SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 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 or 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
Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No _____
At February 13, 1996, the Registrant had outstanding
16,004,368 shares of Common Stock and 1,112,075 shares of Class B
Common Stock.
<TABLE>
Part I
Item 1. Financial Statements
THOMAS NELSON, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<CAPTION>
December 31, March 31, December 31,
1995 1995 1994
------------ ----------- ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 3,368 $ 779 $ 1,564
Accounts receivable,
less allowances of $13,571,
$9,029 and $13,057
respectively 112,049 85,100 82,673
Inventories 98,479 69,351 65,468
Prepaid expenses 24,746 20,683 17,353
Deferred tax asset 11,649 7,714 12,673
------------ ----------- ------------
Total Current Assets 250,291 183,627 179,731
PROPERTY, PLANT AND EQUIPMENT 37,157 16,226 17,000
OTHER ASSETS 23,469 14,688 16,469
GOODWILL 75,582 31,179 31,618
DEFERRED CHARGES 4,375 4,149 3,530
------------ ----------- ------------
TOTAL ASSETS $ 390,874 $ 249,869 $ 248,348
============ =========== ============
LIABILITIES AND SHAREHOLDERS'
EQUITY
CURRENT LIABILITIES
Accounts payable $ 30,285 $ 32,419 $ 22,070
Accrued expenses 28,265 19,558 18,893
Dividends payable 657 537 428
Income taxes currently
payable 2,157 -0- 5,050
Current portion of long-term
debt and capital lease
obligation 2,792 1,672 1,657
------------ ----------- ------------
Total Current Liabilities 64,156 54,186 48,098
LONG-TERM DEBT 191,160 120,108 126,636
CAPITAL LEASE OBLIGATION 726 80 281
DEFERRED TAX LIABILITY AND
OTHER LIABILITIES 7,510 2,766 2,181
SHAREHOLDERS' EQUITY
Preferred stock, $1.00 par
value, authorized 1,000,000
shares; none issued - - -
Common stock, $1.00 par value,
authorized 20,000,000 shares;
issued 15,305,019, 12,362,377
and 9,895,678 shares,
respectively 15,305 12,362 9,896
Class B common stock, $1.00 par
value, authorized 5,000,000
shares; issued 1,109,993,
1,067,094 and 795,233 shares,
respectively 1,110 1,067 795
Additional paid-in capital 69,678 18,211 20,963
Retained earnings 41,871 40,538 39,017
Deferred Compensation ( 1,050) - -
Foreign currency translation
adjustments 408 551 481
------------ ----------- ------------
Total Shareholders' Equity 127,322 72,729 71,152
------------ ----------- ------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 390,874 $ 249,869 $ 248,348
============ =========== ============
See Accompanying Notes
</TABLE>
<TABLE>
THOMAS NELSON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
<CAPTION>
Nine Months Ended Three Months Ended
December 31, December 31,
1995 1994 1995 1994
---------- ---------- ---------- ---------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
NET REVENUES $ 230,018 $ 190,701 $ 87,446 $ 71,086
COST AND EXPENSES:
Cost of goods sold 118,241 96,255 45,921 35,634
Selling, general and
administrative 95,715 71,394 35,701 25,251
Amortization of goodwill
and non-compete
agreements 1,354 1,197 453 320
---------- ---------- ---------- ----------
Total 215,310 168,846 82,075 61,205
---------- ---------- ---------- ----------
OPERATING INCOME 14,708 21,855 5,371 9,881
Other income (expense) 658 164 420 66
Interest expense 7,858 6,330 3,178 2,300
---------- ---------- ---------- ----------
Income before income taxes 7,508 15,689 2,613 7,647
Provision for income taxes 2,776 5,795 967 2,832
---------- ---------- ---------- ----------
NET INCOME $ 4,732 $ 9,894 $ 1,646 $ 4,815
========== ========== ========== ==========
Weighted average number
of shares outstanding:
Primary 15,310 13,365 16,484 13,365
========== ========== ========== ==========
Fully-diluted 18,545 16,600 19,719 16,600
========== ========== ========== ==========
NET INCOME PER SHARE:
Primary $ 0.31 $ 0.74 $ 0.10 $ 0.36
========== ========== ========== ==========
Fully-Diluted $ 0.31 $ 0.69 $ 0.10 $ 0.32
========== ========== ========== ==========
DIVIDENDS DECLARED PER
SHARE $ 0.120 $ 0.096 $ 0.040 $ 0.032
========== ========== ========== ==========
See Accompanying Notes
</TABLE>
<TABLE>
THOMAS NELSON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<CAPTION>
Nine Months Ended December 31,
1995 1994
----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income $ 4,732 $ 9,894
Adjustments to reconcile net income to
net cash provided by (used in)
operations:
Depreciation and amortization 6,110 4,451
Gain on sale of fixed assets ( 502) -0-
Changes in assets and liabilities,
net of acquisitions:
Accounts receivable, net ( 8,535) ( 24,135)
Inventories ( 15,683) 1,825
Prepaid expenses ( 6,421) ( 9,601)
Accounts payable and accrued expenses ( 8,854) 822
Income taxes currently payable and
deferred 2,157 324
----------- -----------
Net Cash Used In Operating Activities ( 26,996) ( 16,420)
----------- -----------
Cash Flows From Investing Activities:
Capital expenditures ( 2,988) ( 1,550)
Proceeds from sale of fixed assets 903 ( 2)
Purchase of net assets of acquired
companies - net of cash ( 69,527) ( 187)
Changes in other assets and deferred
charges ( 1,965) ( 1,787)
----------- -----------
Net Cash Used in Investing Activities ( 73,577) ( 3,526)
----------- -----------
Cash Flows From Financing Activities:
Borrowings under line of credit 59,753 24,350
Payments on capital leases ( 694) ( 537)
Payments on long-term debt ( 8,252) ( 408)
Dividends paid ( 1,848) ( 1,283)
Changes in other liabilities ( 107) ( 1,462)
Proceeds from issuance of common stock 54,611 10
Common stock retired ( 158) ( 28)
----------- -----------
Net Cash Provided by Financing Activities 103,305 20,642
----------- -----------
Effect of Translation Rate Changes ( 143) 80
----------- -----------
Net Increase in Cash and Cash Equivalents 2,589 776
Cash and Cash Equivalents at Beginning of
Period 779 788
----------- -----------
Cash and Cash Equivalents at End of Period $ 3,368 $ 1,564
=========== ===========
Supplemental Disclosures of Non-
cash Investing and Financing Activities:
Capital lease obligations incurred
to lease new equipment $ 830 $ -
=========== ===========
Dividends accrued and unpaid $ 657 $ 428
=========== ===========
See Accompanying Notes
</TABLE>
THOMAS NELSON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements
reflect all adjustments (which are of a normal recurring nature)
that are, in the opinion of management, necessary for a fair
statement of the results for the interim periods presented.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been omitted pursuant to SEC
rules and regulations. The statements should be read in
conjunction with the Summary of Significant Accounting Policies
and notes to the consolidated financial statements included in
the Company's annual report for the year ended March 31, 1995.
The balance sheet and related information in these notes as of
March 31, 1995, have been taken from the audited consolidated
financial statements as of that date. Certain reclassifications
have been made to conform presentation of the fiscal 1995
Financial Statements with fiscal 1996 presentation.
Note B - Inventories
Components of inventories consisted of the following (in
thousands):
<TABLE>
<CAPTION>
December 31, March 31, December 31,
1995 1995 1994
------------ --------- ------------
<S> <C> <C> <C>
Finished goods $ 78,040 $ 59,116 $ 57,767
Raw materials and work in
process 20,439 10,235 7,701
------------ --------- ------------
$ 98,479 $ 69,351 $ 65,468
============ ========= ============
</TABLE>
Note C - Cash Dividend
On May 24, 1995, the Company's directors declared a cash
dividend of $.04 per share. The dividend was paid August 14,
1995, to shareholders of record on July 31, 1995.
On August 24, 1995, the Company's directors declared a cash
dividend of $.04 per share. The dividend was paid November 20,
1995, to shareholders of record on November 6, 1995.
On November 21, 1995, the Company's directors declared a cash
dividend of $.04 per share. The dividend is payable February 19,
1996, to shareholders of record on February 5, 1996.
Note D - Sale of Stock
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 facilities.
Note E - Acquisition
On November 7, 1995, the Company completed its $9.00 per share
cash tender offer for the outstanding shares of common stock of
The C.R. Gibson Company ("Gibson") for approximately $67 million.
The acquisition was financed primarily by a bridge loan for $60
million from senior bank creditors. On December 13, 1995, the
Company amended its bank credit facilities to provide for
aggregate facilities of $185 million and used a portion of the
proceeds to repay the bridge loan.
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 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 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>
Nine Months Ended December 31,
1995 1994
------------ -----------
(Dollars in thousands, except per share data)
<S> <C> <C>
Net Revenues $ 270,547 $ 241,122
Net Income ($ 1,446) $ 9,037
Net Income Per Share
(Primary) ($ .09) $ .68
</TABLE>
Note F - Subsequent Event
On January 3, 1996, the Company issued $35 million of 6.90%
Series A Senior Notes due 2007 (the "Series A Notes") and $15
million of 6.65% Series B Senior Notes due 2005 (the "Series B
Notes"). The Series A Notes and Series B Notes are unsecured.
Interest on the Series A Notes and Series B Notes is payable
semiannually on the last day of June and December of each year
commencing June 30, 1996. Principal payments in the amount of
$3.5 million are due on the Series A Notes on the last day of
each June and December commencing June 30, 2003. Principal
payments in the amount of approximately $1.15 million are due on
the Series B Notes on the last day of each June and December, of
each year commencing December 31, 1999. The Company used the net
proceeds of the Series A Notes and Series B Notes to reduce the
borrowings outstanding under its bank credit facilities and, in
turn, the aggregate amounts available for borrowing pursuant to
the bank credit facilities was reduced from $185 million to $135
million on January 3, 1996.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
OVERVIEW
The following table sets forth certain selected statements of
income data expressed as a percentage of net revenues and the
percentage change in dollars in such data from the prior fiscal
year.
<TABLE>
<CAPTION>
Nine Months Ended Fiscal Year-to-Year
December 31, Increase
----------------------- (Decrease)
1995 1994
---------- ---------- ----------
(%) (%) (%)
<S> <C> <C> <C>
Net revenues:
Publishing:
Book 30.7 31.7 17.0
Bible 23.0 22.3 24.5
---------- ----------
Total publishing 53.7 54.0 20.1
Music 31.3 34.9 8.1
Gift 12.7 8.8 73.0
Other 2.3 2.3 22.2
---------- ----------
Total revenues 100.0 100.0 20.6
---------- ----------
Expenses:
Cost of goods sold 51.4 50.5 22.8
Selling, general and
administrative 41.6 37.4 34.1
Amortization of goodwill
and non-compete
agreements 0.6 0.6 13.1
---------- ----------
Total expenses 93.6 88.5 27.5
---------- ----------
Operating income 6.4 11.5 (32.7)
Income before income
taxes 3.3 8.2 (52.1)
Net income 2.1 5.2 (52.2)
</TABLE>
The Company's net revenues fluctuate seasonally, with net
revenues in the first fiscal quarter being lower than those for
the remainder of the year. This seasonality is the result of
increased consumer purchases of the Company's products during the
traditional holiday periods. 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.
Results of Operations
Net revenues for the first nine months of fiscal 1996
increased by $39.3 million or 20.6% over the comparable period in
fiscal 1995 primarily due to volume increases arising from the
introduction of new products in each of the Company's product
lines and the purchase of Gibson on October 31, 1995. Net
revenues increased for the first nine months of fiscal 1996 over
the comparable period in fiscal 1995 as follows: gift products
increased by $12.3 million or 73.0%; Bible products increased by
$10.4 million or 24.5%; book products increased by $10.2 million
or 17.0%; and music products increased by $5.4 million or 8.1%.
Net revenues for the third quarter of fiscal 1996 increased by
$16.4 million or 16.3% over the same period in fiscal 1995
primarily due to volume increases arising from the introduction
of new products in each of the Company's product lines and the
purchase of Gibson on October 31, 1995. Net revenues increased
for the third quarter of fiscal 1996 over the same period in
fiscal 1995 as follows: gift products increased by $10.1 million
or 138.5%; Bible products increased by $5.7 million or 35.5%; and
book products increased by $1.9 million or 9.4%. Net revenues
decreased for the third quarter of fiscal 1996 from fiscal 1995
for music products by $2.2 million or 8.7%. Of the increase in
net revenues derived from gift products, approximately $8 million
was attributed to Gibson for the first nine months and the third
quarter. Price increases did not have a material effect on net
revenues.
The Company's cost of goods sold for the first nine months of
fiscal 1996 increased by $22.0 million or 22.8% over the same
period in fiscal 1995 and, as a percentage of net revenues,
increased from 50.5% to 51.4%. Cost of goods sold for the third
fiscal quarter increased by $10.3 million or 28.9% over the same
period in fiscal 1995 and, as a percentage of net revenues,
increased from 50.1% to 52.5%. The increase of cost of goods
sold, as a percentage of net revenues, was primarily the result
of a shift in the mix of sales revenues within the Company's
Music Division from proprietary 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.
Selling, general and administrative expenses for the first
nine months of fiscal 1996 increased by $24.3 million or 34.1%
and for the quarter by $10.5 million or 41.4% over the comparable
period in fiscal 1995. These expenses, expressed as a percentage
of net revenues, increased to 41.6% for the first nine months of
fiscal 1996 from 37.4% for the same period in fiscal 1995, and
increased to 40.8% for the third quarter from 35.5% for the same
period in fiscal 1995. These increases resulted from higher than
anticipated sales and marketing program costs within the Music
Division incurred to increase sales of proprietary product. In
addition, the expansion of certain direct marketing programs
beyond the Company's capacity for fulfillment combined with a
more competitive direct marketing sales environment resulted in
increased advertising, bad debt and freight costs as a percentage
of revenues. Costs incurred in connection with the development
of alternative media products and channels in the Royal Media
Division also adversely impacted selling, general and
administrative expenses as a percentage of net revenues. The
Company has implemented several initiatives to improve operating
margins, including reducing salaries and benefits, suspending the
developmental components of the Royal Media Division and limiting
the Company's testing of new product offerings and sale of
existing product offerings through direct marketing.
Interest expense increased 24.1% and 38.2% for the first nine
months and third quarter, respectively, over the same period in
fiscal 1995 due to increased average borrowings for the first
quarter of the fiscal year for working capital needs and for the
third quarter for the Gibson acquisition and increased average
interest rates.
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 December 31, 1995, the Company had $119.3 million outstanding,
and $65.7 million available for borrowing under its credit
facilities. Seasonality has a major impact on the Company's
revenues which in turn have a direct bearing on the level of
borrowings. 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 $54.6 million. The net proceeds were
used to repay a portion of the borrowings under the credit
facilities.
During the nine months ended December 31, 1995, capital
expenditures totaled approximately $3.0 million. The Company has
no plans that will require significant capital expenditures for
the remainder of fiscal 1996.
On October 31, 1995, the Company, through a wholly owned
subsidiary, Nelson Acquisition Corp., completed its $9.00 per
share cash tender offer for all of the outstanding shares of
common stock of The C.R. Gibson Company. The aggregate
consideration paid of approximately $67 million was financed
pursuant to the Company's bank credit facilities and a bridge
loan with the Company's senior lenders in the aggregate principal
amount of $60 million.
As a result of the Gibson stock purchase and expanding working
capital needs, on December 13, 1995 the Company amended its bank
credit facilities to provide for aggregate facilities of $185
million and used a portion of the proceeds to repay the $60
million bridge loan.
On January 3, 1996, the Company issued $35 million of 6.90%
Series A Senior Notes due 2007 (the "Series A Notes") and $15
million of 6.65% Series B Senior Notes due 2005 (the "Series B
Notes"). The Series A Notes and Series B Notes are unsecured.
Interest on the Series A Notes and Series B Notes is payable
semiannually on the last day of June and December of each year
commencing June 30, 1996. Principal payments in the amount of
$3.5 million are due on the Series A Notes on the last day of
each June and December commencing June 30, 2003. Principal
payments in the amount of approximately $1.15 million are due on
the Series B Notes on the last day of each June and December, of
each year commencing December 31, 1999. The Company used the net
proceeds of the Series A Notes and Series B Notes to reduce the
borrowings outstanding under its bank credit facilities and, in
turn, the aggregate amounts available for borrowing pursuant to
the bank credit facilities was reduced from $185 million to $135
million on January 3, 1996.
PART II
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits required by Item 601 of Regulation S-K
Exhibit
Number
-------
2 - 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).
4.1 - 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.
4.2 - Note Purchase Agreement dated January 3,
1996, among the Company, The Prudential
Insurance Company of America and
Metropolitan Life Insurance Company.
27 - Financial Data Schedule
(b) 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 Gibson consummated on November 7, 1995,
in accordance with the terms of the Tender
Offer and Merger Agreement. 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:
i. The C.R. Gibson Company Consolidated Balance
Sheets at December 31, 1994 and 1993
ii. The C.R. Gibson Company Consolidated
Statements of Operations for the years
ended December 31, 1994 and 1993
iii. The C.R. Gibson Company Consolidated
Statements of Cash Flows for the years
ended December 31, 1994 and 1993
iv. The C.R. Gibson Company Consolidated
Statements of Shareholders' Equity at
December 31, 1994 and 1993
v. The C.R. Gibson Company Unaudited
Condensed Consolidated Balance Sheet at
September 30, 1995
vi. The C.R. Gibson Company Unaudited Condensed
Consolidated Statement of Income for the
nine months ended September 30, 1995
vii. The C.R. Gibson Company Unaudited Condensed
Consolidated Statement of Cash Flows for the
nine months ended September 30, 1995
viii.Thomas Nelson, Inc. and Subsidiaries
Unaudited Pro Forma Consolidated Balance
Sheet at September 30, 1995
ix. Thomas Nelson, Inc. and Subsidiaries
Unaudited Pro Forma Consolidated Statements
of Income for the six months ended
September 30, 1995
x. Thomas Nelson, Inc. and Subsidiaries
Unaudited Pro Forma Consolidated Statements of
Income for the six months ended September 30,
1994
xi. Thomas Nelson, Inc. and Subsidiaries
Unaudited Pro Forma Consolidated Statements
of Income for the twelve months ended March
31, 1995
SIGNATURES
Pursuant to the requirements 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.
(Registrant)
February 14, 1996 BY /s/ Joe L. Powers
- - ----------------------- --------------------------
Joe L. Powers
Executive Vice President
(Chief Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's 10-Q for the period ended 12-31-95 and as qualified in its entirety by
reference to such financial statements and the notes thereto.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 3,368
<SECURITIES> 0
<RECEIVABLES> 125,620
<ALLOWANCES> 13,571
<INVENTORY> 98,479
<CURRENT-ASSETS> 250,291
<PP&E> 52,454
<DEPRECIATION> 15,297
<TOTAL-ASSETS> 390,874
<CURRENT-LIABILITIES> 64,156
<BONDS> 191,886
<COMMON> 16,415
0
0
<OTHER-SE> 110,907
<TOTAL-LIABILITY-AND-EQUITY> 390,874
<SALES> 227,269
<TOTAL-REVENUES> 230,018
<CGS> 118,241
<TOTAL-COSTS> 213,956
<OTHER-EXPENSES> 1,354
<LOSS-PROVISION> 3,820
<INTEREST-EXPENSE> 7,858
<INCOME-PRETAX> 7,508
<INCOME-TAX> 2,776
<INCOME-CONTINUING> 4,732
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,732
<EPS-PRIMARY> 0.31
<EPS-DILUTED> 0.31
</TABLE>
EXECUTION COUNTERPART
=================================================================
AMENDED AND RESTATED CREDIT AGREEMENT
dated as of December 13, 1995
among
THOMAS NELSON, INC.,
THE LENDERS LISTED HEREIN,
and
SUNTRUST BANK, NASHVILLE, N. A.
(formerly known as Third National Bank in Nashville),
as Agent
=================================================================<PAGE>
TABLE OF CONTENTS
Page No.
Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Preamble . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
DEFINITIONS: CONSTRUCTION
Section 1.01 Definitions . . . . . . . . . . . . . . . . . . 1
Section 1.02 Accounting Terms and Determination . . . . . . 17
Section 1.03 Other Definitional Terms . . . . . . . . . . . 18
Section 1.04 Exhibits and Schedules . . . . . . . . . . . . 18
ARTICLE II
REVOLVING LOANS
Section 2.01 Revolving Loan Commitment . . . . . . . . . . 18
Section 2.02 Use of Proceeds . . . . . . . . . . . . . . . 18
Section 2.03 Revolving Credit Notes:
Repayment of Principal . . . . . . . . . . . . 19
Section 2.04 Automatic, Mandatory Reduction
of Revolving Loan Commitments . . . . . . . . 19
Section 2.05 Mandatory Reduction of Revolving
Loan Commitments Regarding Senior Debt . . . . 19
Section 2.06 Mandatory Reduction of Revolving
Loan Commitments Regarding Asset Sales . . . . 20
Section 2.07 Voluntary Reduction of Revolving
Loan Commitments . . . . . . . . . . . . . . . 20
Section 2.08 Extension of Initial Reduction Date
and Final Maturity Date . . . . . . . . . . . 21
ARTICLE III
GENERAL REVOLVING LOAN TERMS
Section 3.01 Funding Notices . . . . . . . . . . . . . . . 22
Section 3.02 Disbursement of Funds . . . . . . . . . . . . 23
Section 3.03 Interest . . . . . . . . . . . . . . . . . . . 24
Section 3.04 Interest Periods . . . . . . . . . . . . . . . 24
Section 3.05 Fees . . . . . . . . . . . . . . . . . . . . . 25
Section 3.06 Voluntary Prepayments of
Borrowings . . . . . . . . . . . . . . . . . . 25
Section 3.07 Payments, etc. . . . . . . . . . . . . . . . . 26
Section 3.08 Interest Rate Not Ascertainable, etc. . . . . 28
Section 3.09 Illegality . . . . . . . . . . . . . . . . . . 29
Section 3.10 Increased Costs . . . . . . . . . . . . . . . 29
Section 3.11 Lending Offices . . . . . . . . . . . . . . . 31
Section 3.12 Funding Losses . . . . . . . . . . . . . . . . 31
Section 3.13 Assumptions Concerning Funding
of LIBOR Advances . . . . . . . . . . . . . . 31
Section 3.14 Apportionment of Payments . . . . . . . . . . 32
Section 3.15 Sharing of Payments, Etc. . . . . . . . . . . 32
Section 3.16 Capital Adequacy . . . . . . . . . . . . . . . 32
Section 3.17 Benefits to Guarantors . . . . . . . . . . . . 33
Section 3.18 Limitation on Certain Payment
Obligations . . . . . . . . . . . . . . . . . 33
ARTICLE IV
CONDITIONS TO BORROWINGS
Section 4.01 Conditions Precedent to Initial
Revolving Loans . . . . . . . . . . . . . . . 34
Section 4.02 Conditions to Revolving Loans . . . . . . . . 37
ARTICLE V
NOTICE PERIOD REGARDING CONDITIONS . . . . . . . . . . . . . 38
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Section 6.01 Corporate Existence; Compliance
with Law . . . . . . . . . . . . . . . . . . . 40
Section 6.02 Corporate Power; Authorization . . . . . . . . 40
Section 6.03 Enforceable Obligations . . . . . . . . . . . 40
Section 6.04 No Legal Bar . . . . . . . . . . . . . . . . . 41
Section 6.05 No Material Litigation . . . . . . . . . . . . 41
Section 6.06 Investment Company Act, Etc. . . . . . . . . . 41
Section 6.07 Margin Regulations . . . . . . . . . . . . . . 41
Section 6.08 Compliance With Environmental Laws . . . . . . 41
Section 6.09 Insurance . . . . . . . . . . . . . . . . . . 42
Section 6.10 No Default . . . . . . . . . . . . . . . . . . 42
Section 6.11 No Burdensome Restrictions . . . . . . . . . . 42
Section 6.12 Taxes . . . . . . . . . . . . . . . . . . . . 42
Section 6.13 Subsidiaries . . . . . . . . . . . . . . . . . 43
Section 6.14 Financial Statements . . . . . . . . . . . . . 43
Section 6.15 ERISA . . . . . . . . . . . . . . . . . . . . 44
Section 6.16 Patents, Trademarks, Licenses, Etc. . . . . . 45
Section 6.17 Ownership of Property . . . . . . . . . . . . 45
Section 6.18 Indebtedness . . . . . . . . . . . . . . . . . 45
Section 6.19 Financial Condition . . . . . . . . . . . . . 46
Section 6.20 Labor Matters . . . . . . . . . . . . . . . . 46
Section 6.21 Payment or Dividend Restrictions . . . . . . . 47
Section 6.22 Disclosure . . . . . . . . . . . . . . . . . . 47
Section 6.23 Financial Covenants . . . . . . . . . . . . . 47
ARTICLE VII
REPRESENTATION AND WARRANTY NOTICE PERIOD . . . . . . . . . . 47
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES REGARDING
ARTICLE VIII SUBSIDIARIES . . . . . . . . . . . . . . . . . . 48
ARTICLE IX
AFFIRMATIVE COVENANTS
Section 9.01 Corporate Existence, Etc. . . . . . . . . . . 48
Section 9.02 Compliance with Laws, Etc. . . . . . . . . . . 48
Section 9.03 Payment of Taxes and Claims, Etc. . . . . . . 49
Section 9.04 Keeping of Books . . . . . . . . . . . . . . . 49
Section 9.05 Visitation, Inspection, Etc. . . . . . . . . . 49
Section 9.06 Insurance; Maintenance of Properties . . . . . 49
Section 9.07 Reporting Covenants . . . . . . . . . . . . . 50
Section 9.08 Financial Covenants . . . . . . . . . . . . . 54
Section 9.09 Notices under Certain
Other Indebtedness . . . . . . . . . . . . . . 55
Section 9.10 Additional Credit Parties
and Collateral . . . . . . . . . . . . . . . . 55
Section 9.11 Gibson Debt . . . . . . . . . . . . . . . . . 55
Section 9.12 Schedule VIII Subsidiaries . . . . . . . . . . 56
ARTICLE X
SCHEDULE AMENDMENTS . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE XI
NEGATIVE COVENANTS
Section 11.01 Indebtedness . . . . . . . . . . . . . . . . . 56
Section 11.02 Liens . . . . . . . . . . . . . . . . . . . . 57
Section 11.03 Mergers, Acquisitions, Sales, Etc. . . . . . . 58
Section 11.04 Dividends, Etc. . . . . . . . . . . . . . . . 58
Section 11.05 Investments, Loans, Etc. . . . . . . . . . . . 59
Section 11.06 Sale and Leaseback Transactions . . . . . . . 60
Section 11.07 Transactions with Affiliates . . . . . . . . . 60
Section 11.08 Optional Prepayments . . . . . . . . . . . . . 60
Section 11.09 Changes in Business . . . . . . . . . . . . . 60
Section 11.10 ERISA . . . . . . . . . . . . . . . . . . . . 61
Section 11.11 Additional Negative Pledges . . . . . . . . . 61
Section 11.12 Limitation on Payment Restrictions
Affecting Consolidated Companies . . . . . . . 61
Section 11.13 Actions Under Certain Documents . . . . . . . 61
Section 11.14 Schedule VIII Subsidiaries . . . . . . . . . . 61
ARTICLE XII
EVENTS OF DEFAULT
Section 12.01 Payments . . . . . . . . . . . . . . . . . . . 62
Section 12.02 Covenants Without Notice . . . . . . . . . . . 62
Section 12.03 Other Covenants . . . . . . . . . . . . . . . 62
Section 12.04 Representations . . . . . . . . . . . . . . . 62
Section 12.05 Non-Payments of Other Indebtedness . . . . . . 62
Section 12.06 Defaults Under Other Agreements . . . . . . . 62
Section 12.07 Bankruptcy . . . . . . . . . . . . . . . . . . 63
Section 12.08 ERISA . . . . . . . . . . . . . . . . . . . . 63
Section 12.09 Money Judgment . . . . . . . . . . . . . . . . 64
Section 12.10 Change in Control of Nelson . . . . . . . . . 64
Section 12.11 Default Under Other Credit
Documents . . . . . . . . . . . . . . . . . . 64
Section 12.12 Attachments . . . . . . . . . . . . . . . . . 64
Section 12.13 Schedule VIII Subsidiaries . . . . . . . . . . 65
Section 12.14 Adjustment to Pro Rata Share . . . . . . . . . 65
ARTICLE XIII
THE AGENT
Section 13.01 Appointment of Agent . . . . . . . . . . . . . 66
Section 13.02 Authorization of Agent with
Respect to the Security Documents . . . . . . 67
Section 13.03 Nature of Duties of Agent . . . . . . . . . . 67
Section 13.04 Lack of Reliance on the Agent . . . . . . . . 67
Section 13.05 Certain Rights of the Agent . . . . . . . . . 68
Section 13.06 Reliance by Agent . . . . . . . . . . . . . . 68
Section 13.07 Indemnification of Agent . . . . . . . . . . . 69
Section 13.08 The Agent in its Individual Capacity . . . . . 69
Section 13.09 Holders of Revolving Credit Notes . . . . . . 69
Section 13.10 Successor Agent . . . . . . . . . . . . . . . 70
ARTICLE XIV
MISCELLANEOUS
Section 14.01 Notices . . . . . . . . . . . . . . . . . . . 70
Section 14.02 Amendments, Etc. . . . . . . . . . . . . . . . 71
Section 14.03 No Waiver; Remedies Cumulative . . . . . . . . 71
Section 14.04 Payment of Expenses, Etc. . . . . . . . . . . 72
Section 14.05 Right of Setoff . . . . . . . . . . . . . . . 73
Section 14.06 Benefit of Agreement . . . . . . . . . . . . . 74
Section 14.07 Governing Law; Submission
to Jurisdiction . . . . . . . . . . . . . . . 76
Section 14.08 Independent Nature of
Lenders, Rights . . . . . . . . . . . . . . . 77
Section 14.09 Counterparts . . . . . . . . . . . . . . . . . 77
Section 14.10 Effectiveness; Survival . . . . . . . . . . . 78
Section 14.11 Severability . . . . . . . . . . . . . . . . . 78
Section 14.12 Independence of Covenants . . . . . . . . . . 78
Section 14.13 Change in Accounting Principles,
Fiscal Year or Tax Laws . . . . . . . . . . . 78
Section 14.14 Headings Descriptive; Entire
Agreement . . . . . . . . . . . . . . . . . . 78
Section 14.15 Interest . . . . . . . . . . . . . . . . . . . 79
EXHIBIT A - Form of Assignment and Acceptance
EXHIBIT B - Form of Escrow Letter
EXHIBIT C - Document evidencing the name change from
International Cassette Corp. to TNI Cassette
Corp.
EXHIBIT D - Document evidencing the name change from Word
(UK) Limited to Nelson Word (UK) Limited
EXHIBIT E - Evidence of SunTrust Ten Million Dollar
Revolving Credit Facility
SCHEDULE 4.01(h) - UCC Search Locations
SCHEDULE 6.01 - Organization and Ownership of Subsidiaries
SCHEDULE 6.05 - Pending and Threatened Litigation
SCHEDULE 6.08(a) - Environmental Compliance
SCHEDULE 6.08(b) - Environmental Notices
SCHEDULE 6.08(c) - Environmental Permits
SCHEDULE 6.11 - Burdensome Restrictions
SCHEDULE 6.12 - Tax Filings and Payments
SCHEDULE 6.13 - The C. R. Gibson Company and Subsidiaries
SCHEDULE 6.14 - Leases
SCHEDULE 6.15 - Employee Benefit Matters
SCHEDULE 6.16 - Intellectual Property Matters
SCHEDULE 6.17 - Ownership of Properties
SCHEDULE 6.18 - Refinanced Indebtedness
SCHEDULE 6.20 - Labor Matters
SCHEDULE 6.21 - Dividend Restrictions
SCHEDULE 6.23 - Second Fiscal Quarter 1995 Calculations
SCHEDULE VIII - Subsidiaries of Thomas Nelson, Inc. Excluded
from Certain Provisions of Amended and
Restated Credit Agreement
SCHEDULE 11.01(b)- Existing Indebtedness
SCHEDULE 11.02 - Existing Liens
<PAGE>
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT (as it may be
amended and/or restated from time to time, this "Agreement") is
made and entered into as of the 13th day of December, 1995, by
and among THOMAS NELSON, INC., a Tennessee corporation
("Nelson"), SUNTRUST BANK, NASHVILLE, N. A. (formerly known as
Third National Bank in Nashville), a national banking association
("SunTrust"), the other banks and lending institutions listed
on the signature pages hereof and any assignees of SunTrust or such
other banks and lending institutions that become "Lenders" as
provided herein (SunTrust and such other banks, lending
institutions and assignees are referred to collectively herein as
the "Lenders"), and SUNTRUST BANK, NASHVILLE, N. A. (formerly
known as Third National Bank in Nashville), in its capacity
as agent for the Lenders and each successor agent for
such Lenders as may be appointed from time to time pursuant to
Article XIII (the "Agent").
W I T N E S S E T H:
WHEREAS, Nelson, Lenders and Agent entered into a Credit
Agreement dated as of November 30, 1992, as amended (the
"Initial Credit Agreement") governing the terms of
certain credit facilities more particularly
described in the Initial Credit Agreement; and
WHEREAS, Nelson has requested certain revisions to the
Initial Credit Agreement, and Lenders and Agent have
agreed to the revisions subject to the terms and
conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, Nelson, the Lenders
and the Agent agree upon the terms and subject to
the conditions set forth herein as follows:
ARTICLE I.
DEFINITIONS: CONSTRUCTION
Section 1.01. Definitions. In addition to the other terms
defined herein, the following terms used herein shall
have the meanings herein specified (to be equally
applicable to both the singular and plural forms of the
terms defined):
"Advance" shall mean any principal amount advanced and
remaining outstanding at any time under the Revolving
Loans, which Advance shall be made or outstanding as a
Base Rate Advance or a LIBOR Advance, as the case may
be.
"Affiliate" of any Person means any other Person directly
or indirectly controlling, controlled by, or under common
control with, such Person, whether through the
ownership of voting securities, by contract or
otherwise. For purposes of this definition,
"control," (including with correlative meanings, the
terms "controlling," "controlled by," and "under common control
with") as applied to any Person, means the possession,
directly or indirectly, of the power to direct or cause
the direction of the management and policies of that
Person.
"Agent" shall mean SunTrust Bank, Nashville, N. A.
(formerly known as Third National Bank in Nashville), a
national banking association, and any successor agent
appointed pursuant to Section 13.10 hereto.
"Agreement" shall mean this Amended and Restated Credit
Agreement, as amended, restated or supplemented from
time to time.
"Applicable LIBOR Rate Margin" shall mean, with respect
to all outstanding Borrowings consisting of LIBOR
Advances hereunder, the relevant percentage indicated
below based upon the percentages indicated for Nelson's
Interest Coverage Ratio and Senior Funded Debt to
Total Capital as determined on the date that is
ninety (90) days after the end of each fiscal year of
Nelson based upon the audited financial statements for the
immediately preceding fiscal year, with such
Applicable LIBOR Rate Margin to be immediately
effective as of such date with respect to all
outstanding amounts under the Revolving Loans:
Percentage of Senior Funded Debt
Interest to Total Capital
Coverage Ratio --------------------------------
- - --------------
>45% 35%-45% <35%
================================
<2.5:1:0 1.00% .875% .75%
2.5:1.0-3.0:1.0 .875% .75% .625%
>3.0:1.0-5.0:1.0 .75% .625% .50%
>5.0:1.0 .625% .50% .375%
Notwithstanding the foregoing, in the event Nelson does
not deliver the audited financial statements for the
immediately preceding fiscal year in a manner that
permits the determinations required in the definition of
Applicable LIBOR Rate Margin within ninety (90) days of
the end of Nelson's fiscal year, commencing at the end
of such ninety (90) day period and continuing until
such audited financial statements are made available, the
Applicable LIBOR Rate Margin shall be the highest rate
set forth in the preceding chart.
"Asset Sale" shall mean any sale or other disposition (or
a series of related sales or other dispositions),
including without limitation, loss, damage, destruction
or taking, by any Consolidated Company to any Person
other than a Consolidated Company, of any property or
asset (including capital stock but excluding the
issuance and sale by Nelson of its own capital
stock) having an aggregate Asset Value in excess of $100,000,
other than sales or other dispositions made in the
ordinary course of business of any Consolidated Company.
"Asset Value" shall mean, with respect to any property or
asset of any Consolidated Company as of any particular
date, an amount equal to the greater of (a) the then
book value of such property or asset as established in
accordance with GAAP, or (b) the then fair market
value of such property or asset as determined in
good faith by the board of directors of such
Consolidated Company.
"Assignment and Acceptance" shall mean an Assignment and
Acceptance Agreement entered into by a Lender and an
Eligible Assignee in accordance with the terms of
this Agreement and substantially in the form of Exhibit
A attached hereto.
"Bankruptcy Code" shall mean The Bankruptcy Code of 1978,
as amended and in effect from time to time (11 U.S.C.
Section 101 et seq.).
"Base Rate" shall mean the higher of (a) the rate that
the Agent publicly announces from time to time to be
its prime lending rate, as in effect from time to time,
or (b) the Federal Funds Rate, as in effect from time to
time, plus one-half of one percent (0.50%) per annum
(with any changes in such rates to be effective as of
the date of change any change in such rates). The
Agent's prime lending rate is a reference rate and does not
necessarily represent the lowest or best rate charged
to any customers. The Agent may make commercial loans
or other loans at rates of interest at, above or below
the Agent's prime lending rate.
"Base Rate Advance" shall mean an Advance made or
outstanding as a Revolving Loan bearing interest based
on the Base Rate.
"Borrowing" shall mean the incurrence by Nelson under any
Revolving Loan Commitment of Advances of one Type
concurrently having the same Interest Period or
the continuation of an existing Borrowing or
Borrowings in whole or in part.
"Business Day" shall mean any day excluding Saturday,
Sunday and any other day on which banks are
required or authorized to close in Nashville,
Tennessee or New York, New York.
"Change in Control Provision" shall mean any term or
provision contained in any indenture, debenture, note
or other agreement or document evidencing or
governing Indebtedness of Nelson evidencing debt or a
commitment to extend loans in excess of $1,000,000.00
which requires or permits the holder(s) of such
Indebtedness of Nelson to require that such Indebtedness of
Nelson be redeemed, repurchased, defeased, prepaid or
repaid, either in whole or in part, or the maturity of
such Indebtedness of Nelson to be accelerated in any
respect, as a result of a change in ownership of the
capital stock of Nelson or voting rights with respect
thereto.
"Closing Date" shall mean the date on or before December
13, 1995, on which the Revolving Loans are made
and the conditions set forth in Article IV are
satisfied.
"Closing Fee" has the meaning ascribed to it in
Section 3.05(a).
"Commitment Percentage shall mean the relevant percentage
indicated below based upon the percentages indicated for
Nelson's Interest Coverage Ratio and Senior Funded Debt
to Total Capital as determined on the date that is
ninety (90) days after the end of each fiscal year of
Nelson based upon the audited financial statements for
the immediately preceding fiscal year, with such
Commitment Percentage to be immediately effective as of such date
with respect to all outstanding amounts under the
Revolving Loans:
Percentage of Senior Funded Debt
Interest to Total Capital
Coverage Ratio --------------------------------
- - -------------- >45% 35%-45% <35%
================================
<2.5:1:0 .375% .30% .25%
2.5:1.0-3.0:1.0 .25% .25% .20%
>3.0:1.0-5.0:1.0 .25% .20% .15%
>5.0:1.0 .20% .15% .125%
Notwithstanding the foregoing, in the event Nelson
does not deliver the audited financial statements for
the immediately preceding fiscal year in a manner that
permits the determinations required in the definition
of the Commitment Percentage within ninety (90) days
of the end of Nelson's fiscal year, commencing at the
end of such ninety (90) day period and continuing until
such audited financial statements are made available, the
Commitment Percentage shall be the highest percentage
set forth in the preceding chart.
"Consolidated Companies" shall mean, collectively, Nelson
and all of its Subsidiaries, including Gibson
and its Subsidiaries.
"Consolidated EBIT" shall mean, for any fiscal period of
Nelson, an amount equal to (a) the sum for such fiscal
period of its Consolidated Net Income (Loss) plus, to
the extent subtracted in determining such Consolidated
Net Income (Loss), provisions for (i) taxes based
on income, (ii) Consolidated Interest Expense, and
(iii) charges taken in conformity with FASB-106,
minus (b) any items of gain (or plus any items of loss) that were
(A) not realized in the ordinary course of business, and
(B) the result of any sale of assets.
"Consolidated Interest Expense" shall mean, for any
fiscal period of Nelson, total interest expense
of the Consolidated Companies (including without
limitation, interest expense attributable to
capitalized leases) determined on a consolidated
basis in accordance with GAAP.
"Consolidated Net Income (Loss)" shall mean, for any
fiscal period of Nelson, the net income (or loss)
of the Consolidated Companies on a consolidated basis
for such period (taken as a single accounting period)
determined in conformity with GAAP, but excluding
therefrom (to the extent otherwise included therein)
any income (or loss) of any Person accrued prior to
the date such Person becomes a Subsidiary of Nelson or
is merged into or consolidated with any Consolidated Company or
all or substantially all of such Person's assets are
acquired by any Consolidated Company.
"Consolidated Net Worth" shall mean, as of any date of
determination, Shareholders' Equity of Nelson.
"Contractual Obligation" of any Person shall mean
any provision of any security issued by such Person
or of any agreement, instrument or undertaking under
which such Person is obligated or by which it or any
of the property owned by it is bound.
"Contribution Agreement" shall mean the Amended and
Restated Contribution Agreement executed of even date
herewith by each of the Guarantors, as the same may be
amended, restated or supplemented from time to time,
and in a form acceptable to the Guarantors, Lenders and
their respective counsel.
"Creditanstalt - Bankverein Adjusted Pro Rata Share"
shall equal the quotient of the following formula:
(Creditanstalt - Bankverein's Pro Rata Share of
the outstanding principal amount
under the Revolving Loan Commitments
-----------------------------------------------
(Total Outstanding Principal)
"Credit Documents" shall mean, collectively, this
Agreement, the Revolving Credit Notes, the Guaranty
Agreement, the Gibson Pledge Agreement, the Word
Pledge Agreement and all other Security Documents, if
any.
"Credit Parties" shall mean, collectively, each of
Nelson, the Guarantors and every other Person who from
time to time executes a Security Document with
respect to all or any portion of the Obligations.
"Default" shall mean any condition or event that, with
notice or lapse of time or both, would constitute an
Event of Default.
"DOL" shall have the meaning ascribed to it in Section
9.07(i)(iv).
"Dollar" and "U.S. Dollar" and the sign "$" shall mean
lawful money of the United States of America.
"Eligible Assignee" shall mean (a) a commercial bank
organized under the laws of the United States, or
any state thereof, having total assets in excess of
$1,000,000,000 or any commercial finance or asset based
lending Affiliate of any such commercial bank and (b)
any Lender or any Affiliate of any Lender.
"Environmental Laws" shall mean all federal, state and
local statutes, laws, codes, regulations, rules and
ordinances, and all orders or decrees issued,
promulgated or approved thereunder, now or
hereafter in effect (including, without limitation,
those with respect to asbestos or asbestos containing
material or exposure to asbestos or asbestos containing
material), relating to, regulating or imposing
liability or standards of conduct concerning (a)
pollution or protection of the environment, (b)
emissions, discharges, releases or threatened
releases of pollutants, contaminants, chemicals or
industrial toxic or hazardous constituents, substances or wastes,
including without limitation, any Hazardous Substance,
petroleum including crude oil or any fraction
thereof, any petroleum product or other waste,
chemicals or substances regulated by any Environmental
Law into the environment (including without
limitation, ambient air, surface water, ground water, land
surface or subsurface strata), (c) the manufacture,
processing, distribution, use, generation, treatment,
storage, disposal, transport or handling of any
Hazardous Substance, petroleum including crude oil
or any fraction thereof, any petroleum product or
other waste, chemicals or substances regulated by any
Environmental Law, or (d) underground storage tanks and related
piping, and emissions, discharges and releases or
threatened releases therefrom, such Environmental Laws to
include, without limitation (i) the Clean Air Act (42
U.S.C. Section 7401 et seq.), (ii) the Clean Water Act
(33 U.S.C. Section 1251 et sea.), (iii) the Resource
Conservation and Recovery Act (42 U.S.C. Section 6901 et
seq.), (iv) the Toxic Substances Control Act (15 U.S.C. Section
2601 et seq.), (v) the Comprehensive Environmental Response,
Compensation and Liability Act, as amended by the Superfund
Amendments and Reauthorization Act (42 U.S.C. Section
9601 et seq.), (vi) any "Superfund" or "Superlien" law,
including without limitation the Tennessee Hazardous Waste
Management Acts of 1977 and of 1983 and the Tennessee Hazardous
Waste Reduction Act of 1990, as amended, Tennessee Code
Annotated Section 68-212-101 et seq., Section 68-212-201 et
seq. and Section 68-212-301 et seq., and (vii) all applicable
national and local laws or regulations with respect to
environmental control.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended and in effect from time
to time.
"ERISA Affiliate" shall mean, with respect to any Person,
each trade or business (whether or not incorporated)
that is a member of a group of which that Person is a
member and that is under common control within the
meaning of the regulations promulgated under Section
414 of the Tax Code.
"Escrow Letter" shall mean a letter agreement between
Nelson and the Agent substantially in the form of
Exhibit B attached hereto.
"Event of Default" shall have the meaning ascribed to it
in Article XII.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time, and any successor
statute thereto.
"Executive Officer" shall mean with respect to any
Person, the president, vice presidents, chief financial
officer, treasurer, secretary and any Person holding
comparable offices or duties.
"FASB-106" shall mean Financial Accounting Standards
Board Statement No. 106, as in effect on the date
of this Agreement, specifying applicable accounting
principles with respect to accrual of the expected
cost of providing post retirement benefits to
employees or their dependents.
"Federal Funds Rate" shall mean for any period, a
fluctuating interest rate per annum equal for each day
during such period to the weighted average of the
rates on overnight Federal funds transactions with
member banks of the Federal Reserve System arranged
by Federal funds brokers, as published for such day (or, if
such day is not a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of Atlanta,
or, if such rate is not so published for any day that is a
Business Day, the average of the quotations for such day
on such transactions received by the Agent from three
(3) Federal funds brokers of recognized standing
selected by the Agent.
"Final Maturity Date" shall mean the earlier of (a)
December 13, 2002, and (b) the date on which all
amounts outstanding under this Agreement have been
declared or have automatically become due and payable
pursuant to the provisions of Article XII.
"First American National Bank Adjusted Pro Rata Share"
shall equal the quotient of the following formula:
(First American National Bank's Pro Rata Share of
the outstanding principal amount under the
Revolving Loan Commitments
-------------------------------------------------
(Total Outstanding Principal)
"Funded Debt" shall mean all Indebtedness for money
borrowed, Indebtedness evidenced or secured by
purchase money Liens, capitalized leases, conditional
sales contracts and similar title retention debt
instruments, including any current maturities of such
Indebtedness that by its terms matures more than one
year from the date of any calculation thereof and/or
that is renewable or extendable at the option of the obligor to a
date beyond one (1) year from such date of
calculation. The calculation of Funded Debt shall
include all Funded Debt of the Consolidated Companies,
plus all Funded Debt of other Persons to the extent
guaranteed by a Consolidated Company, to the extent
supported by a letter of credit issued for the account of a
Consolidated Company, or as to which and to the extent
which a Consolidated Company or its assets otherwise
have become liable for payment thereof.
"GAAP" shall mean generally accepted accounting
principles set forth in the opinions and pronouncements
of the Accounting Principles Board of the American
Institute of Certified Public Accountants and
statements and pronouncements of the Financial
Accounting Standards Board or in such other
statements by such other entity as may be approved by a
significant segment of the accounting profession,
which are applicable to the circumstances as of the date
of determination.
"Gibson shall mean The C. R. Gibson Company, a Delaware
corporation.
"Gibson Corrections" shall have the meaning ascribed to
it in Article VII.
"Gibson Debt" shall mean certain indebtedness (consisting
of two term loans) currently owed by Gibson to
MetLife in the aggregate outstanding principal amount
of Twelve Million and No/100 Dollars ($12,000,000.00)
evidenced by two long-term loan agreements.
"Gibson Information" shall have the meaning ascribed to
it in Article V.
"Gibson Pledge Agreement" shall mean that certain Pledge
Agreement executed of even date herewith by Nelson in
favor of the Agent providing for the grant of a first-
priority Lien on all outstanding common stock of
Gibson, as the same may be amended, restated or
supplemented from time to time, and in a form
acceptable to Nelson, the Lenders and their respective counsel.
"Guarantors" shall mean, collectively, all of Nelson's
Subsidiaries, including without limitation, Gibson
(upon its acquisition by Nelson), and their
respective successors and permitted assigns, but
excluding those Subsidiaries of Nelson set forth on
Schedule VIII.
"Guaranty" shall mean any contractual obligation,
contingent or otherwise, of a Person with respect
to any Indebtedness or other obligation or liability
of another Person, including without limitation, any
such Indebtedness, obligation or liability directly or
indirectly guaranteed, endorsed, co-made or discounted
or sold with recourse by that Person, or in respect of
which that Person is otherwise directly or indirectly liable,
including Contractual Obligations (contingent or
otherwise) arising through any agreement to
purchase, repurchase or otherwise acquire such
Indebtedness, obligation or liability or any security
therefor, or any agreement to provide funds for the
payment or discharge thereof (whether in the form of loans,
advances, stock purchases, capital contributions or
otherwise), or to maintain solvency, assets, level
of income or other financial condition or to make any
payment other than for value received. The amount of
any Guaranty shall be deemed to be an amount equal to
the stated or determinable amount of the primary
obligation in respect of which guaranty is made or, if not so
stated or determinable, the maximum reasonably
anticipated liability in respect thereof (assuming such
Person is required to perform thereunder) as determined
by such Person in good faith.
"Guaranty Agreement" shall mean the joint and several
Amended and Restated Guaranty Agreement executed of
even date herewith by each of the Guarantors in favor
of the Lenders and the Agent, as the same may be
amended, restated or supplemented from time to time,
and in a form acceptable to the Guarantors, Lenders and
their respective counsel.
"Hazardous Substance" shall have the meaning assigned to
that term in the Comprehensive Environmental
Response Compensation and Liability Act of 1980, as
amended by the Superfund Amendments and
Reauthorization Acts of 1986.
"Indebtedness" of any Person shall mean, without
duplication (a) all obligations of such Person that in
accordance with GAAP would be shown on the balance sheet
of such Person as a liability (including, without
limitation, obligations for borrowed money and for
the deferred purchase price of property or services, and
obligations evidenced by bonds, debentures, notes or
other similar instruments); (b) all rental obligations under
leases required to be capitalized under GAAP; (c) all
Guaranties of such Person (including contingent
reimbursement obligations under undrawn letters of
credit); (d) Indebtedness of others secured by any
Lien upon property owned by such Person, whether or
not assumed; and (e) obligations or other liabilities under
currency contracts, interest rate hedging contracts or
similar agreements or combinations thereof.
"Indemnitee" shall have the meaning ascribed to it in
Section 14.04(c).
"Indenture" means that certain Indenture dated as of
November 30, 1992, between Nelson and Boatmen's Trust
Company, as Trustee, evidencing Subordinated Debt.
"Initial Reduction Date" shall mean December 13, 1998,
unless further extended in accordance with Section 2.08.
"Interest Coverage Ratio" shall mean, as of the end of
any fiscal period of Nelson, the ratio of (a)
Consolidated EBIT to (b) the sum of Consolidated
Interest Expense.
"Interest Period" shall have the meaning ascribed to it
in Section 3.04.
"Investment" shall mean, when used with respect to any
Person, any direct or indirect advance (excluding
advances made to authors or artists in the ordinary
course of business), loan or other extension of
credit (other than the creation of receivables in
the ordinary course of business) 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
Person, or any direct or indirect purchase or other
acquisition 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.
"IRS" shall have the meaning ascribed to it in Section
9.07(i)(iv).
"Lender" or "Lenders" shall mean SunTrust, the other
banks and lending institutions listed on the
signature pages hereof and each assignee thereof, if
any, pursuant to Section 14.06(c).
"Lending Office" shall mean for each Lender the office
such Lender may designate in writing from time to time
to Nelson and the Agent with respect to each Type of
Revolving Loan.
"LIBOR" shall mean, for any Interest Period, the offered
rates for deposits in U.S. Dollars for a period
comparable to the Interest Period and in an amount
comparable to the Agent's portion of such Advances
determined by the Agent from Telerate Page 3750 as of
11:00 A.M. (London, England time) on the day that is
two Business Days prior to the first day of the Interest
Period. If two or more of such rates appear on the Telerate
Page, the rate for that Interest Period shall be the
arithmetic mean of such rates, rounded, if necessary,
to the next higher 1/16 of 1.0%, if the rate is not
such a multiple, and in either case as such rates
may be adjusted for any applicable reserve
requirements. If such rate is unavailable on such service, then
such rate shall be determined by and based on any other
interest rate reporting service of recognized
standing designated in writing by the Agent to Nelson
and the other Lenders.
"LIBOR Advance" shall mean any Advance made or
outstanding as a Revolving Loan bearing interest at
LIBOR.
"Lien" shall mean any mortgage, pledge, security
interest, lien, charge, hypothecation, assignment,
deposit arrangement, title retention, preferential
property right, trust or other arrangement having the
practical effect of the foregoing and shall include the
interest of a vendor or lessor under any conditional
sale agreement, capitalized lease or other title
retention agreement.
"Margin Regulations" shall mean Regulation G,
Regulation T, Regulation U and Regulation X of the
Board of Governors of the Federal Reserve System, as
the same may be in effect from time to time.
"Materially Adverse Effect" shall mean any materially
adverse change in (a) the business, results of
operations, financial condition, assets or prospects
of the Consolidated Companies, taken as a whole, (b)
the ability of Nelson to perform its obligations under
this Agreement, or (c) the ability of the other
Credit Parties (taken as a whole) to perform their
respective obligations under the Credit Documents.
"MetLife" means Metropolitan Life Insurance Company.
"Multiemployer Plan" shall have the meaning ascribed to
it in Section 4001(a)(3) of ERISA.
"National City Bank, Kentucky (formerly known as First
National Bank of Louisville) Adjusted Pro Rata Share"
shall equal the quotient of the following formula:
(National City Bank, Kentucky's (formerly
known as First National Bank of Louisville)
Pro Rata Share of the outstanding principal
amount under the Revolving Loan Commitments
the outstanding principal amount under the
National City Bank, Kentucky (formerly known
as First National Bank of Louisville)
Letter of Credit Facility
-------------------------------------------
(Total Outstanding Principal)
"National City Bank, Kentucky (formerly known as First
National Bank of Louisville) Letter of Credit
Facility" shall mean that certain $8,000,000 commercial
letter of credit facility pursuant to which National
City Bank, Kentucky (formerly known as First National
Bank of Louisville) issues commercial trade letters
of credit for the account of Nelson, which facility shall
mature July 31, 1996.
"NationsBank of Texas, N.A. Adjusted Pro Rata Share"
shall equal the quotient of the following formula:
(NationsBank of Texas, N.A.'s
Pro Rata Share of the outstanding principal
amount under the Revolving Loan Commitments
-------------------------------------------
(Total Outstanding Principal)
"Nelson" shall mean Thomas Nelson, Inc., a Tennessee
corporation, its successors and permitted assigns.
"Net Proceeds" shall mean, with respect to any Asset
Sale, all cash, including (a) cash receivables (when
received) by way of deferred payment pursuant to a
promissory note, a receivable or otherwise (other
than interest payable thereon), and (b) with respect
to Asset Sales resulting from the loss, damage,
destruction or taking of property, the proceeds of
insurance settlements and condemnation awards (other than the
portion of the proceeds of such settlements and such
awards that are used to repair, replace, improve or
restore the item of property in respect of which such
settlement or award was paid provided that the
recipient of such proceeds enters into a binding
contractual obligation to effect such repair,
replacement, improvement or restoration within six (6) months of
such loss, damage or destruction and completes such
repair, replacement, improvement or restoration within
twelve (12) months of such loss, damage, destruction or
taking) as and when received in cash, in either case, received
by any Consolidated Company as a result of or in connection
with such transaction, net of reasonable sale expenses, fees
and commissions incurred, and taxes paid or expected to be
payable within the succeeding 12-month period in connection
therewith, and net of any payment required to be made with
respect to the outstanding principal amount of, premium or
penalty, if any, and interest on any Indebtedness (other than
the Revolving Loans) secured by a Lien (to the extent permitted
by Section 11.02) upon the asset sold in such Asset Sale.
"Notice of Borrowing" shall have the meaning ascribed to
it in Section 3.01(a).
"Notice of Change" shall have the meaning ascribed to it
in Article X.
"Notice of Conversion/Continuation" shall have the
meaning ascribed to it in Section 3.01(b).
"Notice of Extension" shall have the meaning ascribed to
it in Section 2.08(a).
"Notice Period" shall have the meaning ascribed to it in
Article V.
"Obligations" shall mean all amounts owing to the Agent
or any Lender pursuant to the terms of this Agreement
or any other Credit Document, including without
limitation, all Revolving Loans (including all
principal and interest payments due thereunder),
fees, expenses, indemnification and reimbursement
payments, indebtedness, liabilities, and
obligations of the Credit Parties, direct or indirect, absolute
or contingent, liquidated or unliquidated, now
existing or hereafter arising, together with all
renewals, extensions, modifications or refinancings
thereof.
"Payment Office" shall mean, at any time for any Lender,
the Payment Office set forth opposite such Lender's name
on the signature pages hereof, as the same may be
amended pursuant to Section 14.02.
"PBGC" shall mean the Pension Benefit Guaranty
Corporation, or any successor thereto.
"Person" shall mean any individual, partnership, firm,
corporation, association, limited liability company,
joint venture, trust or other entity, or any
government or political subdivision or agency,
department or instrumentality thereof.
"Plan" shall mean any "employee benefit plan" (as
defined in Section 3(3) of ERISA), including, but not
limited to, any defined benefit pension plan, profit sharing
plan, money purchase pension plan, savings or thrift
plan, stock bonus plan, employee stock ownership plan,
Multiemployer Plan, or any plan, fund, program,
arrangement or practice providing for medical
(including post-retirement medical), hospitalization, accident,
sickness, disability, or life insurance benefits.
"Prescribed Forms" shall mean such duly executed forms or
statements, and in such number of copies, which may, from
time to time, be prescribed by law and which,
pursuant to applicable provisions of (a) an income tax
treaty between the United States and the country of
residence of the Lender providing the form or
statement, (b) the Tax Code, or (c) any applicable rule or
regulation under the Tax Code, permit Nelson to make
payments hereunder for the account of such Lender
free, or subject to a reduced rate, of deduction or
withholding of income or similar taxes.
"Pro Rata Share" shall mean, with respect to each of the
Revolving Loan Commitments of each Lender and each
Revolving Loan to be made by and each payment
(including, without limitation, any payment of
principal, interest or fees) to be made to each
Lender, the percentage designated as such Lender's Pro Rata Share
of such Revolving Loan Commitments, such Revolving Loans
or such payments, as applicable, set forth under the
name of such Lender on the respective signature page for
such Lender, in each case as such Pro Rata Share may
change from time to time as a result of assignments or
amendments made pursuant to this Agreement.
"Reduction Amount" shall mean a constant amount equal to
fifteen percent (15%) of the amount of the
Revolving Loan Commitments outstanding on the Initial
Reduction Date.
"Refinanced Indebtedness" shall mean the Indebtedness of
the Consolidated Companies to be paid on the Closing
Date with the proceeds of the initial Borrowings under
the Revolving Loan Commitments as more particularly
described on Schedule 6.18.
"Required Lenders" shall mean at any time Lenders holding
at least sixty-six and two-thirds percent (66-2/3%) of
the then aggregate amount of the Revolving Loan
Commitments.
"Requirement of Law" for any Person shall mean the
articles or certificate of incorporation and by-laws
or other organizational or governing documents of
such Person, and any law, treaty, rule or
regulation, or determination of an arbitrator or a
court or other governmental authority, in each case
applicable to or binding upon such Person or any of its
property or to which such Person or any of its property
is subject.
"Revolving Credit Notes" shall mean, collectively, the
Consolidated, Amended and Restated Revolving
Credit Notes evidencing the Revolving Loans executed
of even date herewith by Nelson to the order of
Lenders as they may be amended and/or restated from
time to time, and in a form acceptable to Nelson,
Lenders and their respective counsel.
"Revolving Loan Commitment" shall mean, at any time for
any Lender, the amount of the Revolving Loan Commitment
set forth opposite such Lender's name on the signature
pages hereof, as the same may be increased or decreased
from time to time as a result of any reduction thereof
pursuant to Section 2.04, Section 2.05, Section 2.06 or
Section 2.07, any assignment thereof pursuant to
Section 14.06, or any amendment thereof pursuant to Section
14.02.
"Revolving Loans" shall mean, collectively, the revolving
credit loans made to Nelson by the Lenders
pursuant to Section 2.01.
"Security Documents" shall mean, collectively, the
Guaranty Agreement, the Gibson Pledge Agreement, Word
Pledge Agreement and each other guaranty agreement,
mortgage, deed of trust, security agreement, pledge
agreement or other security or collateral document
guaranteeing or securing the Obligations, as the same
may be amended, restated or supplemented from time to
time.
"Senior Debt" shall mean other Indebtedness of Nelson not
to exceed $62,000,000, which Indebtedness shall be
(a) on a parity with the obligations of Nelson and any
other Credit Party arising under this Agreement, the
Revolving Credit Notes, the Guaranty Agreement and all
other Credit Documents, and (b) issued upon terms and
conditions (including without limitation matters
regarding interest rates, payment terms, maturities, amortization
schedules, covenants, defaults and remedies)
satisfactory in all respects to the Agent and the
Required Lenders, as evidenced by the written approval
of the Agent and Required Lenders; provided, however
that the Consolidated Companies, Lenders and Agent
acknowledge and agree that (i) the terms and conditions of the
Senior Debt shall be no more restrictive than the
terms and conditions of the Revolving Loans, (ii) all
Senior Debt shall provide for the payment of interest
only for at least seven (7) years from the date of
issuance (except for Senior Debt in the principal
amount not to exceed $15,000,000 owed to MetLife, which
shall provide for the payment of interest only for at least three
and one-half (3 1/2) years from the date of issuance),
and (iii) the average life of the Senior Debt shall at
all times be greater than seven (7) years. In no event
shall the Senior Debt be deemed to include the SunTrust
Letter of Credit Facility or the National City Bank,
Kentucky (formerly known as First National Bank of Louisville)
Letter of Credit Facility. The Gibson Debt is
included in and shall be a part of the Senior Debt.
"Senior Funded Debt" shall mean all Funded Debt minus the
Subordinated Debt.
"Shareholders' Equity" shall mean, with respect to any
Person as at any date of determination, shareholders'
equity of such Person determined in accordance with
GAAP.
"Subordinated Debt" shall mean other Indebtedness of
Nelson subordinated to all obligations of Nelson or
any other Credit Party arising under this Agreement,
the Revolving Credit Notes, the Guaranty Agreement and
all other Credit Documents on terms and conditions
satisfactory in all respects to the Agent and the
Required Lenders, including without limitation, with
respect to interest rates, payment terms, maturities,
amortization schedules, covenants, defaults,
remedies and subordination provisions, as evidenced by
the written approval of the Agent and Required Lenders.
"Subsidiary" shall mean, with respect to any Person, any
corporation or other entity (including, without
limitation, partnerships, joint ventures, and
associations) regardless of its jurisdiction of
organization or formation, at least a majority of the
total combined voting power of all classes of voting stock or
other ownership interests of which shall, at the time as of
which any determination is being made, be owned by such
Person, either directly or indirectly through one or
more other Subsidiaries.
"SunTrust" shall mean SunTrust Bank, Nashville, N. A.
(formerly known as Third National Bank in Nashville), a
national banking association.
"SunTrust Adjusted Pro Rata Share" shall equal the
quotient of the following formula:
(SunTrust's Pro Rata Share of the outstanding
principal amount under the Revolving Loan
Commitments + the outstanding principal amount
under the SunTrust Ten Million Dollar Revolving
Credit Facility + the outstanding principal amount
under the SunTrust Letter of Credit Facility
--------------------------------------------------------
(Total Outstanding Principal)
"SunTrust Letter of Credit Facility" shall mean that
certain $4,000,000 commercial letter of credit facility
pursuant to which SunTrust issues commercial trade
letters of credit for the account of Nelson, which
facility shall mature September 30, 1996.
"SunTrust Ten Million Dollar Revolving Credit Facility"
shall have the meaning ascribed to it in Section
11.01(f).
"Tax Code" shall mean the Internal Revenue Code of 1986,
as amended and in effect from time to time.
"Taxes" shall mean any present or future taxes, levies,
imposts, duties, fees, assessments, deductions,
withholdings or other charges of whatever nature,
including without limitation, income, receipts,
excise, property, sales, transfer, license, payroll,
withholding, social security and franchise taxes now or
hereafter imposed or levied by the United States, or any state,
local or foreign government or by any department, agency
or other political subdivision or taxing authority
thereof or therein and all interest, penalties,
additions to tax and similar liabilities with respect
thereto.
"Telerate" shall mean, when used in connection with any
designated page and LIBOR, the display page so
designated on the Dow Jones Telerate Service (or such
other page as may replace that page on that service
for the purpose of displaying rates comparable to
LIBOR).
"Total Capital" shall mean the sum of Funded Debt and
Consolidated Net Worth of the Consolidated Companies.
"Total Commitment" shall mean, for any Lender at any
time, such Lender's Revolving Loan Commitment, and
"Total Commitments" shall mean, for all Lenders at any
time, the sum of the Total Commitment of all Lenders.
"Total Outstanding Principal" shall mean the outstanding
principal amount under the Revolving Loan Commitments,
plus the outstanding principal amount under the
SunTrust Ten Million Dollar Revolving Credit Facility,
plus the outstanding principal amount under the
SunTrust Letter of Credit Facility, plus the
outstanding principal amount under the National City Bank,
Kentucky (formerly known as First National Bank of
Louisville) Letter of Credit Facility.
"Type" of Borrowing shall mean a Borrowing consisting of
Base Rate Advances or LIBOR Advances.
"UCC Information" shall have the meaning ascribed to it
in Article V.
"Word Pledge Agreement" shall mean that certain Amended
and Restated Pledge Agreement of even date herewith
executed by Nelson in favor of the Agent providing for
the grant of a first- priority Lien on all
outstanding common stock of Word, Incorporated,
as the same may be amended, restated or supplemented
from time to time, and in a form acceptable to
Nelson, the Lenders and their respective counsel.
Section 1.02. Accounting Terms and Determination. Unless
otherwise defined or specified herein, all accounting
terms shall be construed herein, all accounting
determinations hereunder shall be made, all financial
statements required to be delivered hereunder shall be
prepared, and all financial records shall be maintained
in accordance with GAAP; provided, however, that
compliance with the financial covenants and calculations set
forth in Section 9.08, Article XI and elsewhere
herein, and in the definitions used in such covenants
and calculations, shall be calculated, made and applied
in accordance with GAAP as in effect on the date of
this Agreement applied on a basis consistent with the
preparation of the financial statements referred to in
Section 6.14 unless and until Nelson and the Required
Lenders enter into an agreement with respect thereto
in accordance with Section 14.13.
Section 1.03. Other Definitional Terms. The words
"hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular
provision of this Agreement, and the words Article,
Section, Schedule, Exhibit and like references are to
this Agreement unless otherwise specified.
Section 1.04. Exhibits and Schedules. All Exhibits and
Schedules attached hereto are by reference made a part
hereof.
ARTICLE II.
REVOLVING LOANS
Section 2.01. Revolving Loan Commitment. (a) Subject to
and upon the terms and conditions herein set forth,
each Lender severally agrees to make to Nelson from time
to time on and after the Closing Date, but prior to the
Final Maturity Date, Revolving Loans in an aggregate
amount outstanding at any time not to exceed such
Lender's Revolving Loan Commitment. Nelson shall be
entitled to repay and reborrow Revolving Loans in accordance with
the provisions hereof.
(b) Each Revolving Loan shall, at the option of Nelson,
be made, continued as or converted into part of one
or more Borrowings that shall consist entirely of Base
Rate Advances and LIBOR Advances. Each Borrowing of
Revolving Loans comprised of LIBOR Advances shall not
be less than $2,000,000 or a greater integral
multiple of $500,000, and each Borrowing of Revolving
Loans comprised of Base Rate Advances shall be not less than
$250,000 or a greater integral multiple of $100,000.
Section 2.02. Use Of Proceeds. The proceeds of the
Revolving Loans shall be used solely for the following
purposes:
(a) Approximately $43,000,000 shall be used
initially to repay Refinanced Indebtedness of the
Consolidated Companies on the Closing Date; and
(b) Approximately $74,000,000 shall be used
initially to acquire all of the outstanding common stock
of Gibson, including the cost of such common
stock and any and all acquisition costs
associated therewith, including severance
costs, corporate finance fees and expenses
and attorneys' fees and expenses.
(c) All other amounts shall be used as working
capital and for other general corporate purposes,
including acquisitions and capital expenditures
of the Consolidated Companies.
Section 2.03. Revolving Credit Notes: Repayment of
Principal. (a) Nelson's obligations to pay the
principal of and interest on the Revolving Loans to each
Lender shall be evidenced by the records of the Agent
and such Lender and by the Revolving Credit Note
payable to such Lender (or the assignor of such
Lender) completed in conformity with this Agreement.
(b) All outstanding principal amounts under the
Revolving Loans shall be due and payable in full on
the Final Maturity Date.
Section 2.04. Automatic, Mandatory Reduction of Revolving
Loan Commitments. Commencing on the Initial Reduction
Date and continuing thereafter on each one (1) year
anniversary thereof until the Final Maturity Date,
the Revolving Loan Commitments shall be permanently
and ratably reduced by an amount equal to the
Reduction Amount plus interest accrued and unpaid on the
amount of such prepayment. Any such reduction of the
Revolving Loan Commitments shall apply as a
proportional and permanent reduction of the Revolving
Loan Commitments of each of the Lenders. If the
aggregate outstanding amount of the Revolving Loans
exceeds the amount of the Revolving Loan Commitments as so
reduced, Nelson shall immediately repay the Revolving Loans by
an amount equal to such excess. Each mandatory
prepayment of Revolving Loans pursuant to this
Section 2.04 shall be applied first to Base Rate
Advances to the full extent thereof before
application to LIBOR Advances; provided, however, that, so long
as no Default or Event of Default has occurred and is
continuing, in lieu of application of such prepayment to
LIBOR Advances prior to the expiration of the respective
Interest Periods with respect thereto, Nelson, at its
option, may execute an Escrow Letter with respect to
such prepayment and deposit with the Agent funds equal to the
amount of such prepayment for application in accordance with
the terms of such Escrow Letter.
Section 2.05. Mandatory Reduction of Revolving Loan
Commitments Regarding Senior Debt. Upon the issuance
of any Senior Debt, the Revolving Loan Commitments
shall be permanently and ratably reduced by an amount
equal to one hundred percent (100%) of the amount of
such Senior Debt issued plus interest accrued and
unpaid on the amount of such prepayment. Any such
reduction of the Revolving Loan Commitments shall apply as a
proportional and permanent reduction of the
Revolving Loan Commitments of each of the Lenders. If
the aggregate outstanding amount of the Revolving Loans
exceeds the amount of the Revolving Loan Commitments as
so reduced, Nelson shall immediately repay the
Revolving Loans by an amount equal to such excess. Nothing in
this Section 2.05 shall be deemed to authorize the
issuance of any Indebtedness not constituting Senior
Debt. Each mandatory prepayment of Revolving Loans
pursuant to this Section 2.05 shall be applied first to
Base Rate Advances to the full extent thereof before
application to LIBOR Advances; provided, however, that, so
long as no Default or Event of Default has occurred and
is continuing, in lieu of application of such
prepayment to LIBOR Advances prior to the expiration
of the respective Interest Periods with respect
thereto, Nelson, at its option, may execute an Escrow
Letter with respect to such prepayment and deposit with
the Agent funds equal to the amount of such prepayment for
application in accordance with the terms of such Escrow
Letter.
Section 2.06. Mandatory Reduction of Revolving Loan
Commitments Regarding Asset Sales. No mandatory
reduction shall be required pursuant to this Section
2.06 until the aggregate amount of Asset Sales
(based on the Asset Values thereof but excluding
Asset Sales resulting from loss, damage, destruction or
taking where the proceeds thereof are utilized so as to be
excluded from the definition of Net Proceeds)
occurring after December 13, 1995, exceeds $2,500,000.
Within ten (10) Business Days after each date on which
any Consolidated Company receives any Net Proceeds as
a result of or in connection with an Asset Sale by any
Consolidated Company, the Revolving Loan Commitments
shall be permanently and ratably reduced by an amount equal to
one hundred percent (100%) of such Net Proceeds plus
interest accrued and unpaid on the amount of such
prepayment. Any such reduction of the Revolving Loan
Commitments shall apply as a proportional and
permanent reduction of the Revolving Loan
Commitments of each of the Lenders. If the aggregate outstanding
amount of the Revolving Loans exceeds the amount of the
Revolving Loan Commitments as so reduced, Nelson shall
immediately repay the Revolving Loans by an amount equal
to such excess. Nothing in this Section 2.06 shall be
deemed to authorize any Asset Sale not permitted by
Section 11.03. Each mandatory prepayment of
Revolving Loans pursuant to this Section 2.06 shall be applied
first to Base Rate Advances to the full extent thereof
before application to LIBOR Advances; provided, however, that,
so long as no Default or Event of Default has occurred
and is continuing, in lieu of application of such
prepayment to LIBOR Advances prior to the expiration of
the respective Interest Periods with respect thereto,
Nelson, at its option, may execute an Escrow Letter with
respect to such prepayment and deposit with the Agent funds equal
to the amount of such prepayment for application in
accordance with the terms of such Escrow Letter.
Section 2.07. Voluntary Reduction of Revolving Loan
Commitments. Upon at least three (3) Business
Days prior telephonic notice (promptly confirmed in
writing) to the Agent, Nelson shall have the right,
without premium or penalty, to terminate the
Revolving Loan Commitments, in part or in whole,
provided that (a) any such termination shall apply to
proportionately and permanently reduce the
Revolving Loan Commitments of each of the Lenders,
(b) any prepayment of LIBOR Advances must be in minimum
principal amounts of $2,000,000 and in multiples of
$500,000, and any prepayment of Base Rate Advances
must be in minimum principal amounts of $250,000 and in
multiples of $100,000, and (c) no such reduction shall be
permitted that would require a prepayment that is not
permitted by Section 3.06. If the aggregate
outstanding amount of the Revolving Loans exceeds
the amount of the Revolving Loan Commitments as
so reduced, Nelson shall immediately repay the
Revolving Loans by an amount equal to such excess, together with
all accrued but unpaid interest on such excess amount
and any amounts due under Section 3.12.
Section 2.08. Extension of Initial Reduction Date and
Final Maturity Date. (a) As long as no Default or
Event of Default has occurred and is continuing,
Nelson shall have the right to notify Agent in
writing at its Payment Office at least sixty (60)
Business Days prior to the Initial Reduction Date of
Nelson's desire to extend the Initial Reduction Date for a one
(1) year period (a "Notice of Extension"). Each
Notice of Extension shall request an extension to
the Initial Reduction Date of a one (1) year
period, no more, no less, provided, however, Nelson
may, but shall not be obligated to, submit an
unlimited number of Notices of Extensions to Agent prior to the
Initial Reduction Date provided such Notices of
Extension comply with this Section 2.08.
(b) The Agent shall promptly give each Lender notice in
writing of its receipt of any Notice of Extension.
Within twenty (20) Business Days of Agent's receipt of
the Notice of Extension, Agent shall notify Nelson in
writing of the Lenders' acceptance or rejection of such
Notice of Extension. The Notice of Extension shall only
be accepted upon Agent's receipt from one hundred
percent (100%) of the Lenders of their approval of the Notice of
Extension. The Lenders' determination shall be final,
conclusive and binding upon all parties hereto.
(c) Once Nelson's Notice of Extension has been agreed to
and accepted by one hundred percent (100%) of the Lenders
and the Agent has advised Nelson of such determination
in accordance with Section 2.08(b), such Notice of
Extension shall be irrevocable.
(d) In the event there is a one (1) year extension in
the Initial Reduction Date pursuant to the terms of this
Section 2.08, there shall be a corresponding one (1)
year extension to the Final Maturity Date automatically
without further amendment to this Agreement, provided
the Obligations are unsecured.
(e) The Agent's and Lenders' review of any Notice of
Extension shall in no way obligate the Lenders to agree
to extend the Initial Reduction Date in accordance
with such Notice of Extension. The acceptance of any
one (1) Notice of Extension by the Lenders shall in no
way obligate the Lenders to agree to or accept any
future Notices of Extensions received by Agent from
Nelson.
ARTICLE III.
GENERAL REVOLVING LOAN TERMS
Section 3.01. Funding Notices. (a) Whenever Nelson
desires to make a Borrowing with respect to the
Revolving Loan Commitments (other than one resulting
from a conversion or continuation pursuant to
Section 3.01(b)), it shall give the Agent prior
written notice (or telephonic notice promptly
confirmed in writing) of such Borrowing (a "Notice of
Borrowing"), such Notice of Borrowing to be given prior
to 11:00 A.M. (local time for the Agent) at its Payment
Office (i) one (1) Business Day prior to the requested
date of such Borrowing in the case of Base Rate
Advances, and (ii) two (2) Business Days prior to the
requested date of such Borrowing in the case of LIBOR
Advances. Notices received after 11:00 A.M. shall be deemed
received on the next Business Day. Each Notice of
Borrowing shall be irrevocable and shall specify the
aggregate principal amount of the Borrowing, the date
of Borrowing (which shall be a Business Day), and
whether the Borrowing is to consist of Base Rate
Advances or LIBOR Advances.
(b) Whenever Nelson desires to convert all or a portion
of an outstanding Borrowing under the Revolving Loan
Commitments, which Borrowing consists of Base Rate
Advances or LIBOR Advances, into one or more
Borrowings consisting of Advances of another Type, or
to continue outstanding a Borrowing consisting of LIBOR
Advances for a new Interest Period, it shall give the Agent at
least one (1) Business Day's prior written notice (or
telephonic notice promptly confirmed in writing) of
each such Borrowing being converted into or continued
as Base Rate Advances, and at least two (2) Business
Days prior written notice (or telephonic notice
promptly confirmed in writing) of each such Borrowing to be
converted into or continued as LIBOR Advances. Such notice (a
"Notice of Conversion/Continuation") shall be given prior
to 11:00 A.M (local time for the Agent) on the date
specified at the Payment Office of the Agent.
Each such Notice of Conversion/Continuation shall
be irrevocable and shall specify the aggregate
principal amount of the Advances to be converted or
continued, the date of such conversion or continuation, whether
the Advances are being converted into or continued as
Base Rate Advances or LIBOR Advances and (in the case
of LIBOR Advances) the Interest Period applicable
thereto. If, upon the expiration of any Interest
Period in respect of any Borrowing, Nelson shall have
failed to deliver the Notice of Conversion/Continuation,
Nelson shall be deemed to have elected to convert or
continue such Borrowing to a Borrowing consisting of
Base Rate Advances. So long as any Executive Officer of
Nelson has knowledge that any Default or Event of
Default shall have occurred and be continuing, no
Borrowing may be converted into or continued as (upon
expiration of the current Interest Period) LIBOR Advances
unless the Agent and each of the Lenders shall have
otherwise consented in writing. No conversion of any
Borrowing of LIBOR Advances shall be permitted
except on the last day of the Interest Period in
respect thereof.
(c) Without in any way limiting Nelson's obligation to
confirm in writing any telephonic notice, the Agent
may act without liability upon the basis of telephonic
notice believed by the Agent in good faith to be from
Nelson prior to receipt of written confirmation. In
each such case, Nelson hereby waives the right to
dispute the Agent's record of the terms of such
telephonic notice.
(d) The Agent shall promptly give each Lender notice by
telephone (confirmed in writing) or by telex,
telecopy or facsimile transmission of the matters
covered by the notices given to the Agent pursuant to
this Section 3.01 with respect to the Revolving Loan
Commitments.
Section 3.02. Disbursement of Funds. (a) No later than
noon (local time for the Agent) on the date of each
Borrowing pursuant to the Revolving Loan Commitments
(other than one resulting from a conversion or
continuation pursuant to Section 3.01(b)), each Lender
will make available its Pro Rata Share of the amount
of such Borrowing in immediately available funds at
the Payment Office of the Agent. The Agent will make available to
Nelson the aggregate of the amounts (if any) so made
available by the Lenders to the Agent in a timely
manner by crediting such amounts to Nelson's demand
deposit account maintained with the Agent or at
Nelson's option, to effect a wire transfer of such
amounts to Nelson's account specified by an authorized
representative of Nelson by the close of business
on such Business Day.
(b) Unless the Agent shall have been notified by any
Lender prior to the date of a Borrowing that such Lender
does not intend to make available to the Agent such
Lender's portion of the Borrowing to be made on such
date, the Agent may assume that such Lender will make
such amount available to the Agent on such date and the
Agent may make available to Nelson a corresponding
amount. If such corresponding amount is not in fact made
available to the Agent by such Lender on the date of
Borrowing, the Agent shall be entitled to recover such
corresponding amount on demand from such Lender
together with interest at the Federal Funds Rate. If
such Lender does not pay such corresponding amount
forthwith upon the Agent's demand therefor, the Agent shall
promptly notify Nelson, and Nelson shall immediately
pay such corresponding amount to the Agent together
with interest at the rate specified for the Borrowing
which includes such amount paid and any amounts due
under Section 3.12. Nothing in this Section 3.02(b)
shall be deemed to relieve any Lender from its obligation
to fund its Total Commitments hereunder or to prejudice any
rights that Nelson may have against any Lender as a
result of any default by such Lender hereunder.
(c) All Borrowings under the Revolving Loan Commitments
shall be loaned by the Lenders on the basis of their
Pro Rata Share of the Revolving Loan Commitments. No
Lender shall be responsible for any default by
any other Lender in its obligations hereunder, and
each Lender shall be obligated to make the Revolving
Loans provided to be made by it hereunder,
regardless of the failure of any other Lender to fund its Total
Commitments hereunder.
Section 3.03. Interest. (a) Nelson agrees to pay interest
in respect of all unpaid principal amounts of the
Revolving Loans from the respective dates such principal
amounts were advanced to maturity (whether by
acceleration, notice of prepayment or otherwise) at
rates per annum equal to the applicable rates
indicated below:
(i) For Base Rate Advances -- The Base Rate;
(ii) For LIBOR Advances -- LIBOR plus the
Applicable LIBOR Rate Margin.
(b) Overdue principal and, to the extent not prohibited
by applicable law, overdue interest, in respect of the
Revolving Loans and all other overdue amounts owing
hereunder shall bear interest from each date that such
amounts are overdue at a rate equal to the higher of
(i) the Base Rate plus an additional two percent (2.0%)
per annum, or (ii) the interest rate otherwise
applicable to such amount plus two percent (2.0%) per annum.
(c) Interest on each Revolving Loan shall accrue from
and including the date of such Revolving Loan to but
excluding the date of any repayment thereof; provided that, if
a Loan is repaid on the same day made, one day's
interest shall be paid on such Revolving Loan.
Interest on all outstanding Base Rate Advances shall
be payable monthly in arrears on the last calendar day
of each calendar month each year. Interest on all outstanding
LIBOR Advances shall be payable on the last day of each
Interest Period applicable thereto, and, in the case
of LIBOR Advances having an Interest Period in excess
of three (3) months, on each day that occurs every three
(3) months after the initial date of such Interest
Period. Interest on all Revolving Loans shall be
payable on any conversion of any Advances comprising such
Revolving Loans into Advances of another Type, prepayment
(on the amount prepaid), at maturity (whether by
acceleration, notice of prepayment or otherwise) and,
after maturity, on demand.
Section 3.04. Interest Periods. In connection with the
making or continuation of, or conversion into, each
Borrowing of LIBOR Advances, Nelson shall select an
interest period (each an "Interest Period") to be
applicable to such LIBOR Advances, which Interest Period
shall be either a one (1), two (2), three (3) or six
(6) month period; provided that:
(a) The initial Interest Period for any Borrowing
of LIBOR Advances shall commence on the date
of such Borrowing (including the date of any
conversion from a Borrowing consisting of
Advances of another Type) and each Interest
Period occurring thereafter in respect of such
Borrowing shall commence on the day on which the
next preceding Interest Period expires;
(b) If any Interest Period would otherwise expire
on a day that is not a Business Day, such
Interest Period shall expire on the next
succeeding Business Day, provided that if any
Interest Period in respect of LIBOR Advances
would otherwise expire on a day that is not a
Business Day but is a day of the month after which no
further Business Day occurs in such month, such Interest
Period shall expire on the next preceding
Business Day;
(c) Any Interest Period in respect of LIBOR
Advances that begins on a day for which
there is no numerically corresponding day in
the calendar month at the end of such Interest
Period shall expire on the last Business Day of
such calendar month;
(d) No Interest Period with respect to the
Revolving Loans shall extend beyond the Final
Maturity Date.
Section 3.05. Fees. (a) Nelson shall pay to the Agent,
for the account of and distribution of the respective
Pro Rata Share to each Lender, a closing fee equal
to .10% of the commitment amount of the Revolving Loan
Commitments closed on the Closing Date in accordance
with the terms of this Agreement (collectively, the
"Closing Fee"). The Closing Fee shall be paid on the
Closing Date.
(b) Nelson shall pay to the Agent, for the account of
and distribution of the respective Pro Rata Share to each
Lender, a commitment fee for the period commencing on
the Closing Date and continuing up to but excluding
the Final Maturity Date, computed at the applicable
Commitment Percentage on the average daily unused
portion of the Revolving Loan Commitments of such
Lenders, computed quarterly, such fee being payable quarterly in
arrears on the last calendar day of each fiscal quarter
of Nelson and on the Final Maturity Date.
(c) Nelson shall pay to the Agent an annual
administrative fee in an amount equal to Fifty
Thousand and No/100 Dollars ($50,000.00) per annum,
payable quarterly in advance on the Closing Date and
on the first day of each quarter thereafter as long as
any of the Obligations remain outstanding.
Section 3.06. Voluntary Prepayments of Borrowings. (a)
Nelson may, at its option, prepay Borrowings consisting
of Base Rate Advances at any time in whole, or from time
to time in part, in amounts aggregating $250,000 or any
greater integral multiple of $100,000, by paying the
principal amount to be prepaid together with
interest accrued and unpaid thereon to the date of
prepayment. Those Borrowings consisting of LIBOR Advances may be
prepaid, at Nelson's option, in whole, or from time to
time in part, in amounts aggregating $2,000,000 or any
greater integral multiple of $500,000, by paying the
principal amount to be prepaid, together with interest
accrued and unpaid thereon to the date of prepayment,
and all compensation payments pursuant to Section 3.12
if such prepayment is made on a date other than the
last day of an Interest Period applicable thereto. Each such
optional prepayment shall be applied in accordance with
Section 3.06(c).
(b) Nelson shall give written notice (or telephonic
notice confirmed in writing) to the Agent of any
intended prepayment of the Revolving Loans (i) not
less than one (1) Business Day prior to any prepayment
of Base Rate Advances, and (ii) not less than two (2)
Business Days prior to any prepayment of LIBOR
Advances. Such notice, once given, shall be irrevocable.
Upon receipt of such notice of prepayment pursuant to the first
sentence of this Section 3.06(b), the Agent shall
promptly notify each Lender of the contents of such
notice and of such Lender's share of such prepayment.
(c) Nelson, when providing notice of prepayment pursuant
to Section 3.06(b), may designate the Types of Advances
and the specific Borrowing or Borrowings that are to be
prepaid, provided that (i) if any prepayment of LIBOR Advances
made pursuant to a single Borrowing of the
Revolving Loans shall reduce the outstanding
Advances made pursuant to such Borrowing to an amount
less than $2,000,000, such Borrowing shall immediately be
converted into Base Rate Advances; and (ii) each
prepayment made pursuant to a single Borrowing shall
be applied pro rata among the Revolving Loans
comprising such Borrowing. In the absence of a
designation by Nelson, the Agent shall, subject to the
foregoing, make such designation in its sole discretion.
All voluntary prepayments shall be applied to the
payment of interest before application to principal.
Section 3.07. Payments, etc. (a) Except as otherwise
specifically provided herein, all payments under this
Agreement and the other Credit Documents shall be
made without defense, set-off or counterclaim to the
Agent, for the account of and distribution of the
respective Pro Rata Share to each Lender except in
the case of payments made under Section 3.05(c), which
shall be made solely to Agent, not later than 11:00 A.M. (local
time for the Agent) on the date when due and shall be
made in Dollars in immediately available funds at its
Payment Office.
(b)(i) All such payments shall be made free and
clear of and without deduction or withholding
for any Taxes in respect of this Agreement, the
Revolving Credit Notes or other Credit
Documents, or any payments of principal,
interest, fees or other amounts payable
hereunder or thereunder (but excluding, except as
provided in Section 3.07(b)(iii), (A) any Taxes imposed
on the overall net or gross income of the
Lenders pursuant to the laws of the
jurisdictions with taxing authority over such
Lenders, (B) any franchise or similar taxes
imposed on the Lenders pursuant to the laws of the
jurisdictions with taxing authority over such Lenders
(other than the state of Tennessee), but only where
such franchise or similar taxes are imposed in
lieu of Taxes on the overall net or gross
income of the Lenders, and (C) any franchise or
similar taxes imposed on the Lenders pursuant to
the laws of the state of Tennessee). If any
Taxes are so levied or imposed, Nelson agrees (I) to pay
the full amount of such Taxes, and such additional
amounts as may be necessary so that every net
payment of all amounts due hereunder and under
the Revolving Credit Notes and other Credit
Documents, after withholding or deduction for
or on account of any such Taxes (including
additional sums payable under this Section 3.07), will
not be less than the full amount provided for herein had
no such deduction or withholding been required,
(II) to make such withholding or deduction, and
(III) to pay the full amount deducted to
the relevant authority in accordance with
applicable law. Nelson will furnish to the
Agent and each Lender, within thirty (30) days after the
date the payment of any Taxes is due pursuant to
applicable law, certified copies of tax receipts
evidencing such payment by Nelson. Nelson will
indemnify and hold harmless the Agent and each
Lender and reimburse the Agent and each Lender
upon written request for the amount of any
Taxes so levied or imposed and paid by the
Agent or Lender and any liability (including penalties,
interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes were
correctly or illegally asserted. A
certificate as to the amount of such payment
by such Lender or the Agent, absent manifest
error, shall be final, conclusive and binding for all
purposes.
(ii) Notwithstanding Section 3.07(b)(i), Nelson
shall be entitled, to the extent it is required
to do so by law, to deduct or withhold income
or other similar Taxes imposed by the
United States of America from interest, fees
or other amounts payable hereunder for the
account of any Lender other than a Lender who (A) is a
domestic corporation (as such term is defined in Section
7701 of the Tax Code) for federal income tax
purposes, or (B) has the Prescribed Forms on
file with Nelson for the applicable year to the
extent deduction or withholding of such Taxes
is not required as a result of the filing of
such Prescribed Forms, provided that if Nelson shall so
deduct or withhold any such Taxes, it shall provide a
statement to the Agent and such Lender setting
forth the amount of such Taxes so deducted
or withheld, the applicable rate and any
other information or documentation that
such Lender may reasonably request for assisting
such Lender to obtain any allowable credits or
deductions for the Taxes so deducted or withheld in the
jurisdiction or jurisdictions in which such Lender is
subject to tax.
(iii) Nelson shall also reimburse the Agent and each
Lender, upon written request, for any Taxes
imposed (including, without limitation, Taxes
imposed on the overall gross or net income of
the Agent or such Lender pursuant to the laws
of the jurisdictions with taxing authority
over Agent or such Lender) as the Agent or such
Lender shall determine are payable by the Agent or such
Lender in respect of amounts paid by or on behalf of
Nelson to or on behalf of the Agent or such
Lender pursuant to Section 3.07(b)(i).
(c) Subject to Section 3.04(b), whenever any payment to
be made hereunder or under any Revolving Credit Note
shall be stated to be due on a day that is not a
Business Day, the due date thereof shall be extended
to the next succeeding Business Day and, with respect to
payments of principal, interest thereon shall be
payable at the applicable rate during such extension.
(d) All computations of interest and fees shall be made
on the basis of a year of three hundred and sixty (360)
days for the actual number of days (including the first
day but excluding the last day) occurring in the period
for which such interest or fees are payable (to the
extent computed on the basis of days elapsed).
Interest on Base Rate Advances shall be calculated
based on the Base Rate from and including the date of such
Revolving Loan to but excluding the date of the
repayment or conversion thereof. Interest on LIBOR
Advances shall be calculated as to each Interest
Period from and including the first day thereof to
but excluding the last day thereof. Each
determination by the Agent of an interest rate or fee hereunder
shall be made in good faith and, except for manifest
error, shall be final, conclusive and binding for all
purposes.
(e) Payment by Nelson to the Agent in accordance with
the terms of this Agreement shall, as to Nelson,
constitute payment to the Lenders under this Agreement.
Section 3.08. Interest Rate Not Ascertainable, etc. In
the event that the Agent, in the case of LIBOR,
shall have determined (which determination shall be
made in good faith and, absent manifest error, shall
be final, conclusive and binding upon all parties)
that on any date for determining LIBOR for any Interest
Period, by reason of any changes arising after the date
of this Agreement affecting the London interbank market or the
Agent's position in such market, adequate and fair means
do not exist for ascertaining the applicable interest
rate on the basis provided for in the definition of
LIBOR, then, and in any such event, the Agent shall
forthwith give notice (by telephone confirmed in
writing) to Nelson and to the Lenders of such
determination and a summary of the basis for such determination.
Until the Agent notifies Nelson that the
circumstances giving rise to the notice described
herein no longer exist, the obligations of the
Lenders to make or permit portions of the Revolving
Loans to remain outstanding past the last day of then
current Interest Periods as LIBOR Advances shall be suspended,
and such affected Advances shall bear the same interest
as Base Rate Advances.
Section 3.09. Illegality. (a) In the event that any
Lender shall have determined (which determination shall
be made in good faith and, absent manifest error,
shall be final, conclusive and binding upon all
parties) at any time that the making or continuance of
any LIBOR Advance has become unlawful by compliance by
such Lender in good faith with any applicable law,
governmental rule, regulation, guideline or order (whether or not
having the force of law and whether or not failure
to comply therewith would be unlawful), then, in any
such event, the Lender shall give prompt notice (by telephone
confirmed in writing) to Nelson and to the Agent of
such determination and a summary of the basis for such
determination (which notice the Agent shall promptly
transmit to the other Lenders).
(b) Upon the giving of the notice to Nelson referred to
in Section 3.09(a), (i) Nelson's right to request
and such Lender's obligation to make LIBOR Advances
shall be immediately suspended, and such Lender shall
make an Advance as part of the requested Borrowing of
LIBOR Advances as a Base Rate Advance, which Base
Rate Advance shall, for all other purposes, be
considered part of such Borrowing, and (ii) if the affected LIBOR
Advance or Advances are then outstanding,
Nelson shall immediately, or if permitted by applicable
law, no later than the date permitted thereby, upon at
least one Business Days written notice to the Agent
and the affected Lender, convert each such Advance
into a Base Rate Advance or Advances, provided that if
more than one Lender is affected at any time, then all affected
Lenders must be treated the same pursuant to this
Section 3.09(b).
Section 3.10. Increased Costs. (a) If by reason of (i)
after the date hereof, the introduction of or any
change (including, without limitation, any change by
way of imposition or increase of reserve requirements)
in or in the interpretation of any law or regulation,
or (ii) the compliance with any guideline or request
from any central bank or other governmental authority
or quasi-governmental authority exercising control over
banks or financial institutions generally (whether or not having
the force of law):
(A) any Lender (or its applicable Lending Office)
shall be subject to any tax, duty or other
charge with respect to its LIBOR Advances or
its obligation to make LIBOR Advances, or the
basis of taxation of payments to any Lender of
the principal of or interest on its LIBOR
Advances or its obligation to make LIBOR Advances shall
have changed (except for changes in the tax on the
overall gross or net income of such Lender
imposed by the jurisdictions with taxing
authority over such Lender); or
(B) any reserve (including, without limitation,
any reserve imposed by the Board of Governors
of the Federal Reserve System), special
deposit or similar requirement against assets
of, deposits with or for the account of, or
credit extended by, any Lender's applicable
Lending Office shall be imposed or deemed
applicable or any other condition affecting its LIBOR
Advances or its obligation to make LIBOR Advances shall
be imposed on any Lender or its applicable
Lending Office or the London interbank market;
and as a result thereof there shall be any increase in the cost
to such Lender of agreeing to make or making,
funding or maintaining LIBOR Advances (except to the
extent already included in the determination of LIBOR
for LIBOR Advances), or there shall be a reduction in
the amount received or receivable by such Lender or
its applicable Lending office, then Nelson shall from
time to time (subject, in the case of certain Taxes, to the
applicable provisions of Section 3.07(b)), upon
written notice from and demand by such Lender on
Nelson (with a copy of such notice and demand to the
Agent), pay to the Agent for the account of such Lender
within ten (10) days after the date of such notice and
demand, additional amounts sufficient to indemnify such
Lender against such increased cost. A certificate as to
the amount of such increased cost, submitted to Nelson
and the Agent by such Lender in good faith and
accompanied by a statement prepared by such Lender
describing in reasonable detail the basis for and
calculation of such increased cost, shall, except for
manifest error, be final, conclusive and binding for all
purposes.
(b) If any Lender shall advise the Agent that at any
time, because of the circumstances described in
Section 3.10(a)(i) or Section 3.10(a)(ii) or any
other circumstances beyond such Lender's reasonable
control arising after the date of this Agreement
affecting such Lender or the London interbank market
or such Lender's position in such market, LIBOR as
determined by the Agent will not adequately and fairly reflect
the cost to such Lender of funding its LIBOR Advances,
then, and in any such event:
(i) the Agent shall forthwith give notice (by
telephone confirmed in writing) to Nelson and
to the other Lenders of such advice;
(ii) Nelson's right to request and such Lender's
obligation to make or permit portions of the
Revolving Loans to remain outstanding past the
last day of the then current Interest Periods
as LIBOR Advances shall be immediately
suspended; and
(iii) such Lender shall make a Revolving Loan as
part of the requested Borrowing of LIBOR
Advances as a Base Rate Advance, which such
Base Rate Advance shall, for all other
purposes, be considered part of such
Borrowing.
Section 3.11. Lending Offices. Each Lender agrees that,
if requested by Nelson, it will use reasonable efforts
(subject to overall policy considerations of such
Lender) to designate an alternate Lending Office with
respect to any of its LIBOR Advances affected by
the matters or circumstances described in Section
3.07(b), Section 3.08, Section 3.09 or Section 3.10 to reduce
the liability of Nelson or avoid the results provided
thereunder, so long as such designation is not disadvantageous
to such Lender as determined by such Lender, which
determination if made in good faith, shall be
conclusive and binding on all parties hereto.
Nothing in this Section 3.11 shall affect or
postpone any of the obligations of Nelson or any right of any
Lender provided hereunder.
Section 3.12. Funding Losses. Nelson shall compensate
each Lender, upon its written request to Nelson (which
request shall set forth the basis for requesting
such amounts in reasonable detail and which request
shall be made in good faith and, absent manifest
error, shall be final, conclusive and binding upon
all of the parties hereto), for all losses, expenses and
liabilities (including, without limitation, any interest paid
by such Lender to lenders of funds borrowed by it to
make or carry its LIBOR Advances, in either case to
the extent not recovered by such Lender in connection
with the reemployment of such funds), which the Lender
may sustain: (a) if for any reason (other than a
default by such Lender) a borrowing of, or
conversion to or continuation of, LIBOR Advances to Nelson does
not occur on the date specified therefor in a Notice of
Borrowing or Notice of Conversion/Continuation (whether
or not withdrawn), (b) if any repayment (including
mandatory prepayments and any conversions pursuant to
Section 3.09(b)) of any LIBOR Advances to Nelson occurs
on a date that is not the last day of an Interest
Period applicable thereto, or (c), if, for any reason, Nelson
defaults in its obligation to repay its LIBOR
Advances when required by the terms of this Agreement.
Section 3.13. Assumptions Concerning Funding of LIBOR
Advances. Calculation of all amounts payable to a
Lender under this Article III shall be made as though
that Lender had actually funded its relevant LIBOR
Advances through the purchase of deposits in the
relevant market bearing interest at the rate
applicable to such LIBOR Advances in an amount equal to the
amount of the LIBOR Advances and having a maturity
comparable to the relevant Interest Period; provided,
however, that each Lender may fund each of its LIBOR
Advances in any manner it sees fit and the foregoing
assumption shall be used only for calculation of
amounts payable under this Article III.
Section 3.14. Apportionment of Payments. Aggregate
principal and interest payments in respect of Revolving
Loans and payments in respect of facility fees and
commitment fees shall be apportioned among all
outstanding Total Commitments and Revolving Loans to
which such payments relate proportionately to the
Lenders' respective Pro Rata Share of such Total Commitments and
outstanding Revolving Loans. The Agent shall use its
reasonable efforts to distribute promptly to each
Lender at its Payment Office its share of all such
payments received by the Agent on the same Business
Day such payments are received by Agent, but not later than the
next succeeding Business Day following receipt by Agent
of such payments if such payments are received by Agent
later than 11:00 A.M. (local time for the Agent).
Section 3.15. Sharing of Payments, Etc. If any Lender
shall obtain any payment or reduction (including,
without limitation, any amounts received as adequate
protection of a deposit treated as cash collateral
under the Bankruptcy Code) of the Obligations (whether
voluntary, involuntary, through the exercise of any
right of set-off or otherwise) in excess of its Pro
Rata Share of payments or reductions of such Obligations
obtained by all the Lenders, such Lender shall forthwith
(a) notify each of the other Lenders and Agent of such
receipt, and (b) purchase from the other Lenders such
participations in the affected Obligations as shall
be necessary to cause such purchasing Lender to
share the excess payment or reduction, net of costs
incurred in connection therewith, ratably with each of
them, provided that if all or any portion of such excess payment
or reduction is thereafter recovered from such
purchasing Lender or additional costs are incurred, the
purchase shall be rescinded and the purchase price
restored to the extent of such recovery or such
additional costs, but without interest unless the Lender
obligated to return such funds is required to pay interest
on such funds. Nelson agrees that any Lender so
purchasing a participation from another Lender
pursuant to this Section 3.15 may, to the fullest
extent permitted by law, exercise all its rights of
payment (including the right of set-off) with respect
to such participation as fully as if such Lender were the direct
creditor of Nelson in the amount of such participation.
Section 3.16. Capital Adequacy. Without limiting any
other provision of this Agreement, in the event that
any Lender shall have determined that any law,
treaty, governmental (or quasi-governmental) rule,
regulation, guideline or order regarding capital
adequacy not currently in effect or fully applicable
as of the Closing Date, or any change therein or in
the interpretation or application thereof after the Closing Date,
or compliance by such Lender with any request or
directive regarding capital adequacy not currently
in effect or fully applicable as of the Closing
Date (whether or not having the force of law and
whether or not failure to comply therewith would be
unlawful) from a central bank or governmental authority or
body having jurisdiction, does or shall have the
effect of reducing the rate of return on such
Lender's capital as a consequence of its obligations
hereunder to a level below that which such Lender could
have achieved but for such law, treaty, rule,
regulation, guideline or order, or such change or
compliance (taking into consideration such Lender's policies
with respect to capital adequacy) by an amount deemed
by such Lender to be material, then within ten (10)
Business Days after written notice and demand by such
Lender (with copies thereof to the Agent), Nelson
shall from time to time pay to such Lender additional
amounts sufficient to compensate such Lender for such
reduction (but, in the case of outstanding Base Rate Advances,
without duplication of any amounts already recovered
by such Lender by reason of an adjustment in the
applicable Base Rate). Each certificate as to the
amount payable under this Section 3.16 (which
certificate shall set forth the basis for requesting such
amounts in reasonable detail), submitted to Nelson by any Lender
in good faith, shall, absent manifest error, be final,
conclusive and binding for all purposes.
Section 3.17. Benefits to Guarantors. In consideration
for the execution and delivery by the Guarantors
of their Guaranty Agreement, Nelson agrees to
make the benefit of extensions of credit hereunder
available to the Guarantors.
Section 3.18. Limitation on Certain Payment Obligations.
(a) Each Lender or Agent shall make written demand on
Nelson for indemnification or compensation pursuant to
Section 3.07 no later than ninety (90) days after the
earlier of (i) the date on which such Lender or Agent
makes payment of such Taxes, or (ii) the date on
which the relevant taxing authority or other governmental
authority makes written demand upon such Lender or Agent for
payment of such Taxes.
(b) Each Lender or Agent shall make written demand on
Nelson for indemnification or compensation pursuant to
Section 3.12 no later than ninety (90) days after the
event giving rise to the claim for indemnification or
compensation occurs.
(c) Each Lender or Agent shall make written demand on
Nelson for indemnification or compensation pursuant to
Section 3.10 and Section 3.16 no later than three
hundred sixty-five (365) days after the occurrence
giving rise to a claim pursuant to such sections.
(d) In the event that the Lenders or Agent fail to give
Nelson notice within the time limitations prescribed in
Section 3.18(a) or Section 3.18(b), Nelson shall not
have any obligation to pay such claim for compensation
or indemnification. In the event that the Lender or
Agent fail to give Nelson notice within the time
limitation prescribed in Section 3.18(c), Nelson shall
not have any obligation to pay any amount with respect to claims
accruing prior to the ninetieth (90th) day preceding such
written demand.
ARTICLE IV.
CONDITIONS TO BORROWINGS
The obligations of each Lender to make Advances to Nelson
hereunder is subject to the satisfaction of the
following conditions:
Section 4.01. Conditions Precedent to Initial Revolving
Loans. At the time of the funding of the initial
Revolving Loans hereunder, all obligations of Nelson
hereunder incurred prior to the initial Revolving
Loans (including, without limitation, Nelson's
obligations to reimburse the reasonable fees and
expenses of counsel to the Agent and any fees and expenses
payable to the Agent and the Lenders as previously
agreed with Nelson), shall have been paid in full, and
the Agent shall have received the following, in
form and substance reasonably satisfactory in all
respects to the Agent:
(a) the duly executed counterparts of this Agreement;
(b) the duly completed Revolving Credit Notes evidencing
the Revolving Loan Commitments;
(c) the Guaranty Agreement, the Contribution Agreement,
the Word Pledge Agreement, the Gibson
Pledge Agreement (all of which as to
Gibson and its Subsidiaries shall be
deemed delivered immediately following
the consummation of the acquisition
referenced in Section 4.01(r)) and any and all other
Credit Documents required by Agent;
(d) closing certificate of Nelson in a form acceptable
to Nelson, Lenders and their respective
counsel and appropriately completed;
(e) certificates of the Secretary or Assistant Secretary
of each of the Credit Parties (all of
which as to Gibson and its
Subsidiaries shall be deemed delivered
immediately following the consummation of
the acquisition referenced in Section 4.01(r))
attaching and certifying copies of the resolutions
of the boards of directors of the Credit
Parties, authorizing as applicable (i)
the execution, delivery and performance
of the Credit Documents and (ii) the
granting of the pledges and security
interests granted pursuant to the Word Pledge
Agreement and the Gibson Pledge Agreement;
(f) certificates of the Secretary or an Assistant
Secretary of each of the Credit Parties
(all of which as to Gibson and its
Subsidiaries shall be deemed delivered
immediately following the consummation
of the acquisition referenced in
Section 4.01(r)) certifying (i) the name, title and
true signature of each officer of such entities
executing the Credit Documents, and (ii) the
bylaws or comparable governing documents of
such entities;
(g) certified copies of the certificate or articles of
incorporation of each Credit Party certified
by the Secretary of State, together with
certificates of good standing or existence,
as may be available from the Secretary of
State of the jurisdiction of
incorporation or organization of such Credit Party;
(h) examination reports from the Uniform Commercial Code
records of those locations set
forth on Schedule 4.01(h) attached
hereto, showing no outstanding liens
or security interests granted by any
Credit Party other than (i) Liens permitted by
Section 11.02, and (ii) Liens securing the
Refinanced Indebtedness which are being released on
the Closing Date;
(i) copies of all documents and instruments, including
all consents, approvals,
authorizations, registrations and filings
required or advisable under any
Requirement of Law or by any material
Contractual Obligation of the Credit Parties, in
connection with the execution, delivery,
performance, validity and enforceability of
the Credit Documents and the other
documents to be executed and delivered
hereunder, and such consents, approvals,
authorizations, registrations and filings
shall be in full force and effect and all applicable
waiting periods shall have expired;
(j) agreement by the lenders of the Refinanced
Indebtedness to accept payment in full
of all obligations outstanding under
the Refinanced Indebtedness and
termination of all credit facilities
relating thereto and to release all Liens
securing Refinanced Indebtedness, and the
establishment of escrow or other arrangements for
such repayment and release of Liens acceptable
to the Agent and the Lenders;
(k) certified copies of indentures, credit agreements,
instruments and other documents
evidencing or securing Indebtedness of
any Consolidated Company described on
Schedule 11.01(b), in any single case in
an amount not less than $500,000;
(l) certificates, reports and other information as the
Agent may reasonably request from any
Consolidated Company in order to satisfy
the Lenders as to the absence of any
material liabilities or obligations
arising from matters relating to employees of the
Consolidated Companies, including employee
relations, collective bargaining agreements,
Plans, and other compensation and employee
benefit plans;
(m) certificates, reports, environmental audits and
investigations, and other information as
the Agent may reasonably request from any
Consolidated Company in order to satisfy
the Lenders as to the absence of any
material liabilities or obligations arising from
Environmental Laws, including without limitation,
OSHA laws and regulations to which the Consolidated
Companies may be subject, and the plans
of the Consolidated Companies with respect
thereto;
(n) certificates, reports and other information as the
Agent may reasonably request from any
Consolidated Company in order to satisfy
the Lenders as to the absence of any
material liabilities or obligations
arising from litigation (including without
limitation, products liability and patent
infringement claims) pending or threatened
against the Consolidated Companies;
(o) a summary set forth in format and detail reasonably
acceptable to the Agent of the types and
amounts of insurance (property and
liability) maintained by the Consolidated
Companies;
(p) the favorable opinion of Bass, Berry & Sims and in-
house counsel to Nelson, counsel to the
Credit Parties, in a form acceptable to
Nelson, Lenders and their respective
counsel and addressed to the Agent and
each of the Lenders; and
(q) financial statements of the Consolidated Companies
for their most recently completed fiscal
quarter on a consolidated basis.
(r) evidence that Nelson's acquisition of all of the
outstanding common stock of Gibson pursuant
to the terms of the Tender Offer and
Merger Agreement between Nelson
Acquisition Corp. and Gibson dated
September 13, 1995, as amended October 16, 1995,
will be closed prior to or contemporaneously with
the funding of the Revolving Loans.
In addition to the foregoing, the following conditions shall have
been satisfied or shall exist, all to the satisfaction
of the Agent, as of the time the initial Revolving
Loans are made hereunder:
(x) the Revolving Loans to be made on the Closing Date
and the use of proceeds thereof
shall not contravene, violate or conflict
with, or involve the Agent or any Lender
in a violation of, any law, rule,
injunction or regulation, or determination of
any court of law or other governmental authority;
and
(y) all corporate proceedings and all other legal
matters in connection with the
authorization, legality, validity and
enforceability of the Credit Documents
shall be reasonably satisfactory in form
and substance to the Required Lenders.
Section 4.02. Conditions to Revolving Loans. At the time
of the making of all Revolving Loans (before as well
as after giving effect to such Revolving Loans and to
the proposed use of the proceeds thereof), the
following conditions shall have been satisfied or shall
exist:
(a) there shall exist no Default or Event of Default;
(b) all representations and warranties by Nelson
contained herein shall be true and correct
in all material respects with the same
effect as though such representations and
warranties had been made on and as of the
date of such Revolving Loans (except that
the representations and warranties set forth in
Section 6.19 shall not be deemed to relate to any
time subsequent to the date of the initial Revolving
Loans hereunder);
(c) since the date of the most recent financial
statements of the Consolidated Companies
described in Section 6.14, there shall
have been no change that has had or could
reasonably be expected to have a
Materially Adverse Effect in any Consolidated
Company's financial condition, properties, business,
operations or prospects (whether or not any notice
with respect to such change has been
furnished to the Lenders pursuant to
Section 9.07);
(d) there shall be no action or proceeding instituted or
pending before any court or other
governmental authority or, to the knowledge
of Nelson, threatened that reasonably
could be expected to have a
Materially Adverse Effect in any Consolidated
Company's financial condition, properties, business,
operations or prospects, including without
limitation any action or proceeding seeking
to prohibit or restrict one or more
Credit Party's ownership or operation
of any portion of its business or
assets, or to compel one or more Credit
Party to dispose of or hold separate all or any
portion of its businesses or assets, where such
portion or portions of such business(es) or
assets, as the case may be, constitute a
material portion of the total businesses
or assets of the Consolidated Companies;
(e) the Revolving Loans to be made and the use of
proceeds thereof shall not contravene,
violate or conflict with, or involve the
Agent or any Lender in a violation of,
any law, rule, injunction or
regulation, or determination of any court of law or
other governmental authority applicable to Nelson;
and
(f) the Agent shall have received such other documents
or legal opinions as the Agent or any
Lender may reasonably request, all in
form and substance reasonably
satisfactory to the Agent.
Each request for a Borrowing and the acceptance by elson
of the proceeds thereof shall constitute a
representation and warranty by Nelson, as of the
date of the Revolving Loans comprising such
Borrowing, that the applicable conditions specified
in Section 4.01 and Section 4.02 have been satisfied.
ARTICLE V.
NOTICE PERIOD REGARDING CONDITIONS
Nelson, Agent and the Lenders hereby acknowledge that
prior to or contemporaneously with the funding of the
Revolving Loans, Nelson is acquiring all of the
outstanding common stock of Gibson. Pursuant to Section
4.01(d), Section 4.01(f)(ii), Section 4.01(g), Section
4.01(h), Section 4.01(i), Section 4.01(k), Section
4.01(l), Section 4.01(m), Section 4.01(n), Section
4.01(o) and Section 4.01(q) and Section 4.02(b), Section 4.02(c)
and Section 4.02(d), Nelson is required to provide and
confirm to Agent certain information with respect
to the Consolidated Companies, including Gibson and
its Subsidiaries. Although Nelson has performed
certain due diligence in connection with its
acquisition of Gibson, Nelson has not owned or been in control of
Gibson and its Subsidiaries prior to the funding of the
Revolving Loans. Consequently, in order to provide
Nelson with an opportunity to further review the
records and affairs of Gibson and its Subsidiaries in
connection with the information to be provided and confirmed
pursuant to Section 4.01(d), Section 4.01(f)(ii),
Section 4.01(g), Section 4.01(h), Section 4.01(i),
Section 4.01(k), Section 4.01(l), Section 4.01(m), Section
4.01(n), Section 4.01(o) and Section 4.01(q) and Section
4.02(b), Section 4.02(c) and Section 4.02(d),
Nelson, Agent and the Lenders agree that beginning
on the Closing Date and continuing for the three (3)
month period thereafter (the "Notice Period"), Nelson
shall have the right to provide and confirm the
information required by Section 4.01(d), Section 4.01(f)(ii),
Section 4.01(g), Section 4.01(h), Section 4.01(i),
Section 4.01(k), Section 4.01(l), Section 4.01(m),
Section 4.01(n), Section 4.01(o) and Section 4.01(q)
and Section 4.02(b), Section 4.02(c) and Section 4.02(d)
with respect to Gibson and any of its Subsidiaries (the
"Gibson Information"). During the Notice Period,
any information provided or confirmed pursuant to Section
4.01(d), Section 4.01(f)(ii), Section 4.01(g), Section 4.01(h),
Section 4.01(i), Section 4.01(k), Section 4.01(l),
Section 4.01(m), Section 4.01(n), Section 4.01(o) and
Section 4.01(q) and Section 4.02(b), Section 4.02(c) and
Section 4.02(d) with respect to Gibson and its
Subsidiaries shall not be subject to the provisions
of Section 12.03 hereto. All Gibson Information must
be in writing and received by Agent during the Notice Period.
Agent's receipt of the Gibson Information prior to the
end of the Notice Period shall not constitute an Event
of Default hereunder. In no event shall any Gibson
Information be permitted with respect to Nelson or
any of its Subsidiaries other than Gibson and its
Subsidiaries. Upon termination of the Notice Period, all
information provided and confirmed pursuant to Section 4.01(d),
Section 4.01(f)(ii), Section 4.01(g), Section 4.01(h),
Section 4.01(i), Section 4.01(k), Section 4.01(l),
Section 4.01(m), Section 4.01(n), Section 4.01(o) and
Section 4.01(q) and Section 4.02(b), Section 4.02(c)
and Section 4.02(d), as amended by any Gibson
Information, if any, shall be subject to the provisions of
Section 12.03. In addition to the foregoing, Nelson, Agent
and the Lenders agree that during the Notice Period,
Nelson shall have the right to provide and confirm the
information required by Section 4.01(h) with respect
to Nelson and any of its Subsidiaries (the
"UCC Information"). Any UCC Information delivered
to Agent during the Notice Period shall be added to
Schedule 11.02. During the Notice Period, any information
provided or confirmed pursuant to Section 4.01(h) shall
not be subject to the provisions of Section 12.03
hereto. All UCC Information must be in writing and
received by Agent during the Notice Period. Agent's
receipt of the UCC Information prior to the end of
the Notice Period shall not constitute an Event of
Default hereunder. Upon termination of the Notice Period, all
information provided and confirmed pursuant to Section
4.01(h), as amended by any UCC Information, shall
be subject to the provisions of Section 12.03.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES
Nelson (as to itself and all other Consolidated
Companies) represents and warrants (subject to the
provisions of Article VII) as follows:
Section 6.01. Corporate Existence; Compliance with Law.
Each of the Credit Parties is a corporation duly
organized, validly existing, and in good standing
under the laws of the jurisdiction of its
incorporation. Each of the Credit Parties (a) has the
corporate power and authority and the legal right to own
and operate its property and to conduct its business, (b) is duly
qualified as a foreign corporation and in good standing
under the laws of each jurisdiction where its ownership
of property or the conduct of its business requires
such qualification, and (c) is in compliance with all
Requirements of Law, where (i) the failure to have such
power, authority and legal right as set forth in
Section 6.01(a), (ii) the failure to be so qualified or in good
standing as set forth in Section 6.01(b), or (iii) the
failure to comply with Requirements of Law as set forth
in Section 6.01(c), would reasonably be expected, in
the aggregate, to have a Materially Adverse Effect.
The jurisdiction of incorporation or organization, and
the ownership of all issued and outstanding capital
stock, for each Credit Party (other than Nelson) as of
the date of this Agreement is accurately described on Schedule
6.01.
Section 6.02. Corporate Power; Authorization. Each of the
Credit Parties has the corporate power and authority
to make, deliver and perform the Credit Documents to
which it is a party and has taken all necessary
corporate action to authorize the execution, delivery
and performance of such Credit Documents. No consent
or authorization of, or filing with, any Person
(including, without limitation, any governmental authority), is
required in connection with the execution,
delivery or performance by any Credit Party,
or the validity or enforceability against any
Credit Party, of the Credit Documents, other than such
consents, authorizations or filings that have been
made or obtained.
Section 6.03. Enforceable Obligations. This Agreement has
been duly executed and delivered, and each other Credit
Document will be duly executed and delivered, by the
respective Credit Parties, and this Agreement
constitutes, and each other Credit Document when
executed and delivered will constitute, legal, valid
and binding obligations of the Credit Parties,
respectively, enforceable against the Credit Parties in
accordance with their respective terms, except as may be
limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium, or
similar laws affecting the enforcement of creditors'
rights generally and by general principles of
equity.
Section 6.04. No Legal Bar. The execution, delivery and
performance by the Credit Parties of the Credit
Documents will not violate any Requirement of Law or
cause a breach or default under any of their respective
Contractual Obligations which would have a Materially
Adverse Effect.
Section 6.05. No Material Litigation. Except as set forth
on Schedule 6.05, no litigation, investigations or
proceedings of or before any courts, tribunals,
arbitrators or governmental authorities are pending
or, to the knowledge of Nelson, threatened by or
against any of the Consolidated Companies, or against
any of their respective properties or revenues, whether
such properties or revenues currently exist or may exist in the
future, (a) with respect to any Credit Document, or any
of the transactions contemplated hereby or thereby,
or (b) which, if adversely determined, would
reasonably be expected to have a Materially Adverse
Effect.
Section 6.06. Investment Company Act, Etc. None of the
Credit Parties is an "investment company" or a
company "controlled" by an "investment company" (as
each of the quoted terms is defined or used in the
Investment Company Act of 1940, as amended). None of
the Credit Parties is subject to regulation under the
Public Utility Holding Company Act of 1935, the Federal
Power Act, or any foreign, federal or local statute or regulation
limiting its ability to incur indebtedness for money
borrowed, guarantee such indebtedness, or pledge its
assets to secure such indebtedness, as contemplated
hereby or by any other Credit Document.
Section 6.07. Margin Regulations. No part of the proceeds
of any of the Revolving Loans will be used for any
purpose that violates, or that would be inconsistent
or not in compliance with, the provisions of the
applicable Margin Regulations.
Section 6.08. Compliance With Environmental Laws. (a) The
Consolidated Companies have received no notices of
claims or potential liability under, and are in
compliance with, all applicable Environmental Laws,
where such claims and liabilities under, and failures
to comply with, such statutes, regulations, rules,
ordinances, laws or licenses, would reasonably be expected
to result in penalties, fines, claims or other liabilities to
the Consolidated Companies in amounts in excess of
$1,000,000, either individually or in the aggregate
(including any such penalties, fines, claims, or
liabilities relating to the matters set forth on
Schedule 6.08(a)), except as set forth on Schedule 6.08(a).
(b) Except as set forth on Schedule 6.08(b), none of the
Consolidated Companies has received any notice of
violation, or notice of any action, either judicial or
administrative, from any governmental authority
(whether United States or foreign) relating to the
actual or alleged violation of any Environmental Law,
including, without limitation, any notice of any actual or
alleged spill, leak or other release of any Hazardous
Substance, waste or hazardous waste by any
Consolidated Company or its employees or agents, or
as to the existence of any contamination on any
properties owned by any Consolidated Company, where any
such violation, spill, leak, release or contamination would
reasonably be expected to result in penalties, fines,
claims or other liabilities to the Consolidated
Companies in amounts in excess of $1,000,000, either
individually or in the aggregate.
(c) Except as set forth on Schedule 6.08(c), the
Consolidated Companies have obtained all necessary
governmental permits, licenses and approvals that
are material to the operations conducted on their
respective properties, including without limitation,
all required material permits, licenses and approvals
for (i) the emission of air pollutants or contaminants,
(ii) the treatment or pretreatment and discharge of waste water
or storm water, (iii) the treatment, storage,
disposal or generation of hazardous wastes, (iv) the
withdrawal and usage of ground water or surface water,
and (v) the disposal of solid wastes.
Section 6.09. Insurance. The Consolidated Companies
currently maintain insurance with respect to their
respective properties and businesses, with financially
sound and reputable insurers, having coverages against
losses or damages of the kinds customarily insured
against by reputable companies in the same or similar
businesses, such insurance being in amounts no less than
those amounts that are customary for such companies under similar
circumstances. The Consolidated Companies have paid all
material amounts of insurance premiums now due and
owing with respect to such insurance policies and
coverages, and such policies and coverages are in full
force and effect.
Section 6.10. No Default. None of the Consolidated
Companies is in default under or with respect to any
Contractual Obligation in any respect that has had or
is reasonably expected to have a Materially Adverse
Effect.
Section 6.11. No Burdensome Restrictions. Except as set
forth on Schedule 6.11, none of the Consolidated
Companies is a party to or bound by any Contractual
Obligation or Requirement of Law that has had or
would reasonably be expected to have a Materially
Adverse Effect.
Section 6.12. Taxes. Except as set forth on
Schedule 6.12, each of the Consolidated Companies has
filed or caused to be filed all declarations, reports
and tax returns or tax extensions that are required to
have been filed, and has paid all taxes, custom duties,
levies, charges and similar contributions ("taxes"
in this Section 6.12) shown to be due and payable on
said returns or on any assessments made against them
or their properties, and all other taxes, fees or other charges
imposed on them or any of their properties by any
governmental authority (other than those the amount or
validity of which is currently being contested in
good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have
been provided in its books); and no tax liens have been
filed and, to the knowledge of Nelson, no claims are being
asserted with respect to any such taxes, fees or other
charges.
Section 6.13. Subsidiaries. Except as disclosed on
Schedule 6.13, on the date of this Agreement, Nelson
has no Subsidiaries and neither Nelson nor any
Subsidiary is a joint venture partner or general
partner in any partnership. After the date of this
Agreement and funding of the Obligations, except as
disclosed on Schedule 6.13, Nelson shall have no Subsidiaries.
PrintPlus Publications, Inc., a Tennessee
corporation and previously a Subsidiary of Nelson, is
no longer a Subsidiary of Nelson. Nelson has no
interest in PrintPlus Publications, Inc. TNI Cassette
Corp., a validly existing Texas corporation and
Subsidiary of Nelson, was previously known as International
Cassette Corp. prior to its name change. Attached
hereto as Exhibit C is a true and correct copy of the
document evidencing the name change from International
Cassette Corp. to TNI Cassette Corp. Nelson Word
Limited, a validly existing United Kingdom
corporation and Subsidiary of Nelson, was previously known as
Word (UK) Limited prior to its name change. Attached
hereto as Exhibit D is a true and correct copy of the
document evidencing the name change from Word (UK)
Limited to Nelson Word Limited.
Section 6.14. Financial Statements. Nelson has furnished
to the Agent and the Lenders (a) the audited consolidated
balance sheet as of March 31, 1995 of the Consolidated
Companies and the related consolidated statements of
income, shareholders' equity and cash flows for the
fiscal year then ended, including in each case the
related schedules and notes, and (b) the unaudited
balance sheet of the Consolidated Companies presented on a
consolidated basis as at the end of the second fiscal
quarter of 1995, and the related unaudited
consolidated statements of income, shareholders'
equity and cash flows presented on a consolidated
basis for the year-to-date period then ended,
setting forth in each case in comparative form the figures for
the corresponding quarter of the Consolidated Companies'
previous fiscal year. The foregoing financial statements
fairly present in all material respects the consolidated
financial condition of the Consolidated Companies as at
the dates thereof and results of operations for such
periods in conformity with GAAP consistently applied
(subject, in the case of the quarterly financial
statements, to normal year-end audit adjustments and the absence
of certain footnotes). The Consolidated Companies
taken as a whole do not have any material contingent
obligations, material contingent liabilities, or
material liabilities for known taxes, long-term leases
(except leases as set forth on Schedule 6.14 hereto)
or unusual forward or long-term commitments not reflected
in the foregoing financial statements or the notes thereto. Since
March 31, 1995, there have been no changes with
respect to the Consolidated Companies that has had
or would reasonably be expected to have a Materially
Adverse Effect.
Section 6.15. ERISA. Except as disclosed on Schedule
6.15:
(a) Identification of Plans. None of the Consolidated
Companies nor any of their respective ERISA Affiliates
maintains or contributes to, or has during the past two
years maintained or contributed to, any Plan that is
subject to Title IV of ERISA.
(b) Compliance. Each Plan maintained by the Consolidated
Companies has at all times been maintained by its terms
and in operation in compliance with all applicable
laws, and the Consolidated Companies are subject to
no tax or penalty with respect to any Plan of such
Consolidated Company or any ERISA Affiliate thereof,
including without limitation, any tax or penalty
under Title I or Title IV of ERISA or under Chapter 43 of
the Tax Code, or any tax or penalty resulting from a loss of
deduction under Sections 162, 404 or 419 of the Tax
Code, where the failure to comply with such laws,
and such taxes and penalties, together with all
other liabilities referred to in this Section 6.15
(taken as a whole), would in the aggregate have a
Materially Adverse Effect;
(c) Liabilities. The Consolidated Companies are subject
to no liabilities (including withdrawal liabilities) with
respect to any Plans of such Consolidated Companies or
any of their ERISA Affiliates, including without
limitation, any liabilities arising from Titles I or
IV of ERISA, other than obligations to fund benefits
under an ongoing Plan and to pay current contributions,
expenses and premiums with respect to such Plans where such
liabilities, together with all other liabilities
referred to in this Section 6.15 (taken as a whole),
would in the aggregate have a Materially Adverse Effect;
(d) Funding. The Consolidated Companies and, with
respect to any Plan that is subject to Title IV of ERISA,
each of their respective ERISA Affiliates, have made
full and timely payment of all amounts (i) required to
be contributed under the terms of each Plan and
applicable law, and (ii) required to be paid as
expenses (including PBGC or other premiums) of each Plan,
where the failure to pay such amounts (when taken as a whole,
including any penalties attributable to such amounts)
would have a Materially Adverse Effect. No Plan subject
to Title IV of ERISA has an "amount of unfunded benefit
liabilities" (as defined in Section 4001(a)(18) of ERISA),
determined as if such Plan terminated on any date
on which this representation and warranty is deemed
made, in any amount that, together with all other
liabilities referred to in this Section 6.15 (taken as a whole),
would have a Materially Adverse Effect if such amount
were then due and payable. The Consolidated Companies
are subject to no liabilities with respect to post-
retirement medical benefits in any amounts that,
together with all other liabilities referred to in this
Section 6.15 (taken as a whole), would have a Materially
Adverse Effect if such amounts were then due and payable.
Section 6.16. Patents, Trademarks, Licenses, Etc. Except
as set forth on Schedule 6.16, (a) the Consolidated
Companies have obtained and hold in full force and
effect all material patents, trademarks, service
marks, trade names, copyrights, licenses and other
such rights, free from burdensome restrictions,
that are necessary for the operation of their
respective businesses as presently conducted, and (b) to the best
of Nelson's knowledge, no product, process, method,
service or other item presently sold by or employed
by any Consolidated Company in connection with such
business infringes any patents, trademark, service
mark, trade name, copyright, license or other right
owned by any other Person and there is not presently
pending, or to the knowledge of Nelson, threatened, any claim
or litigation against or affecting any
Consolidated Company contesting such Person's right to
sell or use any such product, process, method,
substance or other item where the result of such failure
to obtain and hold such benefits or such infringement
would have a Materially Adverse Effect.
Section 6.17. Ownership of Property. Except as set forth
on Schedule 6.17, each Consolidated Company has
good and marketable fee simple title to or a valid
leasehold interest in all of its real property and good
title to, or a valid leasehold interest in, all of its
other property, as such properties are reflected in
the consolidated balance sheet of the Consolidated
Companies as of March 31, 1995 referred to in Section 6.14, other
than properties disposed of in the ordinary course of
business since such date or as otherwise permitted by
the terms of this Agreement, subject to no Lien or
title defect of any kind, except Liens permitted
hereby and title defects not constituting material
impairments in the intended use for such properties. The
Consolidated Companies enjoy peaceful and undisturbed possession
under all of their respective leases. Those locations
set forth on Schedule 4.01(h) are all of the
locations (a) at which property owned or leased by the
Consolidated Companies is located other than property
in transit in the ordinary course of business,
and (b) representing each of the Consolidated
Companies' place of business if only one (1) exists or chief
executive office if more than one (1) place of business
exists.
Section 6.18. Indebtedness. (a) Except as set forth on
Schedule 6.18 and Schedule 11.01(b), none of the
Consolidated Companies is an obligor in respect of
any Indebtedness for borrowed money, or any
commitment to create or incur any Indebtedness for
borrowed money, in an amount not less than $500,000
in any single case, and such Indebtedness and
commitments for amounts less than $500,000 do not exceed
$2,000,000 in the aggregate for all such
Indebtedness and commitments of the Consolidated
Companies.
(b) The Indebtedness listed on Schedule 6.18 (the
"Refinanced Indebtedness") and accrued and unpaid
interest thereon and fees in respect thereof have
been paid in full or provision for restructuring such
Indebtedness hereunder has been made such that, in
accordance with the express provisions of the
instruments governing the same, upon funding of the initial
Revolving Loans hereunder, the Consolidated Companies
will be released from all liability and contractual
obligations with respect thereto other than
indemnifications contained therein, and releases in
recordable form of any and all Liens previously
securing the Refinanced Indebtedness will be obtained, including
terminations of all financing statements and other
filings in respect thereof.
Section 6.19. Financial Condition. On the Closing Date
and after giving effect to the transactions contemplated
by this Agreement and the other Credit Documents,
including without limitation, the use of the proceeds
as provided in Section 2.02, (a) the assets of each
Credit Party at fair valuation and based on their
present fair saleable value (including, without
limitation, the fair and realistic value of any contribution or
subrogation rights in respect of any Guaranty Agreement
given by such Credit Party) will exceed such
Credit Party's debts, including contingent
liabilities (as such liabilities may be limited under
the express terms of any Guaranty Agreement of such
Credit Party), (b) the remaining capital of such Credit Party
will not be unreasonably small to conduct the Credit
Party's business, and (c) such Credit Party will not
have incurred debts, or have intended to incur
debts, beyond the Credit Party's ability to pay such
debts as they mature. For purposes of this Section
6.19, "debt" means any liability on a claim, and "claim"
means (A) the right to payment, whether or not such right is
reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured, or (B) the
right to an equitable remedy for breach of performance
if such breach gives rise to a right to payment,
whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured, unmatured,
disputed, undisputed, secured or unsecured.
Section 6.20. Labor Matters. Except as set forth in
Schedule 6.20, the Consolidated Companies have
experienced no strikes, labor disputes, slow downs or work
stoppages due to labor disagreements that have had,
or would reasonably be expected to have, a
Materially Adverse Effect, and, to the best knowledge
of Nelson, there are no such strikes, disputes, slow
downs or work stoppages threatened against any Consolidated
Company. The hours worked and payment made to
employees of the Consolidated Companies have not been in
violation in any material respect of the Fair Labor
Standards Act or any other applicable law dealing
with such matters. All payments due from the
Consolidated Companies, or for which any claim may be made
against the Consolidated Company, on account of
wages and employee health and welfare insurance and
other benefits have been paid or accrued as
liabilities on the books of the Consolidated
Companies where the failure to pay or accrue such
liabilities would reasonably be expected to have a Materially
Adverse Effect.
Section 6.21. Payment or Dividend Restrictions. Except as
set forth in Section 11.04 or described on Schedule 6.21,
none of the Consolidated Companies is party to or
subject to any agreement or understanding restricting
or limiting the payment of any dividends or other
distributions by any such Consolidated Company.
Section 6.22. Disclosure. No factual information,
representation or warranty contained in this Agreement
(including the Schedules attached hereto) or in any
other document furnished from time to time pursuant to
the terms of this Agreement, when viewed in
conjunction with all such other factual information,
representations or warranties in this Agreement or in any other
document furnished pursuant to the terms of this
Agreement, contains or will contain any untrue
statement of a material fact or omits or will omit to
state any material fact necessary to make the
statements herein or therein not misleading in any
material respect as of the date made or deemed to be made. Except
as may be set forth herein (including the Schedules
attached hereto) or in any notice furnished to the
Lenders pursuant to Section 9.07 at or prior to
the respective times the representations and
warranties set forth in this Section 6.22 are made or
deemed to be made hereunder, there is no fact known to
Nelson that has had, or is reasonably expected to have, a
Materially Adverse Effect.
Section 6.23. Financial Covenants. Schedule 6.23 sets
forth the true and correct calculation of the financial
covenant amounts, ratios, and percentages required
by Section 9.08(a) through Section 9.08(c) calculated
as of September 30, 1995.
ARTICLE VII.
REPRESENTATION AND WARRANTY NOTICE PERIOD
Nelson, Agent and the Lenders hereby acknowledge that
prior to or contemporaneously with the funding of the
Revolving Loans, Nelson is acquiring all of the
outstanding common stock of Gibson. Pursuant to
Article VI, Nelson is making certain
representations and warranties with respect to the Consolidated
Companies, including Gibson and its Subsidiaries.
Although Nelson has performed certain due diligence
in connection with its acquisition of Gibson, Nelson
has not owned or been in control of Gibson and its
Subsidiaries prior to the funding of the Revolving
Loans. Consequently, in order to provide Nelson with an
opportunity to further review the records and affairs
of Gibson and its Subsidiaries in connection with the
representations and warranties made in Article VI,
Nelson, Agent and the Lenders agree that during the
Notice Period, Nelson shall have the right to modify
this Agreement by adding to Article VI any schedules
that Nelson deems necessary to correct, clarify and/or modify any
representation or warranty made with respect to Gibson
and any of its Subsidiaries (the "Gibson
Corrections"). During the Notice Period, any
representations and warranties contained in Article VI
with respect to Gibson and its Subsidiaries shall not be
subject to the provisions of Section 12.04. All
Gibson Corrections must be in writing and received by
Agent during the Notice Period. Agent's receipt of a
Gibson Correction prior to the end of the Notice
Period shall not constitute an Event of Default
hereunder. In no event shall any Gibson Correction be
permitted with respect to Nelson or any of its Subsidiaries other
than Gibson and its Subsidiaries. Upon termination of
the Notice Period, all representations and warranties
contained in Article VI, as amended by any Gibson
Corrections, if any, shall be subject to the
provisions of Section 12.04.
ARTICLE VIII.
REPRESENTATIONS AND WARRANTIES REGARDING
ARTICLE VIII SUBSIDIARIES
Nelson represents and warrants that the market value of
the assets owned by those Subsidiaries of Nelson set
forth on Schedule VIII are within the ranges set
forth opposite the respective names of such
Subsidiaries on Schedule VIII. Any Subsidiary that
executes a Guaranty Agreement and related
documents as set forth in Section 9.12 or Section 12.13 shall be
deemed removed from Schedule VIII.
ARTICLE IX.
AFFIRMATIVE COVENANTS
So long as any Revolving Loan Commitment remains in
effect hereunder or any Revolving Credit Note shall
remain unpaid, Nelson will:
Section 9.01. Corporate Existence, Etc. Preserve and
maintain, and cause each of the Credit Parties to
preserve and maintain, its corporate existence,
its material rights, franchises, and licenses, and
its material patents and copyrights (for the scheduled
duration thereof), trademarks, trade names, and
service marks, necessary or desirable in the normal conduct
of its business, and its qualification to do business as
a foreign corporation in all jurisdictions where
it conducts business or other activities making such
qualification necessary, where the failure to be so
qualified would reasonably be expected to have a
Materially Adverse Effect.
Section 9.02. Compliance with Laws, Etc. Comply, and
cause each of its Subsidiaries to comply with all
Requirements of Law (including, without limitation,
the Environmental Laws subject to the exception set
forth in Section 6.08 where the penalties, claims,
fines, and other liabilities resulting from
noncompliance with such Environmental Laws do not involve amounts
in excess of $1,000,000 in the aggregate) and
Contractual Obligations applicable to or binding on
any of them where the failure to comply with such
Requirements of Law and Contractual Obligations would
reasonably be expected to have a Materially Adverse
Effect.
Section 9.03. Payment of Taxes and Claims, Etc. Pay, and
cause each of its Subsidiaries to pay, (a) all taxes,
assessments and governmental charges imposed upon it
or upon its property, and (b) all claims (including,
without limitation, claims for labor, materials,
supplies or services) that might, if unpaid, become a
Lien upon its property, unless, in each case, the
validity or amount thereof is being contested in good faith by
appropriate proceedings and adequate reserves are
maintained with respect thereto.
Section 9.04. Keeping of Books. Keep, and cause each of
its Subsidiaries to keep, proper books of record and
account, containing complete and accurate entries in all
material respects of all their respective financial and
business transactions.
Section 9.05. Visitation, Inspection, Etc. Permit, and
cause each of its Subsidiaries to permit, any
representative of the Agent or any Lender to visit and
inspect any of its property, to examine its books and
records and to make copies and take extracts
therefrom, and to discuss its affairs, finances and accounts
with its officers, all at such reasonable times and as
often as the Agent or such Lender may reasonably request after
reasonable prior notice to Nelson; provided, however,
that at any time following the occurrence and during
the continuance of a Default or an Event of Default,
no prior notice to Nelson shall be required.
Section 9.06. Insurance; Maintenance of Properties. (a)
Maintain or cause to be maintained with financially
sound and reputable insurers, insurance with respect to
its properties and business, and the properties and
business of its Subsidiaries, against loss or damage
of the kinds customarily insured against by reputable
companies in the same or similar businesses, such
insurance to be of such types and in such amounts as is customary
for such companies under similar circumstances;
provided, however, that in any event Nelson shall use
its best efforts to maintain, or cause to be
maintained, insurance in amounts and with coverages
not materially less favorable to any Consolidated
Company as in effect on the date of this Agreement, except where
the costs of maintaining such insurance would, in the
judgment of both Nelson and the Agent, be excessive.
(b) Cause, and cause each of the Consolidated Companies
to cause, all properties used or useful in the
conduct of its business to be maintained and kept in
good condition, repair and working order and supplied
with all necessary equipment and will cause to be made
all necessary repairs, renewals, replacements,
settlements and improvements thereof, all as in the judgment of
Nelson may be necessary so that the business carried
on in connection therewith may be properly and
advantageously conducted at all times; provided,
however, that nothing in this Section 9.06(b) shall
prevent Nelson from discontinuing the operation or
maintenance of any such properties if such discontinuance is, in
the judgment of Nelson, desirable in the conduct of its
business or the business of any Consolidated Company.
Section 9.07. Reporting Covenants. Furnish to each
Lender:
(a) Annual Financial Statements. As soon as available
and in any event within ninety (90) days after the end
of each fiscal year of Nelson, balance sheets of
the Consolidated Companies as at the end of such year,
presented on a consolidated and consolidating basis,
and the related statements of income, shareholders'
equity, and cash flows of the Consolidated
Companies for such fiscal year, presented on a consolidated and
consolidating basis (which consolidating report need
not be audited), setting forth in each case in
comparative form the figures for the previous fiscal
year as then reported, all in reasonable detail and
accompanied by a report thereon of Arthur Andersen &
Co. or other independent public accountants of
comparable recognized national standing, which such report shall
be unqualified as to going concern and scope of audit and shall
state that such financial statements present fairly
in all material respects the financial condition as at
the end of such fiscal year on a consolidated
basis, and the results of operations and
statements of cash flows of the Consolidated
Companies for such fiscal year in accordance with GAAP and that
the examination by such accountants in connection
with such consolidated financial statements has been
made in accordance with generally accepted auditing
standards;
(b) Quarterly Financial Statements. As soon as available
and in any event within sixty (60) days after the end
of each fiscal quarter of Nelson (other than the fourth
fiscal quarter), balance sheets of the Consolidated
Companies as of the end of such quarter presented on
a consolidated basis and the related statements of
income, shareholders' equity, and cash flows of the
Consolidated Companies for such fiscal quarter and for the
portion of Nelson's fiscal year ended at the end of such
quarter, presented on a consolidated basis setting
forth in each case in comparative form the figures
for the corresponding quarter and the corresponding
portion of Nelson's previous fiscal year, all in
reasonable detail and certified by the chief financial officer
or principal accounting officer of Nelson that such
financial statements fairly present in all material
respects the financial condition of the Consolidated
Companies as of the end of such fiscal quarter on a
consolidated basis, and the results of operations
and statements of cash flows of the Consolidated
Companies for such fiscal quarter and such portion of Nelson's
fiscal year, in accordance with GAAP consistently
applied (subject to normal year-end audit adjustments
and the absence of certain footnotes);
(c) No Default/Compliance Certificate. Together with the
financial statements required pursuant to Section
9.07(a) and Section 9.07(b), a certificate of the
president, chief financial officer or principal
accounting officer of Nelson (i) to the effect that,
based upon a review of the activities of the
Consolidated Companies and such financial statements during the
period covered thereby, there exists no Event of Default
and no Default under this Agreement, or if there
exists an Event of Default or a Default hereunder,
specifying the nature thereof and the proposed
response thereto, and (ii) demonstrating in
reasonable detail compliance as of the end of such fiscal year or
such fiscal quarter with Section 9.08 and Section 11.01
through Section 11.05;
(d) Auditor's No Default Certificate. Together with the
financial statements required pursuant to Section
9.07(a), a certificate of the accountants who prepared
the report referred to therein, to the effect that,
based upon their audit, there exists no Default or
Event of Default under this Agreement, or if there exists a
Default or Event of Default hereunder, specifying the
nature thereof;
(e) Notice of Default. Promptly after any Executive
Officer of Nelson has notice or knowledge of the
occurrence of an Event of Default or a Default, a
certificate of the chief financial officer or
principal accounting officer of Nelson specifying the
nature thereof and the proposed response thereto;
(f) Asset Sales. Together with the financial statements
required pursuant to Section 9.07(a), a certificate of
the chief financial officer or principal accounting
officer of Nelson reporting all Asset Sales effected
by the Consolidated Companies during the fiscal year
covered by such financial statements which involved
Asset Values in excess of $100,000 in any single
transaction or related series of transactions, including the
Asset Value of such assets and the amounts received
by the Consolidated Companies with respect to such
sales, and such other information regarding such
transactions as the Agent or any Lender may
reasonably request;
(g) Litigation. Promptly after (i) the occurrence
thereof, notice of the institution of or any material
adverse development in any material action, suit or
proceeding or any governmental investigation or any
arbitration, before any court or arbitrator or any
governmental or administrative body, agency or official,
against any Consolidated Company, or any material
property of any thereof, or (ii) actual knowledge thereof, notice
of the threat of any such action, suit, proceeding,
investigation or arbitration;
(h) Environmental Notices. Promptly after receipt
thereof, notice of any actual or alleged violation, or
notice of any action, claim or request for information,
either judicial or administrative, from any
governmental authority relating to any actual or
alleged claim, notice of potential liability under or
violation of any Environmental Law, or any actual or alleged
spill, leak, disposal or other release of any waste,
petroleum product, or hazardous waste or Hazardous
Substance by any Consolidated Company that could
result in penalties, fines, claims or other
liabilities to any Consolidated Company in amounts
in excess of $250,000;
(i) ERISA. (i) Promptly after Nelson has knowledge
or should have had knowledge of the occurrence
thereof with respect to any Plan of any
Consolidated Company or any ERISA Affiliate
thereof, or any trust established thereunder,
notice of (A) a "reportable event" described in
Section 4043 of ERISA and the regulations issued from
time to time thereunder (other than a "reportable event"
not subject to the provisions for 30-day notice
to the PBGC under such regulations), or (B)
any other event which could reasonably be expected
to subject any Consolidated Company to any
tax, penalty or liability under Title I or
Title IV of ERISA or Chapter 43 of the Tax
Code, or any tax or penalty resulting from a loss of
deduction under Sections 162, 404 or 419 of the Tax Code,
or any tax, penalty or liability under any
Requirement of Law applicable, where any
such taxes, penalties or liabilities exceed
or could reasonably be expected to exceed
$250,000 in the aggregate;
(ii) Promptly after such notice must be provided to
the PBGC, or to a Plan participant,
beneficiary or alternative payee, any notice
referred to or required under Section
101(d), 302(f)(4), 303, 307 or
4041(c)(1)(A) of ERISA or under Section 412 of the Tax
Code with respect to any Plan of any Consolidated Company
or any ERISA Affiliate thereof;
(iii) Promptly after receipt, (A) any notice
received by any Consolidated Company or
any ERISA Affiliate thereof concerning the
intent of the PBGC or any other governmental
authority to terminate a Plan of such
Consolidated Company or ERISA Affiliate thereof that
is subject to Title IV of ERISA, (B) any notice received
by any Consolidated Company or any ERISA
Affiliate thereof concerning the intent of the
PBGC or any other governmental authority to
impose any liability on such Consolidated
Company or ERISA Affiliate thereof under
Title IV of ERISA, or (C) any notice received by any
Consolidated Company or any ERISA Affiliate thereof
concerning the intent of the Internal Revenue
Service or any other governmental authority to
impose any liability on such Consolidated
Company or ERISA Affiliate thereof under
Chapter 43 of the Tax Code, which action under
Section 9.07(i)(iii)(C) could reasonably be expected to
have a Materially Adverse Effect;
(iv) Upon the request of the Agent, promptly upon
the filing thereof with the Internal Revenue
Service ("IRS") or the Department of Labor
("DOL"), a copy of IRS Form 5500 or annual
report for each Plan of any Consolidated
Company or ERISA Affiliate thereof that is
subject to Title IV of ERISA;
(v) Upon the request of the Agent, (A) true and
complete copies of any and all documents,
government reports and IRS determination or
opinion letters or rulings for any Plan of any
Consolidated Company from the IRS, PBGC or DOL,
(B) any reports filed with the IRS, PBGC or
DOL with respect to a Plan of the Consolidated
Companies or any ERISA Affiliate thereof, or (C) a
current statement of withdrawal liability for each
Multiemployer Plan of any Consolidated Company or any
ERISA Affiliate thereof;
(j) Liens. Promptly upon any Consolidated Company
becoming aware thereof, notice of the filing of any
federal statutory Lien, tax or other state or local
government Lien or any other Lien affecting their
respective properties, other than those Liens expressly
permitted by Section 11.02;
(k) Public Filings, Etc. Promptly upon the filing
thereof or otherwise becoming available, copies of all
financial statements, annual, quarterly and
special reports, proxy statements and notices sent or
made available generally by Nelson to its public
security holders, of all regular and periodic
reports and all registration statements and prospectuses, if any,
filed by any of them with any securities exchange,
and of all financial press releases and other
statements made available generally to the public
containing material developments in the business or
financial condition of Nelson and the other
Consolidated Companies;
(l) Accountants' Reports. Promptly upon receipt thereof,
copies of all financial statements of, and all reports
submitted by, independent public accountants to any
of the Consolidated Companies in connection with
each annual, interim or special audit of the
Consolidated Companies' financial statements,
including without limitation, the comment letter submitted by
such accountants to management in connection with
their annual audit;
(m) Burdensome Restrictions, Etc. Promptly upon the
existence or occurrence thereof, notice of the
existence or occurrence of (i) any Contractual
Obligation or Requirement of Law described in Section
6.11, (ii) failure of any Consolidated Company to
hold in full force and effect those material
trademarks, service marks, patents, trade names, copyrights,
licenses and similar rights necessary in the normal
conduct of its business, and (iii) any strike, labor
dispute, slow down or work stoppage as described in
Section 6.20;
(n) New Subsidiaries. Within thirty (30) days after the
formation or acquisition of any Subsidiary, or any
other event resulting in the creation of a new
Subsidiary, notice of the formation or acquisition of
such Subsidiary or such occurrence, including a
description of the assets of such entity, the
activities in which it will be engaged, and such other
information as the Agent may request;
(o) Intercompany Asset Transfers. Promptly upon the
occurrence thereof, notice of the transfer of any assets
from any Consolidated Company to any other
Consolidated Company (in any transaction or series of
related transactions), excluding sales or other transfers of
assets in the ordinary course of business, where the
Asset Value of such assets is greater than $1,000,000;
(p) Asset sales. At any time that the aggregate amount
of Asset Sales made by the Consolidated Companies after
December 13, 1995 exceeds $2,500,000 (based on the
Asset Values), prompt notice of any additional Asset
Sale or related series of Asset Sales involving Asset
Values of $100,000 or more; and
(q) Other Information. With reasonable promptness, such
other information about the Consolidated Companies as
the Agent or any Lender may reasonably request from time
to time.
Section 9.08. Financial Covenants.
(a) Interest Coverage Ratio. Maintain as of the last day
of each fiscal quarter, a minimum Interest Coverage
Ratio, calculated for the immediately preceding four
fiscal quarters, as shown below for each fiscal quarter
indicated:
Fiscal Quarter Minimum Ratio
-------------- -------------
Through March 31, 1997 2.00:1.00
Thereafter 2.50:1.00
(b) Funded Debt to Total Capital. Cause the Consolidated
Companies to maintain on a consolidated basis as of the
last day of each fiscal quarter, a maximum ratio of
Funded Debt to Total Capital, calculated quarterly, as
shown below for each fiscal quarter ending during the
fiscal quarters indicated:
Fiscal Quarter Maximum Ratio
-------------- -------------
Through March 31, 1997 .65:1.00
Thereafter .60:1.00
(c) Senior Funded Debt to Total Capital. Cause the
Consolidated Companies to maintain on a consolidated
basis as of the last day of each fiscal quarter, a
maximum ratio, expressed as a percentage, of Senior
Funded Debt to Total Capital, calculated quarterly,
of 50% (.50:1.00) for each fiscal quarter.
Section 9.09. Notices under Certain Other Indebtedness.
Immediately upon Nelson's receipt thereof, furnish the
Agent a copy of any notice received by it or any
other Consolidated Company from the holder(s) of
Indebtedness referred to in Section 11.01(b), Section
11.01(e) or Section 11.01(f) (or from any trustee,
agent, attorney, or other party acting on behalf of such
holder(s)) in an amount that exceeds $500,000, where such notice
states or claims (a) the existence or occurrence of any
actual or alleged default or event of default with
respect to such Indebtedness under the terms of any
indenture, loan or credit agreement, debenture, note or
other document evidencing or governing such
Indebtedness, or (b) the existence or occurrence of any
event or condition that requires or permits holder(s) of
any Indebtedness to exercise rights under any Change in
Control Provision. Nelson agrees to take such actions as
may be necessary to require the holder(s) of any
Indebtedness (or any trustee or agent acting on their
behalf) incurred pursuant to documents executed or
amended and restated after the Closing Date, to
furnish copies of all such notices directly to the Agent
simultaneously with the furnishing thereof to Nelson,
and that such requirement may not be altered or
rescinded without the prior written consent of the
Agent.
Section 9.10. Additional Credit Parties and Collateral.
Promptly after the formation, creation or acquisition
(provided that nothing in this Section 9.10 shall be
deemed to authorize the acquisition of any entity) of
any Subsidiary not listed on Schedule 6.13 or the
name change of any Subsidiary listed on Schedule
6.01, Nelson shall execute and deliver, and cause to be
executed and delivered a Guaranty Agreement from each such
Subsidiary, together with related documents of the kind
described in Article IV as Agent shall require, all in
form and substance satisfactory to the Agent and the
Required Lenders.
Section 9.11. Gibson Debt. On or before January 5, 1996,
assume the Gibson Debt on terms (a) with respect to
negative covenants and financial covenants, that
conform to the remaining Senior Debt, and (b) with
respect to the remaining terms of the Gibson Debt, that
remain as those terms exist as of the date of this
Agreement. Gibson shall be released from its obligation to
repay the Gibson Debt.
Section 9.12. Schedule VIII Subsidiaries. If any one of
the Subsidiaries listed on Part A of Schedule VIII
ever owns assets having a market value of greater than
$50,000, execute and deliver, and cause to be
executed and delivered a Guaranty Agreement from
each such Subsidiary, together with related
documents of the kind described in Article IV as Agent shall
require, all in form and substance satisfactory to the
Agent and the Required Lenders. Nelson shall review the
market value of the assets held by each of the
Subsidiaries listed on Part A of Schedule VIII
quarterly and shall promptly notify Agent in
writing if the market value of the assets owned by any Subsidiary
listed on Part A of Schedule VIII exceeds $50,000 and
provide Agent with the documentation required by this
Section 9.12. If any one of the Subsidiaries listed
on Part B of Schedule VIII ever owns assets having a
market value of greater than $250,000, execute and
deliver, and cause to be executed and delivered a
Guaranty Agreement from each such Subsidiary, together with
related documents of the kind described in Article IV
as Agent shall require, all in form and substance
satisfactory to the Agent and the Required Lenders.
Nelson shall review the market value of the assets held by
each of the Subsidiaries listed on Part B of Schedule
VIII quarterly and shall promptly notify Agent in
writing if the market value of the assets owned by any
Subsidiary listed on Part B of Schedule VIII exceeds $250,000
and provide Agent with the documentation required by
this Section 9.12. Nelson's failure to comply with the
terms of this Section 9.12 shall constitute an Event of
Default under Section 12.03.
ARTICLE X.
SCHEDULE AMENDMENTS
In the event notice is provided by Nelson pursuant to the
terms of Article IX ("Notice of Change"), any
information contained in a Notice of Change shall
become a part of the Schedule relating to such
information only upon the written approval of the
Required Lenders as evidenced by an amendment to this
Agreement.
ARTICLE XI.
NEGATIVE COVENANTS
So long as any Revolving Loan Commitment remains in
effect hereunder or any Revolving Credit Note shall
remain unpaid, Nelson will not and will not permit any
Subsidiary to:
Section 11.01. Indebtedness. Create, incur, assume or
suffer to exist any Indebtedness, other than:
(a) Indebtedness evidenced by the Revolving Credit
Notes;
(b) Indebtedness outstanding on the date hereof or
pursuant to lines of credit in effect on the date
hereof, all as described on Schedule 11.01(b)
attached hereto (excluding Refinanced Indebtedness);
(c) purchase money Indebtedness acceptable to Agent and
Lenders not to exceed an aggregate amount of
$1,000,000 outstanding at any one time;
(d) unsecured current liabilities (other than
liabilities for borrowed money or liabilities
evidenced by promissory notes, bonds or similar
instruments) incurred in the ordinary course of
business and either (i) not more than sixty (60) days
past due, or (ii) being disputed in good faith by
appropriate proceedings with reserves for such disputed liability
maintained in conformity with GAAP;
(e) Subordinated Debt not to exceed $55,000,000;
(f) Indebtedness owed to Agent by Nelson, which
Indebtedness is evidenced by an Amended and Restated
Revolving Credit Promissory Note in the principal
amount of $10,000,000 substantially in the form
attached hereto as Exhibit E (the "SunTrust Ten
Million Dollar Revolving Credit Facility");
(i) Senior Debt;
(j) Gibson Debt, subject to the terms of Section 9.11;
(k) Other Indebtedness not to exceed $1,000,000 at any
one time outstanding.
Section 11.02. Liens. Create, incur, assume or suffer to
exist any Lien on any of its property now owned or
hereafter acquired to secure any Indebtedness other
than:
(a) any Lien required under this Agreement;
(b) Liens existing on the date hereof disclosed on
Schedule 11.02 (excluding Liens securing
Refinanced Indebtedness);
(c) any Liens securing purchase money Indebtedness
described in Section 11.01(c);
(d) Liens for taxes not yet due (and in the case of
Liens on real property in Tennessee, not then
delinquent), and Liens for taxes that are being
contested in good faith by appropriate proceedings
and with respect to which adequate reserves are
being maintained;
(e) statutory Liens of landlords and 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 that are being
contested in good faith by appropriate proceedings and
with respect to which adequate reserves are being
maintained;
(f) Liens 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, government contracts, performance and
return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money);
and
(g) Liens (other than those permitted by
Section 11.02(a) through Section 11.02(f) encumbering
assets having an Asset Value not greater than
$1,000,000 in the aggregate at any one time.
Section 11.03. Mergers, Acquisitions, Sales, Etc. Merge
or consolidate with any other Person, or sell, lease or
otherwise dispose of its accounts, property or other
assets (including capital stock of Subsidiaries), or
purchase, lease or otherwise acquire all or any
substantial portion of the property or assets (including
capital stock) of any Person; provided, however, that
the foregoing restrictions on asset sales shall not be applicable
to (a) sales of equipment or other personal
property being replaced by other equipment or other
personal property purchased as a capital expenditure
item, (b) other sales of assets (including stock of
Subsidiaries) in an aggregate amount not to exceed ten
percent (10%) of Consolidated Net Worth computed as of
March 31, 1996 subject to Section 2.06, and (c) sales of
inventory in the ordinary course of business; provided
further, that the foregoing restrictions on mergers
shall not apply to mergers between Subsidiaries or
Nelson provided that upon consummation of such
merger, Nelson is in compliance with Section 9.08
and is the surviving corporation of such merger;
provided, however, that no transaction pursuant to Section
11.03(a) or Section 11.03(b) or the second proviso
in this Section 11.03 shall be permitted if any
Default or Event of Default otherwise exists at the
time of such transaction or would otherwise exist as a
result of such transaction.
Section 11.04. Dividends, Etc. Declare or pay any
dividend on its capital stock, or make any payment to
purchase, redeem, retire or acquire any of its
Subordinated Debt or capital stock or any option,
warrant, or other right to acquire such Subordinated
Debt or capital stock, other than:
(a) dividends payable solely in shares of capital stock;
(b) cash dividends declared and paid, and all other such
payments made, after March 31, 1995 in an
aggregate amount at any time not to
exceed the sum of (i) $5,000,000, plus
(ii) fifty percent (50%) of
Consolidated Net Income (or minus one hundred
percent (100%) of Consolidated Net Loss) earned
during Nelson's 1995 fiscal year and thereafter
on a cumulative basis (such period to be
treated as one accounting period);
(c) redemption of Subordinated Debt upon the exercise of
conversion rights contained in the
Indenture; and
(d) payment of Subordinated Debt at maturity as set
forth in the Indenture,
provided, however, no such dividend or other payment may be
declared or paid pursuant to Section 11.04(b) unless (A)
the full amount of any mandatory prepayment required
by Article II has been made, and (B) no Default or
Event of Default exists at the time of such declaration or
payment, or would exist as a result of such declaration
or payment.
Section 11.05. Investments, Loans, Etc. Make, permit or
hold any Investments in any Person, or otherwise acquire
or hold any Subsidiaries, other than:
(a) Investments in (i) Subsidiaries that are Guarantors
under this Agreement, whether such Subsidiaries are
Guarantors on the Closing Date or become Guarantors in
accordance with Section 9.10 after the Closing Date and
(ii) Subsidiaries that are listed on Part B of Schedule
VIII; provided, however, nothing in this Section 11.05
shall be deemed to authorize an investment pursuant to
this Section 11.05(a) in any entity that is not (A) a
Subsidiary and a Guarantor or (B) a Subsidiary that is
listed on Part B of Schedule VIII prior to such
investment;
(b) direct obligations of the United States or any
agency thereof, or obligations guaranteed by the United
States or any agency thereof, in each case supported by
the full faith and credit of the United States and
maturing within one year from the date of creation
thereof;
(c) commercial paper maturing within one year from the
date of creation thereof rated in the highest
grade by a nationally recognized credit rating agency;
(d) time deposits maturing within one (1) year from the
date of creation thereof with, including certificates of
deposit issued by, any office located in the United
States of any bank or trust company that is organized
under the laws of the United States or any state
thereof and has capital, surplus and undivided
profits aggregating at least $500,000,000, including
without limitation, any such deposits in eurodollars issued by a
foreign branch of any such bank or trust company;
(e) those loans or extensions of credit made by any
Consolidated Company to another Consolidated Company; and
(f) Investments (other than those permitted by
Section 11.05(a) through Section 11.05(e)) in an
aggregate amount not to exceed $10,000,000.
Section 11.06. Sale and Leaseback Transactions. Sell or
transfer any property, real or personal, whether now
owned or hereafter acquired, and thereafter rent or
lease such property or other property that any
Consolidated Company intends to use for substantially
the same purpose or purposes as the property being sold
or transferred.
Section 11.07. Transactions with Affiliates. Enter into
any material transaction or series of related
transactions with any Affiliate of any Consolidated Company
(but excluding any Affiliate that is also a
Consolidated Company), other than on terms and
conditions substantially as favorable to such
Consolidated Company as would be obtained by such Consolidated
Company at the time in a comparable arm's-length
transaction with a Person other than an Affiliate.
Section 11.08. Optional Prepayments. Directly or
indirectly, prepay, purchase, redeem, retire,
defease or otherwise acquire or make any optional
payment on account of any principal of, interest on, or
premium payable in connection with the optional
prepayment, redemption or retirement of, any of its
Indebtedness, or give a notice of redemption with respect to any
such Indebtedness, or make any payment in violation
of the subordination provisions of any Subordinated
Debt, except with respect to (a) the Obligations
under this Agreement and the Revolving Credit Notes,
(b) those loans or extensions of credit made by any
Consolidated Company to another Consolidated Company,
(c) the Indebtedness more particularly described in Section
11.01(f), and (d) redemption of Subordinated Debt
upon the exercise of conversion rights contained
in the Indenture; provided, however, that no
prepayment pursuant to this Section 11.08 shall be
permitted if any Default or Event of Default
otherwise exists at the time of such prepayment or would
otherwise exist as a result of such prepayment.
Section 11.09. Changes in Business. Enter into any
business that is substantially different from that
presently conducted by the Consolidated Companies taken
as a whole (which includes the publishing,
distribution and sale of bibles, music and other
books and periodicals, the manufacture, sale and
distribution of gift products, and the design and production of
multi-media programming, including television and
radio production and broadcasting), except where
the aggregate Investment made and other funds
expended or committed with respect to such business
does not exceed $2,500,000; provided, however, that
any Investment permitted by this Section 11.09 shall
be included in the calculation of Investments as set forth
in Section 11.05(f).
Section 11.10. ERISA. Take or fail to take any action
with respect to any Plan or any Consolidated Company
or, with respect to its ERISA Affiliates, any Plans
which are subject to Title IV of ERISA or to
continuation health care requirements for group health
plans under the Tax Code, including without
limitation (a) establishing any such Plan, (b) amending any such
Plan (except where required to comply with applicable
law), (c) terminating or withdrawing from any such
Plan, or (d) incurring an amount of unfunded benefit
liabilities, as defined in Section 4001(a)(18) of
ERISA, or any withdrawal liability under Title IV of
ERISA with respect to any such Plan, without first obtaining
the written approval of the Required Lenders, where such
actions or failures could reasonably be expected to have a
Materially Adverse Effect.
Section 11.11. Additional Negative Pledges. Create or
otherwise cause or suffer to exist or become effective,
directly or indirectly, any prohibition or restriction
on the creation or existence of any Lien upon any asset
of any Consolidated Company, other than pursuant to (a)
Section 11.02, (b) the terms of any agreement,
instrument or other document pursuant to which any
Indebtedness, permitted by Section 11.01(c) is incurred by any
Consolidated Company, so long as such prohibition or
restriction applies only to the property or asset
being financed by such Indebtedness and (c) any
requirement of applicable law or any regulatory
authority having jurisdiction over any of the
Consolidated Companies.
Section 11.12. Limitation on Payment Restrictions
Affecting Consolidated Companies. Create or otherwise
cause or suffer to exist or become effective any
consensual encumbrance or restriction on the ability of
any Consolidated Company to (a) pay dividends or make
any other distributions on such Consolidated Company's
stock, (b) pay any indebtedness owed to Nelson or any
other Consolidated Company, or (c) transfer any of its property
or assets to Nelson or any other Consolidated Company,
except any consensual encumbrance or restriction
existing under the Credit Documents.
Section 11.13. Actions Under Certain Documents. Without
the prior written consent of the Agent (which consent
shall not be unreasonably withheld), modify, amend,
cancel or rescind any agreements or documents
evidencing or governing Subordinated Debt, except
that current interest accrued thereon as of the date of
this Agreement and all interest subsequently accruing thereon
(whether or not paid currently) may be paid unless a
Default or Event of Default has occurred and is
continuing.
Section 11.14. Schedule VIII Subsidiaries.
Notwithstanding any other provision set forth in this
Agreement, as long as any Revolving Loan Commitment
remains in effect hereunder or any Revolving Credit
Note shall remain unpaid, permit any Subsidiary
listed on Schedule VIII to receive any proceeds of
the Revolving Loans, either directly or indirectly.
ARTICLE XII.
EVENTS OF DEFAULT
Upon the occurrence and during the continuance of any of
the following specified events (each an "Event of
Default"):
Section 12.01. Payments. Nelson shall fail to make
promptly when due (including, without limitation, by
mandatory prepayment) any principal payment with respect to the
Revolving Loans, or Nelson shall fail to make within
three (3) days after the due date thereof any payment
of interest, fee or other amount payable hereunder;
Section 12.02. Covenants Without Notice. Nelson shall
fail to observe or perform any covenant or agreement
contained in Section 9.07(e), Section 9.08, Section
11.01 through Section 11.06, Section 11.08, Section
11.09 and Section 11.11 through Section 11.13;
Section 12.03. Other Covenants. Nelson shall fail to
observe or perform any covenant or agreement contained
in this Agreement, other than those referred to in
Section 12.01 and Section 12.02, and, if capable of
being remedied, such failure shall remain unremedied
for thirty (30) days after the earlier of (a) Nelson's
obtaining knowledge thereof, or (b) written notice
thereof shall have been given to Nelson by Agent or any Lender;
Section 12.04. Representations. Any representation or
warranty made or deemed to be made by Nelson or any
other Credit Party or by any of its officers under this
Agreement or any other Credit Document (including the
Schedules attached thereto), or any certificate or
other document submitted to the Agent or the Lenders
by any such Person pursuant to the terms of this
Agreement or any other Credit Document, shall be incorrect in any
material respect when made or deemed to be made or
submitted;
Section 12.05. Non-Payments of Other Indebtedness. Any
Consolidated Company shall fail to make when due
(whether at stated maturity, by acceleration, on
demand or otherwise, and after giving effect to any
applicable grace period) any payment of principal,
interest or any other amount owed on any
Indebtedness (other than the Obligations) exceeding $1,000,000 in
the aggregate;
Section 12.06. Defaults Under Other Agreements. Any
Consolidated Company shall fail to observe or perform
within any applicable grace period any covenants or
agreements contained in any agreements or instruments
relating to any of its Indebtedness (other than the
Obligations) exceeding $1,000,000 in the
aggregate, or any other event shall occur if the effect of such
failure or other event is to accelerate, or to permit
the holder of such Indebtedness or any other Person
to accelerate, the maturity of such Indebtedness, or
any such Indebtedness shall be required to be prepaid
(other than by a regularly scheduled required
prepayment) in whole or in part prior to its stated
maturity;
Section 12.07. Bankruptcy. Nelson or any other
Consolidated Company shall commence a voluntary case
concerning itself under the Bankruptcy Code; or an
involuntary case for bankruptcy is commenced against any
Consolidated Company and the petition is not
controverted within ten (10) days, or is not
dismissed within sixty (60) days, after commencement of the case;
or a custodian (as defined in the Bankruptcy Code) is
appointed for, or takes charge of, all or any
substantial part of the property of any Consolidated
Company; or any Consolidated Company commences
proceedings of its own bankruptcy or to be granted a
suspension of payments or any other proceeding under any
reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, insolvency or
liquidation or similar law of any jurisdiction, whether
now or hereafter in effect, relating to any
Consolidated Company or there is commenced against any
Consolidated Company any such proceeding that remains
undismissed for a period of sixty (60) days; or any
Consolidated Company is adjudicated insolvent or
bankrupt; or any order of relief or other order
approving any such case or proceeding is entered; or any
Consolidated Company suffers any appointment of any custodian
or the like for it or any substantial part of its
property to continue undischarged or unstayed for a
period of sixty (60) days; or any Consolidated
Company makes a general assignment for the benefit of
creditors; or any Consolidated Company shall fail to
pay, or shall state that it is unable to pay, or shall be
unable to pay, its debts generally as they become due;
or any Consolidated Company shall call a meeting of its
creditors with a view to arranging a composition or
adjustment of its debts; or any Consolidated Company
shall by any act or failure to act indicate its
consent to, approval of or acquiescence in any of the
foregoing; or any corporate action is taken by any
Consolidated Company for the purpose of effecting any of
the foregoing;
Section 12.08. ERISA. A Plan of a Consolidated Company or
a Plan subject to Title IV of ERISA of any of
its ERISA Affiliates
(a) shall fail to be funded in accordance with the
minimum funding standard required by applicable
law, the terms of such Plan, Section 412 of the
Tax Code or Section 302 of ERISA for any plan
year or a waiver of such standard is sought or
granted with respect to such Plan under
applicable law, the terms of such Plan or Section 412 of the
Tax Code or Section 303 of ERISA; or
(b) is terminated, or is the subject of termination
proceedings under applicable law or the terms of
such Plan; or
(c) shall require a Consolidated Company to provide
security under applicable law, the terms of
such Plan, Section 412 of the Tax Code or Section
306 or 307 of ERISA;
and any such failure, waiver, termination or other event shall
result in a liability of a Consolidated Company to the
PBGC or a Plan that would have a Materially Adverse
Effect.
Section 12.09. Money Judgment. A judgment or order for the
payment of money in excess of $1,000,000 (for
which the Consolidated Company is not insured) or
otherwise having a Materially Adverse Effect shall
be rendered against any Consolidated Company and
such judgment or order shall continue unsatisfied (in
the case of a money judgment) and in effect for a period
of thirty (30) days during which execution shall not be
effectively stayed or deferred (whether by action of a court, by
agreement or otherwise);
Section 12.10. Change in Control of Nelson. (a) Any "person"
or "group" (within the meaning of Sections 13(d) and
14(d)(2) of the Exchange Act), other than Sam Moore or
his estate, heirs or beneficiaries, shall become the
"beneficial owner(s)" (as defined in said Rule 13d-3) of
more than twenty five percent (25%) of the shares of the
outstanding common stock of Nelson entitled to vote for
members of Nelson's board of directors, or (b) any event or
condition shall occur or exist that, pursuant to the terms of
any Change in Control Provision, requires or permits the
holder(s) of Indebtedness of any Consolidated Company
to require that such Indebtedness be redeemed,
repurchased, defeased, prepaid or repaid, in whole or
in part, or the maturity of such Indebtedness to be
accelerated in any respect;
Section 12.11. Default Under Other Credit Documents.
There shall exist or occur any "Event of Default" as
provided under the terms of any other Credit Document,
or any Credit Document ceases to be in full force and
effect or the validity or enforceability thereof is
disaffirmed by or on behalf of Nelson or any other
Credit Party, or at any time it is or becomes unlawful for Nelson
or any other Credit Party to perform or comply
with its obligations under any Credit Document, or
the obligations of Nelson or any other Credit Party
under any Credit Document are not or cease to be legal,
valid and binding on Nelson or any such Credit Party;
Section 12.12. Attachments. An attachment or similar
action shall be made on or taken against any of the
assets of any Consolidated Company with an Asset Value
exceeding $1,000,000 in aggregate and is not removed,
suspended or enjoined within thirty (30) days of the
same being made or any suspension or injunction being
lifted;
then, and in any such event, and at any time thereafter if any
Event of Default shall then be continuing, the Agent
may, and upon the written or telex request of the
Required Lenders, shall, by written notice to Nelson,
take any or all of the following actions, without
prejudice to the rights of the Agent, any Lender or the holder of
any Revolving Credit Note to enforce its claims against
Nelson or any other Credit Party: (a) declare the Total
Commitments terminated, whereupon the pro rata Total Commitments
of each Lender shall terminate immediately and any
commitment fee shall forthwith become due and payable
without any other notice of any kind; and (b) declare
the principal of and any accrued interest on the
Revolving Loans, and all other Obligations owing
hereunder, to be, whereupon the same shall become, forthwith due
and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby
waived by Nelson; provided, that, if an Event of
Default specified in Section 12.07 shall occur, the
result which would occur upon the giving of written
notice by the Agent to any Credit Party, as specified in clauses
(a) and (b) of this Section, shall occur automatically
without the giving of any such notice.
Section 12.13. Schedule VIII Subsidiaries. Nelson may
cure an Event of Default caused by a breach of Section 9.12
or Section 11.14 as provided in this Section 12.13.
Nelson may execute and deliver, and cause to be
executed and delivered a Guaranty Agreement from each
Subsidiary causing a violation under Section 9.12 or
Section 11.14, as applicable, together with related
documents of the kind described in Article IV as Agent shall
require, all in form and substance satisfactory to the
Agent and the Required Lenders, whereupon such
Subsidiary causing such violation shall be deemed
removed from Schedule VIII.
Section 12.14. Adjustment to Pro Rata Share. Upon
the occurrence of any Event of Default, the Pro Rata
Share of each Lender shall be amended to the amount
designated opposite such Lender's name below in the
following chart in order to recognize the outstanding
indebtedness evidenced by (a) the SunTrust Ten Million
Dollar Revolving Credit Facility, (b) the SunTrust Letter
of Credit Facility, and (c) the National City Bank, Kentucky
(formerly known as First National Bank of Louisville)
Letter of Credit Facility:
SunTrust Bank, Nashville,
N. A. (formerly known
as Third National Bank
in Nashville): SunTrust Adjusted Pro Rata
Share as of the occurrence of
such Event of Default.
National City Bank, Kentucky
(formerly known as
First National Bank
of Louisville): National City Bank, Kentucky
(formerly known as
First National Bank of
Louisville) Adjusted Pro Rata
Share as of the occurrence of
such Event of Default.
First American National Bank: First American National Bank
Adjusted Pro Rata
Share as of the occurrence of
such Event of Default.
NationsBank of Texas, N.A.: NationsBank of Texas, N.A.
Adjusted Pro Rata
Share as of the
occurrence of such Event
of Default.
Creditanstalt - Bankverein: Creditanstalt - Bankverein
Adjusted Pro Rata
Share as of the
occurrence of such Event
of Default.
ARTICLE XIII.
THE AGENT
Section 13.01. Appointment of Agent. Each Lender hereby
designates SunTrust as Agent to administer all matters
concerning the Revolving Loans and to act as herein
specified. Each Lender hereby irrevocably authorizes,
and each holder of any Revolving Credit Note by the
acceptance of a Revolving Credit Note shall be deemed
irrevocably to authorize, the Agent to take such actions
on its behalf under the provisions of this Agreement, the
other Credit Documents and all other instruments
and agreements referred to herein or therein, and to
exercise such powers and to perform such duties
hereunder and thereunder as are specifically delegated
to or required of the Agent by the terms hereof and
thereof and such other powers as are reasonably incidental
thereto. The Agent may perform any of its duties
hereunder by or through its agents or employees.
Section 13.02. Authorization of Agent with Respect to
the Security Documents. (a) Each Lender hereby
authorizes the Agent to enter into each of the
Security Documents, and to take all action contemplated
thereby. All rights and remedies under the Security
Documents may be exercised by the Agent for the
benefit of the Agent and the Lenders and the other beneficiaries
thereof upon the terms thereof. The Lenders further
agree that the Agent may assign its rights and
obligations under any of the Security Documents to any
Affiliate of the Agent or to any trustee, if
necessary or appropriate under applicable law, which
assignee in each such case shall (subject to compliance with any
requirements of applicable law governing the assignment
of such Security Documents) be entitled to all the
rights of the Agent under and with respect to the
applicable Security Document.
(b) In each circumstance where, under any provision of
any Security Document, the Agent shall have the right to
grant or withhold any consent, exercise any remedy, make
any determination or direct any action by the Agent
under such Security Document, the Agent shall act in
respect of such consent, exercise of remedies,
determination or action, as the case may be, with the
consent of and at the direction of the Required Lenders;
provided, however, that no such consent of the Required
Lenders shall be required with respect to any consent,
determination or other matter that is, in the
Agent's reasonable judgment, ministerial or
administrative in nature. In each circumstance where
any consent of or direction from the Required Lenders is
required, the Agent shall send to the Lenders a notice
setting forth a description in reasonable detail of
the matter as to which consent or direction is
requested and the Agent's proposed course of action
with respect thereto. In the event the Agent shall
not have received a response from any Lender within five
(5) Business Days after such Lender's receipt of such
notice, such Lender shall be deemed to have agreed
to the course of action proposed by the Agent.
Section 13.03. Nature of Duties of Agent. The Agent
shall have no duties or responsibilities except those
expressly set forth in this Agreement and the other
Credit Documents. None of the Agent nor any of its
respective officers, directors, employees or agents
shall be liable for any action taken or omitted by
it as such hereunder or in connection herewith, unless
caused by its or their gross negligence or willful misconduct.
The duties of the Agent shall be ministerial and
administrative in nature; the Agent shall not have by
reason of this Agreement a fiduciary relationship in
respect of any Lender; and nothing in this Agreement,
express or implied, is intended to or shall be so
construed as to impose upon the Agent any obligations in respect
of this Agreement or the other Credit Documents
except as expressly set forth herein.
Section 13.04. Lack of Reliance on the Agent. (a)
Independently and without reliance upon the Agent, each
Lender, to the extent it deems appropriate, has made
and shall continue to make (i) its own independent
investigation of the financial condition and affairs
of the Credit Parties in connection with the taking
or not taking of any action in connection herewith,
and (ii) its own appraisal of the creditworthiness of the Credit
Parties, and, except as expressly provided in this
Agreement, the Agent shall have no duty or
responsibility, either initially or on a continuing
basis, to provide any Lender with any credit or other
information with respect thereto, whether coming into its
possession before the making of the Revolving Loans or at
any time or times thereafter.
(b) The Agent shall not be responsible to any Lender for
any recitals, statements, information,
representations or warranties herein or in any
document, certificate or other writing delivered in
connection herewith or for the execution,
effectiveness, genuineness, validity, enforceability,
collectibility, priority or sufficiency of this
Agreement, the Revolving Credit Notes, the Guaranty
Agreement, the Gibson Pledge Agreement, the Word
Pledge Agreement or any other documents contemplated
hereby or thereby, or the financial condition of the
Credit Parties, or be required to make any inquiry concerning
either the performance or observance of any of the
terms, provisions or conditions of this Agreement, the
Revolving Credit Notes, the Guaranty Agreement, the
Gibson Pledge Agreement, the Word Pledge Agreement or
the other documents contemplated hereby or thereby, or
the financial condition of the Credit Parties or the
existence or possible existence of any Default or Event of
Default; provided, however, to the extent that the Agent has
been advised that a Lender has not received any
information formally delivered to the Agent pursuant to
Section 9.07, the Agent shall deliver or cause to be
delivered such information to such Lender.
Section 13.05. Certain Rights of the Agent. If the Agent
shall request instructions from the Required Lenders with
respect to any action or actions (including the
failure to act) in connection with this Agreement, the
Agent shall be entitled to refrain from such act or
taking such act, unless and until the Agent shall have
received instructions from the Required Lenders; and the
Agent shall not incur liability to any Person by reason
of so refraining. Without limiting the foregoing, no Lender shall
have any right of action whatsoever against the Agent as
a result of the Agent acting or refraining from
acting hereunder in accordance with the instructions of
the Required Lenders.
Section 13.06. Reliance by Agent. The Agent shall be
entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or telecopier
message, cable gram, radiogram, order or other
documentary, teletransmission or telephone message believed by it
to be genuine and correct and to have been signed, sent
or made by the proper Person. The Agent may consult with
legal counsel (including counsel for any Credit
Party), independent public accountants and other
experts selected by it and shall not be liable for
any action taken or omitted to be taken by it in good
faith in accordance with the advice of such counsel,
accountants or experts.
Section 13.07. Indemnification of Agent. To the extent
the Agent is not reimbursed and indemnified by
the Credit Parties, each Lender will reimburse and
indemnify the Agent, ratably according to the
respective amounts of the Revolving Loans outstanding
under all Revolving Loan Commitments (or if no amounts
are outstanding, ratably in accordance with the Total
Commitments), in either case, for and against any and all
liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including
counsel fees and disbursements) or disbursements of
any kind or nature whatsoever that may be imposed on,
incurred by or asserted against the Agent in performing
its duties hereunder, in any way relating to or
arising out of this Agreement or the other Credit Documents;
provided that no Lender shall be liable to the Agent
for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting
from the Agent's gross negligence or willful
misconduct; provided further, that a Lender shall not be
liable to the Agent for any portion of such liabilities,
obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements
resulting from the Agent's negligence, if such
Lender shall have given the Agent timely written
notice of the Lender's objections to the act or
omission constituting negligence on the Agent's part.
Section 13.08. The Agent in its Individual Capacity.
With respect to its obligation to lend under this
Agreement, the Revolving Loans made by it and the
Revolving Credit Notes issued to it, the Agent shall
have the same rights and powers hereunder as any other
Lender or holder of a Revolving Credit Note and may
exercise the same as though it were not performing the duties of
Agent specified herein; and the terms "Lenders,"
"Required Lenders," "holders of Revolving Credit
Notes," or any similar terms shall, unless the
context clearly otherwise indicates, include the
Agent in its individual capacity. The Agent may
accept deposits from, lend money to, and generally engage in any
kind of banking, trust, financial advisory or other
business with the Consolidated Companies or any
Affiliate of the Consolidated Companies as if it
were not performing the duties specified herein as
Agent, and may accept fees and other consideration from
the Consolidated Companies for services in connection with this
Agreement and otherwise without having to account for the
same to the Lenders.
Section 13.09. Holders of Revolving Credit Notes. The
Agent may deem and treat the payee of any Revolving
Credit Note as the owner thereof for all purposes
hereof unless and until a written notice of the
assignment or transfer thereof shall have been filed
with the Agent. Any request, authority or consent of
any Person who, at the time of making such request or giving such
authority or consent, is the holder of any Revolving
Credit Note shall be conclusive and binding on any
subsequent holder, transferee or assignee of such
Revolving Credit Note or of any Revolving Credit Note
or Revolving Credit Notes issued in exchange
therefor.
Section 13.10. Successor Agent. (a) The Agent may resign
at any time by giving written notice thereof to the
Lenders and Nelson and may be removed at any time with
or without cause by the Required Lenders; provided,
however, the Agent may not resign or be removed until
a successor Agent has been appointed and shall have
accepted such appointment. Upon any such resignation or
removal, the Required Lenders shall have the right to appoint
a successor Agent subject to Nelson's prior written
approval. If no successor Agent shall have been so
appointed by the Required Lenders, and shall have
accepted such appointment, within thirty (30) days
after the retiring Agent's giving of notice of
resignation or the Required Lenders' removal of the retiring
Agent, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent subject to
Nelson's prior written approval, which shall be a bank
that maintains an office in the United States, or a
commercial bank organized under the laws of the United
States of America or any State thereof, or any
Affiliate of such bank, having a combined capital and surplus of
at least $100,000,000. If at any time SunTrust is
removed as a Lender pursuant to Section
14.06(g), SunTrust shall simultaneously resign as
Agent.
(b) Upon the acceptance of any appointment as the Agent
hereunder by a successor Agent, such successor
Agent shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties
of the retiring Agent, and the retiring Agent
shall be discharged from its duties and
obligations under this Agreement. After any retiring Agent's
resignation or removal hereunder as Agent, the provisions
of this Article XIII shall inure to its benefit as to
any actions taken or omitted to be taken by it while
it was an Agent under this Agreement.
ARTICLE XIV.
MISCELLANEOUS
Section 14.01. Notices. All notices, requests and other
communications to any party hereunder shall be in
writing (including bank wire, telex, telecopy or similar
teletransmission or writing) and shall be given to such party
at its address or applicable teletransmission number
set forth opposite such party's name on the signature
pages hereof, or such other address or applicable
teletransmission number as such party may hereafter
specify by notice to the Agent and Nelson. Each such notice,
request or other communication shall be effective (a) if
given by telex, when such telex is transmitted to
the telex number specified in this Section 14.01 and
the appropriate answerback is received, (b) if given by
mail, seventy-two (72) hours after such communication is
deposited in the mails with first class postage
prepaid, addressed as aforesaid, (c) if given by telecopy, when
such telecopy is transmitted to the telecopy number
specified in this Section 14.01 and the appropriate
confirmation is received, or (d) if given by any
other means (including, without limitation, by air
courier), when delivered or received at the address
specified in this Section 14.01; provided that notices to
the Agent shall not be effective until received.
Section 14.02. Amendments, Etc. No amendment or waiver
of any provision of this Agreement or the other Credit
Documents, nor consent to any departure by any Credit
Party therefrom, shall in any event be effective unless
the same shall be in writing and signed by the Required
Lenders, and then such waiver or consent shall be
effective only in the specific instance and for the
specific purpose for which given; provided that no amendment,
waiver or consent shall, unless in writing and signed by
all the Lenders do any of the following: (a) waive any
of the conditions specified in Section 4.01 or Section
4.02 or amend either such Section or, for the purposes
of such Sections, the definition of any term contained
in, or otherwise material to, either Section, (b)
increase any of the Total Commitments or other contractual
obligations to Nelson under this Agreement, (c) reduce
the principal of, or interest on, the Revolving Credit
Notes or any fees hereunder, (d) postpone any date
fixed for the payment in respect of principal of, or
interest on, the Revolving Credit Notes or any fees
hereunder, (e) change the percentage of any of the Total
Commitments or of the aggregate unpaid principal amount
of the Revolving Credit Notes, or the number or identity of
Lenders that shall be required for the Lenders or any of
them to take any action hereunder, (f) agree to
release (i) any of the outstanding common stock of
Gibson (except pursuant to the terms of the Gibson
Pledge Agreement) from the Lien of the Security
Documents to the extent securing the Obligations, (ii) any of the
outstanding common stock of Word, Incorporated (except
pursuant to the terms of the Word Pledge Agreement)
from the Lien of the Security Documents to the extent
securing the Obligations, or (iii) any Guarantor from
its obligations under any Guaranty Agreement, (g)
modify the definition of "Required Lenders," or (h)
modify this Section 14.02. Notwithstanding the foregoing, no
amendment, waiver or consent shall, unless in writing and
signed by the Agent in addition to the Lenders required
hereinabove to take such action, affect the rights or duties of
the Agent under this Agreement or under any other
Credit Document.
Section 14.03. No Waiver; Remedies Cumulative. No
failure or delay on the part of the Agent, any Lender
or any holder of a Revolving Credit Note in
exercising any right or remedy hereunder or under
any other Credit Document, and no course of dealing
between any Credit Party and the Agent, any Lender or
the holder of any Revolving Credit Note shall operate
as a waiver thereof, nor shall any single or partial exercise of
any right or remedy hereunder or under any other Credit
Document preclude any other or further exercise thereof
or the exercise of any other right or remedy hereunder
or thereunder. The rights and remedies herein
expressly provided are cumulative and not
exclusive of any rights or remedies that the Agent, any Lender or
the holder of any Revolving Credit Note would otherwise
have. No notice to or demand on any Credit Party not
required hereunder or under any other Credit Document
in any case shall entitle any Credit Party to any
other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of
the Agent, the Lenders or the holder of any Revolving Credit Note
to any other or further action in any circumstances
without notice or demand.
Section 14.04. Payment of Expenses, Etc. Nelson shall:
(a) whether or not the transactions hereby contemplated
are consummated, pay all reasonable, out-of-pocket costs
and expenses of the Agent in the administration (both
before and after the execution hereof and including
reasonable expenses actually incurred relating to
advice of counsel as to the rights and duties of the
Agent and the Lenders with respect thereto) of, and in
connection with the preparation, execution and delivery of,
preservation of rights under, enforcement of, and,
after a Default or Event of Default, refinancing,
renegotiation or restructuring of, this Agreement and
the other Credit Documents and the documents and
instruments referred to therein, and any amendment,
waiver or consent relating thereto (including, without
limitation, the reasonable fees actually incurred and
disbursements of counsel for the Agent), and in the
case of enforcement of this Agreement or any Credit
Document after an Event of Default, all such
reasonable, out-of-pocket costs and expenses
(including, without limitation, the reasonable fees
actually incurred and disbursements of counsel), for any of the
Lenders; provided, however, that in no event shall
Nelson be obligated to pay any attorneys' fees
and related expenses incurred by any Lender other
than Agent prior to the occurrence of an Event of
Default;
(b) subject, in the case of certain Taxes, to
the applicable provisions of Section 3.07(b), pay and
hold each of the Lenders harmless from and against any
and all present and future stamp, documentary, and other
similar Taxes with respect to this Agreement, the
Revolving Credit Notes and any other Credit
Documents, any collateral described therein, or any
payments due thereunder, and save each Lender harmless from and
against any and all liabilities with respect to or
resulting from any delay or omission to pay such Taxes;
and
(c) indemnify the Agent and each Lender, and
their respective officers, directors, employees,
representatives and agents from, and hold each of them
harmless against, any and all costs, losses,
liabilities, claims, damages or expenses incurred by any
of them (whether or not any of them is designated a party
thereto) (an "Indemnitee") arising out of or by reason of
any investigation, litigation or other proceeding
related to any actual or proposed use of the
proceeds of any of the Revolving Loans or any Credit
Party's entering into and performing of the Agreement,
the Revolving Credit Notes or the other Credit
Documents, including, without limitation, the reasonable fees
actually incurred and disbursements of counsel
incurred in connection with any such investigation,
litigation or other proceeding; provided, however,
Nelson shall not be obligated to indemnify any
Indemnitee for any of the foregoing arising out of such
Indemnitee's gross negligence or willful misconduct;
(d) without limiting the indemnities set forth
in Section 14.04(c), indemnify each Indemnitee for any
and all expenses and costs (including without
limitation, remedial, removal, response, abatement,
cleanup, investigative, closure and monitoring costs),
losses, claims (including claims for contribution
or indemnity and including the cost of investigating or
defending any claim and whether or not such claim is
ultimately defeated, and whether such claim arose before,
during or after any Credit Party's ownership,
operation, possession or control of its business,
property or facilities or before, on or after the date
hereof, and including also any amounts paid
incidental to any compromise or settlement by the Indemnitee or
Indemnitees to the holders of any such claim),
lawsuits, liabilities, obligations, actions,
judgments, suits, disbursements, encumbrances,
liens, damages (including without limitation damages
for contamination or destruction of natural
resources), penalties and fines of any kind or nature whatsoever
(including without limitation in all cases the
reasonable fees actually incurred, other charges and
disbursements of counsel in connection therewith)
incurred, suffered or sustained by that Indemnitee
based upon, arising under or relating to Environmental
Laws based on, arising out of or relating to in whole or in part,
the existence or exercise of any rights or remedies
by any Indemnitee under this Agreement, any other
Credit Document or any related documents.
If and to the extent that the obligations of Nelson under this
Section 14.04 are unenforceable for any reason,
Nelson hereby agrees to make the maximum contribution to the
payment and satisfaction of such obligations that
is permissible under applicable law.
Section 14.05. Right of Setoff. In addition to and not
in limitation of all rights of offset that any Lender
or other holder of a Revolving Credit Note may have
under applicable law, each Lender or other holder of a
Revolving Credit Note shall, upon the occurrence of
any Event of Default and whether or not such Lender or
such holder has made any demand or any Credit
Party's obligations are matured, have the right to appropriate
and apply to the payment of any Credit Party's
obligations hereunder and under the other Credit
Documents owed to such Lender or other holder of a
Revolving Credit Note, all deposits of any Credit
Party (general or special, time or demand,
provisional or final) then or thereafter held by and other
Indebtedness or property then or thereafter owing by
such Lender or other holder to any Credit Party,
whether or not related to this Agreement or any
transaction hereunder. Each Lender shall promptly
notify Nelson of any offset hereunder.
Section 14.06. Benefit of Agreement. (a) This
Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective
successors and assigns of the parties hereto,
provided that Nelson may not assign or transfer any of
its interest hereunder without the prior written consent
of the Lenders.
(b) Any Lender may make, carry or transfer Revolving
Loans at, to or for the account of, any of its branch
offices or the office of an Affiliate of such Lender.
(c) Each Lender may assign all or a portion of
its interests, rights and obligations under this Agreement
(including all or a portion of any of its Total
Commitments and the Revolving Loans at the time owing
to it and the Revolving Credit Notes held by it) to any
Eligible Assignee; provided, however, that (i) the
Agent and Nelson must give their prior written
consent to such assignment (which consent shall not be
unreasonably withheld) unless such assignment is to an
Affiliate of the assigning Lender, (ii) the amount
of any of the Total Commitments of the assigning
Lender subject to each assignment (determined as of
the date the assignment and acceptance with respect
to such assignment is delivered to the Agent) shall not
be less than $5,000,000, and (iii) the parties to each such
assignment shall execute and deliver to the Agent an
Assignment and Acceptance, together with a
Revolving Credit Note or Revolving Credit Notes
subject to such assignment and, unless such assignment
is to an Affiliate of such Lender, a processing and
recordation fee of $2,500 payable to Agent by such Eligible
Assignee. Nelson shall not be responsible for such processing
and recordation fee or any costs or expenses incurred
by any Lender or the Agent in connection with such assignment.
From and after the effective date specified in each
Assignment and Acceptance, which effective date shall be at
least five (5) Business Days after the execution thereof, the
assignee thereunder shall be a party hereto and to the extent
of the interest assigned by such Assignment and Acceptance,
have the rights and obligations of a Lender under this
Agreement. Notwithstanding the foregoing, the assigning Lender
must retain after the consummation of such Assignment and
Acceptance, a minimum aggregate amount of Total Commitments of
$10,000,000; provided, however, no such minimum amount shall
be required with respect to any such assignment made at any time
there exists an Event of Default hereunder. Within five (5)
Business Days after receipt of the notice and the
Assignment and Acceptance, Nelson, at its own expense, shall
execute and deliver to the Agent, in exchange for the surrendered
Revolving Credit Note or Revolving Credit Notes, a new
Revolving Credit Note or Revolving Credit Notes to
the order of such assignee in a principal amount
equal to the applicable Total Commitments assumed by
it pursuant to such Assignment and Acceptance and
new Revolving Credit Note or Revolving Credit Notes
to the assigning Lender in the amount of its retained Total
Commitments. Such new Revolving Credit Note or Revolving
Credit Notes shall be dated the date of the surrendered
Revolving Credit Note or Revolving Credit Notes that
they replace, and shall otherwise be in
substantially the forms of the appropriate Revolving
Credit Notes described herein.
(d) Each Lender may, without the consent of Nelson or
the Agent, sell participations to one or more banks or
other entities in all or a portion of its post-
assignment rights and obligations under this Agreement
(including all or a portion of its Total Commitments
in the Revolving Loans owing to it and the Revolving
Credit Notes held by it), provided, however, that (i) no Lender
may sell a participation in its aggregate Total
Commitments (after giving effect to any permitted
assignment hereof) in an amount in excess of fifty
percent (50%) of such aggregate Total Commitments and
any such Lender must retain after consummation of the
sale of such participation a minimum aggregate amount of
Total Commitments of $10,000,000, provided, however, sales
of participations to an Affiliate of such Lender
shall not be included in such calculations;
provided, however, no such limitation shall be
applicable to any such participation sold at any time
there exists an Event of Default hereunder, (ii) such
Lender's obligations under this Agreement shall remain unchanged,
(iii) such Lender shall remain solely responsible to
the other parties hereto for the performance of such
obligations, (iv) the participating bank or other
entity shall not be entitled to the benefit (except
through its selling Lender) of the cost
protection provisions contained in Article III of this Agreement,
and (v) Nelson and the Agent and other Lenders shall
continue to deal solely and directly with each Lender in
connection with such Lender's rights and obligations
under this Agreement and the other Credit Documents, and such
Lender shall retain the sole right to enforce the
obligations of Nelson relating to the Revolving
Loans and to approve any amendment, modification or
waiver of any provisions of this Agreement. Any Lender selling a
participation hereunder shall provide prompt written
notice to Nelson of the name of such participant.
(e) Any Lender or participant may, in connection with
the assignment or participation or proposed
assignment or participation, pursuant to this Section
14.06(e), disclose to the assignee or participant or
proposed assignee or participant any information
relating to Nelson or the other Consolidated
Companies furnished to such Lender by or on behalf of Nelson or
any other Consolidated Company. With respect to any
disclosure of confidential, non-public, proprietary
information, such proposed assignee or participant
shall agree to use the information only for the
purpose of making any necessary credit judgments with
respect to the Revolving Loan Commitments and not to use the
information in any manner prohibited by any law,
including without limitation, the securities laws of the
United States. The proposed participant or assignee
shall agree not to disclose any of such information
except (i) to directors, employees, auditors or counsel
to whom it is necessary to show such information, each
of whom shall be informed of the confidential nature of the
information, (ii) in any statement or testimony
pursuant to a subpoena or order by any court,
governmental body or other agency asserting jurisdiction
over such entity, or as otherwise required by law
(provided prior notice is given to Nelson and the Agent
unless otherwise prohibited by the subpoena, order or law),
and (iii) upon the request or demand of any
regulatory agency or authority with proper
jurisdiction. The proposed participant or assignee
shall further agree to return all documents or other
written material and copies thereof received from any Lender, the
Agent or Nelson relating to such confidential
information unless otherwise properly disposed of by
such entity.
(f) Any Lender may at any time assign all or any portion
of its rights in this Agreement and the Revolving
Credit Notes issued to it to a Federal Reserve Bank;
provided that no such assignment shall release the
Lender from any of its obligations hereunder.
(g) If (i) any Taxes referred to in Section 3.07(b)
have been levied or imposed so as to require
withholdings or deductions by Nelson and payment by
Nelson of additional amounts to any Lender as a
result thereof, (ii) any Lender shall make demand for
payment of any material additional amounts as
compensation for increased costs pursuant to Section 3.10 or for
its reduced rate of return pursuant to Section 3.16, or
(iii) any Lender shall decline to consent to a
modification or waiver of the terms of this
Agreement or the other Credit Documents requested
by Nelson, then and in such event, upon request from Nelson
delivered to such Lender and the Agent, such Lender shall
assign, in accordance with the provisions of Section 14.06(c),
all of its rights and obligations under this Agreement
and the other Credit Documents to another Lender or an
Eligible Assignee selected by Nelson, in
consideration for the payment by such assignee to the
Lender of the principal of, and interest on, the
outstanding Revolving Loans accrued to the date of such
assignment, and the assumption of such Lender's Total
Commitment hereunder, together with any and all other
amounts owing to such Lender under any provisions of
this Agreement or the other Credit Documents accrued to
the date of such assignment.
Section 14.07. Governing Law; Submission to
Jurisdiction. (a) THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER AND UNDER THE
REVOLVING CREDIT NOTES SHALL BE CONSTRUED IN ACCORDANCE
WITH AND BE GOVERNED BY THE LAW (WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF) OF THE STATE OF
TENNESSEE.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT, THE REVOLVING CREDIT NOTES OR ANY
OTHER CREDIT DOCUMENT MAY BE BROUGHT IN THE
CHANCERY COURTS FOR DAVIDSON COUNTY, TENNESSEE OR
IN THE FEDERAL COURTS FOR THE MIDDLE DISTRICT OF
TENNESSEE, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, NELSON HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS. THE PARTIES
HERETO HEREBY IRREVOCABLY WAIVE TRIAL BY JURY, AND
NELSON HEREBY IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS,
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF
ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE
JURISDICTIONS.
(c) NELSON 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 NELSON AT ITS SAID ADDRESS, SUCH SERVICE
TO BECOME EFFECTIVE THIRTY (30) DAYS AFTER SUCH
MAILING.
(d) Nothing herein shall affect the right of the Agent,
any Lender, any holder of a Revolving Credit Note or any
Credit Party to serve process in any other manner
permitted by law or to commence legal proceedings or
otherwise proceed against Nelson in any other
jurisdiction.
Section 14.08. Independent Nature of Lenders, Rights.
The amounts payable at any time hereunder to each Lender
shall be a separate and independent debt, and each
Lender shall be entitled to protect and enforce its
rights pursuant to this Agreement and its Revolving
Credit Notes, and it shall not be necessary for any other Lender
to be joined as an additional party in any
proceeding for such purpose.
Section 14.09. Counterparts. This Agreement 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 an
original, but all of which shall together constitute
one and the same instrument.
Section 14.10. Effectiveness; Survival. (a) This
Agreement shall become effective on the date on which all
of the parties hereto shall have executed a copy
hereof (whether the same or different copies) and
shall have delivered the same to the Agent pursuant to
Section 14.01 or, in the case of the Lenders, shall
have given to the Agent written or telex notice (actually
received) that the same has been executed and mailed to
them.
(b) The obligations of Nelson under Section
3.07(b), Section 3.10, Section 3.12, Section 3.16 and
Section 14.04 shall survive the payment in full of the
Revolving Credit Notes after the Final Maturity Date.
All representations and warranties made herein, in the
certificates, reports, notices and other documents
delivered pursuant to this Agreement shall survive the execution
and delivery of this Agreement, the other Credit
Documents, and such other agreements and documents, the
making of the Revolving Loans hereunder, and the
execution and delivery of the Revolving Credit Notes.
Section 14.11. Severability. In case any provision in
or obligation under this Agreement or the other Credit
Documents shall be invalid, illegal or unenforceable,
in whole or in part, in any jurisdiction, the validity,
legality and enforceability of the remaining provisions
or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be
affected or impaired thereby.
Section 14.12. Independence of Covenants. All
covenants hereunder shall be given independent effect
so that if a particular action or condition is not
permitted by any of such covenants, the fact that it
would be permitted by an exception to, or be otherwise
within the limitation of, another covenant, shall not
avoid the occurrence of a Default or an Event of
Default if such action is taken or condition exists.
Section 14.13. Change in Accounting Principles, Fiscal
Year or Tax Laws. If (a) any preparation of the financial
statements referred to in Section 9.07 hereafter
occasioned by the promulgation of rules, regulations,
pronouncements and opinions by or required by the
Financial Accounting Standards Board or the American
Institute of Certified Public Accountants (or successors
thereto or agencies with similar functions) (other than changes
mandated by FASB-106) result in a material change in
the method of calculation of financial covenants, standards or
terms found in this Agreement, (b) there is any change
in Nelson's fiscal quarter or fiscal year, or (c)
there is a material change in federal tax laws that
materially affects any of the Consolidated Companies'
ability to comply with the financial covenants,
standards or terms found in this Agreement, Nelson and the
Required Lenders agree to enter into negotiations in
order to amend such provisions so as to equitably
reflect such changes with the desired result that the
criteria for evaluating any of the Consolidated
Companies' financial condition shall be the same after
such changes as if such changes had not been made. Unless
and until such provisions have been so amended, the provisions
of this Agreement shall govern.
Section 14.14. Headings Descriptive; Entire Agreement.
The headings of the several Sections and subsections
of this Agreement are inserted for convenience only
and shall not in any way affect the meaning or
construction of any provision of this Agreement. This
Agreement, the other Credit Documents, and the
agreements and documents required to be delivered pursuant to the
terms of this Agreement constitute the entire agreement
among the parties hereto and thereto regarding the
subject matters hereof and thereof and supersede all
prior agreements, representations and understandings
related to such subject matters.
Section 14.15. Interest. The parties to this
Agreement intend to conform strictly to applicable usury
laws as presently in effect. Accordingly, if the
transactions contemplated hereby would be usurious under
applicable law (including the laws of the United States
of America and the State of Tennessee), then, in that
event, notwithstanding anything to the contrary in any
Credit Document or agreement executed in connection with or
as security for any of the Revolving Credit Notes,
Nelson and Lenders agree as follows: (a) the aggregate
of all consideration that constitutes interest under
applicable law which is contracted for, charged or
received under any of the Revolving Credit Notes, this
Agreement or any of the other Credit Documents or
agreements, or otherwise in connection with the Revolving
Credit Notes, shall under no circumstances exceed the
maximum lawful rate of interest permitted by
applicable law, and any excess shall be credited on the
applicable Revolving Credit Notes by the holder thereof
(or, if the Revolving Credit Notes shall have been
paid in full, refunded to Nelson); and (b) in the event
that the maturity of any of the Revolving Credit Notes is
accelerated by reason of an election of the holder
resulting from any Event of Default under this Agreement
or otherwise, or in the event of any required or
permitted prepayment, then such consideration that
constitutes interest may never include more than the
maximum amount of interest permitted by applicable law,
and excess interest, if any, for which this Agreement provides,
or otherwise, shall be cancelled automatically as of the
date of such acceleration or prepayment and, if
previously paid, shall be credited on the applicable Revolving
Credit Notes (or, if the Revolving Credit Notes shall
have been paid in full, refunded to Nelson).
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed and delivered in
Nashville, Tennessee, by their duly authorized
officers as of the day and year first above written.
Address for Notices: THOMAS NELSON, INC.
P.O. Box 141000
Nashville, Tennessee 37214 By: /s/ Joe L. Powers
Attention: Joe L. Powers,
Executive Vice Title: Executive Vice President
President and Chief
Financial Officer
Address for Notices: SUNTRUST BANK, NASHVILLE, N. A.
(formerly known as Third National
Bank in Nashville), As Agent
P.O. Box 305110
Nashville, TN 37230-5110 By: /s/ J. Fred Turner
Attention: Fred Turner
Title: First Vice President
Telecopy No.: 615-748-5161
Payment Office:
P.O. Box 305110
Nashville, TN 37230-5110
Attention: Fred Turner
Address for Notices: SUNTRUST BANK, NASHVILLE, N. A.
(formerly known as Third National
Bank in Nashville)
P.O. Box 305110
Nashville, TN 37230-5110 By: /s/ J. Fred Turner
Attention: Fred Turner
Title: First Vice President
Telecopy No.: 615-748-5161
Payment Office:
P.O. Box 305110
Nashville, TN 37230-5110
Attention: Fred Turner
REVOLVING LOAN COMMITMENT: $45,500,000
PRO RATA SHARE OF REVOLVING
LOAN COMMITMENTS: 26%
Address for Notices: NATIONAL CITY BANK, KENTUCKY
(formerly known as First National
Bank of Louisville)
101 South Fifth St.
7th Floor By: /s/ Cheryl Mennen
Louisville, KY 40202
Attention: Cheryl L. Mennen Title: Assistant Vice President
Telecopy No.: 502-581-5122
Payment Office:
101 South Fifth St.
7th Floor
Louisville, KY 40202
Attention: Cheryl L. Mennen
REVOLVING LOAN COMMITMENT: $29,750,000
PRO RATA SHARE OF REVOLVING
LOAN COMMITMENTS: 17%
Address for Notices: FIRST AMERICAN NATIONAL BANK
National Division
Nashville, TN 37237-0310 By: /s/ Scott M. Bane
Attention: Scott M. Bane
Vice President Title: Senior Vice President
Telex No.: 6823023
Telephone No.: 615-736-6206
Telecopy No.: 615-748-2485
Payment Office:
327 Union Street
Nashville, TN 37237-0310
Attention: Fernisa Joy
Commercial Loan Operations
Telephone No.: 615-736-6747
Telecopy No.: 615-748-2184
REVOLVING LOAN COMMITMENT: $35,000,000
PRO RATA SHARE OF REVOLVING
LOAN COMMITMENTS: 20%
<PAGE>
Address for Notices: NATIONSBANK OF TEXAS, N.A.
901 Main Street, 64th Floor
Dallas, TX 75283 By: /s/ Jay S. Tweed
or Title: Vice President
P.O. Box 831000
Dallas, TX 75283
Attention: Gregory Meador
Telex No.: 6829317
Answerback: NationsBK DAL
Telecopy No.: 214-508-0944
Payment Office:
901 Main Street, 64th Floor
Dallas, TX 75283
or
P.O. Box 831000
Dallas, TX 75283
Attention: Gregory Meador
REVOLVING LOAN COMMITMENT: $35,000,000
PRO RATA SHARE OF REVOLVING
LOAN COMMITMENTS: 20%
<PAGE>
Address for Notices: CREDITANSTALT - BANKVEREIN
245 Park Avenue, 27th Floor
New York, New York 10167-0096
Attention: Donato R. Giuseppi By: /s/ Robert Biringer
Telecopy No.: 212/856-1234 Title: Senior Vice President
With a copy to: By: /s/ Joseph R. Longosz
Two Ravinia Drive Title: Vice President
Suite 1680
Atlanta, Georgia 30346
Attention: Joseph P. Longosz
Telecopy No.: 404/390-1851
Payment Office:
245 Park Avenue, 27th Floor
New York, NY 10167-0096
Attention: Sophie Ziegler
Telephone No.: 212/856-1000
Telecopy No.: 212/856-1234
REVOLVING LOAN COMMITMENT: $29,750,000
PRO RATA SHARE OF REVOLVING
LOAN COMMITMENTS: 17%
<PAGE>
EXHIBIT A
FORM OF ASSIGNMENT AND ACCEPTANCE
Reference is made to that certain Amended and Restated Credit
Agreement dated as of December 13, 1995 (as may be
amended, modified or supplemented to the date
hereof, the "Credit Agreement"), among THOMAS NELSON,
INC. as borrower ("Nelson"), the lenders listed on the
signature pages thereof (collectively, the "Lenders"),
and SUNTRUST BANK, NASHVILLE, N. A. (formerly known
as Third National Bank in Nashville) as Agent. Terms
defined in the Credit Agreement are used herein with the
same meanings.
1. Assignor (as identified below) hereby sells and
assigns to Assignee (as identified below), without
recourse against Assignor, and Assignee hereby
purchases and assumes from Assignor, without
recourse against Assignor, effective as of the
Effective Date (as identified below) the interests set forth
below (collectively, the "Assigned Interest"), in
Assignor's rights and obligations under the Credit
Agreement, including without limitation, the below
specified Revolving Loan Commitment of Assignor on the
Effective Date, and the below specified Revolving
Loans owing to Assignor that are outstanding on the
Effective Date, together with unpaid interest accrued on the
assigned Revolving Loans to the Effective Date, and
the amount (if any) set forth below of the fees
referred to in Section 3.05(b) of the Credit Agreement
accrued to the Effective Date for the account of
Assignor. From and after the Effective Date, (a)
Assignee shall be a party to and be bound by the provisions of
the Credit Agreement, and to the extent of the Assigned
Interest, have the rights and obligations of a Lender
thereunder and under the Credit Documents (except for
any such obligations that are due and payable on, or
that become due and payable before, the Effective
Date), and (b) Assignor shall, to the extent of the
Assigned Interest and otherwise to the extent set forth in the
foregoing clause (a), relinquish its rights and be
released from its obligations under the Credit
Agreement and the Credit Documents.
2. Each of the Assignor and the Assignee
represents, warrants and agrees to and with the other
and the Agent as follows: (a) Assignor warrants
that it is the legal and beneficial owner of the
Assigned Interest free and clear of any adverse claim
and that its Revolving Loan Commitment and the
outstanding balances of its Revolving Loans under the Revolving
Loan Commitment, in each case, without giving
effect to assignments thereof which have not become
effective, are as set forth below, (b) except as set
forth in (a), Assignor makes no representation or
warranty and assumes no responsibility with respect
to any statements, warranties or representations made in
or in connection with the Credit Agreement, or the execution,
legality, validity, enforceability, genuineness, sufficiency or
value of the Credit Agreement or any other Credit
Document or any instrument or documents furnished
pursuant thereto, or the financial condition of
Nelson or any other Credit Party or the performance
or observance by any Credit Party of any of its
obligations under the Credit Documents; (c) the Assignee
represents and warrants that it is legally authorized
to enter into this Assignment and Acceptance; (d)
Assignee confirms that it has received a copy of the
Credit Agreement, such financial statements and other
documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter
into this Assignment and Acceptance; (e) Assignee agrees that it
will perform its obligations as a Lender under the
Credit Documents as required by the terms thereof;
and (f) Assignee appoints and authorizes the Agent to
take such actions as agent on its behalf and to
exercise such powers under the Credit Agreement and
the other Credit Documents as are delegated to the Agent
by the terms of the Credit Agreement and the other Credit
Documents, together with such powers as are reasonably
incidental thereto.
3. This Assignment and Acceptance is being delivered to
the Agent, together with (a) the Revolving Credit
Notes evidencing the Revolving Loans included in the
Assigned Interest, and (b) a copy of this Assignment
and Acceptance after it is duly executed by each of the
Assignee and the Assignor.
4. This Assignment and Acceptance shall be governed by
and construed in accordance with the laws of the State
of Tennessee, without regard to the conflict of laws
principles thereof.
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address (Including Telex and Telecopy Numbers) for
Notices:
Assignee's Lending Office:
Effective Date of Assignment (may not be fewer than five (5)
Business Days after the date of the Assignment and
Acceptance):
Percentage of
Principal Amount Facility
Facility Assigned Assigned -
- - ------- ---------------- -------------
Revolving
Loan Facility $ %
Immediately after giving effect to this Assignment and
Acceptance:
(a) The aggregate amount of the Revolving Loan
Commitment of Assignor is .
The terms set forth herein are
hereby agreed to by
, as Assignor.
By:
Name:
Title:
As Assignor
The terms set forth herein are
hereby agreed to by
, as Assignee.
By:
Name:
Title:
As Assignee
CONSENTED TO:
SUNTRUST BANK, NASHVILLE, N. A.
(formerly known as Third
National Bank in Nashville),
as Agent
By:
Name:
Title:
THOMAS NELSON, INC.
By:
Name:
Title:
<PAGE>
EXHIBIT B
FORM OF ESCROW LETTER
[Date]
Thomas Nelson, Inc.
- - ---------------------------
- - ---------------------------
Attention:
Ladies and Gentlemen:
Reference is made to that certain Amended and Restated
Credit Agreement dated as of December 13, 1995 (as it
may be amended and/or restated from time to
time, the "Credit Agreement") by and among Thomas
Nelson, Inc. ("Nelson"), SunTrust Bank, Nashville, N.
A. (formerly known as Third National Bank in Nashville)
as Agent (the "Escrow Agent"), and each of the
financial institutions listed on the signature pages thereto,
together with their successors and assigns
(collectively, the "Lenders"). All capitalized terms
used herein without definition shall have the meanings
assigned to those terms in the Credit Agreement.
By signing in the space provided below, each of Nelson and
the Escrow Agent agree as follows:
1. Nelson hereby establishes with Escrow Agent an account
(Account No. _________) (the "Escrow Account") at its
office in _____________________ and hereby transfers
to the Escrow Agent the sole and exclusive dominion
over and control of the Escrow Account and all property
from time to time deposited therein.
2. The Escrow Agent hereby acknowledges receipt from
Nelson of $________________ (the "Delivered
Funds") in immediately available funds in the Escrow
Account, which delivery is made pursuant to the
requirements of the Credit Agreement.
3. The Delivered Funds shall be deemed to be mandatory
prepayments under the Credit Agreement for purposes of
ownership and to have been relinquished forever by
Nelson. The Escrow Agent shall hold the Delivered Funds
for the account of Lenders pending release pursuant to
Paragraph 4 and the Delivered Funds shall be subject to
a lien in favor of the Escrow Agent for the benefit of
the Lenders. The Escrow Agent shall invest the Delivered Funds;
provided, however, the Escrow Agent may invest the
Delivered Funds only in investments described in
Section 11.05(b), Section 11.05(c) and Section 11.05(d)
of the Credit Agreement or other deposits with any
Lender ("Permitted Investments"). All earnings on the Delivered
Funds (the "Investment Earnings") shall be for the
account of Nelson. The Escrow Agent shall not be liable to
Nelson for any loss suffered in connection with any
investment of funds made by it in accordance with this
letter agreement.
4. On the earliest date following the date hereof on which
an Interest Period with respect to a LIBOR Advance
pursuant to the relevant Revolving Loan Commitment
ends, the Escrow Agent shall release the Delivered
Funds or relevant portion thereof to the Escrow Agent
or the Lender, as appropriate, for application to the
prepayment of the relevant Revolving Loan Commitment in
accordance with the terms thereof. If after such application the
full amount of the required prepayment has not been
made, the Escrow Agent shall hold the remaining
Delivered Funds until the next occurring ending
date(s) for Interest Period(s) on LIBOR Advances under
the relevant Revolving Loan Commitment, on which
date(s) the Escrow Agent shall similarly release such remaining
Delivered Funds for application as aforesaid. Such
application by the Escrow Agent shall continue until
the full amount of the required prepayment has been
made, at which time all remaining Investment Earnings
shall be distributed to Nelson for application
as Nelson may determine.
5. Nelson agrees to indemnify the Escrow Agent, and its
officers, directors, employees and agents, in connection
with any actions taken or omitted to be taken by it
in its capacity as Escrow Agent under this letter
agreement, to the same extent that each Lender is
indemnified pursuant to Section 14.04 of the Credit
Agreement. The provisions of this Paragraph 5 shall
survive the termination of this letter agreement.
6. In order to induce the Escrow Agent to act hereunder,
Nelson agrees that:
(a) The duties and obligations of the Escrow Agent are
those herein specifically provided and no other.
The Escrow Agent shall not have any liability under,
nor duty to inquire into, the terms and
provisions of any agreement or instrument,
other than this letter agreement and the Credit
Agreement. Escrow Agent's duties are ministerial in nature
and the Escrow Agent shall not incur any liability
whatsoever other than for its own willful
misconduct or gross negligence.
(b) The Escrow Agent shall not incur any liability for
following the instructions herein contained or
expressly provided for in written instructions
given by all of the parties hereto.
(c) The Escrow Agent shall not have any responsibility
for the genuineness or validity of any document
or other material presented to or deposited with
Escrow Agent nor any liability for any action taken,
suffered or omitted in accordance with any
written instructions or certificates given to
Escrow Agent hereunder and believed by Escrow Agent
to be signed by the proper party or parties.
(d) The Escrow Agent may consult with counsel of its
choice, including in-house counsel, and shall not
be liable for any action taken, suffered or omitted
by Escrow Agent in accordance with the advice of
such counsel; provided, however, that the Escrow
Agent shall be liable for its own gross negligence
or wilful misconduct.
(e) If the Escrow Agent shall be uncertain as to its
duties or rights hereunder or shall receive
instructions, claims or demands from any party
hereto which, in its opinion, conflict with any
of the provisions of this letter agreement, Escrow
Agent shall be entitled to refrain from taking
any action and its sole obligation shall be to keep
all property held in escrow until Escrow Agent shall be
directed otherwise in writing by all of the other
parties hereto and the Required Lenders or by a
final order or judgment of a court of competent
jurisdiction.
(f) The Escrow Agent shall not be required to institute
legal proceedings of any kind and shall not be
required to initiate or defend any legal
proceedings that may be instituted against it in
respect of the subject matter of this letter
agreement. If the Escrow Agent does elect to act,
Escrow Agent will do so only to the extent that Escrow Agent
is indemnified to its satisfaction against the cost
and expense of such defense or initiation.
(g) The Escrow Agent shall not be bound by any
modification, amendment, termination,
cancellation, rescission or supersession of this
letter agreement unless the same shall be in
writing and signed by all of the other parties
hereto and the Required Lenders and, if Escrow
Agent's rights, duties, immunities or indemnities as Escrow
Agent are affected thereby, unless Escrow Agent shall
have given its prior written consent thereto.
(h) This letter agreement sets forth exclusively the
duties of the Escrow Agent with respect to any
and all matters pertinent hereto and no implied
duties or obligations shall be read into this
letter agreement against the Escrow Agent.
7. The Escrow Agent shall have all rights and remedies
with respect to the Delivered Funds of a secured
party under applicable law.
8. THIS LETTER AGREEMENT SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF TENNESSEE.
9. This letter agreement may be executed and accepted
in any number of counterparts, each of which
counterparts, when so executed and delivered, shall be
deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same
agreement.
Very truly yours,
ESCROW AGENT
SUNTRUST BANK, NASHVILLE, N.A.
(formerly known as Third National
Bank in Nashville)
By:_____________________________
Name:___________________________
Title:__________________________
AGREED TO THIS ____ DAY
OF __________________, 19__:
THOMAS NELSON, INC.
By:_____________________________
Name:___________________________
Title:__________________________
<PAGE>
Exhibit C
Document evidencing the
name change from International Cassette Corp.
to TNI Cassette Corp.
Exhibit D
Document evidencing the name change
From Word (UK) Limited to Nelson Word Limited
See Exhibit A to the Secretary's Certificate for Nelson Word
Limited required by Section 4.01 of the Amended and
Restated Credit Agreement to which this Exhibit D is
attached.
EXHIBIT E
Evidence of
SunTrust Ten Million Dollar Revolving Credit Facility
AMENDED AND RESTATED
REVOLVING CREDIT
PROMISSORY NOTE
Nashville, Tennessee $10,000,000.00
November 30, 1992
Amended November 30, 1993
Amended May 17, 1994
Amended May 24, 1995
Amended and restated
December 13, 1995 to
be effective as of
July 25, 1995
WHEREAS, THOMAS NELSON, INC., a Tennessee corporation (the
"Borrower"), executed a certain Revolving Credit
Promissory Note in the original principal amount of up
to $5,000,000.00 dated November 30, 1992 and payable
to the order of SunTrust Bank, Nashville, N. A.
(formerly known as Third National Bank in
Nashville) ("Lender"), as amended by First Amendment to Revolving
Credit Promissory Note dated November 30, 1993, as
further amended by Second Amendment to Revolving
Credit Promissory Note dated May 17, 1994, and as
further amended by Third Amendment to Revolving Credit
Promissory Note dated May 24, 1995 (as amended to
date, the "Original Note");
WHEREAS, Borrower has requested that Lender modify the
Original Note to increase the amount available under the
Original Note from $5,000,000.00 to up to
$10,000,000.00, and Lender is willing to modify the
Original Note upon the terms contained herein.
The parties therefore wish to amend and restate the Original
Note in its entirety as follows:
NOW, THEREFORE, FOR VALUE RECEIVED, THOMAS NELSON, INC., a
Tennessee corporation (the "Borrower"), promises and
agrees to pay to the order of SUNTRUST BANK,
NASHVILLE, N. A. (formerly known as Third National
Bank in Nashville) (the "Lender") at its offices in
Nashville, Tennessee, or at such other place as may be
designated in writing by the holder, in lawful money of the
United States of America, the principal sum of up to Ten
Million and No/100 Dollars ($10,000,000.00), together
with interest on the unpaid principal balance
outstanding from time to time hereon computed from the
date hereof until the Maturity Date (as hereinafter
defined), at a varying rate of interest that is equal to
the base rate of interest from time to time charged by Lender.
Interest for each year shall be computed based upon a 360-day
year. The "base rate of interest" is defined as that
rate of interest established from time to time and
announced by Lender as its "base rate," such rate
being an interest rate used as an index for
establishing interest rates on loans. The rate of
interest provided herein shall be determined daily to reflect
changes in the base rate of interest charged by Lender
as such base rate of interest may change from time
to time. Interest shall be paid to the Lender on the
first (1st) day of each month for the preceding month
(or portion thereof) following the date of execution
until the Maturity Date. This Note shall mature July 30,
1997 (the "Maturity Date"), at which time all outstanding
principal, accrued interest and other amounts owed
hereunder shall be due and payable in full to
Lender in immediately available funds. This Note
may be renewed for a subsequent period of one (1)
year at Lender's sole option.
Provided Borrower is not in default under the terms of this
Note, the Letter Agreement (as hereinafter defined) or
the Credit Agreement (as hereinafter defined), prior to
the Maturity Date, Borrower may borrow, repay, reborrow
and repay hereunder up to the principal amount of this
Note.
Notwithstanding any provision to the contrary, it is the
intent of the Lender, the Borrower, and all parties
liable on this Note, that neither the Lender nor
any subsequent holder shall be entitled to receive,
collect, reserve or apply, as interest, any amount
in excess of the maximum lawful rate of interest
permitted to be charged by applicable law or
regulations, as amended or enacted from time to time. In the
event the Note calls for an interest payment that
exceeds the maximum lawful rate of interest then
applicable, such interest shall not be received,
collected, charged, or reserved until such time as that
interest, together with all other interest then
payable, falls within the then applicable maximum lawful rate of
interest. In the event the Lender, or any subsequent
holder, receives any such interest in excess of the
then maximum lawful rate of interest, such amount
which would be excessive interest shall be deemed a
partial prepayment of principal and treated hereunder
as such, or, if the principal indebtedness evidenced
hereby is paid in full, any remaining excess funds shall
immediately be paid to the Borrower. In determining
whether or not the interest paid or payable, under any
specific contingency, exceeds the maximum lawful rate of
interest, the Borrower and the Lender shall, to the
maximum extent permitted under applicable law, (a)
exclude voluntary prepayments and the effects thereof,
and (b) amortize, prorate, allocate, and spread, in equal parts,
the total amount of interest throughout the entire
term of the indebtedness; provided that if the
indebtedness is paid in full prior to the end of the
full contemplated term hereof, and if the interest
received for the actual period of existence hereof
exceeds the maximum lawful rate of interest, the holder of the
Note shall refund to the Borrower the amount of such excess or
credit the amount of such excess against the principal
portion of the indebtedness as of the date it was
received, and, in such event, the Lender shall not be
subject to any penalties provided by any laws for
contracting for, charging, reserving, collecting or
receiving interest in excess of the maximum lawful rate of
interest.
Privilege is reserved to pay all or part of the indebtedness
at any time before the Maturity Date without penalty.
Any such payment shall be applied first to accrued
interest and secondly to principal.
Principal and unpaid interest bear interest following any
default in payment of principal and interest as herein
provided at the maximum lawful rate of interest
permitted by law until paid. In case of suit, or if
this obligation is placed in an attorney's hands for
collection, or to protect the security for its
payment, the undersigned will pay all costs of collection and
litigation, including a reasonable attorney's fee.
In the event that (a) there occurs any breach of any promise
made in this Note, in the Letter Agreement by and
between Borrower and Lender of even date herewith (as
it may be amended and/or restated from time to time,
the "Letter Agreement"), in the Amended and Restated
Credit Agreement by and among Borrower, the lenders
listed therein and Lender, as Agent, of even date
herewith (as it may be amended and/or restated from time to time,
the "Credit Agreement"), or in any other document
relating to, securing, or otherwise executed in
connection with the Note; or (b) any party liable
hereon shall (i) petition any court for an order of
relief under any Chapter of the Federal Bankruptcy Code
or (ii) be generally unable to pay its debts as they become due,
(iii) file, or consent to the filing against it of, a
petition for relief or reorganization or arrangement
or any petition in bankruptcy for liquidation or to
take advantage of any bankruptcy or insolvency law of
any jurisdiction, (iv) make an assignment for the
benefit of its creditors, (v) consent to the appointment
of a custodian, receiver, trustee, or other officer with similar
powers of any substantial part of its property, or (vi)
initiate any action for the purpose of the foregoing;
or (c) a court or governmental authority of competent
jurisdiction shall enter an order, without the consent
of any party liable hereon, appointing a custodian,
receiver, trustee, or other officer with similar
powers with respect to such party 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 (d) the dissolution, winding-up or liquidation
of any partnership or corporation liable hereon; or (e)
any party liable hereon becomes insolvent (each, an
"Event of Default"); then, in any of such Events of Default,
at the option of the holder, the entire indebtedness
hereby evidenced shall become due, payable and
collectible then or thereafter, without notice, as the
holder may elect regardless of the Maturity Date. The
holder may waive any Event of Default before or after the same
has been declared and restore this Note to full force
and effect without impairing any rights hereunder,
such right of waiver being a continuing one.
The makers, endorsers, guarantors and all parties to his
Note and all who may become liable for same,
ointly and severally waive presentment for
payment, protest, notice of protest, notice of
nonpayment of this Note, demand and all legal diligence
in enforcing collection, and hereby expressly agree
that the lawful owner or holder of this Note may defer or
postpone collection of the whole or any part
thereof, either principal and/or interest, or may
extend or renew the whole or any part thereof, either
principal and/or interest, or may accept additional
collateral or security for the payment of this Note,
or may release the whole or any part of any collateral security
and/or liens given to secure the payment of this Note,
or may release from liability on account of this Note
any one or more of the makers, endorsers, guarantors
and/or other parties thereto, all without notice to
them or any of them; and such deferment, postponement,
renewal, extension, acceptance of additional
collateral or security and/or release shall not in any way affect
or change the obligation of any such maker, endorser,
guarantor or other party to this Note, or of any who
may become liable for the payment thereof.
The Borrower shall pay a "late charge" of five percent (5%)
of any payments of principal and/or interest due when
paid after the due date thereof (provided that in no
event shall said "late charge" result in the payment
of interest in excess of the maximum lawful rate of
interest permitted by applicable law), to cover the
extra expenses involved in handling delinquent
payments.
The term "maximum lawful rate of interest" as used herein
shall mean a rate of interest equal to the higher or
greater of the following: (a) the "applicable
formula rate" defined in Tennessee Code Annotated
Section 47-14-102(2), or (b) such other rate of
interest as may be charged under other applicable laws or
regulations.
This Note is an unsecured Note.
This Note amends and restates that certain Revolving Credit
Promissory Note in the original principal amount of
up to $5,000,000.00 executed November 30, 1992 by
Borrower and payable to Lender, as amended by First
Amendment to Revolving Credit Promissory Note dated
November 30, 1993, as further amended by Second Amendment to
Revolving Credit Promissory Note dated May 17, 1994,
and as further amended by Third Amendment to Revolving
Credit Promissory Note dated May 24, 1995, and does not
constitute a novation of such original note or the
indebtedness evidenced thereby.
This Note has been executed and delivered in, and shall be
governed by and construed according to the laws of the
State of Tennessee except to the extent pre-empted by
applicable laws of the United States of America.
This Note may not be changed or terminated without the prior
written approval of the Lender and the Borrower. No
waiver of any term or provision hereof shall be valid
unless in writing signed by the holder.
Executed as of the 13th day of December, 1995 to be effective
as of July 25, 1995.
THOMAS NELSON, INC.
By:
Title:
Agreed to by:
SunTrust Bank, Nashville, N.A.
(formerly known as Third National
Bank in Nashville)
By:
Title:
SCHEDULE 4.01(h)
UCC Search Locations
1. Nashville, Davidson County, Tennessee
2. Atlanta, Fulton County, Georgia
3. Miami, Dade County, Florida
4. Camden, Camden County, New Jersey
5. Winona Lake, Kosciasko County, Indiana
6. Waco, McLennan County, Texas
7. Dallas, Dallas County, Texas
8. Richmond, British Columbia, Canada
9. Milton Keynes, England, U.K.
10. Cherryville, Gaston County, North Carolina
11. Beacon Falls, New Haven County, Connecticut
12. Guilford, New Haven County, Connecticut
13. Clifton, Passaic County, New Jersey
14. Norwalk, Fairfield County, Connecticut
15. Scarborough, Ontario, Canada
16. New York City, New York County, New York
SCHEDULE 6.01
Material Subsidiaries
Percent of Capital
Jurisdiction Stock Owned by Nelson or
Subsidiary Organization a Subsidiary Thereof
- - ---------- ------------ ------------------------
Word, Incorporated Delaware 100%
PPC, Inc. North Carolina 100%
Editorial Caribe,
Inc. Florida 100%
Morningstar Radio
Network, Inc. Texas 80%
Nelson Word Limited United Kingdom 100%
Word Communications,
Ltd. Canada, British 100%
Columbia
Word Direct, Inc. Texas 100%
Word Direct Partners,
L.P. Texas 100%
The C.R. Gibson
Company Delaware 100%
855763 Ontario
Limited Canada, Ontario 100%
SCHEDULE 6.05
Pending or Threatened Litigation
NONE
SCHEDULE 6.08(a)
Environmental Compliance
NONE
SCHEDULE 6.08(b)
Environmental Notices
NONE
SCHEDULE 6.08(c)
Environmental Permits
NONE
SCHEDULE 6.11
Burdensome Restrictions
NONE
SCHEDULE 6.12
Tax Filings and Payments
Nelson is in the process of registering for all necessary
Canadian General Sales Tax ("G.S.T.") and Provincial
Sales Tax ("P.S.T.") certifications necessary for
Nelson's third party fulfillment vendors in the U.S.
to collect Canadian GST and/or PST on mail order
shipments to Canadian customers. Annual remittance
under these registrations is anticipated to be less
than $80,000 (Canadian), and any amounts collected to date are
reflected on the U.S. consolidated books and records of
Nelson.
<PAGE>
SCHEDULE 6.13
Subsidiaries
Word, Incorporated
PPC, Inc.
Editorial Caribe, Inc.
Morningstar Radio Network, Inc.
Nelson Word Limited
Word Communications, Ltd.
Word Direct, Inc.
Word Direct Partners, L.P.
The C.R. Gibson Company
855763 Ontario Limited
Elm Hill Press, Inc.
Nelson Acquisition Corp.
Triunity, Inc.
Thomas Nelson Export, Inc.
Thomas Nelson Service Corp.
Royal Publishers, Inc.
Dominion Publishers, Inc.
Nelson Media, Inc.
Nelson Communications, Inc.
TNI Cassette Corporation
C.R. Gibson Catalogue, Inc.
American Sings, Inc.
American Bible Company, Inc.
Lars Desert Oasis
Suncare Products, Inc.
CRG Acquisition, Inc.
Word Direct Marketing
Services, Inc.
<PAGE>
SCHEDULE 6.14
Leases
Premises Landlord Documents
- - -------- -------- ---------
13670 North Meridian Flynn & Zinkan Lease
Meridian Village Plaza Realty Co. 4/29/94
Carmel, IN 46032
15 Merwin Street R. C. Bigelow, Month to
Norwalk, CT 06850 Inc. Month
796 Bloomfield Ave. P.L.C. Realty Lease
Clifton, NJ 46032 Associates 11/1/93
3400 Pharmacy Ave. Atlantis Real Lease
Unit #12 Estate Corp. 6/1/93
Scarborough, Ontario
Canada M1W3J8
Atlanta Gift Mart Atlanta Gift Lease
230 Spring Street Market, L.P. 9/26/89
Suite 1521 Amend.
Atlanta, GA 30303 4/16/90
Dallas Trade Mart Dallas Market Lease
Room 1058 Center Company, 10/19/94
2100 Stemmons Freeway Ltd.
Dallas, TX 75207
225 Fifth Avenue Chrysantheum First Lease
Suites 303-305 Operating 10/19/93
New York, NY 10010 Corporation
<PAGE>
SCHEDULE 6.15
Employee Benefit Matters
Gibson has, through its subsidiary, CRG Acquisition, Inc.,
administrative and trustee responsibility for the Rytex Company
Employees Pension Plan, a defined benefit pension plan. Gibson
also administers for its employees the C.R. Gibson Company
Employee Stock Ownership Plan and the C.R. Gibson Company
401(k) Savings and Investment Plan.
SCHEDULE 6.16
Intellectual Property Matters
NONE
SCHEDULE 6.17
Ownership of Properties
NONE
SCHEDULE 6.18
Refinanced Indebtedness
NONE
SCHEDULE 6.20
Labor Matters
NONE
SCHEDULE 6.21
Dividend Restrictions
NONE
SCHEDULE 6.23
Second Fiscal Quarter 1995 Calculations
(calculated as of September 30, 1995)
(a) Interest Coverage Ratio 2.6 : 1.00
(b) Funded Debt to Total Capital .445 : 1.00
(c) Senior Funded Debt to Total
Capital .210 : 1.00
<PAGE>
SCHEDULE VIII
Subsidiaries of Thomas Nelson, Inc. Excluded from
Certain Provisions of Amended and Restated
Credit Agreement
Subsidiary Approximate Market Value
of Assets Owned
---------- ------------------------
PART A
Elm Hill Press, Inc. $40,000
Nelson Acquisition Corp. $-0-
Triunity, Inc. $-0-
Thomas Nelson Export, Inc. $-0-
Thomas Nelson Service Corp. $-0-
Royal Publishers, Inc. $-0-
Dominion Publishers, Inc. $-0-
Nelson Media, Inc. $-0-
Nelson Communications, Inc. $-0-
American Sings, Inc. $-0-
CRG Acquisition, Inc. $-0-
Word Direct Marketing
Services, Inc. $-0-
PART B
American Bible Company, Inc. $-0-
Lars Desert Oasis
Suncare Products, Inc. $-0-
TNI Cassette Corporation $200,000
C.R. Gibson Catalogue, Inc. $-0-
<PAGE>
SCHEDULE 11.01(b)
Existing Indebtedness
1. Indebtedness of Nelson in connection with
$2,850,000 Industrial Development Revenue Refunding
Bonds, Series 1990 (Thomas Nelson, Inc. Project) of
the Industrial Development Board of the Metropolitan
Government of Nashville and Davidson County (the
"Board"), as evidenced by:
(a) Loan Agreement dated as of May 1, 1990 from the
Board to Nelson; and
(b) Reimbursement Agreement dated as of May 1, 1990
between Nelson and SunTrust.
2. $5,000,000 Construction Loan from SunTrust to Nelson,
made pursuant to a Construction Loan Agreement dated as
of March 31, 1992 and evidenced by a $5,000,000
Promissory note of the same date.
3. Indebtedness of Nelson in connection with
$1,215,000 Industrial Development Revenue Refunding
Bonds, Series 1976 (Thomas Nelson, Inc. Project) of
the Board, as evidenced by Loan Agreement dated as
of December 1, 1976 from the Board to Nelson.
4. Capitalized lease for computer equipment between
Comdisco, Inc. and Nelson dated December 21, 1990 in
the approximate amount of $1,600,000.
5. The SunTrust Letter of Credit Facility.
6. The National City Bank, Kentucky (formerly known as
First National Bank of Louisville) Letter of Credit
Facility.
7. Promissory note dated June 26, 1989 in the aggregate
principal amount of $2,250,000 from Word
Communications Limited (a British Columbia
corporation) and Word, Incorporated (the parent
corporation of Word Communications Limited).
8. $10,000,000 Loan from Metropolitan Life Insurance
Company to Gibson (to be assumed by Nelson) made
pursuant to a Loan Agreement dated September 21, 1989.
9. $5,000,000 Loan from Metropolitan Life Insurance Company
to Gibson (to be assumed by Nelson) made pursuant to a
Loan Agreement dated June 23, 1994.
10. $55,000,000 of Subordinated Debt evidenced by that
certain Indenture dated as of November 30, 1992,
between Nelson and Boatmen's Trust Company, as
Trustee.
<PAGE>
SCHEDULE 11.02
Existing Liens
1. Liens securing the indebtedness described in Item 1 of
Schedule 11.01(b), including:
a. Deed of Trust from Nelson to A. Stuart Campbell, as
Trustee dated as of May 1, 1990, of record in
Book 8111, page 986, Register's Office for
Davidson County, Tennessee ("RODCT")
b. Collateral Assignment of Rents and Leases dated as
of May 1, 1990 between Nelson and the Board and
Third National Bank in Nashville, of record in Book
8112, page 1, RODCT.
c. UCC-1 Financing Statement showing Nelson as
Debtor and Third National Bank in Nashville as
Secured Party, filed with the Tennessee
Secretary of State as #971857.
2. Liens securing the indebtedness described in Item 2 of
Schedule 11.01(b), including:
a. Tennessee Deed of Trust, Assignment of Rents and
Fixture Filing (Construction Mortgage) dated March
31, 1992 from Nelson to A. Stuart Campbell,
Trustee, for the benefit of Third National Bank in
Nashville, of record in Book 8589, page 428, RODCT.
b. Security Agreement dated as of March 31, 1992
between Nelson and Third National Bank in Nashville.
c. UCC-1 Financing Statement showing Nelson as
Debtor and Third National Bank in Nashville as
secured party, of record in Book 8589, page 448,
RODCT.
d. UCC-1 Financing Statement showing Nelson as
Debtor and Third National Bank in Nashville as
secured party, filed with the Tennessee Secretary
of State as #971857.
3. Liens securing the indebtedness described in Item 3 of
Schedule 11.01(b), including:
a. Deed of Trust from Nelson to Third National Bank in
Nashville, as Trustee, dated as of December 1, 1976,
of record in Book 5099, page 628, RODCT.
b. UCC-1 Financing Statement showing Nelson as
Debtor and Third National Bank in Nashville as
Secured Party, filed with the Tennessee Secretary
of State as #919595.
c. UCC-1 Financing Statement showing Nelson as
Debtor and Third National Bank in Nashville as
Secured Party, of record in Book 5099, page 724,
RODCT.
4. UCC-1 Financing Statement showing Word, Incorporated as
Debtor and Banc One Leasing Corporation as Secured
Party, filed with the Tennessee Secretary of State as
#920537.
5. UCC-1 Financing Statement showing Word, Incorporated as
Debtor and Banc One Leasing Corporation as Secured
Party, filed with the Tennessee Secretary of State as
#956590.
6. UCC-1 Financing Statement showing Word, Incorporated
as Debtor and Vanguard Financial Service Corp. as
Secured Party, filed with the Tennessee Secretary of
State as #898863.
7. UCC-1 Financing Statement showing Printplus Publications,
Inc. as Debtor and Capital Leasing and Financial, Inc. as
Secured Party, filed with the Tennessee Secretary of State
as #949193.
8. UCC-1 Financing Statement showing Nelson as the Debtor and
Comdisco, Inc. (Hitachi Credit as assignee) as Secured
Party, filed with the Tennessee Secretary of State as
#857974.
9. UCC-1 Financing Statement showing Nelson as Debtor and
Comdisco, Inc. as Secured Party, filed with the Tennessee
Secretary of State as #864520.
10. UCC-1 Financing Statement showing Nelson as Debtor and
Capitol Systems, Inc. (Contel Credit Corporation as
assignee) as Secured Party, filed with the Tennessee
Secretary of State as #688961.
11. UCC-1 Financing Statement showing Editorial Caribe, Inc.
as the Debtor and Latin America Mission Publications,
Incorporated as the Secured Party, filed with the
Florida Secretary of State as # 91 0000186292.
12. UCC-1 Financing Statement showing Editorial Caribe, Inc.
as the Debtor and Garborg's Heart'n Home, Inc. as the
Secured Party, filed with the Florida Secretary of State
as 92 0000164003.
13. UCC-1 Financing Statement showing Morning Star as the
Debtor and John Deere Co. as the Secured Party, filed
with the Florida Secretary of State as #91 0000084244.
14. Liens disclosed in UCC Searches of Nelson in Dade County,
Florida and the Secretary of State of New Jersey.
FIRST AMENDMENT TO AMENDED AND RESTATED
CREDIT AGREEMENT
This FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT
AGREEMENT (this "First Amendment") is entered into effective as
of the 3rd day of January, 1996, by and among THOMAS NELSON,
INC., a Tennessee corporation ("Nelson"), SUNTRUST BANK,
NASHVILLE, N. A. (formerly known as Third National Bank in
Nashville), a national banking association ("SunTrust"), the
other banks and lending institutions listed on the signature
pages hereof and any assignees of SunTrust or such other banks
and lending institutions that become "Lenders" (SunTrust and such
other banks, lending institutions and assignees are referred to
collectively herein as the "Lenders"), and SUNTRUST BANK,
NASHVILLE, N. A. (formerly known as Third National Bank in
Nashville), in its capacity as agent for the Lenders (the
"Agent").
WHEREAS, Lenders and Agent have entered into an Amended and
Restated Credit Agreement dated as of December 13, 1995 with
Nelson (as amended or otherwise modified from time to time, the
"Credit Agreement") wherein Lenders agreed to extend certain
financial accommodations to Nelson;
WHEREAS, Nelson has requested that Lenders amend the Credit
Agreement, and Lenders are willing to modify the Credit
Agreement, upon the terms contained herein.
NOW, THEREFORE, in consideration of the premises and for
other good and valuable consideration, the receipt and adequacy
of which are mutually acknowledged, the parties hereby amend the
Credit Agreement as follows:
1. Defined Terms. All capitalized terms not otherwise
defined in this First Amendment, including its preamble and
recitals, shall have the meanings set forth in the Credit
Agreement. All capitalized terms shall be equally applicable to
the singular and plural forms thereof and to any gender form
thereof.
2. Dividend Amendment. Section 11.04 of the Credit
Agreement is hereby deleted in its entirety and the following
inserted in its place:
"Section 11.04. Dividends, Etc. Declare or pay any dividend
on its capital stock, or make any payment to purchase, redeem,
retire or acquire any of its Subordinated Debt or capital stock
or any option, warrant, or other right to acquire such
Subordinated Debt or capital stock, other than:
(a) dividends payable solely in shares of capital stock;
(b) cash dividends declared and paid, and all other such
payments made, after March 31, 1995 in an aggregate
amount at any time not to exceed the sum of (i)
$5,000,000, plus (ii) fifty percent (50%) of
Consolidated Net Income (or minus one hundred percent
(100%) of Consolidated Net Loss) earned during Nelson's
1995 fiscal year and thereafter on a cumulative basis
(such period to be treated as one accounting period);
(c) dividends payable solely to Nelson by any Subsidiary of
Nelson, provided that the payment of such dividends to
Nelson shall in no event affect the limitations imposed
upon Nelson as set forth in Section 11.04(b);
(d) redemption of Subordinated Debt upon the exercise of
conversion rights contained in the Indenture; and
(e) payment of Subordinated Debt at maturity as set forth
in the Indenture,
provided, however, no such dividend or other payment may be
declared or paid pursuant to Section 11.04(b) unless (A) the full
amount of any mandatory prepayment required by Article II has
been made, and (B) no Default or Event of Default exists at the
time of such declaration or payment, or would exist as a result
of such declaration or payment."
3. Note Purchase Agreement Amendment. Section 9.07(p) and
Section 9.07 (q) of the Credit Agreement are hereby deleted in
their entirety and the following inserted in their place:
"(p) Asset sales. At any time that the aggregate amount of
Asset Sales made by the Consolidated Companies after December 13,
1995 exceeds $2,500,000 (based on the Asset Values), prompt
notice of any additional Asset Sale or related series of Asset
Sales involving Asset Values of $100,000 or more;
(q) Note Purchase Agreement. True and complete copies of
that certain Note Purchase Agreement by and among Nelson, The
Prudential Insurance Company of America and MetLife dated as of
January 3, 1996, together with true and complete copies of any
amendments thereto, promptly upon execution of same; and
(r) Other Information. With reasonable promptness, such
other information about the Consolidated Companies as the Agent
or any Lender may reasonably request from time to time."
4. Senior Debt Amendment. The definition of Senior Debt
set forth in Article I of the Credit Agreement is hereby deleted
in its entirety and the following inserted in its place:
""Senior Debt" shall mean other Indebtedness of Nelson not
to exceed $62,000,000, which Indebtedness shall be (a) on a
parity with the obligations of Nelson and any other Credit Party
arising under this Agreement, the Revolving Credit Notes, the
Guaranty Agreement and all other Credit Documents, and (b) issued
upon terms and conditions (including without limitation matters
regarding interest rates, payment terms, maturities, amortization
schedules, covenants, defaults and remedies) satisfactory in all
respects to the Agent and the Required Lenders, as evidenced by
the written approval of the Agent and Required Lenders; provided,
however that the Consolidated Companies, Lenders and Agent
acknowledge and agree that (i) the terms and conditions of the
Senior Debt shall be no more restrictive than the terms and
conditions of the Revolving Loans, (ii) all Senior Debt shall
provide for the payment of interest only for at least seven (7)
years from the date of issuance (except for Senior Debt in the
principal amount not to exceed $15,000,000 owed to MetLife, which
shall provide for the payment of interest only for at least three
and one-half (3 1/2) years from the date of issuance), and (iii)
the average life of the Senior Debt shall on the date of issuance
be greater than seven (7) years. In no event shall the Senior
Debt be deemed to include the SunTrust Letter of Credit Facility
or the National City Bank, Kentucky (formerly known as First
National Bank of Louisville) Letter of Credit Facility. The
Gibson Debt is included in and shall be a part of the Senior
Debt."
5. Guarantors. Guarantors join in the execution of this
First Amendment for the purpose of consenting to the terms of
this First Amendment, to acknowledge their agreement that the
terms of the Guaranty Agreement shall remain in full force and
effect and to state that no event has occurred and no claim,
offset or other condition exists that would relieve them of their
obligations to Lenders under the Guaranty Agreement.
6. Authority. Nelson and Guarantors represent that the
terms of this First Amendment have been authorized by a duly
adopted resolution of the Board of Directors of Nelson and
Guarantors, respectively.
7. No other Modification. Except as herein modified and
amended, the terms and conditions of the Credit Agreement shall
remain in full force and effect, and nothing herein is intended
to, nor shall it, release, diminish or waive any rights of
Lenders under the Credit Agreement or any other loan documents
executed in connection therewith.
8. Governing Law. This First Amendment shall be governed
by and construed in accordance with the laws of the State of
Tennessee.
9. Counterparts. This Agreement may be executed in
multiple counterparts, and all such executed counterparts shall
constitute the same agreement. It shall not be necessary that the
signatures of all parties be contained on any one counterpart. It
shall be necessary to account for only one such counterpart in
proving the existence or terms of this Agreement.
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
First Amendment as of the date first written above.
THOMAS NELSON, INC.
By: /s/ Joe L. Powers
Title: Executive Vice President
SUNTRUST BANK, NASHVILLE, N. A.
(formerly known as Third National
Bank in Nashville), As Agent
By: /s/ J. Fred Turner
Title: First Vice President
SUNTRUST BANK, NASHVILLE, N. A.
(formerly known as Third National
Bank in Nashville)
By: /s/ J. Fred Turner
Title: First Vice President
NATIONAL CITY BANK, KENTUCKY
(formerly known as First National
Bank of Louisville)
By: /s/ Randall J. Rawe
Title: Sr. Vice President
FIRST AMERICAN NATIONAL BANK
By: /s/ Scott M. Bane
Title: Senior Vice President
NATIONSBANK OF TEXAS, N.A.
By: /s/ Jay S. Tweed
Title: Vice President
CREDITANSTALT - BANKVEREIN
By: /s/ Robert Biringer
Title: Sr. Vice President
By: /s/ Scott Kray
Title: Sr. Associate
GUARANTORS:
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 (formerly known
as Word (UK) Limited)
By: /s/ Joe L. Powers
Title: Director
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
Title: Secretary
855763 ONTARIO LIMITED
By: /s/ Joe L. Powers
Title: Secretary
=========================================================================
THOMAS NELSON, INC.
$50,000,000
$35,000,000 6.90% SERIES A SENIOR NOTES DUE DECEMBER 31, 2007
$15,000,000 6.68% SERIES B SENIOR NOTES DUE DECEMBER 31, 2005
----------------
NOTE PURCHASE AGREEMENT
----------------
Dated as of January 3, 1996<PAGE>
TABLE OF CONTENTS
Section Page
- - ------- ------
1. Authorization of Notes . . . . . . . . . . . . . 1
2. Sale and Purchase of Notes . . . . . . . . . . . 2
3. Closing . . . . . . . . . . . . . . . . . . . . 2
4. Conditions to Closing . . . . . . . . . . . . . 2
4.1. Representations and Warranties . . . . . . 2
4.2. Performance; No Default . . . . . . . . . . 3
4.3. Compliance Certificates; Certificates of
Good Standing/Qualification to Do
Business . . . . . . . . . . . . . . . . . 3
4.4. Opinions of Counsel . . . . . . . . . . . . 3
4.5. Purchase Permitted By Applicable Law, etc. 4
4.6. Payment of Special Counsel Fees . . . . . . 4
4.7. Private Placement Number . . . . . . . . . 4
4.8. Changes in Corporate Structure . . . . . . 4
4.9. Proceedings and Documents . . . . . . . . . 4
4.10.Related Documents . . . . . . . . . . . . . 4
4.11.Bank Agreements . . . . . . . . . . . . . . 5
5. Representations and Warranties of the Company . 5
5.1. Organization; Power and Authority . . . . . 5
5.2. Authorization, etc. . . . . . . . . . . . . 5
5.3. Disclosure . . . . . . . . . . . . . . . . 5
5.4. Organization and Ownership of Shares of
Subsidiaries; Affiliates . . . . . . . . . 6
5.5. Financial Statements . . . . . . . . . . . 7
5.6. Compliance with Laws, Other Instruments,
etc. . . . . . . . . . . . . . . . . . . . 7
5.7. Governmental Authorizations, etc. . . . . . 7
5.8. Litigation; Observance of Agreements,
Statutes and Orders . . . . . . . . . . . . 8
5.9. Taxes . . . . . . . . . . . . . . . . . . . 8
5.10.Title to Property; Leases . . . . . . . . . 8
5.11.Licenses, Permits, etc. . . . . . . . . . . 9
5.12.Compliance with ERISA . . . . . . . . . . . 9
5.13.Private Offering by the Company . . . . . . 10
5.14.Use of Proceeds; Margin Regulations . . . . 11
5.15.Existing Indebtedness; Future Liens . . . . 11
5.16.Foreign Assets Control Regulations,
etc. . . . . . . . . . . . . . . . . . . . 12
5.17.Status under Certain Statutes . . . . . . . 12
5.18.Environmental Matters . . . . . . . . . . . 12
6. Representations of the Purchasers . . . . . . . 12
6.1. Purchase for Investment . . . . . . . . . . 12
6.2. Source of Funds . . . . . . . . . . . . . . 13
7. Information as to Company . . . . . . . . . . . 14
7.1. Financial and Business Information . . . . 14
7.2. Officer s Certificate . . . . . . . . . . . 17
7.3. Inspection . . . . . . . . . . . . . . . . 17
7.4. Bank Agreements . . . . . . . . . . . . . . . . 18
8. Prepayment of the Notes . . . . . . . . . . . . 18
8.2. Optional Prepayments with Yield Maintenance
Amount . . . . . . . . . . . . . . . . . . 19
8.3. Allocation of Partial Prepayments . . . . . 19
8.4. Maturity; Surrender, etc. . . . . . . . . . 20
8.5. Purchase of Notes . . . . . . . . . . . . . 20
8.6. Yield Maintenance Amount . . . . . . . . . 20
9. Affirmative Covenants . . . . . . . . . . . . . 22
9.1. Compliance with Law . . . . . . . . . . . . 22
9.2. Insurance . . . . . . . . . . . . . . . . . 22
9.3. Maintenance of Properties . . . . . . . . . 22
9.4. Payment of Taxes and Claims . . . . . . . . 22
9.5. Corporate Existence, etc. . . . . . . . . . 23
9.6. Covenant to Secure Notes Equally . . . . . 23
9.7. Guaranteed Obligations . . . . . . . . . . 23
9.8. Parity With Bank Agreements . . . . . . . . 23
9.9. Information Required by Rule 144A . . . . . 24
9.10.No Integration . . . . . . . . . . . . . . 24
10. Negative Covenants . . . . . . . . . . . . . . . 24
10.1. Transactions with Affiliates . . . . . . . 24
10.2. Merger, Consolidation, etc . . . . . . . . 24
10.3. Liens . . . . . . . . . . . . . . . . . . 26
10.4. Loans, Advances and Investments . . . . . 28
10.5. Restricted Payments . . . . . . . . . . . 29
10.6. Nature of Business . . . . . . . . . . . . 29
10.7. Sale of Property . . . . . . . . . . . . . 29
10.8. Certain Financial Limits . . . . . . . . . 30
11. Events of Default . . . . . . . . . . . . . . . 31
12. Remedies on Default, Etc. . . . . . . . . . . . 34
12.1. Acceleration . . . . . . . . . . . . . . . 34
12.2. Other Remedies . . . . . . . . . . . . . . 34
12.3. Rescission . . . . . . . . . . . . . . . . 35
12.4. No Waivers or Election of Remedies,
Expenses, etc. . . . . . . . . . . . . . . 35
13. Registration; Exchange; Substitution of Notes. . 35
13.1. Registration of Notes . . . . . . . . . . 35
13.2. Transfer and Exchange of Notes . . . . . . 36
13.3. Replacement of Notes . . . . . . . . . . . 36
14. Payments on Notes . . . . . . . . . . . . . . . 37
14.1. Place of Payment . . . . . . . . . . . . . 37
14.2. Home Office Payment . . . . . . . . . . . 37
15. Expenses, Etc . . . . . . . . . . . . . . . . . 37
15.1. Transaction Expenses . . . . . . . . . . . 38
15.2. Survival . . . . . . . . . . . . . . . . . 38
16. Survival of Representations and Warranties; Entire
Agreement . . . . . . . . . . . . . . . . . . . 38
17. Amendment and Waiver . . . . . . . . . . . . . . 38
17.1. Requirements . . . . . . . . . . . . . . . 38
17.2. Solicitation of Holders of Notes . . . . . 39
17.3. Binding Effect, etc. . . . . . . . . . . . 39
17.4. Notes held by Company, etc. . . . . . . . 40
18. Notices . . . . . . . . . . . . . . . . . . . . 40
19. Reproduction of Documents . . . . . . . . . . . 40
20. Confidential Information . . . . . . . . . . . . 41
21. Miscellaneous . . . . . . . . . . . . . . . . . 42
21.1. Successors and Assigns . . . . . . . . . . 42
21.2. Payments Due on Non-Business Days . . . . 42
21.3. Severability . . . . . . . . . . . . . . . 42
21.4. Construction . . . . . . . . . . . . . . . 42
21.5. Counterparts . . . . . . . . . . . . . . . 42
21.6. Governing Law . . . . . . . . . . . . . . 43
21.7. Waiver of Trial by Jury . . . . . . . . . 43
SCHEDULE A -- INFORMATION RELATING TO PURCHASERS
SCHEDULE B -- DEFINED TERMS
SCHEDULE 5.3 -- Disclosure Materials
SCHEDULE 5.4 -- Subsidiaries of the Company and
Ownership of Subsidiary Stock
SCHEDULE 5.5 -- Financial Statements
SCHEDULE 5.14 -- Use of Proceeds
SCHEDULE 5.15 -- Existing Indebtedness
SCHEDULE 5.18 -- Environmental Matters
EXHIBIT 1-A -- Form of Series A Notes
EXHIBIT 1-B -- Form of Series B Notes
EXHIBIT 4.4(a) -- Form of Opinion of Counsel for the
Company
EXHIBIT 4.4(b) -- Form of Opinion of Special Counsel
for the Company
EXHIBIT 4.4(c) -- Form of Opinion of Special Counsel
for the Purchasers<PAGE>
THOMAS NELSON, INC.
Nelson Place at Elm Hill Pike
P.O. Box 141000
Nashville, Tennessee 37214-1000
January 3, 1996
TO EACH OF THE PURCHASERS LISTED IN THE ATTACHED SCHEDULE A
Ladies and Gentlemen:
Thomas Nelson, Inc., a Tennessee corporation (the "Company"),
agrees with you as follows:
1. Authorization of Notes. The Company will authorize the
issue and sale of its senior promissory notes in the aggregate
principal amount of $50,000,000 as follows:
(i) $35,000,000, to be dated the issue date thereof, to
mature on December 31, 2007, to bear interest on the unpaid
principal balance thereof from the date thereof until the principal
thereof shall have become due and payable at the rate of 6.90% per
annum and on overdue payments at the rate specified therein (the
"Series A Notes", such term to include any notes issued in
substitution therefor pursuant to Section 13 of this Agreement), and
(ii) $15,000,000, to be dated the issue date thereof, to
mature on December 31, 2005, to bear interest on the unpaid
principal balance thereof from the date thereof until the principal
thereof shall have become due and payable at the rate of 6.68% per
annum and on overdue payments at the rate specified therein (the
"Series B Notes", such term to include any notes issued in
substitution therefor pursuant to Section 13 of this Agreement, and
together with the Series A Notes, the "Notes").
The term "Series" shall mean either the Series A Notes or the
Series B Notes, as applicable. The Series A Notes shall be
substantially in the form set out in Exhibit 1-A, and the Series B
Notes shall be substantially in the form set out in Exhibit 1-B, in
each case, with such changes, if any, as may be approved by you
and the Company. Certain capitalized terms used in this Agreement are
defined in Schedule B; references to a "Schedule" or an Exhibit are,
unless otherwise specified, to a Schedule or an Exhibit attached
to this Agreement.
2. Sale and Purchase of Notes. Subject to the terms and conditions
of this Agreement, the Company will issue and sell to you and,
subject to the terms and conditions herein, you will purchase from the
Company, at the Closing provided for in Section 3, the Notes
specified opposite your name in Schedule A in the principal amount
so specified at the purchase price of 100% of the principal amount
thereof. Your obligations hereunder are several and not joint
obligations and you shall have no obligation and no liability to any
Person for the performance or non-performance by any other Person
hereunder.
3. Closing. The sale and purchase of the Notes to be purchased by you
shall occur at the offices of King & Spalding, 120 West 45th Street,
New York, New York 10036, at 10:00 a.m., New York time, (the "Closing")
on January 3, 1996 or on such other Business Day thereafter as
may be agreed upon by the Company and you. At the Closing the
Company will deliver to you
(i) the Series A Notes to be purchased by you in the form of a
single Series A Note (or such greater number of Series A Notes in
denominations of at least $2,000,000 as you may request), and
(ii) the Series B Notes to be purchased by you in the form of a
single Series B Note (or such greater number of Series B Notes in
denominations of at least $2,000,000 as you may request).
In each case, the Notes will be dated the date of the Closing and the
Notes purchased by you will be registered in your name (or in
the name of your nominee), against delivery by you to the Company or
its order of immediately available funds in the amount of the
purchase price therefor by wire transfer of immediately available
funds for the account of the Company to SunTrust Bank, Nashville,
N.A., P.O. Box 305110, Nashville, Tennessee 37250-5110, ABA No.
064000046; Account No. 5885027. If at the Closing, the Company shall
fail to tender such Notes to you as provided above in this Section
3, or any of the conditions specified in Section 4 shall not have
been fulfilled to your satisfaction, you shall, at your election,
be relieved of all further obligations under this Agreement, without
thereby waiving any rights you may have by reason of such
failure or such nonfulfillment.
4. Conditions to Closing. Your obligation to purchase and pay for the
Notes to be sold to you at the Closing is subject to the
fulfillment to your satisfaction, prior to or at the Closing,
of the following conditions:
4.1. Representations and Warranties. The representations and warranties
of the Company in this Agreement shall be correct when made and at the
time of the Closing.
4.2. Performance; No Default. The Company shall have performed and
complied with all agreements and conditions contained in this Agreement
required to be performed or complied with by it prior to or at the
Closing and after giving effect to the issue and sale of the Notes
(and the application of the proceeds thereof as contemplated by
Schedule 5.14) no Default or Event of Default shall have occurred and be
continuing unless waived by you. Neither the Company nor any
Subsidiary shall have entered into any transaction since the date
of the Memorandum that would have been prohibited by Sections 10.1,
10.2, 10.3, 10.5, 10.6, 10.7 and 10.8 hereof had such Sections
applied since such date.
4.3. Compliance Certificates; Certificates of Good Standing/
Qualification to Do Business. (a) Officer's Certificate. The Company
shall have delivered to you an Officer's Certificate, dated the
date of the Closing, certifying that the conditions specified in
Sections 4.1, 4.2, 4.8, 4.10 and 4.11 have been fulfilled.
(b) Secretary s Certificate. The Company shall have delivered
to you a certificate certifying as to the resolutions attached thereto
and other corporate proceedings relating to the authorization,
execution and delivery of the Notes and this Agreement.
(c) Certificates of Good Standing/Qualification to Do Business.
The Company shall have delivered to you good standing certificates
issued by the Secretary of State of the state of incorporation of the
Company and each Material Subsidiary and good standing or other
certificates of qualification to do business as a foreign
corporation for the Company and each Material Subsidiary in each
jurisdiction in which such qualification is required by law,
other than those jurisdictions as to which the failure to be
so qualified or in good standing could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect,
each dated as of a date not more than twenty days prior to the Closing.
4.4. Opinions of Counsel. You shall have received opinions in form
and substance satisfactory to you, dated the date of the Closing (a)
from Stuart Heaton, Esq., counsel for the Company, covering the matters
set forth in Exhibit 4.4(a) and covering such other matters incident to
the transactions contemplated hereby as you or your counsel may
reasonably request (and the Company hereby instructs its counsel to
deliver such opinion to you), (a) from Bass, Berry & Sims, special
counsel for the Company, covering the matters set forth in Exhibit
4.4(b) and covering such other matters incident to the transactions
contemplated hereby as you or your counsel may reasonably request
(and the Company hereby instructs its special counsel to deliver
such opinion to you) and (a) from King & Spalding, your special
counsel in connection with such transactions, substantially in
the form set forth in Exhibit 4.4(c) and covering such other matters
incident to such transactions as you may reasonably request.
4.5. Purchase Permitted By Applicable Law, etc. On the date of the
Closing your purchase of Notes shall (i) be permitted by the laws
and regulations of each jurisdiction to which you are subject,
without recourse to provisions (such as Section 1405(a)(8) of the New
York Insurance Law) permitting limited investments by insurance
companies without restriction as to the character of the particular
investment, (i) not violate any applicable law or regulation
(including, without limitation, Regulation G, T or X of the Board
of Governors of the Federal Reserve System) and (i) not subject you
to any tax, penalty or liability under or pursuant to any applicable
law or regulation, which law or regulation was not in effect on the date
hereof. If requested by you, you shall have received an Officer's
Certificate certifying as to such matters of fact as you may
reasonably specify to enable you to determine whether such purchase is
so permitted.
4.6. Payment of Special Counsel Fees. Without limiting the provisions
of Section 15.1, the Company shall have paid on or before the Closing
the fees, charges and disbursements of your special counsel referred
to in Section 4.4.
4.7. Private Placement Number. A Private Placement number issued by
Standard & Poor's CUSIP Service Bureau (in cooperation with the
Securities Valuation Office of the National Association of Insurance
Commissioners) shall have been obtained for each of the Series A Notes
and the Series B Notes.
4.8. Changes in Corporate Structure. The Company shall not have changed
its jurisdiction of incorporation or been a party to any merger or
consolidation and shall not have succeeded to all or any substantial
part of the liabilities of any other entity, at any time following
the date of the most recent financial statements referred to in
Schedule 5.5 other than in connection with the Company's acquisition of
The C.R. Gibson Company, a Wholly-Owned Subsidiary.
4.9. Proceedings and Documents. All corporate and other proceedings
in connection with the transactions contemplated by this Agreement and
all documents and instruments incident to such transactions shall
be satisfactory to you and your special counsel, and you and your
special counsel shall have received all such counterpart originals or
certified or other copies of such documents as you or they may
reasonably request.
4.10.Related Documents. Each of the Guaranty Agreements, the Pledge
Agreements and the Intercreditor Agreement shall be in full force and
effect on the Closing Date and each party thereto shall be in full
compliance with their respective obligations thereunder.
4.11.Bank Agreements. You shall have received a true, correct and
duly executed copy of each of the Bank Agreements including all
schedules and exhibits thereto and side letters, if any, affecting the
terms thereof or otherwise delivered in connection therewith, together
with all amendments and waivers thereto and any material agreements
executed in connection therewith. The transactions described in the
Bank Agreements which are to occur prior to the date of Closing
shall have been consummated in all material respects in accordance
with the terms and provisions thereof, and no material provision
of the Bank Agreements shall have been amended, supplemented or
otherwise modified or waived without your prior written consent.
5. Representations and Warranties of the Company. The Company
represents and warrants to you that:
5.1. Organization; Power and Authority. The Company is a corporation
duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation, and is duly qualified as a
foreign corporation and is in good standing in each jurisdiction in which
such qualification is required by law, other than those jurisdictions
as to which the failure to be so qualified or in good standing would
not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect. The Company has the corporate power and
authority to own or hold under lease the properties it purports to own
or hold under lease, to transact the business it transacts and proposes
to transact, to execute and deliver this Agreement and the Notes
and to perform the provisions hereof and thereof.
5.2. Authorization, etc. This Agreement and the Notes have been duly
authorized by all necessary corporate action on the part of the
Company, and this Agreement constitutes, and upon execution and
delivery thereof each Note will constitute, a legal, valid and binding
obligation of the Company enforceable against the Company 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 (i) general principles of equity
(regardless of whether such enforceability is considered in a proceeding
in equity or at law).
5.3. Disclosure. The Company, through its agent, SunTrust Capital
Markets, Inc., has delivered to you a copy of a Private Placement
Memorandum, dated November 16, 1995 (together with the documents
attached as addendums thereto, collectively, the "Memorandum"), relating
to the transactions contemplated hereby. The Memorandum fairly
describes, in all material respects, the general nature of the
business and principal properties of the Company and its Subsidiaries.
Except as disclosed in Schedule 5.3, this Agreement, the
Memorandum, the documents, certificates or other writings
delivered to you by or on behalf of the Company in connection
with the transactions contemplated hereby and the financial
statements listed in Schedule 5.5, taken as a whole, do not contain any
untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein not misleading in light
of the circumstances under which they were made. Except as disclosed in
the Memorandum or as expressly described in Schedule 5.3, or in one
of the documents, certificates or other writings identified therein,
or in the financial statements listed in Schedule 5.5, since
March 31, 1995, there has been no change in the financial
condition, operations, business, properties or prospects of the
Company or any Subsidiary except changes that individually or in the
aggregate could not reasonably be expected to have a Material
Adverse Effect. There is no fact peculiar to the Company known to the
Company that could reasonably be expected to have a Material Adverse
Effect that has not been set forth herein or in the Memorandum or
in the other documents, certificates and other writings delivered to
you by or on behalf of the Company specifically for use in connection
with the transactions contemplated hereby.
5.4. Organization and Ownership of Shares of Subsidiaries;
Affiliates. (a) Schedule 5.4 contains (except as noted therein)
complete and correct lists (i) of the Company's Subsidiaries, showing,
as to each Subsidiary, the correct name thereof, the jurisdiction of its
organization, and the percentage of shares of each class of its
Capital Stock or similar equity interests outstanding owned by the
Company and each other Subsidiary, (i) of the Company's Affiliates,
other than Subsidiaries, and (i) of the Company's directors and
senior officers.
(b) All of the outstanding shares of Capital Stock or similar
equity interests of each Guarantor shown in Schedule 5.4 as being owned
by the Company and its Subsidiaries have been validly issued, are
fully paid and nonassessable and are owned by the Company or another
Subsidiary free and clear of any Lien (except as otherwise disclosed in
Schedule 5.4).
(c) Each Guarantor is a corporation or other legal entity
duly organized, validly existing and in good standing under the laws
of its jurisdiction of organization, and is duly qualified as a
foreign corporation or other legal entity and is in good standing
in each jurisdiction in which such qualification is required
by law, other than those jurisdictions as to which the failure
to be so qualified or in good standing could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse
Effect. Each Subsidiary has the corporate or other power and
authority to own or hold under lease the properties it purports to own
or hold under lease and to transact the business it transacts and
proposes to transact.
(d) No Material Subsidiary is a party to, or otherwise
subject to any legal restriction or any agreement (other than the
agreements listed on Schedule 5.4 and customary limitations imposed by
corporate law statutes) restricting the ability of such Material
Subsidiary to pay dividends out of profits or make any other similar
distributions of profits to the Company or any of its Subsidiaries
that owns outstanding shares of Capital Stock or similar equity
interests of such Material Subsidiary.
5.5. Financial Statements. The Company has delivered to you copies
of the financial statements of the Company and its Subsidiaries
listed on Schedule 5.5. All of said financial statements (including
in each case the related schedules and notes) fairly present in all
material respects the consolidated financial position of the
Company and its Subsidiaries as of the respective dates specified in
such Schedule and the consolidated results of their operations and cash
flows for the respective periods so specified and have been prepared in
accordance with GAAP consistently applied throughout the periods
involved except as set forth in the notes thereto (subject, in the
case of any quarterly financial statements, to normal year-end
adjustments and the absence of notes).
5.6. Compliance with Laws, Other Instruments, etc. Neither the
Company nor any Subsidiary is a party to any contract or agreement or
subject to any charter or other corporate restriction which
materially and adversely affects the business, property, assets, or
financial condition of the Company and its Subsidiaries taken as a
whole. Neither the execution nor delivery of this Agreement or the
Notes, nor the offering, issuance and sale of the Notes, nor
fulfillment of nor compliance with the terms and provisions hereof and
of the Notes, will conflict with, or result in a breach of the terms,
conditions or provisions of, or constitute a default under, or result in
any violation of, or result in the creation of any Lien (except for Liens
under the Pledge Agreements) upon any of the properties or assets of the
Company or any Subsidiary pursuant to, the charter or by-laws of
the Company or any Subsidiary, any award of any arbitrator or any
agreement (including any agreement with stockholders), instrument,
order, judgment, decree, statute, law, rule or regulation to which the
Company or any Subsidiary is subject. Except for the Bank Agreements,
neither the Company nor any Subsidiary is a party to, or otherwise
subject to any provision contained in, any instrument evidencing
Indebtedness of the Company or such Subsidiary, any agreement
relating thereto or any other contract or agreement (including its
charter) which limits the amount of, or otherwise imposes
restrictions on the incurring of, Indebtedness of the Company of the
type to be evidenced by the Notes.
5.7. Governmental Authorizations, etc. No consent, approval or
authorization of, or registration, filing or declaration with, any
Governmental Authority is required in connection with the execution,
delivery or performance by the Company of this Agreement or the
Notes.
5.8. Litigation; Observance of Agreements, Statutes and Orders. (a)
There are no actions, suits or proceedings pending or, to the knowledge
of the Company, threatened against or affecting the Company or any
Subsidiary or any property of the Company or any Subsidiary in any
court or before any arbitrator of any kind or before or by any
Governmental Authority that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
(b) Neither the Company nor any Subsidiary is in default under
any term of any agreement or instrument to which it is a party or by
which it is bound, or any order, judgment, decree or ruling of any
court, arbitrator or Governmental Authority or is in violation of any
applicable law, ordinance, rule or regulation (including without
limitation Environmental Laws) of any Governmental Authority, which
default or violation, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
5.9. Taxes. The Company and its Subsidiaries have filed all tax
returns that are required to have been filed in any jurisdiction,
and have paid all taxes shown to be due and payable on such returns
and all other taxes and assessments levied upon them or their
properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have become
delinquent, except for any taxes and assessments (i) the amount of
which is not individually or in the aggregate Material or (i) the
amount, applicability or validity of which is currently being contested
in good faith by appropriate proceedings and with respect to
which the Company or a Subsidiary, as the case may be, has
established adequate reserves in accordance with GAAP. The Company knows
of no basis for any other tax or assessment that could reasonably be
expected to have a Material Adverse Effect. The charges, accruals and
reserves on the books of the Company and its Subsidiaries in respect of
Federal, state or other taxes for all fiscal periods are adequate.
The Federal income tax liabilities of the Company and its Subsidiaries
have been determined by the Internal Revenue Service and paid, or
the statute of limitations applicable to such Federal income tax
liabilities of the Company and its Subsidiaries has expired, for
all fiscal years up to and including the fiscal year ended March 31,
1992.
5.10. Title to Property; Leases. The Company and its Subsidiaries
have good and sufficient title to their respective properties that
individually or in the aggregate are Material, including all such
properties reflected in the most recent audited balance sheet
referred to in Section 5.5 or purported to have been acquired by the
Company or any Subsidiary after said date (except as sold or
otherwise disposed of in the ordinary course of business), in each
case free and clear of Liens prohibited by this Agreement. All
leases that individually or in the aggregate are Material are
valid and subsisting and are in full force and effect in all material
respects.
5.11. Licenses, Permits, etc.
(a) The Company and its Subsidiaries own or possess all
licenses, permits, franchises, authorizations, patents, copyrights,
service marks, trademarks and trade names, or rights thereto, that
individually or in the aggregate are Material, without known conflict
with the rights of others;
(b) to the best knowledge of the Company, no product of the
Company infringes in any material respect any license, permit,
franchise, authorization, patent, copyright, service mark, trademark,
trade name or other right owned by any other Person; and
(c) to the best knowledge of the Company, there is no Material
violation by any Person of any right of the Company or any of its
Subsidiaries with respect to any patent, copyright, service mark,
trademark, trade name or other right owned or used by the Company or any
of its Subsidiaries.
5.12. Compliance with ERISA. (a) The Company and each ERISA Affiliate
have operated and administered each Plan in compliance with all
applicable laws except for such instances of noncompliance as have
not resulted in and could not reasonably be expected to result in a
Material Adverse Effect. Neither the Company nor any ERISA
Affiliate has incurred 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 (as defined in Section 3 of ERISA), and no
event, transaction or condition has occurred or exists that could
reasonably be expected to result in the incurrence of any such liability
by the Company or any ERISA Affiliate, or in the imposition of any Lien
on any of the rights, properties or assets of the Company or any ERISA
Affiliate, in either case pursuant to Title I or IV of ERISA or to
such penalty or excise tax provisions or to Section 401(a)(29) or 412
of the Code, other than such liabilities or Liens as would not be
individually or in the aggregate Material. No liability to the
Pension Benefit Guaranty Corporation has been or is expected by the
Company to be incurred with respect to any Plan (other than
Multiemployer Plan) by the Company or any of its Subsidiaries
which is or would be materially adverse to the Company and its
Subsidiaries taken as a whole. Neither the Company nor any of its
Subsidiaries has incurred or presently expects to incur any withdrawal
liability under Title IV of ERISA with respect to any Multiemployer
Plan which is or would be materially adverse to the Company and its
Subsidiaries taken as a whole.
(b) The present value of the aggregate benefit liabilities
under each of the Plans (other than Multiemployer Plans),
determined as of the end of such Plan s most recently ended plan year
on the basis of the actuarial assumptions specified for funding
purposes in such Plan's most recent actuarial valuation report, did not
exceed the aggregate current value of the assets of such Plan
allocable to such benefit liabilities by such amount that could
reasonably be expected to have a Material Adverse Effect. The term
"benefit liabilities" has the meaning specified in section 4001 of
ERISA and the terms "current value" and "present value" have the meaning
specified in section 3 of ERISA.
(c) The Company and its ERISA Affiliates have not incurred
withdrawal liabilities (and are not subject to contingent withdrawal
liabilities) under section 4201 or 4204 of ERISA in respect of
Multiemployer Plans that individually or in the aggregate are Material.
(d) The expected postretirement benefit obligation (determined as
of the last day of the Company's most recently ended fiscal year in
accordance with Financial Accounting Standards Board Statement No. 106,
without regard to liabilities attributable to continuation coverage
mandated by section 4980B of the Code) of the Company and its
Subsidiaries is not Material.
(e) The execution and delivery of this Agreement and the issuance
and sale of the Notes hereunder will not involve any transaction that
is subject to the prohibitions of section 406 of ERISA or in
connection with which a tax could be imposed pursuant to
section 4975(c)(1)(A)-(D) of the Code. The representation by the
Company in the first sentence of this Section 5.12(e) is made in
reliance upon and subject to the accuracy of your representation
in Section 6.2 as to the sources of the funds used to pay the purchase
price of the Notes to be purchased by you and subject to the assumptions
that (i) neither you nor your affiliates are engaging in a nonexempt
prohibited transaction described in section 406(b) of ERISA by
acquiring the Notes purchased by you hereunder and (ii) that with
respect to the Series A Notes, either (A) the Source described in
Section 6.2 is an insurance company general account within the
meaning of Prohibited Transaction Exemption ("PTE") 95-60 (issued July
12, 1995) or (B) the record keeping requirements of PTE 90-1 (issued
January 29, 1990) are satisfied and with respect to the Series B
Notes, the Source described in Section 6.2 is an insurance
company general account within the meaning of PTE 95-60 (issued July 12,
1995).
5.13. Private Offering by the Company. Neither the Company nor any
agent acting on its behalf has, directly or indirectly, offered
the Notes or any similar security of the Company for sale to,
or solicited any offers to buy the Notes or any similar security of
the Company from, or otherwise approached or negotiated with respect
thereto with, any Person other than you and not more than 50
Institutional Investors, each of which has been offered the Notes at a
private sale for investment. Neither the Company nor any agent acting on
its behalf has taken, or will take, any action which would subject the
issuance or sale of the Notes to the provisions of section 5 of
the Securities Act or to the provisions of any securities or Blue Sky
law of any applicable jurisdiction. Within the preceding twelve months,
neither the Company nor any other Person acting on behalf of the
Company has offered or sold to any Person (other than institutional
investors at a private sale for investment) any Notes, or any securities
of the same or a similar class as the Notes, or any other substantially
similar securities of the Company.
5.14. Use of Proceeds; Margin Regulations. The Company will apply
the proceeds of the sale of the Notes as set forth in Schedule
5.14. No part of the proceeds from the sale of the Notes hereunder
will be used, directly or indirectly, for the purpose of buying or
carrying any margin stock within the meaning of Regulation G of the
Board of Governors of the Federal Reserve System (12 CFR 207), or
for the purpose of buying or carrying or trading in any securities
under such circumstances as to involve the Company in a violation
of Regulation X of said Board (12 CFR 224) or to involve any broker or
dealer in a violation of Regulation T of said Board (12 CFR 220).
Margin stock does not constitute more than 25% of the value of the
consolidated assets of the Company and its Subsidiaries and the Company
does not have any present intention that margin stock will constitute
more than 25% of the value of such assets. As used in this Section,
the terms "margin stock" and "purpose of buying or carrying" shall
have the meanings assigned to them in said Regulation G.
5.15. Existing Indebtedness; Future Liens. (a) Schedule 5.15 sets
forth a complete and correct list of all outstanding Indebtedness of
the Company and its Subsidiaries as of the date hereof, since which
date there has been no Material change in the amounts, interest rates,
sinking funds, installment payments or maturities of the Indebtedness
of the Company or its Subsidiaries. Neither the Company nor any
Subsidiary is in default (unless such default has been waived;
provided, however, to the best of the Company's knowledge, no
waiver of any such default is currently in effect) in the payment of any
principal or interest on any Indebtedness of the Company or such
Subsidiary and no event or condition exists with respect to any
Indebtedness of the Company or any Subsidiary that would permit (or
that with notice or the lapse of time, or both, would permit) one or
more Persons to cause such Indebtedness to become due and payable
before its stated maturity or before its regularly scheduled dates of
payment.
(b) Except as disclosed in Schedule 5.15, neither the Company nor
any Subsidiary has agreed or consented to cause or permit in the future
(upon the happening of a contingency or otherwise) any of its
property, whether now owned or hereafter acquired, to be subject to a
Lien not permitted by Section 10.3.
5.16. Foreign Assets Control Regulations, etc. Neither the sale of
the Notes by the Company hereunder nor its use of the proceeds thereof
will violate the Trading with the Enemy Act, as amended, or any of the
foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.
5.17. Status under Certain Statutes. Neither the Company nor any
Subsidiary is subject to regulation under the Investment Company Act
of 1940, as amended, the Public Utility Holding Company Act of 1935,
as amended, the Interstate Commerce Act, as amended, or the Federal
Power Act, as amended.
5.18. Environmental Matters. Neither the Company nor any Subsidiary
has knowledge of any claim or has received any notice of any claim, and
no proceeding has been instituted raising any claim against the Company
or any of its Subsidiaries or any of their respective real properties
now or formerly owned, leased or operated by any of them or other
assets, alleging any damage to the environment or violation of
any Environmental Laws, except, in each case, such as could not
reasonably be expected to result in a Material Adverse Effect.
Except as disclosed in Schedule 5.18:
(a) neither the Company nor any Subsidiary has knowledge of any
facts which would give rise to any claim, public or private, of
violation of Environmental Laws or damage to the environment
emanating from, occurring on or in any way related to real properties
now or formerly owned, leased or operated by any of them or to other
assets or their use, except, in each case, such as could not
reasonably be expected to result in a Material Adverse Effect;
(b) neither the Company nor any of its Subsidiaries has stored any
Hazardous Materials on real properties now or formerly owned, leased or
operated by any of them and has not disposed of any Hazardous
Materials in a manner contrary to any Environmental Laws in each
case in any manner that could reasonably be expected to result in a
Material Adverse Effect; and
(c) all buildings on all real properties now owned, leased
or operated by the Company or any of its Subsidiaries are in
compliance with applicable Environmental Laws, except where
failure to comply could not reasonably be expected to result in
a Material Adverse Effect.
6. Representations of the Purchasers. Each Purchaser hereby represents
as to itself as follows:
6.1. Purchase for Investment. Such Purchaser is purchasing the
Notes for its own account or for one or more separate accounts
maintained by it or for the account of one or more pension or trust
funds and not with a view to the distribution thereof, provided that
the disposition of such Purchaser's property shall at all times be
within its control. Such Purchaser understands that the Notes have
not been registered under the Securities Act and may be resold only
if registered pursuant to the provisions of the Securities Act or if an
exemption from registration is available, except under circumstances
where neither such registration nor such exemption is required by
law, and that the Company is not required to register the Notes.
6.2. Source of Funds. With respect to such Purchaser, at least one of
the following statements is an accurate representation as to each
source of funds (a "Source") to be used by such Purchaser to pay the
purchase price of the Notes to be purchased by such Purchaser
hereunder:
(a) the Source is an "insurance company general account"
within the meaning of PTE 95-60 (issued July 12, 1995) and the
purchase of such Notes by such Purchaser is eligible for and
satisfies the requirements of PTE 95-60; or
(b) the Source is (i) an insurance company pooled separate
account, within the meaning of PTE 90-1 (issued January 29, 1990) or
(ii) a bank collective investment fund, within the meaning of PTE 91-38
(issued June 12, 1991), and, except as you have disclosed to the
Company in writing pursuant to this paragraph (b), no employee
benefit plan or group of plans maintained by the same employer or
employee organization beneficially owns more than 10% of all assets
allocated to such pooled separate account or collective investment
fund; or
(c) the Source constitutes assets of an "investment fund"
(within the meaning of Part V of the QPAM Exemption) managed by a
"qualified professional asset manager" or "QPAM" (within the meaning of
Part V of the QPAM Exemption), no employee benefit plan's assets
that are included in such investment fund, when combined with the
assets of all other employee benefit plans established or
maintained by the same employer or by an affiliate (within the
meaning of Section V(c)(1) of the QPAM Exemption) of such employer
or by the same employee organization and managed by such QPAM, exceeds
20% of the total client assets managed by such QPAM, the conditions of
Part I(c) and (g) of the QPAM Exemption are satisfied, neither the
QPAM nor a person controlling or controlled by the QPAM
(applying the definition of "control" in Section V(e) of the QPAM
Exemption) owns a 5% or more interest in the Company and (i) the
identity of such QPAM and (ii) the names of all employee benefit
plans whose assets are included in such investment fund have been
disclosed to the Company in writing pursuant to this paragraph (c); or
(d) the Source is a governmental plan; or
(e) the Source is one or more employee benefit plans, or a
separate account or trust fund comprised of one or more employee
benefit plans, each of which has been identified to the Company in
writing pursuant to this paragraph (e); or
(f) the Source does not include assets of any employee
benefit plan as determined in accordance with Department of
Labor Regulation Section 2510.3-101, other than a plan exempt from
the coverage of ERISA.
As used in this Section 6.2 the terms "employee benefit plan",
"governmental plan" and "separate account" shall have the respective
meanings assigned to such terms in Section 3 of ERISA.
7. Information as to Company.
7.1. 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 7.1(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 7.1(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 (i) 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
becoming 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 hereunder 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 11(f), 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 becoming 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 the date hereof; 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.
7.2. Officer s Certificate. Each set of financial statements
delivered to a holder of Notes pursuant to Section 7.1(a) or
Section 7.1(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 10.3(j), 10.4(e), 10.5,
10.7(b) and 10.8 hereof 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 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.
7.3. 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.
7.4. Bank Agreements. The Company shall provide to each holder of
any 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.
8. Prepayment of the Notes. The Notes must be prepaid by the
Company as specified in Section 8.1 and may, at the Company's option,
be prepaid as specified in Section 8.2.
8.1. Required Prepayments. The Company shall make the following
prepayments of the Notes, without premium:
(i) on the Series A Notes, the Company shall prepay $3,500,000
principal amount (or such lesser principal amount as shall then be
outstanding) on the last day of each June and December beginning June
30, 2003, to and including June 30, 2007; and such principal amount
of the Series A Notes, together with interest thereon to the
prepayment dates, shall become due on such dates; and
(ii) on the Series B Notes, the Company shall prepay $1,153,850
principal amount (or such lesser principal amount as shall then be
outstanding) on the last day of each June and December beginning
December 31, 1999 to and including June 30, 2005, and such principal
amount of the Series B Notes, together with interest thereon to the
prepayment dates, shall become due on such dates.
The remaining unpaid principal amount of the Series A Notes, together
with interest accrued thereon, shall become due on December 31, 2007,
the maturity date of the Series A Notes. The remaining unpaid
principal amount of the Series B Notes, together with interest accrued
thereon, shall become due on December 31, 2005, the maturity date of
the Series B Notes. Any prepayment made by the Company under Section
8.2 shall not reduce or affect its obligations to make the
prepayments required by this Section 8.1 unless the prepayment to be
made by the Company under Section 8.1 is less than the principal
amount as shall then be outstanding.
8.2. Optional Prepayments with Yield Maintenance Amount. The
Company may, at its option, upon notice as provided below, prepay at any
time all, or from time to time any part of, the Notes, on a pro
rata basis between the Series A Notes and the Series B Notes, in each
case at 100% of the principal amount so prepaid, plus accrued and
unpaid interest thereon to the prepayment date and the Yield
Maintenance Amount determined for the prepayment date with respect to
such principal amount. Any partial prepayment with respect to the
Notes shall be not less than $5,000,000 and in integral multiples of
$1,000,000 in excess thereof and applied against required prepayments
pursuant to Section 8.1 and the payments due at maturity in inverse
order of their scheduled due dates. The Company will give each holder
of Notes being prepaid written notice of each optional prepayment
under this Section 8.2 not less than 30 days and not more than 60 days
prior to the date fixed for such prepayment. Each such notice shall
specify the date of prepayment, the aggregate principal amount of
Notes and the Notes of each Series to be prepaid on such date, the
principal amount of each Note held by such holder to be prepaid
(determined in accordance with Section 8.3), and the interest to be paid
on the prepayment date with respect to such principal amount of
each Series being prepaid, and shall be accompanied by a
certificate of a Senior Financial Officer as to the estimated Yield
Maintenance Amount with respect to each Series due in connection with
such prepayment (calculated as if the date of such notice were the date
of the prepayment), setting forth the details of such computation.
Two Business Days prior to such prepayment, the Company shall deliver
to each holder of the Notes being prepaid a certificate of a Senior
Financial Officer specifying the calculation of such Yield Maintenance
Amount with respect to each Series of Notes as of the specified
prepayment date.
8.3. Allocation of Partial Prepayments. In the case of each partial
prepayment of the Series A Notes made pursuant to Section 8.1 and in
the case of each partial prepayment allocated to the Series A Notes
pursuant to Section 8.2, the principal amount of the Series A Notes to
be prepaid shall be allocated among all of the Series A Notes at
the time outstanding in proportion, as nearly as practicable, to the
respective unpaid principal amounts thereof not theretofore called
for prepayment. In the case of each partial prepayment of the Series B
Notes made pursuant to Section 8.1 and in the case of each partial
prepayment allocated to the Series B Notes pursuant to Section 8.2,
the principalamount of the Series B Notes to be prepaid shall be
allocated among all of the Series B Notes at the time outstanding in
proportion, as nearly as practicable, to the respective unpaid
principal amounts thereof not theretofore called for prepayment.
8.4. Maturity; Surrender, etc. In the case of each prepayment of
Notes pursuant to this Section 8, the principal amount of each Note
to be prepaid shall mature and become due and payable on the date fixed
for such prepayment, together with interest on such principal
amount accrued to such date and the applicable Yield
Maintenance Amount, if any. From and after such date, unless the
Company shall fail to pay such principal amount when so due and payable,
together with the interest and Yield Maintenance Amount, if any, as
aforesaid, interest on such principal amount shall cease to accrue.
Any Note paid or prepaid in full shall be surrendered to the Company
and canceled and shall not be reissued, and no Note shall be issued in
lieu of any prepaid principal amount of any Note.
8.5. Purchase of Notes. The Company will not and will not permit any
Affiliate to purchase, redeem, prepay or otherwise acquire, directly or
indirectly, any of the outstanding Notes except upon the payment or
prepayment of the Notes in accordance with the terms of this
Agreement and the Notes. The Company will promptly cancel all
Notes acquired by it or any Affiliate pursuant to any payment,
prepayment or purchase of Notes pursuant to any provision of this
Agreement and no Notes may be issued in substitution or exchange for any
such Notes.
8.6. Yield Maintenance Amount. The term Yield Maintenance
Amount means, with respect to any Note, an amount equal to the excess,
if any, of the Discounted Value of the Remaining Scheduled Payments
with respect to the Called Principal of such Note over the amount of such
Called Principal, provided that the Yield Maintenance Amount may
in no event be less than zero. For the purposes of determining the
Yield Maintenance Amount, the following terms have the following
meanings:
"Called Principal" means, with respect to any Note, the
principal of such Note that is to be prepaid pursuant to Section 8.2 or
has become or is declared to be immediately due and payable
pursuant to Section 12.1, as the context requires.
"Discounted Value" means, with respect to the Called Principal
of any Note, the amount obtained by discounting all Remaining
Scheduled Payments with respect to such Called Principal from their
respective scheduled due dates to the Settlement Date with respect to
such Called Principal, in accordance with accepted financial practice
and at a discount factor (applied on the same periodic basis as that on
which interest on the Notes is payable) equal to the Reinvestment
Yield with respect to such Called Principal.
"Reinvestment Yield" means, with respect to the Called
Principal of any Note, the sum of (a) 50 basis points and (b) the yield
to maturity implied by (i) the yields reported, as of 10:00 A.M. (New
York City time) on the second Business Day preceding the Settlement
Date with respect to such Called Principal, on the display
designated as "Page 678" on the Telerate Access Service (or such other
display as may replace Page 678 on Telerate Access Service) for
actively traded U.S. Treasury securities having a maturity equal to
the Remaining Average Life of such Called Principal as of such
Settlement Date, or (i) if such yields are not reported as of such
time or the yields reported as of such time are not ascertainable, the
Treasury Constant Maturity Series Yields reported, for the latest day for
which such yields have been so reported as of the second Business
Day preceding the Settlement Date with respect to such Called
Principal, in Federal Reserve Statistical Release H.15 (519) (or
any comparable successor publication) for actively traded U.S.
Treasury securities having a constant maturity equal to the Remaining
Average Life of such Called Principal as of such Settlement Date.
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 (a) interpolating
linearly between (1) the actively traded U.S. Treasury security with
the duration closest to and greater than the Remaining Average Life
and (2) the actively traded U.S. Treasury security with the duration
closest to and less than the Remaining Average Life.
"Remaining Average Life" means, with respect to any Called
Principal, the number of years (calculated to the nearest one-twelfth
year) obtained by dividing (i) such Called Principal into (i) the
sum of the products obtained by multiplying (a) the principal
component of each Remaining Scheduled Payment with respect to such
Called Principal by (a) the number of years (calculated to the nearest
one-twelfth year) that will elapse between the Settlement Date with
respect to such Called Principal and the scheduled due date of such
Remaining Scheduled Payment.
"Remaining Scheduled Payments" means, with respect to the Called
Principal of any Note, all payments of such Called Principal and
interest thereon that would be due after the Settlement Date with
respect to such Called Principal if no payment of such Called Principal
were made prior to its scheduled due date, provided that if such
Settlement Date is not a date on which interest payments are due to be
made under the terms of the Notes, then the amount of the next
succeeding scheduled interest payment will be reduced by the amount
of interest accrued to such Settlement Date and required to be paid on
such Settlement Date pursuant to Section 8.2 or 12.1.
"Settlement Date" means, with respect to the Called Principal
of any Note, the date on which such Called Principal is to be
prepaid pursuant to Section 8.2 or has become or is declared
to be immediately due and payable pursuant to Section 12.1, as the
context requires.
9. Affirmative Covenants. The Company covenants that so long as any of
the Notes are outstanding:
9.1. Compliance with Law. The Company will and will cause each of its
Subsidiaries to comply with all laws, ordinances or governmental rules
or regulations to which each of them is subject, including,
without limitation, Environmental Laws, 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, ordinances or governmental rules or
regulations 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.
9.2. 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, co-insurance 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.
9.3. Maintenance of Properties. The Company will and will cause each
of its Subsidiaries to maintain and keep, or cause to be
maintained and kept, their respective properties in good repair,
working order and condition (other than ordinary wear and tear), so that
the business carried on in connection therewith may be properly
conducted at all times, provided that this Section shall not prevent
the Company or any Subsidiary from discontinuing the operation and the
maintenance of any of its properties if such discontinuance is
desirable in the conduct of its business and the Company has
concluded that such discontinuance could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
9.4. Payment of Taxes and Claims. The Company will and will cause each
of its Subsidiaries to file all tax returns required to be filed in
any jurisdiction and to pay and discharge all taxes shown to be due and
payable on such returns and all other taxes, assessments,
governmental charges, or levies imposed on them or any of their
properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have become
delinquent and all claims for which sums have become due and payable
that have or might become a Lien on properties or assets of the
Company or any Subsidiary, provided that neither the Company nor any
Subsidiary need pay any such tax or assessment or claim if (i) the
amount, applicability or validity thereof is contested by the Company
or such Subsidiary on a timely basis in good faith and in appropriate
proceedings, and the Company or a Subsidiary has established
adequate reserves therefor in accordance with GAAP on the books of
the Company or such Subsidiary or (i) the nonpayment of all such taxes,
assessments and claims in the aggregate could not reasonably be
expected to have a Material Adverse Effect.
9.5. Corporate Existence, etc. Subject to Section 10.2, the Company
will at all times preserve and keep in full force and effect its
corporate existence. The Company will at all times preserve and keep
in full force and effect the corporate existence of each of its
Subsidiaries (unless merged into or consolidated with the Company or
a Subsidiary in compliance with Section 10.2(i) and all licenses,
permits, rights and franchises of the Company and its Subsidiaries
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, right or franchise could not, individually
or in the aggregate, have a Material Adverse Effect.
9.6. Covenant to Secure Notes Equally. The Company covenants that,
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 10.3 (unless
prior written consent to the creation or assumption thereof shall
have been obtained pursuant to Section 17), it will 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.
9.7. Guaranteed Obligations. The Company covenants that 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, the Company will simultaneously cause such Subsidiary or
Subsidiaries, as the case may be, to execute and deliver to each
holder of any 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.
9.8. Parity With Bank Agreements. The Company will, and will cause
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.
9.9. Information Required by Rule 144A. The Company covenants that it
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
9.9, the term "qualified institutional buyer" shall have the
meaning specified in Rule 144A under the Securities Act.
9.10. No Integration. The Company covenants that it has taken and
will continue to take all necessary steps so that the issuance of the
Notes has not and will not require registration under the Securities
Act. The Company covenants that no future offer and sale of debt
securities of the Company of any class will be made 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
the offer and sale of the Notes to an exemption from the registration
requirements of the Securities Act.
10. Negative Covenants. The Company covenants that so long as any of
the Notes are outstanding:
10.1. Transactions with Affiliates. The Company will not and
will not permit any Subsidiary 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 10.1
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.
10.2. Merger, Consolidation, etc. The Company shall not, and
shall 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 any Note its assumption of the due
and punctual performance and observance of each covenant and
condition of this Agreement and the Notes, (A) shall have
executed and delivered, or caused to be executed and delivered, to
each holder of any Note a reaffirmation of the Pledge Agreements
and the Guaranty Agreements by each party thereto, and (A) shall have
caused to be delivered to each holder of any 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 the holders of the
Notes 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 any Note its assumption of the due and
punctual performance and observance of each covenant and condition of
this Agreement and the Notes, (2) shall have executed and
delivered, or caused to be executed and delivered, to each holder of
any Note a reaffirmation of the Pledge Agreements and the Guaranty
Agreements by each party thereto, and (3) shall have caused to be
delivered to each holder of any 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 the holders of the
Notes may reasonably request, and (A) 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 any Note its assumption of the due and punctual performance
and observance of each covenant and condition of this Agreement
and the Notes, (2) shall have executed and delivered, or caused to
be executed and delivered, to each holder of any Note a
reaffirmation of the Pledge Agreements and the Guaranty Agreements by
each party thereto, and (3) shall have caused to be delivered to
each holder of any 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 the holders of the Notes may reasonably
request, and (B) immediately after giving effect to such
transaction, no Default or Event of Default shall have occurred or
exist.
10.3. Liens. The Company will not and will not permit any
Subsidiary to create, assume, incur or suffer to exist any Lien
upon any of its property or assets, whether now owned or hereafter
acquired (whether or not provision is made for the equal and ratable
securing of the Notes pursuant to Section 9.6), except:
(a) Liens existing on the date of Closing and specified on
Schedule 10.3, 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 10.3; 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 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.
10.4. Loans, Advances and Investments. The Company will not and
will not permit any Subsidiary 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 10.8(a), (b) and (e);
(d) own, purchase or acquire (A) prime commercial paper of an
issuer rated A-1 or P-1 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;
(e) make or permit to remain outstanding any other Investments
which in the aggregate do not exceed at any time 15% of Shareholders
Equity.
10.5. Restricted Payments. The Company will not, and will not
permit any Subsidiary 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 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 10.5, the conversion of the Company's
Convertible Subordinated Notes due 1999 shall not constitute an
issuance of the Company's Capital Stock.
10.6. Nature of Business. The Company will not and will not permit
any Subsidiary 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
the date hereof.
10.7. Sale of Property. The Company will not, and will not permit
any Subsidiary 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 10.7, "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.
10.8. 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.
11. Events of Default. An "Event of Default" shall exist if any
of the following conditions or events shall occur and be continuing:
(a) the Company defaults in the payment of any principal or
Yield Maintenance Amount, 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 or by declaration or
otherwise; or
(b) the Company defaults in the payment of any interest on any
Note for more than five Business Days after the same becomes due and
payable; or
(c) the Company defaults in the performance of or compliance with
any term contained in Sections 10.1, 10.2, 10.3, 10.5, 10.6, 10.7 and
10.8; or
(d) the Company defaults in the performance of or compliance with
any term contained herein (other than those referred to in paragraphs
(a), (b) and (c) of this Section 11) and such default is not
remedied within 45 days after the earlier of (i) a Responsible Officer
obtaining actual knowledge of such default and (i) the Company
receiving written notice of such default from any holder of a
Note (any such written notice to be identified as a "notice of default"
and to refer specifically to this paragraph (d) of Section
11); or
(e) any representation or warranty made in writing by or
on behalf of the Company or by any officer of the Company in this
Agreement or in any writing furnished in connection with the
transactions contemplated hereby 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 of 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 with
respect to 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)
rendered against one or more of the Company and its Subsidiaries and (A)
action has been 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 are
not, within 90 days after entry thereof, bonded, discharged or
stayed pending appeal, or are not discharged within 90 days after
the expiration of such stay; or
(j) if (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA 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 establishes or amends 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 any or all of the Guaranty Agreements; or any or
all of the Guaranty Agreements 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 11(j), the terms "employee benefit plan" and
"employee welfare benefit plan" shall have the respective meanings
assigned to such terms in Section 3 of ERISA.
12. Remedies on Default, Etc.
12.1. Acceleration. (a) If an Event of Default with respect to the
Company or any Material Subsidiary described in paragraph (g) or (h) of
Section 11 (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.
(b) If any other Event of Default has occurred and is
continuing (including, without limitation, an Event of Default
described in paragraph (h) with 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.
(c) If any Event of Default described in paragraph (a) or
(b) of Section 11 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 12.1,
whether automatically or by declaration, such Notes will forthwith
mature and the entire unpaid principal amount of such Notes, plus (x)
all accrued and unpaid interest thereon and (y) the Yield
Maintenance Amount 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 Yield Maintenance Amount 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.
12.2. 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
12.1, 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 for the
specific performance of any agreement contained herein 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.
12.3. Rescission. At any time after any Notes have been declared due
and payable pursuant to clause (b) or (c) of Section 12.1, 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 Yield Maintenance Amount, 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 Yield Maintenance Amount, if
any, and (to the extent permitted by applicable law) any
overdue interest in respect of the Notes, at the Default 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 17, and (c) no judgment or
decree has been entered for the payment of any monies due
pursuant hereto or to the Notes. No rescission and annulment
under this Section 12.3 will extend to or affect any subsequent Event
of Default or Default or impair any right consequent thereon.
12.4. No Waivers or Election of Remedies, Expenses, etc. No course of
dealing and no delay on the part of any holder of any 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 this Agreement or by
any Note 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 15, 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
12, including, without limitation, reasonable attorneys fees,
expenses and disbursements.
13. Registration; Exchange; Substitution of Notes.
13.1. Registration of Notes. The Company shall keep at its
principal executive office a register for the registration and
registration of transfers of Notes. The name and address of each
holder of one or more Notes, each transfer thereof and the name and
address of each transferee of one or more Notes shall be registered in
such register. The Company shall give to any holder of a Note that
is an Institutional Investor promptly upon request therefor, a complete
and correct copy of the names and addresses of all registered
holders of Notes.
13.2. Transfer and Exchange of Notes. (a) Upon surrender of any
Note at the principal executive office of the Company for registration of
transfer or exchange (and in the case of a surrender for registration
of transfer, duly endorsed or accompanied by a written instrument of
transfer duly executed by the registered holder of such Note or his
attorney duly authorized in writing and accompanied by the address for
notices of each transferee of such Note or part thereof), the
Company shall execute and deliver, at the Company's expense (except
as provided below), one or more new Notes of the same Series (as
requested by the holder thereof) in exchange therefor, in an
aggregate principal amount equal to the unpaid principal amount of the
surrendered Note. Each such new Note shall be payable to such Person
as such holder may request and shall be substantially in the form of
Exhibit 1. Each such new Note shall be dated and bear interest from the
date to which interest shall have been paid on the surrendered Note
or dated the date of the surrendered Note if no interest shall have
been paid thereon. The Company may require payment of a sum
sufficient to cover any stamp tax or governmental charge imposed in
respect of any such transfer of Notes. Notes shall not be transferred
in denominations of less than $5,000,000, in the case of the
Series A Notes, and $2,000,000, in the case of the Series B Notes (or,
in the case of each Series of Notes, such lesser denominations
equal to either (i) the outstanding principal amount of such Note
being transferred or (ii) in the case of the initial Notes issued under
this Agreement, the face amount of such Note. Any transferee,
by its acceptance of a Note registered in its name (or the name of its
nominee), shall be deemed to have made the representation set forth in
Section 6, provided, however, any transferee acquiring such Note
pursuant to a transfer under Rule 144 under the Securities Act
or Rule 144A under the Securities Act shall not be deemed to have made
the representation set forth in Section 6.1.
(b) Prior to due presentment for registration of transfer, the
Company may treat the person in whose name any Note is registered as
the owner and holder of such Note for the purpose of receiving
payment of principal of, interest on and any Yield-Maintenance
Amount, if any, and for all other purposes whatsoever, whether or not
such Note shall be overdue, and the Company shall not be affected
by notice to the contrary. Subject to the preceding sentence,
the holder of any Note may from time to time grant
participations in all or any part of such Note to any Person on such
terms and conditions as may be determined by such holder in its
sole and absolute discretion.
13.3. Replacement of Notes. Upon receipt by the Company of
evidence reasonably satisfactory to it of the ownership of and the
loss, theft, destruction or mutilation of any Note (which evidence shall
be, in the case of an Institutional Investor, notice from such
Institutional Investor of such ownership and such loss, theft,
destruction or mutilation), and
(a) in the case of loss, theft or destruction, of an unsecured
agreement of indemnity reasonably satisfactory to it, or
(b) in the case of mutilation, upon surrender and cancellation
thereof, the Company at its own expense shall execute and deliver, in
lieu thereof, a new Note of the same Series, dated and bearing interest
from the date to which interest shall have been paid on such lost,
stolen, destroyed or mutilated Note or dated the date of such lost,
stolen, destroyed or mutilated Note if no interest shall have been paid
thereon.
14. Payments on Notes.
14.1. Place of Payment. Subject to Section 14.2, payments of
principal, Yield Maintenance Amount, if any, and interest becoming due
and payable on the Notes shall be made by wire transfer in immediately
available funds for credit (no later than 1:00 p.m., New York City
time, on the date due) to your account or accounts as specified on
Schedule A attached hereto, or such other accounts you may designate in
writing.
14.2. Home Office Payment. So long as you or your nominee shall
be the holder of any Note, and notwithstanding anything contained
in such Note to the contrary, the Company will pay all sums becoming due
on such Note for principal, Yield Maintenance Amount, if any, and
interest by the method and at the address specified for such purpose
below your name in Schedule A, or by such other method or to such other
account or address as you shall have from time to time specified to the
Company in writing for such purpose, without the presentation or
surrender of such Note or the making of any notation thereon, except that
upon written request of the Company made concurrently with or
reasonably promptly after payment or prepayment in full of any Note,
you shall surrender such Note for cancellation, reasonably promptly
after any such request, to the Company at its principal executive
office. Prior to any sale or other disposition of any Note held by
you or your nominee you will, at your election, either endorse
thereon the amount of principal paid thereon and the last date to
which interest has been paid thereon or surrender such Note to
the Company in exchange for a new Note or Notes of the same Series
pursuant to Section 13.2. The Company will afford the benefits of this
Section 14.2 to any Institutional Investor that is the direct or
indirect transferee of any Note purchased by you under this Agreement and
that has made the same agreement relating to such Note as you have
made in this Section 14.2.
15. Expenses, Etc.
15.1. Transaction Expenses. Whether or not the transactions
contemplated hereby are consummated, 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 such transactions
and in connection with any amendments, waivers or consents under or
in respect of this Agreement, the Notes, the Pledge Agreements, the
Guaranty Agreements 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 Agreements 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
Agreements or the Intercreditor Agreement, or by reason of being a
holder of any Note, and (a) 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 Agreements 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).
15.2. Survival. The obligations of the Company under this
Section 15 will survive the payment or transfer of, or the grant of
any participation in, any Note, the enforcement, amendment or waiver
of any provision of this Agreement, the Notes, the Pledge
Agreements, the Guaranty Agreements and the Intercreditor
Agreement, and the termination of any thereof.
16. Survival of Representations and Warranties; Entire Agreement.
All representations and warranties contained herein shall
survive the execution and delivery of this Agreement and the Notes,
the purchase or transfer by you of any Note or portion thereof or
interest therein and the payment of any Note, and may be relied upon
by any subsequent holder of a Note, regardless of any investigation
made at any time by or on behalf of you or any other holder of a
Note. All statements contained in any certificate or other
instrument delivered by or on behalf of the Company pursuant to
this Agreement shall be deemed representations and warranties
of the Company under this Agreement. Subject to the preceding
sentence, this Agreement and the Notes embody the entire
agreement and understanding between you and the Company and supersede all
prior agreements and understandings relating to the subject matter
hereof.
17. Amendment and Waiver.
17.1. Requirements. This Agreement and the Notes may be amended,
and the observance of any term hereof or of the Notes may be waived
(either retroactively or prospectively), with (and only with) the
written consent of the Company and the Required Holders, except that no
amendment or waiver may, without the written consent of the holder
of each Note at the time outstanding (or, prior to the Closing,
without your consent), (i) subject to the provisions of Section 12
relating to acceleration or rescission, change the amount or time
of any prepayment or payment of principal of, or change the rate
or time of payment or method of computation of interest or of the
Yield Maintenance Amount on, the Notes, (ii) change the percentage
of the principal amount of the Notes the holders of which are
required to consent to any such amendment or waiver, or (iii) amend
any of Sections 1 through 6, 8, 11(a), 11(b), 12, 14.2, 17 and 20 (or
any defined terms as used therein).
17.2. Solicitation of Holders of Notes. (a) Solicitation.
The Company will provide each holder of the Notes (irrespective of the
amount of Notes then owned by it) with sufficient information,
sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and considered decision with
respect to any proposed amendment, waiver or consent in respect of any
of the provisions hereof or of the Notes. The Company will deliver
executed or true and correct copies of each amendment, waiver or
consent effected pursuant to the provisions of this Section 17 to
each holder of outstanding Notes promptly following the date on
which it is executed and delivered by, or receives the consent or
approval of, the requisite holders of Notes.
(b) Payment. The Company will not directly or indirectly pay
or cause to be paid any remuneration, whether by way of supplemental or
additional interest, fee or otherwise, or grant any security, to any
holder of Notes as consideration for or as an inducement to the
entering into by any holder of Notes or any waiver or amendment of any of
the terms and provisions hereof unless such remuneration is
concurrently paid, or security is concurrently granted, on the same
terms, ratably to each holder of Notes then outstanding even if such
holder did not consent to such waiver or amendment.
17.3. Binding Effect, etc. Any amendment or waiver consented to as
provided in this Section 17 applies equally to all holders of Notes
and is binding upon them and upon each future holder of any Note and
upon the Company without regard to whether such Note has been marked
to indicate such amendment or waiver. No such amendment or waiver will
extend to or affect any obligation, covenant, agreement, Default or
Event of Default not expressly amended or waived or impair any right
consequent thereon. No course of dealing between the Company and the
holder of any Note nor any delay in exercising any rights hereunder or
under any Note shall operate as a waiver of any rights of any holder of
such Note. As used herein, the term "this Agreement" and references
thereto shall mean this Agreement as it may from time to time be amended
or supplemented.
17.4. Notes held by Company, etc. Solely for the purpose of
determining whether the holders of the requisite percentage of the
aggregate principal amount of Notes then outstanding approved or
consented to any amendment, waiver or consent to be given under this
Agreement or the Notes, or have directed the taking of any action
provided herein or in the Notes to be taken upon the direction of the
holders of a specified percentage of the aggregate principal amount
of Notes then outstanding, Notes directly or indirectly owned by the
Company or any of its Affiliates shall be deemed not to be
outstanding.
18. Notices. All notices and communications provided for hereunder
shall be in writing and sent (a) by telecopy if the sender on
the same day sends a confirming copy of such notice by a
recognized overnight delivery service (charges prepaid), or (a) by
registered or certified mail with return receipt requested
(postage prepaid), or (a) by a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the address
specified for such communications in Schedule A, or at such other
address as you or it shall have specified to the Company in writing,
(ii) if to any other holder of any Note, to such holder at such
address as such other holder shall have specified to the Company in
writing, or
(iii) if to the Company, to the Company at its address set
forth at the beginning hereof to the attention of Joe L. Powers,
Executive Vice President and Chief Financial Officer, or at such other
address as the Company shall have specified to the holder of each Note
in writing.
Notices under this Section 18 will be deemed given only when actually
received.
19. Reproduction of Documents. This Agreement and all documents
relating thereto, including, without limitation, (a) consents,
waivers and modifications that may hereafter be executed, (a) documents
received by you at the Closing (except the Notes themselves), and (a)
financial statements, certificates and other information previously or
hereafter furnished to you, may be reproduced by you by any
photographic, photostatic, microfilm, microcard, miniature
photographic or other similar process and you may destroy any
original document so reproduced. The Company agrees and stipulates
that, to the extent permitted by applicable law, any such
reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding (whether or not the original
is in existence and whether or not such reproduction was made by you in
the regular course of business) and any enlargement, facsimile or
further reproduction of such reproduction shall likewise be
admissible in evidence. This Section 19 shall not prohibit the
Company or any other holder of Notes from contesting any such
reproduction to the same extent that it could contest the original, or
from introducing evidence to demonstrate the inaccuracy of any such
reproduction.
20. Confidential Information. For the purposes of this Section
20, "Confidential Information" means information delivered to you by
or on behalf of the Company or any Subsidiary in connection with
the transactions contemplated by or otherwise pursuant to this
Agreement that is proprietary in nature and that was clearly marked or
labeled or otherwise adequately identified when received by you as
being confidential information of the Company or such Subsidiary,
provided that such term does not include information that (a) was
publicly known or otherwise known to you prior to the time of such
disclosure, (b) subsequently becomes publicly known through no act or
omission by you or any person acting on your behalf, (c) otherwise
becomes known to you other than through disclosure by the Company or
any Subsidiary or (d) constitutes financial statements delivered to
you under Section 7.1 that are otherwise publicly available. You
will maintain the confidentiality of such Confidential Information
in accordance with procedures adopted by you in good faith to protect
confidential information of third parties delivered to you, provided
that you may deliver or disclose Confidential Information to (i)
your directors, officers, employees, agents, attorneys and affiliates
(to the extent such disclosure reasonably relates to the
administration of the investment represented by your Notes),
(ii) your financial advisors and other professional advisors who agree
to hold confidential the Confidential Information substantially in
accordance with the terms of this Section 20, (iii) any other holder
of any Note, (iv) any Institutional Investor to which you sell or
offer to sell such Note or any part thereof or any participation therein
(if such Person has agreed in writing prior to its receipt of such
Confidential Information to be bound by the provisions of this
Section 20), (v) any Person from which you offer to purchase any
security of the Company (if such Person has agreed in writing prior to
its receipt of such Confidential Information to be bound by the
provisions of this Section 20), (vi) any federal or state
regulatory authority having jurisdiction over you, (vii) the
National Association of Insurance Commissioners or any similar
organization, or any nationally recognized rating agency that requires
access to information about your investment portfolio or (viii) any
other Person to which such delivery or disclosure may be necessary
or appropriate (w) to effect compliance with any law, rule,
regulation or order applicable to you, (x) in response to any
subpoena or other legal process, (y) in connection with any litigation
to which you are a party or (z) if an Event of Default has occurred and
is continuing, to the extent you may reasonably determine such delivery
and disclosure to be necessary or appropriate in the enforcement
or for the protection of the rights and remedies under your Notes
and this Agreement. Each holder of a Note, by its acceptance of a
Note, will be deemed to have agreed to be bound by and to be entitled to
the benefits of this Section 20 as though it were a party to this
Agreement. On reasonable request by the Company in connection with the
delivery to any holder of a Note of information required to be
delivered to such holder under this Agreement or requested by such
holder (other than a holder that is a party to this Agreement or its
nominee), such holder will enter into an agreement with the Company
embodying the provisions of this Section 20.
21. Miscellaneous.
21.1. Successors and Assigns. All covenants and other agreements
contained in this Agreement by or on behalf of any of the parties
hereto bind and inure to the benefit of their respective successors and
assigns (including, without limitation, any subsequent holder of a
Note) whether so expressed or not.
21.2. Payments Due on Non-Business Days. Anything in this
Agreement or the Notes to the contrary notwithstanding, any
payment of principal of or Yield Maintenance Amount 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.
21.3. Severability. Any provision of this Agreement 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, 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.
21.4. Construction. Each covenant contained herein shall be
construed (absent express provision to the contrary) as being
independent of each other covenant contained herein, 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 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.
21.5. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which
together shall constitute one instrument. Each counterpart may
consist of a number of copies hereof, each signed by less than all, but
together signed by all, of the parties hereto.
21.6. 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 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.
21.7. 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.
* * * * *<PAGE>
S-1
If you are in agreement with the foregoing, please sign the form of
acceptance set forth below and return it to the Company, whereupon the
foregoing shall become a binding agreement between you and the Company.
Very truly yours,
THOMAS NELSON, INC.
By /s/ Joe L. Powers
----------------------
Joe L. Powers
Executive Vice President
and Chief Financial Officer
The foregoing is hereby
agreed to as of the
date thereof.
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By /s/ Catherine A. Cates
---------------------------------
Catherine A. Cates
Vice-President
METROPOLITAN LIFE INSURANCE COMPANY
By /s/ Robert B. Bodett
--------------------------------
Robert B. Bodett
Assistant Vice-President<PAGE>
SCHEDULE B-1
DEFINED TERMS
As used herein, the following terms have the respective
meanings set forth below or set forth in the Section hereof following
such term:
"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 (a) 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.
"Assets" means, at any time, assets of any Person as determined
in accordance with GAAP.
"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.
"Closing" is defined in Section 3.
"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" is defined in the preamble of this Agreement.
"Confidential" Information is defined in Section 20.
"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" shall mean, 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
conformity 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.
"Default Rate" means that rate of interest that is the greater of
(i) 2% per annum above the rate of interest stated in clause (a) of
the first paragraph of the Notes or (ii) 2% 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.
"Disposition" is defined in Section 10.7.
"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 11.
"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.
"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 identified in Schedule 5.4 as
a "Guarantor Subsidiary," and any other Subsidiary which executes a
Guaranty pursuant to Section 9.7 or Section 9.8.
"Guaranty" 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 (b) 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 Agreements" means (i) the Guaranty Agreement,
dated as of the date hereof, made by each Guarantor in favor of The
Prudential Insurance Company of America, (ii) the Guaranty Agreement,
dated as of the date hereof, made by each Guarantor in favor of
Metropolitan Life Insurance Company and (iii) any other Guaranty
executed by a Subsidiary pursuant to Section 9.7 or Section 9.8,
as any such guaranty agreement may be amended, restated,
modified, or supplemented from time to time in accordance with its
terms.
"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).
"Holder" means, with respect to any Note, the Person in
whose name such Note is registered in the register maintained by the
Company pursuant to Section 13.1.
"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) any original purchaser of a
Note, (b) any holder of a Note holding more than 10% of the aggregate
principal amount of the Notes of either Series 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 that certain intercreditor
agreement, dated as of the date hereof, among The Prudential
Insurance Company of America, Metropolitan Life Insurance Company,
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.
"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).
"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 this
Agreement and the Notes, or (c) the validity or enforceability of this
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 Agreements.
"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.
"Memorandum" is defined in Section 5.3.
"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).
"Notes" is defined in Section 1.
"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.
"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 of the date hereof, 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, Metropolitan Life Insurance Company 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 the date hereof, 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, Metropolitan Life Insurance Company 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 The C.R. Gibson Company 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 9.6, 9.7 or 9.8, as any such agreement may be amended,
restated, modified, or supplemented from time to time in accordance with
its terms.
"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 10.3;
(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.
"Purchasers" means, with respect to any Notes, the Persons who
are purchasing the Notes on the date of Closing pursuant to this
Agreement.
"QPAM Exemption" means Prohibited Transaction Class
Exemption 84-14 issued by the United States Department of Labor.
"Receivables Financing" means a transaction pursuant to
which funds are advanced to either Company and/or any of its
Subsidiaries in exchange for which such 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
this Agreement.
"Restricted Payment" is defined in Section 10.5.
"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.
"Series" is defined in Section 1.
"Series A Notes" is defined in Section 1.
"Series B Notes" is defined in Section 1.
"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 10.7, 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.
"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.
"Yield Maintenance Amount" is defined in Section 8.6.
END OF SCHEDULE B<PAGE>
EXHIBIT 1-A
[FORM OF SERIES A NOTE]
THOMAS NELSON, INC.
6.90% SERIES A SENIOR NOTE DUE DECEMBER 31, 2007
No. [_____] [Date]
$[_______] PPN[______________]
FOR VALUE RECEIVED, the undersigned, THOMAS NELSON, INC.
(herein called the "Company"), a corporation organized and existing
under the laws of the State of Tennessee, hereby promises to pay to
[__________], or registered assigns, the principal sum of [_________]
DOLLARS on December 31, 2007, with interest (computed on the basis of a
360-day year of twelve 30-day months) (a) on the unpaid balance
thereof at the rate of 6.90% per annum from the date hereof, 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 Note Purchase Agreement
referred to below), 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) 8.90% 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.
Payments of principal of, interest on and any Yield Maintenance
Amount with respect to this Note are to be made in lawful money of
the United States of America at Morgan Guaranty Trust Company of New
York, or as specified in the Note Purchase Agreement referred to below
and Schedule A thereto for the holder of this Note or at such other place
as the holder of this Note shall have designated by written notice to
the Company as provided in the Note Purchase Agreement referred to
below.
This Note is one of the Series A Senior Notes (herein called
the "Series A Notes") issued pursuant to the Note Purchase Agreement,
dated January 3, 1996, in the aggregate principal amount of $35,000,000
(as from time to time amended, the "Note Purchase Agreement"), between
the Company and the respective purchasers named therein and is
entitled to the benefits thereof. Pursuant to the Note Purchase
Agreement, the Company has also issued a series of Series B Senior
Notes in the aggregate principal amount of $15,000,000. Each holder
of this Note will be deemed, by its acceptance hereof, (i) to have
agreed to the confidentiality provisions set forth in Section 20 of
the Note Purchase Agreement and (ii) except as provided in Section
13.2(a) of the Note Purchase Agreement, to have made the
representation set forth in Section 6 thereof.
This Note is a registered Note and, as provided in the Note
Purchase Agreement, upon surrender of this Note for registration of
transfer, duly endorsed, or accompanied by a written instrument of
transfer duly executed, by the registered holder hereof or such
holder's attorney duly authorized in writing, a new Series A Note
for a like principal amount will be issued to, and registered in
the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name
this Note is registered as the owner hereof for the purpose of
receiving payment and for all other purposes, and the Company will
not be affected by any notice to the contrary.
The Company will make required prepayments of principal on the
dates and in the amounts specified in the Note Purchase Agreement. This
Note is also subject to optional prepayment, in whole or from time to
time in part, at the times and on the terms specified in the Note
Purchase Agreement, but not otherwise.
If an Event of Default, as defined in the Note Purchase
Agreement, occurs and is continuing, the principal of this Note
may be declared or otherwise become due and payable in the manner,
at the price (including any applicable Yield Maintenance Amount) and
with the effect provided in the Note Purchase Agreement.
<PAGE>
This Note 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.
THOMAS NELSON, INC.
By:________________________
Name:
Title:<PAGE>
EXHIBIT 1-B
[FORM OF SERIES B NOTE]
THOMAS NELSON, INC.
6.68% SERIES B SENIOR NOTE DUE DECEMBER 31, 2005
No. [_____] [Date]
$[_______] PPN[______________]
FOR VALUE RECEIVED, the undersigned, THOMAS NELSON, INC.
(herein called the "Company"), a corporation organized and existing
under the laws of the State of Tennessee, hereby promises to pay to
[__________], or registered assigns, the principal sum of [__________]
DOLLARS on December 31, 2005, with interest (computed on the basis of a
360-day year of twelve 30-day months) (a) on the unpaid balance
thereof at the rate of 6.68% per annum from the date hereof, 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 Note Purchase Agreement
referred to below), 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) 8.68% 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.
Payments of principal of, interest on and any Yield Maintenance
Amount with respect to this Note are to be made in lawful money of
the United States of America at Morgan Guaranty Trust Company of New
York, or as specified in the Note Purchase Agreement referred to below
and Schedule A thereto for the holder of this Note or at such other
place as the holder of this Note shall have designated by written notice
to the Company as provided in the Note Purchase Agreement referred to
below.
This Note is one of the Series B Senior Notes (herein called
the "Series B Notes") issued pursuant to the Note Purchase Agreement,
dated January 3, 1996, in the aggregate principal amount of $15,000,000
(as from time to time amended, the "Note Purchase Agreement"), between
the Company and the respective purchasers named therein and is
entitled to the benefits thereof. Pursuant to the Note Purchase
Agreement, the Company has also issued a Series of Series A Senior
Notes in the aggregate principal amount of $35,000,000. Each holder
of this Note will be deemed, by its acceptance hereof, (i) to have
agreed to the confidentiality provisions set forth in Section 20 of the
Note Purchase Agreement and (ii) except as provided in Section 13.2(a) of
the Note Purchase Agreement, to have made the representation set
forth in Section 6 of the Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note
Purchase Agreement, upon surrender of this Note for registration of
transfer, duly endorsed, or accompanied by a written instrument of
transfer duly executed, by the registered holder hereof or such
holder's attorney duly authorized in writing, a new Series B Note
for a like principal amount will be issued to, and registered in
the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name
this Note is registered as the owner hereof for the purpose of
receiving payment and for all other purposes, and the Company will
not be affected by any notice to the contrary.
The Company will make required prepayments of principal on the
dates and in the amounts specified in the Note Purchase Agreement. This
Note is also subject to optional prepayment, in whole or from time to
time in part, at the times and on the terms specified in the Note
Purchase Agreement, but not otherwise.
If an Event of Default, as defined in the Note Purchase
Agreement, occurs and is continuing, the principal of this Note
may be declared or otherwise become due and payable in the manner,
at the price (including any applicable Yield Maintenance Amount) and
with the effect provided in the Note Purchase Agreement.
<PAGE>
This Note 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.
THOMAS NELSON, INC.
By: ______________________
Name:
Title:
