SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
APRIL 14, 2000
Date of Report (Date of Earliest Event Reported)
NASHUA CORPORATION
(Exact Name of Registrant as Specified in its Charter)
DELAWARE
(State or Other Jurisdiction of Incorporation)
1-5492-1 02-0170100
(Commission File Number) (I.R.S. Employer Identification No.)
44 FRANKLIN STREET
NASHUA, NEW HAMPSHIRE 03064
(Address of Principal Executive Offices)
(603) 880-2323
(Registrant's Telephone Number, Including Area Code)
NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report)
ITEM 5 - OTHER EVENTS
On March 21, 2000, Nashua Corporation ("Nashua"), Rittenhouse
Paper Company("Rittenhouse") and the stockholders of Rittenhouse entered
into a Stock Purchase Agreement. A copy of this Stock Purchase Agreement
is attached hereto as Exhibit 2.1 and is incorporated herein by reference.
On April 17, 2000, Nashua, Rittenhouse and such stockholders completed the
transaction contemplated by such Stock Purchase Agreement.
Nashua, the stockholders of Rittenhouse and LaSalle Bank, N.A.
have entered into an Escrow Agreement as of April 14, 2000. A copy of this
Escrow Agreement is attached hereto as Exhibit 2.2 and is incorporated
herein by reference.
Nashua, Rittenhouse, Rittenhouse, L.L.C., Fleet Bank-NH and
LaSalle Bank, N.A. entered into a Revolving Credit and Term Loan Agreement
as of April 14, 2000. A copy of this Revolving Credit and Term Loan
Agreement is attached hereto as Exhibit 10.17 and is incorporated herein by
reference.
Nashua and Andrew B. Albert entered into an Employment Agreement
as of April 14, 2000. A copy of this Employment Agreement is attached
hereto as Exhibit 10.18 and is incorporated herein by reference.
ITEM 7 - EXHIBITS
Exhibit
Number Description
------- -----------
2.1. Stock Purchase Agreement entered into as of March 21, 2000 by and
among Nashua Corporation, Rittenhouse Paper Company and the
stockholders of Rittenhouse Paper Company.
2.2. Escrow Agreement entered into as of April 14, 2000 by and among
Nashua Corporation, the stockholders of Rittenhouse Paper Company
and LaSalle Bank, N.A.
10.17. Revolving Credit and Term Loan Agreement entered into as of
April 14, 2000 by and among Nashua Corporation, Rittenhouse,
L.L.C., Rittenhouse Paper Company, Fleet Bank-NH and LaSalle
Bank, N.A.
10.18. Employment Agreement entered into as of April 14, 2000 by
and between Nashua Corporation and Andrew B. Albert.
Pursuant to Item 601(b)(2) of Regulation S-K, certain schedules and other
attachments to the Stock Purchase Agreement, Escrow Agreement and Revolving
Credit and Term Loan Agreement have been omitted. Such exhibits will be
submitted to the Securities and Exchange Commission upon request.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
NASHUA CORPORATION
Date: April 18, 2000 By /s/ Peter C. Anastos
Peter C. Anastos
Vice President, General Counsel
and Secretary
EXHIBIT INDEX
Exhibit
Number Description
------- -----------
2.1. Stock Purchase Agreement entered into as of March 21, 2000 by and
among Nashua Corporation, Rittenhouse Paper Company and the
stockholders of Rittenhouse Paper Company.
2.2. Escrow Agreement entered into as of April 14, 2000 by and among
Nashua Corporation, the stockholders of Rittenhouse Paper Company
and LaSalle Bank, N.A.
10.17. Revolving Credit and Term Loan Agreement entered into as of
April 14, 2000 by and among Nashua Corporation, Rittenhouse,
L.L.C., Rittenhouse Paper Company, Fleet Bank-NH and LaSalle
Bank, N.A.
10.18. Employment Agreement entered into as of April 14, 2000 by
and between Nashua Corporation and Andrew B. Albert.
Pursuant to Item 601(b)(2) of Regulation S-K, certain schedules and other
attachments to the Stock Purchase Agreement, Escrow Agreement and Revolving
Credit and Term Loan Agreement have been omitted. Such exhibits will be
submitted to the Securities and Exchange Commission upon request.
STOCK PURCHASE AGREEMENT
among
RITTENHOUSE PAPER COMPANY,
THE STOCKHOLDERS LISTED ON
SCHEDULE I ATTACHED HERETO,
and
NASHUA CORPORATION
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Section Page
<S> <C>
1. Purchase and Sale of the Shares..........................................................................1
1.01. Purchase of the Shares from the Stockholders....................................................1
1.02. Further Assurances..............................................................................1
1.03. Purchase Price for the Shares...................................................................2
1.04. Payments on Account of Indemnification..........................................................3
1.05. Stockholders' Representatives...................................................................3
1.06. Closing.........................................................................................5
2. Representations of the Stockholders Regarding the Shares.................................................5
3. Representations of the Stockholders and the Company Regarding the Company................................6
3.01. Organization....................................................................................6
3.02. Capitalization of the Company...................................................................6
3.03. Subsidiaries, Affiliated Entities and Related Entities..........................................6
3.04. Authorization...................................................................................7
3.05. No Conflict.....................................................................................8
3.06. Financial Statements............................................................................8
3.07. Absence of Undisclosed Liabilities.............................................................10
3.08. Litigation.....................................................................................10
3.09. Insurance......................................................................................10
3.10. Personal Property..............................................................................11
3.11. Intangible Property............................................................................11
3.12. Leases.........................................................................................13
3.13. Real Estate....................................................................................13
3.14. Inventory......................................................................................14
3.15. Accounts Receivable............................................................................15
3.16. Tax Matters....................................................................................15
3.17. Books and Records..............................................................................17
3.18. Contracts and Commitments......................................................................17
3.19. Compliance with Agreements and Laws............................................................19
3.20. Employee Relations.............................................................................20
3.21. Employee Benefit Plans.........................................................................21
3.22. Absence of Certain Changes or Events...........................................................25
3.23. Customers......................................................................................25
3.24. Suppliers......................................................................................25
3.25. Warranty and Product Liability Claims..........................................................25
3.26. Prepayments and Deposits.......................................................................25
3.27. Indebtedness to and from Officers, Directors and Stockholders..................................26
3.28. Banking Facilities.............................................................................26
3.29. Powers of Attorney and Suretyships.............................................................26
3.30. Conflicts of Interest..........................................................................26
3.31. Regulatory Approvals...........................................................................27
3.32. Environmental Matters..........................................................................27
3.33. Disclosure.....................................................................................28
4. Representations of the Buyer............................................................................28
4.01. Organization and Authority.....................................................................28
4.02. Authorization..................................................................................29
4.03. Approvals......................................................................................29
4.04. Disclosure.....................................................................................29
4.05. Investment Representation......................................................................29
4.06. Litigation.....................................................................................30
5. HSR Act Filing; Access to Information; Confidentiality; Public Announcements............................30
5.01. HSR Act Filing.................................................................................30
5.02. Access to Management, Properties and Records...................................................30
5.03. Confidentiality................................................................................31
5.04. Public Announcements...........................................................................31
6. Pre-Closing Covenants of the Stockholders, the Company and the Subsidiaries.............................31
6.01. Conduct of Business............................................................................31
6.02. Absence of Material Changes....................................................................32
6.03. Delivery of Interim Financial Statements.......................................................33
6.04. Communications with Customers and Suppliers....................................................34
6.05. Continued Truth of Representations and Warranties..............................................34
6.06. Continuing Obligation to Inform................................................................34
6.07. Exclusive Dealing..............................................................................34
6.08. Reports, Taxes.................................................................................35
6.09. Forms 8023.....................................................................................35
7. Best Efforts to Obtain Satisfaction of Conditions.......................................................35
8. Conditions to Obligations of the Buyer..................................................................35
8.01. Continued Truth of Representations and Warranties of the Stockholders and the Company..........35
8.02. Performance by the Stockholders and the Company................................................35
8.03. Governmental Approvals.........................................................................35
8.04. Consent of Lenders, Lessors and Other Third Parties............................................35
8.05. Adverse Proceedings............................................................................36
8.06. Opinion of Counsel.............................................................................36
8.07. Employment Contract............................................................................36
8.08. Closing Deliveries.............................................................................36
8.09. Transferred Real Estate........................................................................37
8.10. Transferred Equipment..........................................................................37
8.11. Interests In Subsidiaries......................................................................38
8.12. Certain Subsidiary Interests...................................................................38
8.13. Certain Personal Property......................................................................38
8.14. HSR Approval...................................................................................38
8.15. Financing......................................................................................38
8.16. Certain Employment and Equity Interests........................................................38
8.17. Debt Repayments................................................................................39
9. Conditions to Obligations of the Stockholders...........................................................39
9.01. Continued Truth of Representations and Warranties of the Buyer;
Compliance with Covenants and Obligations....................................................39
9.02. Corporate Proceedings..........................................................................39
9.03. Governmental Approvals.........................................................................39
9.04. HSR Approval...................................................................................39
9.05. Adverse Proceedings............................................................................39
9.06. Opinion of Counsel.............................................................................40
9.07. Board Representation...........................................................................40
9.08. Closing Deliveries.............................................................................40
9.09. Effective as of the Closing....................................................................40
10. Indemnification.........................................................................................40
10.01. By the Stockholders and the Company............................................................40
10.02. By the Buyer...................................................................................41
10.03. Special Litigation Indemnity...................................................................42
10.04. Claims for Indemnification.....................................................................42
10.05. Defense by the Indemnifying Party..............................................................42
10.06. Payment of Indemnification Obligations.........................................................43
10.07. Survival of Representations; Claims for Indemnification........................................43
10.08. Deductible Amount; Cap Amount..................................................................44
11. Post-Closing Agreements.................................................................................44
11.01. Proprietary Information........................................................................44
11.02. No Solicitation or Hiring of Former Employees..................................................44
11.03. Non-Competition Agreement......................................................................45
11.04. Section 338(h)(10) Election....................................................................45
11.05. Tax Returns and Cooperation....................................................................47
11.06. Waco Facility Lease............................................................................48
11.07. Retiree Benefits...............................................................................48
12. Termination of Agreement; Option to Proceed; Damages....................................................48
12.01. Termination by Lapse of Time...................................................................49
12.02. Termination by Agreement of the Parties........................................................49
12.03. Termination by Reason of Breach................................................................49
12.04. Availability of Remedies at Law................................................................49
13. Dispute Resolution......................................................................................49
13.01. General........................................................................................49
13.02. Consent of the Parties.........................................................................49
13.03. Arbitration....................................................................................50
14. Brokers.................................................................................................51
14.01. For the Stockholders, the Company and the Subsidiaries.........................................51
14.02. For the Buyer..................................................................................51
15. Notices.................................................................................................51
16. Successors and Assigns..................................................................................52
17. Entire Agreement; Amendments; Attachments...............................................................53
18. Severability............................................................................................53
19. Investigation of the Parties............................................................................53
20. Expenses................................................................................................53
21. Legal Fees..............................................................................................53
22. Governing Law...........................................................................................54
23. Section Headings........................................................................................54
24. Definitions.............................................................................................54
25. Counterparts............................................................................................54
Exhibits
Exhibit A Determination of Contingent Purchase Price
Exhibit B Escrow Agreement
Exhibit C Employment Agreement
Exhibit D Opinion of Hale and Dorr LLP
Exhibit E Opinion of Sonnenschein Nath & Rosenthal
</TABLE>
STOCK PURCHASE AGREEMENT
Agreement (the "Agreement") made as of the 21st day of
March, 2000 by and among Nashua Corporation, a Delaware corporation with
its principal office at 44 Franklin Street, Nashua, New Hampshire (the
"Buyer"), Rittenhouse Paper Company, an Illinois corporation with its
principal office at 250 South Northwest Highway, Suite 103, Park Ridge, IL
60068 (the "Company"), and the Stockholders listed on Schedule 1.01
attached hereto (individually, a "Stockholder" and collectively, the
"Stockholders") who own all of the issued and outstanding capital stock of
the Company.
Preliminary Statement
1. Each of the Stockholders owns the number of the issued and
outstanding shares (collectively, the "Shares") of the common
stock, no par value per share (the "Common Stock"), of the Company
set forth opposite his name on Schedule I attached hereto, which
Shares in the aggregate represent all of the issued and
outstanding shares of capital stock of the Company.
2. The Buyer desires to purchase, and the Stockholders desire to
sell, the Shares for the consideration set forth below, subject to
the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises
hereinafter set forth and other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties hereby agree as
follows:
1. Purchase and Sale of the Shares.
1.01. Purchase of the Shares from the Stockholders. Subject to and upon the
terms and conditions of this Agreement, at the closing of the transactions
contemplated by this Agreement (the "Closing"), each Stockholder shall
sell, transfer, convey, assign and deliver to the Buyer, and the Buyer
shall purchase, acquire and accept from each Stockholder, all the Shares
owned by such Stockholder, as set forth opposite such Stockholder's name on
Schedule 1.01 attached hereto. At the Closing each Stockholder shall
deliver to the Buyer certificates evidencing the Shares owned by such
Stockholder duly endorsed in blank or with stock powers duly executed by
such Stockholder.
1.02. Further Assurances. From time to time after the Closing, each of the
Stockholders and Buyer shall promptly execute and deliver such instruments
of sale, transfer, conveyance, assignment and confirmation, and take all
such other action as necessary, proper and advisable under this Agreement
to more effectively transfer, convey and assign to the Buyer, and to
confirm the Buyer's title to, all of the Shares owned by such Stockholder,
and to consummate or otherwise make effective the transactions contemplated
by this Agreement.
1.03. Purchase Price for the Shares.
(a) The purchase price to be paid by the Buyer for the Shares shall be
Fifty Seven Million Dollars ($57,000,000) plus (i) "Normal Cash" (as
defined in Section 6.01 hereof), (ii) all amounts prepaid prior to the
Closing with respect to the purchase of the combination offset/flexographic
press with 7 offset print stations and 2 flexographic print stations, under
contract with RDP ("New Press") and (iii) "Inventory Build-up Cost" (as
defined in Section 6.01 hereof), less (i) "Credited Liabilities" (as
defined in paragraph 3.06(f) hereof), (ii) the Real Estate Purchase Price
(as defined in Section 8.09) and (iii) the Equipment Purchase Price (as
defined in Section 8.10) (the "Base Purchase Price"), increased by up to an
additional Six Million Dollars ($6,000,000) determined as set forth on
Exhibit A attached hereto (the "Contingent Purchase Price"). The Base
Purchase Price, including the Inventory Build-up Cost as of the day prior
to Closing, shall be payable in the manner described in paragraph (b) of
this Section 1.03, and the Contingent Purchase Price shall be paid as
specified in Exhibit A attached hereto.
(b) At the Closing, the Buyer shall deliver:
(i) to the Stockholders' Representatives (as defined in
Section 1.05(a) hereof), a sum equal to the Base Purchase
Price, the Real Estate Purchase Price and the Equipment
Purchase Price less Two Million Five Hundred Thousand
($2,500,000) in cash, by cashier's or certified check, or
by wire transfer of immediately available funds to
accounts designated by the Stockholders' Representative,
for distribution to the Stockholders by the Stockholders'
Representatives in the amount set forth opposite each
such Stockholder's name on Schedule 1.01 attached hereto;
and
(ii) to LaSalle Bank, N.A., as escrow agent (the "Escrow
Agent"), the sum of Two Million Five Hundred Thousand
($2,500,000), to be held in an interest-bearing escrow
account pursuant to the terms of the Escrow Agreement
attached hereto as Exhibit B (the "Escrow Agreement"), as
a reserve (the "Escrow Fund") to satisfy all or part of
any claims for indemnity pursuant to Section 10 hereof.
(c) In the event that the Stockholders and the Buyer make a Section
338(h)(10) Election, as described in Section 11.04 hereof, Buyer shall pay
to the Stockholders, as an adjustment to purchase price, such additional
amount of cash, if any, as may be required to be paid to the Stockholders
to cause the Stockholders to realize the same after-Tax proceeds as would
have been realized absent the Section 338(h)(10) Election (the "Tax
Adjustment"). The Tax Adjustment shall be determined and paid in the manner
and at the time specified in Section 11.04(c) hereof.
(d) Within 30 days after the Closing Date, the parties shall make the
following purchase price adjustment: In the event that Closing Date Cash
has either increased or decreased by any amount subsequent to the
calculation of Normal Cash, the amount of the increase or decrease shall be
paid by the Stockholders to the Buyer (if Normal Cash exceeds Closing Day
Cash) or by Buyer to the Stockholders (if Closing Day Cash exceeds Normal
Cash) (the "Normal Cash Adjustment"). The Normal Cash Adjustment shall be
made by cashier's or certified check, or by wire transfer of immediately
available funds.
1.04. Payments on Account of Indemnification.
(a) Any amounts payable to the Buyer in connection with any claim for
indemnification pursuant to Section 10 hereof shall be paid immediately
upon the resolution, by agreement or arbitration, of such indemnification
claim in accordance with Section 10.06 hereof.
(b) Any balance remaining in the Escrow Fund, after all payments to the
Buyer pursuant to Section 10.06, shall be paid by the Escrow Agent to the
Stockholders' Representatives upon termination of the Escrow Agreement. All
payments to the Stockholders' Representatives by the Escrow Agent shall be
distributed by the Stockholders' Representatives to each of the
Stockholders in the proportion set forth opposite their respective names on
Schedule 1.01 attached hereto.
(c) Except for payments permitted pursuant to paragraphs (a) and (b) above,
all amounts in the Escrow Fund shall be held in such Account, until the
later of eighteen (18) months from the Closing Date, or (ii) the final
resolution, whether by agreement or arbitration, of any claims for
indemnification under Section 10 hereof which are asserted in writing by
the Buyer prior to the expiration of such eighteen (18) month period.
(d) Amounts payable to the Buyer pursuant to this Section 1.04 or Section
10 shall be treated (and reported on all applicable Tax Returns) as
adjustments to the appropriate Purchase Price.
1.05. Stockholders' Representatives.
(a) In order to efficiently administer (i) the waiver of any condition to
the obligations of the Stockholders to consummate the transactions
contemplated hereby, and (ii) the defense and/or settlement of any claims
for which the Stockholders may be required to indemnify the Buyer pursuant
to Section 10 hereof, the Stockholders hereby designate Simon Blattner, Jr.
and Andrew Albert as their representatives (the "Stockholders'
Representatives");
(b) The Stockholders hereby authorize the Stockholders' Representatives,
acting unanimously, (i) to take all action necessary in connection with the
waiver of any condition to such obligations of the Stockholders to
consummate the transactions contemplated hereby, or the defense and/or
settlement of any claims for which Stockholders may be required to
indemnify the Buyer pursuant to Section 10 hereof, (ii) to give and receive
all notices required to be given under the Agreement, and (iii) to take any
and all additional action as is contemplated to be taken by or on behalf of
Stockholders by the terms of this Agreement.
(c) In the event that Simon Blattner dies, becomes unable to perform his
responsibilities hereunder or resigns from such position, the Blattner
Stockholders holding, prior to the Closing, a majority of the Blattner
Shares as set forth on Schedule 1.01 attached hereto shall select another
Stockholder Representative to fill such vacancy and such substituted
representative shall be deemed to represent the Blattner Stockholders' for
all purposes of this Agreement. In the event that Andrew Albert dies or
becomes unable to perform his responsibilities hereunder, Kenneth Granat
shall be his successor as a Stockholder Representative for all purposes of
this Agreement.
(d) All decisions and actions by the Stockholders' Representatives,
including, without limitation, any agreement between the Stockholders'
Representatives and the Buyer relating to the defense or settlement of any
claims for which the Stockholders may be required to indemnify the Buyer
pursuant to Section 10 hereof, shall be binding upon all of the
Stockholders, and no Stockholder shall have the right to object, dissent,
protest or otherwise contest the same.
(e) By their execution of this Agreement, the Stockholders agree that:
(i) the Buyer shall be able to rely conclusively on the
instructions and decisions of the Stockholders'
Representatives as to the settlement of any claims for
indemnification by the Buyer or the Company pursuant to
Section 10 hereof or any other actions required to be
taken by the Stockholders' Representatives hereunder, and
no party hereunder shall have any cause of action against
the Buyer for any action taken by the Buyer in reliance
upon the instructions or decisions of the Stockholders'
Representatives;
(ii) all actions, decisions and instructions of the
Stockholders' Representatives shall be conclusive and
binding upon the respective Stockholders and no
Stockholder shall have any cause of action against the
Stockholders' Representatives for any action taken,
decision made or instruction given by the Stockholders'
Representatives under this Agreement, except for fraud or
willful breach of this Agreement by either of the
Stockholders' Representatives;
(iii) the provisions of this Section 1.05 are independent and
severable, are irrevocable and coupled with an interest
and shall be enforceable notwithstanding any rights or
remedies that any Stockholder may have in connection with
the transactions contemplated by this Agreement;
(iv) remedies available at law for any breach of the
provisions of this Section 1.05 are inadequate;
therefore, the Buyer shall be entitled to temporary and
permanent injunctive relief without the necessity of
proving damages if the Buyer brings an action to enforce
the provisions of this Section 1.05; and
(v) the provisions of this Section 1.05 shall be binding upon
the executors, heirs, legal representatives and
successors of each Stockholder, and any references in
this Agreement to a Stockholder or the Stockholders shall
mean and include the successors to the Stockholders'
rights hereunder, whether pursuant to testamentary
disposition, the laws of descent and distribution or
otherwise.
(f) All fees and expenses incurred by the Stockholders' Representatives
shall be paid by the Stockholders in proportion to their ownership of
Shares as set forth on Schedule 1.01 attached hereto.
1.06. Closing. The Closing shall take place at the offices of Hale and Dorr
LLP, 60 State Street, Boston, Massachusetts 02109, at 10:00 a.m., Boston
Time, on April 19, 2000 or at such other place, time or date as may be
mutually agreed upon in writing by the parties. The transfer of the Shares
by the Stockholders to the Buyer shall be deemed to occur at 9:00 a.m.,
Boston Time, on the Closing Date.
2. Representations of the Stockholders Regarding the Shares. Each
Stockholder severally, and not jointly, represents and warrants to the Buyer
as follows:
(a) Such Stockholder has good and marketable title to the Shares which are
to be transferred to the Buyer by such Stockholder pursuant hereto, free
and clear of any and all covenants, conditions, restrictions, voting trust
arrangements, liens, charges, encumbrances, options and adverse claims or
rights whatsoever. Schedule 1.01 attached hereto sets forth a true and
correct description of all Shares owned by such Stockholder.
(b) Such Stockholder has the full right, power and authority to enter into
this Agreement and to transfer, convey and sell to the Buyer at the Closing
the Shares to be sold by such Stockholder hereunder and, upon consummation
of the purchase contemplated hereby, the Buyer will acquire from such
Stockholder good and marketable title to such Shares, free and clear of all
covenants, conditions, restrictions, voting trust arrangements, liens,
charges, encumbrances, options and adverse claims or rights whatsoever.
(c) Such Stockholder is not a party to, subject to or bound by any
agreement or any judgment, order, writ, prohibition, injunction or decree
of any court or other governmental body which would prevent the execution
or delivery of this Agreement by such Stockholder or the transfer,
conveyance and sale of the Shares to be sold by such Stockholder to the
Buyer pursuant to the terms hereof.
(d) Except as set forth in Section 14 hereof, no broker or finder has acted
for such Stockholder in connection with this Agreement or the transactions
contemplated hereby, and no broker or finder is entitled to any brokerage
or finder's fee or other commissions in respect of such transactions based
upon agreements, arrangements or understandings made by or on behalf of
such Stockholder.
3. Representations of the Stockholders and the Company Regarding the
Company. Each of the Stockholders and the Company, jointly and severally,
represent and warrant to the Buyer that:
3.01. Organization. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Illinois, and
has all requisite power and authority (corporate and other) to own its
properties, to carry on its business as now being conducted, to execute and
deliver this Agreement and the agreements contemplated herein, and to
consummate the transactions contemplated hereby and thereby. The Company is
duly qualified to do business and in good standing in the jurisdictions
listed on Schedule 3.01, and the Company is qualified and in good standing
in all other jurisdictions in which the failure to so qualify would have a
Material Adverse Effect. Certified copies of the Certificate of
Incorporation and Bylaws of the Company, as amended to date, have been
previously delivered to the Buyer, are complete and correct, and no
amendments have been made thereto or have been authorized since the date
thereof.
3.02. Capitalization of the Company. The Company's authorized capital stock
consists solely of 2,000,000 shares of Class A Common Stock and 2,000,000
shares of Class B Common Stock, no par value per share, of which 699,940
shares of Class A Common Stock and 399,436 shares of Class B Common Stock
are issued and outstanding on the date hereof and held of record and
beneficially by the Stockholders as set forth on Schedule 1.01. All such
issued and outstanding shares of Common Stock have been and on the Closing
Date will be duly and validly issued and are, or will be on such date,
fully paid and non-assessable. There are not and on the Closing Date there
will not be, outstanding (i) any options, warrants or other rights to
purchase from the Company any capital stock of the Company; (ii) any
securities convertible into or exchangeable for shares of such stock; or
(iii) any other commitments of any kind for the issuance of additional
shares of capital stock or options, warrants or other securities of the
Company. No shares of the issued and outstanding shares of Common Stock are
held in the treasury of the Company.
3.03. Subsidiaries, Affiliated Entities and Related Entities.
(a) Schedule 3.03 attached hereto sets forth:
(i) the name and percentage ownership by the Company of each
Subsidiary and Related Entity of the Company;
(ii) the name and percentage ownership by any Stockholder of
each Affiliated Entity and Related Entity of the Company
which has or at any time in the past five years has had a
relationship with the Company or any Subsidiary;
(iii) the jurisdiction of organization, capitalization and
ownership of each Subsidiary, Affiliated Entity and
Related Entity;
(iv) the names of the officers, directors, partners or other
managers of each Subsidiary, Affiliated Entity and
Related Entity; and
(v) the jurisdictions in which each Subsidiary, Affiliated
Entity and Related Entity is qualified or holds licenses
to do business as a foreign corporation.
(b) On the Closing Date, the Company will own of record and beneficially
all of the outstanding shares of capital stock and of any other equity
interests of or in each of the Subsidiaries free and clear of all
covenants, conditions, restrictions, liens, charges and encumbrances.
(c) Each of the Subsidiaries, Affiliated Entities and Related Entities is a
corporation or other entity duly organized and validly existing and in good
standing under the laws of the state of its incorporation or organization
and has all requisite power and authority to own its properties and carry
on its business as now being conducted. The LLC is duly qualified to do
business and in good standing in all jurisdictions in which failure to so
qualify would have a Material Adverse Effect. Certified copies of the
charter, bylaws and other governing instrument of each of the Subsidiaries,
each as amended to date, have been previously delivered to the Buyer, are
complete and correct, and no amendments have been made thereto or have been
authorized since the date of such delivery. The Company does not own any
capital stock of or other equity interest in any corporation, partnership
or other entity other than the Subsidiaries and Related Entities. The
shares of capital stock (or other form of equity interest) of each
Subsidiary as set forth in Schedule 3.03 have been duly and validly issued
and are fully paid and non-assessable.
(d) Except as set forth in Schedule 3.03, none of the Subsidiaries holds
shares of its capital stock in its treasury, and there are not, and on the
Closing Date there will not be, outstanding any (i) options, warrants or
other rights with respect to the capital stock or other equity interests in
or of any of the Subsidiaries, (ii) any securities convertible into or
exchangeable for shares of such stock, or (iii) any other commitments of
any kind for the issuance of additional shares of capital stock or options,
warrants or other securities of any of them.
3.04. Authorization. The execution and delivery by the Company of this
Agreement and the agreements provided for herein, and the consummation by
the Company of all transactions contemplated hereunder and thereunder by
the Company, have been duly authorized by all requisite corporate action.
This Agreement has been duly executed by the Company and the Stockholders.
This Agreement and all other agreements and obligations entered into and
undertaken in connection with the transactions contemplated hereby to which
the Company or any of the Stockholders is a party constitute the valid and
legally binding obligations of the Company and the Stockholders,
enforceable against them in accordance with their respective terms.
3.05. No Conflict. The execution, delivery and performance by the Company
and the Stockholders of this Agreement and the agreements provided for
herein, and the consummation by the Company and the Stockholders of the
transactions contemplated hereby and thereby, will not, with or without the
giving of notice or the passage of time or both, (a) violate the provisions
of any law, rule or regulation applicable to the Company or any of the
Stockholders; (b) violate the provisions of the Certificate of
Incorporation or Bylaws of the Company; (c) violate any judgment, decree,
order or award of any court, governmental body or arbitrator; or (d)
conflict with or result in the breach or termination of any term or
provision of, or constitute a default under, or cause any acceleration
under, or cause the creation of any lien, charge or encumbrance upon the
properties or assets of the Company pursuant to, any indenture, mortgage,
deed of trust or other instrument or agreement to which the Company is a
party or by which the Company or any of its properties is or may be bound;
excluding from the foregoing clauses (a), (c) and (d) such violations,
conflicts, breaches, accelerations, modifications, cancellations and
encumbrances and such failures to obtain any authorization, consents,
approvals or exemptions or to make such notices as would not in the
aggregate have a Material Adverse Effect or would not prevent the transfer
of Shares by any Stockholder free and clear of all Liens. Except as set
forth on Schedule 3.05, neither the execution and delivery by the Company,
its Subsidiaries and the Stockholders of this Agreement, nor the
performance by the Company, its Subsidiaries or the Stockholders of their
obligations hereunder, nor the consummation by the Company, its
Subsidiaries or the Stockholders of the transactions contemplated hereby
will result in a default under, or require the consent or approval of any
party to, any contract or license of the Company or the relevant
Subsidiary. Schedule 3.05 attached hereto sets forth a true, correct and
complete list of all consents and approvals of third parties that are
required in connection with the consummation by the Company of the
transactions contemplated by this Agreement.
3.06. Financial Statements.
(a) The Stockholders have previously delivered to the Buyer the unaudited
consolidated balance sheet of the Company as of December 31, 1998 (the
"Company 1998 Balance Sheet") and the related statements of income,
shareholders' equity, and retained earnings of the Company for the fiscal
year then ended, certified by the Company's chief financial officer
(collectively, the "Company 1998 Financial Statements"). The Stockholders
will also deliver to the Buyer prior to Closing the unaudited consolidated
balance sheet of the Company as of December 31, 1999 (the "Company 1999
Balance Sheet") and the related statements of income, shareholders' equity,
and retained earnings of the Company for the twelve-month period then ended
certified by the Company's chief financial officer (collectively, the
"Company 1999 Financial Statements"). The Company 1998 Financial
Statements, the Company 1999 Financial Statements and the Company Interim
Financial Statements, as defined in and as to be delivered pursuant to
Section 6.03 (collectively, the "Company Financial Statements") have been
(or, in the case of the Company Interim Financial Statements, will be)
prepared in accordance with generally accepted accounting principles
except, in the case of the Company 1999 Financial Statements and the
Company Interim Financial Statements, for the absence of notes thereto and
year-end adjustments and accruals made in the ordinary course of business,
consistent with past practices.
(b) The Stockholders have previously delivered to the Buyer the audited
consolidated balance sheet of Rittenhouse, L.L.C. (the "LLC") as of
December 31, 1998 (the "LLC 1998 Balance Sheet") and the related statements
of income, shareholders' equity, retained earnings and changes in cash flow
of the LLC for the fiscal year then ended, accompanied by the opinion of an
independent auditor (collectively, the "LLC 1998 Financial Statements").
The Stockholders have also previously delivered to the Buyer the unaudited
consolidated balance sheet of the LLC as of December 31, 1999 (the "LLC
1999 Balance Sheet") and the related statements of income, shareholders'
equity, retained earnings and changes in cash flow of the LLC for the
twelve-month period then ended (collectively, the "LLC 1999 Financial
Statements") certified by the LLC's chief financial officer. The LLC 1998
Financial Statements, the LLC 1999 Financial Statements and the LLC Interim
Financial Statements, as defined in and as to be delivered pursuant to
Section 6.03 hereof (collectively, the "LLC Financial Statements") have
been (or, in the case of the LLC Interim Financial Statements, will be)
prepared in accordance with generally accepted accounting principles
except, in the case of the LLC 1999 Financial Statements and the LLC
Interim Financial Statements, for the absence of notes thereto and year-end
adjustments and accruals made in the ordinary course of business,
consistent with past practices. The date of the LLC 1998 Balance Sheet is
hereinafter referred to as the "Balance Sheet Date."
(c) The Company Financial Statements fairly present, as of their respective
dates, the financial condition, retained earnings, assets and liabilities
of the Company and the results of operations of the Company's business for
the periods indicated and can be reconciled to the Company's books and
records.
(d) The LLC Financial Statements fairly present, as of their respective
dates, the financial condition, retained earnings, assets and liabilities
of the LLC and the results of operations and cash flows of the LLC's
business for the periods indicated and can be reconciled to the LLC's books
and records.
(e) The book value of inventory reflected on the LLC 1998 Balance Sheet, as
computed on a first in, first out and lower of cost or market basis, is
true and correct, and the reserve set forth in the footnotes to the LLC
1998 Balance Sheet with respect thereto is true and correct.
(f) Schedule 3.06(f) attached hereto lists (i) all interest-bearing debt of
the Company and the Subsidiaries (ii) all deferred compensation owed by the
Company or any Subsidiary to Simon J. Blattner, Jr. ("Blattner"), and (iii)
the cost of the 20 inch press (the 20" Press) purchased to support
additional Federal Express business and presently leased to the LLC. Buyer
shall have the option to purchase such press for the fair market value upon
the expiration of said lease. "Credited Liabilities" means item (iii)
listed on Schedule 3.06(f) attached hereto.
3.07. Absence of Undisclosed Liabilities. Except (a) as and to the extent
reflected and reserved against in the LLC 1998 Balance Sheet; (b) for
Permitted Exceptions; (c) as set forth on Schedule 3.07 attached hereto and
except for liabilities under agreements, contracts, leases or commitments
described on Schedule 3.18 attached hereto or not required to be disclosed
on such schedules (the "Contract Liabilities"), as of the date of the LLC
1998 Balance Sheet, neither the Company nor any of its Subsidiaries has any
liability or obligation, secured or unsecured, whether accrued, absolute,
contingent, unasserted or otherwise, which is material to the condition
(financial or otherwise) of the assets, properties, business or prospects
of the Company and the Subsidiaries taken as a whole and which is not
required to be disclosed under any other provision of this Agreement. For
purposes of this Section 3.07, "material" means any amount in excess of
$50,000.
3.08. Litigation. Except as set forth on Schedule 3.08 attached hereto (a)
there is no action, suit or proceeding to which the Company or any of the
Subsidiaries is a party, or, to the Stockholders' Knowledge, may be made a
party (either as a plaintiff or defendant) pending or threatened before any
court or governmental agency, authority, body or arbitrator and, to the
Stockholders' Knowledge, there is no basis for any such action, suit or
proceeding; (b) neither the Company nor any of the Subsidiaries, nor, to
the Stockholders' Knowledge, any officer, director or employee of any of
the foregoing, has been permanently or temporarily enjoined by any order,
judgment or decree of any court or any governmental agency, authority or
body from engaging in or continuing any conduct or practice in connection
with the business, assets, or properties of the Company or any of the
Subsidiaries; and (c) there is not in existence on the date hereof any
order, judgment or decree of any court, tribunal or agency enjoining or
requiring the Company or any of the Subsidiaries to take any action of any
kind with respect to its business, assets or properties.
3.09. Insurance. Schedule 3.09 attached hereto sets forth a true, correct
and complete list of all fire, theft, casualty, general liability, workers
compensation, business interruption, environmental impairment, product
liability, automobile and other insurance policies (excluding any insurance
policies relating to any Employee Plan) maintained by the Company or any of
the Subsidiaries, specifying the insurer and the effective date of each
such policy (collectively, the "Insurance Policies") and all claims made
under such Insurance Policies since March 1997. True, correct and complete
copies of all Insurance Policies have been previously delivered, or will be
delivered or made available prior to Closing, by the Stockholders or the
Company to the Buyer. The Insurance Policies are in full force and effect
and are in amounts of a nature which are adequate and customary for the
Company's and the Subsidiaries' business. All premiums due on the Insurance
Policies or renewals thereof have been paid, and there is no default under
the Insurance Policies. Except as set forth on Schedule 3.09, neither the
Company nor any of the Subsidiaries has received any notice or other
communication from any issuer of the Insurance Policies since March 1997
canceling or materially amending any of the Insurance Policies, materially
increasing any deductibles or retained amounts thereunder, or materially
increasing the annual or other premiums payable thereunder, and, to
Stockholders' Knowledge, no such cancellation, amendment or increase of
deductibles, retainages or premiums is threatened. Except as set forth on
Schedule 3.09, neither the Company nor any of the Subsidiaries has any
material outstanding claims or any material dispute with any insurance
carrier regarding claims, settlements or premiums and neither the Company
nor any of the Subsidiaries has failed to give any notice or present any
claim under any Insurance Policy in due and timely fashion. The Company has
not received written notice that there are any outstanding requirements or
recommendations by any issuer of the Insurance Policies or by any Board of
Fire Underwriters or other similar body exercising similar functions or by
any governmental authority exercising similar functions which requires or
recommends any material changes in the conduct of the business of, or any
material repairs or other work to be done on or with respect to any of the
properties or assets of, the Company or any of the Subsidiaries.
3.10. Personal Property. Schedule 3.10 attached hereto sets forth a true,
correct and complete list of all items of tangible personal property owned
by the Company or any of the Subsidiaries as of the date hereof having
either a net book value per unit or an estimated book market value per unit
in excess of $5,000; or not owned by the Company or any Subsidiary but in
the possession of or used or useful in the business of the Company or any
of the Subsidiaries and having rental payments therefor in excess of $1,000
per month or $12,000 per year (other than art work or furniture owned
personally by any of the Stockholders) (collectively, the "Personal
Property"). The total value of such personally owned art work and furniture
does not exceed $30,000 and at or prior to the Closing Date the
Stockholders shall furnish to the Buyer a schedule of such items having a
value of more than $5,000 each. Except as disclosed on Schedule 3.10, the
Company or the relevant Subsidiary, as the case may be, has good and
marketable title to each item of Personal Property free and clear of all
Liens, except Permitted Liens and the Personal Property is in good
operating condition and repair, normal wear and tear excepted, and is used
or useful in the business or the Company or its Subsidiaries.
3.11. Intangible Property. Schedule 3.11 attached hereto sets forth: (i) a
true, correct and complete list and, where appropriate, a description of,
all items of intangible property owned by, or used or useful in connection
with the business of, the Company or any of the Subsidiaries, including,
but not limited to, trade secrets, know-how, any other confidential
information of the Company, United States and foreign patents, trade names,
trademarks, trade name and trademark registrations, copyrights and
copyright registrations, and applications for any of the foregoing (the
"Intangible Property"); and (ii) a true, correct and complete list of all
licenses or similar agreements or arrangements to which the Company or any
of the Subsidiaries is a party, either as licensee or licensor, with
respect to the Intangible Property. Except as otherwise disclosed in
Schedule 3.11:
(a) the Company or a Subsidiary is the sole and exclusive owner of all
right, title and interest in and to the Intangible Property and all
designs, permits, labels and packages used on or in connection therewith,
free and clear of all liens, security interests, charges, encumbrances,
equities or other adverse claims;
(b) the Company or the relevant Subsidiary has the right and authority to
use the Intangible Property in connection with the conduct of its business
in the manner presently conducted, and such use does not conflict with,
infringe upon or violate any rights of any other person, corporation or
entity;
(c) neither the Company nor any of the Stockholders has received notice of,
or has any knowledge of any basis for, a pleading or threatened claim,
interference action or other judicial or adversarial proceeding against the
Company that any of the operations, activities, products, services or
publications of the Company or any of its customers or distributors
infringes or will infringe any patent, trademark, trade name, copyright,
trade secret or other property right of a third party, or that it is
illegally or otherwise using the trade secrets, formulae or property rights
of others;
(d) there are no outstanding, nor to the Stockholders' Knowledge, any
threatened disputes or other disagreements with respect to any licenses or
similar agreements or arrangements described in Schedule 3.11 or with
respect to infringement by a third party of any of the Intangible Property;
(e) the Intangible Property owned or licensed by the Company or the
relevant Subsidiary is sufficient to conduct the Company's or the relevant
Subsidiary's business as presently conducted;
(f) the Company or the relevant Subsidiary has taken all steps reasonably
necessary to protect its right, title and interest in and to the Intangible
Property and the continued use of the Intangible Property;
(g) no officer, director, stockholder or employee of the Company or any
Subsidiary, nor any spouse, child or other relative or affiliate thereof,
owns directly or indirectly, in whole or in part, any of the Intangible
Property; and
(h) neither the Company nor the relevant Subsidiary nor any Stockholder has
any knowledge that any third party is infringing, or will threaten to
infringe, upon or otherwise violate any of the Intangible Property in which
the Company or any Subsidiary has ownership rights.
3.12. Leases. Schedule 3.12 attached hereto sets forth (a) a true, correct
and complete list as of the date hereof identifying separately each lease
of real property, to which the Company or any of the Subsidiaries is a
party (collectively, the "Leases"). True, correct and complete copies of
all Leases and all amendments, modifications and supplemental agreements
thereto, have previously been delivered by the Stockholders or the Company
or otherwise made available to the Buyer or its agents, attorneys, or
representatives and except as set forth on Schedule 3.12, none of the
Leases have been modified or amended since the date of delivery to the
Buyer. No party to any Lease has sent written notice to the other claiming
that such party is in default thereunder and no such default remains
uncured as of the date hereof. To the Stockholders' Knowledge, except as
set forth on Schedule 3.12, there has not occurred any event which would
constitute a breach of or default in the performance of any covenant,
agreement or condition contained in any Lease, nor has there occurred any
event which with the passage of time or the giving of notice or both would
constitute such a breach or material default. Neither the Company nor any
of the Subsidiaries is obligated to pay any leasing or brokerage commission
relating to any Lease and, except as set forth on Schedule 3.12, will not
have any obligation to pay any leasing or brokerage commission upon the
renewal of any Lease. Except as set forth on Schedule 3.12, no
construction, alteration or other leasehold improvement work with respect
to any of the Leases remains to be paid for or to be performed by the
Company or any of the Subsidiaries.
3.13. Real Estate.
(a) Schedule 3.13A attached hereto contains a true, correct and complete
list of the addresses of all real property owned by the Company, the
Stockholders or any Subsidiary and all Transferred Real Estate (the "Real
Estate"). On the Closing Date, upon completion of transfers contemplated by
Section 8.09 the Company, the Stockholders or the relevant Subsidiary will
have good and marketable record title to the Real Estate, free and clear of
all such exceptions to title, other than the Permitted Exceptions.
(b) The Company has not received written notice from any Governmental
Agency of any pending or threatened condemnation or eminent domain
proceeding with respect to the Real Estate.
(c) Except as set forth on Schedule 3.13A, to the Stockholders' Knowledge,
there are no mechanics or materialmen's liens with respect to the Real
Estate, there are no taxes or betterment assessments other than ordinary
real estate Taxes pending or payable against the Real Estate and there are
no contingencies existing under which any assessment for real estate taxes
may be retroactively filed against the Real Estate.
(d) Except as set forth on Schedule 3.13A, to the Stockholders' Knowledge
all utility systems situated on and serving the Real Estate are in good
operating condition.
(e) Except as set forth on Schedule 3.13A, to the Stockholders' Knowledge,
the Real Estate is not located in any special flood hazard area designated
by any federal, state, county or local governmental agencies having
jurisdiction over the Real Estate (collectively, the "Governmental
Agencies").
(f) To the Stockholders' Knowledge, there are no suits, petitions, notices
or proceedings pending, given or threatened by any persons or Governmental
Agencies before any court, Governmental Agencies or instrumentalities,
administrative or otherwise, which if given, commenced or concluded would
have a Material Adverse Effect or the operation of the business of the
Company or any Subsidiary as presently operated.
(g) Neither the Company nor any of the Subsidiaries has received notice
from any insurer of the Real Estate threatening to cancel any insurance
coverage or requiring any material changes or corrective work to the Real
Estate which has not been satisfied.
(h) All of the buildings, fixtures and other improvements located on the
Real Estate are in good operating condition and repair, subject to normal
wear and tear, and the operation thereof as presently conducted is not in
violation in any material respect of any applicable building code, zoning
ordinance or other law or regulation.
(i) To Stockholders' Knowledge, the Company has not received any written
notice from any Governmental Agency that the Real Estate does not comply in
all material respects with the requirements of all building, zoning,
subdivision, health, safety, environmental, pollution control, waste
products, sewage control and all other applicable statutes, laws, codes,
ordinances, rules, orders, regulations and decrees (collectively, the
"Governmental Regulations") of any and all Governmental Agencies. The
Company has not received any written notice of any action pending or
threatened by any Governmental Agencies claiming that the Real Estate
violates any Governmental Regulations or threatening to shut down the
business of the Company or any of the Subsidiaries.
(j) Schedule 3.13A sets forth a true, correct and complete list of all
title insurance policies, surveys engineering reports and environmental
assessments prepared with respect to the Real Estate since March 21, 1990,
copies of which have previously been delivered by the Stockholders or the
Company or otherwise made available to the Buyer.
3.14. Inventory. Except as set forth on Schedule 3.14, the inventories of
the Company and the Subsidiaries (the "Inventory") are usable and salable
in the ordinary course of business and the value of all items of obsolete
materials and of materials of below standard quality have been written down
to realizable market value and the values at which such inventory is
carried reflect the normal Inventory valuation policy of the Company and
the Subsidiaries of stating Inventory at the lower of cost or market value
in accordance with generally accepted accounting principles.
3.15. Accounts Receivable. Except as set forth on Schedule 3.15, accounts
and notes receivable of the Company and the Subsidiaries (the "Accounts
Receivable") have arisen in the ordinary course of business of the Company
and the Subsidiaries and represent collectible receivables due to the
operations of the Company or its Subsidiaries in accordance with their
terms.
3.16. Tax Matters.
(a) Except as set forth on Schedule 3.16 attached hereto:
(i) Within the times and in the manner prescribed by law, the
Company and each of the Subsidiaries have filed all Tax
Returns which are required to be filed by them;
(ii) The Company and each of the Subsidiaries have paid all
Taxes which have become due or which have been claimed to
be due from them, unless contested in good faith by the
Company;
(iii) All Tax Returns filed by the Company and the Subsidiaries
for the for the relevant fiscal year or time period from
March 31, 1993 through December 31, 1998 constitute
complete and accurate representations of the respective
Tax liabilities of the Company and the Subsidiaries for
such years and accurately set forth all items (to the
extent required to be included or reflected in such
returns) relevant to their future Tax liabilities,
including the Tax bases of their properties and assets;
(iv) Neither the Company nor any of the Subsidiaries has
waived or extended any applicable statute of limitations
relating to the assessment of Taxes;
(v) No examinations of the Tax Returns of the Company or any
of the Subsidiaries is currently in progress nor, to
Stockholders' Knowledge, threatened and no deficiencies
have been asserted or assessed against either the Company
or any of the Subsidiaries as a result of any audit by
the Internal Revenue Service or any state or local taxing
authority and no such deficiency has been proposed or
threatened;
(vi) Neither the Company nor any of the Subsidiaries has filed
a consent pursuant to Section 341(f) of the Code relating
to collapsible corporations nor has any such corporation
agreed to have Section 341(f)(2) of the Code apply to any
disposition of a Section (f) asset (as such term is
defined in Section 341(f)(4) of the Code);
(vii) Since December 31, 1993 neither the Company nor any of
the Subsidiaries has participated in or cooperated with
an international boycott, within the meaning of Section
999 of the Code, nor has any such corporation had
operations which are or may hereafter become reportable
under Section 999 of the Code;
(viii) The unpaid Taxes of the Company and the Subsidiaries for
tax periods through the date of the most recent Interim
Financial Statements do not exceed the accruals and
reserves for Taxes set forth on the most recent Interim
Financial Statements (exclusive of any accruals for
"deferred taxes" or similar items that reflect timing
differences between Tax and financial accounting
principles);
(ix) Neither the Company nor any Subsidiary has been informed
in writing by any jurisdiction that the jurisdiction
believes that the Company or Subsidiary was required to
file any Tax Return that was not filed;
(x) Neither the Company nor any Subsidiary has made any
payments, is obligated to make any payments, or is a
party to any agreement that could obligate it to make any
payments that will be "excess parachute payments" under
Code Section 280G;
(xi) Neither the Company nor any Subsidiary has any actual or
potential liability for any Taxes of any person (other
than the Company and its Subsidiaries) under Treasury
Regulation Section 1.1502-6 (or any similar provision of
federal, state, local, or foreign law), or as a
transferee or successor, by contract, or otherwise;
(xii) Neither the Company nor any Subsidiary has undergone a
change in its method of accounting resulting in an
adjustment to its taxable income pursuant to Section
481(a) of the Code which adjustment must be reflected in
a taxable period ending on or after the Closing Date;
(xiii) At all times since September 4, 1996, for federal income
Tax purposes, the Company has validly been treated as an
"S corporation" within the meaning of Code Section
1361(a) and has validly been treated in a similar manner
for purposes of the income Tax laws of all states in
which it has been subject to taxation;
(xiv) None of the Company's Subsidiaries is a domestic
corporation as defined in Section 7701 of the Code;
(xv) The "net unrealized built-in gain" within the meaning of
Code Section 1374(d) of the Company and it Subsidiaries
that would give rise to taxation pursuant to Section 1374
of the Code (or comparable provisions of state or local
law) if all of the assets of the Company and the
Subsidiaries were disposed of as of the end of the day
immediately preceding the Closing Date at their
respective fair market values does not exceed $7,000,000;
and
(xvi) Neither the Company nor any Subsidiary is or has ever
been a member of a group of corporations with which it
has filed (or been required to file) consolidated,
combined or unitary Tax Returns, other than a group of
which only the Company and the Subsidiaries are or were
members.
(b) Schedule 3.16 attached hereto sets forth those taxable years for which
the Tax Returns of the Company (other than those that have closed under the
applicable statute of limitations) and the Subsidiaries have been reviewed
or audited by applicable taxing authorities and those tax years for which
said Tax Returns have received clearances or other indications of approval
from applicable taxing authorities. To the Stockholders' Knowledge, no
issue or issues have been raised in connection with any prior or pending
review or audit of said Tax Returns which the Stockholders reasonably
believe may be expected to be raised in the future by such taxing
authorities in connection with the audit or review of the Tax Returns of
the Company or any of the Subsidiaries.
3.17. Books and Records. The general ledgers and books of account of the
Company and the Subsidiaries, and all federal, state and local income,
franchise, property and other Tax Returns filed by the Company and the
Subsidiaries are in all material respects complete and correct and have
been maintained in accordance with Company's usual, regular and ordinary
manner and in accordance with all applicable procedures required by laws
and regulations.
3.18. Contracts and Commitments.
(a) To the Stockholders' Knowledge, Schedule 3.18 attached hereto contains
a true, complete and correct list of the following contracts and
agreements, whether written or oral (collectively, the "Contracts"):
(i) all loan agreements, indentures, mortgages and guaranties
to which the Company or any of the Subsidiaries is a
party or by which the Company or any of the Subsidiaries
or any of their property is bound;
(ii) all pledges, conditional sale or title retention
agreements, security agreements, equipment obligations,
personal property leases and lease purchase agreements to
which the Company or any of the Subsidiaries is a party
or by which the Company or any of the Subsidiaries or any
of their property is bound;
(iii) all contracts and agreements to which the Company or any
of the Subsidiaries is a party or by which the Company or
any of the Subsidiaries or any of their property is bound
which (A) involve payments or receipts by the Company or
any of the Subsidiaries of more than $50,000 in the case
of any single contract, agreement, commitment,
understanding or arrangement under which full performance
(including payment) has not been rendered by all parties
thereto or (B) which in the opinion of the Stockholders
would have a Material Adverse Effect;
(iv) all collective bargaining agreements, employment and
consulting agreements, executive compensation plans,
bonus plans, deferred compensation agreements, pension
plans, retirement plans, employee stock option or stock
purchase plans and group life, health and accident
insurance and other employee benefit plans or agreements
to which the Company or any of the Subsidiaries is a
party or by which the Company or any of the Subsidiaries
or any of their property is bound;
(v) all agency, distributor, sales representative, franchise
or similar agreements to which the Company or any of the
Subsidiaries is a party or by which the Company or any of
the Subsidiaries or any of their property is bound;
(vi) all contracts or agreements between the Company and any
of the Subsidiaries or the LLC (including, but not
limited to, any Tax sharing arrangements) or between the
Company and any of the Stockholders or their affiliates;
(vii) all leases, whether operating, capital or otherwise,
under which the Company or any of the Subsidiaries is
lessor or lessee;
(viii) all contracts and agreements relating to past disposal of
waste (whether or not hazardous);
(ix) all contracts or agreements imposing a non-competition or
non-solicitation obligation on the Company or any of its
Subsidiaries; and
(x) any other material agreements or contracts entered into
by the Company or any of the Subsidiaries.
(b) Except as set forth on Schedule 3.18:
(i) To the Stockholders' Knowledge, each Contract is a valid
and binding agreement of the Company or the relevant
Subsidiary, enforceable against the Company or the
relevant Subsidiary in accordance with its terms;
(ii) To Stockholders' Knowledge, the Company or the relevant
Subsidiary has fulfilled all material obligations
required pursuant to the Contracts to have been performed
by the Company or the relevant Subsidiary, as the case
may be, on its part prior to the date hereof;
(iii) The Company or the relevant Subsidiary is not in breach
of or default under any Contract, and no event has
occurred which with the passage of time or giving of
notice or both would constitute such a default, result in
a loss of rights or result in the creation of any lien,
charge or encumbrance, thereunder or pursuant thereto;
(iv) To Stockholder's Knowledge, except as set forth on
Schedule 3.18 the Company and the Subsidiaries are not
restricted by any Contract from carrying on their
business anywhere in the world;
(v) Neither the Company nor any of the Subsidiaries has
experienced any shortages of components or other supplies
(collectively "Supplies") within the twelve (12) month
period preceding the date hereof, and the Company and the
Subsidiaries have on hand, or have reason to believe they
can timely obtain, a sufficient quantity of Supplies to
satisfy all outstanding orders heretofore received and
all orders anticipated to be received from the date
hereof through the Closing Date; and
(vi) Neither the Company nor any of the Subsidiaries has
experienced any shortages of raw materials ("Raw
Materials") within the twelve (12) month period preceding
the date hereof, and the Company and the Subsidiaries
have on hand, or have reason to believe they can timely
obtain, a sufficient quantity of Raw Materials to satisfy
all outstanding orders heretofore received and all orders
anticipated to be received through the Closing Date.
(c) True, correct and complete copies of all Contracts have previously been
delivered by the Company or the Stockholders to the Buyer.
3.19. Compliance with Agreements and Laws. The Company and the Subsidiaries
each have all requisite licenses, permits and certificates, including
environmental, health and safety permits, from federal, state and local
authorities necessary to conduct their respective business and own and
operate their respective assets (collectively, the "Permits"). Schedule
3.19 attached hereto sets forth a true, correct and complete list of all
such Permits, copies of which have previously been delivered by the Company
or the Stockholders to the Buyer. To the Stockholder's Knowledge, neither
the Company nor any of the Subsidiaries is in violation of any law,
regulation or ordinance relating to its properties. To the Stockholder's
Knowledge, the business of the Company and the Subsidiaries as conducted
since March 1998 has not violated, and on the date hereof does not violate,
in any material respect, any federal, state, local or foreign laws,
regulations or orders (including, but not limited to, any of the foregoing
relating to employment discrimination, occupational safety, environmental
protection, hazardous waste, conservation, or corrupt practices). Except as
set forth on Schedule 3.19, neither the Company nor any of the Subsidiaries
has received written notice or communication from any federal, state or
local governmental or regulatory authority or otherwise since March 1998 of
any such violation or noncompliance.
3.20. Employee Relations.
(a) To the Stockholders' Knowledge, the Company and each of the
Subsidiaries is in compliance with all federal, state and municipal laws
respecting employment and employment practices, terms and conditions of
employment, and wages and hours, and is not engaged in any unfair labor
practice, and there are no arrears in the payment of wages or social
security taxes in excess of periods permitted by law.
(b) Except as set forth on Schedule 3.20 attached hereto:
(i) none of the employees of the Company or the Subsidiaries
is represented by any labor union;
(ii) there is no unfair labor practice complaint against the
Company or any of the Subsidiaries pending before the
National Labor Relations Board or any state or local
agency;
(iii) there is no pending labor strike or other material labor
dispute affecting the Company or any of the Subsidiaries
(including, without limitation, any organizational
drive);
(iv) there is no material labor grievance pending against the
Company or any of the Subsidiaries;
(v) there is no pending representation question respecting
the employees of the Company or any of the Subsidiaries;
(vi) there are no pending arbitration proceedings arising out
of or under any collective bargaining agreement to which
the Company or any of the Subsidiaries is a party, or to
the Stockholders' Knowledge, any claim threatened under
any collective bargaining agreement to which the Company
or any of the Subsidiaries is a party; and
(vii) neither the Company nor any of the Subsidiaries has any
continuing obligation for health, life, medical insurance
or other similar fringe benefits (other than any welfare
benefits provided in compliance with the Consolidated
Omnibus Reconciliation Act of 1985 or other similar law)
to any former employee of the Company or any Subsidiary.
(c) The Stockholders have provided Buyer with a true, correct and complete
list of the current payroll of the Company and the Subsidiaries, including
the salary or wage rates of each of their employees, showing separately for
each such person who received an annual salary in excess of $25,000 the
maximum amounts paid or payable as salary and bonus payments for the fiscal
year ended December 31, 1999.
(d) The Company is and has been in compliance in all material respects with
the Worker Adjustment and Retraining Notification Act ("WARN"), 29 U.S.C.
2101 et seq., and all applicable state and local plant closing laws, if
applicable, specifically and not limiting the foregoing, with regard to the
closure of its Waco, Texas plant. Except as set forth on Schedule 3.20, no
employee of the Company shall become entitled to any severance pay as a
result of the Waco plant closing.
3.21. Employee Benefit Plans.
(a) Employee Plans. Schedule 3.21 attached hereto contains a true, correct
and complete list of all pension, benefit, profit sharing, retirement,
deferred compensation, welfare, insurance, disability, bonus, vacation pay,
severance pay and other similar plans, programs and agreements, whether
reduced to writing or not other than any "multiemployer plan" as such term
is defined in Section 4001(a)(3) of ERISA maintained at any time since
January 1, 1994 by the Company or by any other member (hereinafter, "ERISA
Affiliate") of any controlled group of corporations, group of trades or
businesses under common control, or affiliated service group (as defined
for purposes of Section 414(b), (c) and (m), respectively, of the Internal
Revenue Code of 1986, as amended (the "Code")) and under which the Company
or any ERISA Affiliate may have any liability or obligation (the "Employee
Plans").
(b) Prohibited Transactions. Except as set forth in Schedule 3.21 attached
hereto, to the Stockholders' Knowledge, neither the Company nor any of its
ERISA Affiliates, directors, officers, employees or agents, or any "party
in interest" or "disqualified person," as such terms are defined in Section
3 of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and Section 4975 of the Code has, with respect to any Employee
Plan, engaged in or been a party to any nonexempt "prohibited transaction,"
as such term is defined in Section 4975 of the Code or Section 406 of
ERISA, in connection with which, directly or indirectly, the Buyer or any
of its ERISA Affiliates, directors or employees or any Employee Plan or any
related funding medium could be subject to either a penalty assessed
pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of the
Code.
(c) Compliance. With respect to all Employee Plans, the Company and its
ERISA Affiliates are in material compliance with the requirements
prescribed by any and all statutes, orders or governmental rules or
regulations currently in effect, including, but not limited to, ERISA and
the Code, applicable to such Employee Plans. The Company and its ERISA
Affiliates have in all material respects performed all obligations required
to be performed by them under, and is not in violation in any material
respect of, and to the Stockholders' Knowledge there has been no default or
violation by any other party with respect to, any of the Employee Plans.
Except as set forth on Schedule 3.21 attached hereto: (i) none of the
Employee Plans which are subject to Title IV of ERISA has been or will be
terminated in whole or in part within the meaning of ERISA or the Code;
(ii) no material liability has been incurred to, nor has any event or
circumstance occurred, nor will any event or circumstance occur prior to
the Closing Date, which could result in such a liability being asserted by,
the Pension Benefit Guaranty Corporation ("PBGC") with respect to any
Employee Plan (other than the payment of annual premiums under Section 4007
of ERISA or benefits payable in accordance with the terms of such Employee
Plan); (iii) no Employee Plan that is subject to Part 3 of Subtitle B of
Title I of ERISA or Section 412 of the Code, or both, incurred any
"accumulated funding deficiency" (as defined in ERISA), whether or not
waived; (iv) neither the Company nor any ERISA Affiliate has failed to pay
any amounts due and owing as required by the terms of any Employee Plan;
(v) there has been no "reportable event" within the meaning of Section
4043(b)(1)-(9) of ERISA, or any event described in Section 4063(a) of
ERISA, with respect to any Employee Plan, other than as disclosed herein or
on accompanying schedules; (vi) neither Company nor any ERISA Affiliate has
failed to make any payment to an Employee Plan required under Section 302
of ERISA nor has any lien ever been imposed under Section 302(f) of ERISA;
(vii) neither the Company nor any ERISA Affiliate has adopted an amendment
to any Employee Plan which requires the provision of security under Section
307 of ERISA, (viii) the PBGC has not instituted any proceedings to
terminate an Employee Plan pursuant to Section 4042 of ERISA.
(d) Multiemployer Plans. Schedule 3.21 lists each and every multiemployer
plan to which the Company or its ERISA Affiliates contribute, are required
to contribute, or have been required to contribute since January 1, 1994.
To the Stockholders' Knowledge, no multiemployer plan listed in Schedule
3.21 is in "reorganization" (as defined in Section 4241 of ERISA) or
"insolvent" (as defined in Section 4245 of ERISA). Neither the Company nor
any ERISA Affiliate has withdrawn or is reasonably expected to withdraw
prior to Closing from a multiemployer plan in a complete or partial
withdrawal which has resulted or will result in "withdrawal liability," as
defined for purposes of Part I of Subtitle E of Part IV of ERISA, with
respect to any such plan which has not been satisfied in full. The Company
and its ERISA Affiliates have made all contributions to any such plan as
are required through the Closing Date under the terms of any such plans or
applicable statutes, regulations, rulings and other applicable law; and no
event has occurred, which could give rise to any other liability (other
than a continuing obligation to contribute to such plan(s) under the terms
of any applicable collective bargaining agreements) on the part of the
Company or the Buyer, or their ERISA Affiliates, officers, employees or
directors with respect to such plan(s).
(e) Retiree Benefits. Except as set forth in Schedule 3.21, no Employee
Plan provides health or life insurance benefits for retirees except as
required by applicable law. Except as set forth in Schedule 3.21, no such
plan contains any provisions, and no commitments or agreements exist, which
in any way would limit or prohibit the Buyer from amending any such plan to
reduce or eliminate such retiree benefits.
(f) Copies of Employee Plans and Related Documents. The Company has
previously delivered to the Buyer true, correct and complete copies of all
Employee Plans that are currently maintained by the Company and its ERISA
Affiliates which have been reduced to writing and written descriptions of
all such Employee Plans which have not been reduced to writing, and all
material agreements relating to each such Employee Plan, including trust
agreements and insurance contracts, related to such Employee Plans, and the
Summary Plan Description and all modifications thereto for each Employee
Plan communicated to employees. With respect to each Employee Plan that is
a "defined benefit plan," as such term is defined in Section 3(35) of ERISA
(the "Defined Benefit Plans"), true, correct and complete copies of (i) the
annual actuarial valuation reports for the last five years, (ii) the Form
5500 and Schedule A or B thereto, or both, filed for the last five years
and (iii) any filings made with the Pension Benefit Guaranty Corporation,
Internal Revenue Service or Department of Labor, or any correspondence with
or from such agencies, regarding the termination of any such Defined
Benefit Plan, have been delivered to the Buyer.
(g) Qualifications. Each Employee Plan intended to qualify under Section
401(a) of the Code has been determined by the Internal Revenue Service to
so qualify, and the trusts created thereunder have been determined to be
exempt from tax under the provisions of Section 501(a). Each Employee Plan
which is a funded welfare benefit plan intended to be exempt from tax under
the provisions of Section 501(c)(9) of the Code has been determined by the
Internal Revenue Service to be so exempt. Copies of all determination
letters with respect to each such Employee Plan have been previously
delivered by the Company to the Buyer, and nothing has since occurred, or,
to the Stockholders' Knowledge, will occur prior to the Closing Date, which
would cause the loss of such qualification or exemption, no such Employee
Plan has been operated in a manner which would cause it to be disqualified
in operation, and, except as set forth in Schedule 3.21 attached hereto,
all such Employee Plans have been administered in material compliance with
and consistent with all applicable requirements of the Code and ERISA,
including, without limitation, all reporting, notice, and disclosure
requirements.
(h) Funding Status, Etc.
(i) Except as set forth on Schedule 3.21, neither the Company
nor any corporation or trade or business (whether or not
incorporated) which would be treated as a member of the
controlled group of the Company under Section 4001(a)(14)
of ERISA would be liable for (A) any amount pursuant to
Section 4062, 4063, 4064, 4068 or 4069 of ERISA if any of
the Employee Plans which are subject to Title IV of ERISA
were to terminate or (B) any amount pursuant to Section
4201 of ERISA if a complete or partial withdrawal from
any multiemployer plan listed on Schedule 3.21 occurred
before the Closing. Except as set forth on Schedule 3.21,
all Employee Plans which are subject to Title IV of ERISA
have no unfunded benefit liabilities, as defined in
Section 4001(a)(18) of ERISA. There is no unpaid
contribution due with respect to the plan year of any
such Defined Benefit Plan ended prior to the Closing
Date, as required under the minimum funding requirements
of Section 412 of ERISA.
(ii) With respect to each Employee Plan which is a qualified
defined contribution pension, profit-sharing or stock
bonus plan, as defined in ERISA, all employer
contributions accrued for plan years ending prior to the
Closing Date under the Plan terms and applicable law have
been made by the Company.
(iii) All premiums or other payments required by the terms of
any group or individual insurance policies and programs
maintained by the Company and covering any present or
former employees of the Company with respect to all
periods up to and including the Closing Date have been
fully paid.
(i) Claims and Litigation. Except as set forth on Schedule 3.21, there are
no pending claims, suits or other proceedings and to the Stockholders'
Knowledge there are no threatened claims, suits or other proceedings by
present or former employees of the Company or its affiliates, plan
participants, beneficiaries or spouses of any of the above, the Internal
Revenue Service, the PBGC, or any other person or entity involving any
Employee Plan including claims against the assets of any trust, involving
any Employee Plan, or any rights or benefits thereunder, other than
ordinary and usual claims for benefits by participants or beneficiaries
including claims pursuant to domestic relations orders.
(j) No Implied Rights. Nothing expressed or implied herein shall confer
upon any past or present employee of the Company, his or her
representatives, beneficiaries, successors and assigns, nor upon any
collective bargaining agent, any rights or remedies of any nature,
including, without limitation, any rights to employment or continued
employment with the Company, the Buyer, or any successor or affiliate.
(k) Liabilities. Schedule 3.21 attached hereto sets forth a list of all
employees of the Company entitled to severance pay on the Closing Date by
reason of the consummation of the transactions contemplated by this
Agreement or severance pay accrued prior to the Closing Date and which will
be payable upon the subsequent termination of their employment after the
Closing Date.
(l) Agreement to Terminate Plans on Buyer's Request. Prior to the Closing
Date and upon the Buyer's request, the Company will by board resolution
terminate any employee benefit plan, including without limitation any
defined contribution or defined benefit retirement plan; provided that if
any such plan covers employees who are members of a collective bargaining
unit, the plan shall not be terminated unless the collective bargaining
agent consents to such termination.
3.22. Absence of Certain Changes or Events. Except as set forth on Schedule
3.22 attached hereto, since the date of the LLC 1999 Balance Sheet, neither
the Company nor any of the Subsidiaries (a) has entered into any
transaction which is not in the usual and ordinary course of business; it
being agreed that S Corporation Distributions are in the ordinary course of
business, nor (b) has it suffered any change which would have a Material
Adverse Effect.
3.23. Customers. Schedule 3.23 attached hereto sets forth a true, correct
and complete list of each customer of the Company and the Subsidiaries
which accounted for more than 5% of the consolidated revenues of the
Company and the Subsidiaries in the fiscal year ended December 31, 1999.
Except as set forth on Schedule 3.23, none of the material customers of
either the Company or any of the Subsidiaries has notified the Company or
the relevant Subsidiary, as the case may be, that it intends to discontinue
its relationship with the Company or the relevant Subsidiary.
3.24. Suppliers. Schedule 3.24 attached hereto sets forth a true, correct
and complete list of (i) the names and addresses of each of the suppliers
of the Company and the Subsidiaries which accounted for a dollar volume of
purchases by the Company and the Subsidiaries in excess of $500,000 for the
fiscal year ended December 31, 1999, and (ii) the present sole source
suppliers of significant goods or services, other than utilities, for any
product with respect to which practical alternative sources of supply are
not available on comparable terms and conditions, indicating the
contractual arrangements for continued supply from each such supplier.
Except as set forth on Schedule 3.24, (a) none of the suppliers of either
the Company or any of the Subsidiaries has notified the Company or the
relevant Subsidiary, as the case may be, that it intends to discontinue its
relationship with the Company or the relevant Subsidiary, and (b) neither
the Company nor any of the Subsidiaries is more than 30 days in arrears in
any material trade accounts payable or other payments owing to any
supplier.
3.25. Warranty and Product Liability Claims. Schedule 3.25 attached hereto
contains a true, correct and complete list of all warranty and product
liability claims made against the Company or any of the Subsidiaries from
October 1, 1999 through the date hereof in the amount of $50,000 or more,
the current status of all such claims, and the costs of all actions taken
in satisfaction of such claims. All information relative to such claims and
those arising thereafter shall be available to the Buyer from and after the
date hereof.
3.26. Prepayments and Deposits. Schedule 3.26 attached hereto sets forth
all prepayments and deposits, which have been received by the Company or
any of the Subsidiaries as of the date hereof from customers for products
to be shipped, or services to be performed, after the Closing Date, other
than products shipped cash in advance.
3.27. Indebtedness to and from Officers, Directors and Stockholders. Except
as set forth on Schedule 3.27 attached hereto and except for intercompany
indebtedness payable among the Company and any Subsidiary or among the
Subsidiaries, neither the Company nor any of the Subsidiaries is indebted,
directly or indirectly, to any person who is an officer, director or
stockholder of any of the foregoing entities or any affiliate of any such
person in any amount whatsoever other than for salaries for services
rendered or reimbursable business expenses, all of which have been
reflected on the LLC 1999 Financial Statements, and no such officer,
director, stockholder or affiliate is indebted to the Company or any of the
Subsidiaries except for advances made to employees of the Company or any of
the Subsidiaries in the ordinary course of business to meet reimbursable
business expenses anticipated to be incurred by such obligor.
3.28. Banking Facilities. Schedule 3.28 attached hereto sets forth a true,
correct and complete list of:
(a) each bank, savings and loan or similar financial institution in which
the Company or any of the Subsidiaries has an account or safety deposit box
and the numbers of the accounts or safety deposit boxes maintained by the
Company or any of the Subsidiaries thereat;
(b) the names of all persons authorized to draw on each such account or to
have access to any such safety deposit box facility, together with a
description of the authority (and conditions thereof, if any) of each such
person with respect thereto; and
(c) each outstanding letter of credit with respect to the Company or the
Subsidiaries.
3.29. Powers of Attorney and Suretyships. Except as set forth on Schedule
3.29 attached hereto, neither the Company nor any of the Subsidiaries has
any general or special powers of attorney outstanding (whether as grantor
or grantee thereof) or has any obligation or liability (whether actual,
accrued, accruing, continent or otherwise) as guarantor, surety, co-signer,
endorser, co-maker, indemnitor or otherwise in respect of the obligation of
any person, corporation, partnership, joint venture, association,
organization or other entity, except as endorser or maker of checks or
letters of credit, respectively, endorsed or made in the ordinary course of
business.
3.30. Conflicts of Interest. Except as set forth on Schedule 3.30 attached
hereto, no officer, director or Stockholder of the Company or any
Subsidiary nor, to Stockholders' Knowledge, any affiliate of any such
person, now has or within the last three (3) years had, either directly or
indirectly:
(a) an equity or debt interest in any corporation, partnership, joint
venture, association, organization or other person or entity which
furnishes or sells or during such period furnished or sold services or
products to the Company or any of the Subsidiaries, or purchases or during
such period purchased from the Company or any of the Subsidiaries any goods
or services, or otherwise does nor during such period did business with the
Company or any of the Subsidiaries, other than an interest of less than 1%
in any publicly traded company; or
(b) a beneficial interest in any contract, commitment or agreement to which
the Company or any of the Subsidiaries is or was a party or under which any
of them is or was obligated or bound or to which any of their respective
properties may be or may have been subject, other than stock options and
other contracts, commitments or agreements between the Company or any of
the Subsidiaries and such persons in their capacities as employees,
officers or directors of the Company or such Subsidiary.
3.31. Regulatory Approvals. Except for approvals of the Federal Trade
Commission and the Antitrust Division of the United States Department
pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "Hart-Scott-Rodino Act"), all consents, approvals,
authorizations or other requirements prescribed by any law, rule or
regulation which must be obtained or satisfied by the Company or any of the
Subsidiaries and which are necessary for the execution and delivery by the
Stockholders and the Company of this Agreement or any documents to be
executed and delivered by the Stockholders or the Company in connection
herewith are set forth on Schedule 3.31 attached hereto and have been, or
prior to the Closing Date will be, obtained and satisfied.
3.32. Environmental Matters.
(a) To the Stockholders' Knowledge, each of the Company and the
Subsidiaries has complied in all respects with all applicable Environmental
Laws (as defined below). There is no pending or, to the knowledge of the
Company, threatened civil or criminal litigation, written notice of
violation, formal administrative proceeding, or investigation, inquiry or
information request by any Governmental Entity, relating to any
Environmental Law involving the Company or any Subsidiary. For purposes of
this Agreement, "Environmental Law" means any federal, state or local law,
statute, rule or regulation or the common law relating to the environment
or occupational health and safety, including without limitation any
statute, regulation, administrative decision or order pertaining to (i)
treatment, storage, disposal, generation and transportation of industrial,
toxic or hazardous materials or substances or solid or hazardous waste;
(ii) air, water and noise pollution; (iii) groundwater and soil
contamination; (iv) the release or threatened release into the environment
of industrial, toxic or hazardous materials or substances, or solid or
hazardous waste, including without limitation emissions, discharges,
injections, spills, escapes or dumping of pollutants, contaminants or
chemicals; (v) the protection of wild life, marine life and wetlands,
including without limitation all endangered and threatened species; (vi)
storage tanks, vessels, containers, abandoned or discarded barrels, and
other closed receptacles; (vii) health and safety of employees and other
persons; and (viii) manufacturing, processing, using, distributing,
treating, storing, disposing, transporting or handling of materials
regulated under any law as pollutants, contaminants, toxic or hazardous
materials or substances or oil or petroleum products or solid or hazardous
waste. As used above, the terms "release" and "environment" shall have the
meaning set forth in the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended ("CERCLA").
(b) To the Stockholders' Knowledge, there have been no releases of any
Materials of Environmental Concern (as defined below) into the environment
by the Company or a Subsidiary. With respect to any such releases of
Materials of Environmental Concern, the Company or such Subsidiary has
given all required notices to Governmental Entities (copies of which have
been provided to the Buyer). For purposes of this Agreement, "Materials of
Environmental Concern" means any chemicals, pollutants or contaminants,
hazardous substances (as such term is defined under CERCLA), solid wastes
and hazardous wastes (as such terms are defined under the Resource
Conservation and Recovery Act), toxic materials, oil or petroleum and
petroleum products or any other material subject to regulation under any
Environmental Law.
(c) Schedule 3.32(c) sets forth a list of all environmental reports,
investigations and audits relating to premises currently or previously
owned or operated by the Company or a Subsidiary (whether conducted by or
on behalf of the Company or a Subsidiary or a third party, and whether done
at the initiative of the Company or a Subsidiary or directed by a
Governmental Entity or other third party) which were issued or conducted
during the past five years and which the Company has possession of or
access to. A complete and accurate copy of each such document has been
provided to the Buyer.
(d) The Company is not aware of any material environmental liability of any
solid or hazardous waste transporter or treatment, storage or disposal
facility that has been used by the Company or any Subsidiary.
3.33. Disclosure. Except for documents prepared by third parties and
provided to Buyer on behalf of the Company in accordance with the terms of
this Agreement, the information concerning the Company and the Subsidiaries
set forth in this Agreement, the Exhibits and Schedules attached hereto and
any document, statement or certificate furnished or to be furnished to the
Buyer pursuant hereto, does not and will not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
herein or therein or necessary to make the statements and facts contained
herein or therein, in light of the circumstances in which they are made,
not false and misleading.
4. Representations of the Buyer. The Buyer represents and warrants to each
Stockholder as follows:
4.01. Organization and Authority. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware, and has all requisite power and authority (corporate and
other) to own its properties and to carry on its business as now being
conducted. The Buyer has full power to execute and deliver this Agreement
and the agreements contemplated herein, and to consummate the transactions
contemplated hereby and thereby. Certified copies of the Certificate of
Incorporation and the Bylaws of the Buyer, as amended to date, have been
previously delivered to the Stockholders, are complete and correct, and no
amendments have been made thereto or have been authorized since the date
thereof.
4.02. Authorization. Except as set forth in Schedule 4.02 attached hereto,
the execution and delivery of this Agreement by the Buyer, and the
agreements provided for herein, and the consummation by the Buyer of the
transactions contemplated hereby and thereby, have been duly authorized by
all requisite corporate action. This Agreement and all such other
agreements and written obligations entered into and undertaken in
connection with the transactions contemplated hereby constitute the valid
and legally binding obligations of the Buyer, enforceable against the Buyer
in accordance with their respective terms. The execution, delivery and
performance of this Agreement and the agreements provided for herein, and
the consummation by the Buyer of the transactions contemplated hereby and
thereby, will not, with or without the giving of notice or the passage of
time or both, (a) violate the provisions of any law, rule or regulation
applicable to the Buyer; (b) violate the provisions of the Buyer's
Certificate of Incorporation or Bylaws; (c) violate any judgment, decree,
order or award of any court, governmental body or arbitrator; or (d)
conflict with or result in the breach or termination of any term or
provision of, or constitute a default under, or cause any acceleration
under, or cause the creation of any lien, charge or encumbrance upon the
properties or assets of the Buyer pursuant to, any indenture, mortgage,
deed of trust or other agreement or instrument to which the Buyer is a
party or by which the Buyer is or may be bound. Schedule 4.02 attached
hereto sets forth a true, correct and complete list of all consents and
approvals of third parties that are required in connection with the
consummation by the Buyer of the transactions contemplated by this
Agreement.
4.03. Approvals. Except for approvals of the Federal Trade Commission and
the Antitrust Division of the United States Department pursuant to the
Hart-Scott-Rodino Act, there are no consents, approvals, authorizations and
other requirements prescribed by any contract, agreement, indenture,
mortgage, loan or credit agreement, law, rule, regulation or other
obligation of the Buyer, which must be obtained or satisfied by the Buyer
and which are necessary for the execution and delivery by the Buyer of this
Agreement, and which are necessary for the consummation of the transactions
contemplated by this Agreement.
4.04. Disclosure. The information concerning the Buyer set forth in this
Agreement, the Exhibits attached hereto and any document, statement or
certificate furnished or to be furnished by the Buyer pursuant hereto, does
not and will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated herein or therein or necessary
to make the statements and facts contained herein or therein, in light of
the circumstances in which they are made, not false and misleading.
4.05. Investment Representation. The Buyer is acquiring the Shares from
each Stockholder for its own account for investment and not with a view to,
or for sale in connection with, any distribution thereof, nor with any
present intention of distributing or selling the same; and, except as
contemplated by this Agreement and the agreements contemplated herein, the
Buyer has no present or contemplated agreement, undertaking, arrangement,
obligation, indebtedness or commitment providing for the disposition
thereof.
4.06. Litigation. Except as provided in Schedule 4.06, there is no action,
suit or proceeding to which the Buyer is a party (either as a plaintiff or
defendant) pending or, to the Buyer's Knowledge, threatened against Buyer
before any court or governmental agency, authority, body or arbitrator
which would adversely affect Buyer's performance under this Agreement or
the consummation of the transactions contemplated hereby.
5. HSR Act Filing; Access to Information; Confidentiality; Public
Announcements.
5.01. HSR Act Filing. Each of the Company and Buyer shall make an HSR Act
filing requesting early termination (the "HSR Act Filing") no later than
March 22, 2000 (the "HSR Filing Date"), and shall coordinate their filing
dates to enable contemporaneous filing. The Buyer shall pay the filing fee
required to be paid to the Federal Trade Commission in connection with the
HSR Act Filing. Each of the Company and the Buyer shall pay all other fees
and expenses incurred by the Company or the Buyer, respectively, in
connection with the HSR Act Filing. The Company and the Buyer shall
cooperate with each other and promptly take or cause to be taken all
actions and do or cause to be done all things necessary, proper or
advisable to obtain favorable review of the proposed transaction under the
HSR Act. The Company and the Buyer agree to use commercially reasonable
efforts to resolve any objections that may be asserted with respect to the
transactions contemplated hereunder by the Department of Justice, the
Federal Trade Commission, any State Attorney General or any other
governmental entity (including, without limitation, objections under any
antitrust laws); provided, however, that neither party shall be required to
accept any condition or restriction, including, without limitation, the
disposition of assets, which would materially adversely impact the economic
or business benefits of the transactions contemplated hereby. The Company
and the Buyer agree to use reasonable efforts to take such action (any
action by the Company to be at Buyer's expense) as may be required by any
federal or state court of the United States, in any suit brought by a
private party or governmental entity challenging the transaction hereunder
as violative of the antitrust laws, in order to avoid the entry of, or to
cause the withdrawal or voiding of, any injunction, temporary restraining
order or other order which has the effect of preventing the consummation of
the transactions contemplated by this Agreement.
5.02. Access to Management, Properties and Records. From the date of this
Agreement until the Closing Date, the Stockholders and the Company shall
afford the officers, attorneys, accountants and other authorized
representatives of the Buyer access upon reasonable notice and during
normal business hours to all management personnel, offices, properties,
books and records of the Company and the Subsidiaries, so that the Buyer
may have full opportunity to make such investigation as it shall desire to
make of the management, business, properties and affairs of the Company and
the Subsidiaries, and the Buyer shall be permitted to make abstracts from,
or copies of, all such books and records; provided, however, that Buyer
shall use its good faith efforts not to disrupt the conduct of the
Company's business activities. The Stockholders and the Company shall
furnish to the Buyer such financial and operating data and other
information as to the business of the Company and the Subsidiaries as the
Buyer shall reasonably request.
5.03. Confidentiality.
(a) The Company and the Stockholders have furnished and will continue to
furnish the Buyer with certain information which is either non-public,
confidential or proprietary in nature and which (i) is not already known to
persons other than the Company, the Stockholders, their representatives and
third parties which have entered into written non-disclosure agreements
with the Company and (ii) has not been independently developed by the
Buyer. All such information furnished to the Buyer, its directors,
officers, employees, agents or representatives, including, without
limitation, attorneys, accountants, consultants, potential lenders,
investors and financial advisors (collectively, "Representatives"), by the
Company, the Stockholders, or any of their respective representatives, and
all analyses, compilations, data, studies or other documents prepared by
the Buyer or its representatives containing or based in whole or in part on
any such furnished information or reflecting the Buyer's review of, or
interest in, the Company is hereinafter referred to as "Information."
(b) Buyer hereby agrees to (i) hold, and will cause its representatives
(including investors and lending institutions) to hold, in strict
confidence, unless compelled to disclose by judicial or administrative
process, requirement of law (including federal and state securities laws),
this Agreement and the terms hereof, and all Information and (ii) use the
Information solely in connection with the consummation of the transactions
contemplated by this Agreement.
5.04. Public Announcements. The parties agree that, except as required by
law, prior to the Closing Date any and all general public pronouncements or
other general public communications concerning this Agreement and the
purchase and sale of the Shares by the Buyer, and the timing, manner and
content of such disclosures, shall be subject to the mutual agreement of
the Company, the Stockholders' Representatives and the Buyer.
6. Pre-Closing Covenants of the Stockholders, the Company and the
Subsidiaries. From and after the date hereof and until the Closing Date:
6.01. Conduct of Business. The Company and the Subsidiaries shall (a)
conduct their business and operations in the usual and ordinary course of
business in accordance with past custom and practice and shall not
accelerate the collection of receivables, delay the payment of payables or
otherwise manage cash flow otherwise than as heretofore, provided,
nevertheless, that the Company and the Subsidiaries may in their reasonable
business judgment increase thermal paper raw material and finished goods
inventory beyond normal seasonal levels and shall pay the resulting
accounts payable in the normal course without failing to take 2% payment
discounts, (b) maintain all of the assets owned or used in the business of
the Company and its Subsidiaries in the ordinary course of business,
consistent with past custom and practice and (c) perform and comply in all
material respects with its obligations under all Contracts. "Inventory
Build-up Cost" means the amount, if any, by which the sum of thermal paper
raw material inventory plus the raw material content of thermal paper
finished inventory on the day prior to the Closing exceeds $2,655,275 less
the amount, if any, by which accounts payable relating to thermal raw
material purchases on such date exceed $5,399,940 determined consistently
with Schedule 6.01. Subject to the Company's compliance with the foregoing,
"Normal Cash" shall be the Company's cash balance at the close of business
on the third business day preceding the Closing Date. "Closing Date Cash"
shall be the Company's cash balance at the close of business on the Closing
Date. Without limitation, all amounts owed pursuant to the 1999 Bonus
Program shall be paid prior to the Closing Date.
6.02. Absence of Material Changes. Except as disclosed on Schedule 6.02,
without the prior written consent of the Buyer and except as permitted
under this Agreement, neither the Company nor any of the Subsidiaries
shall:
(a) take any action to amend its charter documents or bylaws;
(b) issue any stock, bonds or other corporate securities or grant any
option or issue any warrant to purchase or subscribe for any of such
securities or issue any securities convertible into such securities;
(c) incur any obligation or liability (absolute or contingent), except
current liabilities incurred and obligations under contracts entered into
in the ordinary course of business;
(d) declare or make any payment or distribution to its stockholders with
respect to its stock or purchase or redeem any shares of its capital stock
except for S Corporation Distributions;
(e) except for the 20" Press, mortgage, pledge, or subject to any lien,
charge or any other encumbrance any of their respective assets or
properties except in the ordinary course of business;
(f) sell, assign, or transfer any of its material assets, except for
inventory sold in the ordinary course of business, at a normal profit
margin, and for not less than replacement cost, or excess machinery taken
out of service;
(g) other than for Credited Liabilities, cancel any debts or claims, except
in the ordinary course of business;
(h) merge or consolidate with or into any corporation or other entity;
(i) other than for the Company's Profit Bonus Program for 2000 (which shall
be provided to Buyer prior to Closing and shall be consistent with the past
practice of the Company), make, accrue or become liable for any bonus,
profit sharing or incentive payment, except for accruals under existing
plans, if any, or increase the rate of compensation payable or to become
payable by it to any of its officers, directors or employees, other than
increases in the ordinary course of business consistent with past practice;
(j) make any election or give any consent under the Code or the Tax
statutes of any state or other jurisdiction or make any termination,
revocation or cancellation of any such election or any consent or
compromise or settle any claim for past or present Tax due;
(k) waive any rights of material value;
(l) except in the ordinary course of business, modify, amend, alter or
terminate any of its executory contracts of a material value or which are
material in amount;
(m) take or permit any act or omission constituting a material breach or
default under any contract, indenture or agreement by which it or its
properties are bound;
(n) except for the New Press, incur any capital expenditure in excess of
$50,000 in any instance or $250,000 in the aggregate;
(o) engage any new employee for a salary in excess of $100,000 per annum;
(p) materially alter the terms, status or funding condition of any Employee
Plan; or
(q) commit or agree to do any of the foregoing in the future.
6.03. Delivery of Interim Financial Statements.
(a) As promptly as possible following the last day of each month after the
date hereof until the Closing Date, and in any event within 20 days after
the end of each such month, the Stockholders or the Company shall deliver
to the Buyer the consolidated balance sheets of the Company and the related
statements of income, shareholders' equity, and retained earnings for the
one-month period then ended of the Company (the "Company Interim Financial
Statements"), all certified by the chief financial officer of the Company,
to the effect that such financial statements were prepared in accordance
with generally accepted accounting principles and fairly present the
financial condition of the Company and its Subsidiaries as of the date
thereof and for the period covered thereby.
(b) As promptly as possible following the last day of each month after the
date hereof until the Closing Date, and in any event within 20 days after
the end of each such month, the Stockholders or the Company shall deliver
to the Buyer the consolidated balance sheets of the LLC and the related
statements of income, shareholders' equity, retained earnings and changes
in financial condition for the one-month period then ended of the LLC (the
"LLC Interim Financial Statements"), all certified by the chief financial
officer of the LLC to the effect that such financial statements were
prepared in accordance with generally accepted accounting principles and
fairly present the financial condition of the LLC as of the date thereof
and for the period covered thereby.
6.04. Communications with Customers and Suppliers.
(a) Subject to the Company's good faith business judgment, the Company and
each of the Subsidiaries will continue to accept customer orders in the
ordinary course of business and consistent with past practice for all
products offered by the Company and the Subsidiaries but expected to be
shipped after the Closing Date.
(b) The Company, the Subsidiaries and the Buyer will cooperate in
communications with suppliers and customers to accomplish the transfer of
the business of the Company and the LLC to the Buyer on the Closing Date.
6.05. Continued Truth of Representations and Warranties. Neither the
Stockholders nor the Company nor any Subsidiary will take any actions which
would result in any of the representations or warranties set forth in
Sections 2 and 3 hereof being untrue from and after the date hereof and
until the Closing Date.
6.06. Continuing Obligation to Inform. From time to time prior to the
Closing, the Stockholders will deliver or cause to be delivered to the
Buyer supplemental information concerning events subsequent to the date
hereof which would render any statement, representation or warranty in this
Agreement or any information contained in any Schedule attached hereto
inaccurate or incomplete in any material respect at any time after the date
hereof until the Closing Date; provided, that such supplemental information
shall constitute an amendment of any statement, representation or warranty
in this Agreement or any Schedule, Exhibit or document furnished pursuant
hereto.
6.07. Exclusive Dealing. Neither the Stockholders nor the Company will,
directly or indirectly, through any officer, director, agent or otherwise,
(a) solicit, initiate or encourage submission of proposals or offers from
any person relating to an acquisition or purchase of all or a material
portion of the assets of or an equity interest in the Company or any of the
Subsidiaries or any merger, consolidation or business combination with the
Company or any of the Subsidiaries, or (b) participate in any discussions
or negotiations regarding, or furnish to any other person, any non-public
information with respect to or otherwise cooperate in any way with, or
assist or participate in, facilitate or encourage, any effort or attempt by
any other person to do or seek any of the foregoing. The Stockholders, the
Company and the Subsidiaries agree to promptly notify the Buyer of any such
proposal or offer, or any inquiry or contact with respect thereto received
by the Company, any of the Stockholders or any Subsidiary.
6.08. Reports, Taxes. The Company and the Subsidiaries will duly and timely
file all Tax Returns required to be filed prior to Closing and will
promptly pay all Taxes due and payable by them prior to Closing (unless
contesting such in good faith and adequate provision has been made
therefor).
6.09. Forms 8023. On or prior to the Closing, the Stockholders shall
prepare and deliver to Buyers the Forms 8023 as set forth in Section 11.04
hereof.
7. Best Efforts to Obtain Satisfaction of Conditions. The Stockholders, the
Company, the Subsidiaries and the Buyer covenant and agree to use their
best efforts to obtain the satisfaction of the conditions specified in this
Agreement.
8. Conditions to Obligations of the Buyer. The obligations of the Buyer
under this Agreement are subject to the fulfillment, at the Closing Date,
of the following conditions precedent, each of which may be waived in
writing in the sole discretion of the Buyer:
8.01. Continued Truth of Representations and Warranties of the Stockholders
and the Company. The representations and warranties of the Stockholders and
the Company shall be true on and as of the Closing Date as though such
representations and warranties were made on and as of such date (except to
the extent any such representation or warranty is given as of a date
certain), except for any changes permitted by the terms hereof or consented
to in writing by the Buyer. The Stockholders, the Company and the
Subsidiaries shall have performed and complied with all terms, conditions,
covenants, obligations, agreements and restrictions required by this
Agreement to be performed or complied with by each of them prior to or at
the Closing Date.
8.02. Performance by the Stockholders and the Company. At the Closing, the
Stockholders and the Company shall have delivered to the Buyer a
certificate signed by each such Stockholder or the President and Chief
Financial Officer of the Company, as the case may be, as to their
compliance with Section 8.01 hereof.
8.03. Governmental Approvals. All governmental agencies, department,
bureaus, commissions and similar bodies, the consent, authorization or
approval of which is necessary under any applicable law, rule, order or
regulation for the consummation by the Stockholders, the Company or the
Subsidiaries of the transactions contemplated by this Agreement and the
operation of the business of the Company and the Subsidiaries by the Buyer
shall have consented to, authorized, permitted or approved such
transactions.
8.04. Consent of Lenders, Lessors and Other Third Parties. The
Stockholders, the Company and the Subsidiaries shall have received all
requisite consents and approvals of all lenders, lessors and other third
parties whose consent or approval is required in order for the
Stockholders, the Company and the Subsidiaries to consummate the
transactions contemplated by this Agreement, including without limitation,
those set forth on Schedule 8.04 attached hereto.
8.05. Adverse Proceedings. No action or proceeding by or before any court
or other governmental body shall have been instituted or threatened by any
person or governmental body whatsoever which shall seek to restrain,
prohibit or invalidate the transactions contemplated by this Agreement or
which would affect the right of the Buyer to own the Shares or to operate
the business of the Company and the Subsidiaries after the Closing.
8.06. Opinion of Counsel. The Buyer shall have received an opinion of
Sonnenschein Nath & Rosenthal, counsel to the Stockholders, the Company and
the Subsidiaries, dated as of the Closing Date substantially to the effect
set forth on Exhibit E attached hereto and subject to normal and customary
qualifier and limitation.
8.07. Employment Contract. On or prior to the Closing Date, the Buyer shall
have executed an employment contract with Albert substantially in the form
of Exhibit C attached hereto.
8.08. Closing Deliveries. The Buyer shall have received at or prior to the
Closing such documents, instruments or certificates as reasonably necessary
to consummate the transactions contemplated by this Agreement, including,
without limitation:
(a) the stock certificates representing the Shares duly endorsed in
accordance with Section 1.01 of this Agreement;
(b) such certificates of the Company's officers and of the Stockholders and
such other documents evidencing satisfaction of the conditions specified in
this Section 8 as the Buyer shall reasonably request;
(c) a certificate evidencing the existence and good standing of the Company
issued by the Secretary of State of Illinois;
(d) certificates of the Secretary of the Company attesting to the
incumbency of the Company's officers, the authenticity of the resolutions
authorizing the transactions contemplated by this Agreement, and the
authenticity and continuing validity of the charter documents delivered
pursuant to Section 3.01;
(e) where consent to the transaction is required by the Leases in
Tennessee, Illinois, California, or Texas, estoppel certificates from each
lessor from whom the Company or any Subsidiary leases real or personal
property consenting to the acquisition of the Shares by the Buyer and the
other transactions contemplated hereby, and representing that to the
knowledge of the applicable landlord there are no written notices of
defaults against the Company or such Subsidiary under such Lease;
(f) where consent to the transaction is required by the applicable Lease,
estoppel certificates from each tenant to whom the Company or any
Subsidiary leases real property consenting to the acquisition of the Shares
by the Buyer and the other transactions contemplated hereby, and
representing that to the knowledge of the applicable tenant there are no
written notices of defaults against the Company or such Subsidiary under
such Lease;
(g) certificates of appropriate governmental officials evidencing the
Company's and LLC's qualification to do business as a foreign corporation
and good standing of the Company and LLC in each jurisdiction listed in
Schedule 3.01;
(h) written resignations of all members of the Company's Board of
Directors;
(i) the original corporate minute books of the Company and all corporate
seals; and
(j) a cross receipt executed by the Buyer and the Stockholders.
8.09. Transferred Real Estate. At Closing, the LLC (or, at Buyer's request,
a newly organized wholly owned subsidiary of the Company) shall acquire, as
of immediately prior to the transfer of the Shares pursuant to Section 1.01
hereof, the Transferred Real Estate for the aggregate purchase price (the
"Real Estate Purchase Price") shown on Schedule 8.09 hereto, allocated
among such real estate assets as mutually agreed between the parties within
two weeks after the date hereof. Buyer shall advance to the LLC an amount
equal to the Real Estate Purchase Price in cash, or by wire transfer of
readily available funds to the escrow account(s) established to effectuate
the transfer of the Real Estate or such other account or accounts for that
purpose as designated by the Stockholders' Representatives to allow the LLC
to acquire the Real Estate and to pay off all industrial revenue bonds
financing then in effect. At the election of Buyer or the Stockholders, at
Closing Buyer and Stockholders shall establish an escrow with a title
insurance company in order to effectuate the transfer of the Transferred
Real Estate and such repayment. The costs of such escrow shall be split
between the Buyer and the Stockholders. The Stockholders shall be
responsible for all state and local transfer, recording or other taxes or
charges, title insurance and other costs or expenses of such acquisition.
8.10. Transferred Equipment. At Closing, the LLC shall acquire, as of
immediately prior to the transfer of the Shares pursuant to Section 1.01
hereof, the Transferred Equipment for the aggregate purchase price (the
"Equipment Purchase Price") shown on Schedule 8.10 hereto, allocated among
such equipment to be mutually agreed to within two weeks of the date hereof
and to be set forth on such Schedule 8.10. Buyer shall advance to the LLC
an amount equal to the Equipment Purchase Price in cash, or by wire
transfer of readily available funds to the escrow account(s) established to
effectuate the transfer of the Equipment or such other account or accounts
for that purpose as designated by the Stockholders' Representatives to
allow the LLC to acquire the Equipment.
8.11. Interests In Subsidiaries. On or prior to the Closing Date, the
Company shall have acquired, without paying consideration therefor, any and
all shares of capital stock or other equity interests of or in any of the
Subsidiaries which stock or equity interests are not owned by the Company
on the date of this Agreement, so that at the Closing Date the Company will
be the sole owner of all capital stock and other equity interests of or in
each of the Subsidiaries.
8.12. Certain Subsidiary Interests. On or prior to the Closing Date, the
Company shall (a) transfer its 49% interest in the Mexican joint venture,
Rittenhouse Latinoamerica, S.A. de C.V. ("Joint Venture Interest"), to an
entity wholly owned by the Stockholders and (b) transfer its 20% interest
in Rittenhouse California L.P. (the "California Transfer") and its 50%
interest in Ribbons & Rolls Ltd. to the Stockholders. At the Buyer's
request, no later than 120 days after the Closing, the Stockholders shall
transfer the Joint Venture Interest to the Buyer for a purchase price of
One Dollar ($1.00). In the event that the Buyer exercises its option in
accordance with the foregoing, the Stockholders shall be discharged as
guarantor from the Replacement Guarantee (as defined in Section 8.18), and
the Buyer shall assume such obligations.
8.13. Certain Personal Property. On or prior to the Closing Date, the
Company shall have acquired all tangible personal property owned by any
Affiliated Entity and which is listed (or required to be listed) on
Schedule 3.10.
8.14. HSR Approval. The statutory waiting period required under the HSR Act
shall have expired and neither the Department of Justice nor the Federal
Trade Commission shall have taken any action to enjoin or delay the
consummation of the transactions contemplated hereby ("HSR Approval").
8.15. Financing. The Buyer shall have obtained institutional debt financing
of not less than Fifty-Five Million Dollars ($55,000,000) for use in
financing its purchase of the shares pursuant to the terms and conditions
of the commitment letter from Fleet Bank N.H. and LaSalle Bank N.A. in the
amount of $55,000,000, a copy of which is attached as Schedule 8.15.
8.16. Certain Employment and Equity Interests. On or prior to the Closing
Date, the Company shall have terminated, and paid all amounts owed with
respect to, the following:
(a) all employment or compensation agreements between the Company and each
of Simon J. Blattner, Jr. and Andrew B. Albert;
(b) all Rittenhouse, L.L.C. Executive Interest Acceptance, Non-Compete and
Non-Disclosure Agreements;
(c) the agreements listed at items (a)(iv) 11 and 12 and item (a)(vi)(1) of
Schedule 3.18 hereto; and
(d) the Deferred Compensation Agreement between the Company and Simon J.
Blattner, Jr.
8.17. Debt Repayments. At the Closing Date, the Stockholders or the Company
shall pay or cause to be paid all amounts outstanding under the loans
described in items (i) 1, 2, 3, 4 and 6 and item (ii) of Schedule 3.06(f).
8.18. Guaranty. On or prior to Closing, the Company shall be discharged as
guarantor from the Rittenhouse Guarantee (as defined in Schedule 3.07), and
the Stockholders shall assume such obligations (the "Replacement
Guarantee").
9. Conditions to Obligations of the Stockholders. The obligations of the
Stockholders under this Agreement are subject to the fulfillment, at the
Closing Date, of the following conditions precedent, each of which may be
waived in writing in the sole discretion of the Stockholders'
Representatives, who shall have the power and authority to bind all of the
Stockholders:
9.01. Continued Truth of Representations and Warranties of the Buyer;
Compliance with Covenants and Obligations. The representations and
warranties of the Buyer in this Agreement shall be true on and as of the
Closing Date as though such representations and warranties were made on and
as of such date, except for any changes consented to in writing by the
Stockholders' Representatives. The Buyer shall have performed and complied
with all terms, conditions, covenants, obligations, agreements and
restrictions required by this Agreement to be performed or complied with by
it prior to or at the Closing Date.
9.02. Corporate Proceedings. All corporate and other proceedings required
to be taken on the part of the Buyer to authorize or carry out this
Agreement shall have been taken.
9.03. Governmental Approvals. All governmental agencies, departments,
bureaus, commissions and similar bodies, the consent, authorization or
approval of which is necessary under any applicable law, rule, order or
regulation for the consummation by the Buyer of the transactions
contemplated by this Agreement shall have consented to, authorized,
permitted or approved such transactions.
9.04. HSR Approval. The statutory waiting period required under the HSR Act
shall have expired and neither the Department of Justice nor the Federal
Trade Commission shall have taken any action to enjoin or delay the
consummation of the transactions contemplated hereby.
9.05. Adverse Proceedings. No action or proceeding by or before any court
or other governmental body shall have been instituted or threatened by any
person or governmental body whatsoever which shall seek to restrain,
prohibit or invalidate the transactions contemplated by this Agreement or
which might affect the right of the Stockholders to transfer the Shares.
9.06. Opinion of Counsel. The Stockholders shall have received an opinion
of Hale and Dorr LLP, counsel to the Buyer, dated as of the Closing Date
substantially to the effect set forth on Exhibit D attached hereto and
subject to normal and customary qualifier and limitation.
9.07. Board Representation. At the first meeting of the board of directors
of the Buyer following the annual meeting of the shareholders of the Buyer,
the Buyer shall enlarge its board of directors by one and shall elect
Andrew B. Albert to fill the vacancy thereby created.
9.08. Closing Deliveries. The Stockholders shall have received at or prior
to the Closing such documents, instruments or certificates as the
Stockholders may reasonably request including, without limitation:
(a) such certificates of the Buyer's officers and such other documents
evidencing satisfaction of the conditions specified in this Section 9 as
the Stockholders' Representatives shall reasonably request;
(b) a certificate of the Secretary of State of the State of Delaware as to
the legal existence and good standing (including Tax) of the Buyer in
Delaware;
(c) a certificate of the Secretary of the Buyer attesting to the incumbency
of the Buyer's officers, the authenticity of the resolutions authorizing
the transactions contemplated by this Agreement, and the authenticity and
continuing validity of the charter documents and by-laws delivered pursuant
to Section 4.01;
(d) payment of the Base Purchase Price; and
(e) a cross receipt executed by the Buyer and the Stockholders.
9.09. Effective as of the Closing. The following transaction will be deemed
to have occurred: (a) the Notes, dated January 3, 1997 and April 15, 1999
made in favor of the Company by Blattner and Albert, each in the principal
amount of $2.2 million, shall be deemed to have been paid into the Company;
(b) the Company's cash will be deemed to have increased accordingly; and
(c) there will have been deemed to have been a distribution in the amount
of $4.4 million to the Stockholders. Such transactions shall not be deemed
to have affected Normal Cash.
10. Indemnification.
10.01. By the Stockholders and the Company. If the Closing occurs, the
Stockholders, jointly and severally, hereby indemnify and hold harmless the
Buyer and the Company from and against all claims, damages, losses,
liabilities, costs and expenses (including, without limitation, settlement
costs and any legal, accounting or other expenses for investigating or
defending any actions or threatened actions) (the "Buyer Losses") in
connection with each and all of the following:
(i) any misrepresentation or breach of any representation or
warranty made by the Stockholders or the Company in this
Agreement;
(ii) any breach of any covenant, agreement or obligation of
the Stockholders or the Company contained in this
Agreement or any other agreement, instrument or document
contemplated by this Agreement;
(iii) all prohibited transactions disclosed at item (d) of
Schedule 3.21 hereto, and any failure to file Form 5500
listed at item (h) of Schedule 3.21 hereto;
(iv) all items listed on Schedule 3.08, except for the first
$250,000 of any Losses related to any worker's
compensation claims in respect thereof, and items
(a)(iv)6 and (b)(iii) listed on Schedule 3.18 attached
hereto;
(v) all severance obligations to the persons listed at item 3
of Schedule 3.20 accrued prior to the Closing;
(vi) all obligations relating to the Rittenhouse Guarantee,
except if Buyer exercises its option to acquire the Joint
Venture Interest in accordance with Section 8.12; and
(vii) costs, liabilities and expenses (including reasonable
attorneys' fees) arising from (a) the actual or alleged
presence of Materials of Environmental Concern in, at or
under any property owned or used by the Company or any
subsidiary or affiliate on or before the Closing Date or
to which Materials of Environmental Concern were sent by
the Company or any subsidiary or affiliate on or before
the Closing Date and which in the Buyer's good faith
judgment with written advice of outside counsel require
clean-up in accordance with Environmental Law, or (b)
actual or alleged violations of Environmental Law related
to the use, generation, emission, storage, treatment
transport or disposal of Materials of Environmental
Concern from, to, at, in, on or under any property owned
or used by the Company or any subsidiary or affiliate on
or before the Closing Date.
10.02. By the Buyer. If the Closing occurs, the Buyer hereby indemnifies
and holds harmless the Stockholders and the Company from and against all
claims, damages, losses, liabilities, costs and expenses (including,
without limitation, settlement costs and any legal, accounting or other
expenses for investigating or defending any actions or threatened actions)
(the "Stockholders Losses" together with the Buyer Losses, the "Losses") in
connection with each and all of the following:
(i) any misrepresentation or breach of any representation or
warranty made by the Buyer in this Agreement; and
(ii) any breach of any covenant, agreement or obligation of
the Buyer contained in this Agreement or any other
agreement, instrument or document contemplated by this
Agreement.
10.03. Special Litigation Indemnity. If at anytime prior to Closing, the
Stockholders or the Company are made parties to any action or proceeding
challenging or in any way preventing the consummation of the transactions
contemplated by this agreement, the Buyer (without regard to Section 10.04
herein) shall indemnify and hold harmless the Stockholders and the Company
from and against all claims, damages, losses, liabilities, reasonable costs
and expenses (including, without limitation, settlement costs and any legal
or other expenses for investigating or defending any actions or threatened
actions) in connection with any such action or proceeding.
10.04. Claims for Indemnification. Whenever any claim shall arise for
indemnification under this Section 10, the party seeking indemnification
(the "Indemnified Party"), shall promptly notify the party obligated to
provide indemnification (the "Indemnifying Party") of the claim and, when
known, the facts constituting the basis for such claim. In the event of any
such claim for indemnification hereunder resulting from or in connection
with any claim or legal proceedings by a third party, the notice shall
specify, if known, the amount or an estimate of the amount of the liability
arising therefrom. The Indemnified Party shall not settle or compromise any
claim by a third party for which it is entitled to indemnification
hereunder without the prior written consent of the Indemnifying Party,
which shall not be unreasonably withheld or delayed; provided, however,
that if suit shall have been instituted against the Indemnified Party and
the Indemnifying Party shall not have taken control of such suit after
notification thereof as provided in Section 10.05 of this Agreement, the
Indemnified Party shall have the right to settle or compromise such claim
upon giving notice to the Indemnifying Party as provided in Section 10.05.
10.05. Defense by the Indemnifying Party. In connection with any claim
which may give rise to indemnity hereunder resulting from or arising out of
any claim or legal proceeding by a person other than the Indemnified Party,
the Indemnifying Party, at the sole cost and expense of the Indemnifying
Party, may, upon written notice to the Indemnified Party assume the defense
of any such claim or legal proceeding. If the Indemnifying Party assumes
the defense of any such claim or legal proceeding, the Indemnifying Party
shall select counsel reasonably acceptable to the Indemnified Party to
conduct the defense of such claims or legal proceedings and at the sole
cost and expense of the Indemnifying Party shall take all steps necessary
in the defense or settlement thereof. For purposes of this Section 10.05,
the parties agree that Sonnenschein Nath & Rosenthal is acceptable legal
counsel for the Stockholders and Hale and Dorr LLP is acceptable legal
counsel for the Buyer. The Indemnifying Party shall not consent to a
settlement of, or the entry of any judgment arising from, any such claim or
legal proceeding, without the prior written consent of the Indemnified
Party (which consent shall not be unreasonably withheld or delayed). The
Indemnified Party shall be entitled to participate in (but not control) the
defense of any such action, with its own counsel and at its own expense. If
the Indemnifying Party does not assume the defense of any such claim or
litigation resulting therefrom within 30 days after receipt of the prompt
notice of the Buyer or the Company pursuant to Section 10.04 above, the
date such claim is made: (a) the Indemnified Party may defend against such
claim or litigation in such manner as it may deem appropriate, including,
but not limited to, settling such claim or litigation, after giving notice
of the same to the Indemnifying Party, on such terms as the Indemnified
Party may deem appropriate, and (b) the Indemnifying Party shall be
entitled to participate in (but not control) the defense of such action,
with its counsel and at its own expense. If the Indemnifying Party
thereafter seeks to question the manner in which the Indemnified Party
defended such third party claim or the amount or nature of any such
settlement, the Indemnifying Party shall have the burden to prove by a
preponderance of the evidence that the Indemnified Party did not defend or
settle such third party claim in a reasonably prudent manner.
10.06. Payment of Indemnification Obligations. Each of the Stockholders
hereby agrees that any claim for indemnification by the Buyer, or the
Company (if the Closing occurs), under this Section 10 or under any other
provision of this Agreement, including, without limitation, Sections 1.03,
1.04, and 12.04 hereof, may, at the option of the Buyer or the Company, as
the case may be, be satisfied by (a) any amount remaining in the Escrow
Fund following any adjustment pursuant to Section 1.04 hereof or (b)
reducing the Contingent Purchase Price (to the extent such Contingent
Purchase Price has been earned but not theretofore been paid), after final
agreement or final adjudication pursuant to Section 13.03 ("Right of
Offset"). Buyer shall provide notice to Stockholders at least 10 business
days prior to the date (the "Offset Date") on which it intends to exercise
its Right of Offset against the Escrow Fund or the Contingent Purchase
Price. All indemnification by the Stockholders hereunder (to the extent not
satisfied in the manner specified in the preceding sentence), shall be
effected by payment of cash or delivery of a cashier's or certified check
in the amount of the indemnification liability.
10.07. Survival of Representations; Claims for Indemnification. All
representations and warranties made by the Stockholders and the Company in
this Agreement, or in any instrument or document furnished in connection
with this Agreement or the transactions contemplated hereby, shall survive
the Closing and any investigation at any time made by or on behalf of the
Indemnified Party for a period of eighteen (18) months. All such
representations and warranties shall expire on the eighteen (18) month
anniversary of the Closing Date, except for claims, if any, (a) asserted in
writing prior to such eighteen (18) month anniversary identified as a claim
for indemnification pursuant to this Section 10.07 for breach of the
representations and warranties contained in Section 3.16 (Tax Matters) or
3.32 (Environmental Matters) all of which shall survive until the
expiration of the statute of limitations applicable to the matter covered
by the claim, or (c) which are based upon fraud by any of the Stockholders,
which shall survive until finally resolved and satisfied in full.
10.08. Deductible Amount; Cap Amount. Notwithstanding any other provision
of this Agreement to the contrary, (i) no claim may be made by Buyer
against the Stockholders for indemnification pursuant to Section 10.01 with
respect to any individual item (or group of integrally related items) of
Losses, unless the aggregate of all Losses of the Indemnified Parties with
respect to Sections 10.01 shall exceed an amount equal to $250,000 (the
"Deductible Amount"), and the Stockholders shall then only be liable for
Losses in excess of such Deductible Amount; and (ii) the indemnification
obligations of the Stockholders pursuant to Section 10.01 shall be limited
in the aggregate to an amount equal to $4,700,000 (the "Cap Amount");
Notwithstanding anything else in this Section 10.08, claims pursuant to
Section 10.01 for breaches of the representations and warranties contained
in Section 3.16 (Tax Matters), Section 3.32 (Environmental Matters) or
claims made for material breaches of any covenant, agreement or obligation
of the Stockholders or the Company contained Sections 11.04 or 11.05 and
those indemnification matters set forth in Sections 10.01(iii), (iv), (v),
(vi) and (vii) may be made against the Stockholders and shall be payable by
the Stockholders without regard to (and shall not be counted against) the
Deductible Amount or the Cap Amount and the limitations set forth in this
Section 10.08.
11. Post-Closing Agreements. The Buyer and Stockholders agree that from and
after the Closing Date:
11.01. Proprietary Information.
(a) Each of the Stockholders and each of their affiliates (as such term is
defined in the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder) (individually, an "Affiliate" and
collectively "Affiliates") shall hold in confidence and shall use their
best efforts to have all officers, directors and personnel who continue
after the Closing to be employed by any such Stockholder or any Affiliate
thereof to hold in confidence all knowledge and information of a secret or
confidential nature with respect to the business of the Company and the
Subsidiaries and not to disclose, publish or make use of the same without
the consent of the Buyer, except to the extent that such information shall
have become public knowledge other than by breach of this Agreement by the
Stockholders.
(b) Each Stockholder agrees that the remedy at law for any breach of this
Section 11.01 would be inadequate and that the Buyer shall be entitled to
injunctive relief in addition to any other remedy it may have upon breach
of any provision of this Section 11.01.
11.02. No Solicitation or Hiring of Former Employees. Except as provided by
law, for a period of two years after the Closing Date, no Stockholder nor
any Affiliate thereof shall (a) solicit any person who was an employee of
either the Company or any of the Subsidiaries on the date hereof or the
Closing Date to terminate his employment with the Buyer (or the Company or
any of the Subsidiaries, as the case may be) or to become an employee of
such Stockholder or Affiliate, or (b) hire any person who was such an
employee on the date hereof or on the Closing Date.
11.03. Non-Competition Agreement.
(a) For a period of three years after the Closing Date, no Stockholder
shall, directly or indirectly, except as an officer or employee of the
Company: (i) develop, manufacture, market or sell any product which
competes with any existing or proposed product manufactured by either the
Company or any of the Subsidiaries on or prior to the Closing Date, or (ii)
engage in any business competitive with the business of the Company or any
of the Subsidiaries as conducted on the date hereof or on the Closing Date,
in the United States or any other country in which the Company or any of
the Subsidiaries conducted its business during the two years prior to the
Closing Date.
(b) The parties hereto agree that the duration and geographic scope of the
non-competition provision set forth in this Section 11.03 are reasonable.
In the event that any court of competent jurisdiction determines that the
duration or the geographic scope, or both, are unreasonable and that such
provision is to that extent unenforceable, the parties hereto agree that
the provision shall remain in full force and effect for the greatest time
period and in the greatest area that would not render it unenforceable. The
parties intend that this non-competition provision shall be deemed to be a
series of separate covenants, one for each and every county of each and
every state of the United States of America and each and every political
subdivision of each and every country outside the United States of America
where this provision is intended to be effective. The Stockholders agree
that damages are an inadequate remedy for any breach of this provision and
that the Buyer shall, whether or not it is pursuing any potential remedies
at law, be entitled to equitable relief in the form of preliminary and
permanent injunctions without bond or other security upon any actual or
threatened breach of this non-competition provision.
(c) Notwithstanding any provision in this Agreement to the contrary, the
Stockholders shall not be precluded from acting in the capacity of an
owner, director or officer of Rittenhouse Latinoamerica S.A. de C.V.
(Mexico) or any aspect of its business.
11.04. Section 338(h)(10) Election. If the Buyer has given notice pursuant
to Section 6.09 hereof:
(a) At the request of Buyer made within 90 days of Closing, each
Stockholder and Buyer will join in making, and will take any and all action
necessary to effect, a timely and irrevocable election under Section
338(h)(10) of the Code (and the Treasury Regulations and administrative
pronouncements thereunder) and any comparable provision of state, local, or
foreign Tax law (collectively a "Section 338(h)(10) Election"). Each
Stockholder and Buyer shall file all Tax Returns in a manner consistent
with the Section 338(h)(10) Election, and will not take any position
contrary thereto.
(b) On or prior to the Closing, the Stockholders will deliver to Buyer two
properly executed (by each Stockholder) and completed copies of Internal
Revenue Service Form 8023 with respect to the Company (collectively, the
"Form 8023") and, as applicable, two properly executed and completed copies
of any analogous forms required pursuant to state, local, or foreign tax
law. At least ten (10) days prior to the Closing Date, Buyer will provide
the Stockholders' Representatives with the information regarding Buyer
necessary to enable the Stockholders to complete the Form 8023. The Form
8023 that each Stockholder delivers to Buyer at the Closing will be
complete in all respects except for the information required in lines 9 and
11 of the Form 8023 (the "Line 9/11 Information"). Within one hundred and
fifty (150) days following the Closing Date (the "150-Day Period"), Buyer
will determine the Line 9/11 Information. The Stockholders' Representatives
will provide the Buyer with any information regarding the Stockholders as
is necessary for Buyer to determine the Line 9/11 Information. The Line
9/11 Information shall in all events be consistent with the allocation of
the Real Estate Purchase Price pursuant to Schedule 8.09 hereto. At or
prior to the end of the 150-Day Period, Buyer will provide to the
Representative a copy of the Line 9/11 Information. Buyer shall be
responsible for filing the Form 8023.
(c) After the filing of the federal income Tax Return for the Company for
the period including the last day for which its election under Section 1362
of the Code is effective (or after any subsequent amended Tax Return of the
Company or any Tax Return of any Stockholder reporting Taxes relevant to
the determination of the Tax Adjustment, or after the payment of any such
Taxes after an assessment by, or settlement with, a taxing authority),
Stockholders' Representatives shall determine (or redetermine) the amount
of the Tax Adjustment, if any. For this purpose, Stockholders'
Representatives shall take into account, among other factors, (i) the
effects of any tax imposed under Section 1374 of the Code solely by reason
of the Section 338(h)(10) Election, (ii) any change in the amount or
character of income or gain recognized by the Stockholders by reason of the
Section 338(h)(10) Election, (iii) the Illinois Personal Property
Replacement Tax and any other state or local taxes payable by the Company
by reason of the Section 338(h)(10) Election, and (iv) any additional
amount that may be required to gross-up the payments hereunder for any
additional taxes payable thereon by the Stockholders. Thereafter, the Buyer
will have ten (10) business days to review the Tax Adjustment (the "Review
Period") and notify Stockholders' Representatives in writing of any
disagreement Buyer may have regarding the Tax Adjustment. If the Buyer does
not notify Stockholders' Representatives in writing of any such
disagreement by the end of the Review Period, the Buyer will be deemed to
have agreed to the Tax Adjustment as prepared by the Stockholders'
Representatives and shall promptly pay such amount to the Stockholders'
Representatives. If, prior to the end of the Review Period, Buyer notifies
the Stockholders' Representatives of any such disagreement, Buyer and the
Stockholders' Representatives will consult in good faith and attempt to
resolve such disagreement. If, within thirty (30) days following the end of
the Review Period, Buyer and the Stockholders' Representatives cannot
resolve their disagreement, Buyer and the Stockholders' Representatives
will submit this dispute to Peat Marwick (or, if such firm shall decline to
act or is not, at the time of such submission, independent of the
Stockholders, the Company and Buyer, to another independent accounting firm
of international reputation mutually acceptable to the Stockholders and
Buyer) (either Peat Marwick or such other accounting firm being referred to
herein as the "Independent Accounting Firm") for resolution as promptly as
possible (but in no event later than ninety (90) days after the termination
of the Review Period) and will each pay one-half of the fees and expenses
charged by such Independent Accounting Firm. Following the determination of
the amount of the Tax Adjustment, either by agreement of Buyer and the
Stockholders' Representatives or pursuant to the preceding sentence, Buyer
shall promptly pay such amount to the Stockholders' Representatives.
(d) Buyer may, in its sole discretion, choose not to make a Section
338(h)(10) Election, in which case Sections 11.04(c) shall not apply.
11.05. Tax Returns and Cooperation.
(a) The Stockholders' Representatives shall prepare or cause to be prepared
all income Tax Returns or reports for the Company that must be filed after
Closing for all S-Corp Periods of the Company, and each such Tax Return
shall be prepared in a manner consistent with past practice. The
Stockholders' Representatives shall permit Buyer to review and comment on
each such Tax Return described in the preceding sentence prior to filing.
Buyer shall file or cause to be filed each such Tax Return and, in the
event a Section 338(h)(10) Election is made, Buyer shall pay or cause to be
paid to the appropriate taxing authority any Taxes imposed on the Company
that arise by reason of the Section 338(h)(10) Election ("Buyer 338(h)(10)
Taxes") or the California Transfer; provided that any such Buyer 338(h)(10)
Taxes attributable to Section 1374 of the Code or any comparable provisions
of state or local law) shall be no more than such Tax payable on $7,000,000
of net unrealized built-in gain. The Stockholders shall pay to Buyer, and
Buyer shall remit to the appropriate taxing authority, all Taxes imposed on
the Company in respect of such Tax Return other than Buyer 338(h)(10)
Taxes. The Stockholders shall also pay all Taxes imposed on them
individually as S corporation Shareholders pursuant to Section 1366 of the
Code and any analogous provision of state or local law. Buyer shall prepare
or cause to be prepared and file all other Tax Returns required to be filed
after the Closing Date, and shall pay all Taxes shown thereon or otherwise
imposed on or payable by the Company after the Closing Date.
(b) Buyer and the Stockholders shall cooperate fully, as and to the extent
reasonably requested by the other party, in connection with the filing of
Tax Returns pursuant to this Section 11.05 and any audit, litigation or
other proceeding with respect to Taxes. Such cooperation shall include
signing any Tax Return, amended Tax Returns, claims or other documents
necessary to settle any Tax controversy, the retention and (upon the other
party's request) the provision of records and information which are
reasonably relevant to any such audit, litigation or other proceeding and
making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder.
Each of the Buyer and the Stockholders agrees that it will, and, in the
case of Buyer, that it will cause the Company to, retain all books and
records with respect to Tax matters pertinent to the Company relating to
any taxable period beginning before the Closing Date until the expiration
of the statute of limitations (and, to the extent notified by the other
party, any extensions thereof) of the respective taxable periods, and to
abide by all record retention agreements entered into with any taxing
authority.
(c) The Stockholders shall control any Tax proceeding related to an S-Corp
Period of the Company except that Buyer shall have joint control with the
Stockholders of any such Tax proceeding that relates in whole or in part to
Buyer 338(h)(10) Taxes, and Buyer shall have the right to participate in
any other Tax proceeding related to income Taxes for an S-Corp Period of
the Company which may have the effect of increasing the Tax liability of
Buyer, the Company or their Affiliates for any Tax period ending after the
Closing, and the Stockholders shall not settle or compromise any such
proceeding without Buyer's prior written consent.
(d) Promptly after the Closing Date the Stockholders shall provide the
Buyer with tax workpapers which will enable the Buyer to determine, among
other items, (A) the tax basis of the Company or the Subsidiary in its
assets; (B) the tax basis of the stockholder(s) of the Subsidiary in its
stock (or the amount of any "excess loss account"); (C) the amount of any
net operating loss, net capital loss, unused investment or other credit,
unused foreign tax, or excess charitable contribution allocable to the
Company or the Subsidiary; and (D) the amount of any deferred gain or loss
allocable to the Company or the Subsidiary arising out of any "deferred
intercompany transaction" in a timely manner so that the Buyer has
sufficient time to make a determination of whether or not to give notice
under Section 6.09 to make a Section 338(h)(10) Election. The Stockholder
will cooperate fully, as and to the extent reasonably requested by the
Buyer, in connection with the Buyer's calculations concerning the
determination to make the Section 338(h)(10) Election.
11.06. Waco Facility Lease. Buyer shall assume the lease at a cost of
$150,000 per year on a gross rental basis of the Waco, Texas facility until
the earlier of (i) one year after the Closing or (ii) the sale or lease of
the Waco facility by the Stockholders. The Stockholders shall use their
reasonable best efforts to consummate a sale or lease of the facility as
soon as possible after the Closing.
11.07. Retiree Benefits. The obligations listed at item 4 of Schedule 3.20
hereto will be continued by the Buyer, and will be repaid promptly by the
Stockholders on a quarterly basis upon presentation of invoice.
12. Termination of Agreement; Option to Proceed; Damages.
12.01. Termination by Lapse of Time. This Agreement shall terminate at 5:00
p.m., Boston Time, on April 24, 2000, if the transactions contemplated
hereby have not been consummated, unless such date is extended by the
written consent of the Company, the Buyer and the Stockholders'
Representatives (whose consent shall bind each of the Stockholders);
provided, however, in the event that HSR Approval is not received by the
parties prior to April 24, 2000, the termination date, at the Stockholders'
request, shall be extended until 10 business days after receipt of HSR
Approval by the parties; further provided, however, that if HSR Approval is
not received by July 24, 2000 this Agreement will terminate. In the event
of such termination, the Buyer shall have no further obligation or
liability to the Stockholders or the Company under this Agreement, and the
Stockholders shall have no further obligation or liability to the Buyer
under this Agreement.
12.02. Termination by Agreement of the Parties. This Agreement may be
terminated by the mutual written agreement of the parties hereto. In the
event of such termination by agreement, the Buyer shall have no further
obligation or liability to the Stockholders or the Company under this
Agreement, and the Stockholders shall have no further obligation or
liability to the Buyer under this Agreement.
12.03. Termination by Reason of Breach. This Agreement may be terminated by
the Stockholders, if at any time prior to the Closing there shall occur a
breach of any of the material representations, warranties or covenants of
the Buyer or the failure by the Buyer to perform any material condition or
obligation hereunder, and may be terminated by the Buyer, if at any time
prior to the Closing there shall occur a breach of any of the material
representations, warranties or covenants of the Stockholders, the Company
or any of the Subsidiaries or the material failure of the Stockholders, the
Company or any of the Subsidiaries to perform any condition or obligation
hereunder (such a breach by the Buyer, Stockholders, the Company or any of
the Subsidiaries shall be referred to herein as a "Pre-Closing Breach").
12.04. Availability of Remedies at Law. In the event this Agreement is
terminated by the Buyer or the Stockholders, pursuant to the provisions of
Section 12.03, the parties hereto shall have available to them all remedies
afforded to them by applicable law.
13. Dispute Resolution.
13.01. General. In the event that any dispute should arise between the
parties hereto with respect to any matter covered by this Agreement, other
than Section 11.04(c), but including, without limitation, the occurrence of
a Pre-Closing Breach, the parties hereto shall resolve such dispute in
accordance with the procedures set forth in this Section 13.
13.02. Consent of the Parties. In the event of any dispute between the
parties with respect to any matter covered by this Agreement, the parties
shall first use their best efforts to resolve such dispute among
themselves. If the parties are unable to resolve the dispute within 30
calendar days after the commencement of efforts to resolve the dispute, or
within 30 calendar days after the Closing Date in connection with any
dispute in the Adjustment Amount, the dispute will be submitted to
arbitration in accordance with Section 13.03 hereof.
13.03. Arbitration.
(a) Either the Buyer or the Stockholders' Representatives may submit any
matter referred to in Section 13.02 hereof to arbitration by notifying the
other party hereto and the Escrow Agent, in writing, of such dispute.
Within 10 days after receipt of such notice, the Buyer and the
Stockholders' Representatives shall designate in writing one arbitrator to
resolve the dispute; provided, that if the parties hereto cannot agree on
an arbitrator within such 10-day period, the arbitrator shall be selected
by the American Arbitration Association. The arbitrator so designated shall
not be an employee, consultant, officer, director or stockholder of any
party hereto or any Affiliate of any party to this Agreement.
(b) Within 15 days after the designation of the arbitrator, the arbitrator,
the Buyer and the Stockholders' Representatives shall meet, at which time
the Buyer and the Stockholders' Representatives shall be required to set
forth in writing all disputed issues and a proposed ruling on each such
issue.
(c) The arbitrator shall set a date for a hearing, which shall be no later
than 30 days after the submission of written proposals pursuant to
paragraph (b) above, to discuss each of the issues identified by the Buyer
and the Stockholders' Representative. Each such party shall have the right
to be represented by counsel. The arbitration shall be governed by the
rules of the American Arbitration Association; provided, that the
arbitrator shall have sole discretion with regard to the admissibility of
evidence.
(d) The arbitrator shall use his best efforts to rule on each disputed
issue within 30 days after the completion of the hearings described in
paragraph (c) above. The determination of the arbitrator as to the
resolution of any dispute shall be final, binding and conclusive upon all
parties hereto. All rulings of the arbitrator shall be in writing and shall
be delivered to the parties hereto and the Escrow Agent.
(e) The prevailing party in any arbitration shall be entitled to an award
of reasonable attorneys' fees incurred in connection with the arbitration.
The non-prevailing party shall pay such fees, together with the fees of the
arbitrator and the costs and expenses of the arbitration.
(f) Any arbitration pursuant to this Section 13.03 shall be conducted in
Washington, District of Columbia. Any arbitration award may be entered in
and enforced by any court having jurisdiction thereover and the parties
hereby consent and commit themselves to the jurisdiction of the courts of
the United States District Court for the District of Columbia for purposes
of the enforcement of any arbitration award.
14. Brokers.
14.01. For the Stockholders, the Company and the Subsidiaries. Each of the
Stockholders, the Company and the Subsidiaries represent and warrant that,
other than ABN AMRO Incorporated, no person, firm or corporation has acted
in the capacity of broker or finder on its behalf to bring about the
negotiation of this Agreement. The Stockholders agree jointly and severally
to pay all fees, expenses and other compensation owed to ABN AMRO
Incorporated. The Stockholders jointly and severally agree to indemnify and
hold harmless the Buyer against any claims or liabilities asserted against
it by any person acting or claiming to act as a broker or finder on behalf
of the Stockholders, the Company or the Subsidiaries.
14.02. For the Buyer. The Buyer warrants that, other than Lazard Freres no
person, firm or corporation has acted in the capacity of broker or finder
on its behalf to bring about the negotiation of this Agreement. The Buyer
agrees to pay all fees, expenses and other compensation owed to Lazard
Freres. The Buyer agrees to indemnify and hold harmless the Stockholders,
the Company and the Subsidiaries against any claims or liabilities asserted
against it by any person acting or claiming to act as a broker or finder on
behalf of the Buyer.
15. Notices. Any notices or other communications required or permitted
hereunder shall be sufficiently given if delivered personally or sent by
telex, federal express, registered or certified mail, postage prepaid,
addressed as follows or to such other address of which the parties may have
given notice:
To the Buyer: Nashua Corporation
44 Franklin Street
Nashua, NH 03061
Attn: Peter C. Anastos,
Vice President and General
Counsel
With a copy to: John K. P. Stone, III
Hale and Dorr, LLP
60 State Street
Boston, MA 02109
To the Company: Rittenhouse Paper Company
250 South Northwest Highway
Suite 103
Park Ridge, IL 60068
With a copy to: Clarissa Cerda, Esq.
Sonnenschein Nath & Rosenthal
8000 Sears Tower
233 South Wacker Drive
Chicago, IL 60606
To the Blattner Stockholders: Attn: Simon Blattner
109 Alpine Terrace
San Francisco, CA 94117
To Andrew Albert: Andrew Albert
c/o Rittenhouse Paper Company
250 South Northwest Highway
Suite 103
Park Ridge, IL 60068
With a copy to: Clarissa Cerda, Esq.
Sonnenschein Nath & Rosenthal
8000 Sears Tower
233 South Wacker Drive
Chicago, IL 60606
Unless otherwise specified herein, such notices or other communications
shall be deemed received (a) on the date delivered, if delivered
personally, or (b) three business days after being sent, if sent by
registered or certified mail.
16. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns, except that the Buyer, on the one hand, and the Stockholders, the
Company and the Subsidiaries, on the other hand, may not assign their
respective obligations hereunder without the prior written consent of the
other party; provided, however, that the Buyer may assign this Agreement,
and its rights and obligations hereunder, to a subsidiary or Affiliate of
the Buyer. Any assignment in contravention of this provision shall be void.
No assignment shall release the Buyer, the Stockholders, the Company or the
Subsidiaries from any obligation or liability under this Agreement.
17. Entire Agreement; Amendments; Attachments.
(a) This Agreement, all Schedules and Exhibits hereto, the Non-Disclosure
Agreement and all agreements and instruments to be delivered by the parties
pursuant hereto and thereto represent the entire understanding and
agreement between the parties hereto with respect to the subject matter
hereof and supersede all prior oral and written and all contemporaneous
oral negotiations, commitments and understandings between such parties. The
Buyer, by the consent of its Board of Directors or officers authorized by
such Board, and the Stockholders holding a majority of the Shares (who
shall have the authority to bind all of the Stockholders) may amend or
modify this Agreement, in such manner as may be agreed upon, by a written
instrument executed by the Buyer and such majority of the Stockholders.
(b) If the provisions of any Schedule or Exhibit to this Agreement are
inconsistent with the provisions of this Agreement, the provisions of the
Agreement shall prevail. The Exhibits and Schedules attached hereto or to
be attached hereafter are hereby incorporated as integral parts of this
Agreement.
18. Severability. Any provision of this Agreement which is invalid, illegal
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity, illegality or
unenforceability, without affecting in any way the remaining provisions
hereof in such jurisdiction or rendering that or any other provision of
this Agreement invalid, illegal or unenforceable in any other jurisdiction.
19. Investigation of the Parties. All representations and warranties
contained herein which are made to the Stockholders' Knowledge of a party
shall require that such party make reasonable investigation and inquiry
with respect thereto to ascertain the correctness and validity thereof.
20. Expenses. Except as otherwise expressly provided herein, the Buyer, on
the one hand, and the Stockholders, jointly and severally, on the other
hand, will pay all fees and expenses (including, without limitation, legal
and accounting fees and expenses) incurred by them in connection with the
transactions contemplated hereby, other than fees paid by the Company
through March 31, 2000. The Stockholders shall be responsible for payment
of all sales or transfer Taxes arising out of (i) any conveyance of Real
Estate required to comply with Section 8.09 hereof, (ii) any conveyances of
Equipment required to comply with Section 8.10 hereof, (iii) any conveyance
of shares in Subsidiaries required to comply with Section 8.14 hereof and
(iv) the conveyance of the Shares to the Buyer.
21. Legal Fees. In the event that legal proceedings are commenced by the
Buyer against the Stockholders (or the Company, if the transactions
contemplated hereby are not consummated), or by the Stockholders against
the Buyer, in connection with this Agreement or the transactions
contemplated hereby, the party or parties which do not prevail in such
proceedings shall pay the reasonable attorneys' fees and other costs and
expenses, including investigation costs, incurred by the prevailing party
in such proceedings.
22. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
23. Section Headings. The section headings are for the convenience of the
parties and in no way alter, modify, amend, limit, or restrict the
contractual obligations of the parties.
24. Definitions. The terms listed on Schedule I hereto (in their singular
and plural forms as appropriate) shall have the meanings set forth in the
Agreement and Schedule I.
25. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of
which shall be one and the same document.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of and on the date first above written.
(Corporate Seal) BUYER:
NASHUA CORPORATION
ATTEST ___________________________________
/s/ Peter C. Anastos By: /s/ Gerald G. Garbacz
________________________ ________________________________
Secretary Gerald G. Garbacz
President and CEO
COMPANY:
RITTENHOUSE PAPER COMPANY
____________________________________
By: /s/ Andrew B. Albert
_________________________________
Title: Co-Chairman
_____________________________
STOCKHOLDERS:
/s/ Andrew B. Albert
_____________________________________
Address: 35 Longmeadow
Winnetka, Ill. 60093
/s/ Andrew B. Albert under Power of
Attorney For Simon Blattner, Jr.
_____________________________________
Address: 690 Pennsylvania - Suite 119
San Francisco, CA 94107
The Simon J. Blattner III 1996 Trust
By: Andrew B. Albert, as Trustee, and
not individually, and
Robert A. Blattner, as Trustee,
and not individually
Trustee:
/s/ Andrew B. Albert
______________________________________
/s/ Robert A. Blattner
______________________________________
Address: ____________________________
_____________________________
The Kimberly Blattner 1995 Marital Trust
By: Andrew B. Albert, as Trustee, and
not individually, and
Robert A. Blattner, as Trustee,
and not individually
Trustee:
/s/ Andrew B. Albert
______________________________________
/s/ Robert A. Blattner
______________________________________
Address: ____________________________
____________________________
The Charles D. Blattner 1996 Trust
By: Andrew B. Albert, as Trustee, and
not individually, and
Robert A. Blattner, as Trustee,
and not individually
Trustee:
/s/ Andrew B. Albert
______________________________________
/s/ Robert A. Blattner
______________________________________
Address: ____________________________
____________________________
The Diane R. Valentine 1996 Trust
By: Andrew B. Albert, as Trustee, and
not individually, and
Robert A. Blattner, as Trustee,
and not individually
Trustee:
/s/ Andrew B. Albert
______________________________________
/s/ Robert A. Blattner
______________________________________
Address: ____________________________
____________________________
Schedule I
DEFINITIONS
"Accounts Receivable" shall have the meaning set forth in Section
3.15.
"Affiliate" and/or "Affiliates" shall have the meaning set forth
in Section 11.01(a).
"Affiliated Entity" of any particular Person shall mean any other
Person controlling, controlled by or under common control with such Person.
"Agreement" shall have the meaning set forth in the Preamble to
this Agreement.
"Balance Sheet Date" shall have the meaning set forth in Section
3.06(b).
"Base Purchase Price" shall have the meaning set forth in Section
1.03(a).
"Blattner" shall have the meaning set forth in Section 3.06(f).
"Blattner Shares" shall have the meaning set forth in Schedule
1.01.
"Blattner Stockholders" shall mean the following stockholders:
Simon J. Blattner, Jr., The Simon J. Blattner, III 1996 Trust, The Kimberly
Blattner 1995 Marital Trust, The Charles D. Blattner 1996 Trust and the
Diane R. Valentine 1996 Trust.
"Buyer" shall have the meaning set forth in the Preamble to this
Agreement.
"Buyer 338(h)(10) Taxes" shall have the meaning set forth in
Section 11.05(a).
"Buyer Losses" shall have the meaning set forth in Section 10.01.
"California Transfer" shall have the meaning set forth in Section
8.12.
"Cap Amount" shall have the meaning set forth in Section 10.08.
"CERCLA" shall have the meaning set forth in Section 3.32(a).
"Closing" shall have the meaning set forth in Section 1.01.
"Closing Date" shall mean April 20, 2000.
"Closing Date Cash" shall have the meaning set forth in Section
6.01.
"Code" means the United States Internal Revenue Code of 1986, as
amended.
"Common Stock" shall have the meaning set forth in the Preliminary
Statement to this Agreement.
"Company" shall have the meaning set forth in the Preamble to this
Agreement.
"Company Financial Statements" shall have the meaning set forth in
Section 3.06(a).
"Company Interim Financial Statements" shall have the meaning set
forth in Section 6.03.
"Company 1998 Balance Sheet" shall have the meaning set forth in
Section 3.06(a).
"Company 1999 Balance Sheet" shall have the meaning set forth in
Section 3.06(a).
"Company 1998 Financial Statements" shall have the meaning set
forth in Section 3.06(a).
"Company 1999 Financial Statements" shall have the meaning set
forth in Section 3.06(a).
"Contingent Purchase Price" shall have the meaning set forth in
Section 1.03(a).
"Contract Liabilities" shall have the meaning set forth in Section
3.07.
"Contracts" shall have the meaning set forth in Section 3.18(a).
"Credited Liabilities" shall have the meaning set forth in Section
3.06(f).
"Deductible Amount" shall have the meaning set forth in Section
10.08.
"Defined Benefit Plans" shall have the meaning set forth in
Section 3.21(f).
"Employee Plans" shall have the meaning set forth in Section
3.21(a).
"Environmental Law" shall have the meaning set forth in Section
3.32(a).
"Equipment Purchase Price" shall have the meaning set forth in
Section 8.10.
"ERISA" shall have the meaning set forth in Section 3.21(b).
"ERISA Affiliate" shall have the meaning set forth in Section
3.21(a).
"Escrow Agent" shall have the meaning set forth in Section
1.03(b)(ii).
"Escrow Agreement" shall have the meaning set forth in Section
1.03(b)(ii).
"Escrow Fund" shall have the meaning set forth in Section
1.03(b)(ii).
"Form 8023" shall have the meaning set forth in Section 11.04(b).
"Governmental Agencies" shall have the meaning set forth in
Section 3.13(e).
"Governmental Regulations" shall have the meaning set forth in
Section 3.13(i).
"Hart-Scott-Rodino Act" shall have the meaning set forth in
Section 3.31.
"HSR Act Filing" shall have the meaning set forth in Section 5.01.
"HSR Approval" shall have the meaning set forth in Section 8.14.
"HSR Filing Date" shall have the meaning set forth in Section
5.01.
"Indemnified Party" shall have the meaning set forth in Section
10.04.
"Indemnifying Party" shall have the meaning set forth in Section
10.04.
"Independent Accounting Firm" shall have the meaning set forth in
Section 11.04(c).
"Information" shall have the meaning set forth in Section 5.03(a).
"Insurance Policies" shall have the meaning set forth in Section
3.09.
"Intangible Property" shall have the meaning set forth in Section
3.11.
"Inventory" shall have the meaning set forth in Section 3.14.
"Inventory Build-up Cost" shall have the meaning set forth in
Section 6.01.
"Joint Venture Interest" shall have the meaning set forth in
Section 8.12.
"LLC" shall have the meaning set forth in Section 3.06(b).
"LLC Financial Statements" shall have the meaning set forth in
Section 3.06(b).
"LLC Interim Financial Statements" shall have the meaning set
forth in Section 6.03.
"LLC 1998 Balance Sheet" shall have the meaning set forth in
Section 3.06(b).
"LLC 1999 Balance Sheet" shall have the meaning set forth in
Section 3.06(b).
"LLC 1998 Financial Statements" shall have the meaning set forth
in Section 3.06(b).
"LLC 1999 Financial Statements" shall have the meaning set forth
in Section 3.06(b).
"Leases" shall have the meaning set forth in Section 3.12.
"Lien" shall mean any mortgage, pledge, security interest,
conditional sale or other title retention agreement, encumbrance, lien,
easement, option, debt, charge, claim or restriction of any kind.
"Line 9/11 Information" shall have the meaning set forth in
Section 11.04(b).
"Losses" shall have the meaning set forth in Section 10.02.
"Material Adverse Effect" shall mean any action or omission which,
would have a material adverse effect upon the business, financial condition
or operating results of the Company and its Subsidiaries, taken as a whole.
"Materials of Environmental Concern" shall have the meaning set
forth in Section 3.32(b).
"New Press" shall have the meaning set forth in Section 1.03(a).
"Non-Disclosure Agreement" shall mean that certain letter
agreement between Buyer and the Company, dated June 14, 1999.
"Normal Cash" shall have the meaning set forth in Section 6.01.
"Normal Cash Adjustment" shall have the meaning set forth in
Section 1.03(d).
"150-Day Period" shall have the meaning set forth in Section 11.04(b).
"Offset Date" shall have the meaning set forth in Section 10.06.
"PBGC" shall have the meaning set forth in Section 3.21(c).
"Permits" shall have the meaning set forth in Section 3.19.
"Permitted Exceptions" shall mean, collectively, the following:
(a) Present and future zoning laws, ordinances,
resolutions, orders and regulations of all municipal, county,
state or federal governments having jurisdiction over the Real
Estate and the use of improvements thereon.
(b) All covenants, restrictions, easements,
encumbrances and agreements of record.
(c) Beams and beam rights and party walls and
party wall agreements.
(d) Such state of facts as a current, accurate
survey of the Real Estate would disclose.
(e) Such state of facts as a physical inspection
of the Real Estate would disclose.
(f) The lien of any unpaid real estate taxes,
water charges and sewer rents for the fiscal year(s) or other
applicable period in which the Closing occurs.
(g) (i) The lien of all unpaid assessments
encumbering the Real Estate on the date of this Agreement, and
installments thereof, due and payable on or after the Closing
Date, and (ii) the lien of all unpaid assessments which first
encumber the Real Estate subsequent to the date of this Agreement,
and installments thereof, whether due and payable prior to, on or
after the Closing Date.
(h) All liens and encumbrances resulting from
the investigations or any and all other activities undertaken by
Buyer.
(i) Rights, if any, of any utility company to
construct and/or maintain lines, pipes, wires, cables, poles,
conduits and distributions boxes and equipment in, over, under,
and/or upon the Real Estate or any portion thereof.
(j) Building codes and restrictions heretofore
or hereafter adopted by any public agency.
(k) Encroachments of stoops, areas, cellar,
steps, trim, cornices, retaining walls, windows, window sills,
ledges, fire escapes, doors, door caps, projecting air conditioner
units or equipment, hedges, railings, coping, cellar doors or
fences, if any, upon any street, highway, sidewalk or adjoining
premises; variations between record line and retaining walls;
encroachments of adjoining premises upon the Real Estate.
(l) Variations between the description of the
Real Estate and the tax map description of the Real Estate.
(m) Leases.
(n) Contracts.
(o) The printed standard exceptions listed in
Schedule B of the any title commitment or title insurance policy
issued with respect to the Real Estate.
(p) The following specific exceptions to title:
"Permitted Liens" shall mean the Liens listed on Schedule 3.10.
"Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated association, corporation,
entity or governmental entity (whether federal, state, county, city or
otherwise and including, without limitation, any instrumentality, division,
agency or department thereof).
"Personal Property" shall have the meaning set forth in Section
3.10.
"Pre-Closing EBITDA" shall have the meaning set forth in Exhibit A
of this Agreement.
"Pre-Closing Breach" shall have the meaning set forth in Section
12.03.
"Raw Materials" shall have the meaning set forth in Section
3.18(b)(vi).
"Real Estate" shall have the meaning set forth in Section 3.13(a).
"Real Estate Purchase Price" shall have the meaning set forth in
Section 8.09.
"Related Entity" shall mean with respect to any Person, any Person
in whom such Person holds any equity interest (other than a publicly traded
company in which the interest held is less than 1%) if such Person either
(i) currently leases any property to the Company or to any Subsidiary or
(ii) is required pursuant to this Agreement to transfer any property to the
Company or to any Subsidiary at or prior to the Closing Date.
"Replacement Guarantee" shall have the meaning set forth in
Section 8.18.
"Representatives" shall have the meaning set forth in Section
5.03(a).
"Review Period" shall have the meaning set forth in Section
11.04(c).
"Right of Offset" shall have the meaning set forth in Section
10.06.
"Rittenhouse EBITDA" shall have the meaning set forth in Exhibit A
of this Agreement.
"Rittenhouse Guarantee" shall have the meaning set forth in
Schedule 3.07.
"S Corporation Distributions" shall mean distributions of cash to
the Stockholders at such times and in such amounts as to permit the
Stockholders to pay any Taxes, including estimated Taxes, imposed on the
Stockholders with respect to the income or operations of the Company or its
Subsidiaries.
"S-Corp Period" shall mean any taxable period of the Company
ending on or prior to the date of the termination of the Company's election
under Section 1362 of the Code occurring by reason of the transfer
described in Section 1.01 or the Section 338(h)(10) Election.
"Section 338(h)(10) Election" shall have the meaning set forth in
Section 11.04(a).
"Shares" shall have the meaning set forth in the Preliminary
Statement to this Agreement.
"Stockholder" and/or "Stockholders" shall have the meaning set
forth in the Preamble to this Agreement.
"Stockholders' Knowledge" when used in this Agreement with respect
to the Company's awareness of the presence or absence of a fact, event or
condition, shall mean actual, not implied or imputed, then present
knowledge of Andrew Albert, Simon J. Blattner, Jr., William Patrick Murphy,
Thomas Pagel, Karen Adams, John Peterka or Charles Urevick, or any of them.
"Stockholders Losses" shall have the meaning set forth in Section
10.02.
"Stockholders' Representatives" shall have the meaning set forth
in Section 1.05(a).
"Subsidiary" and "Subsidiaries" shall mean Rittenhouse, LLC and,
with respect to any Person, any corporation, partnership, association or
other business entity of which (i) if a corporation, a majority of the
total voting power of shares of stock entitled (irrespective of whether, at
the time, stock of any other class or classes of such corporation shall
have or might have voting power by reason of the happening 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 that
Person or one or more of the other Subsidiaries of that Person or a
combination thereof, or (ii) if a partnership, association or other
business entity, a majority of the partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or
indirectly, by any Person or one or more Subsidiaries of that Person or a
combination thereof.
"Supplies" shall have the meaning set forth in Section 3.18(b)(v).
"Targeted EBITDA" shall have the meaning set forth in Exhibit A of
this Agreement.
"Tax" shall mean any federal, state, local or foreign income,
gross receipts, franchise, estimated, alternative minimum, add-on minimum,
sales, use, transfer, real property gains, registration, value added,
excise, natural resources, severance, stamp, occupation, premium, windfall
profit, customs, duties, real property, personal property, capital stock,
social security, Medicare, hospital insurance, unemployment, disability,
payroll, license, employee or other withholding, or other tax, of any kind
whatsoever, including any interest, penalties or additions to tax.
"Tax Adjustment" shall have the meaning set forth in Section
1.03(c).
"Tax Return" shall mean any return, declaration, report, claim for
refund, information return or other document (including any related or
supporting schedule, statement or information) filed or required to be
filed in connection with the determination, assessment or collection of any
Tax of any party or the administration of any laws, regulations or
administrative requirements relating to any Tax.
"Transferred Equipment" shall mean the equipment identified on
Schedule 8.10 hereto.
"Transferred Real Estate" shall mean the real estate identified on
Schedule 8.09 hereto.
"Trust" shall have the meaning set forth in Section 3.21(l).
"WARN" shall have the meaning set forth in Section 3.20(d).
EXHIBIT A
Determination of Contingent Purchase Price
1.1 The Contingent Purchase Price shall be determined by reference
to (i) the earnings before interest, Taxes, depreciation and amortization
of the Company for the period January 1 through December 31, 2000,
determined as hereinafter set forth (the "Rittenhouse EBITDA") and (ii) Ten
Million Three Hundred Thousand Dollars ($10,300,000) (the "Targeted
EBITDA"). If the Rittenhouse EBITDA is 80% of the Targeted EBITDA the
Contingent Purchase Price shall be Four Million Dollars ($4,000,000) and
shall increase on a linear basis to a maximum of Six Million Dollars
($6,000,000) if the Rittenhouse EBITDA is 120% or more of Targeted EBITDA.
If the Rittenhouse EBITDA is less than 80% of Targeted EBITDA the
Contingent Purchase Price shall be zero, and in no event will the
Contingent Purchase Price exceed Six Million Dollars ($6,000,000). The
Earnout Table set forth below illustrates the methodology described in the
foregoing sentence.
1.2 The Rittenhouse EBITDA shall be the sum of:
(a) the EBITDA of the Company and the Subsidiaries
for the period January 1, 2000 through the day prior to the Closing Date,
as shown on the unaudited financial statements of the Company and the
Subsidiaries for such period prepared in accordance with generally accepted
accounting principles ("GAAP") (the "Pre-Closing EBITDA"); and
(b) the EBITDA of the Company from the Closing Date
through December 31, 2000, as shown on the unaudited financial statements
of the Company prepared in accordance with GAAP and on a basis consistent
with that used in the preparation of the Pre-Closing EBITDA, provided that:
1. The Rittenhouse EBITDA shall include the pre-Closing EBITDA of the
partnerships holding the Transferred Real Estate, determined on
the accrual basis.
2. The Rittenhouse EBITDA shall not include:
(a) Amortization of goodwill acquired in the transaction;
(b) Corporate charges of the Buyer allocated to the Company
or the LLC except to the extent that the services giving
rise to those charges reduced expenses that would
otherwise have been incurred by the Company or the LLC;
(c) any severance costs incurred by reason of employee
terminations initiated after the Closing, and wage
savings resulting from such terminations;
(d) Any post-Closing increase in reserves to assets or
increase in liabilities to the extent not required under
GAAP;
(e) Any reduction in profit attributable to any step-up of
asset value (e.g., inventory) as a result of the
transaction;
(f) The Company's share of profit or loss from its investment
in the Joint Venture;
(g) Post-Closing costs associated with the closing of the
Texas facility or any other Company or LLC facility;
(h) any discretionary bonuses in excess of $200,000 in the
aggregate with respect to year 2000 performance;
(i) any gains or losses from the sale of capital assets; or
(j) any costs, reduced profits or increased profits that
result from Buyer making any material change in the
conduct of the Company's or the LLC's business (e.g.,
wage savings). For purposes hereof, no change shall be
deemed material unless it has an annualized effect of
more than $50,000.
3. The Rittenhouse EBITDA shall not be reduced because of any sales
by the Company or by the LLC to Buyer at prices below market
prices nor increased by any purchases by the Company or by the LLC
from Buyer at prices below market prices.
4. If prior to January 1, 2001, the Buyer converts the Company or the
LLC into a division of the Buyer, the Buyer shall establish such
procedures as will permit the Rittenhouse EBITDA to be calculated
in accordance with the foregoing substantially as accurately as if
no such conversion had occurred.
5. The Pre-Closing EBITDA shall be calculated by the Stockholders
Representatives and delivered (together with schedules
demonstrating in reasonable detail the bases of such calculation)
to Buyer no later than sixty days after Closing. The Rittenhouse
EBITDA shall be calculated by Buyer and delivered (together with
schedules demonstrating in reasonable detail the bases of such
calculation) to the Stockholders Representatives not later than
February 28, 2001. Not later than March 31, 2001 the Stockholders'
Representatives shall inform Buyer in writing whether or not they
accept such calculation and, if they do not, shall at that time
provide Buyer with their reasons, in reasonable detail, for such
disagreement. The parties agree that they shall cooperate to
resolve any such dispute. Any resolution by the parties shall be
final and binding. If in such case the parties have not resolved
their disagreement prior to April 15, 2001, the dispute shall be
submitted to Peat, Marwick LLP for final and binding decision
pursuant to such procedures as such firm may establish. Such
decision shall be enforceable in accordance with Section 13.03(f)
of the Agreement. The Stockholders Representatives' calculation of
the Pre-Closing EBITDA shall not be binding on the Buyer.
6. The Contingent Purchase Price shall be paid on the fifth business
day following the date of its final determination. In the event
that the Contingent Purchase Price is not paid by the fifth
business day following determination, interest shall accrue
thereon at the then existing Fleet Bank - N.H. prime rate.
7. If the Stockholders are materially prevented from obtaining the
Contingent Purchase Price as a result of a business combination or
sale of substantially all the assets of Buyer occurring after the
Closing, then $5,000,000 of the Contingent Purchase Price shall be
deemed earned and payable immediately to Stockholders.
Earnout Table
-----------------------------------------------------
Y2000 Earnout
EBITDA Amount
---------------------------- ------------------------
Below $8,240,000 $0
8,240,000 4,000,000
8,446,000 4,100,000
8,652,000 4,200,000
8,858,000 4,300,000
9,064,000 4,400,000
9,270,000 4,500,000
9,476,000 4,600,000
9,682,000 4,700,000
9,888,000 4,800,000
10,094,000 4,900,000
10,300,000 5,000,000
10,506,000 5,100,000
10,712,000 5,200,000
10,918,000 5,300,000
11,124,000 5,400,000
11,330,000 5,500,000
11,536,000 5,600,000
11,742,000 5,700,000
11,948,000 5,800,000
12,154,000 5,900,000
12,360,000 6,000,000
Above 12,360,000 6,000,000
For example, if Y2000 EBITDA is $11,600,000, then the earnout amount would
be $5,631,068
EXHIBIT B
Escrow Agreement
[Filed separately herewith.]
EXHIBIT C
Employment Agreement
[Filed separately herewith.]
EXHIBIT D
Opinion of Hale and Dorr LLP
Hale and Dorr LLP will issue its opinion to the following effect,
subject to normal and customary qualifications and limitations:
1. The Buyer is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, is qualified to
do business and in good standing in New Hampshire and Nebraska, and has all
requisite power and authority to carry on its business as now being
conducted, to execute and deliver the Buyer's Documents, and to consummate
the transactions contemplated thereby.
2. The execution and delivery of the Buyer's Documents, and the
consummation of the transactions contemplated thereby, have been duly
authorized by all requisite corporate action on the part of the Buyer.
3. The Buyer's Documents have been duly executed and delivered by
the Buyer and constitute the valid and binding obligations of the Buyer,
enforceable against it in accordance with their respective terms.
4. The execution, delivery and performance of the Buyer's
Documents by the Buyer will not result in breach of the terms and
conditions of, or constitute a default under, the Certificate of
Incorporation or Bylaws of the Buyer or, any agreement, indenture or other
instrument known to us to which the Buyer is a party or by which the Buyer
is bound.
5. To the best of our knowledge, after due inquiry, there is no
action, proceeding, suit or investigation pending or threatened against the
Buyer which may have an adverse effect on the Buyer's ability to perform
its obligations under the Agreement.
EXHIBIT E
Opinion of Sonnenschein Nath & Rosenthal
Sonnenschein Nath and Rosenthal will issue its opinion to the
following effect subject to normal and customary qualifications and
limitations:
1. Rittenhouse is a corporation duly organized, validly existing and in
good standing under the laws of the State of Illinois, and Rittenhouse is
duly qualified to transact business and in good standing in each of the
States of California, Florida, Tennessee and Texas, and the Province of
Ontario, Canada.
2. Rittenhouse has all requisite corporate power and authority to own its
properties (as such properties are known to us), to carry on its business
as, to our knowledge, it is currently being conducted, to execute and
deliver Rittenhouse's Documents, and to consummate the transactions
contemplated thereby.
3. Each of the Stockholders has the full legal right and capacity to
execute the Rittenhouse Documents and to perform their respective
obligations under the Rittenhouse Documents.
4. The authorized capital stock of Rittenhouse on the date hereof consists
of 2,000,000 shares of Class A Common Stock, no par value per share ("Class
A Stock"), and 2,000,000 shares of Class B Common Stock, no par value per
share ("Class B Stock"). As of the date hereof, there are of record issued
and outstanding 699,940 shares of Class A Stock, and 399,436 shares of
Class B Stock.
5. The execution, delivery and performance of Rittenhouse's Documents by
Rittenhouse have been duly and validly authorized by all necessary
corporate action on the part of Rittenhouse. Each of Rittenhouse's
Documents has been duly and validly executed and delivered by Rittenhouse
and the Stockholders, and constitutes the valid and binding obligation of
Rittenhouse and the Stockholders, enforceable against Rittenhouse and the
Stockholders in accordance with its respective terms.
6. Except as set forth in the Agreement (including the Schedules and
Exhibits thereto), neither the execution and delivery by Rittenhouse and
the Stockholders of Rittenhouse's Documents, nor the consummation by
Rittenhouse and the Stockholders of the transactions contemplated thereby:
(a) violates the provisions of any law, rule or regulation applicable to
Rittenhouse or the Stockholders; (b) violates the provisions of the
Certificate of Incorporation or Bylaws of Rittenhouse; (c) violates any
judgment, decree, order or award of any court, governmental body or
arbitrator specifically naming Rittenhouse or the Stockholders which is
known to us; or (d) violates, or constitutes a breach or default under
(with or without the giving of notice or lapse of time or both), any
agreement to which Rittenhouse is a party and which is identified on
Schedule 3.18 to the Agreement.
7. Except as obtained and in effect at the Closing, no consent, approval,
order or authorization of, or filing with, any governmental authority is
required on the part of Rittenhouse in connection with the execution and
delivery of Rittenhouse's Documents or the consummation of the transactions
contemplated thereby.
8. To our knowledge, except as disclosed in the Agreement (including the
Exhibits and Schedules thereto), there is no action, proceeding, suit or
investigation pending or threatened against Rittenhouse.
ESCROW AGREEMENT
This Escrow Agreement is entered into as of April 14, 2000, by and
among Nashua Corporation, a Delaware corporation (the "Buyer"), the
Stockholders listed on Schedule I attached hereto (the "Stockholders") and
LaSalle Bank, N.A. (the "Escrow Agent").
WHEREAS, the Buyer, Rittenhouse Paper Company (the "Company") and
the Stockholders have entered into a Stock Purchase Agreement dated March
21, 2000 (the "Stock Purchase Agreement") pursuant to which the Buyer will
purchase all of the issued and outstanding shares of the Company;
WHEREAS, the Stock Purchase Agreement provides that an escrow fund
will be established to secure the indemnification obligations of the
Stockholders to the Buyer; and
WHEREAS, the parties hereto desire to establish the terms and
conditions pursuant to which such escrow fund will be established and
maintained;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. General.
(a) The Escrow Agent is hereby constituted and appointed the
escrow agent hereunder.
(b) The Stock Purchase Agreement by this reference is
incorporated herein and made a part of this Agreement to the same extent as
if its terms were fully set forth herein. Except as otherwise defined
herein, capitalized terms used herein shall have the meaning given to them
in the Stock Purchase Agreement, provided, however, that the Escrow Agent
shall not be charged with knowledge thereof nor subject in any way to the
terms and conditions thereof.
2. Appointment of Stockholders' Representatives. The Stockholders
hereby appoint The Stockholders' Representatives as their representatives
for purposes of this Agreement with the power and authority set forth in
subparagraph 8(c) below.
3. Escrow and Indemnification.
(a) Escrow Fund. Simultaneously with the execution of this
Agreement, the Stockholders shall deposit with the Escrow Agent, by wire
transfer or delivery of checks payable to the Escrow Agent, the sum of
$2,500,000 (the "Escrow Amount") to an account (the "Escrow Account")
designated by the Escrow Agent. The Escrow Account shall be increased by
any interest or other amount received with respect thereto and any
compounding interest or other return (collectively, "Interest") and
decreased by the distributions provided for in Sections 4 and 6 hereof. The
amounts in the Escrow Account from time to time, but not including any
Interest (whether or not still in the Escrow Account), are hereinafter
referred to as the "Escrow Fund". The Escrow Agent agrees to hold, invest
and otherwise act with respect to the Escrow Fund and any Interest earned
thereon in accordance with the terms and conditions of this Agreement The
Escrow Agent shall invest the Escrow Fund and any Interest received thereon
contained in the Escrow Account as directed by instruction of the
Representative, in Permitted Investments (as defined in Section 5 herein)
from time to time during the term of this Agreement. The Escrow Agent
hereby acknowledges receipt of such sum. The Escrow Agent agrees to hold
the Escrow Fund in an escrow account subject to the terms and conditions of
this Agreement.
(b) Indemnification. The Stockholders have agreed in Section 10
of the Stock Purchase Agreement, to indemnify and hold harmless the Buyer
from and against specified Losses (as defined in Section 10 of the Stock
Purchase Agreement). The Escrow Fund shall be security for such indemnity
obligation of the Stockholders, subject to the limitations, and in the
manner provided, in this Agreement.
(c) Transferability. The respective interests of the
Stockholders in the Escrow Fund shall not be assignable or transferable,
other than by operation of law. Notice of any such assignment or transfer
by operation of law shall be given to the Escrow Agent and the Buyer, and
no such assignment or transfer shall be valid until such notice is given.
4. Disbursement of Escrow Fund.
(a) Disbursement by Escrow Agent. The Escrow Agent shall
disburse the Escrow Fund only in accordance with (i) a written instrument
delivered to the Escrow Agent that is executed by both the Buyer, on the
one hand, and the Stockholders' Representatives, on the other hand and that
instructs the Escrow Agent as to the disbursement of some or all of the
Escrow Fund, (ii) an order of a court of competent jurisdiction, which is
final and with respect to which all applicable appeal periods have expired
or which is non-appealable, a copy of which is delivered to the Escrow
Agent by either the Buyer or the Stockholders' Representatives, that
instructs the Escrow Agent as to the disbursement of some or all of the
Escrow Fund, or (iii) the provisions of Section 4(b) hereof. The Buyer and
the Stockholders' Representatives agree to cooperate with each other in
good faith to comply with the provisions of this Section 4 and to use
reasonable efforts to resolve any disputes relating to the distribution
from the Escrow Account.
(b) Disbursement Following Termination Date. Within five
business days after October 14, 2001 (the "Termination Date"), the Escrow
Agent shall distribute to the Stockholders all of the Escrow Fund then held
in escrow. Notwithstanding the foregoing, if the Buyer has previously
delivered to the Escrow Agent a copy of a Claim Notice (as defined in
Section 10.02 of the Stock Purchase Agreement) and the Escrow Agent has not
received written notice of the resolution of the claim covered thereby, the
Escrow Agent shall retain in escrow after the Termination Date an amount
equal to the amount stated in such Claim Notice. Any funds so retained in
escrow shall be disbursed only in accordance with the terms of clauses (i)
or (ii) of Section 4(a) hereof.
(c) Method of Disbursement. Any distribution of all or a
portion of the Escrow Fund to the Stockholders shall be made in accordance
with the percentages set forth opposite the stockholders' respective names
on Schedule I. Distributions to the Stockholders shall be made by mailing
checks to such stockholders at their respective addresses shown on Schedule
I (or such other address as may be provided in writing to the Escrow Agent
by any such stockholder).
5. Investment of Escrow Fund.
(a) Permitted Investments. Any monies held in the Escrow Fund
shall be invested by the Escrow Agent, to the extent permitted by law and
as directed by the Stockholders' Representatives, in (i) obligations issued
or guaranteed by the United States of America or any agency or
instrumentality thereof having maturities of two months or less from the
date of acquisition, (ii) obligations (including certificates of deposit
and bankers' acceptances) of banks which at the date of their last public
reporting had total assets in excess of $500,000,000, (iii) commercial
paper rated at least A-1 or the equivalent thereof by Standard & Poor's
Corporation or P-1 or the equivalent thereof by Moody's Investor Service,
Inc. and in each case maturing within two months after the date of
acquisitions, and (iv) money market mutual funds invested exclusively in
some or all of the securities described in the foregoing clauses (i), (ii)
and (iii).
(b) Tax Reporting. The parties hereto agree that, for tax
reporting purposes, all interest or other income earned from the investment
of the Escrow Fund or any portion thereof shall be allocable to the party
which ultimately receives such Escrow Fund or portion thereof.
(c) Certification of Tax Identification Number. The parties
hereto agree to provide the Escrow Agent with a certified tax
identification number by signing and returning a Form W-9 to the Escrow
Agent prior to the date on which any income earned on the investment of the
Escrow Fund is credited to such Escrow Fund. The parties hereto understand
that, in the event their tax identification numbers are not certified to
the Escrow Agent, the Internal Revenue Code, as amended from time to time,
may require withholding of a portion of any interest or other income earned
on the investment of the Escrow Fund.
6. Fees and Expenses. The Buyer, on the one hand, and the
Stockholders, on the other hand, shall each pay one-half of the fees of the
Escrow Agent for the services to be rendered by the Escrow Agent hereunder,
as described in Schedule II attached hereto.
7. Limitation of Escrow Agent's Liability.
(a) Limitation on Liability. The Escrow Agent shall incur no
liability with respect to any action taken or suffered by it in reliance
upon any notice, direction, instruction, consent, statement or other
documents believed by it to be genuine and duly authorized, nor for other
action or inaction except its own willful misconduct or gross negligence.
The Escrow Agent shall not be responsible for the validity or sufficiency
of this Agreement. In all questions arising under the Escrow Agreement, the
Escrow Agent may rely on the advice of counsel, and the Escrow Agent shall
not be liable to anyone for anything done, omitted or suffered in good
faith by the Escrow Agent based on such advice. The Escrow Agent shall not
be required to take any action hereunder involving any expense unless the
payment of such expense is made or provided for in a manner reasonably
satisfactory to it. In no event shall the Escrow Agent be liable for
indirect, punitive, special or consequential damages.
(b) Indemnification. The Buyer and the Stockholders hereby,
jointly and severally, and the Buyer hereby agree to indemnify the Escrow
Agent for, and hold it harmless against, any loss, liability or expense
incurred without gross negligence or willful misconduct on the part of
Escrow Agent, arising out of or in connection with its carrying out of its
duties hereunder. The Buyer, on the one hand, and the Stockholders, on the
other hand, shall each be liable for one-half of such amounts.
8. Liability and Authority of Stockholders' Representatives;
Successors and Assignees.
(a) Limitation on Liability. The Stockholders' Representatives
shall incur no liability to the Stockholders with respect to any action
taken or suffered by him in reliance upon any note, direction, instruction,
consent, statement or other documents believed by him to be genuinely and
duly authorized, nor for other action or inaction except their own willful
misconduct or gross negligence. The Stockholders' Representatives may, in
all questions arising under the Escrow Agreement, rely on the advice of
counsel and the Stockholders' Representatives shall not be liable to the
Indemnifying Stockholders for anything done, omitted or suffered in good
faith by the Stockholders' Representatives based on such advice.
(b) Successor Stockholders' Representatives. In the event of
the death or permanent disability of the Blatner Stockholders'
Representative, or his resignation as the Blatner Stockholders'
Representative, a successor Blatner Stockholders' Representatives shall be
elected by a majority vote of the Blatner Stockholders, with Stockholders
to be given a vote equal to the respective percentages set forth on
Schedule I. In the event of the death or permanent disability of Andrew
Albert, or his resignation as the Albert Stockholder's Representative,
Kenneth Granat shall be the successor Albert Stockholder's Representative.
Each respective successor Stockholders' Representative shall have all of
the power, authority, rights and privileges conferred by this Agreement
upon the original Stockholders' Representatives, and the term
"Stockholders' Representatives" as used herein shall be deemed to include
successor Stockholders' Representatives.
(c) Power and Authority. The Stockholders' Representatives,
acting unanimously, shall have full power and authority to represent the
Stockholders, and their successors, with respect to all matters arising
under this Agreement and all actions taken by the Stockholders'
Representatives hereunder shall be binding upon the Stockholders, and their
successors, as if expressly confirmed and ratified in writing by each of
them. Without limiting the generality of the foregoing, the Stockholders'
Representatives shall have full power and authority to interpret all of the
terms and provisions of this Agreement, to compromise any claims asserted
hereunder and to authorize payments to be made with respect thereto, on
behalf of the Stockholders and their successors. All actions to be taken by
the Stockholders' Representatives hereunder shall be evidenced by, and
taken upon, the written direction of a majority thereof.
(d) Reliance by Escrow Agent. The Escrow Agent may rely on the
Stockholders' Representatives as the exclusive agents of the Stockholders
under this Agreement and shall incur no liability to any party with respect
to any action taken or suffered by it in reliance thereon.
9. Amounts Payable by Stockholders. The amounts payable by the
Stockholders under this Agreement (i.e., the fees of the Escrow Agent
payable pursuant to Section 6 and the indemnification obligations pursuant
to Section 7(b)) shall be payable solely as follows. The Escrow Agent shall
notify the Stockholders' Representatives of any such amount payable by the
Stockholders as soon as it becomes aware that any such amount is payable,
with a copy of such notice to the Buyer. On the sixth business day after
the delivery of such notice, the Escrow Agent shall disburse such amount
from the Escrow Fund (up to the amount then available in the Escrow Fund)
to the party to whom such amount is owed in satisfaction of such
indemnification obligations of the Stockholders; provided that if the Buyer
delivers to the Escrow Agent (with a copy to the Stockholders'
Representatives), within five business days after delivery of such notice
by the Escrow Agent, a written notice contesting the legitimacy or
reasonableness of such amount, then the Escrow Agent shall not disburse the
disputed portion of such claimed amount except in accordance with the terms
of clauses (i) or (ii) of Section 4(a) hereof.
10. Creditors.
(a) No Person other than the Company and the Sellers are
entitled to receive any payment out of the Escrow Account. The Company and
the Sellers will be entitled to receive payments to of the Escrow Account
solely in accordance with the express terms hereof.
(b) Except as otherwise specifically provided for herein, no
creditor of the Company, Buyer, the Sellers or the Escrow Agent or any of
their respective affiliates or agents shall have any rights in or to the
Escrow Account or the funds held therein. Accordingly, in order to
effectuate the parties' intentions under this Agreement, the Company hereby
grants to the Sellers, and the Sellers hereby grant to the Company, a
security interest in all of the grantor's rights, title and interest in and
to the Escrow Account and any proceeds thereof (as such term is defined in
the Uniform Commercial Code as in effect in the State of Illinois) so long
as the Escrow Account and/or any such proceeds remains subject to the terms
of this Agreement. In addition, the Company and the Sellers hereby appoint
the Escrow Agent a the Company's and the Sellers' agent for possession of
the Escrow Account in order to perfect the Company's and the Sellers'
respective security interests therein. The Escrow Agent agrees to this
appointment and acknowledges that, in connection with the security interest
granted in this Section 10(b), it is acting as bailee with respect to such
Escrow Account and/or such proceeds on behalf of the Company and the
Sellers but subject to the terms and conditions set forth in this
Agreement. The Company and the Sellers further agree to take any and all
necessary additional steps to perfect and continue perfection of the
security interests granted hereunder. Notwithstanding the foregoing, the
Escrow Agent shall have a first perfected security interest in and prior
lien upon all property held by it under this Escrow Agreement but solely in
order to secure the obligations of the parties to the Escrow Agreement
arising under Sections 6 and 7(b) hereof, and shall have the right to
reimburse itself from such property for any and all such obligations which
remain unpaid thirty (30) or more days subsequent to demand by the Escrow
Agent for payment thereof given as provided for in Section 10(b) hereof. In
no event shall the Escrow Agent be responsible for the validity,
enforceability, perfection or priority of any security interest claimed by
any person (other than the Escrow Agent itself) in the Escrow Account.
11. Termination. This Agreement shall terminate upon the
disbursement by the Escrow Agent of all of the Escrow Funds in accordance
with this Agreement; provided that the provisions of Sections 7 and 8 shall
survive such termination.
12. Successor Escrow Agent. In the event the Escrow Agent becomes
unavailable or unwilling to continue in its capacity herewith, the Escrow
Agent may resign and be discharged from its duties or obligations hereunder
by delivering a resignation to the parties to this Escrow Agreement, not
less than 60 days' prior to the date when such resignation shall take
effect. The Buyer may appoint a successor Escrow Agent without the consent
of the Stockholders' Representatives so long as such successor is a bank
with assets of at least $500 million, and may appoint any other successor
Escrow Agent with the consent of the Stockholders' Representatives, which
shall not be unreasonably withheld. If, within such notice period, the
Buyer provides to the Escrow Agent written instructions with respect to the
appointment of a successor Escrow Agent and directions for the transfer of
any Escrow Fund then held by the Escrow Agent to such successor, the Escrow
Agent shall act in accordance with such instructions and promptly transfer
such Escrow Fund to such designated successor. If no successor Escrow Agent
is named as provided in this Section 12 prior to the date on which the
resignation of the Escrow Agent is to properly take effect, the Escrow
Agent may apply to a court of competent jurisdiction for appointment of a
successor Escrow Agent.
13. Miscellaneous.
(a) Entire Agreement. Except for those provisions of the Stock
Purchase Agreement referenced herein, this Agreement constitutes the entire
agreement among the parties and supersedes any prior understandings,
agreements or representations by or among the parties, written or oral,
with respect to the subject matter hereof.
(b) Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties named herein and their
respective successors and permitted assigns.
(c) Counterparts and Facsimile Signature. 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. This Agreement may be executed by facsimile signature.
(d) Headings. The section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
(e) Notices. All notices, instructions and other communications
hereunder shall be in writing. Any notice, instruction or other
communication hereunder shall be deemed duly delivered four business days
after it is sent by registered or certified mail, return receipt requested,
postage prepaid, or one business day after it is sent for next business day
delivery via a reputable nationwide overnight courier service, in each case
to the intended recipient as set forth below:
If to the Buyer: Nashua Corporation
44 Franklin Street
Nashua, NH 03061
Attn: Peter C. Anastos,
Vice President and
General Counsel
With a copy to: John K. P. Stone, III
Hale and Dorr, LLP
60 State Street
Boston, MA 02109
If to the Company: Rittenhouse Paper Company
250 South Northwest Highway
Suite 103
Park Ridge, IL 60068
With a copy to: Clarissa Cerda, Esq.
Sonnenschein Nath and Rosenthal
Suite 800, Sears Tower
233 South Wacker Drive
Chicago, IL 60606
If to the Stockholders' Simon Blattner, Jr.
Representatives 109 Alpine Terrace
San Francisco, CA 94117
and
Andrew Albert
c/o Rittenhouse Paper Company
250 South Northwest Highway
Suite 103
Park Ridge, IL 60068
With a copy to: Clarissa Cerda, Esq.
Sonnenschein Nath and Rosenthal
Suite 800, Sears Tower
233 South Wacker Drive
Chicago, IL 60606
If to the Escrow Agent: Kevin Kolb
LaSalle Bank, N.A.
135 S. LaSalle Street
Chicago, IL 60603
Any party may give any notice, instruction or other communication
hereunder using any other means (including personal delivery, expedited
courier, messenger service, telecopy, telex, ordinary mail or electronic
mail), but no such notice, instruction or other communication shall be
deemed to have been duly given unless and until it actually is received by
the party to whom it is intended. Any party may change the address to which
notices, instructions, or other communications hereunder are to be
delivered by giving the other parties notice in the manner set forth in
this Section.
(f) Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of Delaware without giving
effect to any choice or conflict of law provision or rule (whether of
Delaware or any other jurisdiction) that would cause the application of
laws of any jurisdiction other than those of the Delaware.
(g) Amendments and Waivers. This Agreement may be amended only
with the written consent of the Buyer, the Escrow Agent and the
Stockholders' Representatives. No waiver of any right or remedy hereunder
shall be valid unless the same shall be in writing and signed by the party
giving such waiver. No waiver by any party with respect to any condition,
default or breach of covenant hereunder shall be deemed to extend to any
prior or subsequent condition, default or breach of covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent
such occurrence.
(h) Submission to Jurisdiction. Each of the parties (a) submits
to the jurisdiction of any state or federal court sitting in Illinois in
any action or proceeding arising out of or relating to this Agreement, (b)
agrees that all claims in respect of such action or proceeding may be heard
and determined in any such court, and (c) agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other court.
Each of the parties waives any defense of inconvenient forum to the
maintenance of any action or proceeding so brought and waives any bond,
surety or other security that might be required of any other party with
respect thereto. Any party may make service on another party by sending or
delivering a copy of the process to the party to be served at the address
and in the manner provided for the giving of notices in Section 13. Nothing
in this Section, however, shall affect the right of any party to serve
legal process in any other manner permitted by law.
IN WITNESS WHEREOF, the parties have duly executed this Agreement
as of the day and year first above written.
NASHUA CORPORATION
By /s/ Gerald G. Garbacz
_______________________________
STOCKHOLDER REPRESENTATIVE
/s/ Simon Blattner
_________________________________
/s/ Andrew B. Albert
_________________________________
_________________________________
_________________________________
LASALLE BANK, N.A.
By: /s/ R. C. Bergman
_______________________________
Name:
Title:
REVOLVING CREDIT AND TERM LOAN AGREEMENT
DATED AS OF APRIL 14, 2000
BY AND AMONG
NASHUA CORPORATION
AND CERTAIN OF ITS SUBSIDIARIES
AS THE BORROWER,
AND
THE LENDERS PARTY HERETO
AND
FLEET BANK-NH,
AS AGENT
NASHUA CORPORATION
REVOLVING CREDIT AND TERM LOAN AGREEMENT
TABLE OF CONTENTS
SECTION PAGE
ss.1. DEFINITIONS AND RULES OF INTERPRETATION..........................1
ss.1.1. Definitions..................................................1
ss.1.2. Rules of Interpretation.....................................11
ss.2. THE CREDIT FACILITIES...........................................12
ss.2.1. Amounts and Terms of the Facilities.........................12
ss.2.2. Fees........................................................14
ss.2.3. Reduction of Commitments....................................15
ss.2.4. Revolving Credit Notes......................................15
ss.2.5. Term Notes..................................................15
ss.2.7. Requests for Loans..........................................17
ss.2.8. Conversion and Continuation.................................17
ss.2.9. Funds for Loans.............................................18
ss.2.10. Letter of Credit Request Procedure; Funding;
Obligations.................................................18
ss.2.11. Collateral..................................................21
ss.2.12. Guaranties..................................................21
ss.2.13. Borrowing Base for Revolving Credit Loans...................21
ss.3. PREPAYMENT OF THE LOANS; RESERVES; CROSS DEFAULT
AND TERMINATION..................................................22
ss.3.1. Voluntary Prepayments.......................................22
ss.3.2. Mandatory Prepayments.......................................23
ss.3.3. Prepayment Fee..............................................23
ss.3.4. Cross Default and Termination...............................23
ss.4. CERTAIN GENERAL PROVISIONS.......................................23
ss.4.1. Funds for Payments..........................................23
ss.4.2. Computations................................................24
ss.4.3 Inability to Determine LIBOR................................24
ss.4.4. Illegality..................................................25
ss.4.5. Additional Costs, Etc.......................................25
ss.4.6. Capital Adequacy............................................26
ss.4.7. Certificate.................................................26
ss.4.8. Indemnity...................................................27
ss.4.9. Charges for Overdue Amounts.................................27
ss.4.10. Mitigation..................................................27
ss.4.11. Joint and Several Obligations...............................27
ss.5. REPRESENTATIONS AND WARRANTIES...................................28
ss.5.1 Organization, Standing, etc. of the Borrowers..............28
ss.5.2 Subsidiaries................................................28
ss.5.3 Qualification...............................................28
ss.5.4 Financial Information; Disclosure, Etc......................28
ss.5.5 Licenses, Etc...............................................29
ss.5.6 Tax Returns and Payments....................................29
ss.5.7 Indebtedness, Liens and Investments, Etc....................29
ss.5.8 Title to Properties, Liens..................................29
ss.5.9 Litigation, Etc.............................................30
ss.5.10 Authorization, Compliance with Other Instruments............30
ss.5.11 Governmental Consent........................................30
ss.5.12 Intentionally Omitted.......................................30
ss.5.13 Regulation U, Etc...........................................30
ss.5.14 Employee Retirement Income Security Act of 1974.............30
ss.5.15 Environmental Matters.......................................31
ss.5.16 Use of Proceeds.............................................31
ss.5.17 Investment Company Act, Public Utility Holding
Company Act.................................................32
ss.5.18 Disclosures.................................................32
ss.6. AFFIRMATIVE COVENANTS............................................32
ss.6.1. Records and Accounts..........................................32
ss.6.2. Financial Statements, Certificates and Information............32
ss.6.3. Legal Existence: Compliance with Laws. Etc...................34
ss.6.4. Insurance.....................................................34
ss.6.5. Payment of Taxes..............................................35
ss.6.6. Payment of Other Indebtedness, Etc............................35
ss.6.7. Further Assurances............................................35
ss.6.8. Depository Account............................................35
ss.6.9. Use of Proceeds...............................................35
ss.6.10. Composition of Management.....................................36
ss.6.11. Composition of Board..........................................36
ss.6.12. Operating Account.............................................36
ss.7. CERTAIN NEGATIVE COVENANTS.......................................36
ss.7.1. Indebtedness..................................................36
ss.7.2. Mortgages, Liens, Etc.........................................37
ss.7.3. Loans, Guarantees and Investments.............................37
ss.7.4. Leases........................................................38
ss.7.5. Mergers and Consolidations; Acquisitions......................38
ss.7.6. Sale of Assets................................................39
ss.7.7. Capital Expenditures..........................................39
ss.7.8. Distributions.................................................39
ss.7.9. Compliance with ERISA.........................................39
ss.7.10. Transactions with Affiliates..................................39
ss.7.11. Observance of Subordination Provisions, Etc...................39
ss.7.12. Environmental Liabilities.....................................39
ss.7.13. Subsidiaries..................................................40
ss.7.14. Issuance of Shares............................................40
ss.7.15. Subsidiary Distributions......................................40
ss.7.16. Material Adverse Effect.......................................40
ss.7.17. No Negative Pledges...........................................40
ss.8. FINANCIAL COVENANTS..............................................40
ss.9. DEFAULTS: REMEDIES...............................................41
ss.9.1 Events of Default; Acceleration................................41
ss.9.2 Remedies on Default, Etc.......................................43
ss.10. CLOSING CONDITIONS...............................................43
ss.10.1. Loan Documents, Etc............................................44
ss.10.2. Corporate Action...............................................44
ss.10.3. Incumbency Certificate.........................................44
ss.10.5. Payment of Fees................................................44
ss.10.6. Rittenhouse Transaction........................................45
ss.10.7. Closing Agenda.................................................45
ss.10.8. Title Insurance................................................45
ss.10.9. Employment Agreement...........................................45
ss.10.10.Valuation......................................................45
ss.11. CONDITIONS TO ALL LOANS..........................................45
ss.11.1. Accuracy of Representations: No Event of Default..............45
ss.11.2. Loan Request..................................................46
ss.11.3. No Legal Impediment...........................................46
ss.11.4. Due Diligence Complete........................................46
ss.11.5. No Material Adverse Change....................................46
ss.11.6. Field Audit...................................................46
ss.11.7. Environmental Site Assessment.................................46
ss.11.8. Appraisal.....................................................47
ss.12. THE AGENT........................................................47
ss.12.1. Appointment, Powers and Immunities............................47
ss.12.2. Reliance by Agent.............................................48
ss.12.3. Defaults......................................................48
ss.12.4. Rights as a Lender............................................48
ss.12.5. Indemnification...............................................48
ss.12.6. Non-Reliance on Agent and Other Lenders.......................49
ss.12.7. Failure to Act................................................49
ss.12.8. Resignation of Agent..........................................49
ss.12.9. Cooperation of Lenders........................................49
ss.12.10. Amendment ofss.l2.............................................50
ss.13. SETOFF, ETC......................................................50
ss.14. EXPENSES.........................................................50
ss.15. INDEMNIFICATION.................................................51
ss.15.1. General Indemnification.......................................51
ss.15.2. Foreign Currency Indemnification..............................51
ss.16. SURVIVAL OF COVENANTS. ETC......................................52
ss.17. ASSIGNMENT AND PARTICIPATION.....................................52
ss.17.1. Assignment by the Lenders.....................................52
ss.17.2. Assignment by Borrowers.......................................53
ss.17.3. Participations by the Lenders.................................53
ss.17.4. Replacement of Lender.........................................53
ss.18. FOREIGN LENDER...................................................54
ss.19. NOTICES, ETC.....................................................54
ss.20. GOVERNING LAW; JURISDICTION......................................55
ss.21. HEADINGS.........................................................56
ss.22. COUNTERPARTS.....................................................56
ss.23. ENTIRE AGREEMENT, ETC............................................56
ss.24. WAIVER OF JURY TRIAL.............................................56
ss.25. CONSENTS, AMENDMENTS, WAIVERS, ETC...............................56
ss.26. CONFIDENTIALITY..................................................57
ss.27. SEVERABILITY.....................................................57
ss.28. NATURE OF LENDER'S OBLIGATIONS...................................57
REVOLVING CREDIT AND TERM LOAN AGREEMENT
----------------------------------------
This REVOLVING CREDIT AND TERM LOAN AGREEMENT is made as of the
14th day of April, 2000 by and among NASHUA CORPORATION, a Delaware
corporation ("NASHUA"), RITTENHOUSE, L.L.C., an Illinois limited liability
company ("RITTENHOUSE"), RITTENHOUSE PAPER COMPANY, an Illinois corporation
("RPC") (Nashua, Rittenhouse and RPC are referred to individually as a
"Borrower" and collectively as the "Borrowers") and FLEET BANK-NH, a bank
organized under the laws of the State of New Hampshire ("Fleet"), as a
Lender (as defined below), and as Agent (as defined below) for itself and
the other Lender, LASALLE BANK NATIONAL ASSOCIATION, a national banking
association ("LaSalle") and the other Lenders from time to time party
hereto.
ss.1. DEFINITIONS AND RULES OF INTERPRETATION.
ss.1.1. Definitions. The following terms shall have the meanings
set forth in this ss.1 or elsewhere in the provisions of this Credit
Agreement referred to below:
Affected Lender. The meaning specified in ss.17.4.
Affiliate. As applied to any Person, a spouse of such Person, any
relative (by blood, adoption or marriage) of such Person within the third
degree, any managing member, director or officer of such Person, any
corporation, association, firm or other entity of which such Person is a
managing member, director or officer and any other Person directly or
indirectly controlling, controlled by or under direct or indirect common
control with such Person.
Agent. Fleet in its capacity as agent for the Lenders hereunder,
as well as its successors and assigns in such capacity pursuant toss.12.8.
Available Revolving Commitment. The Total Revolving Commitment
less the sum of (a) the outstanding principal amounts advanced as Revolving
Credit Loans and (b) the aggregate amount of Letter of Credit Liabilities.
Base Rate. For any date, the variable per annum rate of interest
designated from time to time by the Agent as its "prime rate" in effect on
such day; provided, however, such prime rate is a reference rate and does
not necessarily represent the lowest or best rate being charged to any
customer. Each time the Base Rate changes, the interest rate on Base Rate
Loans shall change immediately without notice or demand of any kind.
Base Rate Loans. Loans bearing interest calculated by reference to
the Base Rate.
Base Rate Margin. The meaning specified in ss.2.6(a).
Borrower. NASHUA CORPORATION, RITTENHOUSE PAPER COMPANY OR
RITTENHOUSE, L.L.C.
Borrowers. NASHUA CORPORATION, RITTENHOUSE PAPER COMPANY and
RITTENHOUSE, L.L.C.
Borrowing Base. The sum of eighty percent (80%) of the Eligible
Accounts plus fifty percent (50%) of the Eligible Inventory.
Breakage Costs. With respect to any LIBOR Loan means, the product
of (i) the amount of the LIBOR Loan which is pre-paid or failed to be
borrowed times (ii) the difference between the existing effective rate on
such LIBOR Loan and the rate at which the Agent determines that the amount
of any such Loan can be placed in the London Interbank Market or in United
States Government Securities (whichever rate is higher) for the remainder
of the Interest Period times (iii) the number of days until the expiration
of the Interest Period divided by 360, plus any other reasonable costs and
expenses which Lenders incur resulting from any Borrower's prepayment of,
or failure to borrow such Loan.
Business Day. Any day on which banking institutions in Manchester,
New Hampshire and Chicago, Illinois are open for the transaction of banking
business and, in the case of LIBOR Loans, a day which is a LIBOR Business
Day.
Capital Expenditures. Any payment made directly or indirectly by
any Borrower for the purpose of acquiring or constructing fixed assets,
real property or equipment which in accordance with GAAP would be added as
a debit to the Consolidated fixed asset account of the Borrower, including
without limitation amounts paid or payable under any conditional sale or
other title retention agreement or under any lease or other periodic
payment arrangement which is of such a nature that payment obligations of
such Borrower thereunder would be required by GAAP to be capitalized and
shown as liabilities on the Consolidated balance sheet of the Borrower.
Capitalized Leases. Leases under which a Person is the lessee or
obligor, the discounted future rental payment obligations under which are
required to be capitalized on the balance sheet of such Person in
accordance with GAAP.
Change in Control. Shall be deemed to have occurred if any Person
or group (within the meaning of Rule 13d-5 of the Securities and Exchange
Commission as in effect on the date hereof) shall own directly or
indirectly, beneficially or of record, shares representing more than fifty
percent (50%), on a fully-diluted basis, of the aggregate ordinary voting
power of the Borrower.
Change in Control of the Board. The meaning specified in ss.6.11.
Change in Senior Management. The meaning specified in ss.6.10.
Closing Date. The first date on which the conditions set forth
inss.10 andss.11 have been satisfied and any Loans are made.
Code. The Internal Revenue Code of 1986, as amended.
Collateral. All property of any nature whatsoever upon which a
lien or security interest is created or purported to be created by any Loan
Documents as security for the Obligations or any portion thereof.
Commitment. As to any Lender, the Lender's Percentage of the Total
Commitment.
Commitment Fee. The meaning specified in ss.2.2(c).
Consolidated. With reference to any term herein, shall mean that
term as applied to the accounts of the Borrowers consolidated with its
Subsidiaries in accordance with GAAP.
Credit Agreement. This Revolving Credit and Term Loan Agreement,
including the Schedules and Exhibits hereto, as the same may be amended or
otherwise modified.
Current Lines of Business. The lines of business conducted by the
Borrowers on the Closing Date and any business and activities incidental
thereto.
Dollars or $. Dollars in lawful currency of the United States of
America.
Drawdown Date. The date on which any Loan is made or is to be
made, and the date on which any Loan is converted or continued in
accordance with ss.2.8.
EBITDA. The meaning specified inss.8.
Eligible Accounts. Means and refers to such accounts and accounts
receivable of Nashua and Rittenhouse as the Lenders determine to be
satisfactory, in their sole discretion, and which meet the following
specifications:
(a) are not more than ninety (90) days past due from the date of
the invoice therefor. In the event more than twenty percent (20%) of the
accounts receivable from a particular account debtor are more than ninety
(90) days past due from the earlier of the date of the invoice or the date
of shipping, all of the accounts receivable from that particular account
debtor shall be excluded from Eligible Accounts;
(b) do not arise out of the sale by Nashua or Rittenhouse of goods
consigned or delivered to Nashua or Rittenhouse on "sell or return" terms
(whether or not compliance has been made with Section 2-326 of the Uniform
Commercial Code);
(c) arose in the ordinary course of Nashua's or Rittenhouse's
business;
(d) do not arise out of any sale made on a "bill and hold" or
delayed shipping basis in excess of fifteen (15) days;
(e) are generated from customers whose principal place of business
is within the United States (unless supported by letters of credit acceptable
to the Lenders);
(f) are generated from any corporation or other entity or person
other than one which is related to Nashua or Rittenhouse, or is of common
ownership with Nashua or Rittenhouse, or could be treated as a member of
the same controlled group of corporations of which Nashua or Rittenhouse is
a member;
(g) are not subject to any claim, counterclaim, set off, or
chargeback or which include terms which permit the account debtor to return
to Nashua or Rittenhouse for credit or refund, the goods giving rise to
such account or account receivable (other than adjustments made in the
ordinary course of business);
(h) are not evidenced by a promissory note;
(i) are not finance charges;
(j) are not owed by any person employed by, or salesman of,
Nashua or Rittenhouse;
(k) are not owed by an account debtor that is the subject of a
bankruptcy or similar insolvency proceeding, or that has made an assignment
for the benefit of creditors or whose assets have been conveyed to a
receiver or trustee; and
(l) are not contra accounts or re-aged accounts.
Eligible Inventory. Means and refers to Nashua's and Rittenhouse's
inventory as the Lenders determine to be satisfactory, in their sole
discretion, and which meet the following criteria:
(a) inventory which is not in transit and, with regard to
Rittenhouse inventory, is not located outside of New Hampshire, California,
Tennessee, Illinois or Texas and with regard to Nashua inventory, is not
located outside of California, Tennessee, New Hampshire, Nebraska, Indiana,
Nevada, Pennsylvania or Washington;
(b) inventory which is not perishable;
(c) inventory which is in good condition, or currently usable
or currently saleable in the ordinary course of Nashua's or Rittenhouse's
business;
(d) inventory which is not obsolete or out of season;
(e) inventory not consisting of supplies, containers, or other
packaging materials;
(f) inventory which is not subject to a lien in favor of a
person other than the Agent, or is stored only at Nashua's or Rittenhouse's
principal place of business or at locations approved by the Lenders or is
stored at locations leased by Nashua or Rittenhouse or with a bailee,
consignee, warehouseman or similar third party;
(g) inventory which is considered finished goods or raw
material, but not including work in process; and
(h) inventory which does not require the payment of any tax,
impost, duty or other levy prior to Nashua's or Rittenhouse's exercise of
dominion and control with respect thereto.
Employee Benefit Plan. Any employee benefit plan within the
meaning of Section 3(3) of ERISA maintained or contributed to by any
Borrower or any ERISA Affiliate, or with respect to which any Borrower or
any ERISA Affiliate has actual or contingent liability, in each case other
than a Multiemployer Plan.
Environmental Laws. Any and all applicable current and future
treaties, laws, rules, regulations, codes, ordinances, orders, decrees,
judgments, injunctions, notices or binding agreements issued, promulgated
or entered into by any governmental authority, relating in any way to the
environment, preservation or reclamation of natural resources or human
exposure to or the management or Release or threatened Release of any
Hazardous Material.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
ERISA Affiliate. Any Person which is treated as a single employer
with any Borrower under Section 414 of the Code or Section 4001 of ERISA.
ERISA Reportable Event. A reportable event with respect to a
Guaranteed Pension Plan within the meaning of ss.4043 of ERISA and the
regulations promulgated thereunder as to which the requirement of notice
has not been waived.
Event of Default. The meaning specified in ss.9.1.
Facility Fee. A fee in the amount of $100,000, which Facility Fee
is due and payable ratably to each of the Lenders on the Closing Date, and
which Facility Fee is deemed to be fully earned and non-refundable on the
Closing Date.
Fronting Bank. Means Fleet or such other Lender which is a
commercial bank as the Borrowers and Fleet may mutually designate from time
to time which agrees to be the issuer of a Letter of Credit.
GAAP. Generally accepted accounting principles in the United
States of America.
Guaranteed Pension Plan. Any Employee Benefit Plan, the benefits
of which are guaranteed on termination in full or in part by the PBGC
pursuant to Title IV of ERISA.
Hazardous Materials. All explosive or radioactive substances or
wastes, hazardous or toxic substances or wastes, pollutants, solid, liquid
or gaseous wastes, including petroleum or petroleum distillates, asbestos
or asbestos-containing materials, polychlorinated biphenyls or materials or
equipment containing polychiorinated biphenyls, radon gas, infectious or
medical wastes and all other substances or wastes of any nature regulated
pursuant to any Environmental Law.
Indebtedness. All obligations, contingent and otherwise, that in
accordance with GAAP should be classified upon a Person's balance sheet as
liabilities for borrowed money, including: (a) all debt for borrowed money
and similar monetary obligations, whether direct or indirect; (b) all
liabilities for borrowed money secured by any mortgage, pledge, security
interest, lien, charge, or other encumbrance existing on property owned or
acquired by such Person subject thereto, whether or not the liability
secured thereby shall have been assumed; (c) all obligations in respect of
Capitalized Leases; and (d) all guarantees, endorsements and other
contingent obligations whether direct or indirect in respect of
indebtedness for borrowed money owed by others, including any obligation to
supply funds to or in any manner to invest in, directly or indirectly, the
debtor, to purchase indebtedness, or to assure the owner of indebtedness
against loss, through an agreement to purchase goods, supplies, or services
for the purpose of enabling the debtor to make payment of the indebtedness
held by such owner or otherwise, and the obligations to reimburse the
issuer in respect of any letters of credit.
Interest Expense. For any period, the aggregate amount (determined
in accordance with GAAP) of interest paid or payable during such period by
any Person in respect of all Indebtedness for borrowed money, Capitalized
Leases and the deferred purchase price of property.
Interest Payment Date. (a) As to any Base Rate Loan, the first day
of every month beginning with the first day of the first month after the
Closing Date and any date on which such Base Rate Loan is converted to a
LIBOR Loan; and (b) as to any LIBOR Loan, the last day of the Interest
Period relating to such LIBOR Loan; provided, that in the event that such
Interest Period is more than 90 days, each 90th day during such Interest
Period and the last day of such Interest Period.
Interest Period. With respect to each LIBOR Loan, the period of
one, two or three months, as selected by any Borrower commencing on the
Drawdown Date of such LIBOR Loan; provided that the foregoing provisions
relating to Interest Periods are subject to the following:
(a) if any Interest Period would otherwise end on a day that
is not a LIBOR Business Day, that Interest Period shall be extended to the
next succeeding LIBOR 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
LIBOR Business Day; and
(b) no Interest Period with respect to a LIBOR Loan may
extend beyond the applicable Maturity Date.
Interest Rate Protection Agreement. An interest rate swap, cap or
collar agreement or similar agreement between any Person and a financial
institution providing for the transfer or mitigation of interest risks
either generally or under specific contingencies.
Investments. All expenditures made and all liabilities incurred
(contingently or otherwise), without duplication, for the acquisition of
stock or Indebtedness of, or for loans, advances, capital contributions or
transfers of property to, or in respect of any guaranties (or other
commitments as described under Indebtedness), or obligations of, any
Person. In determining the aggregate amount of Investments outstanding at
any particular time: (a) the amount of any Investment represented by a
guaranty shall be taken at not less than the principal amount of the
obligations guaranteed and still outstanding; (b) there shall be included
as an Investment all interest accrued with respect to Indebtedness
constituting an Investment unless and until such interest is paid; (c)
there shall be deducted in respect of each such Investment any amount
received as a return of capital (but only by repurchase, redemption,
retirement. repayment, liquidating dividend or liquidating distribution);
(d) there shall not be deducted in respect of any Investment any amounts
received as earnings on such Investment, whether as dividends, interest or
otherwise, except that accrued interest included as provided in the
foregoing clause (b) may be deducted when paid; and (e) there shall not be
deducted from the aggregate amount of Investments any decrease in the value
thereof.
Lenders. Each Person which may from time to time own a Percentage
of the Total Commitment, including Fleet in its capacity as a Lender;
provided, however that the term "Lender" shall not include any Participant.
Letter of Credit Agreement. Means, with respect to each Letter of
Credit to be issued by the Fronting Bank therefor, the letter of credit
application and reimbursement agreement which such Fronting Bank requires
to be executed by Borrower in connection with the issuance of such Letter
of Credit.
Letter of Credit Liabilities. Means, at any time, the sum of (a)
the aggregate undrawn face amount of all outstanding Letters of Credit,
plus (b) all unreimbursed drawings under Letters of Credit.
Letters of Credit. Has the meaning specified in ss.2.10.
LIBOR. With respect to any LIBOR Loan for any Interest Period, the
rate per annum (rounded upward, if necessary, to the nearest 1/32 of one
percent) as determined on the basis of the offered rates for deposits in
Dollars, for a period of time comparable to the applicable Interest Period
which appears on the Telerate page 3570 as of 11:00 a.m. London time on the
day that is two London business Days preceding the first day of such
Interest Period; provided, however, if the rate described above does not
appear on the Telerate System on any applicable interest determination
date, the LIBOR shall be the rate (rounded upwards as described above, if
necessary) for deposits in Dollars for a period substantially equal to the
Interest Period on the Rueters page "LIBO" (or such other page as may
replace the LIBO Page on that service for the purpose of displaying such
rates), as of 11:00 a.m. (London Time), on the day that is two (2) London
Business Days prior to the beginning of such Interest Period.
If both the Telerate and Reuters system are unavailable, then the
rate for that date will be determined on the basis of the offered rates for
deposits in Dollars for a period of time comparable to such Interest Period
which are offered by four major banks in the London interbank market at
approximately 11:00 a.m. London time, on the date that is two (2) London
Business Days preceding the first day of such Interest Period as selected
by Agent. The principal London office of each of the four major London
banks will be requested to provide a quotation of its Dollar deposit
offered rate. If at least two such quotations are provided, the rate for
that date will be the arithmetic mean of the quotations. If fewer than two
quotations are provided as requested, the rate for that date will be
determined on the basis of the rates quoted for loans in dollars to leading
European banks for a period of time comparable to such Interest Period
offered by major banks in New York City at approximately 11:00 a.m. New
York City time, on the day that is two London Business Days preceding the
first day of such Interest Period. In the event any Lender is unable to
obtain any such quotation as provided above, it will be deemed that LIBOR
pursuant to a LIBOR Loan cannot be determined. In the event that the Board
of Governors of the Federal Reserve System shall impose a Reserve
Percentage with respect to LIBOR deposits of the Lenders, then for any
period during which such Reserve Percent shall apply, LIBOR shall be equal
to the amount determined above divided by an amount equal to 1 minus the
Reserve Percentage. "Reserve Percentage" shall mean the maximum aggregate
reserve requirement (including all basis, supplemental, marginal and other
reserves) which is imposed on member banks of the Federal Reserve System
against "Euro-currency Liabilities" as defined in Regulation D.
LIBOR Business Day. Any Business Day on which commercial banks are
open for international business (including dealings in Dollar deposits) in
London, England.
LIBOR Loans. Loans bearing interest calculated by reference to the
LIBOR.
LIBOR Margin. The meaning specified in ss.2.6.
Licenses. The meaning specified in ss.5.5.
Loan Documents. This Credit Agreement, the Notes, the Security
Documents, Letters of Credit, the Letter of Credit Agreements, Interest
Rate Protection Agreements among the Borrowers, the Agent and/or any
Lender, and any and all other documents, agreements and instruments now or
hereafter executed and/or delivered in connection with any of the
foregoing, and any and all amendments, modifications, renewals, extensions
or restatements thereof.
Loan Request. The meaning specified in ss.2.7.
Loans. The Term Loan and the Revolving Credit Loans.
Material Adverse Effect. Means, with respect to any Person, any
material adverse effect, or the occurrence of any event or the existence of
any condition that would reasonably be expected to have a material adverse
effect, on (a) the prospects, business or financial condition, or
performance of such Person and its Subsidiaries, taken as a whole, (b) the
ability of such Person to pay and perform the obligations for which such
Person is responsible when due, or (c) with respect to any Borrower, the
validity or enforceability of (i) any of the Loan Documents, (ii) any Lien
created or purported to be created by any of the Loan Documents or the
required priority of any such Lien, or (iii) the rights and remedies of
Agent or the Lenders under any of the Loan Documents.
Material Subsidiary. The meaning specified in ss.5.2.
Maturity Date. June 30, 2005 with respect to the Term Loan and
June 30, 2002 with respect to the Revolving Credit Loans.
Moody's. Moody's Investors Service, Inc.
Multiemployer Plan. Any multiemployer plan within the meaning of
Section 3(37) of ERISA maintained or contributed to by any Borrower or any
ERISA Affiliate or with respect to which any Borrower or any ERISA
Affiliate has actual or contingent liability.
Notes. The Term Note and the Revolving Credit Note.
Obligations. All indebtedness, obligations and liabilities of the
Borrowers to the Lenders, individually or collectively, existing on the
date of this Credit Agreement or arising thereafter, direct or indirect,
joint or several, absolute or contingent, matured or unmatured, liquidated
or unliquidated, secured or unsecured, arising by contract, operation of
law or otherwise, arising or incurred under the Loan Documents, or in
respect of any of the Loans or the Notes or other instruments at any time
evidencing any thereof.
Outstanding. With respect to the Loans, the aggregate unpaid
principal thereof as of any date of determination.
Participant. The meaning specified in ss.17.3.
PBGC. The Pension Benefit Guaranty Corporation created byss.4002
of ERISA and any successor entity or entities having similar
responsibilities.
Percentage. The meaning specified in ss.2.1(a).
Permitted Liens. The meaning specified in ss.7.2.
Person. Any individual, corporation, partnership, limited
liability company, trust, unincorporated association, joint venture,
organization, business, or other legal entity, and any government or any
governmental agency or political subdivision thereof.
Qualified Plan. A pension plan (as defined in Section 3(2) of
ERISA) intended to be tax-qualified under Section 401(a) of the Code which
any Borrower or any ERISA Affiliate sponsors, maintains, or to which any
such Person makes, is making, or is obligated to make, contributions, or,
in the case of a multiple-employer plan (as described in Section 4064(a) of
ERISA), has made contributions at any time during the immediately preceding
period covering at least five (5) plan years, but excluding any
Multiemployer Plan.
Real Estate. The meaning specified in ss.2.11.
Record. The grid attached to the Revolving Credit Note, or the
continuation of such grid, or any other similar record, including computer
records, maintained by the Agent with respect to any Revolving Credit Loan
referred to in the Revolving Credit Note.
Reimbursement Obligation. Means all indebtedness, liabilities, and
obligations of the Borrowers to reimburse the Agent or the Fronting Bank in
accordance with ss.2.10(d) for any demand for payment or drawing under a
Letter of Credit.
Release. Any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposing,
depositing, dispersing, emanating or migrating of any Hazardous Material
in, into, onto or through the environment.
Replacement Lender. The meaning specified in ss.17.4.
Required Lenders. Any two or more Lenders holding in the aggregate
at least sixty six percent (66%) of the amounts Outstanding on the Loans
or, if no amounts are Outstanding hereunder, of the Percentages of the
Total Commitment.
Revolving Credit Loan. A revolving credit loan made pursuant
to ss.2.1(b).
Revolving Credit Note. The meaning specified in ss.2.4.
Revolving Loan Commitment. The meaning specified in ss.2.1.
Rittenhouse Transaction. The transactions contemplated by that
Stock Purchase Agreement among RPC, certain stockholders thereof and Nashua
dated March 21, 2000 regarding the acquisition of all of the stock of RPC.
S&P. Standard & Poor's Ratings Group, a division of the McGraw
Hill Companies, Inc.
Security Documents. Means any guaranty, security agreement,
financing statement, mortgage, collateral assignment or negative pledge
agreement now or hereafter executed and/or delivered by any Borrower or any
Subsidiary thereof in connection with or as security or assurance for the
payment or performance of the Obligations, or the Credit Agreement, as such
agreements may be amended, modified, supplemented or renewed.
Subordinated Debt: (a) The existing Indebtedness of the Borrowers
which is designated as "Subordinated Debt" in Schedule 5.7 attached hereto,
and (b) any other Indebtedness of Borrowers which matures in its entirety
and by its terms (or by the terms of the instrument under which it is
outstanding and to which appropriate reference is made in the instrument
evidencing such Subordinated Debt) is made subordinate and junior in right
of payment to the Notes and to Borrowers' other obligations to the Lenders
hereunder by provisions reasonably satisfactory in form and substance to
the Required Lenders and their counsel.
Subsidiary. Any partnership, corporation, association, trust, or
other business entity of which any Borrower shall at any time own directly
or indirectly through a Subsidiary or Subsidiaries at least a majority (by
number of votes) of the outstanding Voting Interests.
Term Loan. The term loan made in accordance with ss.2.1(d).
Term Loan Commitment. The meaning specified in ss.2.1.
Term Note. The meaning specified in ss.2.5.
Total Commitment. The sum of the Total Revolving Loan Commitment
and the Total Term Loan Commitment.
Total Funded Debt. The meaning specified in ss.8.
Total Revolving Loan Commitment. The meaning specified in ss.2.1.
Total Term Loan Commitment. The meaning specified in ss.2.1.
Type. With respect to any Loan, means a classification of that
Loan as a Base Rate Loan or a LIBOR Loan with a certain Interest Period. By
way of example, a LIBOR Loan with a three month Interest Period ending June
30, 2000 shall be a different Type of Loan than a LIBOR Loan with a two
month Interest Period ending May 15, 2000.
Unfunded Benefit Liability. The excess of a Qualified Plan's or a
multiemployer Plan's benefit liabilities (as defined in Section 4001
(a)(16) of ERISA) over the current value of such plan's assets, determined
in accordance with the assumptions used by the plan's actuaries for funding
the plan pursuant to Section 412 of the Code for the applicable plan year.
Voting Interests. Stock or similar interests, of any class or
classes (however designated) the holders of which are at the time entitled,
as such holders, to vote for the election of a majority of the directors
(or persons performing similar functions) of the partnership, corporation,
association, trust or other business entity involved, whether or not the
right so to vote exists by reason of the happening of a contingency.
ss.1.2. Rules of Interpretation.
(a) A reference to any document or agreement shall include
such document or agreement as amended, modified or supplemented from time to
time in accordance with its terms and the terms of this Credit Agreement.
(b) The singular includes the plural and the plural includes
the singular.
(c) A reference to any law includes any amendment or
modification to such law unless otherwise expressly stated.
(d) A reference to any Person includes its permitted successors
and permitted assigns.
(e) Accounting terms not otherwise defined herein have the
meanings assigned to them by GAAP applied on a consistent basis by the
accounting entity to which they refer.
(f) The words "include", "includes" and "including" are not
limiting.
(g) Reference to a particular "ss." refers to that section of
this Credit Agreement unless otherwise indicated.
(h) The words "herein", "hereof", "hereunder" and words of like
import shall refer to this Credit Agreement as a whole and not to any
particular section or subdivision of this Credit Agreement.
(i) Except as otherwise expressly provided herein, all terms
of an accounting or financial nature shall be construed in accordance with
GAAP, as in effect from time to time; provided that, if Borrowers notify the
Agent that the Borrowers request an amendment to any provision hereof to
eliminate the effect of any change in GAAP occurring after the date hereof
or in the application thereof on the operation of such provision (or if the
Agent notifies Borrower that the Required 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.
ss.2. THE CREDIT FACILITIES.
ss.2.1. Amounts and Terms of the Facilities.
(a) Commitments. Nashua wishes to establish for the benefit
of the Borrowers (i) a term loan facility in the maximum principal amount of
Twenty Million Dollars ($20,000,000) as further described in ss.2.1(d) (the
"Total Term Loan Commitment"); and (ii) a revolving credit facility in an
aggregate principal amount at any one time outstanding up to Thirty Five
Million Dollars ($35,000,000); provided, however, if the aggregate
principal amount at any one time outstanding under the Revolving Credit
Loan exceeds Fifteen Million Dollars ($15,000,000) or the amount of
Eligible Accounts declines to Twenty Five Million Dollars ($25,000,000) or
less, the maximum principal amount of the Revolving Credit Loan shall be
the lesser of (A) Thirty Five Million Dollars ($35,000,000) or (B) the
Borrowing Base (the "Total Revolving Loan Commitment"). Notwithstanding the
foregoing, the parties hereto acknowledge and agree that until such time as
the conditions of ss.11.7 and ss.11.8 are met and the Lenders have deemed
the Real Estate acceptable collateral in their sole discretion, the amount
of the Total Revolving Loan Commitment and the Revolving Credit Loan shall
be the lesser of (A) Thirty Five Million Dollars ($35,000,000) or (B) the
Borrowing Base minus a reserve equal to the sum of Twenty Million Dollars
($20,000,000) minus eighty percent (80%) of the appraised liquidation value
of the machinery and equipment formally pledged to the Lenders hereunder.
Each Lender is severally willing to establish such revolving credit and
term loan facilities on behalf of the Borrowers, subject to the terms and
conditions set forth herein, in the aggregate maximum amounts at any one
time outstanding set forth below opposite each Lender's name and in the
respective percentages set forth opposite each
Lender's name which shall be applicable to such revolving credit facility
and such term loan facility hereunder (hereinafter referred to as such
Lender's "Percentage"). If, when all of the conditions set forth herein are
met, any Lender does not make available to the Agent the amount required
pursuant to ss.2.1(b), ss.2.1(c) or ss.2.1(d), the Agent shall be entitled
to recover such amount on demand from such Lender, together with interest
thereon for each day from the date of nonpayment until such amount is paid
in full at a rate equal to the Base Rate plus the Base Rate Margin.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
LENDER REVOLVING LOAN % OF REVOLVING LOAN TERM LOAN % OF TERM % OF TOTAL
COMMITMENT COMMITMENT COMMITMENT LOAN COMMITMENT COMMITMENT
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Fleet $19,090,910 54.54545% $10,909,090 54.54545% 54.54545%
- -----------------------------------------------------------------------------------------------
LaSalle $15,909,090 45.45455% $ 9,090,910 45.45455% 45.45455%
- -----------------------------------------------------------------------------------------------
TOTAL $35,000,000 100% $20,000,000 100% 100%
- -----------------------------------------------------------------------------------------------
</TABLE>
(b) Revolving Loans. Subject to the terms and conditions set forth
in this Credit Agreement, each Lender hereby severally establishes a
revolving credit facility in favor of the Borrowers in the individual
principal amount of such Lender's Percentage of the Total Revolving Loan
Commitment. Each Lender agrees to lend to the Borrowers, and the Borrowers
may borrow, repay, and reborrow from time to time between the Closing Date
and the Maturity Date, upon notice by the requesting Borrower to the Agent
given in accordance with ss.2.7, such sums as are requested by the
requesting Borrower up to a maximum aggregate principal amount outstanding
(after giving effect to all amounts requested) at any one time equal to
such Lender's Percentage of the Available Revolving Commitment; provided;
however, that the proceeds of any and all borrowings and reborrowings
hereunder shall be used solely for the purposes described in ss.5.16. All
Revolving Credit Loans shall be made as LIBOR Loans or Base Rate Loans, at
the requesting Borrower's option. Base Rate Loans may be converted to LIBOR
Loans; and LIBOR Loans may be continued or converted to Base Rate Loans
under the circumstances, and subject to the conditions, specified in
ss.2.8. Each request for a Revolving Credit Loan hereunder shall constitute
a representation and warranty by the Borrowers that the conditions set
forth in ss.10 and ss.11, in the case of the initial Revolving Credit Loans
to be made on the Closing Date, and ss.11, in the case of all other
Revolving Credit Loans, have been satisfied on the date of such request.
(c) Letters of Credit. The Borrowers may utilize the Revolving
Credit Loans by requesting that the Fronting Bank issue, and the Fronting
Bank, subject to the terms and conditions of this Agreement, shall issue,
standby and commercial letters of credit for the Borrowers' account (such
letters of credit being hereinafter referred to as the "Letters of
Credit"); provided, however, the aggregate amount of outstanding Letter of
Credit Liabilities shall not at any time exceed the lesser of Five Million
Dollars ($5,000,000) or the Available Revolving Commitment. Upon the date
of issue of a Letter of Credit, Agent shall be deemed, without further
action by any party hereto, to have sold to each Lender who holds a
Revolving Loan Commitment, and each such Lender shall be deemed, without
further action by any party hereto, to have purchased from Agent, a
participation to the extent of such Lender's Percentage (calculated with
respect to the Revolving Loan Commitments) in such Letter of Credit and the
related Letter of Credit Liabilities. Upon termination of the Revolving
Loan Commitments, any Letter of Credit then outstanding which has been
fully cash collateralized to the satisfaction of Agent and the Fronting
Bank shall no longer be considered a "Letter of Credit" as defined in this
Agreement and any participating interest heretofore granted by the Fronting
Bank to the Lenders holding Revolving Loan Commitments in such Letter of
Credit shall be deemed terminated but the letter of credit fees payable
hereunder shall continue to accrue to the Fronting Bank with respect to
such Letter of Credit until the expiry thereof.
(d) The Term Loan. On the Closing Date each of the Lenders shall
severally lend to the Borrowers such Lender's Percentage of the Term Loan
Commitment in accordance with a written borrowing request from the
Borrowers pursuant to ss.2.7. Proceeds of the Term Loan Commitment shall be
used by the Borrowers only in connection with the Rittenhouse Transaction.
The Term Loan may consist of one or more LIBOR Loans or Base Rate Loans, at
Borrowers' option, but in the absence of an election by the Borrowers shall
be Base Rate Loans. Base Rate Loans may be converted to LIBOR Loans; and
LIBOR Loans may be continued or converted to Base Rate Loans under the
circumstances, and subject to the conditions, specified in ss.2.8. Each
request for a LIBOR Loan hereunder shall constitute a representation and
warranty by the Borrowers that the conditions set forth in ss.10 and ss.11,
in the case of the initial Loans to be made on the Closing Date, and ss.11,
in the case of all other Loans, have been satisfied on the date of such
request.
ss.2.2. Fees.
(a) Unused Facility Fee. The Borrowers agree to pay to the Agent
for the ratable account of each Lender, a commitment fee (the "Facility
Fee") equal to one quarter of one percent (1/4%) on the daily average
unused portion of such Lender's portion of the Available Revolving
Commitment during the immediately preceding fiscal quarter of the Borrower
(adjusted as appropriate for any reduction or termination of any portion of
the Revolving Loan Commitment during the immediately preceding fiscal
quarter or portion thereof). The Facility Fee shall be computed on the
basis of the actual number of days elapsed in a year of 360 days and shall
be payable quarterly in arrears.
(b) Agent's Fees. The Borrowers agree to pay to the Agent, for the
Agent's own account, on the date hereof and on each anniversary date
hereafter, the agency fee described in the letter to Nashua dated March 17,
2000.
(c) Commitment Fee. On the Closing Date, the Borrowers shall pay
to the Agent for the ratable account of each of the Lenders a Commitment
Fee in the amount of $100,000.
(d) Letter of Credit Fees. The Borrowers will pay to the Agent,
for the ratable account of each Lender holding a Revolving Loan Commitment,
a per annum fee equal to 1.25% of the face amount of each Letter of Credit
which fee shall be due upon issuance of the Letter of Credit and on each
anniversary date thereafter as long as the Letter of Credit remains
outstanding. The Borrowers will pay to the Fronting Bank, for its account
only, all reasonable customary fees for the issuance, amendments to and
processing of Letters of Credit.
ss.2.3. Reduction of Commitments. Subject to the terms and
conditions of ss.3, the Borrowers shall have the right at any time and from
time to time upon two (2) Business Days' prior written notice to the Agent
(which shall in turn give prompt written notice to each Lender) to reduce
by $500,000 or a multiple of $500,000 in excess thereof or terminate
entirely any portion of the Revolving Loan Commitment, pro rata in
accordance with each Lender's Percentage, whereupon the Revolving Loan
Commitment shall be reduced accordingly or, as the case may be, terminated.
Upon the effective date of any such reduction or termination, the Borrowers
shall pay to the Agent for the ratable account of each Lender the full
amount of any Commitment Fee payable pursuant to ss.2.2(a) then accrued on
the amount of the reduction. No reduction of the Revolving Loan Commitment
may be reinstated and no prepayment of the Term Loan may be reinstated or
reborrowed.
ss.2.4. Revolving Credit Notes. The Revolving Credit Loans made
by the Lenders hereunder shall be evidenced by promissory notes of the
Borrowers in substantially the form attached hereto (collectively, the
"Revolving Credit Note"), dated as of the Closing Date. The Revolving
Credit Note shall be payable to the order of each Lender in principal
amounts equal to such Lender's Percentage of the Total Revolving Loan
Commitment or, if less, the aggregate outstanding amount of all Revolving
Credit Loans made by the Lenders hereunder, plus interest accrued thereon,
as set forth below. The Borrowers irrevocably authorize the Agent to make
or cause to be made, at or about the time of the Drawdown Date of any
Revolving Credit Loan or at the time of receipt of any payment of principal
or interest on the Revolving Credit Note, an appropriate notation on its
Record or elsewhere in accordance with the Agent's customary procedures
reflecting the making of such Revolving Credit Loan or (as the case may be)
the receipt of such payment and the respective pro-rata allocations to each
Lender in accordance with its respective Percentage. The Agent shall record
the outstanding amount of the Revolving Credit Loans on the Record or
elsewhere in accordance with the Agent's customary procedures as prima
facie evidence of the principal amount thereof owing and unpaid to the
Lenders, but the failure to record, or any error in so recording, any such
amount on the Record or elsewhere in accordance with the Agent's customary
procedures shall not limit or otherwise affect the obligations of the
Borrowers hereunder or under the Revolving Credit Note to make payments of
principal of or interest on the Revolving Credit Note when due. The
Revolving Credit Note shall be due and payable on the Maturity Date.
ss.2.5. Term Notes. The Term Loan shall be evidenced by
promissory notes in the form attached hereto (collectively, the "Term
Note"), payable to the order of each of the Lenders, dated as of the
Closing Date and in the aggregate principal amount of Twenty Million
Dollars ($20,000,000).
ss. 2.6. Interest on Loans/Principal Repayment.
(a) The Loans shall bear interest, at the Borrowers' option
(subject to the limitations and conditions set forth herein), at a rate per
annum equal to the Base Rate or LIBOR plus the applicable margin set forth
below based on Nashua's net income, as defined in ss.2.6(b) below (which
margins are referred to below as the "Base Rate Margin", the "Revolver
LIBOR Margin" or the "Term LIBOR Margin", respectively, as applicable). The
initial Base Rate Margin is 0%; the initial Revolver LIBOR Margin is 2%;
and the initial Term LIBOR Margin is 2 1/4%. The foregoing initial margins
will apply through the Borrowers' fiscal year end 2000. Thereafter, the
applicable margins will be adjusted quarterly upon the Borrowers' written
request and a change in Nashua's net income which shall be tested on a
rolling four quarter basis as supported by the financial information
contained in Nashua's filings with the Securities and Exchange Commission:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Net Income Base Rate Margin Revolver LIBOR Margin Term LIBOR Margin
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less Than $7,000,000 0% 2% 2 1/4%
- -------------------------------------------------------------------------------------------
Equal to or greater than 0% 1 3/4% 2%
$7,000,000 but less than
$12,000,000
- -------------------------------------------------------------------------------------------
Greater than $12,000,000 0% 1 1/2% 1 3/4%
- -------------------------------------------------------------------------------------------
</TABLE>
(b) For purposes of this ss.2.6 only, Net Income shall mean
Nashua's consolidated net income (or loss) as reported in its SEC filings,
excluding non-operating and extraordinary items of income, excluding
extraordinary or one-time losses associated with the Rittenhouse
Transaction (including taxes incurred under Code Section 338(h)(19)),
excluding extraordinary losses associated with the closing of the Cartridge
division; but including any and all other losses, extraordinary or
otherwise, all determined in accordance with GAAP.
(c) During any period when an Event of Default shall have occurred
and be continuing or after the Maturity Date or judgment is rendered on any
of the Notes, then until such Event of Default is cured or the Notes are
paid in full, as the case may be, the applicable margin over Base Rate
Loans and LIBOR Loan shall be 4% higher than the above referenced
applicable margins.
(d) The Borrowers agree to pay to the Agent, for the pro rata
benefit of the Lenders, interest on each Loan in arrears on each Interest
Payment Date with respect thereto. Any adjustments to interest payments
based upon the calculations provided in ss.2.6(a) shall be made on the
Interest Payment Date following the effective date of such adjustment.
(e) The Borrowers agree to pay to the Agent, for the pro rata
benefit of the Lenders, outstanding principal on the Revolving Loans on the
Maturity Date, and agrees to pay to the Agent for the pro rata benefit of
the Lenders, principal on the Term Loan in seventeen consecutive quarterly
payments, each in the amount of $1,176,471 (being one seventeenth of the
initial face amount of the Term Loan) on the last business day of each
fiscal quarter end (June, September, December and March) commencing on June
30, 2001, with any remaining unpaid balance due on the Maturity Date.
(f) The Agent will credit each Lender, pro rata, on the same
Business Day funds are received if such funds are received by the Agent by
1:00 Boston time, or on the next Business Day, if received after such time.
ss.2.7. Requests for Loans. The Borrowers shall give to the Agent
written notice in the form of Exhibit A hereto (or telephonic notice
confirmed in a writing in the form of Exhibit A hereto) of the Loans
requested from the Lenders hereunder (a "Loan Request"), no later than
12:00 noon, Boston time, (i) no less than one (1) Business Day prior to the
proposed Drawdown Date of any Base Rate Loan and (ii) no less than two (2)
LIBOR Business Days prior to the proposed Drawdown Date of any LIBOR Loans.
Each such notice shall be signed by the requesting Borrowers and shall
specify (i) the aggregate principal amount of the Loans requested from the
Lenders (and in any event not in excess of the unused portion of the
Available Revolving Commitment), (ii) whether such Loans are to be LIBOR
Loans or Base Rate Loans, (iii) the proposed Drawdown Date of such Loans,
(iv) in the case of LIBOR Loans, the Interest Period for such Loans, and
(v) such other matters as are set forth on Exhibit A. The Borrowers may not
make a Loan Request for a LIBOR Loan if such a request would require the
Agent to administer concurrently more than five (5) Types of LIBOR Loans.
Each Loan Request with respect to a LIBOR Loan shall be in a minimum amount
of $500,000 or a higher integral multiple of $500,000. The Agent shall then
promptly notify each Lender by written notice of its respective Percentage
of the Loans requested.
ss.2.8. Conversion and Continuation.
The Borrowers shall have the right at any time upon prior
irrevocable notice to the Agent (a) not later than 12:00 noon, Boston time,
one (1) Business Day prior to the date of conversion, to convert any LIBOR
Loan into a Base Rate Loan, (b) not later than 12:00 noon, Boston time, two
(2) LIBOR Business Days prior to conversion or continuation, to convert any
Loan into a LIBOR Loan or to continue any LIBOR Loan for an additional
Interest Period, subject in each case to the following:
(i) each conversion or continuation shall be made pro rata among
the Lenders in accordance with the respective principal amounts of the
Loans comprising the converted or continued Loans;
(ii) if less than all the outstanding principal amount of any
Loans shall be converted or continued, then the resulting Loans shall
satisfy the limitations specified in the penultimate sentence of ss.2.7
regarding the principal amount of Loans;
(iii) each conversion shall be effected by the Agent by recording
for the account of each Lender the new Loan of such Lender resulting from
such conversion and reducing the Loan (or portion thereof) of such Lender
being converted by an equivalent principal amount;
(iv) accrued interest on a LIBOR Loan (or portion thereof being
converted or continued) shall be paid by the Borrowers at the time of
conversion or continuation;
(v) LIBOR Loans may only be converted at a time that is the end of
the Interest Period applicable thereto;
(vi) any portion of a Loan maturing or required to be repaid in
less than one month may not be converted into or continued as a LIBOR Loan;
(vii) any portion of a LIBOR Loan that cannot be converted into or
continued as a LIBOR Loan by reason of the immediately preceding clause
shall be automatically converted at the end of the Interest Period in
effect for such Loan into a Base Rate Loan; and
(viii) no Event of Default and no event which, with the giving of
notice or passage of time or both, would constitute an Event of Default has
occurred and is continuing; provided, however, that the condition set forth
in this clause (viii) shall not be applicable to the conversion of any
LIBOR Loan into a Base Rate Loan pursuant to ss.2.8(a).
Each notice pursuant to this ss.2.8 shall be irrevocable and shall
refer to this Credit Agreement and specify (i) the identity (i.e. whether
the election is for the Term Loan or the Revolving Loans) and amount of the
Loan that such Borrower requests be converted or continued, (ii) whether
such Loan is to be converted to or continued as a LIBOR Loan or a Base Rate
Loan, (iii) if such notice requests a conversion, the date of such
conversion (which shall be a LIBOR Business Day) and (iv) if such Loan is
to be converted to or continued as a LIBOR Loan, the Interest Period with
respect thereto. If no Interest Period is specified in any such notice with
respect to any conversion to or continuation as a LIBOR Loan, the
requesting Borrower shall be deemed to have selected an Interest Period of
one month's duration. The Agent shall promptly advise the other Lenders of
any notice given pursuant to this ss.2.8 and of each Lender's portion of
any converted or continued Loans. If the requesting Borrower shall not have
given notice in accordance with this ss.2.8 to continue any LIBOR Loans
into a subsequent Interest Period (and shall not otherwise have given
notice in accordance with this ss.2.8 to convert such LIBOR Loans), such
LIBOR Loans shall, at the end of the Interest Period applicable thereto
(unless repaid pursuant to the terms hereof), automatically be converted
into Base Rate Loans.
ss.2.9. Funds for Loans. Subject to the satisfaction of the other
conditions set forth herein, to the extent applicable (including the
conditions set forth in ss.2.7), each Lender will make available to the
Agent on the proposed date of any Loan (as specified herein) by wire
transfer of immediately available funds not later than 1:00 P.M., Boston
time, the aggregate amount of its Percentage of such Loans requested by the
Borrowers, and the Agent shall credit the aggregate amount so received to
the respective accounts designated by the requesting Borrower or, if such
Borrower does not designate any account, to such Borrower's regular deposit
account with the Agent, if any. The Lenders shall make such funds available
to the Agent in U.S. Dollars. In no event shall the aggregate of all Dollar
denominated Loans exceed the respective Dollar denominated facility amounts
set forth in ss.2.1(a).
ss.2.10 Letter of Credit Request Procedure; Funding; Obligations.
(a) Except for Letters of Credit issued on the Closing Date, the
Borrowers shall give Agent not less than three (3) Business Days prior
notice (effective upon receipt) specifying the date of each Letter of
Credit and the nature of the transactions to be supported thereby. Upon
receipt of such notice Agent shall promptly notify the Fronting Bank and
each Lender who holds a Revolving Loan Commitment of the contents thereof
and of such Lender's Percentage of the amount of the proposed Letter of
Credit. Each Letter of Credit shall have an expiration date that does not
extend beyond a date which is thirty (30) days prior to the Maturity Date
of the Revolving Credit Loans, shall be payable in Dollars, must support a
transaction entered into in the ordinary course of business of such
Borrower, must be reasonably satisfactory in form and substance to the
Agent and the Fronting Bank, and shall be issued pursuant to such
documentation as Agent and the Fronting Bank may reasonably require,
including, without limitation, the Fronting Bank's standard form Letter of
Credit Agreement; provided that, in the event of any conflict between the
terms of such agreement and the other Loan Documents, the terms of the
other Loan Documents shall control.
(b) Upon receipt from the beneficiary of any Letter of Credit of
any demand for payment or other drawing under such Letter of Credit, the
Fronting Bank shall promptly so notify Agent and Agent shall promptly so
notify the Borrowers and each Lender that holds a Revolving Loan Commitment
as to the amount to be paid as a result of such demand or drawing and the
respective payment date. If the Borrowers have not reimbursed the Fronting
Bank for the amount paid as a result of such demand or drawing pursuant to
ss.2.10(c), each Lender will make available to Agent, by wire transfer of
immediately available funds not later than 1:00 p.m. Boston time on the
applicable payment date, an amount equal to such Lender's Percentage
(calculated based only on the Revolving Loan Commitments) of the amount to
be paid as a result of such demand or drawing which has not been reimbursed
even if the conditions to a Loan under ss.10 and ss.11 hereof have not been
satisfied and Agent shall promptly pay such amounts to the Fronting Bank.
(c) The Borrowers shall be irrevocably and unconditionally
obligated to immediately reimburse the Fronting Bank (through Agent) for
any amounts paid by the Fronting Bank upon any demand for payment or
drawing under any Letter of Credit, without presentment, demand, protest,
or other formalities of any kind provided that in the event payment has
been made by Lenders pursuant to ss.2.10(b) above, such reimbursement
obligation shall extend to the benefit of the Lenders (through Agent). All
payments on the Reimbursement Obligations shall be made to Agent not later
than 1:00 p.m. on the date of the corresponding payment under the Letter of
Credit by the Fronting Bank; provided, that Agent has provided notice to
the Borrowers prior to 11:00 a.m. Boston time on such day that such payment
is due. In the event such notice is received after 11:00 a.m. Boston time
on a Business Day, such payment shall be due not later than 1:00 p.m.
Boston time on the next succeeding Business Day. Subject to the other terms
and conditions of this Agreement, such reimbursement may be made by the
Borrowers requesting a Revolving Loan in accordance with ss.2.7 hereof;
provided, however, the Lenders agree to waive the one (1) day notice
requirement for Base Rate Loans, the proceeds of which shall be credited
against the Borrower's Reimbursement Obligations. The Agent will pay to
each Lender participating in a Letter of Credit such Lender's Percentage
(calculated based only on the Revolving Loan Commitments) of all amounts
received from the Borrowers for application in payment, in whole or in
part, to the Reimbursement Obligation in respect of any Letter of Credit,
but only to the extent such Lender has made payment to Agent in respect of
such Letter of Credit pursuant to clause (b) of this ss.2.10.
(d) The Reimbursement Obligations of the Borrowers under this
Agreement shall be absolute, unconditional, and irrevocable, and shall be
performed strictly in accordance with the terms of the Loan Documents under
all circumstances whatsoever and the Borrowers hereby waive any defense to
the payment of the Reimbursement Obligations based on any circumstance
whatsoever, including, without limitation, in either case, the following
circumstances: (i) any lack of validity or enforceability of any Letter of
Credit or any other Loan Document; (ii) the existence of any claim,
set-off, counterclaim, defense, or other rights which any Person may have
at any time against any beneficiary of any Letter of Credit, the Fronting
Bank, Agent, any Lender, or any other Person, whether in connection with
any Loan Document or any unrelated transaction; (iii) any statement, draft,
or other documentation presented under any Letter of Credit proving to be
forged, fraudulent, invalid, or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect whatsoever;
(iv) payment by the Fronting Bank under any Letter of Credit against
presentation of a draft or other document that does not comply with the
terms of such Letter of Credit; or (v) any other circumstance whatsoever,
whether or not similar to any of the foregoing.
(e) As among the Borrowers and the Lenders, the Borrowers assume
all risks of the acts and omissions of, or misuse of any of the Letters of
Credit by, the respective beneficiaries of such Letters of Credit. In
furtherance and not in limitation of the foregoing, subject to the
provisions of the applications for the issuance of Letters of Credit, the
Lenders, the Fronting Bank, and Agent shall not be responsible for:
(i) the form, validity, sufficiency, accuracy, genuineness, or
legal effect of any document submitted by any Person in connection with the
application for and issuance of and presentation of drafts with respect to
any of the Letters of Credit, even if it should prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent, or forged;
(ii) the validity or sufficiency of any instrument transferring or
assigning, or purporting to transfer or assign, any Letter of Credit or the
rights or benefits thereunder or proceeds thereof, in whole or in part,
which may prove to be invalid or ineffective for any reason;
(iii) the failure of the beneficiary of any Letter of Credit to
strictly comply with conditions required in order to draw upon such Letter
of Credit;
(iv) errors, omissions, interruptions, or delays in transmission
or delivery of any messages, by mail, cable, telegraph, telex, or
otherwise, whether or not they be in cipher;
(v) errors in interpretation of technical terms;
(vi) any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under any Letter of Credit or
of the proceeds thereof;
(vii) the misapplication by the beneficiary of any Letter of
Credit of the proceeds of any drawing under such Letter of Credit; or
(viii) any consequences arising from causes beyond the control of
any Lender or the Fronting Bank, including, without limitation, any act of
any governmental authority.
None of the foregoing shall affect, impair, or prevent the vesting of any
of the Lenders, the Fronting Bank or Agent's rights or powers under this
ss.2.10. The Borrowers shall have a claim against the Fronting Bank, and
the Fronting Bank shall be liable to the Borrowers, to the extent of any
direct (but not indirect, consequential, or punitive) damages suffered by
the Borrowers which the Borrowers prove in a final nonappealable judgment
were caused by (A) the Fronting Bank's willful misconduct or gross
negligence in determining whether documents presented under any Letter of
Credit complied with the terms thereof or (B) the Fronting Bank's willful
failure to pay under any Letter of Credit after presentation to it of
documentation strictly complying with the terms and conditions of such
Letter of Credit. The Fronting Bank may accept documents that appear on
their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary.
ss.2.11 Collateral. To secure the full and complete payment and
performance of the Obligations, the Borrowers shall grant to the Agent for
the benefit of the Lenders (a) a perfected first priority security interest
in all of Nashua's and Rittenhouse's accounts receivable, inventory and the
specific items of machinery and equipment owned by Nashua described on
Schedule 2.11(a) hereof with a liquidation value which meets the
requirements of ss.10.10; and (b) a first priority mortgage and collateral
assignment of leases and rents on the real property owned and occupied by
Nashua located at Route 3 in Merrimack, New Hampshire, more particularly
described on Schedule 2.11(b) hereto (the "Real Estate").
ss.2.12 Guaranties. Each Material Subsidiary (as defined in
ss.5.2 hereof) shall guaranty the payment and performance of the
Obligations as more fully set forth in ss.7.13 hereof.
ss.2.13 Borrowing Base for Revolving Credit Loans.
(a) The Lenders may exclude from the Borrowing Base all or a
portion of the Eligible Accounts which the Lenders have, in their sole
discretion, deemed to be ineligible because uncertainty exists as to the
creditworthiness of the account debtor.
(b) With respect to accounts which are Eligible Accounts or which
the Borrowers request that the Lenders consider as Eligible Accounts, the
Borrowers shall be deemed to warrant and represent to the Lenders that (i)
Nashua or Rittenhouse is the owner of such accounts and Nashua or
Rittenhouse has the right to subject the same to a lien in favor of the
Lenders; (ii) such accounts are genuine, are in all respects what they
purport to be, and are not evidenced by a judgment; (iii) the amounts shown
on Nashua's or Rittenhouse's books and records, and all invoices, reports
or statements which may be delivered to the Lenders with respect thereto,
net of customary discounts offered in a manner consistent with Nashua's and
Rittenhouse's previous business practices, are actually and absolutely
owing to Nashua or Rittenhouse and are not in any way contingent; (iv)
except as disclosed to the Lenders, there are no setoffs, counterclaims or
disputes existing or asserted with respect thereto and Nashua and/or
Rittenhouse have not made any agreement with any account debtor for any
deduction therefrom except a discount or allowance for prompt payment; (v)
there are no facts, events or occurrences which would reasonably be likely
to impair the validity or enforcement thereof or would reasonably be likely
to reduce the amount payable thereunder as shown on Nashua's or
Rittenhouse's books and records, and all invoices, reports or statements
which may be delivered to the Lenders with respect thereto; (vi) the
services furnished and/or goods sold giving rise thereto were not, at the
time of sale by Nashua or Rittenhouse to any account debtor, subject to any
lien (other than the rights of any consignee) except that of the Lenders or
as specifically permitted by the Lenders; (vii) Nashua and Rittenhouse have
no knowledge of any fact or circumstance which would reasonably be likely
to impair the collectability thereof; (viii) to the best of the Borrowers'
knowledge, there are no proceedings or actions which are pending or
threatened against any account debtor's financial condition which, if
adversely determined, would have a Material Adverse Affect on Nashua or
Rittenhouse; and (ix) such accounts satisfy the objective criteria set
forth herein for "Eligible Accounts."
(c) With respect to inventory which is Eligible Inventory or which
the Borrowers want the Lenders to consider as Eligible Inventory, the
Borrowers shall be deemed to warrant and represent that (i) Nashua or
Rittenhouse is the lawful owner of such inventory and have the right to
subject the same to a lien in favor of the Lenders; (ii) the inventory is
not subject to any lien except that of the Lenders; and (iii) the inventory
satisfies the objective criteria set forth above for "Eligible Inventory".
(d) The above-described percentages of Eligible Accounts and
Eligible Inventory are intended solely for determination of the Borrowing
Base. The determination that a given asset of any Borrower is eligible for
borrowing shall not be deemed a determination by the Lenders relative to
the actual value of the asset in question. All Collateral given to the
Lenders by the Borrowers not considered eligible for borrowing shall
continue as part of the Collateral security for the prompt, punctual, and
faithful performance by the Borrowers of their Obligations to the Lenders.
ss.3. PREPAYMENT OF THE LOANS; RESERVES; CROSS DEFAULT AND TERMINATION.
ss.3.1. Voluntary Prepayments. The Borrowers shall have the
right, at their election, to prepay the outstanding amount of any Loans, as
a whole or in part, at any time without penalty or premium, except as
provided in ss.3.3 and ss.4.8. The Borrowers shall give irrevocable written
notice to the Agent, no later than 12:00 noon, Boston time, one (1)
Business Day prior to any proposed prepayment of Base Rate Loans pursuant
to this ss.3 and no later than 11:00 a.m., Boston time, and three (3) LIBOR
Business Days prior to any proposed prepayment of LIBOR Loans, pursuant to
this ss.3, in each case specifying the proposed date of prepayment of the
Loans and the principal amount and accrued interest to be prepaid, and the
Agent shall promptly give notice thereof to each Lender. Each such
prepayment of the Base Rate Loans shall be in a minimum amount of the
lesser of (i) $500,000 and (ii) the aggregate amount outstanding under the
Notes being prepaid, and shall be accompanied by the payment of accrued
interest on the principal prepaid to the date of such prepayment.
ss.3.2. Mandatory Prepayments. If at any time the outstanding
principal amount of all Revolving Loans and the Letter of Credit
Liabilities exceeds (or, in the case of any notice of reduction of the
Total Revolving Loan Commitment pursuant to ss.2.3, would exceed) the Total
Revolving Loan Commitment, the Borrowers will immediately prepay the
applicable Note or Notes, subject to ss.3.3 and ss.4.8, in an amount
necessary to cause the outstanding principal amount of all Loans and the
Letter of Credit Liabilities not to exceed the Total Revolving Loan
Commitment.
ss.3.3 Prepayment Fee. If the Borrowers prepay the Loans in whole
due to the sale of any Borrower or due to the refinancing of all of the
Obligations hereunder with a third party, the Borrowers shall pay the Agent
for the ratable account of each Lender a prepayment fee equal to two
percent (2%) of the amount being prepaid at any time from the date hereof
until that date one (1) year from the date hereof; and equal to one percent
(1%) of the amount being prepaid at any time thereafter prior to the
applicable Maturity Date.
ss.3.4 Cross Default and Termination. The Borrowers' Obligations
to the Lenders with respect to the Loans and the Letters of Credit shall be
and hereby are cross defaulted with all Loans and Obligations, now existing
or hereafter arising, of any Borrower or any Subsidiary or Affiliate
thereof owed to any of the Lenders or any Affiliates thereof. The Borrowers
expressly agree that if either the Revolving Credit Loan or the Term Loan
are terminated, or the Revolving Loan Commitment is terminated or reduced
to zero pursuant to ss.2.3, then, at the Lender's discretion, all
Obligations, including any amounts under the Loan that was not terminated,
shall become due and payable in full.
ss.4. CERTAIN GENERAL PROVISIONS.
ss.4.1. Funds for Payments.
(a) All payments of principal, interest, fees and any other
amounts due hereunder or under any of the other Loan Documents shall be
made to the Agent for the ratable account of the Lenders at 1155 Elm
Street, Manchester, New Hampshire 03101, or at such other location as the
Agent may from time to time designate. All payments on all Loans shall be
made in Dollars constituting immediately available funds.
(b) All payments by the Borrowers hereunder and under any of the
other Loan Documents shall be made without setoff or counterclaim and free
and clear of and without deduction for any taxes, levies, imports, duties,
charges, fees, deductions, withholdings, compulsory loans, restrictions or
conditions of any nature now imposed or levied by any jurisdiction or any
political subdivision thereof or taxing or other authority therein unless
any such Borrower is compelled by law to make such deduction or withholding
or if the taxes are based upon or measured by the income or profits of the
Lenders, including profits or receipts with respect to the Loans. If any
such obligation is imposed upon any Borrower with respect to any amount
payable by it hereunder or under any of the other Loan Documents, the
Borrowers will pay to the Agent for the ratable account of the Lenders on
the date on which such amount is due and payable hereunder or under such
other Loan Document, such additional amount in Dollars as shall be
necessary to enable the Lenders to receive the same net amount which the
Lenders would have received on such due date had no such obligation been
imposed upon such Borrower. The Borrowers will deliver promptly to the
Agent certificates or other valid vouchers for all taxes or other charges
deducted from or paid with respect to payments made by the Borrowers
hereunder or under such other Loan Document. In the event any Lender
receives a refund of any taxes or other amounts for which it has received
payment from the Borrowers pursuant to this ss.4.1(b), such Lender shall,
within 30 days from the date of such receipt, pay the amount of such refund
to the Borrowers but only to the extent of payments made by the Borrower
pursuant to this ss.4.1(b) and net of all reasonable costs and expenses of
the Agent and such Lender relating thereto and without interest (other than
interest, if any, paid by the relevant government authority with respect to
such refund); provided, however, that the Borrowers upon request of the
Agent or any Lender, agree to repay the amount paid to the Borrowers by the
Agent or such Lender if the Agent or such Lender is required to repay such
refund to such governmental authority.
ss.4.2. Computations. All computations of interest on the LIBOR
Loans and Base Rate Loans and of commitment or other fees shall be based on
a 360-day year and paid for the actual number of days elapsed. Except as
otherwise provided in the definition of the term "Interest Period" with
respect to LIBOR Loans, whenever a payment hereunder or under any of the
other Loan Documents becomes due on a day that is not a Business Day, the
due date for such payment shall be extended to the next succeeding Business
Day, and interest shall accrue during such extension (unless that day falls
in the next calendar month, in which case that date will be the first
preceding day that is a Business Day).
ss.4.3 Inability to Determine LIBOR. In the event, prior to the
commencement of any Interest Period relating to any LIBOR Loan, the Agent
shall determine that adequate and reasonable methods do not exist in the
marketplace for ascertaining the LIBOR that would otherwise determine the
rate of interest to be applicable to any LIBOR Loan during any Interest
Period, the Agent shall give notice of such determination (which shall be
conclusive and binding on the Borrowers) to the Borrowers. In such event
(a) any Loan Request with respect to LIBOR Loans shall be automatically
withdrawn and shall be deemed a request for Base Rate Loans, (b) each LIBOR
Loan will automatically, on the last day of the then current Interest
Period thereof, become a Base Rate Loan, and (c) the obligations of the
Lenders to make LIBOR Loans shall be suspended until the Agent determines
that the circumstances giving rise to such suspension no longer exist,
whereupon the Agent shall so notify the Borrowers.
ss.4.4. Illegality. Notwithstanding any other provisions herein,
if any present or future law, regulation, treaty or directive or change in
the interpretation or application thereof shall make it unlawful for any
Lender to make or maintain LIBOR Loans, such Lender shall forthwith give
notice of such circumstances to the Agent who shall in turn notify the
Borrowers and thereupon (a) the commitment of such Lender to make LIBOR
Loans shall forthwith be suspended and (b) the Loans then outstanding as
LIBOR Loans from such Lender, if any, shall be converted automatically to
Base Rate Loans on the last day of each Interest Period applicable to such
LIBOR Loans (as applicable) or within such earlier period as may be
required by law. The Borrowers hereby agree promptly to pay the Agent on
behalf of such Lender, upon demand by such Lender accompanied by a
certificate setting forth in reasonable detail such costs, any additional
amounts necessary to compensate such Lender for any reasonable costs
incurred by such Lender in making any conversion in accordance with this
ss.4.4, including any Breakage Costs and other reasonable interest or fees
payable by such Lender to lenders of funds obtained by it in order to make
or maintain its LIBOR Loans hereunder; provided, that to the extent
permitted by applicable law, each Lender shall maintain each LIBOR Loan
until the last day of an Interest Period.
ss.4.5. Additional Costs, Etc. If any change in any present
applicable law or if any future applicable law, which expression, as used
herein, includes statutes, rules and regulations thereunder and
interpretations thereof by any competent court or by any governmental or
other regulatory body with the administration or the interpretation thereof
and directives, instructions and notices at any time or from time to time
hereafter made upon or otherwise issued to any Lender by any central bank
or other fiscal, monetary or other authority (whether or not having the
force of law, but only if it is mandatory that such Lender comply), shall:
(a) subject such Lender to any tax, levy, impost, duty, charge,
fee, deduction or withholding of any nature with respect to this Credit
Agreement, the other Loan Documents, or the Loans (other than taxes based
upon or measured by the income or profits of such Lender, including without
limitation profits or receipts with respect to the Loans and other than any
withholding tax imposed on any payments by the Borrowers to such Lender);
or
(b) materially change the basis of taxation (except for changes in
taxes on income or profits and except for any withholding tax imposed on
any payments by the Borrower to the Lenders) of payments to such Lender of
the principal of or the interest on any Loans or any other amounts payable
to such Lender under this Credit Agreement or the other Loan Documents; or
(c) impose or increase or render applicable (other than to the
extent specifically provided for elsewhere in this Credit Agreement) any
special deposit, reserve, assessment, liquidity, capital adequacy or other
similar requirements (whether or not having the force of law, but only if
it is mandatory that such Lender comply) against assets held by, or
deposits in or for the account of, or loans by, or commitments of an office
of such Lender; or
(d) impose on such Lender any other conditions or requirements
with respect to this Credit Agreement, the other Loan Documents, the Loans,
or any class of loans or commitments of which any of the Loans forms a
part;
and the result of any of the foregoing is to:
(i) increase the cost to such Lender of making, funding, issuing
or maintaining of the Loans, the Letters of Credit or its Percentage of the
Total Commitment; or
(ii) reduce the amount of principal, interest or other amount
payable to such Lender hereunder on account of any of
the Loans or its Percentage of the Total Commitment; or
(iii) require such Lender to make any payment or to forego any
interest or other sum payable hereunder, the amount of which payment or
foregone interest or other sum is calculated by reference to the gross
amount of any sum receivable or deemed received by such Lender from the
Borrower hereunder;
then, and in each such case, the Borrowers will, within ten (10) Business
Days following receipt of written notice from the Agent on behalf of such
Lender, which written notice shall include a description of the relevant
change in law, calculations of the amounts payable, pay to the Agent on
behalf of such Lender such additional amounts as will be sufficient to
compensate such Lender for such additional cost, reduction, payment or
foregone interest or other sum.
ss.4.6. Capital Adequacy. If any change in any present law,
governmental rule, regulation, policy, guideline or directive or if any
future law, governmental rule, regulation, policy, guideline or directive
(in each case whether or not having the force of law, but only if it is
mandatory that the Lender comply) or the interpretation thereof by a court
or governmental authority with appropriate jurisdiction or any change in
any such law or interpretation (including, without limitation, any change
according to a prescribed schedule of increasing requirements, whether or
not known on the date of this Credit Agreement) affects the amount of
capital required or expected to be maintained by any Lender or any
corporation controlling such Lender and such Lender determines that the
amount of capital required to be maintained by it is increased by or based
upon the existence of the Commitments or Loans made pursuant hereto, then
the Agent on behalf of such Lender may notify the Borrowers of such fact.
To the extent that the costs of such increased capital requirements are not
reflected in the applicable rate(s) of interest on the Loans, the Borrowers
and the Agent on behalf of such Lender shall thereafter attempt to
negotiate in good faith, within thirty (30) days of the day on which the
Borrowers receives such notice, an adjustment payable hereunder that will
adequately compensate such Lender in light of these circumstances. If the
Borrowers and the Agent on behalf of such Lender are unable to agree to
such adjustment within thirty (30) days of the date on which the Borrowers
receive such notice, then commencing on the date Borrowers received such
notice (but not earlier than the effective date of any such increased
capital requirement), from time to time the Borrowers will pay to the
Agent, on behalf of such Lender after consultation with the affected
Lender, such additional amount that will, in the Agent's reasonable
determination, provide adequate compensation to such Lender. Such Lender
shall allocate such cost increases among its customers in good faith and on
an equitable basis.
ss.4.7. Certificate. A certificate setting forth any additional
amounts payable pursuant to ss.4.5, ss.4.6 or ss.4.8 and a reasonably
detailed explanation of such amounts which are due, including calculation
of such amounts, submitted by the Agent on behalf of any Lender to the
Borrowers, shall be conclusive, absent manifest error, that such amounts
are due and owing.
ss.4.8. Indemnity. The Borrowers agree to indemnify each Lender
and to hold each Lender harmless from and against any loss, reasonable cost
or expense that such Lender may sustain or incur resulting from (a) a
default by any Borrower in payment of the principal amount of or any
interest on any Loans as and when due and payable, including any Breakage
Costs and other such losses or reasonable expenses arising from interest or
fees payable by such Lender to lenders of funds obtained by it in order to
maintain its Loans, (b) the failure of the Borrowers to make a borrowing
after the Borrowers have given (or is deemed to have given) a Loan Request
relating thereto in accordance with ss.2.7 or (c) the making of any payment
or prepayment of a Loan or the conversion of any LIBOR Loan to a Base Rate
Loan on a day that is not the last day of the applicable Interest Period
with respect thereto, including any Breakage Costs, interest or fees
payable by such Lender to lenders of funds obtained by it in order to
maintain any such Loans.
ss.4.9. Charges for Overdue Amounts. The Borrowers shall pay a
late fee equal to five percent (5%) of the required payment of the entire
amount of any required interest and/or principal that is not paid within
ten (10) days after the same due.
ss.4.10. Mitigation. Each Lender shall take commercially
reasonable efforts (which shall not require such Lender to incur an
unreimbursed loss or unreimbursed cost or expense or otherwise take any
action inconsistent with its internal policies or suffer any disadvantage
or burden deemed by it to be significant) to assign its rights and delegate
and transfer its obligations hereunder to another of its offices to the
extent that such assignment, delegation and transfer would reduce amounts
otherwise payable by the Borrower to such Lender pursuant to ss.4.1(b),
ss.4.4, ss.4.5, ss.4.6 and ss.4.8 or to make or maintain LIBOR Loans
hereunder. The Borrowers agree to pay all reasonable costs and expenses
incurred by any Lender in connection with any such assignment, delegation
and transfer.
ss.4.11. Joint and Several Obligations. Notwithstanding any other
provision of this Credit Agreement, (i) each of the covenants, agreements
and obligations of the Borrowers and the Subsidiaries set forth in this
Credit Agreement or in any other Loan Document shall be the joint and
several covenants, agreements and obligations of the Borrowers, the
Subsidiaries and any other guarantor, co-borrower, endorser or other
surety, regardless of whether any such Borrower or Subsidiary was the
actual recipient of the proceeds of a Loan, (ii) all representations and
warranties of the Borrowers and the Subsidiaries contained in this Credit
Agreement or in any other Loan Document shall be deemed to be separately
made by each Borrower and the Subsidiaries and (iii) any notice, request,
consent, report or other information or agreement delivered by any Borrower
shall be deemed for all purposes to be consented to, ratified and delivered
by the Borrowers and the Subsidiaries. In furtherance of the foregoing, the
Borrowers and the Subsidiaries acknowledge and agree that each covenant,
agreement and obligation of the Borrowers and the Subsidiaries in this
Credit Agreement or any other Loan Document is the joint and several
obligation of the Borrowers and the Subsidiaries.
ss.5. REPRESENTATIONS AND WARRANTIES. In order to induce the Lenders to
enter into this Credit Agreement and to make the Loans provided for
hereunder, the Borrowers and the Subsidiaries (as applicable) make the
following representations and warranties, which shall survive the execution
and delivery hereof and of the Notes:
ss.5.1 Organization, Standing, etc. of the Borrowers. Each
Borrower is a corporation or limited liability company (as applicable) duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to own and operate its properties, to carry on its business as
now conducted and proposed to be conducted, to enter into this Credit
Agreement, the other Loan Documents and all other documents to be executed
by it in connection with the transactions contemplated hereby, to issue the
Notes and to carry out the terms hereof and thereof. Each of this Credit
Agreement and the other Loan Documents is the joint and several legal,
valid and binding obligation of the Borrowers enforceable against each
Borrower in accordance with its terms.
ss.5.2 Subsidiaries. Schedule 5.2 attached hereto correctly sets
forth as to each Subsidiary, its name, the jurisdiction of its
incorporation, the number of shares of its capital stock of each class
outstanding and the number of such outstanding shares owned by any Borrower
and its other Subsidiaries. Each such Subsidiary is a corporation, limited
liability company or partnership, duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and
has all requisite corporate power and authority to own and operate its
properties and to carry on its business as now conducted and proposed to be
conducted. All of the outstanding capital stock of each Subsidiary is
validly issued, fully-paid and nonassessable, and is owned by the Borrowers
or by the Borrowers' Subsidiaries as specified in Schedule 5.2, in each
case free of any mortgage, pledge, lien, security interest, charge, option
or other encumbrance, other than restrictions imposed by applicable federal
and state securities laws. The Subsidiaries listed on Schedule 5.2 under
the column "Material Subsidiaries" on said Schedule 5.2 constitute any
Subsidiaries which alone account for five percent (5%) or more of the
Borrowers' consolidated total assets or account for five percent (5%) or
more of the Borrowers' consolidated total revenue for continuing operations
for the immediately preceding fiscal year.
ss.5.3 Qualification. Each Borrower and its Subsidiaries are duly
qualified or licensed and in good standing as foreign corporations or
entities duly authorized to do business in each jurisdiction in which the
character of the properties owned or the nature of the activities conducted
makes such qualification or licensing necessary except where failure to
qualify would not likely cause a Material Adverse Effect.
ss.5.4 Financial Information; Disclosure, Etc. The financial
statements heretofore delivered to the Lenders by the Borrowers have been
prepared in accordance with GAAP applied on a consistent basis and fairly
present the financial position and results of operations of the Persons to
which they purport to relate as of the dates and for the periods indicated.
Since the end of the most recent fiscal period shown in such financial
statements or in the most recent financial statements delivered by the
Borrowers under ss.6.2(a), there has not been any Material Adverse Effect
in the business, operations, condition (financial or otherwise) or
properties of any Borrower or any of its respective Subsidiaries, taken as
a whole. Neither this Credit Agreement nor any financial statements,
reports, projections or documents or certificates furnished to the Lenders
by the Borrowers in connection with the transactions contemplated hereby
contain as of their respective dates any untrue statement of a material
fact or omit to state any material fact necessary to make the statements
herein or therein contained not misleading. None of the Loans will render
any Borrower unable to pay its debts as they become due; no Borrower is
contemplating either the filing of a petition by it under any state or
federal bankruptcy or insolvency laws or the liquidation of all or a major
portion of its property; and no Borrower has knowledge of any Person
contemplating the filing of any such petition against it.
ss.5.5 Licenses, Etc. The Borrowers possess all material
authorizations, licenses, permits and franchises of any public or
governmental regulatory body which are necessary for the conduct of the
business of each Borrower and its Subsidiaries as now conducted and the
absence of which would result, either in any case or in the aggregate, in a
Material Adverse Effect on any of the Borrowers, or their Subsidiaries
(such material authorizations, licenses, permits and franchises, together
with any extensions or renewals thereof, being herein sometimes referred to
collectively as the "Licenses"). All of such Licenses are in full force and
effect and the Borrowers and their Subsidiaries have fulfilled and
performed all of their obligations with respect thereto and have full power
and authority to operate thereunder.
ss.5.6 Tax Returns and Payments. Except as set forth on Schedule
5.6, the Borrowers and their Subsidiaries have filed all tax returns
required by law to be filed and have paid all material taxes, assessments
and other governmental charges levied upon any of their respective
properties, assets, income or franchises, other than those not yet
delinquent and those, not material in aggregate amount, being or about to
be contested as provided in ss.6.5. The charges, accruals and reserves on
the books of each Borrower and its Subsidiaries in respect of their
respective taxes are adequate in the opinion of the Borrowers, and the
Borrowers know of no unpaid assessment for additional taxes or of any basis
therefor.
ss.5.7 Indebtedness, Liens and Investments, Etc. Schedule 5.7
attached hereto sets forth, as of the date hereof, (a) the amounts of all
outstanding Indebtedness of each Borrower and its Subsidiaries in respect
of borrowed money, Capitalized Leases and the deferred purchase price of
property, (b) all existing mortgages, liens and security interests in
respect of such Indebtedness, (c) all agreements which directly or
indirectly require any Borrower or its Subsidiaries to make any material
investments, loans or advances and (d) all existing material guarantees by
any Borrower and its Subsidiaries.
ss.5.8 Title to Properties, Liens. Each Borrower and its
Subsidiaries has good and marketable title to all of their respective
properties and assets, and none of such properties or assets is subject to
any mortgage, pledge, lien, security interest, charge or encumbrance except
for (i) Permitted Liens and (ii) minor liens and encumbrances which in the
aggregate are not substantial in amount, do not in any case materially
detract from the value of the property subject thereto or materially impair
the operations of any Borrower or any Subsidiaries and have not arisen
otherwise than in the ordinary course of business. Each Borrower and its
Subsidiaries enjoy quiet possession under all leases to which they are
parties as lessees, and, to the knowledge of the Borrowers, all of such
leases are valid, subsisting and in full force and effect. None of such
leases contains any provision restricting the incurrence of indebtedness by
the lessee.
ss.5.9 Litigation, Etc. Except as set forth in Schedule 5.9
attached hereto, there is no action, proceeding or investigation pending or
threatened (or any basis therefor known to the Borrowers) which questions
the validity of this Credit Agreement, the Notes or the other documents
executed in connection herewith, or any action taken or to be taken
pursuant hereto, or which could reasonably be expected to result, either in
any case or in the aggregate, in any Material Adverse Effect in the
business, operations, affairs, condition (financial or otherwise) or
properties of any Borrower or any of its respective properties or any
material liability on the part of any Borrower.
ss.5.10 Authorization, Compliance with Other Instruments. The
execution, delivery and performance of this Credit Agreement, the Notes and
the other Loan Documents have been duly authorized by all necessary
corporate or other action on the part of each Borrower and any Material
Subsidiary, will not result in any violation of or be in conflict with or
constitute a default under any term of the charter or by-laws of any
Borrower or any Material Subsidiary, or of any material agreement, material
instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to any Borrower or any Material Subsidiary, or result
in the creation of any mortgage, lien, charge or encumbrance upon any of
the properties or assets of any Borrower pursuant to any such term. No
Borrower nor any Subsidiary is in violation of any term of its charter or
by-laws, or of any term of any material agreement or instrument to which it
is a party, or, to any Borrower's knowledge, of any judgment, decree,
order, statute, rule or governmental regulation applicable to it.
ss.5.11 Governmental Consent. No order, consent, approval or
authorization of, or declaration to or filing with, any governmental
authority (collectively, "Consents") is required to be obtained or made by
any Borrower or by any Subsidiary in connection with the execution and
delivery of this Credit Agreement and the Loan Documents and the issuance
and delivery of the Notes pursuant hereto other than those consents which
have been obtained and are in full force and effect and other than the
filing of financing statements.
ss.5.12 Intentionally Omitted.
ss.5.13 Regulation U, Etc. No Borrower and no Subsidiary owns or
has any present intention of acquiring any "margin stock" within the
meaning of Regulation U (CFR 221) of the Board of Governors of the Federal
Reserve System (herein called "margin stock"). None of the proceeds of the
Loans will be used, directly or indirectly, by any Borrower or any
Subsidiary for the purpose of purchasing or carrying, or for the purpose of
reducing or retiring any indebtedness which was originally incurred to
purchase or carry, any margin stock or for any other purpose which might
constitute the transactions contemplated hereby a "purpose credit" within
the meaning of said Regulation U, or cause this Credit Agreement to violate
Regulation U, Regulation T, Regulation X, or any other regulation of the
Board of Governors of the Federal Reserve System or the Securities Exchange
Act of 1934.
ss.5.14 Employee Retirement Income Security Act of 1974. Each
Employee Benefit Plan and to the Borrowers' knowledge, each Multiemployer
Plan, is in compliance in all material respects with applicable provisions
of ERISA and the Code. No ERISA Reportable Event has occurred or, to the
Borrowers' knowledge, is imminent or likely to occur. No Borrower and no
ERISA Affiliate has incurred any material liability to the PBGC or any
Employee Benefit Plan or Multiemployer Plan on account of any failure to
meet the contribution requirements of any such plan, minimum funding
requirements or prohibited transactions under ERISA or the Code,
termination of a single employer plan, partial or complete withdrawal from
a Multiemployer Plan, or the insolvency, reorganization or termination of
any Multiemployer Plan, and no event has occurred or conditions exist which
present a material risk that any Borrower or any ERISA Affiliate will incur
any material liability on account of any of the foregoing circumstances.
The consummation of the transactions contemplated by this Credit Agreement
and the Loan Documents will not result in any prohibited transaction under
ERISA or the Code for which an exemption is not available.
ss.5.15 Environmental Matters. Except as set forth on Schedule
5.15, no Borrower and no Subsidiary nor, to Borrowers' knowledge, any other
Person has ever caused or permitted any Hazardous Material to be disposed
of on or under any real property owned, leased or operated by any Borrower
or any Subsidiary or in which the Borrower or any Subsidiary has ever held,
directly or indirectly, any legal or beneficial interest or estate, and no
such real property has ever been used (either by any Borrower or any
Subsidiary or, to the Borrowers' knowledge, by any other Person) as (i) a
disposal site or permanent storage site for any Hazardous Material or (ii)
except in compliance with and as permitted by Environmental Laws, a
temporary storage site for any Hazardous Material. Each Borrower and each
of its Subsidiaries have been issued and are in compliance in all material
respects with all material permits, certificates, licenses, approvals and
other authorizations relating to environmental matters and necessary or
desirable for their respective businesses, and have filed all notifications
and reports relating to chemical substances, air emissions, underground
storage tanks, effluent discharges and Hazardous Material waste storage,
treatment and disposal required in connection with the operation of their
respective businesses, the failure to have or comply with which would,
individually or in the aggregate, have a Material Adverse Effect on any
Borrower. All Hazardous Materials used or generated by each Borrower and
each Subsidiary and to the best of the Borrowers' knowledge, each business
merged into or otherwise acquired by any Borrower or any Subsidiary have
been generated, accumulated, stored, transported, treated, recycled and
disposed of in compliance in all material respects with all applicable laws
and regulations, the violation of which has any reasonable likelihood of
having a Material Adverse Effect on any Borrower or any Subsidiary. Except
as disclosed on Schedule 5.15, to the best of the Borrowers' knowledge,
neither Borrower nor any Subsidiary has any liabilities with respect to
Hazardous Materials and no facts or circumstances exist which could give
rise to liabilities with respect to Hazardous Materials. To the best of the
Borrower's knowledge, neither Borrower nor any Subsidiary has any
liabilities with respect to Hazardous Materials which individually or in
the aggregate, including those on Schedule 5.15, have a reasonable
likelihood of having a Material Adverse Effect on any Borrower or any
Subsidiary.
ss.5.16 Use of Proceeds. The Borrowers will use the proceeds of
the Revolving Loans solely for working capital, acquisition financing for
the Rittenhouse Transaction, payment of the Ricoh judgement and for other
general corporate purposes of the Borrowers, and Borrowers shall use the
proceeds of the Term Loan only in connection with the Rittenhouse
Transaction.
ss.5.17 Investment Company Act, Public Utility Holding Company
Act. No Borrower and no Subsidiary is (a) an "investment company" as
defined in, or subject to regulation under, the Investment Company Act of
1940 or (b) a "holding company" as defined in or subject to regulation
under, the Public Utility Holding Company Act of 1935.
ss.5.18 Disclosures. Neither this Credit Agreement nor any other
Loan Document contains any untrue statement of material fact or fails to
state a material fact necessary in order to make the statements contained
herein or therein not misleading in light of the circumstances under which
they were made. No fact is known to the Borrowers or the Subsidiaries which
has resulted or may (to the extent foreseeable) result in any Material
Adverse Effect on the business or prospects of any Borrower or any of the
Subsidiaries, except to the extent that future general economic conditions
may result in a Material Adverse Effect.
ss.6. AFFIRMATIVE COVENANTS. Each of the Borrowers covenant and
agree that, so long as any Loan or Note is outstanding or the Lenders have
any Available Revolving Commitment:
ss.6.1 Records and Accounts. Each Borrower will (a) keep true and
accurate records and books of account in which full, true and correct
entries will be made in accordance with GAAP and (b) maintain adequate
accounts and reserves for all taxes (including income taxes), depreciation,
depletion, obsolescence and amortization of its properties, contingencies,
and other reserves, all in accordance with GAAP.
ss.6.2 Financial Statements, Certificates and Information. The
Borrowers will furnish or cause to be furnished to each Lender:
(a) Within one hundred twenty (120) days after the end of each
fiscal year of the Borrowers: (i) the consolidated balance sheets of the
Borrowers and their Subsidiaries as at the end of such year and (ii) the
related consolidated statements of income and surplus and cash flow for
such year, setting forth in comparative form with respect to such
consolidated financial statements figures for the previous fiscal year, all
in reasonable detail, together with the opinion thereon of independent
public accountants selected by the Borrowers and reasonably satisfactory to
the Lenders, which opinion shall be in a form generally recognized as
unqualified and shall state that the financial statements have been
prepared in accordance with GAAP applied on a basis consistent with that of
the preceding fiscal year (except for changes, if any, which shall be
specified and approved in such opinion) and that the audit by such
accountants in connection with such financial statements has been made in
accordance with generally accepted auditing standards related to reporting.
The Borrowers shall promptly deliver to the Lenders upon receipt thereof,
copies of any management letters submitted to any Borrower by such
Borrowers' accountants in connection with any examination of the financial
statements of any Borrower made by such accountants;
(b) Within thirty (30) days after the end of each month during
Borrowers' fiscal year, (i) the unaudited consolidated and consolidating
balance sheets of the Borrowers and the Subsidiaries as at the end of such
period, and (ii) the related unaudited consolidated and consolidating
statements of income and surplus and cash flows for such period and for the
period from the beginning of the current fiscal year to the end of such
period, all in reasonable detail and signed by the chief financial officer
or treasurer of the Borrowers. Upon request of any Lender, such monthly
statements shall include agings, as of the end of said month, of all the
Borrowers' accounts receivable and a monthly inventory position report. All
such statements shall be prepared in the format approved by and reasonably
acceptable to the Lenders. For month ending April, 2000, the foregoing
monthly statements shall only be required for Nashua. Thereafter, such
monthly statements shall be required for all Borrowers;
(c) Together with the financial statements delivered pursuant to
subparagraph (a) above, a statement signed by the accountants who have
reported on the same to the effect that in connection with their
examination of such financial statements they have reviewed the provisions
of this Credit Agreement and have no knowledge of any event or condition
which constitutes an Event of Default or which, after notice or expiration
of any applicable grace period or both, would constitute such an Event of
Default or, if they have such knowledge, specifying the nature and period
of existence thereof; provided, however, that in issuing such statement,
such independent accountants shall not be required to go beyond normal
auditing procedures conducted in connection with their opinion referred to
above;
(d) On an annual basis prior to the Borrowers' fiscal year end,
furnish the Borrowers' business plan and budget for the upcoming fiscal
year which include a projected profit and loss statement, balance sheet,
cash flow projections and a capital budget;
(e) Furnish the Lenders with a fully executed compliance
certificate substantially in the form of compliance certificate attached
hereto as Exhibit B, within thirty (30) days after the end of each fiscal
quarter (the "Compliance Certificate");
(f) Within twenty (20) days after the end of each fiscal month of
the Borrowers, (i) until such time as the conditions of ss.11.7 and ss.11.8
are met and the Lender's deem the Real Estate to be acceptable collateral,
in their sole discretion, or (ii) if the aggregate principal amount
outstanding under the Revolving Credit Loan exceeds Fifteen Million Dollars
($15,000,000) or the amount of the Eligible Accounts is less than or equal
to Twenty Five Million Dollars ($25,000,000), the Borrowers shall deliver
to the Lenders a monthly certificate, in form attached hereto as Exhibit C,
certifying the amount of the Borrowing Base;
(g) Promptly after the same become publicly available, copies of
all periodic and other reports, proxy statements and other materials filed
by with the Securities and Exchange Commission, or any governmental
authority succeeding to any of or all of the functions of said Commission,
or with any national securities exchange, or distributed to its
shareholders generally, as the case may be (with the exhibits relating
thereto to be provided, at Borrowers' expense, upon the request of the
Agent or any Lender);
(h) Promptly upon their becoming available, copies of any periodic
or special reports filed by any Borrower or any Subsidiary with any
federal, state or local governmental agency or authority, if such reports
indicate any material change in the business, operations, affairs or
condition (financial or otherwise) of the Borrowers and Subsidiaries, taken
as a whole, or if copies thereof are requested by any Lender, and copies of
any materially adverse notices and communications from any federal, state
or local governmental agency or authority which specifically relate to any
Borrower or any Subsidiary;
(i) Promptly upon any officer of any Borrower obtaining knowledge
of any condition or event which constitutes an Event of Default or which,
after notice or lapse of time or both, would constitute an Event of
Default, a certificate signed by such officer specifying in reasonable
detail the nature and period of existence thereof and what action the
Borrowers have taken or propose to take with respect thereto;
(j) Promptly upon any officer of any Borrower obtaining knowledge
of any material litigation, arbitration or administrative or quasi-judicial
action brought or threatened, in writing, to be brought against any
Borrower or any of its Subsidiaries, a certificate signed by such officer
specifying in reasonable detail the nature thereof and what action the
Borrowers have taken or propose to take with respect thereto, the amount of
judgment sought together with (if requested by the Agent) copies of any
pleadings filed or to be filed in such proceeding; and
(k) Such other information regarding the business, affairs and
condition of the Borrowers and their respective Subsidiaries as any Lender
may from time to time reasonably request. The Borrowers will permit each
Lender to inspect the books and any of the properties or assets of the
Borrowers and their Subsidiaries, at the expense of the Borrower, at such
reasonable times as such Lender may from time to time request.
ss.6.3 Legal Existence: Compliance with Laws. Etc. Each Borrower
will, and will cause each Subsidiary to maintain its corporate existence
and business; maintain all properties which are reasonably necessary for
the conduct of such business, now or hereafter owned, in good repair,
working order and condition; take all actions necessary to maintain and
keep in full force and effect its Licenses; to the extent applicable, take
all steps necessary to maintain its status as a public company and to
maintain its status as a company listed on the New York Stock Exchange or a
national stock exchange; and, except as otherwise provided herein, comply
with all applicable statutes, rules, regulations and orders of, and all
applicable restrictions imposed by, all governmental authorities in respect
of the conduct of its business and the ownership of its properties; in each
case except to the extent that the failure to comply would not,
individually or in the aggregate, have a Material Adverse Effect on the
business, operations, affairs or condition (financial or otherwise) of any
Borrower or its Subsidiaries, taken as a whole; or any Subsidiary; provided
that no Borrower and no Subsidiary shall be required by reason of this
ss.6.3 to comply therewith at any time while such Borrower or such
Subsidiary shall be contesting its obligations to do so in good faith by
appropriate proceedings promptly initiated and diligently conducted, and if
it shall have set aside on its books such reserves, if any, with respect
thereto as are required by GAAP and deemed adequate by the Borrowers and
their independent public accountants. No Borrower and no Subsidiary will,
without the prior written consent of the Lenders, engage in any business
other than the Current Lines of Business.
ss.6.4 Insurance. Each Borrower will maintain or cause to be
maintained on all insurable properties now or hereafter owned by such
Borrower and any Subsidiary, insurance against loss or damage by fire or
other casualty to the extent customary with respect to like properties of
companies conducting similar businesses, including business interruption
insurance, and will maintain or cause to be maintained public liability and
workmen's compensation insurance insuring such Borrower and its
Subsidiaries to the extent customary with respect to companies conducting
similar businesses and, upon request, will furnish to the Lenders
satisfactory evidence of the same.
ss.6.5 Payment of Taxes. Each Borrower will, and will cause each
Subsidiary to, pay and discharge promptly as they become due and payable
all taxes, assessments and other governmental charges or levies imposed
upon it or its income or upon any of its properties or assets, or upon any
part thereof, as well as all lawful claims of any kind (including claims
for labor, materials and supplies) which, if unpaid, might by law become a
lien or a charge upon its properties or assets provided that no Borrower
and no Subsidiary shall be required to pay any such tax, assessment,
charge, levy or claim if the amount, applicability or validity thereof
shall currently be contested in good faith by appropriate proceedings
promptly initiated and diligently conducted and if such Borrower or such
Subsidiary, as the case may be, shall have set aside on its books such
reserves, if any, with respect thereto as are required by GAAP and deemed
appropriate by the Borrowers and their independent public accountants.
ss.6.6 Payment of Other Indebtedness, Etc. Except as to matters
being contested in good faith and by appropriate proceedings, each Borrower
will, and will cause each Subsidiary to, pay promptly when due, or in
conformance with customary trade terms, all other Indebtedness and
obligations incident to the conduct of its business.
ss.6.7 Further Assurances. From time to time hereafter, the
Borrowers will execute and deliver, or will cause to be executed and
delivered, such additional instruments, certificates or documents, and will
take all such actions, as the Lenders may reasonably request for the
purposes of implementing or effectuating the provisions of this Credit
Agreement or the other Loan Documents. Upon the exercise by the Lenders (or
the Agent on their behalf) of any power, right, privilege or remedy
pursuant to this Credit Agreement or the other Loan Documents which
requires any privilege, consent, approval, registration, qualification or
authorization of any governmental authority or instrumentality, the
Borrowers will execute and deliver, or will cause the execution and
delivery of, all applications, certifications, instruments and other
documents and papers that the Lenders may be required to obtain for such
governmental consent, approval, registration, qualification or
authorization. Upon receipt of an affidavit (with reasonable
indemnification by such Lender thereunder) of an officer of any Lender as
to the loss, theft, destruction or mutilation of any Note or any other
Security Document which is not of public record, and, in the case of any
such loss, theft, destruction or mutilation, upon surrender and
cancellation of such Note or other Security Document, the Borrowers will
issue, in lieu thereof, a replacement Note or other Security Document in
the same principal amount thereof and otherwise of like tenor.
ss.6.8 Depository Account. Subject to ss.6.12, the Borrowers will
maintain their principal operating accounts with the Agent.
ss.6.9 Use of Proceeds. The Borrowers will use the proceeds of
the Loans only for the purposes not prohibited by, and subject to the terms
and conditions of, ss.5.13 and ss.5.16.
ss.6. 10 Composition of Management. Nashua shall maintain the
current role and management responsibilities of the Senior Management of
Nashua (being Gerald Garbacz, as Chairman and Chief Executive Officer, and
Andrew Albert, as President and Chief Operating Officer); provided,
however, the failure of either of the aforesaid individuals to continue
their current role or responsibilities shall not constitute an Event of
Default hereunder if such individual is replaced, within six (6) months,
with another individual acceptable to the Lenders. Failure to replace the
aforesaid individuals within six (6) months with other individuals
acceptable to the Lenders shall constitute a "Change in Senior Management".
ss.6.11 Composition of Board. Nashua will maintain at least
fifty-one percent (51%) of the current members of the board of directors of
Nashua (being those individuals identified on Schedule 6.11 attached
hereto). The failure of at least fifty-one percent (51%) of the current
board of directors of Nashua to remain on the board shall constitute a
"Change in Control of the Board" and shall constitute an Event of Default
hereunder.
ss.6.12 Operating Account. Within ninety (90) days after the
Closing Date, the Borrowers agree to move the primary Rittenhouse operating
account and lockbox, to LaSalle.
ss.7. CERTAIN NEGATIVE COVENANTS. Each of the Borrowers covenant and
agree that, so long as any Loan or Note is outstanding or the Lenders have
any Available Revolving Commitment:
ss.7.1 Indebtedness. The Borrowers will not, nor will the
Borrower permit any Subsidiary to, create, incur, assume or become or
remain liable in respect of any Indebtedness, except:
(a) Indebtedness to the Lenders hereunder;
(b) Current or long term liabilities of the Borrowers and the
Subsidiaries (other than for borrowed money) incurred in the ordinary
course of their businesses and in accordance with customary trade
practices;
(c) Existing Indebtedness of the Borrowers and the Subsidiaries
referred to in Schedule 5.7 attached hereto, and renewals and extensions
thereof, provided that (i) the aggregate principal amount of such
Indebtedness is not at any time increased, and (ii) the interest rate
applicable to such Indebtedness shall be a market interest rate as of the
time of such renewal or extension;
(d) Indebtedness of the Borrowers and Subsidiaries secured by
Permitted Liens;
(e) To the extent not required to be paid by ss.6.5,
Indebtedness in respect of taxes, assessments, governmental changes and claims
for labor, material and supplies;
(f) Indebtedness in respect of deferred taxes arising in the
ordinary course of business;
(g) Indebtedness of the Borrowers to each other; and
(h) Indebtedness in respect of purchase money financing as
limited by ss.7.2(b); and
(i) Indebtedness of any Subsidiary or Borrower to any other
Borrower or Subsidiary to any Subsidiary as limited by ss.7.3(a).
ss.7.2 Mortgages, Liens, Etc. Without the prior written consent
of the Lenders, the Borrowers will not, nor will the Borrowers permit any
Subsidiary to, directly or indirectly, create, incur, assume or suffer to
exist, any mortgage, lien, charge or encumbrance on, or security interest
in, or pledge of, or conditional sale or other title retention agreement
(including any Capitalized Lease) with respect to any real or personal
property or asset now owned or hereafter acquired by the Borrowers or any
Subsidiary, except for the following (collectively, "Permitted Liens"):
(a) The mortgages and security interests referred to in Schedule
7.2 attached hereto, or any renewal, extension or refunding of any such
mortgage or security interest in an amount not exceeding the amount thereof
remaining unpaid immediately prior to such renewal, extension or refunding;
(b) Purchase money liens and other security interests, including
Capitalized Leases, created in respect of property acquired by any Borrower
or any Subsidiary after the date hereof or existing in respect of property
so acquired at the time of acquisition thereof, provided that (i) each such
lien shall at all times be confined solely to the item or items of property
so acquired, and (ii) the aggregate principal amount of Indebtedness
secured by all such liens shall at no time exceed $2,500,000;
(c) Liens for taxes and other amounts not yet delinquent or being
contested in good faith as provided in ss.6.5; liens in connection with
workmen's compensation, unemployment insurance or other social security
obligations; liens securing the performance of bids, tenders, contracts,
leases, statutory obligations, surety and appeal bonds, liens to secure
progress or partial payments and other liens of like nature arising in the
ordinary course of business; mechanics', workmen's, materialmen's or other
like liens arising in the ordinary course of business in respect of
obligations which are not yet due; and
(d) Encumbrances in the nature of (i) zoning restrictions, (ii)
easements, (iii) restrictions of record on the use of real property, (iv)
landlords' and lessors' liens on rented premises and (v) restrictions on
transfers or assignments of leases, which in each case do not, individually
or in the aggregate, materially detract from the value of the encumbered
property or impair the use thereof in the businesses of any Borrower or any
Subsidiaries.
ss.7.3 Loans, Guarantees and Investments. No Borrower will make
or permit to remain outstanding any loan or advance or guarantee or endorse
(except as a result of endorsing negotiable instruments for deposit or
collection in the ordinary course of business) or otherwise assume or
remain liable with respect to any obligation of, or make or own any
investment in, or acquire (except in the ordinary course of business) the
properties or assets of, any Person, except:
(a) Extensions of credit by any Borrower to any Subsidiary in the
ordinary course of business in accordance with customary trade practices
provided the same does not exceed $1,000,000 in the aggregate at any one
time;
(b) Extensions of credit between the Borrowers in the ordinary
course of business;
(c) The presently outstanding investments, loans and advances, if
any, and the presently existing guarantees, if any, of the Borrowers and
the Subsidiaries all to the extent set forth on Schedule 5.7 attached
hereto and any renewal, extension or refunding thereof, provided that (i)
the aggregate principal amount thereof is not at any time increased, and
(ii) the interest rate (if any) applicable thereto shall be a market
interest rate as of the time of such renewal or extension.
(d) Direct obligations of the United States of America or any
department or agency thereof maturing not more than one year from the date
of acquisition thereof,
(e) Certificates of deposit, repurchase agreements, time deposits
(including sweep accounts), demand deposits, bankers acceptances, money
market deposits or other similar types of investments maturing not more
than one year from the date of acquisition thereof and evidencing direct
obligations of any Lender or any lender within the United States of
America, England or Ireland, in each case having capital surplus and
undivided profits in excess of the equivalent of $50,000,000;
(f) Investments in commercial paper maturing within ninety (90)
days from the date of acquisition thereof and having, at such date of
acquisition, the highest credit rating obtainable from Moody's or S&P;
(g) Any mutual fund or other pooled investment vehicle which
invests principally in obligations described in subparagraphs (c), (d) or
(e) above and having, at the date of investment in such fund or vehicle,
one of the two highest credit ratings from Moody's or S&P;
(h) Guarantees by the Borrowers of Indebtedness and other
obligations incurred by Subsidiaries to the extent permitted by ss.7.1.
ss.7.4 Leases. The Borrowers will not enter into any Capitalized
Lease, except as otherwise permitted under ss.7.1 and ss.7.2.
ss.7.5 Mergers and Consolidations; Acquisitions. No Borrower
will, nor will any Borrower permit any Subsidiary to, enter into any merger
or consolidation, except any wholly-owned Subsidiary of any Borrower may
merge or be liquidated into any Borrower so long as after giving effect to
any such merger to which any Borrower is a party, such Borrower shall be
the surviving or resulting person; and provided further that the Borrowers
and the Subsidiaries remain in compliance with all financial covenants
contained herein. No Borrower will, nor will any Borrower permit any
Subsidiary to, acquire the stock or assets of any company, which
transaction entails a purchase price in excess of $1,000,000, without the
prior written consent of the Lenders.
ss.7.6 Sale of Assets. The Borrowers will not permit, nor will it
permit any of its Subsidiaries to sell, lease or otherwise dispose of all
or any substantial part of its properties or assets.
ss.7.7 Capital Expenditures. The Borrowers will not have Capital
Expenditures in excess of $15,000,000 in the aggregate during fiscal year
2000, and in excess of $10,000,000 in the aggregate in any one fiscal year
thereafter.
ss.7.8 Distributions. The Borrowers will not make any
distribution or declare or pay any cash dividends on, or purchase, acquire
or redeem or retire any of its capital stock of any class, whether now or
hereafter outstanding, if there is a violation of or after such
distribution or dividend there would be a violation of any financial
covenants set forth in ss.8 hereof or if there are any Events of Default
under this Credit Agreement or any other Loan Documents.
ss.7.9 Compliance with ERISA. Each Borrower will make, and will
cause all ERISA Affiliates to make, all payments or contributions to
Employee Benefit Plans and Multiemployer Plans required under the terms
thereof and in accordance with applicable minimum funding requirements of
ERISA and the Code and applicable collective bargaining agreements. Each
Borrower will cause all Employee Benefit Plans sponsored by it or any ERISA
Affiliates to be maintained in material compliance with ERISA and the Code.
No Borrower will engage, or permit or suffer any ERISA Affiliate or any
Person entitled to indemnification or reimbursement from such Borrower or
any ERISA Affiliate to engage, in any prohibited transaction under ERISA or
the Code for which an exemption is not available. No Borrower and no ERISA
Affiliate will terminate, or permit the PBGC to terminate, any Employee
Benefit Plan or withdraw from any Multiemployer Plan, in any manner which
would be reasonably likely to cause a Material Adverse Effect and could
result in material liability of the Borrower or any ERISA Affiliate.
ss.7.10 Transactions with Affiliates. Except as set forth on
Schedule 7.10, no Borrower will not, nor will the Borrower permit any
Subsidiary to, directly or indirectly, enter into any lease or other
transaction with any Affiliate of such Borrower or such Subsidiary (other
than the Borrower) on terms that are less favorable to such Borrower or
such Subsidiary than those which could reasonably be obtained at the time
from a non-Affiliate.
ss.7.11 Observance of Subordination Provisions, Etc. No Borrower
will make, nor will the Borrower cause or permit to be made, any payments
in respect of any Subordinated Debt, in contravention of the subordination
provisions contained in the evidence of such Subordinated Debt or in
contravention of any written agreement pertaining thereto, nor will any
Borrower (a) amend, modify or change in any manner any of such
subordination provisions, or (b) amend, modify or change in any manner
adverse to the interests of the Lenders any of the other provisions set
forth in the agreements under which such Subordinated Debt is outstanding
or contained in the evidence of such Subordinated Debt.
ss.7.12 Environmental Liabilities. Except in accordance with
applicable law, no Borrower will make, nor will any Borrower permit any
Subsidiary to, violate any requirement of any material law, rule or
regulation regarding Hazardous Materials; and, without limiting the
foregoing, no Borrower will, nor will any Borrower permit any Subsidiary or
any other Person to dispose of any Hazardous Material into or onto, or
from, any real property owned, leased or operated by any Borrower or any
Subsidiary or in which any Borrower or any Subsidiary holds, directly or
indirectly, any legal or beneficial interest or estate, nor allow any lien
imposed pursuant to any law, regulation or order relating to Hazardous
Materials or the disposal thereof to be imposed or to remain on such real
property, except for liens being contested in good faith by appropriate
proceedings and for which adequate reserves have been established and are
being maintained on the books of the Borrowers and Subsidiaries.
ss.7.13 Subsidiaries. The Borrowers will not create any new
Subsidiaries without the prior consent of the Lenders (which consent shall
not be unreasonably withheld). The Borrowers shall immediately notify the
Lenders whether such new Subsidiary is a Material Subsidiary. Upon the
Lenders' request, the Borrowers shall cause each Material Subsidiary to
execute the joinder to this Credit Agreement and a guaranty of the
Borrowers' Obligations in the form attached hereto as Exhibit C, and to
deliver all such financial statements, information and reports as the
Lenders may reasonably request.
ss.7.14 Issuance of Shares. The Borrowers shall not permit any of
their wholly-owned Subsidiaries to issue or sell any shares of such
Subsidiary's capital stock or other evidence of beneficial ownership to any
Person other than the Borrowers.
ss.7.15 Subsidiary Distributions. The Borrowers shall not permit
any of its wholly-owned Subsidiaries to enter into or become bound by any
agreement (including covenants requiring the maintenance of specified
amounts of net worth or liquidity) restricting the right of any Subsidiary
to make distributions or dividends to any Borrower.
ss.7.16 Material Adverse Effect No Borrower will take nor fail
to take any action that could reasonably be expected to result in a
Material Adverse Effect.
ss.7.17 No Negative Pledges. No Borrower shall, nor will any of
its Subsidiaries, covenant or agree with any Person other than the Lenders
pursuant to this Credit Agreement that it will not directly or indirectly
create, incur, assume or suffer to exist any mortgage, lien, charge or
encumbrance on, or security interest in, or pledge of, or conditional sale
or other title retention agreement with respect to any property or asset
now owned or hereafter acquired by the Borrowers.
ss.8. FINANCIAL COVENANTS. Each Borrower covenants and agrees that,
so long as any Loan or Note is outstanding or the Lenders have any Available
Revolving Commitment, the Borrowers shall maintain or achieve the following
financial covenants subject to paragraph (a) hereof:
(a) Covenant Calculations. The covenants calculations in ss. 8(b)
and ss. 8(c) below shall be based upon the Borrowers' consolidated
financial statements. Such covenant compliance shall be tested as of the
end of each fiscal quarter on a rolling four quarter basis beginning as of
the end of the first quarter of fiscal year 2001. Prior to that period, the
covenants will be tested on a cumulative quarterly basis for each fiscal
quarter commencing after the date hereof, and EBITDA will be annualized for
purposes of determining covenant compliance for ss.8(b) only. The effect of
any changes resulting from the Rittenhouse Transaction and the integration
of the businesses, including without limitation, severance costs, through
the end of December, 2000, will be excluded from the covenant calculations.
(b) Total Funded Debt/EBITDA. Tested as set forth in ss.8(a), the
ratio of the Borrowers' Total Funded Debt to EBITDA shall not exceed 3.0 to
1.0. "Total Funded Debt" means the aggregate amount of all interest bearing
obligations of the Borrowers. "EBITDA" is the sum of the Borrowers' GAAP
net income (minus extraordinary income) plus Interest Expense, taxes,
depreciation and amortization.
(c) Fixed Charge Coverage Ratio. Tested as set forth in ss.8(a),
the Borrower shall maintain a Fixed Charge Coverage Ratio of at least 1.1
to 1.0. The Fixed Charge Coverage Ratio means the ratio of (i) the sum of
the Borrowers' EBITDA minus the sum of unfinanced Capital Expenditures,
dividends and cash taxes to (ii) the sum of Interest Expense and current
maturities of long term debt paid during the measured period.
ss.9. DEFAULTS: REMEDIES.
ss.9.1 Events of Default; Acceleration. If any of the following
events (each an "Event of Default") shall occur:
(a) The Borrowers shall fail to pay when due any principal or
interest on any Loan, any Note or any other Reimbursement Obligation
payable under any of the Loan Documents or any other fee due hereunder,
whether at maturity or at a date fixed for the payment of any installment
or prepayment thereof or otherwise and such default continues uncured for
three (3) calendar days from the due date hereof; or
(b) The Borrowers shall default in the performance of or
compliance with any term contained in ss.6.2(h), ss.6.2(i), ss.6.2(j),
ss.6.3, ss.6.9, ss.6.10 and ss.7.1 through and including ss.7.17, and ss.8;
or
(c) The Borrowers shall default in the performance of or
compliance with any term, conditions covenant or agreement (other than
those listed in ss.9.1 (a) and (b)) to be performed or observed by it under
this Credit Agreement or under any other Loan Document and such default
shall continue for a period after thirty (30) calendar days or more from
dispatch of notice of such default by the Agent or any Lender; or
(d) Any representation or warranty made by the Borrowers herein or
pursuant hereto shall prove to have been false or incorrect in any material
respect when made or when deemed to have been made; or
(e) Any Borrower or any Subsidiary shall default in (i) the
payment of any Indebtedness in respect of borrowed money (other than the
Loans), any Capitalized Lease or the deferred purchase price of any
property and such default (A) shall continue after giving effect to any
applicable grace periods and (B) shall be in respect of any aggregate
amount of principal (whether or not due) and accrued interest exceeding
$250,000; or (ii) the performance or compliance with any term of any
agreement or instrument relating to such Indebtedness in the principal
amount of $250,000 or more and such default (A) shall continue, without
having been duly cured, waived or consented to, beyond the period of grace,
if any, specified in such agreement or instrument, and (B) shall permit the
acceleration of such Indebtedness prior to its stated maturity; or
(f) Any Borrower or any Material Subsidiary shall discontinue its
business or shall make an assignment for the benefit of creditors, or shall
fail generally to pay its debts as such debts become due, or shall apply
for or consent to the appointment or taking possession by a trustee,
receiver or liquidator (or other similar official) of such Borrower or such
Material Subsidiary or any substantial part of the property of any Borrower
or of any Material Subsidiary, or shall commence a case or have an order
for relief entered against it under the federal bankruptcy laws, as now or
hereafter constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, or if any Borrower or any Material
Subsidiary shall take any action to dissolve or liquidate such Borrower or
such Material Subsidiary; or
(g) If, within sixty (60) days after the commencement against any
Borrower or any Material Subsidiary of a case under the federal bankruptcy
laws, as now or hereafter constituted, or any other applicable federal or
state bankruptcy, insolvency or other similar law, such case shall have
been consented to or shall not have been dismissed or all orders or
proceedings thereunder affecting the operations or the business of such
Borrower or such Material Subsidiary stayed, or if the stay of any such
order or proceeding shall thereafter be set aside, or if within sixty (60)
days after the entry of a decree appointing a trustee, receiver or
liquidator (or other similar official) of any Borrower or any Material
Subsidiary or any substantial part of the property of the Borrower or such
Material Subsidiary, such appointment shall not have been vacated; or
(h) A final judgment which, with other outstanding final judgments
against such Borrower and its Material Subsidiaries, exceeds an aggregate
of $250,000 shall be rendered against any Borrower or any Material
Subsidiary and if, within sixty (60) days after entry thereof, such
judgment shall not have been discharged or execution thereof stayed pending
appeal, or if, within sixty (60) days after the expiration of any such
stay, such judgment shall not have been discharged, or if any such judgment
shall not be discharged forthwith upon the commencement of proceedings to
foreclose any lien, attachment or charge which may attach as security
therefor and before any of the property or assets of any Borrower or any
Material Subsidiary shall have been seized in satisfaction thereof; or
(i) The Collateral is materially injured or destroyed by fire or
otherwise, which casualty is not insured; or
(j) There shall have occurred a Change in Control or a Change in
Control of the Board; or
(k) There shall have occurred a Change in Senior Management; or
(l) If with respect to any Employee Benefit Plans or Multiemployer
Plans, there shall occur any of the following which would reasonably be
expected to have a material adverse effect on the financial condition of
any Borrower: (i) the violation of any of the provisions of ERISA; (ii) the
loss by such a plan intended to be a Qualified Plan of its qualification
under Section 401 (a) of the Code; (iii) the incurrence of liability under
Title IV of ERISA; (iv) a failure to make full payment when due of all
amounts which, under the provisions of any such plan or applicable law, any
Borrower or any ERISA Affiliate is required to make; (v) the filing of a
notice of intent to terminate such a plan under Section 4041 or 4041 A of
ERISA; (vi) a complete or partial withdrawal of any Borrower or any ERISA
Affiliate from any Qualified Plan resulting in the imposition of a tax
under Section 4980B of the Code:
then, and in any such event, and at any time thereafter, if any Event of
Default (other than an event described in ss.9(f) or ss.9(g) hereof) shall
then be continuing, the Required Lenders may direct the Agent to, by
written notice to the Borrowers, (i) declare the principal of and accrued
interest in respect of the Notes to be forthwith due and payable, whereupon
the principal of and accrued interest in respect of the Notes, and all
other amounts then due hereunder, shall become forthwith due and payable
without presentment, demand, protest or other notice of any kind, all of
which are hereby expressly waived by the Borrowers, and/or (ii) terminate
the Revolving Loan Commitment, whereupon the Revolving Loan Commitment of
the Lenders (and the Commitment of each individual Lender) to make Loans
hereunder shall forthwith terminate without any other notice of any kind;
and with respect to any event described in ss. 9(f) or ss. 9(g) above, the
Commitments shall automatically terminate and the principal of the Notes
then outstanding, together with accrued interest thereon and all other
amounts then due hereunder including all Obligations, shall automatically
become due and payable, without presentment, demand, protest or any other
notice of any kind, all of which are hereby expressly waived by the
Borrowers, anything contained herein or in any other Loan Document to the
contrary notwithstanding.
ss.9.2 Remedies on Default, Etc. In case any one or more Events of
Default shall occur and be continuing, the Lenders may proceed to protect
and enforce their rights by an action at law, suit in equity or other
appropriate proceeding, whether for the specific performance of any
agreement contained herein or in any other Loan Document, or for an
injunction against a violation of any of the terms hereof or thereof, or in
aid of the exercise of any power granted hereby or thereby or by law and
may proceed to liquidate and realize upon any of the Collateral in
accordance with their rights as a secured party and mortgagee under the
Uniform Commercial Code and under the Loan Documents. In case of a default
in the payment of any principal of or interest on any Note, or in the
payment of any fee due hereunder, the Borrowers will pay to the Lenders
such further amount as shall be sufficient to cover the cost and expense of
collection, including the Lenders' reasonable attorneys' fees, expenses and
disbursements. No course of dealing and no delay on the part of the Lenders
in exercising any right shall operate as a waiver thereof or otherwise
prejudice the Lenders' rights. No right conferred hereby or by any other
Loan Document upon the Lenders shall be exclusive of any other right
referred to herein or therein or now or hereafter available at law, in
equity, by statute or otherwise.
ss.10. CLOSING CONDITIONS. The obligations of the Lenders to make the
initial Loans and Letters of Credit shall be subject to the satisfaction of
the following conditions precedent:
ss.10.1. Loan Documents, Etc. Each of the Loan Documents shall
have been duly executed and delivered by the Borrowers shall be in full
force and effect and shall be in form and substance reasonably satisfactory
to the Lenders. The Agent and each Lender shall have received a fully
executed original of each such document.
ss.10.2. Corporate Action. All corporate action necessary for the
valid execution, delivery and performance by the Borrowers and any Material
Subsidiary of this Credit Agreement and the other Loan Documents shall have
been duly and effectively taken, and evidence thereof reasonably
satisfactory to the Agent shall have been provided to the Agent.
ss.10.3. Incumbency Certificate. The Agent shall have received
from the Borrowers and any Material Subsidiary an incumbency certificate,
dated as of the Closing Date, signed by a duly authorized officer of each
Borrower and Material Subsidiary and giving the name and bearing a specimen
signature of each individual who shall be authorized in the name and on
behalf of the Borrowers and any Material Subsidiary, (a) to sign each of
the Loan Documents; (b) to make Loan Requests; and (c) to give notices and
to take other action under the Loan Documents.
ss.10.4. Opinions of Counsel. The Agent shall have received a
favorable opinion addressed to the Lenders, dated as of the Closing Date,
from independent counsel to the Borrowers and the Subsidiaries, in form and
substance acceptable to the Lenders, to the effect that (A) each of the
Borrowers and the Material Subsidiary is a business corporation or limited
liability company, as applicable, duly organized and validly existing under
the laws of the state of its organization and each is duly qualified to do
business in all jurisdictions in which the nature of its business or assets
make such qualification necessary; (B) that the Loan Documents constitute
binding obligations of the Borrowers or the Material Subsidiary enforceable
in accordance with their terms; (C) that the Borrowers' and the Material
Subsidiary's entrance into the obligations evidenced by the Loan Documents
does not constitute a breach of the charter documents, articles of
incorporation or bylaws of any Borrower or any Material Subsidiary or any
other arrangements or agreements by which any Borrower or any Material
Subsidiary is bound and that the Borrowers' and Material Subsidiary's
entrance into and performance of the Borrowers loan obligations will not
require any further approvals or consents; (D) that, to such counsel's
knowledge, there is neither pending nor threatened any litigation,
administrative proceedings or investigations which if adversely determined
would have a Material Adverse Effect on any Borrower or Material Subsidiary
or any Borrower's or any Material Subsidiary's financial condition or
otherwise; (E) that the security interests granted to the Agent, on behalf
of the Lenders, in connection with the Loans constitute a valid perfected
security interest in the collateral described therein; (F) that the Real
Estate and the intended use thereof is in full compliance with zoning and
all other governmental laws and regulation applicable to the Real Estate;
and (G) addressing such other matters as deemed appropriate by the Lenders.
ss.10.5. Payment of Fees. The Borrowers shall have paid to the
Agent (i) the reasonable fees and expenses of the Agent's counsel in
connection with the documentation of the transactions described in this
Credit Agreement and (ii) all fees then due and payable pursuant to
ss.2.2(b), ss.2.2(c) and ss. 2.2(d) and elsewhere under this Credit
Agreement.
ss.10.6. Rittenhouse Transaction. The Borrowers' accountant shall
have conducted the due diligence in connection with the Rittenhouse
Transaction and such due diligence shall be deemed acceptable to the
Lenders in all respects. The Borrowers shall have completed the Rittenhouse
Transaction and Nashua shall have succeeded to all of the stock of RPC as
contemplated by the Rittenhouse Transaction on terms and conditions
acceptable to the Lenders.
ss.10.7 Closing Agenda. The Borrowers and any Material Subsidiary
shall have executed and delivered all of the Loan Documents as described
herein. Without limiting the foregoing, the Borrowers shall have delivered
to the Agent all of those items identified as "Borrowers' Documents" on the
Closing Agenda attached hereto as Exhibit D and made a part hereof, all of
which must be reasonably acceptable, in form and substance, to the Lenders.
ss.10.8 Title Insurance. The Agent shall have received:
(a) a title insurance policy written with a company acceptable to
the Lenders, insuring that the Lenders have a valid first lien of record on
Real Estate and that the title to Real Estate is good and marketable
subject only to those exceptions approved by the Lenders. In addition, the
policy shall have all standard exceptions, so-called, deleted, and shall
include such other affirmative insurance and endorsements as may be
requested by the Lenders;
(b) a survey of Real Estate which shall locate the improvements as
well as all easements and utilities on Real Estate and shall show (u) no
violation of any applicable zoning or building requirements, restrictive
covenants or the terms of any permits; (v) no encroachment of the
improvements onto abutting premises; (w) no encroachment of improvements
located on abutting premises onto Real Estate; (x) no material deviation
from the acreage of Real Estate as the same may have been represented to
the Lenders; (y) that Real Estate has access to or abuts a publicly
accepted way; and (z) that Real Estate is not located in a flood hazard
zone;
ss.10.9 Employment Agreement. The Borrowers shall have entered
into an employment agreement with Andrew Albert, on terms and conditions
acceptable to the Lenders.
ss.10.10 Valuation. The Lenders shall have received an
independent determination of at least Six Million Seventy-Nine Thousand
Dollars ($6,079,000) in orderly liquidation value of Nashua's machinery and
equipment in which a first priority security interest must be granted to
the Lenders pursuant to ss.2.11
ss.11. CONDITIONS TO ALL LOANS AND LETTER OF CREDIT. The obligations of the
Lenders to make any Loan and the obligation of the Fronting Bank to issue
any Letter of Credit whether on or after the Closing Date, shall also be
subject to the satisfaction of the following conditions precedent:
ss.11.1. Accuracy of Representations: No Event of Default. After
giving effect to the Loans proposed to be made on such Drawdown Date and
the issuance of any Letter of Credit, (i) all representations and
warranties of the Borrowers and the Subsidiaries contained in this Credit
Agreement, the other Loan Documents or in any document or instrument
delivered pursuant to or in connection with this Credit Agreement shall be
true and correct, in all material respects, as of the date as of which they
were made and shall also be true and correct, in all material respects, at
and as of the time of the making of such Loan or issuance of Letter of
Credit, with the same effect as if made at and as of that time (except to
the extent of changes resulting from transactions contemplated or permitted
by this Credit Agreement and the other Loan Documents, or to the extent
that such representations and warranties relate expressly to an earlier
date) and (ii) no Event of Default or other event which, with the giving of
notice or passage of time, would constitute an Event of Default shall have
occurred and be continuing. Each notice of request for borrowing by the
Borrowers hereunder and each issuance of a Letter of Credit shall
constitute a representation and warranty that all conditions precedent set
forth in Section 10 and 11 have been satisfied, as of the date of such
borrowing or Letter of Credit.
ss.11.2. Loan Request. The Agent shall have received a Loan
Request in the form required by ss.2.7.
ss.11.3. No Legal Impediment. No change shall have occurred in
any law or regulations thereunder or interpretations thereof that in the
reasonable opinion of any Lender would make it illegal for such Lender to
make such Loan.
ss.11.4 Due Diligence Complete. Before the Agent has any
obligation to make any Loan to the Borrowers, the Borrowers shall have
provided to the Agent copies of its constituent organizational documents,
evidence of its continued legal existence, evidence of its compliance with
the representations, warranties and covenants contained in this Credit
Agreement, with opinions as to the due authorization, execution and
delivery and enforceability of the Loan Documents with respect to such
Borrowers, and such other information as the Agent may reasonably require
of such Borrowers.
ss.11.5 No Material Adverse Change. On and as of the date of such
Loan or the issuance of any Letter of Credit, no material adverse change
shall have occurred with respect to the condition (financial or otherwise),
results of operations, business, operations, capitalization, assets or
liabilities of any Borrower, or any Subsidiary of any Borrower since the
Closing Date.
ss.11.6 Field Audit. Within ninety (90) days of the Closing Date,
the Lenders shall have completed their field audits relating to the
Borrowers and the Collateral and shall have found the results acceptable to
them.
ss.11.7 Environmental Site Assessment. On or before June 1, 2000,
the Lenders shall, have received a phase I environmental site assessment of
the Real Estate (the "Phase I"), which shall be at the Borrowers' expense
and be acceptable to the Lenders in their sole discretion. If the Phase I
recommends additional audits or testing or provides evidence or information
which suggests that potential environmental problems exist on the Real
Estate, the Lenders may, require that a full or supplemental environmental
inspection and audit report with respect to the Real Estate of a scope and
level of detail satisfactory to the Lenders be prepared by an environmental
engineer, at the Borrower's expense. If said report or inspection indicates
the presence of any Hazardous Substance (which is not in material
compliance with Environmental Laws and Permits) or a Release (which is not
in material compliance with Environmental Laws and Permits) or the threat
of a Release (which is not in material compliance with Environmental Laws
and Permits) on, at or from the Real Estate, the Borrowers shall promptly
undertake and diligently pursue to completion all necessary and appropriate
investigative, containment, removal, clean up and other remedial actions,
using methods recommended by the engineer or other person who prepared said
audit report or such other actions or methods acceptable to the Lenders.
Notwithstanding the foregoing, if the Borrower receives written notice from
the Agent (after the Agent receives the foregoing environmental reports)
that the Real Estate is not acceptable to the Required Lenders, the
Borrowers will not be required to pursue the remediation of the Real Estate
and the Term Loan shall be due and payable within ninety (90) days of the
date of said written notice unless the Borrowers provide the Agent with
other collateral acceptable to the Required Lenders in their sole
discretion. Failure to comply with the foregoing shall constitute an Event
of Default under the Loan Documents.
ss.11.8 Appraisal. On or before April 30, 2000, the Lenders shall
have received a full appraisal of the Real Estate indicating a value of not
less than Twenty Million Dollars ($20,000,000) and in form and substance
acceptable to the Lenders in their sole discretion.
ss.12. THE AGENT.
ss.12.1. Appointment, Powers and Immunities. Each Lender hereby
irrevocably appoints and authorizes the Agent to act as its agent hereunder
and under each of the Loan Documents specifically delegated to the Agent by
the terms of this Credit Agreement and the Loan Documents, together with
such other powers as are reasonably incidental thereto. The Agent (which
term as used in this sentence and in ss.12.5 and the first sentence of
ss.12.6 shall include reference to its Affiliates and the respective
officers, directors, employees and agents of the Agent and its Affiliates):
(a) shall have no duties or responsibilities except those expressly set
forth in this Credit Agreement to be a trustee for any Lender; (b) shall
not be responsible to the Lenders for any recitals, statements,
representations or warranties contained in this Credit Agreement, or in any
certificate or other document referred to or provided for in, or received
by any of them under, this Credit Agreement, or for the value, validity,
effectiveness, genuineness, enforceability, perfection or sufficiency of
this Credit Agreement, any Note or any other document referred to or
provided for herein or for any failure by the Borrowers or any other Person
to perform any of its obligations hereunder or thereunder; (c) shall not be
required to initiate or conduct any litigation or collection proceedings
hereunder except to the extent requested by or consented to by the Required
Lenders; and (d) shall not be responsible for any action taken or omitted
to be taken by it hereunder or under any other document or instrument
referred to or provided for herein or in connection herewith, except for is
own gross negligence or willful misconduct. The Agent may employ agents and
attorneys-in-fact and shall not be responsible for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it with
reasonable care. Subject to the foregoing, the Agent shall, on behalf of
the Lenders, exercise any and all rights, powers and remedies of the
Lenders under this Credit Agreement and any other Loan Documents, including
the giving of any consent or waiver or the entering into of any amendment,
subject to the provisions of ss.25.
ss.12.2. Reliance by Agent. The Agent shall be entitled to rely
upon any certifications, notices or communications (including any
communications by telephone, telex, telegram or cable) believed by it to be
genuine and correct and to have been signed or sent by or on behalf of the
proper Person or Persons, and upon advice and statements of legal counsel,
independent accountants and other experts selected by the Agent. As to any
matters not expressly provided for by this Credit Agreement, the Agent
shall in all cases be fully protected in acting, or in refraining from
acting, hereunder in accordance with the instructions of the Lenders, and
any action taken or failure to act pursuant thereto shall be binding on all
of the Lenders.
ss.12.3. Defaults. The Agent shall not be deemed to have
knowledge of the occurrence of an Event of Default (other than the
nonpayment of principal of or interest on the Notes or the Reimbursement
Obligations under the Loan Documents) unless the Agent has received written
notice from any Borrower or another Lender specifying such Event of
Default. In the event that the Agent receives such a notice of the
occurrence of an Event of Default, the Agent shall give a notice thereof to
the Lenders (and shall give each Lender prompt notice of each such
nonpayment). The Agent shall (subject to the provisions of ss.2.5 and
ss.12.7) take such action with respect to such Event of Default as shall be
directed by the Lenders, provided that, unless and until the Agent shall
have received such directions, the Agent may (but shall not be obligated
to) take such action, or refrain from taking such action, with respect to
such Event of Default as it shall deem advisable and in the best interest
of the Required Lenders.
ss.12.4. Rights as a Lender. With respect to its Percentage Loans
made by it, Fleet Bank-NH, in its capacity as a Lender hereunder shall have
the same rights and powers hereunder as any other Lender and may exercise
the same as though it were not acting as the Agent, and the term "Lender"
or "Lenders" shall, unless the context otherwise indicates, include the
Agent in its individual capacity. The Agent and its Affiliates may (without
having to account therefor to any Lender) accept deposits from, (subject to
ss.7) lend money to and generally engage in any kind of banking, trust or
other business with the Borrowers or their Subsidiaries, as if the Agent
were not acting as the agent hereunder, and the Agent may accept fees and
other consideration from any of such Persons for services as the Agent or
otherwise without having to account for the same to the Lenders.
ss.12.5. Indemnification. The Lenders agree to indemnify the
Agent ratably in accordance with the aggregate principal amount of the
Notes held by the Lenders (or, if no such principal is at the time
outstanding, ratably in accordance with their respective Percentages), for
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind and nature
whatsoever which may be imposed on, incurred by or against the Agent in any
way relating to or arising out of this Credit Agreement or any of the other
Loan Documents or referred to herein or the transactions contemplated by or
referred to herein or therein (including the costs and expenses which the
Borrowers are obligated to pay but excluding, unless an Event of Default
has occurred and is continuing, normal administrative costs and expenses
incident to the performance of its agency duties hereunder) or the
enforcement of any of the terms of this Credit Agreement or of any such
other documents, provided that no Lender shall be liable for any of the
foregoing to the extent they arise from the gross negligence or willful
misconduct of the Agent.
ss.12.6. Non-Reliance on Agent and Other Lenders. Each Lender
agrees that it has, independently and without reliance on the Agent or any
other Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Borrowers and its own
decision to enter into this Credit Agreement and the other Loan Documents
and that it will, independently and without reliance upon the 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 analysis and decisions in
taking or not taking action under this Credit Agreement and the other Loan
Documents. The Agent shall not be required to keep itself informed as to
the performance or observance by the Borrowers of this Credit Agreement or
any other document referred to or provided for herein or to inspect the
properties or books of the Borrowers. Except for notices, reports and other
documents and information expressly required to be furnished to the Lenders
by the Agent hereunder, the Agent shall not have any duty or responsibility
to provide any Lender with any credit or other information concerning the
affairs, financial condition or businesses of the Borrowers which may come
into the possession of the Agent or any of its Affiliates. Notwithstanding
the foregoing, the Agent will use its best efforts to provide to the
Lenders any and all information reasonably requested by them and reasonably
available to the Agent promptly upon such request.
ss.12.7. Failure to Act. Except for action expressly required of
the Agent hereunder, the Agent shall in all cases be fully justified in
failing or refusing to act hereunder unless it shall 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.
ss.12.8. Resignation of Agent. Subject to the appointment and
acceptance of a successor Agent as provided below, the Agent may resign at
any time by giving notice thereof to the Lenders and the Borrowers. In the
event Agent's Percentage shall at any time be less than 20%, Agent shall
resign if requested by the other Lenders. Upon any such resignation, the
Lenders shall appoint a successor Agent which shall be reasonably
satisfactory to the Borrowers. If no successor Agent shall have been so
appointed by the Lenders and shall have accepted such appointment within 30
days after the retiring Agents giving of notice of resignation, then the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent
which shall be a lender which has a combined capital and surplus of at
least $500,000,000 and which shall be reasonably satisfactory to the
Borrowers. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties if the retiring
Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder. After the retiring Agent's resignation hereunder as
Agent, the provisions of this ss.12 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while
it was acting as the Agent.
ss.12.9. Cooperation of Lenders. Each Lender shall (a) endeavor
to and shall not be liable for any failure to promptly notify the other
Lenders and the Agent of any Event of Default known to such Lender under
this Credit Agreement and not reasonably believed to have been previously
disclosed to the other Lenders; and (b) provide the other Lenders and the
Agent with such information and documentation as such other Lender or the
Agent shall reasonably request in the performance of their respective
duties hereunder, including all information relative to the outstanding
balance of principal, interest and other sums owed to such Lender.
ss.12.10. Amendment of ss. l2. Each Borrower hereby agrees that
the provisions of this ss.12 (other than ss.12.8 and ss.12.11) generally
constitute an agreement among the Agent and the Lenders and that any and
all of the provisions of this ss.12 (other than ss.12.8 and ss.12.11) may
be amended at any time by the Lenders without the consent or approval of,
or notice to, any Borrower (other than the requirement of notice to
Borrowers of the resignation of the Agent and other than any provision in
addition to ss. 12.8 and ss. 12.11 to the extent that it directly affects
the Borrowers).
ss.12.11. Reliance. As to any consent that is granted or any other
action that is taken by the Agent hereunder, or under the Loan Documents,
the Borrowers shall be entitled to rely upon any of the foregoing granted,
delivered or taken by the Agent without the necessity of inquiring or
confirming the Agent's authority.
ss.13. SETOFF, ETC. Regardless of the adequacy of any Collateral, each
Borrower hereby grants to the Lenders, a lien, security interest and right
of setoff as security for all liabilities and Obligations to the Lenders,
whether now existing or hereafter arising, upon and against all deposits,
credits, collateral and property, now or hereafter in the possession,
custody, safekeeping or control of the Lenders or any entity under the
control of any of the Lenders or their Affiliates, or in transit to any of
them. At any time, without demand or notice, the Lenders may set off the
same or any part thereof and apply the same to any liability or Obligation
of the Borrowers and any Subsidiary even though unmatured and regardless of
the adequacy of any other collateral securing the loan. ANY AND ALL RIGHTS
TO REQUIRE THE LENDERS TO EXERCISE THEIR RIGHTS OR REMEDIES WITH RESPECT TO
ANY OTHER COLLATERAL WHICH SECURES THE LOANS PRIOR TO EXERCISING THEIR
RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF
THE BORROWER OR ANY SUBSIDIARY, ARE HEREBY KNOWINGLY, VOLUNTARILY AND
IRREVOCABLY WAIVED. The Lenders agree among themselves that, with respect
to all sums received by the Lenders applicable to the payment of principal
of or interest on the Notes, equitable adjustment will be made among the
Lenders so that, in effect, all such sums shall be shared ratably by each
of the Lenders whether received by voluntary payment, by the exercise of
the right of setoff or banker's lien, by counterclaim or cross-claim or by
the enforcement of any or all of the Notes. If any Lender receives any
payment on its Notes of a sum or sums in excess of its pro rata portion,
then such Lender receiving such excess payment shall purchase for cash from
the other Lenders an interest in their Notes in such amounts as shall
result in a ratable participation by each of the Lenders in the aggregate
unpaid amounts of the Notes then outstanding; provided, however, that if
all or any portion of such excess payment is thereafter recovered from such
Lender, the purchase shall be rescinded and the purchase price restored to
the extent of such recovery, but without interest.
ss.14. EXPENSES. Whether or not the transactions contemplated hereby shall
be consummated, each Borrower agrees to pay (a) the reasonable direct,
out-of-pocket costs of reproducing this Credit Agreement, the other Loan
Documents and the other agreements and instruments mentioned herein, (b)
any taxes (including any interest and penalties in respect thereto) payable
by the Lenders (other than taxes based upon the Lender's net income) on or
with respect to the transactions contemplated by this Credit Agreement (the
Borrowers hereby agreeing to indemnify the Lenders with respect thereto),
(c) the reasonable fees, expenses and disbursements of the Agent's counsel
incurred in connection with the preparation of the Loan Documents and other
instruments mentioned herein and the reasonable fees, expenses and
disbursements of the Agent's counsel and any local counsel to the Lenders
in connection, with any amendments, modifications, approvals, consents,
waivers or Replacement Lenders hereto or hereunder and (d) all reasonable
out-of-pocket expenses (including attorneys fees and costs for external
counsel to the Lenders and the allocated costs and disbursements of
internal counsel of the Lenders) incurred by the Lenders in connection with
(i) the enforcement of or preservation of rights under any of the Loan
Documents against Borrowers or the administration thereof after the
occurrence of an Event of Default or any event which, with the giving of
notice or passage of time or both, would constitute an Event of Default,
(ii) any replacement of a Lender pursuant to ss.17.4 and (iii) any
litigation, proceeding or dispute arising hereunder; provided, however,
that the Borrowers shall have no obligation to pay for the expenses of the
Agent or the Lenders to the extent such expenses result from the Agent's or
any Lender's gross negligence, fraud or willful misconduct.
ss.15. INDEMNIFICATION.
ss.15.1. General Indemnification. Each Borrower agrees to
indemnify and hold harmless each Lender from and against any and all
claims, actions and suits whether groundless or otherwise, and from and
against any and all liabilities, losses, damages and expenses of every
nature and character arising out of this Credit Agreement or any of the
other Loan Documents or the transactions contemplated hereby or thereby,
including (a) any actual or proposed use by the Borrowers of the proceeds
of any of the Loans, (b) any Borrower entering into or performing this
Credit Agreement or any of the other Loan Documents or (c) with respect to
any Borrower and its properties and assets, the violation of any
Environmental Law, the presence, disposal, escape, seepage, leakage,
spillage, discharge, emission, release or threatened release of any
Hazardous substances or any action, suit, proceeding or investigation
brought or threatened with respect to any Hazardous Substances (including,
but not limited to claims with respect to wrongful death, personal injury
or damage to property), in each case including the reasonable fees and
disbursements of counsel for the Agent, incurred in connection with any
such investigation, litigation or other proceeding; provided, however, that
the Borrowers shall not have any obligation to indemnify the Agent or the
Lenders for any liabilities, losses, damages or other expenses (i) incurred
in connection with any litigation commenced by any Borrower against the
Agent or any Lender, or by the Agent or any Lender against any Borrower,
which seeks enforcement of any rights hereunder or under any other Loan
Document and is determined adversely to the Agent or the Lenders in a final
non-appealable judgment or (ii) to the extent such liabilities, losses,
damages or other expenses result directly from the Agent's or any Lender's
gross negligence, fraud or willful misconduct. If, and to the extent that
the obligations of any Borrower under this ss.15 are unenforceable for any
reason, the Borrowers hereby agree to make the maximum contribution to the
payment in satisfaction of such obligations which is permissible under
applicable law.
ss.15.2. Foreign Currency Indemnification. Each Borrower waives,
to the extent it may lawfully do so, any right they may have in any
jurisdiction to pay any Loans in a currency other than the currency in
which such Loan is expressed to be payable under the Loan Documents (the
"Agreed Currency"). If a judgment or order is rendered by a court or other
tribunal of competent jurisdiction for the payment of amounts owing to the
Lenders under the Loan Documents and such order or judgment is expressed in
a currency other than the currency agreed to be paid under the Loan
Documents, or in the event that any payment is made in any currency other
than the Agreed Currency, each Borrower shall, to the extent permitted by
applicable law, indemnify and hold the Lenders harmless against any
deficiency arising from or resulting from any variation in rates of
exchange between (i) the rate at which any amount expressed in the Agreed
Currency is converted for purposes of such judgment, order or payment into
an equivalent amount of the payment currency, and (ii) the rate at which at
the time of payment of such amount pursuant to any Loan Document such
Agreed Currency could be purchased by the Agent with the payment currency
in the spot market in the place where such payment was to have been made.
ss.16. SURVIVAL OF COVENANTS. ETC. All covenants, agreements,
representations and warranties made herein, in any of the other Loan
Documents or in any documents or other papers delivered by or on behalf of
the Borrowers pursuant hereto shall be deemed to have been relied upon by
each Lender, notwithstanding any investigation heretofore or hereafter made
by and shall survive the making by the Lenders of the Loans, as herein
contemplated, and shall continue in full force and effect so long as any
amount due under this Credit Agreement or any of the other Loan Documents
remains outstanding or the Lenders have any obligation to make any Loans.
All statements contained in any certificate or other paper delivered to the
Lenders at any time by or on behalf of the Borrowers pursuant hereto shall
constitute representations and warranties as of the date thereof by the
Borrowers hereunder.
ss.17. ASSIGNMENT AND PARTICIPATION.
ss.17.1. Assignment by the Lenders. No Lender shall assign or
transfer any of its rights or obligations under any of the Loan Documents
(i) without the prior written consent of the Borrowers and the Agent, and
(ii) in amounts of less than $5,000,000 unless such Lender assigns its
entire remaining interest under the Loan Documents; provided, however, that
any Lender may, at any time and from time to time, sell, transfer, assign
or otherwise grant an interest in any Loan to a Subsidiary or any Affiliate
of such Lender or to a Federal Reserve Bank of the United States; and
provided, further, that upon the occurrence and during the continuance of
an Event of Default, no consent of the Borrowers shall be required to any
assignment. No assignment of any Lender's interest in the Loans or Loan
Documents shall be effective until the execution and delivery by the
assignee of a counterpart signature page to this Credit Agreement. The
Borrowers shall execute and deliver any Notes and other documents,
instruments and agreements required by the assignee Lender and the Agent to
effectuate such assignment. The assigning Lender shall pay to the Agent an
administrative fee in the amount of $3,500 at the time of such assignment,
in connection with and as a condition to the effectiveness of any such
assignment. Any Lender may at any time pledge all or any portion of its
rights under the Loan Documents including any portion of the Notes to any
of the twelve (12) Federal Reserve Banks organized under Section 4 of the
Federal Reserve Act, 12 U.S.C. Section 341. No such pledge or enforcement
thereof shall release the Lenders from their obligations under any of the
Loan Documents.
ss.17.2. Assignment by Borrowers. The Borrowers shall not assign
or transfer any of their rights or obligations under any of the Loan
Documents without the prior written consent of the Lenders.
ss.17.3. Participations by the Lenders. Any Lender may, without
the consent of Borrowers, the Agent or any other Lender, sell participating
interests to one or more banks or other entities (each a "Participant") in
all or a portion of such Lender's rights and obligations under this Credit
Agreement and the Loan Documents (including all or a portion of its
Commitment and the Loans owing to it); provided, however, that (i) such
Lender's obligations under this Credit Agreement shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) the Borrowers, the
Agent, and the other Lenders shall continue to deal solely and directly
with such Lender in connection with such Lender's rights and obligations
under this Credit Agreement and (iv) such participation shall be in an
amount of not less than $5,000,000. Any agreement or instrument pursuant to
which a Lender sells such a participation shall provide that such Lender
shall retain the sole right to enforce this Credit Agreement and to approve
any amendment, modification or waiver of any provision of this Credit
Agreement. Each Borrower agrees that each Participant shall be entitled to
the benefits of ss.4.5 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to ss.17.1.
ss.17.4. Replacement of Lender. In the event that any Lender
(other than the Agent in its capacity as a Lender) or, to the extent
applicable, any Participant (the "Affected Lender"):
(a) fails to perform its obligations to fund any portion of any
Loan or Letter of Credit on or after the Closing Date when required to do
so by the terms of this Credit Agreement, or fails to provide its portion
of any LIBOR Loan pursuant to ss.2 or on account of any legal requirement
as contemplated by ss.4.4; or
(b) refuses to consent to a proposed extension of the Maturity
Date that is consented to by all of the other Lenders; or
(c) refuses to consent to a proposed amendment, modification,
waiver or other action requiring consent of all of the Lenders under ss.25
that is consented to by Lenders owning at least 66% of the Percentages of
the Total Commitment;
then, so long as no Event of Default exists, the Borrowers shall have the
right to seek, at their own cost and expense, a replacement lender which is
reasonably satisfactory to the Agent and the Required Lenders (the
"Replacement Lender"). The Replacement Lender shall purchase the interests
of the Affected Lender in the Loans and its Commitment and shall assume the
obligations of the Affected Lender hereunder and under the other Loan
Documents upon execution by the Replacement Lender of an assignment
agreement in form and substance reasonably satisfactory to the Replacement
Lender and Affected Lender, and the tender by the Replacement Lender to the
Affected Lender of a purchase price agreed between the Replacement Lender
and the Affected Lender. Such assignment by any Affected Lender who has
performed its obligations hereunder shall be deemed an early termination of
any Loans to the extent of such Affected Lender's portion thereof, and the
Borrowers will pay to such Affected Lender any resulting amounts due under
ss.4.8. Upon consummation of such assignment, (i) the Replacement Lender
shall become party to this Credit Agreement as a signatory hereto and shall
have all the rights and obligations of the Affected Lender under this
Credit Agreement and the other Loan Documents with a Percentage equal to
the Percentage of the Affected Lender, (ii) the Affected Lender shall be
released from its obligations hereunder and under the other Loan Documents
and (iii) no further consent or action by any party shall be required.
Borrowers shall sign such documents and take such other actions reasonably
requested by the Replacement Lender to enable it to share in the benefits
of the rights created by the Loan Documents. Until the consummation of an
assignment in accordance with the foregoing provisions of this ss.17.4, the
Borrowers shall continue to pay to the Affected Lender any Obligations as
they become due and payable.
ss.18. FOREIGN LENDER. If any Lender is not incorporated or organized
under the laws of the United States of America or a state thereof, such Lender
shall deliver to and the Agent at the following:
(a) Two duly completed copies of United States Internal Revenue
Service Form 1001 or 4224 or successor form, as the case may be, certifying
in each case that such Lender is entitled to receive payments under this
Credit Agreement and the Notes without deduction or withholding of any
United States federal income taxes; provided, however, that if such Lender
is not a "bank" within the meaning of Section 881 (c)(3)(A) of the Code and
cannot deliver Form 100 br 4224, such Lender shall deliver to and the Agent
a certificate to such effect; and
(b) A duly completed Internal Revenue Service Form W-8 or W-9 or
successor form, as the case may be, to establish an exemption from United
States backup withholding tax.
Each such Lender that delivers to and the Agent a Form 1001 or
4224 and Form W-S or 9 pursuant to this ss. 18 further undertakes to
deliver to and the Agent two further copies of Form 1001 or 4224 and Form
W-8 or W-9, or successor applicable form, or other manner of certification,
as the case may be, on or before the date that any such form expires or
becomes obsolete or after the occurrence of any event requiring a change in
the most recent form previously delivered by it to and the Agent. Such
Forms 1001 or 4224 shall certify that such Lender is entitled to receive
payments under this Credit Agreement without deduction or withholding of
any United States federal income taxes. The foregoing documents need not be
delivered in the event any change in treaty, law or regulation or official
interpretation thereof has occurred which renders all such forms
inapplicable or which would prevent such Lender from delivering any such
form with respect to it, or such Lender advises 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. Until such time as and
the Agent have received such forms indicating that payments hereunder are
not subject to United States withholding tax or are subject to such tax at
a rate reduced by an applicable tax treaty, Borrowers shall withhold taxes
from such payments at the applicable statutory rate without regard to
ss.4.1(b).
ss.19. NOTICES, ETC. Except as otherwise expressly provided in this Credit
Agreement, all notices and other communications made or required to be
given pursuant to this Credit Agreement or the other Loan Documents shall
be in writing and shall be delivered in hand, mailed by United States
registered or certified first class mail, postage prepaid, sent by
overnight, or sent by telecopy, and confirmed by delivery via courier or
registered or certified first class mail, postage prepaid, addressed as
follows:
(a) if to Borrowers, at 44 Franklin Street, Nashua, New Hampshire
03064, Attention: John L. Patenaude, Chief Financial Officer, and at 250
South Northwest Highway, Park Ridge, Illinois 60068 Attn: ________________,
or at such other address for notice as Borrowers shall last have furnished
in writing to the Person giving the notice;
with a copy to: Mark N. Polebaum, Esquire
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
(b) if to the Agent in its capacity as Agent or as Lender, at 1155
Elm Street, Manchester, New Hampshire 03101, Attention: John A. Hopper,
Senior Vice President, or at such other address for notice as shall last
have furnished in writing to the Person giving the notice;
with a copy to: Camille Holton Di Croce, Esquire
Devine, Millimet & Branch, P.A.
111 Amherst Street
P.O. Box 719
Manchester, New Hampshire 03105
(c) if to any Lender, at such Lender's address as shown on its
signature page, with a copy to any Person designated thereon;
Any such notice or demand shall be deemed to have been duly given or made
and to have become effective (i) if delivered by hand, overnight courier or
facsimile (so long as a confirmation receipt is received) to a responsible
officer of the party to which it is directed, at the time of the receipt
thereof by such officer or the sending of such facsimile and (ii) if sent
by registered or certified first-class mail, postage prepaid, on the third
Business Day following the mailing thereof.
ss.20. GOVERNING LAW; JURISDICTION. This Agreement and the Loan Documents
shall be construed and their provisions interpreted under and in accordance
with the laws of the State of New Hampshire. The Borrowers and the
Subsidiaries, to the extent they may legally do so, hereby consent to the
jurisdiction of the courts of the State of New Hampshire and the United
States District Court for the State of New Hampshire, as well as to the
jurisdiction of all courts from which an appeal may be taken from such
courts for the purpose of any suit, action or other proceeding arising out
of any of their obligations hereunder or with respect to the transactions
contemplated hereby, and expressly waive any and all objections they may
have to venue in any such courts.
ss.21. HEADINGS. The captions in this Credit Agreement are for
convenience of reference only and shall not define or limit the provisions
hereof.
ss.22. COUNTERPARTS. This Credit Agreement and any amendment hereof may be,
executed in several counterparts and by each party on a separate
counterpart, each of which when so executed and delivered shall be an
original, and all of which together shall constitute instrument. In proving
this Credit Agreement it shall not be necessary to produce or account for
more than one such counterpart signed by the party against whom enforcement
is sought. The counterpart signature pages signed by each Lender hereto and
any Material Subsidiary are expressly agreed and acknowledged to be
integrated parts of this Credit Agreement.
ss.23. ENTIRE AGREEMENT, ETC. The Loan Documents and any other documents
executed in connection herewith or therewith express the entire
understanding of the parties with respect to the transactions contemplated
hereby and thereby. Neither this Credit Agreement nor any term hereof may
be changed, waived, discharged or terminated, except as provided in ss.25.
ss.24. WAIVER OF JURY TRIAL. EACH OF THE BORROWERS AND THE SUBSIDIARIES,
THE AGENT AND THE LENDERS HEREBY WAIVE ITS RIGHT TO A JURY TRIAL WITH
RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION
WITH THIS CREDIT AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, ANY RIGHTS
OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS
AND OBLIGATIONS. EXCEPT AS PROHIBITED BY LAW, AND, EXCEPT IN THE CASE OF
THE GROSS NEGLIGENCE, FRAUD, BAD FAITH OR WILLFUL MISCONDUCT OF THE AGENT
OR ANY LENDER, EACH OF THE BORROWERS AND THE SUBSIDIARIES HEREBY WAIVES ANY
RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION REFERRED TO IN THE
PRECEDING SENTENCE ANY SPECIAL EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES
OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. EACH BORROWER
AND EACH SUBSIDIARY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY
OF THE AGENT OR THE LENDERS HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
EACH OF THE AGENT AND THE LENDERS WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVERS AND (B) ACKNOWLEDGES THAT EACH OF THE
LENDERS HAVE BEEN INDUCED TO ENTER INTO THIS CREDIT AGREEMENT AND THE OTHER
LOAN DOCUMENTS TO WHICH IT IS A PARTY BY, AMONG OTHER THINGS, THE WAIVERS
AND CERTIFICATIONS CONTAINED HEREIN.
ss.25. CONSENTS, AMENDMENTS, WAIVERS, ETC. Except as otherwise expressly
provided in this Credit Agreement, any consent or approval required or
permitted by this Credit Agreement to be given by the Lenders or the Agent
may be given, and any term of this Credit Agreement or of any other
instrument related hereto or mentioned herein may be amended, and the
performance or observance by the Borrowers of any terms of this Credit
Agreement or such other instrument or the continuance of any Default or
Event of Default may be waived (either generally or in a particular
instance and either retroactively or prospectively) with, but only with,
the written consent of and the written consent of the Required Lenders.
Notwithstanding the foregoing, no amendment or waiver shall, without the
prior written consent of the Agent and all of the Lenders, (a) extend the
fixed maturity or reduce the principal amount of, or reduce the rate or
extend the time of payment of interest on, or reduce the amount or extend
the time of payment of any principal or interest of, any Note; (b) change
or waive the Total Commitment or Revolving Loan Commitment (other than
reductions in the Revolving Loan Commitments pursuant to ss.2.3) or
Percentage; (c) amend or waive this ss.25 or amend or waive the definition
of Required Lenders; (d) change or waive the amount or payment terms of
fees due hereunder; or (e) amend or waive any of ss.8 or ss.9.1(a), (f) or
(g) or ss.11. No waiver shall extend to or affect any obligation not
expressly waived nor impair any right consequent thereon. No course of
dealing or delay or omission on the part of the Lenders in exercising any
right shall operate as a waiver thereof or otherwise be prejudicial
thereto. No notice to or demand upon the Borrowers shall entitle the
Borrowers to other or further notice or demand in similar other
circumstances.
ss.26. CONFIDENTIALITY. No Lender will make any disclosure of
confidential information furnished to it by the Borrowers or any of
the Subsidiaries unless such information shall have become public, except:
(a) in connection with operations under or the enforcement of or
the protection of a Lender's interest in this Credit Agreement or any other
Loan Document to Persons who have a reasonable need to be furnished such
information;
(b) pursuant to any law, rule or statutory or regulatory
requirement or any court order, subpoena or other legal process;
(c) to any parent or corporate Affiliate of such Lender or to any
Participant, proposed Participant, assignee, proposed assignee, Replacement
Lender or proposed Replacement Lender; provided, however, that any such
Person shall agree to comply with the restrictions set forth in this ss.26
with respect to such information;
(d) to its directors, officers, employees, agents, independent
counsel, auditors and other professional advisors and consultants with an
instruction to such Person to keep such information confidential;
(e) to any other Lender and to the Agent and any successor Agent
or prospective successor Agent; and
(f) with the prior written consent of the Borrowers, to any other
Person.
ss.27. SEVERABILITY. The provisions of this Credit Agreement are severable
and if any one clause or provision hereof shall be held invalid or
unenforceable in whole or in part in any jurisdiction, then such invalidity
or unenforceability shall affect only such clause or provision, or part
thereof, in such jurisdiction, and shall not in any manner affect such
clause or provision in any other jurisdiction, or any other clause or
provision of this Credit Agreement in any jurisdiction.
ss.28. NATURE OF LENDER'S OBLIGATIONS. The Lenders' obligations to make
their respective Loans are several and not joint or joint and several. Any
Lender which is not in default in the performance of its obligations may, in
its discretion, assume the obligations of any other Lender which is in default.
WITNESS our hands and seals as of this 14th day of April, 2000.
WITNESS BORROWER:
NASHUA CORPORATION
/s/ Gregory Shaw By: /s/ John L. Patenaude
______________________________ ______________________________________
John L. Patenaude, Its Duly Authorized
Vice President-Finance and Chief
Financial Officer
RITTENHOUSE PAPER COMPANY
/s/ Gregory Shaw By: /s/ Gerald G. Garbacz
______________________________ ______________________________________
Gerald G. Garbacz, Its Duly Authorized
Chairman of the Board
RITTENHOUSE, L.L.C.
/s/ Gregory Shaw By: /s/ Gerald G. Garbacz
______________________________ ______________________________________
Gerald G. Garbacz, Its Duly Authorized
Chairman of the Executive Committee
AGENT:
FLEET BANK-NH
/s/ Gregory Shaw By: /s/ John A. Hopper
______________________________ ___________________________________
John A. Hopper, Its Duly
Authorized Senior Vice President
STATE OF NEW HAMPSHIRE
COUNTY OF HILLSBOROUGH
The foregoing instrument was acknowledged before me this 14th day
of April, 2000, by John L. Patenaude, the duly authorized Vice
President-Finance and Chief Financial Officer of NASHUA CORPORATION, a
Delaware corporation, on behalf of the same.
/s/ Laura S. Kaplan
-------------------------------------
Notary Public
My Commission Expires: January 19, 2005
Notary Seal
STATE OF NEW HAMPSHIRE
COUNTY OF HILLSBOROUGH
The foregoing instrument was acknowledged before me this 14th day
of April, 2000, by Gerald G. Garbacz, the duly authorized Chairman of the
Board of RITTENHOUSE PAPER COMPANY, an Illinois corporation, on behalf of
the same.
/s/ Laura S. Kaplan
-------------------------------------
Notary Public
My Commission Expires: January 19, 2005
Notary Seal
STATE OF NEW HAMPSHIRE
COUNTY OF HILLSBOROUGH
The foregoing instrument was acknowledged before me this 14th day
of April, 2000, by Gerald G. Garbacz, the duly authorized Chairman of the
Executive Committee of RITTENHOUSE, L.L.C., an Illinois limited liability
company, on behalf of the same.
/s/ Laura S. Kaplan
-------------------------------------
Notary Public
My Commission Expires: January 19, 2005
Notary Seal
STATE OF NEW HAMPSHIRE
COUNTY OF HILLSBOROUGH
The foregoing instrument was acknowledged before me this 14th day
of April, 2000, by John A. Hopper, the duly authorized Senior Vice
President, of Fleet Bank-NH, a bank organized under the laws of the State
of New Hampshire, on behalf of the same.
/s/ Laura S. Kaplan
-------------------------------------
Notary Public
My Commission Expires: January 19, 2005
Notary Seal
LENDER COUNTERPART SIGNATURE PAGE TO REVOLVING CREDIT AND TERM AGREEMENT
AMONG NASHUA CORPORATION, RITTENHOUSE PAPER COMPANY
AND RITTENHOUSE, L.L.C. AS BORROWER,
FLEET BANK-NH, AS AGENT
AND THE LENDERS
LENDER:
FLEET BANK-NH
/s/ Gregory Shaw By: /s/ John A. Hopper
______________________________ _________________________________
Witness John A. Hopper, Its Duly
Authorized Senior Vice President
Address for Notices:
Fleet Bank-NH
1155 Elm Street
Manchester, NH 03101
Attn: John A. Hopper, Senior Vice President
Telephone: (603) 647-7936
Telecopier: (603) 647-7617
STATE OF NEW HAMPSHIRE
COUNTY OF HILLSBOROUGH
The foregoing instrument was acknowledged before me this 14th day
of April, 2000, by John A. Hopper, the duly authorized Senior Vice
President, of Fleet Bank-NH, a bank organized under the laws of the State
of New Hampshire, on behalf of the same.
/s/ Laura S. Kaplan
-------------------------------------
Notary Public
My Commission Expires: January 19, 2005
Notary Seal
LENDER COUNTERPART SIGNATURE PAGE TO REVOLVING CREDIT AND TERM LOAN AGREEMENT
AMONG NASHUA CORPORATION, RITTENHOUSE PAPER COMPANY
AND RITTENHOUSE, L.L.C., AS BORROWER,
FLEET BANK-NH, AS AGENT
AND THE LENDERS
LENDER:
LASALLE BANK NATIONAL ASSOCIATION
/s/ Diane Waters By: /s/ Monika Casey
______________________________ _______________________________
Witness Monika Casey, Its Duly
Authorized Vice President
Address for Notices:
LaSalle Bank National Association
135 LaSalle Street
Chicago, IL 60603
Attn: Richard Bott
Telephone: (312) 904-2000
Telecopier: (312) 904-1706
with a copy to:
LaSalle Bank National Association
2355 South Arlington Heights Road
Suite 500
Arlington Heights, IL 60005
Attn: Monika Casey
Telephone: (847) 545-5413
Telecopier: (847) 545-5450
STATE OF NEW HAMPSHIRE
COUNTY OF HILLSBOROUGH
The foregoing instrument was acknowledged before me this 14th day
of April, 2000, by Monika Casey, the duly authorized Vice President, of
LaSalle Bank National Association, a national banking association, on behalf
of the same.
/s/ Diane Waters
-------------------------------------
Justice of the Peace/Notary Public
My Commission Expires: 1-14-2003
Notary Seal
COUNTERPART SIGNATURE PAGE TO REVOLVING CREDIT AND TERM LOAN AGREEMENT
AMONG NASHUA CORPORATION, RITTENHOUSE PAPER COMPANY
AND RITTENHOUSE, L.L.C. , AS BORROWER,
FLEET BANK-NH, AS AGENT
AND THE LENDERS
JOINDER OF MATERIAL SUBSIDIARY
The undersigned, being the Person named as a Material Subsidiary
pursuant to ss.7.13 of the Credit Agreement, hereby joins herein and agrees
to be legally and equitably bound by all of the terms, covenants,
warranties, representations, conditions and other provisions thereof, as of
the ____ day of April, 2000.
-----------------------------------
By: _______________________________
______________________, Its Duly
Authorized ____________________
Address for Notices:
____________________________________
____________________________________
STATE OF NEW HAMPSHIRE
COUNTY OF HILLSBOROUGH
The foregoing instrument was acknowledged before me this ____ day
of April, 2000, by _________________, the duly authorized
___________________, of _______________, a _____________________________,
on behalf of the same.
-------------------------------------
Justice of the Peace/Notary Public
My Commission Expires:_______________
Notary Seal
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") dated as of
April 14, 2000 by and between the Nashua Corporation, a Delaware
corporation ("Company" or "Nashua") and Andrew B. Albert ("Executive"), a
resident of Illinois. In consideration of the mutual agreements contained
herein, Nashua and Executive agree as follows:
ARTICLE I
DEFINITIONS
The terms set forth below have the following meanings (such
meanings to be applicable to both the singular and plural forms, except
where otherwise expressly indicated):
1.1 "Accrued Annual Bonus" means the amount of any Annual Bonus
earned but not yet paid with respect to any Fiscal Year ended prior to the
Date of Termination.
1.2 "Accrued Base Salary" means the amount of Executive's Base
Salary which is accrued but not yet paid as of the Date of Termination.
1.3 "Acquisition" means the purchase of substantially all of the
voting control of Rittenhouse Paper Company by the Company.
1.4 "Agreement" - see the introductory paragraph of this Agreement.
1.5 "Agreement Date" means the closing date of the Acquisition.
1.6 "Anniversary Date" means any annual anniversary of the
Agreement Date.
1.7 "Annual Bonus" - see Section 4.2.
1.8 "Base Salary" - see Section 4.1.
1.9 "Beneficiary" - see Section 9.7.
1.10 "Board" means the Board of Directors of the Company.
1.11 "Cause" means any of the following: (a) an action taken by the
Executive involving willful and intentional misconduct involving
specifically a wholly wrongful and unlawful act, or (b) the Executive being
convicted of a felony. For purposes of clause (a), Cause shall not include
any one or more of the following:
(i) bad judgment,
(ii) negligence,
(iii) any act or omission that Executive believed in good
faith to have been in or not opposed to the interest of the Company (without
intent of Executive to gain therefrom.
1.12 "Change of Control" For the purpose of this Agreement, a
"Change of Control" shall mean:
a. The acquisition, other than from the Company, by any
individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) (a "Person") of 30% or more of either
(i) the then outstanding shares of common stock of the company (the
"Outstanding Company Common Stock") or (ii) the combined voting power of
the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Company Voting Securities"),
provided, however, that any acquisition by (x) the Company or any of its
subsidiaries, or any employee benefit plan (or related trust) sponsored or
maintained by the Company or any of its subsidiaries or (y) any corporation
with respect to which, following such acquisition, more than 60% of,
respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election
of directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Company
Voting Securities immediately prior to such acquisition in substantially
the same proportion as their ownership, immediately prior to such
acquisition, of the Outstanding Company Common Stock and Company Voting
Securities, as the case may be, shall not constitute a Change of Control;
or
a. Individuals who, as of the date hereof, constitute
the Board (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board, provided that any individual becoming a
director subsequent to the date hereof whose election or nomination for
election by the Company's shareholders, was approved by a vote of at least
a majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial
assumption of office is in connection with an actual or threatened election
contest relating to the election of the Directors of the Company (as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act); or
b. Approval by the shareholders of the Company of a
reorganization, merger or consolidation (a "Business Combination"), in each
case, with respect to which all or substantially all of the individuals and
entities who were the respective beneficial owners of the Outstanding
Company Common Stock and Company Voting Securities immediately prior to
such Business Combination do not, following such Business Combination,
beneficially own, directly or indirectly, more than 60% of, respectively,
the then outstanding shares of common stock and the combined voting power
of the then outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation resulting
from Business Combination in substantially the same proportion as their
ownership immediately prior to such Business Combination of the Outstanding
Company Common Stock and Company Voting Securities, as the case may be; or
c. (i) a complete liquidation or dissolution of the
Company or (ii) sale or other disposition of all or substantially all of the
assets of the Company other than to a corporation with respect to which,
following such sale or disposition, more than 60% of, respectively, the then
outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the
election of directors is then owned beneficially, directly or indirectly,
by all or substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common Stock
and Company Voting Securities immediately prior to such sale or disposition
in substantially the same proportion as their ownership of the Outstanding
Company Common Stock and Company Voting Securities, as the case may be,
immediately prior to such sale or disposition.
1.13 "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
1.14 "Common Shares" means shares of the common stock, par value
$1.00, of the Company.
1.15 "Company" means Nashua.
1.16 "Date of Termination" means the date of the receipt of the
Notice of Termination by Executive (if such Notice is given by the Company)
or by the Company (if such Notice is given by Executive), or any later date,
not more than 15 days after the giving of such Notice, specified in such
notice; provided, however, that:
a. if Executive's employment is terminated by reason of
death, the Date of Termination shall be the date of Executive's death; and
b. if Executive's employment is terminated by reason of
Disability, the Date of Termination shall be the 30th day after Executive's
receipt of the physician's certification of Disability, unless, before such
date, Executive shall have resumed the full-time performance of Executive's
duties; and
c. if Executive terminates his employment without Good
Reason, the Date of Termination shall be the 30th day after the giving of
such Notice; and
d. if no Notice of Termination is given, the Date of
Termination shall be the last date on which Executive is employed by the
Company.
1.17 "Disability" means a mental or physical condition which
renders Executive unable or incompetent to carry out the material job
responsibilities which such Executive held or the material duties to which
Executive was assigned at the time the disability was incurred, which has
existed, or is expected to last, for at least six months. A determination
of disability shall be made by a physician mutually agreed upon by the
Company and Executive (which agreement neither party shall unreasonably
withhold); provided that if the Executive and the Company cannot agree on a
physician, the Executive and the Company shall each select a physician and
these two shall select a third physician, whose determination as to
disability shall be binding on all parties.
1.18 "Employment Period" - see Section 3.1.
1.19 "Executive" - see the introductory paragraph of this Agreement.
1.20 "Fiscal Year" means the fiscal year used in connection with
the preparation of the consolidated financial statements of the Company.
1.21 "Good Reason" means the occurrence of any one of the following
events unless Executive specifically agrees in writing that such event
shall not be Good Reason:
a. any material breach of the Agreement by the Company,
including:
(i) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position (including status,
offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 2.1 of this Agreement, or any
other action by the Company which results in a diminution in such position,
authority, duties or responsibilities, excluding for this purpose an
isolated, insubstantial and inadvertent action not taken in bad faith and
which is remedied by the Company within 10 days after receipt of notice
thereof given by the Executive;
(ii) any failure by the Company to comply with any of
the provisions of Sections 4.1 and 4.2 of this Agreement, other than an
isolated, insubstantial and inadvertent failure not occurring in bad faith
and which is remedied by the Company within 10 days after receipt of notice
thereof given by Executive;
(iii) until the third Anniversary Date, the Company's
requiring the Executive to be based at any office or location other than
that described in Section 2.1 hereof;
b. any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this
Agreement;
c. any failure of Executive to be nominated, appointed or
elected and to continue to be nominated, re-elected, or re-appointed as
President and Chief Operating Officer of the Company;
d. causing or requiring Executive to report to anyone
other than the Chief Executive Officer, Chairman of the Board and/or the Board;
or
e. the failure of either the Company to assign this
Agreement to a successor of the Company or failure of a successor of the
Company to expressly assume and agree to be bound by the Agreement.
For purposes of this Agreement, any good faith determination of Good Reason
made by the Executive shall be conclusive. A delay in the delivery of a
Notice of Termination or a failure by Executive to include in the Notice of
Termination any fact or circumstance which contributes to a showing of Good
Reason shall not waive any right of Executive under this Agreement or
preclude Executive from asserting such fact or circumstance in enforcing
rights under this Agreement.
1.22 "including" means including without limitation.
1.23 "Initial Grant" -- see Section 5.1.
1.24 "Nashua" - see the introductory paragraph of this Agreement.
1.25 "Notice of Termination" means a written notice given in
accordance with Section 9.13 which sets forth (a) the specific termination
provision in this Agreement relied upon by the party giving such notice, (b)
in reasonable detail the specific facts and circumstances claimed to provide
a basis for such Termination of Employment, and (c) if the Date of
Termination is other than the date of receipt of such Notice of
Termination, the Date of Termination.
1.26 "Restricted Common Share" means Common Shares whose vesting
and transferability is conditioned solely upon the continuation of
Executive's employment for a specified period of time following the date of
grant of such shares.
1.27 "Termination For Good Reason" means a Termination of Employment
by Executive for a Good Reason during the Employment Period.
1.28 "Termination of Employment" means a termination by the Company
or Executive of Executive's employment.
1.29 "Termination Without Cause" means a Termination of Employment
by the Company for any reason other than Cause or Executive's death or
Disability, whether during or after the Employment Period.
1.30 "Withholding Taxes" means any federal, state, provincial,
local or foreign withholding taxes and other deductions required to be paid
in accordance with applicable law by reason of compensation received
pursuant to this Agreement.
ARTICLE II
DUTIES
2.1 Duties. The Company shall employ Executive during the
Employment Period as its President and Chief Operating Officer and
Executive shall assume the authority, duties and responsibilities as are
commensurate and consistent with such position and title. It is
contemplated that, in connection with each annual meeting of shareholders
(or action by written consent in lieu thereof) of the Company during the
Employment Period, the shareholders of the Company will elect Executive to
the Board. Executive shall report solely to the Chief Executive Officer and
Chairman of the Board and the Board. Executive shall have broad discretion
and authority to manage and direct the operations of the Company, including
managing the label business including its consolidation after the closing
date of the Acquisition, actively participating in the paper business,
being a coordinator of the paper and label business, actively participating
with shareholder communications and establishing and maintaining business
relationships. Until the third Anniversary Date, Executive shall not be
required to maintain his principal office other than in Park Ridge,
Illinois or within a 20 mile radius thereof; provided that on and after the
third Anniversary Date, the Company may request that Executive relocate if
the Company reimburses Executive for all reasonable relocation expenses and
if Executive refuses, he shall be deemed to have a Termination of
Employment without Good Reason. During the Employment Period, and excluding
any periods of disability, vacation, or sick leave to which Executive is
entitled, Executive shall perform the duties properly assigned to him
hereunder, shall devote substantially all of his business time, attention
and effort during normal business hours to the affairs of the Company and
shall use his reasonable best efforts to promote the interests of the
Company.
2.2 Other Activities. Executive may serve on corporate, civic or
charitable boards or committees, deliver lectures, fulfill speaking
engagements or teach at educational institutions, and manage personal
investments; provided that such activities do not significantly interfere
with the performance of Executive's duties under this Agreement.
ARTICLE III
EMPLOYMENT PERIOD
3.1 Employment Period. Subject to the termination provisions
hereinafter provided, the term of Executive's employment under this
Agreement (the "Employment Period") shall begin on the Agreement Date and
end on the Anniversary Date which is five years after such date. The
employment of Executive by the Company shall not be terminated other than
in accordance with Article VII.
ARTICLE IV
COMPENSATION
4.1 Salary. The Company shall pay or cause to be paid to Executive
in accordance with its normal payroll practices (but not less frequently
than monthly) an annual salary at a rate of $350,000 per year ("Base
Salary"). During the Employment Period, the Base Salary shall be reviewed
at least annually and may be increased from time to time as shall be
determined by the Board, after consultation with Executive. Any increase in
Base Salary shall not limit or reduce any other obligation of the Company
to Executive under this Agreement. Base Salary shall not be reduced at any
time without the express written consent of Executive.
4.2 Annual Bonus.
a. The Company shall pay or cause to be paid to Executive
an annual cash bonus ("Annual Bonus") in accordance with the terms hereof for
each Fiscal Year which begins or ends during the Employment Period.
Executive shall be eligible for an Annual Bonus based upon target
performance goals (the "Target Annual Goals"), as determined by the Board
on an annual basis after consulting with Executive, which provides for the
payment of 50% of Executive's Base Salary ("Target Annual Bonus") upon the
Executive's achievement of the Target Annual Goals. The Target Annual Goals
shall be set by the Board within 90 days after the first day of the
applicable Fiscal Year or, in the case of the 2000 Fiscal Year, within the
first 120 days after the Agreement Date.
b. For the 2000 Fiscal Year, the amount of the Annual
Bonus shall equal a prorated portion of the Target Annual Bonus for 2000
(in an amount equal to the product of such Target Annual Bonus multiplied
by a fraction, the numerator of which is the number of days in 2000 during
which Executive is employed by the Company and the denominator of which is
365).
c. The Company shall pay or cause to be paid the entire
Annual Bonus that is payable with respect to a Fiscal Year in cash or in
freely-tradable Common Shares as soon as practicable after the Company can
determine whether and the degree to which Target Annual Goals have been
achieved following the close of such Fiscal Year. Any such Annual Bonus, if
earned and payable, shall in any event be paid within 90 days after the end
of the Fiscal Year.
ARTICLE V
STOCK GRANTS
5.1 Restricted Common Share Grant. The Company shall grant to
Executive, effective as of the Agreement Date 100,000 Restricted Common
Shares (the "Initial Grant") pursuant to the Company's 1999 Shareholder
Value Plan. The Initial Grant shall become exercisable and non-forfeitable
as to one-third of the total Initial Grant on each Anniversary Date;
provided that such Initial Grant shall become fully vested and
non-forfeitable before such date immediately upon the death or Disability
of Executive, or a Change of Control.
5.2 Adjustment of Initial Grant.
a. Executive shall be entitled to any dividends declared
on Common Shares whether payable in Common Shares or other securities as if
his Restricted Common Shares were not subject to restriction.
b. In the event of any change in the number or kind of
outstanding Common Shares by reason of any recapitalization,
reorganization, merger, consolidation, stock split or any similar change
affecting the Common Shares (other than a dividend payable in Common Shares
or other securities), the Company shall make an equitable adjustment in the
Restricted Common Shares so that, after such adjustment, the Initial Grant
shall represent a right to receive, upon vesting, the same consideration
(or if such consideration is not available, other consideration of the same
value) that Executive would have received in connection with such
recapitalization, reorganization, merger, consolidation, stock split or any
similar change if he had owned on the applicable record date a number of
Common Shares without restriction equal to the number of Restricted Common
Shares prior to such adjustment.
ARTICLE VI
OTHER BENEFITS
6.1 Stock Option, Restricted Stock and Other Equity Incentive
Plans. In addition to Base Salary and an Annual Bonus, Executive shall be
eligible to participate during the Employment Period in all stock option,
restricted stock and other equity incentive plans, practices, policies and
programs of the Company on a basis consistent with that of other senior
officers taking into account Executive's position and performance relative
to the position and performance of other senior officers. Notwithstanding
the foregoing, prior to the third Anniversary Date, the Company shall in
its discretion consider Executive for possible grants of equity
compensation or incentive awards but shall have no obligation to grant such
awards to Executive.
6.2 Benefits. Executive shall be entitled to participate in all
benefit, incentive and fringe benefit programs that the Company makes
available to its senior officers to the extent that his position, salary
and other qualifications makes him eligible to participate, including but
not limited to the Company's group life insurance, disability insurance and
the Nashua Supplemental Unfunded Excess Retirement Benefit Plan on a basis
consistent with that of other senior officers.
6.3 Vacation. During the Employment Period, Executive shall be
entitled to paid vacation time in accordance with the plans, practices,
policies, and programs applicable to other senior officers of the Company,
in accordance with their terms as in effect from time to time, but in no
event shall such vacation time be less than four weeks per calendar year.
6.4 Expenses. During the Employment Period, Executive shall be
entitled to receive prompt reimbursement for all reasonable
employment-related expenses incurred by Executive upon the receipt by the
Company of accounting in accordance with the Company's practices, policies,
and procedures in effect for senior officers from time to time.
6.5 Split Dollar Life Insurance. Company shall continue to pay or
cause to be paid (during and after the Employment Period) the life
insurance premiums for Executive's Split Dollar Life Insurance Policies
("Split Dollar Policy") to the same extent as Rittenhouse Paper Company
paid such premiums prior to the Agreement Date pursuant to the Split-Dollar
Insurance Agreement, date July 9, 1999 ("Split-Dollar Agreement"). Company
hereby assumes as successor to Rittenhouse Paper Company effective on the
closing date of the Acquisition the obligations and rights of Rittenhouse
Paper Company as regards to the Split Dollar Policy. The Split Dollar
Policy shall be maintained by the Company pursuant to the following terms:
a. Trustee (as such term is defined in the Split-Dollar
Agreement) shall retain and may exercise all incidents and rights of
ownership with respect to the Split Dollar Policy, except that:
(i) Executive's right to receive the cash surrender
value of the Split Dollar Policy shall be subject to the Refund Right (as
defined below); and
(ii) Trustee may not surrender, cancel, or borrow
upon the security of the Split Dollar Policy prior to collection by the Company
of the Refund Right pursuant to sub-Section (d) below unless Trustee
elects, in its sole discretion, at any time, to purchase the Company's
Refund Right by payment to the Company of the value of the Refund Right as
of the date of such purchase as calculated by the Insurance Company who
issued such Split Dollar Policy. Upon receipt of such payment, Company
shall release all rights to the Refund Right of the Split Dollar Policy and
Trustee and Executive shall have full ownership rights in the Split Dollar
Policy without limitation. The cash surrender value of the Split Dollar
Policy as of March 14, 2000, is $211,532.10. The insurance policy referred
to as the Split Dollar Policy as of March 14, 2000, is #2151450V issued by
Minnesota Life Insurance Company.
b. Executive shall not contribute to pay premiums on
the Split Dollar Policy. The Company shall pay, or cause to be paid, an
amount equal to the annual premium due to the Insurer. The payment of the
premium shall be made on or before the date the premium is due, in
accordance with the Split Dollar Agreement. The Trustee shall reimburse the
Company as provided in the Split-Dollar Agreement.
c. The Company shall have the specific, limited right to
receive from the insurer the Refund Right upon the first to occur of the
following events:
(i) Performance of the Split Dollar Policy terms,
following the death of Executive;
(ii) Termination of Employment due to Executive's
Disability;
(iii) Termination of Employment by Executive other
than for Good Reason or by Company for Cause; or
(iv) Eighteen months following a Termination Without
Cause or Termination For Good Reason, but less any severance payment not paid
by the Company pursuant to Section 7.3.
d. The "Refund Right" for purposes of this Section means
an amount equal to the total premiums paid by Rittenhouse Paper Company and
the Company on the Split Dollar Policy, less any portion of such premiums
treated as taxable income to Executive and reimbursed by the Trustee, and
less amounts set forth in the Split-Dollar Agreement.
ARTICLE VII
TERMINATION BENEFITS
7.1 Termination for Cause or Other Than for Good Reason, etc.
a. If the Company terminates Executive's employment for
Cause or Executive terminates his employment other than for Good Reason,
death or Disability at any time 30 days after giving Notice of Termination,
the Company shall pay to Executive immediately after the Date of
Termination an amount equal to the Executive's Accrued Base Salary.
b. The Company may not terminate Executive's employmen
for Cause unless the Board makes a good faith finding that Executive's
employment should be terminated for Cause because the acts or omissions
alleged to constitute Cause did in fact occur and do constitute Cause as
defined in this Agreement.
7.2 Termination for Death or Disability. If, before the end of the
Employment Period, Executive's employment terminates due to his death or
Disability, the Company shall pay to Executive or his Beneficiaries, as the
case may be, immediately after the Date of Termination an amount which is
equal to eighteen months of Executive's Base Salary, less applicable
Withholding Taxes.
7.3 Termination Without Cause or for Good Reason. In the event of a
Termination Without Cause or a Termination for Good Reason during the
Employment Period, Executive shall receive the following:
a. within thirty days after the Date of Termination, a
lump sum amount in immediately available funds equal to the sum of
Executive's Accrued Base Salary, Accrued Annual Bonus and prorated Annual
Bonus for the Fiscal Year of termination through the Date of Termination,
less applicable Withholding Taxes;
b. within thirty days after the Date of Termination, a
lump sum amount in immediately available funds equal to eighteen months of
Executive's Base Salary, less applicable Withholding Taxes;
c. if at any time prior to the Executive's Date of
Termination any senior officer of the Company has an agreement pursuant to
which part or all of such officer's equity interests in the Company becomes
fully vested and nonforteitable if the officer has a termination not for
cause, a termination for "good reason" or a constructive termination, the
Executive shall become fully vested and nonforfeitable in all of his
Restricted Common Shares, within five business days after the Date of
Termination and the Company shall deliver to Executive all of such shares
theretofore held by or on behalf of the Company.
7.4 Termination after a Change of Control. If the Executive's
employment terminates for any reason other than Cause after a Change of
Control, he shall be entitled to:
a. a lump sum payment in immediately available funds equal
to three years Base Salary, less applicable Withholding Taxes, payable within
30 days after the Termination Date;
b. a lump sum payment in immediately available funds equal
to three years Annual Bonus, less applicable Withholding Taxes, based on
the average of the Annual Bonuses paid or payable to Executive in respect
of the three most recent Fiscal Years ended on or before the Change of
Control. If Executive has not been eligible for an Annual Bonus for three
full Fiscal years, the Annual Bonus paid or payable with respect to any
partial Fiscal Year shall be annualized and the average shall be determined
based upon the Fiscal Years for which an Annual Bonus was paid or payable.
If an Annual Bonus has not been paid and is not payable to Executive as of
the date of the Change of Control, for purposes of this Section 7.4(b) the
Annual Bonus shall be 50% of the Executive's Base Salary;
c. Executive shall immediately become fully vested in all
of Executive's Restricted Common Shares, within five business days after
the Date of Termination and the Company shall deliver to Executive all of
such shares theretofore held by or on behalf of the Company.
d. Within thirty days after the Date of Termination, a
lump sum amount in immediately available funds equal to the sum of
Executive's Accrued Base Salary and Accrued Annual Bonus.
7.5 Other Rights. This Agreement shall not prevent or limit
Executive's continuing or future participation in any benefit, bonus,
incentive or other plan, program or policy provided by the Company and for
which Executive may qualify, nor shall this Agreement limit or otherwise
affect such rights as Executive may have under any other agreements with
the Company. Amounts which are vested benefits or which Executive is
otherwise entitled to receive under any plan, program or policy and any
other payment or benefit required by law at or after the Date of
Termination shall be payable in accordance with such plan, program or
policy or applicable law except as expressly modified by this Agreement.
ARTICLE VIII
COVENANTS
8.1 Non-Compete and Non-Solicitation.
a. During the Employment Period and for a period of twelve
(12) months after the Date of Termination or expiration of the Agreement,
for any reason, Executive will not directly or indirectly:
(i) as an individual proprietor, partner,
stockholder, officer, employee, director, joint venturer, investor, lender,
or in any other capacity whatsoever (other than as the holder of not more
than one percent (1%) of the total outstanding stock of a publicly held
company), engage in the business of developing, producing, marketing or
selling products of the kind or type developed or being under active
development or produced, marketed or sold by the Company during the most
recent 12 months while Executive was employed by the Company; or
(ii) recruit, solicit, induce, or hire or attempt to
hire or induce, any employee or employees of the Company to terminate their
employment with, or otherwise cease their relationship with, the Company;
or
(iii) hire any prior employee of the Company whose
employment has ceased within six (6) months prior to the date of such
solicitation; or
(iv) solicit, divert or take away, or attempt to
divert or to take away, the business or patronage of any of the clients,
customers or accounts, or prospective clients, customers or accounts, of
the Company which were such during the most recent 12 months of Executive's
employment prior to the Date of Termination or expiration of the Agreement.
b. If any restriction set forth in this Section 8.1 is
found by any court of competent jurisdiction to be unenforceable because it
extends for too long a period of time or over too great a range of
activities or in too broad a geographic area, it shall be interpreted to
extend only over the maximum period of time, range of activities or
geographic area as to which it may be enforceable.
c. The restrictions contained in this Section 8.1 are
necessary for the protection of the business and goodwill of the Company
and are considered by Executive to be reasonable for such purpose.
Executive agrees that any breach of this Section 8.1 will cause the Company
substantial and irrevocable damage and therefore, in the event of any such
breach, in addition to such other remedies which may be available, the
Company shall have the right to seek specific performance and injunctive
relief without posting a bond or other security.
8.2 Proprietary Information.
a. Executive agrees that all information, whether or not
in writing, of a private, secret or confidential nature concerning the
Company's business or financial affairs (collectively, "Proprietary
Information") is and shall be the exclusive property of the Company. By way
of illustration, but not limitation, Proprietary Information may include
inventions, products, processes, methods, techniques, formulas,
compositions, compounds, projects, developments, plans, research data,
clinical data, financial data, personnel data, computer programs, and
customer and supplier lists. Executive will not disclose any Proprietary
Information to others outside the Company or use the same for any
unauthorized purposes without written approval by the Board, either during
or after Executive's employment, unless and until such Proprietary
Information has become public knowledge without fault by Executive.
b. Executive agrees that all files, letters, memoranda,
reports, records, data, sketches, drawings, laboratory notebooks, program
listings, or other written, photographic, or other tangible material
containing Proprietary Information, whether created by Executive or others,
which shall come into Executive's custody or possession, shall be and are
the exclusive property of the Company to be used by Executive only in the
performance of Executive's duties for the Company.
c. Executive agrees that Executive's obligation not to
disclose or use information, know-how and records of the types set forth in
paragraphs (a) and (b) above, also extends to such types of information,
know-how, records and tangible property of customers of the Company or
suppliers to the Company or other third parties who may have disclosed or
entrusted the same to the Company or to Executive in the course of the
Company's business.
8.3 Developments.
a. Executive will make full and prompt disclosure to the
Company of all inventions, improvements, discoveries, methods,
developments, software, and works of authorship, whether patentable or not,
which are created, made, conceived or reduced to practice by Executive or
under Executive's direction or jointly with others during Executive's
employment by the Company, whether or not during normal working hours or on
the premises of the Company (all of which are collectively referred to in
this Agreement as "Developments").
b. Executive agrees to assign and does hereby assign to
the Company (or any person or entity designated by the Company) all
Executive's right, title and interest in and to all Developments and all
related patents, patent applications, copyrights and copyright
applications, and any similar right existing under judicial or statutory
law of any country in the world, or under any treaty (collectively, "moral
rights"), regardless of whether such right is denominated or generally
referred to as a moral right. However, this Section 8.3(b) shall not apply
to Developments which do not relate to the present or planned business or
research and development of the Company and which are made and conceived by
Executive not during normal working hours, not on the Company's premises
and not using the Company's tools, devices, equipment or Proprietary
Information.
c. Executive agrees to cooperate fully with the Company,
both during and after his employment with the Company (but after
Executive's Termination of Employment, he will be entitled to reimbursement
for any reasonably necessary out-of-pocket expenses), with respect to the
procurement, maintenance and enforcement of copyrights and patents (both in
the United States and foreign countries) relating to Developments.
Executive shall sign all papers, including, without limitation, copyright
applications, patent applications, declarations, oaths, formal assignments,
assignments of priority rights, and powers of attorney, which the Company
may deem necessary or desirable in order to protect its rights and
interests in any Development.
8.4 Mexico. Notwithstanding any provisions in the Agreement to the
contrary, Executive shall not be precluded from acting in the capacity of
an owner, director or officer of Rittenhouse Latino-America S.A. de C.V.
(Mexico) or in any aspect of its business.
ARTICLE IX
MISCELLANEOUS
9.1 Approvals. The Company represents and warrants to Executive
it has taken all corporate action necessary to authorize this Agreement and
to cause the transactions in the Restricted Common Shares contemplated by
this Agreement. Executive hereby represents that he is not bound by the
terms of any agreement with any previous employer or other party which
would impair his right or ability to enter the employ of the Company or
perform fully his obligations pursuant to this Agreement. Executive further
represents and warrants that his performance of all the terms of this
Agreement and as an employee of the Company does not and will not breach
any agreement to keep in confidence proprietary information, knowledge or
data acquired by him in confidence or in trust prior to his employment with
the Company.
9.2 Full Settlement. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including set-off,
counterclaim, recoupment, defense or other claim, right or action which
either the Company or its Affiliates may have against Executive or others.
Any claim which the Company may have against Executive, whether for a
breach of this Agreement or otherwise, shall be brought in a separate
action or proceeding and not as part of any action or proceeding brought by
Executive to enforce any rights against the Company under this Agreement.
The exclusive method for the Company to terminate its obligations to
provide compensation or benefits to Executive pursuant to Articles IV and
VI of this Agreement is to terminate Executive's employment in compliance
with all applicable substantive and procedural requirements of Sections
7.1, 7.2, 7.3 or 7.4 of this Agreement, as applicable, and to make the
payments and provide the benefits specified in this Agreement.
9.3 No Mitigation. In no event shall Executive be obligated to seek
other employment or take any other action to mitigate the amounts payable
to Executive under any of the provisions of this Agreement, nor shall the
amount of any payment hereunder be reduced by any compensation earned as a
result of Executive's employment by another employer.
9.4 Enforcement. If Executive incurs legal, accounting, expert
witness or other fees, costs or expenses in an effort to secure, preserve,
establish entitlement to, or obtain compensation or benefits under this
Agreement, the Company shall on a monthly basis, reimburse Executive for
such fees and expenses (regardless of the outcome thereof). If the Company
fails to pay any amount due under this Agreement within ninety days of
written notice by Executive to the Company that such amount is due and
unpaid, the Company shall pay interest compounded monthly on such amount at
a rate equal to the prime commercial lending rate announced by The Wall
Street Journal in effect from time to time during the period of such
nonpayment beginning with the end of the ninety day notice period.
9.5 Indemnification. The Executive shall be indemnified by the
Company as provided in the Indemnification Agreement attached hereto as
Exhibit A.
9.6 Insurance. The Company shall provide directors and officers
insurance coverage to Executive during the period beginning on the
Agreement Date and ending on the sixth anniversary of the Date of
Termination, such coverage (including deductible and exclusions) shall be
not less than the highest coverage level offered to any senior executive of
the Company, in accordance with the coverage terms as in effect from time
to time and appropriate for a company the same size as the Company.
9.7 Beneficiary. If Executive dies prior to receiving all of the
amounts payable to him in accordance with the terms and conditions of this
Agreement, such amounts shall be paid to the beneficiary ("Beneficiary")
designated by Executive in writing to the Company during his lifetime, or
if no such Beneficiary is designated, to Executive's estate. Such payments
shall be made in a lump sum to the extent so payable and, to the extent not
payable in a lump sum, in accordance with the terms of this Agreement. Such
payments shall not be less than the amount payable to Executive as if
Executive had lived to the date of payment and were the payee. Executive,
without the consent of any prior Beneficiary, may change his designation of
Beneficiary or Beneficiaries at any time or from time to time by submitting
to the Company a new designation in writing.
9.8 Parachute Tax. If a Change of Control shall have occurred
before the Date of Termination, the aggregate amount of "parachute
payments", as defined in Section 280G of the Code payable to the Executive
pursuant to all arrangements with the Company shall not exceed one dollar
less than three times the Executive's "base amount", as defined in Section
280G of the Code (the "cut back amount"); provided, however, that if
Executive would be better off by at least $25,000 on an after-tax basis by
receiving the full amount of the parachute payments as opposed to the cut
back amount (notwithstanding a 20% excise tax) the Executive shall receive
the full amount of the parachute payments. Notwithstanding the foregoing,
if the Company enters into an agreement with any senior officer pursuant to
which the officer is compensated or reimbursed for the 20% excise tax (the
"Parachute Tax Gross-Up"), the Company shall provide the Executive with the
most favorable Parachute Tax Gross-Up provided to any senior officer.
9.9 Assignment; Successors. The Company may not assign its
respective rights and obligations under this Agreement without the prior
written consent of Executive except to a successor of the Company's
business. This Agreement shall be binding upon and inure to the benefit of
Executive, his estate and Beneficiaries, the Company and the successors and
permitted assigns of the Company.
9.10 Non-alienation. Except as is otherwise expressly provided
herein, benefits payable under this Agreement shall not be subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, charge, garnishment, execution or levy of any kind, either
voluntary or involuntary, prior to actually being received by Executive,
and any such attempt to dispose of any right to benefits payable hereunder
shall be void.
9.11 Severability. If all or any part of this Agreement is declared
by any court or governmental authority to be unlawful or invalid, such
unlawfulness or invalidity shall not serve to invalidate any portion of
this Agreement not declared to be unlawful or invalid. Any provision so
declared to be unlawful or invalid shall, if possible, be construed in a
manner which will give effect to the terms of such provision to the fullest
extent possible while remaining lawful and valid.
9.12 Amendment; Waiver. This Agreement shall not be amended or
modified except by written instrument executed by the Company and
Executive. A waiver of any term, covenant or condition contained in this
Agreement shall not be deemed a waiver of any other term, covenant or
condition, and any waiver of any default in any such term, covenant or
condition shall not be deemed a waiver of any later default thereof or of
any other term, covenant or condition.
9.13 Notices. All notices hereunder shall be in writing and
delivered by hand, by nationally-recognized delivery service that
guarantees overnight delivery, or by first-class, registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:
If to the Company, to: Nashua Corporation
44 Franklin Street
P.O. Box 2002
Nashua, NH 03061-2002
Attention: Chairman of the Board
Facsimile no.: (603) 880-2747
With copy to: John K. P. Stone, III
Hale and Dorr LLP
60 State Street
Boston, MA 02109
If to Executive, to: Andrew B. Albert
(at his most recent home address or
facsimile number on file with the
Company)
With copy to: Roger C. Siske, Esq.
Sonnenschein Nath & Rosenthal
8000 Sears Tower
Chicago, Illinois 60606
Facsimile no.: (312) 876-7934
Either party may from time to time designate a new address by notice given
in accordance with this Section. Notice shall be effective when actually
received by the addressee.
9.14 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original, but all of
which together will constitute one and the same instrument.
9.15 Captions. The captions of this Agreement are not a part of
the provisions hereof and shall have no force or effect.
9.16 Entire Agreement. This Agreement forms the entire agreement
between the parties hereto with respect to the subject matter contained in
the Agreement and shall supersede all prior agreements, promises and
representations regarding employment, compensation, severance or other
payments contingent upon termination of employment, whether in writing or
otherwise.
9.17 Applicable Law. This Agreement shall be interpreted and
construed in accordance with the laws of the State of Delaware, without
regard to its choice of law principles.
9.18 Survival of Executive's Rights. All of Executive's rights
hereunder, including his rights to compensation and benefits, and his
obligations under Article VIII hereof, shall survive the termination of
Executive's employment or the termination of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on
the date first above written.
NASHUA CORPORATION
/s/ Gerald G. Garbacz
-------------------------
By:
Its:
EXECUTIVE
/s/ Andrew B. Albert
-------------------------
Andrew B. Albert
