"THIS DOCUMENT IS A COPY OF THE ANNUAL REPORT ON FORM 10-K
FILED ON JULY 2, 1996, PURSUANT TO A RULE 201 TEMPORARY
HARDSHIP EXEMPTION."
=================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended Commission file number
March 31, 1996 0-4095
--------------------
THOMAS NELSON, INC.
(Exact name of Registrant as specified in its charter)
Tennessee 62-0679364
(State or other jurisdiction of (I.R.S. employer
incorporation organization identification number)
Nelson Place at Elm Hill Pike, Nashville, Tennessee 37214-1000
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (615)889-9000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
- ------------------- ------------------------
Common Stock, Par Value $1.00 per share New York Stock Exchange
Class B Common Stock, Par Value $1.00 New York Stock Exchange
per share
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirement for the past 90 days. YES [X] NO [ ] <PAGE>
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of the registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
As of June 26, 1996, the Registrant had outstanding
16,006,183 shares of common stock and 1,112,075 shares of Class B
common stock. On such date the aggregate market value of shares
of common stock and Class B common stock held by nonaffiliates
was approximately $181.1 million. The market value calculation
was determined using the closing sales price of the Registrant's
common stock and Class B common stock on June 26, 1996, as
reported on The New York Stock Exchange, and assumes that all
shares beneficially held by executive officers and the Board of
Directors of the Registrant are shares owned by "affiliates", a
status which each of such officers and directors individually
disclaims.
=================================================================<PAGE>
<TABLE>
<CAPTION> DOCUMENTS INCORPORATED BY REFERENCE
Documents from which portions
Part of Form 10-K are incorporated by reference
- ------------------------------ -----------------------------
<S> <C> <C>
PART II
Item 5 - Market for Company's Page 41 of the Annual Report to
Common Equity and Shareholders for year ended
Related Shareholder March 31, 1996 (market price
Matters and dividend information only)
Item 6 - Selected Financial Page 16 of Annual Report to
Data Shareholders for year ended
March 31, 1996
Item 7 - Management's Page 17 to 21 of Annual Report to
Discussion and Shareholders for year ended
Analysis of Financial March 31, 1996
Condition and Results
of Operations
Item 8 - Financial Statements Page 22 to 40 of Annual Report to
and Supplementary Data Shareholders for year ended
March 31, 1996
PART III
Item 10 - Directors and Executive To be included in Company's Proxy
Officers of the Company Statement for the Annual Meeting
of Shareholders to be held
August 22, 1996, to be filed with
the Securities and Exchange
Commission pursuant to Regulation
14A under the Securities Exchange
Act of 1934, as amended.
Item 11 - Executive Compensation To be included in Company's Proxy
Statement for the Annual Meeting
of Shareholders to be held
August 22, 1996, to be filed with
the Securities and Exchange
Commission pursuant to Regulation
14A under the Securities Exchange
Act of 1934, as amended.
Item 12 - Security Ownership of To be included in Company's Proxy
Certain Beneficial Owners Statement for the Annual Meeting
and Management of Shareholders to be held
August 22, 1996, to be filed with
the Securities and Exchange
Commission pursuant to Regulation
14A under the Securities Exchange
Act of 1934, as amended.
Item 13 - Certain Relationships and To be included in Company's Proxy
Related Transactions Statement for the Annual Meeting
of Shareholders to be held
August 22, 1996, to be filed with
the Securities and Exchange
Commission pursuant to Regulation
14A under the Securities Exchange
Act of 1934, as amended.
</TABLE>
PART I
Item 1. BUSINESS
Thomas Nelson, Inc. (the "Company") is a leading publisher,
producer and distributor of books and recorded music emphasizing
Christian, inspirational and family value themes, and believes it
is the largest commercial publisher of the Bible in English
language translations. The Company also designs, manufactures
and markets a broad line of gift and stationery products. The
Company believes it is the largest publisher of Christian and
inspirational books and the largest producer of recorded
Christian music in the United States and the fourth largest
manufacturer of gift and stationery items in the world.
The Company, incorporated under the laws of the State of
Tennessee in 1961, has grown significantly over the last five
years through a combination of internal product development,
expanded product distribution and acquisitions. In November
1992, the Company acquired Word, Incorporated ("Word"), a leading
producer and publisher of Christian music with complementary
operations in Christian and inspirational book publishing. The
Company also has enhanced its position in the gifts products
market and related distribution channels through its March 1994
combination with PPC, Inc. ("Pretty Paper"), a designer and
manufacturer of gift products and collections, and through the
acquisition of The C.R. Gibson Company ("C.R. Gibson"), effective
October 31, 1995. C.R. Gibson, based in Norwalk, Connecticut, is
a leading designer, manufacturer and distributor of paper gift
products, including baby and wedding memory books, stationery,
gift wrap, greeting cards and other products.
During the fourth quarter of fiscal 1996, the Company
determined to discontinue its Royal Media division operations as
part of its business strategy to refocus its efforts and
resources on the growth of the Company's core businesses. The
Royal Media division was formed in fiscal 1995 to evaluate and
implement new initiatives in the use of alternative forms of
media and new distribution technologies to further capitalize on
the commercial potential of the Company's intellectual
properties. As a result of the termination of the Royal Media
operations, the Company incurred a net loss of approximately $4.7
million from discontinued operations for the fiscal year ended
March 31, 1996. <PAGE>
The following table sets forth the net revenues (in
thousands) and the percentage of total net revenues for each of
the Company's principal product lines for the periods indicated:
<TABLE>
<CAPTION>
Year Ended March 31,
--------------------------------------------
1996 1995 1994
--------------------------------------------
Amount % Amount % Amount %
--------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Publishing:
Book $ 88,334 28.6 $ 85,652 32.5 $ 76,988 34.2
Bible 73,555 23.9 60,214 22.8 53,212 23.6
--------------- -------------- ------------
Total
Publishing 161,889 52.51 45,866 55.31 30,200 57.8
Music 88,572 28.7 89,102 33.8 72,912 32.4
Gifts 54,790 17.8 25,337 9.6 19,926 8.8
Other 3,159 1.0 3,406 1.3 2,291 1.0
--------------- ------------ -----------
$308,410 100.0 $263,711 100.0 $225,329 100.0
================ ============= =============
</TABLE>
PUBLISHING
Books
The Company's book publishing division publishes and
distributes hardcover and trade paperback books emphasizing
Christian, inspirational and family value themes. The Company
believes it is the largest publisher of Christian and
inspirational books in the United States. Books are published by
the Company under the "Nelson" and "Word" imprints and consist
generally of inspirational and personal experience books, and
educational, trade and reference books emphasizing Christian,
inspirational and family value themes. The Company distributes
books primarily through Christian bookstores, general bookstores,
mass merchandisers and directly to consumers. The Company also
distributes books published by other companies to complement
their marketing and distribution capabilities. In fiscal 1996,<PAGE>
approximately 13% of the book division's net revenues related to
the distribution of books published by other companies.
In fiscal 1996, the Company published over 200 new titles
and, in each of the previous two fiscal years, published over 300
new titles. The Company publishes some of the most well-known
communicators in the Christian and inspirational field, including
Charles Colson, James Dobson, Billy Graham, Benny Hinn, Barbara
Johnson, Max Lucado, Frank Peretti, Pat Robertson, Robert
Schuller, Gary Smalley, Charles Stanley, Charles Swindoll, and
Bodie and Brock Thoene. The Company also publishes books
emphasizing positive and inspirational themes by famous athletes
and celebrities, such as Bobby Bowden, Hugh Downs, Joe Gibbs,
Evander Holyfield, Bill McCartney, Tom Osborn, Nolan Ryan and Zig
Ziglar. In each of the last three fiscal years, the Company
published over 50% of the top ten bestselling Christian and
inspirational books based on the monthly Bookstore Journal
Christian Hardcover Bestsellers' Lists. In addition, the Company
maintains a backlist of approximately 1,400 titles which provide
a stable base of recurring revenues as many popular titles
continue to generate significant sales from year to year.
Backlist titles accounted for approximately 55% of the book
division's net revenues in fiscal 1996. Authors and titles are
supported through the use of radio, television, cooperative
advertising, author appearances, in-store promotions, direct mail
catalogs, book clubs and other means.
The Company's book publishing business is enhanced by the
breadth and development of its marketing and distribution
channels. In addition to enhancing sales of its products, the
Company believes its ability to sign and renew contracts with
popular authors is improved because the Company's marketing and
distribution capabilities provide exposure for the authors' books
to a broader audience than its competitors. See "-Marketing,
Distribution and Production."
Bibles
The Company believes it is the largest commercial publisher
of English translations of the Bible. The Bible is based on
ancient manuscripts which are the surviving reproductions of the
original writings. These manuscripts, written in Hebrew, Aramaic
or Greek, have been translated into English and other modern
languages by biblical scholars and theologians, generally under
the auspices of a major Bible society or translation<PAGE>
organization. Each of the many English translations available
differs in some degree from the others, primarily because of
different translation guidelines and principles used as the basis
for each translation. The distinctiveness of each translation is
also, in part, a result of the evolution of the meaning and use
of words within the English language.
Virtually all Bibles and Bible products currently published
in the United States are based on one of ten major translations.
Of these ten translations, nine are protected by copyright laws
which grant the copyright owner the exclusive right, for a
limited term, to control the publication of such translation.
The Company publishes Bibles and Bible products based on nine of
the ten major translations, of which four are exclusive to the
Company as a result of copyright ownership or licensing
arrangements. See "-Copyrights and Royalty Agreements."
Approximately 70% of the Company's net revenues from Bible
publishing in fiscal 1996 were generated through sales of its
proprietary Bible products.
The following table sets forth the nine major Bible
translations currently published by the Company:
<TABLE>
<CAPTION>
Date First Proprietary
Translation Published to the Company
- ----------- ---------- --------------
<S> <C> <C>
King James Version (KJV) 1611 No
New American Bible (NAB) 1970 No
The Living Bible (TLB) 1971 No
New American Standard Bible (NAS) 1972 No
Today's English Version (TEV) 1976 Yes
New King James Version (NKJV) 1982 Yes
New Century Version (NCV) 1984 Yes
New Revised Standard Version (NRSV) 1990 No
Contemporary English Version (CEV) 1995 Yes
</TABLE>
The KJV, currently published in its fourth revision, is the
most widely distributed of all English translations of the Bible.
In 1975, the Company commissioned the fifth revision of the KJV
resulting in the publication of the NKJV in 1982. The monthly<PAGE>
Bookstore Journal consistently reports that the KJV, NKJV and NCV
are the second, third and fourth best selling Bible translations
in the United States, respectively. Among the Company's new
products is the CEV, translated under the auspices of the
American Bible Society, which is designed to be easy to read and
understandable at virtually any reading level. The new testament
portion of the CEV was first published by the Company in 1991 and
the complete CEV Bible was released in June 1995.
The Company continually seeks to expand its Bible product
line by developing or aiding in the development of new
translations and editions and seeking new publishing
opportunities. The Company also continually makes editorial,
design and other changes to its existing line of Bibles and other
Bible products in an effort to increase their marketability. The
Company currently publishes over 1,300 different Bibles and
biblical reference products such as commentaries, study guides
and other popular Bible help texts. Styles range from
inexpensive paperbacks to deluxe leather-bound Bibles. Different
editions of a particular Bible translation are created by
incorporating extra material, such as study helps, concordances,
indices and Bible outlines, or artwork, into the biblical text.
These editions (which are generally proprietary to the Company
regardless of whether or not the Company holds proprietary rights
to the underlying Bible translation) are targeted to the general
market or positioned for sale to specific market segments.
MUSIC
The Company believes it is the leading producer, distributor
and publisher of Christian and inspirational music in the United
States. The Company's music division produces a wide variety of
traditional and contemporary Christian and inspirational music,
such as gospel, praise and worship, and adult contemporary, as
well as pop, country, rock, rhythm and blues, rap and metal with
an emphasis on positive, inspirational and family value themes.
In addition, the music division produces master recordings of
classical music, the Bible on cassette, children's music and
video, and other products, and is a leading supplier of value
priced Christmas music to mass market, convenience and specialty
stores.
The Company produces recorded music and related products
under seven proprietary recording labels and in fiscal 1996
released 79 new titles. Each label is managed and operated by<PAGE>
its own staff within the music division. Over 50 recording
artists are currently under contract for future releases.
Artists produced by the Company include Anointed, Helen Baylor,
Shirley Caesar, Bryan Duncan, Amy Grant, Sandi Patty, Petra and
Point of Grace. In 1996, the Company's artists received 15 Dove
Awards, the Christian music industry's annual awards for
outstanding artists and releases sponsored by the Gospel Music
Association.
As is customary in the recording industry, contractual
arrangements with recording artists provide for the artist to
receive as a royalty a percentage of the suggested retail price
of recorded products sold. Most artists receive advance payments
against future royalties earned. The Company enters into
exclusive multi-record agreements with its recording artists.
During fiscal 1996, the Company renewed recording contracts with
all major artists whose contracts expired during the period.
The Company also distributes recordings for other companies
under their recording labels pursuant to exclusive distribution
agreements. Owners of these third party labels contract with the
Company for the distribution of products typically on an
exclusive basis to Christian markets worldwide. In fiscal 1996,
approximately 26% of the music division's net revenues were
attributable to products distributed under recording labels owned
or controlled by other companies.
In addition to producing and distributing recorded music,
the Company operates a music publishing business engaged in
songwriter development, print music publishing and copyright
administration. The Company has approximately 70 songwriters
under contract who write for the Company's recording artists and
for licensing to independent organizations for print and
recording products. Contracts in the music publishing business
range from exclusive songwriters' arrangements to co-publishing
agreements to copyright administration agreements. The Company
prints and distributes church hymnals, choral music, instrumental
music, vocal folios and solo tracks for churches and other
religious organizations. The copyright administration area
oversees the Company's music catalog of approximately 40,000
copyrighted songs which are licensed to independent publishers,
record companies, churches and other organizations.
GIFTS<PAGE>
The Company's gift division more than doubled in size during
fiscal 1996 through the acquisition of C.R. Gibson, and believes
it now is the fourth largest manufacturer of gift and stationery
products in the world. Current product lines offered by the
Company include journals and gift books, photo albums, baby and
wedding memory books, kitchen accessories, and stationery.
Products are marketed under the C.R. Gibson , Markings ,
Pretty Paper , Creative Papers , Stepping Stones and
Inspirations brand names, the latter of which incorporates
Christian and inspirational text or themes. Certain product
lines are marketed as collections, with each collection including
a variety of products featuring a common design or theme.
Designs include original art work designed in-house as well as
licensed from artists or design groups such as Waverly Fabrics
and Colonial Williamsburg.
The Company believes the gift division has significant
opportunities for growth as a result of the range of
complementary gift categories not offered currently and the
breadth of the Company's existing and potential distribution
channels. In addition to its product lines, the C.R. Gibson
acquisition provides the Company access to a dedicated sales
force of more than 100 representatives experienced in marketing
to the general gift department and specialty stores and C.R.
Gibson's manufacturing and distribution facilities.
MARKETING, DISTRIBUTION AND PRODUCTION
The principal market channels through which the Company
markets its products domestically are Christian bookstores, which
are primarily independently owned; general bookstores, including
national chains such as B. Dalton Booksellers and Waldenbooks;
mass merchandisers such as Target, K-Mart, WalMart and Sam's
Wholesale Club; and directly to consumers through direct mail,
telemarketing and book and record clubs. The Company also
markets its products through other market channels, such as gift,
specialty retail and convenience stores. The Company services
these market channels through its sales force, and through
wholesalers or jobbers servicing bookstores, gift stores,
convenience stores, other retail outlets and libraries. Certain
recorded music products are also distributed to the secular
markets pursuant to a domestic distribution agreement with a
major record distribution company. In addition, the Company
sells certain of its products for promotional purposes and sells<PAGE>
specially designed or imprinted products to certain customers.
The Company's direct marketing operations sell religious and
inspirational products directly to consumers through a variety of
direct marketing methods, including direct mail, continuity
programs (selling a series of products over time) and the
Company's book and record clubs. The Company's book and record
clubs include the Word Family Record and Tape Club, which has
approximately 250,000 members and features contemporary,
traditional and gospel music, and its Book Club, Children's
Record Club, Children's Book Club and Continuity Programs, which
have a combined membership of approximately 150,000 members. The
Company also sells products directly to churches and religious
organizations by direct mail and telemarketing. The Company
markets academic and contemporary books, hymnals, choral music,
trade books and recorded music to approximately 200,000 churches,
other religious organizations and pastors. Retail sales also are
made during the summer months on a door-to-door, cash sales basis
through a student sales organization operated by the Company.
As of March 31, 1996, the Company employed a sales force of
approximately 290 people and maintains 24-hour-a-day
telemarketing capability. These employees service over 50,000
retail accounts and 200,000 church accounts. Customer orders are
usually shipped through a variety of common carriers, as well as
by UPS, RPS and parcel post. No single customer accounted for
more than 10% of net revenues during fiscal 1996.
The Company contracts with a number of foreign publishers to
translate the Company's English titles to foreign languages. The
Company typically retains ownership rights to the titles
translated.
The Company distributes its products internationally in
South America, Europe, Australia, New Zealand, South Africa, the
Far East, Mexico and Canada. In fiscal 1996, the Company's
international and export operations accounted for approximately
8% of the Company's total net revenues.
Substantially all of the Company's book, Bible and music
products are manufactured by domestic and foreign commercial
printers, binders and manufacturers which are selected on the
basis of competitive bids. The Company may contract separately
for paper and certain other supplies used by its manufacturers.
The Company manufactures a significant portion of its gift<PAGE>
products and purchases its raw materials (e.g. paper, film and
boxes) from a wide group of suppliers.
COPYRIGHTS AND ROYALTY AGREEMENTS
The Company customarily secures copyrights on its books,
Bible editions and music in order to protect its publishing
rights. Almost all of the Company's books and music products are
published under royalty agreements with their respective authors
or other copyright proprietors. Many of the Company's gift
products incorporate copyrighted art work, which is licensed
directlyfrom theartistor theowning entityundera royaltyagreement.
COMPETITION
The Company believes that it is the largest publisher of
Christian and inspirational books, the largest commercial
publisher of Bibles in English language translations, the leading
producer, distributor and publisher of Christian and
inspirational music in the United States and the fourth largest
manufacturer of gift and stationery items in the world. The
publishing, music and gift divisions each compete with numerous
other companies that publish and distribute Christian and
inspirational books and/or music or manufacture and distribute
gift products, many of which have significantly longer operating
histories and larger revenue bases than the Company and certain
of which are tax-exempt organizations. While the Company's
prices are comparable to those of its competitors, the Company
believes that its breadth of product line, established market
channels, established sales forces and customer service, give it
a competitive advantage.
The most important factor with respect to the competitive
position of the Company's publishing and music divisions is the
contractual relationships it establishes and maintains with
authors and recording artists. The Company competes with other
book publishing, record and music publishing companies, both
Christian and secular, for signing top authors, artists and
songwriters, and for discovering new talent. The Company's
ability to sign and re-sign popular authors, recording artists
and successful songwriters depends on a number of factors,
including distribution and marketing capabilities, the Company's
management team and the royalty and advance arrangements offered.
The Company believes its relationships with its authors, artists
and songwriters, which are based on its reputation in the book<PAGE>
publishing, recording and music publishing industries, its
marketing experience and its management expertise give it a
competitive advantage in signing and maintaining contracts with
top Christian and inspirational authors, artists and songwriters.
The Company's gift division has many competitors with
respect to one or more of its product lines, but the Company
believes there are few competitors who manufacture and distribute
all of the Company's gift product lines. The gift division also
competes with numerous religious publishers and suppliers,
including tax-free church-owned organizations, in connection with
the sale of its church supply products, and with numerous large
and small companies in the production and sale of stationery
products, gift wrap and paper tableware.
EMPLOYEES
As of March 31, 1996, the Company employed approximately
1,680 persons. The Company has not suffered any work stoppages
as a result of labor disputes in recent years and considers
relations with its employees to be good.<PAGE>
MANAGEMENT
Officers of the Company are elected by the Board of
Directors and serve at the pleasure of the Board of Directors.
Following is certain information regarding the executive officers
of the Company:
<TABLE>
<CAPTION>
Name Age Position with the Company
<S> <C> <C>
Sam Moore 65 Chairman of the Board, Chief Executive Officer,
President and Director
S. Joseph Moore 33 Executive Vice President and Director; President,
Thomas Nelson Gift Division
Joe L. Powers 50 Executive Vice President and Secretary
Charles Z. Moore 62 Senior Vice President, International and
Diversified Markets
Ray Capp 43 Senior Vice President, Operations
Roland Lundy 46 President, Word Records and Music Division
Byron D. Williamson 50 President, NelsonWord Publishing Division
Vance Lawson 37 Vice President, Finance
Stuart A. Heaton 40 Vice President and General Counsel
Phyllis E. Williams 48 Treasurer
</TABLE>
Except as indicated below, each executive officer has been
an employee of the Company as his/her principal occupation for
more than the past five years.
Sam Moore has been Chairman of the Board, Chief Executive
Officer, President and a Director of the Company since its
founding in 1961.
S. Joseph Moore was appointed Executive Vice President and
Director of the Company in 1995 and President of the Thomas
Nelson Gift Division in 1996, and prior to such appointments, he
served as Divisional Vice President of the Company in various
capacities since 1991. S. Joseph Moore is the son of Sam Moore.
Joe L. Powers was appointed Executive Vice President of the
Company in 1995 and has been the Secretary of the Company since
1990. Previously, Mr. Powers served as a Vice President of the
Company since 1980.<PAGE>
Charles Z. Moore has been a Vice President of the Company
since 1983 and was appointed Senior Vice President, International
and Diversified Markets in 1986. Charles Moore is the brother of
Sam Moore.
Ray Capp was appointed Senior Vice President, Operations of
the Company in 1995. Prior to joining the Company, Mr. Capp was
the President and Chief Operating Officer of Ingram Merchandising
Services and Assistant to the Chairman of Ingram Distribution,
Inc. since 1992 and Executive Vice President and Chief Operating
Officer of Ingram Entertainment from 1987 to 1992.
Roland Lundy has been the President of the Company's Word
Records and Music Division since 1993. Mr. Lundy was formerly
President of Word from 1989 until Word was acquired by the
Company in November 1992.
Byron D. Williamson has been the President of the Company's
NelsonWord Publishing Division since 1995. Mr. Williamson was
formerly President of the Company's Word Publishing Division from
1993 to 1995 and Executive Vice President of the Word Publishing
Division of Word from 1988 until Word was acquired by the Company
in November 1992.
Vance Lawson has been the Vice President, Finance of the
Company since 1993. Mr. Lawson was formerly Vice President of
Finance and Operations at Word since 1988.
Stuart A. Heaton has been Vice President and General Counsel
of the Company since 1991. Previous to that time, Mr. Heaton
served as the Company's corporate counsel since 1989.
Phyllis E. Williams has been the Treasurer of the Company
since 1992. Mrs. Williams was previously Controller for the
Company since 1988.
Item 2. Properties
The Company's executive, editorial, sales and production
offices are primarily located at its corporate headquarters at
Nelson Place at Elm Hill Pike in Nashville, Tennessee. These
facilities are housed in a 74,000 square foot building completed
in 1981, which is owned by the Company subject to a mortgage
securing a debt with an outstanding balance at March 31, 1996 of
$2,075,000.<PAGE>
The Company's major warehouse facilities for its publishing
division are located in a building containing approximately
215,000 square feet adjacent to its corporate headquarters in
Nashville, Tennessee. This building which was completed in
fiscal 1978, is owned subject to a mortgage securing debt with an
outstanding balance at March 31, 1996 of $400,000. An addition
to the warehouse and distribution center, of approximately
120,000 square feet, was completed during fiscal 1993. This
addition was financed by a $5,000,000 construction and term loan
secured by a mortgage with an outstanding balance of $3,666,667
at March 31, 1996. The Company maintains other offices and
warehouse facilities for its music division in two locations in
Waco, Texas (of approximately 30,000 and 100,000 square feet
each) which are owned by the Company. The Company also has
offices, manufacturing and warehousing facilities for its gift
division in Beacon Falls, Guilford and Norwalk, Connecticut (of
approximately 112,000, 74,000 and 147,000 square feet,
respectively) which are owned by the Company. <PAGE>
The Company leases properties as described below:
<TABLE>
<CAPTION>
Square Annual Lease
Location Use Feet Rent Expiration
<S> <C> <C> <C> <C>
Miami, FL Editorial and sales
office 1,200 $ 17,500 8/97
Atlanta, GA Editorial office 800 $ 11,100 10/96
Carmel, IN Retail Store 12,500 $ 79,300 09/99
Cherryville,
NC Administrative 77,000 $ 78,000 4/98
Cherryville,
NC Warehousing 35,000 $ 60,000 12/96
Clifton, NJ Manufacturing 11,000 $ 46,800 10/98
Dallas, TX Editorial and sales
office 17,200 $211,400 12/99
King's Mountain,
NC Warehousing 15,000 $ 12,000 monthly
Nashville, TN Creation and sales
office 31,300 $366,500 11/98
Nashville, TN Creation and sales
office 34,400 $543,000 6/01
Nashville, TN Warehousing 85,000 $165,600 12/96
Norwalk, CT Warehousing 10,800 $ 72,000 monthly
Shelton, CT Warehousing 78,300 $313,200 01/99
Waco, TX Warehousing 168,000 $420,000 12/96
Richmond,
British Sales office and
Columbia warehousing 17,000 $ 84,200 06/99
(Canada)
Scarborough, Warehousing and office 18,500 $ 103,300 08/98
Ontario
(Canada)
Milton Keyes, Editorial and sales 25,000 $ 154,500 06/11
United Kingdom office
</TABLE>
All building improvements on the properties are brick
veneer, metal or block construction and are considered adequate
and suitable by the Company for the purpose for which they are
used.
The Company's machinery and equipment consists primarily of
computer equipment located in Nashville, Tennessee, Norwalk,
Connecticut and Waco, Texas; warehousing and shipping racks,
conveyors and other material handling equipment located at the<PAGE>
various warehousing and manufacturing facilities; and office
equipment. Such machinery and equipment are in good repair and
adequate for the Company's present operations. All such
equipment, other than a portion of the computer equipment which
is leased under capital leases, is owned by the Company.
The Company's physical properties are operated at
approximate capacity. Additional personnel are employed as
required.
Item 3. Legal Proceedings
The Company is subject to various legal proceedings, claims
and liabilities which arise in the ordinary course of its
business. In the opinion of management, the amount of ultimate
liability with respect to these actions will not materially
affect the financial position or results of operations of the
Company.
Item 4. Submission of Matter to a Vote of Security Holders
The Company did not submit any matter to a vote of its
security holders during the last quarter of its fiscal year ended
March 31, 1996.
Item 5. Market for Company's Common Equity and Related
Shareholder Matters
Incorporated by reference to the Annual Report to
Shareholders for the year ended March 31, 1996 (the "Annual
Report").
Item 6. Selected Financial Data
Incorporated by reference to the Annual Report.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Incorporated by reference to the Annual Report.
Item 8. Financial Statements and Supplementary Data
Incorporated by reference to the Annual Report. Includes<PAGE>
selected [unaudited] quarterly financial data for the years ended
March 31, 1996 and 1995.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Company
Information regarding the directors of the Company and
compliance with Section 16(a) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") is incorporated by
reference to the Company's Proxy Statement for the Annual Meeting
of Shareholders to be held on August 22, 1996 (the "Proxy
Statement"), to be filed within 120 days of March 31, 1996 with
the Securities and Exchange Commission (the "Commission")
pursuant to Regulation 14A under the Exchange Act. Information
regarding the Company's executive officers is contained in Part
1, Item 1 herein.
Item 11. Executive Compensation
Incorporated by reference to the Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
Incorporated by reference to the Proxy Statement.
Item 13. Certain Relationships and Related Transactions
Incorporated by reference to the Proxy Statement.<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
(a) Documents filed as part of Report
1. Financial Statements
The following consolidated financial statements of the Company
included in the Annual Report are incorporated [herein] by
reference as set forth in Part II, Item 8:
Statements of income -- years ended March 31, 1996, 1995
and 1994
Balance sheets -- March 31, 1996 and 1995
Statements of shareholders' equity -- years ended March 31,
1996, 1995 and 1994
Statements of cash flow -- years ended March 31, 1996, 1995
and 1994
Notes to [consolidated] financial statements
Report of Arthur Andersen LLP, Independent Public
Accountants
2. Financial Statement Schedules
The following consolidated financial statement schedules are
included herein:
Page
Report of Arthur Andersen LLP, Independent
Public Accountants . . . . . . . . . . . . . 19
Schedule VIII -- Valuation and Qualifying Accounts
and Reserves . . . . . . . . . . . . . . . . 20
Schedules not listed above have been omitted because they are
not required, inapplicable or the required information has been
given in the financial statements or notes thereto.
3. Exhibits
The following exhibits are included herein or incorporated by
reference as indicated. Exhibit numbers refer to Item 601 of
Regulation S-K.<PAGE>
Exhibit
Number
- --------
3.1 -- Thomas Nelson, Inc. Amended and Restated Charter (filed
as Exhibit 4.1 to the Company's Registration Statement
on Form S-8 (No. 33-80086) and incorporated herein by
reference)
3.2 -- Thomas Nelson, Inc. Amended Bylaws (filed as Exhibit
3(b) to the Company's Annual Report on Form 10-K for
the year ended March 31, 1990 and incorporated herein
by reference)
4.1 -- Loan Agreement dated December 1, 1976, between the
Company and The Industrial Development Board of
Metropolitan Government of Nashville and Davidson
County (filed as Exhibit 3 to the Company's Annual
Report on Form 10-K for the year ended March 31, 1977
and incorporated herein by reference)
4.2 -- Promissory Note dated December 1, 1976, of the Company
payable to The Industrial Development Board of the
Metropolitan Government of Nashville and Davidson
County (filed as Exhibit 4 to the Company's Annual
Report on Form 10-K for the year ended March 31, 1977
and incorporated herein by reference)
4.3 -- Deed of Trust and Security Agreement dated December 1,
1976, from the Company to SunTrust Bank, Nashville,
N.A. (filed as Exhibit 5 to the Company's Annual Report
on Form 10-K for the year ended March 31, 1977 and
incorporated herein by reference)
4.4 -- Loan Agreement dated May 18, 1990, between the Company
and The Industrial Development Board of The
Metropolitan Government of Nashville and Davidson
County (filed as Exhibit 4(e) to the Company's Annual
Report on Form 10-K for the year ended March 31, 1990
and incorporated herein by reference)
4.5 -- Promissory Note dated May 18, 1990, of the Company
payable to The Industrial Development Board of the
Metropolitan Government of Nashville and Davidson
County (filed as Exhibit 4(f) to the Company's Annual<PAGE>
Report on Form 10-K for the year ended March 31, 1990
and incorporated herein by reference)
4.6 -- Deed of Trust and Security Agreement dated May 18,
1990, from the Company to SunTrust Bank, Nashville,
N.A. (filed as Exhibit 4.6 to the Company's Annual
Report on Form 10-K for the year ended March 31, 1991
and incorporated herein by reference)
4.7 -- Construction and Term Loan Agreement dated March 31,
1992, between the Company and SunTrust Bank, Nashville,
N.A. (filed as Exhibit 4.7 to Company's Annual Report
on Form 10-K for the year ended March 31, 1992 and
incorporated herein by reference)
4.8 -- Promissory Note dated March 31, 1992, of the Company
payable to SunTrust Bank, Nashville, N.A. (filed as
Exhibit 4.8 to Company's Annual Report on Form 10-K for
the year ended March 31, 1992 and incorporated herein
by reference)
4.9 -- Deed of Trust and Security Agreement dated March 31,
1992, from the Company to SunTrust Bank, Nashville,
N.A. (filed as Exhibit 4.9 to Company's Annual Report
on Form 10-K for the year ended March 31, 1992 and
incorporated herein by reference)
4.10 -- Indenture dated as of November 30, 1992, by and between
Thomas Nelson, Inc. and Boatman's Trust Company (filed
as Exhibit 4 to the Company's Form 8-K dated December
11, 1992 and incorporated herein by reference)
4.11 -- Amended and Restated Credit Agreement dated as of
December 13, 1995, and as amended January 3, 1996,
among the Company, SunTrust Bank, Nashville, N.A.,
National City Bank of Louisville, First American
National Bank in Nashville, Nationsbank of Texas, N.A.
in Dallas, and Creditanstalt-Bankverein in New York
(filed as Exhibit 4.1 to the Company's Form 10-Q for
the quarter ended December 31, 1995 and incorporated
herein by reference)
4.12 -- June 1996 Amendment and Waiver with Respect to Amended
and Restated Credit Agreement Dated as of December 13,
1995, among the Company, SunTrust Bank, Nashville,<PAGE>
N.A., National City Bank of Louisville, First American
National Bank in Nashville, Nationsbank of Texas, N.A.
in Dallas, and Creditanstalt-Bankverein in New York
4.13 -- Note Purchase Agreement dated January 3, 1996, among
the Company, The Prudential Insurance Company of
America and Metropolitan Life Insurance Company (filed
as Exhibit 4.1 to the Company's Form 10-Q for the
quarter ended December 31, 1995 and incorporated herein
by reference)
4.14 -- Letter Amendment No. 1 dated June 28, 1996, to Note
Purchase Agreement dated January 3, 1996, among the
Company, The Prudential Life Insurance Company of
America and Metropolitan Life Insurance Company and
related waiver, dated as of March 31, 1996.
4.15 -- Assumption and Amendment Agreement dated as of May 30,
1996, and as amended June 28, 1996, between the Company
and Metropolitan Life Insurance Company
4.16 -- Loan Agreement dated as of September 21, 1989 between
C.R. Gibson and Metropolitan Life Insurance Company
(filed by C.R. Gibson as Exhibit 4(c) to The C.R.
Gibson Company's Registration Statement on Form S-2
(No. 33-43644) and incorporated herein by reference)
4.17 -- Loan Agreement dated as of June 23, 1994 between C.R.
Gibson and Metropolitan Life Insurance Company (filed
by C.R. Gibson (Commission File No. 0-4855) as Exhibit
4(b) to C.R. Gibson's Annual Report on Form 10-K for
the fiscal year ended December 31, 1994, filed with the
commission on March 14, 1995 and incorporated herein by
reference)
10.1 -- Tender Offer and Merger Agreement, dated as of
September 13, 1995, as amended by Amendment No.1, dated
as of October 16, 1995, among the Company, Nelson
Acquisition Corp. and Gibson (filed as Exhibits (c)(1)
and (c)(14) to the Company's joint Tender Offer
Statement on Schedule 14D-1/Schedule 13D filed
September 19, 1995, as amended, and is incorporated
herein by reference).
10.2 -- Thomas Nelson, Inc. Amended and Restated 1986 Stock<PAGE>
Incentive Plan (filed as Exhibit 4.4 to the Company's
Registration Statement on Form S-8 (No. 33-80086) and
incorporated herein by reference)*
10.3 -- Thomas Nelson, Inc. Amended and Restated 1990 Deferred
Compensation Option Plan for Outside Directors (filed
as Exhibit 4.5 to the Company's Registration Statement
on Form S-8 (No. 33-80086) and incorporated herein by
reference)*
10.4 -- Thomas Nelson, Inc. Amended and Restated 1992 Employee
Stock Incentive Plan (filed as Exhibit 4.6 to the
Company's Proxy Statement dated July 26, 1995, for the
Annual Meeting of Shareholders held on August 24, 1995
and incorporated herein by reference)*
10.5 -- Thomas Nelson, Inc. Sales Managers' Stock Plan for the
Varsity Company (filed as Exhibit 4.7 to the Company's
Registration Statement on Form S-8 (No. 33-80086) and
incorporated herein by reference)*
10.6 -- Severance Agreement dated as of May 17, 1991, between
the Company and Sam Moore (filed as Exhibit 10.6 to the
Company's Annual Report on Form 10-K for the year ended
March 31, 1991 and incorporated herein by reference)*
10.7 -- Employment Agreement dated as of May 13, 1996, between
the Company and Sam Moore*
10.8 -- Employment Agreement dated as of May 10, 1996, between
the Company and S. Joseph Moore*
10.9 -- Employment Agreement dated as of May 10, 1996, between
the Company and Joe L. Powers*
10.10-- Employment Agreement dated as of May 13, 1996, between
the Company and Charles Z. Moore*
10.11-- Employment Agreement dated as of May 17, 1993, between
the Company and Roland Lundy (filed as Exhibit 10.14 to
the Company's Annual Report on Form 10-K for the year
ended March 31, 1994 and incorporated herein by
reference)*
10.12-- Employment Agreement dated as of December 7, 1993,<PAGE>
between the Company and Byron Williamson (filed as
Exhibit 10.15 to the Company's Annual Report on Form
10-K for the year ended March 31, 1994 and incorporated
herein by reference)*
10.13-- Employment Agreement dated as of December 22, 1994,
between the Company and Raymond T. Capp (filed as
Exhibit 10.15 to the Company's Annual Report on Form
10-K for the year ended March 31, 1995 and incorporated
herein by reference)*
10.14-- Employment Agreement dated as of January 14, 1988, and
as amended July 17, 1991, between the Company and
Stuart A. Heaton (filed as Exhibit 10.13 to the
Company's Annual Report on Form 10-K for the year ended
March 31, 1992 and incorporated herein by reference)*
10.15-- Employment Agreement dated as of June 23, 1993, between
the Company and Vance Lawson (filed as Exhibit 10.13 to
the Company's Annual Report on Form 10-K for the year
ended March 31, 1994 and incorporated herein by
reference)*
11 -- Statement Re Computation of Per Share Earnings
13 -- Thomas Nelson, Inc. Annual Report to Shareholders for
the year ended March 31, 1996 (to the extent of
portions specifically incorporated by reference)
21 -- Subsidiaries of the Company
23 -- Consent of Independent Public Accountants
27 -- Financial Data Schedule (for SEC use only)
- -----------
*Management contract or compensatory plan or arrangement.<PAGE>
(b) Reports on Form 8-K
A Current Report of Form 8-K dated November 21, 1995 (the
"Form 8-K"), was filed by the Company on November 21, 1995. The
Form 8-K included information required pursuant to Item 2
thereunder relating to the acquisition by the Company of all of
the issued and outstanding capital stock of C.R. Gibson
consummated on November 7, 1995, in accordance with the terms of
the Tender Offer and Merger Agreement [included as Exhibit 10.1
herein]. Required financial statements and pro forma financial
information were not filed with the Form 8-K, in accordance with
applicable rules. The following financial statements and pro
forma financial information were filed on January 19, 1996, under
cover of a Form 8-K/A amending the Form 8-K:
1) The C.R. Gibson Company Consolidated Balance Sheets at
December 31, 1994 and 1993
2) The C.R. Gibson Company Consolidated Statements of
Operations for the years ended December 31, 1994 and
1993
3) The C.R. Gibson Company Consolidated Statements of Cash
Flows for the years ended December 31, 1994 and 1993
4) The C.R. Gibson Company Consolidated Statements of
Shareholders' Equity at December 31, 1994 and 1993
5) The C.R. Gibson Company Unaudited Condensed
Consolidated Balance Sheet at September 30, 1995
6) The C.R. Gibson Company Unaudited Condensed
Consolidated Statement of Income for the nine months
ended September 30, 1995
7) The C.R. Gibson Company Unaudited Condensed
Consolidated Statement of Cash Flows for the nine
months ended September 30, 1995
8) Thomas Nelson, Inc. and Subsidiaries Unaudited Pro
Forma Consolidated Balance Sheet at September 30, 1995
9) Thomas Nelson, Inc. and Subsidiaries Unaudited Pro
Forma Consolidated Statements of Income for the six
months ended September 30, 1995
10) Thomas Nelson, Inc. and Subsidiaries Unaudited Pro
Forma Consolidated Statements of Income for the six
months ended September 30, 1994
11) Thomas Nelson, Inc. and Subsidiaries Unaudited Pro
Forma Consolidated Statements of Income for the twelve
months ended March 31, 1995
(c) Exhibits - The response to this portion of Item 14 is<PAGE>
submitted [above] as a separate section of this report.
(d) Financial Statement Schedules - The response to this
portion of Item 14 is submitted [above] as a separate
section of this report.<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Company has duly caused this
report to be signed on its behalf by the undersigned, thereunto
duly authorized.
THOMAS NELSON, INC.
By: /s/ Sam Moore
Sam Moore, Chief Executive Officer and President
Date: June 28, 1996
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the Company and in
the capacities and on the dates indicated.
Signature Title Date
--------- ------ ------
/s/ Sam Moore Chairman of the Board June 28, 1996
- ------------------- of Directors, Chief
Sam Moore Executive Officer and
President (Principal
Executive Officer)
/s/ S. Joseph Moore Executive Vice President June 28, 1996
S. Joseph Moore and Director
/s/ Joe L. Powers Executive Vice President, June 28, 1996
Joe L. Powers Secretary (Principal
Financial and Accounting
Officer)
/s/ Brownlee O. Currey
Jr. Director June 28, 1996
Brownlee O. Currey, Jr.
/s/ W. Lipscomb Davis,
Jr. Director June 28, 1996
W. Lipscomb Davis, Jr. <PAGE>
/s/ Robert J. Niebel,
Sr. Director June 28, 1996
Robert J. Niebel, Sr.
/s/ Millard V. Oakley Director June 28, 1996
Millard V. Oakley
/s/ Joe M. Rodgers Director June 28, 1996
Joe M. Rodgers
/s/ Cal Turner, Jr. Director June 28, 1996
Cal Turner, Jr.
/s/ Andrew Young Director June 28, 1996
Andrew Young
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Thomas Nelson, Inc.:
We have audited in accordance with generally accepted
auditing standards, the consolidated financial statements
included in Thomas Nelson's annual report to shareholders
incorporated by reference in this Form 10-K, and have issued our
report thereon dated May 21, 1996. Our audit was made for the
purpose of forming an opinion on those consolidated statements
taken as a whole. The schedules listed in the index are the
responsibility of the Company's management and are presented for
purposes of complying with the Securities and Exchange
Commission's rules and are not part of the basic consolidated
financial statements. These schedules have been subjected to the
auditing procedures applied in the audit of the basic
consolidated financial statements and, in our opinion, fairly
state in all material respects the financial data required to be
set forth therein in relation to the basic consolidated financial
statements taken as a whole.
/s/ Arthur Andersen LLP
Nashville, Tennessee
May 21, 1996<PAGE>
THOMAS NELSON, INC.
SCHEDULE VIII
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
=================================================================
<TABLE>
<CAPTION>
Allowances for Trade Accounts Receivable
-----------------------------------------------
March 31, 1996 March 31, 1995 March 31, 1994
-----------------------------------------------
Reserve for Sales Returns
-----------------------------------------------
<S> <C> <C> <C>
Balance at beginning
of period $ 5,744,000 $ 5,220,000 $ 6,054,000
Additions:
1. Charged to costs
and expenses 819,000 524,000 ( 834,000)
2. Charged to other
accounts<F1> 375,000 - -
Deductions - charge-offs - - -
-----------------------------------------------
Balance at end of
period $ 6,938,000 $ 5,744,000 $ 5,220,000
===============================================
Reserve for Doubtful Accounts
-----------------------------------------------
March 31, 1996 March 31, 1995 March 31, 1994
-----------------------------------------------
Balance at beginning
of period $ 3,257,000 $ 3,676,000 $ 4,371,000
Additions:
1. Charged to costs
and expenses 5,679,000 4,308,000 1,336,000
2. Charged to other
accounts<F1> 500,000 - ( 503,804)
Deductions - charge-offs 5,415,000 4,727,000 1,527,196
-----------------------------------------------
Balance at end of <PAGE>
period $ 4,021,000 $ 3,257,000 $ 3,676,000
===============================================
Discontinued Operations
-----------------------------------------------
March 31, 1996 March 31, 1995 March 31, 1994
-----------------------------------------------
Balance at beginning
of period $ - $ - $ -
Additions:
1. Charged to costs
and expenses<F2> 4,381,000 - -
2. Charged to other
accounts - - -
Deductions - charge-offs - - -
-----------------------------------------------
Balance at end of
period $ 4,381,000 $ - $ -
===============================================
<F1> Reserves acquired in connection with acquisition - C.R. Gibson in 1996 and
Word in 1994.
<F2> Reserve for loss on discontinued operations, before taxes, in 1996.
</TABLE> <PAGE>
INDEX TO EXHIBITS
Exhibit
Number
4.12 -- June 1996 Amendment and Waiver With Respect to
Amended and Restated Credit Agreement Dated as of
December 13, 1995, among the Company, SunTrust
Bank, Nashville, N.A., National City Bank of
Louisville, First American National Bank in
Nashville, Nationsbank of Texas, N.A. in Dallas,
and Creditanstalt-Bankverein in New York
4.14 -- Letter Amendment No. 1 dated June 28, 1996, to Note
Purchase Agreement dated January 3, 1996, among the
Company, The Prudential Life Insurance Company of
America and Metropolitan Life Insurance Company and
related waiver, dated as of March 31, 1996
4.15 -- Assumption and Amendment Agreement dated as of May
30, 1996, and as amended June 28, 1996, between the
Company and Metropolitan Life Insurance Company
10.7 -- Employment Agreement dated as of May 13, 1996,
between the Company and Sam Moore
10.8 -- Employment Agreement dated as of May 10, 1996,
between the Company and S. Joseph Moore
10.9 -- Employment Agreement dated as of May 10, 1996,
between the Company and Joe L. Powers
10.10 -- Employment Agreement dated as of May 13, 1996,
between the Company and Charles Z. Moore
11 -- Statement Re-Computation of Per Share Earnings
13 -- Thomas Nelson, Inc. Annual Report to Shareholders
for the year ended March 31, 1996 (to the extent of
portions specifically incorporated by reference)
21 -- Subsidiaries of the Company<PAGE>
23 -- Consent of Independent Public Accountants
27 -- Financial Data Schedule (for SEC purposes only)<PAGE>
EXHIBIT 4.12
JUNE 1996 AMENDMENT AND WAIVER WITH RESPECT TO
AMENDED AND RESTATED CREDIT AGREEMENT DATED AS OF
DECEMBER 13, 1995
THOMAS NELSON, INC. (the "Company"), SUNTRUST BANK,
NASHVILLE, N.A., as agent (the "Agent") and the lenders referred
to therein (the "Lenders") entered into that certain Amended and
Restated Credit Agreement dated as of December 13, 1995 (the
"Credit Agreement").
WHEREAS, the parties hereto wish to waive compliance with
and amend, for certain time periods, the financial covenant set
forth in Section 9.08(a) of the Credit Agreement;
NOW, THEREFORE, the Company, the Agent and the Lenders agree
as follows:
1. Waiver. The Agent and the Lenders waive any default
resulting from the Company's failure to comply with the
covenant set forth in Section 9.08(a) of the Credit
Agreement for the fiscal year ending March 31, 1996. The
waiver described herein applies only to the fiscal year
ending March 31, 1996, and except for such waiver for such
time period, the interest coverage ratio set forth in
Section 9.08(a) of the Credit Agreement shall continue in
full force and effect.
2. Amendment. The Agent and the Lenders agree that the
interest coverage ratio set forth in Section 9.08(a) of the
Credit Agreement shall be amended, but only for the quarters
ending June 30, 1996, September 30, 1996 and December 31,
1996, as follows.
Interest Coverage Ratio
(a) The Company shall maintain as of the last day of each
fiscal quarter a minimum Interest Coverage Ratio, calculated,
with respect to the fiscal quarter ending June 30, 1996, only for
that quarter, with respect to the fiscal quarter ending September
30, 1996, for the immediately preceding two fiscal quarters, and
with respect to the fiscal quarter ending December 31, 1996, for
the immediately preceding three fiscal quarters, as shown below
for each fiscal quarter indicated:
Fiscal Quarter Ending
June 30, 1996 no greater than (.35):1.00
September 30, 1996 no less than 1.25:1.00
December 31, 1996 no less than 1.75:1.00
The amendment as set forth above shall be applicable only
through the quarter ending December 31, 1996, and thereafter
the Company shall maintain compliance with the Interest
Coverage Ratio as set forth in Section 9.08(a) of the Credit
Agreement.
3. All defined terms used herein which are not otherwise
defined shall have the meanings ascribed to such terms in
the Credit Agreement.
4. The waiver set forth in paragraph one above, and the
amendment set forth in paragraph two above, both shall
terminate on January 1, 1997. Any default or event of
default which otherwise would occur under Section 9.08(a) of
the Credit Agreement after January 1, 1997 shall be a
default or event of default under the Credit Agreement and
is not waived.
5. The waiver and amendment set forth herein is conditioned on
the Company's obtaining waivers or amendments prior to June
30, 1996 for the same or greater time periods set forth
above from The Prudential Insurance Company of America
("Prudential") and The Metropolitan Life Insurance Company
("MetLife") of any existing covenant defaults under any
documents and notes relating to all indebtedness of the
Company owed to Prudential and MetLife.
6. This waiver and amendment is entered into on June 25, 1996,
but is to be effective as of March 31, 1996.
7. Except as expressly stated herein, no other waiver or
amendment of any term or provision of the Credit Agreement
shall be inferred or implied.
IN WITNESS WHEREOF, the parties hereto have executed this
June 1996 Amendment and Waiver With Respect to Amended and
Restated Credit Agreement dated as of December 13, 1995, on June
25, 1996, to be effective as of March 31, 1996.
THOMAS NELSON, INC.
By: /s/ Joe L. Powers
--------------------------------
Title: Executive Vice President
SUNTRUST BANK, NASHVILLE, N.A.,
as Agent
By: /s/ J. Fred Turner
--------------------------------
Title: First Vice President
<PAGE>
SUNTRUST BANK, NASHVILLE, N.A.
By: /s/ J. Fred Turner
--------------------------------
Title: First Vice President
NATIONSBANK OF TEXAS, N.A.
By: /s/ Jennifer Zydney
--------------------------------
Title: Vice President
CREDITANSTALT-BANKVEREIN
By: /s/ Robert M. Biringer
--------------------------------
Title: Senior Vice President
By: /s/ Joseph P. Longosz
--------------------------------
Title: Vice President
NATIONAL CITY BANK
By: /s/ Cheryl Mennen
--------------------------------
Title: Assistant Vice President
FIRST AMERICAN NATIONAL BANK
By: /s/ Scott M. Bane
--------------------------------
Title: Senior Vice President
5<PAGE>
EXHIBIT 4.14
June 28, 1996
WAIVER
As of March 31, 1996
The Prudential Insurance Company
of America
C/O Prudential Capital Group
1201 Elm St., Suite 4900
Dallas, TX 75270
Gentlemen:
We refer to the Note Purchase Agreement dated as of
January 3, 1996 between the undersigned, Thomas nelson, Inc., The
Prudential Insurance Company of America and Metropolitan Life
Insurance Company (the "Note Purchase Agreement"). Unless
otherwise defined herein, the terms defined in the Note Purchase
Agreement shall be used herein as therein defined.
We have requested that you waive the requirements of
section 10.8(c) of the Note Purchase Agreement for each of the
four fiscal quarters periods ended March 31, 1996, June 30, 1996,
September 30, 1996 and December 31, 1996. If you agree to waive
the requirements of section 10.8(c) of the Note Purchase
Agreement for the period set forth above, please evidence such
agreement by executing and returning at least one counterpart of
this letter waive to Thomas Nelson, Inc., Nelson Place at Elm
Hill Pike, P.O. Box 141000, Nashville, Tennessee 37214-1000,
Attention Joe L. Powers, Vice President. This letter waive shall
become effective as of the date first above written when and if<PAGE>
(i) counterparts of this waiver or substantially similar waivers
shall have been executed by the Required Holders, (ii) the
consent attached hereto shall have been executed by each of the
Guarantors, (iii) an amendment in the form attached as Exhibit A
shall have executed by all of the parties thereto, (iv) an
allonge in the form attached as Exhibit B shall have been
executed by Thomas Nelson Inc., for each Note outstanding and (v)
each holder of a Note shall have received a fee of .30% of the
principal amount of such Note. The execution, delivery and
effectiveness of this letter waiver shall not, except as
expressly provided herein, operate as a waiver of any right,
power or remedy under the Note Purchase Agreement nor constitute
a waiver of any provision of the Note Purchase Agreement. This
waiver is subject to the provisions of section 17 of the Note
Purchase Agreement.
Very truly yours,
THOMAS NELSON, INC.
By /s/ Joe L. Powers
-------------------
Title: Vice President
Agreed to and accepted
as of the date
first above written:
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By /s/ Robert G. Gwin
--------------------
Vice President<PAGE>
CONSENT
The undersigned, as Guarantors under the Guaranty
Agreements dated January 3, 1996 (the "Guaranty Agreements") in
favor of The Prudential Insurance Company of America and
Metropolitan Life Insurance Company each a party to the Note
Purchase Agreement referred to in the foregoing letter waiver,
hereby consent to said waiver and hereby confirm and agree that,
notwithstanding the effectiveness of said waiver, the Guaranty
Agreements are, and shall continue to be, in full force and
effect and are hereby confirmed and ratified in all respects.
WORD INCORPORATED
By /s/ Joe L. Powers
------------------
Title: Vice President
PPC, INC.
By /s/ Joe L. Powers
------------------
Title: Vice President
EDITORIAL CARIBE, INC.
By /s/ Joe L. Powers
------------------
Title: Vice President
MORNINGSTAR RADIO NETWORK, INC.<PAGE>
By /s/ Joe L. Powers
------------------
Title: Vice President
NELSON WORD LIMITED
By /s/ Joe L. Powers
------------------
Title: Vice President<PAGE>
WORD COMMUNICATIONS, LTD
By /s/ Joe L. Powers
------------------
Title: Vice President
WORD DIRECT, INC.
By /s/ Joe L. Powers
------------------
Title: Vice President
WORD DIRECT PARTNERS, L.P.
By Word Direct, Inc., as
general partner
By /s/ Joe L. Powers
------------------
Title: Vice President
THE C.R. GIBSON COMPANY
By /s/ Joe L. Powers
------------------
855763 ONTARIO LIMITED
By /s/ Joe L. Powers
------------------<PAGE>
THOMAS NELSON, INC.
Nelson Place at Elm Hill Pike
P.O. Box 141000
Nashville, Tennessee 37214-1000
as of March 31, 1996
Metropolitan Life Insurance Company
One Madison Avenue
New York, NY 10010
Attention: Treasurer
Gentlemen:
We refer to the Note Purchase Agreement, dated as of January 3,
1996, between the undersigned, Thomas Nelson, Inc., The
Prudential Insurance Company of America and Metropolitan Life
Insurance Company (the "Note Purchase Agreement"). Unless
otherwise defined herein, the terms defined in the Note Purchase
Agreement shall be used herein as therein defined.
We have requested that you waive the requirements of Section
10.8(c) of the Note Purchase Agreement for each of the four
fiscal quarter periods ended March 31, 1996, June 30, 1996,
September 30, 1996, and December 31, 1996. If you agree to waive
the requirements of Section 10.8(c) of the Note Purchase
Agreement for such period, please evidence such agreement by
executing and returning at least one counterpart of this letter
to Thomas Nelson, Inc., Nelson Place at Elm Hill Pike, P.O. Box
141000, Nashville, Tennessee 37214-1000, Attention of Joe L.
Powers, Vice President. This letter waiver shall become
effective as of the date first above written when and if (i)
counterparts of this or substantially similar waivers shall have
been executed by the Required Holders, (ii) the consent attached
hereto shall have been executed by each of the Guarantors, (iii)
an amendment in the form attached as Exhibit A shall have<PAGE>
executed by all of the parties thereto, (iv) an allonge in the
form attached as Exhibit B shall have been executed by Thomas
Nelson, Inc., for each Note outstanding and (v) each holder of a
Note shall have received a fee of .30% of the principal amount of
such Note. The execution, delivery and effectiveness of this
letter shall not, except as expressly provided herein, operate as
a waiver of any right, power or remedy under the Note Purchase
Agreement nor constitute a waiver of any provision of the Note
Purchase Agreement. This waiver is subject to the provisions of
Section 17 of the Note Purchase Agreement.
Very truly yours,
THOMAS NELSON, INC.
By /s/ Joe L. Powers
----------------------------
Title: Vice President
Agreed to and accepted as of the date
first above written:
METROPOLITAN LIFE INSURANCE COMPANY
By /s/ John R. Endres
--------------------------<PAGE>
CONSENT
The undersigned, as Guarantors under the Guaranty
Agreements dated January 3, 1996 (the "Guaranty Agreements") in
favor of The Prudential Insurance Company of America and
Metropolitan Life Insurance Company, each a party to the Note
Purchase Agreement referred to in the foregoing letter waiver,
hereby consent to said waiver and hereby confirm and agree that,
notwithstanding the effectiveness of said waiver, the Guaranty
Agreements are, and shall continue to be, in full force and
effect and are hereby confirmed and ratified in all respects.
WORD, INCORPORATED
By /s/ Joe L. Powers
----------------------------
Title: Vice President
PPC, INC.
By /s/ Joe L. Powers
----------------------------
Title: Vice President
EDITORIAL CARIBE, INC.
By /s/ Joe L. Powers
----------------------------
Title: Vice President
MORNINGSTAR RADIO NETWORK, INC.
By /s/ Joe L. Powers
----------------------------<PAGE>
Title: Vice President
NELSON WORD LIMITED
By /s/ Joe L. Powers
----------------------------
Title: Vice President
WORD COMMUNICATIONS, LTD.
By /s/ Joe L. Powers
----------------------------
Title: Vice President
WORD DIRECT, INC.
By /s/ Joe L. Powers
-----------------------------
Title: Vice President
WORD DIRECT PARTNERS, L.P.
By: Word Direct, Inc. as general
partner
By /s/ Joe L. Powers
----------------------------
Title: Vice President
THE C.R. GIBSON COMPANY
By /s/ Joe L. Powers
-----------------------------<PAGE>
855763 ONTARIO LIMITED
By /s/ Joe L. Powers
------------------------------<PAGE>
EXHIBIT A
AMENDMENT NO. 1
June 28, 1996
The Prudential Insurance Company
of America
C/O Prudential Capital Group
1201 Elm St., Suite 4900
Dallas, TX 75270
Ladies and Gentlemen:
We refer to the Note Purchase Agreement dated as of January
3, 1996 (the "Agreement" among the undersigned, Thomas Nelson,
Inc., The Prudential Insurance Company of America and
Metropolitan Life Insurance Company. Unless otherwise defined
herein, the terms defined in the Agreement shall be used herein
as therein defined.
The Agreement is, effective the date first above written,
hereby amended as follows:
(a) Section 10. Section 10 is amended by adding thereto
new subsections to read as follows:
10.9 Covenants Incorporated by Reference. To the
extent that covenants set forth in the Amended and
Restated Credit Agreement (the "Credit Agreement" dated
as of December 13, 1995, among Thomas Nelson, Inc., the
lenders listed therein, and SunTrust Bank Nashville,
N.A., as Agent, as amended through the date hereof, are
more restrictive than the covenants set forth herein,
or otherwise require the Company to comply with
computable standards, this Agreement is hereby
automatically amended so as to provide the benefit of
similar covenants for the benefit of the holders of the
Notes. Any such covenants shall be deemed to be<PAGE>
incorporated herein mutatis mutandis for the benefit of
the holders of the Notes unless and until the Required
Holder(s) of the Notes shall otherwise consent thereto.
10.10. Conforming Debt Agreement Changes. The
Company will not become or be a party to any agreement
relating to any Debt entered into after the date of
this Agreement, or to any amendment of or supplement to
any agreement relating to any Debt (which amendment or
supplement is entered into after the date of this
Agreement), if, in any such case, the Company is
agreeing therein to any financial covenants of a type
specified in this Section 10, which are more
restrictive than the covenants set forth herein, or to
other covenants expressly requiring the Company to
comply with computable standards, unless the Company
shall offer to amend this Agreement so as to provide
the benefit of similar covenants for the benefit of the
holders of the Notes for so long as such covenants are
in full force under such agreement, amendment or
supplement. Any such offer shall be made in writing to
the holders of the Notes prior to being effected in any
such agreement, amendment or supplement and, absent
such offer, shall be deemed to be incorporated herein
mutatis mutandis for the benefit of the holders of the
Notes for so long as such covenants are in full force
under such agreement, amendment or supplement unless
and until the Required Holders) of the Notes shall
otherwise consent thereto.
(b) All references to the "$6.90% Series A Senior
Notes due December 31, 2007" and the "6.68% Series B Senior
Notes due December 31, 2005" set forth in the Agreement
shall be changed to the "7.15% Series A Senior Notes due
December 31, 2007" and the "6.93% Series B Senior Notes due
December 31, 2005", respectively.
On and after the effective date of this letter
amendment, each reference in the Agreement to "this Agreement",
"hereunder", "hereof", or words of like import referring to the
Agreement, and each reference in the Notes to "the Agreement",
"thereunder", "thereof", or words of like import referring to the<PAGE>
Agreement, shall mean the Agreement as amended by this letter
amendment. The Agreement, as amended by this letter amendment,
is and shall continue to be in full force and effect and is
hereby in all respects ratified and confirmed. The execution,
delivery and effectiveness of this letter amendment shall not,
except as expressly provided herein, operate as a waiver of any
right, power or remedy under the Agreement not constitute a
waiver of any provision of the Agreement.
This letter amendment may be executed in any number of
counterparts and by any combination of the parties hereto in
separate counterparts, each of which counterparts shall be an
original and all of which taken together shall constitute one and
the same letter amendment.
If requested by you, the Company will enter into a
subsequent amendment of the Agreement to specifically incorporate
any covenant contained in the Credit Agreement into the
Agreement. Each holder of a Note hereby agrees that if and when
the Company complies with Section 10.8(c) of the Agreement (as in
effect on January 3, 1996) the interest rate on each Note will be
reduced to 6.90% for the Series A Notes and 6.68% for the Series
B Notes. Each holder of a Note agrees to enter into such
documentation as may be necessary to evidence such reduction.
If you agree to the terms and provisions hereof, please
evidence your agreement by executing and returning at least a
counterpart of this letter amendment to Thomas Nelson, Inc.,
Nelson Place at Elm Hill Pike, Nashville, Tennessee 37214-1000,
Attention of Joe L. Powers. This letter amendment shall become
effective as of the date first above written when and if
counterparts of this letter amendment shall have been executed by
us and you and the consent attached hereto shall have been
executed by the Guarantors.
Very truly yours,
THOMAS NELSON, INC.
By /s/ Joe L. Powers
---------------------
Title: Vice President<PAGE>
Agreed as of the date
first above written:
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By /s/ Robert G. Gwin
---------------------
Vice President<PAGE>
CONSENT
The undersigned, as Guarantors under the Guaranty
Agreements dated January 3, 1996 (the "Guaranty Agreements") in
favor of The Prudential Insurance Company of America and
Metropolitan Life Insurance Company referred to in the foregoing
amendment, hereby consent to said amendment and hereby confirm
and agree that the Guaranty Agreements are, and shall continue to
be, in full force and effect and is hereby confirmed and ratified
in all respects except that, upon the effectiveness of, and on
and after the date of, said amendment, all references in the
Guaranty Agreements to the Agreement, "thereunder", "thereof", or
words of like import referring to the Agreement shall mean the
Agreement as amended by said amendment.
WORD INCORPORATED
By /s/ Joe L. Powers
---------------------------
Title: Vice President
PPC, INC.
By /s/ Joe L. Powers
---------------------------
Title: Vice President
EDITORIAL CARIBE, INC.
By /s/ Joe L. Powers
---------------------------
Title: Vice President
MORNINGSTAR RADIO NETWORK, INC.<PAGE>
By /s/ Joe L. Powers
---------------------------
Title: Vice President
NELSON WORD LIMITED
By /s/ Joe L. Powers
---------------------------
Title: Vice President
WORD COMMUNICATIONS, LTD
By /s/ Joe L. Powers
---------------------------
Title: Vice President
WORD DIRECT, INC.
By /s/ Joe L. Powers
---------------------------
Title: Vice President
WORD DIRECT PARTNERS, L.P.
By Word Direct, Inc., as
general partner
By /s/ Joe L. Powers
---------------------------
Title: Vice President
THE C.R. GIBSON COMPANY<PAGE>
By /s/ Joe L. Powers
---------------------------
855763 ONTARIO LIMITED
By /s/ Joe L. Powers
---------------------------<PAGE>
EXHIBIT B
ALLONGE
June 28, 1996
The Note due December 31, 2007, in the original principal
amount of$33,000,000, to which this Allonge is attached is
subject to and shall be governed by the terms and conditions of
Amendment No. 1 (the "Amendment") to the Note Purchase Agreement
(the "Agreement") dated January 3, 1996, among the company, The
Prudential Insurance company of America and Metropolitan Life
Insurance Company. The Amendment modifies the Agreement pursuant
to which and subject to which the attached Note was originally
issued. All references in the attached Note to the Agreement
shall be construed and interpreted as references to the Agreement
as amended or supplemented, including as amended by the
Amendment.
As of the date of this Allonge, the Company confirms,
renews, and restates it obligations pursuant to the terms of the
attached Note, provided that the interest rate on the unpaid
principal of the Note shall hereafter be (a) 7.15% per annum
payable semiannually, on the last day of June and December in
each year, commencing June 30, 1996 until the principal hereof
shall have become due and payable, and (b) to the extent
permitted by law on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any
overdue payment of any Yield Maintenance Amount (as defined in
the Agreement), payable semiannually as aforesaid (or, at the
option of the registered holder hereof, on demand), at a rate per
annum from time to time equal to the greater of (i) 9.15% or (ii)
2.0% over the rate of interest publicly announced by Morgan
Guaranty Trust Company of New York from time to time in New York
City as its prime rate.
Except as expressly provided herein, this Note is not
modified or amended in any respect and remains in full force and
effect.<PAGE>
THOMAS NELSON, INC.
By: /s/ Joe L. Powers
-----------------------
Title: Vice President<PAGE>
EXHIBIT B
ALLONGE
June 28, 1996
The Note due December 31, 2007, in the original principal
amount of$2,000,000, to which this Allonge is attached is subject
to and shall be governed by the terms and conditions of Amendment
No. 1 (the "Amendment") to the Note Purchase Agreement (the
"Agreement") dated January 3, 1996, among the company, The
Prudential Insurance company of America and Metropolitan Life
Insurance Company. The Amendment modifies the Agreement pursuant
to which and subject to which the attached Note was originally
issued. All references in the attached Note to the Agreement
shall be construed and interpreted as references to the Agreement
as amended or supplemented, including as amended by the
Amendment.
As of the date of this Allonge, the Company confirms,
renews, and restates it obligations pursuant to the terms of the
attached Note, provided that the interest rate on the unpaid
principal of the Note shall hereafter be (a) 7.15% per annum
payable semiannually, on the last day of June and December in
each year, commencing June 30, 1996 until the principal hereof
shall have become due and payable, and (b) to the extent
permitted by law on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any
overdue payment of any Yield Maintenance Amount (as defined in
the Agreement), payable semiannually as aforesaid (or, at the
option of the registered holder hereof, on demand), at a rate per
annum from time to time equal to the greater of (i) 9.15% or (ii)
2.0% over the rate of interest publicly announced by Morgan
Guaranty Trust Company of New York from time to time in New York
City as its prime rate.
Except as expressly provided herein, this Note is not
modified or amended in any respect and remains in full force and
effect.<PAGE>
THOMAS NELSON, INC.
By: /s/ Joe L. Powers
-----------------------
Title: Vice President<PAGE>
EXHIBIT B
ALLONGE
June 28, 1996
The Note due December 31, 2005, in the original principal
amount of $15,000,000, to which this Allonge is attached is
subject to and shall be governed by the terms and conditions of
Amendment No. 1 (the "Amendment") to the Note Purchase Agreement
(the "Agreement") dated January 3, 1996, among the company, The
Prudential Insurance company of America and Metropolitan Life
Insurance Company. The Amendment modifies the Agreement pursuant
to which and subject to which the attached Note was originally
issued. All references in the attached Note to the Agreement
shall be construed and interpreted as references to the Agreement
as amended or supplemented, including as amended by the
Amendment.
As of the date of this Allonge, the Company confirms,
renews, and restates it obligations pursuant to the terms of the
attached Note, provided that the interest rate on the unpaid
principal of the Note shall hereafter be (a) 6.93% per annum
payable semiannually, on the last day of June and December in
each year, commencing June 30, 1996 until the principal hereof
shall have become due and payable, and (b) to the extent
permitted by law on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any
overdue payment of any Yield Maintenance Amount (as defined in
the Agreement), payable semiannually as aforesaid (or, at the
option of the registered holder hereof, on demand), at a rate per
annum from time to time equal to the greater of (i) 8.93% or (ii)
2.0% over the rate of interest publicly announced by Morgan
Guaranty Trust Company of New York from time to time in New York
City as its prime rate.
Except as expressly provided herein, this Note is not
modified or amended in any respect and remains in full force and
effect.<PAGE>
THOMAS NELSON, INC.
By: /s/ Joe L. Powers
----------------------
Title: Vice President<PAGE>
EXHIBIT 4.15
ASSUMPTION AND AMENDMENT AGREEMENT
ASSUMPTION AND AMENDMENT AGREEMENT, dated as of May 30, 1996
("this Agreement"), made by THOMAS NELSON, INC., a Tennessee
corporation (the "Company"), THE C.R. GIBSON COMPANY, a Delaware
corporation and a wholly-owned subsidiary of the Company
("Gibson"), and METROPOLITAN LIFE INSURANCE COMPANY, a New York
corporation ("MetLife").
WHEREAS, the Company, MetLife and another institutional
investor entered into a Note Purchase Agreement, dated as of
January 3, 1996 (the "1996 Agreement"), pursuant to which MetLife
acquired the Company's 6.68% Series B Senior Note due December
31, 2005 in the principal amount of $15,000,000 (the "1996
Note");
WHEREAS, MetLife is the holder of Gibson's (i) 9.50% Senior
Note due September 22, 1999 (as amended, the "9.50% Note")
outstanding in the principal amount of $7,000,000, which was
issued pursuant to a Loan Agreement, dated as of September 21,
1989, between Gibson and MetLife (as amended, the "1989
Agreement"), and (ii) 8.31% Senior Note due June 23, 2004 (the
"8.31% Note" and, collectively with the 9.50% Note, the "Gibson
Notes" and, individually, a "Gibson Note") outstanding in the
principal amount of $5,000,000, which was issued pursuant to a
Loan Agreement, dated as of June 23, 1994, between Gibson and
MetLife (the "1994 Agreement" and, collectively with the 1989
Agreement, the "Gibson Agreements"); and
WHEREAS, the Company, in connection with MetLife's
acquisition of the 1996 Note and the transactions contemplated by
the 1996 Agreement, wishes to assume the obligations of Gibson
with respect to the Gibson Notes and the Gibson Agreements and to
amend certain provisions of each thereof, and MetLife is
agreeable thereto.
NOW, THEREFORE, for good and valuable consideration, receipt
whereof is hereby acknowledged, the parties hereto agree as
follows:
1. Defined Terms. Unless the context otherwise requires,
capitalized terms used herein without definition shall have the
respective meanings set forth in Exhibits A-1 and A-2 hereto, as
applicable.
2. Assumption of Gibson Notes and Gibson Agreements.
Effective upon the Effective Date (as hereinafter defined), the
Company hereby unconditionally assumes the due and punctual
payment and performance of all of Gibson's obligations and duties
under the Gibson Notes and the Gibson Agreements in accordance
with the terms thereof (as amended hereby), regardless of the
enforceability of the Gibson Notes or the Gibson Agreements or
any discharge or release, whether by operation of law or
otherwise (except for any written release signed by the obligees
of the affected obligation), of Gibson or the Company from their
respective obligations under the Gibson Notes or the Gibson
Agreements. Upon the Effective Date, the Company shall, without
further action hereunder, become a party to the Gibson Notes and
to the Gibson Agreements, and Gibson shall be discharged and
released from all obligations thereunder. On the Effective Date,
the Company shall pay to MetLife interest accrued on the Gibson
Notes for the period from the regularly scheduled interest
payment date for each of the Gibson Notes next preceding the
Effective Date through the day preceding the Effective Date. The
Company agrees that, on and after the Effective Date, it shall
pay and perform all of Gibson's duties and obligations under the
Gibson Notes and the Gibson Agreements (as amended hereby).
MetLife hereby consents to such assumption by the Company and to
the release and discharge of Gibson. Nothing herein shall impair
Gibson's obligations with respect to the Gibson Notes and the
Gibson Agreements under the Guaranty Agreement, as amended and
supplemented by Amendment and Supplement No. 1, dated as of May
30, 1996, in the form of Exhibit B hereto.
3. Amendment of Gibson Notes. Effective upon the
Effective Date, the 9.50% Note and the 8.31% Note are hereby
amended in their entirety to read as set forth in Exhibits A-1
and A-2 hereto, respectively.
4. Amendment of Gibson Agreements.
a. Effective upon the Effective Date, Section 5 of
each of the Gibson Agreements is hereby amended to read as
follows:
"SECTION 5. INFORMATION AS TO COMPANY.
5.1. Financial and Business Information. The Company shall
deliver to each holder of Notes that is an Institutional
Investor:
(a) Quarterly Statements -- within 60 days after the
end of each quarterly fiscal period in each fiscal year of the
Company (other than the last quarterly fiscal period of each such
fiscal year), duplicate copies of
(i) a consolidated balance sheet of the Company
and its Subsidiaries as at the end of such quarter, and
(ii) consolidated statements of income, changes
in shareholders' equity and cash flows of the Company
and its Subsidiaries for such quarter and (in the case
of the second and third quarters) for the portion of
the fiscal year ending with such quarter, setting forth
in each case in comparative form the figures for the
corresponding periods in the previous fiscal year, all
in reasonable detail, prepared in accordance with GAAP
applicable to quarterly financial statements generally,
and certified by a Senior Financial Officer as fairly
presenting, in all material respects, the financial
position of the companies being reported on and their
results of operations and cash flows, subject to
changes resulting from year-end adjustments, provided
that delivery within the time period specified above of
copies of the Company's Quarterly Report on Form 10-Q
prepared in compliance with the requirements therefor
and filed with the Securities and Exchange Commission
shall be deemed to satisfy the requirements of this
Section 5.1(a);
(b) Annual Statements -- within 90 days after the end
of each fiscal year of the Company, duplicate copies of
(i) a consolidated balance sheet of the Company
and its Subsidiaries as at the end of such year, and
(ii) consolidated statements of income, changes
in shareholders' equity and cash flows of the Company
and its Subsidiaries for such year, setting forth in
each case in comparative form the figures for the
previous fiscal year, all in reasonable detail,
prepared in accordance with GAAP, and accompanied by an
opinion thereon of independent certified public
accountants of recognized national standing, which
opinion shall state that such financial statements
present fairly, in all material respects, the financial
position of the companies being reported upon and their
results of operations and cash flows and have been
prepared in conformity with GAAP, and that the
examination of such accountants in connection with such
financial statements has been made in accordance with
generally accepted auditing standards, and that such
audit provides a reasonable basis for such opinion in
the circumstances, provided that the delivery within
the time period specified above of the Company's Annual
Report on Form 10-K for such fiscal year (together with
the Company's annual report to shareholders, if any,
prepared pursuant to Rule 14a-3 under the Exchange Act)
prepared in accordance with the requirements therefor
and filed with the Securities and Exchange Commission
shall be deemed to satisfy the requirements of this
Section 5.1(b);
(c) SEC and Other Reports -- promptly upon their
becoming available, one copy of (i) each financial statement,
report, notice or proxy statement sent by the Company or any
Subsidiary to public securities holders generally, and (ii) each
regular or periodic report, each registration statement other
than any registration statements on Form S-8 or any similar form
(without exhibits except as expressly requested by such holder),
and each prospectus and all amendments thereto filed by the
Company or any Subsidiary with the Securities and Exchange
Commission and of all press releases and other statements made
available generally by the Company or any Subsidiary to the
public concerning developments that are Material;
(d) Notice of Default or Event of Default -- promptly,
and in any event within five Business Days after a Responsible
Officer becomes aware of the existence of any Default or Event of
Default or that any Person has given any notice or taken any
action with respect to a claimed default under the Notes or that
any Person has given any notice or taken any action with respect
to a claimed default of the type referred to in Section 7.01F of
the Notes, a written notice specifying the nature and period of
existence thereof and what action the Company is taking or
proposes to take with respect thereto;
(e) ERISA Matters -- promptly, and in any event within
five Business Days after a Responsible Officer becomes aware of
any of the following, a written notice setting forth the nature
thereof and the action, if any, that the Company or an ERISA
Affiliate proposes to take with respect thereto:
(i) with respect to any Plan, any reportable
event, as defined in section 4043(c) of ERISA and the
regulations thereunder, for which notice thereof has
not been waived pursuant to such regulations as in
effect on January 3, 1996; or
(ii) the taking by the PBGC of steps to
institute, or the threatening by the PBGC of the
institution of, proceedings under section 4042 of ERISA
for the termination of, or the appointment of a trustee
to administer, any Plan, or the receipt by the Company
or any ERISA Affiliate of a notice from a Multiemployer
Plan that such action has been taken by the PBGC with
respect to such Multiemployer Plan; or
(iii) any event, transaction or condition that
could result in the incurrence of any liability by the
Company or any ERISA Affiliate pursuant to Title I or
IV of ERISA or the penalty or excise tax provisions of
the Code relating to employee benefit plans, or in the
imposition of any Lien on any of the rights, properties
or assets of the Company or any ERISA Affiliate
pursuant to Title I or IV of ERISA or such penalty or
excise tax provisions, if such liability or Lien, taken
together with any other such liabilities or Liens then
existing, could reasonably be expected to have a
Material Adverse Effect;
(f) Notices from Governmental Authority -- promptly,
and in any event within 30 days of receipt thereof, copies of any
notice to the Company or any Subsidiary from any Federal or state
Governmental Authority relating to any order, ruling, statute or
other law or regulation that could reasonably be expected to have
a Material Adverse Effect; and
(g) Requested Information -- with reasonable
promptness, such other data and information relating to the
business, operations, affairs, financial condition, assets or
properties of the Company or any of its Subsidiaries or relating
to the ability of the Company to perform its obligations
hereunder and under the Notes as from time to time may be
reasonably requested by any such holder of Notes.
5.2. Officer's Certificate. Each set of financial
statements delivered to a holder of Notes pursuant to Section
5.1(a) or Section 5.1(b) hereof shall be accompanied by a
certificate of a Senior Financial Officer setting forth:
(a) Covenant Compliance -- the information (including
detailed calculations) required in order to establish whether the
Company was in compliance with the requirements of Sections
4.03(j), 4.04(e), 4.05, 4.07(b) and 4.08 of the Notes during the
quarterly or annual period covered by the statements then being
furnished (including with respect to each such Section, where
applicable, the calculations of the maximum or minimum amount,
ratio or percentage, as the case may be, permissible under the
terms of such Sections, and the calculation of the amount, ratio
or percentage then in existence); and
(b) Event of Default -- a statement that such officer
has reviewed the relevant terms hereof and of the Notes and has
made, or caused to be made, under his or her supervision, a
review of the transactions and conditions of the Company and its
Subsidiaries from the beginning of the quarterly or annual period
covered by the statements then being furnished to the date of the
certificate and that such review shall not have disclosed the
existence during such period of any condition or event that
constitutes a Default or an Event of Default or, if any such
condition or event existed or exists (including, without
limitation, any such event or condition resulting from the
failure of the Company or any Subsidiary to comply with any
Environmental Law), specifying the nature and period of existence
thereof and what action the Company shall have taken or proposes
to take with respect thereto.
5.3. Inspection. The Company shall permit the
representatives of each holder of a Note that is an Institutional
Investor:
(a) No Default -- if no Default or Event of Default
then exists, at the expense of such holder and upon reasonable
prior notice to the Company, to visit the principal executive
office of the Company, to discuss the affairs, finances and
accounts of the Company and its Subsidiaries with the Company's
officers, and (with the consent of the Company, which consent
will not be unreasonably withheld) its independent public
accountants, and (with the consent of the Company, which consent
will not be unreasonably withheld) to visit the other offices and
properties of the Company and each Subsidiary, all at such
reasonable times and as often as may be reasonably requested in
writing; and
(b) Default -- if a Default or Event of Default then
exists, at the expense of the Company, to visit and inspect any
of the offices or properties of the Company or any Subsidiary, to
examine all their respective books of account, records, reports
and other papers, to make copies and extracts therefrom, and to
discuss their respective affairs, finances and accounts with
their respective officers and independent public accountants (and
by this provision the Company authorizes said accountants to
discuss the affairs, finances and accounts of the Company and its
Subsidiaries), all at such times and as often as may be requested
in writing.
5.4. Bank Agreement Amendments. The Company shall provide
to each holder of a Note true, correct and complete copies of any
and all amendments, waivers and other modifications to each of
the Bank Agreements promptly after the execution and delivery
thereof by the parties thereto."
b. Effective upon the Effective Date, Section 6 of
each of the Gibson Agreements is hereby amended to read as
follows:
"SECTION 6. PREPAYMENT OF NOTES UPON CHANGE OF CONTROL.
In the event a Change of Control (as hereinafter defined)
shall occur, the Company hereby covenants and agrees to give each
holder of the Notes written notice thereof, promptly after the
occurrence of such Change of Control but in any event within 10
days thereof. Such notice shall also (a) describe in reasonable
detail the facts and circumstances giving rise to such Change of
Control and the effect thereof on the Company, (b) offer to
prepay, on a date (the "Change of Control Prepayment Date") which
shall be not less than 30 days nor more than 60 days after the
date of such notice, all of the Notes held by each such holder,
(c) request each such holder to notify the Company in writing,
not less than 10 days prior to the Change of Control Prepayment
Date, of its acceptance or rejection of such offer and (d) inform
each such holder that, upon its receipt of such notice by the
Company, failure to accept such offer in writing on or before the
10th day prior to the Change of Control Prepayment Date shall be
deemed a rejection of such offer. The notice to the Computing
Holder shall also set forth the respective names and addresses
of, and principal amounts of the Notes held by, the other
holders.
The Computing Holder shall give written notice to the
Company and the other holders on the second Business Day prior to
the Change of Control Prepayment Date, of the amount of the Make-
Whole Premium, if any, with respect to the Notes held by it and
the other holders, which notice shall set forth in reasonable
detail the computation thereof. The Make-Whole Premium, if any,
set forth in such notice shall be binding on the Company and the
other holders absent manifest error, but such notice in itself
shall constitute neither an acceptance nor a rejection by the
Computing Holder of such prepayment offer.
Thereupon, the Company covenants and agrees that it will on
the Change of Control Prepayment Date prepay all of the Notes
held by each holder who has accepted the prepayment offer in
accordance with this Section, by payment of the unpaid principal
amount of such Notes, together with interest accrued thereon to
the Change of Control Prepayment Date, and the Make-Whole
Premium, if any, applicable to such unpaid principal amount.
The term "Change of Control" means any Acquisition subsequent to
the Effective Date by any Person, or related Persons constituting
a "group" for purposes of Section 13(d) of the Exchange Act, of
(a) the power to elect, appoint or cause the election or
appointment of at least a majority of the members of the Board of
Directors of the Company, through beneficial ownership of the
Capital Stock of the Company or otherwise, or (b) all or
substantially all of the properties and assets of the Company;
provided, however, that a Change of Control shall not be deemed
to have occurred if (x) the Acquisition of such power or
properties and assets is pursuant to a transaction in compliance
with the provisions of Section 4.02 of the Notes and (y) no
Person, or related Persons constituting a "group" for purposes of
Section 13(d) of the Exchange Act, shall have the power to elect,
appoint or cause the election or appointment of at least a
majority of the members of the board of directors of such
successor or transferee. For the purposes of this definition,
"Acquisition" of the power or properties and assets stated in the
preceding sentence means the earlier of (i) the actual possession
thereof and (ii) the consummation of any transaction or series of
related transactions which with the passage of time will give
such Person or Persons the actual possession thereof."
c. Effective upon the Effective Date, Section 7 of the
1989 Agreement is hereby amended to read as follows:
"SECTION 7. MISCELLANEOUS.
7.1. Expenses. The Company will pay all costs and expenses
(including reasonable attorneys' fees of a special counsel and,
if reasonably required, local or other counsel) incurred by you
and each other holder of a Note in connection with the
transactions contemplated hereby and in connection with any
amendments, waivers or consents under or in respect of this
Agreement, the Notes, the Pledge Agreements, the Guaranty
Agreement or the Intercreditor Agreement (whether or not such
amendment, waiver or consent becomes effective), including,
without limitation: (a) the costs and expenses incurred in
enforcing or defending (or determining whether or how to enforce
or defend) any rights under this Agreement, the Notes, the Pledge
Agreements, the Guaranty Agreement or the Intercreditor Agreement
or in responding to any subpoena or other legal process or
informal investigative demand issued in connection with this
Agreement, the Notes, the Pledge Agreements, the Guaranty
Agreement or the Intercreditor Agreement, or by reason of being a
holder of a Note, and (b) the costs and expenses, including
financial advisors' fees, incurred in connection with the
insolvency or bankruptcy of the Company or any Subsidiary or in
connection with any work-out or restructuring of the transactions
contemplated hereby, and by the Notes, the Pledge Agreements, the
Guaranty Agreement and the Intercreditor Agreement. The Company
will pay, and will save you and each other holder of a Note
harmless from, all claims in respect of any fees, costs or
expenses if any, of brokers and finders (other than those
retained by you). The obligations of the Company under this
Section 7.1 will survive the payment or transfer of any Note, the
enforcement, amendment or waiver of any provision of this
Agreement, the Notes, the Pledge Agreements, the Guaranty
Agreement and the Intercreditor Agreement, and the termination of
any thereof.
7.2. Stamp Taxes, etc. The Company will pay, and save you
and any subsequent holder of the Notes harmless against, any and
all liability (including any interest or penalty for non-payment
or delay in payment) with respect to stamp and other taxes (other
than income taxes), if any, which may be payable or determined to
be payable in connection with the transactions contemplated
hereby including, without limitation, any modification, amendment
or alteration of this Agreement or the Notes (other than transfer
taxes). The obligations of the Company under this Section 7.2
shall survive the payment or prepayment or transfer of the Notes.
7.3. Successors and Assigns. All covenants, agreements,
representations and warranties made herein or in certificates
delivered in connection herewith by or on behalf of the Company
shall bind the successors and assigns of the Company, whether so
expressed or not, and all such covenants, agreements,
representations and warranties shall inure to the benefit of your
successors and assigns, including any subsequent holder of any of
the Notes.
7.4. Home Office Payment. Notwithstanding any provision to
the contrary in the Notes contained, the Company will promptly
and punctually pay to you by wire transfer of immediately
available funds, for credit not later than 1:00 p.m., New York
City time, on the date payment is due, to Account Number
002-2-410591, Account Name: Metropolitan Life Insurance Company,
Private Placement Number 640376A#6, at The Chase Manhattan Bank,
N.A., Metropolitan Branch, 33 East 23rd Street, New York, New
York 10010 or to such other account or address or by such other
method as may be designated in writing by you, all amounts
payable in respect of the principal of, Make-Whole Premium, if
any, and interest on, any Notes then held by you or your nominee,
without any presentment thereof and without any notation of such
payment being made thereon.
Prior to the delivery of any Note upon sale, you will make
or cause to be made a notation thereon of the date to which
interest has been paid thereon and, if not theretofore made, a
notation of the extent to which payment has been made on account
of the principal thereof. The Company will afford the benefits
of this Section 7.4 to any holder of a Note that is an
Institutional Investor and that has made the same agreement
relating to such Note as you have made in this Section 7.4.
7.5. Notices. All communications and notices provided for
hereunder or under the Notes shall be in writing, and if to you,
mailed (by registered or certified mail, return receipt
requested) or delivered by a recognized overnight delivery
service or sent by facsimile transmission, followed by a
confirmation copy sent on the same day by a recognized overnight
delivery service, to Metropolitan Life Insurance Company, One
Madison Avenue, New York, N.Y. 10010, Attention: Treasurer
(facsimile number (212) 578-3910) with a copy to Metropolitan
Life Insurance Company, Suite 800, One Lincoln Centre, Oak Brook
Terrace, Illinois 60181, Attention: Assistant Vice-President
(facsimile number (708) 916-2575); if to the Company, mailed (by
registered or certified mail, return receipt requested) or
delivered by a recognized overnight delivery service or sent by
facsimile transmission, followed by a confirmation copy sent on
the same day by a recognized overnight delivery service, to
Thomas Nelson, Inc., Nelson Place at Elm Hill Pike, P. O. Box
141000, Nashville, Tennessee 37214, Attention: Joe L. Powers,
Executive Vice President and Chief Financial Officer (facsimile
number (615) 889-5940); if to any other holder of a Note, by any
of the foregoing methods to such address as such holder shall
have specified to the Company in writing; or addressed to either
party hereto at any other address in the United States of America
that such party may hereafter designate by written notice to the
other party. Any such notice or communication sent as provided in
this Section 7.5 shall be effective upon receipt, including
receipt of any facsimile transmission.
7.6. Payments Due on Non-Business Days. Anything in this
Agreement or the Notes to the contrary notwithstanding, any
payment of principal of or Make-Whole Premium or interest on any
Note that is due on a date other than a Business Day shall be
made on the next succeeding Business Day including the additional
days elapsed in the computation of the interest payable on such
next succeeding Business Day.
7.7. Severability. Any provision of this Agreement or the
Notes that is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the
remaining provisions hereof or thereof, and any such prohibition
or unenforceability in any jurisdiction shall (to the full extent
permitted by law) not invalidate or render unenforceable such
provision in any other jurisdiction.
7.8. Construction. Each covenant contained herein or in
the Notes shall be construed (absent express provision to the
contrary) as being independent of each other covenant contained
herein or therein, so that compliance with any one covenant shall
not (absent such an express contrary provision) be deemed to
excuse compliance with any other covenant. Where any provision
herein or therein refers to action to be taken by any Person, or
which such Person is prohibited from taking, such provision shall
be applicable whether such action is taken directly or indirectly
by such Person.
7.9. Governing Law. THIS AGREEMENT AND THE NOTES SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE
PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW YORK,
EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT
WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER
THAN SUCH STATE. THE COMPANY HEREBY SUBMITS TO THE JURISDICTION
OF THE SUPREME COURT OF THE STATE OF NEW YORK LOCATED IN NEW YORK
COUNTY, NEW YORK AND THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK AND IRREVOCABLY AGREES THAT,
SUBJECT TO THE SOLE AND ABSOLUTE ELECTION OF THE REQUIRED HOLDERS
AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, ALL ACTIONS OR
PROCEEDINGS RELATING TO THIS AGREEMENT OR THE NOTES OR ANY OTHER
RELATED DOCUMENT SHALL BE LITIGATED IN SUCH COURTS, AND THE
COMPANY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED ON IMPROPER
VENUE OR FORUM NON CONVENIENS TO THE CONDUCT OF ANY PROCEEDING IN
ANY SUCH COURTS. THE COMPANY HEREBY IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY
SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE COMPANY AT
ITS ADDRESS SPECIFIED IN SECTION 7.5, SUCH SERVICE TO BECOME
EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING. SUBJECT TO THE
ELECTION OF THE REQUIRED HOLDERS, PROCESS MAY BE SERVED IN ANY
OTHER MANNER PERMITTED BY LAW.
7.10. Waiver of Trial by Jury. THE PARTIES HERETO
ACKNOWLEDGE THAT ANY DISPUTE ARISING OUT OF THIS AGREEMENT OR THE
NOTES WILL BE BASED ON DIFFICULT AND COMPLEX FACTS. ACCORDINGLY,
EACH OF THE PARTIES HERETO HEREBY WAIVES ITS RIGHT TO TRIAL BY
JURY IN ANY DISPUTE, CONTROVERSY, SUIT, HEARING OR OTHER
PROCEEDING ARISING OUT OF THIS AGREEMENT OR THE NOTES OR THE
OBLIGATIONS, DUTIES AND RIGHTS OF THE COMPANY OR OF THE HOLDER OF
ANY NOTE AS SET FORTH HEREIN OR IN THE NOTES.
7.11. Defined Terms. The term "Company" shall mean Thomas
Nelson, Inc., a Tennessee corporation. The term "Assumption
Agreement" shall mean the Assumption and Amendment Agreement,
dated as of May 30, 1996, among the Company, The C. R. Gibson
Company and you, pursuant to which the Company assumed the
obligations of The C. R. Gibson Company under the Notes and this
Agreement. The term "Notes" shall mean the Notes as assumed and
amended by the Assumption Agreement in the form of Exhibit A-1
thereto. All other terms used herein shall have the meanings
assigned thereto in said Exhibit A-1.
7.12. Headings. The headings of the sections and
subsections of this Agreement are inserted for convenience only
and do not constitute part of this Agreement.
7.13. Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall
be deemed an original, and it shall not be necessary in making
proof of this Agreement to produce or account for more than one
such counterpart."
d. Effective upon the Effective Date, Section 7 of the
1994 Agreement is hereby amended to read identically to Section 7
of the 1989 Agreement, as amended pursuant to subsection c above,
except that (i) the Private Placement Number for purposes of
Section 7.4 of the 1994 Agreement shall be "640376B*9", and (ii)
Section 7.11 of the 1994 Agreement shall read as follows:
"7.11. Defined Terms. The term "Company" shall mean Thomas
Nelson, Inc., a Tennessee corporation. The term "Assumption
Agreement" shall mean the Assumption and Amendment Agreement,
dated as of May 30, 1996, among the Company, The C. R. Gibson
Company and you, pursuant to which the Company assumed the
obligations of The C. R. Gibson Company under the Notes and this
Agreement. The term "Notes" shall mean the Notes as assumed and
amended by the Assumption Agreement in the form of Exhibit A-2
thereto. All other terms used herein shall have the meanings
assigned thereto in said Exhibit A-2."
5. Representations and Warranties of the Company.
a. Compliance with Other Instruments. The execution,
delivery and performance of this Agreement and Amendment and
Supplement No. 1 to the Pledge Agreements referred to in Section
7c hereof, the assumption and performance of the Gibson Notes and
the Gibson Agreements (as amended by this Agreement), and the
issuance and delivery of the new Gibson Notes referred to in
Section 7a hereof will not (a) result in any violation of or be
in conflict with or constitute a default under any term of the
charter or by-laws of the Company or any Subsidiary, or any
agreement or instrument to which it or any Subsidiary is a party
or by which it or any Subsidiary or any of their respective
assets or properties are bound, or any term of any applicable
law, ordinance, rule or regulation of any Governmental Authority
or any term of any order, judgment, award or decree issued by any
court, arbitrator or other Governmental Authority applicable to
the Company or any Subsidiary, or (b) result in the creation of
(or impose any obligation on the Company or any Subsidiary to
create) any Lien upon any properties or assets of the Company or
any Subsidiary.
b. Governmental Consents. No consent, approval,
authorization or other action of, or registration, declaration or
filing with, any Governmental Authority is required in connection
with the execution, delivery or performance by the Company of
this Agreement and Amendment and Supplement No. 1 to the Pledge
Agreements referred to in Section 7c hereof, the assumption and
performance of the Gibson Notes and the Gibson Agreements (as
amended by this Agreement), and the issuance and delivery of the
new Gibson Notes referred to in Section 7a hereof.
c. Due Authorization. The execution, delivery and
performance of this Agreement and Amendment and Supplement No. 1
to the Pledge Agreements referred to in Section 7c hereof, the
assumption and performance of the Gibson Notes and the Gibson
Agreements (as amended by this Agreement), and the issuance and
delivery of the new Gibson Notes referred to in Section 7a hereof
have been duly authorized by all necessary corporate action on
the part of the Company and this Agreement has been, and said
Amendment and Supplement No. 1 and said new Gibson Notes will on
the Effective Date be, duly executed and delivered by the
Company. This Agreement constitutes, and the Pledge Agreements
as amended by said Amendment and Supplement No. 1, the Gibson
Notes and the Gibson Agreements (as amended hereby) and the new
Gibson Notes referred to in Section 7a hereof will on the
Effective Date constitute, the legal, valid and binding
obligations of the Company, enforceable against the Company in
accordance with their respective terms. The Company has all
requisite corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby.
d. No Registration. The assumption of the Gibson
Notes hereunder and the issuance and delivery of the new Gibson
Notes referred to in Section 7a hereof does not require
registration under the Securities Act.
6. Representations and Warranties of Gibson. Gibson
represents and warrants that:
a. Due Authorization. This Agreement has been duly
authorized by all necessary corporate action on the part of
Gibson and has been duly executed and delivered by Gibson.
Gibson has all requisite corporate power and authority to enter
into this Agreement and to consummate the transactions
contemplated hereby.
7. Conditions to Effectiveness. This Agreement shall
become effective on the date (the "Effective Date") that all the
following conditions shall have been fulfilled and MetLife shall
have delivered written notice of such fact to the Company and
Gibson:
a. The Company shall have duly executed and
delivered to MetLife (i) a new 9.50% Note in the form of
Exhibit A-1 hereto payable to MetLife in the principal
amount of $7,000,000 and dated the Effective Date in
exchange for the outstanding 9.50% Note, and (ii) a new
8.31% Note in the form of Exhibit A-2 hereto payable to
MetLife in the principal amount of $5,000,000 and dated
the Effective Date in exchange for the outstanding 8.31%
Note.
b. Gibson and the other Guarantors shall have duly
executed and delivered to MetLife Amendment and
Supplement No. 1 to the Guaranty Agreement in the form
of Exhibit B hereto and dated the Effective Date.
c. The Company and the other parties to the Pledge
Agreements shall have duly executed and delivered Amendment
and Supplement No. 1 to each Pledge Agreement in the form of
Exhibits C-1 and C-2 hereto, respectively, and dated the
Effective Date.
d. The parties to the Intercreditor Agreement shall
have duly executed and delivered Amendment and Supplement
No. 1 thereto in the form of Exhibit D hereto and dated the
Effective Date.
e. The representations and warranties of the Company
and Gibson contained in this Agreement and otherwise made in
writing by or on behalf of the Company and Gibson in
connection with the transactions contemplated by this
Agreement shall be true and correct at the date hereof and
at the Effective Date, except as affected by the
consummation of such transactions.
f. The Company and Gibson shall have performed and
complied with all provisions and conditions contained in
this Agreement required to be performed or complied with by
each of them prior to or on the Effective Date. Immediately
prior to and after giving effect to the transactions
contemplated hereby, no event which constitutes or which
after notice or lapse of time or both would constitute an
event of default under the Gibson Notes, the 1996 Agreement
or the Bank Agreements shall have occurred and be
continuing.
g. Each of the Company and Gibson shall have delivered
to MetLife a certificate, signed by an authorized officer of
each of them and dated the Effective Date, certifying that
the conditions specified in Sections 7(e) and (f) hereof as
to itself have been fulfilled.
h. The Company and Gibson shall have delivered to
MetLife the written consent of each party to the Bank
Agreements and of The Prudential Insurance Company of
America with respect to this Agreement and the transactions
contemplated hereby, including Exhibits A-1, A-2 and B
hereto, in form and substance satisfactory to MetLife.
i. Bass, Berry & Sims, special counsel for the
Company, and Stuart Heaton, Esq., counsel for the Company,
shall have delivered to MetLife favorable opinions dated the
Effective Date, substantially in the form set forth in
Exhibits E and F hereto, respectively, and covering such
other matters as MetLife may reasonably request.
j. The Company shall have paid to MetLife, by wire
transfer to MetLife's account specified in Section 7.4 of
the Gibson Agreements (as amended hereby), accrued interest
on the Gibson Notes as contemplated by Section 2 hereof.
k. The Company and each Guarantor shall have delivered
to MetLife a certificate of an authorized officer thereof
(or of the general partner thereof, as the case may be),
dated the Effective Date and certifying as to the
resolutions attached thereto relating to the transactions
contemplated hereby.
l. All proceedings in connection with the transactions
contemplated hereby and all documents and instruments
incident to such transactions shall be satisfactory to
MetLife, and MetLife shall have received all such documents,
certificates and instruments relating to such transactions
as MetLife may reasonably request.
8. Ratification. By its execution hereof, the Company
agrees that, upon the Effective Date, the Gibson Notes and the
Gibson Agreements, amended and assumed as herein set forth, shall
be in all respects ratified and confirmed and that the terms,
provisions and conditions of the Gibson Notes and the Gibson
Agreements, as so amended and assumed, shall be and remain in
full force and effect.
9. Expenses. The Company agrees, whether or not the
transactions hereby contemplated shall be consummated, to pay,
and save MetLife harmless from and against any and all liability
for the payment of, all expenses arising in connection with the
execution and delivery of this Agreement and the Exhibits hereto
and consummation of the transactions contemplated hereby, and in
connection with any amendments, modifications or waivers (whether
or not any of the same become effective) under or in respect of
this Agreement, including, without limitation, all stamp and
other taxes (other than Federal or state income taxes, if any)
which may be payable in respect of the execution and delivery of
this Agreement and consummation of the transactions contemplated
hereby (including the issuance of the new Gibson Notes referred
to in Section 7a hereof and the assumption of the Gibson Notes
hereunder), and the fees and disbursements of special counsel and
any other counsel retained by MetLife or by the Company in
connection with this Agreement, the Exhibits hereto, and any such
amendments, modifications or waivers.
10. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL
BE GOVERNED BY, THE LAW OF THE STATE OF NEW YORK, EXCLUDING
CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD
REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN
SUCH STATE. THE COMPANY AND GIBSON HEREBY SUBMIT TO THE
JURISDICTION OF THE SUPREME COURT OF THE STATE OF NEW YORK
LOCATED IN NEW YORK COUNTY, NEW YORK AND THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND
IRREVOCABLY AGREE THAT, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, ALL ACTIONS OR PROCEEDINGS RELATING TO THIS AGREEMENT OR ANY
OTHER RELATED DOCUMENT SHALL BE LITIGATED IN SUCH COURTS, AND THE
COMPANY AND GIBSON WAIVE ANY OBJECTION WHICH IT MAY HAVE BASED ON
IMPROPER VENUE OR FORUM NON CONVENIENS TO THE CONDUCT OF ANY
PROCEEDING IN ANY SUCH COURTS. THE COMPANY AND GIBSON HEREBY
IRREVOCABLY CONSENT TO THE SERVICE OF PROCESS OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE
MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO SUCH PERSON AT ITS ADDRESS SPECIFIED IN
SECTION 13 HEREOF, SUCH SERVICE TO BECOME EFFECTIVE THIRTY (30)
DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT
OF METLIFE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW
OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE
COMPANY AND GIBSON IN ANY OTHER JURISDICTION.
11. Waiver of Trial by Jury. THE PARTIES HERETO
ACKNOWLEDGE THAT ANY DISPUTE ARISING OUT OF THIS AGREEMENT WILL
BE BASED ON DIFFICULT AND COMPLEX FACTS. ACCORDINGLY, EACH OF
THE PARTIES HERETO HEREBY WAIVES ITS RIGHT TO TRIAL BY JURY IN
ANY DISPUTE, CONTROVERSY, SUIT, HEARING OR OTHER PROCEEDING
ARISING OUT OF THIS AGREEMENT OR THE OBLIGATIONS, DUTIES AND
RIGHTS OF SUCH PARTY AS SET FORTH HEREIN.
12. Successors and Assigns. All covenants, agreements,
representations and warranties made herein or in certificates
delivered in connection herewith by or on behalf of the Company
or Gibson shall survive the Effective Date, and shall bind the
successors and assigns of the Company and Gibson, whether so
expressed or not, and all such covenants, agreements,
representations and warranties shall inure to the benefit of
MetLife's successors and assigns, including any subsequent holder
of any of the Gibson Notes.
13. Notices. All communications and notices hereunder
shall be in writing, mailed (by registered or certified mail,
return receipt requested) or delivered by a recognized overnight
delivery service or sent by facsimile transmission followed by a
confirmation copy sent on the same day by a recognized overnight
delivery service, if to MetLife, to Metropolitan Life Insurance
Company, One Madison Avenue, New York, N.Y. 10010, Attention:
Treasurer (facsimile number (212) 578-3910), with a copy to
Metropolitan Life Insurance Company, Suite 800, One Lincoln
Centre, Oak Brook Terrace, Illinois 60181, Attention: Assistant
Vice-President (facsimile number (708) 916-2575), or if to the
Company or Gibson, to Thomas Nelson, Inc. (or, if to Gibson, to
The C. R. Gibson Company, c/o Thomas Nelson, Inc.), Nelson Place
at Elm Hill Pike, P. O. Box 141000, Nashville, Tennessee 37214,
Attention: Joe L. Powers, Executive Vice President and Chief
Financial Officer (facsimile number (615) 889-5940); or addressed
to any party at any other address in the United States of America
that such party may hereafter designate by written notice to the
other parties. Any notice or communication sent as provided in
this Section 13 shall be effective upon receipt, including
receipt of a facsimile transmission.
14. Headings. The headings of the sections and
subsections of this Agreement are inserted for convenience only
and do not constitute part of this Agreement.
15. Counterparts. This Agreement may be executed in two
or more counterparts, and by different parties hereto on separate
counterparts, each of which when so executed and delivered shall
be deemed an original, but all such counterparts together shall
constitute but one and the same instrument.
IN WITNESS WHEREOF, the Company, Gibson and MetLife have
caused this Agreement to be duly executed by its respective
officer thereunto duly authorized as of the date first above
written.
THOMAS NELSON, INC.
By /s/ Joe L. Powers
_______________________
Joe L. Powers
Executive Vice President and
Chief Financial Officer
THE C. R. GIBSON COMPANY
By /s/ Joe L. Powers
_______________________
Joe L. Powers
Secretary
METROPOLITAN LIFE INSURANCE
COMPANY
By /s/ John R. Endres
_______________________
Title: Assistant Vice President
<PAGE>
EXHIBIT A-1
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION SET FORTH IN SECTION 4(2)
THEREOF. THIS NOTE MAY NOT BE TRANSFERRED, SOLD, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR UPON
DELIVERY TO THE COMPANY OF AN OPINION OF COUNSEL (WHICH MAY
BE COUNSEL REGULARLY EMPLOYED BY THE HOLDER OF THIS NOTE)
REASONABLY SATISFACTORY TO THE COMPANY THAT REGISTRATION
UNDER THE ACT IS NOT REQUIRED, EXCEPT THAT NO SUCH OPINION
SHALL BE REQUIRED IN ORDER TO EFFECTUATE A TRANSFER IN
ACCORDANCE WITH THE PROVISIONS OF RULE 144 OR RULE 144A
PROMULGATED UNDER THE ACT OR ANY SIMILAR SUCCESSOR RULE OR
RULES THERETO.
THOMAS NELSON, INC.
9.50% Senior Note Due September 22, 1999
No. New York, New York
$7,000,000 May 30, 1996
THOMAS NELSON, INC., a corporation duly organized and
existing under the laws of the State of Tennessee (hereinafter
called the "Company"), for value received, hereby promises to pay
to Metropolitan Life Insurance Company, or registered assigns, on
September 22, 1999 the principal amount of Seven Million Dollars
(or so much thereof as shall not have been prepaid) in such coin
or currency of the United States of America as at the time of
payment shall be legal tender for public and private debts, at
the Metropolitan Branch of The Chase Manhattan Bank, N.A., in the
Borough of Manhattan, The City of New York, State of New York,
and to pay interest (computed on the basis of a 360-day year of
twelve 30-day months) at said office, in like coin or currency,
on the unpaid portion of said principal amount from the date
hereof, semi-annually on the twenty-second day of March and
September in each year, commencing on the first such day after
the date hereof, at the rate of 9.50% per annum until such unpaid
portion of such principal amount shall have become due and
payable and at the Overdue Interest Rate thereafter and, so far
as may be lawful, on any overdue installment of interest at the
Overdue Interest Rate. SECTION 1. THE NOTES; TRANSFERS,
EXCHANGE, ETC.
1.01. The Notes.
This Note is one of an authorized issue of senior promissory
notes (hereinafter called the "Notes", as more fully defined in
Section 6) made by the Company in an aggregate principal amount
of $7,000,000, maturing on September 22, 1999, bearing interest
payable at the same rate and on the same dates as the interest on
the principal amount of this Note and originally issued pursuant
to the Agreement.
1.02. Registration, Transfer or Exchange of Notes.
The Notes are issuable only as registered Notes. The
Company will keep at its office or agency maintained as provided
in Section 3.02 a register in which the Company shall provide for
the registration and registration of transfer of the Notes.
The holder of this Note may, at its option and either in
person or by duly authorized attorney, surrender the same at said
office or agency for registration of transfer or exchange,
accompanied if surrendered for transfer by a written instrument
of transfer duly executed by such holder or attorney. In case
such holder shall so request a transfer or exchange of this Note,
the Company shall, at the expense of such holder, deliver to or
upon such holder's order one or more Notes in the same aggregate
unpaid principal amount as this Note, each dated as of the date
of, or, if later, the date to which interest has been paid on,
this Note, in the principal amount of $1,000,000 or a multiple of
$1,000 in excess thereof, as requested by such holder (provided
that if such aggregate unpaid principal amount is less than
$500,000, the Company will deliver one Note in exchange for this
Note), and registered in such name or names as shall be specified
by such holder. Every Note so made and delivered upon transfer
or in exchange for this Note shall be in the form of Exhibit A-1
to the Assumption Agreement.
Prior to due presentation for registration of transfer of
this Note, the Company may deem and treat the registered holder
hereof as the absolute owner of this Note for the purpose of
receiving payment of or on account of the principal of and
premium, if any, and interest on this Note, and for the purpose
of any notice, waiver or consent hereunder, and payment of this
Note shall be made only to or upon the order in writing of such
holder.
l.03. Loss, Theft, Destruction or Mutilation of Notes.
Upon receipt of evidence satisfactory to the Company of the
loss, theft, destruction or mutilation of this Note, and, in the
case of any such loss, theft or destruction, upon receipt of a
bond of indemnity reasonably satisfactory to the Company or, in
the case of any such mutilation, upon surrender and cancellation
of this Note, the Company will make and deliver, in lieu of such
lost, stolen, destroyed or mutilated Note, a new Note of like
tenor and unpaid principal amount and dated the date of, or, if
later, the date to which interest has been paid on, the lost,
stolen, destroyed or mutilated Note. In the case of a holder of
the Notes which is an institutional investor having combined
capital, surplus and undivided profits of at least $200,000,000,
its own unsecured agreement of indemnity shall be deemed
satisfactory to the Company.
SECTION 2. PREPAYMENT OF NOTES.
2.0l. Mandatory Prepayments.
The Company covenants and agrees that it will prepay
$1,000,000 of the then unpaid principal amount of the Notes on
September 22, 1996, $2,000,000 of the then unpaid principal
amount of the Notes on September 22, 1997 and $2,000,000 of the
then unpaid principal amount of the Notes on September 22, 1998.
All such prepayments pursuant to this Section 2.01 shall be
applied on the respective payment dates thereof toward the
prepayment of the principal amount of the Notes so to be prepaid,
in each case together with interest accrued thereon to such
prepayment date, but without premium, and otherwise as provided
in Section 2.05. Upon prepayment pursuant to Section 6 of the
Agreement of the Notes held by some but not all holders, the
principal amount of each mandatory prepayment of Notes becoming
due under this Section 2.01 on or after the date of such
prepayment shall be reduced in the same proportion as the
aggregate unpaid principal amount of the Notes is reduced as a
result of such prepayment.
2.02. Optional Prepayments.
Upon notice given as provided in Section 2.04 and otherwise
as provided in Section 2.05, the Company may, at its option,
prepay the Notes in whole at any time, or in part, but not less
than an amount equal to $1,000,000 (provided that in the event
the unpaid principal amount of the Notes outstanding shall be
less than $1,000,000, then in amount equal to the full amount of
such unpaid principal amount) from time to time, together with
accrued interest on the principal amount so prepaid to the
prepayment date and a premium equal to the Make-Whole Premium.
No prepayment of less than all of the outstanding Notes
pursuant to this Section 2.02 shall be credited to or relieve the
Company to any extent from its obligation to make any prepayment
of the Notes required by Section 2.01.
2.03. Prepayment Upon Change of Control.
Upon the request of any holder of a Note as provided in
Section 6 of the Agreement, the Company shall prepay the Notes
then held by such holder in accordance with the provisions of
such Section 6.
2.04. Notice of Prepayment and Other Notices.
The Company shall give written notice of optional prepayment
of this Note or any portion hereof pursuant to Section 2.02 not
less than thirty (30) days nor more than sixty (60) days prior to
the date fixed for such prepayment in such notice, which notice
of prepayment shall specify the amount so to be prepaid, together
with the premium, if any, to be paid thereon and the date fixed
for such prepayment. Such notice of prepayment and all other
notices to be given to any holder of this Note shall be given in
the manner specified in Section 8.01 to the Person in whose name
this Note is registered at its address designated on the register
maintained by the Company on the date such notice of prepayment
or other notice is given. Upon notice of prepayment being given
as aforesaid, the Company covenants and agrees that the Company
will prepay, on the date therein fixed for prepayment, this Note
or the portion hereof, as the case may be, so called for
prepayment, at the principal amount thereof so called for
prepayment together with interest accrued thereon to the date
fixed for such prepayment, plus the applicable premium, if any.
The notice to the Computing Holder shall also set forth the
respective names and addresses of, and principal amounts of the
Notes held by, the other holders. The Computing Holder shall
give written notice to the Company and the other holders, on the
second Business Day prior to the date fixed for prepayment in
such notice, of the amount of the Make-Whole Premium calculated
hereunder, which Computing Holder's notice shall set forth in
reasonable detail the computation thereof. Such Make-Whole
Premium set forth in such notice shall be binding on the Company
and the other holders absent manifest error.
2.05. Allocation of Prepayments.
In the event of any prepayment of less than all of the
outstanding Notes (other than any prepayment pursuant to Section
6 of the Agreement) the Company will allocate the principal
amount so to be prepaid (but only in units of $1,000) among the
registered holders of Notes in proportion, as nearly as may be,
to the respective principal amounts of such Notes not theretofore
called for prepayment, of which they shall be registered holders.
2.06. Interest After Date Fixed for Prepayment.
This Note or any portion hereof to be prepaid shall cease to
bear interest on and after the date fixed for such prepayment
unless, upon presentation for the purpose, the Company shall fail
to pay this Note or such portion, as the case may be, on the date
fixed for such prepayment, in which event this Note or such
portion, as the case may be, shall bear interest at the Overdue
Interest Rate from and after such date until paid and, so far as
may be lawful, any overdue installment of interest shall bear
interest at said rate.
2.07. Surrender of Notes; Notation Thereon.
Upon any prepayment of a portion of the principal amount of
this Note, the registered holder hereof, at its option, may
require the Company to execute and deliver at the expense of such
holder, upon surrender of this Note, a new Note registered in the
name of such Person or Persons as may be designated by such
holder for the principal amount of this Note then remaining
unpaid, dated as of the date to which interest has been paid on
the principal amount of this Note then remaining unpaid, or may
present this Note to the Company for notation hereon of the
payment of the portion of the principal amount of this Note so
prepaid. Every new Note made and delivered pursuant to the
provisions of this Section 2.07 shall in all other respects be in
the same form and have the same terms as this Note. The Company
may, as a condition of payment of all or any of the principal of,
premium, if any, and interest on, this Note, require the holder
to present this Note for notation of such payment and, if this
Note be paid in full, require the surrender hereof.
SECTION 3. AFFIRMATIVE COVENANTS.
The Company covenants that so long as any of the Notes are
outstanding:
3.0l. Payment of Notes. The Company will punctually pay or
cause to be paid the principal and interest (and premium, if any)
to become due in respect of the Notes according to the terms
thereof.
3.02. Maintenance of Company Office. The Company will
maintain an office or agency at 501 Nelson Place, Nashville,
Tennessee 37214 (or such other place in the United States of
America as the Company may designate in writing to the holder
hereof), where notices, presentations and demands to or upon the
Company in respect of the Notes may be given or made.
3.03. Keeping of Books. The Company will, and will cause
each of its Subsidiaries to, keep proper books of record and
account in accordance with GAAP.
3.04. Payment of Taxes and Claims; Preservation of
Corporate Existence, etc.; Maintenance of Properties. The
Company will, and will cause each of its Subsidiaries to,
A. file all tax returns required to be filed in any
jurisdiction and pay and discharge all taxes shown to be due
and payable on such returns and all other taxes, assessments
and governmental charges or levies imposed upon it, its
income, franchises or profits or its property before the same
shall become in default, as well as all lawful claims and
liabilities of any kind (including claims and liabilities for
labor, materials and supplies) which, if unpaid, might by law
become a Lien upon its property; provided, however, that
neither the Company nor any Subsidiary shall be required to
pay any such tax, assessment, charge, levy or claim if (i)
the amount, applicability or validity thereof shall currently
be contested in good faith by appropriate proceedings and if
the Company or any such Subsidiary shall have set aside on
its books adequate reserves therefor in accordance with GAAP,
or (ii) the nonpayment thereof in the aggregate could not
reasonably be expected to have a Material Adverse Effect;
B. subject to Section 4.02, do all things necessary to
preserve and keep in full force and effect its corporate
existence, rights (charter and statutory), permits, licenses
and franchises, unless in the good faith judgment of the
Company, the termination of or failure to preserve and keep
in full force and effect such corporate existence of a
Subsidiary or such right, permit, license or franchise could
not, individually or in the aggregate, have a Material
Adverse Effect; and
C. maintain and keep all its properties used or useful
in the conduct of its business in good condition, repair and
working order (other than ordinary wear and tear) so that the
business carried on in connection therewith may be properly
conducted at all times; provided, however, that nothing in
this Section 3.04C shall prevent the Company or any of its
Subsidiaries from discontinuing the operation and maintenance
of any of its properties, if such discontinuance is, in the
judgment of the Company, desirable in the conduct of the
Company's or such Subsidiary's business and the Company has
concluded that such discontinuance could not, individually or
in the aggregate, have a Material Adverse Effect.
3.05. Insurance. The Company will, and will cause each of
its Subsidiaries to, maintain, with financially sound and
reputable insurers, insurance with respect to their respective
properties and businesses against such casualties and
contingencies, of such types, on such terms and in such amounts
(including deductibles, coinsurance and self-insurance, if
adequate reserves are maintained with respect thereto) as is
consistent with sound business practices customary in the case of
entities of similar size engaged in the same or a similar
business and similarly situated.
3.06. Compliance with Laws, etc. The Company will, and
will cause each of its Subsidiaries to, comply with all present
and future applicable laws, rules, regulations, orders and
requirements (including, without limitation, all applicable
Environmental Laws) of every duly constituted governmental or
quasi-governmental authority or agency applicable to the Company
and its Subsidiaries or any of their respective properties, and
will obtain and maintain in effect all licenses, certificates,
permits, franchises and other governmental authorizations
necessary to the ownership of their respective properties or to
the conduct of their respective businesses, in each case to the
extent necessary to ensure that non-compliance with such laws,
rules, regulations, orders and requirements or failures to obtain
or maintain in effect such licenses, certificates, permits,
franchises and other governmental authorizations could not,
individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect.
3.07. Covenant to Secure Notes Equally. The Company will,
if it or any Subsidiary shall create or assume any Lien upon any
of its property or assets, whether now owned or hereafter
acquired, other than Liens permitted by the provisions of Section
4.03 (unless prior written consent to the creation or assumption
thereof shall have been obtained pursuant to Section 5) make or
cause to be made effective provision whereby the Notes will be
secured by such Lien equally and ratably with any and all other
Indebtedness thereby secured so long as any such other
Indebtedness shall be so secured.
3.08. Guaranteed Obligations. The Company will if, at any
time, any of its Subsidiaries executes a Guaranty of or
collateralizes in any other manner any obligation of the Company
under the Bank Agreements, simultaneously cause such Subsidiary
or Subsidiaries, as the case may be, to execute and deliver to
each holder of a Note a similar Guaranty in form and substance
reasonably satisfactory to such holder with respect to payment of
the principal amount of the Notes and any premium and interest
thereon, which bears the same ratio to the total unpaid principal
amount of the Notes as the amount of such other obligation which
is subject to a Guaranty bears to the total unpaid principal
amount of such other obligation, or if such other obligation is
collateralized, to collateralize the Notes equally and ratably
with the obligations of the Company under the Bank Agreements.
3.09. Parity With Bank Agreements. The Company will, and
will cause each of its Subsidiaries to, execute all such
documents and take such other actions as the Required Holders may
reasonably request in order to assure that at all times the Notes
shall rank pari passu in right of payment with the obligations of
the Company under the Bank Agreements, including, without
limitation, the waiver of set-off rights or the execution of a
set-off and collateral sharing agreement in favor of the holders
of the Notes.
3.10. Information Required by Rule 144A. The Company will,
upon the request of the holder of any Note, provide such holder,
and any qualified institutional buyer designated by such holder,
such financial and other information as such holder may
reasonably determine to be necessary in order to permit
compliance with the information requirements of Rule 144A under
the Securities Act in connection with the resale of Notes, except
at such times as the Company is subject to the reporting
requirements of section 13 or 15(d) of the Exchange Act. For the
purpose of this Section 3.10, the term "qualified institutional
buyer" shall have the meaning specified in Rule 144A under the
Securities Act.
3.ll. No Integration. The Company will take all necessary
steps so that its assumption of the Notes and issuance of new
Notes pursuant to the Assumption Agreement will not require
registration under the Securities Act. The Company will not make
any future offer and sale of debt securities of the Company of
any class if, as a result of the doctrine of "integration", there
is a reasonable possibility that such offer and sale would result
in the loss of the entitlement of its assumption of the Notes and
its issuance of new Notes to an exemption from the registration
requirements of the Securities Act.
SECTION 4. NEGATIVE COVENANTS.
The Company covenants that so long as any of the Notes are
outstanding:
4.01. Transactions with Affiliates. The Company will not,
and will not permit any of its Subsidiaries to, enter into
directly or indirectly any transaction or group of related
transactions (including without limitation the purchase, lease,
sale or exchange of properties of any kind or the rendering of
any service) with any Affiliate (other than the Company or
another Subsidiary), except in the ordinary course and pursuant
to the reasonable requirements of the Company's or such
Subsidiary's business and upon fair and reasonable terms no less
favorable to the Company or such Subsidiary than would be
obtainable in a comparable arm's-length transaction with a Person
not an Affiliate; provided, however, this Section 4.01 shall not
apply to any individual transaction which does not exceed $250,000
or any series of related transactions which in the aggregate do not
exceed $250,000.
4.02. Merger, Consolidation, etc. The Company will not,
and will not permit any of its Subsidiaries to, consolidate with
or merge with any other Person or convey, transfer or lease all
or substantially all of its assets in a single transaction or
series of transactions to any Person except that:
(i) any Subsidiary may merge or consolidate with the
Company or a Material Subsidiary that is a Wholly-Owned
Subsidiary, provided immediately after such merger or
consolidation, no Default or Event of Default shall have
occurred or exist and, in the case of any transaction
involving the Company, the surviving corporation or the
continuing corporation (if not the Company) shall be a
solvent corporation organized and existing under the laws of
the United States or any State thereof (including the
District of Columbia), and such corporation (if not
the Company) (A) shall have executed and delivered to each
holder of a Note its assumption of the due and punctual
performance and observance of each covenant and condition of
the Agreement and the Notes, (B) shall have executed and
delivered, or caused to be executed and delivered, to each
holder of a Note a reaffirmation of the Pledge Agreements and
the Guaranty Agreement by each party thereto, and (C) shall
have caused to be delivered to each holder of a Note (1) an
opinion of nationally recognized independent counsel, or
other independent counsel reasonably satisfactory to the
holders of the Notes, to the effect that all agreements or
instruments effecting such assumption and reaffirmation are
enforceable in accordance with their terms and comply with
the terms hereof which opinion shall be reasonably
satisfactory to the holders of the Notes in all respects and
(2) such other agreements and instruments which any holder of
a Note may reasonably request;
(ii) the Company may merge or consolidate with any
other corporation (including a Material Subsidiary that is a
Wholly-Owned Subsidiary) if (A) the continuing or surviving
corporation (if not the Company) shall be a solvent
corporation existing under the laws of the United States or
any State thereof (including the District of Columbia), and
such corporation (1) shall have executed and delivered to
each holder of a Note its assumption of the due and punctual
performance and observance of each covenant and condition of
the Agreement and the Notes, (2) shall have executed and
delivered, or caused to be executed and delivered, to each
holder of a Note a reaffirmation of the Pledge Agreements and
the Guaranty Agreement by each party thereto, and (3) shall
have caused to be delivered to each holder of a Note a) an
opinion of nationally recognized independent counsel, or
other independent counsel reasonably satisfactory to the
holders of the Notes, to the effect that all agreements or
instruments effecting such assumption and reaffirmation are
enforceable in accordance with their terms and comply with
the terms hereof which opinion shall be reasonably
satisfactory to the holders of the Notes in all respects and
b) such other agreements and instruments which any holder of
a Note may reasonably request, and (B) immediately after such
merger or consolidation, no Default or Event of Default shall
have occurred or exist;
(iii) any Subsidiary may convey, transfer or lease all
or substantially all of its assets to the Company or a
Material Subsidiary that is a Wholly-Owned Subsidiary,
provided immediately after such transaction, no Default or
Event of Default shall have occurred or exist; and
(iv) the Company may convey, transfer or lease all or
substantially all of its assets to any other corporation
(including a Material Subsidiary that is a Wholly-Owned
Subsidiary), provided (A) the acquiring corporation shall be
a solvent corporation existing under the laws of the United
States or any State thereof (including the District of
Columbia), and such corporation (1) shall have executed and
delivered to each holder of a Note its assumption of the due
and punctual performance and observance of each covenant and
condition of the Agreement and the Notes, (2) shall have
executed and delivered, or caused to be executed and
delivered, to each holder of a Note a reaffirmation of the
Pledge Agreements and the Guaranty Agreement by each party
thereto, and (3) shall have caused to be delivered to each
holder of a Note a) an opinion of nationally recognized
independent counsel, or other independent counsel reasonably
satisfactory to the Required Holders, to the effect that all
agreements or instruments effecting such assumption and
reaffirmation are enforceable in accordance with their terms
and comply with the terms hereof which opinion shall be
reasonably satisfactory to the holders of the Notes in all
respects and b) such other agreements and instruments which
any holder of a Note may reasonably request, and (B)
immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred or exist.
4.03. Liens. The Company will not, and will not permit any
of its Subsidiaries to, create, assume, incur or suffer to exist
any Lien upon any of its property or assets, whether owned on
January 3, 1996 or thereafter acquired (whether or not provision
is made for the equal and ratable securing of the Notes pursuant
to Section 3.07), except:
(a) Liens existing on January 3, 1996 and specified on
Schedule 10.3 to the 1996 Agreement, provided in the case of
Liens securing the Company's obligations under the Bank
Agreements, all Persons party to the Bank Agreements shall
have executed and delivered the Intercreditor Agreement and
the Intercreditor Agreement shall be in full force and effect
so long as such Liens exist;
(b) Liens for taxes (including ad valorem and property
taxes) and assessments (other than any Liens and assessments
imposed under ERISA) or governmental charges or levies which
are not yet due (and not then delinquent) or which are being
actively contested in good faith by appropriate proceedings
and with respect to which adequate reserves are being
maintained;
(c) landlord liens and statutory liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed
by law, created in the ordinary course of business for
amounts not yet due or which are being contested in good
faith by appropriate proceedings and with respect to which
adequate reserves are being maintained, and, in any case (i)
were not incurred in connection with the borrowing of money,
and (ii) do not, individually or in the aggregate, materially
detract from the value of the property or assets of the
Company or any Material Subsidiary, or the Company and its
Subsidiaries taken as a whole; (d) Liens (other than any
Lien imposed under ERISA) incurred or deposits made in the
ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of
social security or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases
(other than Capitalized Leases), government contracts,
performance and return of money bonds and similar obligations
which (i) were not incurred in connection with the borrowing
of money, and (ii) do not, individually or in the aggregate,
materially detract from the value of the property or assets
of the Company or any Material Subsidiary, or the Company and
its Subsidiaries taken as a whole;
(e) Liens arising in the ordinary course of business
(including easements, rights of way, zoning restrictions of
record and similar restrictions and other similar charges or
encumbrances) which are not incurred in connection with Debt,
and which do not, individually or in the aggregate, (a)
materially interfere with the ordinary conduct of the
business of the Company, or the Company and its Subsidiaries
taken as a whole, or (b) materially detract from the value of
the property or assets of the Company or any Material
Subsidiary, or the Company and its Subsidiaries taken as a
whole;
(f) any right of setoff or banker's lien arising
(whether by law, contract or otherwise) in connection with
ordinary course of business deposit arrangements maintained
by the Company or its Subsidiaries with its banks or other
financial institutions so long as any such bank or other
financial institution (A) shall not at any time make loans or
otherwise extend credit to the Company or any Subsidiary, (B)
does not maintain accounts (for the deposit of cash or
otherwise) for the benefit of the Company or any Subsidiary,
(C) shall have waived in writing for the benefit of each
holder of a Note such right of setoff or banker's lien or (D)
holds no more than $1,000,000 of obligations owed to the
Company or any Subsidiary and the total of all such
obligations permitted solely by this clause (D) shall not
exceed $3,000,000;
(g) any Lien renewing, extending or refunding any
outstanding obligations secured by a Lien described in clause
(a), (b), (c), (d), (f), (h) and (i) of this Section 4.03,
provided (A) with respect to Debt described in clause (a),
such renewal, extension or refunding shall relate solely to
Debt under the Bank Agreements, so long as all Persons then
party to the Bank Agreements shall have executed and
delivered the Intercreditor Agreement and the Intercreditor
Agreement shall be in full force and effect so long as such
Lien exists, (B) after giving effect to such renewal
extension or refunding of the obligations described in
clauses (b), (c), (d), (f), (h) and (i), such obligations
shall remain subject to the conditions and provisions set
forth in clauses (b), (c), (d), (f), (h) and (i),
respectively, and (C) except for Debt under the Bank
Agreements, the principal amount secured is not increased
and such Lien is not extended to any other property of the
Company or its Subsidiaries;
(h) Liens securing judgments rendered against the
Company or any of its Subsidiaries or arising in connection
with any court proceedings, provided (i) such Liens are being
contested in good faith by appropriate proceedings and (ii)
no action has been taken by any Person to execute or
otherwise collect on such Lien;
(i) Liens securing Debt held by the Company in any
Subsidiary or Debt held by any Subsidiary in any other
Subsidiary; and
(j) Liens securing Debt permitted by clause (ii) of
the definition of Priority Debt, provided that after giving
effect to such Liens, Consolidated Priority Debt shall not
exceed 25% of Shareholders' Equity at any time.
4.04. Loans, Advances and Investments. The Company will
not, and will not permit any of its Subsidiaries to, make or
permit to remain outstanding any Investments, except that the
Company or any Subsidiary may:
(a) make or own Investments in any Subsidiary or any
Person which immediately after giving effect to such
Investment will be a Subsidiary;
(b) own, purchase or otherwise acquire notes or
accounts receivable arising from transactions with
customers, suppliers and employees in the ordinary course
of business;
(c) execute Guaranties of Debt of Subsidiaries,
provided that after giving effect to any such Guaranty the
Company will be in compliance with Sections 4.08(a), (b) and
(e);
(d) own, purchase or acquire (A) prime commercial
paper of an issuer rated A-1 or P1 or better by Moody's or
S&P or certificates of deposit in U.S. commercial banks
(having capital and surplus in excess of $500,000,000), in
each case due within one year from the date of purchase, or
(B) obligations of the United States Government or any agency
thereof for which the full faith and credit of the United
States Government is pledged due within one year from the
date of purchase, or (C) obligations guaranteed by the United
States Government due within one year from the date of
purchase; and
(e) make or permit to remain outstanding any other
Investments which in the aggregate do not exceed at any time
15% of Shareholders' Equity.
4.05. Restricted Payments. The Company will not, and will
not permit any of its Subsidiaries to:
(a) pay or declare any dividend on any class of its Capital
Stock or make any other distribution on account of any class of
its Capital Stock; or
(b) redeem, purchase or otherwise acquire, directly or
indirectly (through a Subsidiary or otherwise), any shares of its
Capital Stock (all of the foregoing events set forth in
subsections (a) and (b), whether made in cash or property, being
herein called "Restricted Payments");
unless (A) the aggregate amount of all Restricted Payments made
since September 30, 1995 would not exceed the sum of (1)
$20,000,000, plus (2) 50% of cumulative Consolidated Net Income
since September 30, 1995 (or minus 100% of cumulative
Consolidated Net Income since September 30, 1995 if such
cumulative Consolidated Net Income for such period is a loss),
plus (3) the aggregate net proceeds of the issuance or sale of the
Company's Capital Stock after September 30, 1995 and (B) no Default
or Event of Default shall have occurred and be continuing, and no
Default or Event of Default would occur as a result of such
Restricted Payment; provided, however, any Subsidiary may make
Restricted Payments to the Company or any Material Subsidiary.
For purposes of this Section 4.05, the conversion of the
Company's Convertible Subordinated Notes due 1999 shall not
constitute an issuance of the Company's Capital Stock.
4.06. Nature of Business. The Company will not, and will
not permit any of its Subsidiaries to, engage in any business, if
as a result, when taken as a whole, the general nature of the
business then engaged in by the Company and its Subsidiaries
would be substantially changed from the nature of the business of
the Company and its Subsidiaries on January 3, 1996.
4.07. Sale of Property. The Company will not, and will not
permit any of its Subsidiaries to, Dispose of any property or
assets (including, without limitation, Subsidiary Stock), except,
so long as no Default or Event of Default shall exist:
(a) the Company or any Subsidiary may Dispose of inventory
in the ordinary course of business at Fair Market Value;
provided, however, the Company and its Subsidiaries may Dispose
of inventory at less than Fair Market Value, provided such
Disposition is in the ordinary course of business of the Company
and its Subsidiaries which shall be consistent with the practice
of the industry of the Company and the Subsidiaries at the time
of such Disposition; and
(b) the Company or any Subsidiary may Dispose of any of its
assets so long as, immediately after giving effect to such
proposed Disposition:
(i) the cumulative net book value of all assets so
Disposed of by the Company and its Subsidiaries during any
fiscal year does not exceed 15% of the net book value of the
Consolidated Assets of the Company and its Subsidiaries
determined after giving effect to any such Disposition;
(ii) the consideration for such assets represents the
Fair Market Value of such assets at the time of such
Disposition; and
(iii) in the case of the Disposition of Subsidiary
Stock, the following additional conditions shall apply:
(A) in connection with such Disposition of
Subsidiary Stock, the entire Investment (whether represented
by stock, Debt, claims or otherwise) of the Company and its
other Subsidiaries in such Subsidiary is Disposed of to a
Person other than (1) the Company, (2) another Subsidiary not
being simultaneously Disposed of, or (3) an Affiliate, and
(B) the Subsidiary being Disposed of has no
continuing Investment in any other Subsidiary of the Company
not being simultaneously Disposed of or in the Company.
For purposes of this Section 4.07, "Disposition" means the sale,
lease, transfer or other disposition of property, and "Disposed
of" has a corresponding meaning to Disposition. The term
"Disposition" shall not include an exchange of assets, provided
that the assets involved in such exchange are similar in function
in that after giving effect to such exchange there has not been
(A) a Material Adverse Effect, (B) any Material deterioration of
cash flow generation, or (C) any deterioration in the overall
quality of plant, property and equipment of the Company and its
Subsidiaries taken as a whole. An "exchange" shall be deemed to
have occurred if each of the transactions involved shall have
been consummated within a six month period.
4.08. Certain Financial Limits. The Company will not
permit:
(a) Consolidated Senior Funded Debt to exceed 60% of Total
Capitalization at any time;
(b) Total Funded Debt to exceed 65% of Total Capitalization
at any time;
(c) the ratio of Consolidated Income Available for Fixed
Charges for the four fiscal quarters most recently ended to
Consolidated Fixed Charges for such four fiscal quarter period to
be less than 1.75 to 1.0 on the last day of any fiscal quarter;
(d) Shareholders' Equity to be less than $100,000,000 at
any time; and
(e) Consolidated Priority Debt to exceed 25% of
Shareholders' Equity at any time.
SECTION 5. CONSENTS, WAIVERS AND AMENDMENTS.
Any term, covenant, agreement or condition of the Agreement
or the Notes may, with the consent of the Company, be amended or
compliance therewith may be waived (either generally or in a
particular instance and either retroactively or prospectively),
by one or more written instruments signed by the Required
Holders; provided, however, that
A. no such amendment or waiver shall
1. change the maturity of the principal of, or any
installment of interest on, any of the Notes, or reduce the
principal amount thereof or the interest or premium thereon,
or subordinate or otherwise modify the terms of, or rights
to, payment of the principal thereof or interest or premium
thereon including, without limitation, change the time for
any such payment, without the consent of the holder of each
Note so affected, or
2. change the percentage of holders of Notes required
to approve any such amendment or effectuate any such waiver
or give to any Note any preference over any other Note,
without the consent of the holders of all Notes then
outstanding;
B. no such amendment or waiver shall modify or alter the
provisions of Section 2.03 of the Notes or Section 6 of the
Agreement without the consent of all holders of the Notes then
outstanding; and
C. no such waiver shall extend to or affect any obligation
not expressly waived or impair any right consequent thereon.
Any amendment or waiver pursuant to this Section 5 shall
apply equally to all the holders of the Notes and shall be
binding upon them, upon each future holder of any Note and upon
the Company, whether or not a notation of such amendment or
waiver shall have been made on such Notes. In the case of an
amendment or waiver of the character described in Section 5A, the
holder of this Note agrees to make a notation on this Note to
indicate that such amendment or waiver has been effected. In the
case of any other amendment or waiver, no notation need be made
on the Notes at the time outstanding, but any Note executed and
delivered thereafter may, at the option of the Company, bear a
notation referring to any such amendment or waiver then in
effect. For purposes of determining whether the holders of
outstanding Notes of the requisite aggregate principal amount at
any time have agreed or consented to any amendment or waiver
pursuant to the provisions of this Section 5, any Notes owned by
the Company, any Subsidiary or any Affiliate shall be disregarded
and deemed not to be outstanding.
The Company will not increase the rate of interest on any
Note or grant any holder of any Note any benefit or payment for
or in connection with any amendment or waiver in respect to the
Agreement or the Notes, whether pursuant to this Section 5 or
otherwise, unless such increase in interest or other benefit or
payment is extended on the same terms ratably to all other
holders of Notes at the time outstanding.
SECTION 6. DEFINITIONS.
For all purposes of this Note and the Agreement, except as
otherwise expressly provided or unless the context otherwise
requires:
"Affiliate" means, at any time, and with respect to any
Person, (a) any other Person that at such time directly or
indirectly through one or more intermediaries Controls, or is
Controlled by, or is under common Control with, such first
Person, and (b) any Person beneficially owning or holding,
directly or indirectly, 10% or more of any class of voting or
equity interests of the Company or any Subsidiary or any
corporation of which the Company and its Subsidiaries
beneficially own or hold, in the aggregate, directly or
indirectly, 10% or more of any class of voting or equity
interests. As used in this definition, "Control" means the
possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract
or otherwise. Unless the context otherwise clearly requires, any
reference to an "Affiliate" is a reference to an Affiliate of the
Company.
"Agreement" means the Loan Agreement dated as of September
21, 1989 between The C. R. Gibson Company ("Gibson") and
Metropolitan Life Insurance Company ("MetLife") pursuant to which
the Notes were originally issued, as amended from time to time,
including by the Assumption Agreement, and as assumed by the
Company pursuant to the Assumption Agreement.
"Assets" means, at any time, assets of any Person as
determined in accordance with GAAP.
"Assumption Agreement" means the Assumption and Amendment
Agreement, dated as of May 30, 1996, among Gibson, the Company
and MetLife, pursuant to which the Agreement, the Notes, the 1994
Agreement and the 8.31% Notes were amended and Gibson's
obligations thereunder were assumed by the Company.
"Bank Agreements" means (i) the Amended and Restated Credit
Agreement, dated December 13, 1995, among the Company, the
Lenders listed therein, and SunTrust Bank, Nashville, N.A., as
agent, and any refinancing thereof or substitution therefor, as
it may be amended, modified or supplemented from time to time in
accordance with its terms, (ii) the Amended and Restated
Revolving Credit Promissory Note dated as of December 13, 1995
(effective as of July 25, 1995) given by the Company to SunTrust
Bank, Nashville, N.A. in the original principal amount of
$10,000,000, and any refinancing thereof or substitution
therefor, as it may be amended, modified or supplemented from
time to time in accordance with its terms, and the Amended and
Restated Letter Agreement dated as of December 13, 1995 from
SunTrust Bank, Nashville, N.A., to the Company delivered in
connection therewith, as it may be amended, modified or
supplemented from time to time in accordance with its terms,
(iii) the SunTrust LOC Facility (as defined in the Intercreditor
Agreement) and (iv) the NCB LOC Facility (as defined in the
Intercreditor Agreement).
"Business Day" means any day other than a Saturday, a Sunday
or a day on which commercial banks in New York City are required
or authorized to be closed.
"Capital Stock" means, with respect to any Person, the
outstanding capital stock (or any options or warrants to purchase
capital stock or other securities exchangeable for or convertible
into capital stock) of such Person.
"Capitalized Lease" means, at any time, and with respect to
any Person, a lease which the lessee is required to capitalize on
the balance sheet of such lessee in accordance with GAAP.
"Capitalized Lease Obligations" means the amount at which
the aggregate rentals due and to become due under all Capitalized
Leases under which the Company or any Subsidiary is the lessee,
would be required to be reflected as a liability on its
consolidated balance sheet.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and the rules and regulations promulgated
thereunder from time to time.
"Company" means Thomas Nelson, Inc., a Tennessee
corporation, and, subject to Section 4.02, its successors and
assigns.
"Computing Holder" means, as of the date of prepayment
pursuant to Section 6 of the Agreement or Section 2.02 hereof or
the date of acceleration pursuant to Section 7.02 hereof, as the
case may be, the holder of Notes with an aggregate principal
amount outstanding higher than that of Notes held by any other
holder of the Notes.
"Consolidated" means the consolidation of accounts of the
Company and its Subsidiaries determined in accordance with GAAP
giving effect to the elimination of any intercompany items and
any minority interests in Subsidiaries.
"Consolidated Net Income" means, for any period, the
consolidated net income (or loss) of the Company and its
Subsidiaries for such period (taken as a single accounting
period) determined in accordance with GAAP, but excluding
therefrom (to the extent otherwise included therein) (i) any
gains or losses, together with any related provision for taxes,
realized upon any sale of assets other than in the ordinary
course of business, and (ii) any income or loss of any Person
accrued prior to the date such Person becomes a Subsidiary of the
Company or is merged into or consolidated with the Company or any
Subsidiary or all or substantially all of such Person's assets
are acquired by the Company or any Subsidiary.
"Current Debt" means, with respect to any Person, all Debt
of such Person which by its terms matures on demand or within one
year from the date of the creation thereof and is not directly or
indirectly renewable or extendible at the option of the obligor
in respect thereto to a date one year or more from the date of
creation thereof, provided that (i) Debt outstanding under an
agreement which obligates the lender or lenders to extend credit
over a period of one year or more and (ii) Current Maturities of
Funded Debt shall constitute Funded Debt and not Current Debt.
"Current Maturities of Funded Debt" means the portion of
Funded Debt outstanding which by its terms is due on demand or
within one year from the date of determination and is not
directly or indirectly renewable, extendible or refundable at the
option of the obligor to a date one year or more from such time.
"Debt" with respect to any Person means, at any time,
without duplication,
(a) its liabilities for borrowed money;
(b) its liabilities for the deferred purchase price of
property acquired by such Person (excluding accounts payable
arising in the ordinary course of business but including, without
limitation, all liabilities created or arising under any
conditional sale or other title retention agreement with respect
to any such property);
(c) its Capitalized Lease Obligations;
(d) all liabilities for borrowed money secured by any Lien
with respect to any property owned by such Person (whether or not
it has assumed or otherwise become liable for such liabilities);
and
(e) any Guaranty of such Person with respect to liabilities
of a type described in any of clauses (a) through (d) hereof.
Debt of any Person shall include all obligations of such Person
of the character described in clauses (a) through (e) to the
extent such Person remains legally liable in respect thereof
notwithstanding that any such obligation is deemed to be
extinguished under GAAP.
"Default" means an event or condition the occurrence or
existence of which would, with the lapse of time or the giving of
notice or both, become an Event of Default.
"Disposition" is defined in Section 4.07.
"Environmental Laws" means any and all Federal, state, local
and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders, decrees, permits, concessions, grants,
franchises, licenses, agreements or governmental restrictions
relating to pollution and the protection of the environment or
the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes,
air emissions and discharges to waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the rules and regulations
promulgated thereunder from time to time in effect.
"ERISA Affiliate" means any trade or business (whether or
not incorporated) that is treated as a single employer together
with the Company under section 414 of the Code.
"Event of Default" is defined in Section 7.01.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" means, at any time, the sale value of
property that would be realized in an arm's-length sale at such
time between an informed and willing buyer, and an informed and
willing seller, under no compulsion to buy or sell, respectively.
"Fixed Charges" means, for any period, the sum of (i)
Interest Expense and (ii) Operating Rents for such period.
"Funded Debt" means, with respect to any Person, all Debt of
such Person which by its terms matures, or which is otherwise
payable or unpaid, one year or more from the date of creation
thereof, or is directly or indirectly renewable or extendible at
the option of the obligor in respect thereof to a date one year
or more from the date of creation thereof, provided that Funded
Debt shall also include, as at any time of determination, Current
Maturities of Funded Debt and the minimum daily average level of
Current Debt outstanding for any sixty day period during the
twelve month period immediately preceding such time of
determination.
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States of America,
consistently applied.
"Gibson" means The C. R. Gibson Company, a Delaware
corporation and a Wholly-Owned Subsidiary.
"Governmental Authority" means
(a) the government of
(i) the United States of America or any State or
other political subdivision thereof, or
(ii) any jurisdiction in which the Company or any
Subsidiary conducts all or any part of its business, or
which asserts jurisdiction over any properties of the
Company or any Subsidiary, or
(b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any
such government.
"Guarantor" means each Subsidiary which is a party to the
Guaranty Agreement, and any other Subsidiary which executes a
Guaranty pursuant to Section 3.08 or Section 3.09.
"Guarantee" means, with respect to any Person, any
obligation (except the endorsement in the ordinary course of
business of negotiable instruments for deposit or collection) of
such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person in
any manner, whether directly or indirectly, including (without
limitation) obligations incurred through an agreement, contingent
or otherwise, by such Person:
(i) to purchase such indebtedness or obligation or any
property constituting security therefor;
(ii) to advance or supply funds (a) for the purchase
or payment of such indebtedness or obligation, or to
maintain any working capital or other balance sheet
condition or any income statement condition of any other
Person or otherwise to advance or make available funds for
the purchase or payment of such indebtedness or obligation;
(iii) to lease properties or to purchase properties or
services primarily for the purpose of assuring the owner of
such indebtedness or obligation of the ability of any other
Person to make payment of the indebtedness or obligation; or
(iv) otherwise to assure the owner of such
indebtedness or obligation against loss in respect thereof.
In any computation of the indebtedness or other liabilities of
the obligor under any Guaranty, the indebtedness or other
obligations that are the subject of such Guaranty shall be
assumed to be direct obligations of such obligor.
"Guaranty Agreement" means the Guaranty Agreement, dated as
of January 3, 1996, made by the Guarantors in favor of MetLife
with respect to the Company's obligations under the 1996 Notes
and the 1996 Agreement, as such Guaranty Agreement may be amended
or supplemented from time to time including by Amendment and
Supplement No. 1 thereto, dated as of May 30, 1996, in the form
of Exhibit B to the Assumption Agreement, to include as
Obligations (as defined in the Guaranty Agreement) thereunder the
Company's obligations under the Agreement, the Notes, the 1994
Agreement and the 8.31% Notes. The term "Guaranty Agreement"
shall also include any other Guaranty executed by a Subsidiary
from time to time pursuant to Section 3.08 or Section 3.09.
"Hazardous Material" means any and all pollutants, toxic or
hazardous wastes or any other substances that might pose a hazard
to health or safety, the removal of which may be required or the
generation, manufacture, refining, production, processing,
treatment, storage, handling, transportation, transfer, use,
disposal, release, discharge, spillage, seepage, or filtration of
which is or shall be restricted, prohibited or penalized by any
applicable law (including, without limitation, asbestos, urea
formaldehyde foam insulation and polychlorinated biphenyls).
"Income Available For Fixed Charges" means, for any period,
the sum of (i) Consolidated Net Income, (ii) taxes, (iii)
Interest Expense, (iv) Operating Rents, and (v) amortization
charges, of the Company and its Subsidiaries for such period, all
as determined in accordance with GAAP.
"Indebtedness" with respect to any Person means, at any
time, without duplication,
(a) its liabilities for borrowed money;
(b) its liabilities for the deferred purchase price of
property acquired by such Person (excluding accounts payable
arising in the ordinary course of business but including, without
limitation, all liabilities created or arising under any
conditional sale or other title retention agreement with respect
to any such property);
(c) its Capitalized Lease Obligations;
(d) all liabilities for borrowed money secured by any Lien
with respect to any property owned by such Person (whether or not
it has assumed or otherwise become liable for such liabilities);
(e) all its liabilities in respect of letters of credit or
instruments serving a similar function issued or accepted for its
account by banks and other financial institutions (whether or not
representing obligations for borrowed money);
(f) Swaps of such Person; and
(g) any Guaranty of such Person with respect to liabilities
of a type described in any of clauses (a) through (f) hereof.
Indebtedness of any Person shall include all obligations of such
Person of the character described in clauses (a) through (g) to
the extent such person remains legally liable in respect thereof
notwithstanding that any such obligation is deemed to be
extinguished under GAAP.
"Institutional Investor" means (a) MetLife, as the original
purchaser of all of the Notes and the holder thereof on May 30,
1996, (b) any holder of a Note holding more than 10% of the
aggregate principal amount of the Notes then outstanding, and (c)
any other holder of a Note which is a bank, trust company,
savings and loan association or other financial institution, any
pension plan, any investment company, any insurance company, any
broker or dealer, or any other similar financial institution or
entity, regardless of legal form.
"Intercreditor Agreement" means the Intercreditor Agreement,
dated as of January 3, 1996, among The Prudential Insurance
Company of America, MetLife, SunTrust Bank, Nashville, N.A.,
First American National Bank, National City Bank, Kentucky,
Nationsbank of Texas, N.A. and Creditanstalt-Bankverein, as it
may be amended, restated, modified or supplemented from time to
time in accordance with its terms, including by Amendment and
Supplement No. 1 thereto, dated as of May 30, 1996, in the form
of Exhibit D to the Assumption Agreement, to more fully include
therein the Company's obligations under the Agreement, the Notes,
the 1994 Agreement and the 8.31% Notes and MetLife as the holder
of all of said Notes and a party to each of said Agreements.
"Interest Expense" means, for any period, all interest
expense in respect of Debt (including imputed interest in respect
of Capitalized Lease Obligations) of the Company and its
Subsidiaries for such period as determined in accordance with
GAAP.
"Investment" shall mean, when used with respect to any
Person, any direct or indirect advance, loan or other extension
of credit or capital contribution by such Person (by means of
transfers of property to others or payments for property or
services for the account or use of others, or otherwise) to any
other Person, or any direct or indirect purchase or other
acquisition or beneficial ownership by such Person of, or of a
beneficial interest in, Capital Stock, partnership interests,
bonds, notes, debentures or other securities issued by any other
Person.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien (statutory or otherwise), or charge of any kind
(including any agreement to give any of the foregoing, any
conditional sale or other title retention agreement, any
Capitalized Lease, and the filing of or agreement to give any
financing statement under the Uniform Commercial Code of any
jurisdiction) or any other type of preferential arrangement for
the purpose, or having the effect, of protecting a creditor
against loss or securing the payment or performance of an
obligation, including any rights of setoff (whether by statute,
common law, contract or otherwise).
"Make-Whole Premium" means the excess, if any, of (i) the
sum of the respective Payment Values of each prospective interest
payment, prospective mandatory prepayment and the principal
payment at maturity in respect of the principal amount of the
Notes to be prepaid pursuant to Section 2.02 or Section 6 of the
Agreement or to be accelerated pursuant to Section 7.02, as the
case may be (the amount of each such payment being herein
referred to as a "Payment") over (ii) the principal amount of the
Notes to be so prepaid or accelerated. The Payment Value of each
Payment shall be determined by discounting such Payment at the
Reinvestment Rate, for the period from the scheduled date of such
Payment to the applicable date of prepayment or acceleration, as
the case may be. The Reinvestment Rate is (i) 50 basis points
plus (ii) the yield to maturity implied by (A) the yields
reported, at the Calculation Time, by the Telerate Access Service
on Page 678 (or such other display as may replace Page 678 on
Telerate Access Service) for United States Treasury securities
having a maturity equal to the Weighted Average Life to Final
Maturity (rounded to the nearest month) of the Notes so to be
prepaid or accelerated, or (B) if such yields are not reported at
the Calculation Time or the yields reported at the Calculation
Time are not ascertainable, the Treasury Constant Maturity Series
Yields reported, for the latest day for which such yields have
been reported at the Calculation Time, in Federal Reserve
Statistical Release H.15(519) (or any comparable successor
publication) for actively traded United States Treasury
securities having a constant maturity equal to such Weighted
Average Life to Final Maturity. Such implied yield will be
determined, if necessary, by (a) converting U.S. Treasury bill
quotations to bond-equivalent yields in accordance with accepted
financial practice and (b) interpolating linearly between (1) the
actively traded U.S. Treasury security with the duration closest
to and greater than such rounded Weighted Average Life to Final
Maturity and (2) the actively traded U.S. Treasury security with
the duration closest to and less than such rounded Weighted
Average Life to Final Maturity. The "Calculation Time" for
determining the yields of such United States Treasury securities
shall be 10 a.m. (New York City time) on the second Business Day
prior to the prepayment date pursuant to Section 2.02 or Section 6
of the Agreement or prior to the date of acceleration pursuant to
Section 7.02, as the case may be.
"Material" means material in relation to the business,
operations, affairs, financial condition, assets, properties, or
prospects of the Company and its Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on
(a) the business, operations, affairs, financial condition,
assets or properties of the Company and its Subsidiaries taken as
a whole, or (b) the ability of the Company to perform its
obligations under the Agreement and the Notes, or (c) the
validity or enforceability against the Company of the Agreement,
or the Notes, or (d) the ability of the Company and its
Subsidiaries (taken as a whole) to perform their respective
obligations under the Pledge Agreements or the Guaranty
Agreement.
"Material Subsidiary" means a Subsidiary having (i) Assets
with an aggregate book value in excess of $5,000,000 at the time
of determination or (ii) Revenues in excess of 5% of Consolidated
Revenues for the fiscal year most recently ended prior to the
time of determination.
"MetLife" means Metropolitan Life Insurance Company, a New
York corporation, the original purchaser of all of the Notes, the
8.31% Notes and the 1996 Notes and which holds the entire
principal amount of each thereof on May 30, 1996.
"Moody's" means Moody's Investors Service, Inc. or any
successor thereto.
"Multiemployer Plan" means any Plan that is a "multiemployer
plan" (as such term is defined in section 4001(a)(3) of ERISA).
"1994 Agreement" means the Loan Agreement dated as of June
23, 1994 between Gibson and MetLife entered into in connection
with the original issuance of the 8.31% Notes, as amended from
time to time, including by the Assumption Agreement, and as
assumed by the Company pursuant to the Assumption Agreement.
"8.31% Notes" means the 8.31% Senior Notes due June 23, 2004
originally issued by Gibson pursuant to the 1994 Agreement, as
amended from time to time, including by the Assumption Agreement,
and as assumed by the Company pursuant to the Assumption
Agreement.
"1996 Agreement" means the Note Purchase Agreement, dated as
of January 3, 1996, among the Company, MetLife and another
institutional investor, pursuant to or in connection with which,
inter alia, (i) MetLife acquired the 1996 Notes, (ii) the Pledge
Agreements, the Guaranty Agreement and the Intercreditor
Agreement were entered into, and (iii) the assumption of the
Notes and the 8.31% Notes by the Company and the amendment
thereof pursuant to the Assumption Agreement was contemplated.
"1996 Notes" means the Company's 6.68% Series B Senior Notes
due December 31, 2005 issued to MetLife in the aggregate
principal amount of $15,000,000 pursuant to the 1996 Agreement.
"Notes" means the Notes as amended from time to time,
including by the Assumption Agreement, and as assumed by the
Company pursuant to the Assumption Agreement.
"Officer's Certificate" means a certificate of a Senior
Financial Officer or of any other officer of the Company whose
responsibilities extend to the subject matter of such
certificate.
"Operating Rents" means, for any period, noncapitalized
lease obligations of the Company and its Subsidiaries for such
period but shall exclude all leases related to vehicles, computer
and office equipment.
"Overdue Interest Rate" means the greater (determined on a
daily basis) of 10.50% per annum or the rate per annum which The
Chase Manhattan Bank, N.A. announces publicly from time to time
as its corporate base rate of interest.
"PBGC" means the Pension Benefit Guaranty Corporation
referred to and defined in ERISA or any successor thereto.
"Person" means an individual, partnership, corporation,
limited liability company, association, trust, unincorporated
organization, or a government or agency or political subdivision
thereof.
"Plan" means an "employee benefit plan" (as defined in
section 3(3) of ERISA) that is or, within the preceding five
years, has been established or maintained, or to which
contributions are or, within the preceding five years, have been
made or required to be made, by the Company or any ERISA
Affiliate or with respect to which the Company or any ERISA
Affiliate may have any liability.
"Pledge Agreements" means (i) the Amended and Restated
Pledge Agreement, dated as January 3, 1996, among the Company, as
pledgor, SunTrust Bank, Nashville, N.A., National City Bank,
Kentucky, First American National Bank, Nationsbank of Texas,
N.A., Creditanstalt - Bankverein, MetLife and The Prudential
Insurance Company of America, as pledgees, and SunTrust Bank,
Nashville, N.A., as agent, pursuant to which the Company has,
among other things, pledged to the pledgees a security interest
in the outstanding common stock of Word, Incorporated owned by
the Company, (ii) the Amended and Restated Pledge Agreement,
dated as of January 3, 1996, among the Company, as pledgor,
SunTrust Bank, Nashville, N.A., National City Bank, Kentucky,
First American National Bank, Nationsbank of Texas, N.A.,
Creditanstalt - Bankverein, MetLife and The Prudential Insurance
Company of America, as pledgees, and SunTrust Bank, Nashville,
N.A., as agent, pursuant to which the Company has, among other
things, pledged to the pledgees a security interest in the
outstanding common stock of Gibson owned by the Company and
(iii) any other pledge agreement or other similar security
agreement executed by the Company or any Subsidiary pursuant to
Sections 3.07, 3.08 or 3.09, as any such agreement may be amended,
restated, modified, or supplemented from time to time in accordance
with its terms, including by Amendment and Supplement No. 1 thereto,
dated as of May 30, 1996, in the form of Exhibits C-1 and C-2,
respectively, to the Assumption Agreement, to include as Secured
Obligations (as defined in the Pledge Agreements) thereunder the
Company's obligations under the Notes, the 8.31% Notes, the
Agreement and the 1994 Agreement and MetLife as obligee of such
obligations as pledgee thereunder.
"Preferred Stock" means any class of Capital Stock of a
corporation that is preferred over any other class of Capital
Stock of such corporation as to the payment of dividends or the
payment of any amount upon liquidation or dissolution of such
corporation.
"Priority Debt" means with respect any Person, at any time,
without duplication, the sum of
(i) Debt of each Subsidiary (other than Debt held by
the Company or another Subsidiary);
(ii) Debt secured by any Lien other than a Lien
described in clauses (a) through (i) of Section 4.03;
(iii) all Preferred Stock of Subsidiaries owned by a
Person other than the Company or a Subsidiary; and
(iv) any obligation or liability arising in connection
with a Receivables Financing.
"Receivables Financing" means a transaction pursuant to
which funds are advanced to the Company and/or any of its
Subsidiaries in exchange for which the Company and/or any of its
Subsidiaries shall pledge, sell or otherwise transfer any or all
of its notes or accounts receivable to secure, in whole or in
part, the repayment of such funds.
"Required Holders" means, at any time, the holders of at
least 66 2/3% in principal amount of the Notes at the time
outstanding (exclusive of Notes then owned by the Company or any
of its Affiliates).
"Responsible Officer" means the chief executive officer, any
Senior Financial Officer and any other officer of the Company
with responsibility for the administration of the relevant
portion of the Agreement or the Notes.
"Restricted Payment" is defined in Section 4.05.
"Revenues" means, at any time, and with respect to any
Person, revenues as determined in accordance with GAAP.
"S&P" means Standard & Poor's Rating Group or any successor
thereto.
"Securities Act" means the Securities Act of 1933, as
amended from time to time.
"Senior Financial Officer" means the chief financial
officer, principal accounting officer, treasurer or comptroller
of the Company.
"Senior Funded Debt" means (i) all Funded Debt of the
Company other than Subordinated Funded Debt, and (ii) all Funded
Debt of the Subsidiaries.
"Shareholders' Equity" means shareholders' equity of the
Company and its Subsidiaries on a consolidated basis as set forth
in the Company's consolidated balance sheet prepared in
accordance with GAAP.
"Subordinated Funded Debt" means all Funded Debt of the
Company which is expressly subordinate to other Funded Debt of
the Company on terms and conditions approved by the Required
Holders, which approval (or disapproval) shall be given within
ten (10) Business Days of receipt by the holders of the Notes of
the subordination terms of such Funded Debt. The Company's
Convertible Subordinated Notes due 1999 shall constitute
Subordinated Funded Debt.
"Subsidiary" means, as to any Person, any corporation,
association or other business entity in which such Person or one
or more of its Subsidiaries or such Person and one or more of its
Subsidiaries owns sufficient equity or voting interests to enable
it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons
performing similar functions) of such entity, and any partnership
or joint venture if more than a 50% interest in the profits or
capital thereof is owned by such Person or one or more of its
Subsidiaries or such Person and one or more of its Subsidiaries
(unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one
or more of its Subsidiaries). Unless the context otherwise
clearly requires, any reference to a "Subsidiary" is a reference
to a Subsidiary of the Company.
"Subsidiary Stock" means the outstanding Capital Stock of
any Subsidiary. For purposes of Section 4.07, the book value of
Subsidiary Stock that is sold or otherwise disposed of shall be
equal to that percentage of book value of the assets of the
Subsidiary that issued such stock as is equal to the percentage
that the book value of such Subsidiary Stock represents of the
book value of all of the outstanding Capital Stock of such
Subsidiary (assuming, in making such calculations, that all
securities convertible into such Capital Stock are so converted
and giving full effect to all transactions that would occur or be
required in connection with such conversion).
"Swaps" means, with respect to any Person, payment
obligations with respect to interest rate swaps, currency swaps
and similar obligations obligating such Person to make payments,
whether periodically or upon the happening of a contingency. For
the purposes of this Agreement, the amount of the obligation
under any Swap shall be the amount determined in respect thereof
as of the end of the then most recently ended fiscal quarter of
such Person, based on the assumption that such Swap had
terminated at the end of such fiscal quarter, and in making such
determination, if any agreement relating to such Swap provides
for the netting of amounts payable by and to such Person
thereunder or if any such agreement provides for the simultaneous
payment of amounts by and to such Person, then in each such case,
the amount of such obligation shall be the net amount so determined.
"Total Capitalization" means the sum of (i) Total Funded
Debt and (ii) Shareholders' Equity.
"Total Funded Debt" means the sum of (i) Consolidated Senior
Funded Debt and (ii) Consolidated Subordinated Funded Debt.
"Weighted Average Life to Final Maturity" of the Notes as of
the time of determination thereof means the number of years
(rounded to the nearest one-twelfth) obtained by dividing the
then Remaining Dollar-Years of the Notes by the then outstanding
principal amount of the Notes. For the purposes of this
definition, "Remaining Dollar-Years" means the sum of the amounts
obtained by multiplying the amount of each then remaining
mandatory prepayment, and repayment at final maturity, by the
number of years (calculated to the nearest one-twelfth) which
will elapse between the time of such determination and the date
of such prepayment or repayment.
"Wholly-Owned Subsidiary" means, at any time, any Subsidiary
one hundred percent (100%) of all of the equity interests (except
directors' qualifying shares) and voting interests of which are
owned by any one or more of the Company and the Company's other
Wholly-Owned Subsidiaries at such time.
All accounting terms used herein or in the Agreement and not
expressly defined in this Note shall have the meanings
respectively given to them in accordance with GAAP from time to
time in effect.
SECTION 7. DEFAULTS AND REMEDIES.
7.0l. Events of Default.
An "Event of Default" shall exist if one or more of the
following events shall occur for any reason whatsoever (and
whether such occurrence shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree
or order of any court or any order, rule or regulation of any
administrative or governmental body):
A. default in the payment of any interest upon any
Note when such interest becomes due and payable and
continuance of such default for a period of 5 Business Days;
or
B. default in the payment of principal of (or premium,
if any, on) any Note for more than three Business Days after
the same becomes due and payable, whether at maturity or at
a date fixed for prepayment (including, without limitation,
a prepayment as provided in Section 2.01, Section 2.02 or
Section 2.03), or by acceleration or otherwise; or
C. default in the performance or observance of any
covenant, agreement or condition contained in Sections 4.01,
4.02, 4.03, 4.05, 4.06, 4.07 or 4.08; or
D. default in the performance or observance of any
other covenant, agreement or condition contained in this
Note or in the Agreement and continuance of any such other
default for a period of 45 days after the earlier of (i)
written notice thereof, specifying such other default and
requiring it to be remedied, shall have been given to the
Company by the holder of any Note (any such notice to be
identified as a "notice of default" and to refer
specifically to this paragraph D of this Section 7.01), and
(ii) a Responsible Officer obtaining actual knowledge of any
such default; or
E. any representation or warranty made in writing by
or on behalf of the Company or Gibson or by any officer of
the Company or Gibson in the Assumption Agreement or in any
writing furnished in connection with the transactions
contemplated thereby proves to have been false or incorrect
in any material respect on the date as of which made; or
F. (i) the Company or any Subsidiary is in default (as
principal or as guarantor or other surety) in the payment of
any principal or premium or make-whole amount or interest on
any Indebtedness that is outstanding in an aggregate
principal amount of at least $5,000,000 beyond any period of
grace provided with respect thereto, or (ii) the Company or
any Subsidiary is in default in the performance of or
compliance with any term of any evidence of any Indebtedness
in an aggregate outstanding principal amount of at least
$5,000,000 or of any mortgage, indenture or other agreement
relating thereto or any other condition exists, and as a
consequence of such default or condition such Indebtedness
has become, or has been declared (or one or more Persons are
entitled to declare such Indebtedness to be), due and
payable before its stated maturity or before its regularly
scheduled dates of payment, or (iii) as a consequence of the
occurrence or continuation of any event or condition (other
than the passage of time or the right of the holder of
Indebtedness to convert such Indebtedness into equity
interests), (x) the Company or any Subsidiary has become
obligated to purchase or repay Indebtedness before its
regular maturity or before its regularly scheduled dates of
payment in an aggregate outstanding principal amount of at
least $5,000,000, or (y) one or more Persons have the right
to require the Company or any Subsidiary so to purchase or
repay such Indebtedness; or
G. the Company or any Material Subsidiary (i) is
generally not paying, or admits in writing its inability to
pay, its debts as they become due, (ii) files, or consents
by answer or otherwise to the filing against it of, a
petition for relief or reorganization or arrangement or any
other petition in bankruptcy, for liquidation or to take
advantage of any bankruptcy, insolvency, reorganization,
moratorium or other similar law of any jurisdiction, (iii)
makes an assignment for the benefit of its creditors, (iv)
consents to the appointment of a custodian, receiver,
trustee or other officer with similar powers with respect to
it or any substantial part of its property, (v) is
adjudicated as insolvent or to be liquidated, or (vi) takes
corporate action for the purpose of any of the foregoing; or
H. a court or governmental authority of competent
jurisdiction enters an order appointing, without consent by
the Company or any of its Subsidiaries, a custodian,
receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its
property, or constituting an order for relief or approving a
petition for relief or reorganization or any other petition
in bankruptcy or for liquidation or to take advantage of any
bankruptcy or insolvency law of any jurisdiction, or
ordering the dissolution, winding-up or liquidation of the
Company or any of its Subsidiaries, or any such petition
shall be filed against the Company or any of its
Subsidiaries and such petition shall not be stayed or
dismissed within 60 days; or
I. a final judgment or judgments for the payment of
money aggregating in excess of $5,000,000 (exclusive of any
insurance coverage for which the insurance company issuing
such coverage shall have acknowledged in writing liability
with respect thereto) shall be rendered against one or more
of the Company and its Subsidiaries and (A) action shall be
taken by a Person within 90 days after entry thereof to
collect on such judgment or to secure such judgment with any
property or assets of the Company or its Subsidiaries or (B)
such judgments shall not, within 90 days after entry
thereof, be bonded, discharged or stayed pending appeal, or
shall not be discharged within 9O days after the expiration
of such stay; or
J. if (i) any Plan shall fail to satisfy the minimum
funding standards of ERlSA or the Code for any plan year or
part thereof or a waiver of such standards or extension of
any amortization period is sought or granted under section
412 of the Code, (ii) a notice of intent to terminate any
Plan shall have been or is reasonably expected to be filed
with the PBGC or the PBGC shall have instituted proceedings
under ERISA section 4042 to terminate or appoint a trustee
to administer any Plan or the PBGC shall have notified the
Company or any ERISA Affiliate that a Plan may become a
subject of any such proceedings, (iii) the aggregate "amount
of unfunded benefit liabilities" (within the meaning of
section 4001(a)(18) of ERISA) under all Plans, determined in
accordance with Title IV of ERISA, shall exceed $5,000,000,
(iv) the Company or any ERISA Affiliate shall have incurred
or is reasonably expected to incur any liability pursuant to
Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans,
(v) the Company or any ERISA Affiliate withdraws from any
Multiemployer Plan, or (vi) the Company or any Subsidiary
shall establish or amend any employee welfare benefit plan
that provides post-employment welfare benefits in a manner
that would increase the liability of the Company or any
Subsidiary thereunder; and any such event or events
described in clauses (i) through (vi) above, either
individually or together with any other such event or
events, could reasonably be expected to have a Material
Adverse Effect; or
K. any Guarantor shall disavow the validity or
enforceability of or attempt to terminate the Guaranty
Agreement; or the Guaranty Agreement shall cease to be in
full force and effect in whole or in part for any reason
whatsoever (other than pursuant to Section 8(a) of the
Intercreditor Agreement); or
L. the security interests granted pursuant to any
Pledge Agreement shall fail at any time to constitute a
first priority security interest in or assignment of the
collateral described in such Pledge Agreement (other than
pursuant to Section 8(a) of the Intercreditor Agreement); or
any Pledge Agreement shall cease to be in full force and
effect in whole or in part for any reason whatsoever (other
than pursuant to Section 8(a) of the Intercreditor
Agreement); or the Company shall disavow the validity or
enforceability of or attempt to terminate any or all of the
Pledge Agreements.
As used in Section 7.01J, the terms "employee benefit plan"
and "employee welfare benefit plan" shall have the respective
meanings assigned to such terms in Section 3 of ERlSA.
7.02. Remedies, Etc.
A. Acceleration.
(i) If an Event of Default with respect to the Company
or any Material Subsidiary described in paragraph G or H of
Section 7.01 (other than an Event of Default described in
clause (i) of paragraph G) or described in clause (vi) of
paragraph G by virtue of the fact that such clause encompasses
clause (i) of paragraph G) has occurred, all the Notes
then outstanding shall automatically become immediately due
and payable.
(ii) If any other Event of Default has occurred and is
continuing (including, without limitation, an Event of Default
described in paragraph H respect to a Subsidiary which is not a
Material Subsidiary), any holder or holders of 51% or more in
principal amount of the Notes at the time outstanding may at any
time, at its or their option, by notice or notices to the
Company, declare all the Notes then outstanding to be immediately
due and payable.
(iii) If any Event of Default described in paragraph A or
B of Section 7.01 has occurred and is continuing, any holder or
holders of Notes at the time outstanding affected by such Event
of Default may at any time, at its or their option, by notice or
notices to the Company, declare all the Notes held by it or them
to be immediately due and payable.
Upon any Notes becoming due and payable under this Section
7.02, whether automatically or by declaration, such Notes will
forthwith mature and the unpaid principal amount of such Notes,
plus (x) all accrued and unpaid interest thereon and (y) the
Make-Whole Premium determined in respect of such principal amount
(to the full extent permitted by applicable law), shall all be
immediately due and payable, in each and every case without
presentment, demand, protest or further notice, all of which are
hereby waived. The Company acknowledges, and the parties hereto
agree, that each holder of a Note has the right to maintain its
investment in the Notes free from repayment by the Company
(except as herein specifically provided for) and that the
provision for payment of a Make-Whole Premium by the Company in
the event that the Notes are prepaid or are accelerated as a
result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such
circumstances.
The Computing Holder shall give prompt written notice to the
Company and all other holders of the Notes, whose names and
addresses shall have been supplied to the Computing Holder by the
Company, of the amount of the Make-Whole Premium, if any, with
respect to any Notes accelerated, computed as of the second
Business Day prior to the date of acceleration, which notice
shall set forth in reasonable detail the computation thereof.
The Make-Whole Premium, if any, set forth in such notice shall be
binding on the Company and the other holders of the Notes absent
manifest error.
B. Other Remedies. If any Default or Event of Default has
occurred and is continuing, and irrespective of whether any Notes
have become or have been declared immediately due and payable
under Section 7.02A, the holder of any Note at the time
outstanding may proceed to protect and enforce the rights of such
holder by an action at law, suit in equity or other appropriate
proceeding, whether to enforce the payment of such Note, or for
the specific performance of any agreement contained in the
Agreement or in any Note, or for an injunction against a
violation of any of the terms hereof or thereof, or in aid of the
exercise of any power granted hereby or thereby or by law or
otherwise. The Company agrees that its obligations under Section
6 of the Agreement are of the essence of the Agreement, and upon
application to any court of equity having jurisdiction in the
premises, any holder of the Notes shall be entitled to a decree
against the Company requiring specific performance of such
obligations. If any holder of a Note shall demand payment
thereof or take any other action in respect of an Event of
Default, the Company will forthwith give written notice, as
provided in Section 8.01, to the other holders of Notes
specifying such action and the nature and status of the Event of
Default.
C. Rescission. At any time after any Notes have been
declared due and payable pursuant to clause (ii) or (iii) of
Section 7.02A, the holders of not less than 66 2/3% in principal
amount of the Notes then outstanding, by written notice to the
Company, may rescind and annul any such declaration and its
consequences if (a) the Company has paid all overdue interest on
the Notes, all principal of and Make-Whole Premium, if any, on
any Notes that are due and payable and are unpaid other than by
reason of such declaration, and all interest on such overdue
principal and Make-Whole Premium, if any, and (to the extent
permitted by applicable law) any overdue interest in respect of
the Notes, at the Overdue Interest Rate, (b) all Events of
Default and Defaults, other than non-payment of amounts that have
become due solely by reason of such declaration, have been cured
or have been waived pursuant to Section 5, and (c) no judgment or
decree has been entered for the payment of any monies due
pursuant to the Notes or the Agreement. No rescission and
annulment under this Section 7.02C will extend to or affect any
subsequent Event of Default or Default or impair any right
consequent thereon.
D. No Waivers or Election of Remedies; Expenses, etc. No
course of dealing and no delay on the part of any holder of a
Note in exercising any right, power or remedy shall operate as a
waiver thereof or otherwise prejudice such holder's rights,
powers or remedies. No right, power or remedy conferred by any
Note or by the Agreement upon any holder thereof shall be
exclusive of any other right, power or remedy referred to herein
or therein or now or hereafter available at law, in equity, by
statute or otherwise. Without limiting the obligations of the
Company under Section 7.1 of the Agreement, the Company will pay
to the holder of each Note on demand such further amount as shall
be sufficient to cover all costs and expenses of such holder
incurred in any enforcement or collection under this Section
7.02, including, without limitation, reasonable attorneys' fees,
expenses and disbursements.
SECTION 8. MISCELLANEOUS.
8.01. Notices.
All notices to be given to any holder of this Note shall be in
writing and delivered by a recognized overnight delivery service,
or mailed (by registered or certified mail, return receipt
requested) or sent by facsimile transmission followed by a
confirmation copy sent on the same day by a recognized overnight
delivery service, to such holder at its address designated on the
date of such notice on the register or other record maintained by
the Company. Any such notice so given shall be effective upon
receipt, including receipt of a facsimile transmission.
8.02. Covenants Bind Successors and Assigns.
All covenants and agreements in this Note by the Company shall
bind its successors and assigns, whether so expressed or not.
8.03. Governing Law.
This Note shall be construed in accordance with and governed
by the internal laws of the State of New York.
8.04. Headings.
The Section headings herein are for convenience only and shall
not affect the construction hereof.
IN WITNESS WHEREOF, THOMAS NELSON, INC. has caused this Note to
be signed in its corporate name by one of its officers thereunto
duly authorized, and to be dated as of the day and year first
above written.
THOMAS NELSON, INC.
By /s/ Joe L. Powers
_______________________
Joe L. Powers
Executive Vice President and
Chief Financial Officer
<PAGE>
EXHIBIT A-2
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION SET FORTH IN SECTION 4(2)
THEREOF. THIS NOTE MAY NOT BE TRANSFERRED, SOLD, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR UPON
DELIVERY TO THE COMPANY OF AN OPINION OF COUNSEL (WHICH MAY
BE COUNSEL REGULARLY EMPLOYED BY THE HOLDER OF THIS NOTE)
REASONABLY SATISFACTORY TO THE COMPANY THAT REGISTRATION
UNDER THE ACT IS NOT REQUIRED, EXCEPT THAT NO SUCH OPINION
SHALL BE REQUIRED IN ORDER TO EFFECTUATE A TRANSFER IN
ACCORDANCE WITH THE PROVISIONS OF RULE 144 OR RULE 144A
PROMULGATED UNDER THE ACT OR ANY SIMILAR SUCCESSOR RULE OR
RULES THERETO.
THOMAS NELSON, INC.
8.31% Senior Note Due June 23, 2004
No. R-1 New York, New York
$5,000,000 May 30, 1996
THOMAS NELSON, INC., a corporation duly organized and existing
under the laws of the State of Tennessee (hereinafter called the
"Company"), for value received, hereby promises to pay to
Metropolitan Life Insurance Company, or registered assigns, on
June 23, 2004 the principal amount of Five Million Dollars
(or so much thereof as shall not have been prepaid) in
such coin or currency of the United States of America as at the
time of payment shall be legal tender for public and private
debts, at the Metropolitan Branch of The Chase Manhattan Bank,
N.A., in the Borough of Manhattan, The City of New York, State of
New York, and to pay interest (computed on the basis of a 360-day
year of twelve 30-day months) at said office, in like coin or
currency, on the unpaid portion of said principal amount from the
date hereof, semi-annually on the twenty-third day of June and
December in each year, commencing on the first such day after the
date hereof, at the rate of 8.31% per annum until such unpaid
portion of such principal amount shall have become due and
payable and at the Overdue Interest Rate thereafter and, so far
as may be lawful, on any overdue installment of interest at the
Overdue Interest Rate.
SECTION 1. THE NOTES; TRANSFERS, EXCHANGE, ETC.
1.01. The Notes.
This Note is one of an authorized issue of senior promissory
notes (hereinafter called the "Notes", as more fully defined in
Section 6) made by the Company in an aggregate principal amount
of $5,000,000, maturing on June 23, 2004, bearing interest payable
at the same rate and on the same dates as the interest on the
principal amount of this Note and originally issued pursuant to
the Agreement.
1.02. Registration, Transfer or Exchange of Notes.
The Notes are issuable only as registered Notes. The Company
will keep at its office or agency maintained as provided in
Section 3.02 a register in which the Company shall provide for
the registration and registration of transfer of the Notes.
The holder of this Note may, at its option and either in person
or by duly authorized attorney, surrender the same at said office
or agency for registration of transfer or exchange, accompanied
if surrendered for transfer by a written instrument of transfer
duly executed by such holder or attorney. In case such holder
shall so request a transfer or exchange of this Note, the Company
shall, at the expense of such holder, deliver to or upon such
holder's order one or more Notes in the same aggregate unpaid
principal amount as this Note, each dated as of the date of, or,
if later, the date to which interest has been paid on, this Note,
in the principal amount of $1,000,000 or a multiple of $1,000 in
excess thereof, as requested by such holder (provided that if
such aggregate unpaid principal amount is less than $500,000, the
Company will deliver one Note in exchange for this Note), and
registered in such name or names as shall be specified by such
holder. Every Note so made and delivered upon transfer or in
exchange for this Note shall be in the form of Exhibit A-2 to the
Assumption Agreement.
Prior to due presentation for registration of transfer of this
Note, the Company may deem and treat the registered holder hereof
as the absolute owner of this Note for the purpose of receiving
payment of or on account of the principal of and premium, if any,
and interest on this Note, and for the purpose of any notice,
waiver or consent hereunder, and payment of this Note shall be
made only to or upon the order in writing of such holder.
l.03. Loss, Theft, Destruction or Mutilation of Notes.
Upon receipt of evidence satisfactory to the Company of the
loss, theft, destruction or mutilation of this Note, and, in the
case of any such loss, theft or destruction, upon receipt of a
bond of indemnity reasonably satisfactory to the Company or, in
the case of any such mutilation, upon surrender and cancellation
of this Note, the Company will make and deliver, in lieu of such
lost, stolen, destroyed or mutilated Note, a new Note of like
tenor and unpaid principal amount and dated the date of, or, if
later, the date to which interest has been paid on, the lost,
stolen, destroyed or mutilated Note. In the case of a holder of
the Notes which is an institutional investor having combined
capital, surplus and undivided profits of at least $200,000,000,
its own unsecured agreement of indemnity shall be deemed
satisfactory to the Company.
SECTION 2. PREPAYMENT OF NOTES.
2.0l. Mandatory Prepayments.
The Company covenants and agrees that it will prepay
$714,285.71 of the then unpaid principal amount of the Notes on
June 23 in each of the years 1998 through 2003, inclusive. All
such prepayments pursuant to this Section 2.01 shall be applied
on the respective payment dates thereof toward the prepayment of
the principal amount of the Notes so to be prepaid, in each case
together with interest accrued thereon to such prepayment date,
but without premium, and otherwise as provided in Section 2.05.
Upon prepayment pursuant to Section 6 of the Agreement of the
Notes held by some but not all holders, the principal amount of
each mandatory prepayment of Notes becoming due under this
Section 2.01 on or after the date of such prepayment shall be
reduced in the same proportion as the aggregate unpaid principal
amount of the Notes is reduced as a result of such prepayment.
2.02. Optional Prepayments.
Upon notice given as provided in Section 2.04 and otherwise as
provided in Section 2.05, the Company may, at its option, prepay
the Notes in whole at any time, or in part, but not less than an
amount equal to $1,000,000 (provided that in the event the unpaid
principal amount of the Notes outstanding shall be less than
$1,000,000, then in amount equal to the full amount of such
unpaid principal amount) from time to time, together with accrued
interest on the principal amount so prepaid to the prepayment
date and a premium equal to the Make-Whole Premium.
No prepayment of less than all of the outstanding Notes pursuant
to this Section 2.02 shall be credited to or relieve the Company
to any extent from its obligation to make any prepayment of the
Notes required by Section 2.01.
2.03. Prepayment Upon Change of Control.
Upon the request of any holder of a Note as provided in
Section 6 of the Agreement, the Company shall prepay the Notes
then held by such holder in accordance with the provisions of such
Section 6.
2.04. Notice of Prepayment and Other Notices.
The Company shall give written notice of optional prepayment
of this Note or any portion hereof pursuant to Section 2.02 not
less than thirty (30) days nor more than sixty (60) days prior to
the date fixed for such prepayment in such notice, which notice of
prepayment shall specify the amount so to be prepaid, together
with the premium, if any, to be paid thereon and the date fixed
for such prepayment. Such notice of prepayment and all other
notices to be given to any holder of this Note shall be given in
the manner specified in Section 8.01 to the Person in whose name
this Note is registered at its address designated on the register
maintained by the Company on the date such notice of prepayment
or other notice is given. Upon notice of prepayment being given
as aforesaid, the Company covenants and agrees that the Company
will prepay, on the date therein fixed for prepayment, this Note
or the portion hereof, as the case may be, so called for
prepayment, at the principal amount thereof so called for
prepayment together with interest accrued thereon to the date
fixed for such prepayment, plus the applicable premium, if any.
The notice to the Computing Holder shall also set forth the
respective names and addresses of, and principal amounts of the
Notes held by, the other holders. The Computing Holder shall
give written notice to the Company and the other holders, on the
second Business Day prior to the date fixed for prepayment in
such notice, of the amount of the Make-Whole Premium calculated
hereunder, which Computing Holder's notice shall set forth in
reasonable detail the computation thereof. Such Make-Whole
Premium set forth in such notice shall be binding on the Company
and the other holders absent manifest error.
2.05. Allocation of Prepayments.
In the event of any prepayment of less than all of the
outstanding Notes (other than any prepayment pursuant to Section
6 of the Agreement) the Company will allocate the principal
amount so to be prepaid (but only in units of $1,000) among the
registered holders of Notes in proportion, as nearly as may be,
to the respective principal amounts of such Notes not theretofore
called for prepayment, of which they shall be registered holders.
2.06. Interest After Date Fixed for Prepayment.
This Note or any portion hereof to be prepaid shall cease to
bear interest on and after the date fixed for such prepayment
unless, upon presentation for the purpose, the Company shall fail
to pay this Note or such portion, as the case may be, on the date
fixed for such prepayment, in which event this Note or such
portion, as the case may be, shall bear interest at the Overdue
Interest Rate from and after such date until paid and, so
far as may be lawful, any overdue installment of interest shall
bear interest at said rate.
2.07. Surrender of Notes; Notation Thereon.
Upon any prepayment of a portion of the principal amount of
this Note, the registered holder hereof, at its option, may
require the Company to execute and deliver at the expense of such
holder, upon surrender of this Note, a new Note registered in the
name of such Person or Persons as may be designated by such holder
for the principal amount of this Note then remaining unpaid, dated
as of the date to which interest has been paid on the principal
amount of this Note then remaining unpaid, or may present this
Note to the Company for notation hereon of the payment of the
portion of the principal amount of this Note so prepaid. Every
new Note made and delivered pursuant to the provisions of this
Section 2.07 shall in all other respects be in the same form and
have the same terms as this Note. The Company may, as a
condition of payment of all or any of the principal of, premium,
if any, and interest on, this Note, require the holder to present
this Note for notation of such payment and, if this Note be paid
in full, require the surrender hereof.
SECTION 3. AFFIRMATIVE COVENANTS.
The Company covenants that so long as any of the Notes are
outstanding:
3.0l. Payment of Notes. The Company will punctually pay or
cause to be paid the principal and interest (and premium, if any)
to become due in respect of the Notes according to the terms
thereof.
3.02. Maintenance of Company Office. The Company will
maintain an office or agency at 501 Nelson Place, Nashville,
Tennessee 37214 (or such other place in the United States of
America as the Company may designate in writing to the holder
hereof), where notices, presentations and demands to or upon the
Company in respect of the Notes may be given or made.
3.03. Keeping of Books. The Company will, and will cause
each of its Subsidiaries to, keep proper books of record and
account in accordance with GAAP.
3.04. Payment of Taxes and Claims; Preservation of Corporate
Existence, etc.; Maintenance of Properties. The Company will,
and will cause each of its Subsidiaries to,
A. file all tax returns required to be filed in any
jurisdiction and pay and discharge all taxes shown to be due
and payable on such returns and all other taxes, assessments
and governmental charges or levies imposed upon it, its
income, franchises or profits or its property before the
same shall become in default, as well as all lawful claims
and liabilities of any kind (including claims and
liabilities for labor, materials and supplies) which, if
unpaid, might by law become a Lien upon its property;
provided, however, that neither the Company nor any
Subsidiary shall be required to pay any such tax,
assessment, charge, levy or claim if (i) the amount,
applicability or validity thereof shall currently be
contested in good faith by appropriate proceedings and if
the Company or any such Subsidiary shall have set aside on
its books adequate reserves therefor in accordance with
GAAP, or (ii) the nonpayment thereof in the aggregate could
not reasonably be expected to have a Material Adverse Effect;
B. subject to Section 4.02, do all things necessary to
preserve and keep in full force and effect its corporate
existence, rights (charter and statutory), permits, licenses
and franchises, unless in the good faith judgment of the
Company, the termination of or failure to preserve and keep
in full force and effect such corporate existence of a
Subsidiary or such right, permit, license or franchise could
not, individually or in the aggregate, have a Material
Adverse Effect; and
C. maintain and keep all its properties used or useful
in the conduct of its business in good condition, repair and
working order (other than ordinary wear and tear) so that
the business carried on in connection therewith may be
properly conducted at all times; provided, however, that
nothing in this Section 3.04C shall prevent the Company or
any of its Subsidiaries from discontinuing the operation and
maintenance of any of its properties, if such discontinuance
is, in the judgment of the Company, desirable in the conduct
of the Company's or such Subsidiary's business and the
Company has concluded that such discontinuance could not,
individually or in the aggregate, have a Material Adverse
Effect.
3.05. Insurance. The Company will, and will cause each of
its Subsidiaries to, maintain, with financially sound and reputable
insurers, insurance with respect to their respective properties
and businesses against such casualties and contingencies, of such
types, on such terms and in such amounts (including deductibles,
coinsurance and self-insurance, if adequate reserves are
maintained with respect thereto) as is consistent with sound
business practices customary in the case of entities of similar
size engaged in the same or a similar business and similarly
situated.
3.06. Compliance with Laws, etc. The Company will, and will
cause each of its Subsidiaries to, comply with all present and
future applicable laws, rules, regulations, orders
and requirements (including, without limitation, all applicable
Environmental Laws) of every duly constituted governmental or
quasi-governmental authority or agency applicable to the Company
and its Subsidiaries or any of their respective properties, and
will obtain and maintain in effect all licenses, certificates,
permits, franchises and other governmental authorizations
necessary to the ownership of their respective properties or to
the conduct of their respective businesses, in each case to the
extent necessary to ensure that non-compliance with such laws,
rules, regulations, orders and requirements or failures to obtain
or maintain in effect such licenses, certificates, permits,
franchises and other governmental authorizations could not,
individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect.
3.07. Covenant to Secure Notes Equally. The Company will,
if it or any Subsidiary shall create or assume any Lien upon any
of its property or assets, whether now owned or hereafter acquired,
other than Liens permitted by the provisions of Section 4.03
(unless prior written consent to the creation or assumption
thereof shall have been obtained pursuant to Section 5) make or
cause to be made effective provision whereby the Notes will be
secured by such Lien equally and ratably with any and all other
Indebtedness thereby secured so long as any such other
Indebtedness shall be so secured.
3.08. Guaranteed Obligations. The Company will if, at any
time, any of its Subsidiaries executes a Guaranty of or
collateralizes in any other manner any obligation of the Company
under the Bank Agreements, simultaneously cause such Subsidiary
or Subsidiaries, as the case may be, to execute and deliver to
each holder of a Note a similar Guaranty in form and substance
reasonably satisfactory to such holder with respect to payment of
the principal amount of the Notes and any premium and interest
thereon, which bears the same ratio to the total unpaid principal
amount of the Notes as the amount of such other obligation which
is subject to a Guaranty bears to the total unpaid principal
amount of such other obligation, or if such other obligation is
collateralized, to collateralize the Notes equally and ratably
with the obligations of the Company under the Bank Agreements.
3.09. Parity With Bank Agreements. The Company will, and
will cause each of its Subsidiaries to, execute all such documents
and take such other actions as the Required Holders may reasonably
request in order to assure that at all times the Notes shall rank
pari passu in right of payment with the obligations of the
Company under the Bank Agreements, including, without limitation,
the waiver of set-off rights or the execution of a set-off and
collateral sharing agreement in favor of the holders of the Notes.
3.10. Information Required by Rule 144A. The Company will,
upon the request of the holder of any Note, provide such
holder, and any qualified institutional buyer designated by such
holder, such financial and other information as such holder may
reasonably determine to be necessary in order to permit
compliance with the information requirements of Rule 144A under
the Securities Act in connection with the resale of Notes, except
at such times as the Company is subject to the reporting
requirements of section 13 or 15(d) of the Exchange Act. For the
purpose of this Section 3.10, the term "qualified institutional
buyer" shall have the meaning specified in Rule 144A under the
Securities Act.
3.ll. No Integration. The Company will take all necessary
steps so that its assumption of the Notes and issuance of new
Notes pursuant to the Assumption Agreement will not require
registration under the Securities Act. The Company will not make
any future offer and sale of debt securities of the Company of
any class if, as a result of the doctrine of "integration", there
is a reasonable possibility that such offer and sale would result
in the loss of the entitlement of its assumption of the Notes and
its issuance of new Notes to an exemption from the registration
requirements of the Securities Act.
SECTION 4. NEGATIVE COVENANTS.
The Company covenants that so long as any of the Notes are
outstanding:
4.01. Transactions with Affiliates. The Company will not,
and will not permit any of its Subsidiaries to, enter into directly
or indirectly any transaction or group of related transactions
(including without limitation the purchase, lease, sale or
exchange of properties of any kind or the rendering of any
service) with any Affiliate (other than the Company or another
Subsidiary), except in the ordinary course and pursuant to the
reasonable requirements of the Company's or such Subsidiary's
business and upon fair and reasonable terms no less favorable to
the Company or such Subsidiary than would be obtainable in a
comparable arm's-length transaction with a Person not an
Affiliate; provided, however, this Section 4.01 shall not apply
to any individual transaction which does not exceed $250,000 or
any series of related transactions which in the aggregate do not
exceed $250,000.
4.02. Merger, Consolidation, etc. The Company will not, and
will not permit any of its Subsidiaries to, consolidate with or
merge with any other Person or convey, transfer or lease all or
substantially all of its assets in a single transaction or series
of transactions to any Person except that:
(i) any Subsidiary may merge or consolidate with the
Company or a Material Subsidiary that is a Wholly-Owned
Subsidiary, provided immediately after such merger or
consolidation, no Default or Event of Default shall have
occurred or exist and, in the case of any transaction
involving the Company, the surviving corporation or the
continuing corporation (if not the Company) shall be a
solvent corporation organized and existing under the laws of
the United States or any State thereof (including the
District of Columbia), and such corporation (if not the
Company) (A) shall have executed and delivered to each
holder of a Note its assumption of the due and punctual
performance and observance of each covenant and condition of
the Agreement and the Notes, (B) shall have executed and
delivered, or caused to be executed and delivered, to each
holder of a Note a reaffirmation of the Pledge Agreements
and the Guaranty Agreement by each party thereto, and (C)
shall have caused to be delivered to each holder of a Note
(1) an opinion of nationally recognized independent counsel,
or other independent counsel reasonably satisfactory to the
holders of the Notes, to the effect that all agreements or
instruments effecting such assumption and reaffirmation are
enforceable in accordance with their terms and comply with
the terms hereof which opinion shall be reasonably
satisfactory to the holders of the Notes in all respects and
(2) such other agreements and instruments which any holder
of a Note may reasonably request;
(ii) the Company may merge or consolidate with any
other corporation (including a Material Subsidiary that is a
Wholly-Owned Subsidiary) if (A) the continuing or surviving
corporation (if not the Company) shall be a solvent
corporation existing under the laws of the United States or
any State thereof (including the District of Columbia), and
such corporation (1) shall have executed and delivered to
each holder of a Note its assumption of the due and punctual
performance and observance of each covenant and condition of
the Agreement and the Notes, (2) shall have executed and
delivered, or caused to be executed and delivered, to each
holder of a Note a reaffirmation of the Pledge Agreements
and the Guaranty Agreement by each party thereto, and (3)
shall have caused to be delivered to each holder of a Note
a) an opinion of nationally recognized independent counsel,
or other independent counsel reasonably satisfactory to the
holders of the Notes, to the effect that all agreements or
instruments effecting such assumption and reaffirmation are
enforceable in accordance with their terms and comply with
the terms hereof which opinion shall be reasonably
satisfactory to the holders of the Notes in all respects and
b) such other agreements and instruments which any holder of
a Note may reasonably request, and (B) immediately after
such merger or consolidation, no Default or Event of Default
shall have occurred or exist;
(iii) any Subsidiary may convey, transfer or lease all
or substantially all of its assets to the Company or a
Material Subsidiary that is a Wholly-Owned Subsidiary,
provided immediately after such transaction, no Default or
Event of Default shall have occurred or exist; and
(iv) the Company may convey, transfer or lease all or
substantially all of its assets to any other corporation
(including a Material Subsidiary that is a Wholly-Owned
Subsidiary), provided (A) the acquiring corporation shall be
a solvent corporation existing under the laws of the United
States or any State thereof (including the District of
Columbia), and such corporation (1) shall have executed and
delivered to each holder of a Note its assumption of the due
and punctual performance and observance of each covenant and
condition of the Agreement and the Notes, (2) shall have
executed and delivered, or caused to be executed and
delivered, to each holder of a Note a reaffirmation of the
Pledge Agreements and the Guaranty Agreement by each party
thereto, and (3) shall have caused to be delivered to each
holder of a Note a) an opinion of nationally recognized
independent counsel, or other independent counsel reasonably
satisfactory to the Required Holders, to the effect that all
agreements or instruments effecting such assumption and
reaffirmation are enforceable in accordance with their terms
and comply with the terms hereof which opinion shall be
reasonably satisfactory to the holders of the Notes in all
respects and b) such other agreements and instruments which
any holder of a Note may reasonably request, and (B)
immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred or exist.
4.03. Liens. The Company will not, and will not permit any
of its Subsidiaries to, create, assume, incur or suffer to exist
any Lien upon any of its property or assets, whether owned on
January 3, 1996 or thereafter acquired (whether or not provision
is made for the equal and ratable securing of the Notes pursuant
to Section 3.07), except:
(a) Liens existing on January 3, 1996 and specified on
Schedule 10.3 to the 1996 Agreement, provided in the case of
Liens securing the Company's obligations under the Bank
Agreements, all Persons party to the Bank Agreements shall
have executed and delivered the Intercreditor Agreement and
the Intercreditor Agreement shall be in full force and
effect so long as such Liens exist;
(b) Liens for taxes (including ad valorem and property
taxes) and assessments (other than any Liens and assessments
imposed under ERISA) or governmental charges or levies which
are not yet due (and not then delinquent) or which are being
actively contested in good faith by appropriate proceedings
and with respect to which adequate reserves are being
maintained;
(c) landlord liens and statutory liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed
by law, created in the ordinary course of business for
amounts not yet due or which are being contested in good
faith by appropriate proceedings and with respect to which
adequate reserves are being maintained, and, in any case (i)
were not incurred in connection with the borrowing of money,
and (ii) do not, individually or in the aggregate,
materially detract from the value of the property or assets
of the Company or any Material Subsidiary, or the Company
and its Subsidiaries taken as a whole;
(d) Liens (other than any Lien imposed under ERISA)
incurred or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment
insurance and other types of social security or to secure
the performance of tenders, statutory obligations, surety
and appeal bonds, bids, leases (other than Capitalized
Leases), government contracts, performance and return of
money bonds and similar obligations which (i) were not
incurred in connection with the borrowing of money, and (ii)
do not, individually or in the aggregate, materially detract
from the value of the property or assets of the Company or
any Material Subsidiary, or the Company and its Subsidiaries
taken as a whole;
(e) Liens arising in the ordinary course of business
(including easements, rights of way, zoning restrictions of
record and similar restrictions and other similar charges or
encumbrances) which are not incurred in connection with
Debt, and which do not, individually or in the aggregate,
(a) materially interfere with the ordinary conduct of the
business of the Company, or the Company and its Subsidiaries
taken as a whole, or (b) materially detract from the value
of the property or assets of the Company or any Material
Subsidiary, or the Company and its Subsidiaries taken as a
whole;
(f) any right of setoff or banker's lien arising
(whether by law, contract or otherwise) in connection with
ordinary course of business deposit arrangements maintained
by the Company or its Subsidiaries with its banks or other
financial institutions so long as any such bank or other
financial institution (A) shall not at any time make loans
or otherwise extend credit to the Company or any Subsidiary,
(B) does not maintain accounts (for the deposit of cash or
otherwise) for the benefit of the Company or any Subsidiary,
(C) shall have waived in writing for the benefit of each
holder of a Note such right of setoff or banker's lien or
(D) holds no more than $1,000,000 of obligations owed to the
Company or any Subsidiary and the total of all such
obligations permitted solely by this clause (D) shall not
exceed $3,000,000;
(g) any Lien renewing, extending or refunding any
outstanding obligations secured by a Lien described in
clause (a), (b), (c), (d), (f), (h) and (i) of this Section
4.03, provided (A) with respect to Debt described in clause
(a), such renewal, extension or refunding shall relate
solely to Debt under the Bank Agreements, so long as all
Persons then party to the Bank Agreements shall have
executed and delivered the Intercreditor Agreement and the
Intercreditor Agreement shall be in full force and effect so
long as such Lien exists, (B) after giving effect to such
renewal, extension or refunding of the obligations described
in clauses (b), (c), (d), (f), (h) and (i), such obligations
shall remain subject to the conditions and provisions set
forth in clauses (b), (c), (d), (f), (h) and (i),
respectively, and (C) except for Debt under the Bank
Agreements, the principal amount secured is not increased
and such Lien is not extended to any other property of the
Company or its Subsidiaries;
(h) Liens securing judgments rendered against the
Company or any of its Subsidiaries or arising in connection
with any court proceedings, provided (i) such Liens are being
contested in good faith by appropriate proceedings and (ii)
no action has been taken by any Person to execute or
otherwise collect on such Lien;
(i) Liens securing Debt held by the Company in any
Subsidiary or Debt held by any Subsidiary in any other
Subsidiary; and
(j) Liens securing Debt permitted by clause (ii) of the
definition of Priority Debt, provided that after giving
effect to such Liens, Consolidated Priority Debt shall not
exceed 25% of Shareholders' Equity at any time.
4.04. Loans, Advances and Investments. The Company will not,
and will not permit any of its Subsidiaries to, make or permit to
remain outstanding any Investments, except that the Company or
any Subsidiary may:
(a) make or own Investments in any Subsidiary or any
Person which immediately after giving effect to such
Investment will be a Subsidiary;
(b) own, purchase or otherwise acquire notes or
accounts receivable arising from transactions with
customers, suppliers and employees in the ordinary course of
business;
(c) execute Guaranties of Debt of Subsidiaries,
provided that after giving effect to any such Guaranty the
Company will be in compliance with Sections 4.08(a), (b) and
(e);
(d) own, purchase or acquire (A) prime commercial
paper of an issuer rated A-1 or P1 or better by Moody's or
S&P or certificates of deposit in U.S. commercial banks
(having capital and surplus in excess of $500,000,000), in
each case due within one year from the date of purchase, or
(B) obligations of the United States Government or any agency
thereof for which the full faith and credit of the United
States Government is pledged due within one year from the
date of purchase, or (C) obligations guaranteed by the
United States Government due within one year from the date
of purchase; and
(e) make or permit to remain outstanding any other
Investments which in the aggregate do not exceed at any time
15% of Shareholders' Equity.
4.05. Restricted Payments. The Company will not, and will not
permit any of its Subsidiaries to:
(a) pay or declare any dividend on any class of its Capital
Stock or make any other distribution on account of any class of
its Capital Stock; or
(b) redeem, purchase or otherwise acquire, directly or
indirectly (through a Subsidiary or otherwise), any shares of its
Capital Stock (all of the foregoing events set forth in
subsections (a) and (b), whether made in cash or property, being
herein called "Restricted Payments");
unless (A) the aggregate amount of all Restricted Payments made
since September 30, 1995 would not exceed the sum of (1)
$20,000,000, plus (2) 50% of cumulative Consolidated Net Income
since September 30, 1995 (or minus 100% of cumulative
Consolidated Net Income since September 30, 1995 if such
cumulative Consolidated Net Income for such period is a loss),
plus (3) the aggregate net proceeds of the issuance or sale of
the Company's Capital Stock after September 30, 1995 and (B) no
Default or Event of Default shall have occurred and be continuing,
and no Default or Event of Default would occur as a result of such
Restricted Payment; provided, however, any Subsidiary may make
Restricted Payments to the Company or any Material Subsidiary.
For purposes of this Section 4.05, the conversion of the
Company's Convertible Subordinated Notes due 1999 shall not
constitute an issuance of the Company's Capital Stock.
4.06. Nature of Business. The Company will not, and will not
permit any of its Subsidiaries to, engage in any business, if as
a result, when taken as a whole, the general nature of the
business then engaged in by the Company and its Subsidiaries
would be substantially changed from the nature of the business of
the Company and its Subsidiaries on January 3, 1996.
4.07. Sale of Property. The Company will not, and will not
permit any of its Subsidiaries to, Dispose of any property or
assets (including, without limitation, Subsidiary Stock), except,
so long as no Default or Event of Default shall exist:
(a) the Company or any Subsidiary may Dispose of inventory in
the ordinary course of business at Fair Market Value; provided,
however, the Company and its Subsidiaries may Dispose of
inventory at less than Fair Market Value, provided such
Disposition is in the ordinary course of business of the Company
and its Subsidiaries which shall be consistent with the practice
of the industry of the Company and the Subsidiaries at the time
of such Disposition; and
(b) the Company or any Subsidiary may Dispose of any of its
assets so long as, immediately after giving effect to such
proposed Disposition:
(i) the cumulative net book value of all assets so
Disposed of by the Company and its Subsidiaries during any
fiscal year does not exceed 15% of the net book value of the
Consolidated Assets of the Company and its Subsidiaries
determined after giving effect to any such Disposition;
(ii) the consideration for such assets represents the
Fair Market Value of such assets at the time of such
Disposition; and
(iii) in the case of the Disposition of Subsidiary
Stock, the following additional conditions shall apply:
(A) in connection with such Disposition of
Subsidiary Stock, the entire Investment (whether represented
by stock, Debt, claims or otherwise) of the Company and its
other Subsidiaries in such Subsidiary is Disposed of to a
Person other than (1) the Company, (2) another Subsidiary
not being simultaneously Disposed of, or (3) an Affiliate,
and
(B) the Subsidiary being Disposed of has no
continuing Investment in any other Subsidiary of the Company
not being simultaneously Disposed of or in the Company.
For purposes of this Section 4.07, "Disposition" means the sale,
lease, transfer or other disposition of property, and "Disposed
of" has a corresponding meaning to Disposition. The term
"Disposition" shall not include an exchange of assets, provided
that the assets involved in such exchange are similar in function
in that after giving effect to such exchange there has not been
(A) a Material Adverse Effect, (B) any Material deterioration of
cash flow generation, or (C) any deterioration in the overall
quality of plant, property and equipment of the Company and its
Subsidiaries taken as a whole. An "exchange" shall be deemed to
have occurred if each of the transactions involved shall have
been consummated within a six month period.
4.08. Certain Financial Limits. The Company will not permit:
(a) Consolidated Senior Funded Debt to exceed 60% of Total
Capitalization at any time;
(b) Total Funded Debt to exceed 65% of Total Capitalization
at any time;
(c) the ratio of Consolidated Income Available for Fixed
Charges for the four fiscal quarters most recently ended to
Consolidated Fixed Charges for such four fiscal quarter period to
be less than 1.75 to 1.0 on the last day of any fiscal quarter;
(d) Shareholders' Equity to be less than $100,000,000 at any
time; and
(e) Consolidated Priority Debt to exceed 25% of Shareholders'
Equity at any time.
SECTION 5. CONSENTS, WAIVERS AND AMENDMENTS.
Any term, covenant, agreement or condition of the Agreement or
the Notes may, with the consent of the Company, be amended or
compliance therewith may be waived (either generally or in a
particular instance and either retroactively or prospectively),
by one or more written instruments signed by the Required
Holders; provided, however, that
A. no such amendment or waiver shall
1. change the maturity of the principal of, or any
installment of interest on, any of the Notes, or reduce the
principal amount thereof or the interest or premium thereon, or
subordinate or otherwise modify the terms of, or rights to,
payment of the principal thereof or interest or premium thereon
including, without limitation, change the time for any such
payment, without the consent of the holder of each Note so
affected, or
2. change the percentage of holders of Notes required to
approve any such amendment or effectuate any such waiver or
give to any Note any preference over any other Note, without
the consent of the holders of all Notes then outstanding;
B. no such amendment or waiver shall modify or alter the
provisions of Section 2.03 of the Notes or Section 6 of the
Agreement without the consent of all holders of the Notes then
outstanding; and
C. no such waiver shall extend to or affect any obligation not
expressly waived or impair any right consequent thereon.
Any amendment or waiver pursuant to this Section 5 shall apply
equally to all the holders of the Notes and shall be binding upon
them, upon each future holder of any Note and upon the Company,
whether or not a notation of such amendment or waiver shall have
been made on such Notes. In the case of an amendment or waiver
of the character described in Section 5A, the holder of this Note
agrees to make a notation on this Note to indicate that such
amendment or waiver has been effected. In the case of any other
amendment or waiver, no notation need be made on the Notes at the
time outstanding, but any Note executed and delivered thereafter
may, at the option of the Company, bear a notation referring to
any such amendment or waiver then in effect. For purposes of
determining whether the holders of outstanding Notes of the
requisite aggregate principal amount at any time have agreed or
consented to any amendment or waiver pursuant to the provisions
of this Section 5, any Notes owned by the Company, any Subsidiary
or any Affiliate shall be disregarded and deemed not to be
outstanding.
The Company will not increase the rate of interest on any Note
or grant any holder of any Note any benefit or payment for or in
connection with any amendment or waiver in respect to the
Agreement or the Notes, whether pursuant to this Section 5 or
otherwise, unless such increase in interest or other benefit or
payment is extended on the same terms ratably to all other
holders of Notes at the time outstanding.
SECTION 6. DEFINITIONS.
For all purposes of this Note and the Agreement, except as
otherwise expressly provided or unless the context otherwise
requires:
"Affiliate" means, at any time, and with respect to any
Person, (a) any other Person that at such time directly or
indirectly through one or more intermediaries Controls, or is
Controlled by, or is under common Control with, such first Person,
and (b) any Person beneficially owning or holding, directly or
indirectly, 10% or more of any class of voting or equity interests
of the Company or any Subsidiary or any corporation of which the
Company and its Subsidiaries beneficially own or hold, in the
aggregate, directly or indirectly, 10% or more of any class of
voting or equity interests. As used in this definition, "Control"
means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by
contract or otherwise. Unless the context otherwise clearly
requires, any reference to an "Affiliate" is a reference to an
Affiliate of the Company.
"Agreement" means the Loan Agreement dated as of June 23, 1994
between The C. R. Gibson Company ("Gibson") and Metropolitan Life
Insurance Company ("MetLife") pursuant to which the Notes were
originally issued, as amended from time to time, including by the
Assumption Agreement, and as assumed by the Company pursuant to
the Assumption Agreement.
"Assets" means, at any time, assets of any Person as
determined in accordance with GAAP.
"Assumption Agreement" means the Assumption and Amendment
Agreement, dated as of May 30, 1996, among Gibson, the Company
and MetLife, pursuant to which the Agreement, the Notes, the 1989
Agreement and the 9.50% Notes were amended and Gibson's
obligations thereunder were assumed by the Company.
"Bank Agreements" means (i) the Amended and Restated Credit
Agreement, dated December 13, 1995, among the Company, the
Lenders listed therein, and SunTrust Bank, Nashville, N.A., as
agent, and any refinancing thereof or substitution therefor, as
it may be amended, modified or supplemented from time to time in
accordance with its terms, (ii) the Amended and Restated
Revolving Credit Promissory Note dated as of December 13, 1995
(effective as of July 25, 1995) given by the Company to SunTrust
Bank, Nashville, N.A. in the original principal amount of
$10,000,000, and any refinancing thereof or substitution
therefor, as it may be amended, modified or supplemented from
time to time in accordance with its terms, and the Amended and
Restated Letter Agreement dated as of December 13, 1995 from
SunTrust Bank, Nashville, N.A., to the Company delivered in
connection therewith, as it may be amended, modified or
supplemented from time to time in accordance with its terms,
(iii) the SunTrust LOC Facility (as defined in the Intercreditor
Agreement) and (iv) the NCB LOC Facility (as defined in the
Intercreditor Agreement).
"Business Day" means any day other than a Saturday, a Sunday
or a day on which commercial banks in New York City are required or
authorized to be closed.
"Capital Stock" means, with respect to any Person, the
outstanding capital stock (or any options or warrants to purchase
capital stock or other securities exchangeable for or convertible
into capital stock) of such Person.
"Capitalized Lease" means, at any time, and with respect to
any Person, a lease which the lessee is required to capitalize on
the balance sheet of such lessee in accordance with GAAP.
"Capitalized Lease Obligations" means the amount at which the
aggregate rentals due and to become due under all Capitalized
Leases under which the Company or any Subsidiary is the lessee,
would be required to be reflected as a liability on its
consolidated balance sheet.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and the rules and regulations promulgated
thereunder from time to time.
"Company" means Thomas Nelson, Inc., a Tennessee corporation,
and, subject to Section 4.02, its successors and assigns.
"Computing Holder" means, as of the date of prepayment
pursuant to Section 6 of the Agreement or Section 2.02 hereof or
the date of acceleration pursuant to Section 7.02 hereof, as the
case may be, the holder of Notes with an aggregate principal amount
outstanding higher than that of Notes held by any other holder of
the Notes.
"Consolidated" means the consolidation of accounts of the
Company and its Subsidiaries determined in accordance with GAAP
giving effect to the elimination of any intercompany items and any
minority interests in Subsidiaries.
"Consolidated Net Income" means, for any period, the
consolidated net income (or loss) of the Company and its
Subsidiaries for such period (taken as a single accounting period)
determined in accordance with GAAP, but excluding therefrom (to
the extent otherwise included therein) (i) any gains or losses,
together with any related provision for taxes, realized upon any
sale of assets other than in the ordinary course of business,
and (ii) any income or loss of any Person accrued prior to the
date such Person becomes a Subsidiary of the Company or is merged
into or consolidated with the Company or any Subsidiary or all or
substantially all of such Person's assets are acquired by the
Company or any Subsidiary.
"Current Debt" means, with respect to any Person, all Debt of
such Person which by its terms matures on demand or within one
year from the date of the creation thereof and is not directly or
indirectly renewable or extendible at the option of the obligor
in respect thereto to a date one year or more from the date of
creation thereof, provided that (i) Debt outstanding under an
agreement which obligates the lender or lenders to extend credit
over a period of one year or more and (ii) Current Maturities of
Funded Debt shall constitute Funded Debt and not Current Debt.
"Current Maturities of Funded Debt" means the portion of
Funded Debt outstanding which by its terms is due on demand or
within one year from the date of determination and is not directly
or indirectly renewable, extendible or refundable at the option of
the obligor to a date one year or more from such time.
"Debt" with respect to any Person means, at any time, without
duplication,
(a) its liabilities for borrowed money;
(b) its liabilities for the deferred purchase price of
property acquired by such Person (excluding accounts payable
arising in the ordinary course of business but including, without
limitation, all liabilities created or arising under any
conditional sale or other title retention agreement with respect
to any such property);
(c) its Capitalized Lease Obligations;
(d) all liabilities for borrowed money secured by any Lien
with respect to any property owned by such Person (whether or not
it has assumed or otherwise become liable for such liabilities);
and
(e) any Guaranty of such Person with respect to liabilities
of a type described in any of clauses (a) through (d) hereof.
Debt of any Person shall include all obligations of such Person
of the character described in clauses (a) through (e) to the
extent such Person remains legally liable in respect thereof
notwithstanding that any such obligation is deemed to be
extinguished under GAAP.
"Default" means an event or condition the occurrence or
existence of which would, with the lapse of time or the giving of
notice or both, become an Event of Default.
"Disposition" is defined in Section 4.07.
"Environmental Laws" means any and all Federal, state, local
and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders, decrees, permits, concessions, grants,
franchises, licenses, agreements or governmental restrictions
relating to pollution and the protection of the environment or
the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes,
air emissions and discharges to waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the rules and regulations
promulgated thereunder from time to time in effect.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that is treated as a single employer together with
the Company under section 414 of the Code.
"Event of Default" is defined in Section 7.01.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" means, at any time, the sale value of
property that would be realized in an arm's-length sale at such
time between an informed and willing buyer, and an informed and
willing seller, under no compulsion to buy or sell, respectively.
"Fixed Charges" means, for any period, the sum of (i) Interest
Expense and (ii) Operating Rents for such period.
"Funded Debt" means, with respect to any Person, all Debt of
such Person which by its terms matures, or which is otherwise
payable or unpaid, one year or more from the date of creation
thereof, or is directly or indirectly renewable or extendible at
the option of the obligor in respect thereof to a date one year or
more from the date of creation thereof, provided that Funded Debt
shall also include, as at any time of determination, Current
Maturities of Funded Debt and the minimum daily average level of
Current Debt outstanding for any sixty day period during the
twelve month period immediately preceding such time of
determination.
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States of America,
consistently applied.
"Gibson" means The C. R. Gibson Company, a Delaware
corporation and a Wholly-Owned Subsidiary.
"Governmental Authority" means
(a) the government of
(i) the United States of America or any State or other
political subdivision thereof, or
(ii) any jurisdiction in which the Company or any
Subsidiary conducts all or any part of its business, or
which asserts jurisdiction over any properties of the
Company or any Subsidiary, or
(b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any
such government.
"Guarantor" means each Subsidiary which is a party to the
Guaranty Agreement, and any other Subsidiary which executes a
Guaranty pursuant to Section 3.08 or Section 3.09.
"Guarantee" means, with respect to any Person, any obligation
(except the endorsement in the ordinary course of business of
negotiable instruments for deposit or collection) of such Person
guaranteeing or in effect guaranteeing any indebtedness, dividend
or other obligation of any other Person in any manner, whether
directly or indirectly, including (without limitation)
obligations incurred through an agreement, contingent or
otherwise, by such Person:
(i) to purchase such indebtedness or obligation or any
property constituting security therefor;
(ii) to advance or supply funds (a) for the purchase or
payment of such indebtedness or obligation, or to maintain any
working capital or other balance sheet condition or any income
statement condition of any other Person or otherwise to advance
or make available funds for the purchase or payment of such
indebtedness or obligation;
(iii) to lease properties or to purchase properties or
services primarily for the purpose of assuring the owner of such
indebtedness or obligation of the ability of any other Person to
make payment of the indebtedness or obligation; or
(iv) otherwise to assure the owner of such indebtedness or
obligation against loss in respect thereof.
In any computation of the indebtedness or other liabilities of
the obligor under any Guaranty, the indebtedness or other
obligations that are the subject of such Guaranty shall be
assumed to be direct obligations of such obligor.
"Guaranty Agreement" means the Guaranty Agreement, dated as
of January 3, 1996, made by the Guarantors in favor of MetLife with
respect to the Company's obligations under the 1996 Notes and the
1996 Agreement, as such Guaranty Agreement may be amended or
supplemented from time to time including by Amendment and
Supplement No. 1 thereto, dated as of May 30, 1996, in the form
of Exhibit B to the Assumption Agreement, to include as
Obligations (as defined in the Guaranty Agreement) thereunder the
Company's obligations under the Agreement, the Notes, the 1989
Agreement and the 9.50% Notes. The term "Guaranty Agreement"
shall also include any other Guaranty executed by a Subsidiary
from time to time pursuant to Section 3.08 or Section 3.09.
"Hazardous Material" means any and all pollutants, toxic or
hazardous wastes or any other substances that might pose a hazard
to health or safety, the removal of which may be required or the
generation, manufacture, refining, production, processing,
treatment, storage, handling, transportation, transfer, use,
disposal, release, discharge, spillage, seepage, or filtration of
which is or shall be restricted, prohibited or penalized by any
applicable law (including, without limitation, asbestos, urea
formaldehyde foam insulation and polychlorinated biphenyls).
"Income Available For Fixed Charges" means, for any period,
the sum of (i) Consolidated Net Income, (ii) taxes, (iii) Interest
Expense, (iv) Operating Rents, and (v) amortization charges, of
the Company and its Subsidiaries for such period, all as
determined in accordance with GAAP.
"Indebtedness" with respect to any Person means, at any time,
without duplication,
(a) its liabilities for borrowed money;
(b) its liabilities for the deferred purchase price of
property acquired by such Person (excluding accounts payable
arising in the ordinary course of business but including, without
limitation, all liabilities created or arising under any
conditional sale or other title retention agreement with respect
to any such property);
(c) its Capitalized Lease Obligations;
(d) all liabilities for borrowed money secured by any Lien
with respect to any property owned by such Person (whether or not
it has assumed or otherwise become liable for such liabilities);
(e) all its liabilities in respect of letters of credit or
instruments serving a similar function issued or accepted for its
account by banks and other financial institutions (whether or not
representing obligations for borrowed money);
(f) Swaps of such Person; and
(g) any Guaranty of such Person with respect to liabilities
of a type described in any of clauses (a) through (f) hereof.
Indebtedness of any Person shall include all obligations of such
Person of the character described in clauses (a) through (g) to
the extent such person remains legally liable in respect thereof
notwithstanding that any such obligation is deemed to be
extinguished under GAAP.
"Institutional Investor" means (a) MetLife, as the original
purchaser of all of the Notes and the holder thereof on May 30,
1996, (b) any holder of a Note holding more than 10% of the
aggregate principal amount of the Notes then outstanding, and (c)
any other holder of a Note which is a bank, trust company,
savings and loan association or other financial institution, any
pension plan, any investment company, any insurance company, any
broker or dealer, or any other similar financial institution or
entity, regardless of legal form.
"Intercreditor Agreement" means the Intercreditor Agreement,
dated as of January 3, 1996, among The Prudential Insurance
Company of America, MetLife, SunTrust Bank, Nashville, N.A.,
First American National Bank, National City Bank, Kentucky,
Nationsbank of Texas, N.A. and Creditanstalt-Bankverein, as it
may be amended, restated, modified or supplemented from time to
time in accordance with its terms, including by Amendment and
Supplement No. 1 thereto, dated as of May 30, 1996, in the form
of Exhibit D to the Assumption Agreement, to more fully include
therein the Company's obligations under the Agreement, the Notes,
the 1989 Agreement and the 9.50% Notes and MetLife as the holder
of all of said Notes and a party to each of said Agreements.
"Interest Expense" means, for any period, all interest
expense in respect of Debt (including imputed interest in respect
of Capitalized Lease Obligations) of the Company and its
Subsidiaries for such period as determined in accordance with
GAAP.
"Investment" shall mean, when used with respect to any Person,
any direct or indirect advance, loan or other extension
of credit or capital contribution by such Person (by means of
transfers of property to others or payments for property or
services for the account or use of others, or otherwise) to any
other Person, or any direct or indirect purchase or other
acquisition or beneficial ownership by such Person of, or of a
beneficial interest in, Capital Stock, partnership interests,
bonds, notes, debentures or other securities issued by any other
Person.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien (statutory or otherwise), or charge of any kind
(including any agreement to give any of the foregoing, any
conditional sale or other title retention agreement, any
Capitalized Lease, and the filing of or agreement to give any
financing statement under the Uniform Commercial Code of any
jurisdiction) or any other type of preferential arrangement for
the purpose, or having the effect, of protecting a creditor
against loss or securing the payment or performance of an
obligation, including any rights of setoff (whether by statute,
common law, contract or otherwise).
"Make-Whole Premium" means the excess, if any, of (i) the sum
of the respective Payment Values of each prospective interest
payment, prospective mandatory prepayment and the principal
payment at maturity in respect of the principal amount of the
Notes to be prepaid pursuant to Section 2.02 or Section 6 of the
Agreement or to be accelerated pursuant to Section 7.02, as the
case may be (the amount of each such payment being herein
referred to as a "Payment") over (ii) the principal amount of the
Notes to be so prepaid or accelerated. The Payment Value of each
Payment shall be determined by discounting such Payment at the
Reinvestment Rate, for the period from the scheduled date of such
Payment to the applicable date of prepayment or acceleration, as
the case may be. The Reinvestment Rate is (i) 50 basis points
plus (ii) the yield to maturity implied by (A) the yields
reported, at the Calculation Time, by the Telerate Access Service
on Page 678 (or such other display as may replace Page 678 on
Telerate Access Service) for United States Treasury securities
having a maturity equal to the Weighted Average Life to Final
Maturity (rounded to the nearest month) of the Notes so to be
prepaid or accelerated, or (B) if such yields are not reported at
the Calculation Time or the yields reported at the Calculation
Time are not ascertainable, the Treasury Constant Maturity Series
Yields reported, for the latest day for which such yields have
been reported at the Calculation Time, in Federal Reserve
Statistical Release H.15(519) (or any comparable successor
publication) for actively traded United States Treasury
securities having a constant maturity equal to such Weighted
Average Life to Final Maturity. Such implied yield will be
determined, if necessary, by (a) converting U.S. Treasury bill
quotations to bond-equivalent yields in accordance with accepted
financial practice and (b) interpolating linearly between (1) the
actively traded U.S. Treasury security with the duration closest
to and greater than such rounded Weighted Average Life to Final
Maturity and (2) the actively traded U.S. Treasury security with
the duration closest to and less than such rounded Weighted
Average Life to Final Maturity. The "Calculation Time" for
determining the yields of such United States Treasury securities
shall be 10 a.m. (New York City time) on the second Business Day
prior to the prepayment date pursuant to Section 2.02 or Section
6 of the Agreement or prior to the date of acceleration pursuant
to Section 7.02, as the case may be.
"Material" means material in relation to the business,
operations, affairs, financial condition, assets, properties, or
prospects of the Company and its Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on
(a) the business, operations, affairs, financial condition, assets
or properties of the Company and its Subsidiaries taken as a whole,
or (b) the ability of the Company to perform its obligations
under the Agreement and the Notes, or (c) the validity or
enforceability against the Company of the Agreement, or the
Notes, or (d) the ability of the Company and its Subsidiaries
(taken as a whole) to perform their respective obligations under
the Pledge Agreements or the Guaranty Agreement.
"Material Subsidiary" means a Subsidiary having (i) Assets
with an aggregate book value in excess of $5,000,000 at the time
of determination or (ii) Revenues in excess of 5% of Consolidated
Revenues for the fiscal year most recently ended prior to the
time of determination.
"MetLife" means Metropolitan Life Insurance Company, a New
York corporation, the original purchaser of all of the Notes, the
9.50% Notes and the 1996 Notes and which holds the entire
principal amount of each thereof on May 30, 1996.
"Moody's" means Moody's Investors Service, Inc. or any
successor thereto.
"Multiemployer Plan" means any Plan that is a "multiemployer
plan" (as such term is defined in section 4001(a)(3) of ERISA).
"1989 Agreement" means the Loan Agreement dated as of
September 21, 1989 between Gibson and MetLife entered into in
connection with the original issuance of the 9.50% Notes, as
amended from time to time, including by the Assumption Agreement,
and as assumed by the Company pursuant to the Assumption Agreement.
"9.50% Notes" means the 9.50% Senior Notes due September 22,
1999 originally issued by Gibson pursuant to the 1989 Agreement,
as amended from time to time, including by the Assumption Agreement,
and as assumed by the Company pursuant to the Assumption
Agreement.
"1996 Agreement" means the Note Purchase Agreement, dated as
of January 3, 1996, among the Company, MetLife and another
institutional investor, pursuant to or in connection with which,
inter alia, (i) MetLife acquired the 1996 Notes, (ii) the Pledge
Agreements, the Guaranty Agreement and the Intercreditor
Agreement were entered into, and (iii) the assumption of the
Notes and the 9.50% Notes by the Company and the amendment
thereof pursuant to the Assumption Agreement was contemplated.
"1996 Notes" means the Company's 6.68% Series B Senior Notes
due December 31, 2005 issued to MetLife in the aggregate principal
amount of $15,000,000 pursuant to the 1996 Agreement.
"Notes" means the Notes as amended from time to time,
including by the Assumption Agreement, and as assumed by the
Company pursuant to the Assumption Agreement.
"Officer's Certificate" means a certificate of a Senior
Financial Officer or of any other officer of the Company whose
responsibilities extend to the subject matter of such
certificate.
"Operating Rents" means, for any period, noncapitalized lease
obligations of the Company and its Subsidiaries for such period
but shall exclude all leases related to vehicles, computer and
office equipment.
"Overdue Interest Rate" means the greater (determined on a
daily basis) of 9.31% per annum or the rate per annum which The
Chase Manhattan Bank, N.A. announces publicly from time to time
as its corporate base rate of interest.
"PBGC" means the Pension Benefit Guaranty Corporation
referred to and defined in ERISA or any successor thereto.
"Person" means an individual, partnership, corporation,
limited liability company, association, trust, unincorporated
organization, or a government or agency or political subdivision
thereof.
"Plan" means an "employee benefit plan" (as defined in
section 3(3) of ERISA) that is or, within the preceding five years,
has been established or maintained, or to which contributions are
or, within the preceding five years, have been made or required
to be made, by the Company or any ERISA Affiliate or with respect
to which the Company or any ERISA Affiliate may have any liability.
"Pledge Agreements" means (i) the Amended and Restated Pledge
Agreement, dated as January 3, 1996, among the Company, as
pledgor, SunTrust Bank, Nashville, N.A., National City Bank,
Kentucky, First American National Bank, Nationsbank of Texas,
N.A., Creditanstalt - Bankverein, MetLife and The Prudential
Insurance Company of America, as pledgees, and SunTrust Bank,
Nashville, N.A., as agent, pursuant to which the Company has,
among other things, pledged to the pledgees a security interest
in the outstanding common stock of Word, Incorporated owned by
the Company, (ii) the Amended and Restated Pledge Agreement,
dated as of January 3, 1996, among the Company, as pledgor,
SunTrust Bank, Nashville, N.A., National City Bank, Kentucky,
First American National Bank, Nationsbank of Texas, N.A.,
Creditanstalt - Bankverein, MetLife and The Prudential Insurance
Company of America, as pledgees, and SunTrust Bank, Nashville,
N.A., as agent, pursuant to which the Company has, among other
things, pledged to the pledgees a security interest in the
outstanding common stock of Gibson owned by the Company and (iii)
any other pledge agreement or other similar security agreement
executed by the Company or any Subsidiary pursuant to Sections
3.07, 3.08 or 3.09, as any such agreement may be amended,
restated, modified, or supplemented from time to time in accordance
with its terms, including by Amendment and Supplement No. 1 thereto,
dated as of May 30, 1996, in the form of Exhibits C-1 and C-2,
respectively, to the Assumption Agreement, to include as Secured
Obligations (as defined in the Pledge Agreements) thereunder the
Company's obligations under the Notes, the 9.50% Notes, the
Agreement and the 1989 Agreement and MetLife as obligee of such
obligations as pledgee thereunder.
"Preferred Stock" means any class of Capital Stock of a
corporation that is preferred over any other class of Capital
Stock of such corporation as to the payment of dividends or the
payment of any amount upon liquidation or dissolution of such
corporation.
"Priority Debt" means with respect any Person, at any time,
without duplication, the sum of
(i) Debt of each Subsidiary (other than Debt held by the
Company or another Subsidiary);
(ii) Debt secured by any Lien other than a Lien described
in clauses (a) through (i) of Section 4.03;
(iii) all Preferred Stock of Subsidiaries owned by a
Person other than the Company or a Subsidiary; and
(iv) any obligation or liability arising in connection
with a Receivables Financing.
"Receivables Financing" means a transaction pursuant to which
funds are advanced to the Company and/or any of its Subsidiaries
in exchange for which the Company and/or any of its Subsidiaries
shall pledge, sell or otherwise transfer any or all of its notes
or accounts receivable to secure, in whole or in part, the
repayment of such funds.
"Required Holders" means, at any time, the holders of at
least 66 2/3% in principal amount of the Notes at the time
outstanding (exclusive of Notes then owned by the Company or any
of its Affiliates).
"Responsible Officer" means the chief executive officer, any
Senior Financial Officer and any other officer of the Company
with responsibility for the administration of the relevant
portion of the Agreement or the Notes.
"Restricted Payment" is defined in Section 4.05.
"Revenues" means, at any time, and with respect to any Person,
revenues as determined in accordance with GAAP.
"S&P" means Standard & Poor's Rating Group or any successor
thereto.
"Securities Act" means the Securities Act of 1933, as amended
from time to time.
"Senior Financial Officer" means the chief financial officer,
principal accounting officer, treasurer or comptroller of the
Company.
"Senior Funded Debt" means (i) all Funded Debt of the Company
other than Subordinated Funded Debt, and (ii) all Funded Debt of
the Subsidiaries.
"Shareholders' Equity" means shareholders' equity of the
Company and its Subsidiaries on a consolidated basis as set forth
in the Company's consolidated balance sheet prepared in accordance
with GAAP.
"Subordinated Funded Debt" means all Funded Debt of the
Company which is expressly subordinate to other Funded Debt of the
Company on terms and conditions approved by the Required Holders,
which approval (or disapproval) shall be given within ten (10)
Business Days of receipt by the holders of the Notes of the
subordination terms of such Funded Debt. The Company's
Convertible Subordinated Notes due 1999 shall constitute
Subordinated Funded Debt.
"Subsidiary" means, as to any Person, any corporation,
association or other business entity in which such Person or one
or more of its Subsidiaries or such Person and one or more of its
Subsidiaries owns sufficient equity or voting interests to enable
it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons
performing similar functions) of such entity, and any partnership
or joint venture if more than a 50% interest in the profits or
capital thereof is owned by such Person or one or more of its
Subsidiaries or such Person and one or more of its Subsidiaries
(unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one
or more of its Subsidiaries). Unless the context otherwise
clearly requires, any reference to a "Subsidiary" is a reference
to a Subsidiary of the Company.
"Subsidiary Stock" means the outstanding Capital Stock of any
Subsidiary. For purposes of Section 4.07, the book value of
Subsidiary Stock that is sold or otherwise disposed of shall be
equal to that percentage of book value of the assets of the
Subsidiary that issued such stock as is equal to the percentage
that the book value of such Subsidiary Stock represents of the
book value of all of the outstanding Capital Stock of such
Subsidiary (assuming, in making such calculations, that all
securities convertible into such Capital Stock are so converted
and giving full effect to all transactions that would occur or be
required in connection with such conversion).
"Swaps" means, with respect to any Person, payment
obligations with respect to interest rate swaps, currency swaps
and similar obligations obligating such Person to make payments,
whether periodically or upon the happening of a contingency. For
the purposes of this Agreement, the amount of the obligation under
any Swap shall be the amount determined in respect thereof as of
the end of the then most recently ended fiscal quarter of such
Person, based on the assumption that such Swap had terminated at
the end of such fiscal quarter, and in making such determination,
if any agreement relating to such Swap provides for the netting
of amounts payable by and to such Person thereunder or if any
such agreement provides for the simultaneous payment of amounts
by and to such Person, then in each such case, the amount of such
obligation shall be the net amount so determined.
"Total Capitalization" means the sum of (i) Total Funded Debt
and (ii) Shareholders' Equity.
"Total Funded Debt" means the sum of (i) Consolidated Senior
Funded Debt and (ii) Consolidated Subordinated Funded Debt.
"Weighted Average Life to Final Maturity" of the Notes as of
the time of determination thereof means the number of years (rounded
to the nearest one-twelfth) obtained by dividing the then
Remaining Dollar-Years of the Notes by the then outstanding
principal amount of the Notes. For the purposes of this
definition, "Remaining Dollar-Years" means the sum of the amounts
obtained by multiplying the amount of each then remaining
mandatory prepayment, and repayment at final maturity, by the
number of years (calculated to the nearest one-twelfth) which
will elapse between the time of such determination and the date
of such prepayment or repayment.
"Wholly-Owned Subsidiary" means, at any time, any Subsidiary
one hundred percent (100%) of all of the equity interests (except
directors' qualifying shares) and voting interests of which are
owned by any one or more of the Company and the Company's other
Wholly-Owned Subsidiaries at such time.
All accounting terms used herein or in the Agreement and not
expressly defined in this Note shall have the meanings
respectively given to them in accordance with GAAP from time to
time in effect.
SECTION 7. DEFAULTS AND REMEDIES.
7.0l. Events of Default.
An "Event of Default" shall exist if one or more of the
following events shall occur for any reason whatsoever (and
whether such occurrence shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree
or order of any court or any order, rule or regulation of any
administrative or governmental body):
A. default in the payment of any interest upon any
Note when such interest becomes due and payable and
continuance of such default for a period of 5 Business Days;
or
B. default in the payment of principal of (or premium,
if any, on) any Note for more than three Business Days after
the same becomes due and payable, whether at maturity or at
a date fixed for prepayment (including, without limitation,
a prepayment as provided in Section 2.01, Section 2.02 or
Section 2.03), or by acceleration or otherwise; or
C. default in the performance or observance of any
covenant, agreement or condition contained in Sections 4.01,
4.02, 4.03, 4.05, 4.06, 4.07 or 4.08; or
D. default in the performance or observance of any
other covenant, agreement or condition contained in this
Note or in the Agreement and continuance of any such other
default for a period of 45 days after the earlier of (i)
written notice thereof, specifying such other default and
requiring it to be remedied, shall have been given to the
Company by the holder of any Note (any such notice to be
identified as a "notice of default" and to refer
specifically to this paragraph D of this Section 7.01), and
(ii) a Responsible Officer obtaining actual knowledge of any
such default; or
E. any representation or warranty made in writing by
or on behalf of the Company or Gibson or by any officer of
the Company or Gibson in the Assumption Agreement or in any
writing furnished in connection with the transactions
contemplated thereby proves to have been false or incorrect
in any material respect on the date as of which made; or
F. (i) the Company or any Subsidiary is in default (as
principal or as guarantor or other surety) in the payment of
any principal or premium or make-whole amount or interest on
any Indebtedness that is outstanding in an aggregate
principal amount of at least $5,000,000 beyond any period of
grace provided with respect thereto, or (ii) the Company or
any Subsidiary is in default in the performance of or
compliance with any term of any evidence of any Indebtedness
in an aggregate outstanding principal amount of at least
$5,000,000 or of any mortgage, indenture or other agreement
relating thereto or any other condition exists, and as a
consequence of such default or condition such Indebtedness
has become, or has been declared (or one or more Persons are
entitled to declare such Indebtedness to be), due and
payable before its stated maturity or before its regularly
scheduled dates of payment, or (iii) as a consequence of the
occurrence or continuation of any event or condition (other
than the passage of time or the right of the holder of
Indebtedness to convert such Indebtedness into equity
interests), (x) the Company or any Subsidiary has become
obligated to purchase or repay Indebtedness before its
regular maturity or before its regularly scheduled dates of
payment in an aggregate outstanding principal amount of at
least $5,000,000, or (y) one or more Persons have the right
to require the Company or any Subsidiary so to purchase or
repay such Indebtedness; or
G. the Company or any Material Subsidiary (i) is
generally not paying, or admits in writing its inability to
pay, its debts as they become due, (ii) files, or consents
by answer or otherwise to the filing against it of, a
petition for relief or reorganization or arrangement or any
other petition in bankruptcy, for liquidation or to take
advantage of any bankruptcy, insolvency, reorganization,
moratorium or other similar law of any jurisdiction, (iii)
makes an assignment for the benefit of its creditors, (iv)
consents to the appointment of a custodian, receiver,
trustee or other officer with similar powers with respect to
it or any substantial part of its property, (v) is
adjudicated as insolvent or to be liquidated, or (vi) takes
corporate action for the purpose of any of the foregoing; or
H. a court or governmental authority of competent
jurisdiction enters an order appointing, without consent by
the Company or any of its Subsidiaries, a custodian,
receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its
property, or constituting an order for relief or approving a
petition for relief or reorganization or any other petition
in bankruptcy or for liquidation or to take advantage of any
bankruptcy or insolvency law of any jurisdiction, or
ordering the dissolution, winding-up or liquidation of the
Company or any of its Subsidiaries, or any such petition
shall be filed against the Company or any of its
Subsidiaries and such petition shall not be stayed or
dismissed within 60 days; or
I. a final judgment or judgments for the payment of
money aggregating in excess of $5,000,000 (exclusive of any
insurance coverage for which the insurance company issuing
such coverage shall have acknowledged in writing liability
with respect thereto) shall be rendered against one or more
of the Company and its Subsidiaries and (A) action shall be
taken by a Person within 90 days after entry thereof to
collect on such judgment or to secure such judgment with any
property or assets of the Company or its Subsidiaries or (B)
such judgments shall not, within 90 days after entry
thereof, be bonded, discharged or stayed pending appeal, or
shall not be discharged within 9O days after the expiration
of such stay; or
J. if (i) any Plan shall fail to satisfy the minimum
funding standards of ERlSA or the Code for any plan year or
part thereof or a waiver of such standards or extension of
any amortization period is sought or granted under section
412 of the Code, (ii) a notice of intent to terminate any
Plan shall have been or is reasonably expected to be filed
with the PBGC or the PBGC shall have instituted proceedings
under ERISA section 4042 to terminate or appoint a trustee
to administer any Plan or the PBGC shall have notified the
Company or any ERISA Affiliate that a Plan may become a
subject of any such proceedings, (iii) the aggregate "amount
of unfunded benefit liabilities" (within the meaning of
section 4001(a)(18) of ERISA) under all Plans, determined in
accordance with Title IV of ERISA, shall exceed $5,000,000,
(iv) the Company or any ERISA Affiliate shall have incurred
or is reasonably expected to incur any liability pursuant to
Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans,
(v) the Company or any ERISA Affiliate withdraws from any
Multiemployer Plan, or (vi) the Company or any Subsidiary
shall establish or amend any employee welfare benefit plan
that provides post-employment welfare benefits in a manner
that would increase the liability of the Company or any
Subsidiary thereunder; and any such event or events
described in clauses (i) through (vi) above, either
individually or together with any other such event or
events, could reasonably be expected to have a Material
Adverse Effect; or
K. any Guarantor shall disavow the validity or
enforceability of or attempt to terminate the Guaranty
Agreement; or the Guaranty Agreement shall cease to be in
full force and effect in whole or in part for any reason
whatsoever (other than pursuant to Section 8(a) of the
Intercreditor Agreement); or
L. the security interests granted pursuant to any
Pledge Agreement shall fail at any time to constitute a first
priority security interest in or assignment of the
collateral described in such Pledge Agreement (other than
pursuant to Section 8(a) of the Intercreditor Agreement); or
any Pledge Agreement shall cease to be in full force and
effect in whole or in part for any reason whatsoever (other
than pursuant to Section 8(a) of the Intercreditor
Agreement); or the Company shall disavow the validity or
enforceability of or attempt to terminate any or all of the
Pledge Agreements.
As used in Section 7.01J, the terms "employee benefit plan"
and "employee welfare benefit plan" shall have the respective
meanings assigned to such terms in Section 3 of ERlSA.
7.02. Remedies, Etc.
A. Acceleration.
(i) If an Event of Default with respect to the Company
or any Material Subsidiary described in paragraph G or H of
Section 7.01 (other than an Event of Default described in clause
(i) of paragraph G) or described in clause (vi) of paragraph G by
virtue of the fact that such clause encompasses clause (i) of
paragraph G) has occurred, all the Notes then outstanding shall
automatically become immediately due and payable.
(ii) If any other Event of Default has occurred and is
continuing (including, without limitation, an Event of Default
described in paragraph H respect to a Subsidiary which is not a
Material Subsidiary), any holder or holders of 51% or more in
principal amount of the Notes at the time outstanding may at any
time, at its or their option, by notice or notices to the
Company, declare all the Notes then outstanding to be immediately
due and payable.
(iii) If any Event of Default described in paragraph
A or B of Section 7.01 has occurred and is continuing, any holder
or holders of Notes at the time outstanding affected by such Event
of Default may at any time, at its or their option, by notice or
notices to the Company, declare all the Notes held by it or them
to be immediately due and payable.
Upon any Notes becoming due and payable under this Section
7.02, whether automatically or by declaration, such Notes will
forthwith mature and the unpaid principal amount of such Notes,
plus (x) all accrued and unpaid interest thereon and (y) the
Make-Whole Premium determined in respect of such principal amount
(to the full extent permitted by applicable law), shall all be
immediately due and payable, in each and every case without
presentment, demand, protest or further notice, all of which are
hereby waived. The Company acknowledges, and the parties hereto
agree, that each holder of a Note has the right to maintain its
investment in the Notes free from repayment by the Company
(except as herein specifically provided for) and that the
provision for payment of a Make-Whole Premium by the Company in
the event that the Notes are prepaid or are accelerated as a
result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such
circumstances.
The Computing Holder shall give prompt written notice to the
Company and all other holders of the Notes, whose names and
addresses shall have been supplied to the Computing Holder by the
Company, of the amount of the Make-Whole Premium, if any, with
respect to any Notes accelerated, computed as of the second
Business Day prior to the date of acceleration, which notice
shall set forth in reasonable detail the computation thereof.
The Make-Whole Premium, if any, set forth in such notice shall be
binding on the Company and the other holders of the Notes absent
manifest error.
B. Other Remedies. If any Default or Event of Default has
occurred and is continuing, and irrespective of whether any Notes
have become or have been declared immediately due and payable
under Section 7.02A, the holder of any Note at the time
outstanding may proceed to protect and enforce the rights of such
holder by an action at law, suit in equity or other appropriate
proceeding, whether to enforce the payment of such Note, or for
the specific performance of any agreement contained in the
Agreement or in any Note, or for an injunction against a
violation of any of the terms hereof or thereof, or in aid of the
exercise of any power granted hereby or thereby or by
law or otherwise. The Company agrees that its obligations under
Section 6 of the Agreement are of the essence of the Agreement,
and upon application to any court of equity having jurisdiction
in the premises, any holder of the Notes shall be entitled to a
decree against the Company requiring specific performance of such
obligations. If any holder of a Note shall demand payment
thereof or take any other action in respect of an Event of
Default, the Company will forthwith give written notice, as
provided in Section 8.01, to the other holders of Notes
specifying such action and the nature and status of the Event of
Default.
C. Rescission. At any time after any Notes have been
declared due and payable pursuant to clause (ii) or (iii) of
Section 7.02A, the holders of not less than 66 2/3% in principal
amount of the Notes then outstanding, by written notice to the
Company, may rescind and annul any such declaration and its
consequences if (a) the Company has paid all overdue interest on
the Notes, all principal of and Make-Whole Premium, if any, on
any Notes that are due and payable and are unpaid other than by
reason of such declaration, and all interest on such overdue
principal and Make-Whole Premium, if any, and (to the extent
permitted by applicable law) any overdue interest in respect of
the Notes, at the Overdue Interest Rate, (b) all Events of Default
and Defaults, other than non-payment of amounts that have become
due solely by reason of such declaration, have been cured or have
been waived pursuant to Section 5, and (c) no judgment or decree
has been entered for the payment of any monies due pursuant to
the Notes or the Agreement. No rescission and annulment under
this Section 7.02C will extend to or affect any subsequent Event
of Default or Default or impair any right consequent thereon.
D. No Waivers or Election of Remedies; Expenses, etc. No
course of dealing and no delay on the part of any holder of a
Note in exercising any right, power or remedy shall operate as a
waiver thereof or otherwise prejudice such holder's rights,
powers or remedies. No right, power or remedy conferred by any
Note or by the Agreement upon any holder thereof shall be
exclusive of any other right, power or remedy referred to herein
or therein or now or hereafter available at law, in equity, by
statute or otherwise. Without limiting the obligations of the
Company under Section 7.1 of the Agreement, the Company will pay
to the holder of each Note on demand such further amount as shall
be sufficient to cover all costs and expenses of such holder
incurred in any enforcement or collection under this Section
7.02, including, without limitation, reasonable attorneys' fees,
expenses and disbursements.
SECTION 8. MISCELLANEOUS.
8.01. Notices.
All notices to be given to any holder of this Note shall be in
writing and delivered by a recognized overnight delivery service,
or mailed (by registered or certified mail, return receipt
requested) or sent by facsimile transmission followed by a
confirmation copy sent on the same day by a recognized overnight
delivery service, to such holder at its address designated on the
date of such notice on the register or other record maintained by
the Company. Any such notice so given shall be effective upon
receipt, including receipt of a facsimile transmission.
8.02. Covenants Bind Successors and Assigns.
All covenants and agreements in this Note by the Company shall
bind its successors and assigns, whether so expressed or not.
8.03. Governing Law.
This Note shall be construed in accordance with and governed
by the internal laws of the State of New York.
8.04. Headings.
The Section headings herein are for convenience only and shall
not affect the construction hereof.
IN WITNESS WHEREOF, THOMAS NELSON, INC. has caused this Note to
be signed in its corporate name by one of its officers thereunto
duly authorized, and to be dated as of the day and year first
above written.
THOMAS NELSON, INC.
By /s/ Joe L. Powers
_______________________
Joe L. Powers
Executive Vice President
and Chief Financial Officer
<PAGE>
EXHIBIT B
THIS AMENDMENT AND SUPPLEMENT NO. 1, dated as of May 30,
1996 ("this Amendment") among the parties which are signatories
hereto, amends and supplements the Guaranty Agreement, dated as
of January 3, 1996, among the same parties (the "Guaranty").
RECITALS:
WHEREAS, the parties hereto have entered into the Guaranty
with respect to all sums owing by Nelson to the Lender under the
Note Purchase Agreement and the Notes;
WHEREAS, Nelson, the Lender and The C. R. Gibson Company
("CR Gibson") have entered into that certain Assumption and
Amendment Agreement, dated as of May 30, 1996, pursuant to which
Nelson assumed CR Gibson's obligations under (w) the 9.50% Senior
Note due September 22, 1999 held by the Lender and outstanding in
the principal amount of $7,000,000 (as amended, the "9.50%
Note"), (x) the Loan Agreement, dated as of September 21, 1989,
between the Lender and CR Gibson, pursuant to which the 9.50%
Note was originally issued, (y) the 8.31% Senior Note due June 23,
2004 held by the Lender and outstanding in the principal amount of
$5,000,000 (the "8.31% Note"), and (z) the Loan Agreement, dated
as of June 23, 1994, between the Lender and CR Gibson, pursuant
to which the 8.31% Note was originally issued; and
WHEREAS, Nelson and the Lender desire to include the CR
Gibson Obligations as Obligations under the Guaranty, and the
Guarantors are agreeable thereto.
NOW, THEREFORE, in consideration of the premises and as
contemplated in connection with the Note Purchase Agreement to
induce the Lender to enter thereinto, the Guarantors hereby agree
as follows:
1) Definitions. Terms defined in the Guaranty and not
defined herein are used herein as defined therein. The term "CR
Gibson Obligations" shall have the meaning set forth in the
Intercreditor Agreement (as defined in the Note Purchase
Agreement), as amended and supplemented by Amendment and
Supplement No. 1 thereto dated as of the date hereof.
2) Amendment and Supplement to Guaranty. The Guaranty is
amended and supplemented as follows:
(a) The first Recital to the Guaranty is amended and
supplemented by deleting the phrase "; terms defined therein and
not otherwise defined herein being used herein as therein
defined".
(b) Section 1 of the Guaranty is amended and supplemented
by:
(i) substituting the phrase ", the Notes, the CR
Gibson Loan Agreements and the CR Gibson Notes" for the
phrase "and the Notes"; and
(ii) adding the phrase "Make-Whole Premium (as defined
in the CR Gibson Notes)," after the phrase "Yield
Maintenance Amount,".
(c) Section 2 of the Guaranty is amended and supplemented
by:
(i) adding the phrase "the CR Gibson Loan Agreements,
the CR Gibson Notes," after the phrase "the Notes,"; and
(ii) substituting the phrase "Pledge Agreements" for
the phrase "Pledge Agreement".
(d) Section 9 of the Guaranty is amended and supplemented
by substituting the phrase "Event of Default under the Note
Purchase Agreement or under the CR Gibson Notes ("Event of
Default")" for the phrase "Event of Default".
(e) Section 13 of the Guaranty is amended and supplemented
by adding the phrase "or in Sections 7.01G or H of the CR Gibson
Notes" after the phrase "Note Purchase Agreement" each time such
phrase appears in Section 13.
(f) Section 17 of the Guaranty is amended and supplemented
by adding the phrase "and of the Assumption Agreement, and the
consummation of the transactions contemplated by the Assumption
Agreement" after the phrase "Credit Documents".
(g) A new Section 20 of the Guaranty is added to read as
follows:
"SECTION 20. Defined Terms. Capitalized terms used in this
Guaranty and not otherwise defined herein shall have the meanings
ascribed thereto in the Note Purchase Agreement or in the
Intercreditor Agreement, as amended and supplemented by Amendment
and Supplement No. 1 thereto, dated as of May 30, 1996."
3) Construction; Ratification. Section 2 of this Amendment
shall be construed to amend and supplement the Guaranty as if the
provisions thereof were set forth in the Guaranty mutatis
mutandis. The Guaranty, as amended and supplemented hereby, is
in all respects ratified and confirmed by the Guarantors.
4) Representations and Warranties. Each Guarantor
represents and warrants for itself only as follows:
(a) The Guarantor has the corporate or partnership power
and authority to execute and deliver this Amendment and to
perform the provisions of the Guaranty as amended and
supplemented hereby.
(b) The execution and delivery of this Amendment and the
performance of the obligations of the Guarantor under the
Guaranty as amended and supplemented hereby have been duly
authorized by all necessary corporate or partnership action of
the Guarantor. Neither the execution and delivery of this
Amendment nor the performance of the obligations of the Guarantor
under the Guaranty as amended and supplemented hereby will
violate the charter or bylaws (or the partnership agreement or
the certificate of limited partnership, as the case may be) of
the Guarantor, any contract or agreement to which the Guarantor
is a party or by which it is bound or any laws, orders or decrees
of Governmental Authorities having jurisdiction over the
Guarantor.
(c) Each of this Amendment and the Guaranty, as amended and
supplemented hereby, constitutes a legal, valid and binding
obligation of the Guarantor enforceable against the Guarantor in
accordance with its terms, except as such enforceability may be
limited by (i) applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
5) Counterparts. This Amendment may be executed in any
number of counterparts and by the different parties hereto on
separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument.
IN WITNESS WHEREOF, each Guarantor and the Lender have
caused this Amendment to be duly executed and delivered by their
respective duly authorized officers as of the date first above
written.
GUARANTORS:
WORD, INCORPORATED
By /s/ Joe L. Powers
_______________________
Joe L. Powers
Secretary
PPC, INC.
By /s/ Joe L. Powers
_______________________
Joe L. Powers
Secretary
EDITORIAL CARIBE, INC.
By /s/ Joe L. Powers
_______________________
Joe L. Powers
Secretary
MORNINGSTAR RADIO NETWORK, INC.
By /s/ Joe L. Powers
______________________
Joe L. Powers
Secretary
NELSON WORD LIMITED
(formerly known as Word (UK)
Limited)
By /s/ Joe L. Powers
_______________________
Joe L. Powers
Secretary
WORD COMMUNICATIONS, LTD.
By /s/ Joe L. Powers
_______________________
Joe L. Powers
Secretary
WORD DIRECT, INC.
By /s/ Joe L. Powers
_______________________
Joe L. Powers
Secretary
WORD DIRECT PARTNERS, L.P.
By: Word Direct, Inc., General
Partner
By /s/ Joe L. Powers
_______________________
Joe L. Powers
Secretary
THE C.R. GIBSON COMPANY
By /s/ Joe L. Powers
________________________
Joe L. Powers
Secretary
855763 ONTARIO LIMITED
By /s/ Joe L. Powers
_________________________
Joe L. Powers
Secretary
LENDER:
METROPOLITAN LIFE
INSURANCE COMPANY
By /s/ John R. Endres
__________________________
Title: Assistant Vice President
<PAGE>
EXHIBIT C-1
THIS AMENDMENT AND SUPPLEMENT NO. 1, dated as of May 30,
1996 ("this Amendment"), among the parties which are signatories
hereto, amends and supplements the Amended and Restated Pledge
Agreement, dated as of January 3, 1996, among the same parties
(the "Gibson Pledge Agreement").
RECITALS:
WHEREAS, the parties hereto have entered into the Gibson
Pledge Agreement with respect to the Stock of The C. R. Gibson
Company (the "Company");
WHEREAS, Pledgor, MetLife and the Company have entered into
that certain Assumption and Amendment Agreement, dated as of May
30, 1996, pursuant to which Pledgor assumed the Company's
obligations under (w) the 9.50% Senior Note due September 22,
1999 held by MetLife and outstanding in the principal amount of
$7,000,000 (as amended, the "9.50% Note"), (x) the Loan
Agreement, dated as of September 21, 1989, between MetLife and
the Company, pursuant to which the 9.50% Note was originally
issued, (y) the 8.31% Senior Note due June 23, 2004 held by
MetLife and outstanding in the principal amount of $5,000,000
(the "8.31% Note"), and (z) the Loan Agreement, dated as of
June 23, 1994, between MetLife and the Company pursuant to which
the 8.31% Note was originally issued; and
WHEREAS, Pledgor and MetLife desire to include (x) the CR
Gibson Obligations as Secured Obligations under the Gibson Pledge
Agreement, and (y) MetLife as obligee of the CR Gibson
Obligations as a Pledgee under the Gibson Pledge Agreement, and
the other parties hereto are agreeable thereto.
NOW, THEREFORE, in consideration of the premises and as
contemplated in connection with the Note Agreement to induce
MetLife to enter thereinto, and as further contemplated by
Section 7(b) of the Intercreditor Agreement, the parties hereto
agree as follows:
1) Definitions. Terms defined in the Gibson Pledge
Agreement and not defined herein are used herein as defined
therein. The term "CR Gibson Obligations" shall have the meaning
set forth in the Intercreditor Agreement, as amended and
supplemented by Amendment and Supplement No. 1 thereto dated as
of the date hereof.
2) Amendment and Supplement to the Gibson Pledge Agreement.
The Gibson Pledge Agreement is amended and supplemented as
follows:
(a) The first paragraph of the Gibson Pledge Agreement is
amended and supplemented by substituting the phrase ", the Note
Holders and MetLife as obligee of the CR Gibson Obligations (as
hereinafter defined)" for the phrase "and the Note Holders".
(b) Section 1 of the Gibson Pledge Agreement is amended and
supplemented by adding the following sentence at the end thereof:
"The terms "CR Gibson Obligations", "CR Gibson Notes", "CR
Gibson Loan Agreements", "CR Gibson Documents" and
"Assumption Agreement" shall have the respective meanings
ascribed to them in the Intercreditor Agreement, as amended
and supplemented by Amendment and Supplement No. 1 thereto,
dated as of May 30, 1996.".
(c) Section 2 of the Gibson Pledge Agreement is amended and
supplemented by substituting the phrase ", to the Note Holders in
connection with the Note Obligations and to MetLife in connection
with the CR Gibson Obligations" for the phrase "and owed to the
Note Holders in connection with the Note Obligations".
(d) Section 4(b) of the Gibson Pledge Agreement is amended
and supplemented by adding the phrase ", the CR Gibson Documents"
after the phrase "Note Agreement".
(e) Section 7(a) of the Gibson Pledge Agreement is amended
and supplemented by adding the phrase ", with respect to MetLife
as obligee of the CR Gibson Obligations automatically upon the
indefeasible payment in full of all of the Secured Obligations
consisting of CR Gibson Obligations owed to it" immediately prior
to the phrase "and,".
(f) Section 7(b) of the Gibson Pledge Agreement is amended
and supplemented by:
(i) adding the phrase ", the CR Gibson Documents"
after the phrase ", the Note Agreement"; and
(ii) substituting the phrase ", the Note Agreement or
the CR Gibson Documents" for the phrase "or the Note
Agreement".
(g) Section 7(c) of the Gibson Pledge Agreement is amended
and supplemented by adding the phrase "and/or MetLife as obligee
of the CR Gibson Obligations" after the phrase "Note Holders".
(h) Section 10(a) of the Gibson Pledge Agreement is amended
and supplemented by adding the phrase "or the CR Gibson Notes"
after the phrase "Note Agreement".
(i) Section 10 of the Gibson Pledge Agreement is amended
and supplemented by deleting the period at the end of subsection
(d) and substituting a semi-colon, and by adding a new subsection
(e) to read as follows:
"(e) breach of any covenant, warranty, agreement or
representation contained in any of the CR Gibson Documents
that constitutes an Event of Default under the CR Gibson
Notes.".
(j) Section 14(h) of the Gibson Pledge Agreement is amended
and supplemented by adding the phrase "or the CR Gibson Loan
Agreements or the Assumption Agreement" after the phrase "Note
Agreement".
(k) Section 15 of the Gibson Pledge Agreement is amended
and supplemented by:
(i) adding the phrase ", MetLife as obligee of the CR
Gibson Obligations" prior to the phrase ", and the Agent";
and
(ii) substituting the phrase ", the Note Holders and
MetLife as obligee of the CR Gibson Obligations" for the
phrase "and the Note Holders".
3) Construction; Ratification. Section 2 of this Amendment
and the Recitals hereto shall be construed to amend and
supplement the Gibson Pledge Agreement as if the provisions
thereof were set forth in the Gibson Pledge Agreement mutatis
mutandis. The Gibson Pledge Agreement, as amended and
supplemented, is in all respects ratified and confirmed by
Pledgor.
4) Representations and Warranties. Pledgor represents and
warrants as follows:
(a) Pledgor has the corporate power and authority to
execute and deliver this Amendment and to perform the provisions
of the Gibson Pledge Agreement as amended and supplemented
hereby.
(b) The execution and delivery of this Amendment and the
performance of the obligations of Pledgor under the Gibson Pledge
Agreement as amended and supplemented hereby have been duly
authorized by all necessary corporate action of Pledgor. Neither
the execution and delivery of this Amendment nor the performance
of the obligations of Pledgor under the Gibson Pledge Agreement
as amended and supplemented hereby will violate the charter or
bylaws of Pledgor, any contract or agreement to which Pledgor is
a party or by which it is bound or any laws, orders or decrees of
governmental authorities and courts having jurisdiction over
Pledgor.
(c) Each of this Amendment and the Gibson Pledge Agreement
as amended and supplemented hereby constitutes a legal, valid and
binding obligation of Pledgor enforceable against Pledgor in
accordance with its terms, except as such enforceability may be
limited by (i) applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
5) Counterparts. This Amendment may be executed in any
number of counterparts and by the different parties hereto on
separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered in Nashville,
Tennessee, by their duly authorized officers as of the day and
year first above written.
THOMAS NELSON, INC.
By /s/ Joe L. Powers
_______________________
Joe L. Powers
Executive Vice President
and Chief Financial Officer
SUNTRUST BANK, NASHVILLE, N.A.
(formerly known as Third National
Bank in Nashville), as Agent
By /s/ J. Fred Turner
_______________________
Title: First Vice President
NATIONAL CITY BANK, KENTUCKY
(formerly known as First National
Bank of Louisville)
By /s/ Cheryl Mennen
_______________________
Title: Assistant Vice President
FIRST AMERICAN NATIONAL BANK
By /s/ Scott M. Bane
_______________________
Title: Senior Vice President
NATIONSBANK OF TEXAS, N.A.
By /s/ Jennifer Zydney
_______________________
Title: Vice President
CREDITANSTALT - BANKVEREIN
By /s/ Robert M. Biringer
_______________________
Title: Senior Vice President
By /s/ Joseph R. Longosz
_______________________
Title: Vice President
METROPOLITAN LIFE INSURANCE COMPANY
By /s/ John R. Endres
_______________________
Title: Assistant Vice President
THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA
By /s/ Robert G. Gwin
_______________________
Title: Vice President
<PAGE>
EXHIBIT C-2
THIS AMENDMENT AND SUPPLEMENT NO. 1, dated as of May 30,
1996 ("this Amendment"), among the parties which are signatories
hereto, amends and supplements the Amended and Restated Pledge
Agreement, dated as of January 3, 1996, among the same parties
(the "Word Pledge Agreement").
RECITALS:
WHEREAS, the parties hereto have entered into the Word
Pledge Agreement with respect to the Stock of Word, Incorporated
(the "Company");
WHEREAS, Pledgor, MetLife and The C.R. Gibson Company
("Gibson") have entered into that certain Assumption and
Amendment Agreement, dated as of May 30, 1996, pursuant to which
Pledgor assumed Gibson's obligations under (w) the 9.50% Senior
Note due September 22, 1999 held by MetLife and outstanding in
theprincipal amount of $7,000,000 (as amended, the "9.50% Note"),
(x) the Loan Agreement, dated as of September 21, 1989, between
MetLife and Gibson, pursuant to which the 9.50% Note was
originally issued, (y) the 8.31% Senior Note due June 23, 2004
held by MetLife and outstanding in the principal amount of
$5,000,000 (the "8.31% Note"), and (z) the Loan Agreement, dated
as of June 23, 1994, between MetLife and Gibson pursuant to which
the 8.31% Note was originally issued; and
WHEREAS, Pledgor and MetLife desire to include (x) the CR
Gibson Obligations as Secured Obligations under the Word Pledge
Agreement, and (y) MetLife as obligee of the CR Gibson
Obligations as a Pledgee under the Word Pledge Agreement, and the
other parties hereto are agreeable thereto.
NOW, THEREFORE, in consideration of the premises and as
contemplated in connection with the Note Agreement to induce
MetLife to enter thereinto, and as further contemplated by
Section 7(b) of the Intercreditor Agreement, the parties hereto
agree as follows:
1) Definitions. Terms defined in the Word Pledge Agreement
and not defined herein are used herein as defined therein. The
term "CR Gibson Obligations" shall have the meaning set forth in
the Intercreditor Agreement, as amended and supplemented by
Amendment and Supplement No. 1 thereto dated as of the date
hereof.
2) Amendment and Supplement to the Word Pledge Agreement.
The Word Pledge Agreement is amended and supplemented as follows:
(a) The first paragraph of the Word Pledge Agreement is
amended and supplemented by substituting the phrase ", the Note
Holders and MetLife as obligee of the CR Gibson Obligations (as
hereinafter defined)" for the phrase "and the Note Holders".
(b) Section 1 of the Word Pledge Agreement is amended and
supplemented by adding the following sentence at the end thereof:
"The terms "CR Gibson Obligations", "CR Gibson Notes", "CR
Gibson Loan Agreements", "CR Gibson Documents" and
"Assumption Agreement" shall have the respective meanings
ascribed to them in the Intercreditor Agreement, as amended
and supplemented by Amendment and Supplement No. 1 thereto,
dated as of May 30, 1996.".
(c) Section 2 of the Word Pledge Agreement is amended and
supplemented by substituting the phrase ", to the Note Holders in
connection with the Note Obligations and to MetLife in connection
with the CR Gibson Obligations" for the phrase "and owed to the
Note Holders in connection with the Note Obligations".
(d) Section 4(b) of the Word Pledge Agreement is amended
and supplemented by adding the phrase ", the CR Gibson Documents"
after the phrase "Note Agreement".
(e) Section 7(a) of the Word Pledge Agreement is amended
and supplemented by adding the phrase ", with respect to MetLife
as obligee of the CR Gibson Obligations automatically upon the
indefeasible payment in full of all of the Secured Obligations
consisting of CR Gibson Obligations owed to it" immediately prior
to the phrase "and,".
(f) Section 7(b) of the Word Pledge Agreement is amended
and supplemented by:
(i) adding the phrase ", the CR Gibson Documents"
after the phrase ", the Note Agreement"; and
(ii) substituting the phrase ", the Note Agreement or
the CR Gibson Documents" for the phrase "or the Note
Agreement".
(g) Section 7(c) of the Word Pledge Agreement is amended
and supplemented by adding the phrase "and/or MetLife as obligee
of the CR Gibson Obligations" after the phrase "Note Holders".
(h) Section 10(a) of the Word Pledge Agreement is amended
and supplemented by adding the phrase "or the CR Gibson Notes"
after the phrase "Note Agreement".
(i) Section 10 of the Word Pledge Agreement is amended and
supplemented by deleting the period at the end of subsection (d)
and substituting a semi-colon, and by adding a new subsection (e)
to read as follows:
"(e) breach of any covenant, warranty, agreement or
representation contained in any of the CR Gibson Documents
that constitutes an Event of Default under the CR Gibson
Notes.".
(j) Section 14(h) of the Word Pledge Agreement is amended
and supplemented by adding the phrase "or the CR Gibson Loan
Agreements or the Assumption Agreement" after the phrase "Note
Agreement".
(k) Section 15 of the Word Pledge Agreement is amended and
supplemented by:
(i) adding the phrase ", MetLife as obligee of the CR
Gibson Obligations" prior to the phrase ", and the Agent";
and
(ii) substituting the phrase ", the Note Holders and
MetLife as obligee of the CR Gibson Obligations" for the
phrase "and the Note Holders".
3) Construction; Ratification. Section 2 of this Amendment
and the Recitals hereto shall be construed to amend and
supplement the Word Pledge Agreement as if the provisions thereof
were set forth in the Word Pledge Agreement mutatis mutandis.
The Word Pledge Agreement, as amended and supplemented, is in all
respects ratified and confirmed by Pledgor.
4) Representations and Warranties. Pledgor represents and
warrants as follows:
(a) Pledgor has the corporate power and authority to
execute and deliver this Amendment and to perform the provisions
of the Word Pledge Agreement as amended and supplemented hereby.
(b) The execution and delivery of this Amendment and the
performance of the obligations of Pledgor under the Word Pledge
Agreement as amended and supplemented hereby have been duly
authorized by all necessary corporate action of Pledgor. Neither
the execution and delivery of this Amendment nor the performance
of the obligations of Pledgor under the Word Pledge Agreement as
amended and supplemented hereby will violate the charter or
bylaws of Pledgor, any contract or agreement to which Pledgor is
a party or by which it is bound or any laws, orders or decrees of
governmental authorities and courts having jurisdiction over
Pledgor.
(c) Each of this Amendment and the Word Pledge Agreement as
amended and supplemented hereby constitutes a legal, valid and
binding obligation of Pledgor enforceable against Pledgor in
accordance with its terms, except as such enforceability may be
limited by (i) applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
5) Counterparts. This Amendment may be executed in any
number of counterparts and by the different parties hereto on
separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered in Nashville,
Tennessee, by their duly authorized officers as of the day and
year first above written.
THOMAS NELSON, INC.
By /s/ Joe L. Powers
_______________________
Joe L. Powers
Executive Vice President
and Chief Financial Officer
SUNTRUST BANK, NASHVILLE, N.A.
(formerly known as Third National
Bank in Nashville), as Agent
By /s/ J. Fred Turner
_______________________
Title: First Vice President
NATIONAL CITY BANK, KENTUCKY
(formerly known as First National
Bank of Louisville)
By /s/ Cheryl Mennen
_______________________
Title: Assistant Vice President
FIRST AMERICAN NATIONAL BANK
By /s/ Scott M. Bane
_______________________
Title: Senior Vice President
NATIONSBANK OF TEXAS, N.A.
By /s/ Jennifer Zydney
_______________________
Title: Vice President
CREDITANSTALT - BANKVEREIN
By /s/ Robert M. Biringer
_______________________
Title: Senior Vice President
By /s/ Joseph P. Longosz
_______________________
Title: Vice President
METROPOLITAN LIFE INSURANCE COMPANY
By /s/ John R. Endres
_______________________
Title: Assistant Vice President
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By /s/ Robert G. Gwin
_______________________
Title: Vice President
<PAGE>
EXHIBIT D
THIS AMENDMENT AND SUPPLEMENT NO. 1, dated as of May 30,
1996 ("this Amendment") among the parties which are signatories
hereto, amends and supplements the Intercreditor Agreement, dated
as of January 3, 1996, among the same parties (the "Agreement").
RECITALS:
WHEREAS, the parties hereto have entered into the
Agreement with respect to the Lenders and the Obligations;
WHEREAS, the Company, MetLife and The C. R. Gibson
Company ("CR Gibson") have entered into that certain Assumption
and Amendment Agreement, dated as of May 30, 1996 (the
"Assumption Agreement"), pursuant to which the Company assumed CR
Gibson's obligations under (w) the 9.50% Senior Note due September
22, 1999 held by MetLife and outstanding in the principal amount
of $7,000,000 (as so assumed and amended, including as amended by
the Assumption Agreement, the "9.50% Note"), (x) the Loan Agreement,
dated as of September 21, 1989, between MetLife and CR Gibson,
pursuant to which the 9.50% Note was originally issued (as so
assumed and amended by the Assumption Agreement, the "1989
Agreement"), (y) the 8.31% Senior Note due June 23, 2004 held by
MetLife and outstanding in the principal amount of $5,000,000 (as
so assumed and amended by the Assumption Agreement, the "8.31%
Note" and, collectively with the 9.50% Note, the "CR Gibson
Notes"), and (z) the Loan Agreement, dated as of June 23, 1994,
between MetLife and CR Gibson, pursuant to which the 8.31% Note was
originally issued (as so assumed and amended by the Assumption
Agreement, the "1994 Agreement" and, collectively with the 1989
Agreement, the "CR Gibson Loan Agreements"); and
WHEREAS, MetLife desires to (x) more fully include the
CR Gibson Obligations as Obligations under the Agreement, and
(y) include itself, as obligee of the CR Gibson Obligations and as
a party to the CR Gibson Documents, as a Lender under the
Agreement, and the other parties hereto are agreeable thereto.
NOW, THEREFORE, in consideration of the premises and
as contemplated by Section 7(b) of the Agreement, the parties
hereto agree as follows:
1) Definitions. Terms defined in the Agreement and
not defined herein are used herein as defined therein. The terms
"CR Gibson Documents" and "CR Gibson Obligations" shall have
the meanings set forth in Sections 2(i)(iii) and 2(i)(iv)
hereof, respectively.
2) Amendment and Supplement to the Agreement. The
Agreement is amended and supplemented as follows:
(a) The eighth Recital to the Agreement is deleted and
the second recital of this Amendment is substituted therefor,
mutatis mutandis.
(b) The ninth Recital to the Agreement is amended and
supplemented by adding the phrase "and, in the case of the
Purchaser Guaranty Agreement to which MetLife is a party, the
CR Gibson Obligations" after the phrase "Note Obligations".
(c) The tenth Recital to the Agreement is amended and
supplemented by adding the phrase "the CR Gibson Obligations,"
after the phrase "Note Obligations,".
(d) The eleventh Recital to the Agreement is amended
and supplemented by adding the phrase ", MetLife as obligee
of the CR Gibson Obligations" after the phrase "Note
Purchasers".
(e) Section 1(d) of the Agreement is amended and
supplemented by:
(i) adding the phrase "the CR Gibson Documents,
"after the phrase "Purchaser Agreements,"; and
(ii) adding the phrase "CR Gibson Document," after
the phrase "Purchaser Agreement,".
(f) Section 1(g) of the Agreement is amended and
supplemented by adding the phrase ", MetLife as obligee of
the CR Gibson Obligations" after the phrase "Banks".
(g) Section 7(a) of the Agreement is amended and
supplemented by adding the phrase ", the CR Gibson Documents"
after the phrase "Purchaser Agreements".
(h) Section 7(b) of the Agreement is amended and
supplemented by deleting the second sentence thereof.
(i) Section 9 of the Agreement is amended and
supplemented by:
(i) adding the phrase ", the CR Gibson Documents"
after the phrase "Purchaser Agreements" in the definition of
"Additional Lien";
(ii) adding the following definition after the
definition of "Additional Lien":
"Assumption Agreement" shall have the meaning set
forth in the introductory paragraphs hereof.";
(iii) adding the following definitions after the
definition of "CR Gibson":
'"CR Gibson Documents" shall mean the CR Gibson
Loan Agreements, the CR Gibson Notes, the Purchaser
Guaranty Agreement to which MetLife is a party with
respect to the CR Gibson Obligations, the
Assumption Agreement and each other document,
instrument or certificate executed in connection
therewith, as any of these may be amended,
supplemented or modified from time to time in
accordance with its respective terms.
"CR Gibson Loan Agreements" shall have the meaning
set forth in the introductory paragraphs hereof.
"CR Gibson Notes" shall have the meaning set forth
in the introductory paragraphs hereof, and shall
include each promissory note delivered in
substitution or exchange for any such Note,
including pursuant to Section 7a of the Assumption
Agreement."';
(iv) deleting the definition of "CR Gibson Obligations"
and substituting the following:
"CR Gibson Obligations" shall mean the Company's
obligations to MetLife with respect to the CR Gibson
Notes (whether in respect of principal, interest,
Make-Whole Premium (as defined in the CR Gibson
Notes) or otherwise) and the CR Gibson Loan
Agreements and the obligations under the other CR
Gibson Documents (including any refinancing or
refunding thereof).";
(v) adding the phrase ", the CR Gibson Documents"
after the phrase "Purchaser Agreements" in the definition of
"Event of Default";
(vi) adding the following sentence at the end of
the definition of "Pledge Agreements":
'"Pledge Agreements" shall include Amendment and
Supplement No. 1, dated as of May 30, 1996, to each
thereof.";
(vii) adding the phrase ", including, in the case of
the Purchaser Guaranty Agreement to which MetLife is a party,
as amended and supplemented by Amendment and Supplement No. 1
thereto, dated as of May 30, 1996" immediately prior to the
period at the end of the definition of "Purchaser Guaranty
Agreements";
(viii) adding the phrase ", the CR Gibson Documents"
after the phrase "Purchaser Agreements" in the definitions of
"Sharing Payment" and "Third Party Guaranty"; and
(ix) adding the phrase "and, in the case of MetLife,
any CR Gibson Note" immediately prior to the period at the
end of the definition of "Transferee".
(j) Section 10(d) of the Agreement is amended and
supplemented by adding the following sentence prior to the
word "Notwithstanding":
"MetLife may assign or otherwise transfer any of its
rights with respect to the CR Gibson Obligations
provided that such assignment is in accordance with
the CR Gibson Notes, such assignee or transferee
agrees in writing (pursuant to an agreement in form
and substance reasonably satisfactory to the
Majority Lenders) to be bound by the terms and
provisions of this Agreement and written notice of
such assignment or transfer is given to all the
other Lenders.".
(k) Section 10(h) of the Agreement is amended and
supplemented by adding the phrase ", with respect to MetLife
as obligee of the CR Gibson Obligations automatically upon the
indefeasible payment in full of all the Obligations consisting
of CR Gibson Obligations owed to it" prior to the phrase
"and,".
3) Construction; Ratification. Section 2 of this
Amendment and the Recitals hereto and the terms defined in such
Recitals shall be construed to amend and supplement the Agreement
as if the provisions thereof were set forth in the Agreement
mutatis mutandis. The Agreement, as amended and supplemented
hereby, is in all respects ratified and confirmed by the parties
hereto.
4) Counterparts. This Amendment may be executed in
any number of counterparts and by the different parties hereto
on separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be duly executed and delivered in
Nashville, Tennessee, by their duly authorized officers as of the
day and year first above written.
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By /s/ Robert G. Gwin
_______________________
Title: Vice President
METROPOLITAN LIFE INSURANCE COMPANY
By /s/ John R. Endres
_______________________
Title: Assistant Vice President
SUNTRUST BANK, NASHVILLE, N.A.
as a Bank and as Collateral Agent
By /s/ J. Fred Turner
_______________________
Title: First Vice President
FIRST AMERICAN NATIONAL BANK
By /s/ Scott M. Bane
_______________________
Title: Senior Vice President
NATIONAL CITY BANK, KENTUCKY
By /s/ Cheryl Mennen
_______________________
Title: Assistant Vice President
NATIONSBANK OF TEXAS, N.A.
By /s/ Jennifer Zydney
_______________________
Title: Vice President
CREDITANSTALT - BANKVEREIN
By /s/ Robert M. Biringer
_______________________
Title: Senior Vice President
By /s/ Joseph P. Longosz
_______________________
Title: Vice President
<PAGE>
ACKNOWLEDGMENT AND AGREEMENT
Each of the undersigned hereby acknowledges and, to the
extent required, consents to the terms and conditions of Amendment
and Supplement No. 1 to the Intercreditor Agreement attached
hereto. Each of the undersigned agrees that the Acknowledgment
and Agreement attached to the Intercreditor Agreement is hereby
amended and supplemented by (x) adding the phrase ", the CR
Gibson Documents" after the phrase "Purchaser Agreements" each
time such phrase appears therein, and (y) adding the phrase ", as
amended and supplemented by Amendment and Supplement No. 1, dated
as of May 30,1996" after the phrase "Intercreditor Agreement"
each time such phrase appears therein.
IN WITNESS WHEREOF, the parties below have caused
this Acknowledgment and Agreement to be duly executed as of May
30,1996.
THOMAS NELSON, INC.
By /s/ Joe L. Powers
_______________________
Joe L. Powers
Executive Vice President
and Chief Financial Officer
GUARANTORS:
WORD, INCORPORATED
By /s/ Joe L. Powers
_______________________
Joe L. Powers
Secretary
PPC, INC.
By /s/ Joe L. Powers
_______________________
Joe L. Powers
Secretary
EDITORIAL CARIBE, INC.
By /s/ Joe L. Powers
_______________________
Joe L. Powers
Secretary
MORNINGSTAR RADIO NETWORK, INC.
By /s/ Joe L. Powers
_______________________
Joe L. Powers
Secretary
NELSON WORD LIMITED
By /s/ Joe L. Powers
_______________________
Joe L. Powers
Secretary
WORD COMMUNICATIONS, LTD.
By /s/ Joe L. Powers
_______________________
Joe L. Powers
Secretary
WORD DIRECT, INC.
By /s/ Joe L. Powers
_______________________
Joe L. Powers
Secretary
WORD DIRECT PARTNERS, L.P.
By: Word Direct, Inc.,
General Partner
By /s/ Joe L. Powers
_______________________
Joe L. Powers
Secretary
THE C. R. GIBSON COMPANY
By /s/ Joe L. Powers
_______________________
Joe L. Powers
Secretary
855763 ONTARIO LIMITED
By /s/ Joe L. Powers
_______________________
Joe L. Powers
Secretary
<PAGE>
EXHIBIT E
The opinion of Bass, Berry & Sims referred to in Section
7i of the Assumption Agreement shall be substantially to the
effect that:
(a) The Company has the corporate power and authority
to enter into the Assumption Agreement and to consummate the
transactions contemplated thereby. The (i) execution, delivery
and performance by the Company of the Assumption Agreement and
the Pledge Agreement Amendments (as defined in (b) below), (ii)
Assumption (as so defined), and (iii) issuance and delivery of
the New Gibson Notes (as so defined) have been duly authorized by
all necessary corporate action on the part of the Company and the
Assumption Agreement, the Pledge Agreement Amendments and the New
Gibson Notes have been duly executed and delivered by the Company.
The Assumption Agreement, the Pledge Agreements as amended
by the Pledge Agreement Amendments, the Gibson Notes and the
Gibson Agreements (as assumed and amended by the Assumption
Agreement) and the New Gibson Notes constitute the legal, valid
and binding obligations of the Company, enforceable against the
Company in accordance with their respective terms subject to (A)
the effect of bankruptcy, insolvency, reorganization, arrangement,
moratorium, fraudulent conveyance, fraudulent transfer and such
other similar laws relating to or affecting the rights of creditors;
and (B) general principles of equity (including, without
limitation, concepts of materiality, reasonableness, good faith
and fair dealing and the possible unavailability of specific
performance, injunctive relief and other equitable remedies),
regardless of whether in a proceeding at law or in equity.
(b) (i) The execution, delivery and performance by the
Company of the Assumption Agreement and Amendment and Supplement
No. 1 to the Pledge Agreements referred to in Section 7c of the
Assumption Agreement (the "Pledge Agreement Amendments"), (ii) the
assumption and performance by the Company of the Gibson Notes and
the Gibson Agreements (as amended by the Assumption Agreement)
(the "Assumption"), and (iii) the issuance and delivery by
the Company of the new Gibson Notes referred to in Section 7a of
the Assumption Agreement (the "New Gibson Notes") do not contravene
the charter or bylaws of the Company or any judgment, order or
decree of any court or arbitrator known to such counsel specifically
directed to the Company and do not constitute a Material default
under or Material breach of the terms of, or an event that, with
the lapse of time or giving of notice, or both, would constitute a
Material default under or a Material breach of the terms of, result
in the creation of any Material Lien upon any properties or assets
of the Company under the terms of, or require the consent (which
has not been obtained) of any Person under the terms of, any
agreement listed in Schedule 5.15 to the 1996 Agreement.
(c) No consent, approval, authorization or other action
by or filing with any Federal or Tennessee governmental
authority is required in connection with (i) the execution,
delivery or performance by the Company of the Assumption Agreement
and the Pledge Agreement Amendments, (ii) the Assumption, or
(iii) the issuance and delivery of the New Gibson Notes or, if
required, the requisite consent, approval or authorization has
been obtained, the requisite action has been taken or the requisite
filing has been made.
(d) The assumption by the Company of the Gibson Notes
pursuant to the Assumption Agreement and the issuance and delivery
by the Company of the New Gibson Notes do not require registration
under the Securities Act.
(e) Gibson has the corporate power and authority to enter
into the Assumption Agreement and to consummate the transactions
contemplated thereby. The Assumption Agreement has been duly
authorized by all necessary corporate action on the part of Gibson
and has been duly executed and delivered by Gibson.
(f) Each of Gibson and Word, Incorporated ("Word") has
the corporate power and authority to execute and deliver
Amendment and Supplement No. 1 to the Guaranty (the "Guaranty
Amendment") and to perform the provisions of the Guaranty as
amended and supplemented thereby. The execution and delivery
by Gibson and Word, respectively, of the Guaranty Amendment and
the performance of the respective obligations of Gibson and Word
under the Guaranty as amended and supplemented thereby have been
duly authorized by all necessary corporate action of Gibson and
Word, respectively.
(g) The Guaranty Amendment has been duly executed and
delivered by each Guarantor. Each of the Guaranty Amendment and
the Guaranty as amended and supplemented thereby constitutes a
legal, valid and binding obligation of each of the Guarantors,
enforceable against such Guarantor in accordance with its terms,
subject to (A) the effect of bankruptcy, insolvency, reorganization,
arrangement, moratorium, fraudulent conveyance, fraudulent transfer
and such other similar laws relating to or affecting the rights
of creditors; and (B) general principles of equity (including,
without limitation, concepts of materiality, reasonableness,
good faith and fair dealing and the possible unavailability of
specific performance, injunctive relief and other equitable
remedies), regardless of whether in a proceeding at law or in
equity.
(h) The execution and delivery of the Guaranty
Amendment by each Guarantor and the performance by each Guarantor
of its obligations under the Guaranty as amended and supplemented
thereby do not contravene each such Guarantor's charter or bylaws
(or its partnership agreement or certificate of limited partnership,
as the case may be), or any judgment, order or decree of any
court or arbitrator known to such counsel specifically directed
to such Guarantor and do not constitute a Material default under
or Material breach of the terms of, or an event that, with
the lapse of time or giving of notice, or both, would constitute a
Material default under or a Material breach of the terms of,
result in the creation of any Material Lien upon any properties or
assets of the Company under, or require the consent (which has not
been obtained) of any Person under the terms of, any agreement
listed in Schedule 5.15 to the 1996 Agreement.
(i) No consent, approval, authorization or other action
by or filing with any Federal or Tennessee governmental
authority is required for the execution and delivery by any
Guarantor of the Guaranty Amendment or the consummation of the
transactions contemplated thereby or by the Guaranty as amended
and supplemented thereby or, if required, the requisite consent,
approval or authorization has been obtained, the requisite action
has been taken or the requisite filing has been made.
With respect to each Guarantor other than Word and
Gibson, such counsel may assume that each such Guarantor has the
corporate (or partnership, as applicable) power and authority under
the laws of its jurisdiction of organization to enter into the
Guaranty Amendment and to perform its obligations under the
Guaranty Amendment and the Guaranty, as amended and supplemented
thereby, and that the Guaranty Amendment has been duly authorized
by all necessary corporate (or partnership, as applicable)
action on the part of such Guarantor.
<PAGE>
EXHIBIT F
The opinion of Stuart Heaton, Esq., referred to in
Section 7i of the Assumption Agreement shall be to the effect that
each Guarantor has the corporate or other power and authority to
enter into the Guaranty Amendment and to perform its obligations
under the Guaranty Amendment and the Guaranty, as amended and
supplemented thereby, and the Guaranty Amendment has been duly
authorized by all necessary corporate or other action on the part
of each such Guarantor.
<PAGE>
Metropolitan Life Insurance Company
One Madison Avenue
New York, NY 10010-9680
June 28, 1996
Thomas Nelson, Inc.
Nelson Place at Elm Hill Pike
P.O. Box 141000
Nashville, TN 37214-1000
Attention: Joe L. Powers
Executive Vice President and Chief Financial Officer
Gentlemen:
Reference is made to the Assumption and Amendment Agreement, dated
as of May 30, 1996, among us, you and The C.R. Gibson Company,
pursuant to which you issued to us your (x) 9.50% Senior Note
due September 22, 1999 in the principal amount of $7,000,000,
and (y) 8.31% senior Note due June 23, 2004 in the principal
amount of $5,000,000 (collectively, the "Notes").
As holder of the Notes, we hereby consent and agree that Section
4 of each of the Notes shall be amended by adding two new Sections
thereto to read as follows:
"4.09. Covenants Incorporated by Reference. To the
extent that the covenants set forth in the Credit
Agreement referred to in clause (i) of the definition of
"Bank Agreements" (as such Credit Amendment is amended
through the date hereof) are more restrictive than the
covenants set forth herein, or otherwise require the
Company to comply with computable standards, the Notes
shall be automatically amended so as to provide the
benefit of similar covenants for the holders of the
Notes. Any such covenants shall be deemed to be
incorporated herein mutatis mutandis for the benefit of
the holders of the Notes unless and until the Required
Holders shall otherwise consent thereto. If requested
by the Required Holders, the Company will enter into an
amendment to the Notes to specifically incorporate any
such covenant.
4.10. Conforming Debt Agreement Changes. The Company
will not become or be a party to any agreement relating to
any Debt entered into after January 3, 1996, or to any
amendment of or supplement to any agreement relating to any
Debt (which amendment or supplement is entered into after
January 3, 1996) if, in any such case, the Company is
agreeing therein to any financial covenants of a type
specified in this Section 4 which are more restrictive
than the covenants set forth herein, or to other
covenants expressly requiring the Company to comply with
computable standards, unless the Company shall offer to
amend the Notes so as to provide the benefit of similar
covenants for the holders of the Notes for so long as
such covenants are in full force under such agreement,
amendment or supplement. Any such offer shall be made
in writing to the holders of the Notes prior to being
effected in any such agreement, amendment or supplement
and, absent such offer, shall be deemed to be
incorporated herein mutatis mutandis for the benefit of
holders of the Notes for so long as such covenants are
in full force under such agreement, amendment or
supplement, unless and until the Required Holders shall
otherwise consent thereto."
Very truly yours,
METROPOLITAN LIFE INSURANCE COMPANY
By /s/ John R. Endres
-------------------------------
Accepted and agreed to for
valuable consideration, the receipt
whereof is hereby acknowledged.
THOMAS NELSON, INC.
By /s/ Joe L. Powers
-------------------------------
Executive Vice President and
Chief Financial Officer
<PAGE>
CONSENT
The undersigned, as Guarantors under the Guaranty Agreement dated
as of January 3, 1996, as amended and supplemented by Amendment
and Supplement No. 1, dated as of May 30, 1996 (the "Guaranty
Agreement") in favor of Metropolitan Life Insurance Company,
hereby consent to the foregoing amendment to the Notes and hereby
confirm and agree that, notwithstanding the effectiveness of said
amendment, the Guaranty Agreement is, and shall continue to be
in full force and effect and is hereby confirmed and ratified
in all respects.
WORD, INCORPORATED
By /s/ Joe L. Powers
------------------------------
Title: Secretary
PPC, INC.
By /s/ Joe L. Powers
------------------------------
Title: Secretary
EDITORIAL CARIBE, INC.
By /s/ Joe L. Powers
------------------------------
Title: Secretary
MORNINGSTAR RADIO NETWORK, INC.
By /s/ Joe L. Powers
------------------------------
Title: Secretary
NELSON WORD LIMITED
By /s/ Joe L. Powers
------------------------------
Title: Secretary
WORD COMMUNICATIONS, LTD.
By /s/ Joe L. Powers
------------------------------
Title: Secretary
WORD DIRECT, INC.
By /s/ Joe L. Powers
------------------------------
Title: Secretary
WORD DIRECT PARTNERS, L.P.
By: Word Direct, Inc., as general
partner
By /s/ Joe L. Powers
-------------------------------
Title: Secretary
THE C.R. GIBSON COMPANY
By /s/ Joe L. Powers
-------------------------------
855763 ONTARIO LIMITED
By /s/ Joe L. Powers
-------------------------------
14647.113228 67<PAGE>
EXHIBIT 10.7
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and
entered into as of May 13, 1996, by and between Thomas Nelson,
Inc., a Tennessee corporation (the "Company"), and Sam Moore
("Executive").
Executive is currently employed by the Company as President
and Chairman of the Board. Executive has served in a senior
executive capacity with the Company for many years thereby
acquiring an intimate knowledge of the business and affairs of
the Company and has demonstrated his ability and has performed
valuable services for the Company. The Company desires to
incentivize the Executive to remain in its employ as well as to
contractually protect the Company from the misuse of proprietary,
confidential information and from the Executive competing with
the Company. Accordingly, the Company hereby offers to enter
into this Agreement with Executive.
The Company's Board of Directors (the "Board") considers the
establishment and continuity of competent management to be
essential to protecting and enhancing the best interests of the
Company and its shareholders. Thus, the Board has determined
that it is appropriate to provide Executive with compensation and
benefits arrangements upon a Change in Control (as defined below)
which ensure that the compensation and benefits expectations of
Executive will be satisfied and which are competitive with those
of other corporations.
Therefore, the Company wishes to secure the services of
Executive for a period to and including March 31, 2001 on the
terms and conditions set forth below, and Executive is willing to
enter into this Agreement. In consideration of the premises
hereof and of new mutual promises and agreements contained
herein, the parties therefore agree as follows:
A. TERM OF AGREEMENT
1. Original Term. This Agreement shall be effective as of
the date first set forth above (the "Effective Date").
The Company shall employ Executive as President of the
Company for a term (the "Employment Period") commencing
on the Effective Date and continuing until March 31,
2001 unless sooner terminated pursuant to Section F or
H hereof.
2. Renewals. The Employment Period shall automatically be
extended for additional one-year periods unless written
notice of nonextension is given in writing by either
party no less than 60 days prior to the scheduled
expiration date.
B. POSITION AND DUTIES
During the Employment Period, subject to the power of the
Board of Directors to elect and remove officers, Executive
shall serve as President and Chairman of the Board of the
Company. Executive shall have the authority, functions,
duties, powers and responsibilities for Executive's
corporate offices and positions which are set forth in the
Company's bylaws from time to time in effect and such other
authority, functions, duties, powers and responsibilities as
the Board of Directors of the Company may from time to time
prescribe or delegate to Executive, in all cases to be
consistent with Executive's corporate offices and positions.
Executive agrees, subject to his election or appointment as
such and without additional compensation, to serve during
the Employment Period in such particular additional offices
of comparable stature and responsibility to which he may be
elected from time to time in the Company and its
subsidiaries and to serve as a Director and as a member of
any committee of the Board of Directors of any subsidiary of
the Company. During the Employment Period, (i) Executive's
services shall be rendered on a full-time, exclusive basis,
(ii) he will apply on a full-time basis all of his skill and
experience to the performance of his duties in such
employment and shall report only to the Company's Board of
Directors and committees of the Board of Directors, (iii) he
shall have no other employment and, without the prior
written consent of the Compensation Committee of the
Company's Board of Directors, no outside business activities
which require the devotion of substantial amounts of
Executive's time, and (iv) unless Executive otherwise
consents in writing, the headquarters for the performance of
his services shall be the principal executive offices of the
Company in Nashville, Tennessee, subject to such reasonable
travel as the performance of his duties in the business of
the Company may require. Notwithstanding the foregoing
sentence, Executive may devote a reasonable amount of his
time to civic, community, charitable, or passive investment
activities and, with the prior approval of the Board of
Directors, to serve as a director of other corporations and
to other types of business or public activities not
expressly mentioned in this paragraph.
C. COMPENSATION
1. Base Salary. Executive shall be paid an annual base
salary as set forth on Exhibit A hereto, subject to
such increase as may from time to time be approved by
the Compensation Committee of the Company's Board of
Directors; provided, however, that following any such
increase in Executive's base salary by the Compensation
Committee, such base salary shall not be reduced
without the prior written consent of Executive. Base
salary shall be payable according to the Company's
regular practice for salary payment.
2. Incentive Compensation. Executive shall be eligible to
receive annual incentive and bonus compensation, shall
be eligible to participate in the Company's long-term
equity-based incentive compensation plans, including,
without limitation, the Company's 1986 Executive Stock
Purchase Plan, 1986 Stock Incentive Plan, and Amended
and Restated 1992 Employee Stock Incentive Plan, and in
all incentive, gainsharing, savings and retirement
plans, practices, policies and programs applicable to
other peer executives of the Company and its
subsidiaries, but in no event shall such plans,
practices, policies and programs provide Executive with
incentive, gainsharing, savings and retirement benefits
opportunities, in each case, less favorable, in the
aggregate, than the most favorable of those provided
by the Company and its subsidiaries for Executive under
such plans, practices, policies and programs as in
effect at any time during the 90-day period immediately
preceding the date (the "Change in Control Date") on
which a Change in Control (as defined below) occurs, or
if more favorable to Executive, those provided
generally at any time on or after the Change in Control
Date to other peer executives of the Company.
3. Other Benefits. During the Employment Period Executive
shall be entitled to all of the fringe benefits which
the Company and its subsidiaries make available to
senior management if and to the extent that the
Executive is eligible to participate in accordance with
the terms of the benefit plans or policies, provided,
however, that the termination benefits hereunder are in
lieu of any severance benefits to which the Executive
would otherwise be entitled. Such benefits may
include, but are not limited to, (i) medical, hospital,
dental, disability and life insurance plans and
coverages, (ii) pension, profit sharing, 401(k),
employee stock ownership plan, deferred compensation
and similar plans or arrangements, and (iii) any other
benefit plan, program or arrangement, including those
relating to automobiles, clubs, vacations, and expense
reimbursement, which the Company and its subsidiaries
from time to time may make available either to their
employees generally or to some or all of their senior
executive officers, but in no event shall such plans,
practices, policies and arrangements provide benefits
which are less favorable, in the aggregate, than the
most favorable of such plans, practices, policies and
arrangements in effect at any time during the 90-day
period immediately preceding the Change in Control Date
or if more favorable to Executive, those provided
generally at any time on or after the Change in Control
Date to other senior executives of the Company.
4. Life Insurance.
During the Employment Period, the Company will provide
the Executive with sufficient compensation to enable
him to pay the after income tax cost of the insurance
premiums on those life insurance policies provided to
Executive under Executive's agreement with the company
dated May 17, 1991 (the "Survivorship Policies"). In
the event that the employment of the Executive is
terminated for any reason other than for "Cause" (as
hereinafter defined), then the Company shall continue
to pay to the Executive (or his estate) in each year an
amount which will permit the Executive (or his estate)
to continue to pay the after income tax cost of the
total insurance premiums due on the Survivorship
Policies until the values in the Survivorship Policies
are sufficient to maintain a net death benefit of
$10,000,000 upon the last to die of the two insureds
without the payment of additional premiums (that is,
until the premiums can "vanish") according to the
projections approved by the Compensation Committee of
the Company's Board of Directors.
D. NONDISCLOSURE AND NON-USE OF CONFIDENTIAL INFORMATION
1. Confidential Information.
(a) Executive acknowledges and agrees that the
information, observations and data obtained by him
during the course of his performance under the
Agreement and the Prior Agreement concerning the
business or affairs of the Company and its subsidiaries
and affiliates is the property of the Company or such
subsidiary or affiliate, as the case may be.
Therefore, during the Employment Period and at all
times thereafter, Executive (i) shall hold in a
fiduciary capacity for the benefit of the Company, its
subsidiaries and affiliates, and (ii) without the prior
written consent of the Board of Directors or except to
the extent required by law (and upon prompt written
notice of such requirement to the Company and such
subsidiary or affiliate), shall not directly or
indirectly, divulge, furnish, disclose, use or make
accessible for any purpose (except in the course of his
employment under this Agreement and in furtherance of
the business of the Company and its subsidiaries and
affiliates) any Confidential Information (as defined
below). Executive acknowledges and agrees that the
disclosure of any Confidential Information will be
damaging or harmful to the business activities of the
Company, its subsidiaries and affiliates, and that such
disclosure can direct or divert corporate
opportunities, product sales and/or profits away from
the Company, its subsidiaries or affiliates. In the
event Executive shall be required by law to make any
disclosure as set forth above, Executive shall promptly
notify the Company and any subsidiary or affiliate
which may reasonably be affected by such disclosure and
shall cooperate with the Company, such subsidiary and
such affiliate to preserve in full the confidentiality
of all Confidential Information of the Company, such
subsidiary or such affiliate. Confidential Information
shall be considered confidential or proprietary unless
and to the extent that such Confidential Information
become generally known to and available for use by the
public other than as a result of any act or omission to
act by Executive. Executive will take all appropriate
steps to safeguard Confidential Information and to
protect it against disclosure, misuse, espionage, loss
and theft.
(b) As used in this Agreement, the term
"Confidential Information" means information that is
not generally known to the public and that is used,
developed or obtained by the Company or any of its
subsidiaries and affiliates in connection with the
Company's or such subsidiary's or affiliate's business,
including but not limited to (i) products or services,
(ii) fees, costs and pricing structures, (iii) designs,
plans or manufacturing data, (iv) analysis,
observations or data, (v) drawings, artwork,
photographs, videotapes, audio tapes, other recordings,
and reports, (vi) computer software, including
operating systems, applications program listings, and
computer files, (vii) flow charts, manuals and
documentation, (viii) data bases, (ix) accounting and
business methods, (x) inventions, devices, new
developments, methods and processes, whether patentable
or unpatentable and whether or not reduced to practice,
(xi) customers, clients, authors or artist and
customer, client, author or artist lists, (xii) other
copyrightable works, (xiii) all technology and trade
secrets, (xiv) intellectual property, unique business
information, or confidential or proprietary
information, and (xv) all similar and related
information in whatever form. Confidential Information
will not include any information that has been
published in a form generally available to the public
prior to the date Executive proposes to disclose or use
such information. Information will not be deemed to
have been published merely because individual portions
of the information have been separately published, but
only if all material features comprising such
information have been published in combination.
2. Product Development. In the event that Executive as
part of his activities on behalf of the Company
generates, authors or contributes, individually or with
the assistance of others, to any invention, design, new
development, device, product, method or process
(whether or not patentable or reduced to practice or
comprising Confidential Information), any copyrightable
work (whether or not comprising Confidential
Information) or any other form of Confidential
Information relating directly or indirectly to the
business of the Company or any of its subsidiaries or
affiliates as now or hereafter conducted (collectively,
the "Intellectual Property"), Executive acknowledges
that such Intellectual Property is the exclusive
property of the Company and hereby assigns all right,
title and interest in and to such Intellectual
Property to the Company. Any copyrightable work
prepared in whole or in part by Executive will be
deemed "a work made for hire" under Section 201(b) of
the 1976 Copyright Act, and the Company will own all of
the rights comprised in the copyright therein.
Executive will cooperate with the Company in all
reasonable respects to protect the Company's interests
in and rights to such Intellectual Property (including,
without limitation, providing reasonable assistance in
securing patent protection and copyright registrations
and executing all documents as reasonably requested by
the Company whether such requests occur prior to or
after termination of Executive's employment with the
Company).
3. Delivery of Materials Upon Termination of Employment.
As requested by the Company from time to time and upon
the termination of the Executive's employment with the
Company for any reason, Executive will promptly deliver
to the Company all copies and embodiments, in whatever
form, of all Confidential Information or Intellectual
Property in Executive's possession or within his
control (including, but not limited to, written
records, memoranda, notes, photographs, plans, records,
video tapes, audiotapes, other recordings, reports,
manuals, notebooks, documentation, program listings,
flow charts, magnetic media, disks, diskettes, tapes
and all other materials containing any Confidential
Information or Intellectual Property) irrespective of
the location or form of such material and, if requested
by the Company, will provide the Company with written
confirmation that all such materials have been
delivered to the Company.
E. NONCOMPETITION
1. Covenant Not to Compete. Executive acknowledges and
agrees with the Company that Executive's services to
the Company and its subsidiaries are unique in nature
and that the Company and its subsidiaries would be
irreparably damaged if Executive were to provide
similar services to any person or entity competing with
the Company or any of its subsidiaries, or engaged in
similar business. Executive accordingly covenants and
agrees with the Company that during the Employment
Period and for two years following the termination of
Executive's employment with the Company for any reason
(the "Noncompetition Period"), Executive will not,
directly or indirectly, either for himself or for any
other individual, corporation, partnership, joint
venture or other entity, participate in (as defined
below) any business (including, without limitation, any
division, group or franchise of a larger organization)
competing with any of the book publishing, music,
and/or gift businesses then conducted (or, to the
knowledge of Executive, planned to be conducted within
two years) by the Company or any of its successors or
then subsidiaries within any geographical area in which
the Company or its subsidiaries engage or plan within
two years to engage in any such businesses. For
purposes of this Agreement, the term "participate in"
will include, without limitation, having any direct or
indirect interest in any corporation, partnership,
joint venture or other entity, whether as a sole
proprietor, owner, stockholder, partner, joint
venturer, creditor or otherwise, or rendering any
direct or indirect service or assistance to any
individual, corporation, partnership, joint venture and
other business entity (whether as a director, officer,
manager, supervisor, employee, agent, consultant or
otherwise).
2. Nonsolicitation and Noninterference. During the
Noncompetition Period, Executive will not directly or
indirectly, on behalf of himself or another entity, (i)
induce, attempt to induce, or assist others to induce
any artist, composer, songwriter, lyricist, musician,
author, writer, editor, programmer, technician, cable
operator, employee, consultant, customer, supplier,
licensee or other person or entity to terminate its,
his or her association with the Company or its
subsidiaries, or to cease doing business with the
Company or its subsidiaries, or do anything to
interfere with the relationship between the Company or
its subsidiaries, on the one hand, and any artist,
composer, songwriter, lyricist, musician, author,
writer, editor, programmer, technician, cable operator,
employee, consultant or other person or entity doing
business and/or under contract with the Company or any
of its subsidiaries, or with whom the Company or any of
its subsidiaries is then negotiating, or with whom the
Company or any of its subsidiaries enters into any
contract or agreement during the Noncompetition Period,
or (ii) hire, without the written consent of the
Company, any person who was an employee of the Company
or any of its subsidiaries at any time within twelve
(12) months of the termination of the Employment
Period.
3. Limitations.
(a) Nothing contained in this Section E shall
prevent Executive from owning up to a 5% interest in
any corporation or entity having one or more classes of
its securities listed on a national securities exchange
or market, or publicly traded in the over-the-counter
market, provided that Executive is not actively
involved in any manner whatsoever in the operation or
management of such corporation or entity.
(b) If under the circumstances existing at the
time of enforcement of this Section E, the period,
scope or geographic area described in this Section E
shall be found or held to be unreasonable, the parties
hereto agree that the maximum period, scope or
geographic area reasonable under the circumstances
shall be substituted for the stated period, scope or
geographic area.
4. Special Remedies. The Parties hereto agree that in the
event of the breach of any provision of Section D or
Section E by Executive, monetary damages alone would
not be an adequate remedy to the Company and its
subsidiaries for the injury that would result from such
breach, and that the Company and its subsidiaries shall
be entitled, at any time after such breach, to
immediately obtain injunctive relief prohibiting any
further breach of this Agreement. Executive further
agrees that any such injunctive relief obtained by the
Company or any of its subsidiaries shall be in addition
to monetary damages.
F. TERMINATION OF EMPLOYMENT (OTHER THAN SUBSEQUENT TO A CHANGE
IN CONTROL).
1. Applicability. This Section F shall apply only to
termination of the employment Period prior to the
occurrence of a Change in Control (as defined below)
during the Employment Period. Termination of the
Employment Period following the occurrence of a Change
in Control shall be governed by Section H.
2. Events of Termination and Related Payments.
(a) Disability. In the event that during the
Employment Period Executive should become Disabled,
the Company (acting by resolution of the Board) may
elect to terminate the Employment Period by written
notice to Executive, his guardian or personal
representative and Executive, his guardian or personal
representative, as the case may be, shall be entitled
to receive (i) full compensation pursuant to Section C
at his then base salary rate from the date of
termination of employment continuing for the lesser of
(a) one year following the date of such notice and (b)
the remainder of the then effective Employment Period,
and (ii) bonus for the calendar year in which
Executive's termination of employment occurs as
determined in good faith by the Compensation Committee
of the Board of Directors in its sole discretion.
Notwithstanding the foregoing provisions of this
Section F(2)(a), the payments provided herein with
respect to any period of Disability shall be reduced by
the amount of any benefits payable to Executive, his
guardian or personal representative, as the case may
be, during such period under any disability or similar
plan or program of the Company of any of its
subsidiaries in respect of Executive's Disability.
(b) Death. In the event of Executive's death
during the Employment Period, his personal
representative shall be entitled to receive any
compensation pursuant to Section C which is accrued and
unpaid as of the date of his death.
(c) Termination Due to Serious Misconduct. In
the event that during the Employment Period Executive
should commit Serious Misconduct (as defined below),
the Company (acting by resolution of the Board) may
elect to terminate the Employment Period by written
notice to Executive, and, except as set forth in
subparagraph "f" hereunder, Executive shall be entitled
only to any compensation and benefits which are vested
but unpaid as of the date of termination of employment.
(d) Termination for Reasons Other Than Death,
Disability, Serious Misconduct or Voluntary Action by
the Executive. In the event that the Employment Period
is terminated at the option of the Company for any
reason other than for serious misconduct, death,
disability, or voluntary action by the Executive, the
Executive shall be paid a lump sum payment equal to the
lesser of (1) current base salary and target bonus for
the remainder of the term hereunder, and (2) a sum
equal to twice current base salary and target bonus,
and the Company shall pay such sum to Executive within
thirty (30) business days following such termination.
Executive's voluntary resignation resulting from
harassment, unwarranted demotion and/or material
diminution of responsibilities shall be governed by the
terms of this provision and shall not be considered a
voluntary termination as defined in subparagraph (e)
hereunder. In the event of such termination, the
Company shall reimburse the Executive for the premium
paid by the Executive for the continued coverage for
the Executive (and any dependents of the Executive
covered by the Company's health care plans as of the
date of termination) under the Company's health care
plan pursuant to COBRA (or any of the mandatory health
care continuation law then in effect), such coverage
being substantially similar to that provided the
Executive on the date of his termination, but such
reimbursement shall be only for a period which is of
(1) the remainder of the term hereof, and (2) two years
from the date of termination.
(e) Voluntary Termination by Executive. In the
event that Executive voluntary terminates his
employment with the Company prior to the end of the
Employment Period, the Company shall pay any earned but
unpaid portion of Executive's base salary and incentive
compensation through the date of his termination
provided that the Executive is in full compliance with
the provisions of Sections D and E hereof.
(f) In special recognition of the many services
provided to the Company by Executive throughout his
lifetime and of Executive's unique abilities which have
furthered the growth and prosperity of the Company,
upon Executive's retirement, following expiration of
the term hereunder, Executive shall be entitled to a
lump sum payment by the Company equivalent to two
years' base salary, calculated at the salary rate in
effect at termination.
3. Definition of Certain Terms.
(a) "Disabled" means such physical or mental
condition of Executive as is determined by the
Company's Board of Directors in its sole discretion to
be expected to continue indefinitely and which renders
him incapable of performing any substantial portion of
the services contemplated hereby (as confirmed by
competent medical evidence).
(b) "Serious Misconduct" means embezzlement or
misappropriation of corporate funds, other acts of
dishonesty or misconduct materially harmful to the
business or reputation of the Company or its
subsidiaries, the conviction of a felony, refusal to
perform or disregard of the duties properly assigned by
the Board, or a material breach of any of the
provisions of Sections D or E above or of any of the
other provisions of this Agreement which violations are
not cured within sixty (60) days of written notice to
the Executive of the breach.
4. Effect of Breach of Noncompetition of Nondisclosure
Provisions. In the event Executive materially breaches
or otherwise fails to comply in any material respect
with the provisions of Sections D or E above, then, in
addition to any other remedies provided herein or at
law on in equity, the Company shall not have any
further obligation to make any additional payments to
Executive pursuant to this Agreement. Termination of
such payments pursuant to the preceding sentence shall
not relieve Executive's obligations pursuant to
Sections D or E above.
G. CHANGE IN CONTROL
For purposes hereof, a "Change in Control" shall have
occurred if:
(1) any "person" other than any trustee or other
fiduciary holding securities under an employee benefit
plan of the Company within the meaning of Section 14(d)
of the Securities Exchange Act of 1934 (the "Exchange
Act") becomes the "beneficial owner" as defined in Rule
13D-3 thereunder, directly or indirectly, of 20% or
more of either the then outstanding shares of the
Company's Common Stock (the "Outstanding Company Common
Stock") or 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 the Company or its subsidiaries, or
by Sam Moore, S. Joseph Moore, members of their
families, relatives, certain family partnerships,
trusts associated with the Moore family and other
entities who have as of July 1, 1995 jointly filed a
Statement on Schedule 13D under the Exchange Act, or by
any reconstituted version of such filing group or any
corporation with respect to which, following such
acquisition, more than 80% of, respectively, the then
outstanding share 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 the
individuals and entities who were the beneficial
owners, respectively, of the Outstanding 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 in Control;
(2) during any two-year period, individuals who
constitute the Board of Directors of the Company (the
"Incumbent Board") as of the beginning of the period
cease for any reason to constitute at least a majority
of the Board, provided that any individual becoming a
director during such period whose election or
nomination for election by the Company's stockholders
was approved by an affirmative vote of at least two-
thirds of the directors then comprising the Incumbent
Board (either by a specific vote or by approval of the
proxy statement of the Company in which such person is
named as a nominee for director without objection to
such nomination) shall be, for the purposes of this
subparagraph (b), considered as though person 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 other actual or threatened
solicitation of proxies or consents; or
(3) approval by the shareholders of the Company
of a reorganization, merger or consolidation, in each
case, with respect to which all or substantially all of
the individuals and entities who were the respective
beneficial owners of the Common Stock and voting
securities of the Company immediately prior to such
reorganization, merger or consolidation do not,
following such reorganization, merger or consolidation,
beneficially own, directly or indirectly, more than 80%
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 such
reorganization, merger or consolidation, or a complete
liquidation or dissolution of the Company or of the
sale or other disposition of all or substantially all
of the assets of the Company.
Notwithstanding the foregoing, a Change in Control for
purposes of this Agreement shall not be considered to occur
as a result of a transaction which is approved by the
Company's Board of Directors in advance of the transaction
and prior to the consummation of the transaction if such
transaction is specifically excluded by the Board of
Directors from the definition of "Change of Control" for
purposes of this Agreement and such exclusion is approved by
an affirmative vote of at least two-thirds of the directors
then comprising the Incumbent Board. Furthermore, anything
in this Agreement to the contrary notwithstanding, if
Executive's employment with the Company is terminated prior
to the date on which a Change in Control occurs, and if it
is reasonably demonstrated by Executive that such
termination of employment (1) was at the request of a third
party who has taken steps reasonably calculated to effect
the Change in Control or (2) otherwise arose in connection
with or in anticipation of the Change in Control, then for
all purposes of this Agreement, a Change in Control shall be
considered to have occurred immediately prior to Executive's
employment termination date.
In the event the Board adopts any plan or takes any action
which, if consummated, would result in a Change in Control
of the Company, the Company shall take any action determined
by the Board to be necessary or appropriate to ensure the
prompt payment when due of any amounts which may thereafter
become payable hereunder upon termination by the Company of
Executive during the Employment Period, including but not
limited to the placement of sufficient funds to pay all such
amounts in an escrow account with a bank or other fiduciary
institution.
On the Change in Control Date, to the extent permitted by
law, regardless of date or grant, all stock options
previously granted shall be come exercisable and all
restrictions on restricted stock shall lapse. All
previously deferred compensation (including interest or
earnings) shall, at Executive's election, be paid to
Executive within 10 days of the Change in Control Date.
H. TERMINATION FOLLOWING CHANGE IN CONTROL
Following a Change in Control of the Company, the provisions
of this Section H shall apply exclusively with respect to
(i) the termination of Executive's employment during the
Employment Period and (ii) amounts payable to Executive upon
such termination.
If a Change in Control of the Company shall have occurred,
Executive shall be entitled to the benefits provided herein
upon Executive's subsequent termination of employment during
the Employment Period, unless such termination is (i)
because of Executive's death, (ii) by the Company because of
Executive's Disability or Serious Misconduct or (iii) by
Executive other than for Good Reason. For purposes hereof,
"Good Reason" shall mean the occurrence or continuation,
without consent of Executive, after a Change in Control of
the Company of any of the following events within 24 months
after the Change in Control Date:
(1) the assignment to Executive of any duties
materially inconsistent with the position with the
Company that Executive held immediately prior to the
Change in Control of the Company, or an adverse change
in the status, position or conditions of Executive's
employment or the nature of Executive's
responsibilities in effect immediately prior to such
Change in Control, or any removal of Executive from or
any failure to re-elect Executive to any of such
positions, except in connection with the termination of
his employment by the Company for Serious Misconduct,
Disability or death or by Executive other than for Good
Reason;
(2) a reduction by the Company in Executive's
annual base salary as in effect immediately prior to
such Change in Control which is not consistent with
general compensation reduction for a Senior Executive
of the Company;
(3) the relocation of Executive' principal office
to a location outside a 25 mile radius from Executive's
principal office immediately prior to such Change in
Control, except for required travel on the Company's
business to an extent substantially consistent with
Executive's business travel obligations immediately
prior to such Change in Control;
(4) the failure by the Company to pay to
Executive any portion of Executive's salary within
seven days of the date such salary is due;
(5) the failure by the Company to continue in
effect any benefit or compensation plan in which
Executive participates immediately prior to the Change
in Control which is material to Executive's total
compensation, including but not limited to the stock
option, employee stock ownership, bonus, insurance,
disability and vacation plans which the Company
currently has or any substitute or additional plans
adopted prior to the Change in Control, unless an
equitable arrangement (embodied in an ongoing
substitute or alternative plan or plans) has been made
with respect to such plan, or the failure by the
Company to continue Executive's participation therein
(or in such substitute or alternative plan) on a basis
not materially less favorable, both in terms of the
amount of benefits provided and the level of
Executive's participation relative to other
participants, as in existence immediately prior to such
Change in Control; or
(6) the failure of the Company to obtain an
agreement from any successor to assume and agree to
perform this Agreement, as contemplated herein.
Executive's right to terminate his employment for Good
Reason pursuant to this section shall not be affected by
Executive's incapacity due to physical or mental illness.
Executive's continued employment shall not constitute
consent to, or a waiver of with respect to, any circumstance
constituting Good Reason hereunder. In the event of any
dispute between Executive and the Company as to whether any
event constituting Good Reason shall have occurred, the
burden of proving by clear and convincing evidence that such
event does not constitute Good Reason shall rest on the
Company.
Any termination of Executive's employment by the Company or
by Executive pursuant to this Section H shall be
communicated by written notice of termination (the "Notice
of Termination") to the other party hereto, and shall
indicate the specific termination provision in the Agreement
relied upon and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for
termination of Executive's employment. For the purposes
hereof, "Date of Termination" shall mean (i) if Executive's
employment is terminated for Disability, 30 days after
Notice of Termination is given (provided that Executive
shall not have returned to the full-time performance of his
duties during such 30 days) or (ii) if Executive's
employment is terminated for any other reason other than
death, the date specified in the Notice of Termination.
I. PAYMENTS UPON TERMINATION SUBSEQUENT TO CHANGE IN CONTROL
Following a Change in Control, Executive shall be entitled
to the following benefits upon termination of employment
during the 36-month period following the Change in Control
Date:
1. Death, Disability, Serious Misconduct or Termination by
Executive Other Than for Good Reason. Following a
termination of Executive's employment because of
Executive's death or by the Company because of
Executive's Disability or Serious Misconduct or by
Executive other than for Good Reason, the Company's
only remaining obligations under this Agreement shall
be to pay any base salary earned through the Date of
Termination plus the amount of any compensation
previously deferred by Executive, in each case to the
extent theretofore unpaid, and Executive's benefits
shall be limited to vested benefits provided under any
retirement, insurance and other benefit programs of the
Company then in effect determined in accordance with
the terms thereof.
2. Other. If the employment shall be terminated by
Executive for Good Reason or by the Company other than
for death, Disability or Serious Misconduct, Executive
shall be entitled to the amounts provided below, such
amounts to be paid in cash in a lump sum no later than
the tenth business day following the Date of
Termination:
(a) the Company shall pay to Executive his full
base salary, and earned or accrued, but unpaid vacation
pay, through the Date of Termination at the rate in
effect at such time, plus all other amounts, including
but not limited to incentive compensation for a past
fiscal year which has not yet been awarded or paid to
Executive under incentive plans, programs or
arrangements, including any deferred awards (it being
understood that with respect to any incentive
compensation which has not been awarded, the individual
performance component of the award shall be determined
on at least the basis that Executive has met all
applicable standards) to which Executive is entitled
under any compensation or benefit plan of the Company;
(b) a lump-sum severance payment (the "Severance
Payment") equal to 2.99 times the sum of (i)
Executive's annual base salary as of the date of
termination of employment and (ii) any cash bonus
received by Executive in the immediately preceding
fiscal year; provided, that such amount shall be paid
in lieu of, and Executive hereby waives the right to
receive, any other amount of severance relating to
salary or bonus continuation to be received by
Executive upon termination of employment of Executive
under any severance plan, policy or arrangement of the
Company;
(c) at the election of Executive, the cash-out of
any or all of Executive's stock or stock-based awards
granted pursuant to both the Thomas Nelson, Inc. 1986
Stock Incentive Plan and the 1992 Employee Stock
Incentive Plan at the "Change in Control Price"
provisions set for therein.
3. Legal Expenses. In addition to any other amounts
payable hereunder, the Company also shall reimburse
Executive for all legal fees and expenses reasonably
incurred by Executive as a result of any termination of
the Employment Period (including all such fees and
expenses, if any, incurred in contesting or disputing
any right or benefit provided by this Agreement or in
connection with any tax audit or proceeding to the
extent attributable to the application of Section 4999
of the Internal Revenue Code of 1986, as amended (the
"Code"), to any payment of benefit provided hereunder).
4. Continuation of Benefits. For the remainder of the
Employment Period, or such longer period as any plan,
program, practice or policy may provide the Company
shall continue benefits to Executive and/or Executive's
family at least equal to those which would have been
provided to them in accordance with the plan, programs,
practices and policies described in Sections C(3) and
(4) of this Agreement if Executive's employment had not
been terminated in accordance with the most favorable
plans, practices, programs or policies of the Company
the its subsidiaries applicable generally to other peer
executives and their families during the 90-day period
immediately preceding the Change in Control Date or, if
more favorable to Executive, as in effect generally at
any time thereafter with respect to other peer
executives of the Company and its subsidiaries and
their families; provided, however, that if Executive
becomes reemployed with another employer and is
eligible to receive medical or other welfare benefits
under another employer provided plan, the medical and
other welfare benefits described herein shall be
secondary to those provided under such other plan
during such applicable period of eligibility. For
purposes of determining eligibility of Executive for
retiree benefits pursuant to such plans, practices,
programs and policies, Executive shall be considered to
have remained employed until the end of the Employment
Period and to have retired on the last day of the
Employment Period.
To the extent not theretofore paid to provided, the
Company shall timely pay or provide to Executive any
other amounts or benefits required to be paid or
provided or which Executive is eligible to receive
pursuant to this Agreement under any plan, program,
policy or practice or contract or agreement of the
Company and its subsidiaries, but excluding solely
purposes of this Section J(4) amounts waived by
Executive pursuant to Section J(2)(b).
5. Certain Reduction in Payments by the Company.
For purposes of this Section, (i) a "Payment" shall
mean any payment or distribution in the nature of
compensation to or for the benefit of Executive,
whether paid or payable pursuant to this Agreement or
otherwise; (ii) an "Agreement Payment" shall mean a
Payment paid or payable pursuant to this Agreement
(disregarding this Section); (iii) "Net After Tax
Receipt" shall mean the Present Value (as defined
below) of a Payment net of all taxes imposed on
Executive with respect thereto under Sections 1 and
4999 of the Code, determined by applying the highest
marginal rate under Section 1 of the Code which applied
to Executive's taxable income for the immediately
preceding taxable year' (iv) "Present Value" shall mean
such value determined in accordance with Section
280G(d)(4) of the Code; and (v) "Reduced Amount" shall
mean the smallest aggregate amount of Agreement
Payments which (a) is less than the sum of all
Agreement Payments and (b) results in aggregate Net
After Tax Receipts which are equal to or greater than
the Net After Tax Receipts which would result if the
aggregate Agreement Payments were any other amount less
than the sum of all Agreement Payments.
Anything in this Agreement to the contrary
notwithstanding, in the event Arthur Andersen LLP (the
"Accounting Firm") shall determine that receipt of all
Payments would subject Executive to tax under Section
4999 of the Code, the Accounting Firm shall determine
whether some amount of Payments would meet the
definition of a Reduced Amount. If the Accounting Firm
determined that there is a Reduced Amount, the
aggregate Payments shall be reduced to such Reduced
Amount. In the event that the Accounting Firm is
serving as accountant or auditor for the individual,
entity or group effecting the change in Control,
Executive shall appoint another nationally recognized
accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred
to as the Accounting Firm hereunder). All fees and
expenses of the Accounting Firm shall be borne solely
by the Company.
If the Accounting Firm determined that aggregate
Agreement Payments should be reduced to the Reduced
Amount, the Company shall promptly give Executive
notice to that effect and a copy of the detailed
calculation thereof, and Executive may then elect, in
his sole discretion, which and how much of the
Agreement Payments shall be eliminated or reduced (as
long as after such election the present value of the
aggregate Agreement Payments equals the Reduced
Amount), and shall advise the Company in writing of his
election within 10 days of his receipt of notice. If
no such election is made by Executive within such 10-
day period, the Company may elect which of such
Agreement Payments shall be eliminated or reduced (as
long as after such election the present value of the
aggregate Agreement Payments equals the Reduced Amount)
and shall notify Executive promptly of such election.
All determinations made by the Accounting Firm under
this Section shall be binding upon the Company and
Executive and shall be made within 60 days of a
termination of employment of Executive. As promptly as
practicable following such determination, the Company
shall pay to or distribute for the benefit of Executive
such Agreement Payments as are then due to Executive
under this Agreement and shall promptly pay to or
distribute for the benefit of Executive in the future
such Agreement Payments as become due to Executive
under this Agreement.
While it is the intention of the Company and Executive
to reduce the amounts payable or distributable to
Executive hereunder only if the aggregate Net After Tax
Receipts to Executive would thereby be increased as a
result of the uncertainty in the application of Section
4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is
possible that amounts will have been paid or
distributed by the Company to or for the benefits of
Executive pursuant to this Agreement which should not
have been so paid or distributed ("Overpayment") or
that additional amounts which will have not been paid
or distributed by the Company for the benefit of the
Executive pursuant to this Agreement could have been so
paid or distributed ("Underpayment"), in each case,
consistent with the calculation of the Reduced Amount
hereunder. In the event that the Accounting Firm,
based either upon the assertion of a deficiency by the
Internal Revenue Service against the Company or
Executive which the Accounting Firm believes has a high
probability of success determines that an Overpayment
has been made, any such Overpayment paid or distributed
by the Company to or for the benefit of Executive shall
be treated for all purposes as a loan to Executive
which Executive shall repay to the Company together
with interest at the applicable federal rate provided
for in Section 7872(f)(2) of the Code; provided,
however, that no such loan shall be deemed to have been
made and no amount shall be payable by the Executive to
the Company if an to the extent such deemed loan and
payment would not either reduce the amount on which the
Executive is subject to tax under Section 1 and Section
4999 of the Code or generate a refund of such taxes.
In the event that the Accounting Firm, based upon
controlling precedent or substantial authority,
determined that an Underpayment has occurred, any such
Underpayment shall be promptly paid by the Company to
or for the benefit of Executive together with interest
at the applicable federal rate provided for in Section
7872(f)(2) of the Code.
6. Full Settlement.
Except as otherwise provided herein, the Company's
obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right
or action which the Company may have against Executive
or others. In no event shall Executive be obligated to
seek other employment or take any other action by way
of mitigation of the amounts payable to Executive under
any of the provision of this Agreement and, except as
provided to Executive under any of the provisions of
this Agreement and, except as provided in Section
J(2)(b) of this Agreement, such amounts shall not be
reduced whether or not Executive obtains other
employment.
J. REMEDIES
Executive acknowledges that he will receive privileged
information from the Company and that he will have
substantial access to the Company's trade secrets, business
information and personnel data. In consideration of his
employment and the privilege of access to the Company's
trade secrets, information, business methods and procedures,
and personnel data, Executive acknowledges that the
restrictions contained within Sections D and E are
reasonable and necessary in order to preserve the Company's
legitimate interests and that any violation thereof would
result in irreparable injury to the Company for which
monetary damages would be an inadequate remedy. Therefore,
Executive acknowledges and agrees that in the event of any
violations thereof, the Company may seek from any court of
competent jurisdiction preliminary and permanent injunctive
relief as well as an equitable account of all Executive's
profits or benefits arising out of such violation, which
rights shall be cumulative and in addition to any other
action or remedies to which the Company may be entitled.
K. SUCCESSORS
(a) This Agreement is personal to Executive and
without the prior written consent of the Company shall not
be assignable by Executive otherwise than by will or the
laws of descent and distribution. This Agreement shall
inure to the benefit of and be enforceable by Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and
be binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly and agree
to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if
no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company as herein before
defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement
by operation of law, or otherwise. Failure of the Company
to obtain such agreement prior to the effectiveness of any
such succession shall be a breach hereof and shall entitle
Executive to terminate his employment for Good Reason.
L. NOTICES
All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other
party or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive:
Sam Moore, President
Thomas Nelson, Inc.
Nelson Place at Elm Hill Pike
Nashville, Tennessee 37214-1000
If to the Company:
Thomas Nelson, Inc.
Nelson Place at Elm Hill Pike
Post Office Box 141000
Nashville, Tennessee 37214-1000
Attention: General Counsel
or to such other address as either party shall have
furnished to the other in writing in accordance herewith.
Notice and communications shall be effective when actually
received by the addressee.
M. MISCELLANEOUS
1. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or
enforceability of any other provision of the Agreement.
2. The Company may withhold from any amounts payable under
this Agreement such Federal, state or local taxes as
shall be required to be withheld pursuant to any
applicable law or regulation.
3. Executive's or the Company's failure to insist upon
strict compliance with any provision hereof or any
other provision of this Agreement or the failure to
assert any right Executive or the Company may have
hereunder, including, without
limitation, the right of the Executive to terminate
employment for Good Reason, shall not be deemed to be a
waiver of such provision or right or any other
promotion or right of this Agreement.
N. WAIVERABILITY OF PROVISIONS
No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is
agreed to in writing and is signed by Executive and an
executive officer of the Company. No waiver by either party
hereto of the party's compliance with or breach of, any
condition or provision herein to be performed by said party
shall constitute a simultaneous waiver of any other terms,
provisions or conditions herein nor shall such waiver by
either party constitute a continuing waiver of said
pertinent term, provision or condition subsequent thereto
unless such continuation of waiver is agreed to in writing
by the parties pursuant to the terms of this paragraph.
O. ENTIRE AGREEMENT
This Agreement, including attachments, contains the entire
agreement between the parties hereto and no agreements or
representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by
either party which are not set forth expressly in this
Agreement, except for the Agreement between the company and
Executive dated __________________, providing for certain
payments necessary to fund certain insurance policies, which
agreement shall remain in full force and effect.
P. APPLICABLE LAW
The validity, interpretation, construction and performance
of this Agreement shall be governed by the laws of the State
of Tennessee. Any dispute regarding this Agreement or any
amendment or addendum hereto shall be resolved through an
arbitration hearing held in accordance with the procedures
of the American Arbitration Association. Such arbitration
hearing shall be held in Davidson County, Tennessee and the
arbitrators' decision shall be final, binding and
nonappealable by the parties hereto. The cost of any
such litigation to enforce all or part of this Agreement,
including, without limitation, court costs and attorney's
fees, shall be paid by the party found to be in default
hereunder or who is otherwise found to be acting or to have
acted contrary to the terms hereof.
IN WITNESS WHEREOF, Executive and the Company have
executed this Agreement as of the day and year first written
above.
ACCEPTED BY: THOMAS NELSON, INC.
/s/ Sam Moore /s/ Millard V. Oakley
- -------------------- -------------------------
Sam Moore Name
President
Chairman,
Compensation Committee
--------------------------
Title
May 13, 1996 May 13, 1996
- --------------------- --------------------------
Date Date
31<PAGE>
/dld
32<PAGE>
EXHIBIT 10.8
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and
entered into as of May 10, 1996, by and between Thomas Nelson,
Inc., a Tennessee corporation (the "Company"), and S. Joseph
Moore ("Executive").
Executive is currently employed by the Company as Executive
Vice President. Executive has served in a senior executive
capacity with the Company for many years thereby acquiring an
intimate knowledge of the business and affairs of the Company and
has demonstrated his ability and has performed valuable services
for the Company. The Company desires to incentivize the
Executive to remain in its employ for the full term of this
Agreement and to contractually protect the Company from the
misuse of proprietary, confidential information and from the
Executive competing with the Company. Accordingly, the Company,
hereby offers to enter into this Agreement with Executive.
The Company's Board of Directors (the "Board") considers the
establishment and continuity of competent management to be
essential to protecting and enhancing the best interests of the
Company and its shareholders. Thus, the Board has determined
that it is appropriate to provide Executive with compensation and
benefits arrangements upon a Change in Control (as defined below)
which ensure that the compensation and benefits expectations of
Executive will be satisfied and which are competitive with those
of other corporations.
Therefore, the Company wishes to secure the services of
Executive for a period to and including March 31, 2001 on the
terms and conditions set forth below, and Executive is willing to
enter into this Agreement. In consideration of the premises
hereof and of the mutual promises and agreements contained
herein, the parties therefore agree as follows:
A. TERM OF AGREEMENT
1. Original Term. This Agreement shall be effective as of
the date first set forth above (the "Effective Date").
The Company shall employ Executive as Executive Vice
President of the Company for a term (the "Employment
Period") commencing on the Effective Date and
continuing until March 31, 2001 unless sooner
terminated pursuant to Section F or H hereof.
2. Renewals. The Employment Period shall automatically be
extended for additional one-year periods unless written
notice of nonextension is given in writing by either
party no less than 60 days prior to the scheduled
expiration date.
B. POSITION AND DUTIES
During the Employment Period, Executive shall serve as
Executive Vice President of the Company. Executive shall
have the authority, functions, duties, powers and
responsibilities for Executive's corporate offices and
positions which are set forth in the Company's bylaws from
time to time in effect and such other authority, functions,
duties, powers and responsibilities as the Board of
Directors or President of the Company may from time to time
prescribe or delegate to Executive, in all cases to be
consistent with Executive's corporate offices and positions.
Executive agrees, subject to his election or appointment as
such and without additional compensation, to serve during
the Employment Period in such particular additional offices
of comparable stature and responsibility to which he may be
elected from time to time in the Company and its
subsidiaries and to serve as a Director and as a member of
any committee of the Board of Directors of the Company.
During the Employment Period, (i) Executive's services shall
be rendered on a full-time, exclusive basis, (ii) he will
apply on a full-time basis all of his skill and experience
to the performance of his duties in such employment and
shall report only to the Company's President, (iii) he shall
have no other employment and, without the prior written
consent of the Compensation Committee of the Company's Board
of Directors, no outside business activities which require
the devotion of substantial amounts of Executive's time, and
(iv) unless Executive otherwise consents in writing, the
headquarters for the performance of his services shall be
the principal executive offices of the Company in Nashville,
Tennessee, subject to such reasonable travel as the
performance of his duties in the business of the Company may
require. Notwithstanding the foregoing sentence, Executive
may devote a reasonable amount of his time to civic,
community, charitable, or passive investment activities and
to serve as a director and/or officer of personally owned
corporations and to other types of business or public
activities not expressly mentioned in this paragraph.<PAGE>
C. COMPENSATION
1. Base Salary. Executive shall be paid an annual base
salary as set forth on Exhibit A hereto, subject to
such increase as may from time to time be approved by
the Compensation Committee of the Company's Board of
Directors; provided, however, that following any such
increase in Executive's base salary by the Compensation
Committee, such base salary shall not be reduced
without the prior written consent of Executive. Base
salary shall be payable according to the Company's
regular practice for salary payment.
2. Incentive Compensation. Executive shall be eligible to
receive annual incentive and bonus compensation, shall
be eligible to participate in the Company's long-term
equity-based incentive compensation plans, including,
without limitation, the Company's 1986 Executive Stock
Purchase Plan, 1986 Stock Incentive Plan, and Amended
and Restated 1992 Employee Stock Incentive Plan, and in
all incentive, gainsharing, savings and retirement
plans, practices, policies and programs applicable to
other peer executives of the Company and its
subsidiaries, but in no event shall such plans,
practices, policies and programs provide Executive with
incentive, gainsharing, savings and retirement benefits
opportunities, in each case, less favorable, in the
aggregate, than the most favorable of those provided
by the Company and its subsidiaries for Executive under
such plans, practices, policies and programs as in
effect at any time during the 90-day period immediately
preceding the date (the "Change in Control Date") on
which a Change in Control (as defined below) occurs, or
if more favorable to Executive, those provided
generally at any time on or after the Change in Control
Date to other peer executives of the Company.
3. Other Benefits. During the Employment Period Executive
shall be entitled to all of the fringe benefits which
the Company and its subsidiaries make available to
senior management if and to the extent that the
Executive is eligible to participate in accordance with
the terms of the benefit plans or policies, provided,
however, that the termination benefits hereunder are in
lieu of any severance benefits to which the Executive
would otherwise be entitled. Such benefits may
include, but are not limited to, (i) medical, hospital,
dental, disability and life insurance plans and
coverages, (ii) pension, profit sharing, 401(k),
employee stock ownership plan, deferred compensation
and similar plans or arrangements, and (iii) any other
benefit plan, program or arrangement, including those
relating to automobiles, clubs, vacations, and expense
reimbursement, which the Company and its subsidiaries
from time to time may make available either to their
employees generally or to some or all of their senior
executive officers, but in no event shall such plans,
practices, policies and arrangements provide benefits
which are less favorable, in the aggregate, than the
most favorable of such plans, practices, policies and
arrangements in effect at any time during the 90-day
period immediately preceding the Change in Control Date
or if more favorable to Executive, those provided
generally at any time on or after the Change in Control
Date to other senior executives of the Company and its
subsidiaries.
D. NONDISCLOSURE AND NON-USE OF CONFIDENTIAL INFORMATION
1. Confidential Information.
(a) Executive acknowledges and agrees that the
information, observations and data obtained by him
during the course of his performance under the
Agreement and the Prior Agreement concerning the
business or affairs of the Company and its subsidiaries
and affiliates is the property of the Company or such
subsidiary or affiliate, as the case may be.
Therefore, during the Employment Period and at all
times thereafter, Executive (i) shall hold in a
fiduciary capacity for the benefit of the Company, its
subsidiaries and affiliates, and (ii) without the prior
written consent of the Board of Directors or except to
the extent required by law (and upon prompt written
notice of such requirement to the Company and such
subsidiary or affiliate), shall not directly or
indirectly, divulge, furnish, disclose, use or make
accessible for any purpose (except in the course of his
employment under this Agreement and in furtherance of
the business of the Company and its subsidiaries and
affiliates) any Confidential Information (as defined
below). Executive acknowledges and agrees that the
disclosure of any Confidential Information will be
damaging or harmful to the business activities of the
Company, its subsidiaries and affiliates, and that such
disclosure can direct or divert corporate
opportunities, product sales and/or profits away from
the Company, its subsidiaries or affiliates. In the
event Executive shall be required by law to make any
disclosure as set forth above, Executive shall promptly
notify the Company and any subsidiary or affiliate
which may reasonably be affected by such disclosure and
shall cooperate with the Company, such subsidiary and
such affiliate to preserve in full the confidentiality
of all Confidential Information of the Company, such
subsidiary or such affiliate. Confidential Information
shall be considered confidential or proprietary unless
and to the extent that such Confidential Information
become generally known to and available for use by the
public other than as a result of any act or omission to
act by Executive. Executive will take all appropriate
steps to safeguard Confidential Information and to
protect it against disclosure, misuse, espionage, loss
and theft.
(b) As used in this Agreement, the term
"Confidential Information" means information that is
not generally known to the public and that is used,
developed or obtained by the Company or any of its
subsidiaries and affiliates in connection with the
Company's or such subsidiary's or affiliate's business,
including but not limited to (i) products or services,
(ii) fees, costs and pricing structures, (iii) designs,
plans or manufacturing data, (iv) analysis,
observations or data, (v) drawings, artwork,
photographs, videotapes, audio tapes, other recordings,
and reports, (vi) computer software, including
operating systems, applications program listings, and
computer files, (vii) flow charts, manuals and
documentation, (viii) data bases, (ix) accounting and
business methods, (x) inventions, devices, new
developments, methods and processes, whether patentable
or unpatentable and whether or not reduced to practice,
(xi) customers, clients, authors or artist and
customer, client, author or artist lists, (xii) other
copyrightable works, (xiii) all technology and trade
secrets, (xiv) intellectual property, unique business
information, or confidential or proprietary
information, and (xv) all similar and related
information in whatever form. Confidential Information
will not include any information that has been
published in a form generally available to the public
prior to the date Executive proposes to disclose or use
such information. Information will not be deemed to
have been published merely because individual portions
of the information have been separately published, but
only if all material features comprising such
information have been published in combination.
2. Product Development. In the event that Executive as
part of his activities on behalf of the Company
generates, authors or contributes, individually or with
the assistance of others, to any invention, design, new
development, device, product, method or process
(whether or not patentable or reduced to practice or
comprising Confidential Information), any copyrightable
work (whether or not comprising Confidential
Information) or any other form of Confidential
Information relating directly or indirectly to the
business of the Company or any of its subsidiaries or
affiliates as now or hereafter conducted (collectively,
the "Intellectual Property"), Executive acknowledges
that such Intellectual Property is the exclusive
property of the Company and hereby assigns all right,
title and interest in and to such Intellectual
Property to the Company. Any copyrightable work
prepared in whole or in part by Executive will be
deemed "a work made for hire" under Section 201(b) of
the 1976 Copyright Act, and the Company will own all of
the rights comprised in the copyright therein.
Executive will cooperate with the Company in all
reasonable respects to protect the Company's interests
in and rights to such Intellectual Property (including,
without limitation, providing reasonable assistance in
securing patent protection and copyright registrations
and executing all documents as reasonably requested by
the Company whether such requests occur prior to or
after termination of Executive's employment with the
Company).
3. Delivery of Materials Upon Termination of Employment.
As requested by the Company from time to time and upon
the termination of the Executive's employment with the
Company for any reason, Executive will promptly deliver
to the Company all copies and embodiments, in whatever
form, of all Confidential Information or Intellectual
Property in Executive's possession or within his
control (including, but not limited to, written
records, memoranda, notes, photographs, plans, records,
video tapes, audiotapes, other recordings, reports,
manuals, notebooks, documentation, program listings,
flow charts, magnetic media, disks, diskettes, tapes
and all other materials containing any Confidential
Information or Intellectual Property) irrespective of
the location or form of such material and, if requested
by the Company, will provide the Company with written
confirmation that all such materials have been
delivered to the Company.
E. NONCOMPETITION
1. Covenant Not to Compete. Executive acknowledges and
agrees with the Company that Executive's services to
the Company and its subsidiaries are unique in nature
and that the Company and its subsidiaries would be
irreparably damaged if Executive were to provide
similar services to any person or entity competing with
the Company or any of its subsidiaries, or engaged in
similar business. Executive accordingly covenants and
agrees with the Company that during the Employment
Period and for two years following the termination of
Executive's employment with the Company for any reason
(the "Noncompetition Period"), Executive will not,
directly or indirectly, either for himself or for any
other individual, corporation, partnership, joint
venture or other entity, participate in (as defined
below) any business (including, without limitation, any
division, group or franchise of a larger organization)
competing with the book publishing, Bible publishing,
and/or music businesses then conducted (or, to the
knowledge of Executive, planned to be conducted within
two years) by the Company or any of its successors or
then subsidiaries within any geographical area in which
the Company or its subsidiaries engage or plan within
two years to engage in any such businesses. For
purposes of this Agreement, the term "participate in"
will include, without limitation, having any direct or
indirect interest in any corporation, partnership,
joint venture or other entity, whether as a sole
proprietor, owner, stockholder, partner, joint
venturer, creditor or otherwise, or rendering any
direct or indirect service or assistance to any
individual, corporation, partnership, joint venture and
other business entity (whether as a director, officer,
manager, supervisor, employee, agent, consultant or
otherwise).
2. Nonsolicitation and Noninterference. During the
Noncompetition Period, Executive will not directly or
indirectly, on behalf of himself or another entity, (i)
induce, attempt to induce, or assist others to induce
any artist, composer, songwriter, lyricist, musician,
author, writer, editor, programmer, technician, cable
operator, employee, consultant, customer, supplier,
licensee or other person or entity to terminate its,
his or her association with the Company or its
subsidiaries, or to cease doing business with the
Company or its subsidiaries, or do anything to
interfere with the relationship between the Company or
its subsidiaries, on the one hand, and any artist,
composer, songwriter, lyricist, musician, author,
writer, editor, programmer, technician, cable operator,
employee, consultant or other person or entity doing
business and/or under contract with the Company or any
of its subsidiaries, or with whom the Company or any of
its subsidiaries is then negotiating, or with whom the
Company or any of its subsidiaries enters into any
contract or agreement during the Noncompetition Period,
or (ii) hire, without the written consent of the
Company, any person who was an employee of the Company
or any of its subsidiaries at any time within twelve
(12) months of the termination of the Employment
Period.
3. Limitations.
(a) Nothing contained in this Section E shall
prevent Executive from owning up to a 5% interest in
any corporation or entity having one or more classes of
its securities listed on a national securities exchange
or market, or publicly traded in the over-the-counter
market, provided that Executive is not actively
involved in any manner whatsoever in the operation or
management of such corporation or entity.
(b) If under the circumstances existing at the
time of enforcement of this Section E, the period,
scope or geographic area described in this Section E
shall be found or held to be unreasonable, the parties
hereto agree that the maximum period, scope or
geographic area reasonable under the circumstances
shall be substituted for the stated period, scope or
geographic area.
F. TERMINATION OF EMPLOYMENT (OTHER THAN SUBSEQUENT TO A CHANGE
IN CONTROL).
1. Applicability. This Section F shall apply only to
termination of the employment Period prior to the
occurrence of a Change in Control (as defined below)
during the Employment Period. Termination of the
Employment Period following the occurrence of a Change
in Control shall be governed by Section H.
2. Events of Termination and Related Payments.
(a) Disability. In the event that during the
Employment Period Executive should become Disabled,
the Company (acting by resolution of the Board) may
elect to terminate the Employment Period by written
notice to Executive, his guardian or personal
representative and Executive, his guardian or personal
representative, as the case may be, shall be entitled
to receive (i) full compensation pursuant to Section C
at his then base salary rate from the date of
termination of employment continuing for the lesser of
(a) one year following the date of such notice and (b)
the remainder of the then effective Employment Period,
and (ii) bonus for the calendar year in which
Executive's termination of employment occurs as
determined in good faith by the Compensation Committee
of the Board of Directors in its sole discretion.
Notwithstanding the foregoing provisions of this
Section F(2)(a), the payments provided herein with
respect to any period of Disability shall be reduced by
the amount of any benefits payable to Executive, his
guardian or personal representative, as the case may
be, during such period under any disability or similar
plan or program of the Company of any of its
subsidiaries in respect of Executive's Disability.
(b) Death. In the event of Executive's death
during the Employment Period, his personal
representative shall be entitled to receive any
compensation pursuant to Section C which is accrued and
unpaid as of the date of his death.
(c) Termination Due to Serious Misconduct. In
the event that during the Employment Period Executive
should commit Serious Misconduct (as defined below),
the Company (acting by resolution of the Board) may
elect to terminate the Employment Period by written
notice to Executive, and Executive shall be entitled
only to any compensation and benefits which are vested
and unpaid as of the date of termination of employment.
(d) Termination for Reasons Other Than Death,
Disability, Serious Misconduct or Voluntary Action by
the Executive. In the event that the Employment Period
is terminated at the option of the Company for any
reason other than for serious misconduct, death,
disability, or voluntary action by the Executive, the
Executive's base salary for the remainder of the term
hereunder shall immediately vest and accelerate, and
the Company shall pay such vested sum to Executive
within ten (10) business days following such
termination. Employee's voluntary resignation
resulting from harassment, unwarranted demotion and/or
material diminution of responsibilities shall be
governed by the terms of this provision and shall not
be considered a voluntary termination as defined in
subparagraph (e) hereunder. In the event of such
termination, the Company shall, for the life of the
Executive, reimburse the Executive for the premium paid
by the Executive for the continued coverage for the
Executive (and any dependents of the Executive covered
by the Company's health care plans as of the date of
termination) under the Company's health care plan
pursuant to COBRA (or any of the mandatory health care
continuation laws then in effect), such coverage being
substantially similar to that provided the Executive on
the date of his termination.
(e) Voluntary Termination by Executive. In the
event that Executive, for reasons other than those set
forth in subparagraph (d) hereinabove, voluntarily
terminates his employment with the Company prior to the
end of the Employment Period, the Company shall pay any
earned but unpaid portion of Executive's base salary
and incentive compensation through the date of his
termination provided that the Executive is in full
compliance with the provisions of Sections D and E
hereof.
3. Definition of Certain Terms.
(a) "Disabled" means such physical or mental
condition of Executive as is determined by the
Company's Board of Directors in its sole discretion to
be expected to continue indefinitely and which renders
him incapable of performing any substantial portion of
the services contemplated hereby (as confirmed by
competent medical evidence).
(b) "Serious Misconduct" means embezzlement or
misappropriation of corporate funds, other acts of
dishonesty or reckless or intentional misconduct which
is materially harmful to the business or reputation of
the Company or its subsidiaries, the conviction of a
felony, willful refusal to perform or substantial
disregard of the duties properly assigned by the Board,
or a material breach of any of the provisions of
Sections D or E above or of any of the other provisions
of this Agreement which violations are not cured within
sixty (60) days of written notice to the Executive of
the breach.
4. Effect of Breach of Noncompetition of Nondisclosure
Provisions. In the event Executive materially breaches
or otherwise fails to comply in any material respect
with the provisions of Sections D or E above, then, in
addition to any other remedies provided herein or at
law on in equity, the Company shall not have any
further obligation to make any additional payments to
Executive pursuant to this Agreement. Termination of
such payments pursuant to the preceding sentence shall
not relieve Executive's obligations pursuant to
Sections D or E above.
G. CHANGE IN CONTROL
For purposes hereof, a "Change in Control" shall have
occurred if:
(1) any "person" other than any trustee or other
fiduciary holding securities under an employee benefit
plan of the Company within the meaning of Section 14(d)
of the Securities Exchange Act of 1934 (the "Exchange
Act") becomes the "beneficial owner" as defined in Rule
13D-3 thereunder, directly or indirectly, of 20% or
more of either the then outstanding shares of the
Company's Common Stock (the "Outstanding Company Common
Stock") or 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 the Company or its subsidiaries, or
by Sam Moore, S. Joseph Moore, members of their
families, relatives, certain family partnerships,
trusts associated with the Moore family and other
entities who have as of July 1, 1995 jointly filed a
Statement on Schedule 13D under the Exchange Act, or by
any reconstituted version of such filing group or any
corporation with respect to which, following such
acquisition, more than 80% of, respectively, the then
outstanding share 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 the
individuals and entities who were the beneficial
owners, respectively, of the Outstanding 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 in Control;
(2) during any two-year period, individuals who
constitute the Board of Directors of the Company (the
"Incumbent Board") as of the beginning of the period
cease for any reason to constitute at least a majority
of the Board, provided that any individual becoming a
director during such period whose election or
nomination for election by the Company's stockholders
was approved by an affirmative vote of at least two-
thirds of the directors then comprising the Incumbent
Board (either by a specific vote or by approval of the
proxy statement of the Company in which such person is
named as a nominee for director without objection to
such nomination) shall be, for the purposes of this
subparagraph (b), considered as though person 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 other actual or threatened
solicitation of proxies or consents; or
(3) approval by the shareholders of the Company
of a reorganization, merger or consolidation, in each
case, with respect to which all or substantially all of
the individuals and entities who were the respective
beneficial owners of the Common Stock and voting
securities of the Company immediately prior to such
reorganization, merger or consolidation do not,
following such reorganization, merger or consolidation,
beneficially own, directly or indirectly, more than 80%
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 such
reorganization, merger or consolidation, or a complete
liquidation or dissolution of the Company or of the
sale or other disposition of all or substantially all
of the assets of the Company.
Notwithstanding the foregoing, a Change in Control for
purposes of this Agreement shall not be considered to occur
as a result of a transaction which is approved by the
Company's Board of Directors in advance of the transaction
and prior to the consummation of the transaction if such
transaction is specifically excluded by the Board of
Directors from the definition of "Change of Control" for
purposes of this Agreement and such exclusion is approved by
an affirmative vote of at least two-thirds of the directors
then comprising the Incumbent Board. Furthermore, anything
in this Agreement to the contrary notwithstanding, if
Executive's employment with the Company is terminated prior
to the date on which a Change in Control occurs, and if it
is reasonably demonstrated by Executive that such
termination of employment (1) was at the request of a third
party who has taken steps reasonably calculated to effect
the Change in Control or (2) otherwise arose in connection
with or in anticipation of the Change in Control, then for
all purposes of this Agreement, a Change in Control shall be
considered to have occurred immediately prior to Executive's
employment termination date.
In the event the Board adopts any plan or takes any action
which, if consummated, would result in a Change in Control
of the Company, the Company shall take any action determined
by the Board to be necessary or appropriate to ensure the
prompt payment when due of any amounts which may thereafter
become payable hereunder upon termination by the Company of
Executive during the Employment Period, including but not
limited to the placement of sufficient funds to pay all such
amounts in an escrow account with a bank or other fiduciary
institution.
On the Change in Control Date, to the extent permitted by
law, regardless of date or grant, all stock options
previously granted shall be come exercisable and all
restrictions on restricted stock shall lapse. All
previously deferred compensation (including interest or
earnings) shall, at Executive's election, be paid to
Executive within 10 days of the Change in Control Date.
H. TERMINATION FOLLOWING CHANGE IN CONTROL
Following a Change in Control of the Company, the provisions
of this Section H shall apply exclusively with respect to
(i) the termination of Executive's employment during the
Employment Period and (ii) amounts payable to Executive upon
such termination.
If a Change in Control of the Company shall have occurred,
Executive shall be entitled to the benefits provided herein
upon Executive's subsequent termination of employment during
the Employment Period, unless such termination is (i)
because of Executive's death, (ii) by the Company because of
Executive's Disability or Serious Misconduct or (iii) by
Executive other than for Good Reason. For purposes hereof,
"Good Reason" shall mean the occurrence or continuation,
without consent of Executive, after a Change in Control of
the Company of any of the following events within 36 months
after the Change in Control Date:
(1) the assignment to Executive of any duties
materially inconsistent with the position with the
Company that Executive held immediately prior to the
Change in Control of the Company, or an adverse change
in the status, position or conditions of Executive's
employment or the nature of Executive's
responsibilities in effect immediately prior to such
Change in Control, or any removal of Executive from or
any failure to re-elect Executive to any of such
positions, except in connection with the termination of
his employment by the Company for Serious Misconduct,
Disability or death or by Executive other than for Good
Reason;
(2) a reduction by the Company in Executive's
annual base salary as in effect immediately prior to
such Change in Control, or the failure by the Company
to increase such base salary the year in which a Change
in Control occurs and each year thereafter by an amount
which at least equals on a percentage basis, the
average percentage increase in base salary for all
officers of the Company during the two full calendar
years immediately preceding the Change in Control;
(3) the relocation of Executive' principal office
to a location outside a 25 mile radius from Executive's
principal office immediately prior to such Change in
Control, except for required travel on the Company's
business to an extent substantially consistent with
Executive's business travel obligations immediately
prior to such Change in Control;
(4) the failure by the Company to pay to
Executive any portion of Executive's salary within
seven days of the date such salary is due;
(5) the failure by the Company to continue in
effect any benefit or compensation plan in which
Executive participates immediately prior to the Change
in Control which is material to Executive's total
compensation, including but not limited to the stock
option, employee stock ownership, bonus, insurance,
disability and vacation plans which the Company
currently has or any substitute or additional plans
adopted prior to the Change in Control, unless an
equitable arrangement (embodied in an ongoing
substitute or alternative plan or plans) has been made
with respect to such plan, or the failure by the
Company to continue Executive's participation therein
(or in such substitute or alternative plan) on a basis
not materially less favorable, both in terms of the
amount of benefits provided and the level of
Executive's participation relative to other
participants, as in existence immediately prior to such
Change in Control; or
(6) the failure of the Company to obtain an
agreement from any successor to assume and agree to
perform this Agreement, as contemplated herein.
Executive's right to terminate his employment for Good
Reason pursuant to this section shall not be affected by
Executive's incapacity due to physical or mental illness.
Executive's continued employment shall not constitute
consent to, or a waiver of with respect to, any circumstance
constituting Good Reason hereunder. In the event of any
dispute between Executive and the Company as to whether any
event constituting Good Reason shall have occurred, the
burden of proving by clear and convincing evidence that such
event does not constitute Good Reason shall rest on the
Company.
Any termination of Executive's employment by the Company or
by Executive pursuant to this Section H shall be
communicated by written notice of termination (the "Notice
of Termination") to the other party hereto, and shall
indicate the specific termination provision in the Agreement
relied upon and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for
termination of Executive's employment. For the purposes
hereof, "Date of Termination" shall mean (i) if Executive's
employment is terminated for Disability, 30 days after
Notice of Termination is given (provided that Executive
shall not have returned to the full-time performance of his
duties during such 30 days) or (ii) if Executive's
employment is terminated for any other reason other than
death, the date specified in the Notice of Termination.
I. PAYMENTS UPON TERMINATION SUBSEQUENT TO CHANGE IN CONTROL
Following a Change in Control, Executive shall be entitled
to the following benefits upon termination of employment
during the 36-month period following the Change in Control
Date:
1. Death, Disability, Serious Misconduct or Termination by
Executive Other Than for Good Reason. Following a
termination of Executive's employment because of
Executive's death or by the Company because of
Executive's Disability or Serious Misconduct or by
Executive other than for Good Reason, the Company's
only remaining obligations under this Agreement shall
be to pay any base salary earned through the Date of
Termination plus the amount of any compensation
previously deferred by Executive, in each case to the
extent theretofore unpaid, and Executive's benefits
shall be limited to vested benefits provided under any
retirement, insurance and other benefit programs of the
Company then in effect determined in accordance with
the terms thereof.
2. Other. If the employment shall be terminated by
Executive for Good Reason or by the Company other than
for death, Disability or Serious Misconduct, Executive
shall be entitled to the amounts provided below, such
amounts to be paid in cash in a lump sum no later than
the tenth business day following the Date of
Termination:
(a) the Company shall pay to Executive his full
base salary, and earned or accrued, but unpaid vacation
pay, through the Date of Termination at the rate in
effect at such time, plus all other amounts, including
but not limited to incentive compensation for a past
fiscal year which has not yet been awarded or paid to
Executive under incentive plans, programs or
arrangements, including any deferred awards (it being
understood that with respect to any incentive
compensation which has not been awarded, the individual
performance component of the award shall be determined
on at least the basis that Executive has met all
applicable standards) to which Executive is entitled
under any compensation or benefit plan of the Company;
(b) a lump-sum severance payment (the "Severance
Payment") equal to two (2) times the sum of (i)
Executive's annual base salary as of the date of
termination of employment and (ii) any cash bonus
received by Executive in the immediately preceding
fiscal year; provided, that such amount shall be paid
in lieu of, and Executive hereby waives the right to
receive, any other amount of severance relating to
salary or bonus continuation to be received by
Executive upon termination of employment of Executive
under any severance plan, policy or arrangement of the
Company;
(c) at the election of Executive, the cash-out of
any or all of Executive's stock or stock-based awards
granted pursuant to both the Thomas Nelson, Inc. 1986
Stock Incentive Plan and the 1992 Employee Stock
Incentive Plan at the "Change in Control Price"
provisions set for therein.
3. Legal Expenses. In addition to any other amounts
payable hereunder, the Company also shall reimburse
Executive for all legal fees and expenses reasonably
incurred by Executive as a result of any termination of
the Employment Period (including all such fees and
expenses, if any, incurred in contesting or disputing
any right or benefit provided by this Agreement or in
connection with any tax audit or proceeding to the
extent attributable to the application of Section 4999
of the Internal Revenue Code of 1986, as amended (the
"Code"), to any payment of benefit provided hereunder).
4. Continuation of Benefits. For the remainder of the
Employment Period, or such longer period as any plan,
program, practice or policy may provide the Company
shall continue benefits to Executive and/or Executive's
family at least equal to those which would have been
provided to them in accordance with the plan, programs,
practices and policies described in Sections C(3) and
(4) of this Agreement if Executive's employment had not
been terminated in accordance with the most favorable
plans, practices, programs or policies of the Company
the its subsidiaries applicable generally to other peer
executives and their families during the 90-day period
immediately preceding the Change in Control Date or, if
more favorable to Executive, as in effect generally at
any time thereafter with respect to other peer
executives of the Company and its subsidiaries and
their families; provided, however, that if Executive
becomes reemployed with another employer and is
eligible to receive medical or other welfare benefits
under another employer provided plan, the medical and
other welfare benefits described herein shall be
secondary to those provided under such other plan
during such applicable period of eligibility. For
purposes of determining eligibility of Executive for
retiree benefits pursuant to such plans, practices,
programs and policies, Executive shall be considered to
have remained employed until the end of the Employment
Period and to have retired on the last day of the
Employment Period.
To the extent not theretofore paid to provided, the
Company shall timely pay or provide to Executive any
other amounts or benefits required to be paid or
provided or which Executive is eligible to receive
pursuant to this Agreement under any plan, program,
policy or practice or contract or agreement of the
Company and its subsidiaries, but excluding solely
purposes of this Section J(4) amounts waived by
Executive pursuant to Section J(2)(b).
5. Certain Reduction in Payments by the Company.
For purposes of this Section, (i) a "Payment" shall
mean any payment or distribution in the nature of
compensation to or for the benefit of Executive,
whether paid or payable pursuant to this Agreement or
otherwise; (ii) an "Agreement Payment" shall mean a
Payment paid or payable pursuant to this Agreement
(disregarding this Section); (iii) "Net After Tax
Receipt" shall mean the Present Value (as defined
below) of a Payment net of all taxes imposed on
Executive with respect thereto under Sections 1 and
4999 of the Code, determined by applying the highest
marginal rate under Section 1 of the Code which applied
to Executive's taxable income for the immediately
preceding taxable year' (iv) "Present Value" shall mean
such value determined in accordance with Section
280G(d)(4) of the Code; and (v) "Reduced Amount" shall
mean the smallest aggregate amount of Agreement
Payments which (a) is less than the sum of all
Agreement Payments and (b) results in aggregate Net
After Tax Receipts which are equal to or greater than
the Net After Tax Receipts which would result if the
aggregate Agreement Payments were any other amount less
than the sum of all Agreement Payments.
Anything in this Agreement to the contrary
notwithstanding, in the event Arthur Andersen LLP (the
"Accounting Firm") shall determine that receipt of all
Payments would subject Executive to tax under Section
4999 of the Code, the Accounting Firm shall determine
whether some amount of Payments would meet the
definition of a Reduced Amount. If the Accounting Firm
determined that there is a Reduced Amount, the
aggregate Payments shall be reduced to such Reduced
Amount. In the event that the Accounting Firm is
serving as accountant or auditor for the individual,
entity or group effecting the change in Control,
Executive shall appoint another nationally recognized
accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred
to as the Accounting Firm hereunder). All fees and
expenses of the Accounting Firm shall be borne solely
by the Company.
If the Accounting Firm determined that aggregate
Agreement Payments should be reduced to the Reduced
Amount, the Company shall promptly give Executive
notice to that effect and a copy of the detailed
calculation thereof, and Executive may then elect, in
his sole discretion, which and how much of the
Agreement Payments shall be eliminated or reduced (as
long as after such election the present value of the
aggregate Agreement Payments equals the Reduced
Amount), and shall advise the Company in writing of his
election within 10 days of his receipt of notice. If
no such election is made by Executive within such 10-
day period, the Company may elect which of such
Agreement Payments shall be eliminated or reduced (as
long as after such election the present value of the
aggregate Agreement Payments equals the Reduced Amount)
and shall notify Executive promptly of such election.
All determinations made by the Accounting Firm under
this Section shall be binding upon the Company and
Executive and shall be made within 60 days of a
termination of employment of Executive. As promptly as
practicable following such determination, the Company
shall pay to or distribute for the benefit of Executive
such Agreement Payments as are then due to Executive
under this Agreement and shall promptly pay to or
distribute for the benefit of Executive in the future
such Agreement Payments as become due to Executive
under this Agreement.
While it is the intention of the Company and Executive
to reduce the amounts payable or distributable to
Executive hereunder only if the aggregate Net After Tax
Receipts to Executive would thereby be increased as a
result of the uncertainty in the application of Section
4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is
possible that amounts will have been paid or
distributed by the Company to or for the benefits of
Executive pursuant to this Agreement which should not
have been so paid or distributed ("Overpayment") or
that additional amounts which will have not been paid
or distributed by the Company for the benefit of the
Executive pursuant to this Agreement could have been so
paid or distributed ("Underpayment"), in each case,
consistent with the calculation of the Reduced Amount
hereunder. In the event that the Accounting Firm,
based either upon the assertion of a deficiency by the
Internal Revenue Service against the Company or
Executive which the Accounting Firm believes has a high
probability of success determines that an Overpayment
has been made, any such Overpayment paid or distributed
by the Company to or for the benefit of Executive shall
be treated for all purposes as a loan to Executive
which Executive shall repay to the Company together
with interest at the applicable federal rate provided
for in Section 7872(f)(2) of the Code; provided,
however, that no such loan shall be deemed to have been
made and no amount shall be payable by the Executive to
the Company if an to the extent such deemed loan and
payment would not either reduce the amount on which the
Executive is subject to tax under Section 1 and Section
4999 of the Code or generate a refund of such taxes.
In the event that the Accounting Firm, based upon
controlling precedent or substantial authority,
determined that an Underpayment has occurred, any such
Underpayment shall be promptly paid by the Company to
or for the benefit of Executive together with interest
at the applicable federal rate provided for in Section
7872(f)(2) of the Code.
6. Full Settlement.
Except as otherwise provided herein, the Company's
obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right
or action which the Company may have against Executive
or others. In no event shall Executive be obligated to
seek other employment or take any other action by way
of mitigation of the amounts payable to Executive under
any of the provision of this Agreement and, except as
provided to Executive under any of the provisions of
this Agreement and, except as provided in Section
J(2)(b) of this Agreement, such amounts shall not be
reduced whether or not Executive obtains other
employment.
J. REMEDIES
Executive acknowledges that he will receive privileged
information from the Company and that he will have
substantial access to the Company's trade secrets, business
information and personnel data. In consideration of his
employment and the privilege of access to the Company's
trade secrets, information, business methods and procedures,
and personnel data, Executive acknowledges that the
restrictions contained within Sections D and E are
reasonable and necessary in order to preserve the Company's
legitimate interests and that any violation thereof would
result in irreparable injury to the Company for which
monetary damages would be an inadequate remedy. Therefore,
Executive acknowledges and agrees that in the event of any
violations thereof, the Company may seek from any court of
competent jurisdiction preliminary and permanent injunctive
relief as well as an equitable account of all Executive's
profits or benefits arising out of such violation, which
rights shall be cumulative and in addition to any other
action or remedies to which the Company may be entitled.
K. SUCCESSORS
(a) This Agreement is personal to Executive and
without the prior written consent of the Company shall not
be assignable by Executive otherwise than by will or the
laws of descent and distribution. This Agreement shall
inure to the benefit of and be enforceable by Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and
be binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly and agree
to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if
no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company as herein before
defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement
by operation of law, or otherwise. Failure of the Company
to obtain such agreement prior to the effectiveness of any
such succession shall be a breach hereof and shall entitle
Executive to terminate his employment for Good Reason.
L. NOTICES
All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other
party or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive:
S. Joseph Moore, Executive Vice President
Thomas Nelson, Inc.
Nelson Place at Elm Hill Pike
Nashville, Tennessee 37214-1000
If to the Company:
Thomas Nelson, Inc.
Nelson Place at Elm Hill Pike
Post Office Box 141000
Nashville, Tennessee 37214-1000
Attention: General Counsel
or to such other address as either party shall have
furnished to the other in writing in accordance herewith.
Notice and communications shall be effective when actually
received by the addressee.
M. MISCELLANEOUS
1. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or
enforceability of any other provision of the Agreement.
2. The Company may withhold from any amounts payable under
this Agreement such Federal, state or local taxes as
shall be required to be withheld pursuant to any
applicable law or regulation.
3. Executive's or the Company's failure to insist upon
strict compliance with any provision hereof or any
other provision of this Agreement or the failure to
assert any right Executive or the Company may have
hereunder, including, without
limitation, the right of the Executive to terminate
employment for Good Reason, shall not be deemed to be a
waiver of such provision or right or any other
promotion or right of this Agreement.
N. WAIVERABILITY OF PROVISIONS
No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is
agreed to in writing and is signed by Executive and an
executive officer of the Company. No waiver by either party
hereto of the party's compliance with or breach of, any
condition or provision herein to be performed by said party
shall constitute a simultaneous waiver of any other terms,
provisions or conditions herein nor shall such waiver by
either party constitute a continuing waiver of said
pertinent term, provision or condition subsequent thereto
unless such continuation of waiver is agreed to in writing
by the parties pursuant to the terms of this paragraph.
O. ENTIRE AGREEMENT
This Agreement, including attachments, contains the entire
agreement between the parties hereto and no agreements or
representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by
either party which are not set forth expressly in this
Agreement.
P. APPLICABLE LAW
The validity, interpretation, construction and performance
of this Agreement shall be governed by the laws of the State
of Tennessee. Any dispute regarding this Agreement or any
amendment or addendum hereto shall be resolved through an
arbitration hearing held in accordance with the procedures
of the American Arbitration Association. Such arbitration
hearing shall be held in Davidson County, Tennessee and the
arbitrators' decision shall be final, binding and
nonappealable by the parties hereto. The cost of any such
litigation to enforce all or part of this Agreement,
including, without limitation, court costs and attorney's
fees, shall be paid by the party found to be in default
hereunder or who is otherwise found to be acting or to have
acted contrary to the terms hereof.
IN WITNESS WHEREOF, Executive and the Company have
executed this Agreement as of the day and year first written
above.
ACCEPTED BY: THOMAS NELSON, INC.
/s/ S. Joseph Moore /s/ Joe L. Powers
- ------------------------- ----------------------
S. Joseph Moore Name
Executive Vice President
Executive Vice President
----------------------
Title
May 10, 1996 May 10, 1996
- ------------------------- ----------------------
Date Date
/dld
EXHIBIT 10.9
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and
entered into as of May 10, 1996, by and between Thomas Nelson,
Inc., a Tennessee corporation (the "Company"), and Joe L. Powers
("Executive").
Executive is currently employed by the Company as Executive
Vice President. Executive has served in a senior executive
capacity with the Company for many years thereby acquiring an
intimate knowledge of the business and affairs of the Company and
has demonstrated his ability and has performed valuable services
for the Company. The Company desires to incentivize the
Executive to remain in its employ for the full term of this
Agreement and to contractually protect the Company from the
misuse of proprietary, confidential information and from the
Executive competing with the Company. Accordingly, the Company,
hereby offers to enter into this Agreement with Executive.
The Company's Board of Directors (the "Board") considers the
establishment and continuity of competent management to be
essential to protecting and enhancing the best interests of the
Company and its shareholders. Thus, the Board has determined
that it is appropriate to provide Executive with compensation and
benefits arrangements upon a Change in Control (as defined below)
which ensure that the compensation and benefits expectations of
Executive will be satisfied and which are competitive with those
of other corporations.
Therefore, the Company wishes to secure the services of
Executive for a period to and including March 31, 1999 on the
terms and conditions set forth below, and Executive is willing to
enter into this Agreement. In consideration of the premises
hereof and of the mutual promises and agreements contained
herein, the parties therefore agree as follows:
A. TERM OF AGREEMENT
1. Original Term. This Agreement shall be effective as of
the date first set forth above (the "Effective Date").
The Company shall employ Executive as Executive Vice
President of the Company for a term (the "Employment
Period") commencing on the Effective Date and
continuing until March 31, 1999 unless sooner
terminated pursuant to Section F or H hereof.
2. Renewals. The Employment Period shall automatically be
extended for additional one-year periods unless written
notice of nonextension is given in writing by either
party no less than 60 days prior to the scheduled
expiration date.
B. POSITION AND DUTIES
During the Employment Period, subject to the power of the
Board of Directors to elect and remove officers, Executive
shall serve as Executive Vice President of the Company.
Executive shall have the authority, functions, duties,
powers and responsibilities for Executive's corporate
offices and positions which are set forth in the Company's
bylaws from time to time in effect and such other authority,
functions, duties, powers and responsibilities as the Board
of Directors or President of the Company may from time to
time prescribe or delegate to Executive, in all cases to be
consistent with Executive's corporate offices and positions.
Executive agrees, subject to his election or appointment as
such and without additional compensation, to serve during
the Employment Period in such particular additional offices
of comparable stature and responsibility to which he may be
elected from time to time in the Company and its
subsidiaries and to serve as a Director of any subsidiary of
the Company. During the Employment Period, (i) Executive's
services shall be rendered on a full-time, exclusive basis,
(ii) he will apply on a full-time basis all of his skill and
experience to the performance of his duties in such
employment and shall report only to the Company's President,
(iii) he shall have no other employment and, without the
prior written consent of the Compensation Committee of the
Company's Board of Directors, no outside business activities
which require the devotion of substantial amounts of
Executive's time, and (iv) unless Executive otherwise
consents in writing, the headquarters for the performance of
his services shall be the principal executive offices of the
Company in Nashville, Tennessee, subject to such reasonable
travel as the performance of his duties in the business of
the Company may require. Notwithstanding the foregoing
sentence, Executive may devote a reasonable amount of his
time to civic, community, charitable, or passive investment
activities and to serve as a director and/or officer of
personally owned corporations and to other types of
business or public activities not expressly mentioned in
this paragraph.
C. COMPENSATION
1. Base Salary. Executive shall be paid an annual base
salary as set forth on Exhibit A hereto, subject to
such increase as may from time to time be approved by
the Compensation Committee of the Company's Board of
Directors; provided, however, that following any such
increase in Executive's base salary by the Compensation
Committee, such base salary shall not be reduced
without the prior written consent of Executive. Base
salary shall be payable according to the Company's
regular practice for salary payment.
2. Incentive Compensation. Executive shall be eligible to
receive annual incentive and bonus compensation, shall
be eligible to participate in the Company's long-term
equity-based incentive compensation plans, including,
without limitation, the Company's 1986 Executive Stock
Purchase Plan, 1986 Stock Incentive Plan, and Amended
and Restated 1992 Employee Stock Incentive Plan, and in
all incentive, gainsharing, savings and retirement
plans, practices, policies and programs applicable to
other peer executives of the Company and its
subsidiaries, but in no event shall such plans,
practices, policies and programs provide Executive with
incentive, gainsharing, savings and retirement benefits
opportunities, in each case, less favorable, in the
aggregate, than the most favorable of those provided
by the Company and its subsidiaries for Executive under
such plans, practices, policies and programs as in
effect at any time during the 90-day period immediately
preceding the date (the "Change in Control Date") on
which a Change in Control (as defined below) occurs, or
if more favorable to Executive, those provided
generally at any time on or after the Change in Control
Date to other peer executives of the Company.
3. Other Benefits. During the Employment Period Executive
shall be entitled to all of the fringe benefits which
the Company and its subsidiaries make available to
senior management if and to the extent that the
Executive is eligible to participate in accordance with
the terms of the benefit plans or policies, provided,
however, that the termination benefits hereunder are in
lieu of any severance benefits to which the Executive
would otherwise be entitled. Such benefits may
include, but are not limited to, (i) medical, hospital,
dental, disability and life insurance plans and
coverages, (ii) pension, profit sharing, 401(k),
employee stock ownership plan, deferred compensation
and similar plans or arrangements, and (iii) any other
benefit plan, program or arrangement, including those
relating to automobiles, clubs, vacations, and expense
reimbursement, which the Company and its subsidiaries
from time to time may make available either to their
employees generally or to some or all of their senior
executive officers, but in no event shall such plans,
practices, policies and arrangements provide benefits
which are less favorable, in the aggregate, than the
most favorable of such plans, practices, policies and
arrangements in effect at any time during the 90-day
period immediately preceding the Change in Control Date
or if more favorable to Executive, those provided
generally at any time on or after the Change in Control
Date to other senior executives of the Company and its
subsidiaries.
D. NONDISCLOSURE AND NON-USE OF CONFIDENTIAL INFORMATION
1. Confidential Information.
(a) Executive acknowledges and agrees that the
information, observations and data obtained by him
during the course of his performance under the
Agreement and the Prior Agreement concerning the
business or affairs of the Company and its subsidiaries
and affiliates is the property of the Company or such
subsidiary or affiliate, as the case may be.
Therefore, during the Employment Period and at all
times thereafter, Executive (i) shall hold in a
fiduciary capacity for the benefit of the Company, its
subsidiaries and affiliates, and (ii) without the prior
written consent of the Board of Directors or except to
the extent required by law (and upon prompt written
notice of such requirement to the Company and such
subsidiary or affiliate), shall not directly or
indirectly, divulge, furnish, disclose, use or make
accessible for any purpose (except in the course of his
employment under this Agreement and in furtherance of
the business of the Company and its subsidiaries and
affiliates) any Confidential Information (as defined
below). Executive acknowledges and agrees that the
disclosure of any Confidential Information will be
damaging or harmful to the business activities of the
Company, its subsidiaries and affiliates, and that such
disclosure can direct or divert corporate
opportunities, product sales and/or profits away from
the Company, its subsidiaries or affiliates. In the
event Executive shall be required by law to make any
disclosure as set forth above, Executive shall promptly
notify the Company and any subsidiary or affiliate
which may reasonably be affected by such disclosure and
shall cooperate with the Company, such subsidiary and
such affiliate to preserve in full the confidentiality
of all Confidential Information of the Company, such
subsidiary or such affiliate. Confidential Information
shall be considered confidential or proprietary unless
and to the extent that such Confidential Information
become generally known to and available for use by the
public other than as a result of any act or omission to
act by Executive. Executive will take all appropriate
steps to safeguard Confidential Information and to
protect it against disclosure, misuse, espionage, loss
and theft.
(b) As used in this Agreement, the term
"Confidential Information" means information that is
not generally known to the public and that is used,
developed or obtained by the Company or any of its
subsidiaries and affiliates in connection with the
Company's or such subsidiary's or affiliate's business,
including but not limited to (i) products or services,
(ii) fees, costs and pricing structures, (iii) designs,
plans or manufacturing data, (iv) analysis,
observations or data, (v) drawings, artwork,
photographs, videotapes, audio tapes, other recordings,
and reports, (vi) computer software, including
operating systems, applications program listings, and
computer files, (vii) flow charts, manuals and
documentation, (viii) data bases, (ix) accounting and
business methods, (x) inventions, devices, new
developments, methods and processes, whether patentable
or unpatentable and whether or not reduced to practice,
(xi) customers, clients, authors or artist and
customer, client, author or artist lists, (xii) other
copyrightable works, (xiii) all technology and trade
secrets, (xiv) intellectual property, unique business
information, or confidential or proprietary
information, and (xv) all similar and related
information in whatever form. Confidential Information
will not include any information that has been
published in a form generally available to the public
prior to the date Executive proposes to disclose or use
such information. Information will not be deemed to
have been published merely because individual portions
of the information have been separately published, but
only if all material features comprising such
information have been published in combination.
2. Product Development. In the event that Executive as
part of his activities on behalf of the Company
generates, authors or contributes, individually or with
the assistance of others, to any invention, design, new
development, device, product, method or process
(whether or not patentable or reduced to practice or
comprising Confidential Information), any copyrightable
work (whether or not comprising Confidential
Information) or any other form of Confidential
Information relating directly or indirectly to the
business of the Company or any of its subsidiaries or
affiliates as now or hereafter conducted (collectively,
the "Intellectual Property"), Executive acknowledges
that such Intellectual Property is the exclusive
property of the Company and hereby assigns all right,
title and interest in and to such Intellectual
Property to the Company. Any copyrightable work
prepared in whole or in part by Executive will be
deemed "a work made for hire" under Section 201(b) of
the 1976 Copyright Act, and the Company will own all of
the rights comprised in the copyright therein.
Executive will cooperate with the Company in all
reasonable respects to protect the Company's interests
in and rights to such Intellectual Property (including,
without limitation, providing reasonable assistance in
securing patent protection and copyright registrations
and executing all documents as reasonably requested by
the Company whether such requests occur prior to or
after termination of Executive's employment with the
Company).
3. Delivery of Materials Upon Termination of Employment.
As requested by the Company from time to time and upon
the termination of the Executive's employment with the
Company for any reason, Executive will promptly deliver
to the Company all copies and embodiments, in whatever
form, of all Confidential Information or Intellectual
Property in Executive's possession or within his
control (including, but not limited to, written
records, memoranda, notes, photographs, plans, records,
video tapes, audiotapes, other recordings, reports,
manuals, notebooks, documentation, program listings,
flow charts, magnetic media, disks, diskettes, tapes
and all other materials containing any Confidential
Information or Intellectual Property) irrespective of
the location or form of such material and, if requested
by the Company, will provide the Company with written
confirmation that all such materials have been
delivered to the Company.
E. NONCOMPETITION
1. Covenant Not to Compete. Executive acknowledges and
agrees with the Company that Executive's services to
the Company and its subsidiaries are unique in nature
and that the Company and its subsidiaries would be
irreparably damaged if Executive were to provide
similar services to any person or entity competing with
the Company or any of its subsidiaries, or engaged in
similar business. Executive accordingly covenants and
agrees with the Company that during the Employment
Period and for two years following the termination of
Executive's employment with the Company for any reason
(the "Noncompetition Period"), Executive will not,
directly or indirectly, either for himself or for any
other individual, corporation, partnership, joint
venture or other entity, participate in (as defined
below) any business (including, without limitation, any
division, group or franchise of a larger organization)
competing with any of the businesses then conducted
(or, to the knowledge of Executive, planned to be
conducted within two years) by the Company or any of
its successors or then subsidiaries within any
geographical area in which the Company or its
subsidiaries engage or plan within two years to engage
in any such businesses. For purposes of this
Agreement, the term "participate in" will include,
without limitation, having any direct or indirect
interest in any corporation, partnership, joint venture
or other entity, whether as a sole proprietor, owner,
stockholder, partner, joint venturer, creditor or
otherwise, or rendering any direct or indirect service
or assistance to any individual, corporation,
partnership, joint venture and other business entity
(whether as a director, officer, manager, supervisor,
employee, agent, consultant or otherwise).
2. Nonsolicitation and Noninterference. During the
Noncompetition Period, Executive will not directly or
indirectly, on behalf of himself or another entity, (i)
induce, attempt to induce, or assist others to induce
any artist, composer, songwriter, lyricist, musician,
author, writer, editor, programmer, technician, cable
operator, employee, consultant, customer, supplier,
licensee or other person or entity to terminate its,
his or her association with the Company or its
subsidiaries, or to cease doing business with the
Company or its subsidiaries, or do anything to
interfere with the relationship between the Company or
its subsidiaries, on the one hand, and any artist,
composer, songwriter, lyricist, musician, author,
writer, editor, programmer, technician, cable operator,
employee, consultant or other person or entity doing
business and/or under contract with the Company or any
of its subsidiaries, or with whom the Company or any of
its subsidiaries is then negotiating, or with whom the
Company or any of its subsidiaries enters into any
contract or agreement during the Noncompetition Period,
or (ii) hire, without the written consent of the
Company, any person who was an employee of the Company
or any of its subsidiaries at any time within twelve
(12) months of the termination of the Employment
Period.
3. Limitations.
(a) Nothing contained in this Section E shall
prevent Executive from owning up to a 5% interest in
any corporation or entity having one or more classes of
its securities listed on a national securities exchange
or market, or publicly traded in the over-the-counter
market, provided that Executive is not actively
involved in any manner whatsoever in the operation or
management of such corporation or entity.
(b) If under the circumstances existing at the
time of enforcement of this Section E, the period,
scope or geographic area described in this Section E
shall be found or held to be unreasonable, the parties
hereto agree that the maximum period, scope or
geographic area reasonable under the circumstances
shall be substituted for the stated period, scope or
geographic area.
F. TERMINATION OF EMPLOYMENT (OTHER THAN SUBSEQUENT TO A CHANGE
IN CONTROL).
1. Applicability. This Section F shall apply only to
termination of the employment Period prior to the
occurrence of a Change in Control (as defined below)
during the Employment Period. Termination of the
Employment Period following the occurrence of a Change
in Control shall be governed by Section H.
2. Events of Termination and Related Payments.
(a) Disability. In the event that during the
Employment Period Executive should become Disabled,
the Company (acting by resolution of the Board) may
elect to terminate the Employment Period by written
notice to Executive, his guardian or personal
representative and Executive, his guardian or personal
representative, as the case may be, shall be entitled
to receive (i) full compensation pursuant to Section C
at his then base salary rate from the date of
termination of employment continuing for the lesser of
(a) one year following the date of such notice and (b)
the remainder of the then effective Employment Period,
and (ii) bonus for the calendar year in which
Executive's termination of employment occurs as
determined in good faith by the Compensation Committee
of the Board of Directors in its sole discretion.
Notwithstanding the foregoing provisions of this
Section F(2)(a), the payments provided herein with
respect to any period of Disability shall be reduced by
the amount of any benefits payable to Executive, his
guardian or personal representative, as the case may
be, during such period under any disability or similar
plan or program of the Company of any of its
subsidiaries in respect of Executive's Disability.
(b) Death. In the event of Executive's death
during the Employment Period, his personal
representative shall be entitled to receive any
compensation pursuant to Section C which is accrued and
unpaid as of the date of his death.
(c) Termination Due to Serious Misconduct. In
the event that during the Employment Period Executive
should commit Serious Misconduct (as defined below),
the Company (acting by resolution of the Board) may
elect to terminate the Employment Period by written
notice to Executive, and Executive shall be entitled
only to any compensation and benefits which are vested
but unpaid as of the date of termination of employment.
(d) Termination for Reasons Other Than Death,
Disability, Serious Misconduct or Voluntary Action by
the Executive. In the event that the Employment Period
is terminated at the option of the Company for any
reason other than for serious misconduct, death,
disability, or voluntary action by the Executive, the
Executive shall be paid a lump sum payment equal to the
lesser of (1) current base salary and target bonus for
the remainder of the term hereunder, and (2) a sum
equal to twice current base salary and target bonus,
and the Company shall pay such sum to Executive within
thirty (30) business days following such termination.
Executive's voluntary resignation resulting from
harassment, unwarranted demotion and/or material
diminution of responsibilities shall be governed by the
terms of this provision and shall not be considered a
voluntary termination as defined in subparagraph (e)
hereunder. In the event of such termination, the
Company shall reimburse the Executive for the premium
paid by the Executive for the continued coverage for
the Executive (and any dependents of the Executive
covered by the Company's health care plans as of the
date of termination) under the Company's health care
plan pursuant to COBRA (or any of the mandatory health
care continuation law then in effect), such coverage
being substantially similar to that provided the
Executive on the date of his termination, but such
reimbursement shall be only for a period which is of
(1) the remainder of the term hereof, and (2) two years
from the date of termination.
(e) Voluntary Termination by Executive. In the
event that Executive, for reasons other than those set
forth in subparagraph (d) hereinabove, voluntarily
terminates his employment with the Company prior to the
end of the Employment Period, the Company shall pay any
earned but unpaid portion of Executive's base salary
and incentive compensation through the date of his
termination provided that the Executive is in full
compliance with the provisions of Sections D and E
hereof.
3. Definition of Certain Terms.
(a) "Disabled" means such physical or mental
condition of Executive as is determined by the
Company's Board of Directors in its sole discretion to
be expected to continue indefinitely and which renders
him incapable of performing any substantial portion of
the services contemplated hereby (as confirmed by
competent medical evidence).
(b) "Serious Misconduct" means embezzlement or
misappropriation of corporate funds, other acts of
dishonesty or reckless or intentional misconduct which
is materially harmful to the business or reputation of
the Company or its subsidiaries, the conviction of a
felony, refusal to perform or disregard of the duties
properly assigned by the Chief Executive of the Company
or the Board, or a material breach of any of the
provisions of Sections D or E above or of any of the
other provisions of this Agreement which violations are
not cured within sixty (60) days of written notice to
the Executive of the breach.
4. Effect of Breach of Noncompetition of Nondisclosure
Provisions. In the event Executive materially breaches
or otherwise fails to comply in any material respect
with the provisions of Sections D or E above, then, in
addition to any other remedies provided herein or at
law on in equity, the Company shall not have any
further obligation to make any additional payments to
Executive pursuant to this Agreement. Termination of
such payments pursuant to the preceding sentence shall
not relieve Executive's obligations pursuant to
Sections D or E above.
G. CHANGE IN CONTROL
For purposes hereof, a "Change in Control" shall have
occurred if:
(1) any "person" other than any trustee or other
fiduciary holding securities under an employee benefit
plan of the Company within the meaning of Section 14(d)
of the Securities Exchange Act of 1934 (the "Exchange
Act") becomes the "beneficial owner" as defined in Rule
13D-3 thereunder, directly or indirectly, of 20% or
more of either the then outstanding shares of the
Company's Common Stock (the "Outstanding Company Common
Stock") or 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 the Company or its subsidiaries, or
by Sam Moore, S. Joseph Moore, members of their
families, relatives, certain family partnerships,
trusts associated with the Moore family and other
entities who have as of July 1, 1995 jointly filed a
Statement on Schedule 13D under the Exchange Act, or by
any reconstituted version of such filing group or any
corporation with respect to which, following such
acquisition, more than 80% of, respectively, the then
outstanding share 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 the
individuals and entities who were the beneficial
owners, respectively, of the Outstanding 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 in Control;
(2) during any two-year period, individuals who
constitute the Board of Directors of the Company (the
"Incumbent Board") as of the beginning of the period
cease for any reason to constitute at least a majority
of the Board, provided that any individual becoming a
director during such period whose election or
nomination for election by the Company's stockholders
was approved by an affirmative vote of at least two-
thirds of the directors then comprising the Incumbent
Board (either by a specific vote or by approval of the
proxy statement of the Company in which such person is
named as a nominee for director without objection to
such nomination) shall be, for the purposes of this
subparagraph (b), considered as though person 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 other actual or threatened
solicitation of proxies or consents; or
(3) approval by the shareholders of the Company
of a reorganization, merger or consolidation, in each
case, with respect to which all or substantially all of
the individuals and entities who were the respective
beneficial owners of the Common Stock and voting
securities of the Company immediately prior to such
reorganization, merger or consolidation do not,
following such reorganization, merger or consolidation,
beneficially own, directly or indirectly, more than 80%
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 such
reorganization, merger or consolidation, or a complete
liquidation or dissolution of the Company or of the
sale or other disposition of all or substantially all
of the assets of the Company.
Notwithstanding the foregoing, a Change in Control for
purposes of this Agreement shall not be considered to occur
as a result of a transaction which is approved by the
Company's Board of Directors in advance of the transaction
and prior to the consummation of the transaction if such
transaction is specifically excluded by the Board of
Directors from the definition of "Change of Control" for
purposes of this Agreement and such exclusion is approved by
an affirmative vote of at least two-thirds of the directors
then comprising the Incumbent Board. Furthermore, anything
in this Agreement to the contrary notwithstanding, if
Executive's employment with the Company is terminated prior
to the date on which a Change in Control occurs, and if it
is reasonably demonstrated by Executive that such
termination of employment (1) was at the request of a third
party who has taken steps reasonably calculated to effect
the Change in Control or (2) otherwise arose in connection
with or in anticipation of the Change in Control, then for
all purposes of this Agreement, a Change in Control shall be
considered to have occurred immediately prior to Executive's
employment termination date.
In the event the Board adopts any plan or takes any action
which, if consummated, would result in a Change in Control
of the Company, the Company shall take any action determined
by the Board to be necessary or appropriate to ensure the
prompt payment when due of any amounts which may thereafter
become payable hereunder upon termination by the Company of
Executive during the Employment Period, including but not
limited to the placement of sufficient funds to pay all such
amounts in an escrow account with a bank or other fiduciary
institution.
On the Change in Control Date, to the extent permitted by
law, regardless of date or grant, all stock options
previously granted shall be come exercisable and all
restrictions on restricted stock shall lapse. All
previously deferred compensation (including interest or
earnings) shall, at Executive's election, be paid to
Executive within 10 days of the Change in Control Date.
H. TERMINATION FOLLOWING CHANGE IN CONTROL
Following a Change in Control of the Company, the provisions
of this Section H shall apply exclusively with respect to
(i) the termination of Executive's employment during the
Employment Period and (ii) amounts payable to Executive upon
such termination.
If a Change in Control of the Company shall have occurred,
Executive shall be entitled to the benefits provided herein
upon Executive's subsequent termination of employment during
the Employment Period, unless such termination is (i)
because of Executive's death, (ii) by the Company because of
Executive's Disability or Serious Misconduct or (iii) by
Executive other than for Good Reason. For purposes hereof,
"Good Reason" shall mean the occurrence or continuation,
without consent of Executive, after a Change in Control of
the Company of any of the following events within 24 months
after the Change in Control Date:
(1) the assignment to Executive of any duties
materially inconsistent with the position with the
Company that Executive held immediately prior to the
Change in Control of the Company, or an adverse change
in the status, position or conditions of Executive's
employment or the nature of Executive's
responsibilities in effect immediately prior to such
Change in Control, or any removal of Executive from or
any failure to re-elect Executive to any of such
positions, except in connection with the termination of
his employment by the Company for Serious Misconduct,
Disability or death or by Executive other than for Good
Reason;
(2) a reduction by the Company in Executive's
annual base salary as in effect immediately prior to
such Change in Control which is not consistent with
general compensation reduction for a Senior Executive
of the Company;
(3) the relocation of Executive' principal office
to a location outside a 25 mile radius from Executive's
principal office immediately prior to such Change in
Control, except for required travel on the Company's
business to an extent substantially consistent with
Executive's business travel obligations immediately
prior to such Change in Control;
(4) the failure by the Company to pay to
Executive any portion of Executive's salary within
seven days of the date such salary is due;
(5) the failure by the Company to continue in
effect any benefit or compensation plan in which
Executive participates immediately prior to the Change
in Control which is material to Executive's total
compensation, including but not limited to the stock
option, employee stock ownership, bonus, insurance,
disability and vacation plans which the Company
currently has or any substitute or additional plans
adopted prior to the Change in Control, unless an
equitable arrangement (embodied in an ongoing
substitute or alternative plan or plans) has been made
with respect to such plan, or the failure by the
Company to continue Executive's participation therein
(or in such substitute or alternative plan) on a basis
not materially less favorable, both in terms of the
amount of benefits provided and the level of
Executive's participation relative to other
participants, as in existence immediately prior to such
Change in Control; or
(6) the failure of the Company to obtain an
agreement from any successor to assume and agree to
perform this Agreement, as contemplated herein.
Executive's right to terminate his employment for Good
Reason pursuant to this section shall not be affected by
Executive's incapacity due to physical or mental illness.
Executive's continued employment shall not constitute
consent to, or a waiver of with respect to, any circumstance
constituting Good Reason hereunder. In the event of any
dispute between Executive and the Company as to whether any
event constituting Good Reason shall have occurred, the
burden of proving by clear and convincing evidence that such
event does not constitute Good Reason shall rest on the
Company.
Any termination of Executive's employment by the Company or
by Executive pursuant to this Section H shall be
communicated by written notice of termination (the "Notice
of Termination") to the other party hereto, and shall
indicate the specific termination provision in the Agreement
relied upon and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for
termination of Executive's employment. For the purposes
hereof, "Date of Termination" shall mean (i) if Executive's
employment is terminated for Disability, 30 days after
Notice of Termination is given (provided that Executive
shall not have returned to the full-time performance of his
duties during such 30 days) or (ii) if Executive's
employment is terminated for any other reason other than
death, the date specified in the Notice of Termination.
I. PAYMENTS UPON TERMINATION SUBSEQUENT TO CHANGE IN CONTROL
Following a Change in Control, Executive shall be entitled
to the following benefits upon termination of employment
during the 36-month period following the Change in Control
Date:
1. Death, Disability, Serious Misconduct or Termination by
Executive Other Than for Good Reason. Following a
termination of Executive's employment because of
Executive's death or by the Company because of
Executive's Disability or Serious Misconduct or by
Executive other than for Good Reason, the Company's
only remaining obligations under this Agreement shall
be to pay any base salary earned through the Date of
Termination plus the amount of any compensation
previously deferred by Executive, in each case to the
extent theretofore unpaid, and Executive's benefits
shall be limited to vested benefits provided under any
retirement, insurance and other benefit programs of the
Company then in effect determined in accordance with
the terms thereof.
2. Other. If the employment shall be terminated by
Executive for Good Reason or by the Company other than
for death, Disability or Serious Misconduct, Executive
shall be entitled to the amounts provided below, such
amounts to be paid in cash in a lump sum no later than
the tenth business day following the Date of
Termination:
(a) the Company shall pay to Executive his full
base salary, and earned or accrued, but unpaid vacation
pay, through the Date of Termination at the rate in
effect at such time, plus all other amounts, including
but not limited to incentive compensation for a past
fiscal year which has not yet been awarded or paid to
Executive under incentive plans, programs or
arrangements, including any deferred awards (it being
understood that with respect to any incentive
compensation which has not been awarded, the individual
performance component of the award shall be determined
on at least the basis that Executive has met all
applicable standards) to which Executive is entitled
under any compensation or benefit plan of the Company;
(b) a lump-sum severance payment (the "Severance
Payment") equal to two (2) times the sum of (i)
Executive's annual base salary as of the date of
termination of employment and (ii) any cash bonus
received by Executive in the immediately preceding
fiscal year; provided, that such amount shall be paid
in lieu of, and Executive hereby waives the right to
receive, any other amount of severance relating to
salary or bonus continuation to be received by
Executive upon termination of employment of Executive
under any severance plan, policy or arrangement of the
Company;
(c) at the election of Executive, the cash-out of
any or all of Executive's stock or stock-based awards
granted pursuant to both the Thomas Nelson, Inc. 1986
Stock Incentive Plan and the 1992 Employee Stock
Incentive Plan at the "Change in Control Price"
provisions set for therein.
3. Legal Expenses. In addition to any other amounts
payable hereunder, the Company also shall reimburse
Executive for all legal fees and expenses reasonably
incurred by Executive as a result of any termination of
the Employment Period (including all such fees and
expenses, if any, incurred in contesting or disputing
any right or benefit provided by this Agreement or in
connection with any tax audit or proceeding to the
extent attributable to the application of Section 4999
of the Internal Revenue Code of 1986, as amended (the
"Code"), to any payment of benefit provided hereunder).
4. Continuation of Benefits. For the remainder of the
Employment Period, or such longer period as any plan,
program, practice or policy may provide the Company
shall continue benefits to Executive and/or Executive's
family at least equal to those which would have been
provided to them in accordance with the plan, programs,
practices and policies described in Sections C(3) and
(4) of this Agreement if Executive's employment had not
been terminated in accordance with the most favorable
plans, practices, programs or policies of the Company
the its subsidiaries applicable generally to other peer
executives and their families during the 90-day period
immediately preceding the Change in Control Date or, if
more favorable to Executive, as in effect generally at
any time thereafter with respect to other peer
executives of the Company and its subsidiaries and
their families; provided, however, that if Executive
becomes reemployed with another employer and is
eligible to receive medical or other welfare benefits
under another employer provided plan, the medical and
other welfare benefits described herein shall be
secondary to those provided under such other plan
during such applicable period of eligibility. For
purposes of determining eligibility of Executive for
retiree benefits pursuant to such plans, practices,
programs and policies, Executive shall be considered to
have remained employed until the end of the Employment
Period and to have retired on the last day of the
Employment Period.
To the extent not theretofore paid to provided, the
Company shall timely pay or provide to Executive any
other amounts or benefits required to be paid or
provided or which Executive is eligible to receive
pursuant to this Agreement under any plan, program,
policy or practice or contract or agreement of the
Company and its subsidiaries, but excluding solely
purposes of this Section J(4) amounts waived by
Executive pursuant to Section J(2)(b).
5. Certain Reduction in Payments by the Company.
For purposes of this Section, (i) a "Payment" shall
mean any payment or distribution in the nature of
compensation to or for the benefit of Executive,
whether paid or payable pursuant to this Agreement or
otherwise; (ii) an "Agreement Payment" shall mean a
Payment paid or payable pursuant to this Agreement
(disregarding this Section); (iii) "Net After Tax
Receipt" shall mean the Present Value (as defined
below) of a Payment net of all taxes imposed on
Executive with respect thereto under Sections 1 and
4999 of the Code, determined by applying the highest
marginal rate under Section 1 of the Code which applied
to Executive's taxable income for the immediately
preceding taxable year' (iv) "Present Value" shall mean
such value determined in accordance with Section
280G(d)(4) of the Code; and (v) "Reduced Amount" shall
mean the smallest aggregate amount of Agreement
Payments which (a) is less than the sum of all
Agreement Payments and (b) results in aggregate Net
After Tax Receipts which are equal to or greater than
the Net After Tax Receipts which would result if the
aggregate Agreement Payments were any other amount less
than the sum of all Agreement Payments.
Anything in this Agreement to the contrary
notwithstanding, in the event Arthur Andersen LLP (the
"Accounting Firm") shall determine that receipt of all
Payments would subject Executive to tax under Section
4999 of the Code, the Accounting Firm shall determine
whether some amount of Payments would meet the
definition of a Reduced Amount. If the Accounting Firm
determined that there is a Reduced Amount, the
aggregate Payments shall be reduced to such Reduced
Amount. In the event that the Accounting Firm is
serving as accountant or auditor for the individual,
entity or group effecting the change in Control,
Executive shall appoint another nationally recognized
accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred
to as the Accounting Firm hereunder). All fees and
expenses of the Accounting Firm shall be borne solely
by the Company.
If the Accounting Firm determined that aggregate
Agreement Payments should be reduced to the Reduced
Amount, the Company shall promptly give Executive
notice to that effect and a copy of the detailed
calculation thereof, and Executive may then elect, in
his sole discretion, which and how much of the
Agreement Payments shall be eliminated or reduced (as
long as after such election the present value of the
aggregate Agreement Payments equals the Reduced
Amount), and shall advise the Company in writing of his
election within 10 days of his receipt of notice. If
no such election is made by Executive within such 10-
day period, the Company may elect which of such
Agreement Payments shall be eliminated or reduced (as
long as after such election the present value of the
aggregate Agreement Payments equals the Reduced Amount)
and shall notify Executive promptly of such election.
All determinations made by the Accounting Firm under
this Section shall be binding upon the Company and
Executive and shall be made within 60 days of a
termination of employment of Executive. As promptly as
practicable following such determination, the Company
shall pay to or distribute for the benefit of Executive
such Agreement Payments as are then due to Executive
under this Agreement and shall promptly pay to or
distribute for the benefit of Executive in the future
such Agreement Payments as become due to Executive
under this Agreement.
While it is the intention of the Company and Executive
to reduce the amounts payable or distributable to
Executive hereunder only if the aggregate Net After Tax
Receipts to Executive would thereby be increased as a
result of the uncertainty in the application of Section
4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is
possible that amounts will have been paid or
distributed by the Company to or for the benefits of
Executive pursuant to this Agreement which should not
have been so paid or distributed ("Overpayment") or
that additional amounts which will have not been paid
or distributed by the Company for the benefit of the
Executive pursuant to this Agreement could have been so
paid or distributed ("Underpayment"), in each case,
consistent with the calculation of the Reduced Amount
hereunder. In the event that the Accounting Firm,
based either upon the assertion of a deficiency by the
Internal Revenue Service against the Company or
Executive which the Accounting Firm believes has a high
probability of success determines that an Overpayment
has been made, any such Overpayment paid or distributed
by the Company to or for the benefit of Executive shall
be treated for all purposes as a loan to Executive
which Executive shall repay to the Company together
with interest at the applicable federal rate provided
for in Section 7872(f)(2) of the Code; provided,
however, that no such loan shall be deemed to have been
made and no amount shall be payable by the Executive to
the Company if an to the extent such deemed loan and
payment would not either reduce the amount on which the
Executive is subject to tax under Section 1 and Section
4999 of the Code or generate a refund of such taxes.
In the event that the Accounting Firm, based upon
controlling precedent or substantial authority,
determined that an Underpayment has occurred, any such
Underpayment shall be promptly paid by the Company to
or for the benefit of Executive together with interest
at the applicable federal rate provided for in Section
7872(f)(2) of the Code.
6. Full Settlement.
Except as otherwise provided herein, the Company's
obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right
or action which the Company may have against Executive
or others. In no event shall Executive be obligated to
seek other employment or take any other action by way
of mitigation of the amounts payable to Executive under
any of the provision of this Agreement and, except as
provided to Executive under any of the provisions of
this Agreement and, except as provided in Section
J(2)(b) of this Agreement, such amounts shall not be
reduced whether or not Executive obtains other
employment.
J. REMEDIES
Executive acknowledges that he will receive privileged
information from the Company and that he will have
substantial access to the Company's trade secrets, business
information and personnel data. In consideration of his
employment and the privilege of access to the Company's
trade secrets, information, business methods and procedures,
and personnel data, Executive acknowledges that the
restrictions contained within Sections D and E are
reasonable and necessary in order to preserve the Company's
legitimate interests and that any violation thereof would
result in irreparable injury to the Company for which
monetary damages would be an inadequate remedy. Therefore,
Executive acknowledges and agrees that in the event of any
violations thereof, the Company may seek from any court of
competent jurisdiction preliminary and permanent injunctive
relief as well as an equitable account of all Executive's
profits or benefits arising out of such violation, which
rights shall be cumulative and in addition to any other
action or remedies to which the Company may be entitled.
K. SUCCESSORS
(a) This Agreement is personal to Executive and
without the prior written consent of the Company shall not
be assignable by Executive otherwise than by will or the
laws of descent and distribution. This Agreement shall
inure to the benefit of and be enforceable by Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and
be binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly and agree
to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if
no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company as herein before
defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement
by operation of law, or otherwise. Failure of the Company
to obtain such agreement prior to the effectiveness of any
such succession shall be a breach hereof and shall entitle
Executive to terminate his employment for Good Reason.
L. NOTICES
All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other
party or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive:
Joe L. Powers, Executive Vice President
Thomas Nelson, Inc.
Nelson Place at Elm Hill Pike
Nashville, Tennessee 37214-1000
If to the Company:
Thomas Nelson, Inc.
Nelson Place at Elm Hill Pike
Post Office Box 141000
Nashville, Tennessee 37214-1000
Attention: General Counsel
or to such other address as either party shall have
furnished to the other in writing in accordance herewith.
Notice and communications shall be effective when actually
received by the addressee.
M. MISCELLANEOUS
1. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or
enforceability of any other provision of the Agreement.
2. The Company may withhold from any amounts payable under
this Agreement such Federal, state or local taxes as
shall be required to be withheld pursuant to any
applicable law or regulation.
3. Executive's or the Company's failure to insist upon
strict compliance with any provision hereof or any
other provision of this Agreement or the failure to
assert any right Executive or the Company may have
hereunder, including, without
limitation, the right of the Executive to terminate
employment for Good Reason, shall not be deemed to be a
waiver of such provision or right or any other
promotion or right of this Agreement.
N. WAIVERABILITY OF PROVISIONS
No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is
agreed to in writing and is signed by Executive and an
executive officer of the Company. No waiver by either party
hereto of the party's compliance with or breach of, any
condition or provision herein to be performed by said party
shall constitute a simultaneous waiver of any other terms,
provisions or conditions herein nor shall such waiver by
either party constitute a continuing waiver of said
pertinent term, provision or condition subsequent thereto
unless such continuation of waiver is agreed to in writing
by the parties pursuant to the terms of this paragraph.
O. ENTIRE AGREEMENT
This Agreement, including attachments, contains the entire
agreement between the parties hereto and no agreements or
representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by
either party which are not set forth expressly in this
Agreement.
P. APPLICABLE LAW
The validity, interpretation, construction and performance
of this Agreement shall be governed by the laws of the State
of Tennessee. Any dispute regarding this Agreement or any
amendment or addendum hereto shall be resolved through an
arbitration hearing held in accordance with the procedures
of the American Arbitration Association. Such arbitration
hearing shall be held in Davidson County, Tennessee and the
arbitrators' decision shall be final, binding and
nonappealable by the parties hereto. The cost of any such
litigation to enforce all or part of this Agreement,
including, without limitation, court costs and attorney's
fees, shall be paid by the party found to be in default
hereunder or who is otherwise found to be acting or to have
acted contrary to the terms hereof.
IN WITNESS WHEREOF, Executive and the Company have
executed this Agreement as of the day and year first written
above.
ACCEPTED BY: THOMAS NELSON, INC.
/s/ Joe L. Powers /s/ Sam Moore
- ------------------------ ---------------------
Joe L. Powers Name
Executive Vice President
CEO
---------------------
Title
May 10, 1996 May 10, 1996
- ------------------------ ---------------------
Date Date
/dld
30<PAGE>
EXHIBIT 10.10
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and
entered into as of May 13, 1996, by and between Thomas Nelson,
Inc., a Tennessee corporation (the "Company"), and Charles Moore
("Executive").
Executive is currently employed by the Company as Senior
Vice President. Executive has served in a senior executive
capacity with the Company for many years thereby acquiring an
intimate knowledge of the business and affairs of the Company and
has demonstrated his ability and has performed valuable services
for the Company. The Company desires to incentivize the
Executive to remain in its employ for the full term of this
Agreement and to contractually protect the Company from the
misuse of proprietary, confidential information and from the
Executive competing with the Company. Accordingly, the Company,
hereby offers to enter into this Agreement with Executive.
The Company's Board of Directors (the "Board") considers the
establishment and continuity of competent management to be
essential to protecting and enhancing the best interests of the
Company and its shareholders. Thus, the Board has determined
that it is appropriate to provide Executive with compensation and
benefits arrangements upon a Change in Control (as defined below)
which ensure that the compensation and benefits expectations of
Executive will be satisfied and which are competitive with those
of other corporations.
Therefore, the Company wishes to secure the services of
Executive for a period to and including March 31, 1999 on the
terms and conditions set forth below, and Executive is willing to
enter into this Agreement. In consideration of the premises
hereof and of the mutual promises and agreements contained
herein, the parties therefore agree as follows:
A. TERM OF AGREEMENT
1. Original Term. This Agreement shall be effective as of
the date first set forth above (the "Effective Date").
The Company shall employ Executive as Senior Vice
President of the Company for a term (the "Employment
Period") commencing on the Effective Date and
continuing until March 31, 1999 unless sooner
terminated pursuant to Section F or H hereof.
2. Renewals. The Employment Period shall automatically be
extended for additional one-year periods unless written
notice of nonextension is given in writing by either
party no less than 60 days prior to the scheduled
expiration date.
B. POSITION AND DUTIES
During the Employment Period, Executive shall serve as
Senior Vice President of the Company. Executive shall have
the authority, functions, duties, powers and
responsibilities for Executive's corporate offices and
positions which are set forth in the Company's bylaws from
time to time in effect and such other authority, functions,
duties, powers and responsibilities as the Board of
Directors or President of the Company may from time to time
prescribe or delegate to Executive, in all cases to be
consistent with Executive's corporate offices and positions.
Executive agrees, subject to his election or appointment as
such and without additional compensation, to serve during
the Employment Period in such particular additional offices
of comparable stature and responsibility to which he may be
elected from time to time in the Company and its
subsidiaries and to serve as a Director of any subsidiary of
the Company. During the Employment Period, (i) Executive's
services shall be rendered on a full-time, exclusive basis,
(ii) he will apply on a full-time basis all of his skill and
experience to the performance of his duties in such
employment and shall report only to the Company's President,
(iii) he shall have no other employment and, without the
prior written consent of the Compensation Committee of the
Company's Board of Directors, no outside business activities
which require the devotion of substantial amounts of
Executive's time, and (iv) unless Executive otherwise
consents in writing, the headquarters for the performance of
his services shall be the principal executive offices of the
Company in Nashville, Tennessee, subject to such reasonable
travel as the performance of his duties in the business of
the Company may require. Notwithstanding the foregoing
sentence, Executive may devote a reasonable amount of his
time to civic, community, charitable, or passive investment
activities and to serve as a director and/or officer of
personally owned corporations and to other types of business
or public activities not expressly mentioned in this
paragraph.
C. COMPENSATION
1. Base Salary. Executive shall be paid an annual base
salary as set forth on Exhibit A hereto, subject to
such increase as may from time to time be approved by
the Compensation Committee of the Company's Board of
Directors; provided, however, that following any such
increase in Executive's base salary by the Compensation
Committee, such base salary shall not be reduced
without the prior written consent of Executive. Base
salary shall be payable according to the Company's
regular practice for salary payment.
2. Incentive Compensation. Executive shall be eligible to
receive annual incentive and bonus compensation, shall
be eligible to participate in the Company's long-term
equity-based incentive compensation plans, including,
without limitation, the Company's 1986 Executive Stock
Purchase Plan, 1986 Stock Incentive Plan, and Amended
and Restated 1992 Employee Stock Incentive Plan, and in
all incentive, gainsharing, savings and retirement
plans, practices, policies and programs applicable to
other peer executives of the Company and its
subsidiaries, but in no event shall such plans,
practices, policies and programs provide Executive with
incentive, gainsharing, savings and retirement benefits
opportunities, in each case, less favorable, in the
aggregate, than the most favorable of those provided
by the Company and its subsidiaries for Executive under
such plans, practices, policies and programs as in
effect at any time during the 90-day period immediately
preceding the date (the "Change in Control Date") on
which a Change in Control (as defined below) occurs, or
if more favorable to Executive, those provided
generally at any time on or after the Change in Control
Date to other peer executives of the Company.
3. Other Benefits. During the Employment Period Executive
shall be entitled to all of the fringe benefits which
the Company and its subsidiaries make available to
senior management if and to the extent that the
Executive is eligible to participate in accordance with
the terms of the benefit plans or policies, provided,
however, that the termination benefits hereunder are in
lieu of any severance benefits to which the Executive
would otherwise be entitled. Such benefits may
include, but are not limited to, (i) medical, hospital,
dental, disability and life insurance plans and
coverages, (ii) pension, profit sharing, 401(k),
employee stock ownership plan, deferred compensation
and similar plans or arrangements, and (iii) any other
benefit plan, program or arrangement, including those
relating to automobiles, clubs, vacations, and expense
reimbursement, which the Company and its subsidiaries
from time to time may make available either to their
employees generally or to some or all of their senior
executive officers, but in no event shall such plans,
practices, policies and arrangements provide benefits
which are less favorable, in the aggregate, than the
most favorable of such plans, practices, policies and
arrangements in effect at any time during the 90-day
period immediately preceding the Change in Control Date
or if more favorable to Executive, those provided
generally at any time on or after the Change in Control
Date to other senior executives of the Company and its
subsidiaries.
D. NONDISCLOSURE AND NON-USE OF CONFIDENTIAL INFORMATION
1. Confidential Information.
(a) Executive acknowledges and agrees that the
information, observations and data obtained by him
during the course of his performance under the
Agreement and the Prior Agreement concerning the
business or affairs of the Company and its subsidiaries
and affiliates is the property of the Company or such
subsidiary or affiliate, as the case may be.
Therefore, during the Employment Period and at all
times thereafter, Executive (i) shall hold in a
fiduciary capacity for the benefit of the Company, its
subsidiaries and affiliates, and (ii) without the prior
written consent of the Board of Directors or except to
the extent required by law (and upon prompt written
notice of such requirement to the Company and such
subsidiary or affiliate), shall not directly or
indirectly, divulge, furnish, disclose, use or make
accessible for any purpose (except in the course of his
employment under this Agreement and in furtherance of
the business of the Company and its subsidiaries and
affiliates) any Confidential Information (as defined
below). Executive acknowledges and agrees that the
disclosure of any Confidential Information will be
damaging or harmful to the business activities of the
Company, its subsidiaries and affiliates, and that such
disclosure can direct or divert corporate
opportunities, product sales and/or profits away from
the Company, its subsidiaries or affiliates. In the
event Executive shall be required by law to make any
disclosure as set forth above, Executive shall promptly
notify the Company and any subsidiary or affiliate
which may reasonably be affected by such disclosure and
shall cooperate with the Company, such subsidiary and
such affiliate to preserve in full the confidentiality
of all Confidential Information of the Company, such
subsidiary or such affiliate. Confidential Information
shall be considered confidential or proprietary unless
and to the extent that such Confidential Information
become generally known to and available for use by the
public other than as a result of any act or omission to
act by Executive. Executive will take all appropriate
steps to safeguard Confidential Information and to
protect it against disclosure, misuse, espionage, loss
and theft.
(b) As used in this Agreement, the term
"Confidential Information" means information that is
not generally known to the public and that is used,
developed or obtained by the Company or any of its
subsidiaries and affiliates in connection with the
Company's or such subsidiary's or affiliate's business,
including but not limited to (i) products or services,
(ii) fees, costs and pricing structures, (iii) designs,
plans or manufacturing data, (iv) analysis,
observations or data, (v) drawings, artwork,
photographs, videotapes, audio tapes, other recordings,
and reports, (vi) computer software, including
operating systems, applications program listings, and
computer files, (vii) flow charts, manuals and
documentation, (viii) data bases, (ix) accounting and
business methods, (x) inventions, devices, new
developments, methods and processes, whether patentable
or unpatentable and whether or not reduced to practice,
(xi) customers, clients, authors or artist and
customer, client, author or artist lists, (xii) other
copyrightable works, (xiii) all technology and trade
secrets, (xiv) intellectual property, unique business
information, or confidential or proprietary
information, and (xv) all similar and related
information in whatever form. Confidential Information
will not include any information that has been
published in a form generally available to the public
prior to the date Executive proposes to disclose or use
such information. Information will not be deemed to
have been published merely because individual portions
of the information have been separately published, but
only if all material features comprising such
information have been published in combination.
2. Product Development. In the event that Executive as
part of his activities on behalf of the Company
generates, authors or contributes, individually or with
the assistance of others, to any invention, design, new
development, device, product, method or process
(whether or not patentable or reduced to practice or
comprising Confidential Information), any copyrightable
work (whether or not comprising Confidential
Information) or any other form of Confidential
Information relating directly or indirectly to the
business of the Company or any of its subsidiaries or
affiliates as now or hereafter conducted (collectively,
the "Intellectual Property"), Executive acknowledges
that such Intellectual Property is the exclusive
property of the Company and hereby assigns all right,
title and interest in and to such Intellectual
Property to the Company. Any copyrightable work
prepared in whole or in part by Executive will be
deemed "a work made for hire" under Section 201(b) of
the 1976 Copyright Act, and the Company will own all of
the rights comprised in the copyright therein.
Executive will cooperate with the Company in all
reasonable respects to protect the Company's interests
in and rights to such Intellectual Property (including,
without limitation, providing reasonable assistance in
securing patent protection and copyright registrations
and executing all documents as reasonably requested by
the Company whether such requests occur prior to or
after termination of Executive's employment with the
Company).
3. Delivery of Materials Upon Termination of Employment.
As requested by the Company from time to time and upon
the termination of the Executive's employment with the
Company for any reason, Executive will promptly deliver
to the Company all copies and embodiments, in whatever
form, of all Confidential Information or Intellectual
Property in Executive's possession or within his
control (including, but not limited to, written
records, memoranda, notes, photographs, plans, records,
video tapes, audiotapes, other recordings, reports,
manuals, notebooks, documentation, program listings,
flow charts, magnetic media, disks, diskettes, tapes
and all other materials containing any Confidential
Information or Intellectual Property) irrespective of
the location or form of such material and, if requested
by the Company, will provide the Company with written
confirmation that all such materials have been
delivered to the Company.
E. NONCOMPETITION
1. Covenant Not to Compete. Executive acknowledges and
agrees with the Company that Executive's services to
the Company and its subsidiaries are unique in nature
and that the Company and its subsidiaries would be
irreparably damaged if Executive were to provide
similar services to any person or entity competing with
the Company or any of its subsidiaries, or engaged in
similar business. Executive accordingly covenants and
agrees with the Company that during the Employment
Period and for two years following the termination of
Executive's employment with the Company for any reason
(the "Noncompetition Period"), Executive will not,
directly or indirectly, either for himself or for any
other individual, corporation, partnership, joint
venture or other entity, participate in (as defined
below) any business (including, without limitation, any
division, group or franchise of a larger organization)
competing with any of the businesses then conducted
(or, to the knowledge of Executive, planned to be
conducted within two years) by the Company or any of
its successors or then subsidiaries within any
geographical area in which the Company or its
subsidiaries engage or plan within two years to engage
in any such businesses. For purposes of this
Agreement, the term "participate in" will include,
without limitation, having any direct or indirect
interest in any corporation, partnership, joint venture
or other entity, whether as a sole proprietor, owner,
stockholder, partner, joint venturer, creditor or
otherwise, or rendering any direct or indirect service
or assistance to any individual, corporation,
partnership, joint venture and other business entity
(whether as a director, officer, manager, supervisor,
employee, agent, consultant or otherwise).
2. Nonsolicitation and Noninterference. During the
Noncompetition Period, Executive will not directly or
indirectly, on behalf of himself or another entity, (i)
induce, attempt to induce, or assist others to induce
any artist, composer, songwriter, lyricist, musician,
author, writer, editor, programmer, technician, cable
operator, employee, consultant, customer, supplier,
licensee or other person or entity to terminate its,
his or her association with the Company or its
subsidiaries, or to cease doing business with the
Company or its subsidiaries, or do anything to
interfere with the relationship between the Company or
its subsidiaries, on the one hand, and any artist,
composer, songwriter, lyricist, musician, author,
writer, editor, programmer, technician, cable operator,
employee, consultant or other person or entity doing
business and/or under contract with the Company or any
of its subsidiaries, or with whom the Company or any of
its subsidiaries is then negotiating, or with whom the
Company or any of its subsidiaries enters into any
contract or agreement during the Noncompetition Period,
or (ii) hire, without the written consent of the
Company, any person who was an employee of the Company
or any of its subsidiaries at any time within twelve
(12) months of the termination of the Employment
Period.
3. Limitations.
(a) Nothing contained in this Section E shall
prevent Executive from owning up to a 5% interest in
any corporation or entity having one or more classes of
its securities listed on a national securities exchange
or market, or publicly traded in the over-the-counter
market, provided that Executive is not actively
involved in any manner whatsoever in the operation or
management of such corporation or entity.
(b) If under the circumstances existing at the
time of enforcement of this Section E, the period,
scope or geographic area described in this Section E
shall be found or held to be unreasonable, the parties
hereto agree that the maximum period, scope or
geographic area reasonable under the circumstances
shall be substituted for the stated period, scope or
geographic area.
F. TERMINATION OF EMPLOYMENT (OTHER THAN SUBSEQUENT TO A
CHANGE IN CONTROL).
1. Applicability. This Section F shall apply only to
termination of the employment Period prior to the
occurrence of a Change in Control (as defined below)
during the Employment Period. Termination of the
Employment Period following the occurrence of a Change
in Control shall be governed by Section H.
2. Events of Termination and Related Payments.
(a) Disability. In the event that during the
Employment Period Executive should become Disabled,
the Company (acting by resolution of the Board) may
elect to terminate the Employment Period by written
notice to Executive, his guardian or personal
representative and Executive, his guardian or personal
representative, as the case may be, shall be entitled
to receive (i) full compensation pursuant to Section C
at his then base salary rate from the date of
termination of employment continuing for the lesser of
(a) one year following the date of such notice and (b)
the remainder of the then effective Employment Period,
and (ii) bonus for the calendar year in which
Executive's termination of employment occurs as
determined in good faith by the Compensation Committee
of the Board of Directors in its sole discretion.
Notwithstanding the foregoing provisions of this
Section F(2)(a), the payments provided herein with
respect to any period of Disability shall be reduced by
the amount of any benefits payable to Executive, his
guardian or personal representative, as the case may
be, during such period under any disability or similar
plan or program of the Company of any of its
subsidiaries in respect of Executive's Disability.
(b) Death. In the event of Executive's death
during the Employment Period, his personal
representative shall be entitled to receive any
compensation pursuant to Section C which is accrued and
unpaid as of the date of his death.
(c) Termination Due to Serious Misconduct. In
the event that during the Employment Period Executive
should commit Serious Misconduct (as defined below),
the Company (acting by resolution of the Board) may
elect to terminate the Employment Period by written
notice to Executive, and Executive shall be entitled
only to any compensation and benefits which are vested
but unpaid as of the date of termination of employment.
(d) Termination for Reasons Other Than Death,
Disability, Serious Misconduct or Voluntary Action by
the Executive. In the event that the Employment Period
is terminated at the option of the Company for any
reason other than for serious misconduct, death,
disability, or voluntary action by the Executive, the
Executive shall be paid a lump sum payment equal to the
lesser of (1) current base salary and target bonus for
the remainder of the term hereunder, and (2) a sum
equal to twice current base salary and target bonus,
and the Company shall pay such sum to Executive within
thirty (30) business days following such termination.
Executive's voluntary resignation resulting from
harassment, unwarranted demotion and/or material
diminution of responsibilities shall be governed by the
terms of this provision and shall not be considered a
voluntary termination as defined in subparagraph (e)
hereunder. In the event of such termination, the
Company shall reimburse the Executive for the premium
paid by the Executive for the continued coverage for
the Executive (and any dependents of the Executive
covered by the Company's health care plans as of the
date of termination) under the Company's health care
plan pursuant to COBRA (or any of the mandatory health
care continuation law then in effect), such coverage
being substantially similar to that provided the
Executive on the date of his termination, but such
reimbursement shall be only for a period which is of
(1) the remainder of the term hereof, and (2) two years
from the date of termination.
(e) Voluntary Termination by Executive. In the
event that Executive, for reasons other than those set
forth in subparagraph (d) hereinabove, voluntarily
terminates his employment with the Company prior to the
end of the Employment Period, the Company shall pay any
earned but unpaid portion of Executive's base salary
and incentive compensation through the date of his
termination provided that the Executive is in full
compliance with the provisions of Sections D and E
hereof.
3. Definition of Certain Terms.
(a) "Disabled" means such physical or mental
condition of Executive as is determined by the
Company's Board of Directors in its sole discretion to
be expected to continue indefinitely and which renders
him incapable of performing any substantial portion of
the services contemplated hereby (as confirmed by
competent medical evidence).
(b) "Serious Misconduct" means embezzlement or
misappropriation of corporate funds, other acts of
dishonesty or reckless or intentional misconduct which
is materially harmful to the business or reputation of
the Company or its subsidiaries, the conviction of a
felony, refusal to perform or disregard of the duties
properly assigned by the Chief Executive of the Company
or the Board, or a material breach of any of the
provisions of Sections D or E above or of any of the
other provisions of this Agreement which violations are
not cured within sixty (60) days of written notice to
the Executive of the breach.
4. Effect of Breach of Noncompetition of Nondisclosure
Provisions. In the event Executive materially breaches
or otherwise fails to comply in any material respect
with the provisions of Sections D or E above, then, in
addition to any other remedies provided herein or at
law on in equity, the Company shall not have any
further obligation to make any additional payments to
Executive pursuant to this Termination of such payments
pursuant to the preceding sentence shall not relieve
Executive's obligations pursuant to Sections D or E
above.
G. CHANGE IN CONTROL
For purposes hereof, a "Change in Control" shall have
occurred if:
(1) any "person" other than any trustee or other
fiduciary holding securities under an employee benefit
plan of the Company within the meaning of Section 14(d)
of the Securities Exchange Act of 1934 (the "Exchange
Act") becomes the "beneficial owner" as defined in Rule
13D-3 thereunder, directly or indirectly, of 20% or
more of either the then outstanding shares of the
Company's Common Stock (the "Outstanding Company Common
Stock") or 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 the Company or its subsidiaries, or
by Sam Moore, S. Joseph Moore, members of their
families, relatives, certain family partnerships,
trusts associated with the Moore family and other
entities who have as of July 1, 1995 jointly filed a
Statement on Schedule 13D under the Exchange Act, or by
any reconstituted version of such filing group or any
corporation with respect to which, following such
acquisition, more than 80% of, respectively, the then
outstanding share 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 the
individuals and entities who were the beneficial
owners, respectively, of the Outstanding 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 in Control;
(2) during any two-year period, individuals who
constitute the Board of Directors of the Company (the
"Incumbent Board") as of the beginning of the period
cease for any reason to constitute at least a majority
of the Board, provided that any individual becoming a
director during such period whose election or
nomination for election by the Company's stockholders
was approved by an affirmative vote of at least two-
thirds of the directors then comprising the Incumbent
Board (either by a specific vote or by approval of the
proxy statement of the Company in which such person is
named as a nominee for director without objection to
such nomination) shall be, for the purposes of this
subparagraph (b), considered as though person 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 other actual or threatened
solicitation of proxies or consents; or
(3) approval by the shareholders of the Company
of a reorganization, merger or consolidation, in each
case, with respect to which all or substantially all of
the individuals and entities who were the respective
beneficial owners of the Common Stock and voting
securities of the Company immediately prior to such
reorganization, merger or consolidation do not,
following such reorganization, merger or consolidation,
beneficially own, directly or indirectly, more than 80%
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 such
reorganization, merger or consolidation, or a complete
liquidation or dissolution of the Company or of the
sale or other disposition of all or substantially all
of the assets of the Company.
Notwithstanding the foregoing, a Change in Control for
purposes of this Agreement shall not be considered to occur
as a result of a transaction which is approved by the
Company's Board of Directors in advance of the transaction
and prior to the consummation of the transaction if such
transaction is specifically excluded by the Board of
Directors from the definition of "Change of Control" for
purposes of this Agreement and such exclusion is approved by
an affirmative vote of at least two-thirds of the directors
then comprising the Incumbent Board. Furthermore, anything
in this Agreement to the contrary notwithstanding, if
Executive's employment with the Company is terminated prior
to the date on which a Change in Control occurs, and if it
is reasonably demonstrated by Executive that such
termination of employment (1) was at the request of a third
party who has taken steps reasonably calculated to effect
the Change in Control or (2) otherwise arose in connection
with or in anticipation of the Change in Control, then for
all purposes of this Agreement, a Change in Control shall be
considered to have occurred immediately prior to Executive's
employment termination date.
In the event the Board adopts any plan or takes any action
which, if consummated, would result in a Change in Control
of the Company, the Company shall take any action determined
by the Board to be necessary or appropriate to ensure the
prompt payment when due of any amounts which may thereafter
become payable hereunder upon termination by the Company of
Executive during the Employment Period, including but not
limited to the placement of sufficient funds to pay all such
amounts in an escrow account with a bank or other fiduciary
institution.
On the Change in Control Date, to the extent permitted by
law, regardless of date or grant, all stock options
previously granted shall be come exercisable and all
restrictions on restricted stock shall lapse. All
previously deferred compensation (including interest or
earnings) shall, at Executive's election, be paid to
Executive within 10 days of the Change in Control Date.
H. TERMINATION FOLLOWING CHANGE IN CONTROL
Following a Change in Control of the Company, the provisions
of this Section H shall apply exclusively with respect to
(i) the termination of Executive's employment during the
Employment Period and (ii) amounts payable to Executive upon
such termination.
If a Change in Control of the Company shall have occurred,
Executive shall be entitled to the benefits provided herein
upon Executive's subsequent termination of employment during
the Employment Period, unless such termination is (i)
because of Executive's death, (ii) by the Company because of
Executive's Disability or Serious Misconduct or (iii) by
Executive other than for Good Reason. For purposes hereof,
"Good Reason" shall mean the occurrence or continuation,
without consent of Executive, after a Change in Control of
the Company of any of the following events within 24 months
after the Change in Control Date:
(1) the assignment to Executive of any duties
materially inconsistent with the position with the
Company that Executive held immediately prior to the
Change in Control of the Company, or an adverse change
in the status, position or conditions of Executive's
employment or the nature of Executive's
responsibilities in effect immediately prior to such
Change in Control, or any removal of Executive from or
any failure to re-elect Executive to any of such
positions, except in connection with the termination of
his employment by the Company for Serious Misconduct,
Disability or death or by Executive other than for Good
Reason;
(2) a reduction by the Company in Executive's
annual base salary as in effect immediately prior to
such Change in Control which is not consistent with
general compensation reduction for a Senior Executive
of the Company.
(3) the relocation of Executive' principal office
to a location outside a 25 mile radius from Executive's
principal office immediately prior to such Change in
Control, except for required travel on the Company's
business to an extent substantially consistent with
Executive's business travel obligations immediately
prior to such Change in Control;
(4) the failure by the Company to pay to
Executive any portion of Executive's salary within
seven days of the date such salary is due;
(5) the failure by the Company to continue in
effect any benefit or compensation plan in which
Executive participates immediately prior to the Change
in Control which is material to Executive's total
compensation, including but not limited to the stock
option, employee stock ownership, bonus, insurance,
disability and vacation plans which the Company
currently has or any substitute or additional plans
adopted prior to the Change in Control, unless an
equitable arrangement (embodied in an ongoing
substitute or alternative plan or plans) has been made
with respect to such plan, or the failure by the
Company to continue Executive's participation therein
(or in such substitute or alternative plan) on a basis
not materially less favorable, both in terms of the
amount of benefits provided and the level of
Executive's participation relative to other
participants, as in existence immediately prior to such
Change in Control; or
(6) the failure of the Company to obtain an
agreement from any successor to assume and agree to
perform this Agreement, as contemplated herein.
Executive's right to terminate his employment for Good
Reason pursuant to this section shall not be affected by
Executive's incapacity due to physical or mental illness.
Executive's continued employment shall not constitute
consent to, or a waiver of with respect to, any circumstance
constituting Good Reason hereunder. In the event of any
dispute between Executive and the Company as to whether any
event constituting Good Reason shall have occurred, the
burden of proving by clear and convincing evidence that such
event does not constitute Good Reason shall rest on the
Company.
Any termination of Executive's employment by the Company or
by Executive pursuant to this Section H shall be
communicated by written notice of termination (the "Notice
of Termination") to the other party hereto, and shall
indicate the specific termination provision in the Agreement
relied upon and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for
termination of Executive's employment. For the purposes
hereof, "Date of Termination" shall mean (i) if Executive's
employment is terminated for Disability, 30 days after
Notice of Termination is given (provided that Executive
shall not have returned to the full-time performance of his
duties during such 30 days) or (ii) if Executive's
employment is terminated for any other reason other than
death, the date specified in the Notice of Termination.
I. PAYMENTS UPON TERMINATION SUBSEQUENT TO CHANGE IN CONTROL
Following a Change in Control, Executive shall be entitled
to the following benefits upon termination of employment
during the 36-month period following the Change in Control
Date:
1. Death, Disability, Serious Misconduct or Termination by
Executive Other Than for Good Reason. Following a
termination of Executive's employment because of
Executive's death or by the Company because of
Executive's Disability or Serious Misconduct or by
Executive other than for Good Reason, the Company's
only remaining obligations under this Agreement shall
be to pay any base salary earned through the Date of
Termination plus the amount of any compensation
previously deferred by Executive, in each case to the
extent theretofore unpaid, and Executive's benefits
shall be limited to vested benefits provided under any
retirement, insurance and other benefit programs of the
Company then in effect determined in accordance with
the terms thereof.
2. Other. If the employment shall be terminated by
Executive for Good Reason or by the Company other than
for death, Disability or Serious Misconduct, Executive
shall be entitled to the amounts provided below, such
amounts to be paid in cash in a lump sum no later than
the tenth business day following the Date of
Termination:
(a) the Company shall pay to Executive his full
base salary, and earned or accrued, but unpaid vacation
pay, through the Date of Termination at the rate in
effect at such time, plus all other amounts, including
but not limited to incentive compensation for a past
fiscal year which has not yet been awarded or paid to
Executive under incentive plans, programs or
arrangements, including any deferred awards (it being
understood that with respect to any incentive
compensation which has not been awarded, the individual
performance component of the award shall be determined
on at least the basis that Executive has met all
applicable standards) to which Executive is entitled
under any compensation or benefit plan of the Company;
(b) a lump-sum severance payment (the "Severance
Payment") equal to two (2) times the sum of (i)
Executive's annual base salary as of the date of
termination of employment and (ii) any cash bonus
received by Executive in the immediately preceding
fiscal year; provided, that such amount shall be paid
in lieu of, and Executive hereby waives the right to
receive, any other amount of severance relating to
salary or bonus continuation to be received by
Executive upon termination of employment of Executive
under any severance plan, policy or arrangement of the
Company;
(c) at the election of Executive, the cash-out of
any or all of Executive's stock or stock-based awards
granted pursuant to both the Thomas Nelson, Inc. 1986
Stock Incentive Plan and the 1992 Employee Stock
Incentive Plan at the "Change in Control Price"
provisions set for therein.
3. Legal Expenses. In addition to any other amounts
payable hereunder, the Company also shall reimburse
Executive for all legal fees and expenses reasonably
incurred by Executive as a result of any termination of
the Employment Period (including all such fees and
expenses, if any, incurred in contesting or disputing
any right or benefit provided by this Agreement or in
connection with any tax audit or proceeding to the
extent attributable to the application of Section 4999
of the Internal Revenue Code of 1986, as amended (the
"Code"), to any payment of benefit provided hereunder).
4. Continuation of Benefits. For the remainder of the
Employment Period, or such longer period as any plan,
program, practice or policy may provide the Company
shall continue benefits to Executive and/or Executive's
family at least equal to those which would have been
provided to them in accordance with the plan, programs,
practices and policies described in Sections C(3) and
(4) of this Agreement if Executive's employment had not
been terminated in accordance with the most favorable
plans, practices, programs or policies of the Company
the its subsidiaries applicable generally to other peer
executives and their families during the 90-day period
immediately preceding the Change in Control Date or, if
more favorable to Executive, as in effect generally at
any time thereafter with respect to other peer
executives of the Company and its subsidiaries and
their families; provided, however, that if Executive
becomes reemployed with another employer and is
eligible to receive medical or other welfare benefits
under another employer provided plan, the medical and
other welfare benefits described herein shall be
secondary to those provided under such other plan
during such applicable period of eligibility. For
purposes of determining eligibility of Executive for
retiree benefits pursuant to such plans, practices,
programs and policies, Executive shall be considered to
have remained employed until the end of the Employment
Period and to have retired on the last day of the
Employment Period.
To the extent not theretofore paid to provided, the
Company shall timely pay or provide to Executive any
other amounts or benefits required to be paid or
provided or which Executive is eligible to receive
pursuant to this Agreement under any plan, program,
policy or practice or contract or agreement of the
Company and its subsidiaries, but excluding solely
purposes of this Section J(4) amounts waived by
Executive pursuant to Section J(2)(b).
5. Certain Reduction in Payments by the Company.
For purposes of this Section, (i) a "Payment" shall
mean any payment or distribution in the nature of
compensation to or for the benefit of Executive,
whether paid or payable pursuant to this Agreement or
otherwise; (ii) an "Agreement Payment" shall mean a
Payment paid or payable pursuant to this Agreement
(disregarding this Section); (iii) "Net After Tax
Receipt" shall mean the Present Value (as defined
below) of a Payment net of all taxes imposed on
Executive with respect thereto under Sections 1 and
4999 of the Code, determined by applying the highest
marginal rate under Section 1 of the Code which applied
to Executive's taxable income for the immediately
preceding taxable year' (iv) "Present Value" shall mean
such value determined in accordance with Section
280G(d)(4) of the Code; and (v) "Reduced Amount" shall
mean the smallest aggregate amount of Agreement
Payments which (a) is less than the sum of all
Agreement Payments and (b) results in aggregate Net
After Tax Receipts which are equal to or greater than
the Net After Tax Receipts which would result if the
aggregate Agreement Payments were any other amount less
than the sum of all Agreement Payments.
Anything in this Agreement to the contrary
notwithstanding, in the event Arthur Andersen LLP (the
"Accounting Firm") shall determine that receipt of all
Payments would subject Executive to tax under Section
4999 of the Code, the Accounting Firm shall determine
whether some amount of Payments would meet the
definition of a Reduced Amount. If the Accounting Firm
determined that there is a Reduced Amount, the
aggregate Payments shall be reduced to such Reduced
Amount. In the event that the Accounting Firm is
serving as accountant or auditor for the individual,
entity or group effecting the change in Control,
Executive shall appoint another nationally recognized
accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred
to as the Accounting Firm hereunder). All fees and
expenses of the Accounting Firm shall be borne solely
by the Company.
If the Accounting Firm determined that aggregate
Agreement Payments should be reduced to the Reduced
Amount, the Company shall promptly give Executive
notice to that effect and a copy of the detailed
calculation thereof, and Executive may then elect, in
his sole discretion, which and how much of the
Agreement Payments shall be eliminated or reduced (as
long as after such election the present value of the
aggregate Agreement Payments equals the Reduced
Amount), and shall advise the Company in writing of his
election within 10 days of his receipt of notice. If
no such election is made by Executive within such 10-
day period, the Company may elect which of such
Agreement Payments shall be eliminated or reduced (as
long as after such election the present value of the
aggregate Agreement Payments equals the Reduced Amount)
and shall notify Executive promptly of such election.
All determinations made by the Accounting Firm under
this Section shall be binding upon the Company and
Executive and shall be made within 60 days of a
termination of employment of Executive. As promptly as
practicable following such determination, the Company
shall pay to or distribute for the benefit of Executive
such Agreement Payments as are then due to Executive
under this Agreement and shall promptly pay to or
distribute for the benefit of Executive in the future
such Agreement Payments as become due to Executive
under this Agreement.
While it is the intention of the Company and Executive
to reduce the amounts payable or distributable to
Executive hereunder only if the aggregate Net After Tax
Receipts to Executive would thereby be increased as a
result of the uncertainty in the application of Section
4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is
possible that amounts will have been paid or
distributed by the Company to or for the benefits of
Executive pursuant to this Agreement which should not
have been so paid or distributed ("Overpayment") or
that additional amounts which will have not been paid
or distributed by the Company for the benefit of the
Executive pursuant to this Agreement could have been so
paid or distributed ("Underpayment"), in each case,
consistent with the calculation of the Reduced Amount
hereunder. In the event that the Accounting Firm,
based either upon the assertion of a deficiency by the
Internal Revenue Service against the Company or
Executive which the Accounting Firm believes has a high
probability of success determines that an Overpayment
has been made, any such Overpayment paid or distributed
by the Company to or for the benefit of Executive shall
be treated for all purposes as a loan to Executive
which Executive shall repay to the Company together
with interest at the applicable federal rate provided
for in Section 7872(f)(2) of the Code; provided,
however, that no such loan shall be deemed to have been
made and no amount shall be payable by the Executive to
the Company if an to the extent such deemed loan and
payment would not either reduce the amount on which the
Executive is subject to tax under Section 1 and Section
4999 of the Code or generate a refund of such taxes.
In the event that the Accounting Firm, based upon
controlling precedent or substantial authority,
determined that an Underpayment has occurred, any such
Underpayment shall be promptly paid by the Company to
or for the benefit of Executive together with interest
at the applicable federal rate provided for in Section
7872(f)(2) of the Code.
6. Full Settlement.
Except as otherwise provided herein, the Company's
obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right
or action which the Company may have against Executive
or others. In no event shall Executive be obligated to
seek other employment or take any other action by way
of mitigation of the amounts payable to Executive under
any of the provision of this Agreement and, except as
provided to Executive under any of the provisions of
this Agreement and, except as provided in Section
J(2)(b) of this Agreement, such amounts shall not be
reduced whether or not Executive obtains other
employment.
J. REMEDIES
Executive acknowledges that he will receive privileged
information from the Company and that he will have
substantial access to the Company's trade secrets, business
information and personnel data. In consideration of his
employment and the privilege of access to the Company's
trade secrets, information, business methods and procedures,
and personnel data, Executive acknowledges that the
restrictions contained within Sections D and E are
reasonable and necessary in order to preserve the Company's
legitimate interests and that any violation thereof would
result in irreparable injury to the Company for which
monetary damages would be an inadequate remedy. Therefore,
Executive acknowledges and agrees that in the event of any
violations thereof, the Company may seek from any court of
competent jurisdiction preliminary and permanent injunctive
relief as well as an equitable account of all Executive's
profits or benefits arising out of such violation, which
rights shall be cumulative and in addition to any other
action or remedies to which the Company may be entitled.
K. SUCCESSORS
(a) This Agreement is personal to Executive and
without the prior written consent of the Company shall not
be assignable by Executive otherwise than by will or the
laws of descent and distribution. This Agreement shall
inure to the benefit of and be enforceable by Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and
be binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly and agree
to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if
no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company as herein before
defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement
by operation of law, or otherwise. Failure of the Company
to obtain such agreement prior to the effectiveness of any
such succession shall be a breach hereof and shall entitle
Executive to terminate his employment for Good Reason.
L. NOTICES
All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other
party or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive:
Charles Moore, Senior Vice President
Thomas Nelson, Inc.
Nelson Place at Elm Hill Pike
Nashville, Tennessee 37214-1000
If to the Company:
Thomas Nelson, Inc.
Nelson Place at Elm Hill Pike
Post Office Box 141000
Nashville, Tennessee 37214-1000
Attention: General Counsel
or to such other address as either party shall have
furnished to the other in writing in accordance herewith.
Notice and communications shall be effective when actually
received by the addressee.
M. MISCELLANEOUS
1. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or
enforceability of any other provision of the Agreement.
2. The Company may withhold from any amounts payable under
this Agreement such Federal, state or local taxes as
shall be required to be withheld pursuant to any
applicable law or regulation.
3. Executive's or the Company's failure to insist upon
strict compliance with any provision hereof or any
other provision of this Agreement or the failure to
assert any right Executive or the Company may have
hereunder, including, without
limitation, the right of the Executive to terminate
employment for Good Reason, shall not be deemed to be a
waiver of such provision or right or any other
promotion or right of this Agreement.
N. WAIVERABILITY OF PROVISIONS
No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is
agreed to in writing and is signed by Executive and an
executive officer of the Company. No waiver by either party
hereto of the party's compliance with or breach of, any
condition or provision herein to be performed by said party
shall constitute a simultaneous waiver of any other terms,
provisions or conditions herein nor shall such waiver by
either party constitute a continuing waiver of said
pertinent term, provision or condition subsequent thereto
unless such continuation of waiver is agreed to in writing
by the parties pursuant to the terms of this paragraph.
O. ENTIRE AGREEMENT
This Agreement, including attachments, contains the entire
agreement between the parties hereto and no agreements or
representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by
either party which are not set forth expressly in this
Agreement.
P. APPLICABLE LAW
The validity, interpretation, construction and performance
of this Agreement shall be governed by the laws of the State
of Tennessee. Any dispute regarding this Agreement or any
amendment or addendum hereto shall be resolved through an
arbitration hearing held in accordance with the procedures
of the American Arbitration Association. Such arbitration
hearing shall be held in Davidson County, Tennessee and the
arbitrators' decision shall be final, binding and
nonappealable by the parties hereto. The cost of any such
litigation to enforce all or part of this Agreement,
including, without limitation, court costs and attorney's
fees, shall be paid by the party found to be in default
hereunder or who is otherwise found to be acting or to have
acted contrary to the terms hereof.
IN WITNESS WHEREOF, Executive and the Company have
executed this Agreement as of the day and year first written
above.
ACCEPTED BY: THOMAS NELSON, INC.
/s/ Charles Moore /s/ Sam Moore
- --------------------- --------------------------
Charles Moore Name
Senior Vice President
CEO
--------------------------
Title
May 13, 1996 May 13, 1996
- --------------------- --------------------------
Date Date
/dld
EXHIBIT 11
STATEMENT RE-COMPUTATION OF
PER SHARE EARNINGS
<TABLE>
<CAPTION>
March 31, 1996 March 31, 1995 March 31, 1994
------------ ------------ -------------
<S> <C> <C> <C>
Primary Earnings Per Share:
Weighted average shares
outstanding 15,718,116 13,374,301 13,355,416
============ ============ =============
Income (Loss) from
continuing operations ($ 6,236,000) $ 12,717,000 $ 9,684,000
Loss from discontinued
operations ( 4,678,000) ( 1,007,000) ( 939,000)
------------ ------------ -------------
Income (Loss) before
cumulative effect of
change in accounting
principle ( 10,914,000) 11,710,000 8,745,000
Cumulative effect of change
in accounting principle
for income taxes -- -- 336,000
------------ ------------ -------------
Net Income (Loss) ($10,914,000) $ 11,710,000 $ 9,081,000
============ ============ =============
Income (Loss) Per Share
from continuing
operations ($ 0.39) $ 0.95 $ 0.72
Loss Per Share from
discontinued
operations ( 0.30) ( 0.07) ( 0.07)
------------ ------------ -------------
Income (Loss) Per Share
before cumulative
effect of change in
accounting principle ( 0.69) 0.88 0.65
Cumulative effect per
share of change in
accounting principle <PAGE>
for income taxes -- -- 0.03
------------ ------------ -------------
Net Income (Loss) Per Share ($ 0.69) $ 0.88 $ 0.68
============ ============ =============
Fully Diluted Earnings
Per Share:
Weighted average shares
outstanding 15,718,116 13,374,301 13,355,416
Convertible Notes 3,235,000 3,235,000 3,235,000
Dilutive stock options -
based on treasury stock
method using the year-
end market price, if
higher than the average
market price 76,428 111,320 118,014
------------ ------------ -------------
Total Shares 19,029,544 16,720,621 16,708,430
============ ============ =============
Income (Loss) from
continuing operations <F1> ($ 4,218,000) $ 14,848,000 $ 11,881,000
Loss from discontinued
operations ( 4,678,000) ( 1,007,000) ( 939,000)
------------ ------------ -------------
Income (Loss) before
cumulative effect of
change in accounting
principle ( 8,896,000) 13,841,000 10,942,000
Cumulative effect of
change in accounting
principle for income
taxes -- -- 336,000
------------ ------------ -------------
Net Income (Loss) ($ 8,896,000) $ 13,841,000 $ 11,278,000
============ ============ =============
Income (Loss) Per Share from
continuing operations ($ 0.22) $ 0.90 $ 0.72
Loss Per Share from
discontinued
operations ( 0.25) ( 0.07) ( 0.07)
------------ ------------ ------------- <PAGE>
Income (Loss) Per Share
before cumulative effect
of change in accounting
principle ( 0.47) 0.83 0.65
Cumulative effect per
share of change in
accounting principle
for income taxes -- -- 0.02
------------ ------------ -------------
Net Income (Loss) Per Share ($ 0.47)<F2>$ 0.83 $ 0.67
============ ============ =============
<F1> Adjusted for interest on convertible debt
<F2> Anti-dilutive for 1996; use primary earnings per share
</TABLE> <PAGE>
EXHIBIT 13
<TABLE>
SELECTED FINANCIAL DATA
<CAPTION>
YEARS ENDED
March 31, 1996<F1> 1995 1994 1993<F1> 1992
(Dollars in thousands,
except per share data)
===========================================================================
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS <F2><F4>
Continuing operations:
Net revenues $308,410 $263,711 $225,329 $142,068 $ 98,290
Operating income
(loss) ( 287) 27,406 21,307 13,271 10,299
Net income (loss) <F5> ( 6,236) 12,717 10,020 7,012 6,338
Net loss from discon-
tinued operations <F6> ( 4,678) ( 1,007) ( 939) ( 730) ( 514)
-------- -------- -------- -------- --------
Total net income (loss) ( 10,914) 11,710 9,081 6,282 5,824
============================================================================
FINANCIAL POSITION <F2>
Total assets $373,596 $249,419 $216,325 $194,850 $ 79,726
Working capital 171,417 124,416 104,539 82,711 44,582
Long-term debt and other
non-current liabilities 185,649 122,954 107,684 100,070 11,074
Shareholders' equity 122,370 72,729 62,725 55,292 49,043
Current ratio 3.6 3.3 3.3 3.1 3.3
Long-term debt to total
capitalization 60.3% 62.8% 63.1% 64.4% 18.4%
============================================================================
PER SHARE DATA <F2><F3><F4>
Net income (loss) per
share from continuing
operations <F5> ($ .39) $ .95 $ .75 $ .53 $ .51
Net loss per share
from discontinued
operations <F6> ( .30) ( .07) ( .07) ( .06) ( .04)
-------- -------- -------- -------- --------
Total net income
(loss) per share ( .69) .88 .68 .47 .47
Dividends declared
per share .160 .136 .128 .117 .085
Book value per share 7.15 5.42 4.70 4.14 3.70
Weighted average
number of shares
outstanding (in
thousands) 15,718 13,374 13,355 13,268 12,500
============================================================================
<F1>Includes C.R. Gibson operations subsequent to acquisition on
October 31, 1995 and Word, Incorporated operations subsequent
to acquisition on November 30, 1992.
<F2>All financial information has been restated to reflect the pooling
of interests with PPC, Inc.
<F3>Per share data has been restated for stock dividends.
<F4>Operating results and per share data have been restated for discontinued
operations.
<F5>For 1994 net income and per share data from continuing operations
includes $336,000 and $0.03, respectively, for accumulated effects
of change in accounting principle.
<F6>During March 1996, the Company adopted plans to sell the Christian-
lifestyle magazines and the radio networks of the Royal Media
division and the projected loss on disposal and results of
operations for this discontinued operation are included herein.
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
=================================================================
OVERVIEW
During the last three fiscal years, the Company's net revenues
have grown at a compound annual rate of approximately 29%. This
growth in net revenues has resulted from increased sales of the
existing product lines and through the development and
acquisition of new product lines. In October 1995, the Company
acquired The C.R. Gibson Company ("Gibson") for approximately $67
million in cash; in November 1992 the Company acquired Word,
Incorporated ("Word") for approximately $72 million in cash; and
in March 1994 the Company merged with PPC, Inc. ("Pretty Paper")
in exchange for the issuance of 115,551 shares of the Company's
Common Stock. The acquisitions of Gibson and Word were accounted
for using the purchase method of accounting with the excess of
the purchase price over the fair value of the net assets acquired
allocated to goodwill of approximately $46 million and $31
million, respectively. The combination with Pretty Paper was
accounted for as a pooling of interests. See Note B of Notes to
Consolidated Financial Statements.
As a result of the acquisition of Word and the further
development of the combined product lines, there has been a shift
in the Company's product revenue mix with each of music and book
products contributing a larger percentage of the Company's net
revenues than Bible products. The broader mix of products has
also enabled the Company to expand its distribution channels from
bookstores to mass market accounts, direct marketing programs,
gift stores and specialty retail stores. The acquisition of
Gibson and the merger with Pretty Paper expanded the Company's
gift product lines and distribution network, which enabled the
gift division to grow significantly in fiscal 1996 and fiscal
1995.
As a result of operating trends which began to adversely
affect fiscal 1996 operating results in the second quarter of the
fiscal year, the Company decided during the fourth quarter of the
fiscal year to discontinue the operations of its Royal Media
division, a division which published magazines and operated radio
networks directed toward the Christian markets. The negative
operating results of the Royal Media division, together with
returns at materially higher levels and reduced fourth quarter
sales in its publishing and music divisions and its direct
marketing division, were the primary factors which resulted in
a net loss of $10.9 million for the 1996 fiscal year, including
a $4.7 million loss from the discontinued operations of the
Royal Media division.
The following table sets forth for the periods indicated
certain selected statements of operations data of the Company
expressed as a percentage of net revenues and the percentage
change in dollars of such data from the prior fiscal year. <PAGE>
<TABLE>
<CAPTION> Fiscal Year to Year
Year Ended March 31, Increase (Decrease)
---------------------------- --------------------------
1996 1995 1994 1995 to 1996 1994 to 1995
---------------------------- ------------ ------------
(%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C>
Net revenues
Publishing:
Book 28.6 32.5 34.2 3.1 11.3
Bible 23.9 22.8 23.6 22.2 13.2
----------------------------
Total
publishing 52.5 55.3 57.8 11.0 12.0
Music 28.7 33.8 32.4 ( 0.6) 22.2
Gift 17.8 9.6 8.8 116.3 27.2
Other 1.0 1.3 1.0 ( 7.3) 48.7
----------------------------
Total net
revenues 100.0 100.0 100.0 16.9 17.0
Expenses:
Cost of goods sold 56.1 50.4 51.0 30.1 15.7
Selling, general
and administrative
expenses 43.3 38.5 38.8 31.5 16.0
Amortization of
goodwill and non-
compete agreements 0.7 0.7 0.7 15.7 11.8
----------------------------
Total expenses 100.1 89.6 90.5 30.6 15.8
----------------------------
Operating income
(loss) ( 0.1) 10.4 9.5 ( 101.0) 28.6
Income (loss) from
continuing
operations before
income taxes ( 3.4) 7.6 6.5 ( 152.1) 35.4
Loss from discon-
tinued operations ( 1.5)( 0.4)( 0.4) 364.5 7.2
Net income (loss) ( 3.5) 4.4 4.0 ( 193.2) 29.0
</TABLE>
The Company's net revenues fluctuate seasonally, with net
revenues in the second and third fiscal quarters historically
being greater than those in the first and fourth fiscal quarters.
This seasonality is the result of increased consumer purchases of
the Company's products during the traditional year-end holidays.
Due to this seasonality, the Company has historically incurred a
loss during the first quarter of each fiscal year. In addition,
the Company's quarterly operating results may fluctuate
significantly due to the seasonality of new product
introductions, the timing of selling and marketing expenses and
changes in sales and product mixes. See Note N of Notes to
Consolidated Financial Statements.
The following discussion includes certain forward-looking
statements. Actual results could differ materially from those
reflected by the forward-looking statements and a number of
factors may affect future results, liquidity and capital
resources. These factors include softness in the general retail
environment, the timing of products being introduced to the
market, the level of returns experienced by the operating
divisions, the level of margins achievable in the marketplace and
the ability to minimize operating expenses. Although the Company
believes it has the business strategy and resources needed for
improved operations, future revenue and margin trends cannot be
reliably predicted and may cause the Company to adjust its
business strategy during the 1997 fiscal year.
RESULTS OF OPERATIONS
Fiscal 1996 compared to Fiscal 1995.
Net revenues for fiscal 1996 increased $44.7 million or
16.9% over fiscal 1995 primarily due to volume increases arising
from the introduction of new products in the book, Bible and gift
product divisions and the purchase of Gibson on October 31, 1995.
Net revenues increased for fiscal 1996 over fiscal 1995 in each
of the Company's product lines, except music, as follows: gift
products increased by $29.5 million or 116.3%; Bible products
increased by $13.3 million or 22.2%; book products increased by
$2.7 million or 3.1%; and music products decreased by $0.5
million or 0.6%. Of the increase in net revenues derived from
gift products, approximately $26 million was attributed to Gibson
for fiscal 1996. Price increases did not have a material effect
on net revenues.
The Company's cost of goods sold for fiscal 1996 increased
by $40.1 million or 30.1% over fiscal 1995 and, as a percentage
of net revenues, increased from 50.4% to 56.1%. The increase of
cost of goods sold, as a percentage of net revenues, was the
result of a change in sales mix of market channels as well as <PAGE>
additional provisions for obsolescence and unearned royalty
advances. Sales through the gift market channels more than
doubled from the prior year as a result of the Gibson acquisition
while sales through the direct market
channels decreased as a percentage of total sales. Sales made
through the direct marketing to consumers channel approximate
retail prices while sales through the gift market channel are at
wholesale prices. Therefore, as gift market channel sales
increased and direct marketing sales decreased as a percentage of
the total Company's revenues, cost of sales as a percent of
revenues increased for fiscal 1996 over 1995. Furthermore, the
increased cost of goods sold resulted from a shift in the mix of
sales revenues within the Company's music division from propri-
etary music products to non-proprietary (distributed) music
products. Distributed music products have lower gross margins.
This distributed product revenue increase resulted from the
timing and popularity of distributed product releases. During the
fourth quarter of fiscal 1996, the Company provided for
additional product obsolescence and anticipated unearned royalty
advances of approximately $6 million greater than in fiscal
1995. These provisions were required as a result of an
increase in actual return rates from domestic sales,
excluding direct sales to consumers, which primarily occurred
during the fourth quarter when return rates increased to 29%
from 19% a year ago and had the effect of increasing the return
rate for the full year of fiscal 1996 to 17.8% as compared to a
return rate of 14.5% during fiscal 1995.
Selling, general and administrative expenses for fiscal 1996
increased by $32.0 million or 31.5% over the comparable period in
fiscal 1995. These expenses, expressed as a percentage of net
revenues, increased to 43.3% for fiscal 1996 from 38.5% for
fiscal 1995. These increases resulted from the expansion of
certain direct marketing programs beyond the Company's capacity
for fulfillment combined with a more competitive direct marketing
sales environment which increased advertising, bad debt and
freight costs as a percentage of revenues. In addition, these
increases resulted from higher than anticipated marketing program
costs within the music division incurred to promote sales of
proprietary product. The Company has implemented several
initiatives to improve operating margins, including staff
reductions and limiting the Company's testing of new product
offerings and sale of existing product offerings through direct
marketing.
Interest expense increased 27.7% for fiscal 1996 due to
increased average borrowings for the first quarter of the fiscal
year for working capital needs and for the third and fourth
quarter to fund the Gibson acquisition.
The Company's effective tax (benefit) rate in fiscal 1996
was (39.9)% compared to 36.2% for fiscal 1995. This increased
rate resulted primarily from higher effective state tax rates.
The acquisition of Gibson and expanded sales in states with
higher tax rates were contributing factors. See Note M in the<PAGE>
notes to consolidated financial statements.
The Company had a net loss of approximately $10.9 million
for fiscal 1996. Included in that loss is a loss from
discontinued operations of approximately $4.7 million as a result
of the Company's decision during the fourth quarter to
discontinue the Christian-lifestyle magazines and the radio
networks of the Royal Media division. The loss from discontinued
operations includes an operating loss of approximately $2 million
and a net loss from the sales and/or disposal of these operations
of $2.6 million with expected completion during fiscal 1997.
Fiscal 1995 compared to Fiscal 1994. Net revenues for fiscal
1995 increased by $38.4 million or 17.0% over fiscal 1994
primarily due to volume increases arising from the introduction
of new products in each of the Company's product lines. Net
revenues increased for fiscal 1995 over fiscal 1994 as follows:
music products increased by $16.2 million or 22.2%; book products
increased by $8.7 million or 11.3%; Bible products increased by
$7.0 million or 13.2%; and gift products increased by $5.4
million or 27.2%. Price increases did not have a material effect
on net revenues.
The Company's cost of goods sold in fiscal 1995 increased by
$18.1 million or 15.7% over fiscal 1994 and, as a percentage of
net revenues, decreased slightly to 50.4% in fiscal 1995 from
51.0% in fiscal 1994. The slight decrease in cost of goods sold,
as a percentage of net revenues, resulted from a change in the
mix of product types and distribution channels. During fiscal
1995, the Company derived a greater percentage of its net
revenues from direct marketing which typically have higher gross
margins than sales through other distribution channels, and
higher music sales as a percentage of total sales, which also
have greater gross margins than other product types.
Selling, general and administrative expenses for fiscal 1995
increased by $14.0 million or 16.0% over fiscal 1994. These
expenses, expressed as a percentage of net revenues, decreased
slightly to 38.5% in fiscal 1995 from 38.8% in fiscal 1994
primarily as a result of volume increases and from cost savings
resulting from the consolidation of certain operational
departments. This improvement was partially offset by increased
sales through direct marketing programs, which have relatively
higher selling and marketing costs than sales through other
distribution channels.
Other income for fiscal 1995 increased by $0.7 million over
fiscal 1994 due to a gain on the sale of substantially all of the
assets of a bindery plant in Camden, New Jersey. See Note B of
Notes to Consolidated Financial Statements.
Interest expense for fiscal 1995 increased $1.6 million or
22.9% over fiscal 1994 due to increased borrowings and an
increase in interest rates.
The Company's effective tax rate in fiscal 1995 was 36.2% as
compared to 34.2% for fiscal 1994. This increase resulted from
an increase in the statutory federal tax rate and proportionately
more income in states and foreign countries with higher effective
tax rates. See Note M of Notes to Consolidated Financial
Statements.
LIQUIDITY AND CAPITAL RESOURCES
The primary sources of liquidity to meet the Company's future
obligations and working capital needs are cash generated from
operations and borrowings available under bank credit facilities.
At March 31, 1996, the Company had working capital of $171.4
million. At March 31, 1996, the Company had $57.8 million
outstanding, and $77.2 million available for borrowing, under its
two credit facilities.
Net cash used in operating activities was $24.2 million, $8.9
million and $0.7 million in fiscal 1996, 1995 and 1994,
respectively. The increase in cash used in operations during
fiscal 1996 was principally attributable to the loss from
operations and the increase in inventories. Inventories
increased by $13.2 million primarily as a result of Bible
products inventory increases from the introduction of a new
translation and in new Bible styles to be utilized over an
extended time period. Accounts receivable decreased by $3.9
million in fiscal 1996.
During fiscal 1996, capital expenditures totaled approximately
$4.2 million. The majority of this amount related to capital
expenditures for computer equipment, convention booth and
building improvements. In fiscal 1997, the Company anticipates
capital expenditures of approximately $3.8 million, consisting of
computer equipment, warehousing and manufacturing equipment and
building improvements.
The Company's bank credit facilities are unsecured and consist
of a $125 million credit facility and a $10 million credit
facility (collectively, the "Credit Agreements"). The $125
million credit facility bears interest at either the prime rate<PAGE>
or, at the Company's option, LIBOR plus a percentage, subject to
adjustment based on certain financial ratios and matures on
December 13, 2002. The $10 million credit facility, bears
interest at the prime rate and matures on July 30, 1997. Due to
the seasonality of the Company's business, borrowings under the
Credit Agreements typically peak during the third quarter of the
fiscal year.
On July 18, 1995, the Company consummated the sale of
2,875,000 shares of its common stock with net proceeds to the
Company of approximately $54.4 million. The net proceeds were
used to repay a portion of the borrowings under the Credit
Agreements.
The Company has outstanding $62 million of senior notes
("Senior Notes") which are unsecured. The Senior Notes bear
interest at rates from 6.93% to 9.5% due through fiscal 2008.
Under the terms of the Credit Agreements and Senior Notes, the
Company has agreed to limit the payment of dividends and to
maintain certin interest coverage and debt-to-total capital
ratios which are similarly calculated for each debt agreement.
At March 31, 1996, the Company was in compliance with all
covenants of these debt agreements except for the interest
coverage ratio as to which agreements have been executed to
provide waivers, modified ratios for each fiscal quarter through
quarter ending December 31, 1996, and a return to the original
ratio of 1.75 to 1 for the fiscal year March 31, 1997. The
Company expects to be in compliance with all of its covenants
for each quarter of fiscal 1997 although no assurance can be
given that such compliance will be maintained.
The Company also has outstanding $55 million of 5.75%
convertible subordinated notes ("Convertible Subordinated Notes")
due November 30, 1999. The Convertible Subordinated Notes
presently are convertible into common stock at $17.00 per share
and are redeemable at the Company's option after November 30,
1995, at 103.29% of the principal amount, declining annually
thereafter to 100% on November 30, 1999.
Management believes cash generated by operations and
borrowings available under the Credit Agreements will be
sufficient to fund anticipated working capital requirements for
existing operations through fiscal 1997. <PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS
=======================================================================
Thomas Nelson, Inc. and Subsidiaries
(Dollars in thousands, except per share data)
<CAPTION> Years Ended March 31,
---------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Net revenues $ 308,410 $ 263,711 $ 225,329
Cost of goods sold 172,956 132,891 114,839
----------- ---------- -----------
Gross profit 135,454 130,820 110,490
Selling, general and
administrative expenses 133,651 101,608 87,567
Amortization of goodwill
and non-compete agreements 2,090 1,806 1,616
---------- ----------- -----------
Operating income (loss) ( 287) 27,406 21,307
Other income 595 897 227
Interest expense 10,691 8,375 6,815
---------- ----------- -----------
Income (loss) from continuing
operations before income taxes ( 10,383) 19,928 14,719
Provision (benefit) for income taxes ( 4,147) 7,211 5,035
---------- ----------- -----------
Income (loss) from continuing
operations before cumulative
effect of change in accounting
principle ( 6,236) 12,717 9,684
Discontinued operations:
Operating loss, net of applicable
tax benefits of $1,357, $572,
and $488, respectively ( 2,045) ( 1,007) ( 939)
Loss on disposal, net of
applicable tax benefit of $1,748 ( 2,633) -- --
---------- ----------- -----------
Loss from discontinued operations ( 4,678) ( 1,007) ( 939)
---------- ----------- -----------
Income (loss) before cumulative
effect of change in accounting
principle ( 10,914) 11,710 8,745
Cumulative effect of change in
accounting principle for income
taxes -- -- 336
---------- ----------- -----------
NET INCOME (LOSS) ($ 10,914) $ 11,710 $ 9,081
========== =========== ===========
Weighted average
number of shares outstanding 15,718 13,374 13,355
========== =========== ===========
NET INCOME (LOSS) PER SHARE:
Income (loss) from continuing
operations ($ .39) $ .95 $ .72
Loss from discontinued operations ( .30) ( .07) ( .07)
---------- ----------- -----------
Income (loss) before cumulative
effect of change in accounting
principle ( .69) .88 .65
Cumulative effect of change in
accounting principle -- -- .03
---------- ----------- -----------
NET INCOME (LOSS) ($ .69) $ .88 $ .68
========== =========== ===========
Fully diluted:
Income (loss) from continuing
operations ($ .39) $ .90 $ .72
Loss from discontinued operations ( .30) ( .07) ( .07)
---------- ----------- -----------
Income (loss) before cumulative
effect of change in accounting
principle ( .69) .83 .65
Cumulative effect of change in
accounting principle -- -- .02
---------- ----------- -----------
NET INCOME (LOSS) ($ .69) $ .83 $ .67
========== =========== ===========
</TABLE>
See NOTES TO CONSOLIDATED FINANCIAL STATEMENTS <PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
======================================================================
Thomas Nelson, Inc. and Subsidiaries
(Dollars in thousands, except per share data)
<CAPTION> March 31,
----------------------------
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 672 $ 767
Accounts receivable, less
allowances of $10,959 and
$9,001, respectively 99,221 84,725
Income tax refunds receivable 4,440 870
Inventories, net 97,496 69,351
Prepaid expenses 18,045 14,725
Deferred tax asset 17,120 7,714
------------ ------------
Total current assets 236,994 178,152
Other assets 19,347 19,855
Property, plant and equipment, net 36,634 16,084
Deferred charges 3,658 4,149
Goodwill, less accumulated
amortization of $3,353 and
$2,046, respectively 76,963 31,179
------------ ------------
TOTAL ASSETS $ 373,596 $ 249,419
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 30,158 $ 32,419
Accrued expenses 28,858 19,108
Dividends payable 685 537
Current portion of long-term debt 2,376 892
Current portion of capital lease
obligations 249 780
Net liability of discontinued
operations 3,251 --
------------ ------------
Total current liabilities 65,577 53,736
Long-term debt 179,489 120,108
Capital lease obligations 527 80
Deferred tax liability 3,127 1,410
Other liabilities 2,506 1,356
Commitments and contingencies
Shareholders' equity
Preferred stock, $l.00 par
value, authorized l,000,000
shares; none issued -- --
Common stock, $1.00 par value,
authorized 20,000,000 shares;
issued 16,004,368 and
12,362,377, respectively 16,004 12,362
Class B common stock, $l.00
par value, authorized 5,000,000
shares; issued 1,112,075 and
1,067,094, respectively 1,112 1,067
Additional paid-in capital 78,825 18,211
Retained earnings 26,952 40,538
Deferred compensation ( 828) --
Foreign currency translation
adjustments 305 551
------------ ------------
Total shareholders' equity 122,370 72,729
------------ ------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 373,596 $ 249,419
============ ============
</TABLE>
See NOTES TO CONSOLIDATED FINANCIAL STATEMENTS <PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
======================================================================
Thomas Nelson, Inc. and Subsidiaries
(Dollars in thousands, except per share data)
<CAPTION> Foreign
Class B Additional Currency Deferred
Common Common Paid-in Retained Translation Compensa-
Stock Stock Capital Earnings Adjustments tion
-------- ------- -------- --------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance at
April 1, 1993 $ 9,877 $ 805 $ 20,667 $ 23,463 $ 480 $ --
Net income 9,081
Common stock
issued:
Option plans -
9,000 common 9 36
Dividends declared
- $0.128 ( 1,696)
PPC, Inc. common
stock:
Dividends declared ( 197)
Net issued 279
Foreign currency
translation
adjustments ( 79)
Class B common
stock converted
to common stock 5 ( 5)
-------- ------- -------- --------- ----------- --------
Balance at
March 31, 1994 9,891 800 20,982 30,651 401 --
Net income 11,710
Common stock
issued:
Option plans -
10,500 common
and 60,000
Class B
common
shares 11 60 306
Retirement for
option
payments
15,038 common
and 180 Class
B common
shares ( 15) ( 348)
Dividends declared
- $0.136 ( 1,823)
Executive Stock
Purchase Plan
Retired 2,255
shares of
common ( 2) ( 26)
Foreign currency
translation
adjustments 150
Stock dividend
- 25% 2,471 213 ( 2,703)
Class B common
stock converted
to common stock 6 ( 6)
-------- ------- -------- --------- ----------- --------
Balance at
March 31, 1995 12,362 1,067 18,211 40,538 551 --
Net loss ( 10,914)
Common stock
issued:
Option plans -
26,738 common
and 18,750
Class B
common shares 27 19 153
Retirement for
option payments
7,349 common
shares ( 7) ( 141)
Incentive plan
stock awards -
49,294 common
shares and
26,250 Class B
common shares 49 26 614
Common stock
offering 2,875 51,521
C.R. Gibson
ESOP - 698,308
common shares 698 8,467
Dividends declared
- $0.16 ( 2,672)
Deferred
compensation ( 828)
Foreign currency
translation
adjustments ( 246)
-------- ------- -------- --------- ----------- -------- <PAGE>
Balance at
March 31, 1996 $16,004 $ 1,112 $ 78,825 $ 26,952 $ 305 ($ 828)
======== ======= ======== ========= =========== =======
</TABLE>
See NOTES TO CONSOLIDATED FINANCIAL STATEMENTS <PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
======================================================================
Thomas Nelson, Inc. and Subsidiaries
<CAPTION>
(Dollars in thousands) Years Ended March 31,
----------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ($ 6,236) $ 12,717 $ 10,020
Adjustments to reconcile net
income to net cash provided
by (used in) operations:
Depreciation and amortization 9,018 5,862 5,343
Deferred income taxes ( 3,924) 5,601 ( 1,062)
Cumulative effect of change
in accounting principle -- -- ( 336)
Effect of exchange rate
changes on cash ( 23) 2 ( 7)
Loss (gain) on sale of
property, plant and
equipment ( 449) ( 702) 61
Deferred compensation 222 -- --
Changes in assets and
liabilities, net of
acquisitions and
disposals:
Accounts receivable, net 3,918 ( 26,853) ( 8,685)
Income tax refunds
receivable ( 3,570) ( 870) --
Inventories ( 13,200) ( 2,713) ( 13,025)
Prepaid expenses ( 1,116) ( 7,841) ( 800)
Accounts payable and
accrued expenses ( 8,336) 12,194 3,651
Income taxes currently
payable and deferred -- ( 4,471) 5,244
----------- ---------- ----------
Net cash provided by
(used) in continuing
operations ( 23,696) ( 7,074) 404
----------- ---------- ----------
Discontinued operations:
Loss from discontinued
operations ( 2,045) ( 1,007) ( 939)
Loss on disposal of
discontinued operations ( 2,633) -- -- <PAGE>
Items not affecting cash, net 4,503 -- --
Cash used for discontinued
operations ( 362) ( 867) ( 193)
----------- ---------- ----------
Net cash used by
discontinued operations ( 537) ( 1,874) ( 1,132)
----------- ---------- ----------
Net cash used in operating
activities ( 24,233) ( 8,948) ( 728)
----------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ( 4,194) ( 2,191) ( 2,284)
Proceeds from sale of property,
plant and equipment 854 23 34
Proceeds from sale of business
assets -- 2,823 4,155
Purchase of net assets of
acquired companies -
net of cash received ( 70,217) ( 187) --
Changes in other assets and
deferred charges ( 1,809) ( 4,975) ( 5,487)
----------- ---------- ----------
Net cash used in investing
activities ( 75,366) ( 4,507) ( 3,582)
----------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings (payments) under
line of credit ( 1,000) 18,300 9,298
Proceeds from issuance of
long-term debt 50,000 -- --
Payments on long-term debt ( 9,375) ( 892) ( 195)
Payments on capital lease
obligations ( 901) ( 723) ( 566)
Changes in other liabilities ( 774) ( 1,646) ( 2,542)
Dividends paid ( 2,524) ( 1,713) ( 1,888)
Proceeds from issuance of
common stock 64,449 377 433
Common stock retired ( 148) ( 391) ( 108)
----------- ---------- ----------
Net cash provided by financing
activities 99,727 13,312 4,432
----------- ---------- ----------
EFFECT OF TRANSLATION RATE CHANGES ( 223) 148 ( 72)
----------- ---------- ----------
Net increase (decrease) in <PAGE>
cash and cash equivalents ( 95) 5 50
Cash and cash equivalents
at beginning of year 767 762 712
----------- ---------- ----------
Cash and cash equivalents
at end of year $ 672 $ 767 $ 762
=========== ========== ==========
Supplemental disclosures of
noncash investing and
financing activities:
Non-compete agreements $ -- $ -- $ 300
Capital lease obligations
incurred to lease new
equipment $ 674 $ -- $ 764
Dividends accrued and unpaid $ 685 $ 537 $ 428
</TABLE>
See NOTES TO CONSOLIDATED FINANCIAL STATEMENTS <PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
=================================================================
Thomas Nelson, Inc. and Subsidiaries
NOTE A-DESCRIPTION OF THE BUSINESS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
DESCRIPTION OF THE BUSINESS: Thomas Nelson, Inc. (a
Tennessee corporation) and Subsidiaries (the "Company"),
is a publisher, producer and distributor of books and
recorded music emphasizing Christian, inspirational and
family value themes. The Company also designs and markets
a broad line of gift and stationery products. The
principal markets for the Company's products are Christian
bookstores, general bookstores, mass merchandisers, gift
stores and direct marketing to consumers in English-
speaking countries.
PRINCIPLES OF CONSOLIDATION: The consolidated financial
statements consist of the accounts of the Company
including its subsidiaries, Word, Incorporated ("Word"),
The C.R. Gibson Company ("Gibson"), and PPC, Inc. ("Pretty
Paper"). See Note B for additional information. The
consolidated statement of operations for the year ended
March 31, 1996, includes Gibson operations for the five
months ended March 31, 1996. All financial data presented
in the consolidated financial statements and notes thereto
have been restated for all periods shown to include the
accounts of Pretty Paper under the pooling-of-interests
method of accounting. All intercompany transactions and
balances have been eliminated.
SALES RETURNS: Provision is made for the estimated effect of
sales returns where right-of-return privileges exist.
Returns of products from customers are accepted in
accordance with standard industry practice. The full
amount of the returns allowance (estimated returns to be
received net of inventory and royalty costs) is shown,
along with the allowance for doubtful accounts, as a
reduction of accounts receivable in the accompanying
financial statements.
INVENTORIES: Inventories are stated at the lower of cost or
market using the first-in, first-out (FIFO) valuation
method. Costs of the production and publication of
products are included in inventory and charged to<PAGE>
operations when sold or when otherwise disposed. Costs of
abandoned publishing projects and appropriate provisions
for inventory obsolescence and decreases in market value
are charged to operations on a current basis.
PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment
are stated at cost. Depreciation and amortization are
provided for principally on the straight-line method over
the estimated useful lives of the individual assets.
GOODWILL: Goodwill is being amortized on a straight-line
basis over forty years. Subsequent to acquisitions, the
Company continually evaluates whether later events and
circumstances have occurred that indicate the remaining
estimated useful life of goodwill may warrant revision or
that the remaining balance of goodwill may not be
recoverable. In the evaluation of possible impairment,
the Company uses the most appropriate method of evaluation
given the circumstances surrounding the particular
acquisition, which has generally been an estimate of the
related business unit's undiscounted operating income
before interest and taxes over the remaining life of the
goodwill.
PREPAID EXPENSES: Prepaid expenses consist primarily of
royalty advances and certain production costs of music
products. These costs are expensed over the expected
benefit periods.
DEFERRED CHARGES: Deferred charges consist primarily of
loan issuance costs which are being amortized over the
average life of the related debt. Also included are
publication costs that are expected to be of significant
benefit to future periods and other deferred charges, all
of which are amortized over periods not to exceed 60
months.
OTHER ASSETS: Other assets consist primarily of costs of
copyright production masters which are amortized over
periods not to exceed 60 months, a non-compete agreement
related to the Word acquisition which is being amortized
over 60 months (the term of the agreement), prepaid
royalty and production advances for works and projects
which are not expected to be released within the next
fiscal year and direct marketing costs expected to benefit
future periods.
INCOME TAXES: Income taxes are accounted for in accordance<PAGE>
with SFAS 109, "Accounting for Income Taxes." Deferred
income taxes are provided for temporary differences
between the financial statement and income tax basis of
assets and liabilities. The Company had adopted SFAS 109
effective April 1, 1993, the first day of its fiscal 1994
operations. See Note M for additional information.
FOREIGN CURRENCY TRANSLATION: Assets and liabilities of
foreign subsidiaries are translated at year-end rates of
exchange and revenues and expenses are translated at the
average rate of exchange for the year. Gains and losses
resulting from translation are accumulated in a separate
component of shareholders' equity. Gains and losses
resulting from foreign currency transactions are not
material.
COMPUTATION OF NET INCOME PER SHARE: Net income per share is
computed by dividing net income by the weighted average
number of common and Class B common shares outstanding
during the year, which includes the additional dilution
related to stock options. The fully diluted per share
computation reflects the effect of common shares
contingently issuable upon conversion of convertible debt
securities in periods in which such exercise would cause
dilution and the effect on net income of converting the
debt securities.
STATEMENT OF CASH FLOWS: For purposes of the statement of
cash flows, the Company considers as cash equivalents all
highly liquid debt instruments with a maturity of three
months or less.
ACCOUNTING ESTIMATES: The preparation of financial
statements in conformity with generally accepted
accounting principles requires management to make
estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial
statements and the reported amounts of revenues and
expenses during the reported period. Actual results could
differ from those estimates.
NEWLY ISSUED ACCOUNTING STANDARD: In 1995, the Financial
Accounting Standards Board issued Statement of Financial
Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets
To Be Disposed Of" ("SFAS 121"). Adoption of SFAS 121 is
required for fiscal years beginning after December 15,<PAGE>
1995. Although the Company does not plan to adopt SFAS
121 until fiscal 1997, it has determined that the adoption
of the pronouncement will not have a material impact on
its financial statements.
RECLASSIFICATIONS: Certain reclassifications of prior
period amounts have been made to conform to the current
year's presentation.<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
=================================================================
Thomas Nelson, Inc. and Subsidiaries
NOTE B-ACQUISITIONS AND DISPOSITIONS
In March 1994, Pretty Paper became a wholly-owned subsidiary
of the Company, and 115,551 shares of the Company's common stock
were issued in exchange for all of the outstanding common stock
of Pretty Paper. The combination was accounted for as a pooling
of interests, and accordingly, the accompanying financial
statements have been restated to include the accounts and
operations of Pretty Paper for all periods prior to the
combination.
The Company completed its $9.00 per share cash tender offer
effective October 31, 1995, for the outstanding shares of common
stock of Gibson for approximately $67 million. The purchase
price was funded by the Company's issuance of $50 million of the
Company's Senior Notes and by borrowings under the Company's
Credit Agreements. See Note H for additional information.
Gibson, headquartered in Norwalk, Connecticut, manufactures and
markets a wide range of paper, gift and stationery products,
primarily under the C.R. Gibson, Creative Papers and Clinton
Prints brand names. Products include baby and wedding memory
books, stationery, giftwrap, greeting cards and paper tableware.
The Gibson acquisition has been accounted for as a purchase,
and Gibson's results of operations are included in the Company's
consolidated financial statements since the date of acquisition.
The total acquisition cost has been allocated to the net assets
acquired based on the information currently available as to the
estimated fair values. An evaluation of the acquired assets and
liabilities is in progress. Upon completion of the evaluation,
net additions or reduction, if any, in the fair values currently
assigned will be credited, or charged, to cost in excess of fair
value of assets acquired (goodwill). The purchase price has been
tentatively allocated to the purchased assets and assumed
liabilities as follows (in thousands):<PAGE>
Working capital, net $ 7,428
Property, plant and equipment, net 20,138
Goodwill 45,974
Other assets 9,607
Other liabilities ( 15,743)
---------
$ 67,404
=========
The following unaudited pro forma information combines the
consolidated results of operations of the Company and Gibson as
if the acquisition had occurred on April 1, 1994, after giving
effect to amortization of goodwill and interest expense on
borrowings to finance the acquisition. The pro forma information
is not necessarily indicative of the results of operations which
would have actually been obtained during such periods. While the
Company believes that it will realize certain long-term synergies
through the integration of certain operating functions, there can
be no assurances that such synergies can be realized, and no
amounts have been reflected in the pro forma adjustments to
reflect such anticipated synergies.
<TABLE>
<CAPTION> Unaudited
Years Ended March 31,
----------------------
1996 l995
--------- ---------
(In thousands, except per share data)
<S> <C> <C>
Net revenues $ 348,939 $ 314,132
Net income (loss) from
continuing operations ($ 12,415) $ 11,860
Net income (loss) per share
from continuing operations ($ .79) $ .89
</TABLE>
NOTE C-INVENTORIES
Inventories consisted of the following at March 31 (in
thousands):
<TABLE>
<CAPTION>
1996 l995
--------- ---------
<S> <C> <C>
Finished goods $ 77,318 $ 59,116
Work in process and raw materials 20,178 10,235 <PAGE>
--------- ---------
$ 97,496 $ 69,351
========= =========
</TABLE>
NOTE D-PREPAID EXPENSES
Prepaid expenses consisted of the following at March 31 (in
thousands):
<TABLE>
<CAPTION> 1996 1995
--------- ---------
<S> <C> <C>
Royalties and production costs $ 16,236 $ 11,516
Other 1,809 3,209
--------- ---------
$ 18,045 $ 14,725
========= =========
</TABLE>
NOTE E-PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following at
March 31 (in thousands):
<TABLE>
<CAPTION> 1996 l995
--------- ---------
<S> <C> <C>
Land $ 4,948 $ 1,916
Buildings 19,885 11,314
Machinery and equipment 25,317 8,817
Furniture and fixtures 4,541 3,521
Assets under capital leases 3,475 2,800
--------- ---------
58,166 28,368
Less allowance for depreciation
and amortization ( 21,532) ( 12,284)
--------- ---------
$ 36,634 $ 16,084
========= =========
</TABLE>
NOTE F-OTHER ASSETS
Other assets consisted of the following at March 31 (in
thousands): <PAGE>
<TABLE>
<CAPTION> 1996 l995
--------- ---------
<S> <C> <C>
Prepaid royalties $ 10,531 $ 9,050
Direct marketing costs 1,605 4,562
Production masters, net of accumulated
amortization of $1,785 and $1,267,
respectively 1,734 2,089
Non-compete agreements, net of
accumulated amortization of $3,059
and $2,121, respectively 1,744 2,682
Other 3,733 1,472
--------- ---------
$ 19,347 $ 19,855
========= =========
</TABLE>
NOTE G-ACCRUED EXPENSES
Accrued expenses consisted of the following at March 31 (in
thousands):
<TABLE>
<CAPTION> 1996 l995
--------- ---------
<S> <C> <C>
Accrued royalties $ 12,361 $ 10,992
Accrued payroll 6,111 4,960
Accrued integration costs 3,296 --
Accrued interest 3,263 1,247
Other 3,827 1,909
--------- ---------
$ 28,858 $ 19,108
========= =========
</TABLE>
Cash payments for interest were $9.6 million in 1996, $8.0
million in 1995 and $6.2 million in 1994. <PAGE>
NOTE H-LONG-TERM DEBT
Long-term debt consisted of the following at March 31 (in
thousands):
<TABLE>
<CAPTION> 1996 1995
--------- ---------
<S> <C> <C>
Industrial Revenue Bonds, 7.75% to
8.35%, due through 2005 $ 2,475 $ 2,700
Loan Agreement 3,667 4,333
Credit Agreements 57,800 58,800
Senior Notes 62,000 --
Convertible Subordinated Notes 55,000 55,000
Other 923 167
--------- ---------
181,865 121,000
Less current portion ( 2,376) ( 892)
--------- ---------
$ 179,489 $ 120,108
========= =========
</TABLE>
At March 31, 1996, Industrial Revenue Bonds were secured by
property, plant and equipment with a net book value of
approximately $2.1 million.
The Loan Agreement indebtedness is secured by property,
plant and equipment related to the Company's Nashville warehouse
and distribution center expansion completed in June 1992.
Interest payable monthly is at the London Interbank Offered Rate
("LIBOR") plus 1.25%, which was 6.6875% at March 31, 1996. Semi-
annual principal payments are due through March 2002.
The Company has Credit Agreements totaling $135 million as
of March 31, 1996. In January 1996, the primary credit facility
("Credit Facility") was amended to provide $125 million maturing
in fiscal 2003. The Credit Facility bears interest at either the
prime rate or, at the Company's option, the LIBOR plus a
percentage, based on certain financial ratios. At March 31,
1996, the average interest rate was 6.0%. The Credit Facility is
guaranteed by all of the Company's material subsidiaries and the
Company has agreed, among other things, to limit the payment of
cumulative cash dividends and to maintain certain interest
coverage and debt-to-total-capital ratios. The maximum dividends
which the Company may pay for fiscal 1997 are $2.9 million.
Additionally, the Company has a $10 million credit facility which <PAGE>
matures July 30, 1997, and bears interest at the prime rate, with
covenants which are the same as the Credit Facility. At
March 31, 1996, the Company was in compliance with all covenants
of the Credit Agreements or had obtained appropriate waivers. At
March 31, 1996, the Company had $77.2 million available under its
Credit Agreements.
The Company has outstanding $62 million of Senior Notes
which bear interest at rates from 6.93% to 9.5% and are due
through fiscal 2008. Under the terms of the Senior Notes, the
Company has agreed, among other things, to limit the payment of
cash dividends and to maintain certain interest coverage and
debt-to-total capital ratios. The maximum dividends which the
Company may pay for fiscal 1997 are $2.9 million. At March 31,
1996, the Company was in compliance with all covenants of the
Senior Notes or had obtained appropriate waivers.
The Company has issued $55 million of Convertible
Subordinated Notes due November 30, 1999, priced at par to yield
5.75%. The notes are convertible into common stock initially at
$17.00 per share and are redeemable at the Company's option after
November 30, 1995, at 103.29% of the principal amount, declining
thereafter to 100% on November 30, 1999. This conversion would
result in 3,235,294 additional shares outstanding.
Maturities of long-term debt for the years ending March 31,
are as follows (in thousands):
1997 $ 2,376
1998 3,780
1999 4,838
2000 60,889
2001 3,889
2002 and thereafter 106,093
---------
$ 181,865
=========
NOTE I-LEASES
Total rental expense for all operating leases, including
short-term leases of less than a year, amounted to approximately
$3.1 million in 1996, $2.2 million in 1995, and $2.2 million in
1994. Generally, the leases provide that, among other things,
the Company shall pay for utilities, insurance, maintenance, and
property taxes in excess of base year amounts.<PAGE>
Minimum rental commitments under non-cancelable leases for
the years ending March 31, are as follows (in thousands):
<TABLE>
<CAPTION> Operating Capital
Leases Leases
--------- ---------
<S> <C> <C>
1997 $ 2,981 $ 249
1998 2,159 289
1999 1,643 254
2000 564 89
2001 428 --
2002 and thereafter 1,845 --
--------- ---------
Total minimum lease payments $ 9,620 881
=========
Less amount representing interest ( 105)
---------
Present value of net lease payments 776
Less current portion ( 249)
---------
$ 527
=========
</TABLE>
NOTE J-STOCK PLANS
1986 STOCK INCENTIVE PLAN: The Company adopted the 1986 Stock
Incentive Plan, which is administered by the Company's
Compensation Committee. Stock options were granted under the
1986 Stock Incentive Plan at a price not less than the fair
market value ("FMV") of the stock on the date the option is
granted and must be exercised not later than five years after
the date of grant. Stock options issued to a person then
owning more than 10% of the voting power in all classes of the
Company's outstanding stock were granted at a purchase price
of not less than 110% of the FMV and must be exercised within
five years from the date of grant. The 1986 Stock Incentive
Plan terminated in March 1996 and options outstanding remain
in effect until exercised or expired. Options outstanding
under this plan are as follows:
<TABLE>
CAPTION
<PAGE>
COMMON STOCK CLASS B COMMON STOCK FMV
--------------------- ---------------------- -------------
Remaining Out- Remaining Out-
Shares standing Shares standing Exercise
Reserved Optioned Reserved Optioned Prices
For Grant Shares For Grant Shares Per Share
---------- --------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C>
April 1,
1993 56,738 46,500 190,487 75,000 $ 5.00-$ 6.23
Exercised -- ( 9,000) -- -- 5.00
Cancelled 1,500 ( 1,500) -- -- 5.00
---------- --------- ---------- ---------- --------------
March 31,
1994 58,238 36,000 190,487 75,000 5.00- 6.23
Granted ( 60,238) 200,000 ( 189,762) 50,000 14.40- 18.40
Stock
Dividend -- 54,750 181 16,250 ( 1.00)-(1.83)
Exercised -- ( 15,000) -- ( 60,000) 4.00- 4.40
Cancelled 2,000 ( 2,000) -- -- 4.00
---------- --------- ---------- ---------- --------------
March 31,
1995 -- 273,750 906 81,250 4.00- 18.40
Exercised -- ( 21,094) -- ( 18,750) 4.00
Cancelled 29,344 ( 29,344) -- -- 4.00
Plan
terminated ( 29,344) -- ( 906) -- --
---------- --------- ---------- ---------- --------------
March 31,
1996 -- 223,312 -- 62,500 $14.40-$15.84
========== ========= ========== ========== ==============
</TABLE>
1990 DEFERRED COMPENSATION OPTION PLAN FOR OUTSIDE DIRECTORS:
The Company has adopted the 1990 Deferred Compensation Option
Plan for Outside Directors, which is administered by the
Company's Compensation Committee. Options may be awarded, on
or prior to the annual meeting of shareholders or on initial
election to the Board of Directors ("Board"), to each Director
of the Company who files with the Company an irrevocable
election to receive options in lieu of not less than fifty
percent (50%) of the retainer fees to be earned during each
fiscal year. The option price shall be $1.00 per share with
the number of shares being determined by dividing the amount
of the annual retainer fee by the fair market value of the
shares on the option date less $1.00 per share. The amount of
annual retainer fee for options is expensed by the Company as<PAGE>
earned. Options granted and outstanding under this plan are
as follows:
<TABLE>
<CAPTION>
COMMON STOCK
--------------------------
Remaining
Shares Outstanding
Reserved Optioned
For Grant Shares
--------- ---------
<S> <C> <C>
April 1, 1993 132,105 8,597
Granted ( 3,840) 3,840
--------- ---------
March 31, 1994 128,265 12,437
Stock Dividend 31,023 4,153
Granted ( 4,175) 4,175
--------- ---------
March 31, 1995 155,113 20,765
Granted ( 3,030) 3,030
--------- ---------
March 31, 1996 152,083 23,795
======== =========
</TABLE>
1992 EMPLOYEE STOCK INCENTIVE PLAN: The Company has adopted the
1992 Amended and Restated Employee Stock Incentive Plan, which
is administered by the Company's Compensation Committee.
Stock options, stock appreciation rights, restricted stock,
deferred stock, stock purchase rights and other stock-based
awards may be granted to employees under this plan. In
addition, 140,000 shares of common stock have been authorized
for issuance under this plan for annual stock option grants to
each of the Company's outside directors for the purchase of
2,000 shares of common stock. Stock options have been granted
under this plan as indicated in the table below. In addition,
for fiscal 1995 and 1996, restricted stock awards were
granted. Under the provision of the restricted stock awards,
employees may earn 50% of the award in fiscal years 1995 and
1996 based upon achieving performance goals in each year
provided the employee does not terminate his or her employment
for two years subsequent to when an award is earned. During
fiscal 1996, the Company issued 51,376 shares of common stock
and 24,168 shares of Class B common stock pursuant to such
restricted stock awards. Compensation expense of $0.7 million
related to this plan was recognized during fiscal 1996. <PAGE>
<TABLE>
<CAPTION>
Outstanding Outstanding FMV
Remaining Award Shares Option Shares --------
Shares --------------- -------------- Exercise
Reserved Common Class B Common Class B Prices
For Grant Stock Stock Stock Stock Per Share
--------- -------- ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance at
April 1, 1994 750,000 -- -- -- -- $ --
Awards Granted ( 187,084) 132,084 55,000 -- -- --
Stock Dividend 187,500 -- -- -- -- --
---------- -------- -------- ------- ------- ---------
Balance at
March 31, 1995 750,416 132,084 55,000 -- -- --
Awards Cancelled 21,136 ( 17,804) ( 3,332) -- -- --
Awards Issued -- ( 51,376) (24,168) -- -- --
Options Granted ( 635,500) -- -- 305,500 330,000 18.375
Shares Authorized 1,202,500 -- -- -- -- --
---------- -------- -------- ------- ------- --------
Balance at
March 31, 1996 1,338,552 62,904 27,500 305,500 330,000 $ 18.375
========== ======== ======== ======= ======= ========
</TABLE>
NOTE K-RETIREMENT PLANS
The Company has adopted the Thomas Nelson, Inc. Employee
Stock Ownership Plan ("Company ESOP") which includes a 401(k)
feature. In addition, Gibson maintains The C.R. Gibson Company
Employee Stock Ownership Plan ("Gibson ESOP") and The C.R. Gibson
Company Savings and Investment Plan ("Gibson 401(k) Plan"). The
Company ESOP covers all eligible officers and employees other
than those employed by Gibson. The Company, at its discretion,
matches each employee's 401(k) contribution annually and, in
addition, may make retirement contributions to the ESOP at its
discretion. The Gibson ESOP and Gibson 401(k) Plan benefit all
eligible Gibson employees. Gibson, at its discretion, matches
each Gibson employee's 401(k) contributions annually and
contributes 4% of the first $6,600 of a participant's
compensation in the Gibson 401(k) Plan. Annual contributions to
the Gibson ESOP are a percentage of compensation in accordance
with the plan provisions and are used to repay the loan to the
Company and to acquire additional shares of common stock. The
shares acquired by the Gibson ESOP through the loan are released
and allocated to the participants as the loan is paid by
contributions. The Company's contributions to these retirement
plans including matching contributions totaled $1.5 million, $1.0
million and $0.9 million in 1996, 1995 and 1994, respectively.<PAGE>
NOTE L-COMMON STOCK
On March 24, 1995, the Company effected a five-for-four
stock split in the form of a 25% stock dividend. All common
stock, Class B common stock, dividends per share and earnings per
share data has been restated to reflect this five-for-four stock
split.
On July 24, 1995, the Company sold 2,875,000 shares of
Common Stock at $20.00 per share to a group of underwriters in a
registered public offering. The net proceeds to the Company of
approximately $54.6 million were used to repay amounts
outstanding under the Company's bank Credit Agreements.
NOTE M-INCOME TAXES
The Company adopted SFAS 109 "Accounting for Income Taxes"
effective April 1, 1993. The adoption of SFAS 109 at the
inception of its fiscal 1994 resulted in a cumulative effect of
change in accounting principle of $0.3 million, or $.03 per
share, and is reported in the consolidated statement of
operations for fiscal year ended March 31, 1994.
The income tax provision is comprised of the expense
(benefit) as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Current:
U.S. federal ($ 3,604) $ 97 $ 4,973
State 150 839 417
Foreign 126 102 219
-------- -------- --------
Total current ( 3,328) 1,038 5,609
Deferred ( 3,924) 5,601 ( 1,062)
-------- -------- --------
Total tax provision ($ 7,252) $ 6,639 $ 4,547
======== ======== ========
</TABLE>
SFAS 109 permits the recognition of a deferred tax asset if <PAGE>
it is more likely than not that the future tax benefit will be
realized. The Company believes that, based on its history of
profitable operations, the net deferred tax asset of $14.0
million will be realized on future tax returns, primarily from
the generation of future taxable income. The net deferred tax
asset is comprised of the following (in thousands):
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Accelerated depreciation ($ 2,913) ($ 1,396)
Deferred charges ( 779) ( 424)
Contributions 1,663 450
Inventory obsolescence reserve 4,748 3,032
Bad debt and returns reserves 4,051 3,298
Inventory-unicap tax adjustment 3,142 3,486
Advances and prepaid expenses 2,478 1,540
Accrued liabilities 3,559 1,442
Discontinued operations 1,665 --
Other 1,769 ( 51)
Valuation allowance ( 5,390) ( 5,073)
-------- --------
Net deferred tax asset $ 13,993 $ 6,304
======== ========
</TABLE>
Reconciliation of the statutory federal income tax rate to
the Company's effective rate is as follows:
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
U.S. federal statutory tax rate
provision (benefit) ( 34.0%) 34.5% 34.2%
State taxes on income ( 6.7%) 4.6% 3.1%
Other .8% ( 2.9%)( 3.1%)
-------- -------- --------
Effective tax rate ( 39.9%) 36.2% 34.2%
======== ======== ========
</TABLE>
Cash payments for income taxes were $0.9 million, $6.0
million, and $0.4 million in 1996, 1995 and 1994, respectively. <PAGE>
NOTE N-QUARTERLY RESULTS (UNAUDITED)
Summarized results for each quarter in the fiscal years
ended March 31, 1996 and 1995 are as follows (dollars in
thousands, except per share data):
<TABLE>
<CAPTION>
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
1996
- -----
Net revenues $ 60,299 $ 80,531 $ 86,238 $ 81,342
Gross profit $ 31,721 $ 37,393 $ 40,716 $ 25,624
Net income (loss)
from continuing
operations ($ 86) $ 3,943 $ 2,081 ($ 12,174)
Net loss from
discontinued
operations ($ 272) ($ 501) ($ 433) ($ 3,470)
Net income (loss) ($ 358) $ 3,442 $ 1,648 ($ 15,646)
Net income (loss)
per share from
continuing
operations ($ 0.01) $ 0.25 $ 0.13 ($ 0.72)
Net loss per share
from discontinued
operations ($ 0.02) ($ 0.03) ($ 0.03) ($ 0.21)
Net income (loss)
per share ($ 0.03) $ 0.22 $ 0.10 ($ 0.93)
1995
- -----
Net revenues $ 48,874 $ 70,177 $ 70,761 $ 73,899
Gross profit $ 23,696 $ 34,926 $ 35,386 $ 36,812
Net income (loss)
from continuing
operations ($ 445) $ 6,065 $ 5,022 $ 2,075
Net loss from
discontinued
operations ($ 99) ($ 442) ($ 207) ($ 259)
Net income (loss) ($ 544) $ 5,623 $ 4,815 $ 1,816
Net income (loss)
per share from
continuing
operations ($ 0.03) $ 0.45 $ 0.38 $ 0.16
Net loss per share
from discontinued <PAGE>
operations ($ 0.01) ($ 0.03) ($ 0.02) ($ 0.02)
Net income (loss)
per share ($ 0.04) $ 0.42 $ 0.36 $ 0.14
</TABLE>
NOTE O-COMMITMENTS AND CONTINGENCIES
The Company has commitments to provide advances to certain
artists and authors in connection with products they are
developing for the Company. Estimated commitments totaled $23.9
million at March 31, 1996. The timing of payments will be
dependent upon the performance by the authors and artists of
conditions provided in the applicable contracts. It is
anticipated that a substantial portion of the commitments will be
completed within the next five years.
The Company is subject to various legal proceedings, claims
and liabilities, which arise in the ordinary course of business.
In the opinion of management, the amount of ultimate liability
with respect to these actions will not materially affect the
financial position or results of operations of the Company.
NOTE P-FINANCIAL INSTRUMENTS
The following disclosure of estimated fair value of
financial instruments as of March 31, 1996 is made in accordance
with SFAS No. 107, "Disclosures about Fair Value of Financial
Instruments". The estimated fair value amounts have been
determined by the Company using available market information as
of March 31, 1996 and 1995, respectively. The estimates
presented are not necessarily indicative of amounts the Company
could realize in a current market transaction (in thousands):
<TABLE>
<CAPTION> 1996 1995
-------------------- ----------------------
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
-------------------- ----------------------
<S> <C> <C> <C> <C>
CASH AND CASH EQUIVALENTS $ 672 $ 672 $ 767 $ 767
LONG-TERM DEBT:
Industrial Revenue
Bonds $ 2,475 $ 2,475 $ 2,700 $ 2,700
Capital Lease
Obligations $ 776 $ 776 $ 860 $ 860 <PAGE>
Loan Agreement $ 3,667 $ 3,667 $ 4,333 $ 4,333
Credit Agreements $ 57,800 $ 57,800 $ 58,800 $ 58,800
Senior Notes $ 62,000 $ 58,733 -- --
Convertible
Subordinated Notes $ 55,000 $ 57,200 $ 55,000 $ 65,450
</TABLE>
The fair values of the Convertible Subordinated Notes and
the Senior Notes are based on the unofficial market for these
privately placed instruments. The carrying value of the
Company's Credit Agreements and Loan Agreement approximates the
fair value. Due to the variable rate nature of the instruments,
the interest rate paid by the Company approximates the current
market rate demanded by investors; therefore, the instruments are
valued at par. The carrying value of the Industrial Revenue
Bonds and the Capital Lease Obligation approximates the fair
value.
Outstanding letters of credit totaled $3.6 million and $4.1
million as of March 31, 1996 and 1995, respectively. The letters
of credit guarantee performance to third parties of various trade
activities. Fair value estimated on the basis of fees paid to
obtain the obligations is not material at March 31, 1996 and
1995.
Financial instruments which potentially subject the Company
to credit risk consist primarily of trade receivables. Credit
risk on trade receivables is minimized as a result of the large
and diverse nature of the Company's customer base.
NOTE Q-DISCONTINUED OPERATIONS
During March 1996, the Company adopted plans to sell the
Christian-lifestyles magazines and the radio networks of the
Company's Royal Media division. These operations are accounted
for as discontinued operations, and accordingly, their assets,
liabilities and results of operations are segregated in the
accompanying consolidated statements of operations, balance
sheets and statements of cash flows.
Net revenues, operating costs and expenses, other income and
expense, and income taxes for all periods presented have been
reclassified for amounts associated with the discontinued
operations. <PAGE>
Sales, losses and income tax benefits associated with the
discontinued operations were as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Net revenues $ 3,258 $ 1,396 $ 1,105
========== ========== ==========
Loss from operations
before income tax
benefit ($ 3,402) ($ 1,579) ($ 1,427)
Income tax benefit ( 1,357) ( 572) ( 488)
---------- ---------- ----------
Loss from operations ( 2,045) ( 1,007) ( 939)
---------- ---------- ----------
Loss on disposal before
income tax benefit:
Estimated unrecovered
costs through
disposal date ( 4,381) -- --
Income tax benefit ( 1,748) -- --
---------- ---------- ----------
Loss on disposal ( 2,633) -- --
---------- ---------- ----------
Total loss from
discontinued
operations ($ 4,678) ($ 1,007) ($ 939)
========== ========== ==========
</TABLE>
Assets and liabilities for all periods presented have been
reclassified for amounts associated with the discontinued
operations. Net assets from discontinued operations for fiscal
1995 has been classified as other assets on the consolidated
balance sheet due to immateriality. Summarized balance sheet
data for the discontinued operations is as follows (in
thousands):
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Current assets $ 1,717 $ 913
Property, plant and equipment, net 240 142<PAGE>
Other assets 190 285
---------- ----------
Total assets 2,147 1,340
Current liabilities 5,271 450
Other non-current liabilities 127 --
---------- ----------
Net assets (liabilities) ($ 3,251) $ 890
========== ==========
</TABLE> <PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
=================================================================
Thomas Nelson, Inc. and Subsidiaries
To the Shareholders and Board of Directors of Thomas Nelson, Inc.
and Subsidiaries:
We have audited the accompanying consolidated balance sheets
of Thomas Nelson, Inc. (a Tennessee corporation) and Subsidiaries
as of March 31, 1996 and 1995, and the related consolidated
statements of operations shareholders' equity and cash flows for
each of the three years in the period ended March 31, 1996.
These financial statements are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Thomas Nelson, Inc. and Subsidiaries as of March 31, 1996 and
1995, and the results of its operations and its cash flows for
each of the three years in the period ended March 31, 1996 in
conformity with generally accepted accounting principles.
As explained in Note M to the financial statements,
effective April 1, 1993, the Company changed its method of
accounting for income taxes.
/s/ Arthur Andersen LLP
Nashville, Tennessee
May 21, 1996 <PAGE>
OTHER FINANCIAL INFORMATION
================================================================
The common stock and the Class B common stock are traded on
the NYSE under the symbols "TNM" and "TNM.B," respectively.
Until June 19, 1995, the common stock and the Class B common
stock were quoted on the Nasdaq National Market under the symbols
"TNEL" and "TNELB," respectively. The following table sets
forth, for the periods indicated, the high and low bid prices of
the common stock and Class B common stock as reported on the
Nasdaq National Market for each of the quarters indicated through
June 16, 1995 and the high and low closing sales prices as
reported on the NYSE composite tape from June 19, 1995:
<TABLE>
<CAPTION>
Common Class B
Stock Common Stock
------------------- ----------------- Dividends Paid
High Low High Low Per Share
------------------- ----------------- -----------
<S> <C> <C> <C> <C> <C>
Fiscal l996
- -----------
First Quarter $ 20 1/4 $ 19 5/8 $ 23 $ 18 1/2 $ .040
Second Quarter 26 3/8 19 1/8 26 20 7/8 .040
Third Quarter 26 1/8 12 1/2 25 3/4 18 3/8 .040
Fourth Quarter 16 3/4 12 3/8 19 1/4 16 1/2 .040
----------
$ .160
==========
Fiscal l995
- -----------
First Quarter $ 17 5/8 $ 15 1/4 $ 17 5/8 $ 16 3/8 $ .032
Second Quarter 16 5/8 14 1/4 16 3/8 14 5/8 .032
Third Quarter 19 1/4 14 1/4 18 3/4 14 5/8 .032
Fourth Quarter 20 3/8 18 3/4 19 3/8 17 5/8 .032
---------
$ .128
=========
</TABLE>
The Company effected a five-for-four stock split of the
common stock and Class B common stock in the form of a 25% stock
dividend on March 24, 1995. The prices in the table set forth
above have been adjusted to give effect to the stock dividend.
As of June 4, 1996, there were 1,188 record holders of the
common stock and 809 record holders of the Class B common stock.
Declaration of dividends is within the discretion of the
Board of Directors of the Company. The Board considers the
payment of dividends on a quarterly basis, taking into account
the Company's earnings and capital requirements as well as
financial and other conditions existing at the time. Certain<PAGE>
covenants of the Company's Credit Agreements and Senior Notes
limit the amount of cash dividends payable based on the Company's
cumulative consolidated net income. See Note H of Notes to
Consolidated Financial Statements. On May 23, 1996, the Company
declared a cash dividend of $.04 per share on its common stock
and Class B common stock to be paid on August 19, 1996 to
shareholders of record on August 5, 1996.<PAGE>
EXHIBIT 21
SUBSIDIARIES OF THE COMPANY
<TABLE>
<CAPTION>
Percentage
Jurisdiction of Ownership of
Subsidiary Incorporation Capital Stock
=============================================================================
<S> <C> <C>
Word, Incorporated Delaware 100%
Word Communications, Ltd. British Columbia, 100%
Canada
Word Direct Partners, LP Texas 100%
NelsonWord, Ltd. (UK) United Kingdom 100%
Word Direct, Inc. Delaware 100%
Editorial Caribe, Inc. Florida 100%
PPC, Inc. North Carolina 100%
Morningstar Radio Network, Inc. Texas 80%
The C.R. Gibson Company Delaware 100%
855763 Ontario Limited Ontario, Canada 100%
</TABLE> <PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Form 10-K of our report dated
May 21, 1996 included in Thomas Nelson, Inc.'s annual report to
shareholders. In addition, we hereby consent to the
incorporation of our reports incorporated by reference in this
Form 10-K, into the Company's previously filed Registration
Statements on Form S-8 (File No. 33-80086 and File No. 333-4503).
/s/ Arthur Andersen LLP
Nashville, Tennessee
June 28, 1996<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF THOMAS NELSON, INC. FOR NINE MONTHS ENDED MARCH 31,
1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> MAR-31-1996
<CASH> 672
<SECURITIES> 0
<RECEIVABLES> 110,180
<ALLOWANCES> 10,959
<INVENTORY> 97,496
<CURRENT-ASSETS> 236,994
<PP&E> 58,166
<DEPRECIATION> 21,532
<TOTAL-ASSETS> 373,596
<CURRENT-LIABILITIES> 65,577
<BONDS> 180,016
<COMMON> 17,116
0
0
<OTHER-SE> 105,254
<TOTAL-LIABILITY-AND-EQUITY> 373,596
<SALES> 304,393
<TOTAL-REVENUES> 308,410
<CGS> 172,956
<TOTAL-COSTS> 306,607
<OTHER-EXPENSES> 2,090
<LOSS-PROVISION> 5,724
<INTEREST-EXPENSE> 10,691
<INCOME-PRETAX> (10,383)
<INCOME-TAX> (4,147)
<INCOME-CONTINUING> (6,236)
<DISCONTINUED> (4,678)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (10,914)
<EPS-PRIMARY> (0.69)
<EPS-DILUTED> (0.69)
</TABLE>
