTO ANACOMP
<TABLE>
<CAPTION>
TITLE S.N. ISSUED PAT. NO.
- --------------------------------------------- --------- --------- ---------
<S> <C> <C> <C>
U.S. 126,396 01/26/82 4,312,896
U.S. CIP 892,984 12/02/80 4,237,506
Cleaning of Self-loaded Tape Cartridges 948,704 07/22/80 4,213,223
(Strap)
U.S. Div. 125,622 02/22/81 4,290,821
Novel Calendar Apparatus 908,644 01/06/81 4,242,954
U.S. Div. 186,517 01/26/82 4,312,898
Improved High Temp Mag. Tape 887,545 02/19/80 4,189,514
Streamline Divisional Appln. Of 070 084,339 05/12/81 4,267,206
Error Testing of Recording Media such as 970,666 03/10/81 4,255,807
Magnetic Tape
Error Locator 486,191 12/23/86 4,631,479
Baffled System 513,770 01/22/85 4,494,878
Bimodal Multi-Track Magnetic Head 171,842 12/18/90 4,979,051
Recording System Having Head Transducers with 171,755 12/04/90 4,975,791
Controlled Skew
</TABLE>
6
<PAGE>
GRAHAM MAGNETICS, INC. PATENTS (continued)
<TABLE>
<CAPTION>
TITLE S.N. ISSUED PAT. NO.
- --------------------------------------------- --------- --------- ---------
<S> <C> <C> <C>
Process for Making Coatings with Improved Awaiting
Winding Characteristics information
Means to Stabilize Operation Characteristics Awaiting
of Belt-Driven Cartridge over Wide information
Temperature Range
Means to Reduce Fluctuations in Tape Speed Awaiting
and Tension in Belt-Driven Cartridge information
Means to Reduce Tension Changes in Awaiting
Belt-Driven Cartridge information
Roll Cleaning Utilizing Laser Abatement Patent search
completed
</TABLE>
7
<PAGE>
ANACOMP, INC. PENDING PATENT APPLICATIONS
<TABLE>
<CAPTION>
TITLE PATENT OR SERIAL NO.
- -------------------------------------------------------- --------------------
<S> <C>
Reloadable Canister with Replaceable Film Spool 5,247,323
Foreign Filed: Canada 2052717
Japan 51701191
EPO Designating Austria; France, Germany, Italy, U.K., 91982329
Netherlands, Switzerland
Reloadable Canister with Replaceable Film Spool 5,389,992
Reloadable Canister with Replaceable Film Spool (Filed 08/387,020
02/10/95 Continuation Application-Abandoned)
(Refiled 08/07/96-Continuation Application) 08/693,951
Digitized Image Reader (Filed 04/02/93) 5,477,343
Continuation-in-part Application (Patent No. 671833)
Foreign Filed: Australia 4132393
Canada 2098693
EPO Designating: Austria; Belgium; Denmark; France; 931097232
Germany; Greece; Italy; Netherlands; Portugal; Spain;
Sweden; Switzerland/ Liechtenstein; United Kingdom
Japan 14661693
Daylight Loadable Film Reel With Overly Wide Leader Not Yet Assigned
Reloadable Film Canister (Acquired from COM Products) 08/589,831
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
TITLE PATENT OR SERIAL NO.
- -------------------------------------------------------- --------------------
<S> <C>
Foreign Filed:
Argentina 337754
Canada 2182447
Chile 138396
European Patent Office 961127313
Finland 963095
Indonesia 962246
Malaysia 9603172
PCT US96/12926
Venezuela 138796
South Africa 966558
</TABLE>
9
<PAGE>
The following U.S. Patents also have the indicated foreign counterparts:
<TABLE>
<CAPTION>
FOREIGN PATENT
COUNTRY TITLE NO.
- ---------------------------------------------- ---------------------------------------------- -----------------
<S> <C> <C>
Canada MICROFICHE READER/PRINTER U.S. No.: 3,899,248 1037104
Canada MICROFICHE READER/PRINTER U.S. No.: 3,898,004 1050098
Canada SELECTOR INTERLOCK FOR MICROFICHE CARTRIDGE
U.S. No.: 4,054,378 1063947
Canada OPTICAL STRUCTURE FOR MICROFICHE READER U.S.
No. 4,111,537 1095298
Canada VERTICALLY SCANNING MICROFILM AND READER/
PRINTER--No. U.S. Patent 1072380
Canada PORTABLE MICROFICHE READER WITH FOLDUP LENS
AND MIRROR ASSEMBLY - U.S. No.: 4,130,352 1097960
Canada MICROFICHE DUPLICATOR WITH COLLIMATED BAFFLED 1099136
LIGHT LENS SYSTEM FOR MICROPHONE DUPLICATOR 1102162
U.S. No.: 4,141,640 1127893
Canada MICROFICHE CARRIER ASSEMBLY -U.S. No.:
4,242,819 1103493
Canada FADE RESISTANT DIAZO MICROFILM Pending
Canada IMAGING FOCUSING APPARATUS U.S. No.: 4,268,135 1128343
Canada MICROFICHE READER PRINTER WITH INTERCHANGEABLE
CARRIAGES U.S. No.: 4,289,396 1140376
</TABLE>
10
<PAGE>
PATENT LICENSES
Tape Cartridge License Agreement (the "DEC License Agreement") dated
effective as of February 1, 1989, between Digital Equipment Corporation ("DEC")
and Anacomp pursuant to which Anacomp is licensed to use DEC patents and
know-how to manufacture TK50/52 data tape cartridges. (DEC has since assigned
the DEC License Agreement to Quantum Corporation.) LICENSE IN.
Patent License Agreement dated effective as of January 1, 1997, between
International Business Machines Corporation ("IBM") and Anacomp pursuant to
which Anacomp is licensed to use IBM patents to manufacture 3480, 3490E and 3590
data tape cartridges. LICENSES IN.
11
<PAGE>
TRADEMARKS AND TRADEMARK LICENSES
GRAHAM MAGNETICS, INC. TRADEMARK REGISTRATIONS
<TABLE>
<CAPTION>
MARK COUNTY NO.
- -------------------------------------- -------------------------------------- --------------
<S> <C> <C>
AH SO DISKA........................... USA 1,264,110
Black/White des....................... USA 1,342,091
COBALOY............................... Japan 2,182,731
COBALOY............................... USA 1,090,159
COBALOY............................... USA 1,165,332
DETECTOR.............................. USA 1,229,015
EPOCH................................. Japan 2,338,676
EPOCH................................. Japan 499,217
EPOCH................................. Mexico 325,269
EPOCH 480............................. Benelux 377,174
EPOCH 480............................. Canada 270,056
EPOCH 480............................. France 1,688,489
EPOCH 480............................. Germany (E) DD 652 416
EPOCH 480............................. Japan 1,759,074
EPOCH 480............................. Switzerland 314,124
EPOCH 480............................. United Kingdom 1,157,948
EPOCH 480............................. USA 1,146,073
EPOCH MTC............................. USA 1,421,767
GMI................................... Benelux 378,001
GMI................................... Canada 271,063
GMI................................... France 1,688,485
GMI................................... France 1,688,488
GMI................................... Japan 2,663,809
GMI................................... Mexico 398,086
GMI................................... Norway 112,415
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
MARK COUNTY NO.
- -------------------------------------- -------------------------------------- --------------
<S> <C> <C>
GMI................................... Switzerland 314,234
GMI................................... United Kingdom B1,157,950
GMI................................... USA 1,253,478
GMI................................... USA 1,354,687
GRAHAM MAGNETICS...................... Benelux 377,175
GRAHAM MAGNETICS...................... Canada 268,751
GRAHAM MAGNETICS...................... France 1,688,487
GRAHAM MAGNETICS...................... Germany (E) DD 652 418
GRAHAM MAGNETICS...................... Germany (W) 1,034,449
GRAHAM MAGNETICS...................... Japan 1,709,644
GRAHAM MAGNETICS...................... Mexico 319,912
GRAHAM MAGNETICS...................... Norway 142,778
GRAHAM MAGNETICS...................... Switzerland 314,125
GRAHAM MAGNETICS...................... United Kingdom B1,160,167
GRAHAM MAGNETICS...................... USA 1,441,854
GRAHAM MAGNETICSE. 480................ Germany (W) 1,059,014
GRAHAM MAGNETICS INS.................. Germany (W) 1,059,015
GRAHAM MAGNETICS INS.................. Switzerland 323,441
GRAHAM MAGNETICS PRO.................. Switzerland 325,014
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
MARK COUNTY NO.
- -------------------------------------- -------------------------------------- --------------
<S> <C> <C>
GRAHAM MAGNETICS
SUMMITT............................. Switzerland 323,471
INSPECTOR............................. Benelux 375,691
INSPECTOR............................. Canada 282,442
INSPECTOR............................. France 1,688,486
INSPECTOR............................. Norway 112,132
INSPECTOR............................. United Kingdom 1,157,949
INSPECTOR............................. USA 1,142,321
PERMA-DISC............................ USA 1,077,314
PROTECTOR............................. Benelux 382,809
PROTECTOR............................. Canada 293,107
PROTECTOR............................. France 1,203,030
PROTECTOR............................. Germany (W) 1,050,582
PROTECTOR............................. United Kingdom B1,174,061
SUMMITT............................... Australia A382,461
SUMMITT............................... Benelux 385,331
SUMMITT............................... Canada 298,710
SUMMITT............................... France 1,215,526
SUMMITT............................... Germany (E) DD 652 417
SUMMITT............................... Germany (W) 1,080,929
SUMMITT............................... Mexico 319,913
SUMMITT............................... United Kingdom 1,183,430
ULTIMAG............................... USA 1,306,847
</TABLE>
ANACOMP, INC. TRADEMARK APPLICATIONS
<TABLE>
<CAPTION>
SERVICE FILING
NUMBER DATE MARK
- ------------ --------- ----------------------------------------------------------------------------------------
<C> <C> <S>
751046357 01/22/96 ALVA & Design (Inventive Approaches To Informations Delivery)
</TABLE>
14
<PAGE>
TRADEMARK LICENSES
Trademark License Agreement dated September 25, 1995, between Anacomp, Inc.
and Hanny International, Inc. ("Hanny") pursuant to which Anacomp licensed to
Hanny and certain of its affiliates the right to use Anacomp's "Precision,"
"Xidex," "Dysan" and "XM2" trademarks on a perpetual basis. LICENSE OUT.
AFP/COM Base Agreement dated June 9, 1994, as amended, between Anacomp, Inc.
and International Business Machines Inc. ("IBM") pursuant to which Anacomp is
granted a limited license to IBM's AFCCU software and COM Unique Software,
LICENSE IN.
XCF Program-Contract AI0001 dated as of October 7, 1992, between Anacomp,
Inc. and Xerox Corporation ("Xerox") pursuant to which Anacomp is granted
limited trademark and software licenses to certain Xerox software and
trademarks. LICENSE IN.
The DEC License Agreement described above under "Patent Licenses" pursuant
to which Anacomp is licensed by Quantum to use the "TK 50" and TK 52"
trademarks. LICENSE IN.
PENDING TRADEMARK LICENSES
Anacomp, Inc. currently has pending with IBM a trademark license agreement
pursuant to which Anacomp is granted a limited, royalty-free license to use
certain IBM trademarks in connection with marketing certain Anacomp products.
LICENSE IN.
15
<PAGE>
Schedule 6
<TABLE>
<CAPTION>
February 11, 1997
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY19602334-4 ANACOMP, INC. ALVA ARGENTINA REG:
MF KP 0000 APP: 2063767
CLT PRIOR JAN 03, 1997
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
NY19602335-5 ANACOMP, INC. ALVA ARGENTINA REG:
MF KP 0000 APP: 2063768
CLT PRIOR JAN 03, 1997
DRT SERVICE MARK REG:
B - BASED ON CLASS(ES): 00035, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY17602181-2 ANACOMP, INC. DATAGRAPHIX ARGENTINA REG: 1229033 MAR 30, 1997
MF LZ 1797 R APP:
CLT PRIOR MAR 30, 1987
DRT REG: 872145
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR RENEWAL DISPATCHED 1996
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003636-5 ANACOMP, INC. DYSAN ARGENTINA REG: 1560030 APR 28, 2005
MF LX 0638 R APP:
CLT PRIOR APR 28, 1995
DRT REG: 1094786
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003758-0 ANACOMP, INC. STORAGEMASTER ARGENTINA REG: 1229469 APR 03, 1997
MF KZ 0302 APP:
CLT PRIOR APR 03, 1987
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR RENEWAL DISPATCHED 1990
L - IF LIC. 1996
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY18903089-4 ANACOMP, INC. ANACOMP AUSTRALIA REG: A526361 JAN 03, 1997
MF LT 8810 APP:
CLT PRIOR JAN 03, 1990
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR A
L - IF LIC.
CR RECEIVED 1997
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY18903090-6 ANACOMP, INC. ANACOMP AUSTRALIA REG: A526363 JAN 03, 1997
MF LT 8482 APP:
CLT PRIOR JAN 03, 1990
DRT SERVICE MARK REG:
B - BASED ON CLASS(ES): 00037, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR A CR RECEIVED
L - IF LIC. 1997
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY15904506-6 ANACOMP, INC. CHARACTRON AUSTRALIA REG: A156424 OCT 13, 2008
MF LV 3684 R APP:
CLT PRIOR OCT 13, 1994
DRT REG: A156424
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY17002416-7 ANACOMP, INC. DATAGRAPHIX AUSTRALIA REG: B275934 FEB 05, 2009
MF LV 8101 R APP:
CLT PRIOR FEB 05, 1995
DRT REG: B275934
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR A
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19000766-5 ANACOMP, INC. DATAGRAPHIX AUSTRALIA REG: A533390 APR 30, 1997
MF LU 4578 APP:
CLT PRIOR APR 30, 1990
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT: CR RECEIVED
A - ASSOC. IF DIFF
O - BASIS FOR A
L - IF LIC. 1997
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY19000779-9 ANACOMP, INC. DATAGRAPHIX AUSTRALIA REG: A564931 OCT 08, 1998
MF LU 9149 APP:
CLT PRIOR OCT 08, 1991
DRT SERVICE MARK REG:
B - BASED ON CLASS(ES): 00037, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR A
L - IF LIC. L
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19000780-1 ANACOMP, INC. DATAGRAPHIX AUSTRALIA REG: A564932 OCT 08, 1998
MF LU 9150 APP:
CLT PRIOR OCT 08, 1991
DRT SERVICE MARK REG:
B - BASED ON CLASS(ES): 00042, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR A
L - IF LIC. L
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19002650-9 ANACOMP, INC. DATAGRAPHIX XFP 2000 AUSTRALIA REG: A548089 DEC 24, 1997
MF LU 5992 R APP:
CLT PRIOR DEC 24, 1990
DRT CLASS(ES): 00009, REG:
B - BASED ON GOODS CODE: SPECIFIC GOODS CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER STAT: 1996
A - ASSOC. A IF DIFF RENEWAL INSTRUCTED
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003617-4 ANACOMP, INC. DYSAN & LOGO AUSTRALIA REG: A402990 JAN 31, 2005
MF LT 4034 R APP:
CLT PRIOR JAN 31, 1991
DRT REG: A402990
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003619-6 ANACOMP, INC. STORAGEMASTER AUSTRALIA REG: A405935 MAR 28, 2005
MF KQ 0500 R APP:
CLT PRIOR MAR 28, 1991
DRT REG: A405935
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-3-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY29000218-8 ANACOMP, INC. XIDEX AUSTRALIA REG: A432121 AUG 22, 2006
MF LV 3079 R APP:
CLT PRIOR AUG 22, 1992
DRT REG: A432121
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT: RECORDAL CHAIN OF
A - ASSOC. IF DIFF TITLE PENDING
O - BASIS FOR
L - IF LIC. 1992
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003612-9 ANACOMP, INC. XIDEX AUSTRALIA REG: A432122 AUG 22, 2006
MF LV 3370 R APP:
CLT PRIOR AUG 22, 1992
DRT REG: A432122
B - BASED ON CLASS(ES): 00042, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR A
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19200097-4 ANACOMP, INC. DATAGRAPHIX XFP 2000 AUSTRIA REG: 142109 MAY 21, 2002
MF LU 0495 APP:
CLT PRIOR MAY 21, 1992
DRT REG:
B - BASED ON CLASS(ES): 00009, 00001, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003623-1 DYSAN CORPORATION DYSAN AUSTRIA REG: 107594APP: DEC 31, 2004
MF LV 9167 DEC 31, 1994
CLT PRIOR
DRT REG: 107594
B - BASED ON CLASS(ES): 00009, 00035, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER 00042, STAT:
A - ASSOC. IF DIFF ANACOMP, IN GOODS CODE: SPECIFIC GOODS
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003622-0 XIDEX CORPORATION (C STORAGEMASTER AUSTRIA REG: 114878 DEC 31, 1996
MF MD 8735 APP:
CLT PRIOR DEC 30, 1986
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT: CR RECEIVED
A - ASSOC. IF DIFF ANACOMP, IN
O - BASIS FOR
L - IF LIC. 1997
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-4-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY18800387-1 ANACOMP, INC. ANACOMP BENELUX REG: 447883 MAR 22, 1998
MF K0 6765 APP:
CLT PRIOR MAR 22, 1988
DRT REG:
B - BASED ON CLASS(ES): 00001, 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER 00016, 00035, +02 STAT:
A - ASSOC. IF DIFF GOODS CODE: SPECIFIC GOODS
O - BASIS FOR
L - IF LIC. L
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY17106692-B ANACOMP, INC. CHARACTRON BENELUX REG: 106657 DEC 31, 1999
MF LS 4440 R APP:
CLT PRIOR DEC 31, 1989
DRT REG: 106657
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY17106693-9 ANACOMP, INC. CHARACTRON BENELUX REG: 110260 DEC 31, 1996
MF KM 9717 R APP:
CLT PRIOR DEC 31, 1986
DRT REG: 110260
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR RENEWAL FILED
L - IF LIC. 1997
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY17106691-7 ANACOMP, INC. DATAGRAPHIX BENELUX REG: 110471 DEC 31, 2000
MF K0 6763 R APP:
CLT PRIOR DEC 31, 1990
DRT REG: 110471
B - BASED ON B CLASS(ES): 00007, 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER 00016, STAT:
A - ASSOC. IF DIFF GOODS CODE: SPECIFIC GOODS
O - BASIS FOR L
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY18800708-8 ANACOMP, INC. DATAGRAPHIX BENELUX REG: 444394 APR 27, 1998
MF K0 6764 APP:
CLT SERVICE MARK PRIOR APR 27, 1988
DRT REG:
B - BASED ON CLASS(ES): 00035, 00036, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER 00037, 00041, +01 STAT:
A - ASSOC. IF DIFF GOODS CODE: SPECIFIC GOODS
O - BASIS FOR
L - IF LIC. L
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-5-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY19002651-0 ANACOMP, INC. DATAGRAPHIX XFP 2000 BENELUX REG: 491054 DEC 21, 2000
MF LT 6218 APP:
CLT PRIOR DEC 21, 1990
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. B OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003616-3 ANACOMP, INC. DYSAN & LOGO BENELUX REG: 376702 NOV 17, 2001
MF LU 0671 R APP:
CLT PRIOR NOV 17, 1991
DRT REG: 376702
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. B OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003653-4 ANACOMP, INC. STORAGEMASTER BENELUX REG: 404679 NOV 26, 2004
MF LV 8341 R APP:
CLT PRIOR NOV 26, 1994
DRT REG: 404679
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19300960-4 ANACOMP, INC. TOTAL MEMORY (STYLIZED) BENELUX REG: 532432 JUN 04, 2003
MF LZ 2110 APP:
CLT PRIOR JUN 04, 1993
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19002643-1 ANACOMP, INC. XFP 2000 BENELUX REG: 490844 DEC 21, 2000
MF LT 6219 APP:
CLT PRIOR DEC 21, 1990
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-6-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY11960176-7 ANACOMP, INC. DATAGRAPHIX BOSNIA-HERZEGOV. REG: 24831 AUG 15, 2000
MF LT 2152 R APP: REVALIDATION
CLT PRIOR Aug 15, 1990 APR 1, 1996
DRT REG: 24831
B - BASED ON CLASS(ES): 00009, 00016, CLT: ANACOMP, INC.-IN
H - HAS DEP. B OWNER GOODS CODE: SPECIFIC GOODS STAT: ACTION FILED
A - ASSOC. IF DIFF 1996
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19602336-6 ANACOMP, INC. ALVA BRAZIL REG:
MF KP 0000 APP: 819783749
CLT PRIOR JAN 09, 1997
DRT REG:
B - BASED ON CLASS(ES): CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER 09.40,09.45,09.55, STAT:
A - ASSOC. IF DIFF GOODS CODE: SPECIFIC GOODS
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19602337-7 ANACOMP, INC. ALVA BRAZIL REG:
MF KP 0000 APP: 819783757
CLT PRIOR JAN 09, 1997
DRT SERVICE MARK REG:
B - BASED ON CLASS(ES): 40.34,40.60,40.65, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY18903091-7 ANACOMP, INC. ANACOMP BRAZIL REG: JAN 28, 2002
MF LU 4617 APP: 815496478
CLT PRIOR JAN 28, 1992
DRT REG:
B - BASED ON CLASS(ES): 09.45,09.55, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY18903092-8 ANACOMP, INC. ANACOMP BRAZIL REG: 815496486 MAR 17, 2002
MF LU 4616 APP:
CLT PRIOR MAR 17, 1992
DRT SERVICE MARK REG:
B - BASED ON CLASS(ES): 37.44,37.45, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-7-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY17602182-3 ANACOMP, INC. DATAGRAPHIX BRAZIL REG: APR 10, 1998
MF LR 9239 R APP: 006663532
CLT PRIOR APR 10, 1988
DRT REG: 1232/0666353
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19002652-1 ANACOMP, INC. DATAGRAPHIX XFP 2000 BRAZIL REG: 816029229 MAY 26, 2002
MF LU 8254 APP:
CLT PRIOR MAY 26, 1992
DRT REG:
B - BASED ON CLASS(ES): CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER 09.40,09.55,09.80, STAT:
A - ASSOC. IF DIFF GOODS CODE: SPECIFIC GOODS
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003637-6 ANACOMP, INC. DYSAN BRAZIL REG: 810895714 FEB 28, 2004
MF LV 8778 R APP:
CLT PRIOR FEB 28, 1994
DRT REG: 810895714
B - BASED ON CLASS(ES): 09.40, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19002644-2 ANACOMP, INC. XFP 2000 BRAZIL REG: 816029210 MAY 26, 2002
MF LU 8255 APP:
CLT PRIOR MAY 26, 1992
DRT REG:
B - BASED ON CLASS(ES): CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER 09.40,09.55,09.80, STAT:
A - ASSOC. IF DIFF GOODS CODE: SPECIFIC GOODS
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19002574-4 ANACOMP, INC. XIDEX PRECISION BRAZIL REG: 816049890 DEC 05, 2005
MF LW 8020 APP:
CLT PRIOR DEC 05, 1995
DRT REG:
B - BASED ON CLASS(ES): 09.40,09.55, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-8-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY19002575-5 ANACOMP, INC. XIDEX STORAGEMASTER BRAZIL REG: 816049904 DEC 05, 2005
MF LW 8019 APP:
CLT PRIOR DEC 05, 1995
DRT REG:
B - BASED ON CLASS(ES): 09.40,09.55, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29102832-3 ANACOMP, INC. XIDEX STYLIZED BRAZIL REG: 810058995 MAR 01, 2003
MF LV 2695 R APP:
CLT PRIOR MAR 01, 1993
DRT REG: 810058995
B - BASED ON CLASS(ES): 09.45, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29102833-4 ANACOMP, INC. XIDEX STYLIZED BRAZIL REG: 811865002 JUL 15, 1996
MF ME 1282 R APP:
CLT PRIOR JUL 15, 1986
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC. RENEWAL FILED 1996
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19602338-8 ANACOMP, INC. ALVA CANADA REG:
MF KP 0000 APP: DISPATCHED
CLT PRIOR
DRT REG:
B - BASED ON CLASS(ES): CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY18800396-1 ANACOMP, INC. ANACOMP CANADA REG: 368518 MAY 11, 2005
MF LS 7297 APP:
CLT PRIOR MAY 11, 1990
DRT REG:
B - BASED ON CLASS(ES): CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC. L
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-9-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY15906149-1 ANACOMP, INC. CHARACTRON CANADA REG: 118160 MAY 20, 2005
MF LS 4088 R APP:
CLT PRIOR MAY 20, 1990
DRT REG: 118160
B - BASED ON CLASS(ES): CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY17002426-8 ANACOMP, INC. DATAGRAPHIX CANADA REG: 226525 MAR 10, 2008
MF KZ 7606 R APP:
CLT PRIOR MAY 10, 1993
DRT REG: 226525
B - BASED ON CLASS(ES): CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC. L
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19002653-2 ANACOMP, INC. DATAGRAPHIX XFP 2000 CANADA REG: 395289 MAR 06, 2007
MF LT 9387 APP:
CLT PRIOR MAR 06, 1992
DRT REG:
B - BASED ON CLASS(ES): CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC. A
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003655-6 DYSAN CORPORATION DYSAN & LOGO CANADA REG: 310413 JAN 10, 2001
MF MD 8768 APP:
CLT PRIOR JAN 10, 1986
DRT REG:
B - BASED ON CLASS(ES): CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF ANACOMP, IN
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19200636-3 ANACOMP, INC. PRECISION STYLIZED CANADA REG: 447294 SEP 08, 2010
MF LW 2881 APP:
CLT PRIOR SEP 08, 1995
DRT REG:
B - BASED ON CLASS(ES): CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC. L
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-10-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY29003656-7 XIDEX CORPORATION (D STORAGEMASTER CANADA REG: 302066 APR 19, 2000
MF MD 8769 R APP:
CLT PRIOR APR 19, 1985
DRT REG:
B - BASED ON CLASS(ES): CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF ANACOMP, I
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19300961-5 ANACOMP, INC. TOTAL MEMORY (STYLIZED) CANADA REG:
MF KP 0000 APP: 730247
CLT PRIOR JUN 03, 1993
DRT REG:
B - BASED ON CLASS(ES): CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19200637-4 ANACOMP, INC. XIDEX CANADA REG: 433154 SEP 09, 2009
MF LV 7382 APP:
CLT PRIOR SEP 09, 1994
DRT REG:
B - BASED ON CLASS(ES): CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR A
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19200638-5 ANACOMP, INC. XIDEX STYLIZED CANADA REG:
MF KP 0000 APP: DISPATCHED
CLT PRIOR
DRT REG:
B - BASED ON CLASS(ES): CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29202183-3
MF KR 4136 R ANACOMP, INC. XIDEX STYLIZED CANADA REG: 245409 MAY 23, 2010
CLT APP:
DRT PRIOR MAY 23, 1995
B - BASED ON REG: 245409
H - HAS DEP. CLASS(ES): CLT: ANACOMP, INC.-GA
A - ASSOC. OWNER GOODS CODE: SPECIFIC GOODS STAT:
O - BASIS FOR IF DIFF
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-11-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY18301234-8 ANACOMP, INC. AUTOCOM CHILE REG: 415801 NOV 04, 2003
MF LZ 2291 R APP:
CLT PRIOR NOV 04, 1993
DRT REG: 276854
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY18201256-1 ANACOMP, INC. DATAGRAPHIX CHILE REG: 401755 FEB 10, 2003
MF LV 0208 R APP:
CLT PRIOR FEB 10, 1993
DRT REG: 268702
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003671-4 ANACOMP, INC. DYSAN CHILE REG: 400812 JAN 22, 2003
MF LV 2884 APP:
CLT PRIOR JAN 22, 1993
DRT REG: 266332
B - BASED ON CLASS(ES): 00007, 00009 CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT: RECORDAL CHAIN OF
A - ASSOC. IF DIFF TITLE PENDING 1992
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY89400023-2 ANACOMP, INC. DYSAN CHILE REG: 400813 JAN 22, 2003
MF LV 2883 APP:
CLT PRIOR JAN 22, 1993
DRT SERVICE MARK REG: 266332
B - BASED ON CLASS(ES): 00040, 00042, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT: RECORDAL CHAIN OF
A - ASSOC. IF DIFF TITLE PENDING 1992
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003672-5 ANACOMP, INC. DYSAN CORPORATION & LOGO CHILE REG: 400814 JAN 22, 2003
MF LV 2886 APP:
CLT PRIOR JAN 22, 1993
DRT REG: 266272
B - BASED ON CLASS(ES): 00007, 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT: RECORDAL CHAIN OF
A - ASSOC. IF DIFF TITLE PENDING 1992
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-12-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY89400024-3 ANACOMP, INC. DYSAN CORPORATION & LOGO CHILE REG: 400815 JAN 22, 2003
MF LV 2885 APP:
CLT PRIOR JAN 22, 1993
DRT SERVICE MARK REG: 266272
B - BASED ON CLASS(ES): 00040, 00042, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT: RECORDAL CHAIN O 1992
A - ASSOC. IF DIFF TITLE PENDING
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003642-2 ANACOMP, INC. DYSAN TAIWAN (R.O.C.) REG: 206302 FEB 28, 2003
MF LV 0163 R APP:
CLT PRIOR MAR 01, 1993
DRT REG: 206302
B - BASED ON CLASS(ES): 00080, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003678-1 ANACOMP, INC. STORAGEMASTER TAIWAN (R.O.C.) REG: 307576 NOV 30, 2005
MF LX 0486 R APP:
CLT PRIOR DEC 01, 1995
DRT REG: 307576
B - BASED ON CLASS(ES): 00080, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY17901117-3 ANACOMP, INC. CHARACTRON CHINA (PEOP. R.) REG: 184913 JUL 04, 2003
MF LV 9118 R APP:
CLT PRIOR JUL 05, 1993
DRT REG: 184913
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY17901116-2 ANACOMP, INC. DATAGRAPHIX CHINA (PEOP. R.) REG: 184914 JUL 04, 2003
MF LV 9119 R APP:
CLT PRIOR JUL 05, 1993
DRT REG: 184914
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-13-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY19400801-9 ANACOMP, INC. DYSAN CHINA (PEOP. R.) REG: 838494 MAY 13, 2006
MF LW 7268 APP:
CLT PRIOR MAY 14, 1996
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19400802-0 ANACOMP, INC. DYSAN IN STYLIZED FORM CHINA (PEOP. R.) REG: 838492 MAY 13, 2006
MF LW 8754 APP:
CLT PRIOR MAY 14, 1996
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19400803-1 ANACOMP, INC. DYSAN IN STYLIZED FORM WITH CHINA (PEOP. R.) REG: 838493 MAY 13, 2006
MF LW 8756 CHINESE CHARACTERS APP:
CLT PRIOR MAY 14, 1996
DRT REG:
B - BASED ON CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER CLASS(ES): 00009, STAT:
A - ASSOC. IF DIFF GOODS CODE: SPECIFIC GOODS
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19601982-2 ANACOMP, INC. STORAGEMASTER CHINA (PEOP. R.) REG: 960122609
MF KP 0000 APP:
CLT PRIOR NOV 05, 1996
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003679-2 ANACOMP, INC. STORAGEMASTER CHINA (PEOP. R.) REG: 274199 JAN 09, 1997
MF KR 1967 R APP:
CLT PRIOR JAN 10, 1987
DRT REG:
B - BASED ON CLASS(ES): 00016, CLT: ANACOMP, INC.-GA 1997
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT: RENEWAL FILED
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-14-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY19602339-9 ANACOMP, INC. ALVA COLOMBIA REG:
MF KP 0000 APP: 96067442
CLT PRIOR DEC 24, 1996
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19602340-1 ANACOMP, INC. ALVA COLOMBIA REG:
MF KP 0000 APP: 96067444
CLT PRIOR DEC 24, 1996
DRT SERVICE MARK REG:
B - BASED ON CLASS(ES): 00035, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003629-7 XIDEX CORPORATION (D DYSAN COLOMBIA REG: 108942 MAY 29, 2000
MF LW 1736 R APP:
CLT PRIOR MAY 29, 1990
DRT SERVICE MARK REG: 108942
B - BASED ON CLASS(ES): 00042, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF ANACOMP, IN
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003630-9 XIDEX CORPORATION (D DYSAN COLOMBIA REG: 108947 MAY 16, 2000
MF LW 1738 R APP:
CLT PRIOR MAY 16, 1990
DRT SERVICE MARK REG: 108947
B - BASED ON CLASS(ES): 00040, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF ANACOMP, IN
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003631-0 XIDEX CORPORATION (C DYSAN COLOMBIA REG: 109031 MAY 29, 2000
MF LV 7420 R APP:
CLT PRIOR MAY 29, 1990
DRT REG: 109031
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF ANACOMP, IN
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-15-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY29003632-1 XIDEX CORPORATION (D DYSAN COLOMBIA REG: 109002 MAY 29, 2000
MF LW 1737 R APP:
CLT PRIOR MAY 29, 1990
DRT REG: 109002
B - BASED ON CLASS(ES): 00007, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: STAT:
A - ASSOC. IF DIFF ANACOMP, IN
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003625-3 XIDEX CORPORATION (C DYSAN & LOGO COLOMBIA REG: 109030 JUN 13, 2000
MF LW 9219 R APP:
CLT PRIOR JUN 13, 1990
DRT SERVICE MARK REG: 109030
B - BASED ON CLASS(ES): 00042, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF ANACOMP, IN
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003626-4 XIDEX CORPORATION (C DYSAN & LOGO COLOMBIA REG: 108973 JUN 13, 2000
MF LV 3121 APP:
CLT PRIOR JUN 13, 1990
DRT SERVICE MARK REG: 108973
B - BASED ON CLASS(ES): 00040, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF ANACOMP, IN
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003627-5 XIDEX CORPORATION (D DYSAN & LOGO COLOMBIA REG: 109525 JUN 13, 2000
MF LW 1739 R APP:
CLT PRIOR JUN 13, 1990
DRT REG: 109525
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF ANACOMP, IN
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003628-6 XIDEX CORPORATION (C DYSAN & LOGO COLOMBIA REG: 109526 JUN 13, 1990
MF MD 8741 JUN 13, 1985
CLT PRIOR
DRT REG:
B - BASED ON CLASS(ES): 00007, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: STAT: INSUFFICIENT DAT 1997
A - ASSOC. IF DIFF ANACOMP, IN CR RECEIVED 1996
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-16-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY19602341-2 ANACOMP, INC. ALVA COMMUNITY TM REG:
MF KP 0000 APP:
CLT PRIOR
DRT REG: 1996
B - BASED ON OWNER CLASS(ES): 00009, 00035, CLT: ANACOMP, INC.-GA
H - HAS DEP. IF DIFF GOODS CODE: SPECIFIC GOODS STAT: UNDISPATCHED
A - ASSOC.
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003683-7 ANACOMP, INC. DYSAN COSTA RICA REG: 61597/9676 DEC 15, 2002
MF LW 0250 R APP:
CLT PRIOR DEC 15, 1992
DRT REG: 61597
B - BASED ON OWNER CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. IF DIFF GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC.
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY11192372-2 ANACOMP, INC. DATAGRAPHIX CROATIA REG: Z930816 AUG 15, 2000
MF LW 9081 R APP:
CLT PRIOR AUG 15, 1990
DRT REG:
B - BASED ON B CLASS(ES): 00009, 00016, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY18903093-9 ANACOMP, INC. ANACOMP DENMARK REG: 1864/1991 MAR 29, 2001
MF LT 4778 APP:
CLT PRIOR MAR 29, 1991
DRT REG:
B - BASED ON OWNER CLASS(ES): 00009, 00037, CLT: ANACOMP, INC.-IN
H - HAS DEP. IF DIFF GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC.
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19000169-2 ANACOMP, INC. CHARACTRON DENMARK REG: 3969/1991 JUN 28, 2001
MF LT 6066 APP:
CLT PRIOR JUN 28, 1991
DRT REG:
B - BASED ON OWNER CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. IF DIFF GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC.
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-17-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY17602183-4 ANACOMP, INC. DATAGRAPHIX DENMARK REG: 1187/1977 MAR 25, 1997
MF KN 9599 R APP:
CLT PRIOR MAR 25, 1987
DRT REG: 1187/1977
B - BASED ON OWNER CLASS(ES): 00009, 00016, CLT: ANACOMP, INC.-IN
H - HAS DEP. IF DIFF GOODS CODE: SPECIFIC GOODS STAT: RENEWAL FILED 1997
A - ASSOC.
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19002654-3 ANACOMP, INC. DATAGRAPHIX XFP 2000 DENMARK REG: VR 08.228/199 SEP 04, 2002
MF LU 4169 APP:
CLT PRIOR SEP 04, 1992
DRT REG:
B - BASED ON OWNER CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. IF DIFF GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC.
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003657-8 ANACOMP, INC. DYSAN & LOGO DENMARK REG: 2392-82 JUL 09, 2002
MF LZ 1276 R APP:
CLT PRIOR JUL 09, 1992
DRT REG: 2932-82
B - BASED ON OWNER CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. IF DIFF GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC.
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003658-9 ANACOMP, INC. STORAGEMASTER DENMARK REG: 4008-1987 DEC 11, 1997
MF KK 9772 R APP:
CLT PRIOR DEC 11, 1987
DRT REG:
B - BASED ON OWNER CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. IF DIFF GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC.
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
EGYPT
NY29003687-1 ANACOMP, INC. DYSAN & LOGO REG: 66368 NOV 02, 1995
MF MD 8800 PRIOR APP:
CLT REG: NOV 02, 1985
DRT CLT: ANACOMP, INC.-GA
B - BASED ON OWNER CLASS(ES): 00009, STAT:RECORDAL CHAIN OF
H - HAS DEP. IF DIFF GOODS CODE: SPECIFIC GOODS TITLE PENDING 1996
A - ASSOC. RENEWAL FILED 1995
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-18-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY19102751-2 ANACOMP, INC. ANACOMP FINLAND REG: 126390 MAY 21, 2003
MF LU 6866 APP:
CLT PRIOR MAY 21, 1993
DRT REG:
B - BASED ON OWNER CLASS(ES): 00009, 00037, CLT: ANACOMP, INC.-IN
H - HAS DEP. IF DIFF GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC.
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY17602184-5 ANACOMP, INC. DATAGRAPHIX FINLAND REG: 73900 JUL 07, 2000
MF LS 7357 R APP:
CLT PRIOR JUL 07, 1990
DRT REG: 73900
B - BASED ON OWNER CLASS(ES): 00009, 00016, CLT: ANACOMP, INC.-IN
H - HAS DEP. IF DIFF GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC.
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19200098-5 ANACOMP, INC. DATAGRAPHIX XFP 2000 FINLAND REG: 127783 SEP 06, 2003
MF LV 0253 APP:
CLT PRIOR SEP 06, 1993
DRT REG:
B - BASED ON OWNER CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. IF DIFF GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC.
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003659-0 ANACOMP, INC. DYSAN CORPORATION & LOGO FINLAND REG: 95699 AUG 21, 1996
MF MD 8772 APP:
CLT PRIOR AUG 21, 1986
DRT REG:
B - BASED ON OWNER CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. IF DIFF GOODS CODE: SPECIFIC GOODS STAT: RECORDAL CHAIN OF 1996
A - ASSOC. TITLE PENDING 1996
O - BASIS FOR RENEWAL FILED
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY18800388-2 ANACOMP, INC. ANACOMP FRANCE REG: 1458143 MAR 29, 1998
MF KZ 7048 APP:
CLT PRIOR MAR 30, 1988
DRT REG:
B - BASED ON OWNER CLASS(ES): 00001, 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. IF DIFF 00016, 00035, + 02, STAT:
A - ASSOC. GOODS CODE: SPECIFIC GOODS
O - BASIS FOR
L - IF LIC. L
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-19-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY15904508-8 ANACOMP, INC. CHARACTRON FRANCE REG: 1259504 FEB 02, 2004
MF LV 3056 R APP:
CLT PRIOR FEB 03, 1994
DRT REG: 1259504
B - BASED ON OWNER CLASS(ES): 00006, 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. IF DIFF GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC.
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY17002418-9 ANACOMP, INC. DATAGRAPHIX FRANCE REG: 1597844 JUN 18, 2000
MF LT 2406 R APP:
CLT PRIOR JUN 19, 1990
DRT REG: 1144565
B - BASED ON OWNER CLASS(ES): 00007, 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. IF DIFF 00016, 00042, STAT:
A - ASSOC. GOODS CODE: SPECIFIC GOODS
O - BASIS FOR
L - IF LIC. L
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY18800709-9 ANACOMP, INC. DATAGRAPHIX FRANCE REG: 1549848 MAY 10, 1998
MF LS 9574 APP:
CLT PRIOR MAY 11, 1988
DRT SERVICE MARK REG:
B - BASED ON OWNER CLASS(ES): 00035, 00037, CLT: ANACOMP, INC.-IN
H - HAS DEP. IF DIFF 00041, 00042, STAT:
A - ASSOC. GOODS CODE: SPECIFIC GOODS
O - BASIS FOR
L - IF LIC. L
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19002655-4 ANACOMP, INC. DATAGRAPHIX XFP 2000 FRANCE REG: 1637311 JAN 07, 2001
MF LT 4532 APP:
CLT PRIOR JAN 08, 1991
DRT CLASS(ES): 00009, REG:
B - BASED ON OWNER GOODS CODE: SPECIFIC GOODS CLT: ANACOMP, INC.-IN
H - HAS DEP. IF DIFF STAT:
A - ASSOC.
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29102878-3 ANACOMP, INC. DYSAN & LOGO FRANCE REG: 1709577 SEP 22, 2001
MF ME 1398 R APP:
CLT PRIOR SEP 23, 1991
DRT REG: 1182499
B - BASED ON OWNER CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. IF DIFF GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC.
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-20-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY29003459-8 ANACOMP, INC. KALVAR DESIGN FRANCE REG: 1585819 APR 09, 2000
MF KQ 0822 R APP:
CLT PRIOR APR 10, 1990
DRT REG: 1146679
B - BASED ON OWNER CLASS(ES): 00001,00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. IF DIFF GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC.
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003688-2 ANACOMP, INC. MICRON FRANCE REG: 1206331 JUN 10, 2002
MF LV 0721 R APP:
CLT PRIOR JUN 11, 1992
DRT REG: 1206331
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003689-3 ANACOMP, INC. PRECISION XIDEX FRANCE REG: 1226225 FEB 01, 2003
MF LU 7112 R APP:
CLT PRIOR FEB 02, 1993
DRT REG: 1226225
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF.
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003462-2 ANACOMP, INC. STORAGEMASTER FRANCE REG: 1259845 FEB 06, 2004
MF LV 6445 R APP:
CLT PRIOR FEB 07, 1994
DRT REG: 1259845
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF.
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19300962-6 ANACOMP, INC. TOTAL MEMORY (STYLIZED) FRANCE REG: 93473272 JUN 21, 2003
MF LV 0254 APP:
CLT PRIOR JUN 22, 1993
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF.
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-21-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY19002645-3 ANACOMP, INC. XFP 2000 FRANCE REG: 1637314 JAN 07, 2001
MF LT 4531 APP:
CLT PRIOR JAN 08, 1991
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF.
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY18800389-3 ANACOMP, INC. ANACOMP GERMANY REG: 1136631 MAR 24, 1998
MF LR 8346 APP:
CLT PRIOR MAR 24, 1988
DRT REG:
B - BASED ON CLASS(ES): 00001, 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER 00016, 00035, + 02 STAT:
A - ASSOC. IF DIFF. GOODS CODE: SPECIFIC GOODS
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY15904509-9 ANACOMP, INC. CHARACTRON GERMANY REG: 762539 MAR 24, 2000
MF LS 7011 APP:
CLT PRIOR MAR 24, 1990
DRT REG: 762539
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF.
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY18800810-2 ANACOMP, INC. DATAGRAPHIX GERMANY REG: 1157507 MAY 10, 1998
MF LS 7331 APP:
CLT PRIOR MAY 10, 1988
DRT REG:
B - BASED ON CLASS(ES): 00007, 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER 00016, 00035, +04 STAT:
A - ASSOC. IF DIFF. GOODS CODE: SPECIFIC GOODS
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19002656-5 ANACOMP, INC. DATAGRAPHIX XFP 2000 GERMANY REG: 2009981 JAN 19, 2001
MF LT 9325 APP:
CLT PRIOR JAN 19,1991
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF.
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-22-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY29003668-0 ANACOMP, INC. PRECISION XIDEX GERMANY REG: 1123901 FEB 01, 2003
MF LZ 1437 APP:
CLT PRIOR FEB 01, 1993
DRT REG: 1123901
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT: RECORDAL CHAIN OF
A - ASSOC. IF DIFF. TITLE PENDING 1992
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19002248-2 ANACOMP, INC. STORAGEMASTER GERMANY REG: SEP 28, 2000
MF KP 0000 APP: DD W 65424
CLT PRIOR SEP 28, 1990
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT: RECORDAL CHAIN O 1992
A - ASSOC. IF DIFF. TITLE PENDING 1996
O - BASIS FOR CR RECEIVED
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19300963-7 ANACOMP, INC. TOTAL MEMORY (STYLIZED) GERMANY REG: JUN 15, 2003
MF KP 0000 APP: A 54798/9WZ
CLT PRIOR JUN 15, 1993
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA 1996
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT: CR RECEIVED
A - ASSOC. IF DIFF.
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19002246-0 ANACOMP, INC. DYSAN & LOGO EAST GERMANY REG: DD652.828 SEP 28, 2000
MF LZ 2255 APP:
CLT PRIOR SEP 28, 1990
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT: RECORDAL CHAIN O 1992
A - ASSOC. IF DIFF. TITLE PENDING
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003669-1 ANACOMP, INC. DYSAN & LOGO WEST GERMANY REG: 1041949 JAN 08, 2002
MF LU 2643 R APP:
CLT PRIOR JAN 08, 1992
DRT REG: 1041949
B - BASED ON CLASS(ES): 00009, 00016, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER 00042, STAT:
A - ASSOC. IF DIFF. GOODS CODE: SPECIFIC GOODS
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-23-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY18903094-0 ANACOMP, INC. ANACOMP GREECE REG: 99190 MAY 23, 2000
MF LV 5208 APP:
CLT PRIOR MAY 23, 1990
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF.
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19000170-4 ANACOMP, INC. CHARACTRON GREECE REG: 100103 JUL 27, 2000
MF LV 3697 APP:
CLT PRIOR JUL 27, 1990
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF.
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY17805168-2 ANACOMP, INC. DATAGRAPHIX GREECE REG: 63487 MAY 02,1999
MF LR 6710 R APP:
CLT PRIOR MAY 02, 1989
DRT REG: 63487
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF.
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19002657-6 ANACOMP, INC. DATAGRAPHIX XFP 2000 GREECE REG: 102413 JAN 14, 2001
MF LV 7965 APP:
CLT PRIOR JAN 14, 1991
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF.
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003692-7 ANACOMP, INC. STORAGEMASTER GREECE REG: 78697 DEC 11, 2004
MF LV 9860 R APP:
CLT PRIOR DEC 11, 1994
DRT REG: 78697
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF.
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-24-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY19002646-4 ANACOMP, INC. XFP 2000 GREECE REG: 102412 JAN 14, 2001
MF LV 4302 APP:
CLT PRIOR JAN 14, 1991
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF.
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003693-8 ANACOMP, INC. DYSAN GUATEMALA REG: 45117 OCT 03, 2003
MF LV 3710 APP:
CLT PRIOR OCT 04, 1993
DRT REG: 45117
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT: RECORDAL CHAIN
A - ASSOC. IF DIFF. TITLE PENDING 1994
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003707-4 ANACOMP, INC. DYSAN HONG KONG REG: 1788/1983 MAY 17, 2003
MF KQ 5712 R APP:
CLT PRIOR MAY 17, 1989
DRT REG: 1788/1983
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF.
O - BASIS FOR
A
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003708-5 ANACOMP, INC. DYSAN HUNGARY REG: 125018 FEB 15, 1995
MF MD 8868 APP:
CLT PRIOR FEB 15, 1985
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT: RECORDAL CHAIN
A - ASSOC. IF DIFF. TITLE PENDING 1995
O - BASIS FOR RENEWAL FILED 1995
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29000215-5 ANACOMP, INC. DYSAN INDIA REG: 417635 FEB 14, 1998
MF KZ 0288 APP:
CLT PRIOR FEB 14, 1991
DRT AKB/SL REG: 417635
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT: **** 1996
A - ASSOC. IF DIFF. CR RETURNED FOR CORRECT
O - BASIS FOR 1996
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-25-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY18903095-1 ANACOMP, INC. ANACOMP IRELAND REG: 136197 JAN 05, 1997
MF LU 1709 APP:
CLT PRIOR JAN 05, 1990
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN 1996
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT: CR RECEIVED
A - ASSOC. IF DIFF.
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY18902561-8 ANACOMP, INC. CHARACTRON IRELAND REG: 135908 OCT 31, 1996
MF LU 3906 APP:
CLT PRIOR OCT 31, 1989
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN 1996
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT: CR RECEIVED
A - ASSOC. IF DIFF.
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY18902562-9 ANACOMP, INC. DATAGRAPHIX IRELAND REG: 8136792 OCT 31, 2006
MF LX 0214 APP:
CLT PRIOR OCT 31, 1996
DRT REG: 8136792
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF.
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19002658-7 ANACOMP, INC. DATAGRAPHIX XFP 2000 IRELAND REG: 8143378 JAN 04, 1998
MF LV 0266 APP:
CLT PRIOR JAN 04, 1991
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF.
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003709-6 XIDEX CORPORATION (C DYSAN & LOGO IRELAND REG: 102852 NOV 16, 2002
MF MD 8869 APP:
CLT PRIOR NOV 17, 1990
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF ANACOMP, IN
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-26-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY17602185-6 ANACOMP, INC. DATAGRAPHIX ISRAEL REG: 42865 SEP 06, 1997
MF KM 9399 R APP:
CLT PRIOR SEP 06, 1983
DRT REG: 42865
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT: RENEWAL INSTRUCT
A - ASSOC. IF DIFF. 1996
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY18903096-2 ANACOMP, INC. ANACOMP ITALY REG: 00588628 FEB 08, 2000
MF LU 8201 APP:
CLT PRIOR FEB 08, 1990
DRT REG:
B - BASED ON CLASS(ES): 00009, 00037 CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY18301445-2 ANACOMP, INC. ARIS ITALY REG: 458369 AUG 25, 2003
MF KQ 2293 R APP:
CLT PRIOR AUG 25, 1983
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY15904511-2 ANACOMP, INC. CHARACTRON ITALY REG: 379213 OCT 17, 1999
MF KQ 2291 R APP:
CLT PRIOR OCT 17, 1979
DRT REG: 153390
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY17002421-3 ANACOMP, INC. DATAGRAPHIX ITALY REG: 00601057 AUG 19, 2000
MF LV 2339 R APP:
CLT PRIOR AUG 19, 1990
DRT REG: 263333
B - BASED ON CLASS(ES): 00007, 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER 00016, 00035, STAT:
A - ASSOC. IF DIFF GOODS CODE: SPECIFIC GOODS
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-27-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY19002659-8 ANACOMP, INC. DATAGRAPHIX XFP 2000 ITALY REG: 611495 FEB 08, 2001
MF LV 7010 APP:
CLT PRIOR FEB 08, 1991
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29102876-1 DYSAN CORPORATION DYSAN & LOGO ITALY REG: 398238 DEC 16, 2001
MF ME 1347 APP:
CLT PRIOR DEC 16, 1981
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF ANACOMP, IN
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29000217-7 ANACOMP, INC. STORAGEMASTER ITALY REG: 446637 NOV 30, 1994
MF KQ 0781 R APP:
CLT PRIOR NOV 30, 1984
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT: RECORDAL CHAIN O 1994
A - ASSOC. IF DIFF TITLE PENDING 1994
O - BASIS FOR RENEWAL FILED
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19300965-9 ANACOMP, INC. TOTAL MEMORY (STYLIZED) ITALY REG: JUN 25, 2003
MF KP 0000 APP: RM93C002097
CLT PRIOR JUN 25, 1993
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA 1997
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT: CR RECEIVED
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19002647-5 ANACOMP, INC. XFP 2000 ITALY REG: 611494 FEB 08, 2001
MF LV 7009 APP:
CLT PRIOR FEB 08, 1991
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-28-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY18902658-5 ANACOMP, INC. ANACOMP JAPAN REG: 2448502 AUG 31, 2002
MF LU 4044 APP:
CLT PRIOR AUG 31, 1992
DRT REG:
B - BASED ON CLASS(ES): 00010, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19001170-5 ANACOMP, INC. ANACOMP JAPAN REG: 2551192 JUN 30, 2003
MF LU 7410 APP:
CLT PRIOR JUN 30, 1993
DRT REG:
B - BASED ON CLASS(ES): 00011, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY15906150-3 ANACOMP, INC. CHARACTRON JAPAN REG: 650569 AUG 20, 2004
MF LV 8836 R APP:
CLT PRIOR AUG 20, 1994
DRT REG: 650569
B - BASED ON CLASS(ES): 00069, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY17002422-4 ANACOMP, INC. DATAGRAPHIX JAPAN REG: 994354 JAN 20, 2003
MF LV 1805 R APP:
CLT PRIOR JAN 20, 1993
DRT REG: 994354
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY17005418-2 ANACOMP, INC. DATAGRAPHIX JAPAN REG: 1380543 JUN 29, 1999
MF LS 0344 R APP:
CLT PRIOR JUN 29, 1989
DRT REG: 1380543
B - BASED ON CLASS(ES): 00011, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: COUNTRY CL. STAT:
A - ASSOC. A IF DIFF HEADING
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-29-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY19002682-4 ANACOMP, INC. DATAGRAPHIX XFP 2000 JAPAN REG: 2701421 DEC 22, 2004
MF LV 8633 APP:
CLT PRIOR DEC 22, 1994
DRT REG:
B - BASED ON CLASS(ES): 00010, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. A IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19002683-5 ANACOMP, INC. DATAGRAPHIX XFP 2000 JAPAN REG: 2661433 MAY 31, 2004
MF LV 4330 APP:
CLT PRIOR MAY 31, 1994
DRT REG:
B - BASED ON CLASS(ES): 00011, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. A IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003711-9 ANACOMP, INC. DYSAN & LOGO JAPAN REG: 1981811 SEP 21, 1997
MF KK 8246 R APP:
CLT PRIOR SEP 21, 1987
DRT REG:
B - BASED ON CLASS(ES): 00011, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29000223-4 ANACOMP, INC. STORAGEMASTER AND KATAKANA JAPAN REG: 2418631 MAY 29, 2002
MF LU 2680 R APP:
CLT PRIOR MAY 29, 1992
DRT REG:
B - BASED ON CLASS(ES): 00011, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19300966-0 ANACOMP, INC. TOTAL MEMORY (STYLIZED) JAPAN REG: 3172142 JUN 28, 2006
MF LW 9245 APP:
CLT PRIOR JUN 28, 1996
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-30-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY19002663-3 ANACOMP, INC. XFP 2000 JAPAN REG: 2695426 SEP 30, 2004
MF LV 7193 APP:
CLT PRIOR SEP 30, 1994
DRT REG:
B - BASED ON CLASS(ES): 00010, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19002664-4 ANACOMP, INC. XFP 2000 JAPAN REG: 2621631 FEB 28, 2004
MF LV 3442 APP:
CLT PRIOR FEB 28, 1994
DRT REG:
B - BASED ON CLASS(ES): 00011, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19500635-5 ANACOMP, INC. XIDEX JAPAN REG:
MF KP 0000 APP: 27452/95
CLT PRIOR MAR 23, 1995
DRT REG:
B - BASED ON CLASS(ES): 00001, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19500636-6 ANACOMP, INC. XIDEX JAPAN REG:
MF KP 0000 APP: 27453/95
CLT PRIOR MAR 23, 1995
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003713-1 ANACOMP, INC. XIDEX PRECISION JAPAN REG: 2208021 JAN 30, 2000
MF KK 8247 R APP:
CLT PRIOR JAN 30, 1990
DRT REG:
B - BASED ON CLASS(ES): 00011, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. A IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-31-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY29003714-2 ANACOMP, INC. XIDEX STYLIZED IN RED AND JAPAN REG: 1755481 MAR 25, 1995
MF KR 2492 R BLACK APP:
CLT PRIOR MAR 25, 1985
DRT REG:
B - BASED ON CLT: ANACOMP, INC.-GA 1995
H - HAS DEP. OWNER CLASS(ES): 00011, STAT: RENEWAL FILED
A - ASSOC. A IF DIFF GOODS CODE: SPECIFIC GOODS
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003715-3 ANACOMP, INC. XIDEX STYLIZED IN RED AND JAPAN REG: 1787827 JUL 29, 2005
MF LW 6681 R BLACK APP:
CLT PRIOR JUL 29, 1995
DRT REG: 1787827
B - BASED ON CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER CLASS(ES): 00010, STAT:
A - ASSOC. IF DIFF GOODS CODE: SPECIFIC GOODS
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY18601515-3 ANACOMP, INC. DATAGRAPHIX KOREA (SOUTH) REG: 147530 NOV 20, 1997
MF LQ 7800 APP:
CLT PRIOR NOV 21, 1987
DRT REG:
B - BASED ON CLASS(ES): 00039, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT: RECORDAL CHAIN O 1987
A - ASSOC. IF DIFF TITLE PENDING 1996
O - BASIS FOR RENEWAL INSTRUCTED
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003644-4 ANACOMP, INC. DYSAN CORPORATION & LOGO KOREA (SOUTH) REG: 120408 NOV 30, 1995
MF MD 8757 APP:
CLT PRIOR NOV 30, 1985
DRT REG:
B - BASED ON CLASS(ES): 00039, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT: RECORDAL CHAIN O 1995
A - ASSOC. IF DIFF TITLE PENDING 1996
O - BASIS FOR RENEWAL FILED
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY17805170-5 ANACOMP, INC. DATAGRAPHIX KUWAIT REG: 10878 JAN 03, 2000
MF LV 4505 R APP:
CLT PRIOR JAN 04, 1990
DRT REG: 10878
B - BASED ON B CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-32-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY11193450-0 ANACOMP, INC. DATAGRAPHIX MACEDONIA (FYRM) REG: 24831 AUG 15, 2000
MF LT 2152 R APP:
CLT PRIOR AUG 15, 1990 REVALIDATION
DRT REG: 24831 JUN 30, 1993
B - BASED ON B CLASS(ES): 00009, 00016, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT: CR RECEIVED 1997
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29000209-8 DYSAN CORPORATION DYSAN DYSAN MALAYA REG: M/94609 APR 09, 2003
MF LU 1570 APP:
CLT PRIOR APR 09, 1989
DRT REG: M/94609
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF ANACOMP, IN
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29000211-1 DYSAN CORPORATION DYSAN LOGO MALAYA REG: M/894866 APR 27, 2003
MF LU 1876 APP:
CLT PRIOR APR 27, 1989
DRT REG: M/894866
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF ANACOMP, IN
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19602342-3
MF KP 0000 ANACOMP, INC. ALVA MEXICO REG: JAN 17, 2007
CLT APP: 284528
DRT PRIOR JAN 17, 1997
B - BASED ON REG:
H - HAS DEP. CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
A - ASSOC. OWNER GOODS CODE: SPECIFIC GOODS STAT:
O - BASIS FOR IF DIFF
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19602343-4 ANACOMP, INC. ALVA MEXICO REG: JAN 17, 2007
MF KP 0000 APP: 284527
CLT SERVICE MARK PRIOR JAN 17, 1997
DRT REG:
B - BASED ON CLASS(ES): 00035, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-33-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY17602186-7 ANACOMP, INC. DATAGRAPHIX MEXICO REG: 202768 NOV 17, 2001
MF LU 6659 R APP:
CLT PRIOR NOV 17, 1991
DRT REG: 202768
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19200099-6 ANACOMP, INC. DATAGRAPHIX XFP 2000 MEXICO REG: 477093 MAR 13, 2002
MF LZ 2430 R APP:
CLT PRIOR MAR 13, 1992
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19202299-0 ANACOMP, INC. DYSAN MEXICO REG: 452893 DEC 15, 2002
MF LV 7218 APP:
CLT PRIOR DEC 15, 1992
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003614-1 ANACOMP, INC. STORAGE MASTER MEXICO REG: 309909 DEC 19, 1994
MF KQ 9545 R APP:
CLT PRIOR DEC 19, 1989
DRT REG: 309909
B - BASED ON CLASS(ES): CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER 00001,00006,00008,00009,+ 04 STAT:
A - ASSOC. IF DIFF GOODS CODE: SPECIFIC GOODS 1996
O - BASIS FOR CR RECEIVED
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19200105-4 ANACOMP, INC. XFP 2000 MEXICO REG: 420015 MAR 13, 2002
MF LZ 2037 APP:
CLT PRIOR MAR 13, 1992
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-34-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY19202331-7 ANACOMP, INC. XIDEX MEXICO REG: 505452 APR 21, 2003
MF LZ 3564 APP:
CLT PRIOR APR 21, 1993
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT: **** 1997
A - ASSOC. IF DIFF CR RETURNED FOR CORRECT
O - BASIS FOR 1997
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19200100-9 ANACOMP, INC. DATAGRAPHIX XFP 2000 NEW ZEALAND REG: 215884 JAN 30, 1999
MF LW 3870 R APP:
CLT PRIOR JAN 30, 1992
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003633-2 DYSAN CORPORATION DYSAN NEW ZEALAND REG: 151407 FEB 27, 2005
MF LT 3191 APP:
CLT PRIOR FEB 27, 1991
DRT REG: 151407
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF ANACOMP, IN
O - BASIS FOR
A
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003634--3 DYSAN CORPORATION DYSAN LOGO NEW ZEALAND REG: 151408 FEB 27, 2005
MF LT 6545 APP:
CLT PRIOR FEB 27, 1991
DRT REG: 151408
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF ANACOMP, IN
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003645-5 ANACOMP, INC. DYSAN NICARAGUA REG: 15166CC MAY 11, 2003
MF LV 9512 R APP:
CLT PRIOR MAY 12, 1993
DRT REG: 15166CC
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
A
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-35-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY19602344-5 ANACOMP, INC. ALVA NORWAY REG:
MF KP 0000 APP: DISPATCHED
CLT PRIOR
DRT REG:
B - BASED ON CLASS(ES): 00009,00035, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
A
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19102752-3
MF LU 7214 ANACOMP, INC. ANACOMP NORWAY REG: 156989 JUN 10, 2003
CLT APP:
DRT PRIOR JUN 10, 1993
B - BASED ON REG:
H - HAS DEP. CLASS(ES): 00009,00037, CLT: ANACOMP, INC.-IN
A - ASSOC. OWNER GOODS CODE: SPECIFIC GOODS STAT:
O - BASIS FOR IF DIFF
A
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY17602187-8 ANACOMP, INC. DATAGRAPHIX NORWAY REG: 108056 APR 15, 2001
MF LT 2138 R APP:
CLT PRIOR APR 15, 1991
DRT REG: 108056
B - BASED ON CLASS(ES): 00009,00016, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
A
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19200101-0 ANACOMP, INC. DATAGRAPHIX XFP 2000 NORWAY REG: 158874 AUG 26, 2003
MF LV 4371 APP:
CLT PRIOR AUG 26, 1993
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
A
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003620-8 ANACOMP, INC. DYSAN & LOGO NORWAY REG: 113311 FEB 24, 2003
MF LU 9854 R APP:
CLT PRIOR FEB 24, 1993
DRT REG: 113311
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
A
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-36-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY29003667-9 ANACOMP, INC. DYSAN PANAMA REG: 32287 JUL 29, 2003
MF KR 3460 R APP: DEP.BASICREG
CLT PRIOR JUL 29, 1993 SEP 14, 1997
DRT REG: 32287
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
A
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003461-1 ANACOMP, INC. DYSAN PERU REG: 46061 OCT 14, 2002
MF KQ 6394 R APP:
CLT PRIOR OCT 14, 1992
DRT REG: 46061
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
A
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19201802-9 ANACOMP, INC. ANACOMP PHILIPPINES REG:
MF KP 0000 APP: 83606-PN
CLT PRIOR NOV 27, 1992
DRT SERVICE MARK REG:
B - BASED ON B CLASS(ES): 00035,00037, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
A
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19301693-8 ANACOMP, INC. ANACOMP PHILIPPINES REG: 60808 JUN 20, 2015
MF LW 2131 APP: USE-NON-USE
CLT PRIOR JUN 20, 1995 JUN 20, 2001
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
A
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29000204-3 ANACOMP, INC. DYSAN & LOGO PHILIPPINES REG: 49518 NOV 27, 2010
MF LT 1252 APP: USE-NON-USE
CLT PRIOR NOV 27, 1990 NOV 27, 1996
DRT REG:
B - BASED ON B CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT: ACTION FILED 1996
A - ASSOC. IF DIFF RECORDAL CHAIN OF TITLE
O - BASIS FOR PENDING 1996
A
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-37-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY29003673-6 ANACOMP, INC. DYSAN POLAND REG: 61092 FEB 14, 1995
MF KR 4260 R APP:
CLT PRIOR FEB 14, 1985
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT: CR RECEIVED 1996
A - ASSOC. IF DIFF
O - BASIS FOR
A
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY18903097-3 ANACOMP, INC. ANACOMP PORTUGAL REG: 261476 AUG 10, 2002
MF LU 9842 APP: USE AFFID.
CLT PRIOR AUG 10, 1992 AUG 10, 1997
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT: ACTION INSTRUCTE 1996
A - ASSOC. IF DIFF
O - BASIS FOR
A
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY18903098-4 ANACOMP, INC. ANACOMP PORTUGAL REG: 261477 AUT 10, 2002
MF LU 9870 APP: USE AFFID.
CLT PRIOR AUG 10, 1992 AUG 10, 1997
DRT SERVICE MARK REG:
B - BASED ON CLASS(ES): 00037, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT: ACTION INSTRUCTE 1996
A - ASSOC. IF DIFF
O - BASIS FOR
A
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19000171-5 ANACOMP, INC. CHARACTRON PORTUGAL REG: 262738 SEP 14, 2002
MF KZ 6634 APP: USE AFFID.
CLT PRIOR SEP 14, 1992 SEP 14, 1997
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT: ACTION INSTRUCTE 1996
A - ASSOC. IF DIFF
O - BASIS FOR
A
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY17805171-6 ANACOMP, INC. DATAGRAPHIX PORTUGAL REG: 200929 JUN 02, 2006
MF LX 1028 R APP: USE AFFID.
CLT PRIOR JUN 02, 1996 JUN 02, 2001
DRT REG: 200929
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
A
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-38-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
FEB 04, 2003
NY19002660-0 ANACOMP, INC. DATAGRAPHIX XFP 2000 PORTUGAL REG: 270697 USE AFFID.
MF KZ 6670 APP: FEB 04, 1998
CLT PRIOR FEB 04, 1993
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
A
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
FEB 04, 2003
NY19002648-6 ANACOMP, INC. XFP 2000 PORTUGAL REG: 270698 USE AFFID.
MF KZ 6672 APP: FEB 04, 1998
CLT PRIOR FEB 04, 1993
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
A
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19602345-6 ANACOMP, INC. ALVA PUERTO RICO REG:
MF KP 0000 APP: DISPATCHED
CLT PRIOR
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
A
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19602346-7
MF KP 0000 ANACOMP, INC. ALVA PUERTO RICO REG:
CLT APP: DISPATCHED
DRT PRIOR
B - BASED ON SERVICE MARK REG:
H - HAS DEP. CLASS(ES): 000035, CLT: ANACOMP, INC.-GA
A - ASSOC. OWNER GOODS CODE: SPECIFIC GOODS STAT:
O - BASIS FOR IF DIFF
A
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003716-4 APR 09, 2003
MF LT 7258 XIDEX CORPORATION (C DYSTAN SABAH REG: S/29702
CLT APP:
DRT PRIOR APR 09, 1989
B - BASED ON REG: S/29702
H - HAS DEP. OWNER CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
A - ASSOC. IF DIFF ANACOMP, IN GOODS CODE: SPECIFIC GOODS STAT:
O - BASIS FOR
A
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-39-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
APR 09, 2003
NY29003717-5 XIDEX CORPORATION (C DYSTAN SARAWAK REG: 24926
MF LV 0533 APP:
CLT PRIOR APRIL 24, 1989
DRT REG: 24926
B - BASED ON OWNER CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. IF DIFF ANACOMP, IN GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC.
O - BASIS FOR
A
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
APR 27, 2003
NY29003675-9 DYSTAN CORPORATION DYSTAN LOGO SARAWAK REG: SAR/24949
MF LV 3036 APP:
CLT PRIOR APR 27, 1989
DRT REG: SAR/24949
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF ANACOMP, IN
O - BASIS FOR
A
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
DEC 11, 1999
NY17804557-3 ANACOMP, INC. DATAGRAPHIX SINGAPORE REG: 78452
MF KN 6904 R APP:
CLT PRIOR DEC 11, 1985
DRT REG: 78452
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
A
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003466-6 XIDEX CORPORATION (D DYSAN DYSAN SINGAPORE REG: 1697/82 APR 06, 2003
MF LV 7504 R APP:
CLT PRIOR 1697/82 APR 06, 1989
DRT REG: ANACOMP, INC.-GA
B - BASED ON CLASS(ES): 00009, CLT:
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF ANACOMP, INC
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003465-5
MF LU 3058 R XIDEX CORPORATION (D DYSAN LOGO SINGAPORE REG: 1797/82 APR 14, 2003
CLT APP:
DRT PRIOR APR 14, 1989
B - BASED ON REG: 1797/82
H - HAS DEP. CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
A - ASSOC. OWNER GOODS CODE: SPECIFIC GOODS STAT:
O - BASIS FOR IF DIFF ANACOMP, INC
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-40-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY11493073-4
MF KR 1124 R ANACOMP, INC. DATAGRAPHIX SLOVENIA REG: 24831 OCT 08, 1996
CLT APP: REVALIDATION
DRT PRIOR OCT 08, 1986 MAR 01, 1994
B - BASED ON B REG: 24831
H - HAS DEP. CLASS(ES): 00009,00016, CLT: ANACOMP, INC.-IN
A - ASSOC. OWNER GOODS CODE: SPECIFIC GOODS STAT: ACTION FILED 1994
O - BASIS FOR IF DIFF RENEWAL FILED 1996
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY17602037-2 ANACOMP, INC. DATAGRAPHIX REP OF SO AFRICA REG: B 5166/76 OCT 12, 1996
MF KN 2919 R APP:
CLT PRIOR OCT 12, 1986
DRT REG: B 5166/76
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS OWNER GOODS CODE: SPECIFIC GOODS STAT:
DEP. H IF DIFF CR RECEIVED 1996
A -
ASSOC. A
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY17602037-2 ANACOMP, INC. DATAGRAPHIX REP OF SO AFRICA REG: B 5167/76 OCT 12,1996
MF KN 2920 R APP:
CLT PRIOR OCT 12,1986
DRT REG: B5167/76
B - BASED ON CLASS(ES): 00016, CLT: ANACOMP, INC.-IN
H - HAS OWNER GOODS CODE: SPECIFIC GOODS STAT: 1996
DEP. H IF DIFF CR RECEIVED
A -
ASSOC. A
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003676-9 ANACOMP, INC. DYSON REP OF SO AFRICA REG: 84/1456 FEB 22, 2004
MF KZ 7076 APP:
CLT PRIOR FEB 22, 1994
DRT REG: 84/1456
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS OWNER GOODS CODE: SPECIFIC GOODS STAT: RECORDAL CHAIN O
DEP. IF DIFF TITLE PENDING
A - 1992
ASSOC.
O - BASIS FOR
L - IF LIC.
L
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
REG: 84-10549
NY29003460-0 ANACOMP, INC. STORAGEMASTER REP OF SO AFRICA APP: NOV 29, 2004
MF KZ 7074 R NOV 29, 1994
CLT PRIOR
DRT REG: 84/10549
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS OWNER GOODS CODE: SPECIFIC GOODS STAT:
DEP. IF DIFF
A -
ASSOC.
O - BASIS FOR A
L - IF
LIC. L
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-41-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY29003677-0 REG: 0504/84
MF KZ 7075 R ANACOMP, INC. STORAGEMASTER REP OF SO AFRICA APP: JAN 25, 2004
CLT JAN 25, 1994
DRT PRIOR
B - BASED ON REG: 0504/84
H - HAS CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - IF DIFF
ASSOC.
O - BASIS FOR A
L - IF
LIC. L
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29602252-4
MF MG 3730 ANACOMP, INC. XIDEX REP OF SO AFRICA REG: 86/5063 AUG 04, 1996
CLT APP:
DRT PRIOR AUG 04, 1986
B - BASED ON REG:
H - HAS CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT: RECORDAL CHAIN O
A - IF DIFF TITLE PENDING 1996
ASSOC. CR RECEIVED 1996
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY18801021-7 ANACOMP, INC. ANACOMP SPAIN REG: 1261904 DEC 05, 2010
MF LW 0459 APP: TAX DUE
CLT PRIOR DEC 05, 1990 DEC 05, 2000
DRT REG:
B - BASED ON CLASS(ES): 00001, CLT: ANACOMP, INC.-IN
H - HAS OWNER GOODS CODE: SPECIFIC GOODS STAT: 1996
DEP. IF DIFF CR RECEIVED
A -
ASSOC.
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY18801022-8 REG: 1261905
MF LZ 0624 ANACOMP, INC. ANACOMP SPAIN APP: MAR 04, 2011
CLT MAR 04, 1991 TAX DUE
DRT PRIOR MAR O4, 2001
B - BASED ON SERVICE MARK REG:
H - HAS CLASS(ES): 00035, CLT: ANACOMP, INC.-IN
DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - IF DIFF
ASSOC.
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY18801023-9 REG: 1261906
MF LV 6392 ANACOMP, INC. ANACOMP SPAIN APP: NOV 16, 2009
CLT NOV 16, 1989 TAX DUE
DRT PRIOR NOV 16, 1999
B - BASED ON SERVICE MARK REG:
H - HAS CLASS(ES): 00037, CLT: ANACOMP, INC.-IN
DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - IF DIFF
ASSOC.
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-42-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY18801024-0 REG: 1261907
MF LW 1472 ANACOMP, INC. ANACOMP SPAIN APP: APR 02, 2011
CLT APR 02, 1991 TAX DUE
DRT PRIOR APR 02, 2001
B - BASED ON SERVICE MARK REG:
H - HAS CLASS(ES): 00042, CLT: ANACOMP, INC.-IN
DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - IF DIFF
ASSOC.
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19000598-8 REG: 1566099
MF LW 0290 ANACOMP, INC. ANACOMP SPAIN APP: MAY 04, 2000
CLT MAY 04, 1990 TAX DUE
DRT PRIOR MAY 04, 2000
B - BASED ON REG:
H - HAS CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - IF DIFF
ASSOC.
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19000599-9 REG: 1566100
MF LV 0078 ANACOMP, INC. ANACOMP SPAIN APP: MAY 04, 2000
CLT MAY 04, 1990 TAX DUE
DRT PRIOR MAY 04, 2000
B - BASED ON REG:
H - HAS CLASS(ES): 00016, CLT: ANACOMP, INC.-IN
DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - IF DIFF
ASSOC.
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19000172-6 REG: 1553231
MF LV 9271 ANACOMP, INC. CHARACTRON SPAIN APP: MAY 04, 2000
CLT MAR 02, 1990 TAX DUE
DRT PRIOR MAR 02, 2000
B - BASED ON REG:
H - HAS CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - IF DIFF
ASSOC.
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY17602189-0 OCT 11, 1997
MF LU 5309 R ANACOMP, INC. DATAGRAPHIX SPAIN REG: 826718 TAX DUE
CLT APP: OCT 11, 1977 OCT 11, 1997
DRT PRIOR
B - BASED ON REG:
H - HAS CLASS(ES): 00009, CLT: ANACOMP, INC.-IN 1996
DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - IF DIFF RENEWAL INSTRUCTED
ASSOC.
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-43-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY19002661-1 REG: 1616895
MF LW 5506 ANACOMP, INC. DATAGRAPHIX XFP 2000 SPAIN APP: FEB 11, 2001
CLT FEB 11, 1991 TAX DUE
DRT PRIOR FEB 11, 2001
B - BASED ON REG:
H - HAS CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - IF DIFF
ASSOC.
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29036411-2
MF LW 2655 R ANACOMP, INC. DYSON & LOGO SPAIN REG: 1072965 OCT 21, 1995
CLT APP: TAX DUE
DRT PRIOR OCT 21, 1985 OCT 21, 2000
B - BASED ON REG:
H - HAS DEP. CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
A - ASSOC. OWNER GOODS CODE: SPECIFIC GOODS STAT:
O - BASIS FOR IF DIFF
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29000203-2 ANACOMP, INC. STORAGEMASTER SPAIN REG: 1088045 MAR 05, 2006
MF LW 5125 R APP: TAX DUE
CLT PRIOR MAR 05, 1986 MAR 05, 2001
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19002649-7 ANACOMP, INC. XFP 2000 SPAIN REG: 1616894 FEB 11, 2001
MF LV 8064 APP: TAX DUE
CLT PRIOR FEB 11, 1991 FEB 11, 2001
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19102753-4 ANACOMP, INC. ANACOMP SWEDEN REG: 2153665 DEC 03, 2003
MF LV 0856 APP:
CLT PRIOR DEC 03, 1993
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-44-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY15904513-4 ANACOMP, INC. CHARACTRON SWEDEN REG: 91107 DEC 23, 2000
MF LS 9385 R APP:
CLT PRIOR DEC 23, 1990
DRT REG: 91107
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY17002424-6 ANACOMP, INC. DATAGRAPHIX SWEDEN REG: 136555 SEP 17, 2001
MF LU 2482 R APP:
CLT PRIOR SEP 17, 1991
DRT REG: 136555
B - BASED ON CLASS(ES): 00009, 00016, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER 00035, 00042 STAT:
A - ASSOC. IF DIFF GOODS CODE: SPECIFIC GOODS
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19200102-1 ANACOMP, INC. DATAGRAPHIX XFP 2000 SWEDEN REG: 246337 FEB 05, 2003
MF LU 7393 APP:
CLT PRIOR FEB 05, 1993
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003611-8 ANACOMP, INC. DYSON & LOGO SWEDEN REG: 183367 OCT 01, 2002
MF LU 5993 APP:
CLT PRIOR OCT 01, 1992
DRT REG: 183367
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF RECORDAL CHAIN OF TITLE 1992
O - BASIS FOR PENDING
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003621-9 ANACOMP, INC. STORAGEMASTER SWEDEN REG: 206194 JUN 18, 1997
MF KQ 3690 R APP:
CLT PRIOR JUN 18, 1987
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-45-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY19300968-2 ANACOMP, INC. TOTAL MEMORY (STYLIZED) SWEDEN REG: 303458 JUL 21, 2005
MF LZ 2583 APP:
CLT PRIOR JUL 21, 1995
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY15904514-5 ANACOMP, INC. CHARACTRON SWITZERLAND REG: 304732 OCT 04. 1999
MF KN 3098 R APP:
CLT PRIOR OCT 04, 1979
DRT REG: 178976
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19102008-7 ANACOMP, INC. DATAGRAPHIX STYLIZED SWITZERLAND REG: 388684 OCT 21, 2011
MF KR 0452 APP:
CLT PRIOR OCT 21, 1991
DRT REG:
B - BASED ON CLASS(ES): 00009,00016 CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR A
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19200103-2 ANACOMP, INC. DATAGRAPHIX XFP 2000 SWITZERLAND REG: 398222 NOV 18, 2012
MF LU 7443 (STYLIZED) APP:
CLT PRIOR NOV 18, 1992
DRT REG:
B - BASED ON CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER CLASS(ES): 00009, STAT:
A - ASSOC. IF DIFF GOODS CODE: SPECIFIC GOODS
O - BASIS FOR A
L - IF LIC. L
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003610-7 DYSAN CORPORATION. DYSON & LOGO SWITZERLAND REG: 319233 NOV 16, 2001
MF MD 8723 APP:
CLT PRIOR NOV 16, 1981
DRT SERVICE MARK REG:
B - BASED ON CLASS(ES): 00007, 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER 00016 STAT:
A - ASSOC. IF DIFF ANACOMP, INC GOODS CODE: SPECIFIC GOODS
O - BASIS FOR A
L - IF LIC. L
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-46-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY29003660-2 XIDEX CORPORATION (C PRECISION XIDEX SWITZERLAND REG: 324479 JUN 29, 2003
MF MD 8773 APP:
CLT PRIOR JUN 29, 1983
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. A IF DIFF ANACOMP, INC
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19300969-3 ANACOMP, INC. TOTAL MEMORY (STYLIZED) SWITZERLAND REG: 413121 JUL 12, 2003
MF LV 7571 APP:
CLT PRIOR JUL 12, 1993
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY18800390-5 ANACOMP, INC. ANACOMP UNITED KINGDOM REG: 1339053 MAR 21, 2005
MF LV 9500 APP:
CLT PRIOR MAR 21, 1995
DRT REG: 1339053
B - BASED ON CLASS(ES): 00001, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY18800391-6 ANACOMP, INC. ANACOMP UNITED KINGDOM REG: 1339054 MAR 21, 2005
MF LZ 0141 APP:
CLT PRIOR MAR 21, 1995
DRT REG: 1339054
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR A
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY18800392-7 ANACOMP, INC. ANACOMP UNITED KINGDOM REG: 1339055 MAR 21, 2005
MF LV 9499 APP:
CLT PRIOR MAR 21, 1995
DRT REG: 1339055
B - BASED ON CLASS(ES): 00016, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR A
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-47-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY18800393-8 ANACOMP, INC. ANACOMP UNITED KINGDOM REG: 1375892 MAR 01, 2006
MF LW 5548 APP:
CLT PRIOR MAR 01, 1996
DRT SERVICE MARK REG: 1375892
B - BASED ON CLASS(ES): 00035, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR A
L - IF LIC.
L
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY91771089-8 ANACOMP, INC. AUTOCOM UNITED KINGDOM REG: B1077333 APR 21, 1998
MF KQ 5875 R APP:
CLT PRIOR APR 21, 1984
DRT REG: B1077333
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY15904510-1 ANACOMP, INC. CHARACTRON UNITED KINGDOM REG: 796716 OCT 19, 2008
MF LV 7309 R APP:
CLT PRIOR OCT 19, 1994
DRT REG: 796716
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY18800355-6 ANACOMP, INC. DATAGRAPHIX UNITED KINGDOM REG: 1336186 FEB 22, 2005
MF LV 8274 R APP:
CLT PRIOR FEB 22, 1995
DRT REG: 1336186
B - BASED ON CLASS(ES): 00035, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR A
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY18800356-7 ANACOMP, INC. DATAGRAPHIX UNITED KINGDOM REG: 1336187 FEB 22, 2005
MF LV 8272 R APP:
CLT PRIOR FEB 22, 1995
DRT SERVICE MARK REG: 1336187
B - BASED ON CLASS(ES): 00037, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR A
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-48-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY18800357-8 ANACOMP, INC. DATAGRAPHIX UNITED KINGDOM REG: 1336188 FEB 22, 2005
MF LV 8273 R APP:
CLT PRIOR FEB 22, 1995
DRT SERVICE MARK REG: 1336188
B - BASED ON CLASS(ES): 00041, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: STAT:
A - ASSOC. IF DIFF
O - BASIS FOR A
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY18800358-9 ANACOMP, INC. DATAGRAPHIX UNITED KINGDOM REG: 1336189 FEB 22, 2005
MF LV 8271 R APP:
CLT PRIOR FEB 22, 1995
DRT SERVICE MARK REG: 1336189
B - BASED ON CLASS(ES): 00042, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR A
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY91741035-6 ANACOMP, INC. DATAGRAPHIX UNITED KINGDOM REG: 1024336 JAN 31, 2005
MF LV 8270 R APP:
CLT PRIOR JAN 31, 1995
DRT REG: 1024336
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR A
L - IF LIC. L
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19002662-2 ANACOMP, INC. DATAGRAPHIX XFP 2000 UNITED KINGDOM REG: A1451522 DEC 21, 1997
MF LU 2027 APP:
CLT PRIOR DEC 21, 1990
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT: RENEWAL INSTRUCT 1996
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003696-1 DYSAN (UK) LIMITED DYSON & LOGO UNITED KINGDOM REG: B1165180 NOV 23, 2020
MF MD 8809 APP:
CLT PRIOR NOV 23, 1988
DRT REG: B1165180
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF ANACOMP, INC
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-49-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY29003694-9 DYSAN (UK) LIMITED DYSAN & LOGO UNITED KINGDOM REG: B1199999 JUL 18, 2004
MF KR 3026 APP:
CLT PRIOR JUL 18, 1990
DRT REG: B1199999
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF ANACOMP, INC
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003695-0 XIDEX CORPORATION (D MICRON UNITED KINGDOM REG: 1171219 MAR 11, 2003
MF MD 8808 APP:
CLT PRIOR MAR 11, 1989
DRT REG: 1171219
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF ANACOMP, INC
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29302809-9 ANACOMP, INC. ADVANCED FUNCTION INDEXING UNITED STATES REG: 1746306 JAN 12, 2003
MF ME 3580 R APP: USE AFFID.
CLT PRIOR JAN 12, 1993 JAN 19, 1999
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29302808-8 ANACOMP, INC. AFI UNITED STATES REG: 1747683 JAN 12, 2003
MF MF 3579 JAN 19, 1993 USE AFFID.
CLT PRIOR JAN 19, 1999
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29600046-3 ANACOMP, INC. ALVA & DEVICE UNITED STATES REG:
MF KP 0000 APP: 75/046357
CLT PRIOR JAN 22, 1996
DRT REG:
B - BASED ON CLASS(ES): 00009, 00035, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-50-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY29002786-0 ANACOMP, INC. ANACOMP UNITED STATES REG: 1329987 APR 09, 2005
MF LT 3590 APP: 8 & 15 FILED
CLT SERVICE MARK PRIOR APR 09, 1985
DRT REG:
B - BASED ON CLASS(ES): 00035, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29002787-1 ANACOMP, INC. ANACOMP UNITED STATES REG: 1324169 MAR 12, 2005
MF LT 3591 APP: 8 & 15 FILED
CLT PRIOR MAR 12, 1985
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR D
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19400394-6 ANACOMP, INC. ANAFIND UNITED STATES REG: 1914652 AUG 29, 2005
MF LW 2285 APP: USE AFFID.
CLT PRIOR AUG 29, 1995 AUG 29, 2001
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19101400-2 ANACOMP, INC. ANASTACK UNITED STATES REG: 1711329 SEP 01, 2002
MF LU 2212 APP: USE AFFID.
CLT PRIOR SEP 01, 1992 SEP 01, 1998
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19400393-5 ANACOMP, INC. ANATRAC UNITED STATES REG: 1901594 JUN 27, 2005
MF LW 0608 APP: USE AFFID.
CLT PRIOR JUN 27, 1995 JUN 27, 2001
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-51-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY19400395-7 ANACOMP, INC. ANATRANS UNITED STATES REG: 1904239 JUL 11, 2005
MF LW 0640 APP: USE AFFID.
CLT PRIOR JUL 11, 1995 JUL 11, 2001
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29302810-1 ANACOMP, INC. ANATRIEVE UNITED STATES REG: 1736333 DEC 01, 2002
MF ME 3581 APP: USE AFFID.
CLT PRIOR DEC 01, 1992 DEC 01, 1998
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19200717-3 ANACOMP, INC. AUTO PLUS UNITED STATES REG: 1870926 JAN 03, 2005
MF LV 8079 R APP: USE AFFID.
CLT PRIOR JAN 03, 1995 JAN 03, 2001
DRT REG:
B - BASED ON CLASS(ES): 00001, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003729-8 ANACOMP, INC. AUTOCOM STYLIZED UNITED STATES REG: 1121757 JUL 10, 1999
MF MD 9138 APP: 8 & 15 FILED
CLT PRIOR JUL 10, 1979
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19402347-6 ANACOMP, INC. AUTOEXCEL UNITED STATES REG: 1931557 OCT 31, 2005
MF LW 3429 APP: USE AFFID.
CLT PRIOR OCT 31, 1995 OCT 31, 2001
DRT REG:
B - BASED ON CLASS(ES): 00001, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-52-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY19200718-4 ANACOMP, INC. AUTOPOS UNITED STATES REG: 1870924 JAN 03, 2005
MF LV 8078 APP: USE AFFID.
CLT PRIOR JAN 03, 1995 JAN 03, 2001
DRT REG:
B - BASED ON CLASS(ES): 00001, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003722-1 ANACOMP, INC. CHARACTRON UNITED STATES REG: 585950 FEB 23, 2004
MF LV 3842 APP:
CLT PRIOR FEB 23, 1994
DRT REG: 585950
B - BASED ON CLASS(ES): 00021, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003723-2 ANACOMP, INC. CHARACTRON UNITED STATES REG: 617164 DEC 06, 2005
MF LW 1836 APP:
CLT PRIOR DEC 06, 1995
DRT REG: 617164
B - BASED ON CLASS(ES) 00021, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003464-4 ANACOMP, INC. CM UNITED STATES REG: 1282290 JUN 19, 2004
MF MD 9245 APP: 8 & 15 FILED
CLT PRIOR JUN 19, 1984
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29600043-0 COM PRODUCTS, INC. COM PRODUCTS UNITED STATES REG:
MF KP 0000 APP: 75/101966
CLT PRIOR MAY 10, 1996
DRT REG:
B - BASED ON CLASS(ES): 00001, 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-53-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY29600040-7 COM PRODUCTS, INC. COMFLO UNITED STATES REG:
MF KP 0000 APP: 75/101967
CLT PRIOR MAY 10, 1996
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19602203-9 ANACOMP, INC. CONCERTO & DEVICE UNITED STATES REG:
MF KP 0000 APP: 75/202591
CLT PRIOR NOV 21, 1996
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003719-7 ANACOMP, INC. DATAGRAPHIX UNITED STATES REG: 924217 NOV 23, 2001
MF LT 7705 APP: SEC 8 FILED
CLT PRIOR NOV 23, 1991
DRT REG: 924217
B - BASED ON CLASS(ES): 00026, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003721-0 ANACOMP, INC. DATAGRAPHIX UNITED STATES REG: 945127 OCT 17, 2002
MF LU 4250 APP: 8 & 15 FILED
CLT PRIOR OCT 17, 1992
DRT REG: 945127
B - BASED ON CLASS(ES): 00021, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003720-9 ANACOMP, INC. DATAGRAPHIX STYLIZED UNITED STATES REG: 924216 NOV 23, 2001
MF LT 9993 APP: SEC 8 FILED
CLT PRIOR NOV 23, 1991
DRT REG: 924216
B - BASED ON CLASS(ES): 00026, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-54-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY29202006-7 ANACOMP, INC. DATAGRAPHIX XFP 2000 UNITED STATES REG: OCT 08, 2001
MF ME 1720 APP: 1660314 USE AFFID.
CLT PRIOR OCT 08, 1991 OCT 08, 1997
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN 1997
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT: ACTION FILED
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19200716-2 ANACOMP, INC. DATAPOS UNITED STATES REG: 1870925 JAN 03, 2005
MF LV-8077 APP: USE AFFID.
CLT PRIOR JAN 03, 1995 JAN 03, 2001
DRT REG:
B - BASED ON CLASS(ES): 00001, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003691-6 DYSAN CORPORATION DISCADDY & DESIGN UNITED STATES REG: 1220645 DEC 21, 2002
MF MD 8804 APP: 8 & 15 FILED
CLT PRIOR DEC 21, 1982
DRT REG: 872145
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF ANACOMP, IN
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003725-4 ANACOMP, INC. DYSAN UNITED STATES REG: 1048004 SEP 14, 2006
MF LX 0769 R APP:
CLT PRIOR SEP 14, 1996
DRT REG: 1048004
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19200834-3 ANACOMP, INC. DYSAN IN STYLIZED FORM UNITED STATES REG: 1785310 AUG 03, 2003
MF LU 7528 APP: USE AFFID.
CLT PRIOR AUG 03, 1993 AUG 03, 1999
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-55-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY29600041-9 COM PRODUCTS, INC. ECOCOM.2000 UNITED STATES REG:
MF KP 0000 APP: 75/008123
CLT PRIOR OCT 20, 1995
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29600042-9 COM PRODUCTS, INC. ECOCOM 2000 UNITED STATES REG:
MF KP 0000 APP: 75/101968
CLT PRIOR MAY 10, 1996
DRT REG:
B - BASED ON CLASS(ES): 00001,00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19402472-5 ANACOMP, INC. ENVIRX UNITED STATES REG:
MF KP 0000 APP: 74/600603
CLT PRIOR NOV 18, 1994
DRT REG:
B - BASED ON CLASS(ES): 00001, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19402473-6 ANACOMP, INC. ENVIRX (STYLIZED) UNITED STATES REG:
MF KP 0000 APP: 74/613614
CLT PRIOR DEC 21, 1994
DRT REG:
B - BASED ON CLASS(ES): 00001, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19602204-0 ANACOMP, INC. EVERYWARE AND DEVICE UNITED STATES REG:
MF KP 0000 APP: 75/202592
CLT PRIOR NOV 21, 1996
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-56-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY29102038-1 ANACOMP, INC. LASERPOS UNITED STATES REG: 1628864 DEC 25, 2000
MF LW 8246 APP: 8 & 15 FILED
CLT PRIOR DEC 25, 1990
DRT REG:
B - BASED ON CLASS(ES): 00001, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19200714-0 ANACOMP, INC. LASERWRITER UNITED STATES REG: 1885738 MAR 28, 2005
MF LV 9078 APP: USE AFFID.
CLT PRIOR MAR 28, 1995 MAR 28, 2001
DRT REG:
B - BASED ON CLASS(ES): 00001, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19200715-1 ANACOMP, INC. LASERX UNITED STATES REG: 1872138 JAN 19, 2005
MF LV 8291 APP: USE AFFID.
CLT PRIOR JAN 10, 1995 JAN 10, 2001
DRT REG:
B - BASED ON CLASS(ES): 00001, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003743-4 BELL & HOWELL COMPAN MICRO DESIGN UNITED STATES REG: 1074909 OCT 11, 1997
MF MD 9145 (DELAWARE). APP: 8 & 15 FILED
CLT PRIOR OCT 11, 1977
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. OWNER
O - BASIS FOR IF DIFF ANACOMP, IN
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003733-3 ANACOMP, INC. MICRON UNITED STATES REG: 1258341 NOV 23, 2003
MF KQ 0439 R APP: 8 & 15 FILED
CLT PRIOR NOV 23, 1983
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-57-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY29003727-6 ANACOMP, INC. STORAGEMASTER UNITED STATES REG: 1319118 FEB 12, 2005
MF KQ 0438 R APP: 8 & 15 FILED
CLT PRIOR FEB 12, 1985
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003735-5 ANACOMP, INC. STORAGEMASTER UNITED STATES REG: 1320464 FEB 19, 2005
MF KQ 0436 R APP: 8 & 15 FILED
CLT PRIOR FEB 19, 1985
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS
FOR 0
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003745-6 XIDEX CORPORATION (C TOOL CHEST UNITED STATES REG: 1532762 APR 04, 2009
MF MD 9156 APP: USE AFFID.
CLT PRIOR APR 04, 1992 APR 04, 1995
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA 1991
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT: ***
A - ASSOC. IF DIFF ANACOMP, IN INSTRUCTED NOT TO PROCE
O - BASIS FOR WITH ACTION 1991
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19300576-7 ANACOMP, INC. TOTAL MEMORY (STYLIZED) UNITED STATES REG:
MF KP 000 APP: 74/381182
CLT PRIOR APR 20, 1993
DRT CLASS(ES): 00009, REG:
B - BASED ON GOODS CODE: SPECIFIC GOODS CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER STAT:
A - ASSOC. IF DIFF.
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29202007-8
MF ME 1721 ANACOMP, INC. XFP 2000 UNITED STATES REG: 1662935 OCT 29, 2001
CLT APP: USE AFFID.
DRT PRIOR OCT 29, 1991 OCT 29, 1997
B - BASED ON REG:
H - HAS DEP. CLASS(ES): 00009, CLT: ANACOMP, INC.-IN
A - ASSOC. OWNER GOODS CODE: SPECIFIC GOODS STAT: 1997
O - BASIS FOR IF DIFF ACTION FIELD
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-58-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY29003726-5 ANACOMP, INC. XIDEX UNITED STATES REG: 1246923 AUG 02, 2003
MF KQ 0434 R APP: 8 & 15 FILED
CLT PRIOR AUG 02, 1983
DRT REG:
B - BASED ON CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER GOODS CODE: SPECIFIC GOODS STAT:
A - ASSOC. IF DIFF
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003744-5
MF LU 4976 R ANACOMP, INC. XIDEX UNITED STATES REG: 945199 0CT 17, 2002
CLT APP: 8 & 15 FILED
DRT PRIOR OCT 17, 1992
B - BASED ON REG: 945199
H - HAS DEP. CLASS(ES): 00026, CLT: ANACOMP, INC.-
A - ASSOC. OWNER GOODS CODE: SPECIFIC GOODS STAT:
O - BASIS FOR IF DIFF
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY9301649-9
MF LZ 3027 ANACOMP, INC. DYSAN URAGUAY REG: 264443 AUG 03, 2005
CLT APP:
DRT PRIOR AUG 03, 1995
B - BASED ON REG:
H - HAS DEP. CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
A - ASSOC. OWNER GOODS CODE: SPECIFIC GOODS STAT:
O - BASIS FOR IF DIFF
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003662-4
MF LW 7868 R ANACOMP, INC. DYSAN URAGUAY REG: 262911 MAY 30, 2003
CLT APP:
DRT PRIOR MAY 30, 1993
B - BASED ON SERVICE MARK REG: 4459
H - HAS DEP. CLASS(ES): 00042, CLT: ANACOMP, INC.-GA
A - ASSOC. OWNER GOODS CODE: SPECIFIC GOODS STAT:
O - BASIS FOR IF DIFF
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19602347-8
MF KP 0000 ANACOMP, INC. ALVA VENEZUELA REG:
CLT APP: DISPATCHED
DRT PRIOR
B - BASED ON REG:
H - HAS DEP. CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
A - ASSOC. OWNER GOODS CODE: SPECIFIC GOODS STAT:
O - BASIS FOR IF DIFF
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19602348-9
MF KP 0000 ANACOMP, INC. ALVA VENEZUELA REG:
CLT APP: DISPATCHED
DRT PRIOR
B - BASED ON SERVICE MARK REG:
H - HAS DEP. CLASS(ES): 00035, CLT: ANACOMP, INC.-GA
A - ASSOC. OWNER GOODS CODE: SPECIFIC GOODS STAT:
O - BASIS FOR IF DIFF
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-58-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY19200104-3
MF KP 0000 ANACOMP, INC. DATAGRAPHIX XFP 2000 VENEZUELA REG:
CLT APP: 13109/92
DRT PRIOR JUN 23, 1992
B - BASED ON CLASS(ES): 00026, REG:
H - HAS DEP. GOODS CODE: SPECIFIC GOODS CLT: ANACOMP, INC.-IN
A - ASSOC. OWNER STAT:
O - BASIS FOR IF DIFF
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19200959-1
MF KP 0000 ANACOMP, INC. DATAGRAPHIX XFP 2000 VENEZUELA REG:
CLT APP: 13111/92
DRT PRIOR JUN 23, 1992
B - BASED ON CLASS(ES): 00024, REG:
H - HAS DEP. GOODS CODE: SPECIFIC GOODS CLT: ANACOMP, INC.-IN
A - ASSOC. OWNER STAT:
O - BASIS FOR IF DIFF
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003608-4
MF MD 8721 DYSON CORPORATION DYSAN VENEZUELA REG: 114848-F SEP 27, 2000
CLT APP:
DRT PRIOR SEP 27, 1985
B - BASED ON REG:
H - HAS DEP. CLASS(ES): 00026, CLT: ANACOMP, INC.-GA
A - ASSOC. OWNER GOODS CODE: SPECIFIC GOODS STAT:
O - BASIS FOR IF DIFF ANACOMP, IN
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003609-5
MF MD 8722 DYSAN CORPORATION DYSAN VENEZUELA REG: 114847-F SEP 27, 2000
CLT APP:
DRT PRIOR SEP 20, 1975
B - BASED ON REG:
H - HAS DEP. CLASS(ES): 00021, CLT: ANACOMP, INC.-GA
A - ASSOC. OWNER GOODS CODE: SPECIFIC GOODS STAT:
O - BASIS FOR IF DIFF ANACOMP, IN
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-60-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY29003665-7 DYSAN CORPORATION DYSON CORPORATION & LOGO VENEZUELA REG: 118579-F APR 23, 2001
MF MD 8778 APP:
CLT PRIOR APR 23, 1986
DRT CLASS(ES): 00021, REG:
B - BASED ON GOODS CODE: SPECIFIC GOODS CLT: ANACOMP, INC.-GA
H - HAS DEP. OWNER STAT:
A - ASSOC. IF DIFF ANACOMP, IN
O - BASIS FOR
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003666-8
MF MD 8779 DYSAN CORPORATION DYSAN CORPORATION & LOGO VENEZUELA REG: 118578-F APR 23, 2001
CLT APP:
DRT PRIOR APR 23, 1986
B - BASED ON CLASS(ES): 00026, REG:
H - HAS DEP. GOODS CODE: SPECIFIC GOODS CLT: ANACOMP, INC.-GA
A - ASSOC. OWNER STAT:
O - BASIS FOR IF DIFF ANACOMP, IN
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19200106-5
MF KP 0000 ANACOMP, INC. XFP 2000 VENEZUELA REG:
CLT APP: 13110/92
DRT PRIOR JUN 23, 1992
B - BASED ON REG:
H - HAS DEP. CLASS(ES): 00026, CLT: ANACOMP, INC.-IN
A - ASSOC. OWNER GOODS CODE: SPECIFIC GOODS STAT:
O - BASIS FOR IF DIFF
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19200960-3
MF KP 0000 ANACOMP, INC. XFP 2000 VENEZUELA REG:
CLT APP: 13112/92
DRT PRIOR JUN 23, 1992
B - BASED ON REG:
H - HAS DEP. CLASS(ES): 00024, CLT: ANACOMP, INC.-IN
A - ASSOC. OWNER GOODS CODE: SPECIFIC GOODS STAT:
O - BASIS FOR IF DIFF
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19300382-2
MF LV 2357 ANACOMP, INC. DYSAN VIETNAM REG: 9298 MAR 17, 2003
CLT APP:
DRT PRIOR MAR 17, 1993
B - BASED ON REG:
H - HAS DEP. CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
A - ASSOC. OWNER GOODS CODE: SPECIFIC GOODS STAT:
O - BASIS FOR IF DIFF
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-61-
<PAGE>
<TABLE>
<CAPTION>
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
CODES REGISTRANT/APPLICANT TRADEMARK COUNTRY NUMBER/DATE DUE DATE
- ------------------- --------------------- ------------------------------ -------------------------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
NY19300383-3
MF LV 2356 ANACOMP, INC. DYSAN IN STYLIZED FORM VIETNAM REG: 9299 MAR 17, 2003
CLT APP:
DRT PRIOR MAR 17, 1993
B - BASED ON REG:
H - HAS DEP. CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
A - ASSOC. OWNER GOODS CODE: SPECIFIC GOODS STAT:
O - BASIS FOR IF DIFF
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19300384-4
MF LV 2349 ANACOMP, INC. STORAGEMASTER VIETNAM REG: 9300 MAR 17, 2003
CLT APP:
DRT PRIOR MAR 17, 1993
B - BASED ON REG:
H - HAS DEP. CLASS(ES): 00009, CLT: ANACOMP, INC.-GA
A - ASSOC. OWNER GOODS CODE: SPECIFIC GOODS STAT:
O - BASIS FOR IF DIFF
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY17602190-2
MF LT 2152 R ANACOMP, INC. DATAGRAPHIX YUGOSLAVIA REG: 24831 AUG 15, 2000
CLT APP:
DRT PRIOR: 24831 AUG 15, 1990
B - BASED ON REG:
H - HAS DEP. CLASS(ES): 00009, 00016, CLT: ANACOMP, INC.-IN
A - ASSOC. OWNER GOODS CODE: SPECIFIC GOODS STAT:
O - BASIS FOR IF DIFF
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY19102991-8
MF LW 5421 ANACOMP, INC. DATAGRAPHIX CALIFORNIA REG: 100536 OCT 13, 2005
CLT APP:
DRT PRIOR OCT 13, 1995
B - BASED ON REG:
H - HAS DEP. CLASS(ES): 00026, CLT: ANACOMP, INC.-IN
A - ASSOC. OWNER GOODS CODE: SPECIFIC GOODS STAT:
O - BASIS FOR IF DIFF
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
NY29003740-1
MF LU 2956 R ANACOMP, INC. PRECISION CALIFORNIA REG: 66199 MAY 12, 2002
CLT APP:
DRT PRIOR MAY 12, 1992
B - BASED ON REG: 66199
H - HAS DEP. CLASS(ES): 00026, CLT: ANACOMP, INC.-GA
A - ASSOC. OWNER GOODS CODE: SPECIFIC GOODS STAT:
O - BASIS FOR IF DIFF
L - IF LIC.
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
- ------------------- --------------------- ------------------------------ ------------------------ -------------------- ------------
</TABLE>
-62-
<PAGE>
SCHEDULE 7
IMMATERIAL SUBSIDIARIES
Dysan International Sales Corporation II*
Xidex International Sales Corporation*
Florida AAC Corporation**
Xidex Magnetics S.A. (Switzerland)
Xidex Corp. S.A. (Switzerland)
Anacomp Pty Ltd. (Australia)*
Xidex New Zealand Ltd. (New Zealand) *
Data/Ware Development International, Ltd. (Barbados)***
- ------------------------
* Has substantially no assets and/or in process of being dissolved.
** Within five (5) business days after the Closing Date will be merged into the
Company or will become a party to the Guarantee and Collateral Agreement.
*** Has approximately $46,400 in assets.
<PAGE>
SCHEDULE 8
EXISTING PRIOR LIENS
<TABLE>
<CAPTION>
BORROWER NAME AGREEMENT AMOUNT
- ---------------------------- ---------------------------- ---------------------------- -----------------------
<S> <C> <C> <C>
Anacomp, Inc. SKC America, Inc. and SKC Amended and Restated Master
Limited Supply Agreement $10,000,000.00
Xidex (U.K.) Limited Barclays Bank Overdraft Agreement GBP 2,400,000.00
Anacomp Italia S.r.l. Banca Commerciale Overdraft Agreement ITL 1,000,000,000.00
</TABLE>
Liens on equipment leased to third parties under operating leases and on the
related leases, incurred prior to January 5, 1996, under which the remaining
receivables aggregate not more than $4,000,000.
Cash collateral securing obligations under the letters of credit referenced
as items 1 through 4 under part I.A. of Schedule 10.2.
<PAGE>
ACKNOWLEDGEMENT AND CONSENT
The undersigned hereby acknowledges receipt of a copy of the Guarantee and
Collateral Agreement dated as of February 28, 1997 (the "AGREEMENT"), made by
the Grantors parties thereto for the benefit of The First National Bank of
Chicago, as Administrative Agent. The undersigned agrees for the benefit of the
Administrative Agent and the Lenders as follows:
1. The undersigned will be bound by the terms of the Agreement and will
comply with such terms insofar as such terms are applicable to the undersigned.
2. The undersigned will notify the Administrative Agent promptly in
writing of the occurrence of any of the events described in Section 5.8(a) of
the Agreement.
3. The terms of Sections 6.3(a) and 6.7 of the Agreement shall apply to
it, MUTATIS MUTANDIS, with respect to all actions that may be required of it
pursuant to Section 6.3(a) or 6.7 of the Agreement.
[NAME OF ISSUER]
By
Title
------------------------------
Address for Notices:
-------------------------
------------------------------
Fax:
------------------------------
-------------------------
<PAGE>
Annex 1 to
GUARANTEE AND COLLATERAL AGREEMENT
ASSUMPTION AGREEMENT, dated as of _____________, made by
______________________________, a ______________ corporation (the "ADDITIONAL
GRANTOR"), in favor of The First National Bank of Chicago, as administrative
agent (in such capacity, the "ADMINISTRATIVE AGENT") for the banks and other
financial institutions (the "LENDERS") parties to the Credit Agreement referred
to below. All capitalized terms not defined herein shall have the meaning
ascribed to them in such Credit Agreement.
W I T N E S S E T H :
WHEREAS, Anacomp, Inc. (the "COMPANY"), certain of its Foreign
Subsidiaries, the Lenders and the Administrative Agent have entered into a
Credit Agreement, dated as of February 28, 1997 (as amended, supplemented or
otherwise modified from time to time, the "CREDIT AGREEMENT");
WHEREAS, in connection with the Credit Agreement, the Company and
certain of its Subsidiaries (other than the Additional Grantor) have entered
into the Guarantee and Collateral Agreement, dated as of February 28, 1997 (as
amended, supplemented or otherwise modified from time to time, the "GUARANTEE
AND COLLATERAL AGREEMENT") in favor of the Administrative Agent for the benefit
of the Lenders;
WHEREAS, the Credit Agreement requires the Additional Grantor to
become a party to the Guarantee and Collateral Agreement; and
WHEREAS, the Additional Grantor has agreed to execute and deliver this
Assumption Agreement in order to become a party to the Guarantee and Collateral
Agreement;
NOW, THEREFORE, IT IS AGREED:
1. GUARANTEE AND COLLATERAL AGREEMENT. By executing and delivering
this Assumption Agreement, the Additional Grantor, as provided in Section 8.15
of the Guarantee and Collateral Agreement, hereby becomes a party to the
Guarantee and Collateral Agreement as a Grantor thereunder with the same force
and effect as if originally named therein as a Grantor and, without limiting the
generality of the foregoing, hereby expressly assumes all obligations and
liabilities of a Grantor thereunder. The information set forth in Annex 1-A
hereto is hereby added to the information set forth in Schedules ____________ to
the Guarantee and Collateral Agreement. The Additional Grantor hereby
represents and warrants that each of the representations and warranties
contained in Section 3 of the Guarantee and
______________________
* Refer to each Schedule which needs to be supplemented.
<PAGE>
Collateral Agreement is true and correct on and as the date hereof (after giving
effect to this Assumption Agreement) as if made on and as of such date.
2. GOVERNING LAW. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK.
IN WITNESS WHEREOF, the undersigned has caused this Assumption
Agreement to be duly executed and delivered as of the date first above written.
[ADDITIONAL GRANTOR]
By:
Name:
Title:
-3-
<PAGE>
<TABLE>
<CAPTION>
ANACOMP, INC.
RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)
Reorganized
Predecessor Company Company
-----------------------------------------------------------
Eight Mos Four Mos
Ended Ended
Year Ended September 30, May 31, Sept 30,
------------------------------------
1992 1993 1994 1995 1996 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Income before taxes 32,421 20,491 15,355 (203,326) 116,228 (17,609)
Fixed charges 78,222 75,397 73,631 78,856 31,413 14,848
-------- ------- ------- --------- -------- --------
Earnings 110,643 95,888 88,986 (124,470) 147,641 (2,761)
-------- ------- ------- --------- -------- --------
-------- ------- ------- --------- -------- --------
Interest Expense and fee amortization 71,947 68,960 67,174 70,938 26,760 12,869
Lease expense considered to be inter 6,275 6,437 6,457 7,918 4,653 1,979
-------- ------- ------- --------- -------- --------
Fixed charges 78,222 75,397 73,631 78,856 31,413 14,848
-------- ------- ------- --------- -------- --------
-------- ------- ------- --------- -------- --------
Ratio of earnings to fixed charges 1.41 1.27 1.21 (1.58) 4.70 (0.19)
-------- ------- ------- --------- -------- --------
-------- ------- ------- --------- -------- --------
<CAPTION>
Predecessor Reorganized
Combined Company Company Combined
------------------------
Year Three Mos Three Mos Twelve Mos
Ended Ended Ended Ended
Sept 30, Dec 31, Dec 31, Dec 31,
1996 1995 1996 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income before taxes 98,619 2,253 (8,114) 88,252
Fixed charges 46,261 20,105 11,208 37,364
-------- ------- ------- --------
Earnings 144,880 22,358 3,094 125,616
-------- ------- ------- --------
-------- ------- ------- --------
Interest Expense and fee amortization 39,629 18,286 9,802 31,145
Lease expense considered to be inter 6,632 1,819 1,406 6,219
-------- ------- ------- --------
Fixed charges 46,261 20,105 11,208 37,364
-------- ------- ------- --------
-------- ------- ------- --------
Ratio of earnings to fixed charges 3.13 1.11 0.28 3.36
-------- ------- ------- --------
-------- ------- ------- --------
</TABLE>
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report (and to all references to our Firm) included in
this registration statement.
Arthur Andersen LLP
Indianapolis, Indiana
April 11, 1997
<PAGE>
EXHIBIT 25.1
------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
--------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305 (B) (2)
--
---------------------
IBJ SCHRODER BANK & TRUST COMPANY
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)
New York 13-5375195
(State of Incorporation (I.R.S. Employer
if not a U.S. national bank) Identification No.)
One State Street, New York, New York 10004
(Address of principal executive offices) (Zip code)
Barbara McCluskey, Vice President
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
(212) 858-2000
(Name, Address and Telephone Number of Agent for Service)
ANACOMP INC.
(Exact name of obligor as specified in its charter)
Indiana 5-1144230
(State or jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11550 North Meridian Street
Indianapolis, IN 46240
(Address of principal executive office) (Zip code)
--------------------
(Title of Indenture Securities)
ANACOMP INC.
$200,000,000
10 7/8% SENIOR SUBORDINATED NOTES DUE 2004, SERIES B
----------------------------------------------------
<PAGE>
Item 1. General information
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
New York State Banking Department
Two Rector Street
New York, New York
Federal Deposit Insurance Corporation
Washington, D.C.
Federal Reserve Bank of New York Second District
33 Liberty Street
New York, New York
(b) Whether it is authorized to exercise corporate trust powers.
Yes
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
The obligor is not an affiliate of the trustee.
Item 3. Voting securities of the trustee.
Furnish the following information as to each class of voting
securities of the trustee:
As of April 1, 1997
Col. A Col. B
Title of class Amount Outstanding
Not Applicable
2
<PAGE>
Item 4. Trusteeships under other indentures.
If the trustee is a trustee under another indenture under which any other
securities, or certificates of interest or participation in any other
securities, of the obligor are outstanding, furnish the following
information:
(a) Title of the securities outstanding under each such other
indenture
Not Applicable
(b) A brief statement of the facts relied upon as a basis for the
claim that no conflicting interest within the meaning of Section
310 (b) (1) of the Act arises as a result of the trusteeship
under any such other indenture, including a statement as to how
the indenture securities will rank as compared with the
securities issued under such other indenture.
Not Applicable
Item 5. Interlocking directorates and similar relationships with the obligor
or underwriters.
If the trustee or any of the directors or executive officers of the
trustee is a director, officer, partner, employee, appointee, or
representative of the obligor or of any underwriter for the obligor,
identify each such person having any such connection and state the
nature of each such connection.
Not Applicable
Item 6. Voting securities of the trustee owned by the obligor or its
officials.
Furnish the following information as to the voting securities of the
trustee owned beneficially by the obligor and each director, partner,
and executive officer of the obligor:
As of April 1, 1997
Col A Col. B Col. C Col. D
Name of Owner Title of class Amount owned Percent of voting
beneficially securities represented by
amount given in Col. C
- ------------- -------------- -------------- ------------------------
Not Applicable
Item 7. Voting securities of the trustee owned by underwriters or their
officials.
3
<PAGE>
Furnish the following information as to the voting securities of the
trustee owned beneficially by each underwriter for the obligor and each
director, partner and executive officer of each such underwriter:
As of April 1, 1997
Col A Col. B Col. C Col. D
Name of Owner Title of class Amount owned Percent of voting
beneficially securities represented by
amount given in Col. C
- ------------- -------------- ------------ ------------------------
Not Applicable
Item 8. Securities of the obligor owned or held by the trustee
Furnish the following information as to securities of the obligor owned
beneficially or held as collateral security for obligations in default by
the trustee:
As of April 1, 1997
Col A Col. B Col. C Col. D
Name of Owner Title of class Amount owned Percent of voting
beneficially or securities
held as collateral represented by
security for amount given
obligations in in Col. C
default
- -------------- -------------- ------------------ ------------------
Not Applicable
Item 9. Securities of underwriters owned or held by the trustee.
If the trustee owns beneficially or holds as collateral security for
obligations in default any securities of an underwriter for the obligor,
furnish the following information as
4
<PAGE>
to each class of securities of such underwriter any of which are so owned
or held by the trustee:
As of April 1, 1997
Col A Col. B Col. C Col. D
Name of Owner Title of class Amount owned Percent of voting
beneficially or securities
held as represented by
collateral amount given
security for in Col. C
obligations in
default
- -------------- -------------- ---------------- -----------------
Not Applicable
Item 10. Ownership or holdings by the trustee of voting securities of certain
affiliates or securityholders of the obligor.
If the trustee owns beneficially or holds as collateral security for
obligations in default voting securities of a person who, to the knowledge
of the trustee (1) owns 10 percent or more of the voting securities of the
obligor or (2) is an affiliate, other than a subsidiary, of the obligor,
furnish the following information as to the voting securities of such
person:
As of April 1, 1997
Col A Col. B Col. C Col. D
Name of Owner Title of class Amount owned Percent of voting
beneficially or securities
held as collateral represented
security for by amount given in
obligations in Col. C
default
- -------------- -------------- ----------------- ------------------
Not Applicable
5
<PAGE>
Item 11. Ownership or holdings by the trustee of any securities of a person
owning 50 percent or more of the voting securities of the obligor.
If the trustee owns beneficially or holds as collateral security security
for obligations in default any securities of a person who, to the knowledge
of the trustee, owns 50 percent or more of the voting securities of the
obligor, furnish the following information as to each class of securities
of such any of which are so owned or held by the trustee:
As of April 1, 1997
Col. A Col. B Col. C
Nature of Indebtedness Amount Outstanding Date Due
- ---------------------- ----------------- ---------
Not Applicable
Item 12. Indebtedness of the Obligor to the Trustee.
Except as noted in the instructions, if the obligor is indebted to the
trustee, furnish the following information:
As of April 1, 1997
Col A Col. B Col. C Col. D
Name of Owner Title of class Amount owned Percent of voting
beneficially or securities represented
held as by amount given in Col. C
collateral
security for
obligations in
default
- ------------- -------------- ---------------- ------------------------
Not Applicable
Item 13. Defaults by the Obligor.
(a) State whether there is or has been a default with respect to the
securities under this indenture. Explain the nature of any such
default.
Not Applicable
(b) If the trustee is a trustee under another indenture under which
any other securities, or certificates of interest or
participation in any other securities, of the obligor are
outstanding, or is trustee for more than one outstanding series
of securities under the indenture, state whether there has been a
default
6
<PAGE>
under any such indenture or series, identify the indenture or series
affected, and explain the nature of any such default.
Not Applicable
Item 14. Affiliations with the Underwriters
If any underwriter is an affiliate of the trustee, describe each such
affiliation.
Not Applicable
Item 15. Foreign Trustees.
Identify the order or rule pursuant to which the foreign trustee is
authorized to act as sole trustee under indentures qualified or to be
qualified under the Act.
Not Applicable
Item 16. List of Exhibits.
List below all exhibits filed as part of this statement of eligibility.
*1. A copy of the Charter of IBJ Schroder Bank & Trust Company as
amended to date. (See Exhibit 1A to Form T-1, Securities and
Exchange Commission File No. 22-18460).
*2. A copy of the Certificate of Authority of the Trustee to Commence
Business (Included in Exhibit I above).
*3. A copy of the Authorization of the Trustee, as amended to date
(See Exhibit 4 to Form T-1, Securities and Exchange Commission
File No. 22-19146).
*4. A copy of the existing By-Laws of the Trustee, as amended to date (See
Exhibit 4 to Form T-1, Securities and Exchange Commission File No. 22-
19146).
7
<PAGE>
5. A copy of each Indenture referred to in Item 4, if the Obligor is
in default. Not Applicable.
6. The consent of the United States institutional trustee required
by Section 321(b) of the Act.
7. A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or
examining authority.
* The Exhibits thus designated are incorporated herein by reference as
exhibits hereto. Following the description of such Exhibits is a reference
to the copy of the Exhibit heretofore filed with the Securities and
Exchange Commission, to which there have been no amendments or changes.
NOTE
In answering any item in this Statement of Eligibility which relates to
matters peculiarly within the knowledge of the obligor and its directors or
officers, the trustee has relied upon information furnished to it by the
obligor.
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
trustee of all facts on which to base responsive answers to Item 2, the
answer to said Item are based on incomplete information.
Item 2, may, however, be considered as correct unless amended by an
amendment to this Form T-1.
Pursuant to General Instruction B, the trustee has responded to Items 1, 2
and 16 of this form since to the best knowledge of the trustee as indicated
in Item 13, the obligor is not in default under any indenture under which
the applicant is trustee.
8
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, IBJ Schroder Bank & Trust Company, a corporation
organized and existing under the laws of the State of New York, has duly
caused this statement of eligibility & qualification to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of
New York, and State of New York, on the 1st day of April, 1997.
IBJ SCHRODER BANK & TRUST COMPANY
By: /s/ Barbara McCluskey
----------------------------
<PAGE>
EXHIBIT 6
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture
Act of 1939, as amended, in connection with the issue by Anacomp, Inc.
of its 10-7/8% Senior Subordinated Notes due 2004, Series B, we hereby
consent that reports of examinations by Federal, State, Territorial,
or District authorities may be furnished by such authorities to the
Securities and Exchange Commission upon request therefor.
IBJ SCHRODER BANK & TRUST COMPANY
By: /s/ Barbara McCluskey
-----------------------
Barbara McCluskey
Vice President
Dated: April 1, 1997
<PAGE>
CONFORMED
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, IBJ Schroder Bank & Trust Company, a corporation
organized and existing under the laws of the State of New York, has
duly caused this statement of eligibility & qualification to be signed
on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York, and State of New York, on the 1st day of April,
1997.
IBJ SCHRODER BANK & TRUST COMPANY
By: /s/ Barbara McCluskey
---------------------
Barbara McCluskey
Vice President
<PAGE>
EXHIBIT 6
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture
Act of 1939, as amended, in connection with the issue by, Anacomp, Inc.
of its 10-7/8% Senior Subordinated Notes due 2004, Series B, we hereby
consent that reports of examinations by Federal, State, Territorial,
or District authorities may be furnished by such authorities to the
Securities and Exchange Commission upon request therefor.
IBJ SCHRODER BANK & TRUST COMPANY
By: /s/ Barbara McCluskey
------------------------------------
Barbara McCluskey
Vice President
Dated: April 1, 1997
<PAGE>
EXHIBIT 7
CONSOLIDATED REPORT OF CONDITION OF
IBJ SCHRODER BANK & TRUST COMPANY
OF NEW YORK, NEW YORK
AND FOREIGN AND DOMESTIC SUBSIDIARIES
REPORT AS OF SEPTEMBER 30, 1996
DOLLAR AMOUNTS
IN THOUSANDS
ASSETS
Cash and balance due from depository institutions:
Noninterest-bearing balances and currency and coin . . . $ 34,228
Interest-bearing balances . . . . . . . . . . . . . . . . . $ 229,175
Securities: Held-to-maturity securities. . . . . . . . . . . $ 174,707
Available-for-sale securities. . . . . . . $ 36,168
Federal funds sold and securities purchased under
agreements to resell in domestic offices of the bank
and of its Edge and Agreement subsidiaries and in IBFs:
Federal Funds sold. . . . . . . . . . . . . . . . . . . . . $ 15,062
Securities purchased under agreements to resell . . . . . . $ -0-
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . $1,780,278
LESS: Allowance for loan and lease losses . . . $ 56,976
LESS: Allocated transfer risk reserve . . . . . $ -0-
Loans and leases, net of unearned income, allowance, and
reserve . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,723,302
Trading assets held in trading accounts . . . . . . . . . . . . $ 622
Premises and fixed assets (including capitalized leases). . . . $ 4,264
Other real estate owned . . . . . . . . . . . . . . . . . . . . $ 397
Investments in unconsolidated subsidiaries and associated
companies . . . . . . . . . . . . . . . . . . . . . . . . . . $ -0-
Customers' liability to this bank on acceptances outstanding. . $ 105
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . $ -0-
Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . $ 153,290
TOTAL ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,371,320
<PAGE>
LIABILITIES
Deposits:
In domestic offices . . . . . . . . . . . . . . . . . . . . . $ 671,747
Noninterest-bearing . . . . . . . . . . . . . $ 224,231
Interest-bearing . . . . . . . . . . . . . . . $ 447,516
In foreign offices, Edge and Agreement subsidiaries, and IBFs $ 856,540
Noninterest-bearing. . . . . . . . . . . . . . $ 17,313
Interest-bearing . . . . . . . . . . . . . . . $ 839,227
Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of the bank and
of its Edge and Agreement subsidiaries, and in IBFs:
Federal Funds purchased . . . . . . . . . . . . . . . . . . $ 430,500
Securities sold under agreements to repurchase. . . . . . . $ -0-
Demand notes issued to the U.S. Treasury. . . . . . . . . . . . $ 50,000
Trading Liabilities . . . . . . . . . . . . . . . . . . . . . . $ 539
Other borrowed money:
a) With a remaining maturity of one year or less. . . . . . $ 61,090
b) With a remaining maturity of more than one year. . . . . $ 7,647
Mortgage indebtedness and obligations under capitalized leases. $ -0-
Bank's liability on acceptances executed and outstanding. . . . $ 105
Subordinated notes and debentures . . . . . . . . . . . . . . . $ -0-
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . $ 77,289
TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . $ 2,155,457
Limited-life preferred stock and related surplus. . . . . . . . $ -0-
EQUITY CAPITAL
Perpetual preferred stock and related surplus . . . . . . . . . $ -0-
Common stock. . . . . . . . . . . . . . . . . . . . . . . . . . $ 29,649
Surplus (exclude all surplus related to preferred stock). . . . $ 217,008
Undivided profits and capital reserves. . . . . . . . . . . . . $ (30,795)
Net unrealized gains (losses) on available-for-sale securities. $ 1
Cumulative foreign currency translation adjustments . . . . . . $ -0-
TOTAL EQUITY CAPITAL. . . . . . . . . . . . . . . . . . . . . . $ 215,863
TOTAL LIABILITIES AND EQUITY CAPITAL. . . . . . . . . . . . . . $ 2,371,320
